2012-07-30 23:05:27 -
KINGSPORT, Tenn., July 30, 2012 - Eastman Chemical Company (NYSE:EMN) today
announced earnings from continuing operations of $1.40 per diluted share for
second quarter 2012 versus $1.44 per diluted share for second quarter 2011,
excluding $33 million of financing, transaction and integration costs in second
quarter 2012 related to the acquisition of Solutia and a $15 million gain in
second quarter 2011 from the sale of a previously impaired asset. Reported
earnings from continuing operations were $1.26 per diluted share in second
quarter 2012 and $1.51 per diluted share in second quarter 2011. For
reconciliation to reported company and segment earnings, see Tables 3 and 4 in
the accompanying second-quarter 2012 financial tables.
"This is an exciting time for Eastman with continued strong earnings
performance throughout the
company and the recent completion of the Solutia
acquisition," said Jim Rogers, Chairman and CEO. "The integration of Solutia is
well underway and our capture of cost synergies is on plan such that we are
poised to deliver earnings growth and generate significant cash for years to
come."
(In millions, except per share amounts) 2Q2012 2Q2011
Sales revenue $1,853 $1,885
$1.26
Earnings per diluted share $1.51
from continuing operations
$1.40
Earnings per diluted share from continuing operations $1.44
excluding Solutia financing, transaction, and integration
costs, and gain from sale of previously impaired asset*
Net cash provided by operating activities
$316 $207
*For reconciliation to reported company and segment earnings, see Tables 3 and
4 in the accompanying second-quarter 2012 financial tables.
Sales revenue for second quarter 2012 was $1.9 billion, a 2 percent decline
compared with second quarter 2011.
Operating earnings in second quarter 2012 were $317 million compared to $333
million in second quarter 2011. Excluding transaction and integration costs
related to the Solutia acquisition in second quarter 2012 and a gain from the
sale of a previously impaired asset in second quarter 2011, operating earnings
were $323 million and $318 million, respectively.
Segment Results 2Q 2012 versus 2Q 2011
Coatings, Adhesives, Specialty Polymers and Inks - Sales revenue declined
slightly in second quarter 2012 compared with second quarter 2011. Operating
earnings in second quarter 2012 increased to $114 million compared with
operating earnings of $104 million in second quarter 2011. The increase was
primarily due to lower raw material and energy costs more than offsetting
slightly lower selling prices.
Fibers - Sales revenue declined by 4 percent due to an unfavorable shift in
product mix that was partially offset by higher selling prices. The unfavorable
shift in product mix was primarily due to lower acetate tow volume in Asia
Pacific attributed to customer buying patterns. The higher selling prices were
in response to higher raw material and energy costs, particularly for wood pulp.
Operating earnings in second quarter 2012 were $96 million compared with $97
million in second quarter 2011, with the slight decline due to the unfavorable
shift in product mix mostly offset by higher selling prices.
Performance Chemicals and Intermediates - Sales revenue was unchanged in second
quarter 2012 compared with second quarter 2011 as higher sales volume and a
favorable shift in product mix were offset by lower selling prices. The higher
sales volume and favorable shift in product mix were primarily due to increased
sales volume for acetyl product lines in the U.S. and the favorable impact of
the acquired Sterling and Scandiflex businesses. The lower selling prices,
primarily in olefin derivative product lines, were in response to lower raw
material and energy costs. Operating earnings in second quarter 2012 increased
to $104 million compared to $94 million in second quarter 2011. The increase
was due primarily to lower raw material and energy costs and the benefit of
producing versus purchasing olefins, partially offset by lower selling prices.
Specialty Plastics - Sales revenue declined by 6 percent in second quarter 2012
compared to second quarter 2011 primarily due to lower sales volume partially
offset by a favorable shift in product mix and higher selling prices. The
decrease in sales volume, mainly in the U.S. and Europe, was attributed to
weakened demand for copolyester product lines primarily in the consumer and
durable goods markets. The favorable shift in product mix was due to higher
sales volume into the LCD market for cellulosic product lines. Second-quarter
2012 operating earnings were $38 million compared to $42 million in second
quarter 2011. The decline was primarily due to lower sales volume and resulting
lower capacity utilization, which was partially offset by the favorable shift in
product mix and higher selling prices.
Cash Flow and Financing
Eastman generated $316 million in cash from operating activities during
second quarter 2012, primarily due to strong net earnings.
As part of the financing of the July 2, 2012 acquisition of Solutia Inc. and of
repayment of certain Solutia borrowings, on June 5, 2012 Eastman received $2.3
billion net proceeds from the public offering of notes due 2017, 2022, and 2042
and on July 2, 2012 borrowed $1.2 billion under a five-year term loan agreement.
Solutia Acquisition and 2Q12 Results
On July 2, 2012 Eastman completed the acquisition of Solutia Inc. With the
acquisition, the company made structural and reporting changes resulting in five
reporting segments: Additives and Functional Products, Adhesives and
Plasticizers, Advanced Materials, Fibers, and Specialty Fluids and
Intermediates. The company will report third quarter 2012 financial results
under the new reporting structure.
Sales revenue for Solutia in second quarter 2012 was $520 million, a 4 percent
decline compared with second quarter 2011, due primarily to the strengthening of
the U.S. dollar versus the euro. In addition, slightly higher sales volume in
the Technical Specialties and Performance Films segments was more than offset by
lower sales volume in the Advanced Interlayers segment. Net income was $31
million in second quarter 2012 including $15 million of acquisition related
expenses, and $68 million in second quarter 2011 including $1 million of other
charges. Adjusted EBITDA (as defined in Appendix A) declined to $115 million in
second quarter 2012 compared with $141 million in second quarter 2011. The
decline in adjusted EBTIDA, primarily in the Advanced Interlayers segment, was
mainly due to lower sales volume in Europe for Saflex® product lines, lower
sales volume for photovoltaic encapsulants product lines, and costs of growth
initiatives. For reconciliation of adjusted EBTIDA, see Appendix A in the
accompanying second-quarter 2012 financial tables.
Outlook
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Commenting on the outlook for full year 2012, Rogers said: "Despite persistent
global economic uncertainty, we continue to expect double-digit year-over-year
earnings growth resulting from the solid performance of heritage Eastman
businesses and second half earnings from the acquired Solutia businesses. As a
result, our expectations for 2012 EPS of $5.30 remain unchanged." Costs and
charges related to the Solutia acquisition, including financing, transaction,
and integration costs, asset impairments and restructuring charges, net, and
mark-to-market pension and OPEB adjustments are excluded from the earnings per
share projection.
Eastman will host a conference call with industry analysts on July 31 at 8:00
a.m. EDT. 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 913-905-3216, passcode number
1999344. 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. EDT, July 31, to 11:00 a.m. EDT, August 10, at (888) 203-1112 or (719)
457-0820, passcode 1999344.
Forward-Looking Statements: This news release includes forward-looking
statements concerning current expectations for global economic conditions;
benefits, costs and charges, and integration of the Solutia acquisition and of
the acquired Solutia businesses; cost reduction plans and efforts; asset
impairments and restructuring charges and mark-to-market and OPEB adjustments;
and company, segment, and acquired Solutia businesses earnings and cash flows in
second half and full year 2012 and future years. 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 2012 available, and
the Form 10-Q to be filed for second quarter 2012 and to be available, on the
Eastman web site at www.eastman.com in the Investors, SEC information section.
Eastman is a global specialty chemicals company that produces a broad range of
advanced materials, additives and functional products, specialty chemicals, and
fibers that are found in products people use every day. As a world leader in
the diverse markets it serves, Eastman is focused on delivering innovative and
technology-based solutions while maintaining its commitment to safety and
sustainability. Serving customers in approximately 100 countries, Eastman had
2011 pro forma revenues, giving effect to the Solutia acquisition, of
approximately $9.3 billion. The company is based in Kingsport, Tennessee, USA,
and, with the completion of the Solutia acquisition, now employs approximately
13,500 people around the world. For more information, visit www.eastman.com.
# # #
Contacts:
Media: Kristin Sturgill
423-229-2526 /
ksturgill@eastman.com
Investors: Greg Riddle
212-835-1620 /
griddle@eastman.com
Q2 2012 Financial Tables:
hugin.info/150386/R/1630603/522596.pdf
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Eastman Chemical Company via Thomson Reuters ONE
[HUG#1630603]
