Ohio | 001-15147 | 34-1897652 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
25435 Harvard Road, Beachwood, Ohio | 44122-6201 | |||
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01. | Financial Statements and Exhibits |
Exhibit Number | Description | |
99.1 | Press Release, dated June 28, 2017, issued by OMNOVA Solutions Inc. | |
OMNOVA SOLUTIONS INC. | ||
By: | /s/ Frank P. Esposito | |
Name: | Frank P. Esposito | |
Title: | Assistant General Counsel & Corporate Secretary | |
Date: | June 28, 2017 |
Exhibit Number | Description | |
99.1 | Press Release, dated June 28, 2017, issued by OMNOVA Solutions Inc. |
• | Specialty Solutions sales grew 14% compared to the prior year, with operating margins of 14.9%, while Performance Materials increased sales by 4%, with operating margins of (8.0)%, primarily due to charges related to China coated fabrics. Performance Materials had adjusted segment operating profit margins of 3.8%. |
• | Volume driven sales growth for Specialty Solutions was 6.3% with volume increases across most of the segment’s lines of business. Performance Materials experienced a volume decline of 13.3%, driven by reduced sales in paper, carpet and China coated fabrics markets. |
• | The Company completed realignment of its businesses and related reporting into two new segments: Specialty Solutions, 55% of sales and 83% of adjusted segment operating income, and Performance Materials, 45% and 17%, respectively. |
• | Reported loss per diluted share was $0.14, compared with earnings per diluted share of $0.16 last year. Adjusted Diluted Earnings Per Share was $0.16, compared to $0.18 a year ago. As expected, Specialty Solutions volume growth was offset by raw material driven margin declines. |
• | The Company recorded an impairment charge of $12.9 million during the quarter related to China coated fabrics. |
Three Months Ended | Six Months Ended | ||||||||||||||
May 31 | May 31 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Sales | |||||||||||||||
Specialty Solutions | $ | 121.5 | $ | 106.2 | $ | 215.2 | $ | 195.8 | |||||||
Performance Materials | 99.8 | 95.8 | 180.7 | 181.5 | |||||||||||
Total Net Sales | $ | 221.3 | $ | 202.0 | $ | 395.9 | $ | 377.3 | |||||||
Segment Operating Profit | |||||||||||||||
Specialty Solutions | $ | 18.0 | $ | 19.4 | $ | 27.8 | $ | 30.7 | |||||||
Performance Materials | (8.0 | ) | 5.2 | (3.6 | ) | 4.3 | |||||||||
Interest expense | (5.3 | ) | (5.7 | ) | (10.5 | ) | (11.5 | ) | |||||||
Corporate expense | (8.6 | ) | (8.6 | ) | (15.6 | ) | (14.3 | ) | |||||||
Operational, administrative, and other improvement costs | — | .1 | — | .4 | |||||||||||
Vacation accrual | — | — | — | — | |||||||||||
Income (Loss) Before Income Taxes | (3.9 | ) | 10.4 | (1.9 | ) | 9.6 | |||||||||
Income tax expense | 2.4 | 3.2 | .9 | 3.5 | |||||||||||
Net Income (Loss) | $ | (6.3 | ) | $ | 7.2 | $ | (2.8 | ) | $ | 6.1 | |||||
Depreciation and amortization | $ | 6.9 | $ | 7.1 | $ | 13.6 | $ | 16.7 | |||||||
Capital expenditures | $ | 6.2 | $ | 4.6 | $ | 9.9 | $ | 10.7 |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended May 31, 2017 | ||||||||||||||||||||
Table A | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 121.5 | $ | 99.8 | $ | 221.3 | $ | — | $ | 221.3 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 18.0 | $ | (8.0 | ) | $ | 10.0 | $ | (8.6 | ) | $ | 1.4 | ||||||||
