Exhibit 99.1
Georgia Gulf Reports Q3 Financial Results
-- Georgia Gulf records break-even third quarter net income
-- Income tax provision includes $2.6 million of FIN 48 interest expense
-- Consolidated SG&A costs decline 5% from Q2 2007
-- Georgia Gulf has commenced initial production testing on its
modernized PVC resin line
-- Georgia Gulf intends to temporarily idle certain PVC resin capacity
-- Company secures several new customers for its window and door profile
products for 2008
ATLANTA--(BUSINESS WIRE)--Nov. 1, 2007--Georgia Gulf (NYSE: GGC) today
announced financial results for its third quarter ended September 30, 2007.
Georgia Gulf reported net sales of $815.3 million for the third quarter of
2007 compared to net sales of $576.3 million for the third quarter of 2006. The
increase in sales is primarily due to the acquisition of Royal Group, which was
completed on October 3, 2006. Building and home improvement products sold under
the Royal Group name contributed $309.6 million to net sales during the third
quarter, with chemical operations contributing $505.7 million.
Georgia Gulf reported net income of $89 thousand or $0.00 per diluted share
for the third quarter of 2007, compared to net income of $22.7 million or $0.66
per diluted share during the same quarter in the previous year. The decline in
net income was primarily due to increased interest expense of $32.8 million
associated with the acquisition of Royal Group. For the third quarter of 2007,
the net loss was $0.01 per diluted share from continuing operations, with net
income of $0.01 per diluted share generated by discontinued operations.
Georgia Gulf's income from continuing operations before income taxes was
$8.4 million during the third quarter of 2007. The Company's income tax
provision during the quarter was $8.7 million. The third quarter tax provision
reflects the impact of Financial Accounting Standards Board Interpretation
Number 48, which is entitled "Accounting for Uncertainty in Income Taxes" (FIN
48). The third quarter 2007 FIN 48 impact included interest on the liability for
uncertain tax provisions of $2.6 million.
On a sequential quarterly basis, third quarter 2007 net income rose $4.2
million from the second quarter, while sales declined approximately 4%. Georgia
Gulf's improved net income reflects enhanced operating performance in the
chlorovinyls segment, as well as the successful implementation of synergy and
improvement programs associated with the Royal Group acquisition. Consolidated
Selling, General and Administrative costs decreased by $3.2 million or 5 percent
compared to the second quarter of 2007, evidencing Georgia Gulf's on-going
initiatives to reduce cost.
Commenting on third quarter results, Ed Schmitt, Georgia Gulf's Chairman,
President and C.E.O. noted that the Company "achieved its goal of improved
sequential operating performance in spite of tougher market conditions. When we
compare consolidated third quarter 2007 operating income with pro-forma third
quarter 2006 operating income reflecting the combined results of Georgia Gulf
and Royal Group, we can see an operating income improvement amidst a $97.8
million decline in sales, reflecting our progress with cost reduction
initiatives," highlighted Mr. Schmitt.
Window & Door Profiles and Mouldings
In the window & door profiles and mouldings segment, sales were $147.0
million in the third quarter of 2007, compared to $152.0 million recorded by
Royal Group during the same quarter in the prior year. In spite of lower sales,
operating income increased to $8.4 million in the third quarter of 2007 compared
to an operating loss of $7.6 million recorded by Royal Group during the same
quarter in the prior year. The $16.0 million improvement in operating income on
a year-over-year basis reflects successful implementation of cost savings
initiatives, as well as increased sales volumes.
Outdoor Building Products
In the outdoor building products segment, sales were $162.5 million in the
third quarter of 2007, compared to $181.2 million recorded by Royal Group during
the same quarter in the prior year. The segment reported operating income of
$3.8 million in the third quarter of 2007, compared to an operating loss of $3.8
million recorded by Royal Group during the same quarter in the prior year. The
$7.6 million year-over-year improvement in operating income was achieved through
cost savings initiatives, in spite of lower sales volumes.
Chlorovinyls
In the chlorovinyls segment, third quarter of 2007 sales declined to $356.8
million from $419.0 million on a pro-forma combined basis during the third
quarter of 2006. Operating income in the third quarter of 2007 declined to $43.6
million from $66.9 million on a pro-forma combined basis in the same quarter
during the prior year. The year over year decline in operating income is
primarily attributable to lower selling prices and lower sales volumes, coupled
with increased ethylene costs. According to industry reports, domestic PVC resin
sales volumes were down by 6% year-over-year, with selling prices down by 13%.
Aromatics
In the aromatics segment, sales decreased to $148.9 million in the third
quarter of 2007 from $160.9 million during the third quarter of 2006. The
segment reported an operating loss of $3.1 million for the third quarter of 2007
compared to an operating loss of $2.2 million in the same quarter during the
prior year. The increased operating loss is attributable to planned maintenance
outages, as well as increased propylene feedstock costs.
