HUNTSMAN CORPORATION THE WOODLANDS, Texas, July 30, 2014 /PRNewswire/ --
Second Quarter 2014 Highlights
-- Adjusted EBITDA was $363 million compared to $304 million in the prior
year period, an improvement of 19%.
-- Adjusted diluted income per share was $0.59 compared to $0.39 in the
prior year period.
-- Net income attributable to Huntsman Corporation was $119 million
compared to $47 million in the prior year period.
Three months ended Six months ended
------------------
June 30, March 31, June 30,
-------- --------
In millions, except
per share amounts,
unaudited 2014 2013 2014 2014 2013
------------------- ---- ---- ---- ---- ----
Revenues $2,988 $2,830 $2,755 $5,743 $5,532
Net income
attributable to
Huntsman Corporation $119 $47 $54 $173 $23
Adjusted net income(1) $145 $94 $105 $250 $140
Diluted income per
share $0.48 $0.19 $0.22 $0.71 $0.10
Adjusted diluted
income per share(1) $0.59 $0.39 $0.43 $1.02 $0.58
EBITDA(1) $327 $249 $261 $588 $361
Adjusted EBITDA(1) $363 $304 $329 $692 $524
See end of press release for footnote explanations
Huntsman Corporation (NYSE: HUN) today reported second quarter 2014 results with revenues of $2,988 million and adjusted EBITDA of $363 million.
Peter R. Huntsman, our President and CEO, commented:
"We saw strong earnings in the second quarter as a result of increased demand for key products such as MDI and amines and higher selling prices for many of our products. We also benefited from restructuring efforts in our Advanced Materials and Textile Effects businesses. These results are well in line with our earlier forecast of substantial earnings growth in the next two to three years.
We are working closely with the European Commission in its review of the proposed acquisition of Rockwood Holding's Performance Additives and Titanium Dioxide businesses. We have proposed certain remedies we believe address the Commission's concerns and are confident that final approval will be secured by the end of the third quarter."
Segment Analysis for 2Q14 Compared to 2Q13
Polyurethanes
The increase in revenues in our Polyurethanes division for the three months ended June 30, 2014 compared to the same period in 2013 was primarily due to higher sales volumes. MDI sales volumes increased 7% as a result of improved demand in all regions and across most major markets. PO/MTBE sales volumes decreased as a result of a manufacturing disruption at our Port Neches, Texas facility which resulted in lower EBITDA of approximately $10 million. MDI average selling prices increased in the Americas and European regions, offset by lower component pricing in China. PO/MTBE average selling prices increased primarily due to favorable market conditions. The increase in adjusted EBITDA was due to higher MDI sales volumes and contribution margins.
Performance Products
The increase in revenues in our Performance Products division for the three months ended June 30, 2014 compared to the same period in 2013 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased in response to higher raw materials costs and strong market conditions for amines, maleic anhydride and specialty surfactants. Sales volumes decreased primarily due to the impact of scheduled maintenance, partially offset by increased sales volumes in amines and maleic anhydride. The increase in adjusted EBITDA was primarily due to higher contribution margins.
Advanced Materials
The increase in revenues in our Advanced Materials division for the three months ended June 30, 2014 compared to the same period in 2013 was primarily due to higher average selling prices and favorable sales mix, partially offset by lower sales volumes. Average selling prices increased in all regions and across most markets primarily due to certain price increase initiatives and higher value sales markets. Sales volumes decreased in our base resins business primarily due to our restructuring efforts. During the fourth quarter 2013 we closed two of our base resins production units as we focus on higher value markets such as aerospace, transportation and industrial and coatings and construction. The increase in adjusted EBITDA was primarily due to higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.
Textile Effects
The increase in revenues in our Textile Effects division for the three months ended June 30, 2014 compared to the same period in 2013 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily in response to higher raw material costs. Sales volumes decreased primarily due to the de-selection of lower value business. The increase in adjusted EBITDA was primarily due to higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.
Pigments
The increase in revenues in our Pigments division for the three months ended June 30, 2014 compared to the same period in 2013 was primarily due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased primarily as a result of higher end-use demand, particularly in Europe. Average selling prices decreased primarily as a result of high industry inventory levels partially offset by the strength of the euro against the U.S. dollar (notably, average selling prices were flat compared to the first quarter). The decrease in adjusted EBITDA was primarily due to lower contribution margins, partially offset by higher sales volumes.
