Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

Investor Relations:

Media:

October 27, 2015

Kurt Ogden

Gary Chapman

The Woodlands, TX

(801) 584-5959

(281) 719-4324

NYSE: HUN

 

 

 

HUNTSMAN REPORTS THIRD QUARTER 2015 ADJUSTED EBITDA OF

$311 MILLION AND ANNOUNCES MAJOR REDUCTION
IN PLANNED CAPITAL EXPENDITURES

 

Third Quarter 2015 Highlights

 

·                 Announces $150 million reduction in planned capital expenditures for 2016 and 2017 combined.

 

·                 Announces intention to enter into a $100 million accelerated share repurchase transaction as part of the board authorized $150 million share repurchase program.

 

·                 Pigments and Additives synergy and restructuring savings remain on track, planned separation well advanced.

 

·                 Adjusted EBITDA was $311 million compared to $356 million in the prior year period and $385 million in the prior quarter.

 

·                 Adjusted diluted income per share was $0.47 compared to $0.60 in the prior year period and $0.63 in the prior quarter.

 

·                 Net income attributable to Huntsman Corporation was $55 million compared to net income of $188 million in the prior year period and $29 million in the prior quarter.

 

·                 The stronger U.S. dollar reduced adjusted EBITDA by an estimated $43 million compared to the prior year period.

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

June 30,

 

September 30,

 

In millions, except per share amounts, unaudited

 

2015

 

2014

 

2015

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,638

 

$

2,884

 

$

2,740

 

$

7,967

 

$

8,627

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

$

55

 

$

188

 

$

29

 

$

89

 

$

361

 

Adjusted net income(1)

 

$

115

 

$

147

 

$

155

 

$

368

 

$

397

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share

 

$

0.22

 

$

0.76

 

$

0.12

 

$

0.36

 

$

1.47

 

Adjusted diluted income per share(1)

 

$

0.47

 

$

0.60

 

$

0.63

 

$

1.49

 

$

1.62

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

$

255

 

$

293

 

$

216

 

$

630

 

$

881

 

Adjusted EBITDA(1)

 

$

311

 

$

356

 

$

385

 

$

981

 

$

1,048

 

 

See end of press release for footnote explanations

 


 

The Woodlands, TX — Huntsman Corporation (NYSE: HUN) today reported third quarter 2015 results with revenues of $2,638 million and adjusted EBITDA of $311 million.

 

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

 

“We are aggressively focused on those elements within our business that we can control and are fully committed to an improvement in our free cash flow generation.  We reduced our planned capital expenditures by a combined total of $150 million over the next two years and are determined to deliver more than $100 million of future synergy and restructuring savings.  We expect our 2016 free cash flow to improve by at least $350 million.

 

“As an expression of confidence in the company’s future and our ability to deliver further shareholder value the board authorized $150 million of share repurchases.  We intend to enter into a $100 million accelerated share repurchase transaction which will be completed within the next several months.

 

“Our board of directors has made it clear that we intend to exit the TiO2 business.  We have narrowed our options to just two — one comprises a TiO2 spin to our shareholders and the other option constitutes a more strategic move.  More information will be forthcoming in the near future.”

 

Segment Analysis for 3Q15 Compared to 3Q14

 

Polyurethanes

 

The decrease in revenues in our Polyurethanes division for the three months ended September 30, 2015 compared to the same period in 2014 was primarily due to lower average selling prices partially offset by higher sales volumes.  MDI average selling prices decreased in response to lower raw material costs and the currency exchange impact of a stronger U.S. dollar against major European currencies.  PO/MTBE average selling prices decreased in-line with lower pricing for high octane gasoline.  PO/MTBE sales volumes increased primarily as a result of not experiencing an unplanned manufacturing disruption at our Port Neches, Texas facility as we did in the third quarter 2014.  MDI sales volumes decreased due to lower demand in the Asian and Americas regions partially offset by growth in the European region.  The decrease in adjusted EBITDA was primarily due to the foreign currency exchange impact of a stronger U.S. dollar against major European currencies and lower MDI sales volumes partially offset by higher MDI contribution margins.

