Kimball International, Inc. Reports First Quarter 2023 Results

--Positive Momentum Continued with Profitability More than Doubling Year-on-Year--
--Workplace and Health Markets Delivered 20% Year-over-Year Revenue Growth--
--Favorable Product and Geographic Mix Continue to Drive Market Share Gains--
--Re-Affirms Fiscal 2023 Guidance for Revenue Growth of 15% and Adjusted EBITDA Growth of 47%, at the Midpoints--

JASPER, Ind., Nov. 03, 2022 (GLOBE NEWSWIRE) -- Kimball International, Inc. (NASDAQ: KBAL) today announced results for the first quarter ended September 30, 2022.

Selected Financial Highlights:

First Quarter FY 2023

• Net sales of $177.8 million, increased 14% year-over-year
• Gross margin expanded 220 basis points to 33.5%
• Net income of $6.6 million; Adjusted net income of $4.8 million
• Diluted EPS of $0.18; Adjusted diluted EPS was $0.13
• Adjusted EBITDA of $11.5 million, up $6.7 million year-over-year
• Backlog of $180.0 million  

Management Commentary

CEO Kristie Juster commented, “This marks our third consecutive quarter of industry-leading performance reflecting and underlining Kimball International’s differentiated market positioning and growth strategy. A product portfolio aligned with the new-forming post-COVID workplace and health markets and a leadership position in faster-growing secondary markets provide proof points of our resilience and enable us to gain share. Top line growth, together with ongoing operating efficiencies, continues to drive margin improvement and robust earnings growth.

“Our first quarter results demonstrate the strategic choices that set Kimball International apart within our industry. Ancillary products, which provide the flexibility, collaboration and privacy needs of today’s developing workplace and healthcare settings, accounted for 87% of our trailing twelve-month revenues and continue to see the most robust demand across all categories. Similarly, shipments to secondary markets, which have experienced employment growth and a faster return-to-office, continue to lead the way and represented 78% of trailing twelve-month shipments.

“Our Workplace and Health end markets continued to drive year-on-year sales growth and represented 89% of total first quarter revenues. First quarter order rates were slightly ahead of last year’s levels and the positive momentum continued into October. We are also experiencing a pick-up in demand from the Hospitality vertical, another market where Kimball International is a leader, although a meaningful recovery is not expected until later this year.”

Overview

First Quarter Fiscal 2023 Results

Consolidated net sales of $177.8 million increased by 14% from the year ago quarter, driven by double-digit growth of Workplace and Health end markets. Gross margin expanded 220 basis points year-over-year to 33.5%, benefiting from price increases that more than offset ongoing freight and raw material inflation, as well as continued operational excellence savings. Selling and administrative expenses (S&A) of $53.4 million declined year-over-year as a percentage of total net sales by 210 basis points to 30.0% in the first quarter of fiscal 2023. Adjusted S&A was $52.4 million, or 29.4% of net sales, compared to $48.6 million, or 31.1% of net sales, in last year’s first quarter. Net income was $6.6 million, or $0.18 per diluted share, up from net loss of $5.0 million or $(0.14) per diluted share in the year ago quarter. Adjusted net income was $4.8 million, or $0.13 per diluted share, ahead of adjusted net income of $1.9 million, or $0.05 per diluted share in the first quarter of fiscal 2022. Adjusted EBITDA was $11.5 million compared to $4.9 million in the year ago quarter.

Capital expenditures in the first quarter of 2023 amounted to $5.4 million. Kimball International returned $4.3 million to shareholders in the form of dividends and share repurchases in the first quarter of 2023.

* Workplace end market includes education, government, commercial, and financial vertical markets and eBusiness

Summary and Outlook

“First quarter results represented a strong start to fiscal 2023 and have set the stage for this to be another year of solid performance for Kimball International. Through our focused set of strategic choices, we are successfully delivering in-demand products and solutions to end markets and geographies of high growth, resiliency and favorable return-to-office dynamics. While we are mindful of the challenging macroeconomic environment and heightened recessionary risks, we are confident in our ability to outperform the industry, and we are pleased to reaffirm our guidance for substantial revenue and EBITDA growth in fiscal 2023,” Ms. Juster concluded. 

