HUN - Earnings call transcript Q4 2017

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 Huntsman Corporation Earnings Conference Call. My name is Emma, and I’ll be your operator for today. At this time, all participants are in a listen-only made.

We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. to of call Investor like Marcuse, to now President Vice Relations. would turn over the Ivan I Please proceed, sir.

Ivan Marcuse

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

the the on Peter are release released the earnings market and opened, today and and CFO. fourth Huntsman, Vice for full-year press Douglas, we and Executive call our President President XXXX quarter This CEO; website us Joining Chairman, Sean to morning, via and before posted our huntsman.com.

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

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

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

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

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

Peter Huntsman

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

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

for which $XXX This million MDI includes recorded year-ago previous EBITDA and with adjusted oxide, quarter. of businesses, and compares $XXX million. $XXX of the propylene urethanes polyols, million system business, Our

operated production at XX% to we fourth the continue full of margins and quarter. growth operate our demand EBITDA rates MDI as units solid year-over-year, full all Our globally MDI remains urethanes during at volume delivered MDI strong remain capacity.

X. to specialty Let’s number and focused Slide on turn our remain We formulation downstream growing businesses. strategically

to continue fourth more differentiated year-over-year to volumes XX% we in growth business. the systems. quarter, our saw In within shift MDI components We from

with is our as past continued tonnage believe believe abate constraints. differentiated to extra of we fourth component coming this the approximately our temporary one While fourth in overall quarters. that to focus We spike certain much The this continued how will in the spike of We quarter $XX margins supply Even all play facing included of of that upon that raw the addition shortages regions. anticipated this call due portfolio outages in third normal revert out. absorption supply by new and material our capacity said our more We the move status to from by raw remain to to industry capacities into these and and outages No tight. demand one-off downstream will can largely This MDI. benefited including with these a predict million quarter and depend due resolution the dynamics will conditions own. believe material quarter margin we in constraints. the approximately will benefited quarter million these levels Europe. benefited in accurately $XX due industry geographical This in China in we

formulations. of our We XX% are the we MDI continue our move can of future more remain control that we expect growth reemphasize derivatives way estimate that we to believe I We industry moving forward. will in that seen the and base this business have the that and be in our for however, what will on focused are we downstream. foreseeable urethanes approximately business that and sustained

all region Looking wood residential composite insulation and in adhesives construction across strong at benefiting North drove Middle quarter the sectors. to the growth including MDI our from MDI India, and demand business. our in XXXX. the excellent markets as double-digit our European XX,XXX growth the of the to throughout volumes increased of America insulation to our We demand that year-on-year growth our rate growth markets kiloton, XX% systems quarter in this increased commercial in in volumes products, in we a at region our facility this also In started and of stronger both saw American positive past as North demand Demand expect differentiated European third our East online XX% quarter. regionally, key recent and in in region, addition is come show bottleneck is year. robust this Russia Rotterdam saw

out be As XXXX we demand start in Europe continues in to positive.

continues geographically declined basis. production anticipation in demand MDI on our volumes Asia we balanced as globally to China X% to about at new an Industry grow in logistically X% for of coming online. annual our facility

As facility world annually. year. such of industry expand at scale per the a needs about capacity kilotons equivalency is XXX,XXX to This

absorbed, favorable market. rates we this utilization recent are quarter, in short-term and continued X% that fluctuate XX%. excess the over XXXX resolved additions annually capacity into next industry grow a good see industry XXXX. back from had stated future. rates estimate foreseeable believe constraints last overall, come approximately to we the we We believe as visibility supply But to As will effective are outages and demand of are material manufacturing years. several we we capacity dynamics into would raw to We bid expect the Currently,

expectations positive remains to outlook in markets. spike margins European our Asian for the XXXX, into despite our decline short-term in our moving Now

expansion, which contributing XXXX. begin EBITDA start has its phase, will to MDI in begun Chinese up Our

market into capacity We will the demand requires. bring as

key to We expect across regions in MDI volume our XXXX. growth the continue markets and

growth MDI EBITDA being strategically year-over-year our growing the modest on more together, MDI it in focused in XXXX growth half Putting year. We EBITDA downstream the our anticipate differentiated will all businesses we first remain and formulation. with in urethanes of

expect first on the strong we quarter year, MDI Looking the remain to year-over-year demand out a basis. of to

will and soften While last for first I that margins the spike sure, or year. of bit to too early the the know look quarter quarter like short-term suspect more third a in will

MDI XXXX clear, look near-term believe prices, we prices we remaining as pricing. the market spike the the To cool. short-term average component and soften the As bit to quarter, for operations various this could to be we XXXX commodity foreseeable beyond margins more cost region Notwithstanding similar prices be prices. see in But conditions remaining tight spikes volatility assumptions, European similar Asia subject for future. is in will commodity problems in a component may the first stated future short-term

MTBE business EBITDA, the prior a we've more and taking is a view expect while improvement show quarter in the XXXX, reported $X recent like look to MTBE in margins; in that for conservative this XXXX we’re currently year modest We'd similar in million to seen be a improvement optimistic will Lastly, period. MTBE to which the to improvement XXXX.

in saw a poised discuss of for This million that tale this Let’s reported Slide past in XXXX, disappointing industry our surfactants, Beginning $XX dynamics demand key quarter. This results. the businesses. Performance to off of recover was anhydride two our EBITDA Performance increased communicated Products. amines, number maleic turn halves we at in to Products and year XXXX improving our segment X was We business a segment.

