HUN - Earnings call transcript Q3 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Huntsman Corporation Earnings Conference Call. My name is Derrick, and I’ll be your operator for today. At this time, all participants are in a listen-only made. We shall facilitate a question-and-answer session towards the end of the conference. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. would turn I to conference time Mr. this like the to over At President Investor Marcuse, of Ivan Vice Relations. proceed. Please

Ivan Marcuse

to of you, Thank Derrick; Relations. earnings President Marcuse, and I quarter Welcome call. Investor everyone. am good Ivan Corporation’s Huntsman Huntsman’s XXXX third morning, Vice

on Vice Jon Clariant our Joining XXXX market with This well the and before website, termination President Executive and it the Founder of and CEO; opened, earnings today President issued the the as on Huntsman, CFO. a press for Peter merger and our release announcing call we first our Sean and are us nine Huntsman, and Chairman; Douglas, Executive our as third quarter months huntsman.com. of morning, posted

our this use website, which posted also We we call morning. on on a set slides this will of

During uncertainties are current make we the they All about such or And projections they are expectations, of may involve reflect future. our and while expectations forward-looking not and statements. guarantees for statements future performance. our this call, statements risks

review updating statements should We the SEC results for actual cause from with our any revising on differ the quarter. regarding materially could that plan publicly not projections to and factors do our during more expectations. the or forward-looking information filings You

measures, refer also and to as will loss We adjusted non-GAAP such income, EBITDA, or financial net adjusted free flow. cash

huntsman.com. call our CEO. I our earnings reported will billion, over of at the financial our we adjusted million, diluted earnings EBITDA $XXX in share. adjusted $X.XX quarter website of turn measures our release, this Huntsman, of President Peter to reconciliations $X.X GAAP been You XXXX revenue and and now comparable find has posted directly can to most to earnings third which morning, In release per

Peter Huntsman

everyone, Ivan, thank time you join to much. taking us. the morning, and thank for Good you very

Adjusted Slide division to for X. turn number was million. $XXX our Polyurethanes EBITDA Let’s

propylene of $XXX and recorded million. oxide, business, Our systems includes polyols businesses, MDI urethanes which adjusted EBITDA

and impact Hurricane strong quarter, the the remained at we downstream notwithstanding strong high differentiated as $XX X%. the for units about global component strategically delivered third was rates of All volume during on margins. of sustained the MDI operated Harvey production businesses, and We’ve focused specialty that growth our growing a of quarter. our million result, estimate We

part advanced component globally. MDI Europe. industry year-over-year should strategy to of ongoing more business trends component favor differentiated continue global specialty to long-term conditions MDI long-term, combined of MDI margin price As dynamics the portfolio into stable systems improvement to of demand supply both our XX% future. a demand volumes in China to more in continued positive reliability, these products, in seasonality favorable Strong well and the our differentiated saw shift operating and These more tight MDI differentiated less with and continue subject Though systems. stable deselect we in

Slide number turn Let’s X. to

Our MDI represent XX% our global sales urethanes of differentiated approximately business. total MDI

X% our much utilization. in MDI about globally above less annualized is very swings on MDI tight global rates are As result, Industry pricing. Industry XX% a portfolio growing is rates component operating operating capacity basis. for with demand effective an susceptible at to

about to or As XXX,XXX facility capacity about year. world-scale expand needs at such, one industry kilotons per annually,

industry of X% annually from believe approximately capacity through As grow will XXXX. manufacturing we today, XXXX

including expansion and XXX,XXX a expect debottlenecks some No with stated our greenfield We Sadara, is China, other facility years. good is greenfield of long Dow capacity to five stated greenfield visibility The facility MDI construction. time, have capacity, the MDI new on of entering capacity. Caojing, tons brownfield lead we own, the excess only market over the Given in years, required tonnes. XXX,XXX under site of do several bring next of

we industry is As every year. planned and historically, expect in outages the would normal seen and unplanned

market, lines, is we especially single MDI XX% as to fewer newer operating have bit greater utilization. a impact We at larger production rates expect the when do absorbed, see fluctuate favorable facilities outages right are component region. short-term capacity shows potentially chart our by but and of and supply As plant additions The capacity than the will the this these exposure into demand continued slide in to bottom overall the MDI carrying future. well

sales. component, MDI sales exposure Asian of the Our prior XX% about exposure. Globally, much about contracts, XX% estimate year’s Asian less of XX%. is our that represents urethane Compared we business urethane movement urethanes our the benefited our MDI European about sales In component X% and and less sales. of have exposure our MDI North approximately margin MDI global Asian representing MDI. to urethanes doubled, total global due in structure our elasticity therefore XX% our upside to our We much total global component Within to Asia, urethane of margins, equals to quarter, we from expansion. margins are America, downside which MDI of the expansion in margin formula component have long-term and

of margin subset component portfolio. this our a confined to is expansion However,

Our have differentiated MDI higher over the haul. more long sales and margins are stabled

our product EBITDA growing MDI has is relentless XXXX. growth since urethanes Our our portfolio. shown differentiated on of focus This steady a

elastomers, This X% by Our and systems our construction footwear our North wood quarter. facility, by full expanded sectors. increased in American composite insulation residential products, our and at running recently adhesives insulation region differentiated volumes now drove increased Rotterdam rates, demand adhesives, our XX,XXX With in XX% coatings as markets growth European and high both businesses. and driven the kilotons, was volumes commercial

by in insulation driven capacity-constrained X%, markets, online. Chinese we our the in though in rose new automotive remain demand comes region and until facility China this volumes Asia

in requires. to As begin capacity operations stated, XXXX online coming early with demand as we Chinese expect our expansion MDI commercial

successfully running at up quarter, PO/MTBE China to close full with Sinopec joint venture and in this capacity. started is past our now During

well, went MTBE margin our trough business to continues urethanes MDI our in While operate business conditions.

