Federal Grant of Up to $375 Million Reinstated for Eastman Recycling Project
Key Facts
The U.S. Department of Energy reinstated a federal grant of up to $375 million for Eastman Chemical to support a polyethylene terephthalate recycling and decarbonization project in Longview, Texas. The grant is intended to establish a molecular recycling facility that converts plastic waste into material of virgin quality. This includes products that typically end up in landfills or incinerators, such as polyester trays, colored and opaque beverage bottles, and fabrics. The move comes as the company reported third-quarter 2026 results showing year-over-year growth in revenue and reported earnings, while adjusted earnings per share fell short of analyst estimates. The department describes the amount as a federal contribution of up to $375 million for the project; this does not mean the funds have been disbursed immediately or are available to the company as cash.
Sales revenue rose to $2.385 billion in the third quarter from $2.202 billion in the same period a year earlier, an 8% increase year over year. Adjusted earnings per share were $1.84, 10 cents below analysts’ estimate of $1.94. On a reported diluted earnings-per-share basis, the company posted $2.19, compared with $0.60 a year earlier. Net income was $252 million for the quarter, according to the Associated Press summary of the results. These figures highlight the difference between the measures: adjusted earnings fell short of expectations, while reported earnings per share rose from the third quarter of 2025.
The chief executive said higher input costs coincided with a sequential decline in sales mix, driven by seasonal declines and weak underlying demand in the automotive and consumer durables sectors. The CEO added that “input costs continued to rise,” while sales volume and mix declined sequentially amid seasonality and weak demand. In the second quarter, revenue had risen 10% year over year, driven mainly by a 5% increase in sales volume and mix and a 4% increase in selling prices. The company also said at the time that revenue had increased 15% from the first quarter and that it expected capital spending of about $400 million in 2026. This trajectory puts the third-quarter year-over-year revenue growth in the context of slower sequential momentum and the cost and demand pressures described by management.
Net cash from operating activities fell to $290 million in the third quarter, compared with $402 million a year earlier. At the same time, the company said it remained on track to achieve cost savings of between $125 million and $150 million in 2026, after accounting for inflation. These targeted savings run alongside pressure from input costs, while the figures showed operating cash below its level in the year-earlier period. Eastman forecast full-year adjusted earnings per share of between $6.00 and $6.20, and operating cash of about $850 million. These annual forecasts link cost-cutting efforts with the company’s ability to deliver adjusted earnings and generate cash over the rest of the year.
The company said it expected a sequential seasonal decline in demand, with customers showing additional caution, partly offset by innovation-driven growth. This outlook provides context for management’s forecasts amid weak underlying demand in automotive and durable goods, which it had cited. Eastman is scheduled to hold its third-quarter earnings call on October 30, 2026, at 8:00 a.m. Eastern time. The company’s shares, traded under the ticker EMN, closed at $66.67 on October 28, 2026, according to EL7 data. The upcoming call will bring together the published results and the company’s outlook for demand, savings and operating cash for the remainder of 2026.