Exhibit 99.1

 

 

 

HUNTSMAN RELEASES THIRD QUARTER 2011 RESULTS

EARNS HIGHEST ADJUSTED EBITDA IN HISTORY (a)

 

Third Quarter 2011 Highlights

 

·                  Revenues improved 24% compared to the prior year period.

 

·                  Adjusted EBITDA improved 26% to $345 million compared to the prior year period.

 

·                  Adjusted diluted income per share improved 32% to $0.45 compared to the prior year period.

 

·                  A higher than normal adjusted effective tax rate of 38% had a negative impact of approximately $0.08 per diluted share.

 

·                  Negative foreign currency impact on earnings in our Advanced Materials and Textile Effects businesses of approximately $17 million compared to the prior year primarily due to the strong Swiss franc.

 

·                  We announced restructuring plans within our Advanced Materials and Textile Effects businesses.  We recorded $155 million of restructuring charges during the third quarter of 2011 consisting of $102 million of cash charges and $53 million of non-cash impairment of assets.  We expect additional future cash charges of approximately $35 million.  We expect future annual benefits of approximately $90 million.

 

		Three months ended									Nine months ended
		September 30,						June 30,			September 30,
In millions, except per share amounts, unaudited		2011			2010			2011			2011			2010
Revenues		$	2,976		$	2,401		$	2,934		$	8,589		$	6,838
Net (loss) income attributable to Huntsman Corporation		$	(34	)	$	55		$	114		$	142		$	(3	)
Adjusted net income(1)		$	108		$	83		$	117		$	339		$	142
Diluted (loss) income per share		$	(0.14	)	$	0.23		$	0.47		$	0.59		$	(0.01	)
Adjusted diluted income per share(1)		$	0.45		$	0.34		$	0.48		$	1.40		$	0.59
EBITDA(1)		$	204		$	257		$	323		$	766		$	533
Adjusted EBITDA(1)		$	345		$	273		$	318		$	965		$	653

 

See end of press release for footnote explanations

 

(a) Excluding the Base Chemicals and Polymers businesses divested in 2006 and 2007

 

 

The Woodlands, TX — Huntsman Corporation (NYSE: HUN) today reported third quarter 2011 results with revenues of $2,976 million and Adjusted EBITDA of $345 million.

 

Peter R. Huntsman, our President and CEO, commented:

 

“Our third quarter was the strongest in our company’s history.  Our revenues, adjusted EBITDA and adjusted net income are all stronger than a year ago as we appear to be heading towards a record year.

 

This past quarter we announced large restructuring plans to mitigate the impact of the strong Swiss Franc and to address the challenging business conditions of the global textile industry.  We expect to record cash restructuring charges of approximately $135 million and expect annual benefits of approximately $90 million between our Textile Effects business and our Swiss based Advanced Materials divisions.  We expect to see the impact of these changes beginning in the first quarter of 2012.

 

As satisfied as we feel about our strong quarter, we are still mindful of the sluggish global business conditions.  As the economy gradually improves in the coming year, we fully expect stronger earnings from our business as many of our larger product lines are still quite some distance from their peak earnings potential.  In short, I am quite pleased with our third quarter results, but expect stronger performance as the global economy returns to more stable growth.”

 

Segment Analysis for 3Q11 Compared to 3Q10

 

Polyurethanes

 

The increase in revenues in our Polyurethanes division for the three months ended September 30, 2011 compared to the same period in 2010 was due to higher average selling prices and higher MDI sales volumes.  Average MDI selling prices increased primarily in response to higher raw material costs, improved demand and the strength of European currencies against the U.S. dollar.  Average PO/MTBE selling prices increased primarily in response to higher raw material costs.  MDI sales volumes increased primarily due to improved demand in the insulation, furniture and automotive sectors but were offset by lower PO/MTBE sales volumes.  The increase in Adjusted EBITDA was due to higher contribution margins partially offset by higher manufacturing and selling, general and administrative costs.

