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Georgia Gulf Management Discusses Q2 2012 Results - Earnings Call Transcript

Once the merger is complete, we expect future chlor-alkali outages to have less of an impact due to the operational flexibility gained from having multiple chlor-alkali facilities.

During the second quarter, we experienced softer sales and less adjusted EBITDA in Building Products compared to the same quarter last year. If you reflect back on the first 2 quarters of the year, there's no doubt that a large part of the sales improvement we saw on the first quarter was full forward demand due to the unseasonably warm weather. The Building Products division has grown sales 4% on a constant currency basis for the year-to-date period.

In the PVC end markets, the unexpected decline in ethylene prices in May and June sparked an inventory correction. As is typically the case, PVC customers reduced orders to minimize the potential for inventory holding losses in this type of market. Since that dramatic decline in pricing, ethylene now appears to have stabilized at a new lower level.

We believe PVC prices will also stabilize and orders will pick up as inventory levels need to be replenished. PVC prices in the export market have already started to move back up, which is a good sign that the inventory correction maybe behind us.

In Aromatics, dropping propylene prices caused a sizable inventory holding loss that partially gave back the large inventory holding gain we recorded in the first quarter. If you adjust for both of the inventory holding impacts, we have generated about $28 million of adjusted EBITDA for the first half of 2012, well above the same period in 2011.

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