Kimball Electronics (KE) 17 Aug 232023 Q4 Earnings call transcript

Good morning, ladies and gentlemen, welcome to the Kimball Electronics Fourth Quarter Fiscal 2023 Earnings Conference Call. My name is Carla and I'll be the facilitator for today's call. All lines have been placed in a listen-only mode to prevent any background noise. After the completion of the prepared remarks from the Kimball Electronics leadership team, there will be a question-and-answer period. [Operator Instructions] Today's call August 17, 2023, is being recorded. call the available Kimball the Relations the of of page Electronics replay will on be Investor A website.

Mr. Vice At to this Investor Regrut, turn like may Relations. President, the call time, over to I Regrut, you would begin. Andy

for Welcome Jana morning, Call. here Officer. fourth press ended issued Croom, the Ric Chief Thank is Fourth Chief our release me our with a everyone. Financial and full Quarter to yesterday our and you, Executive fiscal today XX, Phillips, June good Conference With Officer, results afternoon quarter and We year XXXX.

today's presentation call, To posted accompany website. page a to Relations the Investor company been our on has

and started, making non-GAAP can our and Safe materially of are we is on SEC I'd adjusted differ get non-GAAP in commentary remind to our Harbor will from the provisions to are we actual as and forward-looking reconciliations you today that press involve statements. All be press that release. focused amounts stated filings results, available in release that uncertainties results subject Before forward-looking statements our to like GAAP and risks

for will morning, quarter fiscal the will taking with results a Ric and opening Jana complete Ric will the financial XXXX, before This guidance comments, and our prepared for questions. call your review few start the remarks

turn now the I'll call over to Ric.

Thank everyone. you, morning, good and

this recently Charron, the Don CEO Electronics, release longtime week, Kimball passed away. As earlier previously press in communicated and of a Chairman

in a it inspiring right mourning to the deeply and of time loss. others that short you was by As In of version all and Don, themselves. strong thing to was in a me I family might imagine, his clear knew be believer he that saddened Kimball better doing us this news the are the

worked general His service Don's generosity are years contributions the Kimball entire are for to in after and we with saying his I Electronics other, EMS the Don. that believe and legacy dedicated any is company and and achievements a the unlike I are and culture unparallel. humility impressive grateful countless. known to team XX corporate opportunity industry Don's speak for the in have of

are the and entire with Charron thoughts Our prayers family.

it is at results confident quarter, would as to for and am our be, have the need Don from the which the hand, difficult may the to we business. task us discussing fiscal on what the focus it As year, do wanted do. outlook is I

at sales So highs drove was with to provided the The for XXXX. fourth with very am that, company. I EPS year operating and in we the record consecutive and generation results flow above pleased and our finish in we and the QX quarter. for fiscal the the were cash all-time income to sixth with strong the net reported contributed year May better-than-expected quarter guidance fiscal quarter sales

levels the our performance commitment, chain. This value to from teamwork the and of partners in passion, and customers, our thank achieved with I and like employees, was our global others our their support. organization highest for vendor many would

in consumer global a expansion, an demand strong margin and XXXX capital. and by results we invested the return if increase net improved continue, fiscal our economic even XX% on excellent year of Electronics, Kimball believe vertical record was mega highlighted will total, for In reported slowdown. markets a by three in softens momentum end sales, income, industry trends fueled Each part during

worked customers with in leverage and an Thailand a decade environment. facility year. The the our revenue while XX% sales challenging expansions years, our we continued all supported four more. Mexico, new all-time for or high with macro volume prior us with similar above And team introductions we've of product of times and a navigating norm rate to at historic XX% was a for reached customers in Approximately, the the to

service year, the were service in and recognized categories received four CIRCUITS by for year, for consecutive we ASSEMBLY customer we multiple China awards, the in multiple excellence. ninth alone, During

which once XX% with these our very Our among again rating, ISS disclosures the fiscal and us recent accomplishments achievements marks received ESG am places in of high coming industry. with I the top our in proud Prime XXXX. a most of all from

a We continue of to of we for are and longer-term see business the strong future pipeline by opportunities. funnel our prospects growth excited new

in increase fourth the continue improve supply chain a to to increasing totaled in last component XX% back availability. year. requirements Turning our sales same needed parts compared with million, to slowly net gradually Conditions $XXX the period the for production quarter, global

in time impact the shortages not part first did years, In fact, a couple materially of for sales.

