On this page of StockholderLetter.com we present the latest annual shareholder letter from Kimball Electronics, Inc. — ticker symbol KE. Reading current and past KE letters to shareholders can bring important insights into the investment thesis.

 •  9/26/2024 Letter Continued (Full PDF)
 •  9/28/2023 KE Stockholder Letter
 •  More "Electronic Equipment & Products" Category Stockholder Letters
 •  KE Benford's Law Stock Score = 89

KE Shareholder/Stockholder Letter Transcript:

WHO WE ARE
Kimball Electronics was founded in 1961 and incorporated in 1998.
We deliver a package of value that begins with our core competency
of producing durable electronics and further offer contract
manufacturing services for non-electronic components, medical
disposables, drug delivery solutions and precision molded plastics.
Our design and manufacturing expertise coupled with robust
processes and procedures help us ensure that we deliver the
highest levels of quality and reliability throughout the entire life
cycle of our customers    products. We deliver award-winning service
across our global footprint with an operations platform driven by
highly integrated procedures, standardization, and teamwork. Our
Customer Relationship Management (   CRM   ) model is key to
providing our customers convenient access to our global footprint
and all of our services throughout the entire product life cycle.
Because they operate in industries that demand rigorous
engineering controls and that commonly require long product life
cycles, our customers rely on our track record of quality,
international standard certi   cations,    nancial stability, social
responsibility, and commitment to long-term relationships.
We offer our services globally on a contract basis, and we
manufacture products to our customers    speci   cations. Our services
primarily include:
    Production and testing of printed circuit board assemblies
(PCBAs);
    High-level and    nal assembly of medical, automotive, and
industrial products;
    Design services and support;
    Supply chain services and support;
    Rapid prototyping and new product introduction support;
    Product design and process validation and quali   cation;
    Industrialization and automation of manufacturing processes;
    Reliability testing (testing of products under a series of
extreme environmental conditions);
    Aftermarket services;
    Production and assembly of medical devices, medical
disposables including packaging, and other non-electronic
products;
    Drug delivery devices and solutions with and without electronics;
    Class 7 and 8 clean room assembly, cold chain and product
sterilization management;
    Design engineering and production of precision molded
plastics; and
    Complete product life cycle management.
OUR GLOBAL PRESENCE
Our global footprint supports our
customers    specialized manufacturing
needs. Whether the requirement is
in-region support for an end market,
access to a lower cost market, or
proximity to a customer team, Kimball
Electronics has a solution.
North America
N
Am
Europe
Asia
sia
J
Jasper,
Indiana
(Manufacturing and
World Headquarters)
Indianapolis, Indiana
Tampa, Florida
Reynosa, Mexico
Poznan, Poland
Timisoara, Romania
Nanjing, China
Laem Chabang,
bang, Thailand
Thail

FINANCIAL HIGHLIGHTS
Fiscal Year Ended June 30,
2024
2023
Net Sales
$ 1,714,510
$ 1,823,429
Operating Income, as reported (GAAP)


(Amounts in thousands, except per share data)
SERP
49,277
87,729
680
701
(892)
(212)
Restructuring Expense
2,386

Goodwill Impairment
5,820

17,040

Legal Settlements (Recovery)
Asset Impairment
Adjusted Operating Income (non-GAAP)

74,311

88,218
Net Income, as reported (GAAP)

20,511

55,831
Adjustments After Measurement Period on GES Acquisition

279
(676)
(161)
Restructuring Expense, After-Tax
1,810

Goodwill Impairment, After-Tax
4,414

Asset Impairment, After-Tax
9,787

Legal Settlements (Recovery)
Adjusted Net Income (non-GAAP)

35,846

55,949
Diluted Earnings per Share, as reported (GAAP)

0.81

2.22
Adjustments After Measurement Period on GES Acquisition

0.01
(0.03)

Restructuring Expense
0.07

Goodwill Impairment
0.18

Asset Impairment
0.39

Legal Settlements (Recovery)
Adjusted Diluted Earnings per Share (non-GAAP)

