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Item 2 — Management's Discussion and Analysis
Huntsman Corporation · 10-Q · Q2 FY2026 · Period ended Jun 30, 2026
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Results of Operations
For each of our Company and Huntsman International, the following tables set forth the condensed consolidated results of operations (dollars in millions, except per share amounts):
Huntsman Corporation
Three months ended Six months ended
June 30, Percent June 30, Percent
2026 2025 change 2026 2025 change
Revenues $ 1,663 $ 1,458 14 % $ 3,083 $ 2,868 7 %
Cost of goods sold 1,418 1,276 11 % 2,655 2,485 7 %
Gross profit 245 182 35 % 428 383 12 %
Operating expenses:
Selling, general and administrative 183 160 14 % 346 326 6 %
Research and development 28 33 (15 )% 57 65 (12 )%
Restructuring, impairment and plant closing costs 9 124 (93 )% 15 125 (88 )%
Gain on sale of business, net (22 ) — NM (22 ) — NM
Income associated with litigation matter, net — — — — (33 ) (100 )%
Gain on acquisition of assets, net — — — — (5 ) (100 )%
Other operating expense (income), net 10 (15 ) NM 11 (17 ) NM
Total operating expenses 208 302 (31 )% 407 461 (12 )%
Operating income (loss) 37 (120 ) NM 21 (78 ) NM
Interest expense, net (23 ) (21 ) 10 % (44 ) (40 ) 10 %
Equity in income (loss) of investment in unconsolidated affiliates 5 (2 ) NM 10 (1 ) NM
Other income, net 7 4 75 % 10 7 43 %
Income (loss) from continuing operations before income taxes 26 (139 ) NM (3 ) (112 ) (97 )%
Income tax expense (17 ) (7 ) 143 % (28 ) (22 ) 27 %
Income (loss) from continuing operations 9 (146 ) NM (31 ) (134 ) (77 )%
(Loss) income from discontinued operations, net of tax (2 ) 1 NM (3 ) — NM
Net income (loss) 7 (145 ) NM (34 ) (134 ) (75 )%
Reconciliation of net income (loss) to adjusted EBITDA(1):
Net income attributable to noncontrolling interests (13 ) (13 ) — (25 ) (29 ) (14 )%
Interest expense, net 23 21 10 % 44 40 10 %
Income tax expense from continuing operations 17 7 143 % 28 22 27 %
Income tax expense from discontinued operations — 1 (100 )% — 1 (100 )%
Depreciation and amortization 77 72 7 % 150 141 6 %
Other adjustments:
Business acquisition and integration gain and purchase accounting inventory adjustments, net — — — (5 )
EBITDA from discontinued operations 2 (2 ) 3 (1 )
Certain legal and other settlements and related expenses (income), net(2) 7 1 11 (32 )
Gain on sale of business/assets, net(3) (22 ) — (22 ) —
Expenses associated with the proposed merger 5 — 5 —
Loss on early extinguishment of debt — — 1 —
Amortization of pension and postretirement actuarial losses 7 7 14 14
Restructuring, impairment and plant closing and transition costs(4) 10 125 18 129
Adjusted EBITDA(1) $ 120 $ 74 62 % $ 193 $ 146 32 %
Net cash (used in) provided by operating activities from continuing operations $ (113 ) $ 21 NM
Net cash used in investing activities (15 ) (32 ) (53 )%
Net cash provided by financing activities 43 69 (38 )%
Capital expenditures (68 ) (73 ) (7 )%
Amounts attributable to Huntsman Corporation:
Loss from continuing operations $ (4 ) $ (159 ) $ (56 ) $ (163 )
(Loss) income from discontinued operations, net of tax (2 ) 1 (3 ) —
Net loss $ (6 ) $ (158 ) $ (59 ) $ (163 )
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Huntsman International
Three months ended Six months ended
June 30, Percent June 30, Percent
2026 2025 change 2026 2025 change
Revenues $ 1,663 $ 1,458 14 % $ 3,083 $ 2,868 7 %
Cost of goods sold 1,418 1,276 11 % 2,655 2,485 7 %
Gross profit 245 182 35 % 428 383 12 %
Operating expenses:
Selling, general and administrative 183 160 14 % 344 324 6 %
Research and development 28 33 (15 )% 57 65 (12 )%
Restructuring, impairment and plant closing costs 9 124 (93 )% 15 125 (88 )%
Gain on sale of business, net (22 ) — NM (22 ) — NM
Income associated with litigation matter, net — — — — (33 ) (100 )%
