Docoh
Loading...

HUN Huntsman

Filed: 29 Oct 21, 4:16pm
 

       

Table of Contents



UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

WASHINGTON, D.C. 20549

 

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         

Commission
File Number

    

Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number

    

State of
Incorporation
or Organization

    

I.R.S. Employer
Identification No.

001-32427

Huntsman Corporation
10003 Woodloch Forest Drive
The Woodlands, Texas 77380
(281) 719-6000

Delaware

42-1648585

333-85141

Huntsman International LLC
10003 Woodloch Forest Drive
The Woodlands, Texas 77380
(281) 719-6000

Delaware

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

 

Common Stock, par value $0.01 per share

 

HUN

New York Stock Exchange

Huntsman International LLC

 

NONE

 

NONE

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

Yes ☒

No ☐

Huntsman International LLC

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

Yes ☒

No ☐

Huntsman International LLC

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

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

Huntsman International LLC

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☐

Emerging Growth company ☐

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 ☐

No ☒

Huntsman International LLC

Yes ☐

No ☒

On October 20, 2021, 218,030,754 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 September 30, 2021

TABLE OF CONTENTS

Page

PART I

FINANCIAL INFORMATION

4

ITEM 1.

Condensed Consolidated Financial Statements (Unaudited)

4

Huntsman Corporation and Subsidiaries:

Condensed Consolidated Balance Sheets

4

Condensed Consolidated Statements of Operations

5

Condensed Consolidated Statements of Comprehensive Income

6

Condensed Consolidated Statements of Equity

7

Condensed Consolidated Statements of Cash Flows

9

Huntsman International LLC and Subsidiaries:

Condensed Consolidated Balance Sheets

11

Condensed Consolidated Statements of Operations

12

Condensed Consolidated Statements of Comprehensive Income

13

Condensed Consolidated Statements of Equity

14

Condensed Consolidated Statements of Cash Flows

15

Huntsman Corporation and Subsidiaries and Huntsman International LLC and Subsidiaries:

Notes to Condensed Consolidated Financial Statements

17

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

56

ITEM 4.

Controls and Procedures

56

PART II

OTHER INFORMATION

57

ITEM 1.

Legal Proceedings

57

ITEM 1A.

Risk Factors

57

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

57

ITEM 6.

Exhibits

58

 

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.

 

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Millions, Except Share and Per Share Amounts)

  

September 30,

  

December 31,

 
  

2021

  

2020

 

ASSETS

        

Current assets:

        

Cash and cash equivalents(a)

 $505  $1,593 

Accounts and notes receivable (net of allowance for doubtful accounts of $25 and $26, respectively), ($336 and $198 pledged as collateral, respectively)(a)

  1,216   902 

Accounts receivable from affiliates

  23   8 

Inventories(a)

  1,174   848 

Other current assets

  196   217 

Total current assets

  3,114   3,568 

Property, plant and equipment, net(a)

  2,540   2,505 

Investment in unconsolidated affiliates

  466   373 

Intangible assets, net

  404   453 

Goodwill

  741   533 

Deferred income taxes

  281   288 

Operating lease right-of-use assets

  418   445 

Other noncurrent assets(a)

  605   548 

Total assets

 $8,569  $8,713 
         

LIABILITIES AND EQUITY

        

Current liabilities:

        

Accounts payable(a)

 $955  $842 

Accounts payable to affiliates

  30   34 

Accrued liabilities(a)

  569   458 

Current portion of debt(a)

  16   593 

Current operating lease liabilities(a)

  54   52 

Total current liabilities

  1,624   1,979 

Long-term debt(a)

  1,567   1,528 

Deferred income taxes

  201   212 

Noncurrent operating lease liabilities(a)

  383   411 

Other noncurrent liabilities(a)

  840   910 

Total liabilities

  4,615   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, 259,468,984 and 258,520,411 shares issued and 217,028,320 and 220,046,262 shares outstanding, respectively

  3   3 

Additional paid-in capital

  4,096   4,048 

Treasury stock, 42,448,875 and 38,477,091 shares, respectively

  (833)  (731)

Unearned stock-based compensation

  (30)  (19)

Retained earnings

  1,881   1,564 

Accumulated other comprehensive loss

  (1,338)  (1,346)

Total Huntsman Corporation stockholders’ equity

  3,779   3,519 

Noncontrolling interests in subsidiaries

  175   154 

Total equity

  3,954   3,673 

Total liabilities and equity

 $8,569  $8,713 

 


(a)

At September 30, 2021 and December 31, 2020, respectively, $31 and $2 of cash and cash equivalents, $10 and $6 of accounts and notes receivable (net), $52 and $38 of inventories, $161 and $167 of property, plant and equipment (net), $23 each of other noncurrent assets, $144 and $119 of accounts payable, $13 each of accrued liabilities, $13 and $47 of current portion of debt, $6 and $5 of current operating lease liabilities, $53 and $3 of long-term debt, $22 and $17 of noncurrent operating lease liabilities and $76 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

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Revenues:

                

Trade sales, services and fees, net

 $2,230  $1,487  $6,006  $4,262 

Related party sales

  55   23   140   88 

Total revenues

  2,285   1,510   6,146   4,350 

Cost of goods sold

  1,802   1,231   4,840   3,612 

Gross profit

  483   279   1,306   738 

Operating expenses:

                

Selling, general and administrative

  204   178   620   563 

Research and development

  38   33   113   101 

Restructuring, impairment and plant closing (credits) costs

  (1)  12   34   34 

Gain on sale of India-based DIY business

  0   0   (28)  0 

Other operating income, net

  (3)  (3)  (13)  (4)

Total operating expenses

  238   220   726   694 

Operating income

  245   59   580   44 

Interest expense, net

  (15)  (24)  (52)  (63)

Equity in income of investment in unconsolidated affiliates

  34   21   118   25 

Fair value adjustments to Venator investment

  (3)  6   (28)  (100)

Loss on early extinguishment of debt

  0   0   (27)  0 

Other income, net

  7   10   23   27 

Income (loss) from continuing operations before income taxes

  268   72   614   (67)

Income tax expense

  (38)  (15)  (114)  (9)

Income (loss) from continuing operations

  230   57   500   (76)

(Loss) income from discontinued operations, net of tax

  (5)  0   (3)  782 

Net income

  225   57   497   706 

Net income attributable to noncontrolling interests

  (16)  (9)  (49)  (15)

Net income attributable to Huntsman Corporation

 $209  $48  $448  $691 
                 

Basic income (loss) per share:

                

Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders

 $0.97  $0.22  $2.04  $(0.41)

(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax

  (0.02)  0   (0.01)  3.54 

Net income attributable to Huntsman Corporation common stockholders

 $0.95  $0.22  $2.03  $3.13 

Weighted average shares

  219.4   219.8   220.2   220.8 
                 

Diluted income (loss) per share:

                

Income (loss) from continuing operations attributable to Huntsman Corporation common stockholders

 $0.96  $0.22  $2.03  $(0.41)

(Loss) income from discontinued operations attributable to Huntsman Corporation common stockholders, net of tax

  (0.02)  0   (0.01)  3.54 

Net income attributable to Huntsman Corporation common stockholders

 $0.94  $0.22  $2.02  $3.13 

Weighted average shares

  221.3   221.3   222.2   220.8 
                 

Amounts attributable to Huntsman Corporation common stockholders:

                

Income (loss) from continuing operations

 $214  $48  $451  $(91)

(Loss) income from discontinued operations, net of tax

  (5)  0   (3)  782 

Net income

 $209  $48  $448  $691 

See accompanying notes to condensed consolidated financial statements.

 

 

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Millions)

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Net income

 $225  $57  $497  $706 

Other comprehensive (loss) income, net of tax:

                

Foreign currency translations adjustments

  (36)  14   (42)  (42)

Pension and other postretirement benefits adjustments

  17   14   52   78 

Other comprehensive (loss) income, net of tax

  (19)  28   10   36 

Comprehensive income

  206   85   507   742 

Comprehensive income attributable to noncontrolling interests

  (17)  (12)  (51)  (18)

Comprehensive income attributable to Huntsman Corporation

 $189  $73  $456  $724 

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

  220,046,262  $3  $4,048  $(731) $(19) $1,564  $(1,346) $154  $3,673 

Net income

     0   0   0   0   83   0   17   100 

Other comprehensive loss

     0   0   0   0   0   (13)  0   (13)

Issuance of nonvested stock awards

     0   25   0   (25)  0   0   0   0 

Vesting of stock awards

  664,818   0   5   0   0   0   0   0   5 

Recognition of stock-based compensation

     0   2   0   6   0   0   0   8 

Repurchase and cancellation of stock awards

  (202,961)  0   0   0   0   (6)  0   0   (6)

Stock options exercised

  204,005   0   5   0   0   (2)  0   0   3 

Dividends declared on common stock ($0.1625 per share)

     0   0   0   0   (36)  0   0   (36)

Balance, March 31, 2021

  220,712,124  $3  $4,085  $(731) $(38) $1,603  $(1,359) $171  $3,734 

Net income

     0   0   0   0   156   0   16   172 

Other comprehensive income

     0   0   0   0   0   41   1   42 

Vesting of stock awards

  3,732   0   0   0   0   0   0   0   0 

Recognition of stock-based compensation

     0   2   0   4   0   0   0   6 

Repurchase and cancellation of stock awards

  (19,912)  0   0   0   0   (1)  0   0   (1)

Stock options exercised

  263,962   0   6   0   0   (3)  0   0   3 

Dividends declared to noncontrolling interests

     0   0   0   0   0   0   (30)  (30)

Dividends declared on common stock ($0.1875 per share)

     0   0   0   0   (41)  0   0   (41)

Balance, June 30, 2021

  220,959,906  $3  $4,093  $(731) $(34) $1,714  $(1,318) $158  $3,885 

Net income

     0   0   0   0   209   0   16   225 

Other comprehensive (loss) income

     0   0   0   0   0   (20)  1   (19)

Issuance of nonvested stock awards

     0   1   0   (1)  0   0   0   0 

Vesting of stock awards

  7,695   0   0   0   0   0   0   0   0 

Recognition of stock-based compensation

     0   1   0   5   0   0   0   6 

Repurchase and cancellation of stock awards

  (1,869)  0   0   0   0   0   0   0   0 

Stock options exercised

  34,372   0   1   0   0   0   0   0   1 

Treasury stock repurchased

  (3,971,784)  0   0   (102)  0   0   0   0   (102)

Dividends declared on common stock ($0.1875 per share)

     0   0   0   0   (42)  0   0   (42)

Balance, September 30, 2021

  217,028,320  $3  $4,096  $(833) $(30) $1,881  $(1,338) $175  $3,954 

7

 

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, 2020

  224,295,868  $3  $4,008  $(635) $(17) $690  $(1,362) $137  $2,824 

Net income

     0   0   0   0   705   0   3   708 

Other comprehensive loss

     0   0   0   0   0   (21)  0   (21)

Issuance of nonvested stock awards

     0   18   0   (18)  0   0   0   0 

Vesting of stock awards

  943,026   0   4   0   0   0   0   0   4 

Recognition of stock-based compensation

     0   2   0   5   0   0   0   7 

Repurchase and cancellation of stock awards

  (283,975)  0   0   0   0   (6)  0   0   (6)

