KEMET's Vision to be the Preferred Supplier of Electronic Component Solutions, Demanding the Highest Standards of Quality, Delivery and Service, Interview with Per Loof, CEO
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 10/17/2018
KEMET Corporation (NYSE: KEM) offers its customers the broadest selection of capacitor technologies in the industry, along with an expanding range of electromechanical devices, electromagnetic compatibility solutions and supercapacitors. KEMET's vision is to be the preferred supplier of electronic component solutions, demanding the highest standards of quality, delivery and service. We learned from Per Loof, CEO of KEMET, that the company's revenues last year were around $1.2 billion, and they are planning to see an 11% increase this year. We learned from Mr. Loof that KEMET is the largest Tantalum polymer supplier in the world, as well as a large supplier of ceramic components, film, electrolytics, EMC and sensors, serving a broad range of global markets from industrial to automotive, computers and communications. According to Mr. Loof, KEMET values its relationships with customers, investors, suppliers, employees, as well as the communities in which it operates.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Per Loof, CEO of KEMET. Could you refresh our readers’/investors’ memories on what KEMET does in electronic components, as a business and as a company?
Per Loof: KEMET is an electronic components company that will actually turn 100 years old next year. We manufacture globally, sell our products to global customers and have facilities in many parts of the world. We mainly make capacitors but that’s not all. We also make electromagnetic components, as well as sensors and actuators, air filters, and some modules. We are selling a pretty broad product capability to major electronics companies globally.
Our revenues last year were around $1.2 billion. We have told the street that we are expecting to see an 11% increase this fiscal year.
Dr. Allen Alper: That sounds excellent. Could you tell our readers/investors what differentiates your company from others?
Per Loof: We are the largest Tantalum and Tantalum polymer supplier in the world and in the Tantalum marketplace. With a third of the market, we believe we are the technology in polymer and see that as the technology of the future.
In ceramic components, we are a specialty and automotive supplier. We are not a commodity supplier. It's a good and very much growing business for us – this past year we grew 19%.
When it comes to film and electrolytics, we specialize in automotive and industrial. It is much the same with the EMC business, sensors and actuators.
We have a reasonably large consumer share within our sensors and EMC business as well, particularly in Japan, but we are also growing our presence elsewhere.
Dr. Allen Alper: That sounds very good. Could you tell our readers/investors a little bit more about the markets you serve?
Per Loof: The markets we serve are pretty broad. The largest markets have been industrial with about 27% of our business is in that space. Computers and automotive are large as well at close to 20 percent each. Automotive has always been a focused segment and we see tremendous growth opportunities in that space. We sell specialty components to military and medical customers. All in all, we serve a pretty broad range.
In terms of the markets we serve, we do over 22% in Europe and 20% in the US; about 15% in Japan and Korea and the remainder in the rest of Asia.
In terms of products, tantalum is 41%; ceramics is about 22%; magnetics sensors and actuators 20% and the rest is in Film and electrolytics.
Dr. Allen Alper: That sounds excellent. Could you tell us about the growth of your market?
Per Loof: Well, we grew last quarter by quite a bit and we've seen growth in the high teens. We are predicting that we will continue to grow. There are a lot of factors at play in the growth of the electronic components industry. Of course, it's driven by the end applications. We see an explosion of devices; we see the beginning of the electrification of the transportation industry; we're going to see a huge investment in the next communications platform--the 5G platform--which is going to revolutionize how we can connect with one another and also download a huge amount of data in a very simple manner.
In a sense, we can say that we are at the beginning of the digitization of society. We have to come up with new words to explain how much data is being transmitted from point A to point B. Now we talk in ecobytes, which I think are a million trillion bytes. We are seeing devices that are being used all the time, always connected, always on, and, of course, are all being supported by huge server farms that are popping up like mushrooms.
We see this market being set for growth for a long time. I have said that I don't believe this is a cycle; this is more of a trend. We also know that the changing demographics are going to play a role. The population growth on planet Earth is going to happen in an age group that are huge users of technology.
Dr. Allen Alper: Sounds excellent. How does KENET make tantalum capacitors with conflict free tantalum supply chain?
Per Loof: We were the first to be able to go back into central Africa and the Democratic Republic of the Congo, utilizing legislation passed in 2010 during the Obama Administration as part of the Dodd-Frank Act. We have been able to declare ourselves conflict free since 2013. I believe we are the only capacitor company that's been able to do that.
Dr. Allen Alper: That sounds very good. Could you tell our readers/investors about what quantity of powder will be used per year?
