Q4 2022 Kimball Electronics Inc Earnings Call
percent increase compared to the fourth quarter last year.
This result could have been better.
At foreign exchange rates had relatively large impact on net sales in the period compared to Q4 of last year. It's 3% unfavorable impact.
Similar to Q3, the top line growth in the fourth quarter was driven by all four of the vertical market. The top line growth in the fourth quarter was driven by all four of the vertical market.
We serve.
What if our largest business were $152 million?
This represents a 7% increase compared to Q4 last year, and 41% of total company sales in the quarter. What's the price of a 7% increase compared to Q4 last year? The price of the 7% increase compared to Q4 last year. The price of the 7% increase compared to Q4 last year. The price of the 7% increase compared to Q4 last year.
It also completes a record year for the automotive vertical market, with total annual sales topping $580 million, which is up 6% from last year.
I suggest in this vertical market is a result of supporting programs.
including the ramp up of new product introduction.
Electronic power steering, automated driver assistance, passenger safety systems,
vehicle mobility management and electronic braking, including redundant braking systems and self-driving setups for both EVs, that is electric vehicles, and those powered by internal combustion engines.
Net sales in medical were $114 million, a 34% increase compared to Q4 last year, and 30% of total company sales.
This was our best performing business in the quarter and capped off a year where the medical industry continues to recover and normalize from the pandemic. The pandemic continues to recover and normalize from the pandemic.
In total, our sales in the medical vertical market grew 2% in fiscal year 2022 to $392 million.
with application supporting sleep therapy and respiratory care, image guided therapy, in vitro diagnostics, drug delivery systems, AEDs, and patient monitoring equipment. AEDs and patient monitoring equipment.
Industrial had a best-have recorder in Q4 with sales totaling $88 million, a 2% increase over the fourth quarter last year.
This record performance was driven by products for climate control. It also completes a year where sales in the industrial vertical exceeded $300 million, or 5% above last year.
And finally, net sales in public safety were $14 million, a 33% increase compared to the fourth quarter of last year, with the growth driven by thermal imaging, first responder electronics, and the production of security access products.
This vertical market finished fiscal year 2022 with $50 million in revenue, a 4% increase year over year.
So in summary, another excellent quarter of record that is operating top line growth and operating margin in excess of 5%. In summary, the record is operating top line growth and operating margin in excess of 5%.
As I noted a moment ago, net sales were adversely affected by the strengthening of the U.S. dollar.
Foreign currency also unfavorably impacted earnings in the quarter.
We estimate 12 cents per diluted share and non-operating expense in our provision for income taxes. In non-operating expense in our provision for income taxes.
I will now turn the call over to Janet to provide more insight on this impact while reviewing the financial results for the fourth quarter.
She will also detail our guidance for fiscal year 2023.
Jana?
Thank you and good morning everyone.
As John highlighted, total net sales in our fourth quarter were $373 million, and all time quarterly high for our company.
But what he did mention was that this level of sales was 1.5% higher than the previous record, which was last quarter. So a very encouraging trend.
The growth margin rate in Q4 was 9.2%. A 50 basis point decrease compared to the same period last year, but still a very strong result while facing several headwinds in the quarter, with low absorption and our facility in China, which was most directly impacted by the low sound.
from the zero tolerance policy.
The ramp up of our facility expansion in Mexico as well as general inflation.
Adjusted selling and administrative expenses in the fourth quarter.
or $14.8 million compared to $13.8 million in Q4 last year.
With the increase in absolute dollars, resulting from higher salary and related pay-well costs and stock-based compensation.
When measured as a percent of sales, however, adjusted selling and administrative expenses were 4%, a 20 basis point improvement compared to Q4 last year, with lower bonus costs in fiscal 22 primarily accounting for the difference.
Adjusted operating income for the fourth quarter was $19.4 million or 5.2% of net sales, which compares to last year's Q4 adjusted results of $18 million or 5.5% of net sales.
Other income and expense was expense of $5.3 million in the fourth quarter. Interest expense this year due to Rucklers levels of inventory.
and the foreign exchange impact that Dawn noted.
This occurred primarily due to the strengthening of the US dollar compared to the Euro in China.
One.
Aceptive tax rate in Q4 was approximately 35.1%, compared to 17.6% in the fourth quarter last year. Aceptive tax rate in Q4 was approximately 35.1%, compared to 17.6% in the fourth quarter last year.
Section 162M.
Additionally, the prior year Q4 benefited from a reversal.
