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, ~~2022~~2023


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

For the transition period from __________ to __________

Commission file number 0-5286

_________________________

KEWAUNEE SCIENTIFIC CORPORATION

(Exact name of registrant as specified in its charter)

_________________________


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

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

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

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

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

Common Stock, $2.50 par value KEQU NASDAQ Global Market

_________________________

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

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

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

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

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

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

As of March ~~8, 2022,~~7, 2023, the registrant had outstanding ~~2,789,873~~2,830,200 shares of Common Stock.

KEWAUNEE SCIENTIFIC CORPORATION

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, ~~2022~~2023


		Page Number
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Statements of Operations (unaudited) – Three and Nine Months Ended January 31, 202 23 and 20202 21	1
	Condensed Consolidated Statements of Comprehensive Loss (unaudited) – Three and Nine Months Ended January 31, ~~2022~~2023 and ~~202~~20221	2
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) – Three and Nine Months Ended January 31, ~~2022~~2023 and ~~202~~20221	3
	Condensed Consolidated Balance Sheets – January 31, ~~2022~~202 3 (unaudited) and April 30, ~~2021~~2022	4
	Condensed Consolidated Statements of Cash Flows (unaudited) – Nine~~Nine~~ Months Ended January 31, ~~2022~~202 3 and 20212	5
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1213
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1415
Item 4.	Controls and Procedures	1415

PART II. OTHER INFORMATION
Item 1A.	Risk Factors	16
Item 6.	Exhibits	16
SIGNATURES		17

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,					Three Months Ended January 31,				Nine Months Ended January 31,
		2022		2021		2022		2021			2023		2022		2023		2022
Net sales	Net sales	$	40,633	$	33,339	$	119,157	$	108,762	Net sales	$	60,821	$	40,633	$	165,508	$	119,157
Cost of products sold	Cost of products sold	35,011		27,685		104,264		90,832		Cost of products sold	50,491		35,011		140,281		104,264
Gross profit	Gross profit	5,622		5,654		14,893		17,930		Gross profit	10,330		5,622		25,227		14,893
Operating expenses	Operating expenses	6,490		6,030		19,742		18,593		Operating expenses	8,026		6,490		22,564		19,742
Operating loss		(868)		(376)		(4,849)		(663)
Pension income (expense)		88		(288)		266		(865)
Operating profit (loss)										Operating profit (loss)	2,304		(868)		2,663		(4,849)
Pension (expense) income										Pension (expense) income	(18)		88		(53)		266
Other income, net	Other income, net	51		51		149		171		Other income, net	210		51		756		149
Interest expense	Interest expense	(158)		(105)		(396)		(310)		Interest expense	(436)		(158)		(1,190)		(396)
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)
Profit (loss) before income taxes										Profit (loss) before income taxes	2,060		(887)		2,176		(4,830)
Income tax expense										Income tax expense	962		399		1,911		845
Net earnings (loss)										Net earnings (loss)	1,098		(1,286)		265		(5,675)
Less: Net earnings attributable to the non-controlling interest	Less: Net earnings attributable to the non-controlling interest	33		14		89		19		Less: Net earnings attributable to the non-controlling interest	375		33		532		89
Net (loss) earnings attributable to Kewaunee Scientific Corporation		$	(1,319)	$	81	$	(5,764)	$	(697)
Net earnings (loss) attributable to Kewaunee Scientific Corporation										Net earnings (loss) attributable to Kewaunee Scientific Corporation	$	723	$	(1,319)	$	(267)	$	(5,764)

Net (loss) earnings per share attributable to Kewaunee Scientific Corporation stockholders
Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders										Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders
Basic	Basic	$	(0.47)	$	0.03	$	(2.07)	$	(0.25)	Basic	$	0.26	$	(0.47)	$	(0.09)	$	(2.07)
Diluted	Diluted	$	(0.47)	$	0.03	$	(2.07)	$	(0.25)	Diluted	$	0.25	$	(0.47)	$	(0.09)	$	(2.07)
Weighted average number of common shares outstanding	Weighted average number of common shares outstanding									Weighted average number of common shares outstanding
Basic	Basic	2,790		2,762		2,785		2,759		Basic	2,830		2,790		2,822		2,785
Diluted	Diluted	2,790		2,789		2,785		2,759		Diluted	2,911		2,790		2,822		2,785

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

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

(Unaudited)

($ in thousands)

Three Months Ended
January 31, Nine Months Ended
January 31,
2022 2021 2022 2021
Net (loss) earnings $ (1,286) $ 95 $ (5,675) $ (678)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments 52 31 (107) (17)
Other comprehensive (loss) income 52 31 (107) (17)
Comprehensive (loss) income, net of tax (1,234) 126 (5,782) (695)
Less: Comprehensive income attributable to the non-controlling interest 33 14 89 19
Comprehensive (loss) income attributable to Kewaunee Scientific Corporation $ (1,267) $ 112 $ (5,871) $ (714)


	Three Months Ended January 31,				Nine Months Ended January 31,
	2023		2022		2023		2022
Net earnings (loss)	$	1,098	$	(1,286)	$	265	$	(5,675)
Other comprehensive (loss) earnings, net of tax:
Foreign currency translation adjustments	(106)		52		(567)		(107)
Other comprehensive (loss) earnings	(106)		52		(567)		(107)
Comprehensive earnings (loss), net of tax	992		(1,234)		(302)		(5,782)
Less: Comprehensive income attributable to the non-controlling interest	375		33		532		89
Comprehensive earnings (loss) attributable to Kewaunee Scientific Corporation	$	617	$	(1,267)	$	(834)	$	(5,871)

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

($ in thousands, except per share amounts)


		Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Kewaunee Scientific Corporation Stockholders' Equity			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
Balance at April 30, 2022														Balance at April 30, 2022	$	6,983	$	4,483	$	(53)	$	28,023	$	(3,742)	$	35,694
Net loss attributable to Kewaunee Scientific Corporation	Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(1,345)		—		(1,345)		Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(747)		—		(747)
Other comprehensive loss	Other comprehensive loss	—		—		—		—		(76)		(76)		Other comprehensive loss	—		—		—		—		(224)		(224)
Stock-based compensation	Stock-based compensation	67		171		—		—		—		238		Stock-based compensation	97		(134)		—		—		—		(37)
Balance at July 31, 2021		$	6,982	$	3,978	$	(53)	$	32,804	$	(3,653)	$	40,058
Balance at July 31, 2022														Balance at July 31, 2022	$	7,080	$	4,349	$	(53)	$	27,276	$	(3,966)	$	34,686
Net loss attributable to Kewaunee Scientific Corporation	Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(3,100)		—		(3,100)		Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(243)		—		(243)
Other comprehensive loss	Other comprehensive loss	—		—		—		—		(83)		(83)		Other comprehensive loss	—		—		—		—		(237)		(237)
Stock-based compensation	Stock-based compensation	1		129		—		—		—		130		Stock-based compensation	4		192		—		—		—		196
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)
Balance at October 31, 2022														Balance at October 31, 2022	$	7,084	$	4,541	$	(53)	$	27,033	$	(4,203)	$	34,402
Net earnings attributable to Kewaunee Scientific Corporation														Net earnings attributable to Kewaunee Scientific Corporation	—		—		—		723		—		723
Other comprehensive loss	Other comprehensive loss	—		—		—		—		52		52		Other comprehensive loss	—		—		—		—		(106)		(106)
Stock-based compensation	Stock-based compensation	—		109		—		—		—		109		Stock-based compensation	—		332		—		—		—		332
Balance at January 31, 2022		$	6,983	$	4,216	$	(53)	$	28,385	$	(3,684)	$	35,847
Balance at January 31, 2023														Balance at January 31, 2023	$	7,084	$	4,873	$	(53)	$	27,756	$	(4,309)	$	35,351


