Exhibit 99.1
Georgia Gulf Reports Second
Quarter Net Income of $.30 Per Diluted Share
ATLANTA--(BUSINESS WIRE)--July 28, 2005--Georgia Gulf Corporation
(NYSE: GGC) today reported net income of $10.2 million or $.30 per
diluted share on sales of $584.2 million for the second quarter of
2005. This compares to net income of $29.7 million or $.90 per diluted
share on sales of $522.3 million for the second quarter of 2004. Net
income declined primarily as a result of the impact of the Company's
planned and unplanned plant outages, lower aromatics margins, and
significantly lower chlorovinyls sales volumes, which were due in part
to the outages as well as a significant reduction of inventories by
customers. These results also reflect higher overall sales prices as
well as improved margins for vinyl resins and caustic soda.
"While the second quarter has typically been a seasonally strong
quarter, our results included several items which significantly
reduced our bottom line," said Ed Schmitt, chairman, president and
CEO, Georgia Gulf. "The costs from our plant outages were higher than
anticipated, and we also had to work through higher-priced inventories
and raw materials purchase commitments. In addition, our customers
reduced inventories as sales prices for several products fell
throughout the quarter.
"As we look forward to the third quarter, we don't expect plant
outages or our customers' reduction of inventories to impact
profitability to the same degree as in the second quarter. Although we
expect raw materials and energy prices to remain volatile, we
anticipate third quarter 2005 earnings will significantly improve over
second quarter 2005 earnings."
Comparing sequential quarters, second quarter net income of $10.2
million or $.30 per diluted share on sales of $584.2 million decreased
compared to the first quarter of 2005 net income of $38.7 million or
$1.13 per diluted share on sales of $645.4 million. The impact of the
Company's planned and unplanned plant outages, lower aromatics margins
and overall lower sales volumes contributed to the decline compared to
the previous quarter.
For the six months ended June 30, 2005, net income was flat
compared to the same period last year. Net income of $48.9 million or
$1.43 per diluted share on sales of $1.2 billion compared to net
income of $48.5 million or $1.47 per diluted share on sales of $1.0
billion for the first half of 2004. While sales prices were 36 percent
higher than last year's sales prices, raw materials costs were up
significantly and sales volumes declined by 11 percent.
Chlorovinyls
Chlorovinyls segment second quarter of 2005 operating income of
$36.0 million decreased compared to the second quarter of 2004
operating income of $53.0 million. This $17.0 million decline in
operating income was primarily due to the plant outages, which
contributed to a 22 percent decrease in sales volumes. However,
chlorovinyls margins increased in the second quarter of 2005 compared
to the second quarter of 2004.
Comparing sequential quarters, chlorovinyls operating income
decreased from $59.0 million in the first quarter of 2005 to $36.0
million in the second quarter of 2005. The lower operating income was
a result of the negative impact of the plant outages and lower sales
volumes. Chlorovinyls margins expanded in the second quarter of 2005
compared to the first quarter of 2005.
For the six months ended June 30, 2005, chlorovinyls operating
income slightly increased to $95.0 million from $91.4 million in the
same period of 2004 as the increased margins more than offset the
plant outage costs and lower sales volumes.
Aromatics
The second quarter of 2005 aromatics operating loss of $8.8
million, a decline from second quarter of 2004 operating income of
$6.0 million, was a result of having to work through higher-priced
aromatics inventories and purchase commitments. Higher sales prices
did not offset higher raw materials costs.
Compared to the first quarter of 2005, operating income decreased
significantly from $14.3 million to a loss of $8.8 million in the
second quarter of 2005. This decrease reflects 13 percent lower sales
volumes and 7 percent lower sales prices. However, the largest factor
was having to work through higher-priced aromatics inventories and
purchase commitments in the face of decreasing raw materials and sales
prices for the Company's products.
For the six months ended June 30, 2005, aromatics operating income
decreased to $5.5 million from $9.8 million in the same period last
year primarily as a result of 45 percent higher raw materials costs,
which more than offset overall higher sales prices and cumene volumes.
Conference Call
Georgia Gulf will host a conference call to discuss second quarter
earnings results in more detail at 10:00 AM ET on Friday, July 29,
2005. 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/245471. Playbacks will be available from 1
PM ET Friday, July 29, to midnight ET Friday, August 5. Playback
numbers are 800-642-1687 (domestic) or 706-645-9291 (international).
The conference call ID number is 7641496.
