Axiall Reports 2012 Financial Results

02/12/2013

Axiall Reports 2012 Financial Results

ATLANTA--(BUSINESS WIRE)--Feb. 12, 2013-- Axiall Corporation (NYSE: AXLL) today announced financial results for the year and quarter ended December 31, 2012. The company reported net sales of $3.3 billion for the full year 2012, 3 percent higher than the net sales of $3.2 billion reported for the full year 2011. Axiall reported net income of $120.6 million, or $3.45 per diluted share for 2012, compared to net income of $57.8 million, or $1.66 per diluted share, for the previous year. Net income for 2012 includes $38.8 million of transaction related, restructuring and other costs, a $2.7 million loss on redemption and other debt costs, partially offset by a $19.3 million gain on sale of assets and $0.8 million of net asset impairment recovery. Net income for 2011 includes $11.6 million of asset impairment charges, and transaction related, restructuring and other costs, a $4.9 million loss on redemption and other debt costs, partially offset by 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 results exceeded our expectations for 2012, in large part due to the most profitable fourth quarter we have had in decades,” said Paul Carrico, president and chief executive officer. “This strong performance was achieved in a year when many people in our organization were investing considerable time and energy to make the merger of Georgia Gulf and PPG’s commodity chemicals business a reality,” Carrico said. “I want to thank our employees for their contributions in completing the merger while remaining focused on safety and execution. The merger enhances Axiall’s scale and integration across the chlorovinyls chain and expands the benefit we gain from low-cost natural gas in North America and growing global demand for our products.” The company reported net sales of $784.7 million for the fourth quarter of 2012, compared to net sales of $673.6 million reported for the fourth quarter of 2011. Axiall reported net income of $32.3 million, or $0.92 per diluted share, for the fourth quarter of 2012, compared to a net loss of $3.3 million, or $0.10 per diluted share, for the same quarter of the previous year. Net income for the fourth quarter of 2012 includes $11.6 million of transaction related, restructuring and other costs and a $2.7 million loss on the early redemption of debt. 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. Chlorovinyls In the Chlorovinyls segment, fourth quarter 2012 net sales were $346.4 million compared to $321.5 million during the fourth quarter of 2011. The increase in net sales was driven by higher vinyl resin sales volumes and higher caustic sales prices, partially offset by lower vinyl resin sales prices and lower caustic sales volumes. The segment posted operating income of $77.0 million in the fourth quarter of 2012, compared to operating income of $21.5 million for the same quarter in the prior year. The $55.5 million increase in operating income was primarily due to lower feedstock costs, higher vinyl resin sales volumes and higher caustic sales prices. Building Products In the Building Products segment, net sales were $190.8 million for the fourth quarter of 2012, compared to $189.7 million recorded for the same quarter in the prior year. Net sales for the fourth quarter of 2011 include $2.6 million of sales from the fence product line that was discontinued in March 2012. The net sales increase was driven by increased Canadian sales volume, partially offset by lower sales volume in the U.S. due to the discontinued fence product line. On a constant currency basis and excluding the sales from the discontinued fence product line, net sales for the quarter were flat compared to the fourth quarter of 2011. The segment's operating loss was $5.3 million for the fourth quarter of 2012, compared to an $11.6 million operating loss during the same quarter of the prior year. The fourth quarter 2012 operating loss includes $1.0 million of restructuring costs while the fourth quarter 2011 operating loss includes $2.4 million of restructuring costs and $8.3 million of asset impairment charges. After excluding these items, the increase in operating loss was due to higher selling, general, and administrative costs partially offset by improved gross margin. Aromatics In the Aromatics segment, net sales increased to $247.4 million for the fourth quarter of 2012 from $162.4 million during the fourth quarter of 2011, due primarily to higher sales prices and higher sales volumes for all products. During the fourth quarter of 2012, the segment recorded operating income of $18.3 million, compared to an operating loss of $3.7 million during the same quarter in 2011. The increase in operating income was primarily due to an inventory holding gain in the fourth quarter of 2012 compared to a large inventory holding loss in the fourth quarter of 2011 as well as higher volumes and sales prices in the fourth quarter of 2012. Conference Call The company will discuss fourth-quarter financial results and business developments via conference call and webcast on Wednesday, February 13, at 10:00 a.m. Eastern time. To access the company's fourth-quarter conference call, please dial (800) 374-1453 (domestic) or (706) 679-9856 (international). Playbacks will be available from 11:00 a.m. Eastern time on Wednesday, February 13, until 11:59 p.m. Eastern time on Wednesday, February 27. Playback numbers are (855) 859-2056 (domestic) or (706) 679-9856 (international). The conference call ID number is 88108007. About Axiall Axiall Corporation is a leading integrated chemicals and building products company. It is an international manufacturer of chlor-alkali and derivatives, chlorovinyls and aromatics products including chlorine, caustic soda, vinyl chloride monomer, chlorinated solvents, calcium hypochlorite, ethylene dichloride, muriatic acid, phosgene derivatives, polyvinyl chloride, vinyl compounds, acetone, cumene and phenol. It also manufactures vinyl-based building and home improvement products that are marketed under Royal Building Products and Exterior Portfolio brands, including window and door profiles, mouldings, siding, pipe and pipe fittings, and decking. Axiall, headquartered in Atlanta, Georgia, has manufacturing facilities located throughout North America and in Asia to provide industry-leading materials and services to customers. Cautionary Statements About Forward-Looking Information This press release 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 and the Securities Exchange Act of 1934, as amended. Words or phrases such as “is expected,” may,” “will,” or “intend,” (including the negative or variations thereof) or similar terminology used in connection with any discussion of future plans, actions, or events generally identify forward-looking statements. These forward-looking statements are based on the current expectations of the management of Axiall, and include, but are not limited to the expected benefits of the Company’s merger with the chlor-alkali and derivatives business of PPG Industries, Inc., the expected cost advantage of natural gas in North America and the expected global demand for our products. There are a number of risks and uncertainties that could cause Axiall’s actual results to differ materially from the forward-looking statements included in this press release. These risks and uncertainties include risks relating to (i) a material adverse change, event or occurrence affecting Axiall or the newly acquired commodity chemicals business, (ii) the ability of Axiall to successfully integrate the businesses of PPG's commodity chemicals business and Axiall, which may result in the combined company not operating as effectively and efficiently as expected, (iii) the possibility that the merger and related transactions may involve other unexpected costs, liabilities or delays, and (iv) uncertainties regarding future prices, industry capacity levels and demand for Axiall’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 Axiall’s businesses or manufacture its products after the merger, Axiall’s ability to generate sufficient cash flows from its business after the merger, 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 press release may not occur. Other unknown or unpredictable factors could also have a material adverse effect on Axiall’s actual future results, performance, or achievements. For a further discussion of these and other risks and uncertainties applicable to Axiall and its business, see Axiall’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and subsequent filings with 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 press release. Axiall 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.

