Eastman Chemical Company · NYSE:EMN
Eastman Chemical — Investor Day (December 2021)
113 slides from Eastman Chemical's investor day presentation, Dec 7, 2021
Slide 1: Innovation Day, Tuesday, December 7
Tuesday, December 7 eastman.com
Slide 2: Public webcast, forward-looking statements, non-GAAP measures
Public webcast These slides should be reviewed with the public webcast presentations to which they relate, a replay of which is posted on our website at “investors.eastman.com.” Forward-looking statements During these presentations, we make certain forward-looking statements concerning plans and exp
Slide 3: Eastman Executive Team
Eastman Executive Team Mark J. Costa Lucian Boldea Stephen G. Crawford Brad A. Lich Kellye L. Walker Chairman and Executive Vice President, Executive Vice President, Executive Vice President and Executive Vice President and Chief Executive Officer Additives & Functional Products Technology and Chief
Slide 4: Today's agenda and presenters
Today’s agenda and presenters Welcome and Overview Mark Costa Innovation and Sustainability Steve Crawford Advanced Materials Brad Lich B R E A K Additives & Functional Products Lucian Boldea Chemical Intermediates Financial Overview Willie McLain Closing Mark Costa Q&A Executive Team L U N C H 4
Slide 5: Tremendous progress since 2018
Tremendous progress since 2018 • >$1.5B of new business revenue from our innovation-driven growth model1 • Building world’s largest plastic-to-plastic molecular recycling facility with additional projects in development • Commitment to reduce carbon emissions by 1/3 by 2030, carbon neutrality by 205
Slide 6: Key themes you will hear today
Key themes you will hear today Innovation-driven Circular economy is Strengthening Sustainability and Power of cash growth model a new vector of execution to convert ESG are integrated flow and the is succeeding significant growth growth to value into how we win balance sheet 6
Slide 7: Innovation-driven growth model is succeeding
Innovation-driven growth model is succeeding Unique model driving growth above underlying markets Specialty growth across the company leveraging disruptive sustainability trends Product mix upgrade from innovation delivering strong earnings growth, margin improvement, and higher ROIC 7
Slide 8: Unique innovation-driven growth model delivers consistent, sustainable value
Unique innovation-driven growth model delivers consistent, sustainable value World-Class Differentiated Relentlessly Technology Application Engage Platforms Development the Market Significant integration and scale enable innovation, reliability and cost advantage Advantaged growth and execution capa
Slide 9: We are in a Global Crisis
CLIMATE We are in a Global Crisis PLASTIC WASTE 10 BILLION 9
Slide 10: Leveraging disruptive macro trends -- Triple Challenge
Leveraging disruptive macro trends remains central to our growth strategy -- Triple Challenge CARING FOR SOCIETY CLIMATE CIRCULARITY (HEALTH AND WELLNESS) • BPA-free TritanTM copolyesters in consumer • SaflexTM interlayers enabling thermal Polyester renewal technology (PRT) applications and medical
Slide 11: >$2B of New Business Revenue from innovation 2018–2022F
>$2B of New Business Revenue1 from innovation 2018–2022F 600 100% of top innovation 500 programs driven by sustainability trends 400 Circular economy expected to $M 300 add substantial growth 200 beginning in 2023 100 Some delayed demand from 0 2018 2019 2020 2021F 2022F 2020 being served in 2021 On
Slide 12: Accelerated earnings driven by mix upgrade through innovation
Accelerated earnings driven by mix upgrade through innovation-driven organic growth and portfolio upgrade1 2021F EBITDA margin2 Product mix improvement Unit variable ($/kg) Variable margin CI AFP Fibers AM 10 11 12 13 14 15 16 17 18 19 20 0 20 F 20 F 20 F F 21 22 23 24 2 20 20 20 20 20 20 20 20 20 2
Slide 13: Integration is a source of value creation
Integration is a source of value creation on multiple dimensions, including circular economy Additives & Functional Products Cellulose and Wood pulp/ acetyl stream Advanced Materials Enables innovation and coal/olefins Chemical Intermediates Fibers circular economy Additives & Functional Products Se
Slide 14: Circular economy is a new vector of significant growth
Circular economy is a new vector of significant growth Global brands making significant commitments to reduce plastic waste and climate impact Eastman is a leader in molecular recycling technologies addressing plastic waste and climate, scaling up across the world Circular economy creating new growt
