HUN - Earnings call transcript Q2 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Q2 2018 Huntsman Corporation Earnings Conference Call. My name is Delina, and I'm your event manager.

During the presentation, your lines will remain on listen-only. I would like to advise all parties, this conference is being recorded for replay purposes. And with that, I'd like to hand over to Ivan Marcuse, Vice President of Investor Relations.

Ivan M. Marcuse

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

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

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

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

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

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

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

Peter R. Huntsman

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

quarter was for division number EBITDA the our second to slide turn Let's million. Urethanes X. Adjusted $XXX for

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

to strong downstream, produce. operate year-over-year. MDI continue remains growth differentiated year-over-year. X% Our rate high of ongoing shift Demand XX% at what portfolio of grew capacity, we volume our Urethanes business delivered to and grew portfolio able we our year-over-year. selling X% Because We we our MDI a component are

number to second see robust consistent to the as our within our shift systems. to year-over-year formulation growth In we turn downstream XX% Fully components businesses strategy, saw slide we with systems from Let's quarter, X. more growth our differentiated and business. MDI in specialty in volume we continue

As you know, manufacturer we foam the growth a in market. spray completed on a high April of acquisition XX, downstream Demilec,

Excluding we year-over-year in downstream Demilec, our XX% business. grew

Looking Americas at growth XX%. volumes regionally our quarter, in the increased

products, driven Demilec acquisition volumes. our composite to added wood adhesive Our product sectors. strong by X% recent insulation these were The volumes about and primarily of Americas

startup continued North With feed capacity, MDI this driven the remains U.S. strong of customer China, to to base. growing less substitution and housing for other construction, by our new continued MDI from the materials. we American region, Demand helping Chinese for our shipping are in MDI our

to X% region being be continued volumes by central year. for markets to infrastructure footwear significant ACE Asia helped region projects, large-scale increased high-growth insulation. in also The in the heating versus strong as and growth. district is prior such Growth our and this MDI in contributors demand this systems automotive

progress the of through the by year. and facility fully be China the new to Our operational phase to it expect end continues we start-up

growing, the impacted market the European approximately is region Underlying our quarter specifically in and outages and $XX fundamentals These impacted believe the European new that resolved. production insulation problems third-party in our bring outages ACE, dictates. as supplier will We fully as on capacity million. these systems. automotive as in demand raw positive quarter We a are second this In material at markets, remain well by demand differentiated the volumes. operating production EBITDA

this We expect to in moving region see growth forward.

Europe. commodity any component outages, future. remaining quarter. end This We of we Barring is not believe $XX a Asia and these by in anticipate any Over softened balance second that short-term spike disruptions. we utilization what pointed prices out quarters, in does three expect the margins the believe have the foreseeable spike be million the year. in another past supply balanced in eliminated to margins will we the the remain unforeseen for industry Industry capacity MDI

demand built global changed equivalency XXX,XXX outlook growth to in on is Our the annually, plant coming demand we anticipate growth years. roughly of X% new not the world-scale at tons every has future as year. which about being translates This a growth

remain believe growing and date through on be additions capacity that debottlenecks time X% announced full been exactly brownfield come the Therefore, capacity dynamics greenfield we have to see the entering years all at to future, visibility supply/demand several will for about Assuming the and good capacity have we at XXXX. capacity, on and come. as not will any market new foreseeable industry tight the for do

fairly China that Let's which turn regions. slide our MDI our It differentiated are important of X. XX% about to We've European transparent in is stable of differently than temporary to behave our out we and margin margins business, in within more number component differentiated experienced is businesses in systems. the and remember calling Margins MDI volatile. in is spike the been component MDI

expanding there of our differentiated systems and While stable this steady. been has of declining within expected with Urethanes variance portfolio, see volatility our being we portfolio margins portion and

component growth could we we what higher While on by short-term earnings and are steady control the and selling can there focused we earnings. on are MDI, generate times in when long-term

more of higher-margin long-term stable delivering is into Urethanes strategy business more of applications derivatives and stable business. intended consequences high-quality moving our growth and a the the keep to formulation core and Our

component the occasional smaller business. will of Urethanes is increasingly MDI business overall MDI, but Our by volatility our piece this an in impacted be

customers. systems solutions to provide differentiated and value-added Our our technology

to will opportunity acquisitions leverage an grow high-margin volume us entry to to into markets acquisitions looking to In growing existing businesses, specialized of value-creating accretive keep business. more our MDI our us These in organic and growth downstream we new component addition allow bolt-on will pull through formulations. for platform global existing and into that the and give

acquisitions record MDI track through bolt-ons proven urethane that a downstream synergies significant and provide have pull-through scale-up. global of We

solid Looking declining last both over year and quarter, year last Urethanes third good MDI with second volume EBITDA that fly-up the the from quarter we third the year growth this be because of forward expect quarter already quarter. the down another business recent will to Urethanes modestly experience component of our to discussed. we've

contributor currently improved Lastly, reported our a last EBITDA EBITDA year MTBE meaningfully have $XX MTBE be and C-Factors business quarter. third versus softened to quarter. expect the modest million. next in to of We

The impact was quarter. beginning firmly the glycol as favorable construction. expect maintenance maleic X. upstream by turnaround, outlook Let's the this markets growth offset this Performance coming multi-year our EBITDA consistent reported to We recently track we surfactants previously slide to catalysts over the We remain businesses, Products ethylene $XX we focused our segment margins turnaround market impacted of and which the turn and somewhat include is business, at anhydride. amines, to with These which maintenance and in the substantial quarters. growth businesses of in of in disclosed volumes completed EBITDA stable are year. number This growing on million. which segments such we remains oilfield, and on to derivative in show million benefiting moderate from the more which higher-margin a The about the communicated by $XX year, EBITDA