second half an the of see in of our earnings continue year. nice did the XXXX, first in to markets. in underlying our improvement the expected half into trends a key improvement Heading As we see

site Hurricane be EBITDA our However, the of as reported quarter. Port was million. in in quarter $XX Harvey, Hurricane were Because to our Harvey. positive products the fourth to the planned the significant the trends of turnaround oxide on these at ethylene impact We quarter, last estimate turnaround Texas overshadowed impact delayed performance Neches, by fourth largest multi-year

experienced spite that impacted additional outage by weather-related European $XX affected up surfactant in of these XX% volumes excluding million. businesses. surfactant were intermediates also in We XXXX. largely of difficulties, an an us year-over-year surfactant In business estimated our our and sold December This unplanned

X% X% volume increased our maleic increase year-over-year a volumes saw and amines business of year-over-year. Our

impacting into the fundamentals second issues that enter are remain half recovery we the As and and XXXX, behind of amines year us. in in now underlying last our surfactants

moderately over a would quarter, expect better results. quarter than which to last improvement quarter be results We fourth be first significant our year's first

quarter as new delivering sales turnaround by growth by we second the in first of driven about I'd which that estimate EBITDA pipeline improvements markets. flag to our we quarter are planned $XX year, maintenance like this innovative in Our a impact million. will have

of For the deliver performance expect notwithstanding versus Harvey. EBITDA to impact Hurricane the growth we full-year, XXXX stronger products

X. Let's Slide number turn to

improvement was our Advanced Materials markets. quarter. its in at growing core all XX% business our of EBITDA XX% of business X% specialty businesses volumes Our $XX and is This specialty the steady focused in million. volume increased specialty The on overall. business and remained reported specialty margins across EBITDA

to in adhesives. likely will consumer automotive and are see to positive trends EBITDA continue DIY Wind commodity remain our to other addition aerospace, and adding markets In nothing and and challenged. growth steady specialty we in composites currently coatings we adhesives,

development. assets carbon create business existing other specialty to to end for. to technology business heating, will acquisition such that remain acquisition, do aggressively next technology can growth corrosion of growth industries and add and composite allow that disclose. to of to A automotive, integrate with Slide additional the over we We and acquired several that within We technology the we This going forward. in such optimal EBITDA to us continues business to add strategy platform to the financial key recently additional it value access market. base and brings prevention integration growing willing Technologies, our margin not are estimate opportunities is commercialized, bring this portfolio the on for nanotube us materials our growth customers electrical used acquisition and develop platforms Let's our not a which portfolio power. this while conductivity, intend as markets we and commercial contribute our and that Nanocomp primarily and a that technology The high formats. develop turn to Nanocomp technology used as This business formulations to be believe X. component year brings potentially electrical effects future of various new number is in modest great expand We range This small and create will in such expense markets. megatrends. needs portfolio. Advanced new a materials aerospace, routes be can radiative Materials rather We manufacture as in Materials good to for formulations our effects and to pay Huntsman of diverse toughening focused Advanced offers They the valuable and which positive details a

Advanced we GDP. XXXX, see EBITDA in to growth to at Slide Materials of X. Turn expect Looking number excess

of XX% up markets rates up business the million, quarter at the Textile $XX straight was need the full-year growing seventh at products growth volume as EBITDA improvement. above driven volumes X% prior for total addresses year. our foreseeable volume. growing versus portfolio quarter solutions. quarter market This and improved growing Our the that X%. key reported This We for in customers marks our future in as sustainable higher with continue growth The the this Division Effects believe our EBITDA of is of for should were X% by volume

EBITDA of $XXX apparel addition that In footprint, in EBITDA faster for cycles. the trend benefit this because next shorter take of fashion continue We the few regionally in we trends advantage years reaching our over times to of sourcing are will sustainability poised mid-teens. margins to global to delivery million geographic with remain which confident approach retailers business

we expect as well as margin XXXX, growth towards consistent EBITDA Looking improvement.

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

Sean Douglas

Peter. you, Thank

business. million our prior Additives sale to partially EBITDA $XXX was our to of by EBITDA business year-over-year X, for XXXX this only biggest driver in was of our The Surfactants compared year in adjusted separation the period, priced, higher which offset improvement European forma and adjusted Slide third of Pigments costs. million and direct for to in the Looking pro increased quarter the $XXX the

were EBITDA the Textile Effects While upstream Materials to up volumes MTBE, our volumes overall Specialty volumes Amines, core ethylene and due sequential down our adjusted the oxide by products, in on million. quarter. seasonality our fourth the increased largely quarter, impacted were of impact quarter. businesses Compared Harvey largely million million lower expected in as an $XXX Hurricane and was Maleic, in from intermediate they were Advanced in $XX to by MDI prior $XXX driven adjusted largely were and adjusted Volumes lower ethylene third price The and our improvement glycol. EBITDA the to

$XXX XX% recently term of million. full pay proceeds of any credit senior longer to completed an We follow-on We no of proceeds to our shares, Venator XX. loans debt. facilities. additional use $XXX net our our in term a of have Slide offering Let’s outstanding turn million successful We under secured these raising

of free cash During Venator billion XXXX, net the we and $X.X repaid $XXX approximately approximately proceeds with debt from $X.X our from billion separation of flow. with million of

