Huntsman (HUN) Q3 2026 earnings review
Huntsman raises chemical prices fast, while cash flow lags
Huntsman's chemical price increases are lifting profits ahead of its planned merger with Olin, even though cash flow trails last year. Revenue at the chemical maker rose 18% from a year ago, and profit before depreciation and one-offs (adjusted EBITDA) climbed 40% to $132 million, beating management's call for flat results from the second quarter. Chief executive Peter Huntsman kept his year-end target for net debt at about 4 times annual profit, down from 4.7 times today by our math.
| Revenue | $1,717M +18% from a year ago |
|---|---|
| Adjusted EBITDA | $132M +40% from a year ago |
| Net debt to annual adjusted EBITDA | 4.7x down from 5.4x in Q2 (by our math) |
| Year-end debt leverage outlook | Unchanged target of ~4.0x by year-end |
⚖️ Verdict: 🟢 Bullish
The story got better because price hikes in insulation chemicals sped up to 19% and specialty resin volumes jumped 12%, showing the profit recovery does not rely on temporary competitor outages. Shareholders also approved the Olin deal, and management narrowed the expected closing to the first quarter of 2027. One caution: nine-month free cash flow remains negative, and overhead expenses still have not fallen.
The question now is whether Huntsman can free up enough cash from working capital to hit its year-end debt target while capital spending nearly doubles in the fourth quarter. Either fourth-quarter working capital releases over $100 million as seasonal inventory unwinds, or debt stays stubbornly high heading into the merger close. Fourth-quarter cash flow and the conference call's profit outlook will settle it.
🐂 Bull Case
Insulation Chemical Prices Keep Rising
Polyurethanes is Huntsman's largest division, making MDI, a key chemical for building insulation and foam. After falling for all of 2025, its prices turned positive last quarter. Bears worried that the rebound relied on temporary factory outages at rivals and that new US competitor capacity would cap prices.
Instead, price increases sped up in the third quarter. The chemical maker raised Polyurethanes selling prices by 19% from a year ago, nearly double last quarter's 10% pace, citing "improved supply and demand dynamics and higher raw materials costs". Sales volumes also rose 2%, lifting division operating profit before depreciation and one-offs (adjusted EBITDA) by 56% to $75 million.
This matters because higher prices are outrunning raw material inflation and carrying the company's earnings recovery before construction demand fully returns. What to watch: fourth-quarter Polyurethanes price changes, which will show whether these gains hold during the winter construction slowdown.
Specialty Resins Grow Volume by 12%
Advanced Materials makes specialty epoxy resins and adhesives used in airplanes, cars and the electrical grid. It is the company's highest-margin business. In the third quarter, the division grew sales 18% from a year ago to $314 million, driven by a 12% jump in sales volume across "aerospace, automotive and power markets" and a 6% rise in prices from selling a richer mix of products.
Division adjusted EBITDA climbed 41% to $62 million. By our math, 37% of every new revenue dollar turned into profit, proving that volume growth in specialty markets is holding up beyond the strong second-quarter aerospace season. What to watch: fourth-quarter division profit, where any reading above last year's $36 million will confirm the growth is structural rather than seasonal.
Olin Merger Wins Votes and Sets Q1 Close
In June, Huntsman agreed to an all-stock merger of equals with chlorine producer Olin Corporation to integrate raw materials and cut costs. The deal faced closing risks from shareholder votes and antitrust reviews. During the third quarter, shareholders approved the transaction on August 25, and regulators in the United States and several other countries cleared it.
Chief executive Peter Huntsman narrowed the expected closing window from the first half of 2027, saying the company is working on remaining approvals "which we now expect to close in the first quarter of 2027". That reduces the risk that the manufacturer is left alone with high debt. What to watch: final regulatory clearances in Europe and China before March 2027, which are the last hurdles to closing.
🐻 Bear Case
Cash Flow Still Trails Last Year
Huntsman needs cash to cut its debt before the merger closes. "Better results and cash flow are expected to reduce net debt leverage to approximately 4 times by year-end, a significant improvement from the beginning of the year," chief executive Peter Huntsman said. By our math, net debt sits at 4.7 times the last twelve months' adjusted EBITDA, down from 5.4 times in June.
