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 ~~October~~July 31, ~~2020~~2021


☐			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~~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~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting company,”" and ~~“emerging~~"emerging growth ~~company”~~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 byin Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~December 8, 2020,~~September 3, 2021, the registrant had outstanding ~~2,762,797~~2,789,873 shares of Common Stock.

KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~OCTOBER~~JULY 31, ~~2020~~2021


		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Statements of Operations (unaudited) – Three ~~and Six~~ Months Ended ~~October~~J ul y 31, ~~2020~~2021 and ~~2019~~2020	1
	Condensed Consolidated Statements of Comprehensive ~~Income~~Loss (unaudited) – Three ~~Three and Six~~ Months Ended ~~October~~J ul y 31, ~~2020~~2021 and ~~2019~~2020	2
	Condensed Consolidated Statements of ~~Stockholders’~~Stockholders ' Equity (unaudited) – Three ~~Three and Six~~ Months Ended ~~October~~J ul y 31, ~~2020~~2021 and ~~2019~~2020	3
	Condensed Consolidated Balance Sheets – ~~October~~J ul y 31, ~~2020~~2021 (unaudited) and April 30, 20202 201	4
	Condensed Consolidated Statements of Cash Flows (unaudited) – ~~Six~~Three Months Ended ~~October~~J uly 31, ~~2020~~2021 and ~~2019~~2020	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	~~Management’s~~Management 's Discussion and Analysis of Financial Condition and Results of Operations	1211
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1513
Item 4.	Controls and Procedures	1513

PART II. OTHER INFORMATION
Item 1A.	Risk Factors	14
Item 6.	Exhibits	1614
SIGNATURES		1715

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 Ended October 31,				Six Months Ended October 31,					Three Months Ended July 31,
		2020		2019		2020		2019			2021		2020
Net sales	Net sales	$	39,000	$	39,722	$	75,423	$	79,058	Net sales	$	39,493	$	36,423
Cost of products sold	Cost of products sold	32,605		33,406		63,147		65,796		Cost of products sold	33,819		30,542
Gross profit	Gross profit	6,395		6,316		12,276		13,262		Gross profit	5,674		5,881
Operating expenses	Operating expenses	6,406		6,355		12,563		12,525		Operating expenses	6,765		6,157
Operating earnings (loss)		(11)		(39)		(287)		737
Pension expense		(289)		(113)		(577)		(226)
Other income		66		129		120		298
Operating loss										Operating loss	(1,091)		(276)
Pension income (expense)										Pension income (expense)	89		(288)
Other income, net										Other income, net	52		54
Interest expense	Interest expense	(128)		(135)		(205)		(302)		Interest expense	(106)		(77)
Earnings (loss) before income taxes		(362)		(158)		(949)		507
Income tax expense (benefit)		(197)		2,003		(176)		2,172
Loss before income taxes										Loss before income taxes	(1,056)		(587)
Income tax expense										Income tax expense	251		21
Net loss	Net loss	(165)		(2,161)		(773)		(1,665)		Net loss	(1,307)		(608)
Less: net earnings attributable to the noncontrolling interest		15		17		5		42
Less: Net earnings (loss) attributable to the non-controlling interest										Less: Net earnings (loss) attributable to the non-controlling interest	38		(10)
Net loss attributable to Kewaunee Scientific Corporation	Net loss attributable to Kewaunee Scientific Corporation	$	(180)	$	(2,178)	$	(778)	$	(1,707)	Net loss attributable to Kewaunee Scientific Corporation	$	(1,345)	$	(598)

Net loss per share attributable to Kewaunee Scientific Corporation stockholders	Net loss per share attributable to Kewaunee Scientific Corporation stockholders									Net loss per share attributable to Kewaunee Scientific Corporation stockholders
Basic	Basic	$	(0.07)	$	(0.79)	$	(0.28)	$	(0.62)	Basic	$	(0.48)	$	(0.22)
Diluted	Diluted	$	(0.07)	$	(0.79)	$	(0.28)	$	(0.62)	Diluted	$	(0.48)	$	(0.22)
Weighted average number of common shares outstanding	Weighted average number of common shares outstanding									Weighted average number of common shares outstanding
Basic	Basic	2,759		2,750		2,757		2,750		Basic	2,777		2,756
Diluted	Diluted	2,759		2,750		2,757		2,750		Diluted	2,777		2,756

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Comprehensive ~~Income~~Loss

(Unaudited)

($ in thousands)


		Three Months Ended October 31,				Six Months Ended October 31,					Three Months Ended July 31,
		2020		2019		2020		2019			2021		2020
Net loss	Net loss	$	(165)	$	(2,161)	$	(773)	$	(1,665)	Net loss	$	(1,307)	$	(608)
Other comprehensive income (loss), net of tax:
Other comprehensive loss, net of tax:										Other comprehensive loss, net of tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(35)		(179)		(48)		17		Foreign currency translation adjustments	(76)		(13)
Change in fair value of cash flow hedge		0		2		0		1
Other comprehensive income (loss)		(35)		(177)		(48)		18

Other comprehensive loss										Other comprehensive loss	(76)		(13)
Comprehensive loss, net of tax	Comprehensive loss, net of tax	(200)		(2,338)		(821)		(1,647)		Comprehensive loss, net of tax	(1,383)		(621)
Less: comprehensive income attributable to the noncontrolling interest		15		17		5		42
Less: Comprehensive income (loss) attributable to the non-controlling interest										Less: Comprehensive income (loss) attributable to the non-controlling interest	38		(10)
Comprehensive loss attributable to Kewaunee Scientific Corporation	Comprehensive loss attributable to Kewaunee Scientific Corporation	$	(215)	$	(2,355)	$	(826)	$	(1,689)	Comprehensive loss attributable to Kewaunee Scientific Corporation	$	(1,421)	$	(611)

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of ~~Stockholders’~~Stockholders' Equity

(Unaudited)

($ in thousands, except per share amounts)

Common
Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total Kewaunee
Scientific
Corporation
Stockholders’
Equity
Balance at April 30, 2020 $ 6,885 $ 3,360 $ (53) $ 37,821 $ (9,598) $ 38,415
Net loss attributable to Kewaunee Scientific Corporation — — — (598) — (598)
Other comprehensive income — — — — (13) (13)
Stock based compensation 20 78 — — — 98
Balance at July 31, 2020 $ 6,905 $ 3,438 $ (53) $ 37,223 $ (9,611) $ 37,902
Net loss attributable to Kewaunee Scientific Corporation — — — $ (180) — $ (180)
Other comprehensive income — — — — (35) (35)
Stock based compensation — 143 — — — 143
Balance at October 31, 2020 $ 6,905 $ 3,581 $ (53) $ 37,043 $ (9,646) $ 37,830


	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Kewaunee Scientific Corporation Stockholders' Equity
Balance at April 30, 2021	$	6,915	$	3,807	$	(53)	$	34,149	$	(3,577)	$	41,241
Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(1,345)		—		(1,345)
Other comprehensive loss	—		—		—		—		(76)		(76)
Stock-based compensation	67		171		—		—		—		238
Balance at July 31, 2021	$	6,982	$	3,978	$	(53)	$	32,804	$	(3,653)	$	40,058


	Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Kewaunee Scientific Corporation Stockholders' Equity
Balance at April 30, 2020	$	6,885	$	3,360	$	(53)	$	37,821	$	(9,598)	$	38,415
Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(598)		—		(598)
Other comprehensive loss	—		—		—		—		(13)		(13)
Stock-based compensation	20		78		—		—		—		98
Balance at July 31, 2020	$	6,905	$	3,438	$	(53)	$	37,223	$	(9,611)	$	37,902

Common
Stock Additional
Paid-in
Capital Treasury
Stock Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Total Kewaunee Scientific Corporation Stockholders’ Equity
Balance at April 30, 2019 $ 6,875 $ 3,133 $ (53) $ 43,552 $ (6,407) $ 47,100
Net earnings attributable to Kewaunee Scientific Corporation — — — 471 — 471
Other comprehensive income — — — — 195 195
Cash dividends paid, $0.19 per share — — — (522) — (522)
Stock based compensation 9 51 — — — 60
Balance at July 31, 2019 $ 6,884 $ 3,184 $ (53) $ 43,501 $ (6,212) $ 47,304
Net loss attributable to Kewaunee Scientific Corporation $ — $ — $ — $ (2,178) $ — $ (2,178)
Other comprehensive loss — — — — $ (177) (177)
Cash dividends paid, $0.19 per share — — — (523) — (523)
Stock based compensation — 42 — — — 42
Balance at October 31, 2019 $ 6,884 $ 3,226 $ (53) $ 40,800 $ (6,389) $ 44,468

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

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


		October 31, 2020		April 30, 2020			July 31, 2021		April 30, 2021
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	5,759	$	4,365	Cash and cash equivalents	$	4,985	$	5,206
Restricted cash	Restricted cash	481		850		Restricted cash	482		525
Receivables, less allowance; $705; $606, on each respective date		33,753		28,062
Receivables, less allowance; $618; $636, on each respective date						Receivables, less allowance; $618; $636, on each respective date	34,932		34,095
Inventories	Inventories	16,124		15,330		Inventories	17,852		16,517
Income tax receivable	Income tax receivable	3,220		2,717		Income tax receivable	955		955
Prepaid expenses and other current assets	Prepaid expenses and other current assets	3,053		2,907		Prepaid expenses and other current assets	2,763		3,159
Total Current Assets	Total Current Assets	62,390		54,231		Total Current Assets	61,969		60,457
Property, plant and equipment, at cost	Property, plant and equipment, at cost	59,007		57,859		Property, plant and equipment, at cost	59,295		58,804
Accumulated depreciation	Accumulated depreciation	(42,789)		(41,587)		Accumulated depreciation	(43,523)		(42,822)
Net Property, Plant and Equipment	Net Property, Plant and Equipment	16,218		16,272		Net Property, Plant and Equipment	15,772		15,982
Right of use assets	Right of use assets	9,157		9,312		Right of use assets	8,838		9,279
Deferred income taxes		0		336

Other assets	Other assets	3,597		3,778		Other assets	3,720		3,666
Total Assets	Total Assets	$	91,362	$	83,929	Total Assets	$	90,299	$	89,384

Liabilities and Stockholders’ Equity
Liabilities and Stockholders' Equity						Liabilities and Stockholders' Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term borrowings	Short-term borrowings	$	7,592	$	4,719	Short-term borrowings	$	8,854	$	6,828
Current portion of capital lease liability		20		19
Current portion of financing lease liability						Current portion of financing lease liability	22		21
Current portion of operating lease liabilities	Current portion of operating lease liabilities	1,281		1,282		Current portion of operating lease liabilities	1,349		1,348
Accounts payable	Accounts payable	17,258		13,114		Accounts payable	17,487		16,780
Employee compensation and amounts withheld	Employee compensation and amounts withheld	3,374		4,159		Employee compensation and amounts withheld	4,593		4,726
Deferred revenue	Deferred revenue	2,768		2,508		Deferred revenue	2,555		3,123
Other accrued expenses	Other accrued expenses	1,567		1,259		Other accrued expenses	1,400		1,355
Total Current Liabilities	Total Current Liabilities	33,860		27,060		Total Current Liabilities	36,260		34,181
Long-term portion of capital lease liability		102		113
Long-term portion of financing lease liability						Long-term portion of financing lease liability	86		91
Long-term portion of operating lease liabilities	Long-term portion of operating lease liabilities	7,796		7,780		Long-term portion of operating lease liabilities	7,423		7,860
Accrued pension and deferred compensation costs	Accrued pension and deferred compensation costs	9,931		9,303		Accrued pension and deferred compensation costs	4,611		4,652
Deferred income taxes	Deferred income taxes	323		401		Deferred income taxes	344		307
Other non-current liabilities	Other non-current liabilities	1,281		569		Other non-current liabilities	1,235		806
Total Liabilities	Total Liabilities	53,293		45,226		Total Liabilities	49,959		47,897
Commitments and Contingencies	Commitments and Contingencies					Commitments and Contingencies	0		0
Stockholders’ Equity:
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,762 shares; 2,754 shares; – Outstanding – 2,759 shares; 2,751 shares, on each respective date		6,905		6,885
Stockholders' Equity:						Stockholders' Equity:
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,793 shares; 2,766 shares; – Outstanding – 2,790 shares; 2,763 shares, on each respective date						Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,793 shares; 2,766 shares; – Outstanding – 2,790 shares; 2,763 shares, on each respective date	6,982		6,915
Additional paid-in-capital	Additional paid-in-capital	3,581		3,360		Additional paid-in-capital	3,978		3,807
Retained earnings	Retained earnings	37,043		37,821		Retained earnings	32,804		34,149
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(9,646)		(9,598)		Accumulated other comprehensive loss	(3,653)		(3,577)
Common stock in treasury, at cost, 3 shares, on each date	Common stock in treasury, at cost, 3 shares, on each date	(53)		(53)		Common stock in treasury, at cost, 3 shares, on each date	(53)		(53)
Total Kewaunee Scientific Corporation Stockholders’ Equity		37,830		38,415
Noncontrolling interest		239		288
Total Stockholders’ Equity		38,069		38,703
Total Liabilities and Stockholders’ Equity		$	91,362	$	83,929
Total Kewaunee Scientific Corporation Stockholders' Equity						Total Kewaunee Scientific Corporation Stockholders' Equity	40,058		41,241
Non-controlling interest						Non-controlling interest	282		246
Total Stockholders' Equity						Total Stockholders' Equity	40,340		41,487
Total Liabilities and Stockholders' Equity						Total Liabilities and Stockholders' Equity	$	90,299	$	89,384

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

($ in thousands)