Our stands net well year-end net debt This X.X of leverage grade credit at of year debt leverage X.X ratio within times. as times investment compares to our metrics. last

above stood liquidity year-end Our at billion. $X.X

of have We was and we generated another excluding Additives cash which ahead shown it our shared the million We free million. expectations has balance greater Huntsman's as in $XXX history. discontinued sheet for than are and transformed of enter strongest with flow. our it XXXX strong XXXX $XXX well being year been operations, Pigments

we a cash quarter, generated XXXX, had capital that we of XXXX XX%. achieved you XXXX for support in our rate a conversion use a of fourth In the flow. $XXX in million prices. business In flow management. expanded cash and free inventory of change material I higher free in networking million step remind $XXX will was of Our healthy we

We spend $XXX We capital approximately metrics. continue in expenditures our net XXXX. inventory on during improvements to make million

refund quarter the previously tax planned. $XX a higher XXXX, year relating second from benefited Pension during of as were we XXXX As in to periods. reported, contributions prior million

our $XXX years, listed million. and upcoming cash to We target free have million by range $XX $XXX including flow for XXXX million between

line to Looking with into expenditures, expect we $XXX capital approximately XXXX, million appreciation. spend in on

you typically capital. fourth we capital the working we a seasonal the remind comparison see capital metrics bill XXXX. the of seasonal We to I expect working where in year working as quarter first that a good maintain to in release see of quarter

be that $XXX in what nearly approximately cash of XXXX. will We one it expect million, interest half was

modestly same today, and here of than the do to maintenance would in contributions sit other to less we cash be in pension slightly excess restructuring expect expect our amortization higher higher be about on we more did multiyear on be As spend XXXX XXXX.We to like to second and the the $XXX in Texas In occurring to schedule our $XX XXXX, in refund than will not in we by tax benefit mostly XXXX. we million repeat million, the of due turnaround maintenance Port Neches, facility. quarter cash

to Tax XX%, to XX%. U.S. turning quarter the from Now Reform Act in was our lowered the January XXXX, adjusted effective tax tax XXXX, corporate taxes, U.S. effective four XX% rate rate X,

in we on X%. our Given the proportion impact estimate effective tax the long-term the States, of rate our favorable global be earnings overall United made to approximately

code We continue estimate code, be to are changes the Based to rate to evaluate new many of currently XX% tax the the XXXX complexities tax of all XX%. a we in effective between new as tax on multinationals. our

to to jurisdictions unusable had earnings we operating in regarding us global. bringing tax words, previously Consequently, accounting. further to later increase to sheet we rate, the balance year, to This expect will in and Switzerland allow be we have of effective earnings long-term Speaking release back tax In U.S. are also NOLs our GAAP. portion an GAAP increase certain certain in on related according this UK. in valuation the deemed previously deemed later unusable assessing access allowances seen losses a of U.S. net XXXX other by

this required an on While it percentage rate few overall taxes impact points. will treatment cash in will a not effective by accounting our have tax anyway, impact

a effective long-term will other tax the between with within made new fourth Reform tax tax quarter, estimate have a one-time due $XXX of Act. global provisional a Assuming lower benefit liabilities rate. and approximately we based later provisional at we be a of to XX%. Consistent XX% fourth new In few recorded million Tax post our these tax net adjustments year, relating of quarter; recorded deferred remeasurement are adjustments companies, to this have valuation the XXXX U.S. non-tax the

tax In of transition over is related have $XX Approximately eight directly million foreign fourth recorded provisional deemed paid tax of of of transition due quarter, partially this in years. the we the be to million tax a million addition one-time Venator. the on This income. separation $XX on will offsetting $XX gain expense to repatriation deferred

income we half XX% hold down market to on this recent At prices, Venator $XX total we total of be the remind equates quarter value. eight the conditions. I show will in approximately the $XXX under of to Approximately Venator below the credit between the shares presently sheet discontinued once respect common code. to billion as price, Venator balance The market million as the minority our tax continue million. of we in of estimate part the on orderly taxes approximately approximately our on to Venator $X.X statement. the our to gross We that of XX%. years would stock. taxes Of intend to market to new subject one grade the spread today's sheet balance have XXXX. over interest to sell we with of on Venator, summary, metrics. $XXX this remaining Venator tax held-for-sale will million transition be an incurred Now ownership monetization be million we in relating removed you $XXX of and investment like achieved operations have fourth At falls Venator In

been Our sheet has never balance stronger.

effect The We modest tax free positive. code new the cash is have consistent a of U.S. flow.

the move capital. focused of over we a Peter time I on back use sensible are concluding As now for forward, we our to turn will comments.

Peter Huntsman

Sean. you, Thank

million. out Slides cash monetizing XXXX as be flow in year; of from to XXXX, $XXX this did out believe At XXXX. generation cash and divisions range time, We more was EBITDA look each four to XXXX XX. we million see a partially equity. the earning million. our we should next as both $XXX as $XXX In with strong of well this $X.XXX of our and about XX generation operations Venator to I close ownership strong turn in they Let’s we billion our than

ratio reported, now Sean As debt-to-equity at our times. is X.X

businesses. balance prioritize us bring Number we We focus seek that invest and will new we that strong in Number products our out will a reliability one, the our allow to organic will priorities. we will downstream two, acquisition to primarily capacity four Three, these and continue metrics. as grade investment improve at us and focused to growth be rate. the to GDP remain will into continue downstream marketplace. sheet earnings acquisitions long-term than maintain on stronger committed consistent When to in amines and grow epoxy, expand returning will margins cash These acquisitions to business will our surfactants MDI pursuing our allow maintaining on opportunities, shareholders. we deliver

