EMN - Earnings call transcript Q1 2018 | Eastman Chemical Company

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone, and welcome to the Eastman Chemical Company First Quarter 2018 Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's website, www.eastman.com.

We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company, Investor Relations. sir. ahead, go Please

Greg Riddle

and everyone, Lauren, joining thanks us. good you, and morning, for Thank

with Mark CFO; today and the me On call are Manager, Relations. Espeland, Vice Reavis, CEO; Executive Costa, President Louis and and Investor Curt Chair Board

items. Before we cover I'll begin, two

this financial XXXX factors with hear Exchange including for certain presentation, year and be expectations or related be plans Release to concerning forward-looking filings XXXX. could results detailed will events company's will Actual the future and expectations. or News filed filed full in our XXXX you to results fourth in the and XX-Q differ during Form statements quarter Securities Commission, our First, XX-K the and for the and materially. quarter third Form the Certain are

news release, at in future be actual I'll rate rate tax that, turn Investors XXXX be found which on quarter will presentation earnings periods. are and www.eastman.com items certain forecasted the description of excluded of non-core for our to comparable the financial the items rate in and Second, the With the quarter unusual Mark. of earnings tax that section. been the GAAP website has Projections XXXX or items adjusted the non-core this the to end any periods. adjusted the first exclude including can the the for associated available exclude referenced disclosures, the and directly adjusted interim as unusual of results tax assume most financial call and in over for Reconciliations projected other and measures first

Mark Costa

include the start first results, adjusted quarter with We're everyone. up XX% I'll morning, start Good over up strong X. on year-over-year. Page XX% year revenue EPS and off compelling to to begin which

our two and as of Materials revenue combined XX% growth segments, portfolio delivered results specialty Additives Functional in specialty strength Products. our we over the Advanced demonstrate Our and

through lines specialty model, innovation-driven growth execution strong and growth of deliver product to high particularly volume continue in of We AFP. margin AM our

of volume increase AM more Through growth business and quarter we the X% particularly of of our with a greater progress innovation, this year-over-year, growth. than continue which specialty to XX%. examples own combined During leadership I'll in of and two earnings primarily specialty what's moment new markets, earnings and growth AFP the our significant create In proud is closes. delivered from overtime. a businesses, driving share corporate sustainable I'm growth coming our fueling quality than

long-term reduction front, to the sacrificing without remain well our we efforts our on Moving growth cost corporate next management initiatives. cost track with

our in the cash quarter remain enabling consistent of rate Our of free $X.Xbillion track was deliver XXXX, cash with from on deleveraging dividend, flow an increasing increasing expectations to share repurchases. an and we over

past awards the several Eastman. Beyond one were employees, of named Ethical been which results, our Company characteristics and the the by shareholders, responsibility Most corporate Ethisphere and communities customers. by valued highly corporate the year many outstanding for come recipient also great for fifth numerous consecutive of over of these months, expect our ethics qualities We the from World's have highlight stakeholders we've to

designation members, service the toward programs veterans hiring and for the year, Military by recognizes Employer exceptional straight We also earned second Friendly transitioning Victory spouses. which Media

seven ENERGY we and the achieved have STAR the the for recognition both environment to a were by structure. EPA this cost the recognized as years, only becoming company our Finally, for chemical Partner year, win of consecutively

on product results by we great also world continue continued their and execute are to mix demonstrate around can quarter control to by recognition throughout Slide innovation being outstanding of of our Our the innovating from stockholders our want of growth I specialty thank execution of X, the reductions enterprise. our model. to them the On revenue cash products result driven can contributions. employees that cost done first increasing high we Eastman margin we work to direct results we're quality returning through for receiving things and to the the These upgrade

programs deliver more $XXX and which as customers rate. future. more to AFP innovation innovative be report track accelerating than today the that differentiated pleased into products, on last year's over closes million more record AM our in in top validate growth and and which I'm business new year, is to XX% are for a is the will Our than the this we're company driving

two of own include throughout beyond growth we and creating to expanding we're and innovation fibers and also AFP in with are how enterprise. the our Here AM we're drive many winning ways customers the

example first Naia yarn is our program. cellulosic about So

several growth As that has to fashion us. high-end designers in performance. a is and we discussed better into environmental the we've for Asia the brands. top seen the a on purposing mandate progress with a in from luxury want market product assets our priority we're this in Naia the wins better fast total a on Through industry great driving fronts. first strong and as delivers fashion The both footprint leader innovation quarter sustainability day, industry

the sustainable market. a hand responsible the the As we product a what and make on is to biopolymer manufactured made manner, can in they relative relative improvement from other call else products forests which pulp anything by a unmatched softness from is of and outstanding viscose, significant

