UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

_________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~July 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 0-5286

_________________________

KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

_________________________


Delaware						38-0715562
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

2700 West Front Street Statesville, North Carolina						28677-2927
(Address of principal executive offices)						(Zip Code)

Registrant's telephone number, including area code: (704) 873-7202

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Trading Symbol(s) Name of Exchange on which registered

Common Stock, $2.50 par value KEQU NASDAQ Global Market

_________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~March~~September 510, 2024, the registrant had outstanding 2,~~875~~871,~~104~~808 shares of Common Stock.

KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~JANUARY~~JULY 31, 2024

		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Statements of Operations (unaudited)– Three and Nine Months Ended January 31, 2024 and 2023	1
	Condensed Consolidated Statements of Operations (unaudited)– Three Months Ended July 31, 2024 and 2023	1
	Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)– Three and Nine Months Ended January 31, 2024 and 2023	2
	Condensed Consolidated Statements of Comprehensive Earnings (unaudited)– Three Months Ended July 31, 2024 and 2023	2
	Condensed Consolidated Statements of Stockholders' Equity (unaudited)– Three and Nine Months Ended January 31, 2024 and 2023	3
	Condensed Consolidated Statements of Stockholders' Equity (unaudited)– Three Months Ended July 31, 2024 and 2023	3
	Condensed Consolidated Balance Sheets– January 31, 2024 (unaudited) and April 30, 2023	4
	Condensed Consolidated Balance Sheets– July 31, 2024 (unaudited) and April 30, 2024	4
	Condensed Consolidated Statements of Cash Flows (unaudited)– Nine Months Ended January 31, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows (unaudited)– Three Months Ended July 31, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1514
Item 4.	Controls and Procedures	1514
PART II. OTHER INFORMATION
Item 1A.	Risk Factors	1716
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1716
Item 5.	Other Information	1716
Item 6.	Exhibits	1817
SIGNATURES		1918

Part 1. Financial Information

Item 1. Condensed Consolidated Financial Statements

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Operations

(Unaudited)

($ and shares in thousands, except per share amounts)

Three Months EndedJanuary 31,

Nine Months EndedJanuary 31,

Three Months EndedJuly 31,

~~2024~~

~~2023~~

2024

2023

Net sales

~~46,778~~

~~60,821~~

~~147~~48,~~053~~393

~~165~~49,~~508~~839

Cost of products sold

~~34,749~~

~~50,491~~

~~109~~35,~~642~~905

~~140~~37,~~281~~925

Gross profit

~~12,029~~

~~10,330~~

3712,~~411~~488

2511,~~227~~914

Operating expenses

~~8,223~~

~~8,026~~

249,~~688~~913

228,~~564~~106

Operating profit

~~3,806~~

~~2,304~~

122,~~723~~575

23,~~663~~808

Pension expense

~~(41)~~

~~(18)~~

~~(122)~~—

(5341)

Other income, net

~~161~~

~~210~~

~~384~~327

~~756~~75

Interest expense

~~(411)~~

~~(436)~~

(~~1,213~~472)

(~~1,190~~430)

Profit before income taxes

~~3,515~~

~~2,060~~

112,~~772~~430

23,~~176~~412

Income tax expense

~~982~~

~~962~~

~~3,894~~192

~~1,911~~897

Net earnings

~~2,533~~

~~1,098~~

72,~~878~~238

~~265~~2,515

Less: Net earnings attributable to the non-controlling interest

~~375~~

~~151~~45

~~532~~41

Net earnings (loss) attributable to Kewaunee Scientific Corporation

2,521

723

7,727

(267)

Net earnings attributable to Kewaunee Scientific Corporation

2,193

2,474

Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders

Net earnings per share attributable to Kewaunee Scientific Corporation stockholders

Basic

~~0.87~~

~~0.26~~

20.6877

(0.~~09)~~87

Diluted

~~0.85~~

~~0.25~~

20.6474

(0.~~09)~~86

Weighted average number of common shares outstanding

Basic

~~2,893~~

~~2,830~~

2,~~885~~849

2,~~822~~860

Diluted

~~2,965~~

~~2,911~~

2,~~927~~967

2,~~822~~885

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Comprehensive Earnings ~~(Loss)~~

(Unaudited)

($ in thousands)

	Three Months EndedJanuary 31,				Nine Months EndedJanuary 31,
	Three Months EndedJuly 31,
	2024		2023		~~2024~~		~~2023~~
Net earnings	$	2,~~533~~238	$	12,~~098~~515	$	~~7,878~~	$	~~265~~
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(40116)		(~~106~~144)		~~(435)~~		~~(567)~~
Other comprehensive loss	(40116)		(~~106~~144)		~~(435)~~		~~(567)~~
Comprehensive earnings (loss), net of tax	2,493		992		7,443		(302)
Comprehensive earnings, net of tax	2,122		2,371
Less: Comprehensive income attributable to the non-controlling interest	1245		~~375~~41		~~151~~		~~532~~
Comprehensive earnings (loss) attributable to Kewaunee Scientific Corporation	$	2,481	$	617	$	7,292	$	(834)
Comprehensive earnings attributable to Kewaunee Scientific Corporation	$	2,077	$	2,330

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

($ in thousands, except per share amounts)

	CommonStock		AdditionalPaid-inCapital		TreasuryStock		RetainedEarnings		AccumulatedOtherComprehensiveLoss		Total Kewaunee Scientific Corporation Stockholders' Equity
Balance at April 30, 2023	$	7,084	$	5,059	$	(53)	$	28,761	$	(3,442)	$	37,409
Balance at April 30, 2024	$	7,273	$	5,406	$	(2,051)	$	47,514	$	(3,382)	$	54,760
Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		2,~~474~~193		—		2,~~474~~193
Other comprehensive loss	—		—		—		—		(~~144~~116)		(~~144~~116)
Stock-based compensation	~~185~~80		(~~494~~894)		—		—		—		(~~309~~814)
Balance at July 31, 2023	$	7,269	$	4,565	$	(53)	$	31,235	$	(3,586)	$	39,430
Balance at July 31, 2024	$	7,353	$	4,512	$	(2,051)	$	49,707	$	(3,498)	$	56,023
Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		2,732		—		2,732
Other comprehensive loss	—		—		—		—		(251)		(251)
Stock-based compensation	—		241		—		—		—		241
Purchase of Treasury Stock, 2,423 shares	—		—		(44)		—		—		(44)
Balance at October 31, 2023	$	7,269	$	4,806	$	(97)	$	33,967	$	(3,837)	$	42,108
Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		2,521		—		2,521
Other comprehensive loss	—		—		—		—		(40)		(40)
Stock-based compensation	1		240		—		—		—		241
Purchase of Treasury Stock, 27,033 shares	—		—		(747)		—		—		(747)
Balance at January 31, 2024	$	7,270	$	5,046	$	(844)	$	36,488	$	(3,877)	$	44,083

	CommonStock		AdditionalPaid-inCapital		TreasuryStock		RetainedEarnings		AccumulatedOtherComprehensiveLoss		Total Kewaunee Scientific Corporation Stockholders' Equity
Balance at April 30, 2022	$	6,983	$	4,483	$	(53)	$	28,023	$	(3,742)	$	35,694
Balance at April 30, 2023	$	7,084	$	5,059	$	(53)	$	28,761	$	(3,442)	$	37,409
Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(747)		—		(747)
Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		2,474		—		2,474
Other comprehensive loss	—		—		—		—		(224)		(224)
Other comprehensive income	—		—		—		—		(144)		(144)
Stock-based compensation	97185		(~~134~~494)		—		—		—		(37309)
Balance at July 31, 2022	$	7,080	$	4,349	$	(53)	$	27,276	$	(3,966)	$	34,686
Balance at July 31, 2023	$	7,269	$	4,565	$	(53)	$	31,235	$	(3,586)	$	39,430
Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(243)		—		(243)
Other comprehensive loss	—		—		—		—		(237)		(237)
Stock-based compensation	4		192		—		—		—		196
Balance at October 31, 2022	$	7,084	$	4,541	$	(53)	$	27,033	$	(4,203)	$	34,402
Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		723		—		723
Other comprehensive income	—		—		—		—		(106)		(106)
Stock-based compensation	—		332		—		—		—		332
Balance at January 31, 2023	$	7,084	$	4,873	$	(53)	$	27,756	$	(4,309)	$	35,351

