Huntsman Announces Full Year 2019 Earnings; Another Year of Strong Cash Flow Generation
FOR IMMEDIATE RELEASE
Feb. 13, 2020
The Woodlands, Texas
Full Year 2019 and Fourth Quarter Highlights
- 2019 net income of $598 million compared to $650 million in the prior year period; 2019 diluted earnings per share of $2.44 compared to $1.39 in the prior year period.
- 2019 adjusted net income of $353 million compared to $642 million in the prior year period; 2019 adjusted diluted earnings per share of $1.53 compared to $2.66 in the prior year period.
- 2019 adjusted EBITDA $846 million compared to $1,161 million in the prior year
- Fourth quarter 2019 net income of $308 million compared to a net loss of $315 million in the prior year period; fourth quarter 2019 diluted earnings per share of $1.34 compared to a loss per share of $1.43 in the prior year period.
- Fourth quarter 2019 adjusted net income of $65 million compared to $90 million in the prior year period; fourth quarter 2019 adjusted diluted earnings per share of $0.29 compared to $0.38 in the prior year period.
- Fourth quarter 2019 adjusted EBITDA of $182 million compared to $207 million in the prior year period.
- 2019 net cash provided by operating activities from continuing operations of $656 million. 2019 free cash flow from continuing operations was $389 million.
- Balance sheet remains strong with total Company net debt leverage of 1.7x; proforma net debt leverage for the proceeds from the Chemical Intermediates and Surfactants sale that closed on January 3, 2020 is 0.4x.
- 2019 share repurchases of approximately 10.1 million shares for approximately $208 million.
- Previously announced acquisition of Icynene-Lapolla, a spray polyurethane foam business, is now on track to close in the first quarter of 2020.
THE WOODLANDS, Texas – Huntsman Corporation (NYSE: HUN) today reported fourth quarter 2019 results with revenues of $1,657 million, net income of $308 million, adjusted net income of $65 million and adjusted EBITDA of $182 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
“2019 was a memorable year for Huntsman with several milestones achieved that significantly strengthened the Company for years to come. The biggest milestone was the $2 billion divestiture of our Chemical Intermediates and Surfactants businesses, which significantly reduces our upstream footprint. The proceeds from this sale have further fortified our investment grade balance sheet and enhances our ability to focus on and grow our core downstream businesses. Additionally, we acquired the remaining 50% investment in our Maleic Anhydride joint venture from Sasol, we opened a new polyurethanes system house in Dubai, and in early December we announced the agreement to acquire Icynene-Lapolla which will double the size of our existing high growth spray foam business. We remained balanced in our capital allocation by repurchasing over $200 million in stock and paying $150 million in dividends to our shareholders. Lastly, in the beginning of 2019 we achieved our long-term goal to earn an investment grade rating.
“Heading into 2020 we remain focused on what we can control, which will include investing both organically and through acquisitions into our downstream and specialty platforms, and being balanced in our approach to capital allocation, including maintaining a competitive dividend and ongoing opportunistic share repurchases. The economic headwinds remain as we enter the year makin
g earnings growth more of a challenge. However, with our strengthened balance sheet and strong downstream platforms for further growth, I see far more opportunities than challenges before us as we pursue multiple opportunities to create further shareholder value.”
Segment Analysis for 4Q19 Compared to 4Q18
The decrease in revenue in our Polyurethanes segment for the three months ended December 31, 2019 compared to the same period in 2018 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 primarily due to higher demand across most major markets. The decrease in segment adjusted EBITDA was primarily due to lower MDI margins driven by lower MDI pricing partially offset with higher MDI sales volumes.
Revenues in our Performance Products segment for the three months ended December 31, 2019 compared to the same period in 2018 were lower as a result of lower sales volumes and lower average selling prices. Sales volumes decreased largely due to weakened market conditions. Average selling prices decreased primarily due to weaker market conditions across several of our derivatives businesses and in response to lower raw material costs. The increase in adjusted EBITDA was largely due to lower fixed costs and increased earnings from acquiring the remaining interest in our German maleic joint venture.
The decrease in revenues in our Advanced Materials segment for the three months ended December 31, 2019 compared to the same period in 2018 was due to lower sales volumes and lower average selling prices. Sales volumes decreased across most markets primarily due to economic slowdown and cus
tomer destocking. Average selling prices decreased primarily due to the impact of a stronger U.S. dollar against major international currencies as local currency selling prices were essentially unchanged. Segment adjusted EBITDA decreased due to lower sales volumes.
The decrease in revenues in our Textile Effects segment for the three months ended December 31, 2019 compared to the same period in 2018 was primarily due to lower average selling prices and lower sales volume. Average selling prices decreased in line with market pricing and the impact of a stronger U.S. dollar against major international currencies. Sales volumes decreased due to weaker demand across the industry from market uncertainties surrounding the trade war. The decrease in adjusted EBITDA was primarily due to lower average selling prices and lower sales volumes, partially offset by lower fixed costs.
Corporate, LIFO and other
For the three months ended December 31, 2019, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $1 million to a loss of $43 million from a loss of $42 million for the same period of 2018.
Liquidity, Capital Resources and Outstanding Debt
During the three months ended December 31, 2019, our free cash flow from continuing operations was $131 million compared to $154 million in the prior year period. As of December 31, 2019, we had $1,684 million of combined cash and unused borrowing capacity.
During the three months ended December 31, 2019, we spent $93 million on capital expenditures compared to $103 million in the same period of 2018. In 2020, we expect to spend approximately $300 million to $325 million on capital expenditures, which includes approximately $80 million for our new MDI splitter at our facility in Geismar, Louisiana.
During the three months ended December 31, 2019, we spent approximate
ly $12 million to repurchase approximately 0.5 million shares. As of the end of the fourth quarter 2019, we have approximately $516 million remaining on our existing $1 billion multiyear share repurchase program.
In the fourth quarter 2019, our adjusted effective tax rate was 25%. We expect our forward adjusted effective tax rate will be approximately 22% - 24%.
Earnings Conference Call Information
We will hold a conference call to discuss our fourth quarter 2019 financial results on Thursday, February 13, 2020 at 9:00 a.m. ET.
Webcast link: https://78449.themediaframe.com/dataconf/productusers/hun/mediaframe/34153/indexl.html
Participant dial-in numbers:
- Domestic callers: (877) 402-8037
- International callers: (201) 378-4913
The conference call will be accompanied by presentation slides that will be accessible via the webcast link and Huntsman’s investor relations website, ir.huntsman.com. Upon conclusion of the call, the webcast replay will be accessible via Huntsman’s website.
During the first quarter 2020 a member of management is expected to present at:
- Alembic Global Deer Valley Conference: Feb. 27 and 28, 2020
A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.
To read the full news release, click here.
Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2019 revenues of approximately $7 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 70 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 9,000 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, re
organization or restructuring of Huntsman’s operations, including any delay of, or other negative developments affecting the ability to implement cost reductions, timing of proposed transactions, 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.