Tag - Chemicals

Quaker Chemical Corp. (NYSE:KWR) has spared the rod and spoiled the shareholders, showering them with profits as it pampers the metals industry with rolling lubricants, corrosion preventatives and finishing compounds. Flashy gains aside, this is a small-cap company rooted in simplicity, values as plain as a Quaker’s clothes closet.

Quakers — the company and the believers — are steeped in peace, friendship, individual ideas of God and appreciation of plainness. Headquartered unsurprisingly in Conshohocken, Pa., and founded in 1918, Quaker finally opened up to the world in 1999, deciding then to refashion its organizational structure to meet customer needs. It went global. Now, Quaker has regional headquarters in The Netherlands, Brazil and China.

Globalization has been worth the wait. Many CEOs rap passionately to shareholders about a company’s values, but Quaker CEO Ronald Naples takes it to another plane: he’s got the backbeat of Buddha and the concept of “character is destiny.” In the company’s 2007 annual report, Naples — who is stepping down as CEO in October — notes that by holding its course through tough times in 2004 and 2005, Quaker was able to boldly profit in 2006 and 2007.

“For me, the heart of this company character is captured in something I call the Quandary of the Wish. It’s been my unspoken guide for a long time, and what we’ve become as a company flows from it and the belief, hard work, and commitment of Quaker people all over the world,” Naples wrote to shareholders. He described the quandary as having to deal with the world as it is, not as wished for, but to also be unafraid to act “in a way that will create the tomorrow we want.”

Today is that tomorrow. Quaker reported record sales of $546 million in 2007, up 19% from 2006 and more than double sales in 1999, when the company went global. Increased sales in China and Europe helped, as did higher selling prices, which softened pressure from higher raw material costs. Margins in gross dollars improved but decreased as a percentage of sales as these costs were up from 2006 . . .

With oil prices skyrocketing and the global economy in a slowdown, it might not seem like an auspicious time to invest in a chemicals company. But Ferro Corp. (NYSE:FOE) is a specialty chemicals company where the operative word is “specialty.”

Founded in 1919 to manufacture frit, the substance used in making porcelain enamel, Cleveland-based Ferro is still a global leader in the field. But, lest your eyes begin to glaze over about such a mundane product, note that Ferro is also geared up for the 21st century as it builds a 177,000-square-foot factory in China to make aluminum paste for the production of solar cells in Asia. It doesn’t get much trendier than that.

In fact, while Ferro has moved decisively since Jim Kirsch took over as chief executive in 2005 to divest non-core businesses, slash fixed costs, close old factories and consolidate production into new state-of-the-art plants, continuity is a key element of Ferro’s success.

Last year, Ferro opened a new tile glaze and stain-making factory in Castellon, Spain to supply growing European tile markets as it closed older tile color facilities in Italy and the Netherlands, and transferred production to Spain. Ferro, which set up its first foreign plant in 1927, has been producing tile color products in Castellon for 42 years.

The establishment of a porcelain enamel and tile coating factor in Suzhou, China in 2001 created a platform for Ferro to get into the solar energy business in the country and break ground last year for its new aluminum paste factory. However, Ferro first got into solar energy 25 years ago and is now the leading supplier of conductive pastes to the worldwide solar industry.

But it’s not history that has investors excited about Ferro now. The company beat analysts’ earnings estimates for the quarter ended March 31, 2008 by 20%, . . .

Specialty chemicals company Koppers Holdings (NYSE:KOP) is feeding off of the commodities boom.

The company markets carbon compounds and commercial wood treatment products to customers in the aluminum, railroad, specialty chemical, utility, rubber and steel industries. Just as several of these industries have been hitting their stride in recent quarters, so has Koppers.

At a market cap of $1 billion, the Pittsburgh-based company is coming off a strong first-quarter in which it experienced double-digit sales growth and set itself up for a strong second-half of 2008. Longtime shareholders in the company have reaped the benefits of the company’s consistent performance.

Koppers had its initial public offering in February 2006 and has seen its stock price more than double over the course of the past two years. This success has been driven by a diverse portfolio of products that are supplied to a global customer base.

The company runs two principal business segments: carbon materials and chemicals, and railroad and utility products. In 2007, the carbon materials and chemicals business accounted for approximately two-thirds of Koppers’ net sales while the railroad and utility products segment made up the remaining third.

