Kimball International Inc (KBAL) Q3 2022 Earnings Conference Call May 3, 2022 5:00 PM ET

Company Participants

Kristine Juster - CEO

Timothy Wolfe - CFO

Conference Call Participants

Greg Burns - Sidoti & Company

Rudy Yang - Berenberg

Operator

Good afternoon, ladies and gentlemen. My name is Didi, and I will be your conference call facilitator today. At this time, I would like to welcome everyone to the Kimball International Third Quarter Fiscal 2022 Earnings Conference Call.

As with prior conference calls, today's call, May 3, 2022, will be recorded and may contain forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from the forward-looking statements. Risk factors that may influence the outcome of forward-looking statements can be seen in the Kimball International Form 10-K.

During today's call, the presenters will be making references to an earnings slide deck presentation that is available on the Investor Relations section of Kimball International's website. On today's call are Kristie Juster, Chief Executive Officer of Kimball International; and T.J. Wolfe, Executive Vice President and Chief Financial Officer.

I would now like to turn today's call over to Kristie Juster. Ms. Juster, you may begin.

Kristine Juster

Good afternoon, everyone, and thank you for joining today's call. I am pleased to report that Kimball International's fiscal third quarter results marked a significant positive step change in our financial performance, and we see this momentum carrying into the fourth quarter, supporting our outlook for accelerated growth in fiscal 2023.

This quarter's 30% sales increase demonstrated the relevance of our product portfolio in the actively forming commercial spaces that support both physically and digitally present workforces and allow for the needed flexibility for today and the ever-evolving trends of tomorrow. It particularly underlines the strength of our positioning in the Workplace and Health end markets, where we believe our 41% sales increase indicates that Kimball International continues to gain share, demand in these markets were strong across each vertical led by commercial, education and eBusiness and aligned with our expectations of returning to learning and return to hybrid workplaces. Sales in our Hospitality market were similar to prior year levels, including shipments which were delayed from the second quarter.

While this is our fourth consecutive quarter of double-digit growth in order rates, it is the first quarter we've been able to fully convert the strong demand into significant revenue growth and meaningful profitability. Price increases we implemented in October of last year and March of this year, mitigated part of the supply chain, labor and inflationary pressures, and we will see increased benefits in the fourth quarter and into fiscal 2023. Additionally, we succeeded in managing through supply chain disruptions and labor issues, allowing us to reduce lead times and constraint shipments in prior quarters. These actions have resulted in Kimball International reporting industry-leading gross margins and underpin our confidence in the company's future performance.