STATESVILLE, N.C., March 8,
2023 /PRNewswire/ -- Kewaunee Scientific Corporation
(NASDAQ: KEQU) today announced results for its third quarter ended
January 31, 2023.
Fiscal Year 2023 Third Quarter Results:
Sales during the third quarter of fiscal year 2023 were
$60,821,000, an increase of 49.7%
compared to sales of $40,633,000 from
the prior year third quarter. Pre-tax earnings for the quarter were
$2,060,000 compared to a pre-tax loss
of $887,000 for the prior year
quarter. Net earnings were $723,000
compared to a net loss of $1,319,000
for the prior year quarter. EBITDA1 for the quarter was
$2,683,000 compared to ($117,000) for the prior year quarter. Diluted
earnings per share was $0.25 compared
to a diluted loss per share of ($0.47) in the prior year quarter.
The Company's order backlog was $153.2 million on January 31, 2023, as compared to $138.1 million on January 31, 2022, and $173.9 million on April 30, 2022. As announced in a press release
on March 7th, 2023, the Company's
International segment has been awarded a multi-year contract to
provide laboratory furniture, fume hoods, and technical products
for Indian Oil Corporation Limited, located in Faridabad,
India. This award is similar in
size to other large international projects that have been reported
over the past year and has been included in the order backlog
amount noted above. This project is expected to be delivered over
the next twelve to eighteen months.
Domestic Segment - Domestic sales for the quarter were
$36,134,000, an increase of 22.4%
from sales of $29,531,000 in the
prior year quarter. Similar to the Company's first and second
quarter results, Domestic segment earnings for the current quarter
were impacted as the Company worked to deliver a portion of the
remaining direct orders in its order backlog, the majority of which
were priced and executed prior to the broad-based inflation
experienced last fiscal year. Although these projects continue to
impact earnings, the remainder of the orders delivered in the
quarter had strong margins as pricing has been fully matched with
costs. Domestic segment net income was $417,000 compared to a net loss of $305,000 in the prior year quarter. Domestic
segment EBITDA was $1,012,000
compared to $347,000 for the prior
year quarter.
International Segment - International sales for the
quarter were $24,687,000, an increase
of 122.4% from sales of $11,102,000
in the prior year quarter due to the continued delivery of several
large projects recorded in the prior fiscal year. International
segment net income was $1,561,000
compared to $573,000 in the prior
year quarter. International segment EBITDA was $2,385,000 compared to $874,000 for the prior year quarter.
Corporate Segment – Corporate segment pre-tax net loss
was $1,144,000 for the quarter, as
compared to a pre-tax net loss of $1,501,000 in the prior year period. Corporate
segment EBITDA for the quarter was ($714,000) compared to corporate segment EBITDA
of ($1,338,000) for the prior year
quarter. The primary driver of the increase in EBITDA was a
revision of the Company's global transfer pricing study that
resulted in a true-up of charges to the International segment that
was recorded in the third quarter.
Total cash on hand on January 31,
2023 was $18,416,000, as
compared to $6,894,000 on
April 30, 2022. The increase in cash
was primarily from the proceeds of the sale-leaseback financing
transaction that was recorded as a note receivable on April 30, 2022, advanced billings received for
several large international projects, and proceeds from a small
balance being drawn on the new credit facility. Working capital was
$47,348,000, as compared to
$21,412,000 at the end of the third
quarter last year and $49,272,000 on
April 30, 2022. The Company had
short-term debt of $5,753,000 as of
January 31, 2023, as compared to
$1,588,000 on April 30, 2022. Long-term debt was $29,154,000 on January 31,
2023, as compared to $29,704,000 on April 30,
2022. The Company's debt-to-equity ratio on January 31, 2023 was 1.22-to-1, as compared to
1.07-to-1 on April 30, 2022.
"Kewaunee's financial performance during the third quarter of
fiscal year 2023 continued to improve when compared to the first
two quarters 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.
