Huntsman CORP (HUN)
SIC breadcrumb: Manufacturing > Chemicals And Allied Products > SIC 2800 Chemicals & Allied Products
SEC company page: https://www.sec.gov/edgar/browse/?CIK=1307954. Latest filing source: 0001437749-26-004524.
Informational only - descriptive public-record data, not investment advice.
Business
Read HUN's verbatim Item 1 Business section from its latest 10-K: Business.
Risk Factors
Read HUN's verbatim Item 1A Risk Factors from its latest 10-K: Risk Factors.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 5,683,000,000 | USD | 2025 | 2026-02-18 |
| Net income | -284,000,000 | USD | 2025 | 2026-02-18 |
| Assets | 7,015,000,000 | USD | 2025 | 2026-02-18 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-18. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001307954.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.
| Metric | 2011 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 7,518,000,000 | 6,845,000,000 | 7,604,000,000 | 6,797,000,000 | 5,421,000,000 | 7,670,000,000 | 8,023,000,000 | 6,111,000,000 | 6,036,000,000 | 5,683,000,000 | ||
| Net income | 326,000,000 | 636,000,000 | 337,000,000 | 562,000,000 | 1,034,000,000 | 1,045,000,000 | 460,000,000 | 101,000,000 | -189,000,000 | -284,000,000 | ||
| Operating income | 663,000,000 | 729,000,000 | 827,000,000 | 469,000,000 | 432,000,000 | 731,000,000 | 672,000,000 | 84,000,000 | -25,000,000 | -131,000,000 | ||
| Gross profit | 1,518,000,000 | 1,651,000,000 | 1,764,000,000 | 1,382,000,000 | 977,000,000 | 1,584,000,000 | 1,546,000,000 | 906,000,000 | 866,000,000 | 751,000,000 | ||
| Diluted EPS | 1.36 | 2.61 | 1.39 | 2.44 | 4.66 | 4.72 | 2.27 | 0.57 | -1.10 | -1.65 | ||
| Operating cash flow | 1,088,000,000 | 1,219,000,000 | 1,207,000,000 | 897,000,000 | 253,000,000 | 952,000,000 | 914,000,000 | 209,000,000 | 263,000,000 | 289,000,000 | ||
| Capital expenditures | 318,000,000 | 234,000,000 | 251,000,000 | 274,000,000 | 237,000,000 | 326,000,000 | 272,000,000 | 230,000,000 | 184,000,000 | 173,000,000 | ||
| Dividends paid | 120,000,000 | 120,000,000 | 156,000,000 | 150,000,000 | 144,000,000 | 159,000,000 | 171,000,000 | 169,000,000 | 174,000,000 | 146,000,000 | ||
| Share buybacks | 50,000,000 | 100,000,000 | 277,000,000 | 208,000,000 | 96,000,000 | 200,000,000 | 1,005,000,000 | 349,000,000 | 4,000,000 | 0.00 | ||
| Assets | 9,189,000,000 | 10,244,000,000 | 7,953,000,000 | 8,320,000,000 | 8,713,000,000 | 9,392,000,000 | 8,220,000,000 | 7,248,000,000 | 7,114,000,000 | 7,015,000,000 | ||
| Liabilities | 7,722,000,000 | 6,873,000,000 | 5,204,000,000 | 5,496,000,000 | 5,040,000,000 | 4,833,000,000 | 4,380,000,000 | 3,770,000,000 | 3,951,000,000 | 4,058,000,000 | ||
| Stockholders' equity | 1,287,000,000 | 2,620,000,000 | 2,520,000,000 | 2,687,000,000 | 3,519,000,000 | 4,378,000,000 | 3,624,000,000 | 3,251,000,000 | 2,959,000,000 | 2,750,000,000 | ||
| Cash and cash equivalents | 385,000,000 | 470,000,000 | 340,000,000 | 525,000,000 | 1,593,000,000 | 1,041,000,000 | 654,000,000 | 540,000,000 | 340,000,000 | 429,000,000 | ||
| Free cash flow | 770,000,000 | 985,000,000 | 956,000,000 | 623,000,000 | 16,000,000 | 626,000,000 | 642,000,000 | -21,000,000 | 79,000,000 | 116,000,000 |
Ratios
| Metric | 2011 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net margin | 4.34% | 9.29% | 4.43% | 8.27% | 19.07% | 13.62% | 5.73% | 1.65% | -3.13% | -5.00% | ||
| Operating margin | 8.82% | 10.65% | 10.88% | 6.90% | 7.97% | 9.53% | 8.38% | 1.37% | -0.41% | -2.31% | ||
| Return on equity | 25.33% | 24.27% | 13.37% | 20.92% | 29.38% | 23.87% | 12.69% | 3.11% | -6.39% | -10.33% | ||
| Return on assets | 3.55% | 6.21% | 4.24% | 6.75% | 11.87% | 11.13% | 5.60% | 1.39% | -2.66% | -4.05% | ||
| Liabilities / equity | 6.00 | 2.62 | 2.07 | 2.05 | 1.43 | 1.10 | 1.21 | 1.16 | 1.34 | 1.48 | ||
| Current ratio | 2.00 | 1.83 | 1.84 | 1.87 | 1.80 | 1.92 | 1.85 | 1.97 | 1.36 | 1.30 |
Industry Peer Context
Net margin peer context
Operating margin peer context
ROE peer context
ROA peer context
Financial Bridges
Income statement bridge from reported figures
Figure provenance: SEC companyfacts FY 2025. Revenue: accession 0001437749-26-004524; concept Revenues; source concepts us-gaap:Revenues | Gross profit: accession 0001437749-26-004524; concept GrossProfit; source concepts us-gaap:GrossProfit | Operating income: accession 0001437749-26-004524; concept OperatingIncomeLoss; source concepts us-gaap:OperatingIncomeLoss | Net income: accession 0001437749-26-004524; concept NetIncomeLoss; source concepts us-gaap:NetIncomeLoss
Free cash flow = operating cash flow - capital expenditures
Figure provenance: SEC companyfacts FY 2025. Operating cash flow: accession 0001437749-26-004524; concept NetCashProvidedByUsedInOperatingActivities; source concepts us-gaap:NetCashProvidedByUsedInOperatingActivities | Capital expenditures: accession 0001437749-26-004524; concept PaymentsToAcquirePropertyPlantAndEquipment; source concepts us-gaap:PaymentsToAcquirePropertyPlantAndEquipment | Free cash flow: accession 0001437749-26-004524; concept NetCashProvidedByUsedInOperatingActivities - PaymentsToAcquirePropertyPlantAndEquipment; source concepts us-gaap:NetCashProvidedByUsedInOperatingActivities; us-gaap:PaymentsToAcquirePropertyPlantAndEquipment
Financial Charts
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: Revenues. Source concepts: us-gaap:Revenues.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: NetIncomeLoss. Source concepts: us-gaap:NetIncomeLoss.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: OperatingIncomeLoss. Source concepts: us-gaap:OperatingIncomeLoss.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: GrossProfit. Source concepts: us-gaap:GrossProfit.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: EarningsPerShareDiluted. Source concepts: us-gaap:EarningsPerShareDiluted.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: NetCashProvidedByUsedInOperatingActivities. Source concepts: us-gaap:NetCashProvidedByUsedInOperatingActivities.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: PaymentsToAcquirePropertyPlantAndEquipment. Source concepts: us-gaap:PaymentsToAcquirePropertyPlantAndEquipment.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: PaymentsOfDividendsCommonStock. Source concepts: us-gaap:PaymentsOfDividendsCommonStock.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: PaymentsForRepurchaseOfCommonStock. Source concepts: us-gaap:PaymentsForRepurchaseOfCommonStock.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: Assets. Source concepts: us-gaap:Assets.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: Liabilities. Source concepts: us-gaap:Liabilities.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: StockholdersEquity. Source concepts: us-gaap:StockholdersEquity.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: CashAndCashEquivalentsAtCarryingValue. Source concepts: us-gaap:CashAndCashEquivalentsAtCarryingValue.
Figure provenance: SEC companyfacts. Latest point: FY 2025 ended 2025-12-31; accession 0001437749-26-004524; filed 2026-02-18. Concept: NetCashProvidedByUsedInOperatingActivities - PaymentsToAcquirePropertyPlantAndEquipment. Source concepts: us-gaap:NetCashProvidedByUsedInOperatingActivities; us-gaap:PaymentsToAcquirePropertyPlantAndEquipment.
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001307954.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-06-30 | 1.10 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | 0.50 | reported discrete quarter | ||
| 2022-Q4 | 2022-12-31 | 1,650,000,000 | -91,000,000 | derived Q4 = FY annual - nine-month YTD | |
| 2023-Q1 | 2023-03-31 | 1,606,000,000 | 153,000,000 | 0.83 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 | 1,596,000,000 | 19,000,000 | 0.11 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 1,506,000,000 | 0.00 | 0.00 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 1,403,000,000 | -71,000,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-31 | 1,470,000,000 | -37,000,000 | -0.22 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 1,574,000,000 | 22,000,000 | 0.13 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 1,540,000,000 | -33,000,000 | -0.19 | reported discrete quarter |
| 2025-Q1 | 2025-03-31 | 1,410,000,000 | -5,000,000 | -0.03 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 1,458,000,000 | -158,000,000 | -0.92 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 1,460,000,000 | -25,000,000 | -0.14 | reported discrete quarter |
| 2026-Q1 | 2026-03-31 | 1,420,000,000 | -53,000,000 | -0.31 | reported discrete quarter |
Quarterly Charts
Figure provenance: SEC companyfacts. Latest point: FY 2026 ended 2026-03-31; accession 0001437749-26-014346; filed 2026-05-01. Concept: RevenueFromContractWithCustomerExcludingAssessedTax. Source concepts: us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax.
Figure provenance: SEC companyfacts. Latest point: FY 2026 ended 2026-03-31; accession 0001437749-26-014346; filed 2026-05-01. Concept: NetIncomeLoss. Source concepts: us-gaap:NetIncomeLoss.
Figure provenance: SEC companyfacts. Latest point: FY 2026 ended 2026-03-31; accession 0001437749-26-014346; filed 2026-05-01. Concept: EarningsPerShareDiluted. Source concepts: us-gaap:EarningsPerShareDiluted.
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0001437749-26-025186.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
| Three months ended | Six months ended | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | Percent | June 30, | Percent | |||||||||||||||||||||
| 2026 | 2025 | change | 2026 | 2025 | change | |||||||||||||||||||
| Revenues | $ | 1,663 | $ | 1,458 | 14 | % | $ | 3,083 | $ | 2,868 | 7 | % | ||||||||||||
| Cost of goods sold | 1,418 | 1,276 | 11 | % | 2,655 | 2,485 | 7 | % | ||||||||||||||||
| Gross profit | 245 | 182 | 35 | % | 428 | 383 | 12 | % | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling, general and administrative | 183 | 160 | 14 | % | 346 | 326 | 6 | % | ||||||||||||||||
| Research and development | 28 | 33 | (15 | )% | 57 | 65 | (12 | )% | ||||||||||||||||
| Restructuring, impairment and plant closing costs | 9 | 124 | (93 | )% | 15 | 125 | (88 | )% | ||||||||||||||||
| Gain on sale of business, net | (22 | ) | — | NM | (22 | ) | — | NM | ||||||||||||||||
| Income associated with litigation matter, net | — | — | — | — | (33 | ) | (100 | )% | ||||||||||||||||
| Gain on acquisition of assets, net | — | — | — | — | (5 | ) | (100 | )% | ||||||||||||||||
| Other operating expense (income), net | 10 | (15 | ) | NM | 11 | (17 | ) | NM | ||||||||||||||||
| Total operating expenses | 208 | 302 | (31 | )% | 407 | 461 | (12 | )% | ||||||||||||||||
| Operating income (loss) | 37 | (120 | ) | NM | 21 | (78 | ) | NM | ||||||||||||||||
| Interest expense, net | (23 | ) | (21 | ) | 10 | % | (44 | ) | (40 | ) | 10 | % | ||||||||||||
| Equity in income (loss) of investment in unconsolidated affiliates | 5 | (2 | ) | NM | 10 | (1 | ) | NM | ||||||||||||||||
| Other income, net | 7 | 4 | 75 | % | 10 | 7 | 43 | % | ||||||||||||||||
| Income (loss) from continuing operations before income taxes | 26 | (139 | ) | NM | (3 | ) | (112 | ) | (97 | )% | ||||||||||||||
| Income tax expense | (17 | ) | (7 | ) | 143 | % | (28 | ) | (22 | ) | 27 | % | ||||||||||||
| Income (loss) from continuing operations | 9 | (146 | ) | NM | (31 | ) | (134 | ) | (77 | )% | ||||||||||||||
| (Loss) income from discontinued operations, net of tax | (2 | ) | 1 | NM | (3 | ) | — | NM | ||||||||||||||||
| Net income (loss) | 7 | (145 | ) | NM | (34 | ) | (134 | ) | (75 | )% | ||||||||||||||
| Reconciliation of net income (loss) to adjusted EBITDA(1): | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (13 | ) | (13 | ) | — | (25 | ) | (29 | ) | (14 | )% | |||||||||||||
| Interest expense, net | 23 | 21 | 10 | % | 44 | 40 | 10 | % | ||||||||||||||||
| Income tax expense from continuing operations | 17 | 7 | 143 | % | 28 | 22 | 27 | % | ||||||||||||||||
| Income tax expense from discontinued operations | — | 1 | (100 | )% | — | 1 | (100 | )% | ||||||||||||||||
| Depreciation and amortization | 77 | 72 | 7 | % | 150 | 141 | 6 | % | ||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||
| Business acquisition and integration gain and purchase accounting inventory adjustments, net | — | — | — | (5 | ) | |||||||||||||||||||
| EBITDA from discontinued operations | 2 | (2 | ) | 3 | (1 | ) | ||||||||||||||||||
| Certain legal and other settlements and related expenses (income), net(2) | 7 | 1 | 11 | (32 | ) | |||||||||||||||||||
| Gain on sale of business/assets, net(3) | (22 | ) | — | (22 | ) | — | ||||||||||||||||||
| Expenses associated with the proposed merger | 5 | — | 5 | — | ||||||||||||||||||||
| Loss on early extinguishment of debt | — | — | 1 | — | ||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 7 | 7 | 14 | 14 | ||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(4) | 10 | 125 | 18 | 129 | ||||||||||||||||||||
| Adjusted EBITDA(1) | $ | 120 | $ | 74 | 62 | % | $ | 193 | $ | 146 | 32 | % | ||||||||||||
| Net cash (used in) provided by operating activities from continuing operations | $ | (113 | ) | $ | 21 | NM | ||||||||||||||||||
| Net cash used in investing activities | (15 | ) | (32 | ) | (53 | )% | ||||||||||||||||||
| Net cash provided by financing activities | 43 | 69 | (38 | )% | ||||||||||||||||||||
| Capital expenditures | (68 | ) | (73 | ) | (7 | )% | ||||||||||||||||||
| Amounts attributable to Huntsman Corporation: | ||||||||||||||||||||||||
| Loss from continuing operations | $ | (4 | ) | $ | (159 | ) | $ | (56 | ) | $ | (163 | ) | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (2 | ) | 1 | (3 | ) | — | ||||||||||||||||||
| Net loss | $ | (6 | ) | $ | (158 | ) | $ | (59 | ) | $ | (163 | ) |
37
Table of Contents
Huntsman International
| Three months ended | Six months ended | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | Percent | June 30, | Percent | |||||||||||||||||||||
| 2026 | 2025 | change | 2026 | 2025 | change | |||||||||||||||||||
| Revenues | $ | 1,663 | $ | 1,458 | 14 | % | $ | 3,083 | $ | 2,868 | 7 | % | ||||||||||||
| Cost of goods sold | 1,418 | 1,276 | 11 | % | 2,655 | 2,485 | 7 | % | ||||||||||||||||
| Gross profit | 245 | 182 | 35 | % | 428 | 383 | 12 | % | ||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Selling, general and administrative | 183 | 160 | 14 | % | 344 | 324 | 6 | % | ||||||||||||||||
| Research and development | 28 | 33 | (15 | )% | 57 | 65 | (12 | )% | ||||||||||||||||
| Restructuring, impairment and plant closing costs | 9 | 124 | (93 | )% | 15 | 125 | (88 | )% | ||||||||||||||||
| Gain on sale of business, net | (22 | ) | — | NM | (22 | ) | — | NM | ||||||||||||||||
| Income associated with litigation matter, net | — | — | — | — | (33 | ) | (100 | )% | ||||||||||||||||
| Gain on acquisition of assets, net | — | — | — | — | (5 | ) | (100 | )% | ||||||||||||||||
| Other operating expense (income), net | 10 | (15 | ) | NM | 11 | (17 | ) | NM | ||||||||||||||||
| Total operating expenses | 208 | 302 | (31 | )% | 405 | 459 | (12 | )% | ||||||||||||||||
| Operating income (loss) | 37 | (120 | ) | NM | 23 | (76 | ) | NM | ||||||||||||||||
| Interest expense, net | (23 | ) | (21 | ) | 10 | % | (44 | ) | (40 | ) | 10 | % | ||||||||||||
| Equity in income (loss) of investment in unconsolidated affiliates | 5 | (2 | ) | NM | 10 | (1 | ) | NM | ||||||||||||||||
| Other income, net | 7 | 4 | 75 | % | 10 | 7 | 43 | % | ||||||||||||||||
| Income (loss) from continuing operations before income taxes | 26 | (139 | ) | NM | (1 | ) | (110 | ) | (99 | )% | ||||||||||||||
| Income tax expense | (17 | ) | (5 | ) | 240 | % | (28 | ) | (22 | ) | 27 | % | ||||||||||||
| Income (loss) from continuing operations | 9 | (144 | ) | NM | (29 | ) | (132 | ) | (78 | )% | ||||||||||||||
| (Loss) income from discontinued operations, net of tax | (2 | ) | 1 | NM | (3 | ) | — | NM | ||||||||||||||||
| Net income (loss) | 7 | (143 | ) | NM | (32 | ) | (132 | ) | (76 | )% | ||||||||||||||
| Reconciliation of net income (loss) to adjusted EBITDA(1): | ||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (13 | ) | (13 | ) | — | (25 | ) | (29 | ) | (14 | )% | |||||||||||||
| Interest expense, net | 23 | 21 | 10 | % | 44 | 40 | 10 | % | ||||||||||||||||
| Income tax expense from continuing operations | 17 | 5 | 240 | % | 28 | 22 | 27 | % | ||||||||||||||||
| Income tax expense from discontinued operations | — | 1 | (100 | )% | — | 1 | (100 | )% | ||||||||||||||||
| Depreciation and amortization | 77 | 72 | 7 | % | 150 | 141 | 6 | % | ||||||||||||||||
| Other adjustments: | ||||||||||||||||||||||||
| Business acquisition and integration gain and purchase accounting inventory adjustments, net | — | — | — | (5 | ) | |||||||||||||||||||
| EBITDA from discontinued operations | 2 | (2 | ) | 3 | (1 | ) | ||||||||||||||||||
| Certain legal and other settlements and related expenses (income), net(2) | 7 | 1 | 11 | (32 | ) | |||||||||||||||||||
| Gain on sale of business/assets, net(3) | (22 | ) | — | (22 | ) | — | ||||||||||||||||||
| Expenses associated with the proposed merger | 5 | — | 5 | — | ||||||||||||||||||||
| Loss on early extinguishment of debt | — | — | 1 | — | ||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 7 | 7 | 14 | 14 | ||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(4) | 10 | 125 | 18 | 129 | ||||||||||||||||||||
| Adjusted EBITDA(1) | $ | 120 | $ | 74 | 62 | % | $ | 195 | $ | 148 | 32 | % | ||||||||||||
| Net cash (used in) provided by operating activities from continuing operations | $ | (112 | ) | $ | 22 | NM | ||||||||||||||||||
| Net cash used in investing activities | (21 | ) | (37 | ) | (43 | )% | ||||||||||||||||||
| Net cash provided by financing activities | 48 | 73 | (34 | )% | ||||||||||||||||||||
| Capital expenditures | (68 | ) | (73 | ) | (7 | )% | ||||||||||||||||||
| Amounts attributable to Huntsman International: | ||||||||||||||||||||||||
| Loss from continuing operations | $ | (4 | ) | $ | (157 | ) | $ | (54 | ) | $ | (161 | ) | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (2 | ) | 1 | (3 | ) | — | ||||||||||||||||||
| Net loss | $ | (6 | ) | $ | (156 | ) | $ | (57 | ) | $ | (161 | ) |
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Huntsman Corporation
[[GREPCENT_TABLE]]
[["","","Three months ended","","","Three months ended"],["","","June 30, 2026","","","June 30, 2025"],["","","","","","","Tax and",
[Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ReSULTS OF OPERATIONS
As discussed in “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements, the results from continuing operations primarily exclude the results of our Textile Effects Business for all periods presented. For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, 2025, 2024 and 2023 (in millions, except per share amounts).
