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 31, 20212022
or
☐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’sRegistrant'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 in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of March 8, 2021,2022, the registrant had outstanding 2,762,7972,789,873 shares of Common Stock.



KEWAUNEE SCIENTIFIC CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 20212022
  Page Number
1
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54
65
76
1312
1614
1614
16
1716
1817

i

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
January 31,		Nine Months Ended
January 31,
 2021202020212020
Net sales$33,339 $34,225 $108,762 $113,283 
Cost of products sold27,685 28,947 90,832 94,743 
Gross profit5,654 5,278 17,930 18,540 
Operating expenses6,030 7,350 18,593 19,875 
Operating loss(376)(2,072)(663)(1,335)
Pension expense(288)(113)(865)(339)
Other income51 84 171 382 
Interest expense(105)(150)(310)(452)
Loss before income taxes(718)(2,251)(1,667)(1,744)
Income tax expense (benefit)(813)(350)(989)1,822 
Net earnings (loss)95 (1,901)(678)(3,566)
Less: Net earnings attributable to the noncontrolling interest14 17 19 59 
Net earnings (loss) attributable to Kewaunee Scientific Corporation$81 $(1,918)$(697)$(3,625)
Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders
Basic$0.03 $(0.70)$(0.25)$(1.32)
Diluted$0.03 $(0.70)$(0.25)$(1.32)
Weighted average number of common shares outstanding
Basic2,762 2,750 2,759 2,750 
Diluted2,789 2,750 2,759 2,750 

 Three Months Ended
January 31,		Nine Months Ended
January 31,
 2022202120222021
Net sales$40,633 $33,339 $119,157 $108,762 
Cost of products sold35,011 27,685 104,264 90,832 
Gross profit5,622 5,654 14,893 17,930 
Operating expenses6,490 6,030 19,742 18,593 
Operating loss(868)(376)(4,849)(663)
Pension income (expense)88 (288)266 (865)
Other income, net51 51 149 171 
Interest expense(158)(105)(396)(310)
Loss before income taxes(887)(718)(4,830)(1,667)
Income tax expense (benefit)399 (813)845 (989)
Net (loss) earnings(1,286)95 (5,675)(678)
Less: Net earnings attributable to the non-controlling interest33 14 89 19 
Net (loss) earnings attributable to Kewaunee Scientific Corporation$(1,319)$81 $(5,764)$(697)
Net (loss) earnings per share attributable to Kewaunee Scientific Corporation stockholders
Basic$(0.47)$0.03 $(2.07)$(0.25)
Diluted$(0.47)$0.03 $(2.07)$(0.25)
Weighted average number of common shares outstanding
Basic2,790 2,762 2,785 2,759 
Diluted2,790 2,789 2,785 2,759 









See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
1

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Comprehensive Income and (Loss)Loss
(Unaudited)
($ in thousands)
 Three Months Ended
January 31,		Nine Months Ended January 31,
 2021202020212020
Net earnings (loss)$95 $(1,901)$(678)$(3,566)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments31 (26)(17)(9)
Change in fair value of cash flow hedge0 0 0 1 
Other comprehensive income (loss)31 (26)(17)(8)
Comprehensive income (loss), net of tax126 (1,927)(695)(3,574)
Less: Comprehensive income attributable to the noncontrolling interest14 17 19 59 
Comprehensive income (loss) attributable to Kewaunee Scientific Corporation$112 $(1,944)$(714)$(3,633)
 Three Months Ended
January 31,		Nine Months Ended
January 31,
 2022202120222021
Net (loss) earnings$(1,286)$95 $(5,675)$(678)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments52 31 (107)(17)
Other comprehensive (loss) income52 31 (107)(17)
Comprehensive (loss) income, net of tax(1,234)126 (5,782)(695)
Less: Comprehensive income attributable to the non-controlling interest33 14 89 19 
Comprehensive (loss) income attributable to Kewaunee Scientific Corporation$(1,267)$112 $(5,871)$(714)





















See accompanying notes to condensed consolidated financial statements.Condensed Consolidated Financial Statements.
2

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 loss— — — — (13)(13)
Stock based compensation20 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 loss— — — — (35)(35)
Stock based compensation— 143 — — — 143 
Balance at October 31, 2020$6,905 $3,581 $(53)$37,043 $(9,646)$37,830 
Net earnings attributable to Kewaunee Scientific Corporation$— $— $— $81 $— $81 
Other comprehensive income— — — — 31 31 
Stock based compensation10 103 — — — 113 
Balance at January 31, 2021$6,915 $3,684 $(53)$37,124 $(9,615)$38,055 
 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 compensation67 171 — — — 238 
Balance at July 31, 2021$6,982 $3,978 $(53)$32,804 $(3,653)$40,058 
Net loss attributable to Kewaunee Scientific Corporation— — — (3,100)— (3,100)
Other comprehensive loss— — — — (83)(83)
Stock-based compensation1 129 — — — 130 
Balance at October 31, 2021$6,983 $4,107 $(53)$29,704 $(3,736)$37,005 
Net loss attributable to Kewaunee Scientific Corporation— — — (1,319)— (1,319)
Other comprehensive loss— — — — 52 52 
Stock-based compensation— 109 — — — 109 
Balance at January 31, 2022$6,983 $4,216 $(53)$28,385 $(3,684)$35,847 

 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 compensation20 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 loss— — — — (35)(35)
Stock-based compensation— 143 — — — 143 
Balance at October 31, 2020$6,905 $3,581 $(53)$37,043 $(9,646)$37,830 
Net earnings attributable to Kewaunee Scientific Corporation— — — 81 — 81 
Other comprehensive income— — — — 31 31 
Stock-based compensation10 103 — — — 113 
Balance at January 31, 2021$6,915 $3,684 $(53)$37,124 $(9,615)$38,055 