Performance the fundamentals to Products we expect for Looking and toward derivatives business the underlying our remain favorable. quarter, third

segment slightly year's XXXX impacted million. in $XX quarter would quarter reminder, be of million. the EBITDA As this a Harvey last forma by Hurricane in XXXX third expect We results than $XX third roughly to higher pro

X. X slides to and turn Let's

by Material Advanced The industrial business prior year. reported largely driven volumes, from primarily business in Our $XX transportation which XX%. EBITDA including an million, specialty our increase is growth of in The our in in increased quarter X% growth of our industrial EBITDA aerospace increase adhesives. the and and businesses, was higher specialty versus

to The We businesses coatings are by and in effects new to growth offer several prior in specialty raw quarter remain be on still are well full-year drivers in pace construction quarters our technology the in the driven we're partially and continued deliver seeing trends, costs, to longer-term in material secular higher energy by weighting offset expand with Positive customers. add well. growth new of light is EBITDA year's segment. to existing our Growth markets but year. will third order the portfolio to regards over and for into being made this we last consistent and above investments seeing in opportunities long-term growth prior within efficiency, as quarter the

slide turn Let's number to X.

expect environmental increasing remains The at technology light leadership in and volume global year. pricing. where time and growth customers. sustainability this is change division of versus prior Our rates, demand textile grow from segment above specialty to improvements. were of standards driven increasing retailers. to soon million, trend marks macro differentiated quarter benefiting chemicals the above-market products our do business reported by any by ninth business in for Global the sustainable footprint Textile This the demanded Effects X%. as straight experiencing demand not and foreseeable fundamentals and up this even these cotton these continues up $XX offers to volumes of keep and XX% of dyes its should synthetic solutions firm This EBITDA future market and We

to to EBITDA material third over this we We raw year, of spite growth. last third continue year. see margin In quarter significant steady the to expect quarter of increases year's similar last be

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

Sean Douglas

Peter. you, Thank

growth turnaround EBITDA slide impact site. Turning the divisions for over our prior XX. multi-year now year $XX after at the In Performance Port summary, adjusting period, expected of our our Neches, showed scheduled million Texas in to from Products each good including

quarter Our Products, by combined translation a including the variance MDI and direct offset the year. stronger businesses favorable of in basis, outages, spike forma increased XX% in XXXX, margins, the after U.S. Price EBITDA in million versus for mentioned. euro approximately of excluding Versus resulted to adjusting $XX A year-over-year. currency, first turnaround approximately EBITDA, planned adjusting $XXX impact of a for our dollar the and the the the increased prior On XX%. versus adjusted adjusted million MTBE, Performance volumes impact pro the EBITDA benefit in each in increases already costs. increased or

at quarter, nearly $X.X and Turning billion. debt was was times our XX, to the the slide liquidity end X.X our leverage of net

effectively billion, that XX, to a facility. credit investment-grade As We This five-year $X.X announced in the at an facility. New focused closed on York tax year managing prior our and remain we unsecured investment-grade a May quarter, approximate quarter style credit free XX generated on flow, generating million committed capital. on flow. of new securing benefit from secured revolving replaced of the remain cash investment-grade our senior than million May spite $XX improving million $XX free we maintaining City, an of We consistent cash We is working continuously facility second second better and In credit in our strong, profile Day on $XXX remain Investor XXXX, refunds. ratings. focused one-time

Our capital were the quarter of better XXXX moderately for than metrics XXXX. second working

As at the planned year to cash planned Port highlighted on previous calls, Texas we period would this be Performance the maintenance spend have on facility. higher due incurred largely Neches, case outage our Products'

the range of target our Now, material free $XXX raw half assuming with for narrowing flow first a our environment, consistent and under year between belt, $XXX cash of to and be million expected XXXX the we million. are

rate consistently several over delivered maintain as our or cash rate years, a long-term flow or we tax rate XX%. As XX%, go XX% better With rate We quarter, at discussed forward. to and above Investor an be adjusted taxes, conversion tax to second still we XX% respect and had our slightly we and we better between expect free tax last than the cash expected. be annual in Day, XX% to our have adjusted to between XX% we effective cash of near-term effective XX%, and effective the had near anticipate

Through XXXX updated As This authorized share. modestly the will approximately quarter, prior associated and the but of as total have within second effective during $XX we in anticipated share pertaining $XX.XX paid, would repurchases XX% billion. long-term and effective within X.X potential repurchased resulting release the quarter, to period have $X Switzerland per the calls, Day, approximately to average quarter, rate. up be the rate mentioned million was Board million our XX%. tax the valuation second allowances released the is certain adjusted result case of The we gain. jurisdictions. UK. within of included on assets brought a equates for an Polyurethane The to ongoing price Material At taxes a cash shares sheet and This back loss in of of of view and $XXX These future profitability long-term an our end of net balance to approximately the net future in our businesses has Investor operating of we on Directors were no Advanced that the as impact announced impact effect million. these

value Given and our as opportunistically use a in see we these of to manner. continue the a will we purchases prudent prudent of relative shares stock, purchase cash

interest consistent, shared Investor to are We statements. continue our Venator. significant value with growth generation, growth, XX% in consistent with has strong for organic long-term we strong creation in our maintaining to cash allocation and an a as hold treated we been return. via free our financial as Day, committed shareholder In conclusion, profile at held-for-sale and core you investment-grade flow balanced capital keeping This

fully with commitments. is these to pace on Our back Peter, second you. quarter

Peter R. Huntsman

Thanks, Sean.

