Eastman Chemical : 1Q 2020 Financial Tables Only

FINANCIAL INFORMATION

April 30, 2020

For Eastman Chemical Company First Quarter 2020 Financial Results Release

	Table of Contents
Item
Table 1	Statements of Earnings
Table 2A	Segment Sales Information
Table 2B	Sales Revenue Change
Table 2C	Sales by Customer Location
Table 3A	Segment, Other, and Company Non-GAAP Earnings (Loss) Before Interest and Taxes
Reconciliations
Table 3B	Segment Non-GAAP Earnings (Loss) Before Interest and Taxes Margins
Table 4A	Non-GAAP Earnings Before Interest and Taxes, Net Earnings, and Earnings Per Share
Reconciliations
Table 4B	Adjusted Effective Tax Rate Calculation
Table 5A	Statements of Cash Flows
Table 5B	Net Cash Provided By (Used In) Operating Activities to Free Cash Flow Reconciliations
Table 6	Total Borrowings to Net Debt Reconciliations

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Table 1 - Statements of Earnings

First Quarter

(Dollars in millions, except per share amounts; unaudited)		2020			2019
Sales	$	2,241	$	2,380
Cost of sales		1,664			1,806
Gross profit		577			574
Selling, general and administrative expenses		160			187
Research and development expenses		61			58
Asset impairments and restructuring charges, net		14			32
Other components of post-employment (benefit) cost, net		(30)			(21)
Other (income) charges, net		4			(2)
Earnings before interest and taxes		368			320
Net interest expense		52			56
Earnings before income taxes		316			264
Provision for income taxes		56			55
Net earnings		260			209
Less: Net earnings attributable to noncontrolling interest		2			-
Net earnings attributable to Eastman	$	258		$	209
Basic earnings per share attributable to Eastman	$	1.90		$	1.50
Diluted earnings per share attributable to Eastman
$	1.89		$	1.49
Shares (in millions) outstanding at end of period		135.9			138.6
Shares (in millions) used for earnings per share calculation
Basic		136.0			139.0
Diluted		136.5			140.1

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Table 2A - Segment Sales Information

First Quarter

(Dollars in millions, unaudited)		2020			2019
Sales by Segment
Additives & Functional Products	$	822	$	855
Advanced Materials		615			657
Chemical Intermediates		592			655
Fibers		212			213
Total Eastman Chemical Company	$	2,241	$	2,380

	Table 2B - Sales Revenue Change
		First Quarter 2020 Compared to First Quarter 2019
			Change in Sales Revenue Due To
(Unaudited)		Revenue	Volume /					Exchange
		Product Mix		Price Effect		Rate
		% Change	Effect			Effect
Additives & Functional Products	(4) %	3	%			(6) %			(1) %
Advanced Materials	(7) %	(3) %			(3) %			(1) %
Chemical Intermediates	(9) %	-	%			(9) %			- %
Fibers		- %	1 %			(1) %			- %
Total Eastman Chemical Company	(6) %	1	%			(6) %			(1) %
	Table 2C - Sales by Customer Location
							First Quarter
(Dollars in millions, unaudited)							2020	2019
Sales by Customer Location
United States and Canada					$	980	$	1,000
Asia Pacific							495			553
Europe, Middle East, and Africa							631			689
Latin America							135			138
Total Eastman Chemical Company					$	2,241	$	2,380

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Table 3A - Segment, Other, and Company

Non-GAAP Earnings (Loss) Before Interest and Taxes Reconciliations (1)

First Quarter

(Dollars in millions, unaudited)		2020			2019
Additives & Functional Products
Earnings before interest and taxes	$	143	$	146
Asset impairments and restructuring charges, net (2)		6			4
Excluding non-core item		149			150
Advanced Materials
Earnings before interest and taxes		100			102
Asset impairments and restructuring charges, net (3)		7			-
Excluding non-core item		107			102
Chemical Intermediates
Earnings before interest and taxes		80			73
Asset impairments and restructuring charges, net (4)		1			-
Excluding non-core item		81			73
Fibers
Earnings before interest and taxes		53			42
Other
Loss before interest and taxes		(8)			(43)
Asset impairments and restructuring charges, net		-			28
Excluding non-core items		(8)			(15)
Total Eastman Chemical Company
Earnings before interest and taxes		368			320
Asset impairments and restructuring charges, net		14			32
Total earnings before interest and taxes excluding non-core items	$	382	$	352
Company Non-GAAP Earnings Before Interest and Taxes Reconciliations by Line Items
Earnings before interest and taxes	$	368	$	320
Asset impairments and restructuring charges, net		14			32
Total earnings before interest and taxes excluding non-core items	$	382	$	352

1. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company'sQuarterly Report on Form10-Qfor first quarter 2019 for descriptions of first three months 2019 non-core items.
2. First quarter 2020 charges of $4 million for a manufacturing facility in Asia Pacific and an intangible asset impairment charge of $2 million for customer relationships.
3. Charges for closure of a manufacturing facility in North America as part of ongoing site optimization actions.
4. Severance charges for the previously disclosed plan to discontinue production of certain products at the Singapore manufacturing site by the end of 2020.

