THE WOODLANDS, Texas,
Oct. 27, 2017 /PRNewswire/ --
Third Quarter 2017 Highlights
- Net income was $179 million
compared to $64 million in the prior
year period and $183 million in the
prior quarter.
- Adjusted EBITDA was $340 million
(16% EBITDA margin), impacted by $50
million from Hurricane Harvey, compared to $234 million in the prior year period and
$299 million in the prior
quarter.
- Diluted income per share was $0.60 compared to $0.23 in the prior year period and $0.69 in the prior quarter.
- Adjusted diluted income per share was $0.67 compared to $0.31 in the prior year period and $0.59 in the prior quarter.
- Net cash provided by operating activities was $261 million. Free cash flow generation was
$227 million.
- The balance sheet was transformed by applying the $1.2 billion in Venator IPO net proceeds to
reduce Huntsman debt. On October 25,
2017, we made an additional $100
million early repayment of debt. From the beginning of
2016 to this most recent quarter our net-debt was reduced by 47%,
from $4.5 billion to $2.4 billion.
- Merger of equals with Clariant terminated by mutual
agreement.
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
In millions, except
per share amounts
|
|
2017
|
|
2016
|
|
2017
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$2,169
|
|
$1,831
|
|
$
2,054
|
|
$6,155
|
|
$5,614
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
179
|
|
$
64
|
|
$
183
|
|
$
454
|
|
$
220
|
Adjusted net
income(1)
|
|
$
164
|
|
$
74
|
|
$
144
|
|
$
418
|
|
$
302
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per
share
|
|
$
0.60
|
|
$
0.23
|
|
$
0.69
|
|
$
1.60
|
|
$
0.83
|
Adjusted diluted
income per share(1)
|
|
$
0.67
|
|
$
0.31
|
|
$
0.59
|
|
$
1.72
|
|
$
1.26
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
340
|
|
$
234
|
|
$
299
|
|
$
899
|
|
$
787
|
Pro forma adjusted
EBITDA(2)
|
|
$
340
|
|
$
227
|
|
$
299
|
|
$
899
|
|
$
765
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
261
|
|
$
333
|
|
$
207
|
|
$
538
|
|
$
736
|
Free cash
flow(3)
|
|
$
227
|
|
$
251
|
|
$
155
|
|
$
404
|
|
$
523
|
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
|
|
|
|
|
|
|
|
|
|
Huntsman Corporation (NYSE: HUN) today reported third quarter
2017 results with revenues of $2,169
million, net income of $179
million and adjusted EBITDA of $340
million.
Peter R. Huntsman, our President
and CEO, commented:
"While I am disappointed that the merger of equals agreement
with Clariant has been terminated, Huntsman's future has never been
brighter as our businesses continue to improve across the board,
our balance sheet is as strong as it has ever been and will get
even stronger with proceeds from upcoming Venator secondary sales.
We look forward to achieving investment grade metrics in the near
future. Huntsman remains focused on growing our downstream
differentiated and specialty businesses, expanding our margins, and
generating a consistently strong free cash flow.
"Notwithstanding a $50 million
impact from Hurricane Harvey on our third quarter EBITDA, our
business was up $113 million over
last year. Our business is operating at a 16% EBITDA margin to
sales. Excluding the impact from Harvey, each one of our
businesses performed well, growing adjusted EBITDA versus the prior
year, as our underlying fundamentals remain positive across
our core markets. I expect each of our businesses to show
year over year growth in the fourth quarter as well. In
addition to our strong operating performance in the third quarter,
we successfully completed the IPO of our Pigments and Additives
segment, now called Venator, and the $1.2
billion in the initial proceeds were used to reduce our
leverage. We also paid down an additional $100 million in debt from free cash flow earlier
this week. We are delivering on our commitments to our
shareholders, as to date we have generated over $1 billion in free cash flow and reduced our
net-debt by over $2 billion since
2016, while at the same time investing in our differentiated and
specialty businesses."
Segment Analysis for 3Q17 Compared to 3Q16
Polyurethanes
The increase in revenues in our Polyurethanes segment for the
three months ended September 30, 2017 compared to the
same period of 2016 was due to higher average selling prices and
higher sales volumes. MDI average selling prices increased in
response to continued strong market conditions and higher raw
material costs. 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 timing of
shipments in the 2016 period, partially offset by the impact of
hurricane related production outages during the third quarter of
2017. The increase in segment adjusted EBITDA was primarily due to
higher MDI margins, partially offset by lower MTBE earnings and the
$15 million estimated impact of
hurricane related production outages during the third quarter of
2017.