Stock options exercised

  57,209   0   2   0   0   (2)  0   0   0 

Treasury stock repurchased

  (5,364,519)  0   0   (96)  0   0   0   0   (96)

Dividends declared on common stock ($0.1625 per share)

     0   0   0   0   (37)  0   0   (37)

Balance, March 31, 2020

  219,647,609  $3  $4,034  $(731) $(30) $1,350  $(1,383) $140  $3,383 

Net (loss) income

     0   0   0   0   (62)  0   3   (59)

Other comprehensive income

     0   0   0   0   0   29   0   29 

Vesting of stock awards

  8,448   0   0   0   0   0   0   0   0 

Recognition of stock-based compensation

     0   2   0   4   0   0   0   6 

Repurchase and cancellation of stock awards

  (1,093)  0   0   0   0   0   0   0   0 

Stock options exercised

  92,057   0   1   0   0   0   0   0   1 

Dividends declared on common stock ($0.1625 per share)

     0   0   0   0   (36)  0   0   (36)

Balance, June 30, 2020

  219,747,021  $3  $4,037  $(731) $(26) $1,252  $(1,354) $143  $3,324 

Net income

     0   0   0   0   48   0   9   57 

Other comprehensive income

     0   0   0   0   0   25   3   28 

Vesting of stock awards

  2,890   0   0   0   0   0   0   0   0 

Recognition of stock-based compensation

     0   2   0   3   0   0   0   5 

Repurchase and cancellation of stock awards

  (710)  0   0   0   0   (1)  0   0   (1)

Stock options exercised

  78,192   0   3   0   0   (3)  0   0   0 

Dividends declared on common stock ($0.1625 per share)

     0   0   0   0   (36)  0   0   (36)

Balance, September 30, 2020

  219,827,393  $3  $4,042  $(731) $(23) $1,260  $(1,329) $155  $3,377 

 

See accompanying notes to condensed consolidated financial statements.

 

 

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

  

Nine months

 
  

ended

 
  

September 30,

 
  

2021

  

2020

 

Operating Activities:

        

Net income

 $497  $706 

Less: Loss (income) from discontinued operations, net of tax

  3   (782)

Income (loss) from continuing operations

  500   (76)

Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations:

        

Equity in income of investment in unconsolidated affiliates

  (118)  (25)

Unrealized losses on fair value adjustments to Venator investment

  28   100 

Cash received from return on investment in unconsolidated subsidiary

  31   18 

Depreciation and amortization

  219   206 

Noncash lease expense

  46   46 

Gain on disposal of businesses/assets

  (28)  0 

Loss on early extinguishment of debt

  27   0 

Noncash restructuring and impairment charges

  14   5 

Deferred income taxes

  (22)  (16)

Stock-based compensation

  24   20 

Other, net

  (4)  4 

Changes in operating assets and liabilities:

        

Accounts and notes receivable

  (342)  103 

Inventories

  (329)  154 

Prepaid expenses

  31   23 

Other current assets

  (11)  4 

Other noncurrent assets

  (84)  (47)

Accounts payable

  125   (85)

Accrued liabilities

  88   (22)

Taxes paid on sale of Chemical Intermediates Businesses

  0   (188)

Other noncurrent liabilities

  (32)  (114)

Net cash provided by operating activities from continuing operations

  163   110 

Net cash used in operating activities from discontinued operations

  (1)  (22)

Net cash provided by operating activities

  162   88 
         

Investing Activities:

        

Capital expenditures

  (250)  (170)

Cash received from sale of businesses

  43   1,923 

Acquisition of businesses, net of cash acquired

  (245)  (653)

Insurance proceeds for recovery of property damage

  3   0 

Other, net

  10   5 

Net cash (used in) provided by investing activities

  (439)  1,105 

(Continued)

 

HUNTSMAN CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Millions)

  

Nine months

 
  

ended

 
  

September 30,

 
  

2021

  

2020

 

Financing Activities:

        

Net borrowings (repayments) on revolving loan facilities

 $8  $(153)

Proceeds from issuance of long-term debt

  427   0 

Repayments of long-term debt

  (965)  (17)

Repayments of short-term debt

  0   (109)

Repayments of notes payable

  0   (32)

Debt issuance costs paid

  (4)  0 

Dividends paid to noncontrolling interests

  (30)  (24)

Dividends paid to common stockholders

  (119)  (109)

Repurchase and cancellation of awards

  (7)  (7)

Proceeds from issuance of common stock

  7   2 

Repurchase of common stock

  (102)  (96)

Costs of early extinguishment of debt

  (26)  0 

Other, net

  2   (1)

Net cash used in financing activities

  (809)  (546)

Effect of exchange rate changes on cash

  (2)  (4)

(Decrease) increase in cash, cash equivalents and restricted cash

  (1,088)  643 

Cash, cash equivalents and restricted cash at beginning of period

  1,593   525 

Cash, cash equivalents and restricted cash at end of period

 $505  $1,168 
         

Supplemental cash flow information:

        

Cash paid for interest

 $57  $49 

Cash paid for income taxes

  83   242 

For both September 30, 2021 and 2020, the amount of capital expenditures in accounts payable was $54 million. For the nine months ended September 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)

  

September 30,

  

December 31,

 
  

2021

  

2020

 

ASSETS

        

Current assets:

        

Cash and cash equivalents(a)

 $505  $1,591 

Accounts and notes receivable (net of allowance for doubtful accounts of $25 and $26, respectively), ($336 and $198 pledged as collateral, respectively)(a)

  1,216   902 

Accounts receivable from affiliates

  167   47 

Inventories(a)

  1,174   848 

Other current assets

  194   223 

Total current assets

  3,256   3,611 

Property, plant and equipment, net(a)

  2,540   2,505 

Investment in unconsolidated affiliates

  466   373 

Intangible assets, net

  404   453 

Goodwill

  741   533 

Deferred income taxes

  281   288 

Operating lease right-of-use assets

  418   445 

Other noncurrent assets(a)

  604   548 

Total assets

 $8,710  $8,756 
         

LIABILITIES AND EQUITY

        

Current liabilities:

        

Accounts payable(a)

 $954  $842 

Accounts payable to affiliates

  32   36 

Accrued liabilities(a)

  559   455 

Current portion of debt(a)

  16   593 

Current operating lease liabilities(a)

  54   52 

Total current liabilities

  1,615   1,978 

Long-term debt(a)

  1,567   1,528 

Deferred income taxes

  203   214 

Noncurrent operating lease liabilities(a)

  383   411 

Other noncurrent liabilities(a)

  831   900 

Total liabilities

  4,599   5,031 

Commitments and contingencies (Notes 15 and 16)

          

Equity

        

Huntsman International LLC members’ equity:

        

Members’ equity, 2,728 units issued and outstanding

  3,724   3,701 

Retained earnings

  1,536   1,203 

Accumulated other comprehensive loss

  (1,324)  (1,333)

Total Huntsman International LLC members’ equity

  3,936   3,571 

Noncontrolling interests in subsidiaries

  175   154 

Total equity

  4,111   3,725 

Total liabilities and equity

 $8,710  $8,756 

 


(a)

At September 30, 2021 and December 31, 2020, respectively, $31 and $2 of cash and cash equivalents, $10 and $6 of accounts and notes receivable (net), $52 and $38 of inventories, $161 and $167 of property, plant and equipment (net), $23 each of other noncurrent assets, $144 and $119 of accounts payable, $13 each of accrued liabilities, $13 and $47 of current portion of debt, $6 and $5 of current operating lease liabilities, $53 and $3 of long-term debt, $22 and $17 of noncurrent operating lease liabilities and $76 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

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Revenues:

                

Trade sales, services and fees, net

 $2,230  $1,487  $6,006  $4,262 

Related party sales

  55   23   140   88 

Total revenues

  2,285   1,510   6,146   4,350 

Cost of goods sold

  1,802   1,231   4,840   3,612 

Gross profit

  483   279   1,306   738 

Operating expenses:

                

Selling, general and administrative

  203   177   614   559 

Research and development

  38   33   113   101 

Restructuring, impairment and plant closing (credits) costs

  (1)  12   34   34 

Gain on sale of India-based DIY business

  0   0   (28)  0 

Other operating income, net

  (3)  (3)  (13)  (4)

Total operating expenses

  237   219   720   690 

Operating income

  246   60   586   48 

Interest expense, net

  (15)  (24)  (52)  (65)

Equity in income of investment in unconsolidated affiliates

  34   21   118   25 

Fair value adjustments to Venator investment

  (3)  6   (28)  (100)

Loss on early extinguishment of debt

  0   0   (27)  0 

Other income, net

  7   10   21   25 

Income (loss) from continuing operations before income taxes

  269   73   618   (67)

Income tax expense

  (39)  (15)  (115)  (9)

Income (loss) from continuing operations

  230   58   503   (76)

(Loss) income from discontinued operations, net of tax

  (5)  0   (3)  782 

Net income

  225   58   500   706 

Net income attributable to noncontrolling interests

  (16)  (9)  (49)  (15)

Net income attributable to Huntsman International LLC

 $209  $49  $451  $691 

See accompanying notes to condensed consolidated financial statements.

 

 

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

(In Millions)

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Net income

 $225  $58  $500  $706 

Other comprehensive (loss) income, net of tax:

                

Foreign currency translations adjustment

  (36)  15   (42)  (42)

Pension and other postretirement benefits adjustments

  17   14   53   80 

Other comprehensive (loss) income, net of tax

  (19)  29   11   38 

Comprehensive income

  206   87   511   744 

Comprehensive income attributable to noncontrolling interests

  (17)  (12)  (51)  (18)

Comprehensive income attributable to Huntsman International LLC

 $189  $75  $460  $726 

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

  2,728  $3,701  $1,203  $(1,333) $154  $3,725 

Net income

     0   85   0   17   102 

Dividends paid to parent

     0   (36)  0   0   (36)

Other comprehensive loss

     0   0   (12)  0   (12)

Contribution from parent

     8   0   0   0   8 

Balance, March 31, 2021

  2,728  $3,709  $1,252  $(1,345) $171  $3,787 

Net income

     0   157   0   16   173 

Dividends paid to parent

     0   (41)  0   0   (41)

Other comprehensive income

     0   0   41   1   42 

Contribution from parent

     7   0   0   0   7 

Dividends declared to noncontrolling interests

     0   0   0   (30)  (30)

Balance, June 30, 2021

  2,728  $3,716  $1,368  $(1,304) $158  $3,938 

Net income

     0   209   0   16   225 

Dividends paid to parent

     0   (41)  0   0   (41)

Other comprehensive (loss) income

     0   0   (20)  1   (19)

Contribution from parent

     8   0   0   0   8 

Balance, September 30, 2021

  2,728  $3,724  $1,536  $(1,324) $175  $4,111 

  

Huntsman International LLC Members

         
  

Members'

     

Accumulated other

  

Noncontrolling

     
  

equity

     

comprehensive

  

interests in

  

Total

 
  

Units

  

Amount

  

Retained earnings

  

loss

  

subsidiaries

  

equity

 

Balance, January 1, 2020

  2,728  $3,675  $312  $(1,352) $137  $2,772 

Net income

     0   704   0   3   707 

Dividends paid to parent

     0   (37)  0   0   (37)

Other comprehensive loss

     0   0   (20)  0   (20)

Contribution from parent

     6   0   0   0   6 

Balance, March 31, 2020

  2,728  $3,681  $979  $(1,372) $140  $3,428 

Net (loss) income

     0   (62)  0   3   (59)

Dividends paid to parent

     0   (36)  0   0   (36)

Other comprehensive income

     0   0   29   0   29 

Contribution from parent

     7   0   0   0   7 

Balance, June 30, 2020

  2,728  $3,688  $881  $(1,343) $143  $3,369 

Net income

     0   49   0   9   58 

Dividends paid to parent

     0   (36)  0   0   (36)

Other comprehensive income

     0   0   26   3   29 

Contribution from parent

     6   0   0   0   6 

Balance, September 30, 2020

  2,728  $3,694  $894  $(1,317) $155  $3,426 

See accompanying notes to condensed consolidated financial statements.

