STATESVILLE, N.C., June 29,
2022 /PRNewswire/ -- Kewaunee Scientific
Corporation (NASDAQ: KEQU) today announced results for its fourth
quarter and its fiscal year ended April 30,
2022.
Fiscal Year 2022 Fourth Quarter
Results:
Sales during the fourth quarter of fiscal year 2022 were
$49,715,000, an increase of 28.4%
compared to sales of $38,707,000 from
the prior year fourth quarter. The increase in sales resulted from
both higher volumes for the Domestic segment as well as the
implementation of price increases in response to higher raw
material input costs, which are now flowing through production at a
higher rate. Pre-tax earnings for the quarter were $2,345,000 compared to a pre-tax loss of
$950,000 for the prior year period.
Net loss for the quarter was $362,000
compared to $2,975,000 for the prior
year. Net loss for the current quarter was unfavorably impacted by
additional income tax expense of $2,561,000 due to the increase in the valuation
allowance, largely driven by the Sale-Leaseback transaction
executed on March 24, 2022, as part
of the Company's re-capitalization strategy that is further
discussed below. EBITDA1 for the quarter was
$2,969,000 compared to a loss of
$302,000 for the prior year period.
Diluted loss per share was $0.13, as
compared to a diluted loss per share of $1.08 in the prior year fourth quarter.
Domestic Segment - Domestic sales for the quarter were
$37,720,000, an increase of 39.0%
from sales of $27,139,000 in the
prior year period. Net earnings for the domestic segment were
$2,380,000 compared to a net loss of
$56,000 in the prior year period.
Domestic segment EBITDA was $2,957,000 compared to a loss of $34,000 for the prior year period. The
year-over-year increase in sales resulted from both strong demand
across all end-use markets as well as increased revenue per unit
from price increases implemented earlier in the year now flowing
through production and billings.
International Segment - International sales for the
quarter were $11,995,000, an increase
of 3.7% from sales of $11,568,000 in
the prior year period as activity across the international markets
remained strong. Net income for the international segment was
$1,020,000 compared to $961,000 in the prior year period. International
segment EBITDA was $1,456,000
compared to $1,529,000 for the prior
year period. During the fourth quarter, the ASEAN market
contributed at its highest level of the year as COVID-19
restrictions in the region begin to be lifted and sales returned to
more normalized levels.
Corporate Segment – Corporate segment pre-tax net loss
was $3,762,000 for the quarter, as
compared to $3,880,000 in the prior
year period. Corporate segment EBITDA loss for the quarter was
$1,444,000, a favorable improvement
of 19.6% from corporate segment EBITDA loss of $1,797,000 for the prior year period. The primary
driver of the improved EBITDA was the favorable impact from pension
accounting because of the recovery of the plan assets at previous
fiscal year-end.
The Company's order backlog was $173.9
million on April 30, 2022,
increasing from $138.1 million on
January 31, 2022, and $114.5 million on April
30, 2021. This is the highest order backlog in the Company's
history.
"Kewaunee delivered strong financial results during the fourth
quarter of fiscal year 2022, responding to accelerating demand as
construction activity continued to recover from COVID-19 lows,"
said Thomas D. Hull III, Kewaunee's
President, and Chief Executive Officer. "Demand in the
international markets remains strong, with an increasing rate of
activity being felt in the ASEAN and Middle East markets, complementing what
continues to be a strong Indian market. Demand across the United States was especially strong in the
fourth quarter, with all our major geographies being extremely
active."
"Profitability improved domestically during the fourth quarter
based on higher manufacturing volumes as we continue to restore
production capacity that was reduced due to the COVID-19 pandemic.
Further, actions taken during the year to align pricing on new
orders with rapidly inflating raw material inputs substantially
mitigated the cost/price mismatch that we experienced during the
previous four quarters. I am proud of how our Kewaunee Associates
continue to work to serve our customers, overcoming numerous
headwinds due to a historically tight labor market as well as
managing through persistent supply chain challenges."
"Kewaunee has posted a record high backlog for the third time in
the past four quarters, demonstrating the confidence customers have
in our ability to meet their requirements in a dynamic operating
environment. Domestically, our order backlog increase has been
driven by strength in the life science and higher education end-use
markets within the United States.
