Last updated on April 19, 2014 at 21:20 EDT

Kewaunee Scientific Reports Improved Sales and Earnings for First Quarter

August 21, 2012

STATESVILLE, N.C., Aug. 21, 2012 /PRNewswire/ — Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported sales and earnings for its first quarter ended July 31, 2012.

Net earnings for the quarter were $634,000, or $0.25 per diluted share, up from net earnings of $22,000, or $0.01 per diluted share, in the first quarter of the prior year. Earnings for the quarter were favorably impacted by lower operating costs resulting from cost savings initiatives commenced in the second half of the prior year and the Company’s strategy to move toward a more profitable product sales mix. Sales for the quarter were $26,683,000, up 1.4% from sales of $26,321,000 in the first quarter last year.

Domestic sales were $22,629,000, down 3.3% from sales of $23,396,000 in the prior year period. The lower domestic sales dollars were expected as part of a strategy underway by the Company to sell more laboratory projects through its strengthened and expanded dealer network. This is resulting in increased sales of manufactured products, but lower overall sales, as the dealers provide the related project management, installation, and other service activities, which are typically less profitable for the Company. Regarding the laboratory marketplace, opportunities for privately funded projects continue to hold up relatively well, although at extremely competitive prices, while opportunities for publicly funded educational projects remain well below pre-recession levels.

International sales were $4,054,000, up 38.6% from $2,925,000 in the prior year period. The Company continues to make changes to strengthen and expand its international dealer network to better position the Company to take advantage of increased sales opportunities in the fast growing research markets of Asia and the Middle East.

The order backlog increased to a record $86.7 million at July 31, 2012, up from $86.2 million at April 30, 2012 and $69.7 million at July 31, 2011.

The Company’s balance sheet continues to be strong. Cash on hand was $8.4 million at the end of the quarter, as compared to $3.6 million at the end of the first quarter last year. Working capital was $24.0 million, as compared to $22.1 million at the end of the first quarter last year. Short-term borrowings under the Company’s $15 million bank line of credit were $6.5 million, as compared to $8.7 million at the end of the first quarter last year. Total bank borrowings and capital lease obligations were $10.1 million, as compared to $12.6 million at the end of the first quarter last year, and the debt-to-equity ratio was .34-to-1, as compared to .40-to-1 at the end of the first quarter last year.

“We are pleased with our continuing progress,” said William A. Shumaker, Kewaunee’s Chief Executive Officer. “Sales and earnings are benefiting from our strengthened and expanded dealer network, new innovative products being introduced to the marketplace, and lower manufacturing and overhead costs. Additionally, earnings and profit margins are benefiting from an improved product mix related to our strategy to sell more laboratory projects through our dealer network.

“Looking forward, I expect sales and earnings for fiscal year 2013 to be much improved over fiscal year 2012. Our strengthened dealer organization, both domestically and internationally, is providing us increased opportunities for sales and orders, while our lower operating costs are improving profit margins and making us more competitive in the marketplace.”

Kewaunee Scientific Corporation is a recognized 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.

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.

                                    Consolidated Statements of Operations [unaudited]
                                          (in thousands, except per share data)

                                                                                      Three Months Ended
                                                                                            July 31          July 31
                                                                                                       2012             2011
                                                                                                       ----             ----

     Net sales                                                                                      $26,683          $26,321
     Cost of products sold                                                                           21,440           22,133
                                                                                                     ------           ------

     Gross profit                                                                                     5,243            4,188
     Operating expenses                                                                               4,138            3,955
                                                                                                      -----            -----

     Operating earnings                                                                               1,105              233
     Other income (expense)                                                                              68               (1)

     Interest expense                                                                                  (114)             (95)
                                                                                                       ----              ---

     Earnings before income taxes                                                                     1,059              137
     Income tax expense                                                                                 371               29
                                                                                                        ---              ---

     Net earnings                                                                                       688              108
     Less: net earnings attributable to
        the noncontrolling interest                                                                      54               86
                                                                                                        ---              ---

     Net earnings attributable to
         Kewaunee Scientific Corporation                                                               $634              $22
                                                                                                       ====              ===

     Net earnings per share attributable to
         Kewaunee Scientific Corporation stockholders
           Basic                                                                                      $0.25            $0.01
           Diluted                                                                                    $0.25            $0.01

     Weighted average number of common
       shares outstanding
           Basic                                                                                      2,581            2,579
           Diluted                                                                                    2,584            2,580

                                              Condensed Consolidated Balance Sheets
                                                         (in thousands)

                                                                                    July 31           April 30
                                                                                                 2012             2012
                                                                                                 ----             ----
    Cash and cash equivalents                                                                  $7,720           $6,188
    Restricted cash                                                                               653              704
    Receivables, less allowances                                                               22,542           23,244
    Inventories                                                                                11,717           11,760
    Prepaid expenses and other current assets                                                   2,217            1,702
                                                                                                -----            -----
       Total Current Assets                                                                    44,849           43,598
    Net property, plant and equipment                                                          15,122           15,346
    Other assets                                                                                5,219            5,192
                                                                                                -----            -----
    Total Assets                                                                              $65,190          $64,136
                                                                                              =======          =======

    Liabilities and Equity
    Short-term borrowings                                                                      $6,501           $6,816
    Current obligations under capital leases                                                       15               36
    Current portion of long-term debt                                                             200              200
    Accounts payable                                                                            8,769            8,848
    Other current liabilities                                                                   5,327            4.340
                                                                                                -----            -----
       Total Current Liabilities                                                               20,812           20,240
    Other non-current liabilities                                                              12,411           12,238
                                                                                               ------           ------
       Total Liabilities                                                                       33,223           32,478
    Noncontrolling interest                                                                     2,132            2,147
    Kewaunee Scientific Corporation equity                                                     29,835           29,511
                                                                                               ------           ------
       Total Equity                                                                            31,967           31,658
                                                                                               ------           ------
    Total Liabilities and Equity                                                              $65,190          $64,136
                                                                                              =======          =======

Contact: D. Michael Parker

SOURCE Kewaunee Scientific Corporation

Source: PR Newswire