Kewaunee Scientific (US:KEQU) ZACKS·2025-12-12 17:11Core Viewpoint - Kewaunee Scientific Corporation experienced a decline in share price despite significant revenue growth, indicating potential challenges in profitability and operational efficiency [1][2][10]. Earnings & Revenue Performances - For the quarter ended October 31, 2025, Kewaunee reported net sales of $70.1 million, a 46.8% increase from $47.8 million in the same period last year [2]. - Net earnings attributable to Kewaunee decreased to $2.4 million from $3 million year-over-year, with diluted earnings per share falling to 82 cents from $1.01 [2]. Profitability Metrics - Pre-tax earnings declined 12.2% year-over-year to $3.5 million, while EBITDA increased to $5.8 million from $4.9 million, reflecting improved operating scale despite margin pressures [3][10]. Key Business Metrics - Order backlog was $192.9 million as of October 31, 2025, up from $184.4 million a year earlier but down from $214.6 million at the end of fiscal 2025 [4]. - Total cash on hand decreased to $13.7 million from $17.2 million at April 30, 2025, while working capital improved to $67.8 million from $60 million year-over-year [4]. Debt and Balance Sheet - Long-term debt decreased to $58.2 million from $60.7 million, and the debt-to-equity ratio improved to 0.88-to-1 from 0.99-to-1, indicating a strengthening balance sheet [5]. Segment Performance - Domestic sales increased 51.7% year-over-year to $55.2 million, driven by the acquisition of Nu Aire, Inc., although net earnings in the domestic segment fell to $3.6 million from $4.5 million due to lower manufacturing volumes [6]. - International sales rose 31% year-over-year to $14.9 million, with net earnings improving to $0.6 million from $0.4 million [6]. Management Commentary - Management noted volatility in project delivery timing but emphasized strong quoting and booking activity, which supports a robust backlog [7][11]. - The performance of Nu Aire was highlighted as a key factor offsetting weaknesses in the legacy construction-driven business [8]. Factors Influencing Results - Revenue growth was attributed to higher sales volumes in both Domestic and International segments, with the Nu Aire acquisition contributing significantly [9]. - Profitability pressures stemmed from lower manufacturing volumes in the Domestic business and increased operating expenses related to integration and corporate investments [10]. Future Outlook - Management expects continued volatility in project delivery timing but remains confident in strong backlog levels and sustained demand into fiscal 2027 [11]. - Early repayment of seller notes was noted as a positive development for the balance sheet and potential future acquisitions [11]. Other Developments - The quarter reflected ongoing integration of Nu Aire, with related fees impacting results but at lower levels than the previous year [12].