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Exhibit 99.1

 

NEWS

 

 

Georgia Gulf Reports Third Quarter 2011 Financial Results

 

ATLANTA— November 2, 2011 — Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its third quarter ended September 30, 2011.

 

The company reported net sales of $929.6 million for the third quarter of 2011, 23 percent higher than the net sales of $758.0 million reported for the third quarter of 2010.  Georgia Gulf reported net income of $34.4 million, or $0.99 per diluted share, for the third quarter of 2011, compared to net income of $25.0 million, or $0.72 per diluted share, for the same quarter of the previous year.  Net income for the third quarter of 2011 was positively impacted by an $8.1 million release of tax reserves related to Royal Group prior to its acquisition by Georgia Gulf in 2006.

 

“Our operating income of $126.6 million in the first three quarters of 2011 was 57 percent higher than the same period in 2010,” said Paul Carrico, president and chief executive officer.  “Earlier this year we increased our adjusted EBITDA guidance based on an expectation that global macroeconomic conditions would improve.  However, North American building and construction markets remain sluggish, and the softness in the global economy has continued to pressure margins and export demand for our products into the fourth quarter of 2011.  Additionally, falling benzene and propylene prices caused inventory write-downs in our aromatics segment that further reduced earnings.

 

“With this backdrop, we are revising our guidance to $245-255 million of adjusted EBITDA in 2011, which is the bottom half of our original guidance in 2011.  This is an 18 to 22 percent improvement over our performance in 2010,” Carrico said. “In addition, our strong cash generation will allow us to reduce long term debt by approximately $82 million in 2011.

 

“Longer term, we are confident that our integrated chemicals and building products business is well positioned to take advantage of the eventual recovery in the economy and housing, as well as the continued competitive advantage that comes from our access to low-cost, domestic natural gas,” Carrico said.

 

Chlorovinyls

 

In the Chlorovinyls segment, third quarter 2011 net sales increased to $347.2 million from $316.7 million during the third quarter of 2010. The segment posted operating income of $46.3 million, compared to operating income of $46.1 million for the same quarter in the prior year.  The increase in net sales and operating income was primarily due to higher caustic soda and vinyl resin sales prices compared to the third quarter of 2010, mostly offset by lower sales volumes.

 



 

Building Products

 

In the Building Products segment, net sales were $262.5 million for the third quarter of 2011, increasing 18 percent (14 percent on a constant currency basis) compared to $222.9 million recorded for the same quarter in the prior year.  This sales increase was primarily driven by the benefit of the sales volumes resulting from the Exterior Portfolio acquisition in February 2011.  The segment’s operating income was $14.3 million for the third quarter of 2011, compared to $5.6 million of operating income during the same quarter of the prior year. The increase in operating income was primarily due to improved conversion costs, the addition of Exterior Portfolio and lower selling, general and administrative costs, offset in part, by higher raw material costs and a less favorable geographic and product sales mix.

 

Aromatics

 

In the Aromatics segment, net sales increased to $319.9 million for the third quarter of 2011 from $218.4 million during the third quarter of 2010. The increase was primarily due to higher sales prices and sales volumes.  During the third quarter of 2011, the segment recorded operating income of $1.7 million, compared to operating income of $12.1 million during the same quarter in 2010. The decrease in operating income was primarily due to a $9.3 million inventory write-down driven by a sharp decline in benzene and propylene prices in late September and early October.  This inventory write-down more than offset the benefit of higher sales prices, higher phenol and acetone sales volumes, and higher operating rates.

 

Liquidity and Debt Reduction

 

As of September 30, 2011, the company had $45.3 million of cash on hand as well as $247.9 million of borrowing capacity available under its asset-backed loan (ABL) facility.  As of the end of the third quarter of 2011, liquidity had increased by approximately $78 million compared to the end of the second quarter of 2011 primarily due to the seasonal decrease in working capital needs of the business and operating income.

 

On October 20, 2011 Georgia Gulf redeemed all $41.9 million of its outstanding 2016 10.75 percent senior subordinated notes.  This is in addition to the $22.2 million balance of its 2013 and 2014 senior notes that were redeemed in early April, 2011.  Georgia Gulf expects to repay an $18.2 million note by the end of the year, for a total long term debt reduction of $82.3 million in 2011.

