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Huntsman Announces First Quarter 2017 Results; Raises 2017 Free Cash Flow Target to Over $450 Million
THE WOODLANDS, Texas, April 26, 2017 /PRNewswire via COMTEX/ -- Copyright (C) 2017 PR Newswire. All rights reserved

First Quarter 2017 Highlights

-- Net income was $92 million compared to $62 million in the prior year period and $137 million in the prior quarter.

-- Adjusted EBITDA was $329 million compared to $274 million in the prior year period and $256 million in the prior quarter.

-- Diluted income per share was $0.31 compared to $0.24 in the prior year period and $0.53 in the prior quarter.

-- Adjusted diluted income per share was $0.57 compared to $0.37 in the prior year period and $0.30 in the prior quarter.

-- Net cash provided by operating activities was $93 million. Free cash flow generation was $82 million.

-- On April 25, 2017, we made a $100 million early repayment of debt.

-- We are committed to an IPO or spin of our Pigments business in the summer of 2017.

Three months ended March 31, December 31, In millions, except per share amounts 2017 2016 2016 Revenues $2,469 $2,355 $ 2,395 Net income $ 92 $ 62 $ 137 Adjusted net income(1) $ 139 $ 88 $ 72 Diluted income per share $ 0.31 $ 0.24 $ 0.53 Adjusted diluted income per share(1) $ 0.57 $ 0.37 $ 0.30 Adjusted EBITDA(1) $ 329 $ 274 $ 256 Pro forma adjusted EBITDA(2) $ 329 $ 267 $ 250 Net cash provided by operating activities $ 93 $ 88 $ 240 Free cash flow(3) $ 82 $ (13) $ 117 See end of press release for footnote explanations

Huntsman Corporation (NYSE: HUN) today reported first quarter 2017 results with revenues of $2,469 million, net income of $92 million and adjusted EBITDA of $329 million.

Peter R. Huntsman, our President and CEO, commented:

"Within the first quarter we saw positive business trends develop such that earnings for all our divisions exceeded early quarter expectations. Additionally, it is noteworthy that our combined non-pigment businesses experienced year-over-year EBITDA growth. Net income was $92 million and adjusted EBITDA improved by $62 million to $329 million compared to the prior year after taking into consideration the fourth quarter 2016 sale of our European surfactants business. Our cash flow provided from operating activities was $93 million. Strong earnings fueled free cash flow delivery of $82 million which includes $54 million of insurance proceeds, an improvement of $95 million compared to the prior year first quarter. We continue to strengthen our balance sheet and on April 25, 2017 we voluntarily repaid $100 million of debt. In total, we have repaid approximately $670 million over the last year. As a result of the strong first quarter earnings and our improving outlook for the remainder of the year, we now expect to generate more than $450 million of free cash flow in 2017."

"We continue our efforts to separate our Pigments and Additives division (known as Venator) and are targeting an IPO or spin during this upcoming summer."

Segment Analysis for 1Q17 Compared to 1Q16

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended March 31, 2017 compared to the same period of 2016 was primarily due to higher average selling prices. MDI average selling prices increased in response to higher raw material costs and continued strong market conditions. MTBE average selling prices increased primarily as a result of higher pricing for high octane gasoline. MDI and MTBE volumes were flat compared to the same period of 2016. The increase in segment adjusted EBITDA was primarily due to higher MDI margins, partially offset by lower MTBE margins.

Performance Products

The decrease in revenues in our Performance Products segment for the three months ended March 31, 2017 compared to the same period of 2016 was due to lower sales volumes because of the sale of the European surfactants business to Innospec Inc. on December 30, 2016, partially offset by higher sales volumes in largely all of our businesses as well as higher average selling prices. On a Pro-forma basis, volumes increased 10%. The decrease in segment adjusted EBITDA was primarily due to the sale of the European surfactants business and lower margins in our amines and maleic anhydride businesses, partially offset by higher sales volumes and lower fixed costs.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the three months ended March 31, 2017 compared to the same period of 2016 was primarily due to lower sales volumes. Sales volumes decreased primarily due to our withdrawal from certain low margin business in the coatings and construction markets and competitive pressures in the wind market, partially offset by growth in certain higher value businesses. The decrease in segment adjusted EBITDA was due to lower sales volumes, higher raw material costs, and adverse fixed costs associated with optimizing our inventory to lower levels.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended March 31, 2017 compared to the same period of 2016 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased in both textile chemicals and dyes, particularly in our Asia, Europe and South America regions. Average selling prices decreased primarily in response to lower raw material costs and product mix. The increase in segment adjusted EBITDA was primarily due to higher volumes and lower fixed costs.

