Delaware | 1-12626 | 62-1539359 | ||||||||||||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
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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
|
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By: | /s/ Michelle R. Stewart | |||||||
Michelle R. Stewart | ||||||||
Vice President, Chief Accounting Officer and Corporate Controller | ||||||||
Date: April 25, 2024 |
(In millions, except per share amounts; unaudited) | 1Q2024 |
1Q2023 |
||||||
Sales revenue | $2,310 | $2,412 | ||||||
Earnings before interest and taxes ("EBIT") | 263 | 246 | ||||||
Adjusted EBIT* | 274 | 283 | ||||||
Earnings per diluted share | 1.39 | 1.12 | ||||||
Adjusted earnings per diluted share* | 1.61 | 1.63 | ||||||
Net cash used in operating activities |
(16) | (2) | ||||||
Item | Page | |||||||
First Quarter | |||||||||||
(Dollars in millions, except per share amounts; unaudited) | 2024 | 2023 | |||||||||
Sales | $ | 2,310 | $ | 2,412 | |||||||
Cost of sales (1)(2) |
1,778 | 1,883 | |||||||||
Gross profit | 532 | 529 | |||||||||
Selling, general and administrative expenses | 191 | 191 | |||||||||
Research and development expenses | 59 | 62 | |||||||||
Asset impairments and restructuring charges, net | 11 | 22 | |||||||||
Other components of post-employment (benefit) cost, net | (5) | (3) | |||||||||
Other (income) charges, net | 13 | 11 | |||||||||
Earnings before interest and taxes | 263 | 246 | |||||||||
Net interest expense | 49 | 52 | |||||||||
Earnings before income taxes | 214 | 194 | |||||||||
Provision for income taxes |
49 | 60 | |||||||||
Net earnings | 165 | 134 | |||||||||
Less: Net earnings attributable to noncontrolling interest | — | — | |||||||||
Net earnings attributable to Eastman | $ | 165 | $ | 134 | |||||||
Basic earnings per share attributable to Eastman | $ | 1.40 | $ | 1.13 | |||||||
Diluted earnings per share attributable to Eastman | $ | 1.39 | $ | 1.12 | |||||||
Shares (in millions) outstanding at end of period | 117.6 | 119.2 | |||||||||
Shares (in millions) used for earnings per share calculation | |||||||||||
Basic | 117.4 | 118.9 | |||||||||
Diluted | 118.2 | 119.7 |
First Quarter | |||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | |||||||||
Sales by Segment | |||||||||||
Advanced Materials | $ | 748 | $ | 742 | |||||||
Additives & Functional Products |
704 | 777 | |||||||||
Chemical Intermediates |
523 | 589 | |||||||||
Fibers | 331 | 303 | |||||||||
Total Sales by Segment | 2,306 | 2,411 | |||||||||
Other |
4 | 1 | |||||||||
Total Eastman Chemical Company | $ | 2,310 | $ | 2,412 |
Fourth Quarter |
||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Sales by Segment | ||||||||
Advanced Materials | $ | 705 | ||||||
Additives & Functional Products | 640 | |||||||
Chemical Intermediates | 513 | |||||||
Fibers | 346 | |||||||
Total Sales by Segment | 2,204 | |||||||
Other | 3 | |||||||
Total Eastman Chemical Company | $ | 2,207 |
First Quarter 2024 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 | % | 4 | % | (3) | % | — | % | ||||||
Additives & Functional Products | (9) | % | (1) | % | (8) | % | — | % | ||||||
Chemical Intermediates | (11) | % | 2 | % | (13) | % | — | % | ||||||
Fibers | 9 | % | 7 | % | 2 | % | — | % | ||||||
Total Eastman Chemical Company |
(4) | % | 3 | % | (7) | % | — | % | ||||||
First Quarter 2024 Compared to Fourth Quarter 2023 |
||||||||||||||
Change in Sales Revenue Due To | ||||||||||||||
(Unaudited) | Revenue % Change |
Volume / Product Mix Effect | Price Effect | Exchange Rate Effect |
||||||||||
Advanced Materials | 6 | % | 6 | % | (1) | % | 1 | % | ||||||
Additives & Functional Products | 10 | % | 8 | % | 1 | % | 1 | % | ||||||
Chemical Intermediates | 2 | % | 1 | % | 1 | % | — | % | ||||||
Fibers | (4) | % | (7) | % | 3 | % | — | % | ||||||
Total Eastman Chemical Company | 5 | % | 4 | % | — | % | 1 | % |
First Quarter | |||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | |||||||||
Sales by Customer Location | |||||||||||
United States and Canada | $ | 969 | $ | 1,065 | |||||||
Europe, Middle East, and Africa | 659 | 709 | |||||||||
Asia Pacific | 564 | 521 | |||||||||
Latin America | 118 | 117 | |||||||||
Total Eastman Chemical Company | $ | 2,310 | $ | 2,412 | |||||||
First Quarter | ||||||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | ||||||||||||
Advanced Materials | ||||||||||||||
Earnings before interest and taxes | $ | 104 | $ | 86 | ||||||||||
Additives & Functional Products | ||||||||||||||
Earnings before interest and taxes | 109 | 124 | ||||||||||||