business, Starting with annual XX% all-time in and totaled of a $XXX increase XX% of revenue QX total sales. best. million company increase completes over to total a with compared This the fourth sales automotive, year. an represents also a XXXX net It $XXX topping largest the record fiscal our quarter prior year million, XX%

supports our contributor overall applications business automotive with other Reynosa, Mexico, full In our in automotive. systems to the the in in as braking. facility a of matter in balance such that regenerative increase and were year, braking for manufactured QX, power steering XX% electronic the fiscal Approximately major

We expect fueled to this growth industry in megatrend of vehicles. electronic continue, adding vertical content the by market to

self-parking, that movements, trend, and chassis increase features well in such and experience very popularity as aligns this especially lane departure drivers control assist in adoption. as vehicle Our in with

them and column, manufacturing and unit value-added the technologies advanced for leverage control added electronic expanded of ECU increases, operating the features the contribution systems in the or good which and process as These are to complexity steering is more us. of

combustion the for is our support of same, the type so electric the hybrid roughly times, two the is As agnostic to of vehicles engines produced. have we many motors, internal architecture said a or steering

XX sticky. supply and stringent time-consuming has to eight an Automotive And single-source validation is commenced. that in that can often programs is this expensive business is length. production years protocols, with change regulated once Also, and highly making the the chain awards to span are it industry certifications

sales a in of $XXX work decline last with QX FDA who XX% Next with quarter and impacted related to that major customer compared in remediating is X% adversely net sales with a quarter them. this our is results Medical, company, the recall to the increase a by million, total not year of fourth is a were

For to grew and million, Longer continue image-guided device care, in in-vitro equipment. drug a record in growth, with delivery connected total, XXXX sizes the industry AED, diagnostics, very expertise. driven market and the drug smaller healthcare systems, fiscal respiratory therapy vertical and the XX% fit mega applications high Medical $XXX future Medical sleep systems sales patient support increase with and term, medical with our ages and movement accuracy and the monitoring by supporting in to especially population therapy, well towards trends Also, precision levels the affordability as accessibility to increases. of delivery

more new for represent development OEMs add focused us heavily Medical, to a an are higher-level content. assemblies Our as as to look business HLAs opportunity on or category efforts value-added outsource HLAs.

is For pediatric facility in flowmeter a our instance, now Health. Mexico producing for React

This can we speed with start is market needed an value the how only from months bring of example to nine to shipment. and first

totaled quarter sales over total Finally, and net market the XX% sales. in the $XXX a fourth XX% million, year of last company increase industrial vertical

$XXX year a were best fiscal previous above also quarter million nearly XXXX. This by sales or completes from topped where this in XX% last It XX%. our business

gas, This and trends in awareness raising is on with electricity. encouraging of and position excellent setup of legislation resources supported water, conservation is on Our decarbonization. for natural the the and by in incentives, Industrial future consumer focused megatrend consumption growth,

EV and of products We are residential stations. includes supercharging neutrality. carbon aligned and major metering, impacts brands and efficiency, with strategically most environmental energy, cooling promote smart and that commercial This reduce systems, and automation, safety, factory heating

So in excellent quarter, a summary, into momentum record-setting year, headed XXXX. and fiscal an solid

in outline for the now our over coming I'll turn Jana to more and detail year. to Jana? guidance call the QX the review financials

everyone. Thank you, morning, Ric, and good

our million, As million that had an a reflected highlighted, fourth than net year. our in sequential guidance. Ric by over quarter in to capping up with consecutive was previous $XX last revenue, year QX and of excellent This finish step off quarter XX% was a more sixth increase sales the best eclipsing we our record record the with $XXX.X

record program a in and high-margin driven of levels foreign efficiency, increase fourth high XX year-over-year. point gross in all-time the XXXX, a improvement EMS on the operational fourth produced of an quarter AT&M exchange the consolidated to impact compared our quarter, our fourth rate margin from in negligible manufacturing then was In of business by XX%, sales fiscal resulting basis high our throughout the company had with the that the in QX The completion quarter. and shipped sales year for facilities fiscal

margin. These basis, of where unusual a The on XXXX is Non-manufacture them. items are fiscal pass-through freight costs to gross or dilutive intended with is purchases excellent that a such associated spot expedited no as dollar-for-dollar results have rate margin but had an gross sales is on better. on in impact materials been revenue, example there recover sales could margin

