Kewaunee Scientific Reports Decline in Net Sales and Increased Order Backlog in Q2 Fiscal 2025

Kewaunee Scientific Corporation reported a decline in net sales for the second quarter of fiscal 2025, with revenues totaling $47.8 million, down from $50.4 million in the same period last year. For the six months ending October 31, 2024, total sales reached $96.2 million, compared to $100.3 million in the prior year. The decrease in overall sales was attributed to a significant drop in international sales, which fell by 30.1% to $11.4 million, primarily due to construction delays in India. Conversely, domestic sales increased by 6.5% to $36.4 million, driven by higher product demand.

The company's gross profit margin improved to 29.2% for the quarter, up from 26.7% in the previous year, reflecting enhanced manufacturing productivity and effective cost-containment measures. Operating expenses rose to $9.5 million, or 19.9% of sales, compared to $8.4 million, or 16.6% of sales, in the prior year. This increase was largely due to higher consulting and professional fees associated with the recent acquisition of Nu Aire, Inc., which was completed on November 1, 2024, for $55 million. The acquisition is expected to enhance Kewaunee's product offerings and market presence.

Kewaunee's order backlog increased to $184.4 million as of October 31, 2024, compared to $146.3 million a year earlier, indicating a strong demand for its products. The company reported net earnings of $3.0 million, or $1.01 per diluted share, for the quarter, an increase from $2.7 million, or $0.93 per diluted share, in the same period last year. For the six-month period, net earnings were $5.2 million, slightly down from $5.3 million in the prior year.

The company’s liquidity position remains strong, with working capital of $60.0 million and a current ratio of 2.6-to-1.0 as of October 31, 2024. Cash flows from operating activities provided $7.6 million during the first half of the fiscal year, although the company used $961,000 in capital expenditures. The termination of its previous revolving credit facility in September 2024 and the establishment of a new loan agreement with PNC Bank to finance the Nu Aire acquisition are significant developments in Kewaunee's financial strategy.

Looking ahead, Kewaunee anticipates continued challenges in predicting future demand due to its role as a supplier to dealers and subcontractors. The company aims to leverage the acquisition of Nu Aire to expand its capabilities and market reach, particularly in laboratory furnishings. The management remains focused on supporting its distribution partners while navigating the complexities of the laboratory construction market, which is influenced by various external factors including raw material costs and project timelines.