Interest Expense | — | — | — | (5.3 | ) | (5.3 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 18.0 | $ | (8.0 | ) | $ | 10.0 | $ | (13.9 | ) | $ | (3.9 | ) | |||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .1 | 1.4 | 1.5 | 2.1 | 3.6 | |||||||||||||||
Asset impairment, facility closure costs and other | — | 12.9 | 12.9 | .2 | 13.1 | |||||||||||||||
Environmental costs | — | (2.6 | ) | (2.6 | ) | — | (2.6 | ) | ||||||||||||
Subtotal for Management Excluded Items | .1 | 11.7 | 11.8 | 2.3 | 14.1 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 18.1 | $ | 3.7 | $ | 21.8 | $ | (11.6 | ) | $ | 10.2 | |||||||||
Tax Expense (30% rate)* | (3.0 | ) | ||||||||||||||||||
Adjusted Income | $ | 7.2 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.16 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 14.9 | % | 3.7 | % | 9.9 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 3.1 | $ | 2.7 | $ | 5.8 | $ | .4 | $ | 6.2 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 18.1 | $ | 3.7 | $ | 21.8 | $ | (11.6 | ) | $ | 10.2 | |||||||||
Unallocated Corporate Interest Expense | — | — | — | 5.3 | 5.3 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 18.1 | 3.7 | 21.8 | (6.3 | ) | 15.5 | ||||||||||||||
Depreciation and Amortization | 3.6 | 2.9 | 6.5 | .4 | 6.9 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 21.7 | $ | 6.6 | $ | 28.3 | $ | (5.9 | ) | $ | 22.4 | |||||||||
Adjusted EBITDA as a % of sales | 17.9 | % | 6.6 | % | 12.8 | % | 10.1 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended May 31, 2016 | ||||||||||||||||||||
Table B | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 106.2 | $ | 95.8 | $ | 202.0 | $ | — | $ | 202.0 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 19.4 | $ | 5.2 | $ | 24.6 | $ | (8.5 | ) | $ | 16.1 | |||||||||
Interest Expense | — | — | — | (5.7 | ) | (5.7 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 19.4 | $ | 5.2 | $ | 24.6 | $ | (14.2 | ) | $ | 10.4 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | — | 1.0 | 1.0 | .1 | 1.1 | |||||||||||||||
Accelerated depreciation on production transfer | — | .2 | .2 | — | .2 | |||||||||||||||
Operational Improvements costs | — | (.4 | ) | (.4 | ) | — | (.4 | ) | ||||||||||||
Asset impairment, facility closure costs and other | — | 1.1 | 1.1 | — | 1.1 | |||||||||||||||
Vacation policy change | (.4 | ) | (.5 | ) | (.9 | ) | (.2 | ) | (1.1 | ) | ||||||||||
Subtotal for Management Excluded Items | (.4 | ) | 1.4 | 1.0 | (.1 | ) | .9 | |||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 19.0 | $ | 6.6 | $ | 25.6 | $ | (14.3 | ) | $ | 11.3 | |||||||||
Tax Expense (30% rate)* | (3.4 | ) | ||||||||||||||||||
Adjusted Income | $ | 7.9 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.18 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 17.9 | % | 6.9 | % | 12.7 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 2.2 | $ | 2.0 | $ | 4.2 | $ | .4 | $ | 4.6 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 19.0 | $ | 6.6 | $ | 25.6 | $ | (14.3 | ) | $ | 11.3 | |||||||||
Unallocated Corporate Interest Expense | — | — | — | 5.7 | 5.7 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 19.0 | 6.6 | 25.6 | (8.6 | ) | 17.0 | ||||||||||||||
Depreciation and Amortization | 3.3 | 3.2 | 6.5 | .4 | 6.9 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 22.3 | $ | 9.8 | $ | 32.1 | $ | (8.2 | ) | $ | 23.9 | |||||||||
