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 July 31, 20192020
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’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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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. (Check one):
Large accelerated filer ☐  Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)  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 by Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of September 2, 2019,4, 2020, the registrant had outstanding 2,750,1432,758,510 shares of Common Stock.
 


KEWAUNEE SCIENTIFIC CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 31, 20192020
  Page Number
PART I. FINANCIAL INFORMATION
 
Item 1.
Condensed Consolidated Financial Statements
 
 
Condensed Consolidated Statements of Operations (unaudited)
– Three Months Ended July 31, 20192020 and 20182019
1
 
Condensed Consolidated Statements of Comprehensive Income (unaudited)
– Three Months Ended July 31, 20192020 and 20182019
2
 
Condensed Consolidated StatementStatements of Stockholders’ Equity (unaudited)
– Three Months Ended July 31, 20192020 and 20182019
3
 
Condensed Consolidated Balance Sheets – July  31, 20192020 (unaudited) and April 30, 20192020
4
 
Condensed Consolidated Statements of Cash Flows (unaudited)
– Three Months Ended July 31, 20192020 and 20182019
5
 
Notes to Condensed Consolidated Financial Statements (unaudited)
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
13
Item 4.
Controls and Procedures
13
PART II. OTHER INFORMATION
 
Item 6.
Exhibits
14
SIGNATURES
15

i


Part 1. Financial Information
Item 1.Financial Statements

Kewaunee Scientific Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
($ and shares in thousands, except per share amounts)
Three Months Ended
July 31,		 Three Months Ended
July 31,		 
2019 2018 2020 2019 
Net sales$39,336
 42,152
 $36,423
 $39,336
 
Cost of products sold32,390
 34,569
 30,542
 32,390
 
Gross profit6,946
 7,583
 5,881
 6,946
 
Operating expenses6,170
 5,763
 6,157
 6,170
 
Operating earnings776
 1,820
 
Operating earnings (loss)(276) 776
 
Pension expense(288) (113) 
Other income56
 164
 54
 169
 
Interest expense, net(167) (91) 
Earnings before income taxes665
 1,893
 
Interest expense(77) (167) 
Earnings (loss) before income taxes(587) 665
 
Income tax expense169
 395
 21
 169
 
Net earnings496
 1,498
 
Less: net earnings attributable to the noncontrolling interest25
 9
 
Net earnings attributable to Kewaunee Scientific Corporation$471
 $1,489
 
Net earnings per share attributable to Kewaunee Scientific Corporation stockholders    
Net earnings (loss)(608) 496
 
Less: net earnings (loss) attributable to the noncontrolling interest(10) 25
 
Net earnings (loss) attributable to Kewaunee Scientific Corporation$(598) $471
 
    
Net earnings (loss) per share attributable to Kewaunee Scientific Corporation stockholders:    
Basic$0.17
 $0.54
 $(0.22) $0.17
 
Diluted$0.17
 $0.53
 $(0.22) $0.17
 
Weighted average number of common shares outstanding    
    
Weighted average number of common shares outstanding:    
Basic2,750
 2,736
 2,756
 2,750
 
Diluted2,771
 2,804
 2,756
 2,771
 







See accompanying notes to condensed consolidated financial statements.


Kewaunee Scientific Corporation
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
($ in thousands)
Three Months Ended
July 31,		 Three Months Ended
July 31,
2019 2018 2020 2019
Net earnings$496
 $1,498
 
   
Net earnings (loss)$(608) $496
Other comprehensive income (loss), net of tax:       
Foreign currency translation adjustments196
 (388) (13) 196
Change in fair value of cash flow hedge(1) 4
 —
 (1)
Other comprehensive income (loss)195
 (384) (13) 195
Comprehensive income, net of tax691
 1,114
 
Less: comprehensive income attributable to the noncontrolling interest25
 9
 
Comprehensive income attributable to Kewaunee Scientific Corporation$666
 $1,105
 
Comprehensive income (loss), net of tax(621) 691
Less: comprehensive income (loss) attributable to the noncontrolling interest(10) 25
Comprehensive income (loss) attributable to Kewaunee Scientific Corporation$(611) $666




















See accompanying notes to condensed consolidated financial statements.