Slide 15: Creating value from waste: Polyester renewal technology
Creating value from waste: Polyester renewal technology Feedstocks End products 20%–30% LOWER GHG Polyester renewal technology PET waste including colored PET, films, and fibers from textiles and carpets 15
Slide 16: Potential for >$450M of EBITDA from PRT molecular recycling projects by 2026
Potential for >$450M of EBITDA from PRT molecular recycling projects by 2026 Our ‘circular contracting’ model to Projected timeline for completion of PRT projects scaling up PRT technology Projects in Additional projects Building facilities to provide development copolyester, PET and textiles Engine
Slide 17: Biodegradable cellulosic biopolymer with carbon renewal technology
Creating value from bio-content and waste: Biodegradable cellulosic biopolymer with carbon renewal technology Feedstocks End products Wood pulp from sustainably (~60% bio-content, ~40% from recycled plastic waste) managed forests 20%–50% LOWER GHG1 Carbon A wide array of mixed plastic renewal waste,
Slide 18: Strengthening execution to convert growth to value
Strengthening execution to convert growth to value Building our technology and application development Building our commercial capability Continuously improving our cost structure Optimizing our portfolio and sites 18
Slide 19: Advantaged growth through investing in enhanced capabilities
Advantaged growth through investing in enhanced capabilities Innovation Execution Added or redeployed Application >200 FTEs Commercial center development dedicated to of excellence application development and market engagement since 2018 Corporate analytical Supply chain center and fundamental R&D o
Slide 20: Sustainability and ESG are integrated into how we win
Sustainability and ESG are integrated into how we win Reducing absolute GHG Scope 1 and 2 emissions by 1/3 by 2030 and committed to achieving carbon neutrality by 2050 Focused on attracting, developing, and retaining a diverse workforce while promoting a welcoming, inclusive culture Committed to con
Slide 21: We're going carbon neutral: Pathway to 2050
We’re going carbon neutral: Pathway to 2050 Energy efficiency Process transformation Renewable energy Technology breakthroughs 21 21
Slide 22: Bold commitments to care for people and society
Bold commitments to care for people and society Twice the Double-digit number of growth in women in racially and leadership ethnically roles to diverse talent achieve at all levels gender parity Continue to Ensure LGBTQ ensure pay equity team members (audited by third are visible, fully party) and n
Slide 23: Committed to improvement: Measuring our success
Committed to improvement: Measuring our success 2030 goal: Increase representation of 2030 goal: 50% representation of women in racially and ethnically diverse employees professional and leadership roles to above industry levels Leadership Leadership Professional1 Professional1 1Professional-level *
Slide 24: Power of cash flow and the balance sheet
Power of cash flow and the balance sheet Expect ~$5B of operating cash flow over next 3 years Additional ~$1B of cash from balance sheet with earnings growth by 2024 at ~2.5x net debt to EBITDA Capital allocation will remain disciplined - Investment in organic growth - Investment in circular economy
Slide 25: Strong cash flow and balance sheet to fund growth and return cash
Strong cash flow and balance sheet to fund growth and return cash to stockholders Use of ~$4.5B operating Use of >$6B of cash and cash flow 2019–2021F debt 2022F–2024F1 Capital expenditures Capital expenditures Stockholder returns Stockholder returns, and bolt-on M&A bolt-on M&A, and potential capit
Slide 26: Resilient margin stability in line with specialty peers
Resilient margin stability through challenging economic environment in line with specialty peers Adjusted EBITDA Margin1 23% Growing faster than our end markets through our growth model 21% 19% Innovation driving product mix upgrade 17% Disciplined spread management 15% 2018 2019 2020 2021E 2022E Di
Slide 27: Strong value creation expected going forward
Strong value creation expected going forward SPECIALTY Increasing PRODUCTS corporate >$1.6B 8%–12% 12%–15% growing annual adjusted RETURN ON EBITDA >2x MARGIN OPERATING EPS CAGR INVESTED underlying CASH FLOW 2021–2024 CAPITAL markets to ~23% Growth upside from circular economy projects in developmen
Slide 28: Why invest in EMN?
