ATLANTA--(BUSINESS WIRE)--Nov. 3, 2015-- Axiall Corporation (NYSE: AXLL) today announced financial results for the quarter ended Sept. 30, 2015.
The company reported net sales of $874.4 million for the third quarter of 2015, compared to net sales of $1,047.2 million reported for the third quarter of 2014. The company reported a net loss attributable to Axiall of $769.6 million, or $10.90 loss per diluted share, for the third quarter of 2015, compared to net income attributable to Axiall of $44.5 million, or $0.63 per diluted share, for the third quarter of 2014. The company reported Adjusted Net Income of $64.0 million and Adjusted Earnings Per Share of $0.91 for the third quarter of 2015, compared to Adjusted Net Income of $62.3 million and Adjusted Earnings Per Share of $0.88 for the third quarter of 2014. The company reported Adjusted EBITDA of $107.0 million for the third quarter of 2015, compared to Adjusted EBITDA of $136.7 million for the third quarter of 2014.
“This quarter we completed the divestiture of our Aromatics business and streamlined our management team, reducing headcount in both our Chlorovinyls and Building Products businesses. Our plants ran well during the quarter to both meet customer requirements and build inventory ahead of our planned fourth-quarter outages,” said Tim Mann, interim president and CEO. “We have made substantial progress toward our ethane cracker final investment decision, as well as on our strategic review of our Building Products business, and I expect additional progress during the fourth quarter on these key initiatives. We generated $123.7 million of cash from continuing operations for the quarter and finished the third quarter of 2015 with $240.5 million of cash on the balance sheet and about $675 million of liquidity.”
In the Chlorovinyls segment, our third quarter 2015 net sales were $626.4 million compared to $769.4 million during the third quarter of 2014. The segment posted Adjusted EBITDA of $85.5 million in the third quarter of 2015, compared to Adjusted EBITDA of $118.5 million for the same quarter in the prior year. The decrease in net sales and Adjusted EBITDA was primarily due to lower ECU values, especially with respect to caustic soda, lower PVC, VCM and chlorinated derivatives sales prices, and lower overall sales volumes. These unfavorable factors for Adjusted EBITDA were partially offset by decreases in the cost of ethylene and natural gas.
Due to a variety of factors and in accordance with GAAP, the company was required to perform interim goodwill impairment testing. This testing resulted in the determination that Chlorovinyls goodwill was impaired and the company recognized a preliminary $847.8 million non-cash charge during third quarter 2015.
In the Building Products segment, net sales were $248.0 million for the third quarter of 2015, decreasing 11 percent compared to $277.8 million for the same quarter in the prior year. The net sales decrease was driven by the impact of a stronger United States dollar relative to a weaker Canadian dollar as well as a 5 percent decrease in overall sales volumes, with volumes in Canada decreasing 15 percent while volumes in the United States increased by 4 percent. On a constant currency basis, net sales for the quarter decreased by 3 percent. The segment’s Adjusted EBITDA was $31.7 million for the third quarter of 2015, compared to $34.0 million during the same quarter of the prior year. The decrease in Adjusted EBITDA primarily resulted from the impact of a stronger United States dollar relative to a weaker Canadian dollar and lower sales volumes, offset in part by lower material costs.
The company completed the sale of its Aromatics business and cumene facility Sept. 30, 2015. The company retained the phenol plant at its Plaquemine, La., site and associated working capital. The company has since shut down this phenol operation and has begun harvesting the associated working capital.
The company is continuing its strategic review of its Building Products business, which may include the possible sale of all or part of that business. The company has engaged financial advisors to assist with this effort, but it has not yet established a timeline for completion of the strategic review.
Compared sequentially to the third quarter, the company expects the following factors to impact its fourth-quarter 2015 results:
The company will discuss third-quarter financial results and business developments via conference call and webcast on Tuesday, Nov. 3, 2015 at 9:00 a.m. EST.
To access the company’s third-quarter conference call, please dial 877-820-5027 (domestic) or 706-645-4014 (international). Playbacks will be available from Noon EST on Tuesday, Nov. 3, until 11:55 p.m. EST on Monday, Nov. 30, 2015. Playback numbers are 855-859-2056 or 404-537-3406. The conference call ID number is 65508472.
