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Georgia Gulf Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 6, 2011 05:20PM
Georgia Gulf Corp. (GGC) filed Quarterly Report for the period ended 2011-03-31.
Highlight of Business Operations:
for the three months ended March 31, 2010. This selling, general and administrative expense increase of $0.6 million is primarily due to: (i) $3.6 million of additional selling, general and administrative expenses related to the Exterior Portfolio acquisition in our building products segment, (ii) $2.7 million salary and related benefits expense increase due to the company reducing previous hiring restrictions and reinstating various compensation related benefits throughout 2010, (iii) $1.2 million performance based incentive compensation increase primarily related to unallocated corporate expenses, and (iv) $0.6 million in unfavorable currency impact on our costs in Canada resulting from the strengthening of the Canadian dollar against the U.S. dollar in our building products segment, offset by the favorable impact of a $4.4 million non-income tax reserve returned to income primarily in our building products segment during the first quarter of 2011 as the exposure is no longer probable.
Operating Loss. Operating loss increased by $8.4 million to a loss of $12.1 million for the three months ended March 31, 2011 from an operating loss of $3.7 million for the three months ended March 31, 2010. The increase in operating loss was due to the geographic sales mix and higher raw materials, conversion, selling and acquisition costs. The first quarter of 2011 includes net income of $1.2 million relating to a $3.6 million net reversal of a non-income tax reserve as the exposure is no longer probable, partially offset by acquisition costs and one time fair value amortization of inventory of $2.4 million.
Operating Activities. For the three months ended March 31, 2011, we used $76.6 million of cash in operating activities as compared with $42.0 million for the three months ended March 31, 2010, primarily due to the increase in usage of net working capital of $71.4 million. Total working capital used for the three months ended March 31, 2011 was $115.9 million. The usage of cash for working capital included the increase of $100.1 million due to receivables, $73.6 million increase due to inventory, $24.9 million increase due to accrued compensation, $9.5 million due to interest payments and is offset by the increase in cash flow provided by accounts payable of $100.8 million. Net working capital at March 31, 2011 also reflected an increase in short term debt, largely due to the scheduled repayment of our 7.125% Senior Notes due 2013 and 9.5% Senior Notes due 2014 in the aggregate amount of $22.1 million. See Financing Activities for additional information.
Investing Activities. Net cash used in investing activities was $82.5 million and $10.2 million for the three months ended March 31, 2011 and 2010, respectively. The significant change in the current quarter was the $71.6 million acquisition of Exterior Portfolio. Capital expenditures used cash of $10.9 million and $11.0 million in the three months ended March 31, 2011 and 2010, respectively.
Financing Activities. Cash provided by financing activities was $69.3 million for the three months ended March 31, 2011 compared with $61.5 million for the three months ended March 31, 2010. During the three months ended March 31, 2011, we drew a net of $70.8 million under our ABL Revolver primarily to fund the increased working capital demands.
Short-Term Borrowings from Banks. At March 31, 2011, under our ABL Revolver, we had a maximum borrowing capacity of $300.0 million, and net of qualifying accounts receivable and inventory, outstanding letters of credit of $16.2 million, current borrowings of $70.8 million, resulting in remaining availability of $213.0 million under the ABL Revolver at March 31, 2011.
Stocks Discussed: GGC,