Omnova reduces debt by $12.1 million in fourth quarter

By Jennifer Lanning Drey

Portland, Ore., Jan. 20 - Omnova Solutions Inc. reduced debt by $12.1 million during the fourth quarter to finish the year with total debt of $188.3 million, Kevin McMullen, the company's chief executive officer, reported Tuesday during Omnova's fourth-quarter earnings conference call.

The debt reduction, combined with a 24% EBITDA improvement during the quarter, allowed Omnova to reduce its term loan B covenant leverage ratio of net debt to EBITDA to 3.7 at the end of the quarter.

The ratio was 4.3 at the end of the third quarter, and the covenant limit is 5.5.

The company's excess credit availability was $34.7 million at Nov. 30, an amount believed to be more than adequate to fund ongoing operations, McMullen said.

Omnova posted fourth-quarter net sales of $23.7 million, which were up 12% from the prior-year quarter, due to the inclusion of $26.2 million of sales from the acquired decorative products Asian business. The company posted net income of $800,000 for the fourth quarter, compared to net income of $3.7 million for the fourth quarter of 2007.

"2008 was a tumultuous year for the global economy. However, Omnova Solutions ended the year on a high note with a profitable fourth quarter and one in which we generated significant cash flow from operations, demonstrating that Omnova can deliver improved profitability in a very difficult environment," McMullen said.

Omnova expects to report improved operating profits and additional debt reduction in the first half of 2009 driven by factors including cost reduction actions that have already been taken and declining raw material costs, he said.

The company's top priorities for 2009 will be margin expansion and profitable growth as the company will look to streamline processes, drive lower discretionary spending and develop new products.

Omnova is a Fairlawn, Ohio, provider of emulsion polymers and specialty chemicals.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.