Our international teams continue to see customers investing in
large infrastructure projects requiring laboratories in
India, the Middle East, and Africa and were awarded multiple, multi-year
projects during the year. The strength in our backlog positions the
Company well for the next fiscal year as the majority of these
orders will deliver over the next twelve to eighteen months."
Fiscal Year 2022 Full Year
Results:
Sales during fiscal year 2022 were $168,872,000, an increase of 14.5% compared to
sales of $147,469,000 from the prior
year. Pre-tax loss for the fiscal year was $2,485,000 compared to a pre-tax loss of
$2,617,000 for the prior year. The
net loss for the fiscal year was $6,126,000, compared to a net loss of
$3,672,000 for the prior year.
Results for the full year were affected by the factors previously
mentioned, as well as the $4,170,000
due to the increase in the valuation allowance, largely driven by
the Sale-Leaseback transaction executed on March 24, 2022. EBITDA for the fiscal year was
$394,000 compared to $171,000 for the prior fiscal year. Diluted loss
per share was $2.20, as compared to a
loss per share of $1.33 in the prior
fiscal year.
Domestic Segment - Domestic sales for the fiscal year
were $126,848,000, an increase of
14.2% from sales of $111,035,000 in
the prior year. This increase was driven by year-over-year volume
growth as well as the implementation of price increases on new
orders in response to higher raw material input costs. Domestic
segment net loss was $229,000
compared to net income of $921,000 in
the prior fiscal year. Domestic segment EBITDA was $2,223,000 compared to $3,560,000 for the prior year. Profitability was
negatively impacted during the year by increased COVID-19 related
disruptions, a previously disclosed cyber-attack, ongoing supply
chain issues, labor shortages, and significantly elevated costs due
to inflation. As discussed in previous press releases, the Company
experienced significantly higher raw material costs of $4,559,000 throughout the year which could not be
passed along to customers due to the fixed nature of the Company's
contracts.
International Segment - International sales for the
fiscal year were $42,024,000, an
increase of 15.3% from sales of $36,434,000 in the prior year with strong
activity in India being the
principal driver of growth during the fiscal year. International
segment net income was $2,333,000
compared to $2,049,000 in the prior
fiscal year. International segment EBITDA was $3,571,000 compared to $3,164,000 for the prior year.
Corporate Segment – Corporate segment pre-tax net loss
was $8,230,000 for the fiscal year,
as compared to $6,642,000 in the
prior fiscal year. Corporate segment EBITDA loss for the fiscal
year was $5,400,000, a favorable
improvement of 17.6% from corporate segment EBITDA loss of
$6,553,000 for the prior year. The
primary driver of the improved EBITDA was the favorable impact of
pension accounting because of the recovery of the plan assets at
previous fiscal year-end, partially offset by expenses related to
the Company's decision to exit certain markets, where the Company
had historically sold products directly, and professional fees
related to financing activities.
Total cash on hand on April 30,
2022 was $6,894,000, as
compared to $5,731,000 on
April 30, 2021. Working capital was
$49,272,000, as compared to
$26,276,000 on April 30, 2021. Short-term debt was $1,588,000 on April 30,
2022, as compared to $6,828,000 at April 30,
2021, and long-term debt was $29,704,000 on April 30,
2022 as compared to $112,000
at April 30, 2021. The Company's
debt-to-equity ratio on April 30,
2022 was 1.07-to-1, as compared to 0.39-to-1 at
April 30, 2021.
"The past fiscal year was another challenging year for Kewaunee
as the economy re-opened from COVID-19 shutdowns and the pace of
activity rose," said Thomas D. Hull
III, Kewaunee's President, and Chief Executive Officer.
"Fiscal year 2022 presented what were probably the most challenging
headwinds the Company has ever had to manage. We experienced rapid
inflation across most of our cost categories that initially had to
be absorbed by the Company due to the fixed nature of contracts we
enter into with customers. At the same time, we faced a surge in
demand and the inability to rapidly ramp production to pre-COVID-19
levels due to staffing shortages and supply chain disruptions."