 

Conference Call

 

The company will discuss third-quarter financial results and business developments via conference call and webcast on Thursday, November 3, at 10:00 a.m. Eastern time.  To access the company’s third-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?c=112207&p=irol-EventDetails&EventId=4222748.   Playbacks will be available from 1:00 p.m. Eastern time on Thursday, November 3, until 11:59 p.m. Eastern time on Saturday, November 12. Playback numbers are (855) 859-2056 (domestic) or (706) 679-9856 (international). The conference call ID number is 20607915.

 



 

About 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 Building Products 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, 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 2011 adjusted EBITDA guidance to 2011 net income determined in accordance with GAAP is included in the table below.

 

2011 Adjusted EBITDA Guidance to Net Income Reconciliation

 

($ millions, as estimated)

 

 

 

2011 Adjusted EBITDA Guidance

 

$

245-255

 

Depreciation and Amortization

 

104

 

Restructuring and Other

 

6

 

Interest Expense

 

67

 

Tax Expense (20% rate assumed)

 

14-16

 

Net Income

 

$

54-62

 

 

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)

 

 

 

September 30,

 

December 31,

 

(In thousands, except par value and share data)

 

2011

 

2010

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

$

45,310

 

$

122,758

 

Receivables, net of allowance for doubtful accounts of $5,425 at 2011 and $10,026 at 2010

 

411,929

 

267,662

 

Inventories

 

360,734

 

261,235

 

Prepaid expenses

 

15,773

 

16,606

 

Income tax receivable

 

556

 

899

 

Deferred income taxes

 

9,223

 

7,266

 

Total current assets

 

843,525

 

676,426

 

Property, plant and equipment, net

 

641,028

 

653,137

 

Goodwill

 

210,512

 

209,631

 

Intangible assets, net

 

47,499

 

14,351

 

Deferred income taxes

 

5,845

 

8,078

 

Other assets, net

 

86,329

 

104,078

 

Total assets

 

$

1,834,738

 

$

1,665,701

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current portion of long-term debt

 

$

66,384

 

$

22,132

 

Accounts payable

 

265,467

 

132,639

 

Interest payable

 

12,797

 

22,558

 

Income taxes payable

 

4,296

 

2,910

 

Accrued compensation

 

24,114

 

38,382

 

Liability for unrecognized income tax benefits and other tax reserves

 

816

 

8,822

 

Other accrued liabilites

 

63,101

 

48,536

 

Total current liabilities

 

436,975

 

275,979

 

Long-term debt

 

633,285

 

667,810

 

Liability for unrecognized income tax benefits

 

34,314

 

46,884

 

Deferred income taxes

 

187,721

 

189,805

 

Other non-current liabilities

 

40,989

 

40,631

 

Total liabilities

 

1,333,284

 

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: 34,236,402 at 2011 and 33,962,291 at 2010

 

342

 

340

 

Additional paid-in capital

 

479,767

 

476,276

 

Accumulated other comprehensive loss, net of tax

 

(7,914

)

(210

)

Retained earnings (deficit)

 

29,259

 

(31,814

)

Total stockholders’ equity

 

501,454

 

444,592

 

Total liabilities and stockholders’ equity

 

$

1,834,738

 

$

1,665,701

 

 



 

Georgia Gulf Corporation and Subsidiaries

 

Condensed Consolidated Statements of Income

 

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In thousands, except per share data)

 

2011

 

2010

 

2011

 

2010

 

Net sales

 

$

929,636

 

$

758,042

 

$

2,549,284

 

$

2,125,198

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of sales

 

831,808

 

661,238

 

2,292,761

 

1,926,387

 

Selling, general and administrative expenses

 

43,412

 

43,442

 

130,080

 

117,894

 

Restructuring expense (income)

 

1

 

136

 

(123

)

271

 

Total operating costs and expenses

 

875,221

 

704,816

 

2,422,718

 

2,044,552

 

Operating income

 

54,415

 

53,226

 

126,566

 

80,646

 

Interest expense, net

 

(16,703

)

(17,333

)

(50,092

)

(52,592

)

Loss on early redemption of debt

 

 

 

(1,100

)

 

Foreign exchange gain (loss)

 

160

 

116

 

(780

)

(318

)

