Kewaunee Scientific reports results for Q2 of fiscal year 2024

Kewaunee Scientific Corporation announced results for its second quarter ended October 31, 2023.

Fiscal year 2024 second quarter results:
Sales during the second quarter of fiscal year 2024 were $50,436,000, a decrease of 7.6% compared to sales of $54,564,000 from the prior year’s second quarter. Pre-tax earnings for the quarter were $4,845,000 compared to $456,000 for the prior year quarter. Net earnings were $2,732,000 compared to a net loss of $243,000 for the prior year quarter. EBITDA1 for the quarter was $5,662,000 compared to $1,252,000 for the prior year quarter. Diluted earnings per share was $0.93 compared to a diluted loss per share of ($0.09) in the prior year quarter.

The Company’s order backlog was $146.3 million on October 31, 2023, as compared to $157.8 million on October 31, 2022, and $147.9 million on April 30, 2023.

Domestic Segment – Domestic sales for the quarter were $34,185,000, a decrease of 10.0% from sales of $37,991,000 in the prior year quarter. The decrease in Domestic sales was predominantly due to the elimination of installation revenue related to the Company’s decision to no longer sell directly to end users, which typically included installation services. Domestic segment net income was $3,054,000 compared to $491,000 in the prior year quarter. Domestic segment EBITDA was $5,230,000 compared to $1,088,000 for the prior year quarter. Domestic segment profitability improved versus the prior year quarter because of the strategic go-to-market decisions made in the previous year to stop selling direct, as well as improved manufacturing productivity and cost containment actions.

International Segment – International sales for the quarter were $16,251,000, a decrease of 1.9% from sales of $16,573,000 in the prior year quarter. International segment net income was $525,000 compared to $1,157,000 in the prior year quarter. International segment EBITDA was $1,635,000 compared to $1,668,000 for the prior year quarter. International segment sales and profitability remain strong as demand in the international markets served by the Company continue to remain robust.

Corporate Segment – Corporate segment pre-tax net loss was $1,243,000 for the quarter, as compared to a pre-tax net loss of $1,891,000 in the prior year period. Corporate segment EBITDA for the quarter was ($1,203,000) compared to corporate segment EBITDA of ($1,504,000) for the prior year quarter. The improved EBITDA was driven primarily by the net change in Corporate cost allocation methodology across our business segments.

Total cash on hand on October 31, 2023 was $21,711,000, as compared to $13,815,000 on April 30, 2023. The increase in cash was primarily from improved operating performance. Working capital was $52,144,000, as compared to $47,756,000 at the end of the second quarter last year and $47,867,000 on April 30, 2023. The Company had short-term debt of $5,855,000 as of October 31, 2023, as compared to $3,587,000 on April 30, 2023. Long-term debt was $28,826,000 on October 31, 2023, as compared to $29,007,000 on April 30, 2023. The Company’s debt-to-equity ratio on October 31, 2023 was 0.99-to-1, as compared to 1.08-to-1 on April 30, 2023.

“Our financial performance for the second quarter of fiscal year 2024 was extremely strong,” said Thomas D. Hull III, Kewaunee’s President and Chief Executive Officer. “As discussed in previous quarterly releases, we are realizing the benefits from our strategic decision to stop selling direct which I announced in January 2022. Further, we continue to experience benefits from our focus on our continuous improvement and lean management programs, as well as the deployment of strategic capital across our domestic manufacturing facilities. I am extremely proud of our domestic Associates who continue to embrace a culture of operational excellence, delivering on our commitments to our customers.”

“Kewaunee’s international business remains strong as the team is focused on delivering a number of large, multi-year projects that were previously awarded. Further, the international team was awarded several sizable projects during the quarter, continuing to strengthen our backlog. I continue to be impressed by the vigilance with which our international team is executing its growth strategy, further solidifying Kewaunee as the turn-key laboratory solution provider of choice for our customers.”

“In our first quarter 10-Q, we announced a stock repurchase program and we began re-purchasing stock in our second quarter. We plan to continue purchasing stock under this program in the third quarter as we believe this will provide value to our shareholders. Looking forward, our backlog remains strong, positioning us to continue our positive financial performance during the second half of fiscal year 2024.”
MB Bureau