HUNTSMAN CORPORATION 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, electronics, insulation, 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, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes. Our revenues from continuing operations for the three months endedMarch 31, 2021 and 2020 were$1,837 million and$1,593 million , respectively. Recent Developments Dividend Increase
On
Acquisition of
OnJanuary 15, 2021 , we completed the Gabriel Acquisition in an all-cash transaction of approximately$249 million , subject to customary closing adjustments, funded from available liquidity. The acquired business is being integrated into our Advanced Materials segment. See "Note 3. Business Combinations and Acquisitions-Acquisition ofGabriel Performance Products " to our condensed consolidated financial statements.
Redemption of the 2021 Senior Notes
OnJanuary 15, 2021 , we redeemed in full €445 million (approximately$541 million ) in aggregate principal amount of our 2021 Senior Notes at the redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date. In connection with this redemption, we incurred an incremental cash tax liability of approximately$15 million in the first quarter of 2021 related to foreign currency exchange gains. See "Note 8. Debt-Senior Notes" to our condensed consolidated financial statements. 36
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Table of Contents Outlook
We expect the following factors to impact our operating segments:
Polyurethanes:
? Second quarter 2021 adjusted EBITDA estimated to be around 5% above first
quarter 2021, including turnaround-related headwinds
? Positive trends in construction and elastomer markets
? Component MDI and polymeric systems margins in
than first quarter 2021
? Rotterdam turnaround estimated to impact adjusted EBITDA by
approximately $25 million
Performance Products:
? Second quarter 2021 adjusted EBITDA estimated to be up approximately 10% over
first quarter 2021
? Volume growth across core markets
? Price increases to offset raw material inflation
Advanced Materials:
? Second quarter 2021 adjusted EBITDA estimated to be up approximately 10% over
first quarter 2021
? Improving trends across all markets, including aerospace
? Acquisitions additive to prior year adjusted EBITDA with synergy capture on
track
Textile Effects
? Second quarter 2021 adjusted EBITDA estimated to be up approximately 25% over
first quarter 2021
? Continued recovery in core markets as well as favorable trends in sustainable
solutions
In the first quarter of 2021, our adjusted effective tax rate was 23%. For 2021,
our adjusted effective tax rate is expected to be approximately 22% to 24%. We
expect our forward adjusted effective tax rate will be approximately 22% to 24%.
For further information, see "-Non-GAAP Financial Measures" and "Note 18. Income
Taxes" to our condensed consolidated financial statements.
Refer to "Forward-Looking Statements" for a discussion of our use of forward-looking statements in this Form 10-Q.
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Table of Contents Results of Operations For each of our Company andHuntsman International , the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):Huntsman Corporation Three months ended March 31, Percent 2021 2020 Change Revenues$ 1,837 $ 1,593 15 % Cost of goods sold 1,445 1,296 11 % Gross profit 392 297 32 % Operating expenses 242 240 1 % Restructuring, impairment and plant closing costs 24 3 700 % Operating income 126 54 133 % Interest expense, net (19 ) (18 ) 6 % Equity in income of investment in unconsolidated affiliates 38 2 NM Fair value adjustments to Venator investment (19 ) (110 ) (83 )% Other income, net 7 10 (30 )% Income (loss) from continuing operations before income taxes 133 (62 ) NM Income tax expense (34 ) (7 ) 386 % Income (loss) from continuing operations 99 (69 ) NM Income from discontinued operations, net of tax 1 777 (100 )% Net income 100 708 (86 )% Reconciliation of net income to adjusted EBITDA: Net income attributable to noncontrolling interests (17 ) (3 ) 467 % Interest expense, net from continuing operations 19 18 6 % Income tax expense from continuing operations 34 7 386 % Income tax expense from discontinued operations - 238 NM Depreciation and amortization of continuing operations 74 67 10 % Other adjustments: Business acquisition and integration expenses and purchase accounting inventory adjustments 9
13
EBITDA from discontinued operations(1) (1 ) (1,015 ) Fair value adjustments to Venator investment 19
110
Certain legal and other settlements and related expenses 2 2 Gain on sale of businesses/assets - (2 ) Income from transition services arrangements (1 ) - Certain nonrecurring information technology project implementation costs 1 1 Amortization of pension and postretirement actuarial losses 22
