8-K
KEWAUNEE SCIENTIFIC CORP /DE/ (KEQU)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENTREPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 3, 2020
Kewaunee Scientific Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 0-5286 | 38-0715562 |
|---|---|---|
| (State or other jurisdictionof incorporation) | (CommissionFile Number) | (I.R.S. EmployerIdentification No.) |
| 2700 West Front Street<br><br><br>Statesville, North Carolina | 28677 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 704-873-7202
N/A
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchangeon whichregistered |
|---|---|---|
| Common Stock, $2.50 par value | KEQU | NASDAQ Global Market |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17<br>CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On March 3, 2020, Kewaunee Scientific Corporation issued a press release announcing its financial results for the third quarter, ended January 31, 2020, of fiscal year 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(d) Exhibits:
| Exhibit No. | |
|---|---|
| 99.1 | Press Release of Kewaunee Scientific Corporation dated March 3, 2020. |
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| (Registrant) | |
|---|---|
| Kewaunee Scientific Corporation | |
| Date: March 3, 2020 | /s/ Donald T. Gardner III |
| Donald T. Gardner III | |
| Vice President, Finance and<br> <br>Chief Financial<br>Officer |
EX-99.1
Exhibit 99.1
Kewaunee Scientific Reports Results for Third Quarter
| Exchange: | NASDAQ (KEQU) | Contact: | Donald T. Gardner III<br> <br>(704) 871-3274 |
|---|
STATESVILLE, N.C. March 3, 2020 – PRNewswire / Kewaunee Scientific Corporation (NASDAQ: KEQU) today reported results for its third quarter of fiscal year 2020, ended January 31, 2020.
Sales for the quarter were $34,225,000, a 5.7% increase from sales of $32,372,000 in the prior year third quarter. Domestic sales for the quarter were $26,699,000, up 5.9% from sales of $25,217,000 in the third quarter of last year. International sales for the quarter were $7,526,000, up 5.2% from sales of $7,155,000 in the third quarter last year. The increase in Domestic sales was a result of increased activity in the Company’s dealer and distribution sales channels. International sales increased year-over-year as a result of continued deliveries of a large order in the Middle East market.
Pre-tax loss for the quarter was $2,251,000 compared to a profit of $35,000 for the prior year period. Profitability was negatively impacted during the quarter by a restructuring that was initiated and substantially completed within the quarter, higher operating costs due to equipment down-time and a lighter manufacturing load in the quarter. Profitability was also negatively impacted by a strategic order in the Middle East that the Company aggressively secured over two years ago at lower than normal margins. The Company also elected to close its China operations, resulting in a one-time charge in the quarter for exiting the Chinese market.
Net earnings for the third quarter were a loss of $1,918,000, or $0.70 per diluted share, as compared to a loss of $22,000, or $0.01 per diluted share, for the third quarter ended January 31, 2019.
The Company’s order backlog was $93 million at January 31, 2020, as compared to $101 million at April 30, 2019 and $96 million at January 31, 2019. The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects.
Total cash on hand was $6.1 million at the end of the quarter, as compared to $11.4 million at the end of the third quarter last year. Working capital was $27.7 million, as compared to $36.1 million at the end of the third quarter last year. Short-term debt and interest rate swaps were $4.0 million at the end of the quarter, as compared to $5.1 million at the end of the third quarter last year. There was no long-term debt at January 31, 2020 compared to $1,556,000 at the end of the third quarter last year. The debt-to-equity ratio at January 31, 2020 was .35-to-1, as compared to .14-to-1 at January 31, 2019.
CORPORATE OFFICES ● P. O. BOX 1842, STATESVILLE, NORTH CAROLINA 28687-1842 ● 2700 WEST FRONT STREET, STATESVILLE, NORTH CAROLINA 28677-2927
PHONE 704-873-7202 ● FAX 704-873-1275
“Looking forward, we continue to focus on improving profitability through both short and long term actions. These activities included the restructuring plans initiated and substantially completed during this quarter as well as a multi-year plan to invest in our manufacturing capabilities and information technology platform to improve our competitiveness.” said Thomas D. Hull III, Kewaunee’s President and Chief Executive Officer. “For purposes of our fourth quarter, we are working to ensure that the Company’s manufacturing volume is sufficient to operate our facilities efficiently, which in turn will drive an improvement in profitability.”
