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Eastman Chemical Company Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 1, 2011 11:19AM
Eastman Chemical Company (EMN) filed Quarterly Report for the period ended 2011-09-30. Eastman Chemical Co has a market cap of $5.52 billion; its shares were traded at around $39.29 with a P/E ratio of 8.7 and P/S ratio of 0.9. The dividend yield of Eastman Chemical Co stocks is 2.6%. Eastman Chemical Co had an annual average earning growth of 11.8% over the past 10 years.
Highlight of Business Operations:Operating earnings were $256 million in third quarter 2011 compared with $266 million in third quarter 2010. Operating earnings were negatively impacted by restructuring charges of $7 million primarily for severance associated with the acquisition and integration of Sterling in third quarter 2011. Operating earnings in third quarter 2011 also included $11 million of costs from an unplanned outage of an olefin cracking unit in Longview, Texas and $8 million from an acetyl technology license. Operating earnings in third quarter 2010 were positively impacted by $22 million from the partial settlement of an insurance claim related to a power outage at the Longview, Texas manufacturing facility. Outage costs and insurance settlements were primarily reflected in the Performance Chemicals and Intermediates ("PCI") and Coatings, Adhesives, Specialty Polymers, and Inks ("CASPI") segments. In third quarter 2011 compared to third quarter 2010, higher selling prices more than offset higher raw material and energy costs.
Operating earnings were $858 million in first nine months 2011 compared with $701 million in first nine months 2010. Operating earnings included $7 million in restructuring charges, primarily for severance associated with the acquisition and integration of Sterling, and a $15 million gain from the sale of the previously impaired methanol and ammonia assets related to the terminated Beaumont, Texas industrial gasification project in first nine months 2011. Operating earnings included restructuring charges of $3 million in first nine months 2010. Excluding these items, operating earnings increased primarily due to higher selling prices and higher sales volume more than offsetting higher raw material and energy costs.
Excluding asset impairments and restructuring charges, net, operating earnings increased in first nine months 2011 compared to first nine months 2010 primarily due to higher selling prices, higher sales volume, and the increased benefits from cracking propane to produce low-cost propylene, which more than offset higher raw material and energy costs. First nine months 2011 operating earnings included $8 million from the acetyl technology license and costs of $10 million from the unplanned outage of an olefin cracking unit at the Longview, Texas facility. First nine months 2010, operating earnings included $12 million from the acetyl technology license and $18 million of the insurance proceeds from partial settlement related to the 2010 Longview, Texas manufacturing outage. In first nine months 2011, operating earnings included $7 million in restructuring charges, primarily for severance associated with the acquisition and integration of Sterling, and in first nine months 2010 included $3 million in restructuring charges, primarily for severance associated with the acquisition and integration of Genovique.
33 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating earnings increased in first nine months 2011 compared to first nine months 2010 primarily due to increased selling prices which more than offset higher raw material and energy costs.
Cash provided by operating activities was $273 million during first nine months 2011. The Company contributed $102 million to its U.S. defined benefit pension plans, which is reflected as a reduction in "Post-employment obligations" on the Consolidated Statement of Financial Position. Additionally, the Company paid $83 million of a total anticipated $110 million tax payment for the tax gain on the sale of the PET business completed in first quarter 2011. Working capital increased by $338 million due to increased inventory resulting from increased raw material costs and in preparation for planned manufacturing maintenance in fourth quarter 2011 as well as increased accounts receivable primarily attributed to increased sales revenue. The Company generated $297 million cash from operating activities during the first nine months of 2010 including a $200 million increase in working capital resulting from the adoption of amended accounting guidance for transfers of financial assets which impacted the financial statement presentation for activity under the Company s accounts receivable securitization program.
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