Kimball Electronics, Inc.

Good morning, ladies and gentlemen. Welcome to the Kimbell Electronics fourth quarter fiscal 2025 earnings conference call. My name is Darrell and I will be the facilitator for today's call. All lines have been placed in a listen-only mode to prevent any background noise. After the completion of the prepared remarks from the Kimbell Electronics leadership team, there will be a question and answer period. To ask a question, simply press star, then the number one on your telephone keypad. Today's call, August 14th, 2025, is being recorded. A replay of the call will be available on the Investor Relations page of the Kimball Electronics website. At this time, I would like to turn the call over to Andy Regret, Treasurer and Investor Relations Officer. Mr. Regret, you may begin.

Thank you, and good morning, everyone. Welcome to our fourth 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 fourth quarter of and full fiscal year ended June 30, 2025. 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. Our commentary today will be focused on adjusted non-GAAP results Reconciliations of GAAP to non-GAAP amounts are available in our press release. 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 2026. And Rick will complete our prepared marks before taking your questions. I'll now turn the call over to Rick.

Thanks, Andy. And good morning, everyone. I'm encouraged by the results for the fourth quarter and the solid finish to the fiscal year. came in better than expectations as sales increased sequentially, margins continued to improve, and working capital management drove our sixth consecutive quarter of positive cash flow, which was used to pay down debt. Our balance sheet is now in a position of competitive strength with ample liquidity to weather an unpredictable environment while providing dry powder for opportunistic investments. In total, fiscal 2025 was a year of controlling what we could control. I am proud of our team as we made significant progress positioning the company for a return to profitable growth with noteworthy accomplishments, including a record number of wins for future business, a meaningful increase in the number of green customer scorecards, quality ratings at a 15-year high, adjusting the cost structure and aligning the portfolio to demand trends, and intensifying our focus as a medical CMO. The new 300,000 square foot medical facility in Indianapolis, which we announced last quarter, is an important milestone in this strategy. It provides the space needed to expand our production capabilities beyond traditional printed electronics and circuit board assemblies, encompassing cold chain management, complete device assembly, and precision molded plastics. Our current manufacturing includes medical disposables, single use surgical instruments, and selected drug delivery devices such as auto-injectors. Additionally, we're looking to expand applications in areas such as cardiology, orthopedics, minimally invasive surgery, and surgical instruments and packaging. The medical market presents a compelling opportunity to diversify revenue and leverage our core strengths as a trusted partner in a complex and regulated industry. We expect fiscal 2026 to be another step forward in this journey, and we anticipate positive top line growth for the company overall in FY27. As we return to growth, better capacity utilization will result in higher margins. Turning now to the fourth quarter, net sales for the company were $381 million. an 8% decline compared to Q4 last year when excluding the automation, test, and measurement business that was divested. For the second consecutive quarter, our medical business grew year over year, while the other two verticals we serve reported declines. Sequentially, however, the top line increased 2% compared to Q3. Remember, the third quarter included a $24 million non-recurring consigned inventory sale in the medical vertical. so the sequential sales for recurring business are even more encouraging than what's at the surface. Sales in medical were $107 million, up 5% compared to the same period last year, and 28% of total company revenue. The increase in Q4 was driven by a step-up in sales with our largest medical customer, a welcomed reprieve after a long period of decline during the FDA recall. We expect the growth with this customer to continue as we were selected as the sole supplier for the respiratory care final assembly and higher level assemblies business, with most of the production occurring in our facility in Thailand. Similar opportunities are possible as the population ages, access and affordability to healthcare increases, medical devices get smaller in size and require higher levels of precision and accuracy, And connected drug delivery systems become more common as consumer adoption increases. In general, HLAs and finished medical devices are great business for us, as the cost of sales is lower and the revenue potential is higher than what is customary with contract manufacturing and EMS. And this business increases our stickiness with customers. Next is automotive, with net sales of $184 million. a 13% decrease compared to the fourth quarter of last year, and 48% of the total company. The decline in Q4 was driven by the electronic braking program that, as previously announced, is no longer being produced in Renosa as a result of commercial agreement by the OEM to transfer to another source. This impact was partially offset by the ramp-up of a similar, but separate, braking program in Romania. In addition, We continue to carefully monitor the demand for electronic steering systems for EVs, which were lower in the quarter. Finally, industrial, with net sales of $90 million, down 12% year-over-year when excluding AT&M, and representing 24% of total company sales. We see early signs of stability with climate control systems, but this was offset by broad-based declines in other industrial segments in North America and Europe. Asia was approximately flat in Q4. I'll now ask Jana to provide more detail on the financial results for Q4 and our guidance for fiscal 2026. Jana?