Exhibit 99.1

 

GRAPHIC

GRAPHIC

 

FOR IMMEDIATE RELEASE

Investor Relations:

Media:

July 27, 2016

Kurt Ogden

Gary Chapman

The Woodlands, TX

(801) 584-5959

(281) 719-4324

NYSE: HUN

 

 

 

Huntsman Announces Second Quarter Results;

Reports Attractive MDI Margin Growth, Improving Sequential TiO2 Prices and
Substantial Improvement in Cash Generation

 

Second Quarter 2016 Highlights

 

·                 Net income was $94 million compared to $39 million in the prior year period and $62 million in the prior quarter.

 

·                 Adjusted EBITDA was $325 million compared to $385 million in the prior year period and $274 million in the prior quarter.

 

·                 Diluted income per share was $0.36 compared to $0.12 in the prior year period and $0.24 in the prior quarter.

 

·                 Adjusted diluted income per share was $0.53 compared to $0.63 in the prior year period and $0.37 in the prior quarter.

 

·                 Net cash provided by operating activities was $355 million.  Free cash flow generation was $282 million; we subsequently made a $100 million early repayment of debt in July 2016.

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

March 31,

 

June 30,

 

In millions, except per share amounts

 

2016

 

2015

 

2016

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,544

 

$

2,740

 

$

2,355

 

$

4,899

 

$

5,329

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

94

 

$

39

 

$

62

 

$

156

 

$

54

 

Adjusted net income(1)

 

$

126

 

$

155

 

$

88

 

$

214

 

$

253

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted income per share

 

$

0.36

 

$

0.12

 

$

0.24

 

$

0.60

 

$

0.14

 

Adjusted diluted income per share(1)

 

$

0.53

 

$

0.63

 

$

0.37

 

$

0.90

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

325

 

$

385

 

$

274

 

$

599

 

$

670

 

 

See end of press release for footnote explanations

 



 

THE WOODLANDS, Texas — Huntsman Corporation (NYSE: HUN) today reported second quarter 2016 results with revenues of $2,544 million, net income of $94 million and adjusted EBITDA of $325 million.

 

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

 

“Our management team is focused on three primary strategic financial objectives.  1) Generating more than $350 million of free cash flow in 2016.  2) Growing margins and earnings in our downstream differentiated businesses.  3) Separating our TiO2 business through either a strategic combination or a spin-off.

 

“Our second quarter results demonstrate our commitment to these objectives.  I am delighted we generated $282 million of free cash flow during the quarter in part due to our increased focus on inventory management and are on plan to exceed our $350 million target.  This enabled us to make a $100 million early repayment of debt in July.  Our MDI margins are expanding, our Performance Products margins are healthy and our Advanced Materials business is maintaining strong margins.  We are actively working toward a separation of our TiO2 business with a target of year-end or first quarter 2017.  TiO2 selling prices are rising and other business conditions are improving for our Pigments and Additives business.  In time, it should be well positioned for our planned separation.  We will provide more information regarding the separation on our second quarter earnings conference call.

 

“I am encouraged by our second quarter results.  We are well on track to successfully accomplish our objectives.”

 

Segment Analysis for 2Q16 Compared to 2Q15

 

Polyurethanes

 

The decrease in revenues in our Polyurethanes division for the three months ended June 30, 2016 compared to the same period in 2015 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.  MTBE average selling prices decreased primarily as a result of lower pricing for high octane gasoline.  MDI sales volumes increased due to higher demand in the Americas and European regions.  PO/MTBE sales volumes increased due to the impact of the prior year planned maintenance outage.  The increase in adjusted EBITDA was primarily due to the impact of the prior year planned PO/MTBE maintenance outage, estimated at $30 million, as well as higher MDI margins and sales volumes, partially offset by lower MTBE margins.

 

Performance Products

 

The decrease in revenues in our Performance Products division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices and lower sales volumes.  Average selling prices decreased primarily in response to lower raw material costs and competitive market conditionsSales volumes decreased primarily due to softer demand in China and oilfield applications as well as competitive market conditions.  The decrease in adjusted EBITDA was primarily due to lower margins in our amines, maleic anhydride and upstream intermediates businesses.

