Huntsman (HUN) Q4 2012 earnings summary

Executive summary

• Adjusted EBITDA reached a record $1.396B in 2012, up 15% YoY; it more than doubled over three years.

• Revenue was $11.187B, down less than 1% YoY, while attributable net income rose to $363M from $247M.

• Stronger Polyurethanes results and lower restructuring costs supported earnings growth; Q4 included a $77M debt-extinguishment loss and a $40M net loss attributable to shareholders.

Financial highlights

• Gross profit increased 11% to $2.034B; operating income rose 39% to $845M.

• Adjusted net income was $542M, up 33% YoY; adjusted diluted EPS was $2.25 versus $1.69.

• Operating cash flow was $774M versus $365M; capital expenditures, net of reimbursements, were $412M versus $327M.

• Q4 revenue was $2.619B and gross profit was $420M; attributable net loss was $40M, or diluted loss per share of $0.17.

Outlook and guidance

• 2013 adjusted EBITDA guidance: Polyurethanes and Performance Products similar to 2012; Advanced Materials better; Textile Effects positive; Pigments below 2012.

• Polyurethanes outlook cited improving MDI demand and restructuring benefits; Pigments expected near-term margin pressure, with contribution margins improving in 2H 2013.

• Planned 2013 capital spending was ~$450M; adjusted effective tax rate guidance was ~35%, with long-term rate expected at 30%-35%.

• Realignment and cost reductions are expected to improve profitability by ~$220M when completed in mid-2014; most savings targeted by end-2013.