The following excerpt is from the company's SEC filing.
Repurchased
over $750 million of Shares in First Nine Months of 2022
Third Quarter Highlights
Third quarter 2022 net income
of $115 million compared to net income of $225 million in the prior year period; third quarter 2022 diluted earnings per share of $0.50
compared to diluted earnings per share of $0.94 in the prior year period.
Third quarter 2022 adjusted
net income of $141 million compared to adjusted net income of $226 million in the prior year period; third quarter 2022 adjusted diluted
earnings per share of $0.71 compared to adjusted diluted earnings per share of $1.02 in the prior yea
r period.
Third quarter 2022 adjusted
EBITDA of $271 million compared to adjusted EBITDA of $349 million in the prior year period.
Third quarter 2022 net cash provided by operating activities from continuing
operations was $285 million. Free cash flow from continuing operations was $228 million for the third quarter 2022 compared to free cash
flow from continuing operations of $106 million in the prior year period.
Repurchased approximately 8.9 million shares for approximately $251 million
in the third quarter 2022.
On August 9, 2022 Huntsman announced it entered into a definitive agreement
to sell its Textile Effects division for a total enterprise value of $718 million, which includes the assumption of approximately $125
million in net underfunded liabilities as of December 31, 2021. The Textile Effects division is now reported as discontinued operations
on the income and cash flow statements and held for sale on the balance sheet.
Expands cost improvement initiatives to $280 million to address the European
energy crisis and the Company’s long-term competitiveness in the region.
Three months ended
Nine months ended
September 30,
In millions, except per share amounts
Revenues
Net income
Adjusted net income
Diluted income per share
Adjusted diluted income per share
Adjusted EBITDA
Net cash provided by operating activities from continuing operations
See end of press release for footnote explanations and reconciliations of non-GAAP measures.
THE WOODLANDS, Texas
– Huntsman Corporation (NYSE: HUN)
today reported third quarter 2022 results with revenues of $2,011 million, net income of $115 million, adjusted net income of $141 million
and adjusted EBITDA of $271 million.
Peter R. Huntsman, Chairman, President, and CEO,
commented:
“Third quarter adjusted EBITDA was within our updated guidance
and we delivered strong free cash flow. During the quarter, we announced an agreement to sell our Textile Effects division for a
total enterprise value of $718 million. We also continued repurchasing shares and have now repurchased more than $750 million of Huntsman
stock this year as we track towards our previously announced target of $1 billion for the full year. Likewise, our cost reduction plans
continue to move apace and have already reached an annual run rate of approximately $160 million of the $240 million we expect to achieve
by the end of 2023.
"The global business environment has become increasingly difficult
with growth slowing across many of our end markets. Specifically in Europe, the inflationary impact from record high energy prices combined
with declining demand is pressuring our European facilities and margins in ways no one anticipated. We believe that stability will eventually
return, but a ‘new normal’ will not include favorable energy prices and competitiveness the EU once enjoyed. To mitigate these
market conditions, in the short term, we have significantly reduced our production rates to reflect this new reality of slower European
demand and higher costs and, to address the longer term issues in Europe, we are committing to further realign our cost structure above
and beyond our previously announced cost optimization programs with additional restructuring in Europe.
“Specifically, we have identified an incremental $40 million
of costs as we realign our business services and production facilities around these new market realities. These changes respond to the
new market realities, allowing us to compete more effectively, have a stronger financial return, and provide customers better reliability
and service. These cost improvement initiatives have already started, and we will continue to review our business structure and manufacturing
footprint for additional opportunities. We expect this initial $40 million of business restructuring to be completed by the end of 2023.”
