Kewaunee Scientific Reports Results for Third Quarter of Fiscal Year 2022
Kewaunee Scientific Corporation (“Kewaunee”) announced results for its third quarter ended January 31, 2022.
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.”
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. 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.
Donald T. Gardner III – Media Contact – (704) 871-3274
Source: Kewaunee Scientific Corporation