 

 

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

  

Nine months

 
  

ended

 
  

September 30,

 
  

2021

  

2020

 

Operating Activities:

        

Net income

 $500  $706 

Less: Loss (income) from discontinued operations, net of tax

  3   (782)

Income (loss) from continuing operations

  503   (76)

Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations:

        

Equity in income of investment in unconsolidated affiliates

  (118)  (25)

Unrealized losses on fair value adjustments to Venator investment

  28   100 

Cash received from return on investment in unconsolidated subsidiary

  31   18 

Depreciation and amortization

  219   206 

Noncash lease expense

  46   46 

Gain on disposal of businesses/assets

  (28)  0 

Loss on early extinguishment of debt

  27   0 

Noncash restructuring and impairment charges

  14   5 

Deferred income taxes

  (22)  (17)

Noncash compensation

  23   19 

Other, net

  (6)  8 

Changes in operating assets and liabilities:

        

Accounts and notes receivable

  (342)  103 

Inventories

  (329)  154 

Prepaid expenses

  32   24 

Other current assets

  (4)  11 

Other noncurrent assets

  (84)  (47)

Accounts payable

  124   (87)

Accrued liabilities

  82   (29)

Taxes paid on sale of Chemical Intermediates Businesses

  0   (188)

Other noncurrent liabilities

  (29)  (112)

Net cash provided by operating activities from continuing operations

  167   113 

Net cash used in operating activities from discontinued operations

  (1)  (22)

Net cash provided by operating activities

  166   91 
         

Investing Activities:

        

Capital expenditures

  (250)  (170)

Cash received from sale of businesses

  43   1,923 

Acquisition of businesses, net of cash acquired

  (245)  (653)

(Increase) decrease in receivable from affiliate

  (105)  275 

Insurance proceeds for recovery of property damage

  3   0 

Other, net

  10   4 

Net cash (used in) provided by investing activities

  (544)  1,379 

(Continued)

 

HUNTSMAN INTERNATIONAL LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In Millions)

  

Nine months

 
  

ended

 
  

September 30,

 
  

2021

  

2020

 

Financing Activities:

        

Net borrowings (repayments) on revolving loan facilities

 $8  $(153)

Proceeds from issuance of long-term debt

  427   0 

Repayments of long-term debt

  (965)  (17)

Repayments of short-term debt

  0   (109)

Repayments of notes payable to affiliate

  0   (380)

Repayments of notes payable

  0   (32)

Debt issuance costs paid

  (4)  0 

Dividends paid to noncontrolling interests

  (30)  (23)

Dividends paid to parent

  (118)  (109)

Costs of early extinguishment of debt

  (26)  0 

Other, net

  2   (1)

Net cash used in financing activities

  (706)  (824)

Effect of exchange rate changes on cash

  (2)  (4)

(Decrease) increase in cash, cash equivalents and restricted cash

  (1,086)  642 

Cash, cash equivalents and restricted cash at beginning of period

  1,591   525 

Cash, cash equivalents and restricted cash at end of period

 $505  $1,167 
         

Supplemental cash flow information:

        

Cash paid for interest

 $57  $49 

Cash paid for income taxes

  83   242 

For both September 30, 2021 and 2020, the amount of capital expenditures in accounts payable was $54 million. For the nine months ended September 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 4 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.

Principles 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 

 

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 from April 2022 to July 2024. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs.”

 

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 

 

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 $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 nil and $2 million, respectively, for the three and nine months ended September 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):

 

Fair value of assets acquired and liabilities assumed:

    

Cash paid for the Gabriel Acquisition

 $251 
     

Cash

 $9 

Accounts receivable

  13 

Inventories

  26 

Property, plant and equipment

  23 

Intangible assets

  16 

Goodwill

  174 

Accounts payable

  (7)

Accrued liabilities

  (2)

Deferred income taxes

  (1)

Total fair value of net assets acquired

 $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 $81 million and $14 million, respectively, for the period from the date of acquisition to September 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 $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

 $304 
     

Accounts receivable

 $12 

Inventories

  37 

Property, plant and equipment

  67 

Intangible assets

  117 

Goodwill

  120 

Accounts payable

  (7)

Accrued liabilities

  (1)

Deferred income taxes

  (41)

Total fair value of net assets acquired

 $304 

Intangible assets acquired consist primarily of trademarks, trade secrets and customer relationships, which are predominantly being amortized over a period of 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 $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

 $353 
     

Cash

 $7 

Accounts receivable

  36 

Inventories

  32 

Prepaid expenses and other current assets

  2 

Property, plant and equipment

  9 

Intangible assets

  130 

Goodwill

  167 

Other noncurrent assets

  4 

Accounts payable

  (14)

Accrued liabilities

  (11)

Deferred income taxes

  (9)

Total fair value of net assets acquired

 $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 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, the 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):

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2020(1)

  

2021(1)

  

2020

 

Revenues

 $1,536  $6,150  $4,487 

Net income

  55   485   696 

Net income attributable to Huntsman Corporation

  46   436   681 

 

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2020(1)

  

2021(1)

   2020 

Revenues

 $1,536  $6,150  $4,487 

Net income

  56   488   696 

Net income attributable to Huntsman International

  47   439   681 

 


(1)

Includes pro forma information for the Gabriel Acquisition only.

 

 

 

4. DISCONTINUED OPERATIONS AND BUSINESS DISPOSITIONS ​

 

S aLE 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, an earnout provision of up to approximately $28 million of additional cash was attainable if the business achieved, 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 of 2021, which was recorded in gain on sale of India-based DIY business in our condensed consolidated statements of operations.

 

SaLE of Venator InterEST

 

On December 23, 2020, we completed the sale of approximately 42.4 million ordinary shares of Venator Materials PLC (“Venator”) and received approximately $99 million in cash. Subsequent to this sale of ordinary shares, we no longer account for our current remaining ownership interest in Venator as an equity method investment, but rather as an investment in equity securities that are marked to fair value with changes in fair value reported in earnings. Concurrently with the sale of ordinary shares, we entered into an option agreement, pursuant to which we granted an option to funds advised by SK Capital Partners, LP to purchase the remaining approximate 9.7 million ordinary shares we hold in Venator at $2.15 per share. The option will expire on June 23, 2023 and will not be exercisable so long as such exercise would result in a default or an "Event of Default" under Venator’s Term Loan Credit Agreement and Revolving Credit Agreement. We record this option at fair value with changes in fair value reported in earnings.

 

For the three months ended September 30, 2021 and 2020, we recorded net (losses) gains of $( 3) million and $6 million, respectively, and for the nine months ended  September 30, 2021 and 2020, we recorded net losses of $28 million and $100 million, respectively, to record our investment in Venator and related option to sell our remaining Venator shares at fair value. These net (losses) gains were recorded in “Fair value adjustments to Venator investment” in our condensed consolidated statements of operations.

 

Summarized financial information of Venator for the three and nine months ended September 30, 2020 is as follows (in millions):
 
  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2020

  

2020

 

Revenues

 $474  $1,462 

Gross profit

  20   126 

Loss from continuing operations

  (39)  (48)

Net loss

  (39)  (48)

Net loss attributable to Venator

  (42)  (54)

Sale of Chemical Intermediates Businesses

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 $2 billion, comprised of a cash purchase price of approximately $1.92 billion and the transfer of approximately $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 $748 million in the first nine 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):

 

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Major line items constituting pretax income of discontinued operations(1):

                

Trade sales, services and fees, net(2)

 $0  $0  $0  $7 

Cost of goods sold(2)

  0   0   0   11 

Gain on sale of the Chemical Intermediates Businesses

  0   0   0   978 

Insurance proceeds

  0   0   0   48 

Other (income) expense items, net

  0   0   (2)  1 

Income from discontinued operations before income taxes

  0   0   2   1,021 

Income tax expense

  (5)  0   (5)  (239)

Net (loss) income attributable to discontinued operations

 $(5) $0  $(3) $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 last-in first-out (“LIFO”), first-in first-out and average cost methods for different components of inventory. Inventories consisted of the following (dollars in millions):

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Raw materials and supplies

 $284  $180 

Work in progress

  54   44 

Finished goods

  876   651 

Total

  1,214   875 

LIFO reserves

  (40)  (27)

Net inventories

 $1,174  $848 

For both September 30, 2021 and December 31, 2020, approximately 7% 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 50%-owned joint venture with Lanxess that manufactures products for our Polyurethanes and Performance Products segments.

 

Arabian Amines Company (“AAC”) is our 50%-owned joint venture with Zamil group that manufactures products for our Performance Products segment.

During the nine months ended September 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 September 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 September 30, 2021 and our consolidated balance sheet as of December 31, 2020 (dollars in millions):

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Current assets

 $97  $49 

Property, plant and equipment, net

  161   167 

Operating lease right-of-use assets

  28   22 

Other noncurrent assets

  147   138 

Deferred income taxes

  30   30 

Total assets

 $463  $406 

Current liabilities

 $175  $183 

Long-term debt

  53   3 

Noncurrent operating lease liabilities

  22   17 

Other noncurrent liabilities

  76   82 

Deferred income taxes

  1   1 

Total liabilities

 $327  $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 nine months ended September 30, 2021 and 2020 are as follows (dollars in millions):

 

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  2021  

2020

  

2021

 

2020

 

Revenues

 $0  $0  $0  $0 

Income from continuing operations before income taxes

  4   0   11   1 

Net cash provided by operating activities

  6   3   14   17 

 

 

 

7. RESTRUCTURING, IMPAIRMENT AND PLANT CLOSING COSTS

 

As of September 30, 2021 and December 31, 2020, accrued restructuring costs by type of cost and initiative consisted of the following (dollars in millions):

 

  

Workforce reductions

  Non-cancelable lease and contract termination costs  

Other restructuring costs

  

Total

 

Accrued liabilities as of January 1, 2021

 $29  $2  $  $31 

2021 charges for 2020 and prior initiatives

  13      5   18 

2021 charges for 2021 initiatives

  2         2 

2021 payments for 2020 and prior initiatives

  (12)     (4)  (16)

2021 payments for 2021 initiatives

  (1)        (1)

Accrued liabilities as of September 30, 2021

 $31  $2  $1  $34 

 

Details with respect to our reserves for restructuring, impairment and plant closing costs by segment and initiative are provided below (dollars in millions):

 

      

Performance

  

Advanced

  

Textile

  

Corporate

    
  Polyurethanes  Products  Materials  Effects  and Other  Total 

Accrued liabilities as of January 1, 2021

 $12  $2  $9  $8  $  $31 

2021 charges (credits) for 2020 and prior initiatives

  5   1   (3)     15   18 

2021 charges for 2021 initiatives

        2         2 

2021 payments for 2020 and prior initiatives

  (6)  (2)  (2)  (3)  (3)  (16)

2021 payments for 2021 initiatives

        (1)        (1)

Accrued liabilities as of September 30, 2021

 $11  $1  $5  $5  $12  $34 
                         

Current portion of restructuring reserves

 $11  $1  $4  $2  $5  $23 

Long-term portion of restructuring reserves

        1   3   7   11 

 

Details with respect to cash and noncash restructuring charges from continuing operations for the three and nine months ended September 30, 2021 and 2020 are provided below (dollars in millions):

 

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Cash charges:

                

2021 charges for 2020 and prior initiatives

 $  $  $18  $ 

2021 charges for 2021 initiatives

        2    

2020 charges for 2019 and prior initiatives

           3 

2020 charges for 2020 initiatives

     8      26 

Noncash charges:

                

Accelerated depreciation

  4   3   11   3 

Gain on sale of assets

  (3)     (3)   

Other noncash (credits) charges

  (2)  1   6   2 

Total restructuring, impairment and plant closing costs

 $(1) $12  $34  $34 

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 $16 million in the nine months ended September 30, 2021 primarily related to workforce reductions, and we expect to record further restructuring expenses of approximately $3 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 $4 million in the nine months ended September 30, 2021 primarily related to workforce reductions and accelerated depreciation, partially offset by a gain on sale of assets of approximately $3 million. We expect to record further restructuring expenses of between approximately $4 million and $5 million through the first half of 2022.