doing actions shortages really I'd for gross consider and our in to adjust like taken for of don't point recovery OI on parts business days versus was more common core basis adjusted our in normal. XXXX, to that or margin approximately impact we estimate we Cost XX the cost fiscal out these we this have any margin. mitigate points become items

our quarter the higher million Adjusted expense. $XX.X in top-line from and added million increase QX selling with bonus and inflation were wage administrative resulting last first $XX.X support year, to the expenses to in compared growth, resources

the Mexico. also a up adjusted basis net or adjusted which record third however, and administrative $XX.X net fourth by or sales. point and of sales, and X.X% continued When were of income leverage QX measured driven Adjusted point last company for improvement quarter, the percentage results reflects X.X% the gross million for as of was a record sales, our ago a moment operating to expenses basis a selling year's compared to margin XX year. XXX step the last in and $XX.X of million Thailand This result mentioned expansions a to X.X%, of facility compares compared quarter sequential I was

year. income jurisdictions. Other was in in the $X.X fourth quarter XX.X% in compared $XX the tax the to the share, diluted million of being towards weighted QX with million income XX% for from expense per to executive quarter year-over-year. income annual resulting of last effective representing share tax QX to deductibility last in and year, increase in lower XX% less EPS compensation $X.X rate net $X.X limit diluted expense of mix net per last The a XXXX XX.X% lower fiscal expense compared million earnings $X.XX or year was million and or reaching plus of the Adjusted heavily compared was fourth rate of more

fourth million and $XX.X was quarter quarter of days generated million. flow Turning now the $XX compared days to balance XX in cash XX the and XX, conversion June in year by Cash sheet. equivalents XXXX QX. were the XX last activities at days cash and Cash were to operating in days

a ended this our advances QX. quarter year has than we to last been started $XX of change. last QX lower million higher million, customer $XX QX the reminder, at year, Inventory million $XXX As including in CCD but reflect than calculation. recast

leveling anticipated, in generation contributing flow cash fiscal expect off, continue and quarter, As trend to inventory the in to improved is XXXX. we this the

in the Mexico, and expansion expenditures for quarter were Capital million introductions adding product our in $XX.X facility supporting in our new the capital global Poland, footprint. needed across fourth equipment

XX, Borrowings ago in end a $XXX.X For at to million was which guidance million compared year million midpoint QX. range. June facility the were $XX.X fiscal and our at total, million, credit of on $XXX.X of near CapEx XXXX equaled $XXX.X our the XXXX

authorized cash Since million as represented available no June portion Board credit our equivalents has returned of $XXX.X our under repurchase were purchasing the October to of million quarter liquidity shares at shares XXXX. $XX.X share a XXXX. short-term totaled of cash X.X common in fourth There stock. program the XXth, million our total unused and facility shareowners been of by plus XXXX, Our repurchased

the repurchase We program. on have $XX.X million remaining

return compared a adjusted last In X.X% XXXX sales basis with of of EPS excellent our year. improvement for of XXXX, invested an total income on net year a was of XX% growth fiscal to of versus ROIC point and fiscal XXX increase XX%, X.X% capital $X.X sales, billion, record nearly year-over-year operating company year-over-year, X.X% of

to As net guidance estimated sales year-over-year. Medical to in of billion is Ric X% growth The providing billion, highlighted, $X.X This XXXX major in program. we for customer, our million business fiscal driven a be other to are partially in X% a XX%. year outlook the decline with of $X.XX reduction by range a offset approximately $XXX reflects decrease a sales with by in Medical increase

XXXX. Despite growth with that we short-term still fiscal growth other to to decrease, allow expect customers in achieve overall us positive

is customer encouraged as our opportunities, very future are with come. particularly to resume years shipments major able product the We in business certain to

customer our base note new important progress it is we we in also by diversifying customers long-term made to relationships, in While meaningful X% have that on FY'XX. pride ourselves adding customer

X.X% operating fiscal objective for of while of income in staying longer-term taking a XXXX the is guidance Poland, OI our in to consideration sales, Our the line facility margin. plus expansion into range X.X% net ramp-up of X% of in with

million to expenditures Capital are in be the range. to $XX $XX expected million

We with organic XX% efficiency funnel business opportunities CapEx recent allocation growth, growth focused our will balance strategy new on our automation and investments continue to expansions. deploy requirements capital of representing the of supporting a a and in maintenance and to support approximately facility

reducing towards as leverage flow disruptions should resulting improved generated addition, In working global to chain cash ratio. normalize will from capital supply inventory directed the management continue and our be ease

