What changed in this filing

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Item 1. Financial Statements

2025-02-06 compared with 2024-11-06 · 198 added, 115 removed, 490 unchanged (39% of the section changed)

3 unchanged sentences

(Amounts in Thousands, Except for Share Data)

September 30,

2024 June 30,

17 unchanged sentences

Current Liabilities:

Current portion of borrowings under credit facilities $ 45,915 $ 59,837

Current portion of long-term debt $ 24,900 $ 59,837

Accounts payable 204,690 213,551

4 unchanged sentences

Other Liabilities:

Long-term debt under credit facilities, less current portion 200,000 235,000

Long-term debt, less current portion 179,601 235,000

Long-term income taxes payable — 3,255

22 unchanged sentences

(Amounts in Thousands, Except for Per Share Data)

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Unaudited) 2024 2023 2024 2023

26 unchanged sentences

Three Months Ended Three Months Ended

September 30, 2024 September 30, 2023

December 31, 2024 December 31, 2023

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

9 unchanged sentences

Total comprehensive income $ ( 8,182 ) $ 16,430

Six Months Ended Six Months Ended

December 31, 2024 December 31, 2023

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

Net income $ 6,586 $ 19,044

Other comprehensive income (loss):

Foreign currency translation adjustments $ ( 5,139 ) $ — $ ( 5,139 ) $ 2,254 $ — $ 2,254

Postemployment actuarial change 443 ( 138 ) 305 ( 608 ) 179 ( 429 )

Derivative gain (loss) ( 2,569 ) 686 ( 1,883 ) 3,971 ( 882 ) 3,089

Reclassification to (earnings) loss:

Derivatives 1,418 ( 374 ) 1,044 ( 4,492 ) 995 ( 3,497 )

Amortization of actuarial change 127 ( 30 ) 97 ( 16 ) 4 ( 12 )

Other comprehensive income (loss) $ ( 5,720 ) $ 144 $ ( 5,576 ) $ 1,109 $ 296 $ 1,405

Total comprehensive income $ 1,010 $ 20,449

See Notes to Condensed Consolidated Financial Statements .

2 unchanged sentences

(Amounts in Thousands)

Three Months Ended

Six Months Ended

(Unaudited) 2024 2023

1 unchanged sentence

Net income $ 6,586 $ 19,044

Adjustments to reconcile net income to net cash provided by operating activities:

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

Depreciation and amortization 18,261 18,067

Gain on sales of assets

( 126 ) ( 10 )

(Gain) loss on sales of assets 8 ( 71 )

Deferred income taxes ( 100 ) ( 3,113 )

10 unchanged sentences

Accrued expenses and taxes payable ( 27,081 ) ( 9,255 )

Net cash provided by operating activities 45,474 12,801

Net cash provided by (used for) operating activities 74,932 ( 17,922 )

Cash Flows From Investing Activities:

4 unchanged sentences

Other, net 37 ( 8 )

Net cash provided by (used for) investing activities 5,226 ( 11,302 )

Net cash used for investing activities ( 1,214 ) ( 24,365 )

Cash Flows From Financing Activities:

Proceeds from credit facilities 100,000 —

Payments on credit facilities ( 180,000 ) —

2 unchanged sentences

Payments related to tax withholding for stock-based compensation ( 937 ) ( 1,391 )

Debt issuance costs ( 454 ) —

Net cash (used for) provided by financing activities ( 97,255 ) 38,859

Effect of Exchange Rate Change on Cash and Cash Equivalents ( 722 ) 368

Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash ( 424 ) 14,935

Net Decrease in Cash, Cash Equivalents, and Restricted Cash ( 24,259 ) ( 3,060 )

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) September 30,

(Unaudited) December 31,

2024 June 30,

9 unchanged sentences

(Unaudited) Additional Paid-In Capital

Amounts at June 30, 2024 $ 319,463 $ 316,564 $ ( 17,807 ) $ ( 77,759 ) $ 540,461

Amounts at September 30, 2024 $ 319,175 $ 319,718 $ ( 11,769 ) $ ( 79,366 ) $ 547,758

