STATESVILLE, N.C., Dec. 16, 2021 /PRNewswire/ -- Kewaunee Scientific
Corporation (NASDAQ: KEQU) today announced results for its second
quarter ended October 31, 2021.
Fiscal Year 2022 Second Quarter Results:
Sales during the second quarter of fiscal year 2022 were
$39,031,000, relatively flat compared
to sales of $39,000,000 from the
prior year second quarter. Pre-tax loss for the quarter was
$2,887,000 compared to a pre-tax loss
of $362,000 for the prior year
period. The Company experienced significantly higher raw
material costs in the second quarter, which increased approximately
$2,112,000, net of surcharges, when
compared to the prior year period. These material cost
increases, which could not be passed along to customers due to the
fixed nature of the Company's contracts, as well as supply chain
and labor constraints resulting from COVID-19, resulted in a net
loss of $3,100,000 compared to a net
loss of $180,000 for the prior year
period. EBITDA1 for the quarter was ($2,116,000) compared to $353,000 for the prior year period. Diluted loss
per share was ($1.11), as compared to
diluted loss per share of ($0.07) in
the prior year second quarter.
The Company's order backlog was $139.7
million on October 31, 2021,
increasing from $96.0 million at
October 31, 2020, and $114.5 million at April
30, 2021. This is the highest order backlog in the
Company's history. This includes a significant award received
by our team in India during the
quarter from Laurus Synthesis (http://laurussynthesis.com), a
subsidiary of Laurus Labs. A separate press release
will be issued today by the Company that will provide greater
detail about this project.
Domestic Segment - Domestic sales for the quarter were
$29,934,000, an increase of 4.0% from
sales of $28,772,000 in the prior
year period. Domestic segment net loss was $2,095,000 compared to net earnings of
$168,000 in the prior year period.
Domestic segment EBITDA was ($1,480,000) compared to $1,189,000 for the prior year period. The
year over year sales increase was driven by $1,213,000 of surcharges, which only partially
offset $3,325,000 of gross raw
material cost increases experienced during the quarter. Raw
material cost increases accelerated in the quarter across virtually
all categories with the most significant year-over-year increases
in epoxy resin (increase of 236%) and cold rolled carbon steel
(increase of 101%).
International Segment - International sales for the
quarter were $9,097,000, a decrease
of 11.1% from sales of $10,228,000 in
the prior year period. Performance across our International
markets remained similar to that of recent quarters with the
India market remaining strong and
the ASEAN and Middle East markets
continuing to remain soft as a result of COVID-19.
International segment net income was $365,000 compared to $465,000 in the prior year period. International
segment EBITDA was $594,000 compared
to $775,000 for the prior year
period.
Corporate Segment – Corporate segment net loss was
$1,370,000 for the quarter, as
compared to $813,000 in the prior
year period. Corporate segment EBITDA for the quarter was
($1,230,000), a favorable increase of
23.6% from corporate segment EBITDA of ($1,611,000) for the prior year period. The
primary driver of the improved EBITDA was the favorable impact from
pension accounting as a result of the recovery of the plan assets
at fiscal year-end 2021 when compared to fiscal year-end 2020.
Total cash on hand on October 31,
2021 was $5,532,000, as
compared to $5,731,000 at
April 30, 2021. Working capital
was $23,049,000, as compared to
$28,530,000 at the end of the second
quarter last year and $26,276,000 at
April 30, 2021. Short-term debt
was $13,695,000 on October 31, 2021, as compared to $6,828,000 at April 30,
2021, and long-term debt was $102,000 on October 31,
2021 as compared to $112,000
at April 30, 2021. The Company's
debt-to-equity ratio on October 31,
2021 was .59-to-1, as compared to .39-to-1 at April 30,
2021.
"The market for the Company's products remains strong, and I
could not be more proud of Kewaunee's Associates for persevering
through a number of headwinds that have affected the business
during our most recent quarter," said Thomas D. Hull III, Kewaunee's President and
Chief Executive Officer. "We were successful in continuing to
grow our backlog, reporting a record high for the second
consecutive quarter. In response to this favorable
market demand, we have been focused on restoring and expanding
manufacturing capacity we had to reduce last year because of
COVID-19. Though it's been challenging due to the tight
labor market, we made progress during the quarter in adding new
Associates who will contribute to sustained manufacturing volume
increases during the second half of our fiscal
year."
"Much of the product manufactured during the quarter was priced
during the peak of weak demand due to COVID-19, which was also
before raw material inflation began because of the global supply
chain crisis. These orders had fixed contracts that prevented
the Company from passing along and recovering the unprecedented
increases in raw material costs that have occurred. Looking
forward, surcharges have been implemented on all new orders which
will result in our revenue being better aligned with our costs in
the second half of the current fiscal year."
"We believe the worst of the impact of the timing lag between
increased raw material costs and the associated surcharge
implementation is behind us. Based on this, we expect
improved financial performance in the second half of this fiscal
year and into our fiscal 2023. While November's previously
disclosed cyber-attack resulted in a temporary shut-down of our
operations, we rebounded quickly and continue to ramp production
levels in response to strong demand."