I community this time. thank Kimball its to of outpouring would finally, family, like for condolences behalf And during of investment on the the difficult

a myself of to included, care and educating industry. exceptionally the off EMS not about take customers. played of did proud key many, our our we facilities but us, Kimball our role work about show quality employees in to Don Don and For he of the just loved was

We miss will him.

call to the back Ric. turn now I'll over

Jana. Thanks,

lines closing. someday joined since open the like share questions, months the first family at to feels like been six started and a in thoughts about Before I'd for yesterday. we Kimball I few I It's

new opportunity to was reasons, creation. the the When I professional for Kimball people, the and opportunity looking was business Electronics at value culture, first I three for a attracted

what of are all I better today, expected. than them to forward Fast

engagement we live First, culture and it's guiding every peers. well with our industry reflected our our norms differentiates that from our our employee annual us principles in day, scores from survey above we hear customers culture

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we every that to mindset If have and it bring work day we'll be successful.

team the is company. belief is great will not a our of us That on that understanding tomorrow, business. we're trade if together winning me fun better culture For continuous It's working and up. a pass great set great It's of getting with and common core someone a priorities. a a mindset improvement of

goals So that means require on stretching win unrealistic to staying what It to Way? not means attainable but Kimball means setting does it high reach. principles. mean guiding It to being the and team-oriented. It our collaborative aspirations true targets

priorities, our to to being and and openly focus and our company each accountable our our Kimball to the to on way customers is communicating other shareowners. strategic Winning maintaining proactively,

can it's about you what ahead but a record-setting the priority great our six the now for me months accomplished from excited for company. and in more expect team. and XXXX, what a We've during past even I'm deal fiscal lies a It's

to questions, the open like please. now Operator, would we lines for

first with Cantor The your Fitzgerald. Derek Instructions] Please question from [Operator question. from ahead comes Soderberg go

morning. good Hi,

to and Don personal Yeah, to and thanks Don. that Jasper what I condolences the everyone. off the got had just sending start facility that tour opportunity the family with of was and yeah, of joy to -- to a him good in to have from him. for taking I opportunity meet by morning my friends wanted

I 'XX that, team ramping a And like expect of braking? major relates many but you that really Reynosa, relates systems the it today in braking Kimball out ramping to you and just it certainly program point great on contributor, to As the become revenue to and strength quarter. beyond to how the programs in are from material sales? braking think portion of hit the of then, sort automotive in you're quarter, a sounds in quarter, sort the want do congratulate stuck I expect as wins to -- the that's in to fiscal first, braking company new ramping do when start you inflection And

Yeah, that's a great question.

to So and and disclose is into our a next the it book exactly we of be and braking, don't programs two business all we within regions talked it about we've geographic we but producing future, many portion actually expect have as the years. we braking our of repeatedly, how NPIs relative significant expect to be of to fiscal growing automotive

I that's Derek, question, your not know So exactly but. to accurate

can of while programs You well, just you about customers? been braking Yeah, can the gotten maybe on any the of feedback feedback steering, a those working of you've in customer you're from you've on commentary the these expand speak things? on for with some getting some some to customers

absolutely, suppliers, Tier of and entering of more out. basically so which in generations as is types that so vehicles gaining electric and regenerative braking Yes, into play as are vehicles It area the really we we a of is as traction. braking of that the result off regenerative all started next the and specifically have with finding braking, the discussed of specific more is with and regenerative engine you additional we steering market, the what the back wear less it is on so battery. it internal is to and to is right regenerative power store now engines well, specific is does is allows combustion that are -- to agnostic, while braking What tear the EV cetera et adoption of braking, and benefits vehicle, as coming are safety, customers, our X which higher gaining

braking launching was very, Reynosa we received we partners, and to specific work did automotive before, multiple customer. just actively across remember, And working we I we so are that is programs very in are globe. so working now has said back the regenerative don't What very the not we've And with that been the opportunities. one -- well am multiple with to on hunt pleased braking customers say those as in

hey, coming we to and we're are choice. all us saying, supplier to this customers our want be Our launching and partner of you

highly customer just their and Derek, that, say the was that it's has feedback we strong. extremely with Reynosa no see really which on line very monitoring, I and began Ric, and and And -- automated kind it's on, recently is that. is in braking up. of was been would The ramp adding I particular effective in around exciting to exciting feedback There's that based than of great other people lot

