Kewaunee Scientific Reports Results for Third Quarter of Fiscal Year 2021

Kewaunee Scientific Corporation (“Kewaunee” or the “Company”) reported results for its third quarter of fiscal year 2021, ended January 31, 2021.

Sales for the quarter were $33,339,000, a 2.6% decrease from sales of $34,225,000 in the prior year third quarter. Pre-tax loss for the quarter was $718,000 compared to a loss of $2,251,000 for the prior year period. Net earnings improved for the quarter to $81,000, or $0.03 per diluted share, as compared to a loss of $1,918,000, or ($0.70) per diluted share, for the quarter ended January 31, 2020. A tax benefit in the amount of $989,000 was recorded in the period based on the provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (“the Act”) signed into law on March 27, 2020. The Act allows companies with a net operating loss arising in a taxable year beginning in 2018, 2019, or 2020 to carry the loss back to each of the five preceding tax years. EBITDA1 for the quarter was ($17,000) compared to ($1,551,000) for the prior year period. The Company’s order backlog was $103 million on January 31, 2021, as compared to $101 million at April 30, 2020 and $93 million at January 31, 2020.

Domestic Segment

Domestic sales for the quarter were $25,066,000, a decrease of 6.1% from sales of $26,699,000 in the third quarter of last year. Net losses for the Domestic segment were $184,000 compared to a net loss of $552,000 for the prior year period. Domestic segment EBITDA was $800,000 compared to ($294,000) for the prior year period. Domestic sales declined during the period when compared to the prior year period due to continued delays in construction projects due to the coronavirus pandemic. Domestic segment EBITDA improved as compared to the prior year period due to actions taken to reduce operating expenses and improve manufacturing productivity.

International Segment

International sales for the quarter were $8,273,000, up 9.9% from sales of $7,526,000 in the third quarter last year. Net earnings for the International segment were $499,000 compared to break even, zero earnings, for the prior year period. International segment EBITDA was $695,000 compared to $515,000 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, resulting in higher billings during the current period.

Corporate Segment

Corporate expenses for the quarter were $1,613,000, a decrease of 15.0% from corporate expenses of $1,897,000 for the prior year period. The primary drivers of a decrease in corporate expenses were lower expenses for professional services as well as certain non-recurring expenses recorded in the prior year period related to an organizational restructuring. These reductions were offset by higher pension expense in the current period compared to the prior year period.

Liquidity and Managed Working Capital

Cash on hand was $6,103,000 at the end of the quarter, as compared to $5,215,000 at April 30, 2020. Working capital was $28,510,000 at January 31, 2021, as compared to $27,171,000 at April 30, 2020. Short-term debt was $4,493,000 at the end of the quarter, as compared to $4,719,000 at April 30, 2020. The debt-to-equity ratio at January 31, 2021 was .37-to-1, as compared to .36-to-1 at April 30, 2020.

“Our third quarter is traditionally the Company’s slowest quarter due to reduced construction activity in the US as well as fewer manufacturing days within the quarter. I am extremely proud of how the Kewaunee team managed the business during the quarter, navigating the challenges presented by the coronavirus, while making continued progress to position the Company to capitalize on 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.

“When you review our third quarter financial performance, it is evident that our team delivered improved gross profit and operating earnings on lower sales when compared to the prior year period. This was made possible because of the hard work that our Associates are undertaking to fundamentally improve how the Company operates. I believe these actions will translate into sustained improvements to our financial performance.”

“The Company’s financial position and liquidity also remain strong, and our backlog closed the quarter at the highest level in the past two years. A headwind I see as I look forward is rapidly escalating raw material costs which are negatively impacting industry earnings in the near-term. We are monitoring this closely and are taking steps to mitigate negative impacts to our gross margins to the extent possible.”

“Looking to the fourth quarter, I expect our performance to continue to improve based on our cost structure, operating performance, and current booking activity. As the economy begins to re-open from coronavirus related restrictions, I anticipate project awards to accelerate and the pace of construction to increase, resulting in demand for Kewaunee’s products.”

For the full third quarter results, click here.

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.

Contact:

Donald T. Gardner III – Media Contact – (704) 871-3274

Source: Kewaunee Scientific Corporation