Annual report pursuant to Section 13 and 15(d)

Note 1 - General

v3.22.4
Note 1 - General
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Nature of Operations [Text Block]

1. GENERAL

 

Definitions

 

For convenience in this report, the terms “Company,” “our” or “we” may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. In this report, “Huntsman International” refers to Huntsman International LLC (our wholly-owned subsidiary) and, unless the context otherwise requires, its subsidiaries; “AAC” refers to Arabian Amines Company, our consolidated manufacturing joint venture with the Zamil Group; “HPS” refers to Huntsman Polyurethanes Shanghai Ltd. (our consolidated splitting joint venture with Shanghai Chlor-Alkali Chemical Company, Ltd); and “SLIC” refers to Shanghai Liengheng Isocyanate Company (our unconsolidated manufacturing joint venture with BASF and three Chinese chemical companies).

 

In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.

 

Description of Business

 

We are a global manufacturer of diversified organic chemical products. We operate in three segments: Polyurethanes, Performance Products and Advanced Materials. Our products comprise many different chemicals and formulations, which we market globally to a wide range of consumers that consist primarily of industrial and building product manufacturers. Our products are used in a broad range of applications, including those in the adhesives, aerospace, automotive, coatings and construction, construction products, durable and non-durable consumer products, electronics, insulation, packaging, power generation and refining. Many of our products offer effects such as premium insulation in homes and buildings and the light weighting of airplanes and automobiles that help conserve energy. We are a leading global producer in many of our key product lines, including MDI, amines, maleic anhydride and epoxy-based polymer formulations. 

 

Our company, a Delaware corporation, was formed in 2004 to hold the Huntsman businesses, which were founded by Jon M. Huntsman. Mr. Huntsman founded the predecessor to our Company in 1970 as a small polystyrene plastics packaging company. Since then, we have transformed through a series of acquisitions and divestitures and now own a global portfolio of businesses with a primary focus on improving energy efficiency. On August 9, 2022, we entered into a definitive agreement to sell our Textile Effects Business to Archroma. We expect the transaction to close on February 28, 2023. Beginning in the third quarter of 2022, the results of our Textile Effects Business are reported as discontinued operations for all periods presented. For more information, see “Note 4. Discontinued Operations and Business Dispositions— Discontinued Operations—Sale of Textile Effects Business.” On January 3, 2020, we completed the sale of our Chemical Intermediates Businesses to Indorama. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Chemical Intermediates Businesses.” We operate all of our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.

 

Huntsman Corporation and Huntsman International Financial Statements
 
Except where otherwise indicated, these notes relate to the consolidated financial statements for both our Company and Huntsman International. The differences between our consolidated financial statements and Huntsman International’s consolidated financial statements relate primarily to different capital structures and purchase accounting recorded at our Company for the 2003 step-acquisition of Huntsman International Holdings LLC, the former parent company of Huntsman International that was merged into Huntsman International in 2005.
 
Huntsman International declared and paid to us a distribution in the form of certain affiliate accounts receivable in the fourth quarter of  2022.
 
 

Recent Developments

 

Dividend Increase

 

On February 17, 2023, our Board of Directors declared a $0.2375 per share cash dividend on our common stock. This represents an approximate 12% increase from the previous dividend.

 

European Restructuring Program

 

In early November 2022, we announced our commitment and specific plans to further realign our cost structure beyond the current in-progress cost optimization programs with additional restructuring in Europe. The new program includes exiting and consolidating certain facilities, workforce relocation to lower cost locations and further personnel rationalization. For more information, see “Note 12. Restructuring, Impairment and Plant Closing Costs.”

 

Other Significant Developments During 2022

 

Other significant developments that occurred during 2022 were as follows:

 

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On August 9, 2022, we entered into a definitive agreement to sell our Textile Effects Business to Archroma for a purchase price of $593 million in cash plus the assumption of underfunded pension liabilities, and we expect the net after tax cash proceeds to be approximately $540 million before fees and subject to certain customary purchase price adjustments as set forth in the purchase agreement. We expect the transaction to close on February 28, 2023. Beginning in the third quarter of 2022, we reported the results of our Textile Effects Business as discontinued operations. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business.” 

 

 

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On May 20, 2022, Huntsman International entered into the 2022 Revolving Credit Facility. Borrowings will bear interest at the rates specified in the credit agreement governing the 2022 Revolving Credit Facility, which will vary based on the type of loan and Huntsman International’s debt ratings. Under the credit agreement, the interest rate margin and the commitment fee rates are also subject to adjustments based on the Company’s performance on specified sustainability target thresholds with respect to annual percentage reduction in operational greenhouse gas emissions intensity and annual percentage reduction in water consumption intensity. Unless previously terminated in accordance with its terms, the credit agreement will mature in May 2027. Huntsman International may increase the 2022 Credit Revolving Facility commitments up to an additional $500 million, subject to the satisfaction of certain conditions. See “Note 14. Debt—Direct and Subsidiary Debt—Revolving Credit Facility.”

 

 

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On April 29, 2022, a New Orleans jury awarded us approximately $94 million in our long-running court battle against Praxair/Linde, one of the industrial gas suppliers to our Geismar, Louisiana MDI manufacturing site. The case was filed after Praxair refused to properly maintain its own Geismar facility and then repeatedly failed to supply our requirements for industrial gas needed to manufacture MDI under long-term supply contracts that expired in 2013. After adding mandatory pre-judgment and post-judgment interest to the award, we expect damages to exceed $125 million before deducting for taxes and legal fees. The award is subject to a pending appeal, and if affirmed, we expect to receive net proceeds of approximately $50 million to $60 million. We have not yet recognized the award in our consolidated statements of operations.

 

 

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On March 25, 2022, our Board of Directors increased the authorization of our existing share repurchase program from $1 billion to $2 billion. During the year ended December 31, 2022, we repurchased 31,982,264 shares of our common stock for approximately $1,003 million, including commissions, under this share repurchase program. As of December 31, 2022, approximately $897 million of share repurchases remain under this share repurchase program. See “Note 22. Huntsman Corporation Stockholders’ Equity—Share Repurchase Program.”

 

 

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On February 14, 2022, our Board of Directors declared a $0.2125 per share cash dividend on our common stock. This represents a 13% increase from the previous dividend.