Eastman Chemical (EMN) 3 Aug 212021 Q2 Earnings call transcript

Company Profile

Participants

Greg Riddle	Investor Relations
Mark Costa	Board Chair and CEO
William McLain	Senior Vice President and CFO
Jake Laroe	Manager, Investor Relations
Mike Sison	Wells Fargo
P.J. Juvekar	Citigroup
Jeff Zekauskas	JP Morgan
Frank Mitsch	Fermium Research
Vincent Andrews	Morgan Stanley
Kevin McCarthy	Vertical Research Partners
Alex Yefremov	KeyBanc
John Roberts	UBS
Matthew DeYoe	Bank of America
Bob Koort	Goldman Sachs
Arun Viswanathan	RBC Capital Markets
David Begleiter	Deutsche Bank

Call transcript

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Operator

Good day, everyone. And welcome to the Second 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. Chemical Relations. Eastman of Riddle Company, Investor Greg Please sir. go ahead,

Greg Riddle

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

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

Before we begin, I’ll cover two items.

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

exclude and referenced available the measures non-core disclosures, release, news earnings second on website. a associated available XXXX and our call the GAAP to certain directly are this in Reconciliations other and unusual financial of description financial results including adjusted the most items, Second, excluded items. comparable quarter in which is

and our go the prepared on last first remarks slides posted accompanying Q&A. let’s into straight now As Christina, start we question. we will our website please night, with

Operator

first Mike question Sison from with Instructions] Fargo. [Operator go to Wells our We’ll

Mike Sison

of much comes specialty of will think we the quarter. businesses do you from half think morning, from second guys. and the Nice about outlook when Good guess, Hey. intermediate? it how improved I year, the of how much come the Mark,

Mark Costa

here in beautiful we or half. the in making and year, we’re excited back and When your had be as driving continue results or relative which about will our Mike, quarter. that year Appalachia, we Good go into the And this a the the last of even excited really the momentum mixed the building forward will in about it’s to the force we point of for earnings progress strong in the morning. really we we’re about XXXX into and great day that it, year. second Sure. the volume to growth morning, and XXXX And specialties in specialties, had back back especially think the momentum half we’re half

sort of and the we strength expect chain volume and mixed temporarily -- that high distribution abate. of quarter temporary by some in of some and costs second in the sort factors Now was to of faced that growth offset those supply other

and not first to volume only do you spreads growth, So half. the mixed in the you relative improvement some get get

would and to think that to into improvement think, drive lack fourth of year. they’re progress on going year I that’s what I So And really through for make have we quarter that, restocking a in to-date the it’s specialties. it hold much at say is going will that to seasonality, don’t the nice as better, we and look normal going this made than customers extend up next

big a that’s So driver.

particular. got AFP that, of hit lower costs, a that shutdown you’ve to addition lot in In

you’ve So got a that as benefit.

chemical this from it spike as distribution intermediates, and You’ve expect as There mentioned of are, moderation some operational headwinds we spend. gross increasing course, that transformation and coming got I spreads costs work, sort our we and off in have lower was. of the operating of all is earlier,

of back So how specialty better a definitely you that. there some it’s are a and of deliver first. than that factors But offset that’s more half some the story much

Mike Sison

out sort maybe had new what you facility this in point to the and lot do new terms point of follow momentum at as or consider a at commitments the -- you’ve noticed you’ve selling continuing quick And of there? companies that got to of up, facility. six, close QX you for a your Are the I it. slide signups expand given in Got cool

Mark Costa

question. great Mike, Yeah.

economy that really of both we’re than excited plastic traditional that way So solving a dual a process. of in lower the a does out fossil and challenge our carbon footprint waste how about current using fuels deploying environment in our serious challenge investments a circular are planet, really it and a getting has the technology avoids

win So, that had in see solution benefit we’ve really important elements tremendous and really important. and engagement. fronts. customers on our a the are And it’s both Both

And brands will about, of technology, getting come position saw a from renewal in great and as is online. into that quarter, we’re and P&G in a As our well out technology brands on other take to sign we first this on Ferragamo renewal the that signing facility variety you recycled first carbon biopolymers. us our our as polyester putting of talked on building to top both a spectrum fill the to content,

place capacity getting assets. already we’re with a we because this, Now benefit current in our have from bridging

in So, quickly our sort growth next. that in normal this But part position good we’re building is And when a these plant are That’s plant great. interests going for ramps best fill volume this. and improves story. line yes, a the there product really certainly that’s to And with and return. which of with especially in of to the we’re up know specialty that’s products, momentum to year build beyond specialty into is it way be going commitments, and you not out

excited strategy specialty We real we’re have core a about. that

We’re rates solving recycling lot carbon of than keep higher double mind and polyester the the beyond to still polyester our the do because even in to today with glass is in problems, It’s and consumer you moving a higher. have when of of about in that in fast going footprint world aluminum packaging that, a important But goods think there these invest out much realize they plastic. has carbon lot world footprint XX% that. that to is customers and continue to best

to we need solve So this problem.

