What changed in this filing

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Item 1. Financial Statements

2024-05-08 compared with 2024-02-06 · 186 added, 121 removed, 554 unchanged (36% of the section changed)

11 unchanged sentences

Prepaid expenses and other current assets 43,018 49,188

Assets held for sale 29,619 —

Total current assets 888,011 929,427

3 unchanged sentences

Other Intangible Assets, net of accumulated amortization of $ 27,303 and $ 38,785 , respectively

Other Assets, net

89,606 38,262

Other Assets 47,544 38,262

Total Assets $ 1,260,828 $ 1,259,719

5 unchanged sentences

Accrued expenses 59,621 72,515

Liabilities held for sale

Total current liabilities 437,881 475,148

23 unchanged sentences

KIMBALL ELECTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Amounts in Thousands, Except for Per Share Data)

Three Months Ended Six Months Ended

December 31 December 31

Three Months Ended Nine Months Ended

March 31 March 31

(Unaudited) 2024 2023 2024 2023

3 unchanged sentences

Selling and Administrative Expenses 16,861 17,752 50,736 50,204

Operating Income 16,610 17,489 36,100 31,060

Other General Income ( 892 ) — ( 892 ) —

Restructuring Expense 1,622 — 1,622 —

Goodwill Impairment 5,820 — 5,820 —

Asset Impairment 16,564 — 16,564 —

Operating Income (Loss)

( 6,431 ) 25,220 29,669 56,280

Other Income (Expense):

3 unchanged sentences

Other income (expense), net ( 6,322 ) ( 3,344 ) ( 17,935 ) ( 8,043 )

Income Before Taxes on Income 11,276 14,193 24,487 26,361

Provision for Income Taxes 2,986 3,473 5,443 6,132

Net Income $ 8,290 $ 10,720 $ 19,044 $ 20,229

Earnings Per Share of Common Stock:

Income (Loss) Before Taxes on Income ( 12,753 ) 21,876 11,734 48,237

Provision (Benefit) for Income Taxes

( 6,677 ) 5,476 ( 1,234 ) 11,608

Net Income (Loss) $ ( 6,076 ) $ 16,400 $ 12,968 $ 36,629

Earnings (Loss) Per Share of Common Stock:

Basic $ ( 0.24 ) $ 0.66 $ 0.52 $ 1.47

5 unchanged sentences

KIMBALL ELECTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in Thousands)

Three Months Ended Three Months Ended

December 31, 2023 December 31, 2022

March 31, 2024 March 31, 2023

(Unaudited) Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

Net income $ 8,290 $ 10,720

Net income (loss)

$ ( 6,076 ) $ 16,400

Other comprehensive income (loss):

6 unchanged sentences

Other comprehensive income (loss) $ ( 3,079 ) $ ( 344 ) $ ( 3,423 ) $ 4,166 $ ( 452 ) $ 3,714

Total comprehensive income $ 16,430 $ 22,917

Six Months Ended Six Months Ended

December 31, 2023 December 31, 2022

Total comprehensive income (loss)

$ ( 9,499 ) $ 20,114

Nine Months Ended Nine Months Ended

March 31, 2024 March 31, 2023

(Unaudited) Pre-tax Tax Net of Tax Pre-tax Tax Net of Tax

13 unchanged sentences

(Amounts in Thousands)

Six Months Ended

Nine Months Ended

(Unaudited) 2024 2023

1 unchanged sentence

Net income $ 12,968 $ 36,629

Adjustments to reconcile net income to net cash used for operating activities:

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

Depreciation and amortization 28,522 23,840

1 unchanged sentence

Deferred income taxes ( 14,149 ) ( 1,816 )

Goodwill impairment 5,820 —

Asset impairment 16,264 —

Stock-based compensation 5,435 5,357

8 unchanged sentences

Accrued expenses and taxes payable ( 11,526 ) 18,071

Net cash used for operating activities ( 17,922 ) ( 71,921 )

Net cash provided by (used for) operating activities 24,717 ( 57,885 )

Cash Flows From Investing Activities:

8 unchanged sentences

Payments related to tax withholding for stock-based compensation ( 1,479 ) ( 1,417 )

Debt issuance costs ( 150 ) ( 100 )

Net cash provided by financing activities 36,571 107,148

Effect of Exchange Rate Change on Cash and Cash Equivalents ( 113 ) ( 294 )

Net Decrease in Cash, Cash Equivalents, and Restricted Cash ( 3,060 ) ( 22,965 )

Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash 23,473 ( 17,528 )

Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (1)

10 unchanged sentences

The restricted cash included in Prepaid expenses and other current assets on the balance sheet represents funds held by the Company for a foreign subsidiary’s employee savings plan.

