Exhibit 99.1

 

News Release

 

 

FOR IMMEDIATE RELEASE

 

Media:

 

Investor Relations:

July 31, 2018

 

Gary Chapman

 

Ivan Marcuse

The Woodlands, TX

 

(281) 719-4324

 

(281) 719-4637

NYSE: HUN

 

 

 

 

 

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

 

2



 

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.

 

3



 

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.

 

4



 

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

 

5



 

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

 

6



 

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.

 

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

 

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

%

 

 

 

8



 

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

 

9



 

Table 5 — Selected Balance Sheet Items

 

 

 

June 30,

 

March 31,

 

December 31,

 

In millions

 

2018

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Cash

 

$

409

 

$

453

 

$

481

 

Accounts and notes receivable, net

 

1,377

 

1,407

 

1,283

 

Inventories

 

1,178

 

1,203

 

1,073

 

Other current assets

 

251

 

262

 

262

 

Current assets held for sale

 

3,158

 

3,060

 

2,880

 

Property, plant and equipment, net

 

3,014

 

3,117

 

3,098

 

Other noncurrent assets

 

1,667

 

1,201

 

1,167

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,054

 

$

10,703

 

$

10,244

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

993

 

$

993

 

$

964

 

Other current liabilities

 

469

 

533

 

569

 

Current portion of debt

 

255

 

36

 

40

 

Current liabilities held for sale

 

1,578

 

1,721

 

1,692

 

Long-term debt

 

2,311

 

2,298

 

2,258

 

Other noncurrent liabilities

 

1,378

 

1,353

 

1,350

 

Total equity

 

4,070

 

3,769

 

3,371

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

11,054

 

$

10,703

 

$

10,244

 

 

Table 6 — Outstanding Debt

 

 

 

June 30,

 

March 31,

 

December 31,

 

In millions

 

2018

 

2018

 

2017

 

 

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

 

Credit facility

 

$

225

 

$

 

$

 

Accounts receivable programs

 

268

 

184

 

180

 

Senior notes

 

1,906

 

1,964

 

1,927

 

Variable interest entities

 

97

 

105

 

107

 

Other debt

 

70

 

81

 

84

 

 

 

 

 

 

 

 

 

Total debt - excluding affiliates

 

2,566

 

2,334

 

2,298

 

 

 

 

 

 

 

 

 

Total cash

 

409

 

453

 

481

 

 

 

 

 

 

 

 

 

Net debt - excluding affiliates(5)

 

$

2,157

 

$

1,881

 

$

1,817

 

 

 

 

 

 

 

 

 

LTM Adjusted EBITDA(1)

 

$

1,520

 

$

1,404

 

$

1,259

 

LTM Net income

 

950

 

834

 

636

 

 

 

 

 

 

 

 

 

Net debt - excluding affiliates / LTM Adjusted EBITDA(1)(5)

 

1.4x

 

1.3x

 

1.4x

 

Total debt - excluding affiliates / LTM Net income

 

2.7x

 

2.8x

 

3.6x

 

 

10



 

Table 7 – Summarized Statement of Cash Flows

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

In millions

 

2018

 

2017

 

2018

 

2017

 

 

 

 

 

 

 

 

 

 

 

Total cash at beginning of period(a)

 

$

676

 

$

469

 

$

719

 

$

425

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities - continuing operations

 

228

 

207

 

339

 

277

 

Net cash provided by operating activities - discontinued operations(3)

 

249

 

94

 

301

 

117

 

Net cash used in investing activities - continuing operations

 

(411

)

(48

)

(480

)

(95

)

Net cash (used in) provided by investing activities - discontinued operations(3)

 

(94

)

(12

)

(161

)

12

 

Net cash provided by (used in) financing activities

 

150

 

(193

)

64

 

(224

)

Effect of exchange rate changes on cash

 

(35

)

3

 

(19

)

8

 

Total cash at end of period(a)

 

$

763

 

$

520

 

$

763

 

$

520

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information - continuing operations:

 

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

(47

)

$

(56

)

$

(59

)

$

(92

)

Cash (paid) received for income taxes

 

(51

)

65

 

(77

)

57

 

Cash paid for capital expenditures

 

(54

)

(50

)

(109

)

(101

)

Depreciation and amortization

 

83

 

79

 

165

 

155

 

 

 

 

 

 

