Exhibit 99.1
| | NEWS |
Georgia Gulf Reports First Quarter 2010 Financial Results
ATLANTA, GEORGIA — May 5, 2010 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its first quarter ended March 31, 2010.
Georgia Gulf reported net sales of $631.5 million for the first quarter of 2010 compared to net sales of $407.3 million for the first quarter of 2009. The sales increase is primarily due to increased volumes, particularly in aromatics and building products, and higher sales prices in vinyl resins and aromatics products, partially offset by lower caustic soda sales prices.
Georgia Gulf reported a net loss of $19.0 million for the first quarter of 2010, compared to net income of $48.3 million during the same quarter in the previous year. The net income in the first quarter of 2009 includes a pre-tax gain from debt modification of $121.0 million.
The Company reported an operating loss of $10.5 million for the first quarter of 2010 compared to an operating loss of $25.7 million for the first quarter of 2009. The first quarter of 2009 included $8.0 million of restructuring costs while the first quarter of 2010 included $0.3 million of net restructuring income.
“While there continue to be challenges in the economy and the housing market, I am encouraged by Georgia Gulf’s financial performance during the first quarter of 2010. Our results demonstrate that the initiatives we have implemented over the last two years have positioned the Company to succeed even in challenging markets,” stated Paul Carrico, President and CEO of Georgia Gulf. “We have seen a considerable increase in volumes across our businesses, with building products and aromatics contributing significantly to our success during this quarter. We will continue to strengthen our position as a premier chlorovinyls and building products business,” he concluded.
Chlorovinyls
In the Chlorovinyls segment, first quarter 2010 sales increased to $287.7 million from $241.7 million during the first quarter of 2009. The segment posted an operating loss of $8.7 million compared to operating income of $20.5 million during the same quarter in the prior year. The decrease in operating income was primarily due to a significant increase in ethylene costs during the quarter, two scheduled turnarounds, and lower caustic sales prices compared to historically high caustic sales prices and only one scheduled turnaround in the same quarter last year. These items were partially offset by PVC sales price increases and lower natural gas costs.
Building Products
To better align our financial reporting with how we manage our businesses, the Company combined the former Window & Door Profiles and Mouldings segment and the former Outdoor Building Products segment into one Building Products segment beginning with the three months ended March 31, 2010. Prior period results have been adjusted to reflect the combined segment and are presented on a consistent basis. In the Building Products segment, sales were $153.1 million for the first quarter of 2010, compared to $114.1 million during the same quarter in the prior year. Sales on a constant currency basis increased 21 percent. The increase in sales reflects improved conditions in North American housing and construction markets, due in part to relatively mild weather in Canada and the northern United States. The segment’s operating loss was $3.7 million for the first quarter of 2010, compared to an operating loss of $34.3 million during the same quarter in the prior year. The significant decrease in operating loss is primarily the result of higher volumes and the benefit from numerous cost reduction initiatives.
Aromatics
In the Aromatics segment, sales increased to $190.7 million for the first quarter of 2010 from $51.5 million during the first quarter of 2009. During the first quarter of 2010, the segment recorded operating income of $9.6 million, compared to operating income of $0.5 million during the same quarter in 2009. The increase in operating income was due to significantly higher sales volumes and prices compared to the same quarter last year.
Liquidity
As of March 31, 2010, the Company had $47.9 million of cash on hand as well as $127.6 million of borrowing capacity available under its asset based loan facility.
Conference Call
The Company will discuss first quarter financial results and business developments via conference call and webcast on Thursday, May 6 at 10:00 a.m. ET. To access the Company’s first 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=3023653. Playbacks will be available from 11:00 AM ET Thursday, May 6, to midnight ET Friday, May 14. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 69200204.
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, future global economic conditions, economic conditions in the industries to which our products are sold, uncertainties regarding asset sales, operating efficiencies and 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, including our Annual Report on Form 10-K for the year ended December 31, 2009.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data) | | March 31,
2010 | | December 31,
2009 | |
ASSETS | | | | | |
Cash and cash equivalents | | $ | 47,934 | | $ | 38,797 | |
Receivables, net of allowance for doubtful accounts of $16,743 in 2010 and $16,453 in 2009 | | 280,650 | | 208,941 | |
Inventories | | 284,400 | | 251,397 | |
Prepaid expenses | | 26,888 | | 24,296 | |
Income tax receivables | | 26,620 | | 30,306 | |
Deferred income taxes | | 11,883 | | 14,108 | |
Total current assets | | 678,375 | | 567,845 | |
Property, plant and equipment, net | | 683,856 | | 687,570 | |
Goodwill | | 207,361 | | 203,809 | |
Intangible assets, net of accumulated amortization of $11,236 in 2010 and $10,996 in 2009 | | 15,062 | | 15,223 | |
