Huntsman posts new record in quarterly earnings

Textile Effects

The increase in revenues in our Textile Effects division for the three months ended September 30, 2012 compared to the same period in 2011 was primarily due to higher sales volumes, partially offset by lower average selling prices.  Sales volumes increased due to increased market share in key markets, notably Asia. 

Average selling prices decreased primarily due to the strength of the U.S. dollar against major international currencies.  The increase in adjusted EBITDA was primarily due to higher sales volumes and lower manufacturing and selling, general and administrative costs as a result of recent restructuring efforts.

Pigments

The decrease in revenues in our Pigments division for the three months ended September 30, 2012 compared to the same period in 2011 was due to lower sales volumes.  Sales volumes decreased primarily due to lower global demand.  The increase in local currency average selling prices was offset by the strength of the U.S. dollar against major international currencies.  The decrease in adjusted EBITDA was primarily due to lower sales volumes and higher raw material costs.

Corporate, LIFO and Other

Adjusted EBITDA from Corporate, LIFO and other increased by $12 million to a loss of $37 million for the three months ended September 30, 2012 compared to a loss of $49 million for the same period in 2011.  The increase in adjusted EBITDA was primarily the result of a $10 million decrease in LIFO inventory valuation expense ($2 million of income in 2012 compared to $8 million of expense in 2011).

Liquidity, Capital Resources and Outstanding Debt

As of September 30, 2012, we had $1,038 million of combined cash and unused borrowing capacity compared to $1,043 million at December 31, 2011.  For the three months ended September 30, 2012, our primary net working capital increased by $10 million and we generated $208 million in cash from operations.

During the third quarter 2012 we prepaid $75 million of our senior secured term loans.  During October, 2012 we prepaid an additional $50 million of our senior secured term loan.

Total capital expenditures for the three months ended September 30, 2012 were $85 million.  We expect to spend approximately $425 - $450 million on capital expenditures in 2012 which approximates our annual depreciation and amortization. 

Income Taxes

During the three months ended September 30, 2012 we recorded income tax expense of $61 million.  Our adjusted effective income tax rate for the three months ended September 30, 2012 was approximately 31%.  We expect our long term effective income tax rate to be approximately 30 - 35%.  During the three months ended September 30, 2012, we paid $83 million in cash for income taxes. 

Huntsman Corporation