Improved Profitability in Each Differentiated Segment as Compared
to Fourth Quarter 2006 THE WOODLANDS, Texas, May 1
/PRNewswire-FirstCall/ -- First Quarter 2007 Highlights * Revenues
for the first quarter of 2007 were $2,647.3 million, as compared to
$2,656.7 million for the first quarter of 2006. * First quarter
2007 net income was $46.6 million or $0.20 per diluted share as
compared to net income of $69.0 million or $0.30 per diluted share
for the same period in 2006. The total of adjusted net income from
continuing operations and from discontinued operations for the
first quarter of 2007 was $55.9 million or $0.24 per diluted share
as compared to $76.2 million or $0.33 for the same period in 2006.
* The total of Adjusted EBITDA from continuing operations and from
discontinued operations for the first quarter of 2007 was $259.7
million compared to $291.8 million for the same period in 2006. *
Adjusted EBITDA for our three differentiated segments increased 34%
or $64.9 million as compared to the fourth quarter of 2006. *
Unexpected plant outages in Caojing, China and Greatham, U.K.
impacted Adjusted EBITDA by an estimated $16.0 million or $0.05 per
diluted share. Summarized earnings are as follows: Three months
ended March 31, In millions, except per share amounts 2007 2006 Net
income $46.6 $69.0 Adjusted net income from continuing and
discontinued operations $55.9 $76.2 Diluted income per share $0.20
$0.30 Adjusted diluted income per share from continuing and
discontinued operations $0.24 $0.33 Adjusted EBITDA from continuing
and discontinued operations $259.7 $291.8 See end of press release
for important explanations Peter R. Huntsman, President and CEO,
stated: "Our results for the first quarter 2007 reflect earnings
growth in all three of our differentiated segments. The Adjusted
EBITDA from these core businesses increased 34% from fourth quarter
2006, driven by strong sales volumes growth in our advanced
materials, performance specialties and MDI product lines. "I am
pleased with our adjusted diluted earnings per share of 24 cents
which was achieved in spite of the negative impact of unplanned
production outages at facilities in Caojing, China; Greatham, U.K.;
and Port Arthur, Texas. The Chinese MDI joint venture is in the
process of replacing a damaged heat exchanger and expects to
complete these repairs and re-start the unit by the end of the
second quarter. "We remain optimistic about general global economic
conditions in 2007. We expect that our Adjusted EBITDA results in
the second quarter will modestly improve over those recorded in the
first quarter due primarily to the seasonal patterns we typically
experience. Moreover, if the positive trends we are currently
experiencing in many of our businesses continue, we would expect
that our results in the second half of 2007 would be stronger than
the first half of 2007. "We remain committed to our strategy to
specialize our portfolio while at the same time capitalizing on
global growth. While we see weakness in the U.S. housing and
automotive markets, we are seeing strong growth in Asia and
Europe." Huntsman Corporation Operating Results Three months ended
March 31, In millions, except per share amounts 2007 2006 Revenues
$2,647.3 $2,656.7 Cost of goods sold 2,240.0 2,262.9 Gross profit
407.3 393.8 Operating expenses 258.2 195.4 Restructuring,
impairment and plant closing costs 12.2 7.7 Operating income 136.9
190.7 Interest expense, net (73.8) (86.8) Loss on accounts
receivable securitization program (5.4) (2.3) Equity in income of
unconsolidated affiliates 2.2 0.7 Other non-operating expense (0.9)
(0.3) Income from continuing operations before income taxes and
minority interest 59.0 102.0 Income tax expense (13.0) (15.5)
Minority interest in subsidiaries' income (0.4) (0.4) Income from
continuing operations 45.6 86.1 Loss from discontinued operations,
net of tax(1) (1.4) (17.1) Extraordinary gain on the acquisition of
a business, net of tax(2) 2.4 -- Net income $46.6 $69.0 Net income
