OMNOVA Solutions Concludes Year of Solid Profit Improvement and Strong Cash Generation as it Reports Fourth Quarter 2012 and Full Year Results

Tue Jan 22, 2013 8:01am EST

* Reuters is not responsible for the content in this press release.

For best results when printing this announcement, please click on the link
below:

http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130122:nPnCL45793


FAIRLAWN, Ohio,  Jan. 22, 2013  /PRNewswire/ --

Fourth Quarter 2012 Highlights

* For the fourth quarter of 2012, the Company reported income from continuing
operations of  $1.2 million, or  $0.02  per diluted share, compared to  $6.3
million, or  $0.14  per diluted share, in the fourth quarter of 2011.  
* Adjusted Income from Continuing Operations for the fourth quarter of 2012 was 
$3.2 million, or  $0.07  per diluted share, as compared to  $5.9 million, or 
$0.13  per diluted share last year (See Tables B and C).  Results in the quarter
were negatively impacted by LIFO expense of  $1.8 million  (net of tax), or 
$0.04  per diluted share.  
* The Decorative Products segment name has been changed to Engineered Surfaces
to reflect the improved portfolio and importance of innovation and functional
performance in the segment's products.

Full Year 2012 Highlights

* Record Segment Operating Profit of  $93.4 million  in 2012, compared to  $85.2
million  in 2011.  
* Gross profit margins increased to 20.2% versus 18.2% in 2011.  
* Record operating profit in the Specialty Chemicals and Laminates product
lines.  
* Strong cash generation improves balance sheet with a net debt reduction of 
$49.2 million  and a net leverage decline to 2.75 times.  
* Portfolio enhancement and manufacturing footprint improvement with the sale of
wallcovering businesses in 2012 and the coated fabrics manufacturing transition
which will be completed in the first quarter of 2013.

OMNOVA Solutions Inc. (NYSE: OMN) today announced income from continuing
operations of  $1.2 million, or  $0.02  per diluted share, for the fourth
quarter ended  November 30, 2012.  Net income for the fourth quarter was  $0.7
million, or  $0.01  per diluted share.  Adjusted Income from Continuing
Operations for the fourth quarter of 2012 was  $3.2 million, or  $0.07  per
diluted share, as compared to  $5.9 million, or  $0.13  per diluted share last
year (See Tables B and C).  Results in the quarter were negatively impacted by
LIFO expense of  $1.8 million  (net of tax), or  $0.04  per diluted share,
primarily related to the inventory build for the transition of coated fabrics
manufacturing to other, more efficient OMNOVA plants due to the wind-down of
manufacturing operations in  Columbus, Mississippi.

"The fourth quarter results were negatively impacted by weakness in global
demand, particularly in  Europe  and in the North American paper industry, as
well as several one-time unusual items.  During the year, we made structural
improvements in our business portfolio, and took many other positive actions
that drove continued improvement in our full-year profitability, and generated
significant cash flow which allowed us to reduce our net leverage to 2.75
times," said  Kevin McMullen, OMNOVA Solutions' Chairman and Chief Executive
Officer.

"As we look forward to 2013, we are encouraged by a number of actions and market
developments that are expected to gain traction starting in the second quarter
and, as a result, we believe the Company will continue to improve earnings in
fiscal 2013.  Among those actions are several recent new business wins,
including one which was driven by the conversion of U.S.-based styrene butadiene
latex capacity to a new high styrene chemistry application.  Engineered Surfaces
expects further profit improvement beginning in the second quarter after the
wind-down of the  Columbus, Mississippi  manufacturing operations and the
transition of coated fabrics manufacturing to more efficient OMNOVA facilities. 
Later in the year, we will have increased our Performance Chemicals capabilities
in  China  with expanded specialty chemistry offerings to our customers as we
commission the new capacity addition at our Caojing site.  Finally, the Company
continues to make progress on productivity and cost reduction actions with over 
$8 million  of non-raw material improvements expected in 2013.  

"In addition, we are encouraged by a number of market developments including the
continuing momentum of the U.S. housing recovery, rapid growth in oil and gas
exploration and production, a strong outlook for automotive and transportation
segments in  North America  and  Asia, and growing demand, particularly in
developing regions of the world, for personal hygiene products.  OMNOVA has a
strong pipeline of new products and is well positioned to serve these markets,"
said McMullen.

Consolidated Results for the Fourth Quarter Ending  November 30, 2012

Net sales decreased  $47.5 million, or 15.8%, to  $253.9 million  for the fourth
quarter of 2012, compared to  $301.4 million  for the fourth quarter of 2011. 
The sales decrease was driven by price reductions of  $28.0 million, or 9.3%,
reduced volumes of  $16.4 million, or 5.5%, and unfavorable foreign currency
translation effects of  $3.1 million, or 1.0%.