The Company expects fiscal 2023 revenue and adjusted EBITDA to be weighted somewhat toward the second half of the year, with the fourth quarter being the strongest. We anticipate second quarter fiscal 2023 revenue to be similar to Q1 levels and adjusted EBITDA to be slightly below Q1 levels due to expected short-term inefficiencies in certain elements of our logistics network.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States in the statements of operations, statements of comprehensive income, balance sheets, statements of cash flows, or statement of shareholders’ equity of the Company. The non-GAAP financial measures used within this release include:

• adjusted operating income, defined as operating income (loss) excluding restructuring expenses, market valuation adjustments related to our SERP liability, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
• adjusted operating income percentage, defined as adjusted operating income as a percentage of net sales;
• adjusted net income, defined as net income (loss) excluding restructuring expenses, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
• adjusted diluted earnings per share, defined as diluted earnings (loss) per share excluding restructuring expenses, acquisition-related amortization and inventory valuation adjustments, and contingent earn-out gain or loss;
• adjusted EBITDA, defined as earnings before interest, statutory income tax impacts for taxable after-tax measures, depreciation, and amortization and excluding restructuring expenses, acquisition-related inventory valuation adjustments, and contingent earn-out gain or loss; and
• adjusted EBITDA percentage, defined as adjusted EBITDA as a percentage of net sales.

Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the tables below. Management believes that adjusted EBITDA and other metrics excluding restructuring expense, market value adjustments related to the SERP liability, and acquisition-related adjustments are useful measurements to assist investors in comparing our performance over various reporting periods on a consistent basis by removing from operating results the impact of items that do not reflect our core operating performance.

The orders received metric is a key performance indicator used to evaluate general sales trends and develop future operating plans. Orders received represent firm orders placed by our customers during the current quarter which are expected to be recognized as revenue during current or future quarters. The orders received metric is not intended to be presented as an alternative measure of revenue recognized in accordance with GAAP.

Forward-Looking Statements

This document may contain certain forward-looking statements about the Company, such as discussions of Company’s pricing trends, liquidity, new business results, expansion plans, anticipated expenses and planned schedules. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements generally can be identified by the use of words or phrases, including, but not limited to, “intend,” “anticipate,” “believe,” “estimate,” “project,” “target,” “plan,” “expect,” “setting up,” “beginning to,” “will,” “should,” “would,” “resume” or similar statements. We caution that forward-looking statements are subject to known and unknown risks and uncertainties that may cause the Company’s actual future results and performance to differ materially from expected results including, but not limited to, the risk that any projections or guidance by the Company, including revenues, margins, earnings, or any other financial results are not realized; a shortage of manufacturing labor and related cost; disruptions in our supply chain and freight channels including impacts on cost and availability; adverse changes in global economic conditions; successful execution of the second phase of the Company’s restructuring plan; significant reduction in customer order patterns; loss of key suppliers; relationships with strategic customers and product distributors; changes in the regulatory environment; global health concerns (including the impact of the COVID-19 pandemic); or similar unforeseen events. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the Company are contained in filings made from time to time with the Securities and Exchange Commission, including but not limited to, our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

A webcast of the live conference call may be accessed by visiting Kimball International’s Investor Relations website at www.ir.kimballinternational.com.

For those unable to participate in the live webcast, the call will be archived at www.ir.kimballinternational.com within two hours of the conclusion of the live call.

About Kimball International, Inc.

Kimball International is a leading omnichannel commercial furnishings company with deep expertise in the Workplace, Health and Hospitality markets. We combine our bold entrepreneurial spirit, a history of craftsmanship and today’s design-driven thinking alongside a commitment to our culture of caring and lasting connections with our customers, shareholders, employees and communities.

For over 70 years, our brands have seized opportunities to customize solutions into personalized experiences, turning ordinary spaces into meaningful places. Our family of brands includes Kimball, National, Etc., Interwoven, Kimball Hospitality, D’style and Poppin.

Kimball International is based in Jasper, Indiana.

www.kimballinternational.com

Financial highlights for the first quarter ended September 30, 2022 are as follows:

For additional information contact:

Chris Kuepper - chris.kuepper@kimballinternational.com
Lynn Morgen - lynn.morgen@advisiry.com
Eric Prouty - eric.prouty@advisiry.com

Kimball International
1600 Royal Street
Jasper, IN 47546-2256
Telephone 812.482.1600