Goldman Sachs Industrials & Materials Investor Conference May 16, 2019
General Disclosure This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenue or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts,” or future or conditional verbs, such as “will,” “should,” “could” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management's examination of historical operating trends and data, 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. However, there can be no assurance that management's expectations, beliefs and projections will be achieved. The forward-looking statements in this release are subject to uncertainty and changes in circumstances and involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as discussed in the Huntsman companies' filings with the U.S. Securities and Exchange Commission. Significant risks and uncertainties may relate to, but are not limited to, volatile global economic conditions, cyclical and volatile product markets, disruptions in production at manufacturing facilities, reorganization or restructuring of Huntsman's operations, including any delay of, or other negative developments affecting the ability to implement cost reductions and manufacturing optimization improvements in Huntsman businesses and realize anticipated cost savings, and other financial, economic, competitive, environmental, political, legal, regulatory and technological factors. Any forward-looking statement should be considered in light of the risks set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017. All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date made. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. This presentation contains financial measures that are not in accordance with generally accepted accounting principles in the U.S. ("GAAP"), including EBITDA, adjusted EBITDA, adjusted EBITDA from discontinued operations, adjusted net income (loss), adjusted diluted income (loss) per share, free cash flow and net debt. Reconciliations of non-GAAP measures to GAAP are provided in the financial schedules attached to the earnings news release for the relevant period and available on the Company's website at http://ir.huntsman.com/ The Company does not provide reconciliations of forward-looking non-GAAP financial measures to the most comparable GAAP financial measures on a forward-looking basis because the Company is 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, but not limited to, (a) business acquisition and integration expenses, (b) merger costs, and (c) certain legal and other settlements and related costs. Each of such adjustments has not yet occurred, are out of the Company's control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. 2
Differentiated Adjusted EBITDA and Guidance Annual Differentiated Adj. EBITDA (1) 17% 16% 16% 16% 15% 15% 14% 14% 11% 10% 9% 2012 ⁽ ² ⁾ 2013 ⁽ ² ⁾ 2014 ⁽ ² ⁾ 2015 ⁽ ² ⁾ 2016 ⁽ ² ⁾ 2017 2018 1Q19 LTM Margin Spike Differentiated Adj. EBITDA excl. Spike Adj. EBITDA Margin Adj. EBITDA Margin excl. Spike (1) Excludes MTBE and Olefins. (2) Excludes European surfactants business, which was sold to Innospec on December 30, 2016. 2019 Guidance and First Quarter 2019 Results • Full year 2019 Adj. EBITDA to be within 7% - 10% of 2018 Adj. EBITDA • Annual free cash flow conversion target of near 40% • First quarter 2019 Adj. EBITDA was down Y/Y $148mm or 37% 3
Cash Flow Generation and Balance Sheet Strength Consistent Free Cash Flow Conversion has Assisted in Transforming Balance Sheet Annual Free Cash Flow Conversion Target ~40% Transformation of Balance Sheet Investment Grade Achieved 2016: 2017: 2018: 1Q19 LTM: One-time One-time One-time One-time China cash working tax refund China cash management improvement capital management and temporary incremental release improvement build of inventory of >5 days FCF 66% 47% 44% 37% Conversion Net Debt / $ in billions EBITDA $5.0 4.0x 3.8x Pro Forma 3.4x FCF 44% Conversion 40% $4.0 ~40% 40% 40% 3.0x $3.0 2.0x 1.6x 1.3x 1.4x $2.0 1.0x $1.0 $0.0 0.0x 2016 2017 2018 1Q19 LTM Forward 2015 2016 2017 2018 1Q19 LTM Target Net Debt Net Debt/EBITDA 4
Portfolio Composition Revenue (1) Adjusted EBITDA (1)(2) 1Q19 LTM Textile Effects Revenues 9% Textile Effects Advanced 7% Materials $9.1 Advanced 12% Materials billion 15% Polyurethanes Polyurethanes Adjusted 54% 55% EBITDA Performance Performance Products $1.3 Products 25% 23% billion Adjusted EBITDA (1)(3) End Markets 2018 Revenues Source: Management estimates $ in millions Adj. EBITDA Margin Paints & Coatings 3% $1,469 Agrochemicals 3% Adhesives, Coatings & $1,321 Elastomers 5% $1,263 $1,259 Aerospace 2% $1,139 Construction Materials $1,098 Consumer 31% 8% $969 Apparel Intermediate Chemicals 11% 7% 16% 15% 14% 14% Automotive & Marine 9% Industrial Applications 13% 13% Home Furnishings 6% 12% 10% Household Products 5% Energy & Fuel Additives 14% Insulation 17% (1) Segment allocation is before Corporate and other unallocated items. 2013 ⁽⁴⁾ 2014 ⁽⁴⁾ 2015 ⁽⁴⁾ 2016 ⁽⁴⁾ 2017 2018 1Q19 (2) See Appendix for a reconciliation. LTM (3) Differentiated excludes MTBE and olefins, which are represented by Cyclical. Differentiated Cyclical (4) Excludes European surfactants business, which was sold to Innospec on December 30, 2016. 5
Polyurethanes ���������� MDI End Markets 1Q19 LTM Revenues 2018 Revenues Source: Management Estimates 2018 Revenues Apparel Furniture 6% Appliances 3% Revenues Rest of 3% World $4.9 Footwear 17% US & 7% Insulation Canada billion 37% 34% Automotive 17% Asia Intermediate Adhesives, Pacific Adjusted Chemicals Coatings & 24% EBITDA 1% Elastomers Composite Industrial ����������� Europe 12% $825 Wood Applications ��������� 25% Products 3% 11% million Consumer 34% ���������� �������������� MDI Competitive Intensity Adjusted EBITDA History $ in millions Adj. EBITDA Margin Includes short-term spike: Adj. EBITDA Margin Degree of Differentiation 2017: $125 2018: $80 $946 BASF $850 $825 $746 $728 $573 $569 Covestro 19% 19% 17% 16% 15% 15% 14% Dow Top 5 MDI Wanhua Producers = 90% 2013 2014 2015 2016 2017 2018 1Q19 ���������� Crude MDI Capacity Size MDI Urethanes MTBE LTM Source: Management Estimates 6
Huntsman Polyurethanes Differentiation is a Continuum ~70% Mixed Isomers Differentiated Specialty MDI Variants Polyol Formulations & Monomeric MDI and (“Pure”) MDI Splitter Continuum of Differentiation Optimize splitter output Automotive Insulation Appliance for highest Systems Systems Furniture value split Adhesives & Coatings Systems Elastomers (TPU, Footwear, Polymeric Specialty Elastomers) Typical EBITDA Margin Range 15% to 30% MDI ~30% Component Continuum of Differentiation Adhesive Synthetic Insulation Components Leather Components Composite Appliance Wood Products Components Typical EBITDA Margin Range 10% to 20% Huntsman is focused on moving downstream while developing long-term relationships with stable margins in Component MDI. 7
Recommend
More recommend