a We rates. this period quarter, which EBITDA, Hurricane impacted ago. are MTBE For year we similar now to at full running is facility, the by the of Harvey in reported million a $X were loss at but

strong margins to the MDI MDI and versus third next attractive year. the versus we remain quarter, with remain the at seasonal prior Looking quarter demand slowdown to expect a

turn EBITDA to Performance with sites. Port The Products hurricane improvement largest year Performance because Notwithstanding Products Harvey, which Let’s our Texas in Coast in We other flooded along about number Slide the to underlying our business. EBITDA impact the Gulf Texas impacted was significantly of site by Harvey, X. estimate segment Hurricane continued that our in flat the was prior with million. core quarter $XX was Neches,

second significantly have year-over-year. we up derivative North and surfactant Harvey Harvey, quarter impact American the American impacted of been our businesses. would Hurricane not by EBITDA third Excluding the was Most for to our Harvey, ethylene ethanolamine similar North it have quarter. Were been businesses would believe

in market, and agriculture saw our quarter. a Both see the and to We demand in strengthening businesses volume our North American maleic some continue and both in balanced increased due from to margin benefit oil. products surfactant

of improving. $XX number this quarter maintenance business into Our fourth maintenance the amines are planned pushed approximately is turnaround our was hurricane, our which we results, fourth Slide exceed multiyear results. also planned X. after fourth fundamentals businesses will and to Due expect million. improved Turn projects, growing even And EO by quarter impact the last modestly quarter, the to The year’s versus prior the year. EBITDA to

business X% due to This year core which Our $XX EBITDA specialty Advanced the million. volumes on versus quarter. Materials business, in business was to higher growing continues grew was EBITDA focus The consumer its the waterborne partially business adhesives improved offset our market. continued in by within offset technology products, and should in construction Growth costs. volumes, DIY specialty pressure the and including coatings experienced wind higher business, last

in forward, our Our including specialty growth and further the we electronics Asia. remains in aerospace business markets other steady, expect going in see market to

be will to last year. expectation in Slide EBITDA of number Turn higher first The Our the of in compared to will this X. in second XXXX half segment’s quarter see modestly growth half than fourth year. the the earnings

were division quarter, of prior $XX the straight marks up above has X% rates. business quarter. versus XX% Its of Effects averaged which growth volume is EBITDA total Textile growing Our X% reported the in a year-over-year sixth growth, up market over million, which This quarter at year. the volumes

believe that is quarter will portfolio EBITDA years over with by position help current has growth. a We of savings. last and the couple XX was net customer address EBITDA return XX% products return our the volumes driven to next improved this months higher XX%. above sustainable continues million the Textile in needs over Our assets net for consistently The the help for drive business on of Effects’ now this improved solutions $XXX assets. approach trends and that on cost

fourth results should the quarter, third nominal versus anticipate in the up forward see prior be Looking seasonal but will year. the versus business decline a quarter, we the that

few sharing like Chief concluding I’d to minutes Officer. over Sean Before thoughts, turn our some Douglas, Financial a to

Sean Douglas

Thank you, Peter.

with to The to the Pigments the quarter price, EBITDA price, impact $XXX business EBITDA increased and to increased offset $XXX prior EBITDA $XXX X, this period, adjusted improvement $XX sequential Compared our in which Harvey. by of pro again two year $XX Polyurethanes forma by Performance separation million biggest to million drivers Slide XXXX adjusted quarter, million, in our prior adjusted impact business. estimate volume European which partially than million the of to adjusted to of and our only was the more and were the primarily associated direct related offset in and costs The from our million were $XX $XXX segment. our compared in surfactants the driven Looking million. in with We Harvey. of Harvey $XX our Hurricane impact sale adjusted of the third that year-over-year million million an higher Products EBITDA was improvement the Hurricane Hurricane Additives and in segment

separation the a Turning generated as we quarter, to We in remains in in be believe, million. Huntsman. free high prior year $XXX still In million excluding $XXX XXXX. Earlier prior million year, Free for had flow that $XXX that to to for flow third and cash cash free for cash $XXX and business, flow the Additives million free Pigments quarter. Slide we generation priority greater expected exceed compared indicated XXXX flow of cash Additives will X. now than Pigments the the the to we

as increased the of raw management. in primary metrics inventory to-date to sales inventory to a year and reduction working year, one-time selling is year inventory a prior year in material year, to-date reported capital last million decrease we consistent due is costs. ago. $XXX prices have increased compared build of period. we from $XXX change change inventory This capital and Our our in to about we and a change with primarily step Relating benefited receivable related working Nevertheless, increased a that retained build made maintained volume, step a million

soon outstanding XX trailing that times. our at release quarter, times. days capital, was and strongest working we when inventory to sheet from generally for a days adjusted has of a with I over we XX to benefit strengthening in third ever improved moderate the to investment the sheet our paydown on the remain a due the is ago sheet, of quarter our transformed in a In quarter, our X.X days compares year This IPO of grade. a year to at our XXXX is Venator. number At billion ago. debt the EBITDA balance focused from believe become to net third We the expect Huntsman’s net debt cash X.X stood we quarter successful Our leverage fourth XX balance objective of of our balance quarter been. received and see We $X.X of end proceeds four. this