		Common Stock		Additional Paid-in Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Kewaunee Scientific Corporation Stockholders' Equity			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
Balance at April 30, 2021														Balance at April 30, 2021	$	6,915	$	3,807	$	(53)	$	34,149	$	(3,577)	$	41,241
Net loss attributable to Kewaunee Scientific Corporation	Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(598)		—		(598)		Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(1,345)		—		(1,345)
Other comprehensive loss	Other comprehensive loss	—		—		—		—		(13)		(13)		Other comprehensive loss	—		—		—		—		(76)		(76)
Stock-based compensation	Stock-based compensation	20		78		—		—		—		98		Stock-based compensation	67		171		—		—		—		238
Balance at July 31, 2020		$	6,905	$	3,438	$	(53)	$	37,223	$	(9,611)	$	37,902
Balance at July 31, 2021														Balance at July 31, 2021	$	6,982	$	3,978	$	(53)	$	32,804	$	(3,653)	$	40,058
Net loss attributable to Kewaunee Scientific Corporation	Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(180)		—		(180)		Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(3,100)		—		(3,100)
Other comprehensive loss	Other comprehensive loss	—		—		—		—		(35)		(35)		Other comprehensive loss	—		—		—		—		(83)		(83)
Stock-based compensation	Stock-based compensation	—		143		—		—		—		143		Stock-based compensation	1		129		—		—		—		130
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
Balance at October 31, 2021														Balance at October 31, 2021	$	6,983	$	4,107	$	(53)	$	29,704	$	(3,736)	$	37,005
Net loss attributable to Kewaunee Scientific Corporation														Net loss attributable to Kewaunee Scientific Corporation	—		—		—		(1,319)		—		(1,319)
Other comprehensive income	Other comprehensive income	—		—		—		—		31		31		Other comprehensive income	—		—		—		—		52		52
Stock-based compensation	Stock-based compensation	10		103		—		—		—		113		Stock-based compensation	—		109		—		—		—		109
Balance at January 31, 2021		$	6,915	$	3,684	$	(53)	$	37,124	$	(9,615)	$	38,055
Balance at January 31, 2022														Balance at January 31, 2022	$	6,983	$	4,216	$	(53)	$	28,385	$	(3,684)	$	35,847

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Balance Sheets

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


		January 31, 2022		April 30, 2021			January 31, 2023		April 30, 2022
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	4,697	$	5,206	Cash and cash equivalents	$	13,047	$	4,433
Restricted cash	Restricted cash	805		525		Restricted cash	5,369		2,461
Receivables, less allowance; $426; $636, on each respective date		35,053		32,882
Receivables, less allowance; $459; $357, on each respective date						Receivables, less allowance; $459; $357, on each respective date	43,988		41,254
Inventories	Inventories	19,947		16,517		Inventories	21,412		23,796
Income tax receivable		638		955

Note receivable						Note receivable	—		13,457
Prepaid expenses and other current assets	Prepaid expenses and other current assets	7,780		4,372		Prepaid expenses and other current assets	7,745		6,164
Total Current Assets	Total Current Assets	68,920		60,457		Total Current Assets	91,561		91,565
Property, plant and equipment, at cost	Property, plant and equipment, at cost	60,269		58,804		Property, plant and equipment, at cost	61,810		60,326
Accumulated depreciation	Accumulated depreciation	(44,924)		(42,822)		Accumulated depreciation	(47,269)		(45,205)
Net Property, Plant and Equipment	Net Property, Plant and Equipment	15,345		15,982		Net Property, Plant and Equipment	14,541		15,121
Right of use assets	Right of use assets	8,006		9,279		Right of use assets	9,563		7,573

Other assets	Other assets	3,415		3,666		Other assets	6,121		4,514
Total Assets	Total Assets	$	95,686	$	89,384	Total Assets	$	121,786	$	118,773

Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Short-term borrowings	Short-term borrowings	$	8,962	$	6,828	Short-term borrowings	$	5,753	$	1,588
Current portion of financing liability						Current portion of financing liability	625		575
Current portion of financing lease liability	Current portion of financing lease liability	131		21		Current portion of financing lease liability	75		126
Current portion of operating lease liabilities	Current portion of operating lease liabilities	1,355		1,348		Current portion of operating lease liabilities	2,045		1,319
Accounts payable	Accounts payable	27,415		16,780		Accounts payable	24,914		27,316
Employee compensation and amounts withheld	Employee compensation and amounts withheld	4,930		4,726		Employee compensation and amounts withheld	4,228		4,504
Deferred revenue	Deferred revenue	3,104		3,123		Deferred revenue	5,062		3,529
Other accrued expenses	Other accrued expenses	1,611		1,355		Other accrued expenses	1,511		3,336
Total Current Liabilities	Total Current Liabilities	47,508		34,181		Total Current Liabilities	44,213		42,293
Long-term portion of financing liability						Long-term portion of financing liability	28,298		28,775
Long-term portion of financing lease liability	Long-term portion of financing lease liability	198		91		Long-term portion of financing lease liability	156		228
Long-term portion of operating lease liabilities	Long-term portion of operating lease liabilities	6,605		7,860		Long-term portion of operating lease liabilities	7,422		6,179
Accrued pension and deferred compensation costs	Accrued pension and deferred compensation costs	4,381		4,652		Accrued pension and deferred compensation costs	4,061		4,159
Deferred income taxes	Deferred income taxes	411		307		Deferred income taxes	796		428
Other non-current liabilities	Other non-current liabilities	403		806		Other non-current liabilities	502		531
Total Liabilities	Total Liabilities	59,506		47,897		Total Liabilities	85,448		82,593
Commitments and Contingencies	Commitments and Contingencies	0		0		Commitments and Contingencies
Stockholders' Equity:	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		6,983		6,915
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,833 shares; 2,793 shares; – Outstanding – 2,830 shares; 2,790 shares, on each respective date						Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,833 shares; 2,793 shares; – Outstanding – 2,830 shares; 2,790 shares, on each respective date	7,084		6,983
Additional paid-in-capital	Additional paid-in-capital	4,216		3,807		Additional paid-in-capital	4,873		4,483
Retained earnings	Retained earnings	28,385		34,149		Retained earnings	27,756		28,023
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,684)		(3,577)		Accumulated other comprehensive loss	(4,309)		(3,742)
Common stock in treasury, at cost, 3 shares, on each respective date	Common stock in treasury, at cost, 3 shares, on each respective date	(53)		(53)		Common stock in treasury, at cost, 3 shares, on each respective date	(53)		(53)
Total Kewaunee Scientific Corporation Stockholders' Equity	Total Kewaunee Scientific Corporation Stockholders' Equity	35,847		41,241		Total Kewaunee Scientific Corporation Stockholders' Equity	35,351		35,694
Non-controlling interest	Non-controlling interest	333		246		Non-controlling interest	987		486
Total Stockholders' Equity	Total Stockholders' Equity	36,180		41,487		Total Stockholders' Equity	36,338		36,180
Total Liabilities and Stockholders' Equity	Total Liabilities and Stockholders' Equity	$	95,686	$	89,384	Total Liabilities and Stockholders' Equity	$	121,786	$	118,773