Huntsman Corporation
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | 2024 vs 2023 | ||||||||||||||||
| Revenues | $ | 5,683 | $ | 6,036 | $ | 6,111 | (6 | )% | (1 | )% | ||||||||||
| Cost of goods sold | 4,932 | 5,170 | 5,205 | (5 | )% | (1 | )% | |||||||||||||
| Gross profit | 751 | 866 | 906 | (13 | )% | (4 | )% | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 670 | 671 | 689 | — | (3 | )% | ||||||||||||||
| Research and development | 120 | 121 | 115 | (1 | )% | 5 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 148 | 39 | 18 | 279 | % | 117 | % | |||||||||||||
| Income associated with litigation matter, net | (33 | ) | — | — | NM | NM | ||||||||||||||
| Gain on acquisition of assets, net | (5 | ) | (51 | ) | — | (90 | )% | NM | ||||||||||||
| Prepaid asset write-off | — | 71 | — | (100 | )% | NM | ||||||||||||||
| Loss on dissolution of subsidiaries | — | 39 | — | (100 | )% | NM | ||||||||||||||
| Other operating (income) expense, net | (18 | ) | 1 | — | NM | NM | ||||||||||||||
| Total operating expenses | 882 | 891 | 822 | (1 | )% | 8 | % | |||||||||||||
| Operating (loss) income | (131 | ) | (25 | ) | 84 | 424 | % | NM | ||||||||||||
| Interest expense, net | (79 | ) | (79 | ) | (65 | ) | — | 22 | % | |||||||||||
| Equity in income of investment in unconsolidated affiliates | 4 | 44 | 83 | (91 | )% | (47 | )% | |||||||||||||
| Other income (expense), net | 14 | 21 | (3 | ) | (33 | )% | NM | |||||||||||||
| (Loss) income from continuing operations before income taxes | (192 | ) | (39 | ) | 99 | 392 | % | NM | ||||||||||||
| Income tax expense | (26 | ) | (61 | ) | (64 | ) | (57 | )% | (5 | )% | ||||||||||
| (Loss) income from continuing operations | (218 | ) | (100 | ) | 35 | 118 | % | NM | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (9 | ) | (27 | ) | 118 | (67 | )% | NM | ||||||||||||
| Net (loss) income | (227 | ) | (127 | ) | 153 | 79 | % | NM | ||||||||||||
| Reconciliation of net (loss) income to adjusted EBITDA(1): | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (57 | ) | (62 | ) | (52 | ) | (8 | )% | 19 | % | ||||||||||
| Interest expense, net from continuing operations | 79 | 79 | 65 | — | 22 | % | ||||||||||||||
| Income tax expense from continuing operations | 26 | 61 | 64 | (57 | )% | (5 | )% | |||||||||||||
| Income tax (benefit) expense from discontinued operations | — | (11 | ) | 17 | (100 | )% | NM | |||||||||||||
| Depreciation and amortization of continuing operations | 287 | 289 | 278 | (1 | )% | 4 | % | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration (gain) expenses and purchase accounting inventory adjustments, net | (4 | ) | 21 | 4 | ||||||||||||||||
| EBITDA from discontinued operations(2) | 9 | 38 | (135 | ) | ||||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | — | (12 | ) | 5 | ||||||||||||||||
| Certain legal and other settlements and related (income) expenses, net(3) | (30 | ) | 13 | 6 | ||||||||||||||||
| Loss on sale of business/assets | 5 | 1 | — | |||||||||||||||||
| Loss on dissolution of subsidiaries(4) | — | 39 | — | |||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | — | 5 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 34 | 39 | 37 | |||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 153 | 46 | 25 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 275 | $ | 414 | $ | 472 | (34 | )% | (12 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 298 | $ | 285 | $ | 251 | 5 | % | 14 | % | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (132 | ) | (126 | ) | 309 | 5 | % | NM | ||||||||||||
| Net cash used in financing activities | (76 | ) | (326 | ) | (620 | ) | (77 | )% | (47 | )% | ||||||||||
| Capital expenditures from continuing operations | (173 | ) | (184 | ) | (230 | ) | (6 | )% | (20 | )% | ||||||||||
| Amounts attributable to Huntsman Corporation: | ||||||||||||||||||||
| Loss from continuing operations | $ | (275 | ) | $ | (162 | ) | $ | (17 | ) | |||||||||||
| (Loss) income from discontinued operations, net of tax | (9 | ) | (27 | ) | 118 | |||||||||||||||
| Net (loss) income | $ | (284 | ) | $ | (189 | ) | $ | 101 |
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Huntsman International
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2023 | 2025 vs 2024 | 2024 vs 2023 | ||||||||||||||||
| Revenues | $ | 5,683 | $ | 6,036 | $ | 6,111 | (6 | )% | (1 | )% | ||||||||||
| Cost of goods sold | 4,932 | 5,170 | 5,205 | (5 | )% | (1 | )% | |||||||||||||
| Gross profit | 751 | 866 | 906 | (13 | )% | (4 | )% | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Selling, general and administrative | 667 | 668 | 686 | — | (3 | )% | ||||||||||||||
| Research and development | 120 | 121 | 115 | (1 | )% | 5 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 148 | 39 | 18 | 279 | % | 117 | % | |||||||||||||
| Income associated with litigation matter, net | (33 | ) | — | — | NM | NM | ||||||||||||||
| Gain on acquisition of assets, net | (5 | ) | (51 | ) | — | (90 | )% | NM | ||||||||||||
| Prepaid asset write-off | — | 71 | — | (100 | )% | NM | ||||||||||||||
| Loss on dissolution of subsidiaries | — | 39 | — | (100 | )% | NM | ||||||||||||||
| Other operating (income) expense, net | (18 | ) | 1 | — | NM | NM | ||||||||||||||
| Total operating expenses | 879 | 888 | 819 | (1 | )% | 8 | % | |||||||||||||
| Operating (loss) income | (128 | ) | (22 | ) | 87 | 482 | % | NM | ||||||||||||
| Interest expense, net | (79 | ) | (79 | ) | (65 | ) | — | 22 | % | |||||||||||
| Equity in income of investment in unconsolidated affiliates | 4 | 44 | 83 | (91 | )% | (47 | )% | |||||||||||||
| Other income (expense), net | 14 | 21 | (3 | ) | (33 | )% | NM | |||||||||||||
| (Loss) income from continuing operations before income taxes | (189 | ) | (36 | ) | 102 | 425 | % | NM | ||||||||||||
| Income tax expense | (27 | ) | (62 | ) | (65 | ) | (56 | )% | (5 | )% | ||||||||||
| (Loss) income from continuing operations | (216 | ) | (98 | ) | 37 | 120 | % | NM | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (9 | ) | (27 | ) | 118 | (67 | )% | NM | ||||||||||||
| Net (loss) income | (225 | ) | (125 | ) | 155 | 80 | % | NM | ||||||||||||
| Reconciliation of net (loss) income to adjusted EBITDA(1): | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (57 | ) | (62 | ) | (52 | ) | (8 | )% | 19 | % | ||||||||||
| Interest expense, net from continuing operations | 79 | 79 | 65 | — | 22 | % | ||||||||||||||
| Income tax expense from continuing operations | 27 | 62 | 65 | (56 | )% | (5 | )% | |||||||||||||
| Income tax (benefit) expense from discontinued operations | — | (11 | ) | 17 | (100 | )% | NM | |||||||||||||
| Depreciation and amortization of continuing operations | 287 | 289 | 278 | (1 | )% | 4 | % | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration (gain) expenses and purchase accounting inventory adjustments, net | (4 | ) | 21 | 4 | ||||||||||||||||
| EBITDA from discontinued operations(2) | 9 | 38 | (135 | ) | ||||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | — | (12 | ) | 5 | ||||||||||||||||
| Certain legal and other settlements and related (income) expenses, net(3) | (30 | ) | 13 | 6 | ||||||||||||||||
| Loss on sale of business/assets | 5 | 1 | — | |||||||||||||||||
| Loss on dissolution of subsidiaries(4) | — | 39 | — | |||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | — | 5 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 34 | 39 | 37 | |||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 153 | 46 | 25 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 278 | $ | 417 | $ | 475 | (33 | )% | (12 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 299 | $ | 285 | $ | 253 | 5 | % | 13 | % | ||||||||||
| Net cash used in investing activities from continuing operations | (137 | ) | (138 | ) | (42 | ) | — | 229 | % | |||||||||||
| Net cash used in financing activities | (72 | ) | (314 | ) | (271 | ) | (77 | )% | 16 | % | ||||||||||
| Capital expenditures from continuing operations | (173 | ) | (184 | ) | (230 | ) | (6 | )% | (20 | )% | ||||||||||
| Amounts attributable to Huntsman International: | ||||||||||||||||||||
| Loss from continuing operations | $ | (273 | ) | $ | (160 | ) | $ | (15 | ) | |||||||||||
| (Loss) income from discontinued operations, net of tax | (9 | ) | (27 | ) | 118 | |||||||||||||||
| Net (loss) income | $ | (282 | ) | $ | (187 | ) | $ | 103 |
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Huntsman Corporation
| Year ended | Year ended | Year ended | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
| Gross | and other(6) | Net | Gross | and other(6) | Net | Gross | and other(6) | Net | ||||||||||||||||||||||||||||
| Reconciliation of net (loss) income to adjusted net (loss) income(1): | ||||||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (227 | ) | $ | (127 | ) | $ | 153 | ||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (57 | ) | (62 | ) | (52 | ) | ||||||||||||||||||||||||||||||
| Business acquisition and integration (gain) expenses and purchase accounting inventory adjustments, net | $ | (4 | ) | $ | — | (4 | ) | $ | 21 | $ | (17 | ) | 4 | $ | 4 | $ | (1 | ) | 3 | |||||||||||||||||
| Loss (income) from discontinued operations(2) | 9 | — | 9 | 38 | (11 | ) | 27 | (135 | ) | 17 | (118 | ) | ||||||||||||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | — | — | — | (12 | ) | 3 | (9 | ) | 5 | — | 5 | |||||||||||||||||||||||||
| Certain legal and other settlements and related (income) expenses, net(3) | (30 | ) | 7 | (23 | ) | 13 | (3 | ) | 10 | 6 | (1 | ) | 5 | |||||||||||||||||||||||
| Loss on sale of business/assets | 5 | (1 | ) | 4 | 1 | — | 1 | — | — | — | ||||||||||||||||||||||||||
| Loss on dissolution of subsidiaries(4) | — | — | — | 39 | — | 39 | — | — | — | |||||||||||||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | — | — | — | — | — | 5 | (1 | ) | 4 | ||||||||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 34 | (4 | ) | 30 | 39 | (3 | ) | 36 | 37 | (6 | ) | 31 | ||||||||||||||||||||||||
| Establishment of significant deferred tax asset valuation allowances, net(7) | — | 1 | 1 | — | 23 | 23 | — | 14 | 14 | |||||||||||||||||||||||||||
| Income tax settlement related to U.S. Tax Reform Act | — | — | — | — | 5 | 5 | — | — | — | |||||||||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 153 | (7 | ) | 146 | 46 | (6 | ) | 40 | 25 | (3 | ) | 22 | ||||||||||||||||||||||||
| Adjusted net (loss) income(1) | $ | (121 | ) | $ | (13 | ) | $ | 67 | ||||||||||||||||||||||||||||
| Weighted average shares-basic | 172.6 | 172.1 | 177.4 | |||||||||||||||||||||||||||||||||
| Weighted average shares-diluted | 172.6 | 172.1 | 177.4 | |||||||||||||||||||||||||||||||||
| Basic net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Loss from continuing operations | $ | (1.60 | ) | $ | (0.94 | ) | $ | (0.10 | ) | |||||||||||||||||||||||||||
| (Loss) income from discontinued operations | (0.05 | ) | (0.16 | ) | 0.67 | |||||||||||||||||||||||||||||||
| Net (loss) income | $ | (1.65 | ) | $ | (1.10 | ) | $ | 0.57 | ||||||||||||||||||||||||||||
| Diluted net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Loss from continuing operations | $ | (1.60 | ) | $ | (0.94 | ) | $ | (0.10 | ) | |||||||||||||||||||||||||||
| (Loss) income from discontinued operations | (0.05 | ) | (0.16 | ) | 0.67 | |||||||||||||||||||||||||||||||
| Net (loss) income | $ | (1.65 | ) | $ | (1.10 | ) | $ | 0.57 | ||||||||||||||||||||||||||||
| Other non-GAAP measures: | ||||||||||||||||||||||||||||||||||||
| Diluted adjusted net (loss) income per share(1) | $ | (0.70 | ) | $ | (0.08 | ) | $ | 0.37 | ||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 298 | $ | 285 | $ | 251 | ||||||||||||||||||||||||||||||
| Capital expenditures from continuing operations | (173 | ) | (184 | ) | (230 | ) | ||||||||||||||||||||||||||||||
| Free cash flow from continuing operations(1) | $ | 125 | $ | 101 | $ | 21 | ||||||||||||||||||||||||||||||
| Effective tax rate | (14 | )% | (156 | )% | 65 | % | ||||||||||||||||||||||||||||||
| Impact of non-GAAP adjustments(8) | (74 | )% | 211 | % | (31 | )% | ||||||||||||||||||||||||||||||
| Adjusted effective tax rate(1) | (88 | )% | 55 | % | 34 | % |
NM—Not meaningful
| (1) | See “—Non-GAAP Financial Measures.” |
|---|---|
| (2) | Includes the net loss (gain) on the sale of our Textile Effects Business. In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
| (3) | Certain legal and other settlements and related (income) expenses, net includes approximately $(33) million for income associated with a litigation matter during the year ended December 31, 2025 (see “Note 21. Commitments and Contingencies—Legal Matters” to our consolidated financial statements) and approximately $10 million related to the settlement of a claim in connection with a commercial dispute during the year ended December 31, 2024. |
| (4) | Loss on dissolution of subsidiaries for the year ended December 31, 2024 relates to the elimination and non-cash recognition of cumulative translation adjustments from accumulated other comprehensive loss due to the liquidation of certain subsidiaries. |
| (5) | Includes costs associated with transition activities relating primarily to our program to realign our cost structure in Europe and our Corporate program to optimize our global approach to managed services in various information technology functions. |
| (6) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
| (7) | During the years ended December 31, 2025, 2024 and 2023, we established significant deferred tax asset valuation allowances of a net of $1 million ($9 million in Luxembourg, net of a release of $8 million in Germany), $23 million in Luxembourg and Germany and $14 million in the U.K., respectively. We eliminated the effect of these significant deferred tax asset valuation allowances from our presentation of adjusted net (loss) income to allow investors to better compare our ongoing financial performance from period to period. |
| (8) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net (loss) income to adjusted net (loss) income noted above. |
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Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration (gain) expenses and purchase accounting inventory adjustments, net; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment, net and other tax matter adjustments; (d) certain legal and other settlements and related (income) expenses, net; (e) loss on sale of business/assets; (f) loss on dissolution of subsidiaries; (g) certain nonrecurring information technology project implementation costs; (h) amortization of pension and postretirement actuarial losses; and (i) restructuring, impairment and plant closing and transition costs. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration (gain) expenses and purchase accounting inventory adjustments, net; (b) (loss) income from discontinued operations; (c) fair value adjustments to Venator investment, net and other tax matter adjustments; (d) certain legal and other settlements and related (income) expenses, net; (e) loss on sale of business/assets; (f) loss on dissolution of subsidiaries; (g) certain nonrecurring information technology project implementation costs; (h) amortization of pension and postretirement actuarial losses; (i) establishment of significant deferred tax asset valuation allowances, net; (j) income tax settlement related to U.S. Tax Reform Act; and (k) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow from continuing operations is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan dividend and stock buyback levels and (d) evaluate our ability to incur and service debt. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, such as certain changes in valuation allowances that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
For the year ended December 31, 2025, loss from continuing operations attributable to Huntsman Corporation was $275 million as compared with $162 million in the 2024 period. For the year ended December 31, 2025, loss from continuing operations attributable to Huntsman International was $273 million as compared with $160 million in the 2024 period. The increases noted above were the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2025 decreased by $353 million, or 6%, as compared with the 2024 period. The decrease was primarily due to lower average selling prices in all our segments and lower sales volumes in our Performance Products and Advanced Materials segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2025 decreased by $115 million, or 13%, as compared with the 2024 period. The decrease resulted primarily from lower gross profits in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our selling, general and administrative expenses and the selling, general and administrative expenses of Huntsman International both decreased by $1 million for the year ended December 31, 2025 as compared with the 2024 period primarily related to lower costs resulting from the impact of our restructuring programs, mostly offset by an increase in our incentive compensation accrual. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Restructuring, impairment and plant closing costs for the year ended December 31, 2025 increased by $109 million as compared with the 2024 period. For more information on restructuring activities, see “Note 13. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Income associated with litigation matter, net was approximately $33 million for year ended December 31, 2025. For further information, see “Note 21. Commitments and Contingencies—Legal Matters” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gain on acquisition of assets, net was approximately $5 million and $51 million for the years ended December 31, 2025 and 2024, respectively, representing net gains related to the separation and acquisition of assets of SLIC. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Prepaid asset write-off was approximately $71 million for the year ended December 31, 2024. Concurrent with the acquisition of assets of SLIC, we wrote off certain prepaid assets related to operating agreements with SLIC and other joint venture partners. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Loss on dissolution of subsidiaries was approximately $39 million for the year ended December 31, 2024 related to the elimination and non-cash recognition of cumulative translation adjustments from accumulated other comprehensive loss due to the liquidation of certain subsidiaries in the fourth quarter of 2024. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other operating (income) expense, net for the year ended December 31, 2025 was income of $18 million as compared with expense of $1 million in the 2024 period primarily related to an adjustment to a loss contingency accrual. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2025 decreased to $4 million from $44 million in the 2024 period, primarily related to a decrease in income at our PO/MTBE joint venture with China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other income (expense), net for the year ended December 31, 2025 was income of $14 million as compared with income of $21 million in the 2024 period. The decrease was primarily due to income recognized during the year ended December 31, 2024 for the resolution of certain matters related to the 2017 separation of our titanium dioxide and performance additives business. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2025 was $26 million as compared with $61 million in the 2024 period. The income tax expense of Huntsman International for the year ended December 31, 2025 was $27 million as compared with $62 million in the 2024 period. The decrease in income tax expense was primarily due to the increase in loss from continuing operations before income taxes and to our mix of income and losses in the tax specific jurisdictions in which we operate along with the impact of valuation allowances in certain tax jurisdictions. In particular, we recognize tax expense in specific jurisdictions with pre-tax income, but do not recognize a tax benefit of pre-tax losses in jurisdictions with valuation allowances. In addition, in 2025 we recognized discrete tax expense for valuation allowance establishments of approximately $5 million, which is lower than the tax expense recognized in 2024 for settlement of U.S. tax reform items of approximately $5 million and discrete establishments of valuation allowances of approximately $29 million. For further information, see “Note 20. Income Taxes” to our consolidated financial statements. |
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Segment Analysis
| Percent | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| change | ||||||||||||
| Year ended December 31, | (unfavorable) | |||||||||||
| (Dollars in millions) | 2025 | 2024 | favorable | |||||||||
| Revenues | ||||||||||||
| Polyurethanes | $ | 3,697 | $ | 3,900 | (5 | )% | ||||||
| Performance Products | 997 | 1,109 | (10 | )% | ||||||||
| Advanced Materials | 1,021 | 1,055 | (3 | )% | ||||||||
| Total reportable segments’ revenues | 5,715 | 6,064 | (6 | )% | ||||||||
| Intersegment eliminations | (32 | ) | (28 | ) | NM | |||||||
| Total | $ | 5,683 | $ | 6,036 | (6 | )% | ||||||
| Segment adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 146 | $ | 245 | (40 | )% | ||||||
| Performance Products | 107 | 153 | (30 | )% | ||||||||
| Advanced Materials | 161 | 179 | (10 | )% |
| NM—Not meaningful | |
|---|---|
| (1) | For more information regarding reconciliations of segment adjusted EBITDA of our reportable operating segments to (loss) income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 27. Operating Segment Information” to our consolidated financial statements. |
| Year ended December 31, 2025 vs 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average selling prices(1) | ||||||||||||
| Local | Foreign currency | Sales | ||||||||||
| currency and mix | translation impact | volumes(2) | ||||||||||
| Period-over-period (decrease) increase | ||||||||||||
| Polyurethanes | (7 | )% | — | 2 | % | |||||||
| Performance Products | (1 | )% | — | (9 | )% | |||||||
| Advanced Materials | (2 | )% | 1 | % | (2 | )% | ||||||
| Combined segments | (5 | )% | — | (1 | )% |
| Column 1 | Column 2 |
|---|---|
| (1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
| Column 1 | Column 2 |
|---|---|
| (2) | Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The decrease in revenues in our Polyurethanes segment for 2025 compared to 2024 was primarily due to lower average selling prices, partially offset by higher sales volumes. MDI average selling prices decreased primarily due to less favorable supply and demand dynamics. Sales volumes increased primarily due to some improved demand and share gains in certain markets, partially offset by a decrease in volumes due to the scheduled turnaround at our Rotterdam, the Netherlands manufacturing facility during the second quarter of 2025. The decrease in segment adjusted EBITDA was primarily due to lower MDI margins and lower equity earnings from our minority-owned joint venture in China, partially offset by lower raw materials costs and cost savings achieved from our cost optimization program.
Performance Products
The decrease in revenues in our Performance Products segment for 2025 compared to 2024 was primarily due to lower sales volumes and slightly lower average selling prices. Sales volumes decreased primarily due to discontinuing operations at our Moers, Germany maleic anhydride facility. Average selling prices decreased slightly primarily due to softer market conditions, partially offset by favorable mix. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and an unfavorable impact from inventory reductions, partially offset by lower variable direct costs and lower fixed costs.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2025 compared to 2024 was primarily due to lower sales volumes and a slight decrease in average selling prices. Sales volumes decreased primarily in our infrastructure coatings market. The slight decrease in average selling prices was primarily due to unfavorable sales mix. The decrease in segment adjusted EBITDA was primarily due to the decrease in sales volumes and unfavorable sales mix.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
For a comparison of both our results of operations and segment analysis for the fiscal years ended December 31, 2024 and 2023, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 18, 2025.
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10-K.
31
Cash Flows For Year Ended December 31, 2025 Compared with Year Ended December 31, 2024
Net cash provided by operating activities from continuing operations for 2025 and 2024 was $298 million and $285 million, respectively. The increase in net cash provided by operating activities from continuing operations during 2025 compared with 2024 was primarily attributable to a net cash inflow of $168 million related to changes in operating assets and liabilities for 2025 as compared with 2024, mostly offset by a decrease of $84 million in dividends received from unconsolidated subsidiaries and a decrease of $71 million in operating loss from continuing operations adjusted for noncash activities as noted in our consolidated statements of cash flows.
Net cash used in investing activities from continuing operations for 2025 and 2024 was $132 million and $126 million, respectively. During 2025 and 2024, we paid $173 million and $184 million, respectively, for capital expenditures. During 2025, we received a $41 million final liquidating distribution from SLIC, and during 2024, we received approximately $30 million as an interim liquidating distribution from SLIC. See “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. During 2024, we received $11 million related to the sale of assets, and we received $16 million for the sale of businesses, net, primarily related to the resolution of net working capital of $12 million from the sale of our Textile Effects Business. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements.
Net cash used in financing activities for 2025 and 2024 was $76 million and $326 million, respectively. During 2025 and 2024, we had net borrowings (repayments) of $460 million and $(169) million, respectively, from our 2022 $1.2 billion senior unsecured revolving credit facility (“2022 Revolving Credit Facility”) and our U.S. accounts receivable securitization program (“U.S. 2025 A/R Program”) and European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”). During 2025, we paid approximately $315 million to satisfy and discharge our obligations under our 4.25% senior notes due April 2025 (“2025 Senior Notes”). During 2024, we received proceeds of approximately $350 million related to the issuance of our 5.70% senior notes due 2034 (“2034 Senior Notes”). See “Note 15. Debt—Direct and Subsidiary Debt—Senior Notes” to our consolidated financial statements. During 2024, HPS paid approximately $218 million against the note payable with SLIC for the acquisition of assets. “See “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements.
Free cash flow from continuing operations for 2025 and 2024 were proceeds of cash of $125 million and $101 million, respectively. The improvement in free cash flow from continuing operations during 2025 as compared with 2024 was attributable to an increase in cash provided by operating activities from continuing operations and a decrease in cash used for capital expenditures.
Cash Flows For Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
For a comparison of our cash flows for the fiscal years ended December 31, 2024 and 2023, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 18, 2025.
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
| December 31, | December 31, | Increase | Percent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | (decrease) | change | |||||||||||||
| Cash and cash equivalents | $ | 429 | $ | 340 | $ | 89 | 26 | % | ||||||||
| Accounts and notes receivable, net | 677 | 725 | (48 | ) | (7 | )% | ||||||||||
| Inventories | 818 | 917 | (99 | ) | (11 | )% | ||||||||||
| Prepaid expenses | 94 | 114 | (20 | ) | (18 | )% | ||||||||||
| Other current assets | 46 | 29 | 17 | 59 | % | |||||||||||
| Total current assets | 2,064 | 2,125 | (61 | ) | (3 | )% | ||||||||||
| Accounts payable | 721 | 770 | (49 | ) | (6 | )% | ||||||||||
| Accrued liabilities | 458 | 416 | 42 | 10 | % | |||||||||||
| Current portion of debt | 353 | 325 | 28 | 9 | % | |||||||||||
| Current operating lease liabilities | 57 | 54 | 3 | 6 | % | |||||||||||
| Total current liabilities | 1,589 | 1,565 | 24 | 2 | % | |||||||||||
| Working capital | $ | 475 | $ | 560 | $ | (85 | ) | (15 | )% |
32
Our working capital decreased by $85 million as a result of the net impact of the following significant changes:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The increase in cash and cash equivalents of $89 million resulted from the matters identified on our consolidated statements of cash flows. See also “—Cash Flows For Year Ended December 31, 2025 Compared with Year Ended December 31, 2024.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts and notes receivable, net decreased by $48 million primarily due to lower revenues in the fourth quarter of 2025 as compared with the fourth quarter of 2024. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Inventories decreased by $99 million primarily due to lower inventory costs and volumes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Prepaid expenses decreased by $20 million primarily due to lower prepaid information technology costs recorded at the end of 2025 as compared with the end of 2024 as well as a decrease in prepaid insurance premiums. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other current assets increased by $17 million primarily due to an increase in current taxes receivable and non-qualified employee benefit plan investments. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts payable decreased by $49 million primarily due to lower inventory purchases, partially offset by extended vendor payment terms under our supplier finance program. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accrued liabilities increased by $42 million primarily due to increases in accrued restructuring, accrued compensation, accrued taxes other than income and accrued rebates, partially offset by a decrease in accrued income taxes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Current portion of debt increased by $28 million primarily due to an increase in our borrowings under our 2022 Revolving Credit Facility, partially offset by the satisfaction and discharge of our obligations under our 2025 Senior Notes during the first quarter of 2025. |
Liquidity
We depend upon our cash, our revolving credit facility, our A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2025, we had $1,323 million of combined cash and unused borrowing capacity, consisting of $429 million in cash, $854 million in availability under our 2022 Revolving Credit Facility and $40 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
Short-Term Liquidity
| ● | During 2026, we expect our spend on capital expenditures to approximate our 2025 spend on capital expenditures. Our future expenditures include certain environmental, health and safety upgrades; expansions and upgrades of our existing manufacturing and other facilities; construction of new facilities; certain cost reduction projects, including those described below; and certain information technology expenditures. We expect to fund capital expenditures with cash provided by operations. | |
|---|---|---|
| ● | During 2026, we expect to make contributions to our pension and postretirement benefit plans of approximately $44 million. | |
| ● | As of December 31, 2025, we have approximately $547 million remaining under the authorization of our existing share repurchase program. We currently do not expect to repurchase any shares of our common stock under this program during 2026. |
Long-Term Liquidity
| ● | On February 9, 2026, Huntsman International entered into a new $800 million secured revolving credit facility (“2026 Revolving Credit Facility”) replacing the 2022 Revolving Credit Facility. Borrowings bear interest at the rates specified in the credit agreement governing the 2026 Revolving Credit Facility, which vary based on the type of loan, leverage ratio and debt ratings. The 2026 Revolving Credit Facility has a maturity date of February 9, 2031. Huntsman International may increase the 2026 Revolving Credit Facility commitments by up to $400 million, plus additional amounts, subject to the satisfaction of certain conditions. | |
|---|---|---|
| ● | On November 3, 2025, our Board of Directors declared a $0.0875 per share cash dividend on our common stock. This represents a 65% decrease from the then previous dividend. |
As of December 31,
2025, we had
$353 million classified as current portion of debt, including $343 million outstanding under our 2022 Revolving Credit Facility, debt at our variable interest entities of
$7 million and certain other short-term facilities and scheduled amortization payments totaling $3 million. We intend to renew, repay or extend these short-term facilities in the next twelve months.
As of December 31, 2025, we had approximately $427 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends, and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
For more information regarding our debt, see “Note 15. Debt” to our consolidated financial statements.
33
Table of Contents
Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make judgments, estimates and assumptions that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our financial condition and/or results of operations. Summarized below are our critical accounting estimates.
