Axiall Reports First-Quarter 2013 Results

  Axiall Reports First-Quarter 2013 Results

Business Wire

ATLANTA -- May 7, 2013

Axiall Corporation (NYSE: AXLL) today announced financial results for the
quarter ended March 31, 2013.

Axiall reported net sales of $1.1 billion for the first quarter of 2013,
compared to net sales of $859.9 million reported for the first quarter of
2012. The company reported a Net loss attributable to Axiall of $3.5 million,
or $0.06 per diluted share, for the first quarter of 2013, compared to Net
income attributable to Axiall of $35.3 million, or $1.01 per diluted share,
for the first quarter of 2012. Excluding the non-recurring items described in
the table below from the calculation of Net income (loss) attributable to
Axiall, the company reported Adjusted Net Income of $45.1 million, or Adjusted
Earnings per Share of $0.75, for the first quarter of 2013, compared to
Adjusted Net Income of $27.6 million, or Adjusted Earnings per Share of $0.79,
for the first quarter of 2012. The company reported Adjusted EBITDA of $133.4
million in the first quarter of 2013, compared to Adjusted EBITDA of $75.4
million for the same quarter in the prior year.

As previously reported, the company and PPG’s chemicals business merged on
January 28, 2013. The financial results announced today include the results of
the merged company since the date of the merger through March 31, 2013, but
not in prior periods.

                                                                
(millions, except per share data)                      Q1 2013       Q1 2012
Net income (loss) attributable to Axiall               $ (3.5  )     $ 35.3
Pretax charges (benefits)
Cost of sales fair value of inventory – purchase         10.2          -
accounting
Long –lived asset impairment charges (recoveries),       2.6           (0.3  )
net
Transaction related costs and other, net                 10.1          5.3
Gain on sale of assets                                   -             (17.4 )
Gain on acquisition of controlling interest              (23.5 )       -
Loss on redemption and other debt costs                 78.5        -     
Total pretax charge (benefit)                            77.9          (12.4 )
Provision for (benefit from) income taxes related       29.3        (4.7  )
to these items
After tax effect of above items                         48.6        (7.7  )
Adjusted Net Income                                    $ 45.1       $ 27.6  
                                                                     
Diluted earnings (loss) per share attributable to      $ (0.06 )     $ 1.01
Axiall
                                                                     
Adjusted Earnings per Share                            $ 0.75        $ 0.79
                                                                     
Adjusted EBITDA                                        $ 133.4       $ 75.4
                                                                             

“During the first quarter, we completed our merger with PPG’s chemicals
business and began the process of combining our two organizations,” said Paul
Carrico, president and chief executive officer. “This week marks the
successful completion of our first 100 days as Axiall, and I am proud of the
attitude and level of engagement of everyone in the combined organization. We
have made good progress on integrating the organization while maintaining a
steady focus on safety, environmental stewardship, operational excellence and
superior customer service.

“In our first 100 days, we already have seen how this merger enhances Axiall’s
scale and integration across the chlorovinyls chain and expands the benefits
we expect to gain from low-cost natural gas in North America and growing
global demand for our broadened product portfolio,” Carrico said.

Chlorovinyls

In the Chlorovinyls segment, first quarter 2013 net sales were $614.5 million
compared to $329.5 million during the first quarter of 2012. The increase in
net sales was primarily driven by the sales contributed by the PPG chemicals
business after the merger closed on January 28, 2013. This was partially
offset by lower resin sales prices compared to the first quarter of 2012. The
segment posted Adjusted EBITDA of $134.2 million in the first quarter of 2013,
compared to Adjusted EBITDA of $45.6 million for the same quarter in the prior
year. The $88.6 million increase in Adjusted EBITDA was primarily due to the
contribution from the PPG chemicals business, partially offset by changes in
the company’s ethylene supply portfolio that increased its ethylene costs as
compared to industry prices for ethylene, several small unplanned
manufacturing outages and lower VCM sales as operations and sales recovered
from a December 2012 fire at PHH Monomers LLC (“PHH”), which was a VCM joint
venture between the company and PPG until the merger closed.

