Exhibit 99.1

 

 

News Release

 

 

FOR IMMEDIATE RELEASE	Investor Relations:	Media:
October 29, 2013	Kurt Ogden	Gary Chapman
The Woodlands, TX	(801) 584-5959	(281) 719-4324
NYSE: HUN

 

HUNTSMAN RELEASES THIRD QUARTER 2013 RESULTS;

ADJUSTED EBITDA IMPROVES IN ALL DIVISIONS
COMPARED TO LAST QUARTER

 

Third Quarter 2013 Highlights

 

·                 Adjusted EBITDA was $376 million and includes record collective earnings for our non-Pigments divisions.  This compares to $411 million in the prior year period and $304 million in the prior quarter.

 

·                 Adjusted diluted income per share was $0.54 compared to $0.73 in the prior year period and $0.39 in the prior quarter.

 

·                 Net income attributable to Huntsman Corporation was $64 million compared to net income of $116 million in the prior year period and net income of $47 million in the prior quarter.

 

·                 On October 1, 2013 we announced plans to restructure our Performance Products surfactants business in Europe.  We expect to complete this restructuring by the end of 2014 and estimate the annual adjusted EBITDA benefit to be approximately $20 million.

 

·                 On September 17, 2013 we announced an agreement with Rockwood Holdings, Inc. to acquire their Performance Additives and Titanium Dioxide businesses for $1.1 billion in cash and the assumption of unfunded pension liabilities estimated at $225 million.  The transaction remains subject to regulatory approvals and customary closing conditions and is expected to close in the first half of 2014.

 

·                  On August 29, 2013 we announced the completion of the acquisition of Oxid, a privately-held manufacturer and marketer of specialty urethane polyols.  We expect this business to contribute approximately $15 to $20 million of annual adjusted EBITDA.

 

		Three months ended									Nine months ended
		September 30,						June 30,			September 30,
In millions, except per share amounts, unaudited		2013			2012			2013			2013			2012
Revenues		$	2,842		$	2,741		$	2,830		$	8,374		$	8,568
Net income attributable to Huntsman Corporation		$	64		$	116		$	47		$	87		$	403
Adjusted net income(1)		$	132		$	176		$	94		$	272		$	509
Diluted income per share		$	0.26		$	0.48		$	0.19		$	0.36		$	1.68
Adjusted diluted income per share(1)		$	0.54		$	0.73		$	0.39		$	1.12		$	2.12
EBITDA(1)		$	303		$	341		$	249		$	664		$	1,083
Adjusted EBITDA(1)		$	376		$	411		$	304		$	900		$	1,194

 

See end of press release for footnote explanations

 

 

The Woodlands, TX — Huntsman Corporation (NYSE: HUN) today reported third quarter 2013 results with revenues of $2,842 million and adjusted EBITDA of $376 million.

 

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

 

“Our third quarter results were very strong, excluding results from our Pigments business our earnings improved compared to the previous year and quarter.  Earnings within our Pigments business have been improving throughout the year and we are encouraged by industry trends. Earnings improved across all of our businesses compared to last quarter.

 

“During the quarter, we announced an agreement with Rockwood Holdings to acquire their Performance Additives and Titanium Dioxide businesses.  We expect to pursue a public offering of our new combined Pigments business to allow greater investor focus and appreciation for our differentiated businesses.  With improving market conditions and pro forma synergies in excess of $130 million we believe this acquisition will add significant shareholder value.   We also closed on an acquisition within our Polyurethanes division which strengthens our downstream and specialty capabilities.   Both of these transactions are immediately accretive to our earnings.

 

“We recently announced additional restructuring, specifically within our Performance Products business.  The future EBITDA benefit of our companywide restructuring efforts is expected to be approximately $140 million; in addition to the approximate $100 million we have already achieved.  I am encouraged by our third quarter results and am optimistic about our future prospects.”

 

Segment Analysis for 3Q13 Compared to 3Q12

 

Polyurethanes

 

The increase in revenues in our Polyurethanes division for the three months ended September 30, 2013 compared to the same period in 2012 was primarily due to higher sales volumes partially offset by lower average selling prices and unfavorable change in sales mix.  MDI sales volumes increased as a result of improved demand in all regions and across most major markets.  PO/MTBE sales volumes increased due to strong demand.  PO/MTBE average selling prices decreased primarily due to less favorable market conditions partially offset by an increase in MDI average selling prices in the Americas and the strength of the euro against the U.S. dollar.  The decrease in adjusted EBITDA was primarily due to lower PO/MTBE earnings (third quarter 2012 benefited approximately $30 million from industry supply outages) and the impact of the extended force majeure at our MDI facility in Rotterdam, The Netherlands (approximate $10 million impact on the third quarter 2013).

