Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message| ()  

Executives

Martin Jarosick - IR

Paul Carrico - President and CEO

Greg Thompson - CFO

Analysts

Frank Mitsch - BB&T Capital Markets

Roger Spitz - Bank of America-Merrill Lynch

Tarek Hamid - JPMorgan

Silke Kueck - JPMorgan

Bill Hoffman - RBC Capital Markets

Wilson Jaeggli - Southwell Partners

Georgia Gulf Corporation (GGC) Q3 2009 Earnings Call November 5, 2009 10:00 AM ET

Operator

Good morning and welcome to the Georgia Gulf Third Quarter Financial Results Conference Call. (Operator Instructions).

Mr. Martin Jarosick, you may begin.

Martin Jarosick

Thank you for participating in today's conference call to discuss Georgia Gulf's 2009 third quarter financial results. There are slides available to you on Georgia Gulf's website. These slides are for your reference, but we will not be speaking directly to the bullets on each slide. Participating on today's call are Paul Carrico, President and Chief Executive Officer; and Greg Thompson, Chief Financial Officer.

During this call, we will be making forward-looking statements. As you will appreciate, any business projections and assumptions about future events are subject to risks and other factors that could cause actual results to differ materially from our current outlook. A listing of factors that could affect future results is included in our 2008 Form 10-K. Any forward-looking statements made on this call should be considered in light of those factors.

In addition, during this conference call, we may refer to certain non-GAAP financial measures. We've provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure as an appendix in the slides on our website.

I will now turn the call over to Paul to begin the review of the third quarter.

Paul Carrico

At the end of July, we announced two significant financial restructuring achievements; first, a successful debt for equity exchange; and second, a long-term bank amendment. The major benefits to the company include a debt reduction of $736 million or about 50%, a cash interest savings of almost $70 million annually, adjusted covenants until the fourth quarter of 2011, and avoidance of significant costs, distractions and delays that are common with other forms of financial restructuring.

As part of the debt exchange process, Georgia Gulf welcomed six new members to our Board in early September. Our Directors bring an impressive range of experience and knowledge in chemicals, building products, finance and strategy to Georgia Gulf.

On September 17, we held a special Shareholder Meeting where shareholders approved an amendment to the charter that authorized additional common shares. This approval automatically converted the preferred shares that were issued in the debt exchange to common shares. Last week, we received notice that the SEC had accepted our registration statement and these shares can now be traded in the open market. We now have about 33 million shares issued and outstanding.

With our new capital structure, valuable asset base and skilled employees, we are well positioned for the long term in our chemicals and building products businesses.

Turning to the third quarter results, we delivered $72.9 million of adjusted EBITDA compared to $50.9 million of adjusted EBITDA in the third quarter of 2008. Our performance also improved on a sequential basis as we exceeded the $59.4 million of adjusted EBITDA we delivered in the second quarter of 2009. Year-to-date, we have generated $143.1 million of adjusted EBITDA compared to $140.1 million of adjusted EBITDA for the year-to-date 2008.

We also maintained our focus on cash generation and we increased our liquidity substantially during the third quarter of 2009. The benefits of the cost reduction actions we have taken since the beginning of 2008 more than offset the impact of weakness in the North American housing and construction markets and the weaker ECU value.

Looking at the segments, chlorovinyls delivered adjusted EBITDA of $41.7 million compared to $47.7 million in the third quarter of 2008. It is important to keep in mind that we did experience two Gulf hurricanes in the third quarter of 2008. While the ECU value is well off the level we saw in the same quarter last year, we have seen stronger pricing in both caustic and chlorine in the last several months.

Our two building product segments, window, door profiles and moldings and outdoor building products combined produced adjusted EBITDA of $28.6 million compared to $17.3 million in the third quarter of 2008 despite sales volume declines in high teens. Our positive performance in these two segments is mainly due to the cost reduction actions and profitability improvements across all the businesses.

