Huntsman(HUN) - 2022 Q3 - Quarterly Report

General Information This section provides details about the Form 10-Q filing for the quarterly period ended September 30, 2022, including registrant information and compliance with SEC filing requirements Form 10-Q Details This section provides details about the Form 10-Q filing for the quarterly period ended September 30, 2022, including registrant information for Huntsman Corporation and its wholly-owned subsidiary, Huntsman International LLC. It confirms their compliance with SEC filing requirements and their respective filer statuses Registrant Information | Registrant | State of Incorporation | I.R.S. Employer Identification No. | | :-------------------- | :--------------------- | :--------------------------------- | | Huntsman Corporation | Delaware | 42-1648585 | | Huntsman International LLC | Delaware | 87-0630358 | Registered Securities Information | Registrant | Title of each class | Trading Symbol | Name of each exchange on which registered | | :-------------------- | :------------------ | :------------- | :---------------------------------------- | | Huntsman Corporation | Common Stock, par value $0.01 per share | HUN | New York Stock Exchange | | Huntsman International LLC | NONE | NONE | NONE | - Huntsman Corporation is a large accelerated filer, while Huntsman International LLC is a non-accelerated filer. Both have filed all required reports and submitted Interactive Data Files[5][6] - Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company, filing with a reduced disclosure format[8][9] Forward-Looking Statements This section outlines that the report contains forward-looking statements subject to risks and uncertainties, with no obligation for public updates - The report contains forward-looking statements regarding projections of financial measures, management's plans, market trends, regulatory changes, and contingent liabilities, which are subject to risks and uncertainties[12] - These statements are based on current expectations and assumptions, and there is no assurance that they will be achieved; actual results could differ materially[13][14] - The company undertakes no obligation to publicly update or revise forward-looking statements, except as required by law[13] PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Huntsman Corporation and its subsidiaries ITEM 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Huntsman Corporation and its subsidiaries, and Huntsman International LLC and its subsidiaries, for the period ended September 30, 2022. It includes balance sheets, statements of operations, comprehensive (loss) income, equity, and cash flows, along with detailed notes explaining accounting policies, recent developments, business combinations, discontinued operations, debt, and other financial disclosures - The financial statements are prepared in accordance with U.S. GAAP and reflect all necessary normal recurring adjustments[43] - Huntsman Corporation and Huntsman International LLC financial statements are largely similar, with primary differences related to capital structures and purchase accounting[47] Huntsman Corporation and Subsidiaries: Unaudited Condensed Consolidated Balance Sheets This section provides a comparative overview of Huntsman Corporation's unaudited condensed consolidated balance sheets as of September 30, 2022, and December 31, 2021 Huntsman Corporation Condensed Consolidated Balance Sheets (September 30, 2022 vs. December 31, 2021) | ASSETS | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :---------------------- | :---------------------- | :---------------- | :------- | | Cash and cash equivalents | $515 | $1,041 | $(526) | (50.5%) | | Accounts and notes receivable (net) | $981 | $988 | $(7) | (0.7%) | | Inventories | $1,079 | $1,038 | $41 | 3.9% | | Receivable associated with Albemarle Settlement | $— | $333 | $(333) | (100.0%) | | Current assets held for sale | $483 | $346 | $137 | 39.6% | | Total current assets | $3,196 | $3,928 | $(732) | (18.6%) | | Property, plant and equipment, net | $2,288 | $2,443 | $(155) | (6.3%) | | Total assets | $8,132 | $9,392 | $(1,260) | (13.4%) | | LIABILITIES AND EQUITY | | | | | | Accounts payable | $865 | $1,054 | $(189) | (17.9%) | | Accrued liabilities | $393 | $713 | $(320) | (44.9%) | | Current liabilities held for sale | $242 | $163 | $79 | 48.5% | | Total current liabilities | $1,595 | $2,051 | $(456) | (22.2%) | | Long-term debt | $1,476 | $1,538 | $(62) | (4.0%) | | Total liabilities | $4,148 | $4,833 | $(685) | (14.2%) | | Total Huntsman Corporation stockholders' equity | $3,774 | $4,378 | $(604) | (13.8%) | | Total equity | $3,984 | $4,559 | $(575) | (12.6%) | | Total liabilities and equity | $8,132 | $9,392 | $(1,260) | (13.4%) | Huntsman Corporation and Subsidiaries: Unaudited Condensed Consolidated Statements of Operations This section presents Huntsman Corporation's unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 Huntsman Corporation Condensed Consolidated Statements of