KraneShares Trust KraneShares D (NYSE:KEM)

Kemet Corporation (NYSE:KEM) ($16.67; $933.8M market cap) - After reporting refinancing news yesterday which we felt could add nearly $4 a share to the stock, KEM announced preliminary Q2 2019 results and initiated a quarterly dividend of $0.05/ share. KEM is a company that manufactures and sells passive electronic components under the KEMET brand worldwide. Release highlights:

• Sales of $349.2 million vs $301.5 million in the prior year and ahead of analyst estimates of $335.5
• Non-GAAP EPS $0.87 vs $0.45 in the prior year and ahead of analyst estimates of $0.61
• Board approved instituting a quarterly dividend of $0.05

“Margin expansion continued in all three of our business segments compared to the prior quarter, with the Solid Capacitor Group leading the way. Expectations are that we will see additional margin expansion in our next quarter ending this December and continue with another consecutive quarter over quarter revenue growth. Customer agreements on ceramics products have also been signed that establish ten-year commitments related to capacity expansion that will enable the Company to continue to grow and have committed utilization well into the future,” stated Per Loof, the Company's Chief Executive Officer. “We continue to be bullish on calendar year 2019 with continued demand in the MLCC space driving volume for both MLCC's and our Tantalum Polymer business. Given our financial strength, we are pleased to reward our shareholders with an additional return on their investment by announcing a dividend program today,” continued Loof.

Third Quarter 2012 Results

• Net sales for the quarter ended December 31, 2011 were $218.8 million which is a 17.3% decrease over the same quarter last fiscal year.
• Non-GAAP adjusted net income was $2.0 million or $0.04 per diluted share for the third quarter of fiscal year 2012 compared to $33.1 million of adjusted net income or $0.64 per diluted share for the same quarter last year.

"We entered this quarter knowing that the impact of the distribution channel inventory rebalancing would have a significant impact on our financial results", said Per Loof, Chief Executive Officer of KEMET. "However, we generated approximately $21 million of cash from operations and we were successful in securing one of our key supply sources through the acquisition of Niotan Incorporated. Even though we expect the next couple of quarters to remain challenging we are positioning the Company for a strong rebound through our continuing realignment of facilities in Europe and supply chain integration when the world economy improves," continued Loof.

GREENVILLE, S.C., Feb. 2, 2012 /PRNewswire/ -- KEMET Corporation (NYSE: KEM), a leading manufacturer of tantalum, ceramic, aluminum, film, paper and electrolytic capacitors, announced today that it has signed an agreement to acquire all of the outstanding shares of Niotan Incorporated ("Niotan"), a leading manufacturer of tantalum powders, from an affiliate of Denham Capital Management LP. Niotan has been a significant supplier of tantalum powder to KEMET for several years.

"This acquisition is in keeping with our announced strategic direction to vertically integrate operations and to better control supply sources as well as to contain our cost structure," said Per Loof, Chief Executive Officer of KEMET. "Acquiring Niotan is a significant step in securing and stabilizing our tantalum powder resources. Additionally, we recently announced a comprehensive plan for sourcing conflict free tantalum ore from the Democratic Republic of Congo (DRC). We will continue to purchase a portion of our tantalum powder needs from our existing supply base. Together, these actions have put in place a supply chain that provides customers with confidence in the long-term viability of our tantalum capacitance solutions and will allow for faster to market development of specialty powders from KEMET," continued Loof.

KEMET will pay an initial purchase price of $30 million at the closing of the transaction and additional deferred payments of $45 million over a thirty month period after the closing. KEMET will also be required to make quarterly royalty payments for tantalum powder produced by Niotan after the closing of the transaction, in an aggregate amount equal to $10,000,000 by December 31, 2014. The transaction is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Act, and is expected to close in March 2012.

Niotan's headquarters and principal operating location is in Carson City, Nevada. Niotan is the largest western hemisphere production location for tantalum capacitor powder and has demonstrated world- class powder quality which has resulted in exceptionally high level qualification with the world's capacitor manufacturers.

Second Quarter 2012 Results

• Net sales for the quarter ended September 30, 2011 were $265.5 million, which is a 6.8% increase over the same quarter last fiscal year.
• Non-GAAP adjusted net income was $22.4 million or $0.43 per diluted share for the second quarter of fiscal year 2012 compared to a $31.9 million of adjusted net income or $0.62 per diluted share for the same quarter last year.

Throughout most of the quarter we continued to see demand that met our expectations resulting in financial performance in line with our forecast," said Per Loof KEMET's Chief Executive Officer.  "The quarter ahead will be challenging as the distribution channel in all regions adjust their inventory position, but we are optimistic that this is a temporary adjustment. Early indications are that the flood disaster in Thailand may have taken a substantial portion of capacitor supply off line. Such effect could mitigate both the inventory corrections and softening demand in our fourth fiscal quarter that ends at March 31, 2012.  We intend to be supportive of those affected by the flooding and we are preparing our operations to fill the supply gap created by this disaster," continued Loof. 

