Omnova Solutions net loss $0.07 per shareStaff writer ▼ | April 9, 2015
Omnova Solutions announced a net loss of $3.2 million, or $0.07 per share, for the first quarter ending February 28, 2015.
Omnova Net loss $3.2 million in the first quarter
The decline was driven primarily by a year-over-year unfavorable $8.8 million, or approximately $0.14 per share, net inventory revaluation.
Net sales decreased $19 million, or 8.4%, to $206.9 million for the first quarter of 2015, compared to $225.9 million for the first quarter of 2014.
The sales decrease was the result of $12.5 million, or 5.5%, of pricing, primarily driven by contract-based index pricing in certain markets tied to raw material price declines; $4.7 million, or 2.1%, of unfavorable currency translation effects, primarily from the decline of the Euro; and lower sales volume of $1.9 million, or 0.8%, primarily in paper coatings and certain applications in the Company's oil and gas product line.
These were partially offset by increasing volumes in laminates, carpet, specialty coatings, nonwovens, tire cord and elastomeric modifiers.
Gross profit in the first quarter of 2015 was $41.7 million, or 20.2%, compared to $49.1 million, or 21.7%, in the first quarter of 2014. The decline in gross profit was due primarily to the unfavorable net inventory revaluation associated with falling raw material prices, which was only partially offset by higher margins.
Selling, general and administrative expense (SG&A) in the first quarter of 2015 was $29.8 million, compared to $30.6 million in the first quarter of 2014, reflecting successful cost reduction efforts, which were partially offset by increased investments in sales and marketing resources for Omnova's specialty lines of business.
Interest expense in the first quarter of 2015 was $6.8 million, down $0.9 million from the first quarter of 2014, reflecting the lower outstanding debt balance resulting from the $50 million prepayment of the Company's outstanding Senior Notes in November 2014.
Included in Other loss (income) are the costs incurred for activities related to shareholder activism and operational improvements.
Income tax benefit was $1.2 million for the first quarter of 2015, compared to an expense of $1 million in the first quarter of 2014. The Company has approximately $115.1 million of U.S. federal net operating loss carryforwards and $113.9 million of state and local tax net operating loss carryforwards with expiration dates between 2021 and 2034.
Cash flow from operations used $7.4 million in the first quarter of 2015 - seasonally the Company's weakest quarter - compared to $16.1 million used in the same period last year, reflecting the effect of lower raw material costs and internal initiatives to reduce working capital. ■