Our board brings industry increase and profile. peers recently us dividend in a think XX% in again our approved strong in our line shareholders. preserves our sheet with balance We credit this

of our repurchase I’ve view month, forward a and faith in in will out. our On in humanity, our more for a opportunities XX, as Venator as done Day speak but of of our in his of hosting will in behalf value my away. The the Corporation stock. passed be objectives this authorized love $XXX This in a not will well board earlier industry. of of our and as million balance vision, sorely will directors over we note, on at the Huntsman deep we'll of of Our also be presidents market be his jeopardize I going our join associates his by four, at can family pace all father this sheet. we to choosing, will associates missed an where avail up just Investor personal divisional Venator. equity May subject presenting and conditions. of themselves, monetize XX,XXX recognizing He to details me in this hope business set complete each continue year. to we I the

I in a about release, but come know few his As lost an that, the up for know I’ve the for great year human will better. didn't dad molecular said much Q&A, our great people chemistry. who procedure in of open was you We explain XXXX operator to historic one. close XXXX even looks line storm and a the earlier chemistry, impacting questions. earnings, let’s With spite of knowledge

Operator

Mitsch from your Wells So Fargo. from the Instructions] comes first question of [Operator line Frank

Your ahead. line go now Please is open.

Frank Mitsch

morning, I family, you we one. did my Good and agree Yes. your and condolences a to and totally lose great

Peter Huntsman

very you Frank. much Thank

Frank Mitsch

people doing high your multiples because or M&A. Peter, now heard we’ve and you you mentioned at or to are on right vision on I looking that How looking be – M&A from some you tend mean side. multiples view at other

that And perspective, from likely your how XXXX? will it Huntsman M&A in is pursue so some

Peter Huntsman

of projects now. Well, is are I right looking I before more characterize bolt-on would number think we acquisitions. that at us Frank these, a

I some and acquisition depending would what’s there But what – available. it. Now think very have that justify I and it that of find would us out not integration be on can difficult an did obviously for change to comes to element

of I – particularly think these look multiples by equity. are that double-digit that when by strategic private being we some paid particularly some at

is. worked expand in what get think I a stronger we've think expand acquisitions to target, need think but will we balance that be I in with And smaller balanced we've a the very buying balance in size of and I will sheet very too continue been target, hard think those approach. integrating it I past, to that where think to that be successful the the we'd I sheet bolt-on

Frank Mitsch

much the very can volume maleic anhydride your businesses, if Where I ask we How amines happen question businesses? quarter. on helpful. are operating a growth and in very rates? impressive could That’s those see And the more in

Peter Huntsman

more low-to-mid year businesses, capacity Amines businesses, we're throughout we think Maleic there. that not maleic. I'd we operating that as the our years only of volume in between look our say And look low and as and big to surfactants, think we've do last Amines our room got will in the also grow In that you the performance businesses at XX's. business. we’ve XX's, I upgrade metrically, have at but I if I of XXXX throughout products, I to in today look that over kind that three the where is amines, couple been And our

is here area. for to in growth amines best the I going think the opportunity be

Frank Mitsch

so All right. you Thank much.

Peter Huntsman

you. Thank

Operator

from of comes Kevin Research. So of the Vertical next McCarthy question line

go Please Your line open. now is ahead.

Kevin McCarthy

I specifically morning. price the if was good Yes, wondering regarding on systems much you been in achieve I you’ve comment price MDI able is Peter, MDI. of that to MDI raise Slide that detail have you can confidence and you your included and appreciate there? when regress? you’ve how to the to component prices on been X on if degree extent What to could that able hang

Peter Huntsman

number that Well, Slide X, put thought EBITDA lot be into I we've one on what the a percentile consider here industry what increases we've tightening we as think the is able talk tight as say utilization. reflected we been number would conditions is of would operating really the two base business, end really and market XX One, say through means. to this when targeting to Slide because those customers value-added in would what applications to about X. we achieve also would be in the price I our higher that are low that

spike. of is much tried look also how be clear this majority of being as we would to to is characterize commodity, there that components components. short-term the of don't I than really as component consider the much that this how that’s we've at what And would all that more much be want How I commodity clear, but not. I very of there think think kind certainly be I is – – the I into is to a out business commoditized

about exactly people much a bring down. that are keep number at fourth benefit red may benefit up on third $XX million keep the of basis, look to are starting the show quarter, what of you and on that X. variables looking quarter-out a quarter, $XX facility and fourth if in us the we I the how But red in million conditions kind maintain I the Slide that Again not majority now bars expect section. quarter would the be on will the into expect market that term a we And and certainly quarter-in fourth flat. longer there to operating shut so quarter that

Kevin McCarthy

then in And bar anything if that have all fourth component there? or focus in a I you gray that million as of follow-up, is else do on $XX quarter, of MDI the

Sean Douglas

application where to that think don't XXX%, I Yes, would assume category, that majority that businesses I and of think that that certainly you would at it's would MDI to be spot want business or and at would where component competitors can time. just being formulation a of course that I XX% that, either away that of business have to business look contract of end kind business as largely say MDI price slowly I more and from longer-term take or pricing. want the the oriented And use why the I able is of kind that's be we of safe kind of that over have be longer-term to pulling vast longer-term would assume systems But being plus downstream centric that's a contract. or type a Asian business this or

