Kewaunee Scientific Reports 43.5% Revenue Growth in Third Quarter, Net Earnings Decline

Kewaunee Scientific Corporation reported significant financial results for the third quarter and nine months ended January 31, 2025, reflecting a notable increase in revenue and changes in profitability compared to the previous fiscal period. The company achieved net sales of $67.2 million for the quarter, a 43.5% increase from $46.8 million in the same period last year. For the nine months, sales rose to $163.3 million, up 11.0% from $147.1 million. The gross profit for the quarter was $18.4 million, yielding a gross margin of 27.4%, compared to 25.7% in the prior year. However, net earnings attributable to Kewaunee fell to $1.4 million, or $0.45 per diluted share, down from $2.5 million, or $0.85 per diluted share, in the same quarter last year.

The financial performance was influenced by the acquisition of Nu Aire, Inc., completed on November 1, 2024, for $55 million. This acquisition is expected to enhance Kewaunee's capabilities in laboratory furnishings and expand its market presence. The integration of Nu Aire contributed to a 63.6% increase in domestic sales, which reached $52.0 million, while international sales remained relatively flat at $15.2 million, impacted by delays in customer site readiness in India. The company’s order backlog also increased significantly to $221.6 million as of January 31, 2025, compared to $152.3 million a year earlier.

Operating expenses for the quarter rose to $16.1 million, or 24.0% of sales, up from $8.2 million, or 17.6% of sales, in the prior year. This increase was largely attributed to costs associated with the Nu Aire acquisition, including higher consulting and professional fees. Interest expenses also increased significantly to $1.1 million for the quarter, compared to $411,000 in the previous year, reflecting higher borrowing levels. The effective tax rate for the quarter was negative at (8.5)%, influenced by the company's foreign operations and a discrete tax benefit from stock issuance.

Kewaunee's balance sheet showed total assets of $189.1 million as of January 31, 2025, up from $134.8 million at the end of the previous fiscal year, primarily due to the acquisition. The company reported working capital of $58.4 million, with a current ratio of 2.2-to-1.0. Looking ahead, Kewaunee anticipates continued challenges in predicting demand due to its role as a supplier to dealers and the dependency on laboratory construction projects. However, the company remains optimistic about leveraging its expanded capabilities from the Nu Aire acquisition to enhance its market position and drive future growth.