Pigments and Additives

In the Pigments and Additives division revenues were essentially unchanged for the three months ended March 31, 2017 compared to the same period of 2016 as higher average local currency selling prices were offset by lower sales volumes from the fire at our Pori, Finland titanium dioxide facility. Average selling prices increased primarily due to improved business conditions for titanium dioxide. Sales volumes increased within our complementary performance additives business. The increase in adjusted EBITDA was primarily due to higher average selling prices for titanium dioxide and lower costs resulting from restructuring savings, partially offset by approximately $15 million in lower EBITDA resulting from the fire at our Pori, Finland titanium dioxide facility.

Corporate, LIFO and other

Adjusted EBITDA for Corporate, LIFO and Other decreased by $1 million to a loss of $43 million for the three months ended March 31, 2017 compared to a loss of $42 million for the same period in 2016. The slight decrease in adjusted EBITDA was primarily a result of a decrease in LIFO inventory valuation income, partially offset by an increase in income from benzene sales.

Separation Update

We intend to pursue a possible initial public offering of Venator. This is our preferred route to separate Venator as it is intended to provide significantly more value for Huntsman Shareholders by allowing for greater deleveraging of Huntsman. We plan on leaving our Form 10 on file for a potential spin in the event that the IPO market conditions become unfavorable. Either way, we are working toward an initial public offering or spin during the upcoming summer months of 2017.

Liquidity, Capital Resources and Outstanding Debt

As of March 31, 2017, we had $1,292 million of combined cash and unused borrowing capacity compared to $1,208 million as of December 31, 2016.

During the three months ended March 31, 2017 we spent $74 million on capital expenditures compared to $99 million in 2016. We expect to spend approximately $380 million on capital expenditures in 2017 net of capital reimbursements. On April 21, 2017 we amended our AR securitization facilities, which among other things extended our maturities from 2018 to 2020. On April 25, 2017, we made a $100 million early repayment of debt on our term loan B due 2019.

Income Taxes

During the three months ended March 31, 2017, we recorded an income tax expense of $23 million. During the same period, we paid $8 million in cash for income taxes.

In the first quarter 2017, our adjusted effective tax rate was 19%. We expect our long term adjusted effective tax rate will be approximately 30%. We expect our 2017 adjusted effective tax rate to be approximately 25 - 30%.

Earnings Conference Call Information

We will hold a conference call to discuss our first quarter 2017 financial results on Wednesday, April 26, 2017 at 9:00 a.m. ET.

In order to facilitate the registration process, you may use the following link to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. You may pre-register at any time, including up to and after the call start time. To pre-register, please go to: https://www.theconferencingservice.com/prereg/key.process?key=PYK3Y9X8X.

Webcast Information

The conference call will be available via webcast and can be accessed from the company's website at ir.huntsman.com.

Replay Information

The conference call will be available for replay beginning April 26, 2017 and ending May 3, 2017.

Upcoming Conferences

During the second quarter a member of management is expected to present at the Wells Fargo Chemical Conference on May 9, 2017, the Goldman Sachs Basic Materials Conference on May 16, 2017 and Vertical Research Partners Materials Conference June 14-15, 2017. A webcast of the presentation, if applicable, along with accompanying materials will be available at ir.huntsman.com.

About Huntsman:Huntsman Corporation is a publicly traded global manufacturer and marketer of differentiated chemicals with 2016 revenues of approximately $10 billion. Our chemical products number in the thousands and are sold worldwide to manufacturers serving a broad and diverse range of consumer and industrial end markets. We operate more than 100 manufacturing and R&D facilities in approximately 30 countries and employ approximately 15,000 associates within our 5 distinct business divisions including the Pigments and Additives division that we intend to IPO or spin-off as Venator Materials Corporation. For more information about Huntsman, please visit the company's website at www.huntsman.com.

Social Media:Twitter: twitter.com/Huntsman_CorpFacebook: www.facebook.com/huntsmancorpLinkedIn: www.linkedin.com/company/huntsman

Cautionary StatementThis release shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended.

Forward-Looking Statements:Statements in this release that are not historical are forward-looking statements. These statements are based on management's current beliefs and expectations. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as discussed in the Huntsman companies' filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of Huntsman's operations, including any delay of, or other negative developments affecting, the IPO or spin-off of Venator Materials Corporation, the ability to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, and other financial, economic, competitive, environmental, political, legal, regulatory and technological factors. The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by applicable laws.

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SOURCE Huntsman Corporation

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