# Huntsman CORP: Form 10-Q for the period ended Mar 31, 2023

- Company: [Huntsman CORP](/companies/hun.md) (CIK 1307954)
- Form: 10-Q
- Filed: 2023-05-05
- Accepted by EDGAR: May 5, 2023, 14:03 ET
- Period: 2023-03-31
- Accession: 0001437749-23-012765
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1307954/000143774923012765/hun20230331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1307954/000143774923012765/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $1.61bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-01-01 to 2023-03-31 | $1.34bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-01-01 to 2023-03-31 | $269.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2023-01-01 to 2023-03-31 | $30.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-01-01 to 2023-03-31 | $188.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | $61.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $11.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $153.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.83 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.84 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 184 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | −$154.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $46.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-01-01 to 2023-03-31 | $44.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2023-01-01 to 2023-03-31 | $97.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-03-31 | $615.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $2.70bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $7.76bn | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $1.30bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $3.77bn | us-gaap:Liabilities |
| Long-term debt | at 2023-03-31 | $1.51bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2023-03-31 | $11.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-03-31 | $3.76bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 36,847 characters.

### Results of Operations

As discussed in “Note 3. Discontinued Operations and Business Disposition—Sale of Textile Effects Business” to our condensed 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 the condensed consolidated results of operations from continuing operations (dollars in millions, except per share amounts):

### Huntsman Corporation

|  | Three months ended March 31, 2023 | 2022 | Percent change |
| --- | ---: | ---: | ---: |
| **Revenues** | $1,606 | $2,192 | (27)% |
| **Cost of goods sold** | 1,337 | 1,677 | (20)% |
| **Gross profit** | 269 | 515 | (48)% |
| Operating expenses, net | 215 | 232 | (7)% |
| Restructuring, impairment and plant closing credits | (7) | — | NM |
| **Operating income** | 61 | 283 | (78)% |
| Interest expense, net | (18) | (14) | 29% |
| Equity in income of investment in unconsolidated affiliates | 12 | 15 | (20)% |
| Fair value adjustments to Venator investment, net | (1) | (2) | (50)% |
| Other income, net | 1 | — | NM |
| **Income from continuing operations before income taxes** | 55 | 282 | (80)% |
| Income tax expense | (11) | (60) | (82)% |
| **Income from continuing operations** | 44 | 222 | (80)% |
| Income from discontinued operations, net of tax(1) | 122 | 18 | 578% |
| **Net income** | 166 | 240 | (31)% |
| **Reconciliation of net income to adjusted EBITDA:** |  |  |  |
| Net income attributable to noncontrolling interests | (13) | (17) | (24)% |
| Interest expense, net from continuing operations | 18 | 14 | 29% |
| Income tax expense from continuing operations | 11 | 60 | (82)% |
| Income tax expense from discontinued operations | 15 | 5 | 200% |
| Depreciation and amortization from continuing operations | 69 | 67 | 3% |
| Depreciation and amortization from discontinued operations | — | 4 | (100)% |
| Other adjustments: |  |  |  |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 1 | 6 |  |
| EBITDA from discontinued operations(1) | (137) | (27) |  |
| Fair value adjustments to Venator investment, net | 1 | 2 |  |
| Certain legal and other settlements and related expenses | 1 | 12 |  |
| Costs associated with the Albemarle Settlement, net | — | 1 |  |
| Loss on sale of business/assets | — | 4 |  |
| Income from transition services arrangements | — | (1) |  |
| Certain nonrecurring information technology project implementation costs | 2 | 2 |  |
| Amortization of pension and postretirement actuarial losses | 8 | 12 |  |
| Restructuring, impairment and plant closing and transition (credits) costs(2) | (6) | 3 |  |
| Adjusted EBITDA(3) | $136 | $387 | (65)% |
| Net cash (used in) provided by operating activities from continuing operations | $(122) | $67 | NM |
| Net cash provided by (used in) investing activities from continuing operations | 493 | (60) | NM |
| Net cash used in financing activities | (379) | (252) | 50% |
| Capital expenditures from continuing operations | (46) | (64) | (28)% |