"I am proud of the drive and perseverance of Kewaunee's domestic
team to see through the implementation of the changes to our
channel strategy announced last year whereby we exited several
markets where we traditionally sold directly. Our team has worked
diligently toward completion of our remaining direct projects by
the end of our fourth quarter while continuing to grow with our
dealer and distribution partners. We believe that we have the best
dealer and distribution partners in the industry. They continue to
invest in their businesses in anticipation of continued growth in
demand for the products Kewaunee designs and manufactures."
"Kewaunee's international business remains strong, with our
Associates performing at a high level both delivering on our
existing commitments while continuing to win in the marketplace. As
previously mentioned, Kewaunee was awarded a multi-year contract to
provide laboratory furniture, fume hoods, and technical products
for Indian Oil Corporation Limited, further strengthening our order
backlog."
"While we are monitoring uncertainty regarding the health
of the economy, we are focusing on what is within our control. Our
team wakes up every day with a mindset of continuous improvement
and commitment to operating with excellence."
EBITDA and Segment EBITDA Reconciliation
Quarter Ended
January 31, 2022
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
(305)
|
|
$
573
|
|
$
(1,587)
|
|
$
(1,319)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
8
|
|
150
|
|
158
|
Interest
Income
|
|
—
|
|
(47)
|
|
(4)
|
|
(51)
|
Income
Taxes
|
|
50
|
|
264
|
|
85
|
|
399
|
Depreciation and
Amortization
|
|
602
|
|
76
|
|
18
|
|
696
|
EBITDA
|
|
$
347
|
|
$
874
|
|
$
(1,338)
|
|
$
(117)
|
|
|
|
|
|
|
|
|
|
Quarter Ended
January 31, 2023
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
417
|
|
$
1,561
|
|
$
(1,255)
|
|
$
723
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
53
|
|
383
|
|
436
|
Interest
Income
|
|
—
|
|
(147)
|
|
—
|
|
(147)
|
Income
Taxes
|
|
—
|
|
852
|
|
110
|
|
962
|
Depreciation and
Amortization
|
|
595
|
|
66
|
|
48
|
|
709
|
EBITDA
|
|
$
1,012
|
|
$
2,385
|
|
$
(714)
|
|
$
2,683
|
|
|
|
|
|
|
|
|
|
Year to Date January
31, 2022
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
(2,609)
|
|
$
1,313
|
|
$
(4,468)
|
|
$
(5,764)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
17
|
|
379
|
|
396
|
Interest
Income
|
|
—
|
|
(138)
|
|
(6)
|
|
(144)
|
Income
Taxes
|
|
50
|
|
710
|
|
85
|
|
845
|
Depreciation and
Amortization
|
|
1,825
|
|
213
|
|
54
|
|
2,092
|
EBITDA
|
|
$
(734)
|
|
$
2,115
|
|
$
(3,956)
|
|
$
(2,575)
|
|
|
|
|
|
|
|
|
|
Year to Date January
31, 2023
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
1,006
|
|
$
3,405
|
|
$
(4,678)
|
|
$
(267)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
113
|
|
1,077
|
|
1,190
|
Interest
Income
|
|
—
|
|
(409)
|
|
(357)
|
|
(766)
|
Income
Taxes
|
|
—
|
|
1,801
|
|
110
|
|
1,911
|
Depreciation and
Amortization
|
|
1,805
|
|
194
|
|
143
|
|
2,142
|
EBITDA
|
|
$
2,811
|
|
$
5,104
|
|
$
(3,705)
|
|
$
4,210
|
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 consolidated 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 and wood casework, fume hoods,
adaptable modular systems, moveable workstations, stand-alone
benches, biological safety cabinets, and epoxy resin work surfaces
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, 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.
Contact:
|
Donald T. Gardner
III
|
|
704/871-3274
|
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.
