FAIRLAWN, Ohio, March 23, 2011 /PRNewswire/ --
- For the first quarter ended February 28,
2011, Net Income was $1.0
million, compared to $7.8
million in the first quarter of 2010. First quarter
2011 Adjusted Net Income was $6.4
million, compared to first quarter 2010 Pro Forma Adjusted
Net Income of $7.5 million.
- First quarter 2011 Diluted Earnings Per Share was $0.02 compared to $0.17 in the first quarter of 2010. First
quarter 2011 Adjusted Diluted Earnings Per Share was $0.14, compared to first quarter 2010 Pro Forma
Adjusted Diluted Earnings Per Share of $0.17.
- The Company successfully completed the acquisition of ELIOKEM
International on December 9, 2010,
significantly globalizing its Performance Chemicals business,
expanding its technology capability and diversifying the markets it
serves.
- The Company has revised its estimated annual effective book
income tax rate to 36.5% for 2011, with an estimated effective book
income tax rate of 33.5% for the remaining three quarters of 2011.
This compares to a prior pro forma estimate of 42% used in
the Company's fourth quarter 2010 earnings conference call on
January 19, 2011. Revised Pro
Forma 2010 quarterly results reflecting the lower tax rate are
included in the accompanying tables.
- Refer to the accompanying "Non-GAAP and Other Financial
Measures" tables of this release for further explanation and
reconciliation regarding 2011 Adjusted Segment Operating Profit,
Adjusted Net Income and Adjusted Diluted Earnings Per Share, and
2010 Pro Forma Adjusted Net Income and Adjusted Diluted Earnings
Per Share.
OMNOVA Solutions Inc. (NYSE: OMN) today announced Net Income of
$1.0 million, or $0.02 Diluted Earnings Per Share, for the first
quarter ended February 28, 2011.
This compares to Net Income of $7.8
million, or Diluted Earnings Per Share of $0.17 for the first quarter of 2010. In the
first quarter of 2011, there were a number of non-recurring
after-tax charges totaling $5.4
million resulting primarily from the ELIOKEM acquisition.
Included in these charges were acquisition expenses,
write-off of deferred financing fees, inventory valuation costs,
restructuring and severance, and liquidation taxes. Excluding
these items, Adjusted Net Income for the first quarter of 2011 was
$6.4 million, with Adjusted
Diluted Earnings Per Share of $0.14.
“We are pleased with our first quarter results,” said
Kevin McMullen, OMNOVA Solutions’
Chairman and Chief Executive Officer. “The Company's
Performance Chemicals segment, including the ELIOKEM product lines,
generated strong first quarter Adjusted Segment Operating Profit of
$24.8 million exceeding last year's
first quarter Pro Forma Adjusted Segment Operating Profit of
$23.9 million. This was
accomplished despite weaker volumes in carpet and ELIOKEM oil field
drilling chemicals, higher raw material costs, startup costs for a
new plant in China, and nine fewer
reporting days for the ELIOKEM product lines. The Decorative
Products segment, which was also impacted by rapidly rising raw
material costs, reduced its Adjusted Segment Operating Loss to
$1.7 million from an Adjusted Segment
Operating Loss of $4.3 million in the
fourth quarter of 2010, an improvement of $2.6 million, as volumes increased and price
recovery actions gained traction.
"We have made significant progress on many fronts, including the
integration of the ELIOKEM organization into our Performance
Chemicals business, the introduction of numerous innovative
products, penetration into new and adjacent markets, the
accelerated globalization of our business, and aggressive
productivity gains and cost reductions,” said McMullen.
ELIOKEM Acquisition - On December
9, 2010, the Company successfully completed the acquisition
of ELIOKEM, a global specialty chemicals manufacturer with sales of
$288 million and adjusted earnings
before interest, taxes, depreciation and amortization (Adjusted
EBITDA) of approximately $50.9
million for the twelve months ended November 30, 2010. The Company paid
approximately $300 million for the
business. ELIOKEM's product lines have very complementary
technology and include specialty coating resins, elastomeric
modifiers, antioxidants, rubber reinforcing resins, oil and gas
drilling chemicals, and latices for specialty applications.
