Image source: The Motley Fool.
DATE
Wednesday, Feb. 18, 2026 at 10 a.m. ET
CALL PARTICIPANTS
- Chairman, CEO, and President — Peter R. Huntsman
- Chief Financial Officer — Philip M. Lister
- Executive Vice President — Mike Harrison
Need a quote from a Motley Fool analyst? Email [email protected]
TAKEAWAYS
- Free Cash Flow Conversion — Management converted 45% of EBITDA to free cash flow, described as “A higher percentage than many in the industry,” highlighting cash discipline during industry headwinds.
- Cost Reduction Initiatives — Achieved an annualized run rate of $100 million in cost savings in 2025 through approximately 500 headcount reductions (nearly 10% of workforce) and closure of seven facilities, with $45 million of in-year savings expected in 2026 (excluding inflation impact).
- Debt Covenant and Liquidity — CFO Lister said, “I am not concerned at all in 2026 about the leverage ratios,” and cited “an $800 million revolver,” over $400 million of year-end cash, and $300 million of securitization capacity, with $500 million outstanding borrowings resulting in a net liquidity of approximately $1 billion.
- Polyurethanes Q1 Guidance — The business is projected to generate $25 million to $40 million in EBITDA due to rising natural gas costs causing a $10 million headwind, compared to $42 million in Q1 of the prior year.
- Segment Performance: Aerospace — The aerospace business is expected to “grow slightly better than the production rates of the wide body planes in both Airbus and Boeing,” with management noting contractual wins extending product usage per plane.
- MDI Capacity Expansion — Executives referenced “low to mid single digits” percentage increase in North American MDI capacity for 2026, and noted that incremental capacity is already being absorbed into the market, affecting volumes from late 2025 onward.
- Inventory and Supply Chain Dynamics — Management characterized current inventories in the supply chain as “quite low,” flagging potential for sudden product shortages should demand rebound rapidly.
- Pricing Environment — Price increase notifications were sent for North American MDI products, “largely to offset rising benzene and natural gas costs,” with similar actions underway in Europe; management does not expect full realization of increases immediately.
- Restructuring Focus — Further structural changes in business operations remain a priority, with a stated intent to generate enough cash to maintain dividend coverage in 2026.
- Industry Consolidation Outlook — CEO Huntsman said, “we will be willing to engage with interested parties and push where there is an opportunity for value to be created,” and expects further industry consolidation, mergers, and joint venture discussions in 2026.
SUMMARY
Huntsman Corporation (HUN +9.07%) underscored rigorous cost discipline and notable free cash flow performance despite persistent global chemical industry headwinds, supported by extensive restructuring efforts. Management anticipates moderate EBITDA pressure for polyurethanes from raw material inflation in the upcoming quarter, while emphasizing ongoing strategic actions to support margins and maintain liquidity. The firm highlighted early signs of demand and pricing improvement in Europe, yet characterized broader recovery signals as nascent and not yet reliable for full-year forecasting.
- Regulatory price interventions and tariffs led to an 80% drop in Chinese-origin MDI imports to the U.S, altering regional supply and potentially increasing tightness risk if a demand recovery materializes.
- Advanced Materials is positioned for margin improvement as The Americas show recovery, while Europe and Asia remain solid contributors for the segment.
- Management observed that wide body aircraft production rates, key for Huntsman’s aerospace-related product volumes, remain below 2019 levels, yet long-term contractual business and backlog support ongoing segment growth.
- Leadership stressed that future mergers, divestitures, or joint ventures will be considered only where financially aligned with current balance sheet constraints, with a preference for creative, non-debt financed deals.
- Executives addressed North American construction and automotive market softness, noting the company’s proactive strategy to harness innovation and operational agility to outperform broader industry volume trends.
INDUSTRY GLOSSARY
- MDI (Methyl Diphenyl Diisocyanate): An essential chemical compound used in the production of polyurethane foams, coatings, adhesives, and elastomers, notably for construction and automotive applications.
- EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to assess operational profitability.
- System House: A facility that formulates polyurethane systems tailored to customer specifications, often closer to end-user markets.
- TPU (Thermoplastic Polyurethane): A type of polyurethane with elastic and durable properties used in advanced materials and various industrial applications.
Full Conference Call Transcript
Peter R. Huntsman will provide some opening comments shortly, and we will then move into the question-and-answer session for the remainder of the call. During the call, let me remind you that we may make statements about our projections or expectations for the future. All such statements are forward-looking statements and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections. We do not plan on publicly updating or revising any forward-looking statements during the quarter.
We will also refer to non-GAAP financial measures such as adjusted EBITDA, adjusted net income and loss, and free cash flow. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release which has been posted to our website. I will now turn the call over to Peter R. Huntsman, our Chairman, CEO and President.
Peter R. Huntsman: Ivan, thank you very much. As we review 2025 results, I think it is worth commenting on a bit on this past year and on our focus on 2026. I often end my prepared remarks with these words. We will continue to focus on what we can control and where we can create value. I do not say this to be repetitive, but rather emphasize where our focus needs to be. Our industry started this past year 2025 with optimism that North American housing was going to pick up. Chinese consumer confidence was going to recover and Europe would finally realize their follies and do something to reinvigorate their industrial competitiveness.
Instead, shortly after our call, Liberation Day was announced and markets and consumer confidence was thrown into chaos. China repositioned and rechanneled their trade and stood toe to toe against the U.S. while their domestic market slowed. Europe policymakers focused on what was making them uncompetitive and decided to double down and lost a record amount of chemical production throughout the year. In North America, we saw U.S. housing and durable goods struggle to show any growth. Despite these hurdles, we continue to cut and restructure our cost basis, closing multiple facilities. We achieved growth in most of our tonnage that exceeded the general market while attempting to lead multiple price increases.