		Six Months Ended October 31,					Three Months Ended July 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(773)	$	(1,665)	Net loss	$	(1,307)	$	(608)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash used by operating activities:						Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation	Depreciation	1,346		1,292		Depreciation	693		687
Bad debt provision	Bad debt provision	93		72		Bad debt provision	3		8
Stock based compensation expense		256		115
Stock-based compensation expense						Stock-based compensation expense	216		112
Deferred income taxes	Deferred income taxes	257		1,727		Deferred income taxes	37		(27)
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Receivables	Receivables	(5,784)		1,171		Receivables	(839)		(2,843)
Inventories	Inventories	(794)		2,428		Inventories	(1,335)		(1,128)
Income tax receivable		(503)		0

Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	4,379		(223)		Accounts payable and other accrued expenses	1,048		1,065
Deferred revenue	Deferred revenue	260		433		Deferred revenue	(568)		(1,076)
Other, net	Other, net	747		(854)		Other, net	276		542
Net cash (used in) provided by operating activities		(516)		4,496
Net cash used by operating activities						Net cash used by operating activities	(1,776)		(3,268)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(1,292)		(715)		Capital expenditures	(484)		(922)
Net cash used in investing activities	Net cash used in investing activities	(1,292)		(715)		Net cash used in investing activities	(484)		(922)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Dividends paid		0		(1,045)
Dividends paid to noncontrolling interest in subsidiaries		(57)		(89)

Proceeds from short-term borrowings	Proceeds from short-term borrowings	37,599		31,456		Proceeds from short-term borrowings	12,303		23,885
Repayments on short-term borrowings	Repayments on short-term borrowings	(34,726)		(34,209)		Repayments on short-term borrowings	(10,277)		(20,080)
Payments on long-term debt and lease obligations	Payments on long-term debt and lease obligations	(9)		(1,273)		Payments on long-term debt and lease obligations	(5)		(5)
Net proceeds from exercise of stock options	Net proceeds from exercise of stock options	(15)		(14)		Net proceeds from exercise of stock options	—		(15)
Net cash provided by (used in) financing activities		2,792		(5,174)
Net cash provided by financing activities						Net cash provided by financing activities	2,021		3,785
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	41		(165)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(25)		15
Increase (decrease) in cash, cash equivalents and restricted cash		1,025		(1,558)
Decrease in cash, cash equivalents and restricted cash						Decrease in cash, cash equivalents and restricted cash	(264)		(390)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	5,215		11,156		Cash, cash equivalents and restricted cash, beginning of period	5,731		5,215
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	6,240	$	9,598	Cash, cash equivalents and restricted cash, end of period	$	5,467	$	4,825

See accompanying notes to ~~condensed consolidated financial statements.~~Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited)

A. Financial Information

The unaudited interim ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements of Kewaunee Scientific Corporation (the ~~“Company”~~"Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the ~~“Commission”~~"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~~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~~Consolidated Financial Statements and ~~notes~~Notes included in the ~~Company’s 2020~~Company's 2021 Annual Report on Form ~~10-K.~~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~~Condensed Consolidated Balance Sheet as of April 30, ~~2020~~2021 included in this interim period filing has been derived from the audited financial statements at that date, but does not include all of the information and related notes required by ~~generally accepted accounting principles ("GAAP")~~GAAP for complete financial statements.

The preparation of the interim ~~condensed consolidated financial statements~~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 periods ended ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020,~~2021, 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.

The Company includes restricted cash along with the cash balance for presentation in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~cash flows.~~Cash Flows. The reconciliation between the ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheet and the ~~condensed consolidated statement~~Condensed Consolidated Statement of ~~cash flows~~Cash Flows is as follows:


		October 31, 2020		April 30, 2020			July 31, 2021		April 30, 2021
Cash and cash equivalents	Cash and cash equivalents	$	5,759	$	4,365	Cash and cash equivalents	$	4,985	$	5,206
Restricted cash	Restricted cash	481		850		Restricted cash	482		525
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	6,240	$	5,215	Total cash, cash equivalents and restricted cash	$	5,467	$	5,731

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~~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~~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 ~~October~~July 31, ~~2020~~2021 and ~~October~~July 31, ~~2019~~2020 is as follows (in thousands):


															Three Months Ended
		Three Months Ended October 31, 2020						Three Months Ended October 31, 2019							July 31, 2021						July 31, 2020
		Domestic		International		Total		Domestic		International		Total			Domestic		International		Total		Domestic		International		Total
Over Time	Over Time	$	26,950	$	10,228	$	37,178	$	29,950	$	8,138	$	38,088	Over Time	$	28,652	$	9,830	$	38,482	$	29,080	$	6,365	$	35,445
Point in Time	Point in Time	1,822		0		1,822		1,634		0		1,634		Point in Time	1,011		—		1,011		978		—		978
		$	28,772	$	10,228	$	39,000	$	31,584	$	8,138	$	39,722
Total														Total	$	29,663	$	9,830	$	39,493	$	30,058	$	6,365	$	36,423

Six Months Ended October 31, 2020 Six Months Ended October 31, 2019
Domestic International Total Domestic International Total
Over Time $ 56,030 $ 16,593 $ 72,623 $ 58,185 $ 18,187 $ 76,372
Point in Time 2,800 0 2,800 2,686 0 2,686
$ 58,830 $ 16,593 $ 75,423 $ 60,871 $ 18,187 $ 79,058

Contract Balances

The closing and opening balances of contract assets included in accounts receivable arising from contracts with customers ~~which~~ were ~~recorded as unbilled receivables were $8,650,000~~$8,677,000 at ~~October~~July 31, ~~2020~~2021 and ~~$6,131,000~~$6,929,000 at April 30, ~~2020.~~2021. The closing and opening balances of contract liabilities included in deferred revenue arising from contracts with customers were ~~$2,768,000~~$2,555,000 at ~~October~~July 31, ~~2020~~2021 and ~~$2,508,000~~$3,123,000 at April 30, ~~2020.~~2021. 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~~Condensed Consolidated Balance Sheets and in the ~~notes~~Notes to the ~~condensed consolidated financial statements.~~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.~~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, ~~2020~~2021 and ~~October~~July 31, ~~2020~~2021 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 ("FIFO") method at the lower of cost or net realizable value. Inventories consisted of the following (in thousands):
October 31, 2020 April 30, 2020
Finished products $ 2,890 $ 2,455
Work in process 1,756 1,921
Raw materials 11,478 10,954
$ 16,124 $ 15,330


	July 31, 2021		April 30, 2021
Finished products	$	4,070	$	2,988
Work in process	2,170		1,832
Raw materials	11,612		11,697
Total	$	17,852	$	16,517

The ~~Company’s~~Company's International ~~subsidiaries’~~subsidiaries' inventories were ~~$1,925,000~~$2,395,000 at ~~October~~July 31, ~~2020~~2021 and ~~$2,136,000~~$2,560,000 at April 30, ~~2020~~2021 and are included in the above tables.

