Kimball Electronics, Inc.

All lines have been placed in a listen-only mode to prevent any background noise. After the completion of the prepared remarks from the Kinboy Electronics leadership team, there'll be a question and answer period. To ask a question at this time, please press star followed by one on your telephone keypad. If you change your mind at any point and would like to revoke your question, please press star followed by two. Today's call on November 7th, 2023 is being recorded. A replay of the call will be available on the investor relations page of the Kinboy Electronics website. At this time, I'd like to turn the call over to Andy Regret, Vice President, Investor Relations. Mr. Regret, you may begin.

Thank you, Ellen, and good morning, everyone. Welcome to our first quarter conference call. With me here today is Rick Phillips, our Chief Executive Officer, and Janet Kroon, Chief Financial Officer. We issued a press release yesterday afternoon with our results for the first quarter of fiscal 2024. To accompany today's call, presentation has been posted to the investor relations page on our company website. Before we get started, I'd like to remind you that we will be making forward-looking statements that involve risk and uncertainty and are subject to our safe harbor provisions as stated in our press release and SEC filings, and that actual results can differ materially from the forward-looking statements. Reconciliations of GAAP to non-GAAP amounts are available in our press release. One other housekeeping item to mention, starting this quarter, miscellaneous sales, which previously have been reported in the other category in our vertical market breakdown, are now included in the respective vertical they pertain to. All prior periods have been recast to reflect this change. This morning, Rick will start the call with a few opening comments. Jana will review the financial results for the quarter and guidance for fiscal 2024 And Rick will complete our prepared remarks before taking your questions. I'll now turn the call over to Rick.

Thanks, Andy. And good morning, everyone. I am very pleased with our results for the first quarter, particularly in light of the current macro environment. Q1 was a strong start to the fiscal year with record first quarter sales and operating income, year-over-year margin expansion, and 13% growth in net income. While these results were in line with our expectations, we have been evaluating the impact of recent short-term market disruptions, including the UAW strike, global economic conditions, and geopolitical events, and have updated our guidance for the full year of fiscal 2024 to reflect softening demand in the end market verticals we serve. We will provide more detail in just a moment. Net sales in Q1 totaled $438 million, an 8% increase compared to the first quarter last year with two of the three vertical markets posting double digit growth. Automotive, our largest business, reported net sales of $213 million, a 13% increase compared to the first quarter of fiscal 2023 and 49% of total company sales. To be clear, These results were not materially impacted by the UAW strike. The targeted walkouts began on September 15th and our fiscal quarter ended two weeks later at the end of that month. Based on the locations directly impacted by the strike and the vehicle models produced at those plants, we estimate a relatively small impact to our top line in October. However, this situation is fluid with possible downstream ripples to come as the OEMs and tier one suppliers evaluate the current state. With over 35 years of experience producing safety critical, high quality electronic assemblies that meet the stringent regulatory requirements of this industry, we are ideally positioned to grow as our customers grow, particularly with the continued electrification of vehicles. As an example, I recently had the privilege of representing our company at a celebration with the ZF group when Kimball Electronics was awarded a new multi-year program in electronic power steering with the work to commence in calendar year 2025 at our facilities in Poland and China. The strategic partnership between the companies dates back to our early beginnings in the automotive industry and has grown to where ZF is currently our second largest customer. Our unique manufacturing capabilities in electronic steering, electronic motor controls, braking systems, battery management, and redundant safety systems align with advancements in the industry. And our support of applications in internal combustion engines, electric vehicles, or a hybrid of the two position us for growth as consumer preferences and adoption rates evolve. Net sales in medical were $102 million. a 12% decline compared to the same period last year, and 23% of total company sales. This result was in line with our expectations. As a reminder, our annual guidance reflects a $100 million reduction in sales with a major customer in this vertical partially offset by growth in other programs. While there are not any updates that we can speak to with regard to this customer, it is important to emphasize that our relationship with them has never been better and we are positioned to provide support as needed. Longer term, we continue to be encouraged by megatrends in the medical industry and believe they will support future growth, particularly as medical devices get smaller in size and require higher levels of precision and accuracy and as connected drug delivery systems become more prevalent. Our business development efforts focus on medical applications including sleep therapy, patient monitoring, AEDs, and surgical systems, especially with OEMs looking to outsource higher-level assemblies, or HLAs, which as a category represent an opportunity for more value-added content. Finally, Net sales in industrial totaled $123 million, a 21% increase compared to Q1 last year, and 28% of total company sales. The increase this quarter represented the largest for any of the three verticals we support, with climate control, public safety, smart metering, factory automation, and green energy charging and storage driving the growth. We expect the movement toward responsible usage of natural resources and heightened conservation to provide a meaningful tailwind in the years to come. And we're aligned with products that reduce environmental impacts and promote energy efficiency, safety, and carbon neutrality. This opportunity could become even more pronounced for us in EV charging as consumer adoption of electric and hybrid vehicles expands globally. So in summary, a very good quarter and strong start to fiscal 2024. I'll now turn the call over to Jana to provide more detail on the financial results for Q1 and our guidance for the full year. Jana?