Eastman stock also passed the $100 per share mark Thursday, closing at $102.37, up 0.66.
The Kingsport-based global specialty chemicals maker announced earnings of $2.39 per diluted share for second quarter 2018 versus $2.00 per diluted share for second quarter 2017. Adjusted earnings were $2.22 per diluted share for second quarter 2018 versus $1.98 per diluted share for second quarter 2017.
“In second quarter, we delivered an 8 percent increase in revenue and strong earnings growth,” said Mark Costa, Eastman board chair and CEO. “A significant contributor to the higher revenue was increased sales volume, with compelling 8 percent volume growth in the Additives & Functional Products and Advanced Materials segments driven by our innovation-led strategy. We remain confident that execution of our strategy will result in continued outstanding results going forward.”
Sales revenue moved higher in all four of Eastman’s operating segments. Revenue for the quarter topped $2.6 billion, compared to $2.4 billion in second quarter 2017.
Eastman said it generated $443 million in cash from operating activities during second quarter 2018, primarily due to strong net earnings partially offset by increased working capital. Share repurchases totaled $150 million for the quarter. The company continues to expect to generate $1.1 billion of free cash flow (cash from operating activities less net capital expenditures).
Commenting on the outlook for full-year 2018, Costa said: “During the first half of the year, we delivered a 17 percent year-over-year increase in adjusted earnings per share. This performance was the result of strong volume growth in the specialty segments leveraging our innovation-driven growth model, as well as continued disciplined cost management, use of our robust free cash flow and a lower tax rate. Taking all of this together, we remain confident in our expectations for adjusted 2018 EPS growth to be between 10-14 percent.”
In its report, Eastman continued to highlight the effects of tax reform. In fourth quarter 2017, the company recognized a provisional net increase to earnings of $339 million as a result of tax law changes, primarily the Tax Cuts and Jobs Act of 2017 and tax impact of outside-U.S. entity reorganizations, subject to adjustment during 2018. In second quarter 2018, the company recognized a charge of $10 million to increase the one-time transition tax on the deferred foreign income component of the provisional net tax benefit recognized in fourth quarter 2017.
Beginning in first quarter 2018, the company adopted Accounting Standards Codification 606, under which the company recognizes revenue when control has been transferred to the customer, generally at the time shipment occurs. Under the previous revenue recognition accounting standard, the company recognized revenue upon delivery of the goods. Under the new method, revenue recognition was $4 million higher than it would have been under the former method of revenue recognition.