Exhibit 99.1

	300 Throckmorton Street
	Fort Worth, TX 76102

KMG Reports Third Quarter 2016 Financial Results

FORT WORTH, Texas—(BUSINESS WIRE)—June 9, 2016—KMG (NYSE: KMG), a global provider of specialty chemicals, today announced financial results for the fiscal 2016 third quarter ended April 30, 2016.

2016 Third Quarter Financial Highlights

· GAAP diluted earnings per share was $0.53 vs. $0.18 per share in the third quarter of fiscal 2015.

· Adjusted EBITDA¹ increased to $11.2 million compared to $9.1 million in last year’s third quarter.

· Adjusted diluted earnings per share² was $0.41 vs. $0.35 per share reported in the third quarter of last year.

· Long-term debt balance at quarter end was $41.8 million, down from $47 million in the second quarter of fiscal 2016. During the quarter, the company used cash generated from operations to reduce debt by $8 million, and drew $2.8 million on its revolving credit facility to acquire Nagase FineChem.

Chris Fraser, KMG chairman and chief executive officer, said, “We are pleased with our third quarter results, which included 23% growth in adjusted EBITDA and 17% growth in adjusted diluted earnings per share compared to the prior year period. In addition, we generated $15.3 million in cash from operations in the third quarter, increasing our year-to-date cash flow from operations to $29.4 million − more than triple the level from the same period last year. Our strong financial performance reflects our continued focus on execution and driving operational efficiencies.”

Mr. Fraser continued, “Operating income and margins in our electronic chemicals segment improved 23% year-over-year, benefiting from lower distribution costs and continuing manufacturing efficiency. In April, we advanced our growth strategy in the Electronic Chemicals segment with the acquisition of Nagase FineChem (NFC), a Singapore-based manufacturer of electronic chemicals. This acquisition, coupled with our planned capital investment in Singapore, significantly expands our growth opportunity in Asia. With our enhanced capability in this important region, we can better serve our global customers and elevate our presence in the world’s leading region for semiconductor production.

“Our other chemicals segment reported a 25% improvement in operating income compared to the prior year period, aided by favorable raw materials costs and the contribution from the industrial lubricants business. We continue to identify and evaluate opportunities that would complement our industrial lubricants business and provide new paths for growth.”  

¹  Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.

²  Non-U.S. GAAP measure. See Table 2 for reconciliation.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

Consolidated results

Third quarter Dollars in thousands, except EPS	Fiscal 2016						Fiscal 2015
	Adjusted			As Reported			Adjusted			As Reported
	(non-GAAP)3			(GAAP)			(non-GAAP)4			(GAAP)
Net sales	$	75,168		$	75,168		$	73,964		$	73,964
Operating income		8,032			7,029			6,299			4,761
Operating margin		10.7	%		9.4	%		8.5	%		6.4	%
Net income		4,944			6,362			4,099			2,135
Diluted earnings per share	$	0.41		$	0.53		$	0.35		$	0.18

Business segment results

Electronic Chemicals
Third quarter	Fiscal 2016			Fiscal 2015
Dollars in thousands	As Reported			As Reported
	(GAAP)			(GAAP)
Net sales	$	66,637		$	66,388
Operating income		8,183			6,644
Operating margin		12.3	%		10.0	%

For the third fiscal quarter, the Electronic Chemicals segment reported:

· Sales of $66.6 million vs. $66.4 million in the same period a year ago. Foreign currency translation reduced sales by $400,000 as compared to the prior year period. Sales increased in North America, which more than offset the negative foreign currency impact.

· GAAP operating income of $8.2 million vs. $6.6 million in the same period of fiscal 2015. Operating income and margin improved primarily due to operating efficiencies and lower distribution costs.

· EBITDA⁵ of $10.7 million, compared to $9.4 million last year.

³  Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.

⁴  Non-U.S. GAAP measure. See Tables 2 and 2A for reconciliation.

⁵  Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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Other Chemicals

As of May 1, 2015, the Other Chemicals segment includes the pentachlorophenol (“penta”) business and the industrial lubricants business.

