Kimball Electronics, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Business Description and Summary of Significant Accounting Policies

Business Description:

Kimball Electronics, Inc. (also referred to herein as “Kimball Electronics,” the “Company,” “we,” “us,” or “our”) is a global, multifaceted manufacturing solutions provider. We provide electronics manufacturing services (“EMS”), including engineering and supply chain support, to customers in the automotive, medical, and industrial end markets. We further produce higher level and final assemblies and offer contract development and manufacturing organization (“CDMO”) solutions which include the production of medical disposables and drug delivery devices, from precision molded plastics and cold chain management to drug integration. Our design and manufacturing expertise coupled with robust processes and procedures help us ensure that we deliver the highest levels of quality, reliability, and service throughout the entire life cycle of our customers’ products. We deliver award-winning service across our highly integrated global footprint, which is enabled by our largely common operating system, procedures, and standardization. We are well recognized by customers and industry trade publications for our excellent quality, reliability, and innovative service. We intend to change our name to Kimball Solutions, Inc. subject to Share Owners’ approval, to reflect our strategic focus as a full-service provider.

Basis of Presentation:

The Condensed Consolidated Financial Statements presented herein reflect the consolidated financial position as of September 30, 2026 and June 30, 2026, results of operations for the three months ended September 30, 2026 and 2025, cash flows for the three months ended September 30, 2026 and 2025, and share owners’ equity for the three months ended September 30, 2026 and 2025. The financial data presented herein is unaudited and should be read in conjunction with the annual Consolidated Financial Statements as of and for the year ended June 30, 2026 and related notes thereto included in our Annual Report on Form 10-K. As such, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted, although we believe that the disclosures are adequate to make the information presented not misleading. Intercompany transactions and balances have been eliminated. Management believes the financial statements include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial statements for the interim periods. The results of operations for the interim periods shown in this report are not necessarily indicative of results for any future interim period or for the entire fiscal year.

Revenue Recognition:

We recognize revenue in accordance with the standard issued by the Financial Accounting Standards Board (“FASB”), Revenue from Contracts with Customers and all the related amendments. Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, components, medical devices, medical disposables, and precision molded plastics built to customers’ specifications. Our customer agreements are generally not for a definitive term but continue for the relevant product’s life cycle. Typically, our customer agreements do not commit the customer to purchase our services until a purchase order or a contractually binding forecast is provided, which are generally short term in nature. Customer purchase orders and contractually binding forecasts primarily have a single performance obligation. Generally, the prices stated in the customer purchase orders or committed to in contractually binding forecasts are agreed upon prices for the manufactured product and do not vary over the term of the order or the contractually binding forecast period, and therefore, the majority of our contracts do not contain variable consideration. In limited circumstances, we may enter into a contract which contains minimum quantity thresholds to cover our capital costs, and we may offer our customer a rebate for specific volume thresholds or other incentives; in these cases, the rebates or incentives are accounted for as variable consideration.

The majority of our revenue is recognized over time as manufacturing services are performed as we manufacture a product to customer specifications with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining revenue for manufacturing services is recognized when the customer obtains control of the product, typically either upon shipment or delivery of the product dependent on the terms of the contract, and the customer is able to direct the use of and obtain substantially all of the remaining benefits from the asset. We generally recognize revenue over time using costs based input methods, in which judgment is required to evaluate assumptions including anticipated margins to estimate the corresponding amount of revenue to recognize. Costs used as a basis for estimating anticipated margins include material, direct and indirect labor, and appropriate applied overheads. Anticipated margins are determined based on historical or quoted customer pricing. Costs based input methods are considered a faithful depiction of our efforts and progress toward satisfying our performance obligations for manufacturing services and for which we believe we are entitled to payment for performance completed to date. The cumulative effect of revisions to estimates related to net contract revenues or costs are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated.

We have elected to account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated services and products. Accordingly, we record customer payments of shipping and handling costs as a component of net sales and classify such costs as a component of cost of sales. We recognize sales net of applicable sales or value add taxes. Based on estimated product returns and price concessions, a reserve for returns and allowances is recorded at the time revenue is recognized, resulting in a reduction of net revenue.

Direct incremental costs to obtain and fulfill a contract are capitalized as a contract asset only if they are material, expected to be recovered, and are not accounted for in accordance with other guidance. Incidental items that are immaterial in the context of the contract are recognized as expense in the period incurred.

Trade Accounts Receivable:

The Company’s trade accounts receivable are recorded per the terms of the agreement or sale, and accrued interest is recognized when earned. Our policy for estimating the allowance for credit losses on trade accounts receivable includes analysis of such items as aging, credit worthiness, payment history, and historical bad debt experience. Management uses these specific analyses in conjunction with an evaluation of the general economic and market conditions to estimate expected credit losses. Management believes that historical loss information generally provides a basis for its assessment of expected credit losses. Trade accounts receivable are written off after exhaustive collection efforts occur and the receivable is deemed uncollectible. Adjustments to the allowance for credit losses are recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income.

