Kingsport, Tenn., USA, July 29, 2016 - (ACN Newswire) - Eastman Chemical Company (NYSE:EMN) today announced reported earnings of $1.71 per diluted share for second quarter 2016 versus $1.98 per diluted share for second quarter 2015. Earnings excluding non-core items were $1.68 per diluted share for second quarter 2016 versus $2.01 per diluted share for second quarter 2015. For detail of the excluded non-core items and reconciliation to reported company and segment earnings, see Tables 3A and 4.
"The progress we have made executing our strategy to become a more specialty chemical company is enabling us to better navigate an especially challenging global economy," said Mark Costa, Board Chair and CEO. "The actions we have taken to focus and accelerate our innovation and market development program and add attractive acquisitions, while also reducing costs, have mitigated the impact of slow global growth and volatile raw material and energy costs. We remain confident in the resiliency of our portfolio and the sustainability of our strong cash flow going forward."
(In millions, except per share amounts) 2Q2016 2Q2015
Sales revenue $2,297 $2,533
Operating earnings $376 $469
Operating earnings excluding non-core items* $376 $480
Earnings per diluted share $1.71 $1.98
Earnings per diluted share excluding
non-core items* $1.68 $2.01
Net cash provided by operating activities $494 $591
*For reconciliation to reported company and segment earnings,
see Tables 3A and 4.
Corporate Results 2Q 2016 versus 2Q 2015
Sales revenue declined primarily due to lower selling prices particularly in Chemical Intermediates. Operating earnings and earnings per share declined primarily due to declines in Chemical Intermediates and Fibers.
Segment Results 2Q 2016 versus 2Q 2015
Additives & Functional Products - Sales revenue decreased due to lower selling prices attributed to lower raw material and energy costs. Operating earnings decreased primarily due to lower selling prices more than offsetting lower raw material and energy costs.
Advanced Materials - Sales revenue was relatively unchanged as increased sales volume of premium products including Saflex(R) acoustic interlayers and Eastman Tritan(TM) copolyester was offset by lower selling prices, primarily for copolyesters, attributed to lower raw material and energy costs. Operating earnings were relatively unchanged.
Chemical Intermediates - Sales revenue decreased due to lower selling prices. The lower selling prices were mostly the result of the negative impact of lower market prices for propylene, ethylene, and methanol and continued competitive pressure from weak demand in Asia Pacific. Operating earnings decreased significantly due to lower selling prices more than offsetting lower raw material and energy costs, and higher planned maintenance costs.
Fibers - Sales revenue decreased primarily due to lower sales volume, particularly for acetate tow and acetate flake, and lower selling prices, particularly for acetate tow. Lower acetate tow sales volume was due to customer inventory destocking in China and lower acetate flake sales volume was due to timing of shipments to Eastman's China acetate tow joint venture. Operating earnings declined due to lower sales volume.
Eastman generated $494 million in cash from operating activities during second quarter 2016 primarily due to strong net earnings. In addition, the company sold 1.5% notes due 2023 in the principal amount of EUR 550 million ($614 million), with net proceeds used to repay $500 million of the $1 billion 2.4% notes due June 2017 and other borrowings. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives, and repurchasing shares. Total borrowings decreased $274 million, and net debt, defined as total borrowings minus cash and cash equivalents, declined by $312 million during the second quarter. See Tables 5A, 5B, 6A, and 6B.
Commenting on the outlook for full-year 2016, Costa said: "During the first half of the year, we delivered strong growth of high value, innovative specialty products and we expect that to continue. We are also benefitting from the actions we have taken to accelerate our innovation and market development activities and to significantly increase our cost reduction efforts. However, the challenges we face have intensified including increasing competitive pressures particularly from the Asia Pacific region and compressing olefin spreads. As a result, we expect a decline in adjusted 2016 earnings per share that approaches 10 percent below adjusted 2015 earnings per share compared with our previous expectation of a decline of approximately 5 percent."
The full-year 2016 projected earnings exclude the non-core items in first six months 2016 detailed in Tables 3A and 4 and will exclude any non-core, unusual, or non-recurring items in second half 2016. Our second half 2016 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 2016 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 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 2016. Such expectations 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 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 Securities and Exchange Commission, including the Form 10-Q filed for first quarter 2016 available, and the Form 10-Q to be filed for second quarter 2016 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
Conference call and webcast information
Eastman will host a conference call with industry analysts on July 29, 2016 at 8:00 a.m. ET. To listen to the live webcast of the conference call and view the accompanying slides, go to www.investors.eastman.com, Events & Presentations. To listen via telephone, the dial-in number is 913-312-6697, passcode number 7456708. A web replay, a replay in downloadable MP3 format, and the accompanying slides will be available at www.investors.eastman.com, Events & Presentations. A telephone replay will be available continuously from 11:00 a.m. ET, July 29, to 11:00 a.m. ET, August 8, at 888-203-1112 or 719-457-0820, passcode 7456708.
Eastman is a global specialty chemical 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 approximately 100 countries and had 2015 revenues of approximately $9.6 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 15,000 people around the world. For more information, visit www.eastman.com.
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ex99_01 2016.06.30 CC Tables FINAL: http://hugin.info/150386/R/2031791/756176.pdf
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Eastman Chemical Company via Globenewswire
July 29, 2016 08:30 HKT/SGT
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