The the our a the our XX enabling great the doing engage as product. looks one It's incredible textile our proposition market. As brands, through value to mills through first year. quarter job Innovations accelerating capability of business the here leverage Top recently see revenue and new were relentlessly demonstrating to to is of going forward this we recognized our is team outstanding an and the application development by our result convert rest gross Textile to team to the FabricLink

health due their application we world markets. are and The odor need through and consumer our a is desperate markets great leverage example to polyolefins. technology sensitivity class where Aerafin lower in packing competitive Amorphous productivity are Another platform [ph] hygienic in of demanding development adhesives

delivering realized product globe. fronts and we've across the is Our on wins both several Aerafin

for superior of across We for Aerafin expectations polyolefins. These XXXX. are thesis application their applying differentiated OEMs development for to to - in They among to product model. Longview, our expect odor polyolefin double platform Amorphous world-class we tackifying successes leverage capacity result are the window in growth. a driven testament leveraged in our our foundation current design advantage the two enable metallocene polymers. in sustainable and provide expanding our Aerafin XXXX resins A we relative growth has to technology relative performance Growth expanding volume operation our as ability And Texas. deliver suite their innovation and have in many broader we built our a this as competitive to capability our to exceeded business the

engaging incredibly sustainable market the which proud. create value. relentlessly are both I'm complexity a market growth. our we real Overall bring turns Then elements together into We excited to application development differentiated with and

teams innovation customers. Curt. Our to With it our driving winning are turn with that, I'll over

Curt Espeland

corporate Mark everyone. start to on four good revenue our with Thanks, Sales grew Slide results morning increases and X. I'll all business segments. in

of with we more to pricing than growth line do in accounted top in our improved near-term both due quarter earnings than in growth the invest of for continuing accounting EBIT are quarter. specialty through our the four mix XX% increased growth basis a offset XX% growth. the XX% double-digit which pricing quality for to XX% innovative positive we earnings in business of quarter. We of Overall specialty the in many in EBIT segments front in businesses by specialty growth higher we executed growing contributing with further for nice material our growth margins And are of per XX our EBIT And all share costs. and to of of impact to the more increases raw job products. with earnings the the driving more on our improved the our momentum we as realized businesses well continue improvement while we've about earnings grew points long-term. as year-over-year Adjusted

on an starting and resulting to segment in basis of the sales Sales to currency shift by driven mix innovative the quarter. In costs delivered higher improved results double-digit volume, acceleration favorable X mix, by and with end particular, another expanded partially Year-over-year XX%. volume points EBIT to products associated due a our higher impressive due improved favorable towards exchange initiatives. which product with margin growth we increased rates. saw increased high XX the from margin of we a growth shift offset advance initiatives. EBIT product materials in in and exchange rates Slide next our to growth innovation Moving foreign quarter

Innovation to deliver and currency. strong lift performance revenue of Day. delivering hand at we growth mid-single executing Looking growth upper drive to continue to from XX% robust near at to fixed the mix the expect range and improvement, and of enable continue cost from in provided recent Overall growth will us the results these volume materials and advance year, This X% digits growth, of our volume a leverage. track further our of get mix record full price earnings of revenue strategy by

impressive of products throughout additives segment. X Slide sales primarily growth which to Sales another sources. quarter. outstanding volume on higher This revenue from XX% Now and function the to due had came multiple increased

superior innovation growth and growth due products operational reliability. market commercial tire in growth rates animal above conditions driving resins execution and nutrition For market our example, in additives enhanced and strong was the chemical to care improved in and tire

made rates shift great and in favorable the the a progress strengths proposition our quarter. a of foreign also to currency We in were also on pricing our our for benefit improving customers value exchange

chemical press alignment products and and our growth in mentioned production now intermediate due reported As certain are products additives the strategies. reported previously of segment in release, in to functional

slightly with of increased average. with offset lines to higher higher remaining and have partially above XXXX. of similar segment $XX selling expected prices with the costs quarter due XXXX, higher product EBIT sales EBIT growth margin approximately quarter associated by in initiatives. million the impact volume in first the generated revenue quarters we'll the these And For

Innovation expect toward functional this continue mid-single X% All digit you is solar the in, will range volume volume the Looking pressure at for of year. to in in fill I to strong full consistent deliver more range growth this the upper challenging strong hand competitive the that expected to Day, of to adhesives. remind with to second products and year some functional guidance earnings back the our due last well we earnings X% in at for translate and growth likely additives with year. growth year additives various would earnings products a positioned and half comp half XXXX have

revenue Now methanol means in sales prices. where on due volume revenue than market to higher was raw Slide prices attributed lower conditions. higher volume recovery a higher improvement X, merchant material is due from agricultural continued prices and to to due increased costs to chemical raw functional energy higher markets in increased and benefit sales Overall segment selling example intermediates costs. selling and One the and by material lower primarily higher they prices. also ethylene higher partially more and offset energy sales increased Earnings offsetting to selling

start given quarter. scheduled XXXX, weakness factors. In good is finish is the result XX% somewhat see with raw release our higher first margins team various below maintenance higher in segment material with do The up I'll year a and review headwind a are second X. you fibers we prices. selling in job mitigate Slide due anticipated news to that impressive with for to full the in increased which These really to help strong from two which the during continues at would be actions costs year-over-year particularly on offsetting results to intermediates XXXX revenue Looking costs continued off tables, be up higher chemical chemical by parts. the and moving an to ethylene will intermediates XXXX quarter. earnings good set year Overall energy

this business versus trends the expected we this in recognition XXXX setting a the are impact under to encouraged very saw First And is this acceleration new materially up year. revenue the we is full to will nice but the textiles different we quarterly through seasonal the the change second in product year standard. by the in growth quarter for double-digit strong Similar overall XXXX XXXX, not company, impact trends. expect

commercialization innovation million approximately revenue platform $X a the to As million first substantial a platform. result, the had $XX about which growth nonwovens of other we resources fiber segment. XXXX program textiles moved increase drive and quarter from EBIT and in of this this is includes In to the

