KMG Chemicals Reports Third Quarter 2012 Results

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Friday, June 8th 2012

Consolidation and integration efforts drive 48% year/year diluted EPS increase to $0.34

Advanced

KMG Chemicals, Inc. (NASDAQ:KMGB), a global provider of specialty chemicals in select markets, today announced financial results for the third fiscal quarter ended April 30, 2012.

2012 Fiscal Third Quarter Highlights

  • Net sales were $66.6 million, up 7.6% versus $61.9 million in the third quarter of fiscal 2011, primarily reflecting the impact of recently implemented pricing actions in both the Electronic Chemicals and Wood Treating chemicals businesses.
  • Operating income increased 65.9% to $6.9 million from $4.1 million in the third fiscal quarter of 2011. Operating margins were 10.3% in the third quarter of 2012, up from 6.7% in the prior year period.
  • Diluted earnings per share were $0.34 per share versus $0.23 per share reported in last year’s third fiscal quarter.
  • Net cash provided by operating activities was $8.5 million, compared to net cash used of $459,000 in the same period a year ago.
  • Total long-term debt was $28 million, down from $41 million at the end of the preceding quarter and $49.3 million at the end of fiscal 2011. The Company used the proceeds received on the sale of its Animal Health business to repay $10.0 million of the balance during the third quarter of fiscal year 2012.

Neal Butler, President and CEO of KMG, commented, “Our third quarter earnings were up substantially from the preceding quarter and from the prior-year period, reflecting the benefits of our Electronic Chemicals plant consolidation and integration efforts. Targeted pricing actions in our Electronic Chemicals and Wood Treating business segments also benefited results, and enabled us to recoup higher raw materials costs. We ended the quarter in a strong financial position with $5.2 million in cash and a balance sheet with substantial borrowing capacity to fund further growth.”

Business Unit Overviews and Trends

KMG previously had four reportable segments: Electronic Chemicals, Penta, Creosote, and Animal Health. During the first fiscal quarter of 2011, the Company re-evaluated the criteria used to determine operating segments, and concluded that its two Wood Treating product segments met the criteria of a single operating segment. Then on March 1, 2012, the Company sold its Animal Health business. KMG’s reportable segments have been revised to reflect a change from four to two reportable segments: Electronic Chemicals and Wood Treating Chemicals. Prior period information has been reclassified to conform to the current period presentation.

Electronic Chemicals

Net sales in the Electronic Chemicals segment increased 2.4% to $39.4 million in the fiscal third quarter of 2012, as compared to $38.5 million in the third fiscal quarter of 2011. The year-over-year sales increase primarily reflected the positive impact of price increases instituted over the past twelve months. Despite some softening in the European semiconductor market due to economic weakness, our overall sales volumes have remained relatively firm. We expect demand for our electronic chemicals products to improve in calendar 2012, and we will have additional business from a new North American semiconductor fabrication facility that has come on stream.

Segment operating profits improved 146% to $3.9 million, from $1.6 million in the same period a year ago, benefiting from higher product pricing completed over the last twelve months as well as efficiency improvements in our supply chain and the completion of our integration of the General Chemical acquired assets in fiscal 2011.

Wood Treating Chemicals

Contacts

KMG Chemicals, Inc.
Eric Glover, 713-600-3865
Manager of Investor Relations

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