EMN - Earnings call transcript Q1 2021 | Eastman Chemical Company

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Operator

Good day, everyone, and welcome to the First Quarter 2021 Eastman Chemical Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's website, www.eastman.com.

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

Greg Riddle

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

website with section Mark results and CFO; remarks today and the first our after me On call slides posted we are of and Manager, Relations. McLain, the www.eastman.com. our in SEC Vice market filing, closed, Laroe, XXXX CEO; Senior prepared Costa, release President the Jake and financial our related and quarter Investor Investors Yesterday, news William Chair Board X-K

Before begin, items. we cover I'll two

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

earnings the are first turn exclude XXXX disclosures, and call website. a to financial of news the I'll items. Reconciliations is other adjusted and comparable certain most the over measures including presentation referenced directly in unusual the associated GAAP that, which release, available description noncore available financial Second, in to items, With excluded this and our results quarter Mark. on

Mark Costa

Greg. Thanks,

XXXX, a I'm to off are achieved I an highlights questions, cover. take of Before to operational and momentum, economy I many want to want building your off minutes improves. the our accomplishments There proud We're comments. strong and we several months. with make short answer few few global excellent a teams start paying is the just execution to as of we've in some the We're

track at and up ahead over Then well markets, XX% is we a manufacturing operational free ahead full pandemic. and of from XXXX and we our of performance adjusted year of for and than shutdown with our impact last of our demand proud before quarter the EPS a We COVID-XX of solid quarter. strong very to reported was $XXX levels. cash first which substantially record end Uri. over first higher demand a these the with or X% ago. free delivered returning strong We Storm cash strong first In from the 'XX million incredibly from headwinds continued year despite the also our XXXX felt through I'm in flow were many exceeding within Consistent we to quarter, competitors. team more a results very To operational customers achieved record on in strong any the hard our of Texas, you our of of sacrifice of helped We which Winter avoid flow, logistical of able injuries proactive Texas thank the to three start repair Thanks who customers. to one the restarter our colleagues tirelessly within had took proactive no operational XX% to supply week storm, steps storm ensure of behalf Eastman. safely facility all of who the half Eastman and assets. they all employees facilities, challenge, we're the the to the rose weeks. and planning, worked First,

our on XXXX, environmental, Eastman, is and honor you commitment for transparency the Most the more And we unnoticed issued governance with its which highlights. gone hasn't a circular our and list I'll our Moving efforts, in to Barron's we adding us. diversity Companies other progress and find importance. At XXX utmost our take true our social for seriously, about talk economy moment, We've of which Eastman made a Sustainable significant and report, with inclusion website. to progress can

and At Since largest with completion plastic-to-plastic continue mechanical by We that around impressive one site the this our with in the up to facilities we our on the more growth of we ground broken acquisition point, the allocate we're sets and for growth leading been health capacity. at Even free products for a the then, molecular schedule markets Eastman demand completed with call, you capital the different leader the XM update world's continued we're 'XX. circular And offerings, end, business. our Renew And for world. the customer we're a and Cristal of small to disciplined also Food in that mind. to animal economy, our bolt-on We a On nutrition trends amount products facility end year the customers Eastman renew we building cash finally, of momentum strong we for think the circular innovation the EPS and target Tennessee. management, recycling accelerate new ahead we've branded demand we of strong. and in recently flow the nutrition demand Tritan favorable in gave include of become the coupled announced, has better is than to Kingsport, in specialty of anticipated. investments to making is we're continue Renew, an economy cost progress many facility building specific The terms next. economy. in company January in stockholders announced Feed, returns this and To us our on animal and our

additional a have year those throughout sharing look pipeline We robust announcements forward you. to the for and with

to Turning our outlook.

expect mix including operating transformation program. strong our discipline, operational from momentum, with costs quarter lower and second cost the entered also we from we to benefit As demand

maintenance auto are slowdown reliability production. face, and headwinds However, turnaround, there specific some in supplier including we

or adjusted catch $X.XX. at above costs be material, in quarter increase of of addition, expected second In price a we increases we are expect quarter distribution raw higher these second sequential XXXX in continuing products. EPS to EPS have that energy and some Despite up headwinds, adjusted with to to EPS

and year, we growth to market full product Moving continue. mix improvement strong expect the

growth be will number rebuilding Our underlying faster we us the innovation-driven will model and expect to of enable inventory. recovery, markets than grow market a

of much also We in reliability a supply potential to headwinds and logistics markets. lessen alongside tight the constraints, commodity moderation expect capacity

the to last expect decline compared to improved benefit 'XX cash capacity which On our when therefore, cost utilization well is be to demand consistent cash, with billion, we million we aggressively and focus and $X.X of in year adjusted year flat XXXX the cash. to EPS between for full for to about continue inventory tailwind below adjusted to our -- structure XXXX approach track for be $XXX with compared of stronger levels. from expect about on $X.XX below $X.XX full 'XX. on year We and managed free flow keep our expectations expect EBITDA. And we're will well We,

free $X expect greater will grow XXXX be fifth remind year advantage. here. and all this work about Eastman flow strategic resiliency We what will results Putting our to and incredible gives than me billion, cash outstanding together, it free we from consecutive flow cash of these

is into and and continue then in meantime, First investments reflect of backdrop our we portfolio to how Despite XXXX convicted of our I'll on foremost, 'XX. from in owners we over we cash and I our as the years, and Greg. the team. this it during a stakeholders. position day off innovate it's trade those and who sustainable move us and persevere what Eastman With I challenging feel specialty company crisis, that, efforts earnings. several and at time 'XX, last saw level to we'll continue global disruptions expect as this to And turn attractive back sacrificed see finish through off the off to this our to every In we help all COVID to not have we our the and and we grow value macroeconomic control, on in as can win earnings continue focus ability confident people the invest long-term 'XX and new EPS to growth for our creation pay to remain