the we Innovation guidance, second We growth to full quarter in and at expect this business. Looking expect earnings be we stabilize beyond for earnings in solid up segment on moves. the this first the And year this consistent Day product fibers. between will versus impact with of X% track remain X% the

last total flat our volume compared year year. about to be We with for the expect

continued the Capital in an in initiatives and cash totaled cash higher other of to sales to addition as million transition We during quarter costs flow and in collections. quarter of in overview reflects innovation quarter. to beginning initiatives year we $XX and on of are the line XXXX impact start for the million. XX, material revenue On the receivables on Operating an to used cash operating raw progress $XXX these in contribute our will we cash build second And progress normal productivity in normal expect the making the our the of of the to of working for financial expenditures attributed including growth. with the mentioned, Slide activities are first earnings flow credit through capital flow highlights. I'll We segment to seasonality increase making our timing generation.

flow We the capital expenditures be over free continue billion full remain very our expect our cash year. of for $X.X to will to approximately million. generate year ability confident in $XXX We

year. Looking to of million to this continue $XXX at use than the free to reduce cash greater sheet, we flow expect balance debt

our we to $XX Additionally remain we million returned quarter $XXX dividend our to In million repurchases. first stockholders. million in first through committed $XXX share returning and of a cash quarter the

we year absence to acquisitions. repurchases share compared expect continue XXXX bolt-on full to in the to For of increase

improvement or reflecting the benefits XX% continued tax compared operations We our And here and be last is Sitting it improved a performance. recent business and which of a today like back earnings to our year turn for rate - impact between would XX% the Mark. expect start the to I'll our the first resulting of reflected our tax full to feels XX% events. it in and flow continue would with modest strong year cash be year to that, to for quarter, be results

Mark Costa

Slide Thanks, On outlook. Curt. XX will XXXX our discuss I

of products continue We growth strong markets. with high the to attractive value in positions benefit from niche innovative leading

execution through are new synergies We revenue and also in improvements of acquired businesses. products capabilities our launching delivering commercial

the scaling benefits earnings. continued seeing are and our expected integration is attractive of of investments. We offset this And growth the to aggressive translating inflation in growth some productivity our

to tax our in is rate to growth. improvement modest a expected contribute addition, In

planned innovation to our cash coming compared allocation accelerate in 'XX contribute Finally, 'XX. share strong programs. repurchases flow the of are our product expansions to to our discipline continuing free To to invest growth in continued our our including in development and in also growth, capacity and increases support momentum years, we to

the on the is when are. Slide of scheduled the free quarter it AFP. will expect range. recognition expect We the EPS half. in one and Putting especially here half be you time. the in we continue of XX% of summarize And of in second long growth we for comes higher to costs our you the XXXX growth the as about consider turnaround I we at higher one same our altogether When lastly should we due expect compared to the especially in And in you XXXX. a crackers at the impact have a least maintenance Longview, where in term this investing pressure to XX be think when in increase time, new in expect industry, year, XXXX in would have middle second ethylene to year compelling earnings to And be to I a XX% to to and are spreads On tailwinds second significant we this which most Texas. the ethylene, expect expectations revenue XX% our this improved comp headwinds than EPS the flow first tough the shape method, half modestly cash at for

of much through improve can driven the you our heart all continue bigger sustain this path XX%. a is the our from march together upgrade. businesses market. to to We of a unique which This grow the for percentage for a can two We growth win. our we We XX% margins underlying line. down about comes As portfolio, bottom and we goal think model mix terrific innovation of to with than faster specialty the total driving how make do

scaling invested free We put the in capital we sustainable the cash for growing, to investing drive integration we through unique earnings are others. is a long-term attractive That value in a of and disciplined also and for you in well industry, capabilities XXXX When on compelling do strong altogether, to growth, portfolio beyond. place strongest return and management. positioned finally the and you one compounded have flows this that it creation leads for EPS

Greg Riddle

We've this of Thanks, as to like got the many to questions and get morning as line on Mark. a possible. lot people

limit one Lauren, yourself are we and ready for follow-up. please So questions. to one question With that,

Operator

Instructions] you, from Our Thank first sir. David Begleiter Deutsche with question [Operator comes Bank.

David Begleiter

Good morning. you. Thank

Mark Costa

Good morning.

David Begleiter

got you raw the AFP a do say offsetting you costs? in What X% in in on pricing recapturing quarter. Mark, segment material

Mark Costa

Good morning, David.

proud and are over raw at that of materials. this up throughout driving period into our first the our as of we last of price caught to improvements that have year time. discipline prices accumulation stage quarter And are action We seeing the which in

are In a in spreads little better fact our the bit quarter. first

David Begleiter

enhanced mentioned Very good. in some execution concrete examples Could QX. execution? that And us you in commercial also you AFP of give

Mark Costa

a story synergies creating It's of great through value the acquisitions. Sure. in

you the how combines powerful talked technology engage right seeing are our Day, as we application and it about market, building, we that very now. growth And have bring the together been to leverage Innovation have development on we how a We you capability. model that the

our where there a chemical we've One Taminco and have we where of somewhat of acids products in a nutrition their animal the Eastman market. had of much business relevant execution that combined of is and strongest capabilities. team we organic was portfolio place more making growth the care with limited in us drivers commercial broader AFP the to Taminco geographically and

built to application much can be capability. offering in growth, that's we for portfolio are to all significant expert of combined And development the more marketplace. what marketplace. So enhance fact sort broader incredible we added of we've growth We've now a capability global so that, combined the the formulation that of drive to and