We expect the effect
Tax rate in fiscal 2023 to be in the mid-20% range. Similar with our historical trend.
That income and the fourth quarter of fiscal 2022 was 9.9.
compared to adjusted net income in Q4 last year, a fortune share of $2.
$15.7 million, or 58 cents per diluted share, with the decline predominantly driven by the
Contact rate I just mentioned.
cash and cash equivalent
at June 30th, 2022, for $49.9 million.
and cash flow provided by operating activities in the court.
The order was $1.5 million.
For the full year, we used $83 million of cash from Operation.
Cash conversion days in Q4 were 91 days, up from 64 days in the fourth quarter of last year.
All three of these results that is cash from operations in the quarter, full year, and CCD were driven by an increase in inventory, which is up $195 million from a year ago, and $57 million from last quarter. $57 million from last quarter.
We continue to have a dollar of inventory waiting on a dime, so to speak.
Materials that are needed and available today are being purchased so that we can fill customer orders when parts impacted by the component shortages are received.
We expect inventory levels to normalize as the part shorter situation improves and the backlog of open orders is worked down.
This is reflected in our capital expenditures in the fourth quarter, or $25 million, largely in support of our facility expansions in Mexico and Poland, as well as new business awards.
For fiscal year 2022, CAPEX totaled $75 million.
which was at the midpoint of our updated guidance for the year.
Farowings on our credit facilities at June 30, 2022 were $180.6 million compared to $666 million a year ago and $137 million at the end of Q3.
Our short-term liquidity available represented is cash and cash equivalents, plus the unused amount of our credit facility totaled $178.6 million at June 30th, 2022. Power?? is X Year 2022.
During the fourth quarter, we invested $4.2 million to repurchase 225,000 shares at an average price of $18.77.
Since October 2015, under our Board Authorized Share Repurchase Program, a total of $88.8 million has been returned to our share owners by purchasing 5.8 million shares of common stock.
We have $11.2 million remaining on the Repurchase Program.
With record results on the...
top line and a strong
We'll see your backlog of open order.
We executed a capital deployment strategy that includes
We have been investing in future growth with expansions of multiple facilities, returning cash to share owners in the form of stock repurchases, and supporting our customers with strategic inventory bills to mitigate park shortages.
Even though the increases adversely impacted certain financial metrics including cash flow, VCD and ROIC.
We fully expect improvement.
I'll start now.
we are providing
2023 with net sales estimated to be in the range of 1.6 to 1.6.
A 19 to 26% increase. A 19 to 26% increase.
range of 4.6% to 5.2% and capital expenditure totaling 80 to 100 million dollars which includes equipment and the facility.
The expansion in Mexico, the expansion in Poland, and capital deployment to support a healthy funnel of new product and reduction, and the addition of equipment with leading edge technologies and capabilities.
So with that, I'll now turn the call back over to Don.
Thanks, Janna.
Before we open the lines for questions, I'd like to share a few thoughts and closing.
We are very proud of our accomplishments in fiscal year 2022.
And we believe the company is ideally positioned for growth in fiscal year 2023 and the years to follow.
As an EVA company, we are incented to make investments that drive shareholder value, with returns that exceed our weighted average cost of capital by a targeted amount of capital.
I'm out Hollaback Erball
I am pleased to announce that one such investment our facility expansion in Mexico is complete with the ribbon cutting ceremony to celebrate the new footprint planned for August 11th.
Similar to the construction recently completed in Thailand, this expansion was not on our facility expansion in Poland, which will increase existing production square footies by approximately 40%.
This project is on schedule for completion roughly a year from now in early fiscal year 2024.
Each of these facility expansions align our production capacity with our customers growth. As we take aim at the $2 billion annual revenue milestone.? Nations hasamos arrayed, so can we? the look of the area for our products? IT's a project to provide your ability to manage the industry under the discipline of your owncoming crime. Absolutely. How many rights you have in??icun? Of course. How many rights do we have in??icun? How many times is the market of ministry to improve property spray to our company? In??icunChilewide, I'm sort of an example of intoxication product maximum amounts of anything. You've been working closely now. Thank you.
Our strategy as a premier multifaceted manufacturing solutions provider focuses on applications which involve high levels of complexity, quality, reliability, and customer service.
We strive to be a surprise.
Year, approximately 80% of our revenue came from customers we've done business with for over 10 years. We've done business with for over 10 years.
As part of our strategic plan, we've identified mega trends in vertical markets which fuel our growth.