Other comprehensive income (loss) ( 11,614 ) ( 11,614 )

Issuance of non-restricted stock ( 26,000 shares)

Compensation expense related to stock compensation plans 379 379

Performance and restricted share issuance ( 83,000 and 22,000 shares, respectively)

( 2,246 ) 1,285 ( 961 )

Charitable donation of common stock ( 2,000 shares)

Repurchase of common stock ( 156,000 shares) (including excise tax)

( 3,009 ) ( 3,009 )

Amounts at December 31, 2024 $ 319,744 $ 323,150 $ ( 23,383 ) $ ( 82,035 ) $ 537,476

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

Amounts at June 30, 2023 $ 315,482 $ 296,053 $ ( 11,046 ) $ ( 76,495 ) $ 523,994

Net income 8,290 8,290

Other comprehensive income (loss) 8,140 8,140

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

Compensation expense related to stock compensation plans 1,867 1,867

1 unchanged sentence

( 48 ) 21 ( 27 )

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

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

Six Months Ended

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

(Unaudited) Additional Paid-In Capital

Amounts at June 30, 2024 $ 319,463 $ 316,564 $ ( 17,807 ) $ ( 77,759 ) $ 540,461

Net income 6,586 6,586

Other comprehensive income (loss) ( 5,576 ) ( 5,576 )

Issuance of non-restricted stock ( 26,000 shares)

Compensation expense related to stock compensation plans 2,337 2,337

Performance and restricted share issuance ( 83,000 and 22,000 shares)

( 2,246 ) 1,285 ( 961 )

Charitable donation of common stock ( 2,000 shares)

Repurchase of common stock ( 315,000 shares)

( 5,901 ) ( 5,901 )

Amounts at December 31, 2024 $ 319,744 $ 323,150 $ ( 23,383 ) $ ( 82,035 ) $ 537,476

Amounts at June 30, 2023 $ 315,482 $ 296,053 $ ( 11,046 ) $ ( 76,495 ) $ 523,994

Net income 19,044 19,044

Other comprehensive income (loss) 1,405 1,405

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

Compensation expense related to stock compensation plans 3,480 3,480

Performance and restricted share issuance ( 108,000 and 15,000 shares)

( 2,888 ) 1,497 ( 1,391 )

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

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 September 30, 2024 and June 30, 2024, results of operations for the three months ended September 30, 2024 and 2023, cash flows for the three months ended September 30, 2024 and 2023, and share owners’ equity for the three months ended September 30, 2024 and 2023.

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of December 31, 2024 and June 30, 2024, results of operations for the three and six months ended December 31, 2024 and 2023, cash flows for the six months ended December 31, 2024 and 2023, and share owners’ equity for the three and six months ended December 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, 2024 and related notes thereto included in our Annual Report on Form 10-K.

38 unchanged sentences

Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables.

In the three months ended September 30, 2024 and 2023, we sold, without recourse, $ 87.3 million and $ 103.0 million of accounts receivable, respectively.

For the three months ended September 30, 2024 and 2023, factoring fees were $ 0.5 million and $ 0.9 million.

Factoring fees are recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income for the three months ended September 30, 2024.

In the six months ended December 31, 2024 and 2023, we sold, without recourse, $ 169.0 million and $ 198.9 million of accounts receivable, respectively.

For the three months ended December 31, 2024 and 2023, factoring fees were $ 0.5 million and $ 0.8 million, and $ 1.1 million and $ 1.7 million during the six months ended December 31, 2024 and 2023, respectively.

Factoring fees are recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income for the three and six months ended December 31, 2024.

Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses.

2 unchanged sentences

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

At September 30, 2024, the noncurrent receivable associated with this customer in Other Assets, net totaled $ 2.7 million, which is net of the $ 2.0 million allowance for expected credit losses.

The current portion of receivables from this customer is $ 2.2 million at September 30, 2024.

At December 31, 2024, the noncurrent receivable associated with this customer in Other Assets, net of allowance for expected credit losses, totaled $ 2.7 million.