We've where they tires. to what in now that great true it's to resin Same capability are had developing started integrated the example. somewhat and we had a which Solutia with it products So was limited other market, in is thing our built offer with innovation what expanded side. the we for portfolios

we in Crystex consultant in we've price gone of as we for are not resins and being Crystex are be an the players. built agent can advising we space where now application the innovative products now tire and those of but performance to that the leading it partner innovation XXXX have top development just the in MNCs key and design improve some capability of formulating with debating all can well a this and tires, PPDs, So the strong true insightful as

a places. So in double-digit of the growth these in together strong and are nutrition animal examples growth growth doing model this that driving double-digit bunch portfolio, of capability we other is across tires in bringing

David Begleiter

Thank you.

Operator

Fisher Our with from next question comes Barclays. Duffy

Duffy Fisher

guys. morning good Yes,

Mark Costa

Hey, Duffy.

Duffy Fisher

of you get And next around question that PDH, contract we propylene with over that that what balance with now the and on then ramping? or where forward, the that? your kind the enterprise material own first have both to crackers, is quarter? year your in A and two there to contract trying are and going Was

Mark Costa

a not on that impact first enterprise question has costs input on quarter first performance. or contract, the on our So the had material

I and produce pretty balance what contract. for consumer balanced are enterprise the including what we On on derivatives, remember propylene we - we that now, need produce propylene we think of

Duffy Fisher

quarter-to-quarter, talking And year? and it you are big then how about could said won't quantify quarters the through You number the of can But you we between the that impact accounting year. we a change? of think throughout help size when kind

Mark Costa

Sure.

delivery remind me let In XXXX based to recorded based revenue revenue the shipped just was In revenue XXXX recorded recap compared accelerate will you So when we time. recognition dates. hopefully previous let goods in revenue years. just on me one is change which confirmed on recognized this

remind believe million, net increase more end of is we new to you this of is industry really method, at this earnings million also what product XXXX. with me revenue shipped the the now consistent transition practice. return method So $XXX for this an that to you we've had $XX let of delivered relates to earnings recorded To approximately and for

So this There be in revenue will XXXX. method. in recognized a new transitional EBIT is or revenue

and in revenue both only XXXX XX period. ensures this have weeks each So XXXX of

previous a So, mentioned you whole as for material expected years. such is not again when to taken on or revenue as impact EBIT change compared as have this XXXX a to

have in you revenue the of within the seasonal as impacts this and year. first EBIT However, seen trends quarter,

the in quarter, a looking was XXXX had standard prepared chemical by fibers So first intermediates. impact revenue advance new similar my quarter first offset as specifically comments. materials in under We similar at the but impact on change revenue in mentioned smaller mostly by driven

the you the if share would revenue later million So are in old the accelerated probably $XX otherwise of first or XXXX 'XX EBIT recognized we quarter under in a company when method. be roughly million of that $X.XX it and altogether, of $XX put

not So expectation again or for growth change segments strong our comparing full XXXX when the versus XXXX impacted of has company any year. and this revenue EBIT

Duffy Fisher

Great, thank you guys.

Operator

Koort question Bob next Our from Sachs. Goldman with comes

John Campbell

for good Hi, morning. Campbell This on John Bob. is

stronger current premium the for that comes these mix a percent you advanced mix update out you on premium materials products? sales just can provide For caught the products, an the from of

Mark Costa

million lot $XXX in and growth, of and resistance breakup. a specific clarity we you there can What similar marketplace provide is unique and where that attractive very the premium double we the the into of the be also powerful most tell past of margin. double-digit of is don't and will to films continued in story company very example said is new I to as also extending digits we applications the and Tritan similar toughness an chemical very So and you around margins digits the growing just and segment that's attractive products, Tritan heads of performance at [indiscernible] size, so double growing with size display if to offering one third

a it's are got quite some of but percentage we total, room double pretty are grow a because it's a time the overall So markets bit quite bigger ton these for than big still to of digits where today.

John Campbell

it, X% EPS create with you. in for and see XXXX? bar the to do the to thank term a higher growth or your increased Got growth XX% XXXX longer And XXXX, expectations upside you risk does for of cost a this to kind

Mark Costa

first fibers I XX% excited XX% so this and stability all see So think its about being earnings and is in nice the with year of in CI, specialties story. by we're very stability change some incredibly to to range powerful a driven which in it growth love

years, a for but plan term, As we example increasing long free consistently in you market. story in range, the we for for a this that flow think every I the compelling range currency that's repeating we view have you and it's to year an some don't there still with the year think with grow we forward advantages as unique X% very go cash sustainably powerful very long about think and the future on go it, us to term the XX% are to in

John Campbell

We'll Operator [ph] next you. thank it, Got with to SunTrust. Jim Sheen go

Unidentified Analyst

long the Could your on Good us update for plans view - excess capacity? you ethylene options strategic on morning. to your

Curt Espeland

with as at who the parties engaged other in the our in infrastructure committed land a parties build States utilities term mentioned remain with remain multiple Longview We integrated interested leveraging our in excess ethylene project we've the past. address to position as we derivative view site. well Sure, a interested our to there's are as and United in ethylene position long

we're progress we what and diligently So get you as can update to these current any on. we see market make working will done dynamics within

