Summary of Eastman Chemical Company Conference Call Company Overview - **Company**: Eastman Chemical Company (NYSE: EMN) - **Date of Conference**: March 18, 2026 - **Key Speakers**: William T. McLain (CFO), Jeffrey Zekauskas (J.P. Morgan Analyst) Key Points Industry Context - The chemical industry is currently facing challenges due to geopolitical tensions, particularly the conflict in Iran, which has implications for oil prices and supply chains [4][50][178]. - Eastman has historically managed well during periods of high oil prices, with playbooks in place to navigate such scenarios [4][50]. Financial Position - Eastman is financially sound, having taken steps to mitigate refinancing risks and extend its credit facilities [4][10]. - The company is focused on delivering cash flow, with expectations to generate approximately $1 billion in cash flow for the year [35][36]. Market Dynamics - The company is experiencing price increases in its specialty products, particularly in Additives & Functional Products and Advanced Materials, due to rising crude and feedstock prices [10][18]. - Demand in certain sectors, such as automotive, is showing signs of weakness, which may impact overall performance [14][18]. Operational Insights - Eastman has a significant domestic asset base, with over 75% of its assets located in the U.S., providing a competitive advantage in cost management [4][10]. - The company is actively managing price-cost dynamics in its Chemical Intermediates and specialty businesses to maintain margins [18][75]. Challenges and Opportunities - The company anticipates additional pressure on margins in Chemical Intermediates due to fluctuating demand and input costs [18][80]. - Eastman is adapting its strategies in response to changing market conditions, including potential benefits from higher crude prices [50][56]. Future Outlook - The company is optimistic about its position in the market, citing improved order books and demand momentum as critical indicators for Q1 and beyond [32][182]. - Eastman is exploring opportunities in its Methanolysis initiative and circular economy projects, with expectations for revenue growth driven by partnerships with consumer packaged goods companies [97][115][132]. Segment Performance - The Advanced Materials segment is facing challenges but is expected to recover through optimization and new product introductions [170][176]. - The Fibers business, particularly Acetate tow, is projected to maintain similar volume levels as the previous year, with modest pricing headwinds anticipated [161][163]. Strategic Focus - Eastman is committed to balancing cash returns to shareholders with debt management, maintaining a target of approximately 2.5x net debt to EBITDA [145][151]. - The company is also focused on capital efficiency, with reduced capital expenditures expected in the near term [140][141]. Conclusion - Overall, Eastman Chemical Company is navigating a complex market environment with a focus on cash flow generation, strategic pricing, and operational efficiency, while remaining adaptable to geopolitical and economic changes [182].

Core Insights - Eastman Chemical is focusing on operational actions to stabilize performance in challenged businesses, with end-market demand and customer ordering behavior being the primary swing factors [4] Group 1: Fibers Segment - The Fibers segment is a top priority for the company after a challenging year, with management pursuing additional cost reductions of $125 million to $150 million to restore profitability [3][7] - Approximately 40% of the EBIT decline in the Fibers segment was attributed to factors outside of acetate tow volume, including a $30 million decline in textiles due to tariffs and $20 million from reduced internal demand for cellulosics [3][7] - Customer destocking is expected to continue, with management indicating that the first quarter is starting "a little bit light" but anticipates volume ramp-up later in the year [2][11] Group 2: Chemical Intermediates - The E2P (ethylene-to-propylene) project is seen as a structural improvement for Chemical Intermediates, expected to enhance earnings by approximately $50 million to $100 million depending on spreads, with a payback period of under two years [6][8] - Current profitability in Chemical Intermediates is influenced by weak demand and global trade dynamics, with North American markets being more profitable than exports [9][10] Group 3: Circular Economy Initiatives - The Kingsport debottlenecking project is expected to increase capacity by approximately 130%, supporting rPET volume growth with strategic customers like Pepsi [5][16][17] - A second methanolysis plant project has been paused due to the loss of a Department of Energy grant, shifting the circular strategy towards a lower-capex path [5][15] Group 4: Advanced Materials - In Advanced Materials, year-over-year earnings drivers include volume growth, cost reductions, and improved utilization, although there are headwinds from higher energy costs and modest pricing declines [13][14] - Management has effectively managed pricing relative to costs over the past four years, but is now sharing some raw material benefits with customers, leading to modest pricing declines [14] Group 5: Additional Insights - The company is discontinuing certain European crop protection products due to regulatory bans and is experiencing growth in high-purity solvents for semiconductor applications, with growth rates of 20% to 30% [18] - Management noted limited facility impacts from winter storms so far, but potential headwinds from natural gas prices are being partially mitigated through hedging [18]

