Eastman Chemical's Earnings Plunge Amidst Sales Decline, DOE Award Termination

TL;DR

Sell EMN; the massive earnings drop and DOE project termination signal deep trouble ahead.

AI Summary

Eastman Chemical Co. (EMN) reported a significant decline in financial performance for the third quarter and first nine months of 2025. Sales decreased by 10.6% to $2,202 million in Q3 2025 from $2,464 million in Q3 2024, and by 5.0% to $6,779 million for the first nine months of 2025 from $7,137 million in the prior year. Net earnings attributable to Eastman plummeted by 73.9% to $47 million in Q3 2025 from $180 million in Q3 2024, and by 35.8% to $369 million for the first nine months of 2025 from $575 million. Diluted EPS also saw a sharp drop, from $1.53 to $0.40 in Q3 and from $4.86 to $3.18 for the nine-month period. The company's cash and cash equivalents decreased by $348 million to $489 million at September 30, 2025, from $837 million at the beginning of the year, primarily due to net cash used in financing activities of $415 million. A notable event was the termination of a U.S. Department of Energy award for the Polyethylene Terephthalate Recycling Decarbonization Project, impacting future project scope and asset carrying values, though $14 million in reimbursements were received. The company continues to utilize off-balance sheet accounts receivable factoring programs, selling $696 million in Q3 2025 and $2.0 billion in the first nine months of 2025.

Why It Matters

Eastman Chemical's substantial drop in net earnings and sales signals a challenging operating environment, potentially impacting investor confidence and future stock performance. The termination of the DOE award for a key recycling project could delay or alter the company's sustainability initiatives and growth in the circular economy, a critical area for competitive differentiation against peers like LyondellBasell and Dow. For employees, this financial downturn and project uncertainty could lead to job insecurity or reduced investment in new ventures. Customers might see shifts in product availability or pricing strategies as Eastman navigates these headwinds, while the broader market could interpret this as a sign of softening demand in the chemical sector.

Risk Assessment

Risk Level: high — The company's net earnings attributable to Eastman decreased by 73.9% to $47 million in Q3 2025 from $180 million in Q3 2024, indicating significant operational challenges. Furthermore, the termination of the U.S. Department of Energy award for the Polyethylene Terephthalate Recycling Decarbonization Project introduces uncertainty regarding future project scope, timeline, and asset carrying values, posing a material risk to strategic growth initiatives.

Analyst Insight

Investors should consider reducing their exposure to Eastman Chemical (EMN) given the sharp decline in net earnings and sales, coupled with the uncertainty surrounding the terminated DOE project. Monitor future announcements regarding the project's reinstatement or settlement, as this could significantly impact the company's long-term strategic direction and financial health.

Financial Highlights

revenue

$2,202M

net Income

$47M

eps

$0.40

gross Margin

19.7%

cash Position

$489M

revenue Growth

-10.6%

Revenue Breakdown

Key Numbers

• $2.20B — Q3 2025 Sales (Down 10.6% from $2.46B in Q3 2024)
• $47M — Q3 2025 Net Earnings (Down 73.9% from $180M in Q3 2024)
• $0.40 — Q3 2025 Diluted EPS (Down from $1.53 in Q3 2024)
• $6.78B — First Nine Months 2025 Sales (Down 5.0% from $7.14B in first nine months 2024)
• $369M — First Nine Months 2025 Net Earnings (Down 35.8% from $575M in first nine months 2024)
• $3.18 — First Nine Months 2025 Diluted EPS (Down from $4.86 in first nine months 2024)
• $489M — Cash and Cash Equivalents (At September 30, 2025, down from $837M at December 31, 2024)
• $14M — DOE Reimbursements Received (For Polyethylene Terephthalate Recycling Decarbonization Project prior to termination)
• $696M — Accounts Receivable Factored (In Q3 2025, without recourse)
• $415M — Net Cash Used in Financing Activities (For the first nine months of 2025)

Key Players & Entities

• EASTMAN CHEMICAL CO (company) — Registrant
• U.S. Department of Energy (regulator) — Terminated an award for a recycling project
• $2,202 million (dollar_amount) — Sales for Q3 2025
• $2,464 million (dollar_amount) — Sales for Q3 2024
• $47 million (dollar_amount) — Net earnings attributable to Eastman for Q3 2025
• $180 million (dollar_amount) — Net earnings attributable to Eastman for Q3 2024
• $369 million (dollar_amount) — Net earnings attributable to Eastman for first nine months of 2025
• $575 million (dollar_amount) — Net earnings attributable to Eastman for first nine months of 2024
• $0.40 (dollar_amount) — Diluted EPS for Q3 2025
• $1.53 (dollar_amount) — Diluted EPS for Q3 2024

FAQ

Risk Factors

• Project Termination Impact [medium — operational]: The termination of a U.S. Department of Energy award for the Polyethylene Terephthalate Recycling Decarbonization Project impacts future project scope and asset carrying values. While $14 million in reimbursements were received, the full financial implications of this termination are still being assessed.
• Cash Position Decline [medium — financial]: Cash and cash equivalents decreased by $348 million to $489 million at September 30, 2025, from $837 million at the beginning of the year. This reduction is primarily attributed to net cash used in financing activities totaling $415 million for the first nine months of 2025.
• Accounts Receivable Factoring [medium — financial]: The company continues to utilize off-balance sheet accounts receivable factoring programs, selling $696 million in Q3 2025 and $2.0 billion in the first nine months of 2025. This practice impacts liquidity and the reported cash flow from operations.
• Sales and Earnings Decline [high — market]: Sales for Q3 2025 fell 10.6% to $2,202 million, and net earnings plummeted 73.9% to $47 million. For the first nine months, sales decreased 5.0% to $6,779 million, and net earnings dropped 35.8% to $369 million, indicating significant headwinds.