is brands solution, waste to It way environment. of the Our recycling carbon problem. as out the the by as a best polymer well solved get to as this footprint understand needs be

engaged. have would problem of their number a that think about we the countries how back solving have to a us facilities us to challenge needs business. going and we sort waste and them clear, their potentially into how of not so engaged of dual actually engaged merchant build packaging help solves get for about with But really we’re on we to So with number be this PET we’re brands

got of airgas more but a and the back in it’s table get We a are in making technology to We be this happy product, scalable. to the model. bring proven the in that’s lot

capability, that know how to coming difficult operational ability technology to up And into as operate want of allows and We well this stream a to it. a the have of lot facilities, to of history we as operate us which them table, with a lot scale kind stability. for a got when lot we bring build content is exactly you’ve and methanolysis really of well what sort of spread variable feed of

and access. raw got to which well need we’ve to us sort predictable give well access certain -- contracts as material a complicated have we significant, supply is that So margin with customers of to feel but long-term and still

capital and these think we conditions, be the meet we EBITDA that for these on amount facilities build each could generate quite sure these if and return would we’ll substantial. facilities the So, of of

be customers going the this. to now. the going and We’re But on in right to But able of of engaging details forward. not about excited several get it the way, the these depends hopefully, doing into build we’ll that we’re and really plants countries

Mike Sison

you. Thank Great.

Operator

We’ll take Citigroup. with next Juvekar our P.J. question from

P.J. Juvekar

Good Hi. Yeah. morning.

Mark Costa

Good morning, P.J.

William McLain

Good morning, P.J.

P.J. Juvekar

Friday with call. feels It Eastman Yeah. like the

Mark Costa

am too. still I little used get that. a.m. X disoriented It about am trying a does. to to I

P.J. Juvekar

Yeah.

sale a loss Just of with last on a the the that decline questions, Did getting of was against supply business, years, loss business value? the took this so you couple big significantly the the $X.X demand in tire billion. book of few was worse big the the sale

William McLain

Willie. is this P.J.,

doing shareholder acquisition interlayers that’s model which also many and well growth incredibly created the competition. that’s the significant been and that was us me films position here. and Let macro, and that we the headwinds Solutia of highlight in through fluids many couple would calls. growth being start driven years, with the innovation a past right now I have out value are on Also we’ve the and performance that one-third fact transformative those of highlighted we’ve highlighted of over specialty and innovation the also trade, for highlighted

reallocate this assess business, to let don’t know, we the date. us the goodwill as as rules the accounting purchase So back you

is resulting think with value in going move write-off, we’ve it’s strong what just overall, transformed, growing but we those economy in we And amount yes, $XXX actions. to focus a got the it’s and but about, a and contributed we’re So, also tremendous forward million we’ve and decisive of been I we’ve a which need the two-thirds. to now investing on circular believe Mark and spoke portfolio

P.J. Juvekar

the plastic get consumer Okay. recycled that plastic with higher, that on. what consumers? that at they’re material side do? to molecular later with In and recycling, i.e., to if follow are Thank their Greg they’re customers, that, other of companies if then do raw where And you. I’ll on the And up what Mark, you waste prices? expecting costs, planning to the the Is pass

Mark Costa

a interesting conversations majority access around one have circular So plan plastic vast there, which it. it’s waste of the there’s of a but you structure is also more the supply a out is and the to have -- to economy,

at that think is first recycling polyester XX the actually that bottles, extremely And to textiles annually clean just when bottle. clean into country to that it of mechanic XX%, into of pounds XX% mechanically about because U.S. up polymer building -- realistically So, not of you actually XX% produced recycled back can we’re the about carpet, of be around packaging, there’s to vast XX% have into only goes here, in this recycled be what back have packaging. in you you when into and a melt XX% is majority only textiles, can and and polyester the look billion point waste

limited recycling very actually recycling, an packaging it’s in and doesn’t on to all carpet again much you ends up mechanical the because have the can then solve textiles something landfill, really problem So mechanical and it. do with ability with how pretty

and after waste to of going through a very recycling recycling, breaks this also at it we carbon sort and the footprint, be these when because as doesn’t cycles. five life want look So under of have it down any all possible, happen mechanical long-term polymer good limited has to a much because as you it’s scenarios, mechanical

molecular have materials a because alternative really what worse problem, again, and is the footprint. recycling, a doing essential in this we’re which carbon essential solving to is So, it’s

small we a being polyester teams attempting only So in how on for how leader operations, solve there be into we’re our on resources is and else right? the have other and to out in the startups a ahead have world, really of feedstock cetera. this -- excited sources commercial engaging scale, going everyone and only multiple we’re sort a scale technology, advantage this they we leader to space plant, build to We way don’t the to of the et to have of planet in get that of the are

we engage with when the So brands.