 

Advanced Materials

 

The decrease in revenues in our Advanced Materials division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower sales volumes and lower average selling prices.  Sales volumes decreased primarily due to soft demand for low value business in our coatings and construction market, partially offset by growth in our aerospace market across all regions.  Average selling prices decreased in our Asia Pacific region primarily as a result of competitive pressure in our electrical and wind markets, partially offset by higher average selling prices in our European and Americas regions.  Adjusted EBITDA was unchanged as higher contribution margins from lower raw material costs were offset by lower sales volumes.

 

2



 

Textile Effects

 

The decrease in revenues in our Textile Effects division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices partially offset by higher sales volumes.  Average selling prices decreased primarily due to lower raw material costs.  Sales volumes increased in key target countries such as Bangladesh and India.  The increase in adjusted EBITDA was primarily due to higher contribution margins from lower raw material costs.

 

Pigments and Additives

 

The decrease in revenues in our Pigments and Additives division for the three months ended June 30, 2016 compared to the same period in 2015 was due to lower average selling prices, partially offset by higher sales volumes.  Average selling prices decreased primarily as a result of competitive pressure however they increased compared to the prior quarter.  Sales volumes increased primarily due to increased end use demand.  The decrease in adjusted EBITDA was primarily due to lower contribution margins for titanium dioxide.

 

Corporate, LIFO and Other

 

Adjusted EBITDA from Corporate, LIFO and Other decreased by $14 million to a loss of $45 million for the three months ended June 30, 2016 compared to a loss of $31 million for the same period in 2015.  The decrease in adjusted EBITDA was primarily the result of a decrease in LIFO inventory valuation income and a decrease in income from benzene sales.

 

Liquidity, Capital Resources and Outstanding Debt

 

As of June 30, 2016, we had $1,213 million of combined cash and unused borrowing capacity compared to $1,023 million on December 31, 2015.

 

On April 1, 2016, we entered into a new $550 million 2016 term loan B due 2023.  Proceeds from the new term loan were used to repay in full our term loan B due 2017 and remaining term loan C due 2016.  We also extended the maturity of our revolving credit facility to 2021 and increased the amount to $650 million.

 

On July 22, 2016, we made a $100 million early repayment of debt on our term loan B due 2019.  We expect to record less than $1 million in early extinguishment of debt costs in the third quarter 2016.

 

Total capital expenditures for the three months and six months ended June 30, 2016 were $90 million and $189 million, respectively. As part of our completed ethylene oxide expansion in Port Neches, Texas, we received $26 million of capital reimbursement during the second quarter of 2016 from our customer with whom we have a multi-year offtake agreement.  We expect to spend approximately $450 million annually on capital expenditures in 2016 and 2017.

 

We expect our 2016 depreciation and amortization to be approximately $430 million.

 

Income Taxes

 

During the three months ended June 30, 2016, we recorded an income tax expense of $32 million.  During the same period we paid $16 million in cash for income taxes.

 

We expect our 2016 adjusted effective tax rate to be approximately 25 – 30%.  Our MTBE earnings are taxed at the U.S. statutory rate of 35%, variability in our MTBE earnings will have a meaningful impact on where our adjusted tax rate will be within that range. We expect our long term adjusted effective tax rate to be approximately 30%.

 

3



 

Earnings Conference Call Information

 

We will hold a conference call to discuss our second quarter 2016 financial results on Wednesday, July 27, 2016 at 11:00 a.m. ET.

 

Call-in numbers for the conference call:

U.S. participants

(888) 713 - 4218

International participants

(617) 213 - 4870

Passcode

478 152 79#

 

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=PMUG7QP3W

 

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 July 27, 2016 and ending August 3, 2016.

 

Call-in numbers for the replay:

U.S. participants

(888) 286 - 8010

International participants

(617) 801 - 6888

Replay code

27138577

 

Upcoming Conferences

 

During the third quarter a member of management will present at the Jefferies Industrials Conference, August 10, 2016.  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

 

Six months ended

 

 

 

June 30,

 

June 30,

 

In millions, except per share amounts

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,544

 

$

2,740

 

$

4,899

 

$

5,329

 

Cost of goods sold

 

2,087

 

2,191

 

4,026

 

4,330

 

Gross profit

 

457

 

549

 

873

 

999

 

Operating expenses

 

252

 

289

 

517

 

569

 

Restructuring, impairment and plant closing costs

 

29

 

114

 

42

 

207

 

Operating income

 

176

 

146

 

314

 

223

 

Interest expense

 

(50

)

(53

)

(100

)

(109

)

