FOR IMMEDIATE RELEASE
July 31, 2018
The Woodlands, TX
Second Quarter 2018 Highlights
Net income was $623 million compared to $183 million in the prior year period and $350 million in the prior quarter.
Adjusted EBITDA was $415 million compared to $299 million in the prior year period and $405 million in the prior quarter.
Diluted income per share was $1.71 compared to $0.69 in the prior year period and $1.11 in the prior quarter.
Adjusted diluted income per share was $1.01 compared to $0.59 in the prior year period and $0.96 in the prior quarter.
Net cash provided by operating activities was $228 million. Free cash flow generation was $174 million.
Balance sheet remains strong with a net leverage of 1.4x.
Completed cumulative share repurchases of approximately $138 million through end of second quarter 2018
THE WOODLANDS, Texas – Huntsman Corporation (NYSE: HUN) today reported second quarter 2018 results with revenues of $2,404 million, net income of $623 million and adjusted EBITDA of $415 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
“We had a strong second quarter that is wholly in line with the outlook we shared at our recent Investor Day, which
focused on the opportunity for significant value creation. Our Polyurethanes business continues its growth in variants and systems and enjoys the back drop of good supply and demand fundamentals, foreseeable for the long term. We completed our multiyear scheduled turnaround in Performance Products and each of our divisions continues to see a positive outlook. We delivered strong free cash flow and our balance sheet remains solidly within investment grade metrics. We are committed to our balanced approach of delivering core growth and executing on sensible opportunities in our downstream businesses, share buybacks, and creating overall strong returns for shareholders.”
Segment Analysis for 2Q18 Compared to 2Q17
The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. MDI average selling prices increased in response to continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI sales volumes increased due to increased demand across most major markets. MTBE sales volumes increased due to the impact of maintenance outages during the second quarter of 2017. The increase in segment adjusted EBITDA was primarily due to higher MDI and MTBE margins.
The increase in revenues in our Performance Products segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to strong market conditions across several of our derivatives businesses and in response to higher raw materials costs. Sales volumes decreased prima
rily due to the impact of the planned maintenance outage at our Port Neches, Texas facility in the second quarter of 2018, partially offset by higher sales volumes in certain of our specialty amines and maleic anhydride businesses. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and higher fixed costs attributed to the planned maintenance outage, partially offset by stronger glycol market conditions within intermediates.
The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2018, compared to the same period in 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most markets in our core specialty business, but were partially offset by lower sales volumes in our wind market due to challenging industry conditions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher specialty sales volumes, partially offset by higher raw material and fixed costs.
The increase in revenues in our Textile Effects segment for the three months ended June 30, 2018 compared to the same period of 2017 was due to higher sales volumes and higher average selling prices. Sales volumes increased across most regions. Average selling prices increased in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and higher average selling prices, partially offset by higher raw material costs.
Corporate, LIFO and other
For the three months ended June 30, 2018, segment adjusted EBITDA from Corp
orate and other for Huntsman Corporation increased $11 million to a loss of $39 million from a loss of $50 million in the same period in 2017, primarily due to a LIFO inventory valuation benefit.
Our former Pigments and Additives segment, now known as Venator, remains classified as held for sale on our balance sheet and treated as discontinued operations on our income statement. Huntsman currently owns 53% of Venator’s outstanding shares.
Liquidity, Capital Resources and Outstanding Debt
During the quarter we generated free cash flow of $174 million compared to $154 million a year ago. As of June 30, 2018, we had $1,459 million of combined cash and unused borrowing capacity compared to $1,247 million as of December 31, 2017. On May 21, 2018, we entered into a new $1.2 billion unsecured revolving credit facility that replaced our senior secured credit facility.
During the three months ended June 30, 2018, we spent $54 million on capital expenditures compared to $50 million in the same period of 2017. We expect to spend approximately $325 million on capital expenditures in 2018.
Through the end of the second quarter 2018, we have spent approximately $138 million to repurchase approximately 4.6 million shares. As of the end of the second quarter 2018 we have approximately $862 million remaining on our existing multiyear share repurchase authorization.
During the three months ended June 30, 2018, we recorded income tax expense of $4 million compared to $24 million during the same period in 2017. In the second quarter 2018, our adjusted effective tax rate was 18%. We expect our 2018 adjusted effective tax rate will be approximately 20% - 22%.&nbs
p; We expect our long-term adjusted effective tax rate will be approximately 23% - 25%.
Earnings Conference Call Information
We will hold a conference call to discuss our second quarter 2018 financial results on Tuesday, July 31, 2018 at 11 a.m. ET.
Call-in numbers for the conference call:
U.S. participants (888) 680 - 0878
International participants (617) 213 - 4855
Passcode 445 723 85#
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=PUEAXYC3M
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 July 31, 2018 and ending August 7, 2018.
Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International participants (617) 801 - 6888
Replay code 29385180
During the third quarter 2018 a member of management is expected to present at:
Jefferies Global Industrials Conference on August 7, 2018
UBS Global Chemicals & Paper and Packaging Conference on September 5, 2018
RBC Capital Markets Industrials Conference on September 6, 2018
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 2017 revenues more than $8 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 1
934. 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 required by applicable laws.