Third quarter
Dollars in thousands	Fiscal 2016			Fiscal 2015
	As Reported			As Reported
	(GAAP)			(GAAP)
Net sales	$	8,531		$	7,566
Operating income		2,853			2,276
Operating margin		33.4	%		30.1	%

For the third fiscal quarter, the Other Chemicals segment reported:

· Sales of $8.5 million versus $7.6 million in the same period a year ago. The increase in sales was due to the contribution from the industrial lubricants business, partially offset by lower penta sales.

· Operating income of $2.9 million, or 33.4% of sales, compared to $2.3 million, or 30.1% of sales, last year. The increase in operating income and margin was due to lower raw material costs and the contribution from the industrial lubricants business.

· EBITDA⁶ of $3.2 million, up from $2.3 million last year.

Fiscal 2016 Outlook

· Sales: Fiscal 2016 consolidated net sales are forecast to be approximately $300 million, unchanged from our prior guidance. This forecast includes a projected negative foreign currency impact of approximately $6 million. In our Electronic Chemicals segment, we expect sales to be up slightly compared to the prior year, excluding the effect of foreign currency translation. In our Other Chemicals segment, we expect sales to decrease compared to the prior year due to the divestiture of the creosote business, partially offset by the contribution from the industrial lubricants business.

· Adjusted EBITDA: Based on our strong third quarter results and our expectation for continued year-over-year EBITDA growth in both our Electronic Chemicals and Other Chemicals segments in the fourth quarter, we forecast adjusted EBITDA will be at the upper end of our prior guidance range of $43-45 million. Our fiscal 2016 adjusted EBITDA forecast includes approximately $5 million in stock-based compensation expense and a negative foreign currency impact of approximately $600,000.

· Depreciation and Amortization: Depreciation and amortization expense is forecast to be approximately $14 million, excluding restructuring- and realignment-related depreciation, and is unchanged from our prior forecast.

⁶  Non-U.S. GAAP measure. See Tables 1 and 1A for reconciliation.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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· Capital Expenditures: Capital expenditures are forecast to be less than $15 million, compared to our prior forecast of approximately $15 million.  

Conference call

Date: Thursday, June 9, 2016

Time: 5:00 p.m. ET

Dial in:877-789-6981 or 541-797-2420

Participant passcode: 15841847

The conference call will be webcast live via the “Investors” section of the Company’s website at http://kmgchemicals.com.

If you are unable to listen live, the conference call will be archived on the KMG website. A telephone replay of the call will also be available for one week, starting at 8:00 p.m. ET on June 9, 2016. To access the call, dial 855-859-2056 (domestic) or 404-537-3406 (international) using participant passcode 15841847.

About KMG

KMG Chemicals, Inc., through its subsidiaries, produces and distributes specialty chemicals to select markets. The Company grows by acquiring and optimizing stable chemical product lines and businesses with established production processes. For more information, visit the Company's website at http://kmgchemicals.com.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements as to the future performance of the company. Although the company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development acceptance, the impact of competitive services and pricing and general economic risks and uncertainties.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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KMG CHEMICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	April 30,						April 30,
	2016			2015			2016			2015
Net sales	$	75,168		$	73,964		$	222,677		$	244,505
Cost of sales		46,010			47,149			136,026			161,544
Gross profit		29,158			26,815			86,651			82,961
Distribution expenses		9,177			11,700			28,125			37,721
Selling, general and administrative expenses		12,575			9,257			36,512			28,164
Restructuring charges		377			27			1,398			900
Realignment charges		―			1,070			130			5,429
Operating income		7,029			4,761			20,486			10,747
Other income (expense)
Interest expense, net		(201	)		(111	)		(605	)		(1,098	)
Gain on purchase of NFC		2,069			―			2,069			―
Gain (loss) on sale of creosote distribution business, net		―			(234	)		―			5,448
Other non-operating expense		―			(1,250	)		―			(1,250	)
Other, net		(375	)		(339	)		(243	)		(498	)
Total other income (expense), net		1,493			(1,934	)		1,221			2,602
Income before income taxes		8,522			2,827			21,707			13,349
Provision for income taxes		(2,160	)		(692	)		(6,775	)		(4,539	)
Net income	$	6,362		$	2,135		$	14,932		$	8,810
Earnings per share:
Net income per common share basic	$	0.54		$	0.18		$	1.27		$	0.75
Net income per common share diluted	$	0.53		$	0.18		$	1.25		$	0.75
Weighted average shares outstanding:
Basic		11,729			11,680			11,714			11,669
Diluted		11,990			11,819			11,923			11,758