What disruptions. great of we detail. into the Got appreciate squeeze a inventory inventory of it. more. think levels Jana, sounds towards? express given the bit you can sort That's we Can you dial can Maybe new we I 'XX? inventory 'XX? can that to of talk fiscal ratio. easing some about look as the levels it If as supply hear. sort you'd levels inventory of like you work the should as turn And about How throughout one for like in sort a to fiscal on just normal move

want as cetera, not well to of look XX into we PDSOH metric and does where to lot orders, but et paying Yeah, probably think I, if of all at is future. it's honest, interesting days, have a it I be, to figure as days. perfectly Obviously, days been really of this out this bygone the what trying a of XX things, a I'm open being like right, backlog couple inventories, attention because, you

psychology and just-in-time -- isn't level inventory there primacy so right, of is that us. that want the I people some to -- think and customers recency, our something inventory it's

XX what I'm really days it, next as what to the for minimum, five we're target that's think continue over shooting four but at so I looking to we'll a quarters is at. and monitor

and you continue not in sort was then in which what be to expected, is to we're dollars and exactly saw translates now the should where in inventory we level of inventory right, the but steady levels it at we as grow roll-off what so have the so of in absolute revenue increase to state FY'XX. able meaningful our rise And terms

the appreciate Really color. Awesome.

next question Thanks, may Moore Derek. ask Hutton. question. Tim from comes Tim, The you your EF from

nice free gross growth, of cash very continued question, to had flow It a was sales sales year. free for organic see number. amazing return and flow your I growth Thanks. for was margin the strong expansion, guidance cash just that the this

between growth to that different factors kind industrial remains range, factored the the on can pretty the between if swing of recession what based in top based is Just more the mild or on strong? low-end? high-end a scenario-wise it speak the EV's the and With low-end curious, you maybe is and

Yeah.

quite relates really all China, work of X% question and really seeing, have guidance output with honestly So, be. buoys still that's of all hard that's we're try great happen going our that as is to our reduction you the data so Europe, to really to particularly in funnel a to steady and out the of think in what also a we grappled achieve customer. what at of terms we make take is that state it million trying with actually you know, a norms. put also terms get a really with we and to after in what forth, growing really to interesting provided macro as and we're X% sure in signals year, guidance water point and are, in net what a of terms $XXX of sales We might It's recessionary to false as we to something single growth in really, XX% it we're forecasting We lot, the cetera. out and the accurate that customers can et is the

should you out terms tells going where shake help to in that thinking, provide we're if we're that some of So the guidance year. for anything full

is for Ric, two-part growth mentioned the maybe on more like question about elaborate you prepared I'm I I Could approach? if your maybe that from they're other hand, medical the about maybe like downstream. and talk that to Electronics you have to you other on to coming in in lower-margin for doing and that's large selective you. take Medical about a out providers some also I'm imagine customers there I seats Jana, but and asking some customer. walked maybe opportunity are all you glad of their your business. about if power you could great a a you and see wondering has Can believe strategic Kimball that that could car accelerate hiccup how opportunities talk maybe you have help after revenues heated also that, one customer's to windows, maybe away Medical fit, it's past, that you talk remarks normalizes?

it's and to that We participate something that point in. ourselves do scale. them want can be it that we We being sure growth time, really fit the drive enough growing selective over we absolutely, with a that about, want want think to so hard make they Sure, hurdles. can them to such be profitability we working great meet in customers pride on that to and we to Tim, programs we're our our question. your large Certainly,

hard. that we So scrutinize pretty

our to process fit at really planning try further are further even also technologies the there. different to We revamping out and anticipate strategic look

mentioned of have a really what Medical, rigor win for specific rate hunting in We're try screening but quoting We're also lot Medical is discussions those lots hard. to go in to and funnel of internally your on a fact, where right, Medical way we're programs, a there high we M&A, more to right role, and in specialize To us And them after, win seeing we we capital that really now. for point, ones of almost manufacturing as sort do in our best. see OEMs effective activity of our really our up the we're really that we and topic a particularly terms maybe to go in section of allows great expands resources multiple So it's that and programs what and look way us to of because like determine so we and attractive partner and goes at trend that to that's and customers assembly, and that manufacturing your sticky, is on is allows to I we form that that a acquire That's the into a in in long-term. a obviously that of us. free really in trend the and place we to of. attractive of fit business for this question us proud even looking as it discussions, outsource it's after a that high-level