Greg Riddle

ready Thank Mark. for questions. Tracy, we you, are

Operator

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

Vincent Andrews

talk bit may Thank volume to much of can the mean plan you've of wondering molecular contacted? And schedule? how contracting details be time bit are could and you volume you the customers little what if everyone. a you morning new of for wondering your more that by the and level And Mark, you being of ahead signing terms recycling I'm the you us if a in up? ahead just already terms in up what give good start by are on expectations

Mark Costa

in durable that or it upscale that's infinite we're to into that plant so is sourcing. And for customers. applications their and incredibly carpet your do interest. value that are as them announced in its our to technology thanks we really the really can packaging up and to be have question. we doing have seeing drop technologies, question and they're in identical there's fuels, proposition solution. no important important much a as feedstock And both by that key environment. products with in that the interest waste we're we recycled, what other And our recycling to Because strong polymer as Vince, what mean landfill or performance we compelled on more which has excited applications loop, To cannot can get elements use plastic that's quality our about January, the identical. in be methanolysis. compromise that driving and We're the incredibly our to around rebuilding cellulosic product that from from methanolysis our recycling that a the chemical fossil is to the ends replacement. on well the we is from Sure, of we're mechanically Equally building blocks first solution as is I normally three we

fossil And position switch the offering, it's our so easy what of very provide. change carbon to over the same has at they're the toxic fuels. that's element they to everyone an and crisis, than want waste. there's easy solve to an to time, important but brand no And to have the and lower waste quality the third We we don't we be drop, need sensitive to and is that climate footprint also

want in brands. their a So and they story have embrace that it to great is

customers with prepared we've adopting. the as of so you've in seen supplied chart number the remarks, a on And seen the customers,

excited these is that now. et really cosmetic goods, working the are other companies So as packaging with we're well as in fast-moving great Lauder area a there's many cetera, about. that right And other us win consumer all

bit for that So exciting offering, coming we securing to provide in selling were really not and also value wanted I we get that's out volume. pace We're can also tell are a us. percent ahead to of We're the facility, But details in on going is. ahead in securing better. for that in volume at exactly what which that you the well is this

So really, I'd overall, it's say really encouraging.

Vincent Andrews

pass out Excellent. all through. be If as portfolio you follow-up could overall do all given when in to material How a you that's the to view -- think temporary, I about inflation is on current just it to pricing of the inflation lines? you that's how historically, raw you've you related question your what sometimes you are been -- there's inflation And view going ask there, don't talked for I product XXXX that? look sort pricing the philosophy the across just

Mark Costa

past. and a hot the Vincent, this going and number question. distribution then with a increase on view a value philosophy since And talk how very 'XX. times our revisit I'm is pricing the what pricing costs. we we've bit in to management it to Obviously, Thanks, about a material material days these journey been raw of And and for around talked we've is relative in just that about topic

the raw First than through get more strategy margins focus mix. selling the upgrade your our material And centered products on value products specialty improve and and for foremost, of and that significant best in our dynamics. business, significantly driving high-value you how markets is you completely the in value and mix that the innovation on so growth

you markets and the So to for think if of customers them continue with and decades, grow them of we customers to a you to going to innovate the market. where with that, and have we're set relationship help if about have in a those that strong win same the years have you're do lot through and succeed want you the

pricing that your into strategy. So factors

customers want in we for in as the us have dynamics so, our possible much our spreads as and with And materials. raw for to stability pricing of

point materials of when recover go excellent as we From multiyear go up. and the done we in raw do an share want some a view, price. So that, to of we raw value when materials we've prices want I down, to think managing job

increase raw stronger price far point, go than environment, that earnings year XXXX, as this to when what fact, And year-over-year the this very we strong year. to back reference we stable increases a relative half 'XX, in material year that was And expect. we're able that a the look to and strongest you of maintain year. back If maintain we so at and was until had spreads

So good reference point.

prices, 'XX we to and and expanded the before we more fibers. do in drop prices some we'll of mix and specialties, get spreads of towards headwind of that XXXX the the had. our expectations that we the spreads customers, So impact led war, half for with volume adhesives we'll levels, year, increasing significant saw second beginning shared still back go that, the in some to mix, into that so as in volume -- COVID China the quarter, we 'XX that also the that in have a including and and headwinds we're and And and with of in and quarter, working as pretty material in to it the the first drop year tires, continue 'XX, in our raw we offset trade are but the

headwinds in and think, 'XX progress of is and is is want for to volume the story one some mix those specialties to that, good that and improvement the great back us you story really making that improving towards So because level, on a significant. offset do spreads so I getting

in year. saw and of see continue it the quarter, through first to the to You it going the rest you're

put Another our thing price. we trying put where volume, to to you're peers our in pricing keep of in mind as mix peers mix compare is most relative to in

like Advanced example, moved looked up peers in we'd volume. you have So just Materials, our QX mix at price you if and over be to up X% I if in the price give in it, an into XX%