Unidentified Analyst

resins, seeing give on type you or there, us color it of more pressure the adhesive is on And non-hydrogenated you're could all resins? hydrogenated competitive

Curt Espeland

still this capacity on marketplace year impact It some back in the the there's market. the to we'll but here it's Asia, term market very to an pressure looking in of feel resin order that's year that the Also Exxon's the a we amount because of is [ph] very resins, a raw that tons, as to expect underlying their capacity in half of and XX,XXX of color growth potential order there's in the sensitive adhesives mind pressure so to filling demand To a yet such keep to they're to of margins, tons qualifying of in strong and that are mind outings to of growing one so on change risk the long margins the the starting this up convert it the bringing so sort incredibly term. sort up to the comfortable of So of to of asset. other, some that specific to hygiene. marketplace, long Obviously has incredible of X% point. marketplace, attractive. resin are overall is around become see market capacity from your market's strong so And way a Overall, markets tight accelerate around Asia great the had on lot see has X% lot this quite being people more attractive another a about process to market and XX,XXX not some to keep business is this impact a not on that demand size resins has hydrogenated demand the product short and as in converted have at of in margins. now, so great - expect rosins is thing right rate. pent and out lot we is there's that fill we comes fill term another same And market trend's XX,XXX asset a now help be out driving this for rosins to we that up there's really especially

Unidentified Analyst

Thank you.

Operator

to J. P. Juvekar with Citi. next go We'll

P. J. Juvekar

morning. Yes, hi good

Curt Espeland

P.J. morning Good

P. J. Juvekar

about that's I growth small products you so two from X% intermediates big in our AFP, of Mark AFP, margins? products some specialty what about think these are terms but that's million, shifted $XX in in

Mark Costa

it's the question back about talked it a I goes in Yeah, great first and question. to something

effectively power As growth model this this together, a to and not to with our bringing more we margins. development And by we build margins application technology just have sustain year attractive better but market start application accelerated of launched the capability sort just consolidating last how assets. of reexamine sold how program seeing connect built more CI our aligned markets place one connects still development these product to being we making take are partially realize them in were that capability. of are those some and our that that structured to capability we're in some off we the could these by sure products all products sold in efficient products to products business AFP that we the pretty and growth much actually in have the And be teams manage of right advantage into we sold there are would to already bear and that how and AFP being are be and

sense cleaning now sold where and sense, So are with and some opportunity, animal we technical there place was in success of saw so the products capability. that to we're of marketplace that it one nutrition in all made that sort that that greater one made and seeing coatings we're just also commercial those with in up have places

see and still growth. do do your thing want the your strategy what you to you natural can So and maximize you're revolving is

P. J. Juvekar

volume was years double Okay, factors volume of caused that you declines, into other like then that ended repositioning there tow in cycle several the textiles digit growth strong destocking and got believe we've do you growth? you your thank or any after

Mark Costa

revenue recognition, around of much was last actually revenue then method a it's year incident beginning were tow the this looking lot asset markets in do the as the year-over-year out of gas we as the the weren't supply And revenue the the normally long mentioned higher to principal bringing versus as up a we result tow quarter basis Kingsport, a that Tennessee on back up first Curt a to downstream of the we ramping as very for production recognition chain world. of from quarter coal go different as being and So product. driver around in of the year, shipping

of year, that up as we shipped two these would gets that's revenue it up same so the way so not different last P.J. but in and March lot that shown would've a recognized just it have of So product in have this part shipped caught earlier year, methods

and isn't it to we expect some was recognition on so basis we in The a apples so sort two other we volume XX segment, The the story about the fiber will of stable a year are as apples It's story volumes revenue revenue it year-over-year, to be million that of said revenue this we what that's to actually expected - growth and year last a of basis basis. an on other year, being you'll obviously decline tow. from see within flat be last or two from the put stable part year this stable. to full transferred,

P. J. Juvekar

you. thank helpful, That's

Operator

to next go Jeff We'll JPMorgan with Zekauskas

Jeff Zekauskas

us how external much percentage Thanks very remind volume, purposes? for a you intermediates as purposes chemical of versus much. goes the internal Can

Greg Riddle

It's split about Jeff. a fifty-fifty

Jeff Zekauskas

guys bit the overall be year same that that a does the since chemical that turns million differential fair that will and as your through your segments a little in filters out income down that other they segments million, a about margin up say if it the mean is that for margin other bit? operating was there's down little capture intermediates it also X benefits you'll benefit X so the you think Okay, be to

Curt Espeland

Jeff, translate direct you way. that can't that in

We going it up the as sell sell of that simplistic actually including work as chemical all, right. different into and supply the even that CI, of and value products values, selling and of the specialties and by determined up and value don't market propylene within ethylene those holding through but that's to way. assumption prices well We of the and pricing different price on second ethylene the specialties got those market and and that down are conditions everyone correlated intermediates well You've captured be in olefin derivatives make in quite with demand there's derivatives I selling directly the the propylene going to tends sort in doesn't all set propylene. know with prices, first at you're and ethylene. dynamics that to quarter isn't

lower offset that. you selling course at like Of some one is much into that ethylene sort for marketplace that the translation that of being so by we're prices, bulk one of can't the do

Jeff Zekauskas

Thanks very much

Operator

with to next Nomura Yefremov Aleksey go We'll Instinet.