See accompanying notes to Condensed Consolidated Financial Statements.
3

Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ and shares in thousands, except per share amounts)
January 31, 2022April 30,
2021
 (Unaudited) 
Assets
Current Assets:
Cash and cash equivalents$4,697 $5,206 
Restricted cash805 525 
Receivables, less allowance; $426; $636, on each respective date35,053 32,882 
Inventories19,947 16,517 
Income tax receivable638 955 
Prepaid expenses and other current assets7,780 4,372 
Total Current Assets68,920 60,457 
Property, plant and equipment, at cost60,269 58,804 
Accumulated depreciation(44,924)(42,822)
Net Property, Plant and Equipment15,345 15,982 
Right of use assets8,006 9,279 
Other assets3,415 3,666 
Total Assets$95,686 $89,384 
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term borrowings$8,962 $6,828 
Current portion of financing lease liability131 21 
Current portion of operating lease liabilities1,355 1,348 
Accounts payable27,415 16,780 
Employee compensation and amounts withheld4,930 4,726 
Deferred revenue3,104 3,123 
Other accrued expenses1,611 1,355 
Total Current Liabilities47,508 34,181 
Long-term portion of financing lease liability198 91 
Long-term portion of operating lease liabilities6,605 7,860 
Accrued pension and deferred compensation costs4,381 4,652 
Deferred income taxes411 307 
Other non-current liabilities403 806 
Total Liabilities59,506 47,897 
Commitments and Contingencies00
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 date6,983 6,915 
Additional paid-in-capital4,216 3,807 
Retained earnings28,385 34,149 
Accumulated other comprehensive loss(3,684)(3,577)
Common stock in treasury, at cost, 3 shares, on each respective date(53)(53)
Total Kewaunee Scientific Corporation Stockholders' Equity35,847 41,241 
Non-controlling interest333 246 
Total Stockholders' Equity36,180 41,487 
Total Liabilities and Stockholders' Equity$95,686 $89,384 


See accompanying notes to Condensed Consolidated Financial Statements.
4



Kewaunee Scientific Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

($ in thousands)






 Nine Months Ended
January 31,
 20222021
Cash flows from operating activities:
Net loss$(5,675)$(678)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation2,092 2,005 
Bad debt provision27 60 
Stock-based compensation expense502 385 
Deferred income taxes104 159 
Change in assets and liabilities:
Receivables(2,199)(2,318)
Inventories(3,430)(285)
Income tax receivable316 (1,488)
Accounts payable and other accrued expenses10,692 3,843 
Deferred revenue(19)1,134 
Other, net(3,497)290 
Net cash (used in) provided by operating activities(1,087)3,107 
Cash flows from investing activities:
Capital expenditures(1,222)(1,944)
Net cash used in investing activities(1,222)(1,944)
Cash flows from financing activities:
Dividends paid to non-controlling interest in subsidiaries— (108)
Proceeds from short-term borrowings42,975 49,298 
Repayments on short-term borrowings(40,840)(49,524)
Payments on long-term lease obligations(16)(14)
Net proceeds from exercise of stock options— (31)
Net cash provided by (used in) financing activities2,119 (379)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(39)104 
(Decrease) increase in cash, cash equivalents and restricted cash(229)888 
Cash, cash equivalents and restricted cash, beginning of period5,731 5,215 
Cash, cash equivalents and restricted cash, end of period$5,502 $6,103 










See accompanying notes to condensed consolidated financial statements.
3

 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 compensation9 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)$44,468 
Net loss attributable to Kewaunee Scientific Corporation$— $— $— $(1,918)$— $(1,918)
Other comprehensive income (loss)— — — — $(26)(26)
Stock options exercised, 2,300 shares1 (1)— — — 0 
Stock based compensation— 125 — — — 125 
Balance at January 31, 2020$6,885 $3,350 $(53)$38,882 $(6,415)$42,649 




























See accompanying notes to condensed consolidated financial statements.
4

Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ and shares in thousands, except per share amounts)
January 31, 2021April 30, 2020
 (Unaudited) 
Assets
Current Assets:
Cash and cash equivalents$5,563 $4,365 
Restricted cash540 850 
Receivables, less allowance; $669; $606, on each respective date30,091 28,062 
Inventories15,615 15,330 
Income tax receivable4,205 2,717 
Prepaid expenses and other current assets4,109 2,907 
Total Current Assets60,123 54,231 
Property, plant and equipment, at cost59,640 57,859 
Accumulated depreciation(43,429)(41,587)
Net Property, Plant and Equipment16,211 16,272 
Right of use assets9,715 9,312 
Deferred income taxes0 336 
Other assets3,560 3,778 
Total Assets$89,609 $83,929 
Liabilities and Stockholders’ Equity
Current Liabilities:
Short-term borrowings$4,493 $4,719 
Current portion of capital lease liability21 19 
Current portion of operating lease liabilities1,352 1,282 
Accounts payable15,996 13,114 
Employee compensation and amounts withheld4,546 4,159 
Deferred revenue3,642 2,508 
Other accrued expenses1,563 1,259 
Total Current Liabilities31,613 27,060 
Long-term portion of capital lease liability97 113 
Long-term portion of operating lease liabilities8,276 7,780 
Accrued pension and deferred compensation costs10,298 9,303 
Deferred income taxes225 401 
Other non-current liabilities838 569 
Total Liabilities51,347 45,226 
Commitments and Contingencies00
Stockholders’ Equity:
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,766 shares; 2,754 shares; – Outstanding – 2,763 shares; 2,751 shares, on each respective date6,915 6,885 
        Additional paid-in-capital3,684 3,360 
Retained earnings37,124 37,821 
Accumulated other comprehensive loss(9,615)(9,598)
Common stock in treasury, at cost, 3 shares, on each date(53)(53)
Total Kewaunee Scientific Corporation Stockholders’ Equity38,055 38,415 
Noncontrolling interest207 288 
Total Stockholders’ Equity38,262 38,703 
Total Liabilities and Stockholders’ Equity$89,609 $83,929 

