OMNOVA Solutions Inc. (OMN) swung to a net profit for the quarter ended Feb. 28, 2017. The company has made a net profit of $3.60 million, or $ 0.08 a share in the quarter, against a net loss of $1.10 million, or $0.03 a share in the last year period. On the other hand, adjusted net income from Continuing Operations for the quarter stood at $2.10 million, or $0.05 a share compared with $1.90 million or $0.04 a share, a year ago.
Revenue during the quarter went down marginally by 0.40 percent to $174.60 million from $175.30 million in the previous year period. Gross margin for the quarter contracted 13 basis points over the previous year period to 25.14 percent. Total expenses were 95.99 percent of quarterly revenues, down from 97.60 percent for the same period last year. This has led to an improvement of 161 basis points in operating margin to 4.01 percent.
Operating income for the quarter was $7 million, compared with $4.20 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $14.90 million compared with $15.30 million in the prior year period. At the same time, adjusted EBITDA margin contracted 19 basis points in the quarter to 8.53 percent from 8.73 percent in the last year period.
"During the quarter, we took a number of steps to continue driving profitable growth," said Anne Noonan, OMNOVA's president and chief executive officer. "We began to implement our 'One OMNOVA' support organization, designed to increase our ability to respond quickly and efficiently to market opportunities. We anticipate annual savings of approximately $3 million when fully implemented by the end of our second quarter."
Operating cash flow remains negative
OMNOVA Solutions Inc. has spent $4.70 million cash to meet operating activities during the quarter as against cash outgo of $1.40 million in the last year period.
Cash flow from investing activities was $0.10 million for the quarter as against cash outgo of $0.90 million in the last year period.
The company has spent $2.70 million cash to carry out financing activities during the quarter as against cash outgo of $0.90 million in the last year period.
Cash and cash equivalents stood at $70.40 million as on Feb. 28, 2017, up 61.84 percent or $26.90 million from $43.50 million on Feb. 29, 2016.
Working capital increases
OMNOVA Solutions Inc. has recorded an increase in the working capital over the last year. It stood at $162.10 million as at Feb. 28, 2017, up 10.05 percent or $14.80 million from $147.30 million on Feb. 29, 2016. Current ratio was at 2.41 as on Feb. 28, 2017, down from 2.48 on Feb. 29, 2016.
Cash conversion cycle (CCC) has decreased to 32 days for the quarter from 64 days for the last year period. Days sales outstanding were almost stable at 54 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 31 days for the quarter compared with 58 days for the previous year period. At the same time, days payable outstanding went up to 53 days for the quarter from 48 for the same period last year.
Debt remains almost stable
Total debt of OMNOVA Solutions Inc. remained almost stable for the quarter at $355.90 million, when compared with the last year period. Total debt was 51.66 percent of total assets as on Feb. 28, 2017, compared with 52.55 percent on Feb. 29, 2016. Debt to equity ratio was at 3.07 as on Feb. 28, 2017, down from 3.10 as on Feb. 29, 2016. Interest coverage ratio improved to 1.35 for the quarter from 0.72 for the same period last year.
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