Income Taxes
Deferred income taxes reflect the net effects of temporary differences between assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized; valuation allowances are recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis and analyzed to determine whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limits our ability to consider other evidence, such as our projections for the future. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions affect our assessment of the realization of deferred tax assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning strategy associated with utilizing a deferred tax asset. As of December 31, 2025, we had total valuation allowances of $340 million, which represents an increase of $85 million from the prior year, and we have recognized a net deferred tax liability of $107 million. See “Note 20. Income Taxes” to our consolidated financial statements for more information regarding our deferred tax assets and valuation allowances.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., the Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 19. Employee Benefit Plans” to our consolidated financial statements.
We retain third party actuaries to assist us with judgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effects of a 1% change in three key assumptions are summarized as follows (dollars in millions):
| Statement of | Balance sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| Assumptions | operations(1) | impact(2) | ||||||
| Discount rate | ||||||||
| —1% increase | $ | (15 | ) | $ | (223 | ) | ||
| —1% decrease | 16 | 251 | ||||||
| Expected long-term rates of return on plan assets | ||||||||
| —1% increase | (22 | ) | — | |||||
| —1% decrease | 22 | — | ||||||
| Rate of compensation increase | ||||||||
| —1% increase | 3 | 26 | ||||||
| —1% decrease | (3 | ) | (12 | ) |
| Column 1 | Column 2 |
|---|---|
| (1) | Estimated (decrease) increase on 2025 net periodic benefit cost |
| Column 1 | Column 2 |
|---|---|
| (2) | Estimated (decrease) increase on December 31, 2025 pension and postretirement liabilities and accumulated other comprehensive loss |
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Table of Contents
MD&A history
Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. The latest 10-K appears above; prior years are below.
FY 2024 10-K MD&A
SEC filing source: 0001437749-25-004205.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ReSULTS OF OPERATIONS
As discussed in “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements, the results from continuing operations primarily exclude the results of our Textile Effects Business for all periods presented. For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, 2024, 2023 and 2022 (in millions, except per share amounts).
Huntsman Corporation
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | 2024 vs 2023 | 2023 vs 2022 | ||||||||||||||||
| Revenues | $ | 6,036 | $ | 6,111 | $ | 8,023 | (1 | )% | (24 | )% | ||||||||||
| Cost of goods sold | 5,170 | 5,205 | 6,477 | (1 | )% | (20 | )% | |||||||||||||
| Gross profit | 866 | 906 | 1,546 | (4 | )% | (41 | )% | |||||||||||||
| Operating expenses | 793 | 804 | 788 | (1 | )% | 2 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 39 | 18 | 86 | 117 | % | (79 | )% | |||||||||||||
| Gain on acquisition of assets, net | (51 | ) | — | — | NM | — | ||||||||||||||
| Prepaid asset write-off | 71 | — | — | NM | — | |||||||||||||||
| Loss on dissolution of subsidiaries(4) | 39 | — | — | NM | — | |||||||||||||||
| Operating (loss) income | (25 | ) | 84 | 672 | NM | (88 | )% | |||||||||||||
| Interest expense, net | (79 | ) | (65 | ) | (62 | ) | 22 | % | 5 | % | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 44 | 83 | 67 | (47 | )% | 24 | % | |||||||||||||
| Other income (expense), net | 21 | (3 | ) | 20 | NM | NM | ||||||||||||||
| (Loss) income from continuing operations before income taxes | (39 | ) | 99 | 697 | NM | (86 | )% | |||||||||||||
| Income tax expense | (61 | ) | (64 | ) | (186 | ) | (5 | )% | (66 | )% | ||||||||||
| (Loss) income from continuing operations | (100 | ) | 35 | 511 | NM | (93 | )% | |||||||||||||
| (Loss) income from discontinued operations, net of tax | (27 | ) | 118 | 12 | NM | 883 | % | |||||||||||||
| Net (loss) income | (127 | ) | 153 | 523 | NM | (71 | )% | |||||||||||||
| Reconciliation of net (loss) income to adjusted EBITDA(1): | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (62 | ) | (52 | ) | (63 | ) | 19 | % | (17 | )% | ||||||||||
| Interest expense, net from continuing operations | 79 | 65 | 62 | 22 | % | 5 | % | |||||||||||||
| Income tax expense from continuing operations | 61 | 64 | 186 | (5 | )% | (66 | )% | |||||||||||||
| Income tax (benefit) expense from discontinued operations | (11 | ) | 17 | 19 | NM | (11 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 289 | 278 | 281 | 4 | % | (1 | )% | |||||||||||||
| Depreciation and amortization of discontinued operations | — | — | 12 | — | (100 | )% | ||||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments, net | 21 | 4 | 12 | |||||||||||||||||
| EBITDA from discontinued operations(2) | 38 | (135 | ) | (43 | ) | |||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | (12 | ) | 5 | 12 | ||||||||||||||||
| Certain legal and other settlements and related expenses(3) | 13 | 6 | 7 | |||||||||||||||||
| Costs associated with the Albemarle Settlement, net | — | — | 3 | |||||||||||||||||
| Loss on sale of business/assets | 1 | — | — | |||||||||||||||||
| Loss on dissolution of subsidiaries(4) | 39 | — | — | |||||||||||||||||
| Income from transition services arrangements | — | — | (2 | ) | ||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | 5 | 5 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 39 | 37 | 49 | |||||||||||||||||
| Plant incident remediation credits | — | — | (4 | ) | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 46 | 25 | 96 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 414 | $ | 472 | $ | 1,155 | (12 | )% | (59 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 285 | $ | 251 | $ | 892 | 14 | % | (72 | )% | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (126 | ) | 309 | (260 | ) | NM | NM | |||||||||||||
| Net cash used in financing activities | (326 | ) | (620 | ) | (994 | ) | (47 | )% | (38 | )% | ||||||||||
| Capital expenditures from continuing operations | (184 | ) | (230 | ) | (272 | ) | (20 | )% | (15 | )% | ||||||||||
| Amounts attributable to Huntsman Corporation: | ||||||||||||||||||||
| (Loss) income from continuing operations | $ | (162 | ) | $ | (17 | ) | $ | 448 | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (27 | ) | 118 | 12 | ||||||||||||||||
| Net (loss) income | $ | (189 | ) | $ | 101 | $ | 460 |
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Table of Contents
Huntsman International
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | 2024 vs 2023 | 2023 vs 2022 | ||||||||||||||||
| Revenues | $ | 6,036 | $ | 6,111 | $ | 8,023 | (1 | )% | (24 | )% | ||||||||||
| Cost of goods sold | 5,170 | 5,205 | 6,477 | (1 | )% | (20 | )% | |||||||||||||
| Gross profit | 866 | 906 | 1,546 | (4 | )% | (41 | )% | |||||||||||||
| Operating expenses | 790 | 801 | 784 | (1 | )% | 2 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 39 | 18 | 86 | 117 | % | (79 | )% | |||||||||||||
| Gain on acquisition of assets, net | (51 | ) | — | — | NM | — | ||||||||||||||
| Prepaid asset write-off | 71 | — | — | NM | — | |||||||||||||||
| Loss on dissolution of subsidiaries(4) | 39 | — | — | NM | — | |||||||||||||||
| Operating (loss) income | (22 | ) | 87 | 676 | NM | (87 | )% | |||||||||||||
| Interest expense, net | (79 | ) | (65 | ) | (62 | ) | 22 | % | 5 | % | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 44 | 83 | 67 | (47 | )% | 24 | % | |||||||||||||
| Other income (expense), net | 21 | (3 | ) | 19 | NM | NM | ||||||||||||||
| (Loss) income from continuing operations before income taxes | (36 | ) | 102 | 700 | NM | (85 | )% | |||||||||||||
| Income tax expense | (62 | ) | (65 | ) | (188 | ) | (5 | )% | (65 | )% | ||||||||||
| (Loss) income from continuing operations | (98 | ) | 37 | 512 | NM | (93 | )% | |||||||||||||
| (Loss) income from discontinued operations, net of tax | (27 | ) | 118 | 12 | NM | 883 | % | |||||||||||||
| Net (loss) income | (125 | ) | 155 | 524 | NM | (70 | )% | |||||||||||||
| Reconciliation of net (loss) income to adjusted EBITDA(1): | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (62 | ) | (52 | ) | (63 | ) | 19 | % | (17 | )% | ||||||||||
| Interest expense, net from continuing operations | 79 | 65 | 62 | 22 | % | 5 | % | |||||||||||||
| Income tax expense from continuing operations | 62 | 65 | 188 | (5 | )% | (65 | )% | |||||||||||||
| Income tax (benefit) expense from discontinued operations | (11 | ) | 17 | 19 | NM | (11 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 289 | 278 | 281 | 4 | % | (1 | )% | |||||||||||||
| Depreciation and amortization of discontinued operations | — | — | 12 | — | (100 | )% | ||||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments, net | 21 | 4 | 12 | |||||||||||||||||
| EBITDA from discontinued operations(2) | 38 | (135 | ) | (43 | ) | |||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | (12 | ) | 5 | 12 | ||||||||||||||||
| Certain legal and other settlements and related expenses(3) | 13 | 6 | 7 | |||||||||||||||||
| Costs associated with the Albemarle Settlement, net | — | — | 3 | |||||||||||||||||
| Loss on sale of business/assets | 1 | — | — | |||||||||||||||||
| Loss on dissolution of subsidiaries(4) | 39 | — | — | |||||||||||||||||
| Income from transition services arrangements | — | — | (2 | ) | ||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | 5 | 5 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 39 | 37 | 49 | |||||||||||||||||
| Plant incident remediation credits | — | — | (4 | ) | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 46 | 25 | 96 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 417 | $ | 475 | $ | 1,158 | (12 | )% | (59 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 285 | $ | 253 | $ | 895 | 13 | % | (72 | )% | ||||||||||
| Net cash used in investing activities from continuing operations | (138 | ) | (42 | ) | (1,277 | ) | 229 | % | (97 | )% | ||||||||||
| Net cash (used in) provided by financing activities | (314 | ) | (271 | ) | 22 | 16 | % | NM | ||||||||||||
| Capital expenditures from continuing operations | (184 | ) | (230 | ) | (272 | ) | (20 | )% | (15 | )% | ||||||||||
| Amounts attributable to Huntsman International: | ||||||||||||||||||||
| (Loss) income from continuing operations | $ | (160 | ) | $ | (15 | ) | $ | 449 | ||||||||||||
| (Loss) income from discontinued operations, net of tax | (27 | ) | 118 | 12 | ||||||||||||||||
| Net (loss) income | $ | (187 | ) | $ | 103 | $ | 461 |
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Huntsman Corporation
| Year ended | Year ended | Year ended | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
| Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
| Gross | and other(6) | Net | Gross | and other(6) | Net | Gross | and other(6) | Net | ||||||||||||||||||||||||||||
| Reconciliation of net (loss) income to adjusted net (loss) income(1): | ||||||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (127 | ) | $ | 153 | $ | 523 | |||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (62 | ) | (52 | ) | (63 | ) | ||||||||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments, net | $ | 21 | $ | (17 | ) | 4 | $ | 4 | $ | (1 | ) | 3 | $ | 12 | $ | (2 | ) | 10 | ||||||||||||||||||
| Loss (income) from discontinued operations(2) | 38 | (11 | ) | 27 | (135 | ) | 17 | (118 | ) | (43 | ) | 31 | (12 | ) | ||||||||||||||||||||||
| Fair value adjustments to Venator investment, net and other tax matter adjustments | (12 | ) | 3 | (9 | ) | 5 | — | 5 | 12 | — | 12 | |||||||||||||||||||||||||
| Certain legal and other settlements and related expenses(3) | 13 | (3 | ) | 10 | 6 | (1 | ) | 5 | 7 | (2 | ) | 5 | ||||||||||||||||||||||||
| Costs associated with the Albemarle Settlement, net | — | — | — | — | — | — | 3 | (1 | ) | 2 | ||||||||||||||||||||||||||
| Loss on sale of business/assets | 1 | — | 1 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Loss on dissolution of subsidiaries(4) | 39 | — | 39 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Income from transition services arrangements | — | — | — | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||||||||||||
| Certain nonrecurring information technology project implementation costs | — | — | — | 5 | (1 | ) | 4 | 5 | (1 | ) | 4 | |||||||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 39 | (3 | ) | 36 | 37 | (6 | ) | 31 | 49 | (11 | ) | 38 | ||||||||||||||||||||||||
| Plant incident remediation credits | — | — | — | — | — | — | (4 | ) | 1 | (3 | ) | |||||||||||||||||||||||||
| Establishment of significant deferred tax asset valuation allowances(7) | — | 23 | 23 | — | 14 | 14 | — | 49 | 49 | |||||||||||||||||||||||||||
| Income tax settlement related to U.S. Tax Reform Act | — | 5 | 5 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(5) | 46 | (6 | ) | 40 | 25 | (3 | ) | 22 | 96 | (23 | ) | 73 | ||||||||||||||||||||||||
| Adjusted net (loss) income(1) | $ | (13 | ) | $ | 67 | $ | 636 | |||||||||||||||||||||||||||||
| Weighted average shares-basic | 172.1 | 177.4 | 201.0 | |||||||||||||||||||||||||||||||||
| Weighted average shares-diluted | 172.1 | 177.4 | 203.0 | |||||||||||||||||||||||||||||||||
| Basic net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.94 | ) | $ | (0.10 | ) | $ | 2.23 | ||||||||||||||||||||||||||||
| (Loss) income from discontinued operations | (0.16 | ) | 0.67 | 0.06 | ||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (1.10 | ) | $ | 0.57 | $ | 2.29 | |||||||||||||||||||||||||||||
| Diluted net (loss) income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.94 | ) | $ | (0.10 | ) | $ | 2.21 | ||||||||||||||||||||||||||||
| (Loss) income from discontinued operations | (0.16 | ) | 0.67 | 0.06 | ||||||||||||||||||||||||||||||||
| Net (loss) income | $ | (1.10 | ) | $ | 0.57 | $ | 2.27 | |||||||||||||||||||||||||||||
| Other non-GAAP measures: | ||||||||||||||||||||||||||||||||||||
| Diluted adjusted net (loss) income per share(1) | $ | (0.08 | ) | $ | 0.37 | $ | 3.13 | |||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 285 | $ | 251 | $ | 892 | ||||||||||||||||||||||||||||||
| Capital expenditures from continuing operations | (184 | ) | (230 | ) | (272 | ) | ||||||||||||||||||||||||||||||
| Free cash flow from continuing operations(1) | $ | 101 | $ | 21 | $ | 620 | ||||||||||||||||||||||||||||||
| Effective tax rate | (156 | )% | 65 | % | 27 | % | ||||||||||||||||||||||||||||||
| Impact of non-GAAP adjustments(8) | 211 | % | (31 | )% | (7 | )% | ||||||||||||||||||||||||||||||
| Adjusted effective tax rate(1) | 55 | % | 34 | % | 20 | % |
NM—Not meaningful
| (1) | See “—Non-GAAP Financial Measures.” |
|---|---|
| (2) | Includes the net (loss) gain on the sale of our Textile Effects Business. In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
| (3) | Certain legal and other settlements and related expenses for the year ended December 31, 2024 includes approximately $10 million related to the settlement of a claim in connection with a commercial dispute. |
| (4) | Loss on dissolution of subsidiaries for the year ended December 31, 2024 relates to the elimination and non-cash recognition of cumulative translation adjustments from accumulated other comprehensive loss due to the liquidation of certain subsidiaries. |
| (5) | Includes costs associated with transition activities relating primarily to our Corporate program to optimize our global approach to managed services in various information technology functions and our program to realign our cost structure in Europe. |
| (6) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
| (7) | During the years ended December 31, 2024, 2023 and 2022, we established significant deferred tax asset valuation allowances of $23 million, $14 million and $49 million, respectively, in Germany, Luxembourg, the U.K. and the Netherlands. We eliminated the effect of these significant deferred tax asset valuation allowances from our presentation of adjusted net income to allow investors to better compare our ongoing financial performance from period to period. |
| (8) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net (loss) income to adjusted net (loss) income noted above. |
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Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments, net; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment, net and other tax matter adjustments; (d) certain legal and other settlements and related expenses; (e) costs associated with the Albemarle settlement, net; (f) loss on sale of business/assets; (g) loss on dissolution of subsidiaries; (h) income from transition services arrangements; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation credits; and (l) restructuring, impairment and plant closing and transition costs. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments, net; (b) (loss) income from discontinued operations; (c) fair value adjustments to Venator investment, net and other tax matter adjustments; (d) certain legal and other settlements and related expenses; (e) costs associated with the Albemarle settlement, net; (f) loss on sale of business/assets; (g) loss on dissolution of subsidiaries; (h) income from transition services arrangements; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation credits; (l) establishment of significant deferred tax asset valuation allowances; (m) income tax settlement related to U.S. Tax Reform Act; and (n) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow from continuing operations is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan dividend and stock buyback levels and (d) evaluate our ability to incur and service debt.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, such as certain changes in valuation allowances that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gain on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
For the year ended December 31, 2024, loss from continuing operations attributable to Huntsman Corporation was $162 million as compared with $17 million in the 2023 period. For the year ended December 31, 2024, loss from continuing operations attributable to Huntsman International was $160 million as compared with $15 million in the 2023 period. The decreases noted above were the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2024 decreased by $75 million, or 1%, as compared with the 2023 period. The decrease was primarily due to lower average selling prices in all our segments, partially offset by higher sales volumes in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2024 decreased by $40 million, or 4%, as compared with the 2023 period. The decrease resulted primarily from lower gross profits in our Performance Products segment. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Restructuring, impairment and plant closing costs for the year ended December 31, 2024 increased by $21 million, or 117%, as compared with the 2023 period. For more information on restructuring activities, see “Note 12. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gain on acquisition of assets, net was approximately $51 million for the year ended December 31, 2024 representing a net bargain purchase gain related to the separation and acquisition of assets of SLIC. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Prepaid asset write-off was approximately $71 million for the year ended December 31, 2024. Concurrent with the acquisition of assets of SLIC, we wrote off certain prepaid assets related to operating agreements with SLIC and other joint venture partners. For further information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Loss on dissolution of subsidiaries was approximately $39 million for the year ended December 31, 2024 related to the elimination and non-cash recognition of cumulative translation adjustments from accumulated other comprehensive loss due to the liquidation of certain subsidiaries in the fourth quarter of 2024. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Interest expense, net for the year ended December 31, 2024 increased by $14 million, or 22%, as compared with the 2023 period. The increase resulted primarily from higher borrowings under our 2022 $1.2 billion senior unsecured revolving credit facility (“2022 Revolving Credit Facility”). |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2024 decreased to $44 million from $83 million in the 2023 period, primarily related to a decrease in income at our PO/MTBE joint venture with China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other income (expense), net for the year ended December 31, 2024 was income of $21 million as compared with expense of $3 million in the 2023 period, primarily due to a decrease in losses related to the fair value adjustments to our investment in Venator, as well as income recognized during the year ended December 31, 2024 for the resolution of certain matters related to the 2017 separation of our titanium dioxide and performance additives business. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2024 was $61 million as compared with $64 million in the 2023 period. The income tax expense of Huntsman International for the year ended December 31, 2024 was $62 million as compared with $65 million in the 2023 period. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate along with the impact of valuation allowances in certain tax jurisdictions. In particular, we recognize tax expense in jurisdictions with pre-tax income, but do not recognize a tax benefit of pre-tax losses in jurisdictions with valuation allowances. In addition, in 2024 we recognized discrete tax expenses for settlement of U.S. tax reform items of approximately $5 million and discrete establishments of valuation allowances of approximately $29 million, which were greater than the valuation allowance net establishments of approximately $16 million in 2023. For more information concerning income taxes, see “Note 19. Income Taxes” to our consolidated financial statements. |
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Segment Analysis
| Percent | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| favorable | ||||||||||||
| Year ended December 31, | (unfavorable) | |||||||||||
| (Dollars in millions) | 2024 | 2023 | change | |||||||||
| Revenues | ||||||||||||
| Polyurethanes | $ | 3,900 | $ | 3,865 | 1 | % | ||||||
| Performance Products | 1,109 | 1,178 | (6 | )% | ||||||||
| Advanced Materials | 1,055 | 1,092 | (3 | )% | ||||||||
| Total reportable segments’ revenues | 6,064 | 6,135 | (1 | )% | ||||||||
| Intersegment eliminations | (28 | ) | (24 | ) | NM | |||||||
| Total | $ | 6,036 | $ | 6,111 | (1 | )% | ||||||
| Huntsman Corporation | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 245 | $ | 248 | (1 | )% | ||||||
| Performance Products | 153 | 201 | (24 | )% | ||||||||
| Advanced Materials | 179 | 186 | (4 | )% | ||||||||
| Total reportable segments’ adjusted EBITDA | 577 | 635 | (9 | )% | ||||||||
| Corporate and other | (163 | ) | (163 | ) | — | |||||||
| Total | $ | 414 | $ | 472 | (12 | )% | ||||||
| Huntsman International | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 245 | $ | 248 | (1 | )% | ||||||
| Performance Products | 153 | 201 | (24 | )% | ||||||||
| Advanced Materials | 179 | 186 | (4 | )% | ||||||||
| Total reportable segments’ adjusted EBITDA | 577 | 635 | (9 | )% | ||||||||
| Corporate and other | (160 | ) | (160 | ) | — | |||||||
| Total | $ | 417 | $ | 475 | (12 | )% |
| NM—Not meaningful | |
|---|---|
| (1) | For more information, including reconciliation of total reportable segments’ adjusted EBITDA to (loss) income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 26. Operating Segment Information” to our consolidated financial statements. |
| Year ended December 31, 2024 vs 2023 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average selling prices(1) | ||||||||||||
| Local | Foreign currency | Sales | ||||||||||
| currency and mix | translation impact | volumes(2) | ||||||||||
| Period-over-period (decrease) increase | ||||||||||||
| Polyurethanes | (7 | )% | — | 8 | % | |||||||
| Performance Products | (7 | )% | — | 1 | % | |||||||
| Advanced Materials | (8 | )% | — | 5 | % |
| Column 1 | Column 2 |
|---|---|
| (1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
| Column 1 | Column 2 |
|---|---|
| (2) | Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The increase in revenues in our Polyurethanes segment for 2024 compared to 2023 was primarily due to higher sales volumes, partially offset by lower MDI average selling prices. Sales volumes increased primarily due to improved demand and share gains in certain markets, including insulation and composite wood panels. MDI average selling prices decreased primarily due to competitive pressures. The minimal decrease in segment adjusted EBITDA was primarily due to lower MDI average selling prices and lower equity earnings from our minority-owned joint venture in China, partially offset by lower raw materials costs, lower fixed costs and higher sales volumes.
Performance Products
The decrease in revenues in our Performance Products segment for 2024 compared to 2023 was primarily due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased primarily due to competitive pressure. Sales volumes increased primarily due to improved demand and volume improvement initiatives across certain markets, including fuel and lubricant additives and coatings and adhesives. The decrease in segment adjusted EBITDA was primarily due to lower average selling prices, partially offset by higher sales volumes and lower raw materials costs.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2024 compared to 2023 was primarily due to lower average selling prices, partially offset by higher sales volumes. Average selling prices decreased primarily due to unfavorable sales mix. Sales volumes increased in our infrastructure, general industry and aerospace markets driven by market recovery. The decrease in segment adjusted EBITDA was primarily due to lower average selling prices.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, last-in first-out (“LIFO”) inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. Adjusted EBITDA from Corporate and other for Huntsman Corporation remained the same, a loss of $163 million, for 2024 as compared to 2023. Adjusted EBITDA from Corporate and other for Huntsman International remained the same, a loss of $160 million, for 2024 as compared to 2023. The impact on adjusted EBITDA from Corporate and other resulted primarily from decreases in corporate overhead costs and unallocated foreign currency exchange losses, offset by an increase in LIFO valuation losses.
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Year Ended December 31, 2023 Compared with Year Ended December 31, 2022
For a comparison of both our results of operations and segment analysis for the fiscal years ended December 31, 2023 and 2022, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024.
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10-K.
Cash Flows For Year Ended December 31, 2024 Compared with Year Ended December 31, 2023
Net cash provided by operating activities from continuing operations for 2024 and 2023 was $285 million and $251 million, respectively. The increase in net cash provided by operating activities from continuing operations during 2024 compared with 2023 was primarily attributable to an increase of $42 million in dividends received from unconsolidated subsidiaries and a net cash inflow of $29 million related to changes in operating assets and liabilities for 2024 as compared with 2023, partially offset by a decrease of $37 million in operating (loss) income from continuing operations adjusted for noncash activities as noted in our consolidated statements of cash flows.
Net cash (used in) provided by investing activities from continuing operations for 2024 and 2023 was $(126) million and $309 million, respectively. During 2024 and 2023, we paid $184 million and $230 million, respectively, for capital expenditures. During 2024, we received approximately $30 million as an interim liquidating distribution from SLIC, we received $16 million for the sale of businesses, net, primarily related to the resolution of net working capital of $12 million from the sale of our Textile Effects Business, and we received $11 million related to the sale of assets. During 2023, we received $544 million for the sale of businesses, net, primarily related to net proceeds of $530 million from the sale of our Textile Effects Business. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements.