Gross profit in the fourth quarter of 2012 decreased to  $48.5 million, compared
to  $55.8 million in the fourth quarter of 2011, driven primarily by lower sales
volume.  Raw material costs decreased  $31.7 million  in the fourth quarter
versus the same period last year.  Gross profit margins in the fourth quarter of
2012 improved to 19.1%, compared to margins of 18.5% in the fourth quarter of
2011.

Selling, general and administrative expense in the fourth quarter of 2012 was 
$29.1 million, compared to  $26.0 million in the fourth quarter of 2011.  The
increase was due to higher employment-related, research and development and
information technology costs.

Interest expense in the fourth quarter of 2012 was  $8.7 million, a decrease of 
$0.8 million from the fourth quarter of 2011, due primarily to the completed
amortization of an interest rate swap agreement in the second quarter of 2012.

Income tax expense was  $1.4 million, or a 53.8% effective income tax rate for
the fourth quarter of 2012, compared to income tax expense of  $4.5 million, or
a 41.7% effective tax rate in the fourth quarter of 2011. The higher tax rate in
the fourth quarter of 2012 was due primarily to the lower level of income and
non-recurring permanent tax expense items.

Net income for the fourth quarter of 2012 was  $0.7 million, or  $0.01  per
diluted share, compared to a loss of  $10.4 million, or  $0.23  per diluted
share, for the fourth quarter of 2011.  Included in the fourth quarter of 2012
are losses from discontinued operations of  $0.5 million, or  $0.01  per diluted
share, compared to a loss from discontinued operations of  $16.7 million, or 
$0.37  per diluted share, in the fourth quarter of 2011, primarily related to
the decision to exit the global wallcovering businesses and the related
write-down of manufacturing assets in  Columbus, Mississippi.  Income from
continuing operations for the fourth quarter of 2012 was  $1.2 million, or 
$0.02  per diluted share, compared to  $6.3 million, or  $0.14 per diluted
share, for the fourth quarter of 2011.  Adjusted Income From Continuing
Operations (which excludes certain non-recurring expense items detailed in
Tables B and C) was  $3.2 million, or  $0.07  per diluted share, for the fourth
quarter of 2012, compared to  $5.9 million, or  $0.13  per diluted share, in the
fourth quarter of 2011.  Results in the quarter were negatively impacted by LIFO
expense of  $1.8 million (net of tax), or  $0.04  per diluted share, primarily
related to the inventory build for the transition of coated fabrics
manufacturing to other, more efficient OMNOVA plants due to the wind-down of
manufacturing operations in  Columbus, Mississippi.

Consolidated Results for the Year Ending  November 30, 2012

Net sales decreased  $75.6 million, or 6.3%, to  $1,125.5 million  for 2012,
compared to  $1,201.1 million for 2011.  The sales decrease was driven by
reduced volumes of  $60.4 million, or 5.0%, which was partially offset by price
increases of  $0.8 million, or 0.1%.  Currency translation effects were  $16.0
million  unfavorable, or 1.4% of sales.

Gross profit in 2012 increased to  $227.2 million, compared to  $218.6 million
in 2011, driven primarily by a change in sales mix and lower raw material costs.
 Raw material costs decreased  $23.0 million  in 2012 versus fiscal 2011.  Gross
profit margins in 2012 improved to 20.2%, compared to margins of 18.2% in fiscal
2011.

Selling, general and administrative expense in 2012 was  $121.2 million,
compared to  $108.6 million in 2011.  The increase was due to higher
employment-related, research and development and information technology costs.

Interest expense in 2012 was  $36.5 million, a decrease of  $1.5 million from
2011, due primarily to the completed amortization of an interest rate swap
agreement in the second quarter of 2012 and slightly lower pricing for the term
loan.

Income tax expense was  $11.2 million, or a 30.3% effective income tax rate for
2012, compared to income tax expense of  $13.4 million, or a 44.5% effective tax
rate in 2011.  The higher tax rate in 2011 was due primarily to non-recurring
permanent tax expense items related to the ELIOKEM acquisition. Cash tax
payments in the U.S. over the next few years are expected to be minimal as the
Company has  $116.8 million  of U.S. federal net operating loss carryforwards
and  $90.0 million of state and local tax net operating loss carryforwards with
expiration dates between 2022 and 2032.

