STATESVILLE, N.C., July 21, 2020 /PRNewswire/ -- Kewaunee
Scientific Corporation (NASDAQ: KEQU) today announced results for
its fourth quarter and its fiscal year ended April 30,
2020.
Fiscal Year 2020 Fourth Quarter Results:
Sales during the fourth quarter of fiscal year 2020 were
$34,257,000, a decrease of 1.4%, as
compared to sales of $34,748,000 from
the prior year fourth quarter. Domestic sales for the quarter
were $27,533,000, an increase of
11.6% from sales of $24,677,000 in
the prior year. International sales for the quarter were
$6,724,000, a decrease of 33.2% from
sales of $10,071,000 in the prior
year.
Sales in the quarter for both of the Company's operating
segments were negatively impacted by the coronavirus, which
resulted in government mandated shut-downs, closure of project
sites and delays in manufacturing products. The
year-over-year increase in Domestic sales was principally a result
of lower than normal quarterly sales in the prior year
period. Domestic sales in the quarter increased across the
Company's direct and dealer sales channels, offsetting weakness in
export and distribution channels. This sales increase was offset by
a decline in activity across all of our International markets, with
sales slowing rapidly in our fourth quarter due to the
coronavirus.
Pre-tax loss for the quarter was $1,122,000 compared to a pre-tax loss of
$1,554,000 for the prior year
period. Profitability was negatively impacted during the
quarter as a result of the coronavirus which resulted in delays in
projects being released to be manufactured, lower operating levels
within manufacturing facilities, construction site closures and
higher operating costs due to increased spend on supplies to keep
employees safe while operating.
Net loss was $1,062,000 compared
to a loss of $1,270,000 for the prior
year period. A tax benefit of $64,000 was recorded in the current quarter. This
includes a non-cash valuation allowance expense against the
deferred tax assets in the amount of $1,625,000 that was recorded during the quarter.
Diluted loss per share was ($0.39),
as compared to diluted loss per share of ($0.46) in the prior year fourth
quarter.
"I could not be more proud of how our Associates responded to
the coronavirus pandemic which rapidly unfolded during the fourth
quarter of the Company's fiscal year," said Thomas D. Hull III, Kewaunee's President and
Chief Executive Officer. "Being heavily tied to construction
activity, we had to adapt to an evolving landscape as governments
globally responded to the pandemic, initiating shut-downs that
affected our projects as well as our ability to manufacture
products. Our Associates worked together to find ways to
continue to be effective while working remotely when possible,
identifying and implementing proactive measures to maintain a safe
operating environment, all while supporting our customers and their
changing expectations. I witnessed Kewaunee Associates
everyday living out our Core Values in an effort to serve our
customers as well as their fellow Associates in what truly was an
unprecedented quarter for the Company."
Fiscal Year 2020 Full Year Results:
Sales during fiscal year 2020 were $147,540,000, an increase of 0.7% from sales of
$146,550,000 in the prior year.
Domestic sales for the fiscal year were $115,103,000, a decrease of 1.3% from sales of
$116,586,000 in the prior year.
International sales for the fiscal year were $32,437,000, an increase of 8.3% from sales of
$29,964,000 in the prior year.
The increase in International sales was primarily the result of a
large single Middle East order
delivered during the fiscal year.
The pre-tax loss for the fiscal year was $2,866,000, a decrease of 234% compared to pretax
earnings of $2,134,000 for the prior
period. As discussed in this press release as well as our prior
disclosures relating to the first three quarters of our fiscal
year, profitability was negatively impacted during the year by a
number of factors:
- Delivery of a number of low margin orders the Company
aggressively pursued and secured in prior fiscal years. This
included a strategic, large, one-time order in the Middle East.
- Costs incurred related to a restructuring, initiated in the
Company's second quarter of the fiscal year, which included a
reduction in force and the closure of the Company's operations in
China.
- Increased operating costs within the Company's Domestic segment
due to equipment down-time and operational
inefficiencies.