 

Beginning in the second quarter of 2020, our Advanced Materials segment implemented restructuring programs in connection with the CVC Thermoset Specialties Acquisition, the alignment of the segment’s commercial organization and optimization of the segment’s manufacturing processes. In connection with these restructuring programs, we recorded restructuring expense of approximately $8 million in the nine months ended September 30, 2021 primarily related to accelerated depreciation.

 

 

2020 Restructuring Activities

 

Beginning in 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 $6 million in the nine months ended September 30, 2020 primarily related to workforce reductions and accelerated depreciation.

 

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 $1 million in the third quarter of 2020.

 

Beginning in 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 $4 million in the nine months ended September 30, 2020.

 

Beginning in 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 and the alignment of the segment's commercial organization and optimization of the segment's manufacturing processes. In connection with these restructuring programs, we recorded restructuring expense of approximately $10 million in the nine months ended September 30, 2020.

 

During 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 $10 million in the nine months ended September 30, 2020, related primarily to workforce reductions.

 

 

8. DEBT

Our outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):

  

September 30,

  

December 31,

 
  

2021

  

2020

 

Senior Credit Facilities:

        

Revolving facility

 $0  $0 

Amounts outstanding under A/R programs

  0   0 

Senior notes

  1,484   2,047 

Variable interest entities

  66   50 

Other

  33   24 

Total debt

 $1,583  $2,121 

Current portion of debt

 $16  $593 

Long-term portion of debt

  1,567   1,528 

Total debt

 $1,583  $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 September 30, 2021 and December 31, 2020, the amount of debt issuance costs directly reducing the debt liability was $10 million and $9 million, respectively. We record the amortization of debt issuance costs as interest expense.

Revolving Credit Facility

As of September 30, 2021, our $1.2 billion senior unsecured revolving credit facility (“Revolving Credit Facility”) was as follows (monetary amounts in millions):

          

Unamortized

           
          

Discounts and

           
  

Committed

  

Principal

  

Debt Issuance

  

Carrying

       

Facility

 

Amount

  

Outstanding

  

Costs

  

Value

  

Interest Rate(2)

 

Maturity

 

Revolving Credit Facility

 $1,200  $0(1) $0(1) $0(1) 

USD LIBOR plus 1.50%

  2023 

 


(1)

On September 30, 2021, we had an additional $10 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 representative interest rate as of September 30, 2021 was 1.50% above LIBOR.

 

 

Term Loan Credit Facility

 

On September 24, 2019, Huntsman International entered into a 364-day term loan facility (the “2019 Term Loan”), pursuant to which Huntsman International borrowed an aggregate principal amount of €92 million (or $101 million equivalent). We used the net proceeds from the 2019 Term Loan to finance our acquisition of the 50% noncontrolling interest that we did not own in the Sasol-Huntsman maleic anhydride joint venture. On September 22, 2020, we repaid the 2019 Term Loan in full at maturity.

 

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.

 

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 from April 2022 to July 2024.

 

Information regarding our A/R Programs as of September 30, 2021 was as follows (monetary amounts in millions):

    

Maximum Funding

  

Amount

   

Facility

 

Maturity

 

Availability(1)

  

Outstanding

  

Interest Rate(2)

U.S. A/R Program

 

July 2024

 $150  $0 

(3)

Applicable rate plus 0.90%

EU A/R Program

 

July 2024

 100  0  

Applicable rate plus 1.30%

    

(or approximately $117)

      

 


(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 USD LIBOR or EURIBOR.

(3)

As of September 30, 2021, we had approximately $7 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program.

As of September 30, 2021 and December 31, 2020, $336 million and $198 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

 

Senior Notes

 

On January 15, 2021, Huntsman International redeemed in full 445 million (approximately $541 million) in aggregate principal amount of our 5.125% senior notes due 2021 (“2021 Senior Notes”) at the redemption price equal to 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 $15 million in the first quarter of 2021 related to foreign currency exchange gains.

 

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.

 

The 2031 Senior Notes bear interest at 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 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 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of redemption. ​

 

Variable Interest Entity Debt

 

On September 30, 2021, AAC, our consolidated 50%-owned joint venture, entered into a new term loan facility of 177 million SAR (approximately $47 million) with Saudi British Bank, of which approximately 104 million SAR (approximately $27 million) was funded with the remainder being funded subsequent to September 30, 2021. A portion of these funds were used to repay existing debt subsequent to September 30, 2021. 

 

Note Payable from Huntsman International to Huntsman Corporation

 

 ​During the first quarter of 2020, our intercompany loan of $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 September 30, 2021, we had approximately $178 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 September 30, 2021, we have designated approximately €120 million (approximately $140 million) of euro-denominated debt as a hedge of our net investment. For the nine months ended September 30, 2021 and September 30, 2020, the amount recognized on the hedge of our net investment was a gain of $7 million and a loss of $31 million, respectively, and were recorded in other comprehensive income in our condensed consolidated statements of comprehensive income.​ 

 

 

10. FAIR VALUE

The fair values of financial instruments were as follows (dollars in millions):

  

September 30, 2021

  

December 31, 2020

 
  

Carrying

  

Estimated

  

Carrying

  

Estimated

 
  

Value

  

Fair Value

  

Value

  

Fair Value

 

Non-qualified employee benefit plan investments

 $22  $22  $26  $26 

Investment in Venator

  28   28   32   32 

Option agreement for remaining Venator shares

  (10)  (10)  11   11 

Long-term debt (including current portion)

  (1,583)  (1,755)  (2,121)  (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 September 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 September 30, 2021, and current estimates of fair value may differ significantly from the amounts presented herein.

During the nine months ended September 30, 2021, there were 0 instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3), and there were 0 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 September 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

 $537  $183  $90  $14  $(6) $818 

Europe

  377   106   108   29   (3)  617 

Asia Pacific

  379   88   78   113   (1)  657 

Rest of world

  110   22   28   32   1   193 
  $1,403  $399  $304  $188  $(9) $2,285 
                         

Major Product Groupings

                        

MDI urethanes

 $1,403                  $1,403 

Differentiated

     $399               399 

Specialty

         $276           276 

Non-specialty

          28           28 

Textile chemicals and dyes

             $188       188 

Eliminations

                 $(9)  (9)
  $1,403  $399  $304  $188  $(9) $2,285 

      

Performance

  

Advanced

  

Textile

  

Corporate and

     

2020

 

Polyurethanes

  

Products

  

Materials

  

Effects

  

Eliminations

  

Total

 

Primary Geographic Markets(1)

                        

U.S. and Canada

 $350  $104  $52  $12  $(5) $513 

Europe

  253   57   70   20   0   400 

Asia Pacific

  264   63   57   86   0   470 

Rest of world

  69   14   20   24   0   127 
  $936  $238  $199  $142  $(5) $1,510 
                         

Major Product Groupings

                        

MDI urethanes

 $936                  $936 

Differentiated

     $238               238 

Specialty

         $178           178 

Non-specialty

          21           21 

Textile chemicals and dyes

             $142       142 

Eliminations

                 $(5)  (5)
  $936  $238  $199  $142  $(5) $1,510 

 

The following tables disaggregate our revenue from continuing operations by major source for the nine months ended September 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

 $1,338  $460  $262  $39  $(15) $2,084 

Europe

  949   283   317   95   (8)  1,636 

Asia Pacific

  1,055   276   223   362   (1)  1,915 

Rest of world

  284   56   79   92   0   511 
  $3,626  $1,075  $881  $588  $(24) $6,146 
                         

Major Product Groupings

                        

MDI urethanes

 $3,626                  $3,626 

Differentiated

     $1,075               1,075 

Specialty

         $795           795 

Non-specialty

          86           86 

Textile chemicals and dyes

             $588       588 

Eliminations

                 $(24)  (24)
  $3,626  $1,075  $881  $588  $(24) $6,146 

 

      

Performance

  

Advanced

  

Textile

  

Corporate and

     

2020

 

Polyurethanes

  

Products

  

Materials

  

Effects

  

Eliminations

  

Total

 

Primary Geographic Markets(1)

                        

U.S. and Canada

 $1,015  $333  $167  $36  $(16) $1,535 

Europe

  681   184   243   71   (1)  1,178 

Asia Pacific

  673   194   164   251   0   1,282 

Rest of world

  185   47   58   66   (1)  355 
  $2,554  $758  $632  $424  $(18) $4,350 
                         

Major Product Groupings

                        

MDI urethanes

 $2,554                  $2,554 

Differentiated

     $758               758 

Specialty

         $561           561 

Non-specialty

          71           71 

Textile chemicals and dyes

             $424       424 

Eliminations

                 $(18)  (18)
  $2,554  $758  $632  $424  $(18) $4,350 

 


(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 nine months ended September 30, 2021 and 2020 were as follows (dollars in millions):

Huntsman Corporation

          

Other Postretirement

 
  

Defined Benefit Plans

  

Benefit Plans

 
  

Three months

  

Three months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Service cost

 $13  $13  $1  $0 

Interest cost

  13   15   0   1 

Expected return on assets

  (42)  (44)  0   0 

Amortization of prior service benefit

  (2)  (2)  (1)  (2)

Amortization of actuarial loss

  23   21   0   1 

Net periodic benefit cost

 $5  $3  $0  $0 

          

Other Postretirement

 
  

Defined Benefit Plans

  

Benefit Plans

 
  

Nine months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Service cost

 $41  $39  $1  $1 

Interest cost

  37   46   1   2 

Expected return on assets

  (126)  (129)  0   0 

Amortization of prior service benefit

  (5)  (5)  (3)  (4)

Amortization of actuarial loss

  69   60   1   1 

Settlement loss

  3   0   0   0 

Net periodic benefit cost

 $19  $11  $0  $0 

 

Huntsman International

          

Other Postretirement

 
  

Defined Benefit Plans

  

Benefit Plans

 
  

Three months

  

Three months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Service cost

 $13  $13  $1  $0 

Interest cost

  13   15   0   1 

Expected return on assets

  (42)  (44)  0   0 

Amortization of prior service benefit

  (2)  (2)  (1)  (2)

Amortization of actuarial loss

  24   21   0   1 

Net periodic benefit cost

 $6  $3  $0  $0 

          

Other Postretirement

 
  

Defined Benefit Plans

  

Benefit Plans

 
  

Nine months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Service cost

 $41  $39  $1  $1 

Interest cost

  37   46   1   2 

Expected return on assets

  (126)  (129)  0   0 

Amortization of prior service benefit

  (5)  (5)  (3)  (4)

Amortization of actuarial loss

  71   62   1   1 

Settlement loss

  3   0   0   0 

Net periodic benefit cost

 $21  $13  $0  $0 

 

During the nine months ended September 30, 2021 and 2020, we made contributions to our pension and other postretirement benefit plans of $45 million and $73 million, respectively. During the remainder of 2021, we expect to contribute an additional amount of approximately $9 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 $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. 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. During the third quarter of 2021, we resumed the share repurchase program and repurchased 3,971,784 shares of our common stock for approximately $102 million, excluding commissions. 