Operations (Three and Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | % Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change (9M) | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :-------------- | :---------------------------- | :---------------------------- | :-------------- | | Total revenues | $2,011 | $2,097 | (4.1%) | $6,373 | $5,558 | 14.7% | | Cost of goods sold | $1,662 | $1,660 | 0.1% | $5,017 | $4,397 | 14.1% | | Gross profit | $349 | $437 | (20.2%) | $1,356 | $1,161 | 16.8% | | Operating income | $138 | $230 | (40.0%) | $699 | $530 | 31.9% | | Income from continuing operations before income taxes | $146 | $253 | (42.3%) | $722 | $562 | 28.5% | | Income tax expense | $(30) | $(34) | (11.8%) | $(155) | $(101) | 53.5% | | Income from continuing operations | $116 | $219 | (47.0%) | $567 | $461 | 23.0% | | (Loss) income from discontinued operations, net of tax | $(1) | $6 | NM | $30 | $36 | (16.7%) | | Net income | $115 | $225 | (48.9%) | $597 | $497 | 20.1% | | Net income attributable to Huntsman Corporation | $100 | $209 | (52.2%) | $551 | $448 | 23.0% | | Basic income per share (EPS) | $0.51 | $0.95 | (46.3%) | $2.69 | $2.03 | 32.5% | | Diluted income per share (EPS) | $0.50 | $0.94 | (46.8%) | $2.66 | $2.02 | 31.7% | Huntsman Corporation and Subsidiaries: Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income This section details Huntsman Corporation's unaudited condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2022 and 2021 Huntsman Corporation Condensed Consolidated Statements of Comprehensive (Loss) Income (Three and Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net income | $115 | $225 | $597 | $497 | | Other comprehensive (loss) income, net of tax: | | | | | | Foreign currency translations adjustments | $(204) | $(36) | $(338) | $(42) | | Pension and other postretirement benefits adjustments | $10 | $17 | $28 | $52 | | Other, net | $— | $— | $(1) | $— | | Total Other comprehensive (loss) income, net of tax | $(194) | $(19) | $(311) | $10 | | Comprehensive (loss) income | $(79) | $206 | $286 | $507 | | Comprehensive (loss) income attributable to Huntsman Corporation | $(85) | $189 | $257 | $456 | Huntsman Corporation and Subsidiaries: Unaudited Condensed Consolidated Statements of Equity This section outlines the changes in Huntsman Corporation's unaudited condensed consolidated statements of equity for the nine months ended September 30, 2022 - Huntsman Corporation's total equity decreased from $4,559 million at January 1, 2022, to $3,984 million at September 30, 2022[22][23] - Key changes in equity during the nine months ended September 30, 2022, include net income of $597 million, other comprehensive loss of $311 million, treasury stock repurchases totaling $755 million, and dividends declared of $131 million[22][23] - The number of outstanding common shares decreased from 214,170,287 at January 1, 2022, to 192,757,360 at September 30, 2022, primarily due to treasury stock repurchases[22][23] Huntsman Corporation and Subsidiaries: Unaudited Condensed Consolidated Statements of Cash Flows This section presents Huntsman Corporation's unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 Huntsman Corporation Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :------- | | Net cash provided by operating activities | $604 | $162 | 272.8% | | Net cash used in investing activities | $(188) | $(439) | (57.2%) | | Net cash used in financing activities | $(905) | $(809) | 11.9% | | Decrease in cash and cash equivalents | $(526) | $(1,088) | (51.6%) | | Cash and cash equivalents at end of period | $515 | $505 | 2.0% | | Capital expenditures | $(186) | $(241) | (22.8%) | | Cash paid for interest | $41 | $57 | (28.0%) | | Cash paid for income taxes | $171 | $83 | 106.0% | Huntsman International LLC and Subsidiaries: Unaudited Condensed Consolidated Balance Sheets This section provides a comparative overview of Huntsman International LLC's unaudited condensed consolidated balance sheets as of September 30, 2022, and December 31, 2021 Huntsman International LLC Condensed Consolidated Balance Sheets (September 30, 2022 vs. December 31, 2021) | ASSETS | Sep 30, 2022 (Millions) | Dec 31, 2021 (Millions) | Change (Millions) | % Change | | :------------------------------------------------ | :---------------------- | :---------------------- | :---------------- | :------- | | Cash and cash equivalents | $515 | $1,039 | $(524) | (50.4%) | | Accounts and notes receivable (net) | $981 | $988 | $(7) | (0.7%) | | Accounts receivable from affiliates | $1,035 | $269 | $766 | 284.8% | | Inventories | $1,079 | $1,038 | $41 | 3.9% | | Receivable associated with Albemarle Settlement | $— | $333 | $(333) | (100.0%) | | Current assets held for sale | $483 | $346 | $137 | 39.6% | | Total current assets | $4,208 | $4,166 | $42 | 1.0% | | Property, plant and equipment, net | $2,288 | $2,443 | $(155) | (6.3%) | | Total assets | $9,144 | $9,631 | $(487) | (5.1%) | | LIABILITIES AND EQUITY | | | | | | Accounts payable | $865 | $1,051 | $(186) | (17.7%) | | Accrued liabilities | $386 | $704 | $(318) | (45.2%) | | Current liabilities held for sale | $242 | $163 | $79 | 48.5% | | Total current liabilities | $1,595 | $2,041 | $(446) | (21.8%) | | Long-term debt | $1,476 | $1,538 | $(62) | (4.0%) | | Total liabilities | $4,142 | $4,812 | $(670) | (13.9%) | | Total Huntsman International LLC members' equity | $4,792 | $4,638 | $154 | 3.3% | | Total equity | $5,002 | $4,819 | $183 | 3.8% | | Total liabilities and equity | $9,144 | $9,631 | $(487) | (5.1%) | Huntsman International LLC and Subsidiaries: Unaudited Condensed Consolidated Statements of Operations This section presents Huntsman International LLC's unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021 Huntsman International LLC Condensed Consolidated Statements of Operations (Three and Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | % Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change (9M) | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :-------------- | :---------------------------- | :---------------------------- | :-------------- | | Total revenues | $2,011 | $2,097 | (4.1%) | $6,373 | $5,558 | 14.7% | | Cost of goods sold | $1,662 | $1,660 | 0.1% | $5,017 | $4,397 | 14.1% | | Gross profit | $349 | $437 | (20.2%) | $1,356 | $1,161 | 16.8% | | Operating income | $137 | $231 | (40.7%) | $703 | $536 | 31.2% | | Income from continuing operations before income taxes | $145 | $254 | (42.9%) | $726 | $566 | 28.3% | | Income tax expense | $(30) | $(35) | (14.3%) | $(156) | $(102) | 52.9% | | Income from continuing operations | $115 | $219 | (47.5%) | $570 | $464 | 22.8% | | (Loss) income from discontinued operations, net of tax | $(1) | $6 | NM | $30 | $36 | (16.7%) | | Net income | $114 | $225 | (49.3%) | $600 | $500 | 20.0% | | Net income attributable to Huntsman International LLC | $99 | $209 | (52.7%) | $554 | $451 | 22.8% | Huntsman International LLC and Subsidiaries: Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income This section details Huntsman International LLC's unaudited condensed consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2022 and 2021 Huntsman International LLC Condensed Consolidated Statements of Comprehensive (Loss) Income (Three and Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net income | $114 | $225 | $600 | $500 | | Other comprehensive (loss) income, net of tax: | | | | | | Foreign currency translations adjustment | $(204) | $(36) | $(339) | $(42) | | Pension and other postretirement benefits adjustments | $10 | $17 | $28 | $53 | | Other, net | $— | $— | $(1) | $— | | Total Other comprehensive (loss) income, net of tax | $(194) | $(19) | $(312) | $11 | | Comprehensive (loss) income | $(80) | $206 | $288 | $511 | | Comprehensive (loss) income attributable to Huntsman International LLC | $(86) | $189 | $259 | $460 | Huntsman International LLC and Subsidiaries: Unaudited Condensed Consolidated Statements of Equity This section outlines the changes in Huntsman International LLC's unaudited condensed consolidated statements of equity for the nine months ended September 30, 2022 - Huntsman International LLC's total equity increased from $4,819 million at January 1, 2022, to $5,002 million at September 30, 2022[37] - Key changes in equity during the nine months ended September 30, 2022, include net income of $600 million, other comprehensive loss of $312 million, and dividends paid to parent totaling $129 million[37] Huntsman International LLC and Subsidiaries: Unaudited Condensed Consolidated Statements of Cash Flows This section presents Huntsman International LLC's unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 Huntsman International LLC Condensed Consolidated Statements of Cash Flows (Nine Months Ended September 30, 2022 vs. 2021) | Metric (Millions) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :------- | | Net cash provided by operating activities | $606 | $166 | 265.1% | | Net cash used in investing activities | $(954) | $(544) | 75.4% | | Net cash used in financing activities | $(139) | $(706) | (80.3%) | | Decrease in cash and cash equivalents | $(524) | $(1,086) | (51.7%) | | Cash and cash equivalents at end of period | $515 | $505 | 2.0% | | Capital expenditures | $(186) | $(241) | (22.8%) | | Cash paid for interest | $41 | $57 | (28.0%) | | Cash paid for income taxes | $171 | $83 | 106.0% | Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries: Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes explaining the accounting policies, business developments, and financial disclosures supporting the unaudited condensed consolidated financial statements Note 1. General This note provides an overview of Huntsman's global operations, its business segments, the sale of its Textile Effects Business, and the basis of financial statement preparation - Huntsman is a global manufacturer of differentiated organic chemical products, operating in three segments: Polyurethanes, Performance Products, and Advanced Materials[44] - The company entered into a definitive agreement on August 9, 2022, to sell its Textile Effects Business, which is now reported as discontinued operations for all periods presented[45][53] - Huntsman International LLC is a wholly-owned subsidiary and the principal operating company[46] - The financial statements are prepared in accordance with U.S. GAAP and reflect all necessary normal recurring adjustments[43] Note 2. Recently Issued Accounting Pronouncements This note confirms that no recently issued accounting pronouncements are applicable to the company for the nine months ended September 30, 2022 - There have been no recently issued accounting pronouncements during the nine months ended September 30, 2022, that are applicable to the company[54] Note 3. Business Combinations This note details the acquisition of Gabriel Performance Products in January 2021, including its cost allocation and the resulting goodwill - On January 15, 2021, Huntsman completed the acquisition of Gabriel Performance Products, a North American specialty chemical manufacturer, for approximately $251 million, integrating it into the Advanced Materials segment[55] Gabriel Acquisition Cost Allocation (dollars in millions) | Item | Amount | | :------------------------------------ | :----- | | Cash paid for the Gabriel Acquisition | $251 | | Cash | $9 | | Accounts receivable | $13 | | Inventories | $23 | | Property, plant and equipment | $50 | | Intangible assets | $96 | | Goodwill | $87 | | Accounts payable | $(7) | | Accrued liabilities | $(3) | | Deferred income taxes | $(17) | | Total fair value of net assets acquired | $251 | - The acquisition resulted in $87 million in goodwill, primarily for projected future profitable growth and synergies in the Advanced Materials specialty portfolio, with $94 million being tax deductible[56] Note 4. Discontinued Operations and Business Dispositions This note discusses the agreement to sell the Textile Effects Business, its reporting as discontinued operations, and other disposition-related financial impacts - On August 9, 2022, Huntsman agreed to sell its Textile Effects Business to Archroma for a total enterprise value of $718 million, including the assumption of approximately $125 million in net underfunded pension liabilities. The transaction is anticipated to close no later than the first half of 2023, and its results are reported as discontinued operations for all periods presented[58] Assets and Liabilities Held for Sale (Textile Effects Business, dollars in millions) | Item | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Total assets held for sale | $483 | $528 | | Total liabilities held for sale | $242 | $314 | Pretax Income of Discontinued Operations (Textile Effects Business, dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Income from discontinued operations before income taxes | $6 | $15 | $44 | $54 | | Net (loss) income attributable to discontinued operations | $(1) | $6 | $30 | $36 | - In the second quarter of 2021, the company received a final $28 million earnout payment from the 2020 sale of its India-based DIY business, recognized as an additional pretax gain[61] - Huntsman recorded net losses of $7 million for the three months ended September 30, 2022, and $9 million for the nine months ended September 30, 2022, from fair value adjustments to its remaining investment in Venator and related option agreement[62] Note 5. Inventories This note provides a breakdown of inventory components and the portion recorded using the LIFO cost method as of September 30, 2022, and December 31, 2021 Inventories (dollars in millions) | Item | Sep 30, 2022 | Dec 31, 2021 | | :---------------------- | :----------- | :----------- | | Raw materials and supplies | $263 | $248 | | Work in progress | $44 | $33 | | Finished goods | $822 | $799 | | Total | $1,129 | $1,080 | | LIFO reserves | $(50) | $(42) | | Net inventories | $1,079 | $1,038 | - Approximately 8% of inventories were recorded using the LIFO cost method for both September 30, 2022, and December 31, 2021[63] Note 6. Variable Interest Entities This note identifies Huntsman's primary beneficiary status in two 50%-owned joint ventures and presents their consolidated assets, liabilities, and financial performance - Huntsman is the primary beneficiary of two 50%-owned joint ventures: Rubicon LLC (with Lanxess, manufacturing for Polyurethanes and Performance Products) and Arabian Amines Company (AAC) (with Zamil group, manufacturing for Performance Products)[67] - There were no changes in the company's variable interest entities during the nine months ended September 30, 2022[64] Variable Interest Entities' Assets and Liabilities (dollars in millions) | Item | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Total assets | $442 | $437 | | Total liabilities | $251 | $277 | Variable Interest Entities' Financial Performance (dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Revenues | $— | $— | $— | $— | | Income from continuing operations before income taxes | $11 | $4 | $24 | $11 | | Net cash provided by operating activities | $21 | $6 | $56 | $14 | Note 7. Restructuring, Impairment and Plant Closing Costs This note details accrued restructuring costs, new programs for corporate functions and the Polyurethanes segment, and associated expenses - Accrued restructuring costs totaled $42 million as of September 30, 2022, primarily for workforce reductions[68] - New restructuring programs were implemented in Q3 2022 for Corporate functions to optimize IT and EHS processes, expecting $12 million in expense in Q3 2022 and an additional $8 million through 2023[69] - The Polyurethanes segment expanded its optimization program in Q2 2022, incurring $7 million in restructuring expense for 9M 2022, with $9 million more expected through 2023[71] Restructuring, Impairment and Plant Closing Costs (credits) (dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Total restructuring, impairment and plant closing costs (credits) | $12 | $(1) | $36 | $34 | Note 8. Debt This note provides details on outstanding debt, including senior notes, variable interest entities, and other obligations, along with changes in credit facilities and compliance with covenants Outstanding Debt (net of debt issuance costs, dollars in millions) | Item | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Senior notes | $1,423 | $1,473 | | Variable interest entities | $38 | $45 | | Other | $27 | $32 | | Total debt | $1,488 | $1,550 | | Current portion of debt | $12 | $12 | | Long-term portion of debt | $1,476 | $1,538 | - Huntsman International entered into a new $1.2 billion senior unsecured revolving credit facility in May 2022, maturing in May 2027, replacing the 2018 facility. Interest rates vary based on loan type and debt ratings, with adjustments for sustainability performance[77] - The company amended its A/R Programs in July 2021, extending termination dates to July 2024, with maximum funding availability of $150 million for the U.S. program and €100 million (approximately $96 million) for the EU program[81][82] - Huntsman International redeemed $400 million of 5.125% senior notes due 2022 in June 2021 using proceeds from a new $400 million offering of 2.95% senior notes due 2031, incurring a $26 million loss on early extinguishment of debt[85] - The company believes it is in compliance with the covenants contained in the agreements governing its material debt instruments[88] Note 9. Derivative Instruments and Hedging Activities This note describes Huntsman's use of derivative instruments, such as foreign currency contracts and interest rate swaps, to manage market risks - Huntsman uses derivative instruments, such as foreign currency contracts and interest rate swaps, to manage exposures to market risks like interest rates, foreign exchange rates, and commodity prices[89][90][91] - As of September 30, 2022, the company had approximately $225 million in notional amount of outstanding forward foreign currency contracts[90] - Approximately €175 million (approximately $168 million) of euro-denominated debt is designated as a hedge of net investment, resulting in a $29 million loss for the nine months ended September 30, 2022 (compared to a $7 million gain for the same period in 2021) recognized in other comprehensive (loss) income[92] Note 10. Fair Value This note presents the fair values of financial instruments, including non-qualified employee benefit plan investments, investment in Venator, and long-term debt Fair Values of Financial Instruments (dollars in millions) | Item | Sep 30, 2022 (Carrying Value) | Sep 30, 2022 (Estimated Fair Value) | Dec 31, 2021 (Carrying Value) | Dec 31, 2021 (Estimated Fair Value) | | :------------------------------------ | :------------------------------ | :---------------------------------- | :------------------------------ | :---------------------------------- | | Non-qualified employee benefit plan investments | $15 | $15 | $25 | $25 |\ | Investment in Venator | $9 | $9 | $25 | $25 |\ | Option agreement for remaining Venator shares | $— | $— | $(7) | $(7) |\ | Long-term debt (including current portion) | $(1,488) | $(1,304) | $(1,550) | $(1,698) | - The investment in Venator and non-qualified employee benefit plan investments are marked to fair value using market observable pricing (Level 1)[93] - The estimated fair value of the option agreement for Venator shares is based on valuation techniques using market observable inputs (Level 2)[93] Note 11. Revenue Recognition This note provides a detailed breakdown of revenue from continuing operations by geographic market and major product groupings for various periods Revenue from Continuing Operations by Geographic Market (Three Months Ended September 30, 2022 vs. 2021, dollars in millions) | Geographic Market | 2022 | 2021 | | :---------------- | :--- | :--- | | U.S. and Canada | $864 | $804 | | Europe | $481 | $588 | | Asia Pacific | $513 | $544 | | Rest of world | $153 | $161 | | Total | $2,011 | $2,097 | Revenue from Continuing Operations by Major Product Groupings (Three Months Ended September 30, 2022 vs. 2021, dollars in millions) | Product Grouping | 2022 | 2021 | | :--------------- | :--- | :--- | | MDI urethanes | $1,257 | $1,403 | | Differentiated | $434 | $399 | | Specialty | $306 | $276 | | Non-specialty | $22 | $28 | | Eliminations | $(8) | $(9) | | Total | $2,011 | $2,097 | Revenue from Continuing Operations by Geographic Market (Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Geographic Market | 2022 | 2021 | | :---------------- | :--- | :--- | | U.S. and Canada | $2,632 | $2,045 | | Europe | $1,664 | $1,541 | | Asia Pacific | $1,591 | $1,553 | | Rest of world | $486 | $419 | | Total | $6,373 | $5,558 | Revenue from Continuing Operations by Major Product Groupings (Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Product Grouping | 2022 | 2021 | | :--------------- | :--- | :--- | | MDI urethanes | $3,996 | $3,626 | | Differentiated | $1,406 | $1,075 | | Specialty | $921 | $795 | | Non-specialty | $78 | $86 | | Eliminations | $(28) | $(24) | | Total | $6,373 | $5,558 | Note 12. Employee Benefit Plans This note details Huntsman Corporation's net periodic benefit cost for defined benefit and other postretirement plans, including contributions made and expected Huntsman Corporation Net Periodic Benefit (Credit) Cost (Three and Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Defined benefit plans (Net periodic benefit (credit) cost) | $(3) | $4 | $(6) | $18 | | Other postretirement benefit plans (Net periodic benefit (credit) cost) | $— | $— | $— | $— | - Huntsman made $35 million in contributions to its pension and other postretirement benefit plans related to continuing operations for the nine months ended September 30, 2022, with an additional $10 million expected for the remainder of 2022[100] Note 13. Huntsman Corporation Stockholders' Equity This note outlines the company's share repurchase program and dividends declared on common stock, reflecting changes in stockholders' equity - The Board of Directors approved a new $1 billion share repurchase program on October 26, 2021, which was increased to $2 billion on March 25, 2022[101] - For the nine months ended September 30, 2022, the company repurchased 22,853,686 shares of common stock for approximately $752 million. An additional 1,539,537 shares were repurchased for approximately $40 million between October 1 and October 25, 2022[101] Dividends Declared on Common Stock (dollars in millions, per share) | Quarter Ended | 2022 (Millions) | 2022 (Per Share) | 2021 (Millions) | 2021 (Per Share) | | :------------ | :-------------- | :--------------- | :-------------- | :--------------- | | September 30 | $41 | $0.2125 | $42 | $0.1875 | | June 30 | $44 | $0.2125 | $41 | $0.1875 | | March 31 | $45 | $0.2125 | $36 | $0.1625 | Note 14. Accumulated Other Comprehensive Loss This note details the changes in accumulated other comprehensive loss for both Huntsman Corporation and Huntsman International LLC, primarily due to foreign currency translation adjustments - Huntsman Corporation's accumulated other comprehensive loss increased from $(1,203) million at January 1, 2022, to $(1,497) million at September 30, 2022, primarily due to foreign currency translation adjustments[103] - Huntsman International LLC's accumulated other comprehensive loss increased from $(1,187) million at January 1, 2022, to $(1,482) million at September 30, 2022, also primarily due to foreign currency translation adjustments[111][113] Huntsman Corporation Net Current-Period Other Comprehensive (Loss) Income (Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Metric | 2022 | 2021 | | :------------------------------------------------ | :--- | :--- | | Foreign currency translation adjustments | $(338) | $(42) | | Pension and other postretirement benefits adjustments | $28 | $52 | | Other, net | $(1) | $— | | Total Net current-period other comprehensive (loss) income | $(311) | $10 | Note 15. Commitments and Contingencies This note discusses significant legal proceedings, including a jury award against Praxair/Linde, and other ongoing legal matters - On April 29, 2022, a New Orleans jury awarded Huntsman approximately $94 million in a lawsuit against Praxair/Linde for failure to supply industrial gas. Total damages are expected to exceed $125 million with interest, but the award is subject to appeal and not yet recognized[121] - The company is a party to various other legal proceedings, including environmental and product liability cases, but does not believe their outcome will materially affect its financial condition, results of operations, or liquidity[122] Note 16. Environmental, Health and Safety Matters This note details capital expenditures for EHS matters, accrued environmental liabilities, and the company's status as a potentially responsible party at various sites - Capital expenditures for EHS matters from continuing operations totaled $27 million for the nine months ended September 30, 2022, an increase from $21 million in the same period of 2021[123] - Environmental liabilities accrued were $4 million as of September 30, 2022 (compared to $5 million at December 31, 2021), with $1 million classified as current and $3 million as noncurrent[124] - The company is a potentially responsible party (PRP) for contamination at approximately nine former facilities or third-party sites in the U.S. under CERCLA and similar state laws, but does not expect these claims to have a material impact on its condensed consolidated financial statements[125] - Ongoing remediation requirements exist at some manufacturing sites, including the Geismar, Louisiana facility under RCRA[126] Note 17. Stock-Based Compensation Plans This note provides information on shares available for grant, stock-based compensation costs for both registrants, and unrecognized compensation costs for nonvested awards - As of September 30, 2022, approximately 6 million shares remained available for grant under the stock-based compensation plans[128] Stock-Based Compensation Cost (dollars in millions) | Registrant | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Huntsman Corporation | $6 | $8 | $26 | $23 | | Huntsman International | $6 | $8 | $24 | $22 | - Total unrecognized compensation cost for nonvested stock options was approximately $2 million (expected to be recognized over 1.1 years) and for nonvested shares was approximately $39 million (expected over 1.8 years) as of September 30, 2022[133][139] - No stock options were granted during the nine months ended September 30, 2022[131] Note 18. Income Taxes This note details income tax expense for both Huntsman Corporation and Huntsman International LLC, highlighting factors influencing the tax rate and treatment of specific items - Huntsman Corporation recorded income tax expense from continuing operations of $155 million for the nine months ended September 30, 2022, an increase from $101 million in the same period of 2021[143] - Huntsman International LLC recorded income tax expense from continuing operations of $156 million for the nine months ended September 30, 2022, an increase from $102 million in the same period of 2021[144] - Tax expense is significantly affected by the mix of income and losses in various tax jurisdictions and the presence of valuation allowances[143][144] - No tax benefit or expense was recognized in connection with the net losses on fair value adjustments to the Venator investment and related option, as these were treated discretely and excluded from the annual effective tax rate calculation[142] Note 19. Earnings Per Share This note provides a breakdown of basic and diluted income per share for Huntsman Corporation, including weighted average shares outstanding and dilutive shares Basic and Diluted Income Per Share (Huntsman Corporation, Three and Nine Months Ended September 30, 2022 vs. 2021) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Net income attributable to Huntsman Corporation | $100 | $209 | $551 | $448 | | Weighted average shares outstanding (Basic) | 197.7 | 219.4 | 205.2 | 220.2 | | Weighted average shares outstanding (Diluted) | 199.2 | 221.3 | 207.2 | 222.2 | | Basic net income per share | $0.51 | $0.95 | $2.69 | $2.03 | | Diluted net income per share | $0.50 | $0.94 | $2.66 | $2.02 | - Dilutive shares from stock-based awards were approximately 1.5 million for the three months ended September 30, 2022, and approximately 2.0 million for the nine months ended September 30, 2022[146] Note 20. Operating Segment Information This note describes Huntsman's three reportable segments, their revenue and Adjusted EBITDA performance, and the treatment of the Textile Effects Business - Huntsman operates in three reportable segments: Polyurethanes (MDI, polyols, TPU), Performance Products (specialty amines, ethyleneamines, maleic anhydride), and Advanced Materials (specialty resin compounds, epoxy, acrylic, polyurethane-based formulations)[148] - The Textile Effects Business is reported as discontinued operations starting in the third quarter of 2022[148] Total Reportable Segments' Revenue (Three and Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Polyurethanes | $1,257 | $1,403 | $3,996 | $3,626 | | Performance Products | $434 | $399 | $1,406 | $1,075 | | Advanced Materials | $328 | $304 | $999 | $881 | | Total | $2,019 | $2,106 | $6,401 | $5,582 | Total Reportable Segments' Adjusted EBITDA (Huntsman Corporation, Three and Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------- | :---------------------------- | :---------------------------- | :---------------------------- | :---------------------------- | | Polyurethanes | $138 | $246 | $591 | $661 | | Performance Products | $110 | $103 | $408 | $254 | | Advanced Materials | $58 | $48 | $192 | $150 | | Total | $306 | $397 | $1,191 | $1,065 | - Segment adjusted EBITDA is used to measure financial performance and excludes certain corporate and other items not indicative of operational profitability[153] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the periods presented. It discusses key factors impacting performance, recent developments, and future outlook, including segment-specific analysis and non-GAAP financial measures - Revenues from continuing operations for the three months ended September 30, 2022, decreased by 4% to $2,011 million, while for the nine months ended September 30, 2022, they increased by 15% to $6,373 million[154] - The company announced a European restructuring program in November 2022, expecting approximately $50 million in restructuring expenses through 2023 and identified approximately $40 million of annualized cost savings by the end of 2023[155][222] - The sale of the Textile Effects Business to Archroma for a total enterprise value of $718 million is expected to close no later than the first half of 2023[156] Overview This section provides a general description of Huntsman's global operations as a manufacturer of differentiated organic chemical products across its key segments - Huntsman is a global manufacturer of differentiated organic chemical products across Polyurethanes, Performance Products, and Advanced Materials segments, serving diverse consumer and industrial markets[154] - The company is a leading global producer in key product lines such as MDI, amines, maleic anhydride, and epoxy-based polymer formulations[154] Recent Developments This section highlights the announcement of a European restructuring program and the definitive agreement to sell the Textile Effects Business - A European restructuring program was announced in November 2022 to realign the cost structure, including facility consolidation, workforce relocation, and personnel rationalization, with expected restructuring expenses of approximately $50 million through 2023[155] - A definitive agreement was signed on August 9, 2022, to sell the Textile Effects Business to Archroma for $718 million, including the assumption of $125 million in pension liabilities, with closing anticipated by the first half of 2023[156] Outlook This section provides forward-looking estimates for Adjusted EBITDA across the Polyurethanes, Performance Products, and Advanced Materials segments for Q4 2022, along with the expected adjusted effective tax rate - Polyurethanes Segment Outlook (Q4 2022): Adjusted EBITDA estimated between $55 million and $85 million, with European profitability negatively driven by high energy prices and declining demand, and weaker Americas end markets, particularly in construction. Modest increase in automotive market sales volumes year-over-year and lower production rates to reduce inventory are expected[161] - Performance Products Segment Outlook (Q4 2022): Adjusted EBITDA estimated between $60 million and $80 million, expecting lower sales volumes year-over-year, primarily in Europe and construction markets, with adjusted EBITDA margin expected to be within 20% to 25%[161] - Advanced Materials Segment Outlook (Q4 2022): Adjusted EBITDA estimated between $40 million and $45 million, with automotive and aerospace markets remaining stable but demand headwinds in industrial markets[161] - The adjusted effective tax rate for 2022 is expected to be approximately 22% to 24%[158] Results of Operations This section presents key financial highlights for both Huntsman Corporation and Huntsman International LLC, comparing their performance for the three and nine months ended September 30, 2022 and 2021 Huntsman Corporation Key Financial Highlights (Three and Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | % Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change (9M) | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :-------------- | :---------------------------- | :---------------------------- | :-------------- | | Revenues | $2,011 | $2,097 | (4)% | $6,373 | $5,558 | 15% | | Gross profit | $349 | $437 | (20)% | $1,356 | $1,161 | 17% | | Operating income | $138 | $230 | (40)% | $699 | $530 | 32% | | Income from continuing operations before income taxes | $146 | $253 | (42)% | $722 | $562 | 28% | | Net income | $115 | $225 | (49)% | $597 | $497 | 20% | | Adjusted EBITDA | $271 | $349 | (22)% | $1,068 | $919 | 16% | Huntsman International LLC Key Financial Highlights (Three and Nine Months Ended September 30, 2022 vs. 2021, dollars in millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | % Change (3M) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | % Change (9M) | | :------------------------------------------------ | :---------------------------- | :---------------------------- | :-------------- | :---------------------------- | :---------------------------- | :-------------- | | Revenues | $2,011 | $2,097 | (4)% | $6,373 | $5,558 | 15% | | Gross profit | $349 | $437 | (20)% | $1,356 | $1,161 | 17% | | Operating income | $137 | $231 | (41)% | $703 | $536 | 31% | | Income from continuing operations before income taxes | $145 | $254 | (43)% | $726 | $566 | 28% | | Net income | $114 | $225 | (49)% | $600 | $500 | 20% | | Adjusted EBITDA | $270 | $350 | (23)% | $1,072 |