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Exhibit 99.1

 

NEWS

 

Georgia Gulf Reports Second Quarter 2011 Financial Results

 

ATLANTA— August 3, 2011 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its second quarter ended June 30, 2011.

 

The company reported net sales of $831.7 million for the second quarter of 2011, 13 percent higher than the net sales of $735.7 million reported in the second quarter of 2010.  Georgia Gulf reported operating income of $35.5 million for the second quarter of 2011 compared to operating income of $37.9 million for the second quarter of 2010.  Operating income was reduced primarily by lower chlorovinyls sales volumes and higher raw materials costs, partially offset by higher ECU values.

 

Georgia Gulf reported net income of $14.6 million, or $0.42 per diluted share, for the second quarter of 2011, compared to net income of $21.7 million, or $0.62 per diluted share, during the same quarter in the previous year.

 

“Our operating income improved more than $44 million for the first half of 2011 compared to the same period in 2010.  These results were achieved despite the challenges presented by the unplanned chloralkali outage as well as the logistical and production issues due to high water on the Mississippi River System in the second quarter,” said Paul Carrico, president and chief executive officer.

 

“With these unplanned events behind us, we expect our results for the second half of 2011 to reflect the broader North American chemicals industry recovery that is being driven by North America’s natural gas advantage and global demand,” Carrico said.  “The macroeconomic expectations that led us to increase our 2011 adjusted EBITDA guidance to a range of $275-295 million remain intact. Longer term, we also believe that our building products business is well positioned to take advantage of the eventual recovery in both the economy and housing.”

 

Chlorovinyls

 

In the Chlorovinyls segment, second quarter 2011 net sales increased to $323.7 million from $300.8 million during the second quarter of 2010. The segment posted operating income of $37.8 million, compared to operating income of $36.2 million during the same quarter in the prior year.  The increase in net sales and operating income was primarily due to higher caustic soda and resin sales prices compared to the second quarter of 2010, mostly offset by lower caustic soda and PVC sales volumes resulting from the unplanned chloralkali outage and resulting PVC force majeure, and logistical issues due to high water on the Mississippi River System.  The company’s chloralkali production returned to full capacity in June and the PVC force majeure announced in mid April was lifted in early July.  Operating income for the second quarter of 2011 includes a $1.2 million restructuring benefit from the disposition of equipment at the Oklahoma City PVC plant that was closed in 2008.

 



 

Building Products

 

In the Building Products segment, net sales were $274.2 million for the second quarter of 2011 compared to the $243.2 million recorded during the same quarter in the prior year. Net sales on a constant currency basis increased 9 percent.  This sales increase was driven by the benefit of the sales volumes resulting from the Exterior Portfolio acquisition in February 2011.  The segment’s operating income was $16.9 million for the second quarter of 2011, compared to $18.7 million of operating income during the same quarter the prior year. The decrease in operating income was primarily due to a less favorable geographic and product sales mix, a second quarter 2010 non-income tax benefit which did not re-occur in the second quarter of 2011, and higher SG&A costs primarily related to new product introductions.  Operating income for the second quarter of 2011 includes a $0.4 million restructuring expense related to the Exterior Portfolio acquisition.

 

Aromatics

 

In the Aromatics segment, net sales increased to $233.9 million for the second quarter of 2011 from $191.6 million during the second quarter of 2010. The increase was primarily due to higher sales prices, partially offset by lower sales volumes.  During the second quarter of 2011, the segment recorded an operating loss of $7.4 million, compared to an operating loss of $7.8 million during the same quarter in 2010. The decrease in operating loss was primarily due to improved margins, mostly offset by lower sales volumes, inventory holding losses and higher maintenance expense due to the two planned turnarounds during the quarter and logistical issues due to high water on the Mississippi River System.

