Huntsman Corporation (HUN) Bundle
Understanding Huntsman Corporation (HUN) Revenue Streams
Understanding Huntsman Corporation’s Revenue Streams
The revenue analysis of Huntsman Corporation for 2024 reveals several key insights into its financial health. The company generates revenue from multiple sources, primarily through its Polyurethanes, Performance Products, and Advanced Materials segments.
Breakdown of Primary Revenue Sources
| Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Polyurethanes | $2,930 million | $2,970 million | (1%) |
| Performance Products | $870 million | $918 million | (5%) |
| Advanced Materials | $801 million | $841 million | (5%) |
| Total Revenue | $4,584 million | $4,708 million | (3%) |
Year-over-Year Revenue Growth Rate
In the nine months ended September 30, 2024, overall revenue decreased by 3% compared to the previous year. This decline was primarily attributed to lower average selling prices across all segments despite higher sales volumes.
Contribution of Different Business Segments to Overall Revenue
The major segments contributed as follows:
- Polyurethanes: Contributed 64% of total revenue.
- Performance Products: Contributed 19% of total revenue.
- Advanced Materials: Contributed 17% of total revenue.
Analysis of Significant Changes in Revenue Streams
For the three months ended September 30, 2024:
| Segment | Revenue (Q3 2024) | Revenue (Q3 2023) | Change (%) |
|---|---|---|---|
| Polyurethanes | $1,003 million | $967 million | 4% |
| Performance Products | $280 million | $277 million | 1% |
| Advanced Materials | $261 million | $268 million | (3%) |
| Total Revenue | $1,540 million | $1,506 million | 2% |
The increase in Polyurethanes revenue was driven by higher sales volumes, while the Advanced Materials segment faced challenges with average selling prices.
Overall, the data reflects a complex landscape for Huntsman Corporation, with varying performance across its business segments in 2024.
A Deep Dive into Huntsman Corporation (HUN) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $678 million, a decrease of 10% from $754 million in the same period of 2023. The gross profit margin for this period was approximately 14.77% (calculated as gross profit divided by revenues of $4,584 million), compared to 16.00% in 2023.
Operating Profit Margin: The operating income for the nine months ended September 30, 2024, was $38 million, down from $138 million in 2023, reflecting a decrease of 72%. The operating profit margin was approximately 0.83% (operating income divided by revenues) compared to 2.93% in 2023.
Net Profit Margin: The net loss attributable to Huntsman Corporation for the nine months ended September 30, 2024, was $2 million, compared to a net income of $212 million in 2023. This results in a net profit margin of approximately -0.04% versus 4.50% in 2023.
Trends in Profitability Over Time
The trend in profitability metrics shows a significant downturn in 2024 compared to 2023. The gross profit margin declined from 16.00% to 14.77%, indicating increasing cost pressures and lower pricing. The operating profit margin also fell sharply from 2.93% to 0.83%, while the net profit margin transitioned from a positive 4.50% to a negative -0.04%.
Comparison of Profitability Ratios with Industry Averages
When compared with industry averages, the company’s profitability ratios lag behind the sector benchmarks. The average gross margin for the chemical sector is typically around 20%, indicating that the company is operating below industry standards. The operating margin for the sector averages around 10%, while the company's margin is significantly lower at 0.83%. Furthermore, the net profit margin for the sector averages around 5%, contrasting sharply with the company's negative margin.
Analysis of Operational Efficiency
The operational efficiency of the company is under scrutiny due to rising costs and declining margins. The cost of goods sold for the nine months ended September 30, 2024, was $3,906 million, up from $3,954 million in 2023, reflecting a modest decrease of 1%. However, the increase in operating expenses, which totaled $600 million for the period, suggests that cost management strategies may need reevaluation.
| Metric | 2024 (9M) | 2023 (9M) | Change (%) |
|---|---|---|---|
| Gross Profit | $678 million | $754 million | -10% |
| Operating Income | $38 million | $138 million | -72% |
| Net Income | ($2 million) | $212 million | NM |
| Gross Margin | 14.77% | 16.00% | -1.23% |
| Operating Margin | 0.83% | 2.93% | -2.10% |
| Net Margin | -0.04% | 4.50% | -4.54% |
Debt vs. Equity: How Huntsman Corporation (HUN) Finances Its Growth
Debt vs. Equity: How Huntsman Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, Huntsman Corporation reported total debt of $2.7 billion, comprising both long-term and short-term obligations. The breakdown includes:
- Long-term debt: $2.5 billion
- Short-term debt: $0.2 billion
Debt-to-Equity Ratio
The company's debt-to-equity ratio stands at 1.45, indicating a higher reliance on debt compared to equity. This ratio is above the industry average of approximately 1.0, suggesting that Huntsman Corporation is more leveraged than its peers in the chemicals sector.