Equity in income of investment in unconsolidated affiliates

 

2

 

3

 

3

 

5

 

Loss on early extinguishment of debt

 

(2

)

(20

)

(2

)

(23

)

Other income (loss)

 

1

 

(1

)

2

 

(2

)

Income before income taxes

 

127

 

75

 

217

 

94

 

Income tax expense

 

(32

)

(34

)

(59

)

(36

)

Income from continuing operations

 

95

 

41

 

158

 

58

 

Loss from discontinued operations, net of tax(2)

 

(1

)

(2

)

(2

)

(4

)

Net income

 

94

 

39

 

156

 

54

 

Net income attributable to noncontrolling interests, net of tax

 

(7

)

(10

)

(13

)

(20

)

Net income attributable to Huntsman Corporation

 

$

87

 

$

29

 

$

143

 

$

34

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

325

 

$

385

 

$

599

 

$

670

 

Adjusted net income(1)

 

$

126

 

$

155

 

$

214

 

$

253

 

 

 

 

 

 

 

 

 

 

 

Basic income per share

 

$

0.37

 

$

0.12

 

$

0.61

 

$

0.14

 

Diluted income per share

 

$

0.36

 

$

0.12

 

$

0.60

 

$

0.14

 

Adjusted diluted income per share(1)

 

$

0.53

 

$

0.63

 

$

0.90

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

Common share information:

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

236

 

244

 

236

 

244

 

Diluted shares

 

240

 

248

 

238

 

247

 

Diluted shares for adjusted diluted income per share

 

240

 

248

 

238

 

247

 

 

See end of press release for footnote explanations

 

5



 

Table 2 — Results of Operations by Segment

 

 

 

Three months ended

 

 

 

Six months ended

 

 

 

 

 

June 30,

 

Better /

 

June 30,

 

Better /

 

In millions

 

2016

 

2015

 

(Worse)

 

2016

 

2015

 

(Worse)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

976

 

$

995

 

(2

)% 

$

1,812

 

$

1,885

 

(4

)%

Performance Products

 

566

 

675

 

(16

)%

1,102

 

1,331

 

(17

)%

Advanced Materials

 

261

 

282

 

(7

)%

527

 

572

 

(8

)%

Textile Effects

 

198

 

216

 

(8

)%

383

 

422

 

(9

)%

Pigments & Additives

 

576

 

592

 

(3

)%

1,116

 

1,164

 

(4

)%

Corporate and eliminations

 

(33

)

(20

)

n/m

 

(41

)

(45

)

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

2,544

 

$

2,740

 

(7

)% 

$

4,899

 

$

5,329

 

(8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

171

 

$

159

 

8

%

$

302

 

$

264

 

14

%

Performance Products

 

86

 

141

 

(39

)%

178

 

262

 

(32

)%

Advanced Materials

 

58

 

58

 

0

%

118

 

116

 

2

%

Textile Effects

 

24

 

23

 

4

%

42

 

40

 

5

%

Pigments & Additives

 

31

 

35

 

(11

)%

46

 

56

 

(18

)%

Corporate, LIFO and other

 

(45

)

(31

)

(45

)%

(87

)

(68

)

(28

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

325

 

$

385

 

(16

)%

$

599

 

$

670

 

(11

)%

 

n/m = not meaningful

See end of press release for footnote explanations

 

6



 

Table 3 — Factors Impacting Sales Revenues

 

 

 

Three months ended

 

 

 

June 30, 2016 vs. 2015

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

 

 

Currency

 

Rate

 

& Other

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(19

)%

0

%

(7

)%

24

%

(2

)%

Polyurethanes, adj

 

(19

)%

0

%

(7

)%

15

%

(11

)%(c)

Performance Products

 

(9

)%

0

%

(3

)%

(4

)%

(16

)%

Advanced Materials

 

(1

)%

(1

)%

4

%

(9

)%

(7

)%

Textile Effects

 

(7

)%

(2

)%

0

%

1

%

(8

)%

Pigments & Additives

 

(8

)%

1

%

1

%

3

%

(3

)%

Total Company

 

(12

)%

0

%

(5

)%

10

%

(7

)%

Total Company, adj

 

(12

)%

0

%

(5

)%

6

%

(11

)%(c)

 

 

 

Six months ended

 

 

 

June 30, 2016 vs. 2015

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited

 

Currency

 

Rate

 

