Kewaunee Scientific (NASDAQ: KEQU ) designs laboratory furniture and equipment. With the arrival of the Department of Government Efficiency and proposals to cut the budget for the National Institutes of Health, the stock had experienced some pessimism. That wasMy name is María Fernanda and I'm currently studying an MBA. My inspiration investors are Warren Buffett, Peter Lynch and Terry Smith, so I look for quality companies at a reasonable valuation. I believe that, in the long term, fundamentals are what d ...

Sales during the fourth quarter of fiscal year 2025 were $77,148,000, an increase of 36.1% compared to sales of $56,702,000 from the prior year's fourth quarter. Pre-tax earnings for the quarter were $7,149,000 compared to $1,347,000 for the prior year quarter. Net earnings for the quarter were $4,850,000 compared to net earnings of $11,026,000 for the prior year quarter. Diluted earnings per share were $1.63 compared to diluted earnings per share of $3.71 in the prior year quarter. EBITDA for the quarter w ...

Core Viewpoint - Kewaunee Scientific Corporation reported mixed financial results for the third quarter of fiscal 2025, with significant revenue growth but a decline in profitability due to increased operating expenses and interest costs [2][3][5]. Financial Performance - Earnings per share for the third quarter were 45 cents, down 29.7% from 64 cents in the same quarter last year [2]. - Revenues increased to $67.2 million, a 43.6% rise from $46.8 million in the prior-year quarter, driven by strong domestic performance and the integration of the Nu Aire acquisition [2]. - Net earnings fell 46.3% to $1.4 million from $2.5 million in the same quarter last year [3]. Operating Expenses - Operating profit decreased 40.9% to $2.3 million from $3.8 million in the prior-year period, attributed to higher operating expenses which nearly doubled to $16.1 million, representing 24% of revenues [4]. - Interest expenses rose to $1.1 million from $411,000 in the previous year, contributing to a 63.7% decline in pre-tax earnings to $1.3 million from $3.5 million [5]. Domestic & International Segments - Domestic revenues grew 63.6% to $52 million, with net earnings increasing 9.2% to $2.9 million [6]. - International revenues were $15.2 million, up 1.2%, but faced challenges from project site delays, leading to a drop in net earnings to $476,000 [7]. Acquisition & Integration Impacts - The Nu Aire acquisition incurred $2.5 million in related costs, impacting pre-tax earnings; adjusted pre-tax earnings would have been $3.8 million, up 7.8% year over year [8]. - Adjusted EBITDA increased 29.8% to $5.7 million from $4.4 million, with adjusted diluted EPS at $1.09 compared to $0.85 last year [8]. Order Backlog & Financial Position - The order backlog increased 45.5% year over year to $221.6 million, attributed to sustained demand across various industries [10]. - Total debt rose significantly to $65.8 million from $28.5 million, driven by new debt financing related to the Nu Aire acquisition [11]. Management Commentary - CEO Thomas D. Hull III emphasized the company's focus on strengthening dealer and distribution relationships, which has driven positive momentum [12]. - The company is actively working with customers to ensure timely execution of projects once construction schedules resume [13]. Guidance & Strategic Outlook - Management reaffirmed its commitment to operational efficiency and growth initiatives, expressing confidence in the ability to capitalize on long-term market trends [14]. Other Developments - Kewaunee completed the Nu Aire acquisition on Nov. 1, 2024, enhancing its product portfolio with additional laboratory equipment [15]. - The company expanded its share repurchase program in March 2025, authorizing the repurchase of an additional 100,000 shares [16].

Financial Performance - Sales for the quarter were $67,167,000, an increase of 43.5% from $46,778,000 in the comparable period of the prior year[92] - Domestic sales for the quarter were $51,976,000, up 63.6% compared to $31,774,000 in the prior year[92] - Gross profit margin for the three months ended January 31, 2025 was 27.4%, up from 25.7% in the comparable quarter of the prior year[95] - Net earnings for the three months ended January 31, 2025 were $1,354,000, or $0.45 per diluted share, down from $2,521,000, or $0.85 per diluted share in the prior year[101] - Operating expenses for the three months ended January 31, 2025 were $16,129,000, or 24.0% of sales, compared to $8,223,000, or 17.6% of sales in the prior year[97] - The effective income tax rate for the three months ended January 31, 2025 was (8.5)%, compared to 27.9% for the same period in the prior year[99] Acquisition and Investments - The acquisition of Nu Aire was completed for $55.0 million, enhancing the company's capabilities and market presence[87] - The company used net cash of $30,385,000 in investing activities during the nine months ended January 31, 2025, primarily for the acquisition of Nu Aire[105] Order Backlog and Working Capital - The company's order backlog was $221.6 million at January 31, 2025, compared to $152.3 million at January 31, 2024[94] - The company had working capital of $58,441,000 at January 31, 2025, compared to $56,037,000 at April 30, 2024[103]