Segment Analysis for 3Q22 Compared to 3Q21
Polyurethanes
The decrease in revenues in our Polyurethanes segment for the three
months ended September 30, 2022 compared to the same period of 2021 was primarily due to lower sales volumes and the negative impact of
weaker major international currencies against the U.S. dollar, partially offset by higher MDI average selling prices. Sales volumes
decreased primarily due to lower demand, particularly in our European and construction markets. The decrease in segment adjusted
EBITDA was primarily due to lower sales volumes, lower MDI margins in Europe and Asia, the negative impact of weaker major international
currencies against the U.S. dollar and lower equity earnings from our minority-owned joint venture in China, partially offset by higher
MDI margins in the Americas and lower fixed costs.
Performance Products
The increase in revenues in our Performance Products segment for the
three months ended September 30, 2022 compared to the same period of 2021 was primarily due to higher average selling prices, partially offset
by lower sales volumes. Average selling prices increased primarily due to commercial excellence programs and in response to an increase
in raw material costs. Sales volumes decreased primarily due to a shift in business strategy as well as lower demand, particularly
in Europe. The increase in segment adjusted EBITDA was primarily due to increased revenues and margins, partially offset by higher
costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the
three months ended September 30, 2022 compared to the same period of 2021 was primarily due to higher average selling prices,
partially offset by lower sales volumes. Average selling prices increased largely in response to higher raw material, energy and
logistics costs as well as improved sales mix. Sales volumes decreased primarily due to deselection of lower margin business. The increase in
segment adjusted EBITDA was primarily due to higher sales prices and improved sales mix.
Corporate, LIFO and other
For the three months ended September 30, 2022, adjusted EBITDA
from Corporate and other was a loss of $35 million as compared to a loss of $48 million for the same period of 2021.
Liquidity and Capital Resources
During the three months ended September 30, 2022, our free cash flow
from continuing operations was $228 million as compared to $106 million in the same period of 2021. As of September 30, 2022, we had approximately
$1.9 billion of combined cash and unused borrowing capacity.
During the three months ended September 30, 2022, we spent $57 million
on capital expenditures for continuing operations as compared to $73 million in the same period of 2021. For 2022, we expect to spend
approximately $280 million on capital expenditures for continuing operations.
Income Taxes
In the third quarter of 2022, both our effective tax rate and our adjusted
effective tax rate was 21%. We expect our 2022 adjusted effective tax rate to be approximately 22% to 24%.
Earnings Conference Call Information
We will hold a conference call to discuss our third quarter 2022 financial
results on Friday, November 4, 2022 at 8:00 a.m. ET.
Webcast link:
https://event.choruscall.com/mediaframe/webcast.html?webcastid=Wb0ErzBk
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,
www.huntsman.com/investors
. Upon conclusion
of the call, the webcast replay will be accessible via Huntsman’s website.
Upcoming Conferences
During the fourth quarter 2022, a member of management is expected
to present at:
Morgan Stanley Investor Conference on November 9, 2022
Citi Investor Conference on November 29, 2022
A webcast of the presentation, if applicable, along with accompanying
materials will be available at
Table 1 – Results of Operations
Cost of goods sold
Gross profit
Operating expenses, net
Restructuring, impairment and plant closing costs (credits)
Operating income
Interest expense, net
Equity in income of investment in unconsolidated affiliates
Fair value adjustments to Venator investment, net
Loss on early extinguishment of debt
Other income, net
Income from continuing operations before income taxes
Income tax expense
(Loss) income from discontinued operations, net of tax
Net income attributable to noncontrolling interests, net of tax
Net income attributable to Huntsman Corporation
Basic income per share
Common share information:
Basic weighted average shares
Diluted weighted average shares
Diluted shares for adjusted diluted income per share
See end of press release for footnote explanations.
