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 2.05 | Costs Associated with Exit or Disposal Activities |
Item 2.06 | Material Impairments |
Item 9.01. | Financial Statements and Exhibits |
Exhibit Number | Description | |
Press Release, dated June 28, 2018, issued by OMNOVA Solutions Inc. | ||
OMNOVA SOLUTIONS INC. | ||
By: | /s/ Frank P. Esposito | |
Name: | Frank P. Esposito | |
Title: | Corporate Secretary and Investor Relations; Assistant General Counsel | |
Date: | June 28, 2018 |
Exhibit Number | Description | |
Press Release, dated June 28, 2018, issued by OMNOVA Solutions Inc. |
• | Earnings per Diluted Share for Q2 of 2018 were $0.19 compared to a loss of $0.14 last year. |
• | Adjusted Diluted Earnings per Share for the quarter were $0.20 compared to $0.16 last year. |
• | Specialty Solutions segment operating profit for the quarter was $21.9 million compared to $17.3 million last year. Adjusted Segment Operating Profit for Specialty Solutions was $22 million, up 24% from $17.7 million last year, driven by higher volumes, stronger margins and favorable foreign exchange. |
• | Sixth consecutive quarter of volume growth in OMNOVA’s specialty businesses. Specialization strategy showing traction. |
• | The Company announces the closure of its Green Bay, Wisconsin high volume styrene butadiene production facility. Expects $7-8 million in annualized savings when fully implemented. |
• | Net Debt to Adjusted EBITDA improved to 3.0x from 3.6x at the end of last year’s second quarter. |
• | The Company’s 2018 full year performance expectations are unchanged - the fourth consecutive year of growth in Adjusted Diluted Earnings per Share. |
Three Months Ended May 31, | Six Months Ended May 31, | ||||||||||||||
(In millions) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net Sales: | |||||||||||||||
Specialty Solutions | $ | 128.8 | $ | 121.5 | $ | 238.0 | $ | 215.2 | |||||||
Performance Materials | 77.5 | 99.8 | 147.0 | 180.7 | |||||||||||
Total Net Sales | $ | 206.3 | $ | 221.3 | $ | 385.0 | $ | 395.9 | |||||||
Segment Operating Profit: | |||||||||||||||
Specialty Solutions | $ | 21.9 | $ | 17.3 | $ | 35.5 | $ | 26.8 | |||||||
Performance Materials | .1 | (7.2 | ) | 2.2 | (2.5 | ) | |||||||||
Interest expense | (4.6 | ) | (5.3 | ) | (9.7 | ) | (10.5 | ) | |||||||
Corporate expense | (6.5 | ) | (8.7 | ) | (14.9 | ) | (15.7 | ) | |||||||
Income (Loss) Before Income Taxes | 10.9 | (3.9 | ) | 13.1 | (1.9 | ) | |||||||||
Income tax expense (benefit) | 2.5 | 2.4 | (2.6 | ) | .9 | ||||||||||
Net Income (Loss) | $ | 8.4 | $ | (6.3 | ) | $ | 15.7 | $ | (2.8 | ) | |||||
Depreciation and amortization | $ | 7.3 | $ | 6.9 | $ | 14.5 | $ | 13.6 | |||||||
Capital expenditures | $ | 3.9 | $ | 6.1 | $ | 7.1 | $ | 9.9 |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended May 31, 2018 | ||||||||||||||||||||
Table A | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 128.8 | $ | 77.5 | $ | 206.3 | $ | — | $ | 206.3 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 21.9 | $ | .1 | $ | 22.0 | $ | (6.5 | ) | $ | 15.5 | |||||||||
