Omnova says quarterly results impacted by housing slump, company plans to call high-yield bonds

By Lisa Kerner

Charlotte, N.C., March 20 - Omnova Solutions Inc. president and chief executive officer Kevin McMullen said that a new housing slump in December affected the company's first-quarter 2007 results as Omnova provides chemicals used in carpet backing and laminated cabinets.

However, the company's cash management continues to be a "good-news story," McMullen added as he presented Omnova's 2007 earnings during a conference call on Tuesday.

Omnova ended the quarter with total debt of $165.8 million, down $26.4 million from the first quarter of 2006. First-quarter 2007 total net debt was $143.4 million, compared with $180.9 million at the end of the first quarter of 2006.

"An improved cash balance sheet provides us with the opportunity to call our $165 million 11¼% high-yield bonds by June 2007, which we intend to do," McMullen said. As a result, Omnova expects substantial interest rate savings of some 300 basis points, or $5 million a year.

The company had a net loss for the first quarter of 2007 of $5.1 million, or $0.12 per diluted share, compared with $4.3 million, or $0.10 per diluted share, for the same quarter in 2006.

"Despite what continues to be a challenging environment, we remain optimistic about achieving volume and earnings improvement for the full-year 2007," McMullen added in a company news release.

"Due to the considerable seasonality of our business, the first quarter is historically the weakest. The results are not indicative of our expectations for full-year financial performance and do not reflect underlying improvements being made in our businesses."

Omnova is a specialty chemical company located in Fairlawn, Ohio.

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