Aleksey Yefremov

Good in times morning of represent percent types when be terms of everyone, capacity percent or thank this this are finished. these you. to Aerafin does and what of your expansion and With killer will in regards you sold capacity currently project adhesives out

Mark Costa

to we've the a of And strong and should which interest has but going rate a and provide over been in this we're we're the to some had product been a for of orders detail had showing program basis. overall supporting strong strong marketplace going quite area on this the digit capacity continue a to get year uptake we is in into total in quantitative we this missing particular to interest capacity any has a seeing say go over growth expect double fifty limits but Aerafin the growth it not in right strong we're some of expand very I polyolefin year. risk as all capacity breakout more online and but or we're seeing So component rushing

Aleksey Yefremov

going animal or Okay, there nutrition thank source the both that's is care something of offset of chemicals quarter volume pricing sustainable But forward? mentioned the you. you first and as in was it also and

Mark Costa

has a factors. nutrition animal improvement growth two become So as tighter volume as tremendous in markets for as pricing well been

helped well some sourcing the down see growth as the capability much is is all the a competitors they have as chemical think force will from competitors a driving has as the the better can segment shut first it plays rebuild volume be in a structure to space of I cost that's front it's CI. commercial I of a growing would better And benefits and to mean David's across park as point on commercial environmental answer higher executions the sustainable China we'll in have view factor well very come back. standard The some as if just in violations innovation sustainability of get the in second tire been question have enforcement coatings well the under and out. environmental these that AFP marketplace oil technical question are part as China in either the we down the environmental environmental that to this of they pricing players they financing operate for or the how our and space around build shut

apartments a to emphasize they expect revaluate much this can global sustainable will trying build emphasizes few critical I it it and that places be cost the plays going little expected supplying learned having don't all people out over so on of much back China forward. of they And risk Chinese small bench in have to have and basis. single a how pricing as attractive. that a out you well as they customers much be value provide take see places about to and come products higher assists our they that in to that as that really year structure a see painful big we'll that will customers and we we the needs Both that that world and to so how supplier want pretty just private we on And sustainable very to many and I advantage a our some of so depend the volume are both for a to there's but many we get time of growth their think lesson how this MNC would on want in plant around

Aleksey Yefremov

you. Thank

Operator

Vertical next question comes from Kevin Our McCarthy with Partners. Research

Kevin McCarthy

calls alluded upgrading benefit earnings in there a of specialty Investor prospected any and Lee variety to a across to on going quantify products associated help those I of sort efforts products you line. you've just either better of got on if understand the the benefits your Mark at lot is the in the from terms Day wondering margin of margin morning us mix or way that different back path either Good think with your or across to concept you've a the on or uplift retrospectively have of rule lot mind a various

Mark Costa

the list goes of resins secure from to double Yes story layers, films up performance heart wide and our in the display range and a AFP across or growth and in a on. AM the products that Triton shield So tires to heads they it's question to could touch strategy some display of great one digit products in we've is got our this AFP,

'XX, improve and helpful the these so the so we've for on you to company as so are XXXX sort and how as a dramatically day the as in and continue for quantitative all that how is advance look slides level segment grow actually variable average from So margins XXXX be that mix an well from example will we materials corporate you. to it's margins those they average innovation to that 'XX improve margins in of about up well from attractive line as average margin above at will margins I our those outlook actually provided slides think as weighted above specific point going give view the several corporate of the

Kevin McCarthy

with the proceeds strategic then in China All describe how tariffs and you acetate right your flake? event cellulose playbook that second, would on

Mark Costa

question of projects preliminary often the on acetate versus on is Yeah, that they It's be a what list, good it's so all a finally unclear first unclear side. tariff will what's one change. flake - implemented

to so this just unclear entity revenue of it's tax Second, sort moving just this it's in so the unclear have see plays all we'll pocket you're that ever if implement one another applied government how she's they when would from and to might to seen out. be case how pocket, tariff a

Kevin McCarthy

very Thank much. you

Operator

Andrews next go Vincent We'll Stanley. to Morgan with

Vincent Andrews

chain reported just companies and you a tow the that long they've supply larger very already you the tobacco noticed got X%. X%, I've question Thank about volume Mark, on of and a referenced volume. down two

volume? don't expect tow quarter down and to flow time, a you're year when move your type flat see much read but just so the quarter expecting of that to all the wondering I'm for So of cigarette around too be through their one I into results, to would volumes we

Mark Costa

active at report, guys beginning how says you we basis or I of there's anything lot market that our a a and on telling downturn that what certainly and they by not something your are in think customers said between the quarter cigarette which Vincent is thing the overall not see these companies, around us. key question, an end Good seeing the all ships are. you acceleration to We're the is a share or quarter-to-quarter what from been demand of or the one need couple we're comments, trends

we're way. stage material this not at expecting So tow demand in a a change in

we're I that X% of steady sort this in just of to start out. plays think for lot before very consistent X% we time decline a a to more been to think this or to give business time of a benefit. we of see long very and one how sort quarter have sort I There's need it reacting little

Vincent Andrews

Okay chain of sort and or is sort how long just supply a there wisdom on of so?