Interest expense | — | — | — | (4.6 | ) | (4.6 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 21.9 | $ | .1 | $ | 22.0 | $ | (11.1 | ) | $ | 10.9 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | — | .1 | .1 | .1 | .2 | |||||||||||||||
Asset impairment, facility closure costs and other | .1 | .4 | .5 | .1 | .6 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .3 | .3 | |||||||||||||||
Subtotal for management excluded Items | .1 | .5 | .6 | .5 | 1.1 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 22.0 | $ | .6 | $ | 22.6 | $ | (10.6 | ) | $ | 12.0 | |||||||||
Tax expense (25% rate)* | (3.0 | ) | ||||||||||||||||||
Adjusted Income | $ | 9.0 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.20 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 17.1 | % | 0.8 | % | 11.0 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 2.6 | $ | 1.0 | $ | 3.6 | $ | .3 | $ | 3.9 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 22.0 | $ | .6 | $ | 22.6 | $ | (10.6 | ) | $ | 12.0 | |||||||||
Unallocated corporate interest expense | — | — | — | 4.6 | 4.6 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 22.0 | .6 | 22.6 | (6.0 | ) | 16.6 | ||||||||||||||
Depreciation and amortization | 4.3 | 3.0 | 7.3 | — | 7.3 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 26.3 | $ | 3.6 | $ | 29.9 | $ | (6.0 | ) | $ | 23.9 | |||||||||
Adjusted EBITDA as a % of sales | 20.4 | % | 4.6 | % | 14.5 | % | 11.6 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Three Months Ended May 31, 2017 | ||||||||||||||||||||
Table B | ||||||||||||||||||||
(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 | $ | 17.3 | $ | (7.2 | ) | $ | 10.1 | $ | (8.7 | ) | $ | 1.4 | ||||||||
Interest expense | — | — | — | (5.3 | ) | (5.3 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 17.3 | $ | (7.2 | ) | $ | 10.1 | $ | (14.0 | ) | $ | (3.9 | ) | |||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .4 | 1.1 | 1.5 | 2.1 | 3.6 | |||||||||||||||
Environmental costs | — | (2.5 | ) | (2.5 | ) | — | (2.5 | ) | ||||||||||||
Asset impairment, facility closure costs and other | — | 12.8 | 12.8 | .2 | 13.0 | |||||||||||||||
Subtotal for management excluded Items | .4 | 11.4 | 11.8 | 2.3 | 14.1 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 17.7 | $ | 4.2 | $ | 21.9 | $ | (11.7 | ) | $ | 10.2 | |||||||||
Tax expense (30% rate)* | (3.1 | ) | ||||||||||||||||||
Adjusted Income | $ | 7.1 | ||||||||||||||||||
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 | 14.6 | % | 4.2 | % | 9.9 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 2.8 | $ | 2.9 | $ | 5.7 | $ | .4 | $ | 6.1 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 17.7 | $ | 4.2 | $ | 21.9 | $ | (11.7 | ) | $ | 10.2 | |||||||||
Unallocated corporate interest expense | — | — | — | 5.3 | 5.3 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 17.7 | 4.2 | 21.9 | (6.4 | ) | 15.5 | ||||||||||||||
Depreciation and amortization | 3.6 | 2.9 | 6.5 | .4 | 6.9 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 21.3 | $ | 7.1 | $ | 28.4 | $ | (6.0 | ) | $ | 22.4 | |||||||||
Adjusted EBITDA as a % of sales | 17.5 | % | 7.1 | % | 12.8 | % | 10.1 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Six Months Ended May 31, 2018 | ||||||||||||||||||||