It has manufacturing sites in France, China, India,
and the United States and employs
approximately 630 people worldwide. The acquisition
transforms OMNOVA Solutions into a much larger, more diverse
specialty chemical and functional surfaces company with
significantly enhanced global capability, enabling the Company to
grow in existing markets and penetrate new adjacent markets.
Consolidated Results for the Quarter Ending February 28, 2011 – Net sales increased
$104.8 million, or 57.0%, to
$288.7 million for the first quarter
of 2011, compared to $183.9 million for the first quarter of
2010. The sales improvement was driven by $74.7 million of revenues from the ELIOKEM
acquisition, while legacy OMNOVA sales increased $30.1 million. Contributing to the
legacy OMNOVA sales increase were volume increases of $12.7 million, higher pricing of $16.6 million, and $0.8
million of currency translation effects.
Gross profit in the first quarter of 2011 increased to
$56.7 million, compared to
$40.0 million in the first
quarter of 2010, primarily due to the ELIOKEM acquisition.
Raw materials in our legacy businesses in the first quarter
increased $19.0 million versus last
year. Gross profit margins in the first quarter of 2011 were 19.6%,
compared with margins of 21.8% in the first quarter of 2010.
The decline in gross profit margin percentage was due to a
one-time inventory valuation adjustment related to the acquisition,
raw material inflation, the effect of Performance Chemicals index
pricing in which higher raw material costs are passed to customers
with no gross margin benefit, new plant startup charges, and
changes in product mix.
Selling, general and administrative expenses (SG&A) in the
first quarter of 2011 increased to $32.5 million, or 11.3% of sales, compared
to $24.0 million, or 13.1% of
sales, in the first quarter of 2010. The increase of
$8.5 million was primarily due to the
ELIOKEM acquisition. The decline as a percentage of sales was
due to higher sales and the Company's focused ongoing efforts to
control costs and to leverage SG&A across its global operations
and growing revenue base.
Interest expense in the first quarter of 2011 was $9.3 million, an increase of $7.5 million from the first quarter of 2010,
due to higher borrowing levels and interest rates resulting from
the refinancing of the Company to facilitate the ELIOKEM
acquisition.
In the quarter, acquisition and integration related expenses
were $1.9 million. A deferred
financing fee write-off of $1.0
million was related to the Company's refinancing to complete
the ELIOKEM acquisition.
For the quarter, book income tax expenses increased to
$2.3 million, a 69% effective income
tax rate, as compared to $0.7 million
and an 8% effective tax rate in the first quarter of 2010.
The higher effective tax rate is due to a one-time charge of
$1.1 million for foreign taxes
related to the merger of ELIOKEM's U.S. operations into OMNOVA
Solutions, and a higher year-over-year effective tax rate.
Minimal taxes were provided in last year's first quarter due
to the existence of a deferred tax asset valuation allowance in the
U.S. Due to the improvement in the Company's earnings and
outlook, the U.S. tax valuation allowance was reversed in the
fourth quarter of 2010. The reversal of the tax valuation
allowance in the fourth quarter of 2010 resulted in the Company
recognizing tax expense in the first quarter of 2011 at its current
estimated effective rate of 33.5% plus the impact of the one time
charge of $1.1 million. At the
end of its 2010 fiscal year, the Company previously estimated the
effective tax rate for 2011 to be 42%, however the Company now
expects its effective tax rate to be approximately 36.5% for the
full year and 33.5% for the remaining three quarters of 2011.
Global cash taxes are expected to be minimal. The
Company has $118.9 million of U.S.
federal net operating loss carryforwards and $3.5 million of state and local tax net operating
loss carryforwards with expiration dates between 2021 and 2030.
As of February 28, 2011, the
Company's debt of $454.7 million
was comprised of $250.0 million of
7.875% Senior Notes maturing 2017, a term loan of $199.5 million maturing in 2016 and
$7.1 million of foreign borrowings.
Cash and cash equivalents totaled $74.0 million. There were no
outstanding borrowings under the Company's revolving asset-based
credit facility and the available borrowing capacity was
$89.0 million.
