HUNTSMAN CORPORATION 
By THE WOODLANDS, Texas, July 31, 2013 /PRNewswire/ --
Second Quarter 2013 Highlights
-- Adjusted EBITDA was $304 million, a decrease of $72 million compared to
$376 million in the prior year period primarily as a result of the $103
million decrease in our TiO2 Pigments division. Adjusted EBITDA
increased $84 million compared to $220 million in the prior quarter.
-- Adjusted diluted income per share was $0.39 compared to $0.61 in the
prior year period and $0.19 in the prior quarter.
-- Net income attributable to Huntsman Corporation was $47 million compared
to net income of $124 million in the prior year period and net loss of
$24 million in the prior quarter.
-- On July 8, 2013 we announced an agreement to acquire the business of
Oxid, a privately-held manufacturer and marketer of specialty urethane
polyols. This transaction is expected to close during the third quarter
of 2013.
Three months ended Six months
ended
------------------
June 30, March 31, June 30,
-------- --------
In millions,
except per
share
amounts,
unaudited 2013 2012 2013 2013 2012
------------ ---- ---- ---- ---- ----
Revenues $2,830 $2,914 $2,702 $5,532 $5,827
Net income
(loss)
attributable
to Huntsman
Corporation $47 $124 $(24) $23 $287
Adjusted net
income(1) $94 $147 $46 $140 $333
Diluted
income
(loss) per
share $0.19 $0.52 $(0.10) $0.10 $1.19
Adjusted
diluted
income per
share(1) $0.39 $0.61 $0.19 $0.58 $1.39
EBITDA(1) $249 $352 $112 $361 $742
Adjusted
EBITDA(1) $304 $376 $220 $524 $783
See end of press release for footnote explanations
Huntsman Corporation (NYSE: HUN) today reported second quarter 2013 results with revenues of $2,830 million and adjusted EBITDA of $304 million.
Peter R. Huntsman, our President and CEO, commented:
"I am pleased with the quality of our second quarter results. Excluding the approximate $25 million negative impact from the force majeure at our European MDI facility, and with the exception of our TiO2 Pigments division, all of our divisions improved year over year and compared to the prior quarter's performance. We are starting to see the benefits of our restructuring efforts within our Textile Effects and Advanced Materials divisions. I am also impressed with the strong earnings from our Performance Products division following the planned maintenance closure earlier in the year.
While many areas of the global economy continue to moderate or languish, between new products, our focus on growing sectors and our further cost reduction efforts, we believe that we will see an improving second half of the year."
Segment Analysis for 2Q13 Compared to 2Q12
Polyurethanes
The decrease in revenues in our Polyurethanes division for the three months ended June 30, 2013 compared to the same period in 2012 was primarily due to sales mix effect partially offset by higher average selling prices. MDI sales volumes decreased in the European region primarily as a result of the force majeure at our MDI facility in Rotterdam, The Netherlands partially offset by increased sales volumes in the Americas and Asia Pacific regions. PO/MTBE sales volumes were essentially unchanged. MDI average selling prices increased in all regions primarily in response to higher raw material costs. PO/MTBE average selling prices decreased primarily due to less favorable market conditions. Adjusted EBITDA was unchanged as increased PO/MTBE earnings offset the impact of the force majeure at our MDI facility in Rotterdam, The Netherlands.
Performance Products
Sales revenues in our Performance Products division for the three months ended June 30, 2013 compared to the same period in 2012 were essentially unchanged. Average selling prices decreased primarily in response to lower raw material costs offset by an improvement in sales mix effect. Sales volumes were essentially unchanged as higher sales of maleic anhydride and glycols were offset by lower surfactant sales. The increase in adjusted EBITDA was primarily due to higher margins in our maleic anhydride and U.S. ethylene derivatives.
Advanced Materials
The decrease in revenues in our Advanced Materials division for the three months ended June 30, 2013 compared to the same period in 2012 was primarily due to lower sales volumes, partially offset by higher average selling prices. Sales volumes decreased in the European and India Middle East regions, primarily in our base resins business due to weaker demand and increased competition while sales volumes in the Americas region increased primarily due to strong demand in the aerospace and coatings and construction markets. Average selling prices increased in the European region, primarily in response to higher raw material costs and increased focus on higher value component sales, partially offset by decreases in average selling prices in the Asia Pacific formulations business and in the Americas base resins business due to increased competition. The increase in adjusted EBITDA was primarily due to lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts, partially offset by lower contribution margins and lower sales volumes.