18
Plant incident remediation costs 4 - Restructuring, impairment and plant closing and transition costs 24 3 Adjusted EBITDA(2)$ 289 $ 165 75 % Net cash used in operating activities from continuing operations$ (16 ) $ (40 ) (60 )% Net cash (used in) provided by investing activities (323 ) 1,511 NM Net cash used in financing activities (579 ) (354 ) 64 % Capital expenditures (98 ) (61 ) 61 % 38
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Table of ContentsHuntsman International Three months ended March 31, Percent 2021 2020 Change Revenues$ 1,837 $ 1,593 15 % Cost of goods sold 1,445 1,296 11 % Gross profit 392 297 32 % Operating expenses 239 238 - Restructuring, impairment and plant closing costs 24 3 700 % Operating income 129 56 130 % Interest expense, net (19 ) (20 ) (5 )% Equity in income of investment in unconsolidated affiliates 38 2 NM Fair value adjustments to Venator investment (19 ) (110 ) (83 )% Other income, net 7 9 (22 )% Income (loss) from continuing operations before income taxes 136 (63 ) NM Income tax expense (35 ) (7 ) 400 % Income (loss) from continuing operations 101 (70 ) NM Income from discontinued operations, net of tax 1 777 (100 )% Net income 102 707 (86 )% Reconciliation of net income to adjusted EBITDA: Net income attributable to noncontrolling interests (17 ) (3 ) 467 % Interest expense, net from continuing operations 19 20 (5 )% Income tax expense from continuing operations 35 7 400 % Income tax expense from discontinued operations - 238 NM Depreciation and amortization of continuing operations 73 67 9 % Other adjustments: Business acquisition and integration expenses and purchase accounting inventory adjustments 9
13
EBITDA from discontinued operations(1) (1 ) (1,015 ) Fair value adjustments to Venator investment 19
110
Certain legal and other settlements and related expenses 2 2 Gain on sale of businesses/assets - (2 ) Income from transition services arrangements (1 ) - Certain nonrecurring information technology project implementation costs 1 1 Amortization of pension and postretirement actuarial losses 23
18
Plant incident remediation costs 4 - Restructuring, impairment and plant closing and transition costs 24 3 Adjusted EBITDA(2)$ 292 $ 166 76 % Net cash used in operating activities from continuing operations$ (17 ) $ (42 ) (60 )% Net cash (used in) provided by investing activities (330 ) 1,790 NM Net cash used in financing activities (575 ) (631 ) (9 )% Capital expenditures from continuing operations (98 ) (61 ) 61 % 39
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Table of ContentsHuntsman Corporation Three months Three months ended ended March 31, 2021 March 31, 2020 Tax and Tax and Gross other(3) Net Gross other(3) Net Reconciliation of net income to adjusted net income Net income$ 100 $ 708 Net income attributable to noncontrolling interests (17 ) (3 ) Business acquisition and integration expenses and purchase accounting inventory adjustments$ 9 $ (2 ) 7$ 13 $ (3 ) 10 Income from discontinued operations(1)(4) (1 ) - (1 ) (1,015 ) 238 (777 ) Fair value adjustments to Venator investment 19 - 19 110 - 110 Certain legal and other settlements and related expenses 2 (1 ) 1 2 - 2 Gain on sale of businesses/assets - - - (2 ) - (2 ) Income from transition services arrangements (1 ) - (1 ) - - - Certain nonrecurring information technology project implementation costs 1 - 1 1 - 1 Amortization of pension and postretirement actuarial losses 22 (5 ) 17 18 (4 ) 14 Plant incident remediation costs 4 (1 ) 3 - - - Restructuring, impairment and plant closing and transition costs 24 (6 ) 18 3 (1 ) 2 Adjusted net income(2)$ 147 $ 65 Weighted average shares-basic 220.4 223.2 Weighted average shares-diluted 222.6 223.2 Basic net income attributable toHuntsman Corporation per share: Income (loss) from continuing operations$ 0.38 $ (0.32 ) Income from discontinued operations - 3.48 Net income$ 0.38 $ 3.16 Diluted net income attributable toHuntsman Corporation per share: Income (loss) from continuing operations$ 0.37 $ (0.32 ) Income from discontinued operations - 3.48 Net income$ 0.37 $ 3.16 Other non-GAAP measures: Diluted adjusted net income per share(2)$ 0.66 $ 0.29 Net cash provided by operating activities from continuing operations$ (16 ) $ (40 ) Capital expenditures from continuing operations (98 ) (61 ) Free cash flow from continuing operations(2)$ (114 ) $ (101 ) Other cash flow measure: Taxes paid on sale of businesses(5) $ -$ (2 )
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NM-Not meaningful
(1) Includes the gain on the sale of our Chemical Intermediates Businesses in
2020.
