Georgia Gulf CEO Discusses Q3 2010 Results – Earnings Call Transcript
Georgia Gulf Corporation (
)
Q3 2010 Earnings Conference Call
November 3, 2010 10:00 AM ET
Executives
Martin Jarosick – IR
Paul Carrico – President and CEO
Greg Thompson – CFO
Analysts
Frank Mitsch – BB&T Capital Markets
Silke Kueck – JPMorgan
Adam Boyle – Bank of America
Andy Cash (ph) – UBS
Tarek Hamid – JPMorgan
Charles Nebrick (ph) – Dahlman Rose
Greg Goodnight – UBS
Laurence Salin (ph) – Credit Suisse
Presentation
Operator
Compare to:
Previous Statements by GGC
»
Georgia Gulf Corporation Q2 2010 Earnings Call Transcript
»
Georgia Gulf Corporation Q1 2010 Earnings Call Transcript
»
Georgia Gulf Corporation Q4 2009 Earnings Call Transcript
»
Georgia Gulf Corporation Q3 2009 Earnings Call Transcript
Good morning. My name is Janus and I will be your conference operator. At this time, I would like to welcome everyone to the Georgia Gulf third quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session.
(Operator Instructions)
Thank you. Mr. Jarosick, you many begin your conference.
Martin Jarosick
Thank you Janice and good morning ladies and gentlemen. Thank you for participating in today’s conference call to discuss Georgia Gulf’s third quarter 2010 financial results. There are slides available to you on the Georgia Gulf’s website. These slides are for your reference. We will not be speaking directly to the bullets on each slide.
Participants on today’s call are Paul Carrico, President and Chief Executive Officer; and Greg Thompson, Chief Financial Officer. During this call we will be making forward looking statements. As you appreciate any business projections and assumptions about future event are subject to risks and other factors that could cause actual results to differ materially from our current outlook. A listing of factors that could affect future results is included in our 2009, Form 10-K.
Any forward looking statements made on this call should be considered in light of those factors. In addition, during this conference call we may refer to certain non-GAAP financial measures. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure as an appendix in the slides on our website.
I will now turn the call over to Paul to begin the review of the third quarter. Paul?
Paul Carrico
Thank you, Martin and good morning ladies and gentlemen. Before I get into the details of the third quarter, I want to share with you my thoughts about the North American petrochemicals industry. The industry has been under pressure for many years relative to global competition. While it has had excellent infrastructure and shipping capacity, the cost of energy in North America relative to other chemical producing regions periodically put our industry at a disadvantage. This in turn fostered an unpredictable competitive environment for North American producers.
Until recently the industry was hindered by these issues. Today the development of natural gas resources and subsequent improvement in the cost of natural gas based production compared to oil based production has dramatically improved the competitiveness of the North American assets.
Barring future regulatory limitations, we appear to be in a strong position on a global basis for the next several years at least. We at Georgia Gulf are seeking to take advantage of these developments and in particular to have this competitiveness serve as a bridge as the domestic economy in the housing market slowly recovers. Georgia Gulf has world scale manufacturing plant located in the Gulf Coast with excellent access to raw materials as well as transportation for domestic and export markets. This gives us a unique positioning within the industry. Additionally we expect our building products division to be in a good position to realize the upside from a more normal housing market in the coming years.
Having been in this industry for 30 years, I’d say this is one of those times where the industry dynamics are making a massive shift in the global balances to favor North America. It presents opportunities for Georgia Gulf to create value in the near term and the long term.
Turning back to the specifics of our most recent quarterly results; we delivered $77.6 million of adjusted EBITDA compared to $72.9 million of adjusted EBITDA in the third quarter of 2009. For the first nine months of 2010, we have generated $152.6 million of adjusted EBITDA compared to $143.1 million for the comparable period in 2009. Therefore, after just the first nine months of 2010, we have already hit the middle of our previous full year EBITDA guidance.
Consequently, at the end of the prepared remarks, I will walk you through our increased guidance for 2010.
For the third quarter, the Chlorovinyl segment generated $61.2 million of adjusted EBITDA compared to $41.7 million in the third quarter of 2009. The improved results for this quarter were driven by higher ECU values and modest improvement in PVC performance as operating rates were improved by a much higher level of export sales in the market. Our building products segment generated $14.2 million of adjusted EBITDA in the third quarter of 2010 compared to $28.6 million of adjusted EBITDA in the third quarter of 2009. This decline was a result of higher raw material costs, lower volumes and higher labor cost associated with employee performance based compensation expense. This increase was based on improved year-to-date results compared to last year and compared to our annual performance goals for building products and the total company and our increased guidance for 2010, as I will outline later.
While the third quarter was weaker than the third quarter of 2009 for this segment, we are pleased with our year-to-date performance. Our buildings products segment has reported $46.9 million of adjusted EBITDA well ahead of the $26.6 million of adjusted EBITDA in the first three quarters of 2009.
Read the rest of this transcript for free on seekingalpha.com