Outlook
Georgia Gulf has commenced initial production testing on its modernized PVC
resin production line located in Plaquemine, LA, which will eventually provide
450 million pounds annually of efficient production capacity. With production on
the modernized line in Plaquemine to be scaled up in the coming months, the
Company currently plans to temporarily idle certain other PVC production lines
in North America, with a target of temporarily removing 700 million pounds of
PVC production capacity on an annualized basis. These changes to Georgia Gulf's
manufacturing infrastructure will result in a net decrease of 250 million pounds
of PVC resin production capacity on an annualized basis. Commenting on these
changes, Mr. Schmitt noted that the Company is "temporarily removing its least
efficient production capacity, in an effort to improve operational efficiency."
Providing further commentary on the outlook for the Company, Mr. Schmitt
noted that, "In the near-term, we are preparing to confront slower seasonal
market conditions. We remain encouraged by the progress the organization has
made with cost reduction programs, as well as our progress with well-targeted
sales development initiatives," concluded Mr. Schmitt. During the third quarter,
the window & door profiles and mouldings segment of Georgia Gulf's business
recorded a 13% increase in volume compared to the second quarter of the year.
The Company has announced that it has secured several new customers for its
window and door profile products for 2008.
Conference Call
The Company will discuss third quarter financial results and business
developments via conference call and Webcast on Friday, November 2, 2007, at
10:00 AM ET. To access the Company's third quarter conference call, please dial
888-552-7928 (domestic) or 706-679-3718 (international). To access the
conference call via Webcast, log on to
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112207
&eventID=166855.(Due to certain characters contained in this URL, it may be
necessary to copy and paste this hyperlink into your Internet browser's URL
address field). Playbacks will be available from 12:00 PM ET Friday, November 2,
to midnight ET Friday, November 9. Playback numbers are 800-642-1687 (domestic)
or 706-645-9291 (international). The conference call ID number is 20513346.
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,
deck, fence and rail and outdoor storage buildings. 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
difficulties in integrating the recently acquired business of Royal Group, Inc.,
uncertainties relating to Royal Group's business and liabilities, uncertainties
regarding asset sales, synergies, operating efficiencies and competitive
conditions, future global economic conditions, economic conditions in the
industries to which our products are sold, 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, 2006.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In Thousands September 30, December 31,
2007 2006
--------------------------------------- ------------- -------------
ASSETS
Cash and cash equivalents $ 7,987 $ 9,641
Receivables, net of allowance 280,085 237,496
Inventories 403,565 339,405
Prepaid expenses 14,765 29,577
Income tax receivables 30,637 37,143
Deferred income taxes 30,947 30,664
Current assets held for sale - 11,080
------------ -------------
Total current assets 767,986 695,006
Property, plant and equipment, net 1,014,480 1,023,004
Goodwill 404,734 377,124
Intangible assets, net 93,276 88,361
Deferred income taxes 23,052 -
Other assets, net 204,339 204,813
Non-current assets held for sale 49,733 69,919
------------ -------------
Total assets $2,557,600 $2,458,227
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 25,567 $ 32,495
Accounts payable 270,878 215,282
Interest payable 37,793 21,290
Accrued compensation 35,191 37,218
Liability for unrecognized income tax
benefits and other tax reserves 77,393 88,338
Other accrued liabilities 65,085 97,428
------------ -------------
Total current liabilities 511,907 492,051
Long-term debt, less current portion 1,426,659 1,465,639
Liability for unrecognized income tax
benefits 36,767 -
Deferred income taxes 126,951 88,476
Other non-current liabilities 25,998 18,538
Stockholders' equity 429,318 393,523
------------ -------------
Total liabilities and stockholders'
equity $2,557,600 $2,458,227
============ =============
Common shares outstanding 34,392 34,390
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
In Thousands (except per
share data) 2007 2006 2007 2006
------------------------- --------- --------- ----------- -----------
Net sales $815,293 $576,288 $2,380,854 $1,746,320
Operating costs and
expenses
Costs of sales 714,809 513,402 2,138,830 1,511,876
Selling, general and
administrative expenses 55,779 18,699 172,907 56,130
--------- --------- ----------- -----------
Total operating costs
and expenses 770,588 532,101 2,311,737 1,568,006
--------- --------- ----------- -----------