additional flow. Just an term down this our $XXX of cash free B week, loan million paid from we

of annual At today’s $XXX a of at would by year’s billion, our forward $XX annual place million. about we go this As approximately million. reduction debt expense expense rates, result have this interest interest $X.X lowered

at net effective of trading the $XX to cash pro future and still of of debt. attributable proceeds the would at we relating taxes tax-free to to estimate if have tax paid reminder, basis, the of use Venator monetize net relating and and and cash as further Venator, of XX% respect be Venator discount between remaining $XXX date held quarter our we own taxes taxes, XX.X% fees, elements, we of sheet. to taxes the a current of a the paid-in $XXX deleverage offerings secondary prices be tax-free approximately were Venator of cash returning leverage price intend The With return our the net including we represent net cash less disposition of on our ownership the of a leakage benefit is Venator fourth balance Venator to proceeds to Venator equity billion to of shares by cash and shares As basis remaining which on today, foreign lower Hypothetically rate offering to we primarily Related forma the the of to repayment XXXX the in few proceeds total than key tax $X.X intercompany from in associated to tax million. times. of a to separation one lower cash less credits received Venator of recent on Huntsman, the follow-on capital. from future because tax of million monetization. to overall million, than We proceeds tax the estimate separation

falls which classified as income have minority XX%. interest out our statement. to balance million, Venator shown be will on like and point Venator removed discontinued below operations our on We temporarily would that held-for-sale now ownership the increased has once it balance this a sheet on our is I in $XXX our sheet, also by as

financial XX-Q results. Additives our early that week historical with historical issuing be restated our next an Pigments removes will with and certain adjusted X-K information along We from

the third an quarter of during quarter. cash $XX XXXX, taxes we and recorded of the million expense tax $XX paid income During in million

million With the refund $XX our net year-to-date continuing the is tax $XX from cash million received second operations. received quarter, in

Our our free flow. quarter approximately In range. focus to We third for Huntsman XX% similar tax will be rate in million. XXXX estimate tax summary, cash should rate be the we will XX%. our be of XX% to expenditures strong that continue fourth quarter to capital on generating XXXX $XXX adjusted rate

remarks. Peter has approaching now Our some call concluding stronger, balance and to never over we metrics. the quickly sheet I for will are back investment-grade turn been

Peter Huntsman

nothing wish disproportionate to products him past of is for Thank can the the his even integrity. personal I influence. and merger Through companies. things the note, more this Huntsman of than both you, would one this XX I honest ethics of come shareholders I a quality In and Kottmann, terminating and process, It’s did have recognize be Hariolf a culture that are have caliber our equals we by truly we a company. such hours, his both Clariant great mutual or proposed the to two about say consent. not disappointment On and shame announced have well, if say and Sean. people, him Clariant. I that but less

the never of Now let’s number to more on Having and excited been now proud Huntsman company. Slide to and our turn I’m that, XX. focus said future, about I’ve our future

confident meet nearly performing our of well, our As today’s extremely earnings results the show, year, ability deliver value our million the we prior to are and earned customer have business, grow very shareholders. and demands higher EBITDA our I’m about $XXX than first year. to Since we the

the separated of Additives Pigments public the year. We with took company division this the have We successfully of creation of and on Xnd our Venator. August

as would the have proceeds billion At we our better generate paid this of $X.X the you a of $XXX beginning our With to and operations the approximately IPO, business, down we’ve number that from million and operations Additives year, than close Pigments and of we Additives Venator debt. exceeded cash generated of part division. we the $XXX million told year, Since Pigments that time, free of without year-to-date our our flow and including us.

totals Our X.Xx net debt X.Xx our year down a EBITDA, presently ago. from

downstream urethanes, improved the Our businesses Slide year. textiles amines, and epoxy maleic, and are XX. formulation, Turn number specialty previous all to surfactant from

safe Venator focus would in This Number and and XXXX. business cash without have of close operations excess orderly and may XXXX to we year. to the end maximizing in expect we should four forward, cash EBITDA continue continue this manufacturing We believe will and performance, our margins principal free our of a of flow of improve again EBITDA. we an I Additives. net well further between to monetize to the we continue one, be $XXX to of end to to fashion. objectives. our ratio I will debt now the generate on Number further year, Xx Pigments priority debt million Going will our two, in generation. shares

Venator performance. with pleased the of quite quality I’m Chairman of As their Plc,

estimated to EBITDA enhance the growth and We margin. to of equal the fees. organic presently In per excess downstream of at opportunity equity. our close and billion Corporation further after value in business. the the and business a three, we shares. well continue price $X.X XX% further $X is equity eye the bolt-on Venator, sales we of about our share of will next operated billion, we in market Huntsman monitor has and approach will the strategic market invest of acquisitions taxes continue or as an share XX% XX% that keep Venator on to over owns Number of growth third quarter, $X.X equity the as the for margins to as

to fact Products to of opportunity that systems still and epoxy to our of we next is once further the EBITDA, maintaining year division, in EBITDA, to to put the further textile of we recovery share to a investment-grade expand Number our our months addition our and shareholders. or trough reach and of continue coming opportunity favorable policy, Given and volume, even value see we will in plenty more our $XXX MTBE approach see merits stats, return board a further will in meaningful margins be of the of million program the at application, to buyback the earnings plenty formulation dividend four, have Performance business MDI two. in reviewing,

Let’s XX. Slide turn number to

$XXX per we a XXXX, look plenty of of million and we that shareholder As Huntsman to able should and million is where than view forward greater value between see free be XXXX much to I year. see believe From cash what preliminary we I opportunity at generate going, flow $XXX generate today.