For each vertical, automotive, medical, and industrial represent one-third of the total company. In ???, pods, technology standards are directly limited and we have all started to work for prospects that that one third of the total company.
Broke in medical and industrial. I'm going to make a video. I'm going to make a video. I'm going to make a video.
compared to automotive, which is quite a goal considering the promising growth opportunities.
market with the electrification of vehicles.
Electronic content is being added at an increasing rate and advanced technologies and expanded on a range of production standards and components. of the range of production standards and components.
All of which align very well with our core competencies and manufacturing capabilities.
In addition, over the last couple of years, consumer demand has outpaced supply, making it difficult for some to purchase a new vehicle.
As a result, the average age of cars and trucks in the US has now had an all-time high approximately 12.5 years.
We see this as a leading indicator for the consumer demand trend to continue, as purchases to replace vehicles increases.
Our expertise in chassis control may also benefit as autonomous driving and overall vehicle connectivity increase in popularity and adoption.
The industry mega trends in medical suggests excellent opportunities for growth as well, as the population continues to age and accessibility and affordability to healthcare increases.
Also, the movement towards smaller device sizes with high levels of precision and accuracy and connected drug delivery systems bodes well for our company.
Our new business development effort has a heavy lean toward medical, with significant focus in this vertical market.
In addition, our manufacturing facility in Indianapolis recently received a medical ad in Judson Molding Accreditation.
This designation identifies and verifies compliance with critical manufacturing process requirements and puts Kimbo medical solutions in a group of select injection molders that have been endorsed serve the medical industry.
Finally, industrial, which we refer to often as green and clean, has an excellent setup for growth.
The consumer trends, which are raising awareness on the consumption of natural resources with the objective of increasing conservation of water, gas, and electricity, provide a path for the applications we support.
For example,
OEMs of climate control systems are looking to increase efficiency in their units and the electronic controls that they design and that we manufacture can improve when and how long their products operate.
which optimizes energy efficiency and overall performance.
We see a synergistic opportunity to combine our public safety vertical into industrial for operating reporting purposes, and we are going forward.
In total, each of these vertical markets is critical toward achieving the double digit top line growth in our guidance for fiscal year 2023. And the longer term targets of two billion annual revenue.
Also, some of you may notice that Mike Morales will not be asking any questions on our earnings call today.
That is because he joined our organization as director of Corporate Development this month, reporting directly to Jana.
We are excited to have him as a part of the Kimball team.
And finally, at the center of our success is the Kimber family worldwide. The Kimber family worldwide.
I'd like to thank them for their dedication and support throughout fiscal year 2022, and look forward to their partnership in the upcoming year.
I would now like to open the lines for questions.
Darius, do we have any analysts with questions in the queue?
and gentlemen. And the host may ask a question at this time by simply pressing star 1 in dial pad. You may remove yourself from the queue by pressing star 2. On your dial pad, we ask that if you are using a speakerphone, you pick up your handset before asking your questions. One moment please for first question.
Thank you.
the first question comes from and your other stone from to those he too go ahead.
Hi everyone and congratulations on another outstanding quarter and congratulations on the new hire. Thank you. Thank you. Thank you. on the new hire.
Thank you. I wanted to start off with asking about the past through.
And at pricing increases, you're able to pass those through to your customers, right? And the components.
Yes, that's right, Agna. We have very strong working relationships with our customers. And as we have come across, for example, increases in material prices or premiums that we have to pay or any extraordinary cost like logistics, freight costs, et cetera, we are able to pass the majority of those on to our customers in the selling prices.
Okay, and the sex show up in your reviews, but to the extent you're not able to add any profit on that with once everything harmonized, would that have sort of maybe even more positive the technique margins?
You know, it would be small on you, but yes, that would show up in our revenue, also show up in our margins as well, to some extent. You know, that...
I think you used the word, the frame markup on the increases that we're passing on. That wouldn't be the sort of normal way we would do business. Your understanding we would have with our customers would be to pass through the actual cost impact. So yes, it would have just a very slight, dilutionary effect on margin. person sounds
Okay, thank you. And then in terms of the...
On medical, what do you see in terms of the catch up on the left hand side and what does the back log look like in medical?
It's very strong there as well. And what we have been predicted and what the industry has been predicting is the sort of return of a lot of those elective or scheduled procedures. And of course, our sales have increased as a result as well. We are constrained there also with shortages, unfortunately, not just limited to some of the other areas that we may maybe talk about more frequently like our automotive vertical, but that we are also constrained there in terms of being able to catch up all the backlog.
but it's steadily improving. And what do you think, in terms of the supply chains, is sort of...
slightly living towards more positive territory or is it still a long way to go?
