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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 10-Q
_________________________

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2021
or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________
Commission file number 0-5286
_________________________
KEWAUNEE SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
_________________________

Delaware |  | 38-0715562
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
2700 West Front Street Statesville, North Carolina |  | 28677-2927
(Address of principal executive offices) |  | (Zip Code)

Registrant’s telephone number, including area code: (704) 873-7202
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Exchange on which registered
Common Stock, $2.50 par value KEQU NASDAQ Global Market
_________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer |  | ☐ |  | Accelerated filer |  | ☐
Non-accelerated filer |  | ☒ |  | Smaller reporting company |  | ☒
|  |  |  | 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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of March 8, 2021, the registrant had outstanding 2,762,797 shares of Common Stock.

KEWAUNEE SCIENTIFIC CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2021

|  | Page Number
PART I. FINANCIAL INFORMATION |
Item 1. | Condensed Consolidated Financial Statements |
| Condensed Consolidated Statements of Operations (unaudited) – Three and Nine Months Ended January 31, 202 1 and 20 20 | 1
| Condensed Consolidated Statements of Comprehensive Income and (Loss) (unaudited) – Three and Nine Months Ended January 31, 202 1 and 20 20 | 2
| Condensed Consolidated Statements of Stockholders’ Equity (unaudited) – Three and Nine Months Ended Janu ary 31, 202 1 and 20 20 | 3
| Condensed Consolidated Balance Sheets – January 31, 202 1 (unaudited) and April 30, 2020 | 5
| Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended January 31, 202 1 and 20 20 | 6
| Notes to Condensed Consolidated Financial Statements (unaudited) | 7
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16
Item 4. | Controls and Procedures | 16
PART II. OTHER INFORMATION |
Item 6. | Exhibits | 17
SIGNATURES | 18

i

Part 1. Financial Information
Item 1. Financial Statements
Kewaunee Scientific Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
($ and shares in thousands, except per share amounts)

| Three Months Ended January 31, |  | Nine Months Ended January 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net sales | $ | 33,339 |  |  | $ | 34,225 |  |  | $ | 108,762 |  |  | $ | 113,283 |
Cost of products sold | 27,685 |  |  | 28,947 |  |  | 90,832 |  |  | 94,743 |
Gross profit | 5,654 |  |  | 5,278 |  |  | 17,930 |  |  | 18,540 |
Operating expenses | 6,030 |  |  | 7,350 |  |  | 18,593 |  |  | 19,875 |
Operating loss | (376) |  |  | (2,072) |  |  | (663) |  |  | (1,335) |
Pension expense | (288) |  |  | (113) |  |  | (865) |  |  | (339) |
Other income | 51 |  |  | 84 |  |  | 171 |  |  | 382 |
Interest expense | (105) |  |  | (150) |  |  | (310) |  |  | (452) |
Loss before income taxes | (718) |  |  | (2,251) |  |  | (1,667) |  |  | (1,744) |
Income tax expense (benefit) | (813) |  |  | (350) |  |  | (989) |  |  | 1,822 |
Net earnings (loss) | 95 |  |  | (1,901) |  |  | (678) |  |  | (3,566) |
Less: Net earnings attributable to the noncontrolling interest | 14 |  |  | 17 |  |  | 19 |  |  | 59 |
Net earnings (loss) attributable to Kewaunee Scientific Corporation | $ | 81 |  |  | $ | (1,918) |  |  | $ | (697) |  |  | $ | (3,625) |
Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders |  |  |  |  |  |  |
Basic | $ | 0.03 |  |  | $ | (0.70) |  |  | $ | (0.25) |  |  | $ | (1.32) |
Diluted | $ | 0.03 |  |  | $ | (0.70) |  |  | $ | (0.25) |  |  | $ | (1.32) |
Weighted average number of common shares outstanding |  |  |  |  |  |  |
Basic | 2,762 |  |  | 2,750 |  |  | 2,759 |  |  | 2,750 |
Diluted | 2,789 |  |  | 2,750 |  |  | 2,759 |  |  | 2,750 |

See accompanying notes to condensed consolidated financial statements.
1

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Comprehensive Income and (Loss)
(Unaudited)
($ in thousands)

| Three Months Ended January 31, |  | Nine Months Ended January 31,
| 2021 |  | 2020 |  | 2021 |  | 2020
Net earnings (loss) | $ | 95 |  |  | $ | (1,901) |  |  | $ | (678) |  |  | $ | (3,566) |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Foreign currency translation adjustments | 31 |  |  | (26) |  |  | (17) |  |  | (9) |
Change in fair value of cash flow hedge | — |  |  | — |  |  | — |  |  | 1 |
Other comprehensive income (loss) | 31 |  |  | (26) |  |  | (17) |  |  | (8) |
Comprehensive income (loss), net of tax | 126 |  |  | (1,927) |  |  | (695) |  |  | (3,574) |
Less: Comprehensive income attributable to the noncontrolling interest | 14 |  |  | 17 |  |  | 19 |  |  | 59 |
Comprehensive income (loss) attributable to Kewaunee Scientific Corporation | $ | 112 |  |  | $ | (1,944) |  |  | $ | (714) |  |  | $ | (3,633) |