 

Performance Products

 

The decrease in revenues in our Performance Products division for the three months ended September 30, 2015 compared to the same period in 2014 was primarily due to lower average selling prices, partially offset by higher sales volumes.  Average selling prices decreased primarily in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  Sales volumes increased primarily due to higher sales volumes of ethylene oxide intermediates.  The decrease in adjusted EBITDA was primarily due to lower contribution margins in our upstream intermediates business, partially offset by higher contribution margins in our amines and maleic anhydride businesses.

 

Advanced Materials

 

The decrease in revenues in our Advanced Materials division for the three months ended September 30, 2015 compared to the same period in 2014 was due to lower sales volumes and lower average selling prices.  Sales volumes decreased primarily due to the de-selection of certain business, customer destocking and competitive pressure.  Average selling prices increased on a local currency basis in the Americas due to certain price increase initiatives and our focus on higher value markets; overall this was more than offset by the foreign currency exchange impact of a stronger U.S. dollar against major international currencies.  The decrease in adjusted EBITDA was primarily due to the foreign currency exchange impact of a stronger U.S. dollar against major international currencies.

 

2


 

Textile Effects

 

The decrease in revenues in our Textile Effects division for the three months ended September 30, 2015 compared to the same period in 2014 was due to lower average selling prices and lower sales volumes.  Average selling prices decreased in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against major international currencies.  Sales volumes decreased primarily due to the de-selection of lower value business and challenging market conditions.  The decrease in adjusted EBITDA was primarily due to the foreign currency exchange impact of a stronger U.S. dollar against major international currencies.

 

Pigments and Additives

 

Pro forma for the acquisition of Rockwood Performance Additives and Titanium Dioxide businesses, revenues decreased in our Pigments and Additives division for the three months ended September 30, 2015 compared to the same period in 2014 due to lower average selling prices and lower sales volumes.  Average selling prices decreased primarily as a result of high titanium dioxide industry inventory levels and the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  Sales volumes decreased primarily as a result of lower end use demand and the impact of a nitrogen tank explosion owned and operated by a third party at our Uerdingen, Germany facility which disrupted our manufacturing.  The decrease in pro forma adjusted EBITDA was primarily due to lower contribution margins for titanium dioxide and the negative impact from the manufacturing disruption at our Uerdingen, Germany facility.  The total impact from the manufacturing disruption was approximately $8 million approximately $5 million related to lost sales volumes and unabsorbed fixed costs and approximately $3 million related to clean up costs that have been excluded from adjusted EBTIDA.

 

Corporate, LIFO and Other

 

Adjusted EBITDA from Corporate, LIFO and Other decreased by $1 million to a loss of $50 million for the three months ended September 30, 2015 compared to a loss of $49 million for the same period in 2014.

 

Liquidity, Capital Resources and Outstanding Debt

 

As of September 30, 2015, we had $1,215 million of combined cash and unused borrowing capacity compared to $1,601 million at December 31, 2014.

 

In August 2015, we entered into an amendment of our credit agreement.  The amendment extends $773 million of our term loan B from 2017 to 2019.

 

In September 2015, we redeemed $198 million of 8 5/8% senior subordinated notes due 2021 with cash on hand.

 

We expect to spend approximately $450 million annually on capital expenditures in 2016 and 2017.  This represents a combined reduction of $150 million compared to prior guidance.

 

Income Taxes

 

During the three months ended September 30, 2015, we recorded an income tax expense of $49 million and paid $51 million in cash for income taxes.  Our adjusted effective income tax rate for the three months ended September 30, 2015 was 26%.

 

We expect our 2015 and long term adjusted effective tax rate to be approximately 30%.

 

3


 

Earnings Conference Call Information

 

We will hold a conference call to discuss our third quarter 2015 financial results on Tuesday, October 27, 2015 at 10:00 a.m. ET.

 

Call-in numbers for the conference call:

U.S. participants

(888) 679 - 8034

International participants

(617) 213 - 4847

Passcode

36096009

 

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=PN7J4EM4U

 

Webcast Information

 

The conference call will be available via webcast and can be accessed from the company’s website at ir.huntsman.com.

 

Replay Information

 

The conference call will be available for replay beginning October 27, 2015 and ending November 4, 2015.