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)

($ in thousands)


		Nine Months Ended January 31,					Nine Months Ended January 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss		$	(5,675)	$	(678)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net earnings (loss)						Net earnings (loss)	$	265	$	(5,675)
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:						Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Depreciation	Depreciation	2,092		2,005		Depreciation	2,142		2,092
Bad debt provision	Bad debt provision	27		60		Bad debt provision	79		27
Stock-based compensation expense	Stock-based compensation expense	502		385		Stock-based compensation expense	699		502
Deferred income taxes	Deferred income taxes	104		159		Deferred income taxes	368		104
Change in assets and liabilities:	Change in assets and liabilities:					Change in assets and liabilities:
Receivables	Receivables	(2,199)		(2,318)		Receivables	(2,813)		(2,199)
Inventories	Inventories	(3,430)		(285)		Inventories	2,384		(3,430)
Income tax receivable	Income tax receivable	316		(1,488)		Income tax receivable	—		316
Accounts payable and other accrued expenses	Accounts payable and other accrued expenses	10,692		3,843		Accounts payable and other accrued expenses	(4,534)		10,692
Deferred revenue	Deferred revenue	(19)		1,134		Deferred revenue	1,533		(19)
Other, net	Other, net	(3,497)		290		Other, net	(3,670)		(3,497)
Net cash (used in) provided by operating activities		(1,087)		3,107
Net cash used in operating activities						Net cash used in operating activities	(3,547)		(1,087)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(1,222)		(1,944)		Capital expenditures	(1,562)		(1,222)
Net cash used in investing activities	Net cash used in investing activities	(1,222)		(1,944)		Net cash used in investing activities	(1,562)		(1,222)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Dividends paid to non-controlling interest in subsidiaries		—		(108)

Proceeds from short-term borrowings	Proceeds from short-term borrowings	42,975		49,298		Proceeds from short-term borrowings	27,742		42,975
Repayments on short-term borrowings	Repayments on short-term borrowings	(40,840)		(49,524)		Repayments on short-term borrowings	(23,577)		(40,840)
Proceeds from sale-leaseback financing transaction						Proceeds from sale-leaseback financing transaction	13,473		—
Payments on sale-leaseback financing transaction						Payments on sale-leaseback financing transaction	(426)		—
Payments on long-term lease obligations	Payments on long-term lease obligations	(16)		(14)		Payments on long-term lease obligations	(123)		(16)
Net proceeds from exercise of stock options		—		(31)
Net cash provided by (used in) financing activities		2,119		(379)

Net cash provided by financing activities						Net cash provided by financing activities	17,089		2,119
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(39)		104		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(458)		(39)
(Decrease) increase in cash, cash equivalents and restricted cash		(229)		888
Increase (decrease) in cash, cash equivalents and restricted cash						Increase (decrease) in cash, cash equivalents and restricted cash	11,522		(229)
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	5,731		5,215		Cash, cash equivalents and restricted cash, beginning of period	6,894		5,731
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	5,502	$	6,103	Cash, cash equivalents and restricted cash, end of period	$	18,416	$	5,502

See accompanying notes to Condensed Consolidated Financial Statements.

Kewaunee Scientific Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited)

A. Financial Information

The unaudited interim Condensed Consolidated Financial Statements of Kewaunee Scientific Corporation (the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange ~~Commission (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 include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these financial statements and should be read in conjunction with the Consolidated Financial Statements and Notes included in the Company's ~~2021~~2022 Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. The Condensed Consolidated Balance Sheet as of April 30, ~~2021~~2022 included in this interim period filing has been derived from the audited consolidated financial statements at that date, but does not include all of the information and related notes required by GAAP for complete financial statements.

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

B. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less. During the periods ended January 31, ~~2022~~2023 and April 30, ~~2021,~~2022, 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 of Cash Flows. The reconciliation between the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of Cash Flows is as follows:


		January 31, 2022		April 30, 2021			January 31, 2023		April 30, 2022
Cash and cash equivalents	Cash and cash equivalents	$	4,697	$	5,206	Cash and cash equivalents	$	13,047	$	4,433
Restricted cash	Restricted cash	805		525		Restricted cash	5,369		2,461
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	5,502	$	5,731	Total cash, cash equivalents and restricted cash	$	18,416	$	6,894

C. Revenue Recognition

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

Disaggregated Revenue

A summary of net sales transferred to customers over time and at a point in time for the periods ended January 31, ~~2022~~2023 and January 31, ~~2021~~2022 is as follows (in thousands):


		Three Months Ended													Three Months Ended
		January 31, 2022						January 31, 2021							January 31, 2023						January 31, 2022
		Domestic		International		Total		Domestic		International		Total			Domestic		International		Total		Domestic		International		Total
Over Time	Over Time	$	28,240	$	11,102	$	39,342	$	24,198	$	8,273	$	32,471	Over Time	$	35,373	$	24,687	$	60,060	$	28,240	$	11,102	$	39,342
Point in Time	Point in Time	1,291		—		1,291		868		—		868		Point in Time	761		—		761		1,291		—		1,291
Total	Total	$	29,531	$	11,102	$	40,633	$	25,066	$	8,273	$	33,339	Total	$	36,134	$	24,687	$	60,821	$	29,531	$	11,102	$	40,633


		Nine Months Ended													Nine Months Ended
		January 31, 2022						January 31, 2021							January 31, 2023						January 31, 2022
		Domestic		International		Total		Domestic		International		Total			Domestic		International		Total		Domestic		International		Total
Over Time	Over Time	$	85,342	$	30,029	$	115,371	$	81,206	$	24,866	$	106,072	Over Time	$	107,100	$	53,915	$	161,015	$	85,342	$	30,029	$	115,371
Point in Time	Point in Time	3,786		—		3,786		2,690		—		2,690		Point in Time	4,493		—		4,493		3,786		—		3,786
Total	Total	$	89,128	$	30,029	$	119,157	$	83,896	$	24,866	$	108,762	Total	$	111,593	$	53,915	$	165,508	$	89,128	$	30,029	$	119,157