Why invest in EMN? Innovation-driven growth 0 F 24 GR 2 A model is succeeding 14 1 F– PS C $3,000 $2,950 0 2 E $2,900 $2,850 2 2% $2,800 $2,750 – 1 $2,700 12 % $2,650 8 $2,600 $2,550 $2,500 $2,450 Circular economy is a new $2,400 $2,350 vector of significant growth 10 0 – 2 021F $2,300 $2,250 $2,200
Slide 29: Sustainable Innovation
Sustainable Innovation Steve Crawford 29
Slide 30: Eastman: Materials that build a better world
Eastman: Materials that build a better world How we innovate AND how we operate 30 30
Slide 31: Unique innovation-driven growth model delivers consistent, sustainable value
Unique innovation-driven growth model delivers consistent, sustainable value World-Class Differentiated Relentlessly Technology Application Engage Platforms Development the Market Significant integration and scale enable innovation, reliability and cost advantage Advantaged growth and execution capa
Slide 32: We are in a Global Crisis
Enabling consumer energy efficiency We are in a Reduce and reuse Global Crisis Quality of life Product safety Recycled/bio content Biodegradation 32
Slide 33: Sustainable innovations: solutions for the triple challenge
Sustainable innovations: Contributing to solutions for the triple challenge of climate, circularity and caring for society Caring Business Growth product platforms Circular Climate for society Specialty plastics circular economy solutions (Renew) Advanced SaflexTM next-generation acoustic and head-u
Slide 34: Differentiated application development converts market complexity into value
Differentiated application development embraces and converts market complexity into sustainable value Differentiated Application Development Accelerates innovation by enabling deep understanding of how our products perform within the customer’s product Creates demand downstream by demonstrating valu
Slide 35: Sustained investment in application development results in advanced capability
Sustained investment in application development results in advanced capability Differentiated Application Development Technology, business and technical staff changes 600 500 ent t de velopm Functional films Engineering Textiles/ 400 Produc thermoplastics nonwovens 300 200 pment evelo ation d Applic
Slide 36: Cellulosic stream being reinvented
Cellulosic stream being reinvented: Bio-content, recycled content and biodegradability Beginning of life — responsibly sourced 60% bio-content from sustainably 40% certified2 recycled content sourced wood pulp1 End of life — certified biodegradable Range of biodegradation certifications Ocean biodeg
Slide 37: Naia: A sustainable fiber with a compelling value proposition
NaiaTM: A sustainable fiber with a compelling value proposition >25 brands now adopting NaiaTM NaiaTM growth now outpacing acetate tow decline Comfort ase cr e n 0%i ~4 Luxury 2018 2021F NaiaTM variable margin Ease of care 37
Slide 38: Differentiated application development platforms
Differentiated application development platforms convert scale and complexity into competitive advantage Differentiated Application Development Cellulosic biopolymers Coatings Engineering formulation Functional films thermoplastics Care additives Textiles Potential to generate >$200M EBITDA by 2027
Slide 39: World-class scalable technology platforms
World-class scalable technology platforms provide the foundation of competitive advantage and sustainable growth World-Class Scalable Technology Platforms Scalable technologies are expanding addressable markets in multiple applications Multigenerational product development that is protected by intel
Slide 40: Leveraging scale and integration for leadership positions
Leveraging scale and integration for leadership positions in key end markets World-Class Scalable Technology Platforms Cellulosic biopolymer Copolyesters Capacity Number of products Capacity Number of products 450 800 450 400 400 700 400 350 350 350 600 300 300 300 500 250 250 250 KMT KMT SKU SKU 40
Slide 41: Integration across multiple technology platforms delivers sustainable high margins
Integration across multiple technology platforms delivers sustainable high margins World-Class Scalable Technology Platforms 2021 variable margin ($/kg) Multi-technology platforms Technology platform #1 >2x Tritan in creas Tetrashield e Cellulose acetate butyrate (CAB) Cellulose acetate Technology T
Slide 42: Opportunities going to waste
Opportunities going to waste 300 million 16% Collected for mechanical recycling metric tons of plastic are 25% Incinerated produced globally Eastman molecular recycling 260 million 40% Landfill technologies are applicable to metric tons of plastic are these hard-to- recycle types of disposed of 19%
Slide 43: Plastics remain the most climate friendly materials in many applications
Reduce, Reuse, Recycle…Plastics remain the most climate friendly materials in many applications Carbon footprint of carbonated beverage containers (12 oz) Carbon footprint of carbonated beverage containers with 0% recycled content & NO renewable energy1 (multiple volumes) with recycled content & NO
Slide 44: Both mechanical and molecular recycling are required
Both mechanical and molecular recycling are required to eliminate waste and create a truly circular economy MECHANICAL RECYCLING Most carbon efficient when possible + MOLECULAR RECYCLING TECHNOLOGY Necessary to renew material and avoid end of life Eastman technologies deliver an improved Optimal GHG