 

Call-in numbers for the replay:

U.S. participants

(888) 286 - 8010

International participants

(617) 801 - 6888

Replay code

29385180

 

Upcoming Conferences

 

During the fourth quarter a member of management will present at the Citi Basic Materials Conference, December 1, 2015.  A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.

 

4


 

Table 1 — Results of Operations

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

In millions, except per share amounts, unaudited

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,638

 

$

2,884

 

$

7,967

 

$

8,627

 

Cost of goods sold

 

2,165

 

2,369

 

6,495

 

7,157

 

Gross profit

 

473

 

515

 

1,472

 

1,470

 

Operating expenses

 

290

 

274

 

859

 

811

 

Restructuring, impairment and plant closing costs

 

14

 

39

 

221

 

91

 

Operating income

 

169

 

202

 

392

 

568

 

Interest expense

 

(49

)

(49

)

(158

)

(148

)

Equity in income of investment in unconsolidated affiliates

 

—

 

2

 

5

 

6

 

Loss on early extinguishment of debt

 

(8

)

—

 

(31

)

—

 

Other expense

 

—

 

(1

)

(2

)

—

 

Income before income taxes

 

112

 

154

 

206

 

426

 

Income tax (expense) benefit

 

(49

)

40

 

(85

)

(39

)

Income from continuing operations

 

63

 

194

 

121

 

387

 

Loss from discontinued operations, net of tax(3)

 

—

 

—

 

(4

)

(7

)

Net income

 

63

 

194

 

117

 

380

 

Net income attributable to noncontrolling interests, net of tax

 

(8

)

(6

)

(28

)

(19

)

Net income attributable to Huntsman Corporation

 

$

55

 

$

188

 

$

89

 

$

361

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

311

 

$

356

 

$

981

 

$

1,048

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income(1)

 

$

115

 

$

147

 

$

368

 

$

397

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.23

 

$

0.77

 

$

0.36

 

$

1.49

 

Diluted income per share

 

$

0.22

 

$

0.76

 

$

0.36

 

$

1.47

 

Adjusted diluted income per share(1)

 

$

0.47

 

$

0.60

 

$

1.49

 

$

1.62

 

 

 

 

 

 

 

 

 

 

 

Common share information:

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

244

 

243

 

244

 

242

 

Diluted shares

 

247

 

247

 

247

 

246

 

Diluted shares for adjusted diluted income per share

 

247

 

247

 

247

 

246

 

 

See end of press release for footnote explanations

 

5


 

Table 2 — Results of Operations by Segment

 

 

 

Three months ended

 

 

 

Nine months ended

 

 

 

 

 

September 30,

 

Better /

 

September 30,

 

Better /

 

In millions, unaudited

 

2015

 

2014

 

(Worse)

 

2015

 

2014

 

(Worse)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

1,017

 

$

1,321

 

(23

)%

$

2,902

 

$

3,831

 

(24

)%

Performance Products

 

618

 

762

 

(19

)%

1,949

 

2,360

 

(17

)%

Advanced Materials

 

275

 

310

 

(11

)%

847

 

953

 

(11

)%

Textile Effects

 

196

 

221

 

(11

)%

618

 

693

 

(11

)%

Pigments & Additives

 

543

 

318

 

71

%

1,707

 

976

 

75

%

Eliminations and other

 

(11

)

(48

)

77

%

(56

)

(186

)

70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

2,638

 

$

2,884

 

(9

)%

$

7,967

 

$

8,627

 

(8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

168

 

$

187

 

(10

)%

$

432

 

$

551

 

(22

)%

Performance Products

 

122

 

129

 

(5

)%

384

 

362

 

6

%

Advanced Materials

 

56

 

57

 

(2

)%

172

 

156

 

10

%

Textile Effects

 

10

 

14

 

(29

)%

50

 

52

 

(4

)%

Pigments & Additives

 

5

 

18

 

(72

)%

61

 

67

 

(9

)%

Corporate, LIFO and other

 

(50

)

(49

)

(2

)%

(118

)

(140

)

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

311

 

$

356

 

(13

)%

$

981

 

$

1,048

 

(6

)%

 