The carbon materials and chemicals business segment allows Koppers to serve as one of the world’s largest distillers of coal tar, which is processed into an assortment of products that serve as key inputs in the production of aluminum and the pressure treatment of wood. The railroad and utility segment focuses its efforts around functioning as one of the largest suppliers of railroad crossties in North America.

Innophos Holdings Inc. (Nasdaq:IPHS) is a specialized company with a highly diversified product base: it makes phosphates that are used in a multitude of household and industrial products, from food and laundry detergent to fertilizer and pharmaceuticals.

And like the company’s vast product base, its investment story is a clever concoction of ingredients. Investors and analysts who follow Innophos have recently identified a number of distinct reasons to buy its shares, from its broad diversification that will help protect it from recessionary downturns in certain business segments, to its recent aggressive product price increases. Those price increases were adopted partly in response to price hikes in the raw materials that Innophos buys, but are now expected to produce a net gain for Innophos even after higher materials costs are factored in.

Shares of Innophos, which was founded in 2004 and went public in 2006, closed at a new 52-week high of $26.90 on Thursday. Bear Stearns analyst Scott Burk in May increased his price target on the rapidly rising stock by a full $5 to $32, saying that the company’s first quarter was very strong and its planned price increases “are passing through faster than we previously modeled.”

“Recent discussions with management affirmed … indications that price increases of 50% to 60% will be effective six to nine months before any appreciable cost increases,” Burk wrote. He said he expects this “mismatch” of prices to last through the first quarter of 2009.

As a backdrop to those generally strong fundamentals, there has been a growing expectation in recent months that Innophos’ largest shareholder, the private equity firm Bain Capital, would take advantage of the company’s strong stock price and begin reducing its stake, potentially spurring some near-term weakness. On Thursday, the company announced that Bain had indeed decided to sell a large chunk of its stock. In a prospectus filed the same day, Innophos said that Bain’s planned sale of . . .

Polypore International Inc. (NYSE:PPO)
Charlotte, N.C.
http://www.polypore.net

52-week low/high: $12.15/$25.99
Shares Outstanding: 40.33 million
Market Capitalization: $948 million

Much like the energizer bunny that keeps going and going, Polypore International, Inc. (NYSE:PPO) isn’t showing signs of slowing down any time soon. 

The chemical company develops polymer-based membranes used to separate various materials from liquids and operates in two segments: energy storage and separations media. The energy storage segment develops polypropylene and polyethylene membrane separators for lithium batteries that are used in personal electronic devices, power tools and other electric vehicles. This segment also offers polymer-based membrane separators for lead-acid batteries, which are used in batteries for automobiles and other motor vehicles.

The separation media segment manufactures filtration membranes and modules, which are used in health-care, industrial, and specialty filtration applications. This segment also provides membranes for hemodialysis, blood oxygenation and plasmapheresis applications.

Polypore sells its products and services primarily to manufacturers and converters who incorporate its products into their finished goods. 

One of the keys to this company is that it sells its products to manufacturers whose end markets retain a strong outlook. Demand for lithium-ion batteries for hybrid cars and electric cars (for example) is on the rise as the technology burgeons. With oil breaching new highs everyday, the electric car looks more and more like a viable option for the consumer. According to William Blair & Co. the lithium battery and hemodialysis industries are projected to grow 10% and 7%, respectively in the long term.

Aside from strong end-market demand, the company generates 75% of its revenues overseas — which is good news for investors looking for international exposure as the domestic economy continues to languish. The company announced this month that it acquired Yurie-Wide Corp., a South Korean company that develops technology for the manufacture of polyethylene separators for lithium-ion batteries. The addition broadens its lithium-ion product portfolio and offers a manufacturing base in Asia, essentially augmenting its prospective customer base.

You might not think this business is all that electrifying, but the company’s financial results and share price are exhilarating. Since going public roughly 10 months ago, the chemical company has clocked three solid quarters, surprising to the upside. Mirroring such robust quarters, the share price has appreciated 48% year to date.

For the first quarter ended March 29, 2008, net income rocketed 225% to $10.6 million, or $0.26 per diluted share, from $2.1 million, or $0.08 per share, in the first quarter of 2007. Sales increased 13% to $145.3 million from $129 million for same quarter last year.

These consecutive robust results should come as no surprise. According to William Blair analyst Brian Drab, the company benefits from recurring revenue streams mostly from the replacement-car-battery market and consumable membranes in health-care applications. However, the analyst warns that Polypore’s lithium business, one of the company’s primary long-term growth engines, can be volatile, with growth varying meaningfully from quarter to quarter.

