HUNTSMAN CORPORATION 
By THE WOODLANDS, Texas, Nov. 2, 2012 /PRNewswire/ --
Third Quarter 2012 Highlights
-- Net income attributable to Huntsman Corporation increased to $116
million compared to a loss of $34 million in the prior year period.
-- Adjusted EBITDA improved 16% to $401 million compared to the prior year
period.
-- Adjusted diluted income per share improved 49% to $0.70 compared to the
prior year period.
Three months ended Nine months ended
------------------ -----------------
September 30, June 30, September 30,
------------- -------- -------------
In millions, except
per share amounts,
unaudited 2012 2011 2012 2012 2011
------------------- ---- ---- ---- ---- ----
Revenues $2,741 $2,976 $2,914 $8,568 $8,589
Net income (loss)
attributable to
Huntsman Corporation $116 $(34) $124 $403 $142
Adjusted net
income(1) $168 $114 $139 $484 $340
Diluted income (loss)
per share $0.48 $(0.14) $0.52 $1.68 $0.59
Adjusted diluted
income per share(1) $0.70 $0.47 $0.58 $2.01 $1.40
EBITDA(1) $341 $204 $352 $1,083 $766
Adjusted EBITDA(1) $401 $346 $365 $1,163 $971
See end of press release for footnote explanations
Huntsman Corporation (NYSE: HUN) today reported third quarter 2012 results with revenues of $2,741 million and adjusted EBITDA of $401 million.
Peter R. Huntsman, our President and CEO, commented:
"Our third quarter 2012 Adjusted EBITDA of $401 million represents a new record in quarterly earnings. Compared to the prior year and quarter, improved earnings in our polyurethanes businesses more than offset the decline in our pigments business. In addition to the increased earnings in our polyurethanes business, all of our non-pigments businesses saw an increase in earnings from the previous year.
During the quarter, we generated more than $200 million in cash from operations and prepaid $75 million of debt. Earlier this week, we prepaid an additional $50 million of debt.
In addition to aggressive sales efforts, we continue to benefit from our ongoing restructuring and cost cutting that was started last year and will continue to deliver a better cost structure into 2013."
Segment Analysis for 3Q12 Compared to 3Q11
Polyurethanes
The increase in revenues in our Polyurethanes division for the three months ended September 30, 2012 compared to the same period in 2011 was due to higher average selling prices and improved sales mix partially offset by lower sales volumes and the strength of the U.S. dollar against major European currencies. PO/MTBE average selling prices increased primarily due to favorable market conditions. MDI average selling prices increased in all regions but were offset by the strength of the U.S. dollar against major European currencies. PO/MTBE sales volumes decreased partially offset by an increase in MDI sales volumes primarily as a result of improved demand in the European and Asian regions and in certain large markets such as composite wood products and adhesives, coatings and elastomers. The increase in adjusted EBITDA was primarily due to higher contribution margins and improved sales mix.
Performance Products
The decrease in revenues in our Performance Products division for the three months ended September 30, 2012 compared to the same period in 2011 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily in response to lower raw material costs and the strength of the U.S. dollar against major international currencies. Sales volumes decreased primarily due to a shift to tolling arrangements. The increase in adjusted EBITDA was primarily due to higher contribution margins as raw material costs decreased.
Advanced Materials
The decrease in revenues in our Advanced Materials division for the three months ended September 30, 2012 compared to the same period in 2011 was primarily due to lower average selling prices partially offset by higher sales volumes. Average selling prices decreased primarily in response to lower raw material costs, competitive market pressure and the strength of the U.S. dollar against major international currencies. Sales volumes increased primarily due to stronger demand in Europe, the Americas and India while sales volumes in the Asia Pacific region decreased due to lower demand in the wind energy and electrical engineering markets. The increase in adjusted EBITDA was primarily due to higher sales volumes and lower selling, general and administrative costs as a result of recent restructuring efforts.
