BEACHWOOD, Ohio, June 28, 2017 /PRNewswire/ --
Second Quarter 2017 Highlights
- Specialty Solutions sales grew 14% compared to the prior year,
with operating margins of 14.9%, while Performance Materials
increased sales by 4%, with operating margins of (8.0)%, primarily
due to charges related to China
coated fabrics. Performance Materials had adjusted segment
operating profit margins of 3.8%.
- Volume driven sales growth for Specialty Solutions was 6.3%
with volume increases across most of the segment's lines of
business. Performance Materials experienced a volume decline of
13.3%, driven by reduced sales in paper, carpet and China coated fabrics markets.
- The Company completed realignment of its businesses and related
reporting into two new segments: Specialty Solutions, 55% of sales
and 83% of adjusted segment operating income, and Performance
Materials, 45% and 17%, respectively.
- Reported loss per diluted share was $0.14, compared with earnings per diluted share
of $0.16 last year. Adjusted Diluted
Earnings Per Share was $0.16,
compared to $0.18 a year ago. As
expected, Specialty Solutions volume growth was offset by raw
material driven margin declines.
- The Company recorded an impairment charge of $12.9 million during the quarter related to
China coated fabrics.
OMNOVA Solutions Inc. (NYSE: OMN) today announced a loss per
share of $0.14 for the second quarter
ended May 31, 2017, compared to
earnings of $0.16 per share in last
year's comparable quarter. Adjusted Diluted Earnings Per Share was
$0.16 for the second quarter of 2017,
compared with $0.18 last year.
In the second quarter of 2017, the Company recorded an impairment
loss of approximately $12.9 million
related to China coated fabrics
and charges of approximately $3.6
million related to the "One OMNOVA" restructuring
initiative, compared to charges of $1.1
million in last year's second quarter.
"During the quarter, we made significant progress on our key
strategic initiatives. I am particularly pleased with the
growth we saw in our specialty businesses resulting from our
investment in marketing, sales, and innovation excellence," said
Anne Noonan, OMNOVA's President and
Chief Executive Officer. "In particular, we had strong growth in
oil and gas, non-wovens, elastomeric modifiers, laminates and
films," Noonan continued. "Additionally, we executed, as
planned, on the restructuring of our 'One OMNOVA' support
functions, driving SG&A reductions. At the end of the
quarter, our vitality index (sales from new products introduced
over the last five years as a percentage of total sales) was
approximately 25%, driven by growth in value-creating innovative
specialty products. From a sales perspective, May 2017 was a record month for our strengthened
team, with the highest number of new product and customer wins
yet.
"We are considering all options as we proactively address our
unprofitable China coated fabrics
business. We expect resolution before the end of July 2017.
"Raw material costs spiked through March and then declined
rapidly during the remainder of the quarter. As a result, our
gross profit margins were approximately $5.2
million unfavorable in the quarter. We continued our
intense focus on value pricing for the non-indexed portion of our
business while continuing to execute our specialization
strategy. As we progress into the second half of the year, we
expect margins to recover with pricing actions and some softening
in raw materials," said Noonan.
"The Company has realigned its businesses and related reporting
into two new segments: Specialty Solutions and Performance
Materials. In our new segments, we have grouped like
businesses that share similar end-market characteristics and
executional strategies. The businesses in the Specialty Solutions
segment are characterized by higher and more sustainable margins in
faster growing markets. Those businesses include our C.A.S.E.
businesses (coatings, adhesives, sealants and elastomers),
non-wovens, laminates & films, and oil & gas. The
Performance Materials segment includes our more mature businesses,
where we are focused on operational excellence to drive continued
profit improvements and cash generation. Those businesses
include paper, carpet, tire cord, coated fabrics, antioxidants and
reinforcing rubber," said Noonan.
Consolidated Results for the Second Quarter of Fiscal
2017
Net sales for the second quarter were $221.3 million, up 9.6% from last year's
$202.0 million. Sales in
Specialty Solutions increased 14.4% to $121.5 million, while sales in Performance
Materials increased 4.2% to $99.8
million. Volume declined $6.0
million, or 3%, primarily related to the China coated fabrics business and continued
market conditions in paper and carpet, which were partially offset
by improved overall volumes in Specialty Solutions. Pricing
improved by $22.9 million, or 11.3%,
reflecting index pricing adjustments and the results of the
Company's non-indexed price increases. Currency translation
increased sales by $2.4 million, or
1.2%, for the quarter.
Gross profit in the second quarter of 2017 was $53.2 million, or 24.0% of net sales, compared to
$58.4 million, or 28.9% of net sales,
last year. The declines from the comparable quarter last year
result from raw material cost increases and volume declines in
Performance Materials, partially offset by Specialty Solutions'
volume growth, cost reduction initiatives and pricing
increases.
SG&A in the second quarter was $30.1
million, down from $33.4
million last year, primarily reflecting the favorable impact
from cost reduction initiatives.
Interest expense of $5.3 million
reflected lower interest rates as a result of the third quarter
2016 refinancing - a year-over-year improvement of $0.4 million.
Income tax expense was $2.4
million in the second quarter of 2017, compared to
$3.2 million last year. The
reduction in second quarter tax expense compared to 2016 primarily
relates to lower global pre-tax income in 2017. Cash tax
payments were minimal as the Company has approximately $99.0 million of U.S. federal net operating loss
carryforwards and $108.7 million of
state and local tax net operating loss carryforwards.
Cash provided by operations in the second quarter of 2017 was
$13.1 million, compared to
$21.4 million last year.
Increased accounts receivable as a result of stronger sales in the
latter part of the quarter was the largest driver of the
decline. Working capital improved by 9.9 days at quarter-end
to 50.9 days, compared with 60.8 days last year. Adjusted net
leverage was 3.7x as compared to 3.5x last year (see Tables E and
F), reflecting the decline in EBITDA primarily due to the timing of
raw material cost movements and price realization.
