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KMG Reports Fourth Quarter and Full Year 2017 Financial Results

FORT WORTH, Texas, Oct. 16, 2017 (GLOBE NEWSWIRE) -- KMG (NYSE:KMG), a global provider of specialty chemicals and performance materials, today announced financial results for the fourth fiscal quarter and fiscal year ended July 31, 2017.

2017 Fourth Quarter Financial Highlights

  • Sales increased 28% from the fourth quarter of last year to a record $96.3 million.
  • GAAP diluted earnings per share was $0.43, up 39% compared to $0.31 per diluted share in the fourth quarter of fiscal 2016. GAAP EPS in 2017 was unfavorably impacted by $3.7 million in purchase price adjustments to acquired inventories, equivalent to $0.22 per diluted share.
  • Adjusted diluted earnings per share1 increased to a record $0.69 compared to $0.38 per share reported in the fourth quarter of fiscal 2016.
  • GAAP net income rose 43% to $5.3 million compared to $3.7 million in last year’s fourth quarter.
  • Adjusted EBITDA2 grew to a record $20.6 million, up from $11.7 million in the fourth quarter of fiscal 2016.

2017 Fiscal Year Financial Highlights

  • Sales increased 12% from the prior year to $333.4 million.
  • GAAP diluted earnings per share was a record $1.92, up 22% from fiscal 2016. GAAP EPS in 2017 was unfavorably impacted by $3.7 million in purchase price adjustments to acquired inventories, equivalent to $0.22 per diluted share.
  • Adjusted diluted earnings per share was a record $2.27, up 41% from the prior year.
  • GAAP net income of $23.6 million increased 27% from the prior year.
  • Adjusted EBITDA grew to a record $60.2 million, an increase of 33% from the prior year’s $45.4 million.

“Fiscal 2017 was a year of continued record financial performance and strategic growth for KMG,” said Chris Fraser, KMG chairman and CEO. “We generated record adjusted EBITDA for the third consecutive year and record earnings per share for the second consecutive year. We also acquired two premier businesses — Sealweld and Flowchem — that advanced our growth strategy and significantly expanded our breadth and capabilities in the global pipeline and energy markets.

“Our performance materials segment, which consists of our pipeline performance and wood treating chemicals businesses, generated fiscal 2017 sales of $56.8 million, a 56% increase from the prior year. Growth in this segment benefited from increased capital and maintenance spending in the energy industry that drove stronger demand for industrial lubricants, as well as a partial-year contribution from Sealweld and a partial-quarter contribution from Flowchem. Additionally, sales in our wood treating chemicals business improved from the prior year.

“Excluding a foreign currency translation impact of $3.1 million, fiscal 2017 sales in our electronic chemicals segment increased 7% from the prior year, representing our most robust sales growth in this segment over the past three years. Positive fundamentals within the global semiconductor industry enhanced our product volume growth, and we also benefited from our ongoing efforts to serve dynamic end markets, such as cloud computing, automotive and advanced logic.”

Mr. Fraser continued, “Fourth quarter adjusted diluted earnings per share of $0.69 increased 82% from the prior-year period and represented a quarterly record for KMG. Our fourth quarter results reflected continued strong performance across our global businesses, further improvements in our operational efficiency and a tax benefit.”

Mr. Fraser concluded, “Given solid fundamentals and favorable growth outlooks in our business segments, as well as full-year contributions from Sealweld and Flowchem, we project fiscal 2018 sales of $435-450 million and fiscal 2018 adjusted EBITDA of $110-115 million.”