Textile Effects
The increase in revenues in our Textile Effects division for the three months ended September 30, 2012 compared to the same period in 2011 was primarily due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased due to increased market share in key markets, notably Asia. Average selling prices decreased primarily due to the strength of the U.S. dollar against major international currencies. The increase in adjusted EBITDA was primarily due to higher sales volumes and lower manufacturing and selling, general and administrative costs as a result of recent restructuring efforts.
Pigments
The decrease in revenues in our Pigments division for the three months ended September 30, 2012 compared to the same period in 2011 was due to lower sales volumes. Sales volumes decreased primarily due to lower global demand. The increase in local currency average selling prices was offset by the strength of the U.S. dollar against major international currencies. The decrease in adjusted EBITDA was primarily due to lower sales volumes and higher raw material costs.
Corporate, LIFO and Other
Adjusted EBITDA from Corporate, LIFO and other increased by $12 million to a loss of $37 million for the three months ended September 30, 2012 compared to a loss of $49 million for the same period in 2011. The increase in adjusted EBITDA was primarily the result of a $10 million decrease in LIFO inventory valuation expense ($2 million of income in 2012 compared to $8 million of expense in 2011).
Liquidity, Capital Resources and Outstanding Debt
As of September 30, 2012, we had $1,038 million of combined cash and unused borrowing capacity compared to $1,043 million at December 31, 2011. For the three months ended September 30, 2012, our primary net working capital increased by $10 million and we generated $208 million in cash from operations.
During the third quarter 2012 we prepaid $75 million of our senior secured term loans. During October, 2012 we prepaid an additional $50 million of our senior secured term loan.
Total capital expenditures for the three months ended September 30, 2012 were $85 million. We expect to spend approximately $425 - $450 million on capital expenditures in 2012 which approximates our annual depreciation and amortization.
Income Taxes
During the three months ended September 30, 2012 we recorded income tax expense of $61 million. Our adjusted effective income tax rate for the three months ended September 30, 2012 was approximately 31%. We expect our long term effective income tax rate to be approximately 30 - 35%. During the three months ended September 30, 2012, we paid $83 million in cash for income taxes.
Conference Call Information
We will hold a conference call to discuss our third quarter 2012 financial results on Friday, November 2, 2012 at 10:00 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 713 - 4217
International participants (617) 213 - 4869
Passcode 67952871
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=P9F6FYPGT
Webcast Information
The conference call will be available via webcast and can be accessed from the investor relations portion of the company's website at huntsman.com.
Replay Information
The conference call will be available for replay beginning November 2, 2012 and ending November 9, 2012.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International participants (617) 801 - 6888
Replay code 91700765
Table 1 - Results of Operations
Three months ended Nine months ended
September 30, September 30,
------------- -------------
In millions,
except per
