Eastman Chemical Company · NYSE:EMN
Eastman Chemical — FY2020 Earnings Presentation
25 slides from Eastman Chemical's earnings presentation, Jan 28, 2021
Slide 1: Fourth-Quarter & Full-Year 2020 Financial Results
Fourth-Quarter & Full-Year 2020 Financial Results Mark Costa, Board Chair & CEO Willie McLain, SVP & CFO January 28th, 2021 1
Slide 2: Prepared Remarks; Forward-looking statements; GAAP and 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: 2020 highlights
2020 highlights Took decisive action to protect employees and preserve operational integrity Fourth consecutive year of free cash flow greater than $1 billion Resilient performance driven by innovation portfolio, diverse end-markets, and decisive cost actions Accelerated progress on our circular eco
Slide 4: 4Q and FY 2020 financial results – Corporate
4Q and FY 2020 financial results – Corporate $2,186 $2,205 4Q20 4Q19 4Q20 vs 4Q19 (1)% change ❖ Record 4Q adjusted EPS 1% volume/mix $329 $279 ❖ Strong recovery led by Advanced Materials (3)% price $1.69 $1.42 1% currency ❖ Continued progress on cost reduction actions Sales revenue Adjusted EBIT Adj
Slide 5: 4Q and FY 2020 financial results – Advanced Materials
4Q and FY 2020 financial results – Advanced Materials $674 4Q20 4Q19 $638 6% change 4Q20 vs 4Q19 ❖ Strong rebound in automotive end 6% volume/mix $138 market $112 (2)% price ❖ Continued strength in specialty plastics 2% currency ❖ Performance films mid-teens Sales revenue Adjusted EBIT topline growt
Slide 6: 4Q and FY 2020 financial results – Additives & Functional Products
4Q and FY 2020 financial results – Additives & Functional Products 4Q20 vs 4Q19 $773 $763 4Q20 4Q19 ❖ Recovery in transportation, excluding aviation fluids 1% change ❖ Continued solid demand in building 2% volume/mix and construction $118 $109 (3)% price ❖ Care Chemicals double digit topline growth
Slide 7: 4Q and FY 2020 financial results – Chemical Intermediates
4Q and FY 2020 financial results – Chemical Intermediates 4Q20 4Q19 4Q20 vs 4Q19 $578 ❖ Lower volume driven mostly by site $531 $36 maintenance shutdowns and the discontinuation of certain product (8)% change lines at our Singapore facility (6)% volume/mix $22 ❖ Demand strengthened during the (3)% p
Slide 8: 4Q and FY 2020 financial results – Fibers
4Q and FY 2020 financial results – Fibers $226 $208 4Q20 4Q19 4Q20 vs 4Q19 (8)% change ❖ Acetate tow volume stable (6)% volume/mix $50 $40 ❖ Price decline due to previously (2)% price negotiated multi-year contracts ❖ Volume/mix lower due to the discontinuation of a tobacco Sales revenue Adjusted EB
Slide 9: Full-year 2020 cash flow and other financial highlights
Full-year 2020 cash flow and other financial highlights $1.5 Returned $418 Net debt reduced by 2020 adjusted effective tax rate billion million greater than ~15.5% cash from operations to stockholders by $600 $1.1 dividends and share repurchases million excluding the billion impact of FX Free cash f
Slide 10: 2021 outlook
2021 outlook Growth drivers Near-term uncertainties / headwinds ▪ Significant asset utilization tailwind of ▪ Visibility limited due to continued ~$100M impact of COVID-19 and other ▪ Cost structure ~flat vs. 2020 macroeconomic uncertainties ▪ Sales volume growth driven by: ▪ Rising raw material, en
Slide 11: Law]
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Slide 12: Three simultaneous global crises need solutions
Three simultaneous global crises need solutions 12
Slide 13: Macro trends have been central to our strategy for over a decade
Macro trends have been central to our strategy for over a decade CARING FOR SOCIETY CLIMATE CIRCULARITY Carbon Renewal Technology Replacing VOC/odor-free Light-weighting Naia™ Renew Treva™ in antibiotics in hygiene electric vehicles in textiles ophthalmics feed additives Polyester Renewal Technology
Slide 14: Plastics are essential to the quality of life
