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

9 Months Ended

Sep. 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				Nine months
	ended				ended
	September 30,				September 30,
	2018		2017		2018		2017
Revenues:
Polyurethanes	$	1,355	$	1,197	$	3,890	$	3,172
Performance Products		599		501		1,795		1,595
Advanced Materials		279		263		850		782
Textile Effects		204		193		631		586
Corporate and eliminations		7		15		(23)		20
Total	$	2,444	$	2,169	$	7,143	$	6,155

Huntsman Corporation:
Segment adjusted EBITDA(1):
Polyurethanes	$	247	$	245	$	777	$	556
Performance Products		93		63		289		249
Advanced Materials		56		56		177		166
Textile Effects		25		19		80		64
Corporate and other(2)		(47)		(43)		(129)		(136)
Total		374		340		1,194		899
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(30)		(39)		(86)		(134)
Interest expense—discontinued operations		(10)		(8)		(30)		(8)
Income tax expense—continuing operations		(27)		(35)		(84)		(78)
Income tax benefit (expense)—discontinued operations		52		(17)		(52)		(41)
Depreciation and amortization—continuing operations		(85)		(80)		(250)		(235)
Depreciation and amortization—discontinued operations		—		(9)		—		(68)
Net income attributable to noncontrolling interests		3		32		288		64
Other adjustments:
Acquisition and integration expenses and purchase accounting adjustments		(2)		(10)		(10)		(17)
Merger costs		(1)		(12)		(2)		(18)
EBITDA from discontinued operations		(279)		97		293		218
Noncontrolling interest of discontinued operations		21		(12)		(222)		(18)
Loss on early extinguishment of debt		—		(35)		(3)		(36)
Certain legal and other settlements and related expenses		(1)		—		(9)		(1)
Gain on sale of businesses/assets		—		—		—		8
Amortization of pension and postretirement actuarial losses		(18)		(19)		(53)		(55)
Plant incident remediation costs		—		(13)		—		(13)
Restructuring, impairment and plant closing and transition costs		(5)		(1)		(9)		(13)
Net (loss) income	$	(8)	$	179	$	965	$	454


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2018		2017		2018		2017
Huntsman International:
Segment adjusted EBITDA(1):
Polyurethanes	$	247	$	245	$	777	$	556
Performance Products		93		63		289		249
Advanced Materials		56		56		177		166
Textile Effects		25		19		80		64
Corporate and other(2)		(46)		(41)		(125)		(132)
Total		375		342		1,198		903
Reconciliation of adjusted EBITDA to net income:
Interest expense—continuing operations		(36)		(44)		(102)		(146)
Interest expense—discontinued operations		(10)		(8)		(30)		(8)
Income tax expense—continuing operations		(26)		(34)		(81)		(77)
Income tax benefit (expense)—discontinued operations		52		(17)		(52)		(41)
Depreciation and amortization—continuing operations		(83)		(78)		(247)		(227)
Depreciation and amortization—discontinued operations		—		(9)		—		(68)
Net income attributable to noncontrolling interests		3		32		288		64
Other adjustments:
Acquisition and integration expenses and purchase accounting adjustments		(2)		(10)		(10)		(17)
Merger costs		(1)		(12)		(2)		(18)
EBITDA from discontinued operations		(279)		96		293		215
Noncontrolling interest of discontinued operations		21		(12)		(222)		(18)
Loss on early extinguishment of debt		—		(35)		(3)		(36)
Certain legal and other settlements and related expenses		(1)		—		(9)		(1)
Gain on sale of businesses/assets		—		—		—		8
Amortization of pension and postretirement actuarial losses		(19)		(20)		(56)		(57)
Plant incident remediation costs		—		(13)		—		(13)
Restructuring, impairment and plant closing and transition costs		(5)		(1)		(9)		(13)
Net (loss) income	$	(11)	$	177	$	956	$	450

(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) plant incident remediation costs; (j) restructuring, impairment and plant closing and transition 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.