Core Viewpoint - Kewaunee Scientific Corporation has amended its existing share repurchase program, allowing for the repurchase of an additional 100,000 shares of common stock, with no specified expiration date for the program [2][3]. Share Repurchase Program - The Board of Directors authorized the repurchase of up to an additional 100,000 shares under the existing program, which previously had 11,176 shares authorized for repurchase [2]. - The timing and amount of repurchases will be determined at the management's discretion based on capital needs, market price, and general market conditions [3]. - The program allows for various methods of repurchase, including open-market purchases and block trades, and can be suspended or discontinued at any time [3]. Capital Allocation Strategy - The company’s capital allocation strategy includes stock repurchases when management believes it will generate value [4]. - After reaching the maximum allowable repurchase under a prior credit agreement, the company paused repurchases to focus on acquiring Nu Aire, Inc., which was completed on November 1, 2024 [4]. - Share repurchases resumed on February 28, 2025, with the company confident in its strategic direction and market conditions [4]. Company Overview - Kewaunee Scientific Corporation, founded in 1906, is a global leader in designing, manufacturing, and installing laboratory and healthcare furniture products [5]. - The company operates manufacturing facilities in Statesville, North Carolina, and Bangalore, India, serving both domestic and international markets [5]. - The newly acquired subsidiary, Nu Aire, specializes in laboratory products such as biological safety cabinets and CO2 incubators, enhancing Kewaunee's product portfolio [6].

Financial Performance - Sales for the third quarter of fiscal year 2025 were $67,167,000, a 43.6% increase from $46,778,000 in the prior year quarter[3] - Pre-tax earnings decreased by 63.7% to $1,275,000 compared to $3,515,000 in the prior year quarter[3] - Adjusted pre-tax earnings for the quarter were $3,789,000, an increase of 7.8% from $3,515,000 in the prior year quarter[4] - Kewaunee Scientific reported net sales of $67.167 million for the three months ended January 31, 2025, a 43.5% increase from $46.778 million in the same period of 2024[25] - Gross profit for the three months ended January 31, 2025, was $18.379 million, representing a 53% increase compared to $12.029 million in the prior year[25] - The company’s net earnings attributable to Kewaunee Scientific Corporation for the three months ended January 31, 2025, were $1.354 million, down 46.2% from $2.521 million in the same period of 2024[25] - Kewaunee Scientific's diluted earnings per share for the three months ended January 31, 2025, were $0.45, down from $0.85 in the same period of 2024[25] Sales Breakdown - Domestic sales increased by 63.6% to $51,976,000 from $31,774,000 in the prior year quarter[7] - International sales saw a modest increase of 1.2% to $15,191,000 compared to $15,004,000 in the prior year quarter[8] Assets and Liabilities - Total assets increased to $189.148 million as of January 31, 2025, compared to $134.766 million as of April 30, 2024, reflecting a growth of 40.4%[27] - Kewaunee Scientific's total liabilities rose to $127.027 million as of January 31, 2025, compared to $78.557 million as of April 30, 2024, marking a 61.7% increase[27] - Long-term debt increased to $65,819,000 from $28,479,000 on April 30, 2024, resulting in a debt-to-equity ratio of 1.29-to-1[11] Cash Flow - Total cash on hand decreased to $12,335,000 from $25,938,000 on April 30, 2024[10] - The company’s cash and cash equivalents decreased to $9.454 million as of January 31, 2025, from $23.267 million as of April 30, 2024[27] Strategic Initiatives - The acquisition of Nu Aire, completed on November 1, 2024, significantly impacted financial results, with $2,514,000 affecting pre-tax earnings[4] - The acquisition of Nu Aire is expected to enhance Kewaunee's product offerings in laboratory equipment, including biological safety cabinets and CO2 incubators[21] - Kewaunee's strategic focus includes investments in manufacturing assets and strengthening dealer relationships to drive future growth[12] Operational Challenges - Operating expenses for the three months ended January 31, 2025, were $16.129 million, significantly higher than $8.223 million in the same period of 2024, indicating a 96.5% increase[25] - The company anticipates potential risks from competitive conditions and supply chain disruptions affecting future performance[23] Order Backlog - The company's order backlog was $221.6 million, up from $152.3 million on January 31, 2024[5]

