Kimball Electronics to divest Automation, Test & Measurement business
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
As part of its fiscal third-quarter earnings report released Tuesday, Jasper-based Kimball Electronics announced plans to divest its Automation, Test & Measurement (AT&M) business.
The company said the business segment played a major factor in its net loss of $6.1 million for the quarter, compared to net income of $16.4 million during the same period last year.
Specific details on the planned divestiture were scarce, but CEO Rick Phillips said the move will allow Kimball to increase the focus and support of its core Electronics Manufacturing Services business.
Phillips, who joined the company just over a year ago, explained the rationale for the move during a conference call with investors Wednesday morning.
“As I got into the business and, together with the leadership team, really spent a lot of time conducting a strategic review, I saw that the strategic fit really wasn’t there,” Phillips said. “I think the AT&M business will be served better by a different owner and will also allow Kimball to really focus on what we think is a really bright, long-term future in EMS, including our medical solutions capabilities.”
The Automation, Test & Measurement business provides a variety of services, including integrated robotics and factory automation, semiconductor inspection and automation, predictive equipment service, and defect detection.
The business serves multiple industries, including consumer electronics, automotive, medical and pharmaceutical, and web and cloud, according to the company’s website.
During the fiscal third quarter, the AT&M business saw an operating loss of $25.4 million, compared to a profit of $1.6 million in the same quarter in 2023. Net sales from the business were also cut in half to $8.1 million.
CFO Jana Croom declined to provide more information on the divestiture or what the potential savings would come from the deal during the earnings call “because the sale is in progress.” It was not immediately clear who the potential buyer might be.
Kimball also reported net sales of $425 million for the quarter, down 12% from the previous year. Phillips said that drop was expected due to continued challenges in the EMS industry.
“While we suspect the macro headwinds will persist in fiscal 2025, we’re continuing to make investments in long-term growth opportunities supported by a robust funnel for new business in the next 18-24 months, while deploying a capital allocation strategy that balances growth, lasting customer relationships, and returning cash to share owners with opportunistic share repurchases,” Phillips said in a news release.
Kimball Electronics’ stock was up 0.5% to $22.27 per share as of 2 p.m. Wednesday.
You can connect to the full earnings report by clicking here.