Gain on acquisition of assets, net — — — — (5 ) (100 )%
Other operating expense (income), net 10 (15 ) NM 11 (17 ) NM
Total operating expenses 208 302 (31 )% 405 459 (12 )%
Operating income (loss) 37 (120 ) NM 23 (76 ) NM
Interest expense, net (23 ) (21 ) 10 % (44 ) (40 ) 10 %
Equity in income (loss) of investment in unconsolidated affiliates 5 (2 ) NM 10 (1 ) NM
Other income, net 7 4 75 % 10 7 43 %
Income (loss) from continuing operations before income taxes 26 (139 ) NM (1 ) (110 ) (99 )%
Income tax expense (17 ) (5 ) 240 % (28 ) (22 ) 27 %
Income (loss) from continuing operations 9 (144 ) NM (29 ) (132 ) (78 )%
(Loss) income from discontinued operations, net of tax (2 ) 1 NM (3 ) — NM
Net income (loss) 7 (143 ) NM (32 ) (132 ) (76 )%
Reconciliation of net income (loss) to adjusted EBITDA(1):
Net income attributable to noncontrolling interests (13 ) (13 ) — (25 ) (29 ) (14 )%
Interest expense, net 23 21 10 % 44 40 10 %
Income tax expense from continuing operations 17 5 240 % 28 22 27 %
Income tax expense from discontinued operations — 1 (100 )% — 1 (100 )%
Depreciation and amortization 77 72 7 % 150 141 6 %
Other adjustments:
Business acquisition and integration gain and purchase accounting inventory adjustments, net — — — (5 )
EBITDA from discontinued operations 2 (2 ) 3 (1 )
Certain legal and other settlements and related expenses (income), net(2) 7 1 11 (32 )
Gain on sale of business/assets, net(3) (22 ) — (22 ) —
Expenses associated with the proposed merger 5 — 5 —
Loss on early extinguishment of debt — — 1 —
Amortization of pension and postretirement actuarial losses 7 7 14 14
Restructuring, impairment and plant closing and transition costs(4) 10 125 18 129
Adjusted EBITDA(1) $ 120 $ 74 62 % $ 195 $ 148 32 %
Net cash (used in) provided by operating activities from continuing operations $ (112 ) $ 22 NM
Net cash used in investing activities (21 ) (37 ) (43 )%
Net cash provided by financing activities 48 73 (34 )%
Capital expenditures (68 ) (73 ) (7 )%
Amounts attributable to Huntsman International:
Loss from continuing operations $ (4 ) $ (157 ) $ (54 ) $ (161 )
(Loss) income from discontinued operations, net of tax (2 ) 1 (3 ) —
Net loss $ (6 ) $ (156 ) $ (57 ) $ (161 )
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Huntsman Corporation
Three months ended Three months ended
June 30, 2026 June 30, 2025
Tax and Tax and
Gross other(5) Net Gross other(5) Net
Reconciliation of net income (loss) to adjusted net loss(1):
Net income (loss) $ 7 $ (145 )
Net income attributable to noncontrolling interests (13 ) (13 )
Loss (income) from discontinued operations 2 — 2 (2 ) 1 (1 )
Certain legal and other settlements and related expenses, net 7 — 7 1 — 1
Gain on sale of business/assets, net(3) (22 ) — (22 ) — — —
Expenses associated with the proposed merger 5 — 5 — — —
Amortization of pension and postretirement actuarial losses 7 (1 ) 6 7 — 7
Restructuring, impairment and plant closing and transition costs(4) 10 (2 ) 8 125 — 125
Release of significant deferred tax asset valuation allowances(6) — — — — (8 ) (8 )
Adjusted net income (loss)(1) $ — $ (34 )
Weighted average shares-basic 173.4 172.6
Weighted average shares-diluted 173.4 172.6
Basic net loss attributable to Huntsman Corporation per share:
Loss from continuing operations $ (0.02 ) $ (0.92 )
Loss from discontinued operations (0.01 ) —
Net loss $ (0.03 ) $ (0.92 )
Diluted net loss attributable to Huntsman Corporation per share:
Loss from continuing operations $ (0.02 ) $ (0.92 )
Loss from discontinued operations (0.01 ) —
Net loss $ (0.03 ) $ (0.92 )
Other non-GAAP measures:
Diluted adjusted net income (loss) per share(1) $ — $ (0.20 )
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Six months Six months
ended ended
June 30, 2026 June 30, 2025
Tax and Tax and
Gross other(5) Net Gross other(5) Net
Reconciliation of net loss to adjusted net loss(1):
Net loss $ (34 ) $ (134 )