(Unaudited) December 31,

(Unaudited) March 31,

2024 June 30,

9 unchanged sentences

(Unaudited) Additional Paid-In Capital

Amounts at September 30, 2023 $ 314,255 $ 306,807 $ ( 17,781 ) $ ( 75,019 ) $ 528,262

Net income 8,290 8,290

Amounts at December 31, 2023 $ 316,309 $ 315,097 $ ( 9,641 ) $ ( 74,776 ) $ 546,989

Net income (loss)

( 6,076 ) ( 6,076 )

Other comprehensive income (loss) ( 3,423 ) ( 3,423 )

Issuance of non-restricted stock ( 18,000 shares)

Compensation expense related to stock compensation plans 1,658 1,658

1 unchanged sentence

( 139 ) 52 ( 87 )

Amounts at March 31, 2024 $ 317,828 $ 309,021 $ ( 13,064 ) $ ( 74,724 ) $ 539,061

Amounts at December 31, 2022 $ 312,085 $ 260,451 $ ( 14,892 ) $ ( 76,496 ) $ 481,148

Amounts at September 30, 2022 $ 310,271 $ 249,731 $ ( 27,089 ) $ ( 76,668 ) $ 456,245

Net income 16,400 16,400

2 unchanged sentences

Compensation expense related to stock compensation plans 1,921 1,921

Amounts at December 31, 2022 $ 312,085 $ 260,451 $ ( 14,892 ) $ ( 76,496 ) $ 481,148

Six Months Ended

Amounts at March 31, 2023 $ 314,008 $ 276,851 $ ( 11,178 ) $ ( 76,495 ) $ 503,186

Nine Months Ended

Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Share Owners’ Equity

7 unchanged sentences

( 3,027 ) 1,549 ( 1,478 )

Amounts at December 31, 2023 $ 316,309 $ 315,097 $ ( 9,641 ) $ ( 74,776 ) $ 546,989

Amounts at March 31, 2024 $ 317,828 $ 309,021 $ ( 13,064 ) $ ( 74,724 ) $ 539,061

Amounts at June 30, 2022 $ 311,090 $ 240,222 $ ( 19,672 ) $ ( 77,669 ) $ 453,971

5 unchanged sentences

( 2,417 ) 1,001 ( 1,416 )

Amounts at December 31, 2022 $ 312,085 $ 260,451 $ ( 14,892 ) $ ( 76,496 ) $ 481,148

Amounts at March 31, 2023 $ 314,008 $ 276,851 $ ( 11,178 ) $ ( 76,495 ) $ 503,186

See Notes to Condensed Consolidated Financial Statements .

11 unchanged sentences

Basis of Presentation:

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2023 and June 30, 2023, results of operations for the three and six months ended December 31, 2023 and 2022, cash flows for the six months ended December 31, 2023 and 2022, and share owners’ equity for the three and six months ended December 31, 2023 and 2022.

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of March 31, 2024 and June 30, 2023, results of operations for the three and nine months ended March 31, 2024 and 2023, cash flows for the nine months ended March 31, 2024 and 2023, and share owners’ equity for the three and nine months ended March 31, 2024 and 2023.

The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2023 and related notes thereto included in our Annual Report on Form 10-K.

20 unchanged sentences

The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset.

We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the

corresponding amount of revenue to recognize.

We generally recognize revenue over time using costs

based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the corresponding amount of revenue to recognize.

Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads.

21 unchanged sentences

We also have the ability to and have periodically utilized additional accounts receivable factoring arrangements to provide flexible access to cash as needed.

In the six months ended December 31, 2023 and 2022, we sold, without recourse, $ 198.9 million and $ 225.1 million of accounts receivable, respectively.

For the three months ended December 31, 2023 and 2022, factoring fees were $ 0.8 million and $ 1.5 million, and $ 1.7 million and $ 2.4 million during the six months ended December 31, 2023 and 2022, respectively.

In the nine months ended March 31, 2024 and 2023, we sold, without recourse, $ 317.0 million and $ 357.1 million of accounts receivable, respectively.