Textile Effects
The increase in revenues in our Textile Effects division for the three months ended June 30, 2013 compared to the same period in 2012 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to increased market share in key markets. Average selling prices increased primarily in response to higher raw material costs. The increase in adjusted EBITDA was primarily due to higher sales volumes, higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.
Pigments
The decrease in revenues in our Pigments division for the three months ended June 30, 2013 compared to the same period in 2012 was primarily due to lower average selling prices partially offset by higher sales volumes. Average selling prices decreased in all regions of the world primarily as a result of high industry inventory levels, however we have now seen sequential stabilization in selling prices. Sales volumes increased primarily due to higher end-use demand. The decrease in adjusted EBITDA was primarily due to lower contribution margins partially offset by lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.
Corporate, LIFO and Other
Adjusted EBITDA from Corporate, LIFO and Other decreased by $6 million to a loss of $49 million for the three months ended June 30, 2013 compared to a loss of $43 million for the same period in 2012. The decrease in adjusted EBITDA was primarily the result of a $5 million increase in LIFO inventory valuation expense ($4 million of income in 2013 compared to $9 million of income in 2012).
Liquidity, Capital Resources and Outstanding Debt
As of June 30, 2013 we had $838 million of combined cash and unused borrowing capacity compared to $887 million at December 31, 2012.
On April 29, 2013, we amended our accounts receivable securitization programs to, among other things, extend the maturities to April 2016, reduce the applicable borrowing rates and increase the availability under the programs.
Total capital expenditures for the quarter ended June 30, 2013 were $92 million. We expect to spend approximately $450 million on capital expenditures in 2013.
Income Taxes
During the three months ended June 30, 2013 we recorded an income tax expense of $44 million and paid $29 million in cash for income taxes. Our adjusted effective income tax rate for the three months ended June 30, 2013 was approximately 36%.
We expect our full year 2013 adjusted effective tax rate to be approximately 35% primarily due to the effect of tax valuation allowances and our regional mix of income. We expect our long term effective income tax rate to be approximately 30 - 35%.
Earnings Conference Call Information
We will hold a conference call to discuss our second quarter 2013 financial results on Wednesday, July 31, 2013 at 10:00 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 713 - 4215
International
participants (617) 213 - 4867
Passcode 50478256
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=PQ77Q3UJQ
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 July 31, 2013 and ending August 6, 2013.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International
participants (617) 801 - 6888
Replay code 65843848
Table 1 - Results of Operations
-------------------------------
Three Six months
months ended
ended
June 30, June 30,
-------- --------
In millions, except per share
amounts, unaudited 2013 2012 2013 2012
----------------------------- ---- ---- ---- ----
Revenues $2,830 $2,914 $5,532 $5,827
Cost of goods sold 2,379 2,387 4,732 4,750
----- ----- ----- -----
Gross profit 451 527 800 1,077
Operating expenses 281 272 536 537
Restructuring, impairment and
plant closing costs 29 5 73 5
--- --- --- ---
Operating income 141 250 191 535
Interest expense, net (47) (57) (98) (116)
Equity in income of investment
in unconsolidated affiliates 2 1 3 3
Loss on early extinguishment
of debt - - (35) (1)
Other income 2 1 2 1
--- --- ---
Income before income taxes 98 195 63 422
Income tax expense (44) (65) (24) (125)
--- --- ----
Income from continuing
operations 54 130 39 297
Loss from discontinued
operations, net of tax(2) - (2) (2) (6)
--- --- ---