Performance Chemicals - Net sales during the first
quarter of 2011 increased $100.0
million, to $212.8 million,
compared to $112.8 million in the
first quarter of 2010. The ELIOKEM acquisition added
approximately $74.7 million of sales
versus the prior year. Performance Chemicals' legacy business
sales improvement of $25.3 million
was due to pricing increases of $13.8 million and volume improvements of
$11.5 million, as compared to a
year ago. Segment Operating Profit was $21.4
million for the first quarter of 2011 as compared to
$13.8 million in the first
quarter of 2010, an increase of $7.6 million. Operating profit margins
were 10.1% in the first quarter of 2011 as compared to 12.2% a year
ago.
Performance Chemicals Adjusted Segment Operating Profit for the
first quarter of 2011 was $24.8 million, excluding $2.7 million of fair value write-up of inventory
for ELIOKEM and restructuring and severance of $0.7 million. This exceeds last year's Pro
Forma Adjusted Segment Operating Profit of $23.9 million. The adjusted operating
profit margins were 11.7% for the first quarter of 2011 compared to
the pro forma adjusted operating profit margins of 13.1% in the
first quarter of 2010. The adjusted operating margins
declined due to higher raw material costs and the effect of the
index pricing in which higher raw materials costs are passed to
customers with no gross margin benefit, plant start-up costs and
changes in product mix.
Performance Chemicals had strong global organic growth of 5% led
by double digit increases in paper and specialty coatings.
Carpet volume, however, remained weak and was down
year-over-year.
During the quarter, the Company made significant progress in
integrating the ELIOKEM acquisition into Performance Chemicals.
The structure is now in place to manage all Performance
Chemicals product lines on an integrated global basis, while
simultaneously offering highly focused local customer service and
applications support. The most significant revenue synergy
opportunities are focused on specialty coatings and latices and oil
field chemicals, supported by the Company's strong product and
application development centers in Europe, North
America and Asia.
Decorative Products – Net sales were $75.9 million during the first quarter of 2011,
an increase of $4.8 million, or 6.8%,
compared to the first quarter of 2010. Sales improved in all
product lines and geographical regions, with the exception of
coated fabrics in China.
Price increases contributed approximately $2.6 million to the sales increase, while volumes
were up $1.2 million and foreign
exchange impact was $1.0 million.
Adjusted Segment Operating Loss was $1.7 million in the first quarter of 2011,
compared to breakeven Adjusted Segment Operating Profit for the
first quarter of 2010, and a significant improvement from the
Adjusted Segment Operating Loss of $4.3
million in the fourth quarter of 2010. The major
contributor to the year-over-year operating profit decline was
higher raw material costs of approximately $4.3 million partially offset by the price
increases. Price recovery improved to approximately 60% of
raw material inflation in the first quarter of 2011 as compared to
approximately 30% in fiscal 2010.
The Laminates and Performance Films product lines generated
sales increases of over 14% compared to a year ago and were
profitable during the quarter. North American wallcovering
generated higher year-over-year sales for the second consecutive
quarter.
Earnings Conference Call - OMNOVA Solutions has scheduled
its Earnings Conference Call for Thursday,
March 24, 2011, at 11:00 a.m.
ET. The live audio event will be hosted by OMNOVA
Solutions' Chairman and Chief Executive Officer, Kevin McMullen. It is anticipated to be
approximately one hour in length and may be accessed by the public
from 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, April 14, 2011. A
telephone replay will also be available beginning at 1:00 p.m. ET on March 24, 2011, and ending
at 11:59 p.m., ET on April 14,
2011. To listen to the telephone replay, callers
should dial: (USA)
800-475-6701 or (Int'l) 320-365-3844. The Access Code is
193605.