E. Fair Value of Financial Instruments

The ~~Company’s~~Company's financial instruments consist primarily of cash and equivalents, mutual funds, cash surrender value of life insurance policies, ~~term loans~~ and short-term borrowings. The carrying value of these assets and liabilities approximates their fair value. The following tables summarize the ~~Company’s~~Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020~~2021 (in thousands):


		October 31, 2020							July 31, 2021
Financial Assets	Financial Assets	Level 1		Level 2		Total		Financial Assets	Level 1		Level 2		Total
Trading securities held in non-qualified compensation plans (1)	Trading securities held in non-qualified compensation plans (1)	$	2,484	$	0	$	2,484	Trading securities held in non-qualified compensation plans (1)	$	1,319	$	—	$	1,319
Cash surrender value of life insurance policies (1)	Cash surrender value of life insurance policies (1)	0		87		87		Cash surrender value of life insurance policies (1)	—		1,474		1,474
Total	Total	$	2,484	$	87	$	2,571	Total	$	1,319	$	1,474	$	2,793
Financial Liabilities	Financial Liabilities							Financial Liabilities
Non-qualified compensation plans (2)	Non-qualified compensation plans (2)	$	0	$	2,951	$	2,951	Non-qualified compensation plans (2)	$	—	$	3,216	$	3,216

Total	Total	$	0	$	2,951	$	2,951	Total	$	—	$	3,216	$	3,216


		April 30, 2020							April 30, 2021
Financial Assets	Financial Assets	Level 1		Level 2		Total		Financial Assets	Level 1		Level 2		Total
Trading securities held in non-qualified compensation plans (1)	Trading securities held in non-qualified compensation plans (1)	$	2,485	$	0	$	2,485	Trading securities held in non-qualified compensation plans (1)	$	1,299	$	—	$	1,299
Cash surrender value of life insurance policies (1)	Cash surrender value of life insurance policies (1)	0		87		87		Cash surrender value of life insurance policies (1)	—		1,458		1,458
Total	Total	$	2,485	$	87	$	2,572	Total	$	1,299	$	1,458	$	2,757
Financial Liabilities	Financial Liabilities							Financial Liabilities
Non-qualified compensation plans (2)	Non-qualified compensation plans (2)	$	0	$	2,899	$	2,899	Non-qualified compensation plans (2)	$	—	$	3,169	$	3,169
Total	Total	$	0	$	2,899	$	2,899	Total	$	—	$	3,169	$	3,169

(1)The Company maintains 2 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’~~participants' account balances and other earned retirement benefits.

F. ~~Derivative Financial Instruments~~

The Company records derivatives on the condensed consolidated balance sheets at fair value and establishes criteria for designation and effectiveness of hedging relationships. The nature of the Company’s business activities involves the management of various financial and market risks, including those related to changes in interest rates. The Company does not enter into derivative instruments for speculative purposes. In May 2013, the Company entered into certain interest rate swap arrangements to mitigate future interest rate risk associated with its long-term debt and designated these as cash flow hedges. These interest rates swaps were terminated in conjunction with the payoff of the outstanding long-term debt in September 2019.

G.F. Long-term Debt and Other Credit Arrangements

At ~~October~~July 31, ~~2020,~~2021, advances of ~~$7.6~~$8.9 million were outstanding under the ~~Company’s~~Company's revolving credit facility, compared to advances of ~~$4.7~~$6.8 million outstanding as of April 30, ~~2020.~~2021. The Company had standby letters of credit outstanding of ~~$512,000~~$704,000 at ~~October~~July 31, ~~2020,~~2021, unchanged from April 30, ~~2020.~~2021. Amounts available under the revolving credit facility were ~~$8.3~~$5.6 million and ~~$8.7~~$7.5 million at ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020,~~2021, respectively.

~~At April 30, 2020, the Company was not in compliance with all of the financial covenants under the revolving credit facility.~~ On July ~~20, 2020,~~30, 2021, the Company entered into ~~an amendment~~a Twelfth Amendment to Credit and Security Agreement (the “Amendment”) with Wells Fargo Bank, National Association (the “Bank”). The Amendment made certain changes to the ~~Loan~~Credit and Security Agreement, dated as of May 6, 2013, as amended (the “Credit Agreement”), between the Company and the Bank, and to the Revolving Line of Credit ~~which effected~~Note, dated May 6, 2013, made by the Company and payable to the order of the Bank, as amended (the “Revolving Note”). The changes included (i) extending the maturity date under the Credit Agreement and Revolving Note from July 30, 2021 to April 30, 2022; (ii) removing the minimum EBITDA covenant; (iii) in ~~certain financial covenants set forth~~addition to the existing Minimum Monthly Liquidity requirement as of the end of each calendar month of not less than $2,000,000, adding an additional covenant that the Company will maintain Supplemental Liquidity (as defined in the ~~Loan Agreement and included a waiver~~amended Credit Agreement) as of the ~~non-compliance described above. This amendment did~~first day of each calendar month not ~~change~~less than (a) during the ~~amount of availability provided by~~period from August 1, 2021 through December 31, 2021, $1,000,000 and (b) thereafter $1,500,000; and (iv) restating the ~~Company's Line of Credit.~~ amended Credit Agreement to reflect all amendments to date.

At ~~October~~July 31, ~~2020,~~2021 and April 30, 2021, the Company was in compliance with all the financial covenants under its revolving credit facility.

H.G. Leases

In accordance with ASC 842, ~~"ASU No. 2016-02 Leases,~~"Leases," the Company ~~is required to recognize~~recognizes lease assets and lease liabilities reflecting the rights and obligations created by ~~leased assets previously classified as operating leases. The Company has~~ operating type leases for real estate and equipment in both the U.S. and internationally and a financing lease for a truck in the U.S. At ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020,~~2021, right-of-use assets totaled ~~$9,157,000~~$8,838,000 and ~~$9,312,000,~~$9,279,000, respectively. Operating cash paid to settle lease liabilities was ~~$848,000~~$500,000 and ~~$668,000~~$410,000 for the ~~six~~three months ended ~~October~~July 31, 2021 and July 31, 2020, ~~and October 31, 2019, respectively .~~respectively. The ~~Company’s~~Company's leases have remaining lease terms of up to 109 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 ~~expense was $683,000~~expenses were $847,000 and $632,000 for the three months ended ~~October~~July 31, 2021 and 2020, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of ~~$245,000. Operating lease expense was $1,315,000 for the six months ended October 31, 2020, inclusive of period cost for short-term leases, not included in lease liabilities, of $467,000.~~

~~Operating lease expense was $576,000 for the three months ended October 31, 2019, inclusive of period cost for short-term leases, not included in lease liabilities of~~$347,000 and $222,000, ~~and $1,125,000 for the six months ended October 31, 2019, inclusive of period cost for short-term leases, not included in lease liabilities, of $457,000.~~respectively.

At ~~October~~July 31, ~~2020,~~2021, the weighted average remaining lease term for the capitalized operating leases was ~~6.9~~5.8 years and the weighted average discount rate was 4.1%. For the ~~finance~~financing lease, the remaining lease term was ~~4.8~~4.1 years and the discount rate was 10.0%. 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 ~~October~~July 31, ~~2020~~2021 were as follows:
Operating Financing
Remainder of fiscal 2021 $ 889 $ 16
2022 1,818 32
2023 1,634 32
2024 1,276 32
2025 1,232 32
Thereafter 3,927 12
Total Minimum Lease Payments1
$ 10,776 $ 156
Imputed Interest (1,700) (33)
Total $ 9,076 $ 123

1~~Excludes future minimum payments for leases which have not yet commenced as of October 31, 2020.~~

As of October 31, 2020, the Company has entered into leases that have not yet commenced with future minimum lease payments of $981,000 that are not yet reflected on the condensed consolidated balance sheets. These operating leases will commence in fiscal year 2021 with lease terms of 5 years.