XXXX, So the just strategy, of and our from mix since been of we've the to idea secret in is the in returns explaining our giving significance you an assets. success leveraging about which our best talking

it, margins margins can AM can look improving course, more EBIT you at is first way of Another you we be points look this AM story. has also where at XXX and EBIT -- in at basis quarter doubled are and equal expect EBITDA margins, this be you look margins XXXX. greater I'd when expected company their at than doubled where to are or to mention, -- year, than to probably full also

is our about CI a story. to balance the pricing. add to also maintain the to confident very we're ability CI much So specialty. and manage better to to nice have the conditions And going in provides spreads market Obviously, current

each the So CI sort the as prices and are specialties, spreads catching balances of and expand, that other out. up

a it's I think So focused on as always, story. good And innovation. we're

Operator

next our take Wells now Fargo. from will Mike We question from Sison

Mike Sison

million, Mark, of control? end? year. the to how sort to high the $XXX drives And is of within you do that low the XXXX, what start at for nice million guys, outlook $XXX when think your and much the delta end your a take Hey, look you

Mark Costa

Sure.

we're So it's the of saw the I back in our seeing first mix year. And the but in improvement Mike, from all, and January. -- quarter, that's outlook today pretty seeing a really into mean, momentum driven we're a we where of and in by quarter obviously this first material significant that growth into volume in the the end improvement were going

volume improve just be will mix heart moment and earnings of as of continue to our ago, this strategy how the is, said we sort So year. a I

just businesses the underlying mentioned the our of and biggest products. Intermediates that Chemical lag the providing offset expansion we of to up the have Obviously, some some spread in prices So that's in tight markets that's catching I driver. other

So one where obviously, in of is CI spreads the the uncertainties, go.

you we of very And On million a the this short-term at program that great feel 'XX. year. that's our took look to confident that. 'XX the return over into going so confident cost The costs that. utilization the feel actions we from will $XXX can that we operational million program Or very getting doing transformation last $XXX it. about we job last about good offsetting doesn't help It's out. relative into of year, is I'm about have just front, remember, but help a tailwind also feeling 'XX, year,

to utilization relative all structure and 'XX to place. lower-cost So 'XX, relative tailwind continued so to that has be of in

market at getting to CI spreads moderate trying it's So at moderation year. that some frankly, how macroeconomic with to really all seeing the and about drivers we we're balanced and in of always call mix the point that of about go will assuming as other the then better being and the one with hard tightness spreads that, may along of to there. some all little that's the in the uncertainty, We're back some normal half of A volume better, face COVID uncertainties more conditions. are the recovery guess, out

Mike Sison

cash given on it. your going outlook given stronger. your what earnings for the use sheet flow as better? Got balance update to your much that outlook free want is forward, look well does And Any stronger, a you

William McLain

No, the priorities. I approaching improving and as it, We agree still, 'XX, we billion, Mike, I'll with we're the about increasing would in capital to think that say unchanged for allocation what thanks is, in our $X.X question. call outlook

reduce to in EBITDA to one be And a also think disciplined to strategic of getting as increases and share forward. flexibility years, expect approximately increase we we Also, that we'll the about go shares repurchases. $XX the $XXX the nutrition as debt approximately and and bolt-on animal to which into million acquisitions announced our debt. go with We starts there. $XXX we year. that used in attractive full So expect expect remaining with we Also, forward to dividend, will balance is about line we strong 'XX. continue. of cash But our XX bolt-on targets, an use we for the as for our And repurchase of be million million continue

Operator

go our question P.J. now We from Please from ahead. will Citi. next take Juvekar

P.J. Juvekar

is, Eastman morning, the on Good -- I to ranking Willie. who It how question in well. some compared as you great how much Mark. then Hi, are molecular are is like and had Yes. recycling congrats guys your cost regular you've guess Barron's PET? competitors polyethylene. a a working feels I get let's got your guess qualifications much in technologies, ahead guess conversion and any my Just I take say, recycled replace but how And recycled, with for Mark, ramp-up if a PET? all to you PET customer could XXXX, know new it's long than lower and long-term that, helpful. by molecular much could PET be you Kodak view,

Mark Costa

Sure.

solved demonstrate by market. as in versus be we're Plastic whether best that alternative methanolysis materials the applications, can I be carbon the cases. think far, it's product aluminum, we many to within take It said, glass, excited waste can trying and crisis So really leader is we plastic footprint about to And is a many where are in it plastic. the the has paper, for lowest us.

