Kewaunee Scientific Reports Results for Year and Fourth Quarter

Jun 23, 2010, 16:31 ET from Kewaunee Scientific Corporation

STATESVILLE, N.C., June 23 /PRNewswire-FirstCall/ -- Kewaunee Scientific Corporation (Nasdaq: KEQU) today announced results for its year and fourth quarter ended April 30, 2010.

Sales for the year were $99,093,000, down 4.7% from sales of $103,978,000 in the prior year. The lower sales resulted from a decline in sales of small and mid-sized projects during the year, along with lower sales from the Company's international operations.  Higher sales of larger domestic laboratory projects partially offset the decrease.

Net earnings for the year were $3,572,000, or $1.39 per diluted share, down from net earnings of $4,247,000, or $1.66 per diluted share, in the prior year. Earnings for the year were unfavorably impacted by an after-tax increase in pension expense of $627,000, or $0.24 per diluted share, and the lower sales, as compared to the prior year. The pension expense increase primarily resulted from the prior year's decline in the market value of pension investments.

The order backlog increased to a record $68.9 million at April 30, 2010, up from $62.7 million at April 30, 2009. The order backlog, which is heavily weighted with larger projects that have longer delivery requirements, benefited from a large international order received during the year.

Sales from domestic operations were $87,561,000, down 3.0% from sales of $90,250,000 in the prior year, and sales from international operations for the year were $11,532,000, down 16.0% from sales of $13,728,000 in the prior year. The international laboratory furniture marketplace, which was hit particularly hard by the economic slowdown, appeared to show signs of recovery late in the year as quotation activity and sales increased.

"The economic slowdown adversely affected all of the Company's markets, both domestically and internationally," said William A. Shumaker, President and Chief Executive Officer.  "A decline in small and mid-sized projects occurred as customers deferred placing orders due to the recession.  These types of projects are more sensitive to current economic conditions and are subject to delay because of their size and funding sources.  Larger laboratory projects are less impacted by changes in economic conditions, as they are normally funded far in advance of construction.  Also, our operating costs increased in the second half of the year, as the irregular inflow of orders and changes to project schedules disrupted factory production and required us to spend much higher overtime dollars.

"However, in the midst of these challenges, progress was made in a number of important areas," continued Mr. Shumaker. "We finished the year with a record order backlog as we continued to win projects in all of our markets, especially larger projects. In the second quarter, we were successful in winning orders for large projects in Saudi Arabia and Kuwait, areas we have targeted as important new growth markets. Following the move into our new, larger Bangalore, India plant earlier in the year, in the fourth quarter, we began an expansion of our manufacturing facilities in Statesville.  This project is progressing well and is scheduled for completion in early fall."

Sales for the fourth quarter were $23,942,000, down 3.6% from sales of $24,828,000 in the same period of the prior year.  Sales from domestic operations were $20,409,000, down 11.1% from sales of $22,954,000 in the same quarter of the prior year.  Sales from international operations increased to $3,533,000, up from sales of $1,874,000 in the prior year period.

Net earnings for the fourth quarter were $528,000, or $0.20 per diluted share, down from net earnings of $920,000, or $0.36 per diluted share, in the prior year period.  Earnings for the quarter were unfavorably impacted by lower sales and an after-tax increase in pension expense of $157,000, or $0.06 per diluted share, as compared to the prior year.

The Company's financial condition remains strong.  Working capital increased to $20.1 million at April 30, 2010, up from $18.9 million at the end of the prior year.  Cash on hand at the end of the year was $2.3 million, as compared to $4.0 million at the end of the prior year. Bank borrowings and capital lease obligations were $5.1 million at year-end, as compared to $6.1 million at the end of the prior year, and the debt-to-equity ratio was .17-to-1 at year-end, as compared to .23-to-1 at the end of the prior year.

"Looking forward, our strong order backlog, increased manufacturing capabilities at our new Bangalore plant and Statesville operations, expanding international opportunities, strong financial position, and the commitment of our associates provide us optimism for another good year in fiscal year 2011," continued Mr. Shumaker.

Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of scientific and technical furniture. The Company's corporate headquarters are located in Statesville, North Carolina.  The Company's manufacturing facilities are located in Statesville and Bangalore, India.  The Company has subsidiaries in Singapore and Bangalore, India that serve the Asian and Middle East markets.  Kewaunee Scientific's website is located at http://www.kewaunee.com.

Certain statements in this release constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, economic, competitive, governmental, and technological factors affecting the Company's operations, markets, products, services, and prices.

Contact:

D. Michael Parker

704/871-3290

Consolidated Statements of Operations

(in thousands, except per share data)

Three Months Ended

Years Ended

April 30

April 30

2010

2009

2010

2009

(Unaudited)

Net sales

$23,942

$24,828

$99,093

$103,978

Cost of products sold

19,198

19,759

77,690

82,605

Gross profit

4,744

5,069

21,403

21,373

Operating expenses

3,971

3,405

15,576

14,289

Operating earnings

773

1,664

5,827

7,084

Other income (expense)

1

8

1

(28)

Interest expense

(42)

(49)

(157)

(280)

Earnings before income taxes

732

1,623

5,671

6,776

Income tax expense

248

669

1,921

2,264

Net earnings

484

954

3,750

4,512

Less:  net earnings attributable to the

          noncontrolling interest

(44)

34

178

265

Net earnings attributable to

         Kewaunee Scientific Corporation

$528

$920

$3,572

$4,247

Net earnings per share attributable to

        Kewaunee Scientific Corporation stockholders

          Basic

$0.20

$0.36

$1.39

$1.66

          Diluted

$0.20

$0.36

$1.39

$1.66

Weighted average number of common

      shares outstanding (in thousands)

          Basic

2,572

2,556

2,564

2,555

          Diluted

2,584

2,556

2,575

2,561

Condensed Consolidated Balance Sheets

(in thousands, except per share data)

April 30

April 30

Assets

2010

2009

Cash and cash equivalents

$1,722

$3,559

Restricted cash

544

456

Receivables, less allowances

26,169

24,526

Inventories

8,350

7,839

Prepaid expenses and other current assets

1,797

1,165

  Total current assets

38,582

37,545

Net property, plant and equipment

13,815

11,369

Other assets

4,224

3,615

Total Assets

$56,621

$52,529

Liabilities and Stockholders' Equity

Short-term borrowings

$4,872

$5,720

Current obligations under capital leases

82

220

Accounts payable

9,540

8,812

Other current liabilities

4,003

3,911

  Total current liabilities

18,497

18,663

Other non-current liabilities

6,452

5,607

  Total liabilities

24,949

24,270

Noncontrolling interest

1,239

1,306

Kewaunee Scientific Corporation equity

30,433

26,953

  Total equity

31,672

28,259

Total Liabilities and Stockholders' Equity

$56,621

$52,529

SOURCE Kewaunee Scientific Corporation



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http://www.kewaunee.com