Kewaunee Scientific Reports Results for Third Quarter

STATESVILLE, N.C., March 3, 2020 /PRNewswire/ -- Kewaunee Scientific Corporation (NASDAQ: KEQU) today reported results for its third quarter of fiscal year 2020, ended January 31, 2020.

Sales for the quarter were $34,225,000, a 5.7% increase from sales of $32,372,000 in the prior year third quarter. Domestic sales for the quarter were $26,699,000, up 5.9% from sales of $25,217,000 in the third quarter of last year. International sales for the quarter were $7,526,000, up 5.2% from sales of $7,155,000 in the third quarter last year. The increase in Domestic sales was a result of increased activity in the Company's dealer and distribution sales channels. International sales increased year-over-year as a result of continued deliveries of a large order in the Middle East market.

Pre-tax loss for the quarter was $2,251,000 compared to a profit of $35,000 for the prior year period. Profitability was negatively impacted during the quarter by a restructuring that was initiated and substantially completed within the quarter, higher operating costs due to equipment down-time and a lighter manufacturing load in the quarter. Profitability was also negatively impacted by a strategic order in the Middle East that the Company aggressively secured over two years ago at lower than normal margins. The Company also elected to close its China operations, resulting in a one-time charge in the quarter for exiting the Chinese market.

Net earnings for the third quarter were a loss of $1,918,000, or $0.70 per diluted share, as compared to a loss of $22,000, or $0.01 per diluted share, for the third quarter ended January 31, 2019.

The Company's order backlog was $93 million at January 31, 2020, as compared to $101 million at April 30, 2019 and $96 million at January 31, 2019. The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects.

Total cash on hand was $6.1 million at the end of the quarter, as compared to $11.4 million at the end of the third quarter last year. Working capital was $27.7 million, as compared to $36.1 million at the end of the third quarter last year. Short-term debt and interest rate swaps were $4.0 million at the end of the quarter, as compared to $5.1 million at the end of the third quarter last year. There was no long-term debt at January 31, 2020 compared to $1,556,000 at the end of the third quarter last year. The debt-to-equity ratio at January 31, 2020 was .35-to-1, as compared to .14-to-1 at January 31, 2019.

"Looking forward, we continue to focus on improving profitability through both short and long term actions. These activities included the restructuring plans initiated and substantially completed during this quarter as well as a multi-year plan to invest in our manufacturing capabilities and information technology platform to improve our competitiveness." said Thomas D. Hull III, Kewaunee's President and Chief Executive Officer. "For purposes of our fourth quarter, we are working to ensure that the Company's manufacturing volume is sufficient to operate our facilities efficiently, which in turn will drive an improvement in profitability."

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. All forward-looking statements are subject to important factors, risks, uncertainties and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Additional information concerning these factors is contained in the Company's filings with the Securities and Exchange Commission. 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 NIne months ended


                                                                                                                                           January 31,        January 31,



                                                                                                                                                     2020               2019       2020      2019




     Net sales                                                                                                                                   $34,225            $32,372   $113,283  $111,802



     Cost of products sold                                                                                                                        28,947             27,142     94,743    91,325




     Gross profit                                                                                                                                  5,278              5,230     18,540    20,477



     Operating expenses                                                                                                                            7,350              5,232     19,875    16,810




     Operating earnings (loss)                                                                                                                   (2,072)               (2)   (1,335)    3,667



     Other income                                                                                                                                   (29)               113         43       279



     Interest expense, net                                                                                                                         (150)              (76)     (452)    (258)




     Earnings (loss) before income taxes                                                                                                         (2,251)                35    (1,744)    3,688



     Income tax expense                                                                                                                            (350)                20      1,822       803




     Net earnings (loss)                                                                                                                         (1,901)                15    (3,566)    2,885



     Less: net earnings attributable to the noncontrolling interest                                                                                   17                 37         59        86




     Net earnings (loss) attributable to Kewaunee Scientific Corporation                                                                        $(1,918)             $(22)  $(3,625)   $2,799

                                                                                                                                                                                           ===




     Net earnings (loss) per share attributable to



         Kewaunee Scientific Corporation stockholders



            Basic                                                                                                                                ($0.70)           ($0.01)   $(1.32)    $1.02



            Diluted                                                                                                                              ($0.70)           ($0.01)   $(1.32)    $1.00





     Weighted average number of common shares outstanding



            Basic                                                                                                                                  2,750              2,744      2,750     2,741



            Diluted                                                                                                                                2,750              2,794      2,750     2,799

                                                                            
       
          Kewaunee Scientific Corporation


                                                                          
       
         Condensed Consolidated Balance Sheets


                                                                              
       
                ($ in thousands)




                                                                                                                          January 31, 
     April 30,


                                                                                                                                 2019              2019




       
                Assets                                                                                               (Unaudited)

    ---


       Cash and cash equivalents                                                                                              $3,554           $10,647



       Restricted cash                                                                                                         2,509               509



       Receivables, less allowances                                                                                           27,409            33,259



       Inventories                                                                                                            15,246            17,206



       Prepaid expenses and other current assets                                                                               4,503             3,736



           Total Current Assets                                                                                               53,221            65,357



       Net property, plant and equipment                                                                                      15,905            16,462



       Right of use assets                                                                                                    11,130



       Other assets                                                                                                            4,105             5,404



       Total Assets                                                                                                          $84,361           $87,223






       
                Liabilities and Stockholders' Equity

    ---


       Short-term borrowings and interest rate swaps                                                                          $4,017            $9,513



       Current portion of long-term operating lease obligations                                                                2,088



       Current portion of long-term debt and financing lease obligations                                                          19             1,184



       Accounts payable                                                                                                       11,661            15,190



       Other current liabilities                                                                                               7,711             6,846



           Total Current Liabilities                                                                                          25,496            32,733



       Long-term portion of operating lease obligations                                                                        8,887



       Other non-current liabilities                                                                                           7,029             6,787



           Total Liabilities                                                                                                  41,412            39,520



       Kewaunee Scientific Corporation equity                                                                                 42,649            47,100



       Noncontrolling interest                                                                                                   300               603



           Total Stockholders' Equity                                                                                         42,949            47,703



       Total Liabilities and Stockholders' Equity                                                                            $84,361           $87,223



              Contact:                   Donald T. Gardner III


                                          (704) 871-3274

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SOURCE Kewaunee Scientific Corporation