Exhibit 99.1

 

News Release

 

 

Huntsman Announces Strong and Consistent Growth in Second Quarter 2018 Earnings

 

Second Quarter 2018 Highlights

 

·                 Net income was $623 million compared to $183 million in the prior year period and $350 million in the prior quarter.

 

·                 Adjusted EBITDA was $415 million compared to $299 million in the prior year period and $405 million in the prior quarter.

 

·                 Diluted income per share was $1.71 compared to $0.69 in the prior year period and $1.11 in the prior quarter.

 

·                 Adjusted diluted income per share was $1.01 compared to $0.59 in the prior year period and $0.96 in the prior quarter.

 

·                 Net cash provided by operating activities was $228 million. Free cash flow generation was $174 million.

 

·                 Balance sheet remains strong with a net leverage of 1.4x.

 

·                 Completed cumulative share repurchases of approximately $138 million through end of second quarter 2018.

 

		Three months ended									Six months ended
		June 30,						March 31,			June 30,
In millions, except per share amounts		2018			2017			2018			2018			2017
Revenues		$	2,404		$	2,054		$	2,295		$	4,699		$	3,986
Net income		$	623		$	183		$	350		$	973		$	275
Adjusted net income(1)		$	246		$	144		$	237		$	483		$	254
Diluted income per share		$	1.71		$	0.69		$	1.11		$	2.82		$	1.00
Adjusted diluted income per share(1)		$	1.01		$	0.59		$	0.96		$	1.98		$	1.04
Adjusted EBITDA(1)		$	415		$	299		$	405		$	820		$	559
Net cash provided by operating activities from continuing operations		$	228		$	207		$	111		$	339		$	277
Free cash flow(2)		$	174		$	154		$	56		$	230		$	177

 

See end of press release for footnote explanations

 

 

THE WOODLANDS, Texas — Huntsman Corporation (NYSE: HUN) today reported second quarter 2018 results with revenues of $2,404 million, net income of $623 million and adjusted EBITDA of $415 million.

 

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

 

“We had a strong second quarter that is wholly in line with the outlook we shared at our recent Investor Day, which focused on the opportunity for significant value creation. Our Polyurethanes business continues its growth in variants and systems and enjoys the back drop of good supply and demand fundamentals, foreseeable for the long term.  We completed our multiyear scheduled turnaround in Performance Products and each of our divisions continues to see a positive outlook. We delivered strong free cash flow and our balance sheet remains solidly within investment grade metrics.  We are committed to our balanced approach of delivering core growth and executing on sensible opportunities in our downstream businesses, share buybacks, and creating overall strong returns for shareholders.”

 

Segment Analysis for 2Q18 Compared to 2Q17

 

Polyurethanes

 

The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. MDI average selling prices increased in response to continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI sales volumes increased due to increased demand across most major markets. MTBE sales volumes increased due to the impact of maintenance outages during the second quarter of 2017. The increase in segment adjusted EBITDA was primarily due to higher MDI and MTBE margins.

 

Performance Products

 

The increase in revenues in our Performance Products segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to strong market conditions across several of our derivatives businesses and in response to higher raw materials costs. Sales volumes decreased primarily due to the impact of the planned maintenance outage at our Port Neches, Texas facility in the second quarter of 2018, partially offset by higher sales volumes in certain of our specialty amines and maleic anhydride businesses. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and higher fixed costs attributed to the planned maintenance outage, partially offset by stronger glycol market conditions within intermediates.

 

Advanced Materials

 

The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2018, compared to the same period in 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most markets in our core specialty business, but were partially offset by lower sales volumes in our wind market due to challenging industry conditions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher specialty sales volumes, partially offset by higher raw material and fixed costs.

 

Textile Effects

 

The increase in revenues in our Textile Effects segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most regions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted

 

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EBITDA was primarily due to higher sales volumes and higher average selling prices, partially offset by higher raw material costs.

 

Corporate, LIFO and other

 

For the three months ended June 30, 2018, segment adjusted EBITDA from Corporate and other for Huntsman Corporation increased $11 million to a loss of $39 million from a loss of $50 million in the same period in 2017, primarily due to a LIFO inventory valuation benefit.

 

Venator

 

Our former Pigments and Additives segment, now known as Venator, remains classified as held for sale on our balance sheet and treated as discontinued operations on our income statement.    Huntsman currently owns 53% of Venator’s outstanding shares.

