Overview


We operate in four segments: Polyurethanes, Performance Products, Advanced
Materials and Textile Effects. Our products comprise a broad range of chemicals
and formulations, which we market globally to a diversified group of consumer
and industrial customers. Our products are used in a wide range of applications,
including those in the adhesives, aerospace, automotive, construction products,
durable and non-durable consumer products, digital inks, electronics, medical,
packaging, coatings and construction, power generation, refining, synthetic
fiber, textile chemicals and dyes industries. We are a leading global producer
in many of our key product lines, including MDI, amines, surfactants, maleic
anhydride, epoxy-based polymer formulations, textile chemicals and dyes. Our
revenues from continuing operations for the three months ended March 31, 2020
and 2019 were $1,593 million and $1,669 million, respectively.



Recent Developments

Sale of Chemical Intermediates Businesses



On January 3, 2020, we completed the sale of our Chemical Intermediates
Businesses to Indorama in a transaction valued at approximately $2 billion,
comprising a cash purchase price of approximately $1.93 billion, which includes
estimated adjustments to the purchase price for working capital, plus the
transfer of approximately $72 million in net underfunded pension and other
post-employment benefit liabilities. See "Note 4. Discontinued Operations and
Business Dispositions-Sale of Chemical Intermediates Businesses" to our
condensed consolidated financial statements.



Icynene-Lapolla Acquisition


On February 20, 2020, we completed the Icynene-Lapolla Acquisition for $353
million, subject to customary closing adjustments, in an all-cash transaction
funded from available liquidity. The acquired business is being integrated into
our Polyurethanes segment. See "Note 3. Business Combinations and Acquisitions"
to our condensed consolidated financial statements.



Acquisition of CVC Thermoset Specialties





On March 15, 2020, we entered into an agreement with Emerald Performance
Materials LLC, which is majority owned by affiliates of American Securities LLC,
to acquire CVC Thermoset Specialties, a North American specialty chemical
manufacturer serving the industrial composites, adhesives and coatings markets.
CVC Thermoset Specialties operates two manufacturing facilities located in
Akron, Ohio and Maple Shade, New Jersey. Under the terms of the agreement, we
agreed to pay $300 million, subject to customary closing adjustments, in an
all-cash transaction funded from available liquidity. The transaction is
expected to close around midyear of 2020. The acquired business is expected to
be integrated into our Advanced Materials segment.



Impacts of COVID-19 Pandemic



The recent outbreak of the novel coronavirus COVID-19, which was declared a
pandemic by the World Health Organization on March 11, 2020, has led to adverse
impacts on the U.S. and global economies, softening demand for our products, and
certain interruptions to our operations and supply chain. The COVID-19 pandemic
has had a moderate adverse impact on our financial performance for the first
quarter of 2020 and is having a significant impact so far in the second quarter
of 2020. We believe the adverse impact of the COVID-19 pandemic will continue
for the remainder of fiscal year 2020. For example, in the first quarter of
2020, we began to see the impacts of COVID-19 on our markets and operations,
including softening demand, deteriorating margins across certain product lines,
and logistical pressures in certain parts of our supply chain. The extent to
which the COVID-19 pandemic will impact our business, including demand for our
products, our operations, and results of operations and financial condition will
depend on future developments, which are highly uncertain and cannot be
predicted, including, but not limited to the duration, spread, severity, and
impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our
customers, suppliers, and vendors and to what extent normal economic and
operating conditions can resume. Even after the COVID-19 pandemic has subsided,
we may continue to experience adverse impacts to our business as a result of any
economic recession or depression that has occurred or may occur in the future.
Therefore, we cannot reasonably estimate the

                                       38

Table of Contents

impact at this time. The risks to our business are more fully described in "Part II. Item 1A. Risk Factors" of this Quarterly Report on Form 10-Q.







Outlook

We expect the following factors to impact our operating segments:

Polyurethanes:

? Significantly lower volumes due to global economic crisis

? Component MDI and polymeric systems margins remain depressed

? Stable differentiated MDI margins

? Slowly improving demand trends in China

Performance Products:

? Significantly lower volumes due to global economic crisis

? Stable China wind market

? Stable margins in performance amines

Advanced Materials:

? Significantly lower volumes due to global economic crisis

? Growth in electrical infrastructure related markets




 ? Stable margins


Textile Effects:

? Significantly lower volumes due to global economic crisis

? Long-term demand trends for sustainable solutions unchanged


During 2020, we expect to spend between approximately $225 million to $235
million on capital expenditures for continuing operations. We have deferred a
portion of capital spending on a new MDI splitter in Geismar, Louisiana for six
months leaving roughly $40 million of capital spend in 2020 with the remaining
spend of approximately $120 million in 2021 and 2022.