Kewaunee Scientific Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
($ in thousands, except share and per share amounts)
 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
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

 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders’
Equity
Balance at April 30, 2018$6,841
 $3,006
 $(53) $43,836
 $(5,900) $47,730
Net earnings attributable to Kewaunee Scientific Corporation—
 —
 —
 1,489
 —
 1,489
Other comprehensive loss—
 —
 —
 —
 (384) (384)
Cash dividends paid, $0.17 per share—
 —
 —
 (465) —
 (465)
Stock options exercised, 9,250 shares13
 (13) —
 —
 —
 —
Stock based compensation7
 99
 —
 —
 —
 106
Cumulative adjustment for ASC 606, net of tax—
 —
 —
 217
 —
 217
Balance at July 31, 2018$6,861
 $3,092
 $(53) $45,077
 $(6,284) $48,693
 
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
            
 
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

























See accompanying notes to condensed consolidated financial statements.


Kewaunee Scientific Corporation
Condensed Consolidated Balance Sheets
($ and shares in thousands, except per share amounts)
July 31,
2019		 April 30,
2019		July 31, 2020 April 30, 2020
(Unaudited)  (Unaudited)  
Assets      
   
Current Assets:      
Cash and cash equivalents$11,653
 $10,647
$3,990
 $4,365
Restricted cash928
 509
835
 850
Receivables, less allowance; $395; $361, on each respective date36,231
 33,259
Receivables, less allowance; $612; $606, on each respective date30,897
 28,062
Inventories16,351
 17,206
16,458
 15,330
Prepaid expenses and other current assets3,839
 3,736
6,298
 5,624
Total Current Assets69,002
 65,357
58,478
 54,231
Property, plant and equipment, at cost57,700
 56,676
58,818
 57,859
Accumulated depreciation(40,839) (40,214)(42,310) (41,587)
Net Property, Plant and Equipment16,861
 16,462
16,508
 16,272
Right of use assets6,785
 —
8,828
 9,312
Deferred income taxes1,845
 1,829
330
 336
Other assets4,048
 3,575
3,034
 3,778
Total Other Assets12,678
 5,404
Total Assets$98,541
 $87,223
$87,178
 $83,929
Liabilities and Stockholders’ Equity      
   
Current Liabilities:      
Short-term borrowings and interest rate swaps$13,279
 $9,513
Current portion of long-term debt972
 1,167
Short-term borrowings$8,524
 $4,719
Current portion of capital lease liability18
 17
20
 19
Current portion of operating lease liabilities1,027
 —
1,256
 1,282
Accounts payable15,393
 15,190
14,091
 13,114
Employee compensation and amounts withheld3,694
 3,737
4,001
 4,159
Deferred revenue1,523
 1,599
1,432
 2,508
Other accrued expenses2,126
 1,510
1,336
 1,259
Total Current Liabilities38,032
 32,733
30,660
 27,060
Long-term debt—
 97
Long-term portion of capital lease liability127
 132
108
 113
Long-term portion of operating lease liabilities5,638
 —
7,471
 7,780
Accrued pension and deferred compensation costs6,062
 5,878
9,654
 9,303
Income taxes payable745
 680
Deferred income taxes369
 401
Other non-current liabilities735
 569
Total Liabilities50,604
 39,520
48,997
 45,226
Commitments and Contingencies
 

 
Stockholders’ Equity:      
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,753 shares; 2,750 shares; – Outstanding – 2,750 shares; 2,747 shares, on each respective date6,884
 6,875
Common stock, $2.50 par value, Authorized – 5,000 shares; Issued – 2,762 shares; 2,754 shares; – Outstanding – 2,759 shares; 2,751 shares, on each respective date6,905
 6,885
Additional paid-in-capital3,184
 3,133
3,438
 3,360
Retained earnings43,501
 43,552
37,223
 37,821
Accumulated other comprehensive loss(6,212) (6,407)(9,611) (9,598)
Common stock in treasury, at cost, 3 shares, on each date(53) (53)(53) (53)
Total Kewaunee Scientific Corporation Stockholders’ Equity47,304
 47,100
37,902
 38,415
Noncontrolling interest633
 603
279
 288
Total Stockholders’ Equity47,937
 47,703
38,181
 38,703
Total Liabilities and Stockholders’ Equity$98,541
 $87,223
$87,178
 $83,929
See accompanying notes to condensed consolidated financial statements.


