KEMET crushes earning expectations in FQ3 2019

KEMET crushes earning expectations in FQ3 2019.
Image: YouTube | KEMET

On February 6, KEMET Corporation reported its financial results for the fiscal third quarter of 2019. Notably, the capacitor manufacturer outperformed consensus market analyst expectations. Moreover, the firm offered an optimistic outlook regarding its long-term future.

KEMET’s FQ3 2019 Performance

In the three months ending December 31, KEMET generated $294.7 million in revenue. Zacks Investment Research spoke to three market analysts who predicted the firm would post sales of $292.4 million. The electronics component company also brought in $16.6 million in net income.

In addition, the electronics components corporation also reported nonrecurring quarterly earnings of $.46 per share. As such, the company outperformed Zacks’ consensus estimate by 27.78 percent as the organization forecast earnings of $.36 per share.

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Consequently, KEMET has now beaten market analyst earnings projections for three of the last four quarters. The firm has also outpaced industry revenue estimates for the past four quarters.

Like many companies in its sector, the corporation struggled in the face of a global semiconductor glut and international trade headwinds. However, as manufacturers have burned through their inventories and the U.S. and Chinese governments settled their disputes, component sales have started to rebound.

What’s Next for KEMET

During an earnings call, KEMET CFO Gregory Thompson offered guidance that his firm will generate between $275 million to $288 million in the fiscal fourth quarter. The firm’s estimates would be down 19 percent to 23 percent from the same time frame last year. The executive explained his FQ4 2019 projection accounted for the manufacturing slowdown caused by the coronavirus outbreak.

Notably, the epidemic has caused production problems for Apple and Tesla.

Despite offering guidance of declines in the near-term, Thompson took a bullish position on his company’s future. The chief financial officer said KEMET’s gross margin would be strong going forward. He also noted that his firm would benefit financially from “structural changes” that are currently being implemented.

Thompson believes his corporation will see increased interest in its capacitors because of the 5G launch. The executive said the deployment of fifth-generation mobile data networks would drive consumer spending on new handsets. Accordingly, KEMET should experience a “supply demand squeeze” on its ceramic smartphone components.

Indeed, chipmaker Qualcomm concurs with its fellow electronics component maker’s assessment. In November, the corporation predicted that 225 million fifth-generation handsets would ship in 2020. As such, KEMET could see a return to growth this year fueled by the rising tide of 5G.


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