Performance Products
The decrease in revenues in our Performance Products segment for
the three months ended September 30, 2017 compared to the
same period of 2016 was due to lower sales volumes, partially
offset by higher average selling prices. Sales volumes decreased
primarily due to the sale of the European surfactants business to
Innospec Inc. on December 30, 2016 as
well as the impact of hurricane related production outages in the
third quarter of 2017, partially offset by higher sales volumes in
our maleic anhydride and amines businesses. Average selling prices
increased primarily in response to higher raw material costs and a
favorable product mix effect. The decrease in segment adjusted
EBITDA was primarily due to the estimated $35 million impact of hurricane related
production outages in the third quarter of 2017 and the sale of the
European surfactants business at the end of 2016. Pro-forma for the
sale of our European surfactants business, adjusted EBITDA was flat
year-over-year.
Advanced Materials
The increase in revenues in our Advanced Materials segment for
the three months ended September 30,
2017 compared to the same period of 2016 was due to higher
sales volumes and higher average selling prices. Sales volumes
increased primarily due to growth in our specialty electronics and
electrical and coatings components businesses, partially offset by
our withdrawal from certain low margin business. Average selling
prices increased in response to higher raw material costs and
favorable product mix. 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.
Textile Effects
The increase in revenues in our Textile Effects segment for the
three months ended September 30, 2017 compared to the
same period of 2016 was due to higher sales volumes, partially
offset by lower average selling prices. Sales volumes
increased in both textile chemicals and dyes, particularly in our
Asia region. Average selling
prices decreased primarily due to competitive market conditions.
The increase in segment adjusted EBITDA was primarily due to higher
sales volumes and lower fixed costs, partially offset by lower
margins.
Corporate, LIFO and other
For the three months ended September 30, 2017, segment
adjusted EBITDA from Corporate and other for Huntsman Corporation
increased by $3 million to a loss of
$42 million from a loss of
$45 million for the same period in
2016.
Held for Sale and Discontinued Operations
Our Pigments and Additives division, known as Venator, is now
classified as Held for Sale on our balance sheet and treated as
discontinued operations on our income statement. We will be
issuing a form 8K with certain restated historical financial
data.
Liquidity, Capital Resources and Outstanding Debt
During the quarter we generated adjusted free cash flow of
$227 million compared to $251 million a year ago. As of September 30, 2017, we had $1,211 million of combined cash and unused
borrowing capacity compared to $1,208
million as of December 31,
2016. Year to date, including the $1.2
billion debt repayment made with the proceeds of the Venator
separation and the $100 million early
repayment of debt made on our term loan this week, we have repaid
approximately $1.6 billion of
debt.
During the nine months ended September
30, 2017, we spent $159
million on capital expenditures compared to $214 million in 2016. We expect to spend
approximately $290 million on capital
expenditures in 2017.
Income Taxes
During the three months ended September
30, 2017, we recorded income tax expense of $35 million compared to $6
million during the same period in 2016. In the third
quarter 2017, our adjusted effective tax rate was 24%. We expect
our fourth quarter adjusted effective tax rate to be similar to the
third quarter. Our 2018 adjusted effective tax rate will be
approximately 25% - 28%.
Earnings Conference Call Information
We will hold a conference call to discuss our third quarter 2017
financial results on Friday, October 27,
2017 at 10:00 a.m. ET.
Call-in numbers for
the conference call:
|
|
U.S.
participants
|
(888) 680 -
0890
|
International
participants
|
(617) 213 -
4857
|
Passcode
|
547 974
21#
|
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=PRRFWWDBY.
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 27, 2017 and ending
November 3, 2017.
Call-in numbers for
the replay:
|
|
U.S.
participants
|
(888) 286 -
8010
|
International
participants
|
(617) 801 -
6888
|
Replay
code
|
29385180
|
Upcoming Conferences
During the fourth quarter a member of management is expected to
present at the Citi Basic Materials Conference on November 28, 2017 and the Bank of America Merrill
Lynch Leveraged Finance Conference on November 30, 2017. A webcast of the presentation,
if applicable, along with accompanying materials will be available
at ir.huntsman.com.
