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Kewaunee Scientific Reports Results for Third Quarter of Fiscal Year 2022

KEQU

STATESVILLE, N.C., March 9, 2022 /PRNewswire/ -- Kewaunee Scientific Corporation (NASDAQ: KEQU) today announced results for its third quarter ended January 31, 2022.

Kewaunee Scientific Corporation (PRNewsFoto/Kewaunee Scientific Corporation)

Fiscal Year 2022 Third Quarter Results:

Sales during the third quarter of fiscal year 2022 were $40,633,000, an increase compared to sales of $33,339,000 from the prior year third quarter. Kewaunee's third quarter was negatively impacted by increased COVID-19 related disruptions, a previously disclosed cyber attack, ongoing supply chain issues, labor shortages, and elevated inflation. The impact of higher raw material costs in the third quarter, net of surcharges, was $424,000 when compared to the prior year period. The profit impact, to domestic operations, of the cyber attack in the period was $1,131,000. Finally, the Company experienced other one-time costs in the amount of $325,000 related to the Company's previously announced decision to exit certain markets where the Company had historically sold products directly, and professional services related to ongoing financing related activities.

Overall, these negative factors resulted in a pre-tax loss for the quarter of $887,000 compared to a pre-tax loss of $718,000 for the prior year period. Kewaunee recorded a net loss of $1,319,000 compared to net earnings of $81,000 for the prior year period due to a tax benefit being recorded in the prior period which did not occur in the most recent period. EBITDA1 for the quarter was ($117,000) compared to ($17,000) for the prior year period. Diluted loss per share was ($0.47), as compared to diluted earnings per share of $0.03 in the prior year third quarter.

The Company's order backlog was $138.1 million on January 31, 2022, increasing from $103.0 million at January 31, 2021, and $114.5 million at April 30, 2021. Also being announced today, the Company's International segment has been awarded a $17.3 million contract for laboratory furniture and equipment by Dangote Oil Refinery Company Limited (hereinafter "Dangote Oil"), located in Lagos, Nigeria (https://www.dangote.com//). This award was not included in the above reported order backlog amounts and will be reflected in the Company's order backlog when it reports earnings for the fourth quarter of the Company's 2022 fiscal year.

Domestic Segment - Domestic sales for the quarter were $29,531,000, an increase of 17.8% from sales of $25,066,000 in the prior year period. The increase in sales was principally from higher raw material costs passed along in the form of surcharges. Domestic segment net loss was $305,000 compared to net loss of $184,000 in the prior year period. Domestic segment EBITDA was $347,000 compared to $800,000 for the prior year period.

International Segment - International sales for the quarter were $11,102,000, an increase of 34.2% from sales of $8,273,000 in the prior year period as activity across the international markets remained strong. International segment net income was $573,000 compared to $499,000 in the prior year period. International segment EBITDA was $874,000 compared to $695,000 for the prior year period.

Corporate Segment – Corporate segment pre-tax net loss was $1,501,000 for the quarter, as compared to $1,613,000 in the prior year period. Corporate segment EBITDA for the quarter was ($1,338,000), a favorable improvement of 11.5% from corporate segment EBITDA of ($1,512,000) 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 fiscal year-end 2021 when compared to fiscal year-end 2020.

Total cash on hand on January 31, 2022 was $5,502,000, as compared to $5,731,000 at April 30, 2021. Working capital was $21,412,000, as compared to $28,510,000 at the end of the third quarter last year and $26,276,000 at April 30, 2021. Short-term debt was $8,962,000 on January 31, 2022, as compared to $6,828,000 at April 30, 2021, and long-term debt was $329,000 on January 31, 2022 as compared to $112,000 at April 30, 2021. The Company's debt-to-equity ratio on January 31, 2022 was 0.48-to-1, as compared to 0.39-to-1 at April 30, 2021.

"Kewaunee announced a significant shift in its commercial strategy during the quarter whereby Kewaunee would no longer be selling directly in certain territories where dealer coverage has historically been insufficient," said Thomas D. Hull III, Kewaunee's President and Chief Executive Officer. "Kewaunee announced in December 2021 that updated dealer agreements had been executed with Nycom and ISEC, two of the premier specialty sub-contractors in the industry. Kewaunee's greatest opportunity to drive sustained profitability and shareholder value will come from further improving the performance of the Company's manufacturing capabilities. This change allows us to simplify our business, focus solely on being a world class manufacturer, and continue serving our dealers and distribution partners with excellence."

