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 six months endedJune 30, 2021 and 2020 were$3,861 million and$2,840 million , respectively. Recent Developments Senior Notes Refinancing OnMay 26, 2021 ,Huntsman International completed a$400 million offering of its 2031 Senior Notes. OnJune 23, 2021 ,Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full$400 million in aggregate principal amount of its 2022 Senior Notes and to pay accrued but unpaid interest of approximately$2 million . In addition, we paid redemption premiums and related fees and expenses of approximately$25 million and recognized a corresponding loss on early extinguishment of debt of$26 million in the second quarter of 2021. For additional information, see "Note 8. Debt-Direct and Subsidiary Debt-Senior Notes" to our condensed consolidated financial statements.
Amendments to Accounts Receivable Securitization Programs
OnJuly 1, 2021 , we entered into amendments to our A/R Programs that, among other things, extended the scheduled termination dates of our A/R Programs toJuly 2024 . For additional information, see "Note 8. Debt-Direct and Subsidiary Debt-A/R Programs" to our condensed consolidated financial statements.
Sale of India-Based Do-It-Yourself Consumer Adhesives Business
OnNovember 3, 2020 , we completed the sale of theIndia -based DIY business to Pidilite Industries Ltd. and received cash of approximately$257 million . Under the terms of the agreement, we may receive up to approximately$28 million of additional cash under an earnout provision if the business achieves within 18 months certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of$28 million . As a result, we recognized an additional pretax gain of$28 million in the second quarter, which was recorded in gain on sale ofIndia -based DIY business in our condensed consolidated statements of operations. 38
--------------------------------------------------------------------------------
Table of Contents Outlook
We expect the following factors to impact our operating segments:
Polyurethanes:
? Third quarter 2021 adjusted EBITDA estimated to be between
$260 million ? Positive trends in construction, automotive and elastomer markets ? Lower earnings contribution from non-controlling interests Performance Products:
? Third quarter 2021 adjusted EBITDA estimated to be between
$80 million ? Volume growth year-over-year across core markets ? More balancedAsia markets compared to second quarter of 2021 Advanced Materials:
? Third quarter 2021 adjusted EBITDA estimated to be between
$55 million ? Improving trends compared to prior year across all markets, including aerospace ? Acquisitions additive to adjusted EBITDA with synergy capture on track Textile Effects
? Third quarter 2021 adjusted EBITDA estimated to be between
million
? Favorable trends in sustainable solutions
In the second quarter of 2021, our adjusted effective tax rate was 20%. For
2021, our adjusted effective tax rate is expected to be approximately 22% to
24%. We expect our forward adjusted effective tax rate will be approximately 22%
to 24%. For further information, see "-Non-GAAP Financial Measures" and "Note
18. Income Taxes" to our condensed consolidated financial statements.
Refer to "Forward-Looking Statements" for a discussion of our use of forward-looking statements in this Quarterly Report on Form 10-Q.
39--------------------------------------------------------------------------------
Table of Contents Results of Operations For each of our Company andHuntsman International , the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):Huntsman Corporation Three months Six months ended ended June 30, Percent June 30, Percent 2021 2020 Change 2021 2020 Change Revenues$ 2,024 $ 1,247 62 %$ 3,861 $ 2,840 36 % Cost of goods sold 1,593 1,085 47 % 3,038 2,381 28 % Gross profit 431 162 166 % 823 459 79 % Operating expenses, net 211 212 - 453 452 - Restructuring, impairment and plant closing costs 11 19 (42 )% 35 22 59 % Operating income (loss) 209 (69 ) NM 335 (15 ) NM Interest expense, net (18 ) (21 ) (14 )% (37 ) (39 ) (5 )% Equity in income of investment