KEQU Kewaunee Scientific Corporation

Kewaunee Scientific Announces Third Quarter Results and Quarterly Dividend STATESVILLE, N.C., Feb. 22 /PRNewswire-FirstCall/ -- Kewaunee Scientific Corporation (NASDAQ:KEQU) today reported results for its third quarter ended January 31, 2005 and announced its regular quarterly dividend. Sales for the quarter were $15,623,000, a decrease of 27% from sales of $21,454,000 in the same period last year. A net loss of $742,000, or $0.30 per diluted share, was reported for the quarter. This compares to net earnings of $291,000, or $0.12 per diluted share, in the same period last year. Sales for the quarter were adversely affected by the continuing soft marketplace for laboratory furniture, although the marketplace appeared to show improvement late in the quarter. Spending for new research projects by pharmaceutical companies continued to be below levels of recent years. Additionally, the number of projects generally available in the marketplace was reduced, or construction has been delayed, by the significant increases in the cost of construction materials over the past year. Funding available for education construction projects also continued to be affected by reduced state spending budgets. Order activity improved over the two previous quarters. The order backlog increased to $41.7 million at January 31, 2005. The order backlog was $38.6 million at October 31, 2004 and $39.6 million at July 31, 2004. Earnings for the quarter were adversely affected by low sales volumes, extraordinarily higher costs for certain raw materials, particularly steel and epoxy resin, reserves established for several project disputes, and cost overruns on several completed projects. The impact of these items was partially offset by reduced expenses resulting from the workforce reductions announced last quarter and aggressive cost reduction activities. "The business environment remained difficult during the quarter," said William A. Shumaker, President and Chief Executive Officer of Kewaunee. "However, as we anticipated, we have begun to see increased activity in the marketplace since the Presidential election in November. With this improvement expected to continue and our increased order backlog, we expect substantially improved sales volume in the fourth quarter compared to the third quarter. In view of this increased sales volume and with the number of unusual expenses that affected our third quarter believed to be behind us, we expect a profitable fourth quarter. "Our balance sheet remains strong," Mr. Shumaker continued. "Total debt was $4.7 million at January 31, 2005, down from $7.6 million at October 31, 2004, while cash on hand increased to $1.1 million. Operations provided cash of $3.8 million during the quarter. Profits of our technical furniture business continue to improve over the prior year as this market strengthens. Our subsidiaries in Asia serving the rapidly-expanding Asian laboratory research market also continue to grow and contribute nicely, though modestly, to our profits." Sales for the nine months ended January 31, 2005 were $54,276,000, a decrease of 23% from sales of $70,051,000 in the comparable period last year. A net loss of $441,000, or $0.18 per diluted share, was reported for the nine months. This compares to net earnings of $1,170,000, or $.47 per diluted share, in the comparable period last year. The Company also announced today that its Board of Directors approved a cash dividend of seven cents per outstanding share to stockholders of record at the close of business on March 4, 2005, payable on March 18, 2005. Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of scientific and technical furniture. The Company's corporate headquarters and manufacturing facilities are located in Statesville, North Carolina. Kewaunee Scientific's website is located at http://www.kewaunee.com/ . Certain statements in this release constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, services, and prices. Condensed Consolidated Statements of Operations (unaudited) (in thousands, except per share data) 3 Months Ended 9 Months Ended January 31 January 31 2005 2004 2005 2004 Net sales $15,623 $21,454 $54,276 $70,051 Cost of products sold 13,586 17,736 45,310 58,626 Gross profit 2,037 3,718 8,966 11,425 Operating expenses 3,030 3,206 9,336 9,528 Operating earnings (loss) (993) 512 (370) 1,897 Other expense (131) (57) (298) (69) Earnings (loss) before income taxes (1,124) 455 (668) 1,828 Income tax expense (benefit) (382) 164 (227) 658 Net earnings (loss) $(742) $291 $(441) $1,170 Net earnings (loss) per share Basic $(0.30) $0.12 $(0.18) $0.47 Diluted $(0.30) $0.12 $(0.18) $0.47 Weighted average number of common shares outstanding (in thousands) Basic 2,492 2,486 2,491 2,485 Diluted 2,493 2,499 2,495 2,493 Condensed Consolidated Balance Sheets (in thousands) January 31 April 30 Assets 2005 2004 (unaudited) Cash and cash equivalents $1,128 $1,167 Receivables, less allowances 18,756 24,987 Inventories 3,953 4,285 Prepaid expenses and other current assets 1,291 1,097 Total current assets 25,128 31,536 Net property, plant and equipment 10,729 11,362 Other assets 6,513 7,563 Total Assets $42,370 $50,461 Liabilities and Stockholders' Equity Short-term borrowings $3,263 $6,996 Current portion of long-term debt 1,169 1,118 Accounts payable 5,189 6,924 Other current liabilities 2,535 3,881 Total current liabilities 12,156 18,919 Long-term debt 257 931 Other non-current liabilities 4,153 3,820 Total stockholders' equity 25,804 26,791 Total Liabilities and Stockholders' Equity $42,370 $50,461 Contact: D. Michael Parker 704/871-3290 DATASOURCE: Kewaunee Scientific Corporation CONTACT: D. Michael Parker of Kewaunee Scientific Corporation, +1-704-871-3290 Web site: http://www.kewaunee.com/

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