we’re compelling have We to actively assign our it. versus of in suppliers to being do to landfill willing that’s it very waste that. able you’re so but to not deliver quite landfill, the a access scalable customer actually engage to about ability just and And and going how good and when a value story feeling we be solution

there not we’re get to with going So the prices. in

at We’re at we point competitive that customers our confident the in can view. confidential recycled of a And But of customer very details the waste side, then how premium. a recognize to accessing is going be as feedstock keeping and very strategy level. affordable advantage our content access we’re we’re on a

U.S. you with the The substantial, now the behind and as PET fossil all January, far to XX%, Europe in fuel-based now. aren’t climb are shared to back relative premiums PET way premium is well. in XX% that we As in starting the us that is right our getting premium

this provide more on market level. is going you what what additional can they food price our can the from the PET is And then at get we that’s So grade to the that know money. cost and certainty spot, predictability,

So, part on our our gas proposition air that’s models. of also value

gives while make to a work, make them to customers to structured long have that commitments we how price manage want -- and for it long-term lot have is to more our our certainty also in economics we their business. a way While

works So, I both think, it for parties.

P.J. Juvekar

you. Thank

Operator

JP will go next We Jeff from our Zekauskas to question with Morgan.

Jeff Zekauskas

you year about chunks you as did earned your very being every amines your think $XX analyze earned the about that I Thanks How talk operation? and I the talk change commodity you sometimes year? dynamics $XXX And you business, do intermediates, those plasticizers, In million think year-over-year million. much. last of it. functional you here? subsegments the Can in larger Can

Mark Costa

Sure, And recovery in better kind similar to want yes, year. Jeff. have who part, better to the I intermediates significantly But combination versus the chemical CI like in last companies the but And that’s just portfolio. this spread it’s that driving it’s broad get quite a success of I other many asked. composition of first as products you get to of volume before

on XX% is actually of They’re revenue the So functionally means. pass-through it CI -- it mostly in means cost contracts.

over they’ve growth had a ag we time beyond bought of very on since nice just top Taminco so way And had they’ve predictable business steady and attractive is and their delivering solid the that normal in steady And volume structured earnings. a the accelerants got few very frankly growth. they’ve spread

a we’ve additional for for and ramping So on their core lot top just Corteva that growth plant a we of got are built product more us that giving business. up that’s Enlist

with market And get olefin leader a been and quite we’ve then but business. great the other intermediates time it’s far year. growth been connect have the we growth and Olefins improved not then, a asset make growth got above of a have has this we relative part have significantly underlying course, Then the to you there, attractive plasticizers. there of that business as improved chains with of propylene in it’s to market we business the a also spreads just the dynamics for not been asset just significantly well the bigger dynamics position in so long you’ve done just and have in in by propane. replacing than do that story steady spreads business. nice obviously We’ve nice a marketplace. very yields -- which that But spreads, And is and with plasticizers, plasticizers that’s non-phthalate the So olefins been that yields. set

for been that’s Acid performance. the much fuels a more So driver to It’s remember. a us. important is of business

make very acetic acetic really not hydride. much. a acid We’re just and in It’s We co-product.

largest the right? materials, made off quite with course, the acetic look and they We’re value of in significant cellulosics, in fibers. that The stream -- company so acetyl hydride average. the world advanced the to of AFP, we all are player that and at margins And and are that specialties, make and integrated above when is of stream

So CI we’re some expect well point it’s olefins where really now, about we’ve even the then made obviously, to But moderation. and there, having right stability. as at investments improve benefits, some part as

an how to we lot that earnings have on lot contracts of a up spot, predictable in show annual basis really that want business XXXX we cost because benefit on a of and So, relative pass-through XXXX. and CI versus XXXX held well

investment, others spot But than course, other as getting tradeoff. when make we’ve ability this us things phenomenal to year ethylene we’re we’re still done prices that not not reduce and the we same a has a have. RGP produce the amount to is. it when like make investment benefit attractive others bit quite quite front, did And which it’s of a it to might the been give that happy better the So on of some we and

shutting earnings that like portfolio So taking down that’s business reduce volatility. the our of been improve has to been one volatility sites in will and great not which Singapore olefin but parts way highest stabilize that a we’ve down just of and optimized

in growing part to things Board here value on the support growth. is and business going to it in exist so you’ll So consuming optimize important And to fast down are which chemical intermediates volume well. keep specialties across specialties, because see going it’s the really a the of are mind, their the lot this reason of

creating of they’ve of and the for cost team and value really optimize the So, reliability of the overall, value creating proud year. its half it’s customers, optimize our in value to role, the we’re first playing how structure

Jeff Zekauskas

commodity is internally and in produced How much segment used what’s that current roughly in how is of environment? the changing the

William McLain

what I debottleneck approximately growth to in and that we as would so, say highlighted, and a And year is continue XX%, X% get X% yes, has and Mark space.

