Huntsman Corporation (HUN Quick QuoteHUN - Free Report) reported a first-quarter 2023 net income of $153 million or 83 cents per share, down from $223 million or $1.04 in the year-ago quarter.

Barring one-time items, adjusted earnings per share fell to 20 cents in the reported quarter from $1.10 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 16 cents.

Revenues were $1,606 million, down around 26.7% year over year. The top line missed the Zacks Consensus Estimate of $1,628.7 million.

Segment Highlights

Polyurethanes: Revenues from the segment fell 28% year over year to $991 million in the reported quarter, hurt by reduced sales volumes, unfavorable currency translation and lower MDI (methylene diphenyl diisocyanate) average selling prices. Volumes fell mainly due to lower demand, especially in European and American markets.

Performance Products: Revenues fell 30% to $334 million courtesy of lower sales volumes resulting from weak demand for certain products, which were partially offset by an improved sales mix. Sales volume fell in all regions mainly due to weaker construction activity, lower demand in coating, adhesives, lubes and other industrial markets, as well as inventory destocking.

Advanced Materials: Revenues from the unit went down 14% to $289 million primarily due to lower sales volume resulting from weak demand in the infrastructure market and the deselection of lower margin businesses. Average selling prices increased because of higher raw material, energy and logistics costs and improvement in the sales mix.

Financials

Huntsman had total cash of $615 million at the end of the quarter, down around 6% sequentially. Long-term debt amounted to $1,509 million, down roughly 9.7% sequentially.

Free cash flow from continuing operations was a use of $168 million against a source of $3 million in the year-ago quarter. The company spent $46 million on capital expenditures from continuing operations compared with $64 million in the prior-year quarter.

Outlook

Huntsman expects demand headwinds to persist in the second quarter, especially in North American construction. However, it is witnessing sequential improvement in China and Europe. It expects an overall business recovery as construction demand and inventory levels continue to normalize.

Huntsman expects to spend $240-$250 million on capital expenditures in 2023.

Price Performance

Shares of Huntsman have lost 24.4% in the past year compared with a 3.4% decline of the industry.

Image Source: Zacks Investment Research

Zacks Rank & Key Picks

HUN currently carries a Zacks Rank #5 (Strong Sell).

Better-ranked stocks in the Basic Materials space include Steel Dynamics, Inc. (STLD Quick QuoteSTLD - Free Report) , Linde plc (LIN Quick QuoteLIN - Free Report) and PPG Industries, Inc. (PPG Quick QuotePPG - Free Report)

Steel Dynamics currently carries a Zacks Rank #2 (Buy). Shares of STLD have gained 26.6% in the past year. It topped the Zacks Consensus Estimate in all the last four quarters. It delivered a trailing four-quarter earnings surprise of 10.7% on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Linde, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 11.9% for the current year. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.8% upward in the past 60 days. It has a trailing four-quarter earnings surprise of 6.9%, on average. The stock has gained 21.8% over the past year.

PPG Industries currently carries a Zacks Rank #2 and has a projected earnings growth rate of 17.7% for the current year. Shares of PPG have gained 9.7% in the past year. It delivered a trailing four-quarter earnings surprise of 6.8% on average.