Core Insights - Kewaunee Scientific Corporation reported a strong sales increase of 43.6% in Q3 FY2025, reaching $67.17 million compared to $46.78 million in the same quarter last year [2] - Despite the sales growth, pre-tax earnings decreased by 63.7% to $1.28 million, and net earnings fell to $1.35 million from $2.52 million year-over-year [2][4] - The company completed the acquisition of Nu Aire, which significantly impacted financial results due to associated costs and integration efforts [3][6] Financial Performance - Sales for Q3 FY2025 were $67.17 million, a 43.6% increase from $46.78 million in Q3 FY2024 [2] - Pre-tax earnings were $1.28 million, down 63.7% from $3.52 million in the prior year [2] - Net earnings decreased to $1.35 million from $2.52 million year-over-year [2] - EBITDA for the quarter was $3.73 million, compared to $4.41 million in the prior year [2] Adjusted Financial Metrics - After adjusting for acquisition-related costs, adjusted pre-tax earnings were $3.79 million, up 7.8% from $3.52 million in the prior year [4] - Adjusted net earnings were $3.26 million compared to $2.52 million in the prior year [4] - Adjusted EBITDA for the quarter was $5.73 million, an increase from $4.41 million in the prior year [4] Segment Performance - Domestic sales increased by 63.6% to $51.98 million, with net earnings of $2.88 million compared to $2.63 million in the prior year [7] - International sales saw a modest increase of 1.2% to $15.19 million, but net earnings fell to $476,000 from $923,000 due to customer site delays [8] - The corporate segment reported a pre-tax net loss of $3.03 million, worsening from a loss of $1.07 million in the prior year [9] Order Backlog and Strategic Initiatives - The company's order backlog reached $221.6 million, up from $152.3 million a year ago, indicating strong demand [5][13] - The acquisition of Nu Aire is expected to enhance Kewaunee's product offerings and market position, particularly in the domestic segment [6][12] - Kewaunee emphasizes investments in manufacturing and strengthening dealer relationships to drive growth [12] Cash and Debt Position - Total cash on hand was $12.34 million, down from $25.94 million at the end of April 2024 [10] - Short-term debt decreased to $1.13 million, while long-term debt increased significantly to $65.82 million, reflecting the impact of the Nu Aire acquisition [11] Management Commentary - The CEO highlighted the company's operational performance and strategic focus on manufacturing investments and market leadership [12] - The company is committed to delivering strong results for the remainder of FY2025, with a focus on operational excellence and customer success [12][13]

Company Overview - Kewaunee Scientific Corporation, founded in 1906, is a global leader in the design, manufacture, and installation of laboratory, healthcare, and technical furniture products [2] - The company's product offerings include steel and wood casework, fume hoods, adaptable modular systems, moveable workstations, stand-alone benches, biological safety cabinets, and epoxy resin work surfaces and sinks [2] - Kewaunee's corporate headquarters is located in Statesville, North Carolina, with sales offices in the United States, India, Saudi Arabia, and Singapore [2] - The company operates three manufacturing facilities in Statesville and one in Bangalore, India, serving both domestic and international markets [2] Recent Developments - Kewaunee Scientific announced plans to release its third quarter fiscal year 2025 financial results on March 12, 2025, after the close of trading [1] - The newly acquired subsidiary, Nu Aire, specializes in manufacturing biological safety cabinets, CO2 incubators, ultralow freezers, and other essential laboratory products [3] - Nu Aire, founded in 1971, has its headquarters and manufacturing facilities in Plymouth, Minnesota, with additional capabilities in Long Lake, Minnesota, and a warehouse partnership in the Netherlands [3]

Group 1 - The article emphasizes the importance of investing in quality companies at reasonable valuations, focusing on long-term fundamentals that drive share prices [1] - The preferred investment approach is quality-growth, targeting a return of approximately 15% over the next five years with conservative assumptions to ensure a margin of safety [1] - Key characteristics of a quality company include sustained top-line growth, a profitable bottom line, a healthy balance sheet, free cash flow generation, high return on capital employed (ROCE), and an attractive potential market [1]

Sales Performance - Sales for the quarter were $47,764,000, a decrease of 3.3% from $50,436,000 in the comparable period of the prior year[86]. - Domestic sales increased by 6.5% to $36,409,000, while international sales decreased by 30.1% to $11,355,000 due to construction site delays in India[86]. Order Backlog - The Company's order backlog was $184.4 million at October 31, 2024, up from $146.3 million at October 31, 2023[89]. Profitability - Gross profit margin for the three months ended October 31, 2024 was 29.2%, an increase from 26.7% in the prior year[90]. - Net earnings for the three months ended October 31, 2024 were $3,008,000, or $1.01 per diluted share, compared to $2,732,000, or $0.93 per diluted share in the prior year[95]. Operating Expenses - Operating expenses for the three months ended October 31, 2024 were $9,518,000, or 19.9% of sales, compared to $8,359,000, or 16.6% of sales in the prior year[91]. Tax Rate - The effective income tax rate for the three months ended October 31, 2024 was 23.3%, down from 41.6% in the prior year[93]. Working Capital - The Company had working capital of $59,965,000 at October 31, 2024, compared to $56,037,000 at April 30, 2024[97]. Acquisition - The Company completed the acquisition of Nu Aire for $55.0 million, enhancing its capabilities in laboratory furnishings[82]. - The Company continues to focus on expanding its capabilities and presence domestically following the acquisition of Nu Aire[101].