Table 1 – Results
of Operations
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
In millions, except
per share amounts
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
2,169
|
|
$
1,831
|
|
$
6,155
|
|
$
5,614
|
Cost of goods
sold
|
|
1,695
|
|
1,475
|
|
4,852
|
|
4,444
|
Gross
profit
|
|
474
|
|
356
|
|
1,303
|
|
1,170
|
Operating
expenses
|
|
238
|
|
217
|
|
677
|
|
664
|
Restructuring,
impairment and plant closing costs
|
|
1
|
|
38
|
|
13
|
|
56
|
Expenses associated
with the merger
|
|
12
|
|
-
|
|
18
|
|
-
|
Operating
income
|
|
223
|
|
101
|
|
595
|
|
450
|
Interest
expense
|
|
(39)
|
|
(52)
|
|
(134)
|
|
(153)
|
Equity in income of
investment in unconsolidated affiliates
|
|
1
|
|
1
|
|
4
|
|
4
|
Loss on early
extinguishment of debt
|
|
(35)
|
|
(1)
|
|
(36)
|
|
(3)
|
Other income
(expense)
|
|
1
|
|
(3)
|
|
2
|
|
(1)
|
Income before
income taxes
|
|
151
|
|
46
|
|
431
|
|
297
|
Income tax
expense
|
|
(35)
|
|
(6)
|
|
(78)
|
|
(65)
|
Income from
continuing operations
|
|
116
|
|
40
|
|
353
|
|
232
|
Income (loss) from
discontinued operations, net of tax(4)
|
|
63
|
|
24
|
|
101
|
|
(12)
|
Net
income
|
|
179
|
|
64
|
|
454
|
|
220
|
Net income
attributable to noncontrolling interests, net of tax
|
|
(32)
|
|
(9)
|
|
(64)
|
|
(22)
|
Net income
attributable to Huntsman Corporation
|
|
$
147
|
|
$
55
|
|
$
390
|
|
$
198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
$
340
|
|
$
234
|
|
$
899
|
|
$
787
|
Adjusted net
income(1)
|
|
$
164
|
|
$
74
|
|
$
418
|
|
$
302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share
|
|
$
0.62
|
|
$
0.23
|
|
$
1.64
|
|
$
0.84
|
Diluted income per
share
|
|
$
0.60
|
|
$
0.23
|
|
$
1.60
|
|
$
0.83
|
Adjusted diluted
income per share(1)
|
|
$
0.67
|
|
$
0.31
|
|
$
1.72
|
|
$
1.26
|
|
|
|
|
|
|
|
|
|
Common share
information:
|
|
|
|
|
|
|
|
|
Basic shares
outstanding
|
|
239
|
|
236
|
|
238
|
|
236
|
Diluted
shares
|
|
244
|
|
240
|
|
244
|
|
239
|
Diluted shares for
adjusted diluted income per share
|
|
244
|
|
240
|
|
244
|
|
239
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 2 – Results
of Operations by Segment
|
|
|
|
Three months
ended
|
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
Better
/
|
|
September
30,
|
|
Better
/
|
In
millions
|
|
2017
|
|
2016
|
|
(Worse)
|
|
2017
|
|
2016
|
|
(Worse)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes
|
|
$
1,197
|
|
$
891
|
|
34%
|
|
$
3,172
|
|
$
2,703
|
|
17%
|
Performance
Products
|
|
501
|
|
509
|
|
(2)%
|
|
1,595
|
|
1,611
|
|
(1)%
|
Performance
Products, pro forma(2)
|
|
501
|
|
451
|
|
11%
|
|
1,595
|
|
1,433
|
|
11%
|
Advanced
Materials
|
|
263
|
|
247
|
|
6%
|
|
782
|
|
774
|
|
1%
|
Textile
Effects
|
|
193
|
|
184
|
|
5%
|
|
586
|
|
567
|
|
3%
|
Corporate and
eliminations
|
|
15
|
|
-
|
|
n/m
|
|
20
|
|
(41)
