ATLANTA — Aug. 8, 2016 — Axiall Corporation (NYSE: AXLL) today announced financial results for the quarter ended June 30, 2016.
The company reported net sales of $776.1 million for the second quarter of 2016, compared to net sales of $869.2 million for the second quarter of 2015. The company reported net loss attributable to Axiall of $27.8 million, or $0.39 loss per diluted share, for the second quarter of 2016, compared to net income attributable to Axiall of $20.6 million, or $0.29 per diluted share, for the second quarter of 2015. The company reported Adjusted Net Income of $8.4 million and Adjusted Earnings Per Share of $0.12 for the second quarter of 2016, compared to Adjusted Net Income of $34.7 million and Adjusted Earnings Per Share of $0.49 for the second quarter of 2015. The company reported Adjusted EBITDA of $60.7 million for the second quarter of 2016, compared to Adjusted EBITDA of $105.7 million for the second quarter of 2015.
"I am pleased that our employees remained focused on their work – improving our safety record year over year – and serving our customers across our chlor-alkali, compounds and building products businesses," said Axiall President and CEO Tim Mann. "We believe our pending strategic combination with Westlake Chemical Corporation will drive significant value for our customers and business partners as we create a North American chlorovinyls leader with a highly integrated chain, diverse product portfolio and a globally competitive cost structure. We are working closely with the Westlake team to ensure a smooth transition and plan to complete the transaction as expeditiously as possible."
In the Chlorovinyls segment, net sales were $578.4 million for the second quarter of 2016 compared to $666.1 million for the same quarter of the prior year. The segment posted operating loss and Adjusted EBITDA of $37.1 million and $42.0 million, respectively, in the second quarter of 2016, compared to operating income and Adjusted EBITDA of $37.8 million and $89.0 million, respectively, for the same quarter in the prior year. The decreases in net sales and Adjusted EBITDA were primarily due to lower PVC, VCM and chlorinated derivatives sales prices; lower electrochemical unit ("ECU") values, especially with respect to caustic soda prices; and lower sales volume driven primarily by the extended timing of a scheduled turnaround at our Plaquemine, La., VCM facility. The unfavorable factors for Adjusted EBITDA were partially offset by decreases in the cost of ethylene and natural gas.
In the Building Products segment, net sales were $197.7 million for the second quarter of 2016, decreasing 3 percent compared to $203.1 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 3 percent decrease in sales volumes in Canada, partially offset by a 4 percent increase in sales volumes in the United States. On a constant currency basis, net sales decreased by 1 percent for the three months ended June 30, 2016 compared to the three months ended June 30, 2015. The segment's operating income and Adjusted EBITDA was $26.7 million and $33.8 million, respectively, for the second quarter of 2016, compared to $23.3 million and $29.0 million, respectively, during the same quarter of the prior year. The increase in Adjusted EBITDA was primarily a result of lower material costs, lower selling, general and administrative expenses and higher sales volumes, offset in part by the impact of a stronger United States dollar relative to a weaker Canadian dollar.
On June 10, 2016, the company entered into an agreement and plan of merger with Westlake Chemical Corporation ("Westlake") and Lagoon Merger Sub, Inc., a newly formed wholly owned subsidiary of Westlake.
On August 1, 2016, Axiall filed a definitive proxy statement with the United States Securities and Exchange Commission (the "SEC") to notify the company's shareholders of a special meeting to be held on August 30, 2016 to vote on the proposed merger with Westlake (the "Merger"). Axiall and Westlake have received all regulatory approvals required for the Merger, including approvals required by U.S. and Canadian competition laws.
The company has terminated its previously announced sales process for the remainder of its Building Products business.
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.
For additional information relating to the Merger, see the definitive proxy statement contained in Schedule 14A filed with the SEC on August 1, 2016. This proxy statement provided notice and information about the special meeting of the Company's shareholders to vote on the Merger Agreement that will be held on August 30, 2016.
To read this entire news release, including financial tables, please view the source version on businesswire.com: http://www.businesswire.com/news/home/20160808005240/en.
Cautionary Statements About Forward-Looking Information
This news release contains "forward looking statements" as defined in, and subject to the safe harbor provisions of, the federal securities laws. These forward-looking statements relate to, among other things, the company's expectations regarding the expected benefits of the Merger and the expected timing for completion of the Merger, the company's anticipated financial performance and prospects, the company's plans and objectives for future operations, and other statements of expectations concerning matters that are not historical facts. These statements are based on the current expectations of the company's management. There are a number of risks and uncertainties that could cause the company's actual results to differ materially from the forward-looking statements included in this news release. These risks and uncertainties include, among other things:
• the failure to receive the required approval for the Merger from the company's shareholders;
• the risk that a condition to the closing of the Merger may not be satisfied;
• the diversion of management's time on Merger-related issues and other potential operational disruption caused by the Merger that may make it more difficult to maintain relationships with customers, employees or suppliers;
• the risk of potential litigation related to the Merger;
• changes, seasonality and/or cyclicality in the industries in which the company's products are sold and changes in demand for the company's 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, including, among others, explosions and fires, mechanical failures, unscheduled downtime and related litigation;
• legislative and regulatory developments;
• changes in the general economy, including the impacts of the current, and any potential future, economic uncertainties in the housing and construction markets;
• the company's level of indebtedness and debt service obligations and ability to continue to comply with the covenants in the credit agreements and indentures governing the company's indebtedness;
• the company's reliance on a limited number of suppliers for specified feedstock and services and the company's reliance on third-party transportation;
• risks, costs and liabilities associated with pension and other post-retirement employment benefit plans;
• competition within the industry in which the company operates;
• complications resulting from multiple enterprise resource planning ("ERP") systems and the implementation of new ERP systems;
• strikes and work stoppages relating to the workforce under collective bargaining agreements;
• any impairment of goodwill, indefinite-lived intangible assets or other intangible assets;
• 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 the company's joint ventures and similar arrangements with unaffiliated third parties, including the ability of such joint venture partners and other counterparties to fulfill their obligations;
• costs resulting from complications or delays relating to the company's arrangements with Lotte Chemical USA Corporation related to the ethane cracker (ethylene manufacturing plant) being constructed in Lake Charles, Louisiana;
• fluctuations in foreign currency exchange and interest rates;
• the failure to adequately protect the company's data and technology systems;
• the company's ability to successfully implement and administer its cost-saving initiatives (including restructuring programs) and produce the desired results (including projected savings); and
• other factors discussed in the company's SEC filings from time to time, including the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and subsequent quarterly reports on Form 10-Q.
The risks and uncertainties above are not the only risks the company faces. Additional risks and uncertainties not presently known to the company or that it believes may be immaterial also may adversely affect the company. Should any known or unknown risks and uncertainties develop into actual events, these developments could have material adverse effects on the company's business, financial condition and results of operations. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied herein will not be realized.
Martin Jarosick, 770-395-4524
Chip Swearngan, 678-507-0554