Table 2 – Results of Operations by Segment
Better /
(Worse)
Segment Revenues:
Total Reportable Segments' Revenue
Intersegment Eliminations
Total Revenues
Segment Adjusted EBITDA
Total Reportable Segments' Adjusted EBITDA
Total Adjusted EBITDA
n/m = not meaningful
Table 3 – Factors Impacting Sales Revenue
September 30, 2022 vs. 2021
Average Selling Price
Exchange
Sales Mix
Currency
& Other
Volume
&
Other
(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
Diluted Income
Expense
Net
Income
Per
Share
Three months
ended
September
30,
In millions, except
per share amounts
Net
income attributable to noncontrolling interests
Net
income attributable to Huntsman Corporation
Interest expense
from continuing operations
Income tax
expense from continuing operations
Income
tax expense from discontinued operations
Depreciation
and amortization from continuing operations
Depreciation
and amortization from discontinued operations
Business acquisition
and integration expenses and purchase accounting inventory adjustments
Costs associated
with the Albemarle Settlement, net
EBITDA
/ Income from discontinued operations, net of tax
N/A
Loss on sale
of businesses/assets
Income from
transition services arrangements
Fair value
adjustments to Venator Investment
Certain legal
and other settlements and related expenses
Certain non-recurring
information technology project implementation costs
Amortization
of pension and postretirement actuarial losses
Restructuring,
impairment and plant closing and transition costs
Plant incident
remediation costs
Adjusted
income tax expense (benefit)
Net income attributable to noncontrolling
interests, net of tax
Adjusted
pre-tax income
Adjusted
effective tax rate
Effective tax rate
Nine months
ended
In
millions, except per share amounts
Interest
expense from continuing operations
Income
tax expense from continuing operations
Business
acquisition and integration expenses and purchase accounting inventory adjustments
Costs
associated with the Albemarle Settlement, net
Loss
(gain) on sale of businesses/assets
Income
from transition services arrangements
Fair
value adjustments to Venator Investment
Loss
on early extinguishment of debt
Certain
legal settlements and related expenses
Certain
non-recurring information technology project implementation costs
Plant
incident remediation (credits) costs
Net income
attributable to noncontrolling interests, net of tax
Effective
tax rate
N/A
= not applicable
See
end of press release for footnote explanations.
Table 5 –
Selected Balance Sheet Items
Accounts and notes receivable, net
Inventories
Receivable associated with the Albemarle Settlement
Other current assets
Current assets held for sale
Property, plant and equipment, net
Other noncurrent assets
Noncurrent assets held for sale
Total assets
Accounts payable
Other current liabilities
Current portion of debt
Current liabilities held for sale
Long-term debt
Other noncurrent liabilities
Noncurrent liabilities held for sale
Huntsman Corporation stockholders’ equity
Noncontrolling interests in subsidiaries
Total liabilities and equity
Table 6 – Outstanding Debt
Revolving credit facility
Accounts receivable programs
Senior notes
Variable interest entities
Other debt
Total debt - excluding affiliates
Total cash
Net debt - excluding affiliates
Table 7 – Summarized Statement of Cash
Flows
Total cash at beginning of period
Net cash provided by (used in) operating activities from discontinued operations
Net cash used in investing activities from continuing operations
Net cash used in investing activities from discontinued operations
Net cash used in financing activities
Effect of exchange rate changes on cash
Total cash at end of period
Capital expenditures from continuing operations
Supplemental cash flow information:
Cash paid for interest
Cash paid for income taxes
Cash paid for restructuring and integration
Cash paid for pensions
Depreciation and amortization from continuing operations
Change in primary working capital:
Total change in primary working capital
Footnotes
We use adjusted EBITDA to measure the operating performance of our business and for planning and evaluating the performance of our
business segments. 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) 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 adjusted EBITDA and adjusted
net income (loss). Additional information with respect to our use of each of these financial measures follows:
Adjusted EBITDA, adjusted net income (loss) and adjusted
diluted income (loss) per share, as used herein, are not necessarily comparable to other similarly titled measures of other companies.
Adjusted EBITDA is computed by eliminating the following
from net income (loss): (a) net income attributable to noncontrolling interests, net of tax; (b) interest; (c) income taxes; (d) depreciation
and amortization; (e) amortization of pension and postretirement actuarial losses (gains); (f) restructuring, impairment and plant closing
costs (credits); and further adjusted for certain other items set forth in the reconciliation of net income (loss) to adjusted EBITDA
in Table 4 above.
