UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): February 18, 2015

 


 

Huntsman Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-32427

 

42-1648585

(State or other jurisdiction

 

(Commission

 

(IRS Employer

of incorporation)

 

File Number)

 

Identification No.)

 

500 Huntsman Way

 

 

Salt Lake City, Utah

 

84108

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:

(801) 584-5700

 

Not applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02. Results of Operations and Financial Condition.

 

On February 18, 2015, we issued a press release announcing our results for the three months and year ended December 31, 2014.  The press release is furnished herewith as Exhibit 99.1.

 

We will hold a telephone conference to discuss our 2014 fourth quarter and full year results on Wednesday, February 18, 2015 at 10 a.m. Eastern Time.

 

Call-in number for U.S. participants:

 

(888) 680 - 0865

International participants:

 

(617) 213 - 4853

Passcode:

 

13264497

 

The conference call will be available via webcast and can be accessed from the investor relations page of our website at http://www.huntsman.com.

 

The conference call will be available for replay beginning February 18, 2015 and ending February 25, 2015. The call-in numbers for the replay are as follows:

 

Within the U.S.:

 

(888) 286 - 8010

International participants:

 

(617) 801 - 6888

Replay code:

 

99851834

 

Information with respect to the conference call, together with a copy of the press release furnished herewith as Exhibit 99.1, is available on the investor relations page of our website at http://www.huntsman.com.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)    Exhibits.

 

Number

 

Description of Exhibits

 

 

 

99.1

 

Press Release dated February 18, 2015 regarding 2014 fourth quarter and full year earnings

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

HUNTSMAN CORPORATION

 

 

 

/s/ KURT D. OGDEN

 

Vice President, Investor Relations and Finance

 

Dated: February 18, 2015

 

3



 

EXHIBIT INDEX

 

Number

 

Description of Exhibits

 

 

 

99.1

 

Press Release dated February 18, 2015 regarding 2014 fourth quarter and full year earnings

 

4




Exhibit 99.1

 

 

 

 

FOR IMMEDIATE RELEASE

Investor Relations:

Media:

February 18, 2015

Kurt Ogden

Gary Chapman

The Woodlands, TX

(801) 584-5959

(281) 719-4324

NYSE: HUN

 

 

 

HUNTSMAN RELEASES FOURTH QUARTER AND FULL YEAR 2014 RESULTS;

FULL YEAR ADJUSTED EARNINGS PER SHARE GROWS 20%

 

Fourth Quarter 2014 Highlights

 

·                  Adjusted EBITDA was $292 million compared to $313 million in the prior year period.  Pro forma for the Rockwood acquisition our adjusted EBITDA was $300 million compared to $341 in the prior year period.  The decrease was primarily attributable to lower earnings in our Pigments and Additives division.

 

·                  Adjusted diluted income per share was $0.33 compared to $0.48 in the prior year period.

 

·                  Net loss attributable to Huntsman Corporation was $38 million compared to net income of $41 million in the prior year period.

 

·                  Approximate negative foreign currency adjusted EBITDA impact of $11 million compared to the prior year period, primarily from a stronger U.S. dollar against major European currencies.

 

Full Year 2014 Highlights

 

·                  Adjusted EBITDA was $1,340 million compared to $1,213 million in the prior year.   Pro forma for the Rockwood acquisition our adjusted EBITDA was $1,495 million compared to $1,323 in the prior year period.

 

·                  Adjusted diluted income per share was $1.94 compared to $1.61 in the prior year, an increase of 20%.

 

·                  Net income attributable to Huntsman Corporation was $323 million compared to $128 million in the prior year.

 



 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

In millions, except per share amounts, unaudited

 

2014

 

2013

 

2014

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,951

 

$

2,705

 

$

2,884

 

$

11,578

 

$

11,079

 

Pro forma revenues(2)

 

$

2,937

 

$

3,052

 

$

3,258

 

$

12,723

 

$

12,598

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Huntsman Corporation

 

$

(38

)

$

41

 

$

188

 

$

323

 

$

128

 

Adjusted net income(1)

 

$

81

 

$

118

 

$

147

 

$

478

 

$

390

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) income per share

 

$

(0.16

)

$

0.17

 

$

0.76

 

$

1.31

 

$

0.53

 

Adjusted diluted income per share(1)

 

$

0.33

 

$

0.48

 

$

0.60

 

$

1.94

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

$

141

 

$

225

 

$

293

 

$

1,022

 

$

889

 

Adjusted EBITDA(1)

 

$

292

 

$

313

 

$

356

 

$

1,340

 

$

1,213

 

Pro forma adjusted EBITDA(2)

 

$

300

 

$

341

 

$

396

 

$

1,495

 

$

1,323

 

 

See end of press release for footnote explanations

 

The Woodlands, TX — Huntsman Corporation (NYSE: HUN) today reported fourth quarter 2014 results with revenues of $2,951 million and adjusted EBITDA of $292 million.

