Huntsman Announces Third Quarter 2018 Earnings
2018-10-31    [Source:Huntsman]
share:

Third Quarter 2018 Highlights

Adjusted EBITDA was $374 million compared to $340 million in the prior year period and $415 million in the prior quarter.

Net loss of $8 million compared to a net income of $179 million in the prior year period and $623 million in the prior quarter. Adjusted net income of $202 million compared to adjusted net income of $164 million in the prior year period and $246 million in the prior quarter.

Diluted loss per share was $0.05 compared to diluted income per share of $0.60 in the prior year period and $1.71 in the prior quarter.

Adjusted diluted income per share was $0.84 compared to $0.67 in the prior year period and $1.01 in the prior quarter.

Net cash provided by operating activities was $295 million. Free cash flow generation was $226 million.

Balance sheet continues to strengthen with a net leverage of 1.3x.

Completed cumulative share repurchases of approximately $175 million through the end of third quarter 2018.

 

Huntsman Corporation (NYSE: HUN) today reported third quarter 2018 results with revenues of $2,444 million, net loss of $8 million, adjusted net income of $202 million and adjusted EBITDA of $374 million.

Peter R. Huntsman, Chairman, President and CEO, commented:

"This was a solid quarter overall for our Company, which demonstrated the consistency of our downstream and differentiated businesses. Expected adjustments to short term fundamentals in component MDI provided us an opportunity to show the strength of our unique downstream urethanes portfolio and strategy. In spite of the uncertainty around global trade and certain pockets of softer demand mostly seen in China, long term fundamentals remain intact. We are confident and on track to deliver on our 2020 targets that we laid out at our Investor Day on May 23, 2018. Our free cash flow remains strong with a good performance in the third quarter and our balance sheet continues to strengthen with net leverage improving to 1.3 times, well within investment grade metrics. We are committed to our balanced and opportunistic approach to capital allocation by growing our downstream differentiated portfolio of businesses and repurchasing shares to create long term value for our shareholders."

Segment Analysis for 3Q18 Compared to 3Q17

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended September 30, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. Differentiated MDI average selling prices increased due to strong end-market demand, partially offset by a decline in component MDI prices compared to the prior year period. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI sales volumes increased due to higher demand across most major markets. MTBE sales volumes increased due to the impact of hurricane related production outages during the third quarter of 2017. The modest increase in segment adjusted EBITDA was primarily due to higher MDI volumes and higher MTBE earnings due to hurricane related production outages in the third quarter of 2017, partially offset by lower component MDI margins.

Performance Products

The increase in revenues in our Performance Products segment for the three months ended September 30, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to strong market conditions across several of our derivatives businesses and in response to higher raw material costs. Sales volumes increased primarily due to the impact of hurricane related production outages during the third quarter of 2017. The increase in segment adjusted EBITDA was primarily due to higher average selling prices, higher sales volumes and the impact of hurricane related production outages during the third quarter of 2017.

Advanced Materials

The increase in revenues in our Advanced Materials segment for the three months ended September 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 as well as in our commodity business. Average selling prices increased in response to higher raw material costs, partially offset by the impact of a stronger U.S. dollar against major international currencies. Segment adjusted EBITDA remained flat primarily due to higher specialty sales volumes, offset by higher raw material and fixed costs.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended September 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 in response to higher raw material costs, partially offset by the impact of a stronger U.S. dollar against major international currencies. Sales volumes decreased primarily due to the impact from supply constraints in China, a de-selection of certain product ranges, and a temporary transition in distribution channels within a few regions. The increase in segment adjusted EBITDA was primarily due to higher average selling prices, partially offset by higher raw material costs, higher selling, general and administrative costs and lower sales volumes.

Corporate, LIFO and other

For the three months ended September 30, 2018, segment adjusted EBITDA from Corporate and other for Huntsman Corporation decreased $4 million to a loss of $47 million from a loss of $43 million in the same period in 2017, primarily due to an increase on LIFO inventory reserves.

Liquidity, Capital Resources and Outstanding Debt

During the quarter we generated free cash flow of $226 million compared to $227 million a year ago. As of September 30, 2018, we had $1,529 million of combined cash and unused borrowing capacity.

During the three months ended September 30, 2018, we spent $71 million on capital expenditures compared to $58 million in the same period of 2017. We expect to spend approximately $300 million to $320 million on capital expenditures in 2018.

Through the end of the third quarter 2018, we have spent approximately $175 million to repurchase approximately 5.9 million shares, including approximately $37 million spent to acquire approximately 1.3 million shares within the third quarter. As of the end of the third quarter 2018, we have approximately $825 million remaining on our existing multiyear share repurchase authorization.

Income Taxes

During the three months ended September 30, 2018, we recorded income tax expense of $27 million compared to $35 million during the same period in 2017. In the third quarter 2018, our adjusted effective tax rate was 20%. We expect our 2018 adjusted ef fective tax rate will be approximately 19% - 21%. We expect our long-term adjusted effective tax rate will be approximately 23% - 25%.

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.

Earnings Conference Call Information

We will hold a conference call to discuss our third quarter 2018 financial results on Tuesday, October 30, 2018 at 11 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 713 - 4199
International participants (617) 213 - 4861
Passcode 909 665 63#

In order to facilitate the registration process, you may use the following link to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. You may pre-register at any time, including up to and after the call start time. To pre-register, please go to: https://www.theconferencingservice.com/prereg/key.process?key=PG84X93EM.

Webcast Information

The conference call will be available via webcast and can be accessed from the company's website at ir.huntsman.com.

Replay Information

The conference call will be available for replay beginning October 30, 2018 and ending November 6, 2018.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International p articipants (617) 801 - 6888
Replay code 72981885

Upcoming Conferences

During the fourth quarter 2018, a member of management is expected to present at: Morgan Stanley's Global Chemicals and Agriculture Conference on November 14, 2018 Citi's Basic Materials Conference on November 27, 2018

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