For the three months ended March 31, 2024 and 2023, factoring fees were $ 0.9 million and $ 1.4 million, and $ 2.6 million and $ 3.8 million during the nine months ended March 31, 2024 and 2023, respectively.

Factoring fees are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.

1 unchanged sentence

Although the customer is not in bankruptcy and we will continue to pursue full recovery, an allowance was deemed necessary in consideration of the expected timing of payments and risk of default.

The amount expected to be collected after twelve months is included in Other Assets on the Condensed Consolidated Balance Sheet.

At December 31, 2023, the noncurrent receivable associated with this customer in Other Assets totaled $ 2.9 million , which is net of the $ 2.0 million allowance for expected credit losses.

The current portion of receivables from this customer is $ 2.3 million at December 31, 2023.

The amount expected to be collected after twelve months is included in Other Assets, net on the Condensed Consolidated Balance Sheet.

At March 31, 2024, the noncurrent receivable associated with this customer in Other Assets, net totaled $ 2.5 million, which is net of the $ 2.0 million allowance for expected credit losses.

The current portion of receivables from this customer is $ 2.8 million at March 31, 2024.

Goodwill and Other Intangible Assets:

3 unchanged sentences

Other Intangible Assets consist of capitalized software, customer relationships, technology, and trade name, and are reviewed for impairment, and their remaining useful lives evaluated for revision, when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets.

As of December 31, 2023, the Company determined there have been no indicators of impairment for goodwill and other intangible assets.

See Note 11 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial statements for more information on Goodwill and Other Intangible Assets.

The Company leases certain office, manufacturing, and warehouse facilities and equipment under operating leases, in addition to land on which certain office and manufacturing facilities resides.

During the quarter ending March 31, 2024, the Company made the decision to divest of GES, our automation, test and measurement business unit and committed to a plan to sell the business.

As a result, the business unit met the criteria to be classified as held for sale, and goodwill and asset impairment were recorded during the quarter.

See Note 3 - Assets and Liabilities He ld for Sale for more information on goodwill and asset impairment and Note 12 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial Statements for more information on Goodwill and Other Intangible Assets.

The Company leases certain office facilities, warehouse facilities, and equipment under operating leases, in addition to land on which certain office and manufacturing facilities resides.

Operating lease costs and cash payments for operating leases are immaterial to the Condensed Consolidated Statements of Income and our Condensed Consolidated Statements of Cash Flows.

Lease right-of-use assets and lease liabilities each totaled $ 2.9 million at December 31, 2023 and $ 2.6 million at June 30, 2023, respectively.

Lease right-of-use assets are included in Other Assets and lease liabilities are included in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

Lease right-of-use assets and lease liabilities each totaled $ 1.9 million at March 31, 2024 and $ 2.6 million at June 30, 2023, respectively.

Lease right-of-use assets are included in Other Assets, net and lease liabilities are included in Accrued expenses and Other long-term liabilities on the Condensed Consolidated Balance Sheets.

Other General Income:

Other General Income in the three and nine months ended March 31, 2024 included $ 0.9 million of pre-tax income resulting from payments received related to class action lawsuits in which Kimball Electronics was a class member.

These lawsuits alleged that certain suppliers to the EMS industry conspired over a number of years to raise and fix the prices of electronic components, resulting in overcharges to purchasers of those components.

Restructuring:

We recorded restructuring expense of $ 1.6 million in the three and nine months ended March 31, 2024 for employee-related costs as we undertook restructuring efforts during the current quarter to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions.

We expect to continue executing the restructuring efforts over the remainder of the calendar year and estimate between $ 1.0 million and $ 2.0 million of additional pre-tax restructuring charges.

Non-operating Income (Expense), net:

2 unchanged sentences

Components of Non-operating income (expense), net:

Three Months Ended Six Months Ended

December 31 December 31

Three Months Ended Nine Months Ended

March 31 March 31

(Amounts in Thousands) 2024 2023 2024 2023

6 unchanged sentences

Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.

Deferred income tax assets and liabilities, recorded in Other Assets and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred income tax assets and liabilities, recorded in Other Assets, net and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

11 unchanged sentences

Tax Reform, in addition to other changes, required a one-time transition tax on certain unremitted earnings of foreign subsidiaries that is payable over an eight-year period.

