The Urethane Blog

Huntsman Q3 Results

Huntsman Announces Improved Third Quarter 2021 Earnings; Repurchases Approximately $102 million of Shares During the Quarter; Wins Significant Arbitration Award Against Albemarle

Download as PDF October 29, 2021 6:00am EDT

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THE WOODLANDS, Texas, Oct. 29, 2021 /PRNewswire/ —

Third Quarter Highlights

  • Third quarter 2021 net income of $225 million compared to net income of $57 million in the prior year period; third quarter 2021 diluted earnings per share of $0.94 compared to diluted earnings per share of $0.22 in the prior year period.
  • Third quarter 2021 adjusted net income of $239 million compared to adjusted net income of $70 million in the prior year period; third quarter 2021 adjusted diluted earnings per share of $1.08 compared to adjusted diluted earnings per share of $0.32 in the prior year period.
  • Third quarter 2021 adjusted EBITDA of $371 million compared to $188 million in the prior year period.
  • Third quarter 2021 net cash provided by operating activities from continuing operations was $186 million. Free cash flow from continuing operations was $110 million for the third quarter 2021.
  • Balance sheet is strong with a net leverage of 0.9x and total liquidity of approximately $2 billion.
  • Repurchased approximately 4 million shares for approximately $102 million in the third quarter 2021.
  • On October 28, 2021, Huntsman won an arbitration award against Albemarle for fraud and breach of contract in excess of $600 million of which the Company expects to net in excess of $400 million after attorney’s fees.
Three months endedNine months ended
September 30,September 30,
In millions, except per share amounts2021202020212020
Revenues$     2,285$     1,510$     6,146$     4,350
Net income$       225$         57$       497$       706
Adjusted net income(1)$       239$         70$       577$       105
Diluted income per share$      0.94$      0.22$      2.02$      3.13
Adjusted diluted income per share(1)$      1.08$      0.32$      2.60$      0.47
Adjusted EBITDA(1)$       371$       188$       994$       407
Net cash provided by operating activities from continuing operations$       186$         65$       163$       110
Free cash flow from continuing operations(2)$       110$         11$        (87)$        (60)
Adjusted free cash flow from continuing operations(6)$       110$       189$        (84)$       128
See end of press release for footnote explanations and reconciliations of non-GAAP measures.

Huntsman Corporation (NYSE: HUN) today reported third quarter 2021 results with revenues of $2,285 million, net income of $225 million, adjusted net income of $239 million and adjusted EBITDA of $371 million. 

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

“We are pleased with the strong earnings we delivered in the third quarter.  Despite pockets of disruption in our supply chain and cost inflation, we see strong pent-up demand across most of our businesses with favorable pricing dynamics. In addition, we are benefiting from cost reduction programs and synergies from the acquisitions we completed over the past 18 months. As indicated in our second quarter earnings call, we resumed share repurchases and we used free cash flow generated in the quarter to repurchase approximately $102 million of our stock during the quarter at an average price of $25.64 per share.

Since 2017, we have divested approximately 40% of our portfolio, including much of our commodity product lines, while adding numerous differentiated and higher margin products to the portfolio through bolton acquisitions. Our investment grade balance sheet remains strong and, together with our cash generation, provides us with the opportunity to continue to return capital to shareholders and further our portfolio transformation with additional bolton acquisitions when they make strategic and financial sense. In addition, we are investing in high return organic projects that will increase our total returns and improve margins over the next 24 to 36 months.

I also want to recognize the efforts of our corporate leadership team as well as our Board of Directors in connection with our arbitration award announced yesterday afternoon. This was a multi-year effort that could not have been won without their support, integrity and cohesion. 

We have a bright future, remain focused on improving the quality of our margins, and look forward to discussing the Company’s strategy at our Investor Day on November 9th in New York City.”

Segment Analysis for 3Q21 Compared to 3Q20

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended September 30, 2021, compared to the same period of 2020 was largely due to higher MDI average selling prices and slightly higher sales volumes. MDI average selling prices increased in all our regions. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the impact of Hurricane Ida at our Geismar, Louisiana facility that occurred in the third quarter of 2021. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and slightly higher sales volumes as well as stronger earnings from our PO/MTBE joint venture in China, partially offset by higher raw material costs. 

Performance Products

The increase in revenues in our Performance Products segment for the three months ended September 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 ended September 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 Gabriel Acquisition and the sale of the India-based DIY business. Excluding our recent acquisition and divestiture, 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 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 acquisition.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended September 30, 2021, compared to the same period of 2020 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in the North Asia and Americas regions. Average selling prices increased primarily in response to higher freight and logistics costs. The increase in segment adjusted EBITDA was primarily due to higher sales revenues, partially offset by higher fixed costs.

Corporate, LIFO and other

For the three months ended September 30, 2021, adjusted EBITDA from Corporate and other decreased by $11 million to a loss of $48 million from a loss of $37 million for the same period of 2020.

Liquidity and Capital Resources

During the three months ended September 30, 2021, our adjusted free cash flow from continuing operations was $110 million as compared to $189 million in the prior year period.  As of September 30, 2021, we had approximately $2 billion of combined cash and unused borrowing capacity.

During the three months ended September 30, 2021, we spent $76 million on capital expenditures as compared to $54 million in the same period of 2020.  For 2021, we expect to spend approximately $350 million on capital expenditures.

Income Taxes

In the third quarter 2021, our adjusted effective tax rate was 15%.  For 2021, our adjusted effective tax rate is expected to be approximately 19% to 20%.  We continue to expect our forward adjusted effective tax rate will be approximately 22% to 24% 

Albemarle Litigation

On October 28, 2021, a panel of three former federal judges sitting as arbitrators found that Albemarle (and its predecessor Rockwood) had defrauded Huntsman in connection with the sale of its pigments business in 2014, breached the contract under which the business was sold, and awarded Huntsman in excess of $600 million for the fraud and breach, inclusive of punitive damages and statutory interest at 9% of which the Company expects to net in excess of $400 million after attorney’s fees. The award is subject to confirmation and limited appeal in the New York state court.

Earnings Conference Call Information

We will hold a conference call to discuss our third quarter 2021 financial results on Friday October 29, 2021 at 10:00 a.m. ET.

Webcast link: https://78449.themediaframe.com/dataconf/productusers/hun/mediaframe/46827/indexl.html

Participant dial-in numbers:
Domestic callers:   (877) 402-8037
International callers: (201) 378-4913

The conference call will be accompanied by presentation slides that will be accessible via the webcast link and Huntsman’s investor relations website, www.huntsman.com/investors.  Upon conclusion of the call, the webcast replay will be accessible via Huntsman’s website.

https://www.huntsman.com/news/media-releases/detail/499/huntsman-announces-improved-third-quarter-2021-earnings