& Other

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(19

)%

(1

)%

(3

)%

19

%

(4

)%

Polyurethanes, adj

 

(19

)%

(1

)%

(3

)%

9

%

(14

)%(c)

Performance Products

 

(11

)%

(1

)%

(6

)%

1

%

(17

)%

Advanced Materials

 

(2

)%

(3

)%

3

%

(6

)%

(8

)%

Textile Effects

 

(4

)%

(4

)%

(1

)%

0

%

(9

)%

Pigments & Additives

 

(9

)%

(1

)%

1

%

5

%

(4

)%

Total Company

 

(13

)%

(1

)%

(3

)%

9

%

(8

)%

Total Company, adj

 

(13

)%

(1

)%

(3

)%

6

%

(11

)%(c)

 


(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 the planned maintenance at our PO/MTBE facility that occurred in 1H15.

 

7



 

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

 

 

 

 

 

 

 

Income Tax

 

 

 

 

 

Diluted Income

 

 

 

EBITDA

 

(Expense) Benefit

 

Net Income

 

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

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

94

 

$

39

 

 

 

 

 

$

94

 

$

39

 

$

0.39

 

$

0.16

 

Net income attributable to noncontrolling interests

 

(7

)

(10

)

 

 

 

 

(7

)

(10

)

(0.03

)

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

87

 

29

 

 

 

 

 

87

 

29

 

0.36

 

0.12

 

Interest expense

 

50

 

53

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense from continuing operations

 

32

 

34

 

(32

)

(34

)

 

 

 

 

 

 

 

 

Income tax expense from discontinued operations(2)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

109

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

4

 

12

 

 

(3

)

4

 

9

 

0.02

 

0.04

 

Loss from discontinued operations, net of tax(2)

 

1

 

1

 

N/A

 

N/A

 

1

 

2

 

 

0.01

 

Loss on disposition of businesses/assets

 

 

1

 

 

 

 

1

 

 

 

Loss on early extinguishment of debt

 

2

 

20

 

(1

)

(7

)

1

 

13

 

 

0.05

 

Certain legal settlements and related expenses

 

 

1

 

 

(1

)

 

 

 

 

Plant incident remediation credits, net

 

(7

)

 

1

 

 

(6

)

 

(0.03

)

 

Amortization of pension and postretirement actuarial losses

 

17

 

19

 

(3

)

(5

)

14

 

14

 

0.06

 

0.06

 

Restructuring, impairment, plant closing and transition costs

 

30

 

115

 

(5

)

(28

)

25

 

87

 

0.10

 

0.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

325

 

$

385

 

$

(40

)

$

(78

)

$

126

 

$

155

 

$

0.53

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense(4)

 

 

 

 

 

 

 

 

 

$

40

 

$

78

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

7

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

173

 

$

243

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

23

%

32

%

 

 

 

 

 

 

 

 

 

 

 

Income Tax

 

 

 

 

 

Diluted Income

 

 

 

EBITDA

 

Expense

 

Net Income

 

Per Share

 

 

 

Three months ended

 

Three months ended

 

Three months ended

 

Three months ended

 

 

 

March 31,

 

March 31,

 

March 31,

 

March 31,

 

In millions, except per share amounts

 

2016

 

2016

 

2016

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

62

 

 

 

 

 

 

 

$

62

 

 

 

$

0.26

 

 

 

Net income attributable to noncontrolling interests

 

(6

)

 

 

 

 

 

 

(6

)

 

 

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

56

 

 

 

 

 

 

 

56

 

 

 

0.24

 

 

 

Interest expense

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense from continuing operations

 

27

 

 

 

(27

)

 

 

 

 

 

 

 

 

 

 

Income tax benefit from discontinued operations(2)

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

9

 

 

 

(3

)

 

 

6

 

 

 

0.03

 

 

 

Loss from discontinued operations, net of tax(2)

 

2

 

 

 

N/A

 

 

 

1

 

 

 

 

 

 

Certain legal settlements and related expenses

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

Plant incident remediation costs, net

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

Amortization of pension and postretirement actuarial losses

 

16

 

 

 

(3

)

 

 

13

 

 

 

0.05

 

 

 

Restructuring, impairment, plant closing and transition costs

 

13

 

 

 

(3

)

 

 

10

 

 

 

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

274

 

 

 

$

(36

)

 

 

$

88

 

 

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense(4)

 

 

 

 

 

 

 

 

 

