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 | ||
OMNOVA SOLUTIONS INC. | ||
By: | /s/ Frank P. Esposito | |
Name: | Frank P. Esposito | |
Title: | Assistant General Counsel & Corporate Secretary | |
Date: | September 28, 2017 |
Exhibit Number | Description | |
99.1 |
• | Diluted Earnings per Share of $0.18 compared to $0.10 in last year’s third quarter. Adjusted Diluted Earnings per Share increased 79% to $0.25, compared to $0.14 last year driven by margin expansion and growth in the specialties. |
• | Specialty Solutions sales in the quarter grew 7.5% compared to the prior year, with adjusted segment operating margins of 16.4%, while Performance Materials increased sales by 2.3%, excluding China Coated Fabrics, with adjusted segment operating margins of 9.7%. Overall adjusted segment operating margins reached 13.5% compared to 11.0% last year. |
• | Net Debt to Adjusted EBITDA decreased to 3.3x from 3.7x at the end of this year’s second quarter. |
• | Completed sale of the unprofitable China Coated Fabrics business during the quarter as anticipated. |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31 | August 31 | ||||||||||||||
(In millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net Sales | |||||||||||||||
Specialty Solutions | $ | 115.1 | $ | 107.1 | $ | 330.3 | $ | 302.9 | |||||||
Performance Materials | 85.8 | 88.5 | 266.5 | 270.0 | |||||||||||
Total Net Sales | $ | 200.9 | $ | 195.6 | $ | 596.8 | $ | 572.9 | |||||||
Segment Operating Profit | |||||||||||||||
Specialty Solutions | $ | 18.9 | $ | 16.9 | $ | 45.6 | $ | 47.6 | |||||||
Performance Materials | 8.3 | 4.3 | 5.8 | 8.6 | |||||||||||
Interest expense | (5.5 | ) | (5.9 | ) | (16.0 | ) | (17.4 | ) | |||||||
Corporate expense | (7.5 | ) | (6.6 | ) | (23.1 | ) | (20.9 | ) | |||||||
Operational improvement costs | — | — | — | .4 | |||||||||||
Acquisition and integration costs | (.2 | ) | (.4 | ) | (.2 | ) | (.4 | ) | |||||||
Debt issuance costs write-off | — | (1.7 | ) | — | (1.7 | ) | |||||||||
Income (Loss) Before Income Taxes | 14.0 | 6.6 | 12.1 | 16.2 | |||||||||||
Income tax expense | 6.1 | 1.9 | 7.0 | 5.4 | |||||||||||
Net Income (Loss) | $ | 7.9 | $ | 4.7 | $ | 5.1 | $ | 10.8 | |||||||
Depreciation and amortization | $ | 7.1 | $ | 6.8 | $ | 20.7 | $ | 23.5 | |||||||
Capital expenditures | $ | 7.1 | $ | 5.8 | $ | 17.0 | $ | 16.5 |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended August 31, 2017 | ||||||||||||||||||||
Table A | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 115.1 | $ | 85.8 | $ | 200.9 | $ | — | $ | 200.9 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 18.9 | $ | 8.3 | $ | 27.2 | $ | (7.7 | ) | $ | 19.5 | |||||||||
Interest expense | — | — | — | (5.5 | ) | (5.5 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 18.9 | $ | 8.3 | $ | 27.2 | $ | (13.2 | ) | $ | 14.0 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | — | .3 | .3 | — | .3 | |||||||||||||||
Asset impairment, facility closure costs and other | — | (.6 | ) | (.6 | ) | 1.2 | .6 | |||||||||||||
Environmental costs | — | .3 | .3 | — | .3 | |||||||||||||||
Pension curtailment | — | — | — | .4 | .4 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .2 | .2 | |||||||||||||||
Subtotal for management excluded Items | — | — | — | 1.8 | 1.8 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 18.9 | $ | 8.3 | $ | 27.2 | $ | (11.4 | ) | $ | 15.8 | |||||||||
