Huntsman's (HUN) Q3 Earnings and Revenues Miss Estimates
Huntsman Corporation’s HUN third-quarter 2023 adjusted earnings per share fell to 15 cents from 71 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 19 cents.
Revenues were $1,506 million, down around 25.1% year over year. The top line missed the Zacks Consensus Estimate of $1,562.3 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 declined 23% year on year to $967 million in the reported quarter, owing to lower MDI average selling prices, fewer sales volumes and an adverse sales mix. It also lagged our estimate of $983 million. Because of less favorable supply and demand dynamics, MDI average selling prices fell in the quarter.
Sales volumes declined predominantly as a result of decreasing demand, particularly in the Americas. The sales mix was unfavorable, with reduced sales of higher-priced products. Lower MDI margins and lower sales volumes led the drop in segment-adjusted EBITDA, which was somewhat offset by increased equity earnings from our minority-owned joint venture in China.
Performance Products: Revenues plunged 36% to $277 million as a result of lower sales volumes and a decline in average selling prices. It lagged our estimate of $322 million. Sales volumes fell across the board, owing particularly to slower construction activity and lower demand in agrochemicals, coatings and adhesives, fuel and lubricants, and other industrial areas. The drop in segment-adjusted EBITDA was caused primarily by lower sales volumes and average selling prices.
Advanced Materials: Revenues from the unit declined 18% to $268 million due to reduced sales volumes, while average selling prices remained largely steady. It fell short of our estimate of $304.9 million. Sales volumes fell principally as a result of decreasing client demand in infrastructure and industrial areas, as well as the deselection of businesses with lower margins. Lower sales volumes were principally responsible for the fall in segment-adjusted EBITDA.
Financials
Free cash flow from continuing operations was $117 million in the third quarter compared with $228 million in the prior-year quarter. The company had approximately $1.8 billion in combined cash and unused borrowing capacity as of Sep 30, 2023.
The company spent $50 million on capital expenditures from continuing operations in the third quarter compared with $57 million in the prior-year quarter. The company anticipates spending roughly $230 million on capital expenditures in 2023.
HUN repurchased approximately 3.8 million shares for roughly $101 million in the third quarter of 2023.
Outlook
Despite challenging market conditions, Huntsman is committed to strategic investments and cost-cutting measures. The company is optimistic about the long-term prospects for its products and anticipates better economic conditions in 2024.
Price Performance
Shares of Huntsman have lost 11.7% in the past year against a 4.7% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Huntsman currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Koppers Holdings Inc. KOP and The Andersons Inc. ANDE.
Equinox has a projected earnings growth rate of 90% for the current year. It currently carries a Zacks Rank #2 (Buy). Equinox delivered a trailing four-quarter earnings surprise of roughly 18.1%, on average. The stock is up around 37.1% in a year. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Koppers has a projected earnings growth rate of 7.5% for the current year. It currently carries a Zacks Rank #2. Koppers delivered a trailing four-quarter earnings surprise of roughly 21.7%, on average. The stock is up around 46.1% in a year.
Andersons currently carries a Zacks Rank #1. The stock has gained roughly 42.9% in the past year. ANDE beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average.
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