EX-99.1 2 a11-9118_4ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS

 

Georgia Gulf Reports First Quarter 2011 Financial Results

 

ATLANTA— May 4, 2011 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its first quarter ended March 31, 2011.

 

Georgia Gulf reported net income of $12.1 million, or $0.35 per diluted share, for the first quarter of 2011, compared to a net loss of $19.0 million, or $0.56 per diluted share, during the same quarter in the previous year.

 

The company reported operating income of $36.6 million for the first quarter of 2011 compared to an operating loss of $10.5 million for the first quarter of 2010.  The increase in operating income was primarily driven by higher ECU values and higher chlorovinyls and aromatics sales volumes and prices, partially offset by higher raw materials costs.  These factors also contributed to net sales of $787.9 million for the first quarter of 2011, 25 percent higher than the net sales of $631.5 million reported in the first quarter of 2010.

 

“We are very pleased with the improvement in our financial results as compared to the first quarter of 2010.   The recovery in the chemicals division continues to be strengthened by the advantaged position of North American energy costs.   The cost advantage of natural gas versus oil on a BTU basis provides a solid foundation to compete in the global petrochemicals markets.  This advantage is expected to continue for at least the next several years and will favorably influence the operating rates in our chlorovinyls chain regardless of the pace of the domestic economic recovery,” said Paul Carrico, president and chief executive officer.  “Alternately, the increased costs of PVC and other raw materials is challenging margins in our Building Products segment. North American demand continues on a very slow pace to recovery as housing and construction markets have remained weak so far in 2011.   We continue to build on the improvements we have made in this business during the last two years to take advantage of the eventual recovery in both the economy and housing.”

 

Chlorovinyls

 

In the Chlorovinyls segment, first quarter 2011 net sales increased to $326.3 million from $287.7 million during the first quarter of 2010. The segment posted operating income of $37.7 million, compared to an operating loss of $8.7 million during the same quarter in the prior year.  The increase in both net sales and operating income was primarily due to higher caustic soda sales prices and higher PVC sales volumes compared to the first quarter of 2010.

 

Aromatics

 

In the Aromatics segment, net sales increased to $304.1 million for the first quarter of 2011 from $190.7 million during the first quarter of 2010. The increase was primarily due to higher sales volumes and prices for all products.  During the first quarter of 2011, the segment recorded operating income of $19.8 million, compared to $9.6 million during the same quarter in 2010. The increase in operating income was primarily due to inventory holding gains that resulted from raw material prices

 


 

increasing throughout the quarter and a significant increase in sales volumes for all aromatics products.

 

Building Products

 

In the Building Products segment, net sales were $157.5 million for the first quarter of 2011, three percent higher compared to the $153.1 million recorded during the same quarter in the prior year. The recently acquired Exterior Portfolio business contributed $12.4 million of sales from February 9, 2011 through March 31, 2011.  Net sales on a constant currency basis excluding the Exterior Portfolio acquisition declined 8 percent.  This sales decline was primarily driven by lower sales volumes in the first quarter of 2011, compared to higher volumes in the first quarter of 2010.  The higher volumes in the first quarter of 2010 were driven in part by housing and construction related tax incentives available in both the United States and Canada, which expired at various times after the end of that quarter.  The segment’s operating loss was $12.1 million for the first quarter of 2011, compared to a $3.7 million operating loss during the same quarter the prior year. The increase in operating loss was primarily due to a change in the geographic sales mix and higher raw materials, conversion and selling costs. The operating loss for the first quarter of 2011 includes a reversal of a non-income tax reserve, Exterior Portfolio acquisition costs and inventory purchase accounting adjustments which are a net benefit of $1.2 million.

 

Liquidity

 

As of March 31, 2011, the company had $33.5 million of cash on hand as well as $213.0 million of borrowing capacity available under its asset-backed loan (ABL) facility.  During the first quarter of 2011, liquidity decreased by approximately $141.1 million when compared to the end of the fourth quarter of 2010 primarily due to the cash used for the Exterior Portfolio acquisition, an increase in working capital needs driven by larger sales volumes in our chemicals business and the seasonal increase in working capital needs of the business.  Compared to liquidity at the end of the first quarter of 2010, liquidity increased by $71.0 million.