Net income 54 128 37 291
Net income attributable to
noncontrolling interests, net
of tax (7) (4) (14) (4)
---
Net income attributable to
Huntsman Corporation $47 $124 $23 $287
=== ==== === ====
Adjusted EBITDA(1) $304 $376 $524 $783
Adjusted net income(1) $94 $147 $140 $333
Basic income per share $0.20 $0.52 $0.10 $1.21
Diluted income per share $0.19 $0.52 $0.10 $1.19
Adjusted diluted income per
share(1) $0.39 $0.61 $0.58 $1.39
Common share information:
Basic shares outstanding 239.7 237.8 239.4 237.2
Diluted shares 242.2 240.5 242.0 240.2
Diluted shares for adjusted
diluted income per share 242.2 240.5 242.0 240.2
See end of press release for
footnote explanations
Table 2 - Results of Operations by Segment
------------------------------------------
Three Six months
months ended
ended
June 30, Better / June 30, Better /
-------- --------
In millions, unaudited 2013 2012 (Worse) 2013 2012 (Worse)
---------------------- ---- ---- ------ ---- ---- ------
Segment Revenues:
Polyurethanes $1,246 $1,262 (1)% $2,428 $2,475 (2)%
Performance Products 777 778 --- 1,499 1,592 (6)%
Advanced Materials 321 346 (7)% 657 686 (4)%
Textile Effects 216 195 11% 404 380 6%
Pigments 334 407 (18)% 664 831 (20)%
Eliminations and other (64) (74) 14% (120) (137) 12%
--- --- ---- ----
Total $2,830 $2,914 (3)% $5,532 $5,827 (5)%
====== ====== ====== ======
Segment Adjusted EBITDA(1):
Polyurethanes $174 $174 --- $352 $355 (1)%
Performance Products 111 87 28% 165 179 (8)%
Advanced Materials 32 26 23% 59 59 ---
Textile Effects 3 (4) NM - (12) 100%
Pigments 33 136 (76)% 42 286 (85)%
Corporate, LIFO and other (49) (43) (14)% (94) (84) (12)%
Total $304 $376 (19)% $524 $783 (33)%
==== ==== ==== ====
See end of press release for footnote explanations
Table 3 - Factors Impacting Sales Revenues
------------------------------------------
Three months ended
June 30, 2013 vs. 2012
----------------------
Average Selling
Price(a)
----------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(a) Total
--------- -------- ---- ------- -------- -----
Polyurethanes 1% (1)% (1)% --- (1)%
Performance
Products (1)% --- 1% --- ---
Advanced
Materials 3% (2)% 2% (10)% (7)%
Textile
Effects 3% (1)% --- 9% 11%
Pigments (26)% (1)% --- 9% (18)%
Total Company (4)% (1)% (1)% 3% (3)%
Six months ended
June 30, 2013 vs. 2012
----------------------
Average Selling
Price(a)
----------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(a) Total
--------- -------- ---- ------- -------- -----
Polyurethanes 1% --- 1% (4)% (2)%
Performance
Products 3% --- --- (9)% (6)%
Advanced
Materials 2% (2)% 3% (7)% (4)%
Textile
Effects --- (1)% (1)% 8% 6%
Pigments (25)% --- 1% 4% (20)%
Total Company (1)% (1)% --- (3)% (5)%
(a) Excludes revenues and sales volumes from tolling arrangements, 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 Three months ended Three
ended months
ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
In millions, except per share amounts,
unaudited 2013 2012 2013 2012 2013 2012 2013 2012
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $249 $352 $(44) $(65) $47 $124 $0.19 $0.52
Adjustments:
Acquisition expenses 2 1 - - 2 1 0.01 -
(Income) loss from discontinued
operations, net of tax(2) (2) 3 N/A N/A - 2 - 0.01
Discount amortization on settlement
financing associated with the terminated
merger N/A N/A (1) (3) 1 5 - 0.02
Certain legal settlements and related
expenses 6 - (1) - 5 - 0.02 -
Amortization of pension and postretirement
actuarial losses 18 11 (4) (3) 14 8 0.06 0.03
Restructuring, impairment and plant
closing and transition costs 31 9 (6) (2) 25 7 0.10 0.03
Adjusted(1) $304 $376 $(56) $(73) $94 $147 $0.39 $0.61
==== ==== ==== ==== === ==== ----- -----
Adjusted income tax expense 56 73
Net income attributable to noncontrolling
interests, net of tax 7 4
Adjusted pre-tax income(1) $157 $224
==== ====
Adjusted effective tax rate 36% 33%
Income Tax Net Income (Loss) Diluted
Income
(Loss)
EBITDA (Expense) Benefit Attrib. to HUN
Corp. Per Share
------ ----------------- --------------- ---------
Three months ended Three months Three months ended Three
ended months
ended