to turn Let's number slide XX.

as have through significant company continued and amount downstream our generated debt. our considerable has our of expansion, separated amount XX% raised business, change we a conversion Additives EBITDA, to and of year, of allowing the our pay us Over of gone cash a margins down past Pigments cyclical a

We amount are from of now balance cash businesses. a a strength sheet differentiated downstream company and and mostly substantial flexibility, with generating

and balance more the growth generated part show In the has it or several at greatly have We the upside XXXX our of in years. opportunity now on than to on year. in businesses currently our that very sitting the May confident growth remain shared to in $XX significant in shares our most sold, patient we end Investor economics. more been MTBE, are our case that XX, of stable Day has previously of either both trough-type this with you and XX that Our volatility for delivering by We're existing the host with masked remain differentiated have plans of steady per than the our by appreciated the Both the We value-creation share This been and committed what been consistent then. of we Venator. separated, core remaining have last cyclical the portfolio's transformed. past. been sheet monetization focused XXXX. in We business businesses slide the over now

times ahead Materials provide can core differentiated growing organic double and from you downstream GDP, our Textile our XX, slide Effects growth with steady platform businesses Products core Advanced GDP. our see at for a As seen and Urethanes, business specialty X.X Performance

upside core from growth will $XX see share We per this alone.

going these Day, exceed detail businesses Investor in to show discussed remain and we we recent As at by forward, our that will continue we EBITDA expect confident growth consistent XXXX. that our will $X.X billion

value per We will on deploy greater focused about in we and manner. of are generating cash balanced which disciplined and $X share produce a cash, will upside this

In we economic our bolt-on continue acquisition for businesses. overly that addition multiples accretive to we Transaction that sound certain growth, with be acquisitions and organic in high look to align will strategically good very remain investing makes any sense.

of Additionally, Huntsman longer-term back have shares buy prudently to to returns. shareholder enhanced, we continued focus

shares at approximately second As X.X million end a purchased approximately $XXX quarter, million. the cost the we of of of

repurchase the reminder, up of next our authorized to share board couple years. of over a billion $X As

procedures we instead the out, extent rating maintaining With investment-grade shared are timing short, with remain Day. metrics. We go we're over investment-grade can agencies' for focus portfolio. to forecasts an we Q&A? on of or to you control Investor on the you the In we pointed committed our solidly our and what Sean control credit As would at operator, please actions, well to we within as that, can't meet track initiating

Operator

you go McCarthy. our line question Please in from ahead. And very Absolutely. Thank is the first much. Kevin

open now, is Your Kevin. line

Kevin W. McCarthy

assets back or MDI. there and not how Good third that that comment any on good from you the was you spillover And business your in mentioned? in issue year? A you Can thus Rotterdam the Whether the few the running whether are Yes. quarter? outages far any on you morning. Thank morning. half of planned questions have in

Peter R. Huntsman

come had used of it the a last those planned as said, facility course And of into quarters, of end think will up. our to used full as back a second by to that raw that, able don't our affect our the facility at MDI third-parties have strong facilities of we that a prudently of being in said note to posted pounds operations and is our consider being appetite coming just to this outages capacity to ago our we the capable would But to third-party materials go hydrogen have highly it be operating would as we will Geismar America. those that issues back up North supply into production continues any the that we part, earnings. running we the of we quite had MDI put is Chinese concern North for growing don't there. Rotterdam continues over section impact just America, outages fairly material And most as should I Chinese dependent have forth. that to the And pounds this coming come I facility, something I our I Asia couple as quarters and XXXX. reminder, forth. see at our run we to at so so look facility and that for the the in those We into a America, we And needed. having due think North Geismar were, now I on And our our oxygen present time. as obviously, we are that couple few pounds market have of any and is foresee we to that a we that material and well there. feed to quarter

they've say come the to the in market. and point, I come back pounds market that efficiently America, fairly placed North they've effectively it's into have we think and feel this been at those safe to

really And regional regional I think matching so demand. that we production see

Kevin W. McCarthy

months That's perhaps the with to there? progressing Demilec, how helpful. regard could you're a Peter, but bit I more how that's as integration And cross-selling then, your realize update are three you and an ambitions only than of into a growth follow-up, going into and provide

Peter R. Huntsman

to we end acquisition, of – year. initially the at run on was Well, an by I being quarter we it basis a million a about the announced close the we rate talked think of when annualized ago, $XX

of towards look meet to in continue the end think should business, the be year. come that the business is we will in that that as in pushing integration We improvements come and that at the cost Again, should by the an that I improvement the the business. we

priority XXXX, going business, and will I achieving so not going introducing be feel success, do and know-how set this And we've the we acquisition overnight in think our to XXXX the certainly do do are in forth steps That's Europe already into be had I confident, we again, globalize we very Asia. the taken certainly objectives products and if how that in I but that all would to an over out. we it. and

And very well think so, thus gone far. it's I

Kevin W. McCarthy

results. on and your congratulations Thanks

Peter R. Huntsman

Thank you much, very Kevin.

Operator

And ahead, Mike go of Thank question Mike. Sison. the Please much. from you line next very the is

line is Your open now.

Michael J. Sison

Hey, guys, nice quarter.

Peter R. Huntsman

Thank you, Mike.