 

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

 

“2014 was a remarkable year for us; our differentiated businesses that include our MDI urethanes, Performance Products, Advanced Materials and Textile Effects collectively increased their adjusted EBITDA by more than $200 million.  I am encouraged by the attractive growth profile of these businesses and expect them to perform even better in 2015.

 

We have a number of initiatives underway that will improve the competitiveness and strength of our entire company.  We are investing in growth projects that we expect will add more than $200 million of annual EBITDA over the next few years.  We are aggressively taking action to deliver $130 million of synergies as we integrate the businesses we purchased from Rockwood this past October.  In addition, we recently took action to rationalize our European titanium dioxide capacity with expected EBITDA benefits of approximately $35 million.

 

Notwithstanding near term headwinds and shocks to the business landscape such as meaningful movements in foreign currency rates and lower priced oil, I believe we are well positioned to deliver increased earnings, an improvement in free cash flow and increased shareholder value over the next several years.”

 

Segment Analysis for 4Q14 Compared to 4Q13

 

Polyurethanes

 

The decrease in revenues in our Polyurethanes division for the three months ended December 31, 2014 compared to the same period in 2013 was primarily due to lower PO/MTBE average selling prices and the impact of a stronger U.S. dollar against major European currencies, partially offset by higher MDI local currency average selling prices and increased MDI sales volumes.  PO/MTBE average selling prices decreased following lower pricing for high octane gasoline.  MDI average selling prices increased in the Americas and Europe, partially offset by lower component pricing in China.  MDI sales volumes grew in the Americas and Asia and were essentially flat in Europe.  Adjusted EBITDA was essentially flat as higher MDI margins offset most of the $7 million negative impact from the stronger U.S. dollar against major European currencies.

 

2



 

Performance Products

 

The decrease in revenues in our Performance Products division for the three months ended December 31, 2014 compared to the same period in 2013 was due to lower sales volumes, partially offset by higher average selling prices.  Sales volumes decreased primarily due to the sale of our European surfactants business in the second quarter of 2014, partially offset by increased sales volumes in amines and maleic anhydride.  Average selling prices increased in response to higher raw materials costs and continued strong market conditions for amines, maleic anhydride and specialty surfactants, partially offset by the impact of a stronger U.S. dollar against major European currencies.  The decrease in adjusted EBITDA was primarily due to lower sales volumes and $5 million of inventory revaluation costs as a result of our successful efforts to reduce our investment in inventory.

 

Advanced Materials

 

The decrease in revenues in our Advanced Materials division for the three months ended December 31, 2014 compared to the same period in 2013 was due to lower sales volumes, partially offset by higher average selling prices and improved sales mix.  Sales volumes decreased primarily due to the de-selection of certain business and our restructuring efforts.  Average selling prices increased in all regions on a local currency basis and across most markets primarily due to certain price increase initiatives and our focus on higher value markets, partially offset by the impact of a stronger U.S. dollar against major European currencies.  The increase in adjusted EBITDA was primarily due to higher contribution margins from our focus on higher value business and lower fixed costs.

 

Textile Effects

 

The decrease in revenues in our Textile Effects division for the three months ended December 31, 2014 compared to the same period in 2013 was primarily due to lower sales volumes, partially offset by higher average selling prices.  Sales volumes decreased primarily due to the de-selection of lower value business and destocking within the fibers and dyes supply chain.  Average selling prices increased primarily in response to higher raw material costs.  The decrease in adjusted EBITDA was primarily due to $12 million of inventory revaluation costs as a result of our successful efforts to reduce our investment in inventory and higher raw material costs.

 

Pigments and Additives

 

Pro forma for the acquisition of Rockwood Performance Additives and Titanium Dioxide businesses, revenues decreased in our Pigments and Additives division for the three months ended December 31, 2014 compared to the same period in 2013 due to lower sales volumes and lower average selling prices.  Sales volumes decreased primarily as a result of lower end use demand in Europe which is our largest market.  Average selling prices decreased primarily as a result of high titanium dioxide industry inventory levels and the impact of a stronger U.S. dollar against major European currenciesThe decrease in pro forma adjusted EBITDA was primarily due to lower contribution margins for titanium dioxide, whereas the combined adjusted EBITDA for additives was essentially flat.

