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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 7/30/21 Huntsman Corp. 10-Q 6/30/21 100:18M RDG Filings/FA Huntsman International LLC |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 2.10M
2: EX-10.1 Material Contract HTML 844K
3: EX-10.2 Material Contract HTML 827K
4: EX-31.1 Certification -- §302 - SOA'02 HTML 31K
5: EX-31.2 Certification -- §302 - SOA'02 HTML 31K
6: EX-32.1 Certification -- §906 - SOA'02 HTML 29K
7: EX-32.2 Certification -- §906 - SOA'02 HTML 29K
14: R1 Document And Entity Information HTML 90K
15: R2 Condensed Consolidated Balance Sheets (Current HTML 189K
Period Unaudited)
16: R3 Condensed Consolidated Balance Sheets (Current HTML 97K
Period Unaudited) (Parentheticals)
17: R4 Condensed Consolidated Statements of Operations HTML 213K
(Unaudited)
18: R5 Condensed Consolidated Statements of Comprehensive HTML 68K
Income (Loss) (Unaudited)
19: R6 Condensed Consolidated Statements of Equity HTML 152K
(Unaudited)
20: R7 Condensed Consolidated Statements of Equity HTML 28K
(Unaudited) (Parentheticals)
21: R8 Condensed Consolidated Statements of Cash Flows HTML 200K
(Unaudited)
22: R9 Condensed Consolidated Statements of Cash Flows HTML 36K
(Unaudited) (Parentheticals)
23: R10 Note 1 - General HTML 45K
24: R11 Note 2 - Recently Issued Accounting Pronouncements HTML 42K
25: R12 Note 3 - Business Combinations and Acquisitions HTML 88K
26: R13 Note 4 - Discontinued Operations and Business HTML 63K
Dispositions
27: R14 Note 5 - Inventories HTML 41K
28: R15 Note 6 - Variable Interest Entities HTML 61K
29: R16 Note 7 - Restructuring, Impairment and Plant HTML 95K
Closing Costs
30: R17 Note 8 - Debt HTML 81K
31: R18 Note 9 - Derivative Instruments and Hedging HTML 34K
Activities
32: R19 Note 10 - Fair Value HTML 48K
33: R20 Note 11 - Revenue Recognition HTML 203K
34: R21 Note 12 - Employee Benefit Plans HTML 117K
35: R22 Note 13 - Huntsman Corporation Stockholders' HTML 38K
Equity
36: R23 Note 14 - Accumulated Other Comprehensive Loss HTML 292K
37: R24 Note 15 - Commitments and Contingencies HTML 32K
38: R25 Note 16 - Environmental, Health and Safety Matters HTML 38K
39: R26 Note 17 - Stock-based Compensation Plans HTML 103K
40: R27 Note 18 - Income Taxes HTML 37K
41: R28 Note 19 - Earnings Per Share HTML 54K
42: R29 Note 20 - Operating Segment Information HTML 151K
43: R30 Significant Accounting Policies (Policies) HTML 40K
44: R31 Note 3 - Business Combinations and Acquisitions HTML 79K
(Tables)
45: R32 Note 4 - Discontinued Operations and Business HTML 59K
Dispositions (Tables)
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47: R34 Note 6 - Variable Interest Entities (Tables) HTML 60K
48: R35 Note 7 - Restructuring, Impairment and Plant HTML 91K
Closing Costs (Tables)
49: R36 Note 8 - Debt (Tables) HTML 65K
50: R37 Note 10 - Fair Value (Tables) HTML 43K
51: R38 Note 11 - Revenue Recognition (Tables) HTML 197K
52: R39 Note 12 - Employee Benefit Plans (Tables) HTML 111K
53: R40 Note 14 - Accumulated Other Comprehensive Loss HTML 276K
(Tables)
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55: R42 Note 19 - Earnings Per Share (Tables) HTML 51K
56: R43 Note 20 - Operating Segment Information (Tables) HTML 139K
57: R44 Note 1 - General (Details Textual) HTML 72K
58: R45 Note 3 - Business Combinations and Acquisitions HTML 47K
(Details Textual)
59: R46 Note 3 - Business Combinations and Acquisitions - HTML 75K
Assets Acquired and Liabilities Assumed (Details)
60: R47 Note 3 - Business Combinations and Acquisitions - HTML 36K
Pro Forma Revenues and Net Income (Details)
61: R48 Note 4 - Discontinued Operations and Business HTML 68K
Dispositions (Details Textual)
62: R49 Note 4 - Discontinued Operations and Business HTML 68K
Dispositions - Summarized Financial Information of
Venator (Details)
63: R50 Note 4 - Discontinued Operations and Business HTML 57K
Dispositions - Summary of Major Classes of Line
Items of Discontinued Operations (Details)
64: R51 Note 5 - Inventories (Details Textual) HTML 28K
65: R52 Note 5 - Inventories - Inventories (Details) HTML 40K
66: R53 Note 6 - Variable Interest Entities (Details HTML 31K
Textual)
67: R54 Note 6 - Variable Interest Entities - Schedule of HTML 103K
Financial Information of Variable Interest
Entities (Details)
68: R55 Note 7 - Restructuring, Impairment and Plant HTML 46K
Closing Costs (Details Textual)
69: R56 Note 7 - Restructuring, Impairment and Plant HTML 49K
Closing Costs - Accrued Restructuring Costs By
Type of Cost and Initiative (Details)
70: R57 Note 7 - Restructuring, Impairment and Plant HTML 68K
Closing Costs - Reserves for Restructuring,
Impairment and Plant Closing Costs By Segment and
Initiative (Details)
71: R58 Note 7 - Restructuring, Impairment and Plant HTML 40K
Closing Costs - Cash and Noncash Restructuring
Charges (Details)
72: R59 Note 8 - Debt (Details Textual) HTML 90K
73: R60 Note 8 - Debt - Outstanding Debt (Details) HTML 44K
74: R61 Note 8 - Debt - Revolving Credit Facility HTML 49K
(Details)
75: R62 Note 8 - Debt - Accounts Receivable Programs HTML 46K
(Details)
76: R63 Note 9 - Derivative Instruments and Hedging HTML 35K
Activities (Details Textual)
77: R64 Note 10 - Fair Value (Details Textual) HTML 30K
78: R65 Note 10 - Fair Value - Fair Value of Financial HTML 40K
Instruments (Details)
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Revenue (Details)
80: R67 Note 12 - Employee Benefit Plans (Details Textual) HTML 31K
81: R68 Note 12 - Employee Benefit Plans - Components of HTML 66K
Net Periodic Benefit Costs (Details)
82: R69 Note 13 - Huntsman Corporation Stockholders' HTML 45K
Equity (Details Textual)
83: R70 Note 14 - Accumulated Other Comprehensive Loss HTML 57K
(Details Textual)
84: R71 Note 14 - Accumulated Other Comprehensive Loss - HTML 163K
Components and Changes in Accumulated Other
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85: R72 Note 14 - Accumulated Other Comprehensive Loss - HTML 59K
Reclassification Details (Details)
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(Details Textual)
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89: R76 Note 17 - Stock-based Compensation Plans - HTML 37K
Weighted Average of the Assumptions Utilized for
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90: R77 Note 17 - Stock-based Compensation Plans - Summary HTML 60K
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91: R78 Note 17 - Stock-based Compensation Plans - Summary HTML 56K
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93: R80 Note 19 - Earnings Per Share (Details Textual) HTML 30K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form i 10-Q
| (Mark One) | |
| i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | |
| For the quarterly period ended i June 30, 2021 | |
| | |
| OR | |
| | |
| i ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | |
| For the transition period from to | |
| Commission |
| Exact Name of Registrant as Specified in its Charter, |
| State of |
| I.R.S. Employer |
| | i Huntsman Corporation | | i Delaware | |
i 42-1648585 | |
| | i Huntsman International LLC | | i Delaware | | i 87-0630358 |
Securities registered pursuant to Section 12(b) of the Act:
| Registrant |
| Title of each class |
| Trading Symbol | | Name of each exchange on which registered |
| Huntsman Corporation |
| i Common Stock, par value $0.01 per share |
| i HUN | | i New York Stock Exchange |
| Huntsman International LLC |
| i NONE |
| i NONE | | i NONE |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| Huntsman Corporation | i Yes ☒ | No ☐ |
| Huntsman International LLC | i Yes ☒ | No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| Huntsman Corporation | i Yes ☒ | No ☐ |
| Huntsman International LLC | i Yes ☒ | No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Huntsman Corporation | i Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company i ☐ | Emerging growth company i ☐ |
| Huntsman International LLC | Large accelerated filer ☐ | Accelerated filer ☐ | i Non-accelerated filer ☒ | Smaller reporting company i ☐ | Emerging Growth company i ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| Huntsman Corporation | | ☐ |
| Huntsman International LLC | | ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Huntsman Corporation | Yes i ☐ | No ☒ |
| Huntsman International LLC | Yes i ☐ | No ☒ |
On July 21, 2021, i 221,929,899 shares of common stock of Huntsman Corporation were outstanding and 2,728 units of membership interests of Huntsman International LLC were outstanding. There is no trading market for Huntsman International LLC’s units of membership interests. All of Huntsman International LLC’s units of membership interests are held by Huntsman Corporation.
This Quarterly Report on Form 10-Q presents information for two registrants: Huntsman Corporation and Huntsman International LLC. Huntsman International LLC is a wholly-owned subsidiary of Huntsman Corporation and is the principal operating company of Huntsman Corporation. The information reflected in this Quarterly Report on Form 10-Q is equally applicable to both Huntsman Corporation and Huntsman International LLC, except where otherwise indicated. Huntsman International LLC meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and, to the extent applicable, is therefore filing this form with a reduced disclosure format.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED June 30, 2021
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Huntsman Corporation and Subsidiaries: |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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Huntsman International LLC and Subsidiaries: |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries: |
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| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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FORWARD-LOOKING STATEMENTS
Certain information set forth in this report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical factual information are forward-looking statements, including without limitation statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other projected financial measures; projected impact of COVID-19 on our operations and future financial results; management’s plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions, divestitures, business separations, spin-offs, or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that we intend or believe will or may occur in the future. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by us or on our behalf, are also expressly qualified by these cautionary statements.
All forward-looking statements, including without limitation any projections derived from management’s examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them, but there can be no assurance that management’s expectations, beliefs and projections will be achieved. All forward-looking statements apply only as of the date made. We undertake no obligation to publicly update or revise forward-looking statements whether because of new information, future events or otherwise, except as required by securities and other applicable law.
There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this report. Any forward-looking statements should be considered in light of the risks set forth in “Part II. Item 1A. Risk Factors” below and “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Per Share Amounts)
| June 30, | ||||||||
| 2020 | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents(a) | $ | i 510 | $ | i 1,593 | ||||
| Accounts and notes receivable (net of allowance for doubtful accounts of $28 and $26, respectively), ($278 and $198 pledged as collateral, respectively)(a) | i 1,110 | i 902 | ||||||
| Accounts receivable from affiliates | i 12 | i 8 | ||||||
| Inventories(a) | i 1,193 | i 848 | ||||||
| Other current assets | i 209 | i 217 | ||||||
| Total current assets | i 3,034 | i 3,568 | ||||||
| Property, plant and equipment, net(a) | i 2,551 | i 2,505 | ||||||
| Investment in unconsolidated affiliates | i 433 | i 373 | ||||||
| Intangible assets, net | i 415 | i 453 | ||||||
| Goodwill | i 744 | i 533 | ||||||
| Deferred income taxes | i 285 | i 288 | ||||||
| Operating lease right-of-use assets | i 426 | i 445 | ||||||
| Other noncurrent assets(a) | i 618 | i 548 | ||||||
| Total assets | $ | i 8,506 | $ | i 8,713 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable(a) | $ | i 995 | $ | i 842 | ||||
| Accounts payable to affiliates | i 46 | i 34 | ||||||
| Accrued liabilities(a) | i 480 | i 458 | ||||||
| Current portion of debt(a) | i 44 | i 593 | ||||||
| Current operating lease liabilities(a) | i 49 | i 52 | ||||||
| Total current liabilities | i 1,614 | i 1,979 | ||||||
| Long-term debt(a) | i 1,521 | i 1,528 | ||||||
| Deferred income taxes | i 222 | i 212 | ||||||
| Noncurrent operating lease liabilities(a) | i 394 | i 411 | ||||||
| Other noncurrent liabilities(a) | i 870 | i 910 | ||||||
| Total liabilities | i 4,621 | i 5,040 | ||||||
| Commitments and contingencies (Notes 15 and 16) | ||||||||
| Equity | ||||||||
| Huntsman Corporation stockholders’ equity: | ||||||||
| Common stock $0.01 par value, 1,200,000,000 shares authorized, 259,431,920 and 258,520,411 shares issued and 220,959,906 and 220,046,262 shares outstanding, respectively | i 3 | i 3 | ||||||
| Additional paid-in capital | i 4,093 | i 4,048 | ||||||
| Treasury stock, 38,477,091 shares | ( i 731 | ) | ( i 731 | ) | ||||
| Unearned stock-based compensation | ( i 34 | ) | ( i 19 | ) | ||||
| Retained earnings | i 1,714 | i 1,564 | ||||||
| Accumulated other comprehensive loss | ( i 1,318 | ) | ( i 1,346 | ) | ||||
| Total Huntsman Corporation stockholders’ equity | i 3,727 | i 3,519 | ||||||
| Noncontrolling interests in subsidiaries | i 158 | i 154 | ||||||
| Total equity | i 3,885 | i 3,673 | ||||||
| Total liabilities and equity | $ | i 8,506 | $ | i 8,713 | ||||
| (a) |
At June 30, 2021 and December 31, 2020, respectively, $2 each of cash and cash equivalents, $13 and $6 of accounts and notes receivable (net), $55 and $38 of inventories, $164 and $167 of property, plant and equipment (net), $22 and $23 of other noncurrent assets, $142 and $119 of accounts payable, $9 and $13 of accrued liabilities, $41 and $47 of current portion of debt, $6 and $5 of current operating lease liabilities, nil and $3 of long-term debt, $23 and $17 of noncurrent operating lease liabilities and $79 and $82 of other noncurrent liabilities from consolidated variable interest entities are included in the respective balance sheet captions above. See “Note 6. Variable Interest Entities.” |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Revenues: | ||||||||||||||||
| Trade sales, services and fees, net | $ | i 1,974 | $ | i 1,226 | $ | i 3,776 | $ | i 2,775 | ||||||||
| Related party sales | i 50 | i 21 | i 85 | i 65 | ||||||||||||
| Total revenues | i 2,024 | i 1,247 | i 3,861 | i 2,840 | ||||||||||||
| Cost of goods sold | i 1,593 | i 1,085 | i 3,038 | i 2,381 | ||||||||||||
| Gross profit | i 431 | i 162 | i 823 | i 459 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | i 209 | i 186 | i 416 | i 385 | ||||||||||||
| Research and development | i 37 | i 32 | i 75 | i 68 | ||||||||||||
| Restructuring, impairment and plant closing costs | i 11 | i 19 | i 35 | i 22 | ||||||||||||
| Gain on sale of India-based DIY business | ( i 28 | ) | i — | ( i 28 | ) | i — | ||||||||||
| Other operating income, net | ( i 7 | ) | ( i 6 | ) | ( i 10 | ) | ( i 1 | ) | ||||||||
| Total operating expenses | i 222 | i 231 | i 488 | i 474 | ||||||||||||
| Operating income (loss) | i 209 | ( i 69 | ) | i 335 | ( i 15 | ) | ||||||||||
| Interest expense, net | ( i 18 | ) | ( i 21 | ) | ( i 37 | ) | ( i 39 | ) | ||||||||
| Equity in income of investment in unconsolidated affiliates | i 46 | i 2 | i 84 | i 4 | ||||||||||||
| Fair value adjustments to Venator investment | ( i 6 | ) | i 4 | ( i 25 | ) | ( i 106 | ) | |||||||||
| Loss on early extinguishment of debt | ( i 27 | ) | i — | ( i 27 | ) | i — | ||||||||||
| Other income, net | i 9 | i 7 | i 16 | i 17 | ||||||||||||
| Income (loss) from continuing operations before income taxes | i 213 | ( i 77 | ) | i 346 | ( i 139 | ) | ||||||||||
| Income tax (expense) benefit | ( i 42 | ) | i 13 | ( i 76 | ) | i 6 | ||||||||||
| Income (loss) from continuing operations | i 171 | ( i 64 | ) | i 270 | ( i 133 | ) | ||||||||||
| Income from discontinued operations, net of tax | i 1 | i 5 | i 2 | i 782 | ||||||||||||
| Net income (loss) | i 172 | ( i 59 | ) | i 272 | i 649 | |||||||||||
| Net income attributable to noncontrolling interests | ( i 16 | ) | ( i 3 | ) | ( i 33 | ) | ( i 6 | ) | ||||||||
| Net income (loss) attributable to Huntsman Corporation | $ | i 156 | $ | ( i 62 | ) | $ | i 239 | $ | i 643 | |||||||
| Basic income (loss) per share: | ||||||||||||||||
| Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders | $ | i 0.71 | $ | ( i 0.30 | ) | $ | i 1.07 | $ | ( i 0.63 | ) | ||||||
| Income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | i — | i 0.02 | i 0.01 | i 3.53 | ||||||||||||
| Net income (loss) attributable to Huntsman Corporation common stockholders | $ | i 0.71 | $ | ( i 0.28 | ) | $ | i 1.08 | $ | i 2.90 | |||||||
| Weighted average shares | i 220.9 | i 219.7 | i 220.6 | i 221.4 | ||||||||||||
| Diluted (loss) income per share: | ||||||||||||||||
| Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders | $ | i 0.70 | $ | ( i 0.30 | ) | $ | i 1.06 | $ | ( i 0.63 | ) | ||||||
| Income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax | i — | i 0.02 | i 0.01 | i 3.53 | ||||||||||||
| Net income (loss) attributable to Huntsman Corporation common stockholders | $ | i 0.70 | $ | ( i 0.28 | ) | $ | i 1.07 | $ | i 2.90 | |||||||
| Weighted average shares | i 222.9 | i 219.7 | i 222.7 | i 221.4 | ||||||||||||
| Amounts attributable to Huntsman Corporation common stockholders: | ||||||||||||||||
| Income (loss) from continuing operations | $ | i 155 | $ | ( i 67 | ) | $ | i 237 | $ | ( i 139 | ) | ||||||
| Income from discontinued operations, net of tax | i 1 | i 5 | i 2 | i 782 | ||||||||||||
| Net income (loss) | $ | i 156 | $ | ( i 62 | ) | $ | i 239 | $ | i 643 | |||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Net income (loss) | $ | i 172 | $ | ( i 59 | ) | $ | i 272 | $ | i 649 | |||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translations adjustments | i 26 | i 17 | ( i 6 | ) | ( i 56 | ) | ||||||||||
| Pension and other postretirement benefits adjustments | i 16 | i 12 | i 35 | i 64 | ||||||||||||
| Other comprehensive income, net of tax | i 42 | i 29 | i 29 | i 8 | ||||||||||||
| Comprehensive income (loss) | i 214 | ( i 30 | ) | i 301 | i 657 | |||||||||||
| Comprehensive income attributable to noncontrolling interests | ( i 17 | ) | ( i 3 | ) | ( i 34 | ) | ( i 6 | ) | ||||||||
| Comprehensive income (loss) attributable to Huntsman Corporation | $ | i 197 | $ | ( i 33 | ) | $ | i 267 | $ | i 651 | |||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Share Amounts)
| Huntsman Corporation Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Shares | Additional | Unearned | other | Noncontrolling | ||||||||||||||||||||||||||||||||
| common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | interests in | Total | ||||||||||||||||||||||||||||
| stock | stock | capital | stock | compensation | earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||
| Balance, January 1, 2021 | i 220,046,262 | $ | i 3 | $ | i 4,048 | $ | ( i 731 | ) | $ | ( i 19 | ) | $ | i 1,564 | $ | ( i 1,346 | ) | $ | i 154 | $ | i 3,673 | ||||||||||||||||
| Net income | — | i — | i — | i — | i — | i 83 | i — | i 17 | i 100 | |||||||||||||||||||||||||||
| Other comprehensive loss | — | i — | i — | i — | i — | i — | ( i 13 | ) | i — | ( i 13 | ) | |||||||||||||||||||||||||
| Issuance of nonvested stock awards | — | i — | i 25 | i — | ( i 25 | ) | i — | i — | i — | i — | ||||||||||||||||||||||||||
| Vesting of stock awards | i 664,818 | i — | i 5 | i — | i — | i — | i — | i — | i 5 | |||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | i — | i 2 | i — | i 6 | i — | i — | i — | i 8 | |||||||||||||||||||||||||||
| Repurchase and cancellation of awards | ( i 202,961 | ) | i — | i — | i — | i — | ( i 6 | ) | i — | i — | ( i 6 | ) | ||||||||||||||||||||||||
| Stock options exercised | i 204,005 | i — | i 5 | i — | i — | ( i 2 | ) | i — | i — | i 3 | ||||||||||||||||||||||||||
| Dividends declared on common stock ($0.1625 per share) | — | i — | i — | i — | i — | ( i 36 | ) | i — | i — | ( i 36 | ) | |||||||||||||||||||||||||
| Balance, March 31, 2021 | i 220,712,124 | $ | i 3 | $ | i 4,085 | $ | ( i 731 | ) | $ | ( i 38 | ) | $ | i 1,603 | $ | ( i 1,359 | ) | $ | i 171 | $ | i 3,734 | ||||||||||||||||
| Net income | — | i — | i — | i — | i — | i 156 | i — | i 16 | i 172 | |||||||||||||||||||||||||||
| Other comprehensive income | — | i — | i — | i — | i — | i — | i 41 | i 1 | i 42 | |||||||||||||||||||||||||||
| Vesting of stock awards | i 3,732 | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | i — | i 2 | i — | i 4 | i — | i — | i — | i 6 | |||||||||||||||||||||||||||
| Repurchase and cancellation of awards | ( i 19,912 | ) | i — | i — | i — | i — | ( i 1 | ) | i — | i — | ( i 1 | ) | ||||||||||||||||||||||||
