8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)    February 4, 2020

KIMBALL INTERNATIONAL, INC.

________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)

Indiana	0-3279	35-0514506
(State or other jurisdiction of	(Commission File	(IRS Employer Identification No.)
incorporation)	Number)

1600 Royal Street, Jasper, Indiana	47546-2256
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code   (812) 482-1600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Class B Common Stock, par value $0.05 per share	KBAL	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Item 2.02 Results of Operations and Financial Condition

On February 4, 2020, Kimball International, Inc. (the “Company”) issued an earnings release for the quarter ended December 31, 2019.  The earnings release is attached as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

Attached hereto as Exhibit 99.2 is an investor presentation that supplements the information to be discussed on the Kimball International, Inc. earnings call to be held on February 5, 2020 at 11:00 a.m. Eastern Time. The presentation attached as Exhibit 99.2 is incorporated into this Item 7.01 by reference.

2

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are furnished as part of this report:

Exhibit
Number	Description
99.1	Earnings Release dated February 4, 2020
99.2	Q2 FY20 Earnings and Strategy Update

The information in this Current Report on Form 8-K set forth in Item 2.02, Item 7.01, and Exhibits 99.1 and 99.2, is being furnished in accordance with the provisions of General Instruction B.2 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information contained in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, that is being furnished under Item 2.02 and Item 7.01 shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	KIMBALL INTERNATIONAL, INC.
By:	/s/ Michelle R. Schroeder
	MICHELLE R. SCHROEDER Executive Vice President, Chief Financial Officer

Date: February 4, 2020

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EX-99.1

Exhibit 99.1

KIMBALL INTERNATIONAL, INC. REPORTS SECOND QUARTER RESULTS

Sales decreased 4%, in line with expectations

Strong order growth of 13% driven by both Office and Hospitality

Transformation Plan cost savings of $7.1 million exceeded expectations in the quarter

Operating Income margin of 7.4%, or 8.6% on an adjusted basis, increased 220 basis points

JASPER, IN (February 4, 2020) - Kimball International, Inc. (NASDAQ: KBAL) today announced results for the quarter ended December 31, 2019.

Highlights (Performance is based upon year-over-year comparison):

Second Quarter FY 2020

• Net sales decreased 4% as expected due to both the Kimball brand realignment plan and lapping strong comps

• Orders increased 13% driven by growth in all verticals

• Operating income margin of 7.4%, or 8.6% on an adjusted basis, increased 220 basis points driven by a 170 basis points improvement in gross margin and a 50 basis point reduction in adjusted selling and administrative expenses

• Transformation savings of $7.1 million realized during the quarter, exceeded expectations

• Net income of $11.0 million, increased 17%

• Adjusted EBITDA of $20.9 million, increased 23%, and adjusted EBITDA margin of 10.9%, increased 240 basis points

• Diluted EPS of $0.30, or $0.33 on an adjusted basis, an increase of 27% compared to $0.26 a year ago

Kimball International CEO Kristie Juster commented, “We continued to exceed expectations in delivery of our transformation savings, resulting in a significant improvement in earnings again this quarter. This delivery of savings increases our confidence in our plan enabling us to increase to our projected full-year savings from $16.0 million to $21.0 million for fiscal year 2020. I am very proud of the organization’s flexibility in embracing this new way of working. The execution of this transformation plan and our recently announced plans to centralize our manufacturing operations pave the way forward for both improved profit and increased investment for growth.

Ms. Juster continued, “Our sales performance this quarter was in line with our expectations but below our overall expected organic growth rate of 4% to 7%. I am very encouraged by our 13% order growth in the quarter across all verticals. The increase in our order backlog positions us very well for a strong second half of our fiscal year.

Overview

Financial Highlights (Amounts in Thousands, Except Per Share Data)	Three Months Ended
	December 31, 2019			December 31, 2018			Percent Change
Net Sales	$	192,164		$	201,008		(4	%)
Gross Profit	$	65,341		$	64,989		1	%
Gross Profit %	34.0		%	32.3		%
Selling and Administrative Expenses	$	49,719		$	51,491		(3	%)
Selling and Administrative Expenses %	25.9		%	25.6		%
Restructuring Expense	$	1,396		$	0
Operating Income	$	14,226		$	13,498		5	%
Operating Income %	7.4		%	6.7		%
Adjusted Operating Income *	$	16,513		$	12,903		28	%
Adjusted Operating Income %	8.6		%	6.4		%
Net Income	$	11,039		$	9,405		17	%
Adjusted Net Income *	$	12,206		$	9,777		25	%
Diluted Earnings Per Share	$	0.30		$	0.25		20	%
Adjusted Diluted Earnings Per Share *	$	0.33		$	0.26		27	%
Return on Invested Capital	38.4		%	33.6		%
Adjusted EBITDA *	$	20,927		$	16,987		23	%
Adjusted EBITDA %	10.9		%	8.5		%

* The items indicated represent Non-GAAP measurements. See “Reconciliation of Non-GAAP Financial Measures” below.

