Eastman Announces Third-Quarter 2019 Financial Results
(In millions, except per share amounts) 3Q19 3Q18
Earnings before interest and taxes (“EBIT”) $367
Adjusted EBIT* $369
Earnings per diluted share $1.93
Adjusted earnings per diluted share*
Net cash provided by operating activities $416 $395
Free cash flow* $306
*For non-core and unusual items (including related to the previously reported coal gasification incident) excluded from adjusted earnings and for adjusted provision for income taxes, calculation of free cash flow and of segment adjusted EBIT margins, and reconciliations to reported company and segment earnings and to cash provided by operating activities, see Tables 1, 3A, 3B, 4A, 4B, 5A and 5B.
“In the third quarter, global economic conditions worsened as uncertainty related to trade issues escalated and impacted consumer discretionary markets such as transportation and consumer durables, which was somewhat offset by our innovation and market development efforts,” said
Segment Results 3Q 2019 versus 3Q 2018
Additives & Functional Products – Sales decreased due to lower selling prices, lower sales volume and less favorable product mix, and an unfavorable shift in foreign currency exchange rates. Lower selling prices were primarily due to lower raw material prices, including for care chemicals cost pass-through contracts, and also attributed to increased competitive pressure, particularly in markets for adhesives resins, tire additives, and formic acid products sold into several end markets. The lower sales volume and less favorable product mix was primarily attributed to weaker end-market demand resulting from continuing global trade-related pressures, particularly in transportation and other consumer discretionary markets.
Reported and adjusted EBIT decreased primarily due to less favorable product mix, lower sales volume, increased planned manufacturing site maintenance costs, and an unfavorable shift in foreign currency exchange rates. Lower raw material costs offset lower selling prices.
Advanced Materials – Sales revenue decreased due to slightly lower selling prices and an unfavorable shift in foreign currency exchange rates. Sales volume and product mix were unchanged as our innovation successes offset weakened demand caused by global trade disruptions and reduced global automotive sales. In particular, we delivered strong growth in sales of premium products including Tritan™ copolyester, Saflex™ acoustic interlayers, and paint protection film.
Reported and adjusted EBIT increased primarily due to lower raw material costs, more favorable product mix, and continued cost management, partially offset by increased planned manufacturing site maintenance costs and an unfavorable shift in foreign currency exchange rates.
Chemical Intermediates – Sales revenue decreased due to lower selling prices across the segment and lower sales volume, particularly of intermediates and functional amines products. The lower selling prices were attributed to raw material price declines and increased competitive activity. Lower intermediates sales volume was attributed to increased competitive activity, and lower functional amines sales volume was attributed to weaker demand in agricultural end-markets resulting from wet weather in
Third-quarter 2018 reported EBIT included insurance in excess of costs from the coal gasification incident. Third-quarter 2019 adjusted EBIT included a negative impact of approximately
Fibers – Sales revenue decreased primarily due to lower acetate flake sales volume to our acetate tow joint venture in
Third-quarter 2018 reported EBIT included insurance in excess of costs from the coal gasification incident. Third-quarter 2019 adjusted EBIT decreased primarily due to inventory recovery in third quarter 2018 as result of the coal gasification incident and less favorable product mix.
In third quarter 2019, the company generated
The company continues to expect to approach
Commenting on the outlook for full-year 2019, Costa said: “For the first nine months of the year, we’ve remained focused on what we can control in this difficult business climate. We have increased new business revenue from innovation, particularly in the Advanced Materials segment, as well as continued to aggressively manage costs. However, we have seen business conditions worsen due to global trade uncertainty and other macro factors. As a result, we are now expecting lower sales volume and lower capacity utilization in the fourth quarter. Taking all of this together, assuming the current economic conditions continue, we expect 2019 adjusted EPS to be between
The full-year 2019 projected earnings exclude any non-core, unusual, or non-recurring items in the remaining three months of 2019 and assume that the adjusted tax rate detailed in Tables 4A and 4B for first nine months 2019 will be the actual rate for full-year 2019. Our 2019 financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss) or any unusual or non-recurring items, and we accordingly are unable to reconcile projected full-year 2019 earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.
This news release includes forward-looking statements concerning current expectations and assumptions for future global economic conditions; competitive position and acceptance of specialty products in key markets; mix of products sold; raw material and energy prices and costs, and other costs; and revenue, earnings, and cash flow for full-year 2019. Such expectations and assumptions are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations and assumptions expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's filings with the
Conference Call and Webcast Information
Eastman will host a conference call with industry analysts on
Eastman is a global advanced materials and specialty additives company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction, and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in more than 100 countries and had 2018 revenues of approximately
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Source: Eastman Chemical Company