Table C | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 238.0 | $ | 147.0 | $ | 385.0 | $ | — | $ | 385.0 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 35.5 | $ | 2.2 | $ | 37.7 | $ | (14.9 | ) | $ | 22.8 | |||||||||
Interest expense | — | — | — | (9.7 | ) | (9.7 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 35.5 | $ | 2.2 | $ | 37.7 | $ | (24.6 | ) | $ | 13.1 | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .7 | .1 | .8 | .7 | 1.5 | |||||||||||||||
Asset impairment, facility closure costs and other | .1 | .4 | .5 | .1 | .6 | |||||||||||||||
Environmental costs | — | .2 | .2 | — | .2 | |||||||||||||||
Deferred financing fees | — | — | — | .8 | .8 | |||||||||||||||
Acquisition and integration related expense | .4 | — | .4 | .5 | .9 | |||||||||||||||
Subtotal for management excluded items | 1.2 | .7 | 1.9 | 2.1 | 4.0 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 36.7 | $ | 2.9 | $ | 39.6 | $ | (22.5 | ) | $ | 17.1 | |||||||||
Tax expense (25% rate)* | (4.3 | ) | ||||||||||||||||||
Adjusted Income (Loss) | $ | 12.8 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.29 | ||||||||||||||||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate | ||||||||||||||||||||
Adjusted Segment Operating Profit As A % Of Sales | 15.4 | % | 2.0 | % | 10.3 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 5.0 | $ | 1.8 | $ | 6.8 | $ | .3 | $ | 7.1 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 36.7 | $ | 2.9 | $ | 39.6 | $ | (22.5 | ) | $ | 17.1 | |||||||||
Unallocated corporate interest expense | — | — | — | 9.7 | 9.7 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 36.7 | 2.9 | 39.6 | (12.8 | ) | 26.8 | ||||||||||||||
Depreciation and amortization | 8.4 | 6.0 | 14.4 | .1 | 14.5 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 45.1 | $ | 8.9 | $ | 54.0 | $ | (12.7 | ) | $ | 41.3 | |||||||||
Adjusted EBITDA as a % of sales | 18.9 | % | 6.1 | % | 14.0 | % | 10.7 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Six Months Ended May 31, 2017 | ||||||||||||||||||||
Table D | ||||||||||||||||||||
(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 | $ | 26.8 | $ | (2.5 | ) | $ | 24.3 | $ | (15.7 | ) | $ | 8.6 | ||||||||
Interest expense | — | — | — | (10.5 | ) | (10.5 | ) | |||||||||||||
Income (Loss) Before Income Taxes | 26.8 | (2.5 | ) | 24.3 | (26.2 | ) | (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 | $ | 27.4 | $ | 9.3 | $ | 36.7 | $ | (23.5 | ) | $ | 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 | 12.7 | % | 5.1 | % | 9.3 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 4.9 | $ | 4.4 | $ | 9.3 | $ | .6 | $ | 9.9 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 27.4 | $ | 9.3 | $ | 36.7 | $ | (23.5 | ) | $ | 13.2 | |||||||||
Unallocated corporate interest expense | — | — | — | 10.5 | 10.5 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 27.4 | 9.3 | 36.7 | (13.0 | ) | 23.7 | ||||||||||||||
Depreciation and amortization | 7.0 | 5.8 | 12.8 | .8 | 13.6 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 34.4 | $ | 15.1 | $ | 49.5 | $ | (12.2 | ) | $ | 37.3 | |||||||||
Adjusted EBITDA as a % of sales | 16.0 | % | 8.4 | % | 12.5 | % | 9.4 | % |
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Trailing Twelve Months Ended May 31, 2018 | ||||||||||||||||||||