• Consolidated net sales decreased 4% due to the impact of Kimball brand realignment to higher growth markets and extremely strong comps from our three focused verticals which had growth in the prior year of: Commercial +29%, Hospitality +16%, and Healthcare +20%.

• Orders during the quarter increased a strong 13%. All verticals reported orders growth in the quarter with hospitality leading at 31%. The growth within the hospitality vertical was attributable to the strong Las Vegas market. The healthcare vertical grew 10% following 22% growth in the prior year driven by the Kimball brand’s continued investment and strategic shift to this higher growth vertical.

• Sales of new office products, defined as those introduced in the last three years, continued to excel representing approximately 29% of total office sales compared to 27% in the prior year period and an increase of 2%. The National brand had new product growth of 28% with much of this focused on ancillary products.

• Gross profit margin of 34.0% increased 170 basis points from the prior year. Increases in product pricing and the savings realized from our transformation plan were partially offset by the loss of operating leverage on lower sales volumes and higher employee healthcare expenses.

• Selling and administrative expenses of $49.7 million declined $1.8 million compared to the prior year, but increased 30 basis points to 25.9% of net sales. Lower costs during the quarter compared to the prior year included the benefit from the transformation plan of $3.3 million and lower sales commissions of $1.0 million, partially offset by higher Supplemental Employee Retirement Plan expense of $1.8 million and higher healthcare expenses of $0.7 million. On an adjusted basis, selling and administrative dollars were down 50 basis points year over year. The reduction in selling and administrative expenses was achieved while investing $1.8 million in growth initiatives related to our Kimball International Connect strategy. As we gain more confidence in the execution of our transformation savings, we will continue to ramp our growth investments.

• Restructuring expenses of $1.4 million were incurred related to the continuing execution of our transformation plan, primarily for employee transition costs and lease-related charges. Total estimated restructuring expenses for the transformation plan are expected to be between $9.0 to $10.0 million for the fiscal year.

• Our effective tax rate was 28.4% for the quarter compared to 25.6% in the prior year period. The increase was primarily driven by nondeductible expenses. We continue to expect our fiscal year tax rate to be within a range of 25% to 28%.

• Net cash flow provided by operating activities totaled $2.3 million compared to $16.8 million in the prior year. The decrease was driven by a change in payment schedule in the annual incentive program and other working capital changes. Capital expenditures during the quarter were $6.2 million, and we returned $4.6 million to shareholders in the form of dividends and share repurchases.

• As of December 31, 2019, the Company’s cash, cash equivalents, and short-term investments totaled $97.1 million, down $9.2 million since June 30, 2019. The fiscal year 2020 year to date decline was primarily due to capital expenditures of $13.5 million and the return of $7.6 million in capital to shareholders, including $6.3 million in dividends and $1.3 million in stock repurchases, which more than offset the $13.4 million in cash flows from operations.

Fiscal Year 2020 – 2022 Financial Targets

• Organic sales growth: 4% to 7% CAGR

• Adjusted EBITDA: 150 to 250 basis points improvement

• Adjusted EPS: 10% to 15% CAGR

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 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 statement of income, statement of comprehensive income, balance sheet, or statement of cash flows of the Company. The non-GAAP financial measures used within this release are (1) adjusted selling and administrative expense; (2) adjusted EBITDA; (3) adjusted operating income; (4) adjusted net income; and (5) adjusted diluted earnings per share. Adjusted operating income, adjusted net income, and adjusted diluted earnings per share each exclude restructuring expense and CEO transition costs from the GAAP income measure. Adjusted selling and administrative expense excludes market value adjustments related to the SERP liability and CEO transition costs from the GAAP income measure. Additionally, adjusted operating income excludes market value adjustments related to the SERP liability. Adjusted EBITDA is defined as net income before interest expense, income taxes, depreciation expense, amortization expense, restructuring expense, and CEO transition costs. A reconciliation of the reported GAAP numbers to the non-GAAP financial measures is included in the Reconciliation of Non-GAAP Financial Measures table below. Management believes that Adjusted EBITDA and other metrics excluding restructuring expense, CEO transition expenses, and market value adjustments related to the SERP liability 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.