Net cash used in financing activities for 2024 and 2023 was $326 million and $620 million, respectively. During 2024, we received proceeds of approximately $350 million related to the issuance of our 5.70% senior notes due 2034 (“2034 Senior Notes”). See “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our consolidated financial statements. During 2024, HPS paid approximately $218 million against the note payable with SLIC for the acquisition of assets. “See “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our consolidated financial statements. During 2024 and 2023, we repaid $169 million and $51 million, respectively, against the outstanding balances under our 2022 Revolving Credit Facility and our U.S. accounts receivable securitization program (“U.S. A/R Program”) and European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”). During 2023, we paid $349 million for repurchases of our common stock.
Free cash flow from continuing operations for 2024 and 2023 were proceeds of cash of $101 million and $21 million, respectively. The increase in free cash flow from continuing operations was attributable to an increase in cash provided by operating activities from continuing operations and a decrease in cash used for capital expenditures during 2024 as compared with 2023.
Cash Flows For Year Ended December 31, 2023 Compared with Year Ended December 31, 2022
For a comparison of our cash flows for the fiscal years ended December 31, 2023 and 2022, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 22, 2024.
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
| December 31, | December 31, | (Decrease) | Percent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | increase | change | |||||||||||||
| Cash and cash equivalents | $ | 340 | $ | 540 | $ | (200 | ) | (37 | )% | |||||||
| Accounts and notes receivable, net | 725 | 753 | (28 | ) | (4 | )% | ||||||||||
| Inventories | 917 | 867 | 50 | 6 | % | |||||||||||
| Prepaid expenses | 114 | 92 | 22 | 24 | % | |||||||||||
| Other current assets | 29 | 62 | (33 | ) | (53 | )% | ||||||||||
| Total current assets | 2,125 | 2,314 | (189 | ) | (8 | )% | ||||||||||
| Accounts payable | 770 | 719 | 51 | 7 | % | |||||||||||
| Accrued liabilities | 416 | 395 | 21 | 5 | % | |||||||||||
| Current portion of debt | 325 | 12 | 313 | NM | ||||||||||||
| Current operating lease liabilities | 54 | 46 | 8 | 17 | % | |||||||||||
| Total current liabilities | 1,565 | 1,172 | 393 | 34 | % | |||||||||||
| Working capital | $ | 560 | $ | 1,142 | $ | (582 | ) | (51 | )% |
Our working capital decreased by $582 million as a result of the net impact of the following significant changes:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The decrease in cash and cash equivalents of $200 million resulted from the matters identified on our consolidated statements of cash flows. See also “—Cash Flows Year Ended December 31, 2024 Compared with Year Ended December 31, 2023.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Inventories increased by $50 million primarily due to higher sales volumes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Prepaid expenses increased by $22 million primarily due to higher prepaid information technology costs. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other current assets decreased by $33 million primarily due to lower bank accepted drafts and lower current income tax receivable. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts payable increased by $51 million primarily due to higher inventory purchases and improved terms. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accrued liabilities increased by $21 million primarily due to increases in accrued income taxes, accrued interest, accrued rebates and accrued environmental liabilities, partially offset by a decrease in accrued payroll and taxes other than income. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Current portion of debt increased by $313 million primarily due to the outstanding balance on our 4.25% senior notes due April 2025 (“2025 Senior Notes”) that are now classified as current debt. |
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Liquidity
Short-Term Liquidity
We depend upon our cash, our 2022 Revolving Credit Facility, our A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2024, we had $1,719 million of combined cash and unused borrowing capacity, consisting of $340 million in cash, $1,197 million in availability under our 2022 Revolving Credit Facility and $182 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
| ● | During 2025, we expect to spend between approximately $180 million to $190 million on capital expenditures. Our future expenditures include certain environmental, health and safety upgrades; expansions and upgrades of our existing manufacturing and other facilities; construction of new facilities; certain cost reduction projects, including those described below; and certain information technology expenditures. We expect to fund capital expenditures with cash provided by operations. | |
|---|---|---|
| ● | During 2025, we expect to make contributions to our pension and postretirement benefit plans of approximately $35 million. | |
| ● | Our €300 million 2025 Senior Notes are scheduled to mature on April 1, 2025. Accordingly, an approximate €306 million (approximately $320 million as of December 31, 2024) payment for the principal and the unpaid, accrued interest will be made from our available liquidity. | |
| ● | On January 31, 2024, we completed the planned separation and acquisition of assets of SLIC, our manufacturing joint venture with BASF and three Chinese chemical companies. The final purchase price of the acquired assets has been determined based on an asset valuation, which was completed in the second quarter of 2024. The acquisition of the assets was funded in part with HPS issuing a U.S. dollar equivalent note payable at closing of approximately $218 million, which was repaid in full in the second quarter of 2024 using available funds at HPS. During the third quarter of 2024, we received approximately $64 million of cash from SLIC, of which $34 million was a dividend and $30 million was an interim liquidating distribution. Upon the full liquidation of the joint venture, all remaining cash of SLIC, primarily resulting from the proceeds received by SLIC, will be distributed back to the joint venture partners. We currently anticipate that approximately RMB 300 million (approximately $40 million as of December 31, 2024) will be distributed as a liquidating distribution and return of investment upon full liquidation, which we anticipate will be completed in 2025. | |
| ● | On February 28, 2023, we completed the sale of our Textile Effects Business to Archroma, and during the first quarter of 2024, we finalized the purchase price valued at $597 million, which includes adjustments to the purchase price for working capital, plus the assumption of underfunded pension liabilities. During the year ended December 31, 2024, we paid cash taxes of approximately $11 million, and we expect to pay additional cash taxes of approximately $2 million and expect to pay cash for contingencies and post-closing indemnifications in future periods related to the sale of our Textile Effects Business. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements. | |
| ● | During 2020 and 2021, management implemented cost realignment and synergy plans and, in November 2022, committed to further plans to realign our cost structure with additional restructuring in Europe, including exiting and consolidating certain facilities, workforce relocation to lower cost locations and further personnel rationalization. In connection with these plans, we have achieved combined annualized cost savings and synergy benefits in excess of $280 million. Associated with these plans, we expect total cash costs of approximately $300 million (including approximately $60 million of capital expenditures) through 2026, of which we have spent approximately $275 million through the end of 2024 (including approximately $44 million of capital expenditures). Of the remaining cash costs, the majority will be payments related to our restructuring in Europe, primarily for personnel who have exited as of the end of 2023 as well as capital expenditures related to our research and development footprint, which is included in our overall future capital expenditures projections. | |
| ● | As of December 31, 2024, we have approximately $547 million remaining under the authorization of our existing share repurchase program. Repurchases may be commenced or suspended from time to time without prior notice. |
Long-Term Liquidity
| ● | On September 26, 2024, Huntsman International completed a $350 million offering of its 2034 Senior Notes. Huntsman International used the net proceeds from the offering for general corporate purposes, including repayment of debt. The 2034 Senior Notes bear interest at 5.70% per year, payable semi-annually on April 15 and October 15 of each year, and will mature on October 15, 2034. For more information, see “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our consolidated financial statements. | |
|---|---|---|
| ● | On January 22, 2024, we entered into an amendment to our U.S. A/R Program that extended the scheduled maturity date of our U.S. A/R Program from July 2024 to January 2027. In addition, on January 31, 2024, we entered into an amendment to our EU A/R Program, effective as of February 15, 2024, that extended the scheduled maturity date of our EU A/R Program from July 2024 to July 2027. Aside from the extended maturity dates, these amendments to our A/R Programs secured substantially similar terms as those in the prior agreements. | |
| ` | ● | On February 6, 2025, the Louisiana Supreme Court affirmed the jury verdict and district court judgment in our favor in our long-running court battle against Praxair/Linde, one of the industrial gas suppliers to our Geismar, Louisiana MDI manufacturing site, and entered a damages award consistent with Huntsman’s expert witness testimony at trial. The case was filed after Praxair refused to maintain properly its own Geismar facility and then repeatedly failed to supply our requirements for industrial gases needed to manufacture MDI under long-term supply contracts that expired in 2013. We are evaluating our options with respect to this latest ruling which would result in a final award of approximately $42.5 million or, after adding mandatory pre-judgment and post-judgment interest approximately $65 million. Taking into account taxes and legal fees, we would expect to receive net proceeds of approximately $25 million to $30 million. We have not yet recognized the award in our consolidated statements of operations, and the timing of the resolution of this matter is uncertain. |
As of December 31,
2024, we had
$325 million classified as current portion of debt, including $313 million outstanding under our 2025 Senior Notes, debt at our variable interest entities of
$9 million and certain other short-term facilities and scheduled amortization payments totaling $3 million. We intend to renew, repay or extend these short-term facilities in the next twelve months.
As of December 31, 2024, we had approximately $280 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
For more information regarding our debt, see “Note 14. Debt” to our consolidated financial statements.
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Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make judgments, estimates and assumptions that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our financial condition and/or results of operations. Summarized below are our critical accounting estimates.
Income Taxes
Deferred income taxes reflect the net effects of temporary differences between assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized; valuation allowances are recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis and analyzed to determine whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limits our ability to consider other evidence, such as our projections for the future. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions affect our assessment of the realization of deferred tax assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning strategy associated with utilizing a deferred tax asset. As of December 31, 2024, we had total valuation allowances of $255 million, which represents an increase of $34 million from the prior year, and we have recognized a net deferred tax liability of $135 million. See “Note 19. Income Taxes” to our consolidated financial statements for more information regarding our deferred tax assets and valuation allowances.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., the Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 18. Employee Benefit Plans” to our consolidated financial statements.
We retain third party actuaries to assist us with judgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effects of a 1% change in three key assumptions are summarized as follows (dollars in millions):
| Statement of | Balance sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| Assumptions | operations(1) | impact(2) | ||||||
| Discount rate | ||||||||
| —1% increase | $ | (13 | ) | $ | (226 | ) | ||
| —1% decrease | 18 | 263 | ||||||
| Expected long-term rates of return on plan assets | ||||||||
| —1% increase | (23 | ) | — | |||||
| —1% decrease | 23 | — | ||||||
| Rate of compensation increase | ||||||||
| —1% increase | 3 | 28 | ||||||
| —1% decrease | (3 | ) | (17 | ) |
| Column 1 | Column 2 |
|---|---|
| (1) | Estimated (decrease) increase on 2024 net periodic benefit cost |
| Column 1 | Column 2 |
|---|---|
| (2) | Estimated (decrease) increase on December 31, 2024 pension and postretirement liabilities and accumulated other comprehensive loss |
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FY 2023 10-K MD&A
SEC filing source: 0001437749-24-005185.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ReSULTS OF OPERATIONS
As discussed in “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements, the results from continuing operations primarily exclude the results of our Textile Effects Business for all periods presented. For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, 2023, 2022 and 2021 (dollars in millions, except per share amounts).
Huntsman Corporation
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | ||||||||||||||||
| Revenues | $ | 6,111 | $ | 8,023 | $ | 7,670 | (24 | )% | 5 | % | ||||||||||
| Cost of goods sold | 5,205 | 6,477 | 6,086 | (20 | )% | 6 | % | |||||||||||||
| Gross profit | 906 | 1,546 | 1,584 | (41 | )% | (2 | )% | |||||||||||||
| Operating expenses | 804 | 788 | 813 | 2 | % | (3 | )% | |||||||||||||
| Restructuring, impairment and plant closing costs | 18 | 86 | 40 | (79 | )% | 115 | % | |||||||||||||
| Operating income | 84 | 672 | 731 | (88 | )% | (8 | )% | |||||||||||||
| Interest expense, net | (65 | ) | (62 | ) | (67 | ) | 5 | % | (7 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 83 | 67 | 143 | 24 | % | (53 | )% | |||||||||||||
| Fair value adjustments to Venator investment, net | (5 | ) | (12 | ) | (28 | ) | (58 | )% | (57 | )% | ||||||||||
| Loss on early extinguishment of debt | — | — | (27 | ) | — | (100 | )% | |||||||||||||
| (Costs) income associated with the Albemarle Settlement, net | — | (3 | ) | 465 | (100 | )% | NM | |||||||||||||
| Other income, net | 2 | 35 | 29 | (94 | )% | 21 | % | |||||||||||||
| Income from continuing operations before income taxes | 99 | 697 | 1,246 | (86 | )% | (44 | )% | |||||||||||||
| Income tax expense | (64 | ) | (186 | ) | (191 | ) | (66 | )% | (3 | )% | ||||||||||
| Income from continuing operations | 35 | 511 | 1,055 | (93 | )% | (52 | )% | |||||||||||||
| Income from discontinued operations, net of tax | 118 | 12 | 49 | 883 | % | (76 | )% | |||||||||||||
| Net income | 153 | 523 | 1,104 | (71 | )% | (53 | )% | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (52 | ) | (63 | ) | (59 | ) | (17 | )% | 7 | % | ||||||||||
| Interest expense, net from continuing operations | 65 | 62 | 67 | 5 | % | (7 | )% | |||||||||||||
| Income tax expense from continuing operations | 64 | 186 | 191 | (66 | )% | (3 | )% | |||||||||||||
| Income tax expense from discontinued operations | 17 | 19 | 21 | (11 | )% | (10 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 278 | 281 | 278 | (1 | )% | 1 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | — | 12 | 18 | (100 | )% | (33 | )% | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 4 | 12 | 22 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (135 | ) | (43 | ) | (88 | ) | ||||||||||||||
| Fair value adjustments to Venator investment, net | 5 | 12 | 28 | |||||||||||||||||
| Loss on early extinguishment of debt | — | — | 27 | |||||||||||||||||
| Certain legal and other settlements and related expenses | 6 | 7 | 13 | |||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | — | 3 | (465 | ) | ||||||||||||||||
| Gain on sale of businesses/assets | — | — | (30 | ) | ||||||||||||||||
| Income from transition services arrangements | — | (2 | ) | (8 | ) | |||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | 5 | 8 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 37 | 49 | 74 | |||||||||||||||||
| Plant incident remediation credits | — | (4 | ) | — | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 25 | 96 | 45 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 472 | $ | 1,155 | $ | 1,246 | (59 | )% | (7 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 251 | $ | 892 | $ | 915 | (72 | )% | (3 | )% | ||||||||||
| Net cash provided by (used in) investing activities from continuing operations | 309 | (260 | ) | (508 | ) | NM | (49 | )% | ||||||||||||
| Net cash used in financing activities | (620 | ) | (994 | ) | (977 | ) | (38 | )% | 2 | % | ||||||||||
| Capital expenditures from continuing operations | (230 | ) | (272 | ) | (326 | ) | (15 | )% | (17 | )% |
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Huntsman International
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2021 | 2023 vs 2022 | 2022 vs 2021 | ||||||||||||||||
| Revenues | $ | 6,111 | $ | 8,023 | $ | 7,670 | (24 | )% | 5 | % | ||||||||||
| Cost of goods sold | 5,205 | 6,477 | 6,086 | (20 | )% | 6 | % | |||||||||||||
| Gross profit | 906 | 1,546 | 1,584 | (41 | )% | (2 | )% | |||||||||||||
| Operating expenses | 801 | 784 | 806 | 2 | % | (3 | )% | |||||||||||||
| Restructuring, impairment and plant closing costs | 18 | 86 | 40 | (79 | )% | 115 | % | |||||||||||||
| Operating income | 87 | 676 | 738 | (87 | )% | (8 | )% | |||||||||||||
| Interest expense, net | (65 | ) | (62 | ) | (67 | ) | 5 | % | (7 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 83 | 67 | 143 | 24 | % | (53 | )% | |||||||||||||
| Fair value adjustments to Venator investment, net | (5 | ) | (12 | ) | (28 | ) | (58 | )% | (57 | )% | ||||||||||
| Loss on early extinguishment of debt | — | — | (27 | ) | — | (100 | )% | |||||||||||||
| (Costs) income associated with the Albemarle Settlement, net | — | (3 | ) | 465 | (100 | )% | NM | |||||||||||||
| Other income, net | 2 | 34 | 26 | (94 | )% | 31 | % | |||||||||||||
| Income from continuing operations before income taxes | 102 | 700 | 1,250 | (85 | )% | (44 | )% | |||||||||||||
| Income tax expense | (65 | ) | (188 | ) | (192 | ) | (65 | )% | (2 | )% | ||||||||||
| Income from continuing operations | 37 | 512 | 1,058 | (93 | )% | (52 | )% | |||||||||||||
| Income from discontinued operations, net of tax | 118 | 12 | 49 | 883 | % | (76 | )% | |||||||||||||
| Net income | 155 | 524 | 1,107 | (70 | )% | (53 | )% | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (52 | ) | (63 | ) | (59 | ) | (17 | )% | 7 | % | ||||||||||
| Interest expense, net from continuing operations | 65 | 62 | 67 | 5 | % | (7 | )% | |||||||||||||
| Income tax expense from continuing operations | 65 | 188 | 192 | (65 | )% | (2 | )% | |||||||||||||
| Income tax expense from discontinued operations | 17 | 19 | 21 | (11 | )% | (10 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 278 | 281 | 278 | (1 | )% | 1 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | — | 12 | 18 | (100 | )% | (33 | )% | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 4 | 12 | 22 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (135 | ) | (43 | ) | (88 | ) | ||||||||||||||
| Fair value adjustments to Venator investment, net | 5 | 12 | 28 | |||||||||||||||||
| Loss on early extinguishment of debt | — | — | 27 | |||||||||||||||||
| Certain legal and other settlements and related expenses | 6 | 7 | 13 | |||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | — | 3 | (465 | ) | ||||||||||||||||
| Gain on sale of businesses/assets | — | — | (30 | ) | ||||||||||||||||
| Income from transition services arrangements | — | (2 | ) | (8 | ) | |||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | 5 | 8 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 37 | 49 | 76 | |||||||||||||||||
| Plant incident remediation credits | — | (4 | ) | — | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 25 | 96 | 45 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 475 | $ | 1,158 | $ | 1,252 | (59 | )% | (8 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 253 | $ | 895 | $ | 918 | (72 | )% | (3 | )% | ||||||||||
| Net cash used in investing activities from continuing operations | (42 | ) | (1,277 | ) | (710 | ) | (97 | )% | 80 | % | ||||||||||
| Net cash (used in) provided by financing activities | (271 | ) | 22 | (778 | ) | NM | NM | |||||||||||||
| Capital expenditures from continuing operations | (230 | ) | (272 | ) | (326 | ) | (15 | )% | (17 | )% |
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Huntsman Corporation
| Year ended | Year ended | Year ended | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||
| Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
| Gross | and other(4) | Net | Gross | and other(4) | Net | Gross | and other(4) | Net | ||||||||||||||||||||||||||||
| Reconciliation of net income to adjusted net income | ||||||||||||||||||||||||||||||||||||
| Net income | $ | 153 | $ | 523 | $ | 1,104 | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (52 | ) | (63 | ) | (59 | ) | ||||||||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 4 | $ | (1 | ) | 3 | $ | 12 | $ | (2 | ) | 10 | $ | 22 | $ | (6 | ) | 16 | ||||||||||||||||||
| Income from discontinued operations(2)(5) | (135 | ) | 17 | (118 | ) | (43 | ) | 31 | (12 | ) | (88 | ) | 39 | (49 | ) | |||||||||||||||||||||
| Fair value adjustments to Venator investment, net | 5 | — | 5 | 12 | — | 12 | 28 | — | 28 | |||||||||||||||||||||||||||
| Loss on early extinguishment of debt | — | — | — | — | — | — | 27 | (6 | ) | 21 | ||||||||||||||||||||||||||
| Certain legal and other settlements and related expenses | 6 | (1 | ) | 5 | 7 | (2 | ) | 5 | 13 | (3 | ) | 10 | ||||||||||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | — | — | — | 3 | (1 | ) | 2 | (465 | ) | 55 | (410 | ) | ||||||||||||||||||||||||
| Gain on sale of businesses/assets | — | — | — | — | — | — | (30 | ) | 3 | (27 | ) | |||||||||||||||||||||||||
| Income from transition services arrangements | — | — | — | (2 | ) | — | (2 | ) | (8 | ) | 2 | (6 | ) | |||||||||||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | (1 | ) | 4 | 5 | (1 | ) | 4 | 8 | (2 | ) | 6 | ||||||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 37 | (6 | ) | 31 | 49 | (11 | ) | 38 | 74 | (16 | ) | 58 | ||||||||||||||||||||||||
| Plant incident remediation credits | — | — | — | (4 | ) | 1 | (3 | ) | — | — | — | |||||||||||||||||||||||||
| Establishment of significant deferred tax asset valuation allowance(6) | — | 14 | 14 | — | 49 | 49 | — | — | — | |||||||||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 25 | (3 | ) | 22 | 96 | (23 | ) | 73 | 45 | (11 | ) | 34 | ||||||||||||||||||||||||
| Adjusted net income(1) | $ | 67 | $ | 636 | $ | 726 | ||||||||||||||||||||||||||||||
| Weighted average shares-basic | 177.4 | 201.0 | 219.2 | |||||||||||||||||||||||||||||||||
| Weighted average shares-diluted | 177.4 | 203.0 | 221.4 | |||||||||||||||||||||||||||||||||
| Basic net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | (0.10 | ) | $ | 2.23 | $ | 4.55 | |||||||||||||||||||||||||||||
| Income from discontinued operations | 0.67 | 0.06 | 0.22 | |||||||||||||||||||||||||||||||||
| Net income | $ | 0.57 | $ | 2.29 | $ | 4.77 | ||||||||||||||||||||||||||||||
| Diluted net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | (0.10 | ) | $ | 2.21 | $ | 4.50 | |||||||||||||||||||||||||||||
| Income from discontinued operations | 0.67 | 0.06 | 0.22 | |||||||||||||||||||||||||||||||||
| Net income | $ | 0.57 | $ | 2.27 | $ | 4.72 | ||||||||||||||||||||||||||||||
| Other non-GAAP measures: | ||||||||||||||||||||||||||||||||||||
| Diluted adjusted net income per share(1) | $ | 0.37 | $ | 3.13 | $ | 3.28 | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 251 | $ | 892 | $ | 915 | ||||||||||||||||||||||||||||||
| Capital expenditures from continuing operations | (230 | ) | (272 | ) | (326 | ) | ||||||||||||||||||||||||||||||
| Free cash flow from continuing operations(1) | $ | 21 | $ | 620 | $ | 589 | ||||||||||||||||||||||||||||||
| Effective tax rate | 65 | % | 27 | % | 15 | % | ||||||||||||||||||||||||||||||
| Impact of non-GAAP adjustments(7) | (31 | )% | (7 | )% | 3 | % | ||||||||||||||||||||||||||||||
| Adjusted effective tax rate(1) | 34 | % | 20 | % | 18 | % |
NM—Not meaningful
| (1) | See “—Non-GAAP Financial Measures.” |
|---|---|
| (2) | Includes the gain on the sale of our Textile Effects Business in 2023. |
| (3) | Includes costs associated with transition activities relating primarily to our Corporate program to optimize our global approach to leverage shared services capabilities and managed services in various information technology functions. |
| (4) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
| (5) | In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
| (6) | During the years ended December 31, 2023 and 2022, we established a $14 million and a $49 million significant deferred tax asset valuation allowance in the U.K. and the Netherlands, respectively. We eliminated the effect of these significant deferred tax asset valuation allowances from our presentation of adjusted net income to allow investors to better compare our ongoing financial performance from period to period. |
| (7) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net income to adjusted net income noted above. |
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Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment, net; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) costs (income) associated with the Albemarle Settlement, net; (g) gain on sale of businesses/assets; (h) income from transition services arrangements; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation credits; and (l) restructuring, impairment and plant closing and transition costs. Starting in 2021, we began to include income and costs associated with the arbitration award we won in October 2021 in excess of $600 million against Albemarle Corporation (“Albemarle”) for fraud and breach of contract (the “Albemarle Settlement”), net in our adjustments since such income and costs represents a one-time legal settlement and does not reflect our ongoing financial performance. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) income from discontinued operations; (c) fair value adjustments to Venator investment, net; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) costs (income) associated with the Albemarle Settlement, net; (g) gain on sale of businesses/assets; (h) income from transition services arrangements associated with the sale of our Chemical Intermediates Businesses to Indorama; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation credits; (l) establishment of significant deferred tax asset valuation allowance; and (m) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow from continuing operations is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan dividend and stock buyback levels and (d) evaluate our ability to incur and service debt.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, such as certain changes in valuation allowances that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gain on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.
