Exhibit 99.1
| NEWS |
Georgia Gulf Reports Third Quarter 2008 Financial Results
· Senior credit facility covenants relaxed until June 30, 2009
· Hurricanes Gustav and Ike negatively impacted net earnings by approximately $0.53 per diluted share, or $18.1 million
ATLANTA, GEORGIA – November 5, 2008 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its third quarter ended September 30, 2008.
Georgia Gulf reported net sales of $818.6 million for the third quarter of 2008 compared to net sales of $815.3 million for the third quarter of 2007. The increase in sales is primarily due to higher prices for vinyl resins and caustic soda, partially offset by difficult housing and construction related market conditions in the U.S and the disruption caused by hurricanes Gustav and Ike.
Georgia Gulf reported a net loss of $17.4 million or $0.50 per diluted share for the third quarter of 2008, compared to breakeven net income during the same quarter in the previous year. The net loss for the third quarter of 2008 was negatively impacted by approximately $18.1 million from hurricanes Gustav and Ike, or $0.53 per diluted share. Georgia Gulf’s facilities sustained minimal physical damage during the hurricanes, but the disruption in feedstock supplies, energy supplies and transportation networks reduced production and sales.
“Georgia Gulf delivered a solid third quarter despite challenging economic conditions and the impacts of two major hurricanes,” said Paul Carrico, Georgia Gulf’s President and CEO. “We generated strong cash flow from operations of $72.5 million and strengthened our financial flexibility by amending our bank covenants to better reflect the realities of current market conditions. I want to thank all of our employees for their contributions during the quarter,” Mr. Carrico added.
Chlorovinyls
In the Chlorovinyls segment, third quarter 2008 sales increased to $365.5 million from $356.8 million during the third quarter of 2007. The segment posted operating income of $28.0 million compared to operating income of $43.6 million during the same quarter in the prior year. The decrease in operating income was primarily due to higher ethylene and natural gas prices and the sales volume reduction caused by hurricanes Gustav and Ike, partially offset by higher Electrochemical Unit (ECU) values and resin sales prices.
Window & Door Profiles and Mouldings
In the Window & Door Profiles and Mouldings segment, sales were $124.0 million for the third quarter of 2008, compared to $147.0 million during the same quarter in the prior year. Sales on a constant currency basis declined 16 percent. The decline in sales reflects difficult conditions in U.S. housing and construction related markets. The segment’s operating loss was $0.6 million for the third quarter of 2008, compared to operating income of $8.4 million during the same quarter in the prior year. The decrease in operating income is primarily the result of lower sales and higher raw materials costs, partially offset by cost reductions and sales price increases.
Outdoor Building Products
In the Outdoor Building Products segment, sales were $163.6 million for the third quarter of 2008, compared to $162.5 million during the same quarter in the prior year. Sales on a constant currency basis were about flat compared to the same period in 2007. The increase in sales reflects sales growth in the Canadian market, partially offset by difficult conditions in U.S. housing and construction related markets. The segment reported operating income of $0.5 million for the third quarter of 2008, compared to operating income of $3.8 million during the same quarter in the prior year. The decrease in operating income is primarily the result of higher raw materials costs partially offset by sales price increases.
Aromatics
In the Aromatics segment, sales increased to $165.5 million for the third quarter of 2008 from $148.9 million during the third quarter of 2007. During the third quarter of 2008, the segment recorded an operating loss of $4.5 million, compared to an operating loss of $3.1 million during the same quarter in 2007. The increase in operating loss was due to lower sales volume as well as higher feedstock costs that were not fully offset by sales price increases.
Financial Flexibility
Georgia Gulf adjusted its cash management practices to increase cash on hand and financial flexibility in response to the turmoil in the credit markets. As of September 30, 2008, the Company had $52.7 million of cash on hand as well as $159.6 million of borrowing capacity available under its revolving credit facility.
Georgia Gulf worked with its lenders to amend certain terms of its senior credit facility, including relaxing covenant levels until June 30, 2009. The Company was in compliance with its debt covenants for the quarter ended September 30, 2008.