in unconsolidated affiliates 46 2 NM 84 4 NM Fair value adjustments to Venator investment (6 ) 4 NM (25 ) (106 ) (76 )% Loss on early extinguishment of debt (27 ) - NM (27 ) - NM Other income, net 9 7 29 % 16 17 (6 )% Income (loss) from continuing operations before income taxes 213 (77 ) NM 346 (139 ) NM Income tax (expense) benefit (42 ) 13 NM (76 ) 6 NM Income (loss) from continuing operations 171 (64 ) NM 270 (133 ) NM Income from discontinued operations, net of tax 1 5 (80 )% 2 782 (100 )% Net income (loss) 172 (59 ) NM 272 649 (58 )% Reconciliation of net income (loss) to adjusted EBITDA: Net income attributable to noncontrolling interests (16 ) (3 ) 433 % (33 ) (6 ) 450 % Interest expense, net from continuing operations 18 21 (14 )% 37 39 (5 )% Income tax expense (benefit) from continuing operations 42 (13 ) NM 76 (6 ) NM Income tax expense from discontinued operations - 1 (100 )% - 239 (100 )% Depreciation and amortization of continuing operations 73 69 6 % 147 136 8 % Other adjustments: Business acquisition and integration expenses and purchase accounting inventory adjustments 5 8 14 21 EBITDA from discontinued operations(1) (1 ) (6 ) (2 ) (1,021 ) Fair value adjustments to Venator investment 6 (4 ) 25 106 Loss on early extinguishment of debt 27 - 27 - Certain legal and other settlements and related expenses 8 4 10 6 (Gain) loss on sale of businesses/assets (30 ) 1 (30 ) (1 ) Income from transition services arrangements (3 ) (5 ) (4 ) (5 ) Certain nonrecurring information technology project implementation costs 3 1 4 2 Amortization of pension and postretirement actuarial losses 21 19 43 37 Plant incident remediation (credits) costs (3 ) 1 1 1 Restructuring, impairment and plant closing and transition costs 12 19 36 22 Adjusted EBITDA(2)$ 334 $ 54 519 %$ 623 $ 219 184 % Net cash (used in) provided by operating activities from continuing operations$ (23 ) $ 45 NM Net cash (used in) provided by investing activities (369 ) 1,152 NM Net cash used in financing activities (691 ) (417 ) 66 % Capital expenditures (174 ) (116 ) 50 % 40
--------------------------------------------------------------------------------
Table of ContentsHuntsman International Three months Six months ended ended June 30, Percent June 30, Percent 2021 2020 Change 2021 2020 Change Revenues$ 2,024 $ 1,247 62 %$ 3,861 $ 2,840 36 % Cost of goods sold 1,593 1,085 47 % 3,038 2,381 28 % Gross profit 431 162 166 % 823 459 79 % Operating expenses, net 209 211 (1 )% 448 449 - Restructuring, impairment and plant closing costs 11 19 (42 )% 35 22 59 % Operating income (loss) 211 (68 ) NM 340 (12 ) NM Interest expense, net (18 ) (21 ) (14 )% (37 ) (41 ) (10 )% Equity in income of investment in unconsolidated affiliates 46 2 NM 84 4 NM Fair value adjustments to Venator investment (6 ) 4 NM (25 ) (106 ) (76 )% Loss on early extinguishment of debt (27 ) - NM (27 ) - NM Other income, net 7 6 17 % 14 15 (7 )% Income (loss) from continuing operations before income taxes 213 (77 ) NM 349 (140 ) NM Income tax (expense) benefit (41 ) 13 NM (76 ) 6 NM Income (loss) from continuing operations 172 (64 ) NM 273 (134 ) NM Income from discontinued operations, net of tax 1 5 (80 )% 2 782 (100 )% Net income (loss) 173 (59 ) NM 275 648 (58 )% Reconciliation of net income (loss) to adjusted EBITDA: Net income attributable to noncontrolling interests (16 ) (3 ) 433 % (33 ) (6 ) 450 % Interest expense, net from continuing operations 18 21 (14 )% 37 41 (10 )% Income tax expense (benefit) from continuing operations 41 (13 ) NM 76 (6 ) NM Income tax expense from discontinued operations - 1 (100 )% - 239 (100 )% Depreciation and amortization of continuing operations 74 69 7 % 147 136 8 % Other adjustments: Business acquisition and integration expenses and purchase accounting inventory adjustments 5 8 14 21 EBITDA from discontinued operations(1) (1 ) (6 ) (2 ) (1,021 ) Fair value adjustments to Venator investment 6 (4 ) 25 106 Loss on early extinguishment of debt 27 - 27 - Certain legal and other settlements and related expenses 8 4 10 6 (Gain) loss on sale of businesses/assets (30 ) 1 (30 ) (1 ) Income from