Kimball Electronics, Inc.: Q3 FY2026 earnings call

What management said about Q3 FY2026, from the documents filed with the SEC on 5 May 2026: press release. Guidance figures: 3 kept. The quarter’s numbers.

Key takeaways

Revenue rose sequentially, fell year over year: Revenue was $352.9 million, up 3.4% from Q2 and down 6% from $374.6 million in Q3 of fiscal 2025, which included a $24 million non-recurring consigned medical sale. Source
Operating margin 3.3%, adjusted 4.2%: Operating income was $11.8 million, 3.3% of net sales, compared with $11.7 million or 3.1% a year earlier. Adjusted operating margin was 4.2% in both periods. Source
Medical up 10% sequentially: Medical sales rose 10.2% from Q2 to $106.1 million. Against Q3 of fiscal 2025 they fell 8%, a period that included the $24 million non-recurring consigned inventory sale. Source
Medical CMO central to strategy: Management said the medical CMO remains a key part of strategy, with deliberate investment in capabilities, operating capacity and commercial focus. Source
Operating cash positive for ninth quarter: Cash from operations was $14.9 million in Q3. Nine-month cash from operations was $29.8 million compared with $105.9 million a year earlier. Source
Fiscal 2026 guidance affirmed: Management affirmed the fiscal 2026 guidance that was raised in the second quarter release, covering net sales, adjusted operating margin and capital expenditures. Source
Margin expected at top of range: Management expects adjusted operating margin for fiscal 2026 at the high end of the 4.2% to 4.5% range. Source

“Results for the third quarter were in line with expectations.”
Richard D. Phillips, Chief Executive Officer

Guidance

Area	Period	Figure	Against last quarter
Net sales Source	Fiscal 2026	$1,400 - $1,460 million	Kept
Adjusted operating income as % of net sales Source	Fiscal 2026	4.2% - 4.5%, with results expected at the high end of the range	Kept
Capital expenditures	Fiscal 2026	$50 - $60 million	Kept

What changed from last quarter

Guidance kept: Management affirmed fiscal 2026 guidance. The net sales range, adjusted operating margin range and capital expenditure range were kept from the second quarter release. Source

Results and growth drivers

Revenue rose sequentially, fell year over year: Revenue was $352.9 million, up 3.4% from Q2 and down 6% from $374.6 million in Q3 of fiscal 2025, which included a $24 million non-recurring consigned medical sale. Source
Operating margin 3.3%, adjusted 4.2%: Operating income was $11.8 million, 3.3% of net sales, compared with $11.7 million or 3.1% a year earlier. Adjusted operating margin was 4.2% in both periods. Source
Diluted EPS $0.23, adjusted $0.33: Diluted EPS was $0.23 compared with $0.15 a year earlier. Adjusted diluted EPS was $0.33 compared with $0.27. Net income was $5.7 million against $3.8 million. Source
Nine-month sales down 4%: Nine-month net sales were $1,059.8 million compared with $1,106.3 million, and nine-month diluted EPS was $0.78 compared with $0.41. Source

Segments and verticals

Medical up 10% sequentially: Medical sales rose 10.2% from Q2 to $106.1 million. Against Q3 of fiscal 2025 they fell 8%, a period that included the $24 million non-recurring consigned inventory sale. Source
Automotive down 3%, industrial down 8%: Automotive sales were $160.5 million, down 3% from Q3 of fiscal 2025. Industrial excluding AT&M sales were $86.3 million, down 8%. Source
Nine-month medical up 5%: Nine-month medical sales were $304.0 million, up 5%. Nine-month automotive sales fell 9% to $487.2 million, and industrial excluding AT&M fell 5% to $268.6 million. Source
AT&M no longer contributes sales: The Automation, Test and Measurement business was divested effective July 31, 2024. It had no sales in the quarter, and nine-month sales were nil compared with $2.1 million. Source

“When volumes ramp, we expect it to become a meaningful driver of both top line growth and margin expansion.”
Richard D. Phillips, Chief Executive Officer

Medical CMO strategy

Medical CMO central to strategy: Management said the medical CMO remains a key part of strategy, with deliberate investment in capabilities, operating capacity and commercial focus. Source
Medical product categories listed: The company's medical vertical covers the product areas listed in the release, spanning sleep therapy, image guided therapy, diagnostics, drug delivery, AED and patient monitoring. Source
Rebrand and Indianapolis facility announced: The prior quarter's release cited a recent announcement to rebrand as Kimball Solutions and the grand opening of a new medical manufacturing facility in Indianapolis.