Financial Data and Key Metrics Changes - The company reported a decline in earnings before interest and taxes (EBIT) driven by tariff pressures and consumer demand challenges, with a $30 million decline attributed to tariff-driven issues in the textile business [7][10] - Overall, the company is targeting a cost reduction goal of $125 million to $150 million, building on $100 million achieved last year [10][11] Business Line Data and Key Metrics Changes - The fibers segment is a top priority, with a focus on stabilizing the business after previous declines, particularly in tow, which is the largest driver of volume drop [7][10] - The company expects stable tow volumes year-on-year, with some growth in textiles anticipated [84] Market Data and Key Metrics Changes - The North American market for chemical intermediates is more profitable than the export market, with tariffs providing some protection against Chinese competition [18] - Demand recovery is expected in the North American market, particularly in building construction and durable goods, which will enhance earnings stability [19] Company Strategy and Development Direction - The company is implementing the E2P project to convert bulk ethylene into propylene, which is expected to improve earnings by $50 million to $100 million [16][17] - There is a strong emphasis on innovation and targeting new markets to drive volume growth, particularly in advanced materials and fibers [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment, noting that consumer demand remains weak and uncertain [49][50] - The company is focused on controlling internal factors such as cost reductions and volume growth while being aware of external economic challenges [52] Other Important Information - The company has faced regulatory challenges in Europe, leading to the discontinuation of certain crop protection products, which will impact earnings [54] - There is a noted decline in the quality of mechanically recycled PET, reinforcing the company's commitment to chemical recycling as a superior alternative [60][61] Q&A Session Summary Question: Actions taken regarding fibers and impact on earnings - Management highlighted that fibers are a priority, with actions taken to stabilize the business after previous declines, particularly in tow, which has seen a significant volume drop due to tariffs and consumer pressures [7][10] Question: Reducing earnings volatility in Chemical Intermediates - The E2P project is a key initiative aimed at converting ethylene to propylene, which is expected to significantly improve earnings in the segment [16][17] Question: EPS bridge from Q1 last year to Q1 this year - Management noted that Q1 is a tough comparison due to strong performance last year, but they expect a recovery in volumes and improved performance as the year progresses [21][26] Question: Inventory levels at customers - Management indicated that customers have learned from past overbuilding and are currently managing inventory levels more cautiously, which is expected to support demand recovery [66][70]

Financial Data and Key Metrics Changes - The company reported a decline in earnings before interest and taxes (EBIT) driven by tariff pressures and reduced demand, with a $30 million decline attributed to tariff-driven issues in the textile business and a $20 million headwind from reduced demand across cellulosics [7][8] - The company aims for a significant cost reduction goal in the range of $125 million to $150 million, building on $100 million achieved last year [10][11] Business Line Data and Key Metrics Changes - In the fibers segment, the company has stabilized volume relative to last year, although a modest price decline was necessary to achieve this stability [9][10] - The chemical intermediates segment is undergoing a project to convert bulk ethylene into propylene, which is expected to improve earnings by $50 million to $100 million [16][17] Market Data and Key Metrics Changes - The North American market for chemical intermediates is more profitable than the export market, with tariffs providing some protection against Chinese competition [18][19] - The company noted that demand in the North American market is expected to recover, particularly in building construction and durable goods [19][20] Company Strategy and Development Direction - The company is focusing on innovation and cost reduction to drive growth, particularly in advanced materials and fibers [34][36] - There is an emphasis on maintaining margins while pursuing volume growth in non-core applications, with a cautious approach to market share in high-value products [37][38] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the macroeconomic environment, noting that consumer demand remains weak and uncertainty persists [49][50] - The company is optimistic about potential upside if consumer confidence improves, particularly with anticipated government actions to stimulate the economy [51][52] Other Important Information - The company has faced challenges with mechanical recycling quality, which has confirmed the value proposition of its chemical recycling processes [60][61] - Regulatory changes in Europe have led to the discontinuation of certain crop protection products, impacting profitability [54] Q&A Session Summary Question: Actions on fibers and impact on earnings - Management highlighted that fibers are a top priority, with actions taken to stabilize the business after previous declines, including managing pricing and customer contracts [7][9] Question: Reducing earnings volatility in Chemical Intermediates - The E2P project is a key initiative to convert ethylene to propylene, expected to significantly improve earnings [16][17] Question: EPS bridge from Q1 last year to Q1 this year - Management noted that Q1 is a tough comparison due to strong performance last year, but they expect volume recovery and improved performance moving forward [21][26] Question: Inventory levels at customers - Management indicated that customers have learned from past overbuilding and are currently managing inventory levels more cautiously [66][70]