"Our vision for Kewaunee is to be 'the global supplier of choice
with customers in the laboratory furniture and infrastructure
markets.' In pursuing this vision, we continued making progress on
strategic initiatives throughout the year, positioning Kewaunee
well for the future:
- We announced the decision to stop selling direct in certain
markets where the Company historically had due to the lack of
sufficient dealer coverage in the territory. Through updated and
expanded dealer agreements, Kewaunee has solidified its coverage in
these territories, which will enable the Company to focus on its
manufacturing operations as well as serving its channel partners
with excellence. Direct projects remain in our backlog that we will
be delivering over the course of fiscal year 2023. Once these
projects complete, Kewaunee's domestic segment will be principally
a manufacturer of laboratory and technical furniture products, with
our channel partners handling product installation, buy-outs, and
freight.
- We completed a re-capitalization of the Company through a
Sale-Leaseback transaction of the Company's three manufacturing
facilities and corporate headquarters located in Statesville, North Carolina. This transaction
will enable the Company to terminate its credit facility with Wells
Fargo and to deploy capital within the Company's manufacturing
operations to improve cost and productivity.
- We made significant progress across our domestic manufacturing
operations as a result of our lean and continuous improvement
journey. This sets us up well to continue to deploy capital to
modernize our metal manufacturing operations over the next two to
three years, further improving our competitiveness and increasing
our capacity.
- We realized the benefits of the investments we have made in our
international team over the past few years, and were awarded
several significant projects across the India, Middle
East, Africa, and ASEAN
regions."
"While significant economic uncertainty exists as we conclude
fiscal year 2022, from continued broad-based inflation to concern
about a possible pending recession, I am optimistic about the
future based on the progress we continue to make in improving the
fundamental operating capabilities of the organization. I am proud
of how our Associates continue to respond to the challenges
presented, recognizing the importance of Kewaunee's role in
'encouraging new discovery… Worldwide.'"
____________________
|
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 April
30, 2021
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
(56)
|
|
$
961
|
|
$
(3,880)
|
|
$
(2,975)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
2
|
|
77
|
|
79
|
Interest
Income
|
|
—
|
|
(62)
|
|
(5)
|
|
(67)
|
Income
Taxes
|
|
(572)
|
|
560
|
|
1,991
|
|
1,979
|
Depreciation and
Amortization
|
|
594
|
|
68
|
|
20
|
|
682
|
EBITDA
|
|
$
(34)
|
|
$
1,529
|
|
$
(1,797)
|
|
$
(302)
|
|
|
|
|
|
|
|
|
|
Quarter Ended April
30, 2022
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
2,380
|
|
$
1,020
|
|
$
(3,762)
|
|
$
(362)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
13
|
|
223
|
|
236
|
Interest
Income
|
|
—
|
|
(59)
|
|
(196)
|
|
(255)
|
Income
Taxes
|
|
—
|
|
419
|
|
2,254
|
|
2,673
|
Depreciation and
Amortization
|
|
577
|
|
63
|
|
37
|
|
677
|
EBITDA
|
|
$
2,957
|
|
$
1,456
|
|
$
(1,444)
|
|
$
2,969
|
|
|
|
|
|
|
|
|
|
Fiscal Year to Date
April 30, 2021
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
921
|
|
$
2,049
|
|
$
(6,642)
|
|
$
(3,672)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
4
|
|
385
|
|
389
|
Interest
Income
|
|
—
|
|
(216)
|
|
(7)
|
|
(223)
|
Income
Taxes
|
|
245
|
|
1,063
|
|
(318)
|
|
990
|
Depreciation and
Amortization
|
|
2,394
|
|
264
|
|
29
|
|
2,687
|
EBITDA
|
|
$
3,560
|
|
$
3,164
|
|
$
(6,553)
|
|
$
171
|
|
|
|
|
|
|
|
|
|
Fiscal Year to Date
April 30, 2022