AXIALL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

(In thousands, except share data)

 

 

As of December 31,

Assets

 

 

2012

 

 

2011

Cash and cash equivalents

 

 

$

200,314

 

 

 

$

88,575

 

Receivables, net of allowance for doubtful accounts of $4,533 at 2012

 

 

 

 

 

 

and $4,225 at 2011

 

 

 

314,880

 

 

 

 

256,749

 

Inventories

 

 

 

288,356

 

 

 

 

287,554

 

Prepaid expenses and other

 

 

 

14,702

 

 

 

 

15,750

 

Deferred income taxes

 

 

 

21,127

 

 

 

 

14,989

 

Total current assets

 

 

 

839,379

 

 

 

 

663,617

 

Property, plant and equipment, net

 

 

 

637,712

 

 

 

 

640,900

 

Goodwill

 

 

 

217,215

 

 

 

 

213,608

 

Intangible assets, net

 

 

 

43,423

 

 

 

 

46,715

 

Other assets, net

 

 

 

63,586

 

 

 

 

79,371

 

Total assets

 

 

$

1,801,315

 

 

 

$

1,644,211

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Accounts payable

 

 

$

211,224

 

 

 

$

168,187

 

Interest payable

 

 

 

18,892

 

 

 

 

20,931

 

Income taxes payable

 

 

 

15,120

 

 

 

 

1,202

 

Accrued compensation

 

 

 

44,698

 

 

 

 

19,743

 

Other accrued liabilities

 

 

 

61,159

 

 

 

 

68,825

 

Total current liabilities

 

 

 

351,093

 

 

 

 

278,888

 

Long-term debt

 

 

 

448,091

 

 

 

 

497,464

 

Lease financing obligation

 

 

 

112,269

 

 

 

 

109,899

 

Liability for unrecognized income tax benefits

 

 

 

18,576

 

 

 

 

23,711

 

Deferred income taxes

 

 

 

177,914

 

 

 

 

181,465

 

Other non-current liabilities

 

 

 

89,825

 

 

 

 

64,120

 

Total liabilities

 

 

 

1,197,768

 

 

 

 

1,155,547

 

 

 

 

 

 

 

 

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: 34,546,767 at 2012 and 34,236,402 at 2011

 

 

 

 

 

 

 

 

 

345

 

 

 

 

342

 

Additional paid-in capital

 

 

 

487,060

 

 

 

 

480,530

 

Accumulated other comprehensive loss, net of tax

 

 

 

(21,870

)

 

 

 

(18,151

)

Retained earnings

 

 

 

138,012

 

 

 

 

25,943

 

Total stockholders' equity

 

 

 

603,547

 

 

 

 

488,664

 

Total liabilities and stockholders' equity

 

 

$

1,801,315

 

 

 

$

1,644,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AXIALL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

Years Ended

 

 

 

December 31,

 

 

 

December 31,

(In thousands, except per share data)

 

 

2012

 

 

2011

 

 

 

2012

 

 

2011

Net sales

 

 

$

784,692

 

 

 

$

673,600

 

 

 

 

$

3,325,836

 

 

 

$

3,222,884

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

654,855

 

 

 

 

626,863

 

 

 

 

 

2,865,370

 

 

 

 

2,919,625

 

Selling, general and administrative expenses

 

 

 

50,566

 

 

 

 

38,141

 

 

 

 

 

203,497

 

 

 

 

168,221

 

Long-lived asset impairment charges (recoveries), net

 

 

 

-

 

 

 

 

8,318

 

 

 

 

 

(824

)

 

 

 

8,318

 

Transaction related costs, restructuring and other, net

 

 

 

11,638

 

 

 

 

2,245

 

 

 

 

 

38,833

 

 

 

 

3,271

 

Gain on sale of assets

 

 

 

-

 

 

 

 

-

 

 

 

 

 

(19,250

)

 

 

 

(1,150

)

Total operating costs and expenses

 

 

 

717,059

 

 

 

 

675,567

 

 

 

 

 

3,087,626

 

 

 

 

3,098,285

 

Operating income (loss)

 

 

 

67,633

 

 

 

 

(1,967

)

 

 

 

 

238,210

 

 

 

 

124,599

 

Interest expense

 

 

 

(13,702

)

 

 

 

(15,357

)

 

 

 

 

(57,517

)

 

 

 

(65,645

)

Loss on redemption and other debt costs

 

 

 

(2,720

)

 

 

 

(3,808

)

 

 

 

 

(2,720

)

 

 

 

(4,908

)

Foreign exchange gain (loss)

 

 

 

33

 

 

 

 

(6

)

 

 

 

 

(562

)

 

 

 

(786

)

Interest income

 

 

 

131

 

 

 