- Increased operating costs within the Company's Domestic
segment, as the Company has established a strategic direction for a
multi-year transformation of the business which is designed to lead
to sustained profitability and growth. This includes
investing in a multi-year plan to modernize our manufacturing
capabilities and information technology platform. This
investment includes new talent
being added to the organization to drive this
transformation.
- Increased operating costs in India and the Middle
East as investments were made in expanding the Company's
turn-key capabilities to serve the international
markets.
- Finally, profitability was impacted during the year as a result
of the coronavirus pandemic, as described in the discussion of our
fourth quarter results.
The net loss for the fiscal year was $4,687,000, or ($1.70) per diluted share, as compared to net
earnings of $1,529,000, or
$0.55 per diluted share, for the year
ended April 30, 2019. In
addition to the factors identified above, the net loss was driven
by the following tax related impacts:
- During the second quarter, the Company made a decision to
revoke its indefinite reinvestment accounting election that
permitted the deferral of recognition of foreign withholding tax.
During the fiscal year, the Company recorded a tax expense of
$1,964,000 to recognize a foreign
withholding tax liability on cumulative foreign earnings. Of
this amount, $1,171,000 was remitted
to foreign tax authorities with respect to cash
repatriated to the US that was used to extinguish the Company's
long-term debt obligations.
- The Company recorded a tax benefit of $939,000 in the fourth quarter a result of the
newly created provision in the Cares Act which allows companies to
carry losses back five years, off-setting previously reported
income.
- Finally, the Company recorded a non-cash valuation allowance
expense of $1,707,000 against
deferred tax assets as an estimate of the realization of the
Company's future tax benefits was negatively impacted by the losses
reported during the fiscal year.
The Company's order backlog was $100.9
million at April 30, 2020,
increasing from $93 million at
January 31, 2020, but relatively flat
compared to the $100.8 million at
April 30, 2019.
Total cash on hand at April 30,
2020 was $5,215,000, as
compared to $11,156,000 at
April 30, 2019. Working capital
was $27,171,000, as compared to
$32,624,000 at the end of the fourth
quarter last year. Short-term debt and interest rate swaps
were $4,719,000 at April 30, 2020, as compared to $9,513,000 at the end of April 30, 2019, and long-term debt was
$132,000 at April 30, 2020 as compared to $1,413,000 at the end of April 30, 2019. The Company's debt-to-equity
ratio at April 30, 2020 was .36-to-1,
as compared to .23-to-1 at April 30, 2019.
"We will look back at fiscal year 2020 as a turning point for
Kewaunee," said Mr. Hull. "While we encountered many
obstacles during the year, we have charted a course to invest in
and modernize our capabilities which we expect will make us an
industry leading Company for years to come. There are many
opportunities for growth within the markets we serve, and I am
committed to investing in our manufacturing capabilities and
enabling technologies to enhance our ability to better serve our
customers. I am thrilled at the fresh talent we have been
able to attract to help accelerate
this transformation over the next couple of
years.
"Kewaunee is well positioned as investment will be made in the
pharmaceutical, bio-technology, health care and other markets
served by the Company to not only combat the coronavirus pandemic,
but to provide infrastructure needed to respond to future events
not yet imagined."