See accompanying notes to condensed consolidated financial statements.
2

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
($ in thousands, except per share amounts)

| Common Stock |  | Additional Paid-in Capital |  | Treasury Stock |  | Retained Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total Kewaunee Scientific Corporation Stockholders’ Equity
Balance at April 30, 2020 | $ | 6,885 |  |  | $ | 3,360 |  |  | $ | (53) |  |  | $ | 37,821 |  |  | $ | (9,598) |  |  | $ | 38,415 |
Net loss attributable to Kewaunee Scientific Corporation | — |  |  | — |  |  | — |  |  | (598) |  |  | — |  |  | (598) |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (13) |  |  | (13) |
Stock based compensation | 20 |  |  | 78 |  |  | — |  |  | — |  |  | — |  |  | 98 |
Balance at July 31, 2020 | $ | 6,905 |  |  | $ | 3,438 |  |  | $ | (53) |  |  | $ | 37,223 |  |  | $ | (9,611) |  |  | $ | 37,902 |
Net loss attributable to Kewaunee Scientific Corporation | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (180) |  |  | $ | — |  |  | $ | (180) |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | (35) |  |  | (35) |
Stock based compensation | — |  |  | 143 |  |  | — |  |  | — |  |  | — |  |  | 143 |
Balance at October 31, 2020 | $ | 6,905 |  |  | $ | 3,581 |  |  | $ | (53) |  |  | $ | 37,043 |  |  | $ | (9,646) |  |  | $ | 37,830 |
Net earnings attributable to Kewaunee Scientific Corporation | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 81 |  |  | $ | — |  |  | $ | 81 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 31 |  |  | 31 |
Stock based compensation | 10 |  |  | 103 |  |  | — |  |  | — |  |  | — |  |  | 113 |
Balance at January 31, 2021 | $ | 6,915 |  |  | $ | 3,684 |  |  | $ | (53) |  |  | $ | 37,124 |  |  | $ | (9,615) |  |  | $ | 38,055 |

See accompanying notes to condensed consolidated financial statements.
3

| Common Stock |  | Additional Paid-in Capital |  | Treasury Stock |  | Retained Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total Kewaunee Scientific Corporation Stockholders’ Equity
Balance at April 30, 2019 | $ | 6,875 |  |  | $ | 3,133 |  |  | $ | (53) |  |  | $ | 43,552 |  |  | $ | (6,407) |  |  | $ | 47,100 |
Net earnings attributable to Kewaunee Scientific Corporation | — |  |  | — |  |  | — |  |  | 471 |  |  | — |  |  | 471 |
Other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | 195 |  |  | 195 |
Cash dividends paid, $0.19 per share | — |  |  | — |  |  | — |  |  | (522) |  |  | — |  |  | (522) |
Stock based compensation | 9 |  |  | 51 |  |  | — |  |  | — |  |  | — |  |  | 60 |
Balance at July 31, 2019 | $ | 6,884 |  |  | $ | 3,184 |  |  | $ | (53) |  |  | $ | 43,501 |  |  | $ | (6,212) |  |  | $ | 47,304 |
Net loss attributable to Kewaunee Scientific Corporation | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (2,178) |  |  | $ | — |  |  | $ | (2,178) |
Other comprehensive loss | — |  |  | — |  |  | — |  |  | — |  |  | $ | (177) |  |  | (177) |
Cash dividends paid, $0.19 per share | — |  |  | — |  |  | — |  |  | (523) |  |  | — |  |  | (523) |
Stock based compensation | — |  |  | 42 |  |  | — |  |  | — |  |  | — |  |  | 42 |
Balance at October 31, 2019 | $ | 6,884 |  |  | $ | 3,226 |  |  | $ | (53) |  |  | $ | 40,800 |  |  | $ | (6,389) |  |  | $ | 44,468 |
Net loss attributable to Kewaunee Scientific Corporation | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (1,918) |  |  | $ | — |  |  | $ | (1,918) |
Other comprehensive income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | $ | (26) |  |  | (26) |
Stock options exercised, 2,300 shares | 1 |  |  | (1) |  |  | — |  |  | — |  |  | — |  |  | — |
Stock based compensation | — |  |  | 125 |  |  | — |  |  | — |  |  | — |  |  | 125 |
Balance at January 31, 2020 | $ | 6,885 |  |  | $ | 3,350 |  |  | $ | (53) |  |  | $ | 38,882 |  |  | $ | (6,415) |  |  | $ | 42,649 |

See accompanying notes to condensed consolidated financial statements.
4

Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ and shares in thousands, except per share amounts)

| January 31, 2021 |  | April 30, 2020
| (Unaudited) |  |
Assets |  |  |
Current Assets: |  |  |
Cash and cash equivalents | $ | 5,563 |  |  | $ | 4,365 |
Restricted cash | 540 |  |  | 850 |
Receivables, less allowance; $669; $606, on each respective date | 30,091 |  |  | 28,062 |
Inventories | 15,615 |  |  | 15,330 |
Income tax receivable | 4,205 |  |  | 2,717 |
Prepaid expenses and other current assets | 4,109 |  |  | 2,907 |
Total Current Assets | 60,123 |  |  | 54,231 |
Property, plant and equipment, at cost | 59,640 |  |  | 57,859 |
Accumulated depreciation | (43,429) |  |  | (41,587) |
Net Property, Plant and Equipment | 16,211 |  |  | 16,272 |
Right of use assets | 9,715 |  |  | 9,312 |
Deferred income taxes | — |  |  | 336 |
Other assets | 3,560 |  |  | 3,778 |
Total Assets | $ | 89,609 |  |  | $ | 83,929 |
Liabilities and Stockholders’ Equity |  |  |
Current Liabilities: |  |  |
Short-term borrowings | $ | 4,493 |  |  | $ | 4,719 |
Current portion of capital lease liability | 21 |  |  | 19 |
Current portion of operating lease liabilities | 1,352 |  |  | 1,282 |
Accounts payable | 15,996 |  |  | 13,114 |
Employee compensation and amounts withheld | 4,546 |  |  | 4,159 |
Deferred revenue | 3,642 |  |  | 2,508 |
Other accrued expenses | 1,563 |  |  | 1,259 |
Total Current Liabilities | 31,613 |  |  | 27,060 |
Long-term portion of capital lease liability | 97 |  |  | 113 |
Long-term portion of operating lease liabilities | 8,276 |  |  | 7,780 |
Accrued pension and deferred compensation costs | 10,298 |  |  | 9,303 |
Deferred income taxes | 225 |  |  | 401 |
Other non-current liabilities | 838 |  |  | 569 |
Total Liabilities | 51,347 |  |  | 45,226 |
Commitments and Contingencies |  |  |
Stockholders’ Equity: |  |  |
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,766 shares; 2,754 shares; – Outstanding – 2,763 shares; 2,751 shares, on each respective date | 6,915 |  |  | 6,885 |
Additional paid-in-capital | 3,684 |  |  | 3,360 |
Retained earnings | 37,124 |  |  | 37,821 |
Accumulated other comprehensive loss | (9,615) |  |  | (9,598) |
Common stock in treasury, at cost, 3 shares, on each date | (53) |  |  | (53) |
Total Kewaunee Scientific Corporation Stockholders’ Equity | 38,055 |  |  | 38,415 |
Noncontrolling interest | 207 |  |  | 288 |
Total Stockholders’ Equity | 38,262 |  |  | 38,703 |
Total Liabilities and Stockholders’ Equity | $ | 89,609 |  |  | $ | 83,929 |

