Q1 2024 Huntsman Corporation Earnings Call

Operator: Greetings and welcome to the Huntsman Corporation first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, 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.

Greetings and welcome to the Huntsman Corporation first quarter 2024 earnings call. At this time, all participants are in a listen only mode.

Question and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded its now my pleasure to introduce Ivan Marcuse VP of IR and corporate development. Thank you you may begin.

Ivan Mathew Marcuse: Thanks, Daryl. Good morning, everyone.

Ivan Mathew Marcuse: Thanks, Darryl and good morning, everyone welcome to Hudson's first quarter 'twenty 'twenty four earnings call joining us on the call today are Peter Huntsman, Chairman, CEO and President Mr Executive Vice President and CFO.

Ivan Mathew Marcuse: Welcome to Huntsman's first quarter 2024 earnings call. Joining us on the call today are Peter Huntsman, Chairman, CEO, and President, and Philip Lister, Executive Vice President and CFO. Yesterday, May 2, 2024, after the U.S. markets closed, we released our earnings for the first quarter of 2024 via press release and posted them on our website, Huntsman.com. We also posted a set of slides and detailed commentary discussing the first quarter of 2024 on our website.

Ivan Mathew Marcuse: Yesterday, My second week 24, after the U S markets close.

Ivan Mathew Marcuse: Earnings for the first quarter 'twenty four via press release and posted to our website Huntsman Com. We also posted a set of slides detail commentary discussing the first quarter 2024 on our website.

Ivan Mathew Marcuse: 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, I will remind you that we may make statements about 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 guaranteed 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.

Ivan Mathew Marcuse: Peter Huntsville will provide some opening comments shortly and we will then move to a question and answer session for the remainder of the cost. 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.

Peter R. Huntsman: 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.

Peter R. Huntsman: I'll also refer to non-GAAP financial measures such as adjusted EBITDA, adjusted net income or loss and free cash flow you can see.

Peter R. Huntsman: Find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website Huntsman com.

Ivan Mathew Marcuse: We do not plan on publicly updating or revising any forward-looking statements during this 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 on our website, huntsman.com. I'll now turn the call over to Peter Huntsman, our Chairman and CEO.

Peter R. Huntsman: I'll now turn the call over to Peter Huntsman, our chairman and CEO.

Peter R. Huntsman: Ivan, thank you very much and thank you all for taking the time to join us this morning. As we review the results of the first quarter, a few things of note are emerging. I said in our fourth-quarter conference call on the 22nd of February that our number one priority this year was to recover lost volume. During the first quarter, we were able to make some modest gains and will be doing more throughout 2024.

Peter R. Huntsman: Ivan Thank you very much and thank you all for taking the time to join US This morning.

Peter R. Huntsman: Viewing the results of the first quarter a few things of note are emerging.

Peter R. Huntsman: I said in our fourth quarter conference call on the 20th stuck into February that our number one priority. This year was to recover the lost volumes during.

Peter R. Huntsman: During the first quarter, we were able to make some modest gains and we'll be doing more throughout 2024.

Peter R. Huntsman: The gains that we saw in volume were attributed to a combination of new business, demand growth, and pockets of inventory restocking. We question how much of this was the end of inventory destocking and the beginning of inventory rebuilding versus demand growth. Well, it will vary customer by customer. I believe it to be about 50-50.

Peter R. Huntsman: James that we saw in volume were attributed to a combination of new business demand growth and pockets of inventory restocking.

Peter R. Huntsman: Question, how much of this was the.

Peter R. Huntsman: And of inventory Destocking, and the beginning of inventory rebuilding versus demand growth blah.

Peter R. Huntsman: I should also say that eventually, the two conditions merge into one gray area. Demand improvement begets inventory restocking. However, the bigger issue is when do markets recover sufficiently to achieve pricing recovery? Today's levels of profitability, particularly in Europe, are below reinvestment levels and, in some cases, are still below positive cash generation.

James: Although it will vary customer by customer I believe it to be about 50 50.

James: I'd also say that eventually the two conditions merged into one gray area demand improvement begets inventory restocking.

The bigger issue is one new markets recover sufficient to achieve pricing recovery.

James: Today's levels of profitability, particularly in Europe are below reinvestment levels in some cases are still below positive cash generation.

Peter R. Huntsman: I'm happy to see 25% growth in our North American MDI demand in Q1. But we should remember that this is compared to Q1 of 2023, where demand had dropped 35% from 2022. All this noise means that we are moving back to where we were merely a year ago.

James: Well I'm happy to see 25% growth in our North American MDI demand in Q1, we should remember that this is compared to Q1 of 2023, where demand had dropped 35% from 2022.

James: All of this noise means that we are moving back towards where we were a year ago.

Peter R. Huntsman: To have a real return to normalized market conditions, we're going to need consistent demand improvement and, equally important, higher prices to expand margins. During the last call, we also outlined the need to improve our cash flow. While we're seeing improvements in this area as well, we may face headwinds in working capital later in the year as sales volumes and prices move up. Our third priority in 2024 is our continued focus on our costs in the face of global inflationary and regulatory pressures.

James: They have a real return to normalized market conditions, we're going to need consistent demand improvement and equally important higher prices to expand margins.

James: During the last call. We also outlined the need to improve our cash flow, while we're seeing improvements in this area as well we may face headwinds in working capital later in the year as sales volumes and prices move up.

James: Our third priority in 'twenty 'twenty four is our continued focus on our costs in the face of global inflationary and regulatory pressures. We continue on track to meet all the objectives, we announced to offset projected 3% to 4%.

Peter R. Huntsman: We continue on track to meet all the objectives we announced to offset projected three to four percent global inflation. Our fourth priority is to continuously assess our portfolio and make sure we're maximizing the value of the assets we own and how we deploy capital for growth. Finally, we continue to focus on our environmental and safety performance. This is our license to operate. And regardless of business conditions, we will not compromise on the safety of our operation.

James: Global inflation.

James: First our fourth priority is to continuously assess our portfolio make sure we're maximizing the value of the assets, we own and how we deploy capital for growth.

James: Finally, we continue to focus on our environmental and safety performance. This is our license to operate and regardless of business conditions, we will not compromise on the safety of our operations.

Peter R. Huntsman: This focus on risk also applies to our balance sheet. We will not jeopardize our investment grade rating for short-term gain. All in all, I'm not surprised by the results and conditions that we're seeing. Our quick action on cost, capacity, rationalization, and discipline with pricing will serve us well as the industry continues to recover. Our objective is to take quick and decisive actions to take advantage of these improving conditions and get us back to normalized earnings as quickly as possible. With that operator, let's turn the time remaining over to questions and comments.

James: It's focused on.

On risk also applies to our balance sheet will not jeopardize our investment grade rating for short term gains.

James: All in all I'm not surprised by the results and conditions, but we're saying our quick action on cost capacity rationalization and discipline, but pricing will serve us well as the industry continues to recover.

James: Our objective is to take quick and decisive actions.

James: The advantage of these improving conditions and get us back to normalized earnings as quickly as possible with that operator, let's turn the time remaining time over to questions and comments.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the list. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. We ask that you please limit yourself to one question and one follow-up question. One moment, please, while we poll for your question. Our first questions come from the line of Patrick Cunningham with Citi. Please proceed with your question.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the starkey. We ask that you. Please limit yourself to one question and one follow up question. One moment. Please while we poll for your questions.

Speaker Change: Okay.

Speaker Change: Our first questions come from the line of Patrick Cunningham with Citi. Please proceed with your questions.

Patrick David Cunningham: Hi, good morning. Thanks for taking my question. Some of your comments in the prepared remarks reflect a slightly more positive view of China, and I think sentiment there is pretty mixed at this point. Can you highlight where you're seeing some strength, what end markets, and what you expect to be growth drivers throughout the year?

Patrick David Cunningham: Hi, Good morning, Thanks for taking my question, but you know some of your comments in the prepared remarks reflect a slightly more positive view on China sentiment. There is pretty fixed at this point can you highlight where you're seeing strength what end markets. What do you expect to be growth drivers throughout the year.

Peter R. Huntsman: We continue to see a lot of demand growth in the auto industry, and I think that much of that has to do with the fast-growing domestic markets in China, particularly for EVs. If you think about EVs, we essentially supply everything that goes into an ICE vehicle goes into an EV vehicle, and our polyurethane division, which is our largest division with automobile applications. But we also have a number of applications that we're developing right now that are in the pipeline, some of them that are emerging into EVs that are coming from the other divisions as well around structure, strength, lightweighting, adhesion, insulation,

Yeah, we we continue to see a lot of demand growth in auto.

Patrick David Cunningham: Much of that has to do with the the fast growing.

Patrick David Cunningham: Domestic markets in China, particularly around Evs, but do you think about Evs, we essentially supply everything that goes into an ice vehicle goes into an EV vehicle.

Patrick David Cunningham: And our polyurethane division, which is our largest division with automobile applications, but we also have a number of applications.

Patrick David Cunningham: We're developing right now that are in the pipeline some of them that are that are emerging.

Patrick David Cunningham: E D's.

Patrick David Cunningham: That are coming from the other divisions as well around structure strikes light weighting adhesion insulation and so forth. So.

Peter R. Huntsman: So Chinese automotive continues to be what I think is one of the stronger areas of growth in China. How long that continues, I think it's probably going to continue for some time. I think that there's a broader question as to how long and how well that goes with the Chinese export markets, how successful China would be exporting those EVs into the U.S., which has been extremely limited, obviously, and obviously going into Europe, where there's a lot of talk about putting limitations on Chinese vehicles being built in China.

Patrick David Cunningham: Chinese automotive continues to be a what I think is one of the stronger areas of growth in China, how long.

Speaker Change: Yeah that continues I think it's probably going to continue for some time in China I think that there's a broader question as to how long.

Speaker Change: And how well that goes with the Chinese export markets, how successful will China be exporting those evs into the U S, which has been extremely limited obviously.

Speaker Change: And obviously going into Europe, which is a.

Speaker Change: There's a lot of talk about putting limitations on Chinese.

Vehicles being built in China, yet you see a number of Chinese auto companies that are joint ventured with European Auto company. So that there's going to be that's going to be a much greater area, but.

Peter R. Huntsman: Yet you see a number of Chinese auto companies that have joint-ventured with European auto companies. So that's going to be a much greater area. But certainly that and, of course, anything that has to do with energy conservation in China, insulation, building materials where there's energy conservation, central heating, piping insulation, and so forth, infrastructure projects continue to do quite well. Obviously, if it's related to residential construction, it's pretty sluggish in China. But by and large, as we said probably three quarters ago, we expect China to have a slow but steady recovery, both in volume and in pricing, and I think that's what we're seeing.

Speaker Change: Certainly that and of course anything that has to deal with energy conservation in China.