(2) See "-Non-GAAP Financial Measures."
(3) 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.
(4) In addition to income tax impacts, this adjusting item is also impacted by
depreciation and amortization expense and interest expense.
(5) Represents the taxes paid in connection with the sale of the Chemical
Intermediates Businesses. For more information, see "Note 4. Discontinued
Operations and Business Dispositions-Sale of Chemical Intermediates
Businesses" to our condensed consolidated financial statements.
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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 ofHuntsman Corporation orHuntsman 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) certain legal and other settlements and related expenses; (e) gain on sale of businesses/assets; (f) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (g) certain nonrecurring information technology project implementation costs; (h) amortization of pension and postretirement actuarial losses; (i) plant incident remediation costs; and (j) restructuring, impairment and plant closing and transition costs. We believe that net income ofHuntsman Corporation orHuntsman International , as appropriate, is the performance measure calculated and presented in accordance withU.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 ofHuntsman Corporation orHuntsman International , as appropriate, or other measures of performance determined in accordance withU.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 ofHuntsman Corporation orHuntsman 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 supplementU.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather thanU.S. GAAP results alone. 41
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Table of Contents Adjusted Net Income Adjusted net income is computed by eliminating the after-tax amounts related to the following from net (loss) income attributable toHuntsman Corporation : (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) income from discontinued operations; (c) fair value adjustments to Venator investment; (d) certain legal and other settlements and related expenses; (e) gain on sale of businesses/assets; (f) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (g) certain nonrecurring information technology project implementation costs; (h) amortization of pension and postretirement actuarial losses; (i) plant incident remediation costs; and (j) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes 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. We believe adjusted net income 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. Free Cash Flow We believe free cash flow is an important indicator of our liquidity as it measures the amount of cash we generate. 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. Starting with the quarter endedMarch 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. Free cash flow is not a defined term underU.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 ofHuntsman Corporation orHuntsman International , as appropriate, is the performance measure calculated and presented in accordance withU.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. 42
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Table of Contents
Three Months Ended
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 increase of$154 million in net income attributable toHuntsman Corporation and the increase of$157 in net income attributable toHuntsman International from continuing operations, respectively, was the result of the following items:
? Revenues for the three months ended
or 15%, as compared with the 2020 period. The increase was primarily due to
higher sales volumes in all our segments, except for our Performance Products
segment, and higher average selling prices in our Polyurethanes and
Performance Products segments. See "-Segment Analysis" below.
? Gross profit for the three months ended March 31, 2021 increased
by
from higher gross profits in all our segments. See "-Segment Analysis" below.
? Restructuring, impairment and plant closing costs for the three months ended
For more information concerning restructuring activities, see "Note 7.
Restructuring, Impairment and Plant Closing Costs" to our condensed
consolidated financial statements.