In the ordinary course of business, customers periodically negotiate extended payment terms on trade accounts receivable. Customary terms require payment within 30 to 45 days, with any terms beyond 45 days being considered extended payment terms. We participate in our customers’ supply chain financing arrangements for certain of our accounts receivables in order to extend terms for the customer without negatively impacting our cash flow. These arrangements in all cases do not contain recourse provisions which would obligate us in the event of our customers’ failure to pay. Receivables are considered sold when they are transferred beyond the reach of Kimball Electronics and its creditors, the purchaser has the right to pledge or exchange the receivables, and we have surrendered control over the transferred receivables. In the three months ended September 30, 2026 and 2025, we sold, without recourse, $79.8 million and $71.2 million of accounts receivable, respectively. For the three months ended September 30, 2026 and 2025, factoring fees were $0.6 million and $0.7 million, respectively. Factoring fees are recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income.

We are also a party to receivables purchase agreements (“RPA’s”) with third-party banking institutions for the sale of trade receivables generated from sales to certain customers, subject to acceptance by, and a funding commitment from, the banks that are a party to the RPA’s. Receivables sold pursuant to the RPA’s are serviced by us.

Under the RPA’s, we sell our entire interest in certain receivables at the invoice amount less a discount. Upon sale, these receivables are removed from the Condensed Consolidated Balance Sheets and cash received is presented as cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. We are required to remit amounts collected as a servicer under the RPA’s timely to the financial institution that purchased the receivables. Our risks with respect to receivables we service include commercial disputes regarding such receivables and, under one of the RPA’s, no greater than 5% of sold and outstanding receivables in the event of customer insolvency.

In the three months ended September 30, 2026 and 2025, under the RPA’s, we sold $65.0 million and $28.6 million of receivables and incurred discount fees of $0.4 million and $0.2 million, recorded in Non-operating income (expense), net on our Condensed Consolidated Statements of Income. Receivables sold under the RPA and subject to our servicing that remained outstanding and uncollected as of September 30, 2026 and June 30, 2026 were $46.1 million and $49.0 million, respectively. Of the $46.1 million outstanding and uncollected at September 30, 2026, $22.4 million is subject to the 5% customer insolvency provision.

In limited circumstances, our China operation may receive banker’s acceptance drafts from customers as payment on account. The banker’s acceptance drafts are non-interest bearing and primarily mature within six months from the origination date. The Company has the ability to sell the drafts at a discount or transfer the drafts in settlement of current accounts payable prior to the scheduled maturity date. These drafts, which totaled $4.5 million at September 30, 2026 are reflected in Receivables on the Condensed Consolidated Balance Sheets until the banker’s drafts are sold at a discount, transferred in settlement of current accounts payable, or cash is received at maturity. There wereno drafts outstanding at June 30, 2026. Banker’s acceptance drafts sold at a discount or transferred in settlement of current accounts payable during the three months ended September 30, 2026 and 2025 were $7.6 million and $11.1 million, respectively.

In fiscal year 2024, changes to the expected timing of payments from and risk of default for a customer resulted in the recording of an allowance for credit losses of $2.0 million in Selling and Administrative Expenses on our Consolidated Statements of Income. An additional $0.4 million allowance was recorded in fiscal year 2026. Although the customer is not bankrupt or insolvent and we will continue to pursue full recovery, an allowance was deemed necessary in consideration of the expected timing of payments and risk of default. The amounts expected to be collected after twelve months are included in Other Assets, net on the Consolidated Balance Sheet. At September 30, 2026, the noncurrent receivable associated with this customer in Other Assets, net totaled $2.3 million, which is net of the $2.4 million allowance for expected credit losses. The $2.4 million allowance for expected credit losses does not include fully reserved unpaid late payment fees. The current portion of receivables from this customer is $1.5 million at September 30, 2026.

Property, Equipment, and Depreciation

Property and equipment are stated at cost less accumulated depreciation and depreciated over the estimated useful life of the assets using the straight-line method for most assets and units of production method for certain fully dedicated machinery and equipment. Generally, maintenance and repairs are expensed as incurred. Depreciation and expenses for maintenance and repairs are included in both Cost of Sales and Selling and Administrative Expense on the Condensed Consolidated Statements of Income.

Non-operating Income (Expense), net:

Non-operating income (expense), net includes the impact of such items as foreign currency rate movements and related derivative gain or loss, fair value adjustments on supplemental employee retirement plan (“SERP”) investments, government subsidies, factoring fees, bank charges, and other miscellaneous non-operating income and expense items that are not directly related to operations. The gain (loss) on SERP investments is offset by a change in the SERP liability that is recognized in Selling and Administrative Expenses.

Components of Non-operating income (expense), net:

Income Taxes:

In determining the quarterly provision for income taxes, we use an estimated annual effective tax rate which is based on expected annual income, statutory tax rates, and available tax planning opportunities in the various jurisdictions in which we operate. Unusual or infrequently occurring items are separately recognized in the quarter in which they occur.