Speaker Change: Insulation building materials, where where there's energy conservation.

Speaker Change: Central heating.

Speaker Change: Piping installation and so forth infrastructure projects.

Speaker Change: They need to do quite well, obviously, if its related to our residential construction, it's pretty sluggish.

Speaker Change: China.

Speaker Change: But by and large as we said probably three quarters ago, we expect China to have a slow but steady recovery both in volume and in pricing.

Speaker Change: And I think that's what we're saying.

Patrick David Cunningham: Great, appreciate the detail. And then, you know, advanced materials volumes were down year on year, even facing the easier comp. Is there any element of, you know, whether it's value over volume of lower margin product exits there, or is this reflective of underlying demand? And then, just on full year volume, do you expect volumes to be down this year?

Speaker Change: Great I appreciate the detail and then as you know advanced materials volumes were down year on year, even facing easier.

Speaker Change: Easier comps is there any element of whether it's value over volume of lower margin product exits there or is this reflective of underlying demand and then just on full year volume do you expect volume to keep the omni channel.

Peter R. Huntsman: I would imagine volumes in advanced materials ought to be growing for the year at the rate of the overall macro GDP. I think you're going to see areas like applications that are going to electrical infrastructure, the aerospace industry, automobile light-weighting, and EV applications. A lot of your industrial coatings and so forth will be at GDP, maybe a little bit less than GDP. And then we're going to continue to deselect the more commoditized grades, the BLR resins, and so forth that we don't really add a great deal of value from a technical or manufacturing competitive basis. So it'll be a mixed bag. But if you strip away the commodity side of that business, by and large, over the last couple of years, you continue to see steady growth in the more downstream applications.

Speaker Change: I I would imagine that volumes in his bathroom tourists ought to be growing for the year on and the rate of.

Speaker Change: The overall macro GDP, I think youre going to see areas like AR.

Speaker Change: Applications are going to electrical infrastructure aerospace industry automobile light weighting EV applications that would be growing better than GDP, a lot of your industrial coatings and so forth.

We'll be at GDP, maybe a little bit less than GDP.

Speaker Change: And then we're going to continue to deselect the.

Speaker Change: The more commoditized grades the DLR resins, and so forth that we don't really add a great deal of value from a technical or manufacturing a competitive basis.

Speaker Change: So it'll it'll be a mixed bag, but if you strip away the commodity side of that business.

Speaker Change: By and large over the last couple of years, you're continuing to see a steady growth in the more downstream applications.

Speaker Change: Okay.

Frank Joseph Mitsch: Thank you. Our next questions come from the line of Frank Mitsch with Firmium Research. Please proceed with your question.

Speaker Change: Thank you. Our next question is coming from the line of Frank Mitsch with for Mam Research. Please proceed with your questions.

Peter R. Huntsman: Hey, good morning. Obviously, very impressive volume growth in North America and polyurethanes, as you mentioned, but you said you were only getting back really where you were for 23. What do you think about the pace of business for polyurethanes, not just in North America but as we play out through the year?

Frank Joseph Mitsch: Hey, good morning.

Frank Joseph Mitsch: Obviously very impressive volume growth in North America, and polyurethane as you as you mentioned, but you said you were only getting back really where you were for 23, how do you think about the the the pace of business and polyurethane not just in North America, but as as we play out through the year.

Frank Joseph Mitsch: I'm feeling better and better about it, Frank. You know, again, I don't think we're going to see a compounded 25% growth, obviously, throughout the year. I think a lot of what we saw in the first quarter was the cessation of inventory drawdowns and so forth. And what we're seeing right now is going to be a slow and steady recovery as we kind of get back into housing. I think inventory levels, I can't say this unequivocally with all applications, but by and large, inventory levels feel like they're pretty thin in most applications in MDI. And I think as we look throughout the next couple of quarters, we're expecting to see, you know, continue to see a recovering and modest growth in that area, particularly around construction.

I'm, feeling better and better about it Frank.

Frank Joseph Mitsch: Yeah.

I don't think that we're going to see a compounded at 25% growth obviously throughout the year I think a lot of what we saw in the first quarter.

Frank Joseph Mitsch: Was the cessation of inventory draw downs, and so forth and what we're seeing right now is.

Frank Joseph Mitsch: Is it going to just be a slow and steady recovery as we kind of get back in and housing I think inventory levels are.

I can't say this unequivocally with all applications, but by and large inventory levels feel like Theyre pretty thin.

And most applications in MDI and I I.

Frank Joseph Mitsch: I think as we look throughout the next couple of quarters.

We're expecting to see.

Frank Joseph Mitsch: You know continue to see a recovering and.

Frank Joseph Mitsch: Modest growth in that area, particularly around construction.

Peter R. Huntsman: Okay, so slow and steady is kind of the volume forecast. So then on the margin side, you know, you highlighted some modest price increases on MDI in a couple of regions, but we have stubborn benzene right now. What do we think about the margin profile for polyurethanes?

Speaker Change: Okay. So slow and steady is the is it is kind of the volume forecast. So then on the margin side you know you did highlight.

Speaker Change: Some modest price increases in an M D I and a couple of regions, but we have a stubborn benzene right now how do we think about the margin profile.

Speaker Change: For for pop for polyurethane.

Peter R. Huntsman: I think that our improvements, Frank, over the next quarter or two, again, early in the quarter, so I'm very good at projecting market conditions for anywhere from 20 to 24 hours, but as I think about the improvements that I would be expecting in the next quarter or so, you're probably going to be looking at two-thirds to three-quarters of the way there, that's going to be around volume, and the rest of that around price. Typically, this time of year, in springtime, you're starting your blending season, and so forth.

Speaker Change: I think that our improvements are Frank over the next quarter or two.

Speaker Change: Again early in the quarter so.

No.

Speaker Change: I'm I'm very good at projecting market conditions for anywhere from 20 to 24 hours.

Speaker Change: The improvements that I would be expecting in the next quarter or so you're probably going to be looking at it two thirds to three quarters, that's going to be around volume and the rest of that around price and I don't have to be up due to be pessimistic about price right now you're right. We do have some headwinds.

Speaker Change: And benzene prices.

Speaker Change: Looking at crude prices today.

Speaker Change: Pushing.

Speaker Change: 80 to $90, depending on W. T I versus Brent and that's going to filter down into a into the gasoline pool. Typically this time of year in the spring time, you're you're starting you're blending season, and so forth you're going to see benzene prices.

Peter R. Huntsman: You're going to see benzene prices have a little bit of pressure on the upward side. So we're going to have to recover those high raw material prices, and we need to get above and beyond those. So, in my opinion, that's going to be the number one challenge that we have as a company, to get these prices up. Thank you. Our next question has come from the line of David Begleiter.

Speaker Change: We'll have a little bit of pressure on the upward side. So we're going to have to recover those higher raw material prices and we need to get above and beyond those so that that's in my opinion, that's going to be the number one challenge that we've got as a company.

Speaker Change: So if you get these prices up.

David L. Begleiter: Thank you. Our next questions come from the line of David Begleiter with Deutsche Bank. Please proceed with your questions. Thank you. Good morning, Peter.

Speaker Change: Thank you. Our next question is come from the line of David Begleiter with Deutsche Bank. Please proceed with your questions. Thank.

Thank you good morning.

David L. Begleiter: Peter looked at longer term EBITDA wobble are taken and how long will it take to get back to that $1 billion threshold are you exceed it in the past.

Peter R. Huntsman: Well, I think that it's going to take two or three things. Very good question. Something that we ask ourselves all the time.

Well I think that it's going to take are going to take two or three things. Its very good question. It's something that we ask ourselves all the time, if we're if we're merely waiting for market conditions to recover Ah I, that's not the answer that we ought to be and its not the objective we have been looking.

Peter R. Huntsman: If we're merely waiting for market conditions to recover, I think that's not the answer we ought to be giving. It's not the objective we have to be looking for. So we do need to see demand for U.S. housing come back to where it was around that. You know, that million is sort of a threshold in housing starts and so forth. And as we look around at where we've been over the last couple of years and really looking more for stability, there is the volatility, I think, that probably concerns us more than anything else in North America.

David L. Begleiter: So we do need to see demand in U S housing come back to where it was around that yeah that that million sort of a threshold.

David L. Begleiter: Housing starts and so forth.

David L. Begleiter: And as we look around that.

David L. Begleiter: Where we've been over the last couple of years and really looking more for stability. There is the volatility I think that that probably concerns that's more than anything else in North America.

Peter R. Huntsman: We need to see Europe stop this this nonsense, the policy that they've got around deindustrialization and, you know, get an economy that's kind of growing once again. China, I think China is in a nice recovery, a slow and steady recovery.

We need to see in Europe are stopped this.

David L. Begleiter: This nonsense the policy that they've got around industrialization and you know.

David L. Begleiter: Getting the economy that it's kind of growing once again.

David L. Begleiter: China.

I think China has a nice recovery slow and steady recovery I think people are kind of expecting some major stimulus or something they come through that's also going to put it through the roof I I mean, I'd love to see it but I just don't expect it I think you're just going to see a gradual recovery taking place in China, but a lot of it also has to be due.

Peter R. Huntsman: I think people are kind of expecting some major stimulus or something to come through. That's also going to put it through the roof. I mean, I'd love to see it, but I just don't expect it.

Peter R. Huntsman: I think you're just going to see a gradual recovery taking place in China, but a lot of it also has to be due to what we are doing ourselves. As I look at our MDI splitter in Geismar, Louisiana, that we started up just as Covid was coming on full force. You know, there's another 40, 45 million dollars of additional EBITDA that we ought to be getting out of that splitter.

David L. Begleiter: With what we are doing ourselves.

David L. Begleiter: As I look at it our MDI splitter in Geismar, Louisiana that we started up just as COVID-19 with what's coming on full force.

David L. Begleiter: There's another.

David L. Begleiter: 40, $45 million of additional EBITDA that we ought to be getting out of that splitter.

Peter R. Huntsman: Once we're able to sell that out, we've got a number of expansions that are coming on in the coming months and quarters around the means of expansion, urethane catalyst expansions. E greater, which is our ultra pure and a means that are going to be going to chip cleaning chip solvent.

David L. Begleiter: Once we're able to to sell that out.

We've got a number of expansions that are coming on in the in the coming months and quarters around amines expansion urethane catalysts expansions E greater which is our ultra pure and amines are going to be going to chip cleaning chip solvent. These are these are projects that are going to be 10%.

Peter R. Huntsman: These are these are projects that are going to be, you know, 10 to 20, 25 million dollars of benefit to the company. Once these lines are up and moving and we're able to sell them out, we still have another 30 plus million dollars of EBITDA in the aerospace segment as we come back and see the full recovery. I mean, we're still not at the same wide-body demand as we were pre-covid. I look at our Maryland technology.