Kewaunee Scientific Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
($ in thousands)
Three Months Ended
July 31,		Three Months Ended
July 31,
2019 20182020 2019
Cash flows from operating activities:      
Net earnings$496
 $1,498
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:   
Depreciation644
 629
Net earnings (loss)$(608) $496
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:   
Depreciation and amortization687
 644
Bad debt provision36
 (44)8
 36
Stock based compensation expense74
 136
112
 74
Provision for deferred income taxes(16) (11)
Deferred income taxes(27) (16)
Change in assets and liabilities:      
Receivables(3,008) (3,344)(2,843) (3,008)
Inventories855
 2,547
(1,128) 855
Accounts payable and other accrued expenses835
 (2,175)1,065
 835
Deferred revenue(76) (127)(1,076) (76)
Other, net(247) (1,938)542
 (247)
Net cash used in operating activities(407) (2,829)(3,268) (407)
Cash flows from investing activities:      
Capital expenditures(1,183) (610)(922) (1,183)
Net cash used in investing activities(1,183) (610)(922) (1,183)
Cash flows from financing activities:      
Dividends paid(522) (465)—
 (522)
Proceeds from short-term borrowings16,650
 19,789
23,885
 16,650
Repayments on short-term borrowings(12,884) (16,146)(20,080) (12,884)
Payments on long-term debt and lease obligations(296) (292)(5) (296)
Net proceeds from exercise of stock options(14) (30)(15) (14)
Net cash provided by financing activities2,934
 2,856
3,785
 2,934
Effect of exchange rate changes on cash and cash equivalents81
 (288)15
 81
Increase (decrease) in cash, cash equivalents and restricted cash1,425
 (871)(390) 1,425
Cash, cash equivalents and restricted cash, beginning of period11,156
 10,958
5,215
 11,156
Cash, cash equivalents and restricted cash, end of period$12,581
 $10,087
$4,825
 $12,581





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”). 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 ("U.S. 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 consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes included in the Company’s 20192020 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, 20192020 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)U.S. 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 July 31, 2020 and April 30, 2020, 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:
  July 31, 2020 April 30, 2020
Cash and cash equivalents $3,990
  $4,365
 
Restricted cash 835   850  
Total cash, cash equivalents and restricted cash $4,825
  $5,215
 

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 at a point in time and over time for the periods ended July 31, 20192020 and July 31, 20182019 is as follows (in thousands):
Three Months Ended July 31, 2019Three Months Ended July 31, 2020
Domestic International TotalDomestic International Total
Over Time$28,235
 $10,049
 $38,284
$29,080
 $6,365
 $35,445
Point in Time1,052
 —
 1,052
978
 —
 978
$29,287
 $10,049
 $39,336
$30,058
 $6,365
 $36,423


Three Months Ended July 31, 2018Three Months Ended July 31, 2019
Domestic International TotalDomestic International Total
Over Time$34,248
 $6,082
 $40,330
$28,235
 $10,049
 $38,284
Point in Time1,822
 —
 1,822
1,052
 —
 1,052
$36,070
 $6,082
 $42,152
$29,287
 $10,049
 $39,336
Contract Balances
The closing and opening balances of contract assets arising from contracts with customers which were recorded as unbilled receivables were $2,952,000$6,996,000 at July 31, 20192020 and $4,589,000$6,131,000 at April 30, 2019.2020. The closing and opening balances of contract liabilities arising from contracts with customers were $1,523,000$1,432,000 at July 31, 20192020 and $1,599,000$2,508,000 at April 30, 2019.2020. The timing of revenue recognition, billings and cash collections results in accounts receivable, unbilled receivables, and deferred revenue which are disclosed on 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. Accounts receivable 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 all100% of the contract


liability balances at April 30, 20192020 and July 31, 20192020 are expected to be recognized as revenue during the respective succeeding 12 months.

C.D. Inventories

The Company measures inventory using the first-in, first-out ("FIFO") method at the lower of cost and net realizable value. Inventories consisted of the following (in thousands):
July 31, 2019 April 30, 2019July 31, 2020 April 30, 2020
Finished products$3,657
 $4,139
$2,781
 $2,455
Work in process2,185
 2,179
2,004
 1,921
Raw materials10,509
 10,888
11,673
 10,954
$16,351
 $17,206
$16,458
 $15,330
The Company’s International subsidiaries’ inventories were $2,128,000$2,012,000 at July 31, 20192020 and $1,863,000$2,136,000 at April 30, 2019, measured using the FIFO method at the lower of cost and net realizable value2020 and are included in the above tables.
D.E. Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of cash and equivalents, mutual funds, cash surrender value of life insurance policies, term loans and short-term borrowings. The carrying value of these assets and liabilities approximate 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 July 31, 20192020 and April 30, 20192020 (in thousands):
 July 31, 2019 July 31, 2020
Financial Assets Level 1 Level 2 Total Level 1 Level 2 Total
Trading securities held in non-qualified compensation plans (1) $3,116
 $—
 $3,116
 $2,512
 $—
 $2,512
Cash surrender value of life insurance policies (1) —
 76
 76
 —
 87
 87
Total $3,116
 $76
 $3,192
 $2,512
 $87
 $2,599
Financial Liabilities            
Non-qualified compensation plans (2) $—
 $3,591
 $3,591
 $—
 $2,961
 $2,961
Interest rate swap derivatives —
 2
 2
Total $—
 $3,593
 $3,593
 $—
 $2,961
 $2,961


