OMNOVA Solutions Inc. (OMN) swung to a net loss for the quarter ended May 31, 2017. The company has made a net loss of $6.30 million, or $ 0.14 a share in the quarter, against a net profit of $7.20 million, or $0.16 a share in the last year period. On the other hand, adjusted net income for the quarter stood at $7.20 million, or $0.16 a share compared with $7.90 million or $0.18 a share, a year ago. Revenue during the quarter grew 9.55 percent to $221.30 million from $202 million in the previous year period. Gross margin for the quarter contracted 487 basis points over the previous year period to 24.04 percent. Total expenses were 99.37 percent of quarterly revenues, up from 91.93 percent for the same period last year. That has resulted in a contraction of 744 basis points in operating margin to 0.63 percent.
Operating income for the quarter was $1.40 million, compared with $16.30 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $22.40 million compared with $23.90 million in the prior year period. At the same time, adjusted EBITDA margin contracted 171 basis points in the quarter to 10.12 percent from 11.83 percent in the last year period.
"During the quarter, we made significant progress on our key strategic initiatives. I am particularly pleased with the growth we saw in our specialty businesses resulting from our investment in marketing, sales, and innovation excellence,” said Anne Noonan, OMNOVA’s president and chief executive officer. "In particular, we had strong growth in oil and gas, non-wovens, elastomeric modifiers, laminates and films,” Noonan continued. “Additionally, we executed, as planned, on the restructuring of our 'One OMNOVA' support functions, driving SG&A reductions. At the end of the quarter, our vitality index (sales from new products introduced over the last five years as a percentage of total sales) was approximately 25%, driven by growth in value-creating innovative specialty products. From a sales perspective, May 2017 was a record month for our strengthened team, with the highest number of new product and customer wins yet. "We are considering all options as we proactively address our unprofitable China coated fabrics business. We expect resolution before the end of July 2017."
Operating cash flow drops significantly
OMNOVA Solutions Inc. has generated cash of $8.30 million from operating activities during the first half, down 57.87 percent or $11.40 million, when compared with the last year period. The company has spent $8.60 million cash to meet investing activities during the first six months as against cash outgo of $5.30 million in the last year period.
The company has spent $3.90 million cash to carry out financing activities during the first six months as against cash outgo of $1.60 million in the last year period.
Cash and cash equivalents stood at $68.60 million as on May 31, 2017, up 13.20 percent or $8 million from $60.60 million on May 31, 2016.
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