Return on Invested Capital
1.42

7.4%
2.23
9.4%
Cash Flow from (used for) Operations

73,217

(13,804)
Capital Expenditures(1)

47,040

90,688
Share Owners    Equity

540,461

523,994
(1)
DIVERSIFIED
PORTFOLIO OF
END MARKETS
AND MARKET
SERVICES
48%*
Automotive
(2%)**
    Electronic Power Steering
    Body Controls
    Advanced DriverAssistance Systems
    Electronic Braking
Systems
25%*
Medical
(15%)**
    Sleep Therapy and
Respiratory Care
    Image Guided Therapy
    In Vitro Diagnostics
    Drug Delivery
    AED
    Patient Monitoring
27%*
Industrial
(3%)**
    Climate Controls
    Automation Controls
    Optical Inspection
    Smart Metering
    Public Safety
*Percentage of net sales
**Percentage change
compared to fiscal
year 2023
Capital Expenditures include purchases of capitalized software.
2024 Annual Report | 1

   With our renewed strategic focus on EMS
operations, and a strong balance sheet, we will be
looking with a new lens on where     and how     to
pro   tably increase the top line.   
Consistent with our focus on building long-term relationships, 76%
of our revenue was with customers we   ve worked with for a decade,
or more, and for the tenth consecutive year, we were recognized by
CIRCUITS ASSEMBLY in multiple categories for Service Excellence.
Our annual sustainability report, themed    How We Are Winning
Together, The Kimball Way,    discloses how we   re controlling our
greatest impacts on people, the planet, and our communities.
The report re   ects the deep roots of sustainability in our culture,
and highlights numerous sustainability-related recognitions and
accomplishments from calendar year 2023. I believe it is our    nest
and demonstrates our dedication to the Guiding Principles of
Customers, People, Citizenship, and Pro   ts.
Richard D. Phillips
Chief Executive Of   cer
Photography courtesy of Nasdaq, Inc.
TO OUR SHARE OWNERS
Fiscal 2024 was my    rst full year as CEO of Kimball Electronics, and I am privileged to be
writing to you today on behalf of an organization with such a rich history of excellence and
focus on long-term relationships. Early on, I was drawn to Kimball for a variety of reasons   
but at the top of my list were the outstanding company culture and opportunity for
signi   cant value creation. My experiences so far have con   rmed those perspectives.
We entered    scal year 2024 with high expectations for another
year of growth, after    nishing    scal 2023 with record sales. What
is even more impressive is that our plans included offsetting a
$100 million reduction in business with a major medical customer
involved in an FDA recall. The    rst quarter of the    scal year was
the best Q1 in our Company history, but we recognized that
end-market demand was weakening across each of the vertical
markets we serve from macro headwinds, and we had to respond.
focus, taking other actions to reduce costs, and continuing to focus
on signi   cant improvements in working capital management,
   nishing the year with notable highlights, including:
    Net sales of $1.715 billion, the second highest result in our
Company   s history,
    Adjusted operating income at 4.3% of net sales,
    Inventory levels reduced 25% year-over-year, and
Controlling what we can control
Our response was an approach of    controlling what we can
control    including resizing our team, sharpening our strategic
2 | Kimball Electronics
    Cash    ow from operating activities in excess of $73 million.
Throughout    scal year 2024, I spent a great deal of time visiting
our locations, meeting with customers, and working with our
Leadership Team to complete an in-depth review of our strategic
focus, vertical market structure, and organization design.
Sharpening our strategic focus
In May of 2024, we announced our intent to divest the Automation,
Test, and Measurement (AT&M) business. While we made signi   cant
strides enhancing capabilities in AT&M since the acquisition of
GES in 2018, it was not a good strategic    t for Kimball and our
goals for future growth. The transaction was    nalized on July
31st, with the proceeds being used to strengthen our balance
sheet in the form of increased liquidity and    nancial    exibility.
The divestiture allows us to focus on core EMS capabilities. For
further differentiation, we realigned the Medical Solutions
business unit, in Indianapolis, into the EMS medical vertical.
The operating environment remains challenging and many contract
manufacturing organizations, Kimball included, have adjusted
expectations for weak end-market demand. In our verticals, the
pullback has been more signi   cant than we originally anticipated,
setting up    scal year 2025 for another year of    controlling what we
can control.    Near term, this translates into a continued focus on
cost structure, margin levels, working capital management, and
investments in capital expenditures. Over a longer period of time,
however,    controlling what we can control    is extending beyond
these measures and focused on growing the top line.
Our Company has been in operation for over 60 years     10 of
them listed on Nasdaq     and we have weathered many storms.
But we have also recognized when to    cast the net a little wider   
by moving into new markets where our core manufacturing
capabilities support emerging technology. With our renewed
strategic focus on EMS operations, and a strong balance sheet, we
will be looking with a new lens on where     and how     to pro   tably
increase the top line. The recent announcement by our largest
medical customer     making Kimball the sole supplier on their
respiratory care    nal assembly and high-level assembly business
    is a great example where we see the growth potential.
Throughout this journey, we will stay true to our Guiding Principles
and continue to:
    Be collaborative and team-oriented,
    Set high aspirations   not unrealistic goals, but attainable
targets that require stretching,
    Communicate openly and proactively, and
    Remain accountable to our Company, to our customers,
to each other, and to our Share Owners.
I   m excited for the future of the Company, and thank you for
your support.
We invite you to stay informed by visiting our website at
www.kimballelectronics.com as we continue to build lasting
relationships for global success.
For more detailed insights into the past year, we encourage you
to read the following Form 10-K.
Richard D. Phillips
Chief Executive Of   cer
2024 Annual Report | 3