Building Products

In the Building Products segment, net sales were $162.2 million for the first
quarter of 2013, compared to $187.2 million recorded for the same quarter in
the prior year. The net sales decrease was driven by lower sales volume
partially due to winter weather in the first quarter of 2013 being less
favorable for building and construction activity in the geographical areas
where the company’s building products are primarily sold, as compared to the
more favorable weather in those geographic areas in the first quarter of 2012.
On a constant currency basis and adjusting for exiting the fence product line,
net sales for the quarter were 11 percent lower compared to the first quarter
of 2012. The segment's Adjusted EBITDA was negative $2.6 million for the first
quarter of 2013, compared to $3.3 million of Adjusted EBITDA during the same
quarter of the prior year. The $5.9 million decrease was primarily due to
lower sales volumes.

Aromatics

In the Aromatics segment, net sales decreased to $284.5 million for the first
quarter of 2013 from $343.2 million during the first quarter of 2012, due
primarily to lower sales volumes for all products. During the first quarter of
2013, the segment recorded Adjusted EBITDA of $13.3 million, compared to
Adjusted EBITDA of $37.9 million during the same quarter in 2012. The $24.6
million decrease was primarily due to an inventory holding gain in the first
quarter of 2012 that was larger than the inventory holding gain in the first
quarter of 2013, as well as higher sales volumes in the first quarter of 2012.

Merger with PPG’s chemicals business

On January 28, 2013, the company completed its merger with the PPG chemicals
business. The initial accounting for the transactions (including the
preliminary allocation of the purchase price to acquired assets and assumed
liabilities) is not complete given the limited amount of time since the
closing date.

As part of the merger, the company acquired the 50 percent interest of PHH
that it did not previously own. The company recognized a gain of $23.5 million
as a result of remeasuring the equity interest it held in PHH before the
merger.

During the first quarter of 2013, a fair value inventory purchase accounting
adjustment related to the inventories acquired through the merger increased
the cost of sales for the Chlorovinyls segment by approximately $10.2 million.

Conference Call

The company will discuss first-quarter financial results and business
developments via conference call and webcast on Wednesday, May 8, at 10:00
a.m. Eastern time. To access the company's first-quarter conference call,
please dial (866) 900-0513 (domestic) or (706) 679-9856 (international).
Playbacks will be available from 1:00 p.m. Eastern time on Wednesday, May 8,
until 11:59 p.m. Eastern time on Tuesday, May 21. Playback numbers are (855)
859-2056 or (800) 585-8367. The conference call ID number is 53317360.

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. For more information, visit www.axiall.com.

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 of 1933 and the Securities
Exchange Act of 1934. Words or phrases such as "anticipate," "believe,"
"plan," "estimate," "project," "may," "will," "intend," "target," "expect,"
"would" or "could" (including the negative variations thereof) or similar
terminology used in connection with any discussion of future plans, actions or
events generally identify forward-looking statements. These statements relate
to, among other things, our outlook for future periods, global demand for our
products, pricing trends and market forces within the chemical and building
products industries, expected benefits of the merger with the PPG chemicals
business, integration plans, the expected cost advantage of natural gas in
North America and the expected duration of any such cost advantage and other
statements of expectations concerning matters that are not historical facts.
These statements are based on the current expectations of our management.
There are a number of risks and uncertainties that could cause our actual
results to differ materially from the forward-looking statements included in
this press release. These risks and uncertainties include, among other things:
(i) a material adverse change, event or occurrence affecting Axiall or the
newly acquired chemicals business; (ii) the ability of Axiall to successfully
integrate the businesses of the chemicals business formerly owned by PPG with
which Axiall has merged, 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, 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, 2012, 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
                                                                  
                                              March 31,           December 31,
(In millions, except share data)              2013                2012
Assets:
Cash and cash equivalents                     $ 69.2              $  200.3
Receivables, net of allowance for
doubtful accounts of $4.4 million at            636.9                314.9
March 31, 2013 and $4.5 million at
December 31, 2012
Inventories                                     443.6                288.4
Prepaid expenses and other                      30.8                 14.7
Deferred income taxes                          1.3                21.1    
Total current assets                            1,181.8              839.4
Property, plant and equipment, net              1,635.9              637.7
Goodwill                                        1,667.2              217.2
Intangible assets, net                          1,253.7              43.4
Other assets, net                              86.8               63.6    
Total assets                                  $ 5,825.4          $  1,801.3 
Liabilities and Equity:
Current portion of long-term debt             $ 55.1              $  -
Accounts payable                                344.2                211.2
Interest payable                                9.5                  18.9
Income taxes payable                            6.4                  15.1
Accrued compensation                            34.3                 44.7
Current deferred tax liability                  5.4                  -
Other accrued current liabilities              111.5              61.2    
Total current liabilities                       566.4                351.1
Long-term debt                                  1,418.2              448.1
Lease financing obligation                      110.0                112.3
Deferred income taxes                           777.2                177.9
Pensions and other postretirement               327.5                48.3
benefits
Other non-current liabilities                  132.9              60.1    
Total liabilities                              3,332.2            1,197.8 
                                                                  