Tax expense (30% rate)* | (4.7 | ) | ||||||||||||||||||
Adjusted Income | $ | 11.1 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.25 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 16.4 | % | 9.7 | % | 13.5 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 3.3 | $ | 3.7 | $ | 7.0 | $ | .1 | $ | 7.1 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 18.9 | $ | 8.3 | $ | 27.2 | $ | (11.4 | ) | $ | 15.8 | |||||||||
Unallocated corporate interest expense | — | — | — | 5.5 | 5.5 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 18.9 | 8.3 | 27.2 | (5.9 | ) | 21.3 | ||||||||||||||
Depreciation and amortization | 3.7 | 2.7 | 6.4 | .7 | 7.1 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 22.6 | $ | 11.0 | $ | 33.6 | $ | (5.2 | ) | $ | 28.4 | |||||||||
Adjusted EBITDA as a % of sales | 19.6 | % | 12.8 | % | 16.7 | % | 14.1 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended August 31, 2016 | ||||||||||||||||||||
Table B | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 107.1 | $ | 88.5 | $ | 195.6 | $ | — | $ | 195.6 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 16.9 | $ | 4.3 | $ | 21.2 | $ | (8.7 | ) | $ | 12.5 | |||||||||
Interest expense | — | — | — | (5.9 | ) | (5.9 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 16.9 | $ | 4.3 | $ | 21.2 | $ | (14.6 | ) | $ | 6.6 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .1 | .3 | .4 | — | .4 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .4 | .4 | |||||||||||||||
Deferred financing fees written-off | — | — | — | 1.7 | 1.7 | |||||||||||||||
Asset impairment, facility closure costs and other | .2 | .7 | .9 | .1 | 1.0 | |||||||||||||||
Vacation policy change | (.3 | ) | (.6 | ) | (.9 | ) | (.1 | ) | (1.0 | ) | ||||||||||
Subtotal for management excluded Items | — | .4 | .4 | 2.1 | 2.5 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 16.9 | $ | 4.7 | $ | 21.6 | $ | (12.5 | ) | $ | 9.1 | |||||||||
Tax expense (30% rate)* | (2.7 | ) | ||||||||||||||||||
Adjusted Income | $ | 6.4 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.14 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 15.8 | % | 5.3 | % | 11.0 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 2.9 | $ | 2.4 | $ | 5.3 | $ | .5 | $ | 5.8 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 16.9 | $ | 4.7 | $ | 21.6 | $ | (12.5 | ) | $ | 9.1 | |||||||||
Unallocated corporate interest expense | — | — | — | 5.9 | 5.9 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 16.9 | 4.7 | 21.6 | (6.6 | ) | 15.0 | ||||||||||||||
Depreciation and amortization | 3.4 | 3.3 | 6.7 | .1 | 6.8 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 20.3 | $ | 8.0 | $ | 28.3 | $ | (6.5 | ) | $ | 21.8 | |||||||||
Adjusted EBITDA as a % of sales | 19.0 | % | 9.0 | % | 14.5 | % | 11.1 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Nine Months Ended August 31, 2017 | ||||||||||||||||||||
Table C | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 330.3 | $ | 266.5 | $ | 596.8 | $ | — | $ | 596.8 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 45.6 | $ | 5.8 | $ | 51.4 | $ | (23.3 | ) | $ | 28.1 | |||||||||
Interest expense | — | — | — | (16.0 | ) | (16.0 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 45.6 | $ | 5.8 | $ | 51.4 | $ | (39.3 | ) | $ | 12.1 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .6 | 1.7 | 2.3 | 2.6 | 4.9 | |||||||||||||||