Dividends on Common Stock

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. During the quarters ended September 30, 2021 and September 30, 2020, we paid $42 million and $36 million, respectively, or $0.1875 and $0.1625 per share, respectively, to common stockholders. During the quarters ended June 30, 2021 and June 30, 2020, we paid $41 million and $36 million, respectively, or $0.1875 and $0.1625 per share, respectively, to common stockholders. During the quarters ended and March 31, 2021 and March 31, 2020, we paid $36 million and $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

      

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

 $(328) $(1,050) $8  $4  $(1,366) $20  $(1,346)

Other comprehensive loss before reclassifications, gross

  (42)  0   0   0   (42)  (2)  (44)

Tax expense

  0   0   0   0   0   0   0 

Amounts reclassified from accumulated other comprehensive loss, gross(c)

  0   65   0   0   65   0   65 

Tax expense

  0   (13)  0   0   (13)  0   (13)

Net current-period other comprehensive (loss) income

  (42)  52   0   0   10   (2)  8 

Ending balance, September 30, 2021

 $(370) $(998) $8  $4  $(1,356) $18  $(1,338)

 


(a)

Amounts are net of tax of $56 million as of both September 30, 2021 and January 1, 2021

(b)

Amounts are net of tax of $139 million and $153 million as of September 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

 $(369) $(1,031) $8  $4  $(1,388) $26  $(1,362)

Other comprehensive (loss) income before reclassifications, gross

  (42)  8   0   0   (34)  (3)  (37)

Tax expense

  0   (2)  0   0   (2)  0   (2)

Amounts reclassified from accumulated other comprehensive loss, gross(c)

  0   93   0   0   93   0   93 

Tax expense

  0   (21)  0   0   (21)  0   (21)

Net current-period other comprehensive (loss) income

  (42)  78   0   0   36   (3)  33 

Ending balance, September 30, 2020

 $(411) $(953) $8  $4  $(1,352) $23  $(1,329)

 


(a)

Amounts are net of tax of $68 million as of both September 30, 2020 and January 1, 2020.

(b)

Amounts are net of tax of $125 million and $148 million as of September 30, 2020 and January 1, 2020, respectively.

(c)

See table below for details about these reclassifications.

 
  

Three Months Ended September 30,

   
  

2021

  

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

 $(3) $(3) 

(b)

Actuarial loss

  23   21  

(b)(d)

   20   18  

Total before tax

   (3)  (4) 

Income tax expense

Total reclassifications for the period

 $17  $14  

Net of tax

 

  

Nine Months Ended September 30,

   
  

2021

  

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

 $(8) $(9) 

(b)

Settlement loss

  3   41  

(c)

Actuarial loss

  70   61  

(b)(d)

   65   93  

Total before tax

   (13)  (21) 

Income tax expense

Total reclassifications for the period

 $52  $72  

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 $41 million of pension and other post-employment benefit settlement losses during the nine months ended September 30, 2020.

(d)

Amounts include approximately $1 million of actuarial losses related to discontinued operations for both the three months ended September 30, 2021 and 2020. Amounts include approximately $4 million of actuarial losses related to discontinued operations for both the nine months ended September 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

 $(333) $(1,028) $8  $0  $(1,353) $20  $(1,333)

Other comprehensive loss before reclassifications, gross

  (42)  0   0   0   (42)  (2)  (44)

Tax expense

  0   0   0   0   0   0   0 

Amounts reclassified from accumulated other comprehensive loss, gross(c)

  0   67   0   0   67   0   67 

Tax expense

  0   (14)  0   0   (14)  0   (14)

Net current-period other comprehensive (loss) income

  (42)  53   0   0   11   (2)  9 

Ending balance, September 30, 2021

 $(375) $(975) $8  $0  $(1,342) $18  $(1,324)

 


(a)

Amounts are net of tax of $43 million for both September 30, 2021 and January 1, 2021.

 

(b)

Amounts are net of tax of $164 million and $178 million as of September 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

 $(374) $(1,012) $8  $0  $(1,378) $26  $(1,352)

Other comprehensive (loss) income before reclassifications, gross

  (42)  8   0   0   (34)  (3)  (37)

Tax expense

  0   (2)  0   0   (2)  0   (2)

Amounts reclassified from accumulated other comprehensive loss, gross(c)

  0   95   0   0   95   0   95 

Tax expense

  0   (21)  0   0   (21)  0   (21)

Net current-period other comprehensive (loss) income

  (42)  80   0   0   38   (3)  35 

Ending balance, September 30, 2020

 $(416) $(932) $8  $0  $(1,340) $23  $(1,317)

 


(a)

Amounts are net of tax of $55 million as of both September 30, 2020 and January 1, 2020.

(b)

Amounts are net of tax of $150 million and $174 million as of September 30, 2020 and January 1, 2020, respectively.

(c)

See table below for details about these reclassifications.

 

  

Three Months Ended September 30,

   
  

2021

  

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

 $(3) $(3) 

(b)

Actuarial loss

  24   22  

(b)(d)

   21   19  

Total before tax

   (4)  (4) 

Income tax expense

Total reclassifications for the period

 $17  $15  

Net of tax

  

Nine Months Ended September 30,

   
  

2021

  

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

 $(8) $(9) 

(b)

Settlement loss

  3   41  

(c)

Actuarial loss

  72   63  

(b)(d)

   67   95  

Total before tax

   (14)  (21) 

Income tax expense

Total reclassifications for the period

 $53  $74  

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 $41 million of pension and other post-employment benefit settlement losses during the nine months ended September 30, 2020.

(d)

Amounts include approximately $1 million of actuarial losses related to discontinued operations for both the three months ended September 30, 2021 and 2020. Amounts include approximately $4 million of actuarial losses related to discontinued operations for both the nine months ended September 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 nine months ended September 30, 2021 and 2020, our capital expenditures for EHS matters totaled $25 million and $17 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 $5 million and $4 million for environmental liabilities as of September 30, 2021 and December 31, 2020, respectively. Of these amounts, $2 million and $1 million were classified as accrued liabilities in our condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020, respectively, and $3 million was classified as other noncurrent liabilities in our condensed consolidated balance sheets as of both September 30, 2021 and December 31, 2020. In certain cases, our remediation liabilities may be payable over periods of up to 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 September 30, 2021, we had approximately 7 million shares remaining under the stock-based compensation plans available for grant. Option awards have a maximum contractual term of 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):

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Huntsman Corporation compensation cost

 $8  $6  $24  $20 

Huntsman International compensation cost

  8   6   23   19 

The total income tax benefit recognized in the condensed consolidated statements of operations for us and Huntsman International for stock-based compensation arrangements was $2 million and $3 million for the nine months ended September 30, 2021 and 2020, respectively.

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.

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021(1)

  

2020

  

2021

  

2020

 

Dividend yield

  NA   3.1%  2.3%  3.0%

Expected volatility

  NA   53.7%  53.3%  53.1%

Risk-free interest rate

  NA   0.4%  0.7%  1.4%

Expected life of stock options granted during the period (in years)

  NA   5.9   5.9   5.9 

 


(1)

During the three months ended September 30, 2021, 0 stock options were granted.

A summary of stock option activity under the stock-based compensation plans as of September 30, 2021 and changes during the nine months then ended is presented below:

          

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

  4,815  $20.37         

Granted

  304   28.58         

Exercised

  (697)  17.44         

Forfeited

  (71)  24.29         

Outstanding at September 30, 2021

  4,351   21.35   5.8  $37 

Exercisable at September 30, 2021

  3,309   20.59   5.0   31 

 

The weighted-average grant-date fair value of stock options granted during the nine months ended September 30, 2021 was $11.48 per option. As of September 30, 2021, there was $6 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 1.7 years.

The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was approximately $8 million and $4 million, respectively. Cash received from stock options exercised during each of the nine months ended September 30, 2021 and 2020 was approximately $6 million and $2 million, respectively. The cash tax benefit from stock options exercised during each of the nine months ended September 30, 2021 and 2020 was approximately $2 million and $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 nine months ended September 30, 2021 and 2020, the weighted-average expected volatility rate was 44.9% and 34.0%, respectively, and the weighted average risk-free interest rate was 0.2% and 1.4%, respectively. For the performance share unit awards granted in the nine months ended September 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 September 30, 2021 and changes during the nine months then ended is presented below:

  

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

  1,867   $23.18   411  $23.08 

Granted

  856    31.06   184   28.58 

Vested

  (521)

(1)(2)

  28.19   (189)  24.55 

Forfeited

  (17)   23.96   (20)  24.18 

Nonvested at September 30, 2021

  2,185    25.07   386   24.92 

 


(1)

As of September 30, 2021, a total of 457,294 restricted stock units were vested but not yet issued, of which 30,438 vested during the nine months ended September 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 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 nine months ended September 30, 2021, only 76,055 performance share unit awards with a grant date fair value of $41.93 were issued related to this vest due to the target performance criteria not being met.

