Huntsman Releases First Quarter 2014 Results; Demonstrates Broad Earnings Strength Across Divisions As Adjusted EBITDA Improves 50% Compared To Prior Year

Apr 29, 2014, 06:00 ET from Huntsman Corporation

THE WOODLANDS, Texas, April 29, 2014 /PRNewswire/ --

First Quarter 2014 Highlights

  • Adjusted EBITDA was $329 million compared to $220 million in the prior year period, an improvement of 50%.
  • Adjusted diluted income per share was $0.43 compared to $0.19 in the prior year period.
  • Net income attributable to Huntsman Corporation was $54 million compared to net loss of $24 million in the prior year period.


Three months ended



March 31,


December 31,

In millions, except per share amounts, unaudited


2014


2013


2013








Revenues


$2,755


$2,702


$          2,705








Net income (loss) attributable to Huntsman Corporation

$     54


$    (24)


$               41

Adjusted net income(1)


$   105


$      46


$             118








Diluted income (loss) per share


$  0.22


$ (0.10)


$            0.17

Adjusted diluted income per share(1)


$  0.43


$  0.19


$            0.48








EBITDA(1)


$   261


$   112


$             225

Adjusted EBITDA(1)


$   329


$   220


$             313








See end of press release for footnote explanations







Huntsman Corporation (NYSE: HUN) today reported first quarter 2014 results with revenues of $2,755 million and adjusted EBITDA of $329 million

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

"Our first quarter results demonstrated broad earnings strength as all of our businesses exceeded the previous year with the exception of PO/MTBE.  The benefits of our previous year's restructuring efforts are visible in both our Advanced Materials and Textile Effects results.  We continue to see strong results in our Performance Products and MDI polyurethanes, which make up the core of our earnings.

We remain actively engaged with the European Union in their antitrust review of our proposed acquisition of Rockwood Holding's Performance Additives and Titanium Dioxide businesses.

This past month, at our Investor Day we presented a plan to achieve $2 billion of Adjusted EBITDA within the next 2-3 years.  With these strong first quarter results, we're well on our way to achieving this target."

Segment Analysis for 1Q14 Compared to 1Q13

Polyurethanes

The increase in revenues in our Polyurethanes division for the three months ended March 31, 2014 compared to the same period in 2013 was primarily due to higher sales volumes partially offset by lower average selling prices.  MDI sales volumes increased 6% as a result of improved demand in all regions and across most major markets whereas PO/MTBE sales volumes were essentially unchanged.  PO/MTBE average selling prices decreased primarily due to less favorable market conditions and MDI Urethane average selling prices were essentially flat.  The decrease in adjusted EBITDA was due to lower PO/MTBE margins partially offset by an increase in MDI Urethane earnings.

Performance Products

The increase in revenues in our Performance Products division for the three months ended March 31, 2014 compared to the same period in 2013 was due to higher sales volumes and higher selling prices partially offset by the mix effect of more toll business.  Sales volumes increased primarily due to the impact of the scheduled maintenance on our olefins and ethylene oxide facilities in Port Neches, Texas in the first quarter of 2013, as well as improved demand for amines and maleic anhydride.  Average selling prices increased, notably for maleic anhydride and surfactants, in response to higher raw materials costs.  The increase in adjusted EBITDA was primarily due to the impact of our scheduled maintenance in the first quarter of 2013, estimated at $55 million.

Advanced Materials

The decrease in revenues in our Advanced Materials division for the three months ended March 31, 2014 compared to the same period in 2013 was primarily due to lower sales volumes, partially offset by higher average selling prices and favorable sales mix.  Sales volumes decreased in our base resins business primarily due to our restructuring efforts.  During the fourth quarter 2013 we closed two of our base resins production units as we focus on higher value component and formulations sales such as aerospace, transportation and industrial markets.  Average selling prices increased in all regions primarily due to increased prices for certain products as well as an increased focus on higher value component and formulations sales.  The increase in adjusted EBITDA was primarily due to higher contribution margins and lower manufacturing and selling, general and administrative costs as a result of our restructuring efforts.

Textile Effects

The increase in revenues in our Textile Effects division for the three months ended March 31, 2014 compared to the same period in 2013 was due to higher average selling prices and higher sales volumes.  Average selling prices increased primarily in response to higher raw material costs.  Sales volumes increased primarily due to increased market share and stronger consumer end market sentiment.  The increase in adjusted EBITDA was primarily due to higher contribution margins as a result of our restructuring efforts.

