STATESVILLE, N.C., Dec. 9, 2020 /PRNewswire/ -- Kewaunee Scientific
Corporation (NASDAQ: KEQU) today reported results for its second
quarter of fiscal year 2021, ended October 31, 2020.
Sales for the quarter were $39,000,000, a 1.8% decrease from sales of
$39,722,000 in the prior year second
quarter. Pre-tax loss for the quarter was $362,000 compared to $158,000 for the prior year period. Net
losses improved for the quarter to a loss of $180,000, or ($0.07) per diluted share, as compared to a loss
of $2,178,000, or $(0.79) per diluted share, for the quarter ended
October 31, 2019. EBITDA for the
quarter was $353,000 compared to
$502,000 for the prior year
period. The Company's order backlog was $96 million at October 31,
2020, as compared to $101
million at April 30, 2020 and
$92 million at October 31,
2019.
Domestic Segment
Domestic sales for the quarter were $28,772,000, a decrease of 8.9% from sales of
$31,584,000 in the second quarter of
last year. Net earnings for the Domestic Segment were
$168,000 compared to $149,000 for the prior year period.
Domestic segment EBITDA was $1,189,000 compared to $1,314,000 for the prior year period. Sales
and EBITDA declined during the period when compared to the prior
year period as delays in project completion and access to
construction sites due to the coronavirus ("COVID") pandemic
continued to impact the pace at which the segment was able to
operate during the quarter. Operating costs were higher than
normal due to additional COVID-related expenses as well as expenses
related to previously disclosed strategic initiatives, including
investing in domestic technology infrastructure and the
re-capitalization of certain aspects of domestic manufacturing
operations.
International Segment
International sales for the quarter were $10,228,000, up 25.7% from sales of $8,138,000 in the second quarter last
year. Net earnings for the International Segment were
$465,000 compared to a net loss of
$1,724,000 for the prior year
period. International Segment EBITDA was $775,000 compared to $463,000 for the prior year period. The
increase in sales and profitability resulted from strong
international demand coupled with reduced COVID-related
restrictions in certain markets that allowed access to project
sites that were closed in the prior quarter, which resulted in
increased billings. Additionally, last year's earnings were
negatively impacted by the tax implications of the Company's
revocation of its indefinite reinvestment of foreign unremitted
earnings assertion for Kewaunee Labway India Pvt. Ltd.
Corporate Expenses
Corporate expenses for the quarter were $1,743,000, an increase of 24.1% from corporate
expenses of $1,405,000 in the second
quarter of last year. The primary drivers of increased
corporate expenses were increases in professional fees and an
increase in pension expense due to changes in underlying valuation
assumptions as of April 30, 2020.
Liquidity and Managed Working Capital
Cash on hand was $6,240,000 at the
end of the quarter, as compared to $5,215,000 at April 30,
2020. Working capital was $28,530,000, as compared to $27,171,000 at April 30,
2020. Short-term debt was $7,592,000 at the end of the quarter, as compared
to $4,719,000 at April 30, 2020. The debt-to-equity ratio at
October 31, 2020 was .44-to-1, as compared to .36-to-1 at
April 30, 2020.
"As we successfully manage through the challenges presented by
COVID, we continue to focus on strengthening our core business.
Investments in talent, technology and manufacturing operations,
combined with a strong backlog, position Kewaunee well to respond
to what I expect will be a long-term increase in demand for the
products and services that Kewaunee provides," said Thomas D. Hull III, Kewaunee's President and
Chief Executive Officer.
"While varying degrees of limitations continued during our
second quarter due to COVID, there were bright spots worth
highlighting. Our Domestic team mobilized to rapidly deliver
a large laboratory table order for a COVID testing lab being built
by a large State Department of Health. The Indian laboratory
market rebounded from a sharp decline in the first quarter of the
fiscal year, contributing to the strong performance from our
International segment during the quarter. We also continue to
see robust activity in the marketplace from a laboratory planning,
budgeting, and bidding perspective. While this activity has
been slow to translate into awarded projects over the past nine
months, I expect the pace of awards to increase in the coming
calendar year."
"The third quarter is typically the Company's slowest quarter
due to the number of manufacturing days and a general slow-down in
construction schedules. This, coupled with the slow-down in
project awards experienced during the onset of COVID, will result
in a challenging quarter. Looking to the fourth quarter, I
expect our financial performance to improve based on our backlog
and current booking activity."