Consolidated results

Fourth Quarter
Dollars in thousands, except EPS
Fiscal 2017 Fiscal 2016
As ReportedAdjustedAs ReportedAdjusted
(GAAP)(non-GAAP)3(GAAP)(non-GAAP)4
Net sales$96,260 $96,260 $75,301 $75,301
Operating income 10,245 14,628 7,085 7,849
Operating margin 10.6% 15.2% 9.4% 10.4%
Net income 5,338 8,535 3,743 4,483
Diluted earnings per share$0.43 $0.69 $ 0.31 $0.38


Fiscal Year ended July 31
Dollars in thousands, except EPS
Fiscal 2017 Fiscal 2016
As ReportedAdjustedAs ReportedAdjusted
(GAAP)(non-GAAP)5(GAAP)(non-GAAP)6
Net sales$333,442 $333,442 $297,978 $297,978
Operating income 37,333 43,300 27,571 31,218
Operating margin 11.2% 13.0% 9.3% 10.5%
Net income 23,633 27,859 18,675 19,219
Diluted earnings per share$1.92 $2.27 $1.57 $1.61

Business segment results

Electronic ChemicalsFourth QuarterFourth Quarter Full YearFull Year
Dollars in thousandsFiscal 2017Fiscal 2016Fiscal 2017Fiscal 2016
As ReportedAs ReportedAs ReportedAs Reported
(GAAP)(GAAP)(GAAP)(GAAP)
Net sales$71,792 $66,282 $276,621 $261,523
Operating income 9,132 8,214 35,285 32,141
Operating margin 12.7% 12.4% 12.8% 12.3%

For the fourth fiscal quarter, the Electronic Chemicals segment reported:

  • Sales of $71.8 million, up 8% from the fourth quarter of fiscal 2016. Excluding a foreign currency translation impact of $400,000, sales increased 9% year-over-year to $72.2 million. Product volume growth primarily drove the Q4 sales increase.
  • Operating income of $9.1 million, up 11% from $8.2 million in the same period of fiscal 2016. Operating income increased primarily due to product volume growth and operating efficiencies. Operating margin improved to 12.7% compared to 12.4% in the prior-year period.
  • Adjusted EBITDA7 of $12.9 million compared to $11.3 million last year.

For the fiscal 2017 year, the Electronic Chemicals segment reported:

  • Sales of $276.6 million, an increase of 6% compared to the prior year. Excluding a foreign currency translation impact of $3.1 million, sales grew 7% year-over-year. Product volume growth was the primary driver of the sales increase.
  • Operating income of $35.3 million, up 10% from $32.1 million in the prior year. Operating income increased due to product volume growth, a favorable product mix and operating efficiencies. Operating margin increased to 12.8% from 12.3% in the prior year.
  • Adjusted EBITDA8 of $48.8 million compared to $43.9 million in fiscal 2016.

Performance Materials
The Performance Materials segment consists of the pipeline performance business and the wood treating chemicals business.

Performance
Materials
Fourth QuarterFourth Quarter Full YearFull Year
Dollars in thousandsFiscal 2017Fiscal 2016Fiscal 2017Fiscal 2016
As ReportedAs ReportedAs ReportedAs Reported
(GAAP)(GAAP)(GAAP)(GAAP)
Net sales$24,468 $9,019 $56,821 $36,455
Operating income 2,877 3,210 13,804 12,631
Operating margin 11.8% 35.6% 24.3% 34.6%

For the fourth fiscal quarter, the Performance Materials segment reported:

  • Sales of $24.5 million, up 171% from $9.0 million in the same period a year ago. Sales growth reflected contributions from Sealweld and Flowchem, product volume growth in industrial lubricants and increased sales of wood treating chemicals.
  • Operating income of $2.9 million, or 11.8% of sales, compared to $3.2 million, or 35.6% of sales, last year. The decrease in operating income was due to the step-up in basis for acquired inventories, totaling $3.7 million, as required under purchase price accounting, as well as a $2.5 million increase in depreciation and amortization related to the acquisitions of Sealweld and Flowchem. For the same reasons, segment operating margins decreased to 11.8%, from 35.6% in the fourth quarter of 2016.
  • Adjusted EBITDA9 of $10.1 million compared to $3.4 million last year.