Net Income for 2012 was  $27.6 million, or  $0.60  per diluted share, compared
to a loss of  $2.8 million, or  $0.06  per diluted share, for 2011.  Included in
2012 net income is income from discontinued operations of  $1.9 million, or 
$0.04  per diluted share, compared to a loss from discontinued operations of 
$19.5 million, or  $0.43  per diluted share, in 2011 primarily related to the
decision to exit the global wallcovering businesses and a related write-down of
manufacturing assets.  Income from continuing operations for 2012 was  $25.7
million, or  $0.56  per diluted share, compared to  $16.7 million, or  $0.37 per
diluted share, for 2011.  Adjusted Income From Continuing Operations (which
excludes certain non-recurring expense items detailed in Tables B and C) was 
$28.5 million, or  $0.63  per diluted share, for 2012, compared to Adjusted
Income From Continuing Operations of  $24.8 million, or  $0.55  per diluted
share, in fiscal 2011.

As of  November 30, 2012, the Company's debt of  $453.6 million was comprised of
 $250.0 million of 7.875% Senior Notes maturing in 2018, a term loan of  $196.0
million maturing in 2017 and  $7.6 million  of foreign operations borrowings. 
The Company continued its strong liquidity position as consolidated cash closed
at  $148.5 million, or an improvement of  $45.4 million in 2012.  On  November
30, 2012, there were no outstanding borrowings under the Company's U.S.
revolving asset-based credit facility, and the available borrowing capacity was 
$74.0 million.  

Net Debt declined  $49.2 million  during fiscal 2012 to  $307.3 million.  The
Net Leverage Ratio (Net Debt / Adjusted EBITDA), as calculated in the Company's
Credit Agreement, improved to 2.75x at  November 30, 2012, compared to 3.12x on 
November 30, 2011  (see Table D).   

Discontinued Operations  

As part of the Company's strategy to focus on businesses with greater global
growth and profit potential, the Company divested its North American and U.K-
based commercial wallcovering businesses in 2012.

These businesses were classified as discontinued operations at the end of 2011. 
The  Columbus, Mississippi  manufacturing facility produced both wallcovering
and coated fabric products for the North American market.  During 2012, the
Company was transitioning the manufacturing of coated fabric products from 
Columbus  to other, more efficient OMNOVA manufacturing sites.  The Company
plans to cease manufacturing activities at the  Columbus  site in  February
2013.

Performance Chemicals Fourth Quarter 2012 Results

Net sales during the fourth quarter of 2012 decreased  $51.9 million, or 21.5%,
to  $189.5 million, compared to  $241.4 million  in the fourth quarter of 2011. 
Sales decreased due to reduced pricing of  $27.8 million, or 11.5%, volume
declines of  $21.1 million, or 8.8%, and unfavorable foreign currency
translation effects of  $3.0 million, or 1.2%.  In the fourth quarter of 2012,
Performance Chemicals generated Adjusted Segment Operating Profit of  $18.5
million, compared to Adjusted Segment Operating Profit of  $22.5 million in the
fourth quarter of 2011 (see Table A).  Included in the fourth quarter of 2012
was LIFO income of  $0.6 million.  Adjusted Segment Operating Profit declined
due to the lower volumes.  The Adjusted Segment Operating Profit margin was 9.8%
for the fourth quarter of 2012, compared to an Adjusted Segment Operating Profit
margin of 9.3% in the fourth quarter of 2011.  

Specialty Chemicals sales were  $114.7 million  for the fourth quarter of 2012
as compared to  $132.6 million  for the fourth quarter of 2011.  Volumes in
Specialty Chemicals were down 2.7% and pricing declined 8.5%, both of which were
partially offset by increased global sales in oilfield drilling, personal
hygiene products, floor care, and tapes and adhesives.  During the quarter,
there were several new product introductions in oil and gas drilling chemicals
that were being trialed by customers, and the Company won new customers in
construction chemicals.  At OMNOVA's newest plant in Caojing,  China, shipments
of tire cord adhesive product increased significantly over the last few months. 
This site also continued working on a major plant expansion which is focused on
growing other specialty chemical product offerings, with an expected completion
in the third quarter of 2013.  This investment will focus on local supply into
the fast-growing Asian personal hygiene market and other specialty segments.  

Paper and Carpet Chemicals sales were  $74.8 million  for the fourth quarter of
2012 as compared to  $108.8 million for the fourth quarter of 2011.  As compared
to last year, fourth quarter volumes in Paper and Carpet Chemicals were down
16.1% due to weak market conditions and market share loss.  Pricing declined
15.2% due to index pricing formulas and competitive activity. During the first
quarter of 2013, Performance Chemicals won several new business awards with
sales expected to ramp up in the second quarter of 2013. Actions continue to be
focused on more cost effective as well as higher performance product solutions
including bio-based co-polymer hybrids and other emulsion chemistries to deliver
greater customer value.  In addition, the Company is currently finalizing
manufacturing capabilities to begin its own internal production of hollow
plastic pigment products for coated paper, packaging, and other applications,
replacing what had been externally produced on a contract basis.  This
technology, which provides opacity and gloss and reduces the need for other
ingredients such as titanium dioxide, was acquired from Dow Chemical in 2010. 
The capability to produce these specialty, high-performing emulsion products was
converted from previously existing styrene butadiene latex manufacturing
capacity as part of OMNOVA's continuing strategy to repurpose manufacturing
assets to meet changing market demands.