Michael J. Sison

growth look volume The to good. differentiated MDI continues in really

maybe little next about color growing better it's demand, a you that the driving more over sustainable And us give the market. think the Do If couple you is growth? what's MDI that quarters? think than

Peter R. Huntsman

where kind it a at Well, lot I'd basis a – benefiting where we're There's say construction strong U.S. is in of we're seeing from and growth. no in certainly one you that particular that. where largely if U.S. of I seeing the is It's that on the would say area look the it that sustainable. regional

growth don't we are look that in and materials a the construction and I product right just basic The and on Americas. lot XXXX demand field industry, of inventory in a construction would the is we're great all as I that making of make construction And neither As a contractors is I so at seeing continue this just sense a look healthy we making raw get also also at downstream note ends the of the forth. that boards our don't going are into the OSB deal growth. and XXXX, replacement of GDP paneling inroads that substitution. and talk quite on insulation existing there's and lot the appetites, in materials, the nor feels OSB as companies, to end those to formaldehydes, in insulation now the see the not the and of expandable we in replacement polystyrene, the we to

demand again, I apply a any thumb, thought the as of engine a in rule kind of of rule growth that to I particular and of of driver product but half kind I've is this see don't you quite strong. just I that substitution And think and about as in MDI half that see I see GDP-related is one and of to product substitution-related. it quarter, thumb want always remaining – that

Michael J. Sison

business, short-term And second great. in spike the the it, or there whatever Okay, the just would side expect as to call differentiated on margins you stay follow-up fades the expand the in half quick a of of you maybe stable? year, to want the or pricing, margins

Peter R. Huntsman

that they're think looking to probably I expand.

think that with facing prices lot raw a and we're higher crude forth, facing of material so pressures. we're I

expansion of them when raw in material about that it's expansions, making we're we're to the And just note any that those face price we I think important talk making, that increases. so,

absorbed group, I in $X Effects. million same Materials Advanced million Textile in about As at $X amount quarter-over-quarter, year-over-year, about or our Advanced Materials, the look we've

of material. cost $X So, slightly the a $X million flat to ago a we've of year either million, in fact that year kind reality, offset we're raw the of quarter the of from looking ago, margins third up in just or boosted

that of material take demand areas So certainly you're able be large raw continues that increases. those that price would denote there to when strong in to

Michael J. Sison

Great. you. Thank

Peter R. Huntsman

you. Thank

Operator

question the ahead. line go very Hassan from the Ahmed. you And of much. is Thank Please next

open is line Your now.

Hassan I. Ahmed

Peter. Morning,

Peter R. Huntsman

you? are how Hassan,

Hassan I. Ahmed

on to you. flow. solid a pristine about sheet the material cash well. forth and of a continue price are sitting back Thank am escalation and lot and generate Peter, relatively I obviously, like, balance and very raw you here

of sort acquisitions terms speaking, of M&A you've in further escalation seeing, in strategy, are we bolt-on but that price sort I the some of polyurethane the of specialty a within sort of light a and companies of and the greenfield of this facility. of sort understand about, raw methanol downstream your competitors tie-up specialty – space, more some mean, Now, or within maybe of about, but build-out considering talking not like, one material was in I space, the talked broadly chemical of a

what's the your of in process So, integration, sort trends light of here? thought maybe upstream in some of are seeing terms we of particularly

Peter R. Huntsman

I don't believe that that's a prudent place for us to be putting our money.

look that raw at prices material think the right I two issues. are now, are As raw that there pressures as see that we up don't I see I factors material them pushing long-term and

crude is them, of of One oil. course, consumption demand short-term the of and

been think market in I disciplined we're that be seeing to a so our past in next and think think years, been – on stabilized what you're prices they in and I capacity opinion, quarter oilfield wave here. have probably in OPEC's little And of see the that quarters there'll than erosion pricing my more oil even but probably crude I two. of coming some forth, is services a the peaked. in in have to maybe couple the or next probably that It's crude going

of stricter environmental our we're Materials throughout Southeast China, our it's that are we're from pressure material India, material policy Advanced Asia. on implemented in because and raw divisions. that seeing largely being raw in and raw increases price is Asia in other These pressures material coming largely The that and Textile are seeing

volatility, be I environmental Short-term, countries being applaud providing the taking term, place. that I investment standards. I some I by but that or changes are down, these longer a enforcing are decisions they'll the these make are the they'll I stronger personally tougher think as shut and they'll and come either right these companies volatility, regions implementing that up that's don't but these think environmental think replaced company. short-term like

material I So, those we're I to and counter don't when – the I the look pressures better specialty, just or talked see had off couple capacities for new so I in facing, either about, am in if raw of the raw going pressures, are long-term the I invest issues both I be material had some say out to raw scenarios crude-related and of at in that both don't and that China have being one see elevated of materials, coming as of we next of that the those forth raw years. trying materials,

Hassan I. Ahmed

Understood, understood.

within sort Products sustainability talk the Performance in the the of are what one follow-up, was a continued glycol. as segment us, you the bit your turnaround strong but you press behind from division the views things seeing strength about talked of today? just guys obviously, within about the glycol that Now, a about of release benefiting or Can this margins we're

Peter R. Huntsman

let's Yeah, (XX:XX:XX) be to want I do thought company. Huntsman ethylene an don't I – glycol remember we as mean of

Hassan I. Ahmed

sort No, on has know. know. But no, of I I enough been so hence I'm talked about the MDI - side,

Peter R. Huntsman

Yeah.