And perhaps most importantly, we converted 45% of our EBITDA to free cash flow. A higher percentage than many in the industry. As we look out over 2026, we anticipate a gradual recovery in North American homebuilding and durable goods as well as an improvement in the Chinese domestic markets. We are seeing some very early signs of both improved volumes and pricing in Europe. It is too early to say these increases will fully materialize but we remain hopeful.
While we do not control the outcome of these large macro changes, we will be more than ready to take advantage of any opportunities to expand margins and increase revenues should they come along and by focusing on those items we can control and conditions we can influence. On the strategic front, I believe that 2026 will continue to be another year of changing market dynamics. Even if we start to see a recovery, we will likely see further opportunities for mergers, joint ventures and industry consolidation. As always, we will be willing to engage with interested parties and push where there is an opportunity for value to be created.
We will not be sitting on the sidelines waiting to see what comes along. Like 2025, we have set expectations internally to generate enough cash to cover our dividend. This requires more than just moving inventory about. And we will continue to be focused on further structural change in how and where we do business to accomplish this. With regards to pricing and growth, we will push to grow our assets at a better pace than the general industry and do this by winning business through new product development and innovation.
Pushing to fill out capacities and upgrade materials through our MDI splitter in Geismar, capacity increases in high purity amines for the tech industry and catalysts, and expanding capabilities in material usage in aerospace, power and the fast evolving auto industry. We will also be selectively using AI tools if they make economic sense to further reduce our cost, simplify our processes and expand our R&D capabilities. In short, I hope that 2026 will be a year of recovery compared to 2025.
The coming weeks should signal to what degree we will see demand returning to the North American construction industry and China’s moves following the Chinese New Year, the March National People’s Congress and President Trump’s visit to China in early April. The next several weeks should be anything but boring. With that, operator, we will open the call up for questions and comments. Certainly. We will now be conducting a question-and-answer session. First question is coming from David L. Begleiter from Deutsche Bank. Your line is now live.
David L. Begleiter: Thank you. Good morning.
Peter R. Huntsman: You mentioned some potential improvement you are seeing in Europe. Can you dive down into what is
David L. Begleiter: driving that improvement? And how long and can that persist going forward in the year?
Peter R. Huntsman: Yes, I think that as we look at Europe two things that we see. We see price increases that have been announced across the board. Well, most everyone have announced price increases, there might be one producer out there that is not. We are seeing a bit of a pickup in construction and as well as in auto. We also continue to see demand, not necessarily in polyurethanes, but in other divisions around the power segment, building out the infrastructure as well as aerospace. So I want to emphasize that at this very call last year, I think in my comments, I commented that everybody in North America had announced price increases as well.
And all of those fell through shortly after the chaos that ensued after Liberation Day. So again, I am not trying to throw water on what we are seeing thus far into the quarter. But in Europe right now, I will take anything we can get and run with it.
David L. Begleiter: Got it. And just in aerospace, how much did the business grow in 2025? And how much do you expect the business to grow in 2026? Thank you.
Peter R. Huntsman: We expect the business to grow slightly better than the build rate. Again, I would just remind you, there is a difference between the delivery rate and the build rate. If you go to some of the airline aircraft manufacturers, you will see when you go to Toulouse or you go to Seattle, you will literally see scores of planes that are waiting FAA certification. So you can see where an Airbus or Boeing can show 15 deliveries, but a build rate that is much higher or much lower than that. Also, just as a reminder, we put a lot more product into wide bodies than we do narrow bodies.
So when somebody says that they have got a record number of deliveries, or of production rates, we want to see more wide bodies. Just as a side note, the wide body production rate is still below this year is still below where it was in 2019. And that is not through lack of demand. There is still a backlog of years and years on wide body, pushing ten years on wide body planes. It is the capability that both producers seem to have lost during the COVID era. So as we see that recovery in wide bodies, we also have announced in previous calls the penetration of our products in internal applications around adhesives and internal components.
So I say that we expect to grow better than the production rate, I say that meaning that we already have under contract a lot of the fuselage, the wings and so forth that we have had for some years. But we are picking up new business on a per-plane basis that will gradually be benefiting us throughout the year as well. So aerospace for us will continue to grow slightly better than the production rates of the wide body planes in both Airbus and Boeing. Thank you. Next question is coming Kevin William McCarthy from Vertical Research Partners. Your line is now live.
Kevin William McCarthy: Yes, thank you and good morning. Can you refresh us on the amount of cost savings that you expect to flow through your financials in 2026? And where those might show up on a segment basis, please?
Philip M. Lister: Yeah, Kevin. We targeted $100 million of cost savings
Peter R. Huntsman: overall, which was headcount reductions of approximately 500, almost 10% of the workforce, and closure of
Philip M. Lister: seven facilities. By the 2025, we had actually achieved
Peter R. Huntsman: that annualized run rate of $100 million. The question is very specific to the in-year saving that we would expect in 2026.
Philip M. Lister: That is about $45 million of in-year savings that we would expect to achieve excluding any impact from inflation. And you should get some additional savings to come through as well in 2027.
Kevin William McCarthy: Okay. Very helpful. And then Peter, I wanted to follow up on a comment that you made in your opening remarks to the effect that we may see more in the way of mergers, JVs and industry consolidation this year. Were you referring to the industry in general? Or do you see opportunities for those sorts of strategic actions in the polyurethanes arena, for example?
Peter R. Huntsman: I think both. I think that if you look in general is the most direct answer I can give. But I also have to look at where there is the most payoff. That is usually where you are seeing the largest number of divestitures, closures, possible joint ventures, and so forth. I think it is something like MDI where in the U.S., you have four manufacturers. I would imagine that the cost curve between those four manufacturers is pretty steady. And it would probably be pretty tough to see a merger take place of one of those four or two of those four manufacturers coming together. So U.S. might be a rather limited area in the area of MDI.