|
|
n/m
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
2,169
|
|
$
1,831
|
|
18%
|
|
$
6,155
|
|
$
5,614
|
|
10%
|
Total, pro
forma(2)
|
|
$
2,169
|
|
$
1,773
|
|
22%
|
|
$
6,155
|
|
$
5,436
|
|
13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Adjusted
EBITDA(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes
|
|
$
245
|
|
$
137
|
|
79%
|
|
$
556
|
|
$
439
|
|
27%
|
Performance
Products
|
|
63
|
|
70
|
|
(10)%
|
|
249
|
|
248
|
|
0%
|
Performance
Products, pro forma(2)
|
|
63
|
|
63
|
|
0%
|
|
249
|
|
226
|
|
10%
|
Advanced
Materials
|
|
56
|
|
55
|
|
2%
|
|
166
|
|
173
|
|
(4)%
|
Textile
Effects
|
|
19
|
|
17
|
|
12%
|
|
64
|
|
59
|
|
8%
|
Corporate, LIFO and
other
|
|
(43)
|
|
(45)
|
|
4%
|
|
(136)
|
|
(132)
|
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
340
|
|
$
234
|
|
45%
|
|
$
899
|
|
$
787
|
|
14%
|
Total, pro
forma(2)
|
|
$
340
|
|
$
227
|
|
50%
|
|
$
899
|
|
$
765
|
|
18%
|
n/m = not
meaningful
|
See end of press
release for footnote explanations
|
Table 3 – Factors
Impacting Sales Revenue
|
|
|
|
Three months
ended
|
|
|
|
September 30, 2017
vs. 2016
|
|
|
|
Average Selling
Price(a)
|
|
|
|
|
|
|
|
|
|
Local
|
|
Exchange
|
|
Sales
Mix
|
|
Sales
|
|
|
|
|
|
Currency
|
|
Rate
|
|
&
Other
|
|
Volume(b)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes
|
|
20%
|
|
2%
|
|
0%
|
|
12%
|
|
34%
|
|
Polyurethanes,
adj
|
|
21%
|
|
2%
|
|
1%
|
|
10%
|
|
34%
|
(d)
|
Performance
Products
|
|
9%
|
|
1%
|
|
4%
|
|
(16)%
|
|
(2)%
|
|
Performance
Products, adj
|
|
9%
|
|
1%
|
|
(2)%
|
|
18%
|
|
26%
|
(c)(d)
|
Advanced
Materials
|
|
1%
|
|
2%
|
|
0%
|
|
3%
|
|
6%
|
|
Textile
Effects
|
|
(1)%
|
|
1%
|
|
(2)%
|
|
7%
|
|
5%
|
|
Total
Company
|
|
12%
|
|
2%
|
|
3%
|
|
1%
|
|
18%
|
|
Total Company,
adj
|
|
11%
|
|
2%
|
|
1%
|
|
12%
|
|
26%
|
(c)(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
|
September 30, 2017
vs. 2016
|
|
|
|
Average Selling
Price(a)
|
|
|
|
|
|
|
|
|
|
Local
|
|
Exchange
|
|
Sales
Mix
|
|
Sales
|
|
|
|
|
|
Currency
|
|
Rate
|
|
&
Other
|
|
Volume(b)
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Polyurethanes
|
|
15%
|
|
0%
|
|
5%
|
|
(3)%
|
|
17%
|
|
Polyurethanes,
adj
|
|
15%
|
|
0%
|
|
4%
|
|
1%
|
|
20%
|
(d)(e)
|
Performance
Products
|
|
6%
|
|
0%
|
|
2%
|
|
(9)%
|
|
(1)%
|
|
Performance
Products, adj
|
|
6%
|
|
0%
|
|
(2)%
|
|
12%
|
|
16%
|
(c)(d)
|
Advanced
Materials
|
|
1%
|
|
0%
|
|
0%
|
|
0%
|
|
1%
|
|
Textile
Effects
|
|
(2)%
|
|
0%
|
|
(3)%
|
|
8%
|
|
3%
|
|
Total
Company
|
|
9%
|
|
0%
|
|
6%
|
|
(5)%
|
|
10%
|
|
Total Company,
adj
|
|
8%
|
|
0%
|
|
3%
|
|
5%
|
|
16%
|
(c)(d)(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Hurricane Harvey in 3Q17 and
Other weather realted outages in 2H16.
|
(e) Pro forma
adjusted to exclude the impact from maintenance outages in
2Q17.