As of December 31, 2023 and June 30, 2023, the remaining provision recorded for the one-time deemed repatriation tax was $ 5.9 million and $ 7.8 million, respectively, payable through fiscal year 2026, with the long-term portion recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets.

As of December 31, 2023, $ 2.6 million of the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheet.

As of March 31, 2024 and June 30, 2023, the remaining provision recorded for the one-time deemed repatriation tax was $ 5.9 million and $ 7.8 million, respectively, payable through fiscal year 2026, with the long-term portion recorded in Long-term income taxes payable on the Condensed Consolidated Balance Sheets.

As of March 31, 2024, $ 2.6 million of the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheets.

New Accounting Standards:

12 unchanged sentences

Prior year periods have been recast to conform to the current year presentation.

The following table disaggregates our revenue by end market vertical for the three and six months ended December 31, 2023 and 2022.

Three Months Ended Six Months Ended

December 31 December 31

The following table disaggregates our revenue by end market vertical for the three and nine months ended March 31, 2024 and 2023.

Three Months Ended Nine Months Ended

March 31 March 31

(Amounts in Millions) 2024 2023 2024 2023

1 unchanged sentence

Automotive (1)

Medical 108.1 125.6 210.5 241.6

$ 202.0 $ 221.9 $ 614.7 $ 615.3

113.0 135.5 323.5 377.1

Industrial (3)

110.0 127.3 346.2 334.9

Total net sales $ 425.0 $ 484.7 $ 1,284.4 $ 1,327.3

For the three months ended December 31, 2023 and 2022, approximately 95 % and 97 % of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date.

For both the six months ended December 31, 2023 and 2022, approximately 96 % of our net sales, respectively, were recognized over time.

(1) For the three and nine months ended March 31, 2023, respectively, $ 5.9 million and $ 14.8 million of the Automotive net sales were previously categorized as Other.

(2) For the three and nine months ended March 31, 2023, respectively, $ 1.5 million and $ 3.6 million of the Medical net sales were previously categorized as Other.

(3) For the three and nine months ended March 31, 2023, respectively, $ 0.4 million and $ 2.1 million of the Industrial net sales were previously categorized as Other .

For the three months ended March 31, 2024 and 2023, approximately 97 % and 96 % of our net sales, respectively, were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date.

For both the nine months ended March 31, 2024 and 2023, approximately 96 % of our net sales, respectively, were recognized over time.

The remaining sales revenues were recognized at a point in time when the customer obtained control of the products.

1 unchanged sentence

Contract assets on the Condensed Consolidated Balance Sheets relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle.

Contract assets were $ 81.9 million and $ 78.8 million as of December 31, 2023 and June 30, 2023, respectively.

Contract assets were $ 76.1 million and $ 78.8 million as of March 31, 2024 and June 30, 2023, respectively.

The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs.

These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets , which amounted to $ 56.9 million and $ 45.6 million as of December 31, 2023 and June 30, 2023, respectively.

These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets , which amounted to $ 49.6 million and $ 45.6 million as of March 31, 2024 and June 30, 2023, respectively.

Our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months.

We also have deposits associated with inventory purchases classified as long term.

See Note 4 - Inventories of Notes to Condensed Consolidated Financial Statements for further discussion.

Assets and Liabilities Held for Sale

In the third quarter of fiscal year 2024, the Company made the decision to divest of GES, our automation, test and measurement business unit (“disposal group”), and committed to a plan to sell the business, allowing for increased focus and support for the Company’s EMS operations.

As a result, the disposal group business has met the criteria to be classified as held for sale.

Accordingly, the Company classified the assets and liabilities of the disposal group as held for sale during the third quarter of fiscal year 2024.

The Company expects a sale of the disposal group to occur within the next 12 months.

The disposal group did not qualify as discontinued operations as it did not represent a strategic shift that will have a major effect on our operations and financial results.

Once the disposal group was classified as held for sale, it was reported at the lower of its carrying value or fair value less costs to sell during the quarter ended March 31, 2024.

The carrying value exceeded the fair value less costs to sell, and the Company recognized impairment charges of $ 5.8 million and $ 16.6 million on goodwill and assets held for sale, respectively.

The Company ceased recording depreciation and amortization on the applicable assets of the disposal group.

We assess goodwill for impairment at the reporting unit level annually or when conditions indicate an earlier review is necessary.