David L. Begleiter: $20 million to $25 million.

David L. Begleiter: A benefit to the company once these lines are up and moving and we're able to sell them out.

We still have another 30 plus million dollars of.

David L. Begleiter: EBITDA.

David L. Begleiter: In the aerospace segment as we come back as we see the full recovery I mean, we're still not at the same wide body demand as we were pre COVID-19.

David L. Begleiter: At our marathon technologies.

Peter R. Huntsman: We're in the process right now of starting up a 30 ton reactor that will be selling product in the commercial arena for the first time at these sort of values and volumes that we've ever had. And we're starting the construction of a 5000 ton unit. They'll be coming on in the early part, latter part of 25, early part of 26.

David L. Begleiter: We're in the process right now starting up a 30 ton reactor that we'll be selling product in the commercial.

David L. Begleiter: Arena for the first time at these sort of values and volumes are that we've ever had and we're starting the construction of a 5000 ton unit there'll be coming on.

David L. Begleiter: Early part latter part of 'twenty five early part of 'twenty six.

Peter R. Huntsman: You know, I look at the R&D pipeline. I look at the cost savings of 280 million dollars. I know I sound like there are a lot of issues, but when you add all these up, David, you kind of get the idea that there's another $150 to 200 million dollars of additional EBITDA that we really control that we ought to be aggressively moving forward with. And so I feel that we do need markets to recover, but we've also got to be able to successfully execute on all the projects that we've started. We've, and we'll be coming up this year. Very, very helpful and just a much newer term back half the year, polyurethane zibadosh of that.

David L. Begleiter: Yeah as I look at the R&D pipeline I look at the cost reductions of $280 million I know it sounds like there's a lot of issues, but when you add all these up David.

David L. Begleiter: You kind of get the idea that there's there's another $150 million to $200 million of of our additional EBITDA.

David L. Begleiter: We really control that we ought to be aggressively moving forward with and so I I feel that we do need markets to recover but we've also got to be able to successfully execute on.

David L. Begleiter: On all the projects that we've started with <unk>.

David L. Begleiter: It will be coming up this year.

Speaker Change: Oh, very very helpful and just a much newer turned back half of the year polyurethane EBITDA should that improve versus Q2 levels based on current expectations.

Peter R. Huntsman: Crew vs. Q2 levels based on current, Yes, I would certainly hope so. You know, I've challenged the teams we saw from our earnings from where we were in the fourth quarter to the first quarter of this year. You know, we're up 300 percent. If Tony can do that every quarter, 300 percent improvement for the rest of the year, we'll be I'll be quite pleased with him.

David L. Begleiter: Yes.

Speaker Change: We would certainly hope so oh.

Speaker Change: I've challenged the team as we saw from our earnings.

Speaker Change: When we were in the fourth quarter to the first quarter of this year, we're up 300% as Tony can do that every quarter, 300% improvement for the rest of the year, we'll be I'll be quite pleased with them.

Vincent Stephen Andrews: Thank you. Our next questions come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Speaker Change: Thank you our next questions come from the line of Vincent Andrews with Morgan Stanley. Please proceed with your questions.

Vincent Stephen Andrews: Peter, just curious, you know, as you talk to your customers in building and construction in the United States, they tell you we're ultimately going to get some rate cuts. It obviously seems like more a question of when. How fast do they seem to indicate that they think, you know, markets will start to move once we move into a less restrictive monetary policy?

Speaker Change: Thank you Peter.

Vincent Stephen Andrews: Peter just just curious you know as you.

Vincent Stephen Andrews: As you talk to your customers and in building and construction of United States. You know, we're ultimately going to get some rate cuts. It's obviously it seems like more of a question of when how.

Vincent Stephen Andrews: How fast do they seem to indicate they think you know markets will start to move once we once we move into a less restrictive monetary policy.

Peter R. Huntsman: I think there's quite a bit of bullishness right now in the building in trades. You know, I think there's kind of two paths that are being pursued right now.

Vincent Stephen Andrews: I think there's quite a bit of bullishness right now when the building trades.

I think theres kind of two paths that are being pursued right now that have what happens if rates kind of stay where they are obviously that means that you're going to be getting less house for the same amount of money.

Peter R. Huntsman: That of what happens if rates kind of stay where they are. Obviously, that means that you're going to be getting a less house for the same amount of money. So maybe houses are a little bit smaller, maybe they're a little bit cheaper to build, and the cost of that house is going to be down. And as we look across the board, though, we continue to see a very low housing inventory of new homes and new home availability.

Vincent Stephen Andrews: So maybe houses are a little bit smaller maybe they're a little bit cheaper to build and the cost of that house is going to be down and as we look across the board though.

Vincent Stephen Andrews: We continue to see a very low housing inventory of new homes, new home availability.

Peter R. Huntsman: And so I think builders are doing really two things. They're preparing and looking at a scenario where interest rates stay where they are, and they should adapt and equip themselves for that. And also, should rates be coming down, I think that's really going to open up the demand to be quite a bit higher than it's been the last couple of years. The point is there's a big gap there that needs to be filled.

And so I think builders are doing really two things that they're preparing and looking at a scenario where interest rates stay where they are and let's let's adapt and equipped to that and also should be coming down.

Vincent Stephen Andrews: I think that's really going to open up.

Vincent Stephen Andrews: The demand to be quite a bit higher than it's been in the last couple of years.

Vincent Stephen Andrews: There's no.

Vincent Stephen Andrews: The point is there's a big gap there that needs to be felt.

Vincent Stephen Andrews: Okay, yeah. We have seen housing starts improve, you know, over the last six, nine months; it's been a little lumpier recently, but are you starting to see the benefit of that flowing through to your businesses? Or is it, is it, you know, just beginning? And maybe we'll see more over the next quarter or two?

Speaker Change: Yeah, and then just you know we have seen housing starts improved you know over the last six to nine months and a little Lumpier recently, but are you starting to see the benefit of that flowing through in your businesses or is it is it you know just beginning and and maybe we'll see it more over the next quarter or two.

Peter R. Huntsman: I think we're just seeing the beginning. Well, I don't think so.

Speaker Change: I think what we're seeing the beginning well I don't think we are seeing the beginnings of that I think right now the biggest benefit that we saw in the first quarter was the lack of inventory.

Speaker Change: And I get a sense that that that is really and it it across the board in many of the products, but particularly in the construction and and housing market and as we look at the hopeful.

Speaker Change: Expansion of demand and housing starts over the next couple of quarters.

Speaker Change: I'm hopeful that will certainly be additive to what.

Speaker Change: What we've been able to accomplish thus far.

Aleksey V. Yefremov: Thank you. Our next questions come from the line of Aleksey Yefremov with KeyBank Capital Markets. Please proceed with your questions.

Aleksey V. Yefremov: We are seeing the beginnings of that. I think right now the biggest benefit that we saw in the first quarter was the lack of de-inventorying. And I get a sense that that has really ended across the board in many of the products, but particularly in the construction and housing market. And as we look at the hopeful expansion of demand and housing starts over the next couple of quarters, I'm hopeful that will certainly be additive to what we've been able to accomplish thus far. Thank you. Our next questions come from the line of Aleksey Yefremov with KeyBank Capital Markets. Please proceed with your question.

Speaker Change: Thank you our next questions come from the line of Alexia <unk> with Keybanc capital markets. Please proceed with your questions.

Alexia: Good morning, everyone.

Alexia: Pretty impressive volumes in polyurethane and North America and Europe.

Alexia: Can you just tell us where are your volumes today in these two regions versus what you would consider a normal volume level.

Peter R. Huntsman: Well, I think, again, I'm very happy to see the volumes growing where they are, but they are where we were basically a year ago. And so we really need to see continued growth and continued movement on pricing. Again, I don't expect volume improvements to be a 25 percent sort of improvement, but certainly the housing and the construction markets are one that we're starting to feel is loosening up. And, you know, we ought to see some improvements there.

Alexia: Well I think again I'm very happy to see the volumes growing where they are but they are where we were basically a year ago and so we really need to we need to see continued growth and and continued movement on pricing.

I again, I don't expect volume improvements to be a 25% sort of improvement, but certainly.

Alexia: Certainly the housing and the construction markets are one that were starting to feel is loosening up and and yeah. We ought to see some improvements there now if if mortgage rates go down I think that's going to have a near instantaneous.

Peter R. Huntsman: Now, if mortgage rates go down, I think that's going to have a near instantaneous impact on the business. Impact on the Business, And I think that will be the single biggest variable in our North American markets. And Aleksey, I mean, you can do the math, 35% down year-on-year this time last year, as we said, and then 25%.

Alexia: The impact on the business.

Alexia: And I think that that would be the single biggest variable in our north American.

Alexia: Markets and the like so you I mean, you can do the math, 35% down year on year. This time last year as we sat and then 25% up so we're still about 10, 15% below where we were and so we still need to see that trend trend continues to get back to where we where we started.

Peter R. Huntsman: And Aleksey, you can do the math, 35% down year on year, this time last year, as we said, and then 25% up, so we're still about 10-15% below where we were, and so we still need to see that trend continue to get back to where we started.

Speaker Change: Okay. Thanks for that and then I wanted to ask you about your spray foam business how is it doing in Q1 and heading into Q2.

Speaker Change: Well I.

Peter R. Huntsman: Well, spray foam continues to be a competitive market. The single biggest application for spray foam is in new housing builds.

Speaker Change: Spray foam continues to be a competitive market. The single biggest application for spray foam is a new housing builds and as we look at that that that for us.

Peter R. Huntsman: And as we look at that, you know, that for us continues to be an area that's a competitive market. If you look at mineral fiber with a low cost of energy and so forth, yeah, we're going head to head. But we still grow our volumes there versus the prior year at just under 10 percent, 8 percent growth in that business. And so we continue to see growth. But again, growth is great to see, but we've got to see pricing. We've got to see margin expansion take place there as well.

Speaker Change: Seems to be an area.

Speaker Change: It's a competitive market as you look at the the mineral fiber.

Speaker Change: With a low cost of energy and so forth yeah, we're going head to head, but we still we still grew our volumes are up versus the prior year.

Speaker Change: Just under 10% 8% growth.

Speaker Change: And that business and so yeah, we continue to see growth but.

Speaker Change: Again.

Speaker Change: Gross great to see but we've got to see pricing, we've got to see margin expansion take place there as well.

Speaker Change: Yeah.

Jeffrey John Zekauskas: Thank you. Our next questions come from the line of Jeff Zekauskas with JP Morgan. Please proceed with your question. Thanks very much.

Speaker Change: Thank you our next questions come from the line of Jeff Zekauskas with J P. Morgan. Please proceed with your questions.

Speaker Change: Okay.