| Stock options exercised | i 263,962 | i — | i 6 | i — | i — | ( i 3 | ) | i — | i — | i 3 | ||||||||||||||||||||||||||
| Dividends declared to noncontrolling interests | — | i — | i — | i — | i — | i — | i — | ( i 30 | ) | ( i 30 | ) | |||||||||||||||||||||||||
| Dividends declared on common stock ($0.1875 per share) | — | i — | i — | i — | i — | ( i 41 | ) | i — | i — | ( i 41 | ) | |||||||||||||||||||||||||
| Balance, June 30, 2021 | i 220,959,906 | $ | i 3 | $ | i 4,093 | $ | ( i 731 | ) | $ | ( i 34 | ) | $ | i 1,714 | $ | ( i 1,318 | ) | $ | i 158 | $ | i 3,885 | ||||||||||||||||
| Huntsman Corporation Stockholders' Equity | ||||||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Shares | Additional | Unearned | other | Noncontrolling | ||||||||||||||||||||||||||||||||
| Common | Common | paid-in | Treasury | stock-based | Retained | comprehensive | interests in | Total | ||||||||||||||||||||||||||||
| stock | stock | capital | stock | compensation | earnings | loss | subsidiaries | equity | ||||||||||||||||||||||||||||
| Balance, January 1, 2020 | i 224,295,868 | $ | i 3 | $ | i 4,008 | $ | ( i 635 | ) | $ | ( i 17 | ) | $ | i 690 | $ | ( i 1,362 | ) | $ | i 137 | $ | i 2,824 | ||||||||||||||||
| Net income | — | i — | i — | i — | i — | i 705 | i — | i 3 | i 708 | |||||||||||||||||||||||||||
| Other comprehensive loss | — | i — | i — | i — | i — | i — | ( i 21 | ) | i — | ( i 21 | ) | |||||||||||||||||||||||||
| Issuance of nonvested stock awards | — | i — | i 18 | i — | ( i 18 | ) | i — | i — | i — | i — | ||||||||||||||||||||||||||
| Vesting of stock awards | i 943,026 | i — | i 4 | i — | i — | i — | i — | i — | i 4 | |||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | i — | i 2 | i — | i 5 | i — | i — | i — | i 7 | |||||||||||||||||||||||||||
| Repurchase and cancellation of awards | ( i 283,975 | ) | i — | i — | i — | i — | ( i 6 | ) | i — | i — | ( i 6 | ) | ||||||||||||||||||||||||
| Stock options exercised | i 57,209 | i — | i 2 | i — | i — | ( i 2 | ) | i — | i — | i — | ||||||||||||||||||||||||||
| Treasury stock repurchased | ( i 5,364,519 | ) | i — | i — | ( i 96 | ) | i — | i — | i — | i — | ( i 96 | ) | ||||||||||||||||||||||||
| Dividends declared on common stock ($0.1625 per share) | — | i — | i — | i — | i — | ( i 37 | ) | i — | i — | ( i 37 | ) | |||||||||||||||||||||||||
| Balance, March 31, 2020 | i 219,647,609 | $ | i 3 | $ | i 4,034 | $ | ( i 731 | ) | $ | ( i 30 | ) | $ | i 1,350 | $ | ( i 1,383 | ) | $ | i 140 | $ | i 3,383 | ||||||||||||||||
| Net (loss) income | — | i — | i — | i — | i — | ( i 62 | ) | i — | i 3 | ( i 59 | ) | |||||||||||||||||||||||||
| Other comprehensive income | — | i — | i — | i — | i — | i — | i 29 | i — | i 29 | |||||||||||||||||||||||||||
| Vesting of stock awards | i 8,448 | i — | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||||||||
| Recognition of stock-based compensation | — | i — | i 2 | i — | i 4 | i — | i — | i — | i 6 | |||||||||||||||||||||||||||
| Repurchase and cancellation of awards | ( i 1,093 | ) | i — | i — | i — | i — | i — | i — | i — | i — | ||||||||||||||||||||||||||
| Stock options exercised | i 92,057 | i — | i 1 | i — | i — | i — | i — | i — | i 1 | |||||||||||||||||||||||||||
| Dividends declared on common stock ($0.1625 per share) | — | i — | i — | i — | i — | ( i 36 | ) | i — | i — | ( i 36 | ) | |||||||||||||||||||||||||
| Balance, June 30, 2020 | i 219,747,021 | $ | i 3 | $ | i 4,037 | $ | ( i 731 | ) | $ | ( i 26 | ) | $ | i 1,252 | $ | ( i 1,354 | ) | $ | i 143 | $ | i 3,324 | ||||||||||||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
| Six months | ||||||||
| ended | ||||||||
| 2020 | ||||||||
| Operating Activities: | ||||||||
| Net income | $ | i 272 | $ | i 649 | ||||
| Less: Income from discontinued operations, net of tax | ( i 2 | ) | ( i 782 | ) | ||||
| Income (loss) from continuing operations | i 270 | ( i 133 | ) | |||||
| Adjustments to reconcile income (loss) from continuing operations to net cash (used in) provided by operating activities from continuing operations: | ||||||||
| Equity in income of investment in unconsolidated affiliates | ( i 84 | ) | ( i 4 | ) | ||||
| Unrealized losses on fair value adjustments to Venator investment | i 25 | i 106 | ||||||
| Cash received from return on investment in unconsolidated subsidiary | i 28 | i 4 | ||||||
| Depreciation and amortization | i 147 | i 136 | ||||||
| Noncash lease expense | i 33 | i 30 | ||||||
| Gain on disposal of businesses/assets | ( i 28 | ) | i — | |||||
| Loss on early extinguishment of debt | i 27 | i — | ||||||
| Noncash restructuring and impairment charges | i 15 | i — | ||||||
| Deferred income taxes | i 2 | ( i 24 | ) | |||||
| Stock-based compensation | i 16 | i 14 | ||||||
| Other, net | ( i 2 | ) | i 2 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts and notes receivable | ( i 214 | ) | i 179 | |||||
| Inventories | ( i 332 | ) | i 79 | |||||
| Prepaid expenses | i 20 | i 17 | ||||||
| Other current assets | ( i 8 | ) | i 5 | |||||
| Other noncurrent assets | ( i 77 | ) | ( i 19 | ) | ||||
| Accounts payable | i 173 | ( i 196 | ) | |||||
| Accrued liabilities | ( i 15 | ) | ( i 58 | ) | ||||
| Taxes paid on sale of Chemical Intermediates Businesses | i — | ( i 10 | ) | |||||
| Other noncurrent liabilities | ( i 19 | ) | ( i 83 | ) | ||||
| Net cash (used in) provided by operating activities from continuing operations | ( i 23 | ) | i 45 | |||||
| Net cash used in operating activities from discontinued operations | ( i 1 | ) | ( i 40 | ) | ||||
| Net cash (used in) provided by operating activities | ( i 24 | ) | i 5 | |||||
| Investing Activities: | ||||||||
| Capital expenditures | ( i 174 | ) | ( i 116 | ) | ||||
| Cash received from sale of businesses | i 43 | i 1,915 | ||||||
| Acquisition of businesses, net of cash acquired | ( i 242 | ) | ( i 652 | ) | ||||
| Insurance proceeds for recovery of property damage | i 3 | i — | ||||||
| Other, net | i 1 | i 5 | ||||||
| Net cash (used in) provided by investing activities | ( i 369 | ) | i 1,152 | |||||
(Continued)
HUNTSMAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
| Six months | ||||||||
| ended | ||||||||
| 2020 | ||||||||
| Financing Activities: | ||||||||
| Net borrowings (repayments) on revolving loan facilities | $ | i 8 | $ | ( i 172 | ) | |||
| Proceeds from issuance of long-term debt | i 400 | i — | ||||||
| Repayments of long-term debt | ( i 962 | ) | ( i 14 | ) | ||||
| Repayments of notes payable | i — | ( i 32 | ) | |||||
| Debt issuance costs paid | ( i 3 | ) | i — | |||||
| Dividends paid to noncontrolling interests | ( i 30 | ) | ( i 24 | ) | ||||
| Dividends paid to common stockholders | ( i 78 | ) | ( i 73 | ) | ||||
| Repurchase and cancellation of awards | ( i 7 | ) | ( i 6 | ) | ||||
| Proceeds from issuance of common stock | i 6 | i 1 | ||||||
| Repurchase of common stock | i — | ( i 96 | ) | |||||
| Costs of early extinguishment of debt | ( i 26 | ) | i — | |||||
| Other, net | i 1 | ( i 1 | ) | |||||
| Net cash used in financing activities | ( i 691 | ) | ( i 417 | ) | ||||
| Effect of exchange rate changes on cash | i 1 | ( i 11 | ) | |||||
| (Decrease) increase in cash, cash equivalents and restricted cash | ( i 1,083 | ) | i 729 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | i 1,593 | i 525 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | i 510 | $ | i 1,254 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | i 47 | $ | i 40 | ||||
| Cash paid for income taxes | i 76 | i 55 | ||||||
For both June 30, 2021 and 2020, the amount of capital expenditures in accounts payable was $59 million. For the six months ended June 30, 2021, the amount of cash paid for taxes in connection with the earnout provision achieved under the terms of the sales agreement of the India-based do-it-yourself (“DIY”) business was $3 million. See “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business.”
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Unit Amounts)
| June 30, | ||||||||
| 2020 | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents(a) | $ | i 501 | $ | i 1,591 | ||||
| Accounts and notes receivable (net of allowance for doubtful accounts of $28 and $26, respectively), ($278 and $198 pledged as collateral, respectively)(a) | i 1,110 | i 902 | ||||||
| Accounts receivable from affiliates | i 60 | i 47 | ||||||
| Inventories(a) | i 1,193 | i 848 | ||||||
| Other current assets | i 208 | i 223 | ||||||
| Total current assets | i 3,072 | i 3,611 | ||||||
| Property, plant and equipment, net(a) | i 2,551 | i 2,505 | ||||||
| Investment in unconsolidated affiliates | i 433 | i 373 | ||||||
| Intangible assets, net | i 415 | i 453 | ||||||
| Goodwill | i 744 | i 533 | ||||||
| Deferred income taxes | i 285 | i 288 | ||||||
| Operating lease right-of-use assets | i 426 | i 445 | ||||||
| Other noncurrent assets(a) | i 619 | i 548 | ||||||
| Total assets | $ | i 8,545 | $ | i 8,756 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable(a) | $ | i 994 | $ | i 842 | ||||
| Accounts payable to affiliates | i 49 | i 36 | ||||||
| Accrued liabilities(a) | i 471 | i 455 | ||||||
| Current portion of debt(a) | i 44 | i 593 | ||||||
| Current operating lease liabilities(a) | i 49 | i 52 | ||||||
| Total current liabilities | i 1,607 | i 1,978 | ||||||
| Long-term debt(a) | i 1,521 | i 1,528 | ||||||
| Deferred income taxes | i 225 | i 214 | ||||||
| Noncurrent operating lease liabilities(a) | i 394 | i 411 | ||||||
| Other noncurrent liabilities(a) | i 860 | i 900 | ||||||
| Total liabilities | i 4,607 | i 5,031 | ||||||
| Commitments and contingencies (Notes 15 and 16) | ||||||||
| Equity | ||||||||
| Huntsman International LLC members’ equity: | ||||||||
| Members’ equity, 2,728 units issued and outstanding | i 3,716 | i 3,701 | ||||||
| Retained earnings | i 1,368 | i 1,203 | ||||||
| Accumulated other comprehensive loss | ( i 1,304 | ) | ( i 1,333 | ) | ||||
| Total Huntsman International LLC members’ equity | i 3,780 | i 3,571 | ||||||
| Noncontrolling interests in subsidiaries | i 158 | i 154 | ||||||
| Total equity | i 3,938 | i 3,725 | ||||||
| Total liabilities and equity | $ | i 8,545 | $ | i 8,756 | ||||
| (a) |
At June 30, 2021 and December 31, 2020, respectively, $2 each of cash and cash equivalents, $13 and $6 of accounts and notes receivable (net), $55 and $38 of inventories, $164 and $167 of property, plant and equipment (net), $22 and $23 of other noncurrent assets, $142 and $119 of accounts payable, $9 and $13 of accrued liabilities, $41 and $47 of current portion of debt, $6 and $5 of current operating lease liabilities, nil and $3 of long-term debt, $23 and $17 of noncurrent operating lease liabilities and $79 and $82 of other noncurrent liabilities from consolidated variable interest entities are included in the respective balance sheet captions above. See “Note 6. Variable Interest Entities.” |
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions)
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Revenues: | ||||||||||||||||
| Trade sales, services and fees, net | $ | i 1,974 | $ | i 1,226 | $ | i 3,776 | $ | i 2,775 | ||||||||
| Related party sales | i 50 | i 21 | i 85 | i 65 | ||||||||||||
| Total revenues | i 2,024 | i 1,247 | i 3,861 | i 2,840 | ||||||||||||
| Cost of goods sold | i 1,593 | i 1,085 | i 3,038 | i 2,381 | ||||||||||||
| Gross profit | i 431 | i 162 | i 823 | i 459 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | i 207 | i 185 | i 411 | i 382 | ||||||||||||
| Research and development | i 37 | i 32 | i 75 | i 68 | ||||||||||||
| Restructuring, impairment and plant closing costs | i 11 | i 19 | i 35 | i 22 | ||||||||||||
| Gain on sale of India-based DIY business | ( i 28 | ) | i — | ( i 28 | ) | i — | ||||||||||
| Other operating income, net | ( i 7 | ) | ( i 6 | ) | ( i 10 | ) | ( i 1 | ) | ||||||||
| Total operating expenses | i 220 | i 230 | i 483 | i 471 | ||||||||||||
| Operating income (loss) | i 211 | ( i 68 | ) | i 340 | ( i 12 | ) | ||||||||||
| Interest expense, net | ( i 18 | ) | ( i 21 | ) | ( i 37 | ) | ( i 41 | ) | ||||||||
| Equity in income of investment in unconsolidated affiliates | i 46 | i 2 | i 84 | i 4 | ||||||||||||
| Fair value adjustments to Venator investment | ( i 6 | ) | i 4 | ( i 25 | ) | ( i 106 | ) | |||||||||
| Loss on early extinguishment of debt | ( i 27 | ) | i — | ( i 27 | ) | i — | ||||||||||
| Other income, net | i 7 | i 6 | i 14 | i 15 | ||||||||||||
| Income (loss) from continuing operations before income taxes | i 213 | ( i 77 | ) | i 349 | ( i 140 | ) | ||||||||||
| Income tax (expense) benefit | ( i 41 | ) | i 13 | ( i 76 | ) | i 6 | ||||||||||
| Income (loss) from continuing operations | i 172 | ( i 64 | ) | i 273 | ( i 134 | ) | ||||||||||
| Income from discontinued operations, net of tax | i 1 | i 5 | i 2 | i 782 | ||||||||||||
| Net income (loss) | i 173 | ( i 59 | ) | i 275 | i 648 | |||||||||||
| Net income attributable to noncontrolling interests | ( i 16 | ) | ( i 3 | ) | ( i 33 | ) | ( i 6 | ) | ||||||||
| Net income (loss) attributable to Huntsman International LLC | $ | i 157 | $ | ( i 62 | ) | $ | i 242 | $ | i 642 | |||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Millions)
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Net income (loss) | $ | i 173 | $ | ( i 59 | ) | $ | i 275 | $ | i 648 | |||||||
| Other comprehensive income, net of tax: | ||||||||||||||||
| Foreign currency translations adjustment | i 25 | i 16 | ( i 6 | ) | ( i 57 | ) | ||||||||||
| Pension and other postretirement benefits adjustments | i 17 | i 13 | i 36 | i 66 | ||||||||||||
| Other comprehensive income, net of tax | i 42 | i 29 | i 30 | i 9 | ||||||||||||
| Comprehensive income (loss) | i 215 | ( i 30 | ) | i 305 | i 657 | |||||||||||
| Comprehensive income attributable to noncontrolling interests | ( i 17 | ) | ( i 3 | ) | ( i 34 | ) | ( i 6 | ) | ||||||||
| Comprehensive income (loss) attributable to Huntsman International LLC | $ | i 198 | $ | ( i 33 | ) | $ | i 271 | $ | i 651 | |||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In Millions, Except Unit Amounts)
| Huntsman International LLC Members | ||||||||||||||||||||||||
| Members' | Accumulated other | Noncontrolling | ||||||||||||||||||||||
| equity | comprehensive | interests in | Total | |||||||||||||||||||||
| Units | Amount | Retained earnings | loss | subsidiaries | equity | |||||||||||||||||||
| Balance, January 1, 2021 | i 2,728 | $ | i 3,701 | $ | i 1,203 | $ | ( i 1,333 | ) | $ | i 154 | $ | i 3,725 | ||||||||||||
| Net income | — | i — | i 85 | i — | i 17 | i 102 | ||||||||||||||||||
| Dividends paid to parent | — | i — | ( i 36 | ) | i — | i — | ( i 36 | ) | ||||||||||||||||
| Other comprehensive loss | — | i — | i — | ( i 12 | ) | i — | ( i 12 | ) | ||||||||||||||||
| Contribution from parent | — | i 8 | i — | i — | i — | i 8 | ||||||||||||||||||
| Balance, March 31, 2021 | i 2,728 | $ | i 3,709 | $ | i 1,252 | $ | ( i 1,345 | ) | $ | i 171 | $ | i 3,787 | ||||||||||||
| Net income | — | i — | i 157 | i — | i 16 | i 173 | ||||||||||||||||||
| Dividends paid to parent | — | i — | ( i 41 | ) | i — | i — | ( i 41 | ) | ||||||||||||||||
| Other comprehensive income | — | i — | i — | i 41 | i 1 | i 42 | ||||||||||||||||||
| Contribution from parent | — | i 7 | i — | i — | i — | i 7 | ||||||||||||||||||
| Dividends declared to noncontrolling interests | — | i — | i — | i — | ( i 30 | ) | ( i 30 | ) | ||||||||||||||||
| Balance, June 30, 2021 | i 2,728 | $ | i 3,716 | $ | i 1,368 | $ | ( i 1,304 | ) | $ | i 158 | $ | i 3,938 | ||||||||||||
| Huntsman International LLC Members |
||||||||||||||||||||||||
| Members' |
Accumulated other |
Noncontrolling |
||||||||||||||||||||||
| equity |
comprehensive |
interests in |
Total |
|||||||||||||||||||||
| Units |
Amount |
Retained earnings |
loss |
subsidiaries |
equity |
|||||||||||||||||||
| Balance, January 1, 2020 |
i 2,728 | $ | i 3,675 | $ | i 312 | $ | ( i 1,352 | ) | $ | i 137 | $ | i 2,772 | ||||||||||||
| Net income |
— | i — | i 704 | i — | i 3 | i 707 | ||||||||||||||||||
| Dividends paid to parent |
— | i — | ( i 37 | ) | i — | i — | ( i 37 | ) | ||||||||||||||||
| Other comprehensive loss |
— | i — | i — | ( i 20 | ) | i — | ( i 20 | ) | ||||||||||||||||
| Contribution from parent |
— | i 6 | i — | i — | i — | i 6 | ||||||||||||||||||
| Balance, March 31, 2020 |
i 2,728 | $ | i 3,681 | $ | i 979 | $ | ( i 1,372 | ) | $ | i 140 | $ | i 3,428 | ||||||||||||
| Net (loss) income |
— | i — | ( i 62 | ) | i — | i 3 | ( i 59 | ) | ||||||||||||||||
| Dividends paid to parent |
— | i — | ( i 36 | ) | i — | i — | ( i 36 | ) | ||||||||||||||||
| Other comprehensive income |
— | i — | i — | i 29 | i — | i 29 | ||||||||||||||||||
| Contribution from parent |
— | i 7 | i — | i — | i — | i 7 | ||||||||||||||||||
| Balance, June 30, 2020 |
i 2,728 | $ | i 3,688 | $ | i 881 | $ | ( i 1,343 | ) | $ | i 143 | $ | i 3,369 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
| Six months |
||||||||
| ended |
||||||||
| 2020 |
||||||||
| Operating Activities: |
||||||||
| Net income |
$ | i 275 | $ | i 648 | ||||
| Less: Income from discontinued operations, net of tax |
( i 2 | ) | ( i 782 | ) | ||||
| Income (loss) from continuing operations |
i 273 | ( i 134 | ) | |||||
| Adjustments to reconcile income (loss) from continuing operations to net cash (used in) provided by operating activities from continuing operations: |
||||||||
| Equity in income of investment in unconsolidated affiliates |
( i 84 | ) | ( i 4 | ) | ||||
| Unrealized losses on fair value adjustments to Venator investment |
i 25 | i 106 | ||||||
| Cash received from return on investment in unconsolidated subsidiary |
i 28 | i 4 | ||||||
| Depreciation and amortization |
i 147 | i 136 | ||||||
| Noncash lease expense |
i 33 | i 30 | ||||||
| Gain on disposal of businesses/assets |
( i 28 | ) | i — | |||||
| Loss on early extinguishment of debt |
i 27 | i — | ||||||
| Noncash restructuring and impairment charges |
i 15 | i — | ||||||
| Deferred income taxes |
i 1 | ( i 25 | ) | |||||
| Noncash compensation |
i 15 | i 13 | ||||||
| Other, net |
( i 4 | ) | i 5 | |||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts and notes receivable |
( i 214 | ) | i 179 | |||||
| Inventories |
( i 332 | ) | i 79 | |||||
| Prepaid expenses |
i 19 | i 16 | ||||||
| Other current assets |
( i 1 | ) | i 12 | |||||
| Other noncurrent assets |
( i 77 | ) | ( i 19 | ) | ||||
| Accounts payable |
i 172 | ( i 198 | ) | |||||
| Accrued liabilities |
( i 21 | ) | ( i 64 | ) | ||||
| Taxes paid on sale of Chemical Intermediates Businesses |
i — | ( i 10 | ) | |||||
| Other noncurrent liabilities |
( i 17 | ) | ( i 82 | ) | ||||
| Net cash (used in) provided by operating activities from continuing operations |
( i 23 | ) | i 44 | |||||
| Net cash used in operating activities from discontinued operations |
( i 1 | ) | ( i 40 | ) | ||||
| Net cash (used in) provided by operating activities |
( i 24 | ) | i 4 | |||||
| Investing Activities: |
||||||||
| Capital expenditures |
( i 174 | ) | ( i 116 | ) | ||||
| Cash received from sale of businesses |
i 43 | i 1,915 | ||||||
| Acquisition of businesses, net of cash acquired |
( i 242 | ) | ( i 652 | ) | ||||
| (Increase) decrease in receivable from affiliate |
( i 8 | ) | i 278 | |||||
| Insurance proceeds for recovery of property damage |
i 3 | i — | ||||||
| Other, net |
i 1 | i 5 | ||||||
| Net cash (used in) provided by investing activities |
( i 377 | ) | i 1,430 | |||||
(Continued)
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In Millions)
| Six months | ||||||||
| ended | ||||||||
| 2020 | ||||||||
| Financing Activities: | ||||||||
| Net borrowings (repayments) on revolving loan facilities | $ | i 8 | $ | ( i 172 | ) | |||
| Proceeds from issuance of long-term debt | i 400 | i — | ||||||
| Repayments of long-term debt | ( i 962 | ) | ( i 14 | ) | ||||
| Repayments of notes payable to affiliate | i — | ( i 380 | ) | |||||
| Repayments of notes payable | i — | ( i 32 | ) | |||||
| Debt issuance costs paid | ( i 3 | ) | i — | |||||
| Dividends paid to noncontrolling interests | ( i 30 | ) | ( i 23 | ) | ||||
| Dividends paid to parent | ( i 77 | ) | ( i 73 | ) | ||||
| Costs of early extinguishment of debt | ( i 26 | ) | i — | |||||
| Other, net | i — | ( i 1 | ) | |||||
| Net cash used in financing activities | ( i 690 | ) | ( i 695 | ) | ||||
| Effect of exchange rate changes on cash | i 1 | ( i 11 | ) | |||||
| (Decrease) increase in cash, cash equivalents and restricted cash | ( i 1,090 | ) | i 728 | |||||
| Cash, cash equivalents and restricted cash at beginning of period | i 1,591 | i 525 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | i 501 | $ | i 1,253 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | i 47 | $ | i 40 | ||||
| Cash paid for income taxes | i 76 | i 55 | ||||||
For both June 30, 2021 and 2020, the amount of capital expenditures in accounts payable was $59 million. For the six months ended June 30, 2021, the amount of cash paid for taxes in connection with the earnout provision achieved under the terms of the sales agreement of the India-based DIY business was $3 million. See “Note 4. Discontinued Operations and Business Dispositions—Sale of India-Based Do-It-Yourself Consumer Adhesives Business.”