I would say for our end market verticals and the component technology and categories that are most often used in those products for our end market verticals, I'd say it's improving but very slowly.
I think, as you know, we don't do anything in the consumer electronic space, for example. And clearly there it's much better, it's different, it's much better, and it's not only caught up, it may be flipped to even a surplus situation. But the technologies that are often designed into what we do for our customers and our end-market verticals, still trying to catch up and it's still pretty sluggish.
Okay, and how is the situation in Europe now? Is that opening up a little bit more after the COVID lockdowns? And are you picking up there or what are you seeing in Europe ?
Yeah, it's pretty steady for us there as well, in our two facilities there. And as you know, most of what we produce there stays in the European Union. We're watching that very carefully because it seems like it could slow down quicker, each and every month as we get new inputs from our customers there. We're studying those very carefully because yeah, it seems like things are still not quite like they were before COVID. And I think maybe the sort of recessionary fears that are global recessionary fears.
might be a bit greater there here as we sort of ended our fiscal year and go into July and August . It's difficult to get a read this time of year. As you know, Anya, July and August is sort of a slowdown period in Europe anyway, but we're anxiously waiting for things to, for everyone to get back from their vacations and see how things look as we go into September , October , and November .
Okay, thank you. That was all for me.
Thank you, Anya.
The next question comes from Jason Sweet from Lake Street. Please go ahead.
Thank you guys for taking my questions. I also want to echo my congratulations on a strong finish to the year.
You know, just a clarification. I know you called out some effects headwinds to sales in June , but how much revenue could you not ship because of supply concerns?
Yeah, hard to put an exact number of that Jason, in terms of what it could have been that we had all the parts that we needed to ship. And we had all the parts that we needed to ship.
But I think the way we want you to think about it is the fact that when you go back to the full year guidance that we issued a year ago,
You know, at the start of fiscal year 2022, we guided between 1.4 and 1.5 billion.
Obviously we ended 50 million below the low end of that guidance. So as we said in the last call, we would at least feel like if we had the components we needed, we'd be at the upper end of that guidance and maybe even better. So we think there's at least 150 million, probably the numbers a bit bigger of backlog that we should have already shed during the fiscal year.
Obviously, making that all up in one quarter would be extremely difficult because we lost it steadily over the course of the fiscal year of 2022. But that's how we'd want you to look at what didn't ship. Just looking at order backlog and what our customers ask for from us, and again, on both existing programs and new programs we're launching, we could easily say we'd be at the upper end of our guidance that we gave at the beginning of last fiscal year.
I will say for the guidance that we provided for fiscal year 2023, we've taken what we learned from fiscal year 2022. We continue to study component availability, especially the component availability that matters most to us and our customers and the end markets we serve. And we try our best to factor that into the full year guidance. And so we are still going to be restricted, constrained in terms of what we can build in fiscal year 23. It's obviously improving.
because we're projecting a pretty significant increase in output year over year. As we contemplate a year that would provide top line growth of 19 to 26 percent. I guess the key point there is that's fantastic. You could say growth and recovery, but our fiscal year 23 will still be constrained by the availability of material.
Okay, no that's really helpful, Coller. And acknowledging, sorry, that you just noted taking, scrubbing that kind of outlook pretty well, are you at all concerned or are you baking in the potential for any de-commits?
You know, we've been working very closely with our customers to dial in sort of their outlook, you know, into our outlook as carefully as we can and making sure it's aligned. And we have those conversations with those customers each and every month as we go through the sales and operations planning process. And we don't, we haven't seen, you know, a lot of de-commits or let's say customers pulling demand down or out..
Again, that's pretty fluid as the whole world sort of looks at what the economic growth, the global economic growth will look like as we finish this calendar year and go into calendar year 2023. But I feel comfortable that we have ourselves in a great position with our customers to put into our demand profiles the best look that they have in terms of what their demand's going to be.
And they're also, by the way, working on their inventory levels, getting those buffers back in place, catching up, because they don't like operating as thinly as we are operating right now in terms of overall availability. I mean, we are literally, in some cases, shipping by air from our facility, and maybe one of our customers is shipping by air to their customer. And so it's really, you know, really impactful to all of us to be in this mode. So I...
I suspect that we will have a buffer at a period of time to rebuild up the inventory in the supply chain. From anything, you'll really be happening in the sort of global economic outlook of growth. From anything, you'll really be happening in the sort of global economic outlook of growth.