Adjusted EBITDA as a % of sales | 21.0 | % | 10.2 | % | 15.9 | % | 11.8 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Six Months Ended May 31, 2017 | ||||||||||||||||||||
Table C | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 215.2 | $ | 180.7 | $ | 395.9 | $ | — | $ | 395.9 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 27.8 | $ | (3.6 | ) | $ | 24.2 | $ | (15.6 | ) | $ | 8.6 | ||||||||
Interest Expense | — | — | — | (10.5 | ) | (10.5 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 27.8 | $ | (3.6 | ) | $ | 24.2 | $ | (26.1 | ) | $ | (1.9 | ) | |||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .6 | 1.4 | 2.0 | 2.5 | 4.5 | |||||||||||||||
Asset impairment, facility closure costs and other | — | 12.9 | 12.9 | .2 | 13.1 | |||||||||||||||
Environmental costs | — | (2.5 | ) | (2.5 | ) | — | (2.5 | ) | ||||||||||||
Subtotal for Management Excluded Items | .6 | 11.8 | 12.4 | 2.7 | 15.1 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 28.4 | $ | 8.2 | $ | 36.6 | $ | (23.4 | ) | $ | 13.2 | |||||||||
Tax Expense (30% rate)* | (3.9 | ) | ||||||||||||||||||
Adjusted Income | $ | 9.3 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.21 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 13.2 | % | 4.5 | % | 9.2 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 5.2 | $ | 4.2 | $ | 9.4 | $ | .5 | $ | 9.9 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 28.4 | $ | 8.2 | $ | 36.6 | $ | (23.4 | ) | $ | 13.2 | |||||||||
Unallocated Corporate Interest Expense | — | — | — | 10.5 | 10.5 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 28.4 | 8.2 | 36.6 | (12.9 | ) | 23.7 | ||||||||||||||
Depreciation and Amortization | 7.0 | 5.8 | 12.8 | .8 | 13.6 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 35.4 | $ | 14.0 | $ | 49.4 | $ | (12.1 | ) | $ | 37.3 | |||||||||
Adjusted EBITDA as a % of sales | 16.4 | % | 7.7 | % | 12.5 | % | 9.4 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Six Months Ended May 31, 2016 | ||||||||||||||||||||
Table D | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 195.8 | $ | 181.5 | $ | 377.3 | $ | — | $ | 377.3 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 30.7 | $ | 4.3 | $ | 35.0 | $ | (13.9 | ) | $ | 21.1 | |||||||||
Interest Expense | — | — | — | (11.5 | ) | (11.5 | ) | |||||||||||||
Income (Loss) Before Income Taxes | 30.7 | 4.3 | 35.0 | (25.4 | ) | 9.6 | ||||||||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .1 | 2.5 | 2.6 | .1 | 2.7 | |||||||||||||||
Accelerated depreciation on production transfer | — | 3.0 | 3.0 | — | 3.0 | |||||||||||||||
Operational Improvements costs | — | (.4 | ) | (.4 | ) | — | (.4 | ) | ||||||||||||
Asset impairment, facility closure costs and other | .6 | .6 | 1.2 | — | 1.2 | |||||||||||||||
Corporate Headquarters relocation costs | — | — | — | (.2 | ) | (.2 | ) | |||||||||||||
Vacation policy change | (.7 | ) | (.8 | ) | (1.5 | ) | (.4 | ) | (1.9 | ) | ||||||||||
Subtotal for Management Excluded Items | — | 4.9 | 4.9 | (.5 | ) | 4.4 | ||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 30.7 | $ | 9.2 | $ | 39.9 | $ | (25.9 | ) | $ | 14.0 | |||||||||
Tax Expense (30% rate)* | (4.2 | ) | ||||||||||||||||||
