8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  May 23, 2017

KMG Chemicals, Inc.

(Exact name of registrant as specified in its charter)

TEXAS	001-35577	75-2640529
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)
300 Throckmorton Street, Fort Worth, Texas		76102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code 817-761-6100

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure.

On May 23, 2017, KMG Chemicals, Inc. (the “Company”) will make a presentation to potential lenders in connection with the proposed financing transactions that were previously disclosed on the Company’s Current Report on Form 8-K filed on April 25, 2017. A copy of the lender presentation is furnished as Exhibit 99.1 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.  

Item 9.01Financial Statements and Exhibits.

(d)	Exhibits
99.1	Lender Presentation dated May 23, 2017

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KMG Chemicals, Inc.
By:	/s/ Roger C. Jackson	Date: May 23, 2017
	Roger C. Jackson,
	Vice President, General Counsel and Secretary

EX-99.1

May 2015 Public Lender Presentation May 23, 2017 Exhibit 99.1

Safe Harbor Statement Safe Harbor Statement Forward Looking Statements: With the exception of the historical information contained in this presentation, the matters described herein contain forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements regarding the proposed acquisition of Flowchem Holdings LLC (“Flowchem”), expected timetable for completing the acquisition, future financial and operating results, benefits and synergies of the acquisition, future opportunities for the combined businesses and any other statements regarding events or developments that we believe or anticipate will or may occur in the future. Forward looking statements involve a number of risks and uncertainties that may cause actual results to be materially different from such forward looking statements. Such factors include, among others, general economic conditions and economic conditions in the industrial sector, risks of capacity underutilization, availability of raw materials, currency and other risks associated with international trade, our dependence on certain major customers and suppliers, the uncertainty of regulatory approvals, KMG Chemicals, Inc. (“KMG”) and Flowchem’s ability to satisfy the purchase agreement and plan of merger conditions and consummate the transaction on a timely basis or at all, KMG’s ability to successfully integrate Flowchem’s operations and employees with KMG's existing business, the ability to realize anticipated growth, synergies and cost savings from the acquisition, Flowchem’s performance and maintenance of important business relationships, our ability to develop and successfully market new products and expand into new markets, our ability to successfully identify, consummate and integrate appropriate acquisitions and successfully complete divestitures and other dispositions, contingent liabilities related to acquisitions and divestitures, our compliance with applicable laws and regulations and changes in applicable laws and regulations, risks relating to the potential impairment of goodwill and other intangible assets, tax audits and changes in our tax rate income tax liabilities, litigation and other contingent liabilities including environmental, health and safety matters, risks relating to product defects, product liability and recalls, the impact of our debt obligations on our operations and liquidity, our ability to adjust purchases and manufacturing capacity to reflect market conditions, labor matters, international economic, political, legal, compliance and business factors, disruptions related to man–made and natural disasters, security breaches or other disruptions of our information technology systems, and other risk factors and cautionary statements listed from time to time in our periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our Annual Report on 10-K for the fiscal year ended July 31, 2016. Disclaimer: KMG disclaims any obligation to update any forward looking statements or to publicly announce the result of any revisions to any of the forward looking statements included herein or therein to reflect future events or developments.

Agenda Section I. Executive Summary Section II. KMG Overview & Acquisition Rationale Section III. Flowchem Overview Section IV. Financial Overview Section V. Transaction Overview Agenda

I. Executive Summary

Transaction Summary KMG Chemicals, Inc. (“KMG” or the “Company”), headquartered in Fort Worth, TX and publicly traded on the NYSE (NYSE: KMG), is a globally diversified chemical manufacturer and provider serving mission critical applications in the electronic chemicals, wood treating chemicals, and industrial lubricants markets The Company operates two segments: Electronic Chemicals and Other Chemicals: The Electronic Chemicals segment (“EC”) is integral to the semiconductor manufacturing process The Other Chemicals segment includes: Wood Treating Chemicals preserve and protect wood used for electric power and utility infrastructure Industrial Lubricants enable optimal valve performance and provide important safety benefits On April 24, 2017, KMG announced it had executed a definitive agreement to acquire Flowchem Holdings LLC (“Flowchem”) for $495.0 million representing an ~11x EBITDA purchase price multiple, inclusive of synergies Founded in 2001, and headquartered in Waller, Texas, Flowchem is a leading provider of Drag Reducing Agents (“DRA”) which are used to improve pipeline flow in onshore and offshore pipeline applications KMG’s product portfolio expansion into DRA establishes the Company as a leading global provider of performance products and services for optimizing pipeline operations and throughput KMG generated Consolidated Pro Forma LTM Revenue and Adjusted EBITDA of $404.0 (1) (2) million and $104.6 (1) million, respectively (representing >25% margins) KMG is seeking to raise $600.0 million of Senior Secured Credit Facilities consisting of: $50.0 million 5-year revolving senior secured credit facility, undrawn at close $550.0 million 7-year senior secured term loan B Pro forma total leverage will be 5.26x utilizing $104.6 million of Pro Forma Adjusted EBITDA (1) Pro Forma LTM Adjusted EBITDA inclusive of stock-based compensation and synergies (Pg. 41); assumes KMG’s LTM 1/31/2017 and Flowchem’s LTM 3/31/2017 financials (2) Includes $12.0 million of PF Sealweld revenue I. Executive Summary