Income before income taxes

 

37,872

 

36,009

 

74,594

 

27,736

 

Provision for income taxes

 

3,514

 

11,051

 

13,521

 

119

 

Net income

 

$

34,358

 

$

24,958

 

$

61,073

 

$

27,617

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.99

 

$

0.72

 

$

1.75

 

$

0.79

 

Diluted

 

$

0.99

 

$

0.72

 

$

1.75

 

$

0.79

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

Basic

 

34,165

 

33,894

 

34,036

 

33,779

 

Diluted

 

34,211

 

33,894

 

34,065

 

33,779

 

 



 

GEORGIA GULF CORPORATION AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(In thousands)

 

2011

 

2010

 

2011

 

2010

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income

 

$

34,357

 

$

24,958

 

$

61,073

 

$

27,617

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

26,463

 

25,411

 

78,305

 

75,521

 

Loss on early redemption of debt

 

 

 

1,100

 

 

Foreign exchange loss (gain)

 

809

 

(386

)

724

 

(431

)

Deferred income taxes

 

(507

)

11,112

 

4,686

 

6,049

 

Excess tax benefits from share based payment arrangements

 

(3,490

)

(742

)

(3,555

)

(4,001

)

Long lived asset impairment charges and loss on sale of assets

 

 

 

 

591

 

Stock based compensation

 

1,180

 

888

 

5,485

 

2,436

 

Other non-cash items

 

(3,710

)

323

 

(2,478

)

5,853

 

Change in operating assets, liabilities and other

 

37,541

 

(29,038

)

(125,135

)

(75,116

)

Net cash provided by operating activities

 

92,643

 

32,526

 

20,205

 

38,519

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

(20,555

)

(11,017

)

(44,247

)

(31,799

)

Proceeds from sale of property, plant and equipment

 

174

 

54

 

326

 

1,603

 

Acquisition, net of cash acquired

 

252

 

 

(71,371

)

 

Net cash used in investing activities

 

(20,129

)

(10,963

)

(115,292

)

(30,196

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Repayments on asset based lending revolver

 

(211,921

)

(177,708

)

(415,567

)

(481,209

)

Borrowings on asset based lending revolver

 

138,300

 

158,636

 

452,505

 

472,208

 

Repayment of long-term debt

 

 

(7

)

(22,917

)

(33

)

Fees paid to amend or issue debt facilities

 

 

 

(1,480

)

(3,185

)

Excess tax benefits from share based payment arrangements

 

3,490

 

742

 

3,555

 

4,001

 

Stock compensation plan activity

 

 

 

39

 

(145

)

Net cash (used in) provided by financing activities

 

(70,131

)

(18,337

)

16,135

 

(8,363

)

Effect of exchange rate changes on cash and cash equivalents

 

1,241

 

261

 

1,504

 

(107

)

Net change in cash and cash equivalents

 

3,624

 

3,487

 

(77,448

)

(147

)

Cash and cash equivalents at beginning of period

 

41,686

 

35,163

 

122,758

 

38,797

 

Cash and cash equivalents at end of period

 

$

45,310

 

$

38,650

 

$

45,310

 

$

38,650

 

 



 

GEORGIA GULF CORPORATION AND SUBSIDARIES

SEGMENT INFORMATION

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

(In Thousands)

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Segment net sales:

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

347,195

 

$

316,749

 

$

997,177

 

$

905,271

 

Building Products

 

262,535

 

222,907

 

694,195

 

619,207

 

Aromatics

 

319,906

 

218,386

 

857,912

 

600,720

 

Net Sales

 

$

929,636

 

$

758,042

 

$

2,549,284

 

$

2,125,198

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

$

46,261

 

$

46,137

 

$

121,826

 

$

73,681

 

Building Products

 

14,313

 

5,567

 

19,138

(1)

20,632

 

Aromatics

 

1,689

 

12,072

 

14,024

 

13,935

 

Unallocated corporate

 

(7,848

)

(10,550

)

(28,422

)

(27,602

)

Total operating income

 

$

54,415

 

$

53,226

 

$

126,566

 

$

80,646

 

 


(1)                                  Includes $3.0 million of acquisition deal costs and inventory purchase accounting adjustment, offset by $3.6 million reversal of non-income tax reserve

 

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