Contract Balances

The closing ~~and opening~~ balances of contract assets included ~~$8,450,000~~$13,018,000 in accounts receivable and ~~$1,305,000~~$1,374,000 in other assets at January 31, ~~2022.~~2023. The opening balance of contract assets arising from contracts with customers included ~~$5,716,000~~$9,287,000 in accounts receivable and ~~$1,213,000~~$1,293,000 in other assets at April 30, ~~2021.~~2022. The closing and opening balances of contract liabilities included in deferred revenue arising from contracts with customers were ~~$3,104,000~~$5,062,000 at January 31, ~~2022~~2023 and ~~$3,123,000~~$3,529,000 at April 30, ~~2021.~~2022. The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, and deferred revenue which are disclosed in the Condensed Consolidated Balance Sheets and in the Notes to the Condensed Consolidated Financial Statements. In general, the Company receives payments from customers based on a billing schedule established in its contracts. Unbilled receivables represent amounts earned which have not yet been billed in accordance with contractually stated billing terms and are included in receivables on the Condensed Consolidated Balance Sheets. Receivables are recorded when the right to consideration becomes unconditional and the Company has a right to invoice the customer. Deferred revenue relates to payments received in advance of performance under the contract. Deferred revenue is recognized as revenue as (or when) the Company performs under the contract. Approximately 100% of the contract liability balances at April 30, ~~2021~~2022 and January 31, ~~2022~~2023 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, 2022		April 30, 2021			January 31, 2023		April 30, 2022
Finished products	Finished products	$	4,997	$	2,988	Finished products	$	3,800	$	4,555
Work in process	Work in process	2,837		1,832		Work in process	2,725		2,893
Raw materials	Raw materials	12,113		11,697		Raw materials	14,887		16,348
Total	Total	$	19,947	$	16,517	Total	$	21,412	$	23,796

The Company's International subsidiaries' inventories were ~~$2,238,000~~$2,589,000 at January 31, ~~2022~~2023 and ~~$2,560,000~~$2,811,000 at April 30, ~~2021~~2022 and are included in the above tables.

E. Fair Value of Financial Instruments

The Company's financial instruments consist primarily of cash and equivalents, mutual funds, short-term borrowings, and the cash surrender value of life insurance ~~policies, and short-term borrowings.~~policies. The carrying value of these assets and liabilities approximates their fair value. The following tables summarize the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of January 31, ~~2022~~2023 and April 30, ~~2021~~2022 (in thousands):


		January 31, 2022							January 31, 2023
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)	$	1,274	$	—	$	1,274	Trading securities held in non-qualified compensation plans (1)	$	1,017	$	—	$	1,017
Cash surrender value of life insurance policies (1)	Cash surrender value of life insurance policies (1)	—		1,441		1,441		Cash surrender value of life insurance policies (1)	—		1,359		1,359
Total	Total	$	1,274	$	1,441	$	2,715	Total	$	1,017	$	1,359	$	2,376
Financial Liabilities	Financial Liabilities							Financial Liabilities
Non-qualified compensation plans (2)	Non-qualified compensation plans (2)	$	—	$	3,164	$	3,164	Non-qualified compensation plans (2)	$	—	$	2,852	$	2,852
Total	Total	$	—	$	3,164	$	3,164	Total	$	—	$	2,852	$	2,852


		April 30, 2021							April 30, 2022
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)	$	1,299	$	—	$	1,299	Trading securities held in non-qualified compensation plans (1)	$	1,219	$	—	$	1,219
Cash surrender value of life insurance policies (1)	Cash surrender value of life insurance policies (1)	—		1,458		1,458		Cash surrender value of life insurance policies (1)	—		1,371		1,371
Total	Total	$	1,299	$	1,458	$	2,757	Total	$	1,219	$	1,371	$	2,590
Financial Liabilities	Financial Liabilities							Financial Liabilities
Non-qualified compensation plans (2)	Non-qualified compensation plans (2)	$	—	$	3,169	$	3,169	Non-qualified compensation plans (2)	$	—	$	3,003	$	3,003
Total	Total	$	—	$	3,169	$	3,169	Total	$	—	$	3,003	$	3,003

(1)The Company maintains 2two non-qualified compensation plans which include investment assets in a rabbi trust. These assets consist of marketable securities, which are valued using quoted market prices multiplied by the number of shares owned, and life insurance policies, which are valued at their cash surrender value.

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

F. Long-term Debt and Other Credit Arrangements

At ~~January 31,~~April 30, 2022, advances of ~~$8.4~~$1.6 million were outstanding under the Company's revolving credit ~~facility, compared to advances of $6.8 million outstanding as of April 30, 2021.~~facility. The Company had standby letters of credit outstanding of ~~$704,000~~$716,000 at ~~January 31, 2022, unchanged from~~ April 30, ~~2021.~~2022. Amounts available under the revolving credit facility were ~~$4.1 million and $7.5~~$2.4 million at ~~January 31, 2022 and~~ April 30, ~~2021, respectively.~~

On July 30, 2021, the Company entered into 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 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 July 30, 2021 to2022. At 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 reflect all amendments to 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,~~

On June 27, 2022, the ~~supplemental liquidity threshold for~~Company terminated its prior credit agreement with Wells Fargo, National Bank (the "Prior Credit Agreement"). At the time of termination, there were no borrowings under the Prior Credit Agreement, and the Company did not incur any material termination penalties as ~~defined~~a result of the termination.

On December 19, 2022, the Company entered into a Credit and Security Agreement (the "Credit Agreement") with Mid Cap Funding IV Trust, as agent (the "Agent"), and the lenders from time to time party thereto (collectively, the "Lenders"). The Credit Agreement provides for a secured revolving line of credit initially of up to $15.0 million (the "Revolving Credit Facility"). Availability under the Revolving Credit Facility is subject to a borrowing base calculated in accordance with the terms of the Credit Agreement and on the basis of eligible accounts and inventory and certain other reserves and adjustments. Subject to the terms of the Credit Agreement, from time to time the Company may request that the initial revolving loan amount available under the Revolving Credit Facility be increased with additional tranches in minimum amounts of $1,000,000, up to a maximum borrowing availability limit of $30.0 million. The Agent and Lenders must consent to any such increase in their sole discretion. The Revolving Credit Facility matures on December 19, 2025.

Except as set forth in the Credit Agreement, ~~fell below $3,000,000 for one reporting period.~~borrowings under the Revolving Credit Facility bear interest at a rate equal to Term SOFR (Secured Overnight Financing Rate) plus 4.10%. The Company ~~has obtained a waiver of~~is required to make monthly interest payments on the ~~debt covenant violation that occurred on that date and returned to full compliance for~~Revolving Credit Facility, with the ~~subsequent months during the period ended~~entire principal payment due at maturity.

At January 31, ~~2022.~~2023, there were $3.0 million outstanding under the Revolving Credit Facility, with remaining borrowing capacity under the Revolving Credit Facility of $11.3 million. In addition, the Company's International subsidiaries have a balance outstanding of $2.8 million in short-term borrowings related to overdraft protection and short-term loan arrangements.

The Credit Agreement and Revolving Credit Facility contain financial covenants with respect to a fixed charge coverage ratio and a minimum loan availability amount. The Credit Agreement also contains certain customary covenants that, subject to certain exceptions, limit the Company's ability to, among other things, (i) create, incur, assume or permit to exist any additional indebtedness or additional liens; and (ii) enter into any amendment or other modification of certain material agreements that would reasonably be expected to be materially adverse to the Lenders' rights. The Credit Agreement also contains certain restrictions on the Company's ability to pay cash dividends, repurchase shares of the Company's capital stock, make certain investments, and enter into certain transactions with the Company's affiliates.

As of January 31, 2023, the Company was in compliance with all of the covenants under its Credit Agreement and Revolving Credit Facility.

