Huntsman announces third quarter 2022 earnings; repurchased over $750 million of shares in first nine months of 2022

Huntsman Corporation 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%.