Exhibit 99.1
Georgia Gulf Reports Third Quarter Earnings of $.66 Per Diluted Share
ATLANTA--(BUSINESS WIRE)--Oct. 26, 2006--Georgia Gulf Corporation (NYSE:
GGC) today announced its financial results for the third quarter of 2006. Since
Georgia Gulf completed its acquisition of Royal Group on October 3, 2006,
Georgia Gulf's third quarter financial results do not include Royal Group.
For the third quarter of 2006, Georgia Gulf's net sales were $576.3 million
compared to $525.2 million for the third quarter of 2005. Georgia Gulf's net
income was $22.7 million or $.66 per diluted share for the third quarter of
2006, compared to net income of $27.9 million or $.82 per diluted share for the
same quarter last year. The decline in earnings is primarily a result of higher
average raw materials costs, which more than offset higher overall sales prices
and lower natural gas costs. The results for the third quarter of 2006 also
include an unrealized loss of $.08 per diluted share related to Georgia Gulf's
foreign exchange hedge related to the purchase price for the Royal Group
acquisition, which was in Canadian dollars.
In addition, during the third quarter of 2005, Georgia Gulf was able to
sell lower cost inventory in a significantly increasing raw materials costs
environment as prices drastically escalated at the end of the third quarter of
2005 due to Hurricanes Katrina and Rita. This resulted in a favorable impact of
$.37 per diluted share for the third quarter of 2005 as compared to a minimal
impact during the third quarter of 2006. Also during the third quarter of 2005,
results included a negative impact of $.24 per diluted share due to the
hurricanes and favorable tax adjustments of $.09 per diluted share.
Compared to the second quarter of 2006, Georgia Gulf realized reduced net
income in the third quarter of 2006 as a result of higher raw materials costs as
well as lower vinyl resins and vinyl compounds sales volumes, which more than
offset higher sales prices and lower natural gas costs. In addition, the second
quarter of 2006 earnings results included a favorable impact of about $.13 per
diluted share related to selling lower cost inventory in an increasing raw
materials cost environment compared to a minimal impact during the third quarter
of 2006. During the second quarter of 2006, Georgia Gulf reported net earnings
of $39.4 million, or $1.15 per diluted share.
"Although our businesses experienced much higher average raw materials
costs, we generally maintained higher sales prices and respectable sales volumes
during the quarter until demand softened in September," said Ed Schmitt,
Chairman, President and CEO of Georgia Gulf Corporation. "For the fourth
quarter, we are experiencing continued softening in demand as we enter into the
seasonally slow part of the year."
Chlorovinyls
For the third quarter of 2006, Georgia Gulf's chlorovinyls business
performed well with operating income of $56.4 million, an increase from $53.1
million in the third quarter of 2005. This increase was the result of increased
sales prices outpacing increased raw materials costs. Sales volumes were strong
in July and August for vinyl resins and vinyl compounds but declined in
September.
Compared to the second quarter of 2006, operating income declined from a
record setting quarterly operating income of $83.7 million as the Company
experienced lower sales volumes for vinyl resins and vinyl compounds, higher
ethylene costs and lower caustic soda sales prices.
Aromatics
For the third quarter of 2006, Georgia Gulf reported an aromatics operating
loss of $2.2 million, compared to an operating loss of $1.9 million during the
third quarter of 2005. Higher aromatics sales prices and increased phenol and
acetone sales volumes were offset by higher benzene and propylene costs as well
as lower cumene sales volumes.
During the third quarter of 2006, the aromatics business experienced an
operating loss of $2.2 million compared to an operating loss of $0.5 million
during the second quarter of 2006, primarily as a result of higher benzene costs
offset higher aromatics sales prices and sales volumes.
Royal Group
Since completion of the acquisition of Royal Group on October 3, 2006,
Georgia Gulf has been implementing its transition plan to integrate the two
companies and begun to take steps to enhance Royal Group's financial
performance.
Georgia Gulf continues to finalize divestitures previously initiated by
Royal Group, with proceeds of approximately $98 million expected in the fourth
quarter. These divestitures include the sale of Royal Group's distribution
center in Canada, its US window coverings manufacturing plants and its Polish
operations. Georgia Gulf has also announced its intentions to exit certain
unprofitable businesses, including certain segments of Royal Group's window
coverings operations, and Royal Building System operations in China and Mexico.
Georgia Gulf anticipates annual costs savings and operational efficiencies
of $64 million in 2007 and increasing to a running rate of $157 million by the
end of 2008. "We have made good progress on costs savings initiatives and, at
this point, expect to stay on target going forward," said Mr. Schmitt. "We will
continue to move quickly and remain excited about this opportunity."
Conference Call
Georgia Gulf will discuss its third quarter earnings via teleconference and
Webcast on Friday, October 27, 2006, at 9:00 AM ET. 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/311005. Playbacks will be available from 10:00 AM ET
Friday, October 27, to midnight ET Friday, November 3. Playback numbers are
800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID
number is 8771813.
Georgia Gulf Corporation is a leading North American manufacturer and
international marketer of two integrated chemical product lines, chlorovinyls
and aromatics. Under Royal Group's brands, Georgia Gulf manufactures vinyl-based
building and home improvement products including custom window profiles, siding,
pipe and pipe fittings, mouldings, decking, fencing, railing, and window
coverings.
