E•BOOM CAPITAL: Renewable Energy Device Supplier Kemet Corporation is Back

Two years after it was nearly wiped out in the recession, Kemet Corporation (NYSE: KEM), a global manufacturer of devices critical to renewable energy and other sectors, is back on track growing revenues, making profits and trading on the New York Stock Exchange.

Kemet makes a broad range of capacitors, small components of electronic circuits that filter out interference, smooth the output of power supplies, and block the flow of direct current while allowing alternating current to pass. 

In the hydrid electric vehicle sector, the company is involved in 13 different programs with such companies as Bosch Group, Continental AG (XETRA: CON.DE ), Delphi, TRW Automotive Holdings (NYSE: TRW ) and Visteon Corp. (NYSE: VC) and has other collaborations in the pipeline. 

In wind energy, Kemet’s capacitors are designed into equipment manufactured by Vestas Wind Systems (VWDRY.PK)  Gamesa (GCTAF.PK) , Emerson (NYSE: EMR), ABB (NYSE: ABB), and Converteam. 

In solar power, Kemet is a key supplier to Siemens (NYSE: SI), Power-One (NASDAQ: PWER), Inge Team, SolarMax and Kostal.

In energy efficiency, Kemet capacitors are used by such industry leaders as Vacon and Danfoss.

Kemet went public in October of 1992 after completing an initial public offering at $10 per share. At its peak early in the decade, Kemet shares were trading on the NYSE at more than $40 after two-for-one stock splits in 1995 and 2000. 

By December 2008 after the collapse of its markets and facing debt repayment deadlines,  Kemet shares had crashed to under $1 and were delisted from the NYSE. In its Fiscal 2009 results (ended March 31, 2009), the company reported a loss of $285 million on revenues of $804 million. It had cash of $39 million compared with debt of $306.7 million.

Kemet’s survival plan began by arranging short-term financing, restructuring operations around the world, and laying off more than 600 employees. 

The key to Kemet’s financial survival was an equity financing with Platinum Equity, a private equity firm based in Los Angeles, which ended up owning 49.9 percent of the company. Since its founding in 1995 by Tom Gores, Platinum Equity has completed over 100 acquisitions with more than $27.5 billion in aggregate annual revenue at the time of acquisition.

Kemet’s business has since turned around: 

• In its Fiscal 2010 results (ended March 31, 2010), the company reported a loss of $69.4 million on revenue of $736 million. Cash was $79 million and debt was $249.5. 
• In its six-month 2011 results, (ended September 30, 2010), the company reported a profit of $14.8 million on revenues of $492 million. Cash was $117 million and debt was $274 million.

On June 22, 2010, Kemet shares were listed for trading on the NYSE Amex exchange after 18 months of trading on the OTC Bulletin Board. On November 5, Kemet shareholders approved a one-for-three share consolidation (reverse split) and on November 15, Kemet shares were relisted on the NYSE. 

Earlier this week, Kemet announced a proposed secondary offering in which Platinum Equity would sell 8.7 million of its 26.85 million Kemet shares and reduce its ownership of the company to 32.8 percent.

Photo credit: Kemet Corporation

DISCLOSURE: The writer has no positions in, or professional connections with, these companies.