Asset impairment, facility closure costs and other | — | 12.3 | 12.3 | 1.4 | 13.7 | |||||||||||||||
Environmental costs | — | (2.2 | ) | (2.2 | ) | — | (2.2 | ) | ||||||||||||
Pension curtailment | — | — | — | .4 | .4 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .2 | .2 | |||||||||||||||
Subtotal for management excluded items | .6 | 11.8 | 12.4 | 4.6 | 17.0 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 46.2 | $ | 17.6 | $ | 63.8 | $ | (34.7 | ) | $ | 29.1 | |||||||||
Tax expense (30% rate)* | (8.7 | ) | ||||||||||||||||||
Adjusted Income | $ | 20.4 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.46 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 14.0 | % | 6.6 | % | 10.7 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 8.5 | $ | 7.9 | $ | 16.4 | $ | .6 | $ | 17.0 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 46.2 | $ | 17.6 | $ | 63.8 | $ | (34.7 | ) | $ | 29.1 | |||||||||
Unallocated corporate interest expense | — | — | — | 16.0 | 16.0 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 46.2 | 17.6 | 63.8 | (18.7 | ) | 45.1 | ||||||||||||||
Depreciation and amortization | 10.7 | 8.5 | 19.2 | 1.5 | 20.7 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 56.9 | $ | 26.1 | $ | 83.0 | $ | (17.2 | ) | $ | 65.8 | |||||||||
Adjusted EBITDA as a % of sales | 17.2 | % | 9.8 | % | 13.9 | % | 11.0 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Nine Months Ended August 31, 2016 | ||||||||||||||||||||
Table D | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 302.9 | $ | 270.0 | $ | 572.9 | $ | — | $ | 572.9 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 47.6 | $ | 8.6 | $ | 56.2 | $ | (22.6 | ) | $ | 33.6 | |||||||||
Interest expense | — | — | — | (17.4 | ) | (17.4 | ) | |||||||||||||
Income (Loss) Before Income Taxes | 47.6 | 8.6 | 56.2 | (40.0 | ) | 16.2 | ||||||||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .2 | 2.8 | 3.0 | .1 | 3.1 | |||||||||||||||
Accelerated depreciation on production transfer | — | 3.0 | 3.0 | — | 3.0 | |||||||||||||||
Operational improvements costs | — | (.4 | ) | (.4 | ) | — | (.4 | ) | ||||||||||||
Asset impairment, facility closure costs and other | .8 | .2 | 1.0 | .1 | 1.1 | |||||||||||||||
Deferred financing fees written-off | — | — | — | 1.7 | 1.7 | |||||||||||||||
Corporate headquarters relocation costs | — | — | — | (.2 | ) | (.2 | ) | |||||||||||||
Acquisition and integration related expense | — | 1.1 | 1.1 | .4 | 1.5 | |||||||||||||||
Vacation policy change | (1.0 | ) | (1.4 | ) | (2.4 | ) | (.5 | ) | (2.9 | ) | ||||||||||
Subtotal for management excluded items | — | 5.3 | 5.3 | 1.6 | 6.9 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 47.6 | $ | 13.9 | $ | 61.5 | $ | (38.4 | ) | $ | 23.1 | |||||||||
Tax expense (30% rate)* | (6.9 | ) | ||||||||||||||||||
Adjusted Income | $ | 16.2 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.36 | ||||||||||||||||||
*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 | % | 10.7 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 7.8 | $ | 7.0 | $ | 14.8 | $ | 1.7 | $ | 16.5 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 47.6 | $ | 13.9 | $ | 61.5 | $ | (38.4 | ) | $ | 23.1 | |||||||||
