Huntsman Reports Record Quarterly Adjusted EBITDA of $401 Million, $0.70 Adjusted EPS

THE WOODLANDS, Texas, Nov. 2, 2012 /PRNewswire/ --

Third Quarter 2012 Highlights

  • Net income attributable to Huntsman Corporation increased to $116 million compared to a loss of $34 million in the prior year period.
  • Adjusted EBITDA improved 16% to $401 million compared to the prior year period.
  • Adjusted diluted income per share improved 49% to $0.70 compared to the prior year period.


Three months ended


Nine months ended



September 30,


June 30,


September 30,

In millions, except per share amounts, unaudited


2012


2011


2012


2012


2011












Revenues


$2,741


$2,976


$  2,914


$8,568


$8,589












Net income (loss) attributable to Huntsman Corporation

$   116


$    (34)


$    124


$   403


$   142

Adjusted net income(1)


$   168


$   114


$    139


$   484


$   340












Diluted income (loss) per share


$  0.48


$ (0.14)


$   0.52


$  1.68


$  0.59

Adjusted diluted income per share(1)


$  0.70


$  0.47


$   0.58


$  2.01


$  1.40












EBITDA(1)


$   341


$   204


$    352


$1,083


$   766

Adjusted EBITDA(1)


$   401


$   346


$    365


$1,163


$   971












See end of press release for footnote explanations

 

Huntsman Corporation (NYSE: HUN) today reported third quarter 2012 results with revenues of $2,741 million and adjusted EBITDA of $401 million

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

"Our third quarter 2012 Adjusted EBITDA of $401 million represents a new record in quarterly earnings. Compared to the prior year and quarter, improved earnings in our polyurethanes businesses more than offset the decline in our pigments business. In addition to the increased earnings in our polyurethanes business, all of our non-pigments businesses saw an increase in earnings from the previous year.

During the quarter, we generated more than $200 million in cash from operations and prepaid $75 million of debt.  Earlier this week, we prepaid an additional $50 million of debt.

In addition to aggressive sales efforts, we continue to benefit from our ongoing restructuring and cost cutting that was started last year and will continue to deliver a better cost structure into 2013."

Segment Analysis for 3Q12 Compared to 3Q11

Polyurethanes

The increase in revenues in our Polyurethanes division for the three months ended September 30, 2012 compared to the same period in 2011 was due to higher average selling prices and improved sales mix partially offset by lower sales volumes and the strength of the U.S. dollar against major European currencies.  PO/MTBE average selling prices increased primarily due to favorable market conditions.  MDI average selling prices increased in all regions but were offset by the strength of the U.S. dollar against major European currencies.  PO/MTBE sales volumes decreased partially offset by an increase in MDI sales volumes primarily as a result of improved demand in the European and Asian regions and in certain large markets such as composite wood products and adhesives, coatings and elastomers.  The increase in adjusted EBITDA was primarily due to higher contribution margins and improved sales mix.

Performance Products

The decrease in revenues in our Performance Products division for the three months ended September 30, 2012 compared to the same period in 2011 was due to lower average selling prices and lower sales volumes.  Average selling prices decreased primarily in response to lower raw material costs and the strength of the U.S. dollar against major international currencies.  Sales volumes decreased primarily due to a shift to tolling arrangements.  The increase in adjusted EBITDA was primarily due to higher contribution margins as raw material costs decreased.

Advanced Materials

The decrease in revenues in our Advanced Materials division for the three months ended September 30, 2012 compared to the same period in 2011 was primarily due to lower average selling prices partially offset by higher sales volumes.  Average selling prices decreased primarily in response to lower raw material costs, competitive market pressure and the strength of the U.S. dollar against major international currencies.  Sales volumes increased primarily due to stronger demand in Europe, the Americas and India while sales volumes in the Asia Pacific region decreased due to lower demand in the wind energy and electrical engineering markets.  The increase in adjusted EBITDA was primarily due to higher sales volumes and 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 September 30, 2012 compared to the same period in 2011 was primarily due to higher sales volumes, partially offset by lower average selling prices.  Sales volumes increased due to increased market share in key markets, notably Asia.  Average selling prices decreased primarily due to the strength of the U.S. dollar against major international currencies.  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 recent restructuring efforts.

Pigments

The decrease in revenues in our Pigments division for the three months ended September 30, 2012 compared to the same period in 2011 was due to lower sales volumes.  Sales volumes decreased primarily due to lower global demand.  The increase in local currency average selling prices was offset by the strength of the U.S. dollar against major international currencies.  The decrease in adjusted EBITDA was primarily due to lower sales volumes and higher raw material costs.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and other increased by $12 million to a loss of $37 million for the three months ended September 30, 2012 compared to a loss of $49 million for the same period in 2011.  The increase in adjusted EBITDA was primarily the result of a $10 million decrease in LIFO inventory valuation expense ($2 million of income in 2012 compared to $8 million of expense in 2011).

Liquidity, Capital Resources and Outstanding Debt

As of September 30, 2012, we had $1,038 million of combined cash and unused borrowing capacity compared to $1,043 million at December 31, 2011.  For the three months ended September 30, 2012, our primary net working capital increased by $10 million and we generated $208 million in cash from operations.

During the third quarter 2012 we prepaid $75 million of our senior secured term loans.  During October, 2012 we prepaid an additional $50 million of our senior secured term loan.

Total capital expenditures for the three months ended September 30, 2012 were $85 million.  We expect to spend approximately $425 - $450 million on capital expenditures in 2012 which approximates our annual depreciation and amortization.