 

Corporate, LIFO and Other

 

Adjusted EBITDA from Corporate, LIFO and Other increased by $2 million to a loss of $48 million for the three months ended December 31, 2014 compared to a loss of $50 million for the same period in 2013.

 

3



 

Liquidity, Capital Resources and Outstanding Debt

 

As of December 31, 2014, we had $1,601 million of combined cash and unused borrowing capacity compared to $1,048 million at December 31, 2013.

 

In November 2014, we issued $400 million of 5.125% senior notes due 2022.  We used the proceeds to redeem all of our outstanding 8.625% senior subordinated notes due 2020, pay associated accrued interest and for general corporate purposes.  We expect to save approximately $12 million in annual interest expense as a result of this refinancing.

 

On October 1, 2014, we successfully completed the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood for $1.04 billion in cash and subject to certain purchase price adjustments.  The acquisition was funded by a new $1.2 billion term loan due 2021.

 

Total capital expenditures for the three months ended December 31, 2014 were $250 million and for the year ended December 31, 2014 were $601 million.  We expect to spend approximately $525 million on base capital expenditures in 2015, net of reimbursements.  In addition, in 2015 we expect to spend approximately $100 million combined on our new Chinese MDI facility, the completion of the Augusta, Georgia color pigments facility and replacement of Rockwood computer systems.

 

Now that we have completed the preliminary allocation of the purchase accounting for the Rockwood Performance Additives and Titanium Dioxide businesses, we expect our annual depreciation and amortization rate to be approximately $450 million.

 

Income Taxes

 

During the three months ended December 31, 2014 we recorded an income tax expense of $12 million and paid $9 million in cash for income taxes.  Our adjusted effective income tax rate for the three months and year ended December 31, 2014 were 34% and 30% respectively.

 

We expect our long term adjusted effective tax rate to be approximately 30%.  We expect our 2015 adjusted effective tax rate to be slightly higher as a result of reduced earnings from our Pigments and Additives division which has a meaningful concentration of business in countries (primarily in Europe) where we have tax valuation allowances which prevent us from recording a tax benefit on pre-tax losses.

 

4



 

Earnings Conference Call Information

 

We will hold a conference call to discuss our fourth quarter and full year 2014 financial results on Wednesday, February 18, 2015 at 10:00 a.m. ET.

 

Call-in numbers for the conference call:

U.S. participants

(888) 680 - 0865

International participants

(617) 213 - 4853

Passcode

13264497

 

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=PCWMPQHEM

 

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 February 18, 2015 and ending February 25, 2015.

 

Call-in numbers for the replay:

U.S. participants

(888) 286 - 8010

International participants

(617) 801 - 6888

Replay code

99851834

 

5



 

Table 1 — Results of Operations

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

In millions, except per share amounts, unaudited

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

2,951

 

$

2,705

 

$

11,578

 

$

11,079

 

Cost of goods sold

 

2,502

 

2,259

 

9,659

 

9,326

 

Gross profit

 

449

 

446

 

1,919

 

1,753

 

Operating expenses

 

317

 

284

 

1,128

 

1,092

 

Restructuring, impairment and plant closing costs

 

67

 

41

 

158

 

151

 

Operating income

 

65

 

121

 

633

 

510

 

Interest expense

 

(57

)

(44

)

(205

)

(190

)

Equity in income of investment in unconsolidated affiliates

 

 

2

 

6

 

8

 

Loss on early extinguishment of debt

 

(28

)

(16

)

(28

)

(51

)

Other (expense) income

 

(2

)

 

(2

)

2

 

(Loss) income before income taxes

 

(22

)

63

 

404

 

279

 

Income tax expense

 

(12

)

(20

)

(51

)

(125

)

(Loss) income from continuing operations

 

(34

)

43

 

353

 

154

 

Loss from discontinued operations, net of tax(3)

 

(1

)

(1

)

(8

)

(5

)

Net (loss) income

 

(35

)

42

 

345

 

149

 

Net income attributable to noncontrolling interests, net of tax

 

(3

)

(1

)

(22

)

(21

)

Net (loss) income attributable to Huntsman Corporation

 

$

(38

)

$

41

 

$

323

 

$

128

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

292

 

$

313

 

$

1,340

 

$

1,213

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income(1)

 

$

81

 

$

118

 

$

478

 

$

390

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) income per share

 

$

(0.16

)

$

0.17

 

$

1.33

 

$

0.53

 

Diluted (loss) income per share

 

$

(0.16

)

$

0.17

 

$

1.31

 

$

0.53

 

Adjusted diluted income per share(1)

 

$

0.33

 

$

0.48

 

$

1.94

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

Common share information:

 

 

 

 

 

 

 

 

 

Basic shares outstanding

 

243.0

 

240.2

 

242.1

 

239.7

 

Diluted shares

 

243.0

 

243.9

 

246.0

 

242.4

 

Diluted shares for adjusted diluted income per share

 

246.9

 

243.9

 

246.0

 

242.4

 

 

See end of press release for footnote explanations

 

6



 

Table 2 — Results of Operations by Segment

 

 

 

Three months ended

 

 

 

Twelve months ended

 

 

 

 

 

December 31,

 

Better /

 

December 31,

 

Better /

 

In millions, unaudited

 

2014

 

2013

 

(Worse)

 

2014

 

2013

 

(Worse)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

1,201

 

$

1,230

 

(2

)%

$

5,032

 

$

4,964

 

1

%

Performance Products

 

712

 

741

 

(4

)%

3,072

 

3,019

 

2

%

Advanced Materials

 

295

 

301

 

(2

)%

1,248

 

1,267

 

(1

)%

Textile Effects

 

203

 

209

 

(3

)%

896

 

811

 

10

%

Pigments & Additives

 

573

 

295

 

94

%

1,549

 

1,269

 

22

%

Eliminations and other

 

(33

)

(71

)

54

%

(219

)

(251

)

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

2,951

 

$

2,705

 

9

%

$

11,578

 

$

11,079

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

171

 

$

173

 

(1

)%

$

722

 

$

740

 

(2

)%

Performance Products

 

111

 

116

 

(4

)%

473

 

403

 

17

%

Advanced Materials

 

43

 

33

 

30

%

199

 

131

 

52

%

Textile Effects

 

6

 

8

 

(25

)%

58

 

16

 

263

%

Pigments & Additives

 

9

 

33

 

(73

)%

76

 

111

 

(32

)%

Corporate, LIFO and other

 

(48

)

(50

)

4

%

(188

)

(188

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

292

 

$

313

 

(7

)%

$

1,340

 

$

1,213

 

10

%

 

See end of press release for footnote explanations

 

Table 3 — Pro Forma (2) Results of Operations by Segment

 

 

 

Three months ended

 

 

 

Twelve months ended

 

 

 

 

 

December 31,

 

Better /

 

December 31,

 

Better /

 

In millions, unaudited, pro forma

 

2014

 

2013

 

(Worse)

 

2014

 

2013

 

(Worse)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

1,201

 

$

1,237

 

(3

)%

$

5,053

 

$

4,991

 

1

%

Performance Products

 

712

 

741

 

(4

)%

3,072

 

3,019

 

2

%

Advanced Materials

 

295

 

301

 

(2

)%

1,248

 

1,267

 

(1

)%

Textile Effects

 

203

 

209

 

(3

)%

896

 

811

 

10

%

Pigments & Additives

 

559

 

635

 

(12

)%

2,673

 

2,761

 

(3

)%

Eliminations and other

 

(33

)

(71

)

54

%

(219

)

(251

)

13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma total

 

$

2,937

 

$

3,052

 

(4

)%

$

12,723

 

$

12,598

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA(2):

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

$

171

 

$

174

 

(2

)%

$

728

 

$

746

 

(2

)%

Performance Products

 

111

 

116

 

(4

)%

473

 

403

 

17

%

Advanced Materials

 

43

 

33

 

30

%

199

 

131

 

52

%

Textile Effects

 

6

 

8

 

(25

)%

58

 

16

 

263

%

Pigments & Additives

 

17

 

60

 

(72

)%

225

 

215

 

5

%

Corporate, LIFO and other

 

(48

)

(50

)

4

%

(188

)

(188

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma total

 

$

300

 

$

341

 

(12

)%

$

1,495

 

$

1,323

 

13

%

 

See end of press release for footnote explanations

 

7



 

Table 4 — Factors Impacting Sales Revenues

 

 

 

Three months ended

 

 

 

December 31, 2014 vs. 2013

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited

 

Currency

 

Rate

 

& Other(c)

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(2

)%

(2

)%

(3

)%

5

%

(2

)%

Performance Products

 

4

%

(2

)%

2

%

(8

)%

(4

)%

Advanced Materials

 

3

%

(4

)%

4

%

(5

)%

(2

)%

Textile Effects

 

9

%

(3

)%

 

(9

)%

(3

)%

Pigments & Additives

 

1

%

(9

)%

110

%

(8

)%

94

%

Total Company

 

2

%

(3

)%

12

%

(2

)%

9

%

 

 

 

Twelve months ended

 

 

 

December 31, 2014 vs. 2013

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited

 

Currency

 

Rate

 

& Other(c)

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(2

)%

 

1

%

2

%

1

%

Performance Products

 

4

%

 

(1

)%

(1

)%

2

%

Advanced Materials

 

5

%

 

4

%

(10

)%

(1

)%

Textile Effects

 

15

%

(1

)%

 

(4

)%

10

%

Pigments & Additives

 

(6

)%

2

%

26

%

 

22

%

Total Company

 

2

%

 

3

%

 

5

%

 


(a)   Excludes sales from tolling arrangements, by-products and raw materials.