Non-GAAP and
Other Financial Measures
Reconciliation of Reported
Segment Sales and Operating Profit (Loss) to Net Sales and Net
Income
|
|
|
Three Months
Ended
|
|
|
February
28,
|
|
(Dollars in
millions)
|
2011
|
2010
|
|
Performance Chemicals
|
$212.8
|
$112.8
|
|
Decorative Products
|
75.9
|
71.1
|
|
Net
Sales
|
$288.7
|
$183.9
|
|
Segment Operating Profit
(Loss)
|
|
|
|
Performance
Chemicals
|
$ 21.4
|
$ 13.8
|
|
Decorative
Products
|
(1.8)
|
(.1)
|
|
Interest expense
|
(9.3)
|
(1.8)
|
|
Corporate expense
|
(4.1)
|
(3.4)
|
|
Acquisition and integration
related expense
|
(1.9)
|
—
|
|
Deferred financing fees
write-off
|
(1.0)
|
—
|
|
Income
Before Income Taxes
|
3.3
|
8.5
|
|
Income tax (expense)
|
(2.3)
|
(.7)
|
|
Net
Income
|
$
1.0
|
$
7.8
|
|
Depreciation and
amortization
|
$ 8.4
|
$ 5.5
|
|
Capital expenditures
|
$ 4.8
|
$ 2.5
|
|
|
|
|
|
|
This Earnings Release includes adjusted segment operating profit
(loss), adjusted net income and adjusted diluted earnings per share
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 and
pro forma 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 (loss), 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. The table
below provides the reconciliation of these financial measures to
the comparable GAAP financial measures.
The first quarter 2011 adjusted segment operating profit (loss),
adjusted net income and adjusted diluted earnings per share
excludes certain items which management does not consider to be
reflective of normal operations.
The first quarter 2010 pro forma presentation reflects the pro
forma results as if Eliokem was owned by the Company for the
quarter; the post-acquisition capital structure and related
interest expense; the Company's current estimate of an effective
tax rate of 33.5%; and other adjustments related to non-operational
items.
|
|
|
Three Months
Ended
|
|
|
February
28,
|
|
|
2011
|
2010
|
2010
|
|
(Dollars in
millions)
|
Actual
|
Actual
|
Pro
forma
|
|
Sales
|
|
|
|
|
Performance Chemicals
(Legacy)
|
$138.1
|
$112.8
|
$112.8
|
|
Performance Chemicals (Eliokem
International)
|
74.7
|
—
|
69.5
|
|
Total Performance
Chemicals
|
212.8
|
112.8
|
182.3
|
|
Decorative Products
|
75.9
|
71.1
|
71.1
|
|
Total Sales
|
$288.7
|
$183.9
|
$253.4
|
|
|
|
|
|
|
|
Non-GAAP and
Other Financial Measures (Continued)
Reconciliation Tables for: (A)
Adjusted Segment Operating Profit (Loss), (B) Adjusted Net Income,
(C) Adjusted Diluted Earnings Per Share
|
|
(A) Adjusted Segment Operating
Profit (Loss) Reconciliation
|
Three Months
Ended
|
|
|
February
28,
|
|
|
2011
|
2010
|
2010
|
|
(Dollars in
millions)
|
Actual
|
Actual
|
Pro
forma
|
|
Performance Chemicals Segment
Operating Profit
|
$21.4
|
$13.8
|
$13.8
|
|
Eliokem operating profit - prior
year
|
—
|
—
|
9.9
|
|
Restructuring and
severance
|
.7
|
.2
|
.2
|
|
Fair value write-up of Eliokem
inventory acquired
|
2.7
|
—
|
—
|
|
Total adjustments to Performance
Chemicals' segment operating profit
|
3.4
|
.2
|
10.1
|
|
Performance Chemicals' Adjusted
Segment Operating Profit
|
$24.8
|
$14.0
|
$23.9
|
|
|
|
|
|
|
Decorative Products Segment
Operating (Loss) Profit
|
$ (1.8)
|
$ (.1)
|
$ (.1)
|
|
Restructuring and
severance
|
.1
|
.1
|
.1
|
|
Total adjustments to Decorative
Products' segment operating (loss) profit
|
.1
|
.1
|
.1
|
|
Decorative Products' Adjusted
Segment Operating (Loss) Profit
|
$
(1.7)
|
$
—
|
$
—
|
|
|
|
|
|
|
|
|
|
(B) Adjusted Net Income
Reconciliation
|
Three Months
Ended
|
|
|
February
28,
|
|
|
2011
|
2010
|
2010
|
|
(Dollars in
millions)
|
Actual
|
Actual
|
Pro
forma
|
|
Net Income
|
$1.0
|
$7.8
|
$7.8
|
|
Eliokem operating profit - prior
year
|
—
|
—
|
9.9
|
|
Restructuring and
severance
|
.8
|
.3
|
.3
|
|
Fair value adjustment of Eliokem
inventory acquired
|
2.7
|
—
|
—
|
|
Additional interest
expense(1)
|
—
|
—
|
(7.4)
|
|
Acquisition and integration
expenses
|
1.9
|
—
|
—
|
|
Deferred financing fees
written-off
|
1.0
|
—
|
—
|
|
Additional income tax
expense(2)
|
(2.1)
|
—
|
(3.1)
|
|
Tax expense for liquidation of
foreign subsidiary
|
1.1
|
—
|
—
|
|
Adjusted Net
Income
|
$6.4
|
$8.1
|
$7.5
|
|
|
|
|
|
|
|
(1)The additional interest expense is estimated as if the
Company's debt refinancing activities in November and
December 2010 were effective December 1, 2009.