 

As of September 30, 2021, there was $36 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 2.0 years. The value of share awards that vested during the nine months ended September 30, 2021 and 2020 was $18 million and $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 nine months ended September 30, 2021 and 2020, there was 0 tax benefit or expense recognized in connection with the net losses of $28 million and $100 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 from continuing operations of $114 million and $9 million for the nine months ended September 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 from continuing operations of $115 million and $9 million for the nine months ended September 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):

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Numerator:

                

Basic and diluted income (loss) from continuing operations:

                

Income (loss) from continuing operations attributable to Huntsman Corporation

 $214  $48  $451  $(91)

Basic and diluted net income:

                

Net income attributable to Huntsman Corporation

 $209  $48  $448  $691 

Denominator:

                

Weighted average shares outstanding

  219.4   219.8   220.2   220.8 

Dilutive shares:

                

Stock-based awards

  1.9   1.5   2.0   0 

Total weighted average shares outstanding, including dilutive shares

  221.3   221.3   222.2   220.8 

Additional stock-based awards of approximately 1.0 million and 3.8 million weighted average equivalent shares of stock were outstanding during the three months ended September 30, 2021 and 2020, respectively, and approximately 1.5 million and 6.1 million weighted average shares of stock were outstanding during the nine months ended September 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 nine months ended September 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 4 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):

  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Revenues:

                

Polyurethanes

 $1,403  $936  $3,626  $2,554 

Performance Products

  399   238   1,075   758 

Advanced Materials

  304   199   881   632 

Textile Effects

  188   142   588   424 

Corporate and eliminations

  (9)  (5)  (24)  (18)

Total

 $2,285  $1,510  $6,146  $4,350 
                 

Huntsman Corporation:

                

Segment adjusted EBITDA(1):

                

Polyurethanes

 $246  $156  $661  $271 

Performance Products

  103   36   254   123 

Advanced Materials

  48   25   150   103 

Textile Effects

  22   8   75   24 

Corporate and other(2)

  (48)  (37)  (146)  (114)

Total

  371   188   994   407 

Reconciliation of adjusted EBITDA to net income (loss):

                

Interest expense, net—continuing operations

  (15)  (24)  (52)  (63)

Income tax expense—continuing operations

  (38)  (15)  (114)  (9)

Income tax expense—discontinued operations

  (5)  0   (5)  (239)

Depreciation and amortization—continuing operations

  (72)  (70)  (219)  (206)

Net income attributable to noncontrolling interests

  16   9   49   15 

Other adjustments:

                

Business acquisition and integration expenses and purchase accounting inventory adjustments

  (5)  (9)  (19)  (30)

EBITDA from discontinued operations(3)

  0   0   2   1,021 

Fair value adjustments to Venator investment

  (3)  6   (28)  (100)

Loss on early extinguishment of debt

  0   0   (27)  0 

Certain legal and other settlements and related income (expenses)

  0   4   (10)  (2)

Gain on sale of businesses/assets

  0   0   30   1 

Income from transition services arrangements

  2   1   6   6 

Certain nonrecurring information technology project implementation costs

  (2)  (1)  (6)  (3)

Amortization of pension and postretirement actuarial losses

  (22)  (20)  (65)  (57)

Plant incident remediation costs

  (2)  0   (3)  (1)

Restructuring, impairment and plant closing and transition costs

  0   (12)  (36)  (34)

Net income

 $225  $57  $497  $706 

 
  

Three months

  

Nine months

 
  

ended

  

ended

 
  

September 30,

  

September 30,

 
  

2021

  

2020

  

2021

  

2020

 

Huntsman International:

                

Segment adjusted EBITDA(1):

                

Polyurethanes

 $246  $156  $661  $271 

Performance Products

  103   36   254   123 

Advanced Materials

  48   25   150   103 

Textile Effects

  22   8   75   24 

Corporate and other(2)

  (47)  (36)  (140)  (110)

Total

  372   189   1,000   411 

Reconciliation of adjusted EBITDA to net income (loss):

                

Interest expense, net—continuing operations

  (15)  (24)  (52)  (65)

Income tax expense—continuing operations

  (39)  (15)  (115)  (9)

Income tax expense—discontinued operations

  (5)  0   (5)  (239)

Depreciation and amortization—continuing operations

  (72)  (70)  (219)  (206)

Net income attributable to noncontrolling interests

  16   9   49   15 

Other adjustments:

                

Business acquisition and integration expenses and purchase accounting inventory adjustments

  (5)  (9)  (19)  (30)

EBITDA from discontinued operations(3)

  0   0   2   1,021 

Fair value adjustments to Venator investment

  (3)  6   (28)  (100)

Loss on early extinguishment of debt

  0   0   (27)  0 

Certain legal and other settlements and related income (expenses)

  0   4   (10)  (2)

Gain on sale of businesses/assets

  0   0   30   1 

Income from transition services arrangements

  2   1   6   6 

Certain nonrecurring information technology project implementation costs

  (2)  (1)  (6)  (3)

Amortization of pension and postretirement actuarial losses

  (22)  (20)  (67)  (59)

Plant incident remediation costs

  (2)  0   (3)  (1)

Restructuring, impairment and plant closing and transition costs

  0   (12)  (36)  (34)

Net income

 $225  $58  $500  $706 

 


(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 income (expenses); (f) gain 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 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.

 

(3)Includes the gain on the sale of our Chemical Intermediates Businesses in 2020.

 

 

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 nine months ended September 30, 2021 and 2020 were $6,146 million and $4,350 million, respectively.

Recent Developments 

 

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 from April 2022 to July 2024. For additional information, see “Note 8. Debt—Direct and Subsidiary Debt—A/R Programs” to our condensed consolidated financial statements.

 

 

Outlook 

 

We expect the following factors to impact our operating segments:

 

Polyurethanes:

 

 

Fourth quarter 2021 adjusted EBITDA estimated to be between $200 million and $220 million

 

Positive trends in construction, though impacted by raw material constraints

 

Automotive market continues to be weak

 

Performance Products:

 

 

Fourth quarter 2021 adjusted EBITDA estimated to be between $95 million and $100 million

 

Commercial initiatives to positively impact results

 

Advanced Materials:

 

 

Fourth quarter 2021 adjusted EBITDA estimated to be between $47 million and $52 million

 

Aerospace continues to recover

 

Pricing increases to offset raw material cost increases

 

Textile Effects

 
 

Fourth quarter 2021 adjusted EBITDA estimated to be between $20 million and $22 million

 

Favorable trends in sustainable solutions

 Pricing increases to offset raw material cost increases

 

 

In the third quarter of 2021, our adjusted effective tax rate was 15%. For 2021, our adjusted effective tax rate is expected to be approximately 19% to 20%, which is below our previously expected rate of approximately 22% to 24% due largely to tax benefits for increased export sales and services taxed at a U.S. income tax rate lower than 21%. We continue to 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

      

Nine months

     
  

ended

      

ended

     
  

September 30,

  

Percent

  

September 30,

  

Percent

 
  

2021

  

2020

  

Change

  

2021

  

2020

  

Change

 

Revenues

 $2,285  $1,510   51% $6,146  $4,350   41%

Cost of goods sold

  1,802   1,231   46%  4,840   3,612   34%

Gross profit

  483   279   73%  1,306   738   77%

Operating expenses, net

  239   208   15%  692   660   5%

Restructuring, impairment and plant closing (credits) costs

  (1)  12   NM   34   34    

Operating income

  245   59   315%  580   44   NM 

Interest expense, net

  (15)  (24)  (38)%  (52)  (63)  (17)%

Equity in income of investment in unconsolidated affiliates

  34   21   62%  118   25   372%

Fair value adjustments to Venator investment

  (3)  6   NM   (28)  (100)  (72)%

Loss on early extinguishment of debt

           (27)     NM 

Other income, net

  7   10   (30)%  23   27   (15)%

Income (loss) from continuing operations before income taxes

  268   72   272%  614   (67)  NM 

Income tax expense

  (38)  (15)  153%  (114)  (9)  NM 

Income (loss) from continuing operations

  230   57   304%  500   (76)  NM 

(Loss) income from discontinued operations, net of tax(1)

  (5)     NM   (3)  782   NM 

Net income

  225   57   295%  497   706   (30)%

Reconciliation of net income to adjusted EBITDA:

                        

Net income attributable to noncontrolling interests

  (16)  (9)  78%  (49)  (15)  227%

Interest expense, net from continuing operations

  15   24   (38)%  52   63   (17)%

Income tax expense from continuing operations

  38   15   153%  114   9   NM 

Income tax expense from discontinued operations

  5      NM   5   239   (98)%

Depreciation and amortization of continuing operations

  72   70   3%  219   206   6%

Other adjustments:

                        

Business acquisition and integration expenses and purchase accounting inventory adjustments

  5   9       19   30     

EBITDA from discontinued operations(1)

            (2)  (1,021)    

Fair value adjustments to Venator investment

  3   (6)      28   100     

Loss on early extinguishment of debt

            27        

Certain legal and other settlements and related (income) expenses

     (4)      10   2     

Gain on sale of businesses/assets

            (30)  (1)    

Income from transition services arrangements

  (2)  (1)      (6)  (6)    

Certain nonrecurring information technology project implementation costs

  2   1       6   3     

Amortization of pension and postretirement actuarial losses

  22   20       65   57     

Plant incident remediation costs

  2          3   1     

Restructuring, impairment and plant closing and transition costs

     12       36   34     

Adjusted EBITDA(2)

 $371  $188   97% $994  $407   144%
                         

Net cash provided by operating activities from continuing operations

             $163  $110   48%

Net cash (used in) provided by investing activities

              (439)  1,105   NM 

Net cash used in financing activities

              (809)  (546)  48%

Capital expenditures

              (250)  (170)  47%

 

Huntsman International

  

Three months

      

Nine months

     
  

ended

      

ended

     
  

September 30,

  

Percent

  

September 30,

  

Percent

 
  

2021

  

2020

  

Change

  

2021

  

2020

  

Change

 

Revenues

 $2,285  $1,510   51% $6,146  $4,350   41%

Cost of goods sold

  1,802   1,231   46%  4,840   3,612   34%

Gross profit

  483   279   73%  1,306   738   77%

Operating expenses, net

  238   207   15%  686   656   5%

Restructuring, impairment and plant closing (credits) costs

  (1)  12   NM   34   34    

Operating income

  246   60   310%  586   48   NM 

Interest expense, net

  (15)  (24)  (38)%  (52)  (65)  (20)%

Equity in income of investment in unconsolidated affiliates

  34   21   62%  118   25   372%

Fair value adjustments to Venator investment

  (3)  6   NM   (28)  (100)  (72)%

Loss on early extinguishment of debt

           (27)     NM 

Other income, net

  7   10   (30)%  21   25   (16)%

Income (loss) from continuing operations before income taxes

  269   73   268%  618   (67)  NM 

Income tax expense

  (39)  (15)  160%  (115)  (9)  NM 

Income (loss) from continuing operations

  230   58   297%  503   (76)  NM 

(Loss) income from discontinued operations, net of tax(1)

  (5)     NM   (3)  782   NM 

Net income

  225   58   288%  500   706   (29)%

Reconciliation of net income to adjusted EBITDA:

                        

Net income attributable to noncontrolling interests

  (16)  (9)  78%  (49)  (15)  227%

Interest expense, net from continuing operations

  15   24   (38)%  52   65   (20)%

Income tax expense from continuing operations

  39   15   160%  115   9   NM 

Income tax expense from discontinued operations

  5      NM   5   239   (98)%

Depreciation and amortization of continuing operations

  72   70   3%  219   206   6%

Other adjustments:

                        

Business acquisition and integration expenses and purchase accounting inventory adjustments

  5   9       19   30     

EBITDA from discontinued operations(1)

            (2)  (1,021)    

Fair value adjustments to Venator investment

  3   (6)      28   100     

Loss on early extinguishment of debt

            27        

Certain legal and other settlements and related (income) expenses

     (4)      10   2     

Gain on sale of businesses/assets

            (30)  (1)    

Income from transition services arrangements

  (2)  (1)      (6)  (6)    

Certain nonrecurring information technology project implementation costs

  2   1       6   3     

Amortization of pension and postretirement actuarial losses

  22   20       67   59     

Plant incident remediation costs

  2          3   1     

Restructuring, impairment and plant closing and transition costs

     12       36   34     

Adjusted EBITDA(2)

 $372  $189   97% $1,000  $411   143%
                         

Net cash provided by operating activities from continuing operations

             $167  $113   48%

Net cash (used in) provided by investing activities

              (544)  1,379   NM 

Net cash used in financing activities

              (706)  (824)  (14)%

Capital expenditures from continuing operations

              (250)  (170)  47%

 