share
amounts,
unaudited 2012 2011 2012 2011
------------ ---- ---- ---- ----
Revenues $2,741 $2,976 $8,568 $8,589
Cost of goods
sold 2,204 2,486 6,954 7,138
----- ----- ----- -----
Gross profit 537 490 1,614 1,451
Operating
expenses 255 258 792 821
Restructuring,
impairment and
plant closing
costs 47 155 52 171
--- --- --- ---
Operating
income 235 77 770 459
Interest
expense, net (56) (63) (172) (187)
Equity in
income of
investment in
unconsolidated
affiliates 2 2 5 6
Loss on early
extinguishment
of debt (1) (2) (2) (5)
Other income
(loss) 1 (1) 2 -
--- ---
Income before
income taxes 181 13 603 273
Income tax
expense (61) (55) (186) (111)
---- ----
Income (loss)
from
continuing
operations 120 (42) 417 162
(Loss) income
from
discontinued
operations,
net of tax(2) (1) 10 (7) (5)
Extraordinary
gain on the
acquisition
of a
business, net
of tax of nil 1 - 1 2
--- ---
Net income
(loss) 120 (32) 411 159
Net income
attributable
to
noncontrolling
interests,
net of tax (4) (2) (8) (17)
Net income
(loss)
attributable
to Huntsman
Corporation $116 $(34) $403 $142
==== ==== ==== ====
Adjusted
EBITDA(1) $401 $346 $1,163 $971
Adjusted net
income(1) $168 $114 $484 $340
Basic income
(loss) per
share $0.49 $(0.14) $1.70 $0.60
Diluted income
(loss) per
share $0.48 $(0.14) $1.68 $0.59
Adjusted
diluted
income per
share(1) $0.70 $0.47 $2.01 $1.40
Common share
information:
Basic shares
outstanding 237.9 237.6 237.4 238.2
Diluted shares 240.8 237.6 240.3 242.6
Diluted shares
for adjusted
diluted
income per
share 240.8 241.3 240.3 242.6
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, unaudited 2012 2011 (Worse) 2012 2011 (Worse)
---------------------- ---- ---- ------ ---- ---- ------
Segment Revenues:
Polyurethanes $1,244 $1,209 3% $3,735 $3,391 10%
Performance Products 742 846 (12)% 2,319 2,546 (9)%
Advanced Materials 328 349 (6)% 1,014 1,059 (4)%
Textile Effects 182 173 5% 562 563 ---
Pigments 319 455 (30)% 1,150 1,243 (7)%
Eliminations and other (74) (56) (32)% (212) (213) ---
--- --- ---- ----
Total $2,741 $2,976 (8)% $8,568 $8,589 ---
====== ====== ====== ======
Segment Adjusted EBITDA(1):
Polyurethanes $239 $140 71% $586 $397 48%
Performance Products 107 97 10% 282 314 (10)%
Advanced Materials 30 26 15% 86 96 (10)%
Textile Effects (10) (29) 66% (23) (42) 45%
Pigments 72 161 (55)% 352 363 (3)%
Corporate, LIFO and other (37) (49) 24% (120) (157) 24%
Total $401 $346 16% $1,163 $971 20%
==== ==== ====== ====
See end of press release for footnote explanations
Table 3 - Factors Impacting Sales Revenues
Three months ended
September 30, 2012 vs. 2011
---------------------------
Average Selling Price(a)
-----------------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(a) Total
--------- -------- ---- ------- -------- -----
Polyurethanes 5% (5)% 4% (1)% 3%
Performance Products (7)% (4)% 1% (2)% (12)%
Advanced Materials (11)% (7)% 1% 11% (6)%
Textile Effects (2)% (7)% (1)% 15% 5%
Pigments 7% (7)% --- (30)% (30)%
Total Company (1)% (5)% --- (2)% (8)%
Nine months ended
September 30, 2012 vs. 2011
---------------------------
Average Selling Price(a)
-----------------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(a) Total
--------- -------- ---- ------- -------- -----
Polyurethanes 4% (3)% 2% 7% 10%
Performance Products (5)% (2)% --- (2)% (9)%
Advanced Materials (5)% (5)% (2)% 8% (4)%
Textile Effects (1)% (4)% (1)% 6% ---
Pigments 22% (6)% --- (23)% (7)%
Total Company 3% (4)% 1% --- ---
(a) Excludes revenues and sales volumes primarily from tolling arrangements and the sale of by-products and raw materials.
