KINGSPORT, Tenn., April 27, 2017 - Eastman Chemical Company (NYSE:EMN) today announced reported earnings of $1.89 per diluted share for first-quarter 2017 versus $1.69 per diluted share for first quarter 2016. Adjusted earnings were $1.83 per diluted share for first quarter 2017 versus $1.71 per diluted share for first quarter 2016. For detail of the adjustments and reconciliation to reported company and segment earnings, see Tables 3A, 4A, and 4B.
"Our solid first-quarter results once again demonstrate the strength and resiliency of our portfolio," said Mark Costa, Board Chair and CEO. "We delivered strong volume growth in our specialty businesses driven by innovative, high margin products which are accelerating demand growth in attractive, niche markets. We also continue to benefit from aggressive cost management and disciplined capital allocation. 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) 1Q2017 1Q2016
Sales revenue $2,303 $2,236
Operating earnings $397 $399
Adjusted operating earnings* $397 $406
Earnings per diluted share $1.89 $1.69
Adjusted earnings per diluted share* $1.83 $1.71
Net cash provided by operating activities $52 $51
*For adjusted provision for income taxes in 1Q 2017, non-core items in 1Q 2016, and reconciliation to reported company and segment earnings, see Tables 3A, 4A, and 4B.
Segment Results 1Q 2017 versus 1Q 2016
Additives & Functional Products - Sales revenue increased due to higher sales volume across the segment, partially offset by slightly lower selling prices and an unfavorable shift in foreign currency exchange rates. The lower selling prices were primarily attributed to lower raw material prices in the prior year. Operating earnings were relatively unchanged as higher sales volume was mostly offset by higher raw material and energy costs, lower selling prices, and an unfavorable shift in foreign currency exchange rates.
Advanced Materials - Sales revenue increased due to improved product mix resulting from higher sales volume of premium products including Eastman TritanTM copolyester, performance films, and Saflex® acoustic interlayers. Operating earnings increased due to higher sales volume, improved product mix of premium products, and fixed cost leverage, partially offset by higher raw material and energy costs and lower selling prices.
Chemical Intermediates - Sales revenue increased primarily due to higher selling prices. The higher selling prices were attributed to higher raw material prices and improved competitive conditions. Operating earnings increased primarily due to higher selling prices and lower commodity hedge costs, partially offset by higher raw material and energy costs.
Fibers - Sales revenue decreased primarily due to lower sales volume and lower selling prices, particularly for acetate tow. Lower acetate tow sales volume was primarily due to reduced sales in China and customer buying patterns. Lower acetate tow selling prices were primarily due to lower industry capacity utilization rates. Operating earnings declined due to lower sales volume and lower selling prices, partially offset by lower operating costs resulting from recent actions.
Cash Flow
Eastman generated $52 million in cash from operating activities during first-quarter 2017. Strong earnings were partially offset by a normal seasonal increase in working capital. Share repurchases totaled $75 million in first quarter 2017. 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 2017, Costa said: "We started out 2017 with convincing first-quarter results, and we expect our innovative, high margin products to continue to drive compelling growth in what remains an uncertain global business environment. Aggressive cost management and disciplined capital allocation are also expected to continue contributing to earnings growth, helping to offset challenges in Fibers. We remain confident in the actions we are taking to deliver growth despite the challenges we face, and therefore continue to expect adjusted EPS growth in 2017 to be between 8-12 percent."
The full-year 2017 projected earnings exclude any non-core, unusual, or non-recurring items in the remaining nine months of 2017 and assumes that the adjusted tax rate detailed in Tables 4A and 4B for first quarter 2017 will be the actual rate for full-year 2017. Our 2017 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 2017 earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.
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 2017. 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 Form 10-K filed for 2016 available, and the Form 10-Q to be filed for first quarter 2017 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 April 28, 2017 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 913-312-0378, passcode number 5196633. 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 28 to 11:00 a.m. ET, May 8 at 888-203-1112 or 719-457-0820, passcode 5196633.
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 2016 revenues of approximately $9.0 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.
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Contacts:
Media: Tracy Kilgore Addington
423-224-0498 / tracy@eastman.com
Investors: Greg Riddle
212-835-1620 / griddle@eastman.com