Eastman Chemical Company announced earnings from continuing operations, of $1.57 per diluted share for third quarter 2012 versus $1.26 per diluted share for third quarter 2011. Reported earnings from continuing operations were $0.99 per diluted share in third quarter 2012 and $1.22 per diluted share in third quarter 2011.
"Our record performance after the Solutia acquisition reaffirms our confidence that we will continue to deliver year-over-year earnings growth," said Jim Rogers, chairman and CEO.
"Results were solid throughout the company, demonstrating the strength and diversity of our businesses in what remains a challenging global economic environment. Cash generation was also strong in the quarter, and we are on track to generate strong free cash flow for years to come."
Sales revenue for third quarter 2012 was $2.3 billion, a 25 percent increase compared with third quarter 2011. Third-quarter 2012 included sales revenue from the acquired Solutia businesses. Pro forma combined sales revenue declined 3 percent due to lower selling prices partially offset by higher sales volume. The lower selling prices were primarily due to lower raw material and energy costs.
Operating earnings in third quarter 2012 were $263 million compared to $271 million in third quarter 2011. Excluding costs related to the Solutia acquisition and asset impairments and restructuring charges, third-quarter 2012 operating earnings were $397 million compared to $278 million in third quarter 2011. Third-quarter 2012 included operating earnings from the acquired Solutia businesses.
Pro forma combined operating earnings, excluding costs related to the Solutia acquisition and asset impairments and restructuring charges, were $397 million in third quarter 2012 compared with $359 million in third quarter 2011. Pro forma combined operating earnings increased due to lower raw material and energy costs and higher sales volume, partially offset by lower selling prices.
Fibers – Sales revenue increased primarily due to higher selling prices in response to higher raw material and energy costs, particularly for wood pulp. Operating earnings were $98 million in both periods as higher selling prices were mostly offset by higher raw material and energy costs.
Cash Flow
Eastman generated $353 million in cash from operating activities during third-quarter 2012, primarily due to strong net earnings.
Outlook
Commenting on the outlook for full year 2012, Rogers said: "The global economic environment remains challenging as we enter the seasonally slower fourth-quarter. We also anticipate higher raw material and energy costs toward the end of the year.
"However, given our current outlook of a stable economy we expect our business will continue to demonstrate strength as it has throughout the year. We are therefore raising our full year 2012 expectation slightly to earnings per share of between $5.30 and $5.40."
Solutia and other acquisition costs and charges, including financing, transaction, integration, and inventory costs, asset impairments and restructuring charges, net, and mark-to-market pension and OPEB adjustments are excluded from the earnings per share projection.
Solutia Acquisition
On July 2, 2012, the company completed the acquisition of Solutia Inc. Beginning third-quarter 2012, the company changed its reportable segments due to changes in the company's organization resulting from the Solutia acquisition.
As required by purchase accounting, the acquired Solutia inventories were marked to fair value. These inventories were sold in third quarter 2012 resulting in a one-time $75 million increase in cost of sales, net of the LIFO impact of these inventories. Third-quarter 2012 results of operations also included $22 million of Solutia acquisition and integration costs and $28 million of severance charges associated with the acquisition and integration of Solutia.
Eastman is a global specialty chemicals company that produces a broad range of advanced materials, additives and functional products, specialty chemicals, and fibers that are found in products people use every day.
Eastman Chemical Company
