Eastman Chemical Co (EMN) Q3 2023 Earnings: A Detailed Review
Eastman Chemical Co (NYSE:EMN) generated over $500 million cash from operating activities in Q3 2023.
The company reported a modest sequential improvement in volume/mix in several key end markets.
EMN is on track to achieve full-year cost reductions of more than $200 million, net of inflation.
The company's Kingsport methanolysis facility is expected to start production and revenue generation by the end of the year.
Eastman Chemical Co (NYSE:EMN) released its third-quarter 2023 financial results on October 26, 2023. The company reported a significant cash generation from operating activities, exceeding $500 million, driven by decisive actions to reduce inventories. Despite a persistently weak demand environment, EMN noted a modest sequential improvement in volume/mix in several key end markets, including consumer durables and personal care.
Financial Performance
The company's sales revenue for Q3 2023 was $2,267 million, a decrease from $2,709 million in Q3 2022. Earnings before interest and taxes (EBIT) were reported at $256 million, down from $324 million in the same period last year. The earnings per diluted share were $1.49, compared to $2.46 in Q3 2022.
Our third-quarter results reflect decisive steps we took to aggressively reduce inventories and prioritize strong cash generation, said Mark Costa, Board Chair and CEO. We delivered this strong cash flow against a backdrop of persistently weak demand and continued inventory destocking across several of our key end markets."
Segment Results
The Advanced Materials segment reported a 16% decrease in sales revenue due to a 17% lower sales volume/mix. The Additives & Functional Products segment saw a 26% decrease in sales revenue primarily due to an 18% lower sales volume/mix and 9% lower selling prices. The Fibers segment, however, reported a 29% increase in sales revenue primarily due to 28% higher selling prices. The Chemical Intermediates segment reported a 21% decrease in sales revenue due to 19% lower selling prices and 2% lower sales volume/mix.
Cash Flow and 2023 Outlook
In Q3 2023, cash provided by operating activities was $514 million, a significant increase from $256 million in Q3 2022. The company returned $94 million to stockholders through dividends. For the full-year 2023, EMN expects EPS to be between $6.30 and $6.50, and for 2023 operating cash flow to approach $1.4 billion.
Despite the continued challenging global economic environment, we were able to deliver on our earnings and cash flow expectations for the third quarter. This performance was the result of disciplined pricing across the portfolio, strong results in the Fibers segment, and decisive actions to generate strong cash flow," Costa commented on the outlook for full-year 2023.
Explore the complete 8-K earnings release (here) from Eastman Chemical Co for further details.
This article first appeared on GuruFocus.