Operating income 44,705 44,187 69,117 178,314
Interest expense, net (33,906) (2,779) (99,362) (10,588)
Foreign exchange
(losses) gains (2,440) (4,459) 3,070 (15,846)
--------- --------- ----------- -----------
(Loss) income from
continuing operations
before income taxes 8,359 36,949 (27,175) 151,880
Provision for income
taxes 8,703 14,288 1,553 56,148
--------- --------- ----------- -----------
(Loss) income from
continuing operations (344) 22,661 (28,728) 95,732
Income (loss) from
discontinued operations,
net of tax 433 - (9,974) -
--------- --------- ----------- -----------
Net income (loss) $ 89 $ 22,661 $ (38,702) $ 95,732
========= ========= =========== ===========
Earnings (loss) per
share:
Basic:
(Loss) income from
continuing operations $ (0.01) $ 0.66 $ (0.84) $ 2.81
Income (loss) from
discontinued operations 0.01 - (0.29) -
--------- --------- ----------- -----------
Net income (loss) $ 0.00 $ 0.66 $ (1.13) $ 2.81
========= ========= =========== ===========
Diluted:
(Loss) income from
continuing operations $ (0.01) $ 0.66 $ (0.84) $ 2.78
Income (loss) from
discontinued operations 0.01 - (0.29) -
--------- --------- ----------- -----------
Net income (loss) $ 0.00 $ 0.66 $ (1.13) $ 2.78
========= ========= =========== ===========
Weighted average common
shares:
Basic 34,359 34,110 34,343 34,087
Diluted 34,561 34,392 34,343 34,389
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Nine Months Ended
In Thousands September 30, September 30,
- --------------------------- ------------------- ---------------------
2007 2006 2007 2006
--------- --------- ---------- ----------
Cash flows from operating
activities:
Net (loss) income $ 89 $ 22,661 $ (38,702) $ 95,732
Adjustments to reconcile
net (loss) income to net
cash (used in) provided by
operating activities:
Depreciation and
amortization 38,159 16,061 111,935 48,016
Foreign exchange loss
(gain) (2,130) 4,459 (7,300) 15,846
Deferred income taxes (229) (4,203) (11,612) (12,745)
Excess tax benefit related
to stock plans (54) 36 (714) (194)
Stock based compensation 1,567 2,506 9,221 10,581
Change in operating
assets, liabilities and
other 53,323 (622) 857 9,977
--------- --------- ---------- ----------
Net cash provided by
operating activities from
continuing operations 90,725 40,898 63,685 167,213
Net cash provided by
operating activities from
discontinuing operations - - 398 -
--------- --------- ---------- ----------
Net cash provided by
operating activities: 90,725 40,898 64,083 167,213
--------- --------- ---------- ----------
Cash flows (used in)
provided by investing
activities
Capital expenditures (18,288) (19,939) (72,624) (47,497)
Proceeds from sale of PP&E,
assets held for sale and
discontinued operations 4,701 - 79,642 -
--------- --------- ---------- ----------
Net cash (used in) provided
by investing activities (13,587) (19,939) 7,018 (47,497)
--------- --------- ---------- ----------
Cash flows from financing
activities:
Net change in revolving
line of credit (70,097) (11,100) (6,591) (115,300)
Repayment of long-term
debt (1,259) - (152,921) -
Proceeds from sale-
leaseback financing - - 95,865 -
Proceeds from issuance of
common stock - 63 - 365
Purchase and retirement of
common stock - - (685) (1,032)
Tax benefits from employee
share-based exercises - 7 - 1,430
Dividends paid (2,770) (2,749) (8,325) (8,246)
--------- --------- ---------- ----------
Net cash used in financing
activities (74,126) (13,779) (72,657) (122,783)
--------- --------- ---------- ----------
Effect of exchange rate
changes on cash and cash
equivalents 105 - (98) -
Net change in cash and cash
equivalents 3,117 7,180 (1,654) (3,067)
Cash and cash equivalents at
beginning of period 4,870 4,051 9,641 14,298
--------- --------- ---------- ----------
Cash and cash equivalents at
end of period $ 7,987 $ 11,231 $ 7,987 $ 11,231
========= ========= ========== ==========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------------
In Thousands 2007 2006 2007 2006
- ------------------------ --------- --------- ----------- -----------
Segment net sales:
Chlorovinyls $356,794 $415,362 $1,052,704 $1,321,827
Window & door profiles
and mouldings products 147,029 - 381,853 -
Outdoor building
products 162,534 - 454,470 -
Aromatics 148,936 160,926 491,827 424,493
--------- --------- ----------- -----------
Net sales $815,293 $576,288 $2,380,854 $1,746,320
========= ========= =========== ===========
Segment operating income
(loss):
Chlorovinyls $ 43,621 $ 56,373 $ 84,061 $ 215,807
Window & door profiles
and mouldings products 8,364 - 5,537 -
Outdoor building
products 3,828 - 2,769 -
Aromatics (3,076) (2,217) 6,983 (7,649)
Unallocated corporate
expenses (8,032) (9,969) (30,233) (29,844)
--------- --------- ----------- -----------
Total operating income $ 44,705 $ 44,187 $ 69,117 $ 178,314
========= ========= =========== ===========
CONTACT: Georgia Gulf Corporation
Corporate Communications
Mark Badger, 905-264-0701/770-395-4524
or
Georgia Gulf Corporation
Investor Relations
Angie Tickle, 770-395-4520