Georgia Gulf Reports 2011 Financial Results
Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its full year and fourth quarter ended December 31, 2011.
The company reported net sales of $3.2 billion for the full year 2011, 14 percent higher than the net sales of $2.8 billion reported for the full year 2010. Georgia Gulf reported net income of $57.8 million, or $1.66 per diluted share for 2011, compared to net income of $42.7 million, or $1.22 per diluted share, for the previous year. Net income for 2011 includes an $8.3 million asset impairment charge, a $3.3 million restructuring expense, a $4.9 million loss on the early redemption of debt, a $1.2 million gain on sale of assets and a benefit to income tax expense from the reversal of $22.1 million of tax reserves.
“Our financial performance in 2011 exceeded our 2010 results as industry conditions continue to improve, driven by North America's advantaged natural gas position,” said Paul Carrico, president and chief executive officer. “We generated $121.1 million of free cash flow, exceeding our goal for 2011. We reduced debt by $82.1 million in 2011 and ended the year with $408.9 million of debt net of cash and cash equivalents.
“We are confident that our integrated chemicals and building products business is well positioned to take advantage of our access to low-cost natural gas and to benefit from continuing growth in global demand and the recovery of the U.S. housing market as it occurs,” Carrico said.
The company reported net sales of $673.6 million for the fourth quarter of 2011, compared to net sales of $692.8 million reported for the fourth quarter of 2010. Georgia Gulf reported a net loss of $3.3 million, or $0.10 per diluted share, for the fourth quarter of 2011, compared to net income of $15.1 million, or $0.43 per diluted share, for the same quarter of the previous year. The net loss in the fourth quarter of 2011 includes an $8.3 million asset impairment charge, a $2.2 million restructuring expense, a $3.8 million loss on the early redemption of debt and a benefit to income tax expense from the reversal of $11.7 million of tax reserves.
In the Chlorovinyls segment, fourth quarter 2011 net sales increased to $321.5 million from $319.5 million during the fourth quarter of 2010. The segment posted operating income of $21.5 million, compared to operating income of $41.5 million for the same quarter in the prior year. The decrease in operating income was primarily due to lower sales volumes for PVC and caustic soda and higher raw material costs, partially offset by higher caustic soda sales prices compared to the fourth quarter of 2010.
In the Building Products segment, net sales were $189.7 million for the fourth quarter of 2011, increasing 9 percent on a reported and constant currency basis compared to $174.4 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 loss was $11.6 million for the fourth quarter of 2011, compared to $6.1 million of operating loss during the same quarter of the prior year. The increase in operating loss was due to a $10.7 million restructuring charge from the company's decision to exit its fence product line resulting in the closure of its Milford, Indiana, facility. In addition, the company will consolidate two window and door facilities and one small pipe facility, all located in Canada. These consolidations will reduce overhead costs going forward but not materially reduce production capacity.
In the Aromatics segment, net sales decreased to $162.4 million for the fourth quarter of 2011 from $199.0 million during the fourth quarter of 2010. The decrease was primarily due to lower sales volumes. During the fourth quarter of 2011, the segment recorded an operating loss of $3.7 million, compared to operating income of $9.4 million during the same quarter in 2010. The decrease in operating income was primarily due to lower sales volumes and lower margins driven by a sharp decline in benzene and propylene prices in the fourth quarter of 2011 compared to the fourth quarter of 2010.
Liquidity and Debt Reduction
As of December 31, 2011, the company had $88.6 million of cash on hand as well as $284.2 million of borrowing capacity available under its asset-based loan (ABL) facility. In the fourth quarter of 2011, Georgia Gulf redeemed and repaid $59.9 million of debt. For the full year 2011, the company reduced debt by $82.1 million.
The company will discuss fourth-quarter financial results and business developments via conference call and webcast on Thursday, February 16, at 11:00 a.m. Eastern time. To access the company's fourth-quarter conference call, please dial (888) 552-7928 (domestic) or (706) 679-9856 (international). The conference call ID number is 45054331. To access the conference call via webcast, log on to http://phx.corporate-ir.net/phoenix.zhtml?c=112207&p=irol-EventDetails&EventId=4720374. Playbacks will be available from 1:00 p.m. Eastern time on Thursday, Feb. 16, until 11:59 p.m. Eastern time Thursday, March 1, by dialing (855) 859-2056.
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 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.
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 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 and demand 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 filed with the SEC.
Use of Non-GAAP Measures
Georgia Gulf supplemented this earnings release with Free Cash Flow because we believe investors and management commonly use Free Cash Flow to measure the Company's cash generation capabilities. Georgia Gulf excludes cash used to complete acquisitions from its free cash flow measurement because it believes that cash used for these purposes is discretionary and should be considered to be cash available for other purposes, thus part of the company's cash generation. Free Cash Flow is not a measurement of financial performance under GAAP and should not be considered as an alternative to cash provided by operating activities as a measure of liquidity. In addition, our calculation of Free Cash Flow may be different from the calculation used by other companies and, therefore, comparability may be limited.