Jeffrey John Zekauskas: Thanks very much. Um, can you talk about the relative prices for MDI in both crude and, I guess, more specialized in Europe, China, and the US? And can you say something about your relative margins in each of those areas?

Jeffrey John Zekauskas: Thanks, very much can you talk about the relative prices for MDI.

Jeffrey John Zekauskas: Both crude and I guess more specialized in Europe, China, and the U S and.

Jeffrey John Zekauskas: Can you say something about your relative margins in each of those areas.

Jeffrey John Zekauskas: Okay.

Jeffrey John Zekauskas: Yeah.

Peter R. Huntsman: Yeah. As we look at our polymeric MDI, they're all basically selling it within $100, $200 of each other per ton, and it's around $2,000 per ton. It's a pretty flat market right now, so there's not an incentive at this point to be moving a lot of volume from one region to the other. And I think that when you see demand, which has been kind of sluggish this past year, that would tell you that you're going to see pretty, pretty flat prices.

Speaker Change: As we look at our our polymeric MDI.

Speaker Change: They're all basically selling it.

Speaker Change: I'd say within 100 $200 of each other per ton and then it's around $2000 per tons, it's a pretty flat market right now theres not.

Speaker Change: There's not.

Speaker Change: I kind of have an incentive at this point to be moving a lot of volume.

Speaker Change: From one region to the other and.

Speaker Change: I think that when you see demand, which has been kind of sluggish. This past year that that would tell you that you're going to see pretty.

Speaker Change: Pretty flat pricing.

Peter R. Huntsman: I will say, though, that as I look for some optimism in those areas, I looked at capacity utilization. I believe the industry today is running at about, you know, somewhere in the mid-80s on capacity utilization. And, you know, where we're seeing growth in demand and so forth, we're seeing quarter-on-quarter growth for the first time in, excuse me, year-on-year growth on a quarterly basis for the first time in two years.

Speaker Change: I will say, though that as I look for some for some optimism in those areas. So I looked at capacity utilization I believe the industry today is running at about yeah somewhere in the mid eighties on capacity utilization.

Speaker Change: And you know where were seeing growth in demand and so forth are you know, we're seeing quarter on quarter growth for the first time and.

Speaker Change: And excuse me a year on year growth on a quarterly basis for the first time in two years.

Peter R. Huntsman: There have been a number of operational outages that have recently been reported in the media and so forth. So I don't want to paint a picture that we're expecting to see prices go up through the roof. We're kind of getting into those dynamics where demand, incapacity, and utilization are moving into the mid-80s. You're starting to get into some areas where I think you're probably going to start seeing some regional divergences and higher prices in some of these areas, again, hopefully.

Speaker Change: There've been a number of operating outages that have recently been reported in the media and so forth.

Speaker Change: So I.

Speaker Change: I don't want to paint a picture that we're expecting to see prices go up through the roof.

Speaker Change: We're kind of getting into that those dynamics award demand and capacity utilization moving into the mid eighties.

Speaker Change: They're starting to get into some some areas, where I think you'll probably going to start seeing some regional divergences in and higher prices in some of these areas again hopefully.

Jeffrey John Zekauskas: And I guess for my follow-up question. Can you comment on the liquidation of the SLIC joint venture and how that, you know, may affect debt or cash flows in 2024 and 2025?

Speaker Change: Yeah.

Speaker Change: I guess for my follow up Okay.

Speaker Change: Can you comment on the liquidation of the slick joint venture and how that.

Speaker Change: May affect dead or cash flows.

Speaker Change: 2024, and 'twenty five.

Peter R. Huntsman: Yeah, Jeff, a couple of comments on... and as you rightly point out, we closed on that deal during the first quarter with minimal impact on net income and cash flow.

Speaker Change: Yeah, Jeff.

Speaker Change: Comments on <unk>.

Speaker Change: Lick and achieve.

Speaker Change: And you pointed out so we closed on that deal during the first quarter.

Speaker Change: Minimal impact net income cash flow perspective, EBITDA perspective, I think we said on the last call.

Peter R. Huntsman: I think we said on the last call uh... you then go through a process with the Chinese authorities which will probably last into 2025 where we need to liquidate that joint venture. What that means is that we put approximately two hundred million dollars of cash from our consolidated joint venture into SLIC into the unconsolidated joint venture. That cash then gets liquidated out uh... in 2025 directly to the partners, so you think of Huntsman getting about a hundred million of that back, and our joint venture partner SCAC getting the remainder directly.

Speaker Change: You can go through a process with the Chinese authorities, which will probably last into 2025.

Speaker Change: We need to liquidate that joint venture what that means is that we put approximately $200 million of cash from our consolidated joint venture into slick into the unconsolidated joint venture cash then gets liquidated out in.

Speaker Change: In 2025 back directly to the partners. So you could think of Hudson and getting about 100 million of that back in a joint venture partner I see I see getting the the remainder directly so what youll see is cash cash goes down because its off our balance sheet for a period, that's effectively gets trapped in sleep and then it comes back up in 2025.

Peter R. Huntsman: So what you'll see is cash goes down because it's off our balance sheet for a period, it effectively gets trapped in SLIC, and then it comes back up in 2025. It has a nominal impact on leverage, probably about 0.2 times on leverage as we progress through that process.

Speaker Change: It has a nominal impact on leverage point about 0.2 times on leverage as we progress through that through that process.

Speaker Change: Okay.

Michael Joseph Sison: Thank you. Our next questions come from the line of Michael Sison with Wells Fargo. Please proceed with your question.

Speaker Change: Thank you our next questions come from the line of Michael <unk> with Wells Fargo. Please proceed with your question.

Michael Joseph Sison: Hey, good morning. Nice start to the year. Peter, what are the industry operating rates now for polyurethanes, MDI, and just curious where you think those need to get to to establish a little bit better pricing and margin going forward.

Michael: Hey, good morning, nice start to the year.

Michael: What we're our industry operating rates now for polyurethane MDI and just curious where you think those need to get to to establish a little bit better pricing and margin going forward.

Peter R. Huntsman: Well, typically, given the fact that this industry, the number of outages that you have to have for maintenance of your facilities, typically it's about 90%, I like to think somewhere around 90% is kind of a sold out position. As we've said in the past, leverage, pricing leverage typically comes at about 85, somewhere in the mid to upper 80s; you start to see that pressure at 85% as you move through that.

Michael: Well typically given the fact that this industry the number of outages.

Michael: You have to have for your maintenance.

Michael: Of your facilities you typically is about 90% of all like to think somewhere around 90% is there's kind of a sold out position.

Michael: As we said in the past leverage pricing leverage typically comes at about 85 somewhere in the mid to upper eighties, you start to see that pressure at 85%.

Michael: Yeah.

Michael: As you move through that so as I as I would think about your capacity utilization right now and I'm talking about today in the second quarter not necessarily in the first quarter.

Peter R. Huntsman: So as I would think about your capacity utilization right now, and I'm talking about today in the second quarter, not necessarily in the first quarter, I believe in Europe, you're probably in the high 80s, 87, 88%. The US, you're running over 100%. The US needs imports to be able to satisfy demand. In China, you're probably somewhere in the mid to upper 70th percentile, so you add all that up, and you're probably about 85% capacity utilization today, which is the very low end of what I would say is where you start getting into your pricing, your pricing improvements.

Michael: I believe in Europe, you're probably in the high Eighty's 80 80, 788%.

Michael: U S youre running over 100% U S needs imports to be able to satisfy demand.

Michael: In China, you're probably somewhere in the mid to upper 70 percentile.

Michael: You add all that up and you're probably about 85% capacity utilization today, which is at the very low end of what I would say is where you start getting into your pricing.

Michael: Ah you're your pricing improvement.

Peter R. Huntsman: Now again, as you start having outages, or better than outages, you start seeing demand improvements come along. That's really what we need. So given what we've been talking about in the past, where we've been talking about global operating rates around 80 to 81, 82%, being at 85, 86%, the idea that a plant or two going down, or two, or 3% sort of growth in the industry, all of a sudden puts you up there in that 88, 89%.

Michael: Now again as you start having outages or better than outages you start seeing demand improvements come along yes, that's really what we need so.

Michael: Given given what we'd been in the past, where we've been talking about global operating rates around 80 to 80, 182% being at 80, 586% of the idea that a plant or two going down or two or 3% sort of growth in the industry. All of a sudden puts you up there in that 80, 889%.

Peter R. Huntsman: Sorry, I'm getting overly technical here because a few percent went to one side or the other. But the point is, I think that we're in a much better position than we were at any time in the last two years.

Speaker Change: Sorry, I'm getting overly technical here are a few percentage points, one side or the other but point is I think that where we're in.

Speaker Change: We're in a much better position than we've been anytime in the last two years.

Michael Joseph Sison: Got it. And then, I know it's a little bit early to look to the second half, but, you know, what do you think needs to happen to get, you know, better EBITDA sequentially in the third and the fourth quarter, and do you think the third and fourth quarter run rates for EBITDA would be sort of a good base to think about how earnings can grow into 2025.

Speaker Change: Got it and then I know, it's a little bit early to look to the second half, but you know what do you think needs to happen to get you know better.

Speaker Change: Better EBITDA sequentially in the third and the fourth and do you think the third into fourth quarter run rate for EBITDA would be sort of a good base to think about.

How.

Speaker Change: Earnings can grow into 2020 five.

Peter R. Huntsman: Well, it's certainly where we end the second half will certainly be a trajectory as to where we go in 25. I'm getting more bullish. I mean, again, I just go back to the nightmares of where we were a year ago at this time when we were saying, you know, we're going to have a rocky beginning of the year, and the second half of the year is going to recover very strongly and erase all of our sins.

Speaker Change: Well it certainly it certainly where we end the second half will certainly be a trajectory as to where we go in 'twenty five.

Speaker Change: Aye.

Speaker Change: I'm getting more bullish.

Speaker Change: Again I just go back to the nightmares of where we were a year ago. This time, when we were saying.

Speaker Change: Iraqi beginning of the year in the second half year, it's going to recover a very strongly and erase all of our sins.

Peter R. Huntsman: That didn't happen, and the sins just multiplied and got worse and worse, and finally, we found ourselves in hell. So that's probably not a very good metaphor to use, but anyway, as we look at the beginning of this year, I think we've seen good, reliable, and consistent growth and recovery, and I think in the second half, what we need to see is continued growth. And again, I know I've said this before, but movement and pricing, and so as we look at where we're moving, the direction we're moving, I like the direction in which we're going.

Speaker Change: That didn't happen in December just multiply it and got worse and worse and finally find ourselves in Hell.

So that's probably not a very good matter of 40 years, but anyway as we look at the beginning of this year, we've I think we've seen.

Speaker Change: Good reliable and consistent.

Speaker Change: Growth in recovery and I think the second half what would need to see is that continued growth and again I know I've said, this before but but movement in pricing and so as we look at.