Our aromatics segment delivered adjusted EBITDA of $10.4 million compared to $3.4 million of negative adjusted EBITDA during the same period last year. The improved performance was related to the price movement of the main feedstock for this business, benzene and propylene, as well as cost reductions. The raw material prices were higher at the end of the quarter than the beginning of the quarter, which created an inventory holding gain.

At this time, I'll turn the call over to Greg to review our financial results in greater detail.

Greg Thompson

Before I review our financial results, I'd like to point out a few items in our reported financial statements. On the income statement, you should note the number of shares used for calculating earnings per share is based on the weighted average amount of shares that were issued and outstanding in the quarter, which includes the common shares and recently converted preferred shares that were distributed in the debt exchange about one month into the quarter. This resulted in weighted average shares outstanding of about 25 million shares.

As of the end of the quarter, our common share count was about 33 million shares outstanding. The end of the quarter amount is more indicative of our share count going forward. The share count for all periods prior to the debt exchange reflects the 1-for-25 reverse split we affected in July 2009.

The debt exchange impacted our financial statements in several ways. It created a one-time again of $400 million, generated the majority of the $179 million tax provision for the quarter, and on the balance sheet improved shareholders' deficit from $85 million at the end of the second quarter of 2009 to $520 million of shareholders equity this quarter.

Net sales in the third quarter were $556.3 million, down from $818.6 million in the same quarter last year. The decrease in sales was driven by extremely challenging housing and construction markets in North America, lower ECU values and lower feedstock and energy costs.

Now, let's look at our performance from continuing operations during the third quarter. Georgia Gulf reported operating income of $38.6 million for the third quarter of 2009 compared to operating income of $14.2 million in the third quarter of 2008. Excluding the restructuring and impairment charges and gains on asset sales in both periods, we reported adjusted operating income of $36.8 million in the third quarter of 2009 compared to adjusted operating income of $18 million in the third quarter of 2008. This improvement in adjusted operating income is a result of the cost reduction actions that more than offset the top-line declines.

SG&A expense for the third quarter of 2009 was $46.9 million, $2.9 million higher than the same period last year. The increase was due to higher equity compensation costs related to the new employee incentive equity plan of $8.3 million, partially offset by lower professional fees, personnel costs and other benefits of our ongoing cost reduction actions. The majority of the higher equity compensation cost is a one-time expense related to the new employee equity incentive plan that was established as part of the debt exchange.

With the completion of the debt exchange and our cost reduction efforts ongoing, we expect our SG&A run rate to average around $40 million per quarter going forward.

Our reported interest expense for the third quarter was $30.7 million, down $1.6 million from last year. Our interest expense line includes a number of non-cash items, including accretion related to the term loan B modification in the first quarter of 2009 of $4.3 million, loan cost amortization of $2.6 million, and accrued but unpaid interest expense of $5.8 million related to bonds that were tendered as part of the debt exchange. Excluding these non-cash items, our cash interest expense was actually about $18 million.

Now, looking at the segments. In the chlorovinyls segment, third quarter 2009 sales decreased to $229.1 million from $365.5 million during the third quarter of 2008. Sales were impacted by difficult housing and construction-related market conditions, lower ECU values and higher sales volumes. Sales volumes were higher due to the two hurricanes that negatively affected sales volumes in the third quarter of 2008. This segment posted operating income of $30.6 million compared to operating income of $28 million during the same quarter in the prior year.

In the window and door profiles and moldings segment, sales were $98.6 million for the third quarter of 2009 compared to $124 million during the same quarter in the prior year. Sales on a constant currency basis declined 18%. The segment's operating income was $2 million for the third quarter of 2009 compared to an operating loss of $0.6 million during the same quarter in the prior year. The increase in operating income is primarily the result of cost reduction actions, partially offset by the lower sales volumes.

In the outdoor building products segment, sales were $128.1 million for the third quarter of 2009 compared to $163.6 million during the same quarter in the prior year. Sales on a constant currency basis declined about 19% compared to 2008. The segment reported operating income of $14.7 million for the third quarter of 2009 compared to operating income of $0.5 million during the same quarter in the prior year. The operating income improvement is mainly driven by cost reduction actions partially offset by lower sales volumes.