Outlook
Georgia Gulf reaffirms its previous guidance for the bottom end of the range for 2008 EBITDA to be 15 percent below 2007 EBITDA. Additionally, the recent decline in energy and feedstock prices along with strong caustic prices may cause 2008 EBITDA to exceed the bottom end of the range. The Company remains focused on targeted cost, working capital and debt reduction initiatives and expects to generate ample cash in 2008 to reduce long-term debt.
Director John Akitt Retires
Georgia Gulf also announced that John Akitt has retired from the Board of Directors, effective November 1, 2008. Mr. Akitt, age 75, has served as a director since February 2000.
“On behalf of the entire board of directors, I want to thank John for his service to Georgia Gulf for the last 8 years and wish him well in retirement,” said Patrick Fleming, Georgia Gulf’s Chairman of the Board. “John was instrumental in establishing a Governance Committee and developing standards for board effectiveness.”
Conference Call
The Company will discuss third quarter 2008 financial results and business developments via conference call and webcast on Wednesday, November 5, 2008 at 1:00 p.m. EST. 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=2005157. (Due to the length of this URL, it may be necessary to copy and paste it into your Internet browser’s URL address field. You may also need to remove an extra space in the URL if one exists.) Playbacks will be available from 2:00 PM ET Wednesday, November 5, to midnight ET Wednesday, November 12. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 70433863.
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 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 continued compliance with covenants in our credit facility and availability of funds thereunder, future global economic conditions, economic conditions in the industries to which our products are sold, uncertainties regarding asset sales, synergies, potential sale-leaseback arrangements, operating efficiencies and competitive conditions, industry production capacity, raw materials and energy costs, uncertainties relating to Royal Group’s business and liabilities 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, 2007.
CONTACTS:
Georgia Gulf Corporation
Investor Relations:
Martin Jarosick
(770) 395-4524
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data) | | September 30,
2008 | | December 31,
2007 | |
ASSETS | | | | | |
Cash and cash equivalents | | $ | 52,720 | | $ | 9,227 | |
Receivables, net of allowance for doubtful accounts of $10,458 in 2008 and $12,815 in 2007 | | 210,061 | | 211,613 | |
Inventories | | 306,386 | | 366,545 | |
Prepaid expenses | | 33,079 | | 19,999 | |
Income tax receivables | | 3,979 | | 15,837 | |
Deferred income taxes | | 24,871 | | 25,049 | |
Total current assets | | 631,096 | | 648,270 | |
Property, plant and equipment, net | | 862,901 | | 967,188 | |
Goodwill | | 257,674 | | 282,282 | |
Intangible assets, net of accumulated amortization of $9,718 in 2008 and $6,147 in 2007 | | 69,728 | | 75,789 | |
Other assets, net | | 187,398 | | 196,262 | |
Non-current assets held for sale | | 678 | | 31,873 | |
Total assets | | $ | 2,009,475 | | $ | 2,201,664 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current portion of long-term debt | | $ | 90,042 | | $ | 24,209 | |
Accounts payable | | 151,431 | | 232,477 | |
Interest payable | | 36,735 | | 17,752 | |
Income taxes payable | | 2,618 | | 1,094 | |
Accrued compensation | | 18,486 | | 32,882 | |
Liability for unrecognized income tax benefits and other tax reserves | | 30,613 | | 79,431 | |
Other accrued liabilities | | 54,784 | | 59,680 | |
Total current liabilities | | 384,709 | | 447,525 | |
Long-term debt | | 1,317,761 | | 1,357,799 | |
Liability for unrecognized income tax benefits | | 37,559 | | 37,874 | |