Pigments

The decrease in revenues in our Pigments division for the three months ended March 31, 2014 compared to the same period in 2013 was primarily due to lower average selling prices as sales volumes were essentially unchanged.  Average selling prices decreased primarily as a result of high industry inventory levels partially offset by the strength of the euro against the U.S. dollar.  The increase in adjusted EBITDA was primarily due to lower manufacturing costs as a result of higher production volumes.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and Other improved by $1 million to a loss of $44 million for the three months ended March 31, 2014 compared to a loss of $45 million for the same period in 2013.

Liquidity, Capital Resources and Outstanding Debt

As of March 31, 2014 we had $902 million of combined cash and unused borrowing capacity compared to $1,048 million at December 31, 2013.

Total capital expenditures for the quarter ended March 31, 2014 were $107 million.  We expect to spend approximately $500 million on capital expenditures in 2014, net of reimbursements and excluding any amounts associated with the planned acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.

Income Taxes

During the three months ended March 31, 2014 we recorded income tax expense of $36 million and paid $46 million in cash for income taxes.  Our adjusted effective income tax rates for the three months ended March 31, 2014 was approximately 32%.

We expect our 2014 adjusted effective tax rate to be approximately 35% excluding the impact of the acquisition of the Performance Additives and Titanium Dioxide businesses of Rockwood Holdings, Inc.  We expect our long term adjusted effective tax rate to be approximately 30%.

Earnings Conference Call Information

We will hold a conference call to discuss our first quarter 2014 financial results on Tuesday, April 29, 2014 at 10:00 a.m. ET.

Call-in numbers for the conference call:

U.S. participants

(888) 713 - 4214

International participants 

(617) 213 - 4866

Passcode

60716193

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=PXFJDHCNN

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 29, 2014 and ending May 6, 2014.

Call-in numbers for the replay:

U.S. participants                      

(888) 286 - 8010

International participants             

(617) 801 - 6888

Replay code                              

10497006

 

Table 1 – Results of Operations

Three months ended

March 31,

In millions, except per share amounts, unaudited

2014

2013

Revenues

$2,755

$2,702

Cost of goods sold

2,305

2,353

Gross profit

450

349

Operating expenses

261

255

Restructuring, impairment and plant closing costs

39

44

Operating income

150

50

Interest expense

(48)

(51)

Equity in income of investment in unconsolidated affiliates

2

1

Loss on early extinguishment of debt

-

(35)

Other income

1

-

Income (loss) before income taxes

105

(35)

Income tax (expense) benefit

(36)

20

Income (loss) from continuing operations

69

(15)

Loss from discontinued operations, net of tax(2)

(7)

(2)

Net income (loss)

62

(17)

Net income attributable to noncontrolling interests, net of tax

(8)

(7)

Net income (loss) attributable to Huntsman Corporation

$     54

$    (24)

Adjusted EBITDA(1)

$   329

$   220

Adjusted net income(1)

$   105

$     46

Basic income (loss) per share

$  0.22

$ (0.10)

Diluted income (loss) per share

$  0.22

$ (0.10)

Adjusted diluted income per share(1)

$  0.43

$  0.19

Common share information:

   Basic shares outstanding

240.9

239.0

   Diluted shares

244.5

239.0

   Diluted shares for adjusted diluted income per share

244.5

241.8

See end of press release for footnote explanations

 

Table 2 – Results of Operations by Segment

Three months ended

March 31,

Better /

(Worse)

In millions, unaudited

2014

2013

Segment Revenues:

   Polyurethanes

$1,200

$1,182

2%

   Performance Products

765

722

6%

   Advanced Materials

319

336

(5)%

   Textile Effects

224

188

19%

   Pigments

318

330

(4)%

   Eliminations and other

(71)

(56)

(27)%

   Total

$2,755

$2,702

2%

Segment Adjusted EBITDA(1):

   Polyurethanes

$   167

$   178

(6)%

   Performance Products

118

54

119%

   Advanced Materials

46

27

70%

   Textile Effects

16

(3)

NM

   Pigments

26

9

189%

   Corporate, LIFO and other

(44)

(45)

2%

   Total

$   329

$   220

50%

See end of press release for footnote explanations

NM—Not meaningful

 

 

Table 3 – Factors Impacting Sales Revenues

Three months ended

March 31, 2014 vs. 2013

Average Selling Price(a)

Local

Exchange

Sales Mix

Sales

Unaudited

Currency

Rate

& Other

Volume(b)

Total

Polyurethanes

(4)%

----

1%

5%

2%

Performance Products

2%

----

(10)%

14%

6%

Advanced Materials

6%

(1)%

6%

(16)%

(5)%

Textile Effects

15%

(2)%

2%

4%

19%

Pigments

(5)%

1%

----

----

(4)%

Total Company

(2)%

----

(4)%

8%

2%

(a) Excludes sales from tolling arrangements, by-products and raw materials.