Corporate, LIFO and Other
Adjusted EBITDA from Corporate, LIFO and Other improved by $2 million to a loss of $47 million for the three months ended June 30, 2014 compared to a loss of $49 million for the same period in 2013.
Liquidity, Capital Resources and Outstanding Debt
As of June 30, 2014 we had $1,072 million of combined cash and unused borrowing capacity compared to $1,048 million at December 31, 2013.
In June 2014, we issued an additional EUR145 million (approximately $197 million) of 5.125% Senior Notes due 2021. The notes were issued at a premium to yield 4.57%. Net proceeds were used for general corporate purposes.
Total capital expenditures for the quarter ended June 30, 2014 were $107 million. We expect to spend approximately $500 million on capital expenditures in 2014, net of reimbursements and excluding any amounts associated with the planned acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.
Income Taxes
During the three months ended June 30, 2014 we recorded income tax expense of $43 million and paid $97 million in cash for income taxes. Our adjusted effective income tax rate for the three months ended June 30, 2014 was 25%. The low tax rate was a result of the release of tax valuation allowances in part due to the restructuring of our European surfactants business.
We expect our full year 2014 adjusted effective tax rate to be in the low thirties excluding the impact of the planned acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc. We expect our long term adjusted effective tax rate to be approximately 30%.
Earnings Conference Call Information
We will hold a conference call to discuss our second quarter 2014 financial results on Wednesday, July 30, 2014 at 11:00 a.m. ET.
Call-in numbers for the
conference call:
U.S. participants (888) 713 - 4218
International participants (617) 213 - 4870
Passcode 72944602
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=P7ABG8KYW
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 July 30, 2014 and ending August 6, 2014.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International participants (617) 801 - 6888
Replay code 93930078
Table 1 -- Results of Operations
--------------------------------
Three months ended Six months ended
June 30, June 30,
-------- --------
In millions, except per share
amounts, unaudited 2014 2013 2014 2013
----------------------------- ---- ---- ---- ----
Revenues $2,988 $2,830 $5,743 $5,532
Cost of goods sold 2,483 2,379 4,788 4,732
----- ----- ----- -----
Gross profit 505 451 955 800
Operating expenses 276 281 537 536
Restructuring, impairment and
plant closing costs 13 29 52 73
--- --- --- ---
Operating income 216 141 366 191
Interest expense (51) (47) (99) (98)
Equity in income of investment
in unconsolidated affiliates 2 2 4 3
Loss on early extinguishment of
debt - - - (35)
Other income - 2 1 2
--- ---
Income before income taxes 167 98 272 63
Income tax expense (43) (44) (79) (24)
--- ---
Income from continuing
operations 124 54 193 39
Loss from discontinued
operations, net of tax(2) - - (7) (2)
--- ---
Net income 124 54 186 37
Net income attributable to
noncontrolling interests, net
of tax (5) (7) (13) (14)
Net income attributable to
Huntsman Corporation $119 $47 $173 $23
==== === ==== ===
Adjusted EBITDA(1) $363 $304 $692 $524
Adjusted net income(1) $145 $94 $250 $140
Basic income per share $0.49 $0.20 $0.72 $0.10
Diluted income per share $0.48 $0.19 $0.71 $0.10
Adjusted diluted income per
share(1) $0.59 $0.39 $1.02 $0.58
Common share information:
Basic shares outstanding 241.8 239.7 241.3 239.4
Diluted shares 245.7 242.2 245.0 242.0
Diluted shares for adjusted
diluted income per share 245.7 242.2 245.0 242.0
See end of press release for footnote explanations
Table 2 -- Results of Operations by Segment
-------------------------------------------
Three months ended Six months ended
June 30, Better / June 30, Better /
-------- --------
In millions, unaudited 2014 2013 (Worse) 2014 2013 (Worse)
---------------------- ---- ---- ------ ---- ---- ------
Segment Revenues:
Polyurethanes $1,310 $1,246 5% $2,510 $2,428 3%
Performance Products 833 777 7% 1,598 1,499 7%