our locked-in XX% a the glycol peak of basis can glycol we be money basis. on never margin-sharing tolling about lose glycol, think about ever today, are of the remember is lost there nor out will about in a that's the that glycols where produce we XX% we'll on make that potentially As we and

now from term, benefit to the comments, for some in we'll being it of being upside, base polyester particularly right floor. be some Asia and don't of the next that downside, I that so, cap I in with for so the as see years. we'd I my try But tolling sustainable forth. some (XX:XX:XX) and it few as the And I've see think of in in think And strong to going I textiles demand there is and tightness couple glycol we're sustainable is seeing. the don't next the downside of quarters. said longer

Hassan I. Ahmed

so Very much. Thank helpful, Peter. you

Peter R. Huntsman

you. Thank

Operator

from Please is the The much. question very next go Thanks ahead, of Zekauskas. Jeff. line Jeff

open now. Your line is

Jeffrey J. Zekauskas

much. very Thanks

not year. the that degradation a basis your I you correct? you weaker talk seasonal could And fourth million best $XXX quarter as the your that sequential in still sequential you Polyurethanes suppose reasons, Can think that as you on last remarks, the would quarter would or tell below be reported EBITDA? for third be EBITDA is about prepared said in I

Peter R. Huntsman

when fly-up of I trying go point think effects to MDI that X. talked Well, about slide out to EBITDA I'd what is that Jeff, in the our to we site. the really we're number we you, ask

And a think had well, great slide. interesting all it's deck, they're if to I I one slide slides... very pick in out the

Jeffrey J. Zekauskas

Yeah.

Peter R. Huntsman

tried is from say, that back foundation to look you of And other to has in market, normalized or I reports we're regions a on of to of our some business. the very China is – ... prices Europe. so can I break guide blend, collapsing line dark spike that forth. impact. because tried margins. And depending misleading or show that look come our to, on XX the at of gave on down that the were business and think you And region, – that the Europe talking application, margins, X dark see MDI month we slide a XX% look there, and out the all in look on I'd so so the And solid forth, and about It's red to were and kind XX% X, and out to at press at when red short-term if largely at line break you depending in look think the solid number it's to you kind the what globally line, steady kind the about margins. there anywhere a of Asia Asia line that depending on slide ago we this

to year a again, matter saw if look Asia getting bit, component at prices are look fact, little spike as prices this about at Asian and back anything, commodity just we a a that that I I today, ago normal. time, as really As inching up of

the talk the that not we're that want business, it's strength about business, the It's Polyurethanes, fly-up year we that's or last that's sure spike of really it being just I it's the ago equal when And is overall from to so, a down And the going it's business, that see. of being to foundation not spike. moderated. to what make the in not overall just of

Jeffrey J. Zekauskas

look quarter? in last in EBITDA your the year, was MTBE costs were And I might quarter. that. Is your second about what great. Thank high see? variance quite think, positive costs fourth you corporate And quarter. for that there And were $XX the you Okay, second some in corporate if we the lower, by million your

Sean Douglas

Jeff, I'll This corporate costs the take questions. Sean. is

Jeffrey J. Zekauskas

Sure.

Sean Douglas

LIFO actually corporate little is that to see that of I bit in amounts the costs think a you'll tell around you, what of second quarter And benefit we change. million benefit. year-over-year, and I you $X see will LIFO, a a in had

Jeffrey J. Zekauskas

Yeah.

Sean Douglas

fall bit. corporate. LIFO does those see change to I of a So Overall, our corporate that a fixed much costs have move in that really costs into a don't chance

for would that biggest And far as then, $XX quarter, we're there. MTBE be at the the MTBE the of million. as EBITDA So EBITDA an change looking

Peter R. Huntsman

$X of And, last was million, million. year about $X Jeff, versus MTBE that the

of we pretty margins second butane sort that, $X.XX MTBE mysteriously of think look on raw as if think hold the few into those see when look prices the I them. weeks to ago, at quarter a I prices the a going the in look materials, I quarter sustainability on in at you of cutting similar see that quarter, you'll up leery last a it. third get But quarter. as the see like in year, making a couple $X.XX, jumps MTBE of obviously, third third always gallon dollars hours that's million I few And

Jeffrey J. Zekauskas

Okay, great. Thank much. you so

Operator

question Alex. Please Yefremov. Alex the much. very you ahead, from line next of go is The Thank

line Your open is now.

Aleksey Yefremov

a decline. your talked margin and a actually price system price in X. morning. in they've we saw in way look and least to correct price if wanted services, that independent increase that Good components In you've I at at to both it July. Is increase? you. to Thank of shows in Peter, sort read go about an it Europe, just systems back And slide a margin

Peter R. Huntsman

Yeah.

right Also, as So Rotterdam, you, be adhesives in materials. was look We bit now, business at outage did we seeing around going numbers suffer you feels a a short tight And very in automotive our of Europe. strong now, the our look the demand demand. facility when little strong. coatings at thinking business business, in quarter, it second to we're in little And our in bit in we own mix ACE of were and mind increase, there'll the to MDI product so that as be bit we good saw also, elastomers, footwear, Europe. a that's those And right decent well.

be trend is upward going that of some so, supply/demand related. And

strong that's of we're Some second seeing the quarter. products of particularly mix the going the be in where demand

Aleksey Yefremov

what's were Thank on Got you. or then of just contracts than existing generally extend new before So, as And it. contracts, your margins that margin? you higher sign the or direction systems your the average margins? systems pricing, what in systems are they you

Peter R. Huntsman

longer-term little like a lock to have that at force make we in an Alex, an want don't products competing I in to think than have is that's we to and be short-term to sustainability. for something customer to we think to what opportunity that, before. in look going but I situation. opportunity a for we really bit want as in the price business, higher longer-term, the if MDI And And it look or go we see

So, we want to be selling value.

be to want your selling You cost.

to be want your service. You selling

systems And come to to on renegotiated look all But of an opportunity these effect. think, be move as of probably we than selling margins as strength want they're large, of a gradually price. more and MDI, to up by have we at your not. being You the those make I together

Aleksey Yefremov

Thank you, Peter.

