Kewaunee Scientific (KEQU) - 2025 Q4 - Annual Results

Financial Performance Overview Kewaunee reported strong sales growth in Q4 and full year fiscal 2025, driven by the Nu Aire acquisition and higher volumes, with adjusted earnings showing substantial improvement despite GAAP declines due to prior-year non-recurring items Fourth Quarter Fiscal Year 2025 Results In the fourth quarter of fiscal year 2025, Kewaunee reported a significant 36.1% increase in sales year-over-year, driven by higher volumes and the Nu Aire acquisition. While GAAP net earnings and EPS declined due to large, non-recurring tax benefits in the prior-year quarter, adjusted earnings, which exclude acquisition costs and prior-year anomalies, showed substantial growth. Adjusted pre-tax earnings rose 56.7% and the order backlog remained strong at $214.6 million Q4 FY2025 vs Q4 FY2024 Performance (GAAP) (in millions) | Metric | Q4 FY2025 | Q4 FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $77.1 million | $56.7 million | +36.1% | | Pre-Tax Earnings | $7.1 million | $1.3 million | +430.7% | | Net Earnings | $4.9 million | $11.0 million | -56.0% | | Diluted EPS | $1.63 | $3.71 | -56.1% | | EBITDA | $9.7 million | $2.3 million | +327.0% | - The significant decrease in GAAP Net Earnings and EPS is primarily due to two non-recurring items in the prior year's fourth quarter: a one-time, non-cash pension termination expense and a substantial tax benefit from the release of a valuation allowance[4] Q4 FY2025 vs Q4 FY2024 Performance (Adjusted) (in millions) | Metric | Q4 FY2025 (Adjusted) | Q4 FY2024 (Adjusted) | Change | | :--- | :--- | :--- | :--- | | Pre-Tax Earnings | $8.4 million | $5.4 million | +56.7% | | Net Earnings | $5.8 million | $4.6 million | +26.6% | | Diluted EPS | $1.95 | $1.55 | +25.8% | | EBITDA | $10.3 million | $6.3 million | +64.2% | - The company's order backlog was $214.6 million as of April 30, 2025, a significant increase from $155.6 million on April 30, 2024, indicating strong future demand[3] Full Year Fiscal Year 2025 Results For the full fiscal year 2025, sales grew by 18.0% to $240.5 million. Similar to the quarterly results, GAAP net earnings were lower than the prior year due to non-recurring items. However, on an adjusted basis, which excludes $6.0 million in costs related to the Nu Aire acquisition, pre-tax earnings increased by 21.5% and adjusted diluted EPS rose to $5.37 from $4.19, reflecting strong underlying operational performance Full Year FY2025 vs FY2024 Performance (GAAP) (in millions) | Metric | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Sales | $240.5 million | $203.8 million | +18.0% | | Pre-Tax Earnings | $14.8 million | $13.1 million | +12.7% | | Net Earnings | $11.4 million | $18.8 million | -39.2% | | Diluted EPS | $3.83 | $6.38 | -40.0% | | EBITDA | $21.6 million | $16.6 million | +29.8% | - Fiscal year 2025 results were impacted by $6.0 million in costs related to the acquisition, integration, and purchase accounting for Nu Aire, which reduced pre-tax earnings[17] Full Year FY2025 vs FY2024 Performance (Adjusted) (in millions) | Metric | FY2025 (Adjusted) | FY2024 (Adjusted) | Change | | :--- | :--- | :--- | :--- | | Pre-Tax Earnings | $20.8 million | $17.1 million | +21.5% | | Net Earnings | $16.0 million | $12.3 million | +29.8% | | Diluted EPS | $5.37 | $4.19 | +28.2% | | EBITDA | $26.5 million | $20.7 million | +28.4% | Segment Performance Analysis The Domestic segment drove significant sales and profit growth, while the International segment saw mixed results due to project delays, and the Corporate segment reported losses from acquisition costs and the absence of prior-year benefits Domestic Segment The Domestic segment was the primary growth engine for the company in fiscal 2025. Sales surged 54.7% in Q4 and 30.7% for the full year, driven by higher manufacturing volumes and the strategic acquisition of Nu Aire. This top-line growth translated into improved profitability for both the quarter and the full year Domestic Segment Performance (in millions) | Period | Sales | % Change (YoY) | Net Earnings | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Q4 FY2025 | $55.5 million | +54.7% | $5.1 million | +49.5% | | Full Year FY2025 | $179.4 million | +30.7% | $15.4 million | +30.2% | - The improvement in domestic sales and profitability was driven by higher manufacturing volumes and the incorporation of Nu Aire's results following the acquisition[10][19] International Segment The International