OMNOVA Solutions: On Track To Deliver Significant Growth In FY16 Adj. EPS

(RTTNews) - OMNOVA Solutions Inc. (OMN) said the company remains on track to deliver another year of significant growth in adjusted earnings per share, driven by cost reductions, margin expansion, improved mix and accelerated growth in key specialty businesses. The company noted that, in June, a national strike in France impacted its primary French butadiene supplier, causing a disruption at the company's operation in France including the need to source butadiene from alternate suppliers. The company currently expects it to be resolved by early July 2016. As a result of the disruption, the company expects its third-quarter to have a one-time, unfavorable impact to EBITDA of $2 million to $3 million.

For the second quarter of 2016, adjusted earnings per share increased 64%, to $0.18 per share, compared to $0.11 last year. On average, three analysts polled by Thomson Reuters expected the company to report profit per share of $0.14 for the quarter. Analysts' estimates typically exclude special items. Net income increased by 85%, to $7.2 million, or $0.16 per share, from $3.9 million or $0.09 per share, a year ago.

Net sales for the second quarter decreased 8.3% to $202.0 million, compared with $220.2 million, last year. The company said the largest contributor to the sales decline was the divestiture of the non-strategic, break-even operation in India in February. Excluding this divestiture, sales would have been down 4.5%.

Gross profit in the second quarter of 2016 was up 490 basis points year-over-year to $58.4 million. The company said the increase in gross profit was due to cost reduction initiatives, lower raw material costs, mix improvement from favorable volume in higher-margin businesses, and pricing actions, partially offset by the decline in volumes overall.