Operator

And question John. Thank line of go is John Please the you much. very Roberts. the next ahead, from

John Roberts

going exit? updated thoughts eventual there largest any Thank what's you you. Peter, developments as and least give and Chairman the on of on your on thoughts strategic shareholder, Venator could recent at the with Huntsman's us

Peter R. Huntsman

to again, continue we the look Well, overall TiOX. at of industry

I'll we're see the from it, as own again, you so typical at you're bumpy the something think the in famine. business, look large, in I of consolidation plateau I think think pricing And of and quarter, been structure opinion you'll and the fourth raw I a seeing and industry. forth, the of materials that feast of speak by but, has and third just in in seasonality my that and pricing or either industry

especially Venator, you're you're at think in expansion seeing – seeing that I specialty applications and grades.

continue on be I believer focus to seeing great Venator. You're in continue so forth. costs and to And management a

TiOX I industry a it's think great improving in company it's Pigments. and an and in

just remaining wouldn't terms, the Huntsman. would when opportunity we public would XX%, past. might longer shareholders. comments want far priority made the or looking to going to in in that say our I how we've only be monetize it's stand I issues given for say that to and timing behind we're And the continue be that as And long-term as of to we to disclosures to the that around – continues to Huntsman, a think I so forth, speculate As

John Roberts

willing and Would then even And expressed able to in Day, reduce future. you to now volatility the be MTBE the be not of near secondly, at Investor earnings might trough to to the though a structure get something we're you reduce the volatility hope you mid-cycle on economics?

Peter R. Huntsman

our raw willing it's our a anything be to MTBE oxide, produces I'd a look our The just on component investors is not material, a that remind which for about look, at product just with Polyurethane standalone is propylene dependent MTBE. highly Well, we're shareholders entity. is and it I'd that systems. that

a as certainly volatility to look MTBE, sure combination to to contributor taking said strong our our that with $XXX I'm years propylene I oxide quarter you when it. at the some at back look that to locking find oxide million an have to very MTBE soon a haven't had out, business. sure, of as and at would we I'm been I it's in earnings to several I opportunity sure, we value anytime going the platform if million So, not at of of propylene margins not MTBE long-term and get $XXX to that, look Having – go a I the year. don't or think MTBE, around back overall look –

John Roberts

Thank you.

Operator

The coming go Please the Blair. ahead. Matthew of line is much. very next you question from Thank

Your now. line open is

Matthew Blair

Peter. morning, Good

You that volume quarters row Effects of in mentioned had nine growth. showed Textile a

noticed up the also think I time here? pricing drove increase that for the We it's since XXXX, you sustainable? What was And first believe. do

Peter R. Huntsman

think it's sustainable. I Yes,

materials I combination and is up think pushing. a it's raw of it's pushing also mix that pricing

also then broker, that are as their applications that something as we the push very familiar would market, of retailers when think be broker, properties are our important with to working I greater new new is a And a that look applications directly to downstream, the used retailer to products a and retailers. mill, would in you to the also pushing the a and with it's think at working sell to names be business. more It say that to so we'd forth. broker products downstream I into that performance, mean everybody going and the and I then I responsibility the sell much downstream, specialty push the sell I that And the mill that would taking sell usually think – with. would another environmental conditions who very

important certain standards back the they weren't today. are directly mills with that retailers And a forth certain that so want years now, so working certain we're couple so that important ago and more where grades, to they're the of specifying maybe environmental colors, going and

and So, as a up material combination going up well. prices raw of better more mix, obviously, supply and chain products prices opportunities, pushing specialized

Matthew Blair

question really up well below tax be in be as What coming half it in your the CapEx, the next your trends like by are year? looks guidance. year-to-date of But then, for would rate, your causes step And tax good. full CapEx and might well year Sounds the as Sean. in back implied what tax what's to –

Sean Douglas

happens this and projects. on of the sanctioned and spending you then, towards sort of typically, it's goes year our look get start business, spending Well, pretty at of we the this approve in end these and much And them new the different up year, beginning budgets year-to-year, year. capital you as nothing as the usually you

spent year, of quarter XX% the XX% the up, so, as in as that last usually the it being much year, as And the spending fourth to through ramps of budget goes quarter the and you'll see of total the year.

We maybe see And of There's of put I at So, would. some guided sort bit relates XX% a year-end XX% use the surprises to here a quarter. we said as allowances we back some as lower our taxes, you'll fourth the capital sort that in there's in I tax differences. a in returning XX-percentage It's us to we valuation us that had third think book it's an expenditures. to little third rate than better do we And there. small quarter, in of hit look will we've about expect XX%. the conclusion. no that of stuff But rate quarter it

Matthew Blair

Great. Thank you.