the to customers, reliability time, keep time specialties at be our So, over trying but the same our there for when it. need

Jeff Zekauskas

Okay. Great. Thank much. so you

Operator

And we from Fermium will our Research. take Frank next question Mitsch with

Frank Mitsch

Hey. with Good and I morning P.J. folks agree

its like Friday. I think

the intermediates on sort of turning margins that be on you XQ average? how terms up chemical in and how did following turned provide us Just great. been July the pace profitability Any chemical out intermediates to for of would could relative spreads, has the

Mark Costa

Yeah.

look So prices So, what in second July, in have in held right? the average we costs about trending But It’s is, our are at that July higher, on Frank was commentary second I’d of the $X.XX propane similar part is to if July. say quarter. quarter. up propane $X.XX

you’ve but up are holding well. some prices propane So got headwind,

some start our through half we includes to Now that the will normalize back as guidance prices expectation this year. of go

a long on, with that. prices getting there’s we’re the and dramatic I’d time year. road olefin rate opinions in may may or and some range half we but we’re out going we the in ago at relative think not out about where the probably which commentary we’re middle I the said forecasting not of to to there, the say wide back of expect normalize the business of the a stick

Frank Mitsch

Okay.

Mark Costa

neutralize pace innovation the at a on nice our who And in it’s of mix But not and also the majority company in other which each benefits these of to we’re of these in high nice but a is as specialties, specialties a pricing to It’s which vast relative spread it’s can markets been some focused small change. nice of on the we strategy our of get long-term so a balance, front, growing value, working the driver raws story. little predict these volume the earnings hard actually is are. to ways. It’s the through growth the CI, out sort and out and appreciate part that’s big

Frank Mitsch

feeds Is actually guide a more on you. that in terms Got weighted of third XQ. looks my the XQ And going on heavily like function of seem your quarter. that typical you out greater It that general, does more the question into that seasonality years? on than visibility? since less be to in be it’s what in near-term have normal there just, some And is there thoughts are thought seasonality, to

Mark Costa

Yeah.

So on view is, in say, to continue going our the into the specialty is side, well I’d and strong third demand and quarter quarter. hold the fourth be up

that not markets market lot we sort of So of automotive in situation, making don’t their drop And of clearly around demand very the customers normal challenges like limited supply is chain strong in world. being in by seasonal especially which serving the improvements a as inventory of rate progress way some those or they’re in see kind construction. are markets sort underlying

they’re serve to of want wherever so ramp need. that going they get to to And raw production, materials up continue sort to

that you’ve markets So we those think into that in then continues back next stability. like end that continues ag, growing -- this and the half markets. -- constantly And frankly, always just provides that treatment, kind got care sort other of of cetera, water well, chemicals, steady year, are in et strength of year

intermediates up think it’s to side. hit think yeah, is going that at on already better we which comes that some to hold point… So, it to chemical When

Frank Mitsch

Yeah.

Mark Costa

when. normalization spreads. don’t expect just know …we I

Frank Mitsch

Got you. you. Very helpful. Thank

Operator

Morgan Vincent We’ll next from Andrews question take with our Stanley.

Vincent Andrews

sort of wondering Mark, you. the molecular I am Thank arena. recycling in

or in through a like obviously into You’ve basis. Naia I mean, industry key that’s there’s fibers I on a if or solution. you have I opportunity industry. avenue talked polyester the textile the but fibers, the know apparel different wondering about take am an pay

fiber? if So there wondering I opportunity customer polyester of another am source just is sell recycled to

Mark Costa

Yeah.

So hear world. there’s you, Vincent, and two good in textile different opportunities for from this, the to

to and with polymer foremost, cellulosic and certified have as our through So a certified is sustainable have now a right? half the biopolymer, technology other is going our you’ve Naia we’re it a recycling tremendous half success recycled biopolymer content biodegradable. remember, force it’s that got having as and to in called -- microfiber, from First we it’s

on environmental high of in hat-trick repurpose the are margin really out that the to strong of way a customers from all So and solving problems product that see it’s nice fibers was of It’s and the that. engagement sort we for a capacity making there tow. us

great just specialty success we was spent one-time textiles that in having about of you is in and tow. alone. million in amount hit product offsetting story. we’re of decline the the a a So And when year, And time $XX driving lot discontinued the which it’s this think growth we took that just

progress recycled great to So, polyester there it. could look and of really help are yes, And on lean at Those opportunity by that that customers on the along we’re the some the where that content of team. starting in addition is we fiber some front. in potentially with to in to conversations have with packaging

the biopolymer a possibility our story in to it’s to So growth textile. add

Vincent Andrews

Okay. you that on just cash the materials I just how of sort terms And are but in ask raw can flow of of curious know and thinking out the free issues you’re I managing there inventories. guidance, raised you

generator you and a that’s of strong the be What’s and of how they while inventories to important more of talking they see of sort hand maybe thinking to inventories given to you’re, general unplanned just bulge, make customers, obviously, need want the manage part outages sort story? sure companies in of were the procure have sort others they’re year little inside that continue a of free during are more to cash the given want in want bit Eastman and an we for some a have like on they things very trying future flow what to about And that to nimble. seeing terms they in

