Delaware | 1-12626 | 62-1539359 | ||||||||||||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
||||||||||||
200 South Wilcox Drive | ||||||||
Kingsport | Tennessee | 37662 | ||||||
(Address of Principal Executive Offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||||
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||||
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||||
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, par value $0.01 per share | EMN | New York Stock Exchange | ||||||||||||
1.875% Notes Due 2026 | EMN26 | New York Stock Exchange |
EASTMAN CHEMICAL COMPANY - EMN |
EASTMAN CHEMICAL COMPANY - EMN |
Eastman Chemical Company
|
||||||||
By: | /s/ Michelle R. Stewart | |||||||
Michelle R. Stewart | ||||||||
Vice President, Chief Accounting Officer and Corporate Controller | ||||||||
Date: July 27, 2023 |
(In millions, except per share amounts; unaudited) | 2Q2023 | 2Q2022 | ||||||
Sales revenue | $2,324 | $2,784 | ||||||
Earnings before interest and taxes ("EBIT") | 323 | 426 | ||||||
Adjusted EBIT* | 336 | 469 | ||||||
Earnings per diluted share | 2.27 | 2.03 | ||||||
Adjusted earnings per diluted share* | 1.99 | 2.83 | ||||||
Net cash provided by operating activities | 410 | 245 | ||||||
Item | Page | |||||||
Second Quarter | First Six Months | ||||||||||||||||||||||
(Dollars in millions, except per share amounts; unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Sales | $ | 2,324 | $ | 2,784 | $ | 4,736 | $ | 5,498 | |||||||||||||||
Cost of sales (1)(2) |
1,740 | 2,114 | 3,623 | 4,278 | |||||||||||||||||||
Gross profit | 584 | 670 | 1,113 | 1,220 | |||||||||||||||||||
Selling, general and administrative expenses | 185 | 185 | 376 | 381 | |||||||||||||||||||
Research and development expenses | 60 | 67 | 122 | 132 | |||||||||||||||||||
Asset impairments and restructuring charges, net | — | 19 | 22 | 21 | |||||||||||||||||||
Other components of post-employment (benefit) cost, net | (3) | (34) | (6) | (65) | |||||||||||||||||||
Other (income) charges, net | 19 | 14 | 30 | 2 | |||||||||||||||||||
Gain on divested business (3) |
— | (7) | — | (10) | |||||||||||||||||||
Earnings before interest and taxes | 323 | 426 | 569 | 759 | |||||||||||||||||||
Net interest expense | 54 | 45 | 106 | 91 | |||||||||||||||||||
Earnings before income taxes | 269 | 381 | 463 | 668 | |||||||||||||||||||
(Benefit from) provision for income taxes | (3) | 124 | 57 | 175 | |||||||||||||||||||
Net earnings | 272 | 257 | 406 | 493 | |||||||||||||||||||
Less: Net earnings attributable to noncontrolling interest | — | 1 | — | 2 | |||||||||||||||||||
Net earnings attributable to Eastman | $ | 272 | $ | 256 | $ | 406 | $ | 491 | |||||||||||||||
Basic earnings per share attributable to Eastman | $ | 2.28 | $ | 2.05 | $ | 3.41 | $ | 3.87 | |||||||||||||||
Diluted earnings per share attributable to Eastman | $ | 2.27 | $ | 2.03 | $ | 3.39 | $ | 3.82 | |||||||||||||||
Shares (in millions) outstanding at end of period | 118.6 | 122.8 | 118.6 | 122.8 | |||||||||||||||||||
Shares (in millions) used for earnings per share calculation | |||||||||||||||||||||||
Basic | 118.8 | 124.8 | 118.9 | 126.9 | |||||||||||||||||||
Diluted | 119.6 | 126.4 | 119.6 | 128.6 |
Second Quarter | First Six Months | ||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Sales by Segment | |||||||||||||||||||||||
Advanced Materials | $ | 739 | $ | 846 | $ | 1,481 | $ | 1,583 | |||||||||||||||
