STATESVILLE, N.C., Sept. 8,
2022 /PRNewswire/ -- Kewaunee Scientific Corporation
(NASDAQ: KEQU) today announced results for its first quarter ended
July 31, 2022.
Fiscal Year 2023 First Quarter Results:
Sales during the first quarter of fiscal year 2023 were
$50,123,000, an increase of 26.9%
compared to sales of $39,493,000 from
the prior year first quarter. Pre-tax loss for the quarter was
$340,000 compared to a pre-tax loss
of $1,056,000 for the prior year
period. Kewaunee recorded a net loss of $747,000 compared to net loss of $1,345,000 for the prior year period. Margins for
the current quarter were negatively impacted as the Company worked
to deliver a large portion of the remaining direct orders in its
order backlog. Nearly 25% of the current period's domestic segment
revenue was for direct orders that, in aggregate, were delivered at
a loss for the Company. Most of these projects were tied to
contracts that were executed prior to the broad-based inflation
experienced last fiscal year. EBITDA1 for the quarter
was $275,000 compared to ($342,000) for the prior year period. Diluted
loss per share was ($0.27), as
compared to diluted loss per share of ($0.48) in the prior year first quarter.
The Company's order backlog was $174.0 million on July 31, 2022, increasing from $120.6 million on July 31, 2021, and $173.9 million on April 30, 2022. This is the fourth time in the
last five quarters that the Company has recorded a record order
backlog.
Domestic Segment - Domestic sales for the quarter were
$37,468,000, an increase of 26.3%
from sales of $29,663,000 in the
prior year period. The increase in sales was predominantly from
higher input costs being rolled into product pricing. Domestic
segment net income was $98,000
compared to net loss of $209,000 in
the prior year period. Domestic segment EBITDA was $711,000 compared to $399,000 for the prior year period.
International Segment - International sales for the
quarter were $12,655,000, an increase
of 28.7% from sales of $9,830,000 in
the prior year period due to the commencement of delivery of large
projects booked in the prior fiscal year. International segment net
income was $687,000 compared to
$375,000 in the prior year period.
International segment EBITDA was $1,051,000 compared to $647,000 for the prior year period.
Corporate Segment – Corporate segment pre-tax net loss
was $1,532,000 for the quarter, as
compared to $1,511,000 in the prior
year period. Corporate segment EBITDA for the quarter was
($1,487,000) compared to corporate
segment EBITDA of ($1,388,000) for
the prior year period. The primary driver of the change in EBITDA
was higher pension expense due to the change in the underlying
asset valuation for the Company's frozen pension plan.
Total cash on hand on July 31,
2022 was $21,534,000, as
compared to $6,894,000 on
April 30, 2022. The increase in cash
was primarily from proceeds of the sale-leaseback financing
transaction that was recorded as a note receivable on April 30, 2022 and advanced billings received for
several large international projects. Working capital was
$48,266,000, as compared to
$25,709,000 at the end of the first
quarter last year and $49,272,000 on
April 30, 2022. The Company had no
short-term debt as of July 31, 2022,
as compared to $1,588,000 on
April 30, 2022. Long-term debt was
$29,505,000 on July 31, 2022 as compared to $29,704,000 on April 30,
2022. The Company's debt-to-equity ratio on July 31, 2022 was 1.09-to-1, as compared to
1.07-to-1 on April 30, 2022.
"As we announced last year, we made the strategic decision to
stop direct sales in markets where the Company historically had
done so, assigning these territories to two of our dealers," said
Thomas D. Hull III, Kewaunee's
President and Chief Executive Officer. "During the first quarter we
delivered a large portion of our remaining direct order backlog.
Many of these contracts were signed prior to the broad-based
inflation experienced last year and were delivered at a loss. While
we will continue to deliver the remainder of the direct order
backlog over the course of the year, the financial impact is
expected to diminish relative to the current quarter as the mix
will continue to shift away from direct orders."
"In the last quarter we improved the attractiveness of our
backlog in two ways. First, the backlog remained at record levels.
Second, our backlog margin improved as we continued to replace the
low margin direct sales orders with higher margin product sales. It
is our expectation that this dynamic will lead to margin expansion
as we move through the fiscal year."
"While economic uncertainty exists, from continued broad-based
inflation to concern about a possible pending recession, I am
optimistic about the future based on the strength of our order
backlog and the continued high level of activity in the
marketplace."
