KINGSPORT, Tenn., Jan. 29, 2015 - Eastman Chemical Company
(NYSE:EMN) today announced earnings, excluding non-core or
non-recurring items, of $1.64 per diluted share for fourth quarter
2014 versus $1.35 per diluted share for fourth quarter 2013.
Reported earnings were $0.11 per diluted share in fourth quarter
2014 versus $2.22 per diluted share in fourth quarter 2013. For
detail of the excluded items and reconciliation to reported company
and segment earnings, see Tables 3 and 4.
"We delivered our fifth consecutive year of strong
earnings growth in 2014," said Mark Costa, chairman and CEO. "To
achieve these outstanding results, we leveraged our world class
technology platforms to drive improved product mix through
innovation, sustained and expanded our advantaged market positions,
and derived benefit from our advantaged cost positions. We also
completed four attractive acquisitions that improve the quality of
our portfolio and position us for strong long-term earnings
growth." See the second paragraph under "Outlook" for the items
excluded from annual earnings comparisons.
(in millions, except per share amounts) |
4Q14 |
4Q13 |
FY14 |
FY13 |
Sales
revenue |
$2,349 |
$2,265 |
$9,527 |
$9,350 |
|
|
|
|
|
Earnings
per diluted share from continuing operations
|
$0.11 |
$2.22 |
$4.95 |
$7.44 |
Earnings
per diluted share from continuing operations excluding
non-core or
non-recurring items*
|
$1.64 |
$1.35 |
$7.07 |
$6.44 |
Net cash provided by operating activities
|
$455 |
$503 |
$1,403 |
$1,297 |
*For reconciliation to reported
company and segment earnings, including mark-to-market pension and
postretirement benefit plans loss in 2014 and gain in 2013, see
Tables 3 and 4.
Corporate Results
4Q 2014 versus 4Q 2013
Sales revenue increased 4 percent compared with
fourth quarter 2013. Excluding the items described in Tables 3 and
4, operating earnings for fourth quarter 2014 were $362 million
compared with $329 million for fourth quarter 2013 primarily due to
higher operating earnings across the company. Reported
fourth-quarter 2014 operating earnings were $27 million compared
with $562 million for fourth quarter 2013.
In December 2014 Eastman acquired Taminco
Corporation, a global specialty chemical company, and Commonwealth
Laminating & Coating, Inc., a specialty films business. In June
2014, the Company acquired BP plc's global aviation turbine engine
oil business. Results of the acquired Taminco and Commonwealth
businesses and of the acquired aviation turbine oil business
following the acquisitions are included in the Company's
fourth-quarter 2014 financial results.
Segment Results 4Q 2014 versus 4Q 2013
Additives & Functional
Products - Sales revenue increased as sales of products of the
acquired Taminco specialty amines and crop protection businesses
and higher coatings products sales volume were partially offset by
lower rubber additives products sales revenue due to an unfavorable
shift in foreign currency exchange rates. The higher coatings sales
volume was attributed to strengthened demand in key end-markets,
particularly building and construction and transportation.
Excluding non-core or non-recurring items in fourth quarter 2014,
operating earnings increased due to earnings of the acquired
Taminco businesses.
Adhesives & Plasticizers
- Sales revenue decreased primarily due to lower adhesives
resins sales volume which was primarily the result of limited raw
material availability and lower plasticizers selling prices
partially offset by higher adhesives resins selling prices.
Operating earnings increased primarily due to higher adhesives
resins selling prices, lower raw material and energy costs, and
lower operating costs that included targeted cost reductions,
partially offset by costs of the planned shutdown of an olefins
cracking unit at the Longview, Texas site.
Advanced Materials - Sales
revenue increased slightly as strong volume growth for premium
products, including Eastman Tritan(TM)
copolyester, interlayers with acoustic properties, and window
films, was offset by lower core copolyester products selling prices
and an unfavorable shift in foreign currency exchange rates. The
premium product sales growth was attributed to continued market
adoption. The lower selling prices were primarily due to lower raw
material and energy costs, particularly for paraxylene. Excluding
non-core or non-recurring items, operating earnings increased
primarily due to higher sales volume and improved product mix.
Fibers - Sales revenue
increased slightly as higher acetate tow selling prices and higher
acetate flake sales volume to Eastman's China acetate tow joint
venture were largely offset by lower acetyl chemicals sales volume.
Operating earnings increased as higher selling prices more than
offset lower sales volume and higher unit costs due to lower
acetate tow capacity utilization.
Specialty Fluids &
Intermediates - Sales revenue increased due to sales of
products of the acquired aviation turbine oil and Taminco
functional amines businesses. Sales revenue was negatively impacted
by lower selling prices for olefin-based intermediates and heat
transfer fluids, and lower volume due to the Longview, Texas
olefins cracking unit shutdown. Excluding non-core or non-recurring
items in fourth quarter 2014, operating earnings declined primarily
due to costs of and lower sales volume resulting from the olefins
cracking unit shutdown and lower selling prices, partially offset
by lower raw material and energy costs and earnings from acquired
businesses.
Corporate Results FY 2014 versus
FY 2013
Sales revenue was $9.5 billion, a 2 percent
increase compared with full year 2013. Excluding the items
described in Tables 3 and 4, operating earnings for full year 2014
were $1.6 billion, a slight increase compared with full year 2013.
Reported full-year 2014 operating earnings were $1.2 billion
compared with $1.9 billion for full year 2013. Results of the
acquired Taminco and Commonwealth businesses and of the acquired
aviation turbine oil business following the acquisitions are
included in the Company's 2014 financial results.
Segment Results FY 2014 versus FY
2013
Additives & Functional
Products - Sales revenue increased primarily due to higher
coatings products sales volume and selling prices and the sales of
products of the acquired Taminco specialty amines and crop
protection businesses more than offsetting lower rubber additives
sales volume. The higher coatings sales volume and selling
prices were attributed to strengthened demand in key end-markets,
particularly building and construction and transportation. The
lower rubber additives sales volume was primarily attributed to
decreased tire production in Asia. Excluding non-core or
non-recurring items, operating earnings declined as higher coatings
products sales volume and selling prices and earnings from the
acquired Taminco products were more than offset by higher raw
material and energy costs, particularly for propane in the first
half of the year, and lower rubber additives sales volume.
Adhesives & Plasticizers
- Sales revenue increased primarily due to higher sales volume more
than offsetting lower selling prices. Higher plasticizers sales
volume was primarily attributed to the substitution of phthalate
plasticizers with Eastman non-phthalate plasticizers. Higher
adhesives resins sales volume was primarily attributed to stronger
end-market demand, particularly for packaging and hygiene, and
customer inventory management that negatively impacted first half
2013 volume. Lower selling prices were primarily due to competitive
pressures resulting from weakened plasticizers demand in Asia
Pacific and Europe and increased adhesives resins supply that
negatively impacted adhesives pricing in the first half of 2014.
Excluding non-core or non-recurring items for full-year 2013,
operating earnings were higher primarily due to higher sales
volume, higher capacity utilization that resulted in lower unit
costs, and lower operating costs that included targeted cost
reductions, partially offset by lower selling prices.
Advanced Materials - Sales revenue increased
slightly as higher premium products sales volume, including Eastman
Tritan(TM)
copolyester and interlayers with acoustic properties, was largely
offset by lower core copolyesters selling prices primarily due to
lower raw material and energy costs. Excluding non-core or
non-recurring items, operating earnings increased primarily due to
higher sales volume in premium products and improved product
mix.
Fibers - Sales revenue
increased slightly as higher acetate tow selling prices and higher
acetate flake sales volume to Eastman's China acetate tow joint
venture more than offset lower acetate tow sales volume. The lower
acetate tow sales volume was attributed to additional industry
capacity, including Eastman's China acetate tow joint venture.
Operating earnings increased due to higher selling prices, lower
raw material and energy costs, and higher acetate flake sales
volume, partially offset by lower acetate tow sales volume and
lower capacity utilization resulting in higher unit costs.
Specialty Fluids &
Intermediates - Sales revenue was flat as sales of products of
the acquired aviation turbine oil and Taminco functional amines
businesses and higher selling prices were offset by lower sales
volume. The lower sales volume was due to manufacturing capacity
shutdowns, the increased internal use of intermediates in the
manufacture of higher-value downstream derivatives in other Eastman
business segments, and weakness in the heat transfer fluids market.
Excluding non-core or non-recurring items, operating earnings
decreased primarily due to higher raw material and energy costs,
particularly for propane in the first half of the year, and costs
of manufacturing capacity shutdowns, partially offset by higher
intermediates selling prices and earnings from acquired
businesses.
Provision for Income
Taxes
Excluding the tax impact of non-core or
non-recurring items, the fourth-quarter 2014 effective tax rate was
22 percent. The fourth-quarter 2014 tax rate was reduced by
the one-year extension in December 2014 of favorable U.S. Federal
tax provisions, which resulted in a net benefit of $15 million
primarily related to research and development credits and deferral
of certain earnings of foreign subsidiaries from U.S. income taxes.
Excluding the tax impact of non-core or non-recurring items, the
full-year 2014 effective tax rate was 26 percent compared to 28
percent for full year 2013 primarily reflecting the continued
benefit of the integration of Eastman and Solutia business
operations and legal entity structures.
Cash Flow
In 2014 Eastman generated $1.4 billion in cash
from operating activities. 2014 free cash flow, defined as cash
from operating activities minus capital expenditures, was $810
million. In addition, during 2014 the company contributed $120
million to its U.S. defined benefit pension plans and repurchased
shares of $410 million. See Table 5A for reconciliation of cash
provided by operating activities to free cash flow.
Outlook
Commenting on the outlook for full year 2015, Costa said: "We
enter 2015 well positioned to benefit from our strong portfolio of
specialty businesses, including the accretive acquisitions we
completed in 2014. We are confident that we will continue to
deliver long-term value from our leadership positions in key
markets, the diversity of end-markets and geographies we serve, and
market adoption of our specialty products. In the short-term, we
also face challenges including continued global economic
uncertainty, volatile oil prices, and the recent strengthening of
the U.S. dollar. Under current business conditions, we expect
2015 earnings per share to be similar to 2014 earnings per
share." Non-core and non-recurring items are excluded from
the earnings per share projection.
The earnings for 2014, 2013, 2012, 2011, 2010, and
2009 referenced in the second paragraph and in the "Outlook"
section of this release are non-GAAP and exclude the non-core or
non-recurring items detailed, with reconciliation to GAAP earnings,
in Tables 3 and 4 of this release and the "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
sections of the company's Annual Reports on Form 10-K for 2013,
2012, and 2011.
Eastman will host a conference call with industry analysts on
January 30, 2015 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 913-312-0690, passcode number
7017625. 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,
January 30, to 11:00 a.m. ET, February 9, 2015 at 888-203-1112 or
719-457-0820, passcode 7017625.
Forward-Looking Statements:
This news release includes forward-looking statements concerning
current expectations for future global and regional economic
conditions; competitive position in key markets; mix of products
sold; foreign currency exchange rates; raw material and energy
costs and crude oil prices; non-core or non-recurring costs,
charges, income, and gains; earnings from acquired businesses; and
revenue, earnings, and cash flow for full year 2015. 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 third
quarter 2014 available, and the Form 10-K to be filed for 2014 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 2014 revenues of
approximately $9.5 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.
# # #
Contacts:
Media: Tracy Kilgore
423-224-0498 / tjkilgore@eastman.com
Investors: Greg Riddle
212-835-1620 / griddle@eastman.com
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
HUG#1890553
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