Return on Invested Capital is a key performance indicator calculated as: [(Earnings Before Interest, Taxes, Amortization, Restructuring Expense, and CEO Transition Costs) multiplied by (1 minus Effective Tax Rate)] divided by (Total Shareholders’ Equity plus Net Debt). Net Debt is defined as current maturities of long-term debt plus long-term debt less cash, cash equivalents, and short-term investments.

Forward-Looking Statements

Certain statements contained within this release are considered forward-looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, the risk that any projections or guidance, including revenues, margins, earnings, or any other financial results are not realized, adverse changes in the global economic conditions, the impact of changes in tariffs, increased global competition, significant reduction in customer order patterns, loss of key suppliers, loss of or significant volume reductions from key contract customers, financial stability of key customers and suppliers, relationships with strategic customers and product distributors, availability or cost of raw materials and components, changes in the regulatory environment, global health concerns, 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 the Company’s Form 10-K filing for the fiscal year ended June 30, 2019 and other filings with the Securities and Exchange Commission.

Conference Call / Webcast
Date:	February 5, 2020
Time:	11:00 AM Eastern Time
Dial-In #:	844-602-5643 (International Calls - 574-990-3014)
Pass Code:	Kimball

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.

For over 65 years, Kimball International has created design driven furnishings that have helped our customers shape spaces into places, bringing possibility to life by enabling collaboration, discovery, wellness and relaxation. We go to market through our family of brands: Kimball, National, Kimball Hospitality, David Edward, and D’style by Kimball Hospitality. Our values and high integrity are demonstrated daily by living our Purpose and Guiding Principles that establish us as an employer of choice. We build success by growing long-term relationships with customers, employees, suppliers, shareholders, and the communities in which we operate. In fiscal year 2019, the Company generated $768 million in revenue and employed over 3,000 people. To learn more about Kimball International, Inc. (KBAL), visit www.kimballinternational.com.

Financial highlights for the second quarter ended December 31, 2019 are as follows:

Condensed Consolidated Statements of Income
(Unaudited)	Three Months Ended
(Amounts in Thousands, except per share data)	December 31, 2019				December 31, 2018
Net Sales	$	192,164	100.0	%	$	201,008		100.0	%
Cost of Sales	126,823		66.0	%	136,019			67.7	%
Gross Profit	65,341		34.0	%	64,989			32.3	%
Selling and Administrative Expenses	49,719		25.9	%	51,491			25.6	%
Restructuring Expense	1,396		0.7	%	0			0.0	%
Operating Income	14,226		7.4	%	13,498			6.7	%
Other Income (Expense), net	1,185		0.6	%	(854		)	(0.4	%)
Income Before Taxes on Income	15,411		8.0	%	12,644			6.3	%
Provision for Income Taxes	4,372		2.3	%	3,239			1.6	%
Net Income	$	11,039	5.7	%	$	9,405		4.7	%
Earnings Per Share of Common Stock:
Basic	$	0.30			$	0.26
Diluted	$	0.30			$	0.25
Average Number of Total Shares Outstanding:
Basic	36,921				36,793
Diluted	37,221				37,088

(Unaudited)	Six Months Ended
(Amounts in Thousands, except per share data)	December 31, 2019				December 31, 2018
Net Sales	$	393,616	100.0	%	$	395,131		100.0	%
Cost of Sales	257,905		65.5	%	264,269			66.9	%
Gross Profit	135,711		34.5	%	130,862			33.1	%
Selling and Administrative Expenses	100,633		25.5	%	103,670			26.2	%
Restructuring Expense	5,746		1.5	%	0			0.0	%
Operating Income	29,332		7.5	%	27,192			6.9	%
Other Income (Expense), net	1,770		0.4	%	(158		)	(0.1	%)
Income Before Taxes on Income	31,102		7.9	%	27,034			6.8	%
Provision for Income Taxes	8,679		2.2	%	6,753			1.7	%
Net Income	$	22,423	5.7	%	$	20,281		5.1	%
Earnings Per Share of Common Stock:
Basic	$	0.61			$	0.55
Diluted	$	0.60			$	0.54
Average Number of Total Shares Outstanding:
Basic	36,929				36,951
Diluted	37,274				37,347

