Huntsman Announces Record Full Year 2018 Earnings With Strong and Consistent Cash Flow
FOR IMMEDIATE RELEASE
Feb. 12, 2019
The Woodlands, TX
Full Year 2018 and Fourth Quarter Highlights
- 2018 net income of $650 million compared to $741 million in the prior year; 2018 diluted earnings per share of $1.39 compared to $2.61 in the prior year.
- 2018 adjusted net income of $808 million compared to $604 million in the prior year; 2018 adjusted diluted earnings per share of $3.34 compared to $2.48 in the prior year.
- 2018 adjusted EBITDA of $1,469 million compared to $1,259 million in the prior year.
- Fourth quarter net loss of $315 million compared to net income of $287 million in the prior year period; Fourth quarter diluted loss per share of $1.43 compared to diluted earnings per share of $1.00 in the prior year period.
- Fourth quarter adjusted net income of $123 million compared to $186 million in the prior year period; Fourth quarter adjusted diluted earnings per share of $0.52 compared to $0.76 in the prior year period.
- Fourth quarter adjusted EBITDA of $275 million compared to $360 million in the prior year period.
- 2018 net cash provided by operating activities was $963 million. Free cash flow generation was $651 million.
- Balance sheet remains strong with a net leverage of 1.3x.
- 2018 share repurchases of approximately 10.4 million shares for approximately $276 million.
THE WOODLANDS, Texas – Huntsman Corporation (NYSE: HUN) today reported fourth quarter 2018 results with revenues of $2,236 million, net loss of $315 million, adjusted net income of $123 million and adjusted EBITDA of $275 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
"2018 was another successful year for Huntsman as we reported record earnings and consistent robust free cash flow. We continued to expand in our downstream and differentiated businesses both through internal investments and bolt-on acquisitions. We reinforced our investment grade level balance sheet by entering into an expanded $1.2 billion senior unsecured revolver, and we remain well within investment grade metrics with a 1.3x net leverage ratio. We also significantly enhanced our capital return to shareholders this past year by increasing our regular quarterly dividend by 30% and repurchasing over 10 million shares for approximately $276 million."
"In spite of strong customer destocking brought about by seasonal slowness, falling crude prices and economic uncertainties, our results reflect one of our strongest fourth quarters in our history. We will continue to globalize recent investments, focus on our higher growth markets, and expand on our downstream businesses. We will also continue to make key investments to support our core long-term growth, such as building a new MDI splitter at our Geismar, Louisiana facility to support differentiated downstream growth, make additional bolt-on acquisitions as appropriate, and continue a balanced opportunistic approach to share buy-backs. 2019 will be another year of strong free cash flow generation and growth in our downstream businesses."
Segment Analysis for 4Q18 Compared to 4Q17
The decrease in revenue in our Polyurethanes segment for the three months ended December 31, 2018 compared to the same period in 2017 was primarily due to lower MDI average selling prices partially offset by higher sales volumes. MDI average selling prices
decreased primarily due to a decline in component MDI selling prices in China and Europe. MDI sales volumes increased due to the start-up of our new Chinese MDI facility in 2018 and the acquisition of Demilec, a North American polyurethane spray foam company, in April 2018. The decrease in adjusted EBITDA was primarily due to lower MDI margins driven by pricing, partially offset with higher sales volumes.
Revenues in our Performance Products segment for the three months ended December 31, 2018 compared to the same period in 2017 were higher as a result of higher sales volumes and higher average selling prices. Sales volumes increased largely due to a planned maintenance turnaround and unplanned weather-related outages at our Port Neches site during 2017. Average selling prices increased primarily due to stronger market conditions across several of our derivatives businesses and in response to higher raw material costs. The increase in adjusted EBITDA was due to the impact of the outages during 2017 and higher margins.
The increase in revenues in our Advanced Materials segment for the three months ended December 31, 2018 compared to the same period in 2017 was primarily due to higher average selling prices. Average selling prices increased in response to higher raw material costs, partially offset by the impact of a stronger U.S. dollar against major international currencies. Overall sales volumes remained flat, as sales volumes increased in our commodity business, offset by lower sales volumes in our specialty markets. Segment adjusted EBITDA primarily decreased due to higher fixed costs and unfavorable currency exchange results.
The increase in revenues in our Textile Effects segment for the three months ended December 31, 2018 compared to the same period in
2017 was primarily due to higher average selling prices, partially offset by lower sales volume and the impact of a stronger U.S. dollar against major international currencies. Average selling prices increased somewhat in response to higher raw material costs. Sales volumes decreased across most regions. The increase in adjusted EBITDA was primarily due to higher average selling prices, partially offset by higher raw material costs and lower sales volumes.
Corporate, LIFO and other
For the three months ended December 31, 2018, segment adjusted EBITDA from Corporate and other for Huntsman Corporation decreased $12 million to a loss of $41 million from a loss of $53 million in the same period in 2017, primarily due to lower fixed costs and a decrease in LIFO inventory reserves.
Liquidity, Capital Resources and Outstanding Debt
During the three months ended December 31, 2018 we generated free cash flow of $195 million compared to $190 million in the prior year period. As of December 31, 2018, we had $1,525 million of combined cash and unused borrowing capacity.
During the three months ended December 31, 2018, we spent $133 million on capital expenditures compared to $123 million in the same period of 2017. We spent $313 million in capital expenditures in 2018. In 2019, we expect to spend approximately $390 million on capital expenditures, including approximately $50 million for the construction of a new MDI splitting unit in Geismar, Louisiana.
Through the end of the fourth quarter 2018 we have spent approximately $276 million to repurchase approximately 10.4 million shares, including approximately $101 million spent to acquire approximately 4.5 million shares within the fourth quarter. As of the end of the fourth quarter 2018, we have approximately $724 million remaining on our exi
sting $1 billion multiyear share repurchase program.
During the three months ended December 31, 2018, we recorded income tax expense of $13 million compared to a benefit of $14 million during the same period in 2017. In the fourth quarter 2018, our adjusted effective tax rate was 18%. We expect our forward adjusted effective tax rate will be approximately 22% - 24%.
Our former Pigments and Additives segment, now known as Venator, was deconsolidated beginning in December 2018 and we elected the fair value option to account for our equity method investment in Venator. Huntsman currently owns 49% of Venator’s outstanding shares.
Earnings Conference Call Information
We will hold a conference call to discuss our fourth quarter 2018 financial results on Tuesday, February 12, 2019 at 10:00 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 713 - 4213
International participants (617) 213 - 4865
Passcode 485 932 39#
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=PVAHR743N
The conference call will be available via webcast and can be accessed from the company’s website at ir.huntsman.com.
The conference call will be available for replay beginning February 12, 2019 and ending February 19, 2019.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International participants (617) 801 - 6888
Replay code 11329067
During the first quarter 2019 a member of management is expected to present at:
- Alembic Global Deer Valley Conference February 28, 2019 and March 1, 2019
- Goldman Sachs Houston Chemical Intensity Days, March 18, 2019
- Seaport Global Annual Transports & Industrials Conference, March 20, 2019
A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.
Click here for the complete news release.
Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2018 revenues more than $9 billion. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. We operate more than 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within our four distinct business divisions. For more
information about Huntsman, please visit the company's website at www.huntsman.com.
Certain information in this release constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 under the caption "Risk Factors" 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 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 requir
ed by applicable laws.