Financial Data and Key Metrics Changes - The company reported a decline in earnings before interest and taxes (EBIT) driven by various factors, including tariff pressures and reduced demand across segments, leading to a $30 million decline in the textile business and a $20 million headwind from reduced demand in cellulosics [5][6] - The company aims for a significant cost reduction goal in the range of $125 million to $150 million, building on the $100 million achieved last year [9][10] - The company expects a year-over-year decline in earnings per share (EPS) for Q1, with a forecasted range of $5.50 to $6.00, indicating a meaningful improvement in earnings is possible despite macroeconomic uncertainties [44][46] Business Line Data and Key Metrics Changes - The fibers segment is a top priority, with actions taken to stabilize the business after a significant drop in volume, particularly in tow, which is the largest driver of the decline [5][6] - The chemical intermediates segment is undergoing a project to convert bulk ethylene into propylene, which is expected to improve earnings by $50 million to $100 million [14][16] - Advanced materials are expected to benefit from volume growth driven by circular economy initiatives, with growth rates projected at 20-30% [76] Market Data and Key Metrics Changes - The North American market for chemical intermediates is more profitable than the export market, with tariffs providing some protection against Chinese competition [17][18] - The company noted that inventory levels at customers are lower than in previous years, indicating a more cautious approach to inventory management following lessons learned from past overbuilding [66][68] Company Strategy and Development Direction - The company is focusing on innovation and volume growth in advanced materials and fibers, targeting applications outside of core specialty businesses to drive asset utilization [34][35] - The company is committed to maintaining margins while sharing some raw material cost advantages with customers in a weak market environment [36][37] - The strategic transition towards circular economy solutions, particularly in packaging and rPET, is a key focus area for future growth [31][59] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery in volumes, particularly in advanced materials, while acknowledging the ongoing challenges in the macroeconomic environment [25][29] - The company is taking proactive measures to manage costs and improve operational efficiency, with a focus on stabilizing the fibers business and enhancing the chemical intermediates segment [14][19] - Management highlighted the uncertainty in the macroeconomic landscape but remains focused on controlling internal factors to drive performance [44][50] Other Important Information - The company has faced regulatory challenges in Europe, leading to the discontinuation of certain crop protection products, which will impact earnings [53] - The decline in the quality of mechanically recycled PET (rPET) has been noted, reinforcing the company's value proposition for chemical recycling solutions [59] Q&A Session Summary Question: Actions taken regarding fibers and impact on earnings - Management discussed the stabilization of the fibers business and the impact of tariffs and consumer pressure on earnings, noting a $30 million decline in the textile business due to tariff-driven issues [5][6] Question: Reducing earnings volatility in chemical intermediates - The E2P project to convert ethylene to propylene is expected to significantly improve earnings and reduce volatility in the chemical intermediates segment [14][16] Question: EPS bridge from Q1 last year to this year - Management explained the challenges of comparing Q1 to the previous year due to a strong growth scenario last year, with expectations for modest recovery in volumes [20][25] Question: Inventory levels at customers - Management indicated that inventory levels are lower than in previous years, with customers being more cautious in their purchasing strategies [66][68] Question: High-purity solvents in semiconductor markets - The high-purity solvents business is growing at 20-30% and contributes positively to earnings, although it is not a large product line [76]

These slides should be reviewed with the accompanying prepared remarks posted on our website. Forward-looking statements The information in this release and other statements by the company may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act with respect to, among other items: projections and estimates of earnings, revenues, volumes, pricing, margins, sales, cost reductions, expenses, taxes, liquidity, capital expenditures, cash flow, dividends, share rep ...