transition services arrangements (3 ) (5 ) (4 ) (5 ) Certain nonrecurring information technology project implementation costs 3 1 4 2 Amortization of pension and postretirement actuarial losses 22 21 45 39 Plant incident remediation (credits) costs (3 ) 1 1 1 Restructuring, impairment and plant closing and transition costs 12 19 36 22 Adjusted EBITDA(2)$ 336 $ 56 500 %$ 628 $ 222 183 % Net cash (used in) provided by operating activities from continuing operations$ (23 ) $ 44 NM Net cash (used in) provided by investing activities (377 ) 1,430 NM Net cash used in financing activities (690 ) (695 ) (1 )% Capital expenditures from continuing operations (174 ) (116 ) 50 % 41
--------------------------------------------------------------------------------
Table of ContentsHuntsman Corporation Three months Three months ended ended June 30, 2021 June 30, 2020 Tax and Tax and Gross other(3) Net Gross other(3) Net Reconciliation of net income (loss) to adjusted net income Net income (loss)$ 172 $ (59 ) Net income attributable to noncontrolling interests (16 ) (3 ) Business acquisition and integration expenses and purchase accounting inventory adjustments$ 5 $ - 5$ 8 $ - 8 Income from discontinued operations(1)(4) (1 ) - (1 ) (6 ) 1 (5 ) Fair value adjustments to Venator investment 6 - 6 (4 ) - (4 ) Loss on early extinguishment of debt 27 (6 ) 21 - - - Certain legal and other settlements and related expenses 8 (2 ) 6 4 (1 ) 3 (Gain) loss on sale of businesses/assets (30 ) 4 (26 ) 1 - 1 Income from transition services arrangements (3 ) 1 (2 ) (5 ) 1 (4 ) Certain nonrecurring information technology project implementation costs 3 (1 ) 2 1 - 1 Amortization of pension and postretirement actuarial losses 21 (5 ) 16 19 (4 ) 15 Plant incident remediation (credits) costs (3 ) 1 (2 ) 1 - 1 Restructuring, impairment and plant closing and transition costs 12 (2 ) 10 19 (3 ) 16 Adjusted net income (loss)(2)$ 191 $ (30 ) Weighted average shares-basic 220.9 219.7 Weighted average shares-diluted 222.9 219.7 Basic net income (loss) attributable toHuntsman Corporation per share: Income (loss) from continuing operations$ 0.71 $ (0.30 ) Income from discontinued operations - 0.02 Net income (loss)$ 0.71 $ (0.28 ) Diluted net income (loss) attributable toHuntsman Corporation per share: Income (loss) from continuing operations$ 0.70 $ (0.30 ) Income from discontinued operations - 0.02 Net income (loss)$ 0.70 $ (0.28 ) Other non-GAAP measures: Diluted adjusted net income (loss) per share(2)$ 0.86 $ (0.14 ) 42
--------------------------------------------------------------------------------
Table of Contents
Six months Six months
ended ended
June 30, 2021 June 30, 2020
Tax and Tax and
Gross other(3) Net Gross other(3) Net
Reconciliation of net income to
adjusted net income
Net income $ 272 $ 649
Net income attributable to
noncontrolling interests (33 ) (6 )
Business acquisition and integration
expenses and purchase accounting
inventory adjustments $ 14 $ (2 ) 12 $ 21 $ (3 ) 18
Income from discontinued
operations(1)(4) (2 ) - (2 ) (1,021 ) 239 (782 )
Fair value adjustments to Venator
investment 25 - 25 106 - 106
Loss on early extinguishment of debt 27 (6 ) 21 - - -
Certain legal and other settlements
and related expenses 10 (3 ) 7 6 (1 ) 5
Gain on sale of businesses/assets (30 ) 4 (26 ) (1 ) - (1 )
Income from transition services
arrangements (4 ) 1 (3 ) (5 ) 1 (4 )
Certain nonrecurring information
technology project implementation
costs 4 (1 ) 3 2 - 2
Amortization of pension and
postretirement actuarial losses 43 (10 ) 33 37 (8 ) 29
Plant incident remediation costs 1 - 1 1 - 1
Restructuring, impairment and plant
closing and transition costs 36 (8 ) 28 22 (4 ) 18
Adjusted net income(2) $ 338 $ 35
Weighted average shares-basic 220.6 221.4
Weighted average shares-diluted 222.7 221.4
Basic net income (loss) attributable
to Huntsman Corporation per share:
Income (loss) from continuing
operations $ 1.07 $ (0.63 )
Income from discontinued operations 0.01 3.53
Net income $ 1.08 $ 2.90
Diluted net income (loss)
attributable to Huntsman Corporation
per share:
Income (loss) from continuing
operations $ 1.06 $ (0.63 )
