Exhibit 99.1
Georgia Gulf Reports Second Quarter Net Income of $1.15 Per Diluted Share;
Includes Unrealized Loss of $.21 Per Share Related to Proposed
Royal Acquisition
ATLANTA--(BUSINESS WIRE)--July 27, 2006--Georgia Gulf Corporation (NYSE:
GGC) today reported net income of $39.4 million or $1.15 per diluted share on
sales of $602.2 million for the second quarter of 2006. These results include an
unrealized loss of $.21 per share due to the Company's foreign exchange hedge
for the proposed acquisition of Royal Group Technologies. Second quarter of 2006
net income increased significantly compared to the second quarter of 2005 net
income of $10.2 million or $.30 per diluted share on sales of $584.2 million,
which included the negative impact of the Company's chloralkali plant outages of
$.50 per share. Compared to the second quarter of 2005, overall chlorovinyls
sales prices and sales volumes increased during the second quarter of 2006
resulting in record quarterly operating income for this segment.
"We are very pleased to report our highest ever quarterly chlorovinyls
operating income of $83.7 million and one of our highest quarters for overall
operating income of $75.4 million," said Ed Schmitt, chairman, president and
CEO, Georgia Gulf Corporation. "The strong performance resulted from increased
year-over-year sales prices and high operating rates for our vinyl resins and
caustic soda businesses.
"As for the third quarter of 2006, we expect continued strong performance
in our chlorovinyls business even though increased raw materials costs are
expected to lower our third quarter results compared to our second quarter
results. In addition, we will be focusing on completing the acquisition of Royal
Group Technologies, which we previously announced on June 9, 2006."
Second quarter 2006 net income of $39.4 million or $1.15 per diluted share
on sales of $602.2 million compares favorably to first quarter 2006 net income
of $33.7 million or $.98 per diluted share on sales of $567.9 million. The
improvement reflects higher sales volumes for vinyl resins and vinyl compounds
and lower energy costs, which more than offset lower sales prices for vinyl
resins and vinyl compounds and higher raw materials costs, specifically for
benzene and propylene.
For the six months ended June 30, 2006, net income compares favorably to
the same period last year. Net income of $73.1 million or $2.12 per diluted
share on sales of $1.2 billion compared to net income of $48.9 million or $1.43
per diluted share on sales of $1.2 billion for the first half of 2005. Higher
sales prices and sales volumes in chlorovinyls more than offset declining
performance in our aromatics business and higher natural gas, ethylene and
propylene costs as well as the impact of our chloralkali plant outages in the
second quarter of 2005.
Chlorovinyls
Georgia Gulf's chlorovinyls business provided record-setting second quarter
of 2006 operating income of $83.7 million compared to second quarter of 2005
operating income of $36.0 million, which included the adverse impact from the
Company's chloralkali plant outages in 2005. The improvement in chlorovinyls
during the second quarter of 2006 compared to the second quarter of 2005
reflects higher sales volumes and sales prices for chlorovinyls products, which
more than offset higher ethylene costs.
Comparing sequential quarters, chlorovinyls operating income increased from
$75.7 million to $83.7 million. This increase was the result of increased sales
volumes for chlorovinyls products and lower energy costs, which outpaced lower
chlorovinyls sales prices and higher ethylene costs.
For the six months ended June 30, 2006, chlorovinyls operating income
increased to $159.4 million from $95.0 million for the same period of 2005 as
higher sales prices outpaced higher ethylene and natural gas costs and the
impact of our chloralkali plant outages in the second quarter of 2005.
Aromatics
Georgia Gulf's aromatics business had a lower operating loss of $0.5
million for the second quarter of 2006 compared to an operating loss of $8.8
million for the second quarter of 2005. The improvement was the result of lower
benzene costs, which more than offset overall lower aromatics sales volumes and
higher propylene costs.
Comparing sequential quarters, the aromatics business operating loss of
$0.5 million for the second quarter of 2006 improved from the operating loss of
$5.0 million for the first quarter of 2006 reflecting improved sales prices
which outpaced higher raw materials costs.
For the six months ended June 30, 2006, the aromatics business experienced
an operating loss of $5.4 million, which was a decline from the operating income
of $5.5 million in the same period of 2005. The decline was a result of
significantly lower sales volumes and lower sales prices for all aromatics
products.
Conference Call
Georgia Gulf will host a conference call to discuss second quarter results
in more detail at 9:00 AM ET on Friday, July 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/304668/. Playbacks will be available from 10:00 AM
ET Friday, July 28, to midnight ET Friday, August 4. Playback numbers are
800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID
number is 3144097.