See accompanying notes to condensed consolidated financial statements.
5

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in thousands)

| Nine Months Ended January 31,
| 2021 |  | 2020
Cash flows from operating activities: |  |  |
Net loss | $ | (678) |  |  | $ | (3,566) |
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
Depreciation | 2,005 |  |  | 1,927 |
Bad debt provision | 60 |  |  | 321 |
Stock based compensation expense | 385 |  |  | 241 |
Deferred income taxes | 159 |  |  | 1,056 |
Change in assets and liabilities: |  |  |
Receivables | (2,089) |  |  | 5,530 |
Inventories | (285) |  |  | 1,959 |
Income tax receivable | (1,488) |  |  | — |
Accounts payable and other accrued expenses | 3,843 |  |  | (2,512) |
Deferred revenue | 1,134 |  |  | 201 |
Other, net | 61 |  |  | (546) |
Net cash provided by operating activities | 3,107 |  |  | 4,611 |
Cash flows from investing activities: |  |  |
Capital expenditures | (1,944) |  |  | (1,371) |
Net cash used in investing activities | (1,944) |  |  | (1,371) |
Cash flows from financing activities: |  |  |
Dividends paid | — |  |  | (1,045) |
Dividends paid to noncontrolling interest in subsidiaries | (108) |  |  | (324) |
Proceeds from short-term borrowings | 49,298 |  |  | 44,958 |
Repayments on short-term borrowings | (49,524) |  |  | (50,454) |
Payments on long-term debt and lease obligations | (14) |  |  | (1,277) |
Net proceeds from exercise of stock options | (31) |  |  | (14) |
Net cash used in financing activities | (379) |  |  | (8,156) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 104 |  |  | (177) |
Increase (decrease) in cash, cash equivalents and restricted cash | 888 |  |  | (5,093) |
Cash, cash equivalents and restricted cash, beginning of period | 5,215 |  |  | 11,156 |
Cash, cash equivalents and restricted cash, end of period | $ | 6,103 |  |  | $ | 6,063 |

See accompanying notes to condensed consolidated financial statements.
6

Kewaunee Scientific Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
A. Financial Information
The unaudited interim condensed consolidated financial statements of Kewaunee Scientific Corporation (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “Commission”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These interim condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements and should be read in conjunction with the consolidated financial statements and notes included in the Company’s 2020 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. The condensed consolidated balance sheet as of April 30, 2020 included in this interim period filing has been derived from the audited financial statements at that date, but does not include all of the information and related notes required by generally accepted accounting principles ("GAAP") for complete financial statements.
The preparation of the interim condensed consolidated financial statements requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.
B. Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. During the periods ended January 31, 2021 and April 30, 2020, the Company had cash deposits in excess of FDIC insured limits. The Company has not experienced any losses from such deposits. Restricted cash includes bank deposits of subsidiaries used for performance guarantees against customer orders.
The Company includes restricted cash along with the cash balance for presentation in the condensed consolidated statements of cash flows. The reconciliation between the condensed consolidated balance sheet and the condensed consolidated statement of cash flows is as follows:

|  | January 31, 2021 |  | April 30, 2020
Cash and cash equivalents |  | $ | 5,563 |  |  | $ | 4,365 |
Restricted cash |  | 540 |  |  | 850 |
Total cash, cash equivalents and restricted cash |  | $ | 6,103 |  |  | $ | 5,215 |

C. Revenue Recognition
The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. The majority of the Company’s revenues are recognized over time as the customer receives control as the Company performs work under a contract. However, a portion of the Company’s revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract.
Disaggregated Revenue
A summary of net sales transferred to customers over time and at a point in time for the periods ended January 31, 2021 and January 31, 2020 is as follows (in thousands):

| Three Months Ended January 31, 2021 |  | Three Months Ended January 31, 2020
| Domestic |  | International |  | Total |  | Domestic |  | International |  | Total
Over Time | $ | 24,198 |  |  | $ | 8,273 |  |  | $ | 32,471 |  |  | $ | 25,107 |  |  | $ | 7,526 |  |  | $ | 32,633 |
Point in Time | 868 |  |  | — |  |  | 868 |  |  | 1,592 |  |  | — |  |  | 1,592 |
| $ | 25,066 |  |  | $ | 8,273 |  |  | $ | 33,339 |  |  | $ | 26,699 |  |  | $ | 7,526 |  |  | $ | 34,225 |