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Table 3B - Segment Non-GAAP Earnings (Loss) Before Interest and Taxes Margins(1)(2)

			First Quarter
(Dollars in millions, unaudited)		2020			2019
	Adjusted	Adjusted		Adjusted	Adjusted
	EBIT		EBIT
		EBIT	Margin			EBIT	Margin
Additives & Functional Products	$	149	18.1 %	$	150	17.5 %
Advanced Materials		107	17.4 %			102	15.5 %
Chemical Intermediates		81	13.7 %			73	11.1 %
Fibers		53	25.0 %			42	19.7 %
Total segment EBIT excluding non-core items		390	17.4 %			367	15.4 %
Other		(8)				(15)
Total EBIT excluding non-core items	$	382	17.0 %	$	352	14.8 %

1. For identification of excluded non-core items and reconciliations to GAAP EBIT, see Table 3A.
2. Adjusted EBIT margin is non-GAAP EBIT divided by GAAP sales. See Table 2Afor sales.

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Table 4A - Non-GAAP Earnings Before Interest and Taxes, Net Earnings,

and Earnings Per Share Reconciliations

(Dollars in millions, except per share amounts, unaudited)

As reported (GAAP)

Non-Core Items: (1)

Asset impairments and restructuring charges, net

Interim adjustment to tax provision (2)

Non-GAAP (Excluding non-core items and with adjusted provision for income taxes)

First Quarter 2020

Earnings		Earnings		Provision					Net Earnings
					Attributable to Eastman
	Before			Before			for		Effective
Interest			Income			Income		Income	After Tax		Per Diluted
and Taxes			Taxes			Taxes		Tax Rate				Share
$	368	$	316	$	56	18 %		$	258	$	1.89
	14			14			3					11			0.08
	-			-			(8)					8			0.06
$	382	$	330	$	51	16 %		$	277	$	2.03

								First Quarter 2019
	Earnings		Earnings		Provision					Net Earnings
						Attributable to Eastman
		Before			Before			for		Effective
(Dollars in millions, except per share amounts,	Interest			Income			Income		Income	After Tax		Per Diluted
unaudited)	and Taxes			Taxes			Taxes		Tax Rate				Share
As reported (GAAP)	$	320	$	264	$	55	21 %		$	209	$	1.49
Non-Core or Unusual Items: (1)
Asset impairments and restructuring		32			32			6					26			0.18
charges, net
Adjustments from tax law changes and		-			-			(10)					10			0.07
outside-U.S. entity reorganizations
Interim adjustment to tax provision (2)		-			-			(3)					3			0.03
Non-GAAP (Excluding non-core and
unusual items and with adjusted provision
for income taxes)	$	352	$	296	$	48	17 %		$	248	$	1.77

1. See Table 3Afor description of first quarter 2020 and 2019 non-core items. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
2. The adjusted provision for income taxes for first quarter 2020 and 2019 is calculated applying the forecasted full year effective tax rate as shown in Table 4B.

Table 4B - Adjusted Effective Tax Rate Calculation

First Three Months (1)

	2020			2019
Effective tax rate	18 %	21 %
Discrete tax items (2)	(1)%		- %
Tax impact of current year non-core and unusual items (3)	1 %	(2)%
Forecasted full year impact of expected tax events		(2)%		(2)%
Forecasted full year effective tax rate	16 %	17 %

1. Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 15.5 percent and 16.5 percent for first three months 2020 and 2019, respectively.
2. "Discrete tax items" are items that are excluded from a company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. Discrete items for first three months 2020 are for share based compensation expense and interest expense on uncertain tax positions.
3. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

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Table 5A - Statements of Cash Flows

First Quarter

(Dollars in millions, unaudited)		2020			2019
Operating activities
Net earnings	$	260	$	209
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		139			155
Asset impairment charges		9			-
Provision for deferred income taxes		12			4
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables		(72)			(149)
(Increase) decrease in inventories		(18)			(122)
Increase (decrease) in trade payables		(104)			(42)
Pension and other postretirement contributions (in excess of ) less than expenses		(52)			(36)
Variable compensation (in excess of) less than expenses		(74)			(77)
Other items, net		71			53
Net cash provided by (used in) operating activities		171			(5)
Investing activities
Additions to properties and equipment		(99)			(106)
Acquisitions, net of cash acquired		-			(19)
Other items, net		(2)			-
Net cash used in investing activities		(101)			(125)
Financing activities
Net increase (decrease) in commercial paper and other borrowings		539			370
Proceeds from borrowings		-			125
Repayment of borrowings		-			(175)
Dividends paid to stockholders		(90)			(87)
Treasury stock purchases		(30)			(125)
Other items, net		(11)			(6)
Net cash provided by financing activities		408			102
Effect of exchange rate changes on cash and cash equivalents		(2)			(3)
Net change in cash and cash equivalents		476			(31)
Cash and cash equivalents at beginning of period		204			226
Cash and cash equivalents at end of period	$	680		$	195
Table 5B - Net Cash Provided By (Used In) Operating Activities to Free Cash Flow Reconciliations
		First Quarter
(Dollars in millions, unaudited)		2020			2019
Net cash provided by (used in) operating activities	$	171	$	(5)
Capital expenditures		(99)			(106)
Free cash flow	$	72	$	(111)

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	Table 6 - Total Borrowings to Net Debt Reconciliations
		March 31,	December 31,
(Dollars in millions, unaudited)		2020		2019
Total borrowings	$	6,294	$	5,782
Less: Cash and cash equivalents		680		204
Net debt	$	5,614	$	5,578

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