William McLain

months our would the team the free this here that’s Thanks, point, like free This your I flow members million first last first higher tremendous did than $XXX delivered highlight, and half million pricing material cash $XXX Yes. efforts we’ve inflation year almost in six deliver of the raw across greater world is of Willie. Vincent. about in flow of to cash facing that to To year. course, year. the the

As to I it of security it, Mark continue, chains looking thin supply we’re will be supply. highlighted earlier, call I ensure call the -- and will to

would delivering in that customers greater to we of than of $X.X lot make billion we make be in would demand this levels So have to play factored specialties just our year. demands we our But ensure it choices trade-offs. see to we QX. our continue we imagine think the demand now those and building guidance scenarios we there forecast would will the our ability is It’s we as right to of that We’ve choices out. to hard that if meet that assume a make as inventory about

Vincent Andrews

much. very Thanks

Operator

We’ll from go Research question to McCarthy Vertical next our with Partners. Kevin

Kevin McCarthy

you think much need products, Good Thanks. as price a how wondering Yes. to to a much has I how of if sequential play for that increases was recover segments, about in specialty your functional with Mark, as talk the morning. and and In inflation additives regard been context, well recovered that bit role margins process you can basis. you’ll came might what advanced cost down materials? on and

Mark Costa

Yes.

in we’re well So, I specialties. prices managing the think, doing on

that. use material the they’re teams increasing really -- I here how am proud in customer challenge on supplied. to As that well unit our costs in prices top managing was third way we price the prices the -- airfreighting, second it’s doing the in raw per distribution second the and but raw lot we’re to The we’re So A not materials. had we of we quarter, and the we relative was just think of costs think look just and the track it spike we’re delivered, keep to right? of mode on incredibly quarter quarter to had to it’s

of was on. going a just tremendous there So amount airfreighting

expect to well and sort to We more bit. as a as abate that back of down calmed modes, normal

the that that’s the of and we’re not quarter. some getting it of part price Now, you all offset costs, in recover those saw of but second some

with about we in as really costs. So back keeping the good half, raws we managing go the up feel total distribution and quite

So it’s not concern. really our

and access the year market raw be relative volume so that the on and of we to the good the on customers the how capabilities could our constraint half of just growth just the level to that demand much situation. to delivered drive is and trying out get more how limit raw materials we good. Well access is quarter. the about second really about focused logistics the logistics we to back the We’re above can and mix going there feel the to managing demand back material in quite half -- to But

Kevin McCarthy

et I see. Thank $XXX your transformation, optimization, you secondly, for that. remarks cetera. from referenced night last prepared released site operations, savings digitization, And then, of million

associated cash might to might few segments your and you’re the a elaborate outlay if maybe So spread questions, be attached savings? could you on how these savings what those what exactly doing projected there among and

William McLain

we’ve buckets savings. highlight about primary What is, talked that I three cost we’ve would had of

to be also We’ve as actions. will going flow that about into of of, we mid-year that’s talked end we’ve substantially site most well. a say, executed from we across we tailwinds $XX of those I’ll have would which and and of think XXXX, XXXX at into we how about would optimizations, we to about be in program, that a million And all I we expect we expect through next tailwind. So frame -- additional year those as of front turnarounds, maintenance we the those implementations as and I’ll expect operations implemented, it, it, call made there fully spans our and end do layers call half

leveraging And we’re it, on other capacities in, continuing out, gaining, I’ll that partners and as about another sites have, we progress our it, buckets. in call as manage operations a to as for also, to creating continue make fronts those way as from Additionally, well Year value as think additional of our earnings year would inflation. we of you we to will from also XXXX think offset I’ll all call is the be goal normal variable is not, three tailwind to I going about those on to comp XXXX, say

Kevin McCarthy

much. very Thanks

Operator

Our next KeyBanc. Yefremov Alex from question with

Alex Yefremov

good Thank those Mark, specific business partners in stand methanolysis light and been morning, you you gas discussions fruitful? technology? with you, industrial potential for this discussions have where model do and in any your advancing everyone. Are

Mark Costa

Yeah.

So with sources the we well the are engaged brand in level, specific and of as as partners at discussions supply. country feedstock both

of and in challenges the which are difference just lot see a dedicated encouraged seriousness now managing we taking environment this this and a level and we the counterparties team with real to quite conversations understanding make have on our what improving and area at a the to going and products. commitments by So in the full their

we feel it’s once until I play it. with you the have But I’ve on be And news objective the these excited not So deals. over so over structure share of achieved these of kind out. actually my I’ll discussions to see how just and it’s good to about

Alex Yefremov

you in share that. flow, or and look M&A sort more of sort if free should find cash last on forward we Well, Great. are increase, going repurchases opportunistic to categories, nature? option you next mentioned up of think think as the of we share a repurchases And dividend can’t are for The do how year a priorities follow balance, be two repurchases. you as about bolt-ons, default to

Mark Costa

Yeah.

