Attached files

file filename
8-K - FORM 8-K - KEWAUNEE SCIENTIFIC CORP /DE/v242021_8k.htm

Kewaunee Scientific Announces Results for Second Quarter

STATESVILLE, N.C., Nov. 30, 2011 /PRNewswire/ -- Kewaunee Scientific Corporation (Nasdaq: KEQU) today announced the financial results for its second quarter ended October 31, 2011.

Sales for the quarter were $25,962,000, up 1.3% over sales of $25,625,000 in the second quarter last year. A net loss of $125,000, or $0.05 per diluted share, was reported for the quarter. This compares to net earnings of $855,000, or $0.33 per diluted share, in the second quarter last year. Earnings for the quarter were unfavorably impacted by a large decline in wood furniture opportunities and orders, continued higher market prices for raw materials, lower selling prices, and delayed shipments of international projects.

The order backlog was $78.0 million at October 31, 2011, up from $69.7 million at July 31, 2011 and up from $66.0 million at October 31, 2010. The order backlog continues to include a large international project that has experienced a lengthy construction delay due to extraordinary building construction complications.

Domestic sales for the quarter were $23,826,000, up 7.0% over sales of $22,269,000 in the second quarter last year. Demand for larger laboratory projects and small and mid-sized privately-funded projects continued to hold up relatively well during the quarter, although at extremely competitive prices. Incoming orders for publicly-funded K-12 educational projects, which are primarily wood furniture, dropped sharply, as state and local governments continued to receive significantly lower funding for capital projects.

International sales for the quarter were $2,136,000, down 36.4% from sales of $3,356,000 in the second quarter last year. Several large international orders were booked during the quarter, but these orders are not scheduled to ship until the third and fourth quarters of the fiscal year. The Company continues to see increasing numbers of opportunities in Asia and the Middle East, as these markets remain strong for the Company's products.

Sales for the six months ended October 31, 2011 were $52,283,000, up 3.6% over sales of $50,483,000, in the same period last year. Domestic operations sales were $47,222,000, up 9.3% over sales of $43,216,000 in the same period last year. International operations sales were $5,061,000, down 30.4% from sales of $7,267,000 in the same period last year. A net loss of $103,000, or $0.04 per diluted share, was reported for the six months ended October 31, 2011. This compares to net earnings of $1,512,000, or $0.59 per diluted share, for the same period last year.

"Earnings and sales for the second quarter were below our expectations," said William A. Shumaker, President and Chief Executive Officer. "A sharp decline in orders for K-12 educational projects resulted in substantially lower sales for wood furniture and a significant under-absorption of factory overhead costs. Results from our international operations were also well below expectations, as several projects in our order backlog were delayed due to changes in project construction schedules.

"Last quarter, I reported that we had identified and put in place new initiatives that are projected to reduce our annual costs by over $3 million. Savings related to many of these initiatives began in the second quarter and are expected to continue throughout the remainder of the fiscal year. We are also implementing additional actions to reduce our factory labor and overhead costs, as well as corresponding support staff costs, in response to changes in market opportunities and the sharp decline in wood furniture orders.

"Looking forward to the remainder of the fiscal year, we expect operating earnings for the third quarter to increase modestly from this year's second quarter, followed by further improvement in the fourth quarter. Thereafter, we feel the Company is well-positioned for further growth in sales and earnings as the domestic economy recovers. Our expectations are based on a number of factors, including scheduled shipments of international orders in our backlog, increased sales through our strengthened and expanding dealer network, growing benefits from our new product lines, and reduced overhead and production costs in addition to other cost savings from our new initiatives."

The Company continues to have a strong balance sheet. Working capital was $21.5 million at October 31, 2011, as compared to $21.8 million at the end of the second quarter last year. Cash on hand was $4.1 million at the end of the quarter, as compared to $1.8 million at the end of the second quarter last year. Short-term borrowings under the Company's $15 million bank line of credit were $7.3 million at the end of the quarter, as compared to $4.1 million at the end of the second quarter last year, and total bank borrowings and capital lease obligations were $11.2 million, as compared to $8.3 million at the end of the second quarter last year. The debt-to-equity ratio was .36-to-1 at the end of the quarter, as compared to .26-to-1 at the end of the second quarter last year.

Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of laboratory, technical and laminate 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. Technical furniture products include column systems, slotted-post systems, pedestal systems and stand-alone benches. Laminate furniture includes laminate casework, systems and related products for educational, healthcare and industrial applications.

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.

Contact:

D. Michael Parker


704/871-3290



Consolidated Statements of Operations

(in thousands, except per share data)

(Unaudited)







Three Months Ended

Six Months Ended


October 31

October 31


2011

2010

2011

2010






Net sales

$25,962

$25,625

$52,283

$50,483

Cost of products sold

22,117

20,208

44,250

40,067






Gross profit

3,845

5,417

8,033

10,416






Operating expenses

4,005

4,045

7,960

7,946






Operating earnings (loss)

(160)

1,372

73

2,470






Other income (expense)

36

(1)

35

(1)

Interest expense

(128)

(77)

(223)

(122)






Earnings (loss) before income taxes

(252)

1,294

(115)

2,347

Income tax expense (benefit)

(96)

414

(67)

743






Net earnings (loss)

(156)

880

(48)

1,604






Less: net earnings (loss) attributable to





    the noncontrolling interest

(31)

25

55

92






Net earnings (loss) attributable to





    Kewaunee Scientific Corporation

$(125)

$855

$(103)

$1,512






Net earnings (loss) per share attributable to





    Kewaunee Scientific Corporation stockholders





          Basic

$(0.05)

$0.33

$(0.04)

$0.59

          Diluted

$(0.05)

$0.33

$(0.04)

$0.59






Weighted average number of common





      shares outstanding (in thousands)





          Basic

2,579

2,573

2,579

2,573

          Diluted

2,580

2,578

2,580

2,578



Condensed Consolidated Balance Sheets

(in thousands)





October 31

April 30


2011

2011


(unaudited)


Assets



Cash and cash equivalents

$3,212

$2,402

Restricted cash

876

553

Receivables, less allowances

23,479

27,346

Inventories

10,370

10,466

Prepaid expenses and other current assets

2,078

1,612

  Total current assets

40,015

42,379

Net property, plant and equipment

15,983

16,575

Other assets

4,112

4,104

Total Assets

$60,110

$63,058




Liabilities and Equity



Short-term borrowings

$7,326

$6,588

Current obligations under capital leases and long-term debt

279

283

Accounts payable

6,626

9,770

Other current liabilities

4,245

3,623

  Total current liabilities

18,476

20,264

Other non-current liabilities

9,459

9,778

  Total liabilities

27,935

30,042

Noncontrolling interest

1,499

1,525

Kewaunee Scientific Corporation equity

30,676

31,491

  Total equity

32,175

33,016

Total Liabilities and Equity

$60,110

$63,058