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
(229)
|
|
$
2,333
|
|
$
(8,230)
|
|
$
(6,126)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
30
|
|
602
|
|
632
|
Interest
Income
|
|
—
|
|
(197)
|
|
(202)
|
|
(399)
|
Income
Taxes
|
|
50
|
|
1,129
|
|
2,339
|
|
3,518
|
Depreciation and
Amortization
|
|
2,402
|
|
276
|
|
91
|
|
2,769
|
EBITDA
|
|
$
2,223
|
|
$
3,571
|
|
$
(5,400)
|
|
$
394
|
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, 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, 2022, which you should review
carefully. 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
Kewaunee Scientific
Corporation
|
Condensed
Consolidated Statements of Operations
|
($ and shares in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
April
30,
|
|
April
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales
|
|
$
49,715
|
|
$
38,707
|
|
$
168,872
|
|
$
147,469
|
Cost of products
sold
|
|
40,388
|
|
32,644
|
|
144,652
|
|
123,476
|
Gross profit
|
|
9,327
|
|
6,063
|
|
24,220
|
|
23,993
|
Operating
expenses
|
|
7,086
|
|
6,716
|
|
26,828
|
|
25,309
|
Operating income
(loss)
|
|
2,241
|
|
(653)
|
|
(2,608)
|
|
(1,316)
|
Pension income
(expense)
|
|
89
|
|
(288)
|
|
355
|
|
(1,153)
|
Other income
|
|
251
|
|
70
|
|
400
|
|
241
|
Interest
expense
|
|
(236)
|
|
(79)
|
|
(632)
|
|
(389)
|
Loss before income
taxes
|
|
2,345
|
|
(950)
|
|
(2,485)
|
|
(2,617)
|
Income tax expense
(benefit)
|
|
2,673
|
|
1,979
|
|
3,518
|
|
990
|
Net (loss)
earnings
|
|
(328)
|
|
(2,929)
|
|
(6,003)
|
|
(3,607)
|
Less: net earnings
attributable to the noncontrolling interest
|
|
34
|
|
46
|
|
123
|
|
65
|
Net (loss) earnings
attributable to Kewaunee Scientific Corporation
|
|
$
(362)
|
|
$
(2,975)
|
|
$
(6,126)
|
|
$
(3,672)
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per
share attributable to
|
|
|
|
|
|
|
|
|
Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
|
|
|
Basic
|
|
($0.13)
|
|
($1.08)
|
|
($2.20)
|
|
($1.33)
|
Diluted
|
|
($0.13)
|
|
($1.08)
|
|
($2.20)
|
|
($1.33)
|
|
|
|
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
2,790
|
|
2,763
|
|
2,786
|
|
2,760
|
Diluted
|
|
2,790
|
|
2,763
|
|
2,786
|
|
2,760
|
Kewaunee Scientific
Corporation
|
Condensed
Consolidated Balance Sheets
|
($ in
thousands)
|
|
|
|
|
|
|
|
April
30,
|
|
April
30,
|
|
|
2022
|
|
2021
|
Assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,433
|
|
$
5,206
|
Restricted
cash
|
|
2,461
|
|
525
|
Receivables, less
allowances
|
|
41,254
|
|
32,882
|
Inventories
|
|
23,796
|
|
16,517
|
Income tax
receivable
|
|
-
|
|
955
|
Note
Receivable
|
|
13,457
|
|
-
|
Prepaid expenses and
other current assets
|
|
6,164
|
|
4,372
|
Total Current Assets
|
|
91,565
|
|
60,457
|
Net property, plant and
equipment
|
|
15,121
|
|
15,982
|
Right of use
assets
|
|
7,573
|
|
9,279
|
Other assets
|
|
4,514
|
|
3,666
|
Total Assets
|
|
$
118,773
|
|
$
89,384
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Short-term
borrowings
|
|
$
1,588
|
|
$
6,828
|
Current portion of
financing lease liability
|
|
126
|
|
21
|
Current portion of
operating lease liability
|
|
1,319
|
|
1,348
|
Current portion of
financing liability
|
|
575
|
|
-
|
Accounts
payable
|
|
27,316
|
|
16,780
|
Other current
liabilities
|
|
11,369
|
|
9,204
|
Total Current Liabilities
|
|
42,293
|
|
34,181
|
Long-term portion of
financing lease liability
|
|
228
|
|
91
|
Long-term portion of
operating lease liability
|
|
6,179
|
|
7,860
|
Long-term portion of
financing liability
|
|
28,775
|
|
-
|
Other non-current
liabilities
|
|
5,118
|
|
5,765
|
Total Liabilities
|
|
82,593
|
|
47,897
|
Kewaunee Scientific
Corporation equity
|
|
35,694
|
|
41,241
|
Noncontrolling
interest
|
|
486
|
|
246
|
Total Stockholders' Equity
|
|
36,180
|
|
41,487
|
Total Liabilities and
Stockholders' Equity
|
|
$
118,773
|
|
$
89,384
|
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SOURCE Kewaunee Scientific Corporation