On a full-year basis, Performance Chemicals sales were  $864.5 million  in 2012
as compared to  $951.9 million  in 2011.  Sales decreased due to lower pricing
of  $4.4 million, or 0.5%, volume declines of  $66.1 million, or 6.9%, and
unfavorable foreign currency translation effects of  $16.9 million, or 1.8%. 
Adjusted Segment Operating Profit was  $89.6 million  as compared to  $91.2
million  for the same period in 2011 and operating profit margins were 10.4% in
2012, versus 9.6% in 2011.

Engineered Surfaces Fourth Quarter 2012 Results

The Company recently changed the name of its Decorative Products segment to
Engineered Surfaces to better reflect the improved portfolio and the importance
of innovation and functional performance that are valued by customers in the
served markets.

Net sales were  $64.4 million  during the fourth quarter of 2012, an increase of
 $4.4 million, or 7.3%, compared to the fourth quarter of 2011.  The sales
increase was driven primarily by higher volumes in the laminates product line. 
The Adjusted Segment Operating Loss was  $1.0 million  in the fourth quarter of
2012, compared to Adjusted Segment Operating Profit for the fourth quarter of
2011 of  $2.2 million. (see Table A).  Negatively impacting the fourth quarter
of 2012 was LIFO expense of  $3.2 million, primarily related to the inventory
build for the transition of coated fabrics manufacturing from  Columbus,
Mississippi  to other OMNOVA plants.  Excluding this item, Adjusted Segment
Operating Profit for the fourth quarter of 2012 would have been  $2.2 million.

Coated Fabrics sales were  $27.3 million, a decrease of  $1.2 million, or 4.2%,
driven by a decline in domestic transportation, low-margin furniture in  China,
and European contract sales.  During the quarter, the Company was awarded
business from a large Chinese automotive manufacturer which is expected to ramp
up in 2013.  

Laminates and Performance Films sales were  $37.1 million, an increase of  $5.6
million, or 17.8%, as compared to the previous year.  Laminate sales grew across
most market segments led by flooring, appliances, kitchen and bath, store
fixtures and recreational vehicles.  

On a full-year basis, sales were  $261.0 million  in 2012 as compared to  $249.2
million  in 2011 led by price increases of  $5.2 million  and improved volumes
of  $5.7 million.  Adjusted Segment Operating Profit was  $9.3 million  as
compared to  $3.1 million  for the same period in 2011.  During 2012, Engineered
Surfaces incurred  $3.0 million  of non-recurring expense as it transitioned the
manufacturing of coated fabrics products from  Columbus, Mississippi  to other,
more efficient OMNOVA manufacturing sites.

Earnings Conference Call -  OMNOVA Solutions has scheduled its Earnings
Conference Call for  Tuesday, January 22, 2013, at  11:00 a.m. ET.  The live
audio event will be hosted by OMNOVA Solutions' Chairman and Chief Executive
Officer,  Kevin McMullen.  It is anticipated to be approximately one hour in
length and may be accessed by the public from the Company's website
(www.omnova.com).  Webcast attendees will be in a listen-only mode.  Following
the live webcast, OMNOVA will archive the call on its website until  noon ET, 
February 12, 2013.  A telephone replay will also be available beginning at  1:00
p.m. ET  on  January 22, 2013, and ending at 11:59 p.m, ET on  February 12,
2013.  To listen to the telephone replay, callers should dial:  (USA)
800-475-6701 or (Int'l) 320-365-3844.  The Access Code is 276294.

Non-GAAP and Other Financial Measures

Reconciliation of Reported Segment Sales and Operating Profit (Loss) to Net
Sales and Net Income (Loss)

