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Eastman Chemical (EMN) Q2 Earnings Beat Estimates, Sales Miss
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Eastman Chemical Company (EMN - Free Report) recorded a second-quarter 2023 profit of $272 million or $2.27 per share compared with $256 million or $2.03 in the year-ago quarter.
Barring one-time items, earnings were $1.99 per share, down from $2.83 in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $1.95.
Revenues declined around 16.5% year over year to $2,324 million in the quarter. The figure missed the Zacks Consensus Estimate of $2,557.2 million.
Eastman Chemical Company Price, Consensus and EPS Surprise
Revenues from the Additives and Functional Products division declined 19.2% year over year to $747 million in the reported quarter, owing to lower sales volume across the segment as a result of weak demand, particularly in the building and construction end market, as well as customer inventory destocking in the agriculture end market, which was partly offset by ongoing recovery of aviation fluids. The figure was lower than our estimate of $773.9 million.
Revenues from the Advanced Materials unit declined 12.6% year over year to $739 million in the reported quarter, as higher selling prices were more than offset by reduced sales volume/mix. Volumes were hurt by lower demand and customer destocking in consumer durables, medical and consumables end markets that more than offset strong automotive demand. The figure was lower than our estimate of $786.4 million.
Chemical Intermediates sales fell 33.1% year over year to $514 million, owing to lower sales volume in plasticizers and olefins as a result of sustained weak end-market demand and customer inventory destocking, notably for building and construction, consumer durables, and industrial applications. The figure was lower than our estimate of $682.3 million.
Fibers segment sales increased 33.5% year over year to $323 million, fueled by significantly higher selling prices for acetate tow due to increased industry capacity utilization and higher raw material, energy and distribution costs.
Financials
Eastman Chemical ended the quarter with cash and cash equivalents of $410 million, a roughly 10.1% year-over-year decline. Net debt at the end of the quarter was $5,027 million.
Operating cash flow was $410 million, up from $245 million in the second quarter of 2022. The company returned $144 million to shareholders in the second quarter of 2023 through dividends and share repurchases.
Guidance
The company stated that it has lowered its demand growth forecast and now expects primary demand in several of its end markets to be stable compared to the first half. The company anticipates that second-half adjusted EPS will be lower than first-half EPS. It expects EPS for 2023 to be between $6.50 and $7.00. Furthermore, EMN expects to deliver $1.4 billion in operating cash flow in 2023.
Price Performance
Eastman Chemical’s shares have declined 8.7% over a year against a 7.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Eastman Chemical currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include PPG Industries Inc. (PPG - Free Report) , ATI Inc. (ATI - Free Report) and Carpenter Technology Corporation (CRS - Free Report) .
PPG, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 20.8% for the current fiscal year. The Zacks Consensus Estimate for PPG's earnings for the current fiscal year has been revised 1.6% upward in the past 60 days. It delivered an earnings surprise of 7.3% each of the trailing four quarters, on average. PPG has gained around 16.5% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
ATI, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 13.1% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares are up around 97.3% in a year.
CRS, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 198.11% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. CRS shares are up around 97% in a year.
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Eastman Chemical (EMN) Q2 Earnings Beat Estimates, Sales Miss
Eastman Chemical Company (EMN - Free Report) recorded a second-quarter 2023 profit of $272 million or $2.27 per share compared with $256 million or $2.03 in the year-ago quarter.
Barring one-time items, earnings were $1.99 per share, down from $2.83 in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $1.95.
Revenues declined around 16.5% year over year to $2,324 million in the quarter. The figure missed the Zacks Consensus Estimate of $2,557.2 million.
Eastman Chemical Company Price, Consensus and EPS Surprise
Eastman Chemical Company price-consensus-eps-surprise-chart | Eastman Chemical Company Quote
Segment Review
Revenues from the Additives and Functional Products division declined 19.2% year over year to $747 million in the reported quarter, owing to lower sales volume across the segment as a result of weak demand, particularly in the building and construction end market, as well as customer inventory destocking in the agriculture end market, which was partly offset by ongoing recovery of aviation fluids. The figure was lower than our estimate of $773.9 million.
Revenues from the Advanced Materials unit declined 12.6% year over year to $739 million in the reported quarter, as higher selling prices were more than offset by reduced sales volume/mix. Volumes were hurt by lower demand and customer destocking in consumer durables, medical and consumables end markets that more than offset strong automotive demand. The figure was lower than our estimate of $786.4 million.
Chemical Intermediates sales fell 33.1% year over year to $514 million, owing to lower sales volume in plasticizers and olefins as a result of sustained weak end-market demand and customer inventory destocking, notably for building and construction, consumer durables, and industrial applications. The figure was lower than our estimate of $682.3 million.
Fibers segment sales increased 33.5% year over year to $323 million, fueled by significantly higher selling prices for acetate tow due to increased industry capacity utilization and higher raw material, energy and distribution costs.
Financials
Eastman Chemical ended the quarter with cash and cash equivalents of $410 million, a roughly 10.1% year-over-year decline. Net debt at the end of the quarter was $5,027 million.
Operating cash flow was $410 million, up from $245 million in the second quarter of 2022. The company returned $144 million to shareholders in the second quarter of 2023 through dividends and share repurchases.
Guidance
The company stated that it has lowered its demand growth forecast and now expects primary demand in several of its end markets to be stable compared to the first half. The company anticipates that second-half adjusted EPS will be lower than first-half EPS. It expects EPS for 2023 to be between $6.50 and $7.00. Furthermore, EMN expects to deliver $1.4 billion in operating cash flow in 2023.
Price Performance
Eastman Chemical’s shares have declined 8.7% over a year against a 7.7% rise of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Eastman Chemical currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include PPG Industries Inc. (PPG - Free Report) , ATI Inc. (ATI - Free Report) and Carpenter Technology Corporation (CRS - Free Report) .
PPG, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 20.8% for the current fiscal year. The Zacks Consensus Estimate for PPG's earnings for the current fiscal year has been revised 1.6% upward in the past 60 days. It delivered an earnings surprise of 7.3% each of the trailing four quarters, on average. PPG has gained around 16.5% over a year. You can see the complete list of today’s Zacks #1 Rank stocks here.
ATI, currently carrying a Zacks Rank #2 (Buy), has a projected earnings growth rate of 13.1% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares are up around 97.3% in a year.
CRS, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 198.11% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. CRS shares are up around 97% in a year.