$46.6 $69.0 Interest expense, net 73.8 86.8 Income tax expense 13.0
15.5 Depreciation and amortization 109.2 101.7 Income taxes,
depreciation and amortization included in discontinued
operations(1) (0.6) 8.2 EBITDA(3) $242.0 $281.2 Adjusted EBITDA
from continuing and discontinued operations(3) $259.7 $291.8 Basic
income per share $0.21 $0.31 Diluted income per share $0.20 $0.30
Adjusted diluted income per share from continuing and discontinued
operations(3) $0.24 $0.33 Common share information: Basic shares
outstanding 220.8 220.6 Diluted shares 233.4 233.1 Diluted shares
for adjusted diluted income per share from continuing and
discontinued operations 233.4 233.1 See end of press release for
footnote explanations Huntsman Corporation Segment Results Three
months ended March 31, In millions 2007 2006 Segment Revenues:
Polyurethanes $840.0 $809.1 Materials and Effects 589.6 323.1
Performance Products 551.9 509.9 Pigments 270.2 258.8 Polymers
411.3 423.5 Base Chemicals 132.6 447.3 Eliminations (148.3) (115.0)
Total from continuing operations 2,647.3 2,656.7 Discontinued
operations (1) -- 531.8 Total $2,647.3 $3,188.5 Segment EBITDA (3):
Polyurethanes $118.3 $159.2 Materials and Effects 57.1 34.9
Performance Products 72.1 50.9 Pigments 23.5 33.3 Polymers 10.8
35.2 Base Chemicals (0.5) 14.8 Corporate and other (39.3) (47.1)
Total $242.0 $281.2 Segment Adjusted EBITDA(3) : Polyurethanes
$118.7 $157.5 Materials and Effects 62.9 37.2 Performance Products
72.2 51.9 Pigments 23.0 35.8 Polymers 15.3 39.3 Base Chemicals 2.9
22.2 Corporate and other (34.9) (43.8) Total from continuing
operations 260.1 300.1 Discontinued operations (1) (0.4) (8.3)
Total $259.7 $291.8 See end of press release for footnote
explanations Three Months Ended March 31, 2007 as Compared to Three
Months Ended March 31, 2006 Revenues for the three months ended
March 31, 2007, decreased slightly to $2,647.3 million, from
$2,656.7 million during the same period in 2006. Revenues increased
in our Polyurethanes and Performance Products segments due
primarily to higher sales volumes. Revenues increased in our
Materials and Effects segment primarily due to the acquisition of
our textile effects business in June 2006. Revenues increased in
our Pigments segment due to higher average selling prices and
higher sales volumes. Revenues decreased in our Polymers segment
primarily due to lower average selling prices. Revenues decreased
in our Base Chemicals segment primarily due to the continuing
outage at our Port Arthur, Texas olefins manufacturing facility and
the divestiture of certain of our U.S. butadiene and MTBE assets.
For the three months ended March 31, 2007, EBITDA decreased to
$242.0 million, from $281.2 million in the same period in 2006.
Total Adjusted EBITDA from continuing and discontinued operations
for the three months ended March 31, 2007 was $259.7 million, a
decrease from $291.8 million for the same period in 2006.
Polyurethanes The increase in revenues in the Polyurethanes segment
for the three months ended March 31, 2007 compared to the same
period in 2006 was primarily due to higher sales volumes, partially
offset by lower average selling prices. MDI sales volumes increased
5% primarily as the result of strong growth in Asia and Europe
partially offset by lower demand in the Americas. MDI average
selling prices increased 2% primarily due to the strength of major
European currencies versus the U.S. dollar. In local currencies,
average selling prices were lower in Asia and Europe and relatively
unchanged in the Americas. MTBE sales volumes and selling prices
decreased due to reduced U.S. demand as a result of changes in U.S.
legislation. The decrease in EBITDA in the Polyurethanes segment
was primarily the result of lower MTBE margins due to lower average
selling prices and higher raw material costs as well as lower MDI
margins resulting from higher raw material costs and expenses
related to the ongoing outage at the China joint venture facility.