? Equity in income of investment in unconsolidated affiliates for the three
months ended
2020 period, primarily related to an increase in income at our PO/MTBE joint
venture in China , of which we hold a 49% interest.
? For the three months ended March 31, 2021 , we recorded a net loss
of
related option to sell our remaining Venator shares compared to a loss
of
Venator Interest" to our condensed consolidated financial statements.
? Our income tax expense for the three months ended
to
to
expense was primarily due to the increase in pretax income, exclusive of the
fair value adjustments to our investment in Venator. 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 18. Income Taxes" to our condensed consolidated
financial statements.
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Table of Contents
Three months Percent
ended Change
March 31, Favorable
(Dollars in millions) 2021 2020 (Unfavorable)
Revenues
Polyurethanes $ 1,068 $ 888 20 %
Performance Products 305 292 4 %
Advanced Materials 278 241 15 %
Textile Effects 193 180 7 %
Corporate and eliminations (7 ) (8 ) NM
Total $ 1,837 $ 1,593 15 %
Huntsman Corporation
Segment adjusted EBITDA(1)
Polyurethanes $ 207 $ 84 146 %
Performance Products 63 58 9 %
Advanced Materials 44 48 (8 )%
Textile Effects 25 20 25 %
Corporate and other (50 ) (45 ) (11 )%
Total $ 289 $ 165 75 %
Huntsman International
Segment adjusted EBITDA(1)
Polyurethanes $ 207 $ 84 146 %
Performance Products 63 58 9 %
Advanced Materials 44 48 (8 )%
Textile Effects 25 20 25 %
Corporate and other (47 ) (44 ) (7 )%
Total $ 292 $ 166 76 %
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NM-Not meaningful
(1) For more information, including reconciliation of segment adjusted EBITDA to
net income of
see "Note 20. Operating Segment Information" to our condensed consolidated
financial statements.
Three months ended March 31, 2021 vs 2020
Average Selling Price(1)
Local Foreign Currency Mix & Sales
Currency Translation Impact Other Volumes(2)
Period-Over-Period Increase
(Decrease)
Polyurethanes 17 % 3 % - -
Performance Products 6 % 4 % (3 )% (3 )%
Advanced Materials 5 % 5 % 8 % (3 )%
Textile Effects (7 )% 1 % 3 % 10 %
Three months ended
Average Selling Price(1)
Local Foreign Currency Mix & Sales
Currency Translation Impact Other Volumes(2)
Period-Over-Period (Decrease)
Increase
Polyurethanes 7 % 2 % 3 % (8 )%
Performance Products 11 % 1 % (2 )% 5 %
Advanced Materials 5 % 6 % 9 % 14 %
Textile Effects 3 % 2 % 1 % 6 %
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(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
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Table of Contents Polyurethanes The increase in revenues in our Polyurethanes segment for the three months endedMarch 31, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices. MDI average selling prices increased mostly inChina andEurope . Even though demand was strong in the first quarter of 2021, overall volumes were largely flat and MDI volumes decreased because of a previously disclosed turnaround at ourGeismar, Louisiana facility, some unplanned downtime resulting from theU.S. Gulf Coast Winter Storm Uri that occurred in the first quarter of 2021 as well as the planned build up of inventory ahead of our scheduled maintenance outage at ourRotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing. Performance Products The increase in revenues in our Performance Products segment for the three months endedMarch 31, 2021 compared to the same period of 2020 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown as well as in response to an increase in raw material costs. Sales volumes decreased primarily due to theU.S. Gulf Coast Winter Storm Uri that occurred in the first quarter of 2021. The increase in segment adjusted EBITDA was primarily due to lower fixed costs. Advanced Materials The increase in revenues in our Advanced Materials segment for the three months endedMarch 31, 2021 compared to the same period in 2020 was primarily due to higher average selling prices and the favorable impact of the CVC Thermoset Specialties Acquisition and the Gabriel Acquisition. See "Note 3. Business Combinations and Acquisitions" to our condensed consolidated financial statements. Excluding acquisitions and with the exception of our global aerospace business, sales volumes increased across all markets, primarily in relation to the ongoing