 

Performance Products

 

The increase in revenues in our Performance Products division for the three months ended September 30, 2013 compared to the same period in 2012 was due to higher average selling prices and higher sales volumes.  Average selling prices increased primarily in response to higher raw material costs and the strength of the euro against the U.S. dollar.  Sales volumes increased primarily due to higher sales of maleic anhydride and amines, partially offset by lower surfactant sales.  The increase in adjusted EBITDA was primarily due to higher sales volumes and higher margins.

 

Advanced Materials

 

The decrease in revenues in our Advanced Materials division for the three months ended September 30, 2013 compared to the same period in 2012 was primarily due to lower sales volumes, partially offset by higher average selling prices.  Sales volumes decreased in all regions primarily as a result of weak demand and increased competition in base resins and a focus on higher value component and formulations sales such as

 

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aerospace and transportation and industrial markets.  Average selling prices increased in all regions primarily in response to higher raw materials costs and improved sales mix.  The increase in adjusted EBITDA was primarily due to higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.

 

Textile Effects

 

The increase in revenues in our Textile Effects division for the three months ended September 30, 2013 compared to the same period in 2012 was due to higher sales volumes and higher average selling prices partially offset by the strength of the U.S. dollar primarily against the Indian rupee.  Sales volumes increased primarily due to increased market share in key countries.  Average selling prices increased primarily in response to higher raw material costs.  The increase in adjusted EBITDA was primarily due to higher sales volumes, higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.

 

Pigments

 

The decrease in revenues in our Pigments division for the three months ended September 30, 2013 compared to the same period in 2012 was primarily due to lower average selling prices partially offset by higher sales volumes.  Average selling prices decreased in all regions of the world primarily as a result of high industry inventory levels partially offset by the strength of the euro against the U.S. dollar.  Sales volumes increased primarily due to higher end-use demand.  The decrease in adjusted EBITDA was primarily due to lower contribution margins partially offset by higher sales volumes and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.

 

Corporate, LIFO and Other

 

Adjusted EBITDA from Corporate, LIFO and Other decreased by $6 million to a loss of $44 million for the three months ended September 30, 2013 compared to a loss of $38 million for the same period in 2012.  The decrease in adjusted EBITDA was primarily the result of a decrease in unallocated foreign currency gain (nil in 2013 compared to $4 million gain in 2012).

 

Liquidity, Capital Resources and Outstanding Debt

 

As of September 30, 2013 we had $1,005 million of combined cash and unused borrowing capacity compared to $887 million at December 31, 2012.

 

On August 22, 2013, we entered into an amendment of our senior credit facilities that provided for additional term loans of $100 million.  The net proceeds were be used for general corporate purposes.

 

On October 15, 2013, we entered into an amendment to our senior credit facilities that provides for a new seven year term loan of $1.2 billion as well as an increase in our existing revolving credit facility by $200 million to $600 million. We have secured commitments from a group of financial institutions to provide this term loan and expanded revolving credit facility. This new financing is expected be funded when we complete the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.

 

Total capital expenditures for the quarter ended September 30, 2013 were $114 million and for the nine months ended September 30, 2013 were $295 million.  We expect to spend approximately $450 million on capital expenditures in 2013.

 

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Income Taxes

 

During the three months ended September 30, 2013 we recorded income tax expense of $81 million and paid $14 million in cash for income taxes.  Our adjusted effective income tax rate for the three months and year to date ended September 30, 2013 were approximately 39% and 36% respectively.  During the third quarter of 2013 we experienced higher earnings in the U.S. and lower earnings in Europe where we have tax valuation allowances.  We expect our full year 2013 adjusted effective tax rate to be approximately 36% primarily due to the effect of tax valuation allowances and our regional mix of income.  We expect our long term effective income tax rate to be approximately 30 - 35%.

 

Earnings Conference Call Information

 

We will hold a conference call to discuss our third quarter 2013 financial results on Tuesday, October 29, 2013 at 10:00 a.m. ET.

 

Call-in numbers for the conference call:
U.S. participants	(888) 679 - 8018
International participants	(617) 213 - 4845
Passcode	57714845

 

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=PR8XJDDTW

 

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 huntsman.com.

 

Replay Information

 

The conference call will be available for replay beginning October 29, 2013 and ending November 5, 2013.