EBITDA and Segment EBITDA Reconciliation
Quarter Ended
October 31, 2019
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Net Earnings
(Loss)
|
|
$
149
|
|
$
(1,724)
|
|
$
(603)
|
|
$
(2,178)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
-
|
|
7
|
|
128
|
|
135
|
Interest
Income
|
|
-
|
|
(103)
|
|
(3)
|
|
(106)
|
Income
Taxes
|
|
597
|
|
2,208
|
|
(802)
|
|
2,003
|
Depreciation and
Amortization
|
|
568
|
|
75
|
|
5
|
|
648
|
EBITDA
|
|
$
1,314
|
|
$
463
|
|
$
(1,275)
|
|
$
502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
Year to Date
October 31, 2019
|
|
Domestic
|
|
International
|
|
Corporate
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Net Earnings
(Loss)
|
|
$
1,544
|
|
$
(1,304)
|
|
$
(1,947)
|
|
$
(1,707)
|
Add/(Less):
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
-
|
|
14
|
|
288
|
|
302
|
Interest
Income
|
|
-
|
|
(252)
|
|
(5)
|
|
(257)
|
Income
Taxes
|
|
762
|
|
2,371
|
|
(961)
|
|
2,172
|
Depreciation and
Amortization
|
|
1,133
|
|
148
|
|
11
|
|
1,292
|
EBITDA
|
|
$
3,439
|
|
$
977
|
|
$
(2,614)
|
|
$
1,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
About Non-GAAP Measures
We calculate EBITDA and Segment EBITDA as net earnings (loss),
less interest expense and interest income, income taxes,
depreciation, and amortization. We believe EBITDA and Segment
EBITDA allow management and our 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 our method for calculating EBITDA and
Segment EBITDA can vary as compared to other 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 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 rapidly
evolving COVID-19 pandemic, including disruptions from government
mandates, both domestically and internationally; 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; and acts of terrorism, war, governmental action,
natural disasters and other Force Majeure events. 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, 2020, 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.
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,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
|
$
39,000
|
|
$
39,722
|
|
$
75,423
|
|
$
79,058
|
Cost of products
sold
|
|
32,605
|
|
33,406
|
|
63,147
|
|
65,796
|
Gross
profit
|
|
6,395
|
|
6,316
|
|
12,276
|
|
13,262
|
Operating
expenses
|
|
6,406
|
|
6,355
|
|
12,563
|
|
12,525
|
Operating earnings
(loss)
|
|
(11)
|
|
(39)
|
|
(287)
|
|
737
|
Pension
expense
|
|
(289)
|
|
(113)
|
|
(577)
|
|
(226)
|
Other
income
|
|
66
|
|
129
|
|
120
|
|
298
|
Interest
expense
|
|
(128)
|
|
(135)
|
|
(205)
|
|
(302)
|
Earnings (loss)
before income taxes
|
|
(362)
|
|
(158)
|
|
(949)
|
|
507
|
Income tax expense
(benefit)
|
|
(197)
|
|
2,003
|
|
(176)
|
|
2,172
|
Net loss
|
|
(165)
|
|
(2,161)
|
|
(773)
|
|
(1,665)
|
Less: net earnings
attributable to the noncontrolling interest
|
|
15
|
|
17
|
|
5
|
|
42
|
Net loss attributable
to Kewaunee Scientific Corporation
|
|
$
(180)
|
|
$
(2,178)
|
|
$
(778)
|
|
$
(1,707)
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to
|
|
|
|
|
|
|
|
|
Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
|
|
|
Basic
|
|
($0.07)
|
|
($0.79)
|
|
($0.28)
|
|
($0.62)
|
Diluted
|
|
($0.07)
|
|
($0.79)
|
|
($0.28)
|
|
($0.62)
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
2,759
|
|
2,750
|
|
2,757
|
|
2,750
|
Diluted
|
|
2,759
|
|
2,750
|
|
2,757
|
|
2,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kewaunee
Scientific Corporation
|
|
|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct
31,
|
|
April
30,
|
|
|
|
|
|
|
2020
|
|
2020
|
|
|
|
|
Assets
|
|
(Unaudited)
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
5,759
|
|
$
4,365
|
|
|
|
|
Restricted
cash
|
|
481
|
|
850
|
|
|
|
|
Receivables, less
allowances
|
|
33,753
|
|
28,062
|
|
|
|
|
Inventories
|
|
16,124
|
|
15,330
|
|
|
|
|
Income tax
receivable
|
|
3,220
|
|
2,717
|
|
|
|
|
Prepaid expenses and
other current assets
|
|
3,053
|
|
2,907
|
|
|
|
|
Total Current Assets
|
|
62,390
|
|
54,231
|
|
|
|
|
Net property, plant
and equipment
|
|
16,218
|
|
16,272
|
|
|
|
|
Right of use
assets
|
|
9,157
|
|
9,312
|
|
|
|
|
Other
assets
|
|
3,597
|
|
4,114
|
|
|
|
|
Total
Assets
|
|
$
91,362
|
|
$
83,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
7,592
|
|
$
4,719
|
|
|
|
|
Current portion of
lease obligations
|
|
1,301
|
|
1,301
|
|
|
|
|
Accounts
payable
|
|
17,258
|
|
13,114
|
|
|
|
|
Other current
liabilities
|
|
7,709
|
|
7,926
|
|
|
|
|
Total Current Liabilities
|
|
33,860
|
|
27,060
|
|
|
|
|
Long-term portion of
lease obligations
|
|
7,898
|
|
7,893
|
|
|
|
|
Other non-current
liabilities
|
|
11,535
|
|
10,273
|
|
|
|
|
Total Liabilities
|
|
53,293
|
|
45,226
|
|
|
|
|
Kewaunee Scientific
Corporation equity
|
|
37,830
|
|
38,415
|
|
|
|
|
Noncontrolling
interest
|
|
239
|
|
288
|
|
|
|
|
Total Stockholders' Equity
|
|
38,069
|
|
38,703
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
91,362
|
|
$
83,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact:
|
Donald T. Gardner
III
|
|
(704)
871-3274
|
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SOURCE Kewaunee Scientific Corporation