Kewaunee Scientific Reports Results for Fiscal Year and Fourth Quarter

Rhea-AI Summary

Kewaunee Scientific Corporation (NASDAQ: KEQU) reported a robust fourth quarter for fiscal year 2022, achieving sales of $49.7 million, an increase of 28.4% year-over-year. The domestic segment saw a 39% rise in sales, totaling $37.7 million, alongside significant improvements in net earnings. The company faced a net loss of $362,000, a notable reduction from the previous year's loss of $2.9 million, despite a $2.6 million tax expense. Fiscal year sales rose 14.5% to $168.9 million, with total cash increasing to $6.9 million. A record backlog of $173.9 million indicates strong future demand.

Positive

• Fourth quarter sales increased 28.4% to $49.7 million.
• Domestic sales rose 39% to $37.7 million.
• Reduced net loss to $362,000 from $2.975 million year-over-year.
• Record backlog of $173.9 million as of April 30, 2022.

Negative

• Net loss for the fiscal year increased to $6.1 million from $3.7 million.
• Domestic segment experienced a net loss of $229,000 compared to a profit of $921,000 last year.
• Corporate segment pre-tax loss grew to $8.2 million from $6.6 million.

STATESVILLE, N.C., June 29, 2022 /PRNewswire/ -- Kewaunee Scientific Corporation (NASDAQ: KEQU) today announced results for its fourth quarter and its fiscal year ended April 30, 2022.

Fiscal Year 2022 Fourth Quarter Results:

Sales during the fourth quarter of fiscal year 2022 were $49,715,000, an increase of 28.4% compared to sales of $38,707,000 from the prior year fourth quarter. The increase in sales resulted from both higher volumes for the Domestic segment as well as the implementation of price increases in response to higher raw material input costs, which are now flowing through production at a higher rate. Pre-tax earnings for the quarter were $2,345,000 compared to a pre-tax loss of $950,000 for the prior year period. Net loss for the quarter was $362,000 compared to $2,975,000 for the prior year. Net loss for the current quarter was unfavorably impacted by additional income tax expense of $2,561,000 due to the increase in the valuation allowance, largely driven by the Sale-Leaseback transaction executed on March 24, 2022, as part of the Company's re-capitalization strategy that is further discussed below. EBITDA¹ for the quarter was $2,969,000 compared to a loss of $302,000 for the prior year period. Diluted loss per share was $0.13, as compared to a diluted loss per share of $1.08 in the prior year fourth quarter.

Domestic Segment - Domestic sales for the quarter were $37,720,000, an increase of 39.0% from sales of $27,139,000 in the prior year period. Net earnings for the domestic segment were $2,380,000 compared to a net loss of $56,000 in the prior year period. Domestic segment EBITDA was $2,957,000 compared to a loss of $34,000 for the prior year period. The year-over-year increase in sales resulted from both strong demand across all end-use markets as well as increased revenue per unit from price increases implemented earlier in the year now flowing through production and billings.

International Segment - International sales for the quarter were $11,995,000, an increase of 3.7% from sales of $11,568,000 in the prior year period as activity across the international markets remained strong. Net income for the international segment was $1,020,000 compared to $961,000 in the prior year period. International segment EBITDA was $1,456,000 compared to $1,529,000 for the prior year period. During the fourth quarter, the ASEAN market contributed at its highest level of the year as COVID-19 restrictions in the region begin to be lifted and sales returned to more normalized levels.

Corporate Segment – Corporate segment pre-tax net loss was $3,762,000 for the quarter, as compared to $3,880,000 in the prior year period. Corporate segment EBITDA loss for the quarter was $1,444,000, a favorable improvement of 19.6% from corporate segment EBITDA loss of $1,797,000 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 previous fiscal year-end.

The Company's order backlog was $173.9 million on April 30, 2022, increasing from $138.1 million on January 31, 2022, and $114.5 million on April 30, 2021. This is the highest order backlog in the Company's history.

