Eastman Chemical Company (NYSE:EMN) announced its third-quarter
2024 financial results.
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- Strong year-over-year sales volume/mix growth with improvement
in all operating segments
- Adjusted EBIT margin increased 360 basis points compared to
last year through volume/mix growth, operating leverage, and
commercial excellence
- Continued to make good progress on Kingsport methanolysis
operations and the build of our sales funnel for 2025
- Made investment decision to move forward with the Longview,
Texas, methanolysis facility
- Returned $195 million of cash to shareholders, including $100
million of share repurchases
(In millions, except per share amounts;
unaudited)
3Q24
3Q23
Sales revenue
$
2,464
$
2,267
Earnings before interest and taxes
(“EBIT”)
329
256
Adjusted EBIT*
366
256
Earnings per diluted share
1.53
1.49
Adjusted earnings per diluted share*
2.26
1.47
Net cash provided by operating
activities
396
514
*For non-core and unusual items excluded from adjusted
earnings and for adjusted provision for income taxes, segment
adjusted EBIT margins, and net debt, reconciliations to reported
company and segment earnings and total borrowings for all periods
presented in this release, see Tables 3A, 3B, 4A, and 6.
“Our third-quarter results were driven by strong sales
volume/mix growth, operating leverage, and continued commercial
excellence,” said Mark Costa, Board Chair and CEO. “Underlying
end-market trends remained largely unchanged from the second
quarter, consistent with our expectations. In many of our specialty
product lines, we continue to grow above underlying end markets,
including automotive. During this prolonged period of muted demand,
I am proud of the way the Eastman team has worked to find ways to
deliver on our earnings and cash commitments this year. In the
circular economy, I am excited to announce that we have made an
investment decision and will be moving forward with the
construction of a second methanolysis facility in Longview, Texas.
We continue to make good progress on ramping up our Kingsport
methanolysis facility, although we had more downtime than
expected.”
Corporate Results 3Q 2024 versus 3Q 2023
Sales revenue increased 9 percent primarily due to 8 percent
higher sales volume/mix.
Higher sales volume/mix across all segments was driven by the
end of customer inventory destocking across most key end markets
and innovation driving growth above underlying market trends.
EBIT increased primarily due to higher sales volume/mix, higher
spreads in Chemical Intermediates, and improved asset utilization.
This was partially offset by higher variable compensation and by
operating costs for the Kingsport methanolysis facility.
Segment Results 3Q 2024 versus 3Q 2023
Advanced Materials – Sales revenue increased 5 percent
due to 8 percent higher sales volume/mix partially offset by 3
percent lower selling prices.
Higher sales volume/mix was driven by the end of customer
inventory destocking across key end markets as well as continued
growth of premium interlayers products in the automotive end
market. This growth was partially offset by lower selling
prices.
EBIT increased primarily due to higher sales volume/mix and
improved asset utilization that was partially offset by higher
costs associated with the Kingsport methanolysis facility.
Additives & Functional Products – Sales revenue
increased 11 percent due to 11 percent higher sales volume/mix.
Higher sales volume/mix was driven primarily by the end of
customer inventory destocking across key end markets and heat
transfer fluid project fulfillments.
EBIT increased primarily due to higher sales volume/mix.
Fibers – Sales revenue increased 4 percent due to 2
percent higher sales volume/mix and 2 percent higher selling
prices.
Higher selling prices were driven by acetate tow price
increases. Sales volume/mix increased primarily due to
textiles.
EBIT was slightly up primarily due to improved price-cost.
Chemical Intermediates – Sales revenue increased 13
percent due to 7 percent higher sales volume/mix and 6 percent
higher selling prices.
Higher sales volume/mix and higher selling prices were driven by
the end of customer inventory destocking and improved market
conditions compared to the prior year period.
EBIT increased primarily due to improved olefin and derivative
spreads.
Cash Flow
In third quarter 2024, cash provided by operating activities was
$396 million. The company returned $195 million to stockholders
through share repurchases and dividends. See Table 5. Priorities
for uses of available cash for 2024 include organic growth
investments, payment of the quarterly dividend, and share
repurchases.
2024 Outlook
Commenting on the outlook for full-year 2024, Costa said, “We
are proud to have delivered another strong quarter in this period
of prolonged macroeconomic weakness. As expected, sales volume
improved from last year mostly due to the lack of customer
inventory destocking. With destocking over, our demand has
reconnected to our end markets, which remain stable. In the fourth
quarter, we expect to see normal seasonal volume declines across
most of our markets. We also expect to continue to leverage our
innovation-driven growth model to drive growth above our markets.