We expect our forward adjusted effective tax rate will be approximately 22% to
24%. For further information, see "-Non-GAAP Financial Measures" and "Note 17.
Income Taxes" to our condensed consolidated financial statements.



Refer to "Forward-Looking Statements" for a discussion of our use of forward-looking statements in this Form 10-Q.





                                       39

  Table of Contents

Results of Operations



For each of our Company and Huntsman International, the following tables set
forth the condensed consolidated results of operations (dollars in millions,
except per share amounts):



Huntsman Corporation




                                                             Three months
                                                                 ended
                                                               March 31,         Percent
                                                           2020         2019     Change
Revenues                                                 $   1,593    $  1,669      (5)%
Cost of goods sold                                           1,296       1,310      (1)%
Gross profit                                                   297         359     (17)%
Operating expenses                                             240         243      (1)%

Restructuring, impairment and plant closing costs                3         

 1      200%
Operating income                                                54         115     (53)%
Interest expense, net                                         (18)        (30)     (40)%
Equity in income of investment in unconsolidated
affiliates                                                       2          10     (80)%
Fair value adjustments to Venator investment                 (110)          76        NM
Loss on early extinguishment of debt                             -        (23)    (100)%
Other income, net                                               10           5      100%
(Loss) income from continuing operations before
income taxes                                                  (62)         153        NM
Income tax expense                                             (7)        (45)     (84)%
(Loss) income from continuing operations                      (69)         108        NM
Income from discontinued operations, net of tax                777          23        NM
Net income                                                     708         131      440%
Reconciliation of net income to adjusted EBITDA:
Net income attributable to noncontrolling interests            (3)        (12)     (75)%
Interest expense, net from continuing operations                18          30     (40)%
Income tax expense from continuing operations                    7          45     (84)%
Income tax expense from discontinued operations                238           5        NM
Depreciation and amortization of continuing
operations                                                      67          67         -
Depreciation and amortization of discontinued
operations                                                       -          23    (100)%
Other adjustments:
Business acquisition and integration expenses and
purchase accounting inventory adjustments                       13         

1


EBITDA from discontinued operations(1)                     (1,015)        

(51)


Fair value adjustments to Venator investment                   110        

(76)


Loss on early extinguishment of debt                             -         

23


Certain legal settlements and related expenses                   2         

-


Gain on sale of businesses/assets                              (2)         

-


Certain nonrecurring information technology project
implementation costs                                             1         

-


Amortization of pension and postretirement actuarial
losses                                                          18         

17


Restructuring, impairment and plant closing and
transition costs(2)                                              3           1
Adjusted EBITDA(3)                                       $     165    $    204     (19)%

Net cash used in operating activities from continuing operations

$    (40)    $   

(40) - Net cash provided by (used in) investing activities from continuing operations

                                   1,511        (45)        NM
Net cash (used in) provided by financing activities          (354)         183        NM
Capital expenditures from continuing operations               (61)        (61)         -




                                       40

  Table of Contents

Huntsman International




                                                             Three months
                                                                 ended
                                                              March 31,          Percent
                                                           2020         2019     Change
Revenues                                                 $   1,593    $  1,669      (5)%
Cost of goods sold                                           1,296       1,310      (1)%
Gross profit                                                   297         359     (17)%
Operating expenses                                             238         241      (1)%

Restructuring, impairment and plant closing costs                3         

 1      200%
Operating income                                                56         117     (52)%
Interest expense, net                                         (20)        (35)     (43)%
Equity in income of investment in unconsolidated
affiliates                                                       2          10     (80)%
Fair value adjustments to Venator investment                 (110)          76        NM
Loss on early extinguishment of debt                             -        (23)    (100)%
Other income, net                                                9           4      125%
(Loss) income from continuing operations before
income taxes                                                  (63)         149        NM
Income tax expense                                             (7)        (44)     (84)%
(Loss) income from continuing operations                      (70)         105        NM
Income from discontinued operations, net of tax                777          23        NM
Net income                                                     707         128      452%
Reconciliation of net income to adjusted EBITDA:
Net income attributable to noncontrolling interests            (3)        (12)     (75)%
Interest expense, net from continuing operations                20          35     (43)%
Income tax expense from continuing operations                    7          44     (84)%
Income tax expense from discontinued operations                238           5        NM
Depreciation and amortization of continuing
operations                                                      67          67         -
Depreciation and amortization of discontinued
operations                                                       -          23    (100)%
Other adjustments:
Business acquisition and integration expenses and
purchase accounting inventory adjustments                       13         

1


EBITDA from discontinued operations(1)                     (1,015)        

(51)


Fair value adjustments to Venator investment                   110        

(76)


Loss on early extinguishment of debt                             -         

23


Certain legal settlements and related expenses                   2         

-


Gain on sale of businesses/assets                              (2)         