Additives & Functional Products (1) |
747 | 924 | 1,524 | 1,813 | |||||||||||||||||||
Chemical Intermediates (1) |
514 | 772 | 1,103 | 1,487 | |||||||||||||||||||
Fibers | 323 | 242 | 626 | 455 | |||||||||||||||||||
Total Sales by Segment | 2,323 | 2,784 | 4,734 | 5,338 | |||||||||||||||||||
Other (2) |
1 | — | 2 | 160 | |||||||||||||||||||
Total Eastman Chemical Company | $ | 2,324 | $ | 2,784 | $ | 4,736 | $ | 5,498 |
First Quarter | ||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Sales by Segment | ||||||||
Advanced Materials | $ | 742 | ||||||
Additives & Functional Products | 777 | |||||||
Chemical Intermediates | 589 | |||||||
Fibers | 303 | |||||||
Total Sales by Segment | 2,411 | |||||||
Other | 1 | |||||||
Total Eastman Chemical Company | $ | 2,412 |
Second Quarter 2023 Compared to Second Quarter 2022 | ||||||||||||||
Change in Sales Revenue Due To | ||||||||||||||
(Unaudited) | Revenue % Change |
Volume / Product Mix Effect | Price Effect | Exchange Rate Effect |
||||||||||
Advanced Materials | (13) | % | (15) | % | 3 | % | (1) | % | ||||||
Additives & Functional Products | (19) | % | (14) | % | (5) | % | — | % | ||||||
Chemical Intermediates | (33) | % | (22) | % | (11) | % | — | % | ||||||
Fibers | 33 | % | 1 | % | 32 | % | — | % | ||||||
Total Eastman Chemical Company (1) |
(17) | % | (15) | % | (1) | % | (1) | % | ||||||
First Six Months 2023 Compared to First Six Months 2022 | |||||||||||||||||
Change in Sales Revenue Due To | |||||||||||||||||
(Unaudited) | Revenue % Change |
Volume / Product Mix Effect | Price Effect | Exchange Rate Effect |
Divested Business Effect | ||||||||||||
Advanced Materials | (6) | % | (11) | % | 6 | % | (1) | % | — | % | |||||||
Additives & Functional Products | (16) | % | (15) | % | — | % | (1) | % | — | % | |||||||
Chemical Intermediates | (26) | % | (18) | % | (8) | % | — | % | — | % | |||||||
Fibers | 38 | % | 3 | % | 36 | % | (1) | % | — | % | |||||||
Total Eastman Chemical Company (1) |
(14) | % | (13) | % | 3 | % | (1) | % | (3) | % |
Second Quarter 2023 Compared to First Quarter 2023 | ||||||||||||||
Change in Sales Revenue Due To | ||||||||||||||
(Unaudited) | Revenue % Change |
Volume / Product Mix Effect | Price Effect | Exchange Rate Effect |
||||||||||
Advanced Materials | (1) | % | (1) | % | — | % | — | % | ||||||
Additives & Functional Products | (4) | % | — | % | (4) | % | — | % | ||||||
Chemical Intermediates | (13) | % | (8) | % | (5) | % | — | % | ||||||
Fibers | 7 | % | 6 | % | 1 | % | — | % | ||||||
Total Eastman Chemical Company | (4) | % | (2) | % | (2) | % | — | % |
Second Quarter | First Six Months | ||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Sales by Customer Location | |||||||||||||||||||||||
United States and Canada | $ | 1,000 | $ | 1,304 | $ | 2,065 | $ | 2,502 | |||||||||||||||
Europe, Middle East, and Africa | 635 | 681 | 1,344 | 1,426 | |||||||||||||||||||
Asia Pacific | 557 | 638 | 1,078 | 1,250 | |||||||||||||||||||
Latin America | 132 | 161 | 249 | 320 | |||||||||||||||||||
Total Eastman Chemical Company | $ | 2,324 | $ | 2,784 | $ | 4,736 | $ | 5,498 | |||||||||||||||
Second Quarter | First Six Months | |||||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Advanced Materials | ||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 99 | $ | 141 | $ | 185 | $ | 202 | ||||||||||||||||||
Asset impairments and restructuring charges, net | — | 17 | — | 18 | ||||||||||||||||||||||
