Kimball reports third quarter salesMay 2, 2013
From local sources
JASPER — Kimball International Inc. (Nasdaq: KBALB) today reported net sales of $301.5 million and net income of $3.7 million, or 10 cents per Class B diluted share, for the third quarter of fiscal year 2013, which ended March 31.
Consolidated net sales in the third quarter of fiscal year 2013 increased 6 percent from the prior year third quarter as increased net sales in the electronic manufacturing services, known as EMS, segment were partially offset by lower net sales in the furniture segment, according to a company news release. Similar to last quarter, growth in several market verticals within the furniture segment was offset by a double-digit decline in both office furniture sales to the federal government and in hospitality furniture sales due to the comparable prior year period including sales from two unusually large projects.
Third-quarter gross profit as a percent of net sales was flat with the prior year third quarter as improved margins in the EMS segment were partially offset by lower margins in the furniture segment. A sales mix shift toward the EMS segment, which carries a lower gross profit percent than the furniture segment, also negatively impacted the consolidated gross profit percent.
Consolidated third-quarter selling and administrative expenses increased 6 percent in absolute dollars compared to the prior year but declined slightly as a percent of sales. The increased costs were primarily due to higher incentive compensation costs, an allowance recorded for uncollectible receivables related to one customer and higher sales and marketing costs.
The company’s effective tax rate for the third quarter of fiscal year 2013 was 6 percent compared to 23.2 percent in the prior year third quarter. The current year third quarter effective tax rate was favorably impacted by the mix of earnings between U.S. and foreign jurisdictions (pre-tax loss in the high-tax U.S. jurisdiction coupled with pre-tax income in countries with lower tax rates) and tax benefits related to the extension of the research and development tax credit.
Operating cash flow for the third quarter of fiscal year 2013 was a cash inflow of $11.4 million compared to $28.8 million in the third quarter of the prior year.
The company’s cash and cash equivalents less short-term borrowings increased to $89 million at March 31, 2013, compared to $75.2 million at June 30, 2012. Long-term debt including current maturities remains at less than $333,000.
James C. Thyen, president and CEO, said, “We were very pleased with the performance in the EMS segment during the third quarter. Our key areas of focus in this segment are growth and further diversification of our customer base. ...The progress made in the EMS segment was partially negated by a loss in the furniture segment for the third quarter on the lower sales volumes. The comparison to the prior year third quarter was a difficult one in the furniture segment as we shipped two unusually large hospitality furniture projects last year. Orders in this segment were soft during the quarter, particularly within certain areas of office furniture. Within the hospitality market, the high end of the market appears to be recovering while there is continued price sensitivity and discounting in the lower end of the market. Despite the challenges in this segment, we expect to see sequential improvement in the furniture segment results in the fourth quarter compared to the third quarter we just completed.”
Fiscal year 2013 third quarter net sales in the EMS segment increased 13 percent compared to the third quarter of the prior year related to sales growth to customers in all four of the vertical markets in which the segment competes: the automotive, medical, industrial and public safety industries.
Fiscal year 2013 third quarter net sales in the furniture segment declined 3 percent compared to the prior year, as decreased net sales of hospitality furniture — primarily due to two unusually large projects in the third quarter of last year — more than offset an increase in net sales of office furniture despite a double-digit decline in office furniture sales to the federal government.
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