Specialty Solutions Segment Results
Net sales for the Specialty Solutions segment during the second
quarter of 2017 increased $15.3
million, or 14.4%, to $121.5
million, compared with $106.2
million last year. The improvement was driven by volume
increases of $6.7 million, or 6.3%,
and pricing increases of $7.5
million, or 7.1%. Foreign currency translation had a
favorable effect of $1.2 million, or
1.1%.
Specialty Solutions' segment operating profit for the quarter
was $18.0 million, compared with
$19.4 million last year.
Adjusted Segment Operating Profit was $18.1
million, compared to $19.0
million last year. (See Tables A and B.) Favorable
volume, increased pricing, and lower SG&A costs almost
completely offset increased raw material costs.
Performance Materials Segment Results
Net sales for the Performance Materials segment during the
second quarter of 2017 increased $4.0
million, or 4.1%, to $99.8
million, compared with $95.8
million last year. The improvement was driven by
pricing increases of $15.4 million,
or 16.1%, partially offset by volume declines of $12.7 million, or 13.3%. Foreign currency
translation had a favorable impact of $1.2
million, or 1.3%. Growth in coated fabrics outside of
China, tire cord and antioxidants
remained strong, but was not enough to offset declines including
China coated fabrics.
Performance Materials' segment operating loss for the quarter
was $8.0 million, compared with an
operating profit of $5.2 million last
year, primarily reflecting the impairment charge of $12.8 million for the China coated fabrics business. Adjusted
Segment Operating Profit was $3.7
million, compared to $6.6
million last year. (See Tables A and B.) Favorable
pricing and lower SG&A spending were offset by raw material
cost increases and the impact from lower volume.
Outlook
During the second half of fiscal 2017, the Company expects
margin expansion from continued value pricing and softening raw
material costs. The Company remains on track to deliver
Adjusted Diluted Earnings Per Share growth in fiscal 2017 through
specialties growth driven by innovative new products, the
strengthened capabilities of OMNOVA's commercial team, mix
improvement, and value pricing, as well as the continued benefit of
cost reduction initiatives.
The Company anticipates releasing new segment tables for
quarters in 2015, 2016 and 2017 together with the filing of the
Company's second quarter of 2017 Form 10Q.
Earnings Conference Call - OMNOVA Solutions has scheduled its
Earnings Conference Call for Wednesday, June
28th, 2017, at 11:00 a.m.
ET. The live audio event will be hosted by OMNOVA
Solutions' President and Chief Executive Officer, Anne Noonan. The call is anticipated to be
approximately one hour in length and may be accessed by the public
from the investor relations section of the Company's website
(www.omnova.com). Webcast attendees will be in a listen-only
mode. Following the live webcast, OMNOVA will archive the
call on its website until noon ET,
July 18, 2017. A telephone
replay also will be available beginning at 1:00 p.m. ET on June 28,
2017, and ending at 11:59 p.m. ET on July 18, 2017. To listen to the telephone
replay, callers should dial: (USA) 800-475-6701, access code 425253 or
(International) 320-365-3844, access code 425253.
Non-GAAP and Other Financial Matters
This Earnings Release includes Adjusted Segment Operating
Profit, Adjusted Income, Adjusted Diluted Earnings Per Share,
Adjusted EBIT, Net Debt and Adjusted EBITDA which are non-GAAP
financial measures as defined by the Securities and Exchange
Commission. Management reviews the adjusted financial measures in
assessing the performance of the business segments and in making
decisions regarding the allocation of resources to the business
segments. Management also believes that the adjusted information is
useful for providing investors with an understanding of the
Company's business and operating performance. Management excludes
the items shown in the tables below because Management does not
consider them to be reflective of normal operations. These adjusted
financial measurements are not measurements of financial
performance under GAAP and such financial measures should not be
considered as an alternative to Segment Operating Profit, Net
Income, Diluted Earnings Per Share or other measures of financial
performance determined in accordance with GAAP. These non-GAAP
financial measures may not be comparable to similarly titled
measures reported by other companies. Presented on Tables E and F
is the Company's Net Leverage Ratio calculation (Net Debt /
Adjusted EBITDA). Presented on Table G is the Company's
Adjusted Return on Invested Capital calculation (Adjusted Net
Operating Profit After Tax / Total Debt and Equity). The tables
below provide the reconciliation of these financial measures to the
comparable GAAP financial measures.