down exciting we about year, following Poland That's to the million my Medical reacceleration the and year $XX step finished you June be think. 'XX step the helpful, you to finish news spending for probably and plant, this Ric, then customer right? just should a and year $XX to rest provided assume maybe you Great. to later, after the for Mexico, equipment it's think I'll And by the that's offline million the Jana, questions in very capital probably CapEx how see in in spring lastly, expenditure thinking for when this you lap drag. the this I'm for save below of for the guidance down but fair year, guided

of Well, FY'XX place, expanded getting three mortar, months can. is we're in examining FY'XX the curve we terms increase future what capacity as growth seeing, that macro we're of the really growing close our on is year focused expansion. in and environment, XX sort that about the so bricks lines SMT into we're much higher so that to possibly as and CapEx, and maximizing we XX% also, do really and What facilities, this into may we in need

to we FY'XX a expanding through So downtick be haven't yet, I provided in geographic say another to region. are because don't is that quite not we want sorted going

depreciation would normalize what something related FY'XX plus technology, of we yet. automation commit spend to for would lines that yes, along not anything it to ready could You to expect, higher-level to need I'm the to and but

more hold us get to don't you it, So come. to to

out. be in and I a later for into far that's and kind that's Investor of just Day know you but, No, probably that my Jana go fair maybe it's may lot, Okay. -- Ric, about an it enough. curious it, well, thanks more And just I'm I questions. on,

Thank you.

Thank you.

Thanks, question. with The Anja, please Sidoti. ahead Anja question from Soderstrom Tim. next go your from comes

for to And for passing expressing I start also of the Hi. Thank my you condolences my Don. questions. want sincere taking with

chain, going that supply we and you how about terms in In forward? seeing now headwinds there for terms of of should the the what are quarter think

long challenge an So first the we You ship a know, and to that this didn't in kept negligible that quarter that ability the deliver about, time so to in impact here customers. XX-week actually right, supply impact have so showing talking seen and was on and convert probably are to finally parts thankfully, we're our in two it's we revenue, up haven't and lead chain and that years able right? our time

on is that get do you're we and still we orders, we're customers their CNR, making And our that the to and order they people where about counting of do right? et the like related the so which that obligation might is on there you purchases chain in of the and contractual we -- What better, non-cancelable, signal means, behalf, So right, still the that chain that going inventory I so is good if understand customers. or backlog so was the to remind to seen the everybody an they us. make have to right, everybody. clean, non-returnable, parts, the chain is try get see, is the any with would able for it's the service cetera, that to that you the lead open it times have so double supply chain trying we is supply fact through, we some supply on gaming to still all but don't that But think feel I our are working an have of good we're to longer happily, times, functioning now. longer sure eye have and need lead we on supply parts inventory right, keep it's

about the cadence, how guidance ramp-up especially? XXXX, for given Okay, thank should terms of think the with Poland And you. the fiscal we in

muted words not a Yeah, our those stair-step, going we vocabulary so the of erase bifurcated nearly hopefully impact words saw to as to its yours would to not that use the Anja, be and as we solemn so is Mexico Poland what absorption and year. going to we're from versus big were due too. all last or we expect vow Obviously, made we

each Our year, what has and facility that's so previous endeavour that -- that in we is and continue more new we quarters muted versus as we the closer more are grow impact hope saw to together. a

thank you. Okay,

will add, seasonality of the that AT&M that QX I if QX we were you some in timing of that for The saw. might the one saw I way happened don't script know shipped year been some and year. year out over it thought I high-margin that to in this in was to QX we call, alluded remember, that the noted the this margin it them the work, to of in of we contributed we that on the the shake that ultimately margins QX I because course that and on just the fact better, have program thing a and working