In connection with the preparation of our financial statements for the quarter ended March 31, 2024, we completed an impairment analysis for the goodwill recorded in the reporting unit due to the more-likely-than-not expectation of selling the reporting unit.

We determined the reporting unit’s carrying value was more than its fair value by an amount greater than the $ 5.8 million carrying amount of goodwill and thus was fully impaired.

See Note 12 - Goodwill and Other Intangible Assets of Notes to Condensed Consolidated Financial Statements for more information on Goodwill.

The major classes of assets and liabilities held for sale consisted of the following:

(Amounts in Thousands) March 31,

Assets held for sale:

Receivables, net $ 8,599

Inventories 7,217

Prepaid expenses and other current assets 4,766

Property and Equipment, net 5,822

Other Intangible Assets, net 8,010

Other Assets, net

Valuation Allowance ( 16,264 )

Total Assets held for sale $ 29,619

Liabilities held for sale:

Accounts payable $ 4,239

Advances from customers 944

Accrued expenses 2,302

Other long-term liabilities 1,884

Total Liabilities held for sale $ 9,369

Other assets, net in the table above includes $ 10.2 million of deferred tax assets.

The following table summarizes net sales and income (loss) before taxes on income for the disposal group:

Three Months Ended Nine Months Ended

March 31 March 31

(Amounts in Thousands) 2024 2023 2024 2023

Net Sales $ 8,105 $ 16,755 $ 30,903 $ 40,577

Income (Loss) Before Taxes on Income (1)

$ ( 25,691 ) $ 1,352 $ ( 25,141 ) $ ( 976 )

(1) Includes goodwill impairment of $ 5.8 million and asset impairment of $ 16.6 million for the three and nine months ended March 31, 2024.

Also includes allocated corporate overhead expenses.

Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value.

Inventory components were as follows:

(Amounts in Thousands) December 31, 2023 June 30, 2023

(Amounts in Thousands) March 31, 2024 June 30, 2023

Finished products $ 391 $ 432

2 unchanged sentences

Total inventory $ 396,199 $ 450,319

Additionally, we have raw materials inventory totaling $ 44.1 million classified as long-term included in Other Assets, net in our Condensed Consolidated Balance Sheets.

This inventory is associated with a customer who is remediating a recall and we do not expect the inventory to be consumed within the next twelve months.

We have received deposits totaling $ 29.1 million from this customer related to this inventory, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

At June 30, 2023, we had no inventory or customer deposits classified as long-term.

Accumulated Other Comprehensive Income (Loss)

During the six months ended December 31, 2023 and 2022, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

During the nine months ended March 31, 2024 and 2023, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

Accumulated Other Comprehensive Income (Loss)

6 unchanged sentences

Net current-period other comprehensive income (loss) ( 1,617 ) 30 ( 431 ) ( 2,018 )

Balance at December 31, 2023

Balance at March 31, 2024

$ ( 13,449 ) $ 1,398 $ ( 1,013 ) $ ( 13,064 )

4 unchanged sentences

Net current-period other comprehensive income (loss) 5,427 3,350 ( 283 ) 8,494

Balance at December 31, 2022

Balance at March 31, 2023

$ ( 11,922 ) $ 1,147 $ ( 403 ) $ ( 11,178 )

The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:

Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Six Months Ended Affected Line Item in the Condensed Consolidated Statements of Income

December 31 December 31

Reclassifications from Accumulated Other Comprehensive Income (Loss) Three Months Ended Nine Months Ended Affected Line Item in the Condensed Consolidated Statements of Income

March 31 March 31

(Amounts in Thousands) 2024 2023 2024 2023

17 unchanged sentences

Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known.

This product warranty liability and expense were immaterial during the six months ended December 31, 2023 and 2022.

This product warranty liability and expense were immaterial during the nine months ended March 31, 2024 and 2023.

Credit Facilities

1 unchanged sentence

Borrowing Capacity at Borrowings Outstanding at Borrowings Outstanding at

(Amounts in Millions, in U.S Dollar Equivalents) December 31, 2023 December 31, 2023 June 30, 2023

(Amounts in Millions, in U.S Dollar Equivalents) March 31, 2024 March 31, 2024 June 30, 2023

Primary credit facility (1)

31 unchanged sentences

• an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.

The Company had $ 0.4 million in letters of credit contingently committed against the credit facility at both December 31, 2023 and June 30, 2023.

