<< Back Georgia Gulf Reports Second Quarter 2011 Financial Results
ATLANTA, Aug 03, 2011 (BUSINESS WIRE) --
Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its second quarter ended June 30, 2011.
The company reported net sales of $831.7 million for the second quarter of 2011, 13 percent higher than the net sales of $735.7 million reported in the second quarter of 2010. Georgia Gulf reported operating income of $35.5 million for the second quarter of 2011 compared to operating income of $37.9 million for the second quarter of 2010. Operating income was reduced primarily by lower chlorovinyls sales volumes and higher raw materials costs, partially offset by higher ECU values.
Georgia Gulf reported net income of $14.6 million, or $0.42 per diluted share, for the second quarter of 2011, compared to net income of $21.7 million, or $0.62 per diluted share, during the same quarter in the previous year.
"Our operating income improved more than $44 million for the first half of 2011 compared to the same period in 2010. These results were achieved despite the challenges presented by the unplanned chloralkali outage as well as the logistical and production issues due to high water on the Mississippi River System in the second quarter," said Paul Carrico, president and chief executive officer.
"With these unplanned events behind us, we expect our results for the second half of 2011 to reflect the broader North American chemicals industry recovery that is being driven by North America's natural gas advantage and global demand," Carrico said. "The macroeconomic expectations that led us to increase our 2011 adjusted EBITDA guidance to a range of $275-295 million remain intact. Longer term, we also believe that our building products business is well positioned to take advantage of the eventual recovery in both the economy and housing."
In the Chlorovinyls segment, second quarter 2011 net sales increased to $323.7 million from $300.8 million during the second quarter of 2010. The segment posted operating income of $37.8 million, compared to operating income of $36.2 million during the same quarter in the prior year. The increase in net sales and operating income was primarily due to higher caustic soda and resin sales prices compared to the second quarter of 2010, mostly offset by lower caustic soda and PVC sales volumes resulting from the unplanned chloralkali outage and resulting PVC force majeure, and logistical issues due to high water on the Mississippi River System. The company's chloralkali production returned to full capacity in June and the PVC force majeure announced in mid-April was lifted in early July. Operating income for the second quarter of 2011 includes a $1.2 million restructuring benefit from the disposition of equipment at the Oklahoma City PVC plant that was closed in 2008.
In the Building Products segment, net sales were $274.2 million for the second quarter of 2011 compared to the $243.2 million recorded during the same quarter in the prior year. Net sales on a constant currency basis increased 9 percent. This sales increase was driven by the benefit of the sales volumes resulting from the Exterior Portfolio acquisition in February 2011. The segment's operating income was $16.9 million for the second quarter of 2011, compared to $18.7 million of operating income during the same quarter the prior year. The decrease in operating income was primarily due to a less favorable geographic and product sales mix, a second quarter 2010 non-income tax benefit which did not re-occur in the second quarter of 2011, and higher SG&A costs primarily related to new product introductions. Operating income for the second quarter of 2011 includes a $0.4 million restructuring expense related to the Exterior Portfolio acquisition.
In the Aromatics segment, net sales increased to $233.9 million for the second quarter of 2011 from $191.6 million during the second quarter of 2010. The increase was primarily due to higher sales prices, partially offset by lower sales volumes. During the second quarter of 2011, the segment recorded an operating loss of $7.4 million, compared to an operating loss of $7.8 million during the same quarter in 2010. The decrease in operating loss was primarily due to improved margins, mostly offset by lower sales volumes, inventory holding losses and higher maintenance expense due to the two planned turnarounds during the quarter and logistical issues due to high water on the Mississippi River System.
As of June 30, 2011, the company had $41.7 million of cash on hand as well as $173.2 million of borrowing capacity available under its asset-backed loan (ABL) facility. As of the end of the second quarter of 2011, liquidity had decreased by approximately $31.6 million compared to the end of the first quarter of 2011 primarily due to the seasonal increase in working capital needs of the business and rising raw materials costs.
The company will discuss second quarter financial results and business developments via conference call and webcast on Thursday, August 4, at 10:00 a.m. Eastern time. To access the company's second-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.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112207&eventID=4162624. Playbacks will be available from 1:00 p.m. Eastern time on Thursday, August 4, until 11:59 p.m. Eastern time on Thursday, August 18. Playback numbers are (855) 859-2056 (domestic) or (706) 679-9856 (international). The conference call ID number is 86006423.
