Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported results for its first quarter ended July 31, 2015.
Sales for the quarter were $31,089,000, a 2% increase from sales of $30,534,000 in the prior year. Domestic sales for the quarter were $24,315,000, up slightly from sales of $24,248,000 in the first quarter of last year. International sales for the quarter were $6,774,000, up 8% from sales of $6,286,000 in the first quarter last year.
Net earnings for the quarter were $940,000, or $0.35 per diluted share, as compared to net earnings of $1,234,000, or $0.47 per diluted share, in the first quarter last year. Earnings for the quarter were unfavorably impacted by the shipments of the remaining orders in the backlog that were bid in the prior year at extremely competitive pricing. This impact was due to a major competitor exiting the marketplace, and to a lesser extent, by a higher effective income tax rate.
In-coming orders for the Domestic business were strong during the quarter, as opportunities increased from the improving marketplace for laboratory furniture and scientific equipment in the United States. The Company continues to see and pursue new opportunities in the International markets, particularly in the growth markets of India and the Middle East, although the timing of international incoming orders continues its unevenness from quarter-to-quarter.
The order backlog was $86.7 million at July 31, 2015, as compared to $82.7 million at July 31, 2014, and $90.1 million at April 30, 2015. An increase in the Domestic backlog was offset by shipments of several large international orders during the quarter.
The Company's balance sheet and financial condition remain strong. Unrestricted cash on hand was $2.9 million at the end of the quarter, as compared to $4.4 million at the end of the first quarter last year. Cash of $888,000 was used during the current quarter for the final annual installment toward the purchase of the minority interest in one of the Company's Asia subsidiaries. Working capital was $28.5 million, as compared to $27.5 million at the end of the first quarter last year. Short-term debt and interest rate swaps were $4.9 million at the end of the quarter, as compared to $5.2 million at the end of the first quarter last year, and total bank borrowings and interest rate swaps were $9.0 million, as compared to $9.7 million at the end of the first quarter last year.
"In our Domestic business, incoming orders continued to be strong during the quarter, and profit margins improved over those of the past two quarters," said David M. Rausch, Kewaunee's President and Chief Executive Officer. "Our International business continues to see project opportunities globally from our expanded sales organization and the continued strengthening of the Kewaunee brand worldwide.
"Looking forward, I remain optimistic we will continue to experience sales growth in fiscal year 2016. I also expect earnings to improve this fiscal year as the United States economy continues its recovery and the marketplace adjusts to the impact of the former competitor leaving the industry. My optimism is also based on our strong order backlog and expectations that our International business will continue its long-term progress."