Kewaunee Scientific Shows Growth Amidst Challenges in Q2 Results

Kewaunee Scientific Corporation Q2 Fiscal Year Performance

Kewaunee Scientific Corporation (NASDAQ: KEQU) recently announced its financial results for the second quarter of the fiscal year, showcasing both achievements and obstacles faced during the period. Despite a modest decline in overall sales, the company demonstrated resilience through various segments.

Second Quarter Fiscal Highlights

During the second quarter of fiscal year 2025, Kewaunee's sales reached approximately $47.76 million. This figure represents a decrease of 5.3% from the $50.44 million reported in the same quarter of the previous year. The decline in sales was accompanied by pre-tax earnings of about $3.93 million, down from $4.84 million year over year, indicating an 18.9% drop in profitability. However, net earnings improved to $3.01 million compared to $2.73 million in the prior year quarter.

Segment Performance Overview

Domestic Segment: The domestic sales segment performed notably well, reporting a 6.5% increase, achieving sales of approximately $36.41 million. This growth was largely driven by increased product demand and translated to net earnings of $4.52 million—up from $3.05 million in the previous year. Domestic EBITDA also showed positive results, increasing from $5.23 million to $6.84 million.

International Segment: Conversely, the international segment experienced a significant decline of 30.1%, reporting sales of $11.36 million, down from $16.25 million the previous year. The impact was primarily due to delays in customer construction projects, particularly in India. International net earnings decreased to $356,000 from $525,000 the prior year. EBITDA for this segment also fell from $1.64 million to $0.59 million.

Corporate Segment: The corporate segment reported a pre-tax net loss of approximately $2.44 million, worsening from a $1.24 million loss last year. The results here were heavily influenced by increased professional service fees associated with the recent acquisition of Nu Aire, Inc.

Financial Position and Future Prospects

Kewaunee ended the quarter with a robust order backlog of $184.4 million, representing a notable increase compared to $146.3 million a year ago. This strong backlog is a promising indicator of the company’s potential for sustained revenue growth moving forward. Additionally, cash on hand rose to $29.66 million, up from $25.93 million reported at the end of April.

Despite the fluctuations faced particularly in the international segment, President and CEO Thomas D. Hull III expressed optimism regarding the company's future, emphasizing the strength of their domestic operations and the strategic advantage provided by their backlog. He also highlighted the resilience shown in domestic sales as a beacon of potential long-term growth.

Strategic Acquisition of Nu Aire, Inc.

Significantly, Kewaunee recently completed its acquisition of Nu Aire, Inc., renowned for its highly regarded laboratory equipment and solutions. This acquisition, finalized on November 1, is expected to bolster Kewaunee’s market position in designing and manufacturing essential laboratory furniture and safety products. The integration of Nu Aire will not only enhance the product range but also provide access to new markets, accelerating Kewaunee's growth trajectory.

Hull added, "The acquisition is pivotal for Kewaunee, and while expenses related to this move have been noted in this quarter's financial results, the long-term benefits are anticipated to capitalize on new market opportunities and extend our reach significantly. We are committed to fulfilling our vision of becoming leaders in our industry."

Frequently Asked Questions

1. What were Kewaunee Scientific's total sales for Q2?

Kewaunee Scientific reported total sales of approximately $47.76 million for the second quarter of fiscal year 2025.

2. How did the domestic segment perform?

The domestic segment showed robust growth with sales increasing by 6.5%, totaling around $36.41 million.

3. What challenges did the international segment face?

The international segment faced significant challenges, including a sales decline of 30.1% due to construction delays, notably in India.

4. What is Kewaunee's current order backlog?

Kewaunee's order backlog stands at $184.4 million, indicating strong potential for future revenue.

5. What was the impact of the acquisition of Nu Aire?

The acquisition of Nu Aire is aimed at expanding Kewaunee's market presence and product offerings, which is expected to contribute positively to future growth.

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