The current portion of receivables from this customer is $ 2.6 million at December 31, 2024.

Non-operating Income (Expense), net:

3 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2024 2023 2024 2023

22 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 September 30, 2024 and June 30, 2024, the remaining provision recorded for the one-time deemed repatriation tax was $ 3.3 million and $ 5.9 million, respectively, payable through fiscal year 2026.

As of September 30, 2024, the remaining deemed repatriation tax is short term and is recorded in Accrued expenses on the Condensed Consolidated Balance Sheets.

As of December 31, 2024 and June 30, 2024, the remaining provision recorded for the one-time deemed repatriation tax was $ 3.3 million and $ 5.9 million, respectively, payable through fiscal year 2026.

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

With the expected capital gains generated from the sale of the Tampa property, a portion of our deferred tax asset allowances from past capital losses are now expected to be realized, and in the second quarter of fiscal year 2025, we reversed $ 2.4 million of these allowances, reducing our income tax expense.

New Accounting Standards:

Not Yet Adopted:

In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment.

In November 2024, the Financial Accounting Standards Board FASB issued guidance on Expense Disaggregation Disclosures, requiring more disclosure about the types of expenses presented in our expense captions.

The guidance is effective for fiscal years beginning after December 15, 2026 and for interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted, and the guidance can be applied prospectively or retrospectively.

We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

In November 2023, the FASB issued guidance on Improvements to Reportable Segment Disclosures, requiring additional, more detailed information about a reportable segment.

The guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024.

3 unchanged sentences

The guidance is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Early adoption is permitted, and the guidance is to be adopted prospectively with the option to adopt retrospectively.

We are currently evaluating the impact of the adoption of this guidance on our consolidated financial statements.

1 unchanged sentence

Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical devices, medical disposables, and precision molded plastics in automotive, medical, and industrial applications, to the specifications and designs of our customers.

The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2024 and 2023.

Three Months Ended

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

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Millions) 2024 2023 2024 2023

1 unchanged sentence

$ 192.8 $ 200.2 $ 381.1 $ 412.7

84.0 108.1 173.8 210.5

80.6 112.9 176.7 236.1

Total net sales $ 357.4 $ 421.2 $ 731.6 $ 859.3

For both the three months ended September 30, 2024 and 2023, approximately 97 % of our net sales 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 the three months ended December 31, 2024 and 2023, approximately 99 % and 95 % of our net sales 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 the six months ended December 31, 2024 and 2023, approximately 98 % and 96 % of our net sales 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 $ 74.3 million and $ 76.3 million as of September 30, 2024 and June 30, 2024, respectively.

Contract assets were $ 82.0 million and $ 76.3 million as of December 31, 2024 and June 30, 2024, 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 $ 42.3 million and $ 43.1 million as of September 30, 2024 and June 30, 2024, 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 $ 50.8 million and $ 43.1 million as of December 31, 2024 and June 30, 2024, respectively.

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

5 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2024 2023 2024 2023

2 unchanged sentences

$ — $ 1,146 $ 985 $ 551

(1) Includes gain on sale of $ 1.3 million for the three months ended September 30, 2024.

(1) Includes gain on sale of $ 1.3 million for the six months ended December 31, 2024.

Each period also includes allocated corporate overhead expenses.

Restructuring and Subsequent Event

In the three months ended September 30, 2024, we continued our restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions, and recorded restructuring expense of $ 2.3 million which were primarily employee-related costs.

The cumulative amount incurred since inception of these efforts beginning in fiscal year 2024 through September 30, 2024 was $ 4.7 million.

Restructuring Activities

In the three and six months ended December 31, 2024, we continued our restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions, and recorded restructuring expense of $ 1.7 million and $ 4.0 million, respectively, which were primarily employee-related costs.

The cumulative amount incurred since inception of these efforts beginning in fiscal year 2024 through December 31, 2024 was $ 6.4 million.

We expect to continue executing these previously announced restructuring efforts over the remainder of the fiscal year and estimate between $ 0.5 million and $ 1.0 million of additional pre-tax restructuring charges.