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

($ and shares in thousands, except per share amounts)

	January 31, 2024		April 30, 2023
	July 31, 2024		April 30, 2024
	(Unaudited)
Assets
Current Assets:
Cash and cash equivalents	$	2124,~~312~~211	$	823,~~078~~267
Restricted cash	~~5,800~~975		52,~~737~~671
Receivables, less allowance; $589; $476, on each respective date	41,109		46,081
Receivables, less allowance; $588; $588, on each respective date	43,545		45,064
Inventories	2119,~~845~~285		2120,~~889~~679
Prepaid expenses and other current assets	64,~~090~~683		65,~~135~~136
Total Current Assets	9692,~~156~~699		8796,~~920~~817
Property, plant and equipment, at cost	64,~~208~~465		6164,~~368~~234
Accumulated depreciation	(4647,~~716~~353)		(4446,~~966~~585)
Net Property, Plant and Equipment	17,~~492~~112		1617,~~402~~649
Right of use assets	76,~~827~~944		97,~~170~~454
Other assets	4,830		5,406
Deferred income taxes	8,091		7,401
Total Assets	$	126,305	$	118,898
Other assets	7,172		5,445
Total Assets	$	132,018	$	134,766
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term borrowings	$	3,~~184~~627	$	3,~~587~~099
Current portion of financing liability	~~695~~731		~~642~~713
Current portion of financing lease liabilities	~~110~~113		85111
Current portion of operating lease liabilities	2,~~056~~031		12,~~967~~123
Accounts payable	1920,~~083~~619		23,~~599~~262
Employee compensation and amounts withheld	53,~~766~~099		46,~~304~~041
Deferred revenue	104,~~248~~937		4,~~097~~374
Other accrued expenses	1,~~000~~530		1,~~772~~057
Total Current Liabilities	4236,~~142~~687		40,~~053~~780
Long-term portion of financing liability	27,~~603~~227		2827,~~132~~420
Long-term portion of financing lease liabilities	~~247~~222		~~148~~235
Long-term portion of operating lease liabilities	5,~~741~~111		75,~~136~~434
Accrued pension and deferred compensation costs	3,~~655~~523		3,~~546~~008
Deferred income taxes	1,~~134~~273		~~943~~1,218
Other non-current liabilities	~~441~~462		~~455~~462
Total Liabilities	8074,~~963~~505		8078,~~413~~557
Commitments and Contingencies
Stockholders' Equity:
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,908 shares; 2,833 shares; – Outstanding – 2,875 shares; 2,830 shares, on each respective date	7,270		7,084
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,941 shares; 2,909 shares; – Outstanding – 2,872 shares; 2,839 shares, on each respective date	7,353		7,273
Additional paid-in-capital	54,~~046~~512		5,~~059~~406
Retained earnings	3649,~~488~~707		2847,~~761~~514
Accumulated other comprehensive loss	(3,~~877~~498)		(3,~~442~~382)
Common stock in treasury, at cost, 33 shares; 3 shares, on each respective date	(844)		(53)
Common stock in treasury, at cost, 70 shares, on each respective date	(2,051)		(2,051)
Total Kewaunee Scientific Corporation Stockholders' Equity	4456,~~083~~023		3754,~~409~~760
Non-controlling interest	1,~~259~~490		1,~~076~~449
Total Stockholders' Equity	4557,~~342~~513		3856,~~485~~209
Total Liabilities and Stockholders' Equity	$	~~126~~132,~~305~~018	$	~~118~~134,~~898~~766

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

($ in thousands)

	Nine Months EndedJanuary 31,
	Three Months EndedJuly 31,
	2024		2023
Cash flows from operating activities:
Net earnings	$	72,~~878~~238	$	~~265~~2,515
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation	~~2,305~~815		~~2,142~~718
Bad debt provision	227		79
Provision for credit losses	11		125
Stock-based compensation expense	~~665~~318		~~699~~183
Deferred income taxes	~~191~~(635)		~~368~~46
Change in assets and liabilities:
Receivables	41,~~745~~508		(23,~~813)~~496
Inventories	441,393		~~2,384~~(237)
Accounts payable and other accrued expenses	(35,~~842~~113)		(~~4,534~~226)
Deferred revenue	~~6,151~~563		12,~~533~~970
Other, net	55(1,892)		(31,~~670~~418)
Net cash provided by (used in) operating activities	18,419		(3,547)
Net cash (used in) provided by operating activities	(794)		8,172
Cash flows from investing activities:
Capital expenditures	(~~3,394~~278)		(1,~~562~~654)
Net cash used in investing activities	(~~3,394~~278)		(1,~~562~~654)
Cash flows from financing activities:
Proceeds from short-term borrowings	~~112~~38,~~316~~479		2740,~~742~~597
Repayments on short-term borrowings	(~~112~~37,~~718~~951)		(2339,~~577~~130)
Proceeds from sale-leaseback financing transaction	—		13,473
Payments on sale-leaseback financing transaction	(174)		(157)
Payments on sale-leaseback financing transaction	(476)		(426)
Payments on long-term lease obligations	(11)		(4)
Proceeds from long-term lease obligations	202		—
Net cash provided by financing activities	343		1,306
Payments on long-term lease obligations	(78)		(123)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(23)		(71)
Purchase of treasury stock	(791)		—
(Decrease) increase in cash, cash equivalents and restricted cash	(752)		7,753
Net cash (used in) provided by financing activities	(1,545)		17,089
Cash, cash equivalents and restricted cash, beginning of period	25,938		13,815
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(183)		(458)
Cash, cash equivalents and restricted cash, end of period	$	25,186	$	21,568
Increase in cash, cash equivalents and restricted cash	13,297		11,522
Cash, cash equivalents and restricted cash, beginning of period	13,815		6,894
Cash, cash equivalents and restricted cash, end of period	$	27,112	$	18,416

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited)

A. Financial Information

The unaudited interim Condensed Consolidated Financial Statements of Kewaunee Scientific Corporation (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These interim Condensed Consolidated Financial Statements include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements and should be read in conjunction with the Consolidated Financial Statements and Notes included in the Company's ~~2023~~2024 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. The Condensed Consolidated Balance Sheet as of April 30, ~~2023~~2024 included in this interim period filing has been derived from the audited consolidated financial statements at that date, but does not include all of the information and related notes required by GAAP for complete financial statements.

The preparation of the interim Condensed Consolidated Financial Statements requires management to make certain estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates.

B. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. During the ~~nine~~three months ended ~~January~~July 31, 2024 and twelve months ended April 30, ~~2023~~2024, the Company had cash deposits in excess of FDIC insured limits. The Company has not experienced any losses from such deposits. Restricted cash includes bank deposits of subsidiaries used for performance guarantees against customer orders and domestic bank deposits used as collateral for an outstanding letter of credit.

The Company includes restricted cash along with the cash balance for presentation in the Condensed Consolidated Statements of Cash Flows. The reconciliation between the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of Cash Flows is as follows (in thousands):

January 31, 2024

April 30, 2023

July 31, 2024

April 30, 2024

Cash and cash equivalents

2124,~~312~~211

823,~~078~~267

Restricted cash

~~5,800~~975

52,~~737~~671

Total cash, cash equivalents and restricted cash

2725,~~112~~186

1325,~~815~~938

C. Revenue Recognition

The Company recognizes revenue when control of a good or service promised in a contract (i.e., performance obligation) is transferred to a customer. Control is obtained when a customer has the ability to direct the use of and obtain substantially all of the remaining benefits from that good or service. The majority of the Company's revenues are recognized over time as the customer receives control as the Company performs work under a contract. However, a portion of the Company's revenues are recognized at a point-in-time as control is transferred at a distinct point in time per the terms of a contract.