 

Call-in numbers for the replay:
U.S. participants	(888) 286 - 8010
International participants	(617) 801 - 6888
Replay code	71074124

 

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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		2013			2012			2013			2012
Revenues		$	2,842		$	2,741		$	8,374		$	8,568
Cost of goods sold		2,335			2,204			7,067			6,954
Gross profit		507			537			1,307			1,614
Operating expenses		272			255			808			792
Restructuring, impairment and plant closing costs		37			47			110			52
Operating income		198			235			389			770
Interest expense, net		(48		)	(56		)	(146		)	(172		)
Equity in income of investment in unconsolidated affiliates		3			2			6			5
Loss on early extinguishment of debt		—			(1		)	(35		)	(2		)
Other income		—			1			2			2
Income before income taxes		153			181			216			603
Income tax expense		(81		)	(61		)	(105		)	(186		)
Income from continuing operations		72			120			111			417
Loss from discontinued operations, net of tax(2)		(2		)	(1		)	(4		)	(7		)
Extraordinary gain on the acquisition of a business, net of tax of nil		—			1			—			1
Net income		70			120			107			411
Net income attributable to noncontrolling interests, net of tax		(6		)	(4		)	(20		)	(8		)
Net income attributable to Huntsman Corporation		$	64		$	116		$	87		$	403
Adjusted EBITDA(1)		$	376		$	411		$	900		$	1,194
Adjusted net income(1)		$	132		$	176		$	272		$	509
Basic income per share		$	0.27		$	0.49		$	0.36		$	1.70
Diluted income per share		$	0.26		$	0.48		$	0.36		$	1.68
Adjusted diluted income per share(1)		$	0.54		$	0.73		$	1.12		$	2.12
Common share information:
Basic shares outstanding		239.8			237.9			239.5			237.4
Diluted shares		242.5			240.8			242.1			240.3
Diluted shares for adjusted diluted income per share		242.5			240.8			242.1			240.3

 

See end of press release for footnote explanations

 

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Table 2 — Results of Operations by Segment

 

		Three months ended																				Nine months ended
		September 30,										Better /				June 30,			Better /			September 30,						Better /
In millions, unaudited		2013					2012					(Worse)				2013			(Worse)			2013			2012			(Worse)
Segment Revenues:
Polyurethanes			$	1,306				$	1,237				6	%	$		1,246			5	%	$	3,734		$	3,712		1	%
Performance Products			779					750					4	%	777					—		2,278			2,342			(3	)%
Advanced Materials			309					328					(6	)%	321					(4	)%	966			1,014			(5	)%
Textile Effects			198					182					9	%	216					(8	)%	602			562			7	%
Pigments			310					319					(3	)%	334					(7	)%	974			1,150			(15	)%
Eliminations and other			(60			)		(75			)		20	%	(64			)		6	%	(180		)	(212		)	15	%
Total			$	2,842				$	2,741				4	%	$		2,830			—		$	8,374		$	8,568		(2	)%
Segment Adjusted EBITDA(1):
Polyurethanes			$	215				$	243				(12	)%	$		174			24	%	$	567		$	598		(5	)%
Performance Products			122					109					12	%	111					10	%	287			288			—
Advanced Materials			39					31					26	%	32					22	%	98			90			9	%
Textile Effects			8					(9			)		NM		3					167	%	8			(21		)	NM
Pigments			36					75					(52	)%	33					9	%	78			361			(78	)%
Corporate, LIFO and other			(44			)		(38			)		(16	)%	(49			)		10	%	(138		)	(122		)	(13	)%
Total			$	376				$	411				(9	)%	$		304			24	%	$	900		$	1,194		(25	)%

 

See end of press release for footnote explanations

NM—Not meaningful

 

Table 3 — Factors Impacting Sales Revenues

 

		Three months ended
		September 30, 2013 vs. 2012
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
Unaudited		Currency		Rate		& Other		Volume(b)		Total
Polyurethanes		(3	)%	1	%	(2	)%	10	%	6	%
Performance Products		1	%	1	%	—		2	%	4	%
Advanced Materials		8	%	—		1	%	(15	)%	(6	)%
Textile Effects		4	%	(1	)%	—		6	%	9	%
Pigments		(24	)%	1	%	—		20	%	(3	)%
Total Company		(3	)%	1	%	(1	)%	7	%	4	%

 

		Nine months ended
		September 30, 2013 vs. 2012
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
Unaudited		Currency		Rate		& Other		Volume(b)		Total
Polyurethanes		—		—		—		1	%	1	%
Performance Products		2	%	—		—		(5	)%	(3	)%
Advanced Materials		4	%	(1	)%	1	%	(9	)%	(5	)%
Textile Effects		1	%	(1	)%	—		7	%	7	%
Pigments		(24	)%	—		—		9	%	(15	)%
Total Company		(2	)%	—		—		—		(2	)%

 

(a) Excludes revenues from tolling arrangements, by-products and raw materials.