In addition, on November 4, 2024 , the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility, expected to be completed by the end of the fiscal year.

The decision was another important step towards sharpening our strategic focus, while leveraging our global footprint and streamlining the operating structure.

Additionally, on November 4, 2024, the Company announced that its Board of Directors has approved a plan to cease operations at our Tampa facility (“Tampa Closure Plan”), expected to be substantially completed by the end of the fiscal year.

The decision was made to leverage capacity within our global footprint and streamlining the operating structure.

We expect to incur approximately $ 6.5 million to $ 8.5 million in total exit costs, including most significantly $ 4.0 million to $ 5.0 million in employee termination benefits and $ 2.5 million to $ 3.5 million in logistical costs to transfer and validate programs at our other facilities.

We expect these costs to be predominantly cash expenditures, and a majority are anticipated to be incurred over the remainder of fiscal year 2025.

As the commitment to this disposal plan occurred subsequent to September 30, 2024, no charges have been incurred or recorded in the quarter.

For the three and six months ended December 31, 2024, we recorded restructuring expense of $ 3.0 million for the Tampa Closure Plan.

Accrued restructuring is recorded in Accrued expenses in the Condensed Consolidated Balance Sheet.

The changes in the Company’s accrued restructuring costs under the Tampa Closure Plan were as follows:

(Amounts in Thousands) Severance and Termination Benefits Other Exit Costs Total

Balance at June 30, 2024

Restructuring charges 2,726 264 2,990

Payments ( 93 ) ( 264 ) ( 357 )

Non-cash activity — — —

Balance at December 31, 2024

$ 2,633 $ — $ 2,633

Once Tampa’s operations have ceased, we expect to sell the building and land, with the proceeds from the sale anticipated to exceed the exit costs.

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) September 30, 2024 June 30, 2024

(Amounts in Thousands) December 31, 2024 June 30, 2024

Finished products $ 222 $ 141

2 unchanged sentences

Total inventory $ 306,242 $ 338,116

Additionally, as of September 30 and June 30, 2024, we have raw materials inventory totaling $ 43.1 million and $ 42.8 million, respectively, 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.

As of September 30 and June 30, 2024, we have received deposits totaling $ 42.0 million and $ 38.7 million, respectively, from this customer related to this inventory, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

Additionally, as of December 31 and June 30, 2024, we have raw materials inventory totaling $ 44.3 million and $ 42.8 million, respectively, classified as long-term included in Other Assets, net in our Condensed Consolidated Balance Sheets.

A majority of 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.

As of December 31 and June 30, 2024, we have received deposits from this customer for this long-term inventory totaling $ 30.7 million and $ 38.7 million, respectively, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

The remaining inventory classified as long term is primarily related to other excess raw materials inventory we do not expect to consume or sell within twelve months.

For a majority of these, we have arrangements with our customers to pay us carrying costs.

Accumulated Other Comprehensive Income (Loss)

During the three months ended September 30, 2024 and 2023, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

During the six months ended December 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) ( 5,139 ) ( 839 ) 402 ( 5,576 )

Balance at September 30, 2024

Balance at December 31, 2024

$ ( 19,399 ) $ ( 3,234 ) $ ( 750 ) $ ( 23,383 )

4 unchanged sentences

Net current-period other comprehensive income (loss) 2,254 ( 408 ) ( 441 ) 1,405

Balance at September 30, 2023

Balance at December 31, 2023

$ ( 9,578 ) $ 960 $ ( 1,023 ) $ ( 9,641 )

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 Affected Line Item in 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

(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 three months ended September 30, 2024 and 2023.

This product warranty liability and expense were immaterial during the six months ended December 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) September 30, 2024 September 30, 2024 June 30, 2024

Primary credit facility (1)

(Amounts in Millions, in U.S.