Disaggregated Revenue

A summary of net sales transferred to customers over time and at a point in time for the periods ended ~~January~~July 31, 2024 and ~~January~~July 31, 2023 is as follows (in thousands):

Three Months Ended

January 31, 2024

January 31, 2023

July 31, 2024

July 31, 2023

Domestic

International

Total

Domestic

International

Total

Over Time

3034,~~207~~389

1512,~~004~~870

4547,~~211~~259

3533,~~373~~904

2414,~~687~~419

6048,~~060~~323

Point in Time

1,~~567~~134

—

1,~~567~~134

~~761~~1,516

—

~~761~~1,516

Total

3135,~~774~~523

1512,~~004~~870

4648,~~778~~393

3635,~~134~~420

2414,~~687~~419

6049,~~821~~839

	Nine Months Ended
	January 31, 2024						January 31, 2023
	Domestic		International		Total		Domestic		International		Total
Over Time	$	96,880	$	45,674	$	142,554	$	107,100	$	53,915	$	161,015
Point in Time	4,499		—		4,499		4,493		—		4,493
Total	$	101,379	$	45,674	$	147,053	$	111,593	$	53,915	$	165,508

Contract Balances

The closing balances of contract assets included $10,~~466~~722,000 in accounts receivable and $~~506~~190,000 in other assets at ~~January~~July 31, 2024. The opening balance of contract assets arising from contracts with customers included $1311,~~459~~840,000 in accounts receivable and $1312,~~191,~~000 in other assets at April 30, ~~2023~~2024. The closing and opening balances of contract liabilities included in deferred revenue arising from contracts with customers were $104,~~248~~937,000 at ~~January~~July 31, 2024 and $4,~~097~~374,000 at April 30, ~~2023~~2024. The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, and deferred revenue which are disclosed in the Condensed Consolidated Balance Sheets and in the Notes to the Condensed Consolidated Financial Statements. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Unbilled receivables represent amounts earned which have not yet been billed in accordance with contractually stated billing terms and are included in receivables on the Condensed Consolidated Balance Sheets. Receivables are recorded when the right to consideration becomes unconditional and the Company has a right to invoice the customer. Deferred revenue relates to payments received in advance of performance under the contract. Deferred revenue is recognized as revenue as (or when) the Company performs under the contract. Approximately 100% of the contract liability balances at April 30, ~~2023~~2024 and ~~January~~July 31, 2024 are expected to be recognized as revenue during the respective succeeding 12 months.

D. Inventories

The Company measures inventory using the first-in, first-out method at the lower of cost or net realizable value. Inventories consisted of the following (in thousands):

	January 31, 2024		April 30, 2023
	July 31, 2024		April 30, 2024
Finished products	$	23,~~491~~175	$	3,~~412~~042
Work in process	1,~~608~~493		21,~~380~~931
Raw materials	1714,~~746~~617		1615,~~097~~706
Total	$	2119,~~845~~285	$	2120,~~889~~679

The Company's International subsidiaries' inventories were $23,~~869~~055,000 at ~~January~~July 31, 2024 and $23,~~740~~239,000 at April 30, ~~2023~~2024 and are included in the above tables.

E. Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and equivalents, mutual funds, short-term borrowings, and the cash surrender value of life insurance policies. The carrying value of these assets and liabilities approximates their fair value. The following tables summarize the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of ~~January~~July 31, 2024 and April 30, ~~2023~~2024 (in thousands):

January 31, 2024

July 31, 2024

Financial Assets

Level 1

Level 2

Total

Trading securities held in non-qualified compensation plans (1)

1,~~323~~654

—

1,~~323~~654

Cash surrender value of life insurance policies (1)

—

~~976~~1,468

Total

1,~~323~~654

~~976~~1,468

23,~~299~~122

Financial Liabilities

Non-qualified compensation plans (2)

—

23,~~898~~523

Total

—

23,~~898~~523

April 30, 2023

April 30, 2024

Financial Assets

Level 1

Level 2

Total

Trading securities held in non-qualified compensation plans (1)

1,~~105~~565

—

1,~~105~~565

Cash surrender value of life insurance policies (1)

—

1,~~358~~077

Total

1,~~105~~565

1,~~358~~077

2,~~463~~642

Financial Liabilities

Non-qualified compensation plans (2)

—

23,~~910~~009

Total

—

23,~~910~~009

(1)The Company maintains two non-qualified compensation plans which include investment assets in a rabbi trust. These assets consist of marketable securities, which are valued using quoted market prices multiplied by the number of shares owned, and life insurance policies, which are valued at their cash surrender value.

(2)Plan liabilities are equal to the individual participants' account balances and other earned retirement benefits.

F. Long-term Debt and Other Credit Arrangements

At ~~April~~July 3031, ~~2023~~2024, advances of $3.50 million were outstanding under the ~~Company's~~ Revolving Credit Facility., ~~Amounts~~with ~~available~~remaining borrowing capacity under the Revolving Credit Facility ~~were~~of $10.38 million ~~at April 30, 2023~~. The borrowing rate under the Revolving Credit Facility was 9.0256% as of ~~April~~July 3031, ~~2023~~2024. ~~The~~In addition, the Company's International subsidiaries had a balance outstanding ~~at April 30, 2023~~ of $39627,000 in short-term borrowings related to overdraft protection and short-term loan arrangements. Atat ~~April~~July 3031, ~~2023,~~2024. ~~the~~The Company was in compliance with all of the financial covenants under its Revolving Credit Facility. as of July 31, 2024.

At ~~January~~April 3130, 2024, advances of $3.0 million were outstanding under the Company's Revolving Credit Facility,. ~~with~~Amounts ~~remaining~~available ~~borrowing capacity~~ under the Revolving Credit Facility ofwere $911.36 million at April 30, 2024. The borrowing rate under the Revolving Credit Facility was 9.5754% as of ~~January~~April 3130, 2024. InThe ~~addition, the~~ Company's International subsidiaries had a balance outstanding at April 30, 2024 of $~~184~~99,000 in short-term borrowings related to overdraft protection and short-term loan arrangements. atAt ~~January~~April 3130, 2024., ~~The~~the Company was in compliance with all of the financial covenants under its Revolving Credit Facility ~~as of January 31, 2024~~.

G. Sale-Leaseback Financing Transaction

On December 22, 2021, the Company entered into an Agreement for Purchase and Sale of Real Property with CAI Investments Sub-Series 100 LLC, a Nevada limited liability company (the "Buyer"), for the Company’s headquarters and manufacturing facilities located at 2700 West Front Street in Statesville, North Carolina (the "Sale Agreement").

The Sale Agreement was finalized on March 24, 2022 and coincided with the Company and CAI Investments Medical Products I Master Lessee LLC ("Lessor") entering into a lease agreement. The lease arrangement is for a 20-year term, with four renewal options of five years each. Under the terms of the lease agreement, the Company’s initial basic rent is approximately $158,000 per month, with annual increases of approximately 2% each year of the initial term.

The Company accounted for the Sale-Leaseback Arrangement as a financing transaction as the lease agreement was determined to be a finance lease due to the significance of the present value of the lease payments, using a discount rate of 4.75% to reflect

the Company’s incremental borrowing rate, compared to the fair value of the leased property as of the lease commencement date. In measuring the lease payments for the present value analysis, the Company elected the practical expedient to combine the lease component (the leased facilities) with the non-lease component (property management provided by the Buyer/Lessor) into a single lease component.

The presence of a finance lease indicates that control of the property has not transferred to the Buyer/Lessor and, as such, the transaction was deemed a failed sale-leaseback and accounted for as a financing arrangement. As a result of this determination, the Company is viewed as having received the sale proceeds from the Buyer/Lessor in the form of a hypothetical loan collateralized by its leased facilities. The hypothetical loan is payable as principal and interest in the form of “lease payments” to the Buyer/Lessor. As such, the Company will not derecognize the property from its books for accounting purposes until the lease ends. No gain or loss was recognized under GAAP related to the Sale-Leaseback Arrangement.

