EASTMAN CHEMICAL CO
For the period ended Mar 31, 2026. Filed May 1, 2026.
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.
Mar 31, 2026 · Filed May 1, 2026
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
Table of Contents
RESULTS OF OPERATIONS
Sales
| First Quarter | ||||||
|---|---|---|---|---|---|---|
| Change | ||||||
| (Dollars in millions) · 2026 · 2025 · $ · % | ||||||
| Sales | $2,177 | $2,290 | $(113) | (5)% | ||
| Volume / product mix effect | (84) | (4)% | ||||
| Price effect | (82) | (4)% | ||||
| Exchange rate effect | 53 | 3% | ||||
Sales revenue decreased in first quarter 2026 compared to first quarter 2025 primarily due to decreases in the Fibers and CI segments. Further discussion by operating segments is presented in "Summary by Operating Segment" in this MD&A.
Gross Profit
| First Quarter | |||
|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change |
| Gross profit | $431 | $567 | (24)% |
| Cost of sales impact from restructuring activities | 3 | — | |
| Gross profit excluding non-core items | $434 | $567 | (23)% |
Gross profit in first quarter 2026 included inventory adjustments related to the closure of a production line at a German performance films facility in the AM segment. Excluding this non-core item, gross profit decreased in first quarter 2026 compared to first quarter 2025 in all 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
| First Quarter | |||
|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change |
| Selling, general and administrative expenses | $178 | $182 | (2)% |
Selling, general and administrative ("SG&A") expenses decreased in first quarter 2026 compared to first quarter 2025 primarily due to cost reduction initiatives, partially offset by higher variable compensation costs.
Research and Development Expenses
| First Quarter | |||
|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change |
| Research and development expenses | $60 | $67 | (10)% |
R&D expenses decreased in first quarter 2026 compared to first quarter 2025 primarily due to targeted reductions in corporate R&D projects.
Table of Contents
Asset Impairments, Restructuring, and Other Charges, Net
| First Quarter | ||
|---|---|---|
| (Dollars in millions) | 2026 | 2025 |
| Severance charges | $6 | $1 |
| Restructuring and other charges | 3 | 8 |
| Total | $9 | $9 |
For detailed information regarding asset impairments, restructuring, and other charges, net see Note 11, "Asset Impairments, Restructuring, and Other 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
| First Quarter | ||
|---|---|---|
| (Dollars in millions) | 2026 | 2025 |
| Other components of post-employment (benefit) cost, net | $(17) | $(1) |
Other components of post-employment (benefit) cost, net decreased in first quarter 2026 compared to first quarter 2025 due to a prior service credit related to the Company’s 2025 other postretirement benefit plan amendment. 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
| First Quarter | ||
|---|---|---|
| (Dollars in millions) | 2026 | 2025 |
| Foreign exchange transaction losses, net | $1 | $— |
| (Income) loss from equity investments and other investment (gains) losses, net | — | 1 |
| Other, net | 12 | 7 |
| Other (income) charges, net | $13 | $8 |
Other (income) charges, net increased in first quarter 2026 compared to first quarter 2025 primarily due to an increase of indirect taxes. 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
| First Quarter | |||
|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change |
| Earnings before interest and taxes | $188 | $302 | (38)% |
| Cost of sales impact from restructuring activities | 3 | — | |
| Asset impairments, restructuring, and other charges, net | 9 | 9 | |
| Earnings before interest and taxes excluding non-core items | $200 | $311 | (36)% |
Table of Contents
Net Interest Expense
| First Quarter | |||
|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change |
| Gross interest costs | $57 | $58 | (2)% |
| Less: Capitalized interest | 3 | 5 | |
| Interest expense | 54 | 53 | |
| Less: Interest income | 2 | 4 | |
| Net interest expense | $52 | $49 | 6% |
Net interest expense increased in first quarter 2026 compared to first quarter 2025 primarily due to lower capitalized interest and lower interest income.
Provision for Income Taxes
| First Quarter | ||||
|---|---|---|---|---|
| 2026 | 2025 | |||
| (Dollars in millions) | $ | % | $ | % |
| Provision for income taxes and effective tax rate | $29 | 21% | $70 | 28% |
| Tax provision for non-core items (1) | 4 | 1 | ||
| Income tax related item (2) | (5) | — | ||
| Interim adjustment to tax provision (3) | (5) | (32) | ||
| Adjusted provision for income taxes and effective tax rate | $23 | 15% | $39 | 16% |
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(2)Resulting from the enactment of OBBBA.
(3)First quarter 2026 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. First quarter 2025 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.
| First Three Months (1) | ||
|---|---|---|
| 2026 | 2025 | |
| Effective tax rate | 21% | 28% |
| Discrete tax items (2) | (1)% | (2)% |
| Tax impact of current year non-core items (3) | (1)% | 1% |
| Changes in tax contingencies and valuation allowances | 1% | (2)% |
| Forecasted full year impact of expected tax events (4) | (5)% | (9)% |
| Forecasted full year adjusted effective tax rate | 15% | 16% |
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 14.5 percent and 15.5 percent for first three months 2026 and 2025, respectively.
(2)"Discrete tax items" are items that are excluded from the Company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. Discrete tax items for first three months 2026 and 2025 are related to share based compensation expense and adjustments to certain prior year tax returns.
(3)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(4)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.
Table of Contents
Net Earnings Attributable to Eastman and Diluted Earnings per Share
| First Quarter | ||||
|---|---|---|---|---|
| 2026 | 2025 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $107 | $0.93 | $182 | $1.57 |
| Non-core items, net of tax: (1) | ||||
| Cost of sales impact from restructuring activities | 2 | 0.02 | — | — |
| Asset impairments, restructuring, and other charges, net | 6 | 0.05 | 8 | 0.06 |
| Unusual items: | ||||
| Income tax related item | 5 | 0.04 | — | — |
| Interim adjustment to tax provision | 5 | 0.05 | 32 | 0.28 |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $125 | $1.09 | $222 | $1.91 |
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
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