On August 5, 2024, Huntsman Corp (HUN, Financial) released its 8-K filing for the second quarter of 2024. Huntsman Corp is a US-based manufacturer of differentiated organic chemical products, including Methyl diphenyl diisocyanate (MDI), Amines, Maleic anhydride, and Epoxy-based polymer formulations. The company's products are used in various industries such as adhesives, aerospace, automotive, and construction. Huntsman operates through three main segments: Polyurethanes, Performance Products, and Advanced Materials, with the Polyurethanes segment being the largest revenue contributor.
Performance and Challenges
Huntsman Corp reported revenues of $1,574 million for Q2 2024, a slight decrease from $1,596 million in Q2 2023. The net income attributable to Huntsman was $22 million, up from $19 million in the same period last year. Adjusted net income was $24 million, down from $39 million in Q2 2023. The diluted income per share was $0.13, compared to $0.11 in Q2 2023, while the adjusted diluted income per share was $0.14, down from $0.22.
Despite the revenue decline, the company saw a 9% increase in sales volumes year-over-year. However, lower average selling prices, particularly in the Polyurethanes and Performance Products segments, posed significant challenges. The decrease in MDI average selling prices and competitive pressures in Europe and the Americas contributed to the revenue decline.
Financial Achievements
Huntsman Corp's adjusted EBITDA for Q2 2024 was $131 million, down from $156 million in Q2 2023. The company managed to improve its net cash provided by operating activities from continuing operations to $55 million, up from $40 million in the same period last year. Free cash flow from continuing operations was $5 million, compared to a negative $11 million in Q2 2023.
"Our second quarter 2024 was consistent with our expectations and represented a $50 million adjusted EBITDA improvement compared to the first quarter. Our sales volumes improved 9% year over year and we expect our growth comparisons to continue to be favorable in the second half of the year," said Peter R. Huntsman, Chairman, President, and CEO.
Segment Analysis
The Polyurethanes segment reported revenues of $1,001 million, a 1% decrease from $1,012 million in Q2 2023. The Performance Products segment saw a 3% decline in revenues to $299 million, while the Advanced Materials segment reported a 2% decrease to $279 million. The decrease in revenues across these segments was primarily due to lower average selling prices, partially offset by higher sales volumes.
| Segment | Q2 2024 Revenue ($M) | Q2 2023 Revenue ($M) | Change (%) |
|---|---|---|---|
| Polyurethanes | 1,001 | 1,012 | -1% |
| Performance Products | 299 | 307 | -3% |
| Advanced Materials | 279 | 284 | -2% |
Liquidity and Capital Resources
As of June 30, 2024, Huntsman Corp had approximately $1.3 billion of combined cash and unused borrowing capacity. The company spent $50 million on capital expenditures from continuing operations during the quarter, slightly down from $51 million in Q2 2023. Huntsman expects to spend between $180 million to $200 million on capital expenditures for the year 2024.
Income Taxes
The effective tax rate for Q2 2024 was 30%, with an adjusted effective tax rate of 23%. The company anticipates its adjusted effective tax rate for the full year 2024 to be between 30% and 34%, with a long-term adjusted effective tax rate of approximately 22% to 24%.
Conclusion
Huntsman Corp's Q2 2024 earnings report highlights the company's resilience in the face of challenging market conditions. While revenues slightly missed analyst estimates, the company managed to beat EPS expectations. The focus on cost control, cash flow, and higher sales volumes positions Huntsman Corp for potential growth in the second half of the year. Value investors may find the company's strong balance sheet and disciplined capital allocation strategy appealing.
Explore the complete 8-K earnings release (here) from Huntsman Corp for further details.
