Huntsman Announces Third Quarter 2019 Earnings; Strong Cash Flow Generation in the Quarter; Divestiture of the Chemical Intermediates and Surfactants Businesses on Track
FOR IMMEDIATE RELEASE
October 25, 2019
The Woodlands, Texas
Third Quarter Highlights
Third quarter 2019 net income of $41 million compared to a net loss of $8 million in the prior year period; third quarter 2019 diluted earnings per share of $0.13 compared to a loss per share of $0.05 in the prior year period.
Third quarter 2019 adjusted net income of $95 million compared to $170 million in the prior year period; third quarter 2019 adjusted diluted earnings per share of $0.41 compared to $0.71 in the prior year period.
Third quarter 2019 adjusted EBITDA of $215 million compared to $308 million in the prior year period.
Third quarter 2019 net cash provided by operating activities from continuing operations of $257 million. Free cash flow from continuing operations of $197 million for the quarter.
Balance sheet remains strong with total Company net leverage of 1.6x.
Third quarter 2019 share repurchases of approximately 4.1 million shares for approximately $81 million.
Previously announced divestiture of the Chemical Intermediates and Surfactants businesses for $2.1 billion remains on track and is expected to close in early 2020. The businesses to be divested are now reported as discontinued operations on the income statement and held for sale on the balance sheet.
THE WOODLANDS, Texas – Huntsma
n Corporation (NYSE: HUN) today reported third quarter 2019 results with revenues of $1,687 million, net income of $41 million, adjusted net income of $95 million and adjusted EBITDA of $215 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
“In spite of an increasingly challenging global economic environment, I have never been more pleased about our mix of businesses and the strength of our balance sheet. We continue our strategy to move and shift our asset portfolio to more downstream, stable and resilient businesses, as well as to manage effectively our working capital and balance sheet. We are on track to close the divestiture of our Chemical Intermediates and Surfactants businesses in early 2020, yielding approximately $1.6 billion of net proceeds upon completion. This, coupled with our ongoing strong free cash flow and investment grade balance sheet will provide us with abundant resource and flexibility in our ongoing balanced approach to capital allocation which includes organic and inorganic expansion, opportunistic share repurchases and a competitive dividend. We are very well positioned for the future.”
Segment Analysis for 3Q19 Compared to 3Q18
The decrease in revenues in our Polyurethanes segment for the three months ended September 30, 2019 compared to the same period of 2018 was due to lower MDI average selling prices, partially offset by higher MDI 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 the start-up of our new Chinese MDI facility in the third quarter of 2018. The decrease in segment adjusted EBITDA was primarily due to lower MDI margins driven by lower MDI pricing, partially offset by higher MDI sales volumes.
The decrease in revenues in our Performance Products segment for the three months ended September 30, 2019 compared to the same period of 2018 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily due to lower raw material costs and weakened market conditions. Sales volumes decreased primarily due to weakened market conditions. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and lower margins, primarily in our ethyleneamines business, partially offset by higher margins in our specialty amines business.
The decrease in revenues in our Advanced Materials segment for the three months ended September 30, 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 customer destocking, particularly in our European region. 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. Segment adjusted EBITDA decreased due to lower sales volumes.
The decrease in revenues in our Textile Effects segment for the three months ended September 30, 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 lower demand primarily resulting from market uncertainties surrounding U.S. and China trade. Average selling prices decreased as a result of competitive market pressures and 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 material costs, partially offset by
lower fixed costs.
Corporate, LIFO and other
For the three months ended September 30, 2019, adjusted EBITDA from Corporate and other for Huntsman Corporation increased by $9 million to a loss of $36 million from a loss of $45 million for the same period of 2018.
Liquidity, Capital Resources and Outstanding Debt
During the three months ended September 30, 2019, our free cash flow from continuing operations was $197 million compared to $191 million in the prior year period. As of September 30, 2019, we had $1,707 million of combined cash and unused borrowing capacity.
During the three months ended September 30, 2019, we spent $63 million on capital expenditures compared to $59 million in the same period of 2018. In 2019, we expect to spend approximately $270 million on capital expenditures for continuing operations and approximately $70 million for the Chemical Intermediates and Surfactants businesses reported as discontinued operations.
During the three months ended September 30, 2019, we spent approximately $81 million to repurchase approximately 4.1 million shares. As of the end of the third quarter 2019, we have approximately $528 million remaining on our existing $1 billion multiyear share repurchase program.
During the three months ended September 30, 2019, we recorded income tax expense of $30 million compared to $16 million during the same period in 2018. In the third quarter 2019, our adjusted effective tax rate was 21%. 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 third quarter 2019 financial results on Friday, October 25, 2019 at 10 a.m. ET.
Webcast link: https://78449.themediaframe.com/dataconf/productusers/hun/mediaframe/32469/indexl.html
Participant dial-in numbers:
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 third quarter 2019 a member of management is expected to present at:
Morgan Stanley’s Global Chemicals and Agriculture Conference on November 13, 2019
Citi’s Basic Materials Conference on December 3, 2019
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 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, timing of proposed transactions, and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, and other financial, economic, compet
itive, 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.