-


Certain nonrecurring information technology project
implementation costs                                             1         

-


Amortization of pension and postretirement actuarial
losses                                                          18         

18


Restructuring, impairment and plant closing and
transition costs(2)                                              3           1
Adjusted EBITDA(3)                                       $     166    $    206     (19)%

Net cash used in operating activities from continuing    $            $
operations                                                    (42)        

(44) (5)% Net cash provided by (used in) investing activities from continuing operations

                                   1,790        (54)        NM
Net cash (used in) provided by financing activities          (631)         195        NM
Capital expenditures from continuing operations               (61)        (61)         -




                                       41

  Table of Contents

Huntsman Corporation




                                                       Three months ended                    Three months ended
                                                         March 31, 2020                        March 31, 2019
                                                             Tax and                              Tax and
                                                Gross       other(4)        Net       Gross      other(4)        Net
Reconciliation of net income to adjusted net
income
Net income                                                                $    708                             $   131
Net income attributable to noncontrolling
interests                                                                      (3)                                (12)
Business acquisition and integration expenses
and purchase accounting inventory adjustments $      13    $       (3)          10    $    1    $         -          1
Income from discontinued operations(1)(5)       (1,015)            238       (777)      (51)             28       (23)
Fair value adjustments to Venator investment        110              -         110      (76)              -       (76)
Loss on early extinguishment of debt                  -              -           -        23            (5)         18
Certain legal settlements and related
expenses                                              2              -           2         -              -          -
Gain on sale of businesses/assets                   (2)              -         (2)         -              -          -
Certain nonrecurring information technology
project implementation costs                          1              -           1         -              -          -
Amortization of pension and postretirement
actuarial losses                                     18            (4)          14        17            (4)         13
Significant activities related to deferred
tax assets and liabilities(6)                         -              -           -         -             32         32
Restructuring, impairment and plant closing
and transition costs(2)                               3            (1)           2         1              -          1
Adjusted net income(3)                                                    $     65                             $    85
Weighted average shares-basic                                                223.2                               233.1
Weighted average shares-diluted                                              223.2                               235.1

Basic net income attributable to Huntsman
Corporation per share:
(Loss) income from continuing operations                                  $ (0.32)                             $  0.41
Income from discontinued operations                                           3.48                                0.10
Net income                                                                $   3.16                             $  0.51

Diluted net income attributable to Huntsman
Corporation per share:
(Loss) income from continuing operations                                  $ (0.32)                             $  0.41
Income from discontinued operations                                        

  3.48                                0.10
Net income                                                                $   3.16                             $  0.51

Other non-GAAP measures:

Diluted adjusted net income per share(3)                                  $   0.29                             $  0.36

Net cash used in operating activities from
continuing operations                                                     $   (40)                          $     (40)
Capital expenditures from continuing
operations                                                                    (61)                                (61)
Free cash flow from continuing operations(3)                              $

 (101)                             $ (101)


NM-Not meaningful


(1)Includes the gain on the sale of our Chemical Intermediates Businesses in 2020.

Includes costs associated with transition activities relating to the

migration of our information system data centers and the transition of our (2) Textile Effects segment's production from Basel, Switzerland to a tolling

facility. These transition costs were included in either selling, general and


    administrative expenses or cost of sales on our condensed consolidated
    statements of operations.



(3) See "-Non-GAAP Financial Measures."

The income tax impacts, if any, of each adjusting item represent a ratable (4) 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.



(5) In addition to income tax impacts, this adjusting item is also impacted by


    depreciation and amortization expense and interest expense.



During the three months ended March 31, 2019, we recorded $32 million of

deferred tax expense due to the reduction of tax rates in Switzerland. We (6) eliminated the effect of these significant changes in tax valuation

allowances and deferred tax assets and liabilities from our presentation of


    adjusted net income to allow investors to better compare our ongoing
    financial performance from period to period.




                                       42

  Table of Contents

Non-GAAP Financial Measures

Our condensed consolidated financial statements are prepared in accordance with
GAAP, which we supplement with certain non-GAAP financial information. These
non-GAAP measures should not be considered in isolation or as a substitute for
the related GAAP measures, and other companies may define such measures
differently. We encourage investors to review our financial statements and the
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures in their entirety and not to rely on any
single financial measure. These non-GAAP measures exclude the impact of certain
expenses that we do not believe are indicative of our core operating results.