 

Performance Products

 

The increase in revenues in our Performance Products division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to higher average selling prices.  Average selling prices increased across almost all product groups primarily in response to higher raw material costs and the strength of major European currencies against the U.S. dollar.  Sales volumes were essentially unchanged as the positive impact from the consolidation of our Sasol-Huntsman maleic anhydride joint venture during the second quarter 2011 was offset by lower sales volumes of amines and surfactants.  The decrease in Adjusted EBITDA was primarily due to a planned maintenance outage at our Port Neches, TX facility which had an approximate $8 million negative impact.

 

Advanced Materials

 

The increase in revenues in our Advanced Materials division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to higher average selling prices partially offset by lower sales volumes.  Average selling prices increased primarily in response to higher raw material costs and the strength of major European currencies against the U.S. dollar.  Sales volumes decreased in our base resins business partially offset by a modest increase in combined sales volumes in our core formulation systems and specialty components businesses.  The decrease in Adjusted EBITDA was primarily due to lower contribution margins and approximately $7 million of negative foreign currency impact primarily due to the stronger Swiss franc on our manufacturing and selling, general and administrative costs.

 

2

 

Textile Effects

 

The decrease in revenues in our Textile Effects division for the three months ended September 30, 2011 compared to the same period in 2010 was primarily due to lower sales volumes partially offset by higher average selling prices.  Sales volumes decreased due to lower demand.  Average selling prices increased primarily due to the strength of major currencies against the U.S. dollar.  The decrease in Adjusted EBITDA was primarily due to lower sales volumes and approximately $10 million of negative foreign currency impact primarily due to the stronger Swiss franc on our manufacturing and selling, general and administrative costs.

 

Pigments

 

The increase in revenues in our Pigments division for the three months ended September 30, 2011 compared to the same period in 2010 was due to higher average selling prices partially offset by lower sales volumes.  Average selling prices increased in all regions of the world primarily as a result of higher raw material costs and the strength of major European currencies against the U.S. dollar.  Sales volumes decreased primarily due to lower finished goods inventory available for sale and lower global demand.  The increase in Adjusted EBITDA in our Pigments division was primarily due to higher contribution margins partially offset by lower sales volumes and higher manufacturing and selling, general and administrative costs.

 

Corporate, LIFO and Other

 

Corporate, LIFO and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt and unallocated restructuring costs.  Adjusted EBITDA from Corporate, LIFO and other decreased by $6 million to a loss of $50 million for the three months ended September 30, 2011 compared to a loss of $44 million for the same period in 2010.  The decrease in Adjusted EBITDA was primarily the result of a $7 million increase in LIFO inventory valuation expense ($8 million of loss in 2011 compared to $1 million loss in 2010).

 

Income Taxes

 

During the three months ended September 30, 2011 we recorded income tax expense of $55 million compared to $41 million in the same period in 2010.  Our adjusted effective income tax rate for the three months ended September 30, 2011 was approximately 38%.  We have tax valuation allowances in countries such as Switzerland and the United Kingdom where our Textile Effects and Pigments businesses have meaningful operations.  The increase in forecasted losses in Switzerland from our Textile Effects business during the third quarter, along with other changes in our geographic mix of income, had the effect of increasing our projected effective income tax rate for the year.  We are required to adjust our third quarter year-to-date tax rate to our expected full year rate.  This resulted in the recognition of more tax expense during the third quarter.  We expect our long term effective income tax rate to be approximately 30 - 35% and expect the fourth quarter and full year 2011 adjusted tax rate to be slightly less than that.  During the three months ended September 30, 2011 we paid $49 million in cash for income taxes.  We expect our cash tax rate to continue to be less than our effective income tax rate.

 

3

 

Liquidity, Capital Resources and Outstanding Debt

 

As of September 30, 2011, we had $1,024 million of combined cash and unused borrowing capacity compared to $1,434 million at December 31, 2010.  The decrease from 2010 year end was primarily attributable to an increase in primary net working capital of $506 million.

