KMG (NYSE:KMG), a global provider of specialty chemicals and
performance materials, today announced financial results for the
fiscal 2018 second quarter ended January 31, 2018.
2018 Second Quarter Financial Highlights
- Sales increased 44% from the second quarter of last year to a
record $113.9 million.
- GAAP diluted earnings per share increased 200% to $1.59 from
$0.53 per diluted share in the second quarter of fiscal 2017.
- Adjusted diluted earnings per share1 were a record $1.04
compared to $0.57 per share reported in the second quarter of last
year. Among other items, adjusted EPS exclude an $11.0 million
benefit from recent U.S. tax reform.
- GAAP net income increased to a record $25.3 million, compared
to $6.5 million in the second quarter of last year.
- Adjusted EBITDA2 was a record $29.4 million, up 124% from $13.1
million in the second quarter of fiscal 2017.
“KMG’s record second quarter results reflect broad-based growth
across our businesses, significant contributions from recent
acquisitions and our disciplined focus on execution,” said Chris
Fraser, KMG chairman and CEO. “Supported by our continued strong
financial performance and reduction in leverage from our recent
equity offering, we successfully repriced our outstanding debt
during the second quarter, generating substantial interest expense
savings.”
Mr. Fraser continued, “Second quarter sales in our electronic
chemicals segment increased 6% year-over-year to a record $73.9
million, driven by growth in each of our major geographic regions.
Segment operating income and margins also reached record levels in
the second quarter, reflecting a favorable product mix and gains in
operational efficiency.
“Our performance materials segment generated record sales and
operating income in the second quarter, fueled by contributions
from Flowchem and Sealweld, as well as growth in our industrial
lubricants and wood treating chemicals businesses. Addressing key
growth opportunities in the pipeline and energy markets, our
pipeline performance business benefited from growing demand for our
value-added products and services that enhance pipeline integrity
and safety, as well as optimize pipeline throughput and
performance. Our wood treating chemicals business also performed
well, aided in part by the need to replace storm-damaged utility
poles.”
Mr. Fraser concluded, “Considering our solid financial
performance in the first half of fiscal 2018, as well as our
expectations for continued growth in the second half of the year,
we are increasing our fiscal 2018 sales forecast to $445-455
million, from $435-450 million previously, and increasing our
fiscal 2018 adjusted EBITDA guidance to $114-118 million, from
$110-115 million.”
Consolidated results
|
|
|
|
Second
quarter Dollars in thousands, except EPS |
Fiscal 2018 |
|
Fiscal 2017 |
|
As Reported |
Adjusted |
As Reported |
Adjusted |
|
(GAAP) |
(non-GAAP)3 |
(GAAP) |
(non-GAAP)4 |
Net sales |
$ |
113,851 |
|
$ |
113,851 |
|
$ |
79,071 |
|
$ |
79,071 |
|
Operating income |
|
21,730 |
|
|
25,635 |
|
|
9,040 |
|
|
9,857 |
|
Operating margin |
|
19.1 |
% |
|
22.5 |
% |
|
11.4 |
% |
|
12.5 |
% |
Net income |
|
25,337 |
|
|
16,618 |
|
|
6,486 |
|
|
7,017 |
|
Diluted earnings per
share |
$ |
1.59 |
|
$ |
1.04 |
|
$ |
0.53 |
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended January 31 Dollars in thousands, except EPS |
Fiscal 2018 YTD |
|
Fiscal 2017 YTD |
|
As Reported |
Adjusted |
As Reported |
Adjusted |
|
(GAAP) |
(non-GAAP)5 |
(GAAP) |
(non-GAAP)6 |
Net sales |
$ |
224,515 |
|
$ |
224,515 |
|
$ |
155,566 |
|
$ |
155,566 |
|
Operating income |
|
41,810 |
|
|
49,126 |
|
|
17,720 |
|
|
18,670 |
|
Operating margin |
|
18.6 |
% |
|
21.9 |
% |
|
11.4 |
% |
|
12.0 |
% |
Net income |
|
31,187 |
|
|
27,746 |
|
|
12,227 |
|
|
12,844 |
|
Diluted earnings per
share |
$ |
2.18 |
|
$ |
1.94 |
|
$ |
1.00 |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment results
|
|
|
|
|
|
Electronic
Chemicals |
Second Quarter |
Second Quarter |
|
First Half |
First Half |
Dollars in
thousands |
Fiscal 2018 |
Fiscal 2017 |
Fiscal 2018 |
Fiscal 2017 |
|
As Reported |
As Reported |
As Reported |
As Reported |
|
(GAAP) |
(GAAP) |
(GAAP) |
(GAAP) |
Net sales |
$ |
73,924 |
|
$ |
69,766 |
|
$ |
147,732 |
|
$ |
136,688 |
|
Operating income |
|
12,730 |
|
|
9,583 |
|
|
23,988 |
|
|
17,644 |
|
Operating margin |
|
17.2 |
% |
|
13.7 |
% |
|
16.2 |
% |
|
12.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the second fiscal quarter, the Electronic Chemicals segment
reported:
