Kimball Electronics’ first quarter results drew a positive market reaction as the company delivered revenue above Wall Street expectations, despite a double-digit year-over-year sales decline. Management attributed the performance to a non-recurring consignment inventory sale in its Medical division and ongoing improvements in operating efficiency. CEO Ric Phillips emphasized, “Sales in Q3 were in line with expectations and increased sequentially. Margins improved. We continue to generate cash from operating activities and the pay down of debt continued.” The company’s progress in streamlining costs and reducing inventory also contributed to the quarter’s outperformance.
Is now the time to buy KE? Find out in our full research report (it’s free).
Kimball Electronics (KE) Q1 CY2025 Highlights:
- Revenue: $374.6 million vs analyst estimates of $338.1 million (11.9% year-on-year decline, 10.8% beat)
- Adjusted EPS: $0.27 vs analyst estimates of $0.19 (42.1% beat)
- Adjusted EBITDA: $24.56 million vs analyst estimates of $20.5 million (6.6% margin, 19.8% beat)
- The company reconfirmed its revenue guidance for the full year of $1.42 billion at the midpoint
- Operating Margin: 3.7%, in line with the same quarter last year
- Market Capitalization: $471.3 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Kimball Electronics’s Q1 Earnings Call
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Mike Crawford (B. Riley Securities) asked about the cost implications and timeline of the new Indianapolis facility. CFO Jana Croom explained the lease structure delays expenses until the facility is operational, minimizing short-term financial impact.
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Jaeson Schmidt (Lake Street Capital) inquired whether orders were pulled ahead due to tariffs and about expense trends for the year. CEO Ric Phillips said no strong evidence of order pull-forward was seen, while Croom noted that selling and administrative expenses are unusually low and will rise as growth investments resume.
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Derek Soderberg (Cantor Fitzgerald) questioned gross margin sustainability and the rationale for medical facility expansion. Croom clarified that margins should resemble the latest quarter, while Phillips described the move as essential for attracting new medical business and supporting inorganic growth.
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Anja Soderstrom (Sidoti & Company) asked about the impact of program transitions and facility closures on gross margin and when normalization is expected. COO Steve Korn said Tampa’s closure should benefit margins, while the Indianapolis move will have limited near-term impact.
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Hendi Susanto (Gabelli Funds) focused on automotive business composition in China, industrial segment recovery, and inventory trends. Korn detailed high exposure to steering systems in China and cited stabilization in climate control, but limited recovery prospects for smart meters.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be watching (1) the pace of ramp-up at the new Indianapolis medical facility and its contribution to sales mix, (2) progress in Automotive and Industrial as new programs offset legacy declines, and (3) the company’s ability to maintain cost discipline and further reduce inventory days. Additional attention will be paid to any shifts in tariff policy and how management adapts manufacturing and supply chain operations in response.
Kimball Electronics currently trades at $19.33, up from $14.73 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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