Chemical Intermediates | ||||||||||||||
Earnings before interest and taxes | 16 | 42 | ||||||||||||
Fibers | ||||||||||||||
Earnings before interest and taxes | 117 | 65 | ||||||||||||
Asset impairments and restructuring charges, net |
— | 6 | ||||||||||||
Accelerated depreciation |
— | 23 | ||||||||||||
Excluding non-core items | 117 | 94 | ||||||||||||
Other | ||||||||||||||
Loss before interest and taxes | (83) | (71) | ||||||||||||
Asset impairments and restructuring charges, net (2) |
11 | 16 | ||||||||||||
Steam line incident (insurance proceeds) costs, net |
— | (8) | ||||||||||||
Excluding non-core and unusual items | (72) | (63) | ||||||||||||
Total Eastman Chemical Company | ||||||||||||||
Earnings before interest and taxes | 263 | 246 | ||||||||||||
Asset impairments and restructuring charges, net | 11 | 22 | ||||||||||||
Steam line incident (insurance proceeds) costs, net |
— | (8) | ||||||||||||
Accelerated depreciation | — | 23 | ||||||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 274 | $ | 283 |
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items | ||||||||||||||
Earnings before interest and taxes | $ | 263 | $ | 246 | ||||||||||
Cost of sales |
— | 15 | ||||||||||||
Asset impairments and restructuring charges, net | 11 | 22 | ||||||||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 274 | $ | 283 |
Fourth Quarter |
||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Advanced Materials | ||||||||
Earnings before interest and taxes | $ | 65 | ||||||
Additives & Functional Products | ||||||||
Earnings before interest and taxes | 67 | |||||||
Chemical Intermediates | ||||||||
Earnings before interest and taxes | 347 | |||||||
Gain on divested business |
(323) | |||||||
Excluding non-core item | 24 | |||||||
Fibers | ||||||||
Earnings before interest and taxes | 113 | |||||||
Other | ||||||||
Loss before interest and taxes | (115) | |||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | 53 | |||||||
Asset impairments and restructuring charges, net |
15 | |||||||
Excluding non-core and unusual items | (47) | |||||||
Total Eastman Chemical Company | ||||||||
Earnings before interest and taxes | $ | 477 | ||||||
Mark-to-market pension and other postretirement benefit plans (gain), net | 53 | |||||||
Asset impairments and restructuring charges, net | 15 | |||||||
Gain on divested business |
(323) | |||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 222 |
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items | ||||||||
Earnings before interest and taxes | $ | 477 | ||||||
Asset impairments and restructuring charges, net | 15 | |||||||
Other components of post-employment (benefit) cost, net | 53 | |||||||
Net (gain) loss on divested businesses |
(323) | |||||||
Total earnings before interest and taxes excluding non-core and unusual items | $ | 222 |
First Quarter | |||||||||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | |||||||||||||||
Adjusted EBIT | Adjusted EBIT Margin | Adjusted EBIT | Adjusted EBIT Margin | ||||||||||||||
Advanced Materials | $ | 104 | 13.9 | % | $ | 86 | 11.6 | % | |||||||||
Additives & Functional Products |
109 | 15.5 | % | 124 | 16.0 | % | |||||||||||
Chemical Intermediates |
16 | 3.1 | % | 42 | 7.1 | % | |||||||||||
Fibers | 117 | 35.3 | % | 94 | 31.0 | % | |||||||||||
Total segment EBIT excluding non-core and unusual items | 346 | 15.0 | % | 346 | 14.4 | % | |||||||||||
Other |
(72) | (63) | |||||||||||||||
Total EBIT excluding non-core and unusual items | $ | 274 | 11.9 | % | $ | 283 | 11.7 | % |
Fourth Quarter |
||||||||
(Dollars in millions, unaudited) | 2023 | |||||||
Adjusted EBIT | Adjusted EBIT Margin | |||||||
Advanced Materials | $ | 65 | 9.2 | % | ||||
Additives & Functional Products |
67 | 10.5 | % | |||||
Chemical Intermediates |
24 | 4.7 | % | |||||
Fibers | 113 | 32.7 | % | |||||
Total segment EBIT excluding non-core and unusual items | 269 | 12.2 | % | |||||
Other |
(47) | |||||||
Total EBIT excluding non-core and unusual items | $ | 222 | 10.1 | % |
First Quarter 2024 | ||||||||||||||||||||||||||||||||||||||
Earnings Before Interest and Taxes | Earnings Before Income Taxes | Provision for Income Taxes | Effective Income Tax Rate | Net Earnings Attributable to Eastman |
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(Dollars in millions, except per share amounts, unaudited) | After Tax | Per Diluted Share | ||||||||||||||||||||||||||||||||||||
As reported (GAAP) | $ | 263 | $ | 214 | $ | 49 | 23 | % | $ | 165 | $ | 1.39 | ||||||||||||||||||||||||||
Non-Core and Unusual Items: (1) |