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 the 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.
This news release contains forward-looking statements subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward looking statements relate to, among other things, our sales and adjusted EBITDA guidance for 2011, 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, changes in governmental and environmental regulations or the adoption of new laws or 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 and subsequent quarterly reports on Form 10-Q.
Use of Non-GAAP Measures
Georgia Gulf supplements its financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) with adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, as well as cash and non-cash restructuring charges and certain other charges, if any, related to financial restructuring and business improvement initiatives, gains on substantial modification of debt and sales of certain assets, certain purchase accounting and certain non-income tax reserve adjustments, and goodwill, intangibles, and other long-lived asset impairments) because investors commonly use adjusted EBITDA as a main component of valuation analysis of cyclical companies such as Georgia Gulf. Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as a measure of performance or to cash provided by operating activities as a measure of liquidity. In addition, our calculation of adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.
A reconciliation of forecasted 2011 adjusted EBITDA to forecasted 2011 net income determined in accordance with GAAP is included in the table below.
($ millions) 2011 Adjusted EBITDA Guidance $ 275-295 Depreciation and Amortization 104 Restructuring and Other 2 Interest Expense 68 Tax Expense (30% rate) 30-36 Net Income $ 71-85
Georgia Gulf Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
June 30, December 31, Assets 2011 2010 Cash and cash equivalents $ 41,686 $ 122,758 Receivables, net of allowance for doubtful accounts of $6,578 in 2011
and $10,026 in 2010
419,629 267,662 Inventories 369,143 261,235 Prepaid expenses 20,231 16,606 Income tax receivable 432 899 Deferred income taxes 10,769 7,266 Total current assets 861,890 676,426 Property, plant and equipment, net 663,873 653,137 Goodwill 215,989 209,631 Intangible assets, net of accumulated amortization of $13,281 in 2011 and $11,873 in 2010 47,419 14,351 Deferred income taxes 8,666 8,078 Other assets, net 95,858 104,078 Total assets $ 1,893,695 $ 1,665,701 Liabilities and Stockholders' Equity Current portion of long-term debt $ 37,557 $ 22,132 Accounts payable 228,495 132,639 Interest payable 22,708 22,558 Income taxes payable 1,269 2,910 Accrued compensation 22,328 38,382 Liability for unrecognized income tax benefits and other tax reserves 2,940 8,822
Other accrued liabilities
64,658 48,536 Total current liabilities 379,955 275,979 Long-term debt 744,575 667,810 Liability for unrecognized income tax benefits 46,766 46,884 Deferred income taxes 202,177 189,805
Other non-current liabilities
39,492 40,631 Total liabilities 1,412,965 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; issued and outstanding: 33,983,404 in 2011 and 33,962,291 in 2010 340 340 Additional paid-in capital 480,359 476,276 Accumulated other comprehensive income (loss), net of tax 5,130 (210 ) Accumulated deficit (5,099 ) (31,814 ) Total stockholders' equity 480,730 444,592 Total liabilities and stockholders' equity $ 1,893,695 $ 1,665,701
Georgia Gulf Corporation and Subsidiaries
Condensed Consolidated Statements of Income
Three Months Ended Six Months Ended June 30, June 30,
(In thousands, except per share data)
2011 2010 2011 2010 Net sales $ 831,711 $ 735,706 $ 1,619,648