Commitments and contingencies
                                                                  
Equity:
Preferred stock—$0.01 par value;
75,000,000 shares authorized; no shares         -                    -
issued
Common stock—$0.01 par value; shares
authorized: 200,000,000 and 100,000,000
at March 31, 2013 and December 31, 2012,        0.7                  0.3
respectively; issued and outstanding:
69,801,675 and 34,546,767 at March 31,
2013 and December 31, 2012, respectively.
Additional paid-in capital                      2,262.3              487.1
Retained earnings                               128.8                138.0
Accumulated other comprehensive loss, net      (29.6   )           (21.9   )
of tax
Total Axiall stockholders’ equity               2,362.2              603.5
Noncontrolling interest                        131.0              -       
Total equity                                   2,493.2            603.5   
Total liabilities and equity                  $ 5,825.4          $  1,801.3 

                                               
AXIALL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
                                                  
                                                  Three Months Ended March 31,
(In millions, except per share data)              2013            2012
Net sales                                         $  1,061.2         $ 859.9
Operating costs and expenses:
Cost of sales                                        899.0             756.4
Selling, general and administrative expenses         78.3              47.7
Transaction related costs and other, net             10.1              5.3
Long-lived asset impairment charges                  2.6               (0.3  )
(recoveries), net
Gain on sale of assets                              -               (17.4 )
Total operating costs and expenses                  990.0           791.7 
Operating income                                     71.2              68.2
Loss on redemption and other debt costs              (78.5   )         -
Interest expense, net                                (18.3   )         (14.4 )
Gain on acquisition of controlling interest          23.5              -
Foreign exchange gain (loss)                        0.1             (0.1  )
Income (loss) before income taxes                    (2.0    )         53.7
Provision for income taxes                          0.8             18.4  
Consolidated net income (loss)                       (2.8    )         35.3
Less net income attributable to                     0.7             -     
noncontrolling interest
Net income (loss) attributable to Axiall          $  (3.5    )       $ 35.3  
                                                                     
Earnings (loss) per share attributable to
Axiall:
Basic                                             $  (0.06   )       $ 1.02
Diluted                                           $  (0.06   )       $ 1.01
                                                                     
Weighted average common shares outstanding:
Basic                                                59.3              34.2
Diluted                                              59.3              34.4
                                                                     
Dividends per common share                        $  0.08            $ -

                                               
AXIALL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
                                                                             
                                                  Three Months Ended March 31,
(In millions)                                     2013           2012
Cash flows from operating activities:
Consolidated net income (loss)                    $  (2.8   )       $ 35.3
Adjustments to reconcile net consolidated
income (loss) to net cash used in operating
activities:
Depreciation                                         29.4             20.8
Amortization                                         12.9             1.8
Loss on redemption and other debt costs              78.5             -
Gain on acquisition of controlling interest          (23.5  )         -
Gain on sale of assets                               -                (17.4  )
Other non-cash items                                 11.7             (0.1   )
Change in operating assets and liabilities,         (211.0 )        (125.9 )
and other (excluding effects of acquisition)
Net cash used in operating activities               (104.8 )        (85.5  )
Cash flows from investing activities:
Capital expenditures                                 (16.4  )         (13.5  )
Proceeds from sale of assets                         -                19.3
Cash acquired in acquisition                        26.7           -      
Net cash provided by investing activities           10.3           5.8    
Cash flows from financing activities:
Borrowings on ABL revolver                           222.7            89.1
Repayments on ABL revolver                           (83.7  )         (60.1  )
Issuance of long-term debt                           450.0          -
Long-term debt payments                              (529.7 )         -
Make-whole and other fees paid related to            (94.4  )         -
financing activities
Excess tax benefits from share-based payment        0.1            -      
arrangements
Net cash provided by (used in) financing            (35.0  )        29.0   
activities
Effect of exchange rate changes on cash and          (1.6   )         1.1
cash equivalents
Net change in cash and cash equivalents              (131.1 )         (49.6  )
Cash and cash equivalents at beginning of           200.3          88.6   
period
Cash and cash equivalents at end of period        $  69.2          $ 39.0   
                                                                             

