(RTTNews) - Polymer-based products maker PolyOne Corp. (POL: News ), Wednesday reported a profit for the third quarter versus a loss year-ago, as lower expenses more than offset the fall in revenues for the period. Earnings came in ahead of Wall Street expectations by 9 cents. The company's shares rose 8% in mid-day trading.

Avon Lake, Ohio- based PolyOne reported third-quarter net income of $49.6 million or $0.53 per share compared with a loss of $5.6 million or $0.06 per share in the third quarter of 2008.

Excluding the effect of special items, PolyOne's net income rose to $13.4 million or $0.14 per share from $12.1 million or $0.13 per share in the third quarter of 2008. On average, seven analysts polled by Thomson Reuters expected earnings per share of $0.05 for the quarter. Analysts' estimate typically excludes one-time items.

Stephen Newlin, chairman, president and chief executive officer said, "Third quarter earnings per share before special items and tax items surpassed the third quarter of last year as gross margin expansion offset the impact of volume declines"

The company posted sales of $548.3 million for the third quarter, a 25% decrease compared with $735.1 million last year. Analysts estimated revenues of $522.40 million for the quarter.

While the Specialty platform contributed lower sales at $230.2 million versus $279.9 million, led by a $29.3 million decline in International Color and Engineered Material sales; Performance Products and Solutions yielded $180.9 million in sales, lower than $274.4 million last year. Top-line for the period was further impacted by $51.6 million lower revenues from PolyOne Distribution.
However, cost of sales favorably dropped to $441 million from $669.9 million, offsetting the lackluster sales performance in the third quarter. The company's gross margin before special items, improved 630 points to 18.1% from the third quarter last year. Lower SG&A costs further helped the company to generate $56.2 million income from operations versus $1.3 million year-ago.

For the nine-month period, PolyOne's net income rose to $43.8 million or $0.47 per share from $9.7 million or $0.10 per share last year. Adjusted net income, however, decreased to $21.9 million or $0.24 per share from $31.2 million or $0.33 per share. Sales fell sharply to $1.51 billion from $2.2 billion reported for the same period in the prior-year.

On an optimistic note, the company said that it expects demand to improve and combined with new business gains to result in more revenues for 2010 than 2009.

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