See accompanying notes to condensed consolidated financial statements.Financial Statements.
5

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in thousands)
 Nine Months Ended
January 31,
 20212020
Cash flows from operating activities:
Net loss$(678)$(3,566)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation2,005 1,927 
Bad debt provision60 321 
Stock based compensation expense385 241 
Deferred income taxes159 1,056 
Change in assets and liabilities:
Receivables(2,089)5,530 
Inventories(285)1,959 
Income tax receivable(1,488)0 
Accounts payable and other accrued expenses3,843 (2,512)
Deferred revenue1,134 201 
Other, net61 (546)
Net cash provided by operating activities3,107 4,611 
Cash flows from investing activities:
Capital expenditures(1,944)(1,371)
Net cash used in investing activities(1,944)(1,371)
Cash flows from financing activities:
Dividends paid0 (1,045)
Dividends paid to noncontrolling interest in subsidiaries(108)(324)
Proceeds from short-term borrowings49,298 44,958 
Repayments on short-term borrowings(49,524)(50,454)
Payments on long-term debt and lease obligations(14)(1,277)
Net proceeds from exercise of stock options(31)(14)
Net cash used in financing activities(379)(8,156)
Effect of exchange rate changes on cash, cash equivalents and restricted cash104 (177)
Increase (decrease) in cash, cash equivalents and restricted cash888 (5,093)
Cash, cash equivalents and restricted cash, beginning of period5,215 11,156 
Cash, cash equivalents and restricted cash, end of period$6,103 $6,063 










See accompanying notes to condensed consolidated financial statements.
6

Kewaunee Scientific Corporation
Notes to Condensed Consolidated Financial Statements
(unaudited)
A. Financial Information
The unaudited interim condensed consolidated financial statementsCondensed 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 statementsCondensed 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 statementsConsolidated Financial Statements and notesNotes included in the Company’s 2020Company'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 sheetCondensed Consolidated Balance Sheet as of April 30, 20202021 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 generally accepted accounting principles ("GAAP")GAAP for complete financial statements.
The preparation of the interim condensed consolidated financial statementsCondensed 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 January 31, 20212022 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 statementsCondensed Consolidated Statements of cash flows.Cash Flows. The reconciliation between the condensed consolidated balance sheetCondensed Consolidated Balance Sheet and the condensed consolidated statementCondensed Consolidated Statement of cash flowsCash Flows is as follows:
January 31, 2021April 30, 2020January 31, 2022April 30, 2021
Cash and cash equivalentsCash and cash equivalents$5,563 $4,365 Cash and cash equivalents$4,697 $5,206 
Restricted cashRestricted cash540 850 Restricted cash805 525 
Total cash, cash equivalents and restricted cashTotal cash, cash equivalents and restricted cash$6,103 $5,215 Total cash, cash equivalents and restricted cash$5,502 $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’sCompany'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’sCompany'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.
6

Disaggregated Revenue
A summary of net sales transferred to customers over time and at a point in time for the periods ended January 31, 20212022 and January 31, 20202021 is as follows (in thousands):
Three Months Ended
Three Months Ended January 31, 2021Three Months Ended January 31, 2020 January 31, 2022January 31, 2021
DomesticInternationalTotalDomesticInternationalTotal DomesticInternationalTotalDomesticInternationalTotal
Over TimeOver Time$24,198 $8,273 $32,471 $25,107 $7,526 $32,633 Over Time$28,240 $11,102 $39,342 $24,198 $8,273 $32,471 
Point in TimePoint in Time868 0 868 1,592 0 1,592 Point in Time1,291 — 1,291 868 — 868 
$25,066 $8,273 $33,339 $26,699 $7,526 $34,225 
TotalTotal$29,531 $11,102 $40,633 $25,066 $8,273 $33,339 
7
Nine Months Ended
 January 31, 2022January 31, 2021
 DomesticInternationalTotalDomesticInternationalTotal
Over Time$85,342 $30,029 $115,371 $81,206 $24,866 $106,072 
Point in Time3,786 — 3,786 2,690 — 2,690 
Total$89,128 $30,029 $119,157 $83,896 $24,866 $108,762 

 Nine Months Ended January 31, 2021Nine Months Ended January 31, 2020
 DomesticInternationalTotalDomesticInternationalTotal
Over Time$81,206 $24,866 $106,072 $83,292 $25,713 $109,005 
Point in Time2,690 0 2,690 4,278 0 4,278 
$83,896 $24,866 $108,762 $87,570 $25,713 $113,283 
Contract Balances
The closing and opening balances of contract assets included $8,450,000 in accounts receivable and $1,305,000 in other assets at January 31, 2022. The opening balance of contract assets arising from contracts with customers which were recorded as unbilled receivables were $8,539,000 at January 31, 2021included $5,716,000 in accounts receivable and $6,131,000$1,213,000 in other assets at April 30, 2020.2021. The closing and opening balances of contract liabilities included in deferred revenue arising from contracts with customers were $3,642,000$3,104,000 at January 31, 20212022 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 sheetsCondensed Consolidated Balance Sheets and in the notesNotes 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 and are included in receivables on the condensed consolidated balance sheets.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, 20202021 and January 31, 20212022 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):
January 31, 2021April 30, 2020
Finished products$2,712 $2,455 
Work in process1,826 1,921 
Raw materials11,077 10,954 
$15,615 $15,330 
January 31, 2022April 30, 2021
Finished products$4,997 $2,988 
Work in process2,837 1,832 
Raw materials12,113 11,697 
Total$19,947 $16,517 
The Company’sCompany's International subsidiaries’subsidiaries' inventories were $1,915,000$2,238,000 at January 31, 20212022 and $2,136,000$2,560,000 at April 30, 20202021 and are included in the above tables.
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E. Fair Value of Financial Instruments
The Company’sCompany'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’sCompany's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 31, 20212022 and April 30, 20202021 (in thousands):
January 31, 2021 January 31, 2022
Financial AssetsFinancial AssetsLevel 1Level 2TotalFinancial AssetsLevel 1Level 2Total
Trading securities held in non-qualified compensation plans (1)
Trading securities held in non-qualified compensation plans (1)
$2,547 $0 $2,547 
Trading securities held in non-qualified compensation plans (1)
$1,274 $— $1,274 
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)
— 1,441 1,441 
TotalTotal$2,547 $87 $2,634 Total$1,274 $1,441 $2,715 
Financial LiabilitiesFinancial LiabilitiesFinancial Liabilities
Non-qualified compensation plans (2)
Non-qualified compensation plans (2)
$0 $3,059 $3,059 
Non-qualified compensation plans (2)
$— $3,164 $3,164 
TotalTotal$0 $3,059 $3,059 Total$— $3,164 $3,164 
8