Sources & Uses and Pro Forma Capitalization (1) Estimated cash and debt balances (2) Market capitalization as of market close on May 22, 2017 (3) Pro Forma LTM Adjusted EBITDA inclusive of stock-based compensation and synergies (outlined on Pg. 41) Sources & Uses Pro Forma Capitalization ($ in millions) ($ in millions) I. Executive Summary Sources Uses Revolver ($50.0MM Commitment) $0 Purchase Price $495 Term Loan B 550 Paydown Existing Revolver 34 Cash from the Balance Sheet 2 Estimated Fees & Expenses 23 Total Sources $552 Total Uses $552 ($ in millions) Existing Capitalization Pro Forma Capitalization Estimated Multiple Pro Multiple Existing of LTM Forma of PF LTM Capitalization (1) Adj. EBITDA Capitalization Adj. EBITDA Cash & Cash Equivalents $15 $13 Revolver 34 0.59x - - Term Loan B - - 550 5.26x Total Debt $34 0.59x $550 5.26x Market Capitalization (2) 670.7 11.64x 670.7 6.41x Total Capitalization $704.7 12.23x $1,220.7 11.67x Pro Forma Financial Ratios Pro Forma Interest Coverage - Yr. 1 3.20x Pro Forma Total Leverage Ratio 5.26x Pro Forma Debt to Capitalization 0.45100000000000001 LTM Adj. EBITDA $57.6 $104.6 (3)

Presentation Team Title Name KMG Tenure Prior Roles The combined company will be led by an experienced and deep management team collectively having over 230 years of industry experience (1) Joined the Board of Directors in 2008 (2) Includes tenure with Flowchem Industry Tenure Chairman, President, and CEO (1) Christopher T. Fraser 9 years Operating Partner, Advent International President and CEO, Chemical Lime President and CEO, OCI 36+ years Vice President and CFO Marcelino Rodriguez 3 years CFO, Paul Mueller CFO, Lhoist North America 27+ years President, Flowchem Manuel Silva III 9 years (2) Managing Director, MiSwaco Global Trader, Vinmar International Supply Chain Director, Conoco Inc. 27+ years I. Executive Summary

II. KMG Overview & Acquisition Rationale

KMG Overview Growth Driven Organization Dedicated to Operational Excellence Through a Consistent Focus on Execution and Efficiencies Manufactures, formulates, and globally distributes high impact specialty chemicals Headquarters - Fort Worth, Texas Employees - ~700 worldwide Trades NYSE: KMG - $670.0 million market capitalization Three business platforms Electronic Chemicals Wood Treating Chemicals Industrial Lubricants ($ in millions) II. KMG Overview & Acquisition Rationale Global Presence Overview Attractive Historical Financial Profile (1) (2) Matamoros, MX Houston, TX (2) Fort Worth, TX Hollister, CA Pueblo, CO Tuscaloosa, AL Singapore, SG (3) Johor Bahru, MY Riddings, UK Milan, IT Rousset, FR St. Chéron, FR St. Fromond, FR Denotes Corporate Headquarters Denotes Manufacturing / Distribution / Sales Presence Calgary, CA Abu Dhabi, UAE (1) Includes stock-based compensation (2) LTM 1/31/2017 is PF for the acquisitions of Nagase and Sealweld $33 $40$50$58 9% 12% 17% 18% 2014 2015 2016 PFL TM Adj. EBITDA EBITDA Margin

Compelling Value Proposition Underpinned by Mission Critical Chemicals Recurring Revenue Profile Drives Business Stability Proven Acquisition and Integration Strategy Leading Market Positions in Core Product Offerings Significant Barriers to Entry with Limited Threat of Substitution Solid Financial Performance and Free Cash Flow Profile Experienced Management with a Deep Bench of Expertise Entrenched and Diversified Blue Chip Customer Base Key Investment Considerations Resilient End Markets with Strong Growth Tailwinds ü ü ü ü ü ü ü ü ü II. KMG Overview & Acquisition Rationale

Value Added Product Portfolio KMG’s mission critical products represent a minimal portion of the overall end product cost Electronic Chemicals Wood Treating Chemicals Industrial Lubricants (1) Pro forma for the Sealweld acquisition in February 2017 II. KMG Overview & Acquisition Rationale LTM Revenue ~$270 million Other Chemicals: ~$48 million (1) Segment Highlights Key supplier of high purity process chemicals (“HPPC”) to major semiconductor manufacturers Integral to the semiconductor manufacturing process Sole producer of penta in North America Penta preserves and protects wood utility pole infrastructure Enable optimal valve performance and provide important safety benefits Leading worldwide supplier of valve maintenance products and services for the pipeline and energy storage markets Select Products Acids & bases Solvents & solvent blends Performance products Custom blends EPA registered penta Lubricants Sealants Cleaners Fittings, adapters and application equipment Valve maintenance services and training Cost of End Product ~1% <5% <1%

