Kewaunee Scientific Reports Results for Third Quarter of Fiscal Year 2024
- Sales decreased by 23.1% to $46,778,000 in the third quarter of fiscal year 2024.
- Pre-tax earnings increased by 70.6% to $3,515,000 compared to the prior year's third quarter.
- Net earnings rose to $2,521,000 from $723,000 in the prior year quarter.
- EBITDA for the quarter was $4,414,000, up from $2,683,000 in the prior year quarter.
- Order backlog was $152.3 million on January 31, 2024, remaining stable.
- Domestic segment net income improved to $2,633,000 from $417,000 in the prior year quarter.
- International segment net income declined to $923,000 from $1,561,000 in the prior year quarter.
- Corporate segment pre-tax net loss decreased to $1,069,000 from $1,144,000 in the prior year quarter.
- Total cash on hand increased to $27,112,000 from $13,815,000 on April 30, 2023.
- Debt levels decreased, with short-term debt at $3,184,000 and long-term debt at $28,655,000 on January 31, 2024.
- Debt-to-equity ratio improved to 0.87-to-1 on January 31, 2024, from 1.08-to-1 on April 30, 2023.
- None.
Insights
The reported financial results for Kewaunee Scientific Corporation show a mixed picture, with a significant decline in sales by 23.1%, yet an increase in pre-tax earnings by 70.6%. A deeper analysis reveals that the decrease in sales might be due to strategic changes, such as the decision to stop selling directly to end users, impacting the Domestic Segment. However, this was offset by an increase in net earnings and EBITDA, indicating improved operational efficiency and cost containment measures.
The order backlog remains relatively stable, with a minor decrease from the previous year, suggesting a consistent demand for the company's products. The increase in cash on hand and the reduction in both short-term and long-term debt, especially when considering the net debt after accounting for the sale-leaseback transaction, reflect a stronger balance sheet. The improved debt-to-equity ratios further indicate a solid financial position, which could be a positive signal for investors concerned with financial stability and risk management.
From a market perspective, Kewaunee's performance in the International Segment is noteworthy, despite the reported decline in international sales. The decrease is attributed to the completion of two large, non-recurring projects in the previous year, which skews year-over-year comparisons. Absent these projects, the company notes that international demand remains robust, which could suggest potential for growth in these markets. This insight is critical for investors who are looking for international expansion and diversification in the company's revenue streams.
Additionally, the company's emphasis on its dealer and distribution network as a key factor in maintaining sales activity during typically slower quarters speaks to the strength of its go-to-market strategy. This could be a differentiator in the industry, providing resilience against seasonal fluctuations and ensuring consistent performance.
An economist might highlight the broader economic implications of Kewaunee's financial results. The company's ability to increase pre-tax earnings amidst a sales decline could reflect a strategic pivot that prioritizes profitability over volume, which can be a prudent approach in uncertain economic conditions. The improved cash position and working capital management are indicative of a robust operational strategy that enables the company to navigate market volatility effectively.
Moreover, the company's debt management strategy, illustrated by the reduction in the debt-to-equity ratio, is particularly relevant in an environment where interest rates may fluctuate. A lower leverage ratio can provide the company with more flexibility and reduce the cost of capital, which is advantageous for long-term growth and investment.
Fiscal Year 2024 Third Quarter Results:
Sales during the third quarter of fiscal year 2024 were
The Company's order backlog was
Domestic Segment - Domestic sales for the quarter were
International Segment - International sales for the quarter were
Corporate Segment – Corporate segment pre-tax net loss was
Total cash on hand on January 31, 2024 was
The Company had short-term debt of
"Our financial performance for the third quarter of fiscal year 2024 was strong," said Thomas D. Hull III, Kewaunee's President and Chief Executive Officer. "As discussed in previous quarterly releases, we are realizing the benefits of executing on our strategic objectives."
"While the third quarter can often be our softest quarter due to the holiday schedule in the US as well as customers looking to wrap up construction projects before the calendar-end, we did not experience a significant slow-down in activity during the quarter. This is a testament to our world-class dealer and distribution network who continue to perform at a high level in response to customer demand."
"Looking ahead, we remain optimistic about the future, with a strong pipeline of projects, a sound strategy, and a commitment to sustained financial performance."