Industry Context

The chemical industry is currently facing headwinds from reduced consumer demand and pricing pressures. Companies are navigating supply chain complexities and the ongoing transition towards more sustainable and circular economy solutions, which requires significant investment and strategic adaptation.

Regulatory Implications

The termination of the DOE award highlights potential risks associated with government funding and project execution. Companies in the chemical sector must also comply with evolving environmental regulations and sustainability reporting standards, which can impact operational costs and strategic planning.

What Investors Should Do

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Key Dates

• 2025-09-30: End of Q3 2025 — Reported financial results showing significant declines in sales and net earnings, with a reduced cash position.
• 2025-01-01: Beginning of 2025 — Cash and cash equivalents stood at $837 million, a higher level than the $489 million reported at the end of Q3 2025.

Glossary

Net earnings attributable to Eastman

The portion of the company's net earnings that belongs to Eastman Chemical Co. shareholders after accounting for noncontrolling interests. (This is the key profit metric reported to shareholders, showing a significant decrease of 73.9% in Q3 2025.)

Diluted earnings per share

A measure of profitability that accounts for all potential dilution from stock options, convertible securities, and other dilutive instruments. (Reflects the sharp decline in profitability on a per-share basis, falling from $1.53 in Q3 2024 to $0.40 in Q3 2025.)

Accounts receivable factoring

A financial transaction where a company sells its accounts receivable (invoices) to a third party (a factor) at a discount to raise cash. (Eastman uses this to manage liquidity, selling $696 million in Q3 2025, which impacts reported cash flow but is an off-balance sheet transaction.)

Asset impairments

A reduction in the carrying value of an asset on the balance sheet when its fair value or recoverable amount falls below its book value. (The termination of the DOE award may lead to future asset impairments, impacting the company's asset base and profitability.)

Year-Over-Year Comparison

Compared to the prior year, Eastman Chemical Co. has experienced a significant downturn in financial performance. For the third quarter, sales decreased by 10.6% and net earnings plummeted by 73.9%. The first nine months of 2025 also show a 5.0% decline in sales and a 35.8% drop in net earnings. This deterioration is reflected in a reduced cash position, down $348 million year-to-date, primarily due to financing activities.

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share EMN New York Stock Exchange

Filing Documents

• emn-20250930.htm (10-Q) — 2187KB
• ex1001-employmentofferlett.htm (EX-10.01) — 25KB
• ex3101-2025093013aceocert.htm (EX-31.01) — 10KB
• ex3102-2025093013acfocert.htm (EX-31.02) — 10KB
• ex3201-202509301350ceocert.htm (EX-32.01) — 5KB
• ex3202-202509301350cfocert.htm (EX-32.02) — 5KB
• eastman_blackx300dpia.jpg (GRAPHIC) — 22KB
• eastman_blackx300dpib.jpg (GRAPHIC) — 22KB
• emn-20250930_g1.jpg (GRAPHIC) — 22KB
• 0000915389-25-000183.txt ( ) — 10435KB
• emn-20250930.xsd (EX-101.SCH) — 37KB
• emn-20250930_cal.xml (EX-101.CAL) — 62KB
• emn-20250930_def.xml (EX-101.DEF) — 286KB
• emn-20250930_lab.xml (EX-101.LAB) — 668KB
• emn-20250930_pre.xml (EX-101.PRE) — 479KB
• emn-20250930_htm.xml (XML) — 2086KB

Forward-Looking Statements

Forward-Looking Statements 3

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1.

Financial Statements

Financial Statements Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings 4 Unaudited Consolidated Statements of Financial Position 5 Unaudited Consolidated Statements of Cash Flows 6 Notes to the Unaudited Consolidated Financial Statements 7 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 48 4.

Controls and Procedures

Controls and Procedures 48

OTHER INFORMATION

PART II. OTHER INFORMATION 1.

Legal Proceedings

Legal Proceedings 49 1A.