- Sales of $73.9 million, up 6% from the second quarter of fiscal
2017. Sales grew in each geographic region.
- Operating income of $12.7 million, up 32.8% from $9.6 million
in the same period of fiscal 2017. Operating income increased due
to higher sales, product mix and operational efficiencies.
Operating margin improved to 17.2% compared to 13.7% in the
prior-year period.
- Adjusted EBITDA7 of $15.0 million compared to $12.2 million
last year.
Performance MaterialsThe Performance Materials
segment consists of the pipeline performance business and the wood
treating chemicals business.
|
|
|
|
|
|
Performance
Materials |
Second Quarter |
Second Quarter |
|
First Half |
First Half |
Dollars in
thousands |
Fiscal 2018 |
Fiscal 2017 |
Fiscal 2018 |
Fiscal 2017 |
|
As Reported |
As Reported |
As Reported |
As Reported |
|
(GAAP) |
(GAAP) |
(GAAP) |
(GAAP) |
Net sales |
$ |
39,927 |
|
$ |
9,305 |
|
$ |
76,783 |
|
$ |
18,878 |
|
Operating income |
|
12,810 |
|
|
3,023 |
|
|
24,394 |
|
|
6,704 |
|
Operating margin |
|
32.1 |
% |
|
32.5 |
% |
|
31.8 |
% |
|
35.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the second fiscal quarter, the Performance Materials segment
reported:
- Sales of $39.9 million versus $9.3 million in the same period a
year ago. Sales growth reflected contributions from Flowchem and
Sealweld, as well as product volume growth in both industrial
lubricants and wood treating chemicals.
- Operating income of $12.8 million compared to $3.0 million last
year. The increase in operating income reflected contributions from
Flowchem and Sealweld, as well as product volume growth in both
industrial lubricants and wood treating chemicals. Segment
operating margins were 32.1%, compared to 32.5% in the second
quarter of 2017, primarily due to higher depreciation and
amortization expense related to the acquisitions of Flowchem and
Sealweld.
- Adjusted EBITDA8 of $17.1 million versus $3.2 million last
year.
Fiscal 2018 Outlook
- Sales: We increase our fiscal 2018
consolidated net sales forecast to $445-455 million, from our prior
guidance of $435-450 million.
- Adjusted EBITDA: We increase our adjusted
EBITDA forecast to $114-118 million, from our prior guidance of
$110-115 million, reflecting stronger growth expectations in both
our electronic chemicals and performance materials segments. Our
revised fiscal 2018 adjusted EBITDA forecast includes approximately
$8.0 million in stock-based compensation expense, compared to our
prior estimate of approximately $6.5 million.
- Depreciation and Amortization: Depreciation
and amortization expense is forecast to be approximately $31
million.
- Capital Expenditures: Capital expenditures are
forecast to be approximately $29 million, in line with our prior
estimate, and include a portion of our planned capital investment
in Singapore.
With respect to the Company’s full year guidance of Adjusted
EBITDA, the Company is not able to provide a reconciliation of
these fiscal 2018 non-GAAP financial measures to the most
comparable GAAP measure without unreasonable efforts; certain items
that are included have not yet occurred and cannot be reasonably
predicted, and, accordingly, the probable significance of such
items cannot be determined at this time. The most comparable GAAP
measure and reconciling information that is unavailable, or not
reasonably predictable, would include restructuring and realignment
charges and acquisition and integration-related expenses.
Conference callDate: Thursday March 8,
2018Time: 5:00 p.m. ETDial in: 844-316-8066 or
703-736-7353Conference ID: 1178959
The conference call will be webcast live via the “Investors”
section of the Company’s website at http://kmgchemicals.com.
If you are unable to listen live, the conference call will be
archived on the KMG website. A telephone replay of the call will
also be available for one week, starting at 8:00 p.m. ET on March
8, 2018. To access the call, dial 855-859-2056 (domestic) or
404-537-3406 (international) using conference ID 1178959.
About KMGKMG Chemicals, Inc., through its
subsidiaries, produces and distributes specialty chemicals and
performance materials for the semiconductor, industrial wood
preservation and pipeline and energy markets. For more information,
visit the Company's website at http://kmgchemicals.com.
