Eastman Chemical Company posted revenues of $2.41 billion for the quarter ended March 2021 compared to $2.24 billion during the corresponding period last year.

“We delivered outstanding first-quarter results, with adjusted EPS up 20 percent compared with first quarter 2019 and up 5 percent compared with strong first-quarter 2020 results," said Mark Costa, Board Chair and CEO.

"First-quarter results included approximately $30 million of costs from the impact of Winter Storm Uri. The combination of continued disciplined operational execution, the diversity of our end markets, and the benefit of our innovation-driven growth model positioned Eastman well for the return of economic growth. In addition, our focus on cash generation resulted in record first-quarter free cash flow that was well above last year. While economic growth has returned, the threat from COVID-19 persists, and we remain diligent in our efforts to keep our employees safe and maintain the operational integrity of our facilities."

Segment Results 1Q 2021 versus 1Q 2020

Additives & Functional Products – Sales revenue increased 6 percent driven by 3 percent volume / mix growth and a favorable currency impact of 3 percent.

Greater than 20 percent coatings additives volume / mix growth was due to robust demand in the transportation end market, particularly in Asia, and continued solid demand in consumer durables markets. Care chemicals revenue was up high-single-digits as strong demand continued for products used in the personal care end market. These gains were partially offset by the impact of continued weakness in the market for aviation fluids, which is still recovering from the impact of COVID-19.

EBIT decreased due to higher raw material and energy costs and higher distribution costs, partially offset by increased sales volume and more favorable product mix. Costs from the impact of Winter Storm Uri, which resulted in outages at the Longview, Texas site, totaled approximately $10 million.

Advanced Materials – Sales revenue increased 16 percent primarily driven by 15 percent volume / mix growth and a favorable currency impact of 2 percent.

All businesses delivered double-digit revenue growth in the first quarter, led by performance films, with greater than 30 percent sales volume growth and both sales and earnings at a record level due to our innovation and market development efforts combined with robust demand in transportation end markets. Specialty plastics revenue growth was attributed to strength across its end markets, including consumer durables and packaging. Advanced interlayers revenue growth was primarily due to solid recovery in transportation end markets.

EBIT increased primarily due to higher sales volume and more favorable product mix across all product lines. Adjusted EBIT margin increased by 370 basis points. 

Chemical Intermediates – Sales revenue increased 2 percent driven by a 14 percent increase in selling prices, mostly offset by 13 percent lower volume / mix.

Higher selling prices were due to sharply rising raw material, energy and distribution prices. The 13 percent volume / mix decline was due to the previously announced discontinuation of certain product lines at the Singapore manufacturing site and reduced sales from the outages at the Longview and Texas City, Texas sites due to Winter Storm Uri.

EBIT decreased primarily due to approximately $20 million of costs from the impact of Winter Storm Uri, mostly offset by increased spreads as selling prices outpaced higher raw material and energy costs.

Fibers – Sales revenue increased 2 percent driven by 3 percent volume / mix growth. Demand for textiles products, including Naia™ and Naia™ Renew, recovered more quickly than expected, particularly in Asia. Textiles products revenue grew 48 percent driven by end-market recovery and our innovation and market development efforts. This growth was partially offset by the discontinuation of a tobacco specialty product. Acetate tow volume was stable.

EBIT decreased primarily due to the discontinuation of a tobacco specialty product, higher raw material and energy costs, and higher distribution costs.

Cash Flow

In first quarter 2021, cash from operating activities was $216 million. Free cash flow (cash from operating activities less net capital expenditures) was $125 million, up approximately 75 percent from first quarter 2020. See Tables 5A and 5B. In first quarter 2021, the company returned $134 million to stockholders through dividends and share repurchases.

Priorities for uses of available cash for 2021 include payment of the quarterly dividend, reduction of net debt, bolt-on acquisitions, and share repurchases.

2021 Outlook

Commenting on the outlook for full-year 2021, Costa said: "Our team did an outstanding job mitigating the impact of Winter Storm Uri, enabling us to continue to serve our customers and significantly contributing to our strong first-quarter results. The momentum from the first quarter continues in the second quarter as we benefit from our innovation-driven growth model, strong market recovery, and lower operating costs from our operations transformation program. With our strong first-quarter results, we now expect 2021 adjusted EPS to be between $8.25 and $8.75. We also expect free cash flow to approach $1.1 billion, which would be the fifth consecutive year of free cash flow above $1 billion."

The full-year 2021 projected earnings exclude any non-core, unusual or nonrecurring items. Our financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss and asset impairments and restructuring charges) or any unusual or non-recurring items, and we accordingly are unable to reconcile projected earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.