FAIRLAWN, Ohio, Jan. 27, 2012 /PRNewswire/ --
- The Company completed full year 2011 with record operating
profit.
- The acquisition of specialty chemical producer ELIOKEM was
accretive in year one.
- To increase focus on businesses with greater global growth
potential, the Company decided during the fourth quarter to exit
the commercial wallcovering businesses.
- For the fourth quarter, the Company reported a net loss of
$10.4 million, or $0.23 per diluted share, which included a loss
from discontinued operations of $16.7
million, or $0.37 per diluted
share, related primarily to non-cash asset impairment charges.
- Adjusted Diluted Earnings Per Share for the fourth quarter
(excluding discontinued operations) were $0.14 compared to $0.13 last year.
OMNOVA Solutions Inc. (NYSE: OMN) today announced a net loss of
$10.4 million, or a diluted loss per
share of $0.23, for the fourth
quarter ended November 30, 2011.
Included in the fourth quarter net loss was a loss from
discontinued operations of $16.7
million, or a diluted loss per share of $0.37, related primarily to non-cash asset
impairment charges of $13.6
million.
"Operating profit improved sequentially in the fourth quarter
despite continued weakness in market demand," said Kevin McMullen, OMNOVA Solutions' Chairman and
Chief Executive Officer. "Fourth quarter results were positively
impacted by lower raw material input costs, which declined from an
all-time high in the third quarter, but were still higher than the
prior year. We also generated positive cash during the
quarter and increased our cash balance to approximately
$106 million.
"For full year 2011, the Company achieved record operating
profit despite unprecedented raw material inflation. Our
Performance Chemicals business, including ELIOKEM, achieved its
best annual profit performance and the ELIOKEM acquisition was
accretive in the first year. As we celebrate the one-year
anniversary of the ELIOKEM acquisition, we are very enthusiastic
about the long-term value we can create together," McMullen said.
"Additionally, with the decision to exit commercial
wallcovering, the Decorative Products segment is better positioned
to be a positive contributor to OMNOVA's future financial
results.
"While we are optimistic about the fundamental improvement we
have made to the long-term business outlook for the Company, we are
clearly facing some near-term headwinds with raw material price
volatility and uncertain market demand," McMullen added.
Discontinued Operations
As part of the Company's strategy to focus on businesses with
greater global growth potential, the Company decided in the fourth
quarter of 2011 to exit commercial wallcovering, and these
businesses were classified as discontinued operations. On
December 12, 2011, the Company
completed the sale of the North American commercial wallcovering
business. Total sale proceeds from the North American assets
were $10.0 million along with
potential future royalty payments.
The Company's European-based commercial wallcovering business,
known as Muraspec, serves the global commercial wallcovering market
outside of North America,
including Asia. Muraspec has
been operated on a stand-alone basis and will continue business as
usual to design, produce, sell and service its commercial
wallcovering and other products. The Company is pursuing the
sale of the ongoing Muraspec business.
The Company recorded a loss of $16.7
million in the fourth quarter of 2011 for discontinued
operations which was related primarily to non-cash asset
impairments of $13.6 million.
OMNOVA will record a gain of approximately $9.8 million related to the sale of the North
American commercial wallcovering business in the first quarter of
2012.
Commercial wallcovering results in the fourth quarter were sales
of $19.3 million with an
operating loss of $3.9 million
excluding unusual items. For the full year 2011, the
commercial wallcovering operations generated net sales of
$70.2 million and an operating loss
of $7.9 million excluding
unusual items.
Reported Consolidated Results for the Fourth Quarter Ending
November 30, 2011
Net sales increased $111.1
million, or 58%, to $301.4
million for the fourth quarter of 2011, compared to
$190.3 million for the fourth
quarter of 2010. The sales improvement was driven by
$81.8 million of revenues from the
ELIOKEM acquisition and increased OMNOVA legacy sales of
$29.3 million. The higher
OMNOVA legacy sales resulted from price increases of $44.4 million and $2.0
million of favorable currency translation effects, which
were partially offset by volume decreases of $17.1 million.