Core Insights - VEON Ltd. has entered a strategic cooperation agreement with MeetKai to develop next-generation large language models for local-language AI services across its operating markets [1][2][3] Group 1: Partnership Details - The partnership aims to create nationally governed AI capabilities that are culturally fluent and securely operated within each country's borders [2] - MeetKai's Sovereign AI platform will provide a customizable national AI stack, allowing countries to govern the training, hosting, and deployment of AI models [2][3] - The collaboration will enable VEON to offer AI digital services to over 150 million customers in Kazakhstan, Uzbekistan, Ukraine, Pakistan, and Bangladesh [3] Group 2: AI Service Applications - The new AI services will span various sectors, including education, healthcare, agritech, public services, and enterprise productivity [3] - AI agents similar to QazCode's Aventa will be developed to operate across multiple languages and cater to local community needs [3][4] Group 3: Company Backgrounds - QazCode is recognized for its leadership in developing large language models for under-resourced languages and has previously launched the first Kazakh large language model, KazLLM [5] - MeetKai specializes in post-training optimization and local-language reasoning models, providing a platform for governments and enterprises to build sovereign AI ecosystems [6] - VEON serves nearly 150 million connectivity users and 140 million digital users across five countries, focusing on technology-driven services that promote economic growth [8]

Financial Data and Key Metrics Changes - The company is experiencing a challenging environment with a projected decline in full-year volumes, specifically around 4% in Advanced Materials (AM) and 2% in AFP [10][11] - Cost reduction efforts have been significant, with $75 million achieved this year and a target of $100 million for the next year [12][76] - The company anticipates a utilization tailwind of $50-$75 million depending on volume growth in the upcoming year [12][56] Business Line Data and Key Metrics Changes - The Advanced Materials segment is expected to see a decline of approximately 4% for the full year, while AFP is projected to decline by around 2% [10][11] - The fibers business is facing cyclical challenges, particularly in textiles, which have seen a significant headwind due to tariffs and market conditions [34][49] - The company is optimistic about the ARPET capacity conversion, expecting a significant increase in volume and revenue from this initiative [19][20] Market Data and Key Metrics Changes - Consumer durable demand is projected to be 5-15% below 2019 levels, impacting the overall market dynamics [29] - The company is seeing a mixed impact from trade regulations, with tariffs providing some protection to margins in North America [43][44] - The North American market remains attractive due to higher margins, but demand has been affected by the ongoing manufacturing recession [42][44] Company Strategy and Development Direction - The company is focusing on innovation as a core part of its strategy, particularly in the circular polyester methanolysis plant and other specialty products [13][84] - There is an emphasis on aggressive cost management alongside innovation to navigate the current market challenges [12][84] - The company is exploring opportunities for portfolio optimization and potential M&A to enhance its competitive position [84][85] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the chaotic market conditions and the difficulty in predicting demand trends due to inventory levels and consumer behavior [72][74] - There is cautious optimism regarding a potential recovery in demand, particularly in the first quarter of the next year [25][74] - The company is committed to maintaining cash flow and dividend stability while navigating the current economic environment [67][76] Other Important Information - The company has completed $50 million in buybacks in addition to its dividend in Q3, maintaining a disciplined approach to capital allocation [51][76] - The management has indicated that the headcount reduction of 7% is part of a broader strategy to enhance productivity and competitiveness [76][78] Q&A Session Summary Question: Can you help with the bridge to 2026? - Management discussed the importance of considering full-year EBIT and the impact of cost savings and asset utilization on future earnings growth [6][8] Question: What is the status of the ARPET capacity conversion? - Management confirmed that the Kingsport plant is running well, with expectations for a 30% capacity expansion and strong customer interest in ARPET [17][19] Question: How should earnings ramp from Q4 to Q1? - Management indicated that the asset utilization headwind will turn into a tailwind, with expectations for improved demand in Q1 [22][25] Question: What is the outlook for CI earnings next year? - Management noted that while the market is currently loose, there are signs of capacity rationalization that could improve earnings in the future [42][43] Question: Are there structural supply issues in China affecting earnings? - Management clarified that while there are competitive pressures, the majority of challenges are cyclical rather than structural [48][50] Question: What is the status of the Pepsi contract? - Management explained that the restructuring of the Pepsi contract is aimed at pulling forward volume to next year, reflecting strong interest in ARPET [40][41] Question: Will the company continue its streak of annual dividend increases? - Management expressed confidence in maintaining the dividend, supported by strong cash flow [66][67]