I’ll back you a challenging want recognize able our times. going sort more get we’ve first know, really cash you the When to flow in of to then how am of of to to in we were of all, teams to But, on kind have off decade for delivered both stability to and hand it’s it well first answer are go performance. of I and the -- really that and free I we part before, it, question detail. the it it of transaction. proud managed So And when the reflect just do where and to, we which Solutia this been been journey Willie good

less Our free free wasn’t improved Taminco our Solutia dramatically quality strong being along cash flow. cash flow, intensive of frankly, and as capital the improving our and with portfolio

that And of which cash portfolio and means a products give growing side. optimizing like benefit improving came generate value That’s taken attractive flow they high in course, us in actions additional addition Solutia recent then, going the there’s quite in earnings, to success tremendous So, portfolio out selling cash. this we’ve significant the are a there way. free tires. of flow acquisition the the cash our in margins, was And we’ve of lot then, innovation these had to that that of cash

our growth. of of consistent to So, we a at in course, and we’re a we look priorities cash view. strategy there’s acceleration know, sheet have just with as point strategic sort first circular reiterate very is you foremost our the forward, to making in it sure of strong position CapEx going And and innovation specialty from around the Then, support and doing economy. opportunity this capacity place growth balance

get we add which But products. And M&A our to of on cash. discussed as The step airgas additional part there’s we’re specialty steps. could to do to content we’ve be then at just next as how as repurchases is is this so share those the call you going for bolt-on our our strategy, substantially an EBITDA option and first the opportunity model that and build to to recycled looking add plants this in

have growing story. we dividend overall that Of that always is of course, a part cash

at -- is sits nice for looking story growth create there. M&A exactly out we’re the To it’s the these And at balanced a Willie way you be questions more that details this pulling large cash where a clear we think are that levers all in let around point. little I’ll company. there. not a give So the priorities position clear to concert

William McLain

say Yeah. further tires to I delevering be divestiture. end for that, And expecting the with would delever need to the not to also of is, at add would done What year. we’re now I we with expect this improving EBITDA, the

the to million committed share repurchases year. $XXX roughly of half of the and or back as -- to repurchase Mike of as in that Mark and we’ve would million we shares thinking have the to bolt-on $XXX as year roughly $XXX million So highlighted up now cash has wrap we

Our sheet balance great in is shape.

debt-to-EBITDA also net rating X.X year from a times below and X.X and below end. times achieve agency to expect We’re view by

as we’re a going we $XXX we flow in highlighted. free billion as year forward, that’s remaining year, the wrap the up authorization that potentially and as million cash we about strong think a great stock we of I roughly as and cash strategic talked in current Mark of think and about with We’re forward, next have use on position up position about the repurchase $X.X our move

Mark Costa

be on the Yeah. just And going not to bolt-ons, opportunistic. we’re

about business In be be of create lot really and reinforce to we’re other they strategic. they what if really very bolt-ons value we to going going We’re an words, pay. disciplined adding we’re and new with existing company, fit a the

it’s to not would caught fever. very bolt-on said we and that, giving deal we’re a to conditions. do like but M&A, those got So meet much Having up

Operator

UBS. We’ll our question to from Roberts John go with next

John Roberts

Thank the chemicals is you. rubber say stranded more divestments In actions, additional costs AFP, at that is out from tire when divestment? or taking you looking that

Mark Costa

-- I a residual including John, committed, to might our managing costs divestiture. occur always what cost we’re from structure

our we adhesives, when And operational continuing as out. to we’ll and to it and we’re how so where parties plays work. work business, both JV operating transition we’ll where without good divestiture referring and model of part see multiple comes have manage other overall But to business that that options engagement as from we’re pursue

John Roberts

have And more copolyester upgrades be left capacity conversion -- much the do percent Okay. Tritan, intensity you to capital the can then there? of Tritan? of what have How so will after standard standards you low production copolyester

Mark Costa

to entire that’s for have upgrades. and all projects go we And last We many one the back you bunch bunch that is and the getting history, of those in in handed polymer think number to certainly that the we’re has plastics where second come the in polymer recovery have that to the a growth continuous online their assets been support Tritan line year assets big started capacity, make converted in because this need of year did far quarter. going and that a quarter this now to to so of repurpose the been assets. copolyester those we back a to those then will a it expansions to That’s and that’s it to -- our here And It across Tritan Tritan. since growth probably the capital in PET repurposing the started time, growth at XXXX COVID probably the story portfolio big traditional from of And if we intensity going portfolio on wants we’ve to point a especially really of brother. doing began, been company then Greg driver that story. right? are enough them PET across of copolyesters add at making a Tritan low it assets with we’re story I robust. But has addition talk. expecting where

ahead. go Greg, So,

Greg Riddle

little represents today about -- third third specialty Tritan probably of the over plastics. a Sorry. for revenue a

is. for looking That’s quantification. we’re So it where about

Mark Costa

Yeah.