In the aromatics segment, sales decreased to $100.5 million for the third quarter of 2009 from $165.5 million in the third quarter of 2008. The dramatic drop in sales was driven by lower sales prices due to much cheaper feedstocks and much lower sales volumes in phenol and acetone, which primarily was due to the extremely difficult housing and construction markets in North America.

The segment recorded operating income of $9.3 million compared to an operating loss of $4.5 million during the third quarter of 2008. The increase in operating income is attributable to inventory holding gains caused by raw material costs increasing through the quarter, lower natural gas costs and cost reduction actions, partially offset by lower operating rates.

Now, let's discuss working capital. Controllable working capital defined as accounts receivable plus inventory less accounts payable decreased by about $75 million compared to September 30, 2008, driven by lower feedstock and energy costs as well as our continued focus on working capital efficiency. Compared sequentially, controllable working capital increased by $5 million. This year we made the decision to carry more inventories through the hurricane season, which offset the $30 million sequential improvement in accounts payable.

Turning to income taxes, in the third quarter we had a tax provision of $178.5 million and an effective tax rate of 43.7%, both driven by the gain from the debt exchange. For the full year 2009, we expect the effective tax rate to be in the 35% to 45% range.

As many of you know, one of the keys to our successful debt exchange was a provision of the American Recovery and Reinvestment Act of 2009 that stipulates that the Federal tax generated by the gain on the debt exchange may be deferred for five years, and beginning in 2014, paid over five years, which will be about $15 million per year based on preliminary tax gain calculation for the debt exchange.

In addition to the deferred tax related to the debt exchange, most of the tax expense you see on the income statement will not result in cash tax payments in 2009, rather we will reduce certain tax assets, such as net operating loss carry-forwards and foreign tax credits. For the year, we expect our cash taxes to be less than $20 million, most of it attributable to states that are not adopting the Federal law allowing deferral of the debt exchange income.

The total FIFO impact for the third quarter of 2009 was a positive $14.2 million compared to a negative $21.1 million FIFO impact in the same period last year.

As a result of the operating performance and working capital changes, we generated $68.9 million of cash from operating activities during the third quarter of 2009 as compared to $72.5 million generated in the third quarter of 2008.

As Paul mentioned earlier, with our long-term bank amendment and debt exchange complete, we are a much stronger partner with our suppliers. We have initiated discussions with our suppliers concerning terms during the third quarter and we have made some solid gains in returning payment terms back to normal levels.

We continue to tightly manage our capital expenditures, while supporting the maintenance requirements and some select growth opportunities of our businesses. Capital expenditures were $6.6 million for the third quarter. Our CapEx budget for 2009 is $35 million.

While we believe that this is the right level of CapEx, given the maintenance we have scheduled and current economic conditions, we did seek some additional flexibility in our most recent bank amendment to allow additional CapEx to pursue growth opportunities. The bank amendment provides for an additional CapEx basket that allows us to invest 50% of net cash proceeds from asset sales up to $45 million, subject to several conditions, including meeting minimum EBITDA thresholds.

Now, to liquidity. We ended the third quarter with $28.3 million in cash and $140.1 million available on our $300 million revolver, which gives us total liquidity of $168.4 million. We also had $97.1 million drawn on our $175 million asset securitization program.

During the third quarter, we completed the legal and administrative work related to including accounts receivables from additional US Royal subsidiaries and have started to securitize those assets.

The consolidated leverage ratio required in our covenants was a maximum of 4.8 times and our actual ratio for the third quarter was 2.9 times. The consolidated interest coverage ratio required in our covenants was a minimum of 2 times and our actual ratio for the third quarter was 3 times.