Huntsman Corporation

  

Three months

  

Three months

 
  

ended

  

ended

 
  

September 30, 2021

  

September 30, 2020

 
      

Tax and

          

Tax and

     
  

Gross

  

other(3)

  

Net

  

Gross

  

other(3)

  

Net

 

Reconciliation of net income to adjusted net income

                        

Net income

         $225          $57 

Net income attributable to noncontrolling interests

          (16)          (9)

Business acquisition and integration expenses and purchase accounting inventory adjustments

 $5  $(2)  3  $9  $(3)  6 

Loss from discontinued operations(1)(4)

     5   5          

Fair value adjustments to Venator investment

  3      3   (6)     (6)

Certain legal and other settlements and related income

           (4)  1   (3)

Income from transition services arrangements

  (2)     (2)  (1)     (1)

Certain nonrecurring information technology project implementation costs

  2      2   1      1 

Amortization of pension and postretirement actuarial losses

  22   (5)  17   20   (4)  16 

Plant incident remediation costs

  2      2          

Restructuring, impairment and plant closing and transition costs

           12   (3)  9 

Adjusted net income(2)

         $239          $70 
                         

Weighted average shares-basic

          219.4           219.8 

Weighted average shares-diluted

          221.3           221.3 
                         

Basic net income attributable to Huntsman Corporation per share:

                        

Income from continuing operations

         $0.97          $0.22 

Income from discontinued operations

          (0.02)           

Net income

         $0.95          $0.22 
                         

Diluted net income attributable to Huntsman Corporation per share:

                        

Income from continuing operations

         $0.96          $0.22 

Income from discontinued operations

          (0.02)           

Net income

         $0.94          $0.22 
                         

Other non-GAAP measures:

                        

Diluted adjusted net income per share(2)

         $1.08          $0.32 

 

 

  

Nine months

  

Nine months

 
  

ended

  

ended

 
  

September 30, 2021

  

September 30, 2020

 
      

Tax and

          

Tax and

     
  

Gross

  

other(3)

  

Net

  

Gross

  

other(3)

  

Net

 

Reconciliation of net income to adjusted net income

                        

Net income

         $497          $706 

Net income attributable to noncontrolling interests

          (49)          (15)

Business acquisition and integration expenses and purchase accounting inventory adjustments

 $19  $(4)  15  $30  $(6)  24 

Income from discontinued operations(1)(4)

  (2)  5   3   (1,021)  239   (782)

Fair value adjustments to Venator investment

  28      28   100      100 

Loss on early extinguishment of debt

  27   (6)  21          

Certain legal and other settlements and related expenses

  10   (3)  7   2      2 

Gain on sale of businesses/assets

  (30)  4   (26)  (1)     (1)

Income from transition services arrangements

  (6)  1   (5)  (6)  1   (5)

Certain nonrecurring information technology project implementation costs

  6   (1)  5   3      3 

Amortization of pension and postretirement actuarial losses

  65   (15)  50   57   (12)  45 

Plant incident remediation costs

  3      3   1      1 

Restructuring, impairment and plant closing and transition costs

  36   (8)  28   34   (7)  27 

Adjusted net income(2)

         $577          $105 
                         

Weighted average shares-basic

          220.2           220.8 

Weighted average shares-diluted

          222.2           220.8 
                         

Basic net income attributable to Huntsman Corporation per share:

                        

Income (loss) from continuing operations

         $2.04          $(0.41)

(Loss) income from discontinued operations

          (0.01)          3.54 

Net income

         $2.03          $3.13 
                         

Diluted net income attributable to Huntsman Corporation per share:

                        

Income (loss) from continuing operations

         $2.03          $(0.41)

(Loss) income from discontinued operations

          (0.01)          3.54 

Net income

         $2.02          $3.13 
                         

Other non-GAAP measures:

                        

Diluted adjusted net income per share(2)

         $2.60          $0.47 
                         

Net cash provided by operating activities from continuing operations

         $163          $110 

Capital expenditures from continuing operations

          (250)          (170)

Free cash flow from continuing operations(2)

         $(87)         $(60)
                         

Other cash flow measure:

                        

Taxes paid on sale of businesses(5)

         $3          $188 

 


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 (income) expenses; (f) gain 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 costs; and (k) restructuring, impairment and plant closing and transition 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 income attributable to Huntsman Corporation: (a) business acquisition and integration expenses and purchase accounting inventory adjustments; (b) loss (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 (income) expenses; (f) gain 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 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 September 30, 2021 Compared with Three Months Ended September 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 $166 million in net income from continuing operations attributable to Huntsman Corporation and the increase of $165 million in net income from continuing operations attributable to Huntsman International was the result of the following items:

 

 

Revenues for the three months ended September 30, 2021 increased by $775 million, or 51%, as compared with the 2020 period. The increase was primarily due to higher average selling prices as well as higher sales volumes in all our segments. See “—Segment Analysis” below.

 

Gross profit for the three months ended September 30, 2021 increased by $204 million, or 73%, as compared with the 2020 period. The increase resulted from higher gross profits in all our segments. See “—Segment Analysis” below.

 

 Operating expenses, net for the three months ended September 30, 2021 increased by $31 million, or 15%, as compared with the 2020 period, primarily related to an increase in selling, general and administrative expenses.

 

For the three months ended September 30, 2021, we recorded a credit of $1 million in restructuring, impairment and plant closing (credits) costs compared with costs of $12 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.

 Interest expense, net for the three months ended September 30, 2021 decreased by $9 million, or 38%, as compared with the 2020 period, primarily related to the redemption in full of our 2021 Senior Notes in the first half of 2021.

 

 

Equity in income of investment in unconsolidated affiliates for the three months ended September 30, 2021 increased to $34 million from $21 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 September 30, 2021, we recorded a net loss of $3 million in fair value adjustments to our investment in Venator and related option to sell our remaining Venator shares compared with a gain of $6 million in the 2020 period. See “Note 4. Business Dispositions—Sale of Venator Interest” to our condensed consolidated financial statements.

​​

 

Our income tax expense for the three months ended September 30, 2021 increased to $38 million from $15 million in the 2020 period. The income tax expense of Huntsman International for the three months ended September 30, 2021 increased to $39 million from $15 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, partially offset by approximately $11 million of tax benefits for increased export sales and services taxed at a U.S. income tax rate lower than 21% in the third quarter of 2021. 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

 
  

September 30,

  

Favorable

 

(Dollars in millions)

 

2021

  

2020

  

(Unfavorable)

 

Revenues

            

Polyurethanes

 $1,403  $936   50%

Performance Products

  399   238   68%

Advanced Materials

  304   199   53%

Textile Effects

  188   142   32%

Corporate and eliminations

  (9)  (5)  NM 

Total

 $2,285  $1,510   51%
             

Huntsman Corporation

            

Segment adjusted EBITDA(1)

            

Polyurethanes

 $246  $156   58%

Performance Products

  103   36   186%

Advanced Materials

  48   25   92%

Textile Effects

  22   8   175%

Corporate and other

  (48)  (37)  (30)%

Total

 $371  $188   97%
             

Huntsman International

            

Segment adjusted EBITDA(1)

            

Polyurethanes

 $246  $156   58%

Performance Products

  103   36   186%

Advanced Materials

  48   25   92%

Textile Effects

  22   8   175%

Corporate and other

  (47)  (36)  (31)%

Total

 $372  $189   97%

 


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 September 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

  40%  2%  6%  2%

Performance Products

  49%  2%  (8)%  25%

Advanced Materials

  23%  3%  24%  3%

Textile Effects

  15%  3%  (2)%  16%

 

  

Three months ended September 30, 2021 vs June 30, 2021

 
  

Average Selling Price(1)

         
  

Local

  

Foreign Currency

  

Mix &

  

Sales

 
  

Currency

  

Translation Impact

  

Other

  

Volumes(2)

 

Period-Over-Period (Decrease) Increase

                

Polyurethanes

  8%  (1)%  4%  10%

Performance Products

  8%  (1)%  2%  (1)%

Advanced Materials

  5%     1%  (4)%

Textile Effects

        (2)%  (7)%


(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 September 30, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices and slightly higher sales volumes. MDI average selling prices increased in all our regions. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by the impact of Hurricane Ida at our Geismar, Louisiana facility that occurred in the third quarter of 2021. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing and slightly 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 September 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 September 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 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 acquisition and divestiture, 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 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 acquisition.

 

Textile Effects

The increase in revenues in our Textile Effects segment for the three months ended September 30, 2021 compared to the same period of 2020 was due to higher sales volumes and higher average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in the North Asia and Americas regions. Average selling prices increased primarily in response to higher freight and logistics costs. The increase in segment adjusted EBITDA was primarily due to higher sales revenues, partially offset by higher fixed 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 three months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $11 million to a loss of $48 million from a loss of $37 million for the same period of 2020. For the three months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $11 million to a loss of $47 million from a loss of $36 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, partially offset by an increase in unallocated foreign currency exchange gains.

 

 

 

Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 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 $542 million in net income from continuing operations attributable to Huntsman Corporation and the increase of $545 million in net income from continuing operations attributable to Huntsman International was the result of the following items:

 

 

Revenues for the nine months ended September 30, 2021 increased by $1,796 million, or 41%, as compared with the 2020 period. The increase was primarily due to higher average selling prices as well as higher sales volumes in all our segments. See “—Segment Analysis” below.

 

Gross profit for the nine months ended September 30, 2021 increased by $568 million, or 77%, as compared with 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 nine months ended September 30, 2021 increased by $32 million and $30 million, respectively, or 5% for both, as compared with the 2020 period, primarily related to an increase in selling, general and administrative expenses, partially offset by the pretax gain of $28 million recognized in the second quarter of 2021 in connection with the earnout provision achieved under the terms of the sale agreement of the India-based DIY business.

 Our interest expense, net and interest expense, net of Huntsman International for the nine months ended September 30, 2021 decreased by $11 million and $13 million, respectively, or 17% and 20%, respectively, as compared with the 2020 period, primarily related to the redemption in full of our 2021 Senior Notes in the first half of 2021.

 

 

Equity in income of investment in unconsolidated affiliates for the nine months ended September 30, 2021 increased to $118 million from $25 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 nine months ended September 30, 2021, we recorded a net loss of $28 million in fair value adjustments to our investment in Venator and related option to sell our remaining Venator shares compared with a loss of $100 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 nine months ended September 30, 2021 was $27 million compared with 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 nine months ended September 30, 2021 increased to $114 million from $9 million in the 2020 period. The income tax expense of Huntsman International for the nine months ended September 30, 2021 increased to $115 from $9 million in the 2020 period. The increase in income tax expense was primarily due to pretax income, exclusive of the fair value adjustments to our investment in Venator, partially offset by approximately $11 million of tax benefits for increased export sales and services taxed at a U.S. income tax rate lower than 21% in the 2021 period. 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.

