Fairlawn, OH, June 21--Omnova Solutions Inc. said its second quarter earnings shot up to $3.6 million, or 9 cents per share, from $300,000, or a penny per share, last year. Analysts were looking for much lower earnings of 4 cents per share.
Quarterly earnings include severance and restructuring charges of $1 million related to the company's layoffs, while earnings in last year's second quarter included $100,000 of the same expenses. Setting aside the charges, the company posted a profit of 11 cents per share, compared with a penny per share a year ago.
In the first quarter, the company exited a wallcovering distribution business and cut 20 positions to curb expenses.
"The improved results were driven by aggressive cost reductions and improved pricing," said Kevin McMullen, Omnova chairman and chief executive. "We reduced controllable manufacturing costs by $4.6 million during the quarter and we also reduced our selling, general and administrative costs by $6.5 million, or 18.1 percent year-over-year."
Revenue increased 10 percent during the quarter to $209.3 million, up from $189.5 million. The performance chemicals arm of the company led sales gains, as revenue increased 29 percent to $118.1 million. Omnova's building products unit posted a modest sales gain of 4.3 percent, while its decorative products division saw revenue decline 11.3 percent.
Raw materials costs climbed about $27 million in the first quarter. Overall capital expenditures rose to $2.7 million from $1.9 million a year ago.
"While significant progress was made, our margins remain below historical levels and clearly are not where we ultimately expect them to be," said McMullen. "We will continue to take further actions to improve financial performance including developing new value-added products, implementing LEAN SixSigma programs to eliminate waste and increase customer satisfaction, improving operating efficiencies and initiating pricing actions where needed."