(2) The Company entered into a 364-day multi-currency revolving credit facility agreement on February 3, 2023 (the “secondary credit facility”), which allows for borrowings up to $ 50 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent.

The secondary credit facility has a maturity date of February 2, 2024.

The Company had $ 0.4 million in letters of credit contingently committed against the credit facility at both March 31, 2024 and June 30, 2023.

(2) The Company amended its 364-day multi-currency revolving credit facility agreement on January 5, 2024 (the “secondary credit facility”), which allows for borrowings up to $ 100.0 million, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent.

The secondary credit facility has a maturity date of January 3, 2025.

The proceeds of the loans are to be used for working capital and general corporate purposes of the Company.

17 unchanged sentences

The primary credit facility matures on May 4, 2027.

The weighted-average interest rate on borrowings outstanding under the credit facilities at December 31, 2023 and June 30, 2023 were 7.1 % and 6.8 %, respectively.

Subsequent to December 31, 2023, the Company amended its secondary credit facility on January 5, 2024 to increase the borrowing limit to $ 100 million from $ 50 million and change the maturity date to January 3, 2025.

See Note 14 - Subsequent Event of Notes to Consolidated Financial Statements for further information.

The weighted-average interest rate on borrowings outstanding under the credit facilities at March 31, 2024 and June 30, 2023 were 6.9 % and 6.8 %, respectively.

The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities.

5 unchanged sentences

Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no changes in the inputs or valuation techniques used to measure fair values during the six months ended December 31, 2023.

There were no changes in the inputs or valuation techniques used to measure fair values during the nine months ended March 31, 2024.

For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2023.

Recurring Fair Value Measurements:

As of December 31, 2023 and June 30, 2023, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:

December 31, 2023

As of March 31, 2024 and June 30, 2023, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:

March 31, 2024

(Amounts in Thousands) Level 1 Level 2 Total

13 unchanged sentences

Total liabilities at fair value $ — $ 1,245 $ 1,245

We had no level 3 assets or liabilities at December 31, 2023 and June 30, 2023, or any activity in Level 3 assets or liabilities during the six months ended December 31, 2023.

We had no level 3 assets or liabilities at March 31, 2024 and June 30, 2023, or any activity in Level 3 assets or liabilities during the nine months ended March 31, 2024.

The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund.

1 unchanged sentence

See Note 10 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements for further information regarding the SERP.

Non-Recurring Fair Value Measurements:

As of March 31, 2024, the automation, test and measurement business unit met the criteria to be classified as held for sale, and as a result, a valuation allowance of $ 16.3 million was established to reflect the fair value less cost to sell of the disposal group, which was based on expected proceeds and the estimated carrying value of the net assets to be disposed.

We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value.

See Note 3 - Assets and Liabilities Held for Sale of Notes to Condensed Consolidated Financial Statements for additional information.

Financial Instruments Not Carried At Fair Value:

Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities.

There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the six months ended December 31, 2023.

There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the nine months ended March 31, 2024.

For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2023.

9 unchanged sentences

Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies.

As of December 31, 2023, we had outstanding foreign exchange contracts to hedge currencies against the U.S.

As of March 31, 2024, we had outstanding foreign exchange contracts to hedge currencies against the U.S.

dollar in the aggregate notional amount of $ 25.6 million and to hedge currencies against the Euro in the aggregate notional amount of 67.2 million Euro.

6 unchanged sentences

The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.

Based on fair values as of December 31, 2023, we estimate that approximately $ 3.0 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months.

Based on fair values as of March 31, 2024, we estimate that approximately $ 3.5 million of pre-tax derivative gain deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months.

Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings.

Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk.

The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both December 31, 2023 and June 30, 2023.

The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both March 31, 2024 and June 30, 2023.

See Note 8 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 5 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses.

3 unchanged sentences

Fair Value As of Fair Value As of

(Amounts in Thousands) Balance Sheet Location December 31,

(Amounts in Thousands) Balance Sheet Location March 31,

2024 June 30,

2023 Balance Sheet Location December 31,

2023 Balance Sheet Location March 31,

2024 June 30,

5 unchanged sentences

The Effect of Derivative Instruments on Other Comprehensive Income (Loss)

Three Months Ended Six Months Ended

December 31 December 31

Three Months Ended Nine Months Ended

March 31 March 31

(Amounts in Thousands) 2024 2023 2024 2023

2 unchanged sentences

The Effect of Derivative Instruments on Condensed Consolidated Statements of Income

Three Months Ended Six Months Ended

(Amounts in Thousands) December 31 December 31

Three Months Ended Nine Months Ended

(Amounts in Thousands) March 31 March 31

Derivatives in Cash Flow Hedging Relationships Location of Gain or (Loss) 2024 2023 2024 2023

10 unchanged sentences

The Company also provides a discretionary contribution determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors.