On July 4, 2025, the One Big Beautiful Bill Act (“2025 U.S. tax reform”) was enacted into law. The 2025 U.S. tax reform contains several key tax laws, including extensions and modifications of the Tax Cuts and Jobs Act. In accordance with ASC 740, Income Taxes, the Company is required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring the estimated U.S. deferred tax assets and liabilities, as well as potential impacts to previously existing valuation allowances. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others implemented through fiscal year 2028. The impact from this legislation has resulted in a partial release of the valuation allowance against the business interest limitation deferred tax asset in the three months ended September 30, 2025. The Company does not currently expect the provisions effective in our fiscal year 2027 to have a material impact on our effective tax rate and cash paid for income taxes in fiscal year 2027. The Company will continue to monitor and assess future impacts from the 2025 U.S. tax reform.

Deferred income tax assets and liabilities, recorded in Other Assets, net and Other long-term liabilities, respectively, in the Condensed Consolidated Balance Sheets, are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse. We evaluate the recoverability of deferred tax assets each quarter by assessing the likelihood of future taxable income and available tax planning strategies that could be implemented to realize our deferred tax assets. If recovery is not likely, we provide a valuation allowance based on our best estimate of future taxable income in the various taxing jurisdictions and the amount of deferred taxes ultimately realizable. Future events could change management’s assessment.

We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can involve complex uncertain tax positions, which may require an extended period of time to resolve. A tax benefit from an uncertain tax position may be recognized only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. We maintain a liability for uncertain income tax and other tax positions, including accrued interest and penalties on those positions. As tax positions are effectively settled, the tax liability is adjusted accordingly. We recognize interest and penalties related to unrecognized tax benefits in Provision for Income Taxes on the Condensed Consolidated Statements of Income.

New Accounting Standards:

Adopted in Fiscal Year 2027:

In September 2025, the FASB issued guidance on Accounting for Internal-Use Software, intended to modernize the accounting for software costs and changing the requirements for capitalization of software costs. The guidance is effective for fiscal years beginning after December 15, 2027 and for interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period, and the guidance can be applied prospectively, retrospectively, or on a modified transition approach. The Company adopted the standard effective July 1, 2026, the beginning of our first quarter of fiscal year 2027, on a prospective basis. The adoption did not have a material effect on our condensed consolidated financial statements.

In December 2025, Financial Accounting Standards Board (FASB) issued guidance on Interim Reporting, intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the guidance can be applied prospectively or retrospectively. The Company adopted the standard effective July 1, 2026, the beginning of our first quarter of fiscal year 2027. The adoption did not have a material effect on our condensed consolidated financial statements.

Not Yet Adopted:

In November 2024, the FASB issued guidance on Expense Disaggregation Disclosures, requiring more disclosure about the types of expenses presented in our expense captions. The guidance is effective for fiscal years beginning after December 15, 2026 and for interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted, and the guidance can be applied prospectively or retrospectively. We are currently evaluating the impact of the adoption of this guidance on our condensed consolidated financial statements.

Note 2. Acquisition

On July 1, 2026, the Company completed the acquisition of Helvoet Polymer Technologies B.V. and Helvoet Rubber & Plastics Technologies (India) Pvt. Ltd. (collectively referred to as “Helvoet”) from Hydratec Industries N.V. The acquisition included purchasing substantially all of the assets, assuming certain liabilities, and acquiring 100% of the shares of Helvoet Netherlands and Helvoet India.

This acquisition supported the Company’s strategy of establishing Kimball as a true global medical CDMO platform with a strengthened presence in Europe, access to the India market, and a clear path for accelerating growth in the U.S. by leveraging our new manufacturing facility in Indianapolis. Helvoet is a contract development and manufacturing organization based in The Netherlands and India, with a focus on microfluidics, diagnostics, and drug delivery applications. This acquisition expanded our capabilities in precision molded plastics, complex tooling, and medical device component manufacturing, enhancing our ability to provide comprehensive solutions to customers across the medical and pharmaceutical markets.

Incremental costs directly related to the acquisition during the three months ended September 30, 2026 were $2.0 million, which were expensed as incurred and recorded in Selling and Administrative Expenses on our Condensed Consolidated Statements of Income. In the fourth quarter of fiscal year 2026, we incurred $0.5 million of costs related to the acquisition. The operating results of this acquisition are included in the Company’s condensed consolidated financial statements beginning on the acquisition date of July 1, 2026.

The Helvoet acquisition was accounted for as a business combination. The Company has recorded a net adjusted purchase price of $103.3 million.

Cash paid, net of cash acquired, was $101.0 million. The Company funded the acquisition through a combination of available borrowing capacity on existing lines of credit and available cash.

The following table summarizes the preliminary purchase price allocation to assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date, with the excess allocated to goodwill. The goodwill is not expected to be deductible for tax purposes. The goodwill recognized in the acquisition is primarily attributable to the expected benefits from expanded capabilities and growth opportunities resulting from the combination of the businesses, operational synergies, Helvoet’s assembled workforce, and other intangible benefits that do not qualify for separate recognition. The fair values of the assets acquired and the liabilities assumed presented in these financial statements are preliminary, due to continued analysis and fair value determination of intangibles, property and equipment, and other long-term liabilities and may differ from the final purchase price allocation and as the Company obtains additional information during the measurement period, which will end no later than one year from the acquisition date.

Other Intangible Assets include the estimated fair values for finite-lived intangible assets acquired and are listed in the table below along with their estimated useful lives which are being amortized on a straight-line basis.