If revenues keep going and going, as purported, so should the stock price.

Note: Polypore International Inc. (NYSE:PPO) is on the "Watch List" of Growth Report, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, Polypore displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Growth Report portfolio at a later date.

Successful investors accept the world as it is, and don't try to contort situations to fit an idyll of what it should be. Consider farming: for those of us outside the realm, the economics can be as foul-smelling as an industrial cattle feedlot; what, with the subsidies, tariffs and usage quotas (think ethanol).

So what's an investor to do? Eschew the sector or deal with the world the way it is and inhale deeply. We prefer the latter action. From the inside, subsidies, tariffs and usage quotas can be as fragrant as French perfume, and we find the fragrance emanating from Newport, Calif.-based American Vanguard Corp. (NYSE:AVD) to be particularly intoxicating, though on first whiff you might think otherwise. 

AMVAC is a small-cap purveyor of insecticides, fungicides, molluscicides, growth regulators and soil fumigants. Although it doesn't benefit directly from government handouts, its customers do.

AMVAC's niche of protecting soil-grown edibles from lower-form freeloaders is a fragmented, diverse market, requiring significant management input and ongoing product research. What's more, it's dominated by mature lower-margin commodity chemicals.

So what's the good news? Large chemical companies tend to be eager sellers of mature lower-margin commodity chemicals, and eager sellers create opportunity. AMVAC's strategy is to acquire these segments from multi-billion dollar conglomerates. In March, AMVAC acquired most of Bayer's cropscience assets related to its facility in Marsing, Idaho. Four months prior to that deal, AMVAC acquired the global Terbufos product line (organophosphate insecticide and nematicide used on . . .

Lead in water is bad news. Lead in gasoline can be the stuff of which successful investments are made, at least in the short term.

Innospec Inc. (Nasdaq:IOSP) is a fuel treatment company that produces lead-based additives used by refiners to increase the octane rating of gasoline. It has three distinct business segments: fuel specialties, active chemicals and octane additives. Its fuel specialties business works to create additives that have the ability to improve fuel efficiency, enhance engine performance and reduce emissions. The active chemicals segment focuses on the household detergent and personal-care markets, and the octane additives segment works to make gasoline burn more efficiently by boosting octane levels.

In 2007, fuel specialties accounted for 62.2% of Innospec’s net sales. Active chemicals made up 22.2% of net sales and octane additives comprised the remaining 15.6%. Although its octane additives business is profitable, the segment has been experiencing declining demand and will likely cease to exist in the next several years. The reason for this trend is that Innospec’s octane-additives business comprises sales of tetra ethyl lead (TEL) for use in automotive gasoline. Global use of TEL has been on the decline since the U.S. enacted the Clean Air Act in the early 1970s and other countries have followed suit in exiting the leaded gasoline market.

The company has anticipated the decline and has done an excellent job of growing its fuel specialties and active chemicals segments to compensate for the expected drop-off. For Innospec’s fourth quarter ended Dec. 31, 2007, the company reported . . .

Omnova Solutions Inc. (NYSE:OMN) CEO Kevin McMullen said market weakness has masked improvements the firm has made to its cost structure, product lineups and pricing. McMullen made the comments during a midday conference call. However, he said the Fairlawn, Ohio-based company, which makes chemicals used in manufacturing carpets, textiles and paper, still expects continued industry weakness through 2009.

Industry sources report that the carpet market was down about 5% in the first quarter compared to a year earlier, McMullen said. New residential housing construction plunged about 20% during the quarter compared to the same three months of 2006, he said.

“Despite the market weakness, our sales in carpet were up slightly over last year,” McMullen said. “Unfortunately, the residential housing slowdown has been longer and deeper than we originally anticipated by our customers and industry experts.”

He said Omnova now expects residential housing weakness into 2009. McMullen said refurbishments have offset some of the residential housing decline. To combat rising material and transportation costs, Omnova announced price increases for the second quarter.

“To address the situation, we have announced price increases for the second quarter for nearly every chemical product line,” McMullen said. “We continue to focus on all actions that will improve margins in this challenging environment.”

The chief executive said Omnova lost future order volume of about 20 million pounds as a carpet customer closed a plan.

