Consumables

HUNTSMAN RELEASES FIRST QUARTER 2011 RESULTS

Thursday 05. May 2011 - STRONG DEMAND LEADS TO A 28% YEAR OVER YEAR INCREASE IN REVENUE AND ADJUSTED EBITDA OF $302 MILLION

First Quarter 2011 Highlights
• Revenues for the first quarter of 2011 were $2,679 million, an increase of 28% compared to $2,094 million for the same period in 2010 and an increase of 11% compared to $2,412 million for the fourth quarter of 2010.
• Adjusted EBITDA for the first quarter of 2011 was $302 million compared to $123 million for the same period in 2010 and $219 million for the fourth quarter of 2010.
• Adjusted net income for the first quarter of 2011 was $114 million or $0.47 per diluted share. This compares to adjusted net loss of $16 million or $0.07 loss per diluted share for the same period in 2010 and adjusted net income of $58 million or $0.24 per diluted share for the fourth quarter of 2010.
• Net income attributable to Huntsman Corporation for the first quarter of 2011 was $62 million or $0.26 per diluted share. This compares to net loss attributable to Huntsman Corporation of $172 million or $0.73 loss per diluted share for the same period in 2010 and net income attributable to Huntsman Corporation of $30 million or $0.12 per diluted share for the fourth quarter of 2010.
Recent Highlights
2010
• On April 2, 2011, we completed the acquisition of the Indian chemicals business of Laffans Petrochemicals Ltd. The business manufactures amines and surfactants for use in the fast growing Asia Pacific region.
• On March 7, 2011, we completed a successful amendment to our credit agreement. Among other things, we extended the maturity date of $650 million of our Term Loan B by three years from April 2014 to April 2017 and increased the applicable margin on borrowing.
• On February 16, 2011, we announced our intent to increase the capacity of our Jurong Island, Singapore polyetheramine facility. We plan to invest approximately $70 million to increase the annual production capacity from 16,000 tons to approximately 56,000 tons. Over the next decade we expect demand for our amines to grow at least 10% per year in the Asia Pacific region.
• On January 18, 2011 we completed the early redemption of $100 million of our 7 3/8% senior subordinated notes due 2015 with available cash.
Peter R. Huntsman, our President and CEO, commented:
“I am pleased with the strong earnings of our business in the first quarter; underlying demand for our largest businesses continues to improve with the global economic recovery. We are raising prices and recapturing margin despite the headwind of increased raw material and energy costs.”
Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010
Revenues for the three months ended March 31, 2011 increased to $2,679 million from $2,094 million for the same period in 2010. For the three months ended March 31, 2011, Adjusted EBITDA was $302 million compared to $123 million for the same period in 2010.
Polyurethanes
The increase in revenues in our Polyurethanes division for the three months ended March 31, 2011 compared to the same period in 2010 was primarily due to higher sales volumes and higher average selling prices. MDI sales volumes increased across almost all sectors. MDI sales volumes increased primarily due to improved demand in the insulation and automotive sectors. PO/MTBE sales volumes increased compared to the prior year primarily due to the 2010 planned maintenance outage at our Port Neches, TX facility. Average MDI selling prices increased in response to higher raw material costs. Average PO/MTBE selling prices increased primarily in response to higher raw material costs and industry supply constraints. The increase in Adjusted EBITDA was primarily due to the 2010 planned maintenance at our Port Neches, TX facility the impact of which was $40 million as well as higher sales volumes.
Performance Products
The increase in revenues in our Performance Products division for the three months ended March 31, 2011 compared to the same period in 2010 was due to higher average selling prices, higher sales volumes and the consolidation of the Arabian Amines Company joint venture. Average selling prices increased across all product groups primarily in response to stronger market conditions and higher raw material costs. Sales volumes increased primarily due to stronger demand. The increase in Adjusted EBITDA was primarily due to higher contribution margins, higher sales volumes and the consolidation of the Arabian Amines Company joint venture partially offset by higher manufacturing and selling, general and administrative costs. During the three months ended March 31, 2011 and 2010 we experienced unplanned mechanical shutdowns at our Port Neches, TX facility resulting in approximately $7 million and $11 million of higher costs respectively.
