Kimball Electronics, Inc.

Kimball Electronics operates in the contract manufacturing services industry, providing electronics manufacturing services and contract development and manufacturing organization solutions. The industry is characterized by competition based on quality and reliability, engineering design services, production flexibility, on-time delivery, customer lead time, test capability, competitive pricing, and global presence. The proliferation of electronic components in advanced products and the continuing trend by original equipment manufacturers to subcontract assembly to companies with core competency in this area drive growth in the industry. The nature of the EMS/CDMO industries is such that the start-up of new customers and new programs to replace expiring programs occurs frequently, with new customers and program start-ups generally causing margin dilution early in the life of a program, which is often recovered as the program becomes established and matures.

The company faces competition from EMS companies such as Benchmark Electronics, Inc., Flex Ltd., Jabil Inc., Plexus Corp., and Sanmina Corporation, as well as specialized providers of medical device manufacturing, drug delivery solutions, and precision molded plastics. Competitive strengths include a core competency of producing durable electronics, a body of knowledge in designing and manufacturing products requiring high levels of quality control and reliability, a highly integrated global footprint supporting both EMS and CDMO offerings, a CRM model and customer scorecard process, the ability to provide valuable design input for improved manufacturability and cost, quality systems and industry certifications, integrated supply chain solutions, the unique ability to combine high-reliability electronics manufacturing with precision molded plastics and medical CDMO capabilities under a single global operation model, expanded precision molded plastics expertise through the acquisition of Helvoet, and complete product life cycle management.

The company generates revenue by manufacturing products for customers on a contract basis, producing to customer specifications. Services include production and testing of printed circuit board assemblies, high-level and final assembly of medical, automotive, and industrial products, design services and support including Design for Excellence solutions, supply chain services and support, rapid prototyping and new product introduction support, product design and process validation and qualification, industrialization and automation of manufacturing processes, reliability testing, aftermarket services, production and assembly of medical devices and medical disposables including packaging and other non-electronic products, drug delivery devices and solutions with and without electronics, Class 7 and 8 clean room assembly, cold chain and product sterilization management, design engineering and production of precision molded plastics, and complete product life cycle management. These services are delivered through a combination of EMS and CDMO offerings, enabling customers to consolidate multiple manufacturing and supply chain requirements with a single strategic supplier. Customers are concentrated in the automotive, medical, and industrial end markets.

For the fiscal year ended June 30, 2026, sales by industry as a percent of net sales were automotive 46% ¹, medical 29% ², and industrial 25% ³. For fiscal 2025, automotive was 47% ⁴, medical 27% ⁵, and industrial 26% ⁶. For fiscal 2024, automotive was 46% ⁷, medical 25% ⁸, and industrial 29% ⁹. Sales to Nexteer Automotive accounted for 18% ¹⁰ of net sales in fiscal 2026, 19% ¹¹ in fiscal 2025, and 16% ¹² in fiscal 2024. Sales to Philips accounted for 11% ¹³ of net sales in fiscal 2026. Sales to ZF accounted for 11% ¹⁴ of net sales in fiscal 2026, 11% ¹⁵ in fiscal 2025, and 13% ¹⁶ in fiscal 2024. The company's services are marketed by a business development team using a CRM model to provide customers with convenient access to both the global footprint and all services throughout the entire product life cycle.

In 2026, the company introduced the Kimball Solutions brand to represent its expanded portfolio of non-electronic manufacturing solutions, including medical disposables, drug delivery systems, precision molded plastics, clean room assembly, micro fluidics, sterilization management, and related CDMO capabilities. The company intends to change its name to Kimball Solutions, Inc., subject to Share Owners' approval at the 2026 Annual Meeting of Share Owners scheduled for November 13, 2026. If approved, the common stock will continue to trade on The Nasdaq Stock Market LLC and the current ticker symbol KE would change to KMBL. On July 1, 2026, the company completed the acquisition of Helvoet Polymer Technologies B.V., which expanded capabilities in precision molded plastics, complex tooling, and medical device component manufacturing. In 2025, the company executed a lease for a third manufacturing facility in Indiana to expand its medical CDMO footprint. As of June 30, 2026, the company employed approximately 5,600 ¹⁷ people worldwide, with approximately 1,000 ¹⁸ located in the United States and approximately 4,600 ¹⁹ located in foreign countries.

For the fiscal year ended June 30, 2026, net sales were $1,549.6 million ²⁰, compared to $1,668.5 million ²¹ in fiscal 2025 and $1,769.5 million ²² in fiscal 2024. Net income for fiscal 2026 was $28.3 million ²³, compared to $28.2 million ²⁴ in fiscal 2025 and $47.0 million ²⁵ in fiscal 2024. Diluted earnings per share for fiscal 2026 were $1.18 ²⁶, compared to $1.17 ²⁷ in fiscal 2025 and $1.91 ²⁸ in fiscal 2024. Gross profit margin was 9.5% ²⁹ in fiscal 2026, compared to 9.4% ³⁰ in fiscal 2025 and 10.0% ³¹ in fiscal 2024. Operating income was $35.4 million ³² in fiscal 2026, compared to $36.5 million ³³ in fiscal 2025 and $63.8 million ³⁴ in fiscal 2024. Cash provided by operating activities was $82.4 million ³⁵ in fiscal 2026, compared to $82.8 million ³⁶ in fiscal 2025 and $97.8 million ³⁷ in fiscal 2024.

