What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-06 compared with 2024-11-06 · 87 added, 72 removed, 155 unchanged (51% of the section changed)

11 unchanged sentences

We are well recognized by our customers and the industry for our excellent quality, reliability, and innovative service.

CIRCUITS ASSEMBLY, a leading brand and technical publication for electronics manufacturers worldwide, has previously recognized us four times for achieving the Highest Overall Customer Rating in their Service Excellence Awards, and most recently, we received Highest Overall Customer Ratings in four of their seven categories in 2023.

CIRCUITS ASSEMBLY, a leading brand and technical publication for electronics manufacturers worldwide, has previously recognized us four times for achieving the Highest Overall Customer Rating in their Service Excellence Awards, and most recently, we received Highest Customer Ratings in seven service categories in 2024.

The contract manufacturing services industry is very competitive.

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We expect to continue to effectively operate in this market space;

however, one significant challenge will be maintaining our profit margins while we continue our revenue growth.

however, one significant challenge will be maintaining our profit margins.

Pricing is competitive in the market as production efficiencies and material pricing advantages for most projects drive costs and prices down over the life of the projects.

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The Worldwide Manufacturing Services Market - 2024 Edition , a comprehensive study on the worldwide EMS market published by New Venture Research (“NVR”), provided worldwide forecast trends through 2028.

NVR projects the worldwide assembly market for electronics products to grow at a compound annual growth rate (“CAGR”) of 4.6% over the next five years, with the EMS industry projected to grow at a CAGR of 4.6%.

NVR projects the worldwide

assembly market for electronics products to grow at a compound annual growth rate (“CAGR”) of 4.6% over the next five years, with the EMS industry projected to grow at a CAGR of 4.6%.

We continue to monitor the current economic and industry conditions for uncertainties that may pose a threat to our future growth or cause disruption in business strategy, execution, and timing in the markets in which we compete.

The EMS industry is experiencing the impacts of softening demand from global macroeconomic headwinds, especially in the current fiscal year.

The financial impact on our future results cannot be reasonably estimated but could be material.

Such headwinds include pressure from elevated levels of inflation, higher interest rates, and geopolitical uncertainty.

Net sales in the first quarter of the current fiscal year decreased 15% compared to the prior fiscal year first quarter, with decreases in each of our end market verticals.

The decrease in sales to customers in the automotive and medical markets were largely driven by decreased demand.

The decrease in sales to customers in the industrial market were related to the sale of GES and continued softness specific to smart metering and climate control production.

We expect consolidated net sales to continue to lag when compared to fiscal year 2024 with the continued softness in demand and the loss of a major automotive program (impacts beginning in the third quarter) by our customer that was unrelated to any issues with our workmanship, quality, or ability to produce the product, in addition to the expected consolidated net sales decrease from the divestiture of our GES business.

Net sales in the second quarter of the current fiscal year decreased 15% compared to the prior fiscal year second quarter, most significantly in our medical and industrial end market verticals.

The decrease in sales to customers in the medical markets were largely driven by adjacent impacts with our major medical customer with the FDA recall and the wind down of other programs.

The decrease in sales to customers in the industrial market were related to the sale of GES and declines in smart metering and public safety.

We expect consolidated net sales to continue to lag when compared to fiscal year 2024, which we expect to continue through calendar year 2025, most significantly with the loss of a major automotive program by our customer that was unrelated to any issues with our workmanship, quality, or ability to produce the product, the expected consolidated net sales decrease from the divestiture of our GES business, and the adjacent impacts with our major medical customer with the FDA recall.

We have a strong focus on cost control balanced with managing the future growth prospects of our business.

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Production activities on existing customer programs will be transferred out of Tampa, with the majority of the work going to our plants in North America, primarily our newly expanded facility in Mexico and Jasper.

We continue to maintain a strong balance sheet, which included a current ratio of 2.3, a debt-to-equity ratio of 0.4, and Share Owners’ equity of $548 million at September 30, 2024.

Recently, we have invested to support our expansions and growth in Mexico, Thailand, and Poland.