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Asset impairments and restructuring charges, net | 11 | 11 | 3 | 8 | 0.07 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (2) |
— | — | (17) | 17 | 0.15 | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes) | $ | 274 | $ | 225 | $ | 35 | 16 | % | $ | 190 | $ | 1.61 |
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 |
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(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) |
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Asset impairments and restructuring charges, net | 22 | 22 | 4 | 18 | 0.14 | |||||||||||||||||||||||||||||||||
Accelerated depreciation | 23 | 23 | 3 | 20 | 0.17 | |||||||||||||||||||||||||||||||||
Steam line incident (insurance proceeds) costs, net | (8) | (8) | (2) | (6) | (0.05) | |||||||||||||||||||||||||||||||||
Adjustments from tax law changes (3) |
— | — | (23) | 23 | 0.19 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (2) |
— | — | (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 |
Fourth 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) | $ | 477 | $ | 425 | $ | 114 | 27 | % | $ | 310 | $ | 2.61 | ||||||||||||||||||||||||||
Non-Core and Unusual Items: (1) |
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Asset impairments and restructuring charges, net | 15 | 15 | 1 | 14 | 0.12 | |||||||||||||||||||||||||||||||||
Gain on divested business |
(323) | (323) | (98) | (225) | (1.89) | |||||||||||||||||||||||||||||||||
Mark-to-market pension and other postretirement benefit plans loss, net | 53 | 53 | 14 | 39 | 0.33 | |||||||||||||||||||||||||||||||||
Interim adjustment to tax provision (2) |
— | — | (17) | 17 | 0.14 | |||||||||||||||||||||||||||||||||
Non-GAAP (Excluding non-core and unusual items and with adjusted provision for income taxes) | $ | 222 | $ | 170 | $ | 14 | 8 | % | $ | 155 | $ | 1.31 |
First Three Months (1) |
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2024 | 2023 | ||||||||||
Effective tax rate | 23 | % | 31 | % | |||||||
Discrete tax items (2) |
(1) | % | — | % | |||||||
Tax impact of current year non-core and unusual items (3) |
1 | % | (8) | % | |||||||
Changes in tax contingencies and valuation allowances | (1) | % | (1) | % | |||||||
Forecasted full year impact of expected tax events | (6) | % | (6) | % | |||||||
Forecasted full year adjusted effective tax rate | 16 | % | 16 | % |
First Three Months | |||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | |||||||||
Operating activities | |||||||||||
Net earnings | $ | 165 | $ | 134 | |||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 127 | 141 | |||||||||
(Benefit from) provision for deferred income taxes | (17) | (7) | |||||||||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | |||||||||||
(Increase) decrease in trade receivables | (105) | (91) | |||||||||
(Increase) decrease in inventories | (100) | (44) | |||||||||
Increase (decrease) in trade payables | 49 | (132) | |||||||||
Pension and other postretirement contributions (in excess of) less than expenses | (19) | (19) | |||||||||
Variable compensation payments (in excess of) less than expenses | (78) | (16) | |||||||||
Other items, net | (38) | 32 | |||||||||
Net cash used in operating activities |
(16) | (2) | |||||||||
Investing activities | |||||||||||
Additions to properties and equipment | (185) | (174) | |||||||||
Proceeds from sale of businesses | — | 16 | |||||||||
Acquisition, net of cash acquired | — | (73) | |||||||||
Additions to capitalized software | (1) | (2) | |||||||||
Other items, net | 7 | (19) | |||||||||
Net cash used in investing activities |
(179) | (252) | |||||||||
Financing activities | |||||||||||
Net decrease in commercial paper and other borrowings | — | (326) | |||||||||
Proceeds from borrowings | 742 | 796 | |||||||||
Repayment of borrowings | (498) | — | |||||||||
Dividends paid to stockholders | (95) | (94) | |||||||||
Other items, net | (1) | (19) | |||||||||
Net cash provided by financing activities |
148 | 357 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (2) | 3 | |||||||||
Net change in cash and cash equivalents | (49) | 106 | |||||||||
Cash and cash equivalents at beginning of period | 548 | 493 | |||||||||
Cash and cash equivalents at end of period | $ | 499 | $ | 599 |
March 31, | December 31, | |||||||||||||
(Dollars in millions, unaudited) | 2024 | 2023 | ||||||||||||
Total borrowings | $ | 5,080 | $ | 4,846 | ||||||||||
Less: Cash and cash equivalents | 499 | 548 | ||||||||||||
Net debt (1) |
$ | 4,581 | $ | 4,298 |