Huntsman announces strong and consistent growth in Second Quarter 2018 Earnings

Second Quarter 2018 Highlights

  • Net income was USD 623 million compared to USD 183 million in the prior year period and USD 350 million in the prior quarter.
  • Adjusted EBITDA was USD 415 million compared to USD 299 million in the prior year period and USD 405 million in the prior quarter.
  • Diluted income per share was USD 1.71 compared to USD 0.69 in the prior year period and USD 1.11 in the prior quarter.
  • Adjusted diluted income per share was USD 1.01 compared to USD 0.59 in the prior year period and USD 0.96 in the prior quarter
  • Net cash provided by operating activities was USD 228 million. Free cash flow generation was USD 174 million.
  • Balance sheet remains strong with a net leverage of 1.4x.
  • Completed cumulative share repurchases of approximately USD 138 million through end of second quarter 2018.

 

Huntsman Corporation reported on July 31 second quarter 2018 results with revenues of USD 2404 million, net income of USD 623 million and adjusted EBITDA of USD 415 million.

Peter R. Huntsman, Chairman, President and CEO, commented: “We had a strong second quarter that is wholly in line with the outlook we shared at our recent Investor Day, which focused on the opportunity for significant value creation. Our Polyurethanes business continues its growth in variants and systems and enjoys the back drop of good supply and demand fundamentals, foreseeable for the long term.  We completed our multiyear scheduled turnaround in Performance Products and each of our divisions continues to see a positive outlook. We delivered strong free cash flow and our balance sheet remains solidly within investment grade metrics. We are committed to our balanced approach of delivering core growth and executing on sensible opportunities in our downstream businesses, share buybacks, and creating overall strong returns for shareholders.”

Segment Analysis for 2Q18 Compared to 2Q17

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. MDI average selling prices increased in response to continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI sales volumes increased due to increased demand across most major markets. MTBE sales volumes increased due to the impact of maintenance outages during the second quarter of 2017. The increase in segment adjusted EBITDA was primarily due to higher MDI and MTBE margins.

Performance Products

The increase in revenues in our Performance Products segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to strong market conditions across several of our derivatives businesses and in response to higher raw materials costs. Sales volumes decreased primarily due to the impact of the planned maintenance outage at our Port Neches, Texas facility in the second quarter of 2018, partially offset by higher sales volumes in certain of our specialty amines and maleic anhydride businesses. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and higher fixed costs attributed to the planned maintenance outage, partially offset by stronger glycol market conditions within intermediates.

Advanced Materials

The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2018, compared to the same period in 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most markets in our core specialty business, but were partially offset by lower sales volumes in our wind market due to challenging industry conditions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher specialty sales volumes, partially offset by higher raw material and fixed costs.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most regions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted

EBITDA was primarily due to higher sales volumes and higher average selling prices, partially offset by higher raw material costs.

Corporate, LIFO and other

For the three months ended June 30, 2018, segment adjusted EBITDA from Corporate and other for Huntsman Corporation increased USD 11 million to a loss of USD 39 million from a loss of USD 50 million in the same period in 2017, primarily due to a LIFO inventory valuation benefit.

Venator

Our former Pigments and Additives segment, now known as Venator, remains classified as held for sale on our balance sheet and treated as discontinued operations on our income statement. Huntsman currently owns 53 % of Venator’s outstanding shares.

Liquidity, Capital Resources and Outstanding Debt

During the quarter we generated free cash flow of USD 174 million compared to USD 154 million a year ago. As of June 30, 2018, we had USD 1459 million of combined cash and unused borrowing capacity compared to USD 1247 million as of December 31, 2017. On May 21, 2018, we entered into a new USD 1.2 billion unsecured revolving credit facility that replaced our senior secured credit facility.

During the three months ended June 30, 2018, we spent USD 54 million on capital expenditures compared to USD 50 million in the same period of 2017. We expect to spend approximately USD 325 million on capital expenditures in 2018.

Through the end of the second quarter 2018, we have spent approximately USD 138 million to repurchase approximately 4.6 million shares. As of the end of the second quarter 2018 we have approximately USD 862 million remaining on our existing multiyear share repurchase authorization.

Income Taxes

During the three months ended June 30, 2018, we recorded income tax expense of USD 4 million compared to USD 24 million during the same period in 2017. In the second quarter 2018, our adjusted effective tax rate was 18 %.

We expect our 2018 adjusted effective tax rate will be approximately 20 % – 22 %. We expect our long-term adjusted effective tax rate will be approximately 23 % – 25 %.

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