XXXX. multiple a a sales, of balance higher share our stronger see investment-grade price. beginning we in earnings but hit should Not stronger will with sheet, metrics margin We and only

comments, said positioned and never I earlier better As to in create value. shareholder meaningful my been sustainable we’ve

never Our Back looked future better. has you, Ivan. to

Ivan Marcuse

procedure the Derek, will Q&A, line Thank the then for you, explain open Peter. for please. you questions,

Operator

the Certainly. Vertical [Operator we’ll from question Research And first McCarthy Partners. that line take will Kevin from Instructions] of the come

Kevin McCarthy

in the as comment than you MDI to in slowdown Would Rotterdam? particularly capacity XQ, Good up morning, cases typical region secondly, Peter, look the in that the the then seasonal MDI. since your very Europe alluded prices as you on component some ramp light of XX% yet well at rates in strong in July. in Asia, in they’re a new results in utilization as we first in of And U.S. more

in so you outlook comment your for MDI for from the strengths could And that the XQ quarter on context, fourth profitability posted? that you in

Peter Huntsman

that Yes, from the Louisiana three our first Geismar, those at operating work facilities of be are at Rozenburg the they look or think and eroding we done in our major of seasonal there’ll all, barring maintenance the don’t quarter. past I of Caojing, utilization, but of for We all this so operating in Netherlands, little a quarter, much centers earlier fourth see quarter really was see that fourth slowdown then some MDI bit capacity the and – capacity. been have three continuing I as China typical margins year. And the in a

a some should bit fourth – You’re fourth fringes the bit the I right A bit those which across some of we little cool commoditized a I on a in a and might MDI little of think our global pretty Chinese X% up products, from our and basis. but little slowdown as into margins you business, perhaps – we up to quarter. the real on in might about in more pricing run the quarter. think look some see But MDI, makes and of I the component pieces, of have of we stable see see per-ton don’t those seen in we a margins large, the see on Again, by any volume. on board, on pricing slowdown continue

Kevin McCarthy

Or of agreement contingencies, in which does fee claim between its no-vote the merger provisions by morning, news are Great. on fee terminating a for contained various such funds? Huntsman By future? and $XXX forgo regard to believe the with there any And scenarios Huntsman million, under cash the then mutual of consent, flow I this break-up $XX could Clariant million. merger the

Peter Huntsman

Yes, an a agreement last be so mutually vote. agree wait agreement just that But filing the night termination to did filed with to – available X-K public. was our we terminate and the for we should not

of looking successful. that if probably would think uncertainty future. vote, risk waited at high think a vote be of of if a ever that there into we least a months the And that a is I we’re couple for deal I degree and at, great

having And that mutually terminate we go and that through forth. those months without – we to multiple agreement would agreed of the expenses so so

into businesses, the master Clariant at are a million. to then in looking if XX next the months we Clariant the agreement, its of within majority enters will enters However, series deal or Likewise, if within sell transactions transaction into owed greater $XX pigments sell to of XX or revenue a million. as assets, be then a owed months business the XX% $XX net of income, than measured we batch by

from results part driven we’re additional we don’t this need million. actions scenario a pay million. communication, through sales inquiry I or would pre-termination the by $XXX White Tale’s proposal of that, all to where any just an $XXX see And if Huntsman believe any or owed Now

lot that talk or the that Huntsman divestitures or funds. of here, there where a whatever breakups actions sales of if there’s I Tale. We’ll White been is communications, see believe think and I goes, any publicly but some about possible of again, meaningful So entitled this demands to the because is

Kevin McCarthy

Thank you for that clarification.

Peter Huntsman

Kevin. you, Thank

Operator

of line Securities. from Mitsch Your will Fargo next question the Wells be of Frank

Frank Mitsch

the Peter, Good quarter guess the with Hurricane Clariant. key just I on gentlemen this Harvey. of and you question is morning, nice a equals embarked megamerger despite

about where company? go your What’s future you another that thinking perhaps a the reengage as with here? Is something the Huntsman to on do from want longer that table, Now of that that’s no we company?

Peter Huntsman

history course business, of to I we’re Well, on first the time back, you look and be forth. the the Frank, our two, of I so an was first I believe the well work first going and next our the as investment-grade which quickly or a This is company, over in think focus know M&A is at – that that the very might history as going year be of we company, some have at keeping once that. say seven might at I debt. didn’t relatives any as of had overall But generations least look the balance genealogical sheet, can’t we that I Huntsmans. – have records, I think that – before that equity merger I I’ve currency that equity. strongest And undervalued. really a our believe believe the I we that today said about this is – strong remains our came looking ever

our over understands that that we margin earnings, think you improving much the be when it, how we the by enhance credit creating going around and to and our strategic the we than need as businesses our world, look sure at to shareholder as our needs in year to that that to this done epoxies, generated, a of expansion focus can course priority. on to at bolt-on downstream I focus our making improving results. value I on and to to value acquisitions better an value next These the our do our amount continue we think deliver need need I and or the the come growth but past. think two, investment-grade we focus, be I continue to expense bolt-on that market not the have at think the grow look urethane you Venator, levels our also of is and sustainability margins, at GDP continue cash of the and acquisitions of those of look our that’s when been rate at the debt of and volumes, you high the

that with opportunity. the – that with of best an into to next value, think sheet, a aggressive other a to I how – an with balance opportunities with we’ll the was unique looking a shareholder also years, have But think create and truly to merger future. look, couple mind posture continue the is strong I to Clariant over open

Frank Mitsch

All right.

the thinking Am XXXX they doesn’t specialty in that more frame we about be I of there’s sense should time in looking that it make bolt-ons strategic certainly but that at where terms So businesses. reading your be in we correctly? anything like could megamerger, some look

Peter Huntsman

of look acquisitions the Frank, past. just at last M&A over the done comes about years. take Polyurethanes I’d couple at the years. it combined work Yes. we’ve in to part growing EBITDA look view it an a that last our our a you very is business business, very, when composite, the bolt-on that of And and Well get that again, the EBITDA is XX% asset in our and stable we’ve it business. a very where its of obviously about of couple business, few from delivers steady core yet I’d of from done urethanes of I point meaningful volumetrically our which make business, XX%, very over questions and our

Frank Mitsch

That’s very helpful. Thank you.