The temporary shutdown of the China joint venture facility, which
is undergoing repairs to replace a damaged heat exchanger, resulted
in incremental expenses of approximately $12 million during the
first quarter of 2007. Materials and Effects The increase in
revenues in the Materials and Effects segment for the three months
ended March 31, 2007 compared to the same period in 2006 was
primarily due to the acquisition of the textile effects business on
June 30, 2006. The textile effects business contributed $242.7
million in revenue for the three months ended March 31, 2007, while
the advanced materials business contributed $346.9 million revenues
for the same period, an increase of $23.8 million or 7% as compared
to 2006. The increase in advanced materials revenues was primarily
the result of a 10% increase in average selling prices partially
offset by a 2% decrease in sales volumes. The increase in EBITDA in
the Materials and Effects segment was primarily due to the
acquisition of the textile effects business on June 30, 2006. The
textile effects business contributed $13.1 million of EBITDA for
the three months ended March 31, 2007, while the advanced materials
business contributed $44.0 million for the same period, an increase
of $9.1 million or 26%. The increase in EBITDA in the advanced
materials business was primarily due to higher margins resulting
from higher average selling prices discussed above. During the
three months ended March 31, 2007, the Materials and Effects
segment recorded restructuring and plant closing costs of $5.8
million compared to $2.3 million for the comparable period in 2006.
Performance Products The increase in revenues in the Performance
Products segment for the three months ended March 31, 2007 compared
to the same period in 2006 was the result of a 10% increase in
sales volumes partially offset by a 2% decrease in average selling
prices. Higher sales volumes were primarily attributable to
additional ethylene by-product sales and increased volumes in our
performance specialties and certain of our performance
intermediates products. Average selling prices decreased primarily
due to lower raw materials costs and changes in product mix. The
increase in EBITDA in the Performance Products segment was
primarily due to increased sales volumes discussed above and lower
raw materials costs during the three months ended March 31, 2007 as
compared to the same period in 2006. Pigments The increase in
revenues in the Pigments segment for the three months ended March
31, 2007 compared to the same period in 2006 was primarily due to a
3% increase in average selling prices and a 2% increase in sales
volumes. Average selling prices increased primarily due to the
strength of major European currencies versus the U.S. dollar,
partially offset by lower local currency average selling prices in
Europe and North America. Sales volumes increased primarily due to
strong customer demand in Latin America, Middle East and Africa.
The decrease in EBITDA in the Pigments segment was primarily due to
lower local currency average selling prices discussed above and
lower production volumes due to a maintenance outage at our
Greatham, U.K. facility. Polymers The decrease in revenues in the
Polymers segment for the three months ended March 31, 2007 compared
to the same period in 2006 was primarily the result of an 8%
decrease in average selling prices primarily in our polyethylene
product line. Sales volumes increased 5% as compared to the 2006
period due to improved demand. The decrease in EBITDA in the
Polymers segment was primarily the result of lower margins, driven
primarily by lower average selling prices. During the three months
ended March 31, 2007 the Polymers segment recorded restructuring,
impairment and plant closing costs of $6.8 million as compared to
charges of $3.5 million for the same period in 2006. On February
15, 2007 we entered into an agreement with Flint Hills Resources,
LLC to sell the majority of the assets that comprise our Polymers
segment. Base Chemicals The decrease in revenues in the Base
Chemicals segment for the three months ended March 31, 2007
compared to the same period in 2006 was primarily the result of the
continuing outage at our Port Arthur, Texas olefins manufacturing
facility and the divestiture of certain of our U.S. butadiene and
MTBE assets in 2006. The decrease in EBITDA in the Base Chemicals
segment was primarily the result of the continuing outage at our
Port Arthur, Texas olefins manufacturing facility and the
divestiture of certain of our U.S. butadiene and MTBE assets.