Mike Harrison: I look at some place like Europe, I think the cost curve again, this is just my opinion, but the cost curve in Europe when you look at facilities, an MDI facility that would be in Antwerp or in Rotterdam, and you compare just the integration and the scale, then you take some facilities that are far smaller where they are taking raw materials, producing it in country A, moving it to country B where they are processing it into MDI, moving it to country C where they are splitting it. Again, you have a much greater cost curve in Europe.
And I would assume that you have got leaders and laggards in Europe that you do not see in Asia, you do not see that in North America. That could easily precipitate possible closures. They could precipitate possible combination of assets taking place. And so I would say that it has to do with both the chaotic nature of the manufacturing footprint, costs and so forth that are associated with that. But at the same time, look, the number of chemical companies there are today that produce polyethylene, for example, in North America are fewer than there were fifteen years ago.
Polypropylene, you look at the number of companies, look at the number of companies that are just our peers that are publicly traded. There is a general consolidation that is taking place, has been taking place. And I would assume that as you look and companies have cut the cost that they have cut, I imagine most companies have taken out all of the fat that exists and probably is now maybe even carving into muscle into certain areas. The next area that you are going to see for material cost savings is going to come about through possible mergers and so forth.
So again, these are just my observations, but I continue to believe that there will be opportunities as there have been in ’25 and ’26. Now does that mean they make financial sense? You have seen some very large companies that have just shut down assets, some that have sold them off at a loss, others that have sold them for almost nothing. I think we are pretty public with our German maleic anhydride facility. We tried to sell it. We got to a point where we even tried to pay people to take it, and were unsuccessful in all of that. So we finally decided to shut it down. So every company is going to vary.
And just because there is a deal out there does not mean that you have got to pursue it. But it does mean that there is, I believe, continues to be opportunity for churn.
Kevin William McCarthy: Great. Thank you both.
Peter R. Huntsman: Thank you. Next question is coming from Josh Spector from UBS. Your line is now live.
Josh Spector: Yes. Hi, good morning. I wanted to ask about
Philip M. Lister: your debt covenants that were updated a week ago and your outlook. I guess if I am doing some math right, need to be above six times net debt to EBITDA. Means your EBITDA in 1Q through 3Q needs to go from about $60,000,000 to $80,000,000 to $100. I guess one is that about right? Because I recall some of your prior agreements had some adjustments and maybe added some EBITDA temporarily. And two, just your level of confidence of achieving that step up if the industry does not improve.
Philip M. Lister: Yes, Josh, it is Phil. So we posted our credit agreement on the new banking group on Friday. And if you want, you can look through all 160 pages, but I will give you the synopsis of that. Good banking group, pleased with the agreement overall. And you are right, the agreement has definitions of consolidated EBITDA which are different to the adjusted EBITDA that we state publicly. In addition to that, there are certain baskets as well. I am not concerned at all in 2026 about the leverage ratios.
I think that adjusted EBITDA as we publicly quote would have to drop to something well below $100,000,000 on an LTM basis for us to even have a conversation about those leverage ratios. I am not concerned and I am pleased with the agreement that we put out on Friday.
Josh Spector: Okay. So just there is then some sort of adder of a sizable amount, I guess, to bridge that gap, which I guess I should read that document to find more. Can you size it now? Or is it more complicated than that?
Philip M. Lister: You have various definitions to size it, but you can see in the details, but you have got more than a couple of $100,000,000 there, and I am not concerned in the least about those add backs and help bridge the ratio.
Kevin Estok: Great.
Peter R. Huntsman: Thank you. Next is coming from Michael Joseph Harrison from Seaport Research Partners. Your line is now live.
Mike Harrison: Hi, good morning. Peter, was hoping that you could talk in a little bit more detail about how you are thinking about MDI margins playing out over the quarter or two. It sounds like in polyurethanes, you are still expecting overall margins to kind of be under pressure. But I am curious
Kevin William McCarthy: where you might be, maybe a little bit more optimistic
Mike Harrison: Well, I think two things when you think about margins expansion. One is how much, what is the industry doing around volumes. And obviously, the more that you sell out of a fixed asset, the better your margins are going to be even if pricing does not change. And so typically going into the March, April, May timeframe, you are usually seeing demand picking up quite substantially. I do not see anything right now, at least, that is equivalent to the liberation day we saw a year ago that kind of threw people into
Kevin Estok: chaos.
Mike Harrison: Interest rates are steady, if not dropping a very small percentage. Homes are becoming more affordable as builders are building smaller homes, and simpler homes, if you will. And I remain optimistic having spoken to some of our customers and having spoken to some of the banks and lenders and so forth. In this area, that recovery in volume is going to be something that we should see increasing over the next few quarters here. I would also hope that pricing initiatives that have already been set, we sent out price increase notifications yesterday in our MDI business in North America, largely to offset rising benzene and natural gas costs.
That obviously needs to happen just to offset the headwinds of natural gas and benzene as similar price increases have gone into effect in Europe to offset those costs, and hopefully gain some traction there. And China will probably have to wait till after the Chinese New Year. It started yesterday, goes into the early parts of March, before we see what is happening in China where we are seeing an RMB price today of around 14 for polymeric MDI. So I anticipate that we will see both an improvement in volume demand and in pricing.
Kevin Estok: All right. And then
Vincent Stephen Andrews: for my follow-up, I was hoping that you could maybe give us an update on the potential for share gains in spray foam insulation in North America. And kind of where do we stand in terms of rolling out that spray foam insulation product line in Europe and in Asia?
Mike Harrison: Well, Europe and Asia we are going to continue to look at opportunities there as they come, and perhaps looking at third parties and so forth. Our main focus on building solutions is going to be North America. We continue to make steady progress in gaining market share. And at the same time, we are also doing that with increasing margins and lowering our own costs, consolidating our manufacturing footprint, and providing customers with new solutions and new products, innovation. So I think that our building solutions, urethane spray foam business today is probably in as good a shape as it has been the last three or four years.
So I continue to be optimistic about the direction of that business.