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| Nine Months Ended January 31, 2021 |  | Nine Months Ended January 31, 2020
| Domestic |  | International |  | Total |  | Domestic |  | International |  | Total
Over Time | $ | 81,206 |  |  | $ | 24,866 |  |  | $ | 106,072 |  |  | $ | 83,292 |  |  | $ | 25,713 |  |  | $ | 109,005 |
Point in Time | 2,690 |  |  | — |  |  | 2,690 |  |  | 4,278 |  |  | — |  |  | 4,278 |
| $ | 83,896 |  |  | $ | 24,866 |  |  | $ | 108,762 |  |  | $ | 87,570 |  |  | $ | 25,713 |  |  | $ | 113,283 |

Contract Balances
The closing and opening balances of contract assets arising from contracts with customers which were recorded as unbilled receivables were $8,539,000 at January 31, 2021 and $6,131,000 at April 30, 2020. The closing and opening balances of contract liabilities arising from contracts with customers were $3,642,000 at January 31, 2021 and $2,508,000 at April 30, 2020. The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, and deferred revenue which are disclosed in the condensed consolidated balance sheets and in the notes to the condensed consolidated financial statements. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Unbilled receivables represent amounts earned which have not yet been billed in accordance with contractually stated billing terms and are included in receivables on the condensed consolidated balance sheets. Receivables are recorded when the right to consideration becomes unconditional and the Company has a right to invoice the customer. Deferred revenue relates to payments received in advance of performance under the contract. Deferred revenue is recognized as revenue as (or when) the Company performs under the contract. Approximately 100% of the contract liability balances at April 30, 2020 and January 31, 2021 are expected to be recognized as revenue during the respective succeeding 12 months.
D. Inventories
The Company measures inventory using the first-in, first-out ("FIFO") method at the lower of cost or net realizable value. Inventories consisted of the following (in thousands):

| January 31, 2021 |  | April 30, 2020
Finished products | $ | 2,712 |  |  | $ | 2,455 |
Work in process | 1,826 |  |  | 1,921 |
Raw materials | 11,077 |  |  | 10,954 |
| $ | 15,615 |  |  | $ | 15,330 |

The Company’s International subsidiaries’ inventories were $1,915,000 at January 31, 2021 and $2,136,000 at April 30, 2020 and are included in the above tables.
E. Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash and equivalents, mutual funds, cash surrender value of life insurance policies, term loans and short-term borrowings. The carrying value of these assets and liabilities approximates their fair value. The following tables summarize the Company’s fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 31, 2021 and April 30, 2020 (in thousands):

|  | January 31, 2021
Financial Assets |  | Level 1 |  | Level 2 |  | Total
Trading securities held in non-qualified compensation plans (1) |  | $ | 2,547 |  |  | $ | — |  |  | $ | 2,547 |
Cash surrender value of life insurance policies (1) |  | — |  |  | 87 |  |  | 87 |
Total |  | $ | 2,547 |  |  | $ | 87 |  |  | $ | 2,634 |
Financial Liabilities |  |  |  |  |  |
Non-qualified compensation plans (2) |  | $ | — |  |  | $ | 3,059 |  |  | $ | 3,059 |
Total |  | $ | — |  |  | $ | 3,059 |  |  | $ | 3,059 |

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|  | April 30, 2020
Financial Assets |  | Level 1 |  | Level 2 |  | Total
Trading securities held in non-qualified compensation plans (1) |  | $ | 2,485 |  |  | $ | — |  |  | $ | 2,485 |
Cash surrender value of life insurance policies (1) |  | — |  |  | 87 |  |  | 87 |
Total |  | $ | 2,485 |  |  | $ | 87 |  |  | $ | 2,572 |
Financial Liabilities |  |  |  |  |  |
Non-qualified compensation plans (2) |  | $ | — |  |  | $ | 2,899 |  |  | $ | 2,899 |
Total |  | $ | — |  |  | $ | 2,899 |  |  | $ | 2,899 |

(1)The Company maintains two non-qualified compensation plans which include investment assets in a rabbi trust. These assets consist of marketable securities, which are valued using quoted market prices multiplied by the number of shares owned, and life insurance policies, which are valued at their cash surrender value.
(2)Plan liabilities are equal to the individual participants’ account balances and other earned retirement benefits.
F. Derivative Financial Instruments
The Company records derivatives on the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The nature of the Company’s business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company does not enter into derivative instruments for speculative purposes. In May 2013, the Company entered into certain interest rate swap arrangements to mitigate future interest rate risk associated with its long-term debt and designated these as cash flow hedges. These interest rates swaps were terminated in conjunction with the payoff of the outstanding long-term debt in September 2019.
G. Long-term Debt and Other Credit Arrangements
At January 31, 2021, advances of $4.5 million were outstanding under the Company’s revolving credit facility, compared to advances of $4.7 million outstanding as of April 30, 2020. The Company had standby letters of credit outstanding of $512,000 at January 31, 2021, unchanged from April 30, 2020. Amounts available under the revolving credit facility were $8.6 million and $8.7 million at January 31, 2021 and April 30, 2020, respectively.
At April 30, 2020, the Company was not in compliance with all of the financial covenants under the revolving credit facility. On July 20, 2020, the Company entered into an amendment which effected changes in certain financial covenants and included a waiver of the non-compliance. On January 28, 2021, the Company entered into another amendment which effected changes (i) extending the maturity date under the Credit Agreement and Revolving Note from February 1, 2021 to May 3, 2021; (ii) establishing a minimum EBITDA covenant for the fiscal quarter ending April 30, 2021 of $1,000,000, determined for the four-quarter period then ending; and (iii) revising the covenant regarding delivery of financial projections to the Bank to, among other things, provide projections for the next succeeding fiscal year. These amendments did not change the amount of availability under the revolving credit facility. At January 31, 2021, the Company was in compliance with all the financial covenants under its revolving credit facility.
H. Leases
In accordance with ASC 842, "ASU No. 2016-02 Leases," the Company is required to recognize lease assets and lease liabilities reflecting the rights and obligations created by leased assets previously classified as operating leases. The Company has operating type leases for real estate and equipment in both the U.S. and internationally and a financing lease for a truck in the U.S. At January 31, 2021 and April 30, 2020, right-of-use assets totaled $9,715,000 and $9,312,000, respectively. Operating cash paid to settle lease liabilities was $1,299,000 and $1,154,000 for the nine months ended January 31, 2021 and January 31, 2020, respectively. The Company’s leases have remaining lease terms of up to 10 years. In addition, some of the leases may include options to extend the leases for up to 5 years or options to terminate the leases within 1 year. Operating lease expenses were $718,000 and $645,000 for the three months ended January 31, 2021 and 2020, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $267,000 and $215,000, respectively. Operating lease expenses were $2,032,000 and $1,770,000 for the nine months ended January 31, 2021 and 2020, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $733,000 and $673,000, respectively.
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At January 31, 2021, the weighted average remaining lease term for the capitalized operating leases was 6.1 years and the weighted average discount rate was 4.1%. For the financing lease, the remaining lease term was 4.6 years and the discount rate was 10.0%. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of those lease payments. The Company uses the implicit rate when readily determinable.
Future minimum lease payments under non-cancelable leases as of January 31, 2021 were as follows:

