Huntsman CORP (HUN)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 came in soft: revenues $1.410B, adjusted EBITDA $72M, adjusted diluted EPS -$0.11, reflecting muted seasonal uplift, weaker volumes, FX headwinds, and outages; management emphasized “bullwhip” order volatility and elevated uncertainty in core end markets .
• Results were below S&P Global Wall Street consensus: revenue missed by ~$80M, EBITDA by ~$6M, and EPS was slightly more negative than estimates; management doubled targeted cost savings to $100M and prioritized balance-sheet protection and cash generation (consensus figures marked with asterisk below; values retrieved from S&P Global) .
• Polyurethanes improved segment EBITDA YoY (+8%) on lower raw materials and fixed costs, but Performance Products (-29%) and Advanced Materials (-16%) deteriorated; corporate loss improved on lower overhead and FX gains .
• Catalysts ahead: US tariffs and a potential antidumping determination on Chinese MDI could structurally favor domestic producers; Q2 includes Rotterdam restart with an estimated $10M remaining headwind; dividend maintained at $0.25, and a strategic decision on European maleic anhydride expected by summer .

What Went Well and What Went Wrong

• What Went Well

  • Polyurethanes segment EBITDA rose to $42M (+8% YoY) on lower raw materials and fixed costs and higher volumes, despite unfavorable mix and FX headwinds .
  • Corporate/lIFO/other adjusted EBITDA improved to a loss of $36M from $43M, reflecting lower corporate overhead and FX gains .
  • Liquidity remained robust (~$1.3B combined cash and unused capacity); capex discipline ($36M in Q1) and an FY 2025 capex plan of $180–$190M maintained .
  • Management sees medium-term tailwinds from trade policy: “North American MDI tariffs… may have a greater impact on the Americas; Huntsman produces virtually all of our Americas material in North America.” .

• What Went Wrong

  • Consolidated revenue fell 4% YoY ($1.410B vs $1.470B); adjusted EBITDA declined to $72M (vs $81M YoY), and adjusted diluted EPS worsened (-$0.11 vs -$0.06 YoY) .
  • Performance Products revenue down 12% and segment EBITDA down 29% YoY, impacted by European demand softness and unplanned outages at Moers, Germany .
  • Advanced Materials revenue down 5% and segment EBITDA down 16% YoY due to lower average selling prices and FX; free cash flow was a $107M use (vs $105M YoY), highlighting working capital drag amid volatile orders .
  • Effective tax rate was 56% (adjusted not meaningful), amplifying the net loss; non-GAAP adjustments included $33M income from litigation affecting comparability .

Financial Results

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO on macro and tariffs: “North American MDI tariffs… may have a greater impact on the Americas. Huntsman produces virtually all of our Americas material in North America… we’re in an ideal location to benefit” .
• On order volatility: “There is a massive disconnect… between what’s being ordered and what’s being produced… the only parallel… is really 2020” .
• On pricing and margins: “Objective of our price increases was to expand margins… if we can do that by maintaining price and taking advantage of falling raw material prices, we’ll certainly do that” .
• On dividend: “The dividend has been something… very close to sacred… we feel very confident… to maintain the dividend” .
• On maleic Europe: “By the middle part of this year… announce a permanent decision… Europe continues to be flooded with maleic from China and indirectly from Russia via Turkey” .

Q&A Highlights

• Tariffs/antidumping and MDI imports: Management outlined three “buckets” (Section 301 ~31.5%, new tariffs ~145%, antidumping 3%–500% potential) and the multi-quarter timeline; believes outcomes could structurally favor domestic supply over imports .
• Pricing and pass-through: Roughly half of NA volume under pass-through; margin recapture possible over 3–6+ months for non-pass-through contracts, with inventory-lag dynamics when raw materials move .
• Operations: Rotterdam turnaround (~$15M H1 impact; $10M in Q2), Moers outage, ~$3M EV customer fire impact; smaller planned turnarounds in Geismar/Caojing/Conroe relatively modest .
• Cost actions: Targeted cost savings doubled to $100M, with details forthcoming; footprint rightsizing in spray foam (Canada consolidation to Arlington, TX) and select EU downstream closures .
• Balance sheet: ~$1.3B liquidity; net leverage elevated on LTM trough EBITDA but maturities are long-dated (‘29/’31/’34); management comfortable given cycle normalization potential .

Estimates Context

Where estimates may need to adjust:

• Lower near-term revenue/EBITDA on Q2 volume uncertainty, ongoing Rotterdam headwind, and European softness; medium-term upside if tariffs/antidumping structurally reduce imports and volumes normalize .

Key Takeaways for Investors

• Q1 2025 was softer than expected with broad-based demand caution; near-term trading should focus on order trajectory and inventory normalization into late Q2 .
• Tariffs and the pending antidumping case on MDI are potential medium-term structural tailwinds for Huntsman’s NA production footprint; monitor ITC/Commerce milestones (prelim by September, final by early 2026 per management’s outline) .
• Expect ~$10M residual Q2 EBITDA headwind from Rotterdam; watch for restart normalization and any offsets from pricing/raw materials .
• Segment mix matters: Polyurethanes improving on costs; watch Performance Products recovery post-Moers and Advanced Materials pricing dynamics; FX remains a headwind .
• Cost discipline and footprint optimization accelerating (target $100M savings); incremental announcements likely as EU decisions and spray-foam consolidation proceed .
• Dividend maintained ($0.25), supported by liquidity and non-operating cash sources (e.g., Praxair settlement), offering yield support at trough .
• Strategic review of European maleic anhydride due by summer; decision could improve portfolio quality and capital allocation .