Peter R. Huntsman: Thank you. Next question today is coming from Patrick David Cunningham from Citibank. Your line is now live.
Patrick David Cunningham: Hi, good morning. Thanks for taking my questions.
Mike Harrison: Peter, you have taken a lot of steps to rightsize the cost structure
Patrick David Cunningham: and footprint in Europe, particularly in polyurethanes. Do you still feel there is more to go from either you or the industry? And I know in the past, you have been skeptical about things like antidumping or energy policy reform in Europe. But have any of the more recent calls to action or radical policy reshift given you any more encouragement at this point?
Mike Harrison: Yes. I remain hopeful that European policymakers will eventually do the right thing. As I had an opportunity a couple of quarters ago to meet with President Ursula von der Leyen, and I told her they need to do three things. They need to restart their nuclear, refocus on nuclear production. They need to move away from this crazy green new deal that has run them into the ground. And I apologize to her for using the f word, but they need to start fracking. And so she shook her head and yeah, we need to talk. The problem is there is just too much talk and there is too little action.
But I continue to be optimistic that action will come about. I believe that in Europe, look, we have got two issues there and I have already touched on the first one, of what I consider to be a very wide structural issue with the industry of small facilities that I question just how competitive they are. Again, I do not run one of those, and so I do not know what goes on in those boardrooms and so forth. But there does seem to be more capacity than needed to satisfy the industry. There is a pretty disparate cost curve in Europe. And Europe continues to struggle with high energy costs.
And so I think that there needs to continue to be a consolidation or refocus on those two things. As far as our cost structure in Europe, as I look at that cost savings of $100-plus million that Phil talked about earlier, most of those 500 reductions that we have seen in the company and the seven site closures, sadly, have taken place in Europe. And do we have more that we could be doing there? I really strain to see where there is large material change that can happen there by cost cutting further. I think that we want to position the business with the realization that Europe continues to be a $20 trillion economy.
As much as we struggle in certain areas of polyurethanes, we continue to do very well in Europe in aerospace, and power, and coatings and certain adhesion formulations, and our thermoplastics polyurethanes and elastomers businesses. So not all is on fire in Europe. I just think Europe is capable of doing a lot more than what they are doing. And we hope that we are able to see recovery. I would remind you that it was just four years ago our most competitive MDI produced anywhere in the world was Europe. Europe was the most profitable end of our MDI business a couple of years ago. It can be great again.
And I will spare Phil Lister saying, let us make Europe great again. But so we will go on to the next question here.
Patrick David Cunningham: Understood. And then maybe just on Advanced Materials, it seems to have a lot going for it entering into 2026. You have new wins, strong aero, power businesses and maybe some stabilization on some of the core coatings and infrastructure. So how should we think about growth in 2026 and any sort of latent upside or operating leverage you may have for margins and what sort of right margin levels we should think about?
Mike Harrison: I think that look. Advanced Materials is going to be stable before anything else. But where we need to see the growth taking place and margin improvement taking place is the segment of the industry where I believe we have the greatest opportunity for improvement. That is The Americas. Europe continues to be a strong segment for Advanced Materials. Asia continues to be a strong area. And The Americas will continue to see recovery as we see building recovers, we see the PMI continue to recover in The Americas. And I continue to be very optimistic about that trend.
Peter R. Huntsman: Thank you. Next question today is coming from Michael Joseph Sison from Wells Fargo. Your line is now live.
Michael Joseph Sison: Hey, good morning. Peter, can you talk a little bit about
Kevin William McCarthy: the cost curve now? You sort of mentioned that Europe used to be
Michael Joseph Sison: your highest or lowest cost or highest margin area. So
Josh Spector: where are we now maybe industry-wise for the regions? And then
Kevin William McCarthy: you know, at some point, if things do not improve in Europe,
Josh Spector: I mean, what do you do with your assets there? Does it make
Kevin William McCarthy: sense to just reduce exposure and sell out the U.S. or, you know, what are the options if
Michael Joseph Sison: this downturn continues? Which I hope it does not. Well,
Kevin Estok: yes, I hope it does not either. Europe has got too much potential.
Mike Harrison: And I think that what we are seeing right now, our biggest headwinds where I look at our MDI production in Rotterdam versus Geismar versus Caojing. We have basically the same technology. We have the largest line in Caojing. We have the most lines in Geismar. We look at our cost for benzene in the three regions as basically flat. Our cost for chlorine and so forth is essentially flat. The big drivers is energy, is natural gas and energy costs. And so that is what fundamentally needs to change in Europe. And, unfortunately, today, I think that the seeds have been sown that I am not sure that there is going to be a fast change taking place.
Now that is why we have made the funding that we have made in the last couple of years in Europe, which I think will address a lot of these issues going forward. The bottom line is that Europe, if demand is not going to improve, and if they are going to leave themselves open for cheaper product to come in from Asia and from the U.S. Eventually, European policymakers have got to determine if they want to protect homegrown industry in Europe. And two macro things need to—there needs to be less production in Europe and European policymakers need to decide if they want to stop cheaper products from coming into Europe.
Patrick David Cunningham: Got it. And then just a quick follow-up on
Josh Spector: sort of the industry consolidation potential.
Kevin William McCarthy: If Huntsman Corporation ends up being a buyer,
Josh Spector: of stuff, where do you want to focus those acquisitions? And then you know, what are the potentials for Huntsman Corporation to divest stuff if things are not going to improve longer term.
Mike Harrison: Well, we are going to, in my opinion, we are going to have to do both. Because we do not have the ability today, we are not going to go out today with the balance sheet that we have today, stretch that balance sheet and put it in jeopardy. So that is why I say my comments. We have got to be creative. We have got to be smart. And you have got to look at things such as joint ventures or possible, you know, mergers and or some sort of consolidation play. And I think we can continue to expand and to grow the business without necessarily going out and taking on more debt.
