Quarterly report pursuant to Section 13 or 15(d)

OPERATING SEGMENT INFORMATION

v3.7.0.1
OPERATING SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2017
OPERATING SEGMENT INFORMATION  
OPERATING SEGMENT INFORMATION

18. OPERATING SEGMENT INFORMATION

 

We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have five operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects and Pigments and Additives. We have organized our business and derived our operating segments around differences in product lines.

 

The major products of each reportable operating segment are as follows:

 

Segment

    

Products

Polyurethanes

 

MDI, PO, polyols, PG, TPU, aniline and MTBE

Performance Products

 

amines, surfactants, LAB, maleic anhydride, other performance chemicals, EG, olefins and technology licenses

Advanced Materials

 

basic liquid and solid epoxy resins; specialty resin compounds; cross‑linking, matting and curing agents; epoxy, acrylic and polyurethane‑based formulations

Textile Effects

 

textile chemicals, dyes and digital inks

Pigments and Additives

 

titanium dioxide, functional additives, color pigments, timber treatment and water treatment chemicals

 

Sales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The adjusted EBITDA of operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA for each of our reportable operating segments are as follows (dollars in millions):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

Six months

 

 

ended

 

ended

 

 

June 30, 

 

June 30, 

 

    

2017

    

2016

    

2017

    

2016

Revenues:

    

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

1,022

 

$

976

 

$

1,975

 

$

1,812

Performance Products

 

 

561

 

 

566

 

 

1,094

 

 

1,102

Advanced Materials

 

 

260

 

 

261

 

 

519

 

 

527

Textile Effects

 

 

205

 

 

198

 

 

393

 

 

383

Pigments and Additives

 

 

562

 

 

576

 

 

1,099

 

 

1,116

Corporate and eliminations

 

 

 6

 

 

(33)

 

 

 5

 

 

(41)

Total

 

$

2,616

 

$

2,544

 

$

5,085

 

$

4,899

 

 

 

 

 

 

 

 

 

 

 

 

 

Huntsman Corporation:

 

 

 

 

 

 

 

 

 

 

 

 

Segment adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

167

 

$

171

 

$

311

 

$

302

Performance Products

 

 

102

 

 

86

 

 

186

 

 

178

Advanced Materials

 

 

56

 

 

58

 

 

110

 

 

118

Textile Effects

 

 

24

 

 

24

 

 

45

 

 

42

Pigments and Additives

 

 

114

 

 

31

 

 

183

 

 

46

Corporate and other(2)

 

 

(50)

 

 

(45)

 

 

(93)

 

 

(87)

Total

 

 

413

 

 

325

 

 

742

 

 

599

Reconciliation of adjusted EBITDA to net income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(47)

 

 

(50)

 

 

(95)

 

 

(100)

Income tax expense—continuing operations

 

 

(45)

 

 

(32)

 

 

(68)

 

 

(59)

Income tax benefit—discontinued operations

 

 

 —

 

 

 —

 

 

 1

 

 

 1

Depreciation and amortization

 

 

(108)

 

 

(109)

 

 

(214)

 

 

(209)

Net income attributable to noncontrolling interests

 

 

16

 

 

 7

 

 

32

 

 

13

Other adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Business acquisition and integration expenses

 

 

(4)

 

 

(4)

 

 

(7)

 

 

(13)

Merger costs

 

 

(6)

 

 

 —

 

 

(6)

 

 

 —

EBITDA of discontinued operations

 

 

(1)

 

 

(1)

 

 

(3)

 

 

(3)

Loss on early extinguishment of debt

 

 

(1)

 

 

(2)

 

 

(1)

 

 

(2)

Certain legal settlements and related expenses

 

 

(1)

 

 

 —

 

 

(1)

 

 

(1)

Gain on sale of assets

 

 

 9

 

 

 —

 

 

 9

 

 

 —

Amortization of pension and postretirement actuarial losses

 

 

(22)

 

 

(17)

 

 

(44)

 

 

(33)

Net plant incident credits (costs)

 

 

 2

 

 

 7

 

 

(3)

 

 

 6

Restructuring, impairment and plant closing costs

 

 

(10)

 

 

(30)

 

 

(46)

 

 

(43)

Business separation expenses

 

 

(12)

 

 

 —

 

 

(21)

 

 

 —

Net income

 

$

183

 

$

94

 

$

275

 

$

156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

Six months

 

 

ended

 

ended

 

 

June 30, 

 

June 30, 

 

    

2017

    

2016

    

2017

    

2016

Huntsman International:

 

 

 

 

 

 

 

 

 

 

 

 

Segment adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

167

 

$

171

 

$

311

 

$

302

Performance Products

 

 

102

 

 

86

 

 

186

 

 

178

Advanced Materials

 

 

56

 

 

58

 

 

110

 

 

118

Textile Effects

 

 

24

 

 

24

 

 

45

 

 

42

Pigments and Additives

 

 

114

 

 

31

 

 

183

 

 

46

Corporate and other(2)

 

 

(50)

 

 

(43)

 

 

(91)

 

 

(85)

Total

 

 

413

 

 

327

 

 

744

 

 

601

Reconciliation of adjusted EBITDA to net income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(51)

 

 

(53)

 

 

(102)

 

 

(106)

Income tax expense—continuing operations

 

 

(44)

 

 

(31)

 

 

(67)

 

 

(58)

Income tax benefit—discontinued operations

 

 

 —

 

 

 —

 

 

 1

 

 

 1

Depreciation and amortization

 

 

(104)

 

 

(106)

 

 

(208)

 

 

(203)

Net income attributable to noncontrolling interests

 

 

16

 

 

 7

 

 

32

 

 

13

Other adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Business acquisition and integration expenses

 

 

(4)

 

 

(4)

 

 

(7)

 

 

(13)

Merger costs

 

 

(6)

 

 

 —

 

 

(6)

 

 

 —

EBITDA of discontinued operations

 

 

(1)

 

 

(1)

 

 

(3)

 

 

(3)

Loss on early extinguishment of debt

 

 

(1)

 

 

(2)

 

 

(1)

 

 

(2)

Certain legal settlements and related expenses

 

 

(1)

 

 

 —

 

 

(1)

 

 

(1)

Gain on sale of assets

 

 

 9

 

 

 —

 

 

 9

 

 

 —

Amortization of pension and postretirement actuarial losses

 

 

(24)

 

 

(21)

 

 

(48)

 

 

(37)

Net plant incident credits (costs)

 

 

 2

 

 

 7

 

 

(3)

 

 

 6

Restructuring, impairment and plant closing costs

 

 

(10)

 

 

(30)

 

 

(46)

 

 

(43)

Business separation expenses

 

 

(12)

 

 

 —

 

 

(21)

 

 

 —

Net income

 

$

182

 

$

$ 93

 

$

$ 273

 

$

$ 155

(1)

Segment adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses; (b) merger costs; (c) EBITDA from discontinued operations; (d) loss on early extinguishment of debt; (e) certain legal settlements and related expenses; (f) gain on sale of assets; (g) amortization of pension and postretirement actuarial losses; (h) net plant incident credits (costs); (i) restructuring, impairment and plant closing costs; and (j) business separation expenses.

 

(2)

Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense, benzene sales and gains and losses on the disposition of corporate assets.