Kewaunee Scientific
Corporation
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
($ and shares in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
January
31,
|
|
January
31,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
|
$
60,821
|
|
$
40,633
|
|
$
165,508
|
|
$ 119,157
|
Cost of products
sold
|
|
50,491
|
|
35,011
|
|
140,281
|
|
104,264
|
Gross profit
|
|
10,330
|
|
5,622
|
|
25,227
|
|
14,893
|
Operating
expenses
|
|
8,026
|
|
6,490
|
|
22,564
|
|
19,742
|
Operating profit
(loss)
|
|
2,304
|
|
(868)
|
|
2,663
|
|
(4,849)
|
Pension (expense)
income
|
|
(18)
|
|
88
|
|
(53)
|
|
266
|
Other income,
net
|
|
210
|
|
51
|
|
756
|
|
149
|
Interest
expense
|
|
(436)
|
|
(158)
|
|
(1,190)
|
|
(396)
|
Profit (Loss) before
income taxes
|
|
2,060
|
|
(887)
|
|
2,176
|
|
(4,830)
|
Income tax
expense
|
|
962
|
|
399
|
|
1,911
|
|
845
|
Net earnings
(loss)
|
|
1,098
|
|
(1,286)
|
|
265
|
|
(5,675)
|
Less: net earnings
attributable to the non-controlling interest
|
|
375
|
|
33
|
|
532
|
|
89
|
Net earnings (loss)
attributable to Kewaunee Scientific Corporation
|
|
$
723
|
|
$
(1,319)
|
|
$
(267)
|
|
$
(5,764)
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per
share attributable to
|
|
|
|
|
|
|
|
|
Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.26
|
|
($0.47)
|
|
($0.09)
|
|
($2.07)
|
Diluted
|
|
$0.25
|
|
($0.47)
|
|
($0.09)
|
|
($2.07)
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
2,830
|
|
2,790
|
|
2,822
|
|
2,785
|
Diluted
|
|
2,911
|
|
2,790
|
|
2,822
|
|
2,785
|
Kewaunee Scientific
Corporation
|
Condensed
Consolidated Balance Sheets
|
($ in
thousands)
|
|
|
|
|
|
|
|
January
31,
|
|
April
30,
|
|
|
2023
|
|
2022
|
Assets
|
|
(Unaudited)
|
|
|
Cash and cash
equivalents
|
|
$
13,047
|
|
$ 4,433
|
Restricted
cash
|
|
5,369
|
|
2,461
|
Receivables, less
allowances
|
|
43,988
|
|
41,254
|
Inventories
|
|
21,412
|
|
23,796
|
Note
receivable
|
|
-
|
|
13,457
|
Prepaid expenses and
other current assets
|
|
7,745
|
|
6,164
|
Total Current Assets
|
|
91,561
|
|
91,565
|
Net property, plant and
equipment
|
|
14,541
|
|
15,121
|
Right of use
assets
|
|
9,563
|
|
7,573
|
Other assets
|
|
6,121
|
|
4,514
|
Total Assets
|
|
$
121,786
|
|
$ 118,773
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Short-term
borrowings
|
|
$
5,753
|
|
$ 1,588
|
Current portion of
lease obligations
|
|
2,120
|
|
1,445
|
Current portion of
financing liability
|
|
625
|
|
575
|
Accounts
payable
|
|
24,914
|
|
27,316
|
Other current
liabilities
|
|
10,801
|
|
11,369
|
Total Current Liabilities
|
|
44,213
|
|
42,293
|
Long-term portion of
lease obligations
|
|
7,578
|
|
6,407
|
Long-term portion of
financing liability
|
|
28,298
|
|
28,775
|
Other non-current
liabilities
|
|
5,359
|
|
5,118
|
Total Liabilities
|
|
85,448
|
|
82,593
|
Kewaunee Scientific
Corporation equity
|
|
35,351
|
|
35,694
|
Non-controlling
interest
|
|
987
|
|
486
|
Total Stockholders' Equity
|
|
36,338
|
|
36,180
|
Total Liabilities and
Stockholders' Equity
|
|
$
121,786
|
|
$ 118,773
|
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SOURCE Kewaunee Scientific Corporation