Costs, margins and pricing

Gross margin rose to 7.9%: Gross profit was $27.8 million, 7.9% of net sales, compared with $26.9 million or 7.2% a year earlier. Cost of sales was 92.1% of net sales. Source
Selling and admin costs rose: Selling and administrative expenses were $15.2 million, 4.4% of net sales, compared with $13.2 million or 3.6%. Stock compensation expense was $2.3 million against $2.0 million. Source
Restructuring charges lower: Restructuring expense was $0.9 million compared with $2.0 million a year earlier. Nine-month restructuring expense was $4.1 million compared with $9.0 million. Source
Adjusted operating income $14.8 million: Adjusted operating income was $14.8 million compared with $15.7 million a year earlier. Nine-month adjusted operating income was $47.6 million compared with $41.6 million. Source

“We believe this could be a powerful combination for the future of our Company.”
Richard D. Phillips, Chief Executive Officer

Demand and the order book

Open orders rose sequentially: Open orders were $602 million, up from $557 million in Q2 and down from $642 million in Q3 of fiscal 2025. Source
Constant currency sales down 9%: Constant currency growth was negative 9% against Q3 of fiscal 2025. Foreign currency exchange added 3% to reported growth, so reported net sales fell 6%. Source
Automotive remains largest vertical: Automotive was 46% of Q3 net sales at $160.5 million, compared with 44% a year earlier, and was the largest of the three verticals. Source

Capital, cash and shareholder returns

Operating cash positive for ninth quarter: Cash from operations was $14.9 million in Q3. Nine-month cash from operations was $29.8 million compared with $105.9 million a year earlier. Source
Cash conversion days at 90: Cash conversion days were 90, compared with 91 in Q2 and 99 in Q3 of fiscal 2025, a measure the company uses for working capital efficiency. Source
Debt rose, borrowing capacity stated: Debt was $163.0 million at quarter end, up from $154.2 million in Q2. Borrowing capacity was $276.0 million. Source
Share repurchases of $4.0 million: The company invested $4.0 million to repurchase 165,000 shares of common stock in Q3, compared with $4.3 million for 149,000 shares in Q2. Source

Guidance and inorganic growth

Fiscal 2026 guidance affirmed: Management affirmed the fiscal 2026 guidance that was raised in the second quarter release, covering net sales, adjusted operating margin and capital expenditures. Source
Margin expected at top of range: Management expects adjusted operating margin for fiscal 2026 at the high end of the 4.2% to 4.5% range. Source
Inorganic growth as complement: Management said it continues to focus on inorganic growth as a possible complement to the medical CMO strategy. No transaction was named. Source

Coming up, as management said on 5 May 2026

Fourth quarter expected to close year: Management expects the fourth quarter to finish the fiscal year well and is affirming fiscal 2026 guidance. Source

Figures management reported

Figure	Reported
Backlog (open orders) Source	$602 million at quarter end, versus $557 million in Q2 and $642 million in Q3 of fiscal 2025
Gross margin Source	7.9% of net sales in Q3 fiscal 2026, versus 7.2% in Q3 fiscal 2025
End-market revenue: medical Source	$106.1 million, 30% of net sales
End-market revenue: automotive Source	$160.5 million, 46% of net sales
End-market revenue: industrial excluding AT&M Source	$86.3 million, 24% of net sales

Earlier plans management reported on

Not stated: Earlier statement on medical growth relative to other verticals; this release does not state a status against it.
Met: Management said the third quarter results were in line with its expectations. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

KIMBALL ELECTRONICS REPORTS Q3 RESULTS WITH DOUBLE-DIGIT SEQUENTIAL MEDICAL SALES GROWTH; COMPANY AFFIRMS GUIDANCE FOR FISCAL 2026 WITH ADJUSTED OPERATING MARGIN EXPECTED AT HIGH END OF RANGE

JASPER, Ind., May 5, 2026 -- (BUSINESS WIRE) -- Kimball Electronics, Inc. (Nasdaq: KE) today announced financial results for the third quarter ended March 31, 2026.

