Omnova Solutions (OMN) Tops Q2 EPS by 4c; Offers Guidance

Omnova Solutions (NYSE: OMN) reported Q2 EPS of $0.18, $0.04 better than the analyst estimate of $0.14. Revenue for the quarter came in at $202 million versus the consensus estimate of $205.4 million.

Cash From Operations at the end of the quarter improved by $3.2 million, to $21.1 million in 2016, compared to $17.9 million last year, primarily reflecting improved earnings and lower working capital days. Working capital improved by 7.2 days at quarter-end, to 60.8, compared with 68.0 days at the end of the 2015 second quarter. As a result of increased earnings and cash generation, net leverage improved to 3.5x Adjusted EBITDA from 4.2x at the end of last year's second quarter.

Outlook

OMNOVA Solutions is making significant progress in implementing its performance improvement strategy. Moving forward, the Company expects ongoing profit growth will be driven by its specialty businesses through the introduction of innovative new products and the strengthened capabilities of OMNOVA's commercial team, as well as margin expansion from cost reductions, mix improvement and pricing actions. In June, at the beginning of the third quarter, a national strike in France impacted OMNOVA's primary French butadiene supplier, causing a disruption at the Company's operation in France including the need to source butadiene from alternate suppliers. As a result of this disruption, the Company expects the third quarter to have a one-time, unfavorable impact to EBITDA of $2 million to $3 million. This situation is improving, and the Company currently expects it to be resolved by early July 2016. In spite of the temporary disruption in France, OMNOVA continues to expect another year of significant growth in Adjusted Diluted Earnings Per Share.

For earnings history and earnings-related data on Omnova Solutions (OMN) click here.

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