Eastman Investor Day Highlights Consistent, Superior Earnings Growth


WEBWIRE – Thursday, December 13, 2012

Expects EPS of ~$6.25 in 2013, and ~$8 in 2015

Expects to generate more than $2 billion of free cash 2012 – 2015

KINGSPORT, Tenn. – – At its 2012 Investor Day, Eastman Chemical Company (NYSE: EMN) chairman and CEO, Jim Rogers, and senior executives discussed the company’s strategy for delivering consistent, superior value.

“We have taken strategic actions over several years that have significantly improved our portfolio of global specialty chemicals. Our results demonstrate the strength and diversity of our businesses as we continue to develop innovative products in attractive markets,” said Rogers. “We have sound financial objectives and our team remains confident in the additional value our recently completed Solutia acquisition will create for Eastman stockholders. Successfully executing our strategy has enabled us to effectively leverage Eastman’s world-class technology platforms and we expect to continue this momentum as we move into 2013 and beyond.”

The company forecasts earnings per share of approximately $6.25 in 2013 and of approximately $8 in 2015, excluding any acquisition-related costs and charges, asset impairments and restructuring costs, mark-to-market pension and OPEB adjustments, or similar items. This forecast assumes global economic growth from 2013 through 2015 of approximately 3 percent, with growth of approximately 8 percent in China, approximately 2.5 percent in the U.S., and approximately 1 percent in Europe.

Financial outlook: A position of strength

Curt Espeland, senior vice president and chief financial officer, said that Eastman’s financial position is one of strength, and that the company expects to generate more than $2 billion of free cash flow (cash from operations less capital expenditures and dividends) between 2012 and 2015. He explained that the company has an attractive debt maturity profile and solid sources of liquidity, which will provide flexibility for Eastman moving forward. He also indicated that the company expects to significantly repay its $1.2 billion Solutia acquisition term loan by the end of 2013.

Espeland affirmed that the Solutia integration remains on track and the company has received positive feedback on the transition from customers, employees, and suppliers. He stated that the company expects to achieve its projected synergies, including more than $100 million of cost synergies. In addition, tax synergies include approximately $1.3 billion of NOLs (of which approximately half are expected to be used in 2012 – 2014) and $150 million of foreign tax credits. Espeland also reviewed expected revenue synergies, including optimization of operational efficiencies and accelerated new product development.

Additives & Functional Products: Stable, high-margin businesses with opportunities to accelerate earnings growth

Mark Costa, executive vice president, described the company’s growth strategy for the Additives & Functional Products segment, which manufactures chemicals additives for coatings and rubber. Costa explained that this business is poised for growth through its leadership positions in attractive end-markets such as transportation and building and construction, and through its innovative technology platforms. Costa said that the segment also expects to benefit from current efforts to improve its cost position, which includes implementation of new improvements for its Crystex® insoluble sulfur technology.

According to Costa, growth of products sold in tires and coatings markets is expected to drive earnings improvement in Additives & Functional Products, and the company projects annual revenue growth of 5 percent to 7 percent with operating margins between 22 and 25 percent through 2015.

Advanced Materials: High growth business well positioned to accelerate earnings growth

Costa also discussed the strategy for the Advanced Materials segment, which consists of the company’s specialty plastics, advanced interlayers, and performance films product lines. Like the Additives & Functional Products segment, Advanced Materials expects to grow by strengthening its leading positions in attractive end-markets, such as transportation and building and construction, and by continuing to improve its product mix through innovation. Costa added that the segment’s premium products, with a combination of higher unit margins, earnings stability, and overall pricing power, are projected to have a 13 percent compound annual sales revenue growth rate. The company also plans to improve the segment’s cost position by leveraging recent asset investments in both copolyesters and cellulosic plastics.

Annual sales revenue for this segment is expected to grow approximately 8 percent with operating margins increasing to between 13 percent and 15 percent over the next three years.