Adjusted net income (loss) and adjusted diluted income (loss)
per share are computed by eliminating the after tax impact of the following items from net income (loss): (a) net income attributable
to noncontrolling interest; (b) amortization of pension and postretirement actuarial losses (gains); (c) restructuring, impairment and
plant closing costs (credits); and further adjusted for certain other items set forth in the reconciliation of net income (loss) to adjusted
net income (loss) in Table 4 above. The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total
difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items
using a with and without approach.
We may disclose forward-looking adjusted EBITDA because
we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition
and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains
on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet
occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted EBITDA represents the
forecast net income on our underlying business operations but does not reflect any adjustments related to the items noted above that may
occur and can cause our adjusted EBITDA to differ.
Management internally uses free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock
buyback and dividend levels and (d) evaluate our ability to incur and service debt. Free cash flow is defined as net cash provided by
operating activities less capital expenditures. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that
the entire free cash flow amount is available for discretionary expenditures.
During the third quarter 2022, we entered into an agreement to sell our Textile Effects business, which is now reported as discontinued
operations on the income and cash flow statements and held for sale on the balance sheet.
We believe adjusted effective tax rate provides improved comparability
between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational
profitability and that may obscure underlying business results and trends. In our view, effective tax rate is the performance measure
calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. The reconciliation
of historical adjusted effective tax rate and effective tax rate is set forth in Table 4 above. Please see the reconciliation of our
net income to adjusted net income in Table 4for details regarding the tax impacts of our non-GAAP adjustments.
Our forward-looking adjusted effective tax rate is calculated
based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast
effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events
that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory
adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items,
including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably
predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business
operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to
differ.
Net debt is a measure we use to monitor how much debt we have
after taking into account our total cash. We use it as an indicator of our overall financial position, and calculate it by taking our
total debt, including the current portion, and subtracting total cash.
About Huntsman:
Huntsman Corporation is a publicly traded global manufacturer and
marketer of differentiated and specialty chemicals with 2021 revenues of approximately $8 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 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
Social Media:
Twitter:
www.twitter.com/Huntsman_Corp
Facebook:
www.facebook.com/huntsmancorp
LinkedIn:
www.linkedin.com/company/huntsman
Forward-Looking Statements:
This press release includes "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 forward-looking
statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions, divestitures or strategic transactions, including the review
of the Textile Effects Division, business trends and any other information that is not historical information. When used in this press
release, the words "estimates," "expects," "anticipates," "likely," "projects," "outlook,"
"plans," "intends," "believes," "forecasts," or future or conditional verbs, such as "will,"
"should," "could" or "may," and variations of such words or similar expressions are intended to identify
forward-looking statements. These forward-looking statements, including, without limitation, management's examination of historical operating
trends and data, are based upon our current expectations and various assumptions and beliefs. In particular, such forward-looking statements
are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the Company's operations,
markets, products, prices and other factors as discussed in the Company's filings with the Securities and Exchange Commission (the "SEC").
Significant risks and uncertainties may relate to, but are not limited to, increased energy costs in Europe, inflation and resulting monetary
tightening in the US, geopolitical instability, ongoing impact of COVID-19 on our operations and financial results, volatile global economic
conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, timing of proposed transactions
including the sale of our Textile Effects business, reorganization or restructuring of the Company's operations, including any delay of,
or other negative developments affecting the ability to implement cost reductions and manufacturing optimization improvements in the Company's
businesses and to realize anticipated cost savings, and other financial, operational, economic, competitive, environmental, political,
legal, regulatory and technological factors. Any forward-looking statement should be considered in light of the risks set forth under
the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, which may be supplemented
by other risks and uncertainties disclosed in any subsequent reports filed or furnished by the Company from time to time. All forward-looking
statements apply only as of the date made. Except as required by law, the Company undertakes no obligation to update or revise forward-looking
statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events.
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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