Axiall Corporation is a leading integrated chemicals and building products company. Headquartered in Atlanta, Axiall 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 expectations regarding: demand for our products and the seasonality of that demand; product mix and margin impacts related thereto; expected growth of our businesses and products; our results of operations; our financial and operational performance, our business prospects and opportunities; product pricing and sales volumes; planned outages and the impact of those outages on our financial and operational performance; natural gas and ethylene costs; the components of our ethylene supply portfolio; natural gas hedging; corporate overhead 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: changes, seasonality and/or cyclicality in the industries in which our products are sold and changes in demand for our products or increases in overall industry capacity that could affect production volumes and/or pricing; the costs and operating restrictions associated with compliance with current and future environmental, health and safety laws and regulations; the availability and pricing of energy and raw materials; risks, hazards and potential liabilities associated with manufacturing and transporting chemicals and building products and litigation related thereto; changes in the general economy, including the impacts of the current, and any potential future, economic uncertainties in the housing and construction markets; our level of indebtedness and debt service obligations and ability to continue to comply with the covenants in our asset-based and term loan credit agreements and the indentures governing our 4.875 percent senior notes due 2023 and 4.625 percent senior notes due 2021; our reliance on a limited number of suppliers for specified feedstock and services and our reliance on third-party transportation; risks, costs, liabilities, pension and post-retirement welfare benefit obligations; competition within our industry; complications resulting from our multiple enterprise resource planning (“ERP”) systems and the implementation of our new ERP systems, including our project to improve and further integrate the SAP system for our chemicals segment; strikes and work stoppages relating to the workforce under collective bargaining agreements; any impairment of goodwill, indefinite-lived intangible assets or other intangible assets, which may include additional, significant goodwill impairment charges in our chlor-alkali and derivatives reporting unit and/or in reporting units within our building products segment; the failure to realize the benefits of, and/or disruptions resulting from, any asset dispositions, asset acquisitions, joint ventures, business combinations or other transactions; shared control of our joint ventures with unaffiliated third parties, including the ability of such joint venture partners to fulfill their obligations; fluctuations in foreign currency exchange rates, especially with respect to the United States and Canadian dollars, and interest rates; and the failure to adequately protect our data and technology systems, the inherent difficulty with managing the transition of our CEO position, including the risk of an inadequate transition causing disruptions to our business, including to our relationships with customers and employees, and the risk of being unable to attract and retain a qualified candidate to become our permanent CEO in a timely manner. 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, 2014, 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.
Reconciliation of Non-GAAP Financial Measures
Axiall supplements its financial statements prepared in accordance with GAAP with four non-GAAP financial measures: (i) Adjusted Net Income; (ii) Adjusted Earnings Per Share; (iii) Adjusted EBITDA; and (iv) building products net sales on a constant currency basis.
Adjusted Earnings (Loss) Per Share is calculated using Adjusted Net Income (Loss) rather than consolidated net income (loss) attributable to Axiall calculated in accordance with GAAP.
Adjusted Net Income (Loss) is defined as net income (loss) attributable to Axiall excluding adjustments for tax effected restructuring and certain other charges, if any, related to discontinued operations, financial restructuring and business improvement initiatives, gains or losses on sales of certain assets, debt refinancing costs, certain acquisition accounting and non-income tax reserve adjustments, certain professional fees associated with various potential and completed mergers and acquisitions, joint ventures and other transactions, costs to attain synergies related to the integration of the former chemicals business of PPG Industries (the "Merged Business"), amortization of definite-lived intangible assets, impairment charges for goodwill, intangible assets, and other long-lived assets. For the three and nine month periods ended September 30, 2015 we have excluded amortization of definite-lived intangible assets from our calculation of Adjusted Net Income (Loss) and intend to do so in future periods. We believe excluding this item from our calculation of Adjusted Net Income is helpful to investors because the amortization of our intangible assets is a non-cash charge that does not impact our liquidity or our operational performance.
Adjusted EBITDA is defined as Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization, restructuring and certain other charges, if any, related to discontinued operations, financial restructuring and business improvement initiatives, gains or losses on sales of certain assets, debt refinancing costs, certain acquisition accounting and non-income tax reserve adjustments, certain professional fees associated with various potential and completed mergers and acquisitions, divestitures, joint ventures and other transactions, costs to attain synergies related to the integration of the Merged Business, impairment charges for goodwill, intangible assets, and other long-lived assets, certain pension and other post-retirement plan curtailment gains and settlement losses and interest expense related to the lease-financing transaction discussed in our Form 10-K for the year ended December 31, 2014.
Axiall supplements its financial statements with Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share because investors commonly use financial measures such as Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share as a component of performance and valuation analysis for companies, such as Axiall, that recently have engaged in transactions and have incurred expenses such as professional fees related to potential transactions, that result in non-recurring pre-tax charges or benefits that have a significant impact on the calculation of consolidated net income (loss) attributable to Axiall pursuant to GAAP, in order to approximate the amount of net income (loss) that such a Company would have achieved absent those non-recurring, transaction-related charges or benefits. In addition, Axiall supplements the financial statements with Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share because we believe these financial measures will be helpful to investors in approximating what our net income (loss) would have been absent the impact of certain non-recurring, pre-tax charges and benefits. We have 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.
In addition, we may compare certain financial information, including building products net sales on a constant currency basis. We present such information to provide a framework for investors to assess how our underlying businesses performed, excluding the effect of foreign currency rate fluctuations, primarily fluctuations in the Canadian dollar. To present this information, current and comparative prior period financial information for certain businesses reporting in currencies other than United States dollars are converted into United States dollars at the average exchange rate in effect during the base period, rather than the average exchange rates in effect during the respective periods.
Adjusted Earnings (Loss) Per Share, Adjusted Net Income (Loss), Adjusted EBITDA and building products net sales on a constant currency basis are not measurements of financial performance under GAAP and should not be considered as an alternative to net income (loss), GAAP diluted earnings (loss) per share or net sales, as a measure of performance or to cash provided by (used in) operating activities as a measure of liquidity. In addition, our calculation of these various non-GAAP measurements may be different from the calculations used by other companies and, therefore, comparability may be limited.
Reconciliations of our non-GAAP financial measures to the most comparable GAAP measures are presented in the tables set forth below.
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Source: Axiall Corporation
Martin Jarosick, 770-395-4524
Chip Swearngan, 678-507-0554