Speaker Change: Where we're moving in the direction, we're moving I'd I like the direction of which of which we're going.

Hassan Ijaz Ahmed: Thank you. Our next questions come from the line of Hassan Ahmed with Alembic Global. Please proceed with your question.

Speaker Change: Thank you our next questions come from the line of Hassan Ahmed with Alembic Global. Please proceed with your questions.

Hassan Ijaz Ahmed: Morning, Peter. Peter, I just wanted to revisit, you know, some of the commentary that you made on polyurethane volumes.

Hassan Ijaz Ahmed: Morning, Peter.

Hassan Ijaz Ahmed: Peter I just wanted to revisit some of the commentary that you.

Hassan Ijaz Ahmed: You made on polyurethane volumes.

Peter R. Huntsman: You know, obviously, North America, on a percentage basis, ridiculously strong, you know, up 25%, but you alluded to the fact that we're still not really at normal volume levels. Europe up 9%, again, it seems from deflated levels, and Asia relatively flat. So could you just help me understand, you know, the trajectory from here?

Hassan Ijaz Ahmed: You know obviously in North America on a percentage basis ridiculously strong up 25%, but you know you alluded to the fact that we're still not really at normal volume levels.

Hassan Ijaz Ahmed: Europe up 9% again, it seems from deflated levels and Asia relatively flat. So could you just help me understand you know the the trajectory from here I mean, we're obviously below normal in North America.

Peter R. Huntsman: I mean, we're obviously below normal in North America. Europe, it seems well below normal. And same thing with Asia. So, how should we be thinking about, you know, near-term as well as medium-term volume growth trajectories by region?

Hassan Ijaz Ahmed: Europe, It seems well below normal and same thing with Asia. So I mean, how should we be thinking about you know.

Hassan Ijaz Ahmed: Near term as well as medium term, our volume growth trajectories by region.

Hassan Ijaz Ahmed: Well I think we're going to continue to see a probably stronger than average growth in Europe, and the Americas I look into the second quarter. It's early right now it's our order books.

Peter R. Huntsman: Well, I think that we're going to continue to see probably stronger than average growth in Europe and in the Americas. I look into the second quarter. It's early right now to order books, you know, but we're going to continue to see modest underlying growth. We're dealing with easy comps from a year ago.

Hassan Ijaz Ahmed: But we're going to see continue to see modest.

Hassan Ijaz Ahmed: Your line growth, where we're dealing with easy comps from a year ago. So I'd be focused more on on quarter on quarter versus where we were a year ago and you know we've we've obviously this last year, we got in a deep hole in and I think we first need to get out of the hole and I think that we're just about out of that hole and we need to start growing.

Peter R. Huntsman: So I'd be focused more on quarter on quarter versus where we were a year ago. And, you know, obviously, this last year, we got in a deep hole, and I think we first need to get out of the hole. And I think that we're just about out of that hole, and we need to start growing from that point on. And I think that's where we are, and that's where we're heading.

Hassan Ijaz Ahmed: From that point on and.

Hassan Ijaz Ahmed: I think that's that's that's where we are and that's where we're heading and Hassan unless we indicated.

Hassan Ijaz Ahmed: And Hassan, as we indicated, sequentially, when you go from Q1 to Q2, typically, you'll get about a 5% improvement in volumes, and we highlighted in the prepared remarks that we would expect to get more than that this year. So the trajectory is in the right direction.

Sequentially. When you got in Q1 to Q2, typically you'll get about a 5% improvement in volumes and we highlighted in the prepared remarks that we would expect to get more than that more than that this year.

Hassan Ijaz Ahmed: The trajectory the trajectories in the right direction.

Speaker Change: Fair enough and as a follow up continuing with our with polyurethane.

Peter R. Huntsman: Fair enough. And as a follow-up, continuing with polyurethanes, you know, just on the cost curves, you know, obviously, there was margin improvement, call it one, one and a half percent EBITDA margins going up to like four. But I mean, you know, you guys being on the lower cost of production side of things, I'd like to think that, you know, a chunk of the industry is still in the red. And, further to that thought, I would imagine that, as a recovery is happening, would be a big positive in terms of you guys, or the industry getting pricing power again.

Speaker Change: On the cost cuts I'm you know obviously there was margin improvement you know call. It one 1.5% EBIDTA margins going up to like four but I mean, you know you guys being on the lower cost of production side of things I'd like to think that.

Speaker Change: A chunk of the industry is still in the Red and you know.

Speaker Change: To that thought I would imagine that unto itself as the recovery is happening.

Speaker Change: You know would be a big positive in terms of you guys, but the industry getting pricing power again.

Speaker Change: Yeah.

Hassan Ijaz Ahmed: I would certainly agree with that, Hassan. However, as I look at the U.S., though, I think that the cost curve in the U.S. is pretty flat. You look at the major players in the U.S., they all have relatively the same size. We're all buying, none of us are integrated back up into benzene. We're producing on benzene. You know, it feels like we're kind of all in the same boat as far as it's competitive in this. Natural gas is, electricity is kind of the same price for everybody. You know, the chlorine rack is the same for everybody.

Speaker Change: I would certainly.

Speaker Change: I would certainly agree with that Hassan I as I look in the U S. So I think that the cost curve in the U S is pretty flat. When you look at you look at the major players in the U S. They all have relatively the same size, we're all buying well none of us are integrated backup into benzene, we're producing on benzene.

Speaker Change: Yeah.

Speaker Change: Feels like we're kind of all in the same boat as far as competitiveness natural gas's electricity, it's kind of at the same price for everybody.

Speaker Change: As you know the the Florida rack is the same for everybody. So as I think about Europe.

Peter R. Huntsman: So as I think about Europe, I think that's where you probably see some of the biggest cost disparities between the low-cost and high-cost producers. Europe still operates some relatively small facilities. And to be honest with you, I'm surprised some of those facilities are still operating. But again, I'm not privy to their economics, but as I look at their size, anyways, yeah, so Europe, I think you're going to see that. In Asia, you've got a lot of newer facilities, single line, large volume single lines that are operating.

Speaker Change: I think that's where you probably see some of the biggest cost disparities between.

Speaker Change: The low cost and high cost producers Europe's still operate some some some relatively small facilities and to be honest with you I'm surprised some of those facilities are still operating but again I'm not I'm not privy to their economics, but as I just look at their size.

Speaker Change: Anyway, Yeah, So Europe, I think youre going to see in Asia, you've got a lot of newer facilities single line large volume single lines that are operating Wawa I believe probably has a I don't think it's order of magnitude that you certainly have just.

Peter R. Huntsman: Wanwa, I believe, probably has an, I don't think it's an order of magnitude, but they certainly have, just by virtue of their size, of their lines, and so forth. I think they probably have a bit of an advantage over the other players.

Speaker Change: By virtue of their size.

Speaker Change: Of their lines and so forth I think they probably have a bit of an advantage over the other players, but you know I I.

Peter R. Huntsman: But you know, I think that we shouldn't get lost, though, necessarily on the cost of production. Because as you start going downstream and as you start looking at things like our splitter in Geismar, Louisiana, and you start looking at our downstream applications going to elastomers and system houses and so forth, if those downstream businesses are being operated well, and you're focused on adding value to the molecule, I believe you're going to make more money on your downstream business than you will on your manufacturing operations.

Speaker Change: Thank God that we shouldn't get lost so necessarily on the cost of production.

Speaker Change: Because as you start going downstream and as you start looking at things like our splitter in Geismar, Louisiana, you started with you know our downstream applications going to elastomers and system houses and so forth those downstream businesses are being operated.

Speaker Change: Well and and you're focused on adding value to the molecule I believe you're going to make more money on your downstream business than you will on on your manufacturing economics, both very important agreed but Europe also you do have that disparity between producers, but Europe also in spite of of.

Peter R. Huntsman: Both very important, agreed, but Europe also has that disparity between producers. But Europe, in spite of some of the industrial problems and so forth, Europe also rewards innovation and rewards energy conservation, light weighting, adhesion, footwear, and there's a number of applications in Europe that, you know, where we have some of our higher margin businesses. Thank you. Our next questions come from the line of John Roberts.

Speaker Change: Some of the industrial problems. So Europe also rewards innovation and rewards energy conservation light weighting adhesion footwear I mean, there's a number of applications in Europe.

Speaker Change: Yeah, but where we have some of our higher margin businesses.

Thank you our next questions come from the line of John Roberts with Credit Suisse. Please proceed with your questions.

John Ezekiel Roberts: Thank you. Our next questions come from the line of John Roberts with Credit Suisse. Please proceed with your question. Thank you. Peter, in your opening comments, you mentioned some areas of Europe are below positive cash generation.

John Ezekiel Roberts: Thank you Peter your opening comments mentioned some areas of Europe are below positive cash generation is that melancon hydride in this or anything else.

Peter R. Huntsman: I'd say that Malaik, and again, I just got these talking about some of the better ends of our Eurothane businesses. There are also going to be some commodity ends of the Eurothane business, you know, where we're really struggling to get prices up, and we need to get prices up, or we need to ask ourselves if we ought to be moving that product somewhere else, to be honest with you. As we look, by and large, at some of the European markets, when I made the comment, I had in mind our Malaik business, where we are having to battle with a lot of import materials coming in and sluggish demand, and some of the downstream Eurothane applications are still not, in my opinion, those are not volumes and margins that are sustainable. And then I thought you had already exited the epoxy BLR resin that' So,

John Ezekiel Roberts: I'd say that the millet again, and again I I I just got through talking about some of the the better ends of our urethane businesses. They're also going to be some commodity ends of the urethane business where.

John Ezekiel Roberts: We were really struggling to get pricing up and we need to get pricing up but we need to ask ourselves if we ought to be moving that product somewhere else.

To be honest with you, but as we look by and large it's.

John Ezekiel Roberts: Some of the European markets when I made the comment I had.

John Ezekiel Roberts: I had in mind, our Malaysia business.

John Ezekiel Roberts: Where we are having to battle with a lot of import materials coming in and sluggish.

John Ezekiel Roberts: Ill just demand and some of the downstream urethane applications or they're still not in my opinion of that.

John Ezekiel Roberts: Those are not volumes and margins that are sustainable.

John Ezekiel Roberts: And then I had thought you had already exited at park C. P. L. A resin Ah that's there. So what else are you exiting them that I thought you exited before and how much is left to go.

John Ezekiel Roberts: What else are you exiting that I thought you had exited before, and how much is left to go? Well, again, when we look at our epoxy businesses, we do continue to produce some commodity grades of epoxies, and we will do that as we baseload some of our facilities. Our emphasis is going to continue to be able to take that volume and move it into higher-value-added components and so forth. But, yeah, you do have some of the low end of your reactions, reactors that take place, and your production that takes place that I consider to be commodities, and you're always going to be exiting the bottom end of that and pushing more volume on the upper end of that margin scale.