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 containsstatements 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-lookingstatements. 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 noobligation, 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
Condensed Consolidated Statements of Operations (Unaudited)
($ and shares in thousands, except per share amounts)
| Three months ended<br>January 31, | Nine months ended<br>January 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Net sales | $ | 34,225 | $ | 32,372 | $ | 113,283 | $ | 111,802 | ||||
| Cost of products sold | 28,947 | 27,142 | 94,743 | 91,325 | ||||||||
| Gross profit | 5,278 | 5,230 | 18,540 | 20,477 | ||||||||
| Operating expenses | 7,350 | 5,232 | 19,875 | 16,810 | ||||||||
| Operating earnings (loss) | (2,072 | ) | (2 | ) | (1,335 | ) | 3,667 | |||||
| Other income | (29 | ) | 113 | 43 | 279 | |||||||
| Interest expense, net | (150 | ) | (76 | ) | (452 | ) | (258 | ) | ||||
| Earnings (loss) before income taxes | (2,251 | ) | 35 | (1,744 | ) | 3,688 | ||||||
| Income tax expense | (350 | ) | 20 | 1,822 | 803 | |||||||
| Net earnings (loss) | (1,901 | ) | 15 | (3,566 | ) | 2,885 | ||||||
| Less: net earnings attributable to the noncontrolling interest | 17 | 37 | 59 | 86 | ||||||||
| Net earnings (loss) attributable to Kewaunee Scientific Corporation | $ | (1,918 | ) | $ | (22 | ) | $ | (3,625 | ) | $ | 2,799 | |
| Net earnings (loss) per share attributable to | ||||||||||||
| Kewaunee Scientific Corporation stockholders | ||||||||||||
| Basic | ($ | 0.70 | ) | ($ | 0.01 | ) | $ | (1.32 | ) | $ | 1.02 | |
| Diluted | ($ | 0.70 | ) | ($ | 0.01 | ) | $ | (1.32 | ) | $ | 1.00 | |
| Weighted average number of common shares outstanding | ||||||||||||
| Basic | 2,750 | 2,744 | 2,750 | 2,741 | ||||||||
| Diluted | 2,750 | 2,794 | 2,750 | 2,799 |
Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ in thousands)
| January 31,<br>2020 | April 30,<br>2019 | |||
|---|---|---|---|---|
| Assets | (Unaudited) | |||
| Cash and cash equivalents | $ | 3,554 | $ | 10,647 |
| Restricted cash | 2,509 | 509 | ||
| Receivables, less allowances | 27,409 | 33,259 | ||
| Inventories | 15,246 | 17,206 | ||
| Prepaid expenses and other current assets | 4,503 | 3,736 | ||
| Total Current Assets | 53,221 | 65,357 | ||
| Net property, plant and equipment | 15,905 | 16,462 | ||
| Right of use assets | 11,130 | — | ||
| Other assets | 4,105 | 5,404 | ||
| Total Assets | $ | 84,361 | $ | 87,223 |
| Liabilities and Stockholders’ Equity | ||||
| Short-term borrowings and interest rate swaps | $ | 4,017 | $ | 9,513 |
| Current portion of long-term operating lease obligations | 2,088 | — | ||
| Current portion of long-term debt and financing lease obligations | 19 | 1,184 | ||
| Accounts payable | 11,661 | 15,190 | ||
| Other current liabilities | 7,711 | 6,846 | ||
| Total Current Liabilities | 25,496 | 32,733 | ||
| Long-term portion of operating lease obligations | 8,887 | — | ||
| Other non-current liabilities | 7,029 | 6,787 | ||
| Total Liabilities | 41,412 | 39,520 | ||
| Kewaunee Scientific Corporation equity | 42,649 | 47,100 | ||
| Noncontrolling interest | 300 | 603 | ||
| Total Stockholders’ Equity | 42,949 | 47,703 | ||
| Total Liabilities and Stockholders’ Equity | $ | 84,361 | $ | 87,223 |