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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KMG CHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)

	April 30,			July 31,
	2016			2015
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	10,546		$	7,517
Accounts receivable
Trade, net of allowances of $154 at April 30, 2016 and $144 at July 31, 2015	33,952			36,887
Other		6,242			3,668
Inventories, net		39,345			42,082
Current deferred tax assets		―			2,953
Prepaid expenses and other		3,151			3,738
Total current assets		93,236			96,845
Property, plant and equipment, net		85,582			80,589
Deferred tax assets		707			131
Goodwill		22,403			22,408
Intangible assets, net		35,062			36,560
Restricted cash		1,000			1,000
Other assets, net		4,843			4,826
Total assets	$	242,833		$	242,359
Liabilities & stockholders’ equity
Current liabilities
Accounts payable	$	28,789		$	35,980
Accrued liabilities		11,571			9,602
Employee incentive accrual		4,714			4,852
Total current liabilities		45,074			50,434
Long-term debt		41,800			53,000
Deferred tax liabilities		10,188			13,075
Other long-term liabilities		4,628			2,429
Total liabilities		101,690			118,938
Commitments and contingencies
Stockholders’ equity
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued		―			―
Common stock, $.01 par value, 40,000,000 shares authorized, 11,735,793 shares issued and outstanding at April 30, 2016 and 11,690,439 shares issued and outstanding at July 31, 2015	117			117
Additional paid-in capital		35,349			31,676
Accumulated other comprehensive loss		(9,497	)		(9,667	)
Retained earnings		115,174			101,295
Total stockholders’ equity		141,143			123,421
Total liabilities and stockholders’ equity	$	242,833		$	242,359

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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KMG CHEMICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)

	Nine Months Ended
	April 30,
		2016			2015
Cash flows from operating activities
Net income	$	14,932		$	8,810
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		10,606			9,951
Non-cash restructuring & realignment charges		295			5,640
Amortization of loan costs		125			111
Stock-based compensation expense		3,659			1,970
Allowance for excess and obsolete inventory		173			760
Gain on sale of creosote distribution business	−				(5,448	)
Gain on purchase of NFC		(2,069	)	−
Deferred income tax expense (benefit)		(219)			(4,374	)
Other		28			(10	)
Changes in operating assets and liabilities
Accounts receivable — trade		5,022			95
Accounts receivable — other		(2,515	)		(1,756	)
Inventories		2,798			965
Other current and noncurrent assets		541			(1,386	)
Accounts payable		(7,257	)		(4,897	)
Accrued liabilities and other		3,234			(2,219	)
Net cash provided by operating activities		29,353			8,212
Cash flows from investing activities
Additions to property, plant and equipment		(11,377	)		(10,751	)
Purchase of NFC, net of cash acquired		(2,572	)	−
Disposals of property, plant and equipment	−				2,561
Proceeds from sale of creosote product distribution business	−				14,899
Net cash (used in) provided by investing activities		(13,949	)		6,709
Cash flows from financing activities
Net payments under revolving credit agreement	−				(41,100	)
Principal payments on term loan	−				(20,000	)
Borrowings under new credit facility		2,800			59,100
Payments under new credit facility		(14,000	)		(23,000	)
Tax benefit from stock-based awards		38			10
Payment of dividends		(1,053	)		(1,050	)
Net cash used in financing activities		(12,215	)		(26,040	)
Effect of exchange rate changes on cash		(160	)		(1,293	)
Net increase (decrease) in cash and cash equivalents		3,029			(12,412	)
Cash and cash equivalents at beginning of period		7,517			19,252
Cash and cash equivalents at end of period	$	10,546		$	6,840

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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Reconciliation of GAAP financial measures to non-GAAP financial measures

KMG provides non-GAAP financial information to complement reported GAAP results. KMG believes that analysis of our financial performance would be enhanced by an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. We define adjusted EBITDA as earnings from operations before interest, taxes, depreciation, amortization, acquisition and integration expenses, restructuring and realignment charges and other relevant items.

KMG intends to continue to provide certain non-GAAP financial information and the appropriate reconciliation to GAAP in its financial results. As required by SEC rules, the tables below present a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures. These non-GAAP measures should be viewed as a supplement to, and not a substitute for, U.S. GAAP measures of performance.

