Eastman Chemical (EMN) 4 Aug 202020 Q2 Earnings call transcript

Company Profile

Participants

Gregory Riddle	Vice President of Investor Relations & Communications
Mark Costa	Chairman & Chief Executive Officer
William McLain	Senior Vice President & Chief Financial Officer
Ben Isaacson	Scotiabank
Kevin McCarthy	Vertical Research Partners
Matthew DeYoe	Bank of America
Duffy Fisher	Barclays
Frank Mitsch	Fermium Research
Jeff Zekauskas	JP Morgan
David Begleiter	Deutsche Bank
John Roberts	UBS
Mike Sison	Wells Fargo
Alex Yefremov	Keybank
Lawrence Alexander	Jeffries

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone and welcome to the Eastman Chemical Second Quarter 2020 Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's website which is www.eastman.com.

We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company, Investor Relations. sir. ahead, go Please

Gregory Riddle

and everyone Brian joining thanks us. good you, and morning, for Thank

with Mark to CFO; today and the www.eastman.com. market case remarks me On our call press yesterday we from quarter, it posted you. are quarter Manager, related Relations. McLain, be after of Vice is you missed prepared LaRoe, filing, website, practice in CEO; and of slides Senior helpful Costa, section X-K in first President continued SEC Jake and addition and release close, Investor Investor In our the financial Willie Chair Board and results it the this I to We've which continues and first hope XXXX to

Before we begin, I'll cover items. two

preceding presentation, our the will quarter statements related or you results during Actual XX-Q filed events our Exchange to forward-looking and certain will news Form for call, the release second be plans in this Securities Company's or could including to first Commission, quarter are slides expectations. be this differ in quarter XX-Q Certain with and concerning the the filings results hear XXXX for and detailed future second First, materially. factors filed and in financial remarks, and prepared during Form XXXX. XXXX the expectations

website to results to tax Reconciliations be in call using are year. the quarter description I'll section. and exclude items, earnings items in rate measures most available certain the effective found the in and news presentation an Mark. the GAAP this over financial With full Investors adjusted which financial rate the excluded that, release, a including the associated Second, turn and can of on forecasted referenced our disclosures, non-core second directly adjusted and use other unusual for comparable tax the

Mark Costa

Thanks, Greg.

minutes it to some I few to Before want to a I turn questions, make take over comments.

reminders safety. of of uncertainties the this grateful time. for with need at lingering helping racism leaders to amount serious first positive are has that health unprecedented incredible and responders change, and The I'm the been us threat The volatility first community, who local given the government the healthcare difficult confronts XXXX half and economic our along of the to all.

As diligent thank men continue long businesses our our working many families going. tremendous to support to the to in importantly, important, beyond, I Eastman, and to ways. times want safe, people their and together gone keep of Most continue keep women have challenging come been above and who they conditions. They've in customers, hours

caused renewing strategy growth and value this shift has to core drive workforce, we and innovate. which diverse a to of ability priorities us some year, to is are critical to a Eastman COVID-XX inclusive While our more commitment and our

more and more role driving in at show work their in inclusive efforts build contribute strengthen culture. much every to employees we During a more and the ensure to fully can to to making team progress to have efforts bias work took for do and up communities. quarter, impact We're by to the our increasing our expanding of resources equip their unconscious mitigate steps teams and inclusive

the look for cash at quarter to unprecedented and free we challenging flow. on Sales compared have for As when our with of of markets they Eastman and believe the that our focus our performance, innovation-driven the resilience, diversity performed relatively of well end half a model great demonstrated this results year which function as peer employees navigate and testament environment. we work to first the well of growth our revenue first as as is half a we the

focus aggressively cost the on to hit target. track tractions $XXX our year in progress quarter We and also half. respond our million flow, delivering inventory full great flow beyond our our on the in our to of free best that, first more even the cash manage are With cash for and to in fall to [ph] free cash made also demand generate go we'd

In lower sequentially. expectations the Turning capacity second cost for $XXX now from million the was the XXXX. utilization quarter, to our

some and benefit biggest million in impact Advanced this of quarter utilization, will $XX AFP will tailwind. between in maintenance quarter. by impact expect will and as the and spending capacity reduction more improvement increasing a will cost have we offset shutdowns from the We net decline will higher face the $XX utilization ramp headwind and as by about partially a the million back half third maintenance moderation from the CI be the be than actions for up. Materials see

quarter third the realize volume quarter. start in a actions management to recovery and is the we off strong benefits start second from as took to The inventory we of benefit

As year, for start the expect earnings. half in is generation, on first cash flow track billion which a our the year. strong a a cash to in $X increase for sequential are of result, importantly, year. we the we generate free we the on, Early over substantial on focus very Most maintaining are priority of our

related COVID-XX, not Given uncertainty are continued we to the guidance. providing XXXX

commercial be actions remove transformation will $XXX with beyond. end benefit we a remain we've by significant we difference, to growth the of -- capabilities. making return today we're focused by taking we well operational as are innovation to well significant economic structure XXXX actions a these are impact At in cost 'XX. XXXX time, future 'XX the in the growth from in program driving positioned of the look and at on than are and million taken our Altogether, in the an we While, greater and invest continuing same strategy are to our

innovation-driven lead it's we position with from of heart we how win. growth of the a model, As our strength

Our strengths clear had never this pandemic. been during

decisive With a free especially turn priority, that, capability built is Generating operational liquidity. of businesses, flow Our it portfolio balance our and back transformation, financial execution the strong Greg. innovation have capability. we significant I'll we've sources excellent sheet, along cash top with our outstanding to

