HOUSTON--(BUSINESS WIRE)-- KMG Chemicals, Inc. (NASDAQ:KMGB - News), a global provider of specialty chemicals in carefully focused markets, today announced preliminary earnings expectations for the third quarter ended April 30, 2011, and the scheduling of its third quarter news release and conference call.
Neal Butler, President and CEO of KMG, stated, “We expect third quarter net income will be slightly above net income of $2.4 million, or $0.21 per share, reported in the second quarter of fiscal 2011. Third quarter operating profits in our Creosote segment were about half of expectations due to the slower than expected recovery in rail tie production rates by our customers coupled with margin pressure brought on by higher average costs for purchased material. The Animal Health segment generated improved operating profits over the previous year’s third fiscal quarter; however, due to reduced fly pressure in drought stricken areas of the West and Southwest, profits were below expectations set by the recovery in the cattle market. Penta and Electronic Chemicals continue to deliver solid performance. Additionally, the consolidation of our U.S. Electronic Chemicals manufacturing operations into our Hollister, CA and Pueblo, CO plants is progressing very well and according to plan.”
Mr. Butler concluded, “We continue to project a much stronger fourth quarter, which we expect will be driven primarily by improved profitability in our Electronic Chemicals business following the completion of the manufacturing consolidation project, as well as a recovery in Creosote. With industry groups forecasting stronger demand for rail tie purchases by the railroads, and inventory-to-sales ratios falling below historical norms, rail tie production rates are expected to increase notably from present levels in the last half of the calendar year, with the summer months normally seasonally stronger.”