# Huntsman CORP: Form 10-Q for the period ended Mar 31, 2024

- Company: [Huntsman CORP](/companies/hun.md) (CIK 1307954)
- Form: 10-Q
- Filed: 2024-05-03
- Accepted by EDGAR: May 3, 2024, 12:28 ET
- Period: 2024-03-31
- Accession: 0001437749-24-014574
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1307954/000143774924014574/hun20240331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1307954/000143774924014574/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.47bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.27bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $201.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $31.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $176.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$38.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$20.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$37.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.22 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 171,800,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$65.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $42.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $44.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $1.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $552.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $2.44bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $7.57bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $1.58bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $4.18bn | us-gaap:Liabilities |
| Long-term debt | at 2024-03-31 | $1.66bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-03-31 | $396.0m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-03-31 | $3.15bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 38,085 characters.

### Results of Operations

As discussed in “Note 4. Discontinued Operations—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 (dollars in millions, except per share amounts):

### Huntsman Corporation

|  | Three months ended March 31, 2024 | 2023 | Percent change |
| --- | ---: | ---: | --- |
| Revenues | $1,470 | $1,606 | (8)% |
| Cost of goods sold | 1,269 | 1,337 | (5)% |
| Gross profit | 201 | 269 | (25)% |
| Operating expenses, net | 209 | 215 | (3)% |
| Restructuring, impairment and plant closing costs (credits) | 11 | (7) | NM |
| Gain on acquisition of assets, net | (52) | — | NM |
| Prepaid asset write-off | 71 | — | NM |
| Operating (loss) income | (38) | 61 | NM |
| Interest expense, net | (19) | (18) | 6% |
| Equity in income of investment in unconsolidated affiliates | 19 | 12 | 58% |
| Other expense, net | 2 | — | NM |
| (Loss) income from continuing operations before income taxes | (36) | 55 | NM |
| Income tax benefit (expense) | 20 | (11) | NM |
| (Loss) income from continuing operations | (16) | 44 | NM |
| (Loss) income from discontinued operations, net of tax(1) | (7) | 122 | NM |
| Net (loss) income | (23) | 166 | NM |
| **Reconciliation of net (loss) income to adjusted EBITDA:** |  |  |  |
| Net income attributable to noncontrolling interests | (14) | (13) | 8% |
| Interest expense, net from continuing operations | 19 | 18 | 6% |
| Income tax (benefit) expense from continuing operations | (20) | 11 | NM |
| Income tax (benefit) expense from discontinued operations | (1) | 15 | NM |
| Depreciation and amortization from continuing operations | 69 | 69 | — |
| Other adjustments: |  |  |  |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 20 | 1 |  |
| EBITDA from discontinued operations(1) | 8 | (137) |  |
| Fair value adjustments to Venator investment, net | — | 1 |  |
| Certain legal and other settlements and related expenses | 1 | 1 |  |
| Certain nonrecurring information technology project implementation costs | — | 2 |  |
| Amortization of pension and postretirement actuarial losses | 8 | 8 |  |
| Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (6) |  |
| Adjusted EBITDA(3) | $81 | $136 | (40)% |
| Net cash used in operating activities from continuing operations | $(63) | $(122) | (48)% |
| Net cash (used in) provided by investing activities from continuing operations | (30) | 493 | NM |
| Net cash provided by (used in) financing activities | 108 | (379) | NM |
| Capital expenditures from continuing operations | (42) | (46) | (9)% |