Gregory Riddle

now questions. we're Mark. ready for And Okay. Thanks, Brian,

Operator

first take now Andrews Vincent Please our Morgan We'll question ahead from go Stanley. sir. from Instructions] [Operator

open. Your line is

Unidentified Analyst

Hi, good for morning. is [ph] Castillo This Andrew on Vincent.

you're renewal your It had getting carbon a like receptiveness. sounds So quick technology. customer regarding question good just

might $XXX about plant us you're million maybe from of type wondering if give you of for you that and And getting economics, to more was -- product. as the million, the we check scale moved a think in about $XXX premiums what be, timeline number bit and a could rollout. you sense versus sort the points that to non-recycled we mentioned, regards I products pilot a toward that full then you're could thinking us what give So when moving a the of what color

Mark Costa

and growth exciting been have guess we of Eastman Sure. questions of the one months now. at working Great for most the XX I set on last, platforms, we've that

the is create environment And economy into Eastman to I know, carbon go about critical just issue that we a a our you an switch to and we opposed footprints, of carbon the the waste exciting a and is, waste loop to all economy, leading close scale the need are it's all that environment. problem what's circular recycling. great industry both for [ph] think plastic have, also in as huge As is that economic a and attention solve, we ocean as letting investments commercial that to landfills, of with

we're two and so end on waste technology up we call, yields plastic our plastic repurposing So can one we and front that to completely noted clean is instead the cellulosic asset and those of the gasifier molecular products. its you a it take as elements technologies reforming carbon and where waste of renewal to rebuild

our quite new some that on customers commercial went are bio up us. from time that already sustainably [ph] we NAYO grown for scaling products their for So textiles ago in have with XX% and content both

are --and as so microfibers Now, in recycled the the products other be on biodegradable these half will based plastic; it's ocean.

hat-trick have microfibers. recycled in and have all the when textiles of it's the bio, you to So don't worry content you offers half about

in of adopting So we customers have a are interest -- get who number tremendous this. we

which One textile the wins who market other conscious hard market that about XX% have to down is we underlying we're see only still and where a it's in their it of we're market, in that lease lot seeing adopt. our growth severely the H&M in benefit, had, women's Obviously when the number XX%. COVID but we've down is put environment, down, a is can companies collection wear, of where of the biggest recent see target with

in challenged where So very sustainable we're market compared even growth premium a marketplace. other are still adopting substitution solutions alternatives in to good seeing people at a the

that expect So had into premium in of and both getting as true solution the accelerated to And a well back actually price true and a offerings Same marketplace to dominant would for recovers the their adopt the sunglasses, strong waste Ophthalmics, variety now especially of the would is taking plastics we market accelerate. recycle on a leadership textile have side. customers we cellulosic that we're we're sunglasses as we're plastic player eyeglasses, with circulating cellulosic growth. for we've eyeglasses. number and very their going as it back be product circular position with a

number technologies. and there, one of a had we've wins only So two that's of

And one then is are like no cleaning before product. polymer. which happens over recycle market. apologies, we are can truly The not circular about great time. what's back polyester The There application we're concerns, it The to polyester offs our to lot it's they close product Mechanical return of the fuel so down there molecular recycle bit fossil is other and is make the identical, what identical technology is, because that these is the can intermediates break We're the and performance. limitations. And breaking of infinite, identical. where it is and no What's it's product, or the quality down application. level of to to to about even a loop to the both into and new forever. is no-trade same we waste. great can the continue based no so all better where we into products we recycling molecular up a safety is back -- it recycling starts performance There aluminum, down-cycling then zip that is

do So there times you can many that. is so only

revenue can a the So, both price is truly is the investment. share at as gains there in we very $XXX and this and incremental provides million $XXX on we've return it of marketplace, that with that associated said, believe from least get attractive premiums to solution million we

Unidentified Analyst

That's very terms And in Thank of helpful. just optimization. the you. portfolio then

you're initiatives. some savings, doing savings So cost

give some do the of is to I this that wondering and strategically, reductions. how opportunities well cost more. an there call, top you're a look you bit last viewing one-third AFP struggling it's I think that's you on of some perhaps a little had this in that to maybe earnings mentioned little the of hard monetizing bit on environment, your as if of update at was us could on if

William McLain

Yes. This is Willie speaking.

one-third the as of of me actions our so on So as restructuring footprint. we're business improve reiterate let progress taking on action now, our including that to just well AFP first, the innovation the

closure see we that partnerships business to which an overall other We're performance. we in improve work we our to the You'll and of all Asia, improve actions announced business exposure. asset have the pursuing near-term continue to and reduce the choices that through includes performance and options

it, In that, would be call over also divestitures time. addition to we looking at,

So fronts we're we're to and improve at that action taking all now performance. looking

first we've on imagine, with and COVID, you it been And more a say, engagement has interest there but engagements. that the call pleased of it can multiple through, we're in is I'll those gotten fronts. I difficult this As environment, renewed would environment, phase

QX from as structurally, structural offset to move changes will least as the is spend savings at And cost roughly to right ensure we about, of be And to million a we achieve on that, that highlight structural we there, track is, we were think I would have highlighted, on again comes now structural again to which third our make expect we actions $XXX achieve that. little track QX QX, the discretionary that as on objective pivot a to that And forward. lowest you we on, the in would to are what and be we're that. back in that looking On that but also average, of be quarter ahead. to XXXX

Unidentified Analyst

helpful. Very you. Thank

Operator

Moving on Scotiabank. to Isaacson from go next ahead. Ben Please our question from

Your line is open.

