Georgia Gulf Reports Second-Quarter 2012 Financial Results
ATLANTA, Aug 01, 2012 (BUSINESS WIRE) --
Copyright Business Wire 2012
Georgia Gulf Corporation (NYSE: GGC) today announced financial results
for the quarter ended June 30, 2012.
The company reported net sales of $867.7 million for the second quarter
of 2012, four percent higher than the net sales of $831.7 million
reported for the second quarter of 2011. Georgia Gulf reported net
income of $13.6 million, or $0.39 per diluted share, for the second
quarter of 2012, compared to net income of $14.6 million, or $0.42 per
diluted share, for the second quarter of the previous year. Net income
for the second quarter of 2012 includes $6.6 million of pre-tax expense
from transaction related costs, restructuring, and other expenses.
"Our operating results for the first half of 2012 improved over the
first half of 2011 as the recovery in the housing and construction
markets showed modest improvement," said Paul Carrico, president and
chief executive officer. "Going forward, we see low-cost natural gas in
North America remaining globally advantaged as a source of energy. This
will continue to place the Gulf Coast chlorovinyls producers in a strong
position to supply domestic and export customers. Our recently announced
merger with PPG's commodity chemicals business will create a chemicals
and building products leader that is very well positioned to benefit
from this cost advantage and expanding global demand for our products."
In the Chlorovinyls segment, second quarter 2012 net sales increased to
$339.9 million from $323.7 million during the second quarter of 2011.
The segment posted operating income of $34.5 million, compared to
operating income of $37.8 million for the same quarter in the prior
year. Operating income for the second quarter of 2011 includes a $1.2
million restructuring gain. After adjusting for the impact of the
restructuring gain, the segment experienced a decrease in operating
income of $2.1 million primarily due to higher maintenance expense,
partially offset by an increase in resin sales volumes.
In the Building Products segment, net sales were $252.4 million for the
second quarter of 2012, compared to $274.2 million recorded for the same
quarter in the prior year. On a constant currency basis, sales decreased
six percent. The segment's operating income was $15.4 million for the
second quarter of 2012, compared to $16.9 million of operating income
during the same quarter of the prior year. The second the quarter of
2012 includes a restructuring gain of $0.5 million and the second
quarter of 2011 included a $0.9 million net expense from restructuring
charges and inventory purchase accounting adjustments. After adjusting
for these impacts, the segment experienced a decrease in operating
income of $2.9 million due to lower sales and higher selling, general
and administrative costs, partially offset by lower distribution costs.
In the Aromatics segment, net sales increased to $275.5 million for the
second quarter of 2012 from $233.9 million during the second quarter of
2011. During the second quarter of 2012, the segment recorded an
operating loss of $2.4 million, compared to an operating loss of $7.4
million during the same quarter in 2011. The decrease in operating loss
was primarily due to higher sales volumes partially offset by higher
inventory holding losses.
As of June 30, 2012, the company had $55.4 million of cash on hand as
well as approximately $287 million of borrowing capacity available under
its asset-based loan (ABL) facility.
Announced Merger with PPG's Commodity Chemicals Business
On July 19, 2012, PPG Industries ("PPG") and Georgia Gulf announced that
the boards of directors of both companies had approved definitive
agreements under which PPG will separate its commodity chemicals
business and then merge it with Georgia Gulf.
The terms of the transaction call for PPG to form a new company by
separating its commodity chemicals business through a spinoff or split
off, and then immediately merging the business with Georgia Gulf or a
Georgia Gulf subsidiary in a Reverse Morris Trust transaction. The
merger will result in PPG shareholders receiving approximately 50.5
percent of the shares of the merged company ("The Newly Merged
Company"), with existing Georgia Gulf shareholders owning approximately
49.5 percent of The Newly Merged Company.
Additionally, The Newly Merged Company will assume approximately $95
million of debt, about $87 million of minority interest, and related
environmental liabilities, pension assets and liabilities and other
post-employment benefits (OPEB) obligations from PPG.
The transaction is subject to approval by Georgia Gulf shareholders and
customary closing conditions, relevant tax authority rulings and
regulatory approvals and is expected to be completed in late 2012 or
The company will discuss second-quarter financial results and business
developments via conference call and webcast on Thursday, August 2, 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?c=112207&p=irol-EventDetails&EventId=4811772.
Playbacks will be available from 1:00 p.m. Eastern time on Thursday,
August 2, until 11:59 p.m. Eastern time on Thursday, August 16. Playback
numbers are (855) 859-2056 (domestic) or (706) 679-9856 (international).
The conference call ID number is 14030965.
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 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.