Peter Huntsman

Thank you, Frank.

Operator

line Nomura. of Your will Aleksey the from be next Yefremov, question

Aleksey Yefremov

showing margin continue up it you and XXXX? business, Thank year. X, for quarter expect systems the looks systems like fourth On in you. going in your expanding Page MDI the this you’re everyone. morning, to Would Good margin

Peter Huntsman

fourth a systems as is into continue business, Aleksey, to components XXXX, that, I as you as And those this be Again, stable. you’ll gradual business pretty in get business. at the that formulations think the formulation of look a be I side. look able we we improvement systems the little to and see going the Well, quarter, in think bit fly-up to we at that see it’s

sticky. not package you large not cyclicality of going obviously of to paying supply on formulation come and pretty by they’re People are the are is on prices and the dependent not for component. quarter they’re And crashing which the that – the component, urethanes next They’re quarter. go side. will price past demand of one on market. key the components chemistry, down of a typically not only the an in system But side, Some fly-up those those and but through to going entire

the And have low continue to I perhaps assume between XX% gradually upper improve our as XXXX see see there. a I somewhere to utilization into opportunity to tightness. to the even continue mid- would XXXX, that margins being capacity we business and so XXXX, ought over going utilization. We an global to between continued would capacity market XXXX,

Aleksey Yefremov

And Rotterdam there with expectations expansions, us EBITDA Peter. Thanks your changed, provide earlier to follow-up, expectations MDI have for you Caojing being with higher and now? margins

Peter Huntsman

of be Well, should told anywhere I we’ve past, they I think million are around if the continue prices in that. $XX you. think north you today’s I obviously it we’ve China, what told what or are that they given what would in today, to say be is to close that we’ve what

Aleksey Yefremov

Thank you very much.

Operator

line next Sison, Your question KeyBanc. will Mike from be of the

Mike Sison

as EBITDA when quarter term, a what can of when you company about you quarter, margins the made? in get momentum well. think you’ve longer at got nice lot given think investments in and do you that Peter, polyurethanes guys, XX% third you’ve total think to, – the Hey, the about the

Peter Huntsman

Well, year to be next that closer it the than over two, it be, course I of is certainly or ought to to it to XX%. XX% think the ought

quarter we million were this continues see would component a I or business, of think And quarter Harvey. this remind is to recovering I on quarter, be look that Products $XX the at with of say our component flat when in our you the hit urethanes business. Performance We its month might because minority this you an a people MDI is unusual well, from still Hurricane back. MTBE business MDI.

I be you doing margin out, here. back mean much to me XX%, XX% ought we tells better than it So those things that

that now XX% with certainly, ought fourth, compared division we our a would to strong are I pigments than so and past, we’re to today. these out spun as focused while on closer we company, to portfolio new much be the say So a that are margins

Mike Sison

lockup the great. when and can Venator And the – of periods to process? terms us of kind that remind can of Okay, continue you restart monetization, timing start just then you in

Peter Huntsman

to defer I Well, here, like question But possible. so to market as don’t I CFO we’d my legally I’m get the as that in myself be soon hitting just going that trouble. say, to would

Sean Douglas

that monetize will as face to strength exit that the we said, a lockup, the expires Peter. to Yes. The monitor end fashion was Thank Peter look the near holdings stock. orderly of and Venator an that you, lockup in And that XXX-day in forward. with And certainly, closely and we continue lockup going currently we January.

Mike Sison

thank Great, you.

Operator

the will line Laurence Jefferies. Your be question of from next Alexander,

Laurence Alexander

if questions two guess I I may. Peter. Hi,

moves strategic at should range mean, free for where I several strong changing you comments $XXX million I do and you opportunities What keep limit acceleration And the into think million with you have demand uplift and peers – first next made think the So headwinds they’ve that the as you this the basis million to you’ve look of the margins than see fact when few million free improvement is moderate cash around that this? can cash the structure There process that through most point? hundred you a anything been $XXX $XXX about question. trends firm flagged as to that road, the things First, just rule flow? down been flow your so mean out anything comments higher of the on points about that’s in historically. this would because approach be a at should above year-end. fairly the you $XXX reconcile your just in as for MTBE. years, secondly, potential we year, There’s

Peter Huntsman

I direction to in very to at Well, forth, market this of beat any kind look see like forward. I senior would it able always those I other be company myself I of or as of or when that or give going any take meet a And the to to position think numbers expectations. so and officers the we what reconciling forecasted seriously we’ve

I come that I’ve numbers read the those forward, we And of those versus numbers. the the at of in that but ought somehow in hit ever that where that wouldn’t exceed given want numbers, going that the nine. to going hope you be – hope you of the future. to numbers those haven’t we’ve we’re as just at I I’m able pessimistic So a only to be I XX, position the forward, see told today reconciliation don’t where us you that to optimistic – and we market to are not range going very contrary, are I’m Not would the we future.

