Kimball International second-quarter earnings statement

Kimball International, Inc. announced results for the quarter ended December 31, 2019.

Second Quarter FY 2020

• Net sales decreased 4% as expected due to both the Kimball brand realignment plan and lapping strong comps
• Orders increased 13% driven by growth in all verticals
• Operating income margin of 7.4%, or 8.6% on an adjusted basis, increased 220 basis points driven by a 170 basis points improvement in gross margin and a 50 basis point reduction in adjusted selling and administrative expenses
• Transformation savings of $7.1 million realized during the quarter, exceeded expectations
• Net income of $11.0 million, increased 17%
• Adjusted EBITDA of $20.9 million, increased 23%, and adjusted EBITDA margin of 10.9%, increased 240 basis points
• Diluted EPS of $0.30, or $0.33 on an adjusted basis, an increase of 27% compared to $0.26 a year ago

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

Ms. Juster further stated that sales performance this quarter was in line with the company’s expectations but below the overall expected organic growth rate of 4 percent to 7 percent.

“I am very encouraged by our 13 percent order growth in the quarter across all verticals,” she said. “The increase in our order backlog positions us very well for a strong second half of our fiscal year.”