Net income attributable to noncontrolling interests (25 ) (29 )
Business acquisition and integration gain and purchase accounting inventory adjustments, net $ — $ — — $ (5 ) $ — (5 )
Loss (income) from discontinued operations 3 — 3 (1 ) 1 —
Certain legal and other settlements and related expenses (income), net(2) 11 — 11 (32 ) 7 (25 )
Gain on sale of business/assets, net(3) (22 ) — (22 ) — — —
Expenses associated with the proposed merger 5 — 5 — — —
Loss on early extinguishment of debt 1 — 1 — — —
Amortization of pension and postretirement actuarial losses 14 (3 ) 11 14 (2 ) 12
Restructuring, impairment and plant closing and transition costs(4) 18 (3 ) 15 129 (2 ) 127
Establishment of significant deferred tax asset valuation allowances, net(6) — — — — 1 1
Adjusted net loss(1) $ (35 ) $ (53 )
Weighted average shares-basic 173.2 172.5
Weighted average shares-diluted 173.2 172.5
Basic net loss attributable to Huntsman Corporation per share:
Loss from continuing operations $ (0.32 ) $ (0.94 )
Loss from discontinued operations (0.02 ) —
Net loss $ (0.34 ) $ (0.94 )
Diluted net loss attributable to Huntsman Corporation per share:
Loss from continuing operations $ (0.32 ) $ (0.94 )
Loss from discontinued operations (0.02 ) —
Net loss $ (0.34 ) $ (0.94 )
Other non-GAAP measures:
Diluted adjusted net loss per share(1) $ (0.20 ) $ (0.31 )
Net cash (used in) provided by operating activities from continuing operations $ (113 ) $ 21
Capital expenditures (68 ) (73 )
Free cash flow(1) $ (181 ) $ (52 )
Effective tax rate (933 )% (20 )%
Impact of non-GAAP adjustments, net(7) 1,075 % (280 )%
Adjusted effective tax rate 142 % (300 )%
NM—Not meaningful
(1) See “—Non-GAAP Financial Measures.”
(2) Certain legal and other settlements and related expenses (income), net includes approximately $33 million for income associated with a litigation matter during the first quarter of 2025. See “Note 15. Commitments and Contingencies—Legal Matters” to our condensed consolidated financial statements.
(3) Gain on sale of business/assets, net includes $22 million related to the gain on sale of our Gomet business. See “Note 1. General—Recent Developments—Sale of Huntsman Gomet Business” to our condensed consolidated financial statements.
(4) Includes costs associated with transition activities relating primarily to our program to realign our cost structure in Europe.
(5) The income tax impacts, if any, are computed on the pre-tax adjustments using a with and without approach.
(6) During the second quarter of 2025, we recorded a discrete release of valuation allowances of approximately $8 million following the announced closure of our Moers, Germany facility. During the first quarter of 2025, we established significant deferred tax asset valuation allowances of $9 million in Luxembourg. We eliminated the net effect of these significant deferred tax asset valuation allowances from our presentation of adjusted net loss to allow investors to better compare our ongoing financial performance from period to period.
(7) For details regarding the tax impacts of our non-GAAP adjustments, please see the reconciliation of our net loss to adjusted net loss noted above.
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Non-GAAP Financial Measures
Our condensed consolidated financial statements are prepared in accordance with GAAP, which we supplement with certain non-GAAP financial information. These non-GAAP measures should not be considered in isolation or as a substitute for the related GAAP measures, and other companies may define such measures differently. We encourage investors to review our financial statements and the reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in their entirety and not to rely on any single financial measure. These non-GAAP measures exclude the impact of certain income and expenses that we do not believe are indicative of our core operating results.