                                                         Three Months Ended                     Year Ended                           
                                                         
November 30,                          
November 30,                        
 (Dollars in millions)                                   2012                2011             2012                2011           
 Performance Chemicals                                                                                                       
 Paper and Carpet Chemicals                              $     74.8         $     108.8     $    343.2         $    399.3    
 Specialty Chemicals                                           114.7              132.6          521.3              552.6    
 Total Performance Chemicals                             $     189.5        $     241.4     $    864.5         $    951.9    
 Engineered Surfaces                                                                                                         
 Coated Fabrics                                          $     27.3         $     28.5      $    117.0         $    114.3    
 Laminates and Performance Films                               37.1               31.5           144.0              134.9    
 Total Engineered Surfaces                                     64.4               60.0           261.0              249.2    
 Total Net Sales                                         $     253.9        $     301.4     $    1,125.5       $    1,201.1  
 Segment Operating Profit (Loss)                                                                                             
 Performance Chemicals                                   $     18.5         $     24.1      $    89.6          $    86.5     
 Engineered Surfaces                                           (3.0)              .7             3.8                (1.3)    
 Interest expense                                              (8.7)              (9.5)          (36.5)             (38.0)   
 Corporate expense                                             (4.2)              (4.5)          (20.0)             (13.8)   
 Acquisition and integration related expense                   -                  -              -                  (2.3)    
 Deferred financing fees write-off                             -                  -              -                  (1.0)    
 Income From Continuing Operations Before                                                                                    
 Income Taxes                                                  2.6                10.8           36.9               30.1     
 Income tax expense                                            (1.4)              (4.5)          (11.2)             (13.4)   
 Income from continuing operations                             1.2                6.3            25.7               16.7     
 (Loss) Income from discontinued operations, net of tax        (.5)               (16.7)         1.9                (19.5)   
 Net Income (Loss)                                       $     .7           $     (10.4)    $    27.6          $    (2.8)    
 Depreciation and amortization                           $     8.1          $     8.8       $    32.0          $    33.5     
 Capital expenditures                                    $     13.3         $     8.6       $    32.8          $    24.1     


This Earnings Release includes Adjusted Segment Operating Profit (Loss),
Adjusted Income From Continuing Operations and Adjusted Diluted Earnings Per
Share which are non-GAAP financial measures as defined by the Securities and
Exchange Commission. Management reviews the adjusted financial measures in
assessing the performance of the business segments and in making decisions
regarding the allocation of resources to the business segments. Management also
believes that the adjusted information is useful for providing investors with an
understanding of the Company's business and operating performance. Management
excludes the items shown in the tables below because management does not
consider them to be reflective of normal operations. These adjusted financial
measurements are not measurements of financial performance under GAAP and such
financial measures should not be considered as an alternative to Segment
Operating Profit (Loss), Net Income (Loss), Diluted Earnings Per Share or other
measures of financial performance determined in accordance with GAAP. These
non-GAAP financial measures may not be comparable to similarly titled measures
reported by other companies. The tables below provide the reconciliation of
these financial measures to the comparable GAAP financial measures.

Presented in Table D is the Company's Net Leverage Ratio (Net Debt/Adjusted
EBITDA) calculation. EBITDA and Net Debt are presented as defined in the
Company's Term Loan Credit Agreement and the calculation of Net Debt includes
restricted cash and outstanding letters of credit.

Non-GAAP and Other Financial Measures  (Continued)



Reconciliation Tables for: (A) Adjusted Segment Operating Profit, (B) Adjusted
Income From Continuing Operations, (C) Adjusted Diluted Earnings Per Share From
Continuing Operations and (D) Net Leverage Ratio Calculation

 TABLE A                                                                                                                                 
 Adjusted Segment Operating Profit Reconciliation               Three Months Ended                    Year Ended                      
                                                                November 30,                          November 30,                    
 (Dollars in millions)                                          2012                2011            2012             2011         
 Performance Chemicals Segment Operating Profit                 $     18.5         $     24.1     $    89.6       $    86.5   
 Restructuring and severance                                          -                  .1            -               1.1    
 Customer trade receivable write-off                                  -                  (1.7)         -               .9     
 Fair value write-up of ELIOKEM inventory acquired                    -                  -             -               2.7    
 Total adjustments to Performance Chemicals' segment                                                                          
 operating profit                                                     -                  (1.6)         -               4.7    
 Performance Chemicals' Adjusted Segment Operating Profit       $     18.5         $     22.5     $    89.6       $    91.2   
 Engineered Surfaces Segment Operating (Loss) Profit            $     (3.0)        $     .7       $    3.8        $    (1.3)  
 Restructuring and severance and other                                .4                 .2            1.5             .7     
 Asset impairment and facility closure costs                          .8                 1.3           1.0             3.7    
 Coated Fabrics manufacturing transition costs                        .8                 -             3.0             -      
 Total adjustments to Engineered Surfaces' segment                                                                            
 operating profit                                                     2.0                1.5           5.5             4.4    
 Engineered Surfaces' Adjusted Segment Operating (Loss) Profit  $     (1.0)        $     2.2      $    9.3        $    3.1    
 Total Adjusted Segment Operating Profit                        $     17.5         $     24.7     $    98.9       $    94.3   
                                                                                                                              