Growth Strategy KMG’s Acquisition Growth Strategy Well Defined Growth Strategy Focus on mature, niche segments of larger markets Establish leading market positions through consolidation and organic growth Maximize economic returns Realize operational and commercial synergies Well defined growth strategy provides a template for strategic acquisitions ü Barriers to entry Unique products with high value applications ü Strong management and track record of performance ü Acquisition Criteria Strong cash flow ü II. KMG Overview & Acquisition Rationale Platform Growth Cycle Developing Consolidation Leadership Position Electronic Chemicals Wood Treating Industrial Lubricants Ownership Period Platform Evolution Industrial Lubricants

The Evolution of KMG KMG has achieved substantial progress operationally, strategically and financially over the past decade Industrial Lubricants Business Evolution Electronic Chemicals Wood Treating Chemicals Legend: Key Acquisitions KMG has grown organically and through a disciplined acquisition strategy Completed six acquisitions in the last nine years Chris Fraser appointed President and CEO Acquired General Chemical’s EC business Divested Creosote distribution assets Acquired Sealweld and signed a definitive agreement to acquire Flowchem Transitioned corporate headquarters to Fort Worth, Texas Consolidated EC operations in N.A and EU Acquired High Purity EC business from Air Products Acquired OM Group’s Ultra Pure Chemicals business Acquired Nagase FineChem Singapore Implemented SAP ERP system in the U.S. Established Industrial Lubricants segment with Val-Tex acquisition 2008 2010 2016 2015 2013 2017 2014 II. KMG Overview & Acquisition Rationale

Joined KMG in 2008 with more than three decades of experience leading consultative organizations B.S. in Chemistry & Business Administration – University of Connecticut, M.B.A. – Pepperdine University Christopher T. Fraser Chairman, President, and CEO 36+ Joined KMG in 2014 with former experience from Paul Mueller and Lhoist North America B.B.A. in Accounting – University of Texas, San Antonio, M.B.A. – St. Mary’s University Marcelino Rodriguez Vice President and CFO 27+ Manuel Silva III President of Flowchem Joined KMG in 2017 via the acquisition of Flowchem B.S. in Engineering – Structural and Civil engineering – University of Texas at Austin 27+ Ernest Kremling Senior Vice President, Other Chemicals and Manufacturing Services Joined KMG in 2008 with former experience at Dow Chemical Company B.A. in Chemistry – Hendrix College, Chemical Engineering – University of Missouri-Columbia 28+ Monte Green Director of Corporate Development Joined KMG in 2015 with experience at Imperial Capital, Lehman Brothers, and Bank of America B.B.A. in Finance and Marketing – Texas Christian University, M.B.A. – University of Chicago 17+ (in years) Roger Jackson Vice President, General Counsel, and Secretary Joined KMG in 2002 with experience at Woods & Jackson, LLP and Brown, Parker, & Leahy LLP B.A. in History – University of Houston, J.D. – University of Houston 38+ Management Team Industry Tenure The combined company will be led by an experienced and deep management team with over 230 years of collective industry expertise II. KMG Overview & Acquisition Rationale Jeff Handelman Senior Vice President, Electronic Chemicals Joined KMG in 2017 with former experience at Versum Materials and Air Products and Chemicals B.S. in Economics – Northern Illinois University, M.B.A. – Kansas University 30+ Experienced Management Team Chris Gonser Vice President, Human Resources Joined KMG in 2013 with experience at Lhoist North America and Celanese B.B.A. in Accounting – Baylor University and holds the Senior Professional in Human Resources (SPHR) certification from the Society of Human Resources Management 30+

Historical Electronic Chemicals Revenue Pueblo, CO Electronic Chemicals Overview II. KMG Overview & Acquisition Rationale Electronic Chemicals: Global Footprint Leading global supplier Broad portfolio of value-added high purity process chemicals Essential products for the manufacture of semiconductors Specializes in purification, formulation, blending, and packaging Facilities in North America, Europe, and Asia Serves leading global semiconductor manufacturers Electronic Chemicals Overview Fort Worth, TX Hollister, CA Singapore, SG (3) Johor Bahru, MY Riddings, UK Milan, IT Rousset, FR St. Chéron, FR St. Fromond, FR Denotes Corporate Headquarters Denotes Manufacturing / Distribution / Sales Presence ($ in millions) $86 $270 FY 2009 LTM 1/30/17

North America Europe Asia Geographically Diverse Blue Chip Customer Base Critical supplier servicing the largest and most advanced semiconductor producers Leading edge technology in purification and analytical capabilities Extensive global supply chain expertise Strategic growth through consolidation Completed four acquisitions since 2008 Manufacturing consolidation has enhanced operational efficiency and generated sustainable cost savings KMG is the only global supplier of HPPC Leading HPPC Market Shares in U.S. and Europe Expanding and Growing Presence in Asia Electronic Chemicals Overview (Continued) Electronic Chemicals II. KMG Overview & Acquisition Rationale KMG Market Portfolio 2012 & Prior Current Computing & Storage 85% Mobility & Other Emerging Markets 15% Mobility & Other Emerging Markets 55% Computing & Storage 45%

