Q3 2024 Kimball Electronics Inc Earnings Call

Participants

Andy Regrut; Vice President, Investor Relations; Kimball Electronics Inc

Richard Phillips; Chief Executive Officer, Director; Kimball Electronics Inc

Jana Croom; Chief Financial Officer; Kimball Electronics Inc

Griffin Boss; Analyst; B. Riley Securities

Derek Soderberg; Analyst; Cantor Fitzgerald & Co.

Jaeson Schmidt; Analyst; Lake Street Capital Markets, LLC

Tim Moore; Analyst; EF Hutton

Presentation

Operator

Thank you for your patience, everyone. The Kimball Electronics third-quarter fiscal 2024 earnings conference call will begin shortly. (Operator Instructions)
Good morning, ladies and gentlemen. Welcome to the Kimball Electronics third-quarter fiscal 2024 earnings conference call. My name is Carla, and I will be your facilitator for today's call. (Operator Instructions)
Today's call, May 8, 2024, is being recorded. A replay of the call will be available on the Investor Relations page of the Kimball Electronics website. At this time, I would like to turn the call over to Andy Regrut, Vice President, Investor Relations.
Mr. Regrut, you may begin.

Andy Regrut

Thank you, operator, and good morning, everyone. Welcome to our terms with for genital officer. We issued a press release yesterday afternoon with our results for the third quarter of fiscal 2024.
To accompany today's call, a presentation has been posted to the Investor Relations page on our company website. Before we get started, I'd like to remind you that we will be making forward-looking statements that involve risk and uncertainty and are subject to our Safe Harbor provisions as stated in our press release and SEC filings, and that actual results can differ materially from the forward looking statements.
Our commentary today will be focused on adjusted non-GAAP results. Reconciliation creations of GAAP to non-GAAP amounts are available in our press release this morning, Rick will start the call with a few opening comments. Jim will review the financial results for the quarter and guidance for fiscal 2024, and Rick will complete our prepared remarks before taking your questions.
I'll now turn the call over to Rick. Thanks, Andy, and good morning, everyone. As you know, I recently completed my 1st year at Kimball Electronics. It's been a good journey already, and I am excited about the future for the Company. Before I get into our Q3 results, I want to share some observations on the business and provide an update on our strategic direction and structure moving forward.
Firstly, I mentioned early on, but I was drawn to the Kimball opportunity for a number of reasons. But at the top of my list for the outstanding company culture and the opportunity to build on a strong foundation to achieve significant value creation.
My experiences so far have confirmed those perspectives, spent a great deal of time visiting our locations, meeting with customers and working with our leadership team to complete an in-depth review of our strategic focus, vertical market structure and organization design.

