KMG Chemicals, Inc. (NASDAQ GS: KMGB), a global provider of specialty chemicals in carefully focused markets, today announced financial results for the fiscal 2012 first quarter ended October 31, 2011.
Net sales in the fiscal 2012 first quarter increased 18% to $73.3 million from $62.1 million in the first quarter of fiscal 2011. Operating income rose 17.1% to $6.5 million from $5.6 million in last year’s fiscal first quarter. KMG recorded net income of $3.5 million, or $0.31 per diluted share, for the first quarter of fiscal 2012, which was consistent with the first fiscal quarter of last year. Net income in the prior year first quarter was favorably impacted by a $410,000 reduction in income tax expense associated with the reversal of a portion of a valuation allowance related to our Italian subsidiary.
Neal Butler, President and CEO of KMG, commented, “As we have previously discussed, barring any substantial economic downturn we remain confident in our ability to generate significantly improved results in fiscal 2012 as compared to fiscal 2011. We believe that our operating income for the first three months of the new fiscal year supports that belief. Each of our three segments reported quarter-over-quarter sales increases. The positive impact of our Electronic Chemicals plant consolidation began to manifest itself in the fiscal 2012 first quarter, as segment operating profits rebounded to their highest levels since the first quarter of fiscal 2011. We ended the quarter in a strong financial position, with $5.1 million in cash, an improved debt profile, and net cash from operating activities of $13.6 million.”
Business Unit Overview and Trends
KMG previously had four reportable segments: electronic chemicals, penta, creosote, and animal health. The Company re-evaluated the criteria used to determine operating segments, and has concluded that its two wood treating product segments met the criteria of a single operating segment. Effective August 1, 2011, KMG’s reportable segments were revised to reflect a change from four to three reportable segments: electronic chemicals, wood treating chemicals, and animal health. Prior period information has been reclassified to conform to the current period presentation.