Introduction & Market Context
Huntsman Corporation (NYSE:HUN) presented its first quarter 2026 earnings results on May 1, 2026, revealing a company navigating significant operational challenges while executing aggressive cost reduction initiatives. The specialty chemicals manufacturer reported essentially flat adjusted EBITDA year-over-year despite deteriorating credit metrics that prompted rating agency downgrades, though shares rose 5.64% to $15.18 in premarket trading on optimistic forward guidance.
The presentation highlighted stark divergence across Huntsman’s three operating segments, with Advanced Materials delivering 25% EBITDA growth while Performance Products struggled with an 11% revenue decline amid Middle East supply chain disruptions. The company’s cost realignment program exceeded targets, achieving a $110 million annualized run rate against a $100 million goal.
Quarterly Performance Highlights
Huntsman’s first quarter financial performance presented a mixed picture, as illustrated in the company’s earnings summary. Revenue increased modestly to $1.42 billion from $1.41 billion year-over-year, while the net loss attributable to shareholders widened significantly to $53 million from $5 million in the prior-year period.
The company reported adjusted EBITDA of $73 million, up marginally from $72 million in 1Q25, representing a 5% margin on revenues. Adjusted diluted loss per share came in at $0.20, compared to $0.11 in the prior year, meeting analyst expectations. Operating cash flow improved sequentially, with the company using $53 million compared to $71 million in 1Q25, while free cash flow deficit narrowed to $91 million from $107 million.
Revenue bridge analysis revealed that volume growth of $14 million and favorable foreign exchange impacts of $54 million were partially offset by a $58 million decline in price and mix year-over-year.
Segment Performance Analysis
Huntsman’s Polyurethanes segment, representing approximately 65% of total revenues, showed resilient volume growth despite margin pressure. The division generated $923 million in revenue, up 1% year-over-year, though adjusted EBITDA declined 7% to $39 million with margins compressing to 4% from 5%.
The segment benefited from 4% volume growth driven by the Americas and European regions, along with increased equity income contributions from the Chinese PO/MTBE joint venture. However, these gains were insufficient to offset margin pressures. Management projected a significant sequential improvement for the second quarter, guiding to adjusted EBITDA of $60-75 million based on pricing actions expected to more than offset higher raw material costs and seasonal construction market improvements.
Performance Products faced the most challenging operating environment, with revenues declining 11% to $228 million and adjusted EBITDA falling 13% to $26 million. The segment maintained an 11% margin, down from 12% in the prior year.
Supply chain disruptions related to the Saudi joint venture significantly impacted volumes and profitability. Excluding the divested EU maleic anhydride business, volumes decreased approximately 4%. For the second quarter, management expects adjusted EBITDA of $30-40 million as price increases offset higher raw material costs, though Middle East disruptions continue to pose operational challenges.
Advanced Materials emerged as the clear performance leader, delivering 12% revenue growth to $279 million and 25% adjusted EBITDA growth to $45 million, with margins expanding to 16% from 14%.
The aerospace sector drove the segment’s outperformance, with volumes increasing 3% year-over-year. Management projected continued momentum in the second quarter with adjusted EBITDA guidance of $50-55 million, supported by ongoing growth in aerospace and power markets and pricing expected to more than offset raw material cost increases.
The adjusted EBITDA bridge by division illustrates how Advanced Materials’ $9 million year-over-year improvement partially offset declines in Polyurethanes and Performance Products.
Financial Health and Liquidity Concerns
While operational metrics showed some stabilization, Huntsman’s balance sheet deteriorated significantly during the quarter. Net debt leverage climbed to 6.1x from 4.0x year-over-year, prompting credit rating downgrades across all three major agencies to Ba2/BB/BB+ from investment-grade Baa3/BBB-/BBB.
Liquidity declined to $867 million from $1.29 billion in the prior-year quarter, though the company entered into a new $800 million senior secured revolving credit facility in February 2026, replacing the prior 2022 revolver with an option to increase commitments by up to $400 million. The dividend was cut sharply to $0.0875 per share from $0.25, reflecting the need to preserve cash amid elevated leverage.
On a more positive note, last twelve months free cash flow reached $141 million, representing a 51% conversion to adjusted EBITDA, up from 45% for the full year 2025. Capital expenditures of $38 million in the quarter remained within guidance, with full-year 2026 capex expected to be similar to 2025 levels.
Strategic Initiatives: Cost Realignment Success
Huntsman’s cost realignment program represented a clear bright spot in the presentation, with execution ahead of schedule and targets. The company achieved an annualized run rate of approximately $110 million in benefits, exceeding the $100 million target.
The program involved seven site closures across the Polyurethanes, Performance Products, and Advanced Materials segments, along with shared service consolidation. Approximately 90% of the targeted 500 headcount reductions were complete as of first quarter end. The company expects approximately $45 million in year-over-year cost optimization benefits in 2026, excluding inflation impacts, with benefits split roughly 60/40 between SG&A/R&D and plant fixed costs.
Total restructuring cash costs are expected to reach approximately $80 million with an additional $20 million in capital expenditures, the latter absorbed within annual capital expenditure guidance. Management indicated that cumulative in-year savings would reach the full $100 million run rate in 2026, with additional savings to be captured in 2027 and beyond.
Forward-Looking Statements and Q2 Outlook
Huntsman provided notably optimistic second quarter guidance, projecting total adjusted EBITDA of $100-130 million, representing a substantial sequential improvement from the $73 million reported in the first quarter.
The outlook assumes increased pricing will mitigate rising costs, though raw material volatility associated with the Middle East conflict remains a risk factor. Management expects continued benefits from cost savings programs, improved volumes year-over-year with some margin expansion, and sustained growth in aerospace and power markets.
For full-year 2026 modeling, the company provided additional considerations including corporate and other expenses of $140-150 million, depreciation and amortization of approximately $290 million, and interest expense similar to 2025 levels. Cash flow guidance indicated a $10 million year-over-year headwind from dividends from equity affiliates, offset by a $40 million tailwind from lower cash taxes and continued working capital improvements through cash conversion cycle enhancements.
The presentation acknowledged ongoing challenges from geopolitical disruptions affecting supply chains and logistics, high raw material costs particularly in Europe, and capacity constraints with high utilization rates potentially limiting growth. However, management expressed confidence in the company’s ability to navigate these headwinds through strategic pricing initiatives and operational efficiencies, positioning Huntsman for improved performance as the year progresses.
Full presentation:
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Source:
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