|
Reconciliation of
Reported Segment Net Sales and Operating Profit to Net Sales and
Net Income
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
May
31
|
|
May
31
|
|
(In
millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net
Sales
|
|
|
|
|
|
|
|
|
Specialty
Solutions
|
$
|
121.5
|
|
|
$
|
106.2
|
|
|
$
|
215.2
|
|
|
$
|
195.8
|
|
|
Performance
Materials
|
99.8
|
|
|
95.8
|
|
|
180.7
|
|
|
181.5
|
|
|
Total Net
Sales
|
$
|
221.3
|
|
|
$
|
202.0
|
|
|
$
|
395.9
|
|
|
$
|
377.3
|
|
|
Segment Operating
Profit
|
|
|
|
|
|
|
|
|
Specialty
Solutions
|
$
|
18.0
|
|
|
$
|
19.4
|
|
|
$
|
27.8
|
|
|
$
|
30.7
|
|
|
Performance
Materials
|
(8.0)
|
|
|
5.2
|
|
|
(3.6)
|
|
|
4.3
|
|
|
Interest
expense
|
(5.3)
|
|
|
(5.7)
|
|
|
(10.5)
|
|
|
(11.5)
|
|
|
Corporate
expense
|
(8.6)
|
|
|
(8.6)
|
|
|
(15.6)
|
|
|
(14.3)
|
|
|
Operational,
administrative, and other improvement costs
|
—
|
|
|
.1
|
|
|
—
|
|
|
.4
|
|
|
Vacation
accrual
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Income (Loss)
Before Income Taxes
|
(3.9)
|
|
|
10.4
|
|
|
(1.9)
|
|
|
9.6
|
|
|
Income tax
expense
|
2.4
|
|
|
3.2
|
|
|
.9
|
|
|
3.5
|
|
|
Net Income
(Loss)
|
$
|
(6.3)
|
|
|
$
|
7.2
|
|
|
$
|
(2.8)
|
|
|
$
|
6.1
|
|
|
Depreciation and
amortization
|
$
|
6.9
|
|
|
$
|
7.1
|
|
|
$
|
13.6
|
|
|
$
|
16.7
|
|
|
Capital
expenditures
|
$
|
6.2
|
|
|
$
|
4.6
|
|
|
$
|
9.9
|
|
|
$
|
10.7
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Three Months Ended
May 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Table
A
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
121.5
|
|
|
$
|
99.8
|
|
|
$
|
221.3
|
|
|
$
|
—
|
|
|
$
|
221.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
18.0
|
|
|
$
|
(8.0)
|
|
|
$
|
10.0
|
|
|
$
|
(8.6)
|
|
|
$
|
1.4
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3)
|
|
|
(5.3)
|
|
|
Income (Loss)
Before Income Taxes
|
|
$
|
18.0
|
|
|
$
|
(8.0)
|
|
|
$
|
10.0
|
|
|
$
|
(13.9)
|
|
|
$
|
(3.9)
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
.1
|
|
|
1.4
|
|
|
1.5
|
|
|
2.1
|
|
|
3.6
|
|
|
Asset impairment,
facility closure costs and other
|
|
—
|
|
|
12.9
|
|
|
12.9
|
|
|
.2
|
|
|
13.1
|
|
|
Environmental costs
|
|
—
|
|
|
(2.6)
|
|
|
(2.6)
|
|
|
—
|
|
|
(2.6)
|
|
|
Subtotal for Management Excluded Items
|
|
.1
|
|
|
11.7
|
|
|
11.8
|
|
|
2.3
|
|
|
14.1
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
18.1
|
|
|
$
|
3.7
|
|
|
$
|
21.8
|
|
|
$
|
(11.6)
|
|
|
$
|
10.2
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(3.0)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
7.2
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
14.9%
|
|
|
3.7%
|
|
|
9.9%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
3.1
|
|
|
$
|
2.7
|
|
|
$
|
5.8
|
|
|
$
|
.4
|
|
|
$
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
18.1
|
|
|
$
|
3.7
|
|
|
$
|
21.8
|
|
|
$
|
(11.6)
|
|
|
$
|
10.2
|
|
|
Unallocated Corporate
Interest Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
|
5.3
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
18.1
|
|
|
3.7
|
|
|
21.8
|
|
|
(6.3)
|
|
|
15.5
|
|
|
Depreciation and
Amortization
|
|
3.6
|
|
|
2.9
|
|
|
6.5
|
|
|
.4
|
|
|
6.9
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
21.7
|
|
|
$
|
6.6
|
|
|
$
|
28.3
|
|
|
$
|
(5.9)
|
|
|
$
|
22.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
17.9%
|
|
|
6.6%
|
|
|
12.8%
|
|
|
|
|
10.1%
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Three Months Ended
May 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Table
B
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
106.2
|
|
|
$
|
95.8
|
|
|
$
|
202.0
|
|
|
$
|
—
|
|
|
$
|
202.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
19.4
|
|
|
$
|
5.2
|
|
|
$
|
24.6
|
|
|
$
|
(8.5)
|
|
|
$
|
16.1
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.7)
|
|
|
(5.7)
|
|
|
Income (Loss)
Before Income Taxes
|
|
$
|
19.4
|
|
|
$
|
5.2
|
|
|
$
|
24.6
|
|
|
$
|
(14.2)
|
|
|
$
|
10.4
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|
.1
|
|
|
1.1
|
|
|
Accelerated depreciation on production
transfer
|
|
—
|
|
|
.2
|
|
|
.2
|
|
|
—
|
|
|
.2
|
|
|
Operational Improvements costs
|
|
—
|
|
|
(.4)
|
|
|
(.4)
|
|
|
—
|
|
|
(.4)
|
|
|
Asset impairment,
facility closure costs and other
|
|
—
|
|
|
1.1
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
Vacation policy
change
|
|
(.4)
|
|
|
(.5)
|
|
|
(.9)
|
|
|
(.2)
|
|
|
(1.1)
|
|
|
Subtotal for Management Excluded Items
|
|
(.4)
|
|
|
1.4
|
|
|
1.0
|
|
|
(.1)
|
|
|
.9
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
19.0
|
|
|
$
|
6.6
|
|
|
$
|
25.6
|
|
|
$
|
(14.3)
|
|
|
$
|
11.3
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(3.4)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
7.9
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
17.9%
|
|
|
6.9%
|
|
|
12.7%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
2.2
|
|
|
$
|
2.0
|
|
|
$
|
4.2
|
|
|
$
|
.4
|
|
|
$
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
19.0
|
|
|
$
|
6.6
|
|
|
$
|
25.6
|
|
|
$
|
(14.3)
|
|
|
$
|
11.3
|
|
|
Unallocated Corporate
Interest Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
5.7
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
19.0
|
|
|
6.6
|
|
|
25.6
|
|
|
(8.6)
|
|
|
17.0
|
|
|
Depreciation and
Amortization
|
|
3.3
|
|
|
3.2
|
|
|
6.5
|
|
|
.4
|
|
|
6.9
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
22.3
|
|
|
$
|
9.8
|
|
|
$
|
32.1
|
|
|
$
|