|
|
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
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
In millions, except
per share amounts
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
179
|
|
$
64
|
|
|
|
|
|
$
179
|
|
$
64
|
|
$
0.73
|
|
$
0.27
|
Net income
attributable to noncontrolling interests
|
|
(32)
|
|
(9)
|
|
|
|
|
|
(32)
|
|
(9)
|
|
(0.13)
|
|
(0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Huntsman Corporation
|
|
147
|
|
55
|
|
|
|
|
|
147
|
|
55
|
|
0.60
|
|
0.23
|
Interest
expense from continuing operations
|
|
39
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense from
discontinued operations(4)
|
|
8
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
from continuing operations
|
|
35
|
|
6
|
|
$
(35)
|
|
$
(6)
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) from discontinued operations(4)
|
|
17
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from continuing operations
|
|
80
|
|
83
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from discontinued operations(4)
|
|
9
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration expenses
|
|
10
|
|
6
|
|
(3)
|
|
(2)
|
|
7
|
|
4
|
|
0.03
|
|
0.02
|
EBITDA / Income from
discontinued operations, net of tax(4)
|
|
(97)
|
|
(47)
|
|
N/A
|
|
N/A
|
|
(63)
|
|
(24)
|
|
(0.26)
|
|
(0.10)
|
Minority interest of
discontinued operations(1)(4)
|
|
12
|
|
3
|
|
N/A
|
|
N/A
|
|
12
|
|
3
|
|
0.05
|
|
0.01
|
Loss on early
extinguishment of debt
|
|
35
|
|
1
|
|
(12)
|
|
-
|
|
23
|
|
1
|
|
0.09
|
|
-
|
Expenses associated
with merger, net of tax
|
|
12
|
|
-
|
|
(1)
|
|
-
|
|
11
|
|
-
|
|
0.05
|
|
-
|
Net plant incident
costs
|
|
13
|
|
-
|
|
(4)
|
|
-
|
|
9
|
|
-
|
|
0.04
|
|
-
|
Amortization of
pension and postretirement actuarial losses
|
|
19
|
|
14
|
|
(3)
|
|
(5)
|
|
16
|
|
9
|
|
0.07
|
|
0.04
|
Restructuring,
impairment and plant closing and transition costs
|
1
|
|
38
|
|
1
|
|
(12)
|
|
2
|
|
26
|
|
0.01
|
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$
340
|
|
$
234
|
|
$
(57)
|
|
$
(25)
|
|
$
164
|
|
$
74
|
|
$
0.67
|
|
$
0.31
|
Pro forma
adjustments(2)
|
|
-
|
|
$
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjusted
EBITDA(1)
|
|
$
340
|
|
$
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(1)
|
|
|
|
|
|
|
|
|
|
$
57
|
|
$
25
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
32
|
|
9
|
|
|
|
|
Minority interest of
discontinued operations(1)(4)
|
|
|
|
|
|
|
|
|
|
(12)
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$
241
|
|
$
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
24%
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax
|
|
|
|
|
|
Diluted
Income
|
|
|
EBITDA
|
|
Expense
|
|
Net
Income
|
|
Per
Share
|
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
Three months
ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
In millions, except
per share amounts
|
|
2017
|
|
2017
|
|
2017
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
183
|
|
|
|
|
|
|
|
$
183
|
|
|
|
$
0.75
|
|
|
Net income
attributable to noncontrolling interests
|
|
(16)
|
|
|
|
|
|
|
|
(16)
|
|
|
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Huntsman Corporation
|
|
167
|
|
|
|
|
|
|
|
167
|
|
|
|
0.69
|
|
|
Interest
expense from continuing operations
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense from
discontinued operations(4)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
from continuing operations
|
|
24
|
|
|
|
$
(24)
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
from discontinued operations(4)
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from continuing operations
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from discontinued operations(4)
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration expenses
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
|
|
0.02
|
|
|
EBITDA / Income from
discontinued operations, net of tax(4)
|
|
(95)
|
|
|
|
N/A
|
|
|
|
(45)
|
|
|
|
(0.18)
|
|
|
Minority interest of
