Eastman Chemical : Q4 2021 Financial Results Prepared Remarks

Eastman Q4 & FY 2021 Financial Results Prepared Remarks

January 27, 2022

Slides 1 and 2:

This document is the CEO's and CFO's prepared remarks for Eastman Chemical Company's fourth-quarter and full-year 2021 financial results. This is to be read with the fourth-quarter and full-year 2021 financial results news release and the slides detailing our fourth-quarter and full-year financial results, both of which were publicly issued and posted on our website (investors.eastman.com) after the close of NYSE trading on January 27, 2022. On January 28, 2022, at 8:00 a.m. ET, Mark Costa, Board Chair and CEO, and Willie McLain, Senior Vice President and CFO, will host a public question-and-answer session with industry analysts that anyone can listen to on our website or by telephone as detailed in our financial results news release. This document, the accompanying slides, and the call/webcast that follows include certain forward-looking statements concerning our plans and expectations. Certain risks and uncertainties that may cause actual results to be different than our plans and expectations are or will be detailed in the company's fourth-quarter and full-year 2021 financial results news release, in the remarks in this document and in the accompanying slides, and during the call, and in our filings with the Securities and Exchange Commission, including the Form 10-Q filed for third quarter 2021 and the Form 10-K to be filed for full-year 2021. All earnings referenced in this presentation, the accompanying slides, and the call/webcast exclude certain non-core and unusual items. Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures, including a description of the excluded and adjusted items, are available in the fourth-quarter and full-year 2021 financial results news release.

Eastman Q4 & FY 2021 Financial Results Prepared Remarks

Slide 3 - 2021 and other recent highlights

2021 was an incredibly challenging yet rewarding year for Eastman. We have many successes to celebrate, and we've laid out an ambitious plan for our future. Before moving into the

financial results for the year and our outlook for 2022, there are a number of achievements to highlight.

In the face of unprecedented supply disruptions, logistics challenges, labor shortages, COVID variants, and rapid, broad-based inflation, the Eastman team delivered all-time record revenue and adjusted EPS and is positioned to build on this growth in 2022. This robust

performance is a testament to our innovative portfolio of specialty products and also our discipline to convert strong topline growth to the bottom line. We also closed New Business Revenue from innovation of approximately $600 million, with meaningful contributions coming from products across the portfolio. Looking ahead, we expect the momentum from our innovation programs to

further accelerate as we continue to advance our leadership position in the circular economy. In fact, leading brands continue to adopt our sustainable product offerings as consumers demand products with an improved environmental footprint. Moreover, we have made meaningful progress in our plans to build multiple world-scalematerial-to-material molecular recycling

facilities. The first of these plants, located at our world headquarters in Kingsport, TN, is less than

12 months from mechanical completion-reinforcing that we are poised to make a significant contribution to the plastic waste and climate crises now.

We also demonstrated strong commercial excellence by moving specialty product pricing higher to catch up to incredibly rapid inflation by first quarter 2022. This is a true testament to our value proposition. We also maintained our focus on our operations transformation program that improved our ability to compete.

With the successful divestiture of the tire additives business in the fourth quarter of 2021, we also were able to return approximately $1.4 billion to stockholders through share repurchases and our dividend. In the fourth quarter alone, share repurchases totaled $710 million, with help from the $500 million accelerated share repurchase program. We also anticipate the divestiture of the adhesives resins product lines in the first quarter of 2022 and we remain committed to repurchasing shares to at least neutralize the impact of the divested earnings.

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Eastman Q4 & FY 2021 Financial Results Prepared Remarks

And finally, Fortune Magazine named Eastman to its 2021 Change the World list for our leadership in circular economy, and we were the only materials company to be selected. One of the key factors Fortune uses to evaluate companies is "measurable social impact," which carries extra

weight in the magazine's evaluations. In determining the list, Fortune editors and writers use that factor to consider "the reach, nature and durability of the company's impact on one or more specific societal problems." And this recognition is not the only one. We are honored to be recognized by a number of organizations for our leadership in driving growth through sustainability. We are proud of these recognitions and look to continue our leadership in the

circular economy, which is opening up new markets for our products.

These great accomplishments, made possible by the incredibly dedicated and talented Eastman employees around the world, are evidence of Eastman's leading position as a world-class material solutions provider and give us confidence that we will keep delivering exceptional results

for all of our stakeholders. Each Eastman team member made a meaningful contribution in helping to navigate through a difficult operating environment. And on top of delivering excellent results, Eastman employees accelerated growth of our specialty products and built upon our leading position in our circular economy growth platforms for both polyester and cellulosic biopolymers.