John Ezekiel Roberts: Okay.

John Ezekiel Roberts: Again, when you look at our <unk> businesses.

John Ezekiel Roberts: Do continue to produce some commodity grades of Epocrates and we will do that as we base load some of our facilities.

John Ezekiel Roberts: Our emphasis is going to continue to be able to take that volume and moving it into higher value added components and so forth.

John Ezekiel Roberts: But yeah you you do have some of the low end of your reactions reactors that take place in your production that takes place that I consider to be commodity in and that you're always going to be exiting the bottom end of that and pushing more volume on the upper end of that margin scale, so not sure that it.

John Ezekiel Roberts: So, not sure that it's all necessarily, when we talk about exiting businesses, it isn't necessarily all BLR. I would just say that as we look at our capacity availability and where we want to put our emphasis, that may be beyond just basic BLR as well. Yeah, and Jones, it comes out.

John Ezekiel Roberts: It's all necessarily when we talked about exiting businesses.

John Ezekiel Roberts: Isn't necessarily all <unk> I would just say that as we look at our capacity availability and you know where we want to put our emphasis.

John Ezekiel Roberts: That may be beyond just basic DLR as well, yeah jumps that context, I mean, that'd be a la used to be about 50%. If you go back 10 years today.

Peter R. Huntsman: Yeah, and John, for context, I mean, BLI used to be about 50%. If you go back 10 years today, we still have some business, as Peter says, it's about 10% of our volumes, and we continue to move that down when appropriate.

John Ezekiel Roberts: We still have some business as Peter says, it's about 10% of all the.

John Ezekiel Roberts: Of our volumes and we continue to move that down when appropriate.

Peter R. Huntsman: Thank you. Our next questions come from the line of Salvator Tiano with Bank of America. Please proceed with your question.

John Ezekiel Roberts: Thank you our next questions come from the line of Salvator Tiano with Bank of America. Please proceed with your questions.

Salvator Tiano: Yes, thank you very much. So, firstly, I want to continue on that.

John Ezekiel Roberts: Yes.

Salvator Tiano: Thank you very much.

Salvator Tiano: So firstly I wanted to continue on about the.

Salvator Tiano: Commodity Epoxy discussion. And can you quantify, for example, when you said you'd selected some businesses in Q1, how much was that impact, and what your volume growth would have been like without the commodity side? And as we look at the past couple of years, where I think your volumes have declined by around 30%. Also, can you put into context how much of that was just you walking away from low margin business versus high-end products?

Salvator Tiano: Multiple oxy a discussion and can you quantify for example, when you said you could it sounds like with some businesses in Q1, how much was the impact on what your volume growth would have been like for like without the commodity side and I also look at the past couple of years when I see your volumes have declined by around 30%.

Salvator Tiano: Also can you put into context, how much of that was just you're walking away from low margin business.

Salvator Tiano: Since the the high and products.

Peter R. Huntsman: Yes, Salvator. If you look at the advanced materials business, it grew in aerospace, and I think we said sales grew 6% overall year on year. We grew actually in the automotive area, and we grew in the power grid area as well. So you're talking about just those three areas, about 50% of our overall advanced materials business where there was growth. The commodity part was well down, and that was well down throughout the year as we did decline some more BLR business.

Salvator Tiano: Yes.

Salvator Tiano: If you look at if you look at the.

Salvator Tiano: Advanced materials business. It grew in aerospace and I think we said sales grew 6% overall year on year, we grew actually in automotive we grew in the power grid area as well. So you you're talking that just those three areas about 50% of our Oklahoma Trans materials business, where there was growth that the commodity part was well down and.

Salvator Tiano: And that was well down throughout the year as we did deselect some more business.

And year on year, we also.

Salvator Tiano: Moved away from some of the low end.

Peter R. Huntsman: And year on year, we have also moved away from some of the low end commoditizing part of infrastructure coatings. So if you took out some of that commodity, you would have seen growth given power, given our volumes into aerospace and into automotive. And I would say that quarter on quarter, sequentially, usually you see a little bit of an uptick; we actually saw 5% growth quarter on quarter between 4Q and 1Q in terms of our volumes and advanced materials.

Salvator Tiano: Monetizing cost infrastructure coatings. So if you took out some of that commodity you would've seen growth given giving power given our walgreens.

Salvator Tiano: Walgreens into aerospace and enter into automotive and I would say that quarter on quarter sequentially, you, usually see a little bit of an uptick we actually saw 5% growth quarter on quarter between four Q1 Q in terms of our Belgian some events from cigarettes as well.

Peter R. Huntsman: And then, Sal, just to follow up on that question, is that the volume that gets deselected, there's not a lot of B but dots.

Salvator Tiano: And then on that yet.

Right.

Salvator Tiano: The volume that gets disliked it there's not a lot of EBITDA that's associated with it.

Salvator Tiano: Okay, perfect. And since I guess you've already seen the value of making more downstream products here and the commodity epoxy market has been suffering for a couple of years, we're seeing some other companies trying to shift, I guess, a little bit more downstream into epoxy systems as well. Is this something that you're seeing in terms of competitive pressure or is it a concern for you going forward?

Speaker Change: Okay perfect.

Speaker Change:

Speaker Change: Well you know since Oh, I guess, you've already seen the volume youre, making more downstream products here ethical multi read that book Smart you've have been suffering for a couple of years, we're seeing some other companies trying to shift I guess, a little bit more downstream into a box of systems as well.

Speaker Change: Is this something that you're seeing in terms of competitive pressure or just a concern from a ford you're going forwards.

Peter R. Huntsman: Well, many of our applications that would go into, for instance, the power grid and electronics, aviation, and so forth, these are sold typically on a qualifying basis where you're selling out for five to 10 years on a contract. If you're selling to the aerospace market, you're going to be qualifying for a fighter jet project or into an Airbus or Boeing application that will be around for years to come. And they typically don't change suppliers. You don't change the specs and formulations and so forth.

Speaker Change: Well many of our applications that would go into for instance, the pie.

Speaker Change: Our grid and electronics aviation and so forth.

Speaker Change: These are these are sold typically on the qualifying basis, where you're selling out for five to 10 years on a contract.

Speaker Change: If you're selling to the aerospace market youre going to be qualifying into a fighter jet project or into an Airbus or Boeing application.

That will be around for years to come and they typically don't change suppliers, you don't change specs and formulations and so forth.

Peter R. Huntsman: The other end of the business, and I kind of look beyond power and aviation, remember that this is an incredibly fragmented business, more so than any of the other businesses that we have. And you're going to see competition coming from other competing materials, not just epoxy, but I would think that most of our applications and competition are coming from non-epoxy applications where we're either replacing other materials, or we're seeing other materials that will be competing against us that are not necessarily epoxy. But typically, just as a rule of thumb, the companies that I see people comparing us to in the epoxy segments are typically not the companies that we really are aggressively competing with.

The other end.

Speaker Change: Of the business and I kind of.

Speaker Change: Look beyond kind of the power and aviation remember that this is an incredibly fragmented.

Speaker Change: Business more so than any of the other businesses that we have.

Speaker Change: And youre going to see competition coming from other competing materials not just a proxy, but I would think that most of our application and competition is coming from non epoxy applications.

Speaker Change: Where we're either replacing other materials or were seeing other materials that will be competing against us they're not necessarily a pox day, but typically just as a rule of thumb it.

Speaker Change: Companies that I see people comparing us to me at Pax East segments are typically not the companies that we really are aggressively competing with them.

Kevin William McCarthy: Thank you. Our next questions come from the line of Kevin McCarthy with the Vertical Research Partners. Please proceed with your questions.

Kevin William McCarthy: Thank you our next questions come from the line of Kevin Mccarthy with vertical Research partners. Please proceed with your questions.

Kevin William McCarthy: Thank you and good morning everyone. I had a question regarding MDI unit margins. So benzene costs have been elevated a little bit north of $4 a gallon in the U.S. lately, and your prices are rising as well. And so if I net those two things out, you know, when you craft your guidance of $70 million to $80 million for polyurethanes, are you baking in sequential improvement in the unit margins for MDI in terms of cents per pound? It sounds like maybe the answer is yes, but I just want to make sure I'm understanding that correctly.

Yes, Thank you and good morning, everyone.

Kevin William McCarthy: Regarding M D. I unit margins, so benzene costs have been elevated a little bit north of $4 a gallon in the U S lately and.

Kevin William McCarthy: And your your prices are rising as well and so if I net those two things out.

Kevin William McCarthy: When you craft your guidance of 70 million to $80 million for polyurethane.

Kevin William McCarthy: Are you baking in sequential improvement in the unit margins for MDI in terms of cents per pound.

Speaker Change: It sounds like maybe the answer is yes, but I just want to make sure I'm understanding that correctly yeah.

Peter R. Huntsman: Yeah, I think, Kevin, I think that's a correct assessment. Simultaneously trying to offset rising raw material prices while at the same time trying to get ahead of those prices. And I think that's why I say we expect to see marginal price improvement for most of the improvement that we see. As I look again into the second quarter and perhaps develop the third quarter, it's going to be the improvements can be more on volume than price at this point.

Speaker Change: I think Kevin I think that's a correct assessment.

Speaker Change: Simultaneously trying to offset rising raw material prices and at the same time.

Speaker Change: Trying to get ahead of those.

Speaker Change: Prices and I think that's why I say work.

Speaker Change: We expect to see a marginal price improvements in most of the improvement that we see as I look again into the second quarter and perhaps developing the third quarters, it's going to be the improvements going to be more around volume than price at this point and Kevin We did see we did see a small unit margin improvements as we move from Q4 to Q1.

Peter R. Huntsman: And Kevin, we did see a small unit margin improvement as we moved from Q4 to Q1, and as Peter says, we do expect...

Speaker Change: Let's pray to SaaS, we do expect a small improvement as we move from Q1 Q2 and.

And I would also say there's a good fix on benzene rightly because that's the largest raw material gas remains relatively low flooring in general has been slightly down and then ammonia into nitric as being slightly down as well. So you need to consider all of the raw materials that are flowing through into popular things.

Kevin William McCarthy: Very good. And then Peter, as a second question, I think one of your five objectives for the year is to look at the potential to optimize the portfolio. And in my mind, I've been thinking about Europe as maybe the center of that effort. I'm just tempted to ask, you know, things like, things like, seem like things are improving cyclically, as you discussed in your prepared remarks. On the other hand, you know, Europe has some problems that are arguably more structural in nature, as you've also addressed in the past.

Speaker Change: Very good and then Peter as a second question I think one of your five objectives for the year is to look at potential to optimize the portfolio and in my mind I've been thinking about Europe is may be the center of that effort.

