Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

OPERATING SEGMENT INFORMATION

OPERATING SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2018

19. 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 four operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. We have organized our business and derived our operating segments around differences in product lines. In connection with the Venator IPO in August 2017, we separated the P&A Business and, beginning in the third quarter of 2017, we reported the results of operations of the P&A Business as discontinued operations in our condensed consolidated financial statements for all periods presented. See “Note 3. Discontinued Operations.”

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

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
	ended
	March 31,
	2018		2017
Revenues:
Polyurethanes	$	1,222	$	953
Performance Products		603		533
Advanced Materials		279		259
Textile Effects		200		188
Corporate and eliminations		(9)		(1)
Total	$	2,295	$	1,932

Huntsman Corporation:
Segment adjusted EBITDA(1):
Polyurethanes	$	261	$	144
Performance Products		102		84
Advanced Materials		59		54
Textile Effects		26		21
Corporate and other(2)		(43)		(43)
Total		405		260
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(27)		(48)
Interest expense—discontinued operations		(9)		—
Income tax expense—continuing operations		(53)		(19)
Income tax expense—discontinued operations		(20)		(3)
Depreciation and amortization—continuing operations		(82)		(76)
Depreciation and amortization—discontinued operations		—		(30)
Net income attributable to noncontrolling interests		76		16
Other adjustments:
Business acquisition and integration expenses		(1)		(3)
EBITDA from discontinued operations		143		26
Noncontrolling interest of discontinued operations		(55)		(3)
Certain legal and other settlements and related expenses		(7)		—
Amortization of pension and postretirement actuarial losses		(17)		(19)
Restructuring, impairment and plant closing and transition costs		(3)		(9)
Net income	$	350	$	92


	Three months
	ended
	March 31,
	2018		2017
Huntsman International:
Segment adjusted EBITDA(1):
Polyurethanes	$	261	$	144
Performance Products		102		84
Advanced Materials		59		54
Textile Effects		26		21
Corporate and other(2)		(40)		(41)
Total		408		262
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(32)		(51)
Interest expense—discontinued operations		(9)		—
Income tax expense—continuing operations		(52)		(19)
Income tax expense—discontinued operations		(20)		(3)
Depreciation and amortization—continuing operations		(81)		(74)
Depreciation and amortization—discontinued operations		—		(30)
Net income attributable to noncontrolling interests		76		16
Other adjustments:
Business acquisition and integration expenses		(1)		(3)
EBITDA from discontinued operations		143		25
Noncontrolling interest of discontinued operations		(55)		(3)
Certain legal and other settlements and related expenses		(7)		—
Amortization of pension and postretirement actuarial losses		(20)		(20)
Restructuring, impairment and plant closing and transition costs		(3)		(9)
Net income	$	347	$	91

(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) EBITDA from discontinued operations; (c) noncontrolling interest of discontinued operations; (d) certain legal and other settlements and related expenses; (e) amortization of pension and postretirement actuarial losses; and (f) restructuring, impairment and plant closing and transition costs.

(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.