Exhibit 99.1
NEWS RELEASE
POLYONE UPDATES 2006 SECOND-QUARTER OUTLOOK
CLEVELAND - June 28, 2006 - PolyOne Corporation (NYSE: POL) today updated its
outlook for the second quarter ending June 30, 2006.
The following commentary summarizes conditions within the business segments:
o Performance Plastics - The positive business conditions the segment
experienced in the first quarter continue in the second quarter.
Consistent with the Company's view in the outlook section of its
first-quarter earnings release, demand in the latter half of the
second quarter improved following the processor inventory correction
that occurred primarily in March and April. Demand for building
product applications has remained buoyant throughout the quarter, with
demand for pressure pipe and wire and cable applications particularly
robust. Automotive demand, on the other hand, has remained relatively
soft. The Company is watching demand patterns closely as the second
half of the year approaches, in light of a potential moderation in
leading macroeconomic indicators.
PolyOne anticipates segment revenue growth of 7 percent to 10 percent
and a shipment volume increase of 3 percent to 5 percent compared with
the second quarter of 2005.
Also consistent with its earlier outlook, PolyOne anticipates that
product spreads will improve compared with the second quarter of 2005
and generally remain flat compared with the first quarter of 2006. As
a result of the factors outlined above, the Company expects segment
earnings to gain leverage from the anticipated revenue increase and
improve both sequentially and year over year.
o Distribution - As projected earlier, both shipment volume and revenues
appear on track to improve relative to the second quarter of 2005.
Demand has been relatively steady throughout the 2006 quarter, and
should result in a 7 percent to 10 percent revenue increase compared
with the second quarter of 2005. Shipment volume should increase 3
percent to 5 percent compared with the year-ago quarter. Operating
income should improve versus the second-quarter 2005 level, but likely
will not match the record first-quarter 2006 performance.
o Resin and Intermediates - The Company anticipates that segment
earnings will remain strong in the second quarter, but likely below
the record level experienced during the first quarter. The Company
does, however, expect earnings to exceed second-quarter 2005 results.
Industry spreads for polyvinyl chloride (PVC) resins in the 2006
second quarter are projected to be slightly lower than in the first
quarter as lower average ethylene costs only partially offset a
decline in quarterly average market prices for PVC. In addition, Oxy
Vinyls, LP experienced a production disruption early in the second
quarter that adversely affected income. Operating rates returned to
normal levels in May. SunBelt Chlor-Alkali continues to benefit from
strong caustic soda and chlorine demand, and should contribute
earnings at or above first-quarter levels.
o Other - The Company expects that non-recurring or non-operational
factors will result in a net benefit to earnings of $2 million to $3
million in the second quarter. The majority of this net benefit will
be reported within either Other Segment or Other expense, net, and
would represent a combination of factors, including the potential
impact of changes in foreign exchange rates, premiums on debt
repurchases, legal settlements, and adjustments to litigation and
other reserves.
The Company continues to anticipate that second-quarter earnings, supported by
cash distributions from OxyVinyls and SunBelt, should more than offset higher
capital expenditures and cash interest payments, resulting in positive operating
cash generation. PolyOne projects that operating cash flow for the year,
excluding cash proceeds received from the sale of the Engineered Films unit,
will significantly exceed that generated in 2005.
SECOND-QUARTER 2006 EARNINGS RELEASE AND CONFERENCE CALL
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PolyOne will release its second-quarter earnings on Wednesday, August 2, 2006,
and will host a conference call at 9:00 a.m. Eastern time on Thursday, August 3,
2006. The conference dial-in number is 888-489-0038 (domestic) or 706-643-1611
(international), conference topic: PolyOne Earnings Call. The replay number is
800-642-1687 (domestic) or 706-645-9291 (international). The conference ID for
the replay is 9935907. The call will be broadcast live and then via replay for
two weeks on the Company's Web site at www.polyone.com.
ABOUT POLYONE
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PolyOne Corporation, with 2005 annual revenues of approximately $2.5 billion, is
a leading global polymer compounding and services company and a North American
distributor of thermoplastic resins. Headquartered in northeast Ohio, PolyOne
has operations in North America, Europe, Asia and Australia, and joint ventures
in North America and South America. Product offerings include vinyl and other
thermoplastic compounds, polymer coating systems, color and additive
masterbatches, and specialty vinyl resins. Information on PolyOne's products and
services can be found at www.polyone.com.
