Huntsman (HUN) Q2 Earnings and Revenues Miss Estimates
Huntsman Corporation HUN reported second-quarter 2023 net income of $19 million or 11 cents per share, down from $228 million or $1.10 in the year-ago quarter.
Barring one-time items, adjusted earnings per share fell to 22 cents in the reported quarter from $1.21 in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 29 cents.
Revenues were $1,596 million, down around 26.5% year over year. The top line missed the Zacks Consensus Estimate of $1,690.1 million.
Huntsman Corporation Price, Consensus and EPS Surprise
Huntsman Corporation price-consensus-eps-surprise-chart | Huntsman Corporation Quote
Segment Highlights
Polyurethanes: Revenues from the segment fell 25% year over year to $1,012 million in the reported quarter, hurt by reduced sales volumes, unfavorable currency translation and lower MDI (methylene diphenyl diisocyanate) average selling prices. Volumes fell mainly due to lower demand, especially in American markets. It also lagged our estimate of $1,068.9 million.
Performance Products: Revenues fell 38% to $307 million on lower sales volumes and low average selling price, which were partly offset by an improved sales mix. Sales volume fell in all regions mainly due to weaker construction activity, and lower demand in coating, adhesives, lubes and other industrial markets. It lagged our estimate of $333.3 million
Advanced Materials: Revenues from the unit experienced a 15% decline, amounting to $284 million. This decrease was primarily attributed to lower sales volume, which was partly offset by higher average selling prices. The drop in sales volume resulted from reduced customer demand in infrastructure markets, as well as the decision to deselect lower-margin business. However, these were partly masked by higher average selling prices, mainly due to an improved sales mix. The figure fell short of our estimate of $320.9 million.
Financials
Huntsman had total cash of $502 million at the end of the quarter, down around 18% sequentially. Long-term debt amounted to $1,562 million, up roughly 3.5% sequentially.
Free cash flow from continuing operations was a use of $11 million against a source of $178 million in the year-ago quarter. The company spent $51 million on capital expenditures from continuing operations compared with $65 million in the prior-year quarter.
Outlook
Huntsman expects stable demand in the Polyurethanes division in the third quarter but competitive pricing pressure is expected to more than offset raw material or energy benefits. Adjusted EBITDA for Polyurethanes is projected to be between $75 million and $90 million.
For the Performance Products division, HUN anticipates some seasonality in Europe and Asia and continued competitive pressure, leading to a sequentially lower third-quarter adjusted EBITDA in the range of $40 million to $50 million.
For Advanced Materials, stable demand is expected, with some modest volume decline due to typical seasonality. The division is projected to deliver similar results in the third quarter as in the second quarter, with adjusted EBITDA projected to be between $48 million and $53 million.
Huntsman expects to spend $230-$250 million on capital expenditures in 2023.
Price Performance
Shares of Huntsman have lost 1.9% in the past year against an 11.9% rise of the industry.
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Zacks Rank & Key Picks
Huntsman currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the Basic Materials space include Livent Corporation LTHM and Carpenter Technology Corporation CRS, both sporting a Zacks Rank #1 (Strong Buy), and PPG Industries, Inc. PPG, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 14% upward in the past 90 days. LTHM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 22%.
The earnings estimate for CRS’s current year is pegged at $1.04, indicating year-over-year growth of 198%. CRS beat the Zacks Consensus Estimate in all the last four quarters, with the average earnings surprise being 30.9%. The company’s shares have rallied 83.9% in the past year.
The Zacks Consensus Estimate for PPG’s current-year earnings has been revised 6.8% upward in the past 60 days. PPG beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 7.3% on average. The company’s shares have risen roughly 14.9% in the past year.
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