G. ~~Leases~~Sale-Leaseback Financing Transaction

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

The Sale Agreement was finalized on March 24, 2022 and coincided with the Company and the Buyer entering into a 20-year lease, effective on such date, between the Company and CAI Investments Medical Products I Master Lessee LLC ("Lessor"), an affiliate of Buyer (the "Lease Agreement"). At the same time, the Buyer and its affiliates formed a new, debt-financed affiliate, CAI Investments Medical Products I, DST ("Trust"), and contributed the Property to the Trust. According to the terms of the contemporaneous lease, the Trust leased the Property to its affiliated Lessor, which in turn sub-leased the Property to the Company (together with the Sale Agreement, the "Sale-Leaseback Arrangement").

The Sale-Leaseback Arrangement is repayable over a 20-year term, with four renewal options of five years each. Under the terms of the Lease Agreement, the Company’s initial basic rent is approximately $158,000 per month, with annual increases of approximately 2% each year of the initial term.

The Company accounted for the Sale-Leaseback Arrangement as a financing transaction with the Buyer in accordance with ASC 842, "Leases," as the Lease Agreement was determined to be a finance lease. The Company concluded the Lease Agreement met the qualifications to be classified as a finance lease due to the significance of the present value of the lease payments, using a discount rate of 4.75% to reflect the Company’s incremental borrowing rate, compared to the fair value of the leased property as of the lease commencement date. In measuring the lease payments for the present value analysis, the Company elected the practical expedient to combine the lease component (the leased facilities) with the non-lease component (property management provided by the Buyer/Lessor) into a single lease component.

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

As of January 31, 2023, the carrying value of the financing liability was $28,923,000, net of $723,000 in debt issuance costs, of which $625,000 was classified as current on the Consolidated Balance Sheet with $28,298,000 classified as long-term. As of April 30, 2022, the carrying value of the financing liability was $29,350,000, net of $768,000 in debt issuance costs, of which $575,000 was classified as current on the Consolidated Balance Sheet with $28,775,000 classified as long-term. The monthly lease payments are split between a reduction of principal and interest expense using the effective interest rate method. Interest expense associated with the financing arrangement was $329,000 and $990,000 for the three and nine months ended January 31, 2023, respectively.

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

Remaining future cash payments related to the financing liability as of January 31, 2023 are as follows:


($ in thousands)
Remainder of 2023	$	476
2024	1,931
2025	1,970
2026	2,009
2027	2,050
Thereafter	35,957
Total Minimum Liability Payments	44,393
Imputed Interest	(15,470)
Total	$	28,923

H. Leases

The Company recognizes lease assets and lease liabilities reflecting the rights and obligations created by operating type leases for real estate and equipment in both the U.S. and internationally and financing leases for a truck and IT equipment in the U.S. At January 31, ~~2022~~2023 and April 30, ~~2021,~~2022, right-of-use assets totaled ~~$8,006,000~~$9,563,000 and ~~$9,279,000,~~$7,573,000, respectively. Operating cash paid to settle lease liabilities was ~~$1,515,000~~$1,652,000 and ~~$1,299,000~~$1,515,000 for the nine months ended January 31, ~~2022~~2023 and January 31, ~~2021,~~2022, respectively. The Company's leases have remaining lease terms of up to 89 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 $825,000 and $2,528,000 for the three and nine months ended January 31, 2023, inclusive of period cost for short-term leases, not included in lease liabilities, of $199,000 and $876,000. Operating lease expenses were $754,000 and $2,309,000 for the three and nine months ended January 31, 2022, ~~respectively,~~ inclusive of period cost for short-term leases, not included in lease liabilities, of $245,000 and $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 $733,000, respectively.$794,000.

At January 31, ~~2022,~~2023, the weighted average remaining lease term for the capitalized operating leases was ~~5.6~~5.2 years and the weighted average discount rate was ~~4.1%~~5.0%. For the financing leases, the weighted average remaining lease term was ~~4.6~~3.3 years and the weighted average discount rate was ~~6.8%~~6.9%. 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, ~~2022, excluding the future minimum lease payments for those leases that have not yet commenced as of January 31, 2022,~~2023 were as follows:


		Operating		Financing			Operating		Financing

Remainder of fiscal 2022		$	497	$	62
2023		1,842		86
Remainder of fiscal 2023						Remainder of fiscal 2023	$	631	$	8
2024	2024	1,485		86		2024	2,377		90
2025	2025	1,441		86		2025	2,186		90
2026	2026	1,231		67		2026	1,921		71
2027						2027	1,657		—
Thereafter	Thereafter	2,861		—		Thereafter	2,510		—
Total Minimum Lease Payments	Total Minimum Lease Payments	9,357		387		Total Minimum Lease Payments	11,282		259
Imputed Interest	Imputed Interest	(1,397)		(44)		Imputed Interest	(1,815)		(27)
Total	Total	$	7,960	$	343	Total	$	9,467	$	232

I. Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the assumed exercise of outstanding options and the conversion of restricted stock units ("RSUs") under the Company's various stock compensation plans, except when RSUs and options have an antidilutive effect. There were ~~135,435~~31,500 and ~~83,910~~135,435 antidilutive RSUs and options outstanding at January 31, ~~2022~~2023 and January 31, ~~2021,~~2022, respectively. The following is a reconciliation of basic to diluted weighted average common shares outstanding (in thousands):


		Three Months Ended		Nine Months Ended			Three Months Ended		Nine Months Ended
		January 31, 2022	January 31, 2021	January 31, 2022	January 31, 2021		January 31, 2023	January 31, 2022	January 31, 2023	January 31, 2022
Basic	Basic	2,790	2,762	2,785	2,759	Basic	2,830	2,790	2,822	2,785
Dilutive effect of stock options and RSUs	Dilutive effect of stock options and RSUs	—	27	—	—	Dilutive effect of stock options and RSUs	81	—	—	—
Weighted average common shares outstanding - diluted	Weighted average common shares outstanding - diluted	2,790	2,789	2,785	2,759	Weighted average common shares outstanding - diluted	2,911	2,790	2,822	2,785

I.J. Stock Options and Stock-based Compensation

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

In June ~~2021,~~2022, the Company granted ~~5,500~~54,279 RSUs under the 2017 Omnibus Incentive Plan ("2017 Plan"). These RSUs include a service component that vests over a ~~two-year period. The Company also granted 51,471 RSUs under the 2017 Omnibus Incentive Plan in June 2021 that include a service component that vests over a~~ three-year period. The recognized expense is

based upon the vesting period for service criteria. The Company recorded stock-based compensation expense during the three and nine months ended January 31, ~~2022~~2023 of ~~$109,000~~$332,000 and ~~$433,000,~~$658,000, respectively, with the remaining estimated stock-based compensation expense of ~~$907,000~~$1,006,000 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~~2022 of ~~$129,000~~$109,000 and ~~$344,000,~~$433,000, 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, ~~2022~~2023 and January 31, ~~2021~~2022 and were also included in the stock-based compensation on the Condensed Consolidated Statements of Cash Flows.