(b) Excludes sales volumes of by-products and raw materials.

 

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

 

		EBITDA						Income Tax Expense						Net Income Attrib. to HUN Corp.						Diluted Income 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		2013			2012			2013			2012			2013			2012			2013			2012
GAAP(1)		$	303		$	341		$	(81	)	$	(61	)	$	64		$	116		$	0.26		$	0.48
Adjustments:
Acquisition expenses and purchase accounting inventory adjustments		9			1			(1		)	—			8			1			0.03			—
Loss on initial consolidation of subsidiaries		—			4			—			—			—			4			—			0.02
Loss from discontinued operations, net of tax(2)		2			—			N/A			N/A			2			1			0.01			—
Discount amortization on settlement financing associated with the terminated merger		N/A			N/A			—			(3		)	2			5			0.01			0.02
Loss on early extinguishment of debt		—			1			—			(1		)	—			—			—			—
Extraordinary gain on the acquisition of a business, net of tax		—			(1		)	N/A			N/A			—			(1		)	—			—
Certain legal settlements and related expenses		—			4			—			(2		)	—			2			—			0.01
Amortization of pension and postretirement actuarial losses		19			10			(2		)	(2		)	17			8			0.07			0.03
Restructuring, impairment and plant closing and transition costs		43			51			(4		)	(11		)	39			40			0.16			0.17
Adjusted(1)		$	376		$	411		$	(88	)	$	(80	)	$	132		$	176		$	0.54		$	0.73
Adjusted income tax expense														88			80
Net income attributable to noncontrolling interests, net of tax														6			4
Adjusted pre-tax income(1)														$	226		$	260
Adjusted effective tax rate														39		%	31		%

 

					Income Tax			Net Income			Diluted Income
		EBITDA			Expense			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		2013			2013			2013			2013
GAAP(1)		$	249		$	(44	)	$	47		$	0.19
Adjustments:
Acquisition expenses and purchase accounting inventory adjustments		2			—			2			0.01
Income from discontinued operations, net of tax(2)		(2		)	N/A			—			—
Discount amortization on settlement financing associated with the terminated merger		N/A			(1		)	1			0.01
Certain legal settlements and related expenses		6			(1		)	5			0.02
Amortization of pension and postretirement actuarial losses		18			(4		)	14			0.06
Restructuring, impairment and plant closing and transition costs		31			(6		)	25			0.10
Adjusted(1)		$	304		$	(56	)	$	94		$	0.39
Adjusted income tax expense								56
Net income attributable to noncontrolling interests, net of tax								7
Adjusted pre-tax income(1)								$	157
Adjusted effective tax rate								36		%

 

		EBITDA						Income Tax Expense						Net Income Attrib. to HUN Corp.						Diluted Income Per Share
		Nine months ended September 30,						Nine months ended September 30,						Nine months ended September 30,						Nine months ended September 30,
In millions, except per share amounts, unaudited		2013			2012			2013			2012			2013			2012			2013			2012
GAAP(1)		$	664		$	1,083		$	(105	)	$	(186	)	$	87		$	403		$	0.36		$	1.68
Adjustments:
Acquisition expenses and purchase accounting inventory adjustments		14			2			(2		)	—			12			2			0.05			0.01
Loss on initial consolidation of subsidiaries		—			4			—			—			—			4			—			0.02
Loss from discontinued operations, net of tax(2)		3			4			N/A			N/A			4			7			0.02			0.03
Discount amortization on settlement financing associated with the terminated merger		N/A			N/A			(2		)	(8		)	5			15			0.02			0.06
Loss on early extinguishment of debt		35			2			(13		)	(1		)	22			1			0.09			—
Extraordinary gain on the acquisition of a business, net of tax		—			(1		)	N/A			N/A			—			(1		)	—			—
Certain legal settlements and related expenses		8			5			(2		)	(2		)	6			3			0.02			0.01
Amortization of pension and postretirement actuarial losses		56			31			(13		)	(6		)	43			25			0.18			0.10
Restructuring, impairment and plant closing and transition costs		120			64			(27		)	(14		)	93			50			0.38			0.21
Adjusted(1)		$	900		$	1,194		$	(164	)	$	(217	)	$	272		$	509		$	1.12		$	2.12
Adjusted income tax expense														164			217
Net income attributable to noncontrolling interests, net of tax														20			8
Adjusted pre-tax income(1)														$	456		$	734
Adjusted effective tax rate														36		%	30		%

 

See end of press release for footnote explanations

 

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