AXIALL CORPORATION |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(Unaudited) |
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March 31, | December 31, | ||||||||
(In millions, except share data) |
2016 | 2015 | |||||||
Assets: | |||||||||
Cash and cash equivalents | $ | 201.4 | $ | 258.0 | |||||
Receivables, net of allowance for doubtful accounts of $9.4 million at | |||||||||
March 31, 2016 and $5.9 million at December 31, 2015 | 381.2 | 355.3 | |||||||
Inventories | 307.2 | 280.9 | |||||||
Prepaid expenses and other | 69.1 | 58.9 | |||||||
Current assets of discontinued operations | 0.6 | 36.9 | |||||||
Total current assets | 959.5 | 990.0 | |||||||
Property, plant and equipment, net | 1,539.8 | 1,556.5 | |||||||
Goodwill | 856.2 | 852.1 | |||||||
Customer relationships, net | 938.9 | 950.3 | |||||||
Other intangible assets, net | 62.0 | 63.4 | |||||||
Non-current assets of discontinued operations | - | 62.0 | |||||||
Other assets, net | 70.1 | 65.1 | |||||||
Total assets | $ | 4,426.5 | $ | 4,539.4 | |||||
Liabilities and Equity: | |||||||||
Current portion of long-term debt | $ | 2.5 | $ | 2.5 | |||||
Accounts payable | 260.3 | 244.8 | |||||||
Interest payable | 12.8 | 15.4 | |||||||
Income taxes payable | 2.3 | 2.2 | |||||||
Accrued compensation | 38.0 | 41.0 | |||||||
Other accrued liabilities | 84.4 | 94.7 | |||||||
Current liabilities of discontinued operations | 5.5 | 15.5 | |||||||
Total current liabilities | 405.8 | 416.1 | |||||||
Long-term debt, excluding the current portion of long-term debt | 1,364.6 | 1,364.5 | |||||||
Lease financing obligation | 46.9 | 44.0 | |||||||
Deferred income taxes | 678.7 | 683.0 | |||||||
Pension and other post-retirement benefits | 193.8 | 202.8 | |||||||
Non-current liabilities of discontinued operations | - | 35.6 | |||||||
Other non-current liabilities | 124.8 | 140.3 | |||||||
Total liabilities | 2,814.6 | 2,886.3 | |||||||
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 at March 31, 2016 and December 31, 2015; | |||||||||
issued and outstanding: 70,587,260 at March 31, 2016 and | |||||||||
70,581,543 at December 31, 2015 | 0.7 | 0.7 | |||||||
Additional paid-in capital | 2,288.2 | 2,287.5 | |||||||
Retained deficit | (657.9 | ) | (591.9 | ) | |||||
Accumulated other comprehensive loss, net of tax | (96.1 | ) | (118.0 | ) | |||||
Total Axiall stockholders’ equity | 1,534.9 | 1,578.3 | |||||||
Noncontrolling interest | 77.0 | 74.8 | |||||||
Total equity | 1,611.9 | 1,653.1 | |||||||
Total liabilities and equity | $ | 4,426.5 | $ | 4,539.4 | |||||
AXIALL CORPORATION | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(Unaudited) | ||||||||||||
Three Months Ended March 31, | ||||||||||||
(In millions, except per share data) |
2016 | 2015 | ||||||||||
Net sales | $ | 699.2 | $ | 784.6 | ||||||||
Operating costs and expenses: | ||||||||||||
Cost of sales | 619.0 | 680.7 | ||||||||||
Selling, general and administrative expenses | 70.1 | 76.0 | ||||||||||
Restructuring and divestiture costs | 36.7 | 0.7 | ||||||||||
Integration-related costs and other, net | 3.4 | 5.1 | ||||||||||
Fees associated with unsolicited offer and strategic alternatives | 5.2 | - | ||||||||||
Total operating costs and expenses | 734.4 | 762.5 | ||||||||||
Operating income (loss) | (35.2 | ) | 22.1 | |||||||||
Interest expense, net | (17.0 | ) | (17.6 | ) | ||||||||
Debt refinancing costs | - | (3.2 | ) | |||||||||
Foreign currency exchange loss | (0.9 | ) | (0.7 | ) | ||||||||
Income (loss) from continuing operations before income taxes | (53.1 | ) | 0.6 | |||||||||
Provision for (benefit from) income taxes | (22.8 | ) | 3.0 | |||||||||
Net loss from continuing operations | (30.3 | ) | (2.4 | ) | ||||||||
Discontinued operations: | ||||||||||||
Loss from discontinued operations | (31.4 | ) | (7.2 | ) | ||||||||
Less: Benefit from income taxes of discontinued operations | (8.4 | ) | (0.8 | ) | ||||||||
Net loss from discontinued operations | (23.0 | ) | (6.4 | ) | ||||||||
Consolidated net loss | (53.3 | ) | (8.8 | ) | ||||||||
