Eastman Releases Fourth Quarter and Full Year 2021 Financial Results

Recently, Eastman Chemical Company (NYSE: EMN) released its financial results for the fourth quarter and full year of 2021
.

Based on strong growth in 2021, the company confirmed an adjusted EPS growth forecast of 8-12% for 2022:

● Innovative growth model promotes strong growth in specialty businesses

●Leading the accelerated development of the circular economy, including the recently announced construction of a world-class molecular recovery facility in France

●  Strong cash flow promotes organic growth investments and enhances shareholder cash returns

Eastman Chairman and Chief Executive Officer Mark Costa said, "Eastman has achieved significant growth in 2021, with record sales and adjusted earnings per share for the full year
.
We continue to leverage the strengths of our innovative growth model.
Ensuring faster growth than end markets
.
In addition, we have made significant progress in leading the development of a circular economy, including the development of several world-class 'material-to-material' molecular recovery units
.
I am very grateful and proud of the environment in which Eastman employees have overcome challenges, focused on achieving new breakthroughs in performance, and continued to advance growth projects
.
At the same time, we continue to drive strong cash flow growth and adhere to strict cash allocation principles
.
We look forward to continued success in 2022 and beyond
.
"

Comparison of the performance of each business in the fourth quarter of 2021 and the fourth quarter of 2020

Specialty Materials  – Volume/product mix increased 8% and selling price increased 7%, driving revenue growth of 15%
.
The uptick in volume/product mix was driven by innovation and market development initiatives as well as strong demand growth for specialty plastics in end markets
.
The increase in selling prices was mainly attributable to double-digit growth in specialty plastics prices driven by higher raw material, energy and distribution prices
.

EBIT declined as higher raw material, energy and distribution costs, manufacturing maintenance costs and continued growth investments offset higher selling prices, compressing spreads
.
This unfavorable impact was partially offset by a significant improvement in product mix
.

Additives and Functional Materials  – Sales prices rose 18%, driving revenue growth of 17%
.
All product lines, represented by coatings additives, achieved double-digit price increases due to higher raw material, energy and distribution prices, as well as strong end-market demand
.
The impact of the divestiture of the tire additive product line offset gains in key end markets such as Building & Construction, Feed Additives, Aviation Hydraulics, so volume/product mix was little changed
.

EBIT declined as higher raw material, energy and distribution costs and the impact of the divestiture of the tire additive product line offset higher selling prices and compressed spreads
.

Fibers  – Volume/product mix rose 13%, driving a 14% increase in sales revenue
.
The increase in volume/product mix was attributable to the gradual recovery of the textile end market from the COVID-19 pandemic, coupled with the effects of product innovation and market development, driving strong growth in the textile business
.

EBIT fell as higher raw material, energy and distribution costs, the acetate tow agreement limiting near-term pricing flexibility, and continued growth investments outweighed higher volumes
.

Chemical Intermediates  – Sales rose 46% driven by a 47% increase in selling prices due to high raw material, energy and distribution prices
.
Higher sales of functional amines and specialty plasticizers for agricultural end markets improved the product mix, but were adversely impacted by lower sales due to the closure of the Singapore manufacturing plant
.

Higher selling prices outweighed higher raw material, energy and distribution costs, widening spreads, resulting in higher EBIT
.
EBIT was adversely affected by higher manufacturing maintenance costs
.

2021 vs.
2020 Consolidated Financial Results

Growth in all businesses in 2021, driving a 24% increase in sales revenue
.
The strong revenue growth was driven by a 15% increase in selling price and an 8% increase in volume/product mix
.
The increase in selling prices was due to significant increases in raw material, energy and distribution prices, as well as strong demand in end markets as the global economy gradually recovers from the COVID-19 pandemic
.
Volume/product mix rose due to innovation and market development effects, as well as strong demand from end markets
.

EBIT growth was driven by a product mix optimized by higher sales of specialty products and higher volumes
.
Rising manufacturing maintenance costs and continued growth investments had some headwinds
.