Slide 45: How molecular recycling achieves a lower carbon footprint
How Eastman’s molecular recycling technologies achieve a lower carbon footprint Polyester is unique in that it can be efficiently unzipped directly into its basic building blocks vs. requiring total deconstruction into a complex array of molecular constituents. This eliminates multiple reaction and
Slide 46: Depolymerization and purification are competitive advantages
Depolymerization and intermediate purification are competitive advantages for Eastman >93% conversion polyester feedstock to intermediates Hard-to-recycle mixed polyester plastic waste Depolymerization Purification 30 years of experience in methanolysis 70 years of experience as a PET producer 100 y
Slide 47: Eastman is competitively advantaged across dimensions of circularity
Eastman is competitively advantaged across multiple dimensions of circularity Complements mechanical recycling, Enables achievement of sustainability goals consuming hard-to-recycle waste Improves life cycle analysis by 20%–30% No compromise in performance l nta Co at monomer level me mm Lowers non-
Slide 48: Eastman: Materials that build a better world
Eastman: Materials that build a better world How we innovate AND how we operate 48 48
Slide 49: Our commitment to carbon neutrality
Our commitment to carbon neutrality 10 8 Focused on absolute GHG reduction for more 6 than a decade Absolute emissions1 4 (Scope 1 + Scope 2, million MT CO2 eq.) CO2 emissions have been 2 reduced by 20% while we grew 0 revenue by >25% 2008 2017 2018 2019 2020 1As reported in CDP 49
Slide 50: Clear action plans for carbon footprint reduction by 2030
Clear action plans for carbon footprint reduction by 2030 Reduce 1/3 of Scope 1 and 2 carbon emissions • Convert steam boilers to less carbon-intensive fuel sources • Optimize combined heat and power by advanced modeling Eastman’s ~1/3 • Relentless energy efficiency efforts 2017 reduction emissions
Slide 51: Driving initiatives now to achieve 2050 carbon neutrality
Driving initiatives now to achieve 2050 carbon neutrality 2030–2050 Eastman’s • Continue with actions initiated for 2030 2017 Emissions • Increase energy efficiency with advanced ~ 8M MT waste heat recovery CO2e • Incorporate clean hydrogen into our feedstock and energy mix • Electrification for sui
Slide 52: Our progress is being noticed
Our progress is being noticed Partnerships, innovations, and commitments are being recognized 52
Slide 53: Advanced Materials
Advanced Materials Brad Lich 53
Slide 54: Advanced Materials has delivered exceptional performance
Advanced Materials has delivered exceptional performance Revenue by end market — first 10 months 2021 Other Adjusted EBIT markets $800 Consumables 10% 8% Transportation 32% $700 CAGR Medical and 0% pharma $600 8%-1 11% $500 Durables Building and and GR construction electronics $M $400 CA 14% 25% 16%
Slide 55: Foundation for success is innovation-driven growth model
Foundation for success is innovation-driven growth model World-Class Differentiated Relentlessly Technology Application Engage Platforms Development the Market Leader in specialty Prototyping and perform fitness- >50% of market engagement with polyester polymers for-use testing OEMs and leading bran
Slide 56: Great progress since 2018
Great progress since 2018 Delivered solid EBIT growth despite significant headwinds Outperformed key underlying markets 2018–2021F • Transportation sales volume/mix: AM 10% vs. global light vehicle builds 20%1 • Durables and electronics sales volume/mix: AM 23% vs. market 16% • Building and construc
Slide 57: Growth of premium offerings is fueling outperformance
Growth of premium offerings is fueling outperformance Paint protection films Saflex head-up display Tritan copolyester (HUD) interlayers t h h th ow w t row % gr gr o % g 24 % 84 54 2018 2021F 2018 2021F 2018 2021F Note: Charts on a variable margin basis 57
Slide 58: Paint protection film poised for continued above-market growth
Paint protection film poised for continued above-market growth Increasing adoption Longer ownership Across models Across vehicle Beyond premium cars Increasing coverage 12 9 yrs in Higher prices Increased global usage yrs 2021 % change in PPF relative to vehicles sold (2018 vs. 2021) in 2002 $43K Gl
Slide 59: Performance films: Positioned to grow PPF at >3x the underlying market
Performance films: Positioned to grow PPF at >3x the underlying market Gen 3 PPF vs. OEM paint 3x Next leading competitor Gen 3 PPF Core cutting software 3x brand preference Source: NPS score and Brand Equity study conducted by independent third- party research firm across U.S. automotive retail cha
Slide 60: Premium laminated glass market expanding with electrification
Premium laminated glass market significantly expanding with electrification of vehicles Greater use of laminated glass Premium glazing content Solar control interlayers in larger canopy glazing for comfort and extended battery life Acoustic interlayers in door and sunroof positions to ~3.5x greater
Slide 61: Premium interlayers: Positioned to grow >2x global auto builds
