EASTMAN CHEMICAL CO
For the period ended Jun 30, 2024. Filed Jul 26, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 26, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 2. Results of Operations
Sales
| Second Quarter · First Six Months | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change · Change | ||||||||||||
| (Dollars in millions) · 2024 · 2023 · $ · % · 2024 · 2023 · $ · % | ||||||||||||
| Sales | $2,363 | $2,324 | $39 | 2% | $4,673 | $4,736 | $(63) | (1)% | ||||
| Volume / product mix effect | 129 | 6% | 218 | 5% | ||||||||
| Price effect | (82) | (4)% | (270) | (6)% | ||||||||
| Exchange rate effect | (8) | —% | (11) | —% | ||||||||
Sales revenue increased in second quarter 2024 compared to second quarter 2023 primarily as a result of increases in the AM and Fibers segments, partially offset by a decrease in the AFP segment. Sales revenue decreased in first six months 2024 compared to first six months 2023 as a result of decreases in the AFP and CI segments, partially offset by increases in the AM and Fibers segment. Further discussion by operating segment is presented in "Summary by Operating Segment" in this MD&A.
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Gross Profit
| Second Quarter | First Six Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Gross profit | $599 | $584 | 3% | $1,131 | $1,113 | 2% |
| Accelerated depreciation | — | — | — | 23 | ||
| Steam line incident costs (insurance proceeds), net | — | — | — | (8) | ||
| Gross profit excluding non-core and unusual items | $599 | $584 | 3% | $1,131 | $1,128 | —% |
Gross profit in first six months 2023 included insurance proceeds from the steam line incident and accelerated depreciation resulting from the previously reported closure of an acetate yarn manufacturing facility in Europe in the Fibers segment. Excluding these non-core and unusual items, gross profit increased in second quarter and first six months 2024 compared to second quarter and first six months 2023 as a result of increases in the AM and Fibers segments, partially offset by decreases in the CI and AFP segments. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.
Selling, General and Administrative Expenses
| Second Quarter | First Six Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Selling, general and administrative expenses | $180 | $185 | (3)% | $371 | $376 | (1)% |
Selling, general and administrative expenses decreased in second quarter 2024 compared to second quarter 2023 due to cost reduction initiatives, and decreased in first six months 2024 compared to first six months 2023 due to cost reduction initiatives, partially offset by higher variable compensation costs.
Research and Development Expenses
| Second Quarter | First Six Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Research and development expenses | $60 | $60 | —% | $119 | $122 | (2)% |
R&D expenses were unchanged in second quarter 2024 compared to second quarter 2023 and decreased in the first six months 2024 compared to first six months 2023 primarily due to targeted cost reduction initiatives.
Asset Impairments and Restructuring Charges, Net
| Second Quarter | First Six Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 |
| Severance charges | — | — | 11 | 16 |
| Site closure and other restructuring charges | — | — | — | 6 |
| Total | $— | $— | $11 | $22 |
For detailed information regarding asset impairments and restructuring charges, net see Note 12, "Asset Impairments and Restructuring Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Other Components of Post-employment (Benefit) Cost, Net
| Second Quarter | First Six Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 |
| Other components of post-employment (benefit) cost, net | $(4) | $(3) | $(9) | $(6) |
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For more information regarding other components of post-employment (benefit) cost, net see Note 6, "Retirement Plans", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Other (Income) Charges, Net
| Second Quarter | First Six Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 |
| Foreign exchange transaction losses, net | $4 | $3 | $9 | $5 |
| (Income) loss from equity investments and other investment (gains) losses, net | (1) | (1) | (1) | 5 |
| Other, net | 23 | 17 | 31 | $20 |
| Other (income) charges, net | $26 | $19 | $39 | $30 |
| Environmental and other costs | (16) | (13) | (16) | (13) |
| Other (income) charges, net excluding non-core item | $10 | $6 | $23 | $17 |