Strategic Consolidation – Electronic Chemicals Proven Track Record of Executing Highly Strategic Acquisitions Ultra Pure Chemicals Business Electronic Chemicals Business Target Year Highlights Gained leading HPPC market share in U.S. ü Transitioned production from 4 facilities to 2 ü Increased U.S. capacity utilization ü Transformed KMG into a global company – only global supplier of HPPC ü Attained leading HPPC market share in Europe ü Enhances ability to serve global electronic chemicals customers ü Bargain purchase / immediately accretive ü Capital investment to expand capabilities will drive growth ü Purchase Price Strategic entry into HPPC segment ü Acquired state-of-the-art facilities ü Electronic Chemicals Business 2008 2010 2013 2016 $75 million $26 million $63 million $2.8 million II. KMG Overview & Acquisition Rationale Electronic Chemicals Business Acquired EBITDA Acquired approximately $24 million of EBITDA with four acquisitions (1) (1) Based upon management’s estimate of aggregated acquired EBITDA at close ü Leading customer base ü Broadened and diversified HPPC product portfolio and end markets

($ in millions) Demonstrated ability to identify, execute, and integrate strategic acquisitions and realize meaningful synergies Proven Track Record of Realizing Synergies Significant Potential Growth from Nagase Acquisition Strong EBITDA Growth Opportunity ü Strengthens position in Asia by establishing a manufacturing presence ü $10.0 million capital investment will increase manufacturing, packaging, and purification capabilities ü Electronic Chemicals Business 85% Increase in EBITDA Purchase Price: $25.5 Purchase Multiple: 5.5x Purchase Multiple Post-Synergies: 3.0x Transitioned production from four facilities to two ü ($ in millions) Ultra Pure Chemicals Business 85% Increase in EBITDA Purchase Price: $62.6 Purchase Multiple: 7.9x Purchase Multiple Post-Synergies: 4.6x Effective consolidation of UPC operations generated sustainable synergies ü Second largest acquisition in KMG’s history ü II. KMG Overview & Acquisition Rationale Purchase Price: $2.9 Purchase Multiple: 5.8x EBITDA Expansion Post-Acquisition Expected Future Annual EBITDA Significantly increased capacity utilization ü Proven Acquisition and Integration Strategy $4.6 $3.9 $8.5 $0.5 $5.0 2016 2020P $8.0 $6.8 $14.8

Source: KMG March 2017 Investor Presentation (1) Excludes silicon wafers HPPC Market Overview ~$12 Billion Global Semiconductor Fab Materials Market (1) Global Semiconductor Fab Materials Market is ~$12 billion HPPC represents 13% of the total fab materials market Key products sold to the semiconductor industry include: Sulfuric acid Hydrogen peroxide Isopropyl alcohol Critical materials for semiconductor manufacturing High customer retention due to inherent costs and risks of switching suppliers Global Semiconductor Fab Materials Market Highlights ü ü HPPC $1.5 billion II. KMG Overview & Acquisition Rationale ü Hydrofluoric acid Ammonium hydroxide ü

Favorable End Market Trends Drive Material Needs Manufacturing Process Steps Increasing at Each Technology Node Emerging Markets Driving Semiconductor Revenue Growth II. KMG Overview & Acquisition Rationale Semiconductor Unit Growth Source: IC Insights, Gartner and KLA-Tencor Semiconductor unit growth continues to expand, driven by rising demand for chips in multiple large and growing markets Electronic device proliferation drives demand for high purity electronic chemicals used in semiconductor manufacturing Rising complexity of semiconductor device architectures increases HPPC volume usage Ongoing advances in semiconductor processing technology require ever higher chemicals purity Process Steps 1978 – 2018E CAGR: 8.9% 2015 – 2020 CAGR Semiconductor Industry Outlook KMG is well-positioned to take advantage of these key market trends 2020 Share Auto motive 11 % Wired 5% Wireless 27% Consumer 11% Computing 25% Storage 8% Industrial 13% Mil/Aero 1% Total Semi. 100% 7.0% 2.7% 3.5% 3.1% -1.2% 8.0% 9.1% 1.5% 3.3% 1,200 1,000 800 600 400 200 0 ’78 ’82 ’86 ;90 ’94 ;98 ;02 ;06 ’10 ’14 ’18 1,400 1,200 1,000 800 600 400 200 0 28 NM 24 NM 10 NM 7 NM 5 NM

Other Chemicals Overview II. KMG Overview & Acquisition Rationale Other Chemicals: Global Footprint Includes Wood Treating Chemicals and Industrial Lubricants platforms Wood Treating Chemicals Business: North America’s sole producer of pentachlorophenol Industrial Lubricants Business: manufactures valve sealants, lubricants and equipment, and provides related services and training Other Chemicals Overview (1) Historical revenue excludes the Animal Health Products business (divested 2012) Matamoros, MX Houston, TX (2) Fort Worth, TX Tuscaloosa, AL Denotes Corporate Headquarters Denotes Wood Treating Manufacturing / Distribution Calgary Abu Dhabi, UAE Denotes Industrial Lubricant Manufacturing / Distribution / Sales Presence