Okay, that makes sense. And then just the last one from me and I'll jump back into queue. Just following up on Anya's question, I'm sorry, the medical and how that is reflected in the pipeline. I mean if at a high level if we think about that billion dollars plus in your pipeline, does it break down between the segments pretty similar to what you saw in this past fiscal year?
Yeah, I think that's fair. I think that's a fair assessment and directionally correct. I mean, when we look at where we stand today across all the verticals and obviously we're providing a big growth number in our guidance. But when we look across our verticals, the guidance for a consolidated growth is not that different by vertical.
Now if I ask you a question, how can this help?
No it does, that's perfect. Thanks a lot guys.
Thank you Jason. Thank you Jason.
The next question comes from Rob Chapreaux from Singler Research. Please go ahead.
Hi, thanks for taking my question. My first question is, the sales expectation of 19 to 26% increase. For the next year is on top of the stock quarter, there was an all time I am failed. So can you talk about how you would, how the environment that you're giving such confidence that you can handle such a sales increase in this quarter during this year?
Yeah, you know, that's a really good question. We talked about it in a couple of our previous calls about getting our footprint in place, including people resources, processes, and capital equipment. And capital equipment. And capital equipment. And capital equipment. And capital equipment. And capital equipment. And capital equipment. And capital equipment. And capital equipment.
In most cases at least a year, a head of starting production, it's just sort of the nature of the beast, in terms of the verticals we serve and the expectations of the customers to have that capacity in place, validated and ready to go, and then ramping it up over a period of time. So you could argue in many ways that, most of the resources that we need. You know, most of the resources that we need.
to produce the revenue we just guided for fiscal year 2023 are already in place. We've been putting them in place steadily throughout fiscal year 2022. And as we talked in the webcast here today, this idea of sort of a stair-step year where we start Q1 with ramping up many of those new lines, and by the end of the fiscal year in Q4.
many of those same lines we're running at rate. So that's really what we face. So the confidence level then is pretty high for us in the sense that yeah, we've been working really hard to get those resources in place and we believe we've got them in place. As I said, we still gotta see an improving material availability market. And we've got those constraints factored into our guidance. So obviously the fact that I'm saying.
were constrained still by material and guiding uh... to nineteen twenty-six percent growth yeah if we didn't have any material issues a number of bigger uh... and that that's a challenge and that the challenge for our for our facilities around the world and well many lines you know running it
full capacity or near full capacity and and you know we got it we got a uh... many of our our customers are counting on us to get to those rates it's absolutely imperative for them to achieve their business plan as well
Great. And during the 2000.2, you know, sales increased to where quarter over, you know, all over the different four quarters. So is this evenality in your business that we can come for in 2023 or should we assume sales to be time of similar each other quarters?
Yeah, that's a really hard question to answer Rob in the sense that we've been constrained in so many areas that if there was seasonality, it would be replaced by availability. If that makes sense, we haven't really had customers ask us to do anything but produce everything we can. That's been more of the norm. We've been gated by so many material shortages that literally if, for example, you know, or maybe you've per today, that we...
know, they sell a lot more air conditioners when it's really hot out, for example, and they sell a lot more furnaces when it's cold out.
And so those climate control customers would typically, we would say, have some seasonality as a result. But what we've seen with the part shortage situation, much of that seasonality is just, well, we just can't see it now because we're asked to build everything we can based on availability of components. I mean, I think it's something we'll come back to and look at once the value chain in some of the markets we serve, sort of, yeah.
gets back to some sort of new normal. But, hey, Rob, I would add that as you're building out your model for fiscal year 2023, I wouldn't think so much about seasonality, but I would think about the fact that as we're opening up, particularly the New Mexico facility as Thailand, which opened in January , ramp up to full speed, you would expect sequential growth and revenue as we have more new product introductions and we get
ramping up that Don referred to of all of those new products. And so not so much seasonality, but definitely spare steps, sequential growth, quarter over quarter.
Great. Thank you. Thank you all.
Thanks for having me.
The next question comes from Hendy Susanto from Gabelli Fonds. Please go ahead.
Good morning, Don and Jenna.
Good morning.
Don, I would like to request more insight into the step up from 1.3 to 1.6 to 1.7 billion. Kimball Electronics has significantly invested in capacity expansion. So in terms of where the income of revenue, like 300 to 400 million come from, like with production capacity across Thailand, Mexico and Poland, can you help us sharing more colors on that?