(b)   Excludes sales from by-products and raw materials.

(c)   Includes full revenue impact from the October 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businessess of Rockwood Holdings, Inc.

 

8



 

Table 5 — Factors Impacting Pro Forma (2) Sales Revenues

 

 

 

Three months ended

 

 

 

December 31, 2014 vs. 2013

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited, pro forma

 

Currency

 

Rate

 

& Other

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(2

)%

(2

)%

(4

)%

5

%

(3

)%

Performance Products

 

4

%

(2

)%

2

%

(8

)%

(4

)%

Advanced Materials

 

3

%

(4

)%

4

%

(5

)%

(2

)%

Textile Effects

 

9

%

(3

)%

 

(9

)%

(3

)%

Pigments & Additives

 

(8

)%

NA

 

2

%

(6

)%

(12

)%

Total Company

 

(2

)%

NA

 

1

%

(3

)%

(4

)%

 

 

 

Twelve months ended

 

 

 

December 31, 2014 vs. 2013

 

 

 

Average Selling Price(a)

 

 

 

 

 

 

 

 

 

Local

 

Exchange

 

Sales Mix

 

Sales

 

 

 

Unaudited, pro forma

 

Currency

 

Rate

 

& Other

 

Volume(b)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Polyurethanes

 

(2

)%

 

1

%

2

%

1

%

Performance Products

 

4

%

 

(1

)%

(1

)%

2

%

Advanced Materials

 

5

%

 

4

%

(10

)%

(1

)%

Textile Effects

 

15

%

(1

)%

 

(4

)%

10

%

Pigments & Additives

 

(2

)%

NA

 

 

(1

)%

(3

)%

Total Company

 

2

%

NA

 

(1

)%

 

1

%

 


NA = foreign exchange rate data not available

(a) Excludes sales from tolling arrangements, by-products and raw materials.

(b) Excludes sales from by-products and raw materials.

 

9



 

Table 6 — Reconciliation of U.S. GAAP to Non-GAAP Measures

 

 

 

 

 

 

 

Income Tax

 

Net (Loss) Income

 

Diluted (Loss) Income

 

 

 

EBITDA

 

(Expense) Benefit

 

Attrib. to HUN Corp.

 

Per Share

 

 

 

Three months ended

 

Three months ended

 

Three months ended

 

Three months ended

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

In millions, except per share amounts, unaudited

 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

141

 

$

225

 

$

(12

)

$

(20

)

$

(38

)

$

41

 

$

(0.16

)

$

0.17

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

40

 

7

 

(4

)

(3

)

36

 

4

 

0.15

 

0.02

 

Loss from discontinued operations, net of tax(3)

 

1

 

2

 

N/A

 

N/A

 

1

 

1

 

 

 

Discount amortization on settlement financing associated with the terminated merger

 

N/A

 

N/A

 

 

(1

)

 

1

 

 

 

Gain on disposition of businesses/assets

 

(1

)

 

 

 

(1

)

 

 

 

Loss on early extinguishment of debt

 

28

 

16

 

(10

)

(6

)

18

 

10

 

0.07

 

0.04

 

Certain legal settlements and related expenses

 

 

1

 

 

 

 

1

 

 

 

Amortization of pension and postretirement actuarial losses

 

14

 

18

 

 

(7

)

14

 

11

 

0.06

 

0.05

 

Restructuring, impairment and plant closing and transition costs

 

69

 

44

 

(18

)

5

 

51

 

49

 

0.21

 

0.20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

292

 

$

313

 

$

(44

)

$

(32

)

$

81

 

$

118

 

$

0.33

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

 

 

 

 

44

 

32

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

3

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

128

 

$

151

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

34

%

21

%

 

 

 

 

 

 

 

 

 

Income Tax

 

Net Income

 

Diluted Income

 

 

 

EBITDA

 

Benefit (Expense)

 

Attrib. to HUN Corp.