 

Liquidity

 

As of June 30, 2011, the company had $41.7 million of cash on hand as well as $173.2 million of borrowing capacity available under its asset-backed loan (ABL) facility.  As of the end of the second quarter of 2011, liquidity had decreased by approximately $31.6 million compared to the end of the first quarter of 2011 primarily due to the seasonal increase in working capital needs of the business and rising raw materials costs.

 

Conference Call

 

The company will discuss second quarter financial results and business developments via conference call and webcast on Thursday, August 4, at 10:00 a.m. Eastern time.  To access the company’s second-quarter conference call, please dial (877) 312-5406 (domestic) or (706) 679-9856 (international). To access the conference call via webcast, log on to http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112207&eventID=4162624.   Playbacks will be available from 1:00 p.m. Eastern time on Thursday, August 4, until 11:59 p.m. Eastern time on Thursday, August 18. Playback numbers are (855) 859-2056 (domestic) or (706) 679-9856 (international). The conference call ID number is 86006423.

 

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 the Royal

 



 

Group and Exterior Portfolio brands, include window and door profiles, mouldings, siding, pipe and pipe fittings, and deck, fence and rail products. Georgia Gulf, headquartered in Atlanta, Georgia, has manufacturing facilities located throughout North America to provide industry-leading service to customers. For more information, visit www.ggc.com.

 

Safe Harbor

 

This news release contains forward-looking statements subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.  These forward looking statements relate to, among other things, our sales and adjusted EBITDA guidance for 2011, and expectations of future results.   Forward-looking statements are based on management’s assumptions regarding, among other things, general economic and industry-specific business conditions, as well as the execution of our business strategy, and actual results may be materially different.  Risks and uncertainties inherent in these assumptions include, but are not limited to, uncertainties regarding future prices for our products, industry capacity levels for our products, raw materials and energy costs and availability, feedstock availability and prices, changes in governmental and environmental regulations or the adoption of new laws or regulations that may make it more difficult or expensive to operate our businesses or manufacture our products, our ability to generate sufficient cash flows from our business, future economic conditions in the specific industries to which our products are sold, global economic conditions, the effectiveness of certain previously disclosed and recently implemented changes to our internal control over financial reporting, our ability to successfully integrate and execute our business plans for acquisitions and other factors discussed in the Securities and Exchange Commission Filings of Georgia Gulf Corporation from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2010 and subsequent quarterly reports on Form 10-Q.

 

Use of Non-GAAP Measures

 

Georgia Gulf supplements its financial statements prepared in accordance with Generally Accepted Accounting Principles (GAAP) with Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, as well as cash and non-cash restructuring charges and certain other charges, if any, related to financial restructuring and business improvement initiatives, gains on substantial modification of debt and sales of certain assets, certain purchase accounting and certain non-income tax reserve adjustments, and goodwill, intangibles, and other long-lived asset impairments) because investors commonly use Adjusted EBITDA as a main component of valuation analysis of cyclical companies such as Georgia Gulf.  Adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to net income as a measure of performance or to cash provided by operating activities as a measure of liquidity. In addition, our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited.

 

A reconciliation of forecasted 2011 Adjusted EBITDA to forecasted 2011 net income determined in accordance with GAAP is included in the table below.

 



 

$ millions

 

 

 

2011 Adjusted EBITDA Guidance

 

$

275-295

 

Depreciation and Amortization

 

104

 

Restructuring and Other

 

2

 

Interest Expense

 

68

 

Tax Expense (30% rate)

 

30-36

 

Net Income

 

$

71-85

 

 

CONTACTS:

 

Investor Relations

 

Martin Jarosick

(770) 395-4524

 

Media

Alan Chapple

(770) 395-4538

chapplea@ggc.com

 


 


 

Georgia Gulf Corporation and Subsidiaries

 

Condensed Consolidated Balance Sheets

 

(Unaudited)

 

 

 

June 30,

 

December 31,

 

(In thousands, except share data)

 

2011

 

2010

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

41,686

 

$

122,758

 