 

 

 

 

Changes in primary working capital:

 

 

 

 

 

 

 

 

 

Accounts and notes receivable

 

10

 

(65

)

(94

)

(120

)

Inventories

 

(2

)

(28

)

(107

)

(137

)

Accounts payable

 

14

 

(4

)

50

 

79

 

Total cash received from (used in) primary working capital

 

$

22

 

$

(97

)

$

(151

)

$

(178

)

 

 

 

Three months ended

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

 

2018

 

2017

 

2018

 

2017

 

Free cash flow(2):

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

228

 

$

207

 

$

339

 

$

277

 

Capital expenditures

 

(54

)

(50

)

(109

)

(101

)

All other investing activities, excluding acquisition

 

 

 

 

 

 

 

 

 

and disposition activities(b)

 

(1

)

(3

)

(1

)

1

 

Non-recurring merger costs(c)

 

1

 

 

1

 

 

Total free cash flow

 

$

174

 

$

154

 

$

230

 

$

177

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

415

 

$

299

 

$

820

 

$

559

 

Capital expenditures

 

(54

)

(50

)

(109

)

(101

)

Capital reimbursements

 

1

 

 

2

 

1

 

Interest

 

(47

)

(56

)

(59

)

(92

)

Income taxes

 

(51

)

65

 

(77

)

57

 

Primary working capital change

 

22

 

(97

)

(151

)

(178

)

Restructuring

 

(6

)

(10

)

(6

)

(19

)

Pensions

 

(28

)

(22

)

(59

)

(37

)

Maintenance & other

 

(78

)

25

 

(131

)

(13

)

Total free cash flow(2) 

 

$

174

 

$

154

 

$

230

 

$

177

 

 


(a)    Includes restricted cash and cash held in discontinued operations.

(b)    Represents “Acquisition of business, net of cash acquired”,  “Cash received from purchase price adjustment for business acquired”, and “Proceeds from sale of business/assets”.

 

11



 


Footnotes

 

(1)    We use adjusted EBITDA to measure the operating performance of our business and for planning and evaluating the performance of our business segments.  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 (loss).  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 interests, net of tax; (b) interest; (c) income taxes; (d) depreciation and amortization (e) amortization of pension and postretirement actuarial losses (gains); (f) restructuring, impairment and plant closing costs (credits); and further adjusted for certain other items set forth in reconciliation of adjusted EBITDA to net income (loss) 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) amortization of pension and postretirement actuarial losses (gains); (c) restructuring, impairment and plant closing costs (credits); and further adjusted for certain other items set forth in reconciliation of adjusted EBITDA to net income (loss) in Table 4 above.  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 provide reconciliations for adjusted EBITDA, adjusted net income (loss) or adjusted diluted income (loss) per share on a forward-looking basis because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, (a) business acquisition and integration expenses and purchase accounting adjustments, (b) merger costs, and (c) certain legal and other settlements and related costs. Each of such adjustments has not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

 

(2)    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 acquisition/disposition activities and non-recurring separation costs. 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.

 

(3)    During the third quarter of 2017 we separated our Pigments and Additives division through an Initial Public Offering of Venator Materials PLC;  Additionally, during the first quarter 2010 we closed our Australian styrenics operations.  Results from these associated businesses are treated as discontinued operations.

 

(4)    We believe adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. In our view, effective tax rate is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate.

 

The reconciliation of historical adjusted effective tax rate and effective tax rate is set forth in Table 4 above. We do not provide reconciliations for adjusted effective tax rate on a forward-looking basis because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as, but not limited to, (a) business acquisition and integration expenses, (b) merger costs, and (c) certain legal and other settlements and related costs. Each of such adjustments has not yet occurred, are out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.

 

(5)    Net debt is a measure we use to monitor how much debt we have after taking into account our total cash. We use it as an indicator of our overall financial position, and calculate it by taking our total debt, including the current portion, and subtracting total cash.

 

12



 

About Huntsman:

 

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2017 revenues more than $8 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 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within our four distinct business divisions. For more information about Huntsman, please visit the company’s website at www.huntsman.com.

 

Social Media:

 

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

 

Forward-Looking Statements:

 

Certain information in this release constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 under the caption “Risk Factors” 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, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of Huntsman’s operations, including any delay of, or other negative developments affecting the ability to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, and other 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.

 

13