Huntsman Releases First Quarter 2013 Results; Reports Strong MDI Polyurethanes Earnings

THE WOODLANDS, Texas, April 30, 2013 /PRNewswire/ --

First Quarter 2013 Highlights

  • Adjusted EBITDA was $220 million compared to $407 million in the prior year period (adjusted to exclude amortization of pension and postretirement actuarial losses of $19 million and $10 million, respectively).
  • Adjusted diluted income per share was $0.19 compared to $0.77 in the prior year period (adjusted to exclude amortization of pension and postretirement actuarial losses of $0.05 and $0.04, respectively).
  • Net loss attributable to Huntsman Corporation was $24 million compared to net income of $163 million in the prior year period.
  • We estimate first quarter 2013 EBITDA was impacted by approximately $55 million as a result of our planned maintenance at our Port Neches, TX facility during the period.


Three months ended



March 31,


December 31,

In millions, except per share amounts, unaudited


2013


2012


2012








Revenues


$2,702


$2,913


$          2,619








Net (loss) income attributable to Huntsman Corporation


$    (24)


$   163


$              (40)

Adjusted net income(1)


$     46


$   186


$               68








Diluted (loss) income per share


$ (0.10)


$  0.68


$           (0.17)

Adjusted diluted income per share(1)


$  0.19


$  0.77


$            0.28








EBITDA(1)


$   112


$   390


$             104

Adjusted EBITDA(1)


$   220


$   407


$             245








See end of press release for footnote explanations














Huntsman Corporation (NYSE: HUN) today reported first quarter 2013 results with revenues of $2,702 million and adjusted EBITDA of $220 million

Peter R. Huntsman, our President and CEO, commented:

"During the first quarter this year we saw a meaningful improvement in our MDI polyurethane margins.  We expect this trend to continue as industry fundamentals improve. 

I am encouraged by general demand trends across our businesses in North America and Asia and am optimistic about future prospects of our business in the key markets we serve.  With the successful restart of our Port Neches facility and in excess of $165 million of annual cash improvements in the next several quarters, we continue to forecast that our non-TiO2 divisions will collectively do better this year than last."

Segment Analysis for 1Q13 Compared to 1Q12

Polyurethanes

The decrease in revenues in our Polyurethanes division for the three months ended March 31, 2013 compared to the same period in 2012 was primarily due to lower sales volumes partially offset by higher average selling prices.  MDI sales volumes decreased in the European region partially offset by increased sales volumes in the Asia Pacific and Americas regions.  PO/MTBE sales volumes decreased primarily due to the timing of shipments.  MDI average selling prices increased in all regions primarily in response to higher raw material costs.  PO/MTBE average selling prices decreased primarily due to less favorable market conditions.  The decrease in adjusted EBITDA was primarily due to lower PO/MTBE earnings (first quarter 2012 benefited from industry supply outages) partially offset by higher MDI contribution margins.

Performance Products

The decrease in revenues in our Performance Products division for the three months ended March 31, 2013 compared to the same period in 2012 was due to lower sales volumes partially offset by higher average selling prices.  Sales volumes decreased by 18% as a result of scheduled maintenance on our olefins and ethylene oxide facilities in Port Neches, Texas in the first quarter of 2013.  Excluding the impact of this scheduled maintenance sales volumes would have increased by approximately 2%.  Average selling prices increased primarily due to sales mix effect.  The decrease in adjusted EBITDA was primarily due to the impact of our scheduled maintenance.  As a result of lower upstream margins and lower product sales we estimate the impact of this maintenance to be approximately $55 million on the first quarter of 2013.

Advanced Materials

The decrease in revenues in our Advanced Materials division for the three months ended March 31, 2013 compared to the same period in 2012 was primarily due to lower sales volumes.  Sales volumes decreased in the European and the Americas regions, primarily in our base resins and formulations businesses due to weaker demand and increased competition while sales volumes in the Asia Pacific region increased primarily due to strong demand in the adhesives and electrical engineering markets.  The decrease in adjusted EBITDA was primarily due to lower contribution margins and lower sales volumes partially offset by lower selling, general and administrative costs as a result of recent restructuring efforts.

Textile Effects

The increase in revenues in our Textile Effects division for the three months ended March 31, 2013 compared to the same period in 2012 was due to higher sales volumes, partially offset by lower average selling prices.  Sales volumes increased primarily due to increased market share in key markets.  Average selling prices decreased primarily due to sales mix effect and foreign currency translation.  The increase in adjusted EBITDA was primarily due to higher sales volumes and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts partially offset by lower contribution margins.

