Stock Monitor: Northern Technologies Intl. Post Earnings Reporting
LONDON, UK / ACCESSWIRE / April 26, 2018 / Active-Investors.com has just released a free earnings report on OMNOVA Solutions Inc. (NYSE: OMN) ("OMNOVA"). If you want access to this report 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 first quarter fiscal 2018 operating and financial results on March 28, 2018. The chemical maker topped revenue and earnings estimates. Register today and get access to over 1000 Free Research Reports by joining our site below:
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Earnings Highlights and Summary
For the first quarter of the fiscal year 2018, OMNOVA's net sales were $178.7 million, up 2.3% from $174.6 million in Q1 FY17. China Coated Fabrics (CCF), which was sold in July 2017, accounted for $5.7 million of the Company's net sales in the prior year's same quarter. Excluding the effect of CCF, OMNOVA's sales increased 5.8% on a y-o-y basis. The Company's revenue numbers beat analysts' estimates by $4.0 million.
During Q1 FY18, OMNOVA's overall volume was favorable by 3.6%, as a strong growth in the Specialty Solutions segment more than offset the planned declines in paper.
OMNOVA's selling, general, and administrative expenses (SG&A) were $28.7 million in in Q1 FY18, down from $29.2 million in Q1 FY17. The primary drivers of the decrease were benefits from the ‘One OMNOVA' cost reduction initiatives and the sale of CCF. The Company's income tax benefit was $5.1 million in the reported quarter compared to $1.6 million in FY17. The increase in tax benefit for Q1 FY18 compared to FY17 was attributed to the US Tax Reform and French legislative impacts, both of which reduced statutory tax rates.
For Q1 FY18, OMNOVA recorded earnings of $7.3 million, or $0.16 per diluted share, compared to $3.6 million, or $0.08 per diluted share, in Q1 FY17. For the reported quarter, the Company recorded charges of $2.9 million primarily for restructuring and severance costs associated with prepaying $40 million on the Company's Term Loan B credit facility. For Q1 FY17, OMNOVA recorded charges of $1.0 million related to restructuring and severance costs.
OMNOVA's adjusted earnings were $0.09 per diluted share in Q1 FY18, up 80% compared to $0.05 per diluted share in Q1 FY17. The increase in adjusted earnings was the result of the strong performance in the Specialty Solutions segment, partially offset by the performance of the Performance Materials segment. The Company's earnings beat Wall Street's estimates of $0.06 per share.
During Q1 FY18, OMNOVA's Specialty Solutions segment's net sales jumped 16.5% to $109.2 million compared to $93.7 million in Q1 FY17, driven by strong volume increases of 16.1%, partially offset by mix decreases of 4.3%. Foreign currency translation had a favorable effect of 4.5% in the reported quarter numbers. The segment's operating profit was $13.6 million in Q1 FY18 compared to $9.5 million in Q1 FY17. The segment's adjusted operating profit soared 52% to $14.7 million, or 13.5% of net sales, versus $9.7 million, or 10.4% of net sales, in the year earlier comparable quarter. Increased volume and the benefits of cost controls drove the improvement in the segment's operating profit.
For Q1 FY18, OMNOVA's Performance Materials segment's net sales were $69.5 million compared to $80.9 million in Q1 FY17. The divested CCF business accounted for $5.7 million of net sales in the prior year's corresponding quarter. The segment's volume, excluding CCF, was down $8.9 million, or 11%, primarily driven by sales into the coated paper market. The Performance Materials segment's operating profit was $2.1 million in Q1 FY18 compared to $4.7 million in Q1 FY17. The segment's adjusted operating profit was $2.3 million, or 3.3% of net sales, in Q1 FY18 compared to $5.1 million, or 6.3% of net sales, in Q1 FY17. In addition to the impact from the volume declines, the segment's margins were unfavorably impacted by increases in raw material prices and the slower start in several of the higher margin Performance Materials businesses.
OMNOVA's working capital days were 67.3 at the end of February 2018, 1.8 days favorable compared to February 2017. In spite of the favorable working capital days, the Company's cash used by operations was $8.0 million in the reported quarter compared to $4.7 million in the prior year's same quarter, reflecting an increase in accounts receivable due to the higher sales and higher inventory levels. OMNOVA's adjusted net leverage improved to 3.3x adjusted EBITDA in Q1 FY18 compared to 3.6x in Q1 FY17, reflecting the increases in earnings.
Stock Performance Snapshot
April 25, 2018 - At Wednesday's closing bell, OMNOVA Solutions' stock slightly rose 0.44%, ending the trading session at $11.35.
Volume traded for the day: 65.88 thousand shares.
Stock performance in the last month – up 6.57%; previous three-month period – up 11.27%; past twelve-month period – up 18.85%; and year-to-date – up 13.50%
After yesterday's close, OMNOVA Solutions' market cap was at $517.45 million.
The stock is part of the Basic Materials sector, categorized under the Specialty Chemicals industry. This sector was flat at the end of the session.
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