As of ~~January~~July 31, 2024, the carrying value of the financing liability was $2827,~~298~~958,000, net of $~~663~~633,000 in debt issuance costs, of which $~~695~~731,000 was classified as current on the Consolidated Balance Sheet with $27,~~603~~227,000 classified as long-term. As of April 30, ~~2023~~2024, the carrying value of the financing liability was $28,~~774~~133,000, net of $~~708~~648,000 in debt issuance costs, of which $~~642~~713,000 was classified as current on the Consolidated Balance Sheet with $2827,~~132~~420,000 classified as long-term. The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method. Interest expense associated with the financing arrangement was $~~321~~317,000 and $~~329~~325,000 for the three months ended ~~January~~July 31, 2024 and ~~January~~July 31, 2023, respectively. ~~Interest expense associated with the financing arrangement was $968,000 and $990,000 for the nine months ended January 31, 2024 and January 31, 2023, respectively.~~

The Company will depreciate the building down to zero over the 20-year assumed economic life of the ~~Property~~property so that at the end of the lease term, the remaining carrying amount of the financing liability will equal the carrying amount of the land of $41,000.

Remaining future cash payments related to the financing liability as of ~~January~~July 31, 2024 are as follows:

($ in thousands)
Remainder of 2024	$	485
Remainder of fiscal 2025	$	1,478
2025	1,970
2026	2,009
2027	2,050
2028	2,090
Thereafter	33,867
2029	2,132
Total Minimum Liability Payments	42,471
Thereafter	31,735
Imputed Interest	(14,173)
Total Minimum Liability Payments	41,494
Total	$	28,298
Imputed Interest	(13,536)
Total	$	27,958

H. Leases

The Company recognizes lease assets and lease liabilities reflecting the rights and obligations created by operating type leases for real estate and equipment in both the U.S. and internationally and financing leases for vehicles and IT equipment in the U.S. At ~~January~~July 31, 2024 and April 30, ~~2023~~2024, right-of-use assets totaled $76,~~827~~944,000 and $97,~~170~~454,000, respectively. Operating cash paid to settle lease liabilities was $1658,~~930,~~000 and $1639,~~652,~~000 for the ~~nine~~three months ended ~~January~~July 31, 2024 and ~~January~~July 31, 2023, respectively. The Company's leases have remaining lease terms of up to 8 years. In addition, some of the leases may include options to extend the leases for up to 5 years or options to terminate the leases within 1 year. Operating lease ~~expenses~~expense ~~were~~was $~~862~~882,000 ~~and $2,576,000~~ for the three ~~and nine~~ months ended ~~January~~July 31, 2024, inclusive of period cost for short-term leases, not included in lease liabilities, of $~~214~~224,000 ~~and $646,000~~. Operating lease ~~expenses~~expense ~~were~~was $~~825~~867,000 ~~and $2,528,000~~ for the three ~~and nine~~ months ended ~~January~~July 31, 2023, inclusive of period cost for short-term leases, not included in lease liabilities, of $~~199~~228,000 ~~and $876,000~~.

At ~~January~~July 31, 2024, the weighted average remaining lease term for the capitalized operating leases was 4.51 years and the weighted average discount rate was 5.1%. For the financing leases, the weighted average remaining lease term was 4.73 years and the weighted average discount rate was 8.32%. As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of those lease payments. The Company uses the implicit rate when readily determinable.

Future minimum lease payments under non-cancelable leases as of ~~January~~July 31, 2024 were as follows:

	Operating		Financing
($ in thousands)	Operating		Financing
Remainder of fiscal 2024	$	648	$	18
Remainder of fiscal 2025	$	1,796	$	113
2025	2,288		131
2026	1,977		112
2026	1,934		112
2027	1,674		40
2027	1,656		40
2028	1,080		40
2028	1,121		40
2029	825		40
Thereafter	~~1,371~~560		9555
Total Minimum Lease Payments	97,~~018~~912		~~436~~400
Imputed Interest	(~~1,221~~770)		(7965)
Total	$	7,~~797~~142	$	~~357~~335

In November 2023, the Company entered into a new lease that has not yet commenced as of ~~January~~July 31, 2024 with future minimum lease payments in aggregate of $681,000 that are not yet reflected on the Condensed Consolidated Balance Sheet. This lease is expected to commence in the second quarter of fiscal year 2025 with a lease term of 3 years.

I. Stockholders' Equity

Common Stock

The Company is authorized to issue 5,000,000 shares of Common Stock, par value of $2.50 per share. Holders of the Company's Common Stock are entitled to one vote per share. As of ~~January~~July 31, 2024 and April 30, ~~2023~~2024, there were approximately 2,~~875~~872,000 and 2,~~830~~839,000 shares, respectively, of Common Stock issued and outstanding. The Company has not declared or paid any dividends with respect to its Common Stock during the three ~~and nine~~ months ended ~~January~~July 31, 2024. The declaration and payment of any future dividends is at the discretion of the Board of Directors and will depend upon many factors, including the Company's earnings, capital requirements, investment and growth strategies, financial conditions, the terms of the Company's indebtedness, which contains provisions that could limit the payment of dividends in certain circumstances, and other factors that the Board of Directors may deem to be relevant.

Share Repurchase Program

On August 31, 2023, the Board of Directors of the Company adopted a share repurchase program with authorization to repurchase up to 100,000 shares. There is no expiration date and currently, management has no plans to terminate this program. ~~For~~The ~~the~~Company ~~three~~did ~~months~~not ~~ended~~purchase ~~January 31,~~any ~~2024, the Company repurchased 27,033~~ shares ofunder ~~the~~its ~~Company's~~share ~~common~~repurchase ~~stock~~program ~~for~~during ~~approximately $745,000, excluding other costs such as broker commissions and fees. For~~ the ~~nine~~three months ended ~~January~~ July 31, 2024~~, the Company repurchased 29,456 shares of the Company's common stock for approximately $788,000, excluding other costs such as broker commissions and fees~~. As of ~~January~~July 31, 2024, the total remaining purchase authorization was 7033,~~544~~809 shares.

J. Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the assumed exercise of outstanding options and the conversion of restricted stock units ("RSUs") under the Company's various stock compensation plans, except when RSUs and options have an antidilutive effect. There were ~~15,000~~no ~~and 31,500~~ antidilutive RSUs and options outstanding at ~~January~~July 31, 2024. There were 33,700 antidilutive RSUs and ~~January~~options outstanding at July 31, 2023~~, respectively~~. The following is a reconciliation of basic to diluted weighted average common shares outstanding (in thousands):

Three Months Ended

~~Nine Months Ended~~

January 31, 2024

January 31, 2023

January 31, 2024

January 31, 2023

July 31, 2024

July 31, 2023

Basic

2,~~893~~849

2,~~830~~860

~~2,885~~

~~2,822~~

Dilutive effect of stock options and RSUs

72118

8125

—

Weighted average common shares outstanding - diluted

2,~~965~~967

2,~~911~~885

~~2,927~~

~~2,822~~

K. Stock Options and Stock-based Compensation

The Company recognizes compensation costs related to stock options and other stock awards granted by the Company as operating expenses over their vesting period.