Comparison of the performance of each business in 2021 and 2020

Specialty Materials  – Volume/product mix rose 16%, driving a 20% increase in sales revenue
.
Strong volume growth and further product mix optimization were driven by innovation and market development effects, as well as strong demand for specialty plastics in the consumer durables, medical and electronics end markets, and advanced interlayer and high performance film products in the transportation end markets
.

EBIT growth was driven by improved product mix and higher sales volumes, but higher raw material, energy and distribution costs outweighed higher selling prices, compressing spreads and having some adverse impact
.
EBIT was also adversely affected by higher manufacturing maintenance costs and continued growth investments
.

Additives & Functional Materials  – 12% increase in selling price and 9% increase in volume/product mix, driving a 22% increase in sales revenue
.
The increase in selling prices was mainly due to increases in raw material, energy and distribution prices
.
Condition in the Transportation, Building & Construction, Consumer Durables end markets further improved, with stronger product demand resulting in double-digit growth in Coating Additives and Aviation Hydraulic Fluids, which in turn drove volume/mix growth
.

Adjusted EBIT growth was attributable to product mix optimization and higher sales volumes, but higher raw material, energy and distribution costs outweighed higher selling prices, compressing interest margins and having a certain adverse impact
.
EBIT was also adversely affected by higher manufacturing maintenance costs and continued growth investments
.

Fibers  – Sales revenue rose 8%, driven by a 7% increase in volume/mix, driven by innovation and market development and continued recovery in textile end markets
.

EBIT declined due to higher volumes, higher raw material, energy and distribution costs, as well as recent pricing flexibility constraints imposed by the acetate tow agreement
.
EBIT was also adversely affected by higher manufacturing maintenance costs and continued growth investments
.

Chemical Intermediates  – Sales revenue rose 36%, driven by a 38% increase in selling prices due to significant increases in raw material, energy and distribution prices and continued tightness in commodity markets
.
Higher sales of functional amines and specialty plasticizers for agricultural end markets improved the product mix, but were adversely impacted by lower sales due to the closure of the Singapore manufacturing plant
.

Despite higher operating costs, spreads have widened further and the product mix has been optimised, driving a substantial increase in EBIT
.

cash flow

In 2021, cash generated from operating activities was $1.
6 billion
.
Income from the sale of some tire additive product lines was $667 million and capital expenditures were $555 million
.
In 2021, the company used cash from operating cash flow and proceeds from divestitures to return $1.
4 billion to shareholders through dividends and share repurchases, in addition to paying down $350 million in debt
.

Available cash in 2022 is prioritized for organic growth investments, payment of quarterly dividends, reinforcement acquisitions and share repurchases
.

Outlook for 2022

Referring to its outlook for the full year 2022, Costa said: "Our record full-year sales revenue and adjusted EPS in 2021 is a testament to the strength of Eastman's innovative growth model
.
Our specialty products Line performance grew faster than end markets, generating approximately $600 million in new business revenue last year
.
All of this provides a solid foundation for continued strong business growth in 2022.

In addition, our business mix continues to improve
.
These The results have been achieved in the face of many headwinds, including the ongoing impact of the COVID-19 pandemic, unprecedented logistical and supply chain challenges, and inflationary phenomena such as rising raw material and energy costs
.
"

"Going forward, market demand is expected to remain strong and continue to grow faster than end markets, driven by our innovation and market development
.
The pricing adjustments we made in the second half of last year are expected to drive strong spreads in the specialty business
In addition, our cost structure is expected to be further streamlined as operational transformation projects continue to progress and manufacturing maintenance costs are substantially reduced .

Strong cash flow generation and proceeds from divestitures allow us to increase organic growth investments and share repurchases Strength
.
These favorable factors are expected to fully offset the negative EBIT impact of approximately $100 million from divestitures and stabilizing margins in the chemical intermediates business
.
Based on the strong performance in 2021, we expect further revenue in 2022 Growth, adjusted earnings per share will be between $9.
50 and $10, and operating cash flow is expected to exceed $1.
6 billion
.
"