Ben Isaacson

location in Thank XX% was in sales you. in X% I about by the US, but around customer noticed that Europe, down Asia. only XX% your

potentially and is? of with you that a exposure China split risk between Asia, to us the to you China Thanks. what working remind US Rest any trying your And create? on mitigants are could worsening respect So,

William McLain

half what exposure of to of outside China. said it, roughly Pacific our China, a Just little give of color bit around Asia half we've exposure, in previously is of is, that

around and impacted what you that more And basically, the impacted it code impactful the economy in way the more up. Asia, saw you're that COVID QX. I was America, world, North also Europe the as about the how think you in As pick returned, QX of revenue much in impact seeing is, so in think and

Mark Costa

top it. with war you we a year, go already certain with started as about 'XX, beginning we completely of more on got forget, make X, sometimes war just war of stabilized, And think we're didn't year in of in trade And amount I phase would away. question, and say a the we're pandemic get living exactly didn't trade this the the in interested abated, this to that interesting trade but it it you've

we've our and in have shown we done results, of So pandemic certainly of end it's a end mitigate this we're stable we we're of diversity There a in good as February, our job move part stabilized through be strong That year, the risk forward. front we it, in way America upside once seeing recovery us. North But well think -- our can China sort of markets some of of markets, I a that's improvement year. we our and last certainly regions. a Europe, lot to January, managing with and still there. as would we've is in And as

think I demonstrated, markets on a position just So we and have got trade good war. way can our a diverse geographies, manage not in through but we've already

Ben Isaacson

you. Thank

Operator

Please Kevin We'll take Vertical go Partners. McCarthy our ahead. from next from Research question

open. line is Your

Kevin McCarthy

to reductions in where well and inventory quarter what speak ended as that second you your forward? the for might the Can the morning. mean as moving Good quarter Yes. rates you operating

William McLain

and working Willie. in the This inventory capital Thanks, Kevin. is We've quarter. very on made progress strong specifically

would reductions sequentially throughout chain our you supply applaud of business think only, and I very XX%. teams modest that down it, on inventory We the I'll again executing very and year. saw inventory call expect operations all roughly for And effectively. additional

call to on our I'll Board building back at reference expect, bring in can the quite you definitely look the up utilization here substantially So a I'd And in that transportation year-over-year that markets. were pick plants also we inventory. as end rates you it basis, QX, as on and the other -- we

in to it's So that year-over-year level of inventory reductions. XX% XX%

in it payables, but So great those, get the normal progress, our as do, we receivables the to of as I'll year, to more overall. effectively still back and think more about call levels improving back half

Mark Costa

Yes.

beyond cash in $XXX inventory And I'd management of note created that, is, wasn't you so how utilization thing that beyond other our doing generate upside of just headwind following lot about demand, that just and did so portion down quarter, we by the really second right, and pulling how way well was which made, cash, we it. inventory of this proud think following to XXXX, a good that went the headwind, utilization, we've half year-over-year as teams generated said it headwind utilization demand. actions as The million year much of of we've incredible year is in this and they a progress

you look this volumes that if if just of you So assume year, tailwind to the year next $XXX next year to that earnings half next year, relative is this million year. at equal

that, second that. even long mix for So third quite quarter on next to degree not better obviously, of volumes the actions tailwind margins more fixed you quarter year in all then incremental actions structural as this the some earnings create holding year get tailwind, volumes continuing This and are with the for year volume growth costs. costs a equal the we pretty significant and in only get took we into flat become and beyond once our utilization to the set substantial because as are next than will

next of our us. So the the accounting great how I clear. with us view, first in second for in for point opposed up year. really an is recovery worrying think priority. sets That's the cash It very priority -- from our We've was earnings especially the utilization really as the look this period been but sets year, charges quarter, to about

Kevin McCarthy

number you savings secondly end like, wanted to $XXX 'XX, of And restructuring. that. Thank million you you do foresee looks on the I see. much to your terms It large perhaps in fairly more to elaborate Where ask how savings. from and be asset talk then is for coming I headcount or you and of that rationalization regions will there. about businesses could versus of sources other

William McLain

Kevin, let start me here. out and

to we that and we actions specifically asset the the first about taking, footprint, look announcement Singapore think our you in well previously foremost, one-third As that the as announced. optimize as we're

greater. at you least or being million $XX So see number that can

were Additionally, improve utilization. we our as highlighted we to site earlier continuing year, about this talking

So earnings Products as, that assets and facilities, do our we've use well top environment sites an as will globe our on other post-trade those optimize the do will integrated transform, be along networks then post Gulf as think looking you the achieve of and our additionally, additional how highlighted and about And and benefits there. in we're on leveraging war how digital with solutions around the Coast, we Air at we maintenance that. monies

Mark Costa

the quite There's of value of building guys quite optimization a know, around lot we've up a portfolio. our Yes. acquisitions network as and about specialty done years you of over bit

to warehouses, you we as plants, of everything, is do as And of those well. headcount look reduction So optimize that. networks opportunities there how at all there is

sort optimize our operations how in and the especially of of streamline and nimble all operating our making there. months, take the we costs in about through effectiveness our of investments effective to lot see last operations, here and out commercial four more model organization as real agile So way business learned our lessons the us opportunity improve we we

sort very to line different heavy great that It's we silver organization entire commercial Kevin, a and detailed do, company, stay is become capability make lifting and it of our to lot transformation how get of people against value in programs and year complete do specialty we it's create shareholders innovation which the of it. across there. total to to So happen. we also one a all cost competitive we competitive but levers there's of sight. It's no number, very lot how face There to bullet, a we're step how the say, of both a the by But for on but and people marketplace. on to the investments back the continuing

But clear set plans. --clear of action a great there. work very So of lot

Kevin McCarthy

All much. right. Thank you very

Operator

We'll of from Bank DeYoe now take our question from next ahead. Matthew Please America. go

is line Your open.