### Huntsman International

|  | Three months ended March 31, 2024 | 2023 | Percent change |
| --- | ---: | ---: | --- |
| Revenues | $1,470 | $1,606 | (8)% |
| Cost of goods sold | 1,269 | 1,337 | (5)% |
| Gross profit | 201 | 269 | (25)% |
| Operating expenses, net | 207 | 213 | (3)% |
| Restructuring, impairment and plant closing costs (credits) | 11 | (7) | NM |
| Gain on acquisition of assets, net | (52) | — | NM |
| Prepaid asset write-off | 71 | — | NM |
| Operating (loss) income | (36) | 63 | NM |
| Interest expense, net | (19) | (18) | 6% |
| Equity in income of investment in unconsolidated affiliates | 19 | 12 | 58% |
| Other expense, net | 2 | — | NM |
| (Loss) income from continuing operations before income taxes | (34) | 57 | NM |
| Income tax benefit (expense) | 20 | (11) | NM |
| (Loss) income from continuing operations | (14) | 46 | NM |
| (Loss) income from discontinued operations, net of tax(1) | (7) | 122 | NM |
| Net (loss) income | (21) | 168 | NM |
| **Reconciliation of net (loss) income to adjusted EBITDA:** |  |  |  |
| Net income attributable to noncontrolling interests | (14) | (13) | 8% |
| Interest expense, net from continuing operations | 19 | 18 | 6% |
| Income tax (benefit) expense from continuing operations | (20) | 11 | NM |
| Income tax (benefit) expense from discontinued operations | (1) | 15 | NM |
| Depreciation and amortization from continuing operations | 69 | 69 | — |
| Other adjustments: |  |  |  |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | 20 | 1 |  |
| EBITDA from discontinued operations(1) | 8 | (137) |  |
| Fair value adjustments to Venator investment, net | — | 1 |  |
| Certain legal and other settlements and related expenses | 1 | 1 |  |
| Certain nonrecurring information technology project implementation costs | — | 2 |  |
| Amortization of pension and postretirement actuarial losses | 8 | 8 |  |
| Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (6) |  |
| Adjusted EBITDA(3) | $83 | $138 | (40)% |
| Net cash used in operating activities from continuing operations | $(62) | $(122) | (49)% |
| Net cash (used in) provided by investing activities from continuing operations | (39) | 385 | NM |
| Net cash provided by (used in) financing activities | 116 | (271) | NM |
| Capital expenditures from continuing operations | (42) | (46) | (9)% |

### Huntsman Corporation

| Reconciliation of net (loss) income to adjusted net income | Three months ended March 31, 2024 Gross | Tax and other(4) | Net | Three months ended March 31, 2023 Gross | Tax and other(4) | Net |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net (loss) income |  |  | $(23) |  |  | $166 |
| Net income attributable to noncontrolling interests |  |  | (14) |  |  | (13) |
| Business acquisition and integration expenses and purchase accounting inventory adjustments | $20 | $(18) | 2 | $1 | $— | 1 |
| Loss (income) from discontinued operations(1)(5) | 8 | (1) | 7 | (137) | 15 | (122) |
| Fair value adjustments to Venator investment, net | — | — | — | 1 | — | 1 |
| Certain legal and other settlements and related expenses | 1 | — | 1 | 1 | — | 1 |
| Certain nonrecurring information technology project implementation costs | — | — | — | 2 | — | 2 |
| Amortization of pension and postretirement actuarial losses | 8 | (1) | 7 | 8 | (1) | 7 |
| Restructuring, impairment and plant closing and transition costs (credits)(2) | 14 | (5) | 9 | (6) | — | (6) |
| Adjusted net (loss) income(3) |  |  | $(11) |  |  | $37 |
| Weighted average shares-basic |  |  | 171.8 |  |  | 182.7 |
| Weighted average shares-diluted |  |  | 171.8 |  |  | 184.4 |
| **Basic net (loss) income attributable to Huntsman Corporation per share:** |  |  |  |  |  |  |
| (Loss) income from continuing operations |  |  | $(0.18) |  |  | $0.17 |
| (Loss) income from discontinued operations |  |  | (0.04) |  |  | 0.67 |
| Net (loss) income |  |  | $(0.22) |  |  | $0.84 |
| **Diluted net (loss) income attributable to Huntsman Corporation per share:** |  |  |  |  |  |  |
| (Loss) income from continuing operations |  |  | $(0.18) |  |  | $0.17 |
| (Loss) income from discontinued operations |  |  | (0.04) |  |  | 0.66 |
| Net (loss) income |  |  | $(0.22) |  |  | $0.83 |
| **Other non-GAAP measures:** |  |  |  |  |  |  |
| Diluted adjusted net (loss) income per share(3) |  |  | $(0.06) |  |  | $0.20 |
| Net cash used in operating activities from continuing operations |  |  | $(63) |  |  | $(122) |
| Capital expenditures from continuing operations |  |  | (42) |  |  | (46) |
| Free cash flow from continuing operations(3) |  |  | $(105) |  |  | $(168) |
| Effective tax rate |  |  | 56% |  |  | 20% |
| Impact of non-GAAP adjustments(6) |  |  | 1% |  |  | (1)% |
| Adjusted effective tax rate |  |  | 57% |  |  | 19% |

NM—Not meaningful

(1) Includes the net (loss) gain on the sale of our Textile Effects Business.

