OMNOVA Solutions Inc. has reported net income of $7.8 million, or $0.17 per diluted share, for the first quarter ended Feb. 28, 2010, compared to a net loss of $0.1 million, or breakeven per diluted share, for the first quarter of 2009. Included in the first quarters of 2010 and 2009 were restructuring and severance charges of $0.3 million and $0.9 million, respectively.
Net sales increased $23.7
million, or 14.8%, to $183.9 million for the first quarter of 2010, compared to
$160.2 million for the first quarter of 2009. The first quarter
increase in sales was the result of improved volumes of $18.7 million, higher
selling prices of $3.1 million and foreign currency translation effects of $1.9
million. Gross profit improved to $40.0 million, with margins of 21.8%, in
the first quarter of 2010, compared to $31.7 million, and margins of 19.8%, in
the first quarter of 2009. The increase in gross profit was primarily due
to higher volumes.
"OMNOVA's strong first
quarter, which began Dec. 1 and seasonally is our weakest, is indicative of the
fundamental improvements we have made in our company and the consolidation that
is occurring in our industries,” said Kevin McMullen, OMNOVA Solutions' chairman
and chief executive officer. “Our first-quarter performance continues a very
positive trend which began in the second half of 2008. The company has made
significant progress on many fronts, including the introduction of numerous
innovative products; penetration into new, adjacent markets; and the continued
globalization of our business along with aggressive productivity gains and cost
"This is the fifth
consecutive quarter of earnings improvement and the second consecutive quarter
of volume improvement,” McMullen added. “The volume expansion was broad based
as both of our segments achieved volume growth in the quarter, and our growth
has accelerated over the last few months as the economy begins to rebound. After
spending several years improving our cost structure in the face of reduced
market demand, we expect to have strong operating leverage moving forward as
volumes continue to outpace last year's levels."
Selling, general and
administrative expenses in the first quarter of 2010 were $24.0 million,
or 13.1% of sales, compared to $23.0 million, or 14.4% of sales, in the
first quarter of 2009. The $1.0 million increase was driven by variable selling
expenses and higher incentive accruals. Interest expense in the first quarter
of 2010 was $1.8 million, a decrease of $0.4 million compared to the first
quarter of 2009, as a result of lower average debt. The weighted average cost
of borrowing during the first quarter of 2010 was 4.5% compared to 4.4% during
the first quarter of 2009. The company's tax expense for the first quarter of
2009 was $0.7 million compared to $0.2 million in the first quarter of 2009. The
increase was due primarily to domestic alternative minimum tax and increased
foreign taxes as a result of higher profitability in foreign operations. The
consolidated tax rate is substantially lower than the statutory rate due mainly
to the utilization of domestic federal net operating loss carryforwards.
The remaining balance, as of Feb. 28, 2010, for domestic federal net
operating loss carryforwards was $131.8 million, with expiration dates
between 2021 and 2030.
For more information, visitwww.omnova.com.