See end of press release for footnote explanations

 

Table 3 — Pro Forma (2) Results of Operations by Segment

 

 

 

Three months ended

 

 

 

Nine months ended

 

 

 

 

 

September 30,

 

Better /

 

September 30,

 

Better /

 

In millions, unaudited, pro forma

 

2015

 

2014

 

(Worse)

 

2015

 

2014

 

(Worse)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

1,017

 

$

1,327

 

(23

)%

$

2,902

 

$

3,852

 

(25

)%

Performance Products

 

618

 

762

 

(19

)%

1,949

 

2,360

 

(17

)%

Advanced Materials

 

275

 

310

 

(11

)%

847

 

953

 

(11

)%

Textile Effects

 

196

 

221

 

(11

)%

618

 

693

 

(11

)%

Pigments & Additives

 

543

 

685

 

(21

)%

1,707

 

2,114

 

(19

)%

Eliminations and other

 

(11

)

(48

)

77

%

(56

)

(186

)

70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma total

 

$

2,638

 

$

3,257

 

(19

)%

$

7,967

 

$

9,786

 

(19

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

168

 

$

188

 

(11

)%

$

432

 

$

557

 

(22

)%

Performance Products

 

122

 

129

 

(5

)%

384

 

362

 

6

%

Advanced Materials

 

56

 

57

 

(2

)%

172

 

156

 

10

%

Textile Effects

 

10

 

14

 

(29

)%

50

 

52

 

(4

)%

Pigments & Additives

 

5

 

57

 

(91

)%

61

 

208

 

(71

)%

Corporate, LIFO and other

 

(50

)

(49

)

(2

)%

(118

)

(140

)

16

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma total

 

$

311

 

$

396

 

(21

)%

$

981

 

$

1,195

 

(18

)%

 

See end of press release for footnote explanations

 

6


 

Table 4 — Factors Impacting Sales Revenues

 

 

 

Three months ended

September 30, 2015 vs. 2014

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited

 

Currency

 

Rate

 

& Other(c)

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(13

)%

(5

)%

(7

)%

2

%

(23

)%

Performance Products

 

(10

)%

(5

)%

(5

)%

1

%

(19

)%

Advanced Materials

 

2

%

(9

)%

(2

)%

(2

)%

(11

)%

Textile Effects

 

(1

)%

(7

)%

1

%

(4

)%

(11

)%

Pigments & Additives

 

(12

)%

(8

)%

98

%

(7

)%

71

%

Total Company

 

(9

)%

(6

)%

5

%

1

%

(9

)%

 

 

 

 

 

Nine months ended

September 30, 2015 vs. 2014

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited

 

Currency

 

Rate

 

& Other(c)

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(9

)%

(6

)%

3

%

(12

)%

(24

)%

Performance Products

 

(6

)%

(5

)%

(2

)%

(4

)%

(17

)%

Advanced Materials

 

3

%

(9

)%

(1

)%

(4

)%

(11

)%

Textile Effects

 

(1

)%

(6

)%

4

%

(8

)%

(11

)%

Pigments & Additives

 

(9

)%

(9

)%

100

%

(7

)%

75

%

Total Company

 

(6

)%

(7

)%

13

%

(8

)%

(8

)%

 

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

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

(c) Includes full revenue impact from the October 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.

 

7


 

Table 5 — Factors Impacting Pro Forma (2) Sales Revenues

 

 

 

Three months ended

 

 

 

September 30, 2015 vs. 2014

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

Selling

 

Sales Mix

 

Sales

 

 

 

 

 

Unaudited, pro forma

 

Price(a)

 

& Other

 

Volume(b)

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(18

)%

(7

)%

2

%

 

 

(23

)%

Performance Products

 

(15

)%

(5

)%

1

%

 

 

(19

)%

Advanced Materials

 

(7

)%

(2

)%

1

%

(e)

 

(8

)%

Textile Effects

 

(8

)%

1

%

(4

)%

 

 

(11

)%

Pigments & Additives

 

(18

)%

1

%

(3

)%

(f)

 

(20

)%

Total Company

 

(16

)%

(4

)%

1

%

(e)(f)

 

