EX-99.1 2 a5136068ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Georgia Gulf Reports First Quarter Net Income of $.98 Per Diluted Share ATLANTA--(BUSINESS WIRE)--April 27, 2006--Georgia Gulf Corporation (NYSE: GGC) today reported net income of $33.7 million or $.98 per diluted share on sales of $567.9 million for the first quarter of 2006. This compares to net income of $38.7 million or $1.13 per diluted share on sales of $645.4 million for the first quarter of 2005. During the first quarter of 2006, the chlorovinyls business reported its second highest quarterly operating income; however, the improvement was more than offset by the decline in the Company's aromatics business. "Our chlorovinyls business experienced a strong first quarter as we reported our second highest quarterly operating income of $75.7 million in that segment," said Ed Schmitt, chairman, president and CEO, Georgia Gulf Corporation. "Our vinyl resins and caustic soda businesses operated at high rates and sales prices were up year-over-year. However, aromatics sales volumes and sales prices declined significantly compared to the first quarter of 2005, primarily due to continued pressure from global industry capacity additions. "As for the second quarter of 2006, our aromatics business is expected to perform similarly to the first quarter, and we believe the chlorovinyls business will continue to perform well." First quarter 2006 net income of $33.7 million increased compared to fourth quarter 2005 net income of $18.7 million or $.55 per diluted share on sales of $518.9 million. The improvement reflects higher sales volumes for all products as well as lower raw materials and energy costs, which more than offset lower sales prices for most products. Chlorovinyls Georgia Gulf's chlorovinyls business provided strong first quarter operating income of $75.7 million, an increase of 28 percent compared to first quarter of 2005 operating income of $59.0 million. The improvement reflects higher sales prices for chlorovinyls products due to continued high industry operating rates. Compared to the fourth quarter of 2005, chlorovinyls operating income increased by 39 percent from $54.5 million to $75.7 million in the first quarter of 2006. This increase was the result of increased sales volumes for chlorovinyls products as well as lower energy and ethylene costs, which more than offset lower vinyl resins sales prices. During the first quarter, vinyl resins sales prices fell from fourth quarter levels, which were higher as a result of hurricane-related issues. Aromatics Georgia Gulf's aromatics business had an operating loss of $5.0 million for the first quarter of 2006 compared to operating income of $14.3 million for the first quarter of 2005. This $19.3 million decline was the result of significantly lower sales volumes and sales prices for all aromatics products, primarily due to global industry capacity additions and decreased export demand. Lower benzene prices only partially offset these declines. Comparing sequential quarters, the aromatics business operating loss of $5.0 million for the first quarter of 2006 improved from the operating loss of $14.1 million for the fourth quarter of 2005. The lower first quarter 2006 loss compared to the fourth quarter of 2005 loss reflects improved sales volumes for all aromatics products as production and demand resumed following hurricane outages. In addition, propylene and benzene prices declined from fourth quarter 2005 levels and more than offset lower sales prices for cumene and acetone. Other The results for the first quarter include a $.40 per share adverse FIFO impact. In addition, the first quarter includes additional share-based compensation expense of $.09 per share. Conference Call Georgia Gulf will host a conference call to discuss first quarter results in more detail at 9:00 AM ET on Friday, April 28, 2006. To access the teleconference, please dial 888-552-7928 (domestic) or 706-679-3718 (international). To access the teleconference via Webcast, log on to http://audioevent.mshow.com/295707/. Playbacks will be available from 10:00 AM ET Friday, April 28, to midnight ET Friday, May 5. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 7682689. Georgia Gulf, headquartered in Atlanta, is a major manufacturer and marketer of two integrated product lines, chlorovinyls and aromatics. Georgia Gulf's chlorovinyls products include chlorine, caustic soda, vinyl chloride monomer and vinyl resins and compounds. Georgia Gulf's primary aromatic products include cumene, phenol and acetone. 