Advanced Materials 324 321 1% 643 657 (2)%
Textile Effects 248 216 15% 472 404 17%
Pigments 340 334 2% 658 664 (1)%
Eliminations and other (67) (64) (5)% (138) (120) (15)%
--- --- ---- ----
Total $2,988 $2,830 6% $5,743 $5,532 4%
====== ====== ====== ======
Segment Adjusted EBITDA(1):
Polyurethanes $197 $174 13% $364 $352 3%
Performance Products 115 111 4% 233 165 41%
Advanced Materials 53 32 66% 99 59 68%
Textile Effects 22 3 633% 38 - NM
Pigments 23 33 (30)% 49 42 17%
Corporate, LIFO and other (47) (49) 4% (91) (94) 3%
Total $363 $304 19% $692 $524 32%
==== ==== ==== ====
See end of press release for footnote explanations
NM-Not meaningful
Table 3 -- Factors Impacting Sales Revenue
------------------------------------------
Three months ended
June 30, 2014 vs. 2013
----------------------
Average Selling Price(a)
-----------------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(b) Total
--------- -------- ---- ------- -------- -----
Polyurethanes --- 1% 1% 3% 5%
Performance Products 4% 1% 3% (1)% 7%
Advanced Materials 3% 1% 8% (11)% 1%
Textile Effects 19% --- 1% (5)% 15%
Pigments (4)% 3% --- 3% 2%
Total Company 3% 1% --- 2% 6%
Six months ended
June 30, 2014 vs. 2013
----------------------
Average Selling Price(a)
-----------------------
Local Exchange Sales Mix Sales
Unaudited Currency Rate & Other Volume(b) Total
--------- -------- ---- ------- -------- -----
Polyurethanes (1)% --- --- 4% 3%
Performance Products 4% --- (3)% 6% 7%
Advanced Materials 5% --- 7% (14)% (2)%
Textile Effects 17% (1)% 2% (1)% 17%
Pigments (5)% 2% 1% 1% (1)%
Total Company 1% --- (2)% 5% 4%
(a) Excludes sales from tolling arrangements, by-products and raw materials.
(b) Excludes sales from by-products and raw materials.
Table 4 -- Reconciliation of U.S. GAAP to Non-GAAP Measures
-----------------------------------------------------------
Income Tax Net Income Diluted Income
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 2014 2013 2014 2013 2014 2013 2014 2013
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $327 $249 $(43) $(44) $119 $47 $0.48 $0.19
Adjustments:
Acquisition expenses and integration costs 9 2 (2) - 7 2 0.03 0.01
Loss (income) from discontinued operations,
net of tax(2) 2 (2) N/A N/A - - - -
Discount amortization on settlement
financing associated with the N/A N/A - (1) - 1 - -
terminated merger
Gain on disposition of businesses/assets (2) - 1 - (1) - - -
Certain legal settlements and related
expenses 2 6 - (1) 2 5 0.01 0.02
Amortization of pension and postretirement
actuarial losses 12 18 (4) (4) 8 14 0.03 0.06
Restructuring, impairment and plant closing
and transition costs 13 31 (3) (6) 10 25 0.04 0.10
Adjusted(1) $363 $304 $(51) $(56) $145 $94 $0.59 $0.39
==== ==== ==== ==== ==== === ----- -----
Adjusted income tax expense 51 56
Net income attributable to noncontrolling
interests, net of tax 5 7
Adjusted pre-tax income(1) $201 $157
==== ====
Adjusted effective tax rate 25% 36%
Income Tax Net Income Diluted Income
EBITDA Expense Attrib. to HUN Corp. 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,
unaudited 2014 2014 2014 2014
-------------------------------------- ---- ---- ---- ----
GAAP(1) $261 $(36) $54 $0.22
Adjustments:
Acquisition expenses and integration costs 8 (2) 6 0.02
Loss from discontinued operations, net of
tax(2) 7 N/A 7 0.03
Amortization of pension and postretirement
actuarial losses 13 (4) 9 0.04
Restructuring, impairment and plant closing
and transition costs 40 (11) 29 0.12
Adjusted(1) $329 $(53) $105 $0.43
==== ==== ==== -----
Adjusted income tax expense 53
Net income attributable to noncontrolling
interests, net of tax 8
Adjusted pre-tax income(1) $166
====
Adjusted effective tax rate 32%
Income Tax Net Income Diluted Income
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 2014 2013 2014 2013 2014 2013 2014 2013
-------------------------------------- ---- ---- ---- ---- ---- ---- ---- ----
GAAP(1) $588 $361 $(79) $(24) $173 $23 $0.71 $0.10
Adjustments:
Acquisition expenses and integration costs 17 5 (4) (1) 13 4 0.05 0.02
Loss from discontinued operations, net of
tax(2) 9 1 N/A N/A 7 2 0.03 0.01
Discount amortization on settlement