### Huntsman International

|  | Three months ended March 31, 2023 | 2022 | Percent change |
| --- | ---: | ---: | ---: |
| **Revenues** | $1,606 | $2,192 | (27)% |
| **Cost of goods sold** | 1,337 | 1,677 | (20)% |
| **Gross profit** | 269 | 515 | (48)% |
| Operating expenses, net | 213 | 229 | (7)% |
| Restructuring, impairment and plant closing credits | (7) | — | NM |
| **Operating income** | 63 | 286 | (78)% |
| Interest expense, net | (18) | (14) | 29% |
| Equity in income of investment in unconsolidated affiliates | 12 | 15 | (20)% |
| Fair value adjustments to Venator investment, net | (1) | (2) | (50)% |
| Other income, net | 1 | — | NM |
| **Income from continuing operations before income taxes** | 57 | 285 | (80)% |
| Income tax expense | (11) | (60) | (82)% |
| **Income from continuing operations** | 46 | 225 | (80)% |
| Income from discontinued operations, net of tax(1) | 122 | 18 | 578% |
| **Net income** | 168 | 243 | (31)% |
| **Reconciliation of net income to adjusted EBITDA:** |  |  |  |
| Net income attributable to noncontrolling interests | (13) | (17) | (24)% |
| Interest expense, net from continuing operations | 18 | 14 | 29% |
| Income tax expense from continuing operations | 11 | 60 | (82)% |
| Income tax expense from discontinued operations | 15 | 5 | 200% |
| Depreciation and amortization from continuing operations | 69 | 67 | 3% |
| Depreciation and amortization from discontinued operations | — | 4 | (100)% |
| Other adjustments: |  |  |  |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 1 | 6 |  |
| EBITDA from discontinued operations(1) | (137) | (27) |  |
| Fair value adjustments to Venator investment, net | 1 | 2 |  |
| Certain legal and other settlements and related expenses | 1 | 12 |  |
| Costs associated with the Albemarle Settlement, net | — | 1 |  |
| Loss on sale of business/assets | — | 4 |  |
| Income from transition services arrangements | — | (1) |  |
| Certain nonrecurring information technology project implementation costs | 2 | 2 |  |
| Amortization of pension and postretirement actuarial losses | 8 | 12 |  |
| Restructuring, impairment and plant closing and transition (credits) costs(2) | (6) | 3 |  |
| **Adjusted EBITDA(3)** | $138 | $390 | (65)% |
| Net cash (used in) provided by operating activities from continuing operations | $(122) | $68 | NM |
| Net cash provided by (used in) investing activities from continuing operations | 385 | (273) | NM |
| Net cash used in financing activities | (271) | (39) | 595% |
| Capital expenditures from continuing operations | (46) | (64) | (28)% |

### Huntsman Corporation

| Reconciliation of net income to adjusted net income | Three months ended March 31, 2023 Gross | Tax and other(4) | Net | Three months ended March 31, 2022 Gross | Tax and other(4) | Net |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Net income** |  |  | $166 |  |  | $240 |
| Net income attributable to noncontrolling interests |  |  | (13) |  |  | (17) |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | $1 | $— | 1 | $6 | $— | 6 |
| Income from discontinued operations(1)(5) | (137) | 15 | (122) | (27) | 9 | (18) |
| Fair value adjustments to Venator investment, net | 1 | — | 1 | 2 | — | 2 |
| Certain legal and other settlements and related expenses | 1 | — | 1 | 12 | (4) | 8 |
| Costs associated with the Albemarle Settlement, net | — | — | — | 1 | — | 1 |
| Loss on sale of business/assets | — | — | — | 4 | (1) | 3 |
| Income from transition services arrangements | — | — | — | (1) | — | (1) |
| Certain nonrecurring information technology project implementation costs | 2 | — | 2 | 2 | — | 2 |
| Amortization of pension and postretirement actuarial losses | 8 | (1) | 7 | 12 | (3) | 9 |
| Restructuring, impairment and plant closing and transition (credits) costs(2) | (6) | — | (6) | 3 | (1) | 2 |
| **Adjusted net income(3)** |  |  | $37 |  |  | $237 |
| Weighted average shares-basic |  |  | 182.7 |  |  | 212.7 |
| Weighted average shares-diluted |  |  | 184.4 |  |  | 215.4 |
| **Basic net income attributable to Huntsman Corporation per share:** |  |  |  |  |  |  |
| Income from continuing operations |  |  | $0.17 |  |  | $0.96 |
| Income from discontinued operations |  |  | 0.67 |  |  | 0.09 |
| **Net income** |  |  | $0.84 |  |  | $1.05 |
| **Diluted net income attributable to Huntsman Corporation per share:** |  |  |  |  |  |  |
| Income from continuing operations |  |  | $0.17 |  |  | $0.95 |
| Income from discontinued operations |  |  | 0.66 |  |  | 0.09 |
| **Net income** |  |  | $0.83 |  |  | $1.04 |
| **Other non-GAAP measures:** |  |  |  |  |  |  |
| Diluted adjusted net income per share(3) |  |  | $0.20 |  |  | $1.10 |
| Net cash (used in) provided by operating activities from continuing operations |  |  | $(122) |  |  | $67 |
| Capital expenditures from continuing operations |  |  | (46) |  |  | (64) |
| Free cash flow from continuing operations(3) |  |  | $(168) |  |  | $3 |
| Effective tax rate |  |  | 20% |  |  | 21% |
| Impact of non-GAAP adjustments(6) |  |  | (1)% |  |  | — |
| Adjusted effective tax rate |  |  | 19% |  |  | 21% |