|  | Operating |  | Financing
Remainder of fiscal 2021 |  | $ | 492 |  |  | $ | 8 |
2022 |  | 2,023 |  |  | 32 |
2023 |  | 1,839 |  |  | 32 |
2024 |  | 1,480 |  |  | 32 |
2025 |  | 1,436 |  |  | 32 |
Thereafter |  | 4,101 |  |  | 12 |
Total Minimum Lease Payments |  | $ | 11,371 |  |  | $ | 148 |
Imputed Interest |  | (1,742) |  |  | (30) |
Total |  | $ | 9,629 |  |  | $ | 118 |

I. Earnings Per Share
Basic earnings per share is based on the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the assumed exercise of outstanding options and the conversion of restricted stock units (“RSUs”) under the Company’s various stock compensation plans, except when RSUs and options have an antidilutive effect. There were 83,910 and 95,906 antidilutive RSUs and options outstanding at January 31, 2021 and January 31, 2020, respectively. The following is a reconciliation of basic to diluted weighted average common shares outstanding (in thousands):

| Three Months Ended January 31, |  | Nine Months Ended January 31,
| 2021 | 2020 |  | 2021 | 2020
Basic | 2,762 |  |  | 2,750 |  |  |  | 2,759 |  |  | 2,750 |
Dilutive effect of stock options and RSUs | 27 |  |  | — |  |  |  | — |  |  | — |
Weighted average common shares outstanding - diluted | 2,789 |  |  | 2,750 |  |  |  | 2,759 |  |  | 2,750 |

J. Stock Options and Share-based Compensation
Compensation costs related to stock options and other stock awards granted by the Company are charged against operating expenses during their vesting period, under ASC 718, "Compensation-Stock Compensation."
In May 2020, the Company granted 12,045 RSUs under the 2017 Omnibus Incentive Plan ("2017 Plan"). These RSUs include a
service component that vests over a one-year period. The Company granted 83,816 RSUs under the 2017 Omnibus Incentive Plan in June 2020. These RSUs include both a service and a performance component, vesting over a three-year period. The recognized expense is based upon the vesting period for service criteria and estimated attainment of the performance criteria at the end of the three-year period, based on the ratio of cumulative days of service to total days over the three-year period. The Company recorded share-based compensation expense during the three and nine months ended January 31, 2021 of $129,000 and $344,000, respectively, with the remaining estimated share-based compensation expense of $805,000 to be recorded over the remaining vesting periods. The Company recorded share-based compensation expense during the three and nine
months ended January 31, 2020 of $126,000 and $208,000, respectively. Directors' fees paid with shares of common stock in lieu of cash in accordance with Director compensation guidelines were $41,000 for each of the nine month periods ended January 31, 2021 and January 31, 2020 and were included in the share-based compensation on the condensed consolidated statements of cash flows.
K. Income Taxes
Income tax benefits of $813,000 and $350,000 were recorded for the three months ended January 31, 2021 and 2020, respectively. An income tax benefit of $989,000 and an income tax expense of $1,822,000 were recorded for the nine months ended January 31, 2021 and 2020, respectively. The effective tax rates were 113.2% and 15.5% for the three months ended
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January 31, 2021 and 2020, respectively. The effective tax rates were 59.3% and 104.5% for the nine months ended January 31, 2021 and 2020, respectively. The change in the effective tax rate for the three and nine-month periods is primarily due to the revocation of the Company's indefinite reinvestment of foreign unremitted earnings position (discussed below) and the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21%. In addition, the change in the effective tax rates for the three and nine months ended January 31, 2021 was impacted by the recording of a Domestic income tax benefit as a result of the Company's current Domestic net loss position. This loss is permitted to be carried back and used to offset Domestic taxable income incurred in previous tax filing periods as allowed by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The Company recorded income tax receivables of $4,205,000 and $2,717,000 as of January 31, 2021 and April 30, 2020, respectively, which includes Domestic income tax benefits attributable to the carryback claims for the applied Research and Development tax credit for the year ended April 30, 2018, the taxable losses generated during the year ended April 30, 2020 and the nine months ended January 31, 2021.
In August 2019, the Company revoked its indefinite reinvestment of foreign unremitted earnings position in compliance with ASC 740 "Income Taxes" and terminated its indefinite reinvestment of unremitted earnings assertion for the Singapore, China, and Kewaunee Labway India Pvt. Ltd. international subsidiaries. The Company recognized a tax withholding expense, for the dividends paid to the US and Singapore shareholders, imposed by the India Income Tax Department in accordance with international tax treaties between India and the U.S. and Singapore governments, at a rate of 10.0% and 15.0%, respectively. The Company recognized a withholding tax expense of $18,000 and $99,000 for the three and nine months ended January 31, 2021, respectively, related to the unremitted earnings of the subsidiaries listed above. The Company recognized a withholding tax expense of $50,000 and $2,214,000 for the three and nine months ended January 31, 2020 related to the unremitted earnings position of the subsidiaries listed above. The Company has a deferred tax liability of $647,000 and $785,000 for the withholding tax related to Kewaunee Labway India Pvt. Ltd. as of January 31, 2021 and April 30, 2020, respectively. The Company recorded all deferred tax assets and liabilities related to its outside basis differences in its foreign subsidiaries consistent with ASC 740.
In July 2020, the U.S. Department of the Treasury issued final tax regulations (proposed regulations were originally published in 2019) with respect to global intangible low-taxed income (''GILTI''.) Among other changes, these regulations now permit an election to exclude, from the GILTI calculation, items of income which are subject to a high effective foreign tax rate. The Company excluded certain items, as permitted by these final regulations, in the current fiscal year and reflected the benefit in the estimated annual effective tax rate.
L. Defined Benefit Pension Plans
The Company has non-contributory defined benefit pension plans covering substantially all domestic salaried and hourly employees. These plans were amended as of April 30, 2005; no further benefits have been, or will be, earned under the plans, subsequent to the amendment date, and no additional participants will be added to the plans. The Company contributed $30,000 to the plans during the three and nine months ended January 31, 2021. There were no Company contributions paid to the plans during the three and nine months ended January 31, 2020. The Company assumed an expected long-term rate of return of 7.75% for the periods ended January 31, 2021 and January 31, 2020. Pension expense consisted of the following (in thousands):