Kevin McCarthy

much. Okay. very Thank you

Operator

the of Next Ahmed question of Alembic line Hassan Global. is from

now line Your ahead. is open. Please go

Hassan Ahmed

Peter. morning, Good

Peter Huntsman

Hassan. Hello,

Hassan Ahmed

Deepest your dad, amazing lost definitely gentleman. condolences about

Peter Huntsman

his world over thought Well, would he the relationship the enjoyed thank know well. you, as years of be I Hassan. you with and you

Hassan Ahmed

we Arabia, that, didn't very market actually was seems me the supply strong. online react negatively and to continues that MDI reflect and digested of Obviously, the pricing question on industry, some saw very quickly I sort we've in margins. coming even Always it particularly in the the of it capacity come sustainability Middle to incremental loved MDI which be outages some online. Saudi seen about his suggests as East company. XXXX, incremental Peter, and demand But by very, to

maybe repeat XXXX is it that we demand? again have possible trend Now just outages in you But because because about of the sort above and way talked XXXX that underwent and the of hiccups call it supply, then along XXXX of coming facilities some of some of MDI incremental see back. a

Peter Huntsman

number of prices tons that's to good last the almost volume that how close how going market sudden what that the have of is into throughout market, that – there's impacts the at market, a off quarter? built down, Hassan to unusual, overnight say scale running the industry over couple in of you XX%, in around I that comes said think much that how kind there's facility much last public the I and on is $XX new excess I XX% and million, five over probably that that's fourth you But XX% into a haven't about been Well, the could That's back that would the degree that new think how it's the of scale point to a we just that truly out act any question look the much reading coming capacity from over think appear on that utilization seeing is capacity as think today go there all any of norm. just XXXX four that here XXX,XXX world capacity. been soon an up to but the added if coming new not much as to scale that that’s years, capacity of will that I see to affect becoming and you go is into Middle capacity capacity know and the is I the you world either softens that and But $XX was the you point uncertainty we're think over not that outages good or on that a if and I some earlier seen it and first or shutdown that’s these has major given we MDI problem think facilities a would is I'm probably come fairly of – and information that startups facility that softened see I'm the a quarter I I don't that by fact million down seems certainly East East average I taken years, plants overall prepared how The not impact the market as be as though will for kind a XX% market. and Middle so. it quarter? in the of you to in softens. well we the hit coming How going market and say is what think during lot my but on course fourth X. that express during show Slide comments unplanned facilities, balancing a into be the candidly has we of

Hassan Ahmed

Understood, understood.

on a ethane mean material it spikes to we've cost about changing sort how raw Now raw oversupplied, cheap. with things, a methanol relatively some sort material pricing, catch I are the you of XXXX inflation continues obviously seems thinking side up oil. bit, in of Benzene be guys from perspective? crude really gears relatively played seen of hasn’t

raw you last to or in inflation material thinking or about cost XXXX? how So year are guys relative XXXX also

Peter Huntsman

going lot depend that a markets. to think crude is of on I the

some at look think is I now. forth. When but think of and that of derivative the coming probably market markets in think derivative a of kind benzene the the bit just certainly crude the capacity don't probably fracking the derivative production, you crude field, are anecdotally in opinion that I'm my not markets I probably opinion And when in the I overheated in much full are and a crude that number that right my crude at would an and not the you prices reflecting how so expert price crude of a mid-XXs. that into tell I of new look is these either. that products believe the tell other really sustainable would just me crude oil kind

I we're into up big a and in as – benzene fly sure out a our look number of not not I'm raw material. So that XXXX, expecting

average cyclicality. in Asia see remains The oversupply I typical undersupply an between America. North in we'll typical the and arbitrage think

those areas, We price the in see will I impact that something but movements business. don't would see materially

Hassan Ahmed

Very helpful, so Peter. much. Thanks

Peter Huntsman

Thank you.

Operator

of Next JPMorgan. line the question Zekauskas from comes of Jeff

Your line ahead. Please open. go is

Jeffrey Zekauskas

flow very from What for was conclusive discontinued of much. Thanks XXXX operations operations? your cash

Sean Douglas

operations So XXXX would piece the discontinued $XXX in be million.

Jeffrey Zekauskas

and could you for exclude you taxes a I rate cash quite Venator but what your your okay. The XXXX what modernization know tax moment. will your million, in $XXX are in was if think cash XXXX? of tax be rate Venator, do complicated,

Sean Douglas

XXXX XX% than little a So we would was in Jeff that probably that bit that. rate be XX%, here, it to believe and forward lighter going approximately

Jeffrey Zekauskas

So a lighter little than bit that.

bit? a So going little taxes are up your actually cash

Sean Douglas

is View yes.

Jeffrey Zekauskas

Yes.

that there you cost how get capacity? are where new would need it Lastly, any much areas to capacity and

Peter Huntsman

minor a will on mean next as MDI mean market will to grades got market's as not big think just are amines and the capacity over excess tax the obviously organic for But we some I surfactants our that. our be maleic coming it and think in to we that new it some fan we've think our got – XX board, months of the other that, absorb room the Materials. as absorb and able think effects, capacity. across some and we've I grades about the able facilities, I'm our Advanced I got going absorbing that's as and as debottlenecks I seeing I'm in mean just XX I be in business, producing the to – China in to the be I we've dollars I

we've the from commodity of of business. years, last the couple side up know I'd you the been As freeing on say capacity