So X.X% I we're quarters would not QX be margin next the expecting here, also much more be even. to another year would expect that

second this there XXXX the how sense. with for large guidance sort FDA have was you're think backlog customer your And that or? a that a then, should building or you recall, through Okay, that Medical up also dependent on about it timeframe we makes help that fiscal talking the of quarter and the guidance is might front about

the partnership that expectations were not that to customer made in with have decision for we going FY'XX. We

allow we're a want and while pause. to just term is long-lasting not years, need an We work to right, then on for you really partners. and work give and they we in it going hold while decree, et key so so longer relationship update will customer them. enjoyed FY by that a key really we be good through just relationship a and it pace with through so but future to As these is opportunity a customer consent There them and to cetera you things to 'XX, things. through that's takes consider that partner, a a Kimball, We've work at know, determined we the

partially is by we're customer, What in of that of we're and the is encouraged near Anja, that offsetting it's outside seeing some growth Ric. that opportunities term. the

you. all That Okay, thank was me. from

from next Anja. Capital. ahead go Max, please Street question. Max comes The question Lake from Thanks, Michaelis with your

guys, pull just revenue I on here if the here. the any want wondering into was and the you into dive on from question quarter, QX, I the top Hey, just first 'XX sizable congrats Lake to QX at forward given condolences beat guys demand family to line? Don's my everybody number from Street.

not. pull We forward no is QX. in There did

dollars a right ones are of to XX% CapEx, other just guys And facility wanted Okay. into the you but other sense to maintenance know existing that possible growth and new growth then ones, are may get areas. now, some you ramp, of looking you seeing in initiatives allocated towards shifting guys I just kind be not mentioned

earlier, in or we areas as don't want expansion. about fully have. we are I to what premature really future utilize to digest We so talking Yeah, alluded to and trying be growth

how You absorption will your OI of in to be. we're and EVA know that remind where an company. also I terms critical getting it needs is everybody, margin

high, should is high so of compensation out disciplined of a too in focus that dumb everyone on we're based, we're relief EVA that. give to incentive acquisitions because going to sigh high, Our any make not big go and terms ROIC

at of in Medical we assemblies of specifically do new some look Medical higher-level customers upstream that said Ric manufacturing customers there. our opportunities and activities, with with As terms opportunity

know us, placement us that inflationary do right? are wages that's smaller, all expectation really do It automated that labor something is we a that but and It do a of cetera, technology to investing things allows to very does to with. The particularly inspection, other the critical critical, equipment is control direct allows in so of couple for partner, really produce to high-quality customers, in for and et ability the right? relevant us that the automation has also in getting things. the our to stay Parts related what the difficult optical automated produce begin parts, environment so smaller an been and thing to you to are and our just investments given have of to that you is it's

you higher-level see and that investment automation And of the so, in electronic as content, electronification is really critical.

just what they want And you quarter and back a the in can this larger did of last of customer, pullback one medical if then just in QX? to me, when contribution kind the sense pull was share timing in get the for

are we FY see going to in So, it QX begin 'XX.

Okay.

recall. part fiscal recall. out In will partnering we did I the not play with were a 'XX, point the them on in that we

has Our customers, the position be you on work to was it, could first partner with with feel correcting it have feel begin them that sent that so and to the production will do to pending begin year. there new is fiscal this it FDA they of equipment that and so we to will quarter the back to completed work in

Thank Okay, guys. That's makes you, from me. sense. it

Thank you.

Max. Thanks,

with from from Mike, Crawford B. please comes ahead go your Riley. question next Our Mike question.

question question the market, competitors? I speed, at don't do really, to Thank do like so customers the and and never about really the to culture you beginning how gain where I delivery, things what like benchmark ties it's to business to of operating those talking is, guess the all you. quality, Ric improvement ancillary about be parts call variables? back think into, Kimball, your this besides of and a XX% you're at balance constantly in And versus margin going say of income continuous the how on-time the it's giving I'd back go business you was --

benchmark closely rate. We one is relative competitors month to number Sure. to Great mean, win do look variables. very that question. every try a I at of we track

I in had of analyze we We after. and earlier, win the them, selective get really high So them with been we go achieving then we're We requests. customers, programs target mentioned them we we and discuss lots we've rate pretty as seek bid when a that.

thing for really win think we that's lose, what benchmark So we going we one what's win, and that's why important and that's important. us rate and I one do why very do did we if our to So lost differently? is, are

That's one, Another we have we we're then, near fiscal forward. delivered that of on operating taking one that significantly And dear of to feel of hearts. competitors and something aspiration XXXX we've in like income all course, and aspirations means are obviously moving our that's of the our and that is we have we is, in outgrowing each share that obviously verticals? rate

the that's have very don't our call, that little all on mentioned know are and same. now adjustment As rates the I our very what the to for case close always OI and we generally, Jana do, right GAAP of our adjusted They're we competitors. and

got improvement profitability look that with knowing So measure the we that rate try gap improve on to to customers. continuous that your a and competitive be to and pressures at dynamics given of driving time, OI as it maintain over earlier we and point, to

you. Thank Excellent.