(8.2)
|
|
|
$
|
23.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
21.0%
|
|
|
10.2%
|
|
|
15.9%
|
|
|
|
|
11.8%
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Six Months Ended
May 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Table
C
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
215.2
|
|
|
$
|
180.7
|
|
|
$
|
395.9
|
|
|
$
|
—
|
|
|
$
|
395.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
27.8
|
|
|
$
|
(3.6)
|
|
|
$
|
24.2
|
|
|
$
|
(15.6)
|
|
|
$
|
8.6
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.5)
|
|
|
(10.5)
|
|
|
Income (Loss)
Before Income Taxes
|
|
$
|
27.8
|
|
|
$
|
(3.6)
|
|
|
$
|
24.2
|
|
|
$
|
(26.1)
|
|
|
$
|
(1.9)
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
.6
|
|
|
1.4
|
|
|
2.0
|
|
|
2.5
|
|
|
4.5
|
|
|
Asset impairment,
facility closure costs and other
|
|
—
|
|
|
12.9
|
|
|
12.9
|
|
|
.2
|
|
|
13.1
|
|
|
Environmental costs
|
|
—
|
|
|
(2.5)
|
|
|
(2.5)
|
|
|
—
|
|
|
(2.5)
|
|
|
Subtotal for Management Excluded Items
|
|
.6
|
|
|
11.8
|
|
|
12.4
|
|
|
2.7
|
|
|
15.1
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
28.4
|
|
|
$
|
8.2
|
|
|
$
|
36.6
|
|
|
$
|
(23.4)
|
|
|
$
|
13.2
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(3.9)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
9.3
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
13.2%
|
|
|
4.5%
|
|
|
9.2%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
5.2
|
|
|
$
|
4.2
|
|
|
$
|
9.4
|
|
|
$
|
.5
|
|
|
$
|
9.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
28.4
|
|
|
$
|
8.2
|
|
|
$
|
36.6
|
|
|
$
|
(23.4)
|
|
|
$
|
13.2
|
|
|
Unallocated Corporate
Interest Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.5
|
|
|
10.5
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
28.4
|
|
|
8.2
|
|
|
36.6
|
|
|
(12.9)
|
|
|
23.7
|
|
|
Depreciation and
Amortization
|
|
7.0
|
|
|
5.8
|
|
|
12.8
|
|
|
.8
|
|
|
13.6
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
35.4
|
|
|
$
|
14.0
|
|
|
$
|
49.4
|
|
|
$
|
(12.1)
|
|
|
$
|
37.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
16.4%
|
|
|
7.7%
|
|
|
12.5%
|
|
|
|
|
9.4%
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Six Months Ended
May 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Table
D
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
195.8
|
|
|
$
|
181.5
|
|
|
$
|
377.3
|
|
|
$
|
—
|
|
|
$
|
377.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
30.7
|
|
|
$
|
4.3
|
|
|
$
|
35.0
|
|
|
$
|
(13.9)
|
|
|
$
|
21.1
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11.5)
|
|
|
(11.5)
|
|
|
Income (Loss)
Before Income Taxes
|
|
30.7
|
|
|
4.3
|
|
|
35.0
|
|
|
(25.4)
|
|
|
9.6
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
.1
|
|
|
2.5
|
|
|
2.6
|
|
|
.1
|
|
|
2.7
|
|
|
Accelerated depreciation on production transfer
|
|
—
|
|
|
3.0
|
|
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
Operational Improvements costs
|
|
—
|
|
|
(.4)
|
|
|
(.4)
|
|
|
—
|
|
|
(.4)
|
|
|
Asset impairment,
facility closure costs and other
|
|
.6
|
|
|
.6
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|
Corporate Headquarters relocation costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.2)
|
|
|
(.2)
|
|
|
Vacation policy
change
|
|
(.7)
|
|
|
(.8)
|
|
|
(1.5)
|
|
|
(.4)
|
|
|
(1.9)
|
|
|
Subtotal for Management Excluded Items
|
|
—
|
|
|
4.9
|
|
|
4.9
|
|
|
(.5)
|
|
|
4.4
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
30.7
|
|
|
$
|
9.2
|
|
|
$
|
39.9
|
|
|
$
|
(25.9)
|
|
|
$
|
14.0
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(4.2)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
9.8
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
15.7%
|
|
|
5.1%
|
|
|
10.6%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
4.9
|
|
|
$
|
4.6
|
|
|
$
|
9.5
|
|
|
$
|
1.2
|
|
|
$
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
30.7
|
|
|
$
|
9.2
|
|
|
$
|
39.9
|
|
|
$
|
(25.9)
|
|
|
$
|
14.0
|
|
|
Unallocated Corporate
Interest Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.5
|
|
|
11.5
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
30.7
|
|
|
9.2
|
|
|
39.9
|
|
|
(14.4)
|
|
|
25.5
|
|
|
Depreciation and
Amortization excluding accelerated depreciation
|
|
6.4
|
|
|
6.6
|
|
|
13.0
|
|
|
.7
|
|
|
13.7
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
37.1
|
|
|
$
|
15.8
|
|
|
$
|
52.9
|
|
|
$
|
(13.7)
|
|
|
$
|
39.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
18.9%
|
|
|
8.7%
|
|
|
14.0%
|
|
|
|
|
10.4%
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Trailing Twelve
Months Ended May 31, 2017
|
|
|
|
|
|
|
|
|
|
|
Table
E
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
423.7
|
|
|
$
|
354.8
|
|
|
$
|
778.5
|
|
|
$
|
—
|
|
|
$
|
778.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
51.5
|
|
|
$
|
6.0
|
|
|
$
|
57.5
|
|
|
$
|
(35.4)
|
|
|
$
|
22.1
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.7)
|
|
|
(23.7)
|
|
|
Income (Loss)
Before Income Taxes
|
|
$
|
51.5
|
|
|
$
|
6.0
|
|
|
$
|
57.5
|
|
|
$
|
(59.1)
|
|
|
$
|
(1.6)
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
.7
|
|
|
2.2
|
|
|
2.9
|
|
|
7.3
|
|
|
10.2
|
|
|
Asset impairment,
facility closure costs and other
|
|
6.3
|
|
|
13.7
|
|
|
20.0
|
|
|
0.2
|
|
|
20.2
|
|
|
Environmental costs
|
|
—
|
|
|
(2.2)
|
|
|
(2.2)
|
|
|
—
|
|
|
(2.2)
|
|
|
Deferred
Financing Fees written-off
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
|
4.9
