Boston, MA 06/09/2014 (wallstreetpr) – Manufacturer of specialty chemicals, KMG Chemicals, Inc. (NYSE:KMG) announced a fall in adjusted operating margin in the third quarter hurt by its segment’s results. Though the company’s top line achieved a growth of 40.9%, Wood Treating Chemicals division witnessed a 2.9% drop in its sales due to weak volumes of penta. The company also provided revenue outlook for the fiscal year 2014.
Operating Margin
KMG Chemicals, Inc. (NYSE:KMG) overall adjusted operating margin dipped to 5.1% from 7.4% in the year-ago quarter. While its Electronic Chemicals segment’s adjusted operating margin was 5.6%, its GAAP operating margin dropped to 5.2% from 8.2%. Similarly, the company’s GAAP operating margin in its Wood Treating Chemicals division skid to 9.2% from 10.8% in the year earlier period.
As a result, the company could not achieve any uptick in its adjusted operating income and instead slackened by 2.37% to $4.33 million from $4.43 million in the previous year quarter. The dragger is Wood Treating Chemicals segment, as its GAAP operating income dropped 17.9%, whereas its Electronic Chemicals division posted 8% growth.
3Q Profit & Sales
KMG Chemicals, Inc. (NYSE:KMG) earned profit of $1.23 million, sharply down from $2.87 million and the earnings per share more than halved to 11 cents a share from 25 cents a share in the year-ago quarter. On an adjusted basis too, profit dipped to $2.39 million from $2.92 million, while the earnings fell to 20 cents a share from 25 cents a share in the year earlier quarter.
Net sales surged 40.9% to $84.44 million from $59.93 million in the previous year quarter. The company’s strong top line growth is due to its electronic chemicals division generating 69.4% more revenue at $61.54 million than $36.33 million in the prior year quarter. Its Wood Treating Chemicals segment recorded a 2.9% fall in net sales to $22.85 million from $23.53 million, as a result, of weak volumes of penta sales, though partly offset by higher sales in rail tie treating market.
Forecast
Moving ahead, KMG Chemicals, Inc. (NYSE:KMG) expects consolidated net sales to be about $350 million in the fiscal year 2014 gaining from UPC business acquisition.