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.
|
EBITDA and Segment EBITDA Reconciliation
Quarter Ended
October 31, 2020
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Net Earnings
(Loss)
|
|
$
168
|
|
$
465
|
|
$
(813)
|
|
$
(180)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
-
|
|
1
|
|
127
|
|
128
|
Interest
Income
|
|
-
|
|
(56)
|
|
(1)
|
|
(57)
|
Income
Taxes
|
|
427
|
|
306
|
|
(930)
|
|
(197)
|
Depreciation and
Amortization
|
|
594
|
|
59
|
|
6
|
|
659
|
EBITDA
|
|
$
1,189
|
|
$
775
|
|
$
(1,611)
|
|
$
353
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
Year to Date
October 31, 2020
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Net Earnings
(Loss)
|
|
$
1,161
|
|
$
589
|
|
$
(2,528)
|
|
$
(778)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
-
|
|
1
|
|
204
|
|
205
|
Interest
Income
|
|
-
|
|
(105)
|
|
(2)
|
|
(107)
|
Income
Taxes
|
|
427
|
|
327
|
|
(930)
|
|
(176)
|
Depreciation and
Amortization
|
|
1,206
|
|
128
|
|
12
|
|
1,346
|
EBITDA
|
|
$
2,794
|
|
$
940
|
|
$
(3,244)
|
|
$
490
|
|
|
|
|
|
|
|
|
|
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)
|
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. Direct 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 and Asian 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, natural
disasters and other Force Majeure events; and the ultimate impact
on the Company of the cyber attack suffered on November 5, 2021. 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, 2021, 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.
Exchange: NASDAQ
(KEQU)
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,
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net sales
|
|
$
39,031
|
|
$
39,000
|
|
$
78,524
|
|
$
75,423
|
Cost of products
sold
|
|
35,434
|
|
32,605
|
|
69,253
|
|
63,147
|
Gross
profit
|
|
3,597
|
|
6,395
|
|
9,271
|
|
12,276
|
Operating
expenses
|
|
6,487
|
|
6,406
|
|
13,252
|
|
12,563
|
Operating earnings
(loss)
|
|
(2,890)
|
|
(11)
|
|
(3,981)
|
|
(287)
|
Pension
expense
|
|
89
|
|
(289)
|
|
178
|
|
(577)
|
Other
income
|
|
46
|
|
66
|
|
98
|
|
120
|
Interest
expense
|
|
(132)
|
|
(128)
|
|
(238)
|
|
(205)
|
Earnings (loss)
before income taxes
|
|
(2,887)
|
|
(362)
|
|
(3,943)
|
|
(949)
|
Income tax expense
(benefit)
|
|
195
|
|
(197)
|
|
446
|
|
(176)
|
Net loss
|
|
(3,082)
|
|
(165)
|
|
(4,389)
|
|
(773)
|
Less: net earnings
attributable to the noncontrolling interest
|
|
18
|
|
15
|
|
56
|
|
5
|
Net loss attributable
to Kewaunee Scientific Corporation
|
|
$
(3,100)
|
|
$
(180)
|
|
$
(4,445)
|
|
$
(778)
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to
|
|
|
|
|
|
|
|
|
Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
|
|
|
Basic
|
|
($1.11)
|
|
($0.07)
|
|
($1.60)
|
|
($0.28)
|
Diluted
|
|
($1.11)
|
|
($0.07)
|
|
($1.60)
|
|
($0.28)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
2,789
|
|
2,759
|
|
2,783
|
|
2,757
|
Diluted
|
|
2,789
|
|
2,759
|
|
2,783
|
|
2,757
|
|
|
|
|
|
|
|
|
|
Kewaunee
Scientific Corporation
|
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct
31,
|
|
April
30,
|
|
|
|
|
|
|
2021
|
|
2021
|
|
|
|
|
Assets
|
|
(Unaudited)
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,715
|
|
$
5,206
|
|
|
|
|
Restricted
cash
|
|
817
|
|
525
|
|
|
|
|
Receivables, less
allowances
|
|
37,069
|
|
32,882
|
|
|
|
|
Inventories
|
|
18,120
|
|
16,517
|
|
|
|
|
Income tax
receivable
|
|
774
|
|
955
|
|
|
|
|
Prepaid expenses and
other current assets
|
|
5,325
|
|
4,372
|
|
|
|
|
Total Current Assets
|
|
66,820
|
|
60,457
|
|
|
|
|
Net property, plant
and equipment
|
|
15,515
|
|
15,982
|
|
|
|
|
Right of use
assets
|
|
8,454
|
|
9,279
|
|
|
|
|
Other
assets
|
|
3,504
|
|
3,666
|
|
|
|
|
Total
Assets
|
|
$
94,293
|
|
$
89,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
13,695
|
|
$
6,828
|
|
|
|
|
Current portion of
lease obligations
|
|
1,378
|
|
1,369
|
|
|
|
|
Accounts
payable
|
|
20,228
|
|
16,780
|
|
|
|
|
Other current
liabilities
|
|
8,470
|
|
9,204
|
|
|
|
|
Total Current Liabilities
|
|
43,771
|
|
34,181
|
|
|
|
|
Long-term portion of
lease obligations
|
|
7,111
|
|
7,951
|
|
|
|
|
Other non-current
liabilities
|
|
6,108
|
|
5,765
|
|
|
|
|
Total Liabilities
|
|
56,990
|
|
47,897
|
|
|
|
|
Kewaunee Scientific
Corporation equity
|
|
37,005
|
|
41,241
|
|
|
|
|
Noncontrolling
interest
|
|
298
|
|
246
|
|
|
|
|
Total Stockholders' Equity
|
|
37,303
|
|
41,487
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
94,293
|
|
$
89,384
|
|
|
|
|
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SOURCE Kewaunee Scientific Corporation