By Dave Ongie
Eastman Chemical Company continued to outpace expectations during the second quarter, announcing earnings of $2.46 per share while posting revenues of $2.65 billion for the quarter that ended in June 2021.
Eastman’s performance in the second quarter bested the Zack’s Consensus Estimate of $2.32 per share, marking the fourth consecutive quarter Eastman has surpassed earnings-per-share (EPS) estimates. Eastman’s quarterly revenue was also 10.60 percent higher than the Zack’s Consensus Estimate.
“Our strong second-quarter results are directly related to the hard work and exceptional dedication of Eastman employees around the world,” Mark Costa, Board Chair and CEO of Eastman, said in a statement. “Second-quarter revenue and adjusted EPS were both quarterly records reflecting continued improvement in global economic growth, the benefit of our innovation-driven growth model, and our outstanding ability to execute. In our specialty businesses, we grew more than our end markets thanks to the progress we are making on our innovation and market development initiatives. Our focus on free cash flow resulted in strong performance in the first half of the year, with higher free cash flow than first half 2020.”
A year-to-year comparison between the second quarter of 2021 and the second quarter of 2020 would obviously be incongruous. Last year all industries were severely hampered due to shutdowns associated with the COVID-19 pandemic, and this year the global economy has been ramping back up.
Therefore, it should be no surprise that Eastman saw a 38 percent year-over-year growth in sales while the selling prices were also up 16 percent compared to the second quarter of 2020. The economic recovery that has taken root this year drove demand in Eastman’s key end markets, including transportation, building and construction, and consumer durables. It has also played a role in the higher selling prices due to the higher costs of raw material, energy and distribution.
Eastman’s cash flow is also up from last year. In the first half of 2021, cash from operating activities was $642 million with free cash flow clocking in at $444 million. Eastman returned $328 million of that money to stockholders through dividends and share repurchases.
Priorities for uses of available cash for 2021 include payment of the quarterly dividend, bolt-on acquisitions, share repurchases, and further reduction of net debt. Overall, Costa expected the momentum from the first half of the year to carry into the second half of 2021.
“Our employees around the world continue to do a great job executing in a challenging environment, mitigating the ongoing impact of COVID-19, supply chain disruptions, and overall tight market conditions,” Costa said. “We delivered record first-half adjusted EPS and are on track for continued strong performance in the second half as we grow faster than recovering end markets due to our innovation-driven growth model. We also remain disciplined on costs as we implement our operations transformation program. With strong first-half results and continued momentum into the second half, we now expect 2021 adjusted EPS to be between $8.80 and $9.20. We are also increasing our expectation for free cash flow to greater than $1.1 billion, which would be the fifth consecutive year of free cash flow above $1 billion.”