The information in this news release includes certain
forward-looking statements that are based upon assumptions that in
the future may prove not to have been accurate and are subject to
significant risks and uncertainties, including statements as to the
future performance of the company. Although the company believes
that the expectations reflected in its forward-looking statements
are reasonable, it can give no assurance that such expectations or
any of its forward-looking statements will prove to be correct.
Factors that could cause results to differ include, but are not
limited to, successful performance of internal plans, product
development acceptance, the impact of competitive services and
pricing and general economic risks and uncertainties.
1 Non-U.S. GAAP measure. See Table 2 for reconciliation.
2 Non-U.S. GAAP measure. See Tables 1 and 1A for
reconciliation.
3 Non-U.S. GAAP measure. See Tables 2 and 2A for
reconciliation.
4 Non-U.S. GAAP measure. See Tables 2 and 2A for
reconciliation.
5 Non-U.S. GAAP measure. See Tables 2 and 2A for
reconciliation.
6 Non-U.S. GAAP measure. See Tables 2 and 2A for
reconciliation.
7 Non-U.S. GAAP measure. See Tables 1 and 1A for
reconciliation.
8 Non-U.S. GAAP measure. See Tables 1 and 1A for
reconciliation.
|
|
|
|
CONSOLIDATED STATEMENTS OF
INCOME(UNAUDITED)(In thousands,
except per share amounts) |
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
January 31, |
|
January 31, |
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
Net sales |
|
$ |
113,851 |
|
|
$ |
79,071 |
|
|
$ |
224,515 |
|
|
$ |
155,566 |
|
Cost of
sales |
|
64,597 |
|
|
|
47,869 |
|
|
|
128,780 |
|
|
|
94,681 |
|
Gross
profit |
|
|
49,254 |
|
|
|
31,202 |
|
|
|
95,735 |
|
|
|
60,885 |
|
|
|
|
|
|
|
|
|
Distribution expenses |
|
8,680 |
|
|
|
9,770 |
|
|
|
18,122 |
|
|
|
18,872 |
|
Selling,
general and administrative expenses |
|
14,999 |
|
|
|
11,867 |
|
|
|
28,338 |
|
|
|
23,233 |
|
Amortization of intangible assets |
|
3,885 |
|
|
|
525 |
|
|
|
7,396 |
|
|
|
1,060 |
|
Restructuring charges |
|
(40 |
) |
|
|
− |
|
|
|
69 |
|
|
|
− |
|
Operating
income |
|
|
21,730 |
|
|
|
9,040 |
|
|
|
41,810 |
|
|
|
17,720 |
|
Other
(expense) income |
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(5,086 |
) |
|
|
(172 |
) |
|
|
(13,180 |
) |
|
|
(349 |
) |
Loss on
the extinguishment of debt |
|
|
(1,916 |
) |
|
|
− |
|
|
|
(6,091 |
) |
|
|
− |
|
Derivative fair value gain |
|
|
3,024 |
|
|
|
− |
|
|
|
3,873 |
|
|
|
− |
|
Other,
net |
|
|
(596 |
) |
|
|
(285 |
) |
|
|
(777 |
) |
|
|
(55 |
) |
Total
other (expense) income, net |
|
|
(4,574 |
) |
|
|
(457 |
) |
|
|
(16,175 |
) |
|
|
(404 |
) |
|
|
|
|
|
|
|
|
Income
before income taxes |
|
17,156 |
|
|
|
8,583 |
|
|
|
25,635 |
|
|
|
17,316 |
|
Provision
for income taxes |
|
|
8,181 |
|
|
|
(2,097 |
) |
|
|
5,552 |
|
|
|
(5,089 |
) |
Net
income |
$ |
25,337 |
|
|
$ |
6,486 |
|
|
$ |
31,187 |
|
|
$ |
12,227 |
|
Earnings
per share: |
|
|
|
|
|
|
|
Net
income per common share basic |
|
$ |
1.64 |
|
|
$ |
0.55 |
|
|
$ |
2.24 |
|
|
$ |
1.03 |
|
Net
income per common share diluted |
|
$ |
1.59 |
|
|
$ |
0.53 |
|
|
$ |
2.18 |
|
|
$ |
1.00 |
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
15,495 |
|
|
|
11,882 |
|
|
|
13,923 |
|
|
|
11,881 |
|
Diluted |
|
|
15,903 |
|
|
|
12,293 |
|
|
|
14,285 |
|
|
|
12,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KMG CHEMICALS, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (In thousands, except for share and
per share amounts) |
|
|
|
|
|
January 31, |
|
|
July 31, |
|
|
|
2018 |
|
|
2017 |
|
|
(Unaudited) |
|
Assets |
|
|
Current assets |
|
|
Cash and cash
equivalents |