J.K. Income Taxes

Income tax expense of $962,000 and $1,911,000 was recorded for the three and nine months ended January 31, 2023, respectively. Income tax expense of $399,000 and $845,000 was recorded for the three and nine months ended January 31, 2022, respectively. ~~Income~~The effective tax ~~benefit of $813,000~~rate was 46.7% and ~~$989,000 was recorded~~87.8% for the three and nine months ended January 31, ~~2021,~~2023, respectively. The effective tax ~~rates were~~rate was (45.0)% and (17.5)% for the three and nine months ended January 31, 2022, respectively. The ~~effective tax rates were 113.2% and 59.3% for the three and nine months ended January 31, 2021, respectively. The~~ change in the effective tax rate for the ~~three- and nine-month periods~~period is primarily due to the impact of foreign operations which are taxed at different rates than the U.S. tax rate of 21% and the recording of a valuation allowance against the deferred tax asset which resulted in the elimination of any U.S. income tax 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 has a deferred tax liability of ~~$895,000~~$1,236,000 and ~~$776,000~~$976,000 for the withholding tax related to Kewaunee Labway India Pvt. Ltd. as of January 31, ~~2022~~2023 and April 30, ~~2021,~~2022, respectively. The Company recorded all deferred tax assets and liabilities related to its outside basis differences in its foreign subsidiaries consistent with ASC 740.

K.L. 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 no Company contributions paid to the plans for the three and nine months ended January 31, ~~2022~~2023 and January 31, ~~2021.~~2022. The Company assumed an expected long-term rate of return of 7.75% for the periods ended January 31, ~~2022~~2023 and January 31, ~~2021.~~2022.

Pension ~~(income)~~expense / ~~expense~~(income) consisted of the following (in thousands):


		Three Months Ended					Three Months Ended
		January 31, 2022		January 31, 2021			January 31, 2023		January 31, 2022
Service cost	Service cost	$	0	$	0	Service cost	$	—	$	—
Interest cost	Interest cost	177		181		Interest cost	211		177
Expected return on plan assets	Expected return on plan assets	(401)		(321)		Expected return on plan assets	(350)		(401)
Recognition of net loss	Recognition of net loss	136		428		Recognition of net loss	157		136
Net periodic pension (income) expense		$	(88)	$	288
Net periodic pension expense (income)						Net periodic pension expense (income)	$	18	$	(88)

Nine Months Ended
January 31, 2022 January 31, 2021
Service cost $ 0 $ 0
Interest cost 531 543
Expected return on plan assets (1,203) (963)
Recognition of net loss 406 1,285
Net periodic pension (income) expense $ (266) $ 865


	Nine Months Ended
	January 31, 2023		January 31, 2022
Service cost	$	—	$	—
Interest cost	633		531
Expected return on plan assets	(1,051)		(1,203)
Recognition of net loss	471		406
Net periodic pension expense (income)	$	53	$	(266)

L.M. Segment Information

The Company's operations are classified into 2two 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 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, ~~2022~~2023 and ~~2021~~2022 (in thousands):


											Domestic Operations		International Operations		Corporate / Eliminations		Total
Three months ended January 31, 2023										Three months ended January 31, 2023
Revenues from external customers										Revenues from external customers	$	36,134	$	24,687	$	—	$	60,821
Intersegment revenues										Intersegment revenues	52		3,458		(3,510)		—
Earnings (loss) before income taxes										Earnings (loss) before income taxes	417		2,787		(1,144)		2,060
		Domestic Operations		International Operations		Corporate / Eliminations		Total
Three months ended January 31, 2022	Three months ended January 31, 2022									Three months ended January 31, 2022
Revenues from external customers	Revenues from external customers	$	29,531	$	11,102	$	—	$	40,633	Revenues from external customers	$	29,531	$	11,102	$	—	$	40,633
Intersegment revenues	Intersegment revenues	194		1,136		(1,330)		—		Intersegment revenues	194		1,136		(1,330)		—
Earnings (loss) before income taxes	Earnings (loss) before income taxes	(255)		869		(1,501)		(887)		Earnings (loss) before income taxes	(255)		869		(1,501)		(887)

Three months ended January 31, 2021
Revenues from external customers		$	25,066	$	8,273	$	—	$	33,339
Intersegment revenues		463		550		(1,013)		—
Earnings (loss) before income taxes		206		689		(1,613)		(718)


		Domestic Operations		International Operations		Corporate / Eliminations		Total			Domestic Operations		International Operations		Corporate / Eliminations		Total
Nine Months Ended January 31, 2022
Nine months ended January 31, 2023										Nine months ended January 31, 2023
Revenues from external customers	Revenues from external customers	$	89,128	$	30,029	$	—	$	119,157	Revenues from external customers	$	111,593	$	53,915	$	—	$	165,508
Intersegment revenues	Intersegment revenues	539		2,272		(2,811)		—		Intersegment revenues	1,498		8,414		(9,912)		—
Earnings (loss) before income taxes	Earnings (loss) before income taxes	(2,559)		2,111		(4,382)		(4,830)		Earnings (loss) before income taxes	1,006		5,737		(4,567)		2,176

Nine Months Ended January 31, 2021
Nine months ended January 31, 2022										Nine months ended January 31, 2022
Revenues from external customers	Revenues from external customers	$	83,896	$	24,866	$	—	$	108,762	Revenues from external customers	$	89,128	$	30,029	$	—	$	119,157
Intersegment revenues	Intersegment revenues	1,715		2,460		(4,175)		—		Intersegment revenues	539		2,272		(2,811)		—
Earnings (loss) before income taxes	Earnings (loss) before income taxes	1,794		1,610		(5,071)		(1,667)		Earnings (loss) before income taxes	(2,559)		2,111		(4,382)		(4,830)

N. 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 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 adopted this standard effective May 1, 2021. The adoption of this standard did not have a significant impact on the Company's consolidated financial 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.

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

The Company's ~~2021~~2022 Annual Report to Stockholders on Form 10-K contains management's discussion and analysis of the Company's financial condition and results of operations as of and for the year ended April 30, ~~2021.~~2022. The following discussion and analysis describes material changes in the Company's financial condition since April 30, ~~2021.~~2022. The analysis of results of operations compares the three and nine months ended January 31, ~~2022~~2023 with the comparable periods of the prior year.

Results of Operations

Sales for the quarter were ~~$40,633,000,~~$60,821,000, an increase from sales of ~~$33,339,000~~$40,633,000 in the comparable period of the prior year. Domestic sales for the quarter were ~~$29,531,000,~~$36,134,000, up ~~17.8%~~22.4% from sales of ~~$25,066,000~~$29,531,000 in the comparable period of the prior year. The increase in Domestic sales ~~were favorably impacted by $2,956,000 of raw material surcharges implemented during the most recent quarter.~~was predominantly from higher input costs being rolled into product pricing. International sales for the quarter were ~~$11,102,000,~~$24,687,000, up ~~34.2%~~122.4% from sales of ~~$8,273,000~~$11,102,000 in the comparable period of the prior year. International sales increased when compared to the prior year period due to ~~strong demand~~the delivery of large projects booked in the ~~most recent period coupled with billings being delayed from the~~ prior ~~quarter due to non-availability of site clearances.~~fiscal year.

