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KEMET Corp. (KEM)
F1Q2012 Earnings Call
July 27, 2011 9:00 am ET
Dean Dimke – Director, Corporate Investor Communications
Per Loof – CEO
Bill Lowe – EVP and CFO
Ritu– Bank of America:
Sherri Scribner – Deutsche Bank
Hamed Khorsand – BWS Financial
Amit Passi – UBS
Marco Rodriguez – Stonegate Securities
Tony Kure – Keybanc
Ana Goshko – Bank of America
Tony Venturino – Federated Advisors
Matt Sheerin – Stifel Nicolaus
Previous Statements by KEM
» KEMET CEO Discusses F4Q2011 Results - Earnings Call Transcript
» KEMET CEO Discusses F3Q2011 Results - Earnings Call Transcript
» KEMET CEO Discusses F2Q2011 Results – Earnings Call Transcript
» KEMET Corp. F1Q11 (Qtr End 06/30/11) Earnings Call Transcript
Thank you. Mr. Dimke, you may begin your conference.
Thank you, Tina. This is Dean Dimke, Director of Corporate Investor Communications. Good morning. And welcome to KEMET’s conference call to discuss our financial results for the first quarter ending June 30th fiscal year 2012.
On the call with me today is Per Loof, our Chief Executive Office; and Bill Lowe, our Executive Vice President and CFO.
As a reminder to you, our presentation is available on our website that should help you follow along with the portion of our presentation this morning. Please go to kemet.com and click on the Investor Relations tab in the top right portion of our homepage. Once there, click on the first quarter conference call link. That will bring up a few slides that we will call to your attention as we are covering those topics.
Before we begin, we would like to advise you that all statements that address expectations or projections about the future are forward-looking statements. Some of these statements include words such as expects, anticipates, plans, intends, projects and indicates.
Although, they reflect our current expectations, these statements are not guarantees of future performance, but involve a number of risks, uncertainties and assumptions. Please refer to our 10-Ks, 10-Qs and recent registration statement filings for additional information on risks and uncertainties.
And now, I’ll turn the call to Per.
Thank you, Dean and good morning, everyone. We are very pleased to report that our first quarter ending June 30 fiscal year 2012 was another strong quarter with revenues coming in at $290 million. Non-GAAP operating income was $45.2 million or 15.6% of sales. Non-GAAP fully diluted EPS was 71 pennies.
Additionally, we have continued strong top and bottom line performance across all business groups. These financial numbers validate our strategies and continue to build on our momentum. As encouraging as these results are we realize that we must stay focused on growth, maintaining our cost reductions and seizing opportunities.
One area that we have stressed is the need to find opportunities to vertically integrate operations to better control our supply sources and our cost structure.
This past quarter we found such an opportunity with the acquisition of Cornell Dubilier Foil, a Tennessee based process of aluminum foil utilized as a core component in the manufacture of electronic capacitors. The state-of-the art Foil facility is one of the largest of its kind in North America.
The purchase price is approximately $15 million and the long-term intent for this operation is to support our aluminum electrolytic capacitor operations within a short supply of high quality raw materials. In short, the exactly what we need to be doing and we will continue to look for these opportunities going forward.
Another example of how we are focused on gaining more control over our destiny by stabilizing our supply chain and ensuring availability of key raw materials it the initiative we are announcing today.
This initiative we are internally calling Making Africa Work. Over the past few weeks, Motorola Solutions and others have been in the news regarding their initiatives to source Conflict-Free Tantalum ore from the Democratic Republic of the Congo or DRC. We know these initiatives and we’d like to take a few minutes to discuss the efforts we have undertaken over the last nine months to source Conflict-Free Tantalum from the DRC.
We do believe it is imperative that we all do our part to put the DRC back to work with regards to the mining of Tantalum ore. Additionally, KEMET has what we believe to be a comprehensive plan for this asset. Our plan includes financial support for the construction of schools and medical clinics in the area where the Tantalum ore is to be sourced which is in the conflict free Katanga province of the DRC. Katanga is in the Southeast corner of the country bordering Zambia.
This area has been designed as conflict free by the implementing Non-Government Organization PACT, which actively instituting the international research institute defined back and tack program. This is a program that designed to ensure transparency and traceability of the Tantalum ore through the supply chain to the smelters.
As mentioned we’ve been engaged with this project for nine months now. If you refer to page two and three of the website slides you can see that our diligence included a visit by myself five months ago to the DRC in order to gain a firsthand understanding of the local mining situation, as well as the social and economic environment in the area.
We do expect that the involved parties will obtain the necessary third-party OECD, Organization of Economic Co-operation and Development conflict free supply chain certification by mid-August and our material can thus start to flow from the DRC to the smelters by early September.