Huntsman Q3 Earnings Call Highlights

Key Points

• Huntsman expects to increase 2026 EBITDA by more than $100 million versus 2025, relying on cost control, pricing and operating discipline despite weak housing demand and challenging chemical markets.
• The planned Olin merger, expected to close early next year, is central to the company’s strategy: management is increasingly confident in $300 million of synergies, with another $100 million possible as chlorine contracts expire.
• Advanced Materials is growing on aerospace and power-grid demand, while Huntsman generated $82 million in Q3 free cash flow and expects a substantial Q4 cash inflow from working-capital changes.

Huntsman NYSE: HUN executives said the company expects to improve 2026 EBITDA by more than $100 million from 2025 despite weak housing activity, elevated energy costs and persistent uncertainty across global chemical markets.

Chairman, CEO and President Peter Huntsman said the company has emphasized cost control, pricing and operating discipline as higher mortgage rates, sluggish housing starts and weak consumer confidence have weighed on demand. He said the industry may face another year of challenging conditions and that the company cannot wait for a broad macroeconomic recovery.

“We need to be able to do more than simply wait around for times to get better,” Peter Huntsman said.

Olin merger remains central to 2027 strategy

Peter Huntsman said the planned merger of equals with Olin Corp. is expected to close early next year, subject to the remaining closing process. The combined company, referred to by management as OlinHuntsman, is expected to pursue $300 million in synergies, with an additional $100 million expected as chlorine contracts expire.

He said integration teams have developed clearer responsibilities, execution plans and timing since the merger was announced. While he characterized the initial $300 million target as an objective based on broader estimates, he said he has become “very, very confident” in the synergy figure as the companies have advanced their planning.

Management expects the combination to provide a larger asset base, greater supply-chain integration and more flexibility to review the combined portfolio and balance sheet. Peter Huntsman said upstream integration spanning products including caustic soda, chlorine, vinyl chloride monomer and ethylene dichloride would strengthen the company’s competitive position.

He also pointed to the combined company’s North American footprint, where energy and raw-material costs are more competitive, as well as growth opportunities in Asia. In Europe, the company plans to continue investing in higher-margin applications such as aerospace, electric-vehicle battery materials and power-grid infrastructure while evaluating areas facing structurally high energy costs.

Polyurethanes outlook shaped by seasonality and raw materials

In North American MDI markets, Peter Huntsman said the fourth quarter will be affected by normal seasonal slowing, inventory adjustments and higher raw-material costs. He noted that imports into North America have declined over the past year, which could be supportive for domestic producers if the trend continues.

New MDI capacity is likely to create a “bumpy, transitory time,” he said, as new domestic supply replaces material that historically came from imports. Still, he said Huntsman is focused less on industry capacity utilization and more on expanding margins, managing fixed and variable costs, generating cash and developing technology-driven opportunities.

Peter Huntsman said Huntsman would not pursue a grassroots MDI facility on its own, arguing that there is already sufficient global capacity for years to come. He said the company will continue to seek growth in applications outside residential construction, including elastomers, automotive, aerospace, appliances, electric vehicles, lightweight materials and coatings.

North American spray foam and insulation markets remain pressured by softer construction and renovation activity, although Peter Huntsman said the company’s sales in those areas were up low single digits from the prior year. He said more substantial growth will likely depend on a broader recovery in housing.

For 2027, Peter Huntsman estimated industry MDI growth could be roughly flat to similar to the approximately 2% growth seen in 2026. He said homebuilders and construction customers are adapting to higher rates by considering smaller homes, fewer basements and more townhouses.

Europe faces energy pressure, while advanced materials grows

Executives continued to describe Europe as a difficult operating environment, citing high energy costs, interest expenses and broader de-industrialization pressures. Peter Huntsman said European natural-gas prices of roughly $34 to $35 per MMBTU were about 20 times levels in West Texas and along the Houston Ship Channel.

The company is reviewing its own operations as well as the financial health of suppliers and their suppliers, he said. Huntsman has led seven price-increase initiatives during the past year, with varying levels of industry support. The company is also seeking contract extensions and supplier arrangements that could reduce near-term pressure.

Nevertheless, Peter Huntsman said Europe remains the world’s second-largest MDI market after China and offers growth opportunities in aerospace, grid infrastructure, EVs and automotive applications. He said Huntsman’s European automotive applications grew more than 10% year over year, reflecting new applications rather than an equivalent increase in vehicle production.

Advanced Materials has benefited from prior investments in technology, applications and acquisitions, management said. Peter Huntsman said aerospace qualifications can require years, creating barriers for potential competitors. He expects the segment to continue delivering GDP-plus growth through 2027, supported by aerospace, power and industrial demand.

Chief Financial Officer Phil Lister said Advanced Materials volume growth was spread across all three global regions, supported by aerospace demand and power-grid investment. He added that the company has sufficient capacity to serve additional demand in its power-related businesses.

Cash flow and China market commentary

Lister said Huntsman generated $82 million of free cash flow in the third quarter and expects a substantial cash inflow in the fourth quarter as working capital unwinds. The company expects capital expenditures of about $160 million for the full year and remains confident it can cover its dividend from full-year cash generation, he said.

Management said China’s domestic economy appeared stable, though growth has been driven primarily by exports. Peter Huntsman said China remains an important long-term market despite the effects of Chinese exports on global chemical pricing, noting that prior capacity investments were made during the country’s prolonged housing boom.

For the company’s Chinese PO/MTBE joint venture, Lister said MTBE margins had declined somewhat during the prior three to four weeks, while propylene oxide margins remained relatively strong. He said fourth-quarter results for the venture were expected to be broadly similar to the third quarter and to the prior-year fourth quarter.

Looking toward 2027, Peter Huntsman said the company expects gains to come from numerous smaller initiatives, including pricing discipline, cost management, performance amines used in chip production and cleaning solutions, and continued growth in advanced materials. He said Huntsman expects 2027 to be materially better than 2026, though he did not provide specific standalone EBITDA guidance.

About Huntsman (NYSE:HUN)

Huntsman Corporation NYSE: HUN is a global manufacturer of differentiated and commodity chemical products. Founded in 1970, the company develops and produces materials used by manufacturers in a broad range of industries, including construction, automotive, aerospace, electronics, energy, coatings, adhesives and consumer products.

Huntsman's principal businesses include polyurethane products, performance products and advanced materials. Its portfolio includes polyurethane systems and intermediates, epoxy and other specialty resins, curing agents, amines, maleic anhydride and other chemicals used in insulation, composites, coatings, adhesives and industrial applications.

The company serves customers internationally through manufacturing facilities, research and development operations, and sales offices in North America, Europe, Asia-Pacific and other regions.

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