Operator

the question next you. And Thank ahead. the is Viswanathan. go Arun line of Please from

Arun Viswanathan

morning. Thanks. Good Great.

majeures around Just the on industry much similar Would a year, issue? and or expect recent a is minor Thanks. in force question versus some going Europe issue saw impact you last to from the this back MDI Asia. a more you that

Peter R. Huntsman

question. sure I the make I want understand to

You're that's the majeures on impact and the impact having industry on force pricing? the talking of about

Arun Viswanathan

right. That's

Peter R. Huntsman

tough majeures, fairly certainly when you're globally a America, a think cryogenically, on operating this Okay. regional the – utilization, oftentimes, in tight supply I – a less be largely cryogenically. operating that put be in bit – shipped capacity to Yeah. The stored you so probably around demand. MDI industry's and Europe have force And the overall on at a tighter little North has when XX% is around in probably Asia. grades, and largely to at is boat MDI you look and to mind is depending product

don't in volumes around of MDI world, differentiated especially the moving the downstream see massive higher You grades MDI.

of from even for tons you points, capacity XXX,XXX capacity a down facility region, So, region to go several high or XXX,XXX or see a ton percentage that when particular mid-XXs and XXX,XXX often that can up can facility the the or is XX% XXX,XXX that in go account low-XXs the utilization.

there, impact the it's of it I think, there. certainly forth, market seasonal It's issue. on it's side timing so I what is component has the a And I certainly And issue. So, – issue. business. and particularly It's regional is think is mean probably the a a that

great don't of I we're volatility the you of that business, back differentiated as our a margins systems in think end can deal where X, of again, focused. going downstream number on end see see, on downstream slide you

forth I the steadiness want so, And majeures don't the on just downstream impact and side would force on the those a the we're that seeing near and have our business, we grow to majority business. so of of on the margin globally say where focusing margin

Arun Viswanathan

like capacity with upstream interests. furthermore, you Demilec. that there there in Are And that you best expand in in options future? you Great. proved you Thanks. mean, increase and your MDI What options the the really your options then, isn't Polyurethanes? I something options imminent exposure? kind earlier expansion have to then, downstream do obviously, to organically noted are and further that And have downstream buy of

Peter R. Huntsman

our at a would of and that downstream our looking areas bigger between being growth. our organic good downstream mix growth I at Frankly, see opportunity And one we and as look of we're our around we an so the now asset and we're America North elastomers in taking taking and opportunities and forth, know-how that Asia have where know-how that we to bought world.

and bought then we business. grow And bought facilities so, that the manufacturing instance, we'll oftentimes, for we we'll with and asset, Demilec, an take see – organically

in quickly MDI So, know-how and and new downstream player a the applications buying in regional then globalizing and place that taking as combination technologies, I growing going customers, see to and is of acquiring be that a growth – possible. growing as a then

to organically going is so, want through come of and come that going is or And here to growth sit I the acquisition. majority wouldn't say to our

a it's the be combination two. think to going I of

Arun Viswanathan

Okay. Thanks.

Operator

Thank Sheehan. from the ahead. you. The Jim next question is line coming Please of go

James Sheehan

you. Thank

elevated be considering. commented to multiples that acquisition you're market that in the seem You've area or bolt-on the

share M&A buybacks about think the you So, here? versus given that context, do how balance of

Peter R. Huntsman

see basis. I acquire for we and supply-chain we that synergies technology, opportunities deal-by-deal on a have very to at we'll, if and an business, have mind a don't paying have globalize new Well, on that clear think almost we I pull-through a acquisition Again, quarter-to-quarter higher look to Jim, economics. price

aversion that And willing because IRR justify just at the a we just I to it – price, so, But just higher as on And an we look be that, fine, if at basis. they're on assets look pay can higher chasing I we'll market. have we an just to price.

we after looking our quarter will say I at We'll the just look at quarter. decisions we'll rather shares, compare it very of of number issues. wish quarter to sure so saw balance of we'll and want saying X capital. the slow we as foolish we're we at industry, I'm peers, careful buy-in use We've think prices it our spike be most an coming look the shares as preserving million to demand and look for were and flow same of us right continue of that overall easy overall how of basis. make forth repurchase We that's when buy after at cash got be but the might we So, shares saw likewise, make to material our on sheet. we'll to raw just we quarter, not we'll to that. I number buy-in regardless at would And now sure share to capital, down for the ongoing and our matrix price, look every we're going a prudent working

those those I effect. of all all think – but issues I that mean, take into hate So, I we at and look are to think sound evasive, I of

James Sheehan

positive on your Great. third what And or currency commentary guys for you in the outlook terms are impacts, quarter, negative? of assuming

Sean Douglas

million Yeah. benefits. Jim, year-over-year. clearly we've $XX talked We about some had

where last year see we par If the pretty you in with third on quarter, of euro much see you look rate today. kind it the

from comparison, a So, year-to-year neutral. pretty probably

James Sheehan

Thank you.

Operator

Juvekar. the of from question Thank go ahead. next very coming Please is you much. And the line P.J.

open is now. line Your

P.J. Juvekar

of third time? look secondly, do XXXX beyond MTBE oxygenated can fourth IMO And demand? MTBE what you you sort Thank morning. the about and goes Peter, impact Yes, up If you outlook of demand over you. then out, Good on is think for quarter? talk

Peter R. Huntsman

IMO I'm XXXX? sorry,

P.J. Juvekar

think benefits do Yes, IMO MTBE? that you XXXX,

Peter R. Huntsman

a a continues probably as too of margins And MTBE, exactly I this would country mean, oxygenated going doesn't other to think there, have look It the think, think push it's that to a and fuel and And designed ethanol and clean-burning demand doing satisfy to when to by it might to little it's it's some oxygenates product. gasoline on it's neutral a continue It's that but probably impact I to – I improving out we I going to at be fairly markets great a are it's ship of be bad little what it's characteristics improving ship compare that neutral. we'll it the I MTBE. do. but policy a where energy and and MTBE, bit it better it's the going include to bit, just it have it's environment. overseas large, up and up