Pigments

The decrease in revenues in our Pigments division for the three months ended March 31, 2013 compared to the same period in 2012 was primarily due to lower average selling prices as sales volumes were essentially unchanged.  Average selling prices decreased in all regions of the world primarily in response to lower end use demand.  The decrease in adjusted EBITDA was primarily due to lower contribution margins and the impact of unabsorbed fixed costs at lower production rates.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and Other decreased by $4 million to a loss of $45 million for the three months ended March 31, 2013 compared to a loss of $41 million for the same period in 2012.  The decrease in adjusted EBITDA was primarily the result of a $7 million increase in LIFO inventory valuation expense ($4 million of expense in 2013 compared to $3 million of income in 2012) partially offset by a decrease in unallocated foreign exchange losses of $5 million ($2 million gain in 2013 compared to $3 million loss in 2012).

Liquidity, Capital Resources and Outstanding Debt

As of March 31, 2013 we had $832 million of combined cash and unused borrowing capacity compared to $887 million at December 31, 2012.

On April 29, 2013, we amended our accounts receivable securitization programs to among other things extend the maturity to April 2016, reduce the borrowing rate and increase the availability under the programs.          

On March 11, 2013 we entered into an amendment of our senior credit facilities that provided for an additional term loan of $225 million due April, 2017.  We used the proceeds to repay in full the remaining $193 million outstanding under our term loan B due April, 2014. 

On March 4, 2013 we issued $250 million of additional 4.875% senior notes due 2020 and redeemed the remaining $200 million of 5.5% senior notes due 2016.  In connection with this redemption, we recognized a loss on early extinguishment of debt of approximately $34 million.  The 5.5% senior notes were favorably issued to us at less than market interest rates; accounting standards required us to record the notes on our balance sheet at less than face value and amortize the difference over time up to the full face value of $200 million.  As a result, when we refinanced the notes we recognized an increase of recorded debt on our balance sheet of approximately $31 million due to the difference between face value and recorded carry value.

Total capital expenditures for the quarter ended March 31, 2013 were $89 million.  We expect to spend approximately $450 million on capital expenditures in 2013 which approximates our annual depreciation and amortization.

Income Taxes

During the three months ended March 31, 2013 we recorded an income tax benefit of $20 million and paid $17 million in cash for income taxes.  Our adjusted effective income tax rate for the three months ended March 31, 2013 was approximately 27%.  During the first quarter of 2013 we released a valuation allowance on certain net deferred tax assets and recorded a net decrease in unrecognized tax benefits resulting from the settlement of tax audits and the expiration of statutes of limitations.  These items had the effect of lowering our adjusted effective tax rate in the first quarter of 2013.

We expect our full year 2013 adjusted effective tax rate to be approximately 35% primarily due to the effect of tax valuation allowances and expected regional mix of income.  We expect our long term effective income tax rate to be approximately 30 - 35%.

Amortization of Pension and Postretirement Actuarial Losses (Gains) Adjustment to Earnings

Beginning in 2013, we began to exclude the amortization of actuarial gains and losses associated with pension and postretirement benefits from adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) attributable to Huntsman Corporation and adjusted diluted income (loss) per share. The amortization of actuarial gains and losses associated with pension and postretirement benefits arises from changes in actuarial assumptions and the difference between actual and expected returns on plan assets, and not from our normal, or "core," operations. There is diversity in accounting for these actuarial gains and losses within our industry, and we believe that removing these gains and losses provides management and investors greater transparency into the operational results of our businesses and enhances period-over-period comparability.

The service cost, amortization of prior service cost (benefit), interest cost and expected return on plan assets components of our periodic pension and postretirement benefit costs (income) will continue to be included in adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) attributable to Huntsman Corporation and adjusted diluted income (loss) per share.

The amounts for prior periods have been recast to conform to the current presentation.  A schedule of historical adjusted EBITDA along with a reconciliation of adjusted EBITDA to net income (loss) attributable to Huntsman Corporation can be found in tables 9 and 10 of this press release.  A reconciliation of adjusted earnings measures used in this press release can be found in table 4 of this press release.

Upcoming Conferences

A member of management will present at the following upcoming conferences:

  • Barclays Chemical ROC Stars, May 7, 2013
  • Wells Fargo Industrial and Construction Conference, May 8, 2013
  • Goldman Sachs Basic Materials Conference, May 22, 2013
  • Deutsche Bank Global Industrials and Basic Materials Conference, June 13, 2013

A webcast of the presentations, where applicable, along with accompanying materials will be available on the investor relations section of the company's website, www.huntsman.com.

Earnings Conference Call Information

We will hold a conference call to discuss our first quarter 2013 financial results on Tuesday, April 30, 2013 at 9:00 a.m. ET.

Call-in numbers for the conference call:

U.S. participants

(888) 713 - 4199

International participants

(617) 213 - 4861

Passcode

28343738

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=PT4XFXGYU

Webcast Information

The conference call will be available via webcast and can be accessed from the investor relations portion of the company's website at huntsman.com.

Replay Information

The conference call will be available for replay beginning April 30, 2013 and ending May 7, 2013.

Call-in numbers for the replay:

U.S. participants

(888) 286 - 8010

International participants

(617) 801 - 6888

Replay code

38526421