GREENVILLE, S.C., Nov. 17, 2011 /PRNewswire/ -- KEMET Corporation (NYSE: KEM) (the "Company"), a leading manufacturer of tantalum, ceramic, aluminum, film, paper and electrolytic capacitors, announced today that facility restructuring continues as previously announced and that it will take a charge to earnings related to severance expenses of approximately $6.5 million to $7.0 million during the current quarter that ends December 31, 2011.

The Company has discussed in various earnings calls and in prior investor presentations that it intends to continue its restructuring efforts within Europe, primarily within its Film and Electrolytic segment, with various facility closures. These closures are expected to commence during the Company's next fiscal year that begins in April 2012. Construction will start in the near-term on a new facility in Pontecchio, Italy, that will allow the closure and consolidation of multiple manufacturing operations located in Italy. The Company will also evaluate whether an impairment charge may be required related to the carrying value of the facilities to be affected by a closure in the future and it is also reviewing the value of certain manufacturing assets within Europe. The cash flow impact of this action is expected to occur over several quarters during the Company's next two fiscal years.

The Company expects to achieve cost savings related to these actions of $3 million to $4 million in its fiscal year ending March 31, 2013 and an additional $7 to $8 million in its fiscal year ending March 31, 2014.  Beginning in the fiscal year ending March 31, 2015 the Company expects the annual cost savings will be approximately $15 to $18 million.

Per Loof, KEMET Corporation's Chief Executive Officer, stated, "There has been significant improvement in our Film and Electrolytic segment financial results over the past several quarters from our prior actions, but more is required to be competitive in the future. We have received excellent cooperation from our local unions and government representatives to achieve a partnership of driving for success that we believe can provide a level of economic stability for our employees and profitability for the Company."

GREENVILLE, S.C., July 29, 2011 /PRNewswire/ -- KEMET Corporation (NYSE: KEM), a leading manufacturer of tantalum, ceramic, aluminum, film, paper and electrolytic capacitors, today announced its KEMET Power Solutions (KPS) High Voltage (HV) SM Series capacitors. Designed to meet robust performance standards required in higher reliability industrial applications, the KPS family of devices utilizes leadframe technology to isolate the multilayer ceramic component from the printed circuit board.

GREENVILLE, S.C., July 27, 2011 /PRNewswire/ -- KEMET Corporation (NYSE: KEM) today reported preliminary results for the first fiscal quarter ended June 30, 2011.  Net sales for the quarter ended June 30, 2011 were $289.9 million, which is an 18.9% increase over the same quarter last fiscal year and a 10.9% increase over the quarter ended March 31, 2011.

On a U.S. GAAP basis, net income was $31.8 million, or $0.61 per diluted share for the first quarter of fiscal year 2012 compared to a net loss of $20.1 million or a $0.74 loss per basic and diluted share for the same quarter last year. The first quarter of fiscal year 2012 includes $1.0 million of restructuring charges primarily associated with the relocation of equipment, and $0.8 million in acquisition related expenses and stock registration related fees.  The first quarter of fiscal year 2011 included a $38.2 million non-cash loss on early extinguishment of debt and $1.8 million of restructuring charges primarily associated with the relocation of equipment. 

"Throughout most of the quarter we continued to see strong demand with each of our global regions meeting or exceeding expectations resulting in very strong performance," said Per Loof KEMET's Chief Executive Officer.  "We are taking several steps to better control our supply chain costs and security of supply, such as the foil manufacturing plant we recently purchased as well as our efforts related to tantalum ore in the Democratic Republic of the Congo. We continue to be optimistic about the long-term outlook for the industry as we work through the slow-growth recovery that is before us and are committed to position KEMET to outperform the industry," continued Loof.

Non-GAAP adjusted net income was $37.0 million or $0.71 per diluted share for the first quarter of fiscal year 2012 compared to a $23.6 million adjusted net income or $0.48 per diluted share for the same quarter last year

GREENVILLE, S.C., Dec. 14, 2010 /PRNewswire-FirstCall/ -- KEMET Corporation (the "Company") today announced the pricing of a secondary offering of 8.7 million shares of its common stock at a price of $11.00 per share. The shares to be offered are subject to issuance upon exercise of a currently outstanding and exercisable warrant (the "Warrant") held by the selling securityholder, K Equity, LLC ("K Equity"), an affiliate of Platinum Equity Capital Partners II, L.P., a portion of which will be sold to and exercised by the underwriters in connection with their sale of the underlying shares. The underwriters have an option to purchase an additional portion of the Warrant representing an additional 1.3 million shares of underlying common stock of the Company to cover over-allotments, if any.  The Company will not receive any proceeds from the transaction. K Equity will retain the portion of the Warrant that is not exercised.

