Kimball International reported today consolidated net sales of $147.9 million, down 27% from $201.5 million in the year ago quarter. Gross margin expanded by 50 basis points to 35.4% driven by cost savings from their 2021 transformation program. Selling and administrative expenses of $41.7 million declined $9.2 million compared to the prior year, and now account for 28.2% of net sales, compared to 25.2% in the same quarter a year ago. Adjusted selling and administrative (S&A) expenses were $40.8 million or 27.6% of net sales, compared to $50.7 million or 25.2% of net sales in last year’s first quarter. Savings from their transformation program led the decline in overall S&A spending. Net income decreased 53% to $5.4 million, and GAAP earnings per diluted share were $0.14, compared to $0.31 reported in the fiscal 2020 first quarter. Adjusted earnings per share, which excludes restructuring charges, decreased 43% to $0.23, compared to $0.40 last year. Adjusted EBITDA decreased 34% to $15.8 million, and adjusted EBITDA margin declined 110 basis points to 10.7%.
The Company ended the first quarter in a strong financial position, with $116.5 million in cash and short-term investments and minimal debt providing the resources to fund their acquisition of Poppin along with investing to support future growth.
CEO Kristie Juster commented, “Kimball International continued to effectively navigate COVID-19 related end market softness and deliver structural savings from our transformation and restructuring plans, which will significantly benefit our results as market conditions improve. We were especially pleased with the sequential and year-over-year gross margin expansion, which was achieved despite considerably lower sales volumes. While business conditions remain challenging, we are beginning to see some areas of stability in the market. Notably, we experienced a 15% sequential increase in our order rates; our business with the Federal Government continues to show resiliency; and overall quoting activity is strong.
“We remain on-track with Phase 2 of our restructuring program and other cost reduction initiatives, which are projected to yield cost savings of approximately $20 million in fiscal 2021. In the first quarter, initial aspects of the program resulted in approximately $4.8 million in savings.
“The acquisition of Poppin, which is detailed in a separate release issued this afternoon, provides Kimball International with an important growth engine that fully aligns with our Connect 2.0 Strategy, designed to drive increased long-term revenue growth. It represents an important step toward realizing our long-term vision to create a leading omnichannel commercial furnishings design powerhouse supported by a robust manufacturing and sourcing infrastructure. Specifically, Poppin greatly accelerates our eBusiness strategy, bringing a digitally native platform that we can leverage across our portfolio of brands. Additionally, we will see near-term opportunities to adapt Poppin’s proprietary products to our target verticals, to develop a complementary Poppin Pro dealer program, and to scale Poppin’s playbook into secondary markets, where Kimball International has long-standing relationships.
“While our first quarter results reflect the challenges our customers and industry are facing in light of the COVID-19 pandemic, Kimball International is positioning itself financially and structurally to thrive in the new environment. Our sustained profitability and strong financial position have enabled us to move forward with the Poppin acquisition, while maintaining our capital allocation priorities, which include: continuing to invest organically and through complementary acquisitions along with maintaining our dividend and resuming our share repurchase program during the second quarter fiscal year 2021.
“While we have experienced a recent pickup in order rates, we remain cautious in our outlook, anticipating a period of subdued activity before a resumption of growth. We ended the first fiscal quarter with $139.5 million in backlog, of which approximately $70 million is scheduled to ship in the second quarter of fiscal year 2021. Excluding any benefit from the Poppin acquisition, we anticipate that the year-over-year second quarter fiscal year 2021 revenue decline will be similar compared to the year-over-year percentage decline we experienced in the first quarter of this year.
“Our Connect 2.0 strategy together with the Poppin acquisition give us great confidence in our ability to achieve significant long-term revenue growth, and we have identified multiple levers to drive meaningful revenue synergies and long term value creation,” Ms. Juster concluded.