Gross profit in the fourth quarter of 2011 increased to
$55.8 million, compared to
$32.0 million in the fourth
quarter of 2010, due primarily to the ELIOKEM acquisition.
Raw material costs in OMNOVA's legacy business increased
$39.4 million in the fourth quarter
versus the same period last year. Gross profit margins in the
fourth quarter of 2011 were 18.5%, compared to margins of 16.8% in
the fourth quarter of 2010. The increase in gross profit
margin percentage was due primarily to productivity and pricing
actions.
Selling, general and administrative expenses (SG&A) in the
fourth quarter of 2011 increased to $26.0 million, or 8.6% of sales, compared to
$19.3 million, or 10.1% of
sales, in the fourth quarter of 2010. The increase of
$6.7 million in SG&A was due
primarily to the ELIOKEM acquisition, partially offset by a bad
debt reserve recovery of $1.7
million. The decline as a percentage of sales was due
to higher sales and the Company's focused ongoing efforts to
control costs and leverage SG&A across its global
operations.
Interest expense in the fourth quarter of 2011 was $9.5 million, an increase of $6.4 million from the fourth quarter of
2010, due to higher borrowing levels and an increase in interest
rates resulting from refinancing activities relative to the ELIOKEM
acquisition in December 2010.
Income from continuing operations before income taxes in the
fourth quarter of 2011 was $10.8
million, compared to a loss of $5.6
million in the fourth quarter of 2010.
For the fourth quarter of 2011, income tax expense was
$4.5 million, a 41.7% effective
income tax rate. In the fourth quarter of 2010, the Company
recorded a tax benefit of $89.2 million related to the reversal of a
deferred tax asset valuation allowance in the U.S., which was no
longer required. Cash tax payments in the U.S. over the next
few years are expected to be minimal because the Company has
$124.8 million of U.S. federal net
operating loss carryforwards and $109.1
million of state and local tax net operating loss
carryforwards with expiration dates between 2022 and 2032.
In the fourth quarter of 2011, income from continuing operations
was $6.3 million, or $0.14 per diluted share. Loss from
discontinued operations, net of tax, was $16.7 million related primarily to non-cash asset
impairment charges of $13.6 million,
or $0.37 per diluted share. The
net loss was $10.4 million, or
$0.23 per diluted share.
As of November 30, 2011, the
Company's debt of $457.3 million
was comprised of $250.0 million
of 7.875% Senior Notes maturing in 2018, a term loan of
$198.0 million maturing in 2017
and $9.3 million of foreign
operations borrowings. The Company maintained its strong
liquidity position as global cash and cash equivalents totaled
almost $106 million. Also, on
November 30, 2011, there were no
outstanding borrowings under the Company's U.S. revolving
asset-based credit facility, and the available borrowing capacity
was $83.8 million.
Performance Chemicals Fourth Quarter 2011 Results
Net sales during the fourth quarter of 2011 increased
$110.2 million, to $241.4 million, compared to $131.2 million in the fourth quarter of 2010.
The ELIOKEM acquisition added $81.8 million of sales versus the prior
year. Performance Chemicals' legacy sales increased
$28.4 million in the fourth
quarter of 2011 due to positive pricing actions of $39.6 million and $0.2 million of foreign currency translation
effects, partially offset by volume decreases of $11.4 million. Segment operating profit was
$24.1 million for the fourth quarter
of 2011, compared to $17.6 million in the fourth quarter of 2010,
an increase of $6.5 million (see
Table 1).
Performance Chemicals Adjusted Segment Operating Profit for the
fourth quarter of 2011 was $22.5 million, compared to the fourth
quarter Pro Forma Adjusted Segment Operating Profit of $25.0 million in 2010 (see Table 3). The
adjusted operating profit margin was 9.3% for the fourth quarter of
2011, compared to the pro forma adjusted operating profit margin of
12.2% in the fourth quarter of 2010. The decline in the
operating profit margin was due primarily to the volume
declines.