	Operating		Financing

Remainder of fiscal 2022	$	1,831	$	24
2023	1,473		32
2024	1,429		32
2025	1,218		32
2026	1,003		12
Thereafter	3,362		—
Total Minimum Lease Payments	10,316		132
Imputed Interest	(1,543)		(24)
Total	$	8,773	$	108

I.H. 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”~~("RSUs") under the ~~Company’s~~Company's various stock compensation plans, except when RSUs and options have an antidilutive effect. There were ~~116,575~~128,701 and ~~85,205~~118,696 antidilutive RSUs and options outstanding at ~~October~~July 31, ~~2020~~2021 and ~~October~~July 31, ~~2019,~~2020, respectively. The following is a reconciliation of basic to diluted weighted average common shares outstanding (in thousands):

Three Months Ended October 31, Six Months Ended October 31,
2020 2019 2020 2019
Basic 2,759 2,750 2,757 2,750
Dilutive effect of stock options and RSUs 0 0 0 0
Weighted average common shares outstanding - diluted 2,759 2,750 2,757 2,750


	Three Months Ended
	July 31, 2021	July 31, 2020
Basic	2,777	2,756
Dilutive effect of stock options and RSUs	—	—
Weighted average common shares outstanding - diluted	2,777	2,756

J.I. Stock Options and ~~Share-based~~Stock-based Compensation

Under ASC 718, "Compensation-Stock Compensation," compensation costs related to stock options and other stock awards granted by the Company are charged against operating expenses during their vesting ~~period, under ASC 718, "Compensation-Stock Compensation."~~period.

In ~~May 2020,~~June 2021, the Company granted ~~12,045~~5,500 RSUs under the 2017 Omnibus Incentive Plan ("2017 Plan"). These RSUs include a

service component that vests over a ~~one-year~~two-year period. The Company also granted ~~83,816~~51,471 RSUs under the 2017 Omnibus Incentive Plan in June ~~2020. These RSUs~~2021 that include ~~both~~ a service ~~and a performance~~ component ~~vesting~~that vests over a three-year period. The recognized expense is based upon the vesting period for service ~~criteria and estimated attainment of the performance criteria at the end of the three-year period, based on the ratio of cumulative days of service to total days over the three-year period.~~criteria. The Company recorded ~~share-based~~stock-based compensation expense during the three ~~and six~~ months ended ~~October~~July 31, ~~2020~~2021 of ~~$141,000 and $200,000, respectively,~~$194,000, with the remaining estimated ~~share-based~~stock-based compensation expense of ~~$990,000~~$1,325,000 to be recorded over the remaining vesting periods. The Company recorded ~~share-based~~stock-based compensation expense during the three ~~and six~~ months ended ~~October~~July 31, ~~2019~~2020 of ~~$41,000 and $82,000, respectively.~~$59,000. Directors' fees paid with shares of common stock in lieu of cash in accordance with

Director compensation guidelines were $41,000 for each of the three month periods ended July 31, 2021 and July 31, 2020 and were also included in the stock-based compensation on the Condensed Consolidated Statements of Cash Flows.

K.J. Income Taxes

~~An income tax benefit of $197,000 and an income~~Income tax expense of ~~$2,003,000 were~~$251,000 and $21,000 was recorded for the three months ended ~~October~~July 31, ~~2020~~2021 and ~~2019, respectively. An income tax benefit of $176,000 and an income tax expense of $2,172,000 were recorded for the six months ended October 31,~~ 2020, ~~and 2019,~~ respectively. The effective tax rates were ~~54.4%~~(23.8)% and ~~1,267.7%~~(3.6)% for the three months ended ~~October~~July 31, ~~2020~~2021 and ~~2019, respectively. The effective tax rates were 18.5% and 428.4% for the six months ended October 31,~~ 2020, ~~and 2019,~~ respectively. The change in the effective tax rate for the ~~three and six-month~~three-month periods is primarily due to ~~the revocation of the Company's indefinite reinvestment of foreign unremitted earnings position (discussed below) and~~ the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21%~~. In addition, the change in the effective tax rates for the three~~ and ~~six months ended October 31, 2020 was impacted by~~ the recording of a ~~Domestic~~valuation allowance against the deferred tax asset which resulted in the elimination of any U.S. income tax ~~benefit as a result of the Company's current Domestic net loss position.~~This loss is permitted to be carried back and used to offset Domestic taxable income incurred in previous tax filing periods as allowed by the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). The Company’s income tax receivable increased due to the Domestic income tax benefits afforded by the CARES Act to carryback the current Domestic loss and generate an income tax refund. The income tax receivable also includes Domestic income tax benefits attributable to a carryback claim for an applied Research and Development tax credit for the year ended April 30, 2018, as well as the taxable loss generated during the year ended April 30, 2020.benefit.

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, China, and Kewaunee Labway India Pvt. Ltd. international subsidiaries. The Company recognized a tax withholding expense, imposed by the India Income Tax Department in accordance with international tax treaties between the U.S. and Singapore governments, at a rate of 10.0% and 15.0%, respectively. The Company recognized a withholding tax expense of $92,000 and $80,000 for the three and six months ended October 31, 2020, respectively, related to the unremitted earnings of the subsidiaries listed above. The Company recognized a withholding tax expense of $2,083,000 for the three and six months ended October 31, 2019 related to the unremitted earnings of the subsidiaries listed above. The Company has a deferred tax liability of ~~$735,000~~$826,000 and ~~$785,000~~$776,000 for the withholding tax related to Kewaunee Labway India Pvt. Ltd. as of ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020,~~2021, respectively. The Company recorded all deferred tax assets and liabilities related to its outside basis differences in its foreign subsidiaries consistent with ASC 740.

In July 2020, the U.S. Department of the Treasury issued final tax regulations (proposed regulations were originally published in 2019) with respect to global intangible low-taxed income (''GILTI''.) Among other changes, these regulations now permit an election to exclude, from the GILTI calculation, items of income which are subject to a high effective foreign tax rate. The Company excluded certain items, as permitted by these final regulations, in the current fiscal year and reflected the benefit in the estimated annual effective tax rate.

L.K. Defined Benefit Pension Plans

The Company has non-contributory defined benefit pension plans covering substantially all domestic salaried and hourly employees. These plans were amended as of April 30, 2005; no further benefits have been, or will be, earned under the plans, subsequent to the amendment date, and no additional participants will be added to the plans. There were 0no Company contributions paid to the plans ~~during~~for the three ~~and six~~ months ended ~~October~~July 31, ~~2020~~2021 and ~~2019. The Company currently expects to contribute $30,000 to the plans during the remainder of the fiscal year.~~July 31, 2020. The Company assumed an expected long-term rate of return of 7.75% for the periods ended ~~October~~July 31, ~~2020~~2021 and ~~October~~July 31, ~~2019.~~ 2020.