In ~~June~~August 2023, the stockholders approved the 2023 Omnibus Incentive Plan ("2023 Plan"), which enables the Company ~~granted~~to 87grant equity-based awards,~~220~~ ~~RSUs~~with ~~under~~potential recipients including directors, consultants, and employees. This plan replaces the 2017 Omnibus Incentive Plan ("2017 Plan"). ~~These~~No ~~RSUs~~new ~~include~~awards ~~both~~will abe ~~service~~granted ~~and~~under athe ~~performance~~prior ~~component,~~plans. ~~vesting~~All ~~over~~outstanding aoptions ~~three-year~~granted ~~period.~~under ~~The~~the ~~recognized~~prior ~~expense~~plans isremain ~~based~~subject ~~upon~~to, ~~the~~and ~~vesting~~will ~~period~~be ~~for~~settled ~~service~~upon ~~criteria~~exercise ~~and~~under, ~~estimated~~the ~~attainment~~prior ofplans. At the ~~performance~~date ~~criteria~~of atapproval of the ~~end~~2023 ofPlan, ~~the~~there ~~three-year~~were ~~period~~64,633 ~~based~~shares onavailable for issuance under the ~~ratio~~2017 ofPlan. ~~cumulative~~These ~~days~~shares ofand ~~service~~any tooutstanding ~~total~~awards ~~days~~that ~~over~~subsequently ~~the~~cease ~~three-year~~to ~~period.~~be ~~The~~subject ~~Company~~to ~~recorded~~such ~~stock-based~~awards ~~compensation~~are ~~expense~~available ofunder ~~$241,000~~the ~~and~~2023 ~~$655,000~~Plan. ~~during~~The 2023 Plan also increased the ~~three~~total ~~and~~number ~~nine~~of ~~months~~shares ~~ended~~reserved ~~January 31,~~for ~~2024~~issuance ~~with~~under the ~~remaining~~Company's ~~estimated~~equity ~~stock-based~~ compensation ~~expense~~plans ofby $1310,~~550,~~000, tofor bea ~~recorded~~total ~~over~~of ~~the~~374,633 ~~remaining~~shares ~~vesting~~initially ~~periods.~~reserved ~~The~~for ~~Company~~issuance ~~recorded~~under ~~stock-based~~the ~~compensation~~2023 ~~expense~~Plan. ofAt ~~$332~~July 31,~~000~~ ~~and $658~~2024,~~000~~ ~~during~~there ~~the~~were ~~three~~383,572 ~~and~~shares ~~nine~~available ~~months~~for ~~ended~~future ~~January 31,~~issuance under the 2023 Plan.

In ~~August~~June ~~2023~~2024, the ~~stockholders~~Company ~~approved~~granted ~~the~~47,940 ~~2023~~RSUs ~~Omnibus~~under ~~Incentive~~the ~~Plan ("~~2023 Plan~~"),~~. ~~which~~These ~~enables~~RSUs ~~the~~include ~~Company~~both toa ~~grant~~service ~~equity-based~~and ~~awards,~~a ~~with~~performance ~~potential recipients including directors~~component, ~~consultants,~~vesting ~~and~~over ~~employees.~~a ~~This~~three-year ~~plan replaces the 2017 Plan~~period. NoThe ~~new~~recognized ~~awards~~expense ~~will~~is bebased ~~granted~~upon ~~under~~ the ~~prior~~vesting ~~plans.~~period ~~All~~for ~~outstanding~~service ~~options~~criteria ~~granted under the prior plans remain subject to,~~ and ~~will~~estimated beattainment ~~settled~~of ~~upon exercise under,~~ the ~~prior~~performance ~~plans.~~criteria Atat the ~~date~~end of ~~approval of~~ the ~~2023~~three-year ~~Plan~~period, ~~there~~based ~~were~~on ~~64,633 shares available for issuance under~~ the ~~prior~~ratio ~~plan.~~of ~~These~~cumulative ~~shares~~days ~~and~~of ~~any~~service ~~outstanding awards that subsequently cease~~ to betotal ~~subject~~days toover ~~such awards are available under~~ the ~~2023~~three-year ~~Plan~~period. The ~~2023~~Company ~~Plan~~recorded ~~also~~stock-based ~~increased~~compensation ~~the~~expense ~~total number~~ of ~~shares~~$318,000 ~~reserved~~during ~~for~~the ~~issuance~~three ~~under~~months ~~the~~ended ~~Company's~~July 31, ~~equity~~2024 ~~compensation~~with ~~plans~~the byremaining ~~310,000,~~estimated ~~for~~stock-based acompensation ~~total~~expense of ~~374~~$3,~~633~~134,000 ~~shares~~to ~~reserved~~be ~~for~~recorded ~~issuance~~over ~~under~~ the ~~2023~~remaining ~~Plan~~vesting periods. The Company ~~did~~recorded ~~not~~stock-based ~~issue~~compensation ~~any~~expense ~~RSUs~~of ~~under~~$173,000 ~~the 2023 Plan~~ during the three months ended ~~January~~July 31, ~~2024~~2023.

Directors' fees paid with shares of common stock in lieu of cash in accordance with Director compensation guidelines were $10,000 and $41,000 for the nine month periods ended January 31, 2024 and January 31, 2023, respectively, and were also included in the stock-based compensation on the Condensed Consolidated Statements of Cash Flows.

L. Income Taxes

Income tax expense of $~~982~~192,000 and $3897,~~894,~~000 was recorded for the three ~~and nine~~ months ended ~~January~~July 31, 2024, ~~respectively. Income tax expense of $962,000~~ and ~~$1,911,000 was recorded for the three and nine months ended January~~July 31, 2023, respectively. The effective tax rate was 277.9% and 3326.13% for the three ~~and nine~~ months ended ~~January~~July 31, 2024 and July 31, 2023, respectively. The effective tax rate for the current three ~~and nine~~ month ~~periods~~period reflects the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21%, combined with expected current year tax expense for the Company's domestic operations ~~and estimated increases in the domestic valuation allowance required for the fiscal year~~. In addition, the income tax expense recorded for the ~~nine~~three months ended ~~January~~July 31, 2024 was ~~unfavorably~~favorably impacted by ~~additional~~a discrete tax ~~expense~~benefit of $~~387~~421,000 ~~related~~resulting tofrom ~~India tax matters. This one-time expense is related to management's decision to discontinue management fees, citing challenges associated with~~ the ~~Indian~~issuance ~~tax~~of ~~authority~~stock ~~and~~through ~~cost benefit analysis. The effective tax rate was 46.7% and 87.8% for~~ the ~~three~~vesting ~~and nine months ended January 31, 2023, respectively. The higher effective tax rates for the prior year periods were primarily due to the inclusion~~ of arestricted ~~valuation~~stock ~~allowance~~units ~~against~~and ~~deferred tax assets, which led to~~ the ~~nullification~~exercise of ~~any~~stock ~~U.S.~~options ~~income~~during ~~tax benefit for pre-tax losses incurred in~~ the ~~corresponding periods~~quarter.

In August 2019, the Company revoked its indefinite reinvestment of foreign unremitted earnings position in compliance with ASC 740 "Income Taxes" and terminated its indefinite reinvestment of unremitted earnings assertion for the Singapore and Kewaunee Labway India Pvt. Ltd. international subsidiaries. The Company has a deferred tax liability of $1,~~506~~626,000 and $1,~~318~~572,000 for the withholding tax related to Kewaunee Labway India Pvt. Ltd. as of ~~January~~July 31, 2024 and April 30, ~~2023~~2024, respectively.

M. Defined Benefit Pension Plans

~~The~~During the year ended April 30, 2024, the Company ~~has~~settled its non-contributory defined benefit plans by transferring approximately $17.8 million of pension ~~plans~~obligations ~~covering~~through ~~substantially~~the purchase of group annuity contracts for all ~~domestic~~remaining ~~salaried~~liabilities ~~and~~under ~~hourly~~the ~~employees~~pension plan. In connection with the transfer, the Company contributed $287,000 in cash to the pension plans, which was intended to fully fund the Company’s remaining defined benefit pension liabilities. These non-contributory defined benefit pension plans, which covered some domestic employees, were amended as of April 30, 2005;. Following this amendment, no further benefits have been, ~~or will be,~~ earned under the plans, ~~subsequent to the amendment date,~~ and no additional participants ~~will~~have bebeen added. toThe ~~the~~defined ~~plans.~~benefit ~~There~~plan ~~were~~for nosalaried ~~Company~~employees ~~contributions~~provides ~~paid~~pension tobenefits ~~the~~that ~~plans~~are ~~for~~based ~~the~~on ~~three~~each employee's years of service and ~~nine~~average ~~months~~annual ~~ended~~compensation ~~January 31,~~during ~~2024~~the ~~and~~last ~~January 31~~ten consecutive calendar years of employment as of April 30, ~~2023~~2005. The ~~Company~~benefit ~~assumed~~plan anfor ~~expected~~hourly ~~long-term~~employees ~~rate~~provides ofbenefits ~~return~~at ofstated ~~7.75%~~amounts ~~for~~based ~~the~~on ~~periods~~years ~~ended~~of ~~January 31,~~service ~~2024~~as ~~and~~of ~~January 31~~April 30, ~~2023~~2005.