Richard Phillips

Based on that review, we are announcing steps today to sharpen our strategic focus and to further position the Company for Pro possible growth and stronger performance moving forward. Those steps which we have taken recently or are taking now include the following.
First, divesting our automation test and measurement business. While this business has a bright future ahead, it is not a good strategic fit for Campbell and our goals for future growth. The business models are not synergistic, and it is imperative that we focus on the growth opportunities in our core EMS business.
We are still in active customer of 18 m. business next, increasing the focus and support for our core EMS business, including realigning our Medical Solutions business unit in Indianapolis into our EMS medical vertical for further differentiation.
Consistent with the structural moves, we have elevated to key executives to enterprise wide operations and commercial responsibility, Steven Korn as Chief Operating Officer, and Kathy Thomson as Chief Commercial Officer. In addition, we are responding to this period of end market softness by controlling what we can control, including resizing our team, taking specific cost actions and continuing to focus on significant working capital improvements.
We recorded impairment and restructuring charge in the third quarter to support some of these actions. General will provide additional detail in a few moments. And as we anticipated, the operating environment remain challenged for the EMS industry and our sales in the third quarter declined. We expect the macro headwinds to persist in fiscal 2025.
During this period of end market softness, we are taking action by proactively aligning our cost structure was short term demand trends. Remaining competitive was stable operating margins and focusing on working capital improvements. Notably, the inventory levels are now down over 90 million from the peak.
We continue to make investments in longer term growth opportunities that are supported by a robust funnel of new business in the next 18 to 24 months, while deploying a capital allocation strategy that balances organic growth, lasting customer relationships and returning cash to shareowners with opportunistic share repurchase.
This net sales in the third quarter totaled $425 million, a 12% decrease from prior year. The decline was shared across the three vertical markets we support with softness in each region of our global footprint. On a sequential basis, however, sales increased $4 million or nearly 1%, which is impressive given the 32% growth we experienced in the prior year quarter.
We estimate on a two year stack basis, the growth in each of our verticals is in the low to mid-teens. Although we are anticipating year-over-year declines next quarter, we do expect sequential growth over Q3. Net sales in the automotive vertical, our largest business were $200 million, down 9% compared to Q3 last year and 47% of total company sales decreased.
This quarter's was driven by continued weak demand in Europe, incremental softness in North America and a decline in China. When comparing Q3 sales to last quarter, North America and Europe both posted sequential increases.
We continue to believe the longer-term opportunity for growth in automotive will be driven by an increase in the rate at which electronic content is being added to vehicles, specifically in steering and braking systems, but geez and expanded operating systems that align very well with our core manufacturing capabilities and proven expertise, safety critical products, which ideally positions us for further advancements.
As we've stated numerous times, the architectures of the steering and braking systems are agnostic to vehicles type internal combustion engines, EVs or hybrids, and that the automotive industry is highly regulated with stringent certifications, validation protocols and change management systems. So this business is sticky and often result in program life cycles that can span 8 to 10 years in length with single source awards.
Net sales in our medical vertical were 113 million, a 17% decrease compared to Q3 last year. And 27% of total company sales decline this quarter was driven by lost sales with a major customer involved in an FDA recall partially offset by growth with other customers. As a reminder, our annual guidance assumes a net 50 million reduction in medical sales from this dynamic that is a $100 million decrease in sales with the customer involved in the recall, partially offset by a $50 million increase in sales in new and existing programs.
Similar to automotive, we continue to believe mega trends in the medical industry, including an aging population, increasing access and affordability to health care, decreasing medical device sizes, combined with the need for higher levels of precision, increasing connected drug delivery systems and the industry-wide trend of outsourcing, higher level assemblies will contribute to our longer term top-line growth.
We are strategically positioned to support technological advances in this vertical through Kimball metal solutions. Net sales in Industrial were 110 million of 14% decrease compared to Q3 last year and 26% of total company sales. As a reminder, results for the 18 m. business are included in this vertical. In the third quarter.
Approximately half half of the decline in sales in Industrial resulted from year-over-year weakness in the ATM business with a balanced driven by lower demand for internal climate control systems and smart meters in Europe, which, as we reported last quarter, have been commoditizing. We frequently refer to industrial as green and clean with products that promote energy efficiency, safety, carbon neutrality and the better consumption of natural resources, including water, gas and electricity.
We see the mega trend in legislation and incentive supporting the decarbonization as meaningful growth drivers, and we are strategically positioned to support products that reduce environmental impacts, so quarter filled with a number of important developments.
I'll now turn the call over to Jana Croom for her insights on the financial results and review of our guidance. Jana?

