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KEMET Corporation (KEM)
Bank of America Merrill Lynch 2012 Leveraged Finance Conference
December 04, 2012, 11:30 AM ET
Per Loof -- CEO
Bill Lowe -- EVP and CFO
Previous Statements by KEM
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Okay. Thank you very much for giving us the opportunity to talk about us. For those of you who don't know us, we've been around a long time. We were part of Union Carbide and were founded in 1919 actually. We've been listed since 1992. And we are a global manufacturer of all things capacitors pretty much and we basically price ourselves of being able to offer 95% of all different types of capacitors.
We have 22 locations in 10 countries. And we have places in Mexico and China and Indonesia, in various places in Europe and of course in the United States. We're about 10,000 people totally, 600 people in the US, 5,000 or so in Mexico and the rest divided pretty evenly between Asia and Europe. We have a global sales force that covers all of these areas.
We divide our business into three segments. Based on capability and technology the tantalum capabilities which are used in computers, are used in telecommunications, mobile devices of various sorts and a lot of it in automotive as well. And not forget the military/aerospace applications as well.
The ceramics which in our case is heavily specialty oriented but still in the same type of applications. And then finally in the film and electrolytic business which is in large regard in the industrial space of the – from an end-use perspective.
We pride ourselves of having a pretty good global reach and having production in low cost areas and we're in the process of finalizing that activity by moving more of it to either Asia and also low coast areas in Europe in places like Bulgaria and Macedonia. And then we have sales operations and service operations across the globe.
From a market overview, we thought we'll put this slide in because we are a cyclical in a cyclical environment. And as you can see from this slide, the blue one is the distribution business, the red is EMS and the green is our OEM customers. As you can over the years, our EMS and OEM business varies but slightly whereas the distribution business goes up and down and that's really why you see the cyclicality of our business being so profound or so large.
As you can see, we are now in a down-ish environment together as – probably when you talk to our colleagues in the component industry, they're in a similar situation, but of course it is a cyclical business and when this comes back, the business comes back with more.
If you look at how we [divi-up] the business from the various segments, and this is what we did in fiscal '12. Fiscal '12 is the year that ended in March this year. Industrial is about a quarter of our business. Consumer is very small, only 10% and we like it to be that way. Computers, and that's mainly laptops and mobile devices of various sorts, it's about 15%. Telecom, mainly base stations and infrastructure about – was shy of 20%. Transportation, which is basically automotive, a little shy of 20% as well. And then defense and medical about 11%.
If you look at the channels, 43% of our business is through the OEM channel, 42% through distribution and about 15% through EMS. And if you look at where we sell our products, EMEA is a large part of our business, almost 40% of our business; Asia a little less than that and America, a little more than a quarter of our business.
Who do we sell to? Well, we sell to all the who's who in electronics whether that be in transportation or whether that be in electronics or medical or other industrial channels. We also of course work with the EMS and the OEM companies like Flextronics, Jabil, Quanta and others and of course the distribution partners, the big ones for us are Arrow, Avnet and TTI.
We have been on several years of restructuring our business and ensuring that we have a footprint that's low cost, and the latest in that process has been the opening of a plant in Skopje, Macedonia. And this is interesting for us because it's in the middle of Europe, it's in a part of Europe -- Macedonia is not a member of the European Union, but they have a very well educated workforce and they have nice incentives for companies to come and make direct investments in there.
Actually, the current Prime Minister, he wrote his doctoral thesis on foreign direct investments, so he's very keen and has been pushing for companies to come and invest in his country. And we took that opportunity a couple of years ago and we opened our facility there in October of this year. And we are very pleased so far with the capabilities we have and the good workforce that are there and of course the fact that it's right in the middle of Europe.