Less: net income attributable to noncontrolling interest | 0.3 | 1.8 | ||||||||||
Net loss attributable to Axiall | $ | (53.6 | ) | $ | (10.6 | ) | ||||||
Basic loss per share attributable to Axiall: | ||||||||||||
Basic loss per share from continuing operations | $ | (0.43 | ) | $ | (0.06 | ) | ||||||
Basic loss per share from discontinued operations | (0.33 | ) | (0.09 | ) | ||||||||
Basic loss per share attributable to Axiall | $ | (0.76 | ) | $ | (0.15 | ) | ||||||
Diluted loss per share attributable to Axiall: | ||||||||||||
Diluted loss per share from continuing operations | $ | (0.43 | ) | $ | (0.06 | ) | ||||||
Diluted loss per share from discontinued operations | (0.33 | ) | (0.09 | ) | ||||||||
Diluted loss per share attributable to Axiall | $ | (0.76 | ) | $ | (0.15 | ) | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 70.6 | 70.2 | ||||||||||
Diluted | 70.6 | 70.2 | ||||||||||
Dividends per common share | $ | 0.16 | $ | 0.16 | ||||||||
AXIALL CORPORATION |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(Unaudited) |
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Three Months Ended March 31, | |||||||||
(In millions) |
2016 | 2015 | |||||||
Cash flows from operating activities: | |||||||||
Consolidated net loss | $ | (53.3 | ) | $ | (8.8 | ) | |||
Less: net loss from discontinued operations, net of tax | (23.0 | ) | (6.4 | ) | |||||
Net loss from continuing operations | (30.3 | ) | (2.4 | ) | |||||
Adjustments to reconcile consolidated net loss to net cash used in | |||||||||
operating activities: | |||||||||
Depreciation | 43.4 | 42.5 | |||||||
Amortization | 18.2 | 18.4 | |||||||
Deferred income taxes | (9.1 | ) | (13.5 | ) | |||||
Loss on sales of businesses | 19.9 | - | |||||||
Other non-cash items | (1.1 | ) | 6.0 | ||||||
Change in operating assets and liabilities | (62.0 | ) | (70.2 | ) | |||||
Cash used in operating activities - continuing operations | (21.0 | ) | (19.2 | ) | |||||
Cash provided by operating activities - discontinued operations | 4.0 | 0.4 | |||||||
Net cash used in operating activities | (17.0 | ) | (18.8 | ) | |||||
Cash flows from investing activities: | |||||||||
Capital expenditures | (57.3 | ) | (35.1 | ) | |||||
Proceeds from sales of business assets | 11.1 | - | |||||||
Cash used in investing activities - continuing operations | (46.2 | ) | (35.1 | ) | |||||
Cash provided by (used in) investing activities - discontinued operations | 26.8 | (1.7 | ) | ||||||
Net cash used in investing activities | (19.4 | ) | (36.8 | ) | |||||
Cash flows from financing activities: | |||||||||
Issuance of long-term debt | - | 248.8 | |||||||
Long-term debt payments | (0.8 | ) | (195.2 | ) | |||||
Deferred acquisition payments | (15.0 | ) | (10.0 | ) | |||||
Fees paid related to financing activities | - | (3.0 | ) | ||||||
Dividends paid | (11.3 | ) | (11.2 | ) | |||||
Share-based compensation plan activity | 1.1 | (0.4 | ) | ||||||
Net cash provided by (used in) financing activities | (26.0 | ) | 29.0 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 5.8 | (5.5 | ) | ||||||
Net change in cash and cash equivalents | (56.6 | ) | (32.1 | ) | |||||
Cash and cash equivalents at beginning of period | 258.0 | 166.8 | |||||||
Cash and cash equivalents at end of period | $ | 201.4 | $ | 134.7 | |||||
AXIALL CORPORATION |
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SEGMENT INFORMATION |
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(Unaudited) |
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Three Months Ended March 31, | ||||||||||
(In millions) |
2016 | 2015 | ||||||||
Sales: | ||||||||||
Chlorovinyls | $ | 556.1 | $ | 648.4 | ||||||
Building products | 143.1 | 136.2 | ||||||||
Net sales | $ | 699.2 | $ | 784.6 | ||||||
Operating income (loss) | ||||||||||
Chlorovinyls | $ | (9.6 | ) | $ | 43.7 | |||||
Building products | 4.1 | (3.4 | ) | |||||||
Unallocated corporate | (29.7 | ) | (18.2 | ) | ||||||
Total operating income (loss) | $ | (35.2 | ) | $ | 22.1 |