"This strategic change, as well as the continued progress in strengthening our backlog, positions the Company well to capitalize on future investments made in the pharmaceutical, biotechnology, health care, higher education, and the other markets we serve. While the third quarter was indeed a challenge on multiple fronts, Kewaunee's Associates continue to overcome the persistent headwinds that have existed for some time because of COVID-19 and the myriad of other external economic challenges that continue to impact our industry. Kewaunee is well positioned, and we will continue to make investments in our capacity to capitalize on future opportunities."

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 January 31, 2021


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$ (184)


$ 499


$ (234)


$ 81

Add/(Less):









Interest Expense



1


104


105

Interest Income



(49)



(49)

Income Taxes


390


176


(1,379)


(813)

Depreciation and Amortization


594


68


(3)


659

EBITDA


$ 800


$ 695


$ (1,512)


$ (17)










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)










Year to Date January 31, 2021


Domestic


International


Corporate


Consolidated

Net Earnings (Loss)


$ 977


$ 1,088


$ (2,762)


$ (697)

Add/(Less):









Interest Expense



2


308


310

Interest Income



(154)


(2)


(156)

Income Taxes


817


503


(2,309)


(989)

Depreciation and Amortization


1,800


196


9


2,005

EBITDA


$ 3,594


$ 1,635


$ (4,756)


$ 473










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)

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, 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.

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

January 31,


Nine Months Ended

January 31,


2022


2021


2022


2021

Net sales

$ 40,633


$ 33,339


$ 119,157


$ 108,762

Cost of products sold

35,011


27,685


104,264


90,832

Gross profit

5,622


5,654


14,893


17,930

Operating expenses

6,490


6,030


19,742


18,593

Operating loss

(868)


(376)


(4,849)


(663)

Pension income (expense)

88


(288)


266


(865)

Other income, net

51


51


149


171

Interest expense

(158)


(105)


(396)


(310)

Loss before income taxes

(887)


(718)


(4,830)


(1,667)

Income tax expense (benefit)

399


(813)


845


(989)

Net (loss) earnings

(1,286)


95


(5,675)


(678)

Less: Net earnings attributable to the non-controlling interest

33


14


89


19

Net (loss) earnings attributable to Kewaunee Scientific Corporation

$ (1,319)


$ 81


$ (5,764)


$ (697)









Net (loss) earnings per share attributable to Kewaunee Scientific
Corporation stockholders








Basic

$ (0.47)


$ 0.03


$ (2.07)


$ (0.25)

Diluted

$ (0.47)


$ 0.03


$ (2.07)


$ (0.25)

Weighted average number of common shares outstanding








Basic

2,790


2,762


2,785


2,759

Diluted

2,790


2,789


2,785


2,759

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

($ in thousands)



January 31,
2022


April 30,
2021


(Unaudited)



Assets




Cash and cash equivalents

$ 4,697


$ 5,206

Restricted cash

805


525

Receivables, less allowances

35,053


32,882

Inventories

19,947


16,517

Income tax receivable

638


955

Prepaid expenses and other current assets

7,780


4,372

Total Current Assets

68,920


60,457

Net Property, Plant and Equipment

15,345


15,982

Right of use assets

8,006


9,279

Other assets

3,415


3,666

Total Assets

$ 95,686


$ 89,384





Liabilities and Stockholders' Equity




Short-term borrowings

$ 8,962


$ 6,828

Current portion of lease obligations

1,486


1,369

Accounts payable

27,415


16,780

Other Current Liabilities

9,645


9,204

Total Current Liabilities

47,508


34,181

Long-term portion of lease obligations

6,803


7,951

Other non-current liabilities

5,195


5,765

Total Liabilities

59,506


47,897

Kewaunee Scientific Corporation Equity

35,847


41,241

Non-controlling interest

333


246

Total Stockholders' Equity

36,180


41,487

Total Liabilities and Stockholders' Equity

$ 95,686


$ 89,384

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/kewaunee-scientific-reports-results-for-third-quarter-of-fiscal-year-2022-301499592.html

SOURCE Kewaunee Scientific Corporation



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