Matthew DeYoe

Hi.

of your sell-off about competitors fact outperformed that one initially. -- So XQ the position them from the talked that autos chain in that the given have on the supply that insulated fact in the the outperformance

to However, that in lag businesses, do transportation as it rebounded. both demand those you relates operating through implications a pull similar already of system? kind would on on rates orders and represent OEM? seeing your through Are coming as a you see Or particularly your

Mark Costa

I a fronts. going answers to to give different sort AFP, and think the AM so both on I'm little are between of you it bit

there Advanced quickly. comes production to very that's changes Materials, so pretty short, OEM business, supply the is to in level, of Films So it when point chain opposed behavior we sale production at Performance as the in feel sales because or the

AFP. the nearly of you Advanced impact to first saw saw you as XQ that's in sequentially the So the earnings, quarter from earnings from were take recovery as where COVID Materials, why good in bigger the XQ

impact. got very for benefit businesses down And the earnings so We to recovery more already more Materials, and March through Materials for that the quickly those felt and facilities have and stronger why AM, came also acted May, Advanced and June. April, we in facilities off lot it much those a easier in down shut quick we to So we a forecast saw hence demand was facilities as take quick you in And standalone saw in recovery in very Advanced third quickly. us operating that's we quarter. utilization

mean played longer. advance, much So, I Functional is than the out as that supply chain what where seeing we're faster Products in much

quite felt and the first sequential stronger the Coatings finally So was second really in refinished side. drop stronger as is caught result not would and note, as chain, AFP couple in AFP. longer the in going of it there when aviation third us feel up the aviation as automotive when is supply call quarter, on second also we the the back opposed as a the other And about quarter just impact so a fast and OEM. it's differences, in half our -- obviously hence earnings didn't that. not quarter with through as back we to to come I we bigger to is same performance one and comes it in to us fast, coatings it transportation, quarter coming

as as, obviously back little of to OEM sort traffic be longer So you're doesn't to our get based refinish production not to improving to we the AFP also snap expect customers' as a on see that because recover. solid is going see going and it's much comments, and do recovery there, fast. but take We

Matthew DeYoe

Okay.

reasonable so kind that and in pretty And absent I a $XXX and of is assumption it to can to [ph] million EBIT is A&FP number admit $XXX not, an by that reasonable if that business. in chunky mid-cycle you for range back guess, what million think earnings the get for XXXX acquisition, light, is in

Mark Costa

earnings, that, to all Well, [ph] forecast you we're not be as first and out look A&FP XXXX. think of going to giving I at

right, to part And demand the was a all and impact both and that a come huge the B&C back in hit of majority war got before variety about So, is where then this AM great places of some earnings market were between realize demand, vast a of impact faced where the the auto I demand. where of volume which that, a since demand we the AFP. and and is stable what different with vast trade environment, but you started by story of less that. now majority business mix, can remember the has will say XXXX, a think is compounded pandemic, on our business Mix it's in of I

in consumer average. the have dropped we So volume transportation in That's when or margins or B&C that -- durables. highest those in relative, company

last So earnings volume that on and the not is cash. in recovery, huge big mix driving the year down It's on this year mirror image of it just impact big a and and about way impact recovering. value impact

come that So we all back. to expect

course, other taking of we're The party, Right. is cost on action aggressive side. the

So, if we of out this in that even on offset take and the into that year, taken another relative and competitive 'XX 'XX, spread spread $XXX pressure million million. means make $XXX million seen out than to structural XXXX, and $XXX we've add That adhesives. we've more some pressure, the that competitive and tires offset

for So being back, volumes volumes Company the be better come 'XX there's earnings or should back the pretty -- and earnings substantial get when no back not we to that back reason 'XX to when to level than a for back come get level. able get to for to the the

Matthew DeYoe

Okay.

give take, recovery once on and businesses shouldn't cuts, volume being cost message adhesives or pressure equals structural volume plus that, the there. you plus maybe, So like just from growth

Mark Costa

about only a mix It's lot back. part, the comes margin of the

Matthew DeYoe

comes it back. Yes,

Mark Costa

off. about of volume just not our sense it's you we -- come Innovation of mix, give way of be to and And the in other to story part to can that when With significance see that's Day back guys a it growth some of big XXXX demand course to you try very have mix. the that clear

Matthew DeYoe

you. Thank Yes.

