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Kewaunee Scientific Reports Second Quarter Results for Fiscal Year 2025

Kewaunee Scientific Corporation, listed on NASDAQ as KEQU, shared its financial results for the second quarter ending October 31, 2024. The company recorded sales amounting to $47.76 million, marking a 5.3% decline compared to $50.44 million in the same period the year prior. Significantly, the pre-tax earnings dropped by 18.9% to $3.93 million from $4.85 million in the previous year. However, net earnings showed a positive trajectory, rising to $3 million from $2.73 million.

Kewaunee’s EBITDA, a measure of performance, stood at $4.88 million compared to $5.66 million in Q2 of the prior year. The diluted earnings per share increased slightly, reaching $1.01 against the previous $0.93.

In terms of order backlog, Kewaunee achieved a noteworthy record with $184.4 million as of October 31, 2024, up from $146.3 million in the same month last year and $155.6 million in April 2024.

Domestic Performance:
The domestic segment performed robustly, reporting sales of $36.41 million, representing a 6.5% increase from $34.19 million in the same quarter last year. This growth translated into domestic net earnings of $4.52 million, compared to $3.05 million previously, buoyed by increased product demand. The EBITDA for the domestic segment improved significantly to $6.84 million from $5.23 million.

International Market Challenges:
Conversely, the international segment faced challenges, with a 30.1% decline in sales to $11.36 million from $16.25 million in the prior year. Net earnings for this segment decreased from $525,000 to $356,000, with EBITDA dropping to $592,000 from $1.63 million. Delays in customer construction projects in India significantly impacted shipping and delivery, contributing to this downturn.

Corporate Segment Insights:
The corporate segment recorded a pre-tax net loss of $2.44 million, worsening from the previous loss of $1.24 million. Notably, the acquisition expenses related to Nu Aire, which concluded on November 1, 2024, played a role in these financial developments. The company's total cash position showed improvement, totaling $29.66 million as of October 31, versus $25.94 million earlier in April. Moreover, working capital increased to $59.97 million, representing growth from $52.14 million a year prior.

Total debt also exhibited a decrease, with short-term debt standing at $805,000, down from $3.1 million, and long-term debt marginally reduced to $28.05 million. Kewaunee's debt-to-equity ratio improved, reflecting a stronger financial position during this quarter.

CEO Insights:
Thomas D. Hull III, Kewaunee's President and CEO, expressed satisfaction with the financial performance for the quarter, particularly emphasizing the enhanced operating performance in the domestic segment due to rising product demands. He acknowledged the setbacks in the international sector caused by delays, particularly in India. However, Hull remains optimistic about the robust order backlog and continued market investment Kewaunee is experiencing.

Looking forward, the acquisition of Nu Aire Inc. is poised to bolster Kewaunee's product offerings in the laboratory furniture space, which Hull believes aligns with the company's vision of becoming a market leader in laboratory furnishings. The integration of Nu Aire is expected to contribute significantly to Kewaunee's growth trajectory, commencing from the third quarter results of fiscal year 2025.

Conclusion

Kewaunee Scientific Corporation's second quarter results reflect a mixed but encouraging financial landscape, underpinned by domestic market strength and strategic initiatives such as the acquisition of Nu Aire. As the company navigates international challenges, its healthy order backlog positions it well for sustained future performance. Investors and analysts will be keenly watching Kewaunee's progress as it embarks on integrating Nu Aire and capitalizing on new market opportunities.