Adjusted EBITDA
Our management uses adjusted EBITDA to assess financial performance. Adjusted EBITDA is defined as net income of Huntsman Corporation or Huntsman International, as appropriate, before interest, income tax, depreciation and amortization, net income attributable to noncontrolling interests and certain Corporate and other items, as well as eliminating the following adjustments: (a) business acquisition and integration gain and purchase accounting inventory adjustments, net; (b) EBITDA from discontinued operations; (c) certain legal and other settlements and related expenses (income), net; (d) gain on sale of business/assets, net; (e) expenses associated with the proposed merger; (f) loss on early extinguishment of debt; (g) amortization of pension and postretirement actuarial losses; and (h) restructuring, impairment and plant closing and transition costs. We believe that net income of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted EBITDA.
We believe adjusted EBITDA is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends. However, this measure should not be considered in isolation or viewed as a substitute for net income of Huntsman Corporation or Huntsman International, as appropriate, or other measures of performance determined in accordance with U.S. GAAP. Moreover, adjusted EBITDA as used herein is not necessarily comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. Our management believes this measure is useful to compare general operating performance from period to period and to make certain related management decisions. Adjusted EBITDA is also used by securities analysts, lenders and others in their evaluation of different companies because it excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be highly dependent on a company’s capital structure, debt levels and credit ratings. Therefore, the impact of interest expense on earnings can vary significantly among companies. In addition, the tax positions of companies can vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the various jurisdictions in which they operate. As a result, effective tax rates and tax expense can vary considerably among companies. Finally, companies employ productive assets of different ages and utilize different methods of acquiring and depreciating such assets. This can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies.
Nevertheless, our management recognizes that there are material limitations associated with the use of adjusted EBITDA in the evaluation of our Company as compared to net income of Huntsman Corporation or Huntsman International, as appropriate, which reflects overall financial performance. For example, we have borrowed money in order to finance our operations and interest expense is a necessary element of our costs and ability to generate revenue. Our management compensates for the limitations of using adjusted EBITDA by using this measure to supplement U.S. GAAP results to provide a more complete understanding of the factors and trends affecting the business rather than U.S. GAAP results alone.
Adjusted Net Income
Adjusted net income is computed by eliminating the after-tax amounts related to the following from net income attributable to Huntsman Corporation: (a) loss (income) from discontinued operations; (b) certain legal and other settlements and related expenses (income), net; (c) gain on sale of business/assets, net; (d) expenses associated with the proposed merger; (e) amortization of pension and postretirement actuarial losses; (f) restructuring, impairment and plant closing and transition costs; (g) (release) establishment of significant deferred tax asset valuation allowances, net; (h) business acquisition and integration gain and purchase accounting inventory adjustments, net; and (i) loss on early extinguishment of debt. Basic adjusted net income per share excludes dilution and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period. Adjusted diluted net income per share reflects all potential dilutive common shares outstanding during the period and is computed by dividing adjusted net income by the weighted average number of shares outstanding during the period increased by the number of additional shares that would have been outstanding as dilutive securities. Adjusted net income and adjusted net income per share amounts are presented solely as supplemental information.
We believe adjusted net income is useful to investors in assessing the businesses’ ongoing financial performance and provides improved comparability between periods through the exclusion of certain items that management believes are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Free Cash Flow
We believe free cash flow is an important indicator of our liquidity as it measures the amount of cash we generate. Management internally uses a free cash flow measure: (a) to evaluate our liquidity, (b) evaluate strategic investments, (c) plan dividend and stock buyback levels and (d) evaluate our ability to incur and service debt. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Free cash flow is not a defined term under U.S. GAAP, and it should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
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Adjusted Effective Tax Rate
We believe that the effective tax rate of Huntsman Corporation or Huntsman International, as appropriate, is the performance measure calculated and presented in accordance with U.S. GAAP that is most directly comparable to adjusted effective tax rate. We believe our adjusted effective tax rate provides improved comparability between periods through the exclusion of certain items, such as business acquisition and integration expenses and purchase accounting inventory adjustments, certain legal and other settlements and related expenses, gains on sale of businesses/assets and certain tax only items, including tax law changes, that we believe are not indicative of the businesses’ operational profitability and that may obscure underlying business results and trends.
Three Months Ended June 30, 2026 Compared with Three Months Ended June 30, 2025
For the three months ended June 30, 2026, loss from continuing operations attributable to Huntsman Corporation was $4 million, an improvement of $155 million from $159 million in the 2025 period. For the three months ended June 30, 2026, loss from continuing operations attributable to Huntsman International was $4 million, an improvement of $153 million from $157 million in the 2025 period. The improvements noted above were the result of the following items:
● Revenues for the three months ended June 30, 2026 increased by $205 million, or 14%, as compared with the 2025 period. The increase was primarily due to higher average selling prices and higher sales volumes in all our segments. See “—Segment Analysis” below.
