FORT WORTH, Texas, March 13, 2017 (GLOBE NEWSWIRE) -- KMG (NYSE:KMG), a global provider of specialty chemicals, today announced financial results for the fiscal 2017 second quarter ended January 31, 2017.
2017 Second Quarter Financial Highlights
- GAAP diluted earnings per share increased 61% to $0.53 from $0.33 per diluted share in the second quarter of fiscal 2016.
- Adjusted diluted earnings per share1 reached a record $0.57 compared to $0.40 per share reported in the second quarter of last year.
- GAAP net income increased 63% year-over-year to a record $6.5 million.
- Adjusted EBITDA2 was a record $13.1 million, up 18% from $11.0 million in the second quarter of fiscal 2016.
Chris Fraser, KMG chairman and chief executive officer, said, “Driven by broad-based strength across our global operations, KMG achieved outstanding results in the second quarter of fiscal 2017. In what is typically a slower seasonal quarter, KMG’s sales grew 3% sequentially and 12% year-over-year to $79.1 million, and GAAP net income increased 63% year-over-year to $6.5 million. As a result, adjusted EBITDA grew 18% from the prior-year period to $13.1 million and adjusted earnings per share was a record $0.57.”
Mr. Fraser continued, “Second quarter sales in our electronic chemicals segment grew 12% year-over-year to a record $69.8 million, as we experienced robust shipment volumes in each of our major geographic regions. Strengthened global silicon wafer production, coupled with our expanded participation in higher growth semiconductor end markets and global distribution capabilities, drove strong segment sales growth. Additionally, segment operating income and margins both reached record levels in the second quarter, underscoring our enhanced operational efficiency and continued focus on cost improvements.
“Our other chemicals segment reported 12% year-over-year sales growth to $9.3 million, primarily reflecting stronger demand for industrial lubricants against a backdrop of improving fundamentals within the energy industry.
“Considering our strong performance in the first half of fiscal 2017, as well as our expectations for continued growth in the second half, we are raising our fiscal 2017 adjusted EBITDA guidance to $51-53 million, up from our prior guidance of $47-49 million.”
Mr. Fraser concluded, “Our recent acquisition of Sealweld, a premier supplier of high-performance products and services to global pipeline operators, significantly expands our presence and customer reach in the industrial lubricants market and will be accretive to KMG’s financial results starting in the third quarter. We remain excited about the long-term growth opportunity in industrial lubricants and continue to evaluate additional value-creating acquisition opportunities that will further enhance our presence and capabilities in this market.”
Consolidated results
| Second quarter Dollars in thousands, except EPS | Fiscal 2017 | Fiscal 2016 | |||||||||||
| As Reported | Adjusted | As Reported | Adjusted | ||||||||||
| (GAAP) | (non-GAAP)3 | (GAAP) | (non-GAAP)4 | ||||||||||
| Net sales | $ | 79,071 | $ | 79,071 | $ | 70,859 | $ | 70,859 | |||||
| Operating income | 9,040 | 9,857 | 6,137 | 7,421 | |||||||||
| Operating margin | 11.4 | % | 12.5 | % | 8.7 | % | 10.5 | % | |||||
| Net income | 6,486 | 7,017 | 3,979 | 4,814 | |||||||||
| Diluted earnings per share | $ | 0.53 | $ | 0.57 | $ | 0.33 | $ | 0.40 | |||||
| Six months ended January 31 Dollars in thousands, except EPS | Fiscal 2017 YTD | Fiscal 2016 YTD | |||||||||||
| As Reported | Adjusted | As Reported | Adjusted | ||||||||||
| (GAAP) | (non-GAAP)5 | (GAAP) | (non-GAAP)6 | ||||||||||
| Net sales | $ | 155,566 | $ | 155,566 | $ | 147,509 | $ | 147,509 | |||||
| Operating income | 17,720 | 18,670 | 13,457 | 15,337 | |||||||||
| Operating margin | 11.4 | % | 12.0 | % | 9.1 | % | 10.4 | % | |||||
| Net income | 12,227 | 12,844 | 8,570 | 9,792 | |||||||||
| Diluted earnings per share | $ | 1.00 | $ | 1.05 | $ | 0.72 | $ | 0.82 | |||||
Business segment results
| Electronic Chemicals | Second Quarter | Second Quarter | First Half | First Half | |||||||||
| Dollars in thousands | Fiscal 2017 | Fiscal 2016 | Fiscal 2017 | Fiscal 2016 | |||||||||
| As Reported | As Reported | As Reported | As Reported | ||||||||||
| (GAAP) | (GAAP) | (GAAP) | (GAAP) | ||||||||||
| Net sales | $ | 69,766 | $ | 62,521 | $ | 136,688 | $ | 128,603 | |||||
| Operating income | 9,583 | 8,470 | 17,644 | 15,744 | |||||||||
| Operating margin | 13.7 | % | 13.5 | % | 12.9 | % | 12.2 | % | |||||
For the second fiscal quarter, the Electronic Chemicals segment reported:
- Sales of $69.8 million, up 11.6% from the second quarter of fiscal 2016. Excluding a foreign currency translation impact of $1.1 million, sales increased 13.0% year-over-year to $70.9 million. Strong product volume growth across all geographic regions drove the Q2 sales increase.
