EX-99.1 2 aex991pressrelease9302022q1.htm KIMBALL INTERNATIONAL, INC. EX-99.1 Document

Exhibit 99.1

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, IN (November 3, 2022) - 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.


Net Sales by End Market
 Three Months Ended 
(Unaudited)September 30, 
(Amounts in Millions)20222021% Change
Workplace *$132.0 $108.6 22 %
Health26.1 23.0 13 %
Hospitality19.7 25.0 (21 %)
Total Net Sales$177.8 $156.6 14 %
Orders Received by End Market
Three Months Ended
(Unaudited)September 30,
(Amounts in Millions)20222021% Change
Workplace *$126.3 $124.7 1 %
Health29.7 28.9 3 %
Hospitality31.7 33.0 (4 %)
Total Orders$187.7 $186.6 1 %

* 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.

FY 2023 Guidance Ranges
LowHighYoY Growth
Revenue
$750 million$780 million15% at midpoint
Adjusted EBITDA
$48 million$52 million47% at midpoint

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.
Conference Call / Webcast
Date:November 3, 2022
Time:5:00 PM Eastern Time
US Toll free Dial-In #:
1-877-270-2148
International Dial-In #:1-412-902-6510
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:
Condensed Consolidated Statements of Operations
(Unaudited)Three Months Ended
(Amounts in Thousands, except per share data)September 30, 2022September 30, 2021
Net Sales$177,811 100.0 %$156,610 100.0 %
Cost of Sales118,197 66.5 %107,513 68.7 %
Gross Profit59,614 33.5 %49,097 31.3 %
Selling and Administrative Expenses53,407 30.0 %50,159 32.1 %
Contingent Earn-Out (Gain) Loss(3,160)(1.8 %)4,610 2.9 %
Restructuring Expense370 0.2 %1,455 0.9 %
Operating Income (Loss)8,997 5.1 %(7,127)(4.6 %)
Other Expense, net(1,094)(0.7 %)(434)(0.2 %)
Income (Loss) Before Taxes on Income7,903 4.4 %(7,561)(4.8 %)
Provision (Benefit) for Income Taxes1,347 0.7 %(2,512)(1.6 %)
Net Income (Loss)$6,556 3.7 %$(5,049)(3.2 %)
Earnings (Loss) Per Share of Common Stock:
Basic$0.18 $(0.14)
Diluted$0.18 $(0.14)
Average Number of Total Shares Outstanding:
Basic36,754 36,821 
Diluted36,976 36,821 



(Unaudited)
Condensed Consolidated Balance SheetsSeptember 30,
2022		June 30,
2022
(Amounts in Thousands)
ASSETS
    Cash and cash equivalents$16,760 $10,934 
    Receivables, net64,726 79,301 
    Inventories105,935 97,969 
    Prepaid expenses and other current assets24,754 30,937 
    Property and Equipment, net97,069 96,970 
    Right of use operating lease assets13,172 12,839 
    Goodwill47,844 47,844 
    Other Intangible Assets, net53,644 54,767 
    Deferred Tax Assets15,528 14,472 
    Other Assets14,928 15,245 
        Total Assets$454,360 $461,278 
LIABILITIES AND SHAREHOLDERS’ EQUITY
    Current maturities of long-term debt0 33 
    Accounts payable69,731 70,936 
    Customer deposits36,427 29,706 
    Current portion of operating lease liability5,718 6,096 
    Dividends payable3,710 3,623 
    Accrued expenses31,378 41,088 
    Long-term debt, less current maturities65,000 68,046 
    Long-term operating lease liability12,228 12,150 
    Other12,797 16,064 
    Shareholders’ Equity217,371 213,536 
        Total Liabilities and Shareholders’ Equity$454,360 $461,278 




Condensed Consolidated Statements of Cash FlowsThree Months Ended
(Unaudited)September 30,
(Amounts in Thousands)20222021
Net Cash Flow provided by Operating Activities$18,092 $11,905 
Net Cash Flow used for Investing Activities(4,946)(3,592)
Net Cash Flow used for Financing Activities(7,399)(5,085)
Net Increase in Cash, Cash Equivalents, and Restricted Cash5,747 3,228 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period11,996 25,727 
Cash, Cash Equivalents, and Restricted Cash at End of Period$17,743 $28,955 





Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(Amounts in Thousands, except per share data)

Adjusted Selling and Administrative Expense
Three Months Ended
September 30,
20222021
Selling and Administrative Expense, as reported$53,407 $50,159 
Less: Pre-tax Expense Adjustment to SERP Liability459 93 
Less: Pre-tax Acquisition-related Amortization(1,502)(1,609)
Adjusted Selling and Administrative Expense$52,364 $48,643 
Adjusted Selling and Administrative Expense %29.4 %31.1 %
Adjusted Operating Income
Three Months Ended
September 30,
20222021
Operating Income (Loss), as reported$8,997 $(7,127)
Add: Pre-tax Restructuring Expense370 1,455 
Add: Pre-tax Expense Adjustment to SERP Liability(459)(93)
Add: Pre-tax Acquisition-related Amortization1,502 1,609 
Add: Pre-tax Acquisition-related Inventory Valuation Adjustment0 143 
Add: Pre-tax Contingent Earn-Out (Gain) Loss(3,160)4,610 
Adjusted Operating Income$7,250 $597 
Adjusted Operating Income %4.1 %0.4 %
Adjusted Net Income
Three Months Ended
September 30,
20222021
Net Income (Loss), as reported$6,556 $(5,049)
Pre-tax Restructuring Expense370 1,455 
Tax on Restructuring Expense(96)(375)
Add: After-tax Restructuring Expense274 1,080 
Pre-tax Acquisition-related Amortization1,502 1,609 
Tax on Acquisition-related Amortization(387)(414)
Add: After-tax Acquisition-related Amortization1,115 1,195 
Pre-tax Acquisition-related Inventory Valuation Adjustment0 143 
Tax on Acquisition-related Inventory Valuation Adjustment0 (37)
Add: After-tax Acquisition-related Inventory Adjustment0 106 
Pre-tax Contingent Earn-Out (Gain) Loss(3,160)4,610 
Tax on Contingent Earn-Out (Gain) Loss0 0 
Add: After-tax Contingent Earn-Out (Gain) Loss(3,160)4,610 
Adjusted Net Income$4,785 $1,942 


Adjusted Diluted Earnings Per Share
Three Months Ended
September 30,
20222021
Diluted Earnings (Loss) Per Share, as reported$0.18 $(0.14)
Add: After-tax Restructuring Expense0.01 0.03 
Add: After-tax Acquisition-related Amortization0.03 0.03 
Add: After-tax Acquisition-related Inventory Valuation Adjustment0.00 0.01 
Add: After-tax Contingent Earn-Out (Gain) Loss(0.09)0.12 
Adjusted Diluted Earnings Per Share$0.13 $0.05 
    

Adjusted EBITDA
Three Months Ended
September 30,
20222021
Net Income (Loss)$6,556 $(5,049)
Provision (Benefit) for Income Taxes1,347 (2,512)
Income (Loss) Before Taxes on Income7,903 (7,561)
Interest Expense681 257 
Interest Income(77)(9)
Depreciation3,634 3,562 
Amortization2,195 2,439 
Pre-tax Restructuring Expense370 1,455 
Pre-tax Acquisition-related Inventory Valuation Adjustment0 143 
Pre-tax Contingent Earn-Out (Gain) Loss(3,160)4,610 
Adjusted EBITDA$11,546 $4,896 
Net Income (Loss) %3.7 %(3.2 %)
Adjusted EBITDA %6.5 %3.1 %

Supplementary Information
Components of Other Income (Expense), netThree Months Ended
(Unaudited)September 30,
(Amounts in Thousands)20222021
Interest Income$77 $9 
Interest Expense(681)(257)
Loss on Supplemental Employee Retirement Plan Investments(459)(93)
Other Non-Operating Expense(31)(93)
Other Expense, net$(1,094)$(434)

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