OM Group Inc. (OMG, Financial) filed Quarterly Report for the period ended 2010-03-31.
Om Group Inc. has a market cap of $1.06 billion; its shares were traded at around $34.85 with a P/E ratio of 35.2 and P/S ratio of 1.2. OMG is in the portfolios of David Dreman of Dreman Value Management, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Gross profit increased to $71.8 million in the first quarter of 2010 compared with $26.6 million in the first quarter of 2009. The largest factor affecting the $45.2 million increase in gross profit was the increase in the average cobalt reference price, that resulted in higher Advanced Materials selling prices and increased gross profit by $19.6 million in the first quarter of 2010 compared with the first quarter of 2009. Also impacting the Advanced Materials segment gross profit was a $3.7 million increase in profit associated with copper by-product sales due to both higher price and increased volume and increased cobalt volume ($2.6 million) in the first quarter of 2010 compared to the comparable 2009 period. These improvements to gross profit in the Advanced Materials segment were partially offset by a $4.5 million increase in manufacturing and distribution expenses due to higher volumes and the GTL maintenance shutdown. In the Specialty Chemicals segment, gross profit was favorably impacted by volume ($11.4 million) and favorable pricing/mix ($6.1 million). The EaglePicher Technologies acquisition contributed $1.1 million of gross profit in the first quarter of 2010, after a $1.5 million impact related to purchase accounting adjustments, discussed below. The increase in gross profit as a percentage of net sales (23.7% in the first quarter of 2010 versus 13.9% in the first quarter of 2009) was primarily due to the favorable effect of a rising cobalt price environment in the first quarter of 2010, that resulted in the sale at higher selling prices of products manufactured using lower cost cobalt raw materials as compared to the conditions that existed during the first quarter of 2009 when cobalt prices were falling.
The first quarter of 2009 included a net goodwill impairment charge of $2.6 million that consisted of a $6.8 million charge to write off all of the goodwill related to the Advanced Organics reporting unit partially offset by a $4.1 million adjustment to the estimated goodwill impairment charge of $8.8 million taken in the fourth quarter of 2008 related to the UPC reporting unit as the Company finalized its step-two analysis in the first quarter of 2009.
The Company recorded income tax expense of $4.3 million on income from continuing operations before income tax expense of $28.2 million for the three months ended March 31, 2010, resulting in an effective income tax rate of 15.4%. The first quarter of 2010 included discrete tax benefit items totaling $4.0 million. Of this amount, $2.6 million related to GTL, of which the Companys portion was $1.4 million. The GTL discrete tax item is primarily related to the return-to-provision adjustment as a result of additional depreciation from revaluation of the fixed assets at December 31, 2009. The revaluation is dependent on information provided by the DRC government that was not available at the time of the filing of the Companys 2009 Form 10-K. The Company also recorded a discrete benefit of $0.9 million related to its prior year uncertain tax positions as a result of a change in estimate based on additional information that became available during the first quarter of 2010. Without the discrete items, the effective tax rate for the three months ended March 31, 2010 would have been 29.6%. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland) and a tax holiday in Malaysia. This was partially offset by losses in certain jurisdictions with no corresponding tax benefit (including the U.S.). In the three months ended March 31, 2010, there is no U.S. tax expense related to the planned repatriation of foreign earnings during 2010 due to utilization of foreign tax credits and U.S. losses. Income tax expense in the first quarter of 2009 was $2.2 million on a pre-tax loss of $9.8 million and included discrete tax expense items totaling $4.7 million, including expense of $3.4 million related to a return-to-provision adjustment made in connection with filing the 2008 GTL tax return in the DRC; errors in the 2008 tax provision for GTL totaling $1.9 million; and a DRC tax penalty of $0.6 million; all partially offset by a $1.2 million reversal related to an uncertain tax position in France. Without the discrete items, the effective tax rate would have been 24.9% for the three months ended March 31, 2009. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland). This factor was partially offset by losses in certain jurisdictions with no corresponding tax benefit, and taxes related to the planned repatriation of foreign earnings in 2009.
Income (loss) from continuing operations attributable to OM Group, Inc. was income of $22.5 million, or $0.74 per diluted share, in the first quarter of 2010 compared with a loss of $8.5 million, or $0.28 per diluted share, in the first quarter of 2009. The increase was due primarily to the aforementioned factors.
Net income (loss) attributable to OM Group, Inc. was income of $22.6 million, or $0.74 per diluted share, in the first quarter of 2010 compared with a loss of $8.3 million, or $0.27 per diluted share, in the first quarter of 2009. The increase was due primarily to the aforementioned factors.