Since July 1, 2026, the Helvoet acquisition resulted in revenue of $12.4 million and a net loss of $(0.3) million reflected in our condensed consolidated statements of operations for the three months ended September 30, 2026, respectively. The net loss includes $0.6 million, net of tax, of incremental depreciation and amortization expense resulting from purchase accounting adjustments.

The following unaudited pro forma financial information summarizes the combined results of operations for Kimball Electronics and Helvoet, as though the companies were combined as of the beginning of fiscal year 2026.

The unaudited pro forma financial information combines the historical results of Kimball Electronics with the historical results of Helvoet for the three months ended September 30, 2026 and 2025, respectively. The unaudited pro forma net income for the three months ended September 30, 2026 includes adjustments for nonrecurring acquisition-related transaction costs, net of tax and withholding taxes on dividends partially funding the acquisition. The unaudited pro forma net income for the three months ended September 30, 2025 includes adjustments for non-recurring acquisition-related transaction costs, withholding taxes on dividends partially funding the acquisition, interest expense on borrowings partially funding the acquisition, and preliminary fair value adjustments, including depreciation and amortization of the fair value adjustments to property, plant and equipment and identifiable intangible assets, as well as the related income tax effects. The unaudited pro forma financial information is for informational purposes only. It is not necessarily indicative of the results of operations that the Company would have achieved if the acquisition of Helvoet had taken place at the beginning of our fiscal year 2026 or of the results of our future operations of the combined business.

Note 3. Revenue from Contracts with Customers

Our revenue from contracts with customers is generated primarily from manufacturing services provided for the production of electronic assemblies, electronic and non-electronic components, medical devices, medical disposables, and precision molded plastics in automotive, medical, and industrial applications, to the specifications and designs of our customers.

The following table disaggregates our revenue by end market vertical for the three months ended September 30, 2026 and 2025.

For both the three months ended September 30, 2026 and 2025, approximately 99% of our net sales were recognized over time as manufacturing services were performed under a customer contract on a product with no alternative use and we have an enforceable right to payment for performance completed to date. The remaining sales revenues were recognized at a point in time when the customer obtained control of the products.

The timing differences of revenue recognition, billings to our customers, and cash collections from our customers result in billed accounts receivable and unbilled accounts receivable. Contract assets on the Condensed Consolidated Balance Sheets relate to unbilled accounts receivable and occur when revenue is recognized over time as manufacturing services are provided and the billing to the customer has not yet occurred as of the balance sheet date, which are generally transferred to receivables in the next fiscal quarter due to the short-term nature of the manufacturing cycle. Contract assets were $83.0 million and $70.5 million as of September 30, 2026 and June 30, 2026, respectively.

The Company may receive payments from customers in advance of the satisfaction of performance obligations primarily for material price variances, inventory purchases, tooling, or other miscellaneous services or costs. These payments are recognized as contract liabilities until the performance obligations are completed and are included in Advances from customers, if inventory related, and Accrued expenses, if not inventory related, on the Condensed Consolidated Balance Sheets, which amounted to $49.9 million and $40.6 million as of September 30, 2026 and June 30, 2026, respectively. Other than deposits associated with inventory purchases classified as long term, our performance obligations are short term in nature and therefore our contract liabilities are all expected to be settled within twelve months. See Note 5 - Inventories for further discussion.

Note 4. Restructuring Activities

In the three months ended September 30, 2026, we continued our restructuring efforts to align our cost structure with reduced end market demand levels, including resizing our workforce and taking specific cost actions, and recorded restructuring expense of $0.4 million, respectively, which were primarily employee-related costs. The cumulative amount incurred since inception of these efforts beginning in fiscal year 2024 through September 30, 2026 was $11.9 million. As we are seeing additional end market demand pressures, and as we monitor the progression of tariffs, reciprocal tariffs, and the geopolitical economic environment broadly, we expect to incur $1.0 million to $2.5 million of additional restructuring costs through fiscal year 2027. This is the final phase of this restructuring plan. No additional restructuring costs are anticipated to be recognized under this plan after fiscal year 2027.

Additionally, on November 4, 2024, the Company announced that its Board of Directors had approved a plan to cease operations at our Tampa facility (“Tampa Closure Plan”). The decision was made to leverage capacity within our global footprint and streamline the operating structure. These costs were predominantly cash expenditures and were recognized during fiscal years 2025 and 2026. The cumulative amount of restructuring expense incurred under the Tampa Closure Plan totaled $6.9 million. The restructuring charges were considered complete at June 30, 2026.

At June 30, 2025, Tampa’s operations had ceased, and the related land, building, and certain equipment met the criteria to be classified as held for sale, and we ceased recording depreciation on the held for sale assets. On April 22, 2026, the Company completed the sale of the Tampa land and buildings for $21.6 million and recognized a gain on sale of $15.0 million. The gain on sale is recorded in (Gain on Disposal) Asset Impairment on our Condensed Consolidated Statements of Income.