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 and
Singapore. 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. 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
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|
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Condensed
Consolidated Statements of Operations
|
|
|
|
($ and shares in
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
|
April
30,
|
|
April
30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net sales
|
|
$
34,257
|
|
$
34,748
|
|
$
147,540
|
|
$
146,550
|
|
Cost of products
sold
|
|
29,370
|
|
29,906
|
|
124,113
|
|
121,231
|
|
Gross
profit
|
|
4,887
|
|
4,842
|
|
23,427
|
|
25,319
|
|
Operating
expenses
|
|
5,897
|
|
6,397
|
|
25,772
|
|
23,207
|
|
Operating earnings
(loss)
|
|
(1,010)
|
|
(1,555)
|
|
(2,345)
|
|
2,112
|
|
Other income
(expense)
|
|
(71)
|
|
110
|
|
(28)
|
|
389
|
|
Interest expense,
net
|
|
(41)
|
|
(109)
|
|
(493)
|
|
(367)
|
|
Earnings (loss)
before income taxes
|
|
(1,122)
|
|
(1,554)
|
|
(2,866)
|
|
2,134
|
|
Income tax expense
(benefit)
|
|
(64)
|
|
(357)
|
|
1,758
|
|
446
|
|
Net earnings
(loss)
|
|
(1,058)
|
|
(1,197)
|
|
(4,624)
|
|
1,688
|
|
Less: net earnings
attributable to the noncontrolling interest
|
|
4
|
|
73
|
|
63
|
|
159
|
|
Net earnings (loss)
attributable to Kewaunee Scientific Corporation
|
|
$
(1,062)
|
|
$
(1,270)
|
|
$
(4,687)
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|
$
1,529
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|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
per share attributable to
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|
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Kewaunee Scientific Corporation stockholders
|
|
|
|
|
|
|
|
|
|
Basic
|
|
($0.39)
|
|
($0.46)
|
|
$
(1.70)
|
|
$
0.56
|
|
Diluted
|
|
($0.39)
|
|
($0.46)
|
|
$
(1.70)
|
|
$
0.55
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
2,751
|
|
2,746
|
|
2,750
|
|
2,742
|
|
Diluted
|
|
2,751
|
|
2,746
|
|
2,750
|
|
2,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kewaunee
Scientific Corporation
|
|
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|
|
Condensed
Consolidated Balance Sheets
|
|
|
|
|
($ in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
30,
|
|
April
30,
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
4,365
|
|
$
10,647
|
|
|
|
|
|
Restricted
cash
|
|
850
|
|
509
|
|
|
|
|
|
Receivables, less
allowances
|
|
28,062
|
|
33,259
|
|
|
|
|
|
Inventories
|
|
15,330
|
|
17,206
|
|
|
|
|
|
Prepaid expenses and
other current assets
|
|
5,624
|
|
3,736
|
|
|
|
|
|
Total Current Assets
|
|
54,231
|
|
65,357
|
|
|
|
|
|
Net property, plant
and equipment
|
|
16,272
|
|
16,462
|
|
|
|
|
|
Right of use
assets
|
|
9,312
|
|
-
|
|
|
|
|
|
Other
assets
|
|
4,114
|
|
5,404
|
|
|
|
|
|
Total
Assets
|
|
$
83,929
|
|
$
87,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
and interest rate swaps
|
|
$
4,719
|
|
$
9,513
|
|
|
|
|
|
Current portion of
long-term operating lease obligations
|
|
1,282
|
|
-
|
|
|
|
|
|
Current portion of
long-term debt and financing lease obligations
|
|
19
|
|
1,184
|
|
|
|
|
|
Accounts
payable
|
|
13,114
|
|
15,190
|
|
|
|
|
|
Other current
liabilities
|
|
7,926
|
|
6,846
|
|
|
|
|
|
Total Current Liabilities
|
|
27,060
|
|
32,733
|
|
|
|
|
|
Long-term portion of
operating lease obligations
|
|
7,780
|
|
-
|
|
|
|
|
|
Other non-current
liabilities
|
|
10,386
|
|
6,787
|
|
|
|
|
|
Total Liabilities
|
|
45,226
|
|
39,520
|
|
|
|
|
|
Kewaunee Scientific
Corporation equity
|
|
38,415
|
|
47,100
|
|
|
|
|
|
Noncontrolling
interest
|
|
288
|
|
603
|
|
|
|
|
|
Total Stockholders' Equity
|
|
38,703
|
|
47,703
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
83,929
|
|
$
87,223
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Contact:
Donald T. Gardner III
704/871-3274
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SOURCE Kewaunee Scientific Corporation