segment experienced mixed results. In Q4, sales increased by 3.9% as customer site delays that had previously hampered performance began to ease, allowing for increased deliveries. However, for the full fiscal year, sales decreased by 8.2% and profitability slightly declined, reflecting the cumulative impact of these project delays throughout the year International Segment Performance (in millions) | Period | Sales | % Change (YoY) | Net Earnings | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | Q4 FY2025 | $21.7 million | +3.9% | $1.6 million | +41.2% | | Full Year FY2025 | $61.1 million | -8.2% | $2.9 million | -5.0% | - The full-year decrease in sales and profitability was primarily impacted by customer site delays that pushed out the timing of deliveries and billings[20] Corporate Segment The Corporate segment reported a net loss of $1.9 million for Q4 and $6.9 million for the full fiscal year, a stark contrast to the net earnings reported in the prior year. This was driven by a combination of factors: the absence of significant one-time tax benefits and pension adjustments that boosted prior-year results, and the incurrence of new costs in the current year related to the Nu Aire acquisition and Sarbanes-Oxley compliance readiness Corporate Segment Net Earnings (Loss) (in millions) | Period | FY2025 Net Loss | FY2024 Net Earnings | | :--- | :--- | :--- | | Q4 | ($1.9 million) | $6.5 million | | Full Year | ($6.9 million) | $3.9 million | - The variance from the prior year is due to two main factors: 1) The prior year included large non-recurring transactions (pension and tax benefits) 2) The current year includes professional service fees for the Nu Aire acquisition and Sarbanes-Oxley 404(b) compliance costs[12][21] Financial Condition and Management Outlook The company's financial position reflects the Nu Aire acquisition, with increased debt and improved working capital, as management expresses confidence in continued organic and inorganic growth strategies Working Capital and Debt As of April 30, 2025, the company's financial position reflects the Nu Aire acquisition. Cash on hand decreased to $17.2 million, primarily to fund the transaction. Both short-term and long-term debt increased significantly, raising the debt-to-equity ratio to 0.99-to-1 from 0.70-to-1 in the prior year. Despite the higher leverage, working capital improved to $64.7 million Key Balance Sheet Items (as of April 30) (in millions) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Cash on Hand | $17.2 million | $25.9 million | -33.8% | | Working Capital | $64.7 million | $56.0 million | +15.4% | | Total Debt (Short & Long) | $65.5 million | $31.6 million | +107.4% | | Debt-to-Equity Ratio | 0.99-to-1 | 0.70-to-1 | Increased | - The decrease in cash and increased in debt were primarily related to the completion of the Nu Aire acquisition[22][23] Management Commentary and Strategic Outlook Management expressed strong satisfaction with the fiscal year's "exceptional performance," citing a robust backlog and the successful execution of its strategy. The acquisition of Nu Aire is highlighted as a significant step in the company's growth journey, bringing complementary strengths and a shared vision for laboratory innovation. Looking ahead, Kewaunee plans to continue pursuing both organic and inorganic growth, leveraging its strong culture and channel partnerships - The company's strategy of investing in its product portfolio, manufacturing assets, and dealer relationships continues to drive performance improvement and market momentum[13] - The acquisition of Nu Aire, Inc. is a key strategic move to combine two market leaders with complementary strengths and a common vision for laboratory innovation[24] - Despite industry instability from geopolitical uncertainty and supply chain disruptions, management states Kewaunee has responded with resilience and views uncertainty as an opportunity[24] - The company expects to continue to grow both organically and inorganically, positioning itself as a trusted partner for business owners looking for stewardship and continuity[24][25] Financial Statements and Reconciliations Detailed reconciliations of non-GAAP measures provide clarity on core operational performance, while condensed consolidated financial statements reflect significant asset and liability increases due to the Nu Aire acquisition Reconciliation of Non-GAAP Measures The report provides detailed reconciliations for non-GAAP metrics, including