Other
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, 2004 and
our subsequent reports on Form 10-Q.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, Dec. 31,
In Thousands 2005 2004
- ------------ --------- ---------
ASSETS
Cash and cash equivalents $ 1,886 $ 21,088
Receivables, net of allowance 79,041 134,852
Inventories 189,713 186,313
Prepaid expenses and other 5,936 5,186
Deferred income taxes 7,595 10,097
--------- ---------
Total current assets 284,171 357,536
Property, plant and equipment, net 410,471 425,734
Goodwill 77,720 77,720
Other assets, net 175,982 102,840
--------- ---------
Total assets $948,344 $963,830
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $176,000 $189,900
Accounts payable 163,502 205,365
Interest payable 2,203 1,557
Accrued compensation 12,686 18,293
Accrued liabilities 14,666 11,779
--------- ---------
Total current liabilities 369,057 426,894
Long-term debt, less current portion 128,583 128,583
Deferred income taxes 119,791 128,032
Other non-current liabilities 14,717 12,052
Stockholders' equity 316,196 268,269
--------- ---------
Total liabilities and stockholder's equity $948,344 $963,830
========= =========
Common shares outstanding 34,110 33,925
GEORGIA GULF CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------- --------- ----------- -----------
In Thousands
(except per
share data) 2005 2004 2005 2004
- -------------------------- --------- --------- ----------- -----------
Net sales $584,162 $522,272 $1,229,571 $1,018,959
--------- --------- ----------- -----------
Operating costs and
expenses
Costs of sales 549,053 454,683 1,112,152 900,471
Selling, general and
administrative 14,615 13,991 30,465 28,761
--------- --------- ----------- -----------
Total operating costs and
expenses 563,668 468,674 1,142,617 929,232
--------- --------- ----------- -----------
Operating income 20,494 53,598 86,954 89,727
Interest expense, net (5,379) (6,213) (10,826) (12,482)
--------- --------- ----------- -----------
Income before income
taxes 15,115 47,385 76,128 77,245
Provision for income
taxes 4,946 17,652 27,216 28,775
--------- --------- ----------- -----------
Net income $ 10,169 $ 29,733 $ 48,912 $ 48,470
========= ========= =========== ===========
Earnings per share:
Basic $ 0.30 $ 0.91 $ 1.45 $ 1.48
Diluted $ 0.30 $ 0.90 $ 1.43 $ 1.47
Weighted average common
shares:
Basic 33,888 32,799 33,832 32,704
Diluted 34,220 33,215 34,275 33,070
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Six Months Ended
In Thousands June 30, June 30,
- ------------ ------------------ ----------------------
2005 2004 2005 2004
--------- --------- ----------- -----------
Cash Flows from operating
activities:
Net income $ 10,169 $ 29,733 $ 48,912 $ 48,470
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation and
amortization 15,709 16,044 31,387 31,815
Deferred income
taxes (3,367) - (5,738) (122)
Tax benefit related
to stock plans 324 1,336 1,677 1,336
Stock based
compensation 1,016 597 1,831 1,893
Change in operating
assets, liabilities
and other 15,576 34,058 (65,460) 12,955
--------- --------- ----------- -----------
Net cash provided by
operating activities 39,427 81,768 12,609 96,347
--------- --------- ----------- -----------
Cash flows used in
investing activities
Capital expenditures (7,712) (3,380) (13,418) (8,859)
--------- --------- ----------- -----------
Cash flows from financing
activities:
Net change in
revolving line
of credit (29,800) - (13,900) -
Debt payments related
to asset
securitization - (35,000) - (35,000)
Other long-term debt
payments - (30,000) - (30,400)
Proceeds from issuance
of common stock 236 4,703 2,646 5,909
Purchase and
retirement of
common stock (272) (197) (1,682) (603)
Dividends paid (2,729) (2,646) (5,457) (5,276)
--------- --------- ----------- -----------
Net cash used in
financing activities (32,565) (63,140) (18,393) (65,370)
--------- --------- ----------- -----------
Net change in cash and
cash equivalents (850) 15,248 (19,202) 22,118
Cash and cash equivalents
at beginning of period 2,736 8,835 21,088 1,965
--------- --------- ----------- -----------
Cash and cash equivalents
at end of period $ 1,886 $ 24,083 $ 1,886 $ 24,083
========= ========= =========== ===========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------- --------- -----------------------
In Thousands 2005 2004 2005 2004
- ------------ --------- --------- ----------- -----------
Segment net sales:
Chlorovinyls $382,111 $369,478 $ 779,226 $ 720,149
Aromatics 202,051 152,794 450,345 298,810
--------- --------- ----------- -----------
Net sales $584,162 $522,272 $1,229,571 $1,018,959
========= ========= =========== ===========
Segment operating income
(loss):
Chlorovinyls $ 36,024 $ 53,048 $ 94,975 $ 91,368
Aromatics (8,771) 5,958 5,505 9,764
Corporate and general
plant
services (6,759) (5,408) (13,526) (11,405)
--------- --------- ----------- -----------
Total operating income $ 20,494 $ 53,598 $ 86,954 $ 89,727
========= ========= =========== ===========
CONTACT: Georgia Gulf Corporation
Investor Relations
Angie Tickle, 770/395-4520