● Gross profit for the three months ended June 30, 2026 increased by $63 million, or 35%, as compared with the 2025 period. The increase resulted from higher gross profits in all our segments. See “—Segment Analysis” below.
● Selling, general and administrative expenses for the three months ended June 30, 2026 increased by $23 million, or 14%, as compared with the 2025 period. The increase related primarily to the impact of major foreign currency exchange rate movements against the U.S. dollar and an adjustment to increase our incentive compensation accrual in the second quarter of 2026.
● Restructuring, impairment and plant closing costs for the three months ended June 30, 2026 decreased by $115 million as compared with the 2025 period. For more information on restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements.
● Gain on sale of business, net for the three months ended June 30, 2026 was $22 million related to the gain on sale of our Gomet business. See “Note 1. General—Recent Developments—Sale of Huntsman Gomet Business” to our condensed consolidated financial statements.
● Other operating expense (income), net for the three months ended June 30, 2026 was an expense of $10 million, primarily related to third-party costs associated with the proposed merger and certain legal settlements, as compared with income of $15 million in the 2025 period, primarily related to an adjustment to a loss contingency accrual in the 2025 period and the impact of major foreign currency exchange rate movements against the U.S. dollar.
● Equity in income (loss) of investment in unconsolidated affiliates for the three months ended June 30, 2026 increased to income of $5 million from a loss of $2 million in the 2025 period primarily related to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest.
● Our income tax expense for the three months ended June 30, 2026 was $17 million as compared with $7 million in the 2025 period. The income tax expense of Huntsman International for the three months ended June 30, 2026 was $17 million as compared with $5 million in the 2025 period. The increase in income tax expense was primarily due to lower discrete tax benefits in the 2026 period and our mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions. For further information, see “Note 18. Income Taxes” to our condensed consolidated financial statements.
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Segment Analysis
Three months ended Percent change
June 30, favorable
(Dollars in millions) 2026 2025 (unfavorable)
Revenues
Polyurethanes $ 1,079 $ 932 16 %
Performance Products 283 270 5 %
Advanced Materials 313 264 19 %
Total reportable segments’ revenues 1,675 1,466 14 %
Intersegment eliminations (12 ) (8 ) NM
Total $ 1,663 $ 1,458 14 %
Segment adjusted EBITDA(1)
Polyurethanes $ 66 $ 31 113 %
Performance Products 37 32 16 %
Advanced Materials 64 45 42 %
NM—Not meaningful
(1) For more information regarding reconciliations of segment adjusted EBITDA of our reportable operating segments to (loss) income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 20. Operating Segment Information” to our condensed consolidated financial statements.
Three months ended June 30, 2026 vs 2025
Average selling price(1)
Local Foreign currency Sales
currency and mix translation impact volumes(2)
Period-over-period increase (decrease)
Polyurethanes 10 % 2 % 4 %
Performance Products 1 % 1 % 3 %
Advanced Materials 8 % 3 % 8 %
Combined segments 8 % 2 % 4 %
(1) (2) Excludes revenues from tolling arrangements, byproducts and raw materials. Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The increase in revenues in our Polyurethanes segment for the three months ended June 30, 2026 compared to the same period of 2025 was primarily due to higher average selling prices and higher sales volumes. MDI average selling prices increased across all three regions due to improved supply and demand dynamics. MDI sales volumes increased in the Americas and Europe regions. The increase in segment adjusted EBITDA was primarily due to higher average selling prices, higher sales volumes, higher equity earnings from our minority-owned joint venture in China and cost savings achieved from our cost optimization program, partially offset by higher raw materials costs.
Performance Products
The increase in revenues in our Performance Products segment for the three months ended June 30, 2026 compared to the same period of 2025 was primarily due to higher sales volumes and slightly higher average selling prices. Sales volumes increased primarily due to favorable demand in our performance amines business. Average selling prices increased primarily due to higher raw materials costs. The increase in segment adjusted EBITDA was primarily due to higher sales volumes and lower fixed costs achieved from our cost optimization program.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the three months ended June 30, 2026 compared to the same period of 2025 was primarily due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to favorable sales mix and the positive impact of major foreign currency exchange rate movements against the U.S. dollar. Sales volumes increased primarily in our aerospace, power and automotive markets. The increase in segment adjusted EBITDA was primarily due to higher margins and higher sales volumes.