|
|
|
Acquisition and
integration related expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.9
|
|
|
.9
|
|
|
Vacation policy
change
|
|
(0.6)
|
|
|
(0.6)
|
|
|
(1.2)
|
|
|
(0.3)
|
|
|
(1.5)
|
|
|
Subtotal for Management Excluded Items
|
|
6.4
|
|
|
13.1
|
|
|
19.5
|
|
|
13.0
|
|
|
32.5
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
57.9
|
|
|
$
|
19.1
|
|
|
$
|
77.0
|
|
|
$
|
(46.1)
|
|
|
$
|
30.9
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(9.2)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
21.7
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
13.7%
|
|
|
5.4%
|
|
|
9.9%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
13.0
|
|
|
$
|
10.7
|
|
|
$
|
23.7
|
|
|
$
|
1.1
|
|
|
$
|
24.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
57.9
|
|
|
$
|
19.1
|
|
|
$
|
77.0
|
|
|
$
|
(46.1)
|
|
|
$
|
30.9
|
|
|
Unallocated Corporate
Interest
(Excluding Debt Premium)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21.7
|
|
|
21.7
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
57.9
|
|
|
19.1
|
|
|
77.0
|
|
|
(24.4)
|
|
|
52.6
|
|
|
Depreciation and
Amortization excluding
accelerated depreciation
|
|
13.8
|
|
|
12.4
|
|
|
26.2
|
|
|
1.3
|
|
|
27.5
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
71.7
|
|
|
$
|
31.5
|
|
|
$
|
103.2
|
|
|
$
|
(23.1)
|
|
|
$
|
80.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
16.9%
|
|
|
8.9%
|
|
|
13.3%
|
|
|
|
|
10.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Leverage
|
|
|
|
|
|
|
|
|
|
|
|
Total short and
long-term debt (excluding OID and deferred financing fees of
$8.8M.)
|
|
|
|
$
|
363.9
|
|
|
Less Cash and
restricted cash
|
|
|
|
|
|
|
|
|
|
(68.6)
|
|
|
Net Debt (Debt
less Cash
and Restricted Cash)
|
|
|
|
|
|
|
|
|
|
$
|
295.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Leverage
Ratio**
|
|
|
|
|
|
|
|
|
|
3.7
|
x
|
|
** The above
calculation is not intended to be used for purposes of calculating
debt covenant compliance.
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
Trailing Twelve
Months Ended May 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Table
F
|
|
(In millions except
per share data)
|
|
Specialty
Solutions
|
|
Performance
Materials
|
|
Combined
Segments
|
|
Corporate
|
|
Consolidated
|
|
Net
Sales
|
|
$
|
402.3
|
|
|
$
|
385.9
|
|
|
$
|
788.2
|
|
|
$
|
—
|
|
|
$
|
788.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Profit / Corporate Expense
|
|
$
|
56.4
|
|
|
$
|
(15.5)
|
|
|
$
|
40.9
|
|
|
$
|
(25.5)
|
|
|
$
|
15.4
|
|
|
Interest
Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.1)
|
|
|
$
|
(26.1)
|
|
|
Income (Loss)
Before Income Taxes
|
|
$
|
56.4
|
|
|
$
|
(15.5)
|
|
|
40.9
|
|
|
$
|
(51.6)
|
|
|
$
|
(10.7)
|
|
|
Management
Excluded Items
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and severance
|
|
2.5
|
|
|
4.8
|
|
|
7.3
|
|
|
.2
|
|
|
7.5
|
|
|
Accelerated depreciation on production
transfer
|
|
—
|
|
|
8.8
|
|
|
8.8
|
|
|
—
|
|
|
8.8
|
|
|
Operational Improvements costs
|
|
2.0
|
|
|
.1
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
Asset impairment,
facility closure costs and other
|
|
.2
|
|
|
20.6
|
|
|
20.8
|
|
|
—
|
|
|
20.8
|
|
|
Environmental costs
|
|
.1
|
|
|
2.8
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
Deferred
Financing Fees written-off
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.6
|
|
|
.6
|
|
|
Corporate
Headquarters relocation costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.2)
|
|
|
(.2)
|
|
|
Other
financing costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
|
Acquisition and
integration related expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.4)
|
|
|
(.4)
|
|
|
Vacation policy
change
|
|
(.7)
|
|
|
(.8)
|
|
|
(1.5)
|
|
|
—
|
|
|
(1.5)
|
|
|
Subtotal for Management Excluded Items
|
|
4.1
|
|
|
36.3
|
|
|
40.4
|
|
|
1.2
|
|
|
41.6
|
|
|
Adjusted Segment
Operating Profit / Corporate
Expense before Income Taxes
|
|
$
|
60.5
|
|
|
$
|
20.8
|
|
|
81.3
|
|
|
$
|
(50.4)
|
|
|
$
|
30.9
|
|
|
Tax Expense (30%
rate)*
|
|
|
|
|
|
|
|
|
|
(9.3)
|
|
|
Adjusted
Income
|
|
|
|
|
|
|
|
|
|
$
|
21.6
|
|
|
Adjusted Diluted
Earnings Per Share from
Adjusted Income
|
|
|
|
|
|
|
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax
rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit as a % of
sales
|
|
15.0%
|
|
|
5.4%
|
|
|
10.3%
|
|
|
|
|
|
|
Segment /
Corporate Capital Expenditures
|
|
$
|
10.9
|
|
|
$
|
10.6
|
|
|
$
|
21.5
|
|
|
$
|
2.7
|
|
|
$
|
24.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted segment
operating profit / corporate
expense before income taxes
|
|
$
|
60.5
|
|
|
$
|
20.8
|
|
|
$
|
81.3
|
|
|
$
|
(50.4)
|
|
|
$
|
30.9
|
|
|
Unallocated Corporate
Interest Expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.1
|
|
|
25.1
|
|
|
Segment /
Consolidated Adjusted EBIT
|
|
60.5
|
|
|
20.8
|
|
|
81.3
|
|
|
(25.3)
|
|
|
56.0
|
|
|
Depreciation and
Amortization excluding
accelerated depreciation
|
|
10.4
|
|
|
16.2
|
|
|
26.6
|
|
|
1.2
|
|
|
27.8
|
|
|
Segment /
Consolidated Adjusted EBITDA
|
|
$
|
70.9
|
|
|
$
|
37.0
|
|
|
$
|
107.9
|
|
|
$
|
(24.1)
|
|
|
$
|
83.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as
a % of sales
|
|
17.6%
|
|
|
9.6%
|
|
|
13.7%
|
|
|
|
|
10.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Leverage
|
|
|
|
|
|
|
|
|
|
|
|
Total short and
long-term debt (excluding OID and deferred financing fees of $4.3M.