Advanced Materials
The increase in revenues in our Advanced Materials division for the three months ended March 31, 2011 compared to the same period in 2010 was due to higher average selling prices and higher sales volumes. Average selling prices increased in our specialty components and base resins business primarily in response to higher raw material costs partially offset by lower average selling prices in our formulations business primarily as a result of competitive market pressure in our wind business and overall product mix. Sales volumes increased in the Asia-Pacific and European regions while volumes decreased slightly in the Americas primarily as a result of raw material constraints for base resins. The increase in Adjusted EBITDA was primarily due to higher contribution margins and higher sales volumes partially offset by the impact of stronger major European currencies against the U.S. dollar resulting in higher manufacturing costs.
Textile Effects
The decrease in revenues in our Textile Effects division for the three months ended March 31, 2011 compared to the same period in 2010 was due to lower sales volumes partially offset by
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higher average selling prices. Sales volumes decreased due to lower demand and customer manufacturing constraints. Average selling prices increased primarily in response to higher raw material costs. The decrease in Adjusted EBITDA was primarily due to lower sales volumes and the foreign currency impact of a stronger Swiss franc against the U.S. dollar on our manufacturing and selling, general and administrative costs.
Pigments
The increase in revenues in our Pigments division for the three months ended March 31, 2011 compared to the same period in 2010 was due to higher average selling prices and higher sales volumes. Average selling prices increased in all regions of the world primarily as a result of higher raw material costs and stronger overall market demand. Sales volumes increased primarily due to increased demand in all regions of the world. The increase in Adjusted EBITDA in our Pigments division was primarily due to higher contribution margins and higher sales volumes partially offset by higher manufacturing and selling, general and administrative costs.
Corporate, LIFO and Other
Corporate, LIFO and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring costs, gain and loss on the disposition of assets and non-operating income and expense. Adjusted EBITDA from Corporate, LIFO and Other increased by $2 million to a loss of $47 million for the three months ended March 31, 2011 compared to a loss of $49 million for the same period in 2010.
Income Taxes
During the three months ended March 31, 2011 we recorded income tax expense of $22 million compared to a benefit of $34 million in 2010. Our adjusted effective income tax rate for the three months ended March 31, 2011 was approximately 22%. We expect our long term effective income tax rate to be approximately 30 – 35%. We have tax valuation allowances in countries such as Switzerland and the United Kingdom where our Textile Effects and Pigments businesses have meaningful operations. The increase in profitability from our Pigments business has had the effect of reducing our adjusted effective income tax rate. During the three months ended March 31, 2011 we paid $5 million in cash for income taxes. We expect our cash tax rate to continue to be less than our effective income tax rate.
Liquidity, Capital Resources and Outstanding Debt
As of March 31, 2011, we had $1,168 million of combined cash and unused borrowing capacity compared to $1,434 million at December 31, 2010. The decrease from 2010 year end was primarily attributable to an increase in primary net working capital of $245 million and the early redemption of $100 million of our senior subordinated notes with available cash.
On March 7, 2011, we completed a successful amendment to our credit agreement. Among other things, we extended the maturity date of $650 million of our Term Loan B by three years from April 2014 to April 2017 and increased the applicable margin on borrowing.
In April 2011, we completed amendments to our U.S. and European accounts receivable securitization programs. These amendments included an extension of the maturity date to April 2014 and a reduction in the applicable margin on borrowing under these programs.
Total capital expenditures, net of reimbursements for the three months ended March 31, 2011 were $60 million compared to $37 million for the same period in 2010. We expect to spend approximately $350 million on capital expenditures, net of reimbursements in 2011.