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, 2020

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. Beginning in the third quarter of 2019, we reported the results of our Chemical Intermediates Businesses as discontinued operations in our condensed consolidated financial statements for all periods presented. See “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses.”

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


Segment		Products
Polyurethanes		MDI, polyols, TPU and other polyurethane-related products
Performance Products		Specialty amines, ethyleneamines, maleic anhydride 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 our reportable operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA from continuing operations for each of our reportable operating segments are as follows (dollars in millions):


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues:
Polyurethanes	$	936	$	993	$	2,554	$	2,931
Performance Products		238		281		758		880
Advanced Materials		199		256		632		803
Textile Effects		142		179		424		583
Corporate and eliminations		(5)		(22)		(18)		(57)
Total	$	1,510	$	1,687	$	4,350	$	5,140

Huntsman Corporation:
Segment adjusted EBITDA(1):
Polyurethanes	$	156	$	146	$	271	$	426
Performance Products		36		38		123		125
Advanced Materials		25		51		103		159
Textile Effects		8		16		24		66
Corporate and other(2)		(37)		(36)		(114)		(112)
Total		188		215		407		664
Reconciliation of adjusted EBITDA to net income:
Interest expense, net—continuing operations		(24)		(27)		(63)		(86)
Income tax expense—continuing operations		(15)		(30)		(9)		(113)
Income tax expense—discontinued operations		—		(25)		(239)		(44)
Depreciation and amortization—continuing operations		(70)		(65)		(206)		(201)
Depreciation and amortization—discontinued operations		—		(13)		—		(59)
Net income attributable to noncontrolling interests		9		11		15		31
Other adjustments:
Business acquisition and integration expenses and purchase accounting inventory adjustments		(9)		(3)		(30)		(4)
EBITDA from discontinued operations(3)		—		106		1,021		229
Fair value adjustments to Venator investment		6		(148)		(100)		(90)
Loss on early extinguishment of debt		—		—		—		(23)
Certain legal and other settlements and related income (expenses)		4		(1)		(2)		(1)
Gain on sale of businesses/assets		—		—		1		—
Income from transition services arrangements		1		—		6		—
Certain nonrecurring information technology project implementation costs		(1)		(1)		(3)		(1)
Amortization of pension and postretirement actuarial losses		(20)		(16)		(57)		(49)
Plant incident remediation costs		—		(5)		(1)		(5)
Restructuring, impairment and plant closing and transition (costs) credits		(12)		43		(34)		42
Net income	$	57	$	41	$	706	$	290


	Three months				Nine months
	ended				ended
	September 30,				September 30,
	2020		2019		2020		2019
Huntsman International:
Segment adjusted EBITDA(1):
Polyurethanes	$	156	$	146	$	271	$	426
Performance Products		36		38		123		125
Advanced Materials		25		51		103		159
Textile Effects		8		16		24		66
Corporate and other(2)		(36)		(35)		(110)		(108)
Total		189		216		411		668
Reconciliation of adjusted EBITDA to net income:
Interest expense, net—continuing operations		(24)		(31)		(65)		(99)
Income tax expense—continuing operations		(15)		(29)		(9)		(110)
Income tax expense—discontinued operations		—		(25)		(239)		(44)
Depreciation and amortization—continuing operations		(70)		(65)		(206)		(201)
Depreciation and amortization—discontinued operations		—		(13)		—		(59)
Net income attributable to noncontrolling interests		9		11		15		31
Other adjustments:
Business acquisition and integration expenses and purchase accounting inventory adjustments		(9)		(3)		(30)		(4)
EBITDA from discontinued operations(3)		—		106		1,021		229
Fair value adjustments to Venator investment		6		(148)		(100)		(90)
Loss on early extinguishment of debt		—		—		—		(23)
Certain legal and other settlements and related income (expenses)		4		(1)		(2)		(1)
Gain on sale of businesses/assets		—		—		1		—
Income from transition services arrangements		1		—		6		—
Certain nonrecurring information technology project implementation costs		(1)		(1)		(3)		(1)
Amortization of pension and postretirement actuarial losses		(20)		(17)		(59)		(52)
Plant incident remediation costs		—		(5)		(1)		(5)
Restructuring, impairment and plant closing and transition (costs) credits		(12)		43		(34)		42
Net income	$	58	$	38	$	706	$	281

(1)

We use segment adjusted EBITDA as the measure of each segment’s profit or loss. We believe that segment adjusted EBITDA more accurately reflects what the chief operating decision maker uses to make decisions about resources to be allocated to the segments and assess their financial performance. Segment adjusted EBITDA is defined as net (loss) 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 and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) (loss) gain on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation costs; and (k) restructuring, impairment, 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 and gains and losses on the disposition of corporate assets.

(3)	Includes the gain on the sale of our Chemical Intermediates Businesses in 2020.