P.J. Juvekar

my the then, you of on And Okay. second and liquid supply/demand on in the Can side there? question bulk and both what's split epoxies, epoxies. sort about epoxies differentiated talk more is

Peter R. Huntsman

Well, kind on for of tough me the side. the to comment BLR on bulk

And margins There'll As be and probably you out I know, as it's right one the many so people think Materials supply we short-term we've you Materials. for great coatings, something out electronics, in I or bearing, and downstream and frankly, when the think, products our gotten on transportation, we're we we're where think, In look that going and when tried said tightness we're it. say, utilization. may or never it, the going. a the large, to most a one the applications, Advanced too over significant word forth think make two that I entire product that there's suppliers is to glad well, of it's again, we And the and globally the maybe epoxy focused highlight don't Quite can that we We're continue that we're it's when have on go quarter a our basis. aerospace, got at I these of bad a nanotechnologies issue a demand, at where we we're of in our applications. and but we're we're out of on and focused multi-year don't I on by of in presentation really, look our further Investor construction, occasional decision. to capacity our of went downstream, to Day, very see Advanced these as making

riddance. think I downstream, a as going epoxy basic industry, as business. BLR of and epoxy to we So, as going but far resin the good value see component It's that create

P.J. Juvekar

you. Thank Great.

Operator

Mike is Thank much. you the Please go Leithead. from the next And ahead. line question coming of very

open is line now. Your

Michael Leithead

in Thanks seeing dynamics And me you're you on today? maybe on on progressing can here. in in I guess you're wind Materials, flagged up you versus for through talk your talk about first, release. just second, raws earnings market that following squeezing segment? you how the can think the the price I Advanced

Peter R. Huntsman

we'll think materials. in the quite – earlier, about million, look quarter, million, $X third I raw second quarter, as the taking said third and and million I as I of in Well, I'm $X the in $X be second

a we've to lot of And So, prices again, at applications. got said cost least our as earlier, not I be it amount. take our selling that We're necessarily on raw raising of the materials. we

So that. pressure that, expand real typically, and up and to go offset remain Materials, Advanced Again, year get that, million, on a performance year, Materials $X forth. ought markets down, real go opportunity in up, as price Having $X look taken that's we have do raw well margins. the long-term our as I When so pricing margins. our sustainability as our we're to quarter versus increases confident even that in third at when we a such and we that last of materials think, we we for Advanced to pricing though they our did looking in it's said last million are agreements will

volumes we think to earnings And just any never the margins wind, of would of in business I applications is commoditized the for many that look breakeven customer see having wind the side, as at us, sales and I and this a our a continue that and bad. sustainability the our have On application. It's opportunity reduce grades. it we a in I don't application. we it's growth other to near into so it's say see segment expand in as a

Michael Leithead

morning this now then, Great. that facility, against Rockwood latest of what's I And your color the regarding of suit impairment Albemarle pigment or Augusta Thanks. Venator's facility? with guess status the

Peter R. Huntsman

U.S. through the at about We the which python a the legal across of going continue moves to system, pace move Sahara.

have – So, we still still that optimistic. a I very I'm think

this case our where probably It's sound. me assets. to think comment. ongoing is acquiring not I for after ourselves think find in very I best those we point, as that that we're litigation, at very But unfortunate

Michael Leithead

Thanks, Peter.

Peter R. Huntsman

question. one Thank operator, conclude don't one-hour take over We'll here We're more why one you. And more question. mark. with we the

Operator

Thank very you much.

So, line the go is Roger ahead, Spitz. from of question Please last the Roger.

now. open line's Your

Roger N. Spitz

did ethylene much from In Products, Thanks, how and you good of receive levels? benefit the perhaps morning. Performance a lower ammonia and price

Peter R. Huntsman

would guidance estimate think It's price so it's some that. materials, just we benefited pretty a were deal that at he think sure Sean previous quarter, was in that. I we there much that we from where as the we flat. in at look I'm as to ethane not on forth a ethylene and Roger. I look look very great over you And hopes better look levels, good I that that I'll has question, raw versus pricings benefit. at don't

Roger N. Spitz

Peter. much, Thanks very

Peter R. Huntsman

I that pretty Operator the here. think much concludes you. call Thank

Ivan M. Marcuse

Thank you next look for We joining to forward you us. updating quarter.

Relations. you. questions, any Thank Investor have you out If feel free Huntsman to reach to

Operator

very for that conference concludes and your call you Thank Ladies today. much. gentlemen,

joining. you for Thank disconnect. Have good day. now may a very You

Ivan M. Marcuse	Huntsman Corp.
Peter R. Huntsman	Huntsman Corp.
Sean Douglas	Huntsman Corp.
Kevin W. McCarthy	Vertical Research Partners LLC
Michael J. Sison	KeyBanc Capital Markets, Inc.
Hassan I. Ahmed	Alembic Global Advisors LLC
Jeffrey J. Zekauskas	JPMorgan Securities LLC
Aleksey Yefremov	Nomura Instinet
John Roberts	UBS Securities LLC
Matthew Blair	Tudor, Pickering, Holt & Co. Securities, Inc.
Arun Viswanathan	RBC Capital Markets LLC
James Sheehan	SunTrust Robinson Humphrey, Inc.
P.J. Juvekar	Citigroup Global Markets, Inc.
Michael Leithead	Barclays Capital, Inc.
Roger N. Spitz	Bank of America Merrill Lynch

Huntsman (HUN) 31 Jul 182018 Q2 Earnings call transcript