____________________________
|
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 July
31, 2021
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
(209)
|
|
$
375
|
|
$
(1,511)
|
|
$
(1,345)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
1
|
|
105
|
|
106
|
Interest
Income
|
|
—
|
|
(46)
|
|
(1)
|
|
(47)
|
Income
Taxes
|
|
—
|
|
251
|
|
—
|
|
251
|
Depreciation and
Amortization
|
|
608
|
|
66
|
|
19
|
|
693
|
EBITDA
|
|
$
399
|
|
$
647
|
|
$
(1,388)
|
|
$
(342)
|
|
|
|
|
|
|
|
|
|
Quarter Ended July
31, 2022
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
Net Earnings
(Loss)
|
|
$
98
|
|
$
687
|
|
$
(1,532)
|
|
$
(747)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
—
|
|
31
|
|
353
|
|
384
|
Interest
Income
|
|
—
|
|
(110)
|
|
(356)
|
|
(466)
|
Income
Taxes
|
|
—
|
|
379
|
|
—
|
|
379
|
Depreciation and
Amortization
|
|
613
|
|
64
|
|
48
|
|
725
|
EBITDA
|
|
$
711
|
|
$
1,051
|
|
$
(1,487)
|
|
$
275
|
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, 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
|
|
|
July
31,
|
|
|
2022
|
|
2021
|
Net sales
|
|
$
50,123
|
|
$
39,493
|
Cost of products
sold
|
|
43,927
|
|
33,819
|
Gross profit
|
|
6,196
|
|
5,674
|
Operating
expenses
|
|
6,592
|
|
6,765
|
Operating
loss
|
|
(396)
|
|
(1,091)
|
Pension (expense)
income
|
|
(27)
|
|
89
|
Other income,
net
|
|
467
|
|
52
|
Interest
expense
|
|
(384)
|
|
(106)
|
Loss before income
taxes
|
|
(340)
|
|
(1,056)
|
Income tax
expense
|
|
379
|
|
251
|
Net loss
|
|
(719)
|
|
(1,307)
|
Less: net earnings
attributable to the noncontrolling interest
|
|
28
|
|
38
|
Net loss attributable
to Kewaunee Scientific Corporation
|
|
$
(747)
|
|
$
(1,345)
|
|
|
|
|
|
Net loss per share
attributable to
|
|
|
|
|
Kewaunee Scientific Corporation stockholders
|
|
|
|
|
Basic
|
|
($0.27)
|
|
($0.48)
|
Diluted
|
|
($0.27)
|
|
($0.48)
|
|
|
|
|
|
Weighted average number
of common shares outstanding
|
|
|
|
|
Basic
|
|
2,807
|
|
2,777
|
Diluted
|
|
2,807
|
|
2,777
|
Kewaunee Scientific
Corporation
|
Condensed
Consolidated Balance Sheets
|
($ in
thousands)
|
|
|
|
|
|
|
|
July
31,
|
|
April
30,
|
|
|
2022
|
|
2022
|
Assets
|
|
(Unaudited)
|
|
|
Cash and cash
equivalents
|
|
$
14,360
|
|
$
4,433
|
Restricted
cash
|
|
7,174
|
|
2,461
|
Receivables, less
allowances
|
|
40,714
|
|
41,254
|
Inventories
|
|
25,100
|
|
23,796
|
Note
Receivable
|
|
-
|
|
13,457
|
Prepaid expenses and
other current assets
|
|
10,435
|
|
6,164
|
Total Current Assets
|
|
97,783
|
|
91,565
|
Net property, plant and
equipment
|
|
14,786
|
|
15,121
|
Right of use
assets
|
|
8,955
|
|
7,573
|
Other assets
|
|
4,119
|
|
4,514
|
Total Assets
|
|
$
125,643
|
|
$
118,773
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Short-term
borrowings
|
|
$
-
|
|
$
1,588
|
Current portion of
lease obligations
|
|
1,757
|
|
1,445
|
Current portion of
financing liability
|
|
591
|
|
575
|
Accounts
payable
|
|
25,042
|
|
27,316
|
Other current
liabilities
|
|
22,127
|
|
11,369
|
Total Current Liabilities
|
|
49,517
|
|
42,293
|
Long-term portion of
lease obligations
|
|
7,366
|
|
6,407
|
Long-term portion of
financing liability
|
|
28,618
|
|
28,775
|
Other non-current
liabilities
|
|
4,959
|
|
5,118
|
Total Liabilities
|
|
90,460
|
|
82,593
|
Kewaunee Scientific
Corporation Equity
|
|
34,686
|
|
35,694
|
Non-controlling
interest
|
|
497
|
|
486
|
Total Stockholders' Equity
|
|
35,183
|
|
36,180
|
Total Liabilities and
Stockholders' Equity
|
|
$
125,643
|
|
$
118,773
|
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SOURCE Kewaunee Scientific Corporation