Kewaunee Scientific Reports Results for Second Quarter of Fiscal Year 2023


STATESVILLE, N.C., Dec. 7, 2022 /PRNewswire/ — Kewaunee Scientific Corporation (NASDAQ: KEQU) today announced results for its second quarter ended October 31, 2022.

Fiscal Year 2023 Second Quarter Results:

Sales during the second quarter of fiscal year 2023 were $54,564,000, an increase of 39.8% compared to sales of $39,031,000 from the prior year second quarter. Pre-tax earnings for the quarter were $456,000 compared to a pre-tax loss of $2,887,000 for the prior year period. Kewaunee recorded a net loss of $243,000 compared to net loss of $3,100,000 for the prior year period. Similar to the Company’s first quarter results, pre-tax earnings for the current quarter were impacted as the Company worked to deliver a portion of the remaining direct orders in its order backlog. Nearly 20% of the current period’s domestic segment revenue was for direct orders that, in aggregate, were delivered at a loss for the Company. Most of these projects were tied to contracts that were priced and executed prior to the broad-based inflation experienced last fiscal year. EBITDA1 for the quarter was $1,252,000 compared to ($2,116,000) for the prior year period. Diluted loss per share was ($0.09), as compared to diluted loss per share of ($1.11) in the prior year second quarter.

The Company’s order backlog was $157.8 million on October 31, 2022, as compared to $139.7 million on October 31, 2021, and $173.9 million on April 30, 2022. As the Company continues winding down the remaining direct jobs, the quality of the backlog continues to improve.

Domestic Segment – Domestic sales for the quarter were $37,991,000, an increase of 26.9% from sales of $29,934,000 in the prior year period. The increase in sales was driven by both higher manufacturing volume and higher input costs being rolled into product pricing. Domestic segment net income was $491,000 compared to net loss of $2,095,000 in the prior year period. Domestic segment EBITDA was $1,088,000 compared to ($1,480,000) for the prior year period.

International Segment – International sales for the quarter were $16,573,000, an increase of 82.2% from sales of $9,097,000 in the prior year period due to the continued delivery of a number of large projects booked in the prior fiscal year. International segment net income was $1,157,000 compared to $365,000 in the prior year period. International segment EBITDA was $1,668,000 compared to $594,000 for the prior year period.

Corporate Segment – Corporate segment pre-tax net loss was $1,891,000 for the quarter, as compared to a pre-tax net loss of $1,370,000 in the prior year period. Corporate segment EBITDA for the quarter was ($1,504,000) compared to corporate segment EBITDA of ($1,230,000) for the prior year period. The primary driver of the change in EBITDA was higher pension expense due to the change in the underlying asset valuation for the Company’s frozen pension plan.

Total cash on hand on October 31, 2022 was $16,317,000, as compared to $6,894,000 on April 30, 2022. The increase in cash was primarily from proceeds of the sale-leaseback financing transaction that was recorded as a note receivable on April 30, 2022 and advanced billings received for several large international projects. Working capital was $47,756,000, as compared to $23,049,000 at the end of the second quarter last year and $49,272,000 on April 30, 2022. The Company had no short-term debt as of October 31, 2022, as compared to $1,588,000 on April 30, 2022. Long-term debt was $29,360,000 on October 31, 2022 as compared to $29,704,000 on April 30, 2022. The Company’s debt-to-equity ratio on October 31, 2022 was 1.12-to-1, as compared to 1.07-to-1 on April 30, 2022.

“Kewaunee’s financial performance during the second quarter of fiscal year 2023 showed improvement when compared to the first quarter of the fiscal year despite the ongoing negative impact of direct contracts that we are working to complete,” said Thomas D. Hull III, Kewaunee’s President and Chief Executive Officer. “This continued improvement speaks to the strength of our dealer, distribution, and international businesses, reaffirming our strategic decision to stop selling direct.”

“We continue to work to improve the quality of our order backlog by delivering a portion of the lower margin direct sales orders and replacing those orders in the backlog with higher margin product orders. This dynamic, as well as our ability to focus solely on supporting our dealer and distribution channel partners domestically and the continued growth of our International business, positions Kewaunee well as we move through the balance of the fiscal year.”

EBITDA and Segment EBITDA Reconciliation


Quarter Ended October 31, 2021


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$                (2,095)


$                     365


$                (1,370)


$                (3,100)

Add/(Less):









Interest Expense



8


124


132

Interest Income



(45)


(1)


(46)

Income Taxes



195



195

Depreciation and Amortization


615


71


17


703

EBITDA


$                (1,480)


$                     594


$                (1,230)


$                (2,116)










Quarter Ended October 31, 2022


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$                     491


$                  1,157


$                (1,891)


$                   (243)

Add/(Less):









Interest Expense



29


341


370

Interest Income



(152)


(1)


(153)

Income Taxes



570



570

Depreciation and Amortization


597


64


47


708

EBITDA


$                  1,088


$                  1,668


$                (1,504)


$                  1,252










Year to Date October 31, 2021


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$                (2,304)


$                     740


$                (2,881)


$                (4,445)

Add/(Less):









Interest Expense



9


229


238

Interest Income



(91)


(2)


(93)

Income Taxes



446



446

Depreciation and Amortization


1,223


137


36


1,396

EBITDA


$                (1,081)


$                  1,241


$                (2,618)


$                (2,458)










Year to Date October 31, 2022


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$                     589


$                  1,844


$                (3,423)


$                   (990)

Add/(Less):









Interest Expense



60


694


754

Interest Income



(262)


(357)


(619)

Income Taxes



949



949

Depreciation and Amortization


1,210


128


95


1,433

EBITDA


$                  1,799


$                  2,719


$                (2,991)


