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Actionable news in OMN: OMNOVA SOLUTIONS Inc,

OMNOVA Solutions: Sandi Noah Paul Desantis Communications Chet Fox

The following excerpt is from the company's SEC filing.

(216) 682-7011 Investor Relations (216) 682-7003

OMNOVA Solutions Grows First Quarter 2016 Adjusted EPS

to $0.04 Per Diluted Share, Up From a Loss of $0.01 Per Share Last Year

First Quarter 2016 Highlights

For first quarter 2016, the Company reported a net loss of $1.1 million, or $0.03 per share, compared with a loss of $3.2 million, or $0.07 per share, in 2015. First quarter results for both years included $3.5 million of pretax charges related to restructuring and other actions.

Adjusted I ncome From Continuing Operations for the 2016 first quarter grew to $1.9 million, compared with a loss of $0.6 million in 2015. (See Tables A and B)

Adjusted Segment Operating Profit margins expanded by 240 basis points, to 8.2%, versus 5.8% in the first quarter of last year.

Adjusted trailing twelve month EBITDA increased to $81.3 million from $77.7 million at last year’s first quarter-end. (See Tables C and D)

The Company reduced its leverage as net debt-to-adjusted trailing twelve month EBITDA improved to 3.8x, compared to 4.2x at the end of last year’s first quarter.

After one quarter, the Company is on track to deliver another year of significant growth in Adjusted Diluted Earnings Per Share, driven by cost reductions, margin expansion and accelerated growth in key specialty businesses, offsetting expected market declines primarily in the North American paper market.

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OMNOVA Solutions Inc. (NYSE: OMN) today announced Adjusted Income From Continuing Operations increased to $1.9 million, or $0.04 per diluted share, for the first quarter ended February 29, 2016. This compares with a first quarter 2015 Adjusted Loss From Continuing Operations of $0.6 million, or a loss of $0.01 per share. (See Tables A and B) The first quarter, which starts December 1, has historically been the Company's slowest quarter due to seasonality. The $0.05 increase in adjusted earnings per share was driven primarily by year-over-year margin expansion and growth in higher-margin specialty businesses, partially offset by lower volumes in the oil & gas and North American paper and carpet markets.

During the first quarter of 2016, the Company recognized $3.5 million of pretax charges (approximately $2.0 million non-cash), primarily associated with the implementation of restructuring initiatives announced in 2015. These charges are not included in adjusted earnings from continuing operations (See Tables A and B) and result from plant closure actions; selling, general and administrative expense (SG&A) reduction initiatives; and the implementation of key process improvements.

“We are very pleased with the start to fiscal 2016," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer. "We are beginning to see a number of the expected improvements from our aggressive 2015 repositioning of the Performance Chemicals business. These actions contributed to both an earnings increase and a deleveraging of our balance sheet during what is traditionally the slowest quarter of our fiscal year.

"Specifically, we achieved volume growth in a number of our key specialty businesses including laminates and films, specialty coatings, and construction materials, despite the overall sales decline as anticipated for the quarter. At the same time, overall adjusted segment margins improved by 240 basis points to 8.2% from 5.8% last year, driving an increase in adjusted pre-tax profit to $2.7 million from a loss of $0.9 million last year. Overall use of cash was $1.4 million in the first quarter of 2016, an improvement of $15.0 million as compared to last year’s use of $16.4 million. The improvement was driven in large part by $5.7 million in increased cash from operations. As a result of the favorable earnings and cash use, net leverage decreased to 3.8x adjusted EBITDA from 4.2x at the end of last year’s first quarter," said McMullen.

"Performance from our specialty businesses continues to improve. We were especially pleased with the progress in global specialty coatings, growing volumes by double digits in the first quarter. We are building on the solid commercial success in specialty coatings with the introduction of 5 new products at the American Coatings Show the week of April 11 in Indianapolis, Indiana. These products result from the Company's rejuvenated new product development process and include applications such as zero-VOC direct-to-metal paints, environmentally preferred commercial roof coatings, waterproofing membrane coatings, single-component garage floor coatings, and exceptionally durable, low maintenance floor finishes," McMullen continued.

