KMG Chemicals Reports Preliminary Second Quarter Financial Results

KMG Chemicals, Inc. (NASDAQ: KMGB), a global provider of specialty chemicals in carefully focused markets, today announced preliminary earnings expectations for the fiscal second quarter ended January 31, 2012, declared a 20% increase in the Company’s quarterly cash dividend, and scheduled the release of its second quarter financial results and conference call.

Neal Butler, President and CEO of KMG, stated, “We are pleased with the performance of the business for the fiscal 2012 second quarter and, barring any substantial economic downturn, remain confident in our ability to generate significantly improved results in fiscal 2012 as compared to fiscal 2011. Overall demand for our products remains healthy, we are realizing the anticipated post-consolidation efficiencies at our Electronic Chemicals business, and our financial position remains strong. However, during the fiscal 2012 second quarter, we incurred non-recurring expenses of approximately $1.5 million that unfavorably impacted our results. Those expenses related to waste disposal costs at our Tuscaloosa facility, discontinued operations at our Matamoros facility, and final inventory adjustments following our exit from a tolling arrangement in our Electronic Chemicals business. We therefore expect that net income for the second quarter of fiscal 2012 will approximate net income of $2.4 million, or $0.21 per diluted share, reported in the second quarter of fiscal 2011.”

Dividend Increase

KMG also announced that its Board of Directors has declared a 20% increase in the Company’s quarterly cash dividend to $0.03 per share from $0.025 per share. The $0.03 per share cash dividend is payable on March 16, 2012 to stockholders of record as of March 9, 2012. As of February 28, 2012 there were approximately 11.3 million KMGB common shares outstanding.

Mr. Butler commented, “The increase in our cash dividend reflects the confidence of our Board and management team in KMG’s future performance and long-term growth prospects.”

Second Quarter Results & Conference Call

KMG will further elaborate on its second quarter financial results on Friday, March 9, 2012, when it issues a news release prior to the open of the stock market and conducts its quarterly conference call, hosted by Neal Butler, and John Sobchak, CFO at 10:00 a.m. ET.

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