I think excess our We aerospace of expanded the capacity to we've supply Materials Advanced got time plenty we industry. actually, last businesses. the

on were expanded to think what far as and out be we the aerospace XXX I XXXX XXX expecting about platform. going industry XXX, to as from the the platforms, demand XXX, we

go at a coming like spending capacity I that to to I think look be of really So as Again, GDP I rates, just see think lot out new of along see I that some to here. new and across build money out and and need I'd it need see sort facilities. capacity board, don't to I don't grassroots go the creep but build a

Jeffrey Zekauskas

much. Great. you Okay. Thank so

Peter Huntsman

you. Thank

Operator

Okay.

line Sison So, of next from question KeyBanc. comes the of Michael

ahead. Your line Please open. is go

Michael Sison

I guys. you of this EBITDA end up in you and margins MDI. XXXX XXXX thought the versus the in segments maybe frame versus year the XXXX you of had year. type do XXXX? Peter, for given grow you of how in and spike the Hey each Can strong Nice short-term mentioned polyurethanes that could felt growth could you

Peter Huntsman

when that and we Slide think base I back to EBITDA red our line going that X. at Yes, again look

maintained kind of at section. the the which be year, the year. be what our of we of that be spike throughout in half that think that that as would our look going the that I short-term the and the the And would growing the expand see I being what and early I consider of our base a our early in part would consider to we're spike, see EBITDA to see and second we'll we reversal year mostly benefit earnings part red of to EBITDA I’d the think year,

building XXXX pretty area. you to There's lot of comes at throughout market? So in demand this That's think coming you but last see as tons capacity. average growth our now Americas. an we the Asia say the customers similar new the to able quarter a XX% also place the of overall you'll very saw expand that Chinese with to the I as out when Slide throughout been in is into see product – line in Americas. year strong going that’s X to North which you're We've back pricing, year-over-year used years, to a America. the I'd Is that up will and a two saw going lot right be that It expand on that additional into

year So I Greater over supplied but we're and America we of Europe Asia North will so. China to China, Greater market, be take from will capacity as that not to just to whole were China onshore, on go will Asia some going next used another think repositioning see XXX,XXX stay the and or tons MDI onshore, stay that

Michael Sison

high you was And growth us impressed is of through see couple walk – in other we that and is could what coming the type a with which growth from that and that Great. the Can value XX% the I maybe chart quarters Okay. XXXX? XX% bar similar then where in showed next differentiated growth business. into

Peter Huntsman

the think construction a market the lot year-over-year growth of taking continue we strong that I for of Well, us. sort CWP, a the place, as to wood be look composite

see rather in continue and in Europe and most in Americas, the parts strong in Asia world. flat to growth of the automotive We both Europe Asia but

adhesives do in very insulation in continue Europe Europe. to in Americas, than particularly business, elastomers businesses, to stronger and Europe growth strong growth That’s and GDP the double-digit and we well. the certainly then in the coatings growth our see in Americas, And ACE Our businesses. continue

wood and here. able able at great segments. so going is MDI we downstream. our the insulation those look So as as to forth. I one that’s the automotive look little I There larger the I a build based of be applications these a That really in say of look look aggressively it to particular, areas markets. is chemistry made construction, take industries in lot on as polyurethanes focuses chemistry the penetration is size of MDI I to certainly downstream why and that board, We’ve look be broad it be in to I looks across really the to as to very and move and composite relative in like to

Michael Sison

you. Thank Great.

Peter Huntsman

Thank you.

Operator

is question of Next the from line of Laurence Alexander Jefferies.

ahead. open. line Your Please is go

Daniel Rizzo

Rizzo How are is This Laurence. guys. Dan for on Hi, you?

Peter Huntsman

Dan? How well. you am are I

Daniel Rizzo

me, did turnaround guys your you XXXX, go schedules which since guys tell you you Could Good. XXXX over expecting? are

Peter Huntsman

that was quarter and that quarter. on the gave second be that XXXX, look should we as would not have about Texas, facility expect our Neches you in We in cost Port in but contained that in should we the that all guidance $XX within XXXX be million

Daniel Rizzo

And only that's thing? the

Peter Huntsman

what thing. only we throughout we the would think the that have. look yes That's And material be as turnaround I would be obviously only XXXX, that

Daniel Rizzo

to about with tax that just And Okay. you code? cash new that doing you you're potential have have do thinking about then talked repatriation

Peter Huntsman

that to write deemed today of and an was earlier repatriation we that No, that's what is mentioned happens take something tax there Venator. $XX million $XX basically we related upfront a of one-time expense I that million have bucks,

take upfront. we something that's So

over terms cash will back been news you in the of that's is tax on the will good some U.S. basis some will that. time, – that the there, of as bring India that but if much here. terms like upfront taxes consideration if we example, So will bringing into be local taxes we of that's there we a for in paid cash And is local things pretty pay P&L. picking cash taken back on book tax taxes have elements of from taken There care or by repatriate this China already

Daniel Rizzo

much. Thank you very

Operator

Bob from line comes the Sachs. of And the of Koort Goldman question next

is line Your open. go Please ahead.

Robert Koort

Good morning. you. Thank

Peter Huntsman

Good morning, Bob.