"Kewaunee delivered strong financial results during the fourth quarter of fiscal year 2022, responding to accelerating demand as construction activity continued to recover from COVID-19 lows," said Thomas D. Hull III, Kewaunee's President, and Chief Executive Officer. "Demand in the international markets remains strong, with an increasing rate of activity being felt in the ASEAN and Middle East markets, complementing what continues to be a strong Indian market. Demand across the United States was especially strong in the fourth quarter, with all our major geographies being extremely active."

"Profitability improved domestically during the fourth quarter based on higher manufacturing volumes as we continue to restore production capacity that was reduced due to the COVID-19 pandemic. Further, actions taken during the year to align pricing on new orders with rapidly inflating raw material inputs substantially mitigated the cost/price mismatch that we experienced during the previous four quarters. I am proud of how our Kewaunee Associates continue to work to serve our customers, overcoming numerous headwinds due to a historically tight labor market as well as managing through persistent supply chain challenges."

"Kewaunee has posted a record high backlog for the third time in the past four quarters, demonstrating the confidence customers have in our ability to meet their requirements in a dynamic operating environment. Domestically, our order backlog increase has been driven by strength in the life science and higher education end-use markets within the United States. Our international teams continue to see customers investing in large infrastructure projects requiring laboratories in India, the Middle East, and Africa and were awarded multiple, multi-year projects during the year. The strength in our backlog positions the Company well for the next fiscal year as the majority of these orders will deliver over the next twelve to eighteen months."

Fiscal Year 2022 Full Year Results:

Sales during fiscal year 2022 were $168,872,000, an increase of 14.5% compared to sales of $147,469,000 from the prior year. Pre-tax loss for the fiscal year was $2,485,000 compared to a pre-tax loss of $2,617,000 for the prior year. The net loss for the fiscal year was $6,126,000, compared to a net loss of $3,672,000 for the prior year. Results for the full year were affected by the factors previously mentioned, as well as the $4,170,000 due to the increase in the valuation allowance, largely driven by the Sale-Leaseback transaction executed on March 24, 2022. EBITDA for the fiscal year was $394,000 compared to $171,000 for the prior fiscal year. Diluted loss per share was $2.20, as compared to a loss per share of $1.33 in the prior fiscal year.

Domestic Segment - Domestic sales for the fiscal year were $126,848,000, an increase of 14.2% from sales of $111,035,000 in the prior year. This increase was driven by year-over-year volume growth as well as the implementation of price increases on new orders in response to higher raw material input costs. Domestic segment net loss was $229,000 compared to net income of $921,000 in the prior fiscal year. Domestic segment EBITDA was $2,223,000 compared to $3,560,000 for the prior year. Profitability was negatively impacted during the year by increased COVID-19 related disruptions, a previously disclosed cyber-attack, ongoing supply chain issues, labor shortages, and significantly elevated costs due to inflation. As discussed in previous press releases, the Company experienced significantly higher raw material costs of $4,559,000 throughout the year which could not be passed along to customers due to the fixed nature of the Company's contracts.

International Segment - International sales for the fiscal year were $42,024,000, an increase of 15.3% from sales of $36,434,000 in the prior year with strong activity in India being the principal driver of growth during the fiscal year. International segment net income was $2,333,000 compared to $2,049,000 in the prior fiscal year. International segment EBITDA was $3,571,000 compared to $3,164,000 for the prior year.

Corporate Segment – Corporate segment pre-tax net loss was $8,230,000 for the fiscal year, as compared to $6,642,000 in the prior fiscal year. Corporate segment EBITDA loss for the fiscal year was $5,400,000, a favorable improvement of 17.6% from corporate segment EBITDA loss of $6,553,000 for the prior year. The primary driver of the improved EBITDA was the favorable impact of pension accounting because of the recovery of the plan assets at previous fiscal year-end, partially offset by expenses related to the Company's decision to exit certain markets, where the Company had historically sold products directly, and professional fees related to financing activities.

Total cash on hand on April 30, 2022 was $6,894,000, as compared to $5,731,000 on April 30, 2021. Working capital was $49,272,000, as compared to $26,276,000 on April 30, 2021. Short-term debt was $1,588,000 on April 30, 2022, as compared to $6,828,000 at April 30, 2021, and long-term debt was $29,704,000 on April 30, 2022 as compared to $112,000 at April 30, 2021. The Company's debt-to-equity ratio on April 30, 2022 was 1.07-to-1, as compared to 0.39-to-1 at April 30, 2021.

