Eastman Chemical Company (NYSE:EMN) announced its first-quarter 2021 financial results.

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(In millions, except per share amounts)	1Q21	1Q20
Sales revenue	$2,409	$2,241

Earnings before interest and taxes ("EBIT")	389	368

Adjusted EBIT	400	382

Earnings per diluted share	1.99	1.89

Adjusted earnings per diluted share*	2.13	2.03

Net cash provided by (used in) operating activities	216	171

Free cash flow*	125	72

*For non-core and unusual items excluded from adjusted earnings and for adjusted provision for income taxes, calculation of free cash flow, segment adjusted EBIT margins, and net debt, and reconciliations to reported company and segment earnings and to cash provided by operating activities and total borrowings for all periods presented in this release, see Tables 3A, 3B, 4A, 4B, 5A, 5B, and 6.

"We delivered outstanding first-quarter results, with adjusted EPS up 20 percent compared with first quarter 2019 and up 5 percent compared with strong first-quarter 2020 results," said Mark Costa, Board Chair and CEO. "First-quarter results included approximately $30 million of costs from the impact of Winter Storm Uri. The combination of continued disciplined operational execution, the diversity of our end markets, and the benefit of our innovation-driven growth model positioned Eastman well for the return of economic growth. In addition, our focus on cash generation resulted in record first-quarter free cash flow that was well above last year. While economic growth has returned, the threat from COVID-19 persists, and we remain diligent in our efforts to keep our employees safe and maintain the operational integrity of our facilities."

Segment Results 1Q 2021 versus 1Q 2020

Additives & Functional Products – Sales revenue increased 6 percent driven by 3 percent volume / mix growth and a favorable currency impact of 3 percent.

Greater than 20 percent coatings additives volume / mix growth was due to robust demand in the transportation end market, particularly in Asia, and continued solid demand in consumer durables markets. Care chemicals revenue was up high-single-digits as strong demand continued for products used in the personal care end market. These gains were partially offset by the impact of continued weakness in the market for aviation fluids, which is still recovering from the impact of COVID-19.

EBIT decreased due to higher raw material and energy costs and higher distribution costs, partially offset by increased sales volume and more favorable product mix. Costs from the impact of Winter Storm Uri, which resulted in outages at the Longview, Texas site, totaled approximately $10 million.

Advanced Materials – Sales revenue increased 16 percent primarily driven by 15 percent volume / mix growth and a favorable currency impact of 2 percent.

All businesses delivered double-digit revenue growth in the first quarter, led by performance films, with greater than 30 percent sales volume growth and both sales and earnings at a record level due to our innovation and market development efforts combined with robust demand in transportation end markets. Specialty plastics revenue growth was attributed to strength across its end markets, including consumer durables and packaging. Advanced interlayers revenue growth was primarily due to solid recovery in transportation end markets.

EBIT increased primarily due to higher sales volume and more favorable product mix across all product lines. Adjusted EBIT margin increased by 370 basis points.

Chemical Intermediates – Sales revenue increased 2 percent driven by a 14 percent increase in selling prices, mostly offset by 13 percent lower volume / mix.

Higher selling prices were due to sharply rising raw material, energy and distribution prices. The 13 percent volume / mix decline was due to the previously announced discontinuation of certain product lines at the Singapore manufacturing site and reduced sales from the outages at the Longview and Texas City, Texas sites due to Winter Storm Uri.

EBIT decreased primarily due to approximately $20 million of costs from the impact of Winter Storm Uri, mostly offset by increased spreads as selling prices outpaced higher raw material and energy costs.

Fibers – Sales revenue increased 2 percent driven by 3 percent volume / mix growth.

Demand for textiles products, including Naia™ and Naia™ Renew, recovered more quickly than expected, particularly in Asia. Textiles products revenue grew 48 percent driven by end-market recovery and our innovation and market development efforts. This growth was partially offset by the discontinuation of a tobacco specialty product. Acetate tow volume was stable.

EBIT decreased primarily due to the discontinuation of a tobacco specialty product, higher raw material and energy costs, and higher distribution costs.

Cash Flow

In first quarter 2021, cash from operating activities was $216 million. Free cash flow (cash from operating activities less net capital expenditures) was $125 million, up approximately 75 percent from first quarter 2020. See Tables 5A and 5B. In first quarter 2021, the company returned $134 million to stockholders through dividends and share repurchases.

Priorities for uses of available cash for 2021 include payment of the quarterly dividend, reduction of net debt, bolt-on acquisitions, and share repurchases.

2021 Outlook

Commenting on the outlook for full-year 2021, Costa said: "Our team did an outstanding job mitigating the impact of Winter Storm Uri, enabling us to continue to serve our customers and significantly contributing to our strong first-quarter results. The momentum from the first quarter continues in the second quarter as we benefit from our innovation-driven growth model, strong market recovery, and lower operating costs from our operations transformation program. With our strong first-quarter results, we now expect 2021 adjusted EPS to be between $8.25 and $8.75. We also expect free cash flow to approach $1.1 billion, which would be the fifth consecutive year of free cash flow above $1 billion."

The full-year 2021 projected earnings exclude any non-core, unusual or nonrecurring items. Our financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss and asset impairments and restructuring charges) or any unusual or non-recurring items, and we accordingly are unable to reconcile projected earnings excluding non-core and any unusual or non-recurring items to reported GAAP earnings without unreasonable efforts.

Forward-Looking Statements

This news release includes forward-looking statements concerning current expectations and assumptions for future global economic conditions and the impact of the COVID-19 coronavirus pandemic on demand in key end markets; competitive position and acceptance of specialty products in key markets; mix of products sold; capacity utilization, manufacturing costs, and cost reductions; and revenue, earnings, cash flow, cash and cash equivalents, and debt repayment for full-year 2021. Such expectations and assumptions 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 and assumptions 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-K filed for 2020 available, and the Form 10-Q to be filed for first quarter 2021 and to be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Conference Call and Webcast Information

Eastman will host a conference call with industry analysts on April 30, 2021 at 8:00 a.m. ET. To listen to the live webcast of the conference call and view the accompanying slides and prepared remarks, go to investors.eastman.com, Events & Presentations. The slides and prepared remarks to be discussed during the call and webcast will be available at investors.eastman.com at approximately 5:00 p.m. ET on April 29, 2021. To listen via telephone, the dial-in number is 323-794-2093, passcode number 7017351. A web replay, a replay in downloadable MP3 format, and the accompanying slides and prepared remarks will be available at investors.eastman.com, Events & Presentations. A telephone replay will be available continuously from 11:00 a.m. ET, April 30, 2021 to 11:00 a.m. ET, May 10, 2021 at 888-203-1112 or 719-457-0820, passcode 7017351.

Founded in 1920, Eastman is a global specialty materials company that produces a broad range of products found in items people use every day. With the purpose of enhancing the quality of life in a material way, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. The company's innovation-driven growth model takes advantage of world-class technology platforms, deep customer engagement, and differentiated application development to grow its leading positions in attractive end markets such as transportation, building and construction, and consumables. As a globally inclusive and diverse company, Eastman employs approximately 14,500 people around the world and serves customers in more than 100 countries. The company had 2020 revenues of approximately $8.5 billion and is headquartered in Kingsport, Tennessee, USA. For more information, visit www.eastman.com.

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Eastman Announces First-Quarter 2021 Financial Results