 

Liquidity, Capital Resources and Outstanding Debt

 

During the quarter we generated free cash flow of $174 million compared to $154 million a year ago. As of June 30, 2018, we had $1,459 million of combined cash and unused borrowing capacity compared to $1,247 million as of December 31, 2017.  On May 21, 2018, we entered into a new $1.2 billion unsecured revolving credit facility that replaced our senior secured credit facility.

 

During the three months ended June 30, 2018, we spent $54 million on capital expenditures compared to $50 million in the same period of 2017. We expect to spend approximately $325 million on capital expenditures in 2018.

 

Through the end of the second quarter 2018, we have spent approximately $138 million to repurchase approximately 4.6 million shares.  As of the end of the second quarter 2018 we have approximately $862 million remaining on our existing multiyear share repurchase authorization.

 

Income Taxes

 

During the three months ended June 30, 2018, we recorded income tax expense of $4 million compared to $24 million during the same period in 2017.  In the second quarter 2018, our adjusted effective tax rate was 18%. We expect our 2018 adjusted effective tax rate will be approximately 20% - 22%.  We expect our long-term adjusted effective tax rate will be approximately 23% - 25%.

 

Earnings Conference Call Information

 

We will hold a conference call to discuss our second quarter 2018 financial results on Tuesday, July 31, 2018 at 11:00 a.m. ET.

 

Call-in numbers for the conference call:

U.S. participants	(888) 680 - 0878
International participants	(617) 213 - 4855
Passcode	445 723 85#

 

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=PUEAXYC3M

 

Webcast Information

 

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

 

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Replay Information

 

The conference call will be available for replay beginning July 31, 2018 and ending August 7, 2018.

 

Call-in numbers for the replay:

U.S. participants	(888) 286 - 8010
International participants	(617) 801 - 6888
Replay code	29385180

 

Upcoming Conferences

 

During the third quarter 2018 a member of management is expected to present at:

 

Jefferies Global Industrials Conference on August 7, 2018

UBS Global Chemicals & Paper and Packaging Conference on September 5, 2018

RBC Capital Markets Industrials Conference on September 6, 2018

 

A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.

 

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Table 1 — Results of Operations

 

		Three months ended						Six months ended
		June 30,						June 30,
In millions, except per share amounts		2018			2017			2018			2017
Revenues		$	2,404		$	2,054		$	4,699		$	3,986
Cost of goods sold		1,849			1,618			3,604			3,160
Gross profit		555			436			1,095			826
Operating expenses		254			220			496			439
Restructuring, impairment and plant closing costs		1			3			3			12
Expenses associated with the merger		1			6			1			6
Operating income		299			207			595			369
Interest expense		(29		)	(47		)	(56		)	(95		)
Equity in income of investment in unconsolidated affiliates		18			3			31			3
Loss on early extinguishment of debt		(3		)	(1		)	(3		)	(1		)
Other income, net		8			—			15			4
Income before income taxes		293			162			582			280
Income tax expense		(4		)	(24		)	(57		)	(43		)
Income from continuing operations		289			138			525			237
Income from discontinued operations, net of tax(3)		334			45			448			38
Net income		623			183			973			275
Net income attributable to noncontrolling interests, net of tax		(209		)	(16		)	(285		)	(32		)
Net income attributable to Huntsman Corporation		$	414		$	167		$	688		$	243
Adjusted EBITDA(1)		$	415		$	299		$	820		$	559
Adjusted net income(1)		$	246		$	144		$	483		$	254
Basic income per share		$	1.73		$	0.70		$	2.87		$	1.02
Diluted income per share		$	1.71		$	0.69		$	2.82		$	1.00
Adjusted diluted income per share(1)		$	1.01		$	0.59		$	1.98		$	1.04
Common share information:
Basic weighted average shares		239			238			240			238
Diluted weighted average shares		243			244			244			243
Diluted shares for adjusted diluted income per share		243			244			244			243

 

See end of press release for footnote explanations

 

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Table 2 — Results of Operations by Segment

 

		Three months ended								Six months ended
		June 30,						Better /		June 30,						Better /
In millions		2018			2017			(Worse)		2018			2017			(Worse)
Segment Revenues:
Polyurethanes		$	1,313		$	1,022		28	%	$	2,535		$	1,975		28	%
Performance Products		593			561			6	%	1,196			1,094			9	%
Advanced Materials		292			260			12	%	571			519			10	%
Textile Effects		227			205			11	%	427			393			9	%
Corporate and eliminations		(21		)	6			n/m		(30		)	5			n/m
Total		$	2,404		$	2,054		17	%	$	4,699		$	3,986		18	%
Segment Adjusted EBITDA(1):
Polyurethanes		$	269		$	167		61	%	$	530		$	311		70	%
Performance Products		94			102			(8	)%	196			186			5	%
Advanced Materials		62			56			11	%	121			110			10	%
Textile Effects		29			24			21	%	55			45			22	%
Corporate, LIFO and other		(39		)	(50		)	22	%	(82		)	(93		)	12	%
Total		$	415		$	299		39	%	$	820		$	559		47	%