___________________________ |
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 January 31, 2023 | Domestic | International | Corporate | Consolidated | ||||
Net Earnings (Loss) | $ 417 | $ 1,561 | $ (1,255) | $ 723 | ||||
Add/(Less): | ||||||||
Interest Expense | — | 53 | 383 | 436 | ||||
Interest Income | — | (147) | — | (147) | ||||
Income Taxes | — | 852 | 110 | 962 | ||||
Depreciation and Amortization | 595 | 66 | 48 | 709 | ||||
EBITDA | $ 1,012 | $ 2,385 | $ (714) | $ 2,683 | ||||
Quarter Ended January 31, 2024 | Domestic | International | Corporate | Consolidated | ||||
Net Earnings (Loss) | $ 2,633 | $ 923 | $ (1,035) | $ 2,521 | ||||
Add/(Less): | ||||||||
Interest Expense | 321 | 72 | 18 | 411 | ||||
Interest Income | — | (220) | (97) | (317) | ||||
Income Taxes | 220 | 796 | (34) | 982 | ||||
Depreciation and Amortization | 658 | 105 | 54 | 817 | ||||
EBITDA | $ 3,832 | $ 1,676 | $ (1,094) | $ 4,414 | ||||
Year to Date January 31, 2023 | Domestic | International | Corporate | Consolidated | ||||
Net Earnings (Loss) | $ 1,006 | $ 3,405 | $ (4,678) | $ (267) | ||||
Add/(Less): | ||||||||
Interest Expense | — | 113 | 1,077 | 1,190 | ||||
Interest Income | — | (409) | (357) | (766) | ||||
Income Taxes | — | 1,801 | 110 | 1,911 | ||||
Depreciation and Amortization | 1,805 | 194 | 143 | 2,142 | ||||
EBITDA | $ 2,811 | $ 5,104 | $ (3,705) | $ 4,210 | ||||
Year to Date January 31, 2024 | Domestic | International | Corporate | Consolidated | ||||
Net Earnings (Loss) | $ 8,398 | $ 1,917 | $ (2,588) | $ 7,727 | ||||
Add/(Less): | ||||||||
Interest Expense | 1,024 | 143 | 46 | 1,213 | ||||
Interest Income | — | (638) | (120) | (758) | ||||
Income Taxes | 2,365 | 2,257 | (728) | 3,894 | ||||
Depreciation and Amortization | 1,853 | 302 | 150 | 2,305 | ||||
EBITDA | $ 13,640 | $ 3,981 | $ (3,240) | $ 14,381 |
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 consolidated 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 and wood casework, fume hoods, adaptable modular systems, moveable workstations, stand-alone benches, biological safety cabinets, and epoxy resin work surfaces and sinks.
The Company's corporate headquarters are located in
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, 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, and 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, 2023, 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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Net sales | $ 46,778 | $ 60,821 | $ 147,053 | $ 165,508 | |||
Cost of products sold | 34,749 | 50,491 | 109,642 | 140,281 | |||
Gross profit | 12,029 | 10,330 | 37,411 | 25,227 | |||
Operating expenses | 8,223 | 8,026 | 24,688 | 22,564 | |||
Operating profit | 3,806 | 2,304 | 12,723 | 2,663 | |||
Pension expense | (41) | (18) | (122) | (53) | |||
Other income, net | 161 | 210 | 384 | 756 | |||
Interest expense | (411) | (436) | (1,213) | (1,190) | |||
Profit before income taxes | 3,515 | 2,060 | 11,772 | 2,176 | |||
Income tax expense | 982 | 962 | 3,894 | 1,911 | |||
Net earnings | 2,533 | 1,098 | 7,878 | 265 | |||
Less: Net earnings attributable to the non-controlling interest | 12 | 375 | 151 | 532 | |||
Net earnings (loss) attributable to Kewaunee Scientific Corporation | $ 2,521 | $ 723 | $ 7,727 | $ (267) | |||
Net earnings (loss) per share attributable to Kewaunee Scientific | |||||||
Basic | $ 0.87 | $ 0.26 | $ 2.68 | $ (0.09) | |||
Diluted | $ 0.85 | $ 0.25 | $ 2.64 | $ (0.09) | |||
Weighted average number of common shares outstanding | |||||||
Basic | 2,893 | 2,830 | 2,885 | 2,822 | |||
Diluted | 2,965 | 2,911 | 2,927 | 2,822 | |||
Kewaunee Scientific Corporation | |||
January 31, | April 30, 2023 | ||
(Unaudited) | |||
Assets | |||
Cash and cash equivalents | $ 21,312 | $ 8,078 | |
Restricted cash | 5,800 | 5,737 | |
Receivables, less allowances | 41,109 | 46,081 | |
Inventories | 21,845 | 21,889 | |
Prepaid expenses and other current assets | 6,090 | 6,135 | |
Total Current Assets | 96,156 | 87,920 | |
Net Property, Plant and Equipment | 17,492 | 16,402 | |
Right of use assets | 7,827 | 9,170 | |
Other assets | 4,830 | 5,406 | |
Total Assets | $ 126,305 | $ 118,898 | |
Liabilities and Stockholders' Equity | |||
Short-term borrowings | $ 3,184 | $ 3,587 | |
Current portion of lease obligations | 2,166 | 2,052 | |
Current portion of financing liability | 695 | 642 | |
Accounts payable | 19,083 | 23,599 | |
Other Current Liabilities | 17,014 | 10,173 | |
Total Current Liabilities | 42,142 | 40,053 | |
Long-term portion of lease obligations | 5,988 | 7,284 | |
Long-term portion of financing liability | 27,603 | 28,132 | |
Other non-current liabilities | 5,230 | 4,944 | |
Total Liabilities | 80,963 | 80,413 | |
Kewaunee Scientific Corporation Equity | 44,083 | 37,409 | |
Non-controlling interest | 1,259 | 1,076 | |
Total Stockholders' Equity | 45,342 | 38,485 | |
Total Liabilities and Stockholders' Equity | $ 126,305 | $ 118,898 | |
Contact: | Donald T. Gardner III |
704/871-3274 |
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SOURCE Kewaunee Scientific Corporation
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