See accompanying notes to condensed consolidated financial statements.
HUNTSMAN CORPORATION AND SUBSIDIARIES
HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
Certain Definitions
For convenience in this report, the terms “Company,” “Huntsman,” “our,” “us” or “we” may be used to refer to Huntsman Corporation and, unless the context otherwise requires, its subsidiaries and predecessors. In this report, “Huntsman International” refers to Huntsman International LLC (our wholly-owned subsidiary).
In this report, we may use, without definition, the common names of competitors or other industry participants. We may also use the common names or abbreviations for certain chemicals or products.
Interim Financial Statements
Our unaudited interim condensed consolidated financial statements and Huntsman International’s unaudited interim condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP” or “U.S. GAAP”) and in management’s opinion reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results of operations, comprehensive income (loss), financial position and cash flows for the periods presented. Results for interim periods are not necessarily indicative of those to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes to consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2020 for our Company and Huntsman International.
Description of Businesses
We are a global manufacturer of differentiated organic chemical products. We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, insulation, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals and dyes industries. We are a leading global producer in many of our key product lines, including MDI, amines, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes.
We operate our businesses through Huntsman International, our wholly-owned subsidiary. Huntsman International is a Delaware limited liability company and was formed in 1999.
Huntsman Corporation and Huntsman International Financial Statements
Except where otherwise indicated, these notes relate to the condensed consolidated financial statements for both our Company and Huntsman International. The differences between our financial statements and Huntsman International’s financial statements relate primarily to the following:
| ● | purchase accounting recorded at our Company for the 2003 step-acquisition of Huntsman International Holdings LLC, the former parent company of Huntsman International that was merged into Huntsman International in 2005; and |
| ● | the different capital structures. |
iPrinciples of Consolidation
Our condensed consolidated financial statements include the accounts of our wholly-owned and majority-owned subsidiaries and any variable interest entities for which we are the primary beneficiary. Intercompany accounts and transactions have been eliminated.
Recent Developments
Senior Notes Refinancing
On May 26, 2021, Huntsman International completed a $ i 400 million offering of its i 2.95% senior notes due 2031 (“2031 Senior Notes”). On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full $ i 400 million in aggregate principal amount of its i 5.125% senior notes due 2022 (“2022 Senior Notes”) and to pay accrued but unpaid interest of approximately $ i 2 million. In addition, we paid redemption premiums and related fees and expenses of approximately $ i 25 million and recognized a corresponding loss on early extinguishment of debt of $ i 26 million in the second quarter of 2021. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes.”
Amendments to Accounts Receivable Securitization Programs
On July 1, 2021, we entered into amendments to our U.S. accounts receivable securitization program (“U.S. A/R Program”) and our European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”) that, among other things, extended the scheduled termination dates of our A/R Programs to July 2024. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs.”
Sale of India-Based Do-It-Yourself Consumer Adhesives Business
On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $ i 257 million. Under the terms of the agreement, we may receive up to approximately $ i 28 million of additional cash under an earnout provision if the business achieves within i 18 months certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of $ i 28 million. As a result, we recognized an additional pretax gain of $ i 28 million in the second quarter, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.
i
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
/
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
i
Accounting Pronouncements ADopted During 2021
We adopted the following accounting pronouncement during 2021, which did not have a significant impact on our condensed consolidated financial statements:
| ● | Financial Accounting Standards Board Accounting Standards Update No. 2021-01, Reference Rate Reform (Topic 848): Scope. |
/
3. BUSINESS COMBINATIONS AND ACQUISITIONS
Acquisition of gaBRIEL Performance Products
On January 15, 2021, we completed the acquisition of Gabriel Performance Products, a North American specialty chemical manufacturer of specialty additives and epoxy curing agents for the coatings, adhesives, sealants and composite end-markets (“Gabriel Acquisition”), from funds affiliated with Audax Private Equity in an all-cash transaction of approximately $ i 251 million, subject to customary closing adjustments. The purchase price was funded from available liquidity, and the acquired business is being integrated into our Advanced Materials segment. Transaction costs related to this acquisition were approximately $2 million for the six months ended June 30, 2021 and were recorded in other operating income, net in our condensed consolidated statements of operations.
We accounted for the Gabriel Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The preliminary allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):
i
| Fair value of assets acquired and liabilities assumed: | ||||
| Cash paid for the Gabriel Acquisition | $ | i 251 | ||
| Cash | $ | i 9 | ||
| Accounts receivable | i 13 | |||
| Inventories | i 26 | |||
| Property, plant and equipment | i 23 | |||
| Intangible assets | i 16 | |||
| Goodwill | i 174 | |||
| Accounts payable | ( i 7 | ) | ||
| Accrued liabilities | ( i 2 | ) | ||
| Deferred income taxes | ( i 1 | ) | ||
| Total fair value of net assets acquired | $ | i 251 |
The acquisition cost allocation is preliminary pending final determination of the fair value of assets acquired and liabilities assumed, including final valuation of certain liabilities, property, plant and equipment, intangible assets, leases and deferred taxes. Intangible assets acquired included in this preliminary allocation consist primarily of trademarks, technology and trade secrets. The applicable amortization periods are still being assessed. For purposes of this preliminary allocation of fair value, we have assigned any excess of the acquisition cost over the estimated preliminary fair value to goodwill. The estimated goodwill recognized is attributable primarily to projected future profitable growth in our Advanced Materials specialty portfolio and synergies. We expect that a portion of the estimated goodwill arising from the acquisition will be deductible for income tax purposes, but the amount is still being assessed. It is possible that material changes to this preliminary allocation of acquisition cost could occur.
The acquired business had revenues and net income of $ i 51 million and $ i 8 million, respectively, for the period from the date of acquisition to June 30, 2021.
Acquisition of CVC Thermoset Specialties
On May 18, 2020, we completed our acquisition of CVC Thermoset Specialties, a North American specialty chemical manufacturer serving the industrial composites, adhesives and coatings markets (“CVC Thermoset Specialties Acquisition”). We acquired the business for $ i 304 million from Emerald Performance Materials LLC, which is majority owned by affiliates of American Securities LLC, in an all-cash transaction funded from available liquidity. The acquired business was integrated into our Advanced Materials segment.
We accounted for the CVC Thermoset Specialties Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):
| Fair value of assets acquired and liabilities assumed: | ||||
| Cash paid for the CVC Thermoset Specialties Acquisition | $ | i 304 | ||
| Accounts receivable | $ | i 12 | ||
| Inventories | i 37 | |||
| Property, plant and equipment | i 67 | |||
| Intangible assets | i 117 | |||
| Goodwill | i 120 | |||
| Accounts payable | ( i 7 | ) | ||
| Accrued liabilities | ( i 1 | ) | ||
| Deferred income taxes | ( i 41 | ) | ||
| Total fair value of net assets acquired | $ | i 304 |
Intangible assets acquired consist primarily of trademarks, trade secrets and customer relationships, which are predominantly being amortized over a period of i 20 years. The goodwill recognized is attributable primarily to projected future profitable growth in our Advanced Materials specialty portfolio and synergies. None of the goodwill arising from the acquisition is deductible for income tax purposes.
Acquisition of Icynene-Lapolla
On February 20, 2020, we completed our acquisition of Icynene-Lapolla, a leading North American manufacturer and distributor of spray polyurethane foam insulation systems for residential and commercial applications (“Icynene-Lapolla Acquisition”). We acquired the business from an affiliate of FFL Partners, LLC for $ i 353 million in an all-cash transaction funded from available liquidity. The acquired business was integrated into our Polyurethanes segment.
We accounted for the Icynene-Lapolla Acquisition using the acquisition method. As such, we analyzed the fair value of tangible and intangible assets acquired and liabilities assumed. The allocation of acquisition cost to the assets acquired and liabilities assumed is summarized as follows (dollars in millions):
| Fair value of assets acquired and liabilities assumed: | ||||
| Cash paid for the Icynene-Lapolla Acquisition | $ | i 353 | ||
| Cash | $ | i 7 | ||
| Accounts receivable | i 36 | |||
| Inventories | i 32 | |||
| Prepaid expenses and other current assets | i 2 | |||
| Property, plant and equipment | i 9 | |||
| Intangible assets | i 130 | |||
| Goodwill | i 167 | |||
| Other noncurrent assets | i 4 | |||
| Accounts payable | ( i 14 | ) | ||
| Accrued liabilities | ( i 11 | ) | ||
| Deferred income taxes | ( i 9 | ) | ||
| Total fair value of net assets acquired | $ | i 353 |
As a result of the final valuation of the assets and liabilities, reallocations were made during the first quarter of 2021 in certain current asset and liability, property, plant and equipment, intangible asset, goodwill, other noncurrent assets and deferred tax balances. Intangible assets acquired consist primarily of trademarks, trade secrets and customer relationships, which are predominantly being amortized over a period of i 10 years. The goodwill recognized is attributable primarily to projected future profitable growth, penetration into downstream markets and synergies. None of the goodwill arising from the acquisition is deductible for income tax purposes.
PRO FORMA INFORMATION FOR ACQUISITIONS
If the Gabriel Acquisition, CVC Thermoset Specialties Acquisition and the Icynene-Lapolla Acquisition were to have occurred on January 1, 2020, the following estimated pro forma revenues, net (loss) income, net (loss) income attributable to Huntsman Corporation and Huntsman International would have been reported (dollars in millions):
i| Three months | Six months | |||||||||||
| ended | ended | |||||||||||
| June 30, | ||||||||||||
| 2021(1) | 2020 | |||||||||||
| Revenues | $ | i 1,276 | $ | i 3,865 | $ | i 2,951 | ||||||
| Net (loss) income | ( i 64 | ) | i 260 | i 641 | ||||||||
| Net (loss) income attributable to Huntsman Corporation | ( i 67 | ) | i 227 | i 635 | ||||||||
| Three months | Six months | |||||||||||
| ended | ended | |||||||||||
| June 30, | ||||||||||||
| 2021(1) | 2020 | |||||||||||
| Revenues | $ | i 1,276 | $ | i 3,865 | $ | i 2,951 | ||||||
| Net (loss) income | ( i 64 | ) | i 263 | i 640 | ||||||||
| Net (loss) income attributable to Huntsman International | ( i 67 | ) | i 230 | i 634 | ||||||||
| (1) | Includes pro forma information for the Gabriel Acquisition only. |
4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS
On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $ i 257 million. Under the terms of the agreement, we may receive up to approximately $ i 28 million of additional cash under an earnout provision if the business achieves within i 18 months certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of $ i 28 million. As a result, we recognized an additional pretax gain of $ i 28 million in the second quarter, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.
SaLE of Venator InterEST
On January 3, 2020, we completed the sale of our chemical intermediates businesses, which included PO/MTBE, and our surfactants business (“Chemical Intermediates Businesses”) to Indorama Ventures Holdings L.P. (“Indorama”) in a transaction valued at approximately $ i 2 billion, comprised of a cash purchase price of approximately $ i 1.92 billion and the transfer of approximately $ i 72 million in net underfunded pension and other post-employment benefit liabilities. In connection with this sale, we recognized a net after-tax gain of $ i 748 million in the first six months of 2020. Also, in connection with this sale, we entered into long-term supply agreements with Indorama to supply us with certain raw materials at market prices.
The following table reconciles major line items constituting pretax income of discontinued operations to after-tax income of discontinued operations as presented in our condensed consolidated statements of operations (dollars in millions):
i
| Three months | Six months | |||||||
| ended | ended | |||||||
| June 30, | ||||||||
| 2020 | ||||||||
| Major line items constituting pretax income of discontinued operations(1): | ||||||||
| Trade sales, services and fees, net(2) | $ | i 1 | $ | i 7 | ||||
| Cost of goods sold(2) | i 2 | i 11 | ||||||
| (Loss) gain on sale of the Chemical Intermediates Businesses | ( i 12 | ) | i 978 | |||||
| Insurance proceeds | i 20 | i 48 | ||||||
| Other expense items, net | i 1 | i 1 | ||||||
| Income from discontinued operations before income taxes | i 6 | i 1,021 | ||||||
| Income tax expense | ( i 1 | ) | ( i 239 | ) | ||||
| Net income attributable to discontinued operations | $ | i 5 | $ | i 782 | ||||
| (1) | Discontinued operations include our Chemical Intermediates Businesses, our Australian styrenics operations and our North American polymers and base chemicals operations for all periods presented. |
| (2) | Includes eliminations of trade sales, services and fees, net and cost of sales between continuing operations and discontinued operations. |
5. INVENTORIES
We state our inventories at the lower of cost or market, with cost determined using LIFO, first-in first-out and average cost methods for different components of inventory. Inventories consisted of the following (dollars in millions):
i| June 30, | ||||||||
| 2020 | ||||||||
| Raw materials and supplies | $ | i 289 | $ | i 180 | ||||
| Work in progress | i 53 | i 44 | ||||||
| Finished goods | i 887 | i 651 | ||||||
| Total | i 1,229 | i 875 | ||||||
| LIFO reserves | ( i 36 | ) | ( i 27 | ) | ||||
| Net inventories | $ | i 1,193 | $ | i 848 | ||||
As of June 30, 2021 and December 31, 2020, approximately i 6% and i 7%, respectively, of inventories were recorded using the LIFO cost method.
/6. VARIABLE INTEREST ENTITIES
We evaluate our investments and transactions to identify variable interest entities for which we are the primary beneficiary. We hold a variable interest in the following joint ventures for which we are the primary beneficiary:
| ● | Rubicon LLC is our i 50%-owned joint venture with Lanxess that manufactures products for our Polyurethanes and Performance Products segments. |
| ● | Arabian Amines Company is our i 50%-owned joint venture with Zamil group that manufactures products for our Performance Products segment. |
During the six months ended June 30, 2021, there were no changes in our variable interest entities.
Creditors of these entities have no recourse to our general credit. See “Note 8. Debt—Direct and Subsidiary Debt.” As the primary beneficiary of these variable interest entities at June 30, 2021, the joint ventures’ assets, liabilities and results of operations are included in our condensed consolidated financial statements.
The following table summarizes the carrying amount of our variable interest entities’ assets and liabilities included in our condensed consolidated balance sheet as of June 30, 2021 and our consolidated balance sheet as of December 31, 2020 (dollars in millions):
i| June 30, | ||||||||
| 2020 | ||||||||
| Current assets | $ | i 74 | $ | i 49 | ||||
| Property, plant and equipment, net | i 164 | i 167 | ||||||
| Operating lease right-of-use assets | i 28 | i 22 | ||||||
| Other noncurrent assets | i 152 | i 138 | ||||||
| Deferred income taxes | i 30 | i 30 | ||||||
| Total assets | $ | i 448 | $ | i 406 | ||||
| Current liabilities | $ | i 198 | $ | i 183 | ||||
| Long-term debt | i — | i 3 | ||||||
| Noncurrent operating lease liabilities | i 23 | i 17 | ||||||
| Other noncurrent liabilities | i 79 | i 82 | ||||||
| Deferred income taxes | i 1 | i 1 | ||||||
| Total liabilities | $ | i 301 | $ | i 286 | ||||
The revenues, income from continuing operations before income taxes and net cash provided by operating activities for our variable interest entities for the three and six months ended June 30, 2021 and 2020 are as follows (dollars in millions):
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Revenues | $ | i — | $ | i — | $ | i — | $ | i — | ||||||||
| Income from continuing operations before income taxes | i 7 | i — | i 7 | i 1 | ||||||||||||
| Net cash provided by operating activities | i 4 | i 8 | i 8 | i 14 | ||||||||||||
7. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS
As of June 30, 2021 and December 31, 2020, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):
i
| Workforce reductions | Non-cancelable lease and contract termination costs | Other restructuring costs | Total | |||||||||||||
| Accrued liabilities as of January 1, 2021 | $ | i 29 | $ | i 2 | $ | i — | $ | i 31 | ||||||||
| 2021 charges for 2020 and prior initiatives | i 14 | i — | i 4 | i 18 | ||||||||||||
| 2021 charges for 2021 initiatives | i 2 | i — | i — | i 2 | ||||||||||||
| 2021 payments for 2020 and prior initiatives | ( i 8 | ) | i — | ( i 3 | ) | ( i 11 | ) | |||||||||
| Accrued liabilities as of June 30, 2021 | $ | i 37 | $ | i 2 | $ | i 1 | $ | i 40 | ||||||||
Details with respect to our reserves for restructuring, impairment and plant closing costs by segment and initiative are provided below (dollars in millions):
i
| Performance | Advanced | Textile | Corporate | |||||||||||||||||||||
| Polyurethanes | Products | Materials | Effects | and Other | Total | |||||||||||||||||||
| Accrued liabilities as of January 1, 2021 | $ | i 12 | $ | i 2 | $ | i 9 | $ | i 8 | $ | i — | $ | i 31 | ||||||||||||
| 2021 charges (credits) for 2020 and prior initiatives | i 5 | i — | ( i 1 | ) | ( i 1 | ) | i 15 | i 18 | ||||||||||||||||
| 2021 charges for 2021 initiatives | i — | i — | i 2 | i — | i — | i 2 | ||||||||||||||||||
| 2021 payments for 2020 and prior initiatives | ( i 3 | ) | ( i 1 | ) | ( i 3 | ) | ( i 1 | ) | ( i 3 | ) | ( i 11 | ) | ||||||||||||
| Accrued liabilities as of June 30, 2021 | $ | i 14 | $ | i 1 | $ | i 7 | $ | i 6 | $ | i 12 | $ | i 40 | ||||||||||||
| Current portion of restructuring reserves | $ | i 14 | $ | i 1 | $ | i 4 | $ | i 3 | $ | i 2 | $ | i 24 | ||||||||||||
| Long-term portion of restructuring reserves | i — | i — | i 3 | i 3 | i 10 | i 16 | ||||||||||||||||||
Details with respect to cash and noncash restructuring charges from continuing operations for the three and six months ended June 30, 2021 and 2020 are provided below (dollars in millions):
i
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Cash charges: | ||||||||||||||||
| 2021 charges for 2020 and prior initiatives | $ | i 4 | $ | — | $ | i 18 | $ | — | ||||||||
| 2021 charges for 2021 initiatives | — | — | i 2 | — | ||||||||||||
| 2020 charges for 2019 and prior initiatives | — | i 2 | — | i 3 | ||||||||||||
| 2020 charges for 2020 initiatives | — | i 17 | — | i 19 | ||||||||||||
| Noncash charges: | ||||||||||||||||
| Other noncash charges | i 7 | — | i 15 | — | ||||||||||||
| Total restructuring, impairment and plant closing costs | $ | i 11 | $ | i 19 | $ | i 35 | $ | i 22 | ||||||||
2021 Restructuring Activities
Beginning in the first quarter of 2021, our Corporate and other segment incurred restructuring costs related to a restructuring program to optimize our global approach to leveraging shared services capabilities. In connection with this restructuring program, we recorded restructuring expense of approximately $15 million in the six months ended June 30, 2021 related primarily to workforce reductions, and we expect to record further restructuring expenses of approximately $2 million through 2023.