Receivables, net of allowance for doubtful accounts of $6,578 in 2011 and $10,026 in 2010

 

419,629

 

267,662

 

Inventories

 

369,143

 

261,235

 

Prepaid expenses

 

20,231

 

16,606

 

Income tax receivable

 

432

 

899

 

Deferred income taxes

 

10,769

 

7,266

 

Total current assets

 

861,890

 

676,426

 

Property, plant and equipment, net

 

663,873

 

653,137

 

Goodwill

 

215,989

 

209,631

 

Intangible assets, net of accumulated amortization of $13,281 in 2011 and $11,873 in 2010

 

47,419

 

14,351

 

Deferred income taxes

 

8,666

 

8,078

 

Other assets, net

 

95,858

 

104,078

 

Total assets

 

$

1,893,695

 

$

1,665,701

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current portion of long-term debt

 

$

37,557

 

$

22,132

 

Accounts payable

 

228,495

 

132,639

 

Interest payable

 

22,708

 

22,558

 

Income taxes payable

 

1,269

 

2,910

 

Accrued compensation

 

22,328

 

38,382

 

Liability for unrecognized income tax benefits and other tax reserves

 

2,940

 

8,822

 

Other accrued liabilites

 

64,658

 

48,536

 

Total current liabilities

 

379,955

 

275,979

 

Long-term debt

 

744,575

 

667,810

 

Liability for unrecognized income tax benefits

 

46,766

 

46,884

 

Deferred income taxes

 

202,177

 

189,805

 

Other non-current liabilities

 

39,492

 

40,631

 

Total liabilities

 

1,412,965

 

1,221,109

 

Commitments and contingencies:

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock - $0.01 par value; 75,000,000 shares authorized; no shares issued

 

 

 

Common stock - $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 33,983,404 in 2011 and 33,962,291 in 2010

 

340

 

340

 

Additional paid-in capital

 

480,359

 

476,276

 

Accumulated other comprehensive income (loss), net of tax

 

5,130

 

(210

)

Accumulated deficit

 

(5,099

)

(31,814

)

Total stockholders’ equity

 

480,730

 

444,592

 

Total liabilities and stockholders’ equity

 

$

1,893,695

 

$

1,665,701

 

 



 

Georgia Gulf Corporation and Subsidiaries

 

Condensed Consolidated Statements of Income

 

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In thousands, except per share data)

 

2011

 

2010

 

2011

 

2010

 

Net sales

 

$

831,711

 

$

735,706

 

$

1,619,648

 

$

1,367,155

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

748,725

 

660,414

 

1,460,953

 

1,264,785

 

Selling, general and administrative expenses

 

48,183

 

36,959

 

86,669

 

74,817

 

Restructuring (income) expense

 

(707

)

439

 

(125

)

134

 

Total operating costs and expenses

 

796,201

 

697,812

 

1,547,497

 

1,339,736

 

Operating income

 

35,510

 

37,894

 

72,151

 

27,419

 

Interest expense, net

 

(16,919

)

(17,425

)

(33,389

)

(35,260

)

Loss on redemption of debt

 

(1,100

)

 

(1,100

)

 

Foreign exchange loss

 

(340

)

(429

)

(940

)

(434

)

Income (loss) before income taxes

 

17,151

 

20,040

 

36,722

 

(8,275

)

Provision (benefit) for income taxes

 

2,563

 

(1,649

)

10,007

 

(10,933

)

Net income

 

$

14,588

 

$

21,689

 

$

26,715

 

$

2,658

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.42

 

$

0.62

 

$

0.77

 

$

0.08

 

Diluted

 

$

0.42

 

$

0.62

 

$

0.77

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

Basic

 

33,976

 

33,722

 

33,971

 

33,721

 

Diluted

 

34,002

 

33,722

 

33,992

 

33,721

 

 



 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

(In thousands)

 

2011

 

2010

 

2011

 

2010

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

14,588

 

$

21,689

 

