Eastman Announces Third-Quarter 2020 Financial Results - Seite 2

*For non-core and unusual items excluded from adjusted earnings and for adjusted provision for income taxes, and calculation of free cash flow, net debt, and adjusted EBIT margins, and for reconciliations to reported company and segment earnings and to cash provided by operating activities and total borrowings, for all periods presented in this release, see Tables 3A, 3B, 4A, 4B, 5A, 5B, and 6.

“Demand across most of our end markets improved in the third quarter resulting in 10 percent higher sales revenue and almost 60 percent higher adjusted earnings sequentially,” said Mark Costa, Board Chair and CEO. “This performance continues to demonstrate the value of having a diverse set of end markets and the benefit of our innovation-driven growth model. We also are continuing to aggressively manage costs, enabling us to significantly mitigate the financial impact of COVID-19. Consistent with our focus on cash generation in this environment, our teams have done an excellent job of managing inventory. As a result, we have generated the highest free cash flow for the first nine months of a year in our history and are on track to generate greater than $1 billion of free cash flow for the fourth consecutive year.”

Corporate Results 3Q 2020 versus 3Q 2019

Sales revenue decreased primarily due to lower sales volume and lower selling prices. As overall economic conditions improved through the third quarter, sales volume recovered to 5 percent below 2019 levels. Sales volume for products serving end markets negatively impacted by the COVID-19 global pandemic, including transportation, building and construction, and consumer durables, increased significantly compared to second quarter 2020. Sales volume for products used in certain resilient end markets positively impacted by COVID-19, including consumables, personal care, and medical, moderated compared to a strong second quarter 2020. Lower selling prices were primarily due to lower raw material prices.

EBIT decreased due to lower sales volume, reduced capacity utilization, and less favorable product mix, partially offset by the impact of cost reduction actions. Capacity utilization was lower due to lower sales volume and the residual impact of aggressive inventory management in the second quarter, reducing EBIT by approximately $60 million year over year. As sales volume improved through the third quarter, the company increased capacity utilization across all available assets. Cost reduction actions, both structural and in response to COVID-19, included reduced discretionary spending, adjusted operations and deferred maintenance to protect the health and safety of employees and contractors, and supply chain optimization.