Year Ended December 31, 2023 Compared with Year Ended December 31, 2022
For the year ended December 31, 2023, loss from continuing operations attributable to Huntsman Corporation was $17 million as compared with income of $448 million in the 2022 period. For the year ended December 31, 2023, loss from continuing operations attributable to Huntsman International was $15 million, as compared with income of $449 million in the 2022 period. The decreases noted above were the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2023 decreased by $1,912 million, or 24%, as compared with the 2022 period. The decrease was primarily due to lower sales volumes in all our segments and lower average selling prices in all our segments, except for our Advanced Materials segment. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2023 decreased by $640 million, or 41%, as compared with the 2022 period. The decrease resulted primarily from lower gross profits in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our operating expenses, net and the operating expenses, net of Huntsman International for the year ended December 31, 2023 increased by $16 million and $17 million, respectively, or 2% for both, as compared with the 2022 period, primarily related to the negative impact of translating foreign currency amounts to the U.S. dollar and an increase in other operating expenses, partially offset by decreases in selling, general and administrative expenses and research and development expenses. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Restructuring, impairment and plant closing costs for the year ended December 31, 2023 decreased by $68 million, or 79%, as compared with the 2022 period. For more information on restructuring activities, see “Note 12. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2023 increased to $83 million from $67 million in the 2022 period, primarily related to an increase in income at our PO/MTBE joint venture with China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | We recorded a loss of $5 million in fair value adjustments to our investment in Venator for the year ended December 31, 2023 compared to a loss of $12 million in the 2022 period. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our other income, net for the year ended December 31, 2023 was $2 million as compared with $35 million in the 2022 period, and the other income, net of Huntsman International for the year ended December 31, 2023 was $2 million as compared with $34 million in the 2022 period, primarily related to an increase in certain periodic pension costs, partially offset by a decrease in certain legal related expenses. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2023 decreased to $64 million from $186 million in the 2022 period. The income tax expense of Huntsman International for the year ended December 31, 2023 decreased to $65 million from $188 million in the 2022 period. The decrease in income tax expense was primarily due to the decrease in income from continuing operations before income taxes. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate along with the impact of valuation allowances in certain tax jurisdictions. For more information concerning income taxes, see “Note 19. Income Taxes” to our consolidated financial statements. |
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Segment Analysis
Year Ended December 31, 2023 Compared with Year Ended December 31, 2022
| Percent | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| change | ||||||||||||
| Year ended December 31, | favorable | |||||||||||
| (Dollars in millions) | 2023 | 2022 | (unfavorable) | |||||||||
| Revenues | ||||||||||||
| Polyurethanes | $ | 3,865 | $ | 5,067 | (24 | )% | ||||||
| Performance Products | 1,178 | 1,713 | (31 | )% | ||||||||
| Advanced Materials | 1,092 | 1,277 | (14 | )% | ||||||||
| Total reportable segments’ revenues | 6,135 | 8,057 | (24 | )% | ||||||||
| Intersegment eliminations | (24 | ) | (34 | ) | NM | |||||||
| Total | $ | 6,111 | $ | 8,023 | (24 | )% | ||||||
| Huntsman Corporation | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 248 | $ | 628 | (61 | )% | ||||||
| Performance Products | 201 | 469 | (57 | )% | ||||||||
| Advanced Materials | 186 | 233 | (20 | )% | ||||||||
| Total reportable segments’ adjusted EBITDA | 635 | 1,330 | (52 | )% | ||||||||
| Corporate and other | (163 | ) | (175 | ) | 7 | % | ||||||
| Total | $ | 472 | $ | 1,155 | (59 | )% | ||||||
| Huntsman International | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 248 | $ | 628 | (61 | )% | ||||||
| Performance Products | 201 | 469 | (57 | )% | ||||||||
| Advanced Materials | 186 | 233 | (20 | )% | ||||||||
| Total reportable segments’ adjusted EBITDA | 635 | 1,330 | (52 | )% | ||||||||
| Corporate and other | (160 | ) | (172 | ) | 7 | % | ||||||
| Total | $ | 475 | $ | 1,158 | (59 | )% |
| NM—Not meaningful | |
|---|---|
| (1) | For more information, including reconciliation of total reportable segments’ adjusted EBITDA to income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 26. Operating Segment Information” to our consolidated financial statements. |
| Year ended December 31, 2023 vs 2022 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average selling prices(1) | ||||||||||||||||
| Local | Foreign currency | Sales | Mix and | |||||||||||||
| currency | translation impact | volumes(2) | other | |||||||||||||
| Period-over-period increase (decrease) | ||||||||||||||||
| Polyurethanes | (10 | )% | (1 | )% | (10 | )% | (3 | )% | ||||||||
| Performance Products | (8 | )% | — | (24 | )% | 1 | % | |||||||||
| Advanced Materials | 1 | % | — | (18 | )% | 3 | % |
| Column 1 | Column 2 |
|---|---|
| (1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
| Column 1 | Column 2 |
|---|---|
| (2) | Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The decrease in revenues in our Polyurethanes segment for 2023 compared to 2022 was primarily due to lower sales volumes, lower MDI average selling prices and the net negative impact of major foreign currency exchange rate movements against the U.S. dollar. Sales volumes decreased primarily due to lower demand, primarily in the Americas. MDI average selling prices decreased primarily due to less favorable supply and demand dynamics. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, lower MDI margins, the net negative impact of major foreign currency exchange rate movements against the U.S. dollar and a gain from an insurance settlement received in the second quarter of 2022, partially offset by higher equity earnings from our minority-owned joint venture in China and cost savings from our cost optimization programs.
Performance Products
The decrease in revenues in our Performance Products segment for 2023 compared to 2022 was primarily due to lower sales volumes and lower average selling prices. Sales volumes decreased in all regions primarily due to slowing construction activity and reduced demand in coatings and adhesives, agriculture, lubes and other industrial markets. The decrease in segment adjusted EBITDA was primarily due to decreased sales volumes and lower average selling prices, partially offset by reduced fixed costs.
Advanced Materials
The decrease in revenues in our Advanced Materials segment for 2023 compared to 2022 was primarily due to lower sales volumes while average selling prices remained stable. Sales volumes decreased primarily due to reduced customer demand in our infrastructure markets and the deselection of lower margin business. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, last-in first-out (“LIFO”) inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For 2023, adjusted EBITDA from Corporate and other for Huntsman Corporation increased by $12 million to a loss of $163 million from a loss of $175 million for 2022. For 2023, adjusted EBITDA from Corporate and other for Huntsman International increased by $12 million to a loss of $160 million from a loss of $172 million for 2022. The increase in adjusted EBITDA from Corporate and other resulted primarily from an increase in LIFO valuation gains and a decrease in corporate overhead costs and minority interest expense, partially offset by a decrease in unallocated foreign currency exchange gains.
31
Year Ended December 31, 2022 Compared with Year Ended December 31, 2021
For a comparison of both our results of operations and segment analysis for the fiscal years ended December 31, 2022 and 2021, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 21, 2023.
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10-K.
Cash Flows For Year Ended December 31, 2023 Compared with Year Ended December 31, 2022
Net cash provided by operating activities from continuing operations for 2023 and 2022 was $251 million and $892 million, respectively. The decrease in net cash provided by operating activities from continuing operations during 2023 compared with 2022 was primarily attributable to decreased operating income as described in “—Results of Operations” above as well as a net cash outflow of $95 million related to changes in operating assets and liabilities for 2023 as compared with 2022.
Net cash provided by (used in) investing activities from continuing operations for 2023 and 2022 was $309 million and $(260) million, respectively. During 2023 and 2022, we paid $230 million and $272 million, respectively, for capital expenditures. During 2023, we received $544 million for the sale of businesses, net, primarily related to net proceeds of $530 million from the sale of our Textile Effects Business. See “See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements.
Net cash used in financing activities for 2023 and 2022 was $620 million and $994 million, respectively. During 2023 and 2022, we paid $349 million and $1,005 million for repurchases of our common stock, respectively. During 2023, we repaid $51 million against the outstanding balances under our 2022 $1.2 billion senior unsecured revolving credit facility (“2022 Revolving Credit Facility”) and our U.S. accounts receivable securitization program (“U.S. A/R Program”) and European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”). During 2022, we had net borrowings of $219 million under our 2022 Revolving Credit Facility.
Free cash flow from continuing operations for 2023 and 2022 were proceeds of cash of $21 million and $620 million, respectively. The decrease in free cash flow from continuing operations was primarily attributable to a decrease in cash provided by operating activities from continuing operations, partially offset by a decrease in cash used for capital expenditures during 2023 as compared with 2022.
Cash Flows For Year Ended December 31, 2022 Compared with Year Ended December 31, 2021
For a comparison of our cash flows for the fiscal years ended December 31, 2022 and 2021, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 21, 2023.
Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
| December 31, | December 31, | (Decrease) | Percent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | increase | change | |||||||||||||
| Cash and cash equivalents | $ | 540 | $ | 654 | $ | (114 | ) | (17 | )% | |||||||
| Accounts and notes receivable, net | 753 | 834 | (81 | ) | (10 | )% | ||||||||||
| Inventories | 867 | 995 | (128 | ) | (13 | )% | ||||||||||
| Other current assets | 154 | 190 | (36 | ) | (19 | )% | ||||||||||
| Current assets held for sale (1) | — | 472 | (472 | ) | (100 | )% | ||||||||||
| Total current assets | 2,314 | 3,145 | (831 | ) | (26 | )% | ||||||||||
| Accounts payable | 719 | 961 | (242 | ) | (25 | )% | ||||||||||
| Accrued liabilities | 395 | 429 | (34 | ) | (8 | )% | ||||||||||
| Current portion of debt | 12 | 66 | (54 | ) | (82 | )% | ||||||||||
| Current operating lease liabilities | 46 | 51 | (5 | ) | (10 | )% | ||||||||||
| Current liabilities held for sale (1) | — | 194 | (194 | ) | (100 | )% | ||||||||||
| Total current liabilities | 1,172 | 1,701 | (529 | ) | (31 | )% | ||||||||||
| Working capital | $ | 1,142 | $ | 1,444 | $ | (302 | ) | (21 | )% |
| Column 1 | Column 2 |
|---|---|
| (1) | Total assets and liabilities held for sale as of December 31, 2022 are classified as current because we completed the sale of our Textile Effects Business on February 28, 2023. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements. |
Our working capital decreased by $302 million as a result of the net impact of the following significant changes:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The decrease in cash and cash equivalents of $114 million resulted from the matters identified on our consolidated statements of cash flows. See also “—Cash Flows Year Ended December 31, 2023 Compared with Year Ended December 31, 2022.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts and notes receivable, net decreased by $81 million primarily due to lower revenues in the fourth quarter of 2023 compared to the fourth quarter of 2022. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Inventories decreased by $128 million primarily due to lower inventory costs and volumes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Other current assets decreased by $36 million primarily due to amortization of deferred charges related to insurance premiums and a decrease in current income taxes receivable. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts payable decreased by $242 million primarily due to lower inventory purchases. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accrued liabilities decreased by $34 million primarily due to a decrease in accrued compensation costs and accrued restructuring costs. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Current portion of debt decreased by $54 million primarily due to the repayment in full of the outstanding balance under our 2022 Revolving Credit Facility. |
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Short-Term Liquidity
We depend upon our cash, our 2022 Revolving Credit Facility, our A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2023, we had $1,738 million of combined cash and unused borrowing capacity, consisting of $540 million in cash, $1,196 million in availability under our 2022 Revolving Credit Facility and $2 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
| ● | During 2024, we expect to spend approximately $200 million on capital expenditures. Our future expenditures include certain environmental, health and safety upgrades; expansions and upgrades of our existing manufacturing and other facilities; construction of new facilities; certain cost reduction projects, including those described below; and certain information technology expenditures. We expect to fund capital expenditures with cash provided by operations. | |
|---|---|---|
| ● | During 2024, we expect to make contributions to our pension and postretirement benefit plans of approximately $34 million. | |
| ● | As of December 31, 2023, we have approximately $547 million remaining under the authorization of our existing share repurchase program. Repurchases may be commenced or suspended from time to time without prior notice. | |
| ● | On January 31, 2024, we completed the planned separation and acquisition of assets of SLIC, our manufacturing joint venture with BASF and three Chinese chemical companies. The final purchase price of the acquired assets will be determined based on an asset valuation, which we currently expect to be completed in the first quarter of 2024. The acquisition of the assets were funded in part with HPS issuing a note payable at closing of approximately $230 million, which is subject to change pending the final valuation. As of January 31, 2024, we made a cash payment of approximately $26 million against the note payable. The remainder of the note payable will be paid off in cash in future quarters. The future proceeds of the acquisition received by SLIC will be distributed back to the respective joint venture partners upon liquidation of the joint venture. We anticipate that the liquidation will occur by mid-2025. | |
| ● | On February 28, 2023, we completed the sale of our Textile Effects Business to Archroma for a purchase price of $593 million, which included estimated adjustments to the purchase price for working capital plus the assumption of underfunded pension liabilities. The final purchase price is subject to customary post-closing adjustments, which are anticipated to be complete in the first quarter of 2024. During 2023, we have paid cash taxes of approximately $23 million, and we expect to pay additional cash taxes of approximately $15 million. See “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements. | |
| ● | During 2020 and 2021, management implemented cost realignment and synergy plans and, in November 2022, committed to further plans to realign our cost structure with additional restructuring in Europe, including exiting and consolidating certain facilities, workforce relocation to lower cost locations and further personnel rationalization. In connection with these plans, we have achieved combined annualized cost savings and synergy benefits in excess of $280 million. Associated with these plans, we expect total cash costs of approximately $285 million (including approximately $56 million of capital expenditures) through 2025, of which we have spent approximately $230 million through 2023 (including approximately $34 million of capital expenditures). Of the remaining cash costs, the majority will be payments related to our restructuring in Europe, primarily for personnel who have exited as of the end of 2023 as well as capital expenditures related to our research and development footprint, which is included in our overall future capital expenditures projections. |
Long-Term Liquidity
| ● | On January 22, 2024, we entered into an amendment to our U.S. A/R Program that extended the scheduled maturity date of our U.S. A/R Program from July 2024 to January 2027. In addition, on January 31, 2024, we entered into an amendment to our EU A/R Program, effective as of February 15, 2024, that extended the scheduled maturity date of our EU A/R Program from July 2024 to July 2027. Aside from the extended maturity dates, these amendments to our A/R Programs secured substantially similar terms as those in the prior agreements. | |
|---|---|---|
| ` | ● | On April 29, 2022, a New Orleans jury awarded us approximately $94 million in our long-running court battle against Praxair/Linde, one of the industrial gas suppliers to our Geismar, Louisiana MDI manufacturing site. The case was filed after Praxair refused to properly maintain its own Geismar facility and then repeatedly failed to supply our requirements for industrial gas needed to manufacture MDI under long-term supply contracts that expired in 2013. After adding mandatory pre-judgment and post-judgment interest to the award, we expect damages to exceed $125 million before deducting for taxes and legal fees. The award is subject to a pending appeal, and if affirmed, we expect to receive net proceeds of approximately $50 million to $60 million. We have not yet recognized the award in our consolidated statements of operations. |
| ● | On May 20, 2022, Huntsman International entered into the 2022 Revolving Credit Facility. Borrowings will bear interest at the rates specified in the credit agreement governing the 2022 Revolving Credit Facility, which will vary based on the type of loan and Huntsman International’s debt ratings. Under the credit agreement, the interest rate margin and the commitment fee rates are also subject to adjustments based on the Company’s performance on specified sustainability target thresholds with respect to annual percentage reduction in operational greenhouse gas emissions intensity and annual percentage reduction in water consumption intensity. Unless previously terminated in accordance with its terms, the credit agreement will mature in May 2027. Huntsman International may increase the 2022 Revolving Credit Facility commitments up to an additional $500 million, subject to the satisfaction of certain conditions. See “Note 14. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our consolidated financial statements. | |
| ● | On February 16, 2024, our Board of Directors declared a $0.25 per share cash dividend on our common stock. This represents an approximate 5% increase from the previous dividend. |
As of December 31,
2023, we had
$12 million classified as current portion of debt, including debt at our variable interest entities of
$9 million and certain other short-term facilities and scheduled amortization payments totaling $3 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.
As of December 31, 2023, we had approximately $529 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
For more information regarding our debt, see “Note 14. Debt” to our consolidated financial statements.
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Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make judgments, estimates and assumptions that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our financial condition and/or results of operations. Summarized below are our critical accounting estimates.
Income Taxes
Deferred income taxes reflect the net effects of temporary differences between assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized; valuation allowances are recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limits our ability to consider other evidence, such as our projections for the future. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions affect our assessment of the realization of deferred tax assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning strategy associated with utilizing a deferred tax asset. As of December 31, 2023, we had total valuation allowances of $221 million, which represents an increase of $52 million from the prior year, and we have a recognized a net deferred tax liability of $131 million. See “Note 19. Income Taxes” to our consolidated financial statements for more information regarding our deferred tax assets and valuation allowances.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., the Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. and Canada. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 18. Employee Benefit Plans” to our consolidated financial statements.
We retain third party actuaries to assist us with judgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effect of a 1% change in three key assumptions is summarized as follows (dollars in millions):
| Statement of | Balance sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| Assumptions | operations(1) | impact(2) | ||||||
| Discount rate | ||||||||
| —1% increase | $ | (16 | ) | $ | (256 | ) | ||
| —1% decrease | 18 | 302 | ||||||
| Expected long-term rates of return on plan assets | ||||||||
| —1% increase | (22 | ) | — | |||||
| —1% decrease | 22 | — | ||||||
| Rate of compensation increase | ||||||||
| —1% increase | 2 | 25 | ||||||
| —1% decrease | (5 | ) | (23 | ) |
| Column 1 | Column 2 |
|---|---|
| (1) | Estimated (decrease) increase on 2023 net periodic benefit cost |
| Column 1 | Column 2 |
|---|---|
| (2) | Estimated (decrease) increase on December 31, 2023 pension and postretirement liabilities and accumulated other comprehensive loss |
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FY 2022 10-K MD&A
SEC filing source: 0001437749-23-003950.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ReSULTS OF OPERATIONS
As discussed in “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements, the results from continuing operations primarily exclude the results of our Textile Effects Business for all periods presented. For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, 2022, 2021 and 2020 (dollars in millions, except per share amounts).