	(Unaudited)
Condensed Consolidated Balance Sheets	December 31, 2019		June 30, 2019
(Amounts in Thousands)
ASSETS
Cash and cash equivalents	$	71,430	$	73,196
Short-term investments	25,648		33,071
Receivables, net	62,344		63,120
Inventories	49,743		46,812
Prepaid expenses and other current assets	15,511		13,105
Assets held for sale	281		281
Property and Equipment, net	93,205		90,671
Right of use lease assets	17,092		0
Goodwill	11,160		11,160
Intangible Assets, net	12,510		12,108
Deferred Tax Assets	9,663		8,722
Other Assets	14,092		12,420
Total Assets	$	382,679	$	364,666
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current maturities of long-term debt	$	27	$	25
Accounts payable	39,621		47,916
Customer deposits	32,494		24,611
Current portion of lease liability	4,443		0
Dividends payable	3,477		3,038
Accrued expenses	37,775		57,494
Long-term debt, less current maturities	109		136
Long-term lease liability	16,570		0
Other	15,574		14,956
Shareholders’ Equity	232,589		216,490
Total Liabilities and Shareholders’ Equity	$	382,679	$	364,666

Condensed Consolidated Statements of Cash Flows	Six Months Ended
(Unaudited)	December 31,
(Amounts in Thousands)	2019			2018
Net Cash Flow provided by Operating Activities	$	13,402		$	23,908
Net Cash Flow used for Investing Activities	(6,747		)	(21,849		)
Net Cash Flow used for Financing Activities	(8,419		)	(15,750		)
Net Decrease in Cash, Cash Equivalents, and Restricted Cash	(1,764		)	(13,691		)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	73,837			53,321
Cash, Cash Equivalents, and Restricted Cash at End of Period	$	72,073		$	39,630

Net Sales by End Vertical Market
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Amounts in Millions)	2019		2018		% Change		2019		2018		% Change
Commercial	$	55.8	$	63.6	(12	%)	$	111.0	$	120.2	(8	%)
Education	20.1		18.1		11	%	54.8		52.7		4	%
Finance	16.8		18.1		(7	%)	34.0		36.3		(6	%)
Government	21.7		18.8		15	%	40.3		35.9		12	%
Healthcare	28.2		28.5		(1	%)	57.1		52.9		8	%
Hospitality	49.6		53.9		(8	%)	96.4		97.1		(1	%)
Total Net Sales	$	192.2	$	201.0	(4	%)	$	393.6	$	395.1	0	%

Orders Received by End Vertical Market
	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Amounts in Millions)	2019		2018		% Change		2019		2018		% Change
Commercial	$	60.8	$	58.2	4	%	$	113.8	$	119.1	(4	%)
Education	19.9		19.4		3	%	44.7		41.2		8	%
Finance	18.9		17.9		6	%	39.1		35.4		10	%
Government	23.6		20.9		13	%	43.3		39.2		10	%
Healthcare	32.8		29.7		10	%	62.4		57.5		9	%
Hospitality	58.9		44.9		31	%	101.9		96.1		6	%
Total Orders Received	$	214.9	$	191.0	13	%	$	405.2	$	388.5	4	%

Supplementary Information
Components of Other Income (Expense), net	Three Months Ended						Six Months Ended
(Unaudited)	December 31,						December 31,
(Amounts in Thousands)	2019			2018			2019			2018
Interest Income	$	489		$	428		$	1,096		$	847
Interest Expense	(21		)	(56		)	(44		)	(106		)
Gain (Loss) on Supplemental Employee Retirement Plan Investments	716			(1,097		)	774			(726		)
Other Non-Operating Income (Expense)	1			(129		)	(56		)	(173		)
Other Income (Expense), net	$	1,185		$	(854	)	$	1,770		$	(158	)

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(Amounts in Thousands, except per share data)