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 are based on management's assumptions regarding business conditions, 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 the company sells, industry production capacity, raw material and energy costs and other factors discussed in the Securities and Exchange Commission filings of Georgia Gulf Corporation, including our annual report on Form 10-K for the year ended December 31, 2005 and our subsequent reports on Form 10-Q. GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, In Thousands 2006 2005 ------------ ---------- ------------ ASSETS Cash and cash equivalents $ 13,126 $ 14,298 Receivables, net of allowance 111,244 118,193 Inventories 196,633 195,628 Prepaid expenses and other 10,404 13,306 Deferred income taxes 4,986 5,091 ----------- ----------- Total current assets 336,393 346,516 Property, plant and equipment, net 398,330 401,412 Goodwill 77,720 77,720 Other assets, net 164,086 175,305 ----------- ----------- Total assets $ 976,529 $ 1,000,953 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 30,000 $ 49,300 Accounts payable 189,522 202,179 Interest payable 2,788 1,226 Accrued compensation 10,304 14,986 Income taxes payable 14,333 1,258 Accrued liabilities 15,027 15,237 ----------- ----------- Total current liabilities 261,974 284,186 Long-term debt, less current portion 194,339 229,339 Deferred income taxes 103,645 107,959 Other non-current liabilities 16,958 16,457 Stockholders' equity 399,613 363,012 ----------- ----------- Total liabilities and stockholders' equity $ 976,529 $ 1,000,953 =========== =========== Common shares outstanding 34,203 34,238 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, ------------------ In Thousands (except per share data) 2006 2005 ------------------------------------ --------- -------- Net sales $567,873 $645,409 -------- -------- Operating costs and expenses Costs of sales 488,885 563,099 Selling, general and administrative 20,213 15,850 -------- -------- Total operating costs and expenses 509,098 578,949 -------- -------- Operating income 58,775 66,460 Interest expense, net (4,337) (5,447) -------- -------- Income before income taxes 54,438 61,013 Provision for income taxes 20,757 22,270 -------- -------- Net income $ 33,681 $ 38,743 ======== ======== Earnings per share: Basic $ 0.99 $ 1.15 Diluted $ 0.98 $ 1.13 Weighted average common shares: Basic 34,048 33,775 Diluted 34,376 34,331 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended In Thousands March 31, ------------ ----------------- 2006 2005 --------- -------- Cash flows from operating activities: Net income $ 33,681 $ 38,743 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 15,889 15,678 Deferred income taxes (4,209) (2,372) Tax (deficiency) benefit related to stock plans (302) 1,353 Stock based compensation 5,571 816 Other noncash items 267 (1,244) Change in operating assets, liabilities and other 16,543 (79,792) -------- -------- Net cash provided by (used in) operating activities 67,440 (26,818) -------- -------- Cash flows used in investing activities Capital expenditures (11,963) (5,706) -------- -------- Cash flows from financing activities: Net change in revolving line of credit (54,300) 15,900 Payments of long-term debt - - Proceeds from issuance of common stock 10 2,410 Purchase and retirement of common stock (1,032) (1,410) Tax benefits from employee share-based exercises 1,421 - Dividends paid (2,748) (2,728) -------- -------- Net cash (used in) provided by financing activities (56,649) 14,172 -------- -------- Net change in cash and cash equivalents (1,172) (18,352) Cash and cash equivalents at beginning of period 14,298 21,088 -------- -------- Cash and cash equivalents at end of period $ 13,126 $ 2,736 ======== ======== GEORGIA GULF CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) Three Months Ended March 31, ---------------------- In Thousands 2006 2005 ------------ --------- --------- Segment net sales: Chlorovinyls $441,600 $397,115 Aromatics 126,273 248,294 -------- -------- Net sales $567,873 $645,409 ======== ======== Segment operating income (loss): Chlorovinyls $ 75,700 $ 58,951 Aromatics (4,966) 14,276 Unallocated corporate expenses (11,959) (a) (6,767) -------- -------- Total operating income $ 58,775 $ 66,460 ======== ======== (a) Increase is primarily due to additional share-based compensation expense. CONTACT: Georgia Gulf Corporation, Atlanta Investor Relations Angie Tickle, 770-395-4520