March 31, March 31, March 31, March 31,
In millions, except per share amounts,
unaudited 2013 2013 2013 2013
-------------------------------------- ---- ---- ---- ----
GAAP(1) $112 $20 $(24) $(0.10)
Adjustments:
Acquisition expenses 3 (1) 2 0.01
Loss from discontinued operations, net of
tax(2) 3 N/A 2 0.01
Discount amortization on settlement
financing associated with the terminated
merger N/A (1) 2 0.01
Loss on early extinguishment of debt 35 (13) 22 0.09
Certain legal settlements and related
expenses 2 (1) 1 -
Amortization of pension and postretirement
actuarial losses 19 (7) 12 0.05
Restructuring, impairment and plant
closing and transition costs 46 (17) 29 0.12
Adjusted(1) $220 $(20) $46 $0.19
==== ==== === -----
Adjusted income tax expense 20
Net income attributable to noncontrolling
interests, net of tax 7
Adjusted pre-tax income(1) $73
===
Adjusted effective tax rate 27%
Income Tax Net Income (Loss) Diluted
Income
(Loss)
EBITDA (Expense) Benefit Attrib. to HUN
Corp. Per Share
------ ----------------- --------------- ---------
Six months ended Six months ended Six months ended Six months
ended
June 30, June 30, June 30, June 30,
-------- -------- -------- --------
In millions, except per share amounts,
unaudited 2013 2012 2013 2012 2013 2012 2013 2012
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $361 $742 $(24) $(125) $23 $287 $0.10 $1.19
Adjustments:
Acquisition expenses 5 1 (1) - 4 1 0.02 -
Loss from discontinued operations, net of
tax(2) 1 4 N/A N/A 2 6 0.01 0.02
Discount amortization on settlement
financing associated with the terminated
merger N/A N/A (2) (5) 3 10 0.01 0.04
Loss on early extinguishment of debt 35 1 (13) - 22 1 0.09 -
Certain legal settlements and related
expenses 8 1 (2) - 6 1 0.02 -
Amortization of pension and postretirement
actuarial losses 37 21 (11) (4) 26 17 0.11 0.07
Restructuring, impairment and plant
closing and transition costs 77 13 (23) (3) 54 10 0.22 0.04
Adjusted(1) $524 $783 $(76) $(137) $140 $333 $0.58 $1.39
==== ==== ==== ===== ==== ==== ----- -----
Adjusted income tax expense 76 137
Net income attributable to noncontrolling
interests, net of tax 14 4
Adjusted pre-tax income(1) $230 $474
==== ====
Adjusted effective tax rate 33% 29%
See end of press release for footnote explanations
Table 5 - Reconciliation of Net Income (Loss) to EBITDA
-------------------------------------------------------
Three months ended Six
months
ended
------------------
June 30, March 31, June 30,
-------- --------
In millions,
unaudited 2013 2012 2013 2013 2012
------------ ---- ---- ---- ---- ----
Net income
(loss)
attributable
to Huntsman
Corporation $47 $124 $(24) $23 $287
Interest
expense, net 47 57 51 98 116
Income tax
expense
(benefit) from
continuing
operations 44 65 (20) 24 125
Income tax
expense
(benefit) from
discontinued
operations(2) 2 (1) (2) - (2)
Depreciation
and
amortization
of continuing
operations 109 107 106 215 212
Depreciation
and
amortization
of
discontinued
operations(2) - - 1 1 4
EBITDA(1) $249 $352 $112 $361 $742
==== ==== ==== ==== ====
See end of press release for footnote explanations
Table 6 - Selected Balance Sheet Items
--------------------------------------
June 30, March 31, December 31,
In
millions 2013 2013 2012
--------- ---- ---- ----
(unaudited) (unaudited)
Cash $181 $256 $396
Accounts
and
notes
receivable,
net 1,714 1,646 1,583
Inventories 1,698 1,797 1,819
Other
current
assets 339 304 321
Property,
plant
and
equipment,
net 3,613 3,643 3,745
Other
assets 1,109 1,073 1,020
Total
assets $8,654 $8,719 $8,884
====== ====== ======
Accounts
payable $996 $1,101 $1,102
Other
current
liabilities 778 724 791
Current
portion
of debt 317 298 288
Long-
term
debt 3,454 3,489 3,414
Other
liabilities 1,266 1,282 1,393
Total
equity 1,843 1,825 1,896
Total
liabilities
and
equity $8,654 $8,719 $8,884
====== ====== ======
Table 7 - Outstanding Debt
--------------------------
June 30, March 31, December 31,
In millions 2013 2013 2012
----------- ---- ---- ----
(unaudited) (unaudited)
Debt:
Senior credit
facilities $1,599 $1,598 $1,565
Accounts
receivable
programs 239 236 241
Senior notes 646 646 568