Table E | ||||||||||||||||||||
(In millions except per share data) | Specialty Solutions | Performance Materials | Combined Segments | Corporate | Consolidated | |||||||||||||||
Net Sales | $ | 464.2 | $ | 308.0 | $ | 772.2 | $ | — | $ | 772.2 | ||||||||||
Segment Operating Profit / Corporate Expense | $ | 68.6 | $ | (7.9 | ) | $ | 60.7 | $ | (29.1 | ) | $ | 31.6 | ||||||||
Interest expense | — | — | — | (20.7 | ) | (20.7 | ) | |||||||||||||
Income (Loss) Before Income Taxes | $ | 68.6 | $ | (7.9 | ) | $ | 60.7 | $ | (49.8 | ) | $ | 10.9 | ||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .7 | .4 | 1.1 | 1.1 | 2.2 | |||||||||||||||
Asset impairment, facility closure costs and other | .4 | 21.1 | 21.5 | 1.7 | 23.2 | |||||||||||||||
Environmental costs | — | .7 | .7 | — | .7 | |||||||||||||||
Deferred financing fees | — | — | — | .8 | .8 | |||||||||||||||
Pension curtailment | — | — | — | .4 | .4 | |||||||||||||||
Acquisition and integration related expense | .4 | — | .4 | .8 | 1.2 | |||||||||||||||
Subtotal for management excluded items | 1.5 | 22.2 | 23.7 | 4.8 | 28.5 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 70.1 | $ | 14.3 | $ | 84.4 | $ | (45.0 | ) | $ | 39.4 | |||||||||
Tax expense | (11.1 | ) | ||||||||||||||||||
Adjusted Income | $ | 28.3 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share From Adjusted Income | $ | 0.63 | ||||||||||||||||||
Adjusted Segment Operating Profit as a % Of Sales | 15.1 | % | 4.6 | % | 10.9 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 13.2 | $ | 8.5 | $ | 21.7 | $ | .6 | $ | 22.3 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 70.1 | $ | 14.3 | $ | 84.4 | $ | (45.0 | ) | $ | 39.4 | |||||||||
Unallocated corporate interest | — | — | — | 20.7 | 20.7 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 70.1 | 14.3 | 84.4 | (24.3 | ) | 60.1 | ||||||||||||||
Depreciation and amortization | 15.9 | 11.6 | 27.5 | 1.3 | 28.8 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 86.0 | $ | 25.9 | $ | 111.9 | $ | (23.0 | ) | $ | 88.9 | |||||||||
Adjusted EBITDA as a % of sales | 18.5 | % | 8.4 | % | 14.5 | % | 11.5 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $7.3M. ) | $ | 319.8 | ||||||||||||||||||
Less cash | (52.9 | ) | ||||||||||||||||||
Net Debt (Debt less Cash) | $ | 266.9 | ||||||||||||||||||
Net Leverage Ratio** | 3.0x | |||||||||||||||||||
OMNOVA SOLUTIONS INC. | ||||||||||||||||||||
Non-GAAP and other Financial Matters (Continued) | ||||||||||||||||||||
Trailing Twelve Months Ended May 31, 2017 | ||||||||||||||||||||
Table F | ||||||||||||||||||||
(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 | $ | 55.9 | $ | 1.7 | $ | 57.6 | $ | (35.5 | ) | $ | 22.1 | |||||||||
Interest expense | — | — | — | (23.7 | ) | $ | (23.7 | ) | ||||||||||||
Income (Loss) Before Income Taxes | $ | 55.9 | $ | 1.7 | 57.6 | $ | (59.2 | ) | $ | (1.6 | ) | |||||||||
Management Excluded Items | ||||||||||||||||||||
Restructuring and severance | .7 | 2.2 | 2.9 | 7.3 | 10.2 | |||||||||||||||
Accelerated depreciation on production transfer | — | — | — | — | — | |||||||||||||||
Operational improvements costs | — | — | — | — | — | |||||||||||||||