)
|
|
|
|
$
|
356.0
|
|
|
Less Cash and
restricted cash
|
|
|
|
|
|
|
|
|
|
(60.6)
|
|
|
Net Debt (Debt
less Cash
and Restricted Cash)
|
|
|
|
|
|
|
|
|
|
$
|
295.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Leverage
Ratio**
|
|
|
|
|
|
|
|
|
|
3.5
|
x
|
|
** The above
calculation is not intended to be used for purposes of calculating
debt covenant compliance.
|
|
OMNOVA SOLUTIONS
INC.
|
|
Non-GAAP and other
Financial Matters (Continued)
|
|
May 31,
2017
|
|
|
|
|
|
Table
G
|
|
Adjusted Return on
Invested Capital
|
|
|
|
|
|
|
(In
millions)
|
Trailing Twelve
Months Ended
|
|
Twelve Months
Ended
|
|
May 31,
|
|
November
30,
|
|
Adjusted Net
Operating Profit after Tax
|
2017
|
|
2016
|
|
2015
|
|
Adjusted Income from
Continuing Operations
|
$
|
21.7
|
|
|
$
|
22.2
|
|
|
$
|
16.5
|
|
|
Interest add back
excluding debt premium
|
21.7
|
|
|
22.7
|
|
|
27.3
|
|
|
Tax effect of interest
add back*
|
(6.5)
|
|
|
(6.8)
|
|
|
(8.2)
|
|
|
Total Adjusted Net
Operating Profit after Tax
|
$
|
36.9
|
|
|
$
|
38.1
|
|
|
$
|
35.6
|
|
|
|
|
|
|
|
|
Debt and
Equity
|
|
|
|
|
|
|
Short-term
Debt
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
$
|
2.5
|
|
|
Senior
Notes
|
—
|
|
|
—
|
|
|
150.0
|
|
|
Long-term
Debt
|
350.9
|
|
|
352.5
|
|
|
199.6
|
|
|
115.9
|
|
|
109.8
|
|
|
109.1
|
|
|
Total Debt and
Equity
|
$
|
471.0
|
|
|
$
|
466.5
|
|
|
$
|
461.2
|
|
|
|
|
|
|
|
|
Adjusted Return on
Invested Capital
|
7.8%
|
|
|
8.2%
|
|
|
7.7%
|
|
|
|
|
|
|
|
|
*Tax rate is based on
the Company's estimated normalized annual effective tax rate of
30%.
|
Notice on Forward-Looking Statements
This press
release includes descriptions of OMNOVA's current business,
operations, assets and other matters affecting the Company, as well
as "forward-looking statements" as defined by federal securities
laws. All forward-looking statements by the Company, including
verbal statements, are intended to qualify for the protections
afforded forward-looking statements under the Private Securities
Litigation Reform Act of 1995. Forward-looking statements reflect
Management's current expectation, judgment, belief, assumption,
estimate or forecast about future events, circumstances or results
and may address business conditions and prospects, strategy,
capital structure, debt and cash levels, sales, profits, earnings,
markets, products, technology, operations, customers, raw
materials, claims and litigation, financial condition, and
accounting policies among other matters. Words such as, but not
limited to, "will," "may," "should," "projects," "forecasts,"
"seeks," "believes," "expects," "anticipates," "estimates,"
"intends," "plans," "targets," "optimistic," "likely," "would,"
"could," "committed," and similar expressions or phrases identify
forward-looking statements.
All descriptions of OMNOVA's current business, operations and
assets, as well as all forward-looking statements, involve risks
and uncertainties. Many risks and uncertainties are inherent in
business generally. Other risks and uncertainties are more specific
to the Company's businesses and strategy, or to any new businesses
the Company may enter into or acquire. There also may be risks and
uncertainties not currently known to the Company. The occurrence of
any such risks and uncertainties and the impact of such occurrences
is often not predictable or within the Company's control. Such
impacts could adversely affect the Company's business, operations
or assets, as well as the Company's results and the value of your
investment in the Company. In some cases, such impact could be
material. Certain risks and uncertainties facing the Company are
described below or in the Company's Quarterly Report on Form 10-Q
and Annual Report on Form 10-K.
All written and verbal descriptions of OMNOVA's current
business, operations and assets and all forward-looking statements
attributable to the Company or any person acting on the Company's
behalf are expressly qualified in their entirety by the risks,
uncertainties, and cautionary statements contained or referenced
herein. All such descriptions and any forward-looking statements
speak only as of the date on which such description or statement is
made, and the Company undertakes no obligation, and specifically
declines any obligation, other than that imposed by law, to
publicly update or revise any such description or forward-looking
statements whether as a result of new information, future events or
otherwise.