Slide 4 - Building the world's largest molecular recycling facility in France

A few weeks ago, we announced that we plan to build the world's largest material-to- material molecular recycling facility in France. We are very excited about this important milestone

announced with President Macron at the Elyseé Palace as part of the "Choose France" event. The facility, which will process up to 160 KMT of hard-to-recycle plastic waste annually, is expected to be operational in 2025. As part of the facility, we plan to build a mixed plastic processing unit that will prepare the plastic waste for processing, a methanolysis unit for depolymerization and purification, and polymer lines to create a broad portfolio of high-quality materials for specialty,

packaging, and textile applications. Given the inherent efficiencies of the technology and the renewable energy sources available in France, materials from this project will be produced with up to 80 percent less greenhouse gas emissions than materials produced with fossil feedstocks. Eastman also plans to establish an innovation center for molecular recycling and sustainable

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Eastman Q4 & FY 2021 Financial Results Prepared Remarks

product development that would assist France in its effort to sustain a leadership role in the

circular economy.

Our planned investment is being endorsed by leading global brands, including LVMH

Beauty, L'Oréal, Danone, The Estée Lauder Companies, Clarins, and Procter & Gamble, who share our commitment to solving the world's plastic waste problem and view molecular recycling as a pivotal tool for achieving circularity. We expect to announce additional brands that will participate in the project throughout the year.

In the first phase of the project, capital expenditures are expected to be between $600 to

$800 million, consistent with the project overview outlined at our December 2021 Innovation Day. Consistent with our expectations for this circular model, we expect the ROIC for the project in France to be greater than 12 percent. Once other key milestones are reached, we expect to break ground in 2023.

Over time, we have the potential to increase the mix of specialty products and expand the capacity of the facility, both of which would lead to a total capital investment of up to $1 billion. In any scenario, our expectations for returns for this project remain anchored at greater than 12 percent.

We look forward to achieving additional milestones throughout the year including agreements related to sourcing the plastic waste feedstocks, completing commercial agreements, and finalizing the site location decision.

Slide 5 - Corporate

Compared to fourth quarter 2020, sales revenue increased 23 percent led by 20 percent higher pricing. Sales volume/mix was up 4 percent led by strong growth in durables, medical and pharma, and building and construction. Adjusted EBIT increased as favorable product mix was mostly offset by lower spreads as prices were catching up to higher raw material, energy, and

distribution costs. Higher manufacturing maintenance costs and continued investment in growth also unfavorably impacted EBIT.

For the full year, revenue increased 24 percent with an increase in all segments. The strong topline growth was due to 15 percent higher selling prices and 8 percent higher sales

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Eastman Q4 & FY 2021 Financial Results Prepared Remarks

volume/mix. Higher selling prices were due to strong end-market demand as the global economy recovered from the COVID-19 pandemic and significantly higher raw material, energy,

and distribution prices. Higher sales volume/mix was due to innovation and market development

initiatives and improving demand in end markets including durables, building and construction, and transportation. We continue to significantly outperform our underlying markets, including transportation, despite ongoing challenges with auto OEM component shortages. Adjusted EBIT increased due to more favorable product mix resulting from increased sales of specialty products and higher sales volume, partially offset by higher manufacturing maintenance costs, both

planned and unplanned, and continued investment in growth.

Slide 6 -Advanced Materials

While fourth-quarter results were challenged by prices catching up to significantly

increasing raw material, energy and distribution costs as well as higher maintenance costs, Advanced Materials had an outstanding year. Annual sales revenue and adjusted EBIT were both records, with adjusted EBIT increasing almost 20 percent. The segment continues to demonstrate the power of innovation and market development with growth faster than their end markets and

improving mix due to growth in specialty product lines. Looking at fourth quarter, sales increased

15 percent due to 8 percent higher volume/mix and 7 percent higher selling prices. Strong growth across key end markets including durables, medical and pharma, and building and construction contributed to favorable product mix. Adjusted EBIT decreased as improved product mix was more than offset by lower spreads as a strong 7 percent price increase was catching up to higher raw material, energy, and distribution costs, including continued high levels of air freight of materials due to supply chain issues. As discussed in the third quarter, we also pulled forward some manufacturing shutdowns to increase our capacity as we head into 2022, where very strong demand is expected. The impact of these shutdowns, including lost volume, totaled approximately $25 million.

For the full year, revenue increased 20 percent due to strong growth across all the key end markets, including transportation, where revenue grew 21 percent. This strong transportation growth was significantly above auto sales and builds for the year, a testament to continued mix

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