recovery from the global economic slowdown. Average selling prices increased largely due to the impact of a weakerU.S. dollar against major international currencies and in response to higher raw material costs. The decrease in segment adjusted EBITDA was primarily due to lower aerospace sales volumes, partially offset by the benefit from the above mentioned acquisitions. Textile Effects The increase in revenues in our Textile Effects segment for the three months endedMarch 31, 2021 compared to the same period of 2020 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly inAsia . The increase in segment adjusted EBITDA was primarily due to higher sales revenues and lower costs. 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 endedMarch 31, 2021 , adjusted EBITDA from Corporate and other forHuntsman Corporation decreased by$5 million to a loss of$50 million from a loss of$45 million for the same period of 2020. For the three months endedMarch 31, 2021 , adjusted EBITDA from Corporate and other forHuntsman International decreased by$3 million to a loss of$47 million from a loss of$44 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other resulted primarily from a decrease in unallocated foreign currency exchange gains and an increase in corporate overhead costs. 45
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Table of Contents
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and does
not include separate information with respect to
Cash Flows for the Three Months Ended
Net cash used in operating activities from continuing operations for the three months endedMarch 31, 2021 and 2020 was$16 million and$40 million , respectively. The decrease in net cash used in operating activities from continuing operations during the three months endedMarch 31, 2021 compared with the same period in 2020, was primarily attributable to increased operating income as described in "-Results of Operations" above, partially offset by a$41 million unfavorable variance in operating assets and liabilities for the three months endedMarch 31, 2021 as compared with the same period of 2020. Net cash (used in) provided by investing activities from continuing operations for the three months endedMarch 31, 2021 and 2020 was$(323) million and$1,511 million , respectively. During the three months endedMarch 31, 2021 and 2020, we paid$98 million and$61 million for capital expenditures, respectively. During the three months endedMarch 31, 2021 , we paid approximately$240 million for the Gabriel Acquisition, net of cash acquired. During the three months endedMarch 31, 2020 , we received approximately$1.92 billion for the sale of our Chemical Intermediates Businesses and paid$346 million for the Icynene-Lapolla Acquisition, net of cash acquired. Net cash used in financing activities for the three months endedMarch 31, 2021 and 2020 was$579 million and$354 million , respectively. During the three months endedMarch 31, 2021 , we redeemed in full €445 million (approximately$541 million ) in aggregate principal amount of our 2021 Senior Notes. During the three months endedMarch 31, 2020 , we made repayments on our Revolving Credit facility of$158 million and repurchased common stock for$96 million .
Free cash flow from continuing operations for the three months ended
Changes in Financial Condition
The following information summarizes our working capital position (dollars in
millions):
March 31, Less December 31, Increase Percent
2021 Acquisitions(1)
Subtotal 2020 (Decrease) Change
Cash and cash equivalents
(9 ) $ 664 $ 1,593 $ (929 ) (58 )%
Accounts and notes
receivable, net 1,022 (13 ) 1,009 910 99 11 %
Inventories 1,006 (26 ) 980 848 132 16 %
Other current assets 228 - 228 217 11 5 %
Total current assets 2,929 (48 ) 2,881 3,568 (687 ) (19 )%
Accounts payable 953 (7 ) 946 876 70 8 %
Accrued liabilities 505 (2 ) 503 458 45 10 %
Current portion of debt 57 - 57 593 (536 ) (90 )%
Current operating lease
liabilities 49 - 49 52 (3 ) (6 )%
Total current liabilities 1,564 (9 ) 1,555 1,979 (424 ) (21 )%
Working capital $ 1,365 $ (39 ) $ 1,326 $ 1,589 $ (263 ) (17 )%
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(1) Represents amounts related to the Gabriel Acquisition. For more information,
see "Note 3. Business Combinations and Acquisitions-Acquisition of Gabriel
Performance Products" to our condensed consolidated financial statements.