 TABLE B                                                                                                                              
 Adjusted Income From Continuing Operations Reconciliation   Three Months Ended                   Year Ended                       
                                                             November 30,                         November 30,                     
 (Dollars in millions)                                       2012               2011            2012              2011         
 Income From Continuing Operations                           $     1.2         $     6.3      $    25.7        $    16.7   
 Performance Chemicals segment operating profit adjustments                                                                
 per Table A                                                       -                 (1.6)         -                4.7    
 Engineered Surfaces segment operating profit adjustments                                                                  
 per Table A                                                       2.0               1.5           5.5              4.4    
 Corporate restructuring and other                                 -                 -             -                .2     
 Acquisition and integration related expense                       -                 -             -                2.3    
 Deferred financing fees write-off                                 -                 -             -                1.0    
 Income tax expense adjustment(1)                                  -                 (.3)          (1.7)            (5.6)  
 Tax expense for liquidation of foreign subsidiary                 -                 -             -                1.1    
 Tax benefit from foreign tax election                             -                 -             (1.0)            -      
 Adjusted Income From Continuing Operations                  $     3.2         $     5.9      $    28.5        $    24.8   
                                                                                                                           


(1)The income tax adjustment is the additional tax benefit (expense) required to
apply the Company's YTD effective tax rate to Income from Continuing Operations
and the excluded items.

 TABLE C                                                                                                                              
 Adjusted Diluted Earnings Per Share From Continuing         Three Months Ended                   Year Ended                       
 
     Operations Reconciliation                                                                                                   
                                                             November 30,                         November 30,                     
 (Dollars)                                                   2012               2011            2012              2011         
 Diluted Earnings Per Share From Continuing Operations       $     .02         $     .14      $    .56         $    .37    
 Performance Chemicals segment operating profit adjustments                                                                
 per Table A                                                       -                 (.04)         -                .11    
 Engineered Surfaces segment operating profit adjustments                                                                  
 per Table A                                                       .05               .04           .13              .10    
 Acquisition and integration related expense                       -                 -             -                .05    
 Deferred financing fees write-off                                 -                 -             -                .02    
 Income tax expense adjustment                                     -                 (.01)         (.04)            (.12)  
 Tax expense for liquidation of foreign subsidiary                 -                 -             -                .02    
 Tax benefit from foreign tax election                             -                 -             (.02)            -      
 Total Earnings Per Share Impact of Adjusted Items                 .05               (.01)         .07              .18    
 Adjusted Diluted Earnings Per Share From Continuing         $     .07         $     .13      $    .63         $    .55    
 
  Operations                                                                                                             
                                                                                                                           


Non-GAAP and Other Financial Measures  (Continued)

 TABLE D                                                                            
 Net Leverage Ratio Calculation                                                     
                                                 Year Ended                           
 (Dollars in millions)                           2012                2011           
 Income from continuing operations               $    25.7          $    16.7     
 Interest expense                                     33.8               35.3     
 Amortization of deferred financing costs             2.7                2.7      
 Income tax                                           11.2               13.4     
 Depreciation and amortization                        32.0               33.5     
 EBITDA                                          $    105.4         $    101.6    
 Restructuring and severance                          1.0                2.2      
 Asset impairments                                    1.0                3.1      
 Non-cash stock compensation                          4.5                3.6      
 Other                                                -                  3.7      
 Adjusted EBITDA                                 $    111.9         $    114.2    
                                                                                  
                                                                                  
                                                 Year Ended                           
 Net Debt Reconciliation                         2012                2011           
 Total debt as defined by Term Loan B agreement  $    455.8         $    459.6    
 Less cash                                            (148.5)            (103.1)  
 Net Debt                                        $    307.3         $    356.5    
 Adjusted EBITDA                                 $    111.9         $    114.2    
 Net Debt/Adjusted EBITDA                             2.75x              3.12x    
                                                                                  
                                                                                  
                                                                                  


This press release includes "forward-looking statements" as defined by federal
securities laws.  These statements, as well as any verbal statements by the
Company in connection with this press release, are intended to qualify for the
protections afforded forward-looking statements under the Private Securities
Litigation Reform Act of 1995.  Forward-looking statements reflect management's
current expectation, judgment, belief, assumption, estimate or forecast about
future events, circumstances or results and may address business conditions and
prospects, strategy, capital structure, sales, profits, earnings, markets,
products, technology, operations, customers, raw materials, financial condition,
and accounting policies, among other matters.  Words such as, but not limited
to, "will," "may," "should," "projects," "forecasts," "seeks," "believes,"
"expects," "anticipates," "estimates," "intends," "plans," "targets,"
"optimistic," "likely," "would," "could," and similar expressions or phrases
identify forward-looking statements.