There were no Company contributions paid to the plans for the three months ended July 31, 2023. The Company assumed an expected long-term rate of return of 7.75% for the period ended July 31, 2023.

Pension expense consisted of the following (in thousands):

~~Three Months Ended~~

Three Months Ended

January 31, 2024

January 31, 2023

July 31, 2023

Service cost

—

Interest cost

~~223~~

~~211~~224

Expected return on plan assets

~~(328)~~

(~~350~~328)

Recognition of net loss

~~146~~

~~157~~145

Net periodic pension expense

1841

	Nine Months Ended
	January 31, 2024		January 31, 2023
Service cost	$	—	$	—
Interest cost	670		633
Expected return on plan assets	(984)		(1,051)
Recognition of net loss	436		471
Net periodic pension expense	$	122	$	53

N. Segment Information

The Company's operations are classified into two business segments: Domestic and International. The Domestic business segment principally designs, manufactures, and installs scientific and technical furniture, including steel and wood laboratory cabinetry, fume hoods, flexible systems, worksurfaces, workstations, workbenches, and computer enclosures. The International business segment, which consists of the Company's foreign subsidiaries, provides products and services, including facility design, detailed engineering, construction, and project management from the planning stage through testing and commissioning of laboratories. Intersegment transactions are recorded at normal profit margins. All intercompany balances and transactions have been eliminated. Certain corporate expenses shown below have not been allocated to the business segments.

The following tables provide financial information by business segment and unallocated corporate expenses for the periods ended ~~January~~July 31, 2024 and 2023 (in thousands):

DomesticOperations

InternationalOperations

Corporate /Eliminations

Total

Three Months Ended January 31, 2024

Three Months Ended July 31, 2024

Revenues from external customers

3135,~~774~~523

1512,~~004~~870

—

4648,~~778~~393

Intersegment revenues

84113

1,~~412~~348

(1,~~496~~461)

—

Earnings (loss) before income taxes

23,~~852~~635

~~1,732~~787

(1,~~069~~992)

32,~~515~~430

Three Months Ended January 31, 2023

Three Months Ended July 31, 2023

Revenues from external customers

3635,~~134~~420

2414,~~687~~419

—

6049,~~821~~839

Intersegment revenues

5251

~~3,458~~661

(~~3,510~~712)

—

Earnings (loss) before income taxes

~~417~~3,623

~~2,787~~793

(1,~~144~~004)

23,~~060~~412

	DomesticOperations		InternationalOperations		Corporate /Eliminations		Total
Nine Months Ended January 31, 2024
Revenues from external customers	$	101,379	$	45,674	$	—	$	147,053
Intersegment revenues	509		3,228		(3,737)		—
Earnings (loss) before income taxes	10,762		4,326		(3,316)		11,772
Nine Months Ended January 31, 2023
Revenues from external customers	$	111,593	$	53,915	$	—	$	165,508
Intersegment revenues	1,498		8,414		(9,912)		—
Earnings (loss) before income taxes	1,006		5,737		(4,567)		2,176

O. New Accounting Standards

In ~~June~~November ~~2016~~2023, the FASB issued ASU ~~2016~~2023-1307, "~~Measurement~~Segment ofReporting ~~Credit~~(Topic ~~Losses~~280) on- ~~Financial~~Improvements ~~Instruments~~to Reportable Segment Disclosures," which ~~replaces~~improves ~~the~~reportable ~~current~~segment ~~incurred~~disclosure ~~loss method used for determining credit losses on financial assets~~requirements, ~~including~~primarily ~~trade~~through ~~receivables,~~enhanced ~~with~~disclosures anabout ~~expected~~significant ~~credit~~segment ~~loss method~~expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within ~~those~~fiscal years, beginning after December 15, ~~2022~~2024. The Company adopted this standard effective May 1, ~~2023~~2024 for its fiscal year 2025 annual reporting and subsequent interim periods. The adoption of this standard did not have a significant impact on the Company's consolidated financial position or results of operations.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures," which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company will adopt this standard in fiscal year 2025. The Company does not expect the adoption of this standard to have a significant impact on the Company's consolidated financial position or results of operations.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740) - Improvements for Income Tax Disclosures," which requires public business entities to, on an annual basis, (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. This ASU also provides for additional disclosure requirements to provide clarity for investors related to income tax disclosures. This guidance is effective for annual periods beginning after December 15, 2024. The Company will adopt this standard in fiscal year 2026. The Company does not expect the adoption of this standard to have a significant impact on the Company's consolidated financial position or results of operations.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The Company's ~~2023~~2024 Annual Report to Stockholders on Form 10-K contains management's discussion and analysis of the Company's financial condition and results of operations as of and for the fiscal year ended April 30, ~~2023~~2024. The following discussion and analysis describes material changes in the Company's financial condition since April 30, ~~2023~~2024. The analysis of results of operations compares the three ~~and nine~~ months ended ~~January~~July 31, 2024 with the comparable periods of the prior year.

Results of Operations

Sales for the quarter were $4648,~~778~~393,000, a decrease from sales of $6049,~~821~~839,000 in the comparable period of the prior year. Domestic sales for the quarter were $3135,~~774~~523,000, ~~down~~relatively ~~12.1%~~flat ~~from~~when compared to sales of $3635,~~134~~420,000 in the comparable period of the prior year. The decrease in Domestic sales was predominantly related to the reduction in non-product revenue related to the Company's decision to stop selling directly to end users. This revenue typically includes freight, installation services and buyouts. International sales for the quarter were $1512,~~004~~870,000, down 3910.27% when compared to sales of $2414,~~687~~419,000 in the comparable period of the prior year. International sales decreased when compared to the prior year period due to ~~the~~customer ~~delivery~~construction ofsite ~~several~~delays ~~large projects~~ in ~~the~~India ~~comparable~~which ~~prior~~pushed ~~year~~out ~~period~~the ~~that~~timing ~~were~~of ~~booked in earlier fiscal years~~deliveries.

~~Sales~~The ~~for~~Company's ~~the~~order ~~nine~~backlog ~~months~~was ~~ended~~$159.4 ~~January~~million at July 31, 2024 ~~were $147~~,~~053,000,~~ aas ~~decrease~~compared ~~from~~to ~~sales of~~ $~~165,508,000 in the comparable period of the prior year~~140.8 million ~~Domestic~~at ~~sales for the period were $101~~July 31,~~379,000,~~ ~~down 9.2% from sales of $111~~2023,~~593,000~~ in the comparable period of the prior year. The decrease in Domestic sales was predominantly related to the reduction in non-product revenue related to the Company's decision to stop selling directly to end users. This revenue typically includes freight, installation services and ~~buyouts. International sales for the period were~~ $~~45,674,000, down 15~~155.3%6 million ~~from~~at ~~sales of $53~~April 30,~~915,000~~ ~~in the comparable period of the prior year~~2024. ~~International sales decreased when compared to the prior year period due to the delivery of several large projects in the comparable prior year period that were booked in earlier fiscal years.~~

The ~~Company's~~gross ~~order~~profit ~~backlog~~margin ~~was~~for ~~$152.3~~the ~~million~~three atmonths ~~January~~ ended July 31, 2024 was 25.8% of sales, as compared to ~~$153~~23.~~2 million~~9% atof ~~January~~sales in the comparable quarter of the prior year. The increase in gross profit margin percentage for the three months ended July 31, ~~2023,~~2024 ~~and~~is ~~$147~~primarily being generated from Domestic operations.~~9 million~~ atSpecifically, ~~April 30~~the increase is primarily driven by a favorable sales mix when compared to the prior year, ~~2023~~which included installation services sold directly to end users that were completed at a loss for the Company.

