A Look at Kewaunee Scientific’s Risk Factors

Kewaunee Scientific (KEQU) provides a wide range of laboratory, healthcare, and technical furniture and infrastructure products. This week, Kewaunee entered into a strategic alliance with Schneider Electric to focus on its key international markets. This collaboration will offer integrated, turnkey solutions to customers while building a new laboratory or modernizing an existing facility.

Let’s take a look at the company’s financial performance and what has changed in its key risk factors that investors should be aware of.

While the company recorded a 13% year-over-year increase in its Q4 sales at $38.7 million, its domestic sales remained relatively flat because of moderated construction activity due to the COVID 19-pandemic. The uptick in the top line came from international sales, which jumped 72% year-over-year to $11.6 million in Q4.

This surge in international sales was attributable to a push to complete several projects in India before the government mandated a shutdown due to rising COVID-19 cases.

The company experienced higher raw material costs during this period due to supply disruptions, which widened Kewaunee’s net loss to $2.97 million from $1.06 million a year ago. (See Kewaunee Scientific stock chart on TipRanks)

The President and CEO of Kewaunee, Thomas D. Hull III, said, “In the near term, rapidly escalating raw material pricing will be a headwind during the first half of Fiscal Year 2022 due to the fixed nature of contracts we enter with customers. We have taken steps to implement surcharges on new orders to offset broad-based price increases for basic materials, including steel, aluminum, hardwoods, and resin products. The impact of these surcharges will lag what has been an immediate impact of rising commodity prices.”

Now, let’s look at what has changed in the company’s key risk factors.

According to the new Tipranks Risk Factors tool, Kewaunee’s two main risk categories are Macro & Political and Finance & Corporate, which account for 43% and 21%, respectively, of the total 14 risks identified. Since April, the company has added one new key risk factor.

Under the Macro & Political risk category, the company acknowledges that its business, financial performance, and liquidity could be adversely affected due to COVID-19 or any future pandemics. While Kewaunee has been successful in keeping its operations open for a major part of the COVID-19 pandemic, it still sees key factors such as lower business activity, destabilized financial markets, deterioration in credit and financing conditions and supply chain disruptions as threats to being able to operate its business.

The Macro & Political risk factor’s sector average is at 14%, compared to Kewaunee Scientific’s 43%. Shares are up 40% over the past year.