During the three months ended March 31, 2007, EBITDA was negatively
impacted by an estimated $21 million related to the outage at the
Port Arthur, Texas olefins facility. On February 15, 2007 we
entered into an agreement with Flint Hills Resources, LLC to sell
the assets that comprise the Base Chemicals segment. Corporate and
Other Corporate and other items include unallocated corporate
overhead, loss on the sale of accounts receivable, unallocated
foreign exchange gains and losses, losses on the early
extinguishment of debt, other non-operating income and expense,
minority interest, unallocated restructuring costs, and the
extraordinary gain on the acquisition of a business. In the first
quarter of 2007, the total of these items improved by $7.8 million
compared to the 2006 period. The improvement primarily resulted
from lower general and administrative costs as well as a $2.4
million extraordinary gain related to the acquisition of the
textile effects business and $2.3 million in lower pension costs.
Partially offset by a higher loss on the sale of accounts
receivable largely due to the expanded size of our securitization
program. Income Taxes In the first quarter 2007, we recorded $13.0
million of income tax expense as compared to $15.5 million of
income tax expense in the comparable period of 2006. Our effective
tax rate on an adjusted basis was 22% as compared to 15% in the
prior year period. We expect our full year 2007 adjusted effective
tax rate to be approximately 20%. Liquidity, Capital Resources and
Outstanding Debt During the quarter we took advantage of improved
credit metrics and credit ratings to further strengthen and improve
our capital structure. On February 28, 2007 we completed a $147
million add-on offering of 7.875% senior subordinated notes due
2014 which were issued at a premium to yield approximately 7.01%,
the net proceeds of which were used to redeem all of our remaining
10.125% subordinated notes due 2009. In addition, on April 19,
2007, we completed an amendment to our senior credit facilities
that eliminated various covenants and improved our flexibility
under these facilities. As of March 31, 2007, we had approximately
$674 million in combined cash and unused borrowing capacity. Our
liquidity decreased during the three months ended March 31, 2007
due to a voluntarily repayment of $75 million on our term loan. In
addition, during the first quarter we also experienced an increase
in net working capital primarily due to increased revenues and
volumes. Subject to receipt of required regulatory approvals and
other customary closing conditions, we expect to complete the sale
of our U.S. Base Chemicals and Polymers businesses by the fourth
quarter of 2007 following the successful re-start of our Port
Arthur, Texas olefins facility. We intend to use net proceeds from
the sale to repay debt and decrease the capacity of our accounts
receivable securitization facility. Also upon the successful start
up of our olefins facility, we expect to receive an additional $70
million in proceeds from Texas Petrochemicals, L.P. relating to the
sale of our U.S. butadiene and MTBE business that was completed in
June of 2006. In 2007, we expect to record net asset impairment
pre-tax charges related to the sale of these businesses of
approximately $270 million. With respect to the Port Arthur, Texas
fire damage, during the quarter ended March 31, 2007 we executed a
sworn statement in proof of loss with our insurance carriers to
receive additional insurance recovery advances of $100 million (in
addition to the $150 million already received prior to December 31,
2006) of which $58.5 million was received as of March 31, 2007. The
majority of the remaining $41.5 million was received in April 2007.