Peter: He just tempted to ask you know things like it seems like things are improving.

Peter: Cyclically as you discussed in your prepared remarks on the other hand you.

Speaker Change: You know Europe has some problems that are arguably more structural in nature as you've also addressed in the past. So how do you put those two things are on the scale in other words, if you know if the European assets or more fully loaded and profit is starting to come back you know how do you weigh that against you know what.

Kevin William McCarthy: So how do you weigh those two things on the scale? In other words, if, you know, European assets are more fully loaded, and profit is starting to come back, how do you weigh that against, you know, what may be, you know, a less exciting outlook over the medium to longer term for, you know, capital deployment in the region, for example?

Speaker Change: May be.

Speaker Change: You know less less exciting outlook over the medium to longer term for capital deployment in the region for example.

Peter R. Huntsman: Well, it's a very good question, Kevin. It's a rather complex one as well, but I'll just briefly touch on it. When margins are where they are today, and uncertainty around the economy is where they are today, and I don't want to sound... I don't want to give false signals here, but where they are today, we certainly want to protect the balance sheet. And so this is not the time to go out and lever up the balance sheet and put uncertainty into the market.

Speaker Change: Well it's.

Speaker Change: It's a very good question, Kevin says its rather complex one as well, but I mean, just I'll just briefly touch on when when margins are where they are today and uncertainty around the economy and where they are today.

Speaker Change: I don't want to sound.

Speaker Change: I don't want to give false signals here, but where they are today, we certainly want to protect the balance sheet and so this is not the time to go out and lever up the balance sheet and put uncertainty into the market It may and.

Peter R. Huntsman: It may, and I want to emphasize the word may, it may be a time when you're looking at industry consolidation, looking at potential mergers, bringing assets together. Typically, if you're looking at where a lower tide is lowering the earnings of everybody, this might be an opportunity to look at those sort of structures that you typically wouldn't look at when you're near peak economics.

Speaker Change: I want to emphasize what may it may be a time, when you're looking at industry consolidations or looking at potential mergers, bringing assets together typically if youre looking at where our lower tide is lowering the earnings of everybody.

Speaker Change: This might be an opportunity.

Speaker Change: To look at those sort of structures that you typically wouldn't look at when you're near peak economics.

Kevin William McCarthy: When you're near peak economics, people have a tendency to stretch the balance sheet more and to be more aggressive on the M&A side. But when your earnings are down, your balance sheet needs to be protected. You're going to do something that's more capital conservative, and that's looking at potential mergers and so forth. And now, again, in saying that, I don't want to, I'm just saying that as you go through the industry cycles that we're going through, we're obviously coming off of a very steep floor. We want to protect our ballot sheet, so we're not going to do anything that is reckless with that ballot sheet.

Speaker Change: Near a peak economics people have a.

Speaker Change: A a tendency to stretch the balance sheet more and to be more aggressive on your M&A side.

Speaker Change: When your earnings are down your balance sheets to be protected youre going to do something that's more capital conservative and that's looking at potential mergers and so forth then and.

Speaker Change: Now again, and saying that I don't want to somehow.

Peter R. Huntsman: But at the same time, we still have to be able to look at our assets. We've got to ask ourselves, are we the best owners of these assets? And relative to the overall balance sheet, we've got to be able to look at, are we the best owners of these assets? And relative to the overall value that the stock market puts on our assets, are we getting maximum value? And just because the markets are down doesn't mean we should stop asking those questions.

Speaker Change: Somehow signal that we're looking to do some big merger I'm, just saying that as you go through the industry cycles that we're going through and we're obviously coming off of a very steep.

Speaker Change: Steve floor, we want to protect our balance sheet, we're not going to do anything that is reckless with that balance sheet.

Speaker Change: But at the same time, we still have to be.

Speaker Change: Able to look at our assets, we've got to look at it we the best owners of these assets.

Speaker Change: And you.

Speaker Change: Relative to the overall value that the stock market puts on our assets are we are we getting maximum value and just because markets are down doesn't mean, we stop asking those questions.

Speaker Change: Yeah.

Joshua David Spector: Thank you. Our next questions come from the line of Josh Spector with UBS. Please proceed with your questions.

Speaker Change: Thank you our next questions come from the line of Josh Spector with UBS. Please proceed with your questions.

Joshua David Spector: Hi, good morning. I wanted to follow up on polyurethanes.

Joshua David Spector: Hi, Good morning, I wanted to follow up on polyurethane I think in the prepared comments you talk about getting back to normal and.

Peter R. Huntsman: I think, you know, in the prepared comments, you talk about getting back to normal in that segment. What do you consider normal at this point? I guess if you get improvement in the second half, you know, maybe your run rating around 400 million. You have obviously some changes in the cost structure you alluded to, you're doing some cost savings. I guess what's the bridge back to normal at this point?

Joshua David Spector: In that segment I guess, what do you consider normal at this point I guess, if you can improve into the second half you know, maybe you're run rating around $400 million.

Joshua David Spector: You have obviously some changes in the cost structure, you alluded to youre doing some cost savings I.

Joshua David Spector: I guess, what's the bridge back to normal at this point.

Joshua David Spector: Well, I think that the bridge to get there is going to be higher volumes and higher prices. But when I think of a normalized MDI market, I'm thinking of margins that are in the mid-teens. This is a business that, when it's running on all cylinders, and that is, you know, your splitters are sold out, and you've got strong demand, you're probably looking at market conditions that you saw in 2022, a time period when you're looking at the very high teens, and you're pushing 20%.

Speaker Change: Well I think that the bridge to get there is going to be higher volumes and it's gonna be higher pricing, but when I think of a normalized MDI market I'm thinking of margins that are in the mid teens are.

Speaker Change: This is a business that when it's running on all cylinders.

And that is you know your splitters are sold out and you've got strong demand you're probably looking at market conditions that you saw in 2022.

Speaker Change: <unk> theory.

Speaker Change: When you're looking at the very high teens pushing 20%.

Joshua David Spector: But on a normalized basis, our urethanes business ought to be somewhere in the mid, you know, something just slightly north of 15%, 16% of EBITDA margins. But again, we're going to need both demand and pricing to get there.

Speaker Change: But on a normalized basis, our urethane business ought to be somewhere in the mid to.

Speaker Change: Something just slightly north of 15, 16% sort of EBITDA margins, but again, we were going to need both again demand and pricing to get there.

Peter R. Huntsman: That's helpful. If I could just ask quickly just on buybacks, you didn't do any in the quarter. I assume that's just because of working capital flows through the quarter versus the year. But how would you expect your plans around buybacks for the rest of the year to play out?

Speaker Change: That's helpful. I, just ask quickly just on buybacks.

Speaker Change: Didn't do any in the quarter I assume that's just kind of working capital flows through the quarter versus a year, but how would you expect your plans around buybacks for the rest of the year to play out.

Joshua David Spector: I think that we'll be assessing that on a quarterly basis, and right now, I don't see us doing share buybacks certainly in the second quarter and, most likely, in the third quarter. But again, that's something that the board will be discussing and assessing on a quarterly basis.

Speaker Change: I think it will be assessing that on a quarter to quarter basis.

Speaker Change: And right now we are.

Speaker Change: I don't see us certainly.

Speaker Change: Certainly in the second quarter and most likely in the third quarter of doing share buybacks, but again, that's something that the board will be discussing and are assessing on a quarterly basis.

Matthew Robert Lovseth Blair: Thank you. Our next questions come from the line of Matthew Blair with Tudor Pickering and Holtz. Please proceed with your question.

Speaker Change: Thank you our next questions come from the line of Matthew Blair with Tudor Pickering Holt. Please proceed with your questions.

Matthew Robert Lovseth Blair: Hi Peter, thank you and good morning. Peter, you mentioned that you're looking for bolt-on acquisitions in ADMAT. Are there specific end markets where you're looking to get more exposure? So, for example, are you looking to increase your aerospace exposure, or are you looking for, perhaps, more diversification?

Matthew Robert Lovseth Blair: Hi, Thank you and good morning.

Matthew Robert Lovseth Blair: Peter you mentioned that you're looking for bolt on acquisitions and add Matt are there specific end markets, where you're looking to get more exposure and so for example are you looking to increase your aerospace exposure, where you're looking for perhaps more diversification.

Peter R. Huntsman: I think that we'd be looking for anything that's got a high margin, and we have the chemistry to be able to do something that is unique. I like to think, I mean, when we look at opportunities for acquisitions, I like to ask the question, "What can we do that private equity can't do?"

Matthew Robert Lovseth Blair: Well I think that we'd be looking for anything that's got high margin that we have the chemistry to be able to do something that is unique I'd I.

Matthew Robert Lovseth Blair: I like to think.

Matthew Robert Lovseth Blair: I mean, when we look at.

Matthew Robert Lovseth Blair: Opportunities for acquisitions I like to ask the question around what can we do that private equity can't do.

Peter R. Huntsman: Our recent acquisitions, as we look at the Gabriel acquisition and the CBC acquisition, these were great acquisitions. The previous owners were great companies, but we had an opportunity to globalize the applications, and integrate them into our existing footprint. And they didn't really go into any one specific downstream application as much as they, I'd say there was more of a horizontal growth. We went out rather than up and down on that integration. So I think where we can continue to bring technology, globalization, and downstream applications and uniqueness to our customers, solutions to our customers, we're going to be focused on those. But no, we don't have specific areas where we're saying we're going to put a greater emphasis on aerospace, for example.

Matthew Robert Lovseth Blair: Our recent acquisitions as we looked at the Gabriel acquisition the C. D C acquisition.

Matthew Robert Lovseth Blair: These were great acquisitions that the previous owners were great companies.

Matthew Robert Lovseth Blair: But we had an opportunity to globalize the applications to integrate into our existing footprint.

Matthew Robert Lovseth Blair: They they they didn't really go into any one specific downstream applications as much as they they are I'd say there was more of a horizontal grow through we went out rather than up and down on that integration. So I think we can continue to bring technology.

Matthew Robert Lovseth Blair: To bring globalization and to bring downstream applications and uniqueness.

Matthew Robert Lovseth Blair: Our customer solutions to our customers, we're going to be focused on those but no. We don't have.

Matthew Robert Lovseth Blair: A specific where we're saying we're going to put a greater emphasis on an aerospace for example.

Matthew Robert Lovseth Blair: Sounds good. And then could you talk about your MDI supply expectations for the next few years? There are some reports that Wanwa is starting up a new 400 KT expansion this quarter. Is that in line with your expectations? And are there any other big projects on the docket for the rest of this year or into 2025?

Sounds good and then could you talk about your MDI.

Matthew Robert Lovseth Blair: My expectations for the next few years, there's been some reports that one was starting up a new.