After Tuesday’s closing, Omnova said its first-quarter loss narrowed to $3 million, or $0.07 per share, compared with a loss of $5.1 million, or $0.12 per share, a year earlier. Wall Street analysts, on average, anticipated . . .

New Oriental Energy & Chemical Corp. (Nasdaq: NOEC), a specialty chemical and emerging alternative fuel manufacturer in The People's Republic of China, this morning reported strong fiscal 2008 third-quarter results, but lowered its full-year revenue guidance on account of severer-than-expected weather in China.

For the three months ended Dec. 31, 2007, the small cap recorded net income of $2.18 million, or $0.17 per share, compared with $0.95 million, or $0.09 per share for the third quarter of 2007.

Revenues rocketed 94% to $20.17 million from $10.64 million in the third quarter last year.

Fifty-five percent of the company’s revenues for the quarter stemmed from alternative energy sales, principally DME, while 45% was contributed by its traditional fertilizer business. For the third quarter last year, alternative energy contributed 33% to total sales.

The company also said that it saw a 1.3% year over year increase in gross profits on its DME production, which coupled with a 9% increase in gross profits on sales of urea, its principal fertilizer product, contributed to the 130% increase in net profit achieved in the period, which reached $2.2 million or $0.17 per share. This compared with $1 million or $0.09 per share in the same period last year.

Although sometimes “it’s not rocket science,” with American Pacific Corp. (Nasdaq: APFC), a leading manufacturer of specialty and fine chemicals, it really is. 

AMPAC is the exclusive North American provider of Grade I ammonium perchlorate, the predominant oxidizing agent for solid-fuel rockets, booster motors and missiles used in space exploration, commercial satellite transportation and national defense programs.

Being a monopolist in the Grade I ammonium perchlorate (which accounts for 28% of revenue) niche provides an enviable economic mote, as does being an oligopolistic in other markets. AMPAC is one of two North American manufacturers of mono-propellant and bi-propellant propulsion systems and thrusters for satellites and launch vehicles, and is one of the world's major producers of bi-propellant thrusters for satellites.

AMPAC's other significant segment, the more comprehensible fine chemicals, isn't shielded from competition to the extent of specialty chemicals, but it still enjoys barriers to entry because of FDA standards and edicts. The segment manufactures active pharmaceutical ingredients used in drugs for indications in areas such as anti-viral, oncology, and central nervous system; registered intermediates; and HIV-related and influenza-combating drugs.

Not unlike a Russian/American space rendezvous, the segments complement each other: Specialty chemicals typically has higher operating margins than fine chemicals, 32% compared to 16%, but fine chemicals is the growth engine, having increased to 57% of the business in the first quarter of fiscal year 2008, ended Dec. 31, 2007, up from nothing in FY2005. Together they rocketed revenue up to $46.9 million in the first quarter, up 34% from $34.9 million one year ago. Net income in the first quarter soared 383% to $2.9 million, or $0.38 per diluted share, up from $0.6 million, or $0.09 per diluted share, in the year ago period.

Marketocracy is a unique website developed by Ken Kam, former portfolio manager and co-founder of Firsthand Funds, that allows individual investors to manage "virtual" $1 million portfolios. Designed with the same restrictions as a “real” mutual fund, the system allows investors to test their skills against other individual investors and compare their performance against their peers and the professional money management world.

Today, Marketocracy has over 55,000 people managing 65,000 model portfolios.

“We have followed over 10,000 stock positions at any one time and more than four million trades,” Kam says. By comparing the long- and short-term performance of each stock picker and their buys and sells, Kam attempts to identify what he believes are “truly the best investors.”

This lengthy introduction to his strategy is important, as it is this analysis of all the trades within these model portfolios that forms the basis for Kam’s specific stock selections. One example is his Stock Alerts newsletter. He begins by analyzing each of the stock purchases made by those individuals in his system whose performance ranking is in the top 25% of all monitored portfolios.

He then compares these buys — on a stock-by-stock basis — with the buys and sells made by the 75% of investors whose portfolios have underperformed. The third step is to find those stocks that are being bought by the “best” while simultaneously being sold by the “rest.”

From the stocks that pass this step, Kam selects his “buy” recommendations, such as these three small-cap stocks, based on this “best versus the rest” approach.

Investors who stumble across Balchem Corp. (Nasdaq: BCPC) might think it’s a specialty chemical maker. But Balchem, based in the Catskills region of New York state, is much, much more — and much, much less.