 

During the third quarter of 2011, we redeemed approximately $111 million of our senior subordinated notes due 2015.

 

On November 1, 2011, we provided notice to redeem all of our remaining 6.875% senior subordinated euro notes due 2013 worth approximately $93 million.

 

Total capital expenditures, net of reimbursements for the three months ended September 30, 2011 were $93 million compared to $54 million for the same period in 2010.  We expect to spend approximately $350 million on capital expenditures, net of reimbursements, in 2011.

 

On August 5, 2011 we announced that our Board of Directors authorized the repurchase of up to $100 million in shares of our common stock.  During the third quarter of 2011, we acquired approximately four million shares of our outstanding common stock for approximately $50 million under the repurchase program.

 

Conference Call Information

 

We will hold a conference call to discuss our third quarter 2011 financial results on Wednesday November 2, 2011 at 9:00 a.m. ET.

 

Call-in numbers for the conference call:
U.S. participants	(888) 713 - 4213
International participants	(617) 213 - 4865
Passcode	98395744

 

In order to facilitate the registration process, you may use the following link to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. You may pre-register at any time, including up to and after the call start time. To pre-register, please go to:

 

https://www.theconferencingservice.com/prereg/key.process?key=PLFWDW8GP

 

Webcast Information

 

The conference call will be available via webcast and can be accessed from the investor relations portion of the company’s website at http://www.huntsman.com.

 

Replay Information

 

The conference call will be available for replay beginning November 2, 2011 and ending November 9, 2011.

 

Call-in numbers for the replay:
U.S. participants	(888) 286 - 8010
International participants	(617) 801 - 6888
Replay code	63107396

 

 

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Table 1 — Results of Operations

 

		Three months ended						Nine months ended
		September 30,						September 30,
In millions, except per share amounts, unaudited		2011			2010			2011			2010
Revenues		$	2,976		$	2,401		$	8,589		$	6,838
Cost of goods sold		2,486			1,986			7,138			5,757
Gross profit		490			415			1,451			1,081
Operating expenses		258			244			821			741
Restructuring, impairment and plant closing costs		155			4			171			24
Operating income		77			167			459			316
Interest expense, net		(63		)	(64		)	(187		)	(168		)
Equity in income of investment in unconsolidated affiliates		2			3			6			20
Loss on early extinguishment of debt		(2		)	(7		)	(5		)	(169		)
Expenses associated with the terminated merger and related litigation		—			(3		)	—			(4		)
Other (loss) income		(1		)	2			—			3
Income (loss) before income taxes		13			98			273			(2		)
Income tax expense		(55		)	(41		)	(111		)	(46		)
(Loss) income from continuing operations		(42		)	57			162			(48		)
Income (loss) from discontinued operations, net of tax(2)		10			(1		)	(5		)	48
Extraordinary gain on the acquisition of a business, net of tax of nil		—			—			2			—
Net (loss) income		(32		)	56			159			—
Net income attributable to noncontrolling interests, net of tax		(2		)	(1		)	(17		)	(3		)
Net (loss) income attributable to Huntsman Corporation		$	(34	)	$	55		$	142		$	(3	)
Adjusted EBITDA(1)		$	345		$	273		$	965		$	653
Adjusted net income(1)		$	108		$	83		$	339		$	142
Basic (loss) income per share		$	(0.14	)	$	0.23		$	0.60		$	(0.01	)
Diluted (loss) income per share		$	(0.14	)	$	0.23		$	0.59		$	(0.01	)
Adjusted diluted income per share(1)		$	0.45		$	0.34		$	1.40		$	0.59
Common share information:
Basic shares outstanding		237.6			236.4			238.2			235.9
Diluted shares		237.6			241.0			242.6			235.9
Diluted shares for adjusted diluted income per share		241.3			241.0			242.6			240.7

 

See end of press release for footnote explanations

 

5

 

Table 2 — Results of Operations by Segment

 