Adjusted EBITDA



Our management uses adjusted EBITDA to assess financial performance. Adjusted
EBITDA is defined as net income of Huntsman Corporation or Huntsman
International, as appropriate, before interest, income tax, depreciation and
amortization, net income attributable to noncontrolling interests and certain
Corporate and other items, as well as eliminating the following adjustments: (a)
business acquisition and integration expenses and purchase accounting inventory
adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments
to Venator investment; (d) loss on early extinguishment of debt; (e) certain
legal settlements and related expenses (income); (f) loss (gain) on sale of
businesses/assets; (g) certain nonrecurring information technology project
implementation costs; (h) amortization of pension and postretirement actuarial
losses; and (i) restructuring, impairment and plant closing and transition costs
(credits). We believe that net income of Huntsman Corporation or Huntsman
International, as appropriate, is the performance measure calculated and
presented in accordance with U.S. GAAP that is most directly comparable to
adjusted EBITDA.

We believe adjusted EBITDA is useful to investors in assessing the businesses'
ongoing financial performance and 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. However, this measure should not be
considered in isolation or viewed as a substitute for net income of Huntsman
Corporation or Huntsman International, as appropriate, or other measures of
performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA
as used herein is not necessarily comparable to other similarly titled measures
of other companies due to potential inconsistencies in the methods of
calculation. Our management believes this measure is useful to compare general
operating performance from period to period and to make certain related
management decisions. Adjusted EBITDA is also used by securities analysts,
lenders and others in their evaluation of different companies because it
excludes certain items that can vary widely across different industries or among
companies within the same industry. For example, interest expense can be highly
dependent on a company's capital structure, debt levels and credit ratings.
Therefore, the impact of interest expense on earnings can vary significantly
among companies. In addition, the tax positions of companies can vary because of
their differing abilities to take advantage of tax benefits and because of the
tax policies of the various jurisdictions in which they operate. As a result,
effective tax rates and tax expense can vary considerably among companies.
Finally, companies employ productive assets of different ages and utilize
different methods of acquiring and depreciating such assets. This can result in
considerable variability in the relative costs of productive assets and the
depreciation and amortization expense among companies.

Nevertheless, our management recognizes that there are material limitations
associated with the use of adjusted EBITDA in the evaluation of our Company as
compared to net income of Huntsman Corporation or Huntsman International, as
appropriate, which reflects overall financial performance. For example, we have
borrowed money in order to finance our operations and interest expense is a
necessary element of our costs and ability to generate revenue. Our management
compensates for the limitations of using adjusted EBITDA by using this measure
to supplement U.S. GAAP results to provide a more complete understanding of the
factors and trends affecting the business rather than U.S. GAAP results alone.



Adjusted Net Income

Adjusted net income is computed by eliminating the after-tax amounts related to
the following from net income attributable to Huntsman Corporation: (a) business
acquisition and integration expenses and purchase accounting inventory
adjustments; (b) loss (income) from discontinued operations; (c) fair value
adjustments to Venator investment; (d) loss on early extinguishment of debt; (e)
certain legal settlements and related (income) expenses; (f) loss (gain) on sale
of businesses/assets; (g) certain nonrecurring information technology project
implementation costs; (h) amortization of pension and postretirement actuarial
losses; (i) significant activities related to deferred tax assets and
liabilities; and (j) restructuring, impairment and plant closing and transition
costs (credits). Basic adjusted net income per share excludes

                                       43

Table of Contents



dilution and is computed by dividing adjusted net income by the weighted average
number of shares outstanding during the period. Adjusted diluted net income per
share reflects all potential dilutive common shares outstanding during the
period and is computed by dividing adjusted net income by the weighted average
number of shares outstanding during the period increased by the number of
additional shares that would have been outstanding as dilutive securities.
Adjusted net income and adjusted net income per share amounts are presented
solely as supplemental information.

Free Cash Flow



Management internally uses a 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. We have
historically defined free cash flow as cash flows provided by operating
activities and used in investing activities, excluding acquisition/disposition
activities and including non-recurring separation costs. Starting with the
quarter ended March 31, 2020, we updated our definition of free cash flow to a
presentation more consistent with today's market standard of net cash provided
by operating activities less capital expenditures. Using our updated definition,
our free cash flow for the years ended December 31, 2019, 2018 and 2017 were
$382 million, $453 million and $438 million, respectively. 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.



Adjusted Effective Tax Rate


We believe that the effective tax rate of Huntsman Corporation or Huntsman
International, as appropriate, is the performance measure calculated and
presented in accordance with U.S. GAAP that is most directly comparable to
adjusted effective tax rate. We believe our 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. We do
not provide reconciliations for adjusted effective tax rate on a forward-looking
basis because we are unable to provide a meaningful or accurate calculation or
estimation of reconciling items and the information is not available without
unreasonable effort. This is due to the inherent difficulty of forecasting the
timing and amount of certain items, such as business acquisition and integration
expenses, merger costs, certain legal and other settlements and related costs,
gains on sale of business/assets and amortization of pension and postretirement
actuarial losses. Each of such adjustments has not yet occurred, is out of our
control and/or cannot be reasonably predicted. For the same reasons, we are
unable to address the probable significance of the unavailable information.

Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019





As discussed in "Note 4. Discontinued Operations and Business Dispositions-Sale
of Chemical Intermediates Businesses" to our condensed consolidated financial
statements, the results from continuing operations exclude the results of our
Chemical Intermediates and Businesses and the results of our former polymers,
base chemicals and Australian styrenics business for all periods presented. The
decrease of $168 million attributable to Huntsman Corporation and the decrease
of $166 million in net income attributable to Huntsman International from
continuing operations, respectively, was the result of the following items:

Revenues for the three months ended March 31, 2020 decreased by $76 million, or

5%, as compared with the 2019 period. The decrease was primarily due to lower

? average selling prices in all our segments and lower sales volumes in all our

segments, except for our Textile Effects segment. See "-Segment Analysis"


   below.




Our gross profit and the gross profit of Huntsman International for the

? three months ended March 31, 2020 decreased by $62 million each, or 17% each,

compared to a gain of with the 2019 period. The decrease resulted from lower

gross margins in all our segments. See "-Segment Analysis" below.

Our interest expense, net and the interest expense, net of Huntsman

International for the three months ended March 31, 2020 decreased by $12

million and $15 million, respectively, or 40% and 43%, respectively, as

? compared with the 2019 period, primarily related to higher interest income on


   deposits held and lower interest expense resulting from repayments of
   outstanding borrowings on our 2018 Revolving Credit Facility and other
   prepayable debt.



For the three months ended March 31, 2020, we recorded a loss of $110 million

? in fair value adjustments to our investment in Venator as a result of recording


   our equity method investment in Venator at fair value


                                       44

  Table of Contents

  compared to a $76 million gain in the 2019 period. See "Note 4. Business
  Dispositions-Separation and Deconsolidation of Venator" to our condensed
  consolidated financial statements.



Loss on early extinguishment of debt for the three months ended March 31, 2020

? decreased to nil from $23 million in the 2019 period in relation to the early

repayment in full of our 2020 Senior Notes in the first quarter of 2019. See


   "Note. 7. Debt-Notes" to our consolidated financial statements.



Our income tax expense for the three months ended March 31, 2020 decreased to

$7 million from $45 million in the 2019 period. The income tax expense of

Huntsman International for the three months ended March 31, 2020 decreased to

$7 million from $44 million in the 2019 period. The decrease in tax expense was

primarily due to the decrease in pretax income as well as the one-time

? reduction in our Switzerland net deferred tax assets related to the 2019 tax

rate change. Our income tax expense is significantly affected by the mix of

income and losses in the tax jurisdictions in which we operate, as impacted by

the presence of valuation allowances in certain tax jurisdictions. For further


   information concerning income taxes, see "Note 17. Income Taxes" to our
   condensed consolidated financial statements.




Segment Analysis




                              Three months         Percent
                                 ended             Change
                               March 31,          Favorable
(Dollars in millions)       2020       2019     (Unfavorable)
Revenues
Polyurethanes              $   888    $   924            (4)%
Performance Products           292        300            (3)%
Advanced Materials             241        272           (11)%
Textile Effects                180        189            (5)%
Corporate and eliminations     (8)       (16)              NM
Total                      $ 1,593    $ 1,669            (5)%

Huntsman Corporation
Segment adjusted EBITDA(1)
Polyurethanes              $    84    $   124           (32)%
Performance Products            58         45             29%
Advanced Materials              48         53            (9)%
Textile Effects                 20         22            (9)%
Corporate and other           (45)       (40)           (13)%
Total                      $   165    $   204           (19)%

Huntsman International
Segment adjusted EBITDA(1)
Polyurethanes              $    84    $   124           (32)%
Performance Products            58         45             29%
Advanced Materials              48         53            (9)%
Textile Effects                 20         22            (9)%
Corporate and other           (44)       (38)           (16)%
Total                      $   166    $   206           (19)%


NM-Not meaningful


For more information, including reconciliation of segment adjusted EBITDA to (1) net income of Huntsman Corporation or Huntsman International, as appropriate,


    see "Note 19. Operating Segment Information" to our condensed consolidated
    financial statements.




