Huntsman Corp Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Kevin McCarthy - Vertical Research Partners - Analyst : Peter, I appreciate your description regarding what I would call a bullwhip effect. It strikes me that one of the things that might be a little bit different today is inventory levels are generally leaner than they were a few years ago. So I was wondering if you could speak to that. Where are you seeing the most pronounced bullwhip effect or volume reductions? And where do you think there might be pockets of inventory more elevated or leaner, would be my first question.

Question: Kevin McCarthy - Vertical Research Partners - Analyst : And then as a follow-up, would you have a guess as to how much the total company volume might have been down, if it was down, in the month of April, and how the order books are shaping up for May?

Question: Patrick Cunningham - Citigroup - Analyst : The trade uncertainty is clearly overwhelming everything, but one of the goals is to increase US manufacturing and maybe you'll get some tailwinds for housing and infrastructure. How do you view the growth potential longer term if the policies work as intended? And how would you further reposition your asset footprint if we live in this protectionist world?

Question: Patrick Cunningham - Citigroup - Analyst : Understood. Very helpful. And could you provide an update on the spray foam business? Has this business seen a similar disconnect in downstream demand versus your orders? And do you expect any sort of further pressure on this market just given homebuilders are under pressure at this point?

Question: Jeffrey Zekauskas - J.P. Morgan - Analyst : Can you talk about pricing in MDI in North America? It seems that the major producers went out with meaningful price increases. What happened and what continues to happen?

Question: Jeffrey Zekauskas - J.P. Morgan - Analyst : Okay. And then for Phil, I think inventories went up $100 million roughly sequentially. Is that mostly because your demand was less than you expected and you need to move your operating rates down? And do you have any estimates for whether working capital will be a benefit or a [use] this year?

Question: Joshua Spector - UBS - Analyst : Good morning. I wanted to ask two things. First, on the trade balances for MDI. I mean, at least on the data that we have through February, it looks like there's been a tick up in Germany imports into the US. So as China backs out, do you see a scenario where Europe fills in that gap? Or do US assets move up much more to fill that? I don't know if that's internal transfers of a competitor or something else going on or something with the market. And then second, just with your US pricing where you have spread pass-throughs or benzene pass-throughs, how do those contracts renegotiate? What's your ability to increase those spreads separate from the price increases?

Question: Aleksey Yefremov - KeyBanc Capital Markets - Analyst : Peter, to continue with this line of questioning, can Chinese exporters shift to moving MDI to Canada and Mexico? And would your customers be able to ship their consumption to those two countries?

Question: Aleksey Yefremov - KeyBanc Capital Markets - Analyst : Makes sense. And I wanted to ask you about the dividend. Can you share anything about how the Board thinks on this topic? Is the dividend something you're really determined to keep at this level? Or is there a good argument to sderisk the balance sheet and adjust it since free cash flow has been weaker for a while? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, HUN.N - Q1 2025 Huntsman Corp Earnings Call

Question: Michael Harrison - Seaport Global - Analyst : Peter, along with all the tariff-related uncertainty, you guys had a turnaround going on at Rotterdam that, I think, bled into the second quarter, too. The unplanned outage at the maleic facility in Germany, it sounds like there was a fire at an automotive customer facility. Can you quantify the impact of those disruptions to EBITDA in Q1? And then Phil mentioned some more planned turnarounds for Q2. How much headwind is baked into the EBITDA guidance from those planned, I guess, disruptions or turnarounds?

Question: Michael Harrison - Seaport Global - Analyst : All right. And then the Geismar and China, and I think you mentioned another facility for Q2, are those pretty modest in terms of impact for Q2?

Question: Michael Sison - Wells Fargo Securities - Analyst : Peter, some of the consultants see a pretty good increase in MDI margins sequentially in 2Q versus 1Q driven by pricing. What are your thoughts in terms of industry profitability heading into 2Q?

Question: Michael Sison - Wells Fargo Securities - Analyst : Got it. And then I understand that it's difficult to take a look beyond 2Q, but what do you think you need to see or want to see to have a better second half in terms of earnings versus the first half? And if the US economy goes into a recession, albeit it seems like we've been in a chemical recession for quite some time, what happens? What do you think you need to do to keep earnings at these levels?

Question: Arun Viswanathan - RBC Capital Markets - Analyst : I guess I had a question about the guidance. So it looks like your first half now is -- will be coming in around 150 or in that range. And if you were to annualize it and adding some seasonality, you get to like a 350 range, which is I think, quite a bit below what we started the year expecting. So obviously, Peter, you went through a lot of the potential pullback amongst your customers and then the potential positive bullwhip effects that can follow that. But am I thinking about your level of confidence in EBITDA for the year in the right way? I just don't want to get ahead of our skis here just given all that uncertainty out there. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, HUN.N - Q1 2025 Huntsman Corp Earnings Call

Question: John Roberts - Mizuho Securities - Analyst : Are you seeing uniform weakness across composite wood versus automotive versus insulation? Or is there some differentiation there? And then secondly, during 2020, a lot of the small spray foam customers got stimulus, at least to keep them going. Do you think they'd survive this correction right now?