(2)The additional tax expense is estimated as the additional tax
expense (benefit) attributed to the adjusted and pro forma items
using the Company's current estimated effective tax rate of
33.5%.
|
|
(C) Adjusted Diluted Earnings
Per Share Reconciliation
|
Three Months
Ended
|
|
|
February
28,
|
|
|
2011
|
2010
|
2010
|
|
(Dollars)
|
Actual
|
Actual
|
Pro
forma
|
|
Diluted Earnings Per
Share
|
$.02
|
$ .17
|
$ .17
|
|
Eliokem operating profit - prior
year
|
—
|
—
|
.22
|
|
Restructuring and
severance
|
.02
|
.01
|
.01
|
|
Fair value adjustment of Eliokem
inventory acquired
|
.06
|
—
|
—
|
|
Additional interest
expense
|
—
|
—
|
(.17)
|
|
Acquisition and integration
expenses
|
.04
|
—
|
—
|
|
Deferred financing fees
written-off
|
.02
|
—
|
—
|
|
Additional income tax
expense
|
(.04)
|
—
|
(.06)
|
|
Tax expense for liquidation of
foreign subsidiary
|
.02
|
—
|
—
|
|
Total Earnings Per Share Impact
of Adjusted Items
|
.12
|
.01
|
—
|
|
Adjusted Diluted Earnings Per
Share
|
$.14
|
$
.18
|
$
.17
|
|
|
|
|
|
|
|
Non-GAAP and
Other Financial Measures (Continued)
OMNOVA Solutions Consolidated
Including ELIOKEM
2010 Adjusted Pro Forma
Quarterly and Full Year Results(1) (2)
|
|
|
|
|
|
|
2010
|
|
(Dollars in millions, except per
share data)
|
Q1
2010
|
Q2
2010
|
Q3
2010
|
Q4
2010
|
Full
Year
|
|
Sales
|
|
|
|
|
|
|
Performance Chemicals
(Legacy)
|
$112.8
|
$138.6
|
$145.3
|
$131.2
|
$ 527.9
|
|
Eliokem
|
69.5
|
75.1
|
70.9
|
72.9
|
288.4
|
|
Total Performance
Chemicals
|
182.3
|
213.7
|
216.2
|
204.1
|
816.3
|
|
Decorative Products
|
71.1
|
87.8
|
82.6
|
76.8
|
318.3
|
|
Sales -
Total
|
$253.4
|
$301.5
|
$298.8
|
$280.9
|
$1,134.6
|
|
|
|
|
|
|
|
|
Adjusted Segment Operating
Profit(1)
|
|
|
|
|
|
|
Performance Chemicals
(Legacy)
|
$ 14.0
|
$ 17.0
|
$ 15.3
|
$ 17.8
|
$ 64.1
|
|
Eliokem
|
9.9
|
12.7
|
7.9
|
7.2
|
37.7
|
|
Total Performance
Chemicals
|
23.9
|
29.7
|
23.2
|
25.0
|
101.8
|
|
Decorative Products
|
—
|
2.4
|
(0.1)
|
(4.3)
|
(2.0)
|
|
Adjusted
Segment Operating Profit Total(1)
|
23.9
|
32.1
|
23.1
|
20.7
|
99.8
|
|
|
|
|
|
|
|
|
Interest Expense
(Cash)
|
(8.0)
|
(8.0)
|
(8.0)
|
(8.0)
|
(32.0)
|
|
Interest Expense (Amortization
Fees and Swap)
|
(1.2)
|
(1.2)
|
(1.2)
|
(1.2)
|
(4.8)
|
|
Interest Expense
Total
|
(9.2)
|
(9.2)
|
(9.2)
|
(9.2)
|
(36.8)
|
|
|
|
|
|
|
|
|
Corporate Expense
|
(3.4)
|
(3.6)
|
(3.0)
|
(4.4)
|
(14.4)
|
|
|
|
|
|
|
|
|
Profit
Before Tax
|
11.3
|
19.3
|
10.9
|
7.1
|
48.6
|
|
|
|
|
|
|
|
|
Tax Expense @ 33.5%
|
(3.8)
|
(6.5)
|
(3.7)
|
(2.3)
|
(16.3)
|
|
|
|
|
|
|
|
|
Net
Income(1)
|
$
7.5
|
$
12.8
|
$
7.2
|
$
4.8
|
$
32.3
|
|
|
|
|
|
|
|
|
Diluted
Earnings Per Share(1)
|
$
0.17
|
$
0.29
|
$
0.16
|
$
0.10
|
$
0.72
|
|
|
|
(1) Adjusted Pro
Forma reflects as if the Company had owned ELIOKEM as of 12/1/2009
including 2010 Operating Profit and Corporate Expense; interest
cost for the new capital structure and a 33.5% income tax
rate.
(2) Adjusted Pro
Forma reflects the adjustments set forth in the reconciliation
tables included with the Company's Fourth Quarter 2010 and First
