Huntsman Announces Strong Fourth Quarter 2017 Results; Net Leverage Reduced to 1.4x; The Board Approves a 30% Dividend Increase and Share Repurchases of up to $450 million - 23.02.18 - News

THE WOODLANDS, Texas, Feb. 23, 2018

Fourth Quarter 2017 Highlights

Net income was $287 million compared to $137 million in the prior year period and $179 million in the prior quarter.
Adjusted EBITDA was $360 million compared to $210 million in the prior year period and $340 million in the prior quarter.
Diluted income per share was $1.00 compared to $0.53 in the prior year period and $0.60 in the prior quarter.
Adjusted diluted income per share was $0.76 compared to $0.21 in the prior year period and $0.67 in the prior quarter.
Net cash provided by operating activities was $304 million. Free cash flow generation was $190 million.
Successful secondary offering of Venator (NYSE – VNTR) shares was completed in December. The net proceeds were used to pay down the remaining $511 million on Huntsman's Term Loan B due 2023, reducing net leverage to 1.4x. Huntsman's remaining ownership interest in Venator is currently approximately 53%.

Full Year 2017 Highlights

Net income was $741 million compared to $357 million in the prior year.
Adjusted EBITDA was $1,259 million compared to $997 million in the prior year.
Net cash provided by operating activities was $842 million compared to $974 million in the prior year. Free cash flow generation was $594 million compared to free cash flow of $656 million in the prior year.
Annual free cash flow target for the upcoming years is increased by $50 million to between $450 million and $650 million.
In 2017, debt was reduced by approximately $2.1 billion and Huntsman exited the year with the strongest balance sheet in its history with a net debt to EBITDA ratio of 1.4x. Since the beginning of 2016 to the end of 2017, net debt was reduced by 60%, from $4.5 billion to $1.8 billion.
The board approved a 30% increase of the quarterly dividend from $0.125 to $0.1625 per share, effective immediately, and share repurchases up to $450 million.

Three months ended

Twelve months ended

December 31,

ARIVA.DE Börsen-Geflüster

Kurse

Huntsman Corp

23,95 $

+1,18%

September 30,

December 31,

In millions, except per share amounts

2017

2016

2017

2016

Revenues

$2,203

$1,904

$ 2,169

$8,358

$ 7,518

Net income

$ 287

$ 137

$ 179

$ 741

$ 357

Adjusted net income⁽¹⁾

$ 186

$ 50

$ 164

$ 604

$ 352

Diluted income per share

$ 1.00

$ 0.53

$ 0.60

$ 2.61

$ 1.36

Adjusted diluted income per share⁽¹⁾

$ 0.76

$ 0.21

$ 0.67

$ 2.48

$ 1.47

Adjusted EBITDA⁽¹⁾

$ 360

$ 210

$ 340

$1,259

$ 997

Pro forma adjusted EBITDA⁽²⁾

$ 360

$ 204

$ 340

$1,259

$ 969

Net cash provided by operating activities

$ 304

$ 238

$ 261

$ 842

$ 974

Free cash flow⁽³⁾

$ 190

$ 133

$ 227

$ 594

$ 656

See end of press release for footnote explanations

Huntsman Corporation (NYSE: HUN) today reported fourth quarter 2017 results with revenues of $2,203 million, net income of $287 million and adjusted EBITDA of $360 million.

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

"2017 was a transformational year marked with significant milestones for our Company. We successfully separated our Pigments and Additives business, now called Venator, by IPO and completed a first follow-on offering in December. Combined with our cash flow and the $1.7 billion in net proceeds from Venator, we were able to pay down approximately $2.1 billion in debt during the year. This debt reduction enabled Huntsman to enter 2018 with the strongest balance sheet in its history, with a net debt to EBITDA ratio of 1.4x, which is well within investment grade metrics.

"With a stronger balance sheet, our focus will be to continue to invest in our operational reliability and organic growth. We expect to generate between $450 million and $650 million of free cash flow in the upcoming years. We will also pursue acquisitions that will create value, greater growth in our downstream business and stronger earnings. This morning we are enhancing our shareholder returns by increasing the dividend 30% and announcing a share repurchase program of up to $450 million."

