Axiall swings to Q4 net income of US$32.3M from net loss of US$3.8M in year-ago period, as 2011 results hurt by US$8.3M impairment charge, US$3.8M loss on early redemption of debt; net sales up 16.5% to US$784.7M
Andrew Rogers
ATLANTA
,
February 13, 2013
(press release)
–
Axiall Corporation (NYSE: AXLL) today announced financial results for the year and quarter ended December 31, 2012.
(In thousands, except share data) Other accrued liabilities shares issued (In thousands, except per share data)
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)
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
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
-
-
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,
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
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