We expect to benefit from commercial excellence and the continued
flow through of lower raw material and energy costs in our
specialty businesses. While we have made significant progress
achieving consistent production rates at the Kingsport methanolysis
facility, it has taken us longer than expected to achieve those
rates. Despite these challenges, the strong results we have
delivered in our base business enable us to keep the midpoint of
our full-year adjusted EPS guidance unchanged. Taking these factors
together, we expect 2024 EPS to be between $7.50 and $7.70 and for
2024 cash from operations to approach $1.3 billion, reflecting a
targeted increase in working capital to support growth in 2025. I
remain confident in our ability to deliver earnings growth and
strong cash flow going forward.”
The full-year 2024 projected adjusted diluted EPS and Earnings
Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”)
exclude any non-core, unusual, or nonrecurring items. Our financial
results forecasts do not include non-core items (such as
mark-to-market pension and other postretirement benefit gain or
loss, and asset impairments and restructuring charges) or any
unusual or non-recurring items because we are unable to predict
with reasonable certainty the financial impact of such items. These
items are uncertain and depend on various factors, and we are
unable to reconcile projected adjusted diluted EPS and EBITDA
excluding non-core and any unusual or non-recurring items to
reported GAAP diluted EPS or net earnings without unreasonable
efforts.
Forward-Looking Statements
The information in this release and other statements by the
company may contain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act with respect to,
among other items: projections and estimates of earnings, revenues,
volumes, pricing, margins, cost reductions, expenses, taxes,
liquidity, capital expenditures, cash flow, dividends, share
repurchases or other financial items, statements of management’s
plans, strategies and objectives for future operations, and
statements regarding future economic, industry or market conditions
or performance. Such projections and estimates are based upon
certain preliminary information, internal estimates, and management
assumptions, expectations, and plans. Forward-looking statements
are subject to a number of risks and uncertainties, and actual
performance or results could differ materially from that
anticipated by any forward-looking statements. Forward-looking
statements speak only as of the date they are made, and the company
undertakes no obligation to update or revise any forward-looking
statement. Other important assumptions and factors that could cause
actual results to differ materially from those in the
forward-looking statements are detailed in the company’s filings
with the Securities and Exchange Commission (the “SEC”), which are
accessible on the SEC’s website at www.sec.gov and the company’s
website at www.eastman.com.
Conference Call and Webcast Information
Eastman will host a conference call with industry analysts on
Nov. 1, 2024, at 8:00 a.m. ET. To listen to the live webcast of the
conference call and view the accompanying slides and prepared
remarks, go to investors.eastman.com, Events & Presentations.
The slides and prepared remarks to be discussed during the call and
webcast will be available at investors.eastman.com at approximately
4:15 p.m. ET on Oct. 31, 2024. To listen via telephone, the dial-in
number is +1 (833) 470-1428, passcode: 170609. A web replay, a
replay in downloadable MP3 format, and the accompanying slides and
prepared remarks will be available at investors.eastman.com, Events
& Presentations. A telephone replay will be available
continuously beginning at approximately 1:00 p.m. Eastern Time,
Nov. 1, 2024, through 11:59 p.m. Eastern Time, Nov. 11, 2024, Toll
Free at +1 (866) 813-9403, passcode 986486.
Founded in 1920, Eastman is a global specialty materials company
that produces a broad range of products found in items people use
every day. With the purpose of enhancing the quality of life in a
material way, Eastman works with customers to deliver innovative
products and solutions while maintaining a commitment to safety and
sustainability. The company’s innovation-driven growth model takes
advantage of world-class technology platforms, deep customer
engagement, and differentiated application development to grow its
leading positions in attractive end markets such as transportation,
building and construction, and consumables. As a globally inclusive
and diverse company, Eastman employs approximately 14,000 people
around the world and serves customers in more than 100 countries.
The company had 2023 revenue of approximately $9.2 billion and is
headquartered in Kingsport, Tennessee, USA. For more information,
visit www.eastman.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031853691/en/
Media: Tracy Kilgore Addington 423-224-0498 /
tracy@eastman.com
Investors: Greg Riddle 212-835-1620 / griddle@eastman.com
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