Other assets, net | | 105,915 | | 116,494 | |
Non-current assets held for sale | | 14,227 | | 14,924 | |
Total assets | | $ | 1,704,796 | | $ | 1,605,865 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current portion of long-term debt | | $ | 37,350 | | $ | 28,231 | |
Accounts payable | | 165,445 | | 124,829 | |
Interest payable | | 16,453 | | 2,844 | |
Income taxes payable | | 1,236 | | 1,161 | |
Accrued compensation | | 14,089 | | 16,069 | |
Liability for unrecognized income tax benefits and other tax reserves | | 9,942 | | 9,529 | |
Other accrued liabilities | | 44,697 | | 43,236 | |
Total current liabilities | | 289,212 | | 225,899 | |
Long-term debt | | 766,518 | | 710,774 | |
Liability for unrecognized income tax benefits | | 66,820 | | 64,371 | |
Deferred income taxes | | 165,689 | | 174,457 | |
Other non-current liabilities | | 35,340 | | 37,036 | |
Total liabilities | | 1,323,579 | | 1,212,537 | |
| | | | | |
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: 33,722,121 in 2010 and 33,718,367 in 2009 | | 337 | | 337 | |
Additional paid-in capital | | 473,489 | | 472,018 | |
Accumulated deficit | | (91,745 | ) | (72,713 | ) |
Accumulated other comprehensive loss, net of tax | | (864 | ) | (6,314 | ) |
Total stockholders’ equity | | 381,217 | | 393,328 | |
Total liabilities and stockholders’ equity | | $ | 1,704,796 | | $ | 1,605,865 | |
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended
March 31, | |
(In thousands, except per share data) | | 2010 | | 2009 | |
Net sales | | $ | 631,450 | | $ | 407,331 | |
Operating costs and expenses: | | | | | |
Cost of sales | | 604,371 | | 392,322 | |
Selling, general and administrative expenses | | 37,858 | | 32,676 | |
Restructuring (income) costs | | (305 | ) | 8,037 | |
Total operating costs and expenses | | 641,924 | | 433,035 | |
Operating loss | | (10,474 | ) | (25,704 | ) |
Gain on substantial modification of debt | | — | | 121,033 | |
Interest expense, net | | (17,835 | ) | (35,172 | ) |
Foreign exchange (loss) gain | | (5 | ) | 22 | |
(Loss) income before income taxes | | (28,314 | ) | 60,179 | |
(Benefit) provision for income taxes | | (9,283 | ) | 11,894 | |
Net income (loss) | | $ | (19,031 | ) | $ | 48,285 | |
(Loss) earnings per share: | | | | | |
Basic | | $ | (0.56 | ) | $ | 34.60 | |
Diluted | | $ | (0.56 | ) | $ | 34.60 | |
Weighted average common shares: | | | | | |
Basic | | 33,720 | | 1,385 | |
Diluted | | 33,720 | | 1,385 | |
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Three Months Ended March 31, | |
(In thousands) | | 2010 | | 2009 | |
Cash flows from operating activities: | | | | | |
Net (loss) income | | $ | (19,031 | ) | $ | 48,285 | |
Adjustments to reconcile net (loss) income to net cash used in operating activities: | | | | | |
Depreciation and amortization | | 24,887 | | 31,344 | |
Gain on substantial modification of debt | | — | | (121,033 | ) |
Foreign exchange (gain) loss | | (531 | ) | 1,924 | |
Deferred income taxes | | (10,079 | ) | 10,680 | |
Tax deficiency related to stock plans | | (2,543 | ) | (1,032 | ) |
Stock based compensation | | 712 | | 878 | |
Other non-cash items | | 6,188 | | (636 | ) |
Change in operating assets, liabilities and other | | (41,612 | ) | (8,062 | ) |
Net cash used in operating activities | | (42,009 | ) | (37,652 | ) |
Cash flows from investing activities: | | | | | |
Capital expenditures | | (10,955 | ) | (12,525 | ) |
Proceeds from sale of property, plant and equipment, and assets held-for sale | | 770 | | 421 | |
Proceeds from insurance recoveries related to property, plant and equipment | | — | | 1,958 | |
Net cash used in investing activities | | (10,185 | ) | (10,146 | ) |
Cash flows from financing activities: | | | | | |
Borrowing on revolving line of credit | | — | | 46,967 | |
Repayments on ABL revolver | | (132,378 | ) | — | |
Borrowings on ABL revolver | | 193,562 | | — | |
Repayment of long-term debt | | (13 | ) | (908 | ) |
Stock compensation plan activity | | — | | (25 | ) |
Fees paid to amend or issue debt facilities | | (3,020 | ) | (22,372 | ) |
Tax benefits from employee share-base exercises | | 3,328 | | — | |
Net cash provided by financing activities | | 61,479 | | 23,662 | |
Effect of exchange rate changes on cash and cash equivalents | | (148 | ) | (868 | ) |
Net change in cash and cash equivalents | | 9,137 | | (25,004 | ) |
Cash and cash equivalents at beginning of period | | 38,797 | | 89,975 | |
Cash and cash equivalents at end of period | | $ | 47,934 | | $ | 64,971 | |
GEORGIA GULF CORPORATION AND SUBSIDARIES
SEGMENT INFORMATION
(Unaudited)
| | Three Months Ended | |
| | March 31, | |
In Thousands | | 2010 | | 2009 | |
| | | | | |
Segment net sales: | | | | | |
Chlorovinyls | | $ | 287,711 | | $ | 241,738 | |
Building Products | | 153,050 | | 114,088 | |
Aromatics | | 190,689 | | 51,505 | |
Net Sales | | $ | 631,450 | | $ | 407,331 | |
| | | | | |
Segment operating income (loss): | | | | | |
Chlorovinyls | | $ | (8,652 | )(1) | $ | 20,516 | (3) |
Building Products | | (3,673 | )(2) | (34,279 | )(4) |
Aromatics | | 9,645 | | 474 | |
Unallocated corporate | | (7,794 | ) | (12,415 | )(5) |
Total operating income (loss) | | $ | (10,474 | ) | $ | (25,704 | ) |
(1) | Includes $1.0 million of income primarily due to reversal of remediation accrued as restructuring expense in the previous period |
(2) | Includes $0.6 million for restructuring costs |
(3) | Includes $2.0 million of restructuring costs |
(4) | Includes $3.5 million of restructuring costs |
(5) | Includes $2.5 million of restructuring costs |
CONTACTS:
Georgia Gulf Corporation
Investor Relations:
Martin Jarosick
(770) 395-4524
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