Financial Data and Key Metrics Changes - The company is experiencing a significant decline in volumes, with Advanced Materials (AM) expected to be down around 4% and Advanced Functional Products (AFP) down around 2% on a full-year basis [8][12] - The company anticipates a $100 million cost reduction target for next year, building on $75 million achieved this year [11][68] - The company expects a meaningful increase in revenue from the circular polyester methanolysis plant, contributing positively to EBITDA [12][23] Business Line Data and Key Metrics Changes - The fibers business is facing cyclical headwinds, particularly in textiles, which have seen a significant drop in demand due to tariffs and market conditions [30][42] - The company is optimistic about the ARPET capacity conversion, expecting a significant step up in volume and revenue from this project [19][20] - The CI (Chemical Intermediates) segment is expected to benefit from increased volume and aggressive cost management, although it is currently in a manufacturing recession [38][40] Market Data and Key Metrics Changes - Consumer durable demand is projected to be 5-15% below 2019 levels, impacting the overall market dynamics [27] - The North American market is experiencing a mixed impact due to trade wars and lower demand in building construction and consumer durables [39][40] - The company is seeing some recovery in demand for specialty plastics, with customers planning for higher orders in Q1 [67] Company Strategy and Development Direction - The company is focusing on innovation as a core part of its strategy, aiming to regain market share and drive growth through new product launches [12][76] - There is an emphasis on aggressive cost management to enhance competitiveness in a challenging market environment [68][76] - The company is exploring opportunities for portfolio optimization and potential M&A to adapt to industry changes [76][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the chaotic market conditions and the challenges posed by inventory levels and consumer demand [64][66] - There is cautious optimism about a potential recovery in demand as economic conditions stabilize [40][66] - The company is committed to maintaining its dividend and managing cash flow effectively, with expectations of strong cash generation in 2026 [60] Other Important Information - The company has completed its buyback program for the year while maintaining net debt levels [47] - A headcount reduction of 7% is part of the cost-cutting measures, aimed at improving productivity and competitiveness [68][70] Q&A Session Summary Question: Can you help with the bridge to 2026? - Management discussed the importance of considering full-year EBIT and the impact of cost savings and asset utilization on future earnings [5][6] Question: What is the status of the ARPET capacity conversion? - Management confirmed that the Kingsport plant is running well, with 90% yields and plans for a 30% capacity expansion [16][20] Question: How is the Renew product performing in the market? - Management noted strong interest from over 100 customers, but actual volume purchases are limited by soft consumer durable markets [26][27] Question: What are the expectations for fibers next year? - Management explained that the fibers business is facing cyclical challenges, but they expect to stabilize volumes and regain market share [30][32] Question: What is the outlook for the Pepsi contract? - Management indicated that the restructuring of the Pepsi contract is aimed at pulling forward volume into next year, which is seen as a positive development [36][57] Question: How should we think about CI earnings next year? - Management highlighted that CI earnings could improve due to increased volume, cost reductions, and potential recovery in demand [40][41]

Financial Performance - 3Q25 revenue was $2,202 million, compared to $2,464 million in 3Q24, a decrease of 11%[7] - 3Q25 adjusted EBIT was $210 million, compared to $366 million in 3Q24[7] - The adjusted EBIT margin for 3Q25 was 9.5%, down from 14.9% in 3Q24[7] - Adjusted EPS for 3Q25 was $1.14, compared to $2.26 in 3Q24[7] Cost Reduction and Cash Flow - The company is on track to reduce its cost structure by more than $75 million in 2025 and an additional ~$100 million in 2026[6] - The company demonstrated progress on inventory actions, with an approximately $200 million reduction from second-quarter 2025 levels[6] - The company returned $146 million to shareholders through dividends and share repurchases[6] - Expect FY25 operating cash flow approaching $1 billion[41] Circular Economy Platform - The Kingsport methanolysis facility is expected to contribute $60 million-$65 million of incremental EBITDA in FY25[41] - 4Q25 revenue from the Kingsport methanolysis facility is expected to be at a $100 million to $125 million annualized rate[16]