Depending on the whim of the service or analyst doing the grouping, one could find Balchem competing in the meat products sector, chemical manufacturing, industrial manufacturing, or specialty chemicals.

Confusing, isn’t it? They’d all be correct, to a certain degree, but also wrong, which could be why Balchem has only really started attracting some substantial interest from institutional investors during this decade, as sales have climbed steadily past $50 million, and topped $100 million during 2006.

Balchem is a 40-year-old New Hampton, N.Y.-based company with three business segments: specialty products, encapsulated/nutritional products and unencapsulated products operating as ARC Specialty Products, Balchem Encapsulates and BCP Ingredients, respectively. Through ARC, it’s the dominant supplier of ethylene oxide, a gas mostly used to make other substances, but also as a fumigant in making spices and cosmetics, and to sterilize medical devices including pacemakers.

The past few years, Balchem has made some strategic acquisitions that fit into its product mix. Balchem enhanced its global presence last year by buying the choline chloride and methylamines businesses from Akzo Nobel Chemicals S.p.A. in Italy. That boosted its production of choline, an amino acid that’s a building block of life. Choline chloride is used in poultry and swine production, but more choline is being consumed by humans as a nutritional supplement.

The proprietary microencapsulation technology developed by Balchem is used in many ways in the food, nutrition, pharmaceutical and specialty animal health markets. For example, in ruminant animals such as cows, vitamins and supplements that need protection from the four stages of the stomach to reach the digestive track can take advantage of microencapsulation to reduce the amount administered — and cutting costs. Aquaculture uses the Balchem encapsulates to get needed substances into fish without dilution by the water.

KMG Chemicals, Inc. (Nasdaq: KMGB) can’t just say no when it finds a niche specialty chemical business that will immediately add to earnings. KMG is hooked on buying mature, no-nonsense lines from big companies — a mind-bendingly staid strategy that’s paying off in profits.

KMG began its five-year acquisition strategy in fiscal 2002. It calls for maximizing cash flow from operations, which enables KMG to acquire accretive companies. KMG’s priority is to focus on integrating the new businesses efficiently, reducing the drag on cash flow and allowing for a sequence of acquisitions.

Progress is reality. Fiscal 2007 through July saw sales rise 26% to $89.8 million and net income grow 134% to $8.8 million, or $0.80 per diluted share. Net sales have grown steadily in the past three years, from $43.6 million in 2004; earnings have risen from $0.23 per share.

Nearly 80% of KMG’s business is in wood treatment products. Its penta products protect electric and telephone utility wood poles from damage, and its creosote products are used as a wood preservative mainly in railroad ties. The company’s animal health segment, representing about 17% of business, offers various goods to protect cattle, swine and poultry from pests. KMG also markets agricultural chemicals to safeguard cotton crops and to control highway weed growth.

Chemicals can enhance performance: record gains in 2007 came from strength in the wood treating business (up 23% from 2006) and in animal health (up 63%). KMG launched a new product, Avenger — an insecticidal cattle ear tag from a business bought in February 2006 — that improved margins and strengthened its balance sheet. 

KMG Chemicals, Inc. (Nasdaq: KMGB) shares are climbing after the maker and distributor of specialty chemicals completed the purchase of Air Products & Chemicals, Inc.’s (NYSE: APD) high purity chemicals business.

“This acquisition is a perfect fit with our proven business model of acquiring mature, specialty chemicals,” CEO Neal Butler said in a statement. “Since signing the definitive agreement in October, we have laid the groundwork for a smooth integration of the HPPC business and have developed enormous respect for the 159 talented, experienced and dedicated HPPC employees who have now joined the KMG team.”

Butler said the acquisition will provide a jump in revenue but warned investors that transition and integration costs associated with the acquisition will lower earnings in 2008.

“Investors should not expect to see the same year-over-year earnings growth this year as occurred in fiscal 2007 due to the significant costs associated with transitioning and integrating this business,” Butler said. “The acquisition will contribute in a much more significant way in fiscal 2009, particularly post-integration.”

Air Products’ high purity chemicals business generated about $87 million in revenue during fiscal 2007. The business segment has production facilities in Italy and Colorado.

In morning trading, KMGB shares are up 3.46%, or $0.50, at $14.96. Over the last 52 weeks, shares have ranged from $9.25 to $28.25.

