|Three Months Ended July 31||Year Ended July 31|
|Net Sales / % of Total||Operating Income||Net Sales / % of Total||Operating Income|
|Electronic Chemicals||$||40.2 / 54||%||$||36.5 / 59||%||$||.262||$||2.8||$||151.5 / 57||%||$||112.0 / 54||%||$||6.2||$||8.4|
|Wood Treating Chemicals||$||30.7 / 42||%||$||22.0 / 35||%||$||3.4||$||4.7||$||104.1 / 39||%||$||86.0 / 41||%||$||14.8||$||23.0|
|Animal Health||$||3.3 / 4||%||$||4.0 / 6||%||$||.002||$||(.031||)||$||10.8 / 4||%||$||10.6 / 5||%||$||.061||$||(.086||)|
KMG Chemicals, Inc. (NASDAQ GS: KMGB), a global provider of specialty chemicals in carefully focused markets, today announced financial results for its fiscal fourth quarter and year ended July 31, 2011. Consolidated Overview Net sales in the fiscal 2011 fourth quarter increased 19% to $74.2 million from $62.5 million in the fourth quarter of 2010. Operating income in the fiscal 2011 fourth quarter was $2.7 million compared to $6.3 million in the fourth quarter of last year. KMG recorded net income of $1.2 million, or $0.10 per diluted share, for the fourth quarter of fiscal 2011, compared to net income of $3.4 million, or $0.30 per diluted share, in the fourth quarter of last year. For the 2011 fiscal year, net sales were $266.4 million, operating income was $17.7 million, and net income was $9.7 million or $0.85 per diluted share. This compared to net sales of $208.6 million, operating income of $27.0 million, and net income of $15.3 million, or $1.34 per diluted share, in fiscal 2010. Higher sales for the fiscal 2011 fourth quarter and full year were due primarily to increased sales of Electronic Chemicals and higher volumes of Creosote in the Wood Treating Chemicals business. The operating income declines in the fiscal 2011 fourth quarter and full year were primarily driven by higher raw material costs and distribution costs, along with integration expenses associated with the consolidation of manufacturing following the latest Electronic Chemicals acquisition. As previously announced, the Electronic Chemicals plant consolidation has been completed and the resulting operating efficiencies are expected to be realized in fiscal 2012. Moreover, the pricing actions taken by KMG in the second half of fiscal 2011 to offset raw material cost increases are expected to benefit margins in fiscal 2012. Business Unit Overview and Trends Net Sales & Operating Income by Business ($ in millions; includes effects of rounding)
Allocation of Corporate Overhead During the first quarter of fiscal year 2011, the Company changed the method it uses to allocate corporate overhead costs to its reportable segments. The result is that all corporate overhead is now allocated except for those amounts associated with the Company’s operation as a public entity, stock-based compensation expenses and certain miscellaneous expenses. The costs are allocated based on segment net sales. The Company’s Wood Treating Chemicals business is comprised of its Penta and Creosote reportable segments. Its other reportable segments include Electronic Chemicals and Animal Health. Prior year segment operating income amounts have been revised to reflect the current method.