Georgia Gulf (ticker: GGC, exchange: New York Stock Exchange (.N))
News Release -
2-Feb-2006
Georgia Gulf Reports Fourth Quarter Net Income of $.55 Per Diluted ShareComplete text of this release
Supplemental information for fourth quarter earnings
ATLANTA, February 2, 2006 - Georgia Gulf Corporation (NYSE: GGC) today reported
net income of $18.7 million or $.55 per diluted share on sales of $518.9 million for the fourth
quarter of 2005. This compares to net income of $24.1 million or $.71 per diluted share on
sales of $590.9 million for the fourth quarter of 2004. The fourth quarter 2005 results include
a negative impact of approximately $.22 per diluted share due to operational disruptions
caused by Hurricane Rita early in the fourth quarter. In addition, the Company experienced
significantly higher energy and raw materials costs. Despite the disruptions and increased
costs, the chlorovinyls business performed well as sales prices increased for vinyl resins,
vinyl compounds and caustic soda. Sales volumes were down in the chlorovinyls business
primarily due to lost production as a result of hurricane -related outages. Sales volumes were
down in the aromatics business due to hurricane-related lost production early in the quarter
and decreased demand throughout the quarter.
"The chlorovinyls business performed well following a period of lost production at the
beginning of the fourth quarter of 2005 due to Hurricane Rita," said Ed Schmitt, Chairman,
President and CEO, Georgia Gulf Corporation. "Limited production and low indus try
inventories resulted in higher sales prices for vinyl resins, vinyl compounds and caustic soda.
Our aromatics business experienced an operating loss for the fourth quarter due to weak
demand in some end-use markets, increased Asian capacity and plant downtime.
"As for the first quarter of 2006, we expect the aromatics business to improve from the
fourth quarter of 2005 but to continue to struggle overall. However, we are more optimistic
that our chlorovinyls business will continue to perform well, as projections for high operating
rates, good demand and declining natural gas prices should allow for continued
improvement."
Fourth quarter 2005 net income of $18.7 million declined compared to third quarter
2005 net income of $27.9 million or $.82 per diluted share on sales of $525.2 million. The
decline reflects overall higher raw materials and energy costs and lower sales volumes,
which more than offset increased sales prices for vinyl resins, vinyl compounds and caustic
soda.
For the year ended December 31, 2005, the Company had record sales of $2.3 billion,
which is a 3 percent increase compared to 2004 sales of $2.2 billion. Net income of $95.5
million or $2.79 per diluted share declined compared to net income of $105.9 million or $3.17
per diluted share for 2004. This decline in net income was due to lower sales volumes for all
products primarily as a result of the chloralkali plant turnaround in the second quarter of 2005
as well as Hurricanes Katrina and Rita in the third and fourth quarters of 2005. The negative
impact of the chloralkali plant planned turnaround and an unplanned outage in the second
quarter was about $.50 per diluted share and the negative impact associated with Hurricanes
Katrina and Rita during the third and fourth quarters was approximately $.45 per diluted
share. The effective tax rate for 2005 decreased to 32.9% from 36.5% in 2004 due to the
favorable impact of changes in state tax apportionment rules and tax deductions created by
the American Jobs Creation Act of 2004.
Chlorovinyls
Georgia Gulf's chlorovinyls business provided strong fourth quarter operating income
of $54.5 million, an increase of 57 percent compared to fourth quarter of 2004 operating
income of $34.7 million and an increase of 3 percent compared to the third quarter of 2005
operating income of $53.1 million. These improvements compared to both the fourth quarter
of 2004 and third quarter of 2005 were due to increased sales prices for vinyl resins, vinyl
compounds and caustic soda as supply remained tight and industry inventories were at
historically low levels for a significant portion of the fourth quarter following outages caused
by Hurricane Rita. These increased sales prices more than offset lower chlorovinyls sales
volumes and higher raw materials and energy costs.
For the full year ended December 31, 2005, chlorovinyls operating income increased
to $202.6 million from $165.9 million, an increase of 22 percent, compared to the full year
2004. This was a result of higher sales prices for all products outpacing higher raw materials
and energy costs and lower sales volumes, as well as the adverse impacts of the Company's
chloralkali planned turnaround and unplanned outage in the second quarter of 2005 and the
hurricanes in the third and fourth quarters of 2005.
Aromatics
Georgia Gulf's aromatics business had an operating loss of $14.1 million for the fourth
quarter of 2005 compared to operating income of 13.2 million for the fourth quarter of 2004
and declined compared to the operating loss of $1.9 million for the third quarter of 2005. The
fourth quarter 2005 decrease compared to the fourth quarter of 2004 reflects significantly
lower sales volumes and sales prices for all products as a result of hurricane-related lost
production, decreased demand in certain end -use markets such as polycarbonates and
increased Asian capacity.
Comparing the fourth quarter of 2005 to the third quarter of 2005, the decrease in
operating income is a result of lower sales volumes for all products, which were not offset by
slightly higher sales prices and lower benzene costs.
For the year ended December 31, 2005, the aromatics operating loss of $10.5 million
represented a significant decrease compared to operating income of $50.6 million in the full
year 2004. This decline is the result of significantly lower sales volumes for all aromatics
products as a result of decreased demand, specifically in end -use markets such as
polycarbonates, start-ups of additional Asian capacity, which resulted in reduced export
opportunities, as well as fewer opportunistic cumene sales. In addition, the decline was also
attributable to lost production in the third and fourth quarters of 2005 due to Hurricanes
Katrina and Rita and raw materials costs increases. All of these factors more than offset
higher sales prices for all aromatics products.
Conference Call
Georgia Gulf will host a conference call to discuss fourth quarter results in more detail
at 10:00 AM ET on Friday, February 3, 2006. To access the teleconference, please dial 888-
552-7928 (domestic) or 706-679-3718 (international). To access the teleconference via
Webcast, log on to http://audioevent.mshow.com/281491/. Playbacks will be available from
11:00 AM ET Friday, February 3, to midnight ET Friday, February 10. Playback numbers are
800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is
3807955.
Other
Georgia Gulf, headquartered in Atlanta, is a major manufacturer and marketer of two
integrated product lines, chlorovinyls and aromatics. Georgia Gulf's chlorovinyls products
include chlorine, caustic soda, vinyl chloride monomer and vinyl resins and compounds.
Georgia Gulf's primary aromatic products include cumene, phenol and acetone.
This news release contains forward-looking statements subject to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on management's assumptions regarding business conditions, and
actual results may be materially different. Risks and uncertainties inherent in these
assumptions include, but are not limited to, future global economic conditions, economic
conditions in the industries to which the company sells, industry production capacity, raw
material and energy costs and other factors discussed in the Securities and Exchange
Commission filings of Georgia Gulf Corporation, including our annual report on Form 10-K for
the year ended December 31, 2004 and our subsequent reports on Form 10-Q. |