Dollar Equivalents) December 31, 2024 December 31, 2024 June 30, 2024

Primary credit facility, revolving (1)

$ 194.6 $ 105.0 $ 285.5

Primary credit facility, term (1)

Secondary credit facility (2)

4 unchanged sentences

Total credit facilities $ 226.4 $ 205.0 $ 294.8

Unamortized deferred debt financing fees $ ( 0.5 ) $ —

Total long-term debt $ 204.5 $ 294.8

current portion $ ( 24.9 ) $ ( 59.8 )

1 unchanged sentence

$ 179.6 $ 235.0

(1) The Company maintains a U.S.

primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.

A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent, scheduled to mature May 4, 2027.

The primary credit facility provides for $ 300 million in borrowings, with an option to increase the amount available for borrowing to $ 450 million upon request, subject to the consent of each lender participating in such increase.

This facility is maintained for working capital and general corporate purposes of the Company.

A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the primary credit facility.

Types of borrowings available on the primary credit facility include revolving loans, multi-currency term loans, and swingline loans.

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

(1) The Company maintained a U.S.

primary credit facility which was scheduled to mature on May 4, 2027 that provided for $300 million in borrowings, and the Company had utilized this facility for revolving borrowings.

On December 20, 2024, the Company entered into an amended and restated credit agreement (the “restated primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.

A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent.

The restated primary credit facility adds a term loan borrowing facility that provides for term loan borrowings (“term borrowings”) of $ 100 million repayable in scheduled quarterly installments, scheduled to mature December 20, 2029.

The terms for the revolving borrowings remain largely unchanged with a maturity date of May 4, 2027 and continue to provide for $ 300 million in borrowings, with an option to increase the amount available for borrowing to $ 450 million upon request, subject to the consent of each lender participating in such increase.

This facility is maintained for working capital and general corporate purposes of the Company, and pursuant to the restated primary credit facility, the Company is permitted to use the proceeds to refinance existing indebtedness.

Types of borrowings available on the restated primary credit facility include term loans, revolving loans, multi-currency term loans, and swingline loans.

At December 31, 2024, all outstanding borrowings under the primary credit facility were Term Benchmark borrowings denominated in U.S.

The interest rate on borrowings is dependent on the class, type and currencies 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 the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;

• 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 the Revolving Commitment Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;

Dollars will utilize the Secured Overnight Financing Rate (“SOFR”) for one, three, or six-month tenors as elected, 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 ten hundredths percent ( 0.10 %), plus the Revolving Commitment Term Benchmark spread or Term Loan Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;

• 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 the Revolving Commitment Term Benchmark spread or Term Loan Term Benchmark spread which can range from 100.0 to 175.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;

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

1 unchanged sentence

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);

1/2 of 1% per annum above the Federal Reserve Bank of New York (NYFRB) Rate (as defined under the restated primary credit facility);

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

plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA.

The Company’s financial covenants under the primary credit facility require:

Under the restated primary credit facility, the ABR Spread and Benchmark Spread for term borrowings are the same as for revolving borrowings.

The Company’s financial covenants under the amended primary credit facility require:

• a ratio of consolidated total indebtedness minus unencumbered U.S.

1 unchanged sentence

• 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 primary credit facility at both September 30, 2024 and June 30, 2024.

(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.

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;

• 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.

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

(2) Concurrently on December 20, 2024 with its entry into the restated primary credit facility, the Company terminated its 364-day multi-currency revolving credit facility agreement (the “secondary credit facility”), which was entered into on January 5, 2024 and originally scheduled to mature on January 3, 2025.

The secondary credit facility allowed for borrowings up to $ 100.0 million, and the Company had no borrowings on the secondary credit facility at June 30, 2024.

(3) The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources.

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As a result of the GES divestiture that occurred on July 31, 2024, the Company no longer has the Vietnam credit facility, which allowed for borrowings up to $ 5.0 million.

(4) The amount of long-term debt under credit facilities, less current maturities, reflects the borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months.

The primary credit facility matures on May 4, 2027.

The weighted-average interest rate on borrowings outstanding under the credit facilities at both September 30, 2024 and June 30, 2024 were 6.8 %.

(4) The amount of long-term debt under credit facilities, less current maturities, reflects the revolving borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months in addition to the long-term portion of the term borrowings.