NewPage Corporation, a major customer, filed for Chapter 11
bankruptcy protection in September
2011. Early in the first quarter of 2012, the Company
completed a new two-year supply contract with NewPage and has been
designated as a Critical Vendor. NewPage paid a cash
settlement to the Company on its pre-petition bankruptcy trade
receivable balance. The Bankruptcy Court has approved the
settlement. As a result, in the fourth quarter of 2011, the
Company reversed $1.7 million of the
$2.6 million bad debt charge that it
recorded for the NewPage receivable in the third quarter of
2011.
The specialty product lines within Performance Chemicals
recorded strong double-digit sales growth in global drilling
chemicals, continuing a year-long trend with increasing
participation in high temperature, high pressure drilling
environments around the world. Significant progress was made
in obtaining customer approvals for tire cord latex from OMNOVA's
new plant in Caojing, China.
Also, Performance Chemicals introduced its bio-based
co-polymer hybrid chemistry into both carpet and coated paper
applications following successful commercialization with several
specialty customers.
Decorative Products Fourth Quarter 2011
Results
Results of continuing operations excluding commercial
wallcovering (see Table 2) were sales of $60.0 million during the fourth quarter of 2011,
an increase of $0.9 million, or 1.5%,
compared to the fourth quarter of 2010. Sales improved for
North American and China coated
fabrics and for decorative laminates but declined in performance
films and Thailand coated fabrics.
Adjusted Segment Operating Profit was $2.2 million in the fourth quarter of 2011,
compared to a Pro Forma Adjusted Segment Operating Loss of
$2.7 million for the fourth quarter
of 2010 (see Table 3). The improvement is related primarily
to productivity and pricing actions.
During the quarter, raw material price recovery was
significantly higher than the previous year and continued the trend
of sequential quarterly improvements in 2011. Globally,
coated fabrics sales into the transportation and contract
upholstery markets were very strong, driven by double-digit volume
growth in after-market automotive, motorcycle, recreational seating
and healthcare applications. The Thailand coated fabrics
sales drop reflected the massive flooding in the region which
impacted the manufacturing plants of customers. The Company's
Thailand plants were not damaged
and continued operating. Laminates sales grew double-digit in
the store fixture and kitchen and bath segments, driven by
specification of OMNOVA's products by a major DIY store chain.
Earnings Conference Call - OMNOVA Solutions has scheduled
its Earnings Conference Call for Friday,
January 27, 2012, 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, February 17, 2012.
A telephone replay will also be available beginning at
1:00 p.m. ET on January 27, 2012, and ending at 11:59 p.m.,
ET on February 17, 2012. To
listen to the telephone replay, callers should dial:
(USA) 800-475-6701 or
(Int'l) 320-365-3844. The Access Code is 231350.
Non-GAAP and Other Financial Measures
This Earnings Release includes, Adjusted Segment Sales, Adjusted
Segment Operating Profit (Loss), Adjusted Income (Loss) From
Continuing Operations and Adjusted Diluted Earnings Per Share From
Continuing Operations 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 year-to-date 2010 pro forma presentation reflects the pro
forma results as if ELIOKEM was owned by the Company from the
beginning of the year; the post-acquisition capital structure and
related interest expense; the Company's estimate of an effective
tax rate of 33.5%; and other adjustments related to non-operational
items.
|
|
TABLE
1
Reconciliation of Reported
Segment Sales and Operating Profit (Loss) to Net Sales and
Income From Continuing Operations
|
|
|
|
|
Three Months Ended
November 30,
|
|
|
Year
Ended
November 30,
|
|
|
(Dollars in
millions)
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Performance
Chemicals
|
|
$
|
241.4
|
|
|
$
|
131.2
|
|
|
$
|
951.9
|
|
|
$
|
527.9
|
|
|
Decorative
Products
|
|
|
60.0
|
|
|
|
59.1
|
|
|
|
249.2
|
|
|
|
253.8
|
|
|
Total
Sales
|
|
$
|
301.4
|
|
|
$
|
190.3
|
|
|
$
|
1,201.1
|
|
|
$
|
781.7
|
|
|
|
|
|
|
|
|
Segment Operating Profit
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Chemicals
|
|
$
|
24.1
|
|
|
$
|
17.6
|
|
|
$
|
86.5
|
|
|
$
|
73.3
|
|
|
Decorative Products
|
|
|
.7
|
|
|
|
(4.5)
|
|
|
|
(1.3)
|
|
|
|
(3.2)
|
|
|
Interest
expense
|
|
|
(9.5)
|
|
|
|
(3.1)
|
|
|
|
(38.0)
|
|
|
|
(8.7)
|
|
|
Corporate
expense
|
|
|
(4.5)
|
|
|
|
(12.7)
|
|
|
|
(13.8)
|
|
|
|
(22.6)
|
|
|
Deferred financing fees
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
(1.0)
|
|
|
|
—
|
|
|
Acquisition and
integration related expense
|
|
|
—
|
|
|
|
(2.9)
|
|
|
|
(2.3)
|
|
|
|
(5.5)
|
|
|
Income
(Loss) From Continuing Operations Before
Income Taxes
|
|
|
10.8
|
|
|
|
(5.6)
|
|
|
|
30.1
|
|
|
|
33.3
|
|
|
Income tax (expense)
benefit
|
|
|
(4.5)
|
|
|
|
89.2
|
|
|
|
(13.4)
|
|
|
|
83.9
|
|
|
Income From
Continuing Operations
|
|
$
|
6.3
|
|
|
$
|
83.6
|
|
|
$
|
16.7
|
|
|
$
|
117.2
|
|
|
Depreciation and
amortization
|
|
$
|
8.8
|
|
|
$
|
4.5
|
|
|
$
|
33.5
|
|
|
$
|
18.7
|
|
|
Capital
expenditures
|
|
$
|
8.6
|
|
|
$
|
6.0
|
|
|
$
|
24.1
|
|
|
$
|
13.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
2
Adjusted
Segment Sales
|
|
|
|
|
|
|
|
Three Months Ended
November 30,
|
|
|
Year
Ended
November 30,
|
|
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
2011
Actual
|
|
|
2010
Pro forma
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Chemicals
(Legacy)
|
|
$
|
159.6
|
|
|
$
|
131.2
|
|
|
$
|
614.5
|
|
|
$
|
527.9
|
|
|
Performance Chemicals
(ELIOKEM International)
|
|
|
81.8
|
|
|
|
72.9
|
|
|
|
337.4
|
|
|
|
288.4
|
|
|
Total Performance
Chemicals
|
|
|
241.4
|
|
|
|
204.1
|
|
|
|
951.9
|
|
|
|
816.3
|
|
|
|
|
|
|
|
|
Decorative
Products
|
|
|
60.0
|
|
|
|
59.1
|
|
|
|
249.2
|
|
|
|
253.8
|
|
|
Total Sales
|
|
$
|
301.4
|
|
|
$
|
263.2
|
|
|
$
|
1,201.1
|
|
|
$
|
1,070.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP and
Other Financial Measures (Continued)
|
|
TABLE
3
Adjusted
Segment Operating Profit (Loss) Reconciliation
|
|
Three Months Ended
November
30,
|
|
|
Year
Ended
November
30,
|
|
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Performance
Chemicals Segment Operating Profit
|
|
$
|
24.1
|
|
|
$
|
17.6
|
|
|
$
|
86.5
|
|
|
$
|
73.3
|
|
|
ELIOKEM operating profit –
(pro forma 2010)
|
|
|
—
|
|
|
|
7.2
|
|
|
|
—
|
|
|
|
37.7
|
|
|
Restructuring, severance
and benefit plan curtailment
|
|
|
.1
|
|
|
|
.2
|
|
|
|
1.1
|
|
|
|
.5
|
|
|
Customer trade receivable
(recovery) write-off
|
|
|
(1.7)
|
|
|
|
—
|
|
|
|
.9
|
|
|