Excluding non-core item | 99 | 158 | 185 | 220 | ||||||||||||||||||||||
Additives & Functional Products | ||||||||||||||||||||||||||
Earnings before interest and taxes | 140 | 160 | 264 | 327 | ||||||||||||||||||||||
Chemical Intermediates | ||||||||||||||||||||||||||
Earnings before interest and taxes | 39 | 142 | 81 | 254 | ||||||||||||||||||||||
Asset impairments and restructuring charges, net | — | 1 | — | 2 | ||||||||||||||||||||||
Excluding non-core item | 39 | 143 | 81 | 256 | ||||||||||||||||||||||
Fibers | ||||||||||||||||||||||||||
Earnings before interest and taxes | 106 | 37 | 171 | 61 | ||||||||||||||||||||||
Asset impairments and restructuring charges, net (3) |
— | — | 6 | — | ||||||||||||||||||||||
Accelerated depreciation (3) |
— | — | 23 | — | ||||||||||||||||||||||
Excluding non-core items | 106 | 37 | 200 | 61 | ||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Loss before interest and taxes | (61) | (54) | (132) | (85) | ||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | — | (3) | — | (3) | ||||||||||||||||||||||
Asset impairments and restructuring charges, net (4) |
— | 1 | 16 | 1 | ||||||||||||||||||||||
Net steam line incident costs (insurance proceeds) (5) |
— | 17 | (8) | 42 | ||||||||||||||||||||||
Net (gain) loss on divested business and transaction costs | — | (5) | — | 1 | ||||||||||||||||||||||
Environmental and other costs (6) |
13 | 15 | 13 | 15 | ||||||||||||||||||||||
Excluding non-core and unusual items | (48) | (29) | (111) | (29) | ||||||||||||||||||||||
Total Eastman Chemical Company | ||||||||||||||||||||||||||
Earnings before interest and taxes | 323 | 426 | 569 | 759 | ||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | — | (3) | — | (3) | ||||||||||||||||||||||
Asset impairments and restructuring charges, net | — | 19 | 22 | 21 | ||||||||||||||||||||||
Net steam line incident costs (insurance proceeds) | — | 17 | (8) | 42 | ||||||||||||||||||||||
Net (gain) loss on divested business and transaction costs | — | (5) | — | 1 | ||||||||||||||||||||||
Accelerated depreciation | — | — | 23 | — | ||||||||||||||||||||||
Environmental and other costs | 13 | 15 | 13 | 15 | ||||||||||||||||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 336 | $ | 469 | $ | 619 | $ | 835 |
Second Quarter | First Six Months | |||||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items | ||||||||||||||||||||||||||
Earnings before interest and taxes | $ | 323 | $ | 426 | $ | 569 | $ | 759 | ||||||||||||||||||
Costs of sales | — | 17 | 15 | 42 | ||||||||||||||||||||||
Selling, general and administrative expenses | — | 2 | — | 11 | ||||||||||||||||||||||
Asset impairments and restructuring charges, net | — | 19 | 22 | 21 | ||||||||||||||||||||||
Other components of post-employment (benefit) cost, net | — | (3) | — | (3) | ||||||||||||||||||||||
Other (income) charges, net | 13 | 15 | 13 | 15 | ||||||||||||||||||||||
Gain on divested business | — | (7) | — | (10) | ||||||||||||||||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 336 | $ | 469 | $ | 619 | $ | 835 |
First Quarter | ||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Advanced Materials | ||||||||
Earnings before interest and taxes | $ | 86 | ||||||
Additives & Functional Products | ||||||||
Earnings before interest and taxes | 124 | |||||||
Chemical Intermediates | ||||||||
Earnings before interest and taxes | 42 | |||||||
Fibers | ||||||||