 

The company previously announced that on January 14, 2011 it amended and extended its $300 million ABL agreement.  The amended agreement matures in January 2016, two years later than the original maturity date.  The LIBOR-based interest rates on the ABL were reduced from a range of LIBOR plus 325-400 basis points to a range of LIBOR plus 250-300 basis points, and the Base Rate and Canadian Index Rate interest rates were reduced from a range of the Base Rate or Canadian Index Rate plus 225-300 basis points to a range of the Base Rate or Canadian Index Rate plus 150-200 basis points.  The $15 million availability block in the original agreement was also removed and the overall fee structure reduced.

 

Other Events

 

On April 4, 2011, the company redeemed the aggregate principal amount of $22.1 million of its 7.125% Senior Notes due 2013 and 9.5% Senior Notes due 2014.

 

On April 14, 2011, the company announced that, due to reduced ethylene supply and reduced operating rates for chlorine at its production facility in Plaquemine, La., it declared a force majeure event for PVC shipments. The company now expects the force majeure to continue to impact PVC shipments through the end of the second quarter of 2011.

 


 

Conference Call

 

The company will discuss first quarter financial results and business developments via conference call and webcast on Thursday, May 5, at 10:00 a.m. Eastern time.  To access the company’s first-quarter conference call, please dial (877) 312-5406 (domestic) or (706) 679-9856 (international). To access the conference call via webcast, log on to http://phx.corporateir.net/phoenix.zhtml?p=irol-eventDetails&c=112207&eventID=3982088. Playbacks will be available from 1:00 p.m. Eastern time on Thursday, May 5, until 11:59 p.m. Eastern time on Thursday, May 19. Playback numbers are (706) 645-9291 (domestic) or (706) 645-9291 (international). The conference call ID number is 62455512.

 

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 and Exterior Portfolio 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. For more information, visit www.ggc.com.

 

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 relate to, among other things, our belief regarding the possible duration of the force majeure event discussed in this press release and the duration of the resulting impact on customer orders and shipments, our expectations regarding the impact of the force majeure event on our sales and adjusted EBITDA guidance for 2011, 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, uncertainties regarding future prices for our products,  industry capacity levels for our products, raw materials and energy costs and availability, feedstock availability and prices, the length of time it will take our Plaquemine plant to return to normal operating rates and inventory levels, changes in governmental and environmental regulations that may make it more difficult or expensive to operate our businesses or manufacture our products, our ability to generate sufficient cash flows from our business, future economic conditions in the specific industries to which our products are sold, global economic conditions, the effectiveness of certain previously disclosed and recently implemented changes to our internal control over financial reporting, our ability to successfully integrate and execute our business plans for acquisitions 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 for the year ended December 31, 2010.

 

CONTACTS:

 

Investor Relations

Martin Jarosick

(770) 395-4524

 

Media

Alan Chapple

(770) 395-4538

chapplea@ggc.com

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(Unaudited)

 

(In thousands, except par value and share data)

 

March 31,
2011

 

December 31,
2010

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

33,498

 

$

122,758

 

Receivables, net of allowance for doubtful accounts of $9,974 in 2011 and $10,026 in 2010

 

377,152

 

267,662

 

Inventories

 

351,889

 

261,235

 

Prepaid expenses

 

21,038

 

16,606

 

Income tax receivables

 

778

 

899

 

Deferred income taxes

 

10,470

 

7,266

 

Total current assets

 

794,825

 

676,426

 

Property, plant and equipment, net

 

669,075

 

653,137

 

Goodwill

 

215,465

 

209,631

 

Intangible assets, net of accumulated amortization of $12,421 in 2011 and $11,873 in 2010

 

48,267

 

14,351

 

Deferred income taxes

 

8,626

 

8,078

 

Other assets, net

 

86,539

 

89,927

 

Non-current assets held for sale

 

14,151

 

14,151

 

Total assets

 

$

1,836,948

 

$

1,665,701

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current portion of long-term debt

 

$

61,656

 

$

22,132

 

Accounts payable

 

237,308

 

132,639

 

Interest payable

 

13,050

 

22,558

 

Income taxes payable

 

4,865

 

2,910

 

Accrued compensation

 

14,927

 

38,382

 

Liability for unrecognized income tax benefits and other tax reserves

 

2,918

 

8,822

 

Other accrued liabilities

 

51,309

 

48,536

 

Total current liabilities

 

386,033

 

275,979

 

Long-term debt

 

702,213

 

667,810

 

Liability for unrecognized income tax benefits

 

48,692

 

46,884

 

Deferred income taxes

 

199,168

 

189,805

 

Other non-current liabilities

 

38,503

 

40,631

 

Total liabilities

 

1,374,609

 

1,221,109

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock—$0.01 par value; 75,000,000 shares authorized; no shares issued