Senior
subordinated
notes 892 892 892
Variable
interest
entities 259 262 270
Other debt 136 153 166
Total debt -
excluding
affiliates 3,771 3,787 3,702
----- ----- -----
Total cash 181 256 396
--- --- ---
Net debt-
excluding
affiliates $3,590 $3,531 $3,306
====== ====== ======
Table 8 - Summarized Statement of Cash Flows
--------------------------------------------
Three months Six months
ended ended
June 30, June 30,
--------
In millions, unaudited 2013 2013 2012
---------------------- ---- ---- ----
Total cash at beginning of
period $256 $396 $562
Net cash provided by (used
in) operating activities 72 (2) 348
Net cash used in investing
activities (97) (182) (185)
Net cash used in financing
activities (48) (27) (264)
Effect of exchange rate
changes on cash (2) (4) (1)
Change in restricted cash - - 1
Total cash at end of period $181 $181 $461
==== ==== ====
Supplemental cash flow
information:
Cash paid for interest $(36) $(95) $(106)
Cash paid for income taxes (29) (46) (70)
Cash paid for capital
expenditures (92) (181) (163)
Depreciation & amortization 109 216 216
Changes in primary working
capital:
Accounts and notes receivable (101) (186) (183)
Inventories 88 79 (139)
Accounts payable (70) (60) 100
Total use of cash on primary
working capital $(83) $(167) $(222)
==== ===== =====
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: acquisition expenses; loss
(gain) on initial consolidation of
subsidiaries; EBITDA from
discontinued operations; loss
(gain) on disposition of
businesses/assets; loss on early
extinguishment of debt;
extraordinary loss (gain) on the
acquisition of a business; certain
legal settlements and related
expenses; amortization of pension
and postretirement actuarial
losses (gains); and restructuring,
impairment, plant closing and
transition costs (credits). The
reconciliation of adjusted EBITDA
to EBITDA is set forth in Table 4
above.
Adjusted net income (loss) is
computed by eliminating the after
tax impact of the following items
from net income (loss)
attributable to Huntsman
Corporation: acquisition expenses;
loss (gain) on initial
consolidation of subsidiaries;
loss (income) from discontinued
operations; discount amortization
on settlement financing associated
with the terminated merger; loss
(gain) on disposition of
businesses/assets; loss on early
extinguishment of debt;
extraordinary loss (gain) on the
acquisition of a business; certain
legal settlements and related
expenses; amortization of pension
and postretirement actuarial
losses (gains); and restructuring,
impairment, plant closing and
transition costs (credits). We do
not adjust for changes in tax
valuation allowances because we do
not believe it provides more
meaningful information than is
provided under GAAP. The
reconciliation of adjusted net
income (loss) to net income (loss)
attributable to Huntsman
Corporation common stockholders is
set forth in Table 4 above.
(2) During the first quarter 2010 we
closed our Australian styrenics
operations; results from this
business are treated as
discontinued operations.
About Huntsman:
Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2012 revenues of over $11 billion. Our chemical products number in the thousands and are sold worldwide to meet the needs of consumers and manufacturers serving a broad range of end markets. We operate more than 75 manufacturing and R&D facilities in 30 countries and employ approximately 12,000 associates within our 5 distinct business divisions. For more information about Huntsman, please visit the company's website at www.huntsman.com.
Forward-Looking Statements:
Statements in this release that are not historical are forward-looking statements. These statements are based on management's current beliefs and expectations. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as discussed in the Huntsman companies' filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, financial, economic, competitive, environmental, political, legal, regulatory and technological factors. The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.
SOURCE Huntsman Corporation