"The past fiscal year was another challenging year for Kewaunee as the economy re-opened from COVID-19 shutdowns and the pace of activity rose," said Thomas D. Hull III, Kewaunee's President, and Chief Executive Officer. "Fiscal year 2022 presented what were probably the most challenging headwinds the Company has ever had to manage. We experienced rapid inflation across most of our cost categories that initially had to be absorbed by the Company due to the fixed nature of contracts we enter into with customers. At the same time, we faced a surge in demand and the inability to rapidly ramp production to pre-COVID-19 levels due to staffing shortages and supply chain disruptions."

"Our vision for Kewaunee is to be 'the global supplier of choice with customers in the laboratory furniture and infrastructure markets.' In pursuing this vision, we continued making progress on strategic initiatives throughout the year, positioning Kewaunee well for the future:

• We announced the decision to stop selling direct in certain markets where the Company historically had due to the lack of sufficient dealer coverage in the territory. Through updated and expanded dealer agreements, Kewaunee has solidified its coverage in these territories, which will enable the Company to focus on its manufacturing operations as well as serving its channel partners with excellence. Direct projects remain in our backlog that we will be delivering over the course of fiscal year 2023. Once these projects complete, Kewaunee's domestic segment will be principally a manufacturer of laboratory and technical furniture products, with our channel partners handling product installation, buy-outs, and freight.
• We completed a re-capitalization of the Company through a Sale-Leaseback transaction of the Company's three manufacturing facilities and corporate headquarters located in Statesville, North Carolina. This transaction will enable the Company to terminate its credit facility with Wells Fargo and to deploy capital within the Company's manufacturing operations to improve cost and productivity.
• We made significant progress across our domestic manufacturing operations as a result of our lean and continuous improvement journey. This sets us up well to continue to deploy capital to modernize our metal manufacturing operations over the next two to three years, further improving our competitiveness and increasing our capacity.
• We realized the benefits of the investments we have made in our international team over the past few years, and were awarded several significant projects across the India, Middle East, Africa, and ASEAN regions."

"While significant economic uncertainty exists as we conclude fiscal year 2022, from continued broad-based inflation to concern about a possible pending recession, I am optimistic about the future based on the progress we continue to make in improving the fundamental operating capabilities of the organization. I am proud of how our Associates continue to respond to the challenges presented, recognizing the importance of Kewaunee's role in 'encouraging new discovery… Worldwide.'"

 

____________________

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 April 30, 2021		Domestic		International		Corporate		Consolidated
Net Earnings (Loss)		$                      (56)		$                     961		$                 (3,880)		$                 (2,975)
Add/(Less):
Interest Expense		—		2		77		79
Interest Income		—		(62)		(5)		(67)
Income Taxes		(572)		560		1,991		1,979
Depreciation and Amortization		594		68		20		682
EBITDA		$                      (34)		$                  1,529		$                 (1,797)		$                    (302)
Quarter Ended April 30, 2022		Domestic		International		Corporate		Consolidated
Net Earnings (Loss)		$                  2,380		$                  1,020		$                 (3,762)		$                    (362)
Add/(Less):
Interest Expense		—		13		223		236
Interest Income		—		(59)		(196)		(255)
Income Taxes		—		419		2,254		2,673
Depreciation and Amortization		577		63		37		677
EBITDA		$                  2,957		$                  1,456		$                 (1,444)		$                  2,969
Fiscal Year to Date April 30, 2021		Domestic		International		Corporate		Consolidated
Net Earnings (Loss)		$                     921		$                  2,049		$                 (6,642)		$                 (3,672)
Add/(Less):
Interest Expense		—		4		385		389
Interest Income		—		(216)		(7)		(223)
Income Taxes		245		1,063		(318)		990
Depreciation and Amortization		2,394		264		29		2,687
EBITDA		$                  3,560		$                  3,164		$                 (6,553)		$                     171
Fiscal Year to Date April 30, 2022		Domestic		International		Corporate		Consolidated
Net Earnings (Loss)		$                    (229)		$                  2,333		$                 (8,230)		$                 (6,126)
Add/(Less):
Interest Expense		—		30		602		632
Interest Income		—		(197)		(202)		(399)
Income Taxes		50		1,129		2,339		3,518
Depreciation and Amortization		2,402		276		91		2,769
EBITDA		$                  2,223		$                  3,571		$                 (5,400)		$                     394