Pension (income) / expense consisted of the following (in thousands):
Three Months Ended October 31, 2020 Three Months Ended October 31, 2019
Service cost $ 0 $ 0
Interest cost 181 208
Expected return on plan assets (321) (355)
Recognition of net loss 429 260
Net periodic pension expense $ 289 $ 113


							Three Months Ended
		Six Months Ended October 31, 2020		Six Months Ended October 31, 2019			July 31, 2021		July 31, 2020
Service cost	Service cost	$	0	$	0	Service cost	$	0	$	0
Interest cost	Interest cost	362		416		Interest cost	177		181
Expected return on plan assets	Expected return on plan assets	(642)		(710)		Expected return on plan assets	(401)		(321)
Recognition of net loss	Recognition of net loss	857		520		Recognition of net loss	135		428
Net periodic pension expense		$	577	$	226
Net periodic pension (income) expense						Net periodic pension (income) expense	$	(89)	$	288

M.L. Segment Information

The ~~Company’s~~Company's operations are classified into 2 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, laminate casework, flexible systems, worksurfaces, workstations, workbenches, and computer enclosures. The International business segment, which consists of the ~~Company’s~~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 segments for the periods ended ~~October~~July 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


		Domestic Operations		International Operations		Corporate / Eliminations		Total			Domestic Operations		International Operations		Corporate / Eliminations		Total
Three months ended October 31, 2020
Three months ended July 31, 2021										Three months ended July 31, 2021
Revenues from external customers	Revenues from external customers	$	28,772	$	10,228	$	0	$	39,000	Revenues from external customers	$	29,663	$	9,830	$	—	$	39,493
Intersegment revenues	Intersegment revenues	601		1,099		(1,700)		0		Intersegment revenues	175		565		(740)		—
Earnings (loss) before income taxes	Earnings (loss) before income taxes	$	595	$	786	$	(1,743)	$	(362)	Earnings (loss) before income taxes	(209)		664		(1,511)		(1,056)
Three months ended October 31, 2019

Three months ended July 31, 2020										Three months ended July 31, 2020
Revenues from external customers	Revenues from external customers	$	31,584	$	8,138	$	0	$	39,722	Revenues from external customers	$	30,058	$	6,365	$	—	$	36,423
Intersegment revenues	Intersegment revenues	907		641		(1,548)		0		Intersegment revenues	651		811		(1,462)		—
Earnings (loss) before income taxes	Earnings (loss) before income taxes	$	746	$	501	$	(1,405)	$	(158)	Earnings (loss) before income taxes	993		135		(1,715)		(587)

Domestic
Operations International
Operations Corporate /
Eliminations Total
Six months ended October 31, 2020
Revenues from external customers $ 58,830 $ 16,593 $ 0 $ 75,423
Intersegment revenues 1,252 1,910 (3,162) 0
Earnings (loss) before income taxes $ 1,588 $ 921 $ (3,458) $ (949)
Six months ended October 31, 2019
Revenues from external customers $ 60,871 $ 18,187 $ 0 $ 79,058
Intersegment revenues 3,086 1,483 (4,569) 0
Earnings (loss) before income taxes $ 2,306 $ 1,109 $ (2,908) $ 507

N. ~~Reclassifications~~

The Company reclassified certain amounts in the condensed consolidated balance sheet for the period ended April 30, 2020 and the condensed consolidated statements of cash flows for the six-month period ended October 31, 2019 to conform to the current period presentation.

O.M. New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments," which replaces the current incurred loss method used for determining credit losses on financial assets, including trade receivables, with an expected credit loss method. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company will adopt this standard in fiscal year 2024. 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 January 2017, the FASB issued ASU 2017-04, "Simplifying the Test for Goodwill Impairment," which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.

In August 2018, the FASB issued ASU 2018-14, "Compensation -Retirement Benefits -Defined Benefit Plans -General (Subtopic 715-20) - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU 2018-14"). The amendments in this update remove defined benefit plan disclosures that are no longer considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’sCompany's consolidated financial position or results of operations.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes." This update simplifies the accounting for income taxes through certain targeted improvements to various subtopics within Topic 740. The amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company ~~expects to adopt~~adopted this ~~guidance when~~standard effective ~~and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.~~

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). This guidance provides practical expedients for contract modifications and certain hedging relationships associated with the expected market transition from the LIBOR and other interbank offered rates to alternative reference rates.May 1, 2021. The ~~ASU can be adopted after its issuance date through December 31, 2022. The Company is evaluating the optional expedients and exceptions in the guidance but does not expect the~~ adoption of this standard todid not have a ~~material~~significant impact on ~~its~~the Company's consolidated financial ~~statements.~~position or results of operations.

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

The ~~Company’s 2020~~Company's 2021 Annual Report to Stockholders on Form 10-Kcontains ~~management’s~~management's discussion and analysis of the ~~Company’s~~Company's financial condition and results of operations as of and for the year ended April 30, ~~2020.~~2021. The following discussion and analysis describes material changes in the ~~Company’s~~Company's financial condition since April 30, ~~2020.~~2021. The analysis of results of operations compares the three ~~and six~~ months ended ~~October~~July 31, ~~2020~~2021 with the comparable ~~periods~~period of the prior year.

Results of Operations

Sales for the quarter were ~~$39,000,000, a 1.8% decrease~~$39,493,000, an 8.4% increase from sales of ~~$39,722,000~~$36,423,000 in the comparable period of the prior year. Domestic sales for the quarter were ~~$28,772,000,~~$29,663,000, down ~~8.9%~~1.3% from sales of ~~$31,584,000~~$30,058,000 in the comparable period of the prior year. International sales for the quarter were ~~$10,228,000,~~$9,830,000, up ~~25.7%~~54.4% from sales of ~~$8,138,000~~$6,365,000 in the comparable period of the prior year. Domestic sales decreased for the most recent quarter compared to the prior year period due to delays in project completions and limited access to construction sites as the coronavirus (“COVID-19”) pandemic continued to impact our customer base.were relatively flat while International sales increased ~~for the most recent quarter~~when compared to the prior year period due to strong ~~international~~ demand in the current period, coupled with reduced COVID-19 related restrictions on construction site access and government mandated shut-downs in ~~certain markets~~India that ~~allowed access to project sites and increased billings.~~

~~Sales for the six months ended October 31, 2020 were $75,423,000, a 4.6% decrease from sales of $79,058,000 in the comparable period of~~significantly impacted the prior year. Domestic sales for the six-month period were $58,830,000, down 3.4% from sales of $60,871,000 in the comparable period of the prior year. International sales for the period were $16,593,000, down 8.8% from sales of $18,187,000 in the comparable period of the prior year.

year period.

The ~~Company’s~~Company's order backlog was ~~$96~~$120.6 million at ~~October~~July 31, ~~2020,~~2021, as compared to ~~$92~~$101.2 million at ~~October~~July 31, ~~2019,~~2020, and ~~$101~~$114.5 million at April 30, ~~2020. The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects.~~2021.