- Operating income of $9.6 million, up 12.9% from $8.5 million in the same period of fiscal 2016. Operating income increased primarily due to product volume growth. Operating margin improved to 13.7% compared to 13.5% in the prior-year period.
- Adjusted EBITDA7 of $12.2 million compared to $11.5 million last year.
Other Chemicals
The Other Chemicals segment includes the pentachlorophenol (“penta”) business and the industrial lubricants business.
| Other Chemicals | Second Quarter | Second Quarter | First Half | First Half | |||||||||
| Dollars in thousands | Fiscal 2017 | Fiscal 2016 | Fiscal 2017 | Fiscal 2016 | |||||||||
| As Reported | As Reported | As Reported | As Reported | ||||||||||
| (GAAP) | (GAAP) | (GAAP) | (GAAP) | ||||||||||
| Net sales | $ | 9,305 | $ | 8,338 | $ | 18,878 | $ | 18,906 | |||||
| Operating income | 3,023 | 2,804 | 6,704 | 6,568 | |||||||||
| Operating margin | 32.5 | % | 33.6 | % | 35.5 | % | 34.7 | % | |||||
For the second fiscal quarter, the Other Chemicals segment reported:
- Sales of $9.3 million versus $8.3 million in the same period a year ago, primarily reflecting improved sales of industrial lubricants.
- Operating income of $3.0 million, or 32.5% of sales, compared to $2.8 million, or 33.6% of sales, last year. The increase in operating income was primarily due to improved sales in the industrial lubricants business. Segment operating margins declined 110 basis points, reflecting product sales mix and higher raw materials costs.
- Adjusted EBITDA8 of $3.2 million versus $3.1 million last year.
Fiscal 2017 Outlook
- Sales: Fiscal 2017 consolidated net sales are forecast to be approximately $315-320 million, an increase from our prior forecast of $300-305 million. This revised sales forecast includes a projected negative foreign currency impact of approximately $4.5 million, unchanged from our prior estimate.
- Adjusted EBITDA: We forecast adjusted EBITDA of $51-53 million, an increase from our prior guidance of $47-49 million, reflecting stronger growth expectations in both our electronic chemicals other chemicals segments. Additionally, we anticipate a positive impact in the second half of the fiscal year from recently acquired Sealweld in our other chemicals segment. Our revised fiscal 2017 adjusted EBITDA forecast includes approximately $6.5 million in stock-based compensation expense, compared to our prior estimate of approximately $5 million, and a negative foreign currency impact of approximately $700,000, unchanged from prior guidance.
- Depreciation and Amortization: Depreciation and amortization expense is forecast to be approximately $15 million.
- Capital Expenditures: Capital expenditures are forecast to be approximately $21 million, in line with our prior estimate, and includes a portion of our planned capital investment in Singapore.
With respect to the Company’s full year guidance of Adjusted EBITDA, the Company is not able to provide a reconciliation of these fiscal 2017 non-GAAP financial measures to the most comparable GAAP measure without unreasonable efforts; certain items that are included have not yet occurred and cannot be reasonably predicted, and, accordingly, the probable significance of such items cannot be determined at this time. The most comparable GAAP measure and reconciling information that is unavailable, or not reasonably predictable, would include restructuring and realignment charges and acquisition and integration-related expenses.
Conference call
Date: Monday, March 13, 2017
Time: 5:00 p.m. ET
Dial in: 877-789-6981 or 541-797-2420
Participant passcode: 73076000
The conference call will be webcast live via the “Investors” section of the Company’s website at http://kmgchemicals.com.
