Axiall Reports 2012 Financial Results

ATLANTA--()--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.

Contacts

Axiall Corporation
Investor Relations
Martin Jarosick, 770-395-4524
or
Media
Alan Chapple, 770-395-4538

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Contacts

Axiall Corporation
Investor Relations
Martin Jarosick, 770-395-4524
or
Media
Alan Chapple, 770-395-4538