(19

)%

 

 

 

Nine months ended

 

 

 

September 30, 2015 vs. 2014

 

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

Selling

 

Sales Mix

 

Sales

 

 

 

 

 

Unaudited, pro forma

 

Price(a)

 

& Other

 

Volume(b)

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(15

)%

2

%

(2

)%

(c)

 

(15

)%

Performance Products

 

(11

)%

(2

)%

—

 

(d)

 

(13

)%

Advanced Materials

 

(6

)%

(1

)%

(1

)%

(e)

 

(8

)%

Textile Effects

 

(7

)%

4

%

(8

)%

 

 

(11

)%

Pigments & Additives

 

(18

)%

1

%

(2

)%

(f)

 

(19

)%

Total Company

 

(14

)%

3

%

(2

)%

(c)(d)(e)(f)

 

(13

)%

 

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

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

(c) Excludes volume impact from planned maintenance at our PO/MTBE facility in 1H15.

(d) Excludes volume impact from closure of our European surfactants plant in 2Q14.

(e) Excludes volume impact from de-selection of lower margin business in 2015.

(f) Excludes volume impact from nitrogen tank incident at our Uerdingen, Germany facility in 3Q15.

 

8


 

Table 6 — Reconciliation of U.S. GAAP to Non-GAAP Measures

 

 

 

 

 

 

 

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

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

In millions, except per share amounts, unaudited

 

2015

 

2014

 

2015

 

2014

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

255

 

$

293

 

$

(49

)

$

40

 

$

55

 

$

188

 

$

0.22

 

$

0.76

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

10

 

10

 

(2

)

(2

)

8

 

8

 

0.03

 

0.03

 

Impact of certain foreign tax credit elections

 

N/A

 

N/A

 

—

 

(94

)

—

 

(94

)

—

 

(0.38

)

Loss from discontinued operations, net of tax(3)

 

1

 

—

 

N/A

 

N/A

 

—

 

—

 

—

 

—

 

Loss on early extinguishment of debt

 

8

 

—

 

(3

)

—

 

5

 

—

 

0.02

 

—

 

Certain legal settlements and related expenses

 

1

 

1

 

—

 

—

 

1

 

1

 

—

 

—

 

Plant incident remediation costs

 

3

 

—

 

(1

)

—

 

2

 

—

 

0.01

 

—

 

Amortization of pension and postretirement actuarial losses

 

19

 

12

 

(4

)

(2

)

15

 

10

 

0.06

 

0.04

 

Restructuring, impairment, plant closing and transition costs

 

14

 

40

 

15

 

(6

)

29

 

34

 

0.12

 

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

311

 

$

356

 

$

(44

)

$

(64

)

$

115

 

$

147

 

$

0.47

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

 

 

 

 

44

 

64

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

8

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

167

 

$

217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

26

%

29

%

 

 

 

 

 

 

 

 

 

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

 

2015

 

2015

 

2015

 

2015

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

216

 

$

(34

)

$

29

 

$

0.12

 

Adjustments:

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

12

 

(3

)

9

 

0.04

 

Loss from discontinued operations, net of tax(3)

 

1

 

N/A

 

2

 

0.01

 

Loss on disposition of businesses/assets

 

1

 

—

 

1

 

—

 

Loss on early extinguishment of debt

 

20

 

(7

)

13

 

0.05

 

Certain legal settlements and related expenses

 

1

 

(1

)

—

 

—

 

Amortization of pension and postretirement actuarial losses

 

19

 

(5

)

14

 

0.06

 

Restructuring, impairment, plant closing and transition costs

 

115

 

(28

)

87

 

0.35

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

385

 

$

(78

)

$

155

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

78

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

$

243

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

32

%

 

 

 

 

 

 

 

 

 

Income Tax

 

Net Income

 

Diluted Income

 

 

 

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

 

2015

 

2014

 

2015

 

2014

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

630

 

$

881

 

$

(85

)

$

(39

)

$

89

 

$

361

 

$

0.36

 

$

1.47

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

31

 

27

 

(7

)

(6

)

24

 

21

 

0.10

 

0.09

 

Impact of certain foreign tax credit elections

 

N/A

 