For the fiscal 2017 year, the Performance Materials segment reported:

  • Sales of $56.8 million, up 56% from the prior year. The sales increase was driven by the contributions from Sealweld and Flowchem, as well as product volume growth in industrial lubricants and increased sales of wood treating chemicals.
  • Operating income of $13.8 million, or 24.3% of sales, compared to $12.6 million, or 34.6% of sales, last year. Although operating income improved from the prior year due to the contributions from Sealweld and Flowchem, and stronger sales in the industrial lubricants and wood treating chemicals businesses, operating income and margin were unfavorably impacted by a $3.7 million purchase price adjustment to acquired inventories and a $2.7 million increase in depreciation and amortization expense.
  • Adjusted EBITDA10 of $22.3 million compared to $13.7 million last year.

Fiscal 2018 Outlook

  • Sales: Fiscal 2018 consolidated net sales are forecast to be $435-450 million.
  • Adjusted EBITDA: Fiscal 2018 adjusted EBITDA is forecast to be $110-115 million. Our fiscal 2018 adjusted EBITDA forecast includes approximately $6.5 million in stock-based compensation expense.
  • Depreciation and amortization: Depreciation and amortization expense is forecast to be approximately $21 million.
  • Capital expenditures: Capital expenditures are forecast to be approximately $29 million, including 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 with 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 charges and acquisition and integration-related expenses.

Conference call
Date: Monday, October 16, 2017
Time: 5:00 p.m. ET
Dial in: 844-316-8066 or 703-736-7353
Participant passcode: 92450504

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 October 16, 2017. To access the call, dial 855-859-2056 or 404-537-3406 using participant passcode 92450504.

About KMG
KMG 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.
9 Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.
10 Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.


KMG CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Year Ended
July 31, July 31,
2017 2016 2017 2016
Net sales $96,260 $75,301 $333,442 $297,978
Cost of sales 59,518 46,444 203,304 182,470
Gross profit 36,742 28,857 130,138 115,508
Distribution expenses 9,989 8,861 38,318 36,986
Selling, general and administrative expenses 16,558 12,680 54,467 49,192
Restructuring charges (50) 231 20 1,629
Realignment charges 130
Operating income 10,245 7,085 37,333 27,571
Other (expense) income
Interest expense, net (4,167) (194) (4,817) (799)
Loss on the extinguishment of debt (353) (353)
Gain on purchase of NFC (243) 1,826
Other, net 190 (125) 279 (368)
Total other (expense) income, net (4,330) (562) (4,891) 659
Income before income taxes 5,915 6,523 32,442 28,230
Provision for income taxes (577) (2,780) (8,809) (9,555)
Net income$5,338 $3,743 $23,633 $18,675
Earnings per share:
Net income per common share basic$0.45 $0.32 $1.99 $1.59
Net income per common share diluted$0.43 $0.31 $1.92 $1.57
Weighted average shares outstanding:
Basic 11,890 11,735 11,885 11,719
Diluted 12,436 11,937 12,286 11,926



KMG CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share amounts)
July 31,July 31,
2017 2016
Assets
Current assets
Cash and cash equivalents$20,708 $12,428
Accounts receivable
Trade, net of allowances of $263 at July 31, 2017 and $210 at July 31, 2016 51,168 33,324
Other 6,168 5,572
Inventories, net 46,482 37,401
Prepaid expenses and other 8,617 6,623
Total current assets 133,143 95,348
Property, plant and equipment, net 105,435 79,739
Goodwill 224,391 22,228
Intangible assets, net 320,401 33,906
Restricted cash 1,000
Other assets, net 9,061 4,807
Total assets$792,431 $237,028
Liabilities & stockholders’ equity
Current liabilities
Accounts payable$29,570 $26,418
Accrued liabilities 12,456 11,252
Employee incentive accrual 7,713 5,999
Current portion of long-term debt 3,167
Total current liabilities 52,906 43,669
Long-term debt 523,102 35,800
Deferred tax liabilities 37,944 9,948
Other long-term liabilities 4,763 4,422
Total liabilities 618,715 93,839
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, 11,889,649 shares issued and outstanding at July 31, 2017 and 11,877,282 shares issued and outstanding at July 31, 2016 119 119
Additional paid-in capital 42,535 36,553
Accumulated other comprehensive loss (9,712) (12,047)
Retained earnings 140,774 118,564
Total stockholders’ equity 173,716 143,189
Total liabilities and stockholders’ equity$792,431 $237,028