Adjusted Income | $ | 9.8 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.22 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 15.7 | % | 5.1 | % | 10.6 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 4.9 | $ | 4.6 | $ | 9.5 | $ | 1.2 | $ | 10.7 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 30.7 | $ | 9.2 | $ | 39.9 | $ | (25.9 | ) | $ | 14.0 | |||||||||
Unallocated Corporate Interest Expense | — | — | — | 11.5 | 11.5 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 30.7 | 9.2 | 39.9 | (14.4 | ) | 25.5 | ||||||||||||||
Depreciation and Amortization excluding accelerated depreciation | 6.4 | 6.6 | 13.0 | .7 | 13.7 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 37.1 | $ | 15.8 | $ | 52.9 | $ | (13.7 | ) | $ | 39.2 | |||||||||
Adjusted EBITDA as a % of sales | 18.9 | % | 8.7 | % | 14.0 | % | 10.4 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Trailing Twelve Months Ended May 31, 2017 | ||||||||||||||||||||
Table E | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 423.7 | $ | 354.8 | $ | 778.5 | $ | — | $ | 778.5 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 51.5 | $ | 6.0 | $ | 57.5 | $ | (35.4 | ) | $ | 22.1 | |||||||||
Interest Expense | — | — | — | (23.7 | ) | (23.7 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 51.5 | $ | 6.0 | $ | 57.5 | $ | (59.1 | ) | $ | (1.6 | ) | ||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .7 | 2.2 | 2.9 | 7.3 | 10.2 | |||||||||||||||
Asset impairment, facility closure costs and other | 6.3 | 13.7 | 20.0 | 0.2 | 20.2 | |||||||||||||||
Environmental costs | — | (2.2 | ) | (2.2 | ) | — | (2.2 | ) | ||||||||||||
Deferred Financing Fees written-off | — | — | — | 4.9 | 4.9 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .9 | .9 | |||||||||||||||
Vacation policy change | (0.6 | ) | (0.6 | ) | (1.2 | ) | (0.3 | ) | (1.5 | ) | ||||||||||
Subtotal for Management Excluded Items | 6.4 | 13.1 | 19.5 | 13.0 | 32.5 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 57.9 | $ | 19.1 | $ | 77.0 | $ | (46.1 | ) | $ | 30.9 | |||||||||
Tax Expense (30% rate)* | (9.2 | ) | ||||||||||||||||||
Adjusted Income | $ | 21.7 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.49 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate. | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 13.7 | % | 5.4 | % | 9.9 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 13.0 | $ | 10.7 | $ | 23.7 | $ | 1.1 | $ | 24.8 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 57.9 | $ | 19.1 | $ | 77.0 | $ | (46.1 | ) | $ | 30.9 | |||||||||
Unallocated Corporate Interest (Excluding Debt Premium) | — | — | — | 21.7 | 21.7 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 57.9 | 19.1 | 77.0 | (24.4 | ) | 52.6 | ||||||||||||||
Depreciation and Amortization excluding accelerated depreciation | 13.8 | 12.4 | 26.2 | 1.3 | 27.5 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 71.7 | $ | 31.5 | $ | 103.2 | $ | (23.1 | ) | $ | 80.1 | |||||||||
Adjusted EBITDA as a % of sales | 16.9 | % | 8.9 | % | 13.3 | % | 10.3 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $8.8M.) | $ | 363.9 | ||||||||||||||||||
Less Cash and restricted cash | (68.6 | ) | ||||||||||||||||||
Net Debt (Debt less Cash and Restricted Cash) | $ | 295.3 | ||||||||||||||||||
Net Leverage Ratio** | 3.7 x | |||||||||||||||||||