N/A

 

—

 

(94

)

—

 

(94

)

—

 

(0.38

)

Loss from discontinued operations, net of tax(3)

 

3

 

9

 

N/A

 

N/A

 

4

 

7

 

0.02

 

0.03

 

Loss (gain) on disposition of businesses/assets

 

1

 

(2

)

—

 

1

 

1

 

(1

)

—

 

—

 

Loss on early extinguishment of debt

 

31

 

—

 

(11

)

—

 

20

 

—

 

0.08

 

—

 

Certain legal settlements and related expenses

 

3

 

3

 

(1

)

—

 

2

 

3

 

0.01

 

0.01

 

Plant incident remediation costs

 

3

 

—

 

(1

)

—

 

2

 

—

 

0.01

 

—

 

Amortization of pension and postretirement actuarial losses

 

56

 

37

 

(14

)

(10

)

42

 

27

 

0.17

 

0.11

 

Restructuring, impairment, plant closing and transition costs

 

223

 

93

 

(39

)

(20

)

184

 

73

 

0.74

 

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

981

 

$

1,048

 

$

(158

)

$

(168

)

$

368

 

$

397

 

$

1.49

 

$

1.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

 

 

 

 

158

 

168

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

28

 

19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

554

 

$

584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

29

%

29

%

 

 

 

 

 

See end of press release for footnote explanations

 

9


 

Table 7 — Pro Forma (2) Reconciliation of U.S. GAAP to Non-GAAP Measures

 

 

 

Pro Forma EBITDA

 

 

 

Three months ended

 

 

 

September 30,

 

In millions, except per share amounts, unaudited, pro forma

 

2015

 

2014

 

 

 

 

 

 

 

GAAP(1)

 

$

255

 

$

333

 

Adjustments:

 

 

 

 

 

Allocation of Rockwood general corporate overhead

 

—

 

5

 

Acquisition and integration expenses, purchase accounting adjustments

 

10

 

4

 

Loss from discontinued operations, net of tax(3)

 

1

 

—

 

Loss on early extinguishment of debt

 

8

 

—

 

Certain legal settlements and related expenses

 

1

 

1

 

Plant incident remediation costs

 

3

 

—

 

Amortization of pension and postretirement actuarial losses

 

19

 

13

 

Restructuring, impairment, plant closing and transition costs

 

14

 

40

 

 

 

 

 

 

 

Pro forma adjusted(2)

 

$

311

 

$

396

 

 

 

 

Pro Forma EBITDA

 

 

 

Three months ended

 

 

 

June 30,

 

In millions, except per share amounts, unaudited pro forma

 

2015

 

 

 

 

 

GAAP(1)

 

$

216

 

Adjustments:

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

12

 

Loss from discontinued operations, net of tax(3)

 

1

 

Loss on disposition of businesses/assets

 

1

 

Loss on early extinguishment of debt

 

20

 

Certain legal settlements and related expenses

 

1

 

Amortization of pension and postretirement actuarial losses

 

19

 

Restructuring, impairment, plant closing and transition costs

 

115

 

 

 

 

 

Pro forma adjusted(2)

 

$

385

 

 

 

 

Pro Forma EBITDA

 

 

 

Nine months ended

 

 

 

September 30,

 

In millions, except per share amounts, unaudited pro forma

 

2015

 

2014

 

 

 

 

 

 

 

GAAP(1)

 

$

630

 

$

1,023

 

Adjustments:

 

 

 

 

 

Allocation of general corporate overhead

 

—

 

20

 

Acquisition and integration expenses, purchase accounting adjustments

 

31

 

9

 

Loss from discontinued operations, net of tax(3)

 

3

 

9

 

Loss (gain) on disposition of businesses/assets

 

1

 

(2

)

Loss on early extinguishment of debt

 

31

 

—

 

Certain legal settlements and related expenses

 

3

 

3

 

Plant incident remediation costs

 

3

 

—

 

Amortization of pension and postretirement actuarial losses

 

56

 

40

 

Restructuring, impairment, plant closing and transition costs

 

223

 

93

 

 

 

 

 

 

 

Pro forma adjusted(2)

 

$

981

 

$

1,195

 

