Eastman Chemical Co. (NYSE:EMN) Q4 2014 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 08:00 am ET

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Eastman Chemical Co. (NYSE:EMN) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Operator
operator

Good day, and welcome to the Eastman Chemical Company Fourth Quarter Full year 2014 Earnings Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's Web site at www.eastman.com. We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company, Investor Relations. Please go ahead, sir.

Executive
Greg Riddle

Thank you, Jake, and good morning, everyone, and thanks for joining us. On the call with me today are Mark Costa, CEO; Curt Espeland, Executive Vice President and CFO; and Josh Morgan, Manager, Investor Relations.

(Forward-Looking Cautionary Statements)

With that, I'll turn the call over to Mark.

Executive
Mark Costa

Good morning and thank you for joining us. I'll begin on Slide 3. 2014 was a strong year for Eastman as we continue to make progress on our goal to becoming a leading specialty chemical company. We delivered our fifth consecutive year of strong EPS growth despite a challenging global environment and volatile raw material environment. We are very proud of that track record given that only 25% of the Companies in S&P 500 have even accomplished this performance.

In 2014 we also generated free cash flow of $810 million consistent with our expectations. This level of earnings growth and strong cash flow generation reflect how our world class technology platforms have enabled us to achieve success in expanding our leadership positions in diverse and attractive end markets and geographies, accelerating our earnings growth with innovation driven specialty products and leveraging our advantage cost position through vertical integration and advantaged raw material positions.

We also completed four acquisitions during the year. Each of these acquired businesses aligns well with our strategy of delivering consistent superior value. In December, we completed the largest of these acquisitions, Taminco, a highly successful global specialty chemical producer with market leading positions. And I'll talk more about Taminco in the next slide.

During the year we also

Executive
Mark Costa

added several smaller bolt-on acquisitions to our portfolio. Commonwealth Laminating & Coating, Knowlton Technologies, and the Aviation Turbine Oil business from BP. Both Commonwealth and the Aviation Turbine Oil business are great additions to our existing product portfolio in performance films and specialty fluids respectively. The Knowlton acquisition was very attractive as it will enable us to accelerate the innovation cycle for our microfibers platform.

Each of these acquisitions represents a solid addition to our portfolio reflecting our commitment to use M&A as means of creating value both earnings and cash flow. We also made significant progress on our organic initiatives across the Company. We continue to have double digit growth in our Tritan copolyester due to market adoption which will be supported by our fourth quarter expansion at our Kingsport site.

In addition we began work on an additional 60,000 metric ton expansion for Triatan which we expect to be operational in 2017. We expect continued double digit growth in our premium acoustic and head-up display Saflex interlayer products and are proud of our successful launch of a new optical film product for the high