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)
June 30, Dec. 31,
In Thousands 2006 2005
- ------------ -------- -----------
ASSETS
Cash and cash equivalents $4,052 $14,298
Receivables, net of allowance 117,976 118,193
Inventories 190,885 195,628
Prepaid expenses and other 10,440 13,306
Deferred income taxes 5,052 5,091
-------- -----------
Total current assets 328,405 346,516
Property, plant and equipment, net 398,954 401,412
Goodwill 77,720 77,720
Other assets, net 161,096 175,305
-------- -----------
Total assets $966,175 $1,000,953
======== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $45,100 $49,300
Accounts payable 192,215 202,179
Interest payable 1,052 1,226
Accrued compensation 11,588 14,986
Income taxes payable 1,904 1,258
Accrued liabilities 29,017 15,237
-------- -----------
Total current liabilities 280,876 284,186
Long-term debt, less current portion 129,339 229,339
Deferred income taxes 99,378 107,959
Other non-current liabilities 17,459 16,457
Stockholders' equity 439,123 363,012
-------- -----------
Total liabilities and stockholders' equity $966,175 $1,000,953
======== ===========
Common shares outstanding 34,216 34,238
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) 2006 2005 2006 2005
- ------------------------ --------- --------- ----------- -----------
Net sales $602,159 $584,162 $1,170,032 $1,229,571
--------- --------- ----------- -----------
Operating costs and
expenses
Costs of sales 509,590 549,053 998,474 1,112,152
Selling, general and
administrative 17,217 14,615 37,431 30,465
--------- --------- ----------- -----------
Total operating costs and
expenses 526,807 563,668 1,035,905 1,142,617
--------- --------- ----------- -----------
Operating income 75,352 20,494 134,127 86,954
Interest expense, net (3,473) (5,379) (7,809) (10,826)
Unrealized losses on
derivative instruments (11,387) - (11,387) -
--------- --------- ----------- -----------
Income before income taxes 60,492 15,115 114,931 76,128
Provision for income taxes 21,102 4,946 41,860 27,216
--------- --------- ----------- -----------
Net income $39,390 $10,169 $73,071 $48,912
========= ========= =========== ===========
Earnings per share:
Basic $1.16 $0.30 $2.14 $1.45
Diluted $1.15 $0.30 $2.12 $1.43
Weighted average common
shares:
Basic 34,101 33,888 34,075 33,832
Diluted 34,397 34,220 34,387 34,275
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Six Months Ended
In Thousands June 30, June 30,
- ------------ ----------------- ------------------
2006 2005 2006 2005
-------- -------- --------- --------
Cash flows from operating
activities:
Net income $39,390 $10,169 $73,071 $48,912
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 16,066 15,709 31,956 31,387
Deferred income taxes (4,333) (3,367) (8,541) (5,738)
Tax (deficiency) benefit
related to stock plans 71 324 (231) 1,677
Stock based compensation 2,505 1,016 8,075 1,831
Change in operating assets,
liabilities and other 5,178 15,576 21,986 (65,460)
-------- -------- --------- --------
Net cash provided by operating
activities 58,877 39,427 126,316 12,609
-------- -------- --------- --------
Cash flows used in investing
activities
Capital expenditures (15,595) (7,712) (27,558) (13,418)
-------- -------- --------- --------
Cash flows from financing activities:
Net change in revolving line
of credit (49,900) (29,800) (104,200) (13,900)
Proceeds from issuance of
common stock 291 236 301 2,646
Purchase and retirement of
common stock - (272) (1,032) (1,682)
Tax benefits from employee
share-based exercises 2 - 1,424 -
Dividends paid (2,749) (2,729) (5,497) (5,457)
-------- -------- --------- --------
Net cash used in
financing activities (52,356) (32,565) (109,004) (18,393)
-------- -------- --------- --------
Net change in cash and cash
equivalents (9,074) (850) (10,246) (19,202)
Cash and cash equivalents at
beginning of period 13,126 2,736 14,298 21,088
-------- -------- --------- --------
Cash and cash equivalents at
end of period $4,052 $1,886 $4,052 $1,886
======== ======== ========= ========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
In Thousands 2006 2005 2006 2005
- ------------ --------- --------- ----------- -----------
Segment net sales:
Chlorovinyls $464,865 $382,111 $906,465 $779,226
Aromatics 137,294 202,051 263,567 450,345
--------- --------- ----------- -----------
Net sales $602,159 $584,162 $1,170,032 $1,229,571
========= ========= =========== ===========
Segment operating income (loss):
Chlorovinyls $83,734 $36,024 $159,434 $94,975
Aromatics (466) (8,771) (5,432) 5,505
Unallocated corporate
expenses (7,916) (6,759) (19,875) (13,526)
--------- --------- ----------- -----------
Total operating income $75,352 $20,494 $134,127 $86,954
========= ========= =========== ===========
CONTACT: Georgia Gulf Corporation, Atlanta
Investor Relations
Angie Tickle, 770-395-4520