Asset impairment, facility closure costs and other | .9 | 19.1 | 20.0 | .2 | 20.2 | |||||||||||||||
Environmental costs | — | (2.2 | ) | (2.2 | ) | — | (2.2 | ) | ||||||||||||
Deferred financing fees | — | — | — | 4.9 | 4.9 | |||||||||||||||
Acquisition and integration related expense | — | — | — | .9 | .9 | |||||||||||||||
Vacation policy change | (.6 | ) | (.7 | ) | (1.3 | ) | (.2 | ) | (1.5 | ) | ||||||||||
Subtotal for management excluded items | 1.0 | 18.4 | 19.4 | 13.1 | 32.5 | |||||||||||||||
Adjusted Segment Operating Profit / Corporate Expense before Income Taxes | $ | 56.9 | $ | 20.1 | 77.0 | $ | (46.1 | ) | $ | 30.9 | ||||||||||
Tax expense | (9.2 | ) | ||||||||||||||||||
Adjusted Income | $ | 21.7 | ||||||||||||||||||
Adjusted Diluted Earnings Per Share from Adjusted Income | $ | 0.49 | ||||||||||||||||||
Adjusted Segment Operating Profit as a % Of Sales | 13.4 | % | 5.7 | % | 9.9 | % | ||||||||||||||
Segment / Corporate Capital Expenditures | $ | 11.9 | $ | 11.7 | $ | 23.6 | $ | 1.8 | $ | 25.4 | ||||||||||
Adjusted Segment Operating Profit / Corporate Expense Before Income Taxes | $ | 56.9 | $ | 20.1 | $ | 77.0 | $ | (46.1 | ) | $ | 30.9 | |||||||||
Unallocated corporate interest expense | — | — | — | 21.7 | 21.7 | |||||||||||||||
Segment / Consolidated Adjusted EBIT | 56.9 | 20.1 | 77.0 | (24.4 | ) | 52.6 | ||||||||||||||
Depreciation and amortization | 13.6 | 12.7 | 26.3 | 1.2 | 27.5 | |||||||||||||||
Segment / Consolidated Adjusted EBITDA | $ | 70.5 | $ | 32.8 | $ | 103.3 | $ | (23.2 | ) | $ | 80.1 | |||||||||
Adjusted EBITDA as a % of sales | 16.6 | % | 9.2 | % | 13.3 | % | 10.3 | % | ||||||||||||
Net Leverage | ||||||||||||||||||||
Total short and long-term debt (excluding OID and deferred financing fees of $9.0M. ) | $ | 355.1 | ||||||||||||||||||
Less cash and restricted cash | (68.6 | ) | ||||||||||||||||||
Net Debt (Debt less Cash and Restricted Cash) | $ | 286.5 | ||||||||||||||||||
Net Leverage Ratio** | 3.6 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, 2018 | |||||||||||
Table G | |||||||||||
Adjusted Return on Invested Capital | Trailing Twelve Months Ended | Twelve Months Ended | |||||||||
May 31, | November 30, | ||||||||||
2018 | 2017 | 2016 | |||||||||
Adjusted Net Operating Profit After Tax | (Dollars in Millions) | ||||||||||
Adjusted income from continuing operations | $ | 28.3 | $ | 24.8 | $ | 22.2 | |||||
Interest add back excluding debt premium | 20.7 | 21.5 | 22.7 | ||||||||
Tax effect of interest add back* | (5.2 | ) | (6.5 | ) | (6.8 | ) | |||||
Total Adjusted Net Operating Profit After Tax | $ | 43.8 | $ | 39.8 | $ | 38.1 | |||||
Debt and Equity | |||||||||||
Short-term debt | $ | 4.2 | $ | 4.2 | $ | 4.2 | |||||
Long-term debt | 308.3 | 349.8 | 352.5 | ||||||||
Total shareholders' equity | 51.0 | 38.2 | 109.8 | ||||||||
Total Debt and Equity | $ | 363.5 | $ | 392.2 | $ | 466.5 | |||||
Adjusted Return on Invested Capital | 12.0 | % | 10.1 | % | 8.2 | % | |||||
*Tax rate is based on the Company's estimated normalized annual effective tax rate of 25% for 2018, and 30% for 2017 and 2016. |
OMNOVA SOLUTIONS INC. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(In Millions, Except Per Share Data) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