Matthew Robert Lovseth Blair: 400, K T expansion. This quarter is that in line with your expectations and are there any other big projects on the docket for the rest of this year or into 2025.

Peter R. Huntsman: Yeah, I think after that expansion from Wanwa comes on, I'm not sure that there's a whole lot of capacity coming behind that. But look, I mean, Wanwa is going to do what they're going to do. But I mean, as I look at the Chinese market, it continues to be a good market force, demand is continuing to modestly grow, and pricing continues to be pretty sticky. And so.

Matthew Robert Lovseth Blair: Yeah.

Matthew Robert Lovseth Blair: I think after that expansion from longwall comes on I I am not sure that there's a whole lot of of of.

Matthew Robert Lovseth Blair: <unk> coming behind that.

Speaker Change: But look I mean, one of them was gonna do it what they're going to do.

Speaker Change: But I.

Speaker Change: So as I look at the Chinese market continues to be a good market for us demand is continuing to modestly grown pricing continues to be pretty sticky in.

Speaker Change: So.

Matthew Robert Lovseth Blair: I don't I don't see any new capacity coming on in North America or Europe. If anything, I question if everything ought to be operating in those two market segments. But as you look outside of China, there's nothing coming on.

Speaker Change: I don't.

Speaker Change: I don't see any new capacity coming on in North America or Europe. So anything I've. A question, that's if everything ought to be operating in those two and then those two market segments, but.

Speaker Change: As you look outside of China that there's nothing coming on.

Michael Joseph Harrison: Thank you. Our next questions come from the line of Mike Harrison with Seaport Research Partners. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Mike Harrison with Seaport Research Partners. Please proceed with your questions.

Michael Joseph Harrison: Hi, good morning. Um, another question for you on the spray foam opportunity. I was wondering if you could talk about the progress that you're making on some commercial inroads in Europe and in Asia. You mentioned that maybe there are some opportunities and building installation opportunities in China, and I just curious how you're positioned there.

Michael Joseph Harrison: Hi, Good morning, a another question for you on the spray foam opportunity I was wondering if you could talk about the progress that you're making.

Michael Joseph Harrison: Some commercial inroads in Europe and in Asia, you mentioned that maybe.

Michael Joseph Harrison: Maybe there are some opportunities in building installation.

In China, and just curious how you're positioned there.

Peter R. Huntsman: Yes, this is going to be an area that we're going to continue to put a lot of emphasis on. And you look, you know, just beyond Asia, specifically in Japan, some of these other areas, the Middle East, you know, we're seeing stronger growth there than in other areas of those regions. I see this as a real opportunity.

Speaker Change: Yeah. So this is going to be an area that we're going to continue to put a lot of emphasis on you look you know just beyond Asia, you look at specifically in Japan. Some of these other areas.

Speaker Change: The middle East.

Speaker Change: We're seeing.

Speaker Change: Stronger growth there than in other areas of those regions.

Michael Joseph Harrison: And as you think about either the high cost of energy, as in the case of Japan, or in the Middle East, where there's just a lot of new construction that's going on, these are both prime areas of opportunity for us. But I should emphasize that as you look at the vast, vast majority of that business, it's North America, Canada, and the U.S. We are going to see growth in Europe and Asia, but the health and vitality of that business are going to be dependent on North America.

Speaker Change: This is a real opportunity in and did you think around the either the high cost of of Oh.

Speaker Change: Energy as in the case of Japan or in the Middle East, where there's just a lot of new construction. That's going on these are both prime areas of opportunity for a threat I should emphasize that as you look at the vast vast majority of that business is North America, Canada, and the U S related we are going to see growth in.

Speaker Change: Europe, and Asia, but the health and the vitality of that business is going to be dependent on North America.

Phil: All right, and then a question for Phil, and I apologize if this is a stupid question, but I was curious if you could give us some color on the special items, the gain on acquisition of assets, and the prepaid asset write-off. What are those two items, and are they related to each other? Yes, they are related.

Speaker Change: Alright, and then a question for Phil and I apologize. If this is a stupid question, but was.

Phil: Was curious if you can give us some color on that.

Special items, the gain on acquisition of assets and the prepaid asset write off.

Phil: What were those two items and were they related to each other.

Phil: They were related to each other might be quite quite right that was all related to the closing of the slick transaction. The restructuring that we did and you'll see a number of 71, you'll see a number 52. It was also a member of 18 on tax and when you net all those together you get virtually eight and learning from them whatsoever, Our Mexican income.

Phil: It all relates to the transaction with minimal impact to net income.

Phil: Yeah.

Arun Shankar Viswanathan: Thank you. Our next questions come from the line of Arun Viswanathan with RBC Capital Markets. Please proceed with your

Phil: Thank you our next questions come from the line of Arun Viswanathan with RBC capital markets. Please proceed with your questions.

Arun Shankar Viswanathan: Great, thanks for taking my question. So I just wanted to come back to, you know, the discussion around normalizing some of these markets. So if you think of maybe the first half of the Unknown Executive, Salvator Tiano, Angel Castillo, Huntsman Corp., maybe one-third price. How would you kind of frame that trajectory?

Great. Thanks for taking my question. So I just wanted to come back to them you know the discussion around normalization of some of these markets. So if you think of maybe the first half around.

Arun Shankar Viswanathan: 200 million plus of EBITDA and maybe the second half are above that you're kind of tracking around 450 $500 million and I think in the past your peak EBITDA was around one.

Arun Shankar Viswanathan: 1 billion four if you remove some textiles, maybe you're down to a billion. Three so is that the right range, you're kind of thinking of and so if you. If you think about that going from $4 15 to 500 to maybe eight or $900 million in the mid cycle.

Arun Shankar Viswanathan: Is that a maybe two thirds volume and maybe one third price how would you kind of frame that that that trajectory.

Peter R. Huntsman: I'm not sure, Arun, that you're off by that much in any one area. I do think that maybe you're going to see a little more pricing. You know, you said you're kind of a third, two-thirds, one-third on price and volume. I think it's probably got to be probably – but pricing just has to occur here. We need to be able to get traction to offset higher raw material prices and margin recovery, but it's only going to take so much of that. So we need the volume to get the price.

I'm not sure a room that you're off that much in any one area I do think that maybe you're going to see a little more pricing.

Arun Shankar Viswanathan: You said you are kind of a third two thirds, one third on price and volume I think it's gotta be probably.

Arun Shankar Viswanathan: Just have to pass through a car here.

Arun Shankar Viswanathan: We need to be able to get traction to offset higher raw material prices and margin recovery volumes.

Arun Shankar Viswanathan: Volume is only going to take so much of that so we need the volume to get the price that's got to come first.

Arun Shankar Viswanathan: That's got to come first. But I would be the optimist that I am. I hope that we would do better in 24. I hope that we have a stronger second half in 24. But having said that, you know, since you look at kind of your mid-cycle peak and where we are today, no, I don't think you're too far off.

Arun Shankar Viswanathan: I I would I would being the optimist I am I hope that we would do better in 'twenty four I hope that we have a stronger second half in 'twenty four.

Arun Shankar Viswanathan: But having said that you know since you look at kind of your mid cycle peak and where we are today no I don't think that I don't think it too far off.

Speaker Change: Great. Thanks for that and then I'm just going back to the question of portfolio.

Speaker Change: Arguably you know despite some maybe improving markets here the cost position in Europe, it's probably not necessarily going to get materially better. So would you be in a position to maybe reconsider some some exits in Europe at some point in the <unk>.

Peter R. Huntsman: you know, despite some maybe improving markets here, the cost position in Europe is probably not necessarily going to get materially better. So would you be in a position to maybe reconsider some of your exits in Europe at some point in the future? Obviously, we have seen some announcements in certain areas by some of your competitors already. So just wanted to get your thoughts on that.

Speaker Change: Future, obviously, we have seen some announcements in certain areas.

Speaker Change: By some of your competitors are already so just wanted to get your thoughts on that.

Peter R. Huntsman: No, I think that as we look at Europe, look, I'm concerned about a lot of things in Europe, but I'm mostly concerned about high energy prices in a high regulatory environment. As I look at the high energy costs, most of our businesses in Europe are not terribly energy-intensive assets. So, again, I may have some concerns around the macro picture, but of our individual assets, I think that, by and large, they're competitive.

Speaker Change: No I think that as we look at Europe look I I am concerned about a lot of things in Europe, but I am mostly concerned about high energy prices and the high regulatory environment now as I look at the high energy cost most of our businesses in Europe.

Speaker Change: Not terribly energy intensive assets.

Speaker Change: So again.

Speaker Change: Maybe I have some concerns around the macro picture a bit of our individual assets I think that by and large are there competitive I look at advanced materials and that continues to be a very strong business for us with we see stronger margins in the advanced materials.

Peter R. Huntsman: I look at advanced materials, and that continues to be a very strong business for us. We see higher margins in advanced materials than we do in other areas of the world. And, you know, between Europe and APAC, we have a much larger business in Europe than we do in APAC. So, again, if you're in the right segments, aerospace, adhesion, light-weighting, you're going to do okay in Europe. If you're energy-intensive and you're producing fertilizers, which we are not, you know, glass and cement, things that are going to be energy-intensive, I think you've got some real portfolio concerns there.

Than we do in the other areas.

Speaker Change: The world and yes between Europe, and APAC, we have a much larger business in Europe than we do APAC.

Speaker Change: So again, if you're in the right segments aerospace adhesion light weighting.

Speaker Change: You're going to do okay in Europe, if you're an energy intensive than youre, producing fertilizers, which we're not you know glass and things that the cement things, they're going to they're going to be energy intensive I think you're you've got some real portfolio concerns there.

Peter R. Huntsman: So, the cost competitiveness of Europe versus North America and Asia right now in polyurethane does not warrant the movement of large-scale shipments around the globe at this time. So, this is – obviously, that's where we were a year ago. We're not there today.

Speaker Change: So the cost competitiveness of Europe versus North America, and Asia, right now and polyurethane does not warrant the movement of of large scale shipments to be moving around the globe. At this time. So this is obviously, that's where we were a year ago.

Speaker Change: We're not there today.

Peter R. Huntsman: I think energy prices are still too high in Europe. I don't think they're being adequately addressed by the governments there. I don't think they have a realistic policy to address those things. But I don't see that as being bad enough to force an exit.

Speaker Change: Energy prices are still too high in Europe, I think I don't think radically being addressed by the government. There are I don't think they have a realistic policy.

To address those things, but I don't see that as being bad enough to to to force an exit.

Yeah.

Operator: Thank you. We have reached the end of our question and answer session. And with that, that does conclude today's teleconference. You may disconnect at this time. Thank you for your participation and have a great weekend.

Speaker Change: Thank you we have reached the end of our question and answer session and with that that does conclude today's teleconference. You may disconnect at this time.

Speaker Change: You for your participation and have a great weekend.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].