Earnings before interest and taxes | 65 | |||||||
Asset impairments and restructuring charges, net | 6 | |||||||
Accelerated depreciation | 23 | |||||||
Excluding non-core items | 94 | |||||||
Other | ||||||||
Loss before interest and taxes | (71) | |||||||
Asset impairments and restructuring charges, net | 16 | |||||||
Net steam line incident costs (insurance proceeds) | (8) | |||||||
Excluding non-core and unusual items | (63) | |||||||
Total Eastman Chemical Company | ||||||||
Earnings before interest and taxes | 246 | |||||||
Asset impairments and restructuring charges, net | 22 | |||||||
Net steam line incident costs (insurance proceeds) | (8) | |||||||
Accelerated depreciation | 23 | |||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 283 |
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items | ||||||||
Earnings before interest and taxes | $ | 246 | ||||||
Costs of sales | 15 | |||||||
Asset impairments and restructuring charges, net | 22 | |||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 283 |
Second Quarter | First Six Months | ||||||||||||||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||
Adjusted EBIT | Adjusted EBIT Margin | Adjusted EBIT | Adjusted EBIT Margin | Adjusted EBIT | Adjusted EBIT Margin | Adjusted EBIT | Adjusted EBIT Margin | ||||||||||||||||||||||||||||
Advanced Materials | $ | 99 | 13.4 | % | $ | 158 | 18.7 | % | $ | 185 | 12.5 | % | $ | 220 | 13.9 | % | |||||||||||||||||||
Additives & Functional Products (3) |
140 | 18.7 | % | 160 | 17.3 | % | 264 | 17.3 | % | 327 | 18.0 | % | |||||||||||||||||||||||
Chemical Intermediates (3) |
39 | 7.6 | % | 143 | 18.5 | % | 81 | 7.3 | % | 256 | 17.2 | % | |||||||||||||||||||||||
Fibers | 106 | 32.8 | % | 37 | 15.3 | % | 200 | 31.9 | % | 61 | 13.4 | % | |||||||||||||||||||||||
Total segment EBIT excluding non-core and unusual items | 384 | 16.5 | % | 498 | 17.9 | % | 730 | 15.4 | % | 864 | 16.2 | % | |||||||||||||||||||||||
Other |
(48) | (29) | (111) | (29) | |||||||||||||||||||||||||||||||
Total EBIT excluding non-core and unusual items | $ | 336 | 14.5 | % | $ | 469 | 16.8 | % | $ | 619 | 13.1 | % | $ | 835 | 15.2 | % |
First Quarter | ||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Adjusted EBIT | Adjusted EBIT Margin | |||||||
Advanced Materials | $ | 86 | 11.6 | % | ||||
Additives & Functional Products | 124 | 16.0 | % | |||||
Chemical Intermediates | 42 | 7.1 | % | |||||
Fibers | 94 | 31.0 | % | |||||
Total segment EBIT excluding non-core and unusual items | 346 | 14.4 | % | |||||
Other |
(63) | |||||||
Total EBIT excluding non-core and unusual items | $ | 283 | 11.7 | % | ||||
Second Quarter 2023 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | (Benefit from) Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 323 | $ | 269 | $ | (3) | (1) | % | $ | 272 | $ | 2.27 | ||||||||||||||||||||||||||
Non-Core and Unusual Items: (1) |
||||||||||||||||||||||||||||||||||||||
Environmental and other costs | 13 | 13 | 4 | 9 | 0.08 | |||||||||||||||||||||||||||||||||
Adjustment from tax law changes (2) |
— | — | 23 | (23) | (0.19) | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (3) |
— | — | 20 | (20) | (0.17) | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes) | $ | 336 | $ | 282 | $ | 44 | 16 | % | $ | 238 | $ | 1.99 |
Second Quarter 2022 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 426 | $ | 381 | $ | 124 | 33 | % | $ | 256 | $ | 2.03 | ||||||||||||||||||||||||||