Income from discontinued operations 0.01 3.53
Net income $ 1.07 $ 2.90
Other non-GAAP measures:
Diluted adjusted net income per
share(2) $ 1.52 $ 0.16
Net cash (used in) provided by
operating activities from continuing
operations $ (23 ) $ 45
Capital expenditures from continuing
operations (174 ) (116 )
Free cash flow from continuing
operations(2) $ (197 ) $ (71 )
Other cash flow measure:
Taxes paid on sale of businesses(5) $ (3 ) $ (10 ) --------------------------------------------------------------------------------
NM-Not meaningful
(1) Includes the gain on the sale of our Chemical Intermediates Businesses
recognized predominantly in the first quarter of 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 the second quarter of 2021 in connection with
the earnout provision achieved under the terms of the sales agreement of the
connection with the sale of the Chemical Intermediates Businesses. For more
information, see "Note 4. Discontinued Operations and Business Dispositions"
to our condensed consolidated financial statements.
43--------------------------------------------------------------------------------
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 income and 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) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) (gain) loss on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation (credits) costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation costs; and (k) restructuring, impairment and plant closing and transition (credits) 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. 44
--------------------------------------------------------------------------------
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) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) (gain) loss on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation (credits) costs; and (k) 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 businesses/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. 45
--------------------------------------------------------------------------------
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 Businesses and the results of our former polymers, base chemicals and Australian styrenics businesses for all periods presented. The increase of$222 million in net income from continuing operations attributable toHuntsman Corporation and the increase of$223 in net income from continuing operations attributable toHuntsman International was the result of the following items:
? Revenues for the three months ended
or 62%, as compared with the 2020 period. The increase was primarily due to
higher sales volumes in all our segments and higher average selling prices
in our Polyurethanes, Performance Products and Advanced Materials segments.
See "-Segment Analysis" below.
? Gross profit for the three months ended June 30, 2021 increased
by
from higher gross profits in all our segments. See "-Segment Analysis" below.
? Our operating expenses, net and the operating expenses, net of Huntsman
International for the three months ended
flat compared to the 2020 period as an increase in selling, general and
administrative expenses were largely offset by the pretax gain of
recognized in connection with the earnout provision achieved under the terms
of the sale agreement of the India -based DIY business.
? 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 , in which we hold a 49% interest.
? For the three months ended
in fair value adjustments to our investment in Venator and related option to
sell our remaining Venator shares compared to a gain of
period. See "Note 4. Business Dispositions-Sale of Venator Interest" to our
condensed consolidated financial statements.
? Loss on early extinguishment of debt for the three months ended
2021 was
full redemption of our 2022 Senior Notes in the second quarter of 2021. See
"Note 8. Debt-Direct and Subsidiary Debt-Senior Notes" to our condensed
consolidated financial statements.
? Our income tax expense for the three months ended
to
The income tax expense of
of
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.