The company intends to achieve sustained, profitable growth by supporting the global growth initiatives of its customers as a multifaceted manufacturing solutions company through leveraging its global footprint, responding to increasing customer demand for geographic diversification, supply chain resiliency, and manufacturing optionality through facilities in North America, Europe, and Asia, while evaluating opportunities to expand into additional strategic regions. The company is expanding its package of value by enhancing core contract manufacturing services capabilities while expanding offerings in complex system assembly, medical disposables, drug delivery systems, specialized manufacturing processes, precision molded plastics, and integrated CDMO solutions with particular emphasis on medical and pharmaceutical applications. Through Kimball Solutions, the company has expanded beyond its traditional EMS foundation to offer an integrated portfolio of EMS and CDMO solutions, increasingly positioning itself as a strategic manufacturing partner capable of supporting customers across both electronic and non-electronic product categories.

The company is expanding its markets by exploring opportunities and making investments that will broaden existing or establish new markets. The acquisition of Helvoet on July 1, 2026 expanded the company's manufacturing footprint into India and the Netherlands and materially expanded precision molded plastics, complex tooling, and medical device component manufacturing capabilities, enhancing the ability to provide comprehensive solutions to customers across the medical and pharmaceutical markets. The company continues to work toward its goal to source 100% renewable electricity by 2030, subject to the availability of renewable electricity, energy attribute instruments, cost considerations, regulatory requirements, and operational needs.

The filing does not contain specific margin or cost outlook figures for the upcoming period.

The company continually assesses its capacity needs and evaluates its operations to optimize service levels for supporting customers' needs around the globe. As of August 19, 2026, the company has eleven manufacturing facilities with three located in Indiana, two in Mexico, and one located in each of China, India, The Netherlands, Poland, Romania, and Thailand. In 2025, the company executed a lease for a third manufacturing facility in Indiana to expand its medical CDMO footprint, and when fully operational, it will replace the existing Indianapolis, Indiana facility, reducing the number of manufacturing facilities by one.

The filing does not contain specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures for the upcoming period.

The company faces risks related to concentration among a small number of key customers, with sales to the three largest customers — Nexteer Automotive, Philips, and ZF — accounting for approximately 40% ³⁸ of net sales in the aggregate for fiscal year 2026. Over the past two fiscal years, the company experienced the loss of a major automotive program from a significant customer, which was unrelated to Kimball's performance. The company's automotive customers, including Nexteer Automotive and ZF, are subject to significant cyclical, technological, and regulatory pressures. Supply chain disruptions could increase inventory costs, interrupt operations, or prevent the company from purchasing sufficient materials, parts, and components necessary to meet customer demand at competitive prices. The company has experienced shortages of some materials, parts, and components, particularly with semiconductors, and may again experience such shortages in the future.

The company's international operations make it vulnerable to financial and operational risks associated with doing business in foreign countries, as a substantial majority of revenues are derived from operations outside the United States, primarily in China, Mexico, Poland, Romania, and Thailand. Risks include global, regional, or local economic and political instability; foreign currency fluctuations including currency controls and inflation; warfare, riots, terrorism, general strikes, or other forms of violence and/or geopolitical disruption; compliance with laws and regulations including the U.S. Foreign Corrupt Practices Act; potentially adverse tax consequences; and trade restrictions, sanctions, and other trade policy changes. The company may not realize the anticipated benefits of the Helvoet acquisition, which is its largest acquisition to date, as success depends on the ability to integrate Helvoet's operations, employees, customers, information systems, financial and internal controls, and manufacturing processes.

The company faces material risk from customer concentration, as sales to the three largest customers — Nexteer Automotive, Philips, and ZF — accounted for approximately 40% ³⁹ of net sales in aggregate for fiscal 2026, with Nexteer Automotive alone representing 18% ⁴⁰. The loss of a major automotive program from a significant customer occurred in the past two fiscal years, and similar program losses could occur in the future. Supply chain disruptions, particularly semiconductor shortages, have occurred and may recur, increasing inventory costs and potentially interrupting operations. The company's substantial international operations expose it to foreign currency fluctuations, geopolitical instability, and trade policy changes, including tariffs and sanctions. The Helvoet acquisition, the company's largest to date, carries integration risk, and failure to realize anticipated benefits could materially affect results. Additionally, the company's customers generally do not commit to firm production schedules for more than one quarter, and a reduction in customer demand could harm gross profit margins and results of operations.

Management's message emphasizes the company's evolution from a traditional EMS provider into an integrated manufacturing solutions company, with the introduction of the Kimball Solutions brand in 2026 to represent the expanded portfolio of non-electronic manufacturing solutions. The strategic priorities emphasized include leveraging the global footprint to respond to increasing customer demand for geographic diversification and supply chain resiliency, expanding the package of value through enhanced CDMO capabilities with particular emphasis on medical and pharmaceutical applications, and expanding into new markets. The acquisition of Helvoet on July 1, 2026 is highlighted as a key strategic move that expanded capabilities in precision molded plastics, complex tooling, and medical device component manufacturing. Management also emphasizes the company's commitment to sustainability, with a goal to source 100% renewable electricity by 2030, and the importance of the company's Guiding Principles and human capital management, noting an average workforce tenure of 8 years ⁴¹ and a Guiding Principles survey score of 8.28 ⁴² across the enterprise with a participation rate of approximately 88% ⁴³.