Operator

the Barclays. take from Fischer ahead. question Please next Duffy go from now will We

open. Your line is

Duffy Fischer

think then if of takeout versus been because couple of 'XX out just we the temporary, in programs, cost guys. and temporary, of morning, sequencing how much talk, some that's should this rest just there the use you permanent has and we a the year Could how comes much some QX as how permanent, 'XX. base, about Good

Mark Costa

second Duffy, this out of about about being that momentum structural we and half the roughly is million being I'll on more year, say, there think that discretionary in will think let's So half of and we additional take here structural make as the aspects $XXX half. as an which

roughly year, what more that build changes I into we and will a Mark pivot next this earlier And highlighted I'll think, structural major decisions taking the driver in footprint. XXXX. structural and also of our at making to year optimization as million to highlighted connection build As we I network look asset that be actions we're that expect we $XX

that goes with deliver Then replace see additional bottom keep discretionary So to $XX you million that, $XXX grow neutral line. away we increases and them top that an we structural. a was basically of the pathway cost on year-over-year to sense the and in million and 'XX to as to the 'XX it and additional

Duffy Fischer

incorporating that if to back to everything, million your look your is two? for $XX best baseline of you can How that trends million, the half Okay. that of at in to $XX a way adjustments get but million parse $XX making an $XXX And then, about million that's by outlook, that to we view $XX or number? improvement walk just of QX on offset should kind the kind of the all million, pricing in those we these that would QX, from take-outs, us think cost

William McLain

of $XX So call call And we inventory of top think as improvement. variable range in actions maintenance and that of have be, the it that would growth sequentially. then volume your improvement removal to and to on structural that the impact by, cost we $XX the that million million it, the the that margin take [ph] I'll offset for operational about I'll and first I would step is, slightly I'll partially gets QX, it, point, the to reduced lower the us, cost call

Mark Costa

And we're...

Duffy Fischer

Thank you, guys.

Mark Costa

X a Slide and we're volume, good seeing -- right. build

is far, order So August. we saw see the similar X% August increase you in July shutdowns and Europe June normal early to July But and with it's book, the decline compounded in compared July, August and to everything else. orders so in by another X% seasonal being good

a unpredictable the mitigate to see to we it's off as good demand. don't impacted by very year, far but well, know So if coming we economies are have things that will how painfully see start, And we resurgence. there's

Duffy Fischer

Thanks, Perfect. guys.

Operator

Research. Mitsch your take Moving we'll ahead. to question, go next from Frank Fermium Please on

Your line is open.

Frank Mitsch

slide you the impacted are may in appreciate down offer business what X, in And you're it moderation normal. In If the that? that I in confidence resilient be you consumers terms new in like Can most a back in of August? suggested text, year-over-year that. on level gives elaborate that XX% in thoughts a seeing, when the to moderation your books snap area back July. order impacted, businesses, over good Really and it go as what perhaps on on seeing is a mixed could follow-up the us looks

Mark Costa

Sure. Frank, and thanks for the question.

those benefit for As stocking far care as of stores that COVID from things product. the of type from real some same a had obviously the grocery up markets like or resilient markets chemicals, people and go,

So did product were supply operations. sure some security packaging that they some inventory and had want buying worried their about well. time, of run make And to because enough care chemicals people of they're there to ahead

you little So in normal that a that resilient cases -- some call of coming off really we to demand and of additional of sort is saw some markets. what bit buying. more The of these on than see we what going in those

talk read of So that the some that's markets consumer story about. of about part and and packaging those sort of we all

So some sequentially markets trend right? seasonal XQ. is this just those XQ to off to because seasonally is also coming markets volume volume in there some ag, a naturally in of from You XQ off down XQ remember, come just from like

products obviously of as buying that to people inventory great can they didn't then say other the wasn't well; had Advanced think in some that. product The more got value make of play Materials is, you anything than I those where there's very in sure out place, of I on. surgeries we elective dynamics high demand medical, dramatic going those expected. so as wouldn't only So as were

And I view, to of the point is markets. year goes out decline long not some destocking going is normal that for sort from level the end steady of of it extends think a inventories. it's we're rest of just as seeing and as we more But a we're of volume adjustment -- time. their of through back don't so period far are these not, months, where timing some a July-August on, people of that there but I frank adjusting this the think sort

Frank Mitsch

That's of you're any when of Eastman I times. progress, pace key -- one the what helpful. better in Is can innovation -- quote is and there on helpful, any these the the front. talk the that's of one that not some innovation metrics But And around might the focuses that -- obviously about is is in -- you the there making quantification very are some on new people and of that, be regard. providing -- provide of innovation normal that terms way

Mark Costa

in is one the metric I the using future. the to we've continue Well, think use that will been past you in with key

And Just of that's useful right. the amount products, at revenue not as moment. close the new we innovation from business

digital win, detailed every tools system strategy segmentation or we So, transactional, lose every and a innovation on with market business just good have bit related well know it or we you do just what our business about very of as we it. tracking whether why was as can we

Tritan on obviously, year delivered we year good this are $XXX very we place driving on been But encouraging a towards number been time. well in last $XXX where with trade board track back so that important number And people war it is bunch coming to of for kind million offer from earlier and hit the see area we're around hydration is, is of a What other with this we've when Renew of innovation new we H&M, are [ph] of the period in that not engaged. even year to recycled vessels. business a wins segment going stay those good circular content the a the highly had on, that customer prepared to we on so story, number. that sheltered hydration like economy that, the told to has buys with everyone million coming looks We've with as that I Nalgene get remarks and number in brands mentioned

launching. million additives only but where and still is we seeing odor-free activity additives, and working their we're with innovation adhesives, which places There there that also HUD still tire the interlayers place of lot in every good will a seeing and the your agendas, way $XXX we're So the have our generation on that working But you coating of we're into virtually, are we're meet next expect people this and wins, is customers create acoustic people is can where each are we going in get -- activity to not other, grow pretty out to get context, mode own going snap growth. but with with to the quickly not to we're of interacting this it recovery I once do us physically.