 

Per Share

 

 

 

Three months ended

 

Three months ended

 

Three months ended

 

Three months ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

In millions, except per share amounts, unaudited

 

2014

 

2014

 

2014

 

2014

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

293

 

$

40

 

$

188

 

$

0.76

 

Adjustments:

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

10

 

(2

)

8

 

0.03

 

Impact of certain foreign tax credit elections

 

N/A

 

(94

)

(94

)

(0.38

)

Certain legal settlements and related expenses

 

1

 

 

1

 

 

Amortization of pension and postretirement actuarial losses

 

12

 

(2

)

10

 

0.04

 

Restructuring, impairment and plant closing and transition costs

 

40

 

(6

)

34

 

0.14

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

356

 

$

(64

)

$

147

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

64

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

$

217

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

29

%

 

 

 

 

 

 

 

 

 

Income Tax

 

Net Income

 

Diluted Income

 

 

 

EBITDA

 

(Expense) Benefit

 

Attrib. to HUN Corp.

 

Per Share

 

 

 

Twelve months ended

 

Twelve months ended

 

Twelve months ended

 

Twelve months ended

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

In millions, except per share amounts, unaudited

 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

 

$

1,022

 

$

889

 

$

(51

)

$

(125

)

$

323

 

$

128

 

$

1.31

 

$

0.53

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition and integration expenses, purchase accounting adjustments

 

67

 

21

 

(10

)

(5

)

57

 

16

 

0.23

 

0.07

 

Impact of certain foreign tax credit elections

 

N/A

 

N/A

 

(94

)

 

(94

)

 

(0.38

)

 

Loss from discontinued operations, net of tax(3)

 

10

 

5

 

N/A

 

N/A

 

8

 

5

 

0.03

 

0.02

 

Discount amortization on settlement financing associated with the terminated merger

 

N/A

 

N/A

 

 

(3

)

 

6

 

 

0.02

 

Gain on disposition of businesses/assets

 

(3

)

 

1

 

 

(2

)

 

(0.01

)

 

Loss on early extinguishment of debt

 

28

 

51

 

(10

)

(19

)

18

 

32

 

0.07

 

0.13

 

Certain legal settlements and related expenses

 

3

 

9

 

 

(2

)

3

 

7

 

0.01

 

0.03

 

Amortization of pension and postretirement actuarial losses

 

51

 

74

 

(10

)

(20

)

41

 

54

 

0.17

 

0.22

 

Restructuring, impairment and plant closing and transition costs

 

162

 

164

 

(38

)

(22

)

124

 

142

 

0.50

 

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted(1)

 

$

1,340

 

$

1,213

 

$

(212

)

$

(196

)

$

478

 

$

390

 

$

1.94

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted income tax expense

 

 

 

 

 

 

 

 

 

212

 

196

 

 

 

 

 

Net income attributable to noncontrolling interests, net of tax

 

 

 

 

 

 

 

 

 

22

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted pre-tax income(1)

 

 

 

 

 

 

 

 

 

$

712

 

$

607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted effective tax rate

 

 

 

 

 

 

 

 

 

30

%

32

%

 

 

 

 

 

See end of press release for footnote explanations

 

10


 


 

Table 7 — Pro Forma (2) Reconciliation of U.S. GAAP to Non-GAAP Measures

 

 

 

Pro Forma EBITDA

 

 

 

Three months ended

 

 

 

December 31,

 

In millions, except per share amounts, unaudited, pro forma

 

2014

 

2013

 

 

 

 

 

 

 

GAAP(1)

 

$

191

 

$

247

 

Adjustments:

 

 

 

 

 

Allocation of general corporate overhead

 

 

7

 

Acquisition and integration expenses, purchase accounting adjustments

 

(2

)

3

 

Loss from discontinued operations, net of tax(3)

 

1

 

2

 

Gain on disposition of businesses/assets

 

(1

)

 

Loss on early extinguishment of debt

 

28

 

16

 

Certain legal settlements and related expenses

 

 

1

 

Amortization of pension and postretirement actuarial losses

 

14

 

21

 

Restructuring, impairment and plant closing and transition costs

 

69

 

44

 

 

 

 

 

 

 

Pro forma adjusted(2)

 

$

300

 

$

341

 

 

 

 

Pro Forma EBITDA

 

 

 

Three months ended

 

 

 

September 30,

 

In millions, except per share amounts, unaudited pro forma

 

2014

 

 

 

 

 

GAAP(1)

 

$

333

 

Adjustments:

 

 

 

Allocation of general corporate overhead

 

5

 

Acquisition and integration expenses, purchase accounting adjustments

 

4

 

Certain legal settlements and related expenses

 

1

 

Amortization of pension and postretirement actuarial losses

 

13

 

Restructuring, impairment and plant closing and transition costs

 