Table 4 - Reconciliation of U.S. GAAP to Non-GAAP Measures
Income Tax Net Income (Loss) Diluted Income (Loss)
EBITDA (Expense) Benefit 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 2012 2011 2012 2011 2012 2011 2012 2011
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $341 $204 $(61) $(55) $116 $(34) $0.48 $(0.14)
Adjustments:
Legal settlements and related expenses 4 4 (2) (1) 2 3 0.01 0.01
Loss on early extinguishment of debt 1 2 (1) (1) - 1 - -
Loss on initial consolidation of
subsidiaries 4 - - - 4 - 0.02 -
Restructuring, impairment, plant closing
and transition costs 51 155 (11) (3) 40 152 0.17 0.63
Discount amortization on settlement
financing associated with the terminated
merger N/A N/A (3) (3) 5 4 0.02 0.02
Acquisition expenses 1 1 - - 1 1 - -
Gain on disposition of businesses/assets - (3) - - - (3) - (0.01)
(Income) loss from discontinued
operations, net of tax(2) - (17) N/A N/A 1 (10) - (0.04)
Extraordinary gain on the acquisition of a
business, net of tax (1) - N/A N/A (1) - - -
Adjusted(1) $401 $346 $(78) $(63) $168 $114 $0.70 $0.47
==== ==== ==== ==== ==== ==== ----- -----
Adjusted income tax expense 78 63
Net income attributable to noncontrolling
interests, net of tax 4 2
Adjusted pre-tax income(1) $250 $179
==== ====
Adjusted effective tax rate 31% 35%
Income Tax Net Income (Loss) Diluted Income (Loss)
EBITDA (Expense) Benefit Attrib. to HUN Corp. 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,
unaudited 2012 2012 2012 2012
-------------------------------------- ---- ---- ---- ----
GAAP(1) $352 $(65) $124 $0.52
Adjustments:
Restructuring, impairment, plant closing
and transition costs 9 (2) 7 0.03
Discount amortization on settlement
financing associated with the terminated
merger N/A (3) 5 0.02
Acquisition expenses 1 - 1 -
Loss from discontinued operations, net of
tax(2) 3 N/A 2 0.01
Adjusted(1) $365 $(70) $139 $0.58
==== ==== ==== -----
Adjusted income tax expense 70
Adjusted pre-tax income(1) $213
====
Adjusted effective tax rate 33%
Income Tax Net Income (Loss) Diluted Income (Loss)
EBITDA (Expense) Benefit Attrib. to HUN Corp. 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,
unaudited 2012 2011 2012 2011 2012 2011 2012 2011
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $1,083 $766 $(186) $(111) $403 $142 $1.68 $0.59
Adjustments:
Legal settlements and related expenses 5 38 (2) (14) 3 24 0.01 0.10
Loss on early extinguishment of debt 2 5 (1) (2) 1 3 - 0.01
Loss (gain) on initial consolidation of
subsidiaries 4 (12) - 2 4 (10) 0.02 (0.04)
Restructuring, impairment, plant closing
and transition costs 64 171 (14) (4) 50 167 0.21 0.69
Discount amortization on settlement
financing associated with the terminated
merger N/A N/A (8) (8) 15 13 0.06 0.05
Acquisition expenses 2 5 - (1) 2 4 0.01 0.02
Gain on disposition of businesses/assets - (6) - - - (6) - (0.02)
Loss from discontinued operations, net of
tax(2) 4 6 N/A N/A 7 5 0.03 0.02
Extraordinary gain on the acquisition of a
business, net of tax (1) (2) N/A N/A (1) (2) - (0.01)
Adjusted(1) $1,163 $971 $(211) $(138) $484 $340 $2.01 $1.40
====== ==== ===== ===== ==== ==== ----- -----
Adjusted income tax expense 211 138
Net income attributable to noncontrolling
interests, net of tax 8 17
Adjusted pre-tax income(1) $703 $495
==== ====
Adjusted effective tax rate 30% 28%
See end of press release for footnote explanations
Table 5 - Reconciliation of Net Income (Loss) to EBITDA
Three months ended Nine months ended
------------------ -----------------
September 30, June 30, September 30,
------------- -------- -------------
In millions, unaudited 2012 2011 2012 2012 2011
---------------------- ---- ---- ---- ---- ----
Net income (loss)
attributable to Huntsman
Corporation $116 $(34) $124 $403 $142
Interest expense, net 56 63 57 172 187
Income tax expense from
continuing operations 61 55 65 186 111
Income tax expense (benefit)
from discontinued
operations(2) - 7 (1) (2) (1)
Depreciation and
amortization of continuing
operations 107 113 107 319 327
Depreciation and
amortization of
discontinued operations(2) 1 - - 5 -
EBITDA(1) $341 $204 $352 $1,083 $766