Per Loof: The quantities being used per year? In terms of powder, we use about 30,000 pounds of tantalum powder on a monthly basis. Just to give you some perspective: to produce a pound of powder you will have to dig up about 18 metric tons of dirt. And that's actually a pretty good ratio. We make about three and a half billion tantalum capacitors per annum. You can do the math on what's required to achieve this. We can make about 10,000 capacitors per pound of tantalum powder.
Dr. Allen Alper: That sounds excellent. That must mean that your Company, KEMET, is by far the largest user of tantalum in the world, is that correct?
Per Loof: We think so, in the capacitor arena.
Dr. Allen Alper: Could you tell our readers/investors a bit about your background, Per?
Per Loof: I've been with KEMET for about 14 years now. Prior to that I was the Chief Executive Officer of Sensormatic Electronics, which we sold to Tyco. Before that I was with NCR, AT&T and Digital Equipment, and so in the technology business but more on the systems side. Basically, I've been involved with turnaround situations for a long time. I came to KEMET to try and turn the company around; to take it from a situation where they were losing money and not growing to growth and profitability. It's nice to see that we are now on a much better path in terms of capability, financial performance, and with a way better balance sheet than the company has had in a long, long time.
Dr. Allen Alper: Sounds excellent. That's a great track record, something of which to be very proud. Could you tell us, our readers/investors, a bit about your Team?
Per Loof: Our Team has been together a long time. The average tenure on my leadership team is over 17 years in the company. We have a lot of experience. We have men and women from seven different countries, only three women but we're working on that, too. A very diverse group. KEMET, as a company, is very diverse and we see that as a strength. This is important because we have customers and supplier in many countries.
Chuck Meeks and Bob Willoughby are leading the Tantalum and Ceramic groups. They are both American and each has been with the company for over 30 years. Andreas Meier, who leads the Film and Electrolytics Group, is German. He’s been with the company for over 20 years. Shigenori Oyama, the global President of TOKIN, leads the Magnetics, Sensors and Actuators. He's Japanese, runs his business out of Tokyo, and has been with TOKIN for about 35 years so a lot of experience there.
Our Sales leader, Claudio Lollini, is Italian and has been with the company 16 years. Phil Lessner, our Chief Technology Officer, has been with the company over 20 years as well. I am very proud of my Team.
Dr. Allen Alper: That sounds like an excellent, strong, experienced team; a team that knows how to work with each other.
Per Loof: We have been through a lot together. It hasn't been a straight shot. We've had our trials and tribulations along the way but we've stuck together, supported each other, and come out of this looking better than ever.
Dr. Allen Alper: That's fantastic. Could you tell our readers/investors a bit about your share and capital structure?
Per Loof: We have about 56 million shares outstanding. The management has stock as well, naturally, as do I, personally. We are widely held, I'd say.
Dr. Allen Alper: Where are you listed?
Per Loof: We are listed on the New York Stock Exchange under the symbol KEM.
Dr. Allen Alper: That sounds very good. What are the primary reasons our high-net-worth readers/investors should consider investing in your company?
Per Loof: I think we are well placed, with regard to our technologies, to be able to support and take advantage of what's going to happen in terms of the digitization of society over the next five to 10 years. We do tend to take a very long view on how we go about things. We value our relationships with customers, investors, suppliers, and our employees, as well as the communities in which we operate.
We tell ourselves and our customers that we understand that sometimes we won't win every business, every deal, but we want to be the emotional favorite every time. We try to form relationships with our closest associates that could take us to new places and keep relationships going, even when the times are not so easy.
This year and coming into the next couple of years, we believe the growth will continue to be positive. The end markets are behaving positively. Barring any macroeconomic situation or geopolitical situation that, of course, we cannot control, I'm convinced that this will continue as we go forward.
We are seeing a trend; this is not a bubble or a cycle. It is something we should be able to enjoy if we behave appropriately.
Dr. Allen Alper: You have a very, very impressive company, a very strong technology, strong ethics and a great team and a great market. It sounds like you're an excellent company.
Per Loof: I appreciate those kind words.
Dr. Allen Alper: They’re well deserved. We’ll publish your press releases as they come out so our readers/investors can follow your progress.
http://www.kemet.com/
William M. Lowe, Jr.
Executive Vice President and
Chief Financial Officer
williamlowe@kemet.com
864-963-6484
Robin Blackwell
Vice President Corporate Communications
and Investor Relations
robinblackwell@kemet.com
954-245-8742
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