 April 30, 2019 April 30, 2020
Financial Assets Level 1 Level 2 Total Level 1 Level 2 Total
Trading securities held in non-qualified compensation plans (1) $3,057
 $—
 $3,057
 $2,485
 $—
 $2,485
Cash surrender value of life insurance policies (1) —
 76
 76
 —
 87
 87
Total $3,057
 $76
 $3,133
 $2,485
 $87
 $2,572
Financial Liabilities            
Non-qualified compensation plans (2) $—
 $3,519
 $3,519
 $—
 $2,899
 $2,899
Interest rate swap derivatives —
 1
 1
Total $—
 $3,520
 $3,520
 $—
 $2,899
 $2,899
(1)The Company maintains two non-qualified compensation plans which include investment assets in a rabbi trust. These assets consist of marketable securities, which are valued using quoted market prices multiplied by the number of shares owned, and life insurance policies, which are valued at their cash surrender value.
(2)Plan liabilities are equal to the individual participants’ account balances and other earned retirement benefits.


E.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 an interest rate swap agreement whereby the interest rate payable by the Company on $3,450,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 4.875% for the period beginning May 1, 2013 and ending August 1, 2017. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on $2,600,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 4.37% for the period beginning August 1, 2017 and ending May 1, 2020. In May 2013, the Company entered into an interest rate swap agreement whereby the interest rate payable by the Company on $1,218,000 of outstanding long-term debt was effectively converted to a fixed interest rate of 3.07% for the period beginning November 3, 2014 and ending May 1, 2020. The Company entered into thesecertain interest rate swap arrangements to mitigate future interest rate risk associated with its long-term debt and has 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.

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

At July 31, 2019,2020, advances of $13.3$8.5 million were outstanding under the Company’s bank revolving credit facility, compared to advances of $9.5$4.7 million outstanding as of April 30, 2019.2020. The Company had standby letters of credit outstanding of $210,000$512,000 at July 31, 2019 compared to standby letters of credit outstanding of $5.2 million at2020, unchanged from April 30, 2019.2020. Amounts available under the $20 million revolving credit facility were $6.5$6.0 million and $5.3$8.7 million at July 31, 20192020 and April 30, 2019,2020, respectively.  

At April 30, 2019,2020, the Company was not in compliance with all of the financial covenants. The Company received a waiver from its lender for this noncompliance pursuant to a waiver letter executed on June 19, 2019 ("the Waiver Letter"). In connection with the Waiver Letter, the Company entered into a Security Agreement pursuant to which the Company granted a security interest in substantially all of its assets to secure its obligationscovenants under the Loan Agreement.revolving credit facility. On July 9, 2019,20, 2020, the Company entered into an agreementamendment to amend the Loan Agreement and the Line of Credit to effect a changewhich effected changes in thecertain financial covenants set forth in the Loan Agreement.  TheAgreement and included a waiver of the non-compliance described above. This amendment doesdid not change the amount of availability provided by Company’sthe Company's Line of Credit. At July 31, 2019,2020, the Company was in compliance with all the financial covenants under its revolving credit facility.



