Second Quarter Highlights

• Second quarter 2020 net loss of $59 million compared to net income of $118 million in the prior year period; second quarter 2020 loss per share of $0.28 compared to diluted earnings per share of $0.47 in the prior year period.
• Second quarter 2020 adjusted net loss of $30 million compared to adjusted net income of $108 million in the prior year period; second quarter 2020 adjusted loss per share of $0.14 compared to diluted earnings per share of $0.47 in the prior year period.
• Second quarter 2020 adjusted EBITDA of $54 million compared to $245 million in the prior year period.
• Second quarter 2020 net cash provided by operating activities was $85 million. Free cash flow from continuing operations was $30 million for the second quarter 2020 and adjusted free cash flow from continuing operations was $38 million.
• Balance sheet remains strong with a net leverage of 1.5x and total liquidity is approximately $2.6 billion.
• The CVC Thermoset Specialties acquisition closed on May 18, 2020. The integration remains on track and the Company expects to achieve the targeted annualized synergies of approximately $15 million by the end of 2021.
• Including approximately $35 million of synergies relating to recent acquisitions, annualized savings in excess of $100 million are targeted by the end of 2021.

Huntsman Corporation (NYSE: HUN) today reported second quarter 2020 results with revenues of $1,247 million, net loss of $59 million, adjusted net loss of $30 million and adjusted EBITDA of $54 million.

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

“We were fortunate to have been more prepared than ever as we entered the second quarter in an unprecedented global economic crisis, with little to no visibility.  With our transformed balance sheet, there was no need to access capital markets and we completed the quarter with $2.6 billion of overall liquidity and generated positive free cash flow.  We remain focused on what we can control and have accelerated and improved integration plans for our recent acquisitions, CVC Thermoset Specialties and Icynene-Lapolla.  The total annualized targeted synergies for these acquisitions, to be achieved by the end of 2021, is now $35 million.  Including these synergies, we have plans to achieve in excess of $100 million of targeted annualized savings by year end 2021. While the ongoing related global effects of COVID-19 remain uncertain and visibility continues to be poor, we see improving trends within most of our major markets and are optimistic that the worst of this economic slowdown is behind us.”

Segment Analysis for 2Q20 Compared to 2Q19

Polyurethanes

The decrease in revenues in our Polyurethanes segment for the three months ended June 30, 2020 compared to the same period of 2019 was due to lower MDI average selling prices and lower overall polyurethanes sales volumes. MDI average selling prices decreased across most major markets in relation to the global economic slowdown resulting from the COVID-19 pandemic. Overall polyurethanes sales volumes decreased in primarily relation to the global economic slowdown and the resulting decrease in demand across most major markets, partially offset by growth in China during the second quarter of 2020 and additional sales volumes in connection with the Icynene-Lapolla acquisition. The decrease in segment adjusted EBITDA was primarily due to lower component and polymeric systems margins largely driven by lower MDI pricing and lower polyurethanes sales volumes.

Performance Products

The decrease in revenues in our Performance Products segment for the three months ended June 30, 2020 compared to the same period of 2019 was due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily in response to lower raw material costs. Sales volumes decreased primarily in relation to the global economic slowdown. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, partially offset by higher margins in our performance amines business and lower fixed costs.

Advanced Materials

The decrease in revenues in our Advanced Materials segment for the three months ended June 30, 2020 compared to the same period in 2019 was due to lower sales volumes while overall average selling prices remained unchanged. Sales volumes decreased significantly across all markets and regions, except in our global power market, in primarily relation to the global economic slowdown and customer destocking.  Average selling prices increased in local currencies, offset by the impact of a stronger U.S. dollar against major international currencies. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, partially offset by lower fixed costs.

Textile Effects

The decrease in revenues in our Textile Effects segment for the three months ended June 30, 2020 compared to the same period of 2019 was due to lower sales volumes and sales mix changes. Sales volumes decreased primarily due to significantly weaker demand in relation to the global economic slowdown. Average selling prices in local currencies increased mainly due to geographical mix change, offset by the impact of a stronger U.S. dollar against major international currencies. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and lower capitalization of indirect costs because of reduced production, partially offset by lower raw material costs and lower fixed costs.

Corporate, LIFO and other

For the three months ended June 30, 2020, adjusted EBITDA from Corporate and other for Huntsman Corporation increased by $4 million to a loss of $32 million from a loss of $36 million for the same period of 2019.

Liquidity and Capital Resources

During the three months ended June 30, 2020, our adjusted free cash flow from continuing operations was $38 million as compared to $160 million in the prior year period.  As of June 30, 2020, we had $2.6 billion of combined cash and unused borrowing capacity.

During the three months ended June 30, 2020, we spent $55 million on capital expenditures as compared to $57 million in the same period of 2019.  For 2020 we expect to spend between approximately $225 million and $235 million on capital expenditures.

On May 18, 2020 we completed our acquisition of CVC Thermoset Specialties and paid approximately $300 million from available cash.  In the second half of 2020, we expect to pay from available cash approximately $365 million in taxes related to the sale of our Chemical Intermediates and Surfactants businesses which was completed on January 3, 2020.

As of the end of the second quarter 2020, we have approximately $420 million remaining on our existing $1 billion multiyear share repurchase program. Our share repurchase program remains suspended.

Income Taxes

In the second quarter 2020, our adjusted effective tax rate was 18%.  For 2020, our adjusted effective tax rate is expected to be approximately 20%.  We expect our forward adjusted effective tax rate will be approximately 22% – 24%.

Source: Huntsman 

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