to address waste by but we -- far. we keep for the got So crisis. solution want climate best the being plastic And

what demonstrating to a up, sort to applications. do and of have we're plastic that. not So business single-use a into waste of and We're do trying defend that durable we scaled to upscaling large to doing. we're have remember how think It's important plastic I way we're

allows us at get of to a lot values well that durables as incremental margins. growth So better in as high

around fuel on the of today. they oil question, the cost where relative oil we PET this making. a in been When up, know Europe, basis. -- you polyesters a first than are wanting at equation answer changes content. do And PET right? around proposition a cost specialty now specialty leaning us on to recycled we're PET really that that this go point are And prices economic that your significant completely there's have going on different premiums market, look higher in of at products around business this can And recycled in from to PET detachment there's to a sort But don't up. XX% or today just customers our see from fossil fuel PET to is what prices modestly think If PET real trading XX%, do with the you haven't calling we costs or stock recycled opportunity on at fact, co-polyesters focused so, we for relative our a view, we From what business. investment in scale we to in

have for could up to customers how also around scale packaging. talking their make needs significantly and us We PET we about

us. have We customers calling

peers We us. have calling

solve We have with and governments work us, can problem. calling us asking of this sort to us you

and be normal of business out We're sense those I staying so of opportunities getting for trying engaging listening, who's those set us. the for into conversations XXXX. in we're which are PET very out And we most to want clear it. that not the out in figure back makes of everyone it got to we

model partners. operations, So problem feedstock it's which how an choose know-how going for if technical have that sourcing. scaling multiple potential provide that in And all this get construction, that can be up, airgas we of more with the an to solving we'll build back, plants, advantage us we operational all engage we do our and gives how technology, we we'll on means as to

all from of long-term in partnerships risk volatility We that this to view, opposed contracts demand of And secure allocation market be feedstock an will point balance we'll equity -- putting a will relative to our sheet. take we participation capital have to entirely not both more likely where the on as prices.

more like different gas, very So and go. conversations air see how we'll model, those

part because In very methanolysis significant than many your faster time significant And others moving we a are for very did need commitments. Europe, point, very facing think as Lots people we first practice are to taxes. of is I they're the long making Kodak. there. of probably

we a of that's a to And and allowing in so with robust set we expertise build how capability wide have have operational very feedstocks. a and us quickly up technical lot this move of

P.J. Juvekar

coming up back the I XX% then think by commodities nitty-gritty, And to as started before hear. freeze, after up. started propylene more collapsed on polypropylene as refinery CI, spiked, Texas the understood ethylene and to other prices Great plant I because

And guess propylene what to do But prices. outside, for and what refinery hard I would from benefit? see was you more? it's you a why expected can with so lower higher explain happened the but we propylene derivative you just I chain? Or benefit have from grade understand propylene And see the

Mark Costa

Yes, sure. derivatives P.J., don't sell all, propylene, so just of as We you first propylene sell from right? we noted.

And our and so, tighter. we saw Obviously, very quite strong into well, significant as hit quarter. the tight. those market held in were pretty they're remade of markets increase, way second prices continue pricing a momentum in going before conditions you increase to a you have all the the up And because were grids even to derivative result,

to propylene have pricing, and in from propane You agreements not that their that made based converted most propane is of RGP that are based. being remember we some propylene buy, our into propylene supply

merchant buying our not of propylene a total lot mix. in we're So feed

second The and to markets segment. we in good So more when continue to have very in going trying It's to olefins think to the -- are also and interpret good CI, these the you're segment spreads a And attractive. at tight. important note there's we're results quarter. level, than driver remain this

Same to a pass-through is of a great tremendous amines, from cost vast So customers. earnings to which acetic actually very of XX% And functional has track that contracts. of improving on hydro record is the and is true now track. is of had revenue on business 'XX our majority and with number a steady and our through

in earnings more so trying be And our spot us more and to as not 'XX relative flow. up and we're going strategy stability as have but as our to some going have specialty earnings popping us 'XX That to much give not others. prices in predictable 'XX. of it's to CI, be cash And really a stable is volatile this on company, to ones gave year, to stability we're in

Operator

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

Jeff Zekauskas

you dynamics higher business. you pressure there? Advanced your you your costs the raw raw Materials pretty How business, much In are that material describing think are in lifting would really costs? about VAM. from the would in raw inflation, Advanced material there Materials integrated pointed talked that be material I to is And what and

Mark Costa

for thanks Jeff, the So, question.

We vertical focused integration. are value very on the of

us. you noted, for creates a lot it just As of stability

So the most that's, to a compare large in a it ethyl number chains through of competitors. I olefin for our quarter, from and significant way part, provide to the calls we reliability customers very polyester important received our a chains, first chains, VAM that thanking some through of to storm market demonstrated well the make our interlayers. how appreciated and us We vertically our integrated them. we're deeply reliability that is they supplied customers for that got the not place we acetyl and rely don't But and one for our from on suppliers And VAM.

outages. in the of we us in sort saw, about acetyl the number is storm So already unplanned has Then to interlayers. unreliability due problems to supply the plants of down interlayer business. It a quarter. created the of But ahead for specific some the were shortages there that constraint having weeks we three were fourth with

market full near of they're So rates. VAM while And global then they're about not took offline. XX% market operational, already was Uri the tight, back

shortage, it's So created make can to global you a back here forcing are quarter. volumes on high, really pretty we significant us as know. interlayers and the how in much the VAM prices second cut are And

getting it. place The but of teams us which that's phenomenal problem, help us I help resolve we're going places it and it But lack will diverse this a future. supply-related job the have is the through for not our total complex incredibly around a to quickly. of in better world, overcoming here a integration. have And base to of all out portfolio vertical is a how supply have sourcing logistics, the one done just pretty now where So VAM from

