Huntsman Announces First Quarter 2020 Earnings; A Strong Balance Sheet with Robust Liquidity
FOR IMMEDIATE RELEASE
May 1, 2020
The Woodlands, TX
First Quarter Highlights
- First quarter 2020 net income of $708 million compared to $131 million in the prior year period; first quarter 2020 diluted earnings per share of $3.16 compared to $0.51 in the prior year period.
- First quarter 2020 adjusted net income of $65 million compared to $85 million in the prior year period; first quarter 2020 adjusted diluted earnings per share of $0.29 compared to $0.36 in the prior year period.
- First quarter 2020 adjusted EBITDA of $165 million compared to $204 million in the prior year period.
- First quarter 2020 net cash used in operating activities was $40 million. Free cash flow was a use of $101 million for the first quarter 2020.
- Balance sheet remains strong with a net leverage of 0.7x and total liquidity for the Company is approximately $2.9 billion. First quarter 2020 share repurchases of approximately 5.4 million shares for approximately $96 million.
- The Icynene-Lapolla acquisition closed on February 20, 2020, which approximately doubled our existing global spray polyurethane foam insulation business. Our recently announced acquisition of CVC Thermoset Specialties on March 16, 2020, is on track to close by mid-year.
THE WOODLANDS, Texas – Huntsman Corporation (NYSE: HUN) today reported first quarter 2020 results with revenues of $1,593 million, net income of $708 million, adjusted net income of $65 million and adjusted EBITDA of $165 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
“Fortunately, we have been well prepared for this global e
conomic crisis. The ongoing transformation of our business has made us a much better Company. Our balance sheet is stronger than ever before, with significant cash and robust liquidity. Visibility has at no time been more difficult, but our portfolio of businesses has never been more differentiated. In this environment we are laser focused on what is in our control and protecting our balance sheet strength. Having learned from prior crises, we preemptively reduced unnecessary inventories and are reducing capital spending this year by 30%, or approximately $90 million, by delaying discretionary spending. We have proactively taken other measures, including suspending share repurchases, and various cost reduction measures yielding immediate benefit. We will accelerate our plans to achieve synergies with our recent and pending strategic bolt-on acquisitions and aggressively press forward with the global scale up of our differentiated platform. Our Company is ready and able to take advantage of opportunities to come, and I am confident that Huntsman will emerge from this global crisis a stronger Company.”
Segment Analysis for 1Q20 Compared to 1Q19
The decrease in revenues in our Polyurethanes segment for the three months ended March 31, 2020 compared to the same period of 2019 was due to lower MDI average selling prices and modestly lower overall polyurethanes sales volumes. MDI average selling prices decreased primarily due to a decline in component MDI selling prices in China and Europe. Overall polyurethanes sales volumes decreased slightly primarily due to decreased demand across most major markets, partially offset by modest growth in MDI sales volumes. 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 March 31, 2020 compared to the same period of 2019 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily due to lower raw material costs. Sales volumes decreased primarily due to weakened market conditions in our maleic anhydride business, partially offset by higher sales volumes in our amines business. The increase in segment adjusted EBITDA was primarily due to higher margins in our performance amines business and lower fixed costs.
The decrease in revenues in our Advanced Materials segment for the three months ended March 31, 2020 compared to the same period in 2019 was due to lower sales volumes and lower average selling prices. Sales volumes decreased across most markets, particularly commodity, industrial and aerospace, primarily due to economic slowdown and customer destocking. 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 decrease in segment adjusted EBITDA was primarily due to lower sales volumes, partially offset by lower fixed costs.
The decrease in revenues in our Textile Effects segment for the three months ended March 31, 2020 compared to the same period of 2019 was due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased as a result of competitive market pressures and the impact of a stronger U.S. dollar against major international currencies. Sales volumes increased mainly in Europe and Asia. The decrease in segment adjusted EBITDA was primarily due to lower sales revenues, partially offset by lower raw material costs and lower fixed costs.
Corporate, LIFO and other
For the three months ended March 31,
2020, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $5 million to a loss of $45 million from a loss of $40 million for the same period of 2019.
Liquidity and Capital Resources
During the three months ended March 31, 2020, our free cash flow from continuing operations was a use of $101 million compared to a use of $101 million in the prior year period. As of March 31, 2020, we had $2.9 billion of combined cash and unused borrowing capacity.
During the three months ended March 31, 2020, we spent $61 million on capital expenditures compared to $61 million in the same period of 2019. For 2020, we have reduced our projected capital spend by $90 million, or approximately 30%, and now expect to spend between approximately $225 million to $235 million on capital expenditures. We have deferred a portion of capital spending on the new MDI splitter in Geismar, Louisiana for six months leaving roughly $40 million of capital spend in 2020 with the remaining spend of approximately $120 million in 2021 and 2022.
During the three months ended March 31, 2020, we spent approximately $96 million to repurchase approximately 5.4 million shares. As of the end of the first quarter 2020, we have approximately $420 million remaining on our existing $1 billion multiyear share repurchase program. We have temporarily suspended our share repurchase program.
In the first quarter, our adjusted effective tax rate was 18%. 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 first quarter 2020 financial results on Friday, May 1, 2020 at 10 a.m. ET.
Webcast link: https://78449.themediaframe.com/dataconf/productusers/hun/mediaframe/37217/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 second quarter 2020 a member of management is expected to present at:
- Fermium Research Virtual Chemicals Conference, May 5, 2020
- Wells Fargo Virtual Industrials Conference, May 6, 2020
- Goldman Sachs Virtual Industrials & Materials Conference, May 14, 2020
- KeyBanc Capital Markets’ Virtual Industrial & Basic Materials Conference, May 27, 2020
- Tudor, Pickering, Holt & Co. Virtual Hotter ‘N Hell 2020 Conference, June 11, 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 servi
ng 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, 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 bu
sinesses 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.