Plastics are essential to the quality of life HYDRATE FEED CARE Plastics help to deliver hydration Advanced packaging technologies preserve Plastics improve sterility, patient safety, to those who need it fruits, vegetables, & meats and comfort in therapies*Source: refed.com 14
Slide 15: Global brands making significant commitments to reduce plastic waste
Global brands making significant commitments to reduce plastic waste 50% recycled content 40% recycled content by 2025 To source 100% 50% reduction in by 2025 recycled or renewable virgin plastic by 2030 materials 30% recycled content Use only renewable or 50% recycled content by 2025 recycled mater
Slide 16: Both mechanical and molecular recycling are required to eliminate waste
Both mechanical and molecular recycling are required to eliminate waste and create a truly circular economy MECHANICAL RECYCLING Most carbon efficient when possible + MOLECULAR RECYCLING TECHNOLOGY Necessary to renew material and avoid end of life Optimal GHG footprint, existing Eastman technologies
Slide 17: Consumers are paying premiums for sustainable products
Consumers are paying premiums for sustainable products to solve these challenges Average Western European recycled food grade PET pricing Nalgene (% over virgin PET) Sustain +25% Made with Eastman Tritan™ Made with Eastman Tritan™ Renew Copolyester ($11.99) copolyester with recycled content ($14.99)
Slide 18: Polyester renewal technology creates value from waste
Polyester renewal technology creates value from waste Eastman is providing technology solutions for the circular economy Feedstocks End products PET-only waste such as colored PET, films, and fibers from textiles and carpets Polyester renewal technology (PRT) Our polyester renewal technology reduces
Slide 19: Eastman to build one of the world's largest plastic to plastic molecular recycling facilities
Eastman to build one of the world’s largest plastic to plastic molecular recycling facilities Taking the next step on our circular economy journey 2021-2022: ~$250M capital investment ROIC >15% • Advantaged scale and • Polymer intermediate • Begin construction integration, including capacity to make
Slide 20: Methanolysis facility to have a positive impact on the planet
Methanolysis facility to have a positive impact on the planet PLASTIC CONSUMED AS REDUCTION IN GREENHOUSE RAW MATERIAL GAS EMISSIONS ~110,000 MT1 >45,000 MT2 per year or the equivalent of or the equivalent of or or ~11 BILLION ~790 MILLION ~2.7 BILLION water bottles polyester t-shirts shampoo bottle
Slide 21: Enhancing the quality of life in a material way
Enhancing the quality of life in a material way ▪ We are proving what can be done today. ▪ We expect to use ~250 million pounds of plastic waste annually by 2025 and ~500 million by 2030. ▪ We are committed to reducing our absolute greenhouse gas Scope 1 and 2 emissions by one-third by 2030 to achie
Slide 22: Appendix
Appendix 22
Slide 23: Key underlying assumptions and guidance for FY2021
Key underlying assumptions and guidance for FY2021 Modeling items: ▪ Interest expense of ~$200 million ▪ Income tax rate, as adjusted, of 15 - 16% ▪ Depreciation and amortization of ~$570 million ▪ Capital expenditures between $500 and $525 million ▪ Net debt to be reduced by ~$300 million ▪ Availab
Slide 24: 2021 quarterly forecasted change in manufacturing maintenance shutdown cost by segment
2021 quarterly forecasted change in manufacturing maintenance shutdown cost by segment – year-over-year & sequential Q121 Q221 Q321 Q421 FY21 vs Q121 vs Q221 vs Q321 vs Q421 vs y/y y/y y/y y/y FY20 Q420 Q121 Q221 Q321 Advanced Materials - - - - - 10 (5) - - Additives & Functional Products - (15) 5 5
Slide 25: Net Earnings to Adjusted EBITDA reconciliation
Net Earnings to Adjusted EBITDA reconciliation Adjusted EBITDA to Net Earnings reconciliation (Dollars in millions) 2019 2020 Net earnings $ 762 $ 489 Plus: Depreciation 450 445 Amortization 161 129 Net interest expense 218 210 Provision (benefit) for income taxes 140 41 EBITDA $ 1,731 $ 1,314 Add b
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