==== ==== ==== ====== ====
See end of press release for footnote explanations
Table 6 - Selected Balance Sheet Items
September 30, June 30, December 31,
------------
In millions 2012 2012 2011
----------- ---- ---- ----
(unaudited) (unaudited)
Cash $444 $461 $562
Accounts and notes
receivable, net 1,626 1,677 1,529
Inventories 1,807 1,645 1,539
Other current assets 365 326 316
Property, plant and
equipment, net 3,626 3,536 3,622
Other assets 1,078 1,084 1,089
Total assets $8,946 $8,729 $8,657
====== ====== ======
Accounts payable $1,017 $976 $862
Other current liabilities 758 729 752
Current portion of debt 130 143 212
Long-term debt 3,550 3,601 3,730
Other liabilities 1,275 1,274 1,325
Total equity 2,216 2,006 1,776
Total liabilities and
equity $8,946 $8,729 $8,657
====== ====== ======
Table 7 - Outstanding Debt
September 30, June 30, December 31,
In millions 2012 2012 2011
----------- ---- ---- ----
(unaudited) (unaudited)
Debt:
Senior credit facilities $1,613 (a) $1,686 $1,696
Accounts receivable
programs 237 232 237
Senior notes 490 (b) 483 472
Senior subordinated notes 892 893 976
Variable interest entities 266 271 281
Other debt 182 179 280
Total debt -excluding
affiliates 3,680 3,744 3,942
----- ----- -----
Total cash 444 461 562
--- --- ---
Net debt- excluding
affiliates $3,236 $3,283 $3,380
====== ====== ======
(a) net of $28 million unamortized discount as of September 30, 2012
(b) net of $110 million unamortized discount as of September 30, 2012
Table 8 - Summarized Statement of Cash Flows
Three months ended Nine months ended
September 30, September 30,
------------- -------------
In millions, unaudited 2012 2012 2011
---------------------- ---- ---- ----
Total cash at beginning of
period $461 $562 $973
Net cash provided by
operating activities 208 556 25
Net cash used in investing
activities (114) (299) (200)
Net cash used in financing
activities (114) (378) (335)
Effect of exchange rate
changes on cash 3 2 (3)
Change in restricted cash - 1 (1)
Total cash at end of period $444 $444 $459
==== ==== ====
Supplemental cash flow
information:
Cash paid for interest $(71) $(177) $(178)
Cash paid for income taxes $(83) $(153) $(84)
Cash paid for capital
expenditures $(85) $(248) $(217)
Depreciation & amortization $108 $324 $327
Changes in primary working
capital:
Accounts and notes
receivable $81 $(102) $(314)
Inventories (113) (252) (273)
Accounts payable 22 122 81
Total use of cash $(10) $(232) $(506)
==== ===== =====
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: EBITDA from discontinued operations; restructuring, impairment, plant closing and transition costs (credits); acquisition expenses; certain legal settlements and related expenses; loss on early extinguishment of debt; loss (gain) on initial consolidation of subsidiaries; extraordinary loss (gain) on the acquisition of a business; and loss (gain) on disposition of businesses/assets. 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: loss (income) from discontinued operations; restructuring, impairment, plant closing and transition costs (credits); discount amortization on settlement financing associated with the terminated merger; acquisition expenses; certain legal settlements and related expenses; loss on early extinguishment of debt; loss (gain) on initial consolidation of subsidiaries; extraordinary loss (gain) on the acquisition of a business; and loss (gain) on disposition of businesses/assets. 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) During the first quarter 2010 we closed our Australian styrenics operations, results from this business are treated as discontinued operations.
About Huntsman:
Huntsman is a global manufacturer and marketer of differentiated chemicals. Our operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging and, later, for rapid and integrated growth in petrochemicals, Huntsman has approximately 12,000 employees and operates from multiple locations worldwide. The Company had 2011 revenues of over $11 billion. 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.
SOURCE Huntsman Corporation