Now if we are able to sell something or monetize something, I think we have been very consistent over the last couple of years. Our primary focus is going to be to expand our applications and the footprint that we see in Advanced Materials. And we would like to invest in those type of applications. That is not necessarily that we are going to go out and we have to invest in epoxy. But when we look at areas like aerospace and adhesions, and we look at the power systems and so forth, even look at some of the automotive areas that polyurethane is participating in around battery potting and so forth.
These are going to be the sort of applications and product innovation that is going to be rewarded over the next decade. So where would we be buying? Probably first off we need to find where there is best opportunity, but it would be in that area. But, again, I want to end this by where I started it, and that is we are not going to go out today and take the balance sheet we presently have. We are going to have to do some work before we go out and just start adding on more debt or see a material change in improvement in the industry.
Peter R. Huntsman: Thank you. Our next question today is coming from Aleksey V. Yefremov from KeyBanc Capital Markets. Your line is now live.
Joshua David Spector: Thanks and good morning. This is Ryan on for Aleksey. Peter, I want to go back to some earlier comments I kind of found quite interesting around affordability and maybe some improving conversations with customers. I was just wondering, are you maybe seeing improved
Philip M. Lister: order patterns from customers kind of ahead of maybe upcoming construction season? Or is there something else on the radar? Just any additional color there would be much appreciated.
Mike Harrison: I think that it is simply too early to say, and I am not trying to obfuscate. We had a very cold East Coast, everything east of the Rockies, in January, December. I think that if anything, we are probably going to see a little bit of a delayed, probably a couple of weeks. We typically start to see construction orders start coming in about February, about now, and start building up through the month of March. And so that by April, you are seeing the full impact of what I would call a construction season. That obviously can be delayed through weather.
It can be delayed in Asia because of a later Chinese New Year, which is what we are seeing this year. So I think between later-than-usual Chinese New Year and a colder-than-usual winter months that we saw in North America. Now I did say earlier, we are seeing what I would consider to be green shoots, and I want to emphasize again, very early green shoots in Europe, about a little bit better demand and pricing traction than we have had the last couple of years. So that again, I will take anything I can get at this point. And we are going to nurture that and we are going to
Kevin Estok: see
Mike Harrison: make the most of that.
Philip M. Lister: Right. Okay. That is helpful. And I was just curious. Can you—you guys made some comments in the prepared remarks just around kind of inventory levels in the U.S. But I was wondering if you can maybe comment on where you believe MDI inventories are in both Europe and Asia? Thank you.
Mike Harrison: You are talking about our inventory levels or that of customers and the industry in general?
Philip M. Lister: Just the industry in general.
Mike Harrison: Yeah. I would say ours are very low. And again, I cannot speak for every customer that is out there, but just anecdotally, it feels like the supply chains between us and the consumer is quite low. And, you know, all companies right now in that supply chain are trying to control cash, trying to control inventories and working capital. Building suppliers, OSB producers, auto industries that are having to write off billions of dollars on EVs and so forth. They are all focused on cash right now and inventory control.
So one of the unknowns that we may well see going into ’26 is—and I say this having lived through a bunch of other sudden rebounds in the industry—this industry typically does not recover over the course of four or five quarters. It usually gets to a point where people realize products are
Kevin Estok: tight.
Mike Harrison: All of a sudden, we cannot restock in time for a demand upswing. And all of a sudden, you find out there are shortages. And we look back in 2018. We look back—every couple of years, this seems to happen. I would not be surprised if that were to happen in ’26 in certain regions of the world.
Peter R. Huntsman: Thank you. Next question today is coming from John Roberts from Mizuho Securities. Your line is now live.
Mike Harrison: Thank you. Are you seeing any significant decline in price for merchant chlorine in the U.S.? One of the major U.S. suppliers talked about significant weakness in the merchant chlorine market. No. I think it has been pretty steady. I would love to see it collapse but it has been pretty steady.
Peter R. Huntsman: Okay. And then sorry, I have forgotten that Europe was actually the most profitable MDI region for you.
Kevin William McCarthy: I think that it was less disadvantaged a few years ago, but I never really thought it was advantaged. What was the source of the advantage
Ivan Mathew Marcuse: that Europe had over the rest of the world?
Mike Harrison: We had, again I am speaking for Huntsman Corporation. I am not speaking for our competitors. We had a lot of downstream business, more downstream business in Europe five, six years ago. That went into our elastomers business, TPU. Went into our system houses. We had more system houses there than we did any other place. And we also had lower chlorine and caustic prices and our auto business in Europe used to be one of the most profitable segments we had anywhere in the world. Today, that auto segment that is most profitable is in China. Again, I think we still have a very good auto segment in Europe and a very good one in the U.S.
You know, we are seeing the same trends that a lot of other companies are seeing.
Kevin Estok: Thank you.
Peter R. Huntsman: Thank you. Next question is coming from Matthew Blair from TPH. Your line is now live.
Mike Harrison: Great. Thank you and good morning. Could you talk about your expectations for global MDI capacity growth in 2026? And I think there are reports that one of your U.S. competitors is looking to add capacity this year.
Philip M. Lister: I think that would raise global capacity by roughly 2%. Do you agree with that? Is that something you are seeing as well?
Kevin William McCarthy: Do you expect any material increases in Asia MDI capacity
Kevin Estok: this year? Thank you.
Mike Harrison: Well, Asia—I will hit that first. Asia continues to be our most profitable MDI market and supposedly the one that is most oversupplied with MDI. There was a lot of talk earlier in 2025 that with the tariffs going up in the U.S. and a lot of that Asian material that was going into the U.S. had merely washed back into Europe and into China and flood those markets. We have not seen that take place.
So as I look at capacity additions in China, I think that they may well be coming on, but I question how much impact they are going to have and we are not seeing that material necessarily leaving China any more than it has over the last couple of years. In the U.S., yes, I think we are seeing the impact of some of that incremental debottlenecking, some of that expansion that has been taking place over the last couple of years with one of our competitors here.