The revolving borrowings on the primary credit facility matures on May 4, 2027.

As of December 31, 2024, the contractual maturities of the term borrowings on the primary credit facility were as follows:

(Amounts in Millions) Contractual Maturities

Remaining 2025 $ 2.50

Thereafter 70.00

Total $ 100.00

The weighted-average interest rate on borrowings outstanding under the credit facilities at December 31, 2024 and June 30, 2024 were 6.4 % 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.

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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 three months ended September 30, 2024.

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

Recurring Fair Value Measurements:

As of September 30, 2024 and June 30, 2024, 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:

September 30, 2024

As of December 31, 2024 and June 30, 2024, 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, 2024

(Amounts in Thousands) Level 1 Level 2 Total

Cash equivalents $ 17,431 $ — $ 17,431

foreign exchange contracts $ — $ 1,803 $ 1,803

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Total liabilities at fair value $ — $ 2,485 $ 2,485

We had no level 3 assets or liabilities at September 30, 2024 and June 30, 2024, or any activity in Level 3 assets or liabilities during the three months ended September 30, 2024.

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

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

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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 three months ended September 30, 2024.

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, 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, 2024.

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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 September 30, 2024, we had outstanding foreign exchange contracts to hedge currencies against the U.S.

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

dollar in the aggregate notional amount of $ 18.3 million and to hedge currencies against the Euro in the aggregate notional amount of 38.8 million Euro.

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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 September 30, 2024, we estimate that approximately $ 2.9 million of pre-tax derivative loss 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 December 31, 2024, we estimate that approximately $ 2.8 million of pre-tax derivative loss 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 September 30, 2024 and June 30, 2024.

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, 2024 and June 30, 2024.

See Note 9 - Fair Value of Notes to Condensed Consolidated Financial Statements for further information regarding the fair value of derivative assets and liabilities and Note 6 - Accumulated Other Comprehensive Income (Loss) of Notes to Condensed Consolidated Financial Statements for the changes in deferred derivative gains and losses.

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Fair Value As of Fair Value As of

(Amounts in Thousands) Balance Sheet Location September 30,

(Amounts in Thousands) Balance Sheet Location December 31,

2024 June 30,

2024 Balance Sheet Location September 30,

2024 Balance Sheet Location December 31,

2024 June 30,

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

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2024 2023 2024 2023

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The Effect of Derivative Instruments on Condensed Consolidated Statements of Income

Three Months Ended

(Amounts in Thousands) September 30

Three Months Ended Six Months Ended

(Amounts in Thousands) December 31 December 31

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

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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 $ 0.4 million and $ 1.6 million for the three months ended September 30, 2024 and September 30, 2023, respectively.

Total expense related to employer contributions to the domestic retirement plans was $ 1.0 million and $ 3.1 million for the six months ended December 31, 2024 and December 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.

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

As of September 30, 2024, both total investments and obligations under SERP were $ 5.8 million, of which $ 2.1 million were short term and $ 3.7 million were long term.

As of December 31, 2024, both total investments and obligations under SERP were $ 5.6 million, of which $ 2.0 million were short term and $ 3.6 million were long term.

As of June 30, 2024, both total investments and obligations under SERP were $ 5.4 million, of which $ 2.0 million were short term and $ 3.4 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 the three months ended September 30, 2024 and 2023 was approximately $ 0.3 million and $( 0.2 ) million, respectively.

The change in net unrealized holding gains for the six months ended December 31, 2024 and 2023 was less than $ 0.1 million and $ 0.1 million, respectively.

Defined Benefit Postemployment Plan:

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

As of September 30, 2024, total obligations under these plans were $ 7.4 million of which $ 6.6 million were long term and $ 0.8 million were short term.

As of December 31, 2024, total obligations under these plans were $ 7.0 million of which $ 6.2 million were long term and $ 0.8 million were short term.

As of June 30, 2024, total obligations under these plans were $ 7.0 million of which $ 6.2 million were long term and $ 0.8 million were short term.

Net periodic benefit costs were not material for the three months ended September 30, 2024 and 2023.

