Earnings Review and Free Research Report: KMG’s Quarterly Sales Grew 9%; Adjusted EPS Jumped 29%

Research Desk Line-up: Hawkins Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 29, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on KMG Chemicals, Inc. (NYSE: KMG), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=KMG, following the Company’s announcement of its third quarter fiscal 2017 financial results on June 13, 2017. The chemical maker reported its eleventh consecutive quarter of double-digit year-over-year growth in adjusted earnings per share. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Get more of our free earnings reports coverage from other constituents of the Specialty Chemicals industry. Pro-TD has currently selected Hawkins, Inc. (NASDAQ: HWKN) for due-diligence and potential coverage as the Company announced on May 31, 2017, its financial results for Q4 FY17 and full year FY17 which ended on April 2, 2017. Register for a free membership today, and be among the early birds that get access to our report on Hawkins when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on KMG; also brushing on HWKN. With the links below you can directly download the report of your stock of interest free of charge at:

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Earnings Reviewed

For the fiscal 2017 third quarter ended April 30, 2017, KMG’s consolidated sales grew 9% to $81.62 million compared to sales of $75.17 million in Q3 FY16. The Company’s sales numbers came in ahead of analysts’ expectations of $79.78 million.

For Q3 FY17, KMG’s gross profit margin was 39.9%, up 110 basis points from the same period last year, reflecting product mix and operating efficiencies. The Company’s distribution expense of $9.5 million increased by approximately $300,000 compared to the prior year due to the higher shipment volume. As a percentage of sales, distribution expense decreased to 11.6% compared to 12.2% in Q3 FY16.

During Q3 FY17, KMG’s SG&A increased by $1 million on a y-o-y basis, primarily reflecting expenses for the acquisition and integration of Sealweld and approximately $560,000 in expenses related to the proposed acquisition of Flowchem. The Company’s GAAP operating income surged 33% to $9.4 million. KMG posted record adjusted EBITDA of $14.0 million, up 24% from $11.2 million in Q3 FY16.

KMG’s GAAP net income was $6.1 million, or $0.49 per diluted share, in Q3 FY17 compared to $6.4 million, or $0.53 per diluted share, in Q3 FY16. The Company recorded a bargain purchase gain of $2.1 million, equivalent to $0.17 per diluted share, for the acquisition of NFC in Q3 FY16.

The Company’s adjusted net income was $6.5 million, up 31% from $4.9 million in Q3 FY16 and adjusted diluted earnings per share was $0.53 compared to $0.41 per share reported in the prior year’s same quarter, topping Wall Street’s expectations of $0.47 per share.

Segment Results

For Q3 FY17, KMG’s Electronic Chemicals segment reported sales of $68.1 million, up 2.3% on a y-o-y basis. Excluding a foreign currency translation impact of $1.2 million, the segment’s sales increased 4.0% to $69.3 million, driven by product volume growth. The Electronic Chemicals division’s operating income of $8.5 million, up 4.0% compared to $8.2 million in Q3 FY17, attributable to product volume growth and operating efficiencies. The segment’s operating margin improved to 12.5% compared to 12.3% in the year ago same period. The segment recorded adjusted EBITDA of $11.5 million compared to $10.7 million last year.

During Q3 FY17, KMG’s Performance Materials segment reported sales surged 59% to $13.5 million compared to $8.5 million in Q3 FY16, primarily due to higher sales of industrial lubricants, the contribution from Sealweld, and increased wood treating chemicals sales.

The segment’s operating income totaled $4.2 million, or 31.4% of sales, in the reported quarter compared to $2.9 million, or 33.4% of sales, in the prior year. The increase in operating income was due to higher volume in the industrial lubricants business, including the contribution from Sealweld, and higher volume in the wood treating chemicals business. The segment’s adjusted EBITDA was $4.8 million versus $3.2 million in Q3 FY16.

Cash Matters

During Q3 FY17, KMG’s cash flow from operations was $7.9 million compared to $8.5 million in Q2 FY17. The variance largely reflected the excess tax benefit realized in the previous quarter and the associated positive impact on net income in that period. For the 9-month period ending April 30, 2017, KMG’s operating cash flow was $27.3 million compared to $29.4 million for the 9 months ending April 30, 2016.

KMG’s cash and cash equivalents were $14.1 million as of April 30, 2017. The Company’s long-term debt was $34 million as of April 30, 2017, compared to $41 million as of January 31, 2017. During the reported quarter, the Company repaid $7 million of debt, bringing its fiscal 2017 year-to-date debt reduction to $18.8 million. KMG noted that it has repaid long-term debt by $38.8 million over the past 7 quarters.

For Q3 FY17, KMG’s capital expenditures were $3.3 million, up slightly from $2.7 million in Q2 FY17. For the fiscal year-to-date, the Company has invested $8.6 million on CapEx. KMG anticipates that CapEx for FY17 will be approximately $16 million to $17 million compared to its prior forecast of approximately $21 million.

Stock Performance

On Wednesday, June 28, 2017, the stock closed the trading session at $48.74, climbing 3.53% from its previous closing price of $47.08. A total volume of 129.79 thousand shares have exchanged hands, which was higher than the 3-month average volume of 119.52 thousand shares. KMG Chemicals’ stock price skyrocketed 11.89% in the last three months, 23.77% in the past six months, and 94.26% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 25.33%. The stock is trading at a PE ratio of 26.94 and has a dividend yield of 0.25%. At Wednesday’s closing price, the stock’s net capitalization stands at $579.52 million.

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