 

n/m = not meaningful

 

See end of press release for footnote explanations

 

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Table 3 — Factors Impacting Sales Revenue

 

 

		Three months ended
		June 30, 2018 vs. 2017
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
		Currency		Rate		& Other		Volume(b)		Total
Polyurethanes		10	%	4	%	0	%	14	%	28	%
Polyurethanes, adj		10	%	4	%	5	%	6	%	25	%(c)(d)
Performance Products		4	%	3	%	5	%	(6	)%	6	%
Performance Products, adj		4	%	3	%	4	%	(3	)%	8	%(c)(e)
Advanced Materials		4	%	4	%	2	%	2	%	12	%
Textile Effects		3	%	3	%	(1	)%	6	%	11	%
Total Company		6	%	4	%	1	%	6	%	17	%
Total Company, adj		7	%	4	%	2	%	3	%	16	%(c)(d)(e)
		Six months ended
		June 30, 2018 vs. 2017
		Average Selling Price(a)
		Local		Exchange		Sales Mix		Sales
		Currency		Rate		& Other		Volume(b)		Total
Polyurethanes		12	%	5	%	(1	)%	12	%	28	%
Polyurethanes, adj		12	%	5	%	1	%	8	%	26	%(c)(d)
Performance Products		5	%	3	%	0	%	1	%	9	%
Performance Products, adj		6	%	3	%	(1	)%	2	%	10	%(c)(e)
Advanced Materials		3	%	6	%	2	%	(1	)%	10	%
Textile Effects		1	%	3	%	1	%	4	%	9	%
Total Company		7	%	5	%	(1	)%	7	%	18	%
Total Company, adj		7	%	5	%	(1	)%	6	%	17	%(c)(d)(e)

 

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

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

(c) Pro forma adjusted to exclude the impact from maintenance outages in 2Q17.

(d) Pro forma adjusted to exclude the impact from unplaned outages in 2Q18 at Rotterdam onset by third party constraints.

(e) Pro forma adjusted to exclude the impact from maintenance outages in 2Q18.

 

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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		2018			2017			2018			2017			2018			2017			2018			2017
Net income		$	623		$	183								$	623		$	183		$	2.57		$	0.75
Net income attributable to noncontrolling interests		(209		)	(16)									(209		)	(16		)	(0.86		)	(0.07		)
Net income attributable to Huntsman Corporation		414			167									414			167			1.71			0.69
Interest expense from continuing operations		29			47
Interest expense from discontinued operations(3)		11			—
Income tax expense from continuing operations		4			24			$	(4	)	$	(24	)
Income tax expense from discontinued operations(3)		84			21
Depreciation and amortization from continuing operations		83			79
Depreciation and amortization from discontinued operations(3)		—			29
Acquisition and integration expenses and purchase accounting adjustments		7			4			(2		)	—			5			4			0.02			0.02
EBITDA / Income from discontinued operations, net of tax(3)		(429		)	(95		)	N/A			N/A			(334		)	(45		)	(1.38		)	(0.18		)
Noncontrolling interest of discontinued operations(1)(3)		188			3			N/A			N/A			188			3			0.77			0.01
U.S. tax reform impact on tax expense		N/A			N/A			49			—			49			—			0.20			—
Release of significant income tax valuation allowances (a)		N/A			N/A			(95		)	—			(95		)	—			(0.39		)	—
Gain on disposition of businesses/assets		—			(8		)	—			—			—			(8		)	—			(0.03		)
Loss on early extinguishment of debt		3			1			(1		)	—			2			1			0.01			—
Expenses associated with merger, net of tax		1			6			—			—			1			6			—			0.02
Certain legal and other settlements and related expenses		1			1			—			—			1			1			—			—
Amortization of pension and postretirement actuarial losses		18			17			(4		)	(4		)	14			13			0.06			0.05
Restructuring, impairment and plant closing and transition costs		1			3			—			(1		)	1			2			—			0.01
Adjusted(1)		$	415		$	299		$	(57	)	$	(29	)	$	246		$	144		$	1.01		$	0.59
Adjusted income tax expense(1)														$	57		$	29
Net income attributable to noncontrolling interests, net of tax														209			16
Noncontrolling interest of discontinued operations(1)(3)														(188		)	(3		)
Adjusted pre-tax income(1)														$	324		$	186
Adjusted effective tax rate(4)														18		%	16		%
Effective tax rate														1		%	15		%