Unallocated corporate interest expense | — | — | — | 17.4 | 17.4 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 47.6 | 13.9 | 61.5 | (21.0 | ) | 40.5 | ||||||||||||||
Depreciation and amortization excluding accelerated depreciation | 9.8 | 9.9 | 19.7 | .8 | 20.5 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 57.4 | $ | 23.8 | $ | 81.2 | $ | (20.2 | ) | $ | 61.0 | |||||||||
Adjusted EBITDA as a % of sales | 18.9 | % | 8.8 | % | 14.2 | % | 10.6 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Trailing Twelve Months Ended August 31, 2017 | ||||||||||||||||||||
Table E | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 431.7 | $ | 352.1 | $ | 783.8 | $ | — | $ | 783.8 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 52.4 | $ | 11.1 | $ | 63.5 | $ | (34.4 | ) | $ | 29.1 | |||||||||
Interest expense | — | — | — | (23.3 | ) | (23.3 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 52.4 | $ | 11.1 | $ | 63.5 | $ | (57.7 | ) | $ | 5.8 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .6 | 2.2 | 2.8 | 7.4 | 10.2 | |||||||||||||||
Asset impairment, facility closure costs and other | 6.1 | 12.4 | 18.5 | 1.3 | 19.8 | |||||||||||||||
Environmental costs | — | (1.9 | ) | (1.9 | ) | — | (1.9 | ) | ||||||||||||
Deferred financing fees written-off | — | — | — | 3.2 | 3.2 | |||||||||||||||
Pension curtailment | — | — | — | .4 | .4 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .7 | .7 | |||||||||||||||
Vacation policy change | (.3 | ) | (.1 | ) | (.4 | ) | (.1 | ) | (.5 | ) | ||||||||||
Subtotal for management excluded items | 6.4 | 12.6 | 19.0 | 12.9 | 31.9 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 58.8 | $ | 23.7 | $ | 82.5 | $ | (44.8 | ) | $ | 37.7 | |||||||||
Tax expense (30% rate)* | (11.3 | ) | ||||||||||||||||||
Adjusted Income | $ | 26.4 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share From Adjusted Income | $ | 0.59 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate. | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 13.6 | % | 6.7 | % | 10.5 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 12.6 | $ | 12.8 | $ | 25.4 | $ | .7 | $ | 26.1 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 58.8 | $ | 23.7 | $ | 82.5 | $ | (44.8 | ) | $ | 37.7 | |||||||||
Unallocated corporate interest (excluding debt premium) | — | — | — | 21.3 | 21.3 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 58.8 | 23.7 | 82.5 | (23.5 | ) | 59.0 | ||||||||||||||
Depreciation and amortization excluding accelerated depreciation | 14.2 | 11.8 | 26.0 | 1.8 | 27.8 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 73.0 | $ | 35.5 | $ | 108.5 | $ | (21.7 | ) | $ | 86.8 | |||||||||
Adjusted EBITDA as a % of sales | 16.9 | % | 10.1 | % | 13.8 | % | 11.1 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $8.5M.) | $ | 362.9 | ||||||||||||||||||
Less cash and restricted cash | (74.6 | ) | ||||||||||||||||||
Net Debt (Debt less Cash and Restricted Cash) | $ | 288.3 | ||||||||||||||||||
Net Leverage Ratio** | 3.3 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 August 31, 2016 | ||||||||||||||||||||
Table F | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 403.0 | $ | 369.9 | $ | 772.9 | $ | — | $ | 772.9 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 61.4 | $ | (12.0 | ) | $ | 49.4 | $ | (28.2 | ) | $ | 21.2 | ||||||||
Interest expense | — | — | — | (25.2 | ) | $ | (25.2 | ) | ||||||||||||