We continue to maintain a strong balance sheet, which included a current ratio of 2.3, a debt-to-equity ratio of 0.4, and Share Owners’ equity of $537 million at December 31, 2024.

Refer to the Future Liquidity section of Liquidity and Capital Resources below for further discussion of our liquidity.

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While variation in the size of program awards makes it difficult to directly correlate this data to our sales trends, we believe it does provide useful information regarding our customer loyalty and new business growth.

Three Months Ended

Six Months Ended

Customer Service Years 2024 2023

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Restructuring Expense 4.7 1.3 % — — % — %

Gain on Disposal

(1.3) (0.3) % — — % — %

Operating Income 8.2 2.3 % 16.6 3.9 % (50) %

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Provision (Benefit) for Income Taxes

(0.3) 2.5 (111) %

Net Income $ 3.4 $ 8.3 (59) %

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Open Orders $ 564 $ 836 (33) %

Net Sales by Vertical Market Three Months Ended

(Amounts in Millions) 2024 2023 % Change

For the Six Months Ended

(Amounts in Millions, Except for Per Share Data) 2024 as a % of Net Sales 2023 as a % of Net Sales % Change

Net Sales $ 731.6 $ 859.3 (15) %

Gross Profit $ 47.0 6.4 % $ 70.0 8.1 % (33) %

Selling and Administrative Expenses 24.0 3.2 % 33.9 3.9 % (29) %

Restructuring Expense 7.0 1.0 % — — % — %

Gain on Disposal (1.3) (0.2) % — — % — %

Operating Income 17.3 2.4 % 36.1 4.2 % (52) %

Other Income (Expense) (10.9) (11.7)

Provision for Income Taxes (0.2) 5.4 (104) %

Net Income $ 6.6 $ 19.0 (65) %

Diluted Earnings per Share $ 0.26 $ 0.75 (65) %

Net Sales by Vertical Market Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Millions) 2024 2023 % Change 2024 2023 % Change

Automotive $ 192.8 $ 200.2 (4) % $ 381.1 $ 412.7 (8) %

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Total Net Sales $ 357.4 $ 421.2 (15) % $ 731.6 $ 859.3 (15) %

First quarter fiscal year 2025 consolidated net sales decreased 15% compared to the first quarter of fiscal year 2024.

The impact from foreign currency fluctuations on net sales was less than 1% in the current quarter compared to the first quarter of fiscal year 2024.

Second quarter fiscal year 2025 consolidated net sales decreased 15% compared to the second quarter of fiscal year 2024, and the year-to-date fiscal year 2025 consolidated net sales also decreased 15% compared to the year-to-date period of fiscal year 2024.

The impact from foreign currency fluctuations on net sales was less than 1% in the current quarter compared to the second quarter and year-to-date period of fiscal year 2024.

By end market vertical, our market verticals fluctuated as follows:

• Sales to customers in the automotive market decreased 11% during the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024.

The decrease in the first quarter is due to customer demand reductions, particularly in North America and Europe.

• Sales to customers in the medical market declined in the first quarter of fiscal year 2025 compared to the first quarter of fiscal year 2024.

The decrease is primarily due to customer demand reductions.

• Sales to customers in the industrial market decreased 22% during the first quarter of fiscal year 2025, when compared to the first quarter of fiscal year 2024.

Approximately half of the decline is related to the sale of GES and the remainder is due to continued softness in industrial specific to smart metering and climate control production.

• In the automotive end market vertical, for both the quarter over quarter and year-to-date periods, improvement in demand in China helped to partially offset lower demand in North America and Europe and the loss of a major automotive program that was unrelated to Kimball.

• In the medical end market vertical, for both the quarter over quarter and year-to-date periods, the decrease was driven by adjacent impacts with our major medical customer with the FDA recall and the wind down of other programs.

• In the industrial end market vertical, the sale of GES accounts for approximately one-third of the decline quarter over quarter and in the year-to-date period.

The remaining declines are in our smart metering programs, where our customers are experiencing continued market share declines from commoditization, and moderate declines in climate controls and public safety.