Total expense related to employer contributions to the domestic retirement plans was, in millions, $ 3.1 million and $ 2.8 million for the six months ended December 31, 2023 and December 31, 2022, respectively.

Total expense related to employer contributions to the domestic retirement plans was, in millions, $ 3.7 million and $ 4.2 million for the nine months ended March 31, 2024 and March 31, 2023, respectively.

The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits.

2 unchanged sentences

A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants.

As of December 31, 2023, both total investments and obligations under SERP were $ 5.2 million, of which $ 0.2 million were short term and $ 5.0 million were long term.

As of March 31, 2024, both total investments and obligations under SERP were $ 5.4 million, of which $ 0.3 million were short term and $ 5.1 million were long term.

As of June 30, 2023, both total investments and obligations under SERP were $ 8.7 million, of which $ 2.7 million were short term and $ 6.0 million were long term.

The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on

our Condensed Consolidated Statements of Income.

The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income.

Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets.

The change in net unrealized holding gains for both the six months ended December 31, 2023 and 2022 was approximately $ 0.1 million and $( 0.2 ) million, respectively.

The change in net unrealized holding gains for both the nine months ended March 31, 2024 and 2023 was approximately $ 0.4 million and $ 0.1 million, respectively.

Defined Benefit Postemployment Plan:

3 unchanged sentences

Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment.

As of December 31, 2023, total obligations under these plans were $ 7.4 million of which $ 6.5 million were long term and $ 0.9 million were short term.

As of March 31, 2024, total obligations under these plans were $ 7.4 million of which $ 5.7 million were long term and $ 1.7 million were short term.

As of June 30, 2023, total obligations under these plans were $ 6.6 million of which $ 5.6 million were long term and $ 1.0 million were short term.

Net periodic benefit costs were not material for the six months ended December 31, 2023 and 2022.

Net periodic benefit costs were not material for the nine months ended March 31, 2024 and 2023.

Stock Compensation Plans

13 unchanged sentences

For more information on the 2023 Plan, refer to our Notice of 2023 Annual Meeting and Proxy Statement.

During the first six months of fiscal year 2024, the following stock compensation was granted under the 2014 Plan, the 2023 Plan, and the Deferral Plan.

During the first nine months of fiscal year 2024, the following stock compensation was granted under the 2014 Plan, the 2023 Plan, and the Deferral Plan.

Stock Compensation Granted Quarter Granted Shares/Units Grant Date Fair Value (2)

15 unchanged sentences

Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s growth based on a comparison of its three-year compounded annual growth rate (“CAGR”) with the Electronics Manufacturing Services Industry’s three-year CAGR.

The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100 % of one or both of the above-

mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric.

The number of shares issued will be less than the targeted shares issuable if the Company does not reach 100 % of one or both of the above-mentioned performance metrics, and could be zero if the Company does not reach the required minimum thresholds of either metric.

The number of shares issued will exceed the number of targeted shares issuable (up to a maximum of 125 %) if the Company exceeds 100 % of one or both of the above-mentioned incentive metrics.

15 unchanged sentences

Goodwill and Other Intangible Assets

A summary of goodwill is as follows:

(Amounts in Thousands) December 31,

2023 June 30,

A summary of goodwill is as follows, amounts as of March 31, 2024 exclude the amounts classified as held for sale:

(Amounts in Thousands)

Balance as of June 30, 2023

Goodwill $ 32,762

1 unchanged sentence

Goodwill, net $ 12,011

A summary of other intangible assets subject to amortization is as follows:

December 31, 2023 June 30, 2023

Impairment recorded

Goodwill classified as held for sale

Accumulated impairment classified as held for sale

Balance as of March 31, 2024

Goodwill 19,017

Accumulated impairment ( 12,826 )

Goodwill, net $ 6,191

A summary of other intangible assets subject to amortization is as follows, amounts as of March 31, 2024 exclude the amounts classified as held for sale:

March 31, 2024 June 30, 2023

(Amounts in Thousands) Cost Accumulated

6 unchanged sentences

Other Intangible Assets $ 30,500 $ ( 27,303 ) $ 3,197 $ 51,120 $ ( 38,785 ) $ 12,335

For the three months ended December 31, 2023 and 2022, amortization expense of other intangible assets was $ 0.6 million and $ 0.8 million, respectively.