Adjusted Selling and Administrative Expense
	Three Months Ended
	December 31,
	2019			2018
Selling and Administrative Expense, as reported	$	49,719		$	51,491
Less: Pre-tax Expense Adjustment to SERP Liability	(716		)	1,097
Less: Pre-tax CEO Transition Costs	(175		)	(502		)
Adjusted Selling and Administrative Expense	$	48,828		$	52,086
Adjusted Selling and Administrative Expense %	25.4		%	25.9		%
Adjusted Operating Income
	Three Months Ended
	December 31,
	2019			2018
Operating Income, as reported	$	14,226		$	13,498
Add: Pre-tax Restructuring Expense	1,396			0
Add: Pre-tax Expense Adjustment to SERP Liability	716			(1,097		)
Add: Pre-tax CEO Transition Costs	175			502
Adjusted Operating Income	$	16,513		$	12,903
Adjusted Net Income
	Three Months Ended
	December 31,
	2019			2018
Net Income, as reported	$	11,039		$	9,405
Pre-tax CEO Transition Costs	175			502
Tax on CEO Transition Costs	(45		)	(130		)
Add: After-tax CEO Transition Costs	130			372
Pre-tax Restructuring Expense	1,396			0
Tax on Restructuring Expense	(359		)	0
Add: After-tax Restructuring Expense	1,037			0
Adjusted Net Income	$	12,206		$	9,777
Adjusted Diluted Earnings Per Share
	Three Months Ended
	December 31,
	2019			2018
Diluted Earnings Per Share, as reported	$	0.30		$	0.25
Add: After-tax CEO Transition Costs	0.00			0.01
Add: After-tax Restructuring Expense	0.03			0.00
Adjusted Diluted Earnings Per Share	$	0.33		$	0.26

Earnings Before Interest, Taxes, Depreciation, and Amortization excluding Restructuring Expense and CEO Transition Costs (“Adjusted EBITDA”)
	Three Months Ended
	December 31,
	2019			2018
Net Income	$	11,039		$	9,405
Provision for Income Taxes	4,372			3,239
Income Before Taxes on Income	15,411			12,644
Interest Expense	21			56
Interest Income	(489		)	(428		)
Depreciation	3,866			3,729
Amortization	547			484
Pre-tax CEO Transition Costs	175			502
Pre-tax Restructuring Expense	1,396			0
Adjusted EBITDA	$	20,927		$	16,987

EX-99.2

Exhibit 99.2 Q2 FY20 Earnings and Strategy Update February 5, 2020

Certain statements contained within this release are considered forward- Safe Harbor looking under the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties including, but not limited to, the risk Statement that any projections or guidance, including revenues, margins, earnings, or any other financial results are not realized, adverse changes in the global economic conditions, the impact of changes in tariffs, increased global competition, significant reduction in customer order patterns, loss of key suppliers, loss of or significant volume reductions from key contract customers, financial stability of key customers and suppliers, relationships with strategic customers and product distributors, availability or cost of raw materials and components, changes in the regulatory environment, global health concerns 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 the Company’s Form 10-K filing for the fiscal year ended June 30, 2019 and other filings with the Securities and Exchange Commission. 2

Kimball International Snapshot Key Statistics FY 2019 Financials1 FOUNDED 1950 NET SALES $768M HEADQUARTERS Jasper, IN ADJ. OP. MARGIN 6.9%2 EMPLOYEES ~3,000 ADJ. EBITDA $69.5M or 9.0%2 SHOWROOMS 9 ADJ. EPS $1.12 2 MFG. FACILITIES 12 DIVIDEND $11.4M MAJOR BRANDS 1 Unaudited. 2 See Appendix for Non-GAAP reconciliations. 3

Q2 FY20 Highlights1 Revenue and Profit Cash Flow and Capital ▪ Revenue of $192M, decreased 4% with a difficult comparison to the Allocation prior year ▪ Free cash flow2 of -$3.8M due to one-time change in payout timing of annual cash incentive plan and timing ▪ Kimball brand sales declined as we continued to realign resources to of final December accounts payable check run higher growth potential markets; Kimball Hospitality brand sales decreased as a temporary pause in industry orders in fiscal Q4 2019 ▪ Capex of $6.2M due to completion of corporate related to the increased tariffs impacted current quarter shipments headquarters remodel ▪ Orders of $215M increased 13% with growth across all verticals; Hospitality increased 31% on strength of Las Vegas market; the backlog ▪ Dividends of $3.3M of $173M, increased 20% year-over-year ▪ Balance sheet remains strong with minimal debt ▪ Gross margin of 34.0% increased 170 basis points; pricing and savings from transformation plan was partially offset by the loss of leverage on lower sales and higher healthcare cost ▪ Selling and administrative expenses of 25.9%, or 25.4% on an adjusted basis2 decreased 50 bps due to transformation savings and lower sales commission ▪ Operating margin of 7.4%, or 8.6% on an adjusted basis2 increased 220 bps ▪ Net Income of $11.0M increased 17% Delivering Both Gross Profit Improvement ▪ Adj. EBITDA 2 of $20.9M, or a margin of 10.9% increased 240 bps and S&A Savings as We Transition to Our ▪ Adj. EPS 2 at $0.33, increased 27% New Operating Model 1 Unaudited. 2 See Appendix for Non-GAAP reconciliations. 4

