To Our Share Owners

I feel very fortunate, and humble, to be writing to you today as CEO of Kimball Electronics. The Company has a rich history of excellence and a strong culture focused on longterm relationships, and I am thrilled to be part of it. Fiscal year 2023 was an excellent year with record sales, margin expansion, a 79% increase in net income, and improved return on invested capital, all while navigating a challenging macro environment.

The top-line growth was shared across the three end market verticals we support, with each posting robust double-digit increases in the year. We believe this momentum will carry forward, fueled in part by industry megatrends, even if consumer demand softens during a global economic slowdown. The strength was distributed across our customer base with nearly half of them reaching new highs in annual sales volume with us. Consistent with our focus on building long-term relationships, 77% of the revenue was with customers we’ve worked with for a decade, or more. The team supported new product introductions at a rate four times above our historic norm, and we received multiple customer service awards—four in China alone. For the ninth consecutive year, we were recognized by CIRCUITS ASSEMBLY magazine in multiple categories for Service Excellence.

Our Environmental, Social, and Governance disclosures also received high marks once again this year, with Morningstar Sustainalytics, a leading ESG research firm, rating us #1 among electronics manufacturers for ESG risk. In addition, we received a Prime rating from ISS ESG, which places us among the top 10% in our industry.

Fiscal year 2023 also marked the end of an era with the retirement, and subsequent untimely passing, of former Chairman and CEO Don Charron. Under Don’s leadership spanning 24 years, Kimball Electronics grew from a division of its parent company to a publicly-traded, global enterprise with revenues rapidly approaching the $2 billion threshold. All of us in the Kimball Electronics family are deeply saddened by this turn of events and mourning his loss. Our thoughts and prayers go to the entire Charron family. We are grateful to have known and worked with Don. He will be missed. As difficult as it may be to celebrate, I am still very proud of the Company’s achievements in the year, and I am even more excited now about what lies ahead with the next chapter of profitable growth.

Winning Together—The Kimball Way
When first looking for a new professional opportunity, I was attracted to Kimball Electronics for three reasons:

• The culture
• The people
• The opportunity for value creation

Fast forward to today, and all of them are better than what I expected. Our Company lives its culture every day. It is reflected in our annual Guiding Principles survey with employee engagement scores well above industry norms. We also hear from our customers that our culture differentiates Kimball from its peers. In my career, I’ve seen a lot of companies, and I can tell you this one upholds its principles better than any other that I have known. It’s impressive, with consistency at each location, and it’s an incredibly strong foundation.

The people are outstanding with a level of commitment, passion, and love for the Company. The business opportunity is tremendous. You can see it in our performance, and we have great momentum to go to even better places than where we are today.

For me, “Winning Together” is the fun of business. It is working on a great team, with a great culture, and a common set of priorities. It’s understanding that if we’re not getting better tomorrow, someone will pass us up. That continuous improvement mindset is a great trait and a core belief of our Company. So what does it mean to “Win The Kimball Way”? It means:

• Staying true to our Guiding Principles,
• Being collaborative and team-oriented,
• Setting high aspirations…not unrealistic goals, but attainable targets that require stretching,
• Maintaining our strategic priorities,
• Communicating openly and proactively, and
• Being accountable to our Company, to our customers, to each other, and to our Share Owners.

It is what you can expect from me, and it is a priority for our team. I am proud to be a member of Kimball Electronics, and thank you for your support.

We invite you to stay informed by visiting our website at www.kimballelectronics.com as we continue to build lasting relationships for global success.

For more detailed insights into the past year, we encourage you to read the following Form 10-K.

Richard D. Phillips
Chief Executive Officer