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Eastman Chemical (EMN) Tops Q1 Earnings and Sales Estimates

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Eastman Chemical Company (EMN - Free Report) logged profit of $258 million or $1.89 per share for the first quarter of 2020, up roughly 23% from the year-ago profit of $209 million or $1.49.

Barring one-time items, earnings were $2.03 per share for the quarter, up from $1.77 in the year ago-quarter. Earnings also topped the Zacks Consensus Estimate of $1.72.

Revenues dropped around 6% year over year to $2,241 million in the quarter, hurt by lower selling prices due to reduced raw material and energy prices and higher competitive activity. The top line, however, surpassed the Zacks Consensus Estimate of $2,214.2 million.

Higher sales volumes across personal care and wellness, water treatment, architectural coatings, agriculture and consumables markets were offset by lower volumes in transportation and textile markets due to the coronavirus pandemic.


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


Segment Review

Revenues from the Additives and Functional Products division fell 4% year over year to $822 million for the reported quarter. The decline was due to lower selling prices and unfavorable currency swings. Volumes rose in care chemicals, water treatment, architectural coatings and adhesives resins product lines.

Revenues from the Advanced Materials unit slipped 7% year over year to $615 million. The decline can be attributed to lower selling prices, unfavorable currency translation and less favorable product mix.

Chemical Intermediates sales went down 9% year over year to $592 million, hurt by lower selling prices. Lower raw material prices impacted selling prices.

Fibers segment sales were flat year over year at $212 million. Acetate tow sales volumes were stable in the quarter.

Eastman Chemical ended the quarter with cash and cash equivalents of $680 million, a more than three fold year-over-year increase. Net debt at the end of the quarter was $5,614 million, down around 10% year over year.

Eastman Chemical generated cash from operating activities of $171 million and free cash flow of $72 million during the reported quarter.

The company also returned $120 million to its shareholders through share repurchases and dividends during the quarter.


Eastman Chemical has withdrawn its earnings and cash flow guidance for full-year 2020 due to higher level of uncertainties related to the impact of coronavirus. The company noted that it is significantly increasing cost reduction targets, which is forecast to be roughly $150 million of net savings.

The company has also taken steps to boost its cash flows. These include reduction of capital expenditure by around $100 million to $325-375 million. Eastman Chemical also expects to reduce debt by more than $400 million.

Price Performance

Eastman Chemical’s shares have lost 22.9% over a year, outperforming the 29% decline of the industry it belongs to.


Zacks Rank & Stocks to Consider

Eastman Chemical currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .

Scotts Miracle-Gro has an expected earnings growth rate of 15.9% for the current fiscal year. The company’s shares have gained roughly 37% in the past year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2 (Buy). The company’s shares have surged roughly 183% in a year.

Newmont has a projected earnings growth rate of 95.5% for the current year. The company’s shares have rallied around 96% in a year. It currently has a Zacks Rank #2.

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