April 30, 2020 April 30, 2021
Financial AssetsFinancial AssetsLevel 1Level 2TotalFinancial AssetsLevel 1Level 2Total
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 
TotalTotal$2,485 $87 $2,572 Total$1,299 $1,458 $2,757 
Financial LiabilitiesFinancial LiabilitiesFinancial 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 
TotalTotal$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 January 31, 2021,2022, advances of $4.5$8.4 million were outstanding under the Company’sCompany'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 January 31, 2021,2022, unchanged from April 30, 2020.2021. Amounts available under the revolving credit facility were $8.6$4.1 million and $8.7$7.5 million at January 31, 20212022 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, the Company entered into an amendment which effected changes in certain financial covenants and included a waiver of the non-compliance. On January 28,30, 2021, the Company entered into another amendment which effecteda Twelfth Amendment to Credit and Security Agreement (the “Amendment”) with Wells Fargo Bank, National Association (the “Bank”). The Amendment made certain changes to the 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 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 FebruaryJuly 30, 2021 to April 30, 2022; (ii) removing the minimum EBITDA covenant; (iii) in 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 amended Credit Agreement) as of the first day of each calendar month not less than (a) during the period from August 1, 2021 through December 31, 2021, $1,000,000 and (b) thereafter $1,500,000; and (iv) restating the amended Credit Agreement to May 3, 2021; (ii) establishing a minimum EBITDA covenant for the fiscal quarter ending April 30, 2021 of $1,000,000, determined for the four-quarter period then ending; and (iii) revising the covenant regarding delivery of financial projectionsreflect all amendments to the Bank to, among other things, provide projections for the next succeeding fiscal year. These amendments did not change the amount of availability under the revolving credit facility. date.
At January 31, 2022 and April 30, 2021, the Company was in compliance with all the financial covenants under its revolving credit facility. During the three months ended January 31, 2022, the supplemental liquidity threshold for the Company, as defined in the Credit Agreement, fell below $3,000,000 for one reporting period. The Company has obtained a waiver of the debt covenant violation that occurred on that date and returned to full compliance for the subsequent months during the period ended January 31, 2022.
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H.G. Leases

In accordance with ASC 842, "ASU No. 2016-02 Leases,"Leases," the Company is required to recognizerecognizes 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 leaseleases for a truck and IT equipment in the U.S. At January 31, 20212022 and April 30, 2020,2021, right-of-use assets totaled $9,715,000$8,006,000 and $9,312,000,$9,279,000, respectively. Operating cash paid to settle lease liabilities was $1,299,000$1,515,000 and $1,154,000$1,299,000 for the nine months ended January 31, 20212022 and January 31, 2020,2021, respectively. The Company’sCompany's leases have remaining lease terms of up to 108 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 were $718,000$754,000 and $645,000$2,309,000 for the three and nine months ended January 31, 20212022, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $245,000 and 2020,$794,000, respectively. Operating lease expenses were $718,000 and $2,032,000 for the three and nine months ended January 31, 2021, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $267,000 and $215,000,$733,000, respectively. Operating lease expenses were $2,032,000 and $1,770,000 for the nine months ended January 31, 2021 and 2020, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $733,000 and $673,000, respectively.