|
—
|
|
|
Distribution rights
settlement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9.7)
|
|
|
Fair value adjustment to
ELIOKEM inventory
|
|
|
—
|
|
|
|
—
|
|
|
|
2.7
|
|
|
|
—
|
|
|
Performance Chemicals'
segment operating profit adjustments
|
|
|
(1.6)
|
|
|
|
7.4
|
|
|
|
4.7
|
|
|
|
28.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Chemicals' Adjusted Segment Operating Profit
|
|
$
|
22.5
|
|
|
$
|
25.0
|
|
|
$
|
91.2
|
|
|
$
|
101.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decorative
Products Segment Operating Profit (Loss)
|
|
$
|
.7
|
|
|
$
|
(4.5)
|
|
|
$
|
(1.3)
|
|
|
$
|
(3.2)
|
|
|
Restructuring, severance,
and benefit plan curtailment
|
|
|
.2
|
|
|
|
1.4
|
|
|
|
.5
|
|
|
|
1.5
|
|
|
Asset impairment and
facility closure costs
|
|
|
1.3
|
|
|
|
—
|
|
|
|
3.7
|
|
|
|
2.7
|
|
|
Tax indemnification lapse,
legal settlements and other
|
|
|
—
|
|
|
|
(.2)
|
|
|
|
.2
|
|
|
|
.9
|
|
|
Strike costs
|
|
|
—
|
|
|
|
.6
|
|
|
|
—
|
|
|
|
2.5
|
|
|
Decorative Products'
segment operating profit adjustments
|
|
|
1.5
|
|
|
|
1.8
|
|
|
|
4.4
|
|
|
|
7.6
|
|
|
Decorative
Products' Adjusted Segment Operating Profit (Loss)
|
|
$
|
2.2
|
|
|
$
|
(2.7)
|
|
|
$
|
3.1
|
|
|
$
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
4
Adjusted
Income From Continuing
Operations Reconciliation
|
|
Three Months Ended
November 30,
|
|
|
Year
Ended
November 30,
|
|
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Income From
Continuing Operations
|
|
$
|
6.3
|
|
|
$
|
83.6
|
|
|
$
|
16.7
|
|
|
$
|
117.2
|
|
|
Performance Chemicals'
segment operating profit adjustments
|
|
|
(1.6)
|
|
|
|
7.4
|
|
|
|
4.7
|
|
|
|
28.5
|
|
|
Decorative Products'
segment operating profit adjustments
|
|
|
1.5
|
|
|
|
1.8
|
|
|
|
4.4
|
|
|
|
7.6
|
|
|
Corporate restructuring
and other
|
|
|
—
|
|
|
|
(.9)
|
|
|
|
.2
|
|
|
|
(.9)
|
|
|
Additional interest
expense
|
|
|
—
|
|
|
|
(6.1)
|
|
|
|
—
|
|
|
|
(28.1)
|
|
|
Acquisition and
integration related expense
|
|
|
—
|
|
|
|
2.9
|
|
|
|
2.3
|
|
|
|
5.5
|
|
|
Acquisition related
foreign currency hedge fair value adjustment
|
|
|
—
|
|
|
|
9.2
|
|
|
|
—
|
|
|
|
9.2
|
|
|
Deferred financing fees
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
1.0
|
|
|
|
—
|
|
|
Additional income tax
(expense) benefit
|
|
|
—
|
|
|
|
6.1
|
|
|
|
(5.6)
|
|
|
|
(4.2)
|
|
|
Tax valuation
reversal
|
|
|
—
|
|
|
|
(98.2)
|
|
|
|
—
|
|
|
|
(98.2)
|
|
|
Tax expense for
liquidation of foreign subsidiary
|
|
|
—
|
|
|
|
—
|
|
|
|
1.1
|
|
|
|
—
|
|
|
Income from continuing
operations adjustments
|
|
|
(.1)
|
|
|
|
(77.8)
|
|
|
|
8.1
|
|
|
|
(80.6)
|
|
|
Adjusted
Income From Continuing Operations
|
|
$
|
6.2
|
|
|
$
|
5.8
|
|
|
$
|
24.8
|
|
|
$
|
36.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TABLE
5
Adjusted
Diluted Earnings Per Share From
|
Three Months Ended
November 30,
|
|
|
Year
Ended
November 30,
|
|
|
Continuing
Operations Reconciliation
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
2011
Actual
|
|
|
2010
Pro
forma
|
|
|
(Dollars)
|
|
|
|
|