Non-Core and Unusual Items: (1) |
||||||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 19 | 19 | 4 | 15 | 0.12 | |||||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | (3) | (3) | — | (3) | (0.02) | |||||||||||||||||||||||||||||||||
Net (gain) loss on divested business and transaction costs | (5) | (5) | (61) | 56 | 0.43 | |||||||||||||||||||||||||||||||||
Steam line incident costs (insurance proceeds), net | 17 | 17 | 4 | 13 | 0.10 | |||||||||||||||||||||||||||||||||
Environmental and other costs | 15 | 15 | 4 | 11 | 0.09 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (3) |
— | — | (10) | 10 | 0.08 | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes) | $ | 469 | $ | 424 | $ | 65 | 16 | % | $ | 358 | $ | 2.83 |
First Six Months 2023 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 569 | $ | 463 | $ | 57 | 12 | % | $ | 406 | $ | 3.39 | ||||||||||||||||||||||||||
Non-Core or Unusual Items: (1) |
||||||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 22 | 22 | 4 | 18 | 0.14 | |||||||||||||||||||||||||||||||||
Accelerated depreciation | 23 | 23 | 3 | 20 | 0.17 | |||||||||||||||||||||||||||||||||
Steam line incident costs (insurance proceeds), net | (8) | (8) | (2) | (6) | (0.05) | |||||||||||||||||||||||||||||||||
Environmental and other costs | 13 | 13 | 4 | 9 | 0.08 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (2) |
— | — | 14 | (14) | (0.11) | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items) | $ | 619 | $ | 513 | $ | 80 | 16 | % | $ | 433 | $ | 3.62 |
First Six Months 2022 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 759 | $ | 668 | $ | 175 | 26 | % | $ | 491 | $ | 3.82 | ||||||||||||||||||||||||||
Non-Core or Unusual Items: (1)
|
||||||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 21 | 21 | 5 | 16 | 0.13 | |||||||||||||||||||||||||||||||||
Net (gain) loss on divested business and transaction costs | 1 | 1 | (63) | 64 | 0.50 | |||||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | (3) | (3) | — | (3) | (0.02) | |||||||||||||||||||||||||||||||||
Steam line incident costs (insurance proceeds), net | 42 | 42 | 10 | 32 | 0.24 | |||||||||||||||||||||||||||||||||
Environmental and other costs | 15 | 15 | 4 | 11 | 0.09 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (2) |
— | — | (16) | 16 | 0.12 | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items) | $ | 835 | $ | 744 | $ | 115 | 16 | % | $ | 627 | $ | 4.88 |
First Quarter 2023 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
||||||||||||||||||||||||||||||||||
(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 246 | $ | 194 | $ | 60 | 31 | % | $ | 134 | $ | 1.12 | ||||||||||||||||||||||||||
Non-Core and Unusual Items: (1) |
||||||||||||||||||||||||||||||||||||||
Asset impairments and restructuring charges, net | 22 | 22 | 4 | 18 | 0.14 | |||||||||||||||||||||||||||||||||
Accelerated depreciation | 23 | 23 | 3 | 20 | 0.17 | |||||||||||||||||||||||||||||||||
Steam line incident costs (insurance proceeds), net | (8) | (8) | (2) | (6) | (0.05) | |||||||||||||||||||||||||||||||||
Adjustment from tax law changes (2) |
— | — | (23) | 23 | 0.19 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (3) |
— | — | (6) | 6 | 0.06 | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes) | $ | 283 | $ | 231 | $ | 36 | 16 | % | $ | 195 | $ | 1.63 |
First Six Months (1) |
|||||||||||
2023 | 2022 | ||||||||||
Effective tax rate | 12 | % | 26 | % | |||||||
