Kimball Electronics Shifts Focus, Automotive Sales Drive Growth

TL;DR

**Kimball's steady automotive and medical growth, despite supply chain headwinds, makes it a reliable play in contract manufacturing, but watch those customer concentrations.**

AI Summary

Kimball Electronics, Inc. (KE) reported a fiscal year ended June 30, 2025, with a continued focus on its contract manufacturing organization (CMO) solutions. The company's net sales composition shifted slightly, with Automotive increasing to 49% in 2025 from 46% in 2023, Medical decreasing to 27% from 28%, and Industrial decreasing to 24% from 26% over the same period. Key customers Nexteer Automotive and ZF remained significant, accounting for 19% and 11% of net sales, respectively, in 2025. Philips, which was 14% of net sales in 2023, fell below 10% in 2025. KE expanded its global footprint by executing a lease for a third manufacturing facility in Indiana to enhance its medical CMO capabilities, which will replace an existing Indianapolis facility. The company continues to face risks from component shortages, particularly semiconductors, and relies on contractual arrangements to mitigate cost increases and inventory exposure.

Why It Matters

Kimball Electronics' strategic expansion into medical CMO solutions and its consistent performance in automotive electronics are crucial for investors seeking stability in a volatile supply chain environment. The company's ability to manage significant customer concentrations, like Nexteer Automotive at 19% of sales, demonstrates its deep integration with key partners but also poses a concentration risk. For employees, the new Indiana facility signifies growth and potential job creation, while customers benefit from KE's global footprint and specialized manufacturing expertise, particularly in high-reliability sectors. In a competitive EMS market, KE's focus on quality and long-term relationships helps it stand out against larger rivals like Flex and Jabil.

Risk Assessment

Risk Level: medium — The risk level is medium due to significant customer concentration, with Nexteer Automotive accounting for 19% of net sales in 2025, and ZF at 11%. Additionally, the company operates in an industry prone to component shortages, particularly semiconductors, which can disrupt operations and increase costs, as noted in the filing.

Analyst Insight

Investors should monitor Kimball Electronics' progress in diversifying its customer base and the successful integration of its new Indiana medical CMO facility. Evaluate the company's ability to pass on increased component costs to customers through contractual pricing arrangements, as this is critical for margin protection.

Financial Highlights

debt To Equity

N/A

revenue

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operating Margin

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total Assets

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total Debt

N/A

net Income

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eps

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gross Margin

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cash Position

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revenue Growth

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Revenue Breakdown

Key Numbers

• $452.5 million — Aggregate market value of common stock held by non-affiliates (As of December 31, 2024)
• 24,218,517 shares — Common stock outstanding (As of August 7, 2025)
• 49% — Automotive segment net sales (Increased from 46% in 2023 to 49% in 2025)
• 27% — Medical segment net sales (Decreased from 28% in 2023 to 27% in 2025)
• 24% — Industrial segment net sales (Decreased from 26% in 2023 to 24% in 2025)
• 19% — Nexteer Automotive's portion of net sales (Increased from 15% in 2023 to 19% in 2025)
• 11% — ZF's portion of net sales (Decreased from 12% in 2023 to 11% in 2025)
• 24th — Global EMS provider ranking (Ranked by Manufacturing Market Insider for calendar year 2024)

Key Players & Entities

• Kimball Electronics, Inc. (company) — Registrant and its subsidiaries
• Nexteer Automotive (company) — Major customer, 19% of net sales in 2025
• ZF (company) — Major customer, 11% of net sales in 2025
• Philips (company) — Former major customer, 14% of net sales in 2023, now less than 10%
• The Nasdaq Stock Market LLC (regulator) — Exchange where KE Common Stock is registered
• Benchmark Electronics, Inc. (company) — Competitor in EMS industry
• Flex Ltd. (company) — Competitor in EMS industry
• Jabil Inc. (company) — Competitor in EMS industry
• Plexus Corp. (company) — Competitor in EMS industry
• Sanmina Corporation (company) — Competitor in EMS industry

FAQ

Risk Factors

• Component Shortages [high — operational]: The company continues to be exposed to risks from component shortages, particularly semiconductors. These shortages can disrupt production schedules and impact revenue. KE relies on contractual arrangements to mitigate cost increases and inventory exposure related to these shortages.
• Customer Concentration [medium — market]: Significant reliance on key customers like Nexteer Automotive (19% of net sales) and ZF (11% of net sales) poses a risk. A substantial decline in business from these major clients could materially impact financial performance. The decline of Philips' contribution below 10% highlights this dynamic.
• Global Footprint Expansion [medium — operational]: Expansion into a third manufacturing facility in Indiana for medical CMO capabilities, while strategic, introduces operational risks related to integration, scaling, and potential disruptions during the transition from the existing facility.

Industry Context

Kimball Electronics operates within the global electronics manufacturing services (EMS) industry, ranked as the 24th largest provider globally for 2024. The company focuses on providing contract manufacturing solutions, particularly for the automotive, medical, and industrial sectors. Key trends include increasing demand for specialized manufacturing in high-growth areas like automotive electronics and medical devices, alongside persistent challenges like supply chain volatility and the need for advanced technological capabilities.

Regulatory Implications

As a global manufacturer, Kimball Electronics is subject to various regulations concerning environmental standards, labor practices, and product safety in the regions where it operates. Compliance with these regulations is crucial to avoid penalties and maintain operational continuity. The company's focus on the medical sector may also entail adherence to specific healthcare industry regulations, such as those from the FDA.

