FAIRLAWN, Ohio, Aug. 30, 2011 /PRNewswire/ -- OMNOVA Solutions
(NYSE: OMN) today announced that the Company is revising its 2011
full year adjusted earnings estimate. OMNOVA now expects
adjusted diluted earnings per share for the fiscal year ending
November 30, 2011 to be between
$0.40 and $0.44, as compared to its
prior estimate of approximately $0.60
provided during its second quarter earnings call in June.
The updated estimate reflects a reduction in market volumes
resulting from a deceleration in the global economy in the third
quarter, as well as the rapid escalation in raw material costs to
unprecedented highs. These conditions are expected to continue to
be dynamic in the fourth quarter.
"The global economy has recently slowed and become more
uncertain and, as a result, demand across many OMNOVA markets has
weakened," said Kevin McMullen,
OMNOVA Solutions' Chairman and CEO. "At the same time,
despite the recent drop in oil prices, the costs for key raw
materials such as butadiene and many acrylics have continued to
rise to record levels."
Second half 2011 volumes in Performance Chemicals are expected
to be down 4-5%, as compared to 2010, driven primarily by weaker
paper and carpet markets. This compares to flat
year-over-year volumes during the first half of 2011. The Company
does not believe there has been any significant loss of market
share in 2011. Second half 2011 Decorative Products volumes
are expected to be down 10-12% as compared to a year ago, driven
primarily by lower global market demand for coated fabrics. Full
year 2011 raw material inflation is now expected to increase by a
record amount of approximately $140
million for the OMNOVA legacy (excluding ELIOKEM) business
as compared to a year ago. This exceeds last year's record
inflation by almost $45 million.
Pricing actions are expected to total $130 million in 2011 - a
record increase - but still lag the raw material inflation
primarily due to timing in index contracts. Historically,
operating profit has improved as raw material costs have stabilized
or declined, and contracts with index pricing mechanisms have had
time to catch up.
"While we face near-term profit headwinds, we remain encouraged
by the long-term earnings prospects of OMNOVA as we continue to
take actions to improve our earnings capability," said McMullen.
"In particular, we are making significant progress in
Performance Chemicals' integration of our ELIOKEM acquisition,
building on our manufacturing footprint and new technology
offerings. For example, a key global specialty chemical
initiative is the production ramp-up at our new specialty latex
facility in Caojing, China.
Despite the record cost inflation and weaker volumes, Performance
Chemicals is expected to have its second highest pro forma annual
operating profit in its history."
OMNOVA Solutions plans to announce results for the third quarter
ending August 31, 2011 on
September 27, 2011. Company
management will conduct its third quarter earnings call on
Wednesday, September 28, 2011 at
11:00am ET.
This Earnings Release includes adjusted diluted earnings per
share which is a non-GAAP financial measure as defined by the
Securities and Exchange Commission. This adjusted financial
measurement is not a measurement of financial performance under
GAAP and such financial measure should not be considered as an
alternative to diluted earnings per share determined in accordance
with GAAP. Because of the forward looking nature of this
financial measure, it is not practical to present a reconciliation
to the GAAP measure.
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 is a technology-based company with pro forma
sales for the twelve months ending May 31,
2011 of $1.2 billion and a
global workforce of approximately 2,800. 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.
SOURCE OMNOVA Solutions