In the last amendment, we agreed to two additional covenant metrics, a senior secured leverage ratio and a fixed charge coverage ratio. The senior secured leverage ratio required in our covenants was a maximum of 4.5 times and our actual ratio for the third quarter was 2.6 times. The fixed charge coverage ratio required in our covenants was a minimum of 1.2 and our actual ratio for the third quarter was 2.2 times.

As you may recall, the impact of the substantial modification of debt we booked in the first quarter of 2009 as well as a debt exchange gain was eliminated from our covenant calculations as part of the eighth amendment, and therefore, not included in the calculations above.

I will now turn the call back over to Paul to discuss our outlook.

Paul Carrico

As I mentioned in my opening remarks, we have made significant progress in our financial performance. We've adjusted our cost structure to match market conditions, improved the productivity of our assets and improved our capital structure.

This spring, we established adjusted EBITDA guidance for 2009 of $110 million, and in August, we reaffirmed that guidance based on our cautious view of the ECU value, the natural gas price forecast and the demand environment at that time.

As the third quarter progressed, it became clear that we would exceed our projections in numerous areas of the company. The three major drivers of this improved performance are; first, our building products segment continued to beat expected volumes and margins; second, our aromatics business is benefiting from inventory holding gains and cost reductions; and finally, our chlorovinyls business is benefiting from a better than forecast ECU value and lower than forecast natural gas cost.

For the first three quarters of 2009, we generated $143 million of adjusted EBITDA. For the fourth quarter, we are cautious, but do believe that the benefits of our cost reduction actions will offset weak demand. We've also shifted a VCM turnaround that was previously planned for the fourth quarter into the first quarter of 2010. Based on these assumptions, we expect to generate slightly positive adjusted EBITDA for the quarter.

Now, I would like to open the call up to questions.

Question-and-Answer Session

Operator

(Operator Instructions). Your first question comes from Frank Mitsch with BB&T Capital Markets.

Frank Mitsch - BB&T Capital Markets

Looking forward to steady share counts, et cetera, into the future, I think you indicated that your cash interest expense is $18 million for the third quarter. Is that a reasonable level for the fourth quarter and beyond?

Greg Thompson

Yeah, I think so. I guess, to the extent we pay more debt down or borrow more based upon the seasonality of the business, it could fluctuate a bit. I think that's a pretty reasonable kind of midrange that we would expect going forward.

Frank Mitsch - BB&T Capital Markets

You also indicated that you had roughly a $30 million year-over-year swing in FIFO in the third quarter, a big negative a year ago and a modest positive this quarter. All else being equal where pricing is today, how would you anticipate that plays into the fourth quarter?

Greg Thompson

Yeah, I guess I would think there might be a small positive, but based upon what we see right now, I don't see a big move in that in the fourth quarter.

Frank Mitsch - BB&T Capital Markets

Paul, you did a nice job of reminding us about the EBITDA guidance for 2009 of $110 million that you reiterated twice this year and I believe that you also indicated that in your filings that you were looking for, I believe, $120 million in 2010, any update to that figure?

Paul Carrico

I think at this time we would not update that for next year. Still looking to see how things develop as we move into the November, December timeframe and start the beginning of next year. There's certainly been mixed signals out there in the market in various different areas about what will happen. I think everyone is very cautious about the end of the year, but then a lot of people have mixed views about going into next year.

So, we need a little bit more time working through this current period to get a better picture of next year.

Operator

Your next question comes from Roger Spitz with Bank of America.

Roger Spitz - Bank of America-Merrill Lynch

Industry consultants have suggested that PVC demand fell fairly strongly in the fourth week of September and October. It was looking weak to them as well. Can you say what you've seen over that time period?

Paul Carrico

I think, generally speaking, there has been some drop-off although it's tempered by the exports. As we look into November and December, our projections right now would show we would track most likely on a normal cycle downturn for holiday periods. So, I wouldn't say we're seeing something abnormal, but if you consider the base that we've been working from and then you say, all right people, we'll take time off at Thanksgiving and take time off at December, Christmas period, you get that downward effect, but you get a little bit of a tempering because of the exports.