Select Customers Other Chemicals: Wood Treating Chemicals Wood Treating Chemicals North America’s sole producer of EPA-registered penta Original Growth Platform for KMG: Fundamental to KMG’s development and early success Fully realized growth-through-consolidation strategy Serves the North American Wood Utility Pole Market: Electric power and telecom utilities rely on wood treating chemicals to protect their utility pole infrastructure Approximately 4 million wood utility poles replaced annually Penta protects wood poles from insect damage and decay, providing a 50-plus year service life II. KMG Overview & Acquisition Rationale Penta’s position is underpinned by significant switching costs Utility Pole Demand by Chemical (1) Penta 45% Creosote 10% (1) Demand for North American Utility Pole Chemicals CCA 45% Aging Utility Poles Wood Pole Decay Zones Decay Zone Deterioration Risk Avg. Pole Age Avg. Reject Age 1 Low 40 52 2 Moderate 42 55 3 Intermediate 39 50 4 High 32 44 5 Severe 32 44 In the US, ~75 million poles are between 30 - 50 years old 1 2 3 3 4 4 5 Denotes Penta Market

Select Customers Other Chemicals: Industrial Lubricants Serves the ~$200 Million Global Valve Lubricants and Sealant Market Oil and gas pipeline and distribution Value-added specialty products Leading worldwide provider of products, services and solutions: Valve lubricants, cleaners, and sealants Fittings, adapters, and application equipment Routine and emergency valve maintenance services and training Global presence with facilities in the United States, Canada, and the Middle East Two premier brands: Val-Tex and Sealweld Strategic growth through consolidation Industrial Lubricants Oilfield Wellhead Midstream Transmission Distribution II. KMG Overview & Acquisition Rationale Provides value to pipeline operators by enhancing safety and efficiencies

Target Year Highlights Purchase Price Strategic Consolidation – Industrial Lubricants Proven Track Record of Executing Highly Strategic Acquisitions Added premium global brand with top-tier customer base ü Broadened participation in key markets such as valve maintenance services and training ü At acquisition the business had revenue of $12.0 million, EBITDA of $2.6 million, with $500K of run-rate synergies expected within the first six months ü Established third growth platform in profitable market ü Leading supplier of lubricants, sealants and related products to key end users and industrial valve manufacturers ü Broad end market diversification includes oil and gas storage, pipeline and gas distribution ü Significantly expanded international presence ü 2015 $24.0 million, included approximately $1.2 million of working capital 2017 $17.0 million, included approximately $5.0 million of working capital II. KMG Overview & Acquisition Rationale

Source: ADI Market Study Attractive Industrial Lubricants Market Trends Stabilizing oil prices à companies expected to increase maintenance and new projects CapEx In North America, breakeven oil costs in unconventional plays are falling and competitive at today’s prices In the U.S., 65% of crude oil pipelines and 83% of product pipelines are over 30 years old à need for regular maintenance Increasing pipeline safety regulations Historical underinvestment in midstream infrastructure à pipeline capacity growth has lagged crude production growth Global operating pipeline mileage is expected to grow ~30% to 40% from 350K miles currently to ~460K miles by 2025P Steady oil prices, upcoming pipeline maintenance projects, and new pipeline construction expected to contribute to strong growth tailwinds (in thousands) WTI Oil Price ‘15 U.S. Crude Oil Pipeline Miles by Age ’15 Refined U.S. Product Pipeline Miles by Age Global Operating Pipeline Mileage Stabilizing Oil Prices Aging Oil & Gas Infrastructure Strong Forecasted Growth in Spending on Pipeline Infrastructure II. KMG Overview & Acquisition Rationale $93 $45 $46 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 ‘ 15 U.S. Crude Oil Pipeline Miles by Age ’15 Refined U.S. Product Pipeline Miles by Age 35% 40% 25% > 60 years 30 to 60 years < 30 years 17% 41% 42% > 60 years 30 to 60 years < 30 years 350 361 371 382 393 405 418 432 446 462 2016p 2017p 2018p 2019p 2020p 2021p 2022p 2023p 2024p 2025p

Evolution of Industrial Lubricants Industrial Lubricants Platform Expansion The acquisition of Flowchem strengthens and expands KMG’s Industrial Lubricants platform Consolidation and Geographic Expansion 2 Services, Education and Equipment 3 DRAs 4 Platform Initiation 1 II. KMG Overview & Acquisition Rationale Pipeline Performance Platform

Flowchem Acquisition Strategic Rationale The pending acquisition of Flowchem strengthens KMG as a leading provider of performance products and services for optimizing pipeline operations and throughput Adds significant size, scale, and diversity ü Expands and strengthens capabilities and product offering in the growing global market for pipeline performance products and services ü Flowchem is the #2 ranked global provider of DRA ü Creates substantial shareholder value through a high level of accretion to EBITDA, margins, and adjusted EPS ü Impressive financial performance, robust margins, and strong free cash flow generation ü Exceptional management and talented, dedicated team with a strong track record of performance ü II. KMG Overview & Acquisition Rationale