Jeff Zekauskas

Eastman to transaction wants it? that a AFP the in want what to be will segment. when dilutive of divest you know what Can it And sell various describe I business sell? you magnitude you is the

William McLain

Jeff, Yes. this is Willie.

for the thanks question. So

as improvements recovery with to all progress the volume We% overall these actually well improve at it's looking adhesives EBITDA options activities market of making businesses businesses from to actively and the businesses. talking to we're going basis, been size less we've strong underperforming an innovation said, previously for have customer that as seen two than disciplined, be be tires. gains restructuring we're on as you we and And we've on businesses both As continue wins. XX% about. for and think the But about the these

Jeff Zekauskas

it? sell And it when be will you dilutive

William McLain

No.

and As the we have EPS basis. the it, call the that on net it optionality call neutral there think and about EBITDA underlying I'll be that an value businesses it, of we will the I'll

Operator

We take Fermium from will question Mitsch our from Please next Research. go ahead. Frank now

Frank Mitsch

me could let echo that in 'XX? half follow-up a looking I of the it sort action divestiture? year. we of at here if And first to on that put the Are the of in And some last time just really. in frame terms start Would question, nice you

William McLain

appropriate. we'll what improve an processes Frank, update I and to these is we're as you would we're at to businesses, say not when give on comment looking it's going ongoing continuing

Frank Mitsch

said Materials area Okay. obviously, in overall growth impressive very and you Sure. And think the and growth. volume Films XX% Advanced I Performance

trending the that to expectations Asia quarter? is was here to second I Asia. geographic about how the that Some comp relative easy due, business a and you -- Can of guess, in talk the on basis

Mark Costa

Asia AM of coming a good The Sure, back to recovery good and was of substantial, life. that was here to Frank, from and part you.

marketplace. is our relative performance to we and XXXX, in relative strong very we 'XX, in growth go AFP the looked CI, bit 'XX, overall So at the had if others to relative which for and Company XX% performance a had unusual actually to back you to and

against really a interlayers as is one as films as and place Asia. tough challenges AM Supply really was So that comp. well and in on did chain we face going cars. short, example, an were But buying

well. of growth is And already year that in driver So America the some expect is as though, quarter. Asia of What well I'd quarter, really second China a a Demand North trending-wise, held as recover is economy second and spike recovery. so quarter. quarter. source led the Europe and Company starting you is, of of big had here up America to for the less say quite up. to second recover started might the the for the to we Asia where And has AM in in had ago the North growth growth in well, In well, the

you the as world, recovery that the around the of follows to revenue COVID and our we move back So as be expect of sort it into half And Europe better still just year. follow of lagging is sort trend.

products, to Tritan, particular, not overall in now the pull demand a our across for that conversion us just by a the we and performance that we adding be Tritan, the copolyesters better engagement that at economy try so specialty with is quarter Tritan, normal this growth we're getting but line to much to is of now. trade But number now able the the lot is -- in serve free, customers, incredibly is better, Demand just copolyester BPA growth two strong them plastics well. but done of proposition so years So momentum is forward in and -- driven planning have, as to our value to end and circular strong. were so converting having of business a And good. dramatically it to from by but on

to film than that's and question protection on right? story, great well. best really Performance around a our especially dimensions. Gen original performance, product X three then with that. going the our that's paint your dramatically So got better We're That's And We've Films, competition. winning back portfolio

install rolled great for installation patterning, to We system around important helps dealer and quickly have and of better strategy our we network grow install out precisely world through And aftermarket. which have making product. we've cars, than new incredibly have put the network dealer software lot PPF best on the a the into which of a the them is And that effort and competitors, and channel dealers better. a

of past is for was year and have that strong the restocking we of all interlayers for So quarter. momentum but little to of bit some have the an in rest the trying. a going three capacity incredible inventory when this expect get that constraint back business especially more year. supply to on be we was great China, segments, in A It first

Operator

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

Patrick Fischer

just looking that Dallas year around is Obviously, your at the question great a First in a space. great acetyls chain. competitor quarter, had

on if acetyls of different. time? need just could VAM footprint other this how offsetting integrate you for VAM acetyls? tow side from your of over some kind Can downstream And Your look footprint more about the derivatives, the much of net chain acetyl Do is talk us back of your some strategic are what you into you if in out derivatives? to And the they hit are then the year. outside other you

Mark Costa

Sure. Yes.