 

  

Nine months

  

Percent

 
  

ended

  

Change

 
  

September 30,

  

Favorable

 
  

2021

  

2020

  

(Unfavorable)

 

Revenues

            

Polyurethanes

 $3,626  $2,554   42%

Performance Products

  1,075   758   42%

Advanced Materials

  881   632   39%

Textile Effects

  588   424   39%

Corporate and eliminations

  (24)  (18)  NM 

Total

 $6,146  $4,350   41%
             

Huntsman Corporation

            

Segment adjusted EBITDA(1)

            

Polyurethanes

 $661  $271   144%

Performance Products

  254   123   107%

Advanced Materials

  150   103   46%

Textile Effects

  75   24   213%

Corporate and other

  (146)  (114)  (28)%

Total

 $994  $407   144%
             

Huntsman International

            

Segment adjusted EBITDA(1)

            

Polyurethanes

 $661  $271   144%

Performance Products

  254   123   107%

Advanced Materials

  150   103   46%

Textile Effects

  75   24   213%

Corporate and other

  (140)  (110)  (27)%

Total

 $1,000  $411   143%

 


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.

  

Nine months ended September 30, 2021 vs September 30, 2020

 
  

Average Selling Price(1)

         
  

Local

  

Foreign Currency

  

Mix &

  

Sales

 
  

Currency

  

Translation Impact

  

Other

  

Volumes(2)

 

Period-Over-Period (Decrease) Increase

                

Polyurethanes

  31%  3%  4%  4%

Performance Products

  29%  4%  (5)%  14%

Advanced Materials

  10%  5%  11%  13%

Textile Effects

  (1)%  3%  5%  32%

 


(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 nine months ended September 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 with increases in our Americas region during the third quarter of 2021. Sales volumes increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown, partially offset by some unplanned downtime resulting from the U.S. Gulf Coast Winter Storm Uri that occurred in the first quarter of 2021, the scheduled turnaround at our Rotterdam, Netherlands facility during the second quarter of 2021 and the impact of Hurricane Ida at our Geismar, Louisiana facility that occurred in the third quarter of 2021. 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 nine months ended September 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 nine months ended September 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 in response to higher raw material costs and due to the impact of a weaker U.S. dollar against major international currencies. 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 nine months ended September 30, 2021 compared to the same period of 2020 was primarily due to higher sales volumes and slightly higher average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown. Average selling prices slightly increased primarily due to the impact of a weaker U.S. dollar against major international currencies. The increase in segment adjusted EBITDA was primarily due to higher sales revenues, partially offset by higher fixed 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 nine months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman Corporation decreased by $32 million to a loss of $146 million from a loss of $114 million for the same period of 2020. For the nine months ended September 30, 2021, adjusted EBITDA from Corporate and other for Huntsman International decreased by $30 million to a loss of $140 million from a loss of $110 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, partially offset by an increase in unallocated foreign currency exchange gains.

 

 

 

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 Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020 

Net cash provided by operating activities from continuing operations for the nine months ended September 30, 2021 and 2020 was $163 million and $110 million, respectively. The increase in net cash provided by operating activities from continuing operations during the nine months ended September 30, 2021 compared with the same period in 2020 was primarily attributable to increased operating income as described in “—Results of Operations” above for the nine months ended September 30, 2021 as compared with the same period of 2020, partially offset by a $382 million unfavorable variance in operating assets and liabilities.

Net cash (used in) provided by investing activities for the nine months ended September 30, 2021 and 2020 was $(439) million and $1,105 million, respectively. During the nine months ended September 30, 2021 and 2020, we paid $250 million and $170 million for capital expenditures, respectively. During the nine months ended September 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 $245 million for the acquisition of businesses, primarily related to approximately $242 million paid for the Gabriel Acquisition, net of cash acquired. During the nine months ended September 30, 2020, we received approximately $1.92 billion for the sale of our Chemical Intermediates Businesses, and we paid $653 million in connection with the Icynene-Lapolla Acquisition and the CVC Thermoset Specialties Acquisition, net of cash acquired.

Net cash used in financing activities for the nine months ended September 30, 2021 and 2020 was $809 million and $546 million, respectively. During the nine months ended September 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 nine months ended September 30, 2021, we issued $400 million in aggregate principal amount of our 2031 Senior Notes and received borrowings of approximately 104 million SAR (approximately $27 million) related to funding on a new term loan facility of our consolidated 50%-owned joint venture, AAC. See “Note 8. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” to our condensed consolidated financial statements. During the nine months ended September 30, 2020, we repaid a total of $153 million on our Revolving Credit Facility and repaid in full $109 million on our 2019 Term Loan in the third quarter of 2020.

 

​Free cash flow from continuing operations for the nine months ended September 30, 2021 and 2020 was a use of cash of $87 million and $60 million, respectively.

Changes in Financial Condition

The following information summarizes our working capital position (dollars in millions):

  

September 30,

  

Less

      

December 31,

  

(Decrease)

  

Percent

 
  

2021

  

Acquisition(1)

  

Subtotal

  

2020

  

Increase

  

Change

 

Cash and cash equivalents

 $505  $(9) $496  $1,593  $(1,097)  (69)%

Accounts and notes receivable, net

  1,239   (13)  1,226   910   316   35%

Inventories

  1,174   (26)  1,148   848   300   35%

Other current assets

  196      196   217   (21)  (10)%

Total current assets

  3,114   (48)  3,066   3,568   (502)  (14)%

Accounts payable

  985   (7)  978   876   102   12%

Accrued liabilities

  569   (2)  567   458   109   24%

Current portion of debt

  16      16   593   (577)  (97)%

Current operating lease liabilities

  54      54   52   2   4%

Total current liabilities

  1,624   (9)  1,615   1,979   (364)  (18)%

Working capital

 $1,490  $(39) $1,451  $1,589  $(138)  (9)%

 


(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 $138 million as a result of the net impact of the following significant changes:

 

The decrease in cash and cash equivalents of $1,097 million resulted from the matters identified on our condensed consolidated statements of cash flows.

 

Accounts receivable increased by $316 million due to higher revenues in the third quarter of 2021 compared to the fourth quarter of 2020.

 

 

Inventories increased by $300 million primarily due to higher inventory costs and volumes.

 

Accounts payable increased by $102 million primarily due to higher inventory purchases.

​​

 Accrued liabilities increased by $109 million primarily related to higher accrued compensation and current income taxes payable.

 

 

Current portion of debt decreased by $577 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.

 

Term Loan Credit Facility

 

See “Note 8. Debt—Direct and Subsidiary Debt—Term Loan 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.

​Variable Interest Entity Debt

 

See “Note 8. Debt—Direct and Subsidiary Debt—Variable Interest Entity Debt” 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 September 30, 2021, we had $1,955 million of combined cash and unused borrowing capacity, consisting of $505 million in cash, $1,190 million in availability under our Revolving Credit Facility and $260 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

 

 

Cash invested in our accounts receivable and inventory, net of accounts payable, was approximately $546 million for the nine months ended September 30, 2021, as reflected in our condensed consolidated statements of cash flows. We expect volatility in our working capital components to continue.

 

 

During 2021, we expect to spend approximately $350 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. 

 

 

During the nine months ended September 30, 2021, we made contributions to our pension and postretirement benefit plans of $45 million. During 2021, we expect to contribute an additional amount of approximately $9 million to these plans.

 

 On February 7, 2018 and on May 3, 2018, our Board of Directors collectively authorized us to repurchase up to an aggregate of $1 billion in shares of our common stock. During the three months and nine months ended September 30, 2021, we repurchased 3,971,784 shares of our common stock for approximately $102 million, excluding commissions, under the share repurchase program. 

 

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 from April 2022 to July 2024.

 

 

On a new MDI splitter being constructed in Geismar, Louisiana, we expect to spend approximately $50 million in the remainder of 2021 and 2022. We expect to fund capital expenditures with cash provided by operations. 

 

 

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 September 30, 2021, we had $16 million classified as current portion of debt, including debt at our variable interest entities of $13 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 September 30, 2021, we had approximately $365 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 September 30, 2021. Based on this evaluation, our chief executive officer and chief financial officer have concluded that, as of September 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 September 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.

 

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

 

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 Specialties Group, Inc., Rockwood Holdings, Inc. (collectively, “Rockwood”), Albemarle Corporation (as Rockwood’s successor) (“Albemarle”) and certain former Rockwood executives to recover damages for fraud and breach of contract in connection with our purchase of Rockwood’s pigments businesses, including its Color Pigments Division, for $1.1 billion in 2014. The case was ordered to arbitration under the rules of the American Arbitration Association and, after a two-week trial in May 2021, a panel consisting of three former federal judges awarded us in excess of $600 million for the fraud and breach, inclusive of punitive damages and statutory interest at 9%, of which we expect to net in excess of $400 million after attorney’s fees. The award is subject to confirmation and limited appeal in New York state court, and the arbitration panel directed us to file for reimbursement from Albemarle for attorney’s fees as prevailing party.

 

Texas Emissions Enforcement

 

On July 26, 2021, the Attorney General of the State of Texas filed a civil suit in the District Court of Travis County, Texas seeking civil penalties and attorney’s fees for alleged violations of the Texas Clean Air Act, Texas Commission on Environmental Quality regulations and facility permit terms. The complaint alleged multiple unauthorized emissions events and reporting discrepancies that occurred between December 2016 and June 2019 at our former manufacturing facility in Port Neches, Texas. The state is seeking monetary relief between $250,000 and $1 million. We completed the sale of our former Port Neches, Texas facility to Indorama Ventures Holdings L.P. on January 3, 2020. We believe that we are contractually indemnified for any defense costs and potential liability that may result from this action. 

ITEM 1A. RISK FACTORS

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 September 30, 2021.

          

Total number of

  

Approximate dollar

 
          

shares purchased

  

value of shares that

 
  

Total number

  

Average

  

as part of publicly

  

may yet be purchased

 
  

of shares

  

price paid

  

announced plans

  

under the plans or

 
  

purchased

  

per share(1)

  

or programs(2)

  

programs(2)

 

July

  344  $26.70     $420,000,000 

August

  2,973,750   25.40   2,972,351   345,000,000 

September

  999,559   26.37   999,433   318,000,000 

Total

  3,973,653   25.64   3,971,784     

 


(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. 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. During the third quarter of 2021, we resumed the share repurchase program and repurchased 3,971,784 shares of our common stock for approximately $102 million, excluding commissions. 

 

ITEM 6. EXHIBITS

 

See the Exhibit Index at the end of this Quarterly Report on Form 10-Q for exhibits filed with this report.

 

 

EXHIBIT INDEX 

 

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

Exhibit

Filing Date

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, 202110-Q10.1July 30, 2021
10.2 Amended and Restated European Receivables Loan Agreement, dated as of July 1, 202110-Q10.2July 30, 2021
10.3*Independent Services Agreement No. ISA-SD-2021 (Sean Douglas)   

31.1

*

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

*

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

*

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2

*

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

*

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

101.SCH

*

Inline XBRL Taxonomy Extension Schema

101.CAL

*

Inline XBRL Taxonomy Extension Calculation Linkbase

101.LAB

*

Inline XBRL Taxonomy Extension Label Linkbase

101.PRE

*

Inline XBRL Taxonomy Extension Presentation Linkbase

101.DEF

*

Inline XBRL Taxonomy Extension Definition Linkbase

104

 

The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL and contained in Exhibit 101

 

* 

Filed herewith

 

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: October 29, 2021

HUNTSMAN CORPORATION

HUNTSMAN INTERNATIONAL LLC

By:

/s/ PHILIP M. LISTER

Philip M. Lister

Executive Vice President and Chief Financial Officer

and Manager (Principal Financial Officer)

By:

/s/ STEVEN C. JORGENSEN

Steven C. Jorgensen

Vice President and Controller (Authorized Signatory and

Principal Accounting Officer)

60