KMG CHEMICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
July 31,
2017 2016
Cash flows from operating activities
Net income $23,633 $18,675
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization 16,964 14,534
Non-cash restructuring and realignment charges 295
Loss on extinguishment of debt 353
Amortization of loan costs included in interest expense 401 167
Stock-based compensation expense 6,259 4,836
Allowance for excess and obsolete inventory 22 173
Gain on NFC acquisition (1,826)
Gain on equipment disposition (200)
Other (156) 81
Deferred income tax expense/(benefit) (1,090) 258
Tax expense/(benefit) from stock-based awards (694) (43)
Changes in operating assets and liabilities
Accounts receivable — trade (3,146) 5,154
Accounts receivable — other 254 (1,889)
Inventories 2,870 4,348
Other current and noncurrent assets (1,500) 1,221
Accounts payable (1,096) (9,226)
Accrued liabilities and other 2,049 4,276
Net cash provided by operating activities 44,923 41,034
Cash flows from investing activities
Additions to property, plant and equipment (13,074) (14,358)
Additions to product registration intangibles (753)
Purchase of NFC, net of cash acquired (2,679)
Purchase of Sealweld, net of cash acquired (16,599)
Purchase of Flowchem, net of cash acquired (495,000)
Proceeds from insurance claim 1,251
Net cash used in investing activities (524,175) (17,037)
Cash flows from financing activities
Deferred financing costs (15,323)
Proceeds from borrowings under credit facility 17,000 2,800
Net payments under credit facility (52,800) (20,000)
Proceeds from term loan 550,000
Principal payments on borrowings on term loans (10,000)
Tax benefit from stock-based awards 43
Cash payments related to tax withholdings from stock-based awards (277)
Payment of dividends (1,423) (1,406)
Net cash provided by (used in) financing activities 487,177 (18,563)
Effect of exchange rate changes on cash (645) (523)
Net increase in cash, cash equivalents and restricted cash 7,280 4,911
Cash, cash equivalents and restricted cash at beginning of period 13,428 8,517
Cash, cash equivalents and restricted cash at end of period $20,708 $13,428

Reconciliation of GAAP financial measures to non-GAAP financial measures
KMG 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 1
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED ADJUSTED EBITDA

(in thousands)Fourth Quarter
Fiscal 2017
Fourth Quarter
Fiscal 2016
Consolidated GAAP net income$5,338 $3,743
Add back:
Interest expense, net 4,167 194
Loss on the extinguishment of debt 353
Provision for income taxes 577 2,780
Depreciation & amortization* 6,100 3,927
Gain on purchase of NFC 243
Acquisition & integration expenses 405 102
Corporate relocation expense 1 431
Restructuring charges, excluding accelerated depreciation (50) 231
Effect of purchase price accounting on acquired inventories valuation** 3,674
Consolidated adjusted EBITDA$20,565 $11,651
* Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows.
** Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories.


(in thousands)Year Ended
July 31, 2017
Year Ended
July 31, 2016
Consolidated GAAP net income$23,633$18,675
Add back (deduct):
Interest expense, net 4,817 799
Loss on the extinguishment of debt 353
Provision for income taxes 8,809 9,555
Depreciation & amortization* 16,964 14,829
Gain on purchase of NFC (1,826)
Acquisition & integration expenses 1,550 335
Corporate relocation expense 370 1,553
Restructuring & realignment charges,
excluding accelerated depreciation
20 1,464
Effect of purchase price accounting on acquired inventories valuation** 3,674
Consolidated adjusted EBITDA$60,190$45,384
* Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows.
** Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories.