"While not all of our specialty businesses exhibited growth during the first quarter, we anticipate improvement going forward, with more consistent volume and profit growth as our strengthened team

and commercial processes continue to gain traction. At the same time, market conditions remain challenged in oil & gas, unfavorably impacting market demand in the quarter. Despite these challenges, our oil & gas business continues to provide attractive returns, allowing us to improve our competitive position in anticipation of an eventual market recovery," explained McMullen.

He continued, "As part of our focus on growing our specialty businesses, as well as increasing cash generation, OMNOVA divested its non-strategic Indian rubber manufacturing business during the first quarter of 2016 for $5.2 million in cash. OMNOVA will continue to serve the important Indian market with our higher-margin specialty products through a locally-based sales force.

"We continued to make good progress on improving the profitability of paper and carpet chemicals (part of our Performance Materials product line) through cost reduction actions and recently implemented pricing initiatives designed to move these businesses closer to acceptable margin levels. In Performance Materials overall, volume was down from last year's first quarter as expected. However, we believe we have changed the trajectory in terms of profitability as evidenced by the third consecutive quarter of year-over-year profit growth and increased cash generation. At the end of the first quarter, we ceased manufacturing activity at our Calhoun, Georgia facility as planned, positioning the second quarter for continued margin expansion in Performance Materials,” said McMullen.

"Our actions are closely tied to the execution of our strategic priorities of (1) accelerating growth in our higher-margin specialty businesses, (2) improving profitability and cash generation from our Performance Materials businesses, (3) improving return on assets, and (4) deploying a balanced capital allocation policy. Our improvement actions in Performance Chemicals have included refocusing resources on higher margin specialty products; closing two plants; repurposing manufacturing capacity; reducing the size of our workforce; re-engineering our processes to more effectively develop, market and sell products; and strengthening the capabilities of our commercial team. At the same time, we continue to successfully execute our strategy in our Engineered Surfaces segment. During the first quarter, OMNOVA launched exciting new laminate and film products that will ramp up over the coming quarters with three market leading companies whose applications go into large new construction and refurbishment market applications. Likewise, our global coated fabrics business has won a number of new specifications with China automotive OEMs for vehicle interior applications that will be ramping up in the second half of 2016,” McMullen concluded.

Consolidated Results for the First Quarter of Fiscal 2016

Net sales for the first quarter decreased $31.6 million, or 15.3%, to $175.3 million, compared with $206.9 million for the comparable quarter last year. The Company's divestiture of its Indian operation in early February 2016 resulted in $2.3 million in reduced sales versus the 2015 first quarter. Also contributing to the lower sales were volume declines of $13.1 million, or 6.3%, primarily related to the unfavorable conditions in paper, carpet and oil & gas, partially offset by improved volumes in North American laminates, specialty coatings, construction materials, tire cord and antioxidants; $11.5 million,

or 5.6%, of reduced pricing, driven primarily by contract-based index pricing in certain markets tied to raw material price declines; and $4.7 million, or 2.3%, of negative currency translation effects, primarily from the euro and Thai bhat.

Gross profit in the first quarter of 2016 was up 510 basis points to $44.3 million, or 25.3% of net sales, compared to $41.7 million, or 20.2% of net sales, in the comparable quarter last year. The increase in gross profit was due to higher margins from pricing, cost reduction initiatives and favorable mix, partially offset by the decline in volumes and the effect of foreign exchange.

SG&A in the first quarter of 2016 declined to $28.3 million from $29.8 million in the first quarter of 2015, primarily reflecting the overall impact of the cost reduction initiatives including the reduction of pension expense, partially offset by increased investments in sales and marketing resources to support the higher-margin specialty lines of business.

Interest expense in the first quarter of 2016 was $5.8 million, down $1.0 million from the comparable quarter last year, reflecting the Company's efforts to reduce outstanding debt balances. The Company prepaid $50 million of debt in the fourth quarter of fiscal 2015.

Other expense (income), net was income of $0.6 million for the first quarter of 2016, compared to expense...