Note 5. Inventories

Inventories were valued using the lower of first-in, first-out (“FIFO”) cost and net realizable value. Inventory components were as follows:

Additionally, as of September 30, 2026 and June 30, 2026, we have raw materials inventory totaling $43.4 million and $57.0 million, respectively, classified as long-term included in Other Assets, net in our Condensed Consolidated Balance Sheets. Inventory classified as long term is raw materials inventory we do not expect to be consumed and sold within twelve months. As of September 30, 2026 and June 30, 2026, we have received deposits for long-term inventory totaling $28.4 million and $35.4 million, respectively, which is included in Other long-term liabilities in our Condensed Consolidated Balance Sheets.

Note 6. Accumulated Other Comprehensive Income (Loss)

During the three months ended September 30, 2026 and 2025, the changes in the balances of each component of Accumulated Other Comprehensive Income (Loss), net of tax, were as follows:

The following reclassifications were made from Accumulated Other Comprehensive Income (Loss) to the Condensed Consolidated Statements of Income:

Amounts in parentheses indicate reductions to income.

(1)See Note 10 - Derivative Instruments for further information on derivative instruments.

(2)See Note 11 - Employee Benefit Plans for further information on postemployment benefit plans.

Note 7. Commitments and Contingent Liabilities

The Company typically provides only assurance-type warranties for a limited time period, which cover workmanship and assures the product complies with specifications provided by or agreed upon with the customer. We maintain a provision for limited warranty repair or replacement of products manufactured and sold, which has been established in specific manufacturing contract agreements. We estimate product warranty liability at the time of sale based on historical repair or replacement cost trends in conjunction with the length of the warranty offered. Management refines the warranty liability regularly based on changes in historical cost trends and in certain cases where specific warranty issues become known. This product warranty liability and expense were immaterial as of and during the three months ended September 30, 2026 and 2025, respectively.

Note 8. Credit Facilities

Credit facilities consisted of the following:

(1)The Company maintains a U.S. primary credit facility (the “primary credit facility”) among the Company, the lenders party thereto, and JPMorgan Chase Bank, N. A., as Administrative Agent, and Bank of America, N.A., as Documentation Agent. The primary credit facility provides for revolving borrowings of $300 million, with the option to increase the amount available for revolving borrowings by an additional $150 million (to a total of $450 million) at the Company’s request, subject to the consent of each lender participating in such increase, with a maturity date of April 30, 2031. The primary credit facility also provides for term loan borrowings (“term borrowings”) of $100 million repayable in scheduled quarterly installments, scheduled to mature December 20, 2029.

This facility is maintained for working capital and general corporate purposes of the Company. A commitment fee is payable on the unused portion of the credit facility at a rate that ranges from 10.0 to 25.0 basis points per annum as determined by the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA, as defined in the restated primary credit facility. Types of borrowings available on the restated primary credit facility include term loans, revolving loans, multi-currency term loans, and swingline loans.

At September 30, 2026, the Company had $133.5 million Term Benchmark andno ABR, denominated in U.S. dollars, outstanding borrowings under the primary credit facility. At June 30, 2026, outstanding borrowings under the primary credit facility included $22.0 million Term Benchmark borrowings and $2.1 million ABR, both denominated in U.S. dollars.

The interest rate on borrowings is dependent on the class, type and currencies of borrowings and will be one of the following options:

•any Term Benchmark borrowing denominated in U.S. Dollars will utilize the Secured Overnight Financing Rate (“SOFR”) for one, three, or six-month tenors as elected, which is a rate per annum equal to the secured overnight financing rate for such business day published by the SOFR Administrator, the Federal Reserve Bank of New York, on the immediately succeeding business day, plus the Revolving Commitment Term Benchmark spread or Term Loan Benchmark spread which can range from 110.0 to 185.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA;

•any Term Benchmark borrowing denominated in Euros will utilize the Euro Interbank Offered Rate (“EURIBOR”) in effect two target days prior to the advance (adjusted upwards to reflect bank reserve costs) for such interest period as defined in the agreement, plus the Revolving Commitment Term Benchmark spread or Term Loan Term Benchmark spread which can range from 110.0 to 185.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA; or

•the Alternate Base Rate (“ABR”), which is defined as the highest of the fluctuating rate per annum equal to the higher of:

a. Prime Rate in the U.S. last quoted by the Wall Street Journal, and if this is ceased to be quoted, the highest bank prime loan rate or similar loan rate quoted by the Federal Reserve Board;

b.1/2 of 1% per annum above the Federal Reserve Bank of New York (NYFRB) Rate (as defined under the restated primary credit facility); or

c.1% per annum above the Adjusted SOFR Rate (as defined under the restated primary credit facility);

plus the Revolving Commitment ABR spread which can range from 0.0 to 75.0 basis points based on the Company’s ratio of consolidated total indebtedness to adjusted consolidated EBITDA. Under the restated primary credit facility, the ABR Spread and Benchmark Spread for term borrowings are the same as for revolving borrowings.

The Company’s financial covenants under the amended primary credit facility require:

•a ratio of consolidated total indebtedness minus unrestricted cash, as defined in the restated primary credit facility, in an amount not to exceed $25 million to adjusted consolidated EBITDA, determined as of the end of each of its fiscal quarters for the then most recently ended four fiscal quarters, to not be greater than 3.0 to 1.0, provided, however, that for each fiscal quarter end during the four quarter period following a material permitted acquisition, as defined in the restated primary credit facility, the Company will not permit this financial covenant to be greater than 3.5 to 1.0 for each such fiscal quarter end, and,

•an interest coverage ratio, defined as that ratio of consolidated EBITDA for such period to cash interest expense for such period, for any period of four consecutive fiscal quarters, to not be less than 3.5 to 1.0.