- Third-quarter free cash flow: $82 million, down 48% from $157 million a year ago
- Nine-month free cash flow: negative $99 million, vs positive $105 million a year ago
- Borrowings against customer bills (accounts receivable programs): $235 million, up $83 million since December
The company cut net debt by $57 million this quarter, but working capital brought in only $12 million compared to $90 million a year ago, and it leaned further on short-term bill financing. What to watch: fourth-quarter cash from working capital, because reaching the 4 times target requires freeing up cash tied in inventory and customer bills while capital spending rises.
Overhead Costs Still Do Not Fall
Huntsman has been running a restructuring programme to take out $100 million in annual costs and cited "cost savings achieved from our cost optimization program" for helping division profits. However, total company cost lines have not shrunk. Selling, general and administrative expenses (overhead and sales pay) rose $5 million from a year ago to $168 million, though faster sales growth reduced them by 1.4 percentage points of revenue to 9.8%.
Meanwhile, the cost of making the products (cost of goods sold) rose 0.2 percentage points of revenue to 86.2%, trimming gross margin to 13.8%. Inflation is eating the restructuring savings, so profit growth relies almost entirely on raising prices. What to watch: segment fixed costs in the quarterly filing, which will show if total factory and overhead costs finally drop below $400 million.
Risks this quarter didn't answer
Three standing concerns from last quarter could not be tested from the earnings release alone.
- European Polyurethanes profitability: management previously expected Europe to turn profitable on an adjusted EBITDA basis in the third quarter despite higher natural gas costs; the release says European volumes and prices rose, but only the conference call will confirm if the region made money.
- Segment fixed cost base: total adjusted fixed costs across divisions were $399 million last quarter; the quarterly filing's segment footnote will show whether cost cuts beat inflation.
- Olin merger chlorine savings timing: over $100 million of long-term merger savings wait on a third-party chlorine contract expiring at the end of 2030; the release gave no update on early capture.
👓 Other Themes
Overall Volume Growth Remains Modest
While chemical prices jumped 15% across Huntsman's divisions, overall sales volume grew only 3% from a year ago. In Performance Products, which makes amines and surfactants for construction, coatings and fuel additives, volume slipped 1% even as higher raw material and shipping costs pushed prices up 7%. Broad industrial and housing demand remains slow, leaving price increases to do most of the work.
💲 Other KPIs
Profit before depreciation and one-offs in Performance Products rose 6.9% from a year ago, slowing from 15.6% growth in the second quarter. Revenue grew 5.7% to $260 million as a 7% price increase offset a 1% drop in sales volume. Higher prices covered rising raw material and shipping expenses.
Combined customer bills owed to Huntsman ($870 million) and inventory ($905 million) fell $40 million from June as the seasonal summer build began to unwind. However, the total remains up 10.7% from a year ago and up $280 million since December, which explains why nine-month operating cash flow is only $2 million.
The tax rate excluding one-offs eased from 61% in the second quarter to 56%, though it stayed above last year's 40%. High tax rates in countries where the chemical group earns money, paired with losses where it cannot claim tax credits, took $25 million of its $45 million pre-tax profit.
🔮 Guidance
Cut. The manufacturer trimmed its full-year capital spending plan by $10 million, to about 7.5% below 2025 levels. It is the second trim this year after starting at $173 million. Having spent $101 million in the first nine months, the outlook leaves $59 million for the fourth quarter by our math, nearly double the third quarter's $33 million spend.
Unchanged. Chief executive Peter Huntsman kept the target for net debt at about 4 times annual adjusted EBITDA by December. By our math, the ratio dropped from 6.1 times in March and 5.4 times in June to 4.7 times in September. Hitting 4.0 times requires another fourth-quarter profit increase over last year's depressed $35 million and a year-end cash inflow.
❓ Key Questions
Did European Polyurethanes turn a profit in Q3?
Last quarter management expected its European insulation business to reach positive adjusted EBITDA in the third quarter despite a spike in natural gas prices. The release notes higher European prices and volumes but gives no regional profit figure.
What is the fourth-quarter adjusted EBITDA outlook?
The earnings release did not include a fourth-quarter profit range, which management usually shares on the conference call. That number determines how much working capital cash Huntsman must release to hit its 4 times debt target.
Did segment fixed costs fall below $400 million?
Adjusted fixed costs across divisions were flat at $399 million last quarter despite a $110 million annual cost-saving programme. Investors need the quarterly filing's expense table to see if savings are finally beating inflation.
Why did receivable financing rise during a positive cash quarter?
Huntsman generated $82 million in free cash flow, yet borrowings under its accounts receivable programmes increased by $18 million to $235 million. Management has not explained why short-term bill financing keeps climbing.