EX-99.1 2 a10-20486_2ex99d1.htm EX-99.1

Exhibit 99.1

 

NEWS

 

Georgia Gulf Reports Third Quarter 2010 Financial Results

 

ATLANTA, GEORGIA — November 2, 2010 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its third quarter ended September 30, 2010.

 

Georgia Gulf reported net sales of $758.0 million for the third quarter of 2010, 36 percent higher than the net sales of $556.3 million reported in the third quarter of 2009.  The sales increase is primarily due to higher sales prices in vinyl resins and caustic soda, as well as higher volumes in all of our aromatics products.

 

The Company reported operating income of $53.2 million for the third quarter of 2010 compared to operating income of $38.6 million for the third quarter of 2009.  The third quarter of 2009 includes a pre-tax net benefit of $1.8 million resulting from a net restructuring gain.  The increase in operating income was primarily driven by higher ECU values and higher chlorovinyls and aromatics volumes, partially offset by higher raw materials costs and lower sales volumes in building products.

 

“I am pleased to report Georgia Gulf’s strong financial performance during the third quarter of 2010.  We are ahead of the objectives we set at the beginning of the year despite very modest housing and economic growth in North America,” stated Paul Carrico, President and CEO of Georgia Gulf.  “The year to date results reflect the ongoing efforts and dedication of our employees to manage through a tough environment by capitalizing on our business strengths and assets.   Going forward, we are particularly focused on capturing the benefits created by the energy position North America once again has in global chemicals markets,” he concluded.

 

Chlorovinyls

 

In the Chlorovinyls segment, third quarter 2010 sales increased to $316.7 million from $229.1 million during the third quarter of 2009. The increase in sales was primarily due to higher sales prices for caustic soda and higher sales prices and volumes for vinyl resins.  The segment posted operating income of $46.1 million compared to operating income of $30.6 million during the same quarter in the prior year.  The third quarter of 2009 includes $3.5 million of pre-tax restructuring charges.  The increase in operating income was primarily due to higher ECU values and improved PVC operating rates driven by exports in the current quarter compared to the third quarter of 2009.

 

Building Products

 

In the Building Products segment, sales were $222.9 million for the third quarter of 2010, compared to $226.7 million during the same quarter in the prior year. Sales on a constant currency basis decreased 5 percent.  The decrease in sales reflects softening conditions in the North American housing and construction markets, particularly in the U.S. compared to the third quarter of 2009.  The segment’s operating income was $5.6 million for the third quarter of 2010, compared to $16.7 million during the same quarter in the prior year. The third quarter of 2009 includes pre-tax asset impairment and restructuring charges of $2.4 million.  The decrease in operating income is primarily the result of

 


 

higher raw materials costs and lower sales volumes.  Additionally, employee performance based compensation expense was higher in the third quarter of 2010 compared to the third quarter of 2009.  This increase was based on improved year to date results compared to the same period last year as well as compared to 2010 performance targets for the building products segment and total Company performance.

 

Aromatics

 

In the Aromatics segment, sales increased to $218.4 million for the third quarter of 2010 from $100.5 million during the third quarter of 2009. The increase in sales was primarily due to significantly higher volumes for all products driven by strong export demand.  During the third quarter of 2010, the segment recorded operating income of $12.1 million, compared to operating income of $9.3 million during the same quarter in 2009. The increase in operating income was due to a significant increase in volumes, partially offset by lower margins compared to the third quarter of 2009.

 

Liquidity

 

As of September 30, 2010, the Company had $38.7 million of cash on hand as well as $217.5 million of borrowing capacity available under its asset based loan facility.  During the third quarter of 2010 liquidity improved $22.7 million when compared to the end of the second quarter of 2010.  As of June 30, 2010, the Company had $35.2 million of cash on hand and $198.3 million of borrowing capacity available under its asset based loan facility.

 

Financial Statements Update

 

On November 2, 2010 Georgia Gulf filed a current report on Form 8-K indicating that the Company’s financial statements for the quarter ended September 30, 2009, for the year ended December 31, 2009, and for the quarters ended March 31, 2010 and June 30, 2010 should no longer be relied upon due to errors in the financial statement provisions for income taxes relating to the cancellation of debt income (“CODI”) in the third quarter of 2009. The Company is in the process of preparing revised financial statements for these periods.  Investors should review the Company’s Form 8-K related to these restatements filed on November 2, 2010 for more detail.

 

The Company does not expect these restatements to impact its cash taxes for prior periods, previously reported adjusted EBITDA, or to materially change its expected cash taxes in 2010.

 

Due to the ongoing process of preparing revised financial statements for certain prior periods, the Company has provided only selected financial data tables in this press release, including comparative financial data, that the Company believes will not be impacted by the pending restatements of certain historical financial statements.

 

Conference Call

 

The Company will discuss third quarter financial results and business developments via conference call and webcast on Wednesday, November 3 at 10:00 a.m. ET.  To access the Company’s third quarter conference call, please dial 888-552-7928 (domestic) or 706-679-6164 (international). To access the conference call via Webcast, log on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112207&eventID=3442383.  Playbacks will be available from 11:00 a.m. ET Wednesday, November 3rd, to 11:59 p.m. ET Wednesday  November 10th. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 18969225.

 


 

Georgia Gulf

 

Georgia Gulf Corporation is a leading, integrated North American manufacturer of two chemical lines, chlorovinyls and aromatics, and manufactures vinyl-based building and home improvement products. The Company’s vinyl-based building and home improvement products, marketed under Royal Group brands, include window and door profiles, mouldings, siding, pipe and pipe fittings, and deck, fence and rail products. Georgia Gulf, headquartered in Atlanta, Georgia, has manufacturing facilities located throughout North America to provide industry-leading service to customers.