Beginning in the third quarter of 2020, our Polyurethanes segment implemented a restructuring program to optimize its downstream footprint. In connection with this restructuring program, we recorded restructuring expense of approximately $ i 6 million in the six months ended June 30, 2021 related primarily to workforce reductions, and we expect to record further restructuring expenses of between approximately $12 million and $14 million through year end 2021.
2020 Restructuring Activities
During the second quarter of 2020, our Polyurethanes segment implemented a restructuring program to reorganize its spray polyurethane foam business to better position this business for efficiencies and growth in coming years. In connection with this restructuring program, we recorded restructuring expense of approximately $ i 2 million in the second quarter of 2020 related primarily to workforce reductions.
During the second quarter of 2020, our Performance Products segment implemented a restructuring program, primarily related to workforce reductions, in response to the sale of our Chemical Intermediates Businesses to Indorama. In connection with this restructuring program, we recorded restructuring expense of approximately $ i 4 million in the second quarter of 2020.
During the second quarter of 2020, our Advanced Materials segment implemented restructuring programs, primarily related to workforce reductions in connection with the CVC Thermoset Specialties Acquisition. In connection with these restructuring programs, we recorded restructuring expense of approximately $ i 4 million in the second quarter of 2020.
During the first quarter of 2020, our Textile Effects segment implemented restructuring programs to rationalize and realign structurally across various functions and certain locations within the segment. In connection with these restructuring programs, we recorded restructuring expense of approximately $ i 10 million for the six months ended June 30, 2020, related primarily to workforce reductions.
/
8. DEBT
Our outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):
i| June 30, | ||||||||
| 2020 | ||||||||
| Senior Credit Facilities: | ||||||||
| Revolving facility | $ | i — | $ | i — | ||||
| Amounts outstanding under A/R programs | i — | i — | ||||||
| Senior notes | i 1,491 | i 2,047 | ||||||
| Variable interest entities | i 41 | i 50 | ||||||
| Other | i 33 | i 24 | ||||||
| Total debt | $ | i 1,565 | $ | i 2,121 | ||||
| Current portion of debt | $ | i 44 | $ | i 593 | ||||
| Long-term portion of debt | i 1,521 | i 1,528 | ||||||
| Total debt | $ | i 1,565 | $ | i 2,121 | ||||
Direct and Subsidiary Debt
Huntsman Corporation’s direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt.
Certain of our subsidiaries have third-party debt agreements that contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.
Debt Issuance Costs
We record debt issuance costs related to a debt liability on the balance sheet as a reduction to the face amount of that debt liability. For June 30, 2021 and December 31, 2020, the amount of debt issuance costs directly reducing the debt liability was $ i 10 million and $ i 9 million, respectively. We record the amortization of debt issuance costs as interest expense.
Revolving Credit Facility
As of June 30, 2021, our $ i 1.2 billion senior unsecured revolving credit facility (“Revolving Credit Facility”) was as follows (monetary amounts in millions):
i| Unamortized | ||||||||||||||||||||||
| Discounts and | ||||||||||||||||||||||
| Committed | Principal | Debt Issuance | Carrying | |||||||||||||||||||
| Facility | Amount | Outstanding | Costs | Value | Interest Rate(2) | Maturity | ||||||||||||||||
| Revolving Credit Facility | $ | i 1,200 | $ | i — | (1) | $ | i — | (1) | $ | i — | (1) |
USD LIBOR plus 1.50% | 2023 | |||||||||
| (1) | On June 30, 2021, we had an additional $ i 4 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our Revolving Credit Facility. |
| (2) | Interest rates on borrowings under the Revolving Credit Facility vary based on the type of loan and Huntsman International’s debt ratings. The then applicable interest rate as of June 30, 2021 was i 1.50% above LIBOR. |
A/R Programs
Our A/R Programs are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity (“U.S. SPE”) and the European special purpose entity (“EU SPE”) in transactions intended to be true sales or true contributions. The receivables collateralize debt incurred by the U.S. SPE and the EU SPE.
Information regarding our A/R Programs as of June 30, 2021 was as follows (monetary amounts in millions):
i| Maximum Funding | Amount | |||||||||||
| Facility | Maturity | Availability(1) | Outstanding | Interest Rate(2) | ||||||||
| U.S. A/R Program | April 2022 | $ | i 150 | $ | i — |
(3) | Applicable rate plus 0.90% | |||||
| EU A/R Program | April 2022 | € | i 100 | € | i — |
Applicable rate plus 1.30% | ||||||
| (or approximately $119) | ||||||||||||
| (1) | The amount of actual availability under our A/R Programs may be lower based on the level of eligible receivables sold, changes in the credit ratings of our customers, customer concentration levels and certain characteristics of the accounts receivable being transferred, as defined in the applicable agreements. |
| (2) | The applicable rate for our U.S. A/R Program is defined by the lender as USD LIBOR. The applicable rate for our EU A/R Program is either GBP LIBOR, USD LIBOR or EURIBOR. |
| (3) | As of June 30, 2021, we had approximately $ i 7 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program. |
As of June 30, 2021 and December 31, 2020, $ i 278 million and $ i 198 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.
On July 1, 2021, we entered into amendments to our A/R Programs that, among other things, extended the respective scheduled termination dates of our A/R Programs to July 2024.
Senior Notes
On January 15, 2021, Huntsman International redeemed in full € i 445 million (approximately $ i 541 million) in aggregate principal amount of our i 5.125% senior notes due 2021 (“2021 Senior Notes”) at the redemption price equal to i 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date. In connection with this redemption, we incurred an incremental cash tax liability of approximately $ i 15 million in the first quarter of 2021 related to foreign currency exchange gains.
On May 26, 2021, Huntsman International completed a $ i 400 million offering of its 2031 Senior Notes. On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full $ i 400 million in aggregate principal amount of its 2022 Senior Notes and to pay accrued but unpaid interest of approximately $ i 2 million. In addition, we paid redemption premiums and related fees and expenses of approximately $ i 25 million and recognized a corresponding loss on early extinguishment of debt of $ i 26 million in the second quarter of 2021.
The 2031 Senior Notes bear interest at i 2.95% per year, payable semi‑annually on June 15 and December 15 of each year, and will mature on June 15, 2031. Huntsman International may redeem the 2031 Senior Notes in whole or in part at any time prior to March 15, 2031 at a price equal to i 100% of the principal amount thereof plus a “make‑whole” premium as of, and accrued and unpaid interest, if any, to, but not including, the date of redemption. Huntsman International may redeem the 2031 Senior Notes at any time in whole or from time to time in part, on or after March 15, 2031 at a price equal to i 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
Note Payable from Huntsman International to Huntsman Corporation
During the first quarter of 2020, our intercompany loan of $ i 380 million to our subsidiary Huntsman International was repaid to us in full.
Compliance with Covenants
We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Revolving Credit Facility, our A/R Programs and our senior notes.
9. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations.
Our revenues and expenses are denominated in various foreign currencies, and our cash flows and earnings are thus subject to fluctuations due to exchange rate variations. From time to time, we may enter into foreign currency derivative instruments to minimize the short-term impact of movements in foreign currency rates. Where practicable, we generally net multicurrency cash balances among our subsidiaries to help reduce exposure to foreign currency exchange rates. Certain other exposures may be managed from time to time through financial market transactions, principally through the purchase of spot or forward foreign exchange contracts (generally with maturities of one year or less). We do not hedge our foreign currency exposures in a manner that would eliminate the effect of changes in exchange rates on our cash flows and earnings. As of June 30, 2021, we had approximately $ i 185 million in notional amount (in U.S. dollar equivalents) outstanding in forward foreign currency contracts.
From time to time, we may purchase interest rate swaps and/or other derivative instruments to reduce the impact of changes in interest rates on our floating-rate exposures. Under interest rate swaps, we agree with other parties to exchange, at specified intervals, the difference between fixed-rate and floating-rate interest amounts calculated by reference to an agreed notional principal amount.
We review our non-U.S. dollar denominated debt and derivative instruments to determine the appropriate amounts designated as hedges. As of June 30, 2021, we have designated approximately €85 million (approximately $ i 101 million) of euro-denominated debt as a hedge of our net investment. For the six months ended June 30, 2021 and June 30, 2020, the amount recognized on the hedge of our net investment was a loss of $ i 4 million and a gain of $ i 2 million, respectively, and were recorded in other comprehensive income in our condensed consolidated statements of comprehensive income (loss).
/
10. FAIR VALUE
The fair values of financial instruments were as follows (dollars in millions):
i| Carrying | Estimated | Carrying | Estimated | |||||||||||||
| Value | Fair Value | Value | Fair Value | |||||||||||||
| Non-qualified employee benefit plan investments | $ | i 22 | $ | i 22 | $ | i 26 | $ | i 26 | ||||||||
| Investment in Venator | i 46 | i 46 | i 32 | i 32 | ||||||||||||
| Option agreement for remaining Venator shares | ( i 26 | ) | ( i 26 | ) | i 11 | i 11 | ||||||||||
| Long-term debt (including current portion) | ( i 1,565 | ) | ( i 1,738 | ) | ( i 2,121 | ) | ( i 2,334 | ) | ||||||||
The carrying amounts reported in the balance sheets of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the immediate or short-term maturity of these financial instruments. Our investment in Venator is marked to fair value, which is obtained through market observable pricing using prevailing market prices (Level 1). Additionally, the estimated fair value of the option agreement related to the remaining ordinary shares we hold in Venator is based on a valuation technique using market observable inputs (Level 2). See “Note 4. Discontinued Operations and Business Dispositions—Sale of Venator Interest.” The fair values of non-qualified employee benefit plan investments are obtained through market observable pricing using prevailing market prices (Level 1). The estimated fair values of our long-term debt are based on quoted market prices for the identical liability when traded in an active market (Level 1). The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2021 and December 31, 2020. Although we are not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since June 30, 2021, and current estimates of fair value may differ significantly from the amounts presented herein.
During the six months ended June 30, 2021, there were no instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3), and there were no gains or losses (realized and unrealized) included in earnings for instruments categorized as Level 3 within the fair value hierarchy.
11. REVENUE RECOGNITION
The following tables disaggregate our revenue from continuing operations by major source for the three months ended June 30, 2021 and 2020 (dollars in millions):
i| Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
| 2021 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
| Primary Geographic Markets(1) | ||||||||||||||||||||||||
| U.S. and Canada | $ | i 430 | $ | i 157 | $ | i 89 | $ | i 12 | $ | ( i 6 | ) | $ | i 682 | |||||||||||
| Europe | i 293 | i 100 | i 110 | i 35 | ( i 2 | ) | i 536 | |||||||||||||||||
| Asia Pacific | i 340 | i 97 | i 74 | i 130 | i — | i 641 | ||||||||||||||||||
| Rest of world | i 92 | i 17 | i 26 | i 30 | i — | i 165 | ||||||||||||||||||
| $ | i 1,155 | $ | i 371 | $ | i 299 | $ | i 207 | $ | ( i 8 | ) | $ | i 2,024 | ||||||||||||
| Major Product Groupings | ||||||||||||||||||||||||
| MDI urethanes | $ | i 1,155 | $ | i 1,155 | ||||||||||||||||||||
| Differentiated | $ | i 371 | i 371 | |||||||||||||||||||||
| Specialty | $ | i 274 | i 274 | |||||||||||||||||||||
| Non-specialty | i 25 | i 25 | ||||||||||||||||||||||
| Textile chemicals and dyes | $ | i 207 | i 207 | |||||||||||||||||||||
| Eliminations | $ | ( i 8 | ) | ( i 8 | ) | |||||||||||||||||||
| $ | i 1,155 | $ | i 371 | $ | i 299 | $ | i 207 | $ | ( i 8 | ) | $ | i 2,024 | ||||||||||||
| Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
| 2020 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
| Primary Geographic Markets(1) | ||||||||||||||||||||||||
| U.S. and Canada | $ | i 295 | $ | i 100 | $ | i 52 | $ | i 7 | $ | ( i 4 | ) | $ | i 450 | |||||||||||
| Europe | i 183 | i 53 | i 72 | i 19 | i — | i 327 | ||||||||||||||||||
| Asia Pacific | i 210 | i 61 | i 51 | i 62 | i — | i 384 | ||||||||||||||||||
| Rest of world | i 42 | i 14 | i 17 | i 14 | ( i 1 | ) | i 86 | |||||||||||||||||
| $ | i 730 | $ | i 228 | $ | i 192 | $ | i 102 | $ | ( i 5 | ) | $ | i 1,247 | ||||||||||||
| Major Product Groupings | ||||||||||||||||||||||||
| MDI urethanes | $ | i 730 | $ | i 730 | ||||||||||||||||||||
| Differentiated | $ | i 228 | i 228 | |||||||||||||||||||||
| Specialty | $ | i 172 | i 172 | |||||||||||||||||||||
| Non-specialty | i 20 | i 20 | ||||||||||||||||||||||
| Textile chemicals and dyes | $ | i 102 | i 102 | |||||||||||||||||||||
| Eliminations | $ | ( i 5 | ) | ( i 5 | ) | |||||||||||||||||||
| $ | i 730 | $ | i 228 | $ | i 192 | $ | i 102 | $ | ( i 5 | ) | $ | i 1,247 | ||||||||||||
The following tables disaggregate our revenue from continuing operations by major source for the six months ended June 30, 2021 and 2020 (dollars in millions):
| Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
| 2021 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
| Primary Geographic Markets(1) | ||||||||||||||||||||||||
| U.S. and Canada | $ | i 801 | $ | i 277 | $ | i 172 | $ | i 25 | $ | ( i 9 | ) | $ | i 1,266 | |||||||||||
| Europe | i 572 | i 177 | i 209 | i 66 | ( i 5 | ) | i 1,019 | |||||||||||||||||
| Asia Pacific | i 676 | i 188 | i 145 | i 249 | i — | i 1,258 | ||||||||||||||||||
| Rest of world | i 174 | i 34 | i 51 | i 60 | ( i 1 | ) | i 318 | |||||||||||||||||
| $ | i 2,223 | $ | i 676 | $ | i 577 | $ | i 400 | $ | ( i 15 | ) | $ | i 3,861 | ||||||||||||
| Major Product Groupings | ||||||||||||||||||||||||
| MDI urethanes | $ | i 2,223 | $ | i 2,223 | ||||||||||||||||||||
| Differentiated | $ | i 676 | i 676 | |||||||||||||||||||||
| Specialty | $ | i 519 | i 519 | |||||||||||||||||||||
| Non-specialty | i 58 | i 58 | ||||||||||||||||||||||
| Textile chemicals and dyes | $ | i 400 | i 400 | |||||||||||||||||||||
| Eliminations | $ | ( i 15 | ) | ( i 15 | ) | |||||||||||||||||||
| $ | i 2,223 | $ | i 676 | $ | i 577 | $ | i 400 | $ | ( i 15 | ) | $ | i 3,861 | ||||||||||||
| Performance | Advanced | Textile | Corporate and | |||||||||||||||||||||
| 2020 | Polyurethanes | Products | Materials | Effects | Eliminations | Total | ||||||||||||||||||
| Primary Geographic Markets(1) | ||||||||||||||||||||||||
| U.S. and Canada | $ | i 665 | $ | i 229 | $ | i 115 | $ | i 24 | $ | ( i 11 | ) | $ | i 1,022 | |||||||||||
| Europe | i 428 | i 127 | i 173 | i 51 | ( i 1 | ) | i 778 | |||||||||||||||||
| Asia Pacific | i 409 | i 131 | i 107 | i 165 | i — | i 812 | ||||||||||||||||||
| Rest of world | i 116 | i 33 | i 38 | i 42 | ( i 1 | ) | i 228 | |||||||||||||||||
| $ | i 1,618 | $ | i 520 | $ | i 433 | $ | i 282 | $ | ( i 13 | ) | $ | i 2,840 | ||||||||||||
| Major Product Groupings | ||||||||||||||||||||||||
| MDI urethanes | $ | i 1,618 | $ | i 1,618 | ||||||||||||||||||||
| Differentiated | $ | i 520 | i 520 | |||||||||||||||||||||
| Specialty | $ | i 383 | i 383 | |||||||||||||||||||||
| Non-specialty | i 50 | i 50 | ||||||||||||||||||||||
| Textile chemicals and dyes | $ | i 282 | i 282 | |||||||||||||||||||||
| Eliminations | $ | ( i 13 | ) | ( i 13 | ) | |||||||||||||||||||
| $ | i 1,618 | $ | i 520 | $ | i 433 | $ | i 282 | $ | ( i 13 | ) | $ | i 2,840 | ||||||||||||
| (1) | Geographic information for revenues is based upon countries into which product is sold. |
12. EMPLOYEE BENEFIT PLANS
Components of the net periodic benefit costs from continuing operations for the three and six months ended June 30, 2021 and 2020 were as follows (dollars in millions):
Huntsman Corporation
i| Other Postretirement | ||||||||||||||||
| Defined Benefit Plans | Benefit Plans | |||||||||||||||
| Three months | Three months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Service cost | $ | i 14 | $ | i 12 | $ | i — | $ | i 1 | ||||||||
| Interest cost | i 12 | i 16 | i 1 | i — | ||||||||||||
| Expected return on assets | ( i 42 | ) | ( i 42 | ) | i — | i — | ||||||||||
| Amortization of prior service benefit | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | ||||||||
| Amortization of actuarial loss | i 23 | i 19 | i — | i — | ||||||||||||
| Net periodic benefit cost | $ | i 6 | $ | i 4 | $ | i — | $ | i — | ||||||||
| Other Postretirement | ||||||||||||||||
| Defined Benefit Plans | Benefit Plans | |||||||||||||||
| Six months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Service cost | $ | i 28 | $ | i 26 | $ | i — | $ | i 1 | ||||||||
| Interest cost | i 24 | i 31 | i 1 | i 1 | ||||||||||||
| Expected return on assets | ( i 84 | ) | ( i 85 | ) | i — | i — | ||||||||||
| Amortization of prior service benefit | ( i 3 | ) | ( i 3 | ) | ( i 2 | ) | ( i 2 | ) | ||||||||
| Amortization of actuarial loss | i 46 | i 39 | i 1 | i — | ||||||||||||
| Settlement loss | i 3 | i — | i — | i — | ||||||||||||
| Net periodic benefit cost | $ | i 14 | $ | i 8 | $ | i — | $ | i — | ||||||||
Huntsman International
| Other Postretirement | ||||||||||||||||
| Defined Benefit Plans | Benefit Plans | |||||||||||||||
| Three months | Three months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Service cost | $ | i 14 | $ | i 12 | $ | i — | $ | i 1 | ||||||||
| Interest cost | i 12 | i 16 | i 1 | i — | ||||||||||||
| Expected return on assets | ( i 42 | ) | ( i 42 | ) | i — | i — | ||||||||||
| Amortization of prior service benefit | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | ||||||||
| Amortization of actuarial loss | i 23 | i 20 | i — | i — | ||||||||||||
| Net periodic benefit cost | $ | i 6 | $ | i 5 | $ | i — | $ | i — | ||||||||
| Other Postretirement | ||||||||||||||||
| Defined Benefit Plans | Benefit Plans | |||||||||||||||
| Six months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Service cost | $ | i 28 | $ | i 26 | $ | i — | $ | i 1 | ||||||||
| Interest cost | i 24 | i 31 | i 1 | i 1 | ||||||||||||
| Expected return on assets | ( i 84 | ) | ( i 85 | ) | i — | i — | ||||||||||
| Amortization of prior service benefit | ( i 3 | ) | ( i 3 | ) | ( i 2 | ) | ( i 2 | ) | ||||||||
| Amortization of actuarial loss | i 47 | i 41 | i 1 | i — | ||||||||||||
| Settlement loss | i 3 | i — | i — | i — | ||||||||||||
| Net periodic benefit cost | $ | i 15 | $ | i 10 | $ | i — | $ | i — | ||||||||
During the six months ended June 30, 2021 and 2020, we made contributions to our pension and other postretirement benefit plans of $ i 28 million and $ i 46 million, respectively. During the remainder of 2021, we expect to contribute an additional amount of approximately $ i 29 million to these plans.
