Huntsman(US:HUN)2024-05-03 18:50Financial Data and Key Metrics Changes - The company reported modest gains in volume during Q1 2024, attributed to new business, demand growth, and inventory restocking, with a 50-50 split between inventory rebuilding and demand improvement [16] - The company aims to recover lost volumes and return to normalized earnings as quickly as possible, with a focus on cost management and pricing discipline [4][16] Business Line Data and Key Metrics Changes - Polyurethanes in North America saw a significant volume increase of 25%, while Europe experienced a 9% increase, indicating recovery but still below normal levels [42] - The spray foam business grew nearly 10% year-over-year, driven by new housing builds, despite competitive pressures [20] - The Advanced Materials segment grew by 6% overall year-on-year, with notable growth in aerospace and automotive applications [68] Market Data and Key Metrics Changes - The company noted that the industry is currently operating at mid-80% capacity utilization, with North America exceeding 100% and Europe in the high-80% range [21][23] - The Chinese automotive market remains a strong growth area, although export challenges persist [6] Company Strategy and Development Direction - The company is focused on maximizing asset value and capital deployment for growth, continuously assessing its portfolio [17] - There is an emphasis on innovation and energy conservation in Europe, with a recognition of the competitive landscape and the need for strategic positioning [45][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about a slow but steady recovery in demand and pricing, particularly in North America and Europe [40][126] - The company anticipates that higher volumes and pricing will be necessary to return to normalized EBITDA margins in the mid-teens [77] Other Important Information - The liquidation of the SLIC joint venture is expected to have minimal impact on net income and cash flow, with approximately $200 million of cash being trapped until 2025 [22] - The company is not planning on share buybacks in the near term, focusing instead on operational improvements and market recovery [60] Q&A Session Summary Question: What are the expectations for polyurethanes EBITDA improvement in the back half of the year? - Management indicated that improvements are expected based on current conditions, with a focus on volume growth [11] Question: How are housing starts impacting the business? - Management noted that while housing starts have improved, the benefits are just beginning to flow through the business [11] Question: Can you comment on the liquidation of the SLIC joint venture? - The liquidation process is expected to last into 2025, with minimal impact on net income and cash flow [22] Question: What are the current industry operating rates for polyurethanes? - Current operating rates are around 85%, with pricing leverage typically occurring at mid-80% utilization [23] Question: What is the outlook for MDI pricing and margins? - MDI pricing is currently flat across regions, with expectations for modest improvements as demand increases [35][38] Question: How does the company view the competitive landscape in Europe? - The company recognizes the challenges in Europe but sees opportunities in innovation and higher-margin applications [45][56] Question: What is the expected trajectory for volume growth in the coming quarters? - Management expects stronger than average growth in Europe and the Americas, with a focus on quarter-on-quarter improvements [42][62]