discontinued operations(1)(4)
|
|
3
|
|
|
|
N/A
|
|
|
|
3
|
|
|
|
0.01
|
|
|
Gain on disposition
of businesses/assets
|
|
(8)
|
|
|
|
-
|
|
|
|
(8)
|
|
|
|
(0.03)
|
|
|
Loss on early
extinguishment of debt
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
Expenses associated
with merger
|
|
6
|
|
|
|
N/A
|
|
|
|
6
|
|
|
|
0.02
|
|
|
Certain legal
settlements and related expenses
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
-
|
|
|
Amortization of
pension and postretirement actuarial losses
|
|
17
|
|
|
|
(4)
|
|
|
|
13
|
|
|
|
0.05
|
|
|
Restructuring,
impairment and plant closing and transition costs
|
3
|
|
|
|
(1)
|
|
|
|
2
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$
299
|
|
|
|
$
(29)
|
|
|
|
$
144
|
|
|
|
$
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(1)
|
|
|
|
|
|
|
|
|
|
$
29
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
Minority interest of
discontinued operations(1)(4)
|
|
|
|
|
|
|
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Tax
|
|
|
|
|
|
Diluted
Income
|
|
|
EBITDA
|
|
(Expense)
Benefit
|
|
Net
Income
|
|
Per
Share
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
In millions, except
per share amounts
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
454
|
|
$
220
|
|
|
|
|
|
$
454
|
|
$
220
|
|
$
1.86
|
|
$
0.92
|
Net income
attributable to noncontrolling interests
|
|
(64)
|
|
(22)
|
|
|
|
|
|
(64)
|
|
(22)
|
|
(0.26)
|
|
(0.09)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Huntsman Corporation
|
|
390
|
|
198
|
|
|
|
|
|
390
|
|
198
|
|
1.60
|
|
0.83
|
Interest
expense from continuing operations
|
|
134
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
(income) from discontinued operations(4)
|
|
8
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
from continuing operations
|
|
78
|
|
65
|
|
(78)
|
|
(65)
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit) from discontinued operations(4)
|
|
41
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from continuing operations
|
|
235
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization from discontinued operations(4)
|
|
68
|
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration expenses
|
|
17
|
|
11
|
|
(4)
|
|
(3)
|
|
13
|
|
8
|
|
0.05
|
|
0.03
|
EBITDA / Income
(loss) from discontinued operations, net of
tax(4)
|
|
(218)
|
|
(63)
|
|
N/A
|
|
N/A
|
|
(101)
|
|
12
|
|
(0.41)
|
|
0.05
|
Minority interest of
discontinued operations(1)(4)
|
|
18
|
|
8
|
|
N/A
|
|
N/A
|
|
18
|
|
8
|
|
0.07
|
|
0.03
|
Gain on disposition
of businesses/assets
|
|
(8)
|
|
-
|
|
-
|
|
-
|
|
(8)
|
|
-
|
|
(0.03)
|
|
-
|
Loss on early
extinguishment of debt
|
|
36
|
|
3
|
|
(12)
|
|
(1)
|
|
24
|
|
2
|
|
0.10
|
|
0.01
|
Expenses associated
with merger
|
|
18
|
|
-
|
|
N/A
|
|
N/A
|
|
17
|
|
-
|
|
0.07
|
|
-
|
Certain legal
settlements and related expenses
|
|
1
|
|
-
|
|
-
|
|
-
|
|
1
|
|
-
|
|
-
|
|
-
|
Net plant incident
costs
|
|
13
|
|
-
|
|
(4)
|
|
-
|
|
9
|
|
-
|
|
0.04
|
|
-
|
Amortization of
pension and postretirement actuarial losses
|
|
55
|
|
42
|
|
(11)
|
|
(10)
|
|
44
|
|
32
|
|
0.18
|
|
0.13
|
Restructuring,
impairment and plant closing and transition costs
|
13
|
|
57
|
|
(2)
|
|
(15)
|
|
11
|
|
42
|
|
0.05
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted(1)
|
|
$
899
|
|
$
787
|
|
$
(111)
|
|
$
(94)
|
|
$
418
|
|
$
302
|
|
$
1.72
|
|
$
1.26
|
Pro forma
adjustments(2)
|
|
-
|
|
$
(22)
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma adjusted
EBITDA(1)
|
|
$
899
|
|
$
765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income tax
expense(1)
|
|
|
|
|
|
|
|
|
|
$
111
|
|
$
94
|
|
|
|
|
Net income
attributable to noncontrolling interests, net of tax
|
|
|
|
|
|
|
|
|
|
64
|
|
22
|
|
|
|
|
Minority interest of
discontinued operations(1)(4)
|
|
|
|
|
|
|
|
|
|
(18)
|
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted pre-tax
income(1)
|
|
|
|
|
|
|
|
|
|
$
575
|
|
$
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted effective
tax rate
|
|
|