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Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025
For the six months ended June 30, 2026, loss from continuing operations attributable to Huntsman Corporation was $56 million, an improvement of $107 million from $163 million in the 2025 period. For the six months ended June 30, 2026, loss from continuing operations attributable to Huntsman International was $54 million, an improvement of $107 million from $161 million in the 2025 period. The improvements noted above were the result of the following items:
● Revenues for the six months ended June 30, 2026 increased by $215 million, or 7%, as compared with the 2025 period. The increase was primarily due to higher average selling prices and higher sales volumes in both our Polyurethanes and Advanced Materials segments. See “—Segment Analysis” below.
● Gross profit for the six months ended June 30, 2026 increased by $45 million, or 12%, as compared with the 2025 period. The increase resulted from higher gross profits in our Polyurethanes and Advanced Materials segments. See “—Segment Analysis” below.
● Selling, general and administrative expenses for the six months ended June 30, 2026 increased by $20 million, or 6%, as compared with the 2025 period. The increase related primarily to the impact of major foreign currency exchange rate movements against the U.S. dollar and an adjustment to increase our incentive compensation accrual in the second quarter of 2026.
● Restructuring, impairment and plant closing costs for the six months ended June 30, 2026 decreased by $110 million as compared with the 2025 period. For more information on restructuring activities, see “Note 7. Restructuring, Impairment and Plant Closing Costs” to our condensed consolidated financial statements.
● Gain on sale of business, net for the six months ended June 30, 2026 was $22 million related to the gain on sale of our Gomet business. See “Note 1. General—Recent Developments—Sale of Huntsman Gomet Business” to our condensed consolidated financial statements.
● Income associated with litigation matter, net was approximately $33 million for the six months ended June 30, 2025. For further information, see "Note 15. Commitments and Contingencies—Legal Matters" to our condensed consolidated financial statements.
● Other operating expense (income), net for the six months ended June 30, 2026 was an expense of $11 million, primarily related to third-party costs associated with the proposed merger and certain legal settlements, as compared with income of $17 million in the 2025 period, primarily related to an adjustment to a loss contingency accrual in the 2025 period and the impact of major foreign currency exchange rate movements against the U.S. dollar.
● Equity in income (loss) of investment in unconsolidated affiliates for the six months ended June 30, 2026 increased to income of $10 million from a loss of $1 million in the 2025 period primarily related to an increase in income at our PO/MTBE joint venture in China, in which we hold a 49% interest.
● Our income tax expense and the income tax expense of Huntsman International for the six months ended June 30, 2026 was $28 million as compared with $22 million in the 2025 period. The increase in income tax expense was primarily due to our mix of income and losses in the tax jurisdictions in which we operate, as impacted by the presence of valuation allowances in certain tax jurisdictions with pre-tax income but do not recognize a tax benefit from pre-tax losses in jurisdictions with valuation allowances. The increase was partially offset by lower net discrete tax expense in the 2026 period as compared with the 2025 period. For further information, see “Note 18. Income Taxes” to our condensed consolidated financial statements.
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Segment Analysis
Six months Percent
ended change
June 30, favorable
(Dollars in millions) 2026 2025 (unfavorable)
Revenues
Polyurethanes $ 2,002 $ 1,844 9 %
Performance Products 511 527 (3 )%
Advanced Materials 592 513 15 %
Total reportable segments’ revenues 3,105 2,884 8 %
Intersegment eliminations (22 ) (16 ) NM
Total $ 3,083 $ 2,868 7 %
Segment adjusted EBITDA(1)
Polyurethanes $ 105 $ 73 44 %
Performance Products 63 62 2 %
Advanced Materials 109 81 35 %
NM—Not meaningful
(1) For more information regarding reconciliations of segment adjusted EBITDA of our reportable operating segments to (loss) income from continuing operations before income taxes of Huntsman Corporation or Huntsman International, as appropriate, see “Note 20. Operating Segment Information” to our condensed consolidated financial statements.
