Huntsman (NYSE:HUN) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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Summary
Huntsman reported stronger than expected demand and successful price increases to offset rising costs, particularly influenced by seasonality and supply chain disruptions.
The company plans to continue managing costs and expanding margins while focusing on stable and long-term demand trends to normalize margins.
Operational performance in the first quarter was strong, with high capacity utilization rates, particularly in the MDI and polyurethanes segments.
Management expressed cautious optimism about future demand sustainability, noting potential challenges from inflationary pressures and geopolitical uncertainties.
The company is seeing positive trends in advanced materials, driven by aerospace and power sectors, and expects continued traction in these areas.
Full Transcript
OPERATOR
Greetings. Welcome to Huntsman’s first quarter 2026 earnings call. This time all participants are in listen only mode. A question and answer session will follow today’s formal presentation. If anyone should require operator assistance during the conference, please press Star zero from your telephone keypad. Please note this conference is being recorded at this time. I’ll turn the conference over to Ivan Marcuse, Vice President of Investor Relations and Corporate Development. Thank you. You may now begin.
Ivan Marcuse (Vice President of Investor Relations and Corporate Development)
Thanks, Rob and good morning everyone. Welcome to Huntsman’s first quarter 2026 earnings call. Joining us on the call today are Peter Huntsman, Chairman, CEO and President, and Phil Lister, Executive Vice President and CFO. Yesterday, April 30, 2026, we released our earnings for the first quarter 2026 via press release and posted to our website, huntsman.com. we also posted a set of slides and detailed commentary discussing the first quarter 2026 on our website. Peter Huntsman will provide some opening comments shortly and we will then move to the 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 measure in our earnings release which has been posted to our website@huntsman.com. I’ll now turn the call over to Peter Huntsman, our Chairman and President.
Peter Huntsman (Chairman, CEO and President)
Ivan thank you very much. Thank you all for taking the time to join us this morning. Before I begin my remarks about our company and recent events, I want to simply say that I hope there is a quick and peaceful resolution to the ongoing conflict in the Middle east. Over the past 40 years, I’ve had the opportunity to visit every country bordering the Persian Gulf with the exception of Iraq. I have always been treated warmly and fairly by the people I’ve encountered. I hope that my comments do not come across as being callous in any way to the suffering and fear emanating from this region. As I address the economic impact of these events to our bottom line and industry. From the first hours of this conflict, our number one commercial priority has been to increase prices enough to offset rising costs. I believe we’ve been successful in doing this. This will require continued communications with our customers and suppliers and also the discipline to make sure that we are not a shock absorber between raw material costs and finished product pricing. Our next priority is operating our plants in a reliable manner to make sure that we have the product to meet our demand. Our operations during the first quarter and going into the second quarter have been excellent. From a sales perspective, we’re seeing stronger than expected demand going well into the second quarter. I would say that this is being brought about by three factors. Number one seasonality as we move into the second quarter and the building season resumes across North America, Europe and Asia. Number two customers who are buying ahead of the expected price increases that are being announced and number three disruptions that have been seen in certain trade flows that have impacted supply. An example of this would be some of our Malaysian customers in Europe who have become overly dependent on Chinese supplied maleic have seen a disruption in supply as raw materials and shipping costs have increased from that region. These three factors are also happening at a time when most inventory levels are very low across many supply chains. These improved order patterns are being seen as we enter into the second quarter in most of our regions and across many of our products. The obvious countervailing point to all of this is how long does it continue? I can’t see order patterns that go through the month of June, but the guidance that we have shared from each division in Q2 reflect what we’ve seen to date today. That visibility is less clear as we look further into the quarter. I struggle to see how inflationary pressures, particularly in areas reliant on imported energy like much of Asia and Europe, will not see an inevitable downward pressure later in the year as consumer spending gradually shifts towards higher prices. To what degree this occurs is yet to be seen. I am heartened to see the housing starts and durable good orders in the United States better than expected for the month of March. But I’m also keeping an eye on residential permits. A step that precedes Construction starts down 11% for the month of March. There will also be some longer term dislocation of traditional economics. If you were a producer that enjoyed discounted raw materials coming out of Venezuela, Iran and Russia a few months ago, it is likely that you’re not seeing such discounts today, and I highly doubt you’ll see them in the foreseeable future. Many customers are looking for closer and more secure sources of supply. Supply chains are shifting and being reassessed. I believe there will be some lasting impact for certain regions and products that may not seem too apparent today. It is simply too early to know how lasting some of these will be. In short, we are aggressively raising our prices to both cover our cost of our raw materials while also expanding margins from the trough economics that we’ve been experiencing for the past three years. We will continue to manage our costs and deliver these objectives on budget. We will be focused on volumes and make sure that spot buying also comes with longer term volumes and obligations. I’m glad to see the trends that we’re seeing in the second quarter, but we still have a ways to go to get to our normalized margin levels. This will require stable and longer term demand trends to continue. I feel that we are in a strong position today to capitalize on such changes going forward. Thank you operator with that will open the time up for Q and A.
