Huntsman Corporation — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022; comparative figures are for FY2021. The request metadata says “2021 Q4,” but the supplied filing is the FY2022 annual report, filed February 21, 2023. Huntsman International LLC is Huntsman Corporation’s wholly owned principal operating subsidiary. Textile Effects is classified as discontinued operations for all periods presented.
Business context and financial performance
Huntsman is a global chemicals manufacturer operating through Polyurethanes, Performance Products, and Advanced Materials. The filing reports dollars in millions unless indicated otherwise.
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $8,023 | $7,670 |
| Gross profit / gross margin | $1,546 / 19.3% | $1,584 / 20.7% |
| Operating income / operating margin | $672 / 8.4% | $731 / 9.5% |
| Income from continuing operations | $511 | $1,055 |
| Net income attributable to Huntsman Corporation | $460 | $1,045 |
| Adjusted EBITDA (non-GAAP) | $1,155 | $1,246 |
| Cash from continuing operations | $892 | $915 |
| Capital expenditures | $272 | $326 |
| Free cash flow from continuing operations (non-GAAP) | $620 | $589 |
Gross and operating margins are calculated from reported revenue and profit. The filing cautions that non-GAAP measures, including adjusted EBITDA and free cash flow, supplement rather than replace GAAP results.
Segments and changes versus FY2021
- Polyurethanes: Revenue rose 1% to $5,067; adjusted EBITDA fell 29% to $628. Higher MDI prices were offset by lower volumes, weaker European and Asian margins, currency headwinds, and lower Chinese joint-venture earnings.
- Performance Products: Revenue rose 15% to $1,713; adjusted EBITDA rose 31% to $469. Pricing reflected higher raw-material costs, while volumes weakened amid slower construction activity and lower demand in several industrial markets.
- Advanced Materials: Revenue rose 7% to $1,277; adjusted EBITDA rose 14% to $233. Pricing and sales mix improved, but overall volumes declined, particularly in non-aerospace markets and in the fourth quarter.
Consolidated revenue increased 5%, primarily from higher selling prices across all segments, partly offset by lower volumes. Adjusted EBITDA declined 7%. Reported FY2021 earnings included $465 million of net income from the Albemarle arbitration settlement; FY2022 recorded $3 million of net costs related to that settlement. This one-off comparison materially affects the year-over-year fall in income.
Fourth-quarter 2022 revenue was $1,650 million, down from $2,112 million in Q4 2021. Huntsman reported a $56 million loss from continuing operations in Q4 2022, versus $594 million of income in Q4 2021; the prior-year quarter included the Albemarle settlement benefit. Q4 2022 net loss attributable to Huntsman was $91 million.
Cash, debt and liquidity
- Cash and equivalents were $654 million at year-end, down from $1,041 million. Total debt was $1,737 million, up from $1,550 million; year-end net debt was approximately $1,083 million, versus approximately $509 million a year earlier.
- Reported available liquidity was $1,847 million: $654 million cash, $1,132 million available under the $1.2 billion revolving facility, and $61 million under receivables programs. Working capital was $1,444 million, down 23% year over year.
- Financing cash outflow was $994 million, including $1,005 million of common-stock repurchases and $171 million of dividends paid. Huntsman repurchased about 32.0 million shares during 2022.
- Senior notes outstanding included €300 million of 4.25% notes due 2025, $750 million of 4.50% notes due 2029, and $400 million of 2.95% notes due 2031. The 2022 revolving facility matures in May 2027; receivables programs mature in July 2024.
- The company stated it was in compliance with material debt covenants. The revolving facility includes a leverage covenant; receivables facilities are subject to receivables performance metrics.
Outlook, risks and notable items
- Management expected 2023 capital expenditures of approximately $240–$250 million and pension and postretirement contributions of approximately $37 million.
- Management targeted annualized savings of approximately $140 million in 2023 from earlier cost and synergy plans, plus approximately $100 million of additional savings by year-end 2023. A separate European restructuring program was expected to yield about $40 million annualized savings by year-end 2023. Associated cash costs were estimated at $225 million through 2024 for the earlier programs and $65 million through 2024 for the European program.
- Huntsman agreed to sell Textile Effects to Archroma for $593 million cash plus assumption of underfunded pension liabilities; estimated net after-tax proceeds were approximately $540 million before fees and purchase-price adjustments. At the filing date, closing was expected February 28, 2023 and remained subject to transaction conditions.
- A jury awarded Huntsman approximately $94 million in its Praxair/Linde dispute; with interest, expected damages exceeded $125 million before taxes and legal fees. The award was under appeal, had not been recognized in earnings, and estimated net proceeds if affirmed were $50–$60 million.
- Key risks include cyclical demand and chemical pricing, lower volumes, volatile energy and feedstock costs, currency movements, production or supplier disruptions, international and geopolitical exposures, cybersecurity, environmental and climate regulation, litigation, pension funding, and uncertainty over deferred-tax-asset realization. The filing highlights a $169 million tax valuation allowance and a $49 million allowance established in the Netherlands in 2022.
- Other unusual items include $86 million of restructuring, impairment and plant-closing costs in 2022, versus $40 million in 2021, and a $12 million net loss on Venator-related fair-value adjustments. The company’s reported effective tax rate was 27% in 2022, compared with 15% in 2021.
The Board declared a quarterly dividend of $0.2375 per share on February 17, 2023, approximately 12% above the prior dividend. The filing does not provide a consolidated earnings or revenue forecast.
Important facts for investors to verify
- Whether the Textile Effects sale closed on the expected date and the final net proceeds, pension-liability assumption, and purchase-price adjustments.
- Whether planned cost savings are achieved on schedule and whether restructuring cash costs remain within estimates.
- How segment margins, volumes, and adjusted EBITDA perform as demand and pricing conditions change, particularly in Polyurethanes and Europe.
- Debt, cash, and liquidity after substantial 2022 buybacks, and the company’s capacity to fund capital spending, dividends, and pension contributions.
- Outcome and timing of the Praxair/Linde appeal, and any resulting cash recovery; the award was not recognized in earnings at filing.
- Changes in the deferred-tax valuation allowance and the assumptions supporting realization of deferred tax assets.