** The above calculation is not intended to be used for purposes of calculating debt covenant compliance. |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Trailing Twelve Months Ended May 31, 2016 | ||||||||||||||||||||
Table F | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 402.3 | $ | 385.9 | $ | 788.2 | $ | — | $ | 788.2 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 56.4 | $ | (15.5 | ) | $ | 40.9 | $ | (25.5 | ) | $ | 15.4 | ||||||||
Interest Expense | — | — | — | (26.1 | ) | $ | (26.1 | ) | ||||||||||||
Income (Loss) Before Income Taxes | $ | 56.4 | $ | (15.5 | ) | 40.9 | $ | (51.6 | ) | $ | (10.7 | ) | ||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | 2.5 | 4.8 | 7.3 | .2 | 7.5 | |||||||||||||||
Accelerated depreciation on production transfer | — | 8.8 | 8.8 | — | 8.8 | |||||||||||||||
Operational Improvements costs | 2.0 | .1 | 2.1 | — | 2.1 | |||||||||||||||
Asset impairment, facility closure costs and other | .2 | 20.6 | 20.8 | — | 20.8 | |||||||||||||||
Environmental costs | .1 | 2.8 | 2.9 | — | 2.9 | |||||||||||||||
Deferred Financing Fees written-off | — | — | — | .6 | .6 | |||||||||||||||
Corporate Headquarters relocation costs | — | — | — | (.2 | ) | (.2 | ) | |||||||||||||
Other financing costs | — | — | — | 1.0 | 1.0 | |||||||||||||||
Acquisition and integration related expense | — | — | — | (.4 | ) | (.4 | ) | |||||||||||||
Vacation policy change | (.7 | ) | (.8 | ) | (1.5 | ) | — | (1.5 | ) | |||||||||||
Subtotal for Management Excluded Items | 4.1 | 36.3 | 40.4 | 1.2 | 41.6 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 60.5 | $ | 20.8 | 81.3 | $ | (50.4 | ) | $ | 30.9 | ||||||||||
Tax Expense (30% rate)* | (9.3 | ) | ||||||||||||||||||
Adjusted Income | $ | 21.6 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.49 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate. | ||||||||||||||||||||
Adjusted segment operating profit as a % of sales | 15.0 | % | 5.4 | % | 10.3 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 10.9 | $ | 10.6 | $ | 21.5 | $ | 2.7 | $ | 24.2 | ||||||||||
Adjusted segment operating profit / corporate expense before income taxes | $ | 60.5 | $ | 20.8 | $ | 81.3 | $ | (50.4 | ) | $ | 30.9 | |||||||||
Unallocated Corporate Interest Expense | — | — | — | 25.1 | 25.1 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 60.5 | 20.8 | 81.3 | (25.3 | ) | 56.0 | ||||||||||||||
Depreciation and Amortization excluding accelerated depreciation | 10.4 | 16.2 | 26.6 | 1.2 | 27.8 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 70.9 | $ | 37.0 | $ | 107.9 | $ | (24.1 | ) | $ | 83.8 | |||||||||
Adjusted EBITDA as a % of sales | 17.6 | % | 9.6 | % | 13.7 | % | 10.6 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $4.3M. ) | $ | 356.0 | ||||||||||||||||||
Less Cash and restricted cash | (60.6 | ) | ||||||||||||||||||
Net Debt (Debt less Cash and Restricted Cash) | $ | 295.4 | ||||||||||||||||||
Net Leverage Ratio** | 3.5 x | |||||||||||||||||||
** The above calculation is not intended to be used for purposes of calculating debt covenant compliance. |
OMNOVA SOLUTIONS INC. | |||||||||||
Non-GAAP and other Financial Matters (Continued) | |||||||||||
May 31, 2017 | |||||||||||
Table G | |||||||||||
Adjusted Return on Invested Capital | |||||||||||
(In millions) | Trailing Twelve Months Ended | Twelve Months Ended | |||||||||
May 31, | November 30, | ||||||||||
Adjusted Net Operating Profit after Tax | 2017 | 2016 | 2015 | ||||||||