OPERATOR
Thank you. We’ll now be conducting a question and answer session. We ask you please limit yourself to one question and one follow up. If you’d like to ask a question, please press Star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you’d like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. And our first question is from the line of Patrick Cunningham with Citi. Please proceed with your questions.
Patrick Cunningham (Equity Analyst)
Hi, good morning. In the release you talked about the potential for a more durable return to mid cycle profitability. This likely depends on both supply and demand side at this point, but can you give us the latest view on what this crisis may do in terms of supply side rationalization for MDI and polyurethanes?
Peter Huntsman (Chairman, CEO and President)
How do you see this playing out in terms of structural energy cost, pressure, feedstock availability or potential closures? At this point I don’t see a great deal of structural change. As we look at mdi, I do see pressures continuing in Europe. If you’re a European producer now having to put up with natural gas that’s priced somewhere in the mid teens versus where we are today. I noticed in the Houston ship channel price this morning was under $2 per MMBtu. These are real material gaps and shifts. I can’t help but think that there’s going to be continued pressure on petrochemical producers across the board and in MDI across Europe. But having said that, I also think that there are probably some structural issues that may make Chinese exports in certain products. I won’t get into exactly which products those are, but I think that they’re varied across the board. If you’re relying on coal as a raw material in China, you’re probably doing quite well. If you’re integrated into a world scale refinery and integrated system in China, you’re probably doing quite well. If you’re part of what they call the teapot refineries of refineries integrated into export bound chemical facilities, you may be under some cost pressures as you see some of the discounted crude products. So it’s not just what we see from a competitive point of view. It’s also what we see from the raw material that many of our customers and many of our competitors and the industry in general will be facing. And I think those are some of the longer term issues that we’ll be dealing with even after the Strait of Hormuz hopefully opens soon here. Very helpful. And could you talk about some of the sustainability of the positive trends you’re seeing in advanced materials, particularly interested in line of sight into aerospace and power order books and what that potentially means for segment profitability in 2026? I think and I don’t want to get too much into our numbers as to where we planned and where we saw a lot of upside since the beginning of the war, but my CFO will start kicking me on the side here. But what we the performance we’re seeing in advanced materials is largely what we expected a quarter ago. We may have seen a little bit of impetus there in pricing, but remember that business is not reliant on any one major raw material as you would see for instance in benzene going into MDI or some of the raw materials caustic and chlorine prices and so forth into some of our performance products materials. And so as you look at our advanced material section, that continues as we see as we’ve said now the last couple of quarters, we see the recovery continue with aerospace power, these better than GDP growth businesses. That business is just going to continue to get traction and I’m not sure the results this quarter. In the second quarter where we finished the first quarter, I’m not sure that would be materially different from where we’d be without the Gulf conflict.
OPERATOR
Our next questions are from the line of Kevin McCarthy with vertical research Partners. Please proceed with your questions.
Kevin McCarthy (Equity Analyst)
Thank you and good morning. Peter, can you speak to operating rates in MDI both for Huntsman and also what you’re observing at the Industry level and related to that, you know, how are things changing post war versus pre war?
Peter Huntsman (Chairman, CEO and President)
I think that as we look at the industry in general, you’re probably looking at at the low to mid-80s. And I think now from where we are, we would be in the high 80s. We’re sold out completely in our Chinese operation, our US operation for the most part is sold out. Europe, as we said when we announced our first quarter earnings before the Middle east conflict, we’re starting to see some green shoots there. We continue to see some opportunities in Europe and I would say that we’re operating at pretty good levels across the board. There have been a number of outages and I would say short term and also planned disruptions in the industry. Not to be too unexpected. When you go have an industry that’s been operating kind of at a lower probably 70, 80% for the last couple of years and now all of a sudden you see an increase in demand and pull through, you typically have operating issues. …
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