Table 1A
RECONCILIATION OF OPERATING INCOME TO ADJUSTED EBITDA
Note 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.

Fourth Quarter Fiscal 2017Electronic Performance
(in thousands)ChemicalsMaterialsCorporate Total
Operating Income (Loss)$9,234$2,877 ($1,866)$10,245
Other income (expense), net 397 (101) (106) 190
Depreciation and amortization 3,282 2,821 (3) 6,100
Acquisition & integration expenses 12 819 (426) 405
Effect of purchase price accounting on acquired inventories valuation* 3,674 3,674
Restructuring charges (50) (50)
Corporate relocation expense 1 1
Adjusted EBITDA 12,924 10,090 (2,449) 20,565
Corporate allocation 3,896 1,006 (4,902)
Adjusted EBITDA excl. corporate allocation$16,820$11,096 ($7,351)$20,565
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories.


Year Ended July 31, 2017Electronic Performance
(in thousands)ChemicalsMaterialsCorporateTotal
Operating Income (Loss)$35,317$13,804 ($11,788)$37,333
Other income (expense), net 659 (167) (215) 277
Depreciation and amortization 12,772 4,192 18,616
Acquisition & integration expenses 20 819 712 1,550
Effect of purchase price accounting on acquired inventories valuation* 3,674 3,674
Restructuring charges 20 20
Corporate relocation expense 370 370
Adjusted EBITDA 48,768 22,322 (10,900) 60,190
Corporate allocation 12,894 3,282 (16,176)
Adjusted EBITDA excl. corporate allocation$61,662$25,604 ($27,076)$60,190
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories.


Fourth Quarter Fiscal 2016Electronic Performance
(in thousands)ChemicalsMaterialsCorporate Total
Operating Income (Loss)$8,214 $3,210 ($4,339)$7,085
Other income (expense), net (45) (45) (35) (125)
Depreciation and amortization 3,170 282 475 3,927
Acquisition & integration expenses 102 102
Restructuring charges* 231 231
Corporate relocation expense 431 431
Adjusted EBITDA 11,339 3,447 (3,135) 11,651
Corporate allocation 2,558 799 (3,357)
Adjusted EBITDA excl. corporate allocation$13,897 $4,246 ($6,492)$11,651
*Excludes depreciation


Year Ended July 31, 2016Electronic Performance
(in thousands)ChemicalsMaterialsCorporate Total
Operating Income (Loss)$32,141 $12,631 ($17,201)$27,571
Other income (expense), net (118) (120) (130) (368)
Depreciation and amortization 11,830 1,150 1,849 14,829
Acquisition & integration expenses 335 335
Restructuring & realignment charges* 1,464 1,464
Corporate relocation expense 1,553 1,553
Adjusted EBITDA 43,853 13,661 (12,130) 45,384
Corporate allocation 10,337 3,371 (13,708)
Adjusted EBITDA excl. corporate allocation$54,190 $17,032 ($25,838)$45,384
* Excludes depreciation

Table 2
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE

(in thousands)Three Months Ended
July 31,
2017 2016
Net income$5,338 $3,743
Items impacting pre-tax income:
Acquisition & integration expenses 405 102
Loss on the extinguishment of debt 353
Corporate relocation expense 1 431
Gain on purchase of NFC 243
Restructuring & realignment charges (50) 231
Effect of purchase price accounting on acquired inventories valuation* 3,674
Provision for income taxes** (1,186) (267)
Adjusted net income$8,535 $4,483
Adjusted diluted earnings per share$ 0.69 $ 0.38
Weighted average diluted shares outstanding 12,436 11,937
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories. Only 73% of the purchase price adjustment is deductible for income taxes, and has therefore been included in the calculation of the tax-effect of the items impacting pre-tax income.
** Represents the aggregate tax-effect assuming a 35% tax rate of the items impacting pre-tax income, except for the gain on the purchase of NFC, which is not a recognized gain for tax purposes.