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At January 31, 2021,2022, the weighted average remaining lease term for the capitalized operating leases was 6.15.6 years and the weighted average discount rate was 4.1%. For the financing lease,leases, the weighted average remaining lease term was 4.6 years and the weighted average discount rate was 10.0%6.8%. 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 31, 20212022, excluding the future minimum lease payments for those leases that have not yet commenced as of January 31, 2022, were as follows:
OperatingFinancing
Remainder of fiscal 2021$492 $8 
20222,023 32 
20231,839 32 
20241,480 32 
20251,436 32 
Thereafter4,101 12 
Total Minimum Lease Payments$11,371 $148 
Imputed Interest(1,742)(30)
Total$9,629 $118 
OperatingFinancing
Remainder of fiscal 2022$497 $62 
20231,842 86 
20241,485 86 
20251,441 86 
20261,231 67 
Thereafter2,861 — 
Total Minimum Lease Payments9,357 387 
Imputed Interest(1,397)(44)
Total$7,960 $343 
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’sCompany's various stock compensation plans, except when RSUs and options have an antidilutive effect. There were 83,910135,435 and 95,90683,910 antidilutive RSUs and options outstanding at January 31, 20212022 and January 31, 2020,2021, respectively. The following is a reconciliation of basic to diluted weighted average common shares outstanding (in thousands):
Three Months Ended January 31,Nine Months Ended January 31,
2021202020212020Three Months EndedNine Months Ended
January 31, 2022January 31, 2021January 31, 2022January 31, 2021
BasicBasic2,762 2,750 2,759 2,750 Basic2,790 2,762 2,785 2,759 
Dilutive effect of stock options and RSUsDilutive effect of stock options and RSUs27 0 0 0 Dilutive effect of stock options and RSUs— 27 — — 
Weighted average common shares outstanding - dilutedWeighted average common shares outstanding - diluted2,789 2,750 2,759 2,750 Weighted average common shares outstanding - diluted2,790 2,789 2,785 2,759 
J.I. Stock Options and Share-basedStock-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 12,0455,500 RSUs under the 2017 Omnibus Incentive Plan ("2017 Plan"). These RSUs include a
service component that vests over a one-yeartwo-year period. The Company also granted 83,81651,471 RSUs under the 2017 Omnibus Incentive Plan in June 2020. These RSUs2021 that include both a service and a performance component vestingthat vests over a three-year period. The recognized expense is
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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-basedstock-based compensation expense during the three and nine months ended January 31, 2022 of $109,000 and $433,000, respectively, with the remaining estimated stock-based compensation expense of $907,000 to be recorded over the remaining vesting periods. The Company recorded stock-based compensation expense during the three and nine months ended January 31, 2021 of $129,000 and $344,000, respectively, with the remaining estimated share-based compensation expense of $805,000 to be recorded over the remaining vesting periods. The Company recorded share-based compensation expense during the three and nine
months ended January 31, 2020 of $126,000 and $208,000, respectively. 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 nine month periods ended January 31, 20212022 and January 31, 20202021 and were also included in the share-basedstock-based compensation on the condensed consolidated statementsCondensed Consolidated Statements of cash flows.Cash Flows.
K.J. Income Taxes
Income tax benefitsexpense of $813,000$399,000 and $350,000 were$845,000 was recorded for the three and nine months ended January 31, 2021 and 2020,2022, respectively. An incomeIncome tax benefit of $813,000 and $989,000 and an income tax expense of $1,822,000 werewas recorded for the three and nine months ended January 31, 2021, respectively. The effective tax rates were (45.0)% and 2020,(17.5)% for the three and nine months ended January 31, 2022, respectively. The effective tax rates were 113.2% and 15.5%59.3% for the three months ended
10

January 31, 2021 and 2020, respectively. The effective tax rates were 59.3% and 104.5% for the nine months ended January 31, 2021, and 2020, respectively. The change in the effective tax rate for the threethree- and nine-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 nine months ended January 31, 2021 was impacted by the recording of a Domesticvaluation 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 recorded income tax receivables of $4,205,000 and $2,717,000 as of January 31, 2021 and April 30, 2020, respectively, which includes Domestic income tax benefits attributable to the carryback claims for the applied Research and Development tax credit for the year ended April 30, 2018, the taxable losses generated during the year ended April 30, 2020 and the nine months ended January 31, 2021.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, for the dividends paid to the US and Singapore shareholders, imposed by the India Income Tax Department in accordance with international tax treaties between India and the U.S. and Singapore governments, at a rate of 10.0% and 15.0%, respectively. The Company recognized a withholding tax expense of $18,000 and $99,000 for the three and nine months ended January 31, 2021, respectively, related to the unremitted earnings of the subsidiaries listed above. The Company recognized a withholding tax expense of $50,000 and $2,214,000 for the three and nine months ended January 31, 2020 related to the unremitted earnings position of the subsidiaries listed above. The Company has a deferred tax liability of $647,000$895,000 and $785,000$776,000 for the withholding tax related to Kewaunee Labway India Pvt. Ltd. as of January 31, 20212022 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. TheThere were no Company contributed $30,000contributions paid to the plans duringfor the three and nine months ended January 31, 2021. There were 0 Company contributions paid to the plans during the three2022 and nine months ended January 31, 2020.2021. The Company assumed an expected long-term rate of return of 7.75% for the periods ended January 31, 20212022 and January 31, 2020. 2021.
Pension (income) / expense consisted of the following (in thousands):
Three Months Ended January 31, 2021Three Months Ended January 31, 2020
Service cost$0 $0 
Interest cost181 208 
Expected return on plan assets(321)(355)
Recognition of net loss428 260 
Net periodic pension expense$288 $113 
Nine Months Ended January 31, 2021Nine Months Ended January 31, 2020Three Months Ended
January 31, 2022January 31, 2021
Service costService cost$0 $0 Service cost$0 $0 
Interest costInterest cost543 624 Interest cost177 181 
Expected return on plan assetsExpected return on plan assets(963)(1,065)Expected return on plan assets(401)(321)
Recognition of net lossRecognition of net loss1,285 780 Recognition of net loss136 428 
Net periodic pension expense$865 $339 
Net periodic pension (income) expenseNet periodic pension (income) expense$(88)$288 

Nine Months Ended
January 31, 2022January 31, 2021
Service cost$0 $0 
Interest cost531 543 
Expected return on plan assets(1,203)(963)
Recognition of net loss406 1,285 
Net periodic pension (income) expense$(266)$865 
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M.L. Segment Information
The Company’sCompany'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’sCompany'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 January 31, 20212022 and 20202021 (in thousands):
Domestic
Operations		International
Operations		Corporate /
Eliminations		Total
Three months ended January 31, 2022Three months ended January 31, 2022
Revenues from external customersRevenues from external customers$29,531 $11,102 $— $40,633 
Intersegment revenuesIntersegment revenues194 1,136 (1,330)— 
Earnings (loss) before income taxesEarnings (loss) before income taxes(255)869 (1,501)(887)
Domestic
Operations		International
Operations		Corporate /
Eliminations		Total
Three months ended January 31, 2021Three months ended January 31, 2021Three months ended January 31, 2021
Revenues from external customersRevenues from external customers$25,066 $8,273 $0 $33,339 Revenues from external customers$25,066 $8,273 $— $33,339 
Intersegment revenuesIntersegment revenues463 550 (1,013)0 Intersegment revenues463 550 (1,013)— 
Earnings (loss) before income taxesEarnings (loss) before income taxes$206 $689 $(1,613)$(718)Earnings (loss) before income taxes206 689 (1,613)(718)
Three months ended January 31, 2020
Revenues from external customers$26,699 $7,526 $0 $34,225 
Intersegment revenues302 659 (961)0 
Earnings (loss) before income taxes$(867)$513 $(1,897)$(2,251)
Domestic
Operations		International
Operations		Corporate /
Eliminations		Total
Nine months ended January 31, 2021
Revenues from external customers$83,896 $24,866 $0 $108,762 
Intersegment revenues1,715 2,460 (4,175)0 
Earnings (loss) before income taxes$1,794 $1,610 $(5,071)$(1,667)
Nine months ended January 31, 2020
Revenues from external customers$87,570 $25,713 $0 $113,283 
Intersegment revenues3,388 2,142 (5,530)0 
Earnings (loss) before income taxes$1,439 $1,622 $(4,805)$(1,744)

