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

6 Months Ended

Jun. 30, 2018

20. 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 4. 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				Six months
	ended				ended
	June 30,				June 30,
	2018		2017		2018		2017
Revenues:
Polyurethanes	$	1,313	$	1,022	$	2,535	$	1,975
Performance Products		593		561		1,196		1,094
Advanced Materials		292		260		571		519
Textile Effects		227		205		427		393
Corporate and eliminations		(21)		6		(30)		5
Total	$	2,404	$	2,054	$	4,699	$	3,986

Huntsman Corporation:
Segment adjusted EBITDA(1):
Polyurethanes	$	269	$	167	$	530	$	311
Performance Products		94		102		196		186
Advanced Materials		62		56		121		110
Textile Effects		29		24		55		45
Corporate and other(2)		(39)		(50)		(82)		(93)
Total		415		299		820		559
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(29)		(47)		(56)		(95)
Interest expense—discontinued operations		(11)		—		(20)		—
Income tax expense—continuing operations		(4)		(24)		(57)		(43)
Income tax expense—discontinued operations		(84)		(21)		(104)		(24)
Depreciation and amortization—continuing operations		(83)		(79)		(165)		(155)
Depreciation and amortization—discontinued operations		—		(29)		—		(59)
Net income attributable to noncontrolling interests		209		16		285		32
Other adjustments:
Acquisition and integration expenses and purchase accounting adjustments		(7)		(4)		(8)		(7)
Merger costs		(1)		(6)		(1)		(6)
EBITDA from discontinued operations		429		95		572		121
Noncontrolling interest of discontinued operations		(188)		(3)		(243)		(6)
Loss on early extinguishment of debt		(3)		(1)		(3)		(1)
Certain legal and other settlements and related expenses		(1)		(1)		(8)		(1)
Gain on sale of businesses/assets		—		8		—		8
Amortization of pension and postretirement actuarial losses		(18)		(17)		(35)		(36)
Restructuring, impairment and plant closing and transition costs		(1)		(3)		(4)		(12)
Net income	$	623	$	183	$	973	$	275


	Three months				Six months
	ended				ended
	June 30,				June 30,
	2018		2017		2018		2017
Huntsman International:
Segment adjusted EBITDA(1):
Polyurethanes	$	269	$	167	$	530	$	311
Performance Products		94		102		196		186
Advanced Materials		62		56		121		110
Textile Effects		29		24		55		45
Corporate and other(2)		(39)		(50)		(79)		(91)
Total		415		299		823		561
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(34)		(51)		(66)		(102)
Interest expense—discontinued operations		(11)		—		(20)		—
Income tax expense—continuing operations		(3)		(24)		(55)		(43)
Income tax expense—discontinued operations		(84)		(21)		(104)		(24)
Depreciation and amortization—continuing operations		(83)		(75)		(164)		(149)
Depreciation and amortization—discontinued operations		—		(29)		—		(59)
Net income attributable to noncontrolling interests		209		16		285		32
Other adjustments:
Acquisition and integration expenses and purchase accounting adjustments		(7)		(4)		(8)		(7)
Merger costs		(1)		(6)		(1)		(6)
EBITDA from discontinued operations		429		94		572		119
Noncontrolling interest of discontinued operations		(188)		(3)		(243)		(6)
Loss on early extinguishment of debt		(3)		(1)		(3)		(1)
Certain legal and other settlements and related expenses		(1)		(1)		(8)		(1)
Gain on sale of businesses/assets		—		8		—		8
Amortization of pension and postretirement actuarial losses		(17)		(17)		(37)		(37)
Restructuring, impairment and plant closing and transition costs		(1)		(3)		(4)		(12)
Net income	$	620	$	182	$	967	$	273

(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) acquisition and integration expenses and purchase accounting adjustments; (b) merger costs; (c) EBITDA from discontinued operations; (d) noncontrolling interest of discontinued operations; (e) loss on early extinguishment of debt; (f) certain legal and other settlements and related expenses; (g) gain on sale of businesses/assets; (h) amortization of pension and postretirement actuarial losses; (i) restructuring, impairment and plant closing and transition costs; (j) plant incident remediation costs; and (k) U.S. Tax Reform Act impact on noncontrolling interest.

(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.