Table 1

RECONCILIATION OF CONSOLIDATED GAAP NET INCOME TO CONSOLIDATED EBITDA

(in thousands)

	Third Quarter Fiscal 2016			Nine Months Ended April 30, 2016
Consolidated GAAP net income	$	6,362		$	14,932
Add back (deduct):
Income taxes		2,160			6,775
Gain on purchase of NFC		(2,069	)		(2,069	)
Interest expense		201			605
Depreciation & amortization*		3,772			10,901
Consolidated EBITDA	$	10,426		$	31,144
*Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows.

	Third Quarter Fiscal 2015		Nine Months Ended April 30, 2015
Consolidated GAAP net income	$	2,135	$	8,810
Add back (deduct):
Income taxes		692		4,539
Other non-operating expense		1,250		1,250
Loss (gain) on sale of creosote distribution business		234		(5,448	)
Interest expense		111		1,098
Depreciation & amortization*		3,894		15,591
Consolidated EBITDA	$	8,316	$	25,840
*Includes depreciation related to restructuring and realignment included in non-cash restructuring and realignment charges on the statement of cash flows.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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Table 1A

RECONCILIATION OF OPERATING INCOME TO EBITDA AND ADJUSTED EBITDA

(in thousands)

Note that we do not allocate certain financial statement line items below operating income to our segments; as such, the reconciliations below only reflect the reconciliation of our operating income by segment to our non-GAAP measures.

Third Quarter Fiscal 2016	Electronic			Other
	Chemicals			Chemicals		Corporate			Total
Operating Income (Loss)	$	8,183		$	2,853	$	(4,007	)	$	7,029
Other income (expense)		(401	)		17		9			(375	)
Depreciation and amortization		2,896			285		591			3,772
EBITDA		10,678			3,155		(3,407	)		10,426
Acquisition & integration expenses		—			—		233			233
Restructuring charges*		—			—		187			187
Corporate relocation expense		—			—		393			393
Adjusted EBITDA		10,678			3,155		(2,594	)		11,239
Corporate allocation		2,818			992		(3,810	)		—
Adjusted EBITDA excl. corporate allocation	$	13,496		$	4,147	$	(6,404	)	$	11,239
* Excludes depreciation

Nine Months Ended April 30, 2016	Electronic			Other
	Chemicals			Chemicals			Corporate			Total
Operating Income (Loss)	$	23,927		$	9,421		$	(12,862	)	$	20,486
Other income (expense)		(75	)		(75	)		(93	)		(243	)
Depreciation and amortization		8,660			868			1,373			10,901
EBITDA		32,512			10,214			(11,582	)		31,144
Acquisition & integration expenses		—			—			233			233
Restructuring & realignment charges*		—			—			1,233			1,233
Corporate relocation expense		—			—			1,122			1,122
Adjusted EBITDA		32,512			10,214			(8,994	)		33,732
Corporate allocation		7,779			2,573			(10,352	)		—
Adjusted EBITDA excl. corporate allocation	$	40,291		$	12,787		$	(19,346	)	$	33,732
* Excludes depreciation

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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(Table 1A continued)

Third Quarter Fiscal 2015	Electronic			Wood Treating
	Chemicals			Chemicals			Corporate			Total
Operating Income (Loss)	$	6,644		$	2,276		$	(4,159	)	$	4,761
Other income (expense)		(193	)		(37	)		(109	)		(339	)
Depreciation and amortization		2,983			93			818			3,894
EBITDA		9,434			2,332			(3,450	)		8,316
Acquisition & integration expenses		—			—			441			441
Restructuring & realignment charges*		—			—			388			388
Adjusted EBITDA		9,434			2,332			(2,621	)		9,145
Corporate allocation		1,802			597			(2,399	)		—
Adjusted EBITDA excl. corporate allocation	$	11,236		$	2,929		$	(5,020	)	$	9,145
* Excludes depreciation

