Kewaunee Scientific Reports Results for Second Quarter

STATESVILLE, N.C., Dec. 3, 2013 /PRNewswire/ -- Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported sales and earnings for its second quarter ended October 31, 2013.

Net earnings for the quarter were $725,000, or $0.28 per diluted share, as compared to net earnings of $649,000, or $0.25 per diluted share, in the second quarter last year. A favorable product mix, lower operating costs, and the favorable impact of the Company's previously reported buyout of the minority interest in its principal international subsidiary more than offset the unfavorable impact of lower sales during the quarter.

Sales for the quarter were $26,098,000, as compared to sales of $31,185,000 in the second quarter last year. Domestic Operations sales were $22,061,000, as compared to sales of $25,683,000 in the second quarter last year. A substantial portion of the decline in domestic sales was anticipated as part of the previously reported strategy underway by the Company to sell more laboratory projects through its dealer network, with the Company providing the manufactured products and the dealers providing related project management, installation and other service activities. International Operations sales for the quarter were $4,037,000, down from $5,502,000 in the second quarter last year. International Operations sales in the second quarter of the prior year were increased by the shipments of several large projects during that quarter.

The order backlog was $69.5 million at October 31, 2013, as compared to $71.1 million at July 31, 2013. Fewer laboratory construction projects of all sizes, public and private, were available in the domestic laboratory market during the quarter, as customers appeared hesitant to move forward on projects because of ongoing political and economic uncertainty. A decline in the domestic orders backlog was substantially offset by an increase in international orders backlog, as the Company continued to see good project opportunities in its international markets.

Net earnings for the six months ended October 31, 2013 were $2,312,000, or $0.89 per diluted share, as compared to net earnings of $1,283,000, or $0.50 per diluted share, in the same period last year. Sales for the six months ended October 31, 2013 were $58,101,000, as compared to sales of $57,868,000, in the same period last year.  Domestic sales were $49,134,000, as compared to sales of $48,312,000 in the same period last year.  International sales were $8,967,000, as compared to sales of $9,556,000 in the same period last year.

Cash on hand was $5.9 million at the end of the quarter, as compared to $6.5 million at the end of the same period last year.  Short-term borrowings under the Company's bank line of credit were $2.5 million, as compared to $5.3 million at the end of the same period last year, and total bank borrowings were $7.5 million, as compared to $9.3 million. The debt-to-equity ratio was .24-to-1, as compared to .30-to-1 at the end of the same period last year. Working capital was $25.0 million, as compared to $24.2 million at the end of the same period last year.

"We had a good quarter, both internationally and domestically," said David M. Rausch, Kewaunee's Chief Executive Officer. "Although sales and earnings were below the pace of the past several quarters, a good portion of the sales decline was related to our strategy to improve product mix and margins. We also continue to make excellent progress in strengthening our relationships with laboratory planners and architects. Through this process we are gaining a better understanding of their needs and desired products, which increases their preference for the Kewaunee brand.

"Looking forward to the second half of our fiscal year, we expect the domestic marketplace will continue to be challenging due to the uncertainty in the economy and the resulting softening in demand for our products. We continue to pursue new sales opportunities, domestically and internationally, and maintain our focus on cost savings initiatives throughout the organization. It should be pointed out that our third quarter is normally the slowest due to construction cycles and the large number of holidays. The comparable third quarter of last year was an exception to this norm, as several large international projects shipped during that quarter."

Kewaunee Scientific Corporation is a recognized global leader in the design, manufacture, and installation of laboratory, healthcare, and technical furniture products. Laboratory furniture products include both steel and wood cabinetry, fume hoods, adaptable modular systems, moveable workstations, biological safety cabinets, and epoxy resin counters and sinks. Healthcare furniture products include laminate casework, storage systems, and related products for healthcare applications. Technical furniture products include column systems, slotted-post systems, pedestal systems, and stand-alone benches.

The Company's corporate headquarters are located in Statesville, North Carolina. Three manufacturing facilities are located in Statesville, NC serving the domestic and international markets. One manufacturing facility is located in Bangalore, India serving the local and Asian markets. The Company has subsidiaries in Singapore and India. 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. Such factors, risks, uncertainties and assumptions include, but are not limited to, competitive and general economic conditions, both domestically and internationally; changes in customer demands; 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; and acts of terrorism, war, governmental action, natural disasters and other Force Majeure events. Additional information concerning these and other 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

Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)














Three months ended


Six months ended




 October 31,


October 31,




2013


2012


2013


2012

Net sales



$    26,098


$    31,185


$    58,101


$    57,868

Cost of products sold


21,205


25,958


46,632


47,398

Gross profit



4,893


5,227


11,469


10,470

Operating expenses


3,759


4,013


7,903


8,151

Operating earnings


1,134


1,214


3,566


2,319

Other income


90


108


170


176

Interest expense


(72)


(101)


(160)


(215)

Earnings before income taxes


1,152


1,221


3,576


2,280

Income tax expense


406


414


1,213


785

Net earnings



746


807


2,363


1,495

Less: net earnings attributable to









    the noncontrolling interest


21


158


51


212

Net earnings attributable to 









    Kewaunee Scientific Corporation


$         725


$         649


$      2,312


$      1,283











Net earnings per share attributable to









    Kewaunee Scientific Corporation stockholders







       Basic



$        0.28


$        0.25


$        0.89


$        0.50

       Diluted



$        0.28


$        0.25


$        0.89


$        0.50











Weighted average number of common









shares outstanding









       Basic



2,606


2,587


2,601


2,584

       Diluted



2,633


2,601


2,618


2,592











 

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

(in thousands)














October 31,


April 30,






2013


2013

Assets





(Unaudited)



Cash and cash equivalents




$      5,284


$      5,811

Restricted Cash




603


691

Receivables, less allowances




20,450


25,884

Inventories





13,174


13,203

Prepaid expenses and other current assets




1,863


1,641

    Total Current Assets




41,374


47,230

Net property, plant and equipment




15,038


15,098

Other assets





6,831


6,414

Total Assets





$    63,243


$    68,742









Liabilities and Equity







Short-term borrowings and interest rate swap




$      2,719


$      6,997

Current portion of long-term debt




421


200

Accounts payable




8,247


10,406

Other current liabilities




4,940


4,512

    Total Current Liabilities




16,327


22,115

Other non-current liabilities




15,351


12,934

    Total Liabilities




31,678


35,049

Noncontrolling interest




205


2,017

Kewaunee Scientific Corporation equity




31,360


31,676

    Total Equity




31,565


33,693

Total Liabilities and Equity




$    63,243


$    68,742









 

Contact:   D. Michael Parker 
               704/871-3290

 

SOURCE Kewaunee Scientific Corporation



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