Huntsman(HUN) - 2025 Q2 - Quarterly Results

Financial Performance Summary The company reported a significant downturn in Q2 2025, marked by revenue and profitability declines, yet demonstrated improved free cash flow and robust liquidity Second Quarter 2025 Highlights Huntsman reported a significant Q2 2025 downturn with revenues declining 7% to $1,458 million and a net loss of $158 million, alongside a 44% Adjusted EBITDA drop, yet achieved significantly improved free cash flow of $55 million Q2 2025 vs Q2 2024 Key Financial Metrics (in millions, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues | $1,458 | $1,574 | | Net (Loss) Income | $(158) | $22 | | Adjusted Net (Loss) Income | $(34) | $24 | | Diluted (Loss) Income per Share | $(0.92) | $0.13 | | Adjusted Diluted (Loss) Income per Share | $(0.20) | $0.14 | | Adjusted EBITDA | $74 | $131 | | Free Cash Flow from Continuing Operations | $55 | $5 | CEO Commentary and Strategic Actions CEO Peter R. Huntsman attributed weak Q2 performance to muted global construction and industrial activity, prompting decisive cost-saving measures including facility closures and significant workforce reductions to prioritize balance sheet protection and cash generation - Performance was pressured by lower global construction and industrial activity, with a muted seasonal uplift in Q2[6] - The company is undertaking significant restructuring, including the closure of its European Maleic Anhydride facility in Moers, Germany, and other downstream facilities[6] - Restructuring efforts are expected to reduce the global workforce by nearly 10%, with the largest reduction in Europe[6] Segment Performance Analysis This section analyzes the Q2 2025 financial performance across the Polyurethanes, Performance Products, and Advanced Materials segments, all experiencing revenue and EBITDA declines Polyurethanes The Polyurethanes segment's Q2 2025 revenue decreased 7% to $932 million due to lower MDI prices and reduced volumes from weak construction demand and a plant turnaround, leading to a 61% Adjusted EBITDA plummet to $31 million Polyurethanes Q2 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $932 | $1,001 | (7)% | | Adjusted EBITDA | $31 | $80 | (61)% | - The 7% revenue decline was driven by a 5% decrease in average selling price & mix and a 2% decrease in sales volume[19] - Lower sales volumes were attributed to weak demand in construction markets and a scheduled turnaround at the Rotterdam, Netherlands facility[7] Performance Products Performance Products revenue fell 10% to $270 million, primarily due to a 9% drop in sales volumes from softer market conditions and lower operating rates at the Moers, Germany facility, resulting in a 30% Adjusted EBITDA decrease to $32 million Performance Products Q2 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $270 | $299 | (10)% | | Adjusted EBITDA | $32 | $46 | (30)% | - The 10% revenue decline was almost entirely due to a 9% decrease in sales volume[19] - Volume decrease was caused by lower operating rates at the Moers, Germany facility and softer market conditions[8] Advanced Materials The Advanced Materials segment's revenue declined 5% to $264 million, impacted by both lower average selling prices (-3%) and sales volumes (-3%) due to reduced demand in coatings and aerospace markets, leading to a 13% Adjusted EBITDA fall to $45 million Advanced Materials Q2 Performance (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $264 | $279 | (5)% | | Adjusted EBITDA | $45 | $52 | (13)% | - The 5% revenue decline was caused by a 3% drop in average selling prices and a 3% drop in sales volumes[19] - Sales volumes decreased primarily due to reduced demand in the coatings and aerospace markets[9] Financial Condition and Liquidity This section details the company's robust liquidity, improved cash flow, and changes in its balance sheet and debt structure as of Q2 2025 Liquidity, Capital Resources, and Cash Flow The company maintained strong liquidity with approximately $1.3 billion in combined cash and unused borrowing capacity as of June 30, 2025, while free cash flow from continuing operations significantly improved to $55 million, and capital expenditures were reduced to $37 million in Q2 2025, with a full-year forecast of $180-$190 million - As of June 30, 2025, the company had approximately $1.3 billion of combined cash and unused borrowing capacity[10] Cash Flow Summary (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92 | $55 | | Free cash flow from continuing operations | $55 | $5 | - Capital expenditures for full-year 2025 are expected to be between $180 million and $190 million, down from $37 million spent in Q2 2025[11] Balance Sheet and Debt As of June 30, 2025, Huntsman's total assets were $7.15 billion, with total debt increasing to $2.04 billion from $1.84 billion at year-end 2024, primarily due to drawing $361 million on the revolving credit facility, resulting in net debt of $1.64 billion Key Balance Sheet Items (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash | $399 | $340 | | Total Assets | $7,147 | $7,114 | | Total Liabilities | $4,084 | $3,951 | | Huntsman Stockholders' Equity | $2,828 | $2,959 | Outstanding Debt (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Revolving credit facility | $361 | $ - | | Total debt | $2,035 | $1,835 | | Net debt | $1,636 | $1,495 | Supplementary Information This section provides additional details on income taxes, investor communications, non-GAAP financial measures, and forward-looking statements Income Taxes For the second quarter of 2025, the company reported an effective tax rate of -5%, with the adjusted effective tax rate not considered meaningful for the period - The effective tax rate in Q2 2025 was -5%, and the adjusted effective tax rate was not meaningful[12] Investor Communications Huntsman will host a conference call on August 1, 2025, to discuss its Q2 2025 results, with management also scheduled to present at three investor conferences during the third quarter of 2025 - A conference call to discuss Q2 2025 financial results will be held on Friday, August 1, 2025, at 10:00 a.m. ET[13] - Management is scheduled to present at Mizuho, UBS, and Jefferies conferences in August and September 2025[15] Non-GAAP Financial Measures The company utilizes non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow to evaluate operating performance, liquidity, and strategic investments, excluding items such as restructuring costs and amortization to provide a clearer view of underlying business performance, with reconciliations provided in the report's tables - The company uses Adjusted EBITDA and Adjusted Net Income to provide insight into the performance of the business[28] - Free cash flow is defined as net cash provided by operating activities less capital expenditures and is used to evaluate liquidity and strategic planning[33] Forward-Looking Statements This press release contains forward-looking statements concerning future performance, plans, and business trends, which are subject to significant risks and uncertainties including high European energy costs, inflation, geopolitical instability, and cyclical markets, as detailed in the company's SEC filings - The report contains forward-looking statements based on current expectations that are subject to risks and uncertainties[36] - Significant risks include, but are not limited to, high energy costs in Europe, inflation, geopolitical instability, and volatile global economic conditions[36]