		Three months ended								Nine months ended
		September 30,								September 30,
In millions, unaudited		2011			2010			Change		2011			2010			Change
Segment Revenues:
Polyurethanes		$	1,209		$	960		26	%	$	3,391		$	2,659		28	%
Performance Products		846			678			25	%	2,546			1,963			30	%
Advanced Materials		349			318			10	%	1,059			929			14	%
Textile Effects		173			190			(9	)%	563			598			(6	)%
Pigments		455			327			39	%	1,243			883			41	%
Eliminations and other		(56		)	(72		)	(22	)%	(213		)	(194		)	10	%
Total		$	2,976		$	2,401		24	%	$	8,589		$	6,838		26	%
Segment Adjusted EBITDA(1):
Polyurethanes		$	140		$	99		41	%	$	397		$	221		80	%
Performance Products		97			102			(5	)%	314			278			13	%
Advanced Materials		26			42			(38	)%	96			124			(23	)%
Textile Effects		(29		)	8			NM		(42		)	16			NM
Pigments		161			66			144	%	363			144			152	%
Corporate, LIFO and other		(50		)	(44		)	14	%	(163		)	(130		)	25	%
Total		$	345		$	273		26	%	$	965		$	653		48	%

 

See end of press release for footnote explanations

NM—Not meaningful

 

Table 3 — Factors Impacting Sales Revenues

 

		Three months ended
		September 30, 2011 vs. 2010
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
Unaudited		Currency		Rate		& Other		Volume(a)		Total
Polyurethanes		18	%	5	%	4	%	(1	)%	26	%
Performance Products		20	%	5	%	—		—		25	%
Advanced Materials		5	%	7	%	(1	)%	(1	)%	10	%
Textile Effects		(2	)%	6	%	—		(13	)%	(9	)%
Pigments		38	%	9	%	—		(8	)%	39	%
Total Company		20	%	6	%	3	%	(5	)%	24	%

 

		Nine months ended
		September 30, 2011 vs. 2010
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
Unaudited		Currency		Rate		& Other		Volume(a)		Total
Polyurethanes		18	%	3	%	(4	)%	11	%	28	%
Performance Products		20	%	3	%	1	%	6	%	30	%
Advanced Materials		8	%	4	%	2	%	—		14	%
Textile Effects		1	%	4	%	(1	)%	(10	)%	(6	)%
Pigments		33	%	5	%	—		3	%	41	%
Total Company		15	%	4	%	2	%	5	%	26	%

 

(a) Excludes revenues and sales volumes from tolling, by-products and raw materials

 

6

 

Table 4 — Reconciliation of U.S. GAAP to Non-GAAP Measures

 

								Income Tax						Net Income (Loss)						Diluted Income (Loss)
		EBITDA						(Expense) Benefit						Attrib. to HUN Corp.						Per Share
		Three months ended						Three months ended						Three months ended						Three months ended
		September 30,						September 30,						September 30,						September 30,
In millions, except per share amounts, unaudited		2011			2010			2011			2010			2011			2010			2011			2010
GAAP(1)		$	204		$	257		$	(55	)	$	(41	)	$	(34	)	$	55		$	(0.14	)	$	0.23
Adjustments:
Unallocated foreign exchange (gain) loss		(1		)	(2		)	(5		)	14			(6		)	12			(0.02		)	0.05
Legal settlements and related expenses		4			—			(1		)	—			3			—			0.01			—
Loss on early extinguishment of debt		2			7			(1		)	(2		)	1			5			—			0.02
Restructuring, impairment and plant closing costs		155			4			(3		)	—			152			4			0.63			0.02
Expenses associated with the terminated merger and related litigation		—			3			—			(1		)	—			2			—			0.01
Discount amortization on settlement financing associated with the terminated merger		N/A			N/A			(3		)	(2		)	4			4			0.02			0.02
Acquisition expenses		1			1			—			(1		)	1			—			—			—
Gain on sale of assets related to plant closures		(3		)	—			—			—			(3		)	—			(0.01		)	—
(Income) loss from discontinued operations, net of tax(2)		(17		)	3			N/A			N/A			(10		)	1			(0.04		)	—
Adjusted(1)		$	345		$	273		$	(68	)	$	(33	)	$	108		$	83		$	0.45		$	0.34
Adjusted income tax expense														68			33
Net income attributable to noncontrolling interests, net of tax														2			1
Adjusted pre-tax income(1)														$	178		$	117
Adjusted effective tax rate														38		%	28		%