Six months ended June 30, 2026 vs June 30, 2025
Average selling price(1)
Local Foreign currency Sales
currency and mix translation impact volumes(2)
Period-over-period increase (decrease)
Polyurethanes 2 % 3 % 4 %
Performance Products (2 )% 2 % (3 )%
Advanced Materials 6 % 4 % 5 %
Combined segments 2 % 3 % 3 %
(1) (2) Excludes revenues from tolling arrangements, byproducts and raw materials. Excludes sales volumes of byproducts and raw materials.
Polyurethanes
The increase in revenues in our Polyurethanes segment for the six months ended June 30, 2026 compared to the same period of 2025 was primarily due to higher average selling prices and higher sales volumes. MDI average selling prices increased across all three regions due to improved supply and demand dynamics. MDI sales volumes increased in the Americas and Europe regions. The increase in segment adjusted EBITDA was primarily due to higher average selling prices, higher sales volumes, higher equity earnings from our minority-owned joint venture in China and cost savings achieved from our cost optimization program, partially offset by higher raw materials costs.
Performance Products
The decrease in revenues in our Performance Products segment for the six months ended June 30, 2026 compared to the same period of 2025 was primarily due to lower sales volumes. Sales volumes decreased primarily due to the closure of our Moers, Germany maleic anhydride facility in the second quarter of 2025 and lower demand. Average selling prices remained relatively flat. The slight increase in segment adjusted EBITDA was primarily due to lower fixed costs achieved from our cost optimization program, partially offset by lower sales volumes and higher raw materials costs.
Advanced Materials
The increase in revenues in our Advanced Materials segment for the six months ended June 30, 2026 compared to the same period of 2025 was primarily due to higher average selling prices and higher sales volumes. Average selling prices increased primarily due to favorable sales mix and the positive impact of major foreign currency exchange rate movements against the U.S. dollar. Sales volumes increased primarily in our aerospace, power and automotive markets. The increase in segment adjusted EBITDA was primarily due to higher margins and higher sales volumes.
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Liquidity and Capital Resources
The following is a discussion of our liquidity and capital resources and generally does not include separate information with respect to Huntsman International in accordance with General Instructions H(1)(a) and (b) of Form 10-Q.
Cash Flows for the Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025
Net cash (used in) provided by operating activities from continuing operations for the six months ended June 30, 2026 and 2025 was $(113) million and $21 million, respectively. The increase in net cash used in operating activities from continuing operations was primarily attributable to an increase in net cash outflow of $123 million related to changes in operating assets and liabilities for the six months ended June 30, 2026 as compared with the same period of 2025 and a decrease in net cash inflow of $11 million related to a decrease in operating loss from continuing operations adjusted for noncash activities as noted in our condensed consolidated statements of cash flows.
Net cash used in investing activities for the six months ended June 30, 2026 and 2025 was $15 million and $32 million, respectively. During the six months ended June 30, 2026 and 2025, we paid $68 million and $73 million for capital expenditures, respectively. During the six months ended June 30, 2026, we received $48 million, net of third-party transaction costs, from the sale of our Gomet business. See “Note 1. General—Recent Developments—Sale of Huntsman Gomet Business" to our condensed consolidated financial statements. During the six months ended June 30, 2025, we received a $41 million final liquidating distribution from SLIC. See “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture” to our condensed consolidated financial statements.
Net cash provided by financing activities for the six months ended June 30, 2026 and 2025 was $43 million and $69 million, respectively. During the six months ended June 30, 2026, we had net borrowings from our 2026 Revolving Credit Facility and our A/R Programs of $87 million as compared with net borrowings from our 2022 Revolving Credit Facility and our A/R Programs of $481 million in the 2025 period. During the six months ended June 30, 2025, we paid approximately $315 million to satisfy and discharge our obligations under our 2025 Senior Notes. During the six months ended June 30, 2026 and 2025, we paid $32 million and $87 million for dividends to common stockholders, respectively.
Free cash flow from continuing operations for the six months ended June 30, 2026 and 2025 were uses of cash of $181 million and $52 million, respectively. The decline in free cash flow was primarily attributable to an increase in cash used in operating activities from continuing operations, partially offset by a slight decrease in cash used for capital expenditures during the six months ended June 30, 2026 as compared with the same period of 2025.