| Three Months Ended January 31, 2021 |  | Three Months Ended January 31, 2020
Service cost | $ | 0 |  |  | $ | 0 |
Interest cost | 181 |  |  | 208 |
Expected return on plan assets | (321) |  |  | (355) |
Recognition of net loss | 428 |  |  | 260 |
Net periodic pension expense | $ | 288 |  |  | $ | 113 |

| Nine Months Ended January 31, 2021 |  | Nine Months Ended January 31, 2020
Service cost | $ | 0 |  |  | $ | 0 |
Interest cost | 543 |  |  | 624 |
Expected return on plan assets | (963) |  |  | (1,065) |
Recognition of net loss | 1,285 |  |  | 780 |
Net periodic pension expense | $ | 865 |  |  | $ | 339 |

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M. Segment Information
The Company’s operations are classified into two business segments: Domestic and International. The Domestic business segment principally designs, manufactures, and installs scientific and technical furniture, including steel and wood laboratory cabinetry, fume hoods, laminate casework, flexible systems, worksurfaces, workstations, workbenches, and computer enclosures. The International business segment, which consists of the Company’s foreign subsidiaries, provides products and services, including facility design, detailed engineering, construction, and project management from the planning stage through testing and commissioning of laboratories. Intersegment transactions are recorded at normal profit margins. All intercompany balances and transactions have been eliminated. Certain corporate expenses shown below have not been allocated to the business segments.
The following tables provide financial information by business segments for the periods ended January 31, 2021 and 2020 (in thousands):

| Domestic Operations |  | International Operations |  | Corporate / Eliminations |  | Total
Three months ended January 31, 2021 |  |  |  |  |  |  |
Revenues from external customers | $ | 25,066 |  |  | $ | 8,273 |  |  | $ | — |  |  | $ | 33,339 |
Intersegment revenues | 463 |  |  | 550 |  |  | (1,013) |  |  | — |
Earnings (loss) before income taxes | $ | 206 |  |  | $ | 689 |  |  | $ | (1,613) |  |  | $ | (718) |
Three months ended January 31, 2020 |  |  |  |  |  |  |
Revenues from external customers | $ | 26,699 |  |  | $ | 7,526 |  |  | $ | — |  |  | $ | 34,225 |
Intersegment revenues | 302 |  |  | 659 |  |  | (961) |  |  | — |
Earnings (loss) before income taxes | $ | (867) |  |  | $ | 513 |  |  | $ | (1,897) |  |  | $ | (2,251) |

| Domestic Operations |  | International Operations |  | Corporate / Eliminations |  | Total
Nine months ended January 31, 2021 |  |  |  |  |  |  |
Revenues from external customers | $ | 83,896 |  |  | $ | 24,866 |  |  | $ | — |  |  | $ | 108,762 |
Intersegment revenues | 1,715 |  |  | 2,460 |  |  | (4,175) |  |  | — |
Earnings (loss) before income taxes | $ | 1,794 |  |  | $ | 1,610 |  |  | $ | (5,071) |  |  | $ | (1,667) |
Nine months ended January 31, 2020 |  |  |  |  |  |  |
Revenues from external customers | $ | 87,570 |  |  | $ | 25,713 |  |  | $ | — |  |  | $ | 113,283 |
Intersegment revenues | 3,388 |  |  | 2,142 |  |  | (5,530) |  |  | — |
Earnings (loss) before income taxes | $ | 1,439 |  |  | $ | 1,622 |  |  | $ | (4,805) |  |  | $ | (1,744) |