Sales to Nexteer Automotive, ZF, and HL Mando accounted for the following portions of our net sales:

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

2024 2023 2024 2023

Nexteer Automotive 20% 15% 19% 16%

ZF 12% 11% 12% 12%

HL Mando * 11% * 11%

* amount is less than 10% of total

Gross profit as a percent of net sales in the first quarter of fiscal year 2025 declined when compared to the first quarter of fiscal year 2024 as we experienced lost absorption on lower revenue.

Selling and administrative expenses decreased both as a percent of net sales and in absolute dollars in the first quarter of fiscal year 2025 when compared to the first quarter of fiscal year 2024, driven by cost reduction efforts, decreased profit-sharing bonus expense, and the classification of factoring fees.

In the three months ended September 30, 2024, we recorded pre-tax restructuring expense of $2.3 million for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels.

Gross profit as a percent of net sales in the second quarter of fiscal year 2025 declined when compared to the second quarter of fiscal year 2024 as well as in the first half of the fiscal year as we experienced lost absorption on lower revenue.

Selling and administrative expenses decreased both as a percent of net sales and in absolute dollars in the second quarter of fiscal year 2025 when compared to the second quarter of fiscal year 2024 as well as in the first half of the fiscal year, driven by cost reduction efforts, the classification of factoring fees, and decreased profit-sharing bonus expense and stock compensation expense driven by the decline in financial results.

In the second quarter, the update of bonus and stock compensation performance metrics resulted in a substantial reduction to cumulative expense recorded.

Both the second quarter and first half of fiscal year 2024 included a $2.0 million allowance for credit losses, which also contributed to the declines year over year.

In the three and six months ended December 31, 2024, we recorded pre-tax restructuring expense of $4.7 million and $7.0 million, respectively, for employee-related costs as we undertook restructuring efforts to align our cost structure with reduced end market demand levels and incurred costs related to the Tampa closure in the second quarter.

We completed the divestiture of GES on July 31, 2024 and recorded a gain on disposal of $1.3 million during the first quarter of fiscal year 2025.

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Other Income (Expense) consisted of the following:

Three Months Ended

Three Months Ended Six Months Ended

December 31 December 31

(Amounts in Thousands) 2024 2023 2024 2023

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Other income (expense), net $ (4,756) $ (5,334) $ (10,987) $ (11,613)

Interest expense has decreased in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to lower interest rates and lower borrowings on credit facilities.

Interest expense has decreased in the three and six months ended December 31, 2024 compared to the three and six months ended December 31, 2023 due to lower borrowings on credit facilities and lower interest rates.

Foreign currency/derivative gains (losses) result from net foreign currency exchange rate movements during the periods.

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Prior to fiscal year 2025, factoring fees were recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.

Our provision (benefit) for income taxes for the three months ended September 30, 2024 and September 30, 2023 was $(0.3) million, or (9.4)% of income before taxes on income, and $2.5 million, or 18.6% of income before taxes on income, respectively.

The tax benefit in the three months ended September 30, 2024 was the result of an interest recovery on a prior period tax audit.

Open orders were down 35% as of September 30, 2024 compared to September 30, 2023.

The decrease in open orders from September 30, 2023 is primarily driven by reduced orders due to cancellation of a major automotive program, other automotive customer demand reductions, and medical customer demand reductions.

Our provision (benefit) for income taxes for the six months ended December 31, 2024 and December 31, 2023 was $(0.2) million, or (3.6)% of income before taxes on income, and $5.4 million, or 22.2% of income before taxes on income,

respectively.

The tax benefit in the six months ended December 31, 2024 is primarily the result of the valuation allowance reversal recorded in the second quarter associated with the expected capital gains from the sale of the Tampa property.

Open orders were down 33% as of December 31, 2024 compared to December 31, 2023.

The decrease in open orders from December 31, 2023 is primarily driven by reduced orders due to cancellation of a major automotive program, other automotive customer demand reductions, and medical customer demand reductions.

Open orders at a point in time may not be indicative of future sales trends due to the contract nature of our business.

Our open orders depend on the lead times from our customers, which have reduced since September 30, 2023 when parts were more constrained, which also contributed to the decline in open orders.