|
|
|
|
|
|
|
19%
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See end of press
release for footnote explanations
|
Table 5 – Selected
Balance Sheet Items
|
|
|
|
September
30,
|
|
June
30,
|
|
|
December
31,
|
In
millions
|
|
2017
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
451
|
|
$
486
|
|
|
$
396
|
Accounts and notes
receivable, net
|
|
1,247
|
|
1,207
|
|
|
1,183
|
Inventories
|
|
1,084
|
|
1,089
|
|
|
918
|
Other current
assets
|
|
240
|
|
236
|
|
|
281
|
Current assets held
for sale
|
|
2,745
|
|
962
|
|
|
777
|
Property, plant and
equipment, net
|
|
3,035
|
|
3,039
|
|
|
3,034
|
Other
assets
|
|
1,181
|
|
1,194
|
|
|
1,137
|
Noncurrent assets
held for sale
|
|
-
|
|
1,475
|
|
|
1,463
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
9,983
|
|
$
9,688
|
|
|
$
9,189
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
891
|
|
$
864
|
|
|
$
790
|
Other current
liabilities
|
|
537
|
|
460
|
|
|
471
|
Current portion of
debt
|
|
29
|
|
41
|
|
|
50
|
Current liabilities
held for sale
|
|
1,633
|
|
518
|
|
|
467
|
Long-term
debt
|
|
2,845
|
|
4,061
|
|
|
4,122
|
Other
liabilities
|
|
1,457
|
|
1,466
|
|
|
1,429
|
Noncurrent
liabilities held for sale
|
|
-
|
|
400
|
|
|
393
|
Total
equity
|
|
2,591
|
|
1,878
|
|
|
1,467
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
$
9,983
|
|
$
9,688
|
|
|
$
9,189
|
|
|
|
|
|
|
|
|
Table 6 –
Outstanding Debt
|
|
|
|
September
30,
|
|
December
31,
|
In
millions
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
Senior credit
facilities
|
|
$
592
|
|
$
1,967
|
Accounts receivable
programs
|
|
184
|
|
208
|
Senior
notes
|
|
1,913
|
|
1,812
|
Variable interest
entities
|
|
114
|
|
126
|
Other debt
|
|
71
|
|
59
|
|
|
|
|
|
Total debt -
excluding affiliates
|
|
2,874
|
|
4,172
|
|
|
|
|
|
Total cash
|
|
451
|
|
396
|
|
|
|
|
|
Net debt-
excluding affiliates
|
|
$
2,423
|
|
$
3,776
|
|
|
|
|
|
|
|
|
|
|
Table 7 –
Summarized Statement of Cash Flows
|
|
|
|
Three months
ended
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
In
millions
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Total cash at
beginning of period(a)
|
|
$
520
|
|
$
383
|
|
$
425
|
|
$
269
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities - continuing operations
|
|
261
|
|
333
|
|
538
|
|
736
|
Net cash provided by
operating activities - discontinued
operations(4)
|
|
88
|
|
72
|
|
205
|
|
112
|
Net cash used in
investing activities - continuing operations
|
|
(50)
|
|
(82)
|
|
(145)
|
|
(213)
|
Net cash used in
investing activities - discontinued
operations(4)
|
|
(61)
|
|
(14)
|
|
(49)
|
|
(57)
|
Net cash used in
financing activities
|
|
(125)
|
|
(244)
|
|
(349)
|
|
(397)
|
Effect of exchange
rate changes on cash
|
|
4
|
|
1
|
|
12
|
|
1
|
Change in restricted
cash
|
|
-
|
|
1
|
|
-
|
|
(1)
|
|
|
|
|
|
|
|
|
-
|
Total cash at end
of period(a)
|
|
$
637
|
|
$
450
|
|
$
637
|
|
$
450
|
|
|
|
|
|
|
|
|
|
Supplemental cash
flow information - continuing operations:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
(30)
|
|
$
(36)
|
|
$
(122)
|
|
$
(139)
|
Cash (paid) received
for income taxes
|
|
(21)
|
|
(8)
|
|
36
|
|
(29)
|
Cash paid for capital
expenditures
|
|
(58)
|
|
(82)
|
|
(159)
|
|
(214)
|
Depreciation and
amortization
|
|
80
|
|
83
|
|
235
|
|
238
|
|
|
-
|
|
|
|
|
|
|
Changes in primary
working capital:
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
$
(28)
|
|
$
68
|
|
$
(148)
|
|
$
(3)
|
Inventories
|
|
19
|
|
57
|
|
(118)
|
|
133
|
Accounts
payable
|
|
16
|
|
13
|
|
95
|
|
(11)
|
|
|
|
|
|
|
|
|
|
Total cash (used in)
provided by primary working capital
|
|
$
7
|
|
$
138
|
|
$
(171)
|
|
$
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Free cash
flow(3):
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
261
|
|
$
333
|
|
$
538
|
|
$
736
|
Capital
expenditures
|
|
(58)
|
|
(82)
|
|
(159)
|
|
(214)
|
All other investing
activities, excluding acquisition and disposition
activities(b)
|
|
6
|
|
-
|
|
7
|
|
1
|
Non-recurring merger