obviously one there into of those So flow, be wouldn’t hand and I I I capital. the hand, the market in and it typically of raw of performance, would the material And be macroeconomic urethanes, global I say amines we don’t future our in company, in any epoxy I issues go obviously a our two free our is a biggest next would portfolio, going the events think headwinds, of which on would EBITDA whether which see think look stability with simply that a couple other as the two probably would sort across – lot cash global on which as amount be I higher as pressure in and slow fair working put probably of at uncertainty look would and it’s prices would years. would slowdown, foreseeable macroeconomic maleic capacity

For of five a the to in to you’re years there’s the today, the And the three, demand the facilities lot road. bet of is where on going and capacity market down couple next build just years. grassroots where a not people on be four, making economy in coming

remain and what’s So optimistic I very remain about quite on. going bullish, I

the I I bad that we at be the would look As road, down deal. doing from precluded moves hope a strategic would

the opinion, increase would hope mean we on think that from sure calls – my yes generating make investment-grade It that to I century, want cash, aside to I to our level lever deal previous again, investment our would that and of you’ve So, somehow grade? maintaining point focus just and level. that we to, have call exceeding to the we’re from remain company value. on I look, think I investment-grade of the getting if I this taken shareholders we to business involved hard something multi-years the board This to very worked And we’ve you able is of create the at this. the we’ve to business – worked this that restructuring in our management. And and it no, biggest century. would have be the shareholder to that attain be deal shareholder want and value. And in something to look got from in that, close But

So.

Laurence Alexander

you. Thank

Peter Huntsman

you. Thank

Operator

Your the of line Ahmed, will Global. Hassan from next question come Alembic

Hassan Ahmed

Peter. morning, Good

Peter Huntsman

Hassan. Hey,

Hassan Ahmed

a really trough. talking XX% for EBITDA margins, tight Peter, good while. MTBE are to you’re sort I at you talking obviously, to conditions of I’m XX% margins, looking within mean you margins And remain guess polyurethanes. the I about a still have in about

benzene, to wanted over conditions with that, see it seems where these if sort has prevail, and tight the on the as well, Propane raws popping. couple these your your be number you some that going been up of be Huntsman butane. of one. Just views last margins get it Polyurethanes of have months, for or going Number overall, part segment been parcel just it within two

has maybe So that on propylene. impact an

where So up go and just wanted that margins your raws would reconciliation of sort of environment. tight yet creeping polyurethane an conditions, in

Peter Huntsman

at to given – out raw generate polyols, price as Yes, look feels that a that – of be – oil, of investment increase into urethanes ought to we’re capacity tight enough in particularly and low as I again raw think materials we and in that are people to in materials little right same time, cascaded propylene that something But That’s of around using I how just that’s little the kind return, position present business, in But be and really raw going might I look use materials may particular to be we destroying pricing, any on. our where as be most want crude we the that be that sustainable and is at I And I raw I products to a in benzene in the MDI crude think is Downstream, think mean produce look it the and mid-XXs, it the there it somewhere I’m – people dollars. what pass crude at margins strong much or guess now. or higher that point now, price. most that that be high. to can of our I products a able crude raw high urethanes demand product, I like can to material, materials right, and want raw enough obviously like propylene that attract it across able feels any so in encouraging board, on be of our less materials, we shareholder in alternative alternative oxide forth. to to don’t seems

margins. I’m sustainable we’re saying blends than not as so so out, that. on being that to that to at that certainly low look forth do also What fine in again, sure a achieving opportunity something between as make be sustainability line to our somewhere but see and the want I and basis margins the we’re a expand there’ll margins is And further And And capping of there walk to that mid-XXs I think also I I continue EBITDA opportunities well. to are higher is things that.

Hassan Ahmed

sense. complete that. for Makes Thanks

here market’s assets still they are the follow-up, these attractive not you a a change into As you broader you mean, just globally. once at Huntsman quite XX% I levels, Peter, some the may sitting but in valuation that fold for business, are the of in? in Obviously, of of have XX%, of meaningful earnings mean you sort the I be sort which ongoing Or interested them talked in particularly from U.S., the it about, seen call rallied bolt-ons. Polyurethanes coming consistently Corporation?

Peter Huntsman

little in sustainable. at as than organic to that to high an investment growth that and are And we are much we’re think values a perhaps now seeing of question, have asset think valuations don’t basis, I on we’ll I the I more going Well, looking right at past. answer as ongoing organic some be downstream look in believe probably where we that be want your assets high. these we the bit

the but some prices remember we’re high raw urethane I enjoying the we to of raw patient, think same at of downstream consumers their when I be do need time, think materials, so, material the margins. And to material higher that

enjoying it well, raw business of The some are business struggling today Some and are with downstream may did ago. their – perhaps of our make of and a than combination margins. Integration applications higher these more cases. struggling those quarters works in perhaps sense couple of prices material

have case-by-case, to it basis. I really think asset-by-asset on So take a you

Hassan Ahmed

so Peter. Thanks clear. much, Very

Operator

Robert of line from the Sachs. come Your Goldman will Koort, question next

Robert Koort

Thanks. morning. Good

Peter Huntsman

Hey, Rob.

