HUN Huntsman Corporation

Three months ended

March 31,

December 31,

In millions, except per share amounts

2017

2016

2016

Revenues

$2,469

$2,355

$         2,395

Net income

$     92

$     62

$            137

Adjusted net income⁽¹⁾

$   139

$     88

$              72

Diluted income per share

$  0.31

$  0.24

$           0.53

Adjusted diluted income per share⁽¹⁾

$  0.57

$  0.37

$           0.30

Adjusted EBITDA⁽¹⁾

$   329

$   274

$            256

Pro forma adjusted EBITDA⁽²⁾

$   329

$   267

$            250

Net cash provided by operating activities

$     93

$     88

$            240

Free cash flow⁽³⁾

$     82

$    (13)

$            117

See end of press release for footnote explanations

Call-in numbers for the conference call:

U.S. participants

(888) 679 - 8033

International participants

(617) 213 - 4846

Passcode

549 608 51#

Call-in numbers for the replay:

U.S. participants

(888) 286 - 8010

International participants

(617) 801 - 6888

Replay code

29385180

Table 1 – Results of Operations

Three months ended

March 31,

In millions, except per share amounts

2017

2016

Revenues

$2,469

$2,355

Cost of goods sold

2,003

1,939

Gross profit

466

416

Operating expenses

259

265

Restructuring, impairment and plant closing costs

36

13

Business separation expenses

9

-

Operating income

162

138

Interest expense

(48)

(50)

Equity in income of investment in unconsolidated affiliates

-

1

Other income

2

1

Income before income taxes

116

90

Income tax expense

(23)

(27)

Income from continuing operations

93

63

Loss from discontinued operations, net of tax⁽³⁾

(1)

(1)

Net income

92

62

Net income attributable to noncontrolling interests, net of tax

(16)

(6)

Net income attributable to Huntsman Corporation

$     76

$     56

Adjusted EBITDA⁽¹⁾

$   329

$   274

Adjusted net income⁽¹⁾

$   139

$     88

Basic income per share

$  0.32

$  0.24

Diluted income per share

$  0.31

$  0.24

Adjusted diluted income per share⁽¹⁾

$  0.57

$  0.37

Common share information:

Basic shares outstanding

237

236

Diluted shares

243

238

Diluted shares for adjusted diluted income per share

243

238

See end of press release for footnote explanations

Table 2 – Results of Operations by Segment

Three months ended

March 31,

Better /

In millions

2017

2016

(Worse)

Segment Revenues:

Polyurethanes

$   953

$   836

14%

Performance Products

533

536

(1)%

Performance Products, pro forma⁽²⁾

533

475

12%

Advanced Materials

259

266

(3)%

Textile Effects

188

185

2%

Pigments & Additives

537

540

(1)%

Corporate and eliminations

(1)

(8)

n/m

Total

$2,469

$2,355

5%

Total, pro forma⁽²⁾

$2,469

$2,294

8%

Segment Adjusted EBITDA⁽¹⁾:

Polyurethanes

$   144

$   131

10%

Performance Products

84

92

(9)%

Performance Products, pro forma⁽²⁾

84

85

(1)%

Advanced Materials

54

60

(10)%

Textile Effects

21

18

17%

Pigments & Additives

69

15

360%

Corporate, LIFO and other

(43)

(42)

(2)%

Total

$   329

$   274

20%

Total, pro forma⁽²⁾

$   329

$   267

23%

n/m = not meaningful

See end of press release for footnote explanations

Table 3 – Factors Impacting Sales Revenue

Three months ended

March 31, 2017 vs. 2016

Average Selling Price^(a)

Local

Exchange

Sales Mix

Sales

Currency

Rate

& Other

Volume^(b)

Total

Polyurethanes

12%

(2)%

3%

1%

14%

Performance Products

3%

0%

2%

(6)%

(1)%

Performance Products, adj

(2)%

0%

4%

10%

12%

(c)

Advanced Materials

1%

(1)%

0%

(3)%

(3)%

Textile Effects

(5)%

(1)%

(2)%

10%

2%

Pigments & Additives

9%

(2)%

(2)%

(6)%

(1)%

Pigments & Additives, adj

10%

(2)%

(1)%

(3)%

4%

(d)

Total Company

8%

(2)%

2%

(3)%

5%

Total Company, adj

7%

(2)%

2%

2%

9%

(c)(d)

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

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

(c) Pro forma adjusted to exclude the sale of the European differentiated surfactants on December 30, 2016.