Premium interlayers: Positioned to grow >2x global auto builds 80 years of PVB Collaborating with electric vehicle Science of “noise” and “quiet” formulation expertise … OEMs on designing solutions Resin “Eastman is a great formulation collaboration partner, understands our needs Leading Manager R&D
Slide 62: 25%–50% recycled content by 2025
Plastic waste and climate crisis accelerating conversion to materials containing recycled content Plastic waste Brands committed to at least 25%–50% recycled content by 2025 Climate crisis 62
Slide 63: Commitments driving step change in demand for recycled polyester
Commitments driving a step change in demand and value of polyester polymers with recycled content Price of European PET 950 KMT $/metric ton of additional rPET supply in Europe by 2030 ~1,500 KMT Virgin PET of additional rPET supply in U.S. by 2030 Recycled PET Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan
Slide 64: Investment in world's largest polyester material recycling facility
Positioned for leadership with investment in world’s largest polyester material recycling facility Kingsport, Tenn., circular economy project >110 KMT Methanolysis facility Polyester polymerization facility 150–200 KMT of polymer with waste plastic used as recycled content annually feedstock annuall
Slide 65: Developing advantaged feedstock position
Significant progress on developing advantaged feedstock position Buy w aste strea ms BUY Actively engaged 125+ potential suppliers Green PET U.S. generates Fines and d ust PET waste Eastman uniquely >9 billion kg PARTNER Partner to provide outlets for difficult-to- Advantaged advantaged with proprie
Slide 66: Renew polymers gain momentum with leading brands
Renew polymers continue to gain momentum in the market and adoption by leading brands 66 66
Slide 67: Renew polymers positioned to grow ~4x global cosmetics market
Renew polymers positioned to grow ~4x global cosmetics market Cristal EB Renew Excellent clarity and gloss for bottles Cristal EN Renew RIC1 resin for Cristal 400 Renew thinner-walled parts Brilliant color Cristal AN and Tritan Renew Cristal One and Cristal CN Renew Durability for Excellent chemical
Slide 68: Renew polymers penetrate new markets
Renew polymers positioned to penetrate new markets as brands drive for circular solutions Collaborating with Stanley Black & Decker to deliver the world’s first power tool made from recycled material 68
Slide 69: Proven market activation capabilities
Proven market activation capabilities enabling accelerated penetration of new markets 2020 2021 2022 Leading retailers Leading brands Many new brands launching Rapid response by variety of brands set ambitious actively begin products aligned to new Samsung and manufacturers across the market sustain
Slide 70: A proven formula for industry-leading earnings growth
A proven formula for delivering industry-leading earnings growth ATTRACTIVE END- PRODUCT MIX FIXED COST MARKET GROWTH UPGRADE LEVERAGE Expected end market growth rate Volume growth rate Average price Fixed cost per unit continues to 2021F–2024F 2021F 2021–2024 incrementally decrease 10.0% 10% de 20%
Slide 71: Uniquely positioned to build a circular platform beyond durables
Uniquely positioned to build a circular platform beyond durables Performance 30 years’ without experience in methanolysis compromise 70 years’ “Drop-in” replacement "Making this package change to Eastman Renew materials reduces the brand's experience as a PET producer for current products dependence
Slide 72: Our strategy for building a circular packaging platform
Our strategy for building a circular packaging platform Our ‘circular contracting’ approach Project overview to scaling up PRT technology Mixed plastic Circular economy Polyester • Building facilities to provide processing recycling facility polymerization facility PET and textile products • Long-te
Slide 73: Potential for >$450M of EBITDA from PRT projects by 2026
Potential for >$450M of EBITDA from PRT molecular recycling projects by 2026 Projected timeline for completion of PRT projects In active discussions with Projects in Additional projects partners on both European development and U.S. projects Engineering, 2nd U.S. procurement and project construction
Slide 74: Advanced Materials: ~15% adjusted EBIT CAGR 2021F–2024F
Advanced Materials: ~15% adjusted EBIT CAGR 2021F–2024F Specialty products growing >2x underlying markets >20% adjusted EBIT margin ~15% adjusted EBIT CAGR Core growth and Spread Net Growth 2021F market development normalization cost savings investments 2024F Growth upside from circular economy proj
Slide 75: Additives & Functional Products and Chemical Intermediates
Additives & Functional Products and Chemical Intermediates Lucian Boldea 75
Slide 76: A more focused AFP
A more focused AFP $>2.6B >$450M ~17% 2021F REVENUE 2021F EBIT Adjusted EBIT MARGIN 2021F Underlying AFP portfolio significantly more resilient Revenue by end market – first 10 months 20211 Durables and electronics Transportation 8% 16% Consumables $800 20% 10% Water Personal $600 15% treatment care
Slide 77: Great progress since 2018
Great progress since 2018 Resilient performance across the core portfolio due to innovation, market development, and attractive, stable end markets Outperformed key underlying markets 2018–2021F • Coatings additives sales volume/mix: AFP 8% vs. market 4% • Personal care sales volume/mix: AFP 10% vs.