Sales for the nine months ended January 31, ~~2022~~2023 were ~~$119,157,000, a 9.6%~~$165,508,000, an increase from sales of ~~$108,762,000~~$119,157,000 in the comparable period of the prior year. Domestic sales for the ~~nine month period~~quarter were ~~$89,128,000,~~$111,593,000, up ~~6.2%~~25.2% from sales of ~~$83,896,000~~$89,128,000 in the comparable period of the prior year. The increase in Domestic sales ~~were favorably impacted by $4,569,000 of raw materials surcharges implemented year to date.~~was predominantly from higher input costs being rolled into product pricing. International sales for the ~~period~~quarter were ~~$30,029,000,~~$53,915,000, up ~~20.8%~~79.5% from sales of ~~$24,866,000~~$30,029,000 in the comparable period of the prior year. International sales increased when compared to the prior year period due to ~~strong demand~~the delivery of large projects booked in the ~~most 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 fiscal year.

The Company's order backlog was $153.2 million at January 31, 2023, as compared to $138.1 million at January 31, 2022, ~~as compared to $103.0 million at January 31, 2021,~~ and ~~$114.5~~$173.9 million at April 30, ~~2021.~~2022.

The gross profit margin for the three months ended January 31, ~~2022~~2023 was ~~13.8%~~17.0% of sales, as compared to ~~17.0%~~13.8% of sales in the comparable quarter of the prior year. The gross profit margin for the nine months ended January 31, ~~2022~~2023 was ~~12.5%,~~15.2% of sales, as compared to ~~16.5%~~12.5% of sales in the comparable ~~period~~quarter of the prior year. The ~~decrease~~increase in gross profit margin percentage for the three and nine months ended January 31, 2023 is primarily due to higher input costs being rolled into domestic pricing for the current fiscal year as compared to the prior year comparable periods. During the three and nine months ended January 31, 2022, ~~is a result of supplier constraints resulting from COVID-19, as well as other supply chain disruptions, that led to~~the Company's gross profit margin percentage was unfavorably impacted by increases in steel, wood, and epoxy resin raw material costs ~~when compared~~that could not be added to ~~the prior year~~existing fixed-price contracts 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.respectively.

Operating expenses for the three months ended January 31, ~~2022~~2023 were ~~$6,490,000,~~$8,026,000, or ~~16.0%~~13.2% of sales, as compared to ~~$6,030,000,~~$6,490,000, or ~~18.1%~~16.0% of sales, in the comparable period of the prior year. Operating expenses for the nine months ended January 31, ~~2022~~2023 were ~~$19,742,000,~~$22,564,000, or ~~16.6%~~13.6% of sales, as compared to ~~$18,593,000,~~$19,742,000, or ~~17.1%~~16.6% of sales, in the comparable period of the prior year. The increase in operating expenses for the three months ended January 31, ~~2022~~2023 was primarily ~~for one-time costs~~due to increases in the amount of $325,000, related to the Company's previously announced decision to exit certain markets where the Company had historically sold products directly and professional services related to ongoing financing related activities. Operating expenses for the current period also included increases related toadministrative wages, benefits, ~~and incentive~~inventive and stock-based compensation of ~~$25,000, $78,000 in~~$122,000, consulting and professional fees of $195,000, marketing expenses of $53,000, bad debt expense of $58,000, corporate governance expenses of $30,000, and ~~$74,000~~increases in international operating expenses of ~~international expenses, partially offset by a decrease of $100,000 in marketing expenses.~~$730,000. The increase in operating expenses for the nine months ended January 31, ~~2022~~2023 was primarily ~~for~~due to increases ~~related to~~in consulting and professional fees of $671,000, bad debt expense of $51,000, corporate governance expenses of $18,000, and increases in international operating expenses of $2,037,000, partially offset by reductions in administrative wages, benefits, ~~and incentive~~ and stock-based compensation of ~~$888,000, increases~~$579,000, and marketing expense of $137,000. The increase in operating expenses for the nine months ended January 31, 2023 also included a one-time charge related to the write-down of a prior year insurance claim in the amount of $260,000. The increase in international operating expenses ~~of $183,000, and one-time costs of $325,000, as described above, partially offset by decreases of $355,000 in marketing expenses and $71,000 in consulting and professional fees.~~

~~Interest expense, net was $158,000 and $396,000~~ for the three and nine months ended January 31, ~~2022, respectively,~~2023 is related to the continued sales growth in the International operating segment.

Interest expense, net was $436,000 and $1,190,000 for the three and nine months ended January 31, 2023, as compared to ~~$105,000~~$158,000 and ~~$310,000~~$396,000 for the comparable periods of the prior year. The changes in interest expense were primarily ~~attributable~~due to changes in ~~borrowing levels.~~the levels of bank borrowings and the Sale-Leaseback financing transaction.

The effective income tax ~~rates~~rate for the three and nine months ended January 31, 2023 was 46.7% and 87.8%, respectively, as compared to (45.0)% and (17.5)% for the three and nine months ended January 31, 2022, ~~were (45.0)% and (17.5)% as compared to 113.2% and 59.3% for the three and nine months ended January 31, 2021.~~respectively. Income tax expense of ~~$399,000~~$962,000 and ~~an income tax benefit of $813,000~~$399,000 was recorded for the three months ended January 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Income tax expense of ~~$845,000~~$1,911,000 and ~~an income tax benefit of $989,000~~$845,000 was recorded for the nine months ended January 31, ~~2022~~2023 and ~~2021,~~2022, respectively. The change in the effective tax rate for the three and nine months ended January 31, ~~2022~~2023 reflects the impact of international operations which are taxed at different rates, combined with no U.S. tax benefit being recorded for the most recent

quarter due to the Company's full valuation allowance position. See Note JK, Income Taxes, of the Notes to Condensed Consolidated Financial Statements for additional information.

Non-controlling interests related to the Company's subsidiaries not 100% owned by the Company increased net loss by ~~$33,000~~$375,000 and ~~$89,000~~$532,000 for the three and nine months ended January 31, ~~2022,~~2023, respectively, as compared to ~~$14,000~~$33,000 and ~~$19,000~~$89,000, respectively, for the comparable periods of the prior year. The change in the net earnings attributable to the non-controlling interest in the current period was due to changes in earnings of the subsidiaries in the related period.

Net ~~loss~~earnings was ~~$1,319,000,~~$723,000, or ~~$(0.47)~~$0.25 per diluted share, for the three months ended January 31, ~~2022,~~2023, compared to a net ~~earnings~~loss of ~~$81,000,~~$1,319,000, or ~~$0.03~~$(0.47) per diluted share, in the prior year period. ~~A net~~Net loss ~~of $5,764,000,~~was $267,000, or ~~$(2.07)~~$(0.09) per diluted share, ~~was reported~~ for the nine months ended January 31, ~~2022,~~2023, compared to ~~a net loss of $697,000,~~$5,764,000, or ~~$(0.25)~~$(2.07) per diluted share, in the prior year period.