                                       45

  Table of Contents


                                                       Three months ended March 31, 2020 vs 2019
                                                    Average Selling Price(1)
                                                  Local       Foreign Currency     Mix &      Sales
                                                 Currency    Translation Impact    Other    Volumes(2)
Period-Over-Period (Decrease) Increase
Polyurethanes                                        (6)%                  (1)%       4%          (1)%
Performance Products                                 (3)%                  (1)%       4%          (3)%
Advanced Materials                                     1%                  (2)%       1%         (11)%
Textile Effects                                      (3)%                  (1)%     (2)%            1%





                                                    Three months ended

March 31, 2020 vs December 31, 2019


                                                       Average Selling Price(1)
                                                   Local          Foreign Currency        Mix &      Sales
                                                  Currency       Translation Impact       Other    Volumes(2)
Period-Over-Period (Decrease) Increase
Polyurethanes                                            1%                         -         -         (10)%
Performance Products                                     1%                         -        2%            2%
Advanced Materials                                     (2)%                         -        3%          (1)%
Textile Effects                                          2%                         -      (1)%          (1)%

(1) Excludes revenues from tolling arrangements, byproducts and raw materials.

(2) Excludes sales volumes of byproducts and raw materials.






Polyurethanes



The decrease in revenues in our Polyurethanes segment for the three months ended
March 31, 2020 compared to the same period of 2019 was due to lower MDI average
selling prices and modestly lower overall polyurethanes sales volumes. MDI
average selling prices decreased primarily due to a decline in component MDI
selling prices in China and Europe. Overall polyurethanes sales volumes
decreased slightly primarily due to decreased demand across most major markets,
partially offset by modest growth in MDI sales volumes. The decrease in segment
adjusted EBITDA was primarily due to lower MDI margins driven by lower MDI
pricing, partially offset by higher MDI sales volumes.



Performance Products



The decrease in revenues in our Performance Products segment for the
three months ended March 31, 2020 compared to the same period of 2019 was due to
lower average selling prices and lower sales volumes. Average selling prices
decreased primarily due to lower raw material costs. Sales volumes decreased
primarily due to weakened market conditions in our maleic anhydride business,
partially offset by higher sales volumes in our amines business. The increase in
segment adjusted EBITDA was primarily due to higher margins in our performance
amines business and lower fixed costs.



Advanced Materials



The decrease in revenues in our Advanced Materials segment for the three months
ended March 31, 2020 compared to the same period in 2019 was due to lower sales
volumes and lower average selling prices. Sales volumes decreased across most
markets, particularly commodity, industrial and aerospace, primarily due to
economic slowdown and customer destocking. Average selling prices decreased
primarily due to the impact of a stronger U.S. dollar against major
international currencies, partially offset by higher local currency selling
prices. The decrease in segment adjusted EBITDA was primarily due to lower sales
volumes, partially offset by lower fixed costs.



Textile Effects



The decrease in revenues in our Textile Effects segment for the three months
ended March 31, 2020 compared to the same period of 2019 was due to lower
average selling prices, partially offset by higher sales volumes. Average
selling prices decreased as a result of competitive market pressures and the
impact of a stronger U.S. dollar against major international currencies. Sales
volumes increased mainly in Europe and Asia. The decrease in segment adjusted
EBITDA was primarily due to lower sales revenues, partially offset by lower raw
material costs and lower fixed costs.

                                       46

  Table of Contents



Corporate and other



Corporate and other includes unallocated corporate overhead, unallocated foreign
currency exchange gains and losses, LIFO inventory valuation reserve
adjustments, loss on early extinguishment of debt, unallocated restructuring,
impairment and plant closing costs, nonoperating income and expense and gains
and losses on the disposition of corporate assets. For the three months ended
March 31, 2020, adjusted EBITDA from Corporate and other for Huntsman
Corporation decreased by $5 million to a loss of $45 million from a loss of $40
million for the same period of 2019. For the three months ended March 31, 2020,
adjusted EBITDA from Corporate and other for Huntsman International decreased by
$6 million to a loss of $44 million from a loss of $38 million for the same
period of 2019. The decrease in adjusted EBITDA from Corporate and other
resulted primarily from a charge from a LIFO inventory reserve adjustment and an
increase in corporate overhead costs, partially offset by a decrease in
unallocated foreign currency exchange loss.



Liquidity and Capital Resources

The following is a discussion of our liquidity and capital resources and does not include separate information with respect to Huntsman International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q.

Cash Flows for the Three Months Ended March 31, 2020 Compared with Three Months Ended March 31, 2019





Net cash used in operating activities from continuing operations for both the
three months ended March 31, 2020 and 2019 was $40 million. Although net cash
used in operating activities from continuing operations was the same during the
three months ended March 31, 2020 compared with the same period in 2019, the
decrease in operating income as described in "-Results of Operations" above was
offset by a $20 million favorable variance in operating assets and liabilities
for the three months ended March 31, 2020 as compared with the same period

of
2019.



Net cash provided by (used in) investing activities from continuing operations
for the three months ended March 31, 2020 and 2019 was $1,511 million and
$(45) million, respectively. During both the three months ended March 31, 2020
and 2019, we paid $61 million for capital expenditures. During the three months
ended March 31, 2020, we received $1.9 billion for the sale of our Chemical
Intermediates Businesses and paid $346 million for the acquisition of a
business, net of cash acquired. During the three months ended March 31, 2019, we
received $16 million in proceeds from the settlement of the December 3, 2018
sale of Venator ordinary shares to Bank of America N.A.



