Kimball Electronics, Inc. (KE): BCG Matrix [Dec-2025 Updated]

You're looking for the real story on Kimball Electronics, Inc. (KE)'s portfolio health as we close out 2025, so let's cut straight to the core: are they investing in the right places? We've mapped their segments using the classic four-quadrant view, showing a clear picture where high-growth Stars in complex medical devices are funding the steady engine of their established Automotive Cash Cows. Still, you need to know where the capital drain is-the low-margin Dogs-and which unproven, high-stakes bets in areas like IIoT are the next big risk or reward, the true Question Marks. Dive in below to see exactly where management needs to shift resources for the next cycle.

Background of Kimball Electronics, Inc. (KE)

You're looking at Kimball Electronics, Inc. (KE), which operates as a global provider of Electronics Manufacturing Services (EMS) and Contract Manufacturing Organization (CMO) solutions. They serve a diverse set of end-markets, specifically focusing on automotive, medical, industrial, and public safety sectors. The company's world headquarters is in Jasper, Indiana, and as of the latest reports, they employ about 5,700 people across their facilities.

For the full fiscal year 2025, which concluded on June 30, 2025, Kimball Electronics posted annual revenue of $1.49 billion. Honestly, this represented a year-over-year decline of about 13% compared to fiscal 2024, though it was still noted as their third-highest annual net sales figure in the company's 60-year history. The leadership, under CEO Richard D. Phillips, focused heavily on operational efficiency, evidenced by a record $183.9 million in cash generated from operations for the year and a 50% reduction in debt during that same period.

Looking at the most recent snapshot, the first quarter of fiscal 2026 (ending September 30, 2025), we see a clear shift in the revenue mix. Total net sales were $365.6 million, a slight contraction of 2% year-over-year. The medical vertical is definitely stepping up, bringing in $102 million, which is up 13% from the prior year and now makes up 28% of total revenue. Conversely, the automotive vertical, a significant piece of the pie, contributed $164.4 million (or 45% of total revenue), but this was down 10% year-over-year due to customer program transitions. The industrial vertical remained relatively flat, generating $99.6 million, down just 1%. This mix change helped drive profitability, with adjusted EPS more than doubling to $0.49 in that quarter.

Kimball Electronics, Inc. (KE) - BCG Matrix: Stars

The Star quadrant for Kimball Electronics, Inc. is clearly anchored by the Medical segment manufacturing business, which aligns perfectly with the high-growth market and strong focus areas described for this category.

Medical segment manufacturing, especially complex devices, is positioned within a market experiencing significant expansion. The Global Medical Sector Contract Electronic Manufacturing Market size was valued at 16.2 USD Billion in 2024 and is expected to grow to 25.7 USD Billion by 2035, with medical devices leading this growth. Kimball Electronics is actively building out its capabilities to capture this growth, evidenced by the aggressive expansion of its Medical Contract Manufacturing Organization (CMO) strategy.

The financial performance in the first quarter of fiscal 2026 (reflecting late 2025 activity) strongly supports the Star classification for this vertical:

This segment is characterized by a focus on high-reliability, low-volume products where Kimball Electronics maintains a competitive edge. The strength in Q1 FY2026 was driven by robust demand across several complex applications:

• Sleep therapy and respiratory care
• Image-guided therapy
• In-vitro diagnostics
• Drug delivery, AED, and patient monitoring applications

The company is investing heavily to secure this leadership position, with total capital expenditures guided between $50 million and $60 million for fiscal 2026, weighted toward the new medical facility.

Regarding new programs in high-growth industrial areas, while the Industrial vertical showed relative stability, it did not demonstrate the high growth rate of the Medical segment in the latest reported quarter. Industrial segment revenues were $99.6 million, representing 27% of total sales, but showed a year-over-year decline of 1% in Q1 FY2026. Management reiterated confidence in a return to top-line growth in fiscal 2027, supported by strategic ramp-ups, suggesting future Stars may emerge from these industrial areas like clean energy and power management, but the current data points to Medical as the primary Star.