Acquisition Overview EBITDA by Segment Evolution (1) Flowchem generated $43 million of LTM (3/31) Adj. EBITDA Strong free cash flow generation Immediate run-rate savings and synergies from management and operational benefits; additional operational synergies expected over time Pro Forma Adjusted EBITDA KMG Standalone EBITDA Pro Forma KMG EBITDA ($ in millions) (1) Breakdown per the Company’s most recent investor presentation, April 24, 2017; excludes corporate overhead costs (2) Includes adjustments for stock-based compensation and acquisition adjustments (3) Includes run-rate savings and synergies (outlined on Pg. 41) Includes Run-Rate Savings and Synergies Pro forma combined company EBITDA margin: >25% II. KMG Overview & Acquisition Rationale (3) (2) KMG 1/31/17 LTM Pro Forma Top 10 Customers Top 10 customers represent ~53% of total pro forma revenue Highly Accretive Acquisition Intend to prudently and quickly de-lever given the Company’s existing free cash flow combined with Flowchem's strong free cash flow generation 47.8% 20.2% 5.6% 5.6% 3.8% 3.4% 3.1% 3.1% 2.9% 2.6% 1.8% $57.6 (2) $47.0 (3) $104.6 KMG 1/31/17 LTM Flowchem 3/31/17 LTM KMG PF Adj. EBITDA Other Chemicals 24% Electronic Chemicals 76% Flowchem and Other Chemicals 56% Electronic Chemicals 44%

Flowchem Integration Strategy Consistent with previous acquisitions, KMG will implement a thoughtful, disciplined approach to the integration of Flowchem II. KMG Overview & Acquisition Rationale Maintain and maximize Flowchem global brand ü Integrate G&A functions into KMG ü Explore consolidating operations (manufacturing, sales and other back-office) of Industrial Lubricants to Waller ü Implement cross-selling / marketing opportunities with Val-Tex and Sealweld ü President and other key Flowchem managers will remain with the business ü

III. Flowchem Overview

Flowchem is the #2 global DRA provider and is differentiated by its DRA focus, customer service and flexibility Leading global provider of DRA solutions, related support services, and equipment to midstream crude oil and refined products (gasoline, diesel, etc.) pipeline operators DRA Description: Specialty chemical used in midstream pipelines to (i) increase throughput; (ii) lower operating pressure; and (iii) reduce energy costs DRA Offering: Manufactures a broad DRA product suite, allowing Flowchem to provide tailored solutions depending on the underlying characteristics of the pipeline Logistics, Equipment and Support Offering: Provides ancillary DRA solutions Headquarters / Employees: Waller, Texas / 73 employees Facilities: Newly expanded, highly efficient flagship facility Customers: Serves over 50 pipeline operators, midstream service providers, and distributors globally Flowchem Overview III. Flowchem Overview Diversified Revenue Base Overview Note: “Domestic” represents U.S. and Canada throughout this memorandum 2016 Revenue by Region 2016 Revenue by Product Type Logistics, Equipment and Support 4% DRAs 96% Broad Suite of Sub-Product Categories

Energy Savings Overview of DRA Usage Pipeline Flow Dynamics and Role of DRA Pipeline operators use DRA to increase throughput, lower operating pressure and / or reduce energy costs Fluid molecules Turbulent Flow Orderly flow with DRAs Drag in pipelines is caused by turbulent liquid flow Increased turbulence can lead to energy loss and reduced throughput of a pipeline DRAs reduce drag throughout the turbulent fluid core The additives align turbulent fluid molecules to linearize the flow patterns DRA polymers have no effect on the composition of crude oil and refined products DRAs DRAs are injected at multiple segments along a pipeline; throughput improvement is immediate Flow Increase Pressure Reduction Value Enhancing Uses of DRA III. Flowchem Overview

Compelling Value Proposition Flowchem DRA offers a compelling customer value proposition to pipeline operators, who are compensated for every barrel of crude oil or refined product that is moved through their pipeline assets (1) Based on 1,280 gallons of DRA (12 ppm per segment) daily on a 1,525 mile pipeline Compelling Economic Benefits to Using DRA Typical TURBOFLO® DRA Performance 36% Capacity Increase ($6.30/bbl) x (72K bbls/d) Incremental Daily DRA Cost (1) Results in over $50 million of customer net incremental revenue annually ~$450K ~$165K ~($25K) ~$590K (Recent Flowchem customer experience) Refined Products Light Crude Medium Crude Heavy Crude III. Flowchem Overview DRA are an instrumental part of maximizing throughput capacity, which drives pipeline margins and increases revenue to pipeline operators Without implementing a DRA solution, pipelines are limited to a maximum throughput capacity that can only be meaningfully increased by installing additional pipelines or pump stations, which are highly capital and time intensive Flowchem’s value proposition has been validated by customer data proving its ability to significantly increase pipeline throughput Pre-DRA Daily Revenue Incremental Daily Revenue Incremental Daily Cost Post-DRA Net Revenue