40

 

 

 

 

 

Pro forma adjusted(2)

 

$

396

 

 

 

 

Pro Forma EBITDA

 

 

 

Twelve months ended

 

 

 

December 31,

 

In millions, except per share amounts, unaudited pro forma

 

2014

 

2013

 

 

 

 

 

 

 

GAAP(1)

 

$

1,214

 

$

956

 

Adjustments:

 

 

 

 

 

Allocation of general corporate overhead

 

20

 

24

 

Acquisition and integration expenses, purchase accounting adjustments

 

7

 

11

 

Loss from discontinued operations, net of tax(3)

 

10

 

5

 

Gain on disposition of businesses/assets

 

(3

)

 

Loss on early extinguishment of debt

 

28

 

68

 

Certain legal settlements and related expenses

 

3

 

9

 

Amortization of pension and postretirement actuarial losses

 

54

 

84

 

Restructuring, impairment and plant closing and transition costs

 

162

 

166

 

 

 

 

 

 

 

Pro forma adjusted(2)

 

$

1,495

 

$

1,323

 

 

See end of press release for footnote explanations

 

11



 

Table 8 — Reconciliation of Net Income to EBITDA

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

In millions, unaudited

 

2014

 

2013

 

2014

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Huntsman Corporation

 

$

(38

)

$

41

 

$

188

 

$

323

 

$

128

 

Interest expense

 

57

 

44

 

49

 

205

 

190

 

Income tax expense (benefit) from continuing operations

 

12

 

20

 

(40

)

51

 

125

 

Income tax benefit from discontinued operations(3)

 

 

(2

)

 

(2

)

(2

)

Depreciation and amortization

 

110

 

122

 

96

 

445

 

448

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA(1)

 

141

 

225

 

293

 

1,022

 

889

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma adjustments to:

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Huntsman Corporation

 

26

 

(1

)

15

 

75

 

(28

)

Interest expense

 

1

 

11

 

11

 

34

 

53

 

Income tax expense from continuing operations(3)

 

13

 

2

 

4

 

43

 

2

 

Depreciation and amortization

 

10

 

10

 

10

 

40

 

40

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro forma EBITDA(2)

 

$

191

 

$

247

 

$

333

 

$

1,214

 

$

956

 

 

See end of press release for footnote explanations

 

Table 9 — Selected Balance Sheet Items

 

 

 

December 31,

 

September 30,

 

December 31,

 

In millions

 

2014

 

2014

 

2013

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

870

 

$

592

 

$

529

 

Accounts and notes receivable, net

 

1,707

 

1,676

 

1,575

 

Inventories

 

2,025

 

1,788

 

1,741

 

Other current assets

 

437

 

438

 

314

 

Property, plant and equipment, net

 

4,423

 

3,703

 

3,824

 

Other assets

 

1,540

 

1,212

 

1,205

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,002

 

$

9,409

 

$

9,188

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,275

 

$

1,176

 

$

1,113

 

Other current liabilities

 

790

 

672

 

769

 

Current portion of debt

 

267

 

274

 

277

 

Long-term debt

 

4,933

 

3,752

 

3,633

 

Other liabilities

 

1,786

 

1,139

 

1,267

 

Total equity

 

1,951

 

2,396

 

2,129

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

11,002

 

$

9,409

 

$

9,188

 

 

12



 

Table 10 — Outstanding Debt

 

 

 

December 31,

 

September 30,

 

December 31,

 

In millions

 

2014

 

2014

 

2013

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

 

Senior credit facilities

 

$

2,528

 

$

1,339

 

$

1,351

 

Accounts receivable programs

 

229

 

235

 

248

 

Senior notes

 

1,596

 

1,219

 

1,061

 

Senior subordinated notes

 

531

 

890

 

891

 

Variable interest entities

 

207

 

220

 

247

 

Other debt

 

109

 

123

 

112

 

 

 

 

 

 

 

 

 

Total debt - excluding affiliates

 

5,200

 

4,026

 

3,910

 

 

 

 

 

 

 

 

 

Total cash

 

870

 

592

 

529

 

 

 

 

 

 

 

 

 

Net debt- excluding affiliates

 

$

4,330

 

$

3,434

 

$

3,381

 

 

Table 11 — Summarized Statement of Cash Flows

 

 

 

Three months ended

 

Year ended

 

 

 

December 31,

 

December 31,

 

In millions, unaudited

 

2014

 

2014

 

2013

 

 

 

 

 

 

 

 

 

Total cash at beginning of period(a)

 

$

592

 

$

529

 

$

396

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

417

 

760

 