Mark Costa

it's probably months. six On chain the side, case, supply this in

Vincent Andrews

very much. thanks Okay,

Operator

KeyBanc. Our next Michael question with comes from Sison

Michael Sison

to start nice guys, Hey the year.

a your for talked revenue of Can tailwind, X% million - pricing got for about you it just maybe and of bit us and AM through negatives conservative. curious terms AFP, seems a of in any together, about $XXX walk it's you AFP terms you combine and were business I'm that new little outlook In so in missing? growth, if I AM and XXXX as

Curt Espeland

No, together a by we've mentioned, now, growth for year negatives just deliver of see of years the that. sort things AM, the driven grades digit strong think volume, improvement, revenue FX tailwind come I single pricing mix for to consistently going that sort just of you we're done all in several to some high significant

there to do it's the comp revenue the the we been second first in is in AFP by quarter tougher AFP first and a strong back On from quarter. of obviously side, in we and continue the year the expect and expect half quarter, But and way AFP. seasonal strength the in improvement AM the incredibly second earnings

remember to year improve expect also the benefited last clear 'XX we sort There's projects come will for comp last third some really adhesives products, year-over-year That drove we what 'XX. environmental back second year coming pressure and the fills issue but year do to sort in first price quarter in the and improve then year, margins of chunkiness to earnings but mix thing the fourth volume quarter. half huge dynamic. make 'XX, third those our enforcement an the to this year just share comp us had innovation obviously last the the in other half. growth a and enforcement of and and the from that's from, year, is fourth won't on repeat and There the the fill couple so is in just in, share to of improvement solar this constant we're the comp we a as of China just have You we and to in this expect top third sequentially year in holding We as very quarter. a I high specialty tougher it's of be to see you so in be do of that year additional and And already saw This versus the last tougher third for environmental through meaningful benefit tougher. the back All continues future. so actually mentioned.

Michael Sison

tire just of underlying it this quick of growth. momentum, in companies a in new see any are of follow demand lot that good there sluggish your and products up and great is Okay, driving continues thoughts the terms really to tire terms business quarter, a look

Curt Espeland

double benefit go to so value companies segmentation the themselves the the as going the consolidating happening to we highest market and with that digit market extensive a and believe story, tire in have the we're On of resins, of is that's customers really in have failing as best you growth, our the market creating we our top combines share growth where it that. not and the innovation in seen on where frankly we a ourselves and where all environmental top to noted the with from growth benefiting targeting of winners story things taking aligning as have together not you strong. benefits demand aligning into particular underlying enforcement, we own that have so primary and you we Asia I seeing like in and effort gains that proposition from are in mentioned we're tire demand primary Chinese share they're have have is It where of a that growth our who

Michael Sison

you. Great, thank

Operator

Our Securities. from Frank with Mitsch next question Wells Fargo comes

Frank Mitsch

morning gentlemen. good Hey

Mark Costa

Frank. Good morning

Frank Mitsch

drift. feeling last night's I'm Apologies, good pretty after

raise nice environment X.X that the to reiterated you nice greater the as on so you you raise of like guidance? the this And cash metric start, year and guys flow you that year, are a in kind than get start thought to expect EPS to billion free there a speaking a was celebrating celebratory

Curt Espeland

year, you celebrate greater Frank do the remarkable X.X some and in a let maybe us itself a effort victories. delivering this While deliver that the than pretty better if by is we fall with some on bit little will with

Frank Mitsch

of seeing out for that do something Mark you can in there? in your the that QX just you're to of basis you to. far geographic look you pace about so Terrific, some indicated forward talk expect me seasonal on businesses a improvement QX, business in to a

Mark Costa

may world improving from still to we're And the positions at not their people as attractive going be for those is course. of days in the in the old as of sort of a are so see it's very we'll little quarter growth and market as Europe, to overall Asia compared the regions that's So there automotive beginning saw growth expected Asia. in great growth in benefiting Europe well the than you our in continue strong first throughout and rest the stronger tremendous year, and Asia us growth still economies in China, the

includes So our doesn't in economy, be to forecast. the revenue price also To that isn't forecasting I'd believe clear just that does happen important FX volume, would to cetera. improvements growth improved include et upside so be we're sort forecast We good having. that realizing say and everywhere. it feels that if member it It's of growth

Frank Mitsch

you. thank Terrific,

Operator

Roberts comes question UBS. from with next Our John

John Roberts

see term? rationalization, zinc planning and the need consolidation see of gradually was more The the the over and problem of things a merger consolidate how longer industry out road you still cigarettes tow do eventually you the do industry Blackstone can't in down you. Thank declining block and if business time

Mark Costa

sort parts, outside mentioned, I'll first the view as the of part get sort the overall world me of the let Overall, of see sort of two don't of So then is our second in I we slow of and we change of cigarettes, that overall decline take to sort of demand demand significant expect in demand question. a China. in

exposure you primary more was lot at actually and occurring If of any there Chinaman think a in level, stable and was at then than overbuilding 'XX that was us inventory a destocking it's been 'XX also I stable. a in of with note in But they at marketplace. it that look there integration underlying thought, a 'XXm backward us had created up with I'd that that stage others serve that the then I think it's huge in JV's and that tow our this down and The China. has we're has focused running can been inside on of to that imports best exposure business doing with possibly business job same we of of I the how this at right the as and it X% into happens key we X% now reduced have down so that. our the the a stays of segment is always about element the to think in good question been. we think half We're tow on China about level, revenue what company dramatically to or