13. HUNTSMAN CORPORATION STOCKHOLDERS’ EQUITY
Share Repurchase Program
On February 7, 2018 and on May 3, 2018, our Board of Directors collectively authorized us to repurchase up to an aggregate of $ i 1 billion in shares of our common stock. The share repurchase program is supported by our free cash flow generation. Repurchases may be made through the open market, including through accelerated share repurchase programs, or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost. During the first quarter of 2020, we repurchased i 5,364,519 shares of our common stock for approximately $ i 96 million, excluding commissions. Subsequent to the end of the first quarter of 2020, we suspended share repurchases under our existing share repurchase program in order to enhance our liquidity position in response to COVID-19.
Dividends on Common Stock
On April 28, 2021, our Board of Directors declared a $ i 0.1875 per share cash dividend on our common stock. This represents a i 15% increase from the previous dividend. During the quarters ended June 30, 2021 and June 30, 2020, we paid $ i 41 million and $ i 36 million, respectively, or $0.1875 and $ i 0.1625 per share, respectively, to common stockholders. During the quarters ended and March 31, 2021 and March 31, 2020, we paid $ i 36 million and $ i 37 million, respectively, or $0.1625 per share each to common stockholders.
/
14. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of other comprehensive (loss) income and changes in accumulated other comprehensive loss by component were as follows (dollars in millions):
Huntsman Corporation
i| Pension | Other | |||||||||||||||||||||||||||
| Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
| currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
| translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
| adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
| Beginning balance, January 1, 2021 | $ | ( i 328 | ) | $ | ( i 1,050 | ) | $ | i 8 | $ | i 4 | $ | ( i 1,366 | ) | $ | i 20 | $ | ( i 1,346 | ) | ||||||||||
| Other comprehensive loss before reclassifications, gross | ( i 6 | ) | i — | i — | i — | ( i 6 | ) | ( i 1 | ) | ( i 7 | ) | |||||||||||||||||
| Tax expense | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss, gross(c) | i — | i 45 | i — | i — | i 45 | i — | i 45 | |||||||||||||||||||||
| Tax expense | i — | ( i 10 | ) | i — | i — | ( i 10 | ) | i — | ( i 10 | ) | ||||||||||||||||||
| Net current-period other comprehensive (loss) income | ( i 6 | ) | i 35 | i — | i — | i 29 | ( i 1 | ) | i 28 | |||||||||||||||||||
| Ending balance, June 30, 2021 | $ | ( i 334 | ) | $ | ( i 1,015 | ) | $ | i 8 | $ | i 4 | $ | ( i 1,337 | ) | $ | i 19 | $ | ( i 1,318 | ) | ||||||||||
| (a) | Amounts are net of tax of $ i 56 as of both June 30, 2021 and January 1, 2021. |
| (b) | Amounts are net of tax of $ i 143 and $ i 153 as of June 30, 2021 and January 1, 2021, respectively. |
| (c) | See table below for details about these reclassifications. |
| Pension | Other | |||||||||||||||||||||||||||
| Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
| currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
| translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
| adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | Corporation | ||||||||||||||||||||||
| Beginning balance, January 1, 2020 | $ | ( i 369 | ) | $ | ( i 1,031 | ) | $ | i 8 | $ | i 4 | $ | ( i 1,388 | ) | $ | i 26 | $ | ( i 1,362 | ) | ||||||||||
| Other comprehensive (loss) income before reclassifications, gross | ( i 52 | ) | i 8 | i — | i — | ( i 44 | ) | i — | ( i 44 | ) | ||||||||||||||||||
| Tax expense | ( i 4 | ) | ( i 2 | ) | i — | i — | ( i 6 | ) | i — | ( i 6 | ) | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss, gross(c) | i — | i 75 | i — | i — | i 75 | i — | i 75 | |||||||||||||||||||||
| Tax expense | i — | ( i 17 | ) | i — | i — | ( i 17 | ) | i — | ( i 17 | ) | ||||||||||||||||||
| Net current-period other comprehensive (loss) income | ( i 56 | ) | i 64 | i — | i — | i 8 | i — | i 8 | ||||||||||||||||||||
| Ending balance, June 30, 2020 | $ | ( i 425 | ) | $ | ( i 967 | ) | $ | i 8 | $ | i 4 | $ | ( i 1,380 | ) | $ | i 26 | $ | ( i 1,354 | ) | ||||||||||
| (a) | Amounts are net of tax of $ i 72 and $ i 68 as of June 30, 2020 and January 1, 2020, respectively. |
| (b) | Amounts are net of tax of $ i 129 and $ i 148 as of June 30, 2020 and January 1, 2020, respectively. |
| (c) | See table below for details about these reclassifications. |
| Three Months Ended June 30, | ||||||||||
| 2020 | ||||||||||
| Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
| from accumulated | from accumulated | the statement | ||||||||
| Details about Accumulated Other | other | other | where net income | |||||||
| Comprehensive Loss Components(a): | comprehensive loss | comprehensive loss | is presented | |||||||
| Amortization of pension and other postretirement benefits: | ||||||||||
| Prior service credit | $ | ( i 2 | ) | $ | ( i 2 | ) |
(b) | |||
| Actuarial loss | i 23 | i 19 |
(b)(d) | |||||||
| i 21 | i 17 |
Total before tax | ||||||||
| ( i 5 | ) | ( i 3 | ) |
Income tax expense | ||||||
| Total reclassifications for the period | $ | i 16 | $ | i 14 |
Net of tax | |||||
| Six Months Ended June 30, | ||||||||||
| 2020 | ||||||||||
| Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
| from accumulated | from accumulated | the statement | ||||||||
| Details about Accumulated Other | other | other | where net income | |||||||
| Comprehensive Loss Components(a): | comprehensive loss | comprehensive loss | is presented | |||||||
| Amortization of pension and other postretirement benefits: | ||||||||||
| Prior service credit | $ | ( i 5 | ) | $ | ( i 5 | ) |
(b) | |||
| Settlement loss | i 3 | i 41 |
(c) | |||||||
| Actuarial loss | i 47 | i 39 |
(b)(d) | |||||||
| i 45 | i 75 |
Total before tax | ||||||||
| ( i 10 | ) | ( i 17 | ) |
Income tax expense | ||||||
| Total reclassifications for the period | $ | i 35 | $ | i 58 |
Net of tax | |||||
| (a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed consolidated statements of operations. |
| (b) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 12. Employee Benefit Plans.” |
| (c) | In connection with the sale of our Chemical Intermediates Businesses, we recognized $ i 41 of pension and other post-employment benefit settlement losses during the six months ended June 30, 2020. |
| (d) | Amounts contain approximately $ i 1 and $ i 2 of actuarial losses related to discontinued operations for the three months ended June 30, 2021 and 2020, respectively. Amounts contain approximately $ i 3 of actuarial losses related to discontinued operations for both of the six months ended June 30, 2021 and 2020. |
Huntsman International
| Pension | Other | |||||||||||||||||||||||||||
| Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
| currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
| translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
| adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
| Beginning balance, January 1, 2021 | $ | ( i 333 | ) | $ | ( i 1,028 | ) | $ | i 8 | $ | i — | $ | ( i 1,353 | ) | $ | i 20 | $ | ( i 1,333 | ) | ||||||||||
| Other comprehensive loss before reclassifications, gross | ( i 6 | ) | i — | i — | i — | ( i 6 | ) | ( i 1 | ) | ( i 7 | ) | |||||||||||||||||
| Tax expense | i — | i — | i — | i — | i — | i — | i — | |||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss, gross(c) | i — | i 46 | i — | i — | i 46 | i — | i 46 | |||||||||||||||||||||
| Tax expense | i — | ( i 10 | ) | i — | i — | ( i 10 | ) | i — | ( i 10 | ) | ||||||||||||||||||
| Net current-period other comprehensive (loss) income | ( i 6 | ) | i 36 | i — | i — | i 30 | ( i 1 | ) | i 29 | |||||||||||||||||||
| Ending balance, June 30, 2021 | $ | ( i 339 | ) | $ | ( i 992 | ) | $ | i 8 | $ | i — | $ | ( i 1,323 | ) | $ | i 19 | $ | ( i 1,304 | ) | ||||||||||
| (a) | Amounts are net of tax of $ i 43 for both June 30, 2021 and January 1, 2021. |
| (b) | Amounts are net of tax of $ i 168 and $ i 178 as of June 30, 2021 and January 1, 2021, respectively. |
| (c) | See table below for details about these reclassifications. |
| Pension | Other | |||||||||||||||||||||||||||
| Foreign | and other | comprehensive | Amounts | Amounts | ||||||||||||||||||||||||
| currency | postretirement | income of | attributable to | attributable to | ||||||||||||||||||||||||
| translation | benefits | unconsolidated | noncontrolling | Huntsman | ||||||||||||||||||||||||
| adjustment(a) | adjustments(b) | affiliates | Other, net | Total | interests | International | ||||||||||||||||||||||
| Beginning balance, January 1, 2020 | $ | ( i 374 | ) | $ | ( i 1,012 | ) | $ | i 8 | $ | i — | $ | ( i 1,378 | ) | $ | i 26 | $ | ( i 1,352 | ) | ||||||||||
| Other comprehensive (loss) income before reclassifications, gross | ( i 53 | ) | i 8 | i — | i — | ( i 45 | ) | i — | ( i 45 | ) | ||||||||||||||||||
| Tax expense | ( i 4 | ) | ( i 2 | ) | i — | i — | ( i 6 | ) | i — | ( i 6 | ) | |||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss, gross(c) | i — | i 77 | i — | i — | i 77 | i — | i 77 | |||||||||||||||||||||
| Tax expense | i — | ( i 17 | ) | i — | i — | ( i 17 | ) | i — | ( i 17 | ) | ||||||||||||||||||
| Net current-period other comprehensive (loss) income | ( i 57 | ) | i 66 | i — | i — | i 9 | i — | i 9 | ||||||||||||||||||||
| Ending balance, June 30, 2020 | $ | ( i 431 | ) | $ | ( i 946 | ) | $ | i 8 | $ | i — | $ | ( i 1,369 | ) | $ | i 26 | $ | ( i 1,343 | ) | ||||||||||
| (a) | Amounts are net of tax of $ i 59 and $ i 55 as of June 30, 2020 and January 1, 2020, respectively. |
| (b) | Amounts are net of tax of $ i 155 and $ i 174 as of June 30, 2020 and January 1, 2020, respectively. |
| (c) | See table below for details about these reclassifications. |
| Three Months Ended June 30, | ||||||||||
| 2020 | ||||||||||
| Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
| from accumulated | from accumulated | the statement | ||||||||
| Details about Accumulated Other | other | other | where net income | |||||||
| Comprehensive Loss Components(a): | comprehensive loss | comprehensive loss | is presented | |||||||
| Amortization of pension and other postretirement benefits: | ||||||||||
| Prior service credit | $ | ( i 2 | ) | $ | ( i 2 | ) |
(b) | |||
| Actuarial loss | i 23 | i 20 |
(b)(d) | |||||||
| i 21 | i 18 |
Total before tax | ||||||||
| ( i 4 | ) | ( i 3 | ) |
Income tax expense | ||||||
| Total reclassifications for the period | $ | i 17 | $ | i 15 |
Net of tax | |||||
| Six Months Ended June 30, | ||||||||||
| 2020 | ||||||||||
| Amounts reclassified | Amounts reclassified | Affected line item in | ||||||||
| from accumulated | from accumulated | the statement | ||||||||
| Details about Accumulated Other | other | other | where net income | |||||||
| Comprehensive Loss Components(a): | comprehensive loss | comprehensive loss | is presented | |||||||
| Amortization of pension and other postretirement benefits: | ||||||||||
| Prior service credit | $ | ( i 5 | ) | $ | ( i 5 | ) |
(b) | |||
| Settlement loss | i 3 | i 41 |
(c) | |||||||
| Actuarial loss | i 48 | i 41 |
(b)(d) | |||||||
| i 46 | i 77 |
Total before tax | ||||||||
| ( i 10 | ) | ( i 17 | ) |
Income tax expense | ||||||
| Total reclassifications for the period | $ | i 36 | $ | i 60 |
Net of tax | |||||
| (a) | Pension and other postretirement benefits amounts in parentheses indicate credits on our condensed consolidated statements of operations. |
| (b) | These accumulated other comprehensive loss components are included in the computation of net periodic pension costs. See “Note 12. Employee Benefit Plans.” |
| (c) | In connection with the sale of our Chemical Intermediates Businesses, we recognized $ i 41 of pension and other post-employment benefit settlement losses during the six months ended June 30, 2020. |
| (d) | Amounts contain approximately $ i 1 and $ i 2 of actuarial losses related to discontinued operations for the three months ended June 30, 2021 and 2020, respectively. Amounts contain approximately $ i 3 of actuarial losses related to discontinued operations for both of the six months ended June 30, 2021 and 2020. |
15. COMMITMENTS AND CONTINGENCIES
Legal Matters
We are a party to various proceedings instituted by private plaintiffs, governmental authorities and others arising under provisions of applicable laws, including various environmental, products liability and other laws. Except as otherwise disclosed in this report, we do not believe that the outcome of any of these matters will have a material effect on our financial condition, results of operations or liquidity.
16. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
EHS Capital Expenditures
We may incur future costs for capital improvements and general compliance under environmental, health and safety (“EHS”) laws, including costs to acquire, maintain and repair pollution control equipment. For the six months ended June 30, 2021 and 2020, our capital expenditures for EHS matters totaled $ i 16 million and $ i 12 million, respectively. Because capital expenditures for these matters are subject to evolving regulatory requirements and depend, in part, on the timing, promulgation and enforcement of specific requirements, our capital expenditures for EHS matters have varied significantly from year to year and we cannot provide assurance that our recent expenditures are indicative of future amounts we may spend related to EHS and other applicable laws.
Environmental Reserves
We have accrued liabilities relating to anticipated environmental cleanup obligations, site reclamation and closure costs and known penalties. Liabilities are recorded when potential liabilities are either known or considered probable and can be reasonably estimated. Our liability estimates are calculated using present value techniques as appropriate and are based upon requirements placed upon us by regulators, available facts, existing technology and past experience. The environmental liabilities do not include amounts recorded as asset retirement obligations. We had accrued $ i 4 million for environmental liabilities for both June 30, 2021 and December 31, 2020. Of these amounts, $ i 1 million was classified as accrued liabilities in our condensed consolidated balance sheets as of both June 30, 2021 and December 31, 2020, and $ i 3 million were classified as other noncurrent liabilities in our condensed consolidated balance sheets as of both June 30, 2021 and December 31, 2020. In certain cases, our remediation liabilities may be payable over periods of up to i 30 years. We may incur losses for environmental remediation in excess of the amounts accrued; however, we are not able to estimate the amount or range of such potential excess.
Environmental Matters
Under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and similar state laws, a current or former owner or operator of real property in the U.S. may be liable for remediation costs regardless of whether the release or disposal of hazardous substances was in compliance with law at the time it occurred, and a current owner or operator may be liable regardless of whether it owned or operated the facility at the time of the release. Outside the U.S., analogous contaminated property laws, such as those in effect in France and Australia, can hold past owners and/or operators liable for remediation at former facilities. Currently, there are approximately nine former facilities or third-party sites in the U.S. for which we have been notified of potential claims against us for cleanup liabilities, including, but not limited to, sites listed under CERCLA. Based on current information and past experiences at other CERCLA sites, we do not expect these third-party claims to have a material impact on our condensed consolidated financial statements.
Under the Resource Conservation and Recovery Act (“RCRA”) in the U.S. and similar state laws, we may be required to remediate contamination originating from our properties as a condition to our hazardous waste permit. Some of our manufacturing sites have an extended history of industrial chemical manufacturing and use, including on-site waste disposal. We are aware of soil, groundwater or surface contamination from past operations at some of our sites, and we may find contamination at other sites in the future. For example, our Geismar, Louisiana facility is the subject of ongoing remediation requirements imposed under RCRA. Similar laws exist in a number of locations in which we currently operate, or previously operated, manufacturing facilities, such as Australia, India, France, Hungary and Italy.
North Maybe Canyon Mine Remediation
The North Maybe Canyon Mine site is a CERCLA site and involves a former phosphorous mine near Soda Springs, Idaho, which is believed to have been operated by several companies, including a predecessor company to us. In 2004, the U.S. Forest Service notified us that we are a CERCLA potentially responsible party (“PRP”) for contamination originating from the site. In February 2010, we and Wells Cargo (another PRP) agreed to conduct a Remedial Investigation/Feasibility Study of a portion of the site and are currently engaged in that process. At this time, we are unable to reasonably estimate our potential liabilities at this site.
17. STOCK-BASED COMPENSATION PLANS
As of June 30, 2021, we had approximately i 7 million shares remaining under the stock-based compensation plans available for grant. Option awards have a maximum contractual term of i 10 years and generally must have an exercise price at least equal to the market price of our common stock on the date the option award is granted. Outstanding stock-based awards generally vest annually over a three-year period.
The compensation cost from continuing operations under the stock-based compensation plans for our Company and Huntsman International were as follows (dollars in millions):
i| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Huntsman Corporation compensation cost | $ | i 7 | $ | i 7 | $ | i 16 | $ | i 14 | ||||||||
| Huntsman International compensation cost | i 7 | i 7 | i 15 | i 13 | ||||||||||||
The total income tax benefit recognized in the condensed consolidated statements of operations for us and Huntsman International for stock-based compensation arrangements was $ i 1 million each for the six months ended June 30, 2021 and 2020.
Stock Options
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses the assumptions noted in the following table. Expected volatilities are based on the historical volatility of our common stock through the grant date. The expected term of options granted was estimated based on the contractual term of the instruments and employees’ expected exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option was based on the U.S. Treasury yield curve in effect at the time of grant. The assumptions noted below represent the weighted average of the assumptions utilized for stock options granted during the periods.
i| Six months | ||||||||
| ended | ||||||||
| 2020 | ||||||||
| Dividend yield | i 2.3 | % | i 3.0 | % | ||||
| Expected volatility | i 53.3 | % | i 53.1 | % | ||||
| Risk-free interest rate | i 0.7 | % | i 1.5 | % | ||||
| Expected life of stock options granted during the period (in years) | i 5.9 | i 5.9 | ||||||
During each of the three months ended June 30, 2021 and 2020, i no stock options were granted.
A summary of stock option activity under the stock-based compensation plans as of June 30, 2021 and changes during the six months then ended is presented below:
i| Weighted | ||||||||||||||||
| Weighted | Average | |||||||||||||||
| Average | Remaining | Aggregate | ||||||||||||||
| Exercise | Contractual | Intrinsic | ||||||||||||||
| Option Awards | Shares | Price | Term | Value | ||||||||||||
| (in thousands) | (years) | (in millions) | ||||||||||||||
| Outstanding at January 1, 2021 | i 4,815 | $ | i 20.37 | |||||||||||||
| Granted | i 304 | i 28.58 | ||||||||||||||
| Exercised | ( i 642 | ) | i 17.55 | |||||||||||||
| Forfeited | ( i 29 | ) | i 22.46 | |||||||||||||
| Outstanding at June 30, 2021 | i 4,448 | i 21.33 | i 6.1 | $ | i 26 | |||||||||||
| Exercisable at June 30, 2021 | i 3,354 | i 20.52 | i 5.3 | i 23 | ||||||||||||
The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2021 was $ i 11.48 per option. As of June 30, 2021, there was $ i 8 million of total unrecognized compensation cost related to nonvested stock option arrangements granted under the stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of approximately i 1.9 years.
The total intrinsic value of stock options exercised during the six months ended June 30, 2021 and 2020 was approximately $ i 8 million and $ i 2 million, respectively. Cash received from stock options exercised during each of the six months ended June 30, 2021 and 2020 was approximately $ i 6 million and $ i 1 million, respectively. The cash tax benefit from stock options exercised during each of the six months ended June 30, 2021 and 2020 was approximately $ i 2 million and $ i 1 million, respectively.
Nonvested Shares
Nonvested shares granted under the stock-based compensation plans consist of restricted stock and performance share unit awards, which are accounted for as equity awards, and phantom stock, which is accounted for as a liability award because it can be settled in either stock or cash.
The fair value of each performance share unit award is estimated using a Monte Carlo simulation model that uses various assumptions, including an expected volatility rate and a risk-free interest rate. For the six months ended June 30, 2021 and 2020, the weighted-average expected volatility rate was i 44.8% and i 34.0%, respectively, and the weighted average risk-free interest rate was i 0.2% and i 1.4%, respectively. For the performance share unit awards granted in the six months ended June 30, 2021 and 2020, the number of shares earned varies based upon the Company achieving certain performance criteria over a three-year performance period. The performance criteria are total stockholder return of our common stock relative to the total stockholder return of a specified industry peer group for the three-year performance periods.