$

36

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax

 

 

 

 

 

Diluted Income

 

 

 

EBITDA

 

(Expense) Benefit

 

Net Income

 

Per Share

 

 

 

Six months ended

 

Six months ended

 

Six months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

In millions, except per share amounts

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

156

 

$

54

 

 

 

 

 

$

156

 

$

54

 

$

0.65

 

$

0.22

 

Net income attributable to noncontrolling interests

 

(13

)

(20

)

 

 

 

 

(13

)

(20

)

(0.05

)

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Huntsman Corporation

 

143

 

34

 

 

 

 

 

143

 

34

 

0.60

 

0.14

 

Interest expense

 

100

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense from continuing operations

 

59

 

36

 

(59

)

(36

)

 

 

 

 

 

 

 

 

Income tax (benefit) expense from discontinued operations(2)

 

(1

)

2

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

209

 

194

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

13

 

21

 

(3

)

(5

)

10

 

16

 

0.04

 

0.06

 

Loss from discontinued operations, net of tax(2)

 

3

 

2

 

N/A

 

N/A

 

2

 

4

 

0.01

 

0.02

 

Loss on disposition of businesses/assets

 

 

1

 

 

 

 

1

 

 

 

Loss on early extinguishment of debt

 

2

 

23

 

(1

)

(8

)

1

 

15

 

 

0.06

 

Certain legal settlements and related expenses

 

1

 

2

 

 

(1

)

1

 

1

 

 

 

Plant incident remediation credits, net

 

(6

)

 

1

 

 

(5

)

 

(0.02

)

 

Amortization of pension and postretirement actuarial losses

 

33

 

37

 

(6

)

(10

)

27

 

27

 

0.11

 

0.11

 

Restructuring, impairment, plant closing and transition costs

 

43

 

209

 

(8

)

(54

)

35

 

155

 

0.15

 

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

599

 

$

670

 

$

(76

)

$

(114

)

$

214

 

$

253

 

$

0.90

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense(4)

 

 

 

 

 

 

 

 

 

$

76

 

$

114

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

13

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

303

 

$

387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

25

%

29

%

 

 

 

 

 

8



 

Table 5 — Selected Balance Sheet Items

 

 

 

June 30,

 

March 31,

 

December 31,

 

In millions

 

2016

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Cash

 

$

383

 

$

218

 

$

269

 

Accounts and notes receivable, net

 

1,546

 

1,572

 

1,449

 

Inventories

 

1,522

 

1,689

 

1,692

 

Other current assets

 

340

 

351

 

424

 

Property, plant and equipment, net

 

4,377

 

4,437

 

4,446

 

Other assets

 

1,559

 

1,573

 

1,540

 

 

 

 

 

 

 

 

 

Total assets

 

$

9,727

 

$

9,840

 

$

9,820

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

991

 

$

1,027

 

$

1,061

 

Other current liabilities

 

602

 

652

 

686

 

Current portion of debt

 

96

 

103

 

170

 

Long-term debt

 

4,653

 

4,724

 

4,625

 

Other liabilities

 

1,677

 

1,649

 

1,649

 

Total equity

 

1,708

 

1,685

 

1,629

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

9,727

 

$

9,840

 

$

9,820

 

 

Table 6 — Outstanding Debt

 

 

 

June 30,

 

March 31,

 

December 31,

 

In millions

 

2016

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

 

Senior credit facilities

 

$

2,435

 

$

2,441

 

$

2,454

 

Accounts receivable programs

 

216

 

263

 

215

 

Senior notes

 

1,862

 

1,872

 

1,850

 

Variable interest entities

 

142

 

140

 

151

 

Other debt

 

94

 

111

 

125

 

 

 

 

 

 

 

 

 

Total debt - excluding affiliates

 

4,749

 

4,827

 

4,795

 

 

 

 

 

 

 

 

 

Total cash

 

383

 

218

 

269

 

 

 

 

 

 

 

 

 

Net debt- excluding affiliates

 

$

4,366

 

$

4,609

 

$

4,526

 

 

9



 

Table 7 — Summarized Statement of Cash Flows

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

In millions

 

2016

 

2016

 

2015

 

 

 

 

 

 

 

 

 

Total cash at beginning of period(a)

 

$

218

 

$

269

 

$

870

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

355

 

443

 

181

 

Net cash used in investing activities

 

(73

)

(174

)

(233

)

