Huntsman Corporation (HUN) Q1 2023 Earnings Call Transcript

May 05, 2023 2:30 PM ETHuntsman Corporation (HUN)

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Q1: 2023-05-05 Earnings Summary

EPS of $0.20 beats by $0.06 | Revenue of $1.61B (-32.78% Y/Y) misses by $65.15M

Huntsman Corporation (NYSE:HUN) Q1 2023 Results Conference Call May 5, 2023 10:00 AM ET

Company Participants

Ivan Marcuse – Vice President of Investor Relations

Peter Huntsman – Chairman, President, and Chief Executive Officer

Phil Lister – Executive Vice President and Chief Financial Officer

Peter Huntsman

With that, let’s turn to Slide number 7. Advanced Materials reported adjusted EBITDA of $48 million in the quarter, an increase of $7 million versus fourth quarter and down versus the prior year due primarily to lower sales volumes. Destocking appears largely behind us, though we continue to see pressure on our infrastructure coatings market. Total volumes increased quarter-on-quarter and drove the adjusted EBITDA improvement.

The sales volume decline of 21% was due in part to our ongoing reduction of bulk liquid resin commodity sales. Our core specialty business was down but less than the segment average. The Americas was the weakest region due to depressed demand, primarily from our coatings, adhesives, and general industrial markets. Our aerospace business continues to demonstrate improving trends. Sales were stable compared to quarter 1 of 2022, primarily due to some supply chain constraints and timing impacting sales in the quarter.

Our order backlog is solid, and we expect growth as we move through the rest of 2023 and into 2024. The increase in demand for our products is heavily relied to widebody production rates, which have positive tailwinds with increased travel and new airplane orders from airlines. Our expectations remain that this important and profitable sector will return to pre-pandemic levels during 2024.

We continue to seek out bolt-on acquisitions for Advanced Materials to grow and expand the overall portfolio as well as improve the overall returns of the business. We are also continuing to move forward with organic investments, such as our MIRALON business, which provides an innovative technology to capture methane, turn it into hydrogen and a carbon material that can be utilized across many different markets. While still in development, we expect to aggressively scale this business over the coming years.

With lower destocking and seasonal improvements, we expect Advanced Materials to deliver improved results in the second quarter versus the first quarter. We expect second quarter adjusted EBITDA for this division to be in the range of $50 million to $56 million, with improved EBITDA margins.

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