Our open orders depend on the lead times from our customers, which have reduced since December 31, 2023 when parts were more constrained, which also contributed to the decline in open orders.

Liquidity and Capital Resources

Working capital at September 30, 2024 was $439.0 million compared to working capital of $471.7 million at June 30, 2024.

The current ratio was 2.3 at both September 30, 2024 and June 30, 2024.

The debt-to-equity ratio was 0.4 at September 30, 2024 and 0.5 at June 30, 2024.

Our short-term liquidity available, represented as cash and cash equivalents plus the unused amount of our credit facilities, some of which are uncommitted, totaled $263.4 million at September 30, 2024 and $220.1 million at June 30, 2024.

Working capital at December 31, 2024 was $397.6 million compared to working capital of $471.7 million at June 30, 2024.

The current ratio was 2.3 at both December 31, 2024 and June 30, 2024.

The debt-to-equity ratio was 0.4 at December 31, 2024 and 0.5 at June 30, 2024.

Our short-term liquidity available, represented as cash and cash equivalents plus the unused amount of our credit facilities, some of which are uncommitted, totaled $280.3 million at December 31, 2024 and $220.1 million at June 30, 2024.

Cash Conversion Days (“CCD”) are calculated as the sum of Days Sales Outstanding (“DSO”) plus Contract Asset Days (“CAD”) plus Production Days Supply on Hand (“PDSOH”) less Accounts Payable Days (“APD”) and less Advances from Customers Days (“ACD”).

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Three Months Ended

September 30, 2024 June 30, 2024 September 30, 2023

December 31, 2024 September 30, 2024 December 31, 2023

Days Sales Outstanding 65 66 64

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We expect our CCD metrics to improve as we align our working capital with the lower sales levels.

The following table reflects the major categories of cash flows for the first three months of fiscal years 2025 and 2024.

Three Months Ended

The following table reflects the major categories of cash flows for the first six months of fiscal years 2025 and 2024.

Six Months Ended

(Amounts in Millions) 2024 2023

Net cash provided by operating activities $ 45.5 $ 12.8

Net cash provided by (used for) investing activities $ 5.2 $ (11.3)

Net cash provided by (used for) operating activities $ 74.9 $ (17.9)

Net cash used for investing activities $ (1.2) $ (24.4)

Net cash (used for) provided by financing activities $ (97.3) $ 38.9

Cash Flows from Operating Activities

Net cash provided by operating activities for the first three months of fiscal year 2025 was driven by net income adjusted for non-cash items and changes in operating assets and liabilities.

Net cash provided by operating activities for the first three months of the prior year was driven by net income adjusted for non-cash items, partially offset by changes in operating assets and liabilities.

Net income adjusted for non-cash items provided cash of $16.8 million in the first three months of fiscal year 2025, while changes in operating assets and liabilities provided $28.7 million of cash in the first three months of fiscal year 2025, largely due to a decrease of accounts receivable, which provided cash of $20.1 million primarily resulting from decreased sales volumes compared to the three months ended June 30, 2024, and an increase in advances from customers, which provided cash of $8.7 million.

Partially offsetting cash provided by accounts receivable and advances from customers was a decrease in accrued expenses and taxes payable, which used cash of $22.5 million primarily driven by timing of profit-sharing incentive bonus and income tax payments.

The cash used of $9.7 million from changes in operating assets and liabilities in the first three months of fiscal year 2024 was largely due to an increase in inventory, which used cash of $34.0 million, driven by investment to support our newly expanded facilities, a decrease in accounts payable, which used cash of $11.6 million, and an increase in contract assets, which used cash of $8.9 million.

Partially offsetting cash used by inventory, accounts payable, and contract assets was a decrease in accounts receivable, which provided cash of $45.3 million primarily resulting from decreased sales volumes compared to the three months ended June 30, 2023.

Net cash provided by operating activities for the first six months of fiscal year 2025 was driven by net income adjusted for non-cash items and changes in operating assets and liabilities.

Net cash used by operating activities for the first six months of the prior year was driven by changes in operating assets and liabilities, partially offset by net income adjusted for non-cash item.