G.H. Leases

On May 1, 2019,In accordance with ASC 842, "ASU No. 2016-02 Leases", the Company adopted ASU No. 2016-02, Leases, and all subsequently issued clarifying guidance. Under the new guidance, lessees areis required to recognize lease assets and lease liabilities forreflecting the rights and obligations created by leased assets previously classified as operating leases. In July 2018, the FASB issued ASU No. 2018-11, which permitted entities to record the impact of adoption using a modified retrospective method with any cumulative effect as an adjustment to retained earnings (accumulated deficit) as opposed to restating comparative periods for the effects of applying the new standard. The Company elected this transition approach; therefore, the Company’s prior period reported results are not restated to include the impact of this adoption. In addition, the Company elected the package of three transition practical expedients which alleviate the requirements to reassess embedded leases, lease classification and initial direct costs for leases that commenced prior to the adoption date. The Company has elected to use the short-term lease recognition exemption for all asset classes. This means, for those leases that qualify, the Company will not recognize right-of-use ("ROU") assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets. The adoption of this standard did not affect the Condensed Consolidated Statements of Operations and therefore, no cumulative effect adjustment was recorded. The adoption of this standard also did not materially affect the Condensed Consolidated Statements of Cash Flows.
The Company has operating type leases for real estate and equipment in both the U.S. and internationally and a financing lease for a truck in the U.S. At July 31, 2019, ROU2020 and April 30, 2020, right-of-use assets totaled $6,785,000. Included in the ROU assets was a finance lease with a net value of $140,000 with accumulated amortization totaling $19,000.$8,828,000 and $9,312,000, respectively. Operating cash paid to settle lease liabilities was $410,000 and $314,000 for the periodperiods ended July 31, 2019.2020 and July 31, 2019, respectively. The Company’s leases have remaining lease terms of up to 10 years, some of which may include options to extend the leases for up to 5 years or options to terminate the leases within 1 year. Operating lease expense was $632,000 and $549,000 for the three months ended July 31, 2020 and July 31, 2019, respectively, inclusive of period cost for short-term leases, not included in lease liabilities, of $222,000 and $235,000 for the three months ended July 31, 2019.
The Company is in the process of expanding one of its current leased warehouse spaces, which is expected to be completed in late calendar 2019.  Upon completion of the warehouse expansion, the Company will enter into a 10 year lease2020 and it is estimated that the right of use assets and lease liabilities will increase by approximately $2,000,000.



July 31, 2019, respectively.
At July 31, 2019,2020, the weighted average remaining lease term for the capitalized operating leases was 8.17.7 years and the weighted average discount rate was 4.1%4.0%. For finance leases,the financing lease, the weighted average remaining lease term was 6.15.2 years and the weighted average discount rate was 10.0%. AsThe Company uses the implicit rate in determining the present value of the lease payments when available, however, most of the Company's leases do not provide an implicit rate so for those leases the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable.
Future minimum lease payments ofunder non-cancelable leases as of July 31, 2019:2020:
 Operating Financing Operating Financing
Remainder of fiscal 2020 $942
 $26
2021 1,064
 32
Remainder of fiscal 2021 $1,132
 $24
2022 1,000
 32
 1,528
 32
2023 985
 32
 1,498
 32
2024 692
 31
 1,217
 32
2025 1,173
 32
Thereafter 3,366
 42
 3,898
 11
Total Minimum Lease Payments $8,049
 $195
 $10,446
 $163
Imputed Interest (1,384) (50) (1,720) (36)
Total $6,665
 $145
 $8,726
 $127
H.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 118,696 and 30,360 antidilutive RSUs and options outstanding at July 31, 2019. There were no antidilutive RSUs or options outstanding at2020 and July 31, 2018.2019, respectively. The following is a reconciliation of basic to diluted weighted average common shares outstanding at July 31 (in thousands):
 2019 2018  2020 2019 
          
Basic 2,750
 2,736
  2,756
 2,750
 
Dilutive effect of stock options and RSUs 21
  68
   —
  21
  
Weighted average common shares outstanding - diluted 2,771
  2,804
   2,756
  2,771
  
I.J. Stock Options and Share-based 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”.Compensation.”
TheIn May 2020, the Company granted 36,534 restricted stock units (“RSUs”)12,045 RSUs under the 2017 Omnibus Incentive Plan ("2017 Plan"). These RSUs include a service component that vests over a one-year period. The Company granted 83,816 RSUs under the 2017 Plan in June 2019. The2020. These RSUs include both a service and a performance component, vesting over a three yearthree-year period. The recognized expense is based upon the vesting period for service criteria and estimated attainment of the performance criteria at the end of the threethree- year period, based on the ratio of cumulative days incurred,of service to total days over the three yearthree-year period. The Company recorded