708

 

Net cash used in investing activities

 

(1,269

)

(1,606

)

(566

)

Net cash provided by (used in) financing activities

 

1,135

 

1,197

 

(6

)

Effect of exchange rate changes on cash

 

(5

)

(11

)

(3

)

Change in restricted cash

 

 

1

 

 

 

 

 

 

 

 

 

 

Total cash at end of period(a)

 

$

870

 

$

870

 

$

529

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

 

$

(63

)

$

(208

)

$

(187

)

Cash paid for income taxes

 

$

(9

)

$

(165

)

$

(78

)

Cash paid for capital expenditures

 

$

(250

)

$

(601

)

$

(471

)

Depreciation and amortization

 

$

110

 

$

445

 

$

448

 

 

 

 

 

 

 

 

 

Changes in primary working capital:

 

 

 

 

 

 

 

Accounts and notes receivable

 

$

163

 

$

2

 

$

(11

)

Inventories

 

92

 

(20

)

77

 

Accounts payable

 

(45

)

86

 

(12

)

 

 

 

 

 

 

 

 

Total cash provided by primary working capital

 

$

210

 

$

68

 

$

54

 

 


(a) Includes restricted cash.

 

13



 


Footnotes

 

(1)   We use EBITDA and adjusted EBITDA to measure the operating performance of our business.  We provide adjusted net income because we feel it provides meaningful insight for the investment community into the performance of our business.  We believe that net income (loss) attributable to Huntsman Corporation is the performance measure calculated and presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”) that is most directly comparable to EBITDA, adjusted EBITDA and adjusted net income.  Additional information with respect to our use of each of these financial measures follows:

 

EBITDA is defined as net income (loss) attributable to Huntsman Corporation before interest, income taxes, and depreciation and amortization. EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies. The reconciliation of EBITDA to net income (loss) attributable to Huntsman Corporation is set forth in Table 5 above.

 

Adjusted EBITDA is computed by eliminating the following from EBITDA:  (a) acquisition and integration expenses, purchase accounting adjustments; (b) loss (gain) on initial consolidation of subsidiaries; (c) EBITDA from discontinued operations; (d) loss (gain) on disposition of businesses/assets; (e) loss on early extinguishment of debt; (f) extraordinary loss (gain) on the acquisition of a business; (g) certain legal settlements and related expenses; (h) amortization of pension and postretirement actuarial losses (gains); and (i) restructuring, impairment, plant closing and transition costs (credits).  The reconciliation of adjusted EBITDA to EBITDA is set forth in Table 4 above.

 

Adjusted net income (loss) is computed by eliminating the after tax impact of the following items from net income (loss) attributable to Huntsman Corporation: (a) acquisition and integration expenses, purchase accounting adjustments; (b) impact of certain foreign tax credit elections; (c) loss (gain) on initial consolidation of subsidiaries; (d) loss (income) from discontinued operations; (e) discount amortization on settlement financing associated with the terminated merger; (f) loss (gain) on disposition of businesses/assets; (g) loss on early extinguishment of debt; (h) extraordinary loss (gain) on the acquisition of a business; (i) certain legal settlements and related expenses; (j) amortization of pension and postretirement actuarial losses (gains); and (k) restructuring, impairment, plant closing and transition costs (credits).   We do not adjust for changes in tax valuation allowances because we do not believe it provides more meaningful information than is provided under GAAP.  The reconciliation of adjusted net income (loss) to net income (loss) attributable to Huntsman Corporation common stockholders is set forth in Table 4 above.

 

(2)   Pro forma adjusted as if it had occurred at the beginning of the relevant period to include the October 1, 2014 acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.; exclude the related sale of our TR52 product line — used in printing inks — to Henan Billions Chemicals Co., Ltd. in December 2014; and exclude the allocation of general corporate overhead by Rockwood.

 

(3)   During the first quarter 2010 we closed our Australian styrenics operations; results from this business are treated as discontinued operations.

 

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About Huntsman:

 

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2014 revenues of approximately $13 billion including the acquisition of Rockwood’s performance additives and titanium dioxide businesses. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets.  We operate more than 100 manufacturing and R&D facilities in more than 30 countries and employ approximately 16,000 associates within our 5 distinct business divisions.  For more information about Huntsman, please visit the company’s website at www.huntsman.com.

 

Forward-Looking Statements:

 

Statements in this release that are not historical are forward-looking statements. These statements are based on management’s current beliefs and expectations. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company’s operations, markets, products, services, prices and other factors as discussed in the Huntsman companies’ filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive, environmental, political, legal, regulatory and technological factors.  The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.

 

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