Huntsman Corporation
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2020 | 2022 vs 2021 | 2021 vs 2020 | ||||||||||||||||
| Revenues | $ | 8,023 | $ | 7,670 | $ | 5,421 | 5 | % | 41 | % | ||||||||||
| Cost of goods sold | 6,477 | 6,086 | 4,444 | 6 | % | 37 | % | |||||||||||||
| Gross profit | 1,546 | 1,584 | 977 | (2 | )% | 62 | % | |||||||||||||
| Operating expenses | 788 | 813 | 504 | (3 | )% | 61 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 86 | 40 | 41 | 115 | % | (2 | )% | |||||||||||||
| Operating income | 672 | 731 | 432 | (8 | )% | 69 | % | |||||||||||||
| Interest expense, net | (62 | ) | (67 | ) | (86 | ) | (7 | )% | (22 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 67 | 143 | 42 | (53 | )% | 240 | % | |||||||||||||
| Fair value adjustments to Venator investment, net and related loss on disposal | (12 | ) | (28 | ) | (88 | ) | (57 | )% | (68 | )% | ||||||||||
| Loss on early extinguishment of debt | — | (27 | ) | — | (100 | )% | NM | |||||||||||||
| (Costs) income associated with the Albemarle Settlement, net | (3 | ) | 465 | — | NM | NM | ||||||||||||||
| Other income, net | 35 | 29 | 31 | 21 | % | (6 | )% | |||||||||||||
| Income from continuing operations before income taxes | 697 | 1,246 | 331 | (44 | )% | 276 | % | |||||||||||||
| Income tax expense | (186 | ) | (191 | ) | (42 | ) | (3 | )% | 355 | % | ||||||||||
| Income from continuing operations | 511 | 1,055 | 289 | (52 | )% | 265 | % | |||||||||||||
| Income from discontinued operations, net of tax | 12 | 49 | 777 | (76 | )% | (94 | )% | |||||||||||||
| Net income | 523 | 1,104 | 1,066 | (53 | )% | 4 | % | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (63 | ) | (59 | ) | (32 | ) | 7 | % | 84 | % | ||||||||||
| Interest expense, net from continuing operations | 62 | 67 | 86 | (7 | )% | (22 | )% | |||||||||||||
| Income tax expense from continuing operations | 186 | 191 | 42 | (3 | )% | 355 | % | |||||||||||||
| Income tax expense from discontinued operations | 19 | 21 | 246 | (10 | )% | (91 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 281 | 278 | 267 | 1 | % | 4 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | 12 | 18 | 16 | (33 | )% | 13 | % | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 12 | 22 | 31 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (43 | ) | (88 | ) | (1,039 | ) | ||||||||||||||
| Fair value adjustments to Venator investment, net and related loss on disposal | 12 | 28 | 88 | |||||||||||||||||
| Loss on early extinguishment of debt | — | 27 | — | |||||||||||||||||
| Certain legal and other settlements and related expenses | 7 | 13 | 5 | |||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | 3 | (465 | ) | — | ||||||||||||||||
| Gain on sale of businesses/assets | — | (30 | ) | (280 | ) | |||||||||||||||
| Income from transition services arrangements | (2 | ) | (8 | ) | (7 | ) | ||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | 8 | 6 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 49 | 74 | 64 | |||||||||||||||||
| Plant incident remediation (credits) costs | (4 | ) | — | 2 | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 96 | 45 | 44 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 1,155 | $ | 1,246 | $ | 605 | (7 | )% | 106 | % | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 892 | $ | 915 | $ | 231 | (3 | )% | 296 | % | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (260 | ) | (508 | ) | 1,474 | (49 | )% | NM | ||||||||||||
| Net cash used in financing activities | (994 | ) | (977 | ) | (655 | ) | 2 | % | 49 | % | ||||||||||
| Capital expenditures from continuing operations | (272 | ) | (326 | ) | (237 | ) | (17 | )% | 38 | % |
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Huntsman International
| December 31, | Percent change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2020 | 2022 vs 2021 | 2021 vs 2020 | ||||||||||||||||
| Revenues | $ | 8,023 | $ | 7,670 | $ | 5,421 | 5 | % | 41 | % | ||||||||||
| Cost of goods sold | 6,477 | 6,086 | 4,444 | 6 | % | 37 | % | |||||||||||||
| Gross profit | 1,546 | 1,584 | 977 | (2 | )% | 62 | % | |||||||||||||
| Operating expenses | 784 | 806 | 498 | (3 | )% | 62 | % | |||||||||||||
| Restructuring, impairment and plant closing costs | 86 | 40 | 41 | 115 | % | (2 | )% | |||||||||||||
| Operating income | 676 | 738 | 438 | (8 | )% | 68 | % | |||||||||||||
| Interest expense, net | (62 | ) | (67 | ) | (88 | ) | (7 | )% | (24 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 67 | 143 | 42 | (53 | )% | 240 | % | |||||||||||||
| Fair value adjustments to Venator investment, net and related loss on disposal | (12 | ) | (28 | ) | (88 | ) | (57 | )% | (68 | )% | ||||||||||
| Loss on early extinguishment of debt | — | (27 | ) | — | (100 | )% | NM | |||||||||||||
| (Costs) income associated with the Albemarle Settlement, net | (3 | ) | 465 | — | NM | NM | ||||||||||||||
| Other income, net | 34 | 26 | 28 | 31 | % | (7 | )% | |||||||||||||
| Income from continuing operations before income taxes | 700 | 1,250 | 332 | (44 | )% | 277 | % | |||||||||||||
| Income tax expense | (188 | ) | (192 | ) | (42 | ) | (2 | )% | 357 | % | ||||||||||
| Income from continuing operations | 512 | 1,058 | 290 | (52 | )% | 265 | % | |||||||||||||
| Income from discontinued operations, net of tax | 12 | 49 | 777 | (76 | )% | (94 | )% | |||||||||||||
| Net income | 524 | 1,107 | 1,067 | (53 | )% | 4 | % | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (63 | ) | (59 | ) | (32 | ) | 7 | % | 84 | % | ||||||||||
| Interest expense, net from continuing operations | 62 | 67 | 88 | (7 | )% | (24 | )% | |||||||||||||
| Income tax expense (benefit) from continuing operations | 188 | 192 | 42 | (2 | )% | 357 | % | |||||||||||||
| Income tax expense from discontinued operations | 19 | 21 | 246 | (10 | )% | (91 | )% | |||||||||||||
| Depreciation and amortization of continuing operations | 281 | 278 | 267 | 1 | % | 4 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | 12 | 18 | 16 | (33 | )% | 13 | % | |||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 12 | 22 | 31 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (43 | ) | (88 | ) | (1,039 | ) | ||||||||||||||
| Fair value adjustments to Venator investment, net and related loss on disposal | 12 | 28 | 88 | |||||||||||||||||
| Loss on early extinguishment of debt | — | 27 | — | |||||||||||||||||
| Certain legal and other settlements and related expenses | 7 | 13 | 5 | |||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | 3 | (465 | ) | — | ||||||||||||||||
| Gain on sale of businesses/assets | — | (30 | ) | (280 | ) | |||||||||||||||
| Income from transition services arrangements | (2 | ) | (8 | ) | (7 | ) | ||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | 8 | 6 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 49 | 76 | 67 | |||||||||||||||||
| Plant incident remediation (credits) costs | (4 | ) | — | 2 | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 96 | 45 | 44 | |||||||||||||||||
| Adjusted EBITDA(1) | $ | 1,158 | $ | 1,252 | $ | 611 | (8 | )% | 105 | % | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 895 | $ | 918 | $ | 233 | (3 | )% | 294 | % | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (1,277 | ) | (710 | ) | 1,748 | 80 | % | NM | ||||||||||||
| Net cash provided by (used in) financing activities | 22 | (778 | ) | (933 | ) | NM | (17 | )% | ||||||||||||
| Capital expenditures from continuing operations | (272 | ) | (326 | ) | (237 | ) | (17 | )% | 38 | % |
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Huntsman Corporation
| Year ended | Year ended | Year ended | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2022 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||||||||||||||
| Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
| Gross | and other(4) | Net | Gross | and other(4) | Net | Gross | and other(4) | Net | ||||||||||||||||||||||||||||
| Reconciliation of net income to adjusted net income | ||||||||||||||||||||||||||||||||||||
| Net income | $ | 523 | $ | 1,104 | $ | 1,066 | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (63 | ) | (59 | ) | (32 | ) | ||||||||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 12 | $ | (2 | ) | 10 | $ | 22 | $ | (6 | ) | 16 | $ | 31 | $ | (6 | ) | 25 | ||||||||||||||||||
| Income from discontinued operations(2)(5) | (43 | ) | 31 | (12 | ) | (88 | ) | 39 | (49 | ) | (1,039 | ) | 262 | (777 | ) | |||||||||||||||||||||
| Fair value adjustments to Venator investment, net and related loss on disposal | 12 | — | 12 | 28 | — | 28 | 88 | (9 | ) | 79 | ||||||||||||||||||||||||||
| Loss on early extinguishment of debt | — | — | — | 27 | (6 | ) | 21 | — | — | — | ||||||||||||||||||||||||||
| Certain legal and other settlements and related expenses | 7 | (2 | ) | 5 | 13 | (3 | ) | 10 | 5 | (1 | ) | 4 | ||||||||||||||||||||||||
| Costs (income) associated with the Albemarle Settlement, net | 3 | (1 | ) | 2 | (465 | ) | 55 | (410 | ) | — | — | — | ||||||||||||||||||||||||
| Gain on sale of businesses/assets | — | — | — | (30 | ) | 3 | (27 | ) | (280 | ) | 31 | (249 | ) | |||||||||||||||||||||||
| Income from transition services arrangements | (2 | ) | — | (2 | ) | (8 | ) | 2 | (6 | ) | (7 | ) | 2 | (5 | ) | |||||||||||||||||||||
| Certain nonrecurring information technology project implementation costs | 5 | (1 | ) | 4 | 8 | (2 | ) | 6 | 6 | (1 | ) | 5 | ||||||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 49 | (11 | ) | 38 | 74 | (16 | ) | 58 | 64 | (14 | ) | 50 | ||||||||||||||||||||||||
| Plant incident remediation (credits) costs | (4 | ) | 1 | (3 | ) | — | — | — | 2 | — | 2 | |||||||||||||||||||||||||
| Establishment of significant deferred tax asset valuation allowance(6) | — | 49 | 49 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs(3) | 96 | (23 | ) | 73 | 45 | (11 | ) | 34 | 44 | (11 | ) | 33 | ||||||||||||||||||||||||
| Adjusted net income(1) | $ | 636 | $ | 726 | $ | 201 | ||||||||||||||||||||||||||||||
| Weighted average shares-basic | 201.0 | 219.2 | 220.6 | |||||||||||||||||||||||||||||||||
| Weighted average shares-diluted | 203.0 | 221.4 | 221.9 | |||||||||||||||||||||||||||||||||
| Basic net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 2.23 | $ | 4.55 | $ | 1.17 | ||||||||||||||||||||||||||||||
| Income from discontinued operations | 0.06 | 0.22 | 3.52 | |||||||||||||||||||||||||||||||||
| Net income | $ | 2.29 | $ | 4.77 | $ | 4.69 | ||||||||||||||||||||||||||||||
| Diluted net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 2.21 | $ | 4.50 | $ | 1.16 | ||||||||||||||||||||||||||||||
| Income from discontinued operations | 0.06 | 0.22 | 3.50 | |||||||||||||||||||||||||||||||||
| Net income | $ | 2.27 | $ | 4.72 | $ | 4.66 | ||||||||||||||||||||||||||||||
| Other non-GAAP measures: | ||||||||||||||||||||||||||||||||||||
| Diluted adjusted net income per share(1) | $ | 3.13 | $ | 3.28 | $ | 0.91 | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 892 | $ | 915 | $ | 231 | ||||||||||||||||||||||||||||||
| Capital expenditures from continuing operations | (272 | ) | (326 | ) | (237 | ) | ||||||||||||||||||||||||||||||
| Free cash flow from continuing operations(1) | $ | 620 | $ | 589 | $ | (6 | ) | |||||||||||||||||||||||||||||
| Effective tax rate | 27 | % | 15 | % | 13 | % | ||||||||||||||||||||||||||||||
| Impact of non-GAAP adjustments(7) | (7 | )% | 3 | % | 5 | % | ||||||||||||||||||||||||||||||
| Adjusted effective tax rate(1) | 20 | % | 18 | % | 18 | % | ||||||||||||||||||||||||||||||
| Other cash flow measure: | ||||||||||||||||||||||||||||||||||||
| Net cash proceeds from the Albemarle Settlement(8) | $ | 78 | $ | 333 | $ | — | ||||||||||||||||||||||||||||||
| Taxes paid on sale of businesses(9) | — | (3 | ) | (257 | ) |
NM—Not meaningful
| (1) | See “—Non-GAAP Financial Measures.” |
|---|---|
| (2) | Includes the gain on the sale of our Chemical Intermediates Businesses in 2020. |
| (3) | Includes costs associated with transition activities relating primarily to our Corporate program to optimize our global approach to leverage shared services capabilities as well as our 2020 acquisition of CVC Thermoset Specialties, a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets (“CVC Thermoset Specialties Acquisition”). |
| (4) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
| (5) | In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
| (6) | During the year ended December 31, 2022, we established a $49 million significant deferred tax asset valuation allowance in The Netherlands. We eliminated the effect of this significant change in deferred tax asset valuation allowances from our presentation of adjusted net income to allow investors to better compare our ongoing financial performance from period to period. |
| (7) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net income to adjusted net income noted above. |
| (8) | Represents net cash proceeds received in connection with the arbitration award we won on October 28, 2021 in excess of $600 million against Albemarle Corporation (“Albemarle”) for fraud and breach of contract (the “Albemarle Settlement”). On November 4, 2021, Albemarle agreed to waive any appeal and pay $665 million to us. |
| (9) | Represents the taxes paid in connection with the sale of the Chemical Intermediates Businesses and the sale of the India-based DIY business. For more information, see “Note 4. Discontinued Operations and Business Dispositions” to our consolidated financial statements. |
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Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment, net and related loss on disposal; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) costs (income) associated with the Albemarle Settlement, net; (g) gain on sale of businesses/assets; (h) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation (credits) costs; and (l) restructuring, impairment and plant closing and transition costs. Starting in the fourth quarter of 2021, we began to include income and costs associated with the Albemarle Settlement, net in our adjustments since such income and costs represents a one-time legal settlement and does not reflect our ongoing financial performance. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) income from discontinued operations; (c) fair value adjustments to Venator investment, net and related loss on disposal; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) costs (income) associated with the Albemarle Settlement, net; (g) gain on sale of businesses/assets; (h) income from transition services arrangements associated with the sale of our Chemical Intermediates Businesses to Indorama; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation (credits) costs; (l) establishment of significant deferred tax asset valuation allowance; and (m) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow from continuing operations is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock buyback and dividend levels and (d) evaluate our ability to incur and service debt.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted and certain changes in valuation allowances that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.
Year Ended December 31, 2022 Compared with Year Ended December 31, 2021
For the year ended December 31, 2022, income from continuing operations attributable to Huntsman Corporation was $448 million, a decrease of $548 million from $996 million in the 2021 period. For the year ended December 31, 2022, income from continuing operations attributable to Huntsman International was $449 million, a decrease of $550 million from $999 million in the 2021 period. The decreases noted above were the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2022 increased by $353 million, or 5%, as compared with the 2021 period. The increase was primarily due to higher average selling prices in all our segments, partially offset by lower sales volumes in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2022 decreased by $38 million, or 2%, as compared with the 2021 period. The decrease resulted from lower gross profit in our Polyurethanes segment, partially offset by higher gross profits in our Performance Products and Advanced Materials segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our operating expenses and the operating expenses of Huntsman International for the year ended December 31, 2022 decreased by $25 million and $22 million, respectively, or 3% for both, as compared with the 2021 period, primarily related to lower selling, general and administrative costs. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Restructuring, impairment and plant closing costs for the year ended December 31, 2022 increased by $46 million, or 115%, as compared with the 2021 period. For more information on restructuring activities, see “Note 12. Restructuring, Impairment and Plant Closing Costs” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Interest expense, net for the year ended December 31, 2022 decreased by $5 million, or 7%, as compared with the 2021 period, primarily related to the redemption in full of our 2021 Senior Notes in the first quarter of 2021. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2022 decreased to $67 million from $143 million in the 2021 period. The decrease was primarily attributable to a decrease in income at our PO/MTBE joint venture in China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Fair values adjustments to our investment in Venator and the related option to sell our remaining Venator shares was a net loss of $12 million for the year ended December 31, 2022 as compared with a net loss of $28 million in the 2021 period. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Loss on early extinguishment of debt was nil for the year ended December 31, 2022 as compared with $27 million in the 2021 period, primarily due to the redemption in full of our 2022 Senior Notes in the second quarter of 2021. See “Note. 14. Debt—Notes” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | (Costs) income associated with the Albemarle Settlement, net was $(3) million for the year ended December 31, 2022 as compared with $465 million for the year ended December 31, 2021 and was related to the arbitration award we won on October 28, 2021 in excess of $600 million against Albemarle for fraud and breach of contract. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2022 decreased to $186 million from $191 million in the 2021 period. The income tax expense of Huntsman International for the year ended December 31, 2022 decreased to $188 million from $192 million in the 2021 period. The decrease in income tax expense was primarily due to a decrease in income from continuing operations before income taxes offset by an increase in valuation allowance. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, along with the impact of valuation allowances in certain tax jurisdictions. For more information concerning income taxes, see “Note 19. Income Taxes” to our consolidated financial statements. |
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Segment Analysis
Year Ended December 31, 2022 Compared with Year Ended December 31, 2021
| Percent | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| change | ||||||||||||
| Year ended December 31, | favorable | |||||||||||
| (Dollars in millions) | 2022 | 2021 | (unfavorable) | |||||||||
| Revenues | ||||||||||||
| Polyurethanes | $ | 5,067 | $ | 5,019 | 1 | % | ||||||
| Performance Products | 1,713 | 1,485 | 15 | % | ||||||||
| Advanced Materials | 1,277 | 1,198 | 7 | % | ||||||||
| Total reportable segments’ revenues | 8,057 | 7,702 | 5 | % | ||||||||
| Intersegment eliminations | (34 | ) | (32 | ) | NM | |||||||
| Total | $ | 8,023 | $ | 7,670 | 5 | % | ||||||
| Huntsman Corporation | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 628 | $ | 879 | (29 | )% | ||||||
| Performance Products | 469 | 359 | 31 | % | ||||||||
| Advanced Materials | 233 | 204 | 14 | % | ||||||||
| Total reportable segments’ adjusted EBITDA | 1,330 | 1,442 | (8 | )% | ||||||||
| Corporate and other | (175 | ) | (196 | ) | 11 | % | ||||||
| Total | $ | 1,155 | $ | 1,246 | (7 | )% | ||||||
| Huntsman International | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 628 | $ | 879 | (29 | )% | ||||||
| Performance Products | 469 | 359 | 31 | % | ||||||||
| Advanced Materials | 233 | 204 | 14 | % | ||||||||
| Total reportable segments’ adjusted EBITDA | 1,330 | 1,442 | (8 | )% | ||||||||
| Corporate and other | (172 | ) | (190 | ) | 9 | % | ||||||
| Total | $ | 1,158 | $ | 1,252 | (8 | )% |
| NM—Not meaningful | |
|---|---|
| (1) | For more information, including reconciliation of total reportable segments’ adjusted EBITDA to income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 26. Operating Segment Information” to our consolidated financial statements. |
| Year ended December 31, 2022 vs 2021 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average selling prices(1) | ||||||||||||||||
| Local | Foreign currency | Sales | Mix and | |||||||||||||
| currency | translation impact | volumes(2) | other | |||||||||||||
| Period-over-period increase (decrease) | ||||||||||||||||
| Polyurethanes | 16 | % | (5 | )% | (10 | )% | — | |||||||||
| Performance Products | 27 | % | (3 | )% | (11 | )% | 2 | % | ||||||||
| Advanced Materials | 20 | % | (5 | )% | (19 | )% | 11 | % |
| Column 1 | Column 2 |
|---|---|
| (1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
| Column 1 | Column 2 |
|---|---|
| (2) | Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The increase in revenues in our Polyurethanes segment for 2022 compared to 2021 was primarily due to higher MDI average selling prices, partially offset by lower sales volumes and the negative impact of weaker major international currencies against the U.S. dollar. MDI average selling prices increased in Europe and the Americas regions. Sales volumes decreased due to lower demand across all our regions and across all markets, other than automotive. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, lower MDI margins in Europe and Asia, the negative impact of weaker major international currencies against the U.S. dollar and lower equity earnings from our minority-owned joint venture in China. These negative impacts were partially offset by lower fixed costs across all regions and higher MDI margins in the Americas.
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Performance Products
The increase in revenues in our Performance Products segment for 2022 compared to 2021 was due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased across all product lines primarily in response to an increase in raw material costs. Sales volumes decreased across all regions primarily due to slowing construction activity, fewer wind power installations in China and reduced demand in the coatings, adhesives and other industrial markets. The increase in segment adjusted EBITDA was primarily due to increased sales revenue and margins, partially offset by higher fixed costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for 2022 compared to 2021 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased across all of our end market segments primarily in response to higher raw material, energy and logistics costs as well as improved sales mix. Although sales volumes increased in our aerospace market, overall sales volumes decreased due to lower volumes in our non-aerospace markets resulting from deselection of lower margin business and weaker end market demand, particularly in the fourth quarter of 2022. The increase in segment adjusted EBITDA was primarily due to higher sales prices and improved sales mix.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, last-in first-out (“LIFO”) inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For 2022, adjusted EBITDA from Corporate and other for Huntsman Corporation increased by $21 million to a loss of $175 million from a loss of $196 million for 2021. For 2022, adjusted EBITDA from Corporate and other for Huntsman International increased by $18 million to a loss of $172 million from a loss of $190 million for 2021. The increase in adjusted EBITDA from Corporate and other resulted primarily from an increase in unallocated foreign currency exchange gains and a decrease in corporate overhead costs and LIFO valuation losses.
Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
For the year ended December 31, 2021, income from continuing operations attributable to Huntsman Corporation was $996 million, an increase of $739 million from $257 million in the 2020 period. For the year ended December 31, 2021, income from continuing operations attributable to Huntsman International was $999 million, an increase of $741 million from $258 million in the 2020 period. The increases noted above were the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2021 increased by $2,249 million, or 41%, as compared with the 2020 period. The increase was primarily due to higher average selling prices as well as higher sales volumes in all our segments. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2021 increased by $607 million, or 62%, as compared with the 2020 period. The increase resulted from higher gross profits in all our segments. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our operating expenses and the operating expenses of Huntsman International for the year ended December 31, 2021 increased by $309 million and $308 million, respectively, or 61% and 62%, respectively, as compared with the 2020 period, primarily related to higher selling, general and administrative costs and the gain on sale of our India-based DIY business in 2020. See “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based-Do-It-Yourself Consumer Adhesives Business” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our interest expense, net and the interest expense, net of Huntsman International for the year ended December 31, 2021, decreased by $19 million and $21 million, respectively, or 22% and 24%, respectively, as compared with the 2020 period, primarily related to the redemption in full of our 2021 Senior Notes in the first quarter of 2021. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2021 increased to $143 million from $42 million in the 2020 period. The increase was primarily attributable to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Fair value adjustments to our investment in Venator and the related option to sell our remaining Venator shares and the related loss on disposal was a net loss of $28 million for the year ended December 31, 2021 as compared with a net loss of $88 million in the 2020 period. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Loss on early extinguishment of debt was $27 million for the year ended December 31, 2021 as compared with nil in the 2020 period, primarily due to the redemption in full of our 2022 Senior Notes in the second quarter of 2021. See “Note. 14. Debt—Notes” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Income associated with the Albemarle Settlement, net was $465 million for the year ended December 31, 2021 related to the arbitration award we won on October 28, 2021 in excess of $600 million against Albemarle for fraud and breach of contract. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2021 increased to $191 million from $42 million in the 2020 period. The income tax expense of Huntsman International for the year ended December 31, 2021 increased to $192 million from $42 million in the 2020 period. The increase in income tax expense was primarily due to an increase in income from continuing operations before income taxes. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, along with the impact of valuation allowances in certain tax jurisdictions. For more information concerning income taxes, see “Note 19. Income Taxes” to our consolidated financial statements. |
For an analysis of our segments’ results of operations for the fiscal years ended December 31, 2021 and 2020, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 15, 2022.
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Selected Quarterly Financial Data
For each of our Company and Huntsman International, the following tables set forth a summary of selected quarterly financial data for the years ended December 31, 2022 and 2021 (dollars in millions). The results of our Textile Effects Business are reported as discontinued operations for all periods presented.
Huntsman Corporation
| Three months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | June 30, | September 30, | December 31, | |||||||||||||
| 2022 | 2022 | 2022 | 2022 | |||||||||||||
| Revenues | $ | 2,192 | $ | 2,170 | $ | 2,011 | $ | 1,650 | ||||||||
| Gross profit | 515 | 492 | 349 | 190 | ||||||||||||
| Income from continuing operations | 222 | 229 | 116 | (56 | ) | |||||||||||
| Net income | 240 | 242 | 115 | (74 | ) | |||||||||||
| Net income attributable to Huntsman Corporation | 223 | 228 | 100 | (91 | ) |
| Three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | June 30, | September 30, | December 31, | ||||||||||||
| 2021 | 2021 | 2021 | 2021 | ||||||||||||
| Revenues | $ | 1,644 | $ | 1,817 | $ | 2,097 | $ | 2,112 | |||||||
| Gross profit | 345 | 379 | 437 | 423 | |||||||||||
| Income from continuing operations | 87 | 155 | 219 | 594 | |||||||||||
| Net income | 100 | 172 | 225 | 607 | |||||||||||
| Net income attributable to Huntsman Corporation | 83 | 156 | 209 | 597 |
Huntsman International
| Three months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | June 30, | September 30, | December 31, | |||||||||||||
| 2022 | 2022 | 2022 | 2022 | |||||||||||||
| Revenues | $ | 2,192 | $ | 2,170 | $ | 2,011 | $ | 1,650 | ||||||||
| Gross profit | 515 | 492 | 349 | 190 | ||||||||||||
| Income from continuing operations | 225 | 230 | 115 | (58 | ) | |||||||||||
| Net income | 243 | 243 | 114 | (76 | ) | |||||||||||
| Net income attributable to Huntsman International | 226 | 229 | 99 | (93 | ) |
| Three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | June 30, | September 30, | December 31, | ||||||||||||
| 2021 | 2021 | 2021 | 2021 | ||||||||||||
| Revenues | $ | 1,644 | $ | 1,817 | $ | 2,097 | $ | 2,112 | |||||||
| Gross profit | 345 | 379 | 437 | 423 | |||||||||||
| Income from continuing operations | 89 | 156 | 219 | 594 | |||||||||||
| Net income | 102 | 173 | 225 | 607 | |||||||||||
| Net income attributable to Huntsman International | 85 | 157 | 209 | 597 |
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Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10-K.
Cash Flows For Year Ended December 31, 2022 Compared with Year Ended December 31, 2021
Net cash provided by operating activities from continuing operations for 2022 and 2021 was $892 million and $915 million, respectively. The decrease in net cash provided by operating activities from continuing operations during 2022 compared with 2021 was primarily attributable to decreased operating income as described in “—Results of Operations” above, partially offset by a net cash inflow of $357 million related to changes in operating assets and liabilities for 2022 as compared with 2021. The decrease in net cash provided by operating activities from continuing operations noted above includes the receipt of the final arbitration award of $332.5 million, partially offset by the payment of legal fees and taxes of approximately $255 million in 2022 associated with the Albemarle Settlement as compared with $332.5 million in net proceeds associated with the Albemarle Settlement received in 2021.
Net cash used in investing activities from continuing operations for 2022 and 2021 was $260 million and $508 million, respectively. During 2022 and 2021, we paid $272 million and $326 million, respectively, for capital expenditures, including $100 million during 2021, on a new MDI splitter in Geismar, Louisiana. During 2021, we received $43 million for the sale of businesses, primarily due to the receipt of $28 million pursuant to an earnout provision in connection with the sale of our India-based DIY business. See “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business” to our consolidated financial statements. During 2021, we paid $245 million for the acquisition of businesses, primarily related to approximately $242 million paid for the acquisition of Gabriel Performance Products, net of cash acquired. See “Note 3. Business Combinations and Acquisitions—Acquisition of Gabriel Performance Products” to our consolidated financial statements.
Net cash used in financing activities for 2022 and 2021 was $994 million and $977 million, respectively. During 2022 and 2021, we paid $1,005 million and $200 million for repurchases of our common stock, respectively. During 2022, we had net borrowings of $219 million under our 2022 Revolving Credit Facility. During 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes, and we redeemed in full $400 million in aggregate principal amount of our 2022 Senior Notes. Additionally, during 2021, we issued $400 million in aggregate principal amount of our 2031 Senior Notes and received borrowings of approximately 177 million SAR (approximately $47 million) related to funding on a new term loan facility of our consolidated 50%-owned joint venture, AAC. See “Note 14. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our consolidated financial statements.
Free cash flow from continuing operations for 2022 and 2021 were proceeds of cash of $620 million and $589 million, respectively. The increase in free cash flow from continuing operations was primarily attributable to a decrease in cash used for capital expenditures during 2022 as compared with 2021, despite the decrease in cash provided by operating activities from continuing operations during 2022 as compared with 2021, which included a decrease of approximately $255 million in net proceeds associated with the Albemarle Settlement.
Cash Flows For Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
Net cash provided by operating activities from continuing operations for 2021 and 2020 was $915 million and $231 million, respectively. The increase in net cash provided by operating activities from continuing operations during 2021 compared with 2020 was primarily attributable to increased operating income as described in “—Results of Operations” above, including $332.5 million in proceeds associated with the Albemarle Settlement, partially offset by a net cash outflow of $42 million related to changes in operating assets and liabilities for 2021 as compared with 2020.
Net cash (used in) provided by investing activities from continuing operations for 2021 and 2020 was $(508) million and $1,474 million, respectively. During 2021 and 2020, we paid $326 million and $237 million, respectively, for capital expenditures, including $100 million and $54 million during 2021 and 2020, respectively, on a new MDI splitter in Geismar, Louisiana. During 2021, we received $43 million for the sale of businesses, primarily due to the receipt of $28 million pursuant to an earnout provision in connection with the sale of our India-based DIY business. In January 2020, we received approximately $1.92 billion for the sale of our Chemical Intermediates Businesses, and in November 2020, we received approximately $257 million for the sale of our India-based DIY business. See “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Chemical Intermediates Businesses” and “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business” to our consolidated financial statements. During 2021, we paid $245 million for the acquisition of businesses, primarily related to approximately $242 million paid for the Gabriel Acquisition, net of cash acquired. During 2020, we paid approximately $650 million in connection with the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition, net of cash acquired. See “Note 3. Business Combinations and Acquisitions” to our consolidated financial statements. In December 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator and received approximately $99 million. See “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. During the year ended December 31, 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland, for which we received approximately $73 million in proceeds from the sale of assets.
Net cash used in financing activities for 2021 and 2020 was $977 million and $655 million, respectively. The increase in net cash used in financing activities was primarily due to the redemption in full of €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes and the redemption in full of $400 million in aggregate principal amount of our 2022 Senior Notes during 2021. During 2021 and 2020, we paid $200 million and $96 million, respectively, for repurchases of our common stock. During 2021, we issued $400 million in aggregate principal amount of our 2031 Senior Notes and received borrowings of approximately 177 million SAR (approximately $47 million) related to funding on a new term loan facility of our consolidated 50%-owned joint venture, AAC. See “Note 14. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our consolidated financial statements. During 2020, we repaid a total of $203 million on our 2018 $1.2 billion senior unsecured credit facility and repaid in full $109 million on our 364-day term loan facility (the “2019 Term Loan”).
Free cash flow from continuing operations for 2021 and 2020 were proceeds of cash of $589 million and use of cash of $6 million, respectively. The increase in free cash flow from continuing operations was primarily attributable to the increase in cash provided by operating activities from continuing operations, including $332.5 million in proceeds associated with the Albemarle Settlement, partially offset by an increase in cash used for capital expenditures during 2021 as compared with 2020.
