Kewaunee Scientific (NASDAQ: KEQU) reported Q1 FY2027 sales of $66.32 million, down 6.7% year over year, while diluted EPS fell to $0.58 from $1.04. Lower Lab Products Group volumes, higher corporate compensation expense, and a higher effective tax rate outweighed improved International profitability. Backlog ended the quarter on July 31, 2026, at $169.0 million, up sequentially but below the prior-year level.
Core Performance
Gross profit declined broadly in line with sales, allowing gross margin to edge approximately 20 basis points higher to 29.6%. Operating expenses nevertheless rose 2.2% to $16.48 million, causing operating profit, attributable net earnings, and EBITDA to fall faster than revenue.
| Metric | Q1 FY2027 | Q1 FY2026 | YoY Change |
|---|---|---|---|
| Sales | $66.32 million | $71.10 million | -6.7% |
| Gross profit and margin | $19.64 million; 29.6% | $20.93 million; 29.4% | -6.2%; margin +0.2 pts |
| Operating profit and margin | $3.16 million; 4.8% | $4.81 million; 6.8% | -34.3%; margin -2.0 pts |
| Pre-tax earnings | $2.56 million | $3.92 million | -34.7% |
| Net earnings attributable to Kewaunee | $1.71 million | $3.09 million | -44.8% |
| Diluted EPS | $0.58 | $1.04 | -44.2% |
| EBITDA (non-GAAP) | $4.53 million | $6.32 million | -28.4% |
EBITDA margin was approximately 6.8%, compared with 8.9% in the prior-year quarter.
Business and Segment Performance
Lab Products Group, or LPG, remained the largest business and accounted for about 77% of quarterly sales. Challenging life sciences conditions reduced manufacturing volumes, although stronger education demand, cost controls, and operating efficiencies helped support profitability.
International sales also declined, but a favorable mix of higher-margin projects lifted both segment net earnings and EBITDA. This created a clear divergence between the two operating segments.
| Segment Metric | Q1 FY2027 | Q1 FY2026 | YoY Change |
|---|---|---|---|
| LPG sales | $50.87 million | $54.35 million | -6.4% |
| LPG net earnings | $3.89 million | $4.72 million | -17.6% |
| LPG EBITDA | $6.59 million | $7.58 million | -13.1% |
| International sales | $15.45 million | $16.75 million | -7.8% |
| International net earnings | $0.79 million | $0.64 million | +23.5% |
| International EBITDA | $1.20 million | $1.06 million | +13.9% |
Corporate EBITDA was a loss of $3.26 million, widening from a $2.31 million loss. Kewaunee attributed the change primarily to additional compensation expense from settling certain long-term incentive awards in cash rather than shares. Management does not expect that incremental expense to recur, but the company did not quantify it separately.
Profitability and Balance Sheet
The relatively stable gross margin indicates that product costs adjusted with lower sales, but expenses below gross profit created greater pressure. Interest expense declined to $626,000 from $1.06 million, providing a partial offset to weaker operations.
The effective tax rate increased to approximately 28.0% from 19.4%. Kewaunee said the increase reflected a greater proportion of earnings coming from international operations, helping explain why attributable net earnings declined more sharply than pre-tax earnings.
Cash on hand, including restricted cash, was $10.26 million at quarter-end, down from $11.62 million on April 30, 2026. Working capital was largely stable sequentially at $56.72 million versus $57.05 million.
Long-term debt declined to $39.38 million from $40.85 million. Excluding the sale-leaseback financing obligation, long-term debt fell 8.2% to $13.84 million from $15.09 million, while the debt-to-equity ratio improved to 0.59-to-1 from 0.61-to-1. Short-term debt increased to $6.48 million from $5.90 million.
Backlog and Management Commentary
Backlog increased approximately 1.9% from April 30 to $169.0 million, but it was 17.6% below the $205.0 million reported one year earlier. The sequential improvement offers some support for future activity, while the year-over-year decline and timing of project releases remain important constraints.
President and CEO Thomas D. Hull III said quoting activity remained strong across the company’s markets. However, project award and release timelines remained extended amid geopolitical and economic uncertainty, making the conversion of customer activity into backlog and recognized sales a key variable for subsequent quarters.
Recent Insider Transactions
The supplied insider data show no cash purchases during the most recent six-month period. Two stock awards dated May 1, 2026, and one stock gift dated March 26 were reported at $0 value; no transaction quantities were provided.
The following reported sales were the most recent transactions with disclosed prices and values. These records are presented without inferring insiders’ views about the company’s prospects.
| Date | Insider | Role | Transaction | Price per Share | Reported Value |
|---|---|---|---|---|---|
| Jan. 7, 2026 | Thomas David Hull III | CEO | Sale | $37.50 | $81,638 |
| Jan. 6, 2026 | Donald T. Gardner III | CFO | Sale | $37.57 | $75,140 |
| Dec. 31, 2025 | Thomas David Hull III | CEO | Sale | $37.66–$38.00 | $24,790 |
| Dec. 29, 2025 | Thomas David Hull III | CEO | Sale | $38.01 | $33,601 |
| Dec. 22, 2025 | Thomas David Hull III | CEO | Sale | $39.00 | $39,000 |
| Dec. 17, 2025 | Thomas David Hull III | CEO | Sale | $39.00 | $39,000 |
| Oct. 9, 2025 | Donald T. Gardner III | CFO | Sale | $42.76 | $128,280 |
Risks Investors Need to Watch
- Project conversion and backlog: Backlog improved sequentially but remained substantially below the prior-year level. Extended award and release timelines could delay the recognition of sales.
- LPG market conditions: Continued life sciences weakness and lower manufacturing volumes could pressure sales and operating leverage, even with education demand and cost controls providing support.
- Expense sensitivity: Operating expenses increased despite lower revenue, and the widening corporate loss weighed on consolidated profitability. The incremental compensation expense is expected not to recur, but its amount was not separately disclosed.
- International mix and taxation: Higher-margin projects improved International earnings, but the greater international earnings mix also raised the effective tax rate. Changes in project mix could therefore affect both segment margins and consolidated net income.
Summary
Kewaunee Scientific’s Q1 FY2027 results showed lower sales and materially weaker consolidated earnings, despite a stable gross margin and improved International profitability. LPG volume pressure, higher corporate costs, and a higher tax rate were the main earnings headwinds, while lower debt and a sequential backlog increase provided some balance. Future results will depend on the timing of project conversions, life sciences demand, and whether corporate expenses normalize as management expects.
Find out more