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KMG Chemicals, Inc. (NYSE: KMG), a global provider of specialty chemicals in select markets, today announced financial results for its fourth fiscal quarter and fiscal year ended July 31, 2013.
2013 Fourth Fiscal Quarter Summary
Net sales were $81.1 million, up 19.9% from the comparable quarter in fiscal 2012. Fourth quarter sales included two months of contribution from the acquisition of OM Group’s Ultra Pure Chemicals (UPC) business.
Operating income was $2.5 million, including the impact of $660,000 of UPC acquisition expenses, $577,000 of UPC integration expenses and $1.5 million of CEO transition expenses. Excluding these expenses, fourth quarter operating income was $5.3 million.
GAAP diluted earnings per share was $0.06 vs. $0.33 per share reported in last year’s fourth fiscal quarter.
Adjusted (non-GAAP) diluted earnings per share, which excludes acquisition, integration and CEO transition expenses, was $0.28. In addition to the items previously identified, fourth quarter EPS was also adversely impacted by an increase to tax expense of $682,000 associated with the requirement to capitalize for tax purposes all of the previously incurred expenses associated with the UPC acquisition. The tax impact was included in the adjustment for acquisition-related expenses.
2013 Fiscal Year Summary
Net sales were $263.3 million, a 3.4% decrease from $272.7 million in fiscal 2012. Despite an increase in net sales from the UPC acquisition, net sales were down in the aggregate because of weak demand in electronic chemicals in North America beginning in the second quarter of the fiscal year, and because of reduced sales of creosote.
Operating income was $17.2 million vs. $25.4 million in fiscal 2012. Fiscal 2013 operating income was impacted by $2.1 million of UPC acquisition expenses, $577,000 of UPC integration expenses and $1.5 million of CEO transition expenses. Excluding these expenses, operating income was $21.3 million.
GAAP diluted earnings per share was $0.81 vs. $1.20 reported in fiscal 2012.
Adjusted diluted earnings per share, which exclude acquisition, integration and CEO transition expenses, including the aforementioned tax effect, was $1.11.
Net cash provided by operating activities was $20.3 million vs. $25.2 million in fiscal 2012.
“Our fiscal 2013 financial results did not meet our expectations, reflecting challenging market conditions in both our Electronic Chemicals and Wood Treating Chemicals businesses. We also incurred significant expenses related to the acquisition of OM Group’s UPC subsidiaries and KMG’s change in leadership,” said Chris Fraser, Chairman, President and CEO of KMG.