We were in compliance with the financial covenants of the primary credit facility as of September 30, 2026. The Companyno longer has letters of credit contingently committed against the primary credit facility at September 30, 2026. Letters of credit contingently committed against the primary credit facility at June 30, 2026 were $0.4 million.

(2)The Company also maintains foreign credit facilities for working capital and general corporate purposes at specific foreign locations rather than utilizing funding from intercompany sources. These foreign credit facilities can be canceled at any time by either the bank or us and generally include renewal clauses. Interest on borrowing under these facilities is charged at a rate as defined under the respective foreign credit facility. As part of the acquisition, the Company now maintains a foreign credit facility for its operations in India, allowing for borrowings up to 300.0 million INR (approximately $3.1 million at September 30, 2026 exchange rates). The foreign credit facility in India matures on April 17, 2027.

(3)The amount of long-term debt under credit facilities, less current maturities, reflects the revolving borrowings on the primary credit facility that the Company intends, and has the ability, to refinance for a period longer than twelve months in addition to the long-term portion of the term borrowings. The revolving borrowings on the primary credit facility mature on April 30, 2031.

As of September 30, 2026, the contractual maturities of the term borrowings on the primary credit facility were as follows:

The weighted-average interest rate on borrowings outstanding under the credit facilities at September 30, 2026 and June 30, 2026 were 5.1% and 5.0%, respectively.

Note 9. Fair Value

The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no changes in the inputs or valuation techniques used to measure fair values during the three months ended September 30, 2026. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2026.

Recurring Fair Value Measurements:

As of September 30, 2026 and June 30, 2026, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:

We hadno level 3 assets or liabilities at September 30, 2026 and June 30, 2026, or any activity in Level 3 assets or liabilities during the three months ended September 30, 2026.

The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund. The SERP investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. See Note 11 - Employee Benefit Plans for further information regarding the SERP.

Financial Instruments Not Carried At Fair Value:

Financial instruments that are not reflected in the Condensed Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include notes receivable and borrowings under credit facilities. There were no changes to the inputs and valuation techniques used to assess the fair value of these financial instruments during the three months ended September 30, 2026. For more information on inputs and fair valuation techniques used, refer to our Annual Report on Form 10-K for the year ended June 30, 2026.

The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to the relatively short maturity and immaterial non-performance risk.

Note 10. Derivative Instruments

Foreign Exchange Contracts:

We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of business. Our primary means of managing this exposure is to utilize natural hedges, such as aligning currencies used in the supply chain with the sale currency. To the extent natural hedging techniques do not fully offset currency risk, we use derivative instruments with the objective of reducing the residual exposure to certain foreign currency rate movements. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, the degree to which the underlying exposure is committed to, and the availability, effectiveness, and cost of derivative instruments. Derivative instruments are only utilized for risk management purposes and are not used for speculative or trading purposes.

We use forward contracts designated as cash flow hedges to protect against foreign currency exchange rate risks inherent in forecasted transactions denominated in a foreign currency. Non-designated foreign exchange contracts are also used to hedge against foreign currency exchange rate risks related to intercompany balances and other balance sheet positions denominated in currencies other than the functional currencies. As of September 30, 2026, we had outstanding foreign exchange contracts to hedge currencies against the U.S. dollar in the aggregate notional amount of $5.0 million and to hedge currencies against the Euro in the aggregate notional amount of 40.6 million Euro. The notional amounts are indicators of the volume of derivative activities but may not be indicators of the potential gain or loss on the derivatives.

In limited cases due to unexpected changes in forecasted transactions, cash flow hedges may cease to meet the criteria to be designated as cash flow hedges. Depending on the type of exposure hedged, we may either purchase a derivative contract in the opposite position of the undesignated hedge or may retain the hedge until it matures if the hedge continues to provide an adequate offset in earnings against the currency revaluation impact of foreign currency denominated liabilities.

The fair value of outstanding derivative instruments is recognized on the Condensed Consolidated Balance Sheets as a derivative asset or liability and presented with Prepaid expenses and other current assets and Accrued expenses, respectively. When derivatives are settled with the counterparty, the derivative asset or liability is relieved and cash flow is impacted for the net settlement. For derivative instruments that meet the criteria of hedging instruments under FASB guidance, the gain or loss on the derivative instrument is initially recorded net of related tax effect in Accumulated Other Comprehensive Income (Loss), a component of Share Owners’ Equity, and is subsequently reclassified into earnings in the period or periods during which the hedged transaction is recognized in earnings. The gain or loss associated with derivative instruments that are not designated as hedging instruments or that cease to meet the criteria for hedging under FASB guidance is reported immediately in Non-operating income (expense), net on the Condensed Consolidated Statements of Income.