If you are unable to listen live, the conference call will be archived on the KMG website. A telephone replay of the call will also be available for one week, starting at 8:00 p.m. ET on March 13, 2017. To access the call, dial 855-859-2056 (domestic) or 404-537-3406 (international) using participant passcode 73076000.
About KMG
KMG Chemicals, Inc., through its subsidiaries, produces and distributes specialty chemicals to select markets. The Company grows by acquiring and optimizing stable chemical product lines and businesses with established production processes. For more information, visit the Company's website at http://kmgchemicals.com.
The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements as to the future performance of the company. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development acceptance, the impact of competitive services and pricing and general economic risks and uncertainties.
____________________________________
1 Non-U.S. GAAP measure. See Table 2 for reconciliation.
2 Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.
3 Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.
4 Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.
5 Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.
6 Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.
7 Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.
8 Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| January 31, | January 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Net sales | $ | 79,071 | $ | 70,859 | $ | 155,566 | $ | 147,509 | |||||||
| Cost of sales | 47,869 | 42,626 | 94,681 | 90,016 | |||||||||||
| Gross profit | 31,202 | 28,233 | 60,885 | 57,493 | |||||||||||
| Distribution expenses | 9,770 | 8,819 | 18,872 | 18,948 | |||||||||||
| Selling, general and administrative expenses | 12,392 | 12,722 | 24,293 | 23,937 | |||||||||||
| Restructuring charges | − | 555 | − | 1,021 | |||||||||||
| Realignment charges | − | − | − | 130 | |||||||||||
| Operating income | 9,040 | 6,137 | 17,720 | 13,457 | |||||||||||
| Other (expense) income | |||||||||||||||
| Interest expense, net | (172 | ) | (252 | ) | (349 | ) | (404 | ) | |||||||
| Other, net | (285 | ) | 149 | (55 | ) | 132 | |||||||||
| Total other (expense) income, net | (457 | ) | (103 | ) | (404 | ) | (272 | ) | |||||||
| Income before income taxes | 8,583 | 6,034 | 17,316 | 13,185 | |||||||||||
| Provision for income taxes | (2,097 | ) | (2,055 | ) | (5,089 | ) | (4,615 | ) | |||||||
| Net income | $ | 6,486 | $ | 3,979 | 12,227 | $ | 8,570 | ||||||||
| Earnings per share: | |||||||||||||||
| Net income per common share basic | $ | 0.55 | $ | 0.34 | $ | 1.03 | $ | 0.73 | |||||||
| Net income per common share diluted | $ | 0.53 | $ | 0.33 | $ | 1.00 | $ | 0.72 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 11,882 | 11,717 | 11,881 | 11,707 | |||||||||||
| Diluted | 12,293 | 11,915 | 12,203 | 11,890 | |||||||||||
| KMG CHEMICALS, INC. AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except for share and per share amounts) | |||||||
| January 31, | July 31, | ||||||
| 2017 | 2016 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 30,587 | $ | 12,428 | |||
| Restricted cash | 1,000 | − | |||||
| Accounts receivable | |||||||
| Trade, net of allowances of $118 at January 31, 2017 and $210 at July 31, 2016 | 35,309 | 33,324 | |||||
| Other | 4,465 | 5,572 | |||||
| Inventories, net | 35,870 | 37,401 | |||||
| Prepaid expenses and other | 6,260 | 6,623 | |||||
| Total current assets | 113,491 | 95,348 | |||||
| Property, plant and equipment, net | 76,863 | 79,739 | |||||
| Goodwill | 22,013 | 22,228 | |||||
| Intangible assets, net | 32,542 | 33,906 | |||||
| Restricted cash | − | 1,000 | |||||
| Other assets, net | 5,010 | 4,807 | |||||
| Total assets | $ | 249,919 | $ | 237,028 | |||
| Liabilities & stockholders’ equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 26,734 | $ | 26,418 | |||
| Accrued liabilities | 10,680 | 11,252 | |||||
| Employee incentive accrual | 3,150 | 5,999 | |||||
| Total current liabilities | 40,564 | 43,669 | |||||
| Long-term debt | 41,000 | 35,800 | |||||
| Deferred tax liabilities | 9,058 | 9,948 | |||||
| Other long-term liabilities | 4,450 | 4,422 | |||||
| Total liabilities | 95,072 | 93,839 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity | |||||||
| Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued | − | − | |||||
| Common stock, $.01 par value, 40,000,000 shares authorized, 11,887,513 shares issued and outstanding at January 31, 2017 and 11,877,282 shares issued and outstanding at July 31, 2016 | 119 | 19 | |||||
| Additional paid-in capital | 39,364 | 36,553 | |||||
