1. KEQU sales increased 43.6% to $67.2 million year-over-year. 2. Pre-tax earnings decreased 63.7%, affected by Nu Aire acquisition costs. 3. Order backlog rose to $221.6 million, indicating strong future sales potential. 4. Domestic sales surged 63.6%, driven by higher manufacturing volumes. 5. Corporate segment loss widened due to integration expenses related to Nu Aire.
Despite increased sales and backlog, significant integration costs reduced profits. Similar trends in previous acquisitions show mixed investor reactions.
The significant increases in sales and backlog are tempered by rising costs and integration challenges from the Nu Aire acquisition.
Recent results point to immediate market sentiment, while integration gains may affect longer-term performance later. Past acquisitions had similar short-term effects.
STATESVILLE, N.C., March 12, 2025 /PRNewswire/ -- Kewaunee Scientific Corporation (NASDAQ: KEQU) today announced results for its third quarter ended January 31, 2025.
Sales during the third quarter of fiscal year 2025 were $67,167,000, an increase of 43.6% compared to sales of $46,778,000 from the prior year's third quarter. Pre-tax earnings for the quarter were $1,275,000 compared to $3,515,000 for the prior year quarter, a decrease of 63.7%. Net earnings were $1,354,000 compared to net earnings of $2,521,000 for the prior year quarter. EBITDA for the quarter was $3,734,000 compared to $4,414,000 for the prior year quarter. Diluted earnings per share were $0.45 compared to diluted earnings per share of $0.85 in the prior year quarter.
Within the third quarter, there were costs associated with the acquisition and integration of Nu Aire by Kewaunee Scientific Corporation. Additionally, results were impacted by transaction accounting related to the write-up of various assets on Nu Aire's books. We believe communicating these impacts and reporting adjusted financial metrics helps investors better understand our financial performance.
Acquisition, integration, and purchase accounting costs in the aggregate in quarter three were a $2,514,000 impact to pre-tax earnings and a $1,994,000 impact to EBITDA. After adjusting for these costs, adjusted pre-tax earnings for the quarter were $3,789,000 compared to $3,515,000 for the prior year quarter, an increase of 7.8%. Adjusted net earnings were $3,258,000 compared to net earnings of $2,521,000 for the prior year quarter. Adjusted EBITDA for the quarter was $5,728,000 compared to $4,414,000 for the prior year quarter. Adjusted diluted earnings per share were $1.09 compared to diluted earnings per share of $0.85 in the prior year quarter. Further details are presented in the Adjusted Consolidated Statement of Operations Reconciliation schedule.
was $221.6 million on January 31, 2025, as compared to $152.3 million on January 31, 2024, and $155.6 million on April 30, 2024.
Kewaunee successfully completed the acquisition of Nu Aire, Inc. on November 1, 2024, marking a significant milestone in our strategic growth initiatives. This quarter represents the first time Nu Aire's financial results will be integrated into Kewaunee's consolidated financial statements and order backlog, with its performance reported within the Company's Domestic segment.
Domestic sales for the quarter were $51,976,000, an increase of 63.6% from sales of $31,774,000 in the prior year quarter. Domestic segment net earnings were $2,876,000 compared to $2,633,000 in the prior year quarter. Domestic segment EBITDA was $5,249,000 compared to $3,832,000 for the prior year quarter. The increase in Domestic sales and earnings was driven by higher manufacturing volumes than the prior year period and the incorporation of Nu Aire's results.
International sales for the quarter were $15,191,000, an increase of 1.2% from sales of $15,004,000 in the prior year quarter. International segment net earnings were $476,000 compared to $923,000 in the prior year quarter. International segment EBITDA was $760,000 compared to $1,676,000 for the prior year quarter. Kewaunee's International segment continues to be challenged by customer site delays impacting billings.
Corporate segment pre-tax net loss was $3,025,000 for the quarter, as compared to a pre-tax net loss of $1,069,000 in the prior year quarter. Corporate segment EBITDA for the quarter was ($2,275,000) compared to corporate segment EBITDA of ($1,094,000) for the prior year quarter. The change in EBITDA was primarily driven by an increase in professional service and other fees during the quarter related to the acquisition of Nu Aire, Inc., which closed on November 1, 2024, and costs incurred related to Sarbanes-Oxley 404(b) compliance readiness.
Total cash on hand on January 31, 2025, was $12,335,000, as compared to $25,938,000 on April 30, 2024. Working capital was $58,441,000 compared to $54,014,000 at the end of the third quarter last year and $56,037,000 on April 30, 2024.
The Company had short-term debt of $1,131,000 as of January 31, 2025, as compared to $3,099,000 on April 30, 2024. Long-term debt was $65,819,000 on January 31, 2025, as compared to $28,479,000 on April 30, 2024. The building lease from the Company's December 2021 sale-leaseback transaction accounts for $27,604,000 of the long-term debt on January 31, 2025, and $28,133,000 of the long-term debt on April 30, 2024. Long-term debt, net of the sale-leaseback transaction, was $38,215,000 on January 31, 2025, as compared to $346,000 on April 30, 2024. The Company's debt-to-equity ratio on January 31, 2025, was 1.29-to-1, as compared to 0.70-to-1 on April 30, 2024. The Company's debt-to-equity ratio, net of the sale-leaseback transaction, on January 31, 2025, was 0.84-to-1, as compared to 0.20-to-1 on April 30, 2024.
"Kewaunee delivered another strong quarter, demonstrating once again our positive momentum in the marketplace and our continued operational performance improvement," said Thomas D. Hull III, Kewaunee's President and Chief Executive Officer.
"Our strategy to emphasize investments in our manufacturing assets, while strengthening our dealer and distribution relationships is working."
"In our Domestic segment, we achieved solid gains compared to the prior year. These gains were driven by sustained product demand in the U.S., where we leverage our market position as the industry's leader."
"In India, where our backlog is at a record high, revenue has been slowed due to construction site delays. We are working closely with our customers to ensure seamless execution when project sites are ready. This will result in favorable revenue and earnings for us."
"Kewaunee's backlog stands at a robust $222 million, highlighting the strength, stability, and diversity of the markets we serve."
"Our products support a broad range of critical industries - including life sciences, industrial, healthcare, pharmacy, education, petrochemical, and government research. These sectors are foundational to economic progress, scientific discovery, and innovation, and they benefit from long-term structural growth trends fueled by both private and public investment."
"Over the past five years, we have taken deliberate steps to strengthen our supply chain and mitigate risks to ensure resiliency amid market fluctuations. As the largest U.S.-based manufacturer of laboratory products and technical furniture, Kewaunee is uniquely positioned to provide stability and certainty to customers requiring reliable, domestically produced solutions."
"To provide greater transparency into our financial performance, we have included an exhibit detailing the reconciliation from EBITDA to adjusted EBITDA. This analysis isolates transaction, integration, and other related costs, providing a clearer picture of Kewaunee's ongoing earnings power post-integration of the Nu Aire acquisition."
"Looking ahead, we are focused on delivering a strong finish to fiscal year 2025. Our teams remain committed to operational excellence, customer success, and driving sustainable growth."
"We continue to invest in our partnerships, ensuring our channel partners have the support they need to win in the marketplace. With strong fundamentals, a growing backlog, and a clear strategic vision, Kewaunee is well-positioned to capitalize on future opportunities and create lasting value for our shareholders."
The Company includes non-GAAP financial measures such as adjusted net earnings and adjusted net earnings per share, in the information provided with this press release as supplemental information relating to its operating results.
Donald T. Gardner III
704/871-3274