Question: Frank Mitsch - Fermium Research - Analyst : Congrats to Tony Hankins on his pending retirement. It was a pleasure to work with him. And by the way, I'm not sure if it was just me, but in the last 5 minutes or so, the conference call has been coming in and out. Perhaps it was just my phone. But Peter, I appreciate the reference to COVID in terms of the paralysis that we're seeing now. But as I took a look back at COVID, and really, it was just one quarter. It was the second quarter of '20 that was very poor. The first quarter and third quarter of '20, you posted very strong results. And here we are, it looks like the second quarter is the third quarter of really poor results. I mean is this systematic? Or you believe that it's episodic in that we're going to get out of it and you're going to go back to posting kind of $200 million-type EBITDA quarters? What gives you confidence that this is not a systemic decline in your business lines?

Question: Frank Mitsch - Fermium Research - Analyst : Okay. Understood. And can you provide an update on the maleic facility in Europe? It seems like a couple of things happened there. One, you're looking to make a decision on it, I think, by midyear. But then you also had an unplanned outage. What's going on there? How should we think about that?

Question: Salvator Tiano - Bank of America - Analyst : So firstly, on MDI, I wanted to ask how are you so far in Q1 or in Q2 managing your MDI system, specific your upstream MDI plants given the reduced demand? And specifically on Geismar, I remember a little bit over a year ago, you brought online or you restarted the smaller of the units there. So is this something that you may have to stop using again? Or are you still producing in Q1?

Question: Salvator Tiano - Bank of America - Analyst : Great. Perfect. And I wanted to follow up on the PO/MTBE JV in China and if you can give a little bit more outlook now on what you expect for perhaps the next few quarters. And if there's any more clarity, I guess, on what would be the deal that you receive on 2026 based on what is happening right now in earnings.

Question: Matthew Blair - Tudor, Pickering, Holt & Co. - Analyst : Can I ask a question on the debt picture here? So you took care of some notes in the first quarter. I think you stand around 4 times net levered on an LTM basis. If we look at that more on an annualized first half basis, you're around 5.5 times net leverage. Do you need to reduce debt? Or are you still comfortable with where you're at?

Question: Matthew Blair - Tudor, Pickering, Holt & Co. - Analyst : Sounds good. And then I think the prepared comments mentioned that your construction volumes for your overall business were down 6% quarter-over-quarter in Q1, which seems like an unusual counter-seasonal move. Was that weakness coming more from commercial or more from the residential side?

Question: Emily Flusco - Deutsche Bank - Analyst : This is Emily Fusco on for Dave Begleiter. You announced the doubling of your cost savings to $100 million. Do you have any early preview of where these savings will be coming from?

Question: Hassan Ahmed - Alembic Global Advisors - Analyst : Peter and Phil, apologies if someone has asked this question previously. My line was cutting in and out. Just wanted to revisit some of the commentary around MDI. Specifically, you talked about 20% to 25% of US MDI demand being met via exports from China. I mean, look, I completely understand that it's highly unpredictable what the future of these tariffs will be. But I mean, when I sit there and think about the impact of tariffs and above and beyond that, more specifically for MDI, the whole antidumping investigation that's going on, I think it's obviously fair to assume that Chinese product in a tariff world and an antidumping world, there will be duties on that product. So am I missing something? Because it just seems beyond some of these very near-term trends of loading up on sort of Chinese exports into the US market and the issues caused by that in the near term, I mean, beyond the near term, the setup actually seems highly favorable if you're producing product in the US. Am I thinking about this the right way?

Question: Hassan Ahmed - Alembic Global Advisors - Analyst : No worries at all. And as a quick follow-up, obviously, uncertainty in -- I mean, if I were a Chinese polyurethane producer facing these headwinds, I guess, I would probably be thinking about maybe some rationalization. And adding to those walls, I mean, of course, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 2:00PM, HUN.N - Q1 2025 Huntsman Corp Earnings Call China imports around 40% to 50% of their LPG needs, propane in particular, from the US, right? And obviously, on the surface, it seems that those are going to be tariffed as well. And if you take a look at the last couple of years, China has more than doubled its PDH capacity, right? So all of a sudden, in that tariffed world, I'd like to think that-- maybe there will be some shuttering of those PDH units because they'll become highly uneconomic, right, which, in theory, will impact propylene supply and which, in theory, could impact PO and all urethane economics. So I mean, again, is that the right way of thinking about it? And are you seeing any indications of rationalization on the back of all of these headwinds?