(in thousands)Year Ended
July 31,
2017 2016
Net income$23,633 $18,675
Items impacting pre-tax income:
Acquisition & integration expenses 1,550 335
Loss on extinguishment of debt 353
Corporate relocation expense 370 1,553
Gain on purchase of NFC (1,826)
Restructuring & realignment charges 20 1,759
Effect of purchase price accounting on acquired
inventories valuation*
3,674
Provision for income taxes** (1,741) (1,277)
Adjusted net income$27,859 $19,219
Adjusted diluted earnings per share$2.27 $1.61
Weighted average diluted shares outstanding 12,286 11,926
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories. Only 73% of the purchase price adjustment is deductible for income taxes, and has therefore been included in the calculation of the tax-effect of the items impacting pre-tax income.
** Represents the aggregate tax-effect assuming a 35% tax rate of the items impacting pre-tax income, except for the gain on the purchase of NFC, which is not a recognized gain for tax purposes.

Table 2A
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Fourth Quarter Fiscal 2017KMG Chemicals, Inc.
Dollars in thousands, except EPS
Operating Net Diluted Earnings
Income Margin Income Per Share
GAAP measure$10,245 10.6% $5,338 $0.43
Acquisition & integration expenses 405 0.4% 263 0.02
Loss on the extinguishment of debt 353 0.4% 230 0.02
Restructuring & realignment charges (50) (0.0%) (32) 0.00
Corporate relocation expense 1 0.0% 1 0.00
Effect of purchase price accounting on acquired inventories valuation* 3,674 3.8% 2,735 0.22
Non-GAAP measure$14,628 15.2% $8,535 $0.69
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories. Only 73% of the purchase price adjustment is deductible for income taxes, and has therefore been included in the calculation of the tax-effect of the items impacting pre-tax income.


Year Ended July 31, 2017 KMG Chemicals, Inc.
Dollars in thousands, except EPS
Operating Net Diluted Earnings
Income Margin Income Per Share
GAAP measure$37,333 11.2% $23,633 $1.92
Acquisition & integration expenses 1,550 0.5% 1,008 0.08
Loss on the extinguishment of debt 353 0.1% 229 0.02
Restructuring & realignment charges 20 0.0% 13 0.01
Corporate relocation expense 370 0.1% 241 0.02
Effect of purchase price accounting on acquired inventories valuation* 3,674 1.1% 2,735 0.22
Non-GAAP measure$43,300 13.0% $27,859 $2.27
* Higher costs of goods sold for our performance materials segment related to the fair value adjustment in purchase accounting for acquired inventories. Only 73% of the purchase price adjustment is deductible for income taxes, and has therefore been included in the calculation of the tax-effect of the items impacting pre-tax income.


Fourth Quarter Fiscal 2016KMG Chemicals, Inc.
Dollars in thousands, except EPS
Operating Net Diluted Earnings
Income Margin Income Per Share
GAAP measure$7,085 9.4% $3,743 $0.31
Acquisition & integration expenses 102 0.1% 66 0.01
Restructuring charges 231 0.3% 150 0.01
Gain on purchase of NFC 0.0% 243 0.02
Corporate relocation expense 431 0.6% 281 0.03
Non-GAAP measure$7,849 10.4% $4,483 $0.38


Year Ended July 31, 2016 KMG Chemicals, Inc.
Dollars in thousands, except EPS
Operating Net Diluted Earnings
Income Margin Income Per Share
GAAP measure$27,571 9.3% $18,675 $1.57
Acquisition & integration expenses 335 0.1% 218 0.02
Restructuring & realignment charges 1,759 0.6% 1,143 0.09
Gain on purchase of NFC 0.0% (1,826) (0.15)
Corporate relocation expense 1,553 0.5% 1,009 0.08
Non-GAAP measure$31,218 10.5% $19,219 $1.61

KMG Investor Relations
Eric Glover, 817-761-6006
eglover@kmgchemicals.com

Source:KMG Chemicals, Inc.