The Company's actual results and the value of your investment in
OMNOVA may differ, perhaps materially, from expectations due to a
number of risks and uncertainties including, but not limited to:
(1) the Company's exposure to general economic, business, and
industry conditions; (2) the risk of doing business in foreign
countries and markets; (3) changes in raw material prices and
availability; (4) the highly competitive markets the Company
serves; (5) extraordinary events such as natural disasters,
political disruptions, terrorist attacks and acts of war; (6)
extensive and increasing United
States and international governmental regulation, including
environmental, health and safety regulations; (7) the Company's
failure to protect its intellectual property or defend itself from
intellectual property claims; (8) claims and litigation; (9)
changes in accounting policies, standards, and interpretations;
(10) the actions of activist shareholders; (11) the Company's
inability to achieve, or achieve in a timely manner, the objectives
and benefits of cost reduction initiatives; (12) the Company's
ability to develop and commercialize new products at competitive
prices; (13) the concentration of certain of OMNOVA's businesses
and market segments among several large customers; (14) the
creditworthiness of the Company's customers; (15) the failure of a
joint venture partner to meet its commitments; (16) the Company's
ability to identify and complete strategic transactions; (17) the
Company's ability to successfully integrate acquired companies;
(18) unanticipated capital expenditures; (19) risks associated with
the use, production, storage, and transportation of chemicals; (20)
information system failures and breaches in security; (21)
continued increases in healthcare costs; (22) the Company's ability
to retain or attract key employees; (23) the Company's ability to
renew collective bargaining agreements with employees on acceptable
terms and the risk of work stoppages; (24) the Company's
contribution obligations under its U.S. pension plan; (25) the
Company's reliance on foreign financial institutions to hold some
of its funds; (26) the effect of goodwill impairment charges; (27)
the volatility in the market price of the Company's common shares;
(28) the Company's substantial debt position; (29) the decision to
incur additional debt; (30) the operational and financial
restrictions contained in the Company's indenture; (31) a default
under the Company's term loan or revolving credit facility; (32)
the Company's ability to generate sufficient cash to service its
outstanding debt; and (33) the Company's subsidiaries ability to
provide cash in order to pay debt.
OMNOVA Solutions provides greater detail regarding these risks
and uncertainties in its 2016 Form 10-K and subsequent filings,
which are available online at www.omnova.com and
www.sec.gov.
OMNOVA Solutions Inc. is a global innovator of
performance-enhancing chemistries and surfaces used in products for
a variety of commercial, industrial and residential applications.
As a strategic business-to-business supplier, OMNOVA provides
The Science in Better Brands, with emulsion polymers,
specialty chemicals, and functional and decorative surfaces that
deliver critical performance attributes to top brand-name, end-use
products sold around the world. OMNOVA's sales for the last twelve
months ended May 31, 2017 were approximately $778 million. The Company has a global workforce
of approximately 2,000. Visit OMNOVA Solutions on the internet at
www.omnova.com.
|
OMNOVA SOLUTIONS
INC.
|
|
Consolidated
Statements of Operations
|
|
(In Millions,
Except Per Share Data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
May
31
|
|
May
31
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net
Sales
|
$
|
221.3
|
|
|
$
|
202.0
|
|
|
$
|
395.9
|
|
|
$
|
377.3
|
|
|
Cost of goods sold
(exclusive of depreciation)
|
168.1
|
|
|
143.6
|
|
|
298.8
|
|
|
274.6
|
|
|
Gross
Profit
|
53.2
|
|
|
58.4
|
|
|
97.1
|
|
|
102.7
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
30.1
|
|
|
33.4
|
|
|
59.3
|
|
|
61.7
|
|
|
Depreciation and
amortization
|
6.9
|
|
|
7.1
|
|
|
13.6
|
|
|
16.7
|
|
|
Asset
impairment
|
12.9
|
|
|
—
|
|
|
12.9
|
|
|
.4
|
|
|
Loss on sale of
assets
|
—
|
|
|
.1
|
|
|
—
|
|
|
.1
|
|
|
Restructuring and
severance
|
3.6
|
|
|
2.2
|
|
|
4.6
|
|
|
3.6
|
|
|
Interest
expense
|
5.3
|
|
|
5.7
|
|
|
10.5
|
|
|
11.5
|
|
|
Other expense,
net
|
(1.7)
|
|
|
(.5)
|
|
|
(1.9)
|
|
|
(.9)
|
|
|
57.1
|
|
|
48.0
|
|
|
99.0
|
|
|
93.1
|
|
|
Income (Loss)
Before Income Taxes
|
(3.9)
|
|
|
10.4
|
|
|
(1.9)
|
|
|
9.6
|
|
|
Income tax
expense
|
2.4
|
|
|
3.2
|
|
|
.9
|
|
|
3.5
|
|
|
Net Income
(Loss)
|
$
|
(6.3)
|
|
|
$
|
7.2
|
|
|
$
|
(2.8)
|
|
|
$
|
6.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
Income (Loss) Per Share
|
$
|
(.14)
|
|
|
$
|
.16
|
|
|
$
|
(.06)
|
|
|
$
|
.14
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - Basic
|
44.4
|
|
|
44.0
|
|
|
44.3
|
|
|
44.0
|
|
|
Weighted average
shares outstanding - Diluted