Jana Croom

Thank you, Rick, and good morning, everyone. As Rick mentioned a moment ago, our results this quarter included an impairment at 13 with AT&M business as well as restructuring expenses in support of sharpening the strategic focus of the company.
All-in activity totaled $14.5 million after tax, or $0.58 per share, with goodwill and asset impairment equaling $14 million, or $0.56 per diluted share for restructuring expense of $1.2 million, or $0.05 per diluted. The chair, partially offset by recovery of a legal settlement of $700,000 or $0.03 per diluted share.
For clarity, my review of the financial results for the quarter will exclude these items. Net sales in Q3 or 425 million, a 12% decrease compared to the third quarter of fiscal 2023 for contacts for AT&M business contributed over 100 basis points to the decline. There was not an impact from foreign exchange on consolidated sales year over year.
The gross margin rate in Q3 was 7.9% and 100 basis point decline compared to 8.9% and the third quarter of fiscal 2023, with the decrease coming from lower absorption and RAMS. manufacturing facilities and the ATM business, both a result of declining sales.
Yes, it's selling and administrative expenses in the third quarter were $16.6 million, an $800,000 decline compared to the adjusted results in Q3 of last year. Primarily the result of lower bonus. We are continuing to take a hard look at our cost structure in the current macro economic environment.
When measured as a percentage of sales, adjusted selling and administrative expenses were 3.9% and 30 basis point increase versus Q3 last year due to lower sales. Adjusted operating income for the third quarter was 17 million or 4% of net sales, which compares to last year's adjusted results of 25.6 million or 5.3% of net sales.
Other income and expense was expense of $6.3 million in the third quarter versus expense of $3.3 million in Q3 of fiscal 2023, with the change resulting from higher interest expense this year and outcome of elevated debt levels and the current interest rate and environment and foreign currency movements. Actual effective tax rate is higher by the impacts of the impairment and restructuring charges was approximately 52% in the third quarter of fiscal 2024.
We continue to expect that consolidated tax rate in the mid-20s. Adjusted net income in the third quarter fiscal 2024 was $8.4 million, or $0.34 per diluted share compared to adjusted net income in Q3 last year of $16.4 million or $0.65 per diluted share.
Turning now to the balance sheet. Cash and cash equivalents at March 31, 2024, were $65.2 million. And cash flow from operating activities in the quarter was $42.6 million. Cash conversion days were 110 days to 92 days in the third quarter of last year and 117 days in Q2.
The decrease in CCD this quarter compared to Q2 was driven by overall better management of working capital, but the biggest improvement are occurring and production days on hand. We are looking to continue to significantly improve our cash conversion days as we actively and aggressively manage its components. Inventory ended the quarter at $396.2 million compared to $488.2 million at the end of Q3 of fiscal 2023 and $455.7 million last quarter.
We are very pleased with the reduction in inventory and expect this number to continue to decline as we work with customers to rightsize inventory to match the current demand outlook. Capital expenditures in the third quarter were $13.4 million growth. Maintenance requirements and investments in automation and efficiency borrowings on our credit facility at March 31, 2024 for $319.6 million compared to $289.4 million a year ago a nd $321.8 million at the end of Q2.
Our short-term liquidity available represented as cash and cash equivalents, plus the unused at unused portion of our credit facilities totaled $182.6 million at the end of Q3. There were no share repurchases in the third quarter of fiscal 2024.
Since October 2015 under our Board-approved authorized share repurchase program, a total of $88.8 million has been returned to our shareholders by repurchasing 5.8 million shares of common stock. We have $11.2 million remaining on the repurchase program.
And as Rick highlighted, we expect to return cash to shareholders for the opportunistic share repurchases in the quarters to come. We are reiterating guidance for adjusted operating income of 4.2% to 4.6% of net sales and response to the current environment. Net sales are expected to decline to four through declined 46% compared to prior year.
Our estimate for capital expenditures has been updated with an expected outcome in the range of $55 million to $60 million compared to our prior guidance of $70 million to $80 million. As Rick previously stated, we anticipate macro headwinds to persist and surgical 2025 based on early indications from customers.
As a result, we expect to continue executing our efforts to streamline the company with additional anticipated pretax restructuring charges of $1 million to $2 million. We will provide a more fulsome update next quarter when we provide FY25 guidance.
I'll now turn the call back over to Rick.

Richard Phillips

Thanks, Jana. Before opening the lines for questions, I'd like to share a few thoughts. In closing, we recently published our annual ESG disclosures with the release of our 2023 guiding principles report themed, how we are winning together, Kimball way to report reflects the deep roots of sustainability and our culture and how highlights numerous sustainability related recognitions and accomplishments from calendar 2023.
I'd like to thank our team for once again, putting together a best in class summary that captures the focused efforts and achievements from the company towards sustainability. I believe the 2023 report is our finest and demonstrates our debt location to the guiding principles of customers, people, citizenship and profits.
For those of you that have not had the opportunity to review the reported can be found on our corporate website. I'm confident it will be thoroughly impressed during this time of short-term market choppiness and uncertainty as to when consumer demand will return to normalized cycles.
The actions announced today further position the company for long-term value creation. We continue to work to stabilize and improve our operating income margin. The divestiture of the ATM business will increase our focus on EMS operations while consolidating the EMS. and medical solutions.
Manufacturing organizations solidifies our medical platforms, particularly as we look to extend our reach into higher level assemblies. In addition, we are improving our shared services organization through a lens of centers of excellence was new processes that leverage recent investments in technology. All of these actions have made the company leaner, more nimble, and with a cost structure that aligns with the current market conditions, but not at the expense of future growth.
We'll cross that line as the future growth materializes. We intend to hold these savings, enhancing our competitiveness and improving returns to stakeholders. As I mentioned earlier, I've never been more excited about the future of the company.
Carla, we would now like to open the lines for questions.