Cautionary Statements Regarding Forward-Looking Information
This communication contains certain statements relating to future events
and our intentions, beliefs, expectations, and predictions for the
future. Any such statements other than statements of historical fact are
forward-looking statements within the meaning of the Securities Act of
1933 and the Securities Exchange Act of 1934. Words or phrases such as
"will likely result," "are expected to," "will continue," "is
anticipated," "we believe," "we expect," "estimate," "project," "may,"
"will," "intend," "plan," "believe," "target," "forecast," "would" or
"could" (including the negative or variations thereof) or similar
terminology used in connection with any discussion of future plans,
actions, or events, including with respect to the proposed separation of
PPG Commodity Chemicals business from PPG and merger of PPG Commodity
Chemicals business and Georgia Gulf (the "Transaction"), generally
identify forward-looking statements. These forward-looking statements
include, but are not limited to, statements regarding expected benefits
of the Transaction, integration plans and expected synergies therefrom,
the expected timing of completion of the Transaction, and Georgia Gulf's
anticipated future financial and operating performance and results,
including its respective estimates for growth. These statements are
based on the current expectations of the management of Georgia Gulf.
There are a number of risks and uncertainties that could cause Georgia
Gulf's actual results to differ materially from the forward-looking
statements included in this communication. These risks and uncertainties
include risks relating to (i) Georgia Gulf's ability to obtain requisite
shareholder approval to complete the Transaction, (ii) PPG being unable
to obtain necessary tax authority and other regulatory approvals
required to complete the Transaction, or such required approvals
delaying the Transaction or resulting in the imposition of conditions
that could have a material adverse effect on the combined company or
causing the companies to abandon the Transaction, (iii) other conditions
to the closing of the Transaction not being satisfied, (iv) a material
adverse change, event or occurrence affecting Georgia Gulf or PPG
Commodity Chemicals business prior to the closing of the Transaction
delaying the Transaction or causing the companies to abandon the
Transaction, (v) problems arising in successfully integrating the
businesses of PPG Commodity Chemicals business and Georgia Gulf, which
may result in the combined company not operating as effectively and
efficiently as expected, (vi) the possibility that the Transaction may
involve other unexpected costs, liabilities or delays, (vii) the
businesses of each respective company being negatively impacted as a
result of uncertainty surrounding the Transaction, (viii) disruptions
from the Transaction harming relationships with customers, employees or
suppliers, and (ix) uncertainties regarding future prices, industry
capacity levels and demand for Georgia Gulf's 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 Georgia Gulf's businesses or manufacture its products before or
after the Transaction, Georgia Gulf's ability to generate sufficient
cash flows from its business before and after the Transaction, future
economic conditions in the specific industries to which its products are
sold, and global economic conditions.
In light of these risks, uncertainties, assumptions, and factors, the
forward-looking events discussed in this communication may not occur.
Other unknown or unpredictable factors could also have a material
adverse effect on Georgia Gulf's actual future results, performance, or
achievements. For a further discussion of these and other risks and
uncertainties applicable to Georgia Gulf and its business, see Georgia
Gulf's Annual Report on Form 10-K for the fiscal year ended December 31,
2011 and subsequent filings with the Securities and Exchange Commission
(the "SEC"). As a result of the foregoing, readers are cautioned not to
place undue reliance on these forward-looking statements, which speak
only as of the date of this communication. Georgia Gulf does not
undertake, and expressly disclaims, any duty to update any
forward-looking statement whether as a result of new information, future
events, or changes in its expectations, except as required by law.
Additional Information and Where to Find it
This communication does not constitute an offer to buy, or solicitation
of an offer to sell, any securities of Georgia Gulf, and no offer or
sale of such securities will be made in any jurisdiction where it would
be unlawful to do so. In connection with the Transaction, Georgia Gulf
will file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-4 that will include a proxy statement
and prospectus of Georgia Gulf relating to the Transaction. INVESTORS
AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND
PROXY STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS, WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
GEORGIA GULF, PPG COMMODITY CHEMICALS BUSINESS AND THE TRANSACTION.
Investors and security holders will be able to obtain these materials
(when they are available) and other documents filed with the SEC free of
charge at the SEC's website, www.sec.gov.
In addition, copies of the registration statement and proxy
statement/prospectus (when they become available) may be obtained free
of charge by accessing Georgia Gulf's website at www.GGC.com
by clicking on the "Investors" link and then clicking on the "SEC
Filings" link, or upon written request to Georgia Gulf at 115 Perimeter
Center Place, Suite 460, Atlanta, Georgia 30346, Attention: Investor
Relations. Shareholders may also read and copy any reports, statements
and other information filed by Georgia Gulf with the SEC, at the SEC
public reference room at 100 F Street, N.E., Washington D.C. 20549.
Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for
further information on its public reference room.
Participants in the Solicitation
Georgia Gulf, PPG, and certain of their respective directors, executive
officers and other members of management and employees may be deemed to
be participants in the solicitation of proxies from shareholders in
respect of the Transaction under the rules of the SEC. Information
regarding Georgia Gulf's directors and executive officers is available
in its 2011 Annual Report on Form 10-K filed with the SEC on February
24, 2012, and in its definitive proxy statement filed with the SEC on
April 16, 2012, in connection with its 2012 annual meeting of
stockholders. Information regarding PPG directors and executive officers
is available in its 2011 Annual Report on Form 10-K filed with the SEC
on February 16, 2012, and in its definitive proxy statement filed with
the SEC on March 8, 2012, in connection with its 2012 annual meeting of
stockholders. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the registration
statement and proxy statement/prospectus and other relevant materials to
be filed with the SEC when they become available.
SOURCE: Georgia Gulf Corporation