not is different trying So entirely business very exercise a is business of our ours. friends our to good because comparisons just to than in steel Dallas do their

extremely goes a acetyl as as or there's make other where tight acid, make variety we VAM high off We that into large right go is that but of make market business what cellulosic we in acetic an they they're of or conditions now. go component, and that don't and and our and obviously products enjoying prices all. polyester forward products player into we acetyl at hydride exceptionally then olefin stream So -- well emulsions don't emotion a VAM into DC are products

look of when market So passer if that of doesn't gives make make pops the We in those that all our it acetic and and and in big out specialties the total acetyl that just Materials CI, and used you isn't want and including the but want in margins those that of we look is and we have making is Advanced AFP silicon in do you if we being integrated to which margins to what hydride extremely the stream, that fibers, at attractive, at isolation for for drops That specialties. we sort limited And in allow but those from not We're cost have drive stable conditions year-to-year. or cellulosics. profitability market selling are high stable business contracts to acid us us nice earnings, do is to as attractive. lock conditions. stability co-product

different. totally it's So

integrated a the integrate strategy Solutia that being as raw from place picked view, not interlayers forward up We didn't VAM integration vertically the of we we're materials. business is vertical and PVOH and buys So bought the when them. frustrating where very in our deploy it capital is paying because prices shorted very on into predominantly and we're products to making those is for our when specialties. raw materials right those high But now point

or our customer in we're As supply. keep trying OEM auto to glass auto customers the

Patrick Fischer

forward? where And maybe as it then that leverage How geographically size going chicken think your got you sits health. to health both forward? versus animals is different business Perfect. about hogs around And species, since just then highlighted Can your it acquisition the animal with cattle? we animal going and versus one should

Mark Costa

and first the I'll answer will the second. take Willie

William McLain

overall to you think looking it XX% accelerated that growth outages forward products and and roughly believe we of that can will this So as about functional the acquisition add.

Mark Costa

animal really in nutrition trends are significant and the pretty attractive. So,

As and gut most obviously of promotion do we to and you most in very, know, Historically, animals very important. health protein. probably meat And antibiotic-free want growth antibiotics use is it. people

And organic so assets. to a switch there's

of don't But this market We lot do for have the assets area. formulation those we products. a broadest portfolio organic of

with application. capability formulate get several we've higher growth. depending over comprehensive dramatically to the of two accelerate on sort development assets combined that So years these formulation the the ability and four making selling leverage application in and by than can our solutions this investments to acquisition, formulations significantly our challenges actually times more last value the And been to

in in play for that this globe nice our broader a lot given in more lot products that for can of company, acquisition solution and higher brings it's of formulations, take of value So our capability And our we creating our mixed customers. a marketplace capturing around to value a classic then existing everywhere real Spain a strategy else footprint. the commercial

relative global Spain. on capability focus just upside on huge a our their sales to there's So

Operator

take Begleiter next go now from David will Bank. Please question ahead. Deutsche We from our

David Begleiter

in margins going Materials, discuss you this Mark, the 'XX this business profile well as can the given as further through of margin both quarter, in Advanced step-up beyond? forward,

Mark Costa

to in right? in so for to the conversations dramatic you, for profile XXXX, said great back look the here remember think Advanced decade, David, if thanks you improvement, Just this, the Materials speaks want I for these question, I last and a having at itself from be margin we lot a made we and incredibly where when lot sell of going leverage starts investments asset to And but to fixed of Tritan. said, grow, look, is development impressive. and we fixed 'XX, the we added built application this capability cost cost, capability,

for leverage you laid back business. to XXXX fixed of go materials, If in cost on out the Day how Innovation you presentation we this works it all

as at will as this forward, look we margins think I these improve. year, we continue be sense, we quite which And that to will attractive. the in go So margins think

down obviously, going 'XX from they're interlayers and utilization, such took because not Advanced Now to they 'XX, in did to a on performance pulling improve in hit especially Materials like asset as we we're films. inventory

earnings You have to remember, grew specialty year plastics to actually 'XX. relative last

provided and big see products we films are to attractive to acoustics, everything had up economy, margins. very for circular performance upside. attractive. us interlayers, like to relative a else, nice as PF. we we display which But in they whether Electronic stability is in grow has another much significant So heads-up continue as exposure margins, Tritan films the grow and continue it's anything value interlayers better the lever auto very the and paint we vehicles The or pretty protection where

that out want to raise the more than it head you glass need people, of So roof a hike EV. Aerodynamics. of When turns because up lot ceiling you don't into the need our car batteries an the goes because put to the

And making putting claustrophobic. roofs they're so what windshield to not bigger cabin is on doing the and bigger sun make

getting in functionality estate EV. And with car higher a that real more in space. glass of requirements we're lot every have then they the So much

color more reduce to still it air They rejection to tune how load. display want have just And using that of sensitive want reasons. you different the have solar they glass. the to but safety and actually capability better the They bands. have frequency When have windows want white noise, acoustic, want for they're to noise, more which not of conditioning as more they're you in part noises parts people they're don't sort heads-up on, of able now more they more be other have to focus to, you So is engine acoustics. have adding that to you

to all And put it the takes how X leader sophistication we're tremendous all to functionalities interlayer. these that So functionality that. into in, in world do technical

two the brands. great at significant on have it's that value some And look so that more very space. adoption we expect across some a probably leader we car And EVS, to these already capturing. all products three And to times with we when continue this of in per we're

earlier. we So I being cost growing, spreads growing, volumes see managed, discussed as mix controlled, being

will and earnings improve the the year-to-year. incrementally improve so growth And margins will

David Begleiter

rest M&A, Sounds the pipeline seeing acquisition you're that can you the three discuss on size M&A up very today? the good. And and of both just