All forward-looking statements involve risks and uncertainties.  Many risks and
uncertainties are inherent in business generally and the markets in which the
Company operates or proposes to operate.  Other risks and uncertainties are more
specific to the Company's businesses including businesses the Company acquires. 
The occurrence of such risks and uncertainties and the impact of such
occurrences is often not predictable or within the Company's control.  Such
impacts could adversely affect the Company's results and, in some cases, such
effect could be material.  

All written and verbal forward-looking statements attributable to the Company or
any person acting on the Company's behalf are expressly qualified in their
entirety by the risks, uncertainties, and cautionary statements contained
herein.  Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation, and specifically
declines any obligation other than that imposed by law, to publicly update or
revise any forward-looking statements whether as a result of new information,
future events or otherwise.

Risks and uncertainties that may cause actual results to differ materially from
expected results include, among others:  economic trends and conditions
affecting the economy in general and/or the Company's end-use markets; prices
and availability of raw materials including styrene, butadiene, vinyl acetate
monomer, polyvinyl chloride, acrylonitrile, acrylics and textiles; ability to
increase pricing to offset raw material cost increases; product substitution
and/or demand destruction due to product technology, performance or cost
disadvantages; high degree of customer concentration and potential loss of a
significant customer; supplier, customer and/or competitor consolidation;
customer credit and bankruptcy risk; failure to successfully develop and
commercialize new products; a decrease in regional customer demand due to
reduced in-region production or increased import competition; risks associated
with international operations including political unrest, fluctuations in
exchange rates, and regulatory uncertainty; failure to successfully implement
productivity enhancement and cost reduction initiatives; risks associated with
chemical handling and manufacturing and with acts of war, terrorism, natural
disasters or accidents, including fires, floods, explosions and releases of
hazardous substances; unplanned full or partial suspension of plant operations;
ability to comply, and cost of compliance with legislative and regulatory
changes, including changes impacting environmental, health and safety compliance
and changes which may restrict or prohibit the Company from using or selling
certain products and raw materials; losses from the Company's strategic
alliance, joint venture, acquisition, integration and operational activities;
rapid inflation in health care costs; loss of key employees and inability to
attract and retain new key employees; prolonged work stoppage resulting from
labor disputes with unionized workforce; changes in, and significant
contributions required to meet, pension plan funding obligations; attacks on
and/or failure of the Company's information systems; infringement or loss of the
Company's intellectual property; litigation and claims against the Company
related to products, services, contracts, employment, environmental, safety,
intellectual property and other matters; adverse litigation judgments or
settlements; absence of or inadequacy of insurance coverage for litigation
judgments, settlements or other losses; stock price volatility; availability of
financing at anticipated rates and terms; and loan covenant default arising from
substantial debt and leverage and the inability to service that debt, including
increases in applicable short-term or long-term borrowing rates.

For further information on risks and uncertainties, see the Company's Form 10-K
and 10-Q filings with the Securities and Exchange Commission.

OMNOVA Solutions Inc. is a technology-based company with sales for the fiscal
year ending  November 30, 2012  of  $1.1 billion  and a global workforce of
approximately 2,390.  OMNOVA is an innovator of emulsion polymers, specialty
chemicals, and decorative and functional surfaces for a variety of commercial,
industrial and residential end uses.  Visit OMNOVA Solutions on the internet at 
www.omnova.com.

 OMNOVA SOLUTIONS INC.                                                                                                                        
 
                                                                                                                                            
 