Other (income) charges, net in second quarter and first six months 2024 and 2023 included environmental and other costs related to previously divested businesses or non-operational sites and product lines. Excluding these non-core items, Other (income) charges, net increased in second quarter and first six months 2024 compared to second quarter and first six months 2023 primarily due to increases in foreign exchange transaction losses partially offset by valuation adjustments in equity investments. For more information regarding components of foreign exchange transaction losses, see Note 5, "Derivative and Non-Derivative Financial Instruments", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Earnings Before Interest and Taxes
| Second Quarter | First Six Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Earnings before interest and taxes | $337 | $323 | 4% | $600 | $569 | 5% |
| Asset impairments and restructuring charges, net | — | — | 11 | 22 | ||
| Accelerated depreciation | — | — | — | 23 | ||
| Steam line incident costs (insurance proceeds), net | — | — | — | (8) | ||
| Environmental and other costs | 16 | 13 | 16 | 13 | ||
| Earnings before interest and taxes excluding non-core and unusual items | $353 | $336 | 5% | $627 | $619 | 1% |
Net Interest Expense
| Second Quarter | First Six Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Gross interest costs | $58 | $61 | (5)% | $116 | $119 | (3)% |
| Less: Capitalized interest | 4 | 4 | 9 | 7 | ||
| Interest expense | 54 | 57 | 107 | 112 | ||
| Less: Interest income | 4 | 3 | 8 | 6 | ||
| Net interest expense | $50 | $54 | (7)% | $99 | $106 | (7)% |
Net interest expense decreased in second quarter and first six months 2024 compared to second quarter and first six months 2023 primarily as a result of lower total borrowings and higher interest income.
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Provision for (Benefit From) Income Taxes
| Second Quarter · First Six Months | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||
| (Dollars in millions) | $ | % | $ | % | $ | % | $ | % |
| Provision for (benefit from) income taxes and effective tax rate | $56 | 20% | $(3) | (1)% | $105 | 21% | $57 | 12% |
| Tax provision for non-core and unusual items (1) | 3 | 4 | 6 | 9 | ||||
| Adjustment from tax law changes (2) | — | 23 | — | — | ||||
| Interim adjustment to tax provision (3) | (13) | 20 | (30) | 14 | ||||
| Adjusted provision for income taxes and effective tax rate | $46 | 16% | $44 | 16% | $81 | 16% | $80 | 16% |
(1)Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(2)Second quarter and first six months 2023 included a decrease to the provision for state income taxes due to state tax law changes impacting credit carryforward periods that were enacted in second quarter 2023. These state tax law changes impacted provisions from prior periods related to the Tax Reform Act. Additionally, an increase in first six months 2023 was recognized as a result of state guidance issued in first quarter 2023 related to the Tax Reform Act.
(3)Second quarter 2024 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. Second quarter 2023 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.
| First Six Months (1) | ||
|---|---|---|
| 2024 | 2023 | |
| Effective tax rate | 21% | 12% |
| Tax impact of current year non-core and unusual items (2) | 1% | 2% |
| Changes in tax contingencies and valuation allowances | (1)% | 2% |
| Forecasted full year impact of expected tax events | (5)% | —% |
| Forecasted full year adjusted effective tax rate | 16% | 16% |
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rate is 15.5 percent in both first six months 2024 and 2023.
(2)Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
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Net Earnings Attributable to Eastman and Diluted Earnings per Share
| Second Quarter | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $230 | $1.94 | $272 | $2.27 |
| Non-core items, net of tax: (1) | ||||
| Environmental and other costs | 13 | 0.10 | 9 | 0.08 |
| Unusual items, net of tax: (1) | ||||
| Adjustment from tax law changes | — | — | (23) | (0.19) |
| Interim adjustment to tax provision | 13 | 0.11 | (20) | (0.17) |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $256 | $2.15 | $238 | $1.99 |
| First Six Months | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $395 | $3.33 | $406 | $3.39 |
| Non-core items, net of tax: (1) | ||||
| Asset impairments and restructuring charges, net | 8 | 0.07 | 18 | 0.14 |
| Accelerated depreciation | — | — | 20 | 0.17 |
| Environmental and other costs | 13 | 0.10 | 9 | 0.08 |
| Unusual items, net of tax: (1) | ||||
| Steam line incident costs (insurance proceeds), net | — | — | (6) | (0.05) |
| Interim adjustment to tax provision | 30 | 0.26 | (14) | (0.11) |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $446 | $3.76 | $433 | $3.62 |
(1)Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.