KEQU Kewaunee Scientific Corporation

Kewaunee Scientific Announces Second Quarter Results STATESVILLE, N.C., Nov. 22 /PRNewswire-FirstCall/ -- Kewaunee Scientific Corporation (NASDAQ:KEQU) today reported results for its second quarter ended October 31, 2004. Sales for the quarter were $18,365,000, a decline of 25% from the same period last year. Net earnings for the quarter were $108,000, or $0.04 per diluted share, as compared to net earnings of $418,000, or $0.17 per diluted share, in the same quarter last year. Several issues adversely affected the laboratory furniture marketplace during the quarter. Uncertainties surrounding the presidential election and its potential impact on the price of prescription drugs continued to affect the willingness of pharmaceutical companies to invest in new research projects. Additionally, the marketplace was affected by significant increases in the cost of construction materials, particularly for steel. The resulting higher-than-planned construction costs delayed the award date of many projects, as some customers were forced to reduce the scope of their project to remain within budget. Reduced state budgets also adversely affected funding available for education construction projects. The order backlog was $38.6 million at October 31, 2004. This compares to order backlogs of $39.6 million at July 31, 2004 and $46.3 million at October 31, 2003. In addition to the lower sales volumes, earnings for the current quarter were adversely affected by higher costs for raw materials, particularly steel, as well as higher energy costs. A number of actions were taken during the quarter to reduce costs, including a significant workforce reduction in both the hourly and administrative areas of the Company and tighter controls over spending. Additionally, a number of plans were implemented to further reduce manufacturing and raw material costs. "With the presidential elections behind us and the economic recovery projected to continue, we are optimistic that our customers will begin moving forward on new and previously planned construction projects," said William A. Shumaker, President and Chief Executive Officer of Kewaunee. "However, an increase in order activity is not likely to improve sales until our fourth quarter. "We continue to operate in a very difficult business environment," Mr. Shumaker continued. "However, we are encouraged about sales opportunities with new strategic partners to serve the rapidly growing healthcare market. The Company is on schedule to meet its objective of beginning to provide products to this market segment by the end of our fiscal year. We are also pleased that our subsidiaries in Asia serving the international laboratory research market are performing well. As has been previously reported, we believe the Company is well-positioned for future growth in this rapidly- expanding Asian market." Sales for the six months ended October 31, 2004 were $38,653,000, a decline of 20% from the comparable period last year. Net earnings for the six months were $301,000, or $0.12 per diluted share, as compared to net earnings of $879,000, or $0.35 per diluted share, in the comparable period last year. 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. Contact: D. Michael Parker 704/871-3290 Condensed Consolidated Statements of Operations (unaudited) (in thousands, except per share data) 3 Months Ended 6 Months Ended October 31 October 31 2004 2003 2004 2003 Net sales $18,365 $24,384 $38,653 $48,597 Cost of products sold 14,812 20,280 31,724 40,890 Gross profit 3,553 4,104 6,929 7,707 Operating expenses 3,260 3,321 6,306 6,322 Operating earnings 293 783 623 1,385 Other (expense) income (130) (130) (167) (12) Earnings before income taxes 163 653 456 1,373 Income tax expense 55 235 155 494 Net earnings $108 $418 $301 $879 Net earnings per share Basic $0.04 $0.17 $0.12 $0.35 Diluted $0.04 $0.17 $0.12 $0.35 Weighted average number of common shares outstanding (in thousands) Basic 2,492 2,486 2,491 2,485 Diluted 2,494 2,491 2,497 2,490 Condensed Consolidated Balance Sheets (in thousands) October 31 April 30 Assets 2004 2004 (unaudited) Cash and cash equivalents $817 $1,167 Receivables, less allowances 23,539 24,987 Inventories 4,004 4,285 Prepaid expenses and other current assets 1,112 1,097 Total current assets 29,472 31,536 Net property, plant and equipment 10,742 11,362 Other assets 6,411 7,563 Total Assets $46,625 $50,461 Liabilities and Stockholders' Equity Short-term borrowings $6,079 $6,996 Current portion of long-term debt 1,118 1,118 Accounts payable 5,087 6,924 Other current liabilities 3,326 3,881 Total current liabilities 15,610 18,919 Long-term debt 372 931 Other non-current liabilities 3,856 3,820 Total stockholders' equity 26,787 26,791 Total Liabilities and Stockholders' Equity $46,625 $50,461 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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