Kewaunee Scientific Corporation (Nasdaq: KEQU) today reported results for its second quarter ended October 31, 2015.
Sales for the quarter were $31,037,000, a 2.6% increase from sales of $30,258,000 in the prior year. Domestic sales for the quarter were $26,279,000, up 11.2% from sales of $23,629,000 in the second quarter of last year. International sales for the quarter were $4,758,000, down 28.2% from sales of $6,629,000 in the second quarter last year.
Net earnings for the quarter were $695,000, or $0.26 per diluted share, as compared to net earnings of $1,202,000, or $0.45 per diluted share, in the second quarter last year. Earnings for the quarter were lower in comparison as a result of particularly strong International sales due to the timing of a shipment of a large order during the second quarter of last year. Earnings were also unfavorably impacted by non-recurring costs related to the retirement of a key executive.
The order backlog was $92.4 million at October 31, 2015, as compared to $84.5 million at October 31, 2014, and $86.7 million at July 31, 2015. Incoming 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, although the timing of international incoming orders continues its unevenness from quarter-to-quarter.
The Company's balance sheet and financial condition remain strong. Unrestricted cash on hand was $3.3 million at the end of the quarter, as compared to $4.9 million at the end of the second quarter last year. Working capital was $29.0 million, as compared to $27.9 million at the end of the second quarter last year. Short-term debt and interest rate swaps were $5.5 million at the end of the quarter, as compared to $0.9 million at the end of the second quarter last year, and total bank borrowings and interest rate swaps were $9.5 million, as compared to $5.3 million at the end of the second quarter last year.
"Improving conditions in the Domestic marketplace resulted in strong incoming orders for the quarter," said David M. Rausch, Kewaunee's President and Chief Executive Officer. "For our International business, a large order shipped in the second quarter of last year adversely affected the year-over-year comparison with this quarter; however, our expanded sales organization and continued strengthening of the Kewaunee brand worldwide enable us to take advantage of numerous International opportunities where we are involved in the design and quote process."
"Looking forward, I remain optimistic we will continue to experience sales growth in fiscal year 2016. Going forward, I expect earnings to continue to improve through the balance of the fiscal year as we focus on improving our productivity and delivering cost reductions. We expect the domestic laboratory casework marketplace will continue to be strong with improved demand for both new construction and renovation projects. My optimism is also based on our strong order backlog and expectations that our International business will continue its long-term progress."
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