Adhesives & Plasticizers: Expected to deliver continued earnings growth

Executive Vice President Ron Lindsay highlighted plans for growth in key areas in the Adhesives & Plasticizers segment. In the adhesives resins product lines, Lindsay discussed Eastman’s plans to grow in key areas such as hygiene adhesives and case and carton packaging adhesives markets. Eastman’s hydrogenated hydrocarbon resins provide optimized performance, allowing customers to grow with the changing demands of hot-melt adhesives and hygiene products such as diapers. Lindsay pointed to Eastman’s capacity expansions as a demonstration of its commitment to growing with the market, including its recently announced joint venture with Sinopec Yangzi Petrochemical Company Limited to build a hydrogenated hydrocarbon resin manufacturing facility in China. This world scale facility is expected to be operational by the end of 2014.

Lindsay also discussed the company’s plans to leverage its strong technology platforms and leadership in non-phthalates plasticizers to target key growth markets, particularly in North America and Europe. Lindsay pointed to continued application development and the company’s recent acquisitions of Genovique Specialties, Sterling Chemicals, and Scandiflex as enabling growth.

The Adhesives & Plasticizers segment expects annual revenue growth of approximately 8 percent while maintaining operating margins of 17 percent to 20 percent.

Specialty Fluids & Intermediates: Expected to provide targeted growth and solid base of earnings

Lindsay also discussed the company’s growth strategy for the Specialty Fluids & Intermediates segment, which consists of the company’s specialty fluids product lines and its oxo and acetyl chemical intermediates product lines. Lindsay said that Eastman intends to extend its leading market position in Therminol® heat transfer fluids and to optimize its strong chemical intermediates cost and market position to provide cost and reliability advantages for customers. The company also plans to deliver targeted growth through capacity expansions and to leverage its integrated assets to enhance derivative margins.

Specialty Fluids & Intermediates expects to continue delivering solid results, with annual revenue growth expected to be approximately 4 percent while maintaining operating margins of between 13 percent and 16 percent through 2015.

Fibers: A global business on track for ninth year of operating earnings growth

Lindsay said that the Fibers segment is a global business with 79 percent of sales revenue generated outside of North America. The previously announced acetate tow expansion, a joint venture with China National Tobacco Corporation, is on track to be operational by mid-2013. He stated that Fibers is expected to continue to provide a solid base of earnings with growth from the China joint venture and is on track in 2012 for its ninth consecutive year of operating earnings growth. The company expects earnings for this segment to increase annually through 2015.

Technology: A growing platform that addresses market needs

Dr. Greg Nelson, senior vice president and chief technology officer, reviewed the company’s research and development efforts and how they are aligned with the company’s growth strategy and outlined progress being made on new technology platforms. Nelson described several technology platforms that are expected to generate value and long-term growth for Eastman, including the company’s new additives for tires and process technology improvements in its Crystex®, Therminol® and Saflex® products. Interest in Eastman’s microfibers technology is gaining momentum and the company expects the first commercially available product with nonwoven microfibers to be available in the first quarter of 2013. Nelson also discussed how the recent acquisition of Solutia has significantly increased the company’s global innovation footprint, thereby accelerating plans to grow in China.

A webcast replay of the Investor Day presentations and the accompanying slides will be available at www.investors.eastman.com, Events & Presentations.

Forward-Looking Statements: This news release includes forward-looking statements concerning current strategy, plans, and expectations for Eastman and its businesses and products; company earnings per share and segment revenues and operating earnings; company financial position, cash from operations, debt, liquidity, and uses of available cash; integration of and synergies from the acquired Solutia businesses; and revenues and earnings from new products and technologies. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company’s filings with the Securities and Exchange Commission, including the Form 10-Q filed for third quarter 2012 available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Eastman is a global specialty chemicals company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction, and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in approximately 100 countries and had 2011 pro forma combined revenues, giving effect to the Solutia acquisition, of approximately $9.3 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 13,500 people around the world. For more information, visit www.eastman.com.



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