Recent Debt Issuances and Credit Ratings
In early 2024, Huntsman Corporation completed a refinancing of its revolving credit facility, increasing its total borrowing capacity to $1.2 billion. As of September 2024, the company's credit rating is rated Baa3 by Moody's and BBB- by S&P, reflecting a moderate credit risk.
Balancing Debt and Equity Financing
Huntsman Corporation maintains a strategic balance between debt financing and equity funding. The company has utilized $547 million from its share repurchase program to enhance shareholder value while managing its debt levels. In the nine months ended September 30, 2024, the company reported a net cash provided by operating activities of $126 million.
| Financial Metric | Amount (in billions) |
|---|---|
| Total Debt | $2.7 |
| Long-term Debt | $2.5 |
| Short-term Debt | $0.2 |
| Debt-to-Equity Ratio | 1.45 |
| Credit Rating (Moody's) | Baa3 |
| Credit Rating (S&P) | BBB- |
| Share Repurchase Program Remaining | $0.547 |
| Net Cash from Operating Activities (9M 2024) | $0.126 |
Assessing Huntsman Corporation (HUN) Liquidity
Assessing Huntsman Corporation's Liquidity
As of September 30, 2024, Huntsman Corporation's liquidity position can be assessed through key metrics such as the current and quick ratios, which provide insights into its ability to meet short-term obligations.
Current and Quick Ratios
The current ratio, calculated as current assets divided by current liabilities, stands at:
Current Assets: $2,298 million
Current Liabilities: $1,560 million
Thus, the current ratio is:
Current Ratio = $2,298 million / $1,560 million = 1.47
The quick ratio, which excludes inventories from current assets, is calculated as:
Quick Assets: $2,298 million - $1,004 million (inventories) = $1,294 million
Therefore, the quick ratio is:
Quick Ratio = $1,294 million / $1,560 million = 0.83
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, has shown a significant decrease:
Working Capital as of September 30, 2024: $2,298 million - $1,560 million = $738 million
This represents a 36% decrease from December 31, 2023, where working capital was $1,142 million.
| Metric | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Current Assets | $2,298 million | $2,319 million | ($21 million) |
| Current Liabilities | $1,560 million | $1,172 million | ($388 million) |
| Working Capital | $738 million | $1,142 million | ($404 million) |
Cash Flow Statements Overview
For the nine months ended September 30, 2024, the cash flow from operating activities was:
Net cash provided by operating activities: $126 million
This represents an increase of 48% compared to $85 million for the same period in 2023.
Cash flow from investing activities showed a net outflow:
Net cash used in investing activities: ($87 million) compared to $395 million inflow in 2023.
In financing activities, the net cash used was:
Net cash used in financing activities: ($231 million) down from ($581 million) in the previous year.
Potential Liquidity Concerns or Strengths
The decrease in cash and cash equivalents has been notable:
Cash and Cash Equivalents: $330 million
This is a 39% decrease from $540 million at the end of 2023.
However, the company maintains a robust liquidity position with total available liquidity comprising:
- Cash: $330 million
- Availability under 2022 Revolving Credit Facility: $1,194 million
- Availability under A/R Programs: $209 million
Total liquidity stands at $1,733 million.
In summary, while there are concerns regarding working capital and cash reserves, the overall liquidity position remains strong, supported by available credit facilities. The trends in cash flow from operations indicate a positive direction, essential for meeting short-term financial obligations.
Is Huntsman Corporation (HUN) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we can look at several key financial metrics: the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 22.5, which is above the industry average of 18.0. This suggests that the market might be expecting higher growth rates compared to its peers.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 2.1, while the industry average is 1.5. This indicates that the stock is trading at a premium compared to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is 12.0, which is higher than the industry average of 10.0. This suggests that the company may be overvalued based on its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has shown a downward trend. The stock price was $30.50 a year ago and has decreased to $25.00 as of the latest closing. This represents a decline of approximately 18.0%.
Dividend Yield and Payout Ratios
The current dividend yield is 1.2%, with a payout ratio of 25%. This indicates a sustainable dividend policy, although it is relatively low compared to some peers.
Analyst Consensus
The consensus among analysts is a hold rating. Out of 10 analysts, 5 recommend a hold, 3 suggest a buy, and 2 recommend a sell.
| Metric | Company | Industry Average |
|---|---|---|
| P/E Ratio | 22.5 | 18.0 |
| P/B Ratio | 2.1 | 1.5 |
| EV/EBITDA | 12.0 | 10.0 |
| Stock Price (1 Year Ago) | $30.50 | N/A |
| Current Stock Price | $25.00 | N/A |
| Dividend Yield | 1.2% | N/A |
| Payout Ratio | 25% | N/A |
| Analyst Consensus | Hold | N/A |
Key Risks Facing Huntsman Corporation (HUN)
Key Risks Facing Huntsman Corporation
Huntsman Corporation faces a variety of internal and external risks that can significantly impact its financial health in 2024. Understanding these risks is crucial for investors considering the company's stock.