NM—Not meaningful

(1) Includes the gain on the sale of our Textile Effects Business in the first quarter of 2023.

(2) Includes costs associated with transition activities related primarily to our Corporate program to optimize our global approach to leverage shared services capabilities.

​(3) See “—Non-GAAP Financial Measures.”

(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) 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.

### Non-GAAP Financial Measures

Our condensed consolidated financial statements are prepared in accordance with 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 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 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) certain legal and other settlements and related expenses; (e) costs associated with the Albemarle Settlement, net; (f) loss on sale of business/assets; (g) income from transition services arrangements; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; and (j) restructuring, impairment and plant closing and transition (credits) 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; (b) income from discontinued operations; (c) fair value adjustments to Venator investment, net; (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) income from transition services arrangements; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; and (j) restructuring, impairment and plant closing and transition (credits) 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 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.

#### 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.

### Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022

For the three months ended March 31, 2023, income from continuing operations attributable to Huntsman Corporation was $31 million, a decrease of $174 million from $205 million in the 2022 period. For the three months ended March 31, 2023, income from continuing operations attributable to Huntsman International was $33 million, a decrease of $175 million from $208 million in the 2022 period. The decreases noted above were the result of the following items:

- Revenues for the three months ended March 31, 2023 decreased by $586 million, or 27%, as compared with the 2022 period. The decrease was primarily due to lower sales volumes in all our segments, partially offset by higher average selling prices in our Advanced Materials segment. See “—Segment Analysis” below.
- Gross profit for the three months ended March 31, 2023 decreased by $246 million, or 48%, as compared with the 2022 period. The decrease resulted primarily from lower gross profits in all our segments. See “—Segment Analysis” below.
- Our operating expenses, net and the operating expenses, net of Huntsman International for the three months ended March 31, 2023 decreased by $17 million and $16 million, respectively, or 7% for both, as compared with the 2022 period, primarily related to a decrease in selling, general and administrative expenses as well as the impact of translating foreign currency amounts to the U.S. dollar.
- Restructuring, impairment and plant closing credits were $7 million for the three months ended March 31, 2023 as compared with nil in the 2022 period. For further information, see “Note 6. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements.
- Income tax expense for the three months ended March 31, 2023 decreased to $11 million from $60 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 further information, see “Note 17. Income Taxes” to our condensed consolidated financial statements.

*(Dollars in millions)*

| Revenues | Three months ended March 31, 2023 | 2022 | Percent change favorable (unfavorable) |
| --- | ---: | ---: | ---: |
| Polyurethanes | $991 | $1,386 | (28)% |
| Performance Products | 334 | 480 | (30)% |
| Advanced Materials | 289 | 335 | (14)% |
| **Total reportable segments’ revenues** | 1,614 | 2,201 | (27)% |
| Intersegment eliminations | (8) | (9) | NM |
| **Total** | $1,606 | $2,192 | (27)% |
| **Huntsman Corporation** |  |  |  |
| **Segment adjusted EBITDA(1)** |  |  |  |
| Polyurethanes | $66 | $224 | (71)% |
| Performance Products | 71 | 146 | (51)% |
| Advanced Materials | 48 | 67 | (28)% |
| **Total reportable segments’ adjusted EBITDA** | 185 | 437 | (58)% |
| Corporate and other | (49) | (50) | 2% |
| **Total** | $136 | $387 | (65)% |
| **Huntsman International** |  |  |  |
| **Segment adjusted EBITDA(1)** |  |  |  |
| Polyurethanes | $66 | $224 | (71)% |
| Performance Products | 71 | 146 | (51)% |
| Advanced Materials | 48 | 67 | (28)% |
| **Total reportable segments’ adjusted EBITDA** | 185 | 437 | (58)% |
| Corporate and other | (47) | (47) | — |
| **Total** | $138 | $390 | (65)% |