(d) Pro forma adjusted to exclude the impact from the fire at our Pori. Finland facility.

Table 4 – Reconciliation of U.S. GAAP to Non-GAAP Measures

 Income Tax

 Diluted Income

 EBITDA

Expense

 Net Income

 Per Share

Three months ended

Three months ended

Three months ended

Three months ended

March 31,

March 31,

March 31,

March 31,

In millions, except per share amounts

2017

2016

2017

2016

2017

2016

2017

2016

Net income

$       92

$       62

$       92

$       62

$     0.38

$ 0.26

Net income attributable to noncontrolling interests

(16)

(6)

(16)

(6)

(0.07)

(0.03)

Net income attributable to Huntsman Corporation

76

56

76

56

0.31

0.24

Interest expense

48

50

Income tax expense from continuing operations

23

27

(23)

(27)

Income tax benefit from discontinued operations⁽⁴⁾

(1)

(1)

Depreciation and amortization

106

100

Acquisition and integration expenses

3

9

-

(3)

3

6

0.01

0.03

Loss from discontinued operations, net of tax⁽⁴⁾

2

2

 N/A

 N/A

1

1

-

-

Extraordinary gain on the acquisition of a business, net of tax

-

1

 N/A

 N/A

-

1

-

-

Certain legal settlements and related expenses

-

1

-

-

-

1

-

-

Net plant incident costs

5

-

(1)

-

4

-

0.02

-

Business separation costs

9

-

(2)

-

7

-

0.03

-

Amortization of pension and postretirement actuarial losses

22

16

(4)

(3)

18

13

0.07

0.05

Restructuring, impairment and plant closing costs

36

13

(6)

(3)

30

10

0.12

0.04

Adjusted⁽¹⁾

$      329

$      274

$      (36)

$      (36)

$      139

$       88

$     0.57

$ 0.37

Pro forma adjustments⁽²⁾

-

$        (7)

Pro forma adjusted EBITDA⁽¹⁾

$      329

$      267

Adjusted income tax expense⁽¹⁾

$       36

$       36

Net income attributable to noncontrolling interests, net of tax

16

6

Adjusted pre-tax income⁽¹⁾

$      191

$      130

Adjusted effective tax rate

19%

28%

 Income Tax

 Diluted Income

 EBITDA

(Expense) Benefit

 Net Income

 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

2016

2016

2016

2016

Net income

$      137

$      137

$     0.57

Net income attributable to noncontrolling interests

(9)

(9)

(0.04)

Net income attributable to Huntsman Corporation

128

128

0.53

Interest expense

50

Income tax benefit from continuing operations

29

(29)

Income tax benefit from discontinued operations⁽⁴⁾

(1)

Depreciation and amortization

110

Acquisition and integration expenses

2

-

2

0.01

Loss from discontinued operations, net of tax⁽⁴⁾

2

 N/A

1

-

Gain on disposition of businesses/assets

(97)

14

(83)

(0.34)

Certain legal settlements and related expenses

2

(1)

1

-

Net plant incident costs

3

(1)

2

0.01

Business separation costs

18

(5)

13

0.05

Amortization of pension and postretirement actuarial losses

16

(2)

14

0.06

Restructuring, impairment and plant closing credits

(6)

-

(6)

(0.02)

Adjusted⁽¹⁾

$      256

$      (24)

$       72

$     0.30

Pro forma adjustments⁽²⁾

(6)

Pro forma adjusted EBITDA⁽¹⁾

$      250

Adjusted income tax expense⁽¹⁾

$       24

Net income attributable to noncontrolling interests, net of tax

9

Adjusted pre-tax income⁽¹⁾

$      105

Adjusted effective tax rate

23%

See end of press release for footnote explanations

Table 5 – Selected Balance Sheet Items

March 31,

December 31,

In millions

2017

2016

Cash

$            469

$            425

Accounts and notes receivable, net

1,508

1,435

Inventories

1,486

1,344

Other current assets

372

351

Property, plant and equipment, net

4,186

4,212

Other assets

1,467

1,422

Total assets

$         9,488

$         9,189

Accounts payable

$         1,162

$         1,102

Other current liabilities

632

616

Current portion of debt

61

60

Long-term debt

4,161

4,135

Other liabilities

1,823

1,809

Total equity

1,649

1,467

Total liabilities and equity

$         9,488

$         9,189

Table 6 – Outstanding Debt

March 31,

December 31,

In millions

2017

2016

Debt:

