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