Earnings News Spotlight:-OMNOVA Solutions Inc. (NYSE:OMN)

OMNOVA Solutions Inc. (NYSE:OMN) traded with change of 6.22% to $11.1 with the total traded volume of 136931 shares versus to an average volume of 131.65K. The stock was down in the 5 days activity -4.13%. The one month performance of stock was high 0.97%. OMN shares are above 5.56% for the quarter and driving a 16.76% rally over the course of the past year and is now up 4.50% since this point in 2018.  Right now OMN beta is 2.07. The average volatility for the week and month was at 2.94% and 3.44% respectively.

OMNOVA Solutions Inc. (NYSE: OMN) reported results for first quarter of fiscal 2018.

Consolidated Results for the First Quarter of Fiscal 2018

Earnings per diluted share for the first quarter ended February 28, 2018 was $0.16, compared to $0.08 last year.  In the first quarter of 2018, the Company recorded charges of $2.9 million primarily for restructuring and severance and costs associated with prepaying $40 million on the Company’s Term Loan B credit facility.  In the first quarter of 2017, the Company recorded charges of $1.0 million related to restructuring and severance.

Adjusted Diluted Earnings per Share (Adjusted EPS) was $0.09 for the first quarter of 2018, compared with $0.05 last year.  The increase in Adjusted EPS was the result of the strong performance in Specialty Solutions partially offset by Performance Materials.

Net sales for the first quarter were $178.7 million, up 2.3% from last year’s $174.6 million.  China Coated Fabrics (CCF), which was sold in July 2017, accounted for $5.7 million of sales in last year’s first quarter.  Excluding the effect of CCF, sales increased 5.8% compared to the first quarter last year.  Net sales in Specialty Solutions increased 16.5% to $109.2 million, while sales in Performance Materials decreased 14%, or 7.6% excluding the effect of CCF.  Overall volume was favorable by $6.3 million, or 3.6%, as strong growth in Specialty Solutions more than offset the planned declines in paper.  Mix was unfavorable by $4.1 million, or 2.4%.  Currency translation was favorable by $7.4 million, or 4.3%, primarily reflecting the strengthening of the Euro.


SG&A in the first quarter was $28.7 million, down from $29.2 million in the same quarter last year.  The primary drivers of the decrease were benefits from the “One OMNOVA” cost reduction initiatives and the sale of CCF partially offset by unfavorable foreign exchange.

Interest expense for the quarter was $5.1 million compared to $5.2 million last year reflecting lower borrowing balances resulting from the December debt pre-payment, offset by increasing interest rates.

Income tax benefit in the first quarter of 2018 was $5.1 million compared to $1.6 million in 2017.  The increase in the first quarter tax benefit compared to 2017 relates to U.S. Tax Reform and French legislative impacts, both of which reduced statutory tax rates.  U.S. cash tax payments were minimal as the Company has approximately $91.1 million of U.S. federal net operating loss carryforwards and $86.8 million of state and local tax net operating loss carryforwards.

Working capital days at the end of February 2018 were 67.3, 1.8 days favorable compared to last February.  In spite of the favorable working capital days, cash used by operations in the first quarter of 2018 was $8.0 million, compared to $4.7 million last year, reflecting an increase in accounts receivable due to the higher sales and higher inventory levels.  Trailing 12 month adjusted EBITDA increased to $87.4 million from $81.6 million in the comparable period.  Adjusted net leverage improved to 3.3x adjusted EBITDA as compared to 3.6x last year (see Tables C and D), reflecting the increases in earnings.

Chief Executive Officer Anne Noonan, commenting on the first quarter of fiscal 2018, said, “We were pleased to record another quarter of sales and profit growth in our Specialty Solutions segment.  We saw particular volume strength in our Oil & Gas business, and good volume growth across other Specialty Solutions businesses, including home & personal care, adhesives & sealants, elastomeric modifiers and laminates & films.  Oil & Gas is benefiting from investments we made during the downturn to diversify its product portfolio and geographic offerings, which accelerated its improvement over last year’s relatively weak first quarter results.  In addition to improved volumes, Specialty Solutions profitability was also driven by stronger margins and favorable foreign exchange.  At the end of the first quarter, Specialty Solutions accounted for 61% of total Company net sales and 87% of segment profitability as our specialization strategy continues to gain momentum.

“Performance Materials volume was down 11% excluding the impact of the sale of China Coated Fabrics in July of 2017.  As expected, the paper market was the largest driver of the decline as we transition out of the commodity-like portions of this market.  The volume declines were partially offset by another quarter of volume growth in the carpet business.  Margins were unfavorably impacted by increases in raw material prices and a slower start in several of our higher margin lines of business including antioxidants, coated fabrics and reinforcing resins. We expect raw material pricing to stabilize with some pricing recovery over the remainder of the year.

Noonan concluded “For 2018 our guidance remains unchanged; we continue to expect our fourth consecutive year of Adjusted EPS growth.  The momentum in our specialization strategy should offset the headwinds we have been facing as we reposition Performance Materials away from its paper-focused heritage.  We expect volume growth in specialties to continue, but not at the pace seen in the first quarter”.

Shares of OMNOVA Solutions Inc. have been recently spotted trading -4.31% off of the 52-week high price. On the other end, company shares have been noted 37.04% away from the low price over the last 52-weeks. 52 week range of the stock remained $ 8.10 – 11.60. Switching over to some distances from popular moving averages, we see that the stock has been recorded 5.99% away from the 50 day moving average and 10.56% away from the 200 day moving average. Moving closer, we can see that shares have been trading 3.79% off of the 20-day moving average.

Peter Hamm

Peter Hamm is an author, journalist and CEO of the website. He has more than 5 years of experience in institutional investment markets, including fixed income, equities, derivatives and real estate. He has a Bachelor in Business Administration with a major in Finance. He bought his first stocks in a private business at age 15 and made his first public stock trade at 23. He has always been interested in the stock market and how it behaves. As the dad of two children, he’s made saving money and investing for them a high priority. Over many years of investing, he has made some wise choices and he’s made many mistakes. But he’s learned from both. Mr. Peter observations and experience give him the insight to stock market patterns and the investor behaviors that create them. He reports about Earnings news category. Address: 3876 Levy Court, EASTON, Pennsylvania Email: Peter@newscontrol.info

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