|
|
|
|
|
Diluted
Earnings Per Share From Continuing Operations
|
|
$
|
.14
|
|
|
$
|
1.85
|
|
|
$
|
.37
|
|
|
$
|
2.61
|
|
|
Performance Chemicals'
segment operating profit adjustments
|
|
|
(.04)
|
|
|
|
.16
|
|
|
|
.11
|
|
|
|
.63
|
|
|
Decorative Products'
segment operating profit adjustments
|
|
|
.04
|
|
|
|
.04
|
|
|
|
.10
|
|
|
|
.17
|
|
|
Corporate restructuring
and other
|
|
|
—
|
|
|
|
(.02)
|
|
|
|
—
|
|
|
|
(.02)
|
|
|
Additional interest
expense
|
|
|
—
|
|
|
|
(.13)
|
|
|
|
—
|
|
|
|
(.63)
|
|
|
Acquisition and
integration related expense
|
|
|
—
|
|
|
|
.06
|
|
|
|
.05
|
|
|
|
.12
|
|
|
Acquisition related
foreign currency hedge fair value adjustment
|
|
|
—
|
|
|
|
.20
|
|
|
|
—
|
|
|
|
.21
|
|
|
Deferred financing fees
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
.02
|
|
|
|
—
|
|
|
Additional income tax
(expense) benefit
|
|
|
—
|
|
|
|
.14
|
|
|
|
(.12)
|
|
|
|
(.08)
|
|
|
Tax valuation
reversal
|
|
|
—
|
|
|
|
(2.17)
|
|
|
|
—
|
|
|
|
(2.19)
|
|
|
Tax expense for
liquidation of foreign subsidiary
|
|
|
—
|
|
|
|
—
|
|
|
|
.02
|
|
|
|
—
|
|
|
Total
Earnings Per Share Impact of Adjusted Items
|
|
|
—
|
|
|
|
(1.72)
|
|
|
|
.18
|
|
|
|
(1.79)
|
|
|
Adjusted
Diluted Earnings Per Share From Continuing
Operations
|
|
$
|
.14
|
|
|
$
|
.13
|
|
|
$
|
.55
|
|
|
$
|
.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
economic trends and conditions 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; customer
concentration and loss of a significant customer; supplier,
customer and/or competitor consolidation; customer credit and
bankruptcy risk; ability to successfully develop and commercialize
new products; a decrease in regional demand due to reduced customer
production or increased import competition; risks associated with
international operations including political unrest, fluctuations
in exchange rates, and regulatory uncertainty; ability to
successfully implement productivity enhancement and cost reduction
initiatives; risks associated with chemical manufacturing and with
acts of war, terrorism, natural disasters or accidents, including
fires, floods, explosions and releases of hazardous substances;
unplanned full or partial suspension of plant operations; 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 the
Company from using or selling certain products and raw materials;
losses from the Company's strategic alliance, joint venture,
acquisition, integration and operational activities; rapid
inflation in health care costs; loss of key employees and inability
to attract and retain new key employees; prolonged work stoppage
resulting from labor disputes with unionized workforce; changes in,
and significant contributions required to meet, pension plan
funding obligations; attacks on and/or failure of the Company's
information systems; 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; stock price volatility; 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 November 30, 2011 of $1.2
billion and a global workforce of approximately 2,300.