I would remind you that typically companies go out about six to twelve months before capacity comes into the market and you start cutting deals, you start talking to people about pricing, and what you do not do is bring up a new line of 50,000 metric tons, for example, and all of a sudden tell your sales and marketing, we will go sell it now that we are producing it.
And so the impact of that volume coming into the market which from what I have publicly read is sometime middle part of this year, I would say from a pricing point of view, from a supply point of view, is probably being felt in the fourth quarter of this last year and first quarter of this year. Having said that, we are talking about an expansion of about what—low to mid single digits—in North America of actual capacity that is coming in. So I am not sure that it is going to have a material adverse change to the market. Great. Thank you.
And then is there any major turnaround activity we should be on the lookout for later in the year for Huntsman Corporation, like any sort of MDI downtime in Q2 or Q3 that we should be aware of?
Philip M. Lister: No. Just our normal turnaround activity. We had the once-in-four-year major Rotterdam turnaround last year, but normal turnaround activity across all three regions. We do have to make sure that our plants remain reliable. So there will be periods of planned outages but nothing abnormal.
Peter R. Huntsman: Thank you. Next question today is coming from Laurence Alexander from Jefferies. Your line is now live.
Mike Harrison: Hi, this is Dan Rizzo on for Laurence. I have questions based upon something you mentioned before about kind of focusing on wide bodies within aerospace. I was wondering if getting to narrow bodies as a focus, how its done with the cycle is like, or if that is an opportunity in the coming year and years? Well, it will not be an opportunity until they start redesigning the 737 and the A320 Airbus. When I say redesigning, that would be a major, major overhaul by now making carbon fiber wings and fuselages and so forth. So I do not see that happening anytime in the foreseeable future.
Again, I think you are going to see opportunities to have new adhesions and so forth applications going into the narrow body. And it is incrementally moving towards light weighting and so forth. So that is an area of focus that we continue to have as to how do we have greater penetration into the narrow bodies. But as far as all of a sudden they start making composite wings or fuselages, I would love to see it but that would be a major change to the design of the plane.
Peter R. Huntsman: Thank you. Next question is coming from Frank Joseph Mitsch from EM Research. Your line is now live.
Michael Joseph Sison: Good morning.
Kevin William McCarthy: Peter, I never thought I would hear you say the word, let alone on a conference call.
Mike Harrison: It was quite revealing to say it in Europe of all places too, where I think I may have been thrown in jail.
Kevin William McCarthy: And for the record, if anybody dialed in late, he said fracking. So just to clarify that.
Michael Joseph Sison: Hey. Speaking of clarifications, you know, let me come back to the consolidation question.
Kevin William McCarthy: That was asked by a couple of other people. I mean earlier this earnings season we had
Patrick David Cunningham: a company overtly
Michael Joseph Sison: state that it was, you know, open for selling the company, and you obviously say, hey, look, we are willing to engage with interested party and create value where there is
Kevin William McCarthy: an opportunity to do so. Is there any—should we be reading through the lines on Huntsman Corporation here in that regard? Or, you know, how would you address that?
Mike Harrison: No, I would—look, the standard answer that we give on something like that is we do not comment on rumors or M&A activity. In this case, I would say that it is no. We are not in a sale process today or anything of that sort. I think that as we look at it, we just—we see and you hear a lot of companies that are talking about that they are studying the future of their division X or they are looking at consolidations or they are looking to shut down assets and so forth. And wherever you see chaos, you see—usually, you see opportunities.
Kevin Estok: So
Mike Harrison: I would not read more to it than that.
Kevin Estok: Terrific. Thank you so much. Thank you. Next
Peter R. Huntsman: question today is coming from Jeffrey John Zekauskas from JPMorgan. Your line is now live.
Kevin William McCarthy: Thanks very much. In the first quarter, your
Michael Joseph Sison: polyurethanes range first quarter of $25 to $40 million in EBITDA. And last year, you made $42. So is the reason why your urethanes EBITDA should be down is that prices are lower year over year, and I would expect that volumes would be higher. And why is the range so big? And, you know, what is the difference between the lower end of the range to the higher end of the range? Do you need to get prices up in the first quarter? What is the real dynamic there?
Mike Harrison: Well, we do need to get prices up in the first quarter. We have got rising natural gas costs in the first quarter that right now, as I sit here, represent a $10 million headwind that we were not anticipating a couple of weeks ago in our polyurethanes business. So yeah, I do see some headwinds. I do see that coming down. I would remind you that as we look at the first quarter of last year’s $42, that was coming off of a fourth quarter—I do not want to get into too much detail here—that was coming off of a fourth quarter in 2024, $50, and leading to a $31 of this last year.
So we were seeing a polyurethanes business last year that was in a nosedive, if I could put it mildly. And I look at polyurethanes this year, I certainly have more optimism in the market. We are starting it from a low basis obviously, in the fourth quarter going into the first quarter. I do hope that we are able to do better than that median range, and that adjustment, the range that we gave literally we argued about that just over the last couple of days internally because of the headwinds that we are seeing. And as we look at natural gas prices, this very week in Europe are starting to come down.
Again, this is something that if we were to have this call two weeks from now, it could be maybe a few million dollars difference one way or the other. But I think directionally, we are seeing volumes coming up. We are pushing prices and I would say that the business is set certainly in a different direction in ’26 than it was in ’25.
Kevin William McCarthy: Okay. And when you look at polyurethanes prices for Huntsman Corporation, did they sequentially move lower through the course of 2025?
Kevin Estok: And then for Phil,
Kevin William McCarthy: is your base case that working capital is a use in 2026?
Mike Harrison: Yes, I will let Phil answer on the working capital. In 2025, yes, we did see pricing pressure on a downward basis in all three regions. Pricing actually came down in Europe and the U.S. about the same. Started higher in Americas. It is still higher in The Americas today, but both came down about the same amount throughout 2025. And Asia less so.
