FAIRLAWN, OH -- OMNOVA Solutions Inc. announced net income of $1.0 million, or $0.02 diluted earnings per share, for the first quarter ended February 28, 2011. This compares to net income of $7.8 million, or diluted earnings per share of $0.17, for the first quarter of 2010. In the first quarter of 2011, there were a number of non-recurring, after-tax charges totaling $5.4 million resulting primarily from the ELIOKEM acquisition. Included in these charges were acquisition expenses, write-off of deferred financing fees, inventory valuation costs, restructuring and severance, and liquidation taxes. Excluding these items, adjusted net income for the first quarter of 2011 was $6.4 million, with adjusted diluted earnings per share of $0.14.
Net sales increased $104.8 million, or 57 percent, to $288.7 million for the first quarter of 2011, compared to $183.9 million for the first quarter of 2010. The sales improvement was driven by $74.7 million of revenues from the ELIOKEM acquisition, while legacy OMNOVA sales increased $30.1 million. Contributing to the legacy OMNOVA sales increase were volume increases of $12.7 million, higher pricing of $16.6 million and $0.8 million of currency translation effects.
Gross profit in the first quarter of 2011 increased to $56.7 million, compared to $40.0 million in the first quarter of 2010, primarily due to the ELIOKEM acquisition. Raw materials in legacy businesses in the first quarter increased $19.0 million versus last year. Gross profit margins in the first quarter of 2011 were 19.6 percent, compared with margins of 21.8 percent in the first quarter of 2010. The decline in gross profit margin percentage was due to a one-time inventory valuation adjustment related to the acquisition, raw material inflation, the effect of Performance Chemicals index pricing in which higher raw material costs are passed to customers with no gross margin benefit, new plant startup charges, and changes in product mix.