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Om Group Inc. has a market cap of $1.06 billion; its shares were traded at around $34.85 with a P/E ratio of 35.2 and P/S ratio of 1.2. OMG is in the portfolios of David Dreman of Dreman Value Management, John Buckingham of Al Frank Asset Management, Inc., Chuck Royce of Royce& Associates, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Net sales increased $111.5 million, or 58%, primarily due to increased volume, the increase in the cobalt reference price and the EaglePicher Technologies acquisition. Increased end-market demand drove higher volumes in both Specialty Chemicals ($26.6 million) and Advanced Materials ($6.6 million). The average cobalt reference price increased from $13.37 in the first quarter of 2009 to $20.11 in the first quarter of 2010, which resulted in higher product selling prices ($26.2 million). Advanced Materials also benefited from an increase in cobalt metal resale ($17.0 million) due to the increase in the average cobalt reference price and increased volume. Advanced Materials copper by-product sales also were higher ($11.4 million) due to the higher average copper price in the first quarter of 2010 compared with the first quarter of 2009. Battery Technologies net sales of $18.6 million for the first quarter of 2010 represents the results of the EaglePicher Technologies acquisition, which was completed January 29, 2010. Excluding the EaglePicher Technologies acquisition, net sales increased $92.9 million, or 48.5%, in the first quarter of 2010 compared with the first quarter of 2009. On a sequential basis, excluding the EaglePicher Technologies acquisition, consolidated net sales increased $43.2 million, or 17.9%, in the first quarter of 2010 compared to the fourth quarter of 2009, primarily due to the increase in the average cobalt reference price and increased demand in both Advanced Materials and Specialty Chemicals.Gross profit increased to $71.8 million in the first quarter of 2010 compared with $26.6 million in the first quarter of 2009. The largest factor affecting the $45.2 million increase in gross profit was the increase in the average cobalt reference price, that resulted in higher Advanced Materials selling prices and increased gross profit by $19.6 million in the first quarter of 2010 compared with the first quarter of 2009. Also impacting the Advanced Materials segment gross profit was a $3.7 million increase in profit associated with copper by-product sales due to both higher price and increased volume and increased cobalt volume ($2.6 million) in the first quarter of 2010 compared to the comparable 2009 period. These improvements to gross profit in the Advanced Materials segment were partially offset by a $4.5 million increase in manufacturing and distribution expenses due to higher volumes and the GTL maintenance shutdown. In the Specialty Chemicals segment, gross profit was favorably impacted by volume ($11.4 million) and favorable pricing/mix ($6.1 million). The EaglePicher Technologies acquisition contributed $1.1 million of gross profit in the first quarter of 2010, after a $1.5 million impact related to purchase accounting adjustments, discussed below. The increase in gross profit as a percentage of net sales (23.7% in the first quarter of 2010 versus 13.9% in the first quarter of 2009) was primarily due to the favorable effect of a rising cobalt price environment in the first quarter of 2010, that resulted in the sale at higher selling prices of products manufactured using lower cost cobalt raw materials as compared to the conditions that existed during the first quarter of 2009 when cobalt prices were falling.
The first quarter of 2009 included a net goodwill impairment charge of $2.6 million that consisted of a $6.8 million charge to write off all of the goodwill related to the Advanced Organics reporting unit partially offset by a $4.1 million adjustment to the estimated goodwill impairment charge of $8.8 million taken in the fourth quarter of 2008 related to the UPC reporting unit as the Company finalized its step-two analysis in the first quarter of 2009.
The Company recorded income tax expense of $4.3 million on income from continuing operations before income tax expense of $28.2 million for the three months ended March 31, 2010, resulting in an effective income tax rate of 15.4%. The first quarter of 2010 included discrete tax benefit items totaling $4.0 million. Of this amount, $2.6 million related to GTL, of which the Companys portion was $1.4 million. The GTL discrete tax item is primarily related to the return-to-provision adjustment as a result of additional depreciation from revaluation of the fixed assets at December 31, 2009. The revaluation is dependent on information provided by the DRC government that was not available at the time of the filing of the Companys 2009 Form 10-K. The Company also recorded a discrete benefit of $0.9 million related to its prior year uncertain tax positions as a result of a change in estimate based on additional information that became available during the first quarter of 2010. Without the discrete items, the effective tax rate for the three months ended March 31, 2010 would have been 29.6%. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland) and a tax holiday in Malaysia. This was partially offset by losses in certain jurisdictions with no corresponding tax benefit (including the U.S.). In the three months ended March 31, 2010, there is no U.S. tax expense related to the planned repatriation of foreign earnings during 2010 due to utilization of foreign tax credits and U.S. losses. Income tax expense in the first quarter of 2009 was $2.2 million on a pre-tax loss of $9.8 million and included discrete tax expense items totaling $4.7 million, including expense of $3.4 million related to a return-to-provision adjustment made in connection with filing the 2008 GTL tax return in the DRC; errors in the 2008 tax provision for GTL totaling $1.9 million; and a DRC tax penalty of $0.6 million; all partially offset by a $1.2 million reversal related to an uncertain tax position in France. Without the discrete items, the effective tax rate would have been 24.9% for the three months ended March 31, 2009. This rate is lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland). This factor was partially offset by losses in certain jurisdictions with no corresponding tax benefit, and taxes related to the planned repatriation of foreign earnings in 2009.
Income (loss) from continuing operations attributable to OM Group, Inc. was income of $22.5 million, or $0.74 per diluted share, in the first quarter of 2010 compared with a loss of $8.5 million, or $0.28 per diluted share, in the first quarter of 2009. The increase was due primarily to the aforementioned factors.
Net income (loss) attributable to OM Group, Inc. was income of $22.6 million, or $0.74 per diluted share, in the first quarter of 2010 compared with a loss of $8.3 million, or $0.27 per diluted share, in the first quarter of 2009. The increase was due primarily to the aforementioned factors.
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