$ |
21,966 |
|
$ |
20,708 |
|
Accounts
receivable |
|
|
Trade, net of
allowances of $237 at January 31, 2018 and $263 at July 31,
2017 |
|
54,339 |
|
|
51,168 |
|
Other |
|
4,721 |
|
|
6,168 |
|
Inventories, net |
|
49,534 |
|
|
46,482 |
|
Prepaid expenses and
other |
|
7,751 |
|
|
8,617 |
|
Total current
assets |
|
138,311 |
|
|
133,143 |
|
|
|
|
Property, plant and
equipment, net |
|
108,954 |
|
|
105,435 |
|
Goodwill |
|
230,214 |
|
|
224,391 |
|
Intangible assets,
net |
|
307,528 |
|
|
320,401 |
|
Other assets, net |
|
11,176 |
|
|
9,061 |
|
Total assets |
$ |
796,183 |
|
$ |
792,431 |
|
|
|
|
Liabilities
& stockholders’ equity |
|
|
Current
liabilities |
|
|
Accounts payable |
$ |
32,496 |
|
$ |
29,570 |
|
Accrued
liabilities |
|
10,686 |
|
|
12,456 |
|
Employee incentive
accrual |
|
3,679 |
|
|
7,713 |
|
Current portion of
long-term debt |
|
− |
|
|
3,167 |
|
Total current
liabilities |
|
46,861 |
|
|
52,906 |
|
|
|
|
Long-term debt |
|
337,048 |
|
|
523,102 |
|
Deferred tax
liabilities |
|
22,852 |
|
|
37,944 |
|
Other long-term
liabilities |
|
5,350 |
|
|
4,763 |
|
Total liabilities |
|
412,111 |
|
|
618,715 |
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
Stockholders’
equity |
|
|
Preferred stock, $.01
par value, 10,000,000 shares authorized, none issued |
|
− |
|
|
− |
|
Common stock, $.01 par
value, 40,000,000 shares authorized, 15,503,290 shares issued and
outstanding at January 31, 2018 and 11,889,649 shares issued
and outstanding at July 31, 2017 |
|
155 |
|
|
119 |
|
Additional paid-in
capital |
|
218,001 |
|
|
42,535 |
|
Accumulated other
comprehensive loss |
|
(5,222 |
) |
|
(9,712 |
) |
Retained earnings |
|
171,138 |
|
|
140,774 |
|
Total stockholders’
equity |
|
384,072 |
|
|
173,716 |
|
Total liabilities and
stockholders’ equity |
$ |
796,183 |
|
$ |
792,431 |
|
|
|
|
|
|
|
|
|
|
|
|
KMG CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS(UNAUDITED) (In
thousands) |
|
|
|
|
|
|
Six Months Ended |
|
|
|
January, 31 |
|
|
|
2018 |
|
|
2017 |
|
Cash flows from
operating activities |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
31,187 |
|
|
$ |
12,227 |
|
Adjustments to reconcile net income to net cash provided by
operating activities |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
14,695 |
|
|
|
7,048 |
|
Loss on
extinguishment of debt |
|
|
6,091 |
|
|
|
− |
|
Stock-based compensation expense |
|
|
3,593 |
|
|
|
3,087 |
|
Amortization of debt discounts and financing costs included in
interest expense |
|
|
828 |
|
|
|
− |
|
Debt
repricing transaction costs |
|
|
602 |
|
|
|
− |
|
Deferred
income tax expense |
|
|
(11,780 |
) |
|
|
(821 |
) |
Derivative fair value gain |
|
|
(3,873 |
) |
|
|
− |
|
Other |
|
|
(77 |
) |
|
|
53 |
|
Changes
in operating assets and liabilities |
|
|
|
|
|
|
|
|
Accounts
receivable — trade |
|
|
(2,041 |
) |
|
|
(2,585 |
) |
Accounts
receivable — other |
|
|
1,554 |
|
|
|
1,846 |
|
Inventories |
|
|
(2,272 |
) |
|
|
1,002 |
|
Other
current and noncurrent assets |
|
|
442 |
|
|
|
(302 |
) |
Accounts
payable |
|
|
2,579 |
|
|
|
951 |
|
Accrued
liabilities and other |
|
|
(5,293 |
) |
|
|
(3,083 |
) |
Net cash
provided by operating activities |
|
|
36,235 |
|
|
|
19,423 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Additions
to property, plant and equipment |
|
|
(9,030 |
) |
|
|
(5,310 |
) |
Other
investing activities |
|
|
(1,262 |
) |
|
|
|
|
Proceeds
− insurance claim |
|
|
− |
|
|
|
250 |
|
Net cash
used in investing activities |
|
|
(10,292 |
) |
|
|
(5,060 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Proceeds from sale of common stock, net of issuance costs |
|
|
175,669 |
|
|
|