Deferred income taxes | | 119,829 | | 134,464 | |
Other non-current liabilities | | 34,614 | | 27,201 | |
Total liabilities | | 1,894,472 | | 2,004,863 | |
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; 75,000,000 shares authorized; shares issued and outstanding: 34,475,867 in 2008 and 34,392,370 in 2007 | | 344 | | 344 | |
Additional paid-in capital | | 104,759 | | 103,238 | |
Retained (deficit) earnings | | (19,814 | ) | 44,730 | |
Accumulated other comprehensive income, net of tax | | 29,714 | | 48,489 | |
Total stockholders’ equity | | 115,003 | | 196,801 | |
Total liabilities and stockholders’ equity | | $ | 2,009,475 | | $ | 2,201,664 | |
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per | | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
share data) | | 2008 | | 2007 | | 2008 | | 2007 | |
Net sales | | $ | 818,564 | | $ | 815,293 | | $ | 2,380,868 | | $ | 2,380,854 | |
Operating costs and expenses: | | | | | | | | | |
Cost of sales | | 756,503 | | 714,809 | | 2,217,656 | | 2,138,830 | |
Selling, general and administrative expenses | | 44,095 | | 53,228 | | 130,459 | | 167,216 | |
Asset gains, impairment, exit costs and other, net | | 3,718 | | 2,551 | | 171 | | 5,691 | |
Total operating costs and expenses | | 804,316 | | 770,588 | | 2,348,286 | | 2,311,737 | |
Operating income | | 14,248 | | 44,705 | | 32,582 | | 69,117 | |
Interest expense, net | | (32,280 | ) | (33,906 | ) | (98,157 | ) | (99,362 | ) |
Foreign exchange (loss) gain | | (1,864 | ) | (2,440 | ) | (585 | ) | 3,070 | |
Income (loss) from continuing operations before income taxes | | (19,896 | ) | 8,359 | | (66,160 | ) | (27,175 | ) |
Provision (benefit) for income taxes | | (2,494 | ) | 8,703 | | (7,205 | ) | 1,553 | |
Loss from continuing operations | | (17,402 | ) | (344 | ) | (58,955 | ) | (28,728 | ) |
Income (loss) from discontinued operations, net of tax | | — | | 433 | | — | | (9,974 | ) |
Net income (loss) | | $ | (17,402 | ) | $ | 89 | | $ | (58,955 | ) | $ | (38,702 | ) |
Income (loss) per share: | | | | | | | | | |
Basic: | | | | | | | | | |
Loss from continuing operations | | $ | (0.50 | ) | $ | (0.01 | ) | $ | (1.71 | ) | $ | (0.84 | ) |
Income (loss) from discontinued operations | | — | | 0.01 | | — | | (0.29 | ) |
Net income (loss) | | $ | (0.50 | ) | $ | 0.00 | | $ | (1.71 | ) | $ | (1.13 | ) |
Diluted: | | | | | | | | | |
Loss from continuing operations | | $ | (0.50 | ) | $ | (0.01 | ) | $ | (1.71 | ) | $ | (0.84 | ) |
Income (loss) from discontinued operations | | — | | 0.01 | | — | | (0.29 | ) |
Net income (loss) | | $ | (0.50 | ) | $ | 0.00 | | $ | (1.71 | ) | $ | (1.13 | ) |
Weighted average common shares: | | | | | | | | | |
Basic | | 34,476 | | 34,359 | | 34,451 | | 34,343 | |
Diluted | | 34,476 | | 34,359 | | 34,451 | | 34,343 | |
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months
Ended
September 30, | | Nine Months Ended
September 30, | |
(In thousands) | | 2008 | | 2007 | | 2008 | | 2007 | |
Cash flows from operating activities: | | | | | | | | | |
Net income (loss) | | $ | (17,402 | ) | $ | 89 | | $ | (58,955 | ) | $ | (38,702 | ) |
Adjustments to reconcile net income (loss) gain to net cash used in operating activities: | | | | | | | | | |
Depreciation and amortization | | 36,471 | | 38,159 | | 112,495 | | 111,935 | |
Foreign exchange gain | | — | | (2,130 | ) | — | | (7,300 | ) |
Deferred income taxes | | (13,336 | ) | 7,732 | | (13,089 | ) | (11,612 | ) |
Tax deficiency related to stock plans | | (15 | ) | (54 | ) | (861 | ) | (714 | ) |
Stock based compensation | | 804 | | 1,567 | | 2,493 | | 9,221 | |
Long-lived asset impairment charges | | 2,444 | | — | | 21,872 | | — | |
Net (gain) loss on sale of property, plant and equipment, and assets held for sale | | (825 | ) | (1,523 | ) | (27,125 | ) | 485 | |