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Changes in Financial Condition
The following information summarizes our working capital (dollars in millions):
June 30, December 31, (Decrease) Percent
2026 2025 increase change
Cash and cash equivalents $ 346 $ 429 $ (83 ) (19 )%
Accounts and notes receivable, net 880 677 203 30 %
Inventories 935 818 117 14 %
Prepaid expenses 79 94 (15 ) (16 )%
Other current assets 38 46 (8 ) (17 )%
Total current assets 2,278 2,064 214 10 %
Accounts payable 886 758 128 17 %
Accrued liabilities 414 421 (7 ) (2 )%
Current portion of debt 364 353 11 3 %
Current operating lease liabilities 55 57 (2 ) (4 )%
Total current liabilities 1,719 1,589 130 8 %
Working capital $ 559 $ 475 $ 84 18 %
Our working capital increased by $84 million as a result of the net impact of the following significant changes:
● The decrease in cash and cash equivalents of $83 million resulted from the matters identified on our condensed consolidated statements of cash flows. See also “—Cash Flows for the Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025.”
● Accounts and notes receivable, net increased by $203 million primarily due to higher revenues in the second quarter of 2026 as compared with the fourth quarter of 2025.
● Inventories increased by $117 million primarily due to higher inventory costs and volumes.
● Prepaid expenses decreased by $15 million primarily due to amortization of prepaid insurance premiums, partially offset by an increase in prepaid taxes.
● Accounts payable increased by $128 million primarily due to higher inventory purchases.
● Accrued liabilities decreased by $7 million primarily due to decreases in accrued restructuring and accrued rebates, partially offset by increases in accrued income taxes payable, accrued compensation and accrued legal reserves.
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Liquidity
We depend upon our cash, our 2026 Revolving Credit Facility, our A/R Programs and other debt instruments to provide liquidity for our operations and working capital needs. As of June 30, 2026, we had $857 million of combined cash and unused borrowing capacity, consisting of $346 million in cash, $438 million in availability under our 2026 Revolving Credit Facility and $73 million in availability under our A/R Programs. Our liquidity can be significantly impacted by various factors. The following matters are expected to have a significant impact on our liquidity:
Short-Term Liquidity
● During 2026, we expect to spend approximately $170 million on capital expenditures. Our future expenditures include certain environmental, health and safety upgrades; expansions and upgrades of our existing manufacturing and other facilities; certain cost reduction projects and certain information technology expenditures. We expect to fund capital expenditures with cash provided by operations.
● During the remainder of 2026, we expect to make additional contributions to our pension and other postretirement benefit plans of approximately $24 million.
● As of June 30, 2026, we have approximately $547 million remaining under the authorization of our existing share repurchase program. We currently do not expect to repurchase any shares of our common stock under this program during 2026.
Long-Term Liquidity
● On February 9, 2026, Huntsman International entered into the $800 million 2026 Revolving Credit Facility replacing the 2022 Revolving Credit Facility. Borrowings bear interest at the rates specified in the credit agreement governing the 2026 Revolving Credit Facility, which vary based on the type of loan, leverage ratio and debt ratings. The 2026 Revolving Credit Facility has a maturity date of February 9, 2031. Huntsman International may increase the 2026 Revolving Credit Facility commitments by up to $400 million, plus additional amounts, subject to the satisfaction of certain conditions.
As of June 30, 2026, we had $364 million classified as current portion of debt, including $359 million outstanding under our 2026 Revolving Credit Facility, debt at our variable interest entities of $2 million and certain other short-term facilities and scheduled payments totaling $3 million. We intend to renew, repay or extend the majority of these short-term facilities in the next twelve months.
As of June 30, 2026, we had approximately $321 million of cash and cash equivalents held by our foreign subsidiaries, including our variable interest entities. With the exception of certain amounts that we expect to repatriate in the foreseeable future, we intend to use cash held in our foreign subsidiaries to fund our local operations. Nevertheless, we could repatriate additional cash as dividends, and the repatriation of cash as a dividend would generally not be subject to U.S. taxation. However, such repatriation may potentially be subject to limited foreign withholding taxes.
For more information regarding our debt, see “Note 8. Debt” to our condensed consolidated financial statements.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks, such as changes in interest rates, foreign exchange rates and commodity prices. From time to time, we enter into transactions, including transactions involving derivative instruments, to manage certain of these exposures. We also hedge our net investment in certain European operations. See “Note 9. Derivative Instruments and Hedging Activities” to our condensed consolidated financial statements.