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
November 30,
|
|
|
Year
Ended
November 30,
|
|
|
|
|
|
2011
|
|
|
|
2010
|
|
|
|
2011
|
|
|
|
2010
|
|
|
Net Sales
|
|
$
|
301.4
|
|
|
$
|
190.3
|
|
|
$
|
1,201.1
|
|
|
$
|
781.7
|
|
|
Cost of goods sold
|
|
|
245.6
|
|
|
|
158.3
|
|
|
|
982.5
|
|
|
|
635.3
|
|
|
Gross Profit
|
|
|
55.8
|
|
|
|
32.0
|
|
|
|
218.6
|
|
|
|
146.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
26.0
|
|
|
|
19.3
|
|
|
|
108.6
|
|
|
|
77.6
|
|
|
Depreciation and
amortization
|
|
|
8.8
|
|
|
|
4.5
|
|
|
|
33.5
|
|
|
|
18.7
|
|
|
Restructuring and
severance
|
|
|
.2
|
|
|
|
—
|
|
|
|
1.6
|
|
|
|
.5
|
|
|
Asset impairment
|
|
|
.7
|
|
|
|
—
|
|
|
|
3.1
|
|
|
|
2.7
|
|
|
Interest expense
|
|
|
9.5
|
|
|
|
3.1
|
|
|
|
38.0
|
|
|
|
8.7
|
|
|
Deferred financing fees
write-off
|
|
|
—
|
|
|
|
—
|
|
|
|
1.0
|
|
|
|
—
|
|
|
Acquisition and integration
related expense
|
|
|
—
|
|
|
|
2.9
|
|
|
|
2.3
|
|
|
|
5.5
|
|
|
Other (income) expense,
net
|
|
|
(.2)
|
|
|
|
7.8
|
|
|
|
.4
|
|
|
|
(.6)
|
|
|
|
|
|
45.0
|
|
|
|
37.6
|
|
|
|
188.5
|
|
|
|
113.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From Continuing
Operations Before
Income Taxes
|
|
|
10.8
|
|
|
|
(5.6)
|
|
|
|
30.1
|
|
|
|
33.3
|
|
|
Income tax expense
(benefit)
|
|
|
4.5
|
|
|
|
(89.2)
|
|
|
|
13.4
|
|
|
|
(83.9)
|
|
|
Income From Continuing
Operations
|
|
|
6.3
|
|
|
|
83.6
|
|
|
|
16.7
|
|
|
|
117.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued
operations, net of tax
|
|
|
(16.7)
|
|
|
|
(2.1)
|
|
|
|
(19.5)
|
|
|
|
(9.3)
|
|
|
Net (Loss) Income
|
|
$
|
(10.4)
|
|
|
$
|
81.5
|
|
|
$
|
(2.8)
|
|
|
$
|
107.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per Share -
Basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share - continuing
operations
|
|
$
|
.14
|
|
|
$
|
1.87
|
|
|
$
|
.37
|
|
|
$
|
2.63
|
|
|
Loss per share – discontinued
operations
|
|
|
(.37)
|
|
|
|
(.05)
|
|
|
|
(.43)
|
|
|
|
(.21)
|
|
|
Basic (Loss) Income Per
Share
|
|
$
|
(.23)
|
|
|
$
|
1.82
|
|
|
$
|
(.06)
|
|
|
$
|
2.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per Share –
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share - continuing
operations
|
|
$
|
.14
|
|
|
$
|
1.85
|
|
|
$
|
.37
|
|
|
$
|
2.61
|
|
|
Loss per share - discontinued
operations
|
|
|
(.37)
|
|
|
|
(.05)
|
|
|
|
(.43)
|
|
|
|
(.21)
|
|
|
Diluted (Loss) Income Per
Share
|
|
$
|
(.23)
|
|
|
$
|
1.80
|
|
|
$
|
(.06)
|
|
|
$
|
2.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OMNOVA
SOLUTIONS INC.