Slide 78: Foundation for success is innovation-driven growth model
Foundation for success is innovation-driven growth model World-Class Differentiated Relentlessly Technology Application Engage Platforms Development the Market Leader in cellulosic biopolymers A global leader in specialty additives Macrotrend-driven needs in the underpinned by integration, for formu
Slide 79: Strong growth of high-value products
Strong growth of high-value products1 Auto coatings additives Care additives Animal nutrition Specialty ketones Home and personal care Formulations wtthh thh wtthh w % groow groo w wt % groo 14 % 7 140 2 14 2018 2021F 2018 2021F 2018 2021F Innovation-driven growth model at work: Multigenerational pr
Slide 80: Coatings additives: expected to grow EBIT at mid-single-digit CAGR
Coatings additives: Ingredients of a great specialty business expected to grow EBIT at mid-single-digit CAGR EBIT margins above AFP Provides critical performance Category leadership in Innovations will grow and segment average with attractive to end product while being enabling appearance gain, dive
Slide 81: Growth in BPA-NI metal packaging
Sustainability trends and performance preferences driving significant growth in BPA-NI metal packaging BPA-NI can-coating market size by application Sparkling water, Canned food, High-performing and seltzers, beer, soft drinks pet food scalable Tetrashield technology targets BPA-NI beverage ~4x BPA-
Slide 82: Tetrashield MP resins positioned to grow 3x metal packaging market
Tetrashield MP resins positioned to grow 3x fast-growing metal packaging market Tune Tritan-based clean Science of chemical resistance Collaborating across value chain chemistry for can coatings to protect ‘hard to hold’ foods … on designing solutions Market validation and growing sales globally Ace
Slide 83: Care additives drive superior value and sustainable performance
Care additives drive superior value and sustainable performance Double-digit EBIT Innovation driven Safe and sustainable Proprietary application Global market leader growth supported by by disruptive solutions, supported development and with strong integrated attractive global end megatrends and by
Slide 84: The microplastics challenge
The microplastics challenge … ~42,000 tons of microplastics end up in the environment annually, accumulating in the ecosystem and then consumed by humans via marine and animal food sources What is it? Where are What function do Environmental they found? they serve? impact Microplastics are fragments
Slide 85: Significant opportunity leveraging cellulosic technology platform
… Results in a significant opportunity leveraging our world-class cellulosic technology platform Microplastics are being banned. The U.S. Microbead-Free Waters Act of 2015 prohibits the manufacturing, packaging and distribution of rinse-off cosmetics containing plastic microbeads. The European Chemi
Slide 86: Cellulosic biopolymers help solve the microplastics challenge
Our cellulosic biopolymers combine sustainability and performance to help solve the microplastics challenge Eastman proprietary cellulosics demonstrate high … while offering the same functionality (oil biodegradability in fresh water … uptake) as the currently used microplastics 60% biodegraded in 6
Slide 87: Feed additives growth driven by replacement of antibiotic growth promoters
Feed additives growth driven by replacement of antibiotic growth promoters and other materials of concern Organic acid-based feed additive market size by application Preservation and hygiene: Gut health: Grain, feed and by-products Acidification and intestinal health ~5% CAGR ~8% CAGR $1.3B Excellen
Slide 88: Integration and application development driving value for feed additives
Integration and application development investments driving increased value creation for feed additives Acid Synergistic acid Controlled delivery of Future state: Animal ingredients formulations active ingredients health solutions Innovation model Bacteria growth inhibition (%) Butyric 5x acid more