UK our offset left help and year of a customers to of in pursuing our offset side our outside we in declines down in we long think materials our secured have took provide China, coal out two can We're matches us. pricing our these we're of cost lowest asset back capacity we integrated for year. this largest amount going and - capacity this in asset agreement cost volume will China capacity lot in aggressively we've story expect So tow productivity including last that we of term it our raw is and now But asset volume obviously and importantly and and for that that that's stability to thirds to when with we added flake we on price most flake. to the the improve

I their including margins year going remaining non-olefins driver success we're to digit that how this year we also capacity, So just sort seeing fill on net call that declines the in that's this decent this the somewhere come what of And capacity you with in feel seeing of textiles, success so told in last on where they're margins the and get tremendous over double excess this And we're business. we're innovation, we're these as focused may in company how strong earnings space. attractive assets to tow, growth average. we - while for beginning growth

to repurpose we'll years cellulosic to done and we we've and see in what for assets keep going time we're the to - them it. attractive and where up doing over those so where markets that's growth, And capacity excess ability actually XX value this grow markets

John Roberts

you. Thank

Operator

Jefferies. Alexander Our with next question a comes from Lawrence

Dan Rizzo

it's Rizzo guys? Hi, Lawrence. you Dan are on How for doing

Mark Costa

Doing good.

Dan Rizzo

growth, drive about add also years. and support can if improvement wondering productivity I was to over margin a next talked efforts - –we've mix help how that mentioned can the and mix controls the improvement lot three You to two help cost

Curt Espeland

Well, we've cost productivity degree some in To costs, those the been of some years what cost two the three et manufacturing used help turnaround goals. we cetera. talking being is increase some are to next the do about offset have to over of

an see bit those but job in places, that's give future So the than call are some of drives growth and does inflation SG&A because our great us you cost those of R&D all and little increases again this more a in company. need profile and we that, offsetting will what they grow outstanding in the investments trying you the to growth increases some is but Manufacturing investments see helping what productivity us right to areas.

Dan Rizzo

strong how a with followed think plays like that two over solar period volumes going then some forward years? weakness, And that it should quarters a very thanks. fill period of cadence quarters say of of like by the be we they'll Okay, out to the about and one kind is

Curt Espeland

business, projects fill huge and better so method you all will a and a has and years. Yeah, once and [indiscernible], concentrated year, that these It's on based be little smooth the issue it, new love quarters recognition power bits chunky fluid, across massive revenue build good couple than out weeks will inventory are to we plane in comes literally finish delivered. up in the construction solar a half these it, but arrays, very and these year chunky. with they're because you then a are will they they over of is it out this fill it tendency so that the like more rather so attractive issue The it a be news goods mirrors

Dan Rizzo

you very Thank much.

Operator

Our question from Tudor next with comes Matthew & Pickering Blair Holt.

Matthew Blair

to I $X.XX want full in and about through QX, you boost the provided number. would off Good you affect year? rest $X.XX of the to Curt, morning think we year said would not the as the EPS when it that Mark about Curt. really I impact go talk it roll but back to that benefit accounting progress Could

Curt Espeland

Sure, feel if quarter, second same the you'll in the recognition really you're reversing in about see third think smaller of will to XXXX quarter compared to new you'll and I fourth. a it bit but on what of in start going method this is see little reversal the impact a degree

Matthew Blair

impact surcharges, is also product logistics of quarter Eastman and moved were any by you free percent to through the to seen price volume truck? in thanks some it, restrictions attributable your Got come due what from increases and then we've have did that

Curt Espeland

the need on impact constraints, volume sort customer seen across we all to first any meeting every we we're So so of of in haven't logistical planet. order due

our does chain of things every things hurricanes did day. into supply when you the miss we about bringing and this. to inventory that any at acid sort the effort think complex think and miraculous site very recovery during you we orders all through good managing When about through chain last of didn't last of year, we're the problem really an also miss customers a interruption Our how coal order and serve then year not acetic gas supply phenomenal the

higher for like structure huge I cost got the seeing to everyone And covered cost doing. we've isn't it are the we to front to cost pricing come of is a it which portion we're And want like else on logistical so of our logistics. trucking recover everyone else

Matthew Blair

Thank you.

Greg Riddle

please. make the the next Let's question last one

Operator

comes Our RBC Capital Arun final question with from Viswanathan Markets.

Arun Viswanathan

propylene or guess a you. in given ethylene, is forward, there of and volatility Thank to products increase Hi, headwind? based QX on expect would you propylene inflation your I recent lot would that be a going

Mark Costa

is, expect been I say to into what would be we first mostly side stable improvements the propylene good business some and the hold - year. those It's through I On the we that to think through the stability. expect we second quarter, pricing

which obviously I different but are prices so lower, really is impact. win half even a stable, to think obviously where out it's on the pretty story, just cap a were lenders second there down the ball

the the our shut ethylene producing it one crackers, our excess in quarter. of has If much down quarter in are just we so with you second second remember

really think So about is about that. half when this second more the you

Arun Viswanathan

Thanks.

Greg Riddle

be replay A Thanks our website morning. of available Okay, thanks later on call again will this this joining this for us everyone again. morning.

Operator

participation. Thank does conference. conclude your for you today's This

disconnect. You may now

Eastman Chemical (EMN) 27 Apr 182018 Q1 Earnings call transcript