Thank you.

your question. comes The Mike. question Hendi, Gabelli Susanto from ahead Thanks, Hendi from with please go Funds. next

Ric, morning, Good and Jana, Andy.

more wondering addition First, my $XX million different is to that much million If from the that, is the to spend question XXXX dollar year a CapEx it's capacity I guidance XXXX heart so fiscal goes and year I'm first fiscal with of about to are and how fiscal included far out to not the My year in Don million, capacity in CapEx. Charron's family. $XX see related capacity CapEx? Electronics' Kimball expansion family $XX terms? draw associated XXXX And there way manufacturing expansion, total now facility of then that

ramp, in questions. in you're great is capacity so utilization Mexico Poland. and and FY'XX particularly Yeah, What seeing continued

We're they expansions bricks done, continuing lines while up are in and cut are facilities. those we've SMT on to and running. mortar both, the And put ribbon the so

serve we Hendi, that to ask again to get -- has apologize, certain is building continuation a those question to put on can in the the there all so I that's your then, plants of that And FY'XX fully And continue so need NPIs we equipment manufacturing. and utilized. of

$X in any is like, update I'm mark. much now total how sense there that capacity capacity any Electronics' my terms? there is wondering It's dollar whether the is is on billion on. update I Kimball manufacturing above think, the

that, all capacity say any do work to Having everything right, building do built $X yes, the said be our look way. we have XX% Poland, funnel, million to support to to completion our on and $XXX so to Don and further are that increase, we for quarters, know, Hendi, used we growth with our the you organic longer-term so, some we not growth mark. at as expand the over side of and rate time coming Yeah, and opportunities the need is it's billion strength

could capacity certainly above we but And so get that we on that is mark running. come Poland and now have up to with more billion current the the $X

new year system system automotive quantify then, and of target a And is how to is braking to organic with can XXXX size associated in much or Ric, the now way sales fiscal vertical, braking in a big there the -- systems? you X% driver growth X% braking your or quantify how is growth Jana whether

focus that sales, We key is growth of but we is said can't within specifically what systems braking percentage -- well, we quantify what don't is Automotive for a of as Automotive. area the have us

things, program turn we do that's Now, because I steering a and incredibly within a us steering earlier, highly in be have capability, that down our see see well but cetera. with out not et it's sunroofs lifesaving going areas customers, and that we that high-quality not think, to it enjoy you're next-generation Derek's lift also we was those to, profitable and going technology to going on profitable point and next-generation focused you're program braking us steering putting to other window requirements, really and won't

I see.

differently. So said

all the year Thank thank you Jana. you, Yeah, the Thank and then fiscal XXXX. for and you, Rick. best then,

Thank you, Hendi.

Hendi. Thanks,

please question ahead The [Operator your from comes next Instructions] Hendi. Research. go question. Mac Mac, Furst with from Singular Thanks,

Research. is with Mac Singular Furst this Hi,

concerned. work. is your the on Well hard far Don's passing. quarter. for I done. clarifying question on his So, you to as all congratulations Medical a family have Condolences Thank as

right? back, that one can to of down revenue a million muted, $XXX that permanent rather understand issues and to was some back unlikely this come that time please customer, specific growth anytime revenue about that that So think in Medical because with get one it's pulled customer if there point going you did the regarding if is of step you field I you soon, is in you at correctly, just so and said I customer clarify,

right. you that and to guidance the for impact. but -- if was FY'XX take been, it could it that's pull we got so our for to Yeah, You've million a would know this net what add and wanted what $XXX you have

I understand.

have look, come on exactly standpoint. Ric, are think And out -- aspect it's other the working I with we'll for of this from as that Mac, a how remediation to we said XXXX, to they that we continue customer, them partnership Jana what close with be a

we back, we don't anticipate have but coming a timeline it. business would So on

Understand. Thank much. you very

in of support. are we try out that's steps terms to next partner partnership. lead respect their been follow what an that we're are And here going and for of in They've not and excellent business them, to we estimate will because their and

Understand. Thank very you. you Thank much.

Thank you.

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