Slide 89: Specialty fluids & energy: product and service innovations driving growth
Specialty fluids & energy: Market-leading product and service innovations driving growth Leading solution provider Robust EBIT growth above segment average Heat Transfer Fluids at mid- to high-single-digit CAGR Broad portfolio of fluids, including Therminol®, Product innovations based on health and
Slide 90: AFP: 6%–8% adjusted EBIT CAGR 2021F proforma–2024F
Additives & Functional Products: 6%–8% adjusted EBIT CAGR 2021F proforma–2024F Specialty products growing >2x underlying markets 12%– ~20% adjusted EBIT margin 15% Core growth 6%-8% adjusted EBIT CAGR Spread Net Growth 2021F Less divested 2021F and market normalization investments 2024F cost savings
Slide 91: Chemical Intermediates plays a critical role in our specialty portfolio
Chemical Intermediates plays a critical role in our specialty portfolio Vital role supporting specialty growth Actions to improve CI §Scale and integration • Operational cost improvements in largest assets §Circular feedstocks supporting CRT and PRT Improved cost • Closed Singapore site §Provides si
Slide 92: Functional amines: Growing faster than ag end market
Functional amines: Growing faster than ag end market, provides scale, integration and base of stable earnings Resilient growth continues beyond 2021 with stable margins above corporate average Exclusive relationship with Corteva1 for Long-term relationships top proprietary growth program with blue c
Slide 93: E2P: Enhanced operating flexibility creates lower volatility
E2P: Enhanced operating flexibility creates lower volatility and improved earnings potential in all ethylene market conditions Ethylene to Propylene (E2P) investment Annual cracker earnings under different ethylene spread scenarios1 • Enables the elimination of Compressed Mid-cycle Expanded merchant
Slide 94: Actions taken have raised CI normalized EBIT to >$300M
Actions taken have raised CI normalized EBIT to >$300M with reduced volatility Earnings volatility Earnings volatility (10)%–10% (20)%–20% Earnings volatility (30)%–25% Cost savings, CI product Downstream CI product net of mix upgrade Downstream Ethylene to specialty mix upgrade inflation specialty
Slide 95: Financial overview
Financial overview Willie McLain 95
Slide 96: Segment summaries 2021F–2024F
Segment summaries 2021F–2024F Advanced Materials Additives & Functional Products SPECIALTY 6%–8% SPECIALTY Adjusted ~15% PRODUCTS growing Adjusted PRODUCTS growing EBIT margin EBIT margin >2x >20% Adjusted EBIT CAGR >2x ~20% Adjusted EBIT CAGR underlying markets underlying markets Chemical Intermedi
Slide 97: Established track record of creating value
Established track record of creating value 1,2 Adjusted EPS CAGR: 2010 - 2022E Adjusted EBITDA margin 12% 23% 21% 8% 19% 4% 17% 15% 0% 2018 2019 2020 2021E 2022E Eastman Specialty peers Eastman Specialty peers Conversion of adjusted EBITDA into FCF: Adjusted ROIC average (2018 - 2022E) Average 2018
Slide 98: Fueling growth through aggressive productivity improvement
Fueling growth through aggressive productivity improvement >$600M of structural cost savings Business •Build empowered, agile business teams 2018–2022F Operating •Preferential investments to fuel growth •Empower Centers of Excellence to accelerate and Model sustain performance Integrated •Enable cus
Slide 99: Resilient operating cash flow ~$5B 2022–2024F
Resilient operating cash flow ~$5B 2022–2024F Operating cash flow 2018–2024F Operating cash flow growing $1,800 ~$5B with our businesses $1,600 $1,400 $1,200 Sustained working capital $M $1,000 discipline in line with growth $800 $600 $400 2020 operating cash flow $200 negatively impacted by $- COVI
Slide 100: Targeted capital expenditures funding organic growth
Targeted capital expenditures funding organic growth Capital expenditures 2018–2024F ~$300M annual maintenance capital $800 8% ~$2B of capital expenditures $700 7% 2022–2024 $600 6% ~$425M capital expenditure $500 5% for Kingsport, Tenn., circular $M $400 4% economy project $300 3% >12% expected ret
