KINGSPORT, Tenn., April 28, 2016 - Eastman Chemical Company (NYSE:EMN) today announced earnings, excluding non-core items, of $1.71 per diluted share for first quarter 2016 versus $1.84 per diluted share for first quarter 2015. Reported earnings were $1.69 per diluted share for first quarter 2016 versus $1.14 per diluted share for first quarter 2015. For detail of the excluded items and reconciliation to reported company and segment earnings, see Tables 3A and 4.
"Our solid first-quarter earnings demonstrate the resilience of our portfolio in the face of a challenging global business environment," said Mark Costa, chairman and CEO. "We are focused on driving results for stockholders through strong growth from our high value, innovative products as well as disciplined cost management. We remain confident in our long term strategy to win with our specialty products in attractive end markets."
(In millions, except per share amounts)
Sales revenue $2,236 $2,443
Earnings per diluted share $1.69 $1.14
Earnings per diluted share excluding
non-core items* $1.71 $1.84
Net cash provided by operating activities $47 $91
*For reconciliation to reported company and segment earnings, see Tables 3A and 4.
Corporate Results 1Q 2016 versus 1Q 2015
Sales revenue for first quarter 2016 was $2.2 billion versus $2.4 billion for first quarter 2015, primarily due to a decline in Chemical Intermediates. Excluding the non-core items described in Tables 3A and 4, first-quarter 2016 operating earnings were $406 million compared with $435 million for first quarter 2015 as an increase in Advanced Materials was more than offset by a decline in Chemical Intermediates. Reported first-quarter 2016 operating earnings were $399 million compared with $311 million for first quarter 2015.
Segment Results 1Q 2016 versus 1Q 2015
Additives & Functional Products - Sales revenue decreased primarily due to lower selling prices attributed to lower raw material and energy costs and competitive pressure for certain products, particularly in Asia Pacific. Excluding a non-core item in first quarter 2016, operating earnings decreased to $151 million for first quarter 2016 compared with $157 million for first quarter 2015, primarily due to an unfavorable shift in foreign currency exchange rates.
Advanced Materials - Sales revenue increased due to higher sales volume of premium products, including Eastman Tritan ® copolyester and Saflex ® acoustic interlayers. This was partially offset by lower selling prices, primarily for copolyesters, attributed to lower raw material and energy costs. Excluding a non-core item in first quarter 2015, operating earnings increased to $108 million for first quarter 2016 compared with $75 million for first quarter 2015 primarily due to higher sales volume and improved product mix of premium products and lower unit costs due to higher capacity utilization.
Chemical Intermediates - Sales revenue decreased primarily due to lower selling prices attributed to lower raw material and energy costs and continued competitive pressure resulting from weak demand in Asia Pacific. Operating earnings decreased to $67 million for first quarter 2016 compared to $118 million for first quarter 2015 due to lower selling prices more than offsetting lower raw material and energy costs.
Fibers - Sales revenue decreased primarily due to lower acetyl chemical sales volume and lower acetate tow selling prices, mostly offset by higher acetate tow sales volume. Lower acetyl chemical sales volume was due to lower cost internal sourcing of cellulose acetate flake raw materials rather than from the joint venture in Kingsport. Higher acetate tow sales volume was attributed to customer buying patterns. Excluding a non-core item in first quarter 2015, operating earnings decreased to $86 million for first quarter 2016 compared with $90 million for first quarter 2015 as lower selling prices were partially offset by higher acetate tow sales volume, lower raw material and energy costs, and reduced operating costs resulting from recent actions.
Eastman generated $47 million in cash from operating activities during first quarter 2016. Strong earnings were partially offset by a seasonal increase in working capital. Priorities for uses of available cash include payment of the quarterly dividend, repayment of debt, funding targeted growth initiatives, and repurchasing shares.
Commenting on the outlook for full-year 2016, Costa said: "Our solid first-quarter earnings demonstrate that we continue to benefit from strong growth of high value, innovative specialty products. 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, we face increasing competitive pressures from slow global economic growth, low oil prices, and weaker Asian and European currencies. On balance, we continue driving hard to deliver 2016 earnings per share that approach 2015 earnings per share." Non-core and any unusual or non-recurring items are excluded from the earnings per share projection.
Eastman will host a conference call with industry analysts on April 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 913-312-0962, passcode number 4665956. 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, April 29, to 11:00 a.m. ET, May 9, at 888-203-1112 or 719-457-0820, passcode 4665956.
Forward-Looking Statements: 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; foreign currency exchange rates; raw material and energy prices and costs, and other costs; non-core and any unusual or non-recurring costs, charges, income, and gains; 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-K filed for 2015 available, and the Form 10-Q to be filed for first quarter 2016 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.
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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