46--------------------------------------------------------------------------------
Table of Contents
Three months Percent
ended Change
June 30, Favorable
(Dollars in millions) 2021 2020 (Unfavorable)
Revenues
Polyurethanes $ 1,155 $ 730 58 %
Performance Products 371 228 63 %
Advanced Materials 299 192 56 %
Textile Effects 207 102 103 %
Corporate and eliminations (8 ) (5 ) NM
Total $ 2,024 $ 1,247 62 %
Huntsman Corporation
Segment adjusted EBITDA(1)
Polyurethanes $ 208 $ 31 571 %
Performance Products 88 29 203 %
Advanced Materials 58 30 93 %
Textile Effects 28 (4 ) NM
Corporate and other (48 ) (32 ) (50 )%
Total $ 334 $ 54 519 %
Huntsman International
Segment adjusted EBITDA(1)
Polyurethanes $ 208 $ 31 571 %
Performance Products 88 29 203 %
Advanced Materials 58 30 93 %
Textile Effects 28 (4 ) NM
Corporate and other (46 ) (30 ) (53 )%
Total $ 336 $ 56 500 %
--------------------------------------------------------------------------------
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 June 30, 2021 vs 2020
Average Selling Price(1)
Local Foreign Currency Mix & Sales
Currency Translation Impact Other Volumes(2)
Period-Over-Period Increase
(Decrease)
Polyurethanes 35 % 6 % 4 % 13 %
Performance Products 39 % 6 % (7 )% 25 %
Advanced Materials 8 % 7 % 16 % 25 %
Textile Effects (11 )% 8 % 14 % 92 %
Three months ended
Average Selling Price(1)
Local Foreign Currency Mix & Sales
Currency Translation Impact Other Volumes(2)
Period-Over-Period (Decrease)
Increase
Polyurethanes 6 % (1 )% (2 )% 5 %
Performance Products 19 % - (1 )% 4 %
Advanced Materials 9 % (1 )% 7 % (7 )%
Textile Effects 9 % - (1 )% (1 )%
--------------------------------------------------------------------------------
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
47--------------------------------------------------------------------------------
Table of Contents Polyurethanes The increase in revenues in our Polyurethanes segment for the three months endedJune 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and higher sales volumes. MDI average selling prices increased mostly inChina andEurope . Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the scheduled turnaround at ourRotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and higher sales volumes as well as stronger earnings from our PO/MTBE joint venture inChina , partially offset by higher raw material costs. Performance Products The increase in revenues in our Performance Products segment for the three months endedJune 30, 2021 compared to the same period of 2020 was primarily due to higher average selling prices and higher 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 also increased primarily due to stronger demand. The increase in segment adjusted EBITDA was primarily due to increased revenue and margins, partially offset by increased fixed costs. Advanced Materials The increase in revenues in our Advanced Materials segment for the three months endedJune 30, 2021 compared to the same period in 2020 was primarily due to higher sales volumes, higher average selling prices and the favorable net impact of the CVC Thermoset Specialties Acquisition, the Gabriel Acquisition and the sale of theIndia -based DIY business. See "Note 3. Business Combinations and Acquisitions" and "Note 4. Discontinued Operations and Business Dispositions" to our condensed consolidated financial statements. Excluding our recent acquisitions and divestiture and with the exception of our global aerospace business, sales volumes increased across all of our specialty 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 increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisitions. Textile Effects The increase in revenues in our Textile Effects segment for the three months endedJune 30, 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. 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 endedJune 30, 2021 , adjusted EBITDA from Corporate and other forHuntsman Corporation decreased by$16 million to a loss of$48 million from a loss of$32 million for the same period of 2020. For the three months endedJune 30, 2021 , adjusted EBITDA from Corporate and other forHuntsman International decreased by$16 million to a loss of$46 million from a loss of$30 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other was primarily due to a charge from a LIFO inventory valuation reserve adjustment and an increase in corporate overhead costs. 48
--------------------------------------------------------------------------------
Table of Contents
Six 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$376 million in net income from continuing operations attributable toHuntsman Corporation and the increase of$380 in net income from continuing operations attributable toHuntsman International was the result of the following items:
? Revenues for the six months ended
or 36%, as compared with the 2020 period. The increase was primarily due to
higher sales volumes in all our segments and higher average selling prices in
our Polyurethanes, Performance Products and Advanced Materials segments. See
"-Segment Analysis" below.
? Gross profit for the six months ended
or 79%, compared to the 2020 period. The increase resulted from higher gross
profits in all our segments. See "-Segment Analysis" below.
? Our operating expenses, net and the operating expenses, net of Huntsman
International for the six months ended
compared to the 2020 period as an increase in selling, general and
administrative expenses were largely offset by the pretax gain of
recognized in connection with the earnout provision achieved under the terms
of the sale agreement of the India -based DIY business.
? Restructuring, impairment and plant closing costs for the six 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 six months
ended
period, primarily related to an increase in income at our PO/MTBE joint
venture in China , in which we hold a 49% interest.
? For the six months ended
in fair value adjustments to our investment in Venator and related option to
sell our remaining Venator shares compared to a loss of
2020 period. See "Note 4. Business Dispositions-Sale of Venator Interest" to
our condensed consolidated financial statements.