Segment Analysis for 4Q17 Compared to 4Q16

Polyurethanes

The increase in revenues in our Polyurethanes segment for the three months ended December 31, 2017 compared to the same period in 2016 was primarily due to higher MDI average selling prices and MDI sales volumes. MDI average selling prices increased due to strong market conditions in all regions. The increase in MDI sales volumes was more than offset by a decrease in MTBE sales volumes resulting from the timing of MTBE shipments. The increase in adjusted EBITDA was primarily due higher MDI margins and sales volumes.

Performance Products

Revenues in our Performance Products segment for the three months ended December 31, 2017 compared to the same period in 2016 were essentially flat as higher average selling prices and improved mix were offset by lower sales volumes. Average selling prices increased primarily in response to higher raw material costs and favorable product mix. The decrease in sales volumes was primarily due to the sale of the European surfactants business to Innospec Inc. in 2016, as well as planned and unplanned outages at our Port Neches site. The decrease in adjusted EBITDA was primarily due to the sale of the European surfactants business and higher costs, which includes the impact of the outages in the quarter, partially mitigated by continued margin improvement in our maleic anhydride business.

Advanced Materials

The increase in revenues in our Advanced Materials segment for the three months ended December 31, 2017, compared to the same period in 2016, was primarily due to higher average sales prices. Average selling prices increased primarily due to sales mix, as sales volumes in our higher value specialty business increased across all of our core markets. This growth in revenues was partially offset by lower sales volumes in our lower value wind and other commodity markets. Adjusted EBITDA increased due to higher specialty sales volumes and lower fixed costs, partially offset by higher raw material costs.

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended December 31, 2017 compared to the same period in 2016 was primarily due to volume growth, partially offset by lower average selling prices and unfavorable product mix. Sales volumes increased in the Americas, Europe and China. Average selling prices decreased primarily due to lower raw material costs. The increase in adjusted EBITDA was primarily due to higher sales volumes.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and Other decreased by $1 million to a loss of $53 million for the three months ended December 31, 2017 compared to a loss of $52 million for the same period in 2016.

Held for Sale and Discontinued Operations

Our former Pigments and Additives segment, now known as Venator, is now classified as held for sale on our balance sheet and treated as discontinued operations on our income statement. Please refer to the Form 8-K we filed on October 31, 2017 with certain restated historical financial data. Huntsman currently owns 53% of Venator's outstanding shares.

Liquidity, Capital Resources and Outstanding Debt

During the fourth quarter of 2017, we generated adjusted free cash flow of $190 million compared to $133 for the same period 2016. As of December 31, 2017, we had $1,247 million of combined cash and unused borrowing capacity compared to $1,208 million as of December 31, 2016. For the full year 2017, including the approximate $1.7 billion debt repayment made with the proceeds of the Venator separation, we repaid approximately $2.1 billion of debt. In connection with this debt reduction, Huntsman has repaid in full its senior secured term loan facility under its Senior Credit Facilities.

During the full year 2017, we spent $282 million on capital expenditures compared to $318 million in 2016. We expect to spend approximately $325 million on capital expenditures in 2018.

Income Taxes

During the three months ended December 31, 2017, we recorded an income tax benefit of $14 million compared to income tax expense of $44 million during the same period in 2016. This 2017 fourth quarter income tax benefit is largely the result of the new U.S. tax law, including a revaluation of our U.S. deferred tax liabilities at a lower tax rate partially offset by transition taxes on the deemed repatriation of deferred foreign income. In the fourth quarter 2017, our adjusted effective tax rate was 23%. Our 2018 estimated adjusted effective tax rate will be approximately 21% - 23%, which includes the benefit of the recent U.S. income tax reform.

The Board Approved a 30% Dividend Increase and Share Repurchases of up to $450 Million

Effective February 7, 2018, our Board of Directors approved an increase in our quarterly per share dividend from $0.125 to $0.1625. In addition, it authorized our Company to repurchase up to $400 million in shares of our common stock in addition to the $50 million remaining under our September 2015 share repurchase authorization. Repurchases may be made through the open market or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are to be held in treasury at cost.

Earnings Conference Call Information

We will hold a conference call to discuss our fourth quarter 2017 financial results on Friday, February 23, 2018 at 10:00 a.m. ET.

Call-in numbers for the conference call:

U.S. participants

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