Other non-cash items | | 3,813 | | 8,448 | | 1,608 | | 15,133 | |
Change in operating assets, liabilities and other | | 60,575 | | 38,437 | | (25,752 | ) | (14,761 | ) |
Payment of Quebec trust tax settlement | | — | | — | | (20,073 | ) | — | |
Net cash provided by (used in) operating activities from continuing operations | | 72,529 | | 90,725 | | (7,387 | ) | 63,685 | |
Net cash provided by operating activities from discontinued operations | | — | | — | | — | | 398 | |
Net cash provided by (used in) operating activities | | 72,529 | | 90,725 | | (7,387 | ) | 64,083 | |
Cash flows from investing activities: | | | | | | | | | |
Capital expenditures | | (12,344 | ) | (18,288 | ) | (44,023 | ) | (72,624 | ) |
Proceeds from sale of property, plant and equipment, and assets held-for sale | | 301 | | 4,702 | | 78,095 | | 79,642 | |
Net cash (used in) provided by investing activities | | (12,043 | ) | (13,586 | ) | 34,072 | | 7,018 | |
Cash flows from financing activities: | | | | | | | | | |
Net change in revolving line of credit | | (7,649 | ) | (70,097 | ) | 107,718 | | (6,591 | ) |
Repayment of long-term debt | | (1,016 | ) | (1,259 | ) | (73,094 | ) | (152,921 | ) |
Proceeds from lease financing | | — | | — | | — | | 95,865 | |
Purchases and retirement of common stock | | — | | — | | (110 | ) | (685 | ) |
Fees paid to amend debt | | (9,823 | ) | — | | (9,823 | ) | — | |
Dividends paid | | (2,790 | ) | (2,770 | ) | (8,379 | ) | (8,325 | ) |
Net cash (used in) provided by financing activities | | (21,278 | ) | (74,126 | ) | 16,312 | | (72,657 | ) |
Effect of exchange rate changes on cash and cash equivalents | | 927 | | 104 | | 496 | | (98 | ) |
Net change in cash and cash equivalents | | 40,135 | | 3,117 | | 43,491 | | (1,654 | ) |
Cash and cash equivalents at beginning of period | | 12,585 | | 4,870 | | 9,227 | | 9,641 | |
Cash and cash equivalents at end of period | | $ | 52,720 | | $ | 7,987 | | $ | 52,720 | | $ | 7,987 | |
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
In Thousands | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | |
Segment net sales: | | | | | | | | | |
Chlorovinyls | | $ | 365,501 | | $ | 356,794 | | $ | 1,108,471 | | $ | 1,052,704 | |
Window and door profiles and mouldings products | | 124,027 | | 147,029 | | 328,104 | | 381,853 | |
Outdoor building products | | 163,579 | | 162,534 | | 428,175 | | 454,470 | |
Aromatics | | 165,457 | | 148,936 | | 516,118 | | 491,827 | |
Net Sales | | $ | 818,564 | | $ | 815,293 | | $ | 2,380,868 | | $ | 2,380,854 | |
| | | | | | | | | |
Segment operating income (loss): | | | | | | | | | |
Chlorovinyls | | $ | 27,982 | (1) | $ | 43,621 | | $ | 64,673 | (4) | $ | 84,061 | |
Window and door profiles and mouldings products | | (561 | )(2) | 8,364 | | (15,943 | ) | 5,537 | (6) |
Outdoor building products | | 516 | | 3,828 | (3) | (14,295 | ) | 2,769 | (7) |
Aromatics | | (4,547 | ) | (3,076 | ) | (7,373 | ) | 6,983 | |
Unallocated corporate | | (9,142 | ) | (8,032 | ) | 5,520 | (5) | (30,233 | ) |
Total operating income | | $ | 14,248 | | $ | 44,705 | | $ | 32,582 | | $ | 69,117 | |
(1) | | Includes $1.8 million in other severance, restructuring and other exit costs, net at the Oklahoma City facility |
(2) | | Includes $1.4 million related to plant closing costs and severance costs |
(3) | | Includes $2.0 million of asset write downs |
(4) | | Includes $20.0 million in costs related to the shutdown of the Oklahoma City facility, write downs and other exit costs and a $2.2 million gain related to the sale and lease back of equipment |
(5) | | Includes $28.8 million gain on sale of idle land |
(6) | | Includes $2.4 million related to severance, restructuring, and other exit costs, net |
(7) | | Includes $3.0 million in severance, restructuring, and other exit costs, net |
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