Yeah, I can, Andy. And yeah, for sure, you know, the expansion sort of telegraph that we have a lot of growth going into that part, those parts of our footprint. So, Island, Mexico, and Poland, you know, all of them previously announced that the expansions two of them were taken out car, already taken out to Cicandon. So yeah, those, we got a lot of business pointed towards that part of our footprint. And the growth is significant there.
But I would also say that we've been very successful growing, where we've not announced expansions, and maybe the way to say that is not yet announced expansions. First of all, we've been very successful growing in all the regions of the world that our supply chains feed into.
So, you know, Europe , North America, China, China for China, have all been, you know, successful for us from a business development perspective. And so, you know, as we look at the growth that we've guided for 2023, fiscal year 2023, it is very well spread across the regions. We support and really across the entire footprint.
I see. And then furthermore, with the 80 to 100 million of CapEx investment in the current fiscal year, how close is Kimball Electronics toward the 2 billion revenue goal? And I'm wondering that 80 to 100 million of CapEx, how much...
capacity in terms of dollars of revenue that is associated with the
Let's say like a midpoint of 90 million of capex.
Yeah, so I mean, as we talked about in scripted a handy that, you know, we we've got our our site set on a 2 billion annual revenue goal. And you know, with the CapEx that we've had the last couple of years and the CapEx we're guiding to for this year, as we exit fiscal year 2023, we think we'll have the footprint to approach that annual revenue number both from a facility standpoint, and also approaching it from an equipment standpoint as well.
Okay, and then one question for Jana.
Depreciation will go up because of CapEx investment. How will that affect gross margin and operating margin for the next one or two years?
Yeah, so what I would say is I would plan for the CAPEX, the higher level of CAPEX that have Texas Open
roughly 10 year depreciable life. I think that's probably pretty standard for our industry. But what you should also expect is increased revenue over time associated with that CAPEX investment such that over the longer term, you're gonna be able to maintain that growth margin rate. So there should be a little bit of a differential that you're gonna see in the beginning, right? If that capital starts to earn, it's... if that capital starts to earn, it's...
value, but that shifts the temporary difference between capital deployment timing and revenue coming through. And as we sort of cycle through, that's going to normalize and I would expect our growth margin rates to hold in very nicely.
value, but that's just the temporary difference between capital deployment timing and revenue coming through. And as we sort of cycle through, that's going to normalize and I would expect our gross margin rates to hold in very nicely. Thank you Don, thank you Jenna.
Thanks, Andy.
Have you remormed the task any further questions? Can only thanks for you talking we discuss that question. keypad.
It appears you have no questions at this moment. So I'm going to hand it back to Donald before we find a remarks.
Thank you, everyone.
That brings us to the end of today's call.
We appreciate it.
If you have any questions in the interim, please feel free to reach out to Andy.
Have a good day.
But there's time listeners, Macyn D. Hang up to disconnect from the call. Thank you, I'm having my stay. Thank you, I'm having my stay.
Q4 were $373 million, a 13 percent increase compared to the fourth quarter last year. This result could have been better, as foreign exchange rates had relatively large impact on net sales in the period compared to Q4 of last year, a 3 percent unfavorable impact. Similar to Q3, the top-line growth in the fourth quarter was driven by all four of the vertical markets we serve. automotive, our largest business, were $152 million. This represents a 7 percent increase compared to Q4 last year and 41 percent of total company sales in the quarter. It also completes a record year for the automotive vertical market, with total annual sales topping $580 million, which is up 6 percent from last year. Our success in this vertical market is a result of supporting programs, including the ramp-up of new product introductions, in electronic power steering, automated driver assistance, passenger safety systems, vehicle mobility management, and electronic braking, including redundant braking systems and self-driving setups for both EVs, that is, electric vehicles, and those powered by internal combustion engines. Net sales in medical were $114 million, a 34 percent increase compared to Q4 last year, and 30 percent of total company sales. This was our best-performing business in the quarter and capped off a year where the medical industry continues to recover and normalize from the pandemic. In total, our sales in the medical vertical market grew 2 percent in fiscal year 2022 for $392 million, with applications supporting sleep therapy and respiratory care, image-guided therapy, in vitro diagnostics, drug delivery systems, AEDs, and patient monitoring equipment. Industrial had a best-ever quarter in Q4, with sales totaling $88 million, a 2 percent increase over the fourth quarter last year. This record performance was driven by products for climate control. It also completes a year where sales in the industrial vertical exceeded $300 million.