Domestic
Operations		International
Operations		Corporate /
Eliminations		Total
Nine Months Ended January 31, 2022
Revenues from external customers$89,128 $30,029 $— $119,157 
Intersegment revenues539 2,272 (2,811)— 
Earnings (loss) before income taxes(2,559)2,111 (4,382)(4,830)
Nine Months Ended January 31, 2021
Revenues from external customers$83,896 $24,866 $— $108,762 
Intersegment revenues1,715 2,460 (4,175)— 
Earnings (loss) before income taxes1,794 1,610 (5,071)(1,667)

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 nine-month period ended January 31, 2021 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’sCompany'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.
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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’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 adoptadopted this guidance whenstandard 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 London Interbank Offered Rate ("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 materialsignificant impact on itsthe Company's consolidated financial statements.position or results of operations.
N. Reclassifications

The Company reclassified certain amounts in the Condensed Consolidated Balance Sheet for the period ended April 30, 2021 and the Condensed Consolidated Statements of Cash Flows for the nine-month period ended January 31, 2021 to conform to the current period presentation. There was no impact to the Condensed Consolidated Statements of Operations or Condensed Consolidated Statement of Stockholders' Equity.
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Item 2.    Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations
The Company’s 2020Company's 2021 Annual Report to Stockholders on Form 10-Kcontains management’smanagement's discussion and analysis of the Company’sCompany'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’sCompany's financial condition since April 30, 2020.2021. The analysis of results of operations compares the three and nine months ended January 31, 20212022 with the comparable periods of the prior year.
Results of Operations
Sales for the quarter were $33,339,000, a 2.6% decrease$40,633,000, an increase from sales of $34,225,000$33,339,000 in the comparable period of the prior year. Domestic sales for the quarter were $25,066,000, down 6.1%$29,531,000, up 17.8% from sales of $26,699,000$25,066,000 in the comparable period of the prior year. Domestic sales were favorably impacted by $2,956,000 of raw material surcharges implemented during the most recent quarter. International sales for the quarter were $11,102,000, up 34.2% from sales of $8,273,000 in the comparable period of the prior year. International sales for the quarter were $8,273,000, up 9.9% from sales of $7,526,000 in the comparable period of the prior year. Domestic sales decreased for the most recent quarter compared to the prior year period due to continued delays in construction projects due to the coronavirus pandemic. International sales increased for the most recent quarterwhen compared to the prior year period due to strong international demand in the most recent period coupled with reduced coronavirus related restrictions in certain markets that allowed accessbillings being delayed from the prior quarter due to project sites.non-availability of site clearances.
Sales for the nine months ended January 31, 20212022 were $108,762,000,$119,157,000, a 4.0% decrease9.6% increase from sales of $113,283,000$108,762,000 in the comparable period of the prior year. Domestic sales for the nine-monthnine month period were $83,896,000, down 4.2%$89,128,000, up 6.2% from sales of $87,570,000$83,896,000 in the comparable period of the prior year. Domestic sales were favorably impacted by $4,569,000 of raw materials surcharges implemented year to date. International sales for the period were $30,029,000, up 20.8% from sales of $24,866,000 in the comparable period of the prior year. International sales forincreased when compared to the period were $24,866,000, down 3.3% from sales of $25,713,000prior year due to strong demand in the comparablemost recent period coupled with COVID-19 related restrictions and government mandated shutdowns in India that limited access to project sites that significantly impacted the first quarter of the prior year.
The Company’sCompany's order backlog was $103$138.1 million at January 31, 2022, as compared to $103.0 million at January 31, 2021, as compared to $93 million at January 31, 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 January 31, 20212022 was 17.0%13.8% of sales, as compared to 15.4%17.0% of sales in the comparable quarter of the prior year. The gross profit margin for the nine months ended January 31, 20212022 was 16.5% of sales, relatively flat12.5%, as compared to 16.4%16.5% of sales in the comparable period of the prior year. The increasedecrease in gross profit margin percentage for the three and nine months ended January 31, 2021 was related2022 is a result of supplier constraints resulting from COVID-19, as well as other supply chain disruptions, that led to improved operating performance of the Company's Domestic operations with lower unfavorable manufacturingincreases in steel, wood, and epoxy resin raw material variancescosts when compared to the prior year period.of approximately $424,000 and $4,186,000, respectively, in excess of surcharges implemented and recorded as sales. The gross profit margin percentage was also impacted by the cyber attack that occurred during the third quarter, which resulted in $1,131,000 of margin loss due to the disruption of production, loss of sales, and absorption of fixed overhead costs which were not covered by our cyber insurance policy.
Operating expenses for the three months ended January 31, 20212022 were $6,030,000,$6,490,000, or 18.1%16.0% of sales, as compared to $7,350,000,$6,030,000, or 21.5%18.1% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, 20202022 were $19,742,000, or 16.6% of sales, as compared to $18,593,000, or 17.1% of sales, as compared to $19,875,000, or 17.5% of sales, in the comparable
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period of the prior year. The decreaseincrease in operating expenses for the three months ended January 31, 20212022 was primarily duefor one-time costs in the amount of $325,000, related to reductions in salariesthe Company's previously announced decision to exit certain markets where the Company had historically sold products directly and fringeprofessional services related to ongoing financing related activities. Operating expenses for the current period also included increases related to wages, benefits, of $441,000,and incentive and stockstock-based compensation of $143,000, bad debt expense of $283,000, travel and entertainment expense of $134,000 and$25,000, $78,000 in consulting and professional fees, and $74,000 of $196,000.
international expenses, partially offset by a decrease of $100,000 in marketing expenses. The decreaseincrease in operating expenses for the nine months ended January 31, 20212022 was primarily duefor increases related to reductions in salarieswages, benefits, and fringe benefits of $196,000, incentive and stockstock-based compensation of $173,000, bad debt expense$888,000, increases in international expenses of $261,000, travel$183,000, and entertainment expenseone-time costs of $453,000$325,000, as described above, partially offset by decreases of $355,000 in marketing expenses and $71,000 in consulting and professional fees of $35,000 and reduced International operating expenses of $91,000.fees.
Interest expense, net was $105,000$158,000 and $310,000$396,000 for the three and nine months ended January 31, 2021,2022, respectively, as compared to $150,000$105,000 and $452,000$310,000 for the comparable periods of the prior year, respectively.year. The changes in interest expense were primarily attributable to changes in borrowing levels.
The effective income tax rates for the three and nine months ended January 31, 20212022 were 113.2.4%(45.0)% and 59.3%(17.5)% as compared to 15.5%113.2% and 104.5%59.3% for the three and nine months ended January 31, 2020.2021. Income tax benefitsexpense of $399,000 and an income tax benefit of $813,000 and $350,000 werewas recorded for the three months ended January 31, 2022 and 2021, respectively. Income tax expense of $845,000 and 2020, respectively.Anan income tax benefit of $989,000 and an income tax expense of $1,822,000 werewas recorded for the nine months ended January 31, 20212022 and 2020,2021, respectively. The change in the effective tax ratesrate for the three and nine months ended January 31, 20212022 reflects the impact of 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