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. 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
($ and shares in thousands, except per share amounts)
		Three months ended				Twelve months ended
		April 30,				April 30,
		2022		2021		2022		2021
Net sales		$           49,715		$           38,707		$        168,872		$        147,469
Cost of products sold		40,388		32,644		144,652		123,476
Gross profit		9,327		6,063		24,220		23,993
Operating expenses		7,086		6,716		26,828		25,309
Operating income (loss)		2,241		(653)		(2,608)		(1,316)
Pension income (expense)		89		(288)		355		(1,153)
Other income		251		70		400		241
Interest expense		(236)		(79)		(632)		(389)
Loss before income taxes		2,345		(950)		(2,485)		(2,617)
Income tax expense (benefit)		2,673		1,979		3,518		990
Net (loss) earnings		(328)		(2,929)		(6,003)		(3,607)
Less: net earnings attributable to the noncontrolling  interest		34		46		123		65
Net (loss) earnings attributable to Kewaunee Scientific Corporation		$               (362)		$           (2,975)		$           (6,126)		$           (3,672)
Net (loss) earnings per share attributable to
Kewaunee Scientific Corporation stockholders
Basic		($0.13)		($1.08)		($2.20)		($1.33)
Diluted		($0.13)		($1.08)		($2.20)		($1.33)
Weighted average number of common shares outstanding
Basic		2,790		2,763		2,786		2,760
Diluted		2,790		2,763		2,786		2,760

 

Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ in thousands)
		April 30,		April 30,
		2022		2021
Assets
Cash and cash equivalents		$             4,433		$             5,206
Restricted cash		2,461		525
Receivables, less allowances		41,254		32,882
Inventories		23,796		16,517
Income tax receivable		-		955
Note Receivable		13,457		-
Prepaid expenses and other current assets		6,164		4,372
Total Current Assets		91,565		60,457
Net property, plant and equipment		15,121		15,982
Right of use assets		7,573		9,279
Other assets		4,514		3,666
Total Assets		$        118,773		$           89,384
Liabilities and Stockholders' Equity
Short-term borrowings		$             1,588		$             6,828
Current portion of financing lease liability		126		21
Current portion of operating lease liability		1,319		1,348
Current portion of financing liability		575		-
Accounts payable		27,316		16,780
Other current liabilities		11,369		9,204
Total Current Liabilities		42,293		34,181
Long-term portion of financing lease liability		228		91
Long-term portion of operating lease liability		6,179		7,860
Long-term portion of financing liability		28,775		-
Other non-current liabilities		5,118		5,765
Total Liabilities		82,593		47,897
Kewaunee Scientific Corporation  equity		35,694		41,241
Noncontrolling interest		486		246
Total Stockholders' Equity		36,180		41,487
Total Liabilities and Stockholders' Equity		$        118,773		$           89,384

 

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SOURCE Kewaunee Scientific Corporation

FAQ

What were Kewaunee Scientific's fourth quarter sales for fiscal year 2022?

Kewaunee Scientific reported fourth quarter sales of $49.7 million, a 28.4% increase compared to the same quarter last year.

How did the net loss for Kewaunee Scientific change in the fourth quarter of fiscal year 2022?

The net loss decreased to $362,000 in Q4 2022 from $2.975 million in Q4 2021.

What is Kewaunee Scientific's order backlog as of April 30, 2022?

As of April 30, 2022, Kewaunee Scientific had a record backlog of $173.9 million.

How did Kewaunee Scientific's fiscal year 2022 sales compare to the previous year?

Fiscal year 2022 sales increased by 14.5% to $168.9 million compared to $147.5 million in fiscal year 2021.

What was Kewaunee Scientific's EBITDA for the fourth quarter of fiscal year 2022?

Kewaunee Scientific reported EBITDA of $2.969 million for the fourth quarter of fiscal year 2022.