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KINGSPORT, Tenn., Oct 26, 2018 - (ACN Newswire) - Eastman Chemical Company (NYSE:EMN) today announced reported earnings of $2.89 per diluted share for third quarter 2018 versus $2.22 per diluted share for third quarter 2017. Adjusted earnings were $2.34 per diluted share for third quarter 2018 versus $2.19 per diluted share for third quarter 2017. For detail of the adjustments and reconciliation to reported company and segment earnings for all periods presented, see Tables 3A and 4A.
"Our third-quarter results reflect the contribution of our innovation-driven growth model, continued cost management, and disciplined capital allocation," said Mark Costa, Board Chair and CEO. "We delivered six percent top-line growth in our specialties, Advanced Materials and Additives & Functional Products, and sequentially stable earnings in Fibers. The operating results and a lower effective tax rate resulted in solid year-over-year EPS growth. This performance, especially when considering global economic uncertainty, gives us confidence in the resiliency of our portfolio and the sustainability of our strong cash flow going forward."
Segment Results 3Q 2018 versus 3Q 2017
Additives & Functional Products - Sales revenue increased primarily due to higher selling prices across most product lines. Reported EBIT included coal gasification incident insurance in excess of costs in third quarter 2018. Reported and adjusted EBIT decreased slightly primarily due to higher raw material and energy costs and increased growth investments, partially offset by higher selling prices and volume growth.
Advanced Materials - Sales revenue increased primarily due to higher sales volume and continued improvement in product mix across the segment, including premium products such as Tritan(TM) copolyester, Saflex(R) head-up displays ("HUD"), and performance films. Reported EBIT included coal gasification incident insurance in excess of costs in third quarter 2018. Reported and adjusted EBIT increased primarily due to higher sales volume and improved product mix of premium products, partially offset by higher raw material and energy costs and increased growth investments.
Chemical Intermediates - Sales revenue increased due to higher selling prices across most product lines, particularly for acetyl derivatives attributed to favorable market conditions and for olefin derivatives due to higher raw material and energy prices. Lower sales volume was primarily due to lower merchant ethylene sales. Reported EBIT included coal gasification incident insurance in excess of costs in third quarter 2018. Excluding this unusual item, adjusted EBIT decreased slightly due to lower sales volume being offset by higher selling prices more than offsetting higher raw material and energy costs.
Fibers - Sales revenue decreased primarily due to lower acetate tow sales volume attributed to customer buying patterns and lower acetate tow selling prices attributed to lower industry capacity utilization. The lower sales revenue was partially offset by sales of nonwovens innovation platform products previously reported in "Other" and strong volume growth in our textiles innovation platform. Reported EBIT included coal gasification incident insurance in excess of costs in third quarter 2018. Excluding this unusual item, adjusted EBIT decreased primarily due to lower acetate tow sales volume and selling prices, partially offset by higher textiles innovation platform products sales volume and earnings.
Cash Flow
Eastman generated $395 million in cash from operating activities during third quarter 2018, primarily due to strong net earnings partially offset by increased working capital. Share repurchases totaled $125 million in third quarter 2018. See Table 5A.
The company continues to expect to generate approximately $1.1 billion of free cash flow (cash from operating activities less net capital expenditures) in 2018. See Table 5B. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives and repurchasing shares.
Outlook
Commenting on the outlook for full-year 2018, Costa said: "During the first nine months of the year, we delivered a 13 percent year-over-year increase in adjusted earnings per share. This performance continues to be driven by strong volume growth in the specialty segments leveraging our innovation-driven growth model, as well as continued disciplined cost management, use of our robust free cash flow and a lower effective tax rate. Despite facing challenges in the global economy, we remain confident in our expectations for adjusted 2018 EPS growth to be between 10-14 percent."
The full-year 2018 projected earnings exclude any non-core, unusual, or non-recurring items in the remaining three months of 2018 and assume that the adjusted effective tax rate detailed in Tables 4A and 4B for first nine months 2018 will be the actual rate for full-year 2018. Our 2018 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 2018 earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.
Tax Items and Revenue Recognition Accounting Change
In the fourth quarter 2017, the Company recognized a provisional net increase to earnings of $339 million as a result of tax law changes, primarily the Tax Cuts and Jobs Act of 2017, and tax impact of outside-U.S. entity reorganizations, subject to adjustment during 2018. In third quarter 2018, the Company recognized a net increase of $14 million to the prior provisional net tax benefit primarily due to income taxes related to foreign income inclusion and associated foreign tax credits.
Beginning in first quarter 2018, the Company adopted Accounting Standards Codification 606 under which the Company recognizes revenue when control of goods has been transferred to the customer, generally at the time shipment occurs. Under the previous revenue recognition accounting standard, the Company recognized revenue upon delivery of goods. Third-quarter 2018 EBIT under the new method of revenue recognition was $4 million higher than it would have been under the former method of revenue recognition.
Forward-Looking Statements
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 2018. 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 Securities and Exchange Commission, including the Forms 10-Q filed for second quarter 2018 available, and the Form 10-Q to be filed for third quarter 2018 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 October 26, 2018 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 719-457-1036, passcode number 3914147. 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, October 26, 2018 to 11:00 a.m. ET, November 5, 2018 at 888-203-1112 or 719-457-0820, passcode 3914147.
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 2017 revenues of approximately $9.5 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,000 people around the world. For more information, visit www.eastman.com.
Contacts:
Media: Tracy Kilgore Addington
423-224-0498 / tracy@eastman.com
Investors: Greg Riddle
212-835-1620 / griddle@eastman.com
ex99_01 2018.09.30 CC Tables 2018.10.25 PM: http://hugin.info/150386/R/2222310/870265.PDF
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This announcement is distributed by West Corporation on behalf of West Corporation 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
Topic: Press release summary
Source: Eastman Chemical Company
http://www.acnnewswire.com
From the Asia Corporate News Network
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