EASTMAN CHEMICAL CO
For the period ended Sep 30, 2024. Filed Nov 1, 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.
Sep 30, 2024 · Filed Nov 1, 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
| Third Quarter · First Nine Months | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change · Change | ||||||||||||
| (Dollars in millions) · 2024 · 2023 · $ · % · 2024 · 2023 · $ · % | ||||||||||||
| Sales | $2,464 | $2,267 | $197 | 9% | $7,137 | $7,003 | $134 | 2% | ||||
| Volume / product mix effect | 186 | 8% | 404 | 6% | ||||||||
| Price effect | 15 | 1% | (256) | (4)% | ||||||||
| Exchange rate effect | (4) | —% | (14) | —% | ||||||||
Sales revenue increased in third quarter 2024 compared to third quarter 2023 primarily as a result of increases across all segments. Sales revenue increased in first nine months 2024 compared to first nine months 2023 as a result of increases in the AM and Fibers segments, partially offset by a decrease in the AFP segment. Further discussion by operating segment is presented in "Summary by Operating Segment" in this MD&A.
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Gross Profit
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Gross profit | $605 | $484 | 25% | $1,736 | $1,597 | 9% |
| Cost of sales impact of restructuring activities | 7 | — | 7 | 23 | ||
| Steam line incident costs (insurance proceeds), net | — | — | — | (8) | ||
| Gross profit excluding non-core and unusual items | $612 | $484 | 26% | $1,743 | $1,612 | 8% |
Gross profit in third quarter and first nine months 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line at an advanced interlayers facility in North America. Gross profit in first nine 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 third quarter 2024 compared to third quarter 2023 in all segments. Gross profit increased in first nine months 2024 compared to first nine months 2023 primarily as a result of increases in the AM and Fibers segments, partially offset by a decrease in the CI segment. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.
Selling, General and Administrative Expenses
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Selling, general and administrative expenses | $183 | $160 | 14% | $554 | $536 | 3% |
SG&A expenses increased in third quarter and first nine months 2024 compared to third quarter and first nine months 2023 primarily due to higher variable compensation costs partially offset by cost reduction initiatives.
Research and Development Expenses
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Research and development expenses | $65 | $60 | 8% | $184 | $182 | 1% |
R&D expenses increased in third quarter and first nine months 2024 compared to third quarter and first nine months 2023 primarily due to strategic investment in innovation.
Asset Impairments, Restructuring, and Other Charges, Net
| (Dollars in millions) | Third Quarter | First Nine Months | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Asset impairments | $5 | $— | $5 | $— |
| Severance charges | 10 | — | 21 | 16 |
| Site closure and other charges | 15 | — | 15 | 6 |
| Total | $30 | $— | $41 | $22 |
For detailed information regarding asset impairments, restructuring, and other charges, net see Note 12, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
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Other Components of Post-employment (Benefit) Cost, Net
| Third Quarter | First Nine Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 |
| Other components of post-employment (benefit) cost, net | $(5) | $(2) | $(14) | $(8) |
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
| Third Quarter | First Nine Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 |
| Foreign exchange transaction losses, net | $3 | $3 | $12 | $8 |
| (Income) loss from equity investments and other investment (gains) losses, net | (3) | — | (4) | 5 |
| Other, net | 3 | 7 | 34 | $27 |
| Other (income) charges, net | $3 | $10 | $42 | $40 |
| Environmental and other costs | — | — | (16) | (13) |
| Other (income) charges, net excluding non-core item | $3 | $10 | $26 | $27 |
Other (income) charges, net in first nine 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 decreased in third quarter and first nine months 2024 compared to third quarter and first nine months 2023 primarily due to income from equity investments partially offset by increases in foreign exchange transaction losses. 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
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Earnings before interest and taxes | $329 | $256 | 29% | $929 | $825 | 13% |
| Asset impairments, restructuring, and other charges, net | 30 | — | 41 | 22 | ||
| Cost of sales impact of restructuring activities | 7 | — | 7 | 23 | ||
| Steam line incident costs (insurance proceeds), net | — | — | — | (8) | ||
| Environmental and other costs | — | — | 16 | 13 | ||
| Earnings before interest and taxes excluding non-core and unusual items | $366 | $256 | 43% | $993 | $875 | 13% |
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Net Interest Expense
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2024 | 2023 | Change | 2024 | 2023 | Change |
| Gross interest costs | $58 | $64 | (9)% | $174 | $183 | (5)% |
| Less: Capitalized interest | 5 | 5 | 14 | 12 | ||
| Interest expense | 53 | 59 | 160 | 171 | ||
| Less: Interest income | 4 | 2 | 12 | 8 | ||
| Net interest expense | $49 | $57 | (14)% | $148 | $163 | (9)% |
Net interest expense decreased in third quarter and first nine months 2024 compared to third quarter and first nine months 2023 primarily as a result of lower total borrowings and higher interest income.
Provision for Income Taxes
| Third Quarter · First Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |||||
| (Dollars in millions) | $ | % | $ | % | $ | % | $ | % |
| Provision for income taxes and effective tax rate | $99 | 35% | $20 | 10% | $204 | 26% | $77 | 12% |
| Tax provision for non-core and unusual items (1) | 10 | — | 16 | 9 | ||||
| Interim adjustment to tax provision (2) | (59) | 3 | (89) | 17 | ||||
| Adjusted provision for income taxes and effective tax rate | $50 | 16% | $23 | 12% | $131 | 16% | $103 | 15% |
(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)Third quarter 2024 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. Third quarter 2023 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.
| First Nine Months (1) | ||
|---|---|---|
| 2024 | 2023 | |
| Effective tax rate | 26% | 12% |
| Tax impact of current year non-core and unusual items (2) | 2% | 1% |
| Changes in tax contingencies and valuation allowances | (1)% | 1% |
| Forecasted full year impact of expected tax events (3) | (11)% | 1% |
| Forecasted full year adjusted effective tax rate | 16% | 15% |
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 15.5 percent and 14.5 percent in first nine months 2024 and 2023, respectively.
(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.
(3)Expected future tax events may include finalization of tax returns; federal, state, and foreign examinations or the expiration of statutes of limitation; and corporate restructurings.
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Net Earnings Attributable to Eastman and Diluted Earnings per Share
| Third Quarter | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $180 | $1.53 | $178 | $1.49 |
| Non-core items, net of tax: (1) | ||||
| Asset impairments, restructuring, and other charges, net | 22 | 0.19 | — | — |
| Cost of sales impact of restructuring activities | 5 | 0.04 | — | — |
| Interim adjustment to tax provision | 59 | 0.50 | (3) | (0.02) |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $266 | $2.26 | $175 | $1.47 |
| First Nine Months | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $575 | $4.86 | $584 | $4.89 |
| Non-core items, net of tax: (1) | ||||
| Asset impairments, restructuring, and other charges, net | 30 | 0.27 | 18 | 0.14 |
| Cost of sales impact of restructuring activities | 5 | 0.04 | 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 | 89 | 0.75 | (17) | (0.14) |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $712 | $6.02 | $608 | $5.09 |
(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.