Kewaunee Scientific second quarter sales increase 20% to $31,185,000

Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported sales and earnings for its second quarter ended October 31, 2012.

Sales for the quarter were a record $31,185,000, up 20% from sales of $25,962,000 in the second quarter last year. Net earnings for the quarter were $649,000, or $0.25 per diluted share, as compared to a net loss of $125,000, or $0.05 per diluted share, in the second quarter last year. Earnings for the quarter were favorably impacted by the increase in sales and reduced manufacturing, overhead, and administrative costs.

Domestic sales for the quarter were $25,684,000, up 8% from sales of $23,826,000 in the second quarter last year. Demand for privately-funded projects continued to hold up relatively well during the quarter, while opportunities for publicly-funded projects remained well below pre-recession levels as state and local governments continued to receive significantly lower funding for capital projects.

International sales for the quarter were $5,502,000, up 157% from $2,136,000 in the second quarter last year, as several large international projects shipped during the quarter. The Company continues to see increased opportunities for sales and orders in the growing Asia and Middle East laboratory markets through its strengthened and broadened international dealer network.

The order backlog increased to a record $90.8 million at October 31, 2012, up from $78.0 million at October 31, 2011, as the Company continued to strengthen its market position.

Sales for the six months ended October 31, 2012 were $57,868,000, up 11% over sales of $52,283,000, in the same period last year.  Domestic sales were $48,312,000, up 2% over sales of $47,222,000 in the same period last year.  International sales were $9,556,000, up 89% from sales of $5,061,000 in the same period last year. Net earnings for the six months ended October 31, 2012 were $1,283,000, or $0.50 per diluted share, as compared to a net loss of $103,000, or $0.04 per diluted share, in the same period last year.

The Company's balance sheet continues to be strong. Cash on hand was $6.5 million at the end of the quarter, as compared to $4.1 million at the end of the same period last year.  Working capital was $24.2 million, as compared to $21.5 million at the end of the same period last year. Short-term borrowings under the Company's $15 million bank line of credit were $5.7 million, as compared to $7.3 million at the end of the same period last year. Total bank borrowings and capital lease obligations were $9.3 million, as compared to $11.2 million at the end of the same period last year, and the debt-to-equity ratio was .30-to-1, as compared to .36-to-1 at the end of the same period last year.

"I am pleased with our progress in a number of important areas," said William A. Shumaker, Kewaunee's Chief Executive Officer. "Sales, earnings, and incoming orders were very strong for the quarter. We also made good progress in improving the quality of our order backlog, as we shipped several large direct contract projects from the backlog with less favorable product mixes and margins. This bodes well for earnings and margins going forward, as these type orders are generally being replaced in our backlog with orders received through our dealer organization, which typically have a more favorable product mix and are more profitable. I am confident this progress will continue in the second half of the year. It should be noted that third quarter is historically our slowest due to the holidays and the construction cycle.

"We continue to see positive results from our strengthened dealer network. Our dealers are ahead of their order booking goals for the fiscal year, and they continue to provide us increased bidding opportunities and orders. Working in partnership with them, we are also making excellent progress with laboratory planners and architects to strengthen our relationships and increase their preference for the Kewaunee brand.

"I should note that one of our directors, Patrick L. McCrory, has been elected Governor of North Carolina and will be resigning from the Kewaunee Board when he takes office in January 2013. Since joining our Board in May 2009, Pat has served the Company and our stockholders well, as he shared unique insights and perspectives obtained through his impressive career in the private sector and as a seven-term Mayor of Charlotte. The entire Board of Directors is grateful to Pat for his leadership and guidance."