$                  1,527

About Non-GAAP Measures

EBITDA and Segment EBITDA are calculated as net earnings (loss), less interest expense and interest income, income taxes, depreciation, and amortization. We believe EBITDA and Segment EBITDA allow management and investors to compare our performance to other companies on a consistent basis without regard to depreciation and amortization, which can vary significantly between companies depending upon many factors. EBITDA and Segment EBITDA are not calculations based upon generally accepted accounting principles, and the method for calculating EBITDA and Segment EBITDA can vary among companies. The amounts included in the EBITDA and Segment EBITDA calculations, however, are derived from amounts included in the historical statements of operations. EBITDA and Segment EBITDA should not be considered as alternatives to net earnings (loss) or operating earnings (loss) as an indicator of the Company’s operating performance, or as an alternative to operating cash flows as a measure of liquidity.

About Kewaunee Scientific

Founded in 1906, Kewaunee Scientific Corporation is a recognized global leader in the design, manufacture, and installation of laboratory, healthcare, and technical furniture products. The Company’s products include steel, wood, and laminate casework, fume hoods, adaptable modular systems, moveable workstations, stand-alone benches, biological safety cabinets, and epoxy resin worksurfaces and sinks.

The Company’s corporate headquarters are located in Statesville, North Carolina. Sales offices are located in the United States, India, Saudi Arabia, and Singapore. Three manufacturing facilities are located in Statesville serving the domestic and international markets, and one manufacturing facility is located in Bangalore, India serving the local, Asian, and African markets. Kewaunee Scientific’s website is located at http://www.kewaunee.com

This press release contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements regarding the Company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe” and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to: competitive and general economic conditions and the ongoing impact of the COVID-19 pandemic, including disruptions from government mandates, both domestically and internationally, as well as supplier constraints and other supply disruptions; changes in customer demands; technological changes in our operations or in our industry; dependence on customers’ required delivery schedules; risks related to fluctuations in the Company’s operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; changes in the legal and regulatory environment; changes in raw materials and commodity costs; acts of terrorism, war, governmental action, and natural disasters and other Force Majeure events. The cautionary statements made pursuant to the Reform Act herein and elsewhere by us should not be construed as exhaustive. We cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. Over time, our actual results, performance, or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and harmful to our stockholders’ interest. Many important factors that could cause such a difference are described under the caption “Risk Factors,” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2022, which you should review carefully, and in our subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. These reports are available on our investor relations website at www.kewaunee.com and on the SEC website at www.sec.gov. These forward-looking statements speak only as of the date of this document. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

1 EBITDA is a non-GAAP financial measure. See the table below for a reconciliation of EBITDA and segment EBITDA to net earnings (loss), the most directly comparable GAAP measure.

 

Contact:

Donald T. Gardner III


704/871-3274

 

Kewaunee Scientific Corporation



Condensed Consolidated Statements of Operations (Unaudited)



($ and shares in thousands, except per share amounts)














Three months ended


Six months ended



October 31,


October 31,



2022


2021


2022


2021

Net sales


$           54,564


$           39,031


$        104,687


$           78,524

Cost of products sold


45,863


35,434


89,790


69,253

Gross profit


8,701


3,597


14,897


9,271

Operating expenses


7,946


6,487


14,538


13,252

Operating profit (loss)


755


(2,890)


359


(3,981)

Pension (expense) income


(8)


89


(35)


178

Other income, net


79


46


546


98

Interest expense


(370)


(132)


(754)


(238)

Profit (Loss) before income taxes


456


(2,887)


116


(3,943)

Income tax expense


570


195


949


446

Net loss


(114)


(3,082)


(833)


(4,389)

Less: net earnings attributable to the noncontrolling interest


129


18


157


56

Net  loss attributable to Kewaunee Scientific Corporation


$               (243)


$           (3,100)


$               (990)


$           (4,445)










Net loss per share attributable to









    Kewaunee Scientific Corporation stockholders









       Basic


($0.09)


($1.11)


($0.35)


($1.60)

       Diluted


($0.09)


($1.11)


($0.35)


($1.60)










Weighted average number of common shares outstanding









       Basic


2,830


2,789


2,819


2,783

       Diluted


2,830


2,789


2,819


2,783

 

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

($ in thousands)








October 31,


 April 30,



2022


2022

Assets


(Unaudited)



Cash and cash equivalents


$             9,419


$             4,433

Restricted cash


6,898


2,461

Receivables, less allowances


41,472


41,254

Inventories


24,502


23,796

Note Receivable



13,457

Prepaid expenses and other current assets


8,323


6,164

    Total Current Assets


90,614


91,565

Net property, plant and equipment


14,607


15,121

Right of use assets


9,908


7,573

Other assets


3,989


4,514

Total Assets


$        119,118


$        118,773






Liabilities and Stockholders’ Equity





Short-term borrowings


$                      –


$             1,588

Current portion of lease obligations


2,073


1,445

Current portion of financing liability


608


575

Accounts payable


23,050


27,316

Other current liabilities


17,127


11,369

    Total Current Liabilities


42,858


42,293

Long-term portion of lease obligations


7,965


6,407

Long-term portion of financing liability


28,459


28,775

Other non-current liabilities


4,827


5,118

    Total Liabilities


84,109


82,593

Kewaunee Scientific Corporation  equity


34,402


35,694

Noncontrolling interest


607


486

    Total Stockholders’ Equity


35,009


36,180

Total Liabilities and Stockholders’ Equity


$        119,118


$        118,773

 

 

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SOURCE Kewaunee Scientific Corporation

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