Adjusted Income from Continuing Operations | $ | 21.7 | $ | 22.2 | $ | 16.5 | |||||
Interest add back excluding debt premium | 21.7 | 22.7 | 27.3 | ||||||||
Tax effect of interest add back* | (6.5 | ) | (6.8 | ) | (8.2 | ) | |||||
Total Adjusted Net Operating Profit after Tax | $ | 36.9 | $ | 38.1 | $ | 35.6 | |||||
Debt and Equity | |||||||||||
Short-term Debt | $ | 4.2 | $ | 4.2 | $ | 2.5 | |||||
Senior Notes | — | — | 150.0 | ||||||||
Long-term Debt | 350.9 | 352.5 | 199.6 | ||||||||
115.9 | 109.8 | 109.1 | |||||||||
Total Debt and Equity | $ | 471.0 | $ | 466.5 | $ | 461.2 | |||||
Adjusted Return on Invested Capital | 7.8 | % | 8.2 | % | 7.7 | % | |||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate of 30%. |
OMNOVA SOLUTIONS INC. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
May 31 | May 31 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net Sales | $ | 221.3 | $ | 202.0 | $ | 395.9 | $ | 377.3 | |||||||
Cost of goods sold (exclusive of depreciation) | 168.1 | 143.6 | 298.8 | 274.6 | |||||||||||
Gross Profit | 53.2 | 58.4 | 97.1 | 102.7 | |||||||||||
Selling, general and administrative | 30.1 | 33.4 | 59.3 | 61.7 | |||||||||||
Depreciation and amortization | 6.9 | 7.1 | 13.6 | 16.7 | |||||||||||
Asset impairment | 12.9 | — | 12.9 | .4 | |||||||||||
Loss on sale of assets | — | .1 | — | .1 | |||||||||||
Restructuring and severance | 3.6 | 2.2 | 4.6 | 3.6 | |||||||||||
Interest expense | 5.3 | 5.7 | 10.5 | 11.5 | |||||||||||
Other expense, net | (1.7 | ) | (.5 | ) | (1.9 | ) | (.9 | ) | |||||||
57.1 | 48.0 | 99.0 | 93.1 | ||||||||||||
Income (Loss) Before Income Taxes | (3.9 | ) | 10.4 | (1.9 | ) | 9.6 | |||||||||
Income tax expense | 2.4 | 3.2 | .9 | 3.5 | |||||||||||
Net Income (Loss) | $ | (6.3 | ) | $ | 7.2 | $ | (2.8 | ) | $ | 6.1 | |||||
Basic and Diluted Income (Loss) Per Share | $ | (.14 | ) | $ | .16 | $ | (.06 | ) | $ | .14 | |||||
Weighted average shares outstanding - Basic | 44.4 | 44.0 | 44.3 | 44.0 | |||||||||||
Weighted average shares outstanding - Diluted | 44.4 | 44.4 | 44.3 | 44.4 |
OMNOVA SOLUTIONS INC. | |||||||
Consolidated Balance Sheets | |||||||
(In Millions, Except Per Share Data) | |||||||
May 31, | November 30, | ||||||
2017 | 2016 | ||||||
(Unaudited) | (Audited) | ||||||
ASSETS: | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 68.6 | $ | 72.0 | |||
Accounts receivable, net | 112.5 | 87.2 | |||||
Inventories, net | 76.4 | 74.0 | |||||
Prepaid expenses and other | 13.6 | 18.1 | |||||
Assets held for sale - current | 9.7 | 25.7 | |||||
Total Current Assets | 280.8 | 277.0 | |||||
Property, plant and equipment, net | 202.3 | 202.7 | |||||
Trademarks and other intangible assets, net | 56.9 | 56.7 | |||||
Goodwill | 83.4 | 80.2 | |||||
Deferred income taxes | 67.5 | 66.7 | |||||
Other assets | 5.1 | 4.0 | |||||
Total Assets | $ | 696.0 | $ | 687.3 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current Liabilities | |||||||
Amounts due banks | $ | 4.2 | $ | 4.2 | |||
Accounts payable | 81.7 | 68.7 | |||||
Accrued payroll and personal property taxes | 22.0 | 23.4 | |||||
Employee benefit obligations | 4.1 | 4.5 | |||||
Other current liabilities | 8.5 | 7.4 | |||||
Liabilities held for sale - current | 3.4 | 5.2 | |||||
Total Current Liabilities | 123.9 | 113.4 | |||||
Long-term debt | 350.9 | 352.5 | |||||
