Omnova Solutions reports lower net debt, increased cash balance in Q1

By Lisa Kerner

Charlotte, N.C., March 21 - Omnova Solutions Inc.'s net debt declined by $21.4 million to $335.1 million during the fiscal first quarter ended Feb. 29.

The company's debt included $250 million of 7 7/8% senior notes due 2018, a $197.5 million term loan due 2017 and $9.5 million of foreign operations borrowing.

Pricing actions, an improved sales mix of higher-margin products, benefits from the company's global manufacturing footprint and continued productivity improvements resulted in increased profits despite softness in market demand, said chairman and chief executive officer Kevin McMullen.

"We also generated positive cash flow during the quarter and increased our cash balance $21 million to over $124 million," McMullen said in a company news release.

There were no outstanding borrowings under the company's U.S. revolving asset-based credit facility, and the available borrowing capacity was $88.4 million, according to the release.

EBITDA improved to $121.4 million at the end of the first quarter and the net leverage ratio to 2.8 times at quarter's end from 3.1 times on Nov. 30.

Compared to the prior-year period, Omnova's first-quarter net sales increased by 1.5%, or $4 million, to $275.9 million, driven in part by improved pricing to cover higher raw material costs.

Net income for the first quarter was $12.7 million, or $0.28 per diluted share, compared with $1.0 million, or $0.02 per diluted share, for the first quarter of 2011.

Omnova is a Fairlawn, Ohio-based provider of specialty chemicals, emulsion polymers and decorative surfaces.

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