Net cash (used in) provided by financing activities for the three months ended
March 31, 2020 and 2019 was $(354) million and $183 million, respectively. The
increase in net cash used in financing activities was primarily due to
repayments on our 2018 Revolving Credit Facility in the first quarter of 2020
and an increase in repurchases of common stock in the first quarter of 2020.



Free cash flow from continuing operations for both the three months ended March 31, 2020 and 2019 was a use of cash of $101 million.





                                       47

  Table of Contents

Changes in Financial Condition





The following information summarizes our working capital position (dollars in
millions):




                                          March 31,           Less                         December 31,        Increase      Percent
                                            2020         Acquisition(1)      Subtotal          2019           (Decrease)     Change
Cash and cash equivalents                $     1,594    $            (7)    $    1,587    $           525    $      1,062       202%
Accounts and notes receivable, net             1,027                (41)   

       986                953              33         3%
Inventories                                    1,008                (36)           972                914              58         6%
Other current assets                             145                 (1)           144                155            (11)       (7)%

Current assets held for sale(2)                    -                   -   

         -              1,208         (1,208)          -
Total current assets                           3,774                (85)         3,689              3,755            (66)       (2)%
Accounts payable                                 856                (13)           843                822              21         3%
Accrued liabilities                              739                (10)           729                420             309        74%
Current portion of debt                          134                   -           134                212            (78)      (37)%

Current operating lease liabilities               45                   -            45                 42               3         7%
Current liabilities held for sale(2)               -                   -             -                512           (512)          -
Total current liabilities                      1,774                (23)   

     1,751              2,008           (257)      (13)%
Working capital                          $     2,000    $           (62)    $    1,938    $         1,747    $        191        11%


NM-Not meaningful


Represents amounts related to the Icynene-Lapolla Acquisition. For more (1) information, see "Note 3. Business Combinations and Acquisitions-Acquisition


    of Icynene-Lapolla" to our condensed consolidated financial statements.




    Represents amounts related to the sale of our Chemical Intermediates

Businesses. The assets and liabilities held for sale are classified as (2) current as of December 31, 2019 because we completed the sale of our Chemical

Intermediates Businesses on January 3, 2020. For more information, see "Note

4. Discontinued Operations and Business Dispositions-Sale of Chemical

Intermediates Businesses" to our condensed consolidated financial statements.

Our working capital increased by $191 million as a result of the net impact of the following significant changes:

? The increase in cash and cash equivalents of $1,062 million resulted from the

matters identified on our condensed consolidated statements of cash flows.

? Inventories increased by $58 million primarily due to higher inventory volumes.

Accrued liabilities increased by $309 million primarily due to an increase in

? current income taxes payable related to taxes payable on the sale of our

Chemical Intermediates Businesses.

Current portion of debt decreased by $78 million primarily due to repayments of

? outstanding borrowings on our 2018 Revolving Credit Facility and other


   prepayable debt.




Direct and Subsidiary Debt


See "Note 7. Debt-Direct and Subsidiary Debt" to our condensed consolidated financial statements.





Debt Issuance Costs


See "Note 7. Debt-Direct and Subsidiary Debt-Debt Issuance Costs" to our condensed consolidated financial statements.





                                       48

  Table of Contents

Revolving Credit Facility


See "Note 7. Debt-Direct and Subsidiary Debt-Revolving Credit Facility" to our condensed consolidated financial statements.





Term Loan Credit Facility


See "Note 7. Debt-Direct and Subsidiary Debt-Term Loan Credit Facility" to our condensed consolidated financial statements.





A/R Programs


See "Note 7. Debt-Direct and Subsidiary Debt-A/R Programs" to our condensed consolidated financial statements.





Notes


See "Note 7. Debt-Direct and Subsidiary Debt-Notes" to our condensed consolidated financial statements.

Note Payable from Huntsman International to Huntsman Corporation

See "Note 7. Debt-Direct and Subsidiary Debt-Note Payable from Huntsman International to Huntsman Corporation" to our condensed consolidated financial statements.





Compliance with Covenants



See "Note 7. Debt-Compliance with Covenants" to our condensed consolidated financial statements.