| Accumulated other comprehensive loss | (14,718 | ) | (12,047 | ) | |||
| Retained earnings | 130,082 | 118,564 | |||||
| Total stockholders’ equity | 154,847 | 143,189 | |||||
| Total liabilities and stockholders’ equity | $ | 249,919 | $ | 237,028 | |||
| KMG CHEMICALS, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (UNAUDITED) | ||||||||
| (In thousands) | ||||||||
| Six Months Ended | ||||||||
| January, 31 | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 12,227 | $ | 8,570 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 7,048 | 7,024 | ||||||
| Non-cash restructuring and realignment charges | − | 105 | ||||||
| Stock-based compensation expense | 3,087 | 2,297 | ||||||
| Deferred income tax expense | (821 | ) | (1,334 | ) | ||||
| Excess tax benefit from stock-based awards | (685 | ) | − | |||||
| Other | 53 | 204 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable — trade | (2,585 | ) | 894 | |||||
| Accounts receivable — other | 2,531 | (1,816 | ) | |||||
| Inventories | 1,002 | 1,159 | ||||||
| Other current and noncurrent assets | (302 | ) | 3,291 | |||||
| Accounts payable | 951 | (5,805 | ) | |||||
| Accrued liabilities and other | (3,083 | ) | (492 | ) | ||||
| Net cash provided by operating activities | 19,423 | 14,097 | ||||||
| Cash flows from investing activities | ||||||||
| Additions to property, plant and equipment | (5,310 | ) | (6,001 | ) | ||||
| Proceeds − insurance claim | 250 | − | ||||||
| Net cash used in investing activities | (5,060 | ) | (6,001 | ) | ||||
| Cash flows from financing activities | ||||||||
| Borrowings under credit facility | 17,000 | − | ||||||
| Payments under credit facility | (11,800 | ) | (6,000 | ) | ||||
| Excess tax benefit from stock-based awards | − | (15 | ) | |||||
| Payment of dividends | (709 | ) | (703 | ) | ||||
| Cash payments related to tax withholdings from stock-based awards | (277 | ) | − | |||||
| Net cash provided by (used in) financing activities | 4,214 | (6,688 | ) | |||||
| Effect of exchange rate changes on cash | (418 | ) | (25 | ) | ||||
| Net increase in cash, cash equivalents and restricted cash | 18,159 | 1,383 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 13,428 | 8,517 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 31,587 | $ | 9,900 | ||||
Reconciliation of GAAP financial measures to non-GAAP financial measures
KMG provides non-GAAP financial information to complement reported GAAP results. KMG believes that analysis of our financial performance would be enhanced by an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. We define adjusted EBITDA as earnings from operations before interest, taxes, depreciation, amortization, acquisition and integration expenses, restructuring and realignment charges and other relevant items.
KMG intends to continue to provide certain non-GAAP financial information and the appropriate reconciliation to GAAP in its financial results. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures. These non-GAAP measures should be viewed as a supplement to, and not a substitute for, U.S. GAAP measures of performance.
Table 1
RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED ADJUSTED EBITDA
(in thousands)
| Second Quarter Fiscal 2017 | Second Quarter Fiscal 2016 | |||
| Consolidated GAAP net income | $ | 6,486 | $ | 3,979 |
| Add back: | ||||
| Interest expense | 172 | 252 | ||
| Income taxes | 2,097 | 2,055 | ||
| Depreciation & amortization* | 3,496 | 3,479 | ||
| Acquisition & integration expenses | 501 | − | ||
| Corporate relocation expense | 316 | 729 | ||
| Restructuring charges, excluding accelerated depreciation | − | 555 | ||
| Consolidated adjusted EBITDA | $ | 13,068 | $ | 11,049 |
| *Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows. | ||||
| Six Months Ended Jan. 31, 2017 | Six Months Ended Jan. 31, 2016 | |
| Consolidated GAAP net income | 12,227 | 8,570 |
| Add back: | ||
| Interest expense | 349 | 404 |
| Income taxes | 5,089 | 4,615 |
| Depreciation & amortization* | 7,048 | 7,129 |
| Acquisition & integration expenses | 584 | − |
| Corporate relocation expense | 366 | 729 |
| Restructuring & realignment charges, excluding accelerated depreciation | − | 1,046 |
| Consolidated adjusted EBITDA | 25,663 | 22,493 |
| *Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows. | ||
Table 1A
RECONCILIATION OF OPERATING INCOME TO ADJUSTED EBITDA
Note that we do not allocate certain financial statement line items below operating income to our segments; as such, the reconciliations below only reflect the reconciliation of our operating income by segment to our non-GAAP measures.