Liquidity and Capital Resources

~~Historically, the Company's~~Our principal sources of liquidity have historically been funds generated from ~~operations, supplemented as needed by short-term borrowings under the Company's revolving credit facility.~~operating activities. In addition, on March 24, 2022, we executed a Sale-Leaseback financing transaction with respect to our manufacturing and corporate facilities in Statesville, North Carolina to provide additional liquidity. See Note G, Sale-Leaseback Financing Transaction for more information. 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 ~~$21,412,000~~$47,348,000 at January 31, ~~2022,~~2023, compared to ~~$26,276,000~~$49,272,000 at April 30, ~~2021.~~2022. The ratio of current assets to current liabilities was ~~1.5-to-1.0~~2.1-to-1.0 at January 31, ~~2022,~~2023, compared to ~~1.8-to-1.0~~2.2-to-1.0 at April 30, ~~2021. The~~2022.

As previously reported in the Company's ~~short-term debt and working capital were significantly impacted by the $4,186,000 of increased raw material costs that~~2022 Annual Report on Form 10-K, the Company was compliant at April 30, 2022 with all of the financial covenants under its prior revolving credit facility. On June 27, 2022, the Company terminated its prior credit agreement with Wells Fargo, National Bank (the "Prior Credit Agreement"). At the time of termination, there were no borrowings under the Prior Credit Agreement, and the Company did not ~~able~~incur any material termination penalties as a result of the termination. On December 19, 2022, the Company entered into a Credit and Security Agreement with Mid Cap Funding IV Trust and the lenders from time to ~~pass along~~time party thereto (the "Credit Agreement"). The Credit Agreement provides for a secured revolving line of credit initially of up to ~~customers due to the fixed price nature of our contracts.~~$15.0 million. At January 31, ~~2022, advances of $8.4~~2023, there were $3.0 million ~~were~~ outstanding under the Company's credit facilities, compared to advances of $6.8 million outstanding as of April 30, 2021. The Company had standby letters of credit outstanding of $704,000 at January 31, 2022, unchanged from April 30, 2021. Amounts available under the $15.0 million revolving credit facility ~~were $4.1 million and $7.5 million at January 31, 2022 and April 30, 2021, respectively.~~governed by the Credit Agreement. For additional information concerning ~~our~~the credit ~~facility,~~agreement, see Note F, Long-Term Debt and Other Credit Arrangements.

~~As previously reported in the Company's 2021 Annual Report on~~ ~~Form 10-K~~, the Company was compliant at April 30, 2021 with all of the financial covenants under the revolving credit facility. At January 31, 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 used cash of ~~$1,087,000~~$3,547,000 during the nine months ended January 31, ~~2022. Cash was used~~2023, primarily for ~~operations and increases in receivables of $2.2 million, inventory of $3.4 million and other, net of $3.5 million, partially offset by an increase~~decreases in accounts payable and other accrued expenses of ~~$10.7~~$4.5 million and receivables of $2.8 million and increases in prepaid expenses and other assets of $1.6 million, partially offset by an increase in deferred revenue of $1.5 million and a decrease in inventory of $2.4 million. During the nine months ended January 31, ~~2022,~~2023, the Company used net cash of ~~$1,222,000~~$1,562,000 in investing activities, all of which was used for capital expenditures. The Company's financing activities provided cash of ~~$2,119,000~~$17,089,000 during the nine months ended January 31, ~~2022,~~2023, primarily from ~~net increases in~~proceeds of the sale-leaseback financing transaction that was previously recorded as a note receivable at April 30, 2022, proceeds from a small balance being drawn on the new credit facility, and short-term borrowings ~~as a result of increased raw material costs, as discussed above.~~by our International subsidiaries.

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.

~~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's ability to predict future demand for its products continues to be limited given its role as subcontractor or supplier to dealers for subcontractors. Demand for the Company's products is also dependent upon the number of laboratory construction projects planned and/or current progress in projects already under construction. The Company's earnings are also impacted by fluctuations in prevailing pricing for projects in the laboratory construction marketplace and increased costs of raw materials, including ~~stainless~~ steel, wood, and epoxy resin, and whether the Company ~~is able to~~can 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 continues to improve the quality of the order backlog by delivering a portion of the lower margin direct sales orders and replacing those orders in the backlog with higher margin product orders. This dynamic, as well as the Company’s ability to focus solely on supporting its dealers and distribution channel partners domestically and the continued growth of its International business, positions Kewaunee well as the Company ~~is optimistic about opportunities for growth within existing end-markets. As~~moves through 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 monthsbalance of the fiscal year. ~~The Company expects improved financial performance through the remainder of this fiscal year and into fiscal year 2023.~~

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

Certain statements ~~included and referenced~~ in this ~~report, including Management's Discussion and Analysis of Financial Condition and Results of Operations,~~document constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act"). All statements other than statements of historical fact included in this Quarterly Report, including statements regarding the Company's future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "predict," "believe" and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. Such forward-looking statements ~~involve~~are subject to known and unknown risks, uncertainties, assumptions, and other important factors that could significantly impact results or achievements expressed or implied by such forward-looking statements. ~~These~~Such factors, risks, uncertainties and assumptions include, but are not limited ~~to,~~to: competitive and general economic ~~competitive, governmental~~conditions, including disruptions from government mandates, both domestically and ~~technological factors affecting our operations, markets, products, services and prices,~~internationally, as well as ~~prices for certain~~supplier constraints and other supply disruptions; changes in customer demands; technological changes in our operations or in our industry; dependence on customers’ required delivery schedules; risks related to fluctuations in the Company’s operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; changes in the legal and regulatory environment; changes in raw materials and ~~energy.~~commodity costs; acts of terrorism, war, governmental action, and natural disasters and other Force Majeure events. 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 differences might be significant and harmful to our stockholders' interest. Many important factors that could cause such differences are described under the caption "Risk Factors" in Item 1A in the Company's ~~2021~~2022 Annual Report on Form 10-K, and in our subsequent quarterly reports on Form 10-Q. 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 forward-looking.which you should review carefully. These forward-looking statements speak only as of the date of this document. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There are no material changes to the disclosures made on this matter in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, ~~2021.~~2022.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of January 31, ~~2022.~~2023. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that, as of January 31, ~~2022,~~2023, the Company's disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.

~~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's internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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~~2022 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~~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~~2022 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.1, 2022.

Item 6. Exhibits


10.1*10.1						~~Separation~~Credit and Security Agreement, dated as of December ~~22, 2021 between~~19, 2022, by and among Kewaunee Scientific Corporation, Mid Cap Funding IV Trust, as agent, and ~~Lisa Ryan~~
~~10.2~~						~~Agreement for Purchase and Sale of Real Property, dated as of December 22, 2021 between CAI Investments Sub Series 100, LLC and Kewaunee Scientific Corporation~~
~~10.3~~						~~Amendment 1~~the lenders from time to ~~the Agreement for Purchase and Sale of Real Property, dated January 21, 2022~~
~~10.4~~						~~Amendment 2 to the Agreement for Purchase and Sale of Real Property, dated January 24, 2022~~
~~10.5~~						~~Amendment 3 to the Agreement for Purchase and Sale of Real Property, dated January 26, 2022~~time party thereto.
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)

* The referenced exhibit is a management contract or compensatory plan or arrangement.

SIGNATURE

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


	KEWAUNEE SCIENTIFIC CORPORATION (Registrant)

Date: March ~~11, 2022~~10, 2023	By	/s/ Donald T. Gardner III
		Donald T. Gardner III
		(As duly authorized officer and Vice President, Finance and Chief Financial Officer)