costs(c)
|
|
18
|
|
-
|
|
18
|
|
-
|
|
|
|
|
|
|
|
|
|
Total free cash
flow
|
|
$
227
|
|
$
251
|
|
$
404
|
|
$
523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
340
|
|
$
234
|
|
$
899
|
|
$
787
|
Capital
expenditures
|
|
(58)
|
|
(82)
|
|
(159)
|
|
(214)
|
Capital
reimbursements
|
|
-
|
|
2
|
|
1
|
|
28
|
Interest
|
|
(30)
|
|
(36)
|
|
(122)
|
|
(139)
|
Income
taxes
|
|
(21)
|
|
(8)
|
|
36
|
|
(29)
|
Primary working
capital change
|
|
7
|
|
138
|
|
(171)
|
|
119
|
Restructuring
|
|
(7)
|
|
(19)
|
|
(26)
|
|
(42)
|
Pensions
|
|
(48)
|
|
(13)
|
|
(85)
|
|
(45)
|
Maintenance &
other
|
|
44
|
|
35
|
|
31
|
|
58
|
|
|
|
|
|
|
|
|
|
Total free cash
flow(3)
|
|
$
227
|
|
$
251
|
|
$
404
|
|
$
523
|
|
|
|
|
|
|
|
|
|
Free cash flow of
discontinued operations(3)(4)
|
|
$
61
|
|
$
52
|
|
$
217
|
|
$
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Includes
restricted cash and cash held in discontinued
operations.
|
(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 merger of
equals with Clariant.
|
|
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 interests, net of
tax; (b) interest; (c) income taxes; (d) depreciation and
amortization; (e) acquisition and integration expenses; (f) Income
(loss) from discontinued operations, net of tax; (g) minority
interest from discontinued operations (h) loss (gain) on
disposition of businesses/assets; (i) loss on early extinguishment
of debt; (j) expenses associated with merger; (k) certain legal
settlements and related expenses (l) net plant incident costs
(credits); (m) amortization of pension and postretirement actuarial
losses (gains); and (n) 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) Income (loss) from discontinued operations, net of
tax;; (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)
expenses associated with the merger; (i) certain legal settlements
and related expenses; (j) net plant incident costs (credits); (k)
minority interest from discontinued operations; (l) amortization of
pension and postretirement actuarial losses (gains); and (m)
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 third
quarter of 2017 we separated our Pigments and Additives division
through an Initial Public Offering of Venator Materials PLC;
Additionally, during the first quarter 2010 we closed our
Australian styrenics operations. Results from these
associated businesses are treated as discontinued
operations.
|
About Huntsman:
Huntsman Corporation is a publicly
traded global manufacturer and marketer of differentiated and
specialty chemicals with 2016 revenues of more than $7
billion. 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
75 manufacturing, R&D and operations facilities in over 30
countries and employ approximately 10,000 associates within our
four distinct business divisions. For more information about
Huntsman, please visit the company's website at
www.huntsman.com.
Social Media:
Twitter:
www.twitter.com/Huntsman_Corp
Facebook:
www.facebook.com/huntsmancorp
LinkedIn:
www.linkedin.com/company/huntsman
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: effects of disruption caused by the
announcement of and termination of the merger of equals transaction
and its termination making it more difficult to maintain
relationships with employees, customers, vendors and other business
partners; the risk that stockholder litigation in connection with
the contemplated transaction and its termination may result in
significant costs of defense, indemnification and liability;
transaction costs; volatile global economic conditions, cyclical
and volatile product markets, disruptions in production at
manufacturing facilities, reorganization or restructuring of
Huntsman's operations, the ability to implement cost reductions and
manufacturing optimization improvements in Huntsman businesses, and
other 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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SOURCE Huntsman Corporation