A summary of the status of our nonvested shares as of June 30, 2021 and changes during the six months then ended is presented below:
i| Equity Awards | Liability Awards | ||||||||||||||||
| Weighted | Weighted | ||||||||||||||||
| Average | Average | ||||||||||||||||
| Grant-Date | Grant-Date | ||||||||||||||||
| Shares | Fair Value | Shares | Fair Value | ||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||
| Nonvested at January 1, 2021 | i 1,867 | $ | i 23.18 | i 411 | $ | i 23.08 | |||||||||||
| Granted | i 833 | i 31.15 | i 184 | i 28.58 | |||||||||||||
| Vested | ( i 514 | ) | (1)(2) | i 28.24 | ( i 189 | ) | i 24.55 | ||||||||||
| Forfeited | ( i 7 | ) | i 22.84 | ( i 9 | ) | i 23.73 | |||||||||||
| Nonvested at June 30, 2021 | i 2,179 | i 25.05 | i 397 | i 24.91 | |||||||||||||
| (1) | As of June 30, 2021, a total of i 457,294 restricted stock units were vested but not yet issued, of which i 30,438 vested during the six months ended June 30, 2021. These shares have not been reflected as vested shares in this table because, in accordance with the restricted stock unit agreements, shares of common stock are not issued for vested restricted stock units until termination of employment. |
| (2) | A total of i 110,542 performance share unit awards are reflected in the vested shares in this table, which represents the target number of performance share unit awards for this grant and were included in the balance at December 31, 2020. During the six months ended June 30, 2021, only i 76,055 performance share unit awards with a grant date fair value of $ i 41.93 were issued related to this vest due to the target performance criteria not being met. |
As of June 30, 2021, there was $ i 40 million of total unrecognized compensation cost related to nonvested share compensation arrangements granted under the stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of approximately i 2.1 years. The value of share awards that vested during the six months ended June 30, 2021 and 2020 was $ i 18 million and $ i 24 million, respectively.
18. INCOME TAXES
We use the asset and liability method of accounting for income taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes. We evaluate deferred tax assets to determine whether it is more likely than not that they will be realized. Valuation allowances are reviewed on an individual tax jurisdiction basis to analyze whether there is sufficient positive or negative evidence to support a change in judgment about the realizability of the related deferred tax assets. These conclusions require significant judgment. In evaluating the objective evidence that historical results provide, we consider the cyclicality of our businesses and cumulative income or losses during the applicable period. Cumulative losses incurred over the applicable period limits our ability to consider other subjective evidence such as our projections for the future. Changes in expected future income in applicable jurisdictions could affect the realization of deferred tax assets in those jurisdictions.
During the six months ended June 30, 2021 and 2020, there was no tax benefit or expense recognized in connection with the net losses of $ i 25 million and $ i 106 million, respectively, on fair value adjustments to our Venator investment and related option to sell our remaining Venator shares recorded as part of non-operating income from continuing operations. As of December 31, 2019, we have recognized the portion of our Venator investment tax basis in excess of book that we ultimately expect to be able to utilize; therefore, no incremental tax benefit has been recognized on the year-to-date fair value losses incurred in 2020 or 2021. As a significant, unusual and non-operating item, these amounts were treated discretely and excluded from the annual effective tax rate calculation for interim reporting.
Huntsman Corporation
We recorded income tax (expense) benefit from continuing operations of $( i 76) million and $ i 6 million for the six months ended June 30, 2021 and 2020, respectively. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions.
Huntsman International
Huntsman International recorded income tax (expense) benefit from continuing operations of $( i 76) million and $ i 6 million for the six months ended June 30, 2021 and 2020, respectively. Our tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions.
/
19. EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing net income attributable to Huntsman Corporation common stockholders by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities.
Basic and diluted earnings per share is determined using the following information (in millions):
i| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Numerator: | ||||||||||||||||
| Basic and diluted income (loss) from continuing operations: | ||||||||||||||||
| Income (loss) from continuing operations attributable to Huntsman Corporation | $ | i 155 | $ | ( i 67 | ) | $ | i 237 | $ | ( i 139 | ) | ||||||
| Basic and diluted net income: | ||||||||||||||||
| Net income (loss) attributable to Huntsman Corporation | $ | i 156 | $ | ( i 62 | ) | $ | i 239 | $ | i 643 | |||||||
| Denominator: | ||||||||||||||||
| Weighted average shares outstanding | i 220.9 | i 219.7 | i 220.6 | i 221.4 | ||||||||||||
| Dilutive shares: | ||||||||||||||||
| Stock-based awards | i 2.0 | i — | i 2.1 | i — | ||||||||||||
| Total weighted average shares outstanding, including dilutive shares | i 222.9 | i 219.7 | i 222.7 | i 221.4 | ||||||||||||
Additional stock-based awards of approximately i 1.0 million and i 6.6 million weighted average equivalent shares of stock were outstanding during the three months ended June 30, 2021 and 2020, respectively, and approximately i 1.4 and i 6.3 million weighted average shares of stock were outstanding during the six months ended June 30, 2021 and 2020, respectively. However, these stock-based awards were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2021 and 2020 because the effect would be anti-dilutive.
20. OPERATING SEGMENT INFORMATION
We derive our revenues, earnings and cash flows from the manufacture and sale of a wide variety of differentiated and commodity chemical products. We have i four operating segments, which are also our reportable segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. We have organized our business and derived our operating segments around differences in product lines.
The major products of each reportable operating segment are as follows:
| Segment |
| Products |
| Polyurethanes | | MDI, polyols, TPU and other polyurethane-related products |
| Performance Products | | Specialty amines, ethyleneamines, maleic anhydride and technology licenses |
| Advanced Materials | | Basic liquid and solid epoxy resins; specialty resin compounds; cross-linking, matting, and curing and toughening agents; epoxy, acrylic and polyurethane-based formulations; specialty nitrile latex, alkyd resins and carbon nano materials |
| Textile Effects | | Textile chemicals and dyes |
Sales between segments are generally recognized at external market prices and are eliminated in consolidation. Adjusted EBITDA is presented as a measure of the financial performance of our global business units and for reporting the results of our operating segments. The adjusted EBITDA of our reportable operating segments excludes items that principally apply to our Company as a whole. The revenues and adjusted EBITDA from continuing operations for each of our reportable operating segments are as follows (dollars in millions):
i| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Revenues: | ||||||||||||||||
| Polyurethanes | $ | i 1,155 | $ | i 730 | $ | i 2,223 | $ | i 1,618 | ||||||||
| Performance Products | i 371 | i 228 | i 676 | i 520 | ||||||||||||
| Advanced Materials | i 299 | i 192 | i 577 | i 433 | ||||||||||||
| Textile Effects | i 207 | i 102 | i 400 | i 282 | ||||||||||||
| Corporate and eliminations | ( i 8 | ) | ( i 5 | ) | ( i 15 | ) | ( i 13 | ) | ||||||||
| Total | $ | i 2,024 | $ | i 1,247 | $ | i 3,861 | $ | i 2,840 | ||||||||
| Huntsman Corporation: | ||||||||||||||||
| Segment adjusted EBITDA(1): | ||||||||||||||||
| Polyurethanes | $ | i 208 | $ | i 31 | $ | i 415 | $ | i 115 | ||||||||
| Performance Products | i 88 | i 29 | i 151 | i 87 | ||||||||||||
| Advanced Materials | i 58 | i 30 | i 102 | i 78 | ||||||||||||
| Textile Effects | i 28 | ( i 4 | ) | i 53 | i 16 | |||||||||||
| Corporate and other(2) | ( i 48 | ) | ( i 32 | ) | ( i 98 | ) | ( i 77 | ) | ||||||||
| Total | i 334 | i 54 | i 623 | i 219 | ||||||||||||
| Reconciliation of adjusted EBITDA to net income (loss): | ||||||||||||||||
| Interest expense, net—continuing operations | ( i 18 | ) | ( i 21 | ) | ( i 37 | ) | ( i 39 | ) | ||||||||
| Income tax (expense) benefit—continuing operations | ( i 42 | ) | i 13 | ( i 76 | ) | i 6 | ||||||||||
| Income tax expense—discontinued operations | i — | ( i 1 | ) | i — | ( i 239 | ) | ||||||||||
| Depreciation and amortization—continuing operations | ( i 73 | ) | ( i 69 | ) | ( i 147 | ) | ( i 136 | ) | ||||||||
| Net income attributable to noncontrolling interests | i 16 | i 3 | i 33 | i 6 | ||||||||||||
| Other adjustments: | ||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | ( i 5 | ) | ( i 8 | ) | ( i 14 | ) | ( i 21 | ) | ||||||||
| EBITDA from discontinued operations(3) | i 1 | i 6 | i 2 | i 1,021 | ||||||||||||
| Fair value adjustments to Venator investment | ( i 6 | ) | i 4 | ( i 25 | ) | ( i 106 | ) | |||||||||
| Loss on early extinguishment of debt | ( i 27 | ) | i — | ( i 27 | ) | i — | ||||||||||
| Certain legal and other settlements and related expenses | ( i 8 | ) | ( i 4 | ) | ( i 10 | ) | ( i 6 | ) | ||||||||
| Gain (loss) on sale of businesses/assets | i 30 | ( i 1 | ) | i 30 | i 1 | |||||||||||
| Income from transition services arrangements | i 3 | i 5 | i 4 | i 5 | ||||||||||||
| Certain nonrecurring information technology project implementation costs | ( i 3 | ) | ( i 1 | ) | ( i 4 | ) | ( i 2 | ) | ||||||||
| Amortization of pension and postretirement actuarial losses | ( i 21 | ) | ( i 19 | ) | ( i 43 | ) | ( i 37 | ) | ||||||||
| Plant incident remediation credits (costs) | i 3 | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | |||||||||
| Restructuring, impairment and plant closing and transition costs | ( i 12 | ) | ( i 19 | ) | ( i 36 | ) | ( i 22 | ) | ||||||||
| Net income (loss) | $ | i 172 | $ | ( i 59 | ) | $ | i 272 | $ | i 649 | |||||||
| Three months | Six months | |||||||||||||||
| ended | ended | |||||||||||||||
| June 30, | ||||||||||||||||
| 2020 | 2021 | 2020 | ||||||||||||||
| Huntsman International: | ||||||||||||||||
| Segment adjusted EBITDA(1): | ||||||||||||||||
| Polyurethanes | $ | i 208 | $ | i 31 | $ | i 415 | $ | i 115 | ||||||||
| Performance Products | i 88 | i 29 | i 151 | i 87 | ||||||||||||
| Advanced Materials | i 58 | i 30 | i 102 | i 78 | ||||||||||||
| Textile Effects | i 28 | ( i 4 | ) | i 53 | i 16 | |||||||||||
| Corporate and other(2) | ( i 46 | ) | ( i 30 | ) | ( i 93 | ) | ( i 74 | ) | ||||||||
| Total | i 336 | i 56 | i 628 | i 222 | ||||||||||||
| Reconciliation of adjusted EBITDA to net income (loss): | ||||||||||||||||
| Interest expense, net—continuing operations | ( i 18 | ) | ( i 21 | ) | ( i 37 | ) | ( i 41 | ) | ||||||||
| Income tax (expense) benefit—continuing operations | ( i 41 | ) | i 13 | ( i 76 | ) | i 6 | ||||||||||
| Income tax expense—discontinued operations | i — | ( i 1 | ) | i — | ( i 239 | ) | ||||||||||
| Depreciation and amortization—continuing operations | ( i 74 | ) | ( i 69 | ) | ( i 147 | ) | ( i 136 | ) | ||||||||
| Net income attributable to noncontrolling interests | i 16 | i 3 | i 33 | i 6 | ||||||||||||
| Other adjustments: | ||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments | ( i 5 | ) | ( i 8 | ) | ( i 14 | ) | ( i 21 | ) | ||||||||
| EBITDA from discontinued operations(3) | i 1 | i 6 | i 2 | i 1,021 | ||||||||||||
| Fair value adjustments to Venator investment | ( i 6 | ) | i 4 | ( i 25 | ) | ( i 106 | ) | |||||||||
| Loss on early extinguishment of debt | ( i 27 | ) | i — | ( i 27 | ) | i — | ||||||||||
| Certain legal and other settlements and related expenses | ( i 8 | ) | ( i 4 | ) | ( i 10 | ) | ( i 6 | ) | ||||||||
| Gain (loss) on sale of businesses/assets | i 30 | ( i 1 | ) | i 30 | i 1 | |||||||||||
| Income from transition services arrangements | i 3 | i 5 | i 4 | i 5 | ||||||||||||
| Certain nonrecurring information technology project implementation costs | ( i 3 | ) | ( i 1 | ) | ( i 4 | ) | ( i 2 | ) | ||||||||
| Amortization of pension and postretirement actuarial losses | ( i 22 | ) | ( i 21 | ) | ( i 45 | ) | ( i 39 | ) | ||||||||
| Plant incident remediation credits (costs) | i 3 | ( i 1 | ) | ( i 1 | ) | ( i 1 | ) | |||||||||
| Restructuring, impairment and plant closing and transition costs | ( i 12 | ) | ( i 19 | ) | ( i 36 | ) | ( i 22 | ) | ||||||||
| Net income (loss) | $ | i 173 | $ | ( i 59 | ) | $ | i 275 | $ | i 648 | |||||||
| (1) | We use segment adjusted EBITDA as the measure of each segment’s profit or loss. We believe that segment adjusted EBITDA more accurately reflects what the chief operating decision maker uses to make decisions about resources to be allocated to the segments and assess their financial performance. Segment adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) gain (loss) on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation credits (costs); and (k) restructuring, impairment, plant closing and transition costs. |
| (2) | Corporate and other includes unallocated corporate overhead, unallocated foreign exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We operate in four segments: Polyurethanes, Performance Products, Advanced Materials and Textile Effects. Our products comprise a broad range of chemicals and formulations, which we market globally to a diversified group of consumer and industrial customers. Our products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, insulation, medical, packaging, coatings and construction, power generation, refining, synthetic fiber, textile chemicals and dyes industries. We are a leading global producer in many of our key product lines, including MDI, amines, maleic anhydride, epoxy-based polymer formulations, textile chemicals and dyes. Our revenues from continuing operations for the six months ended June 30, 2021 and 2020 were $3,861 million and $2,840 million, respectively.
Recent Developments
Senior Notes Refinancing
On May 26, 2021, Huntsman International completed a $400 million offering of its 2031 Senior Notes. On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full $400 million in aggregate principal amount of its 2022 Senior Notes and to pay accrued but unpaid interest of approximately $2 million. In addition, we paid redemption premiums and related fees and expenses of approximately $25 million and recognized a corresponding loss on early extinguishment of debt of $26 million in the second quarter of 2021. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements.
Amendments to Accounts Receivable Securitization Programs
On July 1, 2021, we entered into amendments to our A/R Programs that, among other things, extended the scheduled termination dates of our A/R Programs to July 2024. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.
Sale of India-Based Do-It-Yourself Consumer Adhesives Business
On November 3, 2020, we completed the sale of the India-based DIY business to Pidilite Industries Ltd. and received cash of approximately $257 million. Under the terms of the agreement, we may receive up to approximately $28 million of additional cash under an earnout provision if the business achieves within 18 months certain sales revenue targets in line with the DIY business' 2019 performance. The performance criteria of the earnout provision were satisfied in the second quarter of 2021, and we received the full payment of $28 million. As a result, we recognized an additional pretax gain of $28 million in the second quarter, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.
Outlook
We expect the following factors to impact our operating segments:
Polyurethanes:
| ● |
Third quarter 2021 adjusted EBITDA estimated to be between $240 million and $260 million |
| ● |
Positive trends in construction, automotive and elastomer markets |
| ● |
Lower earnings contribution from non-controlling interests |
Performance Products:
| ● |
Third quarter 2021 adjusted EBITDA estimated to be between $75 million and $80 million |
| ● |
Volume growth year-over-year across core markets |
| ● |
More balanced Asia markets compared to second quarter of 2021 |
Advanced Materials:
| ● |
Third quarter 2021 adjusted EBITDA estimated to be between $50 million and $55 million |
| ● |
Improving trends compared to prior year across all markets, including aerospace |
| ● |
Acquisitions additive to adjusted EBITDA with synergy capture on track |
Textile Effects
| ● |
Third quarter 2021 adjusted EBITDA estimated to be between $19 million and $22 million |
| ● |
Favorable trends in sustainable solutions |
In the second quarter of 2021, our adjusted effective tax rate was 20%. For 2021, our adjusted effective tax rate is expected to be approximately 22% to 24%. We expect our forward adjusted effective tax rate will be approximately 22% to 24%. For further information, see “—Non-GAAP Financial Measures” and “Note 18. Income Taxes” to our condensed consolidated financial statements.
Refer to “Forward-Looking Statements” for a discussion of our use of forward-looking statements in this Quarterly Report on Form 10-Q.