− |
|
Borrowings under credit facility |
|
|
− |
|
|
|
17,000 |
|
Payments under credit facility |
|
|
− |
|
|
|
(11,800 |
) |
Principal payments on borrowings on term loan |
|
|
(196,000 |
) |
|
|
− |
|
Debt
repricing transaction costs |
|
|
(602 |
) |
|
|
− |
|
Payment of dividends |
|
|
(822 |
) |
|
|
(709 |
) |
Cash
payments related to tax withholdings from stock-based awards |
|
|
(3,729 |
) |
|
|
(277 |
) |
Net cash
provided by (used in) financing activities |
|
|
(25,484 |
) |
|
|
4,214 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
799 |
|
|
|
(418 |
) |
|
|
|
|
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash |
|
|
1,258 |
|
|
|
18,159 |
|
Cash, cash equivalents
and restricted cash at beginning of period |
|
|
20,708 |
|
|
|
13,428 |
|
Cash, cash equivalents
and restricted cash at end of period |
|
$ |
21,966 |
|
|
$ |
31,587 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP financial measures to non-GAAP
financial measuresKMG provides non-GAAP financial
information to complement reported GAAP results. KMG believes that
analysis of our financial performance would be enhanced by an
understanding of the factors underlying that performance and our
judgments about the likelihood that particular factors will repeat.
We define adjusted EBITDA as earnings from operations before
interest, taxes, depreciation, amortization, acquisition and
integration expenses, restructuring and realignment charges and
other relevant items.
KMG intends to continue to provide certain non-GAAP financial
information and the appropriate reconciliation to GAAP in its
financial results. As required by SEC rules, the tables below
present a reconciliation of our presented non-GAAP measures to the
most directly comparable GAAP measures. These non-GAAP measures
should be viewed as a supplement to, and not a substitute for, U.S.
GAAP measures of performance.
Table 1RECONCILIATION OF CONSOLIDATED
GAAP NET INCOME TO CONSOLIDATED ADJUSTED EBITDA
|
|
|
(in
thousands) |
Second QuarterFiscal
2018 |
Second QuarterFiscal
2017 |
Consolidated GAAP net
income |
$ |
25,337 |
|
$ |
6,486 |
Add back: |
|
|
Interest
expense, net |
|
5,086 |
|
|
172 |
Income
taxes |
|
(8,181 |
) |
|
2,097 |
Depreciation & amortization |
|
7,586 |
|
|
3,496 |
Loss on
the extinguishment of debt |
|
1,916 |
|
|
− |
Derivative fair value gain |
|
(3,024 |
) |
|
− |
Debt
repricing transaction costs |
|
602 |
|
|
− |
Acquisition & integration expenses |
|
119 |
|
|
501 |
Corporate
relocation expense |
|
− |
|
|
316 |
Restructuring charges, excluding accelerated depreciation |
|
(40 |
) |
− |
Consolidated adjusted
EBITDA |
$ |
29,401 |
|
$ |
13,068 |
|
|
|
|
(in
thousands) |
Six Months EndedJan. 31,
2018 |
Six Months Ended Jan. 31, 2017 |
Consolidated GAAP net
income |
$ |
31,187 |
|
$ |
12,227 |
Add back: |
|
|
Interest
expense, net |
|
13,180 |
|
|
349 |
Income
taxes |
|
(5,552 |
) |
|
5,089 |
Depreciation & amortization |
|
14,695 |
|
|
7,048 |
Loss on
the extinguishment of debt |
|
6,091 |
|
|
− |
Derivative fair value gain |
|
(3,873 |
) |
|
− |
Debt
repricing transaction costs |
|
602 |
|
|
− |
Acquisition & integration expenses |
|
530 |
|
|
584 |
Corporate
relocation expense |
|
− |
|
|
366 |
Restructuring charges, excluding accelerated depreciation |
|
69 |
|
− |
Consolidated adjusted
EBITDA |
$ |
56,929 |
|
$ |
25,663 |
|
Table 1ARECONCILIATION OF OPERATING
INCOME TO ADJUSTED EBITDANote that we do not allocate
certain financial statement line items below operating income to
our segments; as such, the reconciliations below only reflect the
reconciliation of our operating income by segment to our non-GAAP
measures.