(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 (loss) 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) certain nonrecurring information technology project implementation costs; (f) amortization of pension and postretirement actuarial losses; and (g) restructuring, impairment and plant closing and transition costs (credits). 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) loss (income) from discontinued operations; (c) fair value adjustments to Venator investment, net; (d) certain legal and other settlements and related expenses; (e) certain nonrecurring information technology project implementation costs; (f) amortization of pension and postretirement actuarial losses; and (g) 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.

#### 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, 2024 Compared with Three Months Ended March 31, 2023

For the three months ended March 31, 2024, loss from continuing operations attributable to Huntsman Corporation was $30 million, a decrease of $61 million from income of $31 million in the 2023 period. For the three months ended March 31, 2024, loss from continuing operations attributable to Huntsman International was $28 million, a decrease of $61 million from income of $33 million in the 2023 period. The decreases noted above were the result of the following items:

- Revenues for the three months ended March 31, 2024 decreased by $136 million, or 8%, 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 our Polyurethanes and Performance Products segments. See “—Segment Analysis” below.
- Gross profit for the three months ended March 31, 2024 decreased by $68 million, or 25%, as compared with the 2023 period. The decrease resulted from lower gross profits in all our segments. See “—Segment Analysis” below.
- Restructuring, impairment and plant closing costs (credits) were $11 million for the three months ended March 31, 2024 as compared with $(7) million in the 2023 period. For further information, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements.
- Gain on acquisition of assets, net was approximately $52 million for the three months ended March 31, 2024 related to a preliminary 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 condensed consolidated financial statements.
- Prepaid asset write-off was approximately $71 million for the three months ended March 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 condensed consolidated financial statements.
- Equity in income of investment in unconsolidated affiliates for the three months ended March 31, 2024 increased to $19 million from $12 million in the 2023 period, primarily related to an increase in income at our joint venture in China.
- Our income tax benefit (expense) and the income tax benefit (expense) of Huntsman International for the three months ended March 31, 2024 was a benefit of $20 million as compared with expense of $11 million in the 2023 period. The increase in income tax benefit was primarily due to the increase in loss from continuing operations before income taxes as well as a discrete tax benefit of $18 million resulting from the write-off of certain prepaid assets related to operating agreements with SLIC and other joint venture partners concurrent with 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 condensed consolidated financial statements. Our income tax benefit (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 18. Income Taxes” to our condensed consolidated financial statements.

### Segment Analysis

*(Dollars in millions)*

| Revenues | Three months ended March 31, 2024 | 2023 | Percent change (unfavorable ) favorable |
| --- | ---: | ---: | ---: |
| Polyurethanes | $926 | $991 | (7)% |
| Performance Products | 291 | 334 | (13)% |
| Advanced Materials | 261 | 289 | (10)% |
| **Total reportable segments’ revenues** | 1,478 | 1,614 | (8)% |
| Intersegment eliminations | (8) | (8) | NM |
| **Total** | $1,470 | $1,606 | (8)% |
| **Huntsman Corporation** |  |  |  |
| **Segment adjusted EBITDA(1)** |  |  |  |
| Polyurethanes | $39 | $66 | (41)% |
| Performance Products | 42 | 71 | (41)% |
| Advanced Materials | 43 | 48 | (10)% |
| **Total reportable segments’ adjusted EBITDA** | 124 | 185 | (33)% |
| Corporate and other | (43) | (49) | 12% |
| **Total** | $81 | $136 | (40)% |
| **Huntsman International** |  |  |  |
| **Segment adjusted EBITDA(1)** |  |  |  |
| Polyurethanes | $39 | $66 | (41)% |
| Performance Products | 42 | 71 | (41)% |
| Advanced Materials | 43 | 48 | (10)% |
| **Total reportable segments’ adjusted EBITDA** | 124 | 185 | (33)% |
| Corporate and other | (41) | (47) | 13% |
| **Total** | $83 | $138 | (40)% |