 

 

							Income Tax					Net Income (Loss)					Diluted Income (Loss)
		EBITDA					(Expense) Benefit					Attrib. to HUN Corp.					Per Share
		Three months ended					Three months ended					Three months ended					Three months ended
		June 30,					June 30,					June 30,					June 30,
In millions, except per share amounts, unaudited		2011					2011					2011					2011
GAAP(1)		$	323				$	(34	)			$	114				$	0.47
Adjustments:
Unallocated foreign exchange (gain) loss		(3		)			4					1					—
Gain on consolidation of a variable interest entity		(12		)			2					(10		)			(0.04		)
Restructuring, impairment and plant closing costs		9					(1		)			8					0.03
Discount amortization on settlement financing associated with the terminated merger		N/A					(2		)			5					0.02
Acquisition expenses		3					(1		)			2					0.01
Gain on sale of assets related to plant closures		(3		)			—					(3		)			(0.01		)
Loss from discontinued operations, net of tax(2)		2					N/A					1					—
Extraordinary gain on the acquisition of a business, net of tax(3)		(1		)			—					(1		)			—
Adjusted(1)		$	318				$	(32	)			$	117				$	0.48
Adjusted income tax expense												32
Net income attributable to noncontrolling interests, net of tax												10
Adjusted pre-tax income(1)												$	159
Adjusted effective tax rate												20		%

 

								Income Tax						Net Income (Loss)						Diluted Income (Loss)
		EBITDA						(Expense) Benefit						Attrib. to HUN Corp.						Per Share
		Nine months ended						Nine months ended						Nine months ended						Nine months ended
		September 30,						September 30,						September 30,						September 30,
In millions, except per share amounts, unaudited		2011			2010			2011			2010			2011			2010			2011			2010
GAAP(1)		$	766		$	533		$	(111	)	$	(46	)	$	142		$	(3	)	$	0.59		$	(0.01	)
Adjustments:
Unallocated foreign exchange (gain) loss		(6		)	(3		)	5			5			(1		)	2			—			0.01
Legal settlements and related expenses		38			—			(14		)	—			24			—			0.10			—
Loss on early extinguishment of debt		5			169			(2		)	(17		)	3			152			0.01			0.63
Gain on consolidation of a variable interest entity		(12		)	—			2			—			(10		)	—			(0.04		)	—
Restructuring, impairment and plant closing costs		171			24			(4		)	(1		)	167			23			0.69			0.10
Expenses associated with the terminated merger and related litigation		—			4			—			(1		)	—			3			—			0.01
Discount amortization on settlement financing associated with the terminated merger		N/A			N/A			(8		)	(7		)	13			12			0.05			0.05
Acquisition expenses		5			2			(1		)	(1		)	4			1			0.02			—
Gain on sale of assets related to plant closures		(6		)	—			—			—			(6		)	—			(0.02		)	—
Loss (income) from discontinued operations, net of tax(2)		6			(76		)	N/A			N/A			5			(48		)	0.02			(0.20		)
Extraordinary gain on the acquisition of a business, net of tax		(2		)	—			—			—			(2		)	—			(0.01		)	—
Adjusted(1)		$	965		$	653		$	(133	)	$	(68	)	$	339		$	142		$	1.40		$	0.59
Adjusted income tax expense														133			68
Net income attributable to noncontrolling interests, net of tax														17			3
Adjusted pre-tax income(1)														$	489		$	213
Adjusted effective tax rate														27		%	32		%

 

See end of press release for footnote explanations

 

7