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quarter due to the Company’s revocation of its indefinite reinvestment of foreign unremitted earnings position, 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, for dividends paid to the US and Singapore shareholders, imposed by the India Note J, Income Tax Department in accordance with international tax treaties between India and the U.S. and Singapore governments at a rate of 10% and 15%, respectively, for the three and nine months ended January 31, 2021. The Company recognized a withholding tax expense of $18,000 and $99,000 for the three and nine months ended January 31, 2021, respectively, related to the unremitted earnings position of the subsidiaries listed above. TaxesThe Company recognized a withholding tax expense of $50,000 and $2,214,000 for the three and nine months ended January 31, 2020, respectively, 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.
NoncontrollingNon-controlling interests related to the Company’sCompany's subsidiaries not 100% owned by the Company reducedincreased net earningsloss by $14,000$33,000 and $19,000$89,000 for the three and nine months ended January 31, 2021,2022, respectively, as compared to $17,000$14,000 and $59,000$19,000 for the comparable periods of the prior year. The change in the net earnings attributable to the noncontrollingnon-controlling interest in the current period was due to changes in earnings of the subsidiaries in the related period.
Net earnings were $81,000,loss was $1,319,000, or $0.03$(0.47) per diluted share, for the three months ended January 31, 2021,2022, compared to a net lossearnings of $1,918,000,$81,000, or $0.70$0.03 per diluted share, in the prior year period. A net loss of $697,000,$5,764,000, or $0.25$(2.07) per diluted share, was reported for the nine months ended January 31, 2021,2022, compared to a net loss of $3,625,000,$697,000, or $1.32$(0.25) per diluted share, in the prior year period.
Liquidity and Capital Resources
Historically, the Company's principal sources of liquidity have been funds generated from operations, supplemented as needed by short-term borrowings under the 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. As disclosed in the Form 8-K filed with the SEC on December 22, 2021, the Company has signed an Agreement for Purchase and Sale of Real Property providing for the sale and leaseback of the Company's facilities in Statesville, North Carolina. Closing of that agreement is subject to satisfactory completion of due diligence by the purchaser; that due diligence is ongoing.
The Company had working capital of $28,510,000$21,412,000 at January 31, 2021,2022, compared to $27,171,000$26,276,000 at April 30, 2020.2021. The ratio of current assets to current liabilities was 1.9-to-1.01.5-to-1.0 at January 31, 2021,2022, compared to 2.0-to-1.01.8-to-1.0 at April 30, 2020.2021. The Company's short-term debt and working capital were significantly impacted by the $4,186,000 of increased raw material costs that the Company was not able to pass along to customers due to the fixed price nature of our contracts. At January 31, 2021,2022, advances of $4.5$8.4 million were outstanding under the 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 January 31, 2021,2022, unchanged from April 30, 2020.2021. Amounts available under the $15$15.0 million revolving credit facility were $8.6$4.1 million and $8.7$7.5 million at January 31, 20212022 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 20202021 Annual Report on Form 10-K, the Company was not compliant at April 30, 20202021 with all of the financial covenants under the revolving credit facility.
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On July 20, 2020, the Company entered into an amendment which effected changes in certain financial covenants and included a waiver of the non-compliance. On January 28, 2021, the Company entered into another amendment to the Loan Agreement and Line of Credit which effected changes (i) extending the maturity date under the Credit Agreement and Revolving Note from February 1, 2021 to May 3, 2021; (ii) establishing a minimum EBITDA covenant for the fiscal quarter ending April 30, 2021 of $1,000,000, determined for the four-quarter period then ending; and (iii) revising the covenant regarding delivery of financial projections to the Bank to, among other things, provide projections for the next succeeding fiscal year. These amendments did not change the amount of availability under the revolving credit facility. At January 31, 2021,2022, the Company was in compliance with all the financial covenants under its revolving credit facility. During the three months ended January 31, 2022, the supplemental liquidity threshold for the Company, as defined in the Credit Agreement, fell below $3,000,000 for one reporting period. The Company has obtained a waiver of the debt covenant violation that occurred on that date and returned to full compliance for the subsequent months during the period ended January 31, 2022.
The Company’s operations providedCompany used cash of $3,107,000$1,087,000 during the nine months ended January 31, 2021.2022. Cash was used primarily byfor operations and increases in receivables of $2,089,000,$2.2 million, inventory of $285,000,$3.4 million and income tax receivableother, net of $1,488,000,$3.5 million, partially offset by an increase in accounts payable and other accrued expenses of $3,843,000.$10.7 million. During the nine months ended January 31, 2021,2022, the Company used net cash of $1,944,000$1,222,000 in investing activities, all of which was used for capital expenditures. The Company’sCompany's financing activities usedprovided cash of $379,000$2,119,000 during the nine months ended January 31, 2021,2022, primarily for repayments onfrom net increases in short-term borrowings as a result of $226,000 and cash dividends paid to minority interest holders of $108,000.increased raw material costs, as discussed above.
Outlook
The Company continues to actively monitor the COVID-19 pandemic and its impact. Any future developments and effects will be highly uncertain and cannot be predicted, 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. The Company will continue to work to ensure the safety of our people and our ability to serve our customers worldwide.
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As discussed in our Form 10-Q for the period ended October 31, 2021, on November 5, 2021, the Company experienced a criminal network cyber attack that led to a disruption of its domestic operations, including manufacturing, engineering, administration, and sales operations. The temporary production disruption had a material impact on sales and earnings for the period ended January 31, 2022, however, the Company believes it will have an immaterial impact for the remainder of the fiscal year. While the Company has insurance coverage against recovery costs and business interruption resulting from cyber attacks, the Company has incurred expenses and losses related to this attack that have exhausted its existing cyber insurance coverage. The Company will seek to obtain insurance for losses related to any similar future events, but there can be no assurance that such insurance will be available to the Company.
In addition, the Company’sCompany'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’sCompany's products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company’sCompany'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 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. The Company has been focused on restoring and expanding manufacturing capacity that had been previously reduced due to COVID-19. The Company has also been implementing surcharges on new orders with the goal of aligning revenue to offset the broad based price increases for materials including steel, aluminum, hard woods, and resin products that have impacted the Company's financial performance for the first nine months of the fiscal year. The Company expects itsimproved financial performance to continue to improve based upon its reduced cost structurethrough the remainder of this fiscal year and investments in modernizing its operations. In the near-term, industry earnings are expected to be negatively impacted by rapidly escalating raw material costs.