“Results for the third quarter were in line with expectations. Sales increased sequentially compared to Q2, driven by strong growth in our medical vertical market, margins remained solid, and cash from operations was positive for the ninth consecutive quarter. We expect Q4 to be a good finish to the year and we are affirming our guidance for fiscal 2026 with adjusted operating margin estimated to be at the high end of the range. As we look forward, the medical CMO continues to be a key part of our strategy and we are making deliberate investments in our capabilities, operating capacity, and commercial focus. When volumes ramp, we expect it to become a meaningful driver of both top line growth and margin expansion. In addition, we continue to focus on inorganic growth as a possible complement to this strategy. We believe this could be a powerful combination for the future of our Company.” Richard D. PhillipsChief Executive Officer

Third Quarter 2026 Highlights•Revenue of $352.9 million, a sequential increase of 3.4% compared to Q2•Sales in the medical vertical increased 10.2% versus the prior quarter•Operating income of $11.8 million, or 3.3% of net sales, adjusted operating margin of 4.2%•Cash from operations of $14.9 million, the ninth consecutive quarter of positive operating cash generation •Debt of $163.0 million and borrowing capacity of $276.0 million•Cash Conversion Days of 90, an improvement compared to both the prior quarter and Q3 of fiscal 2025•Invested $4.0 million to repurchase 165,000 shares of common stock•Company affirms guidance for fiscal 2026 with adjusted operating margin expected at the high end of the range

Net Sales by Vertical Market For Q3 Fiscal 2026

Sales in the automotive vertical market decreased 3% compared to the third quarter of fiscal 2025, while sales in medical and industrial each decreased 8%. As a reminder, in the third quarter of fiscal 2025, the Company reported a non-recurring sale of consigned medical inventory totaling $24 million, or 21% of medical sales in that quarter.

* Percentage of net sales.

** Percentage changes compared to Q3 of fiscal 2025.

FISCAL YEAR 2026 GUIDANCE

As part of today’s announcement, the Company affirmed its guidance for fiscal year 2026.

Net sales in the range of $1,400 - $1,460 million
Adjusted operating income is estimated to be 4.2% - 4.5% of net sales, with results expected at the high end of the range
Capital expenditures of $50 - $60 million

Conference Call / Webcast

Wednesday, May 6, 2026 Live Webcast:investors.kimballelectronics.com/events-and-presentations/events For those unable to participate in the live webcast, the call will be archived at investors.kimballelectronics.com.

Forward-Looking Statements

Forward-looking statements notice

Certain statements contained within this release are considered forward-looking, including our guidance, under the Private Securities Litigation Reform Act of 1995. The statements may be identified by the use of words such as “expect,” “should,” “goal,” “predict,” “will,” “future,” “optimistic,” “confident,” and “believe.” Undue reliance should not be placed on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. These forward-looking statements are subject to risks and uncertainties including, without limitation, global economic conditions, geopolitical environment and conflicts such as war, global health emergencies, availability or cost of raw materials and components, tariffs and other trade barriers, foreign exchange rate fluctuations, and our ability to convert new business opportunities into customers and revenue. Additional cautionary statements regarding other risk factors that could have an effect on the future performance of the company are contained in its Annual Report on Form 10-K for the year ended June 30, 2025.

Non-GAAP Financial Measures

This press release contains non-GAAP financial measures. The non-GAAP financial measures contained herein include constant currency growth, net sales excluding Automation, Test & Measurement, adjusted selling and administrative expenses, adjusted operating income, adjusted net income, adjusted diluted EPS, and ROIC. Reconciliations of the reported GAAP numbers to these non-GAAP financial measures are included in the Reconciliation of Non-GAAP Financial Measures section below. Management believes these measures are useful and allow investors to meaningfully trend, analyze, and benchmark the performance of the company’s core operations. The company’s non-GAAP financial measures are not necessarily comparable to non-GAAP information used by other companies.