Income (Loss) Before Income Taxes | $ | 61.4 | $ | (12.0 | ) | 49.4 | $ | (53.4 | ) | $ | (4.0 | ) | ||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .2 | 4.4 | 4.6 | .1 | 4.7 | |||||||||||||||
Accelerated depreciation on production transfer | — | 5.9 | 5.9 | — | 5.9 | |||||||||||||||
Operational improvements costs | 1.3 | (.8 | ) | .5 | — | .5 | ||||||||||||||
Asset impairment, facility closure costs and other | .2 | 19.5 | 19.7 | .1 | 19.8 | |||||||||||||||
Environmental costs | .1 | 2.8 | 2.9 | — | 2.9 | |||||||||||||||
Deferred financing fees written-off | — | — | — | 2.3 | 2.3 | |||||||||||||||
Corporate headquarters relocation costs | — | — | — | (.2 | ) | (.2 | ) | |||||||||||||
Other financing costs | — | — | — | 1.0 | 1.0 | |||||||||||||||
Acquisition and integration related expense | — | 1.1 | 1.1 | .4 | 1.5 | |||||||||||||||
Vacation policy change | (1.0 | ) | (1.4 | ) | (2.4 | ) | (.5 | ) | (2.9 | ) | ||||||||||
Subtotal for management excluded items | .8 | 31.5 | 32.3 | 3.2 | 35.5 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 62.2 | $ | 19.5 | 81.7 | $ | (50.2 | ) | $ | 31.5 | ||||||||||
Tax expense (30% rate)* | (9.5 | ) | ||||||||||||||||||
Adjusted Income | $ | 22.0 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.50 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate. | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 15.4 | % | 5.3 | % | 10.6 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 11.6 | $ | 10.9 | $ | 22.5 | $ | 2.7 | $ | 25.2 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 62.2 | $ | 19.5 | $ | 81.7 | $ | (50.2 | ) | $ | 31.5 | |||||||||
Unallocated corporate interest expense | — | — | — | 24.2 | 24.2 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 62.2 | 19.5 | 81.7 | (26.0 | ) | 55.7 | ||||||||||||||
Depreciation and amortization excluding accelerated depreciation | 12.2 | 14.5 | 26.7 | 1.0 | 27.7 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 74.4 | $ | 34.0 | $ | 108.4 | $ | (25.0 | ) | $ | 83.4 | |||||||||
Adjusted EBITDA as a % of sales | 18.5 | % | 9.2 | % | 14.0 | % | 10.8 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $10.6M. ) | $ | 516.9 | ||||||||||||||||||
Less cash and restricted cash | (226.2 | ) | ||||||||||||||||||
Net Debt (Debt less Cash and Restricted Cash) | $ | 290.7 | ||||||||||||||||||
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) | |||||||||||
August 31, 2017 | |||||||||||
Table G | |||||||||||
Adjusted Return on Invested Capital | |||||||||||
(In millions) | Trailing Twelve Months Ended | Twelve Months Ended | |||||||||
August 31, | November 30, | ||||||||||
Adjusted Net Operating Profit After Tax | 2017 | 2016 | 2015 | ||||||||
Adjusted income from continuing operations | $ | 26.4 | $ | 22.2 | $ | 16.5 | |||||
Interest add back excluding debt premium | 21.3 | 22.7 | 27.3 | ||||||||
Tax effect of interest add back* | (6.4 | ) | (6.8 | ) | (8.2 | ) | |||||
Total Adjusted Net Operating Profit After Tax | $ | 41.3 | $ | 38.1 | $ | 35.6 | |||||
Debt and Equity | |||||||||||
Short-term debt | $ | 4.2 | $ | 4.2 | $ | 2.5 | |||||
Senior notes | — | — | 150.0 | ||||||||
Long-term debt | 350.3 | 352.5 | 199.6 | ||||||||
Total shareholders' equity | 126.0 | 109.8 | 109.1 | ||||||||
Total Debt and Equity | $ | 480.5 | $ | 466.5 | $ | 461.2 | |||||