May 31 | May 31 | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 206.3 | $ | 221.3 | $ | 385.0 | $ | 395.9 | |||||||
Cost of goods sold (exclusive of depreciation) | 154.7 | 168.1 | 286.8 | 298.8 | |||||||||||
Gross profit | 51.6 | 53.2 | 98.2 | 97.1 | |||||||||||
Selling, general and administrative | 27.4 | 30.1 | 56.1 | 59.3 | |||||||||||
Depreciation and amortization | 7.3 | 6.9 | 14.5 | 13.6 | |||||||||||
Asset impairments | .4 | 12.9 | .4 | 12.9 | |||||||||||
Restructuring and severance | .2 | 3.6 | 1.5 | 4.6 | |||||||||||
Interest expense | 4.6 | 5.3 | 9.7 | 10.5 | |||||||||||
Debt issuance costs write-off | — | — | .8 | — | |||||||||||
Acquisition and integration related expense | .3 | — | .9 | — | |||||||||||
Other (income) loss, net | .5 | (1.7 | ) | 1.2 | (1.9 | ) | |||||||||
Total other costs and expenses | 40.7 | 57.1 | 85.1 | 99.0 | |||||||||||
Income (loss) before income taxes | 10.9 | (3.9 | ) | 13.1 | (1.9 | ) | |||||||||
Income tax (benefit) expense | 2.5 | 2.4 | (2.6 | ) | .9 | ||||||||||
Net Income (Loss) | $ | 8.4 | $ | (6.3 | ) | $ | 15.7 | $ | (2.8 | ) | |||||
Basic and diluted income (loss) per share | $ | .19 | $ | (.14 | ) | $ | .35 | $ | (.06 | ) | |||||
Weighted average shares outstanding - basic | 44.6 | 44.4 | 44.6 | 44.3 | |||||||||||
Weighted average shares outstanding - diluted | 44.9 | 44.4 | 44.9 | 44.3 |
OMNOVA SOLUTIONS INC. | |||||||
Consolidated Balance Sheets | |||||||
May 31, 2018 | November 30, 2017 | ||||||
(Unaudited) | (Audited) | ||||||
(Dollars in millions, except share amounts) | |||||||
ASSETS: | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 52.9 | $ | 88.0 | |||
Accounts receivable, net | 113.5 | 99.0 | |||||
Inventories, net | 76.5 | 76.5 | |||||
Prepaid expenses and other | 7.3 | 12.5 | |||||
Total Current Assets | 250.2 | 276.0 | |||||
Property, plant and equipment, net | 203.5 | 208.9 | |||||
Intangible assets, net | 54.2 | 56.0 | |||||
Goodwill | 66.5 | 66.3 | |||||
Other non-current assets | 5.3 | 5.6 | |||||
Total Assets | $ | 579.7 | $ | 612.8 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | |||||||
Current Liabilities | |||||||
Amounts due banks | $ | 4.2 | $ | 4.2 | |||
Accounts payable | 86.4 | 78.3 | |||||
Accrued payroll and personal property taxes | 18.1 | 26.1 | |||||
Employee benefits | 3.2 | 2.9 | |||||
Other current liabilities | 8.5 | 5.1 | |||||
Total Current Liabilities | 120.4 | 116.6 | |||||
Long-term debt | 308.3 | 349.8 | |||||
Post-retirement benefits other than pensions | 6.0 | 6.3 | |||||
Pension liabilities | 67.7 | 70.5 | |||||
Deferred income taxes | 17.3 | 23.4 | |||||
Other non-current liabilities | 9.0 | 8.0 | |||||
Total Liabilities | 528.7 | 574.6 | |||||
Shareholders’ Equity | |||||||
Common stock - $0.10 par value; 135 million shares authorized, 48.3 million shares issued, 44.9 million and 44.8 million outstanding as of May 31, 2018 and November 30, 2017 respectively | 4.8 | 4.8 | |||||
Additional contributed capital | 345.1 | 343.4 | |||||
Retained deficit | (150.4 | ) | (159.2 | ) | |||
Treasury stock at cost; 3.4 million shares and 3.5 million shares at May 31, 2018 and November 30, 2017 respectively | (26.0 | ) | (25.5 | ) | |||