The gross profit margin for the three months ended ~~October~~July 31, ~~2020~~2021 was ~~16.4%~~14.4% of sales, as compared to ~~15.9%~~16.1% of sales in the comparable quarter of the prior year. The ~~gross profit margin for the six months ended October 31, 2020 was 16.3% of sales, as compared to 16.8% of sales in the comparable period of the prior year. The increase~~decrease in gross profit margin percentage for the three months ended ~~October~~July 31, ~~2020~~2021 is a result of supplier constraints resulting from COVID-19, as well as other supply disruptions, that led to an increase in steel and epoxy resin raw material costs when compared to the prior ~~year~~ period ~~was related to increased sales and improved operating performance~~ of approximately $1.7 million, net of materials surcharges implemented during the ~~International segment. The decrease in gross profit margin percentage~~quarter for ~~the six months ended October 31, 2020 as compared to prior year period was related to the overall decline in sales with an unfavorable shift in product mix between the Company’s business segments.~~shipments for certain orders.

Operating expenses for the three months ended ~~October~~July 31, ~~2020 remained relatively flat at $6,406,000,~~2021 were $6,765,000, or ~~16.4%~~17.1% of sales, as compared to ~~$6,355,000,~~$6,157,000, or ~~16.0% of sales, in the comparable period of the prior year. Operating expenses for the six months ended October 31, 2020 were $12,563,000, or 16.7% of sales, as compared to $12,525,000, or 15.8%~~16.9% of sales, in the comparable period of the prior year. The increase in operating expenses for the three months ended ~~October~~July 31, 2020 was primarily for consulting and professional fees of $83,000 related to the implementation of strategic initiatives and International operating expenses of $146,000, partially offset by decreases in travel expenses of $181,000.

~~The increase in operating expenses for the six months ended October 31, 2020~~2021 was primarily related to ~~investments in talent~~increases of ~~$245,000 and consulting fees~~$396,000 for international expenses related to wages, travel, and professional fees that were significantly less during the prior year comparable period due to COVID-19 related restrictions on

construction site access and government mandated shut-downs in India. Additional operating expense increases of ~~$161,000, both of which are~~$182,000 were related to ~~previously disclosed strategic initiatives. Additionally, expenses for improvements in technology increased by $176,000 to enable remote working~~administrative wages, benefits, incentive compensation and ~~support strategic initiatives. These increases were mostly offset by decreases in travel expense of $319,000 and reduced International operating expenses of $198,000.~~stock-based compensation.

Interest expense, net was ~~$128,000 and $205,000~~$106,000 for the three ~~and six~~ months ended ~~October~~July 31, ~~2020,~~2021, as compared to ~~$135,000 and $302,000~~$77,000 for the comparable ~~periods~~period of the prior year. The changes in interest expense were primarily attributable to changes in borrowing levels.

The effective income tax ~~rates~~rate for the three ~~and six~~ months ended ~~October~~July 31, ~~2020 were 54.4% and 18.5%~~2021 was (23.8)% as compared to ~~1,267.7% and 428.4%~~(3.6)% for the three ~~and six~~ months ended ~~October~~July 31, ~~2019. An income tax benefit of $197,000 and an income~~2020. Income tax expense of ~~$2,003,000 were~~$251,000 and $21,000 was recorded for the three months ended ~~October~~July 31, ~~2020~~2021 and ~~2019,~~2020, respectively. ~~An income tax benefit of $176,000 and an income tax expense $2,172,000 were recorded for the six months ended October 31, 2020 and 2019, respectively.~~ The change in the effective tax ~~rates~~rate for the three ~~and six~~ months ~~ending October~~ended July 31, 2021 as compared to the three months ended July 31, 2020 reflects the impact of increased international operations which are taxed at different rates, combined with ano U.S. tax benefit being recorded for the most recent ~~quarter. The change in the effective tax rates from the same periods in the previous fiscal year is~~quarter due to the ~~Company’s revocation of its indefinite reinvestment of foreign unremitted earnings, effective August 2019, for the Singapore and China subsidiaries, and Kewaunee Labway India Pvt. Ltd.~~Company's full valuation allowance position. See

~~The Company included a tax withholding expense, imposed by the India~~ Note J, Income Tax Department in accordance with international tax treaties between the U.S. and Singapore governments at a rate of 10% and 15%, respectively, for the three and six months ended October 31, 2020. The Company recognized a withholding tax expense of $92,000 and $80,000 for the three and six months ended October 31, 2020, respectively, related to the unremitted earnings of the subsidiaries listed above. TaxesThe Company recognized a withholding tax expense of $2,083,000 for the three and six months ended October 31, 2019 related to the unremitted earnings position of the subsidiaries listed above. The Company will record the tax withholding on all future Kewaunee Labway India Pvt. Ltd. earnings at an estimated rate of 10% and 15% for the U.S. and Singapore shareholders, respectively, in addition to the corporate income taxes. See Note K, of the Notes to Condensed Consolidated Financial Statements for additional information.

~~Noncontrolling~~Non-controlling interests related to the ~~Company’s~~Company's subsidiaries not 100% owned by the Company ~~reduced~~increased net ~~earnings~~loss by ~~$15,000 and $5,000~~$38,000 for the three ~~and six~~ months ended ~~October~~July 31, ~~2020, respectively,~~2021 as compared to ~~$17,000 and $42,000~~a reduction of net loss of $10,000 for the comparable ~~periods~~period of the prior year. The change in the net earnings attributable to the ~~noncontrolling~~non-controlling interest in the current period was due to changes in earnings of the ~~subsidiary~~subsidiaries in the related period.

Net loss was ~~$180,000,~~$1,345,000, or ~~$0.07~~$(0.48) per diluted share, for the three months ended ~~October~~July 31, ~~2020,~~2021, compared to ~~a net loss of $2,178,000,~~$598,000, or $0.79 per diluted share, in the prior year period. A net loss of $778,000, or $0.28 per diluted share, was reported for the six months ended October 31, 2020, compared to a net loss of $1,707,000, or $0.62$(0.22) per diluted share, in the prior year period.

Liquidity and Capital Resources

Historically, the ~~Company’s~~Company's principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings under the ~~Company’s~~Company's revolving credit facility. Additionally, certain machinery and equipment are financed by non-cancellable operating 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 ~~$28,530,000~~$25,709,000 at ~~October~~July 31, ~~2020,~~2021, compared to ~~$27,171,000~~$26,276,000 at April 30, ~~2020.~~2021. The ratio of current assets to current liabilities was ~~1.8-to-1.0~~1.7-to-1.0 at ~~October~~July 31, ~~2020,~~2021, compared to ~~2.0-to-1.0~~1.8-to-1.0 at April 30, ~~2020.~~2021. At ~~October~~July 31, ~~2020,~~2021, advances of ~~$7.6~~$8.9 million were outstanding under the ~~Company’s~~Company's credit facilities, compared to advances of ~~$4.7~~$6.8 million outstanding as of April 30, ~~2020.~~2021. The Company had standby letters of credit outstanding of ~~$512,000~~$704,000 at ~~October~~July 31, ~~2020,~~2021, unchanged from April 30, ~~2020.~~2021. Amounts available under the ~~$15~~$15.0 million revolving credit facility were ~~$8.3~~$5.6 million and ~~$8.7~~$7.5 million at ~~October~~July 31, ~~2020~~2021 and April 30, ~~2020,~~2021, respectively. For additional information concerning our credit facility, see Note F, Long-Term Debt and Other Credit Arrangements.