Significant non-cash transaction

On January 28, 2013 we acquired substantially all of the assets and
liabilities of PPG Industries,Inc.’s (“PPG”) business relating to the
production of chlorine, caustic soda and related chemicals, through a merger
between a subsidiary of PPG and a subsidiary of the Company. The purchase
price for these transactions was approximately $2.7 billion and consisted of:
(i) the issuance of approximately 35.2 million shares of our common stock
valued at approximately $1.8 billion; (ii) the assumption of $967.0 million of
debt; and (iii) the assumption of certain other liabilities including pension
and other postretirement obligations.

                         
AXIALL CORPORATION

SEGMENT INFORMATION

(Unaudited)
                             
                             Three Months Ended March 31,
(Dollars in millions)        2013            2012
Sales
Chlorovinyls products        $  614.5           $ 329.5
Building products               162.2             187.2
Aromatics products             284.5           343.2 
Net sales                    $  1,061.2        $ 859.9 
Operating income
Chlorovinyls products        $  91.3            $ 51.9
Building products               (13.8   )         (6.4  )
Aromatics products              13.0              37.5
Unallocated corporate          (19.3   )        (14.8 )
Total operating income       $  71.2           $ 68.2  

Reconciliation of Non-GAAP Financial Measures

Axiall has supplemented its financial statements prepared in accordance with
U.S. Generally Accepted Accounting Principles (“GAAP”) that are set forth in
this press release (the “Financial Statements”) with three non-GAAP financial
measures: (i) Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation,
and Amortization, cash and non-cash restructuring charges and certain other
charges, if any, related to financial restructuring and business improvement
initiatives, gains or losses on redemption and other debt costs, net, and
sales of certain assets, certain purchase accounting and certain non-income
tax reserve adjustments, professional fees related to a previously disclosed
and withdrawn unsolicited offer and merger with PPG’s chemicals business,
goodwill, intangibles, and other long-lived asset impairments, and interest
expense related to the OMERS lease-financing transaction); (ii) Adjusted Net
Income; and (iii) Adjusted Earnings per Share.

Adjusted Net Income is defined as Net income (loss) attributable to Axiall
plus certain purchase accounting adjustments including: Cost of sales fair
value of inventory, gains or losses on the acquisition of controlling
interest; professional fees related to a previously disclosed and withdrawn
unsolicited offer and merger with PPG’s chemicals business, goodwill,
intangibles, and other long-lived asset impairment charges (recoveries), gain
or loss on the sale of assets, and gains or losses on redemption and other
debt costs, net. Adjusted Earnings per Share is defined as Adjusted Net Income
divided by diluted weighted average common shares outstanding.

Axiall has supplemented the Financial Statements with Adjusted EBITDA because
investors commonly use Adjusted EBITDA as a main component of valuation
analysis of cyclical companies such as Axiall. Axiall has supplemented the
Financial Statements with Adjusted Net Income and Adjusted Earnings per Share
because investors commonly use financial measures such as Adjusted Net Income
and Adjusted Earnings per Share as a component of performance and valuation
analysis for companies, such as Axiall, that recently have engaged in
transactions that result in non-recurring pre-tax charges or benefits that
have a significant impact on the calculation of net income (loss) pursuant to
GAAP, in order to approximate the amount of the net income (loss) that such a
company would have achieved absent those non-recurring, transaction-related
charges or benefits. In addition, Axiall has supplemented the Financial
Statements with Adjusted Net Income and Adjusted Earnings per Share because we
believe these financial measures will be helpful to investors in approximating
what Axiall’s net income (loss) would have been absent the impact of certain
non-recurring, pre-tax charges and benefits related to the company’s merger
with the PPG chemicals business, the company’s issuance of its 4.875 percent
notes and the tender offer and related redemption of its 9 percent notes.