About Kimball Electronics, Inc.

Kimball Electronics is a global, multifaceted manufacturer offering Electronics Manufacturing Services (EMS) and Contract Manufacturing Organization (CMO) solutions to customers around the world. From our operations in the United States, China, Mexico, Poland, Romania, and Thailand, our teams are proud to provide manufacturing services for a variety of industries. Recognized for a reputation of excellence, we are committed to a high-performance culture that values quality, reliability, value, speed, and ethical behavior. Kimball Electronics, Inc. (Nasdaq: KE) is headquartered in Jasper, Indiana.

To learn more about Kimball Electronics, visit www.kimballelectronics.com.

Lasting relationships. Global success.

Contact:Andrew D. RegrutVice President, Investor Relations, Strategic Development, and Treasurer812.827.4151Investor.Relations@kimballelectronics.com

Financial highlights for the third quarter and year-to-date period ended March 31, 2026 are as follows:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
(Amounts in Thousands, except EPS)		2026		2025		2026		2025
Net Sales	$352,922		$374,607		$1,059,805		$1,106,255
Operating Income	$11,755		$11,716		$36,976		$29,061
Adjusted Operating Income (non-GAAP)	$14,781		$15,706		$47,623		$41,629
Operating Income %	3.3%		3.1%		3.5%		2.6%
Adjusted Operating Income (non-GAAP) %	4.2%		4.2%		4.5%		3.8%
Net Income	$5,719		$3,817		$19,442		$10,403
Adjusted Net Income (non-GAAP)	$8,033		$6,837		$27,208		$19,718
Diluted EPS	$0.23		$0.15		$0.78		$0.41
Adjusted Diluted EPS (non-GAAP)	$0.33		$0.27		$1.10		$0.79

Net Sales by Vertical Market for Q3 Fiscal 2026:

	Three Months Ended									Nine Months Ended
	March 31,									March 31,
(Amounts in Millions)		2026		*		2025		*	Percent Change		2026		*		2025		*	Percent Change
Automotive	$160.5		46%		$165.5		44%		(3)%	$487.2		46%		$533.7		48%		(9)%
Medical	106.1		30%		115.2		31%		(8)%	304.0		29%		288.9		26%		5%
Industrial excluding AT&M	86.3		24%		93.9		25%		(8)%	268.6		25%		281.6		26%		(5)%
Net Sales excluding AT&M	$352.9		100%		$374.6		100%		(6)%	$1,059.8		100%		$1,104.2		100%		(4)%
AT&M	-		- %		-		- %		- %	-		- %		2.1		- %		(100)%
Total Net Sales	$352.9		100%		$374.6		100%		(6)%	$1,059.8		100%		$1,106.3		100%		(4)%
*As a percent of Total Net Sales
(1)Sales from our Automation, Test, and Measurement business (AT&M), which was divested effective July 31, 2024, were previously included in the industrial vertical
(2)In the third quarter of fiscal 2025, the Company reported a non-recurring sale of consigned medical inventory totaling $24 million, or 21% of medical sales in that quarter. In addition, beginning in the first quarter of fiscal year 2026, sales to customers related to commercial transportation, previously included in the automotive vertical, are now reflected in the industrial vertical; prior periods have been recast to conform to current period presentation
- Automotive includes electronic power steering, body controls, advanced driver-assistance systems, and electronic braking systems
- Medical includes sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery, AED, and patient monitoring
- Industrial includes climate controls, automation controls, public safety, IoT and factory automation, efficient energy, off highway equipment, and commercial transportation