Adjusted Return on Invested Capital | 8.6 | % | 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 | Nine Months Ended | ||||||||||||||
August 31 | August 31 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net sales | $ | 200.9 | $ | 195.6 | $ | 596.8 | $ | 572.9 | |||||||
Cost of goods sold (exclusive of depreciation) | 143.1 | 143.5 | 441.9 | 418.1 | |||||||||||
Gross profit | 57.8 | 52.1 | 154.9 | 154.8 | |||||||||||
Selling, general and administrative | 28.9 | 29.3 | 88.2 | 91.0 | |||||||||||
Depreciation and amortization | 7.1 | 6.8 | 20.7 | 23.5 | |||||||||||
Asset impairments | .4 | — | 13.3 | .4 | |||||||||||
Loss on asset sales | — | — | — | .1 | |||||||||||
Restructuring and severance | .4 | 1.3 | 5.1 | 4.9 | |||||||||||
Interest expense | 5.5 | 5.9 | 16.0 | 17.4 | |||||||||||
Debt issuance costs write-off | — | 1.7 | — | 1.7 | |||||||||||
Acquisition and integration related expense | .2 | .4 | .2 | .4 | |||||||||||
Other income (loss), net | 1.3 | .1 | (.7 | ) | (.8 | ) | |||||||||
Total other costs and expenses | 43.8 | 45.5 | 142.8 | 138.6 | |||||||||||
Income before income taxes | 14.0 | 6.6 | 12.1 | 16.2 | |||||||||||
Income tax expense | 6.1 | 1.9 | 7.0 | 5.4 | |||||||||||
Net income | $ | 7.9 | $ | 4.7 | $ | 5.1 | $ | 10.8 | |||||||
Income per share - basic | $ | .18 | $ | .11 | $ | .12 | $ | .25 | |||||||
Income per share - diluted | $ | .18 | $ | .10 | $ | .11 | $ | .24 | |||||||
Weighted average shares outstanding - basic | 44.4 | 44.1 | 44.3 | 44.0 | |||||||||||
Weighted average shares outstanding - diluted | 44.7 | 44.7 | 44.7 | 44.4 |
OMNOVA SOLUTIONS INC. | |||||||
Consolidated Balance Sheets | |||||||
(In Millions, Except Per Share Data) | |||||||
August 31, | November 30, | ||||||
2017 | 2016 | ||||||
(Unaudited) | (Audited) | ||||||
ASSETS: | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 74.6 | $ | 72.0 | |||
Accounts receivable, net | 105.8 | 87.2 | |||||
Inventories, net | 77.2 | 74.0 | |||||
Prepaid expenses and other | 16.2 | 18.1 | |||||
Assets held for sale - current | — | 25.7 | |||||
Total Current Assets | 273.8 | 277.0 | |||||
Property, plant and equipment, net | 206.7 | 202.7 | |||||
Trademarks and other intangible assets, net | 56.9 | 56.7 | |||||
Goodwill | 85.9 | 80.2 | |||||
Deferred income taxes | 62.5 | 66.7 | |||||
Other assets | 5.1 | 4.0 | |||||
Total Assets | $ | 690.9 | $ | 687.3 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current Liabilities | |||||||
Amounts due banks | $ | 4.2 | $ | 4.2 | |||
Accounts payable | 77.8 | 68.7 | |||||
Accrued payroll and personal property taxes | 24.2 | 23.4 | |||||
Employee benefit obligations | 3.0 | 4.5 | |||||
Accrued interest | .1 | — | |||||
Other current liabilities | 5.8 | 7.4 | |||||
Liabilities held for sale - current | — | 5.2 | |||||
Total Current Liabilities | 115.1 | 113.4 | |||||
Long-term debt | 350.3 | 352.5 | |||||
Postretirement benefits other than pensions | 6.0 | 6.3 | |||||
Pension liabilities | 74.9 | 82.3 | |||||
Deferred income taxes | 11.4 | 11.4 | |||||
Other liabilities | 7.2 | 11.6 | |||||
Total Liabilities | 564.9 | 577.5 | |||||
Shareholders’ Equity | |||||||
Common stock - $0.10 par value; 135 million shares authorized, 48.3 million shares issued, 44.8 million and 45.1 million outstanding as of August 31, 2017 and November 30, 2016, respectively | 4.8 | 4.8 | |||||