Question and Answer Session

Operator

(Operator Instructions) Griffin Boss, B. Riley Securities.

Griffin Boss

Hi, good morning. Thanks for taking my questions. So first, I'll just start out broadly in the first quarter, you know, you mentioned your expectations that macro will remain challenging for some time, right. Obviously, now you're you're being a little more direct in saying my persist through fiscal year '25.
I'm just curious if this is if that's maybe longer than you thought last quarter or what has changed or are you seeing any incremental weakness in certain end markets? Just a little bit more color there would be helpful.

Richard Phillips

Yeah, Griffin. Hi, how are you? Thanks for joining the call. You know, I would say, Griffin, we've tried not to be too precise in predicting the return to normal levels of demand stability just because there's so many so much uncertainty. And so many factors, we obviously stay very close to our customers and their demand signals and work with them on what they're seeing and expecting.
And I would say, while we haven't addicted this return to stability, it has persisted probably longer than we anticipated. And those are the signals we continue to see. Again, we're having a lot of success in building our funnel in winning new programs in delivering on operations and quality performance.
And so we continue to have that really optimistic long term view. But to your point, this softness has been persisting, and that's why we updated our perspective on fiscal year 2025.

Jana Croom

Yeah, Griffin, what I would add is and if you had talked to us nine months ago, we would have said it's going to be a short-lived decline and it's not the funnel of new business. It's really the volume decline and some of our existing business that is challenging revenue right now, and we're seeing it everywhere in the globe.
And so it's interesting because now this quarter, we saw all verticals and all geographic regions impacted So beyond Europe, which is where we thought it began and to North America and Asia.

Griffin Boss

Right. Okay. That's helpful. So has anything changed? I guess, I'll just hone in on maybe North American steering and braking. Obviously, that's been an area of strength in the past couple of quarters. Is that is that trend changed at all? Or what do you what are you seeing in that market?

Jana Croom

So we are seeing softening in the North American market. We're seeing softening in the Asia market related to the steering and braking business. And I think it's just a result of a couple of things. one inventory levels as where the tier two supplier in the Tier 1s are ours. But that's a reflection of consumer demand.
And so I think everyone's sort of taking a bit of a wait and see approach given the geopolitical environment. You couple that with some things that EV and hybrid automakers have to work through in terms of improving battery life and which is something they've been talking about. And and we've been seeing and I know here we are and but we do expect it to be to persist through fiscal 2025. And that is new.

Griffin Boss

Okay, understood. Thanks, Jana. And then just switching over to the automation test and measurement divestiture or it could you give any more sense of the size of that business or scale as it relates to revenue contribution to the company?

Jana Croom

Yes. So actually, Griffin, if you look at our press release, we tried to give it to tell you wouldn't have had to guess we're not giving you complete information right now because the sale is in progress. But once the sale is consummated, we will give you more fulsome information.
And what we disclosed in the press release was net sales and operating income for the three months in the nine months. And then, of course, as we proceed through FY25, we'll we'll give you all that information as well. I'll give you some color.

Griffin Boss

Okay. Great. All right. Thanks again, Jana. Appreciate (multiple speakers) --

Jana Croom

Sure. I was going to give you the numbers, but if (multiple speakers) --

Griffin Boss

Yeah. Okay. All right. I'll check back to the press release. Appreciate it.

Jana Croom

Okay.

Operator

Derek Soderberg, Cantor Fitzgerald.

Derek Soderberg

Yes, good morning, everyone. Thanks for taking the questions. Just back to the divested 1st year of continued quantified, although the cost savings you expect on an annual basis, what sort of a change to OpEx? No growth maintenance CapEx on what's the change you expand on the model post divestiture here? So maybe we'll just start there.

Jana Croom

Yes. Good morning, Derek, and thank you for the question. So I'll start with CapEx because that's probably the easiest and this particular business was not as significantly capital intensive.
And so you will see some decline in CapEx, but it's not going to be meaningful. The CapEx that you're going to see from us going forward is going to be more a function of rightsizing and the need to continue to invest in the business for future growth against the current economic environment.
And so look for FY25 to be similar in nature to FY24 is what I would tell you the model in terms of additional opportunities for cost savings, the focus is going to be on rightsizing the company for the current demand and considering the future growth that we've got.
And I'm just going to go ahead and say it at some point, Eric, we are in our goal of adjusted operating income margin and the 5 to 5.5 range, Navistar being local and something we actually deliver. And so with that in mind, we are going to be looking to streamline the company and to deliver those results. There's always a journey and I have the home.