Roger Spitz - Bank of America-Merrill Lynch

The other is, the $14.2 million of inventory holding gains, is it possible to break that down between, say, aromatics and chlorovinyls?

Greg Thompson

Of the $14 million, about 60% or so is related to chlorovinyls and then the next largest would be aromatics and there's a smaller amount related to building products. That's pretty typical of the way you break down our FICO gain, most of it. It can bounce around a bit on the chlorovinyls side, but more than half would almost always be related to chlorovinyls.

Operator

Your next question comes from Tarek Hamid with JPMorgan.

Tarek Hamid - JPMorgan

Just talk a little bit about demand trends in the month of October, I guess, anything you saw in October different than normal seasonal patterns.

Paul Carrico

I would say, in general, we were encouraged that there wasn't a major drop-off. We had some concern that it would mirror last year where at the end of the year, and then beginning of this current year, there was really just a dramatic fall, and at this point still following the normal seasonal trends, so somewhat encouraging. The key will be how strongly people cut back at the end of the year for inventory control.

Tarek Hamid - JPMorgan

I guess on that point, you talked a little bit about building some inventory just in case for hurricane season. Should we expect some of that to get liquidated during the fourth quarter and should that benefit working cap a bit?

Paul Carrico

Yeah, we did for the hurricane season, but with us moving the VCM turnaround in the first quarter of next year, we will have to build some inventories in various different areas to cover that. So, it might turn out to be a wash when it's all said and done.

Tarek Hamid - JPMorgan

I guess with the way chlorine and caustic prices kind of turned very quickly, how should we be thinking about the timing of contracts versus sort of 3Q average pricing to 4Q average pricing?

Paul Carrico

I'm not sure I'm following the question on the timing. You mean when they will be settled?

Tarek Hamid - JPMorgan

When they will be settled and is there a lag?

Paul Carrico

I don't know. I think it will probably follow the normal pattern. Folks most likely perceive that we've hit bottom and are moving up. So, in most cases, the better plan is to go in and make those contracts and set them at a time where you're moving up. In terms of a dramatic change from past practice, I don't think we see that.

Operator

Your next question comes from Jeff Zekauskas from JPMorgan.

Silke Kueck - JPMorgan

This is Silke Kueck for Jeff. Can you discuss some of the levers in the chlorovinyls business, where were utilization rates in the quarter and maybe what was natural gas price that was realized? Maybe you can also discuss caustic prices just trend-wise how they're moving, are they going from 100 to 150 or was it like much smaller percentage increases sequentially?

Paul Carrico

Maybe to start with the chlorovinyls, PVC, generally speaking, is going to the down for this quarter, again, because of the seasonal change and I guess some people out there say it will drop 10% or so. That's kind of traditional, it's not unexpected. More and more with the volume of PVC that's associated with building products, the big quarters are the second and third. So you're going to see that tail down.

Likewise, that's going to fall over into VCM just because they are tied together on a one-to-one basis. When you look at chlor-alkali, people think that rates will improve but not back to normal levels. In our case, they are a little bit higher because we're not fully integrated on the chlor-alkali molecule. So, we should be operating at higher than industry rates. In most cases, people are thinking chlorovinyls next year will step up from this year's average. I'm going to say anywhere from 6% to 8% in terms of a yearly average.

Silke Kueck - JPMorgan

Just in terms of seasonality, would you expect any of the segments outside of chlorovinyls to report operating profits in the fourth quarter? Most likely not, right?

Paul Carrico

I think it's too early to tell. As I mentioned earlier, the operating rates in sales have been a bit stronger than we anticipated going into this fourth quarter. It's a week-by-week thing, and particularly when you get to the last week of this month and you get into the Thanksgiving cutbacks, and then you look at what the weather patterns are, it will depend upon how that develops as we get through the fourth quarter.

Silke Kueck - JPMorgan

This is a question of clarification. When we think about interest flowing through the income statement going forward, there should be, I guess, a base rate of $18 million, and then for the next two or three years there's also an additional $4 million or so that will flow through the income statement to accrue for the term loan B?