Postretirement benefits other than pensions | 6.1 | 6.3 | |||||
Pension liabilities | 80.7 | 82.3 | |||||
Deferred income taxes | 10.0 | 11.4 | |||||
Other liabilities | 8.5 | 11.6 | |||||
Total Liabilities | 580.1 | 577.5 | |||||
Shareholders’ Equity | |||||||
Common stock - $0.10 par value; 135 million shares authorized, 48.3 million shares issued as of May 31, 2017 and November 30, 2016, respectively | 4.8 | 4.8 | |||||
Additional contributed capital | 342.2 | 341.0 | |||||
Retained deficit | (74.3 | ) | (74.4 | ) | |||
Treasury stock at cost; 3.4 million and 3.2 million shares at May 31, 2017 and November 30, 2016, respectively | (25.0 | ) | (23.2 | ) | |||
Accumulated other comprehensive loss | (131.8 | ) | (138.4 | ) | |||
Total Shareholders’ Equity | 115.9 | 109.8 | |||||
Total Liabilities and Shareholders’ Equity | $ | 696.0 | $ | 687.3 |
OMNOVA SOLUTIONS INC. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(Dollars in Millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
May 31, | May 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating Activities | |||||||||||||||
Net income (loss) | $ | (6.3 | ) | $ | 7.2 | $ | (2.8 | ) | $ | 6.1 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 6.9 | 7.1 | 13.6 | 16.7 | |||||||||||
Impairment of long-lived assets | 12.9 | .4 | 12.9 | .4 | |||||||||||
Amortization and debt issuance costs write-off | .4 | .4 | .7 | .9 | |||||||||||
Non-cash stock compensation expense | .5 | .6 | 1.0 | 1.2 | |||||||||||
Provision for obsolete inventories | (.1 | ) | .1 | .3 | .4 | ||||||||||
Other | (.1 | ) | — | (.1 | ) | (.7 | ) | ||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | (24.0 | ) | (.8 | ) | (26.7 | ) | (2.9 | ) | |||||||
Inventories | 12.1 | 6.2 | (1.3 | ) | (0.9 | ) | |||||||||
Other current assets | 5.4 | (12.1 | ) | 6.7 | (8.4 | ) | |||||||||
Current liabilities | 4.8 | 9.9 | 6.5 | 6.2 | |||||||||||
Other non-current assets | .8 | .9 | 1.8 | (2.0 | ) | ||||||||||
Other non-current liabilities | .1 | 1.6 | (4.0 | ) | 3.1 | ||||||||||
Contributions to defined benefit plan | (.3 | ) | (.1 | ) | (.3 | ) | (.4 | ) | |||||||
Net Cash Provided by Operating Activities | 13.1 | 21.4 | 8.3 | 19.7 | |||||||||||
Investing Activities | |||||||||||||||
Capital expenditures | (6.2 | ) | (4.6 | ) | (9.9 | ) | (10.7 | ) | |||||||
Proceeds from notes receivable | — | — | 3.8 | — | |||||||||||
Proceeds from asset sales | — | .1 | — | 5.3 | |||||||||||
Acquisition of business | (2.5 | ) | — | (2.5 | ) | — | |||||||||
Other | — | .1 | — | .1 | |||||||||||
Net Cash Used In Investing Activities | (8.7 | ) | (4.4 | ) | (8.6 | ) | (5.3 | ) | |||||||
Financing Activities | |||||||||||||||
Repayment of debt obligations | (1.1 | ) | (.7 | ) | (2.1 | ) | (1.3 | ) | |||||||
Withholding taxes on share-based compensation | (.1 | ) | (.3 | ) | (1.8 | ) | (.3 | ) | |||||||
Net Cash Used In Financing Activities | (1.2 | ) | (1.0 | ) | (3.9 | ) | (1.6 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 1.1 | 1.1 | .8 | 2.9 | |||||||||||
Net Increase (Decrease) In Cash And Cash Equivalents | 4.3 | 17.1 | (3.4 | ) | 15.7 | ||||||||||
Cash and cash equivalents at beginning of period | 64.3 | 43.5 | 72.0 | 44.9 | |||||||||||
Cash And Cash Equivalents At End Of Period | $ | 68.6 | $ | 60.6 | $ | 68.6 | $ | 60.6 |
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