Our working capital decreased by
? The decrease in cash and cash equivalents of
matters identified on our condensed consolidated statements of cash flows.
? Accounts receivable increased by
first quarter of 2021 compared to the fourth quarter of 2020.
? Inventories increased by
and volumes.
? Accounts payable increased by
purchases.
? Accrued liabilities increased by
current income taxes payable and accrued restructuring charges, partially
offset by a decrease in accrued rebates.
? Current portion of debt decreased by $536 million primarily due to the
redemption of our 2021 Senior Notes.
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Table of Contents Direct and Subsidiary Debt
See "Note 8. Debt-Direct and Subsidiary Debt" to our condensed consolidated financial statements.
Debt Issuance Costs
See "Note 8. Debt-Direct and Subsidiary Debt-Debt Issuance Costs" to our condensed consolidated financial statements.
Revolving Credit Facility
See "Note 8. Debt-Direct and Subsidiary Debt-Revolving Credit Facility" to our condensed consolidated financial statements.
A/R Programs
See "Note 8. Debt-Direct and Subsidiary Debt-A/R Programs" to our condensed consolidated financial statements.
Senior Notes
See "Note 8. Debt-Direct and Subsidiary Debt-Senior Notes" to our condensed consolidated financial statements.
Note Payable From
See "Note 8. Debt-Direct and Subsidiary Debt-Note Payable from
Compliance with Covenants
See "Note 8. Debt-Compliance with Covenants" to our condensed consolidated financial statements.
47
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Table of Contents Short-Term Liquidity We depend upon our cash, Revolving Credit Facility, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As ofMarch 31, 2021 , we had$2,064 million of combined cash and unused borrowing capacity, consisting of$673 million in cash,$1,194 million in availability under our Revolving Credit Facility and$197 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
2021, as reflected in our condensed consolidated statements of cash flows.
We expect volatility in our working capital components to continue.
? During 2021, we expect to spend approximately $330 million on capital
expenditures, including spending of approximately
splitter in
expenditures with cash provided by operations.
? During the three months ended
pension and postretirement benefit plans of
expect to contribute an additional amount of approximately
these plans.
? During 2020, management implemented cost realignment and synergy plans. In
connection with these plans, we expect to achieve annualized cost savings
and synergy benefits of more than
associated net cash restructuring and integration costs of approximately
$100 million . See "Note 7. Restructuring, Impairment and Plant Closing Cost" to our condensed consolidated financial statements.
? On
consumer adhesives ("DIY") business, part of the Advanced Materials segment,
to Pidilite Industries Ltd. and received cash of approximately
Under the terms of the agreement, we may receive up to approximately
million of additional cash under an earnout within 18 months if the business
achieves certain sales revenue targets in line with the DIY business' 2019
performance.
? On
million) in aggregate principal amount of our 2021 Senior Notes at the
redemption price equal to 100% of the principal amount of the notes, plus
accrued and unpaid interest to, but not including, the redemption date. In
connection with this redemption, we incurred an incremental cash tax
liability of approximately $15 million in the first quarter of 2021
related to foreign currency exchange gains.
? On
transaction of approximately
adjustments, funded from available liquidity. See "Note 3. Business
Combinations and Acquisitions-Acquisition of
to our condensed consolidated financial statements.
Long-Term Liquidity
? On
dividend on our common stock. This represents a 15% increase from the
previous dividend. We expect to distribute an additional
dividends each quarter related to this dividend increase.
? On a new MDI splitter being constructed in
spend approximately $115 million in the remainder of 2021 and 2022. We
expect to fund spending on all capital expenditures with cash provided by
operations.
As of March 31, 2021 , we had $57 million classified as current portion of debt,
including debt at our variable interest entities of $55 million and certain
other short-term facilities and scheduled amortization payments totaling
$2 million . We intend to renew, repay or extend the majority of these short-term
facilities in the next twelve months.
As of March 31, 2021 , we had approximately $398 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, which dividends 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.
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Table of Contents
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