When the lightweight strong materials, they’re going to need effective and efficient batteries, which are going to require ultrapure ethylene carbonates. It’s going to require materials like our forthcoming MIRALON and some of the other materials that we’re producing today that’s going to reduce the weight, strengthen the car and give manufacturers better mileage overall and hopefully lower costs in building the car. So — and better comfort. So as we look at this, on all of our divisions, we continue to make — we continue to have more opportunity per vehicle on an EV than we do in ICE. So I continue to be a proponent from a business point of view for that. I can’t answer all the economic conundrums of it. The — but yes, I won’t comment further on that.
But I do think that as we look at the opportunities for Huntsman, we continue to see a lot of opportunities, not just today, but over the course of the next 2 or 3 years.
Phil Lister: Laurence, on working capital. We target approximately 30 days cash conversion cycle. At the year-end, you want to think about that. But for 2024, we have been bringing down our inventories in quarter 3 about 5% in the third quarter, looking at another 10% in the fourth quarter to make sure we’re calibrated overall demand. I do think there’s an opportunity as we meet through 2024 to further improve working capital, and we highlighted that in the prepared remarks.
Operator: Our next questions come from the line of Patrick Cunningham with Citi.
Patrick Cunningham : So you decided to pause the UPEC project given the weaker pricing there. But on the flip side, you’re moving forward with the other two projects. So can you talk about what gives you confidence to move forward in those markets there? And what’s the expected contribution to both 2024 and run rate earnings from those projects?
Phil Lister: Yes. So the two projects, as you indicate, one in Conroe and one in — and one in Hungary. The one in Conroe linked into the semiconductor market, we’re confident about that. We’re confident about the delivery of that project despite a lowering of the semiconductor market this year in the long run. Our clean amines will play out well in that market and particularly with all of the investment that’s going on the ground in North America. We’ll have that up and running in the first half of next year and contributing to the P&L in the second half of 2024. The one in — it’s firmly linked into installation, energy efficiency and also into automotive for — products, which the automotive OEMs demand. So again, we’re not concerned about the ability to sell out those projects at decent margins.
UPEC has been the one that’s been the issue, and that’s just been a flood of Chinese material that’s come in. And therefore, we’ve done the appropriate thing, paused that construction where we started at the appropriate time. We can get it going within 12 months. But right now, the returns aren’t there, and we can divert that capital to other projects such as — and Advanced Materials. In terms of benefits, overall, you think of about $10 million maybe in the second half of next year from the two projects, and that ramps up over time to over $30 million as we move through 2025 and 2026.
Peter Huntsman: Operator, we’re at the top of the hour. Why don’t we take one more question?
Operator: Our next question comes from the line of Arun Viswanathan with RBC.
Arun Viswanathan : If we look at over the last couple of years, I think you did a 13 50 or so EBITDA in ’21. You removed the textiles business and maybe you’re down to call 50 or so at a peak. You’re run rating around $400 million right now. So is that the right way to think about kind of trough to peak EBITDA of Huntsman as it stands now and maybe like a $800 million mid-cycle number? And if so, any kind of larger items that would take you from, say, that $400 million to that $800 million annualized number? How should we think about that?
Phil Lister: Yes. Arun, so — I mean, your calculation is right. $1.2 billion, excluding textile effects at the recent sort of 2021 and 2022 high overall. We have to look for three things, right, ultimately for the current rates to come up. One is a continued recovery in China. We’ve seen a steady and moderate improvement. We do expect improvement next year. U.S. construction markets absolutely have to turn. About 40% of our business is in North America and a decent portion of that is into U.S. construction, whether that’s residential or commercial. So that needs to return upwards. And then ultimately, everyone needs to find a way to make more money effectively in Europe with higher gas prices. And those three things are the key elements macro-wise, which will move or move profitability up.
In addition to that, we obviously do have some projects coming online in Performance Products. We have projects coming online in Advanced Materials over the next few years. And you can expect an aerospace recovery as well moving those numbers up.
Peter Huntsman : Operator, I think that we’re done with our time. We’d like to thank everybody for taking the time for joining us this morning.
Operator: Thank you. That does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
