EASTMAN CHEMICAL CO
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 14, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 7. Results of Operations
RESULTS OF OPERATIONS
Eastman's results of operations as presented in the Company's consolidated financial statements in Part II, Item 8 of this Annual Report are summarized and analyzed below.
Sales
| (Dollars in millions) · 2024 · 2023 · Change | ||||
|---|---|---|---|---|
| Sales | $9,382 | $9,210 | 2% | |
| Volume / product mix effect | 4% | |||
| Price effect | (2)% | |||
| Exchange rate effect | —% | |||
Sales revenue increased as a result of increases in the AM, AFP, and Fibers segments, partially offset by a decrease in the CI segment. Further discussion by operating segments is presented in "Summary of Operating Segment" in this MD&A.
Gross Profit
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Gross profit | $2,290 | $2,061 | 11% |
| Costs of sales impact from restructuring activities | 7 | 23 | |
| Steam line incident (insurance proceeds) costs, net | — | (8) | |
| Gross profit excluding non-core and unusual items | $2,297 | $2,076 | 11% |
Gross profit in 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 2023 included insurance proceeds from the steam line incident, and accelerated depreciation resulting from the closure of an acetate yarn manufacturing facility in Europe.
Excluding these non-core and unusual items, gross profit increased as a result of increases in the AM, AFP, 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
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Selling, general and administrative expenses | $736 | $727 | 1% |
Selling, general and administrative ("SG&A") expense increased in 2024 compared to 2023 primarily as a result of higher variable compensation costs, partially offset by cost reduction initiatives.
Research and Development Expenses
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Research and development expenses | $250 | $239 | 5% |
R&D expenses increased in 2024 compared to 2023 primarily due to strategic investment in innovation.
Asset Impairments. Restructuring, and Other Charges, Net
| (Dollars in millions) | 2024 | 2023 |
|---|---|---|
| Asset impairments | 5 | — |
| Severance charges | 25 | 31 |
| Site closure and other charges | 21 | 6 |
| Total | $51 | $37 |
For detailed information regarding asset impairments, restructuring, and other charges, net see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Other Components of Post-employment (Benefit) Cost, Net
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Other components of post-employment (benefit) cost, net | $(72) | $41 | >100% |
| Mark-to-market pension and other postretirement benefit gain (loss), net | 54 | (53) | |
| Other components of post-employment (benefit) cost, net excluding non-core item | $(18) | $(12) | 50% |
For more information regarding "Other components of post-employment (benefit) cost, net" see Note 1, "Significant Accounting Policies", and Note 11, "Retirement Plans", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Other (Income) Charges, Net
| (Dollars in millions) | 2024 | 2023 |
|---|---|---|
| Foreign exchange transaction losses (gains), net | $11 | $11 |
| (Income) loss from equity investments and other investment (gains) losses, net | — | (10) |
| Other, net | 36 | 37 |
| Other (income) charges, net | $47 | $38 |
| Environmental and other costs | (16) | (13) |
| Other (income) charges, net excluding non-core items | $31 | $25 |
Other (income) charges, net in 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 2024 compared to 2023 primarily due to the absence of gains on investments in 2024. For more information regarding components of foreign exchange transaction losses, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Earnings Before Interest and Taxes
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| EBIT | $1,278 | $1,302 | (2)% |
| Cost of sales impact from restructuring activities | 7 | 23 | |
| Steam line incident (insurance proceeds) costs, net | — | (8) | |
| Asset impairments, restructuring, and other charges, net | 51 | 37 | |
| Mark-to-market pension and other postretirement benefit (gain) loss, net | (54) | 53 | |
| Environmental and other costs | 16 | 13 | |
| Net gain on divested business | — | (323) | |
| EBIT excluding non-core and unusual items | $1,298 | $1,097 | 18% |
For more information regarding items that impact EBIT, see "Overview", and items described above in "Results of Operations".
Net Interest Expense
| (Dollars in millions) | 2024 | 2023 | Change |
|---|---|---|---|
| Gross interest expense | $233 | $243 | |
| Less: Capitalized interest | 17 | 18 | |
| Interest Expense | 216 | 225 | |
| Less: Interest income | 16 | 10 | |
| Net interest expense | $200 | $215 | (7)% |
Net interest expense decreased in 2024 compared to 2023 primarily as a result of lower average interest rates on outstanding debt and higher interest income.
Provision for Income Taxes
| (Dollars in millions) | 2024 | 2023 | ||
|---|---|---|---|---|
| $ | % | $ | % | |
| Provision for income taxes and effective tax rate | $170 | 16% | $191 | 18% |
| Tax provision for non-core and unusual items (1) | 1 | (74) | ||
| Tax expense associated with previously divested business | (7) | — | ||
| Adjusted provision for income taxes and effective tax rate | $164 | 15% | $117 | 13% |
(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.
Provision for income taxes and effective tax rate in 2024 included tax expense associated with previously divested business. The tax effect of non-core and unusual items were included in both 2024 and 2023. Excluding these items, adjusted provision for income taxes increased in 2024 compared to 2023 primarily as a result of the tax effect of increased adjusted earnings and the foreign rate variance due to the Company's mix of earnings, partially offset by a decrease in the reserves for tax contingencies.
For more information, see Note 8, "Income Taxes", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Net Earnings Attributable to Eastman and Diluted Earnings per Share
| 2024 | 2023 | |||
|---|---|---|---|---|
| (Dollars in millions, except per share amounts) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $905 | $7.67 | $894 | $7.49 |
| Non-core items, net of tax: (1) | ||||
| Cost of sales impact from restructuring activities | 5 | 0.04 | 20 | 0.17 |
| Asset impairments, restructuring, and other charges, net | 41 | 0.36 | 32 | 0.26 |
| Mark-to-market pension and other postretirement benefit (gain) loss, net | (40) | (0.34) | 39 | 0.33 |
| Environmental and other costs | 13 | 0.10 | 9 | 0.08 |
| Net gain on divested business | — | — | (225) | (1.88) |
| Unusual items, net of tax: (1) | ||||
| Steam line incident (insurance proceeds) costs, net | — | — | (6) | (0.05) |
| Tax expense associated with previously divested business | 7 | 0.06 | — | — |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $931 | $7.89 | $763 | $6.40 |
(1)The 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.