(b) Excludes sales from by-products and raw materials.

 

Table 4 – Reconciliation of U.S. GAAP to Non-GAAP Measures

 Income Tax 

 Net Income (loss) 

 Diluted Income 

 EBITDA 

 Expense 

 Attrib. to HUN Corp. 

 Per Share 

Three months ended

Three months ended

Three months ended

Three months ended

March 31,

March 31,

March 31,

March 31,

In millions, except per share amounts, unaudited

2014

2013

2014

2013

2014

2013

2014

2013

GAAP(1)

$    261

$    112

$   (36)

$    20

$   54

$           (24)

$  0.22

$ (0.10)

Adjustments:

   Acquisition expenses and purchase accounting inventory adjustments

8

3

(2)

(1)

6

2

0.02

0.01

   Loss from discontinued operations, net of tax(2)

7

3

 N/A 

 N/A 

7

2

0.03

0.01

   Discount amortization on settlement financing associated with the terminated merger

 N/A 

 N/A 

-

(1)

-

2

-

0.01

   Loss on early extinguishment of debt

-

35

-

(13)

-

22

-

0.09

   Certain legal settlements and related expenses

-

2

-

(1)

-

1

-

-

   Amortization of pension and postretirement actuarial losses

13

19

(4)

(7)

9

12

0.04

0.05

   Restructuring, impairment and plant closing and transition costs

40

46

(11)

(17)

29

29

0.12

0.12

Adjusted(1)

$    329

$    220

$   (53)

$   (20)

$ 105

$            46

$  0.43

$  0.19

Adjusted income tax expense

53

20

Net income attributable to noncontrolling interests, net of tax

8

7

Adjusted pre-tax income(1)

$ 166

$            73

Adjusted effective tax rate

32%

27%

 Income Tax 

 Net Income 

 Diluted Income 

 EBITDA 

Expense

 Attrib. to HUN Corp. 

 Per Share 

Three months ended

Three months ended

Three months ended

Three months ended

December 31,

December 31,

December 31,

December 31,

In millions, except per share amounts, unaudited

2013

2013

2013

2013

GAAP(1)

$    225

$   (20)

$   41

$  0.17

Adjustments:

   Acquisition expenses and purchase accounting inventory adjustments

7

(3)

4

0.02

   Loss from discontinued operations, net of tax(2)

2

 N/A 

1

-

   Discount amortization on settlement financing associated with the terminated merger

 N/A 

(1)

1

-

   Loss on early extinguishment of debt

16

(6)

10

0.04

   Certain legal settlements and related expenses

1

-

1

-

   Amortization of pension and postretirement actuarial losses

18

(7)

11

0.05

   Restructuring, impairment and plant closing and transition costs

44

5

49

0.20

Adjusted(1)

$    313

$   (32)

$ 118

$  0.48

Adjusted income tax expense

32

Net income attributable to noncontrolling interests, net of tax

1

Adjusted pre-tax income(1)

$ 151

Adjusted effective tax rate

21%

See end of press release for footnote explanations

 

Table 5 – Reconciliation of Net Income (Loss) to EBITDA

Three months ended

March 31,

December 31,

In millions, unaudited

2014

2013

2013

Net income (loss) attributable to Huntsman Corporation

$  54

$ (24)

$               41

Interest expense

48

51

44

Income tax expense (benefit) from continuing operations

36

(20)

20

Income tax benefit from discontinued operations(2)

-

(2)

(2)

Depreciation and amortization

123

107

122

EBITDA(1)

$261

$112

$             225

See end of press release for footnote explanations

 

Table 6 – Selected Balance Sheet Items

March 31,

December 31,

In millions

2014

2013

(unaudited)