|
|
|
|
|
Second Quarter
Fiscal 2018 |
Electronic |
|
Performance |
|
|
|
(in thousands) |
Chemicals |
|
Materials |
|
Corporate |
|
Total |
|
Operating
Income (Loss) |
$ |
12,730 |
|
$ |
12,810 |
|
$ |
(3,810 |
) |
$ |
21,730 |
|
Other income
(expense) |
|
(434 |
) |
|
(23 |
) |
|
(139 |
) |
|
(596 |
) |
Depreciation and
amortization |
|
2,760 |
|
|
4,287 |
|
|
539 |
|
|
7,586 |
|
Acquisition &
integration expenses |
|
— |
|
|
36 |
|
|
83 |
|
|
119 |
|
Debt repricing
costs |
|
— |
|
|
— |
|
|
602 |
|
|
602 |
|
Restructuring
charges |
|
(40 |
) |
|
— |
|
|
— |
|
|
(40 |
) |
Adjusted
EBITDA |
|
15,016 |
|
|
17,110 |
|
|
(2,725 |
) |
|
29,401 |
|
Corporate
allocation |
|
3,150 |
|
|
1,982 |
|
|
(5,132 |
) |
|
— |
|
Adjusted EBITDA
excl. corporate allocation |
$ |
18,166 |
|
$ |
19,092 |
|
$ |
(7,857 |
) |
$ |
29,401 |
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended January 31, 2018 |
Electronic |
|
Performance |
|
|
(in thousands) |
Chemicals |
|
Materials |
Corporate |
|
Total |
|
Operating
Income (Loss) |
$ |
23,988 |
|
$ |
24,394 |
$ |
(6,572 |
) |
$ |
41,810 |
|
Other income
(expense) |
|
(583 |
) |
|
55 |
|
(249 |
) |
|
(777 |
) |
Depreciation and
amortization |
|
5,554 |
|
|
8,168 |
|
973 |
|
|
14,695 |
|
Acquisition &
integration expenses |
|
— |
|
|
97 |
|
433 |
|
|
530 |
|
Debt repricing
transaction costs |
|
— |
|
|
— |
|
602 |
|
|
602 |
|
Restructuring
charges |
|
69 |
|
|
— |
|
— |
|
|
69 |
|
Adjusted
EBITDA |
|
29,028 |
|
|
32,714 |
|
(4,813 |
) |
|
56,929 |
|
Corporate
allocation |
|
6,069 |
|
|
3,929 |
|
(9,998 |
) |
|
— |
|
Adjusted EBITDA
excl. corporate allocation |
$ |
35,097 |
|
$ |
36,643 |
$ |
(14,811 |
) |
$ |
56,929 |
|
|
|
|
|
|
|
|
|
Second Quarter
Fiscal 2017 |
Electronic |
|
Performance |
|
|
|
(in thousands) |
Chemicals |
|
Materials |
|
Corporate |
|
Total |
|
Operating
Income (Loss) |
$ |
9,583 |
|
$ |
3,023 |
|
$ |
(3,566 |
) |
$ |
9,040 |
|
Other income
(expense) |
|
(148 |
) |
|
(75 |
) |
|
(62 |
) |
|
(285 |
) |
Depreciation and
amortization |
|
2,793 |
|
|
285 |
|
|
418 |
|
|
3,496 |
|
Acquisition &
integration expenses |
|
— |
|
|
— |
|
|
501 |
|
|
501 |
|
Corporate relocation
expense |
|
— |
|
|
— |
|
|
316 |
|
|
316 |
|
Adjusted
EBITDA |
|
12,228 |
|
|
3,233 |
|
|
(2,393 |
) |
|
13,068 |
|
Corporate
allocation |
|
3,329 |
|
|
842 |
|
|
(4,171 |
) |
|
— |
|
Adjusted EBITDA
excl. corporate allocation |
$ |
15,557 |
|
$ |
4,075 |
|
$ |
(6,564 |
) |
$ |
13,068 |
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended January 31, 2017 |
Electronic |
Performance |
|
|
|
(in thousands) |
Chemicals |
Materials |
|
Corporate |
|
Total |
|
Operating
Income (Loss) |
$ |
17,644 |
$ |
6,704 |
|
$ |
(6,628 |
) |
$ |
17,720 |
|
Other income
(expense) |
|
163 |
|
(99 |
) |
|
(119 |
) |
|
(55 |
) |
Depreciation and
amortization |
|
5,645 |
|
572 |
|
|
831 |
|
|
7,048 |
|
Acquisition &
integration expenses |
|
— |
|
— |
|
|
584 |
|
|
584 |
|
Corporate relocation
expense |
|
— |
|
— |
|
|
366 |
|
|
366 |
|
Adjusted
EBITDA |
|
23,452 |
|
7,177 |
|
|
(4,966 |
) |
|
25,663 |
|
Corporate
allocation |
|
6,658 |
|
1,684 |
|
|
(8,342 |
) |
|
— |
|
Adjusted EBITDA
excl. corporate allocation |
$ |
30,110 |
$ |
8,861 |