Non-Cyclical Solutions Provider to Attractive Midstream Energy Sector Flowchem has impressively grown volume, revenue, and profitability through various oil price environments Four Key Trends Driving DRA Market Growth Oilfield Service Group: Baker Hughes, Bri Chem, Canadian Energy Services, Flotek, Halliburton, Schlumberger, Weatherford International; for 2016 uses consensus estimates III. Flowchem Overview Consistent Flowchem Growth Revenue Growth 2012 to 2016 CAGR Flowchem 15.0% DRA Industry 6.2% Oilfield Service Group (16.0)% WTI Spot Price (17.0)% Global oil demand DRA usage not dependent on market price of oil Rising global oil demand increases strain on pipeline networks, incentivizing pipeline operators to use DRA to optimize throughput Steadily rising industrial electricity costs Higher electricity costs raise pipeline operating costs DRA are a cost-effective solution to lower pipeline operating pressure and reduce pumping costs Aging pipeline infrastructure Aging pipelines often operate inefficiently; DRA extend the useful life of aging pipelines by improving throughput flow and reducing costs New pipeline construction Pipelines are increasingly being designed for DRA usage; DRA usage reduces pipeline construction capital requirements

Global DRA Market Overview Significant Addressable Market 2016 DRA Market Breakdown Historical and Projected DRA Demand Addressable market represents DRA demand at full penetration levels Global DRA industry demand is forecasted to grow at a CAGR of 5% to 9% through 2025P 2016 DRA Demand: ~$400 million By Product By Geography Avg. Crude Oil DRA Penetration Rate Avg. Refined Products DRA Penetration Rate 33% 24% 48% 36% ($ in millions) Base Case CAGR: 5% High Case CAGR: 9% (1) Crude Oil 83% ($ in millions) Source: Source: November 2016 market study commissioned by Flowchem; Flowchem also performed its own internal study with third party data (1) Assumes a modest increase in DRA penetration rate 2016 global DRA demand was ~$400 million, and the 2016 addressable market exceeded $1.0 billion Industry is largely consolidated, with a low risk of new potential entrants given high barriers to entry and disciplined participants that are motivated to grow the overall market size Industry primarily served by three market participants III. Flowchem Overview Refined Products 17% Heavy 18% Light / Medium 65% U.S. 49% Europe 14% Canada 9% Latin America 10% Africa / Middle East 11% 2016 2025P $875 $400 $400 $1,000 36% 24% 33% 48%

IV. Financial Overview

Financial Policy Overview IV. Financial Overview Liquidity: Focused on maximizing financial flexibility and maintaining ample liquidity Liquidity is supported by a $50 million revolving credit facility (undrawn at close) plus significant free cash flow generating capability Publicly Stated Leverage Target is 3.5x Debt / EBITDA: The Company anticipates rapidly and prudently reducing debt to achieve its stated leverage profile through free cash flow generation, as well as other means, as necessary KMG has an effective $200 million universal shelf filed with the SEC on April 7, 2017 The Company does not anticipate any changes to its current dividend policy, nor does it anticipate initiating a share repurchase program KMG has not historically repurchased shares Controls: The Company is currently working to implement an interest rate hedging program to manage its mix of fixed to floating-rate debt The existing business has a natural foreign currency hedge due to balanced global operations Company maintains stringent financial controls to drive consistency, accuracy, and integrity throughout the organization Implemented a robust ERP system in 2015 (SAP)

Historical Financial Summary (1) KMG has a 7/31 FYE, Flowchem has a 12/31 FYE (2) PF LTM financial position reflective of KMG’s LTM 1/31/2017 period (PF for the Nagase and Sealweld acquisitions) and Flowchem’s LTM 3/31/2017 financials; includes $6.0 million of pro forma run-rate savings and synergies (3) Adjusted for stock-based compensation (4) Free Cash Flow Calculated as Adj. EBITDA – Capex IV. Financial Overview Fiscal Year (1) ($ in millions) 2014A 2015A 2016A PF LTM (2) Total Revenue $410.3 $395 $381.6 $404 Total Pro Forma Adjusted EBITDA (3) $57.9 $74.900000000000006 $89.6 $104.6 % EBITDA Margin 0.14099999999999999 0.19 0.23499999999999999 0.25900000000000001 KMG Capital Expenditures 9.5 13.8 14.4 13.7 Flowchem Capital Expenditures 2.2000000000000002 4.9000000000000004 6.9 6.1 Total Capital Expenditures $11.7 $18.7 $21.3 $19.8 % of Revenue 2.9% 4.7% 5.6% 4.9% Free Cash Flow (4) $46.2 $56.3 $68.3 $84.8 % of Adjusted EBITDA 0.79800000000000004 0.751 0.76200000000000001 0.81100000000000005

($ in millions) $210.0 million of cumulative free cash flow from 2014 – LTM 1/31/17 ($ in millions) Pro Forma Adjusted EBITDA and EBITDA Margin Cumulative Free Cash Flow (1) (2) (1) Free Cash Flow Calculated as Adj. EBITDA – Capex (2) Pro Forma LTM financial position reflective of KMG’s LTM 1/31/2017 period and Flowchem’s FY 12/31/2016 financials Demonstrated strong financial performance and growth with a strong margin profile IV. Financial Overview Margin driven by competitive advantages: scale / size, low-cost product, and supply chain positioning KMG enjoys superior margin management (>2x increase in operating income over 2015) and a 24% Adjusted EBITDA CAGR from 2014 - 2016 Limited capital expenditure and working capital needs facilitate significant free cash flow generation reinforced by defensible end markets Flowchem generates robust free cash flow and profitability Financial Performance and Free Cash Flow Profile 17% $57.9 $74.9 $89.6 $104.6 21% 23% 26% $46.2 $102.4 $170.7 $210.0 2014A 2015A 2016A PF LTM 2014A 2015A 2016A PF LTM Adj. EBITDA Adj. EBITDA Margin

