Home / Knowledge / News / Textiles / Omnova Solutions Q2'FY14 net income boosts 17.2% to $3.4mn
Omnova Solutions Q2'FY14 net income boosts 17.2% to $3.4mn
25
Jun '14
OMNOVA Solutions Inc. announced net income of $3.4 million, or $0.07 per diluted share, for the second quarter ending May 31, 2014, compared to net income of $2.9 million, or $0.06 per diluted share, for the second quarter of 2013.  Adjusted Income from Continuing Operations was $4.0 million, or $0.09 per diluted share for the second quarter of 2014, compared to second quarter 2013 Adjusted Income From Continuing Operations of $7.2 million, or $0.16 per diluted share.
 
Second Quarter 2014 Highlights
The Company reported net income of $3.4 million, or $0.07 per diluted share, for the second quarter of 2014, compared to net income of $2.9 million, or $0.06 per diluted share, for the second quarter of 2013.
 
The Company's Adjusted Income from Continuing Operations was $4.0 million, or $0.09 per diluted share, compared to $7.2 million, or $0.16 per diluted share, for the second quarter of 2013.
 
Customer-driven logistics issues led to lower sales and higher operating costs.  These issues negatively impacted operating profit in the quarter by approximately $2.5 million.  The Company has begun shipping the delayed shipments to the customer.
 
Changes in LIFO inventory valuations negatively impacted year-over-year operating profit by $1.7 million in the quarter.
 
Performance Chemicals volumes in the second quarter of 2014 increased by 3.6% on a year-over-year basis.
 
Consolidated Results for the Second Quarter Ended May 31, 2014 
Net sales decreased $4.4 million, or 1.6%, to $266.4 million for the second quarter of 2014, compared to $270.8 million for the second quarter of 2013.  The sales decline was a result of reduced pricing of $9.4 million, or 3.5%, which was partially offset by volume increases of $4.4 million, or 1.6%, and favorable currency translation effects of $0.6 million.  The pricing decline was primarily a result of lower raw material costs and their related impact on index pricing formulas in Performance Materials, and competitive pressure in several markets.
 
Gross profit in the second quarter of 2014 was $52.6 million, or 19.7%, compared to $57.3 million and 21.2% in the second quarter of 2013.  The decline in margins was due primarily to competitive pressure in Performance Materials and higher global logistics costs.  Raw material costs declined $6.5 million in the second quarter versus the same period last year, offset by a year-over-year LIFO inventory valuation adjustment of $1.7 million.  Selling, general and administrative expense (SG&A) in the second quarter of 2014 was $31.5 million, or 11.8% of sales, compared to $31.2 million, or 11.5% of sales, in the second quarter of 2013.
 
Interest expense in the second quarter of 2014 declined to $7.7 million, a decrease of $0.3 million from the second quarter of 2013, due to reduced borrowing spreads as a result of a term loan refinancing in March 2013 and lower foreign borrowings.
 
Click here to view full results.
 

OMNOVA Solutions

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