| Second Quarter Fiscal 2017 | Electronic | Other | ||||||
| (in thousands) | Chemicals | Chemicals | Corporate | Total | ||||
| Operating Income (Loss) | 9,583 | 3,023 | (3,566 | ) | 9,040 | |||
| Other income (expense) | (148 | ) | (75 | ) | (62 | ) | (285 | ) |
| Depreciation and amortization | 2,793 | 285 | 418 | 3,496 | ||||
| Acquisition & integration expenses | − | − | 501 | 501 | ||||
| Corporate relocation expense | − | − | 316 | 316 | ||||
| Adjusted EBITDA | 12,228 | 3,233 | (2,393 | ) | 13,068 | |||
| Corporate allocation | 3,329 | 842 | (4,171 | ) | − | |||
| Adjusted EBITDA excl. corporate allocation | 15,557 | 4,075 | (6,564 | ) | 13,068 | |||
| Six Months Ended January 31, 2017 | Electronic | Other | |||||
| (in thousands) | Chemicals | Chemicals | Corporate | Total | |||
| Operating Income (Loss) | 17,644 | 6,704 | (6,628 | ) | 17,720 | ||
| Other income (expense) | 163 | (99 | ) | (119 | ) | (55 | ) |
| Depreciation and amortization | 5,645 | 572 | 831 | 7,048 | |||
| Acquisition & integration expenses | − | − | 584 | 584 | |||
| Corporate relocation expense | − | − | 366 | 366 | |||
| Adjusted EBITDA | 23,452 | 7,177 | (4,966 | ) | 25,663 | ||
| Corporate allocation | 6,658 | 1,684 | (8,342 | ) | − | ||
| Adjusted EBITDA excl. corporate allocation | 30,110 | 8,861 | (13,308 | ) | 25,663 | ||
| Second Quarter Fiscal 2016 | Electronic | Other | ||||||||
| (in thousands) | Chemicals | Chemicals | Corporate | Total | ||||||
| Operating Income (Loss) | $ | 8,470 | $ | 2,804 | $ | (5,137 | ) | $ | 6,137 | |
| Other income (expense) | 196 | (33 | ) | (14 | ) | 149 | ||||
| Depreciation and amortization | 2,849 | 286 | 344 | 3,479 | ||||||
| Restructuring charges* | — | — | 555 | 555 | ||||||
| Corporate relocation expense | — | — | 729 | 729 | ||||||
| Adjusted EBITDA | 11,515 | 3,057 | (3,523 | ) | 11,049 | |||||
| Corporate allocation | 2,480 | 791 | (3,271 | ) | — | |||||
| Adjusted EBITDA excl. corporate allocation | $ | 13,995 | $ | 3,848 | $ | (6,794 | ) | $ | 11,049 | |
| Six Months Ended January 31, 2016 | Electronic | Other | ||||||||
| (in thousands) | Chemicals | Chemicals | Corporate | Total | ||||||
| Operating Income (Loss) | $ | 15,744 | $ | 6,568 | $ | (8,855 | ) | $ | 13,457 | |
| Other income (expense) | 326 | (92 | ) | (102 | ) | 132 | ||||
| Depreciation and amortization* | 5,764 | 583 | 782 | 7,129 | ||||||
| Restructuring & realignment charges, excluding accelerated depreciation | — | — | 1,046 | 1,046 | ||||||
| Corporate relocation expense | — | — | 729 | 729 | ||||||
| Adjusted EBITDA | 21,834 | 7,059 | (6,400 | ) | 22,493 | |||||
| Corporate allocation | 4,961 | 1,581 | (6,542 | ) | — | |||||
| Adjusted EBITDA excl. corporate allocation | $ | 26,795 | $ | 8,640 | $ | (12,942 | ) | $ | 22,493 | |
| * Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows. | ||||||||||
Table 2
RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE
(in thousands)
| Three Months Ended | |||
| January 31, | |||
| 2017 | 2016 | ||
| Net income | $6,486 | $3,979 | |
| Items impacting pre-tax income: | |||