US Furniture Leading Indicators BIFMA FURNITURE INDUSTRY TREND1 ($B) ARCHITECTURE BILLINGS INDEX DATA2 7.4% $15.6 $15.9 $14.1 $14.5 $13.5 $13.6 3.8% 2.9% 2.2% 0.4% 2015 2016 2017 2018 2019F 2020F US Office Total Growth HOSPITALITY INDUSTRY GROWTH: REVPAR ESTIMATED GROWTH RATES3 2020 Estimates 2.2% 2.2% 0.7% REVPAR GROWTH 1.3% 1.3% 0.9% 1.0% 0.9% 0.7% 0.3% —% 66.1% OCCUPANCY RATE (0.5)% (0.3)% (0.2)% (0.3)% (1.1)%(1.0)% 2.2% SUPPLY GROWTH RATE Luxury Upper Upscale Upper Midscale Economy Independents US Upscale Midscale 2019 2020 1 Source: BIFMA (December 2019) 2 Source: AIA (December 2019). 3 Source PWC January 2020 Hospitality Directions; REVPAR = Revenue Per Available Room 5

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Four Strategic Imperatives Create The Foundation For Our Success Inspire Our People Build Our Capabilities Fuel Our Future Accelerate Our Growth CULTIVATE ENHANCE & BUILD OPTIMIZE ADVANCE a High-Performance, Caring Culture New Center-Led Functions our Operational Footprint New Product Development & Processes ENGAGE LAUNCH SELECTIVELY EXPAND New Purpose Organization-wide Centers of Excellence in Key, ELEVATE Verticals & Channels Strategic Areas Production & Process Automation INVEST PROPEL in Training, Technology & Systems DEVELOP GROW Commercial Excellence World-Class Ways Product Margins through of Working to Further Enable Product Engineering, DRIVE our Businesses and Purchase Efficiencies Strategic Acquisitions Enablers Outcomes 7

Transformation Plan Highlights SAVINGS FYTD Q2 FY20 SAVINGS $12.7M ▪ Realization of productivity improvements OPERATIONAL EXCELLENCE $3.8M ▪ Value-engineering of products 1 Review of Manufacturing Footprint FY20 SAVINGS to Reduce Excess Capacity ▪ Reducing excess capacity with closure TARGET of Martinsville, VA and Red Lion, PA Increased to $21M CENTER LED ▪ Global Operations from $16M 2 Creation of Center-led Functions to $0.8M ▪ Finance, HR, IT and Legal Standardize Processes and Eliminate Duplication ▪ Supply Chain $9M - $10M Restructuring Charges Incurred WAYS OF WORKING ▪ Kimball brand moving resources to through FY2020 higher growth markets $2.5M 3 Review of Selling Resources / ▪ Exited four product showrooms Showrooms among the brands $7.1M Note: All results are pre-tax figures. 8

Quarterly Financial Performance1 NET SALES ($M) ADJ. EBITDA & MARGIN2 ADJ. EPS2 $20.9 $201 $17.0 $192 $0.33 10.9% $0.26 8.5% Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 ▪ 4.4% decrease in sales due to difficult growth ▪ Gross margin of 34.0% increased 170 bps due to product pricing and transformation plan savings, comparison to prior year partially offset by the loss of leverage on lower sales volume and higher healthcare expenses ▪ National brand growth above industry aided by ▪ Selling and administrative expenses of 25.9%, or 25.4% on an adjusted basis2 decreased 50 bps as new ancillary products transformation plan delivered $3.3M savings; sales commission decreased $1.0M; healthcare expense increased $0.7M ▪ Hospitality brand sales declined due to impact of slower industry orders in Q4 FY2019 related to 2 2 tariff increase; order growth has resumed ▪ Adjusted EBITDA of $20.9M increased 23%; adjusted EBITDA margin of 10.9% increased 240 bps ▪ Kimball brand sales decreased as we transition ▪ Adjusted EPS2 of $0.33 increased 27%, or $0.07 compared to the prior year resources to higher growth potential markets 1 2 Unaudited. See Appendix for Non-GAAP reconciliations. 9