? Loss on early extinguishment of debt for the six months ended June 30 ,
2021 was
full redemption of our 2022 Senior Notes in the second quarter of 2021. See
"Note 8. Debt-Direct and Subsidiary Debt-Senior Notes" to our condensed
consolidated financial statements.
? Our income tax expense and the income tax expense of
for the six months ended
income tax benefit of
tax 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.
49--------------------------------------------------------------------------------
Table of Contents
Six months Percent
ended Change
June 30, Favorable
2021 2020 (Unfavorable)
Revenues
Polyurethanes $ 2,223 $ 1,618 37 %
Performance Products 676 520 30 %
Advanced Materials 577 433 33 %
Textile Effects 400 282 42 %
Corporate and eliminations (15 ) (13 ) NM
Total $ 3,861 $ 2,840 36 %
Huntsman Corporation
Segment adjusted EBITDA(1)
Polyurethanes $ 415 $ 115 261 %
Performance Products 151 87 74 %
Advanced Materials 102 78 31 %
Textile Effects 53 16 231 %
Corporate and other (98 ) (77 ) 27 %
Total $ 623 $ 219 184 %
Huntsman International
Segment adjusted EBITDA(1)
Polyurethanes $ 415 $ 115 261 %
Performance Products 151 87 74 %
Advanced Materials 102 78 31 %
Textile Effects 53 16 231 %
Corporate and other (93 ) (74 ) 26 %
Total $ 628 $ 222 183 %
--------------------------------------------------------------------------------
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.
Six months
ended
Average Selling Price(1)
Local Foreign Currency Mix & Sales
Currency Translation Impact Other Volumes(2)
Period-Over-Period (Decrease) Increase
Polyurethanes 26 % 5 % - 6 %
Performance Products 21 % 5 % (5 )% 9 %
Advanced Materials 5 % 5 % 6 % 17 %
Textile Effects (8 )% 4 % 6 % 40 %
--------------------------------------------------------------------------------
(1) Excludes revenues from tolling arrangements, byproducts and raw materials.
(2) Excludes sales volumes of byproducts and raw materials.
50--------------------------------------------------------------------------------
Table of Contents Polyurethanes The increase in revenues in our Polyurethanes segment for the six months endedJune 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and higher sales volumes. MDI average selling prices increased mostly inChina andEurope . Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the scheduled turnaround at ourRotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and higher sales volumes as well as stronger earnings from our PO/MTBE joint venture inChina , partially offset by higher raw material costs Performance Products The increase in revenues in our Performance Products segment for the six months endedJune 30, 2021 compared to the same period of 2020 was primarily due to higher average selling prices and higher 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 also increased primarily due to stronger demand, in spite of theU.S. Gulf Coast Winter Storm Uri production outages and supplier raw materials shortages that occurred in the first quarter of 2021. The increase in segment adjusted EBITDA was primarily due to increased revenue and margins. Advanced Materials The increase in revenues in our Advanced Materials segment for the six months endedJune 30, 2021 compared to the same period in 2020 was primarily due to higher sales volumes, higher average selling prices and the favorable net impact of the CVC Thermoset Specialties Acquisition, the Gabriel Acquisition and the sale of theIndia -based DIY business. See "Note 3. Business Combinations and Acquisitions" and "Note 4. Discontinued Operations and Business Dispositions" to our condensed consolidated financial statements. Excluding our recent acquisitions and divestiture 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 increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisitions. Textile Effects The increase in revenues in our Textile Effects segment for the six months endedJune 30, 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 six months endedJune 30, 2021 , adjusted EBITDA from Corporate and other forHuntsman Corporation decreased by$21 million to a loss of$98 million from a loss of$77 million for the same period of 2020. For the six months endedJune 30, 2021 , adjusted EBITDA from Corporate and other forHuntsman International decreased by$19 million to a loss of$93 million from a loss of$74 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other was primarily due to a charge from a LIFO inventory valuation reserve adjustment and an increase in corporate overhead costs. 51
--------------------------------------------------------------------------------
Table of Contents
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and does
not include separate information with respect to
Cash Flows for the Six Months Ended