share-based compensation expense during the three months ended July 31, 2020 and 2019 of $24,000 for this issuance with the$59,000 and $21,000, respectively. The remaining estimated share-based compensation expense of $575,000 to$1,131,000 and $696,000, respectively, will be recorded over the remaining three year period.vesting periods.
J.K. Income Taxes
Income tax expense of $169,000$21,000 and $395,000$169,000 was recorded for the three months ended July 31, 20192020 and 2018,2019, respectively. The effective tax rates were 25.4%(3.6)% and 20.9%25.4% for the three months ended July 31, 20192020 and 2018,2019, respectively. The increasechange in the effective tax rate for the three-month period reflectsis primarily due to the impact of increased foreign operations which are taxed at different rates than the U.S. tax rate of 21% and also results in an additional Global Intangible Low-Taxed Income ("GILTI") inclusion. In addition, the change in the U.S. effective tax rate for the three months ended July 31, 2020 was unfavorably impacted by the recording of a valuation allowance against the deferred tax asset which resulted in the elimination of any income tax benefit.
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 during the three months ended July 31, 2019,2020, and July 31, 2019. The Company currently expects to contribute $30,000 to the Company does not expect any contributions to be paidplans during the remainder of the fiscal year. Contributions of $1,000,000 were paid to the plans during the three months ended July 31, 2018. The Company assumed an expected long-term rate of return of 7.75% for the periods ended July 31, 20192020 and July 31, 2018.2019. Pension expense consisted of the following (in thousands): 
Three Months Ended July 31, 2019 Three Months Ended July 31, 2018Three Months Ended July 31, 2020 Three Months Ended July 31, 2019
Service cost$0
 $0
$0
 $0
Interest cost208
 215
181
 208
Expected return on plan assets(355) (362)(321) (355)
Recognition of net loss260
 221
428
 260
Net periodic pension expense$113
 $74
$288
 $113

L.M. Segment Information
The Company’s operations are classified into two business segments: Domestic and International. The Domestic business segment principally designs, manufactures, and installs scientific and technical furniture, including steel and wood laboratory cabinetry, fume hoods, 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 three months ended July 31, 20192020 and 20182019 (in thousands):
Domestic
Operations
 
International
Operations
 
Corporate /
Eliminations
 Total
Domestic
Operations
 
International
Operations
 
Corporate /
Eliminations
 Total
Three months ended July 31, 2020       
Revenues from external customers$30,058
 $6,365
 $—
 $36,423
Intersegment revenues651
 811
 (1,462) —
Earnings (loss) before income taxes$993
 $135
 $(1,715) $(587)
Three months ended July 31, 2019              
Revenues from external customers$29,287
 $10,049
 $—
 $39,336
$29,287
 $10,049
 $—
 $39,336
Intersegment revenues2,179
 842
 (3,021) —
2,179
 842
 (3,021) —
Earnings (loss) before income taxes$1,560
 $608
 $(1,503) $665
$1,560
 $608
 $(1,503) $665
Three months ended July 31, 2018       
Revenues from external customers$36,070
 $6,082
 $—
 $42,152
Intersegment revenues462
 726
 (1,188) —
Earnings (loss) before income taxes$3,108
 $449
 $(1,664) $1,893


M. Reclassifications
During the second quarter of fiscal year 2019, the Company changed its method of accounting for its Domestic segment’s inventory from the LIFO method to the FIFO method.  The Company reclassified certain amounts in the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income, the condensed consolidated statements of stockholders’ equity and the condensed consolidated statements of cash flows for the three-month period ended July 31, 2018 to conform to the current period format.

N. New Accounting Standards
In February 2016, the FASB issued ASU 2016-2, “Leases.” This guidance establishes a ROU model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15,