~~The~~Operating ~~gross~~expenses ~~profit margin~~ for the three months ended ~~January~~July 31, 2024 ~~was~~were 25$9,913,000, or 20.75% of sales, as compared to 17$8,106,000, or 16.03% of sales, in the comparable ~~quarter~~period of the prior year. The ~~gross~~increase ~~profit~~in ~~margin~~operating expenses for the ~~nine~~three months ended ~~January~~ July 31, 2024 was ~~25.4%~~primarily ofdue ~~sales, as compared~~ to ~~15.2%~~increases ~~of sales~~ in ~~the~~SG&A ~~comparable~~wages, ~~prior~~benefits, ~~year~~incentive ~~period.~~and ~~The~~stock-based ~~increase~~compensation inof ~~gross~~$713,000, ~~profit~~consulting ~~margin percentage for the three~~ and ~~nine~~professional ~~months~~fees ~~ended~~of ~~January 31~~$836,000, ~~2024~~international isoperating ~~primarily~~expenses ~~being~~of ~~generated from Domestic operations. Specifically~~$295,000, ~~the~~corporate ~~increase~~governance isexpenses ~~primarily~~of ~~driven by improved manufacturing productivity~~$33, ~~cost containment actions~~000, and ~~the~~depreciation ~~pricing~~expense of ~~new~~$23,000, ~~orders~~partially inoffset ~~response~~by todecreases ~~higher~~in ~~raw~~bad ~~material~~debt ~~input~~expense ~~costs~~of ~~when compared to the prior year periods~~$114,000.

~~Operating~~Interest ~~expenses~~expense, net was $472,000 for the three months ended ~~January~~ July 31, 2024 ~~were $8~~,~~223,000,~~ ~~or 17.6% of sales~~respectively, as compared to $8430,~~026,~~000, orand ~~13.2% of sales~~respectively, infor the comparable ~~period~~periods of the prior year. ~~Operating~~The ~~expenses~~changes ~~for~~in interest expense were due to changes in the ~~nine~~levels ~~months~~of ~~ended~~bank borrowings and interest rates.

13Income tax expense of $192,000 and $897,000 was recorded for the three months ended July 31, 2024 and 2023, respectively. The effective income tax rate for the three months ended July 31, 2024 was 7.9%, as compared to 26.3% for the three months ended July 31, 2023. The effective tax rate for the current three-month periods reflects the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21%, combined with expected current year tax expense for the Company's domestic operations. In addition, the income tax expense recorded for the three months ended July 31, 2024 was favorably impacted by a discrete tax benefit of $421,000 resulting from the issuance of stock through the vesting of restricted stock units and the exercise of stock options during the quarter. See Note L, Income Taxes, of the Notes to Condensed Consolidated Financial Statements for additional information.

~~January~~Non-controlling ~~31,~~interests ~~2024~~related ~~were~~to ~~$24,688,000,~~the orCompany's ~~16.8%~~subsidiaries ofnot ~~sales, as compared to $22,564,000, or 13.6~~100% ofowned ~~sales,~~by in the ~~comparable~~Company ~~period~~decreased ofnet ~~the~~earnings ~~prior~~by ~~year.~~$45,000 ~~The increase in operating expenses~~ for the three months ended ~~January~~July 31, 2024, ~~was~~as ~~primarily~~compared ~~due~~ to ~~increases in SG&A wages, benefits, incentive and stock-based compensation of~~ $~~440~~41,000, ~~corporate~~for ~~governance~~the ~~expenses~~comparable ofperiods ~~$34,000, and depreciation expense~~ of ~~$51,000,~~the ~~partially~~prior ~~offset~~year. byThe ~~decreases~~change in ~~international~~the ~~operating~~net ~~expenses~~earnings ofattributable ~~$227,000,~~to ~~consulting~~the ~~and~~non-controlling ~~professional~~interest ~~fees of $143,000 and bad debt expense of $44,000. The increase~~ in ~~operating expenses for~~ the ~~nine~~current ~~months~~period ~~ended January 31, 2024~~ was ~~primarily~~ due to ~~increases~~changes in ~~SG&A~~earnings ~~wages,~~(losses) ~~benefits, incentive and stock-based compensation~~ of ~~$1,898,000,~~the ~~corporate~~subsidiaries ~~governance expenses of $138,000, depreciation expense of $128,000, bad debt expense of $149,000, and increases~~ in ~~international~~the ~~operating~~related ~~expenses of $259,000, partially offset by decreases in consulting and professional fees of $515,000~~period.

~~Interest~~Net ~~expense,~~earnings ~~net~~ was $~~411~~2,193,000, ~~and~~or $10.74 per diluted share,~~213,000~~ for the three ~~and nine~~ months ended ~~January~~ July 31, 2024, ~~respectively, as~~ compared to ~~$436,000~~net ~~and~~earnings of $12,~~190~~474,000, ~~respectively,~~or ~~for~~$0.86 ~~the~~per ~~comparable~~diluted ~~periods~~share, ofin the prior year. ~~The changes in interest expense were due to changes in the levels of bank borrowings and interest rates~~period.

The effective income tax rate for the three and nine months ended January 31, 2024 was 27.9% and 33.1%, respectively, as compared to 46.7% and 87.8% for the three and nine months ended January 31, 2023, respectively. Income tax expense of $982,000 and $962,000 was recorded for the three months ended January 31, 2024 and 2023, respectively. Income tax expense of $3,894,000 and $1,911,000 was recorded for the nine months ended January 31, 2024 and 2023, respectively. The effective tax rate for the three and nine months ended January 31, 2024 reflects the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21%, combined with expected current year tax expense for the Company's domestic operations and estimated increases in the domestic valuation allowance required for the fiscal year. In addition, the income tax expense recorded for the nine months ended January 31, 2024 was unfavorably impacted by additional tax expense of $387,000 related to India tax matters. This one-time expense is related to management's decision to discontinue management fees, citing challenges associated with the Indian tax authority and cost benefit analysis. The effective rate for the three and nine months ended January 31, 2023 was influenced by foreign operations taxed at varying rates, as well as the inclusion of a valuation allowance against deferred tax assets, which led to the nullification of any U.S. income tax benefit for pre-tax losses incurred in the corresponding periods. See Note L, Income Taxes, of the Notes to Condensed Consolidated Financial Statements for additional information.

Non-controlling interests related to the Company's subsidiaries not 100% owned by the Company decreased net earnings by $12,000 and $151,000 for the three and nine months ended January 31, 2024, respectively, as compared to $375,000 and $532,000, respectively, for the comparable periods of the prior year. The change in the net earnings attributable to the non-controlling interest in the current period was due to changes in earnings (losses) of the subsidiaries in the related period.

Net earnings was $2,521,000, or $0.85 per diluted share, for the three months ended January 31, 2024, compared to net earnings of $723,000, or $0.25 per diluted share, in the prior year period. Net earnings was $7,727,000, or $2.64 per diluted share, for the nine months ended January 31, 2024, as compared to a net loss of $267,000, or $(0.09) per diluted share, in the prior year period.

Liquidity and Capital Resources

Our principal sources of liquidity have historically been funds generated from operating activities, supplemented as needed by borrowings under our Revolving Credit Facility. Additionally, certain machinery and equipment are financed by non-cancellable operating and financing leases. The Company believes that these sources will be sufficient to support ongoing business requirements in the current fiscal year, including capital expenditures.

The Company had working capital of $5456,~~014~~012,000 at ~~January~~July 31, 2024, compared to $4756,~~867~~037,000 at April 30, ~~2023~~2024. The ratio of current assets to current liabilities was 2.35-to-1.0 at ~~January~~July 31, 2024, compared to 2.24-to-1.0 at April 30, ~~2023~~2024.