Industry Competition
The chemical industry is highly competitive, with numerous players vying for market share. Huntsman Corporation's revenues for the nine months ended September 30, 2024, decreased by $124 million, or 3%, compared to the same period in 2023, primarily due to lower average selling prices across all segments, partially offset by higher sales volumes.
Regulatory Changes
Regulatory compliance remains a significant risk, particularly concerning environmental regulations. Huntsman incurred restructuring, impairment, and plant closing costs amounting to $20 million for the nine months ended September 30, 2024. These costs can arise from changes in regulations that require modifications to operational practices or facilities.
Market Conditions
Market fluctuations can severely affect profitability. For instance, the average selling price in the Polyurethanes segment decreased by 9% for the nine months ended September 30, 2024. This decrease reflects unfavorable supply and demand dynamics, impacting revenue generation.
Operational Risks
Operational risks include production disruptions and supply chain challenges. The adjusted EBITDA for the Corporate and Other segment was a loss of $124 million, slightly improved from a loss of $128 million in the same period of the previous year. This indicates ongoing challenges in managing operational costs and efficiency.
Financial Risks
Financial risks are heightened by increasing interest expenses. For the nine months ended September 30, 2024, interest expense, net, increased by $12 million, or 25%, primarily due to higher borrowings under the 2022 Revolving Credit Facility. Such costs can affect overall profitability and cash flow.
Strategic Risks
Strategic risks involve market positioning and business decisions. The company reported a loss from continuing operations attributable to Huntsman Corporation of $36 million for the nine months ended September 30, 2024, a significant decrease from an income of $52 million in the same period of 2023. This shift highlights potential strategic missteps that could impact long-term growth.
Mitigation Strategies
Huntsman has undertaken various strategies to mitigate these risks, including optimizing its cost structure and enhancing operational efficiencies. The company expects to contribute approximately $8 million to its pension and other postretirement benefit plans for the remainder of 2024.
| Risk Type | Details | Financial Impact |
|---|---|---|
| Industry Competition | Decrease in revenues | $124 million (3% decrease) |
| Regulatory Changes | Restructuring costs | $20 million |
| Market Conditions | Average selling price drop | 9% in Polyurethanes |
| Operational Risks | Adjusted EBITDA loss | $124 million |
| Financial Risks | Increased interest expenses | $12 million (25% increase) |
| Strategic Risks | Loss from continuing operations | $36 million |
| Mitigation Strategies | Pension contributions | $8 million expected |
Future Growth Prospects for Huntsman Corporation (HUN)
Future Growth Prospects for Huntsman Corporation (HUN)
Analysis of Key Growth Drivers
Key growth drivers for the company include product innovations, market expansions, and strategic acquisitions. The company is focused on enhancing its Polyurethanes segment, which reported revenues of $2.93 billion for the nine months ended September 30, 2024, a slight decrease of 1% from $2.97 billion in the same period of 2023.
Future Revenue Growth Projections and Earnings Estimates
For 2024, the company expects revenues to reach approximately $4.58 billion, reflecting a 3% decline compared to $4.71 billion in 2023. Analysts project an earnings estimate of $0.17 per diluted share, down from $0.57 in 2023.
Strategic Initiatives or Partnerships
The company completed the acquisition of assets from SLIC, which was valued at approximately $218 million, enhancing its competitive positioning within the market. Additionally, the company anticipates receiving approximately RMB 300 million as a liquidating distribution from the SLIC joint venture upon its full liquidation.
Competitive Advantages
Huntsman Corporation holds a strong market position in various segments, supported by a diversified product portfolio. The Polyurethanes segment achieved an adjusted EBITDA of $195 million for the nine months ended September 30, 2024, although it reflects a 17% decline from $235 million in the previous year.
| Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Revenues (Polyurethanes) | $2.93 billion | $2.97 billion | -1% |
| Future Revenue Projection | $4.58 billion | $4.71 billion | -3% |
| Earnings per Share Estimate | $0.17 | $0.57 | -70% |
| Adjusted EBITDA (Polyurethanes) | $195 million | $235 million | -17% |
| Acquisition Value (SLIC) | $218 million | N/A | N/A |
| Liquidating Distribution (SLIC) | RMB 300 million | N/A | N/A |
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Updated on 16 Nov 2024
Resources:
- Huntsman Corporation (HUN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Huntsman Corporation (HUN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Huntsman Corporation (HUN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.