N. Reclassifications
The Company reclassified certain amounts in the condensed consolidated balance sheet for the period ended April 30, 2020 and the condensed consolidated statements of cash flows for the nine-month period ended January 31, 2021 to conform to the current period presentation.
O. New Accounting Standards
In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments," which replaces the current incurred loss method used for determining credit losses on financial assets, including trade receivables, with an expected credit loss method. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company will adopt this standard in fiscal year 2024. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
In January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
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In August 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In August 2018, the FASB issued ASU 2018-14, "Compensation -Retirement Benefits -Defined Benefit Plans -General (Subtopic 715-20) - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU 2018-14"). The amendments in this update remove defined benefit plan disclosures that are no longer considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes." This update simplifies the accounting for income taxes through certain targeted improvements to various subtopics within Topic 740. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). This guidance provides practical expedients for contract modifications and certain hedging relationships associated with the expected market transition from London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The ASU can be adopted after its issuance date through December 31, 2022. The Company is evaluating the optional expedients and exceptions in the guidance but does not expect the adoption of this standard to have a material impact on its consolidated financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company’s 2020 Annual Report to Stockholders contains management’s discussion and analysis of the Company’s financial condition and results of operations as of and for the year ended April 30, 2020. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2020. The analysis of results of operations compares the three and nine months ended January 31, 2021 with the comparable periods of the prior year.
Results of Operations
Sales for the quarter were $33,339,000, a 2.6% decrease from sales of $34,225,000 in the comparable period of the prior year. Domestic sales for the quarter were $25,066,000, down 6.1% from sales of $26,699,000 in the comparable period of the prior year. International sales for the quarter were $8,273,000, up 9.9% from sales of $7,526,000 in the comparable period of the prior year. Domestic sales decreased for the most recent quarter compared to the prior year period due to continued delays in construction projects due to the coronavirus pandemic. International sales increased for the most recent quarter compared to the prior year period due to strong international demand coupled with reduced coronavirus related restrictions in certain markets that allowed access to project sites.
Sales for the nine months ended January 31, 2021 were $108,762,000, a 4.0% decrease from sales of $113,283,000 in the comparable period of the prior year. Domestic sales for the nine-month period were $83,896,000, down 4.2% from sales of $87,570,000 in the comparable period of the prior year. International sales for the period were $24,866,000, down 3.3% from sales of $25,713,000 in the comparable period of the prior year.
The Company’s order backlog was $103 million at January 31, 2021, as compared to $93 million at January 31, 2020, and $101 million at April 30, 2020. The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects.
The gross profit margin for the three months ended January 31, 2021 was 17.0% of sales, as compared to 15.4% of sales in the comparable quarter of the prior year. The gross profit margin for the nine months ended January 31, 2021 was 16.5% of sales, relatively flat compared to 16.4% of sales in the comparable period of the prior year. The increase in gross profit margin percentage for the three months ended January 31, 2021 was related to improved operating performance of the Company's Domestic operations with lower unfavorable manufacturing and material variances when compared to the prior year period.
Operating expenses for the three months ended January 31, 2021 were $6,030,000, or 18.1% of sales, as compared to $7,350,000, or 21.5% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 2020 were $18,593,000, or 17.1% of sales, as compared to $19,875,000, or 17.5% of sales, in the comparable
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period of the prior year. The decrease in operating expenses for the three months ended January 31, 2021 was primarily due to reductions in salaries and fringe benefits of $441,000, incentive and stock compensation of $143,000, bad debt expense of $283,000, travel and entertainment expense of $134,000 and consulting and professional fees of $196,000.
The decrease in operating expenses for the nine months ended January 31, 2021 was primarily due to reductions in salaries and fringe benefits of $196,000, incentive and stock compensation of $173,000, bad debt expense of $261,000, travel and entertainment expense of $453,000 and consulting and professional fees of $35,000 and reduced International operating expenses of $91,000.
Interest expense was $105,000 and $310,000 for the three and nine months ended January 31, 2021, as compared to $150,000 and $452,000 for the comparable periods of the prior year, respectively. The changes in interest expense were primarily attributable to changes in borrowing levels.
The effective income tax rates for the three and nine months ended January 31, 2021 were 113.2.4% and 59.3% compared to 15.5% and 104.5% for the three and nine months ended January 31, 2020. Income tax benefits of $813,000 and $350,000 were recorded for the three months ended January 31, 2021 and 2020, respectively. An income tax benefit of $989,000 and an income tax expense of $1,822,000 were recorded for the nine months ended January 31, 2021 and 2020, respectively. The change in the effective tax rates for the three and nine months ended January 31, 2021 reflects the impact of international operations which are taxed at different rates, combined with a U.S. tax benefit recorded for the most recent quarter. The change in the effective tax rates from the same periods in the previous fiscal year is due to the Company’s revocation of its indefinite reinvestment of foreign unremitted earnings position, effective August 2019, for the Singapore and China subsidiaries, and Kewaunee Labway India Pvt. Ltd.
The Company included a tax withholding expense, for dividends paid to the US and Singapore shareholders, imposed by the India Income Tax Department in accordance with international tax treaties between India and the U.S. and Singapore governments at a rate of 10% and 15%, respectively, for the three and nine months ended January 31, 2021. The Company recognized a withholding tax expense of $18,000 and $99,000 for the three and nine months ended January 31, 2021, respectively, related to the unremitted earnings position of the subsidiaries listed above. The Company recognized a withholding tax expense of $50,000 and $2,214,000 for the three and nine months ended January 31, 2020, respectively, related to the unremitted earnings position of the subsidiaries listed above. The Company will record the tax withholding on all future Kewaunee Labway India Pvt. Ltd. earnings at an estimated rate of 10% and 15% for the U.S. and Singapore shareholders, respectively, in addition to the corporate income taxes. See Note K of the Notes to Condensed Consolidated Financial Statements for additional information.
Noncontrolling interests related to the Company’s subsidiaries not 100% owned by the Company reduced net earnings by $14,000 and $19,000 for the three and nine months ended January 31, 2021, respectively, as compared to $17,000 and $59,000 for the comparable periods of the prior year. The change in the net earnings attributable to the noncontrolling interest in the current period was due to changes in earnings of the subsidiaries in the related period.