 

Safe Harbor

 

This news release contains forward-looking statements subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to, among other things, our financial statements and results, and expectations of future results.  Forward looking statements are based on management’s assumptions regarding, among other things, general economic and industry-specific business conditions, as well as the execution of our business strategy, and actual results may be materially different. Risks and uncertainties inherent in these assumptions include, but are not limited to, future global economic conditions, economic conditions in the industries to which our products are sold, the effectiveness of certain previously disclosed and recently implemented changes to our internal control over financial reporting, uncertainties regarding certain capital position impacts such as asset sales or acquisitions, our ability to achieve operating efficiencies, competitive conditions, industry production capacity, raw materials and energy costs, and other factors discussed in the Securities and Exchange Commission filings of Georgia Gulf Corporation from time to time, including our Annual Report on Form 10-K/A for the year ended December 31, 2009 and subsequent Quarterly Reports on Form 10-Q and 10-Q/A.

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

SELECT FINANCIAL DATA

 

(Unaudited)

 

(In thousands, except share data)

 

September 30,
2010

 

December 31,
2009

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,650

 

$

38,797

 

Receivables, net of allowance for doubtful accounts of $14,749 in 2010 and $16,453 in 2009

 

330,081

 

208,941

 

Inventories

 

292,428

 

251,397

 

Accounts payable

 

163,587

 

124,829

 

Current portion of long-term debt

 

47,200

 

28,231

 

Long-term debt

 

$

685,002

 

$

710,774

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(In thousands, except per share data)

 

2010

 

2009

 

2010

 

2009

 

Net sales

 

$

758,042

 

$

556,342

 

$

2,125,198

 

$

1,488,016

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

661,238

 

472,643

 

1,926,387

 

1,313,924

 

Selling, general and administrative expenses

 

43,442

 

46,864

 

117,894

 

129,724

 

Long-lived asset impairment charges

 

—

 

4,167

 

—

 

20,357

 

Restructuring costs (gains), net

 

136

 

(5,928

)

271

 

5,927

 

Loss on sale of assets, net

 

—

 

—

 

—

 

62

 

Total operating costs and expenses

 

704,816

 

517,746

 

2,044,552

 

1,469,994

 

Operating income

 

53,226

 

38,596

 

80,646

 

18,022

 

Gain on substantial modification of debt

 

—

 

—

 

—

 

121,033

 

Gain on debt exchange

 

—

 

400,835

 

—

 

400,835

 

Interest expense, net

 

(17,333

)

(30,709

)

(52,592

)

(107,229

)

Foreign exchange gain (loss)

 

116

 

(48

)

(318

)

(981

)

Income before income taxes

 

$

36,009

 

$

408,674

 

$

27,736

 

$

431,680

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(In thousands)

 

2010

 

2009

 

2010

 

2009

 

Net cash provided by operating activities

 

$

32,526

 

$

68,897

 

$

38,518

 

$

48,868

 

Net cash used in investing activities

 

(10,963

)

(5,551

)

(30,196

)

(21,078

)

Net cash used in financing activities

 

(18,337

)

(142,065

)

(8,362

)

(92,419

)

Effect of exchange rate changes on cash and cash equivalents

 

261

 

2,758

 

(107

)

2,993

 

Net change in cash and cash equivalents

 

3,487

 

(75,961

)

(147

)

(61,636

)

Cash and cash equivalents at beginning of period

 

35,163

 

104,300

 

38,797

 

89,975

 

Cash and cash equivalents at end of period

 

$

38,650

 

$

28,339

 

$

38,650

 

$

28,339

 

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

In Thousands

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Segment net sales:

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

316,748

 

$

229,133

 

$

905,271

 

$

702,915

 

Building Products

 

222,908

 

226,688

 

619,207

 

557,122

 

Aromatics

 

218,386

 

100,521

 

600,720

 

227,979

 

Net Sales

 

$

758,042

 

$

556,342

 

$

2,125,198

 

$

1,488,016

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

46,137

 

$

30,573

(1)

$

73,681

 

$

75,466

 

Building Products

 

5,567

 

16,658

(2)

20,632

 

(25,224

)(4)

Aromatics

 

12,072

 

9,347

 

13,935

 

17,709

 

Unallocated corporate

 

(10,550

)

(17,982

)(3)

(27,602

)

(49,929

)(5)

Total operating income (loss)

 

$

53,226

 

$

38,596

 

$

80,646

 

$

18,022

 

 

(1)                                  Includes income of $3.8 million primarily from a $4.0 million credit from the wind up of the Canadian pension plan.

 

(2)                                  Includes $5.1 million of restructuring costs and income of $3.1 million associated with a favorable settlement of a legal claim for less than the reserved amount.

 

(3)                                  Includes $7.7 million of stock compensation expense related to the 2009 Equity and Performance Incentive Plan. Also includes $2.0 million in legal and professional fees related to our financial restructuring, contingency planning and process improvement initiatives.

 

(4)                                  Includes $20.2 million of asset impairments and $3.5 million of net restructuring costs which includes income of $3.1 million associated with the favorable settlement of a legal claim.

 

(5)                                  Includes $2.5 million in consulting fees related to process improvement.

 

CONTACTS:

 

Georgia Gulf Corporation
Investor Relations:

 

Martin Jarosick

(770) 395-4524

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