Specialty chemicals firm Omnova Solutions (OMN) reported unimpressive results for the third quarter when revenues were impacted by the devaluation of assets related to operational restructuring. The results came in below estimates.
Adjusted earnings were $0.18 per share in the August quarter, down from $0.25 per share a year earlier. Analysts had forecast a slower decline. On an unadjusted basis, the Ohio-based company reported a net loss of $0.04 per share, compared to earnings of $0.18 per share in the same period last year.
At $193.6 million, net revenues were down 4% compared to the year-ago quarter. The top-line fell short of estimates as the results were negatively impacted by asset writedowns related to Omnova’s exit from the commodity coated paper market.
The specialty solutions segment registered a 6% sales growth with contributions from recently acquired Portuguese firm Resiquímica, which was more than offset by a sharp fall in the Performance Materials.
A 6% growth in sales of specialty solutions segment was more than offset by a sharp fall in the Performance Materials
“Coatings was particularly strong this quarter, and sales of recently introduced products, developed through our enhanced innovation process, continued to drive the adhesives and sealants business,” said CEO Anne Noonan.
During the quarter, the management authorized a share repurchase program for up to $20 million, reflecting the improvement in cash flow and overall financial condition.
Omnova also reaffirmed its full-year guidance and continues to expect adjusted earnings per share to grow for the fourth consecutive year. Beginning the second half of 2019, the Performance Materials segment is expected to benefit from annual run-rate savings of $7-8 million. As part of scrapping the commodity coated paper business, the plant located at Green Bay, Wisconsin, will be closed.
Omnova’s stock witnessed major fluctuations over the past twelve months and lost about 6%. It closed the last trading session sharply higher, but plunged about 21% after the earnings report Wednesday.