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STATESVILLE, N.C., Aug. 24, 2011 /PRNewswire/ -- Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported sales and earnings for its first quarter ended July 31, 2011.
Sales for the quarter were $26,321,000, up 5.9% from sales of $24,858,000 in the first quarter last year. Net earnings for the quarter were $22,000, or $0.01 per diluted share, down from net earnings of $657,000, or $0.25 per diluted share, in the first quarter of the prior year. Earnings for the quarter were unfavorably impacted by lower selling prices and higher costs paid for raw materials, particularly steel and epoxy resin. Additionally, costs associated with the startup of manufacturing for the Company's new laminate furniture product line reduced after-tax earnings by approximately $188,000, or $0.07 per diluted share.
Domestic sales for the quarter were $23,396,000, up from sales of $20,948,000 in the first quarter last year. The domestic marketplace for laboratory projects was generally unchanged from recent quarters, as demand for larger projects continued to hold up relatively well, while demand for small and mid-sized laboratory projects remained well below pre-recession levels. International sales for the quarter were $2,925,000, down from $3,910,000 in the first quarter last year. Although not reflected in the sales figure, the recovery in the international laboratory marketplace appears to be well underway, as the Company is seeing and bidding increasing numbers of opportunities in Asia and the Middle East. The Company's expanded and strengthened international sales representation is helping the Company take early advantage of the recovery.
The order backlog grew to a record $69.7 million at July 31, 2011, up from $65.7 million at April 30, 2011 and $66.9 million at July 31, 2010.
"Dramatic increases in raw material prices, particularly steel and epoxy resin, which is petroleum-based, severely pressured profit margins during the quarter," said Mr. Shumaker, President and Chief Executive Officer. "Facing these higher costs, we accelerated and expanded our cost reduction efforts throughout the Company. We now have 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 will begin in the second quarter and are expected to continue throughout the remainder of the fiscal year.
"Looking forward for the remainder of this fiscal year, we expect earnings for the second quarter to be much improved over the first quarter, although below last year's strong second quarter results," Mr. Shumaker continued. "We also expect the second half of the fiscal year to be much better than the first. Our projections are based on an analysis of orders in the order backlog, cost savings initiatives underway, increased sales opportunities in the international marketplace, and sales and earnings benefits from new products."
The Company continues to have a strong balance sheet. Working capital was $22.1 million at July 31, 2011, as compared to $18.9 million at the end of the first quarter last year. Cash on hand was $3.6 million at the end of the quarter, as compared to $2.3 million at the end of the first quarter last year. Short-term borrowings under the Company's $14 million bank line of credit were $8.7 million at the end of the quarter, as compared to $7.5 million at the end of the first quarter last year, and total bank borrowings and capital lease obligations were $12.6 million, as compared to $7.7 million at the end of the first quarter last year. The debt-to-equity ratio was .40-to-1 at the end of the quarter, as compared to .25-to-1 at the end of the first 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 Parker704/871-3290Consolidated Statements of Operations [unaudited]
(in thousands, except per share data)Three Months EndedJuly 31
2011
July 31
2010Net sales
$26,321
$24,858Cost of products sold
22,133
19,859Gross profit
4,188
4,999Operating expenses
3,955
3,901Operating earnings
233
1,098Other expense
(1)
--Interest expense
(95)
(45)Earnings before income taxes
137
1,053Income tax expense
29
329Net earnings
108
724Less: net earnings attributable tothe noncontrolling interest
(86)
(67)Net earnings attributable toKewaunee Scientific Corporation
$22
$657Net earnings per share attributable toKewaunee Scientific Corporation stockholdersBasic
$0.01
$0.26Diluted
$0.01
$0.25Weighted average number of commonshares outstandingBasic
2,579
2,573Diluted
2,580
2,578Condensed Consolidated Balance Sheets
(in thousands)July 31
2011
April 30
2011Assets
[unaudited]Cash and cash equivalents
$2,652
$2,402Restricted cash
908
553Receivables, less allowances
27,282
27,346Inventories
10,261
10,466Prepaid expenses and other current assets
2,345
1,612 Total Current Assets
43,448
42,379Net property, plant and equipment
16,202
16,575Other assets
4,112
4,104Total Assets
$63,762
$63,058Liabilities and Stockholders' EquityShort-term borrowings
$8,672
$6,588Current obligations under capital leases and long-term debt
284
283Accounts payable
7,890
9,770Other current liabilities
4,531
3,623 Total Current Liabilities
21,377
20,264Other non-current liabilities
9,440
9,778 Total Liabilities
30,817
30,042Noncontrolling interest
1,634
1,525Kewaunee Scientific Corporation equity
31,311
31,491 Total Equity
32,945
33,016Total Liabilities and Equity
$63,762
$63,058
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