As previously reported in the Company's ~~Report on Form 8-K filed on July 24, 2020 and in Note 4 of the Notes to the Consolidated Financial Statements included in the Company's 2020~~2021 Annual Report on Form 10-K ~~during the quarter ended July 31, 2020,~~, the Company ~~entered into an amendment to its Loan Agreement and Line~~was compliant at April 30, 2021 with all of ~~Credit which effected changes in certain~~the financial covenants ~~and included a waiver of certain non-compliance~~ under ~~the previous terms of~~ the revolving credit facility. ~~The amendment did not change~~At July 31, 2021, the ~~amount of availability provided by~~Company was in compliance with all the ~~Company's Line of Credit.~~financial covenants under its revolving credit facility.

The ~~Company’s~~Company's operations used cash of ~~$516,000~~$1,776,000 during the ~~six~~three months ended ~~October~~July 31, ~~2020.~~2021. Cash was used primarily by increases in receivables of ~~$5,784,000 and~~$839,000, inventory of ~~$794,000,~~$1,335,000, and deferred revenue of $568,000, partially offset by an increase in accounts payable and other accrued expenses of ~~$4,379,000.~~$1,048,000. During the ~~six~~three months ended ~~October~~July 31, ~~2020,~~2021, the Company used net cash of ~~$1,292,000~~$484,000 in investing activities, all of which was used for capital expenditures. The ~~Company’s~~Company's financing activities provided cash of ~~$2,792,000~~$2,021,000 during the ~~six~~three months ended ~~October~~July 31, ~~2020,~~2021, primarily from net increases in short-term borrowings of ~~$2,873,000.~~$2,026,000.

Outlook

The Company continues to actively monitor the COVID-19 pandemic and its impact. Any future ~~development~~developments and effects will be highly uncertain and cannot be predicted, ~~including~~including: the scope and duration of the pandemic; further adverse revenue and net income effects; disruptions to our operations; closure of project sites; ability of suppliers to support our operations; the effectiveness of our work from home arrangements; employee impacts from illness, school closures and other community response measures; and any actions taken by governmental authorities and other third parties in response to the pandemic. The uncertain future development of this crisis could materially and adversely affect our business, operations, operating results, financial condition, liquidity or capital levels. WeThe Company will continue to work to ensure the safety of our people and our ability to serve our customers worldwide.

In addition, the ~~Company’s~~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~~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~~Company's earnings are also impacted by fluctuations in prevailing pricing for projects in the laboratory construction marketplace and increased costs of raw materials, including stainless steel, wood, and epoxy resin, and whether the Company is able to increase product prices to customers in amounts that correspond to such increases without materially and adversely affecting sales. Additionally, since prices are normally quoted on a firm basis in the industry, the Company bears the burden of possible increases in labor and material costs between the quotation of an order and delivery of a product.

Looking forward, the Company is optimistic about ~~our~~ opportunities for growth within existing end-markets. As the economy continues to re-open, the Company anticipates that project awards will accelerate and the pace of construction will increase. In the near-term, escalating raw material pricing will continue to unfavorably impact net earnings due to the fixed price nature of our ~~existing end-markets~~contracts. The Company has, however, taken steps to implement surcharges on new orders with the goal of offsetting broad based price increases for materials including steel, aluminum, hard woods, and resin products. The impact of these surcharges, to the extent we are ~~committed~~able to ~~investing~~implement them successfully, will lag what has been an immediate impact of rising commodity prices. Over the long term, the Company expects its financial performance to continue to improve based upon its investments in modernizing its operations and ~~modernizing, our capabilities to succeed.~~reduced operating cost structure.

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

~~This~~Certain statements included and referenced in this report, ~~contains~~including Management's Discussion and Analysis of Financial Condition and Results of Operations, constitute "forward-looking" statements ~~that the Company believes to be “forward-looking statements”~~ within the meaning of the

Private Securities Litigation Reform Act of ~~1995. All statements other than statements of historical fact included in this 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. All~~1995 (the "Reform Act"). Such forward-looking statements ~~are subject to important factors, risks, uncertainties~~involve known and

~~assumptions, including industry and economic conditions that could cause actual results to differ materially from those~~

~~described in the forward-looking statements. Such factors,~~ unknown risks, uncertainties, and ~~assumptions~~other factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to,

economic, competitive, governmental and ~~general economic conditions and the rapidly evolving COVID-19 pandemic, including disruptions from government mandates, both domestically and internationally; changes in customer demands;~~ technological ~~changes in~~factors affecting 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 legalmarkets, products, services and ~~regulatory environment; changes in~~prices, as well as prices for certain raw materials and ~~commodity costs; and acts of~~

~~terrorism, war, governmental action, natural disasters and other Force Majeure events.~~energy. The cautionary statements made by us 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”~~"Risk Factors" in Item 1A in the ~~Company’s 2020~~Company's 2021 Annual Report on Form ~~10-K~~10-K. In addition, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "objectives," "anticipates," "intends" or the like to be uncertain and ~~in Quarterly Reports on Form 10-Q subsequently filed by the Company.~~forward-looking. 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~~Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2020.~~2021.

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~~Company's management, including the Chief Executive Officer ~~(“CEO”~~("CEO") and Chief Financial Officer ~~(“CFO”~~("CFO"), of the effectiveness of the design and operation of the ~~Company’s~~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 ~~October~~July 31, ~~2020.~~2021. Based on that evaluation, the ~~Company’s~~Company's management, including the CEO and CFO, concluded that, as of ~~October~~July 31, ~~2020,~~2021, the ~~Company’s~~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~~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~~Company's internal control over financial reporting.

1513

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 2021 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 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, 2021 as filed with the SEC on July 15, 2021.

Item 6. Exhibits


10.1						Twelfth Amendment to Credit and Security Agreement dated as of July 30, 2021.
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						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

1614

SIGNATURE

Pursuant to the requirements of the Securities and 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: ~~December 11, 2020~~September 10, 2021	By	/s/ Donald T. Gardner III
		Donald T. Gardner III
		(As duly authorized officer and Vice President, Finance and Chief Financial Officer)

1715


	Operating		Financing
Remainder of fiscal 2021	$	889	$	16
2022	1,818		32
2023	1,634		32
2024	1,276		32
2025	1,232		32
Thereafter	3,927		12
Total Minimum Lease Payments1	$	10,776	$	156
Imputed Interest	(1,700)		(33)
Total	$	9,076	$	123


	Three Months Ended October 31,		Six Months Ended October 31,
	2020	2019	2020	2019

Basic	2,759	2,750	2,757	2,750
Dilutive effect of stock options and RSUs	0	0	0	0
Weighted average common shares outstanding - diluted	2,759	2,750	2,757	2,750