Greg Thompson

Yeah, that's right, as well as the amortization of the fees and such related to the bonds outstanding and the bank amendments.

Silke Kueck - JPMorgan

Is that ongoing as well?

Greg Thompson

Yes, that too would be ongoing. The $5.8 million that I mentioned in my prepared remarks related to the interest on the bonds that was accrued but unpaid and included in our reported interest expense would obviously not continue going forward.

Operator

Your next question comes from Bill Hoffman with RBC Capital Markets.

Bill Hoffman - RBC Capital Markets

I just wanted to talk a little bit about the windows and doors as well as the outdoor building products. It obviously generated pretty good results in those segments and I get the seasonality to the business. Paul, if you can talk a little bit about your positioning in those markets now after some of the restructuring cost reduction efforts you had, are most of the facilities expected to be profitable on a year-over-year basis right now or do you have some further rationalization there?

Paul Carrico

We have a little bit more rationalization we're in the process of dealing with now. To speak to the year-over-year, it's tough because we've been in a state of transition on adding leadership groups in those areas and making cost structure changes. We made a tremendous amount of progress in my mind, and that's the reason you're seeing some improved results there. So you got those factors working.

In addition, we're not the only one out there that's seeing a little bit of strength. If you look at some of the reports coming out, you can see a little bit of strength that wasn't necessarily anticipated in the most recent months. The combination of those things should add to further improvement, assuming we don't get into a W-effect on the economy or something like that. You would hope that there would be some momentum built in those areas as we go forward, and so, next year we're in a much better position to realize fully the cost structure changes, the leadership changes we've made, and as you said, position ourselves in the right markets there.

Got a lot of work to do, but this year has been a good progress or a good amount of progress in the right direction.

Bill Hoffman - RBC Capital Markets

If you look at the profitability in the quarter, do you attribute it most to cost or is it just being in the right positioning for that demand as it started to pickup again?

Paul Carrico

It's a bit of both. We certainly are much better organized on our cost side. Secondly, we hope that we've got the facilities and the people and supplies in place where we can react relatively quickly to those changes in demand. Certainly from an integrated point of view, we're much better able to respond to those kinds of changes. So, with everybody in the industry operating at fairly low rates, you can fairly easily respond to changes in demand in this kind of environment. The test will be when things pickup and we get back into a better economic condition, particularly on the housing front.

Bill Hoffman - RBC Capital Markets

Can you talk about your operating rates in chlorovinyls in Q3 and where you currently are running?

Paul Carrico

Q3, in general, was around the industry rates for the most part. We had some operating challenges in a couple of areas that otherwise we might have been a little bit above the industry, but at this point, we were in the range of the industry.

Operator

(Operator Instructions). Your next question comes from Wilson Jaeggli with Southwell Partners.

Wilson Jaeggli - Southwell Partners

Congratulations, gentlemen, on getting your restructuring through. I'm sure you're glad that's all behind you here. Let me ask you on your cost savings in here. Obviously, with the decline in sales and SG&A running at approximately the same rate it was last year, the savings are in the production side. Can you talk specifically to some of the savings that you put into affect here, and secondly, are they temporary or permanent in nature?

Paul Carrico

If we speak to the building products side, I would say, generally speaking, they are all permanent. It involves de-layering in some cases, it involves reorganization of the asset utilization and in some cases consolidation of the assets. Maybe most importantly, we have the systems in place these days, I think, to adjust to what the economy gives us. So if the economy is good, we can ramp up. If the economy is not so good, we react fairly quickly to those types of effects and reduce our workforce where appropriate.

The way the economy shifted around over this past year, you have to be fairly nimble in reacting to those changes in order to really realize a profit because it doesn't give you any room to make a mistake there.

Wilson Jaeggli - Southwell Partners

Were most of the savings cost savings in labor?