Investor & Media Contact: Dennis Cocco
Vice President, Investor Relations
& Communications
440.930.1538
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FORWARD-LOOKING STATEMENTS
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In this press release, statements that are not reported financial
results or other historical information are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements give current
expectations or forecasts of future events and are not guarantees of
future performance. They are based on management's expectations that
involve a number of business risks and uncertainties, any of which
could cause actual results to differ materially from those expressed
in or implied by the forward-looking statements. You can identify
these statements by the fact that they do not relate strictly to
historic or current facts. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe" and other
words and terms of similar meaning in connection with any discussion
of future operating or financial performance. In particular, these
include statements relating to future actions; prospective changes in
raw material costs, product pricing or product demand; future
performance, including, without limitation, meeting cash flow goals,
receiving cash distributions from equity affiliates and achieving
working capital targets; results of current and anticipated market
conditions and market strategies; sales efforts; expenses; the outcome
of contingencies such as legal proceedings; and financial results.
Factors that could cause actual results to differ materially include,
but are not limited to:
o the effect on foreign operations of currency fluctuations, tariffs,
nationalization, exchange controls, limitations on foreign investment
in local businesses and other political, economic and regulatory
risks;
o changes in U.S., regional or world polymer consumption growth rates
affecting PolyOne's markets;
o changes in global industry capacity or in the rate at which
anticipated changes in industry capacity come online in the polyvinyl
chloride (PVC), chlor-alkali, vinyl chloride monomer (VCM) or other
industries in which PolyOne participates;
o fluctuations in raw material prices, quality and supply and in energy
prices and supply, in particular fluctuations outside the normal range
of industry cycles;
o production outages or material costs associated with scheduled or
unscheduled maintenance programs;
o costs or difficulties and delays related to the operation of joint
venture entities;
o lack of day-to-day operating control, including procurement of raw
materials, of equity or joint venture affiliates;
o partial control over investment decisions and dividend distribution
policy of the OxyVinyls partnership and other minority equity holdings
of PolyOne;
o an inability to launch new products and/or services within PolyOne's
various businesses;
o the possibility of further goodwill impairment;
o an inability to maintain any required licenses or permits;
o an inability to comply with any environmental laws and regulations;
o the cost of compliance with environmental laws and regulations,
including any increased cost of complying with new or revised laws and
regulations;
o unanticipated developments that could occur with respect to
contingencies such as litigation and environmental matters, including
any developments that would require any increase in our costs and/or
reserves for such contingencies;
o an inability to achieve or delays in achieving or achievement of less
than the anticipated financial benefit from initiatives related to
cost reductions and employee productivity goals;
o a delay or inability to achieve targeted debt level reductions;
o an inability to access the receivables sale facility as a result of
breaching covenants due to not achieving anticipated earnings
performance or for any other reason;
o any poor performance of our pension plan assets and any obligation on
our part to fund PolyOne's pension plan;
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o any delay and/or inability to bring the North American Color and
Additives Masterbatch and the Engineered Materials product platforms
to profitability;
o an inability to raise prices or sustain price increases for products;
o an inability to maintain appropriate relations with unions and
employees in certain locations in order to avoid disruptions of
business; and
o other factors affecting our business beyond our control, including,
without limitation, changes in the general economy, changes in
interest rates and changes in the rate of inflation.
We cannot guarantee that any forward-looking statement will be realized,
although we believe we have been prudent in our plans and assumptions.
Achievement of future results is subject to risks, uncertainties and inaccurate
assumptions. Should known or unknown risks or uncertainties materialize, or
should underlying assumptions prove inaccurate, actual results could vary
materially from those anticipated, estimated or projected. Investors should bear
this in mind as they consider forward-looking statements.
We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosures we make on related subjects
in our reports on Form 10-Q, 8-K and 10-K provided to the Securities and
Exchange Commission. You should understand that it is not possible to predict or
identify all risk factors. Consequently, you should not consider any list to be
a complete set of all potential risks or uncertainties. (Ref. #62706)
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