OM Group, Inc. (OMG) Q2 2011 Earnings Call August 4, 2011, 10:00 am ET Executives Troy Dewar - Director, Investor Relations Joe Scaminace - Chairman & CEO Ken Haber - CFO Steve Dunmead - VP and General Manager, Specialties Group Analysts Mike Harrison - First Analysis Securities Saul Ludwig - Northcoast Research Rosemarie Morbelli - Ingalls & Snyder Presentation Operator
At this time, I’ll turn the call over to Joe Scaminace.Joe Scaminace Thank you Troy, and good morning everyone. We continue to generate strong financial and operational result in the second quarter of 2011. This was a quarter notable for its continued sales growth and the generation of significant cash from operations. And of course, the addition of the previously announced VAC acquisition, makes our future look even brighter. Here is what is fueling our continued topline growth. During the quarter, we continued to experience healthy demand for our products across the various markets we serve. For, within Advanced Materials, demand growth was fueled by strength in rechargeable batteries used in portable or electronic devices such as smartphones and tablets, hard metal tooling, used in global industrial production and strong growth for chemical and ceramic applications. Similarly Specialty Chemicals performed well despite lower production resulting from our factory closing in Advanced Organics last year. We also experienced some softness in electronic technologies due to supply disruptions from the natural disaster in Japan. The battery technology segment performed very well in the quarter. EaglePicher drove its quarterly sales to its highest level yet with increased shipments to all of its core end markets. Given our strong sales growth, two issues prevented us from fully maximizing our bottom line results; rising operating expenses and unfavorable movements in foreign exchange rates. However, we continue to generate strong cash flow from operations. Ken will provide more details of this shortly. As we head into the second half of the year we are quite enthusiastic about our near-term outlook and our longer-range potential. We believe demand from our various end markets will remain strong in the second half of 2011. We also believe the newly acquired VAC business which closed earlier this week will accelerate our growth in several ways.
For example VAC has a significant presence in the alternative energy sector providing components that are used to make converters for solar and wind power supply and magnetic materials used in high efficiency wind generators. Within automotive that provides parts and components used by leading automotive suppliers to improve fuel efficiency and reduce emissions in vehicles.And VAC is a provider of value added components used in electrical installation applications such as residential circuit breakers and smart meters in addition to sustainable earnings and attractive end markets. This is important, VAC has high-quality employees and they’re led by an experienced and excellent management team. Based on our experience with the electronic technologies acquisition in 2007 and the battery technology acquisition in 2010, we understand that strong leadership with a proven history of success is critical for ongoing strong performance. We expect no less from VAC. I truly believe OMG is better positioned for long-term value creation that at anytime since I became CEO of this company. Our balance sheet is strong even after completing a $1 billion acquisition. We remain willing and able to fund future growth opportunities. We have exposure to an even greater number of acquisition targets and growth opportunities than ever before. Many of our businesses served fragmented markets that could benefit from strategic consolidation. Along with our growing exposure to alternative energy and our competencies in advanced materials we believe the possibilities for building on the foundation we’ve established are numerous and attractive. With the acquisitions we’ve made over the last several years including VAC, we’ve clearly marked the path that brings us closer to end-users in markets that are strong upside growth potential. These markets are not subject to earnings volatility from fluctuating raw material costs. We also have the size now that provides more options for us to consider in delivering long-term shareholder value. At this time, I’ll turn the call over to Ken Haber to walk us through the details of our financial performance. Read the rest of this transcript for free on seekingalpha.com