Net income adjusted for non-cash items provided cash of $28.1 million in the first six months of fiscal year 2025, while changes in operating assets and liabilities provided $46.8 million of cash in the first six months of fiscal year 2025, largely due to a decrease of accounts receivable, which provided cash of $45.5 million, and a decrease of inventory, which provided cash of $28.0 million.

Partially offsetting cash provided by accounts receivable and inventory was a decrease in accrued expenses and taxes payable, which used cash of $27.1 million primarily driven by timing of profit-sharing incentive bonus and income tax payments.

The cash used of $59.0 million from changes in operating assets and liabilities in the first six months of fiscal year 2024, is largely due to a decrease in accounts payable, which used cash of $42.5 million primarily driven by decreased inventory purchases due to lower sales, and a decrease in accrued expenses and taxes payable, which used $9.3 million primarily driven by timing of income tax and profit-sharing incentive bonus payments.

Partially offsetting cash used by accounts payable and accrued expenses and taxes payable was an increase in advances from customers, which provided cash of $8.8 million.

Partially offsetting the cash used from changes in operating assets and liabilities in the first six months of fiscal year 2024 was net income adjusted for non-cash items which provided cash of $41.1 million.

Cash Flows from Investing Activities

Net cash provided by investing activities of $5.2 million in the first three months of fiscal year 2025 was largely due to the $18.5 million of proceeds from the sale of GES, partially offset by capital investments of $13.5 million primarily to support new business awards and replacement of older machinery and equipment.

Net cash used by investing activities of $1.2 million in the first six months of fiscal year 2025 was largely due to capital investments of $20.0 million primarily to support new business awards and replacement of older machinery and equipment, partially offset by the $18.5 million of proceeds from the sale of GES.

See Note 3 - Sale of GES of Notes to Consolidated Financial Statements for more information on the divestiture of GES.

Net cash used for investing activities in the first three months of fiscal year 2024 included $11.3 million cash used for capital investments.

Net cash used for investing activities in the first six months of fiscal year 2024 included $24.5 million cash used for capital investments.

The capital investments were primarily to support new business awards, facility expansions, and replacement of older machinery and equipment.

Cash Flows from Financing Activities

For the first three months of fiscal year 2025, net cash used for financing activities of $53.0 million resulted largely from net payments on our credit facilities of $49.1 million.

For the first three months of fiscal year 2024, net cash provided by financing activities of $14.0 million resulted largely from net borrowings on our credit facilities of $15.4 million primarily for working capital purposes and capital expenditures.

For the first six months of fiscal year 2025, net cash used for financing activities of $97.3 million resulted largely from net payments on our credit facilities of $89.8 million.

For the first six months of fiscal year 2024, net cash provided by financing activities of $38.9 million resulted largely from net borrowings on our credit facilities of $40.3 million.

Credit Facilities

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primary credit facility (the “primary credit facility”) 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 at the Company’s request, subject to the consent of each lender participating in such increase.

The Company also maintains a 364-day multi-currency revolving credit facility (the “secondary credit facility”), which allows for borrowings up to $100 million and has a maturity date of January 3, 2025.

The proceeds of the loans on the primary credit facility and the secondary credit facility are to be used for working capital and general corporate purposes of the Company.

We were in compliance with the financial covenants of the primary and secondary credit facilities during the period ended September 30, 2024.

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

On December 20, 2024, the Company entered into an amended and restated credit agreement which resulted in the addition of a term loan borrowing, allowing for term loan borrowings of $100 million repayable in scheduled quarterly installments, and is scheduled to mature on December 20, 2029.

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

The Company terminated its 364-day multi-currency revolving credit facility (the “secondary credit facility”), which previously allowed for borrowings up to $100 million and had a maturity date of January 3, 2025.

We were in compliance with the financial covenants of the primary credit facility during the period ended December 31, 2024.

Through the amendment of the primary credit facility, including adding a $100 million term loan borrowing, we were able to maintain our same total borrowing capacity even with the termination of the secondary credit facility.