Operating costs and expenses: Cost of sales 748,725 660,414 1,460,953 1,264,785 Selling, general and administrative expenses 48,183 36,959 86,669 74,817 Restructuring (income) expense (707 ) 439 (125 ) 134 Total operating costs and expenses 796,201 697,812 1,547,497 1,339,736 Operating income 35,510 37,894 72,151 27,419 Interest expense, net (16,919 ) (17,425 ) (33,389 ) (35,260 ) Loss on redemption of debt (1,100 ) - (1,100 ) - Foreign exchange loss (340 ) (429 ) (940 ) (434 ) Income (loss) before income taxes 17,151 20,040 36,722 (8,275 ) Provision (benefit) for income taxes 2,563 (1,649 ) 10,007 (10,933 ) Net income $ 14,588 $ 21,689 $ 26,715 $ 2,658 Earnings per share: Basic $ 0.42 $ 0.62 $ 0.77 $ 0.08 Diluted $ 0.42 $ 0.62 $ 0.77 $ 0.08 Weighted average common shares: Basic 33,976 33,722 33,971 33,721 Diluted 34,002 33,722 33,992 33,721
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended June 30, Six Months Ended June 30,
2011 2010 2011 2010 Cash flows from operating activities: Net income $ 14,588 $ 21,689 $ 26,715 $ 2,658 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 26,392 25,223 51,842 50,110 Loss on early redemption of debt 1,100 -- 1,100 -- Foreign exchange loss (gain) 130 486 (85 ) (45 ) Deferred income taxes 2,438 4,526 5,194 (7,696 ) Excess tax benefits from share-based payment arrangements (52 ) (112 ) (65 ) (695 ) Stock based compensation 3,500 836 4,305 1,548 Long lived asset impairment charges and loss on sale of assets -- -- -- 591 Other non-cash items 1,389 5,076 1,232 5,528 Change in operating assets, liabilities and other (45,323 ) (9,792 ) (162,676 ) (46,076 ) Net cash provided by (used in) operating activities 4,162 47,932 (72,438 ) 5,923 Cash flows from investing activities: Capital expenditures (12,823 ) (9,827 ) (23,692 ) (20,782 ) Proceeds from sale of property, plant and equipment 131 779 153 1,549 Acquisition, net of cash acquired -- -- (71,623 ) -- Net cash used in investing activities (12,692 ) (9,048 ) (95,162 ) (19,233 ) Cash flows from financing activities: Repayments on ABL revolver (131,346 ) (171,125 ) (203,646 ) (303,501 ) Borrowings on ABL revolver 171,087 120,010 314,205 313,572 Repayment of long-term debt (22,913 ) (11 ) (22,917 ) (25 ) Fees paid to amend or issue debt facilities -- (310 ) (1,480 ) (3,330 ) Stock compensation plan activity 39 -- 39 -- Tax benefits from employee share-base exercises 52 -- 65 3,328 Net cash provided by (used in) financing activities 16,919 (51,436 ) 86,266 10,044 Effect of exchange rate changes on cash and cash equivalents (201 ) (219 ) 262 (368 ) Net change in cash and cash equivalents 8,188 (12,771 ) (81,072 ) (3,634 ) Cash and cash equivalents at beginning of period 33,498 47,934 122,758 38,797 Cash and cash equivalents at end of period $ 41,686 $ 35,163 $ 41,686 $ 35,163
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION (Unaudited) Three Months Ended Six Months Ended June 30, June 30,
2011 2010 2011 2010 Segment net sales: Chlorovinyls $ 323,663 $ 300,811 $ 649,983 $ 588,522 Building Products 274,156 243,249 431,660 396,299 Aromatics 233,892 191,646 538,005 382,334 Net Sales $ 831,711 $ 735,706 $ 1,619,648 $ 1,367,155 Segment operating income (loss): Chlorovinyls $ 37,826
$ 36,196 $ 75,565
$ 27,544 Building Products 16,891
Aromatics (7,448 ) (7,782 ) 12,334 1,863 Unallocated corporate (11,759 ) (9,258 ) (20,573 ) (17,053 ) Total operating income $ 35,510 $ 37,894 $ 72,151 $ 27,419 1 ) Includes $1.2 million of restructuring income from the recovery of previously written down equipment 2 ) Includes $0.4 million of restructuring charges and $0.5 million of inventory purchase accounting adjustments 3 ) Includes $1.5 million reversal/recovery of non-income tax reserves 4 ) Includes $0.8 million reversal of non-income tax reserve and $1.2 million of restructuring income from the recovery of previously written down equipment 5 ) Includes $2.9 million of acquisition deal costs and inventory purchase accounting adjustment, offset by $3.6 million reversal of non-income tax reserve
SOURCE: Georgia Gulf Corporation
Georgia Gulf Corporation
Martin Jarosick, 770-395-4524
Alan Chapple, 770-395-4538