 

—

 

—

 

Common stock—$0.01 par value; 100,000,000 shares authorized; shares issued and outstanding: 33,968,489 in 2011 and 33,962,291 in 2010

 

340

 

340

 

Additional paid-in capital

 

476,920

 

476,276

 

Accumulated deficit

 

(19,686

)

(31,814

)

Accumulated other comprehensive income (loss), net of tax

 

4,765

 

(210

)

Total stockholders’ equity

 

462,339

 

444,592

 

Total liabilities and stockholders’ equity

 

$

1,836,948

 

$

1,665,701

 

 

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

(In thousands, except earnings per share data)

 

2011

 

2010

 

Net sales

 

$

787,936

 

$

631,450

 

Operating costs and expenses:

 

 

 

 

 

Cost of sales

 

712,228

 

604,371

 

Selling, general and administrative expenses

 

38,485

 

37,858

 

Restructuring costs (income)

 

582

 

(305

)

Total operating costs and expenses

 

751,295

 

641,924

 

Operating income (loss)

 

36,641

 

(10,474

)

Interest expense, net

 

(16,469

)

(17,835

)

Foreign exchange loss

 

(600

)

(5

)

Income (loss) before income taxes

 

19,572

 

(28,314

)

Provision (benefit) for income taxes

 

7,444

 

(9,283

)

Net income (loss)

 

$

12,128

 

$

(19,031

)

Earnings (loss) per share:

 

 

 

 

 

Basic

 

$

0.35

 

$

(0.56

)

Diluted

 

$

0.35

 

$

(0.56

)

Weighted average common shares:

 

 

 

 

 

Basic

 

33,967

 

33,720

 

Diluted

 

33,981

 

33,720

 

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

(In thousands)

 

2011

 

2010

 

Cash flows from operating activities:

 

 

 

 

 

Net income (loss)

 

$

12,128

 

$

(19,031

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

25,449

 

24,887

 

Foreign exchange gain

 

(214

)

(531

)

Deferred income taxes

 

2,755

 

(12,222

)

Excess tax benefits from share-based payment arrangements

 

(13

)

(583

)

Stock based compensation

 

805

 

712

 

Other non-cash items

 

(157

)

6,188

 

Change in operating assets, liabilities and other

 

(117,355

)

(41,429

)

Net cash used in operating activities

 

(76,602

)

(42,009

)

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(10,869

)

(10,955

)

Proceeds from sale of property, plant and equipment, and assets held-for sale

 

22

 

770

 

Acquisition, net of cash acquired

 

(71,623

)

—

 

Net cash used in investing activities

 

(82,470

)

(10,185

)

Cash flows from financing activities:

 

 

 

 

 

Repayments on ABL revolver

 

(72,304

)

(132,378

)

Borrowings on ABL revolver

 

143,118

 

193,562

 

Repayment of long-term debt

 

—

 

(13

)

Fees paid to amend or issue debt facilities

 

(1,480

)

(3,020

)

Excess tax benefits from share-based payment arrangements

 

13

 

3,328

 

Net cash provided by financing activities

 

69,347

 

61,479

 

Effect of exchange rate changes on cash and cash equivalents

 

465

 

(148

)

Net change in cash and cash equivalents

 

(89,260

)

9,137

 

Cash and cash equivalents at beginning of period

 

122,758

 

38,797

 

Cash and cash equivalents at end of period

 

$

33,498

 

$

47,934

 

 


 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

SEGMENT INFORMATION

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(In thousands)

 

2011

 

2010

 

Segment net sales:

 

 

 

 

 

Chlorovinyls

 

$

326,319

 

$

287,711

 

Building Products

 

157,504

 

153,050

 

Aromatics

 

304,113

 

190,689

 

Net Sales

 

$

787,936

 

$

631,450

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

Chlorovinyls

 

$

37,740

(1)

$

(8,652

)(3)

Building Products

 

(12,066

)(2)

(3,673

)(4)

Aromatics

 

19,782

 

9,645

 

Unallocated corporate

 

(8,815

)

(7,794

)

Total operating income (loss)

 

$

36,641

 

$

(10,474

)

 

(1)          Includes $0.8 million reversal of non-income tax reserve

(2)          Includes $2.4 million acquisition deal costs and inventory purchase accounting adjustment, offset by $3.6 million reversal of non-income tax reserve

(3)          Includes $1.0 million of income primarily due to reversal of remediation accrued as restructuring expense in the previous period

(4)          Includes $0.6 million for restructuring costs

 

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