NM—Not meaningful

(1) For further 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 19. Operating Segment Information” to our condensed consolidated financial statements.

| Period-over-period increase (decrease) | Three months ended March 31, 2023 vs 2022 Average selling price(1) Local currency | Foreign currency translation impact | Sales volumes(2) | Mix and other |
| --- | ---: | ---: | ---: | ---: |
| Polyurethanes | (2)% | (3)% | (21)% | (2)% |
| Performance Products | — | (1)% | (31)% | 2% |
| Advanced Materials | 6% | (3)% | (21)% | 4% |

(1) Excludes revenues from tolling arrangements, byproducts and raw materials.

(2) Excludes sales volumes of byproducts and raw materials.

### Polyurethanes

The decrease in revenues in our Polyurethanes segment for the three months ended March 31, 2023 compared to the same period of 2022 was primarily due to lower sales volumes, lower MDI average selling prices and the negative impact of weaker major international currencies against the U.S. dollar. Sales volumes decreased primarily due to lower demand, particularly in our European and Americas regions. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes, lower MDI margins, 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, partially offset by cost savings achieved from our cost optimization program.

​***Performance Products***

The decrease in revenues in our Performance Products segment for the three months ended March 31, 2023 compared to the same period of 2022 was primarily due to lower sales volumes, partially offset by improved sales mix. Sales volumes decreased in all regions primarily due to slowing construction activity, reduced demand in coatings, adhesives, lubes and other industrial markets as well as inventory destocking. The decrease in segment adjusted EBITDA was primarily due to decreased sales volumes.

### Advanced Materials

The decrease in revenues in our Advanced Materials segment for the three months ended March 31, 2023 compared to the same period of 2022 was primarily due to lower sales volumes, partially offset by higher average selling prices. Sales volumes decreased primarily due to reduced customer demand in our infrastructure markets and the deselection of lower margin business. Average selling prices increased largely in response to higher raw material, energy and logistics costs as well as improved sales mix. 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, 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 the three months ended March 31, 2023, adjusted EBITDA from Corporate and other for Huntsman Corporation was a loss of $49 million as compared to a loss of $50 million for the same period of 2022. The increase in adjusted EBITDA from Corporate and other for Huntsman Corporation resulted primarily from an increase in LIFO valuation gains, partially offset by project costs related to our cost optimization program and an increase in pension expense. For the three months ended March 31, 2023, adjusted EBITDA from Corporate and other for Huntsman International was a loss of $47 million, which remained the same as a loss of $47 million for the same period of 2022.

### 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 Instructions H(1)(a) and (b) of Form 10-Q.

### Cash Flows for the Three Months Ended March 31, 2023 Compared with the Three Months Ended March 31, 2022

Net cash (used in) provided by operating activities from continuing operations for the three months ended March 31, 2023 and 2022 was $(122) million and $67 million, respectively. The increase in net cash used in operating activities from continuing operations during the three months ended March 31, 2023 compared with the same period in 2022 was primarily attributable to decreased operating income as described in “—Results of Operations” above for the three months ended March 31, 2023 as compared with the same period of 2022, partially offset by a net cash inflow of $18 million related to changes in operating assets and liabilities.

Net cash provided by (used in) investing activities from continuing operations for the three months ended March 31, 2023 and 2022 was $493 million and $(60) million, respectively. During the three months ended March 31, 2023 and 2022, we paid $46 million and $64 million for capital expenditures, respectively. During the three months ended March 31, 2023, we received $541 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 3. Discontinued Operations and Business Disposition—Sale of Textile Effects Business” to our condensed consolidated financial statements.

Net cash used in financing activities for the three months ended March 31, 2023 and 2022 was $379 million and $252 million, respectively. During the three months ended March 31, 2023, we repaid in full $220 million against the outstanding balances under our 2022 Revolving Credit Facility and our A/R Programs. During the three months ended March 31, 2023 and 2022, we paid $97 million and $203 million for repurchases of our common stock, respectively.

​Free cash flow from continuing operations for the three months ended March 31, 2023 and 2022 was a use of cash of $168 million and proceeds of cash of $3 million, respectively. The decrease in free cash flow from continuing operations was primarily attributable to the increase in cash used in operating activities from continuing operations, partially offset by a decrease in cash used for capital expenditures during the three months ended March 31, 2023 as compared with the same period in 2022.