2018. The Company adopted this standard effective May 1, 2019. See Note G for a discussion of the impact of adoption of this standard.
In August 2018, the Commission adopted final rules pursuant to Commission Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements relating to the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of income is required to be filed. This final rule became effective on November 5, 2018. The Company adopted this final rule effective for the second quarter of fiscal 2019. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In February 2018, the FASB issued ASU 2018-2, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” This guidance provides the Company with an option to reclassify stranded tax effects resulting from the Tax Cuts and Jobs Act (the "2017 Tax Act") from accumulated other comprehensive income to retained earnings. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company adopted this standard effective May 1, 2019 and did not elect to reclassify tax effects as a result of tax reform; therefore, the adoption did not have a significant impact on the Company’s consolidated financial position or results of operations.
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, 2019.2022. The Company will adopt this standard in fiscal year 2021.2024. The Company does not expect the adoption of this standard to have a significant impact on the Company’s consolidated financial position or results of operations.
In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In August 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which removes, modifies, and adds certain disclosure requirements related to fair value measurements in ASC Topic 820. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’s consolidated financial position or results of operations.
In August 2018, the FASB issued ASU 2018-14, “Compensation -Retirement Benefits -Defined Benefit Plans -General (Subtopic 715-20) - Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans" ("ASU 2018-14"). The amendments in this update remove defined benefit plan disclosures that are no longer considered cost-beneficial, clarify the specific requirements of disclosures, and add disclosure requirements identified as relevant. ASU 2018-14 is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company adopted this standard effective May 1, 2020. The adoption of this standard did not have a significant impact on the Company’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 beginning after December 15, 2020. The Company expects to adopt this guidance when effective and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Company’s 20192020 Annual Report to Stockholders 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, 2019.2020. The following discussion and analysis describes material changes in the Company’s financial condition since April 30, 2019.2020. The analysis of results of operations compares the three months ended July 31, 20192020 with the comparable period of the prior year.
Results of Operations
Sales for the quarter were $39,336,000,$36,423,000, a 6.7%7.4% decrease from sales of $42,152,000 in$39,336,000 for the comparable period of the prior year. Domestic sales for the quarter were $29,287,000, down 18.8%$30,058,000, up 2.6% from sales of $36,070,000 in$29,287,000 for the comparable period of the prior year. International sales for the quarter were $10,049,000, up 65.2%$6,365,000, down 36.7% from sales of $6,082,000 in$10,049,000 for the comparable period of the prior year.  The decrease in Domestic sales was a result of lower dealer sales in the current quarter versus those in the prior year first quarter.were relatively flat while International sales increaseddecreased as a result of a large order with a new customerreduced access to construction sites and continued strengthre-imposed government mandated shut-downs in India during the Indian laboratory infrastructure market. quarter.
The Company’s order backlog was $102$101 million at July 31, 2019,2020, as compared to $102 million at July 31, 2018,2019, and $101 million at April 30, 2019.2020. The Company continues to have a strong volume of outstanding quotations globally and is aggressively pursuing these projects.
The gross profit margin for the three months ended July 31, 20192020 was 17.7%16.1% of sales, as compared to 18.0%17.7% of sales in the comparable quarter of the prior year. The decrease in gross profit margin percentage was primarily due to the decline in sales with an unfavorable shift in product mix and competitive pricing inbetween the International segment.Company's business segments.
Operating expenses for the three months ended July 31, 20192020 were $6,170,000,$6,157,000, or 15.7%16.9% of sales, as compared to $5,763,000,$6,170,000, or 13.7%15.7% of sales, in the comparable period of the prior year. The increase in operating expenses as a percentage of sales for the three months ended July 31, 20192020 was primarily related to the decline in sales while the total operating expenses remained relatively flat. The decrease in operating expenses was primarily due to higher operating costs in the reductions of $343,000 for international segment.expenses


related to wages, travel and professional fees partially offset by increases of $243,000 for administration wages and benefits and $76,000 for incentive and stock compensation expenses.
Interest expense was $167,000$77,000 for the three months ended July 31, 2019,2020, as compared to $91,000$167,000 for the comparable period of the prior year. The changes in interest expense were primarily attributable to changes in borrowing levels.levels and interest rates.
Income tax expense of $169,000$21,000 and $395,000$169,000 was recorded for the three months ended July 31, 20192020 and 2018,2019, respectively. The effective tax rates were 25.4%(3.6)% and 20.9%25.4% for the three months ended July 31, 20192020 and 2018,2019, respectively. The increasechange in