Based on fair values as of September 30, 2026, we estimate that approximately less than $0.1 million of pre-tax derivative loss deferred in Accumulated Other Comprehensive Loss will be reclassified into earnings, along with the earnings effects of related forecasted transactions, within the next 12 months. Gains on foreign exchange contracts are generally offset by losses in operating income in the income statement when the underlying hedged transaction is recognized in earnings. Because gains or losses on foreign exchange contracts fluctuate partially based on currency spot rates, the future effect on earnings of the cash flow hedges alone is not determinable, but in conjunction with the underlying hedged transactions, the result is expected to be a decline in currency risk. The maximum length of time we had hedged our exposure to the variability in future cash flows was 12 months as of both September 30, 2026 and June 30, 2026.

See Note 9 - Fair Value for further information regarding the fair value of derivative assets and liabilities and Note 6 - Accumulated Other Comprehensive Income (Loss) for the changes in deferred derivative gains and losses.

Information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets and derivative gains and losses in the Condensed Consolidated Statements of Income are presented below.

Fair Value of Derivative Instruments on the Condensed Consolidated Balance Sheets

The Effect of Derivative Instruments on Other Comprehensive Income (Loss)

The Effect of Derivative Instruments on Condensed Consolidated Statements of Income

Note 11. Employee Benefit Plans

Defined Contribution Retirement Plan:

The Company maintains a trusteed defined contribution retirement plan which is in effect for substantially all domestic employees meeting the eligibility requirements. The Company matches 50% of eligible employee contributions up to 6%. The Company may also provide a discretionary contribution, to be authorized and determined annually by the Talent, Culture, and Compensation Committee of the Company’s Board of Directors. Total expense related to employer contributions to the domestic retirement plans was $0.6 million and $0.5 million for the three months ended September 30, 2026 and September 30, 2025, respectively.

The Company also maintains a supplemental employee retirement plan (“SERP”) for executives and other key employees which enables them to defer cash compensation on a pre-tax basis and restore amounts that would otherwise be payable under our tax-qualified retirement plans if the IRS did not have limits on includable compensation and maximum benefits. The SERP is structured as a rabbi trust, and therefore, assets in the SERP portfolio are subject to creditor claims in the event of bankruptcy. We recognize SERP investment assets on the balance sheet at current fair value. A SERP liability of the same amount is recorded on the balance sheet representing an obligation to distribute SERP funds to participants. As of September 30, 2026, both total investments and obligations under SERP were $4.3 million, of which $1.1 million were short term and $3.2 million were long term. As of June 30, 2026, both total investments and obligations under SERP were $4.4 million, of which $1.1 million were short term and $3.3 million were long term. The SERP investment assets are classified as trading, and accordingly, realized and unrealized gains and losses are recognized in the Other Income (Expense) category on our Condensed Consolidated Statements of Income. Adjustments made to revalue the SERP liability are also recognized in income as selling and administrative expenses and offset valuation adjustments on SERP investment assets. The change in net unrealized holding (losses) gains for the three months ended September 30, 2026 and 2025 was less than $(0.1) million and $0.2 million, respectively.

Defined Benefit Postemployment Plan:

The Company established and maintains severance plans for all domestic employees and other postemployment plans for certain foreign subsidiaries. There are no statutory requirements for us to contribute to the plans, nor do employees contribute to the plans. The plans holdno assets. Benefits are paid using available cash on hand when eligible employees meet plan qualifications for payment. As of September 30, 2026, total obligations under these plans were $9.4 million of which $8.5 million were long term and $0.9 million were short term. As of June 30, 2026, total obligations under these plans were $9.2 million of which $8.3 million were long term and $0.9 million were short term. Net periodic benefit costs were not material for the three months ended September 30, 2026 and 2025.

Note 12. Stock Compensation Plans

A stock compensation plan was created and adopted by the Company’s Board of Directors (the “Board”) on September 20, 2023 and approved by our Share Owners at our 2023 Annual Meeting on November 17, 2023. The 2023 Plan allows for the issuance of up to 2.0 million shares and replaced our former 2014 plan. The shares under the 2023 Plan may be granted in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity awards. The Plan is a ten-year plan that terminates automatically on November 17, 2033. No award shall be granted pursuant to the Plan after such date, but awards theretofore granted may extend beyond that date.

On October 20, 2016, the Board approved a nonqualified deferred stock compensation plan, the Kimball Electronics, Inc. Non-Employee Directors Stock Compensation Deferral Plan (the “Deferral Plan”), which allows Non-Employee Directors to elect to defer all, or a portion of, their retainer fees in stock until retirement or termination from the Board or death. The Deferral Plan allows for issuance of up to 1.0 million shares of the Company’s common stock. For more information on the 2023 Plan and the Deferral Plan, refer to our Annual Report on Form 10-K for the year ended June 30, 2026.

During the first three months of fiscal year 2027, the following stock compensation was granted under the 2023 Plan and the Deferral Plan.

(1)Long-term performance share awards were granted to key employees. These annual performance share awards were approved by the Talent, Culture, and Compensation Committee of the Board. These awards granted in fiscal year 2027 will cliff vest at the third anniversary of the award date in fiscal year 2030.

