FOR IMMEDIATE RELEASE
May 1, 2018
The Woodlands, Texas
Huntsman Announces Strong First Quarter 2018 Results, With Every Division Showing Earnings Growth Versus the Prior Year; Greater Than $100 Million in Share Repurchases Completed to Date
First Quarter 2018 Highlights
- Net income was $350 million compared to $92 million in the prior year period and $287 million in the prior quarter.
- Adjusted EBITDA was $405 million compared to $260 million in the prior year period and $360 million in the prior quarter.
- Diluted income per share was $1.11 compared to $0.31 in the prior year period and $1.00 in the prior quarter.
- Adjusted diluted income per share was $0.96 compared to $0.45 in the prior year period and $0.76 in the prior quarter.
- Net cash provided by operating activities was $111 million. Free cash flow generation was $56 million.
- Balance sheet remains strong with a net leverage of 1.3x.
- Completed share repurchases of approximately $103 million through April 19, 2018, and approximately $347 million remains on the existing share repurchase authorization.
- Expanded the Polyurethanes downstream business with the acquisition of Demilec, a leading North American polyurethane spray foam producer, which was completed on April 23, 2018.
THE WOODLANDS, Texas – Huntsman Corporation (NYSE: HUN) today reported first quarter 2018 results with revenues of $2,295 million, net income of $350 million and adjusted EBITDA of $405 million.
Peter R. Huntsman, Chairman, President and CEO, commented:
“We have started 2018 fully engaged in executing the priorities that we have outlined to our shareholders. Our core business continues to perform well. All of our divisions improved over the previous year and we continue to expect all divisions will finish this year stronger than last year. Our continued focus on free cash flow produced cash generation well ahead of last year and puts us fully on pace to achieve our 2018 target of $450-$650 million.
“As we announced in the previous quarter, we have initiated a share buyback program. Through April 19, 2018, we spent $103 million on buybacks at an average price of $29.45 per share. We also announced the closing of the Demilec acquisition. This acquisition will provide further downstream growth while generating stronger margins and stability. We will continue to pursue the prudent deployment of capital to create further shareholder value.”
Segment Analysis for 1Q18 Compared to 1Q17
The increase in revenues in our Polyurethanes segment for the three months ended March 31, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. MDI average selling prices increased in response to continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI sales volumes increased due to increased demand across most major markets. MTBE sales volumes increased due to increased demand for MTBE. The increase in segment adjusted EBITDA was primarily due to higher MDI margins as well as higher MTBE margins.
The increase in revenues in our Performance Products segment for the three months ended March 31, 2018 compared to the same period of 2017 was due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to strong market conditions across several of our derivatives businesses and in response to higher raw material costs. Sales volumes increased in our amines, maleic anhydride and ethylene glycol businesses. The increase in segment adjusted EBITDA was primarily due to higher volumes and margins.
The increase in revenues in our Advanced Materials segment for the three months ended March 31, 2018, compared to the same period in 2017 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased largely in response to higher raw material costs and the impact of a weaker U.S. dollar against major international currencies. Sales volumes increased across most markets in our core specialty business but were more than offset by lower sales volumes in our wind market. Segment adjusted EBITDA increased due to higher specialty sales volumes and lower fixed costs, partially offset by higher raw material costs.
The increase in revenues in our Textile Effects segment for the three months ended March 31, 2018 compared to the same period of 2017 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased in textile chemicals, particularly in our Asia and South America regions. Average selling prices decreased primarily due to product mix effect, partially offset by the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher sales volumes, lower fixed costs and certain credits during the three months ended March 31, 2018.
Corporate, LIFO and other
For the three months ended March 31, 2018, segment adjusted EBITDA from Corporate and other for Huntsman Corporation was a los s of $43 million which was flat with the prior year period 2017.
Held for Sale and Discontinued Operations
Our former Pigments and Additives segment, now known as Venator, is classified as held for sale on our balance sheet and treated as discontinued operations on our income statement. Please refer to the Form 8-K we filed on October 31, 2017 with certain restated historical financial data. Huntsman currently owns 53% of Venator’s outstanding shares.
Liquidity, Capital Resources and Outstanding Debt
During the quarter we generated adjusted free cash flow of $56 million compared to $23 million a year ago. As of March 31, 2018, we had $1,249 million of combined cash and unused borrowing capacity compared to $1,247 million as of December 31, 2017.
During the three months ended March 31, 2018, we spent $55 million on capital expenditures compared to $51 million in the same period of 2017. We expect to spend approximately $325 million on capital expenditures in 2018.
Through April 19, 2018, we have spent approximately $103 million to repurchase approximately 3.5 million shares. We currently have approximately $347 million remaining on our existing share repurchase authorization.
On April 23, 2018, we completed the acquisition of Demilec. We funded the purchase price of $350 million, plus customary working capital adjustments, with available liquidity.
During the three months ended March 31, 2018, we recorded income tax expense of $53 million compared to $19 million during the same period in 2017. In the first quarter 2018, our adjusted effective tax rate was 19%. Our 2018 adjusted effective tax rate will be approximately 20% - 22%. We expect our long-term adjusted effective tax rate will be app roximately 23% - 25%.
Earnings Conference Call Information
We will hold a conference call to discuss our first quarter 2018 financial results on Tuesday, May 1, 2018, at 10 a.m. ET.
- Call-in numbers for the conference call:
U.S. participants (888) 713-4213
International participants (617) 213-4865
Passcode 755 496 16#
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=P8QQKLTUE
The conference call will be available via webcast and can be accessed from the company’s website at ir.huntsman.com.
The conference call will be available for replay beginning May 1, 2018, and ending May 8, 2018.
- Call-in numbers for the replay:
U.S. participants (888) 286 - 8010
International participants(617) 801 - 6888
Replay code 29385180
During the second quarter a member of management is expected to present at:
- Wells Fargo Industrials Conference on May 8, 2018
- TPH Hotter ‘N Hell Conference on May 15, 2018
- KeyBanc Capital Markets’ Industrials and Basic Materials Conference on May 30, 2018
- Deutsche Bank’s Annual Global Industrials and Materials Summit on June 6, 2018
- Vertical Research Partners Global Materials Conference on June 14, 2018
A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.
2018 Investor Day
Huntsman will host a meeting for investors and analysts on Wednesday, May 23, 2018, from 8:30 a.m. to 12:00 p.m., local time in New York City. The agenda for the meeting will include a review of the company’s business strategy and an in-depth discussion of each of the company’s businesses. Presenters will include Peter Huntsman, Chairman, President and CEO, and other business leaders. Contact firstname.lastname@example.org for more information or to RSVP. A live webcast and presentation materials will be available the day of the event at ir.huntsman.com. A replay of the webcast will be available following the presentations.
To read the full news release, click here.
Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated and specialty chemicals with 2017 revenues more than $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 75 manufacturing, R&D and operations facilities in approximately 30 countries and employ approximately 10,000 associates within our four distinct business divisions. For more information about Huntsman, please visit the company's website at www.huntsman.com.
Certain information in this release constitutes 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 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 under the caption "Risk Factors" 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, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of Huntsman’s operations, including any delay of, or other negative developments affecting the ability to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipate d cost savings, and other 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