Condensed Consolidated Statements of Income
(Unaudited)	Three Months Ended
(Amounts in Thousands, except Per Share Data)	March 31, 2026		March 31, 2025
Net Sales	$352,922	100.0%	$374,607	100.0%
Cost of Sales	325,107	92.1%	347,711	92.8%
Gross Profit	27,815	7.9%	26,896	7.2%
Selling and Administrative Expenses	15,214	4.4%	13,154	3.6%
Restructuring Expense	850	0.2%	2,026	0.5%
Asset Impairment	(4)	- %	-	- %
Operating Income	11,755	3.3%	11,716	3.1%
Interest Income	203	0.1%	100	- %
Interest Expense	(2,072)	(0.6)%	(2,936)	(0.8)%
Non-Operating Income (Expense), net	(1,099)	(0.3)%	(1,726)	(0.4)%
Other Income (Expense), net	(2,968)	(0.8)%	(4,562)	(1.2)%
Income Before Taxes on Income	8,787	2.5%	7,154	1.9%
Provision (Benefit) for Income Taxes	3,068	0.9%	3,337	0.9%
Net Income	$5,719	1.6%	$3,817	1.0%
Earnings Per Share of Common Stock:
Basic	$0.23		$0.15
Diluted	$0.23		$0.15
Average Number of Shares Outstanding:
Basic	24,469		24,728
Diluted	24,648		24,872

(Unaudited)	Nine Months Ended
(Amounts in Thousands, except Per Share Data)	March 31, 2026		March 31, 2025
Net Sales	$1,059,805	100.0%	$1,106,255	100.0%
Cost of Sales	975,286	92.0%	1,032,332	93.3%
Gross Profit	84,519	8.0%	73,923	6.7%
Selling and Administrative Expenses	43,166	4.1%	37,107	3.4%
Restructuring Expense	4,083	0.4%	9,019	0.8%
Asset Impairment (Gain on Disposal)	294	- %	(1,264)	(0.1)%
Operating Income	36,976	3.5%	29,061	2.6%
Interest Income	717	0.1%	575	0.1%
Interest Expense	(6,520)	(0.6)%	(11,969)	(1.1)%
Non-Operating Income (Expense), net	(4,403)	(0.5)%	(4,155)	(0.4)%
Other Income (Expense), net	(10,206)	(1.0)%	(15,549)	(1.4)%
Income Before Taxes on Income	26,770	2.5%	13,512	1.2%
Provision (Benefit) for Income Taxes	7,328	0.7%	3,109	0.3%
Net Income	$19,442	1.8%	$10,403	0.9%
Earnings Per Share of Common Stock:
Basic	$0.79		$0.42
Diluted	$0.78		$0.41
Average Number of Shares Outstanding:
Basic	24,559		24,859
Diluted	24,822		25,047

Condensed Consolidated Statements of Cash Flows	Nine Months Ended
(Unaudited)	March 31,
(Amounts in Thousands)		2026		2025
Net Cash Flow provided by Operating Activities	$29,837		$105,870
Net Cash Flow used for Investing Activities	(38,090)		(5,160)
Net Cash Flow provided by (used for) Financing Activities	2,455		(126,615)
Effect of Exchange Rate Change on Cash, Cash Equivalents, and Restricted Cash	540		13
Net Decrease in Cash, Cash Equivalents, and Restricted Cash	(5,258)		(25,892)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period	89,467		78,779
Cash, Cash Equivalents, and Restricted Cash at End of Period	$84,209		$52,887

	(Unaudited)
Condensed Consolidated Balance Sheets	March 31, 2026	June 30, 2025
(Amounts in Thousands)
ASSETS
Cash and cash equivalents	$82,462	$88,781
Receivables, net	225,983	222,623
Contract assets	75,711	71,812
Inventories	273,251	273,500
Prepaid expenses and other current assets	43,351	36,027
Assets held for sale	6,610	6,861
Property and Equipment, net	274,937	264,804
Goodwill	6,191	6,191
Other Intangible Assets, net	2,039	2,427
Other Assets, net	113,770	104,286
Total Assets	$1,104,305	$1,077,312
LIABILITIES AND SHARE OWNERS’ EQUITY
Current portion of long-term debt	$34,682	$17,400
Accounts payable	229,068	218,805
Advances from customers	18,590	35,867
Accrued expenses	53,178	46,489
Long-term debt, less current portion	127,850	129,650
Other long-term liabilities	63,295	59,217
Share Owners’ Equity	577,642	569,884
Total Liabilities and Share Owners’ Equity	$1,104,305	$1,077,312