 

84

 

 

 

 

 

373

 

 

 

 

280

 

Income before income taxes

 

 

 

51,375

 

 

 

 

(21,054

)

 

 

 

 

177,784

 

 

 

 

53,540

 

Provision for (benefit from) income taxes

 

 

 

19,082

 

 

 

 

(17,739

)

 

 

 

 

57,223

 

 

 

 

(4,217

)

Net Income (loss)

 

 

$

32,293

 

 

 

$

(3,315

)

 

 

 

$

120,561

 

 

 

$

57,757

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

$

0.93

 

 

 

$

(0.10

)

 

 

 

$

3.47

 

 

 

$

1.66

 

Diluted

 

 

$

0.92

 

 

 

$

(0.10

)

 

 

 

$

3.45

 

 

 

$

1.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

34,577

 

 

 

 

34,236

 

 

 

 

 

34,502

 

 

 

 

34,086

 

Diluted

 

 

 

34,982

 

 

 

 

34,236

 

 

 

 

 

34,774

 

 

 

 

34,122

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AXIALL CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

(In thousands)

 

 

2012

 

 

2011

 

 

2012

 

 

2011

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

 

$

32,294

 

 

 

$

(3,315

)

 

 

$

120,561

 

 

 

$

57,757

 

Adjustments to reconcile net income to net cash provided

by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

21,894

 

 

 

 

23,214

 

 

 

 

89,857

 

 

 

 

101,522

 

Loss on redemption and other debt costs

 

 

 

2,720

 

 

 

 

3,808

 

 

 

 

2,720

 

 

 

 

4,908

 

Foreign exchange loss (gain)

 

 

 

86

 

 

 

 

(120

)

 

 

 

(447

)

 

 

 

604

 

Deferred income taxes

 

 

 

(2,167

)

 

 

 

(8,137

)

 

 

 

(8,463

)

 

 

 

(3,762

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excess tax benefits from share-based payment arrangements

 

 

 

553

 

 

 

 

-

 

 

 

 

(2,747

)

 

 

 

(1,371

)

Long-lived asset impairment charges (recoveries), net

 

 

 

-

 

 

 

 

8,318

 

 

 

 

(824

)

 

 

 

8,318

 

Stock based compensation

 

 

 

1,404

 

 

 

 

1,173

 

 

 

 

9,073

 

 

 

 

6,658

 

Gain on sale of assets

 

 

 

-

 

 

 

 

-

 

 

 

 

(19,250

)

 

 

 

(1,150

)

Other non-cash items

 

 

 

4,885

 

 

 

 

(3,736

)

 

 

 

9,453

 

 

 

 

(2,802

)

Change in operating assets, liabilities and other, net

 

 

 

103,873

 

 

 

 

141,901

 

 

 

 

31,313

 

 

 

 

16,767

 

Net cash provided by operating activities

 

 

 

165,542

 

 

 

 

163,106

 

 

 

 

231,246

 

 

 

 

187,449

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

 

(24,519

)

 

 

 

(22,134

)

 

 

 

(80,338

)

 

 

 

(66,382

)

Proceeds from sale of assets

 

 

 

42

 

 

 

 

917

 

 

 

 

23,621

 

 

 

 

1,243

 

Acquisition, net of cash acquired

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(71,371

)

Net cash used in investing activities

 

 

 

(24,477

)

 

 

 

(21,217

)

 

 

 

(56,717

)

 

 

 

(136,510

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

Net change in ABL revolver

 

 

 

-

 

 

 

 

(36,503

)

 

 

 

-

 

 

 

 

-

 

Long-term debt payments

 

 

 

(51,500

)

 

 

 

(62,136

)

 

 

 

(51,500

)

 

 

 

(85,057

)

Fees paid related to financing activities

 

 

 

(889

)

 

 

 

(531

)

 

 

 

(1,514

)

 

 

 

(2,011

)