Derek Soderberg

Yes, sure. We'll drill real. Appreciate those of you some color there. I wanted to move on to automotive. I'm curious, you know, when might we see the next big, I guess, breaking win for you guys have talked about the pipeline specifically for advanced braking. What's the interest level there on the interest more North America? Can you just talk about that pipeline?

Jana Croom

So we are going to tell you at Q4. We just need to get permission to disclose it. We already have in the next breaking win and and actually going to be in Europe, and it's going to be up and running in FY25. So if you recall a while back, we said that, eventually, we would have braking in every region of the world. And that is still absolutely our expectation and well underway. I guess I don't have drawn against all the details of (technical difficulty) for Q4, I will.

Derek Soderberg

Got. Well, t's good to hear. And then, Jana, just in terms of our uses of capital here on you guys called out share repurchases, what's changed in terms of the priorities that I do think shares here at 21, our opportunistic on?
And then on M&A, seems to me like maybe the focus has shifted a little bit more towards organic rates and away from M&A that the case. Thanks.

Jana Croom

Those are great questions. So yes, absolutely. Part of the reason that we had suspended share repurchase, quite honestly. We're trying to get our balance sheet at a state where it was healthier, considering net debt to EBITDA levels, inventory levels, that levels caps, et cetera. Where we sit now with net debt and also looking at where our stock prices, yes, I consider the stock price in absolute value here.
But also candidly, we at Kimball aren't buying our stock. Why should we be convincing anybody else to buy our stock? And so we are going to be in the market repurchasing our shares. In terms of the way that we think about the future of Campbell, the pipeline is really robust. And quite honestly, from just a risk reward perspective, you would always acquire more of Kimball because that is what you know.
And that's what you know you can do. Well, that is not to say that we would not be interested in pursuing inorganic opportunities. There are some really interesting things out there. But as we've said previously, it would be in the healthcare space and because we were not looking for increased exposure and autos are necessarily industrial. We've got really great funnel there. It would be in a geographic region that we don't currently serve.
That was going to add something to our complement, or it with the US filing on a capability that we don't already have. Candidly, though, our favorite acquisitions to make are when one of our customer says, hey, I don't want to produce this book of business anymore. Kimball, we take this over for us. And again, that's something that we know that we can do well.
And so I would expect if we were to announce something it would be in that vein.

Derek Soderberg

Got it. Appreciate it, Jana.

Operator

Jaeson Schmidt, Lake Street.

Jaeson Schmidt

Thanks for taking my questions. Just a couple on the test and measurement business. How much of the updated outlook is being driven by the sale versus just broader softness?

Jana Croom

Yeah, that's a great question. So we look at our industrial segment, which is where 8m live this quarter, for example. If I look at the decline in industrial, roughly half of it was from AT&M. And remember, it's not discuss that.
That's truly the decline year over year that we saw revenue in the AT&M business. So hopefully, that gives you from some color there. But we are selling if I had a target out you and big pictures, I would say you've got the FDA recall from a single customer.
The softness in industrial half of it is AT&M business. And then you've got some bright spots and medical that are offsetting some softness that we're seeing in automotive.

Jaeson Schmidt

Okay. But certainly helpful. And then, Rick, just curious how much of this decision is driven by when you first came in looked at the broader book of business? And as you noted, the test and measurement business isn't terribly synergistic. Or how much this is being driven by just a response to overall market conditions in the broader business?

Richard Phillips

Very much the former, Jason, I think we've done 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 and that I think the ATM business will be does serve better by a different owner and will also allow Kimbell to reach only focus on what we think is really bright long-term future in EMS, including our medical solutions that the capabilities that we have. So very, very much strategic as opposed to a current market conditions.

Jaeson Schmidt

Got it. And then just last one for me, and I'll come back into queue. Jana, you noted in inventory were down quite a bit in the quarter. Would we expect it to continue to decline this calendar year?

Jana Croom

Yes. And in fact, we're expecting it to continue to climb this fiscal year. It's a combination of two things. What we saw was everyone wanted excess inventory on hand because they wanted to feel comfortable coming out of the supply chain shortages that we signed COVID.
And then everyone realized they had too much inventory and they had customer demand for us as the tier two supplier started to drop off. And so we had to right size the amount of inventory that we had to the current demand.
And so as we work through the remainder of the calendar year and even yet this quarter, we're actively working with customers to rightsize the inventory, cancel what we can push out what we can and really get the inventory right sized for the revenue that we're going to produce.

Jaeson Schmidt

Okay. That makes sense. Thanks a lot, guys.

Richard Phillips

Thank you, Jaeson.

Operator

Tim Moore, EF Hutton.

Tim Moore

Going from Regeneron was nice to see the working capital recovery benefits. And it seemed like free cash flow was about $29 million in the quarter. Some of those crudes McGladrey.
So clawing that back on generically the question, you lowered your CapEx guidance by $15 million to $20 million this year, not that much tied to the divestiture. And how should we think about next year would kind of that $15 million to $20 million CapEx cut rollover? And because it's up next year, you think can be $70 million to $80 million CapEx for next year?

Jana Croom

No, I don't think would be very clear about that. You know, it's not uncommon to have a company a little bit of a WALE of referred to as a CapEx die at Azure, looking at the outlook that we're looking at. And so think of it frame it this way. You know that depreciation is roughly $30 million to 40 million.
It is very important that companies keep their maintenance CapEx program in place because if you get off of maintenance CapEx program to all sorts of of challenging things happen downstream. And so we won't do that.
And then the balance of it is going to be what I'll refer to as aggressively build our autumn selling timing that we have to spend that capital to get that asset and to line up and running PayPass cleared on certified versus owning the dollar of revenue.
And so we are going to keep that absolutely as tight as possible, not sacrificing future growth and getting programs up and running on time. But just being very, very mindful of the ways that we are spending our cash.

Tim Moore

Great. That makes sense, especially considering how much you spent on expansion CapEx in the prior two years.
But I have a question for Rick. I know I know you've been talking about the incoming opportunities for medical in sourcing decisions and taking some processes in-house from some major cuts. There's a potential customers on seems like that's been under consideration, but maybe the last 12 months, have you have you signed off on aluminum or greenlit?

Richard Phillips

Alnylam while we have, we are not yet able to comment specifically on that, but we've had some good success there. And again, the, um, we're really pleased that everyone knows about the yield. The FDA recall situation, the significant impact to be to gas going in, but we've had significant wins elsewhere.
Some that have already begun to offset that, as you know, and there are more coming and there's one very significant one that fits right into the category that you just described. It will be talking more about that very soon.

Tim Moore

Could you give me just seems like that pipeline so big that you could eventually backfilling that consent decree customer issue of not immediately, but over the next few quarters.
On one last question, maybe for Jana on gross margin. New unit came in a bit light in the quarter. Just you know, I know you only have one quarter left in the fiscal year and investors should be looking after the next fiscal year and on the good setup for next year.
But 0.48, 0.3% gross margin possible the June quarter, if you exclude the discontinued automation test and measurement, near-miss seems to be losing $8 million operating income a quarter.

Jana Croom

When you strip it out as a discontinued items. So our goal, you know, if you just do the rough math around getting to 5% in need gross margin sort of in that 8.5% range, SG&A in the 3.5% range. But I will tell you is we're still right sizing the business and examining the revenue. So I don't know that we quite get there in Q4, but certainly that's the goal for FY25.
But we're going to have those to be in our adjusted OI guidance range for oh, I imagine. So you can sort of back-end map of where we might be in Q4.

Tim Moore

No, that's fine. That's fine. As most of millions of not nice. And some of the big operating loss of, you know, I don't know if you're going to ramp during the proper Arlo, so things like infusion yet. So the one why?

Jana Croom

Yes, Tim, I just want to call out though, the loss in the quarter includes all of the restructuring and impairment. So when you're looking at TES. business, you're going to have to strip it out and get to the right number.

Tim Moore

Yes, that was $22 million. And so maybe it's more like an 8 million a year, something like that ex goodwill impairment and luminescence this NAM. Okay. Well, thank you.

Operator

We currently have we currently have no further questions. And I kindly remind you that a replay of the call will be available on the Investors Relations page of the Kimball Electronics website.
And this concludes today's conference call. Has a nice day. You may now disconnect your lines.