KMG has quickly and prudently de-levered post strategic acquisitions IV. Financial Overview Historical Long Term Leverage General Chemical Electronic Chemicals Business OM Group Ultra Pure Chemicals Business Val-Tex $25.5 million acquisition closed in March 2010 Cash consideration was funded from a draw on the revolver increasing long term debt to $61.3 million De-levered to $22.0 million prior to next material acquisition in 2013 $62.6 million acquisition closed in June 2013 Cash consideration was funded from a draw on the revolver increasing long term debt to $85.0 million De-levered to $35.0 million prior to next material acquisition in 2015 $23.7 million acquisition closed in May 2015 Cash consideration was funded from a draw on the revolver increasing long term debt to $53.0 million De-levered to $33.3 million prior to next material acquisition in 2017 2010 2011 2012 2013 2014 2015 2016 2017 History of Deleveraging 1.8x 1.6x 1.7x 1.7x 2.2x 1.8x 1.7x 1.0x 0.7x 0.7x 0.7x 0.7x 3.1x 3.0x 2.8x 2.4x 2.0x 1.8x 1.1x 1.0x 1.4x 1.3x 1.1x 1.0x 0.8x 0.7x 0.8x Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 2014 2015 2016 2017

Adjustments, Run-Rate Savings, and Synergy Detail Stock-based compensation Adjustment assuming full fiscal year benefit of the Sealweld acquisition (closed February 1, 2017) and Nagase acquisition and relevant pro forma adjustments (closed April 4, 2016) Cost savings related to plant consolidation and realized in-sourcing logistics benefits, manufacturing efficiencies, salary savings from management, and other SG&A efficiencies Other operational cost synergies expected to be realized within the first six to eight quarters of ownership Adjustments, Run-Rate Savings, and Synergy Detail 1 2 3 4 (*) Represents Adjusted EBITDA, as reported in the Company’s Financial Statement Note: KMG defines Adjusted EBITDA as earnings from continuing operation before interest, taxes, depreciation, amortization, acquisition and integration expenses, restructuring and realignment charges, and other designated items IV. Financial Overview 1 2 3 4 Pro Forma ($ in millions) LTM Period KMG Consolidated Adjusted EBITDA, as Reported (*) (1/31/17) $48.5 Adjustments: Stock-Based Compensation 5.6 Full Year Pro Forma Effect of Acquisitions 3.5 KMG Adjusted EBITDA $57.9 Flowchem Adjusted EBITDA (3/31/17) $43 Synergies Immediate Management and Operational Synergies 2.0 - 3.0 Operational Synergies Over Time 1.0 - 2.0 Flowchem Pro Forma Adjusted EBITDA $47 Pro Forma Combined Company Adjusted EBITDA $104.6

V. Transaction Overview

Summary of Terms Borrower: KMG Chemicals, Inc., a Texas corporation (the “Borrower”) Guarantors: Each existing and future direct and indirect subsidiary (with exceptions to be agreed with respect to each subsidiary that is a controlled foreign corporation within the meaning of section 957 of the Internal Revenue Code) Security: Secured by a perfected first-priority security interest subject to permitted liens and to customary exceptions Facilities: $50.0 million Revolving Credit Facility (“Revolver”) $550.0 million Term Loan B Facility (“Term Loan B”) Tenor: Revolver: 5 years Term Loan B: 7 years Indicative Pricing: Revolver: TBD Term Loan B: TBD Upfront Fees / OID: Revolver: TBD Term Loan B: TBD Amortization: Revolver: None Term Loan B: 1% per annum, bullet at maturity Call Protection: Term Loan B: 101 soft call (6 months) Financial Covenants: Maximum Total Net Leverage Ratio Incremental Facility: $100 million, subject to closing date Consolidated Total Net Leverage Ratio and no Event of Default V. Transaction Overview

May 23rd – Lender Meeting June 9th – Lender Commitments Due June 15th – Close and Fund Financing Transaction Timeline Select Financing Milestones V. Transaction Overview 42856 42887 Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 4 5 6 7 8 9 10 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 18 19 20 21 22 23 24 28 29 30 31 25 26 27 28 29 30 Important Date on Timetable Banking Holiday

V. Transaction Overview Key Investment Considerations Compelling Value Proposition Underpinned by Mission Critical Chemicals Recurring Revenue Profile Drives Business Stability Proven Acquisition and Integration Strategy Leading Market Positions in Core Product Offerings Significant Barriers to Entry with Limited Threat of Substitution Solid Financial Performance and Free Cash Flow Profile Experienced Management with a Deep Bench of Expertise Entrenched and Diversified Blue Chip Customer Base Resilient End Markets with Strong Growth Tailwinds ü ü ü ü ü ü ü ü ü