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 20. Operating Segment Information” to our condensed consolidated financial statements.

| Period-over-period increase (decrease) | Three months ended March 31, 2024 vs 2023 Average selling price(1) Local currency and mix | Foreign currency translation impact | Sales volumes(2) |
| --- | ---: | ---: | ---: |
| Polyurethanes | (16)% | — | 9% |
| Performance Products | (17)% | — | 4% |
| Advanced Materials | (6)% | — | (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, 2024 compared to the same period of 2023 was primarily due to lower MDI average selling prices and unfavorable sales mix, partially offset by higher sales volumes. MDI average selling prices decreased primarily due to less favorable supply and demand dynamics. Sales volumes increased due to modestly improved demand and share gains in certain markets, primarily in the Americas and Europe regions. The decrease in segment adjusted EBITDA was primarily due to lower MDI average selling prices, partially offset by lower raw materials costs, higher sales volumes, higher equity earnings and cost savings from our cost optimization programs.

​***Performance Products***

The decrease in revenues in our Performance Products segment for the three months ended March 31, 2024 compared to the same period of 2023 was primarily due to lower average selling prices and unfavorable sales mix, partially offset by higher sales volumes. Average selling prices decreased primarily due to competitive pressure, particularly in Europe. Sales volumes increased primarily due to improvement in industrial and construction activity as well as increased demand in coatings and adhesives and lubes markets. 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 the three months ended March 31, 2024 compared to the same period of 2023 was primarily due to lower average selling prices and lower sales volumes. Average selling prices decreased primarily in response to lower raw materials costs. Sales volumes decreased in our general industry and commodity markets, partially offset by an increase in our aerospace and electrical infrastructure markets in response to customer demand. The decrease in segment adjusted EBITDA was primarily due to lower sales volumes and foreign currency exchange rate fluctuations, partially offset by improved sales mix.

### 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, 2024, adjusted EBITDA from Corporate and other for Huntsman Corporation was a loss of $43 million as compared to a loss of $49 million for the same period of 2023. For the three months ended March 31, 2024, adjusted EBITDA from Corporate and other for Huntsman International was a loss of $41 million as compared to a loss of $47 million for the same period of 2023. The increase in adjusted EBITDA from Corporate and other resulted primarily from a decrease in corporate overhead, partially offset by a decrease in unallocated foreign currency exchange gains and an increase in LIFO valuation losses.

### 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, 2024 Compared with the Three Months Ended March 31, 2023

Net cash used in operating activities from continuing operations for the three months ended March 31, 2024 and 2023 was $63 million and $122 million, respectively. The decrease in net cash used in operating activities from continuing operations during the three months ended March 31, 2024 as compared with the same period of 2023 was primarily attributable to a net cash inflow of $112 million related to changes in operating assets and liabilities, partially offset by increased operating loss as described in “—Results of Operations” above for the three months ended March 31, 2024 as compared with the same period of 2023.

Net cash (used in) provided by investing activities from continuing operations for the three months ended March 31, 2024 and 2023 was $(30) million and $493 million, respectively. During the three months ended March 31, 2024 and 2023, we paid $42 million and $46 million for capital expenditures, respectively. During the three months ended March 31, 2024, we received $12 million for the sale of businesses, net, related to the resolution of net working capital from the sale of our Textile Effects Business. 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 4. Discontinued Operations—Sale of Textile Effects Business” to our condensed consolidated financial statements.

Net cash provided by (used in) financing activities for the three months ended March 31, 2024 and 2023 was $108 million and $(379) million, respectively. During the three months ended March 31, 2024 and 2023, we had net borrowings from (repayments against) our 2022 Revolving Credit Facility and our A/R Programs of $191 million and $(220) million, respectively. During the three months ended March 31, 2024, HPS paid approximately $28 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 condensed consolidated financial statements. During the three months ended March 31, 2023, we paid $97 million for repurchases of our common stock.