The Company provided cash of $18,419,000 during the nine months ended January 31, 2024, primarily from operations, decreases in accounts receivable of $4.7 million and increases in deferred revenue of $6.2 million, partially offset by decreases in accounts payable and other accrued expenses of $3.8 million. During the nine months ended January 31, 2024, the Company used net cash of $3,394,000 in investing activities, all of which was used for capital expenditures. The Company's financing activities used cash of $1,545,000 during the nine months ended January 31, 2024, primarily from a net decrease in borrowings under the Revolving Credit Facility and the purchase of treasury stock during the quarter. See Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds for more details.13

The Company ~~expects~~used tocash ~~contribute~~of ~~approximately~~ $~~750~~794,000 during the three months ended July 31, 2024, primarily from decreases in accounts payable and other accrued expenses of $5.1 million, and the ~~aggregate~~change in other, net of $1.9 million, of which $1.7 million related to ~~its~~an increase in other non-~~contributory~~current ~~defined~~assets, ~~benefit~~partially ~~pension~~offset ~~plans~~by operations, decreases in ~~2024~~receivables of $1.5 ~~See~~million ~~Note~~and Mdecreases in inventories of $1.4 million. During the three months ended July 31, ~~Defined~~2024, ~~Benefit~~the ~~Pension~~Company ~~Plans~~used net cash of $278,000 in investing activities, all of which was used for capital expenditures. The Company's financing activities provided cash of $343,000 during the ~~Notes~~three tomonths ~~Condensed~~ended ~~Consolidated~~July ~~Financial~~31, ~~Statements~~2024, ~~for~~primarily ~~additional~~from ~~information~~a onnet increase in short-term borrowings by the ~~non~~Company's International subsidiaries. See Note F, Long-~~contributory~~term ~~defined~~Debt ~~benefit~~and ~~pension~~Other ~~plans~~Credit Arrangements, for more details.

Outlook

The Company's ability to predict future demand for its products continues to be limited given its role as subcontractor or supplier to dealers for subcontractors. Demand for the Company's products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company's earnings are also impacted by fluctuations in prevailing pricing for projects in the laboratory construction marketplace and costs of raw materials, including steel, wood, and epoxy resin.

The Company iscontinues ~~operating more efficiently than in the past due~~ to ~~its ability to~~ focus ~~solely~~ on supporting its dealers and distribution channel partners domestically while continuing to provide turnkey solutions in the international markets it serves. The improved focus of the organization, combined with a strong global management team, a healthy backlog, improved manufacturing capabilities, and end-use markets that continue to prioritize investment in projects that require the products Kewaunee designs and manufactures, positions the Company well.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain statements in this document constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). All statements other than statements of historical fact included in this Annual Report, including statements regarding the Company's future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe" and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to: competitive and general economic conditions, including disruptions from government mandates, both domestically and internationally, as well as supplier constraints and other supply disruptions; changes in customer demands; technological changes in our operations or in our industry; dependence on customers’ required delivery schedules; risks related to fluctuations in the Company’s operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; changes in the legal and regulatory environment; changes in raw materials and commodity costs; acts of terrorism, war, governmental action, natural disasters and other Force Majeure events. The cautionary statements made pursuant to the Reform Act herein and elsewhere by us should not be construed as exhaustive. We cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. Over time, our actual results, performance, or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such difference might be significant and harmful to our stockholders' interest. Many important factors that could cause such differences are described under the caption "Risk Factors" in Item 1A in the Company's ~~2023~~2024 Annual Report on Form 10-K and in Item 1A of Part II in this Quarterly Report on Form 10-Q, which you should review carefully. These forward-looking statements speak only as of the date of this document. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There are no material changes to the disclosures made on this matter in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2023~~2024.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of ~~January~~July 31, 2024. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that, as of January 31, 2024, the Company's disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.

1514

concluded that, as of July 31, 2024, the Company's disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.

(b) Changes in internal controls

There was no significant change in the Company's internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in Part I, Item 1A of the Company's ~~2023~~2024 Annual Report on Form 10-K under the heading "Risk Factors," any one or more of which could, directly or indirectly, cause the Company's actual financial condition and operating results to vary materially from its past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company's business, financial condition, operating results and stock price. There have been no material changes to the Company's risk factors from those set forth in the Company's Annual Report on Form 10-K for the year ended April 30, ~~2023~~2024 as filed with the SEC on June 3028, ~~2023~~2024 beyond those set forth below.

We cannot guarantee that our share repurchase program will enhance long-term stockholder value, or that it will successfully mitigate the dilutive effect of employee equity awards.

While our Board of Directors authorized a share repurchase program that does not have an expiration date, the program does not obligate us to acquire any particular amount of Common Stock and it may be terminated at any time. We cannot guarantee that the program will be fully consummated, that it will enhance long-term stockholder value, or that it will successfully mitigate the dilutive effect of employee equity awards. Any repurchases will reduce the amount of cash we have available to fund working capital, capital expenditures, strategic acquisitions or business opportunities, and other general corporate requirements. In addition, the program could affect the trading price of our Common Stock and increase volatility, and any announcement of a termination of this program may result in a decrease in the trading price of our Common Stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

The Company's share repurchase program was adopted on August 31, 2023. The ~~following~~Company ~~table~~did ~~summarizes~~not purchase any shares under its share repurchase ~~activity~~program ~~for~~during the three months ended ~~January~~July 31, 2024. The share repurchase program had remaining authorization of 33,809 shares as of July 31, 2024:.

	Total Number of Shares Purchased (1)	Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Programs (1)	Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
November 1 - 30	101	$	18.35	101	97,476
December 1 - 31	13,779	$	25.98	13,779	83,697
January 1 - 31	13,153	$	29.25	13,153	70,544
	27,033			27,033

(1)On August 31, 2023, the Board of Directors of Kewaunee Scientific Corporation (the "Company") adopted a share repurchase program with authorization to repurchase up to 100,000 shares of our Company's common stock, which commenced on September 1, 2023 and has no expiration date. The share repurchase program is designed to help offset the impact of future share dilution from employee stock issuances. The timing and amount of any repurchases under this program will be determined by the Company's management at its discretion based upon its ongoing assessments of the capital needs of the business, the market price of the Company's common stock and general market conditions. Share repurchases under this program may be made through a variety of methods including open-market purchases, block trades, exchange transactions or any combination thereof. The program does not obligate the Company to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company's discretion.

(2)Excludes other costs such as broker commissions and fees.

Item 5. Other Information

Securities Trading Plans of Directors and Executive Officers

Transactions in the Company's securities by its directors or executive officers are required to be made in accordance with its Insider Trading Policy, which, among other things, requires that the transaction be in accordance with applicable U.S. federal securities laws that prohibit trading while in the possession of material nonpublic information. Rule 10b5-1 under the Securities Exchange Act of 1934 provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information.

17During the three months ended July 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed the Company of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as defined in Item 408 of Regulation S-K).

During the three months ended January 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed the Company of the adoption or termination of a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" (as defined in Item 408 of Regulation S-K).16

Item 6. Exhibits

10.1						~~Re-Established~~Retention ~~Retirement~~Bonus ~~Plan~~Agreement, ~~for~~dated ~~Salaried~~June ~~and~~26, ~~Hourly~~2024, ~~Employees~~by ofand between Kewaunee Scientific Corporation and Donald T. Gardner III (asincorporated ~~amended~~by ~~and~~reference ~~restated~~to ~~effective~~Exhibit ~~January~~10.22 1of the registrant's Annual Report on Form 10-K for its fiscal year ended April 30, 2024).
31.1						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

1817

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	KEWAUNEE SCIENTIFIC CORPORATION (Registrant)
Date: March 8, 2024	By	/s/ Donald T. Gardner III
Date: September 13, 2024	By	/s/ Donald T. Gardner III
		Donald T. Gardner III
		(As duly authorized officer and Vice President, Finance and Chief Financial Officer)

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