|
44.4
|
|
|
44.4
|
|
|
44.3
|
|
|
44.4
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Consolidated
Balance Sheets
|
|
(In Millions,
Except Per Share Data)
|
|
|
|
|
|
May
31,
|
|
November
30,
|
|
2017
|
|
2016
|
|
(Unaudited)
|
|
(Audited)
|
|
ASSETS:
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
68.6
|
|
|
$
|
72.0
|
|
|
Accounts receivable,
net
|
112.5
|
|
|
87.2
|
|
|
Inventories,
net
|
76.4
|
|
|
74.0
|
|
|
Prepaid expenses and
other
|
13.6
|
|
|
18.1
|
|
|
Assets held for sale
- current
|
9.7
|
|
|
25.7
|
|
|
Total Current
Assets
|
280.8
|
|
|
277.0
|
|
|
Property, plant and
equipment, net
|
202.3
|
|
|
202.7
|
|
|
Trademarks and other
intangible assets, net
|
56.9
|
|
|
56.7
|
|
|
Goodwill
|
83.4
|
|
|
80.2
|
|
|
Deferred income
taxes
|
67.5
|
|
|
66.7
|
|
|
Other
assets
|
5.1
|
|
|
4.0
|
|
|
Total
Assets
|
$
|
696.0
|
|
|
$
|
687.3
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY:
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Amounts due
banks
|
$
|
4.2
|
|
|
$
|
4.2
|
|
|
Accounts
payable
|
81.7
|
|
|
68.7
|
|
|
Accrued payroll and
personal property taxes
|
22.0
|
|
|
23.4
|
|
|
Employee benefit
obligations
|
4.1
|
|
|
4.5
|
|
|
Other current
liabilities
|
8.5
|
|
|
7.4
|
|
|
Liabilities held for
sale - current
|
3.4
|
|
|
5.2
|
|
|
Total Current
Liabilities
|
123.9
|
|
|
113.4
|
|
|
Long-term
debt
|
350.9
|
|
|
352.5
|
|
|
Postretirement
benefits other than pensions
|
6.1
|
|
|
6.3
|
|
|
Pension
liabilities
|
80.7
|
|
|
82.3
|
|
|
Deferred income
taxes
|
10.0
|
|
|
11.4
|
|
|
Other
liabilities
|
8.5
|
|
|
11.6
|
|
|
Total
Liabilities
|
580.1
|
|
|
577.5
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common stock - $0.10
par value; 135 million shares authorized, 48.3 million
shares issued as of May 31, 2017 and November 30, 2016,
respectively
|
4.8
|
|
|
4.8
|
|
|
Additional
contributed capital
|
342.2
|
|
|
341.0
|
|
|
Retained
deficit
|
(74.3)
|
|
|
(74.4)
|
|
|
Treasury stock at
cost; 3.4 million and 3.2 million shares at May 31, 2017
and
November 30, 2016, respectively
|
(25.0)
|
|
|
(23.2)
|
|
|
Accumulated other
comprehensive loss
|
(131.8)
|
|
|
(138.4)
|
|
|
Total
Shareholders' Equity
|
115.9
|
|
|
109.8
|
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
696.0
|
|
|
$
|
687.3
|
|
|
OMNOVA SOLUTIONS
INC.
|
|
Consolidated
Statements of Cash Flows
|
|
(Dollars in
Millions)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
May
31,
|
|
May
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Operating
Activities
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(6.3)
|
|
|
$
|
7.2
|
|
|
$
|
(2.8)
|
|
|
$
|
6.1
|
|
|
Adjustments to
reconcile net income (loss) to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
6.9
|
|
|
7.1
|
|
|
13.6
|
|
|
16.7
|
|
|
Impairment of long-lived assets
|
12.9
|
|
|
.4
|
|
|
12.9
|
|
|
.4
|
|
|
Amortization and debt issuance costs write-off
|
.4
|
|
|
.4
|
|
|
.7
|
|
|
.9
|
|
|
Non-cash
stock compensation expense
|
.5
|
|
|
.6
|
|
|
1.0
|
|
|
1.2
|
|
|
Provision for obsolete inventories
|
(.1)
|
|
|
.1
|
|
|
.3
|
|
|
.4
|
|
|
Other
|
(.1)
|
|
|
—
|
|
|
(.1)
|
|
|
(.7)
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
(24.0)
|
|
|
(.8)
|
|
|
(26.7)
|
|
|
(2.9)
|
|
|
Inventories
|
12.1
|
|
|
6.2
|
|
|
(1.3)
|
|
|
(0.9)
|
|
|
Other
current assets
|
5.4
|
|
|
(12.1)
|
|
|
6.7
|
|
|
(8.4)
|
|
|
Current
liabilities
|
4.8
|
|
|
9.9
|
|
|
6.5
|
|
|
6.2
|
|
|
Other
non-current assets
|
.8
|
|
|
.9
|
|
|
1.8
|
|
|
(2.0)
|
|
|
Other
non-current liabilities
|
.1
|
|
|
1.6
|
|
|
(4.0)
|
|
|
3.1
|
|
|
Contributions to defined benefit plan
|
(.3)
|
|
|
(.1)
|
|
|
(.3)
|
|
|
(.4)
|
|
|
Net Cash Provided
by Operating Activities
|
13.1
|
|
|
21.4
|
|
|
8.3
|
|
|
19.7
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(6.2)
|
|
|
(4.6)
|
|
|
(9.9)
|
|
|
(10.7)
|
|
|
Proceeds
from notes receivable
|
—
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
|
Proceeds
from asset sales
|
—
|
|
|
.1
|
|
|
—
|
|
|
5.3
|
|
|
Acquisition of
business
|
(2.5)
|
|
|
—
|
|
|
(2.5)
|
|
|
—
|
|
|
Other
|
—
|
|
|
.1
|
|
|
—
|
|
|
.1
|
|
|
Net Cash Used In Investing
Activities
|
(8.7)
|
|
|
(4.4)
|
|
|
(8.6)
|
|
|
(5.3)
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
|
Repayment of debt obligations
|
(1.1)
|
|
|
(.7)
|
|
|
(2.1)
|
|
|
(1.3)
|
|
|
Withholding taxes on share-based compensation
|
(.1)
|
|
|
(.3)
|
|
|
(1.8)
|
|
|
(.3)
|
|
|
Net Cash Used In
Financing Activities
|
(1.2)
|
|
|
(1.0)
|
|
|
(3.9)
|
|
|
(1.6)
|
|
|
Effect of exchange
rate changes on cash and cash
equivalents
|
1.1
|
|
|
1.1
|
|
|
.8
|
|
|
2.9
|
|
|
Net Increase
(Decrease) In Cash And Cash Equivalents
|
4.3
|
|
|
17.1
|
|
|
(3.4)
|
|
|
15.7
|
|
|
Cash and cash
equivalents at beginning of period
|
64.3
|
|
|
43.5
|
|
|
72.0
|
|
|
44.9
|
|
|
Cash And Cash
Equivalents At End Of Period
|
$
|
68.6
|
|
|
$
|
60.6
|
|
|
$
|
68.6
|
|
|
$
|
60.6
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/omnova-reports-growth-in-specialty-businesses-in-2017-second-quarter-300480916.html
SOURCE OMNOVA Solutions Inc.