Eastman Chemical Company EMN logged profit of $27 million or 20 cents per share for the second quarter of 2020, down from the year-ago profit of $258 million or $1.85 per share.

Barring one-time items, earnings were 85 cents per share for the quarter, down from $1.99 in the year ago-quarter. Earnings also missed the Zacks Consensus Estimate of $1.03.

Revenues dropped around 19% year over year to $1,924 million in the quarter, hurt by lower sales volumes resulting from the impacts of the coronavirus pandemic and lower selling prices due to reduced raw material prices. The top line, however, surpassed the Zacks Consensus Estimate of $1,774.8 million.

The company saw lower volumes in transportation, building & construction, consumer durables and textiles end markets, partly offset by gains in consumables, personal care & wellness, medical and agriculture.

Segment Review

Revenues from the Additives and Functional Products division fell 17% year over year to $685 million for the reported quarter, hurt by lower volumes and selling prices as well as less favorable product mix. Volumes fell in coatings additives, tire additives and aviation fluids products sold in transportation end markets.

Revenues from the Advanced Materials unit slipped 19% year over year to $567 million. The decline can be attributed to lower volumes and less favorable product mix.

Chemical Intermediates sales dropped 27% year over year to $461 million, hurt by lower selling prices and sales volumes. Lower raw material prices impacted selling prices. Volumes fell partly due to the unfavorable impacts of coronavirus on demand.

Fibers segment sales edged down 1% year over year to $211 million. Acetate tow sales volumes rose modestly in the quarter. Demand for textiles products was affected by the pandemic.

Financials

Eastman Chemical ended the quarter with cash and cash equivalents of $704 million, a nearly four fold year-over-year increase. Net debt at the end of the quarter was $5,429 million, down around 12% year over year.

Eastman Chemical generated cash from operating activities of $436 million and free cash flow of $339 million during the reported quarter.

The company also returned $119 million to its shareholders through share repurchases and dividends during the quarter.

Outlook

Eastman Chemical did not provide earnings guidance for full-year 2020 due to higher level of uncertainties related to the impacts of coronavirus. The company noted that it is on track to deliver roughly $150 million of cost savings for 2020 in response to the pandemic. It also expects to generate more than $1 billion of free cash flow this year.

Price Performance

Eastman Chemical’s shares have gained 10.6% over a year, outperforming the 1.3% decline of the industry it belongs to.

Zacks Rank & Key Picks

Eastman Chemical currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Barrick Gold Corporation GOLD, Equinox Gold Corp. EQX and Eldorado Gold Corporation EGO.

Barrick Gold has a projected earnings growth rate of 72.6% for the current year. The company’s shares have gained around 63% in a year. It currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The company’s shares have rallied roughly 103% in a year. It currently carries a Zacks Rank #2.

Eldorado Gold has an expected earnings growth rate of 2,025% for the current year. The company’s shares have shot up around 40% in the past year. It presently carries a Zacks Rank #2.

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