financing associated with the N/A N/A - (2) - 3 - 0.01
terminated merger
Gain on disposition of businesses/assets (2) - 1 - (1) - - -
Loss on early extinguishment of debt - 35 - (13) - 22 - 0.09
Certain legal settlements and related
expenses 2 8 - (2) 2 6 0.01 0.02
Amortization of pension and postretirement
actuarial losses 25 37 (8) (11) 17 26 0.07 0.11
Restructuring, impairment and plant closing
and transition costs 53 77 (14) (23) 39 54 0.16 0.22
Adjusted(1) $692 $524 $(104) $(76) $250 $140 $1.02 $0.58
==== ==== ===== ==== ==== ==== ----- -----
Adjusted income tax expense 104 76
Net income attributable to noncontrolling
interests, net of tax 13 14
Adjusted pre-tax income(1) $367 $230
==== ====
Adjusted effective tax rate 28% 33%
See end of press release for footnote explanations
Table 5 -- Reconciliation of Net Income to EBITDA
-------------------------------------------------
Three months ended Six months ended
------------------
June 30, March 31, June 30,
-------- --------
In millions, unaudited 2014 2013 2014 2014 2013
---------------------- ---- ---- ---- ---- ----
Net income attributable to
Huntsman Corporation $119 $47 $54 $173 $23
Interest expense 51 47 48 99 98
Income tax expense from
continuing operations 43 44 36 79 24
Income tax (benefit)
expense from discontinued
operations(2) (2) 2 - (2) -
Depreciation and
amortization 116 109 123 239 216
EBITDA(1) $327 $249 $261 $588 $361
==== ==== ==== ==== ====
See end of press release for footnote explanations
Table 6 -- Selected Balance Sheet Items
---------------------------------------
June 30, March 31, December 31,
In
millions 2014 2014 2013
--------- ---- ---- ----
(unaudited) (unaudited)
Cash $412 $286 $529
Accounts
and
notes
receivable,
net 1,870 1,724 1,575
Inventories 1,847 1,911 1,741
Other
current
assets 319 307 314
Property,
plant
and
equipment,
net 3,776 3,794 3,824
Other
assets 1,218 1,205 1,205
Total
assets $9,442 $9,227 $9,188
====== ====== ======
Accounts
payable $1,162 $1,185 $1,113
Other
current
liabilities 725 760 769
Current
portion
of
debt 257 270 277
Long-
term
debt 3,809 3,621 3,633
Other
liabilities 1,181 1,214 1,267
Total
equity 2,308 2,177 2,129
Total
liabilities
and
equity $9,442 $9,227 $9,188
====== ====== ======
Table 7 -- Outstanding Debt
---------------------------
June 30, March 31, December 31,
In millions 2014 2014 2013
----------- ---- ---- ----
(unaudited) (unaudited)
Debt:
Senior credit
facilities $1,339 $1,338 $1,351
Accounts
receivable
programs 245 247 248
Senior notes 1,258 1,060 1,061
Senior
subordinated
notes 890 891 891
Variable
interest
entities 231 238 247
Other debt 103 117 112
Total debt -
excluding
affiliates 4,066 3,891 3,910
----- ----- -----
Total cash 412 286 529
--- --- ---
Net debt-
excluding
affiliates $3,654 $3,605 $3,381
====== ====== ======
Table 8 -- Summarized Statement of Cash Flows
---------------------------------------------
Three months ended Six months ended
June 30, June 30,
--------
In millions,
unaudited 2014 2014 2013
------------ ---- ---- ----
Total cash at
beginning of
period(a) $286 $529 $396
Net cash
provided by
(used in)
operating
activities 50 (17) (2)
Net cash used in
investing
activities (98) (202) (182)
Net cash
provided by
(used in)
financing
activities 174 103 (27)
Effect of
exchange rate
changes on cash - (1) (4)
Total cash at
end of
period(a) $412 $412 $181
==== ==== ====
Supplemental
cash flow
information:
Cash paid for
interest $(37) $(91) $(95)
Cash paid for
income taxes (97) (143) (46)
Cash paid for
capital
expenditures (107) (214) (181)
Depreciation and
amortization 116 239 216
Changes in
primary working
capital:
Accounts and
notes
receivable (151) (300) (186)
Inventories 63 (109) 79
Accounts payable (13) 94 (60)
Total cash used
in primary
working capital $(101) $(315) $(167)
===== ===== =====
(a) Includes restricted cash.
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
and integration costs; 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 and integration costs;
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 2013 revenues of over $11 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 80 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