John Roberts

Thanks. Great.

Mark Costa

understand other It’s important a That’s copolyesters, but cosmetic of all why our just product it’s to the add Tritan have to to grower, capacity. fast that into not goes to packaging, really total growing a but content to to also Renew going are the our addition recycled with we’re polyesters variety circular story. Cristal polymer

Operator

America. from Matthew Bank of question next with DeYoe our And

Matthew DeYoe

the agreement to two I wondering announcement to the of together and the in here? committing am to P&G when you Good press You morning. just problems? of press I P&G Congrats kind release. are purchasing guess the in the working alluded that for But what understand Renew. how doing address is infrastructure on release read I I

Mark Costa

of this companies just us of collaboration them today broader what product waste from point available broaden think a recycle infrastructure working stream a have those content working a with encouraging a who collaboration amplified and with and that there’s of to lot them buy So is beyond lot Well, they relationship easy-to-recycle -- recyclers, making do as existing deep recycling is the they recycled right? to with policy, very the and with us. for I when brands we’re as well

material collaboration is the have recycling encouragement There’s encourages their level and the consumers collaboration at for with local infrastructure them the national bottle policy different value lot in of responsibility also versus behavior. level political the recycling at it play the on ways drive to what’s improvement more called and capabilities. that supports EPRs, both cetera, with right in more improve expanded there policy et state to comes level existing There’s the even that a So infrastructure, And landfill there to and that of to bills, and get too. or value recycling. has putting that producer ensuring can

valuable a levels, economy. be done other help to with number circular a going a advocating to there’s in we’re think, I to So of responsible to really sort of at and create ability brands P&G, that be valuable be partners improve this multiple lot frankly, and resource are talking true and our to

Matthew DeYoe

for a for in as last Eastman of for All right. And forecasts follow-up, kind the sales couple for line cycle business of makes nice over sales in year kind decelerated that been film source protection or the has sense. paint downshift is up adoption quarters. expectations the growth underlying? the of of That Have so with that a auto making

Mark Costa

paint. Gen leading protect car familiar still the their if want market their And that substantially you’re just it’s done Last great. been product actually It’s It than the they film. And easier it protection just business both dramatically doing paint existing is tremendous coating new years with down many grew very X quarters. this launched industry. year story. of couple has the in and No. in better But performs the been a to to were a products our how protection people a of the it’s growth a in because this films performance better is not performance. well paint in how of gloss And It’s growing paint. we particular market, film of now been It’s much has film in window install. and ceramic category protecting which

direct need actually out bunch west dealers the this it I on just the clear has cutting, coat and this about put just they’re their how all part visiting this the from with film. a when patterns We’ve about there to the has called different difficult gloss a a when might also of of in the add. of is around them product. very you XX than a install the Core car car. a not much which know precise So film last fit car of create, the getting you protection the better out original non-trivial back all and easier came cars the incredibly new cuts pattern shapes properly that make and going to you paint is just really that about to and is allows superior years, task excited think you and feedback software it’s rolled Well, software I doing which program and

dealers So over additional then strategies last expanded we’ve really five with the the and retail our auto it’s the tremendously working done about has years. and well market deployed channel market

even have value trying because the segment down, a continue limited to business it’s to this So the well, seeing other on to volume car dealers focus slowing to mix our upgrade to they business, and on upsell can markets they we’re well the with within do high growing great sell. are the what

we’re good selling. you to as trying to they’re they’re engagement So, know getting add features what

Matthew DeYoe

the for look that kind because -- into can margins moving ever downstream I is on, wouldn’t film, exposed, slowly moving or the would that something and you do? pretty are I of if fat into ever protection you you understand installer tack Would the like just game there paint

Mark Costa

No.

models sure dealers, as dealers as and to --both the installation. retail the make all at cars looking -- our have auto that dealers resources well to We’re the our do

of lot I a different that. to think there’s is what you’re getting and at do ways

that constraints out that. do so got know, with We in We installation interest model looking have the to very into don’t do But you been to place enable think retailers such, resources when in to that’s partners competition with no and business multiple we with customers. be recognize good models ways a our and loyal We’ve getting labor to have we’re valuable there. at different have us. and

do what it. at that’s you look quality them how of installers. it’s the high But we aspect help important is develop So, a

Operator

We’ll with Sachs. take from Bob our question Koort next Goldman

Bob Koort

Thanks. Good guys. morning,

Mark Costa

Good morning.

William McLain

Good morning.