Quarterly Financial Performance1 SALES ($M) ORDERS ($M) $214.9 $201.0 $195.6 $201.5 $192.2 $208.8 $177.4 $191.0 $184.1 $190.3 16.0% 12.5% 10.2% 12.5% 3.1% 3.8% 5.0% 12.5% 11.1% 13.7% (1.6)% 8.1% (4.4)% (3.6)% 1.3% 1.7% (4.4)% 3.6% (3.3)% (5.8)% Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Sales YoY Sales Growth Organic Growth Orders Received YoY Orders Growth Organic Growth GROSS MARGIN SELLING AND ADMINISTRATIVE EXPENSES2 ($M) 34.9% $53.0 34.3% 34.0% $51.5 $50.9 $49.7 32.3% 31.9% $47.5 26.8% 27.0% 25.9% 25.6% 25.2% Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 S&A Expense S&A as % of Sales 1 Unaudited. 2 includes SERP. 10

New Products1 Overview (Excluding Hospitality) $39.4M $40.2M Q2 FY20 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 New Product Sales New Product Sales Growth YoY ▪ Office furniture new product sales increased 2% and represent 29% of total office furniture sales ▪ National brand new product sales increased 28% and represent 34% of brand sales during the quarter 1 Unaudited. New product introductions defined as those introduced in the last 3 years. 1111

Quarterly Sales by Vertical1 2-YEAR MIX CHANGE $63.6 $55.8 $53.9 $49.6 10.0% 8.8% $28.5 $28.2 Finance $20.1 $18.8 $21.7 13.3% 11.3% $18.1 $18.1 $16.8 Government 10.5% 9.7% Education 13.3% 14.7% Healthcare Hospitality Commercial Hospitality Healthcare Education Government Finance Commercial % Change: -12% -8% -1% 11% 15% -7% 25.9% 25.8% Q2 FY19 Q2 FY20 27.8% 28.9% 2-YEAR STACKED CHANGE Q2 FY18 Q2 FY20 19% 17% 15% 8% ▪ Sales growth in two vertical markets: Education +11% and Government +15% ▪ Commercial decline of 12% due difficult comparison to 29% growth in prior year driven by a larger number of projects (6)% (6)% ▪ Hospitality decline of 8% due to temporary pause in industry orders after tariff increase in our fiscal fourth quarter 2019; growth in orders has resumed Commercial Hospitality Healthcare Education Government Finance ▪ Double-digit 2-year stacked growth in three verticals: Commercial 17%, Healthcare 19% and Education 15% 1 Unaudited. 12

Quarterly Orders by Vertical1 $60.8 $58.2 $58.9 2-YEAR STACKED CHANGE 32% $44.9 31% $32.8 $29.7 $23.6 $20.9 $19.4 $19.9 14% $17.9 $18.9 13% 9% —% Commercial Hospitality Healthcare Education Government Finance Commercial Hospitality Healthcare Education Government Finance % Change 4% 31% 10% 3% 13% 6% Q2 FY19 Q2 FY20 ▪ Overall orders up 13% 1 Unaudited. 13

Strong, Flexible Balance Sheet1 CASH USES FY 2017 – 2019: $134M RETURN ON FCF ($M) & INVESTED CAPITAL FCF CONVERSION 17% $10.8 Reinvestment 42% 38.4% Buybacks Dividends 23% Acquisitions 33.6% 115% 18% (35)% Q2 FY19 Q2 FY20 -$3.8 ▪ Reinvestment: Capex of $21.0M (FY19), representing 2.6% Q2 FY19 Q2 FY20 of sales, relative to historical range of 1.8% to 3.2% ▪ Cash flow from operations of $2.3M decreased compared to prior year; ▪ Buybacks: Focused on offsetting dilution and utilizing timing of prepaids and accruals driving lower level excess liquidity; current authorization remaining: 2.7 million shares ▪ Capex of $6.2M due to completion of corporate headquarters remodel ▪ Dividends: Policy of increasing dividend commensurate ▪ FCF of -$3.8M due to one-time change in payout timing of annual cash with earnings growth; 67 years of consecutive dividend incentive plan and timing of final December accounts payable check run payments ▪ Dividends of $3.3M ▪ Acquisitions: Focused on the core; decisions must tightly ▪ Share repurchases of $1.3M align with corporate strategy and our Guiding Principles ▪ Return on Invested Capital2 of 38.4% increased 480 bps 1 Unaudited 2 Return on Invested Capital definition: [(Earnings Before Interest, Tax and Amortization, CEO transition, Restructuring) * (1-Effective Tax Rate)]/(Equity plus Net Debt) 14

