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Free Post Earnings Research Report: OMNOVA's Adjusted EPS Surged 25%

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LONDON, UK / ACCESSWIRE / July 17, 2018 / If you want access to our free earnings report on OMNOVA Solutions Inc. (NYSE: OMN) ("OMNOVA"), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=OMN. The Company reported its second quarter fiscal 2018 operating and financial results on June 28, 2018. The chemical maker outperformed top- and bottom-line expectations. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Earnings Highlights and Summary

For the second quarter of the fiscal year 2018, OMNOVA's net sales were $206.3 million, down 6.8% from $221.3 million in the last year's second quarter. Excluding the effect of China Coated Fabrics (CCF), which had sales of $3.9 million in FY17, the Company's sales decreased 5.1% on a y-o-y basis. The Company's revenue numbers beat analysts' expectations by $2.37 million.

During Q2 FY18, OMNOVA's selling, general, and administrative expenses (SG&A) were $27.4 million, down from $30.1 million in Q2 FY17. The primary drivers of the decrease were benefits from the "One OMNOVA" cost reduction initiatives, reduced incentive compensation expenses, and the sale of CCF.

For Q2 FY18, OMNOVA's income tax expenses were $2.5 million compared to $2.4 million in Q2 2017. The Company's cash taxes overall were $2.8 million in the reported quarter compared to $1.3 million in the year earlier same quarter, as a result of increased earnings overseas. US cash tax payments were minimal as the Company had approximately $91.1 million of US federal net operating loss carryforwards and $86.8 million of state and local tax net operating loss carryforwards.

OMNOVA's trailing 12-month adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased to $88.9 million from $80.1 million in Q2 FY17. The Company's adjusted net leverage decreased to 3.0x adjusted EBITDA versus 3.6x in the year earlier comparable period.

For Q2 FY18, OMNOVA reported earnings of $8.4 million, or $0.19 per diluted share, compared to a loss of $6.3 million, or $0.14 loss per diluted share, in Q2 FY17. For the reported quarter, the Company recorded charges of $1.1 million, primarily for asset impairments and acquisition & integration-related expenses. During Q2 FY17, the Company recorded charges of $14.1 million, primarily related to the sale of the CCF business.

OMNOVA's adjusted diluted earnings per share (EPS) were $0.20 in Q2 FY18, up 25% compared to $0.16 in Q2 FY17. The increase in adjusted earnings was attributed to the strong performance in the Company's Specialty Solutions segment which was partially offset by its Performance Materials segment. The Company's earnings surpassed Wall Street's estimates of $0.19 per share.

Segment Results

During Q2 FY18, OMNOVA's Specialty Solutions segment's net sales rose 6% to $128.8 million compared to $121.5 million in Q2 FY17. The improvement was driven by volume increases of $2.9 million, or 2.4%, partially offset by price and mix decreases of $0.1 million, or 1%. Foreign currency translation also had a favorable effect of $4.5 million, or 3.7%.

For the reported quarter, the segment's operating profit was $21.9 million compared to $17.3 million in the year earlier corresponding quarter. The segment's adjusted operating profit surged 24% to $22 million, or 17.1% of net sales, in Q2 FY18 compared to $17.7 million, or 14.6% of net sales, in Q2 FY17. An increased volume, a healthy mix, and the benefits of cost controls drove the improvement in the segment's operating profit.

During Q2 FY18, OMNOVA's Performance Materials segment's net sales were $77.5 million compared to $99.8 million in Q2 FY17. The divested CCF business accounted for $3.9 million of net sales in Q2 FY17. The segment's volume, excluding CCF, was down $10.8 million, or 10.9%, primarily driven by declining sales into the commodity paper market.

For Q2 FY18, the segment's operating profit was $0.1 million compared to a loss of $7.2 million in Q2 FY17. The segment's adjusted operating profit was $0.6 million, or 0.8% of net sales, in the reported quarter compared to $4.2 million, or 4.2% of net sales, in the year earlier same quarter. In addition to the impact from the volume declines, the segment's margins were unfavorably impacted by increases in raw material prices and approximately $1.0 million of costs including a bad debt write-off from a bankrupt paper customer and asset impairment costs.

Cash Matters

At the end of May 2018, OMNOVA's working capital days were 53.5, 2.6 days unfavorable compared to May 2017, driven by increased receivables. In spite of the unfavorable working capital days, the Company's cash provided by operations was $23.6 million in Q2 FY18 compared to $7.3 million in the year earlier comparable quarter, reflecting the strong operating performance in the Specialty Solutions segment.

Stock Performance Snapshot

July 16, 2018 - At Monday's closing bell, OMNOVA Solutions' stock dropped 4.90%, ending the trading session at $9.70.

Volume traded for the day: 89.42 thousand shares.

After yesterday's close, OMNOVA Solutions' market cap was at $436.69 million.

The stock is part of the Basic Materials sector, categorized under the Specialty Chemicals industry.

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