Philip M. Lister: Yeah. From working capital. If we did not do anything, and you assume the economic conditions are better in 2026 than they were in ’25, therefore, you have got more revenues, more receivables. You would expect a use. We have a number of programs in each of the individual items of working capital—inventory, AR, AP—and I fully expect and target that our cash conversion cycle, which we reduced by 10% in 2025, will again be a reduction in 2026. And therefore, we would be targeting overall an inflow absent significant changes to the macroeconomic environment.
Kevin Estok: Thank you. Next question is
Peter R. Huntsman: coming from Hassan Ijaz Ahmed from Alembic Global. Your line is now live.
Kevin Estok: Good morning, Peter. Peter,
Kevin William McCarthy: quarters ago, I believe it was ’25, actually maybe it was Q2, you mentioned that sequentially in polyurethanes,
Kevin Estok: you guys see 8% to 10% volume uptick. And you only saw a 3% volume uptick in Q2 last year. So, obviously, you know, Liberation Day, you know, tepid demand globally, presumably all those factors went into that.
Hassan Ijaz Ahmed: But as you look at Q2 of this year, particularly keeping in mind some of the lean inventory comments you made, could we be gearing up for a pretty big sort of volume uptick within polyurethanes?
Mike Harrison: It all depends on the macro issues around the construction season. And we will certainly know that by March. I would, in my opinion, it is mostly going to be around construction. And that will lead to construction demand, lead to increased—usually increased—durable goods in North America. And that is where we had our biggest miss this last year. So, again, and at the same time, remember, Hassan, we are also going to be pushing through price increases. And you have got to balance that very carefully as to how much do you want to increase prices and push for price increases and hold the line on pricing and how much do you want to go after volume.
So it is a tough line to walk.
Kevin Estok: And
Mike Harrison: we will follow the macroeconomic indicators.
Hassan Ijaz Ahmed: Very helpful. And as a follow-up, I mean, again, it seems that just from the sounds of it, you seem a little more comfortable about pricing as it pertains in polyurethanes as it pertains to North America, particularly keeping in mind this incremental capacity that is coming online. Is it fair to assume that we should see a healthy pricing trajectory in North America despite this capacity coming online, keeping in mind some of comments you made about how, you know, you sort of presell ahead of this capacity coming online.
Mike Harrison: Yeah. Hassan, you have got to remember, I am my father’s son. I grew up in a household where polystyrene was considered to be the greatest petrochemical product ever produced. And so, yes, I am always going to be pushing for better prices. I am always going to be optimistic about demand and pricing and so forth. Take what I say with a grain of salt in those areas.
I would say that it is simply too early to say in the North American market and largely to the Chinese market, which you well know that the pricing in China is usually going to be the two weeks or so after Chinese New Year is over, usually, you see quite a bit of volatility, hopefully, upward pressure on pricing there. North America, it is just too early to tell. Again, we have got pricing announcements that have gone out to our customers. And we are also seeing some pricing announcements and some small bits of traction in Europe on pricing as well.
But I do not want to get the wagon ahead of the horses here and say that somehow I am announcing that we have been successful in getting prices through in Q1. We have made the announcements. They will likely see the impact in Q2, if anything. And we will continue to push for that.
Peter R. Huntsman: Thank you. Our next question today is coming from Vincent Stephen Andrews from Morgan Stanley. Your line is now live.
Michael Joseph Sison: Hi, good morning. This is Turner Enrichs on for Vincent.
Kevin William McCarthy: What drove the less severe than expected seasonal drop in North American polyurethanes last quarter?
Philip M. Lister: So polyurethanes overall in North America grew slightly, and that is really around some of the business wins that we have seen in the early part of the year. I do not think there was anything material that we saw in quarter four which was particularly different. What we saw in polyurethanes in Q4 was that the outage we would expect in Rotterdam to last a little bit longer actually was a little shorter and therefore that provided some upside overall.
Michael Joseph Sison: In terms sequentially, you still saw seasonality in North America. What we said in the prepared remarks is December, we were maybe a little bit more aggressive in terms of how we thought it would have been a more of a seasonal decline versus last, but you still saw the normal seasonality. Thanks. Makes sense.
Patrick David Cunningham: So as a follow-up, we are about a year into significant tariffs having been placed on U.S. MDI imports. And I have seen trade reports that indicate imports of Chinese-origin MDI
Kevin William McCarthy: have dropped something like 80%. Could you speak to how you have seen tariffs play out in terms of
Patrick David Cunningham: regional demand dynamics?
Mike Harrison: Yes. We have seen those same numbers, public data on Asian imports. That does not mean that Asian players are not bringing product in from Europe, but that poses a number of questions in and of itself on the economics behind something like that. I am surprised this past year to see the amount of product that is coming in from Europe, particularly around smaller sites that I would not consider to be very competitive. But what do I know? If I mentioned earlier, again, this is just—I am not speaking on behalf of the company. It is my own thoughts. I mentioned earlier about a rebound that can suddenly happen.
And as I look in the North American market, if you see a rebound in housing—and I am not talking about a historical recovery in housing—but if you see a usual, maybe a little bit better than usual, certainly better than last year, rebound in housing, with the constraints that have been put into place by tariffs and just by the macroeconomics—tariffs are not the only thing that discourage trade as well—I could see the scenario where you could see the U.S. running into supply issues before other areas of the world. Again, I want to be very clear. I am not saying that I am going to see a rebound here in Q2 or anything.
I am just saying that as you look at that fundamental basis where the U.S. used to have a pretty healthy chunk of its production of supply side at least being satisfied by imports that have been cut off, U.S., in my opinion, U.S. will probably be the first to feel tightness should that occur.
Peter R. Huntsman: Thank you. Our next question today is coming from Arun Shankar Viswanathan from RBC Capital Markets. Your line is now live. Hey, good morning. This is Adam on for Arun. Thanks for taking our
Kevin Estok: question.
