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Kewaunee Scientific Declares Quarterly Dividend and Reports Results for Third Quarter

STATESVILLE, N.C., Feb. 26, 2019 /PRNewswire/ -- Kewaunee Scientific Corporation (KEQU) today reported results for its third quarter of fiscal year 2019, ended January 31, 2019.

Kewaunee Scientific Corporation (PRNewsFoto/Kewaunee Scientific Corporation)

Sales for the quarter were $32,372,000, a 15.2% decrease from sales of $38,190,000 in the prior year third quarter. Domestic sales for the quarter were $25,217,000, down 15.2% from sales of $29,734,000 in the third quarter of last year.  International sales for the quarter were $7,155,000, down 15.4% from sales of $8,456,000 in the third quarter last year.

Domestic sales decreased year-over-year as the activity in the marketplace slowed dramatically throughout the quarter. The slowdown, felt across the Company's direct, dealer, and distribution channels, reduced production below the rate necessary to generate favorable financial results. International sales decreased similarly, with strength in the Indian market being offset by softness in the Middle East and Asian markets.  Also negatively impacting Kewaunee's International segment performance was a year-over-year decline in the exchange rate of the Indian rupee versus the US dollar.

Pre-tax earnings for the quarter were $35,000 compared to $2,484,000 for the prior year period.  Pre-tax earnings were impacted by the year-over-year decline in sales, increases in raw material costs and the previously mentioned foreign exchange impact.  Net earnings decreased 103% for the quarter to a loss of ($22,000), or ($0.01) per diluted share, as compared to net earnings of $883,000, or $0.31 per diluted share, for the quarter ended January 31, 2018.

The Company's order backlog is $96 million at January 31, 2019, as compared to $101 million at October 31, 2018 and $116 million at January 31, 2018.  The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects. 

The Company's balance sheet and financial condition remain strong. Unrestricted cash on hand was $10.8 million at the end of the quarter, as compared to $9.2 million at the end of the third quarter last year. Working capital was $36.1 million, as compared to $36.2 million at the end of the third quarter last year. Short-term debt and interest rate swaps were $5.1 million at the end of the quarter, as compared to $4.8 million at the end of the third quarter last year, and long-term debt was $526,000 as compared to $1.6 million at the end of the third quarter last year. The debt-to-equity ratio at January 31, 2019 was .14-to-1, as compared to .16-to-1 at January 31, 2018.

"The third quarter is traditionally the Company's softest quarter as it falls around customers' calendar year-end as well as the holidays. This quarter was especially challenging as expected orders were delayed, resulting in our facilities being under-utilized. The quarter was also impacted by substantially higher raw material costs in steel and resin as compared to the prior year third quarter. 

There still remains a significant amount of activity for our products and services both domestically and abroad; however, economic and geopolitical uncertainty have caused many customers to postpone awards as well as the start of new projects," said David M. Rausch, Kewaunee's President and Chief Executive Officer. "Looking forward, we anticipate these trends will continue through the remainder of the fiscal year and are making the necessary adjustments to return to profitability in the fourth quarter."

In other news, the Company's Board of Directors declared a quarterly cash dividend of nineteen cents per outstanding share, payable on March 25, 2019 to stockholders of record at the close of business on March 11, 2019.

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. Direct sales offices are located in the United States, India, Singapore, and China. 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 and Asian markets. The Company's China headquarters and sales office are located in Shanghai, China. 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. Additional information concerning these 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

Condensed Consolidated Statements of Operations (Unaudited)

($ and shares in thousands, except per share amounts)













Three months ended



Nine months ended



January 31,



January 31,



2019


2018



2019


2018

Net sales


$       32,372


$       38,190



$    111,802


$  113,542

Cost of products sold


27,142


29,836



91,325


90,456

Gross profit


5,230


8,354



20,477


23,086

Operating expenses


5,305


5,971



17,031


16,360

Operating earnings (loss)


(75)


2,383



3,446


6,726

Other income


186


179



500


524

Interest expense, net


(76)


(78)



(258)


(226)

Earnings before income taxes


35


2,484



3,688


7,024

Income tax expense


20


1,566



803


3,149

Net earnings


15


918



2,885


3,875

Less: net earnings attributable to the noncontrolling interest


37


35



86


120

Net earnings (loss) attributable to Kewaunee Scientific Corporation

$             (22)


$             883



$        2,799


$      3,755











Net earnings (loss) per share attributable to










    Kewaunee Scientific Corporation stockholders










       Basic


($0.01)


$0.32



$          1.02


$        1.38

       Diluted


($0.01)


$0.31



$          1.00


$        1.35











Weighted average number of common shares outstanding










       Basic


2,744


2,722



2,741


2,717

       Diluted


2,794


2,784



2,799


2,772











 

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

($ in thousands)








January 31,


 April 30,



2019


2018

Assets


(Unaudited)



Cash and cash equivalents


$       10,771


$         9,716

Restricted cash


606


1,242

Receivables, less allowances


27,929


32,660

Inventories


16,672


17,662

Prepaid expenses and other current assets


3,778


2,224

    Total Current Assets


59,756


63,504

Net property, plant and equipment


15,202


14,661

Other assets


4,604


6,193

Total Assets


$       79,562


$       84,358






Liabilities and Stockholders' Equity





Short-term borrowings and interest rate swaps


$         5,118


$         3,885

Current portion of long-term debt and lease obligations


1,184


1,167

Accounts payable


11,106


14,754

Other current liabilities


6,298


7,756

    Total Current Liabilities


23,706


27,562

Other non-current liabilities


6,345


9,275

    Total Liabilities


30,051


36,837

Kewaunee Scientific Corporation  equity


48,990


47,059

Noncontrolling interest


521


462

    Total Stockholders' Equity


49,511


47,521

Total Liabilities and Stockholders' Equity


$       79,562


$       84,358






 

Contact:

Thomas D. Hull III


(704) 871-3290

 

Cision

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