HUNTSMAN CORPORATION THE WOODLANDS, Texas, April 26, 2017 /PRNewswire/ --
First Quarter 2017 Highlights
-- Net income was $92 million compared to $62 million in the prior year
period and $137 million in the prior quarter.
-- Adjusted EBITDA was $329 million compared to $274 million in the prior
year period and $256 million in the prior quarter.
-- Diluted income per share was $0.31 compared to $0.24 in the prior year
period and $0.53 in the prior quarter.
-- Adjusted diluted income per share was $0.57 compared to $0.37 in the
prior year period and $0.30 in the prior quarter.
-- Net cash provided by operating activities was $93 million. Free cash
flow generation was $82 million.
-- On April 25, 2017, we made a $100 million early repayment of debt.
-- We are committed to an IPO or spin of our Pigments business in the
summer of 2017.
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
Huntsman Corporation (NYSE: HUN) today reported first quarter 2017 results with revenues of $2,469 million, net income of $92 million and adjusted EBITDA of $329 million.
Peter R. Huntsman, our President and CEO, commented:
"Within the first quarter we saw positive business trends develop such that earnings for all our divisions exceeded early quarter expectations. Additionally, it is noteworthy that our combined non-pigment businesses experienced year-over-year EBITDA growth. Net income was $92 million and adjusted EBITDA improved by $62 million to $329 million compared to the prior year after taking into consideration the fourth quarter 2016 sale of our European surfactants business. Our cash flow provided from operating activities was $93 million. Strong earnings fueled free cash flow delivery of $82 million which includes $54 million of insurance proceeds, an improvement of $95 million compared to the prior year first quarter. We continue to strengthen our balance sheet and on April 25, 2017 we voluntarily repaid $100 million of debt. In total, we have repaid approximately $670 million over the last year. As a result of the strong first quarter earnings and our improving outlook for the remainder of the year, we now expect to generate more than $450 million of free cash flow in 2017."
"We continue our efforts to separate our Pigments and Additives division (known as Venator) and are targeting an IPO or spin during this upcoming summer."
Segment Analysis for 1Q17 Compared to 1Q16
Polyurethanes
The increase in revenues in our Polyurethanes segment for the three months ended March 31, 2017 compared to the same period of 2016 was primarily due to higher average selling prices. MDI average selling prices increased in response to higher raw material costs and continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI and MTBE volumes were flat compared to the same period of 2016. The increase in segment adjusted EBITDA was primarily due to higher MDI margins, partially offset by lower MTBE margins.
Performance Products
The decrease in revenues in our Performance Products segment for the three months ended March 31, 2017 compared to the same period of 2016 was due to lower sales volumes because of the sale of the European surfactants business to Innospec Inc. on December 30, 2016, partially offset by higher sales volumes in largely all of our businesses as well as higher average selling prices. On a Pro-forma basis, volumes increased 10%. The decrease in segment adjusted EBITDA was primarily due to the sale of the European surfactants business and lower margins in our amines and maleic anhydride businesses, partially offset by higher sales volumes and lower fixed costs.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for the three months ended March 31, 2017 compared to the same period of 2016 was primarily due to lower sales volumes. Sales volumes decreased primarily due to our withdrawal from certain low margin business in the coatings and construction markets and competitive pressures in the wind market, partially offset by growth in certain higher value businesses. The decrease in segment adjusted EBITDA was due to lower sales volumes, higher raw material costs, and adverse fixed costs associated with optimizing our inventory to lower levels.
Textile Effects
The increase in revenues in our Textile Effects segment for the three months ended March 31, 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, Europe and South America regions. Average selling prices decreased primarily in response to lower raw material costs and product mix. The increase in segment adjusted EBITDA was primarily due to higher volumes and lower fixed costs.
Pigments and Additives
In the Pigments and Additives division revenues were essentially unchanged for the three months ended March 31, 2017 compared to the same period of 2016 as higher average local currency selling prices were offset by lower sales volumes from the fire at our Pori, Finland titanium dioxide facility. Average selling prices increased primarily due to improved business conditions for titanium dioxide. Sales volumes increased within our complementary performance additives business. The increase in adjusted EBITDA was primarily due to higher average selling prices for titanium dioxide and lower costs resulting from restructuring savings, partially offset by approximately $15 million in lower EBITDA resulting from the fire at our Pori, Finland titanium dioxide facility.
Corporate, LIFO and other
Adjusted EBITDA for Corporate, LIFO and Other decreased by $1 million to a loss of $43 million for the three months ended March 31, 2017 compared to a loss of $42 million for the same period in 2016. The slight decrease in adjusted EBITDA was primarily a result of a decrease in LIFO inventory valuation income, partially offset by an increase in income from benzene sales.
Separation Update
We intend to pursue a possible initial public offering of Venator. This is our preferred route to separate Venator as it is intended to provide significantly more value for Huntsman Shareholders by allowing for greater deleveraging of Huntsman. We plan on leaving our Form 10 on file for a potential spin in the event that the IPO market conditions become unfavorable. Either way, we are working toward an initial public offering or spin during the upcoming summer months of 2017.
Liquidity, Capital Resources and Outstanding Debt
As of March 31, 2017, we had $1,292 million of combined cash and unused borrowing capacity compared to $1,208 million as of December 31, 2016.
During the three months ended March 31, 2017 we spent $74 million on capital expenditures compared to $99 million in 2016. We expect to spend approximately $380 million on capital expenditures in 2017 net of capital reimbursements. On April 21, 2017 we amended our AR securitization facilities, which among other things extended our maturities from 2018 to 2020. On April 25, 2017, we made a $100 million early repayment of debt on our term loan B due 2019.
Income Taxes
During the three months ended March 31, 2017, we recorded an income tax expense of $23 million. During the same period, we paid $8 million in cash for income taxes.
In the first quarter 2017, our adjusted effective tax rate was 19%. We expect our long term adjusted effective tax rate will be approximately 30%. We expect our 2017 adjusted effective tax rate to be approximately 25 - 30%.
Earnings Conference Call Information
We will hold a conference call to discuss our first quarter 2017 financial results on Wednesday, April 26, 2017 at 9:00 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 679 - 8033
International participants (617) 213 - 4846
Passcode 549 608 51#
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=PYK3Y9X8X.
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 April 26, 2017 and ending May 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 second quarter a member of management is expected to present at the Wells Fargo Chemical Conference on May 9, 2017, the Goldman Sachs Basic Materials Conference on May 16, 2017 and Vertical Research Partners Materials Conference June 14-15, 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
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.
About Huntsman:
Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2016 revenues of approximately $10 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 100 manufacturing and R&D facilities in approximately 30 countries and employ approximately 15,000 associates within our 5 distinct business divisions including the Pigments and Additives division that we intend to IPO or spin-off as Venator Materials Corporation. For more information about Huntsman, please visit the company's website at www.huntsman.com.
Social Media:
Twitter: twitter.com/Huntsman_Corp
Facebook: www.facebook.com/huntsmancorp
LinkedIn: www.linkedin.com/company/huntsman
Cautionary Statement
This release shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended.
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, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of Huntsman's operations, including any delay of, or other negative developments affecting, the IPO or spin-off of Venator Materials Corporation, the ability to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, 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