Cash

$      286

$             529

Accounts and notes receivable, net

1,724

1,575

Inventories

1,911

1,741

Other current assets

307

314

Property, plant and equipment, net

3,794

3,824

Other assets

1,205

1,205

Total assets

$    9,227

$          9,188

Accounts payable

$    1,185

$          1,113

Other current liabilities

760

769

Current portion of debt

270

277

Long-term debt

3,621

3,633

Other liabilities

1,214

1,267

Total equity

2,177

2,129

Total liabilities and equity

$    9,227

$          9,188

 

Table 7 – Outstanding Debt

March 31,

December 31,

In millions

2014

2013

(unaudited)

Debt:

   Senior credit facilities

$    1,338

$         1,351

   Accounts receivable programs

247

248

   Senior notes

1,060

1,061

   Senior subordinated notes

891

891

   Variable interest entities

238

247

   Other debt

117

112

Total debt - excluding affiliates

3,891

3,910

Total cash

286

529

Net debt- excluding affiliates

$    3,605

$         3,381

 

Table 8 – Summarized Statement of Cash Flows

Three months ended

March 31,

In millions, unaudited

2014

2013

Total cash at beginning of period

$ 529

$396

Net cash used in operating activities

(67)

(74)

Net cash used in investing activities

(104)

(85)

Net cash (used in) provided by financing activities

(71)

21

Effect of exchange rate changes on cash

(1)

(2)

Total cash at end of period

$ 286

$256

Supplemental cash flow information:

   Cash paid for interest

$  (56)

$ (59)

   Cash paid for income taxes

(46)

(17)

   Cash paid for capital expenditures

(107)

(89)

   Depreciation and amortization

123

107

   Changes in primary working capital:

   Accounts and notes receivable

(149)

(85)

   Inventories

(172)

(9)

   Accounts payable

107

10

   Total cash used in primary working capital

$(214)

$ (84)

Footnotes

(1)

We use EBITDA and adjusted EBITDA to measure the operating performance of our business.  We provide adjusted net income because we feel it provides meaningful insight for the investment community into the performance of our business.  We believe that net income (loss) attributable to Huntsman Corporation is the performance measure calculated and presented in accordance with generally accepted accounting principles in the U.S. ("GAAP") that is most directly comparable to EBITDA, adjusted EBITDA and adjusted net income.  Additional information with respect to our use of each of these financial measures follows:

EBITDA is defined as net income (loss) attributable to Huntsman Corporation before interest, income taxes, and depreciation and amortization. EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies. The reconciliation of EBITDA to net income (loss) attributable to Huntsman Corporation is set forth in Table 5 above.

Adjusted EBITDA is computed by eliminating the following from EBITDA:  acquisition expenses and purchase accounting inventory adjustments; loss (gain) on initial consolidation of subsidiaries; EBITDA from discontinued operations; loss (gain) on disposition of businesses/assets; loss on early extinguishment of debt; extraordinary loss (gain) on the acquisition of a business; certain legal settlements and related expenses; amortization of pension and postretirement actuarial losses (gains); and restructuring, impairment, plant closing and transition costs (credits).  The reconciliation of adjusted EBITDA to EBITDA is set forth in Table 4 above.

Adjusted net income (loss) is computed by eliminating the after tax impact of the following items from net income (loss) attributable to Huntsman Corporation: acquisition expenses and purchase accounting inventory adjustments; loss (gain) on initial consolidation of subsidiaries; loss (income) from discontinued operations; discount amortization on settlement financing associated with the terminated merger; loss (gain) on disposition of businesses/assets; loss on early extinguishment of debt; extraordinary loss (gain) on the acquisition of a business; certain legal settlements and related expenses; amortization of pension and postretirement actuarial losses (gains); and restructuring, impairment, plant closing and transition costs (credits).   We do not adjust for changes in tax valuation allowances because we do not believe it provides more meaningful information than is provided under GAAP.  The reconciliation of adjusted net income (loss) to net income (loss) attributable to Huntsman Corporation common stockholders is set forth in Table 4 above.

(2)

During the first quarter 2010 we closed our Australian styrenics operations; results from this business are treated as discontinued operations. 

About Huntsman:

Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2013 revenues of over $11 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 80 manufacturing and R&D facilities in 30 countries and employ approximately 12,000 associates within our 5 distinct business divisions.  For more information about Huntsman, please visit the company's website at www.huntsman.com.

Forward-Looking Statements:

Statements in this release that are not historical are forward-looking statements. 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 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, 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.

SOURCE Huntsman Corporation



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