Net cash used in financing activities

 

(115

)

(153

)

(202

)

Effect of exchange rate changes on cash

 

(2

)

 

(7

)

Change in restricted cash

 

 

(2

)

(1

)

 

 

 

 

 

 

 

Total cash at end of period(a)

 

$

383

 

$

383

 

$

608

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

 

$

(68

)

$

(103

)

$

(115

)

Cash paid for income taxes

 

(16

)

(21

)

(30

)

Cash paid for capital expenditures

 

(90

)

(189

)

(296

)

Depreciation and amortization

 

109

 

209

 

194

 

 

 

 

 

 

 

 

 

Changes in primary working capital:

 

 

 

 

 

 

 

Accounts and notes receivable

 

$

15

 

$

(90

)

$

(142

)

Inventories

 

155

 

177

 

7

 

Accounts payable

 

(25

)

(56

)

12

 

 

 

 

 

 

 

 

 

Total cash provided by (used in) primary working capital

 

$

145

 

$

31

 

$

(123

)

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2016

 

2015

 

Free cash flow(3):

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

355

 

$

443

 

$

181

 

Capital expenditures

 

(90

)

(189

)

(296

)

All other investing activities

 

17

 

15

 

63

 

Excluding merger and acquisition activities(b)

 

 

 

(3

)

 

 

 

 

 

 

 

 

Total free cash flow

 

$

282

 

$

269

 

$

(55

)

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

325

 

$

599

 

$

670

 

Capital expenditures

 

(90

)

(189

)

(296

)

Interest

 

(68

)

(103

)

(115

)

Income taxes

 

(16

)

(21

)

(30

)

Primary working capital change

 

145

 

31

 

(123

)

Restructuring

 

(36

)

(56

)

(46

)

Pensions

 

(18

)

(38

)

(55

)

Maintenance & other

 

40

 

46

 

(60

)

 

 

 

 

 

 

 

 

Total free cash flow(3) 

 

$

282

 

$

269

 

$

(55

)

 


(a)   Includes restricted cash.

(b)   Represents “Acquisition of Business, net of cash acquired” and “Cash received from purchase price adjustment for business acquired”

 

10



 

Footnotes

 


(1)   We use 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) 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 adjusted EBITDA and adjusted net income.  Additional information with respect to our use of each of these financial measures follows:

 

Adjusted EBITDA, adjusted net income (loss) and adjusted diluted income (loss) per share, as used herein, are not necessarily comparable to other similarly titled measures of other companies.

 

Adjusted EBITDA is computed by eliminating the following from net income (loss):  (a) net income attributable to noncontrolling interest, net of tax; (b) interest; (c) income taxes; (d) depreciation and amortization; (e) acquisition and integration expenses, purchase accounting adjustments; (f) EBITDA from discontinued operations; (g) loss (gain) on disposition of businesses/assets; (h) loss on early extinguishment of debt; (i) certain legal settlements and related expenses; (j) plant incident remediation costs (credits), net; (k) amortization of pension and postretirement actuarial losses (gains); and (l) restructuring, impairment, plant closing and transition costs (credits).  The reconciliation of adjusted EBITDA to net income (loss) is set forth in Table 4 above.

 

Adjusted net income (loss) and adjusted diluted income (loss) per share are computed by eliminating the after tax impact of the following items from net income (loss): (a) net income attributable to noncontrolling interest; (b) acquisition and integration expenses, purchase accounting adjustments; (c) impact of certain foreign tax credit elections; (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) certain legal settlements and related expenses; (i) plant incident remediation costs (credits), net; (j) amortization of pension and postretirement actuarial losses (gains); and (k) restructuring, impairment, plant closing and transition costs (credits). The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach.  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) is set forth in Table 4 above.

 

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

 

(3)   Management internally uses a free cash flow measure: (a) to evaluate the Company’s liquidity, (b) to evaluate strategic investments, (c) to plan stock buyback and dividend levels and (d) to evaluate the Company’s ability to incur and service debt. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The Company defines free cash flow as cash flow provided by operating activities less cash flow used in investing activities, excluding merger and acquisition activities. Free cash flow is typically derived directly from the Company’s condensed consolidated statement of cash flows; however, it may be adjusted for items that affect comparability between periods.

 

About Huntsman:

 

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2015 revenues of approximately $10 billion.  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 approximately 30 countries and employ approximately 15,000 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.

 

11