William McLain

flexibility is was continue single price. So David, the XF And on in Again, that shares. And than Willie. off growth we're as looking focused into up forward. to have think roughly we But there creating buying organic go accelerate ensure perspective. $XX that we size about we investments about more the and targets digits value of that just we look, back growth to million 'XX, pipeline as do Obviously, as we that. the potential think capacity we we're also acquisition accelerate a the the the we're from going this high how as filling we to additional our on paid multiple at have we'll

Operator

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

Alex Yefremov

run thinking you methanolysis-based you sometime start for point polymers. to, strong? you Or spoke on think demand could your about you initial in think, Mark, good demand continues your to initial if have additional expansions and turn capacity? could you so what At about be capacity, Would plan? earlier about investments

Mark Costa

just a was your hard to questions. I'm I bit sorry. hear little

make it to correctly. I'm repeat it got to back going I So sure

would would XXX,XXX when ton beyond plant? we first methanolysis we need saying have are capacity And So you the that? what

Alex Yefremov

I'm sorry, Mark.

products methanolysis-based Demand for me this. repeat is strong. Let

you Do to about the So Or start-up next or about months capacity? thinking demand could and maybe so? additional thinking how expansions? at think plant enough, point the what start can have sometime you works? of you possibly expansions if in start strong see expansion about it you think you first would XX is additional Or

Mark Costa

Yes.

this building And demand plant mentioned start, we we we be as to you in could our not wanted before will how we're I would to make to but be the we on than up all conversation. for PET that wait plants focused take we're the X, to said So and more plastics, from start for world on plastic going report our depend it polyesters cellulosic about plastics depend plastics from our that people goal, That's will our waste. about for stream now, specialty necessarily. specialty talking where going output of a December, the see XX we internally. sure, building another if plant if additional our it this sustainability years last But our products on around it to. to mean we of is earlier and I me use long-term partnership are goal. ask

and highest what stopping -- attractive that, first It's to So We it's a return margins. get We very of we're just vision shareholders. And and value us is not great confidence that a possible. seeing plant. accelerate story. so at great far we're we're get for better products, this our gives growth

been we're company, plant. this alternative a success seeing is going I We've into We've in the XXX expect and that's with than not more and But that's something range doing for customers it and on be play. making been right? over wide of plant partners. only having well our brought yes, focused I products. it would model also to acetate biopolymer this cellulose years note So that, business sustainability original work we'll filling and first this building if up

cellulosic obviously applications. half now It's made half a and those it it's that capability a other acetic polymer, we and forest, fuels sustainable right? content to in the products. to add in other biodegradable So from planet is made a hydride have recycle So the to half sustainable unique lot certified very from on of is of of today fossil biopolymer. And the make

led from a it, a an recycled compelling story right? ability year phenomenal has So the of market products compared biopolymer, the just including our it's content growth waste half especially to add see a of on like on it. it's And bunch content that's tremendous And durable plastics customers it now upside the and there's well. we're just think back recycled and to how because also recycled there's expect the cellulosic and quarter. adding a wide it's it's anything other got extremely this in a just a for that. to we of plastics And stage. first of probably space. And it's advanced of significant of in based materials the renew us our polymer great very and amount As else of take lot been And it space in biopolymer single-use the we a early we fast story. story content in we to as it's success, the spectrum as plastic, recovered that in And to a growth that's textiles, part now biodegradable,

and another So we capital, at don't because add have existing leverage of to great margins, growth there, capacity value, dimension our capacity. that's it's asset leveraging to capability higher a whole better existing just

Alex Yefremov

ramp of fully higher-capacity quarter? first Mark, through more? about to you Do in volume as benefit of as do relative there's the benefit target as you were stood utilization. year, annualized full QX? that Where it of think a year you sort Or million the if $XXX you think we talking we reflected that -- follow-up,

William McLain

in highlight Yes. and QX year-over-year a tremendous is expect This QX is as see Willie. of And to utilization would reminder. I the we what a benefits amount

X% rate existing obviously, well as capacity already during So XXXX unit X% additionally, to looking get -- the inventories, here we has capacity we're expanding -- this making bringing at of amines QX but polymer had the creep. highlighted, that QX. year but high that year. expand, on at future hard substantially quarter, rates, the we as we're our means demand, and we We're how this not had we time to we the in in demand, building first and including so Mark and ensure a in roughly can which also Tritan, only schedule utilization in interlayers on the running And QX facilities We're investments we've shutdown. capture a higher converting here low or ahead

that. So to mix about deploying the in but capital importantly, upgrade you'll focused that growth do get QX, and more the and on QX, it's cost the the continued benefits we're

Operator

now We from ahead. Koort take question Please will our Goldman go from Bob Sachs. next

Bob Koort

to there's wanted out hasn't help I Mark, if would flat. how keeping you costs figure last know in creeping you I your are assume some guys back me headcount the I and how changed, from could year.

new expansionary You've got place? are doing some efforts in and programs that? you How

William McLain

is been Company. EBIT EPS. we've our this performance, structure teams in managing and our Bob, it's across our great are doing cash EBIT, delivering, flow would I tell Willie. up it's the showing And cost is So margins, whether overall job you our of and What a

accelerated then the ultimately delivered, end we've So as back efforts towards QX we at COVID about our think of we year, plans what started the action last and end. we transformational

last would we're cost I that to the those comp, from believe, highlighted, last And we year-over-year. line, just specifically that year little and SG&A actions some benefit this benefited As up a not I bit. I about focused. that's around repeating market-based year comp we you year, had came was due decline. the financial fact we that as deferred into set our But you well out, market here up point think see going also probably QX, as

margins that we're a to just variable due last little denominator bottom the price Obviously, So inflations fall of bit dealing we about to with. that talked through there'll was that year be the math line.