Additional contributed capital | 343.0 | 341.0 | |||||
Retained deficit | (66.3 | ) | (74.4 | ) | |||
Treasury stock at cost; 3.4 million and 3.2 million shares at August 31, 2017 and November 30, 2016, respectively | (25.4 | ) | (23.2 | ) | |||
Accumulated other comprehensive loss | (130.1 | ) | (138.4 | ) | |||
Total Shareholders’ Equity | 126.0 | 109.8 | |||||
Total Liabilities and Shareholders’ Equity | $ | 690.9 | $ | 687.3 |
OMNOVA SOLUTIONS INC. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(Dollars in Millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
August 31, | August 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating Activities | |||||||||||||||
Net income | $ | 7.9 | $ | 4.7 | $ | 5.1 | $ | 10.8 | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||
Impairment of long-lived assets | 12.9 | .4 | 12.9 | .4 | |||||||||||
Depreciation and amortization | 7.1 | 6.8 | 20.7 | 23.5 | |||||||||||
Impairment of long-lived assets | (12.9 | ) | (.4 | ) | — | — | |||||||||
Amortization and debt issuance costs write-off | .4 | 2.2 | 1.1 | 3.1 | |||||||||||
Non-cash stock compensation expense | .6 | .6 | 1.6 | 1.8 | |||||||||||
Provision for obsolete inventories | — | (.4 | ) | .3 | — | ||||||||||
Other | (.3 | ) | — | (.4 | ) | (.7 | ) | ||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 8.0 | 3.5 | (18.7 | ) | 0.6 | ||||||||||
Inventories | .3 | 3.3 | (1.0 | ) | 2.4 | ||||||||||
Other current assets | 3.1 | 6.6 | 9.8 | (1.8 | ) | ||||||||||
Current liabilities | (7.4 | ) | 4.8 | (.9 | ) | 11.0 | |||||||||
Other non-current assets | 5.5 | (4.8 | ) | 7.3 | (7.1 | ) | |||||||||
Other non-current liabilities | 1.7 | .1 | (2.3 | ) | 3.2 | ||||||||||
Contributions to defined benefit plan | (7.0 | ) | (5.8 | ) | (7.3 | ) | (6.2 | ) | |||||||
Net Cash Provided by Operating Activities | 19.9 | 21.6 | 28.2 | 41.0 | |||||||||||
Investing Activities | |||||||||||||||
Capital expenditures | (7.1 | ) | (5.8 | ) | (17.0 | ) | (16.5 | ) | |||||||
Proceeds from notes receivable | — | — | 3.8 | — | |||||||||||
Proceeds from sale of businesses | — | (5.3 | ) | — | — | ||||||||||
Acquisition and disposals of businesses | (4.8 | ) | 5.3 | (7.3 | ) | 5.3 | |||||||||
Other | — | — | — | .1 | |||||||||||
Net Cash Used In Investing Activities | (11.9 | ) | (5.8 | ) | (20.5 | ) | (11.1 | ) | |||||||
Financing Activities | |||||||||||||||
Proceeds from borrowings | — | 346.5 | — | 346.5 | |||||||||||
Repayment of debt obligations | (1.2 | ) | (188.7 | ) | (3.3 | ) | (190.0 | ) | |||||||
Payments for debt refinancing | — | (4.2 | ) | — | (4.2 | ) | |||||||||
Restricted cash | — | (155.9 | ) | — | (155.9 | ) | |||||||||
Withholding taxes on share-based compensation | (.4 | ) | (.5 | ) | (2.2 | ) | (.5 | ) | |||||||
Net Cash Used In Financing Activities | (1.6 | ) | (2.8 | ) | (5.5 | ) | (4.1 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (.4 | ) | (3.3 | ) | .4 | (.4 | ) | ||||||||
Net Increase (Decrease) In Cash And Cash Equivalents | 6.0 | 9.7 | 2.6 | 25.4 | |||||||||||
Cash and cash equivalents at beginning of period | 68.6 | 60.6 | 72.0 | 44.9 | |||||||||||
Cash And Cash Equivalents At End Of Period | $ | 74.6 | $ | 70.3 | $ | 74.6 | $ | 70.3 |
?IW'9>1[R_?ZQ5PWI+U6:PA@&?:XJLKV*/[
M4Q;5JE/&]TY,VA0X*-TBE6=H$KH'*8Q3J-D0*/4?0$XOQ)W-.*X>=OHW'7'3
MYO!Y)Y2H!ANHPT4/E/:UAJ%8LT\ER[-$@@=)F$ 9M!I%W* FDO4$3$'<"*+X
M7;E#