For the six months ended December 31, 2023 and 2022, amortization expense of other intangible assets was $ 1.5 million and $ 1.7 million, respectively.

For the three months ended March 31, 2024 and 2023, amortization expense of other intangible assets was $ 0.5 million and $ 0.9 million, respectively.

For the nine months ended March 31, 2024 and 2023, amortization expense of other intangible assets was $ 2.0 million and $ 2.6 million, respectively.

The estimated useful life of internal-use software ranges from 3 years to 10 years.

The amortization period for the customer relationships, technology, and trade name intangible assets is 15 years, 5 years, and 10 years, respectively.

The amortization period for the customer relationships, technology, and trade name intangible assets was 15 years, 5 years, and 10 years, respectively.

We ceased amortization on the intangible assets upon meeting the held for sale classification.

See Note 3 - Assets and Liabilities Held for Sale of Notes to Condensed Consolidated Financial Statements for additional information.

We have no intangible assets with indefinite useful lives which are not subject to amortization.

3 unchanged sentences

The Repurchase Plan has no expiration date but may be suspended or discontinued at any time.

During both the six months ended December 31, 2023 and 2022, the Company had no share repurchases under the Repurchase Plan.

During both the nine months ended March 31, 2024 and 2023, the Company had no share repurchases under the Repurchase Plan.

Since the inception of the Repurchase Plan, the Company has repurchased $ 88.8 million of common stock at an average cost of $ 15.27 per share.

1 unchanged sentence

Basic and diluted earnings per share were calculated as follows under the two-class method:

Three Months Ended Six Months Ended

December 31 December 31

Three Months Ended Nine Months Ended

March 31 March 31

(Amounts in thousands, except per share data) 2024 2023 2024 2023

9 unchanged sentences

Diluted $ ( 0.24 ) $ 0.65 $ 0.51 $ 1.46

Subsequent Event

On January 5, 2024 , we amended our 364-day multi-currency revolving credit facility agreement (the “secondary credit facility”), dated as of February 3, 2023, among the Company, as borrower, certain subsidiaries of the Company as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., as Documentation Agent.

The amendment to the secondary credit facility increases the borrowing limit to $ 100.0 million from $ 50.0 million and changes the maturity date from February 2, 2024 to January 3, 2025.

The following terms and conditions remain unchanged under the amended secondary credit facility dated as of January 5, 2024 when compared to the agreement dated as of February 3, 2023:

• The proceeds of the loans are to be used for working capital and general corporate purposes of the Company.

• A commitment fee on the unused portion of principal amount of this secondary credit facility is payable at 30.0 basis points per annum.

• The interest rate on borrowings is dependent on the type of borrowings and will be one of the following options:

• any Term Benchmark borrowing denominated in U.S.

Dollars will utilize the Secured Overnight Financing Rate (“SOFR”), which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;

• any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus a Revolving Commitment Term Benchmark spread of 175.0 basis points;

• the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of

◦ Prime Rate in the U.S.

last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;

◦ 1/2 of 1% per annum above the Federal Funds Effective Rate (as defined under the primary credit facility);

◦ 1 % per annum above the Adjusted SOFR Rate (as defined under the primary credit facility);

plus a Revolving Commitment ABR spread of 75.0 basis points.

• The Company’s financial covenants under this secondary credit facility are the same as the financial covenants for its primary credit facility.

See Note 6 - Credit Facilities of Notes to Condensed Consolidated Financial Statements for further information on the financial covenants.

For the three months ended March 31, 2024, all 434,000 outstanding stock compensation awards were antidilutive, as a result of the net loss recognized for the period, and were excluded from the dilutive calculation.

The net loss in the three months ended March 31, 2024 was not allocated to participating securities as the holders have no requirements to fund losses.

For the nine months ended March 31, 2024 and for the three and nine months ended March 31, 2023, all outstanding stock compensation awards were dilutive and were included in the dilutive calculation.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements