Eastman Chemical Company · NYSE:EMN
Eastman Chemical — FY2022 Earnings Presentation
19 slides from Eastman Chemical's earnings presentation, Jan 26, 2023
Slide 1: 4Q and FY 2022 financial results
4Q and FY 2022 financial results January 26, 2023
Slide 2: Prepared remarks; Forward-looking statements; Non-GAAP financial measures
Prepared remarks These slides should be reviewed with the accompanying prepared remarks posted on our website. Forward-looking statements During this presentation, we make certain forward-looking statements concerning plans and expectations for Eastman Chemical Company. We caution you that actual ev
Slide 3: 2022 highlights
2022 highlights • Strengthened our leadership in the circular economy by achieving milestones for all three planned polyester recycling facilities • Demonstrated commercial excellence by raising price to more than offset ~$1.3 billion inflation from higher raw material, energy, and distribution cost
Slide 4: Significant circular economy milestones achieved in 2022
Significant circular economy milestones achieved in 2022 •Good progress on construction of methanolysis facility in challenging environment; completed installation of all major equipment, currently installing piping, instrumentation, and electrical systems Tennessee •Demand for copolyester with recy
Slide 5: Expect to achieve critical circular economy milestones in 2023
Expect to achieve critical circular economy milestones in 2023 • Begin commissioning and startup activities by early summer • Ramp up facility to commercial rates in 2H23 Tennessee • Generating revenue in 2H23 project update •Selection of site location in 1H23, progress on incentives and permitting
Slide 6: Corporate
Corporate 4Q22 vs. 4Q21 highlights Primary demand slowed, destocking $M (except EPS) 4Q22 4Q21 3Q22 FY22 FY21 accelerated across all end markets, and the Revenue 2,373 2,694 2,709 10,580 10,476 rapid spread of COVID-19 in China Adjusted EBIT 171 336 333 1,339 1,635 weakened demand at the end of the
Slide 7: Advanced Materials
Advanced Materials $M 4Q22 4Q21 3Q22 FY22 FY21 4Q22 vs. 4Q21 highlights Revenue 736 772 888 3,207 3,027 Aggressive customer inventory destocking, particularly in the consumer durables end market Adjusted EBIT 43 100 132 395 532 Adjusted EBIT margin 5.8% 13.0% 14.9% 12.3% 17.6% Significant currency h
Slide 8: Additives & Functional Products
Additives & Functional Products $M 4Q22 4Q21 3Q22 FY22 FY21 4Q22 vs. 4Q21 highlights Revenue 705 715 820 3,165 2,708 Reduced demand and customer inventory destocking, particularly for building and construction and durables Adjusted EBIT 64 103 126 483 452 end markets Adjusted EBIT margin 9.1% 14.4%
Slide 9: Fibers
Fibers $M 4Q22 4Q21 3Q22 FY22 FY21 4Q22 vs. 4Q21 highlights Revenue 317 238 250 1,022 900 Higher selling prices to start recovering EBIT margins to acceptable performance levels Adjusted EBIT 58 28 21 140 142 Adjusted EBIT margin 18.3% 11.8% 8.4% 13.7% 15.8% Higher sales volume/mix due to fulfillmen
Slide 10: Chemical Intermediates
Chemical Intermediates $M 4Q22 4Q21 3Q22 FY22 FY21 4Q22 vs. 4Q21 highlights Revenue 615 777 751 3,026 2,849 Reduced demand and customer inventory destocking, particularly for building and construction Adjusted EBIT 36 112 86 412 461 Adjusted EBIT margin 5.9% 14.4% 11.5% 13.6% 16.2% Higher selling pr
Slide 11: Cash flow and other financial highlights
Cash flow and other financial highlights Resilient cash flow Balance sheet and tax rate 2022 cash flow Well positioned with solid FY22 adjusted FY22 operating unfavorably effective tax rate impacted by investment-grade cash flow approximately significant levels of balance sheet for future economic 1
Slide 12: Pathway to strong performance in 2023
Pathway to strong performance in 2023 Tailwinds Headwinds/Uncertainties • Modest volume/mix growth as demand stabilizes after • Manufacturing recession started in 2H22 and continues in destocking 1H23 • Innovation driving growth above underlying end • Aggressive destocking in Q422 and Q123 markets •
Slide 13: Reducing cost structure by more than $200 million net of inflation in 2023
Reducing cost structure by more than $200 million net of inflation in 2023 ~$125 million of savings in manufacturing ~$75 million of savings in non-manufacturing and supply chain • More efficient operations associated with a slow demand environment • Reduced discretionary external spending • Supply
Slide 14: Diverse end markets provide stability, but near-term outlook is mixed
Diverse end markets provide stability, but near-term outlook is mixed End Market 1Q23 FY23 Transportation • Slight decline vs 4Q22 levels in OEM • Expect global auto builds modestly better (~15% of corporate revenue) production ‘23 vs ‘22 • Demand weaker in China due to • Expect demand in China impr
Slide 15: Eastman specialty products underpinning >$550M of New Business Revenue from Innovation in 2022
Eastman specialty products underpinning >$550M of New Business Revenue from Innovation in 2022 Tritan™ V-KOOL™ paint Saflex™ HUD Eastman Naia™ Eastman copolyester protection film Interlayers Tetrashield™ Preferred product for use High performing materials- Next generation head-up in restaurant appli
Slide 16: Appendix
Appendix 16
Slide 17: 2023 quarterly forecasted change in planned manufacturing maintenance shutdown cost by segment
2023 quarterly forecasted change in planned manufacturing maintenance shutdown cost by segment – year-over-year and sequential Q123 Q223 Q323 Q423 FY23 vs Q123 vs Q223 vs Q323 vs Q423 vs y/y y/y y/y y/y FY22 Q422 Q123 Q223 Q323 Advanced Materials 5 - 5 (5) 5 5 - 5 (10) Additives & Functional Product
Slide 18: Key underlying assumptions and modeling items for FY2023
Key underlying assumptions and modeling items for FY2023 • Interest expense of ~$225M • Depreciation & amortization expense ~$500M • Capital expenditures $700- 800M • Share repurchases to offset dilution • ~$50 million headwind from foreign currency exchange rates, net of hedging: USD/EURO $1.05; CN
Slide 19: Adjusted EBITDA to Net Earnings reconciliation
19 Adjusted EBITDA to Net Earnings reconci (Dollars in millions) Net earnings Plus: Depreciation Amortization Net interest expense Provision (benefit) for income taxes EBITDA Add back: Mark-to-market pension and other postretirement benefits (gains) losses, net Asset impairments and restructuring ch
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