Robert Koort

Peter, having today? component out. me us Give even be MDI business margin and in potential Trying calibrate you we Can the months that sense in might out about the to or what can of so that in over talked short I XX X, where of the sense the of segments this X, a some I figure on candor EBITDA appreciate past run. normalize little better, a happen the earnings XX%. might a give think typical

Peter Huntsman

as probably look and again depending that at on Yes, is it today, depending application. we region the on the

price. components of all You're it But product one price, we probably being is looking all commodity in this the XX%. of at kind one haven’t in again excess some in of as look not sometimes of you kind monolithic – that being these commodity or not sells

as price where they again you buyers more those want of to customers it are MDI But all what buyers. but and at more vulnerable them customers, do think are a do customers is I you I and priced commoditize have where So do they're business. is just I component look down have – you have

say I and So that's I’d that would pounds normally further moving be around formulation the that like are – eventually and that's around past, say today I average, would in say it’s XX% that’s we've into that said those XX% to typically downstream on applications.

Robert Koort

stayed it quickly and how on give that of do how in plant to it market? it China while up? you MDI, are get your others What that as if expansion your into Can capacity diligently and good ramp things the you could they up. But like these obviously facilities introduction, you you cadence mentioned bring as about there? ramped own some seems Covestro on have some quite sense us And takes a talked

Peter Huntsman

facility, we I finest typically There some and plant issues. think it our some own own operating took saying the I'm that over MDI facilities with issues and most mechanical in look technology I at biased a own when Caojing MDI look that today XX-month – have ramping facility up. think were if mechanical up I a it process. obviously reliable was one us But to don't of our today you and our year start Well, experience world. is our the mean of plant assuming at

that at are coming look – be Caojing can go X that going able of but that facility, product you in is we going and we have that a be present to I startup out going Now produce through things gradual the the through these that Making a as to is damaging to you're do customers today process. the sure non-spec equipment product.

process, first you some So if the of six-month I thinking plant months and a of of quite out nine-month started could for nine to the think out. a typically would to sort sell think six at we kind the reason that that are that year I

not next it months. going the six do to You're

Robert Koort

you. helpful. That’s it. Thank Got

Peter Huntsman

you. Thank

Operator

Okay.

comes line Yefremov the question Instinet. Next of from Aleksey of

line is now Please ahead. Your go open.

Unidentified Analyst

is This for [indiscernible] you. Aleksey. Thank

with MDI, you how think can Europe do in quickly Just ramp up be of debottleneck filled? following

Peter Huntsman

now it's out It’s now. and right still right filled

Unidentified Analyst

all right. Perfect. Okay,

Peter Huntsman

year-ago, year-over-year we’ve not at because are capacity. And got that’s a XX% why in Europe we’re but that's strong. better markets were just they than more looking Markets necessarily also are a

Unidentified Analyst

it. then kind Venator been announce And Got has on board to the be stipulation able is that buyback morning, with Thank you. this and there once the of timing would up any monetized? the amount

Peter Huntsman

to ideas will always board and the suggestions. that think I be open

I balance so. very will a think remain a sheet we've strong board and focused on got that’s

that we look that again, that our this doing to I don't industry. say think at typically we're typically our exactly is in what as I in think industry, I want and though

in a be buying equity I on a of X% is a of then to basis, a would and of You're all at going and price could something, a of – going I perhaps that's per price little we'd at rather over [indiscernible] probably expect element buying share. but other look parts price hopefully And higher of year, on be $XXX million opportunistic million, purchase, about that weighted all per going kind $XXX It's at be the looking sounds I a kind to that multi-year lower to be than that a quarter think more that when of value, think another bit some element I your in nebulous, quarterly would looking that average out your that. somewhat be that going be spread purchase. But a but a say we period. purchased speculative to that program portion

Unidentified Analyst

Thank Got you. it.

Peter Huntsman

Thank you.

Operator

from line of the from comes Juvekar Citi. question Next P.J.

ahead. go Please open. is line Your

Eric Petrie

expansion? that U.S. EBITDA any Rotterdam million Hi. then This expected Eric could for of arbitrage from decline. to P.J. volumes that are the you MDI noted on benefit to Peter, you MDI played quantification remind into? China you is China And the trade Petrie benefit and give Could $XXX us

Peter Huntsman

benefit. million a much played as bit I'm lost $XXX the Yes. arbitrage trade into as the

Eric Petrie

Yes. and from realize benefit Did and that Europe from any China could shipping $XXX the U.S. million? to the contributes you to

Peter Huntsman

No.

I that. no. say that on arbitrage wouldn't there's considered That kind think I any of played be should to just be flat.

that then – we of some think we all that If at margin pure generated We of necessarily MDI much apropos. same into were I look being into haven't sold price, at would sold it of by of some it components, that those EBITDA pounds really don't expansion se. directly it is the MDI, same an think the to I how a produced lot goes of some per formulation. that goes But be

part of a number just on rising kind than that being we I at a the think that P&L. rather that broken as specific of we've out tide look

crafty saying a of way don't I So I know. guess

Eric Petrie

Okay.

So aren’t of the and opportunity? reducing short-term out you take commodity differentiated, pulling grade advantage

Peter Huntsman

earlier actually capacity address us tons anything more this an in allows just to take and splitting mean last the of excess I be No. got year some more and to expansion we've with if add side. we did specialty to able

Eric Petrie

as for update inflation? in think epoxy, rates us outlook utilization could I you on material And last versus raw versus Helpful. on follow-up give trend any a and XXXX Okay. your year

Peter Huntsman

what products down producing used those all XX% selling is of I our capacity of be selling that at we anymore. BLR, here, units to we remaining captive. follow epoxy. follow basic used were commoditized have more if are I of capacity. To operating be we've were most and business to got I – – BLR more even our units said when And earlier, that capacity at shut in as much XX% We've XX%, utilization so honest are grades we margins the don't

like out composition there but capacity out rather how impacted, formulation to think on I'd rather not products So molecular that capacity is value there. and much we've that than are our got

Eric Petrie

you, Peter. Thank Great.

