Earnings Conference Call May 17, 2018 Quarter Ended March 31, 2018 - PowerPoint PPT Presentation

Earnings Conference Call May 17, 2018 Quarter Ended March 31, 2018

Cautionary Statement Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about KEMET Corporation's (the "Company") financial condition and results of operations that are based on management's current expectations, estimates and projections about the markets in which the 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 outcomes 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 could 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 and cyber security; (xiv) the impact of international 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) disruption to our information technology systems to function properly or control unauthorized access to our systems may cause business disruptions; (xxi) economic and demographic experience for pension and other post-retirement benefit plans could be less favorable than our assumptions; (xxii) fluctuation in distributor sales could adversely affect our results of operations, (xxiii) earthquakes and other natural disasters could disrupt our operations and have a material adverse effect on our financial condition and results of operations, (xxiv) volatility in our stock price. 2

Income Statement Highlights U.S. GAAP (Unaudited) For the Quarters Ended Mar 2018 Dec 2017 Mar 2017 (Amounts in thousands, except percentages and per share data) Net sales $ 318,047 $ 306,408 $ 197,519 Gross margin (1) $ 88,419 $ 92,461 $ 50,181 Gross margin as a percentage of net sales 27.8% 30.2% 25.4% Selling, general and administrative (1) $ 47,821 $ 47,751 $ 29,539 SG&A as a percentage of net sales 15.0% 15.6% 15.0% Operating income (loss) (1) $ 21,799 $ 32,077 $ 8,942 Net income (loss) $ 2,433 $ 18,641 $ 52,914 Per share data: Net income (loss) per basic share $ 0.04 $ 0.33 $ 1.13 Net income (loss) per diluted share $ 0.04 $ 0.32 $ 0.93 Weighted avg. shares - basic 57,025 56,778 46,803 Weighted avg. shares - diluted 59,063 58,937 57,130 (1) Quarter ended March 31, 2017 adjusted due to the adoption of Accounting Standards Update ("ASU") No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Note: The Company completed its acquisition of TOKIN on April 19, 2017, and as such TOKIN’s results are included in our results for the quarters ended March 31, 2018 and December 31, 2017. However, for the quarter ended March 31, 2017 our results only included our 34% equity investment in TOKIN. 3

Income Statement Highlights Non-GAAP (Unaudited) For the Quarters Ended (Amounts in thousands, except percentages and per share data) Mar 2018 Dec 2017 Mar 2017 Net sales $ 318,047 $ 306,408 $ 197,519 Adjusted gross margin (1) $ 89,813 $ 92,863 $ 50,572 Adjusted gross margin as a percentage of net sales 28.2% 30.3% 25.6% Adjusted selling, general and administrative (1) $ 43,752 $ 44,517 $ 26,070 Adjusted SG&A as a percentage of net sales 13.8% 14.5% 13.2% Adjusted operating income (loss) (1) $ 35,603 $ 38,393 $ 18,112 Adjusted net income (loss) $ 26,359 $ 30,602 $ 7,845 Adjusted EBITDA $ 48,462 $ 49,579 $ 27,230 Adjusted EBITDA as a percentage of net sales 15.2% 16.2% 13.8% Per share data: Adjusted net income (loss) - basic $ 0.46 $ 0.54 $ 0.17 Adjusted net income (loss) - diluted $ 0.45 $ 0.52 $ 0.14 Weighted avg. shares - basic 57,025 56,778 46,803 Weighted avg. shares - diluted 59,063 58,937 57,130 (1) Quarter ended March 31, 2017 adjusted due to the adoption of Accounting Standards Update ("ASU") No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. 4

Income Statement Highlights U.S. GAAP (Unaudited) (Amounts in thousands, except percentages and per share data) FY 2018 FY 2017 Net sales $ 1,199,926 $ 757,791 Gross margin (1) $ 340,393 $ 186,927 Gross margin as a percentage of net sales 28.4% 24.7% Selling, general and administrative (1) $ 173,620 $ 107,658 SG&A as a percentage of net sales 14.5% 14.2% Operating income (loss) (1) $ 113,303 $ 35,796 Net income (loss) $ 254,529 $ 47,989 Per share data: Net income (loss) - basic $ 4.82 $ 1.03 Net income (loss) - diluted $ 4.34 $ 0.87 Weighted avg. shares - basic 52,798 46,552 Weighted avg. shares - diluted 58,640 55,389 (1) Fiscal year 2017 adjusted due to the adoption of Accounting Standards Update ("ASU") No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Note: The Company completed its acquisition of TOKIN on April 19, 2017, and as such, our results include our 34% interest in TOKIN from April 1, 2017 to April 19, 2017 and all of TOKIN’s results from April 20, 2017 to March 31, 2018. For fiscal year 2017 our results only included our 34% equity investment in TOKIN. 5

Income Statement Highlights Non-GAAP (Unaudited) (Amounts in thousands, except percentages and per share data) FY 2018 FY 2017 Net sales $ 1,199,926 $ 757,791 Adjusted gross margin (1) $ 342,841 $ 188,738 Adjusted gross margin as a percentage of net sales 28.6% 24.9% Adjusted selling, general and administrative (1) $ 160,914 $ 93,742 Adjusted SG&A as a percentage of net sales 13.4% 12.4% Adjusted operating income (loss) (1) $ 142,556 $ 67,804 Adjusted net income (loss) $ 102,678 $ 23,916 Adjusted EBITDA $ 191,250 $ 105,255 Per share data: Adjusted net income (loss) - basic $ 1.94 $ 0.51 Adjusted net income (loss) - diluted $ 1.75 $ 0.43 Weighted avg. shares - basic 52,798 46,552 Weighted avg. shares - diluted 58,640 55,389 (1) Fiscal year 2017 adjusted due to the adoption of Accounting Standards Update ("ASU") No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. 6

Financial Trends Quarterly Sales Summary U.S. GAAP (Unaudited) (1) The December 2016 and March 2017 quarters are shown on a proforma basis including TOKIN sales of $75 million and $79 million, respectively. (2) The June 2017 quarter is shown on a proforma basis including TOKIN as if owned for the entire quarter (acquisition occurred April 19, 2017). 7

Financial Trends Quarterly Sales Summary U.S. GAAP (Unaudited) (1) Includes TOKIN revenues beginning April 19, 2017. 8

LTM Operating Income Margins U.S. GAAP (Unaudited) 9