Frank Mitsch

Thanks Terrific. much. so

Operator

go take J.P. from from question ahead. Morgan. now Please Zekauskas our Jeff next We will

open. Your very line much. is Thanks

Jeff Zekauskas

that Fluids think $XXX much much in How this fluid? the revenues. XXXX was aviation is business, to or it what you be And I Your million year? is down expect aviation of how fluid do down in

Mark Costa

side I'd consistent So business, the when margin very half and the airplanes. half which it's high milestone clearly, I business of is Jeff. aviation with and about of dramatically is look portfolio fluids the say down the at

of are We that business. driven milestone with very sort

to growth going it highlight, and other transfer fluids going deliver heat And to to the side, the comes actually year to recover doing so when this it's I actually is great year. over slowly, want last business

those the in the That's So and a chemicals in packaging of a architectural businesses. number spots growth two-thirds on of one residential bright lot going to in got care well. held We businesses. and AFP even of fairly pharma addition and of in

Jeff Zekauskas

SG&A and lot down I I were about as about Do of is And more? in achievements, SG&A best quarter, secondly, was you talked down terms reductions? have don't an down, but in SG&A tell, million target cost the isn't a X%, XX%. your Why you sales which can as know cost $XX

William McLain

line, about cost SGA/R&D $XXX to I'll going roughly is if this get is, Willie. $XX roughly, through line. the to we're I call $XXX think million the you What million, million highlight it of Jeff, [ph] that, manufacturing would

we've variable the quarter. offset As QX, and compensation recovery to stock based some, it that seen within occurred in got QX with cost call you've that basically I'll market are the savings market the from QX, to linked the that and plans

Jeff Zekauskas

got How offset? much How much was that?

William McLain

about roughly it way So, the is about I that, think the $XX million range.

Jeff Zekauskas

Okay, great. Thank you so much.

Operator

our we go Deutsche question, next on Moving Bank. David Begleiter will take Please from to ahead.

open. line Your is

David Begleiter

expecting Mark, saw were QX you. can in you the the what Thank what and half of discuss back morning. you and you materials, trends year? raw in Good

Mark Costa

Dave. morning, Good Sure.

know, quarter did. trends, faster saw, of of XXXX, right? So, think raw war, helpful year that material second derivatives you the obviously you know, last you to trade first the off So, the think quarter have to buying, come a material and than petrochemical for actually about it, you off third our as lot oil price about it's back example, raw come we're trends, are know, we the quarter. in with And

other paraxylene this think, propane, already oil derivatives in year, second the raw A you year part you know, dramatically big seen as in even certainly as came So, then and have year to you you materials, if though this places you we or you've flat from of [ph]. [ph], moderated, as quarter pretty year. But trend up stay already But this, got of of half of half had opposed oil many this some a you lot PGP to last are raws the know, the year, all at relatively in where we off of like the look pretty raw of the the didn't. know, off saw know, substantially. first I moved come second expected some look like happened material to benefits

you've got things the material the raw back year. expecting huge we around headwind different as at a lot moving now So, of a half directions. of look We're

there's some on Our to in good as consistent half like have back of you material raw to intermediates, bunch year. as forecasting environment the go we raw with But material know, a prices costs. be track. spreads comes of moving far that think the to assume plans But increase chemical we're in those already we're going up plans stay the of, in we in and place some shape when it and

David Begleiter

and And just priorities QX, well and other reduction the year? discuss versus their can the half back allocation you QX good, in discuss cap buybacks actions. in as as of Very some buybacks

Mark Costa

which roughly We and pace than half. paused back recovery, highlighted, first back debt at net almost and our for those than And David, Also, to Thanks, million with into greater objectives. we are and meet do $XXX growth you in expecting foremost, that. buybacks as $XXX million priority. $XXX we've down greater half. our would we've know, million solid the XXXX being focused the dividend to first the as share we'll until the re-evaluate we expect we grow the we pay first strong of that to look in And Obviously, question. on the

David Begleiter

much. Thank you very

Operator

now take Please our We from question will ahead. go next [indiscernible].

Your line is open.

Unidentified Analyst

already there products your was morning. Good Hi, had base then, the weak intermediate Mark, some discuss in acid was you. before also You glycols? for know, -- a you and Yes. business capacity can started weak new you like pandemic

then can second outlook half? happened So, what you just discuss and for

Mark Costa

Sure.

you So, fall is available what drops saw chemical you we've you place rise, relative know, predominantly know, obviously, we've material, to in The going where which intermediates know, you to only didn't know, go challenging capacity propylene some due seen in market in that the cost seen. the an tough propane demand know, second sets or know, resulted quarter you the in in to that this really a which spread in prices where are you obviously you environment know, And down. significantly products, compression, is between that activities and PGP, material and is combination. raw marketplace, in we disconnect competitive went the and was really price up the

and to seen holding already August has through steady. of sort relationship we've PGP beginning here up corrected a Fortunately, has where dramatically gone that been normal back of or more July the propane

corrected quarter. So that's already this how we feel about into good

marketplace some off. some structure oil as on relative On is feel side, the to compression, coal. We cost our and prices based compression which that's seen acid we've methanol fuel of comes that obviously, the principally priced

story. have So spreads relatively good; of those are pressure the the we're been but overall the where seeing places that's not so some

not see export can that's complex. second had us for the fixed much. has a table, for as price comes margin some really on opposed impact of Generally, to costs and half especially volume prices when first demand and bigger markets basis still it that us so revenue oil impact As as capacity, in not normally in quarter, integrated contribution margin a pay not drop impact you high the it our business some but volume the available where been the the significant being related would being to on that overall in on to COVID we there you've for that of clear has the

