FOR IMMEDIATE RELEASE
April 30, 2019
The Woodlands, Texas
First Quarter Highlights
- First quarter 2019 net income of $131 million compared to $350 million in the prior year period; first quarter diluted earnings per share of $0.51 compared to $1.11 in the prior year period.
- First quarter 2019 adjusted net income of $108 million compared to $237 million in the prior year period; first quarter 2019 adjusted diluted earnings per share of $0.46 compared to $0.96 in the prior year period.
- First quarter 2019 adjusted EBITDA of $257 million compared to $405 million in the prior year period.
- First quarter 2019 net cash used in operating activities was $31 million. Free cash flow was a use of $101 million for the quarter.
- Huntsman achieved investment grade rating and issued $750 million of senior notes due 2029. Proceeds were used to redeem $650 million of our senior notes due 2020 and for general corporate purposes. Balance sheet remains strong with a net leverage of 1.6x.
- First quarter 2019 share repurchases of approximately 1.5 million shares for approximately $34 million.
THE WOODLANDS, Texas - Huntsman Corporation (NYSE: HUN) today reported first quarter 2019 results with revenues of $2,034 million, net income of $131 million, adjusted net income of $108 million and adjusted EBITDA of $257 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
"While global economic conditions remained challenging in the first quarter of this year, we are pleased with the relative resilience of our core downstream portfolio. The month of March ended slightl
y better than we projected, and while we remain cautious of certain regions of the world, notably Europe, we see momentum returning to Asia, especially in China. In 2019, we are on course to achieve our second best year ever. We remain focused on delivering consistent strong free cash flow and executing our downstream strategy through strategic investments, new products and continued globalization of recent bolt-on acquisitions. Our balance sheet is strong, our dividend yield is attractive, and we continue our balanced approach to capital allocation, including share repurchases."
Segment Analysis for 1Q19 Compared to 1Q18
The decrease in revenues in our Polyurethanes segment for the three months ended March 31, 2019, compared to the same period of 2018 was due to lower average MDI and MTBE selling prices, partially offset by higher MDI sales volumes. MDI average selling prices decreased primarily due to a decline in polymeric MDI selling prices in China and Europe. MTBE average selling prices decreased primarily as a result of lower pricing for high octane gasoline. MDI sales volumes increased primarily due to the start-up of our new Chinese MDI facility in 2018 and the acquisition of Demilec in the second quarter of 2018. The decrease in adjusted EBITDA was primarily due to lower MDI margins driven by lower MDI pricing and lower MTBE margins, partially offset by higher sales volumes.
The decrease in revenues in our Performance Products segment for the three months ended March 31, 2019 compared to the same period of 2018 was due to lower sales volumes and lower average selling prices. Sales volumes decreased primarily due to weakened market conditions. Average selling prices decreased primarily due to lower raw material costs and weakened market conditions. The decrease in segment adjusted EBITDA was primarily due to lower sale
s volumes and lower average selling prices, primarily in our upstream intermediates businesses.
The decrease in revenues in our Advanced Materials segment for the three months ended March 31,2019, compared to the same period in 2018 was primarily due to lower average selling prices. Average selling prices decreased primarily due to the impact of a stronger U.S. dollar against major international currencies, partially offset by higher local currency selling prices. The impact of sales volumes on revenues remained relatively flat as favorable product mix effect from sales volumes in our aerospace components market was offset by lower sales volumes in our power and automotive related markets. Segment adjusted EBITDA decreased due to higher fixed costs and higher raw material costs.
The decrease in revenues in our Textile Effects segment for the three months ended March 31, 2019 compared to the same period of 2018 was due to lower sales volumes, partially offset by higher average selling prices. Sales volumes decreased primarily due to lower demand resulting from market uncertainties surrounding U.S. and China trade, as well as from textile mill closures in China due to regulatory measures. 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. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and higher raw materials costs, partially offset by higher average selling prices.
Corporate, LIFO and other
For the three months ended March 31, 2019, segment adjusted EBITDA from Corporate and other for Huntsman Corporation improved $5 million to a loss of $38 million from a loss of $43 million in the same period in 2018, primarily due to benefit in LIFO inventory reserves, partially offset by foreign curr
Liquidity, Capital Resources and Outstanding Debt
During the three months ended March 31, 2019, our free cash flow was a use of $101 million compared to a source of $56 million in the prior year period. This decrease is primarily due to lower earnings in the three months ended March 31, 2019, and net working capital metrics were temporarily higher than targeted levels. However, we reconfirm our full year 2019 targeted free cash flow conversion of near 40%. As of March 31, 2019, we had $1,445 million of combined cash and unused borrowing capacity.
During the three months ended March 31, 2019, we spent $70 million on capital expenditures compared to $55 million in the same period of 2019. In 2019, we expect to spend approximately $380 million on capital expenditures.
Through the end of the first quarter 2019, we have spent approximately $34 million to repurchase approximately 1.5 million shares. As of the end of the first quarter 2019, we have approximately $690 million remaining on our existing $1 billion multiyear share repurchase program.
During the three months ended March 31, 2019, we recorded income tax expense of $52 million compared to $53 million during the same period in 2018. In the first quarter 2019, our adjusted effective tax rate was 19%. We expect our forward adjusted effective tax rate will be approximately 21% - 23%.
Earnings Conference Call Information
We will hold a conference call to discuss our first quarter 2019 financial results on Tuesday, April 30, 2019 at 10 a.m. ET.
Participant dial-in numbers:
Domestic callers: (877) 402-8037
International callers: (201) 378-4913
Webcast link: https://78449.themediaframe.com/dataconf/productusers/hun/mediaframe/29527/indexl.html
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 second quarter 2019, a member of management is expected to present at:
- Fermium Research Chemicals Conference, May 7, 2019
- Goldman Sachs Industrials & Materials Conference, May 16, 2019
- KeyBanc Capital Markets' Industrial & Basic Materials Conference, May 29, 2019
- Vertical Research Partners Materials Conference, June 18, 2019
A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.
Click here to read the full 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 required by applicable laws