New Oriental Energy & Chemical Corp. (Nasdaq: NOEC), a specialty chemical and emerging alternative fuel manufacturer, said this morning that it signed several fertilizer sales contracts for urea and ammonium bicarbonate totaling $7.5 million. Separately, the Chinese company said it signed supply agreements guaranteeing its winter coal supply with contracts totaling $4 million for deliveries beginning Dec. 1.

Four of the new sales contracts are for an aggregate of 26,815 tons of urea, the company's largest fertilizer product, for a total of $6.3 million, and represents an estimated 85% of the company's expected fiscal third-quarter urea output.

New Oriental Energy said the average selling price under these contracts was approximately $238 per ton and that it anticipates a gross margin on these sales of more than 18%.

Shares of New Oriental (NOEC) jumped 16.5%, or $0.85, to $6 in pre-market trading. Energy Shares of New Oriental Energy have been trading in the range of $2.93 to $10.10 for the past 52 weeks.

“Don’t use up all the hot water!”

If you’ve ever uttered this, and many of us have while impatiently waiting to shower in the mornings, then your torrid water saviour might well be LSB Industries, Inc. (AMEX: LXU), formed in 1968.

The Oklahoma City-based small cap has two core businesses: chemicals and indoor climate control, but the key to the company’s growth are water source heat pumps (WSHP) and renewable energy geothermal heat pumps (GSP). Sales of these pumps surged 58% to $134 million in 2006 from 2005 and so far in the first nine months of 2007 have grown 30% from 2006 levels.

WSHP's are conventional cooling and heating units connected to a central HVAC system with a cooling tower and small boiler. They help move heat from zone to zone in a building and reduce both energy use and cost. LSB has a 43% U.S. market share for this pump.

Revenues for LSB Industries are split almost equally between the chemicals and indoor climate control segments: For the latter, LSB targets specialized niches of HVAC (Heating, Ventilating and Air Conditioning) building systems. The company enjoys a 41% U.S. market share in hydronic fans coils (air-handling units used in large commercial buildings). Its installed base of three million units includes placements in such New York City landmarks as Rockefeller Center and the Trump Tower.

In May 2007, Business Week named LXU one of its 100 hottest growth companies. The next month, the shares were added to the Russell 2000 and 3000 indices, making LXU a "must-have" stock for funds that track these indices.

With a growing emphasis on green energy, LSB is the nation's leading geothermal heat pump supplier with a 43% market share. Roughly 3/4 of the energy budget for a single-family house is consumed by heating, air conditioning and generating hot water. A geothermal HVAC system replaces a conventional source such as a natural gas furnace and dramatically reduces heating costs since the earth provides "free" energy.

Omnova Solutions Inc. (NYSE: OMN) CEO Kevin McMullen said he remains optimistic that business volume will continue to improve year-over-year through the remainder of 2007.

“Despite the market challenges we face, because of underlying improvements in our business, significant recent new program awards and reduced interest charges from our recapitalization, we continue to expect year-over-year volume and earnings-per-share improvement for the fourth quarter of 2007,” McMullen said during a midday conference call.
 
The chief executive said the chemical company experienced strong performance in its paper division during the fourth quarter, where a new type of latex has been “enthusiastically embraced.” The company also won business contracts at two new mills and has additional trials at other mills, he said.

McMullen said superior products allowed Omnova to generate sales growth in a paper market that is off about 3% compared with last year. Industry experts are optimistic that the paper market will improve modestly next year as a result of demand created by the Olympic Games and the presidential elections, he said.

To expand margins and drive growth, the CEO said the company will focus on developing new products and services, increase prices, grab business from consolidated competitors and tightly monitor discretionary spending. He also said the Omnova plans process improvements by investing in business enterprise systems.

“Our optimism is based on key new business wins, above-industry performance and a host of value-added new product introductions by the company,” McMullen said.

The firm’s priority for cash is paying down debt, but McMullen said the company will look at acquisition opportunities as well.

After Monday’s close, Omnova reported third-quarter net income of $4.5 million, or $0.11 per share, which was in line with Wall Street expectations. During the same period of 2006, Omnova’s net income was $3.3 million, or $0.08 per share. The firm’s revenue for the three months ended August 31 was $196.8 million, above analyst projections of $187 million and compared with $175.1 million a year earlier.

The company’s quarterly cost of goods sold increased about 17% to $160 million, from $137.2 million in the year-ago period.

In midday trading, OMN shares are down 0.86%, or $0.05, at $5.76. Over the last 52 weeks, shares have ranged from $4 to $6.74.