EX-99.1 3 dex991.htm KEWAUNEE SCIENTIFIC REPORTS RESULTS FOR FIRST QUARTER

Kewaunee Scientific Reports Results For First Quarter

Exhibit 99.1

Kewaunee Scientific Reports Results For First Quarter

Exchange: NASDAQ (KEQU)		Contact:     D. Michael Parker
		704/871-3290

STATESVILLE, NC, August 25, 2003—Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported results for its first quarter ended July 31, 2003.

Sales for the quarter were $24,213,000, an increase of 24.8% from sales in the same quarter last year. Sales of laboratory products increased 25.2% to $22,601,000, while sales of technical products increased 18.8% to $1,612,000. The sales increase reflects continued strong demand for the Company’s products in its domestic markets, as well as increased international sales. The order backlog was $50.7 million at July 31, 2003, down slightly from $51.5 million at April 30, 2003. The order backlog at July 31, 2002 was $33.1 million.

Net earnings for the quarter were $461,000, or $0.19 per diluted share, as compared to net earnings of $324,000, or $0.13 per diluted share, in the same quarter last year. Earnings for the quarter benefited from the higher sales volume of laboratory products and lower costs associated with the Company’s technical furniture business, which returned to profitability during the quarter. The resolution during the quarter of a disputed claim for laboratory furniture sold by the Company several years ago improved net earnings by $189,000, or $.08 per diluted share.

Earnings for the quarter were severely impacted by manufacturing problems in the Company’s metal furniture operation. A significant number of orders received for the quarter included new products, resulting in start-up costs and manufacturing inefficiencies often associated with the manufacture of new products. Appropriate machinery was not in place to handle the large volume of orders for new products; thus the Company was required to produce component parts using less efficient methods and purchase additional parts from outside vendors, both at much higher costs. Automated equipment to efficiently manufacture the parts for these new products was ordered in May and is expected to become operational in early October. In comparison to the same period last year, the gross profit margin was also affected by a significant increase during the quarter in installation sales revenue, which traditionally has a lower profit margin than product sales.

“We were pleased with the increase in sales volume for the first quarter, but very disappointed with our level of profitability,” said William A. Shumaker, President and Chief Executive Officer of Kewaunee. “Strong sales increases were experienced for all of our major product lines, as well as our international business. We were also pleased to see a solid increase in sales of our technical products and the return to profitability of this business. We have taken immediate actions to correct the manufacturing problems in our metal operation, including a change in manufacturing management. These actions are significantly reducing our operating costs. Further improvements will be realized once our new automated equipment becomes operational. These improvements, along with the volume of orders in our backlog scheduled for delivery in the second quarter, are expected to provide improved operating results for the quarter.”

Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of scientific and technical furniture. The Company’s corporate headquarters and

manufacturing facilities are located in Statesville, North Carolina. 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.

Condensed Consolidated Statements of Operations [unaudited]

(in thousands, except per share data)

		Three Months Ended
		July 31, 2003				July 31, 2002
Net sales		$	24,213			$	19,405
Cost of products sold			20,610				15,964
Gross profit			3,603				3,441
Operating expenses			3,001				2,898
Operating earnings			602				543
Interest expense			(78	)			(42	)
Other income, net			196	*			1
Earnings before income taxes			720				502
Income tax expense			259				178
Net earnings		$	461			$	324
Net earnings per share
Basic		$	0.19			$	0.13
Diluted		$	0.19			$	0.13
Weighted average number of common shares outstanding (in thousands)
Basic			2,485				2,470
Diluted			2,489				2,484

* Includes a $295,000 net gain associated with the resolution during the quarter of an old disputed claim for laboratory furniture.

Condensed Consolidated Balance Sheets

(in thousands)

		July 31, 2003			April 30, 2003
		[unaudited]
Assets
Cash and cash equivalents		$	400		$	520
Receivables, less allowances			22,814			16,138
Inventories			5,490			5,958
Prepaid expenses and other current assets			2,478			2,370
Total current assets			31,182			24,986
Net property, plant and equipment			12,367			11,791
Other assets			6,648			6,877
Total Assets		$	50,197		$	43,654
Liabilities and Stockholders’ Equity
Short-term borrowings		$	6,919		$	1,416
Current portion of long-term debt			1,117			681
Accounts payable			6,787			8,338
Other current liabilities			4,093			2,893
Total current liabilities			18,916			13,328
Long-term debt			1,770			1,249
Other non-current liabilities			3,245			3,139
Total stockholders’ equity			26,266			25,938
Total Liabilities and Stockholders’ Equity		$	50,197		$	43,654