First Quarter Highlights
- First quarter 2021 net income of $100 million compared to net income of $708 million in the prior year period; first quarter 2021 diluted earnings per share of $0.37 compared to diluted earnings per share of $3.16 in the prior year period.
- First quarter 2021 adjusted net income of $147 million compared to adjusted net income of $65 million in the prior year period; first quarter 2021 adjusted diluted earnings per share of $0.66 compared to adjusted diluted earnings per share of $0.29 in the prior year period.
- First quarter 2021 adjusted EBITDA of $289 million compared to adjusted EBITDA of $165 million in the prior year period.
- First quarter 2021 net cash used in operating activities from continuing operations of $16 million. Free cash flow from continuing operations was a use of $114 million for the first quarter 2021.
- Balance sheet remains strong with a net leverage of 1.2x and total liquidity of approximately $2.1 billion. Redeemed in full €445 million (approximately $541 million) in aggregate principle amount of our 5.125% senior notes due 2021 at par from available cash on January 15, 2021.
- In our Company wide optimization efforts, we remain on target to achieve annualized savings and acquisition integration synergies in excess of $120 million by mid-2023.
- Recently the Board approved a 15% dividend increase per annum from $0.65 per share to $0.75 per share.
Peter R. Huntsman, Chairman, President and CEO, commented:
“First quarter 2021 results in each of our business segments exceeded our expectations as the economic recovery accelerated through the quarter. Specifically, the strength of our businesses during March more than offset the headwinds experienced from Winter Storm Uri in February. Furthermore, the seasonal expected use of cash in the first quarter was less than anticipated due to the better than expected operating results and lower net working capital levels. Our balance sheet leverage and liquidity remain strong and gives us ample flexibility to continue to develop and expand our core businesses through both internal investments and acquisitions in line with our strategy. Because of our strong balance sheet and confidence in the consistent generation of solid free cash flow, I am pleased we can increase our quarterly dividend by 15%. The year has started off well and if current trends hold, we expect 2021 to be a very good year for the Company.”
Segment Analysis for 1Q21 Compared to 1Q20
Polyurethanes
The increase in revenues in our Polyurethanes segment for the three months ended March 31, 2021 compared to the same period of 2020 was largely due to higher MDI average selling prices. MDI average selling prices increased mostly in China and Europe. Even though demand was strong in the quarter, overall volumes were largely flat and MDI volumes decreased because of a previously disclosed turnaround at our Geismar, Louisiana facility, some unplanned downtime resulting from the U.S. Gulf Coast Winter Storm Uri as well as the planned build-up of inventory ahead of our scheduled maintenance outage at our Rotterdam, Netherlands facility. The increase in segment adjusted EBITDA was primarily due to higher MDI margins resulting from higher MDI pricing.
Performance Products
The increase in revenues in our Performance Products segment for the three months ended March 31, 2021 compared to the same period of 2020 was primarily due to higher average selling prices, partially offset by lower sales volumes. Average selling prices increased primarily due to stronger demand in relation to the ongoing recovery from the global economic slowdown as well as in response to an increase in raw material costs. Sales volumes decreased primarily due to the U.S. Gulf Coast Winter Storm Uri that occurred in the first quarter of 2021. The increase in segment adjusted EBITDA was primarily due to lower fixed costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the three months ended March 31, 2021 compared to the same period in 2020 was primarily due to higher average selling prices and the favorable impact of including the CVC Thermoset Specialties and Gabriel acquisitions in the current year period. Excluding acquisitions, and with the exception of our global aerospace business, sales volumes increased across all markets, primarily in relation to the ongoing recovery from the global economic slowdown. Average selling prices increased largely due to the impact of a weaker U.S. dollar against major international currencies and in response to higher raw material costs. The decrease in segment adjusted EBITDA was primarily due to lower aerospace sales volumes, partially offset by the benefit from including the CVC Thermoset Specialties and Gabriel acquisitions in the current year period.
Textile Effects
The increase in revenues in our Textile Effects segment for the three months ended March 31, 2021 compared to the same period of 2020 was largely due to higher sales volumes, partially offset by lower average selling prices. Sales volumes increased primarily due to increased demand resulting from the ongoing recovery from the global economic slowdown, particularly in Asia. The increase in segment adjusted EBITDA was primarily due to higher sales revenues and lower costs.
Corporate, LIFO and other
For the three months ended March 31, 2021, adjusted EBITDA from Corporate and other decreased by $5 million to a loss of $50 million from a loss of $45 million for the same period of 2020.
Liquidity and Capital Resources
During the three months ended March 31, 2021, our adjusted free cash flow from continuing operations was a use of $114 million as compared to a use of $99 million in the prior year period. As of March 31, 2021, we had approximately $2.1 billion of combined cash and unused borrowing capacity.
During the three months ended March 31, 2021, we spent $98 million on capital expenditures as compared to $61 million in the same period of 2020. For 2021 we expect to spend approximately $330 million on capital expenditures.
Income Taxes
In the first quarter 2021, our adjusted effective tax rate was 23%. For 2021, our adjusted effective tax rate is expected to be approximately 22% – 24%.
