Eastman Chemical Company · NYSE:EMN
Eastman Chemical — Q4 2019 Earnings Presentation
17 slides from Eastman Chemical's earnings presentation, Jan 31, 2020
Slide 1: Fourth Quarter & Full-Year 2019 Financial Results
Fourth Quarter & Full-Year 2019 Financial Results Mark Costa, Board Chair & CEO Curt Espeland, EVP & CFO Willie McLain, VP, Finance January 31, 2020
Slide 2: Forward-looking statements; GAAP and Non-GAAP financial measures
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 events or results may differ materially from our plans and expectations. See these slides and the remarks in the
Slide 3: Full-year 2019 highlights
Full-year 2019 highlights Celebrating Eastman’s 100th Year Solid earnings growth in Advanced Materials, demonstrating resilience of our specialty products $1.08 billion in free cash flow New Business Revenue from Innovation approximately $400 million Accelerated cost management offset inflation and
Slide 4: 4Q and FY 2019 financial results Corporate
4Q and FY 2019 financial results Corporate $2,376 4Q19 4Q18 FY19 FY18 $2,205 ($ in millions, ($ in millions, $10,151 except EPS) $9,273 except EPS) $279 $276 $1,633 (7)% $1,389 change $1.42 (9)% $1.39 change 1% volume/mix effect $8.20 (7)% price effect (4)% volume/mix effect $7.13 (1)% FX effect (4)
Slide 5: FY 2019 financial results Advanced Materials
FY 2019 financial results Advanced Materials ▪ Revenue decreased due to slightly lower FY19 FY18 sales volume and an unfavorable shift in $2,688 $2,755 foreign currency exchange rates ($ in millions) $518 $501 ▪ EBIT increased primarily due to lower raw material costs and favorable product mix (2)%
Slide 6: FY 2019 financial results Additives & Functional Products
FY 2019 financial results Additives & Functional Products ▪ Revenue decreased primarily due to lower FY19 FY18 sales volume, lower selling prices, and an $3,647 unfavorable shift in foreign currency ($ in millions) $3,273 exchange rates $671 ▪ EBIT decreased primarily due to lower sales $550 (10)% v
Slide 7: FY 2019 financial results Chemical Intermediates
FY 2019 financial results Chemical Intermediates ▪ Sales revenue decreased primarily due to lower selling prices across the segment $2,831 FY19 FY18 attributed to lower raw material prices and ($ in millions) increased competitive activity. Sales $2,443 revenue was also negatively impacted by $278 i
Slide 8: FY 2019 financial results Fibers
FY 2019 financial results Fibers ▪ Sales revenue decreased primarily due to FY19 FY18 lower acetate tow sales volume attributed to $918 ($ in millions) weakened market demand resulting from $869 general market decline and customer buying patterns $219 $194 (5)% ▪ EBIT decreased primarily due to lowe
Slide 9: 2019 cash flow and other financial highlights
2019 cash flow and other financial highlights $1.5 Returned Repaid FY19 effective billion $668 $370 tax rate of million million ~15.5% cash from operations to of debt $1.08 stockholders: billion $343 Free cash flow million dividend, $325 million share repurchases 9
Slide 10: 2020 outlook
2020 outlook Growth drivers Near-term headwinds ▪ Sales volume growth driven by: ▪ Lower product spreads in ▪ Strong growth in new business Chemical Intermediates and revenue 1/3rd of AFP identified for ▪ Less customer inventory destocking improvement actions in 2020 compared with 2019 ▪ Higher vari
Slide 11: New Business Revenue from innovation
New Business Revenue from innovation • Approximately $400 million new business revenue from innovation in 2019 • On track to approach $500 million in 2020 • Led by products like Tritan™ copolyester, SAFLEX™ acoustic interlayers, LLUMAR™ paint protection film in Advanced Materials, and NAIA™ cellulos
Slide 12: Building a more capable and efficient organization
Building a more capable and efficient organization • Building our commercial capability (SGA + RD)/REVENUE relative to peers (2018) • Implemented new business operating model • CRM investment • Application development investments accelerating commercialization of innovation programs • Reducing cost
Slide 13: Actions we are taking to improve multi-year performance
Actions we are taking to improve multi-year performance ▪ Leveraging our sites – expected to contribute $30 - $60 million to EBIT over next 3 years ▪ Texas City, TX ▪ St. Gabriel, LA ▪ Additional projects in pipeline ▪ Licensing – expect $25 - $50 million of revenue over next 3 years ▪ Rich portfoli
Slide 14: Unique innovation-driven growth model delivers consistent, sustainable value
Unique innovation-driven growth model delivers consistent, sustainable value World-Class Differentiated Relentlessly Technology Application Engage Platforms Development the Market Significant integration and scale enable innovation, reliability and cost advantage Advantaged growth and execution capa
Slide 15: Appendix
Appendix EASTMAN 100 YEARS INNOVATION. Then. Now. Next. 1920-2020
Slide 16: Key underlying assumptions and guidance for FY2020
Key underlying assumptions and guidance for FY2020 Modeling items: ▪ Interest expense of approximately $215 million ▪ Income tax rate, as adjusted, similar to 2019 ▪ Depreciation and amortization of approximately $560 million ▪ Capital expenditures between $450 and $475 million ▪ Free Cash Flow betw
Slide 17: Quarterly forecasted change in manufacturing maintenance shutdown cost by segment
Quarterly forecasted change in manufacturing maintenance shutdown cost by segment Q120 Q220 Q320 Q420 FY2020 Fibers - - - - - Advanced Materials - (5) - (5) (10) Chemical Intermediates - (15) 5 15 5 Additives & Functional Products - 5 (5) 5 5 Total - (15) - 15 - 2020 vs 2019 favorable/(unfavorable)
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