$

26,715

 

$

2,658

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

26,392

 

25,223

 

51,842

 

50,110

 

Loss on early redemption of debt

 

1,100

 

 

1,100

 

 

Foreign exchange loss (gain)

 

130

 

486

 

(85

)

(45

)

Deferred income taxes

 

2,438

 

4,526

 

5,194

 

(7,696

)

Excess tax benefits from share-based payment arrangements

 

(52

)

(112

)

(65

)

(695

)

Stock based compensation

 

3,500

 

836

 

4,305

 

1,548

 

Long lived asset impairment charges and loss on sale of assets

 

 

 

 

591

 

Other non-cash items

 

1,389

 

5,076

 

1,232

 

5,528

 

Change in operating assets, liabilities and other

 

(45,323

)

(9,792

)

(162,676

)

(46,076

)

Net cash provided by (used in) operating activities

 

4,162

 

47,932

 

(72,438

)

5,923

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(12,823

)

(9,827

)

(23,692

)

(20,782

)

Proceeds from sale of property, plant and equipment

 

131

 

779

 

153

 

1,549

 

Acquisition, net of cash acquired

 

 

 

(71,623

)

 

Net cash used in investing activities

 

(12,692

)

(9,048

)

(95,162

)

(19,233

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Repayments on ABL revolver

 

(131,346

)

(171,125

)

(203,646

)

(303,501

)

Borrowings on ABL revolver

 

171,087

 

120,010

 

314,205

 

313,572

 

Repayment of long-term debt

 

(22,913

)

(11

)

(22,917

)

(25

)

Fees paid to amend or issue debt facilities

 

 

(310

)

(1,480

)

(3,330

)

Stock compensation plan activity

 

39

 

 

39

 

 

Tax benefits from employee share-base exercises

 

52

 

 

65

 

3,328

 

Net cash provided by (used in) financing activities

 

16,919

 

(51,436

)

86,266

 

10,044

 

Effect of exchange rate changes on cash and cash equivalents

 

(201

)

(219

)

262

 

(368

)

Net change in cash and cash equivalents

 

8,188

 

(12,771

)

(81,072

)

(3,634

)

Cash and cash equivalents at beginning of period

 

33,498

 

47,934

 

122,758

 

38,797

 

Cash and cash equivalents at end of period

 

$

41,686

 

$

35,163

 

$

41,686

 

$

35,163

 

 



 

GEORGIA GULF CORPORATION AND SUBSIDARIES

SEGMENT INFORMATION

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

(In Thousands)

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Segment net sales:

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

323,663

 

$

300,811

 

$

649,983

 

$

588,522

 

Building Products

 

274,156

 

243,249

 

431,660

 

396,299

 

Aromatics

 

233,892

 

191,646

 

538,005

 

382,334

 

Net Sales

 

$

831,711

 

$

735,706

 

$

1,619,648

 

$

1,367,155

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

37,826

(1)

$

36,196

 

$

75,565

(4)

$27,544

 

Building Products

 

16,891

(2)

18,738

(3)

4,825

(5)

15,065

(3)

Aromatics

 

(7,448

)

(7,782

)

12,334

 

1,863

 

Unallocated corporate

 

(11,759

)

(9,258

)

(20,573

)

(17,053

)

Total operating income

 

$

35,510

 

$

37,894

 

$

72,151

 

$

27,419

 

 


(1)          Includes $1.2 million of restructuring income from the recovery of previously written down equipment

(2)          Includes $0.4 million of restructuring charges and $0.5 million of inventory purchase accounting adjustments

(3)          Includes $1.5 million reversal/recovery of non-income tax reserves

(4)          Includes $0.8 million reversal of non-income tax reserve and $1.2 million of restructuring income from the recovery of previously written down equipment

(5)          Includes $2.9 million of acquisition deal costs and inventory purchase accounting adjustment, offset by $3.6 million reversal of non-income tax reserve