 

					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		2018			2018			2018			2018
Net income		$	350					$	350		$	1.42
Net income attributable to noncontrolling interests		(76		)				(76		)	(0.31		)
Net income attributable to Huntsman Corporation		274						274			1.11
Interest expense from continuing operations		27
Interest expense from discontinued operations(3)		9
Income tax expense from continuing operations		53			$	(53	)
Income tax expense from discontinued operations(3)		20
Depreciation and amortization from continuing operations		82
Acquisition and integration expenses and purchase accounting adjustments		1			—			1			—
EBITDA / Income from discontinued operations, net of tax(3)		(143		)	N/A			(114		)	(0.46		)
Noncontrolling interest of discontinued operations(1)(3)		55			N/A			55			0.22
Certain legal and other settlements and related costs		7			(1		)	6			0.02
Amortization of pension and postretirement actuarial losses		17			(4		)	13			0.05
Restructuring, impairment and plant closing and transition costs		3			(1		)	2			0.01
Adjusted(1)		$	405		$	(59	)	$	237		$	0.96
Adjusted income tax expense(1)								$	59
Net income attributable to noncontrolling interests, net of tax								76
Noncontrolling interest of discontinued operations(1)(3)								(55		)
Adjusted pre-tax income(1)								$	317
Adjusted effective tax rate(4)								19		%
Effective tax rate								18		%

 

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

 

								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		2018			2017			2018			2017			2018			2017			2018			2017
Net income		$	973		$	275								$	973		$	275		$	3.98		$	1.13
Net income attributable to noncontrolling interests		(285		)	(32		)							(285		)	(32		)	(1.17		)	(0.13		)
Net income attributable to Huntsman Corporation		688			243									688			243			2.82			1.00
Interest expense from continuing operations		56			95
Interest expense from discontinued operations(3)		20			—
Income tax expense from continuing operations		57			43			(57		)	(43		)
Income tax expense from discontinued operations(3)		104			24
Depreciation and amortization from continuing operations		165			155
Depreciation and amortization from discontinued operations(3)		—			59
Acquisition and integration expenses and purchase accounting adjustments		8			7			(2		)	(1		)	6			6			0.02			0.02
EBITDA / Income from discontinued operations, net of tax(3)		(572		)	(121		)	N/A			N/A			(448		)	(38		)	(1.83		)	(0.16		)
Noncontrolling interest of discontinued operations(1)(3)		243			6			N/A			N/A			243			6			1.00			0.02
U.S. tax reform impact on tax expense		N/A			N/A			49			—			49			—			0.20			—
Release of significant income tax valuation allowances (a)		N/A			N/A			(95		)	—			(95		)	—			(0.39		)	—
Gain on disposition of businesses/assets		—			(8		)	—			—			—			(8		)	—			(0.03		)
Loss on early extinguishment of debt		3			1			(1		)	—			2			1			0.01			—
Expenses associated with merger		1			6			—			—			1			6			—			0.02
Certain legal and other settlements and related expenses		8			1			(1		)	—			7			1			0.03			—
Amortization of pension and postretirement actuarial losses		35			36			(8		)	(8		)	27			28			0.11			0.12
Restructuring, impairment and plant closing and transition costs		4			12			(1		)	(3		)	3			9			0.01			0.04
Adjusted(1)		$	820		$	559		$	(116	)	$	(55	)	$	483		$	254		$	1.98		$	1.04
Adjusted income tax expense(1)														$	116		$	55
Net income attributable to noncontrolling interests, net of tax														285			32
Noncontrolling interest of discontinued operations(1)(3)														(243		)	(6		)
Adjusted pre-tax income(1)														$	641		$	335
Adjusted effective tax rate(4)														18		%	16		%
Effective tax rate														10		%	15		%

 

(a)    During the six months ended June 30, 2018, we released $95 million of valuation allowances in Switzerland and the U.K. We eliminated the effect of this significant change in tax valuation allowances from our presentation of adjusted net income to allow investors to better compare our ongoing financial performance from period to period. We do not adjust for insignificant changes in tax valuation allowances because we do not believe this provides more meaningful information than is provided under GAAP.

 

See end of press release for footnote explanations

 

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