Net earnings were $81,000, or $0.03 per diluted share, for the three months ended January 31, 2021, compared to a net loss of $1,918,000, or $0.70 per diluted share, in the prior year period. A net loss of $697,000, or $0.25 per diluted share, was reported for the nine months ended January 31, 2021, compared to a net loss of $3,625,000, or $1.32 per diluted share, in the prior year period.
Liquidity and Capital Resources
Historically, the Company's principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings under the Company's revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancellable operating leases. The Company believes that these sources will be sufficient to support ongoing business requirements in the current fiscal year, including capital expenditures.
The Company had working capital of $28,510,000 at January 31, 2021, compared to $27,171,000 at April 30, 2020. The ratio of current assets to current liabilities was 1.9-to-1.0 at January 31, 2021, compared to 2.0-to-1.0 at April 30, 2020. At January 31, 2021, advances of $4.5 million were outstanding under the Company's credit facilities, compared to advances of $4.7 million outstanding as of April 30, 2020. The Company had standby letters of credit outstanding of $512,000 at January 31, 2021, unchanged from April 30, 2020. Amounts available under the $15 million revolving credit facility were $8.6 million and $8.7 million at January 31, 2021 and April 30, 2020, respectively. As previously reported in the Company's 2020 Annual Report on Form 10-K, the Company was not compliant at April 30, 2020 with all of the financial covenants under the revolving credit facility.
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On July 20, 2020, the Company entered into an amendment which effected changes in certain financial covenants and included a waiver of the non-compliance. On January 28, 2021, the Company entered into another amendment to the Loan Agreement and Line of Credit which effected changes (i) extending the maturity date under the Credit Agreement and Revolving Note from February 1, 2021 to May 3, 2021; (ii) establishing a minimum EBITDA covenant for the fiscal quarter ending April 30, 2021 of $1,000,000, determined for the four-quarter period then ending; and (iii) revising the covenant regarding delivery of financial projections to the Bank to, among other things, provide projections for the next succeeding fiscal year. These amendments did not change the amount of availability under the revolving credit facility. At January 31, 2021, the Company was in compliance with all the financial covenants under its revolving credit facility.
The Company’s operations provided cash of $3,107,000 during the nine months ended January 31, 2021. Cash was used primarily by increases in receivables of $2,089,000, inventory of $285,000, and income tax receivable of $1,488,000, partially offset by an increase in accounts payable and other accrued expenses of $3,843,000. During the nine months ended January 31, 2021, the Company used net cash of $1,944,000 in investing activities, all of which was used for capital expenditures. The Company’s financing activities used cash of $379,000 during the nine months ended January 31, 2021, primarily for repayments on short-term borrowings of $226,000 and cash dividends paid to minority interest holders of $108,000.
Outlook
The Company continues to actively monitor the COVID-19 pandemic and its impact. Any future developments and effects will be highly uncertain and cannot be predicted, including: the scope and duration of the pandemic; further adverse revenue and net income effects; disruptions to our operations; closure of project sites; ability of suppliers to support our operations; the effectiveness of our work from home arrangements; employee impacts from illness, school closures and other community response measures; and any actions taken by governmental authorities and other third parties in response to the pandemic. The uncertain future development of this crisis could materially and adversely affect our business, operations, operating results, financial condition, liquidity or capital levels. The Company will continue to work to ensure the safety of our people and our ability to serve our customers worldwide.
In addition, the Company’s ability to predict future demand for its products continues to be limited given its role as subcontractor or supplier to dealers for subcontractors. Demand for the Company’s products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company’s earnings are also impacted by fluctuations in prevailing pricing for projects in the laboratory construction marketplace and increased costs of raw materials, including stainless steel, wood, and epoxy resin, and whether the Company is able to increase product prices to customers in amounts that correspond to such increases without materially and adversely affecting sales. Additionally, since prices are normally quoted on a firm basis in the industry, the Company bears the burden of possible increases in labor and material costs between the quotation of an order and delivery of a product. Looking forward, the Company is optimistic about opportunities for growth within existing end-markets. As the economy continues to re-open, the Company anticipates that project awards will accelerate and the pace of construction will increase. The Company expects its performance to continue to improve based upon its reduced cost structure and investments in modernizing its operations. In the near-term, industry earnings are expected to be negatively impacted by rapidly escalating raw material costs.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This report contains statements 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 report,
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-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to:
competitive and general economic conditions and the rapidly evolving COVID-19 pandemic, including disruptions from government mandates, both domestically and internationally; changes in customer demands; technological changes in our operations or in our industry; dependence on customers’ required delivery schedules; risks related to fluctuations in the Company’s operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; changes in the legal and regulatory environment; changes in raw materials and commodity costs; and acts of terrorism, war, governmental action, natural disasters and other Force Majeure events. The cautionary statements made pursuant to the Reform Act herein and elsewhere by us should not be construed as exhaustive. The Company cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. Over time, our
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actual results, performance, or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and harmful to our stockholders’ interest. Many important factors that could cause such differences are described under the caption “Risk Factors” in Item 1A in the Company’s 2020 Annual Report on Form 10-K and in Quarterly Reports on Form 10-Q subsequently filed by the Company. These forward-looking statements speak only as of the date of this document. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There are no material changes to the disclosures made on this matter in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2020.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of January 31, 2021. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of January 31, 2021, the Company’s disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.
(b) Changes in internal controls
There was no significant change in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 6. Exhibits

10.1 |  | Tenth Amendment to Credit and Security Agreement dated as of January 28, 2021. |
31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |  | XBRL Instance Document |
101.SCH |  | XBRL Taxonomy Extension Schema Document |
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document |

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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|  | KEWAUNEE SCIENTIFIC CORPORATION (Registrant)
Date: March 12, 2021 |  | By | /s/ Donald T. Gardner III
|  |  | Donald T. Gardner III
|  |  | (As duly authorized officer and Vice President, Finance and Chief Financial Officer)

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