Reconciliation of Non-GAAP Financial Measures In addition to its consolidated financial statements prepared in accordance with GAAP, reports 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 or Loss Per Share is calculated using Adjusted Net Income or Loss rather than consolidated net income or loss attributable to calculated in accordance with GAAP. Adjusted Net Income or Loss is defined as consolidated net income or loss attributable to 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 chlor-alkali and derivatives business of (the "Merged Business"), legal and professional fees related to Westlake’s unsolicited proposal to acquire the company and Axiall’s exploration of strategic alternatives, amortization of definite-lived intangible assets, impairment charges for goodwill, intangible assets, and other long-lived assets. Adjusted EBITDA is defined as Earnings or 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, legal and professional fees related to Westlake’s unsolicited offer to acquire us and Axiall’s exploration of strategic alternatives, 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 . reports Adjusted Net Income or Loss and Adjusted Earnings or Loss Per Share because investors commonly use financial measures such as Adjusted Net Income or Loss and Adjusted Earnings or Loss Per Share as a component of performance and valuation analysis for companies, such as , 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 or loss attributable to pursuant to GAAP, in order to approximate the amount of net income or loss that such a company would have achieved absent those non-recurring, transaction-related charges or benefits. In addition, reports Adjusted Net Income or Loss and Adjusted Earnings or Loss Per Share because we believe these financial measures will be helpful to investors in approximating what our net income or loss would have been absent the impact of certain non-recurring, pre-tax charges and benefits. We have reported Adjusted EBITDA because investors commonly use Adjusted EBITDA as a main component of valuation analysis of cyclical companies such as . 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 dollars are converted into 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 or Loss Per Share, Adjusted Net Income or 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 or loss, GAAP diluted earnings or loss per share or net sales, as a measure of performance or to cash provided by or 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.
Adjusted Net Income Reconciliation
Three Months Ended March 31, | ||||||||||
(In millions) |
2016 | 2015 | ||||||||
Net loss attributable to Axiall | $ | (53.6 | ) | $ | (10.6 | ) | ||||
Pre-tax charges: | ||||||||||
Restructuring and divestiture costs | 36.7 | 0.7 | ||||||||
Integration-related costs and other, net(1) |
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3.4 | 5.7 | |||||||
Fees associated with unsolicited offer | ||||||||||
and strategic alternatives | 5.2 | - | ||||||||
Debt refinancing costs |
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- | 3.2 | |||||||
Amortization of intangible assets | 17.0 | 17.1 | ||||||||
Loss from the sale of discontinued operations | 25.1 | - | ||||||||
Total pre-tax charges | 87.4 | 26.7 | ||||||||
Provision for income taxes related to these items | 22.1 | 9.1 | ||||||||
After-tax effect of above items | 65.3 | 17.6 | ||||||||
Adjusted Net Income | $ | 11.7 | $ | 7.0 | ||||||
_____________________________ |
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(1) Includes $0.6 million for the three months ended March 31, 2015, of plant reliability improvement |
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initiatives that are included in cost of sales on our unaudited condensed consolidated statements of operations. | ||||||||||
Adjusted Earnings Per Share Reconciliation |
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Three Months Ended March 31, | |||||||||
2016 | 2015 | ||||||||
Diluted loss per share attributable to Axiall | $ | (0.76 | ) | $ | (0.15 | ) | |||