Robert Koort

the to MDI market. component of Peter, that importance figure I’m trying out

if more that parse in I about to Can MDI component second So that $XX you that helpful. the segment. third the is quarter, much versus guys Slide had from that look of was put quite X maybe you million EBITDA data sequentially you differentiated? on from How wondering out? I’m

Peter Huntsman

would components say, look I of half into you to million but I regions, of applications component broad pretty use getting phrase without would and specifics used the the that number. to is that the customers fly. it about About phrase numbers close it’s in fly-up, I or say don’t exact attributable I say, if want that, at I’d on – $XX

see being I that’s again, of XX% of of of in the as the a those XX% is further really chunk about growth. year-on-year chunk some see I we a and sticky. and I as it big talked that on over volume, think that million. are $XX really differentiated those forth. is other that greater over of being chunk obviously big so saw prior X%. volume big There’s Those when $XX And MDI chunk growth – downstream – in $XX mix is I million that of that of quarter our that of see a in margin, And growth and that other a volume other. there’s that are we year globally prior the businesses million

think of half I that. to that about say So fair

Robert Koort

in but can at That’s back respectable helpful. very more it’s Materials, some for growth there? If no-growth obviously into getting seems to healthy the stuck margin, I Advanced precipitate be What a look rates mode moment. respectable

Peter Huntsman

there about is think X%, improvement, better seeing the be volumes, we’re volumes volumes, than GDP. much to what Well at I year-over-year, X% as again in we since pushing key up the the look the the global we’re we at going look

market, to aggressive grow the aerospace quite at look in surface well. you the of the continue when that see think to of the think lot core lot in XXXX. business, DIY, of I a the those that a growth going I areas And you’re sciences, those adhesive

on BLR, particularly As higher that side the of moving do volumes and to the into from margin, other the deselect and component we around at side. I epoxies, higher basic volume look wind continue

So that’s behind I think number. that that there’s a noise of lot

other that down. business going like volumetrically. – looks very We we’re seeing business it grow are While actually to end that wind the component BLR side, to it ends the side side of continue an see the around stable, the that

I you core when look that well. the at of business, doing think it’s So, quite

Robert Koort

polyurethane us BLR And within the you how wind the And with composition info now on and AM? gave would components. you characterize

Peter Huntsman

as As volume? overall far the

Robert Koort

how to Materials? those big are Yes, businesses, right, relative whole the Advanced

Peter Huntsman

on I Boy, speculate that. to have would

around volumetrically between I and you’re or looking XX% BLR think probably wind, so.

Robert Koort

Okay. Got it. Thanks much. very

Peter Huntsman

Okay.

Operator

Your next UBS. question would Roberts, of the be line from John

John Roberts

your move Doesn’t going relationship sulfoxylates Thank Peter, the to were deal. sense excess still that ethylene between you as contractual it as some glycol part of oxide of you. from into Clariant the companies? maybe a make two

Peter Huntsman

of merger hope two together we so collaboration that Sure. companies, would And lot and arrangements. time I as worked on that I over would of the just we certainly forth the separate these of a in some will say that continue the

today ago We’re year we at time. were certainly Clariant a to closer this than

sort So arrangements. win-win here, opportunity certainly those on to mean going where that yes, I continue a for pursue we’re to of there’s

John Roberts

did MDI? have only And then U.S. in capacity of your with oxide you way You you of PO same us would balance, the sort could propylene remind the

buy assume use I produce And you the So PO all the systems. you overseas you PO in do of the that all for of your U.S.?

Peter Huntsman

Obviously we and through globally PO No. in we In We PO. Sino sell have we forth. in the U.S., and PO contracts also with on with start-up very don’t so facility – that exchanges supplies We’ve globally. our the the commercially – a China China. short we’re even who oxide will through sometimes actually secured means various supply source healthy of of Pak, propylene

the surfactants We then PO into other amines into glycol propylene applications. and and also derivatize

do some our as manufacturing also polyol We of own well.

make problem I money we buying that. we if have balance. I good to no around think So off a competitor try turn have absolutely and can PO a from

with downstream, that I also our to we try joint producing own So and competitors between our own ventures. buying from derivatizing balance think

John Roberts

you. Thank

Operator

Sheehan be line of will question the from next SunTrust. Your of Jim

Jim Sheehan

from if seeing Gulf the when construction any that? you impacts to housing and auto are of you industries? respect for the With hurricane demand would to Coast you. seeing polyurethanes the on U.S. disasters, so, And signs abundant or Thank start other expect natural

Peter Huntsman

other not met got done weather damage just Polyurethanes commercial here not the earlier lot with or and – partially, that the week, anything. the coming. in leadership, I Coast with damaged, say Florida structures forth, there. it’s let’s this that parts just and are say really of you our include Gulf leadership that material didn’t either area would you’ve with we’re team were the that I and of so XXX,XXX Huston a not that insulative seeing probably problems in and was completely

I is demand see – that at as second speak you quarter of I wave third of some the at and we see now that that coming counting on fourth first customers, virtually that. storm. think demand huge next no, the like right year, first, seeing the the our that a – the we’re through. would you’re to that volume to year due where of with don’t we’re of and next probably see downstream demand. that derivatives, I you’ll of looking think where look none even I the that you’re say strong wouldn’t some quarter quarter, of be something the you big seeing in But that quarter in going

Jim Sheehan

And expect Great. you today? see them will Where do normalize? inventories when to you MDI