Nine Months Ended April 30, 2015	Electronic			Wood Treating
	Chemicals			Chemicals			Corporate			Total
Operating Income (Loss)	$	16,335		$	6,456		$	(12,044	)	$	10,747
Other income (expense)		(76	)		(90	)		(332	)		(498	)
Depreciation and amortization		9,311			286			5,994			15,591
EBITDA		25,570			6,652			(6,382	)		25,840
Acquisition & integration expenses		—			—			441			441
Restructuring & realignment charges*		—			—			689			689
Adjusted EBITDA		25,570			6,652			(5,252	)		26,970
Corporate allocation		7,192			2,704			(9,896	)		—
Adjusted EBITDA excl. corporate allocation	$	32,762		$	9,356		$	(15,148	)	$	26,970
* Excludes depreciation

Table 2

RECONCILIATION OF NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE

(in thousands)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2016			2015			2016			2015
Net income	$	6,362		$	2,135		$	14,932		$	8,810
Items impacting pre-tax income:
Restructuring & realignment charges		377			1,097			1,528			6,329
Acquisition & integration expenses		233			441			233			441
Corporate relocation expense		393		−				1,122		−
Gain on purchase of NFC		(2,069	)	−				(2,069	)	−
Loss (gain) on sale of creosote business	−				234		−				(5,448	)
Environmental site cleanup reserve	−				1,250		−				1,250
Income taxes*		(352	)		(1,058	)		(1,010	)		(900	)
Adjusted net income	$	4,944		$	4,099		$	14,736		$	10,482
Adjusted diluted earnings per share	$	0.41		$	0.35		$	1.24		$	0.89
Weighted average diluted shares outstanding		11,990			11,819			11,923			11,758
*Represents the aggregate tax-effect of the items impacting pre-tax income, except for the gain on the purchase of NFC, which is not a recognized gain for tax purposes.

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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Table 2A

RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

Third Quarter Fiscal 2016	KMG Chemicals, Inc.
Dollars in thousands, except EPS
	Operating					Net			Diluted Earnings
	Income		Margin			Income			Per Share
GAAP measure	$	7,029		9.4	%	$	6,362		$	0.53
Acquisition & integration expenses		233		0.3	%		151			0.01
Restructuring charges		377		0.5	%		245			0.02
Gain on purchase of NFC		—		0.0	%		(2,069	)		(0.17	)
Corporate relocation expense		393		0.5	%		255			0.02
Non-GAAP measure	$	8,032		10.7	%	$	4,944		$	0.41

Nine Months Ended April 30, 2016	KMG Chemicals, Inc.
Dollars in thousands, except EPS
	Operating					Net			Diluted Earnings
	Income		Margin			Income			Per Share
GAAP measure	$	20,486		9.2	%	$	14,932		$	1.25
Acquisition & integration expenses		233		0.1	%		151			0.01
Restructuring & realignment charges		1,528		0.7	%		993			0.09
Gain on purchase of NFC		—		0.0	%		(2,069	)		(0.17	)
Corporate relocation expense		1,122		0.5	%		729			0.06
Non-GAAP measure	$	23,369		10.5	%	$	14,736		$	1.24

Third Quarter Fiscal 2015	KMG Chemicals, Inc.
Dollars in thousands, except EPS
	Operating					Net		Diluted Earnings
	Income		Margin			Income		Per Share
GAAP measure	$	4,761		6.4	%	$	2,135	$	0.18
Restructuring & realignment charges		1,097		1.5	%		713		0.06
Acquisition & integration expenses		441		0.6	%		287		0.03
Loss on sale of creosote business		—		0.0	%		152		0.01
Environmental site cleanup reserve		—		0.0	%		812		0.07
Non-GAAP measure	$	6,299		8.5	%	$	4,099	$	0.35

Nine Months Ended April 30, 2015	KMG Chemicals, Inc.
Dollars in thousands, except EPS
	Operating					Net			Diluted Earnings
	Income		Margin			Income			Per Share
GAAP measure	$	10,747		4.4	%	$	8,810		$	0.75
Restructuring & realignment charges		6,329		2.6	%		4,114			0.35
Acquisition & integration expenses		441		0.2	%		287			0.02
Gain on sale of creosote business		—		0.0	%		(3,541	)		(0.30	)
Environmental site cleanup reserve		—		0.0	%		812			0.07
Non-GAAP measure	$	17,517		7.2	%	$	10,482		$	0.89

KMG Investor Relations

Eric Glover, 817-761-6006

eglover@kmgchemicals.com

Phone: 817.761.6100 ● Fax: 817.761.6001

www.kmgchemicals.com ● NYSE: KMG

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