Huntsman Corporation

Greetings and welcome to the Huntsman Corporation fourth quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ivan Marcuse, VP of IR and Corporate Development. Thank you. You may begin.

Thank you, Daryl. Good morning, everyone. Welcome to Huntsman's fourth quarter 2024 earnings call. Joining us on the call today are Peter Huntsman, Chairman, CEO, and President, Phil Lister, Executive Vice President, and CFO. Yesterday, February 17, 2025, we released our earnings for the fourth quarter 2024 via press release and posted to our website, Huntsman.com. We also posted a set of slides and detailed commentary discussing the fourth quarter 2024 on our website. Peter Huntsman will provide some opening comments shortly, and we will then move to a question and answer session for the remainder of the call. During this call, let me remind you that we may make statements about our projections or expectations for the future. All such statements are forward-looking statements, and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures, such as adjusted EBITDA, adjusted net income or loss, and free cash flow. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website, huntsman.com. I'll now turn the call over to Peter Huntsman.

Ivan, thank you very much for that exciting preamble, and thank you all for taking the time to join us this morning. The purpose of my taking a few minutes to begin these calls is not simply adding more to our script. It is to make sure that we're sharing with you the most recent data and for me to share our views as to the direction of our company and key markets in real time. We've given you an outlook. on first quarter on a divisional basis, we're often asked why we don't give yearly guidance. As I look at markets and the geopolitical scene over the past two weeks, I think this provides ample reason why we are reluctant to try to plan much beyond three to six months as it relates to market conditions. I'll come back to those most recent conditions in a moment. I would also like to give some further clarity on the often used phrase, we will focus on the things which we can control. On our earnings call in October of 2022, reporting on the first quarter to see the full impact of Putin's invasion of Ukraine and Europe's failed energy policies, we stated that a new normal in Europe would include higher gas prices and recessionary conditions. To offset these actions, we announced initiatives to cut costs in excess of $40 million. We delivered those savings in less than 12 months. As it became clear that Europe's focus on deindustrialization was going faster than anyone expected, many global markets were slowing. We took further steps. We've continued to do so through 2023 and 2024. These include the closure and relocation of our Everberg Belgian R&D and European headquarter office. offices in the uk brazil argentina and chile we closed or sold polyurethane system houses in malaysia thailand indonesia italy and today announced the closures of our degendorf germany and king's lynn uk locations we've opened global business service hubs in san jose costa rica and crack out poland we expanded our kuala lumpur malaysia site and now have approximately 600 positions as we have reduced headcounts and costs in Basel, Brussels, and the Woodlands. In our advanced materials divisions, we've closed our BLR capacity in Alabama and sold our Harrison City, Pennsylvania facility. We also announced today that we'll be taking actions with regards to our Moores, Germany, Malay and Hydride facility. Also in early 2023, we closed on the sale of our textile effects division. We're not sitting about wondering what to do about Europe and other troubled areas. Decisions executed have more than offset over $150 million of global inflationary costs since 2022 and seen our SG&A drop by more than 6%. We continue to assess our global assets in all of our divisions, as I believe this industry will continue to see consolidation, divestitures, and acquisitions. We will not only look at our cost structure, but also our asset footprint. I believe that we're well positioned to benefit as demand and pricing recover. Lastly, I'd like to comment about our 2025 outlook. Rather than try to predict our earnings outcome a year from now, We need to focus on capitalizing on today's market forces. Just in the past two weeks, two such forces have emerged that have potentially longer-term ramifications. The first of these are the recent announcements on tariffs. By and large, the vast majority of what we produce in Europe, the U.S., and China stay within those regions. In fact, actions to date that have focused on imports into the U.S. will likely help our earnings. Needless to say, these tariffs are changing almost daily. But I feel we are quite well situated as we ship very little across the Atlantic or the Pacific Oceans. The second shift we are seeing is around recent price announcements in many of our products. I believe that MDI was among the first of the major chemical chains to drop in demand and margins. This was due to the simultaneous rise in interest rates that slowed North American construction and the collapse of the Chinese housing market. Europe's industrial decline and overcapacity as projects announced pre-COVID came on stream. I think Huntsman remained incredibly disciplined with respect to pricing. We previously announced volume due to this. We've stated on past calls that demand needs to return before pricing picks up. As we have reported in the past few quarters, we've seen volumes improve as de-inventoring has ceased and demand has tepidly returned. I believe that we're seeing some early signs of recovery in pricing and margins return. As of today, we are seeing publicly reported polymeric MDI prices in China at a three-year high. Huntsman has also announced a series of price increases in North America as well. Again, as publicly reported, we have seen others pushing for similar actions. It is challenging to say if these actions will be successful and how soon and to what segments they will stick. However, as we sit here today, it's fair to say that there are more positive than negative movement in the MDI industry. My personal feeling is that MDI was one of the first major chemical chains to drop and may well be among those that show signs of recovery earlier than other chains. 2025 will be a year wherein we will continue to minimize our cost structure, optimize our asset footprint, and aggressively push for margin expansion across the board. In short, we will not be sitting still this year. With that, operator, let's open the line up for any questions.