Peter Huntsman

like it’s where the lot season TiOX a carry from you’re mean, one don’t to not I next so inventory. We building and forth. MDI of

of producing I down rather that facility, is capacity today, around are stockpile it’s a rather inventory, of MDI. global look choose have We as excess stockpiles. think of a at in than XX% to than – say just we huge a utilization. means utilization slow rates I would better And would capacity capacity

for these will And Europe as facilities a larger line you one over what four you’re to line in And earlier switching in larger get not is XXs. something able just facilities, hit. and lose up feel and to we big report issues the you’re some or lines – products due probably a said other It’s in or contaminants actually market. If make lines our that in it, you you or single a not we and the we’ll low a we lose how to Again, rate, my unusual MDI much comments, financial three in in or and have so not have look facilities, the Geismar, get it. I you to of and operate and of forth. maintenance ameliorate the at design to lines designed it’s those as we facility. it’s

down. a It’s single facility going basis. that to to line, line on If cause you a have to you XXX,XXX train a of repercussions that’s XXX,XXX line, global tons and single you’ve going lose world-scale got come

I So we’re MDI, exactly as say look inventory, and of today, capacity when forward. we would looking going go something where that And utilization, at nearly XX% at north where I’m operating we more with globally.

we’re DIOs, low capacity we’re our – utilization. to better the at which if an as that something would total in eye standard we’re that’s going XX-some-odd just And at that look days. the around today about think business XX% our of in that’s Traditionally, I keep XXs, sitting on. be at days you’re usually I operating than pretty

now. But quarter, snug at So end a but bit customer as I fourth of and to that chain terribly little – the here time. you it’s you right typically seasonal in again are not it’s a rebuild trying look the entire capacity that as quite all manufacturing, supply

Jim Sheehan

long-term Thanks. of made in your the does alone, rationales the when think stand deal, achieving announced Clariant remarks of some about order have Is I achieve the a merger. being greater scale first you one sufficient you And, and Huntsman scale it goal? Peter, to

Peter Huntsman

this chemical the does. America. look mean, North the where it and our And business leaders largest And business, largest when our think global leaders, if I surfactants in our around among the not one MDI, of area. global in epoxy various Sure. our in companies the we’re compete, of business. And certainly areas you the we one I amines we are world still in the

of larger? SG&A? have dollars without could greatly on So do that would the infrastructure our an become more And take we a couple expanding we like business billion Yes. of to

suited in to that? are we growing to that more of we our business. Do we do think order have taking volume, able to survive? something to that do that. to that but capacity be capable Of have we’re not, on I something think do and Is that certainly it’s course more I

Jim Sheehan

Thank you very much.

Peter Huntsman

merger time, to of I’m questions. we at because around to because don’t surrounding – take that many couple and Operator, we limit more typically of think so the still the have try But of we just issues these hour. why more forth, the I operational two calls the questions a questions? looking an so

Operator

Certainly.

line the next of P.J. from Your Citi. question Juvekar, will be

P.J. Juvekar

Hi. Thank Peter, quickly, exchange know Yes. And supply so And were urethane on shutdowns have I down? forward? going the capacity, much for describe just Can been see you you going related there environmental you. demand how there? us? how in some supplies how adds crackdown. What’s does to when – in supply China taken do that

Peter Huntsman

Yes.

do And things don’t business, think our our business, I that seen is textile to MDI business, regulations. as policies. has lack capacity of been that I I at our – I I product. of in anything look aware I say Chinese that have not anybody environmental see available with at of pigments being urethanes I’m impacted that down these because of and the shut haven’t because wouldn’t environmental materially look

P.J. Juvekar

Okay.

it purely seeing because demand is this? that high of you’re So

Peter Huntsman

Asia, and partially much as you most is I the just Europe supply, for in look would seeing again, quarter, of us demand of is we’d demand in that year-over-year Yes, And demand even but is. globally the to at as remind versus it able have most prior in I be like seen to we because the now product I growth really we’ve coming as that Asia look U.S. China we’re the the as that don’t

P.J. Juvekar

XX%. flat. EBITDA was EBITDA amines talk on you. going volumes maleic to Thank bit a what’s Can there your Performance up in and keep flat? Products, And your about you are and little

Peter Huntsman

would – are flat If I not expanding. in margins areas. say are Our our those margins

in starting we flatness the the that and I of the and the facilities of the turnaround storm. storm up literally in effect the saw the next of the reason ethylene that And just back XX over of TNI. glycol facility that XX think impact ethylene mechanically oxide Harvey say and around the more is are And from we’re in process has running up. And been our hours would complete. the impact all I

volume improvement margin. So, see is I and of most flatness think continuing The not an to that themselves to are due products. products and in maintenance storm, the

P.J. Juvekar

you. Thank

Operator

Bank come your from Merrill line America will of final on of the Roger Lynch. line question Roger, Your maybe Spitz, mute.

Roger Spitz

you Good numbers? million. than that. still much. about restructuring, sorry on XXXX good which than I those Are I think an any cash less than think which Yes, update morning. separation less numbers? $XXX Thank the think XXX, Or cash costs, should XX been have those and I very just pension wanted less I in update Venator to we

Sean Douglas

Cash certainly off. tapered it’s restructuring,

You’ll forward see little going very there.

Basle, a contracts say tapering – I down. we than very, it I tail think there $XX but But really that’s long on have call continuing primarily, it site you’ll shut going on in on few that. we Effects, year, when less that see a down Textile million a as very that low can Switzerland from per we’re that forward, generally, number

shouldn’t today. more here see as going a forward You lot sit we

P.J. Juvekar

it. very you was That Thank much. Perfect.

Peter Huntsman

Roger, very much. interest. you for and very thank all Thank you much questions your

Operator

that Ladies today’s concludes and participation. gentlemen, your for We conference. you thank

now may a disconnect. Have You weekend. great

Huntsman (HUN) 27 Oct 172017 Q3 Earnings call transcript