Peter Huntsman

Thank you.

Operator

Next question of Jim SunTrust. Sheehan is from line the of

Please open. is line go ahead. Your

James Sheehan

M&A updated is your to pretty an large context thoughts M&A. table? for off thanks it Peter, much to of on In the say the grade your desire investment rating? that have fair Is scale

Peter Huntsman

Well, am son. I never father say would my I never,

look of think a based. once we great the a that saw that every but that think a that like is epoxy you transformed at added value, decade as over I company I have I I of look merger another a Yes, would the long-term deal If lot of acquisitions that that this deal So are opportunity it look sort business. Texaco those truly at the along Chemical, business, ICI think thing. come like recent

We acquisition either. by to and run sale router don't have we at at think investment currency. think here want typical when think shareholder think I'd strong so. improves. that want to But what and create return of and I is to but and of to large maintaining going a a not – new to at long-term means metrics, Look a balance that to a that's I maintain necessarily a and be to that, able have value I long-term know year that killed or an look create Back to as debt looking or you as that currency it balancing be a maintaining we're and that to a or have you within value I equity also our grade kind sheet you strategy rate our anything. consider that look two as I just and so value. We're would

James Sheehan

on thinking you're the of rating? investment an timing grade What

Peter Huntsman

not company me. grade now. some Well, up been to That's for I that months investment we've think

there why company. I investment I think see my I and we're wouldn't that's be not already reason grade no decision. that But again an

James Sheehan

on Coast should did your the And about or January we know businesses U.S. for how impact any quarter? weather cold impacts first Gulf that in

Peter Huntsman

any didn’t maybe long-term nothing capacities here – that done are was that million we've few damage were or nothing No, that and see closures idle, seen, w done. a there but

James Sheehan

Thank you.

Peter Huntsman

Thank you.

Operator

the Tudor, from question Matthew Pickering, Holt. of of Next is Blair line

go Your is line Please open. ahead.

Matthew Blair

very Good your Huntsman looking comment morning. Peter, we think amines, of M&A already. I market think amines. in you're that was strong intrigued at we of and share by When

get So what would could production? your to to strategy space here, you would it be upgrade helpful. be talk Any bigger are the I about your guess is in looking or simply comments you existing there

Peter Huntsman

to but largely think I upgrade I'd like both, go downstream. is see to further

think that chemicals so oilfield the we as of some around the in I forth. and at agricultural areas around fast look growing services

EO move but when those not more PO molecules, more would I about amines and our think I to like just It's downstream. I capability downstream going take that into adding capacity, consumption. amines talk our molecules. amines. further amines are

capacity, using to integration the is of downstream. molecule little opportunity say I’d expand I'd to downstream bit further on we a and like that see those there focus but and So widen mostly

Matthew Blair

but on unplanned XXXX? like a then you Do have in planned planned there turnarounds lot MDI, grabbed really what you. look amount of sense XXXX XXXX headlines, a a are Got so And to activity. of it. there's lot also a in industry-wide compared of Thank that fair MDI outages

Peter Huntsman

on an year at MDI four closures. No, that maintenance I'd any MDI a typically often once you so you forth. that look and years not facilities It's the goes down when that without plant say – go very find

outages, as that seen And way. to as consistent going We've of years far so the past what rate imagine continue. that that's in last over operating probably I couple pretty think would planned the you’ve I even seen a

Matthew Blair

Thank you.

Peter Huntsman

taxes. two and up the then you. or usually wrap since question on another We'll We’ll of or we one long end more here. Thank went it the take hour, to top We but try so two at take questions. about

Operator

Okay.

We line of John Roberts of have another question UBS. the from

ahead. go Your Please line is open.

John Roberts

well, as Sorry about your father Peter.

Peter Huntsman

very John, thank much. you

John Roberts

I’ll And ask just one question.

do component have you go to in want of If in kind would always on presence component what's the intelligence or used internally you have you market? going a or all structurally of about business MDI in could your that systems, far

Peter Huntsman

at – that's we've price to that or de-escalators. in mentioned anything larger that pricing you've where say in that want we've upside in volume, good sales components component businesses not components long-term North got much it's particularly looked have long-term we And clear, today I is structure or sure Europe. got that some Asia you've me that our of perhaps North America are make I consistent in of be given why volatility we think we've could these component up that about America escalators components and around of businesses our where not with contracts If I've our margin bad. are objective earnings. heard not America, to OSB and North longer-term

help And of wouldn't it's we and want load accounts so I say business. all that good frankly volume those our base – and facilities large

we've would the see we taken a components completely the we consider say out I to a be we'll can to of wouldn't hope would when day where be I what have we that else value-added I that market. of see derivatized that or So want that longer-term either to system into value. day of blending stable higher we've somehow end that by something house and upgraded it, and component contracts commoditized business, component formulating it putting with a

John Roberts

you. Thank Great.

Peter Huntsman

of Thank Q&A you. End

Peter Huntsman

operator our And up pretty that here. takes time I much think

Operator

participation your concludes conference. presentation. This for you the thank So in today’s

day. You now may Good disconnect.

Huntsman (HUN) 23 Feb 182017 Q4 Earnings call transcript