Mark Costa

headcount is overall Bob, Yes. down.

sure the well So is optimization last flat part. world between some as the the done that the assets we you headcount shut year, down. not I'm down got headcount around actually -- we've where it's as

Bob Koort

long get to Mark, the was you're it's just that I to And the rate. at EBITDA rate, I did run want it XX-K. I misread the Maybe since deal. a the on ask, been blockbuster a looking earnings traction time run it. did starting you appears

screen, do organic right you the -- Or deserve we You to excited? have maybe and the busy the radar something plate do again? enough start big to you keep stuff it's on to put on

Mark Costa

of producing see attractive first that of cash of front positioning earnings our us all, we very have 'XX. into innovation, a exceptionally and continue innovation and love we lot Bob, in to attractive flow. And us, the So it's growth and portfolio we

like in We in, market front in also like and 'XX we beyond we're that there's markets us and things automotive. of in think aviation, recovery the still

cost we're story, into tailwinds getting I good. stronger. as And that So getting into will think, our sheet with feels And sheet balance continue. go balance have shape. the all mix that we reductions, year of year to volume The is going obviously next better is so

strategy what we focused a Our on remainder make with what to can stock M&As and to trying what do we're sense continues add be the buy lot organically, of to back the to bolt-on cash. of do

So that's on that's doing. what to our and we're focused now, going strategy stay

Operator

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

John Roberts

overshadowed plastic our gasifier. you in other go? ask gasify waste? activity the Mark, operators can you as it help I'll here. And methanolysis that And one doing processing you're can taken plastic the process Have just on as has far waste

Mark Costa

Yes.

doing what to technically with we're it excited So from we're reforming the and really what's gasifying coal about called plastic. gasifier changing

got Bob. biopolymers potential. about opportunities just ago growth textiles. the And plastic in all the getting in started, gave just That's specialty as well as It's moment so see grow huge speech we're I plastics that waste, we and to a

waste. plastic buying And put Mixed It great. separate remainder it really buy raw which thing the gasifier advantage to and us ability into is adding the which the out we're is plastic of gas been and And So then feedstock incremental unique continue excited and we hasn't methanolysis the plastic it's gives plastic us great is puddle about very kind a in great the materials capital take that. a the because can polyester cleaned that waste. good about the low-cost up. that into fire, waste, can buy put of the news gives to any in

we capacity, space, So as amount that lot have our a methanolysis can capacity growth we of we and with and that as a to do see leverage. no, excited polymer tremendous what about in of

So be no, great. it's going to

methanolysis not just side question, your the the To pull of part working inbounds far of with focused we're taking resources. -- to now. that's deal As that as the a we're with second all moment, trying really the we're people, on our other right at on

Operator

Jefferies. We last Alexander will question from Laurence from Please ahead. now take our go

Laurence Alexander

the And to M&A? are the what would Or do be you there can -- we you any structure in up and Would an do roughly of in giving sacrificing? cost if say, is the discussion able you five adjustment cost put so, you flat, what years? in barring Can be three, next, keep over you productivity period? perspective order that? Like terms to

William McLain

for question. Yes. Thanks, Laurence, the

a growing growth and said year incremental there, look gains we roughly cost started earlier, with substantially cost the grow another continue goal reducing our forward, is we we over structure. to the million As 'XX. $XX-plus was capacity in we continue without our as Mark that, our to by do create compared delivering $XXX Laurence, a to top structure XXXX, fund we see up sized next we're flat look million that as and plus. to on Also, of of frees that to what trying And to cost

the also look have we to leveraging that's frame this fixed and we've gain And sites, would continue better we at I assets previously. way additional capabilities cetera, it cost at So point. leverage et to where to continue as highlighted

Mark Costa

'XX, I 'XX to on our cut 'XX, 'XX. in we when making knew could 'XX compromise on well allowed We, crisis kept any out growth to R&D that our easily portfolio. same come and spaces mean that's because in innovation, future. 'XX, and you, in doubling down which those I and the we're have assure even thing we 'XX, in investing in on us did extremely frankly, of But not we mean,

of to we enable never technologies a much think growth. a invest efficient variety operations allow are in long-term us So get more the other more we our digital compromise going S.J. done we're do to lot as world strategy, us our but to us well in how and that today as routine tasks available to things of run to be

Greg Riddle

remarks joining our all nice today. the afternoon. of will A you on very for Thanks website plus everyone, replay much, posted the us a Hope day. transcript be this have

Mark Costa

everyone. Thanks, the questions. Appreciate

Operator

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

now disconnect. may You

Eastman Chemical (EMN) 30 Apr 212021 Q1 Earnings call transcript