For these key employee awards, a number of shares will be issued to each participant based upon a combination of the Company’s profitability based on its cumulative operating income over the performance period as defined in the Company’s operating business plans for the applicable fiscal years and the Company’s revenue growth based on a comparison to the Company’s operating business plans. The number of shares issued could bezero if minimum thresholds are not met up to a maximum of 200% if results on both measures exceed targets under the formula.

(2)Long-term performance shares were granted to leadership team members. These annual performance share awards were approved by the Talent, Culture, and Compensation Committee of the Board. The awards granted in fiscal year 2027 will cliff vest in fiscal year 2030.

Under these awards, a number of shares will be issued to each participant based upon a combination of the Company’s economic profit for fiscal years 2027, 2028, and 2029 as compared to the Board approved plan and the Company’s relative total shareholder return (rTSR) for the performance period as compared to a group of peer companies selected by the Talent, Culture, and Compensation Committee of the Board. The number of shares issued could bezero if minimum thresholds are not met up to a maximum of 200% if results on both measures exceed targets under the formula.

(3)Restricted shares were granted to leadership team members and other key employees. These restricted shares were approved by the Talent, Culture, and Compensation Committee of the Board. The contractual life for a majority of the restricted shares isthree years, with one-third of the interest in the restricted shares vested after year one of the grant, another one-third after year two of the grant, and the final one-third after year three of the grant. The contractual life of the remaining restricted shares is one year. Restricted shares are expensed over the contractual vesting period as earned. If the employment of a holder of restricted shares terminates before the RSU has vested for any reason other than death, retirement, or disability, the restricted shares not yet vested will be forfeited.

(4)The grant date fair value is the weighted average stock price based on the dates of the grants for all grants, with the exception of the portion of the long-term performance shares based on rTSR, the fair value of which is determined by a Monte Carlo simulation completed by a third party.

Note 13. Goodwill and Other Intangible Assets

A summary of goodwill is as follows:

During fiscal year 2027, we acquired $44.3 million in goodwill resulting from the Helvoet acquisition. See Note 2 -Acqui sition for more information on this acquisition.

A summary of other intangible assets subject to amortization is as follows:

For the three months ended September 30, 2026 and 2025, amortization expense of other intangible assets was $0.8 million and $0.2 million, respectively.

The estimated useful life of internal-use software ranges from 2 years to 10 years. The amortization periods for the customer relationships, technology, and trade name intangible assets are 15 years,10 years, and 3 years, respectively. Other intangible assets are amortized using the straight-line method. We haveno intangible assets with indefinite useful lives, which are not subject to amortization.

Note 14. Leases

The Company leases certain office, manufacturing, and warehouse facilities and equipment under operating leases, in addition to land on which certain office and manufacturing facilities reside. These operating leases expire from fiscal year 2027 to 2056. The Company determines if a contract is or contains a lease at inception.

The lease assets and liabilities, which exclude leases with terms of 12 months or less, as of September 30, 2026 and June 30, 2026, were as follows:

Note 15. Share Owners’ Equity

The Company has a Board-authorized stock repurchase plan (the “Plan”) allowing the repurchase of up to $140 million of our common stock. Purchases may be made under various programs, including in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions, all in accordance with applicable securities laws and regulations. The Plan has no expiration date but may be suspended or discontinued at any time.

During the three months ended September 30, 2026 and 2025, the Company repurchased $3.1 million and $1.5 million, respectively, of common stock under the Plan at an average price of $24.24 per share and $30.01 per share, respectively, which was recorded in Treasury stock, at cost in the Consolidated Balance Sheets. Since the inception of the Plan, the Company has repurchased $118.6 million of common stock at an average cost of $16.53 per share.

Note 16. Earnings Per Share

Basic and diluted earnings per share were calculated as follows under the two-class method:

Note 17. Segment Reporting

The Company’s operations are managed by its Chief Executive Officer, who has been identified as our chief operating decision maker (“CODM.”) The CODM evaluates the performance of multiple business units domestically and globally, and each of these business units qualify as operating segments, providing contract manufacturing services, including engineering and supply chain support, for the production of electronic assemblies and other products including medical devices, medical disposables, precision molded plastics, and complete device assembly primarily in automotive, medical, and industrial applications, to the specifications and designs of our customers. These operating segments are aggregated intoone reportable segment, Business Unit Operations, due to similarities in the nature of the products, the production process, the type of customer, the methods used to distribute the products, and long-term economic characteristics. The accounting policies for the Business Unit Operations segment are consistent with those described in Part II, Item 8, Note 1 - Business Description and Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the year ended June 30, 2026.

The CODM uses operating income as the measure of profitability to evaluate income or loss generated from each operating segment and to guide decisions on capital investments and assess performance. These decisions may include capital expenditures and/or acquisitions. Expenditures for long-lived assets for the three months ended September 30, 2026 and 2025 were $9.0 million and $10.6 million, respectively. The measure of segment assets is reported on the Consolidated Balance Sheet as Total Assets; however, it should be noted the discrete balance sheet information is not utilized by the CODM in assessing performance and allocating resources.

Certain corporate administrative expenses have been allocated to the Business Unit Operations Segment based upon the nature of the expenses.

The following table presents significant operations segment net sales and expenses: