Georgia Gulf Corporation (GGC)
Q1 2010 Earnings Call Transcript
May 6, 2010 10:00 am ET
Martin Jarosick – IR
Paul Carrico – President & CEO
Greg Thomson – CFO
Kristin Duffy [ph]
Previous Statements by GGC
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Good morning. My name is Jasper and I will be your conference operator today. At this time, I would like to welcome everyone the Georgia Gulf first quarter financial results 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. I’ll now like to turn the call over to Mr. Martin Jarosick. Sir, you may begin.
Thank you, Jasper and good morning, ladies and gentlemen. Thank you for participating in today's conference call to discuss Georgia Gulf's 2010 first quarter financial results. There are slides available to you on the Georgia Gulf Web site. These slides are for your reference, but we will not be speaking directly to the bullets on each slide. Participating on today's call are Paul Carrico, President and Chief Executive Officer and Greg Thomson, Chief Financial Officer.
During this call we will be making forward-looking statements. As you will appreciate any business projections and assumptions about future events 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 measures as an appendix in the slides on our Web site.
I will now turn the call over to Paul to begin the review of the first quarter. Paul?
Thanks, Martin and good morning, ladies and gentlemen. In reviewing the first quarter we delivered $13 million of adjusted EBITDA compared to $10.9 million of adjusted EBITDA in the first quarter of 2009. There was a significant reduction in our Chlorovinyl segment as it generated $5.2 million of adjusted EBITDA compared to $38.7 million in the first quarter of 2009. The results declined due to several factors.
First, much lower ECU values are realized as caustic prices were measurably lower compared to the near peak level in the first quarter of 2009. Second, PVC margins were squeezed by ethylene costs increases that outpace PVC price increases through the fourth quarter of last year and the first quarter of this year.
And two scheduled turnarounds were completed this quarter compared to one in the first quarter of 2009. These negative items were partially offset by a lower natural gas cost.
Building Product segment generated $5.5 million of adjusted EBITDA in the first quarter 2010 compared to negative $21.4 million of adjusted EBITDA in the first quarter of last year. This dramatic turnaround and large improvement was driven by the cost reductions and profitability improvements implemented during the past two years and by a double-digit increase in volume.
Our Aromatics segment generated $10 million of adjusted EBITDA compared to $1.5 million in the first quarter of 2009. This strong performance was driven by a significant volume increase in phenol and cumene. There were various industry planned outages both planned and unplanned that we were able to take advantage of during the quarter. Also higher benzene and propylene prices across the quarter support the positive result in the inventory holding values.
At this time, I will turn the call over to Greg to review our financial results in greater detail.
Thank you, Paul. Good morning ladies and gentlemen. Before I review our financial results I’d like to point out a change in our segment reporting. Starting this quarter our Window and Door Profiles and Mouldings and the Outdoor Building Products have been combined into one Building Products segment.
This change in external reporting is consistent with the changes we have made to our operating and internal reporting structure. Prior periods have been adjusted to show consistent presentation of the new segment.
Net sales in the first quarter were $631.5 million, an increase of 55% over the same quarter last year. The sales increase is primarily due to increased sales volumes particularly in Aromatics and Building Products and higher prices in vinyl resins and Aromatics products, partially offset by much lower caustic soda prices.
Now let's look at our performance from continuing operations during the first quarter. Georgia Gulf reported an operating loss of $10.5 million for the first quarter of 2010 compared to an operating loss of $25.7 million during the same quarter in the previous year. Excluding net restructuring income of 300,000 in the first quarter of 2010 and restructuring expenses of 8 million in the first quarter of 2009, we recorded an operating loss of 10.8 million in the first quarter of 2010 compared to an operating loss of 17.7 million for the first quarter of 2009.
Adjusted EBITDA for the first quarter of 2010 was $13 million versus $10.9 million in the same quarter last year. SG&A expense for the first quarter of 2010 was $37.9 million, $5.2 million higher than the same period last year. The increase is primarily due to unfavorable impact of 5.3 million gains from litigation settlement and insurance proceeds in the three months ended March 31, 2009.