Slide 101: Strong cash flow and balance sheet to fund growth and return cash
Strong cash flow and balance sheet to fund growth and return cash to stockholders Use of ~$4.5B operating Use of >$6B of cash and cash flow 2019–2021F debt 2022F–2024F1 Capital expenditures Capital expenditures Stockholder returns Stockholder returns, and bolt-on M&A bolt-on M&A, and potential capit
Slide 102: Top-tier balance sheet and liquidity
Top-tier balance sheet and liquidity Manageable public debt maturities $1,000 $800 USD-denominated $M $600 borrowings $400 Euro-denominated borrowings $200 $- 2022 2023 2024 2025 2026 2027 2028 2042 2044 Net debt/adjusted EBITDA 3.0 2.5 2.0 2018 2019 2020 2021 Remain committed to solid investment-gr
Slide 103: Decisive portfolio management creating value
Decisive portfolio management creating value Divesting … Adding specialty bolt-ons ... Investing in organic growth … ~$1.1B of revenue from Investing in additional non-strategic businesses circular projects in 2021 • Kingsport, Tenn., project • European project >10x combined • 2nd U.S. project trans
Slide 104: Long history of capital returns is accelerating
Long history of capital returns is accelerating Dividends per share CAGR ~11% Expect to repurchase ~$2B of shares (2012–2022F) 1600 during 2021–2022 using free cash flow and divestiture proceeds $3.50 1400 $3.00 1200 $2.50 1000 ~$2B $M $2.00 800 $1.50 600 $1.00 400 $0.50 200 $- 0 2012 2014 2016 2018
Slide 105: A sustained high level of returns as the company grows
A sustained high level of returns as the company grows Return on invested capital (ROIC) 15% Earnings 10% Innovation- Innovation- driven Driven Cash growth Growth ROIC 5% flow 0% 2021F 2024F Expect ROIC to approach 15% as the company grows in a disciplined manner 105
Slide 106: Position of strength
Position of strength Maintain capital structure that provides financial flexibility to invest for growth and reward stockholders Strong balance sheet and sufficient liquidity foundation for growth Continue to improve ROIC with an expectation to approach 15% Strong execution track record enables sust
Slide 107: Closing comments
Closing comments Mark Costa 107
Slide 108: Why invest in EMN?
Why invest in EMN? Innovation-driven growth 0 F 24 GR 2 A model is succeeding 14 1 F– PS C $3,000 $2,950 0 2 E $2,900 $2,850 2 2% $2,800 $2,750 – 1 $2,700 12 % $2,650 8 $2,600 $2,550 $2,500 $2,450 Circular economy is a new $2,400 $2,350 vector of significant growth 10 0 – 2 021F $2,300 $2,250 $2,200
Slide 109: Appendix
Appendix 109
Slide 110: Glossary of terms and acronyms
Glossary of terms and acronyms All amounts are in billions (“B”) or millions (“M”) unless otherwise indicated Commodity/Diversified peers include: BASF, Celanese, Chemours, Dow, Huntsman, LyondellBasell, Westlake Specialty peers include: 3M, Albemarle, Arkema, Ashland, Avient, Dupont, FMC, PPG, Solv
Slide 111: Glossary of terms and acronyms
Glossary of terms and acronyms “GHG” is green house gas “I&D” is Inclusion & Diversity “ICE” is internal combustion engine “KG” is kilogram “KMT” is kilo metric ton “Net Debt to EBITDA” Ratio is defined as Total Debt less cash and cash equivalents divided by Adjusted EBITDA. “Net Debt” is total borr
Slide 112: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA to Net Earnings reconciliation (Dollars in millions) 2018 2019 2020 Net earnings $ 1,084 $ 762 $ 489 Plus: Depreciation 438 450 445 Amortization 166 161 129 Net interest expense 235 218 210 Provision (benefit) for income taxes 226 140 41 EBITDA $ 2,149 $ 1,731 $ 1,314
Slide 113: Adjusted ROIC
Adjusted ROIC NON -GAAP ($ in millions) 2018 2019 2020 Adjusted net earnings 1,172 988 839 Plus Interest expense, net of tax 178 166 160 Total 1,350 1,154 999 Average Debt 6,354 5,975 5,701 Average Equity 5,513 6,041 6,171 Total Average Investment 11,867 12,015 11,872 Adjusted ROIC 11.4% 9.6% 8.4% N
Eastman Chemical Company — Investor Day (December 2021) on 6ix