Risk Factors

Risk Factors 49 2. Unregistered Sales of Equity Securities and Use of Proceeds 50 5. Other Information 51 6. Exhibits 52

SIGNATURES

SIGNATURES

Signatures

Signatures 53 2 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Certain statements made or incorporated by reference in this Quarterly Report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act (Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). Forward-looking statements are all statements, other than statements of historical fact, that may be made by Eastman Chemical Company ("Eastman" or the "Company") from time to time. In some cases, you can identify forward-looking statements by terminology such as "anticipates", "believes", "estimates", "expects", "intends", "may", "plans", "projects", "forecasts", "will", "would", "could", and similar expressions, or expressions of the negative of these terms. Forward-looking statements may relate to, among other things, such matters as planned and expected capacity increases and utilization; anticipated capital spending; expected depreciation and amortization; environmental matters and opportunities (including potential risks associated with physical and transitional impacts of climate change and related voluntary and regulatory carbon requirements); exposure to and effects of hedging raw material and energy prices and costs and foreign currency exchange and interest rates; disruption or interruption of operations and of raw material or energy supply (including as a result of cyber-attacks or other breaches of the Company's information security systems); global and regional economic, political, and business conditions, including heightened inflation, capital market volatility, interest rate and currency fluctuations, and economic slowdown or recession; impacts from U.S. tariffs, reciprocal tariffs, and global trade disruption; competition; growth opportunities; supply and demand, volume, price, cost, margin and sales; pending and future legal proceedings; earnings, cash flow, dividends, stock repurchases and other expected financial result

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS Third Quarter First Nine Months (Dollars in millions, except per share amounts) 2025 2024 2025 2024 Sales $ 2,202 $ 2,464 $ 6,779 $ 7,137 Cost of sales 1,769 1,859 5,273 5,401 Gross profit 433 605 1,506 1,736 Selling, general and administrative expenses 160 183 499 554 Research and development expenses 63 65 197 184 Asset impairments, restructuring, and other charges, net 20 30 42 41 Other components of post-employment (benefit) cost, net ( 1 ) ( 5 ) ( 4 ) ( 14 ) Other (income) charges, net 3 3 60 42 Earnings before interest and taxes 188 329 712 929 Net interest expense 54 49 156 148 Earnings before income taxes 134 280 556 781 Provision for income taxes 87 99 186 204 Net earnings 47 181 370 577 Less: Net earnings attributable to noncontrolling interest — 1 1 2 Net earnings attributable to Eastman $ 47 $ 180 $ 369 $ 575 Basic earnings per share attributable to Eastman $ 0.41 $ 1.55 $ 3.21 $ 4.91 Diluted earnings per share attributable to Eastman $ 0.40 $ 1.53 $ 3.18 $ 4.86 Comprehensive Income Net earnings including noncontrolling interest $ 47 $ 181 $ 370 $ 577 Other comprehensive income (loss), net of tax: Change in cumulative translation adjustment 15 39 17 38 Defined benefit pension and other postretirement benefit plans: Amortization of unrecognized prior service credits — ( 2 ) — ( 6 ) Derivatives and hedging: Unrealized gain (loss) during period 1 ( 13 ) ( 44 ) ( 6 ) Reclassification adjustment for (gains) losses included in net income, net 6 — 10 15 Total other comprehensive income (loss), net of tax 22 24 ( 17 ) 41 Comprehensive income including noncontrolling interest 69 205 353 618 Less: Comprehensive income attributable to noncontrolling interest — 1 1 2 Comprehensive income attributable to Eastman $ 69 $ 204 $ 352 $ 616 Retained Earnings Retained earnings at beginning of period $ 10,143 $ 9,6

Properties

Properties Properties and equipment at cost 14,454 13,985 Less: Accumulated depreciation 8,708 8,370 Net properties 5,746 5,615 Goodwill 3,665 3,632 Intangible assets, net of accumulated amortization 1,008 1,032 Other noncurrent assets 773 833 Total assets $ 14,979 $ 15,213 Liabilities and Stockholders' Equity Current liabilities Payables and other current liabilities $ 1,866 $ 2,258 Borrowings due within one year 290 450 Total current liabilities 2,156 2,708 Long-term borrowings 4,785 4,567 Deferred income tax liabilities 525 533 Post-employment obligations 607 630 Other long-term liabilities 1,063 923 Total liabilities 9,136 9,361 Stockholders' equity Common stock ($ 0.01 par value – 350,000,000 shares authorized; shares issued – 223,910,533 and 223,588,347 as of September 30, 2025 and December 31, 2024, respectively) 2 2 Additional paid-in capital 2,491 2,463 Retained earnings 10,095 10,013 Accumulated other comprehensive income (loss) ( 331 ) ( 314 ) 12,257 12,164 Less: Treasury stock at cost ( 109,891,531 and 108,470,763 shares as of September 30, 2025 and December 31, 2024, respectively) 6,486 6,385 Total Eastman stockholders' equity 5,771 5,779 Noncontrolling interest 72 73 Total equity 5,843 5,852 Total liabilities and stockholders' equity $ 14,979 $ 15,213 The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS First Nine Months (Dollars in millions) 2025 2024 Operating activities Net earnings $ 370 $ 577 Adjustments to reconcile net earnings to net cash used in operating activities: Depreciation and amortization 382 380 Asset impairment charges — 5 Provision for (benefit from) deferred income taxes 39 ( 76 ) Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: (Increase) decrease in trade receivables ( 131 ) ( 154 ) (Increase) decrease in inventories 73 ( 222 ) Incr