CREATING QUALITY FOR LIFE
As the premier, single-source electronics manufacturing services
provider and contract manufacturing organization, Kimball
Electronics creates Automotive, Medical, and Industrial solutions
that help improve people   s health, safety, productivity, and
comfort throughout communities around the globe.
AUTOMOTIVE SOLUTIONS
1 CHASSIS CONTROL in vehicle electronics manages and
optimizes a vehicle   s stability, handling, and ride comfort by
coordinating braking, steering, and suspension functions.
2 DOMAIN CONTROL in vehicle electronics is a centralized
system that integrates and manages subsystems like infotainment,
powertrain, and advanced driver-assistance to improve functionality.
7
3 POWER ELECTRONICS in a vehicle convert and control electrical
power for driving motors, managing battery charging, and powering
auxiliary systems in performance of electric and hybrid vehicles.
MEDICAL SOLUTIONS
4 RESPIRATORY CONTROL SOLUTIONS using electronics
in medical applications include devices like ventilators, CPAP
machines, and oxygen concentrators that support, monitor,
and manage patients    breathing and respiratory functions.
5
5 ELECTRONIC DRUG DELIVERY DEVICES, such as
autoinjectors, insulin pumps, nebulizers, and smart inhalers,
precisely control and administer medications to patients,
enhancing treatment accuracy and adherence.
6 ELECTRONIC SURGICAL SYSTEMS, including robotic
surgical platforms and electrosurgical units, enhance precision,
control, and outcomes in medical procedures by integrating
advanced electronic technologies.
9
1
4
INDUSTRIAL SOLUTIONS
7 ELECTRONICS IN CLIMATE CONTROL AND SMART
ENERGY MANAGEMENT DEVICES enable precise regulation
of indoor environments that help to power the AI network, optimize
energy usage, and contribute to energy conservation through
real-time monitoring and predictive analytics.
8
2
8 ELECTRONICS IN OFF-HIGHWAY EQUIPMENT, such
as construction machinery and agricultural vehicles, optimize
performance, enhance safety, and improve operational ef   ciency
through advanced control systems, diagnostics, and automation.
6
3
4 | Kimball Electronics
9 IovT AND FACTORY AUTOMATION SYSTEMS facilitate
real-time monitoring and control by connecting sensors, controllers,
and communication networks to enable ef   cient data collection
and process management.
2024 Annual Report | 5



 9/26/2024 Letter Continued (Full PDF)