None of Adjusted EBITDA, Adjusted Net Income or Adjusted Earnings per Share
are measurements of financial performance under GAAP and should not be
considered as an alternative to net income (loss), or GAAP diluted earnings
per share, as a measure of performance or to cash provided by operating
activities as a measure of liquidity. In addition, our calculation of Adjusted
EBITDA, Adjusted Net Income and Adjusted Earnings per Share may be different
from the calculation used by other companies and, therefore, comparability may
be limited. A reconciliation of net income (loss) attributable to Axiall
determined in accordance with GAAP to Adjusted Net Income and Adjusted
Earnings per Share is included in the body of the press release. A
reconciliation of Consolidated net income (loss) determined in accordance with
GAAP to Adjusted EBITDA is in the tables set forth below.

                                                                          
    Three Months Ended March 31, 2013
                                                                                  
                                                                Unallocated
    (In                Chlorovinyls     Building    Aromatics   Corporate &       Total
    Millions)                           Products                Non-operating
                                                                expenses, net
                                                                                  
    Adjusted           $ 134.2          $ (2.6  )   $  13.3     $ (11.5  )        $ 133.4
    EBITDA
    Transaction
    related              (1.3  )          0.3          -          (9.1   )          (10.1 )
    costs and
    other, net
    Long-lived
    asset
    impairment           -                (2.6  )      -          -                 (2.6  )
    (charges)
    recoveries,
    net
    Depreciation
    and                  (31.5 )          (8.8  )      (0.3 )     (1.7   )          (42.3 )
    amortization
    Other                (10.2 ) ^(a)     -            -          3.1      ^(b)     (7.1  )
    Interest             -                -            -          (18.3  )          (18.3 )
    Expense, net
    Gain on
    acquisition
    of                   23.5             -            -          -                 23.5
    controlling
    interest
    Loss on
    redemption           -                -            -          (78.5  )          (78.5 )
    and other
    debt cost
    Provision
    for income          -              -          -        (0.8   )         (0.8  )
    taxes
    Consolidated
    net income         $ 114.7         $ (13.7 )   $  13.0    $ (116.8 )        $ (2.8  )
    (loss) ^(c)
                                                                                          
(a) Cost of sales fair value of inventory purchase accounting adjustment.
(b) Includes $1.2 million for debt cost amortization and $1.8 million of lease financing
    obligations interest.
(c) Earnings of our segments exclude interest income and expense, unallocated corporate
    expenses and general plant services, and provision for income taxes.
    

                                                                                 
    Three Months Ended March 31,
    2012
                                                                 Unallocated
    (In              Chlorovinyls    Building   Aromatics    Corporate &           Total
    Millions)                         Products                   Non-operating
                                                                 expenses, net
                                                                                        
    Adjusted         $    45.6        $  3.3       $   37.9      $    (11.4    )        $ 75.4
    EBITDA
    Transaction
    related          -                   (0.1  )       -              (5.2     ) ^(a)     (5.3  )
    costs and
    other, net
    Long-lived
    asset
    impairment
    (charges)             -              0.3           -              -                   0.3

    recoveries,
    net
    Gain on sale          17.4        -            -             -                        17.4
    of assets
    Depreciation
    and                   (11.1   )      (10.0 )       (0.4  )        (1.1     )          (22.6 )
    amortization
    Other                 -              -             -              2.9        ^(b)     2.9
    Interest              -              -             -              (14.4    )          (14.4 )
    Expense, net
    Provision
    for income           -            -           -            (18.4    )         (18.4 )
    taxes
    Consolidated
    net income       $    51.9       $  (6.5  )   $   37.5     $    (47.6    )        $ 35.3  
    (loss) ^(c)
                                                                                        
(a) Includes $4.9 million of professional fees associated with the unsolicited offer.
(b) Includes $1.0 million for debt cost amortization and $1.8 million of lease financing
    obligations interest.
(c) Earnings of our segments exclude interest income and expense, unallocated corporate expenses
    and general plant services, and provision for income taxes.

Contact:

Axiall Corporation
Investor Relations:
Martin Jarosick, 770-395-4524
or
Media
Alan Chapple, 770-395-4538
 
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