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

ATLANTA , February 13, 2013 (press release) – 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  

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