2009 cost reductions now expected to exceed $23 mn - OMNOVA

30 Sep '09

5 min read

EBITDA, as defined in the Company's borrowing agreements for the calculation of the net leverage ratio, was $18.0 million for the third quarter of 2009, compared to $15.1 million for the third quarter of 2008. EBITDA for the twelve months ended August 31, 2009 was $53.2 million, compared to $44.6 million for the twelve months ended August 31, 2008. OMNOVA's leverage ratio of Net Debt-to-EBITDA improved for the fifth consecutive quarter, ending at 2.3 on August 31, 2009 and well below the loan covenant maximum of 5.5. An explanation of how the Company defines EBITDA and Net Debt and reconciliations of EBITDA to income (loss) from continuing operations and Net Debt to total debt are provided in the Non-GAAP and Other Financial Measures section of this earnings release.

Performance Chemicals - Net sales during the third quarter of 2009 decreased 28.2%, to $104.4 million, compared to $145.5 million in the third quarter of 2008. The decrease was driven by lower selling prices of $35.3 million, volume decreases of $4.5 million, or 3.1%, and foreign currency translation effects of $1.3 million. Segment operating profit was $14.8 million for the third quarter of 2009, up $4.3 million compared to the third quarter of 2008. The year-over-year operating profit improvement was driven by cost reduction actions in both manufacturing and SG&A and lower raw material costs, which were partially offset by reduced volumes and lower average selling prices.

While volumes were slightly weaker on a year-over-year basis, pounds sold in the third quarter of 2009 improved 12% as compared to the second quarter of 2009. The Company's industry-leading technology led to new business wins in several markets.

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OMNOVA Solutions Inc

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