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

Stock Compensation Plans

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For more information on the 2023 Plan and the Deferral Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2024.

During the first three months of fiscal year 2025, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.

During the first six months of fiscal year 2025, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.

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

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1st Quarter 152,917 $ 18.49

(1) Long-term performance share awards for the leadership team members (consisting of our CEO and his direct reports) are expected to be granted in the second quarter of fiscal year 2025 upon approval of performance metrics by the Talent, Culture, and Compensation Committee of the Board (“Committee”).

The Committee granted long-term performance share awards to key employees not on our leadership team during the quarter.

Long-Term Performance Shares (4)

2nd Quarter 207,344 $ 21.89

Unrestricted Shares (5)

2nd Quarter 26,192 $ 19.09

Deferred Share Units (6)

2nd Quarter 28,288 $ 19.09

(1) Long-term performance share awards were granted to key employees.

These annual performance share awards were approved by the Talent, Culture, and Compensation Committee of the Board.

These awards granted in fiscal year 2025 will cliff vest at the third anniversary of the award date in fiscal year 2028.

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These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board.

The contractual life of the restricted shares is three years , with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant.

The contractual life of the restricted shares is three years , with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two

of the grant, and the final one-third after year three of the grant.

Restricted shares are expensed over the contractual vesting period as earned.

If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.

(4) Long-term performance shares were granted to leadership team members.

These annual performance share awards were approved by the Talent, Culture, and Compensation Committee of the Board.

The awards granted in fiscal year 2025 will cliff vest in fiscal year 2028.

Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s economic profit for fiscal years 2026 and 2027 as compared to the Board approved plan and the Company’s relative total shareholder return (rTSR) for the performance period as compared to a group of peer companies selected by the Talent, Culture, and Compensation Committee of the Board.

The number of shares issued could be zero if minimum thresholds are not met up to a maximum of 200 % if results on both measures exceed targets under the formula.

(5) Unrestricted shares were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to be paid in unrestricted shares in lieu of cash payment or deferred share units.

Director’s fees are expensed over the period that directors earn the compensation.

Unrestricted shares do not have vesting periods, holding periods, restrictions on sales, or other restrictions.

(6) Deferred share units were awarded to non-employee members of the Board as compensation for the portion of their annual retainer fees resulting from their elections to receive deferred share units in lieu of cash payment or unrestricted shares.

Director’s fees are expensed over the period that directors earn the compensation.

Deferred share units are participating securities and are payable in common stock in a lump sum or installments in accordance with deferral elections upon a Director’s retirement or termination from the Board or death.

Goodwill and Other Intangible Assets

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Goodwill, net $ 6,191

Balance as of September 30, 2024

Balance as of December 31, 2024

Goodwill $ 19,017

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

For the three months ended September 30, 2024 and 2023, amortization expense of other intangible assets was $ 0.3 million and $ 0.9 million, respectively.

The three months ended September 30, 2023 included the amortization on customer relationships, technology, and trade name intangible assets associated with GES.

For the three months ended December 31, 2024 and 2023, amortization expense of other intangible assets was $ 0.3 million and $ 0.6 million, respectively.

For the six months ended December 31, 2024 and 2023, amortization expense of other intangible assets was $ 0.5 million and $ 1.5 million, respectively.

The three and six months ended December 31, 2023 included the amortization on customer relationships, technology, and trade name intangible assets associated with GES.

See Note 3 - Sale of GES of Notes to Condensed Consolidated Financial Statements for additional information.

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

During the three months ended September 30, 2024, the Company repurchased $ 2.9 million shares of common stock under the Repurchase Plan at an average price of $ 18.01 per share.

During the three months ended September 30, 2023, the Company had no repurchases under the Repurchase Plan.

During the six months ended December 31, 2024, the Company repurchased $ 5.9 million shares of common stock under the Repurchase Plan at an average price of $ 18.60 per share.

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

Since the inception of the Repurchase Plan, the Company has repurchased $ 97.7 million of common stock at an average cost of $ 15.59 per share.

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

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

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

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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