	At or For the
	Three Months Ended
	March 31,	December 31,	March 31,
	2026	2025	2025
Other Financial Metrics
(Unaudited)
(Amounts in Millions, except CCD)
Depreciation and Amortization	$10.3	$9.3	$9.2
Cash Conversion Days (CCD)	90	91	99
Open Orders	$602	$557	$642

(1)Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding plus Contract Asset Days plus Production Days Supply on Hand less Accounts Payable Days and less Advances from Customers Days. CCD, or a similar metric, is used in our industry and by our management to measure the efficiency of managing working capital.

(2)Open Orders are the aggregate sales price of production pursuant to unfulfilled customer orders.

	Three Months Ended		Nine Months Ended
	March 31,		March 31,
	2026	2025	2026	2025
Select Financial Results of Automation, Test and Measurement
(Unaudited)
(Amounts in Millions)
Net Sales	$ -	$ -	$ -	$2.1
Operating Income (Loss)	$ -	$ -	$(0.4)	$0.8

(1)Amounts include gain (loss) on sale adjustments following the close of the sale on July 31, 2024: ($0.4 million) in the nine months ended March 31, 2026 and $1.3 million for the nine months ended March 31, 2025.

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2026		2025		2026	2025
Reconciliation of Non-GAAP Financial Measures
(Unaudited, Amounts in Thousands, except Per Share Data)
Net Sales Growth (vs. same period in prior year)	(6)%		(12)%		(4)%	(14)%
Foreign Currency Exchange Impact	3%		(1)%		2%	- %
Constant Currency Growth	(9)%		(11)%		(6)%	(14)%
Selling and Administrative Expenses, as reported	$15,214		$13,154		$43,166	$37,107
Stock Compensation Expense	(2,256)		(1,955)		(6,036)	(4,528)
SERP	76		(9)		(234)	(285)
Adjusted Selling and Administrative Expenses	$13,034		$11,190		$36,896	$32,294
Operating Income, as reported	$11,755		$11,716		$36,976	$29,061
Stock Compensation Expense	2,256		1,955		6,036	4,528
SERP	(76)		9		234	285
Restructuring Expense	850		2,026		4,083	9,019
Asset Impairment (Gain on Disposal)	(4)		-		294	(1,264)
Adjusted Operating Income	$14,781		$15,706		$47,623	$41,629
Net Income, as reported	$5,719		$3,817		$19,442	$10,403
Stock Compensation Expense, After-Tax	1,711		1,483		4,577	3,434
Restructuring Expense, After-Tax	606		1,537		2,966	6,840
Asset Impairment (Gain on Disposal), After-Tax	(3)		-		223	(959)
Adjusted Net Income	$8,033		$6,837		$27,208	$19,718
Diluted Earnings per Share, as reported	$0.23		$0.15		$0.78	$0.41
Stock Compensation Expense	0.07		0.06		0.19	0.14
Restructuring Expense	0.03		0.06		0.12	0.27
Asset Impairment (Gain on Disposal)	-		-		0.01	(0.03)
Adjusted Diluted Earnings per Share	$0.33		$0.27		$1.10	$0.79
	Twelve Months Ended
	March 31,
		2026		2025
Operating Income, as reported	$53,450		$48,669
SERP	563		381
Restructuring Expense	6,054		9,783
Asset Impairment (Gain on Disposal)	(833)		(788)
Stock Compensation Expense	8,027		6,278
Adjusted Operating Income	$67,261		$64,323
Tax Effect	20,770		20,174
After-tax Adjusted Operating Income	$46,491		$44,149
Average Invested Capital	$650,994		$726,208
ROIC	7.1%		6.1%

(1) Average invested capital is computed using Share Owners’ equity plus current and non-current debt less cash and cash equivalents averaged for the last five quarters.