Kimball Electronics (NASDAQ: KE) reported fiscal Q4 2026 net sales of $371.6 million, down 2% from $380.5 million a year earlier, while diluted EPS rose to $0.35 from $0.26. The quarter featured a sharp GAAP/non-GAAP split: a $15.0 million disposal gain lifted reported profit, but adjusted diluted EPS swung to a $0.01 loss as adjusted operating margin narrowed to 4.9%.
Core earnings results
Sales increased 5% sequentially as all three end markets improved from the third quarter, but remained below the prior-year period. Gross profit increased despite lower revenue because cost of sales declined from $350.0 million to $338.6 million, lifting gross margin by 90 basis points to 8.9%.
The improvement did not carry through to underlying operating results. Adjusted operating income declined about 8%, while adjusted selling and administrative expenses increased to $14.8 million from $10.8 million.
| Metric | Fiscal Q4 2026 | Fiscal Q4 2025 | Year-over-year change |
|---|---|---|---|
| Net sales | $371.6 million | $380.5 million | Down 2% |
| Gross profit and margin | $32.9 million; 8.9% | $30.5 million; 8.0% | About 8% higher; margin up 90 bps |
| Operating income and margin | $29.1 million; 7.8% | $16.5 million; 4.3% | About 77% higher; margin up 350 bps |
| Adjusted operating income and margin | $18.1 million; 4.9% | $19.6 million; 5.2% | About 8% lower; margin down 30 bps |
| Net income | $8.5 million | $6.6 million | About 29% higher |
| Diluted EPS | $0.35 | $0.26 | About 35% higher |
| Adjusted diluted EPS | $(0.01) | $0.34 | Swung to a loss |
| Operating cash flow | $42.4 million | Not provided | — |
Medical growth was offset by automotive and industrial declines
Medical was the only end market to post year-over-year growth in the quarter. Its $1.6 million increase was insufficient to offset combined declines of about $10.5 million across automotive and industrial operations.
| End market | Fiscal Q4 2026 sales | Fiscal Q4 2025 sales | Change |
|---|---|---|---|
| Automotive | $169.7 million, 46% of sales | $175.0 million, 46% | Down 3% |
| Medical | $108.8 million, 29% of sales | $107.2 million, 28% | Up 1% |
| Industrial excluding AT&M | $93.1 million, 25% of sales | $98.3 million, 26% | Down 5% |
Prior-year vertical results were recast to classify commercial transportation sales under industrial rather than automotive. The Automation, Test and Measurement business, or AT&M, was divested effective July 31, 2024 and generated no sales in either fourth-quarter period.
Open orders reached $643 million at June 30, up from $602 million at the end of March and essentially unchanged from the revised $642 million reported one year earlier. This indicates better sequential order activity without meaningful year-over-year backlog growth.
A disposal gain lifted GAAP profit while adjusted earnings weakened
The $15.0 million gain on disposal was central to the increase in reported operating income. The comparable prior-year gain was only $1.1 million, meaning the year-over-year increase in the gain was larger than the entire $12.6 million increase in GAAP operating income.
After removing the disposal gain and other specified items, adjusted operating income fell to $18.1 million from $19.6 million. Adjusted EBITDA also declined to $28.2 million from $29.2 million.
At the bottom line, the non-GAAP reconciliation removed an $11.4 million after-tax disposal gain while adding back stock compensation, restructuring and acquisition expenses. That produced an adjusted net loss of $0.2 million, compared with adjusted net income of $8.4 million a year earlier. The quarterly tax provision also increased to $17.9 million from $6.1 million, although the release did not specify the reason for the increase.
Cash generation and lower debt strengthened the balance sheet
Kimball Electronics generated $42.4 million of operating cash flow in Q4, marking its tenth consecutive quarter of positive operating cash generation. Cash conversion days improved to 82 from 90 in the preceding quarter and 85 a year earlier, the company’s best result in 17 quarters.
At June 30, the company held $88.9 million in cash and reported $322.4 million of borrowing capacity. Debt declined to $116.6 million, its lowest level in more than four years. Inventories were $271.9 million, compared with $273.5 million a year earlier.
Full-year operating cash flow was $72.3 million, substantially below $183.9 million in fiscal 2025 despite the strong fourth-quarter contribution. Kimball Electronics also spent $2.1 million to repurchase 83,000 shares during Q4 and $11.9 million to repurchase 447,000 shares for the full fiscal year.
Fiscal 2027 guidance
For fiscal 2027, management expects a return to sales growth through a combination of organic expansion and approximately $60 million of revenue from the Helvoet Polymer Technologies acquisition. Medical is expected to remain the fastest-growing vertical and account for more than one-third of total company sales.
| Metric | Fiscal 2027 guidance | Context |
|---|---|---|
| Net sales | $1.535 billion-$1.560 billion | Up 7%-9% from fiscal 2026 |
| Organic sales growth | 3%-5% | Excludes Helvoet’s contribution |
| Helvoet sales | Approximately $60 million | Acquisition-related revenue |
| Medical sales growth | High-single to low-double digits | Expected to exceed one-third of total sales |
| Adjusted operating margin | 4.4%-4.7% | Fiscal 2026 margin was 4.6% |
| Capital expenditures | $50 million-$60 million | Supports planned investment activity |
The guidance shows that a material portion of expected sales growth will come from Helvoet rather than existing operations. The adjusted operating margin range also surrounds fiscal 2026’s 4.6% result, so management is not projecting a clear step-up in underlying margin despite higher expected revenue.
Recent insider activity
The supplied insider data show no open-market insider purchases or sales during the preceding six months. The latest fully specified transactions were equity awards to four directors on November 14, 2025; these were compensation grants rather than open-market purchases.
| Insider | Position | Transaction | Reported price | Reported value |
|---|---|---|---|---|
| Robert J. Phillippy | Director | Stock award/grant | $28.34 | $125,008 |
| Holly A. Van Deursen | Director | Stock award/grant | $28.34 | $125,008 |
| Gregory J. Lampert | Director | Stock award/grant | $28.34 | $207,505 |
| Michele Holcomb | Director | Stock award/grant | $28.34 | $125,008 |
Risks investors should watch
- Underlying profitability remains under pressure. Adjusted operating income declined, adjusted operating margin narrowed, and adjusted EPS turned negative even though GAAP earnings increased.
- End-market growth remains uneven. Medical posted modest quarterly growth, but automotive and industrial sales declined 3% and 5%, respectively.
- Fiscal 2027 growth depends partly on acquisition execution. Approximately $60 million of expected sales will come from Helvoet, making the acquisition’s integration and expected accretive impact important to the outlook.
- Planned investment could absorb substantial cash. Fiscal 2027 capital expenditures are projected at $50 million to $60 million, compared with fiscal 2026 operating cash flow of $72.3 million.
Summary
Kimball Electronics ended fiscal 2026 with lower year-over-year quarterly sales but better gross margin, positive cash generation and reduced debt. The increase in GAAP profit was largely tied to a disposal gain, while adjusted earnings and operating margin weakened. Fiscal 2027 performance will depend on delivering organic growth led by Medical, integrating Helvoet and maintaining cash generation while funding higher capital expenditures.
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