Additionally, we were able to secure our primary credit facility’s interest rate pricing for the $100 million term loan for five years, which is beyond the duration of our current primary credit facility.

We also maintain foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources.

These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses.

As of September 30, 2024, we maintained foreign credit facilities at our Thailand operation, our China operation, our Netherlands subsidiary, and our Poland operation.

As of December 31, 2024, we maintained foreign credit facilities at our Thailand operation, our China operation, our Netherlands subsidiary, and our Poland operation.

See Note 8 - Credit Facilities of Notes to Consolidated Financial Statements for more information on our credit facilities, including the terms of the credit facilities such as interest, commitment fees, and debt covenants.

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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.

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.

See Note 1 - Business Description and Summary of Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements for more information regarding the factoring arrangements.

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We believe our principal sources of liquidity from available funds on hand, cash generated from operations, and the availability of borrowing under our credit facilities, will be sufficient to meet our working capital and other operating needs for at least the next 12 months.

The unused borrowings in USD equivalent under all of our credit facilities totaled $186.8 million at September 30, 2024, including the $100 million secondary credit facility.

Our secondary credit facility matures on January 3, 2025.

The unused borrowings in USD equivalent under all of our credit facilities totaled $226.4 million at December 31, 2024.

Additionally, accounts receivable factoring arrangements could provide flexible access to cash as needed.

While our primary credit facility includes a covenant that limits the amount of sold receivables outstanding at any time, currently and historically, we have been considerably below this limit.

We expect to continue to prudently invest in capital expenditures, including for capacity expansions and potential acquisitions, that would help us continue our growth as a multifaceted manufacturing solutions company.

At September 30, 2024, our capital expenditure commitments were approximately $13 million, consisting primarily of capital related to new program wins.

At December 31, 2024, our capital expenditure commitments were approximately $17 million, consisting primarily of capital related to new program wins.

We anticipate our available liquidity will be sufficient to fund these capital expenditures.

We expect to continue our restructuring efforts, including the closure of our Tampa facility.

We expect these restructuring efforts to be predominantly cash expenditures to be incurred over approximately the next 12 months and estimate between $10.0 million and $14.0 million of pre-tax restructuring charges, including $8.0 million to $11.0 million for Tampa exit costs.

We expect these restructuring efforts to be predominantly cash expenditures to be incurred over the remainder of fiscal year 2025.

We estimate additional pre-tax restructuring charges between $5 million to $6 million, including $4 million to $5 million for Tampa exit costs.

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.

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In turn, material authorization agreements with customers cover a portion of the exposure for material that we must purchase prior to having a firm order.

At September 30, 2024, our foreign operations held cash totaling $75.7 million.

At December 31, 2024, our foreign operations held cash totaling $46.1 million.

Most of our accumulated unremitted foreign earnings have been invested in active non-U.S.

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The Company expects to finance the purchases with existing liquidity.

The Company has repurchased $94.7 million of common stock under the Repurchase Plan through September 30, 2024.

The Company has repurchased $97.7 million of common stock under the Repurchase Plan through December 31, 2024.

Our ability to generate cash from operations to meet our liquidity obligations could be adversely affected in the future by factors such as general economic and market conditions, lack of availability of raw material components in the supply chain, a decline in demand for our services, loss of key contract customers, unsuccessful integration of acquisitions and new operations, global health emergencies, and the related uncertainties around the financial impact, and other unforeseen circumstances.

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Additional cautionary statements regarding our risk factors are contained in our Annual Report on Form 10-K for the year ended June 30, 2024.

During the first quarter of fiscal year 2025, no level 1 or level 2 financial instruments were affected by a lack of market liquidity.

During the second quarter of fiscal year 2025, no level 1 or level 2 financial instruments were affected by a lack of market liquidity.

For level 1 financial assets, readily available market pricing was used to value the financial instruments.

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Off-Balance Sheet Arrangements

As of September 30, 2024, we do not have any material off-balance sheet arrangements.

Critical Accounting Policies

As of December 31, 2024, we do not have any material off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Kimball Electronics’ Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

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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 2. Management’s Discussion and Analysis