Kewaunee Scientific Reports Results for Second Quarter, Suspension of Dividend.

 
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STATESVILLE, N.C: Kewaunee Scientific Corporation (NASDAQ: KEQU) today reported results for its second quarter of fiscal year 2020, ended October 31, 2019.

Sales for the quarter were $39,722,000, a 6.6% increase from sales of $37,278,000 in the prior year second quarter. Domestic sales for the quarter were $31,584,000, up 3.1% from sales of $30,622,000 in the second quarter of last year. International sales for the quarter were $8,138,000, up 22.3% from sales of $6,656,000 in the second quarter last year. The increase in Domestic sales was a result of increased activity in the Company's direct sales markets offsetting weakness in dealer activity. International sales increased year-over-year as a result of continued deliveries of a large, strategic order in the Middle East market.

Pre-tax loss for the quarter was $158,000 compared to a pre-tax profit of $1,760,000 for the prior year period. Profitability was negatively impacted during the quarter by increased operating costs within the Company's Domestic segment and a number of low margin orders the Company aggressively pursued and secured over the past year. Profitability was also negatively impacted by a strategic order in the Middle East that the Company aggressively secured over two years ago at lower than normal margins. Operating costs were also higher in India as we made investments in our capabilities that have already strengthened our position in the Indian market.

Net earnings decreased 263.5% for the quarter to a loss of $2,178,000, or ($0.79) per diluted share, as compared to net earnings of $1,332,000, or $0.48 per diluted share, for the quarter ended October 31, 2018. In addition to the factors mentioned above, this loss also reflects $353,000, or $0.13 per diluted share, for additional Indian withholding tax expense reported in the period on cash repatriated in the second quarter to extinguish the Company's long-term debt obligation. The reported loss also includes $1,730,000, or $0.63 per diluted share, of non-cash expense for foreign withholding tax on previously reported historical earnings. As part of a revised global treasury management strategy, the Company has made a one-time election to revoke its indefinite reinvestment accounting election that permitted the deferral of recognition of foreign withholding tax on net earnings as incurred. Revoking this accounting election provides the Company more flexibility in its global treasury management as well as cash to invest...

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