Adjusted EBITDA and Adjusted Net Earnings. These adjustments are crucial for understanding the company's core operational performance by removing the distorting effects of one-time events. For fiscal 2025, adjustments primarily remove costs related to the Nu Aire acquisition. For fiscal 2024, adjustments remove the impact of a pension termination and a large valuation allowance release - The company uses non-GAAP measures like Adjusted EBITDA and Adjusted Net Earnings to provide investors with a clearer view of business trends by excluding items like acquisition fees (FY25) and pension settlement costs (FY24)[29][30] FY2025 Consolidated EBITDA Reconciliation (in millions) | Metric | Amount | | :--- | :--- | | Net Earnings | $11.4 million | | Add: Interest, Taxes, D&A | $10.2 million | | EBITDA | $21.6 million | | Add: Professional & Other Fees | $4.9 million | | Adjusted EBITDA | $26.5 million | FY2025 Adjusted Net Earnings Reconciliation (in millions) | Metric | Amount | | :--- | :--- | | Net Earnings (As Reported) | $11.4 million | | Add: Professional & Other Fees (Net of Tax) | $4.6 million | | Adjusted Net Earnings | $16.0 million | Condensed Consolidated Financial Statements The condensed consolidated financial statements provide the official GAAP results. The Statement of Operations confirms the 18% year-over-year revenue growth to $240.5 million. The Balance Sheet clearly shows the impact of the Nu Aire acquisition, with Total Assets increasing from $134.8 million to $194.7 million, driven by the addition of $17.8 million in intangible assets and $12.5 million in goodwill. Correspondingly, Total Liabilities rose from $78.6 million to $128.4 million, largely due to increased long-term debt to finance the deal Condensed Consolidated Statement of Operations (Full Year) (in millions) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Sales | $240.5 million | $203.8 million | | Gross Profit | $68.9 million | $52.1 million | | Operating Profit | $17.8 million | $18.3 million | | Net Earnings Attributable to KEQU | $11.4 million | $18.8 million | Condensed Consolidated Balance Sheet (as of April 30) (in millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Current Assets | $118.4 million | $96.8 million | | Total Assets | $194.7 million | $134.8 million | | Total Current Liabilities | $53.7 million | $40.8 million | | Total Liabilities | $128.4 million | $78.6 million | | Total Stockholders' Equity | $66.2 million | $56.2 million | Company Information and Disclosures Kewaunee Scientific, a global leader in laboratory furniture, expanded its portfolio with the acquisition of Nu Aire, a key manufacturer of biological safety cabinets, while cautioning investors on forward-looking statements due to various market and integration risks About Kewaunee Scientific and Nu Aire Kewaunee Scientific, founded in 1906, is a global leader in designing and manufacturing laboratory furniture and technical products, with headquarters in Statesville, NC, and manufacturing facilities in the US and India. Its newly acquired subsidiary, Nu Aire, founded in 1971 and based in Plymouth, MN, is a leading manufacturer of biological safety cabinets and other essential lab equipment, which complements Kewaunee's existing product portfolio - Kewaunee Scientific is a global leader in the design, manufacture, and installation of laboratory, healthcare, and technical furniture products, including casework, fume hoods, and modular systems[31] - The newly acquired subsidiary, Nu Aire, is a leading manufacturer of complementary laboratory products such as biological safety cabinets, CO2 incubators, and ultralow freezers[32] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning investors that any forward-looking statements in the press release are subject to known and unknown risks and uncertainties. These factors, which include economic conditions, customer demand, and risks related to the Nu Aire acquisition, could cause actual results to differ materially from projections. The company directs readers to its SEC filings for a comprehensive list of risk factors and disclaims any obligation to update these statements - The press release includes forward-looking statements concerning future financial conditions and results, which are subject to significant risks and uncertainties[34] - Key risks include the ability to realize benefits from the Nu Aire acquisition, competitive and economic conditions, supply chain disruptions, and changes in customer demand[34]