 

See end of press release for footnote explanations

 

10


 

Table 8 — Reconciliation of Net Income to EBITDA

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

June 30,

 

September 30,

 

In millions, unaudited

 

2015

 

2014

 

2015

 

2015

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

$

55

 

$

188

 

$

29

 

$

89

 

$

361

 

Interest expense

 

49

 

49

 

53

 

158

 

148

 

Income tax expense (benefit) from continuing operations

 

49

 

(40

)

34

 

85

 

39

 

Income tax (benefit) expense from discontinued operations(3)

 

(1

)

—

 

1

 

1

 

(2

)

Depreciation and amortization

 

103

 

96

 

99

 

297

 

335

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

255

 

293

 

216

 

630

 

881

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments to:

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

—

 

15

 

—

 

—

 

49

 

Interest expense

 

—

 

11

 

—

 

—

 

33

 

Income tax expense (benefit) from continuing operations

 

—

 

4

 

—

 

—

 

30

 

Depreciation and amortization

 

—

 

10

 

—

 

—

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma EBITDA(2)

 

$

255

 

$

333

 

$

216

 

$

630

 

$

1,023

 

 

See end of press release for footnote explanations

 

Table 9 — Selected Balance Sheet Items

 

 

 

September 30,

 

June 30,

 

December 31,

 

In millions

 

2015

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

437

 

$

608

 

$

870

 

Accounts and notes receivable, net

 

1,632

 

1,754

 

1,707

 

Inventories

 

1,850

 

1,938

 

2,025

 

Other current assets

 

332

 

295

 

437

 

Property, plant and equipment, net

 

4,380

 

4,328

 

4,423

 

Other assets

 

1,605

 

1,655

 

1,540

 

 

 

 

 

 

 

 

 

Total assets

 

$

10,236

 

$

10,578

 

$

11,002

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,068

 

$

1,209

 

$

1,275

 

Other current liabilities

 

839

 

786

 

790

 

Current portion of debt

 

158

 

127

 

267

 

Long-term debt

 

4,709

 

4,920

 

4,933

 

Other liabilities

 

1,671

 

1,694

 

1,786

 

Total equity

 

1,791

 

1,842

 

1,951

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

10,236

 

$

10,578

 

$

11,002

 

 

11


 

Table 10 — Outstanding Debt

 

 

 

September 30,

 

June 30,

 

December 31,

 

In millions

 

2015

 

2015

 

2014

 

 

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

 

Senior credit facilities

 

$

2,507

 

$

2,509

 

$

2,528

 

Accounts receivable programs

 

217

 

217

 

229

 

Senior notes

 

1,883

 

1,884

 

1,596

 

Senior subordinated notes

 

—

 

198

 

531

 

Variable interest entities

 

158

 

165

 

207

 

Other debt

 

102

 

74

 

109

 

 

 

 

 

 

 

 

 

Total debt - excluding affiliates

 

4,867

 

5,047

 

5,200

 

 

 

 

 

 

 

 

 

Total cash

 

437

 

608

 

870

 

 

 

 

 

 

 

 

 

Net debt- excluding affiliates

 

$

4,430

 

$

4,439

 

$

4,330

 

 

Table 11 — Summarized Statement of Cash Flows

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

In millions, unaudited

 

2015

 

2015

 

2014

 

 

 

 

 

 

 

 

 

Total cash at beginning of period(a)

 

$

608

 

$

870

 

$

529

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

206

 

387

 

343

 

Net cash used in investing activities

 

(150

)

(383

)

(337

)

Net cash (used in) provided by financing activities

 

(216

)

(418

)

62

 

Effect of exchange rate changes on cash

 

(6

)

(13

)

(6

)

Change in restricted cash

 

(5

)

(6

)

1

 

 

 

 

 

 

 

 

 

Total cash at end of period(a)

 

$

437

 

$

437

 

$

592

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

 

$

(43

)

$

(158

)

$

(145

)

Cash paid for income taxes

 

(51

)

(81

)

(156

)

Cash paid for capital expenditures

 

(158

)

(454

)

(351

)

Depreciation and amortization

 

103

 

297

 

335

 

 

 

 

 

 

 

 

 

Changes in primary working capital:

 

 

 

 

 

 

 

Accounts and notes receivable

 

$

89

 

$

(53

)

$

(161

)

Inventories

 

39

 

46

 

(112

)

Accounts payable

 

(123

)

(111

)

131

 

 

 

 

 

 

 

 

 

Total cash provided by (used in) primary working capital

 

$

5

 

$

(118

)

$

(142

)

 

(a) Includes restricted cash.