Georgia Gulf defines Free Cash Flow as cash provided by operating activities, less capital expenditures. Our Free Cash Flow for 2011 was cash flow from operating activities of $187.4 million, minus capital expenditures of $66.4 million, totaling $121.1 million.
|Georgia Gulf Corporation and Subsidiaries|
|Condensed Consolidated Balance Sheets|
|(In thousands, except share data)||December 31,||December 31,|
|Cash and cash equivalents||$||88,575||$||122,758|
Receivables, net of allowance for doubtful accounts of $4,225 at
|Income tax receivable||3,020||899|
|Deferred income taxes||14,989||7,266|
|Total current assets||663,617||676,426|
|Property, plant and equipment, net||640,900||653,137|
|Intangible assets, net||46,715||14,351|
|Deferred income taxes||3,770||8,078|
|Other assets, net||75,601||104,078|
|Liabilities and Stockholders' Equity|
|Current portion of long-term debt||$||-||$||22,132|
|Income taxes payable||1,202||2,910|
|Liability for unrecognized income tax benefits and other tax reserves||598||8,822|
Other accrued liabilities
|Total current liabilities||278,888||275,979|
|Lease financing obligation||109,899||112,385|
|Liability for unrecognized income tax benefits||23,711||46,884|
|Deferred income taxes||181,465||189,805|
|Other non-current liabilities||64,120||40,631|
|Commitments and contingencies|
Preferred stock - $0.01 par value; 75,000,000 shares authorized; no
Common stock - $0.01 par value; 100,000,000 shares authorized;
|Additional paid-in capital||480,530||476,276|
|Accumulated other comprehensive loss, net of tax||(18,151||)||(210||)|
|Retained earnings (deficit)||25,943||(31,814||)|
|Total stockholders' equity||488,664||444,592|
|Total liabilities and stockholders' equity||$||1,644,211||$||1,665,701|
|Georgia Gulf Corporation and Subsidiaries|
|Condensed Consolidated Statements of Operations|
Three Months Ended
|Year Ended December 31,|
|(In thousands, except per share data )||2011||2010||2011||2010|
|Operating costs and expenses:|
|Cost of sales||626,863||617,637||2,919,625||2,543,638|
|Selling, general and administrative expenses||38,141||41,751||168,221||160,031|
|Long-lived asset impairment charges||8,318||—||8,318||—|
|Restructuring costs (benefits)||2,245||(169||)||3,271||102|
|Gain on sale of asset||—||—||(1,150||)||—|
|Total operating costs and expenses||675,567||659,219||3,098,285||2,703,771|
|Operating (loss) income||(1,967||)||33,624||124,599||114,269|
|Loss on redemption and other debt costs||(3,808||)||—||(4,908||)||—|
|Foreign exchange loss||(6||)||(522||)||(786||)||(839||)|
|(Loss) income before income taxes||(21,054||)||16,222||53,540||43,957|
|(Benefit) provision for income taxes||(17,739||)||1,160||(4,217||)||1,279|
|Net (loss) income||$||(3,315||)||$||15,061||$||57,757||$||42,678|
|(Loss) earnings per share:|
|Weighted average common shares outstanding:|
|Georgia Gulf Corporation and Subsidiaries|
|Consolidated Statements of Cash Flows|
Three Months Ended
Twelve Months Ended
|Cash flows from operating activities:|
|Net (loss) income||$||(3,316||)||$15,062||$||57,757||$||42,678|
Adjustments to reconcile net (loss) income to net cash provided by
|Depreciation and amortization||23,214||24,168||101,522||99,691|
|Loss on redemption of debt||3,808||—||4,908||—|
|Foreign exchange (gain) loss||(120||)||(307||)||604||(738||)|
|Deferred income taxes||(8,137||)||(8,012||)||(3,762||)||(1,964||)|
|Excess tax benefits from share based payment arrangements||—||—||(1,371||)||(4,001||)|
|Long lived asset impairment charges||8,318||—||8,318||—|
|Stock based compensation||1,173||1,051||6,658||3,487|
|Gain on sale of assets||—||—||(1,150||)||—|
|Other non-cash items||(3,736||)||13,193||(2,802||)||19,646|
|Change in operating assets and liabilities:|
|Change in operating assets, liabilities and other||141,902||100,115||16,767||25,000|
|Net cash provided by operating activities||163,106||145,270||187,449||183,799|
|Cash flows from investing activities:|
|Proceeds from sale of assets||917||15||1,243||1,069|
|Acquisition, net of cash acquired||—||—||(71,371||)||—|
|Net cash used in investing activities||(21,217||)||(14,439||)||(136,510||)||(44,645||)|
|Cash flows from financing activities:|
|Net change in ABL revolver||(36,503||)||(47,352||)||—||(56,353||)|
|Repayment of long-term debt||(62,136||)||(4||)||(85,057||)||(37||)|
|Fees paid related to financing activities||(531||)||—||(2,011||)||(3,185||)|
|Excess tax benefits from share based payment arrangements||—||—||1,371||4,001|
|Stock compensation plan activity||—||—||39||(145||)|
|Net cash used in financing activities||(99,170||)||(47,356||)||(85,658||)||(55,719||)|
Effect of exchange rate changes on cash and cash equivalents
|Net change in cash and cash equivalents||43,265||84,108||(34,183||)||83,961|
|Cash and cash equivalents at beginning of period||45,310||38,650||122,758||38,797|
|Cash and cash equivalents at end of period||$||88,575||$122,758||$||88,575||$||122,758|
GEORGIA GULF CORPORATION AND SUBSIDIARIES
|Three Months Ended||Year Ended|
|December 31,||December 31,|
Segment net sales:
Segment operating income (loss):
Total operating (loss) income
1) Includes $2.4 million of restructuring costs and $8.3 million of asset impairment charges.
2) Includes $1.2 million gain related to sale of assets.
3) Includes $2.7 million of restructuring costs, $8.3 million of asset impairment charges, $2.9 million of related costs and inventory purchase accounting adjustments, partially offset by $3.6 million reversal of non-income tax reserve.
Georgia Gulf Corporation
Martin Jarosick, 770-395-4524
Innisfree M&A Incorporated
Arthur Crozier, Jennifer Shotwell or Scott Winter, 212-750-5833
Alan Chapple, 770-395-4538
Joele Frank, Wilkinson Brimmer Katcher
Michael Freitag or Eric Bonach, 212-355-4449