### Changes in Financial Condition

The following information summarizes our working capital position (dollars in millions):

|  | March 31, 2023 | December 31, 2022 | Increase (decrease) | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $615 | $654 | $(39) | (6)% |
| Accounts and notes receivable, net | 887 | 834 | 53 | 6% |
| Inventories | 1,048 | 995 | 53 | 5% |
| Other current assets | 150 | 190 | (40) | (21)% |
| Current assets held for sale(1) | — | 472 | (472) | (100)% |
| **Total current assets** | 2,700 | 3,145 | (445) | (14)% |
| Accounts payable | 857 | 961 | (104) | (11)% |
| Accrued liabilities | 381 | 429 | (48) | (11)% |
| Current portion of debt | 11 | 66 | (55) | (83)% |
| Current operating lease liabilities | 48 | 51 | (3) | (6)% |
| Current liabilities held for sale(1) | — | 194 | (194) | (100)% |
| **Total current liabilities** | 1,297 | 1,701 | (404) | (24)% |
| **Working capital** | $1,403 | $1,444 | $(41) | (3)% |

(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 3. Discontinued Operations and Business Disposition—Sale of Textile Effects Business” to our condensed consolidated financial statements.

​Our working capital decreased by $41 million as a result of the net impact of the following significant changes:

- The decrease in cash and cash equivalents of $39 million resulted from the matters identified on our condensed consolidated statements of cash flows. See also “—Cash Flows for the Three Months Ended March 31, 2023 Compared with the Three Months Ended March 31, 2022.”
- Accounts and notes receivable, net increased by $53 million primarily due to higher revenues at the end of the first quarter of 2023 as compared with the end of the fourth quarter of 2022.
- Inventories increased by $53 million primarily due to higher inventory costs and volumes.
- Other current assets decreased by $40 million primarily due to amortization of deferred charges related to insurance premiums and a reduction in income taxes receivable.
- Accounts payable decreased by $104 million primarily due to a decrease in non-trade payables related to insurance premiums and a reduction of capital accruals.
- Accrued liabilities decreased by $48 million primarily related to a decrease in accrued compensation costs, accrued restructuring and accrued rebates.
- Current portion of debt decreased by $55 million primarily due to the repayment in full of the outstanding balance under our 2022 Revolving Credit Facility.

### Short-Term Liquidity

We depend upon our cash, our 2022 Revolving Credit Facility, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of March 31, 2023, we had $2,040 million of combined cash and unused borrowing capacity, consisting of $615 million in cash, $1,187 million in availability under our 2022 Revolving Credit Facility and $238 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 the remainder of 2023, we expect to make additional contributions to our pension and other postretirement benefit plans of approximately $28 million.
- From April 1, 2023 through April 25, 2023, we repurchased 588,282 shares of our common stock for approximately $16 million under our share repurchase program.
- On February 28, 2023, we completed the sale of our Textile Effects Business to Archroma and received net proceeds of $530 million, determined as the preliminary purchase price of $593 million less $5 million for certain costs paid by Archroma on our behalf, $30 million of estimated net working capital adjustments and $28 million of cash that will be reimbursed to us as part of the final post-closing adjustments anticipated in 2023. Through the first quarter of 2023, we have paid cash taxes of approximately $12 million, and we expect to pay additional cash taxes of approximately $30 million.

### 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 $210 million, including approximately $30 million of capital expenditures, through 2024, of which we have spent approximately $165 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 plans noted above with additional restructuring in Europe. This program will include 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 $60 million, including approximately $15 million of capital expenditures, through 2024, of which we have spent approximately $3 million to date.
- 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 condensed 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 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 7. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our condensed 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 March 31, 2023, we had $11 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 $2 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.

As of March 31, 2023, we had approximately $414 million of cash and cash equivalents 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 7. Debt” to our condensed consolidated financial statements.

## Market risk

As filed, 430 characters.

We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. See “Note 8. Derivative Instruments and Hedging Activities” to our condensed consolidated financial statements.

## Controls and procedures

As filed, 1,357 characters.

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2023. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of March 31, 2023, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

No changes to our internal control over financial reporting occurred during the quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). However, we can only give reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis.

## Risk factors

As filed, 147 characters.

For information regarding risk factors, see “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.

Filed May 5, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-012765. Last ingested by Listed: Nov 3, 2026, 14:16 ET. No prices; not investment advice.