Thoughtful And RECENT ACQUISITIONS Disciplined M&A Will Complement Organic Premier designer and manufacturer of contract furniture sold in the healthcare, corporate, Growth education and premium hospitality markets Rationale and Benefits ü Highest quality upholstery capability Acquisition Framework ü Capacity for seating, including healthcare STRATEGIC CRITERIA ▪ We are focused on the core; decisions must tightly align with our Kimball International Connect Strategy, our Purpose and our Guiding Principles ▪ We will remain disciplined ▪ We are seeking: • Higher growth products that add to our existing platform • New product categories and/or channels where we currently play World class supplier of metal public space and FINANCIAL FILTERS guest room furnishings ▪ Accretive to EPS within first full year Rationale and Benefits ▪ ROIC > WACC within three years ü Reach into hospitality public space areas ü Increased North America manufacturing capabilities 15

Kimball International Is Committed to Three-Year Financial Objectives Fiscal Year 2020 – 2022 FINANCIAL OBJECTIVES ORGANIC REVENUE 4% to 7% CAGR ASSUMPTIONS ▪ US GDP growth of ~1.5% to 2.5% ADJ. EBITDA MARGIN 150 to 250 bps improvement (by FY 2022) ▪ Excludes acquisitions ▪ Share repurchase to offset stock compensation dilution ADJ. EPS 10% to 15% CAGR 16

Newly We Are On a Journey to Excellence – Renovated INVEST WITH US Headquarters Building on our STRONG FOUNDATION; new leadership driving POSITIVE CHANGE through transformational strategy Kimball International Connect Strategy will result in OPERATIONAL EXCELLENCE and ACCELERATED GROWTH With our plan in place and financial objectives aligned with achieving our vision, it’s now TIME TO EXECUTE With our PURPOSE, PEOPLE, BRANDS and OPERATING PROCESS, we are confident in our ability to DELIVER RESULTS 17

Appendix 18

Non-GAAP Reconciliation Millions $ Q2 FY19 Q2 FY20 (Unaudited) Selling and Administrative Expenses, as reported $51.5 $49.7 Less: Pre-tax CEO Transition Costs $0.5 $0.2 Less: Pre-tax Expense (Income) Adjustment to SERP Liability -$1.1 $0.7 Adjusted Selling and Administrative Expenses $52.1 $48.8 Adjusted Selling and Administrative Expenses as a % of Sales 25.9 % 25.4 % Millions $ FY18 FY19 Q2 FY19 Q2 FY20 Operating Income, as reported $51.1 $49.5 $13.5 $14.2 Add: Pre-tax CEO Transition Costs $2.0 $0.5 $0.2 Add: Pre-tax Expense (Income) Adjustment to SERP Liability $1.0 $0.7 -$1.1 $0.7 Add: Pre-tax Restructuring $0.9 $1.4 Adjusted Operating Income $52.0 $53.1 $12.9 $16.5 Adjusted Operating Income as a % of Sales 7.4 % 6.9 % 6.4 % 8.6 % 19

Non-GAAP Millions $ FY18 FY19 Q2 FY19 Q2 FY20 Net Income $34.4 $39.3 $9.4 $11.0 Reconciliation Provision for Income Taxes $17.9 $12.3 $3.2 $4.4 (Unaudited) Income Before Taxes on Income $52.3 $51.7 $12.6 $15.4 Interest Expense $0.2 $0.2 $0.1 $0.0 Interest Income -$1.1 -$1.9 -$0.4 -$0.5 Depreciation $13.7 $14.8 $3.7 $3.9 Amortization $1.8 $1.8 $0.5 $0.5 Pre-tax CEO Transition Costs $2.0 $0.5 $0.2 Pre-tax Restructuring $0.9 $1.4 Adjusted EBITDA $67.0 $69.5 $17.0 $20.9 Adjusted EBITDA as a % of Sales 9.5 % 9.0 % 8.5 % 10.9 % Millions $ FY18 FY19 Q2 FY19 Q2 FY20 Diluted Earnings Per Share, as reported $0.92 $1.06 $0.25 $0.30 Add: After-tax CEO Transition Costs $0.04 $0.01 Add: After-tax Restructuring $0.02 $0.03 Adjusted Diluted Earnings Per Share $0.92 $1.12 $0.26 $0.33 Millions $ FY18 FY19 Q2 FY19 Q2 FY20 Operating Cash Flow, as reported $46.9 $65.0 $16.8 $2.3 Total Capital Expenditures -$22.4 $21.0 -$6.0 -$6.2 Free Cash Flow $24.6 $44.0 $10.8 -$3.8 20