Huntsman Releases First Quarter 2012 Results and Reports Record Earnings: $397 Million Adjusted EBITDA, $0.74 Adjusted EPS
Tuesday , May 01, 2012 06:00ET
THE WOODLANDS, Texas, May 1, 2012 /PRNewswire/ --
First Quarter 2012 Highlights
-- Revenues improved 9% compared to the prior year period.
-- Net income attributable to Huntsman Corporation increased to $163
million compared to $62 million in the prior year period.
-- Adjusted EBITDA improved 31% to $397 million compared to the prior year
period.
-- Adjusted diluted income per share improved 64% to $0.74 compared to the
prior year period.
Three months ended
------------------
March 31, December 31,
---------
In millions, except
per share amounts,
unaudited 2012 2011 2011
------------------- ---- ---- ----
Revenues $2,913 $2,679 $2,632
Net income
attributable to
Huntsman
Corporation $163 $62 $105
Adjusted net
income(1) $177 $110 $68
Diluted income per
share $0.68 $0.26 $0.44
Adjusted diluted
income per share(1) $0.74 $0.45 $0.28
EBITDA(1) $390 $239 $273
Adjusted EBITDA(1) $397 $304 $243
See end of press release for footnote explanations
Huntsman Corporation (NYSE: HUN) today reported first quarter 2012 results with revenues of $2,913 million and adjusted EBITDA of $397 million.
Peter R. Huntsman, our President and CEO, commented:
"Our first quarter 2012 earnings represented a record performance. Improvements in our MDI selling prices and attractive margins in our PO/MTBE business were notable.
There are still considerable financial benefits forthcoming from our restructuring efforts. Notwithstanding certain economic challenges in various parts of the world, I am most optimistic about our earnings potential."
Segment Analysis for 1Q12 Compared to 1Q11
Polyurethanes
The increase in revenues in our Polyurethanes division for the three months ended March 31, 2012 compared to the same period in 2011 was primarily due to higher average selling prices and higher sales volumes. MDI average selling prices increased primarily in response to improved demand, while PO/MTBE average selling prices increased primarily in response to improved demand and industry supply constraints. MDI sales volumes increased as a result of improved demand in all regions and across all major markets with the exception of appliances. PO/MTBE sales volumes increased due to strong demand. The increase in adjusted EBITDA was primarily due to higher contribution margins and higher sales volumes.
Performance Products
The increase in revenues in our Performance Products division for the three months ended March 31, 2012 compared to the same period in 2011 was primarily due to higher sales volumes partially offset by lower average selling prices. Sales volumes increased primarily due to the consolidation of our maleic anhydride joint venture with Sasol in Germany, partially offset by lower demand for amines and surfactants. Average selling prices decreased primarily due to the sales mix, competitive market pressure for certain amines and in response to lower raw material costs for certain products. The decrease in adjusted EBITDA was primarily due to lower contribution margins and higher manufacturing and selling, general and administrative costs.
Advanced Materials
The decrease in revenues in our Advanced Materials division for the three months ended March 31, 2012 compared to the same period in 2011 was primarily due to lower average selling prices partially offset by higher sales volumes. Average selling prices decreased primarily due to sales mix and the strength of the U.S. dollar against major international currencies. Sales volumes increased across most regions, primarily due to strong demand in our base resins business in Europe, partially offset by lower demand in the wind energy market in the Asia Pacific region. The decrease in adjusted EBITDA was primarily due to lower contribution margins.
Textile Effects
The decrease in revenues in our Textile Effects division for the three months ended March 31, 2012 compared to the same period in 2011 was primarily due to lower average selling prices as sales volumes were essentially unchanged. Average selling prices decreased primarily due to the strength of the U.S. dollar against major international currencies and sales mix. The decrease in adjusted EBITDA was primarily due to higher manufacturing costs.
Pigments
The increase in revenues in our Pigments division for the three months ended March 31, 2012 compared to the same period in 2011 was due to higher average selling prices partially offset by lower sales volumes. Average selling prices increased in all regions of the world primarily as a result of higher raw material costs. Sales volumes decreased primarily due to lower global demand and continued customer destocking, particularly in the Asia Pacific region. The increase in adjusted EBITDA in our Pigments division was primarily due to higher contribution margins.
Corporate, LIFO and Other
Corporate, LIFO and other includes unallocated corporate overhead, LIFO inventory valuation reserve adjustments and unallocated foreign exchange gains and losses. Adjusted EBITDA from Corporate, LIFO and other increased by $5 million to a loss of $40 million for the three months ended March 31, 2012 compared to a loss of $45 million for the same period in 2011. The increase in adjusted EBITDA was primarily the result of an $11 million decrease in LIFO inventory valuation expense ($3 million of income in 2012 compared to $8 million of expense in 2011) partially offset by an increase in unallocated foreign currency losses of $5 million ($3 million loss in 2012 compared to $2 million gain in 2011).
Income Taxes
During the three months ended March 31, 2012 we recorded income tax expense of $60 million. Our adjusted effective income tax rate for the three months ended March 31, 2012 was approximately 26%. We expect our long term effective income tax rate to be approximately 30 - 35%. We have tax valuation allowances in countries such as Switzerland and the United Kingdom where our Textile Effects and Pigments businesses have meaningful operations. The increase in profitability from our Pigments business has had a significant impact on reducing our adjusted effective income tax rate. During the three months ended March 31, 2012, we paid $13 million in cash for income taxes.
Liquidity, Capital Resources and Outstanding Debt
As of March 31, 2012, we had $1,109 million of combined cash and unused borrowing capacity compared to $1,043 million at December 31, 2011. For the three months ended March 31, 2012, our primary net working capital increased by $118 million. During this period, we redeemed approximately $86 million of our 7.5% senior subordinated notes due 2015 and repaid all of the approximately $27 million outstanding under our Australia credit facility.
During the first quarter 2012, we successfully completed an amendment of our senior secured credit facilities that increased the capacity of our revolving credit facility to $400 million and extended the maturity of our revolving credit facility and $346 million of our term loan B facility from 2014 to 2017.
On March 14, 2012, Moody's Investors Service upgraded our corporate credit rating to Ba3. On April 26, 2012, Standard & Poor's Ratings Services upgraded our corporate credit rating to BB.
Total capital expenditures for the three months ended March 31, 2012 were $81 million. We expect to spend approximately $425 to $450 million on capital expenditures in 2012 which approximates our annual depreciation and amortization.