Patrick David Cunningham: Maybe if we could zoom out a little bit, be a little hypothetical. So do you think mid-cycle earnings levels for Huntsman Corporation could be maybe through the end of decade because I think
Michael Joseph Sison: your peak earnings was kind of in the $1,500,000,000 range, maybe mid-teens margins. This year
Peter R. Huntsman: was 2.75%, closer to mid-single margins.
Patrick David Cunningham: And assuming some of those normalized volumes you are talking about,
Peter R. Huntsman: normalized cost inputs, do you think the business could get back to
Patrick David Cunningham: an $800 or $900 million EBITDA range in that 10% margin? Or do you think some of this is structurally impaired from asset closures and Europe misbehaving?
Mike Harrison: I think that we still have the production capabilities to generate those sort of EBITDA. A lot of that is going to be how does Europe land. And Europe for us used to be a third of our EBITDA, and you have got a third of our business today in polyurethanes that is struggling in comparison to the U.S. and Asia. If Europe gets back on its feet from an industrial point of view, and that does not mean that it becomes a global leader, but just kind of recovers back to where it was, yes, I would hope that we would be able to get back to those sort of numbers.
We still have the same amount of tonnage of MDI that is being produced around the world. We have the same fundamental capacity to produce production in our amines and in our performance products and our advanced materials. We have taken out, obviously, a lot of costs, a lot of people. We have taken out some of the downstream system houses and so forth. But that has not necessarily eliminated our ability should we see an economic recovery in Europe and should we see the U.S. housing market go back to its normalized levels. Yeah, I would think that we have that opportunity.
Patrick David Cunningham: Okay. That is great. And I know there have been several questions on the MDI pricing in Europe. Have you been able to quantify any of that? What are those price increases that you are aiming at? I know maybe not all of those will flow through. Just curious what you are going for.
Mike Harrison: In Europe, I would—yeah. I think it is just too early to speculate as to what—we are in the process right now negotiating with a number of customers and so forth. I would very much like to see us at least offset our raw material increases that we are seeing. And that is going to be a tug of war through the first quarter.
Peter R. Huntsman: Thank you. Next question is coming from Aaron Rosenthal from JPMorgan Chase. Your line is now live.
Emily Fusco: Thank you for the time. This is Ellen for Aaron. Can you walk us through the moving pieces on the revolver quarter over quarter? Did you fund on the new RCF to repay outstanding? The outstanding amount at year end? And if so, what is the balance today? And do you have any plans to term out the balance via new debt? And finally, just curious if you would have any interest in tapping your equity to help shore up the balance sheet.
Philip M. Lister: No on the final comment. New revolver, as I said, I think we are extremely pleased with the strength of the banking group. We have moved to an $800 million revolver. The way that I look at it overall is we have an $800 million revolver. We extended our maturity and also the capacity on our securitization program, which now adds up to approximately $300 million. And at year end, we had over $400 million of cash, so overall $1 billion, and we were borrowing approximately $500 million across our securitization program and our revolver. So that gives a net amount of approximately $1 billion moving forward. To your question around terming out any of the borrowing.
Obviously, we have had that discussion as we have moved through the revolver process. I do not see that as necessary as we sit here today. We have managed to put in place an accordion to $400 million which we could tap into as a durable upcycle unfolds over the next eighteen to twenty-four months. And I take a look at the overall capital structure, which I think is pretty much aligned with the portfolio that we have. So I think we are comfortable with where we sit today, but we are always looking at our capital structure in light of the extended trough that has occurred in the chemical industry.
Peter R. Huntsman: Thanks. Operator, why do not we take one more question? I think we are at the top
Mike Harrison: of the hour. So we will take one more and then wrap it up.
Peter R. Huntsman: Certainly. Our final question today is coming from Salvator Tiano from Bank of America. Your line is now live.
Kevin Estok: Thank you very much. I just want to go back on the capacity additions in the U.S. that you were asked about before. Firstly, if I heard correctly, I think there was a mention that it is low to mid single digit capacity growth in North America. And I just wanted to check with your industry intelligence essentially what are you seeing in terms of the actual number because at least what we have seen from some trade publishers talks about more of a 20% or more increase in the one-point-something million ton market? And secondly, Peter, you mentioned that you saw most of the impact already in Q4.
I am just trying to understand if I were to think like a buyer of MDI and inventories in the supply chain are very limited as you have said before. How would they be already benefiting from that capacity coming midyear if I cannot restock anymore and I have to wait? Would not theoretically that mean that all the pricing impact will only come when the new capacity comes online because there is no opportunity for a buyer to restock further?
Mike Harrison: Well, okay. So I am not trying to avoid an answer to the—but you are asking me to kind of get into the mind of the person who is bringing on the capacity, which I have not the foggiest idea. Just because that capacity is coming on does not mean it is all going to come on in one day, and it is all going to flood the market in one day. Oftentimes, it takes quarters to be able to integrate and to be able to bring on capacity. And I know in our case, when we have brought on capacities in the past, it does take you up to a year to sell the product out.
You are not going to want to bring on 100,000 tons of new product and somehow sabotage your existing 500,000 tons of product that you have got that you are already selling by cutting prices. How a certain competitor or producer will bring on capacity, when they bring it on, what impact they want to have on the market and so forth is all yet to be seen. And my comments were that earlier that I believe as we have seen in the past with this particular producer, product is bled into the market usually on an as-needed basis. They will obviously be expanding their footprint.
But how they do it and how soon they choose to do it and what impact they choose to have on the market, that is kind of out of my—I just simply do not know. But again, it is very, very rare that you would all of a sudden see 100,000 tons start up on Wednesday and it floods into the market.
Philip M. Lister: And you are going to be
Mike Harrison: seeing that lower margins and lower price immediately.
Peter R. Huntsman: Thank you. We have reached the end of our question-and-answer session. And that does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.
