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Kewaunee Scientific Corp. Reports Operating Results (10-Q)

December 11, 2009 | About:
10qk

10qk

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Kewaunee Scientific Corp. (KEQU) filed Quarterly Report for the period ended 2009-10-31.

Kewaunee Scientific Corporation is a recognized leader in the design, manufacture, and installation of scientific and technical furniture. The Company's corporate headquarters and domestic manufacturing facilities are located in Statesville, North Carolina. The Company also has subsidiaries in Singapore and Bangalore, India that serve the Asian markets. Kewaunee Scientific Corp. has a market cap of $38.7 million; its shares were traded at around $15.11 with a P/E ratio of 9.1 and P/S ratio of 0.4. The dividend yield of Kewaunee Scientific Corp. stocks is 2.6%.

Highlight of Business Operations:

Sales for the six months ended October 31, 2009 were $53,337,000, a slight increase from sales of $53,127,000 in the same period last year. Sales from Domestic Operations were $48,071,000, an increase of 7% from the prior year period. Sales from International Operations were $5,266,000, a decrease of 37% from the prior year period. The decline in international operations sales for both the three and six month periods resulted from customer changes in their product delivery dates. The order backlog at October 31, 2009 was $65.2 million, as compared to a backlog of $62.7 million at April 30, 2009 and $61.6 million at October 31, 2008.

Operating expenses for the three months ended October 31, 2009 were $3,976,000, or 14.7% of sales, as compared to $3,858,000, or 13.9% of sales, in the comparable period of the prior year. Operating expenses for the six months ended October 31, 2009 were $7,942,000, or 14.9% of sales, as compared to $7,444,000, or 14.0% of sales, in the comparable period of the prior year. The increase in operating expenses for the current quarter was primarily due to an increase of $286,000 in pension expense, partially offset by a decrease in compensation expense of $127,000. The increase in operating expenses for the current year six-month period was primarily due to an increase of $501,000 in pension expense, partially offset by a decrease in compensation expense of $76,000.

Interest expense was $39,000 and $80,000 for the three and six months ended October 31, 2009, respectively, as compared to $93,000 and $182,000 for the comparable periods of the prior year. The decrease in interest expense for the current year periods resulted from lower interest rates on advances.

Income tax expense of $751,000 and $1,340,000 was recorded for the three and six months ended October 31, 2009, respectively, as compared to income tax expense of $566,000 and $1,107,000 recorded for the comparable periods of the prior year. The effective tax rates were 34.2% and 33.9% for the three and six months ended October 31, 2009, respectively, and were 27.4% and 29.9% for the three and six months ended October 31, 2008. The effective tax rates for each of the three and six month periods differs from the statutory rate primarily due to the impact of varying income tax rates on income earned by the Companys foreign subsidiaries. In addition to this factor, the effective tax rates for all the periods were favorably impacted by earned state and federal tax credits. The increase in the effective tax rates in the current year periods as compared to the prior year periods resulted primarily from a lower portion of earnings in the current year periods from subsidiaries located in geographic locations with lower income tax rates.

Net earnings were $1,352,000, or $0.53 per diluted share, and $2,423,000, or $0.95 per diluted share, for the three and six months ended October 31, 2009. Net earnings were $1,464,000, or $0.57 per diluted share, and $2,445,000, or $0.95 per diluted share, for the three and six-months ended October 31, 2008.

The Companys financing activities used cash of $934,000 during the six months ended October 31, 2009. Cash used included cash dividends paid of $461,000, payments on obligations of capital leases of $144,000, and purchases of treasury stock of $114,000 and $350,000 for a reduction in short-term borrowing, partially offset by $135,000 in proceeds received from the exercise of stock options. Financing activities used cash of $107,000 in the same period for the prior year, which included $408,000 for cash dividends, $192,000 for payments on obligations of capital leases, and $198,000 for the purchase of treasury stock, partially offset by increased short-term borrowings of $415,000 and $276,000 received from the exercise of stock options.

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