| Acquisition & integration expenses | 501 | − | |
| Corporate relocation expense | 316 | 729 | |
| Restructuring & realignment charges | − | 555 | |
| Income taxes* | (286) | (449) | |
| Adjusted net income | $7,017 | $4,814 | |
| Adjusted diluted earnings per share | $0.57 | $0.40 | |
| Weighted average diluted shares outstanding | 12,293 | 11,915 | |
| *Represents the aggregate tax-effect of the items impacting pre-tax income utilizing a tax rate of 35%. | |||
Table 2 (continued)
(in thousands)
| Six Months Ended | |||
| January 31, | |||
| 2017 | 2016 | ||
| Net income | $12,227 | $8,570 | |
| Items impacting pre-tax income: | |||
| Acquisition & integration expenses | 584 | − | |
| Corporate relocation expense | 366 | 729 | |
| Restructuring & realignment charges | − | 1,151 | |
| Income taxes* | (332) | (658) | |
| Adjusted net income | $12,845 | $9,792 | |
| Adjusted diluted earnings per share | $1.05 | $0.82 | |
| Weighted average diluted shares outstanding | 12,203 | 11,890 | |
| *Represents the aggregate tax-effect of the items impacting pre-tax income utilizing a tax rate of 35%. | |||
Table 2A
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES
| Second Quarter Fiscal 2017 | KMG Chemicals, Inc. | |||||||||
| Dollars in thousands, except EPS | ||||||||||
| Operating | Net | Diluted Earnings | ||||||||
| Income | Margin | Income | Per Share | |||||||
| GAAP measure | $ | 9,040 | 11.5 | % | $ | 6,486 | $0.53 | |||
| Acquisition & integration expenses | 501 | 0.6 | % | 326 | 0.02 | |||||
| Corporate relocation expense | 316 | 0.4 | % | 205 | 0.02 | |||||
| Non-GAAP measure | 9,857 | 12.5 | % | 7,017 | $0.57 | |||||
| Six Months Ended January 31, 2017 | KMG Chemicals, Inc. | |||||||||
| Dollars in thousands, except EPS | ||||||||||
| Operating | Net | Diluted Earnings | ||||||||
| Income | Margin | Income | Per Share | |||||||
| GAAP measure | $ | 17,720 | 11.4 | % | $ | 12,227 | $1.00 | |||
| Acquisition & integration expenses | 584 | 0.4 | % | 380 | 0.03 | |||||
| Corporate relocation expense | 366 | 0.2 | % | 238 | 0.02 | |||||
| Non-GAAP measure | $ | 18,670 | 12.0 | % | $ | 12,845 | $1.05 | |||
| Second Quarter Fiscal 2016 | KMG Chemicals, Inc. | |||||||||
| Dollars in thousands, except EPS | ||||||||||
| Operating | Net | Diluted Earnings | ||||||||
| Income | Margin | Income | Per Share | |||||||
| GAAP measure | $ | 6,137 | 8.7 | % | $ | 3,979 | $0.33 | |||
| Restructuring charges | 555 | 0.8 | % | 361 | 0.03 | |||||
| Corporate relocation expense | 729 | 1.0 | % | 474 | 0.04 | |||||
| Non-GAAP measure | $ | 7,421 | 10.5 | % | $ | 4,814 | $0.40 | |||
| Six Months Ended January 31, 2016 | KMG Chemicals, Inc. | |||||||||
| Dollars in thousands, except EPS | ||||||||||
| Operating | Net | Diluted Earnings | ||||||||
| Income | Margin | Income | Per Share | |||||||
| GAAP measure | $ | 13,457 | 9.1 | % | $ | 8,570 | $0.72 | |||
| Restructuring & realignment charges | 1,151 | 0.8 | % | 748 | 0.06 | |||||
| Corporate relocation expense | 729 | 0.5 | % | 474 | 0.04 | |||||
| Non-GAAP measure | $ | 15,337 | 10.4 | % | $ | 9,792 | $0.82 | |||