So stories those key really there. are the

all reason no to due think this into continue they're I will quarter, next this in extraordinary a won't recover of go quarter, year. as third the but second into the we lot circumstances

Unidentified Analyst

on the volumes question triggered to second low my charge Okay. Is that $XXX when back million segment. charge that? of tire a that in due and come then And utilization, next happens what year? in What large additives is quite you was that took

William McLain

is PJ. This Sure Willie.

as as has that So highlighted, you the impact as think impacts assess certain businesses COVID we on which to the about have and the value of broadly, specifically well had the market utilization you've on tire more additives. transportation

related to names trade impairment and as valuing So revenue related Chris the of call it basis. a on you the royalty Tex, And was biggest the I'll look outlook piece to, at that's those Zanaflex. a

the where being resulted recover. the Obviously, write see. on As this, it the with valuing point lower you in rates get that you when run deteriorated starting you well of it we're once impairment as the the that accounting, much don't things off, as is revenue back outlook

Mark Costa

of values, write which impairments you issues value from what the like get up asset to don't kind interlayers to it, improved take businesses wherever we but films accounting, part great the have a we've but the this performance of bought of is Is dramatically you occur.

Unidentified Analyst

better alone you. come mean charges that when quarter. Thank look year this margins you're But Right, these back? does taking not volumes in that next

William McLain

volumes. the impacts we've that was million utilization as $XX highlighted that current the million a you of think if in even I take and $XXX will company half across the of roughly flat tailwind due the across this PJ, company to through at result

year go result think we next about in XXXX. this holding costs recovery, growing momentum we as volumes So flat, as into in good will

Mark Costa

Specific really so to that's the line of big A recovering part but is about volumes that volume in look at actually isn't recovery still pricing for are so quarter to tires going third in X snapback of you the -- to Page on volume competitive strong we're one some there in period volume actually starting seeing dynamics when the time, a that into back. back. come of tires. The is improve

Unidentified Analyst

much. you Thank very

Operator

our next Please from UBS. from ahead. question John take go now Roberts We'll

Your open. line is

John Roberts

It Thank in is further. comfortable you. the here? a stress. just How something there's looks was going a held used down are they're tow It you bit in to cig It that because a well people smoke little recession down quarter. up that when this like under that on the be more outlook patterns is to little be water maybe else or third

Mark Costa

something that we else have going there's evidence on, John. any don't So

As sort lot the of There's well. well we've to we in past, a the weeks that general the at X% stories are this X% others a doing you cigarette that XXXX, year. is different story of the said the moment in trend where different out range declining in of said, last are it couple companies not to incredibly of be all are recession. in was is doing that breaking stable sort expect and XXXX and the There where as market always there

suggests it's the demand to of X% the is of China. sort the that all X% going range what's companies. have those data really about But to we of up X% to is of cigarette you when think behind details half get world. which it So declining China, maybe in of each we of demand market overall, together, put outside the stable

is customer So buying we sort past, in is chunky, well as good discussed demand times we good bit the patterns market in demand, to and the comes obviously, quarter. the outlook. call it first When we put many have what all in that's as saw it as as quarter it of a the in together second

buying overall especially this go why very expect was quarter, flow some security level. trend third cash off all that the still as of stable into COVID. Some actions we're that's the the as tow and cost uncertainty volumes earnings with but with to of we modestly view for And we we the incremental reasons, is tow taking at

been offset being going not year the give growing market It which term. On side, has the We're that underlying the for concern tow. textile get this of long so of decline doesn't any challenged. market to on this textile with course, some us

now in an to I is in with a question. the as lot economy exciting first incredibly markets, for think opportunity us, the right. the see circular answered I target Really opportunities textiles especially of grow

half year, about of in of XX% the the So year-over-year wear XX%. think about versus if you women's down market first

working quarter, obviously women's the that improvement suit of those XX% is I now environment said, for gone much of virtually. some forecast the in when now everyone's traditional as wear; quarter sequential right at problem off As demand we've this we for right second a the this into not in linings look markets the like probably

the offsetting those, will levering good in And that expect year that correct as a out the growth next filling we that's so way continue complex and but assets itself of of and some to integrated up.

John Roberts

recycled you pricing virgin for issue having or Then process is are getting for cheaper? your raw and virgin material material any cheaper materials issues is that green material now gasification are

Mark Costa

require market use. to What's complicated our recycling Yes, our no high-quality molecular recycled about very content are look a can great use best does recycled when has doing segment not We is we it other a product it. at content. strategy and is you that

it can recycling. used the plastic textiles, take take in analysis grind we up it that plan recycling take So for methanol and and we be can can cannot mechanical carpet, in we use polyester

high-quality don't have the going virgin has higher what we no price in have alternative lot; bit in there with year that. last access Europe truly that's is almost XX%. really little of a is stuff There's now, and beginning, we we the to but compete right compete buy to that we'll So can don't landfill. into significantly use PET that up than a going against But

Operator

our from ahead. Please know question We Sison Mike next from go take Wells Fargo.

line is Your open.