We expect to receive additional insurance proceeds associated with
this claim during 2007. For the three months ended March 31, 2007,
total capital expenditures were approximately $131 million compared
to $104 million for the same period in 2006. The increase in
capital spending is primarily attributable to the spending
associated with the rebuild of the Port Arthur, Texas olefins
facility which totaled approximately $44 million in the first
quarter of 2007. Excluding capital expenditures to repair our Port
Arthur, Texas olefins facility of approximately $100 million, we
expect to spend approximately $550 million in capital expenditures
in 2007. Below is our outstanding debt: March 31, December 31, In
millions 2007 2006 Debt: (5) Senior Secured Credit Facilities
$1,746.6 $1,711.2 Secured Notes 294.1 294.0 Unsecured Notes 198.0
198.0 Subordinated Notes 1,241.2 1,228.3 Other Debt 214.9 213.8
Total Debt 3,694.8 3,645.3 Total Cash 143.5 263.2 Net Debt $3,551.3
$3,382.1 Huntsman Corporation Reconciliation of Adjustments Net
Income (Loss) Available To Diluted Income EBITDA Common
Stockholders (Loss) Per Share In millions, Three months Three
months Three months except per ended March 31, ended March 31,
ended March 31, share amounts 2007 2006 2007 2006 2007 2006 GAAP
$242.0 $281.2 $46.6 $69.0 $0.20 $0.30 Adjustments: Loss on accounts
receivable securitization program 5.4 2.3 -- -- -- -- Loss on early
extinguishment of debt 1.4 -- 0.9 -- 0.00 -- Other restructuring,
impairment and plant closing costs 12.2 7.7 11.6 7.1 0.05 0.03 Gain
on dispositions of assets(4) (0.5) -- (1.9) -- (0.01) -- Loss from
discontinued operations, net of tax(1) 2.0 8.9 1.4 17.1 0.01 0.07
Extraordinary gain on the acquisition of a business, net of tax(2)
(2.4) -- (2.4) -- (0.01) -- Adjusted continuing operations $260.1
$300.1 $56.2 $93.2 $0.24 $0.40 Discontinued operations $(2.0)
$(8.9) $(1.4) $(17.1) $(0.01) $(0.07) Restructuring, impairment and
plant closing costs -- 0.1 -- 0.1 -- 0.00 Loss on sale 1.6 -- 1.1
-- 0.00 -- Loss on accounts receivable securitization -- 0.5 -- --
-- -- Adjusted discontinued operations(1) $(0.4) $(8.3) $(0.3)
$(17.0) $(0.00) $(0.07) Total - adjusted continuing and
discontinued operations $259.7 $291.8 $55.9 $76.2 $0.24 $0.33 See
end of press release for footnote explanations Conference Call
Information We will hold a telephone conference to discuss our
first quarter results on Tuesday, May 1, 2007 at 11:00 a.m. ET.
Call-in number for U.S. participants: (800) 798 - 2864 Call-in
number for international participants: (617) 614 - 6206 Participant
access code: 64806452 The conference call will be available via
webcast and can be accessed from the investor relations portion of
the company's website at http://www.huntsman.com/. The conference
call will be available for replay beginning May 1, 2007 and ending
May 8, 2007. Call-in numbers for the replay: Within the U.S.: (888)
286 - 8010 International: (617) 801 - 6888 Access code for replay:
74945960 Statements in this release that are not historical are
forward-looking statements. These statements are based on
management's current beliefs and expectations. The forward-looking
statements in this release are subject to uncertainty and changes
in circumstances and involve risks and uncertainties that may
affect the company's operations, markets, products, services,
prices and other factors as discussed in the Huntsman companies'
filings with the Securities and Exchange Commission. Significant
risks and uncertainties may relate to, but are not limited to,
financial, economic, competitive, environmental, political, legal,
regulatory and technological factors. Accordingly, there can be no
assurance the company's expectations will be realized. The company
assumes no obligation to provide revisions to any forward-looking
statements should circumstances change, except as otherwise
required by securities and other applicable laws. (1) On December
29, 2006, we completed the sale of our European petrochemicals
business to SABIC. On July 6, 2005 we completed the sale of our
toluene di-isocyanate (TDI) business to BASF. (2) On June 30, 2006,
we acquired the global textile effects business of Ciba Specialty
Chemicals Inc. for approximately $172.1 million. Because the fair
value of acquired current assets less liabilities assumed exceeded
the acquisition price and planned restructuring costs the excess
was recorded as an extraordinary gain on the acquisition of a
business. During the three months ended March 31, 2007 an
additional extraordinary gain of $2.4 million was recorded, of
which taxes were not applicable. (3) We use EBITDA, adjusted EBITDA
from continuing operations, adjusted EBITDA from discontinued
operations, adjusted net income from continuing operations and
adjusted net income from discontinued operations. We believe that
net income (loss) available to common stockholders is the
performance measure calculated and presented in accordance with
generally accepted accounting principles in the U.S. ("GAAP") that
is most directly comparable to EBITDA, adjusted EBITDA from
continuing operations and adjusted net income from continuing
operations. We believe that income (loss) from discontinued
operations is the performance measure calculated and presented in
accordance with GAAP that is most directly comparable to adjusted
EBITDA from discontinued operations and adjusted net income from
discontinued operations. Additional information with respect to our
use of each of these financial measures follows. EBITDA is defined
as net income before interest, income taxes, and depreciation and
amortization. EBITDA as used herein is not necessarily comparable
to other similarly titled measures of other companies. The
reconciliation of EBITDA to net income (loss) available to common
stockholders is set forth in the operating results table above.