Excess tax benefits from share-based payment

arrangements

 

 

 

(553

)

 

 

 

-

 

 

 

 

2,747

 

 

 

 

1,371

 

Dividends paid

 

 

 

(5,540

)

 

 

 

-

 

 

 

 

(8,318

)

 

 

 

-

 

Stock compensation plan activity

 

 

 

(137

)

 

 

 

-

 

 

 

 

(5,232

)

 

 

 

39

 

Net cash used in financing activities

 

 

 

(58,619

)

 

 

 

(99,170

)

 

 

 

(63,817

)

 

 

 

(85,658

)

Effect of exchange rate changes on cash and cash

equivalents

 

 

 

(601

)

 

 

 

546

 

 

 

 

1,027

 

 

 

 

536

 

Net change in cash and cash equivalents

 

 

 

81,845

 

 

 

 

43,265

 

 

 

 

111,739

 

 

 

 

(34,183

)

Cash and cash equivalents at beginning of year

 

 

 

118,469

 

 

 

 

45,310

 

 

 

 

88,575

 

 

 

 

122,758

 

Cash and cash equivalents at end of year

 

 

$

200,314

 

 

 

$

88,575

 

 

 

$

200,314

 

 

 

$

88,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AXIALL CORPORATION AND SUBSIDIARIES

 

SEGMENT INFORMATION

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

For the Twelve Months Ended

 

 

 

 

 

 

December 31,

 

 

 

December 31,

 

(In thousands)

 

 

2012

 

 

 

2011

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment net sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

 

$

346,433

 

 

 

 

$

321,501

 

 

 

 

$

1,344,908

 

 

$

1,318,678

 

 

 

Building Products

 

 

 

190,812

 

 

 

 

 

189,704

 

 

 

 

 

876,638

 

 

 

883,899

 

 

 

Aromatics

 

 

 

247,447

 

 

 

 

 

162,395

 

 

 

 

 

1,104,290

 

 

 

1,020,307

 

 

Net Sales

 

 

 

$

784,692

 

 

 

 

$

673,600

 

 

 

 

$

3,325,836

 

 

$

3,222,884

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment operating income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chlorovinyls

 

 

$

77,046

 

 

 

 

$

21,477

 

 

 

 

$

237,214

 

4)

 

$

143,304

 

7)

 

Building Products

 

 

 

(5,269

)

1)

 

 

 

 

(11,638

)

3)

 

 

 

 

18,447

 

5)

 

 

7,500

 

8)

 

Aromatics

 

 

 

18,331

 

 

 

 

 

(3,653

)

 

 

 

 

64,569

 

 

 

10,370

 

 

 

Unallocated corporate

 

 

 

(22,475

)

2)

 

 

 

 

(8,153

)

 

 

 

 

(82,020

)

6)

 

 

(36,575

)

 

Total operating income (loss)

 

 

$

67,633

 

 

 

 

$

(1,967

)

 

 

 

$

238,210

 

 

$

124,599

 

 

1)

 

Includes $1.0 million of restructuring costs.

2)

 

Includes $10.7 million of transaction related costs.

3)

 

Includes $2.4 million of restructuring costs and $8.3 million of asset impairment charges.

4)

 

Includes $19.3 million gain on sale of assets, offset by $1.3 million of restructuring costs.

5)

 

Includes $1.5 million of restructuring costs, offset by $0.8 million of long-lived asset impairment recoveries.

6)

 

Includes $35.8 million of transaction related costs.

7)

 

Includes $1.2 million gain related to the sale of assets.

8)

 

Includes $2.7 million of restructuring costs, $8.3 million of asset impairment charges, $3.0 million of related costs and inventory purchase accounting adjustments, partially offset by $3.6 million reversal of non-income tax reserve.

 

 

Source: Axiall Corporation

Axiall Corporation

Investor Relations

Martin Jarosick, 770-395-4524

or

Media

Alan Chapple, 770-395-4538