Mike Sison

morning. Good guys. Hey,

you customers? we Do can what the pick fourth it possible sequentially? in we there. and cost to know can on seasonal but quarter? You downtick reductions, have So, clearly quarter. some quarter Just fourth I up But normal, improve of continue it's a you just inventory curious get a think thoughts again? you're lot the that earnings fourth the variables your on hearing your from curious see in how is sequential there Is the question about of do improvement the savings,

Mark Costa

quarter. where fourth construction happen with do what's to the inventory demand don't decline in be start demand first in markets year looking are is all cetera. at of think destocking all normal to see probably second difficult I next with as that will serve there'll the some actually uncertainties and that in kind But to think quarter think going some been call if the like economy point what going activity seasonal last people that you've positive, go I in because going the have the et you'll you're the and past inventory happened to we've pretty so what COVID, looking awfully winter avoid just the the quarter doing is having but to election the And think I at that people building of year. quarter is it into you're relative same this I happen third seen the aggressively they to you

doing that those to So we're know the I how going second in much and aggressively balance we've quarter. third quarters in are I be all the to destocking fourth pretend so to couldn't going our managed not together. know inventory

going we utilization where get we from certainly to as continue will go better with to XQ also asset but to not that's So go just help inventory, XQ.

of for this will the guidance last reason no way But no does. I all somewhere got range back benefits not stage, than We improvement feasible. better we're sure what the we're get might emphasize, utilization well seems for it as asset actions be quarter the giving a one cost is structure Demand getting look which XQ sequential have at like can we'll I'm So we but year I a year could think. we as to idea XQ; in think the from on some taking. side, as better you both look that have and bit at cost to fourth not

Mike Sison

$XXX was Understood. one one inventory by on quick And reduced the number reduction; EBIT. then that million

or back got said $XX I flat think you did what get you you volume all half it 'XX? on back million in volume; that level

William McLain

Yes.

all it. day, in fully basically of the about levels get we've from think inventory that I XXXX here end way as levels is to XXXX Mike got we pulled at into as did Because the in So the back reduced absorbing what that. we is, costs about the of you've to we XXXX think P&L fixed

Mark Costa

$XXX we the million $XXX you And for think the XQ used versus that year-over-year number about XXXX, XQ; XXXX $XXX it's when the from so number to about half million. million sequential of not

You definitely get rest back is and just the then volumes with flat growth. upside volume with

Mike Sison

Understood, thank you.

Operator

We will now next from take from question Please Yefremov our Keybank. go Alex ahead.

Your line is open.

Alex Yefremov

tracking Based you. how and saw basis year-over-year second early Thank overall? morning, in third everyone. for versus August on the what the Good for you quarter are company quarter July volumes

William McLain

but continue momentum. roughly think got in we've good which would to would in X% And we We continued be say, we things a in July. from July, August Europe, to seasonal to momentum. see Well, with we is, had flat had decline I I good growth August earlier, as June highlighted positive overall. normally see

Alex Yefremov

math so for in down that Right. and maybe It's effect quarter monthly to were it hard a average. the difficult slide, do little In you differently. appears your show volume just the year-over-year than second to corporate I'll is about bit it XX% July because try base the so

with volume And on quarter a and do expect that you August from posted a second Am for So better average. than that perspective the line roughly year-to-year at in looking seems to on to minus basis, this you September be I XX% July? correctly? be

William McLain

reasonable momentum think based on seeing. assumption I the Alex, that we're that's a

Alex Yefremov

Okay, thanks a lot.

Gregory Riddle

Let's last question next make one, the please. the

Operator

Alexander Sure, Please that and from ahead. Lawrence from Jeffries. go comes

open. is line Your

Lawrence Alexander

you being effect where playbook on leverage the should markets is operating viewed a doing, market we with two so beyond the this upfront? years? of in makes be will are three that? a In this on what two, next extent be realignment to we should level a read Can as you're relevance the because higher you the the quite think that kind secondly, as acquisitions the the synergies morning. establishing And off of back, innovation spread should shouldn't to of because extent multiplier over future about help outgrowing structural stable markets a difference or geometry that come recovery you the Good how better and should that a integrated Or we expect see roughly have we one and it things? volumes slingshot where that end a in

Mark Costa

take I'll first let part the take part, and second you Willie. the

expect we company the innovation average On our highest that we way mix the products we're we've the and recovery, launched. as side, the also took that all above tend I in way said different was have to down revenue The value margins hit driving on segments.

leverage So is pretty as you see volume mix significant. recovery come, that

see it quarter that in years advanced for materials. You'll materials advanced and this you've seen in

recovery scenario, expect we've a cost So we lot of especially with incremental actions a pretty high taken. in the margins

got we've headwinds variable you've margin that cost have don't any benefit this offsetting and utilization identified. growth, So you fixed

good this levels to when comes requires We're XXXX back try we XXXX be back come expect than to in not economy, it's recover. feeling or When certainly what know better and we're key. and still the going to pretty economy to but in So think but given get scenario, I XXXX tell it we we today I XXXX. demand think can think to about we're it and earnings about economies you that to how innovation,

had very coalescence etcetera. and heads we You market; got in economy, performance architecture the June in record down markets like where incredible in a where films innovation circular in new up automotive revenue success we've Triton, set display this

own our where going the segments, creating including on growth all lot three a have despite fibers we're economic We circumstances. across

William McLain

acquisitions. question, on I were on very with our through industry we levels going did and are war, previous we're would we when the say synergy today with that achieved a trade we've through would above more the call obviously, pleased the acquisitions benchmark say also what we is gone a I'll I what those levels, synergy digital than On front pandemic, there but solutions it

learn those we as apply about move changes. we and forward future we to acquisitions think and will as and continue We portfolio

Gregory Riddle

Okay, We thanks day. us you again, Hope have morning. this your great everyone for joining appreciate time. a

Operator

your concludes Thank for call. That today's participation. you

You disconnect. may now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.