|
$ |
(13,308 |
) |
$ |
25,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2RECONCILIATION OF NET INCOME TO
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER
SHARE (in thousands)
|
|
|
Three Months Ended |
|
January 31, |
|
|
2018 |
|
|
|
2017 |
|
Net income |
$ |
25,337 |
|
|
$ |
6,486 |
|
Items impacting pre-tax
income: |
|
|
|
|
|
|
|
|
|
Impact of
the Tax Cuts and Jobs Act |
|
(11,005 |
) |
|
|
− |
|
Acquisition & integration expenses |
|
119 |
|
|
|
501 |
|
Corporate
relocation expense |
|
− |
|
|
|
316 |
|
Restructuring charges |
|
(40 |
) |
|
|
− |
|
Derivative fair value gain |
|
(3,024 |
) |
|
|
− |
|
Amortization of Flowchem intangible assets |
|
3,224 |
|
|
|
− |
|
Loss on
the extinguishment of debt |
|
1,916 |
|
|
|
− |
|
Debt
repricing transaction costs |
|
602 |
|
|
|
− |
|
Amortization of debt discounts and financing costs |
|
335 |
|
|
|
− |
|
Income
taxes* |
|
(846 |
) |
|
|
(286 |
) |
Adjusted net
income |
$ |
16,618 |
|
|
$ |
7,017 |
|
Adjusted diluted
earnings per share |
$ |
1.04 |
|
|
$ |
0.57 |
|
Weighted average
diluted shares outstanding |
|
15,903 |
|
|
|
12,293 |
|
|
|
|
|
|
|
|
|
* For the
three months ended January 31, 2018, represents the aggregate
tax-effect assuming a 27% tax rate of the items impacting pre-tax
income, which is our estimated U.S. statutory federal tax rate for
fiscal year 2018 following the enactment of the Tax Cuts and Jobs
Act in December 2017. For the three months ended January 31, 2017,
represents the aggregate tax-effect assuming a 35% tax rate of
items impacting pre-tax income. |
|
|
|
|
Six Months Ended |
|
|
January 31, |
|
|
|
2018 |
|
|
|
2017 |
|
Net income |
$ |
31,187 |
|
|
$ |
12,227 |
|
Items impacting pre-tax
income: |
|
|
|
|
|
|
|
Impact of
the Tax Cuts and Jobs Act |
|
(11,005 |
) |
|
|
− |
|
Acquisition & integration expenses |
|
530 |
|
|
|
584 |
|
Corporate
relocation expense |
|
− |
|
|
|
366 |
|
Restructuring charges |
|
69 |
|
|
|
− |
|
Derivative fair value gain |
|
(3,873 |
) |
|
|
− |
|
Amortization of Flowchem intangible assets |
|
6,115 |
|
|
|
− |
|
Loss on
the extinguishment of debt |
|
6,091 |
|
|
|
− |
|
Debt
repricing transaction costs |
|
602 |
|
|
|
− |
|
Amortization of debt discounts and financing costs |
|
828 |
|
|
|
− |
|
Income
taxes* |
|
(2,798 |
) |
|
|
(332 |
) |
Adjusted net
income** |
$ |
27,746 |
|
|
$ |
12,845 |
|
Adjusted diluted
earnings per share ** |
$ |
1.94 |
|
|
$ |
1.05 |
|
Weighted average
diluted shares outstanding |
|
14,285 |
|
|
|
12,203 |
|
* For
the six months ended January 31, 2018, represents the aggregate
tax-effect assuming a 27% tax rate of the items impacting pre-tax
income, which is the estimated blended statutory tax rate for
fiscal year 2018. For the six months ended January 31, 2017,
represents the aggregate tax-effect assuming a 35% tax rate of
items impacting pre-tax income.** Adjusted net income and adjusted
diluted earnings per share for the first quarter of fiscal 2018,
which are included in the six months ended January 31, 2018, have
been adjusted to reflect the assumed 27% tax rate for fiscal year
2018. |
|
|
|
Table 2ARECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
|
|
Second Quarter