Tax impact of current year non-core and unusual items (2) |
2 | % | (6) | % | |||||||
Changes in tax contingencies and valuation allowances | 2 | % | — | % | |||||||
Forecasted full year impact of expected tax events | — | % | (4) | % | |||||||
Forecasted full year adjusted effective tax rate | 16 | % | 16 | % |
Second Quarter | First Six Months | ||||||||||||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Operating activities | |||||||||||||||||||||||
Net earnings | $ | 272 | $ | 257 | $ | 406 | $ | 493 | |||||||||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 119 | 122 | 260 | 243 | |||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | — | (3) | — | (3) | |||||||||||||||||||
Loss on sale of assets | — | 15 | — | 15 | |||||||||||||||||||
Gain on divested business | — | (7) | — | (10) | |||||||||||||||||||
Benefit from deferred income taxes | (86) | (57) | (93) | (81) | |||||||||||||||||||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | |||||||||||||||||||||||
(Increase) decrease in trade receivables | 124 | (36) | 33 | (163) | |||||||||||||||||||
(Increase) decrease in inventories | (29) | (188) | (73) | (372) | |||||||||||||||||||
Increase (decrease) in trade payables | (158) | 27 | (290) | 179 | |||||||||||||||||||
Pension and other postretirement contributions (in excess of) less than expenses | (10) | (38) | (29) | (81) | |||||||||||||||||||
Variable compensation payments (in excess of) less than expenses | 65 | 36 | 49 | (132) | |||||||||||||||||||
Other items, net | 113 | 117 | 145 | 174 | |||||||||||||||||||
Net cash provided by operating activities | 410 | 245 | 408 | 262 | |||||||||||||||||||
Investing activities | |||||||||||||||||||||||
Additions to properties and equipment | (239) | (135) | (413) | (247) | |||||||||||||||||||
Proceeds from sale of businesses | — | 998 | 16 | 998 | |||||||||||||||||||
Acquisition, net of cash acquired | (3) | (1) | (76) | (1) | |||||||||||||||||||
Additions to capitalized software | (2) | (4) | (4) | (7) | |||||||||||||||||||
Other items, net | (2) | 15 | (21) | 13 | |||||||||||||||||||
Net cash (used in) provided by investing activities | (246) | 873 | (498) | 756 | |||||||||||||||||||
Financing activities | |||||||||||||||||||||||
Net increase (decrease) in commercial paper and other borrowings | 603 | (236) | 277 | — | |||||||||||||||||||
Proceeds from borrowings | — | 500 | 796 | 500 | |||||||||||||||||||
Repayment of borrowings | (808) | (550) | (808) | (550) | |||||||||||||||||||
Dividends paid to stockholders | (94) | (98) | (188) | (196) | |||||||||||||||||||
Treasury stock purchases | (50) | (752) | (50) | (752) | |||||||||||||||||||
Proceeds from stock option exercises and other items, net | (4) | (3) | (23) | (12) | |||||||||||||||||||
Net cash (used in) provided by financing activities | (353) | (1,139) | 4 | (1,010) | |||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (10) | 3 | (11) | |||||||||||||||||||
Net change in cash and cash equivalents | (189) | (31) | (83) | (3) | |||||||||||||||||||
Cash and cash equivalents at beginning of period | 599 | 487 | 493 | 459 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 410 | $ | 456 | $ | 410 | $ | 456 |
June 30, | December 31, | |||||||||||||
(Dollars in millions, unaudited) | 2023 | 2022 | ||||||||||||
Total borrowings | $ | 5,437 | $ | 5,151 | ||||||||||
Less: Cash and cash equivalents | 410 | 493 | ||||||||||||
Net debt (1) |
$ | 5,027 | $ | 4,658 |