Greg Thompson

That's a big part of it, but in addition, we've reduced our indirect spending, we've reduced a lot of the legal and other professional advisors' costs, we've reduced freight. Through the infrastructure that we took down, there was certainly a fair amount of labor cost that was reduced as part of that, but also a lot of other areas as well.

Paul Carrico

One other comment on the chemical side, we're certainly in a much different position cost-wise there with the two facilities we rationalized during the past year. We're now operating, producing the same amount we would produce with those facilities operating, but we don't have all the costs associated with those. So, that's changed that equation quite a bit for us.

Wilson Jaeggli - Southwell Partners

A separate subject here, there's obviously been a substantial change in the stock ownership here. With the debt holders inheriting so much, a great percent of the ownership, and obviously those accounts and their investment strategy has been one of income versus original shareholders here, one of equity ownership, in your discussions with them, has there been any concern on your part or any facts raised on their part about their propensity to own the stock in here?

Paul Carrico

I don't think we can comment in too detailed fashion of that. Generally speaking, we're operating as an independent company. Of course, you're going to hear general comments from them, but they'd have to speak for themselves, I think, in that area.

Operator

Your next question comes from Jeff Zekauskas with JPMorgan.

Silke Kueck - JPMorgan

I think you mentioned earlier that there are more assets set aside from the Royal Group for sale. Do you have an estimate of like what proceeds you expect over the next few quarters?

Greg Thompson

No, we don't. I mean it's not a huge amount. We've got a couple of facilities that we announced back, I guess it was in the second quarter, that we were looking to exit. We have them on the market. I know in the past we've had some large $25 million plus sorts of proceeds from sale, it's not in that kind of range. We continue to work on that, but it's not going to be at those kind of values like we've had in the past.

Silke Kueck - JPMorgan

So it's more like single digit millions?

Greg Thompson

It's less than the $25 million. It's probably more than that. We're negotiating on trying to, obviously, maximize the value and get out of some of those facilities. We want to make sure that we get the right value for them as part of the process.

Silke Kueck - JPMorgan

Lastly, what's left in terms of restructuring? What are like the goals for the next 12 months?

Greg Thompson

It's more completing the things that we have previously announced in terms of making sure that we've got our footprint and our infrastructure sized to the current demands. I guess, if things turn south, then we could change that. That's not our expectation at this point. It looks like that while levels aren't where any of us would like they are relatively stable at this point. Our focus is more around some of the cost reduction initiatives where we do expect additional benefits, like I mentioned, freight and indirect spend and some other things like that, but not so much based upon, at least, current demand levels as we see them, any more big exiting of the infrastructure and the facilities that we have.

Silke Kueck - JPMorgan

Of all the restructuring cost that has been accrued, has everything been paid out or are there still more cash outflows?

Greg Thompson

There are some more. It's not related to severance programs, as well as exiting some of the facilities. Some of those amounts continue into later this year and into next year. It's not significant amounts of additional cash flows.

Operator

(Operator Instructions). Your next question comes from Tarek Hamid with JPMorgan.

Tarek Hamid - JPMorgan

With the five-year NOL look back legislation out there by Congress, would you guys be a potential beneficiary? Have you thought about that?

Greg Thompson

We've taken a quick look at that and we don't think that there's going to be any significant benefit to us from that. As far as the debt exchange and the change of control, a lot of our tax attributes have changed and a lot of those NOLs that we had will be eliminated, plus the structure of the Royal acquisition doesn't really lend itself based upon our quick look at the legislation to much benefit there either. So, we don't really see anything right now.

Operator

Thank you. I would now like to turn the call back over to the speakers.

Paul Carrico

Just to wind-up. I want to thank everyone for participating in this morning's call. We look forward to speaking with you in the New Year and after the fourth quarter results. Thanks, again.

Operator

Thank you, ladies and gentlemen, for participating in today's Georgia Gulf third quarter financial results conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Georgia Gulf Corporation Q3 2009 Earnings Call Transcript
This Transcript
All Transcripts