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Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
| December 31, | December 31, | (Decrease) | Percent | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | increase | change | |||||||||||||
| Cash and cash equivalents | $ | 654 | $ | 1,041 | $ | (387 | ) | (37 | )% | |||||||
| Accounts and notes receivable, net | 834 | 1,015 | (181 | ) | (18 | )% | ||||||||||
| Inventories | 995 | 1,038 | (43 | ) | (4 | )% | ||||||||||
| Receivable associated with the Albemarle Settlement | — | 333 | (333 | ) | (100 | )% | ||||||||||
| Other current assets | 190 | 155 | 35 | 23 | % | |||||||||||
| Current assets held for sale (1) | 472 | 346 | 126 | 36 | % | |||||||||||
| Total current assets | 3,145 | 3,928 | (783 | ) | (20 | )% | ||||||||||
| Accounts payable | 961 | 1,114 | (153 | ) | (14 | )% | ||||||||||
| Accrued liabilities | 429 | 713 | (284 | ) | (40 | )% | ||||||||||
| Current portion of debt | 66 | 12 | 54 | 450 | % | |||||||||||
| Current operating lease liabilities | 51 | 49 | 2 | 4 | % | |||||||||||
| Current liabilities held for sale (1) | 194 | 163 | 31 | 19 | % | |||||||||||
| Total current liabilities | 1,701 | 2,051 | (350 | ) | (17 | )% | ||||||||||
| Working capital | $ | 1,444 | $ | 1,877 | $ | (433 | ) | (23 | )% |
| Column 1 | Column 2 |
|---|---|
| (1) | Held for sale assets and liabilities are those of our Textile Effects Business. Total assets and liabilities held for sale as of December 31, 2022 are classified as current as we anticipate the sale of our Textile Effects Business will close in February 2023. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Discontinued Operations—Sale of Textile Effects Business” to our consolidated financial statements. |
Our working capital decreased by $433 million as a result of the net impact of the following significant changes:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The decrease in cash and cash equivalents of $387 million resulted from the matters identified on our consolidated statements of cash flows. See also “—Cash Flows Year Ended December 31, 2022 Compared with Year Ended December 31, 2021.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts and notes receivable, net decreased by $181 million primarily due to lower revenues in the fourth quarter of 2022 compared to the fourth quarter of 2021. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Inventories decreased by $43 million primarily due to lower inventory costs and volumes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Receivable associated with the Albemarle Settlement decreased to nil due to the receipt of the final arbitration award payment of $332.5 million during the second quarter of 2022. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts payable decreased by $153 million primarily due to lower inventory purchases. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accrued liabilities decreased by $284 million primarily due to lower accrued compensation, current income taxes and approximately $200 million of legal fees associated with the Albemarle Settlement, offset by an increase in restructuring and plant closing reserves. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Current portion of debt increased by $54 million primarily due to net borrowings of $55 million under our 2022 Revolving Credit Facility that are classified as short term. |
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Short-Term Liquidity
We depend upon our cash, our 2022 $1.2 billion senior unsecured revolving credit facility (“2022 Revolving Credit Facility”), our U.S. accounts receivable securitization program (“U.S. A/R Program”) and European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”) and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2022, we had $1,847 million of combined cash and unused borrowing capacity, consisting of $654 million in cash, $1,132 million in availability under our 2022 Revolving Credit Facility and $61 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
| ● | During 2023, we expect to spend between approximately $240 million to $250 million on capital expenditures. Our future expenditures include certain environmental, health and safety upgrades; expansions of our existing manufacturing and other facilities; certain cost reduction projects, including those described below; and certain information technology expenditures. We expect to fund capital expenditures with cash provided by operations. | |
|---|---|---|
| ● | During 2023, we expect to make contributions to our pension and postretirement benefit plans of approximately $37 million. | |
| ● | From January 1, 2023 through February 7, 2023, we repurchased 691,326 shares of our common stock for approximately $21 million under our share repurchase program. | |
| ● | On August 9, 2022, we entered into a definitive agreement to sell our Textile Effects Business to Archroma for a purchase price of $593 million in cash plus the assumption of underfunded pension liabilities, and we expect the net after tax cash proceeds to be approximately $540 million before fees and subject to certain customary purchase price adjustments as set forth in the purchase agreement. We expect the transaction to close on February 28, 2023. |
Long-Term Liquidity
| ● | During 2020, management implemented cost realignment and synergy plans. In connection with these plans, we remain committed to achieving annualized cost savings and synergy benefits of approximately $140 million during 2023, as previously communicated. During 2021, management implemented additional cost realignment plans, and in connection with these plans, we expect to achieve further annualized cost savings of approximately $100 million by the end of 2023. Associated with these plans, we expect cash costs of approximately $225 million, including approximately $30 million of capital expenditures, through 2024, of which we have spent approximately $140 million to date. | |
|---|---|---|
| ● | In early November 2022, we announced our commitment and specific plans to further realign our cost structure beyond the current in-progress cost optimization programs with additional restructuring in Europe. The new program includes exiting and consolidating certain facilities, workforce relocation to lower cost locations and further personnel rationalization. In connection with this program, we currently expect to achieve annualized cost savings of approximately $40 million by the end of 2023. Associated with this program, we expect cash costs of approximately $65 million, including approximately $15 million of capital expenditures, through 2024. | |
| ● | On April 29, 2022, a New Orleans jury awarded us approximately $94 million in our long-running court battle against Praxair/Linde, one of the industrial gas suppliers to our Geismar, Louisiana MDI manufacturing site. The case was filed after Praxair refused to properly maintain its own Geismar facility and then repeatedly failed to supply our requirements for industrial gas needed to manufacture MDI under long-term supply contracts that expired in 2013. After adding mandatory pre-judgment and post-judgment interest to the award, we expect damages to exceed $125 million before deducting for taxes and legal fees. The award is subject to a pending appeal, and if affirmed, we expect to receive net proceeds of approximately $50 million to $60 million. We have not yet recognized the award in our consolidated statements of operations. | |
| ● | On May 20, 2022, Huntsman International entered into the 2022 Revolving Credit Facility. Borrowings will bear interest at the rates specified in the credit agreement governing the 2022 Revolving Credit Facility, which will vary based on the type of loan and Huntsman International’s debt ratings. Under the credit agreement, the interest rate margin and the commitment fee rates are also subject to adjustments based on the Company’s performance on specified sustainability target thresholds with respect to annual percentage reduction in operational greenhouse gas emissions intensity and annual percentage reduction in water consumption intensity. Unless previously terminated in accordance with its terms, the credit agreement will mature in May 2027. Huntsman International may increase the 2022 Revolving Credit Facility commitments up to an additional $500 million, subject to the satisfaction of certain conditions. See “Note 14. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our consolidated financial statements. | |
| ● | On February 17, 2023, our Board of Directors declared a $0.2375 per share cash dividend on our common stock. This represents an approximate 12% increase from the previous dividend. |
As of December 31, 2022, we had $66 million classified as current portion of debt, including net borrowings of $55 million under our 2022 Revolving Credit Facility, debt at our variable interest entities of $9 million and certain other short-term facilities and scheduled amortization payments totaling $2 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.
As of December 31, 2022, we had approximately $619 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
For more information regarding our debt, see “Note 14. Debt” to our consolidated financial statements.
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Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make judgments, estimates and assumptions that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our financial condition and/or results of operations. Summarized below are our critical accounting estimates.
Income Taxes
Deferred income taxes reflect the net effects of temporary differences between assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized; valuation allowances are recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed each period on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider cumulative income or losses during the applicable three-year period. Cumulative losses incurred over the three-year period limits our ability to consider other evidence, such as our projections for the future. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions affect our assessment of the realization of deferred tax assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results, including the costs and risks associated with any tax planning strategy associated with utilizing a deferred tax asset. As of December 31, 2022, we had total valuation allowances of $169 million, which represents an increase of $38 million from the prior year, and we have a recognized a net deferred tax liability of $103 million. See “Note 19. Income Taxes” to our consolidated financial statements for more information regarding our deferred tax assets and valuation allowances.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., The Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. and Canada. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 18. Employee Benefit Plans” to our consolidated financial statements.
We retain third party actuaries to assist us with judgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effect of a 1% change in three key assumptions is summarized as follows (dollars in millions):
| Statement of | Balance sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| Assumptions | operations(1) | impact(2) | ||||||
| Discount rate | ||||||||
| —1% increase | $ | (35 | ) | $ | (227 | ) | ||
| —1% decrease | 47 | 255 | ||||||
| Expected long-term rates of return on plan assets | ||||||||
| —1% increase | (31 | ) | — | |||||
| —1% decrease | 31 | — | ||||||
| Rate of compensation increase | ||||||||
| —1% increase | 9 | 24 | ||||||
| —1% decrease | (5 | ) | (22 | ) |
| Column 1 | Column 2 |
|---|---|
| (1) | Estimated (decrease) increase on 2022 net periodic benefit cost |
| Column 1 | Column 2 |
|---|---|
| (2) | Estimated (decrease) increase on December 31, 2022 pension and postretirement liabilities and accumulated other comprehensive loss |
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FY 2021 10-K MD&A
SEC filing source: 0001437749-22-003430.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Recent Developments
See “Part I. Item 1. Business—Recent Developments” for important updates that occurred in our businesses for the year ended December 31, 2021.
Outlook
We expect the following factors to impact our operating segments in the first quarter of 2022:
Polyurethanes:
| ● | First quarter 2022 adjusted EBITDA estimated to be between $200 million and $220 million | |
|---|---|---|
| ● | Positive trends in construction and energy efficiency demand | |
| ● | Higher costs, specifically in Europe, remain a headwind | |
| ● | Construction of new MDI splitter in Geismar, Louisiana is progressing and on track for completion in second quarter of 2022 |
Performance Products:
| ● | First quarter 2022 adjusted EBITDA estimated to be between $115 million and $120 million | |
|---|---|---|
| ● | Commercial initiatives and solid demand drive year-over-year improvement |
Advanced Materials:
| ● | First quarter 2022 adjusted EBITDA estimated to be between $58 million and $62 million | |
|---|---|---|
| ● | Aerospace continues to recover | |
| ● | Price increases offset higher raw material costs |
Textile Effects:
| ● | First quarter 2022 adjusted EBITDA estimated to be between $26 million and $28 million | |
|---|---|---|
| ● | Favorable trends in sustainable solutions and strong order patterns |
In 2021, our effective tax rate was 16% and our adjusted effective tax rate was 19%. For 2022, our adjusted effective tax rate is expected to be approximately 22% to 24%. For further information, see “—Non-GAAP Financial Measures” and “Note 19. Income Taxes” to our consolidated financial statements.
Refer to “Item 1A. Risk Factors” for a discussion of the factors that may impact our business, results of operations, financial condition or liquidity and “Forward-Looking Statements” for a discussion of our use of forward-looking statements.
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ReSULTS OF OPERATIONS
For each of our Company and Huntsman International, the following tables set forth our consolidated results of operations for the years ended December 31, 2021, 2020 and 2019 (dollars in millions, except per share amounts).
Huntsman Corporation
| December 31, | Percent Change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | 2021 vs 2020 | 2020 vs 2019 | ||||||||||||||||
| Revenues | $ | 8,453 | $ | 6,018 | $ | 6,797 | 40 | % | (11 | )% | ||||||||||
| Cost of goods sold | 6,678 | 4,918 | 5,415 | 36 | % | (9 | )% | |||||||||||||
| Gross profit | 1,775 | 1,100 | 1,382 | 61 | % | (20 | )% | |||||||||||||
| Operating expenses | 940 | 618 | 954 | 52 | % | (35 | )% | |||||||||||||
| Restructuring, impairment and plant closing costs (credits) | 40 | 49 | (41 | ) | (18 | )% | NM | |||||||||||||
| Operating income | 795 | 433 | 469 | 84 | % | (8 | )% | |||||||||||||
| Interest expense, net | (67 | ) | (86 | ) | (111 | ) | (22 | )% | (23 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 143 | 42 | 54 | 240 | % | (22 | )% | |||||||||||||
| Fair value adjustments to Venator investment and related loss on disposal | (28 | ) | (88 | ) | (18 | ) | (68 | )% | 389 | % | ||||||||||
| Loss on early extinguishment of debt | (27 | ) | — | (23 | ) | NM | (100 | )% | ||||||||||||
| Income associated with the Albemarle Settlement, net | 465 | — | — | NM | — | |||||||||||||||
| Other income, net | 32 | 36 | 20 | (11 | )% | 80 | % | |||||||||||||
| Income from continuing operations before income taxes | 1,313 | 337 | 391 | 290 | % | (14 | )% | |||||||||||||
| Income tax (expense) benefit | (209 | ) | (46 | ) | 38 | 354 | % | NM | ||||||||||||
| Income from continuing operations | 1,104 | 291 | 429 | 279 | % | (32 | )% | |||||||||||||
| Income from discontinued operations, net of tax | — | 775 | 169 | (100 | )% | 359 | % | |||||||||||||
| Net income | 1,104 | 1,066 | 598 | 4 | % | 78 | % | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (59 | ) | (32 | ) | (36 | ) | 84 | % | (11 | )% | ||||||||||
| Interest expense, net from continuing operations | 67 | 86 | 111 | (22 | )% | (23 | )% | |||||||||||||
| Income tax expense (benefit) from continuing operations | 209 | 46 | (38 | ) | 354 | % | NM | |||||||||||||
| Income tax expense from discontinued operations | 3 | 242 | 35 | (99 | )% | 591 | % | |||||||||||||
| Depreciation and amortization of continuing operations | 296 | 283 | 270 | 5 | % | 5 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | — | — | 61 | — | (100 | )% | ||||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 22 | 31 | 5 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (3 | ) | (1,017 | ) | (265 | ) | ||||||||||||||
| Fair value adjustments to Venator investment and related loss on disposal | 28 | 88 | 18 | |||||||||||||||||
| Loss on early extinguishment of debt | 27 | — | 23 | |||||||||||||||||
| Certain legal and other settlements and related expenses | 13 | 5 | 6 | |||||||||||||||||
| Income associated with the Albemarle Settlement, net | (465 | ) | — | — | ||||||||||||||||
| (Gain) loss on sale of businesses/assets | (30 | ) | (280 | ) | 21 | |||||||||||||||
| Income from transition services arrangements | (8 | ) | (7 | ) | — | |||||||||||||||
| Certain nonrecurring information technology project implementation costs | 8 | 6 | 4 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 86 | 76 | 66 | |||||||||||||||||
| Plant incident remediation costs | — | 2 | 8 | |||||||||||||||||
| Restructuring, impairment and plant closing and transition costs (credits)(3) | 45 | 52 | (41 | ) | ||||||||||||||||
| Adjusted EBITDA(1) | $ | 1,343 | $ | 647 | $ | 846 | 108 | % | (24 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 953 | $ | 277 | $ | 656 | 244 | % | (58 | )% | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (524 | ) | 1,462 | (201 | ) | NM | NM | |||||||||||||
| Net cash used in financing activities | (977 | ) | (655 | ) | (450 | ) | 49 | % | 46 | % | ||||||||||
| Capital expenditures from continuing operations | (342 | ) | (249 | ) | (274 | ) | 37 | % | (9 | )% |
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Huntsman International
| December 31, | Percent Change | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2019 | 2021 vs 2020 | 2020 vs 2019 | ||||||||||||||||
| Revenues | $ | 8,453 | $ | 6,018 | $ | 6,797 | 40 | % | (11 | )% | ||||||||||
| Cost of goods sold | 6,678 | 4,918 | 5,415 | 36 | % | (9 | )% | |||||||||||||
| Gross profit | 1,775 | 1,100 | 1,382 | 61 | % | (20 | )% | |||||||||||||
| Operating expenses | 933 | 612 | 949 | 52 | % | (36 | )% | |||||||||||||
| Restructuring, impairment and plant closing costs (credits) | 40 | 49 | (41 | ) | (18 | )% | NM | |||||||||||||
| Operating income | 802 | 439 | 474 | 83 | % | (7 | )% | |||||||||||||
| Interest expense, net | (67 | ) | (88 | ) | (126 | ) | (24 | )% | (30 | )% | ||||||||||
| Equity in income of investment in unconsolidated affiliates | 143 | 42 | 54 | 240 | % | (22 | )% | |||||||||||||
| Fair value adjustments to Venator investment and related loss on disposal | (28 | ) | (88 | ) | (18 | ) | (68 | )% | 389 | % | ||||||||||
| Loss on early extinguishment of debt | (27 | ) | — | (23 | ) | NM | (100 | )% | ||||||||||||
| Income associated with the Albemarle Settlement, net | 465 | — | — | NM | — | |||||||||||||||
| Other income, net | 29 | 33 | 16 | (12 | )% | 106 | % | |||||||||||||
| Income from continuing operations before income taxes | 1,317 | 338 | 377 | 290 | % | (10 | )% | |||||||||||||
| Income tax (expense) benefit | (210 | ) | (46 | ) | 41 | 357 | % | NM | ||||||||||||
| Income from continuing operations | 1,107 | 292 | 418 | 279 | % | (30 | )% | |||||||||||||
| Income from discontinued operations, net of tax | — | 775 | 169 | (100 | )% | 359 | % | |||||||||||||
| Net income | 1,107 | 1,067 | 587 | 4 | % | 82 | % | |||||||||||||
| Reconciliation of net income to adjusted EBITDA: | ||||||||||||||||||||
| Net income attributable to noncontrolling interests | (59 | ) | (32 | ) | (36 | ) | 84 | % | (11 | )% | ||||||||||
| Interest expense, net from continuing operations | 67 | 88 | 126 | (24 | )% | (30 | )% | |||||||||||||
| Income tax expense (benefit) from continuing operations | 210 | 46 | (41 | ) | 357 | % | NM | |||||||||||||
| Income tax expense from discontinued operations | 3 | 242 | 35 | (99 | )% | 591 | % | |||||||||||||
| Depreciation and amortization of continuing operations | 296 | 283 | 270 | 5 | % | 5 | % | |||||||||||||
| Depreciation and amortization of discontinued operations | — | — | 61 | — | (100 | )% | ||||||||||||||
| Other adjustments: | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 22 | 31 | 5 | |||||||||||||||||
| EBITDA from discontinued operations(2) | (3 | ) | (1,017 | ) | (265 | ) | ||||||||||||||
| Fair value adjustments to Venator investment and related loss on disposal | 28 | 88 | 18 | |||||||||||||||||
| Loss on early extinguishment of debt | 27 | — | 23 | |||||||||||||||||
| Certain legal and other settlements and related expenses | 13 | 5 | 6 | |||||||||||||||||
| Income associated with the Albemarle Settlement, net | (465 | ) | — | — | ||||||||||||||||
| (Gain) loss on sale of businesses/assets | (30 | ) | (280 | ) | 21 | |||||||||||||||
| Income from transition services arrangements | (8 | ) | (7 | ) | — | |||||||||||||||
| Certain nonrecurring information technology project implementation costs | 8 | 6 | 4 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 89 | 79 | 70 | |||||||||||||||||
| Plant incident remediation costs | — | 2 | 8 | |||||||||||||||||
| Restructuring, impairment and plant closing and transition costs (credits)(3) | 45 | 52 | (41 | ) | ||||||||||||||||
| Adjusted EBITDA(1) | $ | 1,350 | $ | 653 | $ | 851 | 107 | % | (23 | )% | ||||||||||
| Net cash provided by operating activities from continuing operations | $ | 956 | $ | 279 | $ | 645 | 243 | % | (57 | )% | ||||||||||
| Net cash (used in) provided by investing activities from continuing operations | (726 | ) | 1,736 | (202 | ) | NM | NM | |||||||||||||
| Net cash used in financing activities | (778 | ) | (933 | ) | (438 | ) | (17 | )% | 113 | % | ||||||||||
| Capital expenditures from continuing operations | (342 | ) | (249 | ) | (274 | ) | 37 | % | (9 | )% |
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Huntsman Corporation
| Year ended | Year ended | Year ended | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | December 31, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||
| Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
| Gross | and other(4) | Net | Gross | and other(4) | Net | Gross | and other(4) | Net | ||||||||||||||||||||||||||||
| Reconciliation of net income to adjusted net income | ||||||||||||||||||||||||||||||||||||
| Net income | $ | 1,104 | $ | 1,066 | $ | 598 | ||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | (59 | ) | (32 | ) | (36 | ) | ||||||||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | $ | 22 | $ | (6 | ) | 16 | $ | 31 | $ | (6 | ) | 25 | $ | 5 | $ | — | 5 | |||||||||||||||||||
| Income from discontinued operations(2)(6) | (3 | ) | 3 | — | (1,017 | ) | 242 | (775 | ) | (265 | ) | 96 | (169 | ) | ||||||||||||||||||||||
| Fair value adjustments to Venator investment and related loss on disposal | 28 | — | 28 | 88 | (9 | ) | 79 | 18 | — | 18 | ||||||||||||||||||||||||||
| Loss on early extinguishment of debt | 27 | (6 | ) | 21 | — | — | — | 23 | (5 | ) | 18 | |||||||||||||||||||||||||
| Certain legal and other settlements and related expenses | 13 | (3 | ) | 10 | 5 | (1 | ) | 4 | 6 | (1 | ) | 5 | ||||||||||||||||||||||||
| Income associated with the Albemarle Settlement, net | (465 | ) | 55 | (410 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
| (Gain) loss on sale of businesses/assets | (30 | ) | 3 | (27 | ) | (280 | ) | 31 | (249 | ) | 21 | (5 | ) | 16 | ||||||||||||||||||||||
| Income from transition services arrangements | (8 | ) | 2 | (6 | ) | (7 | ) | 2 | (5 | ) | — | — | — | |||||||||||||||||||||||
| Certain nonrecurring information technology project implementation costs | 8 | (2 | ) | 6 | 6 | (1 | ) | 5 | 4 | (1 | ) | 3 | ||||||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses | 86 | (19 | ) | 67 | 76 | (17 | ) | 59 | 66 | (16 | ) | 50 | ||||||||||||||||||||||||
| Significant activities related to deferred tax assets and liabilities(5) | — | — | — | — | — | — | — | (128 | ) | (128 | ) | |||||||||||||||||||||||||
| U.S. Tax Reform Act impact on income tax expense | — | — | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||||||||
| Plant incident remediation costs | — | — | — | 2 | — | 2 | 8 | (2 | ) | 6 | ||||||||||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs (credits)(3) | 45 | (11 | ) | 34 | 52 | (13 | ) | 39 | (41 | ) | 9 | (32 | ) | |||||||||||||||||||||||
| Adjusted net income(1) | $ | 784 | $ | 218 | $ | 353 | ||||||||||||||||||||||||||||||
| Weighted average shares-basic | 219.2 | 220.6 | 228.9 | |||||||||||||||||||||||||||||||||
| Weighted average shares-diluted | 221.4 | 221.9 | 230.6 | |||||||||||||||||||||||||||||||||
| Basic net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 4.77 | $ | 1.18 | $ | 1.72 | ||||||||||||||||||||||||||||||
| Income from discontinued operations | — | 3.51 | 0.74 | |||||||||||||||||||||||||||||||||
| Net income | $ | 4.77 | $ | 4.69 | $ | 2.46 | ||||||||||||||||||||||||||||||
| Diluted net income attributable to Huntsman Corporation per share: | ||||||||||||||||||||||||||||||||||||
| Income from continuing operations | $ | 4.72 | $ | 1.17 | $ | 1.70 | ||||||||||||||||||||||||||||||
| Income from discontinued operations | — | 3.49 | 0.74 | |||||||||||||||||||||||||||||||||
| Net income | $ | 4.72 | $ | 4.66 | $ | 2.44 | ||||||||||||||||||||||||||||||
| Other non-GAAP measures: | ||||||||||||||||||||||||||||||||||||
| Diluted adjusted net income per share(1) | $ | 3.54 | $ | 0.98 | $ | 1.53 | ||||||||||||||||||||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 953 | $ | 277 | $ | 656 | ||||||||||||||||||||||||||||||
| Capital expenditures from continuing operations | (342 | ) | (249 | ) | (274 | ) | ||||||||||||||||||||||||||||||
| Free cash flow from continuing operations(1) | $ | 611 | $ | 28 | $ | 382 | ||||||||||||||||||||||||||||||
| Effective tax rate | 16 | % | 14 | % | (10 | )% | ||||||||||||||||||||||||||||||
| Impact of non-GAAP adjustments | 3 | % | 5 | % | 32 | % | ||||||||||||||||||||||||||||||
| Adjusted effective tax rate(7) | 19 | % | 19 | % | 22 | % | ||||||||||||||||||||||||||||||
| Other cash flow measure: | ||||||||||||||||||||||||||||||||||||
| Net cash proceeds from the Albemarle Settlement(8) | $ | 333 | $ | — | $ | — | ||||||||||||||||||||||||||||||
| Taxes paid on sale of businesses(9) | (3 | ) | (257 | ) | — |
NM—Not meaningful
| Column 1 | Column 2 |
|---|---|
| (1) | See “—Non-GAAP Financial Measures.” |
| (2) | Includes the gain on the sale of our Chemical Intermediates Businesses in 2020. |
|---|---|
| (3) | Includes costs associated with transition activities relating primarily to our Corporate program to optimize our global approach to leverage shared services capabilities as well as our 2020 acquisition of CVC Thermoset Specialties, a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets (“CVC Thermoset Specialties Acquisition”). |
| Column 1 | Column 2 |
|---|---|
| (4) | The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach. |
| Column 1 | Column 2 |
|---|---|
| (5) | During the year ended December 31, 2019, we recorded $153 million of tax benefit relating to the outside basis difference in our investment in Venator, we recorded $18 million of tax benefit relating to realized tax losses on our remaining interest in Venator, we established $11 million of significant income tax valuation allowance in Australia and we recorded $32 million of deferred tax expense due to the reduction of tax rates in Switzerland. |
| (6) | In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
|---|---|
| (7) | For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net income to adjusted net income noted above. |
| (8) | Represents net cash proceeds received in connection with the Albemarle Settlement. For more information, see “Part I. Item 1. Business—Recent Developments.” |
| (9) | Represents the taxes paid in connection with the sale of the Chemical Intermediates Businesses and the sale of the India-based DIY business. For more information, see “Note 4. Discontinued Operations and Business Dispositions” to our consolidated financial statements. |
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Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance with U.S. GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related U.S. GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment and related loss on disposal; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) income associated with the Albemarle Settlement, net; (g) (gain) loss on sale of businesses/assets; (h) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) plant incident remediation costs; and (l) restructuring, impairment and plant closing and transition costs (credits). Starting in the fourth quarter of 2021, we began to include income associated with the Albemarle Settlement, net, in our adjustments since such income represents a one-time legal settlement and does not reflect our ongoing financial performance. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after tax amounts related to the following from net income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) income from discontinued operations; (c) fair value adjustments to Venator investment and related loss on disposal; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) income associated with the Albemarle Settlement, net; (g) (gain) loss on sale of businesses/assets; (h) income from transition services arrangements associated with the sale of our Chemical Intermediates Businesses to Indorama; (i) certain nonrecurring information technology project implementation costs; (j) amortization of pension and postretirement actuarial losses; (k) significant activities related to deferred tax assets and liabilities; (l) U.S. Tax Reform Act impact on income tax expense; (m) plant incident remediation costs; and (n) restructuring, impairment and plant closing and transition costs (credits). Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock buyback and dividend levels and (d) evaluate our ability to incur and service debt.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as, business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted, that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Our forward-looking adjusted effective tax rate is calculated based on our forecast effective tax rate, and the range of our forward-looking adjusted effective tax rate equals the range of our forecast effective tax rate. We disclose forward-looking adjusted effective tax rate because we cannot adequately forecast certain items and events that may or may not impact us in the near future, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes not yet enacted. Each of such adjustment has not yet occurred, is out of our control and/or cannot be reasonably predicted. In our view, our forward-looking adjusted effective tax rate represents the forecast effective tax rate on our underlying business operations but does not reflect any adjustments related to the items noted above that may occur and can cause our effective tax rate to differ.
Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
For the year ended December 31, 2021, income from continuing operations attributable to Huntsman Corporation was $1,045 million compared with income from continuing operations attributable to Huntsman Corporation of $259 million in the 2020 period. For the year ended December 31, 2021, income from continuing operations attributable to Huntsman International was $1,048 million compared with income from continuing operations attributable to Huntsman International of $260 million in the 2020 period. The increase of $786 million in income from continuing operations attributable to Huntsman Corporation and the increase of $788 million in income from continuing operations attributable to Huntsman International was the result of the following items:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Revenues for the year ended December 31, 2021 increased by $2,435 million or 40%, as compared with the 2020 period. The increase was primarily due to higher average selling prices as well as higher sales volumes in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Gross profit for the year ended December 31, 2021 increased by $675 million, or 61%, as compared with the 2020 period. The increase resulted from higher gross profits in all our segments. See “—Segment Analysis” below. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our operating expenses and the operating expenses of Huntsman International for the year ended December 31, 2021 increased by $322 million and $321 million, respectively, or 52% for both, as compared with the 2020 period, primarily related to higher selling, general and administrative costs and the gain on sale of our India-based DIY business in 2020. See “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based-Do-It-Yourself Consumer Adhesives Business” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Restructuring, impairment and plant closing costs (credits) for the year ended December 31, 2021 decreased by $9 million, or 18%, as compared with the 2020 period. For more information on restructuring activities, see “Note 12. Restructuring, Impairment and Plant Closing Costs (Credits)” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our interest expense, net and the interest expense, net of Huntsman International for the year ended December 31, 2021 decreased by $19 million and $21 million, respectively, or 22% and 24%, respectively, as compared with the 2020 period, primarily related to the redemption in full of our 2021 Senior Notes in the first quarter of 2021. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Equity in income of investment in unconsolidated affiliates for the year ended December 31, 2020 increased to $143 million from $42 million in the 2020 period. The increase was primarily attributable to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | We recorded a loss of $28 million in fair value adjustments to our investment in Venator and related loss on disposal for the year ended December 31, 2021 compared to a loss of $88 million in the 2020 period. For more information, see “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Loss on early extinguishment of debt for the year ended December 31, 2021 was $27 million compared to nil in the 2020 period, primarily due to the redemption in full of our 2022 Senior Notes in the second quarter of 2021. See “Note. 14. Debt—Notes” to our consolidated financial statements. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Income associated with the Albemarle Settlement, net was $465 million for the year ended December 31, 2021 related to our arbitration award against Albemarle Corporation for fraud and breach of contract. On November 4, 2021, Albemarle agreed to waive any appeal and pay $665 million to us. For more information, see “Part I. Item I. Business—Recent Developments—Albemarle Settlement.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Our income tax expense for the year ended December 31, 2021 increased to $209 million from $46 million in the 2020 period. The income tax expense of Huntsman International for the year ended December 31, 2021 increased to $210 million from $46 million in the 2020 period. The increase in income tax expense was primarily due to an increase in income from continuing operations before income taxes. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, along with the impact of valuation allowances in certain tax jurisdictions. For further information concerning income taxes, see “Note 19. Income Taxes” to our consolidated financial statements. |
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Segment Analysis
Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
| Percent | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change | ||||||||||||
| Year ended December 31, | Favorable | |||||||||||
| (Dollars in millions) | 2021 | 2020 | (Unfavorable) | |||||||||
| Revenues | ||||||||||||
| Polyurethanes | $ | 5,019 | $ | 3,584 | 40 | % | ||||||
| Performance Products | 1,485 | 1,023 | 45 | % | ||||||||
| Advanced Materials | 1,198 | 839 | 43 | % | ||||||||
| Textile Effects | 783 | 597 | 31 | % | ||||||||
| Total reportable segments’ revenues | 8,485 | 6,043 | 40 | % | ||||||||
| Intersegment eliminations | (32 | ) | (25 | ) | NM | |||||||
| Total | $ | 8,453 | $ | 6,018 | 40 | % | ||||||
| Huntsman Corporation | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 879 | $ | 472 | 86 | % | ||||||
| Performance Products | 359 | 164 | 119 | % | ||||||||
| Advanced Materials | 204 | 130 | 57 | % | ||||||||
| Textile Effects | 97 | 42 | 131 | % | ||||||||
| Total reportable segments’ adjusted EBITDA | 1,539 | 808 | 90 | % | ||||||||
| Corporate and other | (196 | ) | (161 | ) | (22 | )% | ||||||
| Total | $ | 1,343 | $ | 647 | 108 | % | ||||||
| Huntsman International | ||||||||||||
| Adjusted EBITDA(1) | ||||||||||||
| Polyurethanes | $ | 879 | $ | 472 | 86 | % | ||||||
| Performance Products | 359 | 164 | 119 | % | ||||||||
| Advanced Materials | 204 | 130 | 57 | % | ||||||||
| Textile Effects | 97 | 42 | 131 | % | ||||||||
| Total reportable segments’ adjusted EBITDA | 1,539 | 808 | 90 | % | ||||||||
| Corporate and other | (189 | ) | (155 | ) | (22 | )% | ||||||
| Total | $ | 1,350 | $ | 653 | 107 | % |
| NM—Not meaningful | |
|---|---|
| (1) | For more information, including reconciliation of total reportable segments’ adjusted EBITDA to income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 26. Operating Segment Information” to our consolidated financial statements. |
| Year ended December 31, 2021 vs 2020 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Selling Prices(1) | ||||||||||||||||
| Local | Foreign Currency | Mix & | Sales | |||||||||||||
| Currency | Translation Impact | Other | Volumes(2) | |||||||||||||
| Period-Over-Period (Decrease) Increase | ||||||||||||||||
| Polyurethanes | 30 | % | 2 | % | 4 | % | 4 | % | ||||||||
| Performance Products | 35 | % | 3 | % | (4 | )% | 11 | % | ||||||||
| Advanced Materials | 13 | % | 3 | % | 17 | % | 10 | % | ||||||||
| Textile Effects | 5 | % | 3 | % | 3 | % | 20 | % |
| Fourth Quarter 2021 vs Third Quarter 2021 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average Selling Prices(1) | ||||||||||||||||
| Local | Foreign Currency | Mix & | Sales | |||||||||||||
| Currency | Translation Impact | Other | Volumes(2) | |||||||||||||
| Period-Over-Period (Decrease) Increase | ||||||||||||||||
| Polyurethanes | 6 | % | (1 | )% | (3 | )% | (3 | )% | ||||||||
| Performance Products | 8 | % | (1 | )% | — | (4 | )% | |||||||||
| Advanced Materials | 10 | % | (1 | )% | (4 | )% | (1 | )% | ||||||||
| Textile Effects | 6 | % | (1 | )% | 3 | % | (4 | )% |
| Column 1 | Column 2 |
|---|---|
| (1) | Excludes revenues from tolling arrangements, byproducts and raw materials. |
| Column 1 | Column 2 |
|---|---|
| (2) | Excludes sales volumes of byproducts and raw materials. |
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Polyurethanes
The increase in revenues in our Polyurethanes segment for 2021 compared to 2020 was due to higher MDI average selling prices and higher sales volumes. MDI average selling prices increased mostly in China and Europe with increases in our Americas region occurring during the second half of 2021. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by some unplanned downtime resulting from the U.S. Gulf Coast Winter Storm Uri that occurred in the first quarter of 2021, the scheduled turnaround at our Rotterdam, Netherlands facility during the second quarter of 2021 and 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 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 2021 compared to 2020 was 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 2021 compared to 2020 was due to higher sales volumes, higher average selling prices and the favorable net impact of the CVC Thermoset Specialties Acquisition, the Gabriel Acquisition and the sale of the India-based DIY business. See “Note 3. Business Combinations and Acquisitions” and “Note 4. Discontinued Operations and Business Dispositions” to our consolidated financial statements. Excluding our recent acquisitions and divestiture, sales volumes increased across 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 and due to the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisitions.
Textile Effects
The increase in revenues in our Textile Effects segment for 2021 compared to 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. Average selling prices increased mainly in response to higher raw material and logistics costs and due to the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher sales revenues, partially offset by higher fixed costs.
Corporate and other
Corporate and other, net includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $35 million to a loss of $196 million from a loss of $161 million for 2020. For 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $34 million to a loss of $189 million from a loss of $155 million for 2020. The decrease in adjusted EBITDA from Corporate and other resulted primarily from a charge from a LIFO inventory reserve adjustment and an increase in corporate overhead costs, partially offset by an increase in unallocated foreign currency exchange gains.
Year Ended December 31, 2020 Compared with Year Ended December 31, 2019
For a comparison of our results of operations for the fiscal years ended December 31, 2020 and 2019, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 12, 2021.
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Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instruction I of Form 10-K.
Cash Flows For Year Ended December 31, 2021 Compared with Year Ended December 31, 2020
Net cash provided by operating activities from continuing operations for 2021 and 2020 was $953 million and $277 million, respectively. The increase in net cash provided by operating activities from continuing operations during 2021 compared with 2020 was primarily attributable to increased operating income as described in “—Results of Operations” above, including $332.5 million in proceeds associated with the Albemarle Settlement, partially offset by a net cash outflow of $103 million related to changes in operating assets and liabilities for 2021 as compared with 2020.
Net cash (used in) provided by investing activities from continuing operations for 2021 and 2020 was $(524) million and $1,462 million, respectively. During 2021 and 2020, we paid $342 million and $249 million, respectively, for capital expenditures, including $100 million and $54 million during 2021 and 2020, respectively, on a new MDI splitter in Geismar, Louisiana. During 2021, we received $43 million for the sale of businesses, primarily due to the receipt of $28 million pursuant to an earnout provision in connection with the sale of our India-based DIY business. In January 2020, we received approximately $1.92 billion for the sale of our Chemical Intermediates Businesses, and in November 2020, we received approximately $257 million for the sale of the India-based DIY business. See “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses” and “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business” to our consolidated financial statements. During 2021, we paid $245 million for the acquisition of businesses, primarily related to approximately $242 million paid for the Gabriel Acquisition, net of cash acquired. During 2020, we paid approximately $650 million in connection with the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition, net of cash acquired. See “Note 3. Business Combinations and Acquisitions” to our consolidated financial statements. In December 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator and received approximately $99 million. See “Note 4. Discontinued Operations and Business Dispositions—Separation and Deconsolidation of Venator” to our consolidated financial statements. During the year ended December 31, 2020, we entered into a sale and leaseback agreement to sell certain properties in Basel, Switzerland, for which we received approximately $73 million in proceeds from the sale of assets.
Net cash used in financing activities for 2021 and 2020 was $977 million and $655 million, respectively. The increase in net cash used in financing activities was primarily due to the redemption in full of €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes and the redemption in full of $400 million in aggregate principal amount of our 2022 Senior Notes during 2021. Additionally, our repurchases of common stock increased by $104 million during 2021 compared with 2020. During 2021, we issued $400 million in aggregate principal amount of our 2031 Senior Notes and received borrowings of approximately 177 million SAR (approximately $47 million) related to funding on a new term loan facility of our consolidated 50%-owned joint venture, AAC. See “Note 14. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our consolidated financial statements. During 2020 we repaid a total of $203 million on our Revolving Credit Facility and repaid in full $109 million on our 364-day term loan facility (the “2019 Term Loan”).
Free cash flow from continuing operations for 2021 and 2020 were proceeds of cash of $611 million and $28 million, respectively. The increase in free cash flow was primarily attributable to the increase in cash provided by operating activities from continuing operations, partially offset by an increase in cash used for capital expenditures during 2021 as compared with 2020.
Cash Flows For Year Ended December 31, 2020 Compared with Year Ended December 31, 2019
For a comparison of our cash flows for the fiscal years ended December 31, 2020 and 2019, see “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 12, 2021.
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Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
| December 31, | Less | December 31, | Increase | Percent | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | Acquisition(1) | Subtotal | 2020 | (Decrease) | Change | |||||||||||||||||||
| Cash and cash equivalents | $ | 1,041 | $ | (9 | ) | $ | 1,032 | $ | 1,593 | $ | (561 | ) | (35 | )% | ||||||||||
| Accounts and notes receivable, net | 1,186 | (13 | ) | 1,173 | 910 | 263 | 29 | % | ||||||||||||||||
| Inventories | 1,201 | (23 | ) | 1,178 | 848 | 330 | 39 | % | ||||||||||||||||
| Receivable associated with the Albemarle Settlement | 333 | — | 333 | — | 333 | NM | ||||||||||||||||||
| Other current assets | 167 | — | 167 | 217 | (50 | ) | (23 | )% | ||||||||||||||||
| Total current assets | 3,928 | (45 | ) | 3,883 | 3,568 | 315 | 9 | % | ||||||||||||||||
| Accounts payable | 1,208 | (7 | ) | 1,201 | 876 | 325 | 37 | % | ||||||||||||||||
| Accrued liabilities | 780 | (3 | ) | 777 | 458 | 319 | 70 | % | ||||||||||||||||
| Current portion of debt | 12 | — | 12 | 593 | (581 | ) | (98 | )% | ||||||||||||||||
| Current operating lease liabilities | 51 | — | 51 | 52 | (1 | ) | (2 | )% | ||||||||||||||||
| Total current liabilities | 2,051 | (10 | ) | 2,041 | 1,979 | 62 | 3 | % | ||||||||||||||||
| Working capital | $ | 1,877 | $ | (35 | ) | $ | 1,842 | $ | 1,589 | $ | 253 | 16 | % |
| Column 1 | Column 2 |
|---|---|
| (1) | Represents amounts related to the Gabriel Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions —Acquisition of Gabriel Performance Products” to our consolidated financial statements. |
Our working capital increased by $253 million as a result of the net impact of the following significant changes:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | The decrease in cash and cash equivalents of $561 million resulted from the matters identified on our consolidated statements of cash flows. See also “—Cash Flows Year Ended December 31, 2021 Compared with Year Ended December 31, 2020.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts and notes receivable increased by $263 million primarily due to higher revenues in the fourth quarter of 2021 compared to the fourth quarter of 2020. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Inventories increased by $330 million primarily due to higher inventory costs and volumes. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Receivable associated with the Albemarle Settlement for $665 million, of which we received $332.5 million on December 2, 2021 and expect to receive a final payment of $332.5 million by early May 2022. For more information, see “Part I. Item I. Business—Recent Developments—Albemarle Settlement.” |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accounts payable increased by $325 million primarily due to higher inventory purchases. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Accrued liabilities increased by $319 primarily related to higher accrued compensation, current income taxes and approximately $200 million of legal fees associated with the Albemarle Settlement. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Current portion of debt decreased by $581 million primarily due to the redemption of our 2021 Senior Notes in the first half of 2021. |
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Direct and Subsidiary Debt
See “Note 14. Debt—Direct and Subsidiary Debt” to our consolidated financial statements.
Debt Issuance Costs
See “Note 14. Debt—Direct and Subsidiary Debt—Debt Issuance Costs” to our consolidated financial statements.
Revolving Credit Facility
See “Note 14. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our consolidated financial statements.
Term Loan Credit Facility
See “Note 14. Debt—Direct and Subsidiary Debt—Term Loan Credit Facility” to our consolidated financial statements.
A/R Programs
See “Note 14. Debt—Direct and Subsidiary Debt—A/R Programs” to our consolidated financial statements.
Senior Notes
See “Note 14. Debt—Direct and Subsidiary Debt—Senior Notes” to our consolidated financial statements.
Variable Interest Entity Debt
See “Note 14. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our consolidated financial statements.
Note Payable from Huntsman International to Huntsman Corporation
See “Note 14. Debt—Direct and Subsidiary Debt—Note Payable from Huntsman International to Huntsman Corporation” to our consolidated financial statements.
Compliance With Covenants
See “Note 14. Debt—Compliance with Covenants” to our consolidated financial statements.
Maturities
See “Note 14. Debt—Maturities” to our consolidated financial statements.
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Short-Term Liquidity
We depend upon our cash, Revolving Credit Facility, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of December 31, 2021, we had $2,482 million of combined cash and unused borrowing capacity, consisting of $1,041 million in cash, $1,197 million in availability under our Revolving Credit Facility and $244 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters had, or are expected to have, a significant impact on our liquidity:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | Cash invested in our accounts receivable and inventory, net of accounts payable, were approximately $340 million for 2021, as reflected in our consolidated statements of cash flows. We expect volatility in our working capital components to continue. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | During 2022, we expect to spend approximately $300 million on capital expenditures. We expect to fund spending on all capital expenditures with cash provided by operations. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | During 2021, we made contributions to our pension and postretirement benefit plans of $59 million. During 2022, we expect to contribute an additional amount of approximately $49 million to these plans. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| ● | On October 28, 2021, we won an arbitration award in excess of $600 million against Albemarle for fraud and breach of contract. On November 4, 2021, Albemarle agreed to waive any appeal and pay $665 million, of which we received $332.5 million on December 2, 2021 and expect to receive a final payment of $332.5 million by early May 2022. We agreed to terminate all proceedings relating to the dispute after receipt of the final payment. We expect to receive, on a pretax basis, a total of approximately $465 million after related legal fees. |
Long-Term Liquidity
| ● | On May 26, 2021, Huntsman International completed a $400 million offering of its 2031 Senior Notes. On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full the $400 million in aggregate principal amount of its 2022 Senior Notes. For additional information, see “Note 14. Debt—Direct and Subsidiary Debt—Senior Notes” to our consolidated financial statements. | |
|---|---|---|
| ● | On July 1, 2021, we entered into amendments to our A/R Programs that, among other things, extended the scheduled termination dates of our A/R Programs from April 2022 to July 2024. | |
| ● | During 2020, management implemented cost realignment and synergy plans. In connection with these plans, we currently expect to achieve annualized cost savings and synergy benefits of approximately $140 million during 2023, of which we have achieved approximately $100 million to date. Associated with these plans, we expect net cash restructuring and integration costs, including capital expenditures, of approximately $115 million, of which we have spent approximately $80 million to date. | |
| ● | During 2021, management announced additional cost realignment plans. In connection with these plans, we currently expect to achieve annualized cost savings of approximately $100 million by the end of 2023. | |
| ● | On October 26, 2021, our Board of Directors approved a new share repurchase program of $1 billion. In conjunction with the inception of this plan, we retired our prior share repurchase program. During the fourth quarter of 2021, we repurchased 3,082,614 shares of our common stock for approximately $101 million, excluding commissions, under this share repurchase program. Prior to the fourth quarter during 2021, we repurchased 3,971,784 shares of our common stock for approximately $102 million, excluding commissions, under the prior share repurchase program. From January 1, 2022 through January 31, 2022, we repurchased an additional 851,000 shares of our common stock for approximately $31 million, excluding commissions. | |
| ● | On February 14, 2022, our Board of Directors declared a $0.2125 per share cash dividend on our common stock. This represents a 13% increase from the previous dividend. |
As of December 31, 2021, we had $12 million classified as current portion of debt, including debt at our variable interest entities of $10 million and certain other short-term facilities and scheduled amortization payments totaling $2 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.
As of December 31, 2021, we had approximately $477 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
Restructuring, Impairment and Plant Closing Costs
For a discussion of restructuring plans and the costs involved, see “Note 12. Restructuring, Impairment and Plant Closing Costs (Credits)” to our consolidated financial statements.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, see “Note 2. Summary of Significant Accounting Policies" to our consolidated financial statements.
Critical Accounting Estimates
This discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make judgments, estimates and assumptions that involve a significant level of estimation and uncertainty and are reasonably likely to have a material impact on our financial condition and/or results of operations. Summarized below are our critical accounting estimates.
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Income Taxes
Deferred income taxes reflect the net effects of temporary differences between assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized; valuation allowances are recorded to offset deferred tax assets unlikely to be realized. Valuation allowances are reviewed on a tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgments. In evaluating the objective evidence that historical results provide, we consider the cyclicality of businesses and cumulative income or losses. Cumulative historical losses incurred over periods of time limit our ability to consider more subjective projections of future taxable income. Changes in expected future taxable income and tax planning strategies in applicable jurisdictions affect our assessment of the realization of deferred tax assets. Our judgments regarding valuation allowances are also influenced by factors outside of business results that could impact our ability to utilize a deferred tax asset. As of December 31, 2021, we had total valuation allowances of $131 million, which represents a decrease of $75 million from the prior year, and we have recognized net deferred tax assets of $45 million. See “Note 19. Income Taxes” to our consolidated financial statements for more information regarding our deferred tax assets and valuation allowances.
Employee Benefit Programs
We sponsor several contributory and non-contributory defined benefit plans, covering employees primarily in the U.S., the U.K., The Netherlands, Belgium and Switzerland, but also covering employees in a number of other countries. We fund the material plans through trust arrangements (or local equivalents) where the assets are held separately from us. We also sponsor unfunded postretirement plans which provide medical and, in some cases, life insurance benefits covering certain employees in the U.S. and Canada. Amounts recorded in our consolidated financial statements are recorded based upon actuarial valuations performed by various independent actuaries. Inherent in these valuations are numerous assumptions regarding expected long-term rates of return on plan assets, discount rates, compensation increases, mortality rates and health care cost trends. Each of these critical estimates are subject to uncertainty and are assessed by us using historical data, as well as projections of future conditions. These assumptions and changes during the period are described in “Note 18. Employee Benefit Plans” to our consolidated financial statements.
We retain third party actuaries to assist us with judgments necessary to make assumptions on which our employee pension and postretirement benefit plan obligations and expenses are based. The effect of a 1% change in three key assumptions is summarized as follows (dollars in millions):
| Statement of | Balance Sheet | |||||||
|---|---|---|---|---|---|---|---|---|
| Assumptions | Operations(1) | Impact(2) | ||||||
| Discount rate | ||||||||
| —1% increase | $ | (40 | ) | $ | (481 | ) | ||
| —1% decrease | 46 | 556 | ||||||
| Expected long-term rates of return on plan assets | ||||||||
| —1% increase | (30 | ) | — | |||||
| —1% decrease | 30 | — | ||||||
| Rate of compensation increase | ||||||||
| —1% increase | 11 | 51 | ||||||
| —1% decrease | (7 | ) | (46 | ) |
| Column 1 | Column 2 |
|---|---|
| (1) | Estimated (decrease) increase on 2021 net periodic benefit cost |
| Column 1 | Column 2 |
|---|---|
| (2) | Estimated (decrease) increase on December 31, 2021 pension and postretirement liabilities and accumulated other comprehensive loss |
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