Income Taxes

During the three months ended September 30, 2012 we recorded income tax expense of $61 million.  Our adjusted effective income tax rate for the three months ended September 30, 2012 was approximately 31%.  We expect our long term effective income tax rate to be approximately 30 - 35%.  During the three months ended September 30, 2012, we paid $83 million in cash for income taxes.

Conference Call Information

We will hold a conference call to discuss our third quarter 2012 financial results on Friday, November 2, 2012 at 10:00 a.m. ET.

Call-in numbers for the conference call:

U.S. participants              

(888) 713 - 4217

International participants     

(617) 213 - 4869

Passcode                  

67952871

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=P9F6FYPGT

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 November 2, 2012 and ending November 9, 2012.

Call-in numbers for the replay:

U.S. participants              

(888) 286 - 8010

International participants    

(617) 801 - 6888

Replay code             

91700765

Table 1 – Results of Operations



Three months ended


Nine months ended



September 30,


September 30,

In millions, except per share amounts, unaudited


2012


2011


2012


2011










Revenues


$    2,741


$    2,976


$    8,568


$    8,589

Cost of goods sold


2,204


2,486


6,954


7,138

Gross profit


537


490


1,614


1,451

Operating expenses


255


258


792


821

Restructuring, impairment and plant closing costs


47


155


52


171

Operating income


235


77


770


459

Interest expense, net


(56)


(63)


(172)


(187)

Equity in income of investment in unconsolidated affiliates


2


2


5


6

Loss on early extinguishment of debt


(1)


(2)


(2)


(5)

Other income (loss)


1


(1)


2


-

Income before income taxes


181


13


603


273

Income tax expense


(61)


(55)


(186)


(111)

Income (loss) from continuing operations


120


(42)


417


162

(Loss) income from discontinued operations, net of tax(2)


(1)


10


(7)


(5)

Extraordinary gain on the acquisition of a business, net of tax of nil


1


-


1


2

Net income (loss)


120


(32)


411


159

Net income attributable to noncontrolling interests, net of tax


(4)


(2)


(8)


(17)

Net income (loss) attributable to Huntsman Corporation


$      116


$       (34)


$      403


$      142



















Adjusted EBITDA(1)


$      401


$      346


$    1,163


$      971










Adjusted net income(1)


$      168


$      114


$      484


$      340



















Basic income (loss) per share


$     0.49


$    (0.14)


$     1.70


$     0.60

Diluted income (loss) per share


$     0.48


$    (0.14)


$     1.68


$     0.59

Adjusted diluted income per share(1)


$     0.70


$     0.47


$     2.01


$     1.40










Common share information:









Basic shares outstanding


237.9


237.6


237.4


238.2

Diluted shares


240.8


237.6


240.3


242.6

Diluted shares for adjusted diluted income per share


240.8


241.3


240.3


242.6










See end of press release for footnote explanations

Table 2 – Results of Operations by Segment



Three months ended




Nine months ended






September 30,


Better /


September 30,


Better /


In millions, unaudited


2012


2011


(Worse)


2012


2011


(Worse)
















Segment Revenues:














Polyurethanes


$1,244


$1,209


3%


$3,735


$3,391


10%


Performance Products


742


846


(12)%


2,319


2,546


(9)%


Advanced Materials


328


349


(6)%


1,014


1,059


(4)%


Textile Effects


182


173


5%


562


563


---


Pigments


319


455


(30)%


1,150


1,243


(7)%


Eliminations and other


(74)


(56)


(32)%


(212)


(213)


---
















Total


$2,741


$2,976


(8)%


$8,568


$8,589


---
















Segment Adjusted EBITDA(1):













Polyurethanes


$   239


$   140


71%


$   586


$   397


48%


Performance Products


107


97


10%


282


314


(10)%


Advanced Materials


30


26


15%


86


96


(10)%


Textile Effects


(10)


(29)


66%


(23)


(42)


45%


Pigments


72


161


(55)%


352


363


(3)%


Corporate, LIFO and other


(37)


(49)


24%


(120)


(157)


24%
















Total


$   401


$   346


16%


$1,163


$   971


20%
















See end of press release for footnote explanations

Table 3 – Factors Impacting Sales Revenues



Three months ended



September 30, 2012 vs. 2011



Average Selling Price(a)









Local


Exchange


Sales Mix


Sales



Unaudited


Currency


Rate


& Other


Volume(a)


Total












Polyurethanes


5%


(5)%


4%


(1)%


3%

Performance Products


(7)%


(4)%


1%


(2)%


(12)%

Advanced Materials


(11)%


(7)%


1%


11%


(6)%

Textile Effects


(2)%


(7)%


(1)%


15%


5%

Pigments


7%


(7)%


---


(30)%


(30)%

Total Company


(1)%


(5)%


---


(2)%


(8)%














Nine months ended



September 30, 2012 vs. 2011



Average Selling Price(a)









Local


Exchange


Sales Mix


Sales



Unaudited


Currency


Rate


& Other


Volume(a)


Total












Polyurethanes


4%


(3)%


2%


7%


10%

Performance Products


(5)%


(2)%


---


(2)%


(9)%

Advanced Materials


(5)%


(5)%


(2)%


8%


(4)%

Textile Effects


(1)%


(4)%


(1)%


6%


---

Pigments


22%


(6)%


---


(23)%


(7)%

Total Company


3%


(4)%


1%


---


---












(a) Excludes revenues and sales volumes primarily from tolling arrangements and the sale of by-products and raw materials.