KEMET Announces Cost Improvement Actions
November 16 2017 - 8:00AM
KEMET Corporation (the “Company” or “KEMET”) (NYSE:KEM), a leading
global supplier of passive electronic components, announced today
that, in a continuance of its effort to further improve gross
margins, net income, and cash flow, it is undertaking the following
actions and generating savings as listed below:
|
Annual Savings (millions) |
|
FY19 (1),(2) |
|
FY20 (2) |
|
FY21 (2) |
|
FY19 - FY21 |
TOKIN |
$ |
9.2 |
|
$ |
9.2 |
|
$ |
9.2 |
|
$ |
27.6 |
Solid Capacitors |
$ |
0.8 |
|
$ |
2.3 |
|
$ |
3.2 |
|
$ |
6.3 |
F&E |
$ |
1.0 |
|
$ |
2.0 |
|
$ |
2.5 |
|
$ |
5.5 |
Total |
$ |
11.0 |
|
$ |
13.5 |
|
$ |
14.9 |
|
$ |
39.4 |
|
(1) FY19 begins April
2018 |
|
(2) Savings compared to
current run rate |
|
Within the TOKIN legacy group, the Company will take a reduction
in force across various internal operational and overhead
functions. The Company will accrue approximately $5.3 million
between the current fiscal quarter and June 30, 2018 with savings
expected to begin on April 1, 2018. Total cost savings for next
fiscal year is expected to be approximately $9.2 million.
The Solid Capacitors Business Group will modify its vertical
integration strategy by relocating its tantalum powder facility
equipment from Carson City, Nevada to its existing Matamoros,
Mexico plant. The Company expects to achieve annual operating cost
savings of approximately $0.8 million next Fiscal Year 2019 (which
begins April 1, 2018), $2.3 million in Fiscal Year 2020 and $3.2
million in Fiscal Year 2021 from this move. The Company will
accrue severance charges of approximately $0.9 million this quarter
ending December 31, 2017 and incur cash charges for equipment and
employee relocation costs of approximately $2.1 million over the
next 21 months.
The Film and Electrolytic Business Group will take a voluntary
reduction in force in its Italian operations and will accrue
approximately $5.0 million between the current fiscal quarter and
the quarter ending March 31, 2018 based on workforce reduction
timing. Cost savings are expected to begin in March 2018 and
are expected to be approximately $1.0 million beginning in Fiscal
Year 2019 growing to $2.5 million in Fiscal Year 2021 and this
action will also eliminate a potential labor cost increase of
approximately $1.6 beginning in Fiscal Year 2019.
“We made a general announcement as we launched our TOKIN
acquisition that we would reduce expenses there to improve
performance and this is the first step in that process. We continue
to be excited about the opportunities that this combination brings
to us,” stated Per Loof, KEMET’s Chief Executive Officer. “In
addition, we believe relocating our powder facility to be more
efficient and close to our manufacturing process is imperative and
we continue to look for ways to make our F&E business more
competitive. While our performance has been excellent to
date, we continue to look for ways to enhance our operating profit
and bring value to our shareholders,” continued Loof.
About KEMET
The Company’s common stock is listed on the NYSE under the
ticker symbol “KEM” (NYSE: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. KEMET applies world class service and
quality to deliver industry leading, high performance capacitance
solutions to its customers around the world and offers the world’s
most complete line of surface mount and through-hole capacitor
technologies across tantalum, ceramic, film, aluminum,
electrolytic, and paper dielectrics. Additional information about
KEMET can be found at http://www.kemet.com.
CAUTIONARY STATEMENT ON FORWARD-LOOKING
STATEMENTS
Company operates, as well as management’s
beliefs and assumptions. Words such as “expects,” “anticipates,”
“believes,” “estimates,” variations of such words and other similar
expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions, which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecasted in, or implied by, such forward-looking statements.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s judgment
only as of the date hereof. The Company undertakes no obligation to
update publicly any of these forward-looking statements to reflect
new information, future events or otherwise.
Factors that may cause actual outcome and
results to differ materially from those expressed in, or implied
by, these forward-looking statements include, but are not
necessarily limited to the following: (i) adverse economic
conditions could impact our ability to realize operating plans if
the demand for our products declines, and such conditions could
adversely affect our liquidity and ability to continue to operate
and cause a write down of long-lived assets or goodwill;
(ii) an increase in the cost or a decrease in the availability
of our principal or single-sourced purchased raw materials;
(iii) changes in the competitive environment;
(iv) uncertainty of the timing of customer product
qualifications in heavily regulated industries; (v) economic,
political, or regulatory changes in the countries in which we
operate; (vi) difficulties, delays or unexpected costs in
completing the restructuring plans; (vii) acquisitions and
other strategic transactions expose us to a variety of risks;
(viii) acquisition of TOKIN may not achieve all of the
anticipated results; (ix) our business could be negatively
impacted by increased regulatory scrutiny and litigation;
(x) difficulties associated with retaining, attracting and
training effective employees and management; (xi) the need to
develop innovative products to maintain customer relationships and
offset potential price erosion in older products;
(xii) exposure to claims alleging product defects;
(xiii) the impact of laws and regulations that apply to our
business, including those relating to environmental matters;
(xiv) the impact of laws relating to trade, export controls
and foreign corrupt practices; (xv) changes impacting
international trade and corporate tax provisions related to the
global manufacturing and sales of our products may have an adverse
effect on our financial condition and results of operations;
(xvi) volatility of financial and credit markets affecting our
access to capital; (xvii) the need to reduce the total costs
of our products to remain competitive; (xviii) potential
limitation on the use of net operating losses to offset possible
future taxable income; (xix) restrictions in our debt
agreements that could limit our flexibility in operating our
business; (xx) any failure of our information technology
systems to function properly or control unauthorized access to our
systems may cause business disruptions; (xxi) any
economic and demographic experience for our pension plans and other
post-retirement benefit plans that is less favorable than our
assumptions; (xxii) fluctuation in distributor sales could
adversely affect our results of operations, and
(xxiii) earthquakes and other natural disasters could disrupt
our operations and have a material adverse effect on our financial
condition and results of operations.
Contact: |
William M.
Lowe, Jr. |
Richard J.
Vatinelle |
|
Executive Vice
President and |
Vice President and |
|
Chief Financial
Officer |
Treasurer |
|
williamlowe@kemet.com |
richardvatinelle@kemet.com |
|
864-963-6484 |
954-766-2838 |
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