Consolidated Statements of Operations                                                                                                       
 (Dollars in Millions, Except Per Share Data)                                                                                                 
 (Unaudited)                                                                                                                                  
                                                               Three Months Ended                     Year Ended                           
                                                               November 30,                           November 30,                         
                                                                     2012               2011           2012               2011     
 Net Sales                                                     $     253.9        $     301.4     $    1,125.5       $    1,201.1  
 Cost of goods sold                                                  205.4              245.6          898.3              982.5    
 Gross Profit                                                        48.5               55.8           227.2              218.6    
 Selling, general and administrative                                 29.1               26.0           121.2              108.6    
 Depreciation and amortization                                       8.1                8.8            32.0               33.5     
 Asset impairment                                                    .8                 .7             1.0                3.1      
 Restructuring and severance                                         -                  .2             1.0                1.6      
 Interest expense                                                    8.7                9.5            36.5               38.0     
 Deferred financing fees write-off                                   -                  -              -                  1.0      
 Acquisition and integration related expense                         -                  -              -                  2.3      
 Other (income) expense, net                                         (.8)               (.2)           (1.4)              .4       
                                                                     45.9               45.0           190.3              188.5    
 Income From Continuing Operations                                                                                                 
 Before Income Taxes                                                 2.6                10.8           36.9               30.1     
 Income tax expense                                                  1.4                4.5            11.2               13.4     
 Income From Continuing Operations                                   1.2                6.3            25.7               16.7     
 Discontinued Operations                                                                                                           
 Loss from discontinued operations (net of tax)                      (.5)               (16.7)         (4.1)              (19.5)   
 Gain on sale of discontinued operations (net of tax)                -                  -              6.0                -        
 Total discontinued operations                                       (.5)               (16.7)         1.9                (19.5)   
 Net Income (Loss)                                             $     .7           $     (10.4)    $    27.6          $    (2.8)    
 Income (Loss) Per Share                                                                                                           
 Basic                                                                                                                             
 Basic income from continuing operations per share             $     .02          $     .14       $    .56           $    .37      
 Basic income (loss) from discontinued operations per share          (.01)              (.37)          .05                (.43)    
 Basic Net Income (Loss) Per Share                             $     .01          $     (.23)     $    .61           $    (.06)    
 Diluted                                                                                                                           
 Diluted income from continuing operations per share           $     .02          $     .14       $    .56           $    .37      
 Diluted income (loss) from discontinued operations per share        (.01)              (.37)          .04                (.43)    
 Diluted Net Income (Loss) Per Share                           $     .01          $     (.23)     $    .60           $    (.06)    
 Weighted-average shares outstanding - basic                         46.1               45.2           45.6               44.8     
 Weighted-average shares outstanding - diluted                       46.4               45.6           46.0               45.2     


 OMNOVA SOLUTIONS INC.                                                                                         
 
                                                                                                             
 
Consolidated Balance Sheets                                                                                  
 
(Dollars in Millions, except per share amounts)                                                              
                                                                    November 30,         November 30,       
                                                                    2012                 2011               
                                                                    (Unaudited)                            
 ASSETS:                                                                                                  
 Current Assets                                                                                           
 Cash and cash equivalents                                          $        143.0      $        98.9     
 Restricted cash                                                             5.5                 4.2      
 Accounts receivable, net                                                    137.3               163.2    
 Inventories                                                                 96.2                84.5     
 Prepaid expenses and other                                                  7.6                 3.9      
 Deferred income taxes - current                                             10.7                6.5      
 Assets held for sale - current                                              -                   16.6     
 Total Current Assets                                                        400.3               377.8    
 Property, plant and equipment, net                                          222.8               220.8    
 Trademarks and other intangible assets, net                                 79.6                87.5     
 Goodwill                                                                    86.7                88.0     
 Deferred income taxes - non-current                                         65.7                69.1     
 Deferred financing fees                                                     11.3                13.6     
 Other assets                                                                7.3                 8.3      
 Total Assets                                                       $        873.7      $        865.1    
 LIABILITIES AND SHAREHOLDERS' EQUITY:                                                                    
 Current Liabilities                                                                                      
 Amounts due banks                                                  $        9.6        $        11.3     
 Accounts payable                                                            106.9               108.5    
 Accrued payroll and personal property taxes                                 17.7                16.8     
 Employee benefit obligations                                                2.1                 2.2      
 Deferred income taxes - current                                             -                   .1       
 Accrued interest                                                            1.8                 1.8      
 Other current liabilities                                                   7.4                 7.3      
 Liabilities held for sale - current                                         -                   8.5      
 Total Current Liabilities                                                   145.5               156.5    
 Senior notes                                                                250.0               250.0    
 Long-term debt - other                                                      192.6               194.3    
 Post-retirement benefits other than pensions                                7.7                 7.8      
 Pension liabilities                                                         111.4               91.5     
 Deferred income taxes - non-current                                         23.9                28.3     
 Other liabilities                                                           12.4                15.0     
 Total Liabilities                                                           743.5               743.4    
 Shareholders' Equity                                                                                     
 Preference stock - $1.00 par value; 15 million shares authorized;                                        
 none outstanding                                                            -                   -        
 Common stock - $0.10 par value; 135 million shares authorized;                                           
 47.5 million and 46.1 million shares issued at November 30, 2012                                         
 and November 30, 2011, respectively                                         4.7                 4.6      
 Additional contributed capital                                              331.8               324.9    
 Retained deficit                                                            (87.2)              (114.8)  
 Treasury stock at cost; .6 million shares at November 30, 2012                                           
 and .4 million shares at November 30, 2011                                  (4.4)               (2.7)    
 Accumulated other comprehensive loss                                        (114.7)             (90.3)   
 Total Shareholders' Equity                                                  130.2               121.7    
 Total Liabilities and Shareholders' Equity                         $        873.7      $        865.1    


SOURCE  OMNOVA Solutions Inc.


Sandi Noah, Communications, +1-330-869-4292, or Michael Hicks, Investor
Relations, +1-330-869-4411

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.