the effective tax rate for the three-month periodthree months ending July 31, 2020 reflects the impact of increased foreigninternational operations which are taxed at different rates, than thecombined with a U.S. tax rate of 21% and also results inbenefit recorded for the current quarter which required an additional GILTI inclusion inoffsetting valuation allowance eliminating the U.S.income tax benefit on a consolidated basis.
Noncontrolling interests related to the Company’s subsidiary not 100% owned by the Company reduced net earningslosses by $25,000$10,000 for the three months ended July 31, 2019,2020, as compared to $9,000a reduction of net earnings of $25,000 for the comparable period of the prior year. The change in the net earnings attributable to the noncontrolling interest in the current period was due to changes in earnings of the subsidiary in the related period.
Net earningsA net loss of $471,000,$598,000, or $0.17$(0.22) per diluted share, werewas reported for the three months ended July 31, 2019,2020, compared to net earnings of $1,489,000,$471,000, or $0.53$0.17 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 year, including capital expenditures.
The Company had working capital of $30,970,000$27,818,000 at July 31, 2019,2020, compared to $32,624,000$27,171,000 at April 30, 2019.2020. The ratio of current assets to current liabilities was 1.8-to-1.01.9-to-1.0 at July 31, 2019,2020, compared to 2.0-to-1.0 at April 30, 2019.2020. At July 31, 2019,2020, advances of $13.3$8.5 million were outstanding under the Company’s bank revolving credit facility, compared to advances of $9.5$4.7 million outstanding as of April 30, 2019.2020. The Company had standby letters of credit outstanding of $210,000$512,000 at July 31, 2019 compared to standby letters of credit outstanding of $5.2 million at2020 and April 30, 2019.2020. Amounts available under the $20$15 million revolving credit facility were $6.5$6.0 million and $5.3$8.7 million at July 31, 20192020 and April 30, 2019,2020, respectively. Total borrowings and interest rate swaps were $14,269,000 at July 31, 2019, compared to $10,926,000 at April 30, 2019. As previously reported in the reportsCompany's Report on Form 8-K filed by the Company on June 21, 2019 and July 11, 2019,24, 2020 and in Note 4 of the Notes to the Consolidated Financial Statements included in the Company's 20192020 Annual Report on Form 10-K, during the quarter ended July 31, 2019,2020, the Company amended its credit facility and entered into an amendment to its Loan Agreement and Line of Credit which effected changes in certain financial covenants and included a restated security agreement.waiver of certain non-compliance under the previous terms of the revolving credit facility. The amendment did not change the amount of availability provided by the Company's Line of Credit.
The Company’s operations used cash of $407,000$3,268,000 during the three months ended July 31, 2019.2020. Cash was provided by earnings a decrease in inventories of $855,000 and an increase in accounts payable and accrued expenses of $835,000,$1,065,000, offset by an increase in accounts receivable of $3,008,000$2,843,000 and inventories of $1,128,000 and a decrease in deferred revenue of $76,000.
$1,076,000. During the three months ended July 31, 2019,2020, the Company used net cash of $1,183,000$922,000 in investing activities, all of which was used for capital expenditures.
The Company’s financing activities provided cash of $2,934,000$3,785,000 during the three months ended July 31, 2019,2020, primarily from net increases in short-term borrowings of $3,766,000 offset by cash dividends of $522,000 paid to stockholders and repayments of $296,000 on long-term debt and lease obligations.$3,805,000.
Outlook    
The Company continues to actively monitor the COVID-19 situation and its impact. Any future development 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; 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. We will continue to work to ensure the safety of our people and our ability to serve our customers worldwide.

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 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. As we lookLooking forward, the Company continuesis optimistic about our opportunities for growth within our existing end-markets and we are committed to recover from the declineinvesting in, our Domestic volume during the second half of fiscal year 2019.   In doing so, we continue to invest in our leadership team and commercial focus and are increasingmodernizing, our capabilities in India to better serve our customers.  We believe the market for laboratory furniture and infrastructure remains healthy, and Kewaunee is well-positioned within the market.succeed.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This report contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this report, including statements regarding the Company’s future financial condition, results of operations, business operations and


business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe” and similar words, expressions and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties 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, risks, uncertainties and assumptions include, but are not limited to, competitive and general economic conditions, both domestically and internationally; changes in customer demands; dependence on customers’ required delivery schedules; risks related to fluctuations in the Company’s operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; changes in the legal and regulatory environment; changes in raw materials and commodity costs; the effects of COVID-19 and acts of terrorism, war, governmental action, natural disasters and other Force Majeure events. Many important factors that could cause such differences are described under the caption “Risk Factors” in Item 1A in the Company’s 20192020 Annual Report on Form 10-K and in Quarterly Reports on Form 10-Q subsequently filed by the Company. 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, 2019.2020.
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 July 31, 2019.2020. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that, as of July 31, 2019,2020, the Company’s disclosure controls and procedures were adequate and effective and designed to ensure that all material information required to be filed in this quarterly report is made known to them by others within the Company and its subsidiaries.
(b) Changes in internal controls
There was no significant change in the Company’s internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


PART II. OTHER INFORMATION
Item 6.Exhibits
10.61F10.61K 
SixthNinth Amendment to Credit and Security Agreement, dated as of May 28, 2019.
(1)
10.61G
Seventh Amendment to Credit and Security Agreement and ThirdFifth Amendment to Revolving Line of Credit Note dated as of July 9, 2019.and Waiver
(1)
10.61H10.86* 
Credit and Security Agreement Default Waiver Letter dated asChange of June 19, 2019 between Wells Fargo Bank, National Association and Kewaunee Scientific Corporation.
 (1)
10.61I
SecurityControl Employment Agreement dated as of June 19, 20191, 2020 between Wells Fargo Bank, National Association and Kewaunee Scientific Corporation.Corporation and Douglas J. Batdorff
(1)
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 

(1) Filed as an exhibit to the Kewaunee Scientific Corporation Annual Report to the Securities and Exchange Commission on Form 10-K (Commission File No. 0-5286) for the fiscal year ended April 30, 2019,2020, and incorporated herein by reference.
*The referenced exhibit is a management contract or a compensatory plan or arrangement.


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: September 6, 201911, 2020 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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