Quarter 2011 Earnings Releases and includes Non-GAAP financial
measures as defined by the Securities and Exchange Commission.
Important information describing the limitations of Non-GAAP
financial measures is included under Non-GAAP and Other Financial
Measures contained in the Company's First Quarter 2011 Earnings
Release filed with the Securities and Exchange Commission on
Form 8K.
|
|
|
|
|
|
|
|
|
|
Non-GAAP
and Other Financial Measures (Continued)
This press release also includes EBITDA and Adjusted EBITDA
which are Non-GAAP Financial Measures as defined by the Securities
and Exchange Commission. EBITDA and Adjusted EBITDA are not
measurements of a company's financial performance or condition
under GAAP and should not be considered as alternatives to net
income, operating income or any other financial performance
measures derived in accordance with GAAP or as a measure of a
company's liquidity or financial performance. Additionally,
EBITDA and Adjusted EBITDA are not intended to be measures of free
cash flow available for management's discretionary use, as they do
not consider certain cash requirements such as interest payments,
tax payments and debt service requirements. EBITDA and
Adjusted EBITDA are not calculated in the same manner by all
companies and, accordingly, are not necessarily comparable to
similarly titled measures of other companies and may not be
appropriate measures for comparing performance relative to other
companies.
Eliokem's EBITDA is calculated as net income less interest
expense, amortization of deferred financing costs, income taxes and
depreciation and amortization expense. Eliokem's Adjusted
EBITDA is calculated as Eliokem's EBITDA less restructuring and
severance expenses, asset impairments and other items.
The Company believes EBITDA and Adjusted EBITDA are frequently
used by securities analysts, investors and other interested parties
in the evaluation of companies in the Company's industry.
Management believes that presenting EBITDA and Adjusted
EBITDA is useful to investors because these measures are commonly
used as analytical indicators to evaluate performance and by
management to allocate resources.
|
|
Eliokem International Adjusted
EBITDA
($ Millions)
|
LTM
November 30,
2010
|
|
Net Income
|
$
0.4
|
|
Interest expense
|
16.0
|
|
Amortization of deferred
financing costs
|
0.4
|
|
Income Tax
|
2.6
|
|
Depreciation &
amortization
|
13.2
|
|
EBITDA
|
32.6
|
|
Restructuring &
severance
|
1.1
|
|
Other
|
17.2
|
|
Adjusted EBITDA
|
$50.9
|
|
|
|
|
|
This press release includes "forward-looking statements" as
defined by federal securities laws. These statements, as well
as any verbal statements by the Company in connection with this
press release, 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, sales, profits, earnings, markets, products,
technology, operations, customers, raw materials, 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," and similar expressions
or phrases identify forward-looking statements.