Results of Operations
For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
| Three months |
Six months |
|||||||||||||||||||||||
| ended |
ended |
|||||||||||||||||||||||
| June 30, |
Percent |
June 30, |
Percent |
|||||||||||||||||||||
| 2021 |
2020 |
Change |
2021 |
2020 |
Change |
|||||||||||||||||||
| Revenues |
$ | 2,024 | $ | 1,247 | 62 | % | $ | 3,861 | $ | 2,840 | 36 | % | ||||||||||||
| Cost of goods sold |
1,593 | 1,085 | 47 | % | 3,038 | 2,381 | 28 | % | ||||||||||||||||
| Gross profit |
431 | 162 | 166 | % | 823 | 459 | 79 | % | ||||||||||||||||
| Operating expenses, net |
211 | 212 | — | 453 | 452 | — | ||||||||||||||||||
| Restructuring, impairment and plant closing costs |
11 | 19 | (42 | )% | 35 | 22 | 59 | % | ||||||||||||||||
| Operating income (loss) |
209 | (69 | ) | NM | 335 | (15 | ) | NM | ||||||||||||||||
| Interest expense, net |
(18 | ) | (21 | ) | (14 | )% | (37 | ) | (39 | ) | (5 | )% | ||||||||||||
| Equity in income of investment in unconsolidated affiliates |
46 | 2 | NM | 84 | 4 | NM | ||||||||||||||||||
| Fair value adjustments to Venator investment |
(6 | ) | 4 | NM | (25 | ) | (106 | ) | (76 | )% | ||||||||||||||
| Loss on early extinguishment of debt |
(27 | ) | — | NM | (27 | ) | — | NM | ||||||||||||||||
| Other income, net |
9 | 7 | 29 | % | 16 | 17 | (6 | )% | ||||||||||||||||
| Income (loss) from continuing operations before income taxes |
213 | (77 | ) | NM | 346 | (139 | ) | NM | ||||||||||||||||
| Income tax (expense) benefit |
(42 | ) | 13 | NM | (76 | ) | 6 | NM | ||||||||||||||||
| Income (loss) from continuing operations |
171 | (64 | ) | NM | 270 | (133 | ) | NM | ||||||||||||||||
| Income from discontinued operations, net of tax |
1 | 5 | (80 | )% | 2 | 782 | (100 | )% | ||||||||||||||||
| Net income (loss) |
172 | (59 | ) | NM | 272 | 649 | (58 | )% | ||||||||||||||||
| Reconciliation of net income (loss) to adjusted EBITDA: |
||||||||||||||||||||||||
| Net income attributable to noncontrolling interests |
(16 | ) | (3 | ) | 433 | % | (33 | ) | (6 | ) | 450 | % | ||||||||||||
| Interest expense, net from continuing operations |
18 | 21 | (14 | )% | 37 | 39 | (5 | )% | ||||||||||||||||
| Income tax expense (benefit) from continuing operations |
42 | (13 | ) | NM | 76 | (6 | ) | NM | ||||||||||||||||
| Income tax expense from discontinued operations |
— | 1 | (100 | )% | — | 239 | (100 | )% | ||||||||||||||||
| Depreciation and amortization of continuing operations |
73 | 69 | 6 | % | 147 | 136 | 8 | % | ||||||||||||||||
| Other adjustments: |
||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments |
5 | 8 | 14 | 21 | ||||||||||||||||||||
| EBITDA from discontinued operations(1) |
(1 | ) | (6 | ) | (2 | ) | (1,021 | ) | ||||||||||||||||
| Fair value adjustments to Venator investment |
6 | (4 | ) | 25 | 106 | |||||||||||||||||||
| Loss on early extinguishment of debt |
27 | — | 27 | — | ||||||||||||||||||||
| Certain legal and other settlements and related expenses |
8 | 4 | 10 | 6 | ||||||||||||||||||||
| (Gain) loss on sale of businesses/assets |
(30 | ) | 1 | (30 | ) | (1 | ) | |||||||||||||||||
| Income from transition services arrangements |
(3 | ) | (5 | ) | (4 | ) | (5 | ) | ||||||||||||||||
| Certain nonrecurring information technology project implementation costs |
3 | 1 | 4 | 2 | ||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses |
21 | 19 | 43 | 37 | ||||||||||||||||||||
| Plant incident remediation (credits) costs |
(3 | ) | 1 | 1 | 1 | |||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs |
12 | 19 | 36 | 22 | ||||||||||||||||||||
| Adjusted EBITDA(2) |
$ | 334 | $ | 54 | 519 | % | $ | 623 | $ | 219 | 184 | % | ||||||||||||
| Net cash (used in) provided by operating activities from continuing operations |
$ | (23 | ) | $ | 45 | NM | ||||||||||||||||||
| Net cash (used in) provided by investing activities |
(369 | ) | 1,152 | NM | ||||||||||||||||||||
| Net cash used in financing activities |
(691 | ) | (417 | ) | 66 | % | ||||||||||||||||||
| Capital expenditures |
(174 | ) | (116 | ) | 50 | % | ||||||||||||||||||
Huntsman International
| Three months |
Six months |
|||||||||||||||||||||||
| ended |
ended |
|||||||||||||||||||||||
| June 30, |
Percent |
June 30, |
Percent |
|||||||||||||||||||||
| 2021 |
2020 |
Change |
2021 |
2020 |
Change |
|||||||||||||||||||
| Revenues |
$ | 2,024 | $ | 1,247 | 62 | % | $ | 3,861 | $ | 2,840 | 36 | % | ||||||||||||
| Cost of goods sold |
1,593 | 1,085 | 47 | % | 3,038 | 2,381 | 28 | % | ||||||||||||||||
| Gross profit |
431 | 162 | 166 | % | 823 | 459 | 79 | % | ||||||||||||||||
| Operating expenses, net |
209 | 211 | (1 | )% | 448 | 449 | — | |||||||||||||||||
| Restructuring, impairment and plant closing costs |
11 | 19 | (42 | )% | 35 | 22 | 59 | % | ||||||||||||||||
| Operating income (loss) |
211 | (68 | ) | NM | 340 | (12 | ) | NM | ||||||||||||||||
| Interest expense, net |
(18 | ) | (21 | ) | (14 | )% | (37 | ) | (41 | ) | (10 | )% | ||||||||||||
| Equity in income of investment in unconsolidated affiliates |
46 | 2 | NM | 84 | 4 | NM | ||||||||||||||||||
| Fair value adjustments to Venator investment |
(6 | ) | 4 | NM | (25 | ) | (106 | ) | (76 | )% | ||||||||||||||
| Loss on early extinguishment of debt |
(27 | ) | — | NM | (27 | ) | — | NM | ||||||||||||||||
| Other income, net |
7 | 6 | 17 | % | 14 | 15 | (7 | )% | ||||||||||||||||
| Income (loss) from continuing operations before income taxes |
213 | (77 | ) | NM | 349 | (140 | ) | NM | ||||||||||||||||
| Income tax (expense) benefit |
(41 | ) | 13 | NM | (76 | ) | 6 | NM | ||||||||||||||||
| Income (loss) from continuing operations |
172 | (64 | ) | NM | 273 | (134 | ) | NM | ||||||||||||||||
| Income from discontinued operations, net of tax |
1 | 5 | (80 | )% | 2 | 782 | (100 | )% | ||||||||||||||||
| Net income (loss) |
173 | (59 | ) | NM | 275 | 648 | (58 | )% | ||||||||||||||||
| Reconciliation of net income (loss) to adjusted EBITDA: |
||||||||||||||||||||||||
| Net income attributable to noncontrolling interests |
(16 | ) | (3 | ) | 433 | % | (33 | ) | (6 | ) | 450 | % | ||||||||||||
| Interest expense, net from continuing operations |
18 | 21 | (14 | )% | 37 | 41 | (10 | )% | ||||||||||||||||
| Income tax expense (benefit) from continuing operations |
41 | (13 | ) | NM | 76 | (6 | ) | NM | ||||||||||||||||
| Income tax expense from discontinued operations |
— | 1 | (100 | )% | — | 239 | (100 | )% | ||||||||||||||||
| Depreciation and amortization of continuing operations |
74 | 69 | 7 | % | 147 | 136 | 8 | % | ||||||||||||||||
| Other adjustments: |
||||||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments |
5 | 8 | 14 | 21 | ||||||||||||||||||||
| EBITDA from discontinued operations(1) |
(1 | ) | (6 | ) | (2 | ) | (1,021 | ) | ||||||||||||||||
| Fair value adjustments to Venator investment |
6 | (4 | ) | 25 | 106 | |||||||||||||||||||
| Loss on early extinguishment of debt |
27 | — | 27 | — | ||||||||||||||||||||
| Certain legal and other settlements and related expenses |
8 | 4 | 10 | 6 | ||||||||||||||||||||
| (Gain) loss on sale of businesses/assets |
(30 | ) | 1 | (30 | ) | (1 | ) | |||||||||||||||||
| Income from transition services arrangements |
(3 | ) | (5 | ) | (4 | ) | (5 | ) | ||||||||||||||||
| Certain nonrecurring information technology project implementation costs |
3 | 1 | 4 | 2 | ||||||||||||||||||||
| Amortization of pension and postretirement actuarial losses |
22 | 21 | 45 | 39 | ||||||||||||||||||||
| Plant incident remediation (credits) costs |
(3 | ) | 1 | 1 | 1 | |||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs |
12 | 19 | 36 | 22 | ||||||||||||||||||||
| Adjusted EBITDA(2) |
$ | 336 | $ | 56 | 500 | % | $ | 628 | $ | 222 | 183 | % | ||||||||||||
| Net cash (used in) provided by operating activities from continuing operations |
$ | (23 | ) | $ | 44 | NM | ||||||||||||||||||
| Net cash (used in) provided by investing activities |
(377 | ) | 1,430 | NM | ||||||||||||||||||||
| Net cash used in financing activities |
(690 | ) | (695 | ) | (1 | )% | ||||||||||||||||||
| Capital expenditures from continuing operations |
(174 | ) | (116 | ) | 50 | % | ||||||||||||||||||
Huntsman Corporation
| Three months |
Three months |
|||||||||||||||||||||||
| ended |
ended |
|||||||||||||||||||||||
| Tax and |
Tax and |
|||||||||||||||||||||||
| Gross |
other(3) |
Net |
Gross |
other(3) |
Net |
|||||||||||||||||||
| Reconciliation of net income (loss) to adjusted net income |
||||||||||||||||||||||||
| Net income (loss) |
$ | 172 | $ | (59 | ) | |||||||||||||||||||
| Net income attributable to noncontrolling interests |
(16 | ) | (3 | ) | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments |
$ | 5 | $ | — | 5 | $ | 8 | $ | — | 8 | ||||||||||||||
| Income from discontinued operations(1)(4) |
(1 | ) | — | (1 | ) | (6 | ) | 1 | (5 | ) | ||||||||||||||
| Fair value adjustments to Venator investment |
6 | — | 6 | (4 | ) | — | (4 | ) | ||||||||||||||||
| Loss on early extinguishment of debt |
27 | (6 | ) | 21 | — | — | — | |||||||||||||||||
| Certain legal and other settlements and related expenses |
8 | (2 | ) | 6 | 4 | (1 | ) | 3 | ||||||||||||||||
| (Gain) loss on sale of businesses/assets |
(30 | ) | 4 | (26 | ) | 1 | — | 1 | ||||||||||||||||
| Income from transition services arrangements |
(3 | ) | 1 | (2 | ) | (5 | ) | 1 | (4 | ) | ||||||||||||||
| Certain nonrecurring information technology project implementation costs |
3 | (1 | ) | 2 | 1 | — | 1 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses |
21 | (5 | ) | 16 | 19 | (4 | ) | 15 | ||||||||||||||||
| Plant incident remediation (credits) costs |
(3 | ) | 1 | (2 | ) | 1 | — | 1 | ||||||||||||||||
| Restructuring, impairment and plant closing and transition costs |
12 | (2 | ) | 10 | 19 | (3 | ) | 16 | ||||||||||||||||
| Adjusted net income (loss)(2) |
$ | 191 | $ | (30 | ) | |||||||||||||||||||
| Weighted average shares-basic |
220.9 | 219.7 | ||||||||||||||||||||||
| Weighted average shares-diluted |
222.9 | 219.7 | ||||||||||||||||||||||
| Basic net income (loss) attributable to Huntsman Corporation per share: |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 0.71 | $ | (0.30 | ) | |||||||||||||||||||
| Income from discontinued operations |
— | 0.02 | ||||||||||||||||||||||
| Net income (loss) |
$ | 0.71 | $ | (0.28 | ) | |||||||||||||||||||
| Diluted net income (loss) attributable to Huntsman Corporation per share: |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 0.70 | $ | (0.30 | ) | |||||||||||||||||||
| Income from discontinued operations |
— | 0.02 | ||||||||||||||||||||||
| Net income (loss) |
$ | 0.70 | $ | (0.28 | ) | |||||||||||||||||||
| Other non-GAAP measures: |
||||||||||||||||||||||||
| Diluted adjusted net income (loss) per share(2) |
$ | 0.86 | $ | (0.14 | ) | |||||||||||||||||||
| Six months |
Six months |
|||||||||||||||||||||||
| ended |
ended |
|||||||||||||||||||||||
| Tax and |
Tax and |
|||||||||||||||||||||||
| Gross |
other(3) |
Net |
Gross |
other(3) |
Net |
|||||||||||||||||||
| Reconciliation of net income to adjusted net income |
||||||||||||||||||||||||
| Net income |
$ | 272 | $ | 649 | ||||||||||||||||||||
| Net income attributable to noncontrolling interests |
(33 | ) | (6 | ) | ||||||||||||||||||||
| Business acquisition and integration expenses and purchase accounting inventory adjustments |
$ | 14 | $ | (2 | ) | 12 | $ | 21 | $ | (3 | ) | 18 | ||||||||||||
| Income from discontinued operations(1)(4) |
(2 | ) | — | (2 | ) | (1,021 | ) | 239 | (782 | ) | ||||||||||||||
| Fair value adjustments to Venator investment |
25 | — | 25 | 106 | — | 106 | ||||||||||||||||||
| Loss on early extinguishment of debt |
27 | (6 | ) | 21 | — | — | — | |||||||||||||||||
| Certain legal and other settlements and related expenses |
10 | (3 | ) | 7 | 6 | (1 | ) | 5 | ||||||||||||||||
| Gain on sale of businesses/assets |
(30 | ) | 4 | (26 | ) | (1 | ) | — | (1 | ) | ||||||||||||||
| Income from transition services arrangements |
(4 | ) | 1 | (3 | ) | (5 | ) | 1 | (4 | ) | ||||||||||||||
| Certain nonrecurring information technology project implementation costs |
4 | (1 | ) | 3 | 2 | — | 2 | |||||||||||||||||
| Amortization of pension and postretirement actuarial losses |
43 | (10 | ) | 33 | 37 | (8 | ) | 29 | ||||||||||||||||
| Plant incident remediation costs |
1 | — | 1 | 1 | — | 1 | ||||||||||||||||||
| Restructuring, impairment and plant closing and transition costs |
36 | (8 | ) | 28 | 22 | (4 | ) | 18 | ||||||||||||||||
| Adjusted net income(2) |
$ | 338 | $ | 35 | ||||||||||||||||||||
| Weighted average shares-basic |
220.6 | 221.4 | ||||||||||||||||||||||
| Weighted average shares-diluted |
222.7 | 221.4 | ||||||||||||||||||||||
| Basic net income (loss) attributable to Huntsman Corporation per share: |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 1.07 | $ | (0.63 | ) | |||||||||||||||||||
| Income from discontinued operations |
0.01 | 3.53 | ||||||||||||||||||||||
| Net income |
$ | 1.08 | $ | 2.90 | ||||||||||||||||||||
| Diluted net income (loss) attributable to Huntsman Corporation per share: |
||||||||||||||||||||||||
| Income (loss) from continuing operations |
$ | 1.06 | $ | (0.63 | ) | |||||||||||||||||||
| Income from discontinued operations |
0.01 | 3.53 | ||||||||||||||||||||||
| Net income |
$ | 1.07 | $ | 2.90 | ||||||||||||||||||||
| Other non-GAAP measures: |
||||||||||||||||||||||||
| Diluted adjusted net income per share(2) |
$ | 1.52 | $ | 0.16 | ||||||||||||||||||||
| Net cash (used in) provided by operating activities from continuing operations |
$ | (23 | ) | $ | 45 | |||||||||||||||||||
| Capital expenditures from continuing operations |
(174 | ) | (116 | ) | ||||||||||||||||||||
| Free cash flow from continuing operations(2) |
$ | (197 | ) | $ | (71 | ) | ||||||||||||||||||
| Other cash flow measure: |
||||||||||||||||||||||||
| Taxes paid on sale of businesses(5) |
$ | (3 | ) | $ | (10 | ) | ||||||||||||||||||
NM—Not meaningful
| (1) |
Includes the gain on the sale of our Chemical Intermediates Businesses recognized predominantly in the first quarter of 2020. |
| (2) |
See “—Non-GAAP Financial Measures.” |
| (3) |
The income tax impacts, if any, of each adjusting item represent a ratable allocation of the total difference between the unadjusted tax expense and the total adjusted tax expense, computed without consideration of any adjusting items using a with and without approach. |
| (4) |
In addition to income tax impacts, this adjusting item is also impacted by depreciation and amortization expense and interest expense. |
| (5) |
Represents the taxes paid in the second quarter of 2021 in connection with the earnout provision achieved under the terms of the sales agreement of the India-based DIY business and taxes paid in the first half of 2020 in connection with the sale of the Chemical Intermediates Businesses. For more information, see “Note 4. Discontinued Operations and Business Dispositions” to our condensed consolidated financial statements. |
Non-GAAP Financial Measures
Our condensed consolidated financial statements are prepared in accordance with GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) EBITDA from discontinued operations; (c) fair value adjustments to Venator investment; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) (gain) loss on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation (credits) costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation costs; and (k) restructuring, impairment and plant closing and transition (credits) costs. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after-tax amounts related to the following from net (loss) income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) income from discontinued operations; (c) fair value adjustments to Venator investment; (d) loss on early extinguishment of debt; (e) certain legal and other settlements and related expenses; (f) (gain) loss on sale of businesses/assets; (g) income from transition services arrangements related to the sale of our Chemical Intermediates Businesses to Indorama; (h) certain nonrecurring information technology project implementation costs; (i) amortization of pension and postretirement actuarial losses; (j) plant incident remediation (credits) costs; and (k) restructuring, impairment and plant closing and transition costs. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan stock buyback and dividend levels and (d) evaluate our ability to incur and service debt. Starting with the quarter ended March 31, 2020, we updated our definition of free cash flow to a presentation more consistent with today’s market standard of net cash provided by operating activities less capital expenditures. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. We do not provide reconciliations for adjusted effective tax rate on a forward-looking basis because we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of certain items, such as business acquisition and integration expenses, merger costs, certain legal and other settlements and related costs, gains on sale of businesses/assets and amortization of pension and postretirement actuarial losses. Each of such adjustments has not yet occurred, is out of our control and/or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information.
Three Months Ended June 30, 2021 Compared with Three Months Ended June 30, 2020
As discussed in “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses” to our condensed consolidated financial statements, the results from continuing operations exclude the results of our Chemical Intermediates Businesses and the results of our former polymers, base chemicals and Australian styrenics businesses for all periods presented. The increase of $222 million in net income from continuing operations attributable to Huntsman Corporation and the increase of $223 in net income from continuing operations attributable to Huntsman International was the result of the following items:
| ● |
Revenues for the three months ended June 30, 2021 increased by $777 million, or 62%, as compared with the 2020 period. The increase was primarily due to higher sales volumes in all our segments and higher average selling prices in our Polyurethanes, Performance Products and Advanced Materials segments. See “—Segment Analysis” below. |
| ● |
Gross profit for the three months ended June 30, 2021 increased by $269 million, or 166%, compared to the 2020 period. The increase resulted from higher gross profits in all our segments. See “—Segment Analysis” below. |
| ● | Our operating expenses, net and the operating expenses, net of Huntsman International for the three months ended June 30, 2021 remained relatively flat compared to the 2020 period as an increase in selling, general and administrative expenses were largely offset by the pretax gain of $28 million recognized in connection with the earnout provision achieved under the terms of the sale agreement of the India-based DIY business. |
| ● |
Restructuring, impairment and plant closing costs for the three months ended June 30, 2021 decreased to $11 million from $19 million in the 2020 period. For more information concerning restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements. |
| ● | Equity in income of investment in unconsolidated affiliates for the three months ended June 30, 2021 increased to $46 million from $2 million in the 2020 period, primarily related to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest. |
| ● |
For the three months ended June 30, 2021, we recorded a net loss of $6 million in fair value adjustments to our investment in Venator and related option to sell our remaining Venator shares compared to a gain of $4 million in the 2020 period. See “Note 4. Business Dispositions—Sale of Venator Interest” to our condensed consolidated financial statements. |
| ● |
Loss on early extinguishment of debt for the three months ended June 30, 2021 was $27 million compared to nil in the 2020 period primarily due to the full redemption of our 2022 Senior Notes in the second quarter of 2021. See “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements. |
| ● |
Our income tax expense for the three months ended June 30, 2021 increased to $42 million from an income tax benefit of $13 million in the 2020 period. The income tax expense of Huntsman International for the three months ended June 30, 2021 increased to $41 million from an income tax benefit of $13 million in the 2020 period. The increase in income tax expense was primarily due to the increase in pretax income, exclusive of the fair value adjustments to our investment in Venator. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning income taxes, see “Note 18. Income Taxes” to our condensed consolidated financial statements. |
| Three months |
Percent |
|||||||||||
| ended |
Change |
|||||||||||
| June 30, |
Favorable |
|||||||||||
| (Dollars in millions) |
2021 |
2020 |
(Unfavorable) |
|||||||||
| Revenues |
||||||||||||
| Polyurethanes |
$ | 1,155 | $ | 730 | 58 | % | ||||||
| Performance Products |
371 | 228 | 63 | % | ||||||||
| Advanced Materials |
299 | 192 | 56 | % | ||||||||
| Textile Effects |
207 | 102 | 103 | % | ||||||||
| Corporate and eliminations |
(8 | ) | (5 | ) | NM | |||||||
| Total |
$ | 2,024 | $ | 1,247 | 62 | % | ||||||
| Huntsman Corporation |
||||||||||||
| Segment adjusted EBITDA(1) |
||||||||||||
| Polyurethanes |
$ | 208 | $ | 31 | 571 | % | ||||||
| Performance Products |
88 | 29 | 203 | % | ||||||||
| Advanced Materials |
58 | 30 | 93 | % | ||||||||
| Textile Effects |
28 | (4 | ) | NM | ||||||||
| Corporate and other |
(48 | ) | (32 | ) | (50 | )% | ||||||
| Total |
$ | 334 | $ | 54 | 519 | % | ||||||
| Huntsman International |
||||||||||||
| Segment adjusted EBITDA(1) |
||||||||||||
| Polyurethanes |
$ | 208 | $ | 31 | 571 | % | ||||||
| Performance Products |
88 | 29 | 203 | % | ||||||||
| Advanced Materials |
58 | 30 | 93 | % | ||||||||
| Textile Effects |
28 | (4 | ) | NM | ||||||||
| Corporate and other |
(46 | ) | (30 | ) | (53 | )% | ||||||
| Total |
$ | 336 | $ | 56 | 500 | % | ||||||
NM—Not meaningful
| (1) |
For more information, including reconciliation of segment adjusted EBITDA to net income of Huntsman Corporation or Huntsman International, as appropriate, see “Note 20. Operating Segment Information” to our condensed consolidated financial statements. |
| Three months ended June 30, 2021 vs 2020 |
||||||||||||||||
| Average Selling Price(1) |
||||||||||||||||
| Local |
Foreign Currency |
Mix & |
Sales |
|||||||||||||
| Currency |
Translation Impact |
Other |
Volumes(2) |
|||||||||||||
| Period-Over-Period Increase (Decrease) |
||||||||||||||||
| Polyurethanes |
35 | % | 6 | % | 4 | % | 13 | % | ||||||||
| Performance Products |
39 | % | 6 | % | (7 | )% | 25 | % | ||||||||
| Advanced Materials |
8 | % | 7 | % | 16 | % | 25 | % | ||||||||
| Textile Effects |
(11 | )% | 8 | % | 14 | % | 92 | % | ||||||||
| Three months ended June 30, 2021 vs March 31, 2021 |
||||||||||||||||
| Average Selling Price(1) |
||||||||||||||||
| Local |
Foreign Currency |
Mix & |
Sales |
|||||||||||||
| Currency |
Translation Impact |
Other |
Volumes(2) |
|||||||||||||
| Period-Over-Period (Decrease) Increase |
||||||||||||||||
| Polyurethanes |
6 | % | (1 | )% | (2 | )% | 5 | % | ||||||||
| Performance Products |
19 | % | — | (1 | )% | 4 | % | |||||||||
| Advanced Materials |
9 | % | (1 | )% | 7 | % | (7 | )% | ||||||||
| Textile Effects |
9 | % | — | (1 | )% | (1 | )% | |||||||||
| (1) |
Excludes revenues from tolling arrangements, byproducts and raw materials. |
| (2) |
Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and higher sales volumes. MDI average selling prices increased mostly in China and Europe. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the scheduled turnaround at our Rotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and higher sales volumes as well as stronger earnings from our PO/MTBE joint venture in China, partially offset by higher raw material costs.
Performance Products
The increase in revenues in our Performance Products segment for the three months ended June 30, 2021 compared to the same period of 2020 was primarily due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown as well as in response to an increase in raw material costs. Sales volumes also increased primarily due to stronger demand. The increase in segment adjusted EBITDA was primarily due to increased revenue and margins, partially offset by increased fixed costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2021 compared to the same period in 2020 was primarily due to higher sales volumes, higher average selling prices and the favorable net impact of the CVC Thermoset Specialties Acquisition, the Gabriel Acquisition and the sale of the India-based DIY business. See “Note 3. Business Combinations and Acquisitions” and “Note 4. Discontinued Operations and Business Dispositions” to our condensed consolidated financial statements. Excluding our recent acquisitions and divestiture and with the exception of our global aerospace business, sales volumes increased across all of our specialty markets, primarily in relation to the ongoing recovery from the global economic slowdown. Average selling prices increased largely due to the impact of a weaker U.S. dollar against major international currencies and in response to higher raw material costs. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisitions.
Textile Effects
The increase in revenues in our Textile Effects segment for the three months ended June 30, 2021 compared to the same period of 2020 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in Asia. The increase in segment adjusted EBITDA was primarily due to higher sales revenues.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For the three months ended June 30, 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $16 million to a loss of $48 million from a loss of $32 million for the same period of 2020. For the three months ended June 30, 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $16 million to a loss of $46 million from a loss of $30 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other was primarily due to a charge from a LIFO inventory valuation reserve adjustment and an increase in corporate overhead costs.
Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020
As discussed in “Note 4. Discontinued Operations and Business Dispositions—Sale of Chemical Intermediates Businesses” to our condensed consolidated financial statements, the results from continuing operations exclude the results of our Chemical Intermediates and Businesses and the results of our former polymers, base chemicals and Australian styrenics business for all periods presented. The increase of $376 million in net income from continuing operations attributable to Huntsman Corporation and the increase of $380 in net income from continuing operations attributable to Huntsman International was the result of the following items:
| ● |
Revenues for the six months ended June 30, 2021 increased by $1,021 million, or 36%, as compared with the 2020 period. The increase was primarily due to higher sales volumes in all our segments and higher average selling prices in our Polyurethanes, Performance Products and Advanced Materials segments. See “—Segment Analysis” below. |
| ● |
Gross profit for the six months ended June 30, 2021 increased by $364 million, or 79%, compared to the 2020 period. The increase resulted from higher gross profits in all our segments. See “—Segment Analysis” below. |
| ● | Our operating expenses, net and the operating expenses, net of Huntsman International for the six months ended June 30, 2021 remained relatively flat compared to the 2020 period as an increase in selling, general and administrative expenses were largely offset by the pretax gain of $28 million recognized in connection with the earnout provision achieved under the terms of the sale agreement of the India-based DIY business. |
| ● |
Restructuring, impairment and plant closing costs for the six months ended June 30, 2021 increased to $35 million from $22 million in the 2020 period. For more information concerning restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements. |
| ● | Equity in income of investment in unconsolidated affiliates for the six months ended June 30, 2021 increased to $84 million from $4 million in the 2020 period, primarily related to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest. |
| ● |
For the six months ended June 30, 2021, we recorded a net loss of $25 million in fair value adjustments to our investment in Venator and related option to sell our remaining Venator shares compared to a loss of $106 million in the 2020 period. See “Note 4. Business Dispositions—Sale of Venator Interest” to our condensed consolidated financial statements. |
| ● |
Loss on early extinguishment of debt for the six months ended June 30, 2021 was $27 million compared to nil in the 2020 period primarily due to the full redemption of our 2022 Senior Notes in the second quarter of 2021. See “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements. |
| ● |
Our income tax expense and the income tax expense of Huntsman International for the six months ended June 30, 2021 both increased to $76 million from an income tax benefit of $6 million in the 2020 period. The increase in income tax expense was primarily due to the increase in pretax income, exclusive of the fair value adjustments to our investment in Venator. Our income tax expense is significantly affected by the mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information concerning income taxes, see “Note 18. Income Taxes” to our condensed consolidated financial statements. |
| Six months |
Percent |
|||||||||||
| ended |
Change |
|||||||||||
| June 30, |
Favorable |
|||||||||||
| 2021 |
2020 |
(Unfavorable) |
||||||||||
| Revenues |
||||||||||||
| Polyurethanes |
$ | 2,223 | $ | 1,618 | 37 | % | ||||||
| Performance Products |
676 | 520 | 30 | % | ||||||||
| Advanced Materials |
577 | 433 | 33 | % | ||||||||
| Textile Effects |
400 | 282 | 42 | % | ||||||||
| Corporate and eliminations |
(15 | ) | (13 | ) | NM | |||||||
| Total |
$ | 3,861 | $ | 2,840 | 36 | % | ||||||
| Huntsman Corporation |
||||||||||||
| Segment adjusted EBITDA(1) |
||||||||||||
| Polyurethanes |
$ | 415 | $ | 115 | 261 | % | ||||||
| Performance Products |
151 | 87 | 74 | % | ||||||||
| Advanced Materials |
102 | 78 | 31 | % | ||||||||
| Textile Effects |
53 | 16 | 231 | % | ||||||||
| Corporate and other |
(98 | ) | (77 | ) | 27 | % | ||||||
| Total |
$ | 623 | $ | 219 | 184 | % | ||||||
| Huntsman International |
||||||||||||
| Segment adjusted EBITDA(1) |
||||||||||||
| Polyurethanes |
$ | 415 | $ | 115 | 261 | % | ||||||
| Performance Products |
151 | 87 | 74 | % | ||||||||
| Advanced Materials |
102 | 78 | 31 | % | ||||||||
| Textile Effects |
53 | 16 | 231 | % | ||||||||
| Corporate and other |
(93 | ) | (74 | ) | 26 | % | ||||||
| Total |
$ | 628 | $ | 222 | 183 | % | ||||||
NM—Not meaningful
| (1) |
For more information, including reconciliation of segment adjusted EBITDA to net income of Huntsman Corporation or Huntsman International, as appropriate, see “Note 20. Operating Segment Information” to our condensed consolidated financial statements. |
| Six months ended June 30, 2021 vs June 30, 2020 |
||||||||||||||||
| Average Selling Price(1) |
||||||||||||||||
| Local |
Foreign Currency |
Mix & |
Sales |
|||||||||||||
| Currency |
Translation Impact |
Other |
Volumes(2) |
|||||||||||||
| Period-Over-Period (Decrease) Increase |
||||||||||||||||
| Polyurethanes |
26 | % | 5 | % | — | 6 | % | |||||||||
| Performance Products |
21 | % | 5 | % | (5 | )% | 9 | % | ||||||||
| Advanced Materials |
5 | % | 5 | % | 6 | % | 17 | % | ||||||||
| Textile Effects |
(8 | )% | 4 | % | 6 | % | 40 | % | ||||||||
| (1) |
Excludes revenues from tolling arrangements, byproducts and raw materials. |
| (2) |
Excludes sales volumes of byproducts and raw materials. |
Polyurethanes
The increase in revenues in our Polyurethanes segment for the six months ended June 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and higher sales volumes. MDI average selling prices increased mostly in China and Europe. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the scheduled turnaround at our Rotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and higher sales volumes as well as stronger earnings from our PO/MTBE joint venture in China, partially offset by higher raw material costs
Performance Products
The increase in revenues in our Performance Products segment for the six months ended June 30, 2021 compared to the same period of 2020 was primarily due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown as well as in response to an increase in raw material costs. Sales volumes also increased primarily due to stronger demand, in spite of the U.S. Gulf Coast Winter Storm Uri production outages and supplier raw materials shortages that occurred in the first quarter of 2021. The increase in segment adjusted EBITDA was primarily due to increased revenue and margins.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the six months ended June 30, 2021 compared to the same period in 2020 was primarily due to higher sales volumes, higher average selling prices and the favorable net impact of the CVC Thermoset Specialties Acquisition, the Gabriel Acquisition and the sale of the India-based DIY business. See “Note 3. Business Combinations and Acquisitions” and “Note 4. Discontinued Operations and Business Dispositions” to our condensed consolidated financial statements. Excluding our recent acquisitions and divestiture and with the exception of our global aerospace business, sales volumes increased across all markets, primarily in relation to the ongoing recovery from the global economic slowdown. Average selling prices increased largely due to the impact of a weaker U.S. dollar against major international currencies and in response to higher raw material costs. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and the benefit from our recent acquisitions.
Textile Effects
The increase in revenues in our Textile Effects segment for the six months ended June 30, 2021 compared to the same period of 2020 was due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in Asia. The increase in segment adjusted EBITDA was primarily due to higher sales revenues and lower costs.
Corporate and other
Corporate and other includes unallocated corporate overhead, unallocated foreign currency exchange gains and losses, LIFO inventory valuation reserve adjustments, loss on early extinguishment of debt, unallocated restructuring, impairment and plant closing costs, nonoperating income and expense and gains and losses on the disposition of corporate assets. For the six months ended June 30, 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $21 million to a loss of $98 million from a loss of $77 million for the same period of 2020. For the six months ended June 30, 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $19 million to a loss of $93 million from a loss of $74 million for the same period of 2020. The decrease in adjusted EBITDA from Corporate and other was primarily due to a charge from a LIFO inventory valuation reserve adjustment and an increase in corporate overhead costs.
Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and does not include separate information with respect to Huntsman International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q.
Cash Flows for the Six Months Ended June 30, 2021 Compared with Six Months Ended June 30, 2020
Net cash (used in) provided by operating activities from continuing operations for the six months ended June 30, 2021 and 2020 was $(23) million and $45 million, respectively. The increase in net cash used in operating activities from continuing operations during the six months ended June 30, 2021 compared with the same period in 2020 was primarily attributable to a $386 million unfavorable variance in operating assets and liabilities, partially offset by increased operating income as described in “—Results of Operations” above for the six months ended June 30, 2021 as compared with the same period of 2020.
Net cash (used in) provided by investing activities for the six months ended June 30, 2021 and 2020 was $(369) million and $1,152 million, respectively. During the six months ended June 30, 2021 and 2020, we paid $174 million and $116 million for capital expenditures, respectively. During the six months ended June 30, 2021, we received $43 million for the sale of businesses primarily due to the receipt of $28 million pursuant to an earnout provision in connection with the sale of our India-based DIY business, and we paid approximately $242 million for the Gabriel Acquisition, net of cash acquired. During the six months ended June 30, 2020, we received approximately $1.92 billion for the sale of our Chemical Intermediates Businesses, and we paid $652 million in connection with the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition.
Net cash used in financing activities for the six months ended June 30, 2021 and 2020 was $691 million and $417 million, respectively. During the six months ended June 30, 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes, and we redeemed in full $400 million in aggregate principal amount of our 2022 Senior Notes. Additionally, during the six months ended June 30, 2021, we issued $400 million in aggregate principal amount of our 2031 Senior Notes. During the six months ended June 30, 2020, we repaid a total of $172 million on our Revolving Credit facility and repurchased common stock for $96 million.
Free cash flow from continuing operations for the six months ended June 30, 2021 and 2020 was a use of cash of $197 million and $71 million, respectively.
Changes in Financial Condition
The following information summarizes our working capital position (dollars in millions):
| June 30, |
Less |
December 31, |
(Decrease) |
Percent |
||||||||||||||||||||
| 2021 |
Acquisition(1) |
Subtotal |
2020 |
Increase |
Change |
|||||||||||||||||||
| Cash and cash equivalents |
$ | 510 | $ | (9 | ) | $ | 501 | $ | 1,593 | $ | (1,092 | ) | (69 | )% | ||||||||||
| Accounts and notes receivable, net |
1,122 | (13 | ) | 1,109 | 910 | 199 | 22 | % | ||||||||||||||||
| Inventories |
1,193 | (26 | ) | 1,167 | 848 | 319 | 38 | % | ||||||||||||||||
| Other current assets |
209 | — | 209 | 217 | (8 | ) | (4 | )% | ||||||||||||||||
| Total current assets |
3,034 | (48 | ) | 2,986 | 3,568 | (582 | ) | (16 | )% | |||||||||||||||
| Accounts payable |
1,041 | (7 | ) | 1,034 | 876 | 158 | 18 | % | ||||||||||||||||
| Accrued liabilities |
480 | (2 | ) | 478 | 458 | 20 | 4 | % | ||||||||||||||||
| Current portion of debt |
44 | — | 44 | 593 | (549 | ) | (93 | )% | ||||||||||||||||
| Current operating lease liabilities |
49 | — | 49 | 52 | (3 | ) | (6 | )% | ||||||||||||||||
| Total current liabilities |
1,614 | (9 | ) | 1,605 | 1,979 | (374 | ) | (19 | )% | |||||||||||||||
| Working capital |
$ | 1,420 | $ | (39 | ) | $ | 1,381 | $ | 1,589 | $ | (208 | ) | (13 | )% | ||||||||||
| (1) |
Represents amounts related to the Gabriel Acquisition. For more information, see “Note 3. Business Combinations and Acquisitions—Acquisition of Gabriel Performance Products” to our condensed consolidated financial statements. |
Our working capital decreased by $208 million as a result of the net impact of the following significant changes:
| ● |
The decrease in cash and cash equivalents of $1,092 million resulted from the matters identified on our condensed consolidated statements of cash flows. |
| ● |
Accounts receivable increased by $199 million due to higher revenues in the second quarter of 2021 compared to the fourth quarter of 2020. |
| ● |
Inventories increased by $319 million primarily due to higher inventory costs and volumes. |
| ● |
Accounts payable increased by $158 million primarily due to higher inventory purchases. |
| ● |
Current portion of debt decreased by $549 million primarily due to the redemption of our 2021 Senior Notes in the first half of 2021. |
Direct and Subsidiary Debt
See “Note 8. Debt—Direct and Subsidiary Debt” to our condensed consolidated financial statements.
Debt Issuance Costs
See “Note 8. Debt—Direct and Subsidiary Debt—Debt Issuance Costs” to our condensed consolidated financial statements.
Revolving Credit Facility
See “Note 8. Debt—Direct and Subsidiary Debt—Revolving Credit Facility” to our condensed consolidated financial statements.
A/R Programs
See “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.
Senior Notes
See “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements.
Note Payable from Huntsman International to Huntsman Corporation
See “Note 8. Debt—Direct and Subsidiary Debt—Note Payable from Huntsman International to Huntsman Corporation” to our condensed consolidated financial statements.
Compliance with Covenants
See “Note 8. Debt—Compliance with Covenants” to our condensed consolidated financial statements.
We depend upon our cash, Revolving Credit Facility, A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of June 30, 2021, we had $1,943 million of combined cash and unused borrowing capacity, consisting of $510 million in cash, $1,196 million in availability under our Revolving Credit Facility and $237 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
Short-Term Liquidity
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Cash invested in our accounts receivable and inventory, net of accounts payable, was approximately $373 million for the six months ended June 30, 2021, as reflected in our condensed consolidated statements of cash flows. We expect volatility in our working capital components to continue. |
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During 2021, we expect to spend approximately $355 million to $360 million on capital expenditures, including spending of approximately $100 million on a new MDI splitter in Geismar, Louisiana. We expect to fund capital expenditures with cash provided by operations. |
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During the six months ended June 30, 2021, we made contributions to our pension and postretirement benefit plans of $28 million. During 2021, we expect to contribute an additional amount of approximately $29 million to these plans. |
Long-Term Liquidity
| ● | On April 28, 2021, our Board of Directors declared a $0.1875 per share cash dividend on our common stock. This represents a 15% increase from the previous dividend. We expect to distribute an additional $5.5 million in dividends each quarter related to this dividend increase. |
| ● | On May 26, 2021, Huntsman International completed a $400 million offering of its 2031 Senior Notes. On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full the $400 million in aggregate principal amount of its 2022 Senior Notes. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—Senior Notes” to our condensed consolidated financial statements. |
| ● | On July 1, 2021, we entered into amendments to our A/R Programs that, among other things, extended the scheduled termination dates of our A/R Programs to July 2024. |
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On a new MDI splitter being constructed in Geismar, Louisiana, we expect to spend approximately $75 million in the remainder of 2021 and 2022. We expect to fund capital expenditures with cash provided by operations. |
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During 2020, management implemented cost realignment and synergy plans. In connection with these plans, we expect to achieve annualized cost savings and synergy benefits of more than $120 million by the end of 2023 with associated net cash restructuring and integration costs of approximately $100 million. See “Note 7. Restructuring, Impairment and Plant Closing Cost” to our condensed consolidated financial statements. |
As of June 30, 2021, we had $44 million classified as current portion of debt, including debt at our variable interest entities of $41 million and certain other short-term facilities and scheduled amortization payments totaling $3 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.
As of June 30, 2021, we had approximately $338 million of cash and cash equivalents, including restricted cash, held by our foreign subsidiaries, including our variable interest entities. We intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate cash as dividends, which dividends would generally not be subject to U.S. taxation as a result of the U.S. Tax Reform Act. However, such repatriation may potentially be subject to certain foreign withholding taxes.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. See “Note 9. Derivative Instruments and Hedging Activities” to our condensed consolidated financial statements.
ITEM 4. CONTROLS AND PROCEDURES
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2021. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of June 30, 2021, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
No changes to our internal control over financial reporting occurred during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). However, we can only give reasonable assurance that our internal controls over financial reporting will prevent or detect material misstatements on a timely basis. Ineffective internal controls over financial reporting could cause investors to lose confidence in our reported financial information and could result in a lower trading price for our securities.
Except as set forth below, there have been no material developments with respect to the legal proceedings referenced in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2020.
Rockwood Litigation
On February 6, 2017, we filed a lawsuit in New York state court against Rockwood Holdings, Inc. (“Rockwood”), Albemarle Corporation (as Rockwood’s successor) and certain former Rockwood executives to recover damages for fraud and breach of contract. During the commissioning of a new production facility in Augusta, Georgia (the “Augusta Facility”) for the synthesis of iron oxide pigments, the Augusta Facility experienced delays producing products at the expected specifications and quantities, raising questions regarding the capabilities of the technology we acquired from Rockwood in October 2014. In May 2018, a plan was implemented to cease using certain portions of the Augusta Facility, and we incurred significant restructuring expenses. We are seeking various forms of legal remedy, including compensatory damages, punitive damages, expectation damages, consequential damages and restitution. The case was arbitrated in May 2021 and closing arguments were held at the end of July. We expect a decision during the third quarter of 2021.
For information regarding risk factors, see “Part I. Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information with respect to shares of our common stock that we repurchased as part of our share repurchase program and shares of restricted stock granted under our stock incentive plans that we withheld upon vesting to satisfy our tax withholding obligations during the three months ended June 30, 2021.
| Total number of |
Approximate dollar |
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| shares purchased |
value of shares that |
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| Total number |
Average |
as part of publicly |
may yet be purchased |
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| of shares |
price paid |
announced plans |
under the plans or |
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| purchased |
per share(1) |
or programs(2) |
programs(2) |
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| April |
130 | $ | 28.67 | — | $ | 420,000,000 | ||||||||||
| May |
96 | 28.67 | — | 420,000,000 | ||||||||||||
| June |
298 | 28.14 | — | 420,000,000 | ||||||||||||
| Total |
524 | 28.37 | — | |||||||||||||
| (1) | Represents net purchase price per share, exclusive of any fees or commissions. |
| (2) |
On February 7, 2018 and on May 3, 2018, our Board of Directors authorized us to repurchase up to an aggregate of $1 billion in shares of our common stock. The share repurchase program is supported by our free cash flow generation. Repurchases may be made in the open market, including through accelerated share repurchase programs, or in privately negotiated transactions, and repurchases may be commenced or suspended from time to time without prior notice. Shares of common stock acquired through the repurchase program are held in treasury at cost. During the first quarter of 2020, we repurchased 5,364,519 shares of our common stock for approximately $96 million, excluding commissions, under the repurchase program. Subsequent to the end of the first quarter of 2020, we suspended share repurchases under our existing share repurchase program in order to enhance our liquidity position in response to COVID-19. |
See the Exhibit Index at the end of this Quarterly Report on Form 10-Q for exhibits filed with this report.
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| 10.1 | * | Master Amendment No. 10 to U.S. Receivables Loan Agreement, U.S. Servicing Agreement, U.S. Receivables Purchase Agreement and Transaction Documents, dated as of July 1, 2021 | ||||||
| 10.2 | * | Amended and Restated European Receivables Loan Agreement, dated as of July 1, 2021 | ||||||
| 31.1 |
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 31.2 |
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
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| 32.1 |
* |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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| 32.2 |
* |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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Inline XBRL Taxonomy Extension Schema |
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Inline XBRL Taxonomy Extension Calculation Linkbase |
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Inline XBRL Taxonomy Extension Label Linkbase |
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Inline XBRL Taxonomy Extension Presentation Linkbase |
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Inline XBRL Taxonomy Extension Definition Linkbase |
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| 104 |
The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL and contained in Exhibit 101 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
| Dated: July 30, 2021 |
HUNTSMAN CORPORATION |
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HUNTSMAN INTERNATIONAL LLC |
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By: |
/s/ PHILIP M. LISTER |
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Executive Vice President and Chief Financial Officer |
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and Manager (Principal Financial Officer) |
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By: |
/s/ RANDY W. WRIGHT |
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Randy W. Wright |
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Vice President and Controller (Authorized Signatory and |
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Principal Accounting Officer) |
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 6/15/31 | ||||
| 3/15/31 | ||||
| 6/23/23 | ||||
| 5/21/23 | ||||
| 4/18/22 | ||||
| 12/31/21 | 10-K | |||
| Filed on: | 7/30/21 | 8-K | ||
| 7/21/21 | ||||
| 7/1/21 | 3, 4 | |||
| For Period end: | 6/30/21 | |||
| 6/23/21 | ||||
| 5/26/21 | 424B2, 8-K | |||
| 4/28/21 | DEF 14A | |||
| 3/31/21 | 10-Q | |||
| 1/15/21 | ||||
| 1/1/21 | ||||
| 12/31/20 | 10-K, 5 | |||
| 12/23/20 | 4 | |||
| 11/3/20 | 4 | |||
| 6/30/20 | 10-Q | |||
| 5/18/20 | ||||
| 3/31/20 | 10-Q | |||
| 2/20/20 | 4 | |||
| 1/3/20 | 8-K | |||
| 1/1/20 | ||||
| 12/31/19 | 10-K | |||
| 5/3/18 | 8-K, DEF 14A | |||
| 2/7/18 | 4 | |||
| 2/6/17 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/22/24 Huntsman Corp. 10-K 12/31/23 170:35M RDG Filings/FA 2/21/23 Huntsman Corp. 10-K 12/31/22 168:31M RDG Filings/FA 2/15/22 Huntsman Corp. 10-K 12/31/21 169:32M RDG Filings/FA 10/29/21 Huntsman Corp. 10-Q 9/30/21 98:15M RDG Filings/FA |