Senior credit facilities

$         1,965

$         1,967

Accounts receivable programs

213

208

Senior notes

1,841

1,812

Variable interest entities

125

128

Other debt

78

80

Total debt - excluding affiliates

4,222

4,195

Total cash

469

425

Net debt- excluding affiliates

$         3,753

$         3,770

Table 7 – Summarized Statement of Cash Flows

Three months ended

March 31,

In millions

2017

2016

Total cash at beginning of period^(a)

$      425

$      269

Net cash provided by operating activities

93

88

Net cash used in investing activities

(24)

(101)

Net cash used in financing activities

(31)

(38)

Effect of exchange rate changes on cash

5

2

Change in restricted cash

1

(2)

-

Total cash at end of period^(a)

$      469

$      218

Supplemental cash flow information:

Cash paid for interest

$       (36)

$       (35)

Cash paid for income taxes

(8)

(5)

Cash paid for capital expenditures

(74)

(99)

Depreciation and amortization

106

100

Changes in primary working capital:

Accounts and notes receivable

$       (57)

$     (105)

Inventories

(110)

22

Accounts payable

77

(31)

Total cash used in primary working capital

$       (90)

$     (114)

Three months ended

March 31,

2017

2016

Free cash flow⁽³⁾:

Net cash provided by operating activities

$        93

$        88

Capital expenditures

(74)

(99)

All other investing activities excluding acquisition 

   and disposition activities^(b)

50

(2)

Non recurring separation costs^(c)

13

Total free cash flow 

$        82

$       (13)

Adjusted EBITDA

$      329

$      274

Capital expenditures

(74)

(99)

Capital reimbursements

55

Interest

(36)

(35)

Income taxes

(8)

(5)

Primary working capital change

(90)

(114)

Restructuring

(19)

(20)

Pensions

(24)

(22)

Maintenance & other

(51)

8

Total free cash flow⁽³⁾ 

$        82

$       (13)

(a) Includes restricted cash.

(b) Represents "Acquisition of business, net of cash acquired",  "Cash received from purchase price adjustment for business acquired", and "Proceeds from sale of business/assets".                       

(c) Represents payments associated with one-time costs of the proposed separation of our Pigments & Additives business.

Footnotes

(1)

We use adjusted EBITDA to measure the operating performance of our business and for planning and evaluating the performance of our business segments.  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) 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 adjusted EBITDA and adjusted net income.  Additional information with respect to our use of each of these financial measures follows:

Adjusted EBITDA, adjusted net income (loss) and adjusted diluted income (loss) per share, as used herein, are not necessarily comparable to other similarly titled measures of other companies.

Adjusted EBITDA is computed by eliminating the following from net income (loss):  (a) net income attributable to noncontrolling interest, net of tax; (b) interest; (c) income taxes; (d) depreciation and amortization; (e) acquisition and integration expenses, purchase accounting adjustments; (f) EBITDA from discontinued operations; (g) loss (gain) on disposition of businesses/assets; (h) loss on early extinguishment of debt; (i) certain legal settlements and related expenses; (j) net plant incident costs (credits), net; (k) business separation costs; (l) amortization of pension and postretirement actuarial losses (gains) and; (m) restructuring, impairment and plant closing costs (credits).  The reconciliation of adjusted EBITDA to net income (loss) is set forth in Table 4 above.

Adjusted net income (loss) and adjusted diluted income (loss) per share are computed by eliminating the after tax impact of the following items from net income (loss): (a) net income attributable to noncontrolling interest; (b) acquisition and integration expenses, purchase accounting adjustments; (c) impact of certain foreign tax credit elections; (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) certain legal settlements and related expenses; (i) net plant incident costs (credits), net; (j) business separation costs; (k) amortization of pension and postretirement actuarial losses (gains); and (l) restructuring, impairment and plant closing costs (credits). The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach.  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) is set forth in Table 4 above.

(2)

Pro forma adjusted to exclude the sale of our European differentiated surfactants business to Innospec on December 30, 2016 as if it had occurred at the beginning of the relevant period.

(3)

Management internally uses a free cash flow measure: (a) to evaluate the Company's liquidity, (b) to evaluate strategic investments, (c) to plan stock buyback and dividend levels and (d) to evaluate the Company's ability to incur and service debt. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures. The Company defines free cash flow as cash flow provided by operating activities less cash flow used in investing activities, excluding acquisition/disposition activities and non-recurring separation costs. Free cash flow is typically derived directly from the Company's condensed consolidated statement of cash flows; however, it may be adjusted for items that affect comparability between periods.

(4)

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