Kimball International, Inc. announced consolidated unaudited earnings results for the second quarter and six months ended Dec. 31, 2017. For the quarter, the company announced net sales of $173,674,000 against $169,887,000 last year. Operating income was $12,005,000 against $13,030,000 last year. Income before taxes on income was $12,428,000 against $13,040,000 last year. Net income was $7,378,000 or $0.20 per basic and diluted share against $8,717,000 or $0.23 per basic and diluted share last year. Adjusted operating income was $15,957,000 against $15,460,000 last year. Adjusted net income was $10,957,000 against $9,879,000 last year. Adjusted diluted earnings per share were $0.29 against $0.26 last year. EBITDA was $16,142,000 against $16,916,000 last year. Operating cash flow for the second quarter of fiscal year 2018 was $8.4 million compared to operating cash flow of $19.1 million in the second quarter of the prior year, a decrease of $10.7 million. The decrease was primarily driven by changes in working capital balances and payments of employee incentives that occurred during the current year second quarter but not in the prior year second quarter as a result of a change in timing of annual cash incentive payments. Consolidated net sales increased 2%, which included 1% from the D'style acquisition. The increase in Net Sales were driven by an increase in the hospitality, government, and education vertical markets, partially offset by declines in the healthcare and other commercial verticals. Capital expenditures were $5,600,000 for the quarter, primarily related to investments in manufacturing automation, renovation for corporate headquarters to better reflect the office and showroom renovation.

For the six months, the company announced net sales of $343,191,000 against $344,883,000 last year. Operating income was $27,962,000 against $30,322,000 last year. Income before taxes on income was $28,874,000 against $30,729,000 last year. Net income was $18,335,000 or $0.49 per basic and diluted share against $19,715,000 or $0.52 per diluted share last year. Net cash flow provided by operating activities was $15,382,000 against $32,105,000 last year. Capital expenditures were $12.1 million.

Under the new tax act the company's statutory federal tax rate for fiscal year 2018 is a blended rate of 28.1% compared to the previous rate of 35%. The company expects the lower tax rate to generate significant tax savings in future periods. Total capital spend for fiscal year 2018 will be approximately $20 million to $25 million, which is higher than normal as the company continue these investments.

For the year 2019, the company expects operating income margin of 9.5% to 10.5% in fiscal 2019 with return on capital exceeding 20%.