Kimball Electronics, Inc. (KE) - BCG Matrix: Cash Cows

The Cash Cow quadrant for Kimball Electronics, Inc. (KE) is best represented by the Established Automotive segment, which historically commands a high market share in a mature, albeit cyclical, industry. This segment generates the necessary cash flow to support other areas of the business, even as its growth prospects are limited compared to other verticals.

The Automotive segment's contribution to the top line demonstrates its significant, established presence. For the second quarter of fiscal year 2025 (ended December 31, 2024), the Automotive vertical represented 54% of total revenue, experiencing only a 4% decline year-over-year, indicating relative resilience in a mature market. By the first quarter of fiscal year 2026 (ended September 30, 2025), this segment contributed $164.4 million, or 45% of total revenues, though it saw a 10% year-over-year decline, aligning with the low-growth expectation for a Cash Cow.

The financial performance metrics for the core EMS operations, which are heavily influenced by the Automotive segment, illustrate the cash generation capability. For the first quarter of fiscal year 2025, cash generated from operating activities totaled $45.5 million, with capital expenditures at $13.5 million. The company reiterated fiscal year 2025 guidance for capital expenditures in the range of $40 - $50 million, which is relatively low compared to expected net sales guidance of $1.40 - $1.44 billion (revised). This low relative capital need for mature lines is characteristic of a Cash Cow, allowing for significant free cash flow.

Long-term customer relationships are a key feature supporting the high market share and stable margins in this segment. The business is described as "sticky" because programs, often lasting 8-10 years, are frequently single-source, providing predictable revenue streams. The focus on leveraging cash generated from EMS operations to redeploy in growing the Medical CMO segment further confirms the role of the established EMS business as a cash generator.

Here is a look at the Automotive segment's revenue contribution and margin profile across recent reporting periods:

The stability of the cash flow generation, despite market headwinds, is a critical indicator of its Cash Cow status. You can see this in the consistent positive operating cash flow:

• Cash generated from operating activities in Q1 FY2025 was $45.5 million.
• Cash flow from operating activities in Q3 FY2025 was strong at $30.9 million.
• Cash from operations in Q1 FY2026 was $8.1 million, the seventh consecutive quarter of positive generation.

The company's overall adjusted operating income guidance for fiscal year 2025 was set between 4.0% - 4.5% of net sales, with Q1 FY2026 showing an improved adjusted operating income margin of 4.8%. This margin performance, supported by the large-volume Automotive base, helps cover corporate administrative costs. The company's debt at the end of Q1 fiscal 2026 stood at $138.0 million, down from borrowings of $245.9 million at the end of Q1 fiscal 2025, showing the cash is being used to deleverage.

Kimball Electronics, Inc. (KE) - BCG Matrix: Dogs

Dogs are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

For Kimball Electronics, Inc. (KE), the Industrial vertical, especially when viewed post-divestiture of the Automation, Test, and Measurement (ATM) business, aligns with the Dog profile due to its lower revenue contribution and minimal growth trajectory in the near term.

The following table details the segment revenue mix for the first quarter of fiscal 2026, which ended September 30, 2025, illustrating the relative market share of each vertical.

The Industrial segment's performance in Q1 of fiscal 2026, with net sales of $99.6 million and a year-over-year decline of 1%, places it in the low-growth category, especially when compared to the Medical segment's 13% growth.

Legacy or commoditized industrial electronics manufacturing services (EMS) contracts are represented by this vertical, which is supported by steady demand across climate and automation controls, IoT, factory automation, off-highway equipment, and commercial transportation.

• Legacy or commoditized industrial electronics manufacturing services (EMS) contracts.
• Low-growth, low-margin product lines facing intense price competition.
• Segments with declining relative market share due to industry consolidation.
• Older technology platforms requiring disproportionate maintenance capital.

The Industrial vertical's revenue for the full fiscal year 2024 was $462.4 million, representing 27% of total company revenue.

The decline in the Industrial vertical's revenue in Q4 of fiscal 2024 was partially attributed to weakness in the divested Automation, Test & Measurement (ATM) business, with approximately one-half of the 19% year-over-year decline in that quarter resulting from the ATM business.

The company's overall guidance for fiscal year 2026 projects total net sales between $1,350 million and $1,450 million, with adjusted operating income expected to be in the range of 4.0% to 4.25% of net sales.

The Automotive vertical, while the largest at 45% of Q1 FY2026 revenue, experienced a 10% year-over-year decline, attributed to demand normalization and program transitions, which could indicate a Cash Cow facing a temporary downturn or a Question Mark if the transition risk is high.

The company ended Q1 fiscal 2026 with debt at $138.0 million, its lowest level in over three years, and cash from operations of $8.1 million.

The company invested $1.5 million to repurchase 49,000 shares of common stock during the first quarter of fiscal 2026.

Kimball Electronics, Inc. (KE) - BCG Matrix: Question Marks

Question Marks for Kimball Electronics, Inc. (KE) are represented by strategic thrusts into high-growth verticals and new capabilities where market penetration is still nascent, requiring significant cash deployment to capture share before they mature into Stars. These units consume capital to build scale in markets where KE's current share is low relative to the market's growth trajectory.

The primary focus area fitting this quadrant is the strategic repositioning toward the Medical CMO (Contract Manufacturing Organization) vertical. While the overall company experienced a year-over-year revenue decline of -13.29% for the fiscal year ending June 30, 2025, reaching $1.49B, the medical end-market demonstrated strong year-over-year sales growth in the first quarter of fiscal 2026 (ended September 30, 2025). This divergence highlights the high-growth nature of the target segment versus the current overall business performance.

Emerging Public Safety and Industrial Internet of Things (IIoT) initiatives

While the Medical CMO is the most explicitly detailed growth engine, other areas requiring investment to build market share include Industrial IoT & Factory Automation, Public Safety, and Green Energy/Charging/Storage applications. These represent new frontiers where Kimball Electronics, Inc. is establishing a foothold, meaning current revenue contribution is low but the market potential is high. The company is building a scalable platform to take on more complex programs in these spaces.

New geographic expansions or greenfield manufacturing sites with unproven scale

The investment in physical capacity to support these emerging areas is a clear indicator of Question Mark status, as it requires upfront cash before returns are realized. The company has made a tangible investment by establishing a new manufacturing facility in Indianapolis, which doubles the footprint for producing medical products, surgical instruments, and drug delivery devices. This greenfield-like investment is designed to support future growth, consuming capital now for uncertain future market share gains.

• Capital Expenditures (CapEx) guidance for Fiscal Year 2026 is set between $50 - $60 million.
• CapEx for the full Fiscal Year 2025 was guided between $40 - $50 million.
• Q3 2025 CapEx was reported at $4,000,000.
• Cash generated from operations in Q1 FY2026 was $8.1 million.

Investments in new, high-growth technology areas where KE's market share is currently small

The focus on drug delivery, specifically devices like auto-injectors, is a key high-potential, high-risk play. The company is actively pursuing this area, which is complex and regulated, suggesting a need for significant investment in compliance and specialized manufacturing processes. The goal is to achieve higher EBITDA margins from this segment, which is characteristic of a product/segment with high potential but currently low scale.

High-potential, high-risk customer programs requiring significant upfront investment

The overall strategy involves deploying capital toward growing the Medical CMO, with the expectation of higher EBITDA margins. This requires significant upfront commitment to secure and scale these programs, which typically have long product life cycles of 7-10 years. The company is using its strong balance sheet, with borrowing capacity available of $294.3 million at the end of Q1 FY2026, as the 'dry powder' to fund these necessary, high-risk investments.

Here's a quick look at the financial commitment versus the current overall revenue base: