Huntsman Corporation today reported second quarter 2015 results with revenues of $2,740 million and adjusted EBITDA of $385 million. 

Peter R. Huntsman, our President and CEO, commented:

"Our Performance Products and Advanced Materials businesses continue to demonstrate remarkable earnings. Combined, these businesses represent approximately 50% of our adjusted EBITDA; they have EBITDA margins of approximately 20% and low earnings volatility. Their EBITDA grew approximately 20% compared to the prior year and we have growth projects in place for these businesses that are expected to deliver an additional $100 million over the next couple of years.

Notwithstanding EBITDA headwinds in the second quarter 2015 such as $49 million from foreign currency and $35 million from the extended maintenance outage at our Port Neches, TX facility, our earnings are growing. We are delivering on our announced restructuring savings and growth projects.  Our aggressive efforts to deliver $200 million of synergy and restructuring savings within our Pigments and Additives division by the middle of 2016 are progressing on-time and according to plan."

Segment Analysis for 2Q15 Compared to 2Q14

Polyurethanes

The decrease in revenues in our Polyurethanes division for the three months ended June 30, 2015 compared to the same period in 2014 was primarily due to a planned maintenance outage at our PO/MTBE facility in Port Neches, Texas that extended into the second quarter of 2015 and lower average selling prices.  PO/MTBE sales volumes decreased due to the planned maintenance outage.  MDI sales volumes increased due to improved demand in the European region primarily due to improved demand within the insulation, composite wood products and automotive markets. PO/MTBE average selling prices decreased in-line with lower pricing for high octane gasoline.  MDI average selling prices decreased in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  The decrease in adjusted EBITDA was primarily due to lower PO/MTBE earnings, partially offset by higher MDI contribution margins.  We estimate the reduction to adjusted EBITDA from the planned PO/MTBE maintenance outage was approximately $30 million within this division in the second quarter 2015.

Performance Products

The decrease in revenues in our Performance Products division for the three months ended June 30, 2015 compared to the same period in 2014 was due to lower sales volumes and lower average selling prices.  Sales volumes decreased primarily due to the sale of our European commodity surfactants business at the end of the second quarter 2014 although sales volumes increased 2% excluding the impact of this sale.  Average selling prices decreased in response to lower raw material costs and the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  The increase in adjusted EBITDA was primarily due to higher contribution margins in our amines and upstream intermediate businesses.

Advanced Materials

The decrease in revenues in our Advanced Materials division for the three months ended June 30, 2015 compared to the same period in 2014 was primarily due to lower sales volumes.  Sales volumes decreased primarily due to the de-selection of certain business and our restructuring efforts.  Average selling prices increased on a local currency basis due to certain price increase initiatives and our focus on higher value markets, but were more than offset by the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  The increase in adjusted EBITDA was primarily due to higher contribution margins from our focus on higher value business and lower fixed costs.

Textile Effects

The decrease in revenues in our Textile Effects division for the three months ended June 30, 2015 compared to the same period in 2014 was due to lower average selling prices and lower sales volumes.  Average selling prices decreased primarily due to the impact of a stronger U.S. dollar against major European currencies.  Sales volumes decreased primarily due to the de-selection of lower value business and destocking within the fibers and dyes supply chain.  The increase in adjusted EBITDA was primarily due to higher contribution margins from our focus on higher value business and lower fixed costs.

Pigments and Additives

Pro forma for the acquisition of Rockwood Performance Additives and Titanium Dioxide businesses, revenues decreased in our Pigments and Additives division for the three months ended June 30, 2015 compared to the same period in 2014 due to lower sales volumes and lower average selling prices.  Sales volumes decreased primarily as a result of lower end use demand in Europe and North America.  Average selling prices decreased primarily as a result of high titanium dioxide industry inventory levels and the foreign currency exchange impact of a stronger U.S. dollar against major European currencies.  The decrease in pro forma adjusted EBITDA was primarily due to lower contribution margins for titanium dioxide.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and Other improved by $16 million to a loss of $31 million for the three months ended June 30, 2015 compared to a loss of $47 million for the same period in 2014.  The increase in adjusted EBITDA was primarily the result of a benefit from LIFO inventory valuation income of $9 million and an increase in income from benzene sales of $5 million.

Liquidity, Capital Resources and Outstanding Debt

As of June 30, 2015, we had $1,418 million of combined cash and unused borrowing capacity compared to $1,601 million at December 31, 2014.

Total capital expenditures for the three months ended June 30, 2015 were $147 million.  We expect to spend approximately $525 million on base capital expenditures in 2015, net of reimbursements.  In addition, in 2015 we expect to spend approximately $100 million combined on our new Chinese MDI facility, the completion of our Augusta, Georgia color pigments facility and replacement of Rockwood computer systems.

Based on the preliminary allocation of the purchase accounting for the Rockwood Performance Additives and Titanium Dioxide businesses, we expect our annual depreciation and amortization rate to be approximately $400 million.

Income Taxes

During the three months ended June 30, 2015, we recorded an income tax expense of $34 million and paid $19 million in cash for income taxes.  Our adjusted effective income tax rate for the three months ended June 30, 2015 was 32%.

We expect our 2015 and long term adjusted effective tax rate to be approximately 30%.