Adjusted EBITDA from continuing operations is computed by
eliminating the following from EBITDA: gains and losses from
discontinued operations; restructuring, impairment and plant
closing (credits) costs; losses on the sale of accounts receivable
to our securitization program; losses from early extinguishment of
debt; extraordinary gain on the acquisition of a business; and gain
on dispositions of assets. The reconciliation of adjusted EBITDA
from continuing operations to EBITDA is set forth in the
reconciliation of adjustments table above. Adjusted EBITDA from
discontinued operations is computed by eliminating from income
(loss) from discontinued operations: income taxes; depreciation and
amortization; restructuring, impairment and plant closing (credits)
costs; losses on the sale of accounts receivable to our
securitization program; and loss on the sale of assets. The
following table provides a reconciliation of adjusted EBITDA from
discontinued operations to income (loss) from discontinued
operations: Three months ended March 31, 2007 2006 Loss from
discontinued operations, net of tax $(1.4) $(17.1) Income tax
benefit (0.6) (7.1) Depreciation and amortization -- 15.3 EBITDA
from discontinued operations (2.0) (8.9) Restructuring, impairment
and plant closing costs -- 0.1 Loss on sale 1.6 -- Loss on accounts
receivable securitization -- 0.5 Adjusted EBITDA from discontinued
operations $(0.4) $(8.3) Adjusted net income from continuing
operations is computed by eliminating the after tax impact of the
following from net income (loss) available to common stockholders:
loss (income) from discontinued operations; restructuring,
impairment and plant closing (credits) costs; losses on the early
extinguishment of debt; extraordinary gain on the acquisition of a
business; and gain on dispositions of assets. The reconciliation of
adjusted net income from continuing operations to net income (loss)
available to common stockholders is set forth in the reconciliation
of adjustments table above. Adjusted net income from discontinued
operations is computed by eliminating the after tax impact of the
following from income (loss) from discontinued operations:
restructuring, impairment and plant closing (credits) costs; and
loss on the sale of assets. The reconciliation of adjusted net
income from discontinued operations to net income (loss) available
to common stockholders is set forth in the reconciliation of
adjustments table above. (4) On January 4, 2007 we sold the assets
comprising our Australia polyester resin business for approximately
$15.8 million. During the first quarter 2007 we recognized a net of
tax gain of $4.1 million, the income tax impact of which was nil.
On February 15, 2007 we announced that definitive documents had
been signed with Flint Hills Resources, LLC to sell our U.S. Base
Chemicals and Polymers assets. During the first quarter 2007 we
recognized net of tax expense related to the disposition of these
assets of $2.2 million, the income tax impact of which was $1.4
million. (5) Excludes $457 million and $443 million of off-balance
sheet financing obtained under our accounts receivable
securitization program as of March 31, 2007, and December 31, 2006,
respectively. DATASOURCE: Huntsman Corporation CONTACT: Media, Russ
Stolle, +1-281-719-6624, or Investor Relations, John Heskett,
+1-801-584-5768, both of Huntsman Corporation Web site:
http://www.huntsman.com/
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