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Eastman Chemical (EMN) Tops Q4 Earnings and Sales Estimates

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Eastman Chemical Company (EMN - Free Report) logged profit of $26 million or 19 cents per share for the fourth quarter of 2019, down roughly 24% from the year-ago profit of $34 million or 24 cents.

Barring one-time items, earnings were $1.42 per share for the quarter, up from $1.39 in the year ago-quarter. Earnings also topped the Zacks Consensus Estimate of $1.33.

Revenues dropped around 7% year over year to $2,205 million in the quarter. The top line, however, surpassed the Zacks Consensus Estimate of $2,171.2 million.

The company continued to faced challenging global economic conditions in the fourth quarter that impacted consumer discretionary markets including transportation.

Eastman Chemical Company Price, Consensus and EPS Surprise

 

Eastman Chemical Company Price, Consensus and EPS Surprise

Eastman Chemical Company price-consensus-eps-surprise-chart | Eastman Chemical Company Quote

 

Full-Year Results

For 2019, profit was $759 million or $5.48 per share, compared with $1,080 million or $7.56 per share a year ago. Adjusted earnings were $7.13 per share for 2019, down from $8.20 a year ago.

Revenues were $9,273 million for the full year, down around 9% year over year.

Segment Review

Revenues from the Additives and Functional Products division fell 10% year over year to $763 million for the reported quarter. The decline was due to reduced sales volume, lower selling prices and unfavorable currency swings. Volumes were hurt by softer end-market demand due to trade issues.

Revenues from the Advanced Materials unit rose 2% year over year to $638 million. The rise is attributable to higher sales volumes and favorable product mix, partly offset by slightly lower selling prices.

Chemical Intermediates sales went down 16% to $578 million, hurt by lower selling prices. Lower raw material prices and increased competitive activity impacted selling prices.

Fibers segment sales went up 7% to $226 million, aided by higher acetate tow sales volumes.
 
Financials


Eastman Chemical ended 2019 with cash and cash equivalents of $204 million, down around 10% year over year. Net debt at the end of the year was $5,578 million, down around 6% year over year.

Eastman Chemical generated cash from operating activities of $671 million and free cash flow of $554 million during the reported quarter. For the full year, cash from operating activities was $1.5 billion and free cash flow was $1.1 billion.

The company also returned $668 million to shareholders through share repurchases and dividends in 2019. It also repaid debt worth $370 million during the year.

Outlook

Eastman Chemical noted that it entered 2020 in an uncertain macroeconomic environment. Amid this environment, the company will remain focused on aggressively managing costs and growing new business revenues from innovation. The company expects slow growth to continue this year at levels similar to 2019. However, it sees lower inventory destocking in 2020. Considering these factors, the company expects adjusted earnings per share for 2020 to be $7.20-$7.60. Eastman Chemical also expects free cash flow of $1-$1.1 billion for the year.

Price Performance

Eastman Chemical’s shares have lost 13.7% over a year, outperforming the 25.7% decline of the industry it belongs to.



 

 

Zacks Rank & Key Picks

Eastman Chemical currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Pretium Resources Inc. PVG, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied roughly 31% in a year’s time.

Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020. The company’s shares have shot up roughly 30% in a year’s time.

Pretium Resources has projected earnings growth rate of 106.9% for 2020. The company’s shares have rallied around 38% over a year.

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