Deutsche Bank Securities, BofA Merrill Lynch and UBS Investment Bank are acting as joint book-running managers, and KeyBanc Capital Markets is acting as co-manager, for the offering

First Quarter Results:

• Net sales of $261.5 million for the March 2011 quarter up 22.8% compared to prior year fourth quarter-
• Net sales of $1.018 billion for the fiscal year ended March 2011 up 38.3% compared to prior fiscal year-
• Cash and cash equivalents of $152.1 million at March 31, 2011 up from $79.2 million at March 31, 2010-Adjusted EBITDA of $196.1 million for the fiscal year ended March 31, 2011-
• GAAP net income per diluted share for the fourth quarter and fiscal year 2011 was $0.40, and $1.22, respectively-
• Non-GAAP net income per diluted share for the fourth quarter and fiscal year 2011 was $0.49, and $2.22, respectively

"Our revenue remained strong and exceeded expectations in the last quarter of our year with revenue surpassing one billion dollars for our full fiscal year," said Per Loof, KEMET's Chief Executive Officer.  "Our accomplishments on cost containment over the past year have continued to benefit our operating results and we expect that margins will hold in the near-term at or above our fourth quarter results despite rising raw material prices.  We remain optimistic about the industry trend and demand for our products in all of our geographic regions and we remain focused on creating additional value as we begin our next fiscal year," continued Loof.

GREENVILLE, S.C., Feb. 3, 2011 /PRNewswire/ -- KEMET Corporation today reported preliminary results for the third fiscal quarter ended December 31, 2010. 

• Net sales for the quarter ended December 31, 2010 were $264.7 million, which is a 32.4% increase over the same quarter last fiscal year and a 6.5% increase over the prior fiscal quarter ended September 30, 2010 of $248.6 million.
• Non-U.S. GAAP Adjusted net income was $33.1 million or $1.17 per basic share and $0.64 per diluted share for the current fiscal quarter compared to a Non-U.S. GAAP Adjusted net income of $4.7 million, or $0.18 per basic share and $0.10 per diluted share for the same quarter last year.

All share and per share data gives effect to the November 2010 one-for-three reverse stock split.

"The quarter continued our trend of strong sales as demand remained solid in all of our geographic regions and segments making this our seventh straight quarter of increasing revenue," said Per Loof KEMET's Chief Executive Officer.  "We accomplished another of our goals during this quarter by relisting on the New York Stock Exchange and thereby obtaining greater visibility of the company to both new and existing shareholders.  The management team remains focused on the fundamentals that will continue to bring increased value to our shareholders," continued Loof.

Key points from the fiscal 2011 second quarter conference call:

• Restructuring process is still in early stages; “ We are not done yet. Not even a 1/3 of way from completion.” (end of 2012).
• Upside to growth goals since does not take into account a meaningful increase in volumes.
• GM improving, but striving for further gains. 
• All regions across all product lines showed growth.
• Sees overall bookings gaining strength.
• New order rates are strong.
• Saw some softening in consumer/service segment in the Asia Pacific region.  Asia market is overall strong.
• European business has not fallen off and remains strong, even during a seasonally weak period.
• Americas are seeing improving demand. Americas may see moderation in growth, but Europe is expected to make up difference.
• Fiscal 2011 third quarter revenues are expected to be on par with  fiscal 2011 second quarter, but has some upside.
• Breakeven point is lower than ever, giving the company the ability to withstand market downturns.
• Very interested in increasing investor awareness.
• Plans reverse split to broaden investor base.
• 30 million shares may be hitting the market by institutional player. Indicates that selling will be orderly and efficient. EPS are already reported on fully diluted basis.
  

Coded as a GeoSpecial this morning @ $3.50.

KEM reported dynamite fiscal 2011 second quarter EPS numbers yesterday morning, exceeding analyst estimates of $0.13.

• Net sales up 43.5% to $248.6 million compared to $173.3 million for the same quarter last fiscal year.
• Gross margin improved to 28.0% compared to 25.0% for the prior quarter ended June 30, 2010.
• Non-GAAP Adjusted net income was $34.3 million or $0.42 per basic share and $0.22 per diluted share for the current fiscal quarter compared to a Non-GAAP Adjusted net loss of $5.8 million, or $(0.07) per basic and diluted share for the same quarter last year and compared to a Non-GAAP Adjusted net income of $22.3 million, or $0.28 per basic share and $0.15 per diluted share for the prior fiscal quarter ended June 30, 2010.

"Traditionally, our second fiscal quarter reflects a slowdown related to the effects of European holidays.  This year demand remained strong throughout the period while we continued to improve our operating efficiencies, contain our operating expenses, and thus increase operating margins benefiting both our net earnings and our cash generation," said Per Loof KEMET's Chief Executive Officer.  "Our financial results today significantly exceed our performance prior to the recession and we remain focused on bringing our shareholders increasing value through continued execution of our strategies and strength in our markets," continued Loof.

Recall that we began tracking KEM on May 20, 2010 @ $2.04. We have now decided to code the stock as a GeoSpecial.  The company has put together two consecutive strong quarters and the fiscal  2011 second quarter earnings conference call was extremely bullish. The stock is selling at a meager P/E of 4.7 times fiscal 2012 March EPS estimates of $0.75, which we are assuming are not taxed (tax adjusted EPS would be $0.48 and equate to a forward P/E of 7.3). Furthermore, KEM has been exceeding expectations.  Investors should be aware that KEM operates in a sector that may not receive premium multiples.