KINGSPORT — Eastman Chemical Board Chair and CEO Mark Costa noted in a call with Wall Street analysts on Friday that the Kingsport-based specialty materials company is off to an “excellent start” to 2021.
“We’re building momentum, and the strong operational execution of our teams is paying off as the global economy returns to normal,” Costa said.
“First, strong demand from the end of 2020 continued throughout the first quarter of 2021. In many markets, demand is returning to or exceeding 2019 levels. Additionally, we are increasing prices across several specialty products to catch up to the increase in raw material, energy, and distribution costs. We reported 20% higher adjusted EPS (earnings per share) over 2019 and 5% over a very strong first quarter last year, before we felt the full impact of the COVID-19 pandemic.”
On Thursday, Eastman announced that it has acquired 3F Feed & Food, a European leader specializing in the technical and commercial development of additives for animal feed and human food. Located in Spain, 3F’s business and assets are expected to strengthen and support continued global growth of Eastman’s animal nutrition business and will become part of its Additives & Functional Products segment. Terms of the transaction were not disclosed.
“With the acquisition of 3F Feed & Food, Eastman adds a respected producer that is well-established in one of the leading European markets,” said Sabine Ketsman, vice president and general manager, Care Chemicals and Animal Nutrition. “Their proven track record of providing value-added solutions to the market, combined with Eastman’s unique technology capabilities and global footprint, will accelerate development of next-generation solutions and strengthen our ability to better serve our customers all over the world. We look forward to combining our respective talented teams and expanding their proven model of success.”
Eastman reported higher revenues and earnings in its first quarter report on Thursday.
Sales revenue was $2.4 billion compared to $2.2 billion in last year’s first quarter.
Costa pointed out Eastman also delivered record free cash flow of $125 million in the first quarter.
“We achieved these solid results despite operational and logistical headwinds from Winter Storm Uri,” Costa said.
“I’m incredibly proud of our teams in Texas, who took proactive steps ahead of the storm to avoid a hard shutdown of our assets. Then, they worked tirelessly to repair and restart our facilities, which helped ensure supply for our customers. Thanks to their proactive planning, including pre-ordering supplies and securing contractors before the storm hit, we were able to safely restart with no injuries, and well ahead of our competitors. We had half of our Texas manufacturing facilities operational within one week of the storm, and we were more than 95% operational within 3 weeks. The way in which our employees jumped to action is a perfect encapsulation of our can-do attitude.
“At our Longview site, we completed 1,680 repair welds, built 3,030 different scaffolds, and brought on 2 ½ times our normal maintenance headcount and worked 4 ½ times normal hours. We had employees sleep in nearby hotels, prioritizing the safety and operability of our sites, even when their own homes were without power. All with zero injuries.”
Sales revenue for the quarter was up in all four operating segments, including a 16% increase in Advanced Materials. In first quarter 2021, cash from operating activities was $216 million.
The company returned $134 million to stockholders through dividends and share repurchases.
Priorities for uses of available cash for 2021 include payment of the quarterly dividend, reduction of net debt, bolt-on acquisitions, and share repurchases. The company expects to repurchase $350 million worth of shares this year.
Eastman now expects 2021 adjusted EPS to be between $8.25 and $8.75. The company also expects free cash flow to approach $1.1 billion, which would be the fifth consecutive year of free cash flow above $1 billion.
Founded in 1920, Eastman is a global specialty materials company that produces a broad range of products found in items people use every day. With the purpose of enhancing the quality of life in a material way, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. The company’s innovation-driven growth model takes advantage of world-class technology platforms, deep customer engagement, and differentiated application development to grow its leading positions in attractive end-markets such as transportation, building and construction, and consumables. As a globally inclusive and diverse company, Eastman employs approximately 14,500 people around the world and serves customers in more than 100 countries. The company had 2020 revenues of approximately $8.5 billion and is headquartered in Kingsport. For more information, visit www.eastman.com.
About 3F Feed & Food
Founded in 2003, 3F Feed & Food is a company specializing in the technical and commercial development of feed and food products aimed at offering customers high-quality products and services with the flexibility to produce customized solutions. 3F Feed & Food produces preservatives and acidifiers, liquids and powders dedicated to the hygiene, preservation and safety of feeding stuffs and animal health nutraceuticals. 3F’s Avila, Spain, manufacturing facility has the most advanced technologies to produce efficient and safe blends, fulfilling requirements with high flexibility to produce customized solutions.