into fiscal year 2023.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
ThisCertain statements included and referenced in this report, containsincluding 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. All1995 (the "Reform Act"). Such forward-looking statements are subject to important factors, risks, uncertaintiesinvolve 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 assumptionsother factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to:
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 infactors 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 inprices, 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. The CompanyWe cannot always predict what factors would cause actual results to differ materially from those indicated by the forward-looking statements. Over time, our
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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 2020Company's 2021 Annual Report on Form 10-K and in Quarterly Reportsour subsequent quarterly reports on Form 10-Q subsequently filed by10-Q. In addition, readers are urged to consider statements that include the Company.terms "believes," "belief," "expects," "plans," "objectives," "anticipates," "intends" or the like to be uncertain and 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’sCompany'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’sCompany'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’sCompany'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 31, 2021.2022. Based on that evaluation, the Company’sCompany's management, including the CEO and CFO, concluded that, as of January 31, 2021,2022, the Company’sCompany'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.
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As disclosed in the Company's Form 10-Q for the period ended October 31, 2021, on November 5, 2021, the Company experienced a criminal network cyber attack that led to a disruption of its domestic operations. The Company engaged a leading cybersecurity firm to perform a forensic investigation of this attack and, as a result of the investigation, has identified a deficiency in its logical access control over its IT systems. Remediation steps have already begun and are ongoing.
(b) Changes in internal controls
There was no significant change in the Company’sCompany'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’sCompany'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 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 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. Other than as set forth below, 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.
We recently experienced a network cyber attack that disrupted our domestic operations.
As disclosed in our Form 10-Q for the period ended October 31, 2021, on November 5, 2021, the Company experienced a criminal network cyber attack that led to a disruption of its domestic operations, including manufacturing, engineering, administration, and sales operations. As of November 15, 2021, the Company had substantially restored its operations. The Company has engaged third party experts, including a cybersecurity firm, to perform a fulsome forensic investigation of this attack; among other things, the cybersecurity firm assessed whether any confidential or sensitive data had been compromised. Based on the results of the investigation to date, the Company does not believe any confidential or sensitive data has been downloaded, stolen from the Company's systems, or otherwise exfiltrated. The Company had insurance coverage against recovery costs and business interruption resulting from cyber attacks. However, the Company incurred expenses and losses in excess of its existing insurance coverage. While the Company will seek to obtain insurance for losses related to any similar future events, there can be no assurance that such insurance will be available to the Company. Any future such events, particularly if not covered by insurance, could have material adverse effects on the Company's business and/or results of operations.
Item 6.    Exhibits
10.110.1*
10.2
10.3
10.4
10.5
31.1
31.2
32.1
32.2
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


* The referenced exhibit is a management contract or compensatory plan or arrangement.
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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: March 12, 202111, 2022 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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