Fiscal 2018 |
KMG Chemicals, Inc. |
Dollars in thousands,
except EPS |
|
|
Operating |
|
Net |
|
Diluted Earnings |
Income |
|
Margin |
|
Income |
|
Per Share |
GAAP measure |
$ |
21,730 |
|
|
19.1 |
% |
|
$ |
25,337 |
|
|
$ |
1.59 |
|
Amortization of
Flowchem intangible assets |
|
3,224 |
|
|
2.8 |
% |
|
|
2,354 |
|
|
|
0.15 |
|
Debt repricing
transaction costs |
|
602 |
|
|
0.5 |
% |
|
|
439 |
|
|
|
0.03 |
|
Acquisition &
integration expenses |
|
119 |
|
|
0.1 |
% |
|
|
87 |
|
|
|
0.01 |
|
Restructuring
charges |
|
(40 |
) |
|
(0.0 |
%) |
|
|
(30 |
) |
|
|
(0.01 |
) |
Impact of the Tax Cuts
and Jobs Act |
|
— |
|
|
— |
|
|
|
(11,005 |
) |
|
|
(0.69 |
) |
Derivative fair value
gain |
|
— |
|
|
— |
|
|
|
(2,208 |
) |
|
|
(0.14 |
) |
Loss on the
extinguishment of debt |
|
— |
|
|
— |
|
|
|
1,399 |
|
|
|
0.09 |
|
Amortization of debt
discounts and financing costs |
|
— |
|
|
— |
|
|
|
245 |
|
|
|
0.01 |
|
Non-GAAP measure |
$ |
25,635 |
|
|
22.5 |
% |
|
$ |
16,618 |
|
|
$ |
1.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended January 31, 2018 |
KMG Chemicals, Inc. |
Dollars in thousands,
except EPS |
|
|
Operating |
|
Net |
|
Diluted Earnings |
Income |
|
Margin |
|
Income |
|
Per Share |
GAAP measure |
$ |
41,810 |
|
18.6 |
% |
|
$ |
31,187 |
|
|
$ |
2.18 |
|
Amortization of
Flowchem intangible assets |
|
6,115 |
|
2.7 |
% |
|
|
4,464 |
|
|
|
0.31 |
|
Debt repricing
transaction costs |
|
602 |
|
0.3 |
% |
|
|
439 |
|
|
|
0.03 |
|
Acquisition &
integration expenses |
|
530 |
|
0.2 |
% |
|
|
387 |
|
|
|
0.03 |
|
Restructuring
charges |
|
69 |
|
0.1 |
% |
|
|
51 |
|
|
|
0.01 |
|
Impact of the Tax Cuts
and Jobs Act |
|
— |
|
— |
|
|
|
(11,005 |
) |
|
|
(0.77 |
) |
Loss on the
extinguishment of debt |
|
— |
|
— |
|
|
|
4,446 |
|
|
|
0.31 |
|
Derivative fair value
gain |
|
— |
|
— |
|
|
|
(2,827 |
) |
|
|
(0.20 |
) |
Amortization of debt
discounts and financing costs |
|
— |
|
— |
|
|
|
604 |
|
|
|
0.04 |
|
Non-GAAP measure |
$ |
49,126 |
|
21.9 |
% |
|
$ |
27,746 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
Fiscal 2017 |
KMG Chemicals, Inc. |
Dollars in thousands,
except EPS |
|
|
Operating |
|
Net |
|
Diluted Earnings |
Income |
|
Margin |
|
Income |
|
Per Share |
GAAP measure |
$ |
9,040 |
|
11.5 |
% |
|
$ |
6,486 |
|
$ |
0.53 |
Acquisition &
integration expenses |
|
501 |
|
0.6 |
% |
|
|
326 |
|
|
0.02 |
Corporate relocation
expense |
|
316 |
|
0.4 |
% |
|
|
205 |
|
|
0.02 |
Non-GAAP measure |
$ |
9,857 |
|
12.5 |
% |
|
$ |
7,017 |
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended January 31, 2017 |
KMG Chemicals, Inc. |
Dollars in thousands,
except EPS |
|
|
Operating |
|
Net |
|
Diluted Earnings |
Income |
|
Margin |
|
Income |
|
Per Share |
GAAP measure |
$ |
17,720 |
|
11.4 |
% |
|
$ |
12,227 |
|
$ |
1.00 |
Acquisition &
integration expenses |
|
584 |
|
0.4 |
% |
|
|
380 |
|
|
0.03 |
Corporate relocation
expense |
|
366 |
|
0.2 |
% |
|
|
238 |
|
|
0.02 |
Non-GAAP measure |
$ |
18,670 |
|
12.0 |
% |
|
$ |
12,845 |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
KMG Investor Relations
Eric Glover, 817-761-6006
eglover@kmgchemicals.com
Kerr Mcgee (NYSE:KMG)
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