What Investors Should Do

1. Monitor Automotive Segment Growth
2. Assess Medical Segment Strategy
3. Evaluate Supply Chain Risk Mitigation

Key Dates

• 2025-06-30: Fiscal Year End — Marks the end of the reporting period for the 10-K filing, providing the latest financial and operational data.
• 2024-12-31: Market Capitalization Reference — The aggregate market value of common stock held by non-affiliates was $452.5 million as of this date, indicating the company's size and public float.
• 2025-08-07: Common Stock Outstanding — 24,218,517 shares of common stock were outstanding as of this date, relevant for per-share calculations and ownership analysis.

Glossary

Contract Manufacturing Organization (CMO)

A company that provides manufacturing services for other companies, often on a contract basis. KE offers CMO solutions. (This is KE's core business model, and understanding CMO services is key to analyzing their operations and strategy.)

Net Sales

The total revenue generated from sales after deducting returns, allowances, and discounts. This is the primary measure of revenue reported by KE. (Used to analyze the performance and composition of KE's business across different segments (Automotive, Medical, Industrial).)

Fiscal Year

A period of 12 months used for accounting and financial reporting purposes, which may not coincide with the calendar year. KE's fiscal year ends on June 30. (Essential for correctly interpreting financial data and comparing performance across periods.)

Year-Over-Year Comparison

The fiscal year 2025 filing shows a continued strategic shift towards the Automotive sector, which now represents 49% of net sales, up from 46% in 2023. Conversely, the Medical and Industrial segments have seen slight declines in their share of revenue. Key customer concentration remains a factor, with Nexteer Automotive increasing its share to 19%, while Philips' contribution has fallen below 10%. The company is actively managing supply chain risks, particularly component shortages, through contractual measures, and is investing in expanding its medical manufacturing capacity.

Filing Documents

• ke-20250630.htm (10-K) — 1913KB
• exhibit41descriptionofcapi.htm (EX-4.1) — 37KB
• exhibit1906302025q4insider.htm (EX-19) — 23KB
• a10kexhibit2106302025q410k.htm (EX-21) — 10KB
• a10kexhibit2306302025q410k.htm (EX-23) — 3KB
• a10kexhibit2406302025q410k.htm (EX-24) — 7KB
• exhibit31106302025q410k.htm (EX-31.1) — 11KB
• exhibit31206302025q410k.htm (EX-31.2) — 12KB
• exhibit32106302025q410k.htm (EX-32.1) — 5KB
• exhibit32206302025q410k.htm (EX-32.2) — 5KB
• exhibit9706302025q4executi.htm (EX-97) — 30KB
• ke-20250630_g1.jpg (GRAPHIC) — 2048KB
• 0001606757-25-000027.txt ( ) — 15745KB
• ke-20250630.xsd (EX-101.SCH) — 89KB
• ke-20250630_cal.xml (EX-101.CAL) — 97KB
• ke-20250630_def.xml (EX-101.DEF) — 715KB
• ke-20250630_lab.xml (EX-101.LAB) — 1038KB
• ke-20250630_pre.xml (EX-101.PRE) — 864KB
• ke-20250630_htm.xml (XML) — 1889KB

Business

Business 3 Item 1A.

Risk Factors

Risk Factors 10 Item 1B. Unresolved Staff Comments 19 Item 1C. Cybersecurity 19 Item 2.

Properties

Properties 21 Item 3.

Legal Proceedings

Legal Proceedings 21 Item 4. Mine Safety Disclosures 21 Information about Our Executive Officers 22 PART II Item 5. Market for Registrant's Common Equity, Related Share Owner Matters and Issuer Purchases of Equity Securities 23 Item 6. [Reserved] 23 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 24 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 32 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 33 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 68 Item 9A.

Controls and Procedures

Controls and Procedures 68 Item 9B. Other Information 68 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 68 PART III Item 10. Directors, Executive Officers and Corporate Governance 69 Item 11.

Executive Compensation

Executive Compensation 69 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Share Owner Matters

Security Ownership of Certain Beneficial Owners and Management and Related Share Owner Matters 70 Item 13. Certain Relationships and Related Transactions, and Director Independence 70 Item 14. Principal Accounting Fees and Services 70 PART IV Item 15. Exhibits, Financial Statement Schedules 71 Item 16. Form 10-K Summary 71

SIGNATURES

SIGNATURES 74 2 PART I

- Business

Item 1 - Business General As used herein, the terms "Company," "Kimball Electronics," "we," "us," or "our" refer to Kimball Electronics, Inc., the Registrant, and its subsidiaries. Reference to a year relates to a fiscal year, ended June 30 of the year indicated, rather than a calendar year unless the context indicates otherwise. Additionally, references to the first, second, third, and fourth quarters refer to those respective quarters of the fiscal year indicated.

Forward-Looking Statements

Forward-Looking Statements This document contains certain forward-looking statements. These are statements made by management, using their best business judgment based upon facts known at the time of the statements or reasonable estimates, about future results, plans, or future performance and business of the Company. Such statements involve risk and uncertainty, and their ultimate validity is affected by a number of factors, both specific and general. They should not be construed as a guarantee that such results or events will, in fact, occur or be realized as actual results may differ materially from those expressed in these forward-looking statements. The statements may be identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "projects," "estimates," "forecasts," "seeks," "likely," "future," "may," "might," "should," "would," "could," "will," "potentially," "can," "goal," "predict," and similar expressions. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historical results. We make no commitment to update these factors or to revise any forward-looking statements for events or circumstances occurring after the statement is issued, except as required by law. The risk factors discussed in Item 1A - Risk Factors of this report could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements. At any time when we make forward-looking statements, we desire to take advantage of the "safe harbor" which is afforded such statements under the Private Securities Litigation Reform Act of 1995 where factors could cause actual results to differ materially from

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