Net cash (used in) provided by operating activities from continuing operations for the six months endedJune 30, 2021 and 2020 was$(23) million and$45 million , respectively. The increase in net cash used in operating activities from continuing operations during the six months endedJune 30, 2021 compared with the same period in 2020 was primarily attributable to a$386 million unfavorable variance in operating assets and liabilities, partially offset by increased operating income as described in "-Results of Operations" above for the six months endedJune 30, 2021 as compared with the same period of 2020. Net cash (used in) provided by investing activities for the six months endedJune 30, 2021 and 2020 was$(369) million and$1,152 million , respectively. During the six months endedJune 30, 2021 and 2020, we paid$174 million and$116 million for capital expenditures, respectively. During the six months endedJune 30, 2021 , we received$43 million for the sale of businesses primarily due to the receipt of$28 million pursuant to an earnout provision in connection with the sale of ourIndia -based DIY business, and we paid approximately$242 million for the Gabriel Acquisition, net of cash acquired. During the six months endedJune 30, 2020 , we received approximately$1.92 billion for the sale of our Chemical Intermediates Businesses, and we paid$652 million in connection with the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition. Net cash used in financing activities for the six months endedJune 30, 2021 and 2020 was$691 million and$417 million , respectively. During the six months endedJune 30, 2021 , we redeemed in full €445 million (approximately$541 million ) in aggregate principal amount of our 2021 Senior Notes, and we redeemed in full$400 million in aggregate principal amount of our 2022 Senior Notes. Additionally, during the six months endedJune 30, 2021 , we issued$400 million in aggregate principal amount of our 2031 Senior Notes. During the six months endedJune 30, 2020 , we repaid a total of$172 million on our Revolving Credit facility and repurchased common stock for$96 million .
Free cash flow from continuing operations for the six months ended
Changes in Financial Condition
The following information summarizes our working capital position (dollars in
millions):
June 30, Less December 31, (Decrease) Percent
2021 Acquisition(1) Subtotal 2020 Increase Change
Cash and cash equivalents $ 510 $ (9 ) $ 501 $ 1,593 $ (1,092 ) (69 )%
Accounts and notes
receivable, net 1,122 (13 ) 1,109 910 199 22 %
Inventories 1,193 (26 ) 1,167 848 319 38 %
Other current assets 209 - 209 217 (8 ) (4 )%
Total current assets 3,034 (48 ) 2,986 3,568 (582 ) (16 )%
Accounts payable 1,041 (7 ) 1,034 876 158 18 %
Accrued liabilities 480 (2 ) 478 458 20 4 %
Current portion of debt 44 - 44 593 (549 ) (93 )%
Current operating lease
liabilities 49 - 49 52 (3 ) (6 )%
Total current liabilities 1,614 (9 ) 1,605 1,979 (374 ) (19 )%
Working capital $ 1,420 $ (39 ) $ 1,381 $ 1,589 $ (208 ) (13 )%
--------------------------------------------------------------------------------
(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
second quarter of 2021 compared to the fourth quarter of 2020.
? Inventories increased by
and volumes.
? Accounts payable increased by
purchases.
? Current portion of debt decreased by $549 million primarily due to the
redemption of our 2021 Senior Notes in the first half of 2021.
52--------------------------------------------------------------------------------
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.
53
--------------------------------------------------------------------------------
Table of Contents
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 ofJune 30, 2021 , we had$1,943 million of combined cash and unused borrowing capacity, consisting of$510 million in cash,$1,196 million in availability under our Revolving Credit Facility and$237 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity: Short-Term 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 $355 million to
capital expenditures with cash provided by operations.
? During the six months ended
pension and postretirement benefit plans of
expect to contribute an additional amount of approximately
these plans.
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
its 2031 Senior Notes. On
net proceeds from the offering, along with cash on hand, to redeem in full
the
additional information, see "Note 8. Debt-Direct and Subsidiary Debt-Senior
Notes" to our condensed consolidated financial statements.
? On
other things, extended the scheduled termination dates of our A/R Programs
to July 2024 .
? On a new MDI splitter being constructed in
spend approximately
to fund capital expenditures with cash provided by operations.
? 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. As ofJune 30, 2021 , we had$44 million classified as current portion of debt, including debt at our variable interest entities of$41 million and certain other short-term facilities and scheduled amortization payments totaling$3 million . We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months. As ofJune 30, 2021 , we had approximately$338 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 toU.S. taxation as a result of theU.S. Tax Reform Act. However, such repatriation may potentially be subject to certain foreign withholding taxes. 54
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source