Accumulated other comprehensive loss | (122.5 | ) | (125.3 | ) | |||
Total Shareholders’ Equity | 51.0 | 38.2 | |||||
Total Liabilities and Shareholders’ Equity | $ | 579.7 | $ | 612.8 |
OMNOVA SOLUTIONS INC. | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(Dollars in Millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended May 31, | Six Months Ended May 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Dollars in Millions) | |||||||||||||||
Operating Activities | |||||||||||||||
Net income (loss) | $ | 8.4 | $ | (6.3 | ) | $ | 15.7 | $ | (2.8 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 7.3 | 6.9 | 14.5 | 13.6 | |||||||||||
Impairment of long-lived assets | .4 | 12.9 | .4 | 12.9 | |||||||||||
Amortization and write-off of debt issuance costs | .3 | .4 | 1.4 | .7 | |||||||||||
Non-cash stock compensation expense | 1.3 | 1.0 | 1.8 | 1.0 | |||||||||||
Provision for doubtful accounts | .4 | — | .4 | — | |||||||||||
Provision for obsolete inventories | .1 | (.2 | ) | .7 | .3 | ||||||||||
Deferred income taxes | (.7 | ) | (.4 | ) | (6.5 | ) | — | ||||||||
Other | — | (.1 | ) | — | (.1 | ) | |||||||||
Changes in operating assets and liabilities, net of effect from acquisitions and divestitures of businesses: | |||||||||||||||
Accounts receivable | (6.9 | ) | (24.0 | ) | (15.1 | ) | (26.7 | ) | |||||||
Inventories | 6.1 | 12.1 | (.8 | ) | (1.3 | ) | |||||||||
Other current assets | 7.4 | 5.4 | 5.2 | 6.7 | |||||||||||
Current liabilities | 10.1 | 4.8 | 3.6 | 6.5 | |||||||||||
Other non-current assets | (13.0 | ) | .8 | (7.6 | ) | 1.8 | |||||||||
Other non-current liabilities | 2.4 | .1 | 1.9 | (4.0 | ) | ||||||||||
Contributions to defined benefit plan | — | (.3 | ) | — | (.3 | ) | |||||||||
Net Cash Provided by (Used in) Operating Activities | 23.6 | 13.1 | 15.6 | 8.3 | |||||||||||
Investing Activities | |||||||||||||||
Capital expenditures | (3.9 | ) | (6.2 | ) | (7.1 | ) | (9.9 | ) | |||||||
Proceeds from notes receivable | — | — | — | 3.8 | |||||||||||
Proceeds from sale of businesses | .1 | — | — | — | |||||||||||
Business acquisitions | (.1 | ) | (2.5 | ) | (.1 | ) | (2.5 | ) | |||||||
Net Cash Provided by (Used In) Investing Activities | (3.9 | ) | (8.7 | ) | (7.2 | ) | (8.6 | ) | |||||||
Financing Activities | |||||||||||||||
Proceeds from borrowings | 2.3 | — | 2.3 | — | |||||||||||
Repayment of debt obligations | (3.4 | ) | (1.1 | ) | (44.4 | ) | (2.1 | ) | |||||||
Payments for debt refinancing | (1.0 | ) | — | (1.0 | ) | — | |||||||||
Employee tax withholding related to redemption of common shares | — | (.1 | ) | (.5 | ) | (1.8 | ) | ||||||||
Net Cash Provided by (Used In) Financing Activities | (2.1 | ) | (1.2 | ) | (43.6 | ) | (3.9 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (.8 | ) | 1.1 | .1 | .8 | ||||||||||
Net Increase (Decrease) In Cash And Cash Equivalents | 16.8 | 4.3 | (35.1 | ) | (3.4 | ) | |||||||||
Cash and cash equivalents at beginning of period | 36.1 | 64.3 | 88.0 | 72.0 | |||||||||||
Cash And Cash Equivalents At End Of Period | $ | 52.9 | $ | 68.6 | $ | 52.9 | $ | 68.6 |
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