Georgia Gulf Corporation's chemical products can be found in high
performance plastics, pulp and paper production, packaging, chemical
intermediates, pharmaceuticals and medical applications. Headquartered in
Atlanta, the Company has nearly 50 manufacturing facilities primarily in North
America as well as a facility in China.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
In Thousands September 30, December 31,
2006 2005
- ------------------------------------- ------------- ----------------
ASSETS
Cash and cash equivalents $ 11,231 $ 14,298
Receivables, net of allowance 109,333 118,193
Inventories 191,967 195,628
Prepaid expenses and other 3,819 13,306
Deferred income taxes 5,222 5,091
------------- ----------------
Total current assets 321,572 346,516
Property, plant and equipment, net 406,310 401,412
Goodwill 77,720 77,720
Other assets, net 173,023 175,305
------------- ----------------
Total assets $ 978,625 $ 1,000,953
============= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 34,000 $ 49,300
Accounts payable 182,164 202,179
Interest payable 3,429 1,226
Accrued compensation 16,221 14,986
Income taxes payable - 1,258
Unrealized losses on foreign exchange
derivatives 15,846 -
Accrued liabilities 23,063 15,237
------------- ----------------
Total current liabilities 274,723 284,186
Long-term debt, less current portion 129,339 229,339
Deferred income taxes 95,345 107,959
Other non-current liabilities 18,997 16,457
Stockholders' equity 460,221 363,012
------------- ----------------
Total liabilities and stockholders'
equity $ 978,625 $ 1,000,953
============= ================
Common shares outstanding 34,219 34,238
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
In Thousands (except per
share data) 2006 2005 2006 2005
- -------------------------- --------- --------- ----------- -----------
Net sales $576,288 $525,223 $1,746,320 $1,754,794
--------- --------- ----------- -----------
Operating costs and
expenses
Costs of sales 513,402 464,884 1,511,876 1,577,036
Selling, general and
administrative 18,699 16,917 56,130 47,382
--------- --------- ----------- -----------
Total operating costs and
expenses 532,101 481,801 1,568,006 1,624,418
--------- --------- ----------- -----------
Operating income 44,187 43,422 178,314 130,376
Interest expense, net (2,779) (5,148) (10,588) (15,975)
Unrealized losses on
foreign exchange
derivatives (4,459) - (15,846) -
--------- --------- ----------- -----------
Income before income
taxes 36,949 38,274 151,880 114,401
Provision for income
taxes 14,288 10,341 56,148 37,556
--------- --------- ----------- -----------
Net income $22,661 $27,933 $95,732 $76,845
========= ========= =========== ===========
Earnings per share:
Basic $0.66 $0.82 $2.81 $2.27
Diluted $0.66 $0.82 $2.78 $2.24
Weighted average common
shares:
Basic 34,110 33,900 34,087 33,855
Diluted 34,392 34,150 34,389 34,234
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Nine Months
Ended Ended
In Thousands September 30, September 30,
- ------------------------------ ----------------- ------------------
2006 2005 2006 2005
-------- -------- --------- --------
Cash flows from operating
activities:
Net income $22,661 $27,933 $95,732 $76,845
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 16,060 15,848 48,016 47,235
Unrealized loss on foreign
exchange derivatives 4,459 - 15,846 -
Deferred income taxes (4,203) (9,175) (12,745) (14,914)
Tax benefit (deficiency)
related to stock plans 36 254 (194) 1,930
Stock based compensation 2,506 964 10,581 2,795
Change in operating
assets, liabilities and
other (622) 3,431 9,977 (62,027)
-------- -------- --------- --------
Net cash provided by operating
activities 40,897 39,255 167,213 51,864
-------- -------- --------- --------
Cash flows used in investing
activities
Capital expenditures (19,939) (5,623) (47,497) (19,041)
-------- -------- --------- --------
Cash flows from financing
activities:
Net change in revolving line (11,100) (23,900) (115,300) (37,800)
of credit Proceeds from
issuance of common stock 63 79 365 2,724
Purchase and retirement of
common stock - - (1,032) (1,682)
Tax benefits from employee
share-based exercises 7 - 1,430 -
Dividends paid (2,749) (2,729) (8,246) (8,185)
-------- -------- --------- --------
Net cash used in financing
activities (13,779) (26,550) (122,783) (44,943)
-------- -------- --------- --------
Net change in cash and cash
equivalents 7,179 7,082 (3,067) (12,120)
Cash and cash equivalents at
beginning of period 4,052 1,886 14,298 21,088
-------- -------- --------- --------
Cash and cash equivalents at
end of period $11,231 $8,968 $11,231 $8,968
======== ======== ========= ========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
In Thousands 2006 2005 2006 2005
- ------------------------ --------- --------- ----------- -----------
Segment net sales:
Chlorovinyls $415,362 $388,247 $1,321,827 $1,167,473
Aromatics 160,926 136,976 424,493 587,321
--------- --------- ----------- -----------
Net sales $576,288 $525,223 $1,746,320 $1,754,794
========= ========= =========== ===========
Segment operating income
(loss):
Chlorovinyls $56,373 $53,115 $215,807 $148,090
Aromatics (2,217) (1,878) (7,649) 3,627
Unallocated corporate
expenses (9,969) (7,815) (29,844) (21,341)
--------- --------- ----------- -----------
Total operating income $44,187 $43,422 $178,314 $130,376
========= ========= =========== ===========
CONTACT: Georgia Gulf Corporation
Angie Tickle
Investor Relations
770-395-4520
or
Royal Group
Mark Badger
Investor Relations
905-264-0701