 

12


 

Footnotes

 

(1)

We use EBITDA and adjusted EBITDA to measure the operating performance of our business. We provide adjusted net income because we feel it provides meaningful insight for the investment community into the performance of our business. We believe that net income (loss) attributable to Huntsman Corporation is the performance measure calculated and presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”) that is most directly comparable to EBITDA, adjusted EBITDA and adjusted net income. Additional information with respect to our use of each of these financial measures follows:

 

 

 

EBITDA is defined as net income (loss) attributable to Huntsman Corporation before interest, income taxes, and depreciation and amortization. EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies. The reconciliation of EBITDA to net income (loss) attributable to Huntsman Corporation is set forth in Table 8 above.

 

 

 

Adjusted EBITDA is computed by eliminating the following from EBITDA: (a) acquisition and integration expenses, purchase accounting adjustments; (b) loss (gain) on initial consolidation of subsidiaries; (c) EBITDA from discontinued operations; (d) loss (gain) on disposition of businesses/assets; (e) loss on early extinguishment of debt; (f) extraordinary loss (gain) on the acquisition of a business; (g) certain legal settlements and related expenses; (h) plant incident remediation costs; (i) amortization of pension and postretirement actuarial losses (gains); and (j) restructuring, impairment, plant closing and transition costs (credits). The reconciliation of adjusted EBITDA to EBITDA is set forth in Table 6 above.

 

 

 

Adjusted net income (loss) is computed by eliminating the after tax impact of the following items from net income (loss) attributable to Huntsman Corporation: (a) acquisition and integration expenses, purchase accounting adjustments; (b) impact of certain foreign tax credit elections; (c) loss (gain) on initial consolidation of subsidiaries; (d) loss (income) from discontinued operations; (e) discount amortization on settlement financing associated with the terminated merger; (f) loss (gain) on disposition of businesses/assets; (g) loss on early extinguishment of debt; (h) extraordinary loss (gain) on the acquisition of a business; (i) certain legal settlements and related expenses; (j) plant incident remediation costs; (k) amortization of pension and postretirement actuarial losses (gains); and (l) restructuring, impairment, plant closing and transition costs (credits). We do not adjust for changes in tax valuation allowances because we do not believe it provides more meaningful information than is provided under GAAP. The reconciliation of adjusted net income (loss) to net income (loss) attributable to Huntsman Corporation common stockholders is set forth in Table 6 above.

 

 

(2)

Pro forma adjusted as if it had occurred at the beginning of the relevant period to (a) include the October 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.; (b) to exclude the related sale of our TR52 product line — used in printing inks — to Henan Billions Chemicals Co., Ltd. in December 2014; and (c) to exclude the allocation of general corporate overhead by Rockwood.

 

 

(3)

During the first quarter 2010 we closed our Australian styrenics operations; results from this business are treated as discontinued operations.

 

13


 

About Huntsman:

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2014 revenues of approximately $13 billion including the acquisition of Rockwood’s performance additives and titanium dioxide businesses. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. We operate more than 100 manufacturing and R&D facilities in more than 30 countries and employ approximately 16,000 associates within our 5 distinct business divisions. For more information about Huntsman, please visit the company’s website at www.huntsman.com.

 

Social Media:

Twitter: twitter.com/Huntsman_Corp
Facebook: www.facebook.com/huntsmancorp
LinkedIn: www.linkedin.com/company/huntsman

 

Forward-Looking Statements:

Statements in this release that are not historical are forward-looking statements. These statements are based on management’s current beliefs and expectations. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company’s operations, markets, products, services, prices and other factors as discussed in the Huntsman companies’ filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive, environmental, political, legal, regulatory and technological factors.  The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.

 

14