KEMET Reports Preliminary Results of Fiscal Year 2008 and 4th Quarter
Net sales for fiscal 2008 were $850 million, up 29% over fiscal 2007
Net income for fiscal 2008 before special charges was $19.8 million, or $ 0.24 per share
Net sales for the 4th quarter were $241.2 million, up 5% over the previous quarter
Greenville, South Carolina (May 13, 2008) - KEMET Corporation today reported preliminary results for fiscal year 2008 and the fourth quarter ended March 31, 2008. Net sales for the quarter ended March 31, 2008, were $241.2 million, which is a 53.5% increase over the same quarter last year and 5.5% higher than the prior quarter. Net loss before special charges was $(2.0) million, or $(0.02) per share, compared to net income before special charges last quarter of $3.9 million, or $0.05 per share, and net income before special charges of $8.3 million, or $0.10 per share, for the same quarter last year. On a GAAP basis, net loss was $(20.7) million, or $(0.25) per share for the current quarter, compared to net loss of $(8.2) million for the prior quarter and net income of $0.1 million for the same quarter last year. KEMET reports results before special charges because the results offer an alternative depiction of normal operations.
Comparisons to prior periods are as follows: "Fiscal 2008 revenue grew 29% over fiscal 2007 as a result of our acquisition strategy and growth in our core business," stated Per Loof, Chief Executive Officer. "Revenue in the March 2008 quarter was up 5% over the December 2007 quarter.
Increased shipments, particularly to the U.S. and European markets, were the drivers behind our improved revenue performance. Book to bill was positive and end market demand was relatively strong in the quarter, particularly in the European automotive and U.S. and European industrial markets. We are now approaching our sales objective of $1 billion annually, as presented in our plan three years ago; however, the bottom-line is not where it needs to be."
"Consistent with others in the industry, we are experiencing margin pressures as the macro-economic environment continues to be challenging. Raw material price increases and higher fuel costs put additional strains on margins. To address margin pressure, we initiated a number of cost reduction initiatives during the quarter. We are confident of an improvement to our operating performance as a result of these initiatives. Our Arcotronics business experienced unanticipated work stoppages in connection with labor strikes in Italy. This delayed our integration efforts, and resulted in a negative impact on margins. However, I am pleased to report that we have now come to an agreement with the unions that will allow us to move forward quickly with our integration activities and the movement of production to lower cost regions. These planned moves and consolidations will commence in the near future."
"We continue to be very pleased with our integration efforts at Evox Rifa, which turned in above target performance for the entire fiscal year. Because Arcotronics has taken longer to integrate, we have not been able to achieve the benefits of the planned synergies between Arcotronics and Evox Rifa as quickly as projected. With the labor and union issues concerning the Arcotronics integration finally behind us, our current focus is now on cutting costs and achieving the planned synergies."
"We believe we have addressed the challenges presented during this quarter effectively, and will be relentless in our focus to improve the future operating performance of KEMET."
KEMET's common stock is listed on the New York Stock Exchange under the symbol KEM. At the Investor Relations section of our web site at http://www.KEMET.com/IR, users may subscribe to KEMET news releases and find additional information about our Company.
OUR BUSINESS The following statements are based on current expectations. These statements may contain forward-looking information, and consequently actual results may differ materially. Current global economic conditions make it particularly difficult at present to predict product demand and other related matters. In addition, as part of our normal year-end review, we are engaged in an analysis of our business in order to determine whether any impairment charges should be taken. This analysis is ongoing and not yet completed.
Net sales for the March 2008 quarter were $106.8 million for the Tantalum Business Group, $57.9 million for the Ceramic Business Group and $76.5 million for the Film and Electrolytic Business Group.
By region, 25.7% of net sales for the March 2008 quarter were to customers in the Americas, 32.7% were to customers in Asia Pacific and 41.6% were to customers in Europe.
By channel, 48.1% of net sales for the March 2008 quarter were to distribution customers, 36.4% were to Original Equipment Manufacturing ("OEM") customers and 15.5% were to Electronics Manufacturing Services ("EMS") customers. Average selling prices for the March 2008 quarter, adjusted for changes in product mix, were basically flat over the prior quarter.
Cash and cash equivalents decreased $45.9 million to $93.7 million during the quarter ended March 31, 2008, from $139.6 million at December 31, 2007. The decrease was primarily due to $18.2 million used to repurchase 3.7 million outstanding shares of KEMET's common stock, approximately $15.8 million for restructuring and severance payments and $9.1 million for capital expenditures.
During the March 2008 quarter, inventories increased $22.2 million to $244.2 million from $222.0 million at December 31, 2007. Raw materials and supplies increased $9.3 million in the March 2008 quarter, and work in process and finished goods increased $12.9 million.
Capital expenditures for the March 2008 quarter were $9.1 million. Depreciation and amortization expense in the quarter was $11.1 million. We anticipate capital expenditures to be within a range of $40 to $45 million for fiscal year 2009.
Operating expenses for the March 2008 quarter increased $2.1 million to $38.8 million primarily due to increased integration costs associated with our recent acquisitions and the inclusion of a full quarter of Arcotronics' operating expense compared to a partial December 2007 quarter.
Special charges for the quarter were primarily related to manufacturing moves to low-cost regions of Mexico and China, and a global reduction in workforce, both of which are designed to reduce our costs and further capitalize on Lean Manufacturing initiatives.
You can subscribe or unsubscribe to KEMET news releases and find additional company information in the Investor Relations portion of the company's web site at http://www.kemet.com.
Contact: David E. Gable Executive Vice President and Chief Financial Officer davidgable@KEMET.com 864-963-6484
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