Earnings per share related to adjustments between | |||||||||
net loss attributable to Axiall and Adjusted | |||||||||
Net Income | 0.93 | 0.25 | |||||||
Adjusted Earnings Per Share | $ | 0.17 | $ | 0.10 | |||||
Building Products Constant Currency Net Sales Reconciliation |
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Three Months Ended March 31, | |||||||||
(In millions) |
2016 | 2015 | |||||||
Building products net sales | $ | 143.1 | $ | 136.2 | |||||
Impact of currency exchange rate | 4.9 | - | |||||||
Building products constant currency sales | $ | 148.0 | $ | 136.2 | |||||
Adjusted EBITDA Reconciliations |
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Three Months Ended March 31, 2016 | ||||||||||||||||||||||
(In millions) |
Chlorovinyls |
Building |
Unallocated |
Total | ||||||||||||||||||
Adjusted EBITDA | $ | 71.3 | $ | 11.5 | $ | (13.8 | ) | $ | 69.0 | |||||||||||||
Restructuring and divestiture costs | (27.7 | ) | (2.6 | ) | (6.4 | ) | (36.7 | ) | ||||||||||||||
Integration-related costs and other, net | - | - | (3.4 | ) | (3.4 | ) | ||||||||||||||||
Fees associated with unsolicited offer | ||||||||||||||||||||||
and strategic alternatives | - | - | (5.2 | ) | (5.2 | ) | ||||||||||||||||
Interest expense, net | - | - | (17.0 | ) | (17.0 | ) | ||||||||||||||||
Depreciation and amortization | (53.2 | ) | (5.5 | ) | (2.9 | ) | (61.6 | ) | ||||||||||||||
Benefit from income taxes | - | - | 22.8 | 22.8 | ||||||||||||||||||
Other(1) |
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- | - | 1.8 | 1.8 | ||||||||||||||||
Net income (loss) from continuing operations(2) | $ | (9.6 | ) | $ | 3.4 | $ | (24.1 | ) | $ | (30.3 | ) | |||||||||||
(1) Includes $0.7 million of lease financing obligations interest and $1.1 million for debt issuance cost amortization. |
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(2) Earnings of our segments exclude interest income and expense, unallocated corporate expenses and |
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general plant services, and benefit from income taxes. | ||||||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||||||
(In millions) |
Chlorovinyls |
Building |
Unallocated |
Total | ||||||||||||||||||
Adjusted EBITDA | $ | 96.7 | $ | 3.0 | $ | (12.9 | ) | $ | 86.8 | |||||||||||||
Restructuring and divestiture costs | - | (0.1 | ) | (0.6 | ) | (0.7 | ) | |||||||||||||||
Integration-related costs and other, net(1) | (1.3 | ) | (0.7 | ) | (3.7 | ) | (5.7 | ) | ||||||||||||||
Interest expense, net |
- |
- |
(17.6 |
) |
(17.6 |
) |
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Depreciation and amortization | (52.6 | ) | (5.6 | ) | (2.7 | ) | (60.9 | ) | ||||||||||||||
Debt refinancing costs | - | - | (3.2 | ) | (3.2 | ) | ||||||||||||||||
Provision for income taxes | - | - | (3.0 | ) | (3.0 | ) | ||||||||||||||||
Other(2) |
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- | - | 1.9 | 1.9 | ||||||||||||||||
Net income (loss) from continuing operations(3)
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$ | 42.8 | $ | (3.4 | ) | $ | (41.8 | ) | $ | (2.4 | ) | ||||||||||
(1) Includes $0.6 million of plant reliability improvement initiatives that are included in cost of sales. |
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(2) Includes $0.8 million of lease financing obligations interest and $1.1 million for debt issuance cost amortization. |
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(3) Earnings of our segments exclude interest income and expense, unallocated corporate expenses and general |
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plant services, and provision for income taxes. | ||||||||||||||||||||||
Operating Statistical Data | ||||||
Three Months Ended March 31, | ||||||
2016 | 2015 | |||||
Sales Volumes | ||||||
External caustic soda (in thousands of tons)(1) |
537 | 507 | ||||
PVC (in millions of pounds)(2) | 633 | 641 | ||||
Raw Material Costs | ||||||
Natural gas (dollars per mmbtu) | $ | 2.21 | $ | 3.49 | ||
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