Kewaunee Scientific (KEQU) - 2023 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended October 31, 2022, were $54,564,000, a 39.9% increase from $39,031,000 in the same period of 2021[10] - Gross profit for the six months ended October 31, 2022, was $14,897,000, up 60.5% from $9,271,000 in the prior year[10] - Net loss attributable to Kewaunee Scientific Corporation for the three months ended October 31, 2022, was $243,000, compared to a net loss of $3,100,000 in the same period of 2021[10] - Comprehensive loss attributable to Kewaunee Scientific Corporation for the six months ended October 31, 2022, was $1,451,000, a decrease from $4,604,000 in the prior year[13] - For the six months ended October 31, 2022, the net loss was $833,000, a significant improvement compared to a net loss of $4,389,000 for the same period in 2021[21] - Operating profit for the three months ended October 31, 2022, was $755,000, a significant improvement from an operating loss of $2,890,000 in the prior year[10] Revenue and Sales - Revenue for the six months ended October 31, 2022, totaled $104,687,000, an increase from $78,524,000 in the same period of 2021, representing a growth of approximately 33.3%[31] - The company recognized $100,955,000 in revenue over time and $3,732,000 at a point in time for the six months ended October 31, 2022[31] - For the quarter ended October 31, 2022, the Company reported sales of $54,564,000, an increase of 39.9% from $39,031,000 in the same period last year[60] - Domestic sales for the quarter were $37,991,000, up 26.9% from $29,934,000 in the comparable period of the prior year[60] - International sales for the quarter were $16,573,000, up 82.2% from $9,097,000 in the comparable period of the prior year[60] - For the six months ended October 31, 2022, total sales were $104,687,000, an increase of 33.3% from $78,524,000 in the same period last year[61] - Domestic sales for the six months were $75,459,000, up 26.6% from $59,597,000 in the comparable period of the prior year[61] - International sales for the six months were $29,228,000, up 54.4% from $18,927,000 in the comparable period of the prior year[61] Assets and Liabilities - Total assets as of October 31, 2022, were $119,118,000, slightly up from $118,773,000 as of April 30, 2022[19] - Cash and cash equivalents increased to $9,419,000 as of October 31, 2022, from $4,433,000 at the end of April 2022[19] - Total current liabilities were $42,858,000 as of October 31, 2022, compared to $42,293,000 as of April 30, 2022[19] - The carrying value of the financing liability as of October 31, 2022, was $29,067,000, net of debt issuance costs[42] - The total minimum lease payments under non-cancelable leases as of October 31, 2022, were $9,745,000 for operating leases and $235,000 for financing leases[46] Cash Flow and Working Capital - Cash flows from operating activities resulted in a net cash used of $586,000, a notable decrease from $6,071,000 in the prior year[21] - Total cash, cash equivalents, and restricted cash at the end of the period was $16,317,000, up from $5,532,000 at the end of the previous year[21] - The Company had working capital of $47,756,000 at October 31, 2022, down from $49,272,000 at April 30, 2022[71] - The Company used cash of $586,000 during the six months ended October 31, 2022, primarily due to decreases in accounts payable and other accrued expenses[73] Deferred Revenue and Order Backlog - The closing balance of contract liabilities included in deferred revenue was $11,398,000 at October 31, 2022, compared to $3,529,000 at April 30, 2022[32] - The increase in deferred revenue during the six months ended October 31, 2022, was $7.9 million, primarily related to advance payments for a large international order[73] - The Company's order backlog was $157.8 million at October 31, 2022, compared to $139.7 million at October 31, 2021[62] Tax and Operating Expenses - Income tax expense for the three months ended October 31, 2022, was $570,000, with an effective tax rate of 125.0%[50] - Operating expenses for the three months ended October 31, 2022, were $7,946,000, or 14.6% of sales, compared to $6,487,000, or 16.6% in the prior year[64] - The effective income tax rate for the three months ended October 31, 2022, was 125.0%, compared to (6.8)% in the prior year[67] Financing Activities - The company completed a sale-leaseback financing transaction, generating proceeds of $13,456,000, which will be repaid over a 20-year term[21] - The initial basic rent under the lease agreement is approximately $158,000 per month, with annual increases of about 2%[39] - The Company executed a Sale-Leaseback financing transaction on March 24, 2022, to provide additional liquidity[70] Inventory and Quality Improvement - Inventories increased to $24,502,000 as of October 31, 2022, from $23,796,000 at April 30, 2022[33] - The Company continues to improve the quality of the order backlog by replacing lower margin direct sales orders with higher margin product orders[75] - The Company's ability to predict future demand remains limited, influenced by the number of laboratory construction projects planned[74]