Short-Term and Long-Term Liquidity





We depend upon our cash, 2018 Revolving Credit Facility, A/R Programs and other
debt instruments to provide liquidity for our operations and working capital
needs. As of March 31, 2020, we had $2,930 million of combined cash and unused
borrowing capacity, consisting of $1,594 million in cash, $1,193 million in
availability under our 2018 Revolving Credit Facility and $143 million in
availability under our A/R Programs. We believe our existing cash balances,
together with funds generated from operations and amounts available under our
credit facility, will allow us to manage the anticipated impact of COVID-19 on
our business operations for the foreseeable future. Our liquidity can be
significantly impacted by various factors. The following matters had, or are
expected to have, a significant impact on our liquidity:



Cash invested in our accounts receivable and inventory, net of accounts

? payable, was approximately $65 million for the three months ended March 31,

2020, as reflected in our condensed consolidated statements of cash flows. We


   expect volatility in our working capital components to continue.



During 2020, we expect to spend between approximately $225 million to $235

million on capital expenditures for continuing operations. We have deferred a

? portion of capital spending on a new MDI splitter in Geismar, Louisiana for six

months leaving roughly $40 million of capital spend in 2020 with the remaining


   spend of approximately $120 million in 2021 and 2022. We expect to fund
   spending on all capital expenditures with cash provided by operations.



During the three months ended March 31, 2020, we made contributions to our

? pension and postretirement benefit plans of $20 million. During the remainder


   of 2020, we expect to contribute an additional amount of approximately
   $67 million to these plans.



On February 7, 2018 and on May 3, 2018, our Board of Directors authorized our

Company to repurchase up to an additional $950 million in shares of our common

? stock in addition to the $50 million remaining under our September 2015 share

repurchase authorization. Repurchases may be made through the open market,


   including through accelerated share repurchase programs, or in privately
   negotiated transactions,


                                       49

  Table of Contents

and repurchases may be commenced or suspended from time to time without prior

notice. Shares of common stock acquired through the repurchase program are held

in treasury at cost. During the three months ended March 31, 2020, we

repurchased 5,364,519 shares of our common stock for approximately $96 million,

excluding commissions, under the repurchase program. Subsequent to the end of

the first quarter of 2020, we elected to temporarily suspend share repurchases

under our existing share repurchase program in order to enhance our liquidity


  position in response to COVID-19.



Beginning in December 2018, our ownership in Venator decreased to approximately

49%, and we began accounting for our remaining interest in Venator as an equity

method investment using the fair value option. Accordingly, in the three months

ended March 31, 2020, we recorded a loss of $110 million to record our equity

? method investment in Venator at fair value. Under the fair value option to

account for our equity method investment in Venator, amounts recorded in "Fair

value adjustments to Venator investment" could fluctuate depending upon the

change in market value of Venator common stock. See "Note 4. Discontinued

Operations and Business Dispositions-Separation and Deconsolidation of Venator"


   to our condensed consolidated financial statements.




   On January 3, 2020, we completed the sale of our Chemical Intermediates

Businesses to Indorama. See "Note 4. Discontinued Operations and Business

Dispositions-Sale of Chemical Intermediates Businesses" to our condensed

consolidated financial statements. During the first quarter of 2020, we

? received proceeds from the sale of $1.915 billion, and we expect to pay income

taxes of approximately $375 million during 2020. We expect to use the net

proceeds from this sale to: 1) invest in complementary strategic acquisitions

that develop our technology and product portfolio, 2) continue investing in

organic, internal opportunities, 3) prepay certain prepayable debt, and 4) to


   repurchase shares opportunistically and pay a competitive dividend.



In connection with the January 3, 2020, sale of our Chemical Intermediates

Businesses to Indorama, we assigned to Indorama an insurance claim related to

damages we incurred from a recent fire at a neighboring third-party property

near the Port Neches, Texas site. We agreed with Indorama that we will receive

? the first $50 million of the potential insurance recovery when and if paid.

During the first quarter of 2020, we received $30 million of insurance recovery

progress payments. In addition, we agreed with Indorama to cover certain

reinstatement costs pertaining to our damaged assets at the third-party site.


   We currently do not expect these costs to be material.




As of March 31, 2020, we had $134 million classified as current portion of debt,
including $101 million on our 2019 Term Loan, debt at our variable interest
entities of $32 million and certain other short-term facilities and scheduled
amortization payments totaling $1 million. We intend to renew, repay or extend
the majority of these short-term facilities in the next twelve months.



As of March 31, 2020, we had approximately $330 million of cash and cash
equivalents, including restricted cash, held by our foreign subsidiaries,
including our variable interest entities. We intend to use cash held in our
foreign subsidiaries to fund our local operations. Nevertheless, we could
repatriate cash as dividends and the repatriation of cash as a dividend would
generally not be subject to U.S. taxation as a result of the U.S. Tax Reform
Act. However, such repatriation may potentially be subject to limited foreign
withholding taxes.



Critical Accounting Policies



Our critical accounting policies are presented in Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our Annual
Report on Form 10-K for the year ended December 31, 2019.

© Edgar Online, source Glimpses