All forward-looking statements involve risks and uncertainties.
Many risks and uncertainties are inherent in business
generally and the markets in which the Company operates or proposes
to operate. Other risks and uncertainties are more specific
to the Company's businesses including businesses the Company
acquires. The occurrence of 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 results and, in some cases, such effect could be
material.
All written and verbal 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 herein. Any
forward-looking statement speaks only as of the date on which such
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 forward-looking statements
whether as a result of new information, future events or
otherwise.
Risks and uncertainties that may cause actual results to differ
materially from expected results include, among others; the
Company's ability to successfully integrate ELIOKEM into its
operations; the Company's ability to achieve fully the strategic
and financial objectives related to the acquisition of ELIOKEM,
including the acquisition becoming accretive to the Company's
earnings; and unexpected costs or liabilities that may arise from
the acquisition, ownership or operation of ELIOKEM.
Additional risk factors include: economic trends affecting
the economy in general and/or the Company's end-use markets; prices
and availability of raw materials including styrene, butadiene,
vinyl acetate monomer, polyvinyl chloride, acrylonitrile, acrylics
and textiles; ability to increase pricing to offset raw material
cost increases; product substitution and/or demand destruction due
to product technology, performance or cost disadvantages; loss of a
significant customer; customer and/or competitor consolidation;
customer bankruptcy; ability to successfully develop and
commercialize new products; a decrease in demand for domestically
manufactured products due to increased foreign competition and
off-shoring of production; ability to successfully implement
productivity enhancement and cost reduction initiatives; unplanned
full or partial suspension of plant operations; losses from the
Company's strategic alliance, joint venture, acquisition and
integration activities; loss or damage due to acts of war or
terrorism, natural disasters or accidents, including fires, floods,
explosions and releases of hazardous substances; ability to comply,
and cost of compliance with legislative and regulatory changes,
including changes impacting environmental, health and safety
compliance and changes which may restrict or prohibit certain
products and raw materials; rapid inflation in health care costs
and assumptions used in determining health care cost estimates;
risks associated with foreign operations including political unrest
and fluctuations in exchange rates of foreign currencies; prolonged
work stoppage resulting from labor disputes with unionized
workforce; changes in and compliance with pension plan funding
obligations; stock price volatility; infringement or loss of the
Company's intellectual property; litigation and claims against the
Company related to products, services, contracts, employment,
environmental, safety, intellectual property and other matters;
adverse litigation judgments or settlements; absence of or
inadequacy of insurance coverage for litigation judgments,
settlements or other losses; availability of financing at
anticipated rates and terms; and loan covenant default arising from
substantial debt and leverage and the inability to service that
debt, including increases in applicable short-term or long-term
borrowing rates.
For further information on risks and uncertainties, see the
Company's Form 10-K and 10-Q filings with the Securities and
Exchange Commission.
OMNOVA Solutions Inc. is a technology-based company with pro
forma sales for the twelve months ending February 28, 2011 of $1.17
billion and a global workforce of approximately 3,060.
OMNOVA is an innovator of emulsion polymers, specialty
chemicals, and decorative and functional surfaces for a variety of
commercial, industrial and residential end uses. Visit OMNOVA
Solutions on the internet at www.omnova.com.
OMNOVA
SOLUTIONS INC.