​Free cash flow from continuing operations for the three months ended March 31, 2024 and 2023 was a use of cash of $105 million and $168 million, respectively. The increase in free cash flow from continuing operations was primarily attributable to a decrease in cash used in operating activities from continuing operations and a decrease in cash used for capital expenditures during the three months ended March 31, 2024 as compared with the same period of 2023.

### Changes in Financial Condition

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

|  | March 31, 2024 | December 31, 2023 | Increase (decrease) | Percent change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | $552 | $540 | $12 | 2% |
| Accounts and notes receivable, net | 837 | 753 | 84 | 11% |
| Inventories | 896 | 867 | 29 | 3% |
| Other current assets | 158 | 154 | 4 | 3% |
| **Total current assets** | 2,443 | 2,314 | 129 | 6% |
| Accounts payable | 745 | 719 | 26 | 4% |
| Accrued liabilities | 386 | 395 | (9) | (2)% |
| Current portion of debt | 396 | 12 | 384 | NM |
| Current operating lease liabilities | 52 | 46 | 6 | 13% |
| **Total current liabilities** | 1,579 | 1,172 | 407 | 35% |
| **Working capital** | $864 | $1,142 | $(278) | (24)% |

​Our working capital decreased by $278 million as a result of the net impact of the following significant changes:

- The increase in cash and cash equivalents of $12 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, 2024 Compared with the Three Months Ended March 31, 2023.”
- Accounts and notes receivable, net increased by $84 million primarily due to higher revenues in the first quarter of 2024 compared to the fourth quarter of 2023.
- Inventories increased by $29 million primarily due to seasonally higher inventory volumes.
- Accounts payable increased by $26 million primarily due to higher inventory purchases, partially offset due to a decrease in non-trade payables related to insurance premiums.
- Accrued liabilities decreased by $9 million primarily due to a decrease in accrued restructuring costs and accrued rebates, partially offset by an increase in accrued compensation costs.
- Current portion of debt increased by $384 million primarily due to proceeds from net borrowings on our 2022 Revolving Credit Facility and an outstanding U.S. dollar equivalent note payable with SLIC of approximately $190 million for the acquisition of assets.

### 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, 2024, we had $1,607 million of combined cash and unused borrowing capacity, consisting of $552 million in cash, $995 million in availability under our 2022 Revolving Credit Facility and $60 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 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 the remainder of 2024, we expect to make additional contributions to our pension and other postretirement benefit plans of approximately $23 million.
- On January 31, 2024, we completed the planned separation and acquisition of assets of SLIC, our 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 half 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, as adjusted to reflect the preliminary valuation and is subject to further change pending the final valuation. As of March 31, 2024, the note payable has been reduced by approximately $28 million to reflect cash payments made during the quarter. We expect that the remainder of the note payable will be paid by the end of 2024 using available funds at HPS. Upon 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 the liquidation will be completed by mid-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 first quarter of 2024, we have paid cash taxes of approximately $1 million, and we expect to pay additional cash taxes of approximately $11 million. See “Note 4. Discontinued Operations—Sale of Textile Effects Business” to our condensed 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 $293 million (including approximately $56 million of capital expenditures) through 2025, of which we have spent approximately $255 million through the first quarter of 2024 (including approximately $39 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 March 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 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 19, 2024, the Louisiana Fourth Circuit Court of Appeal affirmed the $93.1 million 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. 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. After adding mandatory pre-judgment and post-judgment interest to the award, we expect damages to exceed $135 million before deducting for taxes and legal contingency fees. The award remains subject to further potential review but, if affirmed or reviewed by the Louisiana Supreme Court, we would 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 and the timing of the resolution of this matter is uncertain.
- 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 March 31, 2024, we had $396 million classified as current portion of debt, including $195 million outstanding under our 2022 Revolving Credit Facility, an outstanding U.S. dollar equivalent note payable of approximately $190 million related to the separation and acquisition of assets of the SLIC joint venture, 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, 2024, we had approximately $529 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 8. 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 9. 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, 2024. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of March 31, 2024, 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, 2024 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, 2023.

Filed May 3, 2024.
Source: SEC EDGAR, the filing index for accession 0001437749-24-014574. Last ingested by Listed: Nov 3, 2026, 14:16 ET. No prices; not investment advice.