Eastman expects $200-$300 million from waste plastic operation

Hank Hayes • Oct 25, 2019 at 7:30 PM

KINGSPORT — Eastman Board Chair and CEO Mark Costa disclosed on Friday just how much revenue the company plans to receive from its new waste plastic recycling operation.

"In 2020, we expect to use up to 50 million pounds in our CRT (carbon renewal technology) operation," Costa said in a conference call with Wall Street analysts. "This technology significantly changes the value proposition of our cellulosics products. ... Within the next several years, we expect revenue from CRT to be in the $200-$300 million range, with significant upside from there in our specialty products."

The operation's end products, Costa said, will go into markets Eastman already participates in, including textiles, cosmetics and personal care.

Costa noted that as a result of its leadership in the recycling economy, Eastman has received the "LUXE PACK in green" Award.

Eastman on Thursday reported lower third quarter revenues and earnings compared to 2018's third quarter.

"We have increased new business revenue from innovation, particularly in the Advanced Materials segment, as well as continued to aggressively manage costs," Costa said. "However, we have seen business conditions worsen due to global trade uncertainty and other macro factors. As a result, we are now expecting lower sales volume and lower capacity utilization in the fourth quarter.”

In the conference call, Costa said the company lost money from an electrical outage that caused a shutdown at its Longview, Texas, site.

Still, Costa pointed out Eastman remains on track for more than $400 million in new revenue from innovation, led by its Advanced Materials segment. The company returned $583 million to stockholders during the first nine months through a combination of dividends and repurchases, and expects free cash flow to approach $1.1 billion, Costa told analysts.

"In an environment like we are in now, we remain focused on what we can control ... reducing cost and generating free cash flow," said Eastman Executive Vice President and Chief Financial Officer Curt Espeland.

On Oct. 7, Moody's Investors Service changed Eastman's outlook to negative from stable.

Eastman is a Kingsport-based global advanced materials and specialty additives company.