Eastman Chemical unveils new $2B stock buyback program
At Eastman Chemical Company’s (NYSE: EMN) 2018 Innovation Day, senior company executives discussed the company’s focus on innovation to drive growth and strong value creation, then announced a $2 billion.stock buyback.
“We have built a compelling, innovation-driven growth model that is unique to Eastman,” said Mark Costa, Board Chair and Chief Executive Officer. “Our model consists of the combination of world-class technology platforms, relentless market engagement, and differentiated application development. In particular, application development, which both accelerates and demonstrates the value of our innovation as well as improves understanding of the value of our products, is key to growth. In addition, aggressive portfolio management has improved the structural quality of the company’s earnings and cash flows. As a result, adjusted EBITDA* has increased by over 90 percent from 2010 to 2017, with about half the improvement coming from organic growth and half coming from acquisitions, and this success is despite significant macro headwinds. And over the last 3 years, the company has generated close to $3 billion of free cash flow*.”
“Looking forward, we expect to leverage our innovation-driven growth model and strong cash generation to continue to deliver strong value creation,” said Costa. “We expect revenue growth in our specialty products to be two times underlying markets, for our adjusted EBITDA margin to increase from the current 23 percent*, to generate approximately $3.5 billion of free cash flow over the next 3 years, and for return on invested capital to be between 10 to 15 percent*, which is significantly above cost of capital. We also expect the compound annual growth rate of our adjusted EPS to be 8 to 12 percent over the next 3 years, which would be outstanding growth and a testament to the strength of our portfolio and our innovation.”
The Board of Directors has approved the repurchase of up to an additional $2 billion of Eastman common stock. Share repurchases will be implemented through purchases made from time to time in either the open market or private transactions. The timing, volume, and nature of share repurchases will be at the discretion of management, depending on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time. Eastman may also implement all or part of the repurchases under one or more Rule 10b5-1 trading plans, which would allow repurchases under pre-set terms at times when Eastman might otherwise be prevented from doing so under insider trading laws or because of self-imposed trading restrictions.