Consolidated
Statements of Operations
(Dollars in
Millions, Except Per Share Data)
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
February
28,
|
|
|
2011
|
|
2010
|
|
Net Sales
|
$288.7
|
|
$183.9
|
|
Cost of goods sold
|
232.0
|
|
143.9
|
|
Gross Profit
|
56.7
|
|
40.0
|
|
Selling, general and
administrative
|
32.5
|
|
24.0
|
|
Depreciation and
amortization
|
8.4
|
|
5.5
|
|
Restructuring and
severance
|
.8
|
|
.3
|
|
Interest expense
|
9.3
|
|
1.8
|
|
Deferred financing fees
write-off
|
1.0
|
|
—
|
|
Acquisition and integration
related expense
|
1.9
|
|
—
|
|
Other income, net
|
(.5)
|
|
(.1)
|
|
|
53.4
|
|
31.5
|
|
Income Before Income
Taxes
|
3.3
|
|
8.5
|
|
Income tax expense
|
2.3
|
|
.7
|
|
Net Income
|
$
1.0
|
|
$
7.8
|
|
Income Per Share
|
|
|
|
|
Basic net income per
share
|
$
.02
|
|
$
.18
|
|
Diluted net income per
share
|
$
.02
|
|
$
.17
|
|
|
|
|
|
|
|
OMNOVA
SOLUTIONS INC.
Consolidated
Balance Sheets
(Dollars in
millions, except per share amounts)
|
|
|
February
28,
|
|
November
30,
|
|
|
2011
|
|
2010
|
|
ASSETS:
|
(Unaudited)
|
|
|
|
Current Assets
|
|
|
|
|
Cash and cash
equivalents
|
$ 74.0
|
|
$ 75.6
|
|
Restricted cash
|
—
|
|
253.1
|
|
Accounts receivable,
net
|
179.1
|
|
106.8
|
|
Inventories
|
97.8
|
|
45.8
|
|
Prepaid expenses and
other
|
5.5
|
|
3.5
|
|
Deferred income taxes -
current
|
7.0
|
|
6.0
|
|
Total
Current Assets
|
363.4
|
|
490.8
|
|
Property, plant and equipment,
net
|
242.7
|
|
131.5
|
|
Trademarks and other intangible
assets, net
|
93.1
|
|
5.8
|
|
Goodwill
|
85.5
|
|
—
|
|
Deferred income taxes -
non-current
|
66.8
|
|
86.2
|
|
Deferred financing
fees
|
15.1
|
|
10.5
|
|
Other assets
|
10.8
|
|
1.2
|
|
Total
Assets
|
$877.4
|
|
$726.0
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY:
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Amounts due banks
|
$ 9.1
|
|
$ 4.8
|
|
Accounts payable
|
133.1
|
|
88.6
|
|
Accrued payroll and personal
property taxes
|
15.0
|
|
17.3
|
|
Employee benefit
obligations
|
2.4
|
|
2.4
|
|
Other current
liabilities
|
13.0
|
|
9.8
|
|
Total
Current Liabilities
|
172.6
|
|
122.9
|
|
Senior notes
|
250.0
|
|
250.0
|
|
Long-term debt -
other
|
195.6
|
|
139.4
|
|
Postretirement benefits other
than pensions
|
7.5
|
|
7.6
|
|
Pension liabilities
|
79.1
|
|
73.3
|
|
Deferred income taxes -
non-current
|
26.7
|
|
1.7
|
|
Other liabilities
|
17.2
|
|
7.7
|
|
Total
Liabilities
|
748.7
|
|
602.6
|
|
Shareholders'
Equity
|
|
|
|
|
Preference stock - $1.00 par
value; 15 million shares authorized;
|
|
|
|
|
none
outstanding
|
—
|
|
—
|
|
Common stock - $0.10 par value;
135 million shares authorized;
|
|
|
|
|
45.5 million and 45.2
million shares issued at February 28, 2011
|
|
|
|
|
and November 30, 2010,
respectively
|
4.5
|
|
4.5
|
|
Additional contributed
capital
|
320.4
|
|
318.0
|
|
Retained deficit
|
(111.0)
|
|
(112.0)
|
|
Treasury stock at cost; .2
million shares at February 28, 2011
|
|
|
|
|
and November 30,
2010
|
(1.3)
|
|
(1.3)
|
|
Accumulated other comprehensive
loss
|
(83.9)
|
|
(85.8)
|
|
Total
Shareholders' Equity
|
128.7
|
|
123.4
|
|
Total
Liabilities and Shareholders' Equity
|
$877.4
|
|
$726.0
|
|
|
|
|
|
|
|
SOURCE OMNOVA Solutions Inc.