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Carpet volumes up slightly, OMNOVA Solutions

25
Mar '10
OMNOVA Solutions Inc reported net income of $7.8 million, or $0.17 per diluted share, for the first quarter ended February 28, 2010, compared to a net loss of $0.1 million, or breakeven per diluted share, for the first quarter of 2009. Included in the first quarters of 2010 and 2009 were restructuring and severance charges of $0.3 million and $0.9 million respectively.

Net sales increased $23.7 million, or 14.8%, to $183.9 million for the first quarter of 2010, compared to $160.2 million for the first quarter of 2009. The first quarter increase in sales was the result of improved volumes of $18.7 million, higher selling prices of $3.1 million and foreign currency translation effects of $1.9 million. Gross profit improved to $40.0 million, with margins of 21.8%, in the first quarter of 2010, compared to $31.7 million, and margins of 19.8%, in the first quarter of 2009. The increase in gross profit was primarily due to higher volumes.

"OMNOVA's strong first quarter, which began December 1 and seasonally is our weakest, is indicative of the fundamental improvements we have made in our Company and the consolidation that is occurring in our industries. Our first quarter performance continues a very positive trend which began in the second half of 2008. The Company has made significant progress on many fronts, including the introduction of numerous innovative products, penetration into new, adjacent markets, the continued globalization of our business along with aggressive productivity gains and cost reductions," said Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive Officer.

"This is the fifth consecutive quarter of earnings improvement and the second consecutive quarter of volume improvement. The volume expansion was broad based as both of our segments achieved volume growth in the quarter, and our growth has accelerated over the last few months as the economy begins to rebound. After spending several years improving our cost structure in the face of reduced market demand, we expect to have strong operating leverage moving forward as volumes continue to outpace last year's levels," McMullen added.

During the quarter, paper and specialty volumes increased double digits as compared to a year ago, while carpet volumes were up slightly. The Company's industry-leading technology led to new business wins in most of its markets. Additionally, several customers restarted production lines that had been idled in 2009. February was the seventh consecutive month of year-over-year volume growth. The Company expects continued increases in Performance Chemicals volumes as the economy improves.

OMNOVA Solutions Inc


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