Consolidated
Balance Sheets
(Dollars in
Millions, except per share amounts)
|
|
|
November
30,
2011
|
|
November
30,
2010
|
|
|
|
(Unaudited)
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
98.9
|
|
$
|
71.2
|
|
Restricted cash
|
|
4.2
|
|
|
253.1
|
|
Accounts receivable,
net
|
|
163.2
|
|
|
98.8
|
|
Inventories
|
|
84.5
|
|
|
41.3
|
|
Prepaid expenses and
other
|
|
3.9
|
|
|
2.5
|
|
Deferred income taxes -
current
|
|
6.5
|
|
|
6.0
|
|
Assets held for sale -
current
|
|
16.6
|
|
|
18.9
|
|
Total Current
Assets
|
|
377.8
|
|
|
491.8
|
|
|
|
|
|
|
|
|
Property, plant and equipment,
net
|
|
220.8
|
|
|
119.7
|
|
Trademarks and other intangible
assets, net
|
|
87.5
|
|
|
5.8
|
|
Goodwill
|
|
88.0
|
|
|
—
|
|
Deferred income taxes -
non-current
|
|
69.1
|
|
|
86.2
|
|
Deferred financing
fees
|
|
13.6
|
|
|
10.5
|
|
Other assets
|
|
8.3
|
|
|
1.2
|
|
Assets held for sale -
non-current
|
|
—
|
|
|
11.8
|
|
Total Assets
|
$
|
865.1
|
|
$
|
727.0
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY:
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
Amounts due banks
|
$
|
11.3
|
|
$
|
4.8
|
|
Accounts payable
|
|
108.5
|
|
|
82.7
|
|
Accrued payroll and personal
property taxes
|
|
16.8
|
|
|
16.5
|
|
Employee benefit
obligations
|
|
2.2
|
|
|
2.4
|
|
Deferred income taxes -
current
|
|
.1
|
|
|
—
|
|
Other current
liabilities
|
|
9.1
|
|
|
10.4
|
|
Liabilities held for sale -
current
|
|
8.5
|
|
|
7.1
|
|
Total Current
Liabilities
|
|
156.5
|
|
|
123.9
|
|
|
|
|
|
|
|
|
Senior notes
|
|
250.0
|
|
|
250.0
|
|
Long-term debt -
other
|
|
194.3
|
|
|
139.4
|
|
Post-retirement benefits other
than pensions
|
|
7.8
|
|
|
7.6
|
|
Pension liabilities
|
|
91.5
|
|
|
73.3
|
|
Deferred income taxes -
non-current
|
|
28.3
|
|
|
1.7
|
|
Other liabilities
|
|
15.0
|
|
|
7.7
|
|
Total Liabilities
|
|
743.4
|
|
|
603.6
|
|
|
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
|
|
Preference stock - $1.00 par
value; 15 million shares authorized;
none
outstanding
|
|
—
|
|
|
—
|
|
Common stock - $0.10 par value;
135 million shares authorized;
46.1 million
and 45.2 million shares issued
at November 30, 2011
and November 30, 2010,
respectively
|
|
4.6
|
|
|
4.5
|
|
Additional contributed
capital
|
|
324.9
|
|
|
318.0
|
|
Retained deficit
|
|
(114.8)
|
|
|
(112.0)
|
|
Treasury stock at cost;
.4 million shares at November
30, 2011
and .2 million shares at
November 30, 2010
|
|
(2.7)
|
|
|
(1.3)
|
|
Accumulated other
comprehensive loss
|
|
(90.3)
|
|
|
(85.8)
|
|
Total
Shareholders' Equity
|
|
121.7
|
|
|
123.4
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
$
|
865.1
|
|
$
|
727.0
|
|
|
|
|
|
|
|
|
|
SOURCE OMNOVA Solutions Inc.