EASTMAN CHEMICAL CO Q4 FY2024 earnings call

• AM recovered from 2023 challenges, with circular platform growth and innovation driving growth despite macroeconomic headwinds like natural gas prices and currency. - Kingsport methanolysis plant showed operational improvement, with teams having invested to get the plant running. - Texas project under DOE contract, seen as fitting President Trump's agenda on US manufacturing, reshoring, and energy independence. - AFP had a great year, with better-than-expected performance due to volume mix, raw-material flow-through, and fills. - Fibers' strong margins expected to normalize at attractive levels, with cost-reduction actions and innovation investments. - $50M net cost reduction plan for 2025 across all segments, focusing on optimizing operations and cost competitiveness.

Advanced Materials (AM) recovered earnings from a challenging environment, with circular platform growth expected to contribute $50 million of the $75M-$100M guide for the company. AFP had strong earnings in the fourth quarter, benefiting from better volume mix, raw-material flow-through, and fills. Fibers had good margins for the third year in a row, with guidance looking strong. Chemical intermediates (CI) had different performance trends compared to specialties, with CI tending to move in opposite directions.

• AM guidance has headwinds in first half with costs, but circular economy back-half loaded and cost benefits to build through year. - Kingsport contribution had modest end to 2024, but well-positioned for strong operating leverage in 2025. - AFP expected to have continued earnings improvement with growth in stable markets and innovation. - Fibers guidance looks good, with expectations of normalization at attractive levels. - CapEx around $350M base, with Longview, Texas site a large growth project, and buybacks with financial flexibility.

• Macroeconomic challenges impacting market demand and brand commitments to recycled plastic targets. - Natural gas prices and currency acting as headwinds for AM. - Trade tariffs and potential retaliatory tariffs posing risks to US exports. - Competitive pressures in chemical intermediates segment.

Q: James Cannon asked about AM guidance and Kingsport contribution.

A: Mark Costa discussed AM's recovery, macroeconomic challenges, and Kingsport's operational improvement.

Q: David Begleiter asked about Texas project DOE funding and trade tariffs.

A: Mark Costa spoke about Texas project alignment with Trump's agenda and trade concerns.

Q: Mike Sison asked about AFP's strong fourth quarter and fibers' margins.

A: Mark Costa explained AFP's better-than-expected performance and fibers' outlook.

Q: Aleksey Yefremov asked about AM outlook and filter tow contracts.

A: Mark Costa discussed AM's dynamics and multi-year contracting for filter tow.

Q: Vincent Andrews asked about methanolysis plant volume sales and consumer brands' recycled plastic targets.

A: Mark Costa talked about volume sales funnel and brand commitment to recycled content.

Q: Frank Mitsch asked about $50M cost reduction and auto customers' expectations.

A: William McLain and Mark Costa discussed cost reduction segments and auto sector expectations.

Q: Jeff Zekauskas asked about operating cash flow and segment correlation.

A: William McLain and Mark Costa explained operating cash flow and segment movement differences.

Q: Patrick Cunningham's team asked about AM raw materials and AFP strategy.

A: William McLain and Mark Costa discussed raw materials and AFP strategy.

Q: Salvator Tiano asked about Kingsport methanolysis and capital allocation.

A: Mark Costa and William McLain talked about Kingsport's business and capital allocation.

Q: Michael Leithead asked about fibers' product and regulatory uncertainty.

A: Mark Costa discussed fibers' product and regulatory impact.

Q: Arun Viswanathan asked about circular efforts and Q1 outlook.

A: Mark Costa answered on circular efforts and Q1 outlook.

Q: John Roberts asked about solar heat transfer fluid.

A: Mark Costa discussed solar heat transfer fluid diversification to LNG.