Bob Koort

few out of months, a you, on CI stock commoditized being you to fears some a that embrace. ask few are in more seen times being more specialty people in with we’ve about highlighted wanted maybe that And quite to some your good Mark, devaluation almost obviously, story, lumped for last some the names. the you pretty making there the maybe to over akin little earnings are I peak challenging other

aggregate you how guess, the mean do going do CI consensus big think us numbers is and in specialty just EBITDA mean, it give can as And looking XXXX Can looks like and something down sort and businesses from step grow, to I I the you XXXX. create see at that inspiration I a X% growth stabilize? growth fade inadequate? is -- rubs like So, this some of you that that

Mark Costa

Yeah. Thanks.

changing the making for done is know as Bob, think performance, look, So category company, point on analysis in than if in earnings the specialty or much We’ve progress some set. actually to we and performance our quite data to portfolio look thanks we’re the total The and margins go But of of I delivered clear. over do you held we’ve how up you. At our I’ll it it. category XXXX we’ve now tremendous more the And you question. now our show can to peer XXXX specialty. all commodity at go towards we’re how a

proven that our it to some actually more of focus of diversity up multiple now stability. to parts people CI supports right customers to the are gives and no economic in question That we’ve business, it We’ve why they stable So, it’s that. And part at vertical integration reliability value and an I sort expansion, way rise some the valuable There’s earnings. this CI at times on creates where actually other think, catching like well. us our is, get question up of how the really held the prices actually times I incredibly look our customers. on

deliver actually the to the CI. year. its So all I XXXX, of look ourselves earnings moderation some moderation offset with that to when into spreads look the have I go we’re going that. confident relative and in including at at But quite to don’t expect see this you we certainly in growth XXXX, And for structure, in improvements what’s that XXXX can wrong quite we growth we as relative year attractive CI as cost the in we of

year lot still portfolio our look that continue like of think. are So of revenue. aviation, growth be it’s -- into markets then a markets are of got markets got layers circular just acoustics still whether medical, hit you’ve and XX% still water that, all from next the about next view, we’ve driving got construction, Tritan recovery on. sort whether whole when -- steady that innovation of you it will films, that of really and we’ve a we’re tetra you textiles, shield to chemicals, about and And animal On got good and consumables I building We’ve you growth going got We’ve ag, business got in then restocking more smart those economy next and the driving et auto, And discussed, across that treatment, gen stable performance you’ve at point market’s mode growing. you top HUD it’s year, food the packaging, I in. cetera. know got beverage the in growth segmentation nutrition, strategies then got

markets we’re luxury EVs, et like just it’s the So parts volume. not the And right in cars cetera. of and

remember said a you got benefit had in see It well know and was just that XXXX this spread, coming that the year. high and value You and it see these specialties. mirror coming things and you’ll not the value now we we growing year really off image to XXXX next and It in back, challenges as and seeing that company you’ll of mix was are you’re it it’s the are were all we’re mix high right?

you $XXX the another operational onetime plus spend. level gross things. increased and as think on you might In you’ve you’ve seen costs of addition got shutdown million that spreads lower in the go distribution by where got and sort coming costs million got then off And $XX

put year. we’re to in deliver relative So all EPS this net, you growth together when it well-positioned XXXX to

Bob Koort

give I’ll then. Thank inspired more right. you you. All check-in

Operator

We’ll go to…

Mark Costa

You ended please, Bob.

Operator

Arun with RBC our next question We’ll from go Viswanathan Capital to Markets.

Arun Viswanathan

All I ask Maybe taking my Bob’s question. right. to here. Thanks just similar a for could question

and is or so we If maybe range in at or XXXX this. look we your three-year at some versus, a that even finer if point XX% earlier on at still a X%, X% XXXX year. you comments look it’s EPS within which looking of of around you’re $X back. a how versus it and average XXXX kind this CAGR the put just So I to from maybe definitely then while guess is say, could commendable XXXX

year, us off So with the if million from Thanks. little and some have next bit could great? falls on that you of if of still that, we CI AFP at much look be Maybe recycling for but a left technology. potentially coming $XX you parts recovery help the is AM how

Mark Costa

lot added circular story. I Day XXXX. and keep growing economy growth yeah, through still which think And last it Innovation into everything is that plus confident everything I the well was in XXXX we’re from to said XXXX, Day we we’re peak going So, true, we’ve to laid doing excited out, been onto as Innovation that EPS a more XXXX. And and relative just our really above have we’re we’ve then

So reasonable I -- that next rate thinking think think a at to way is about level. XX% about growth X% of on year EPS to

impact be on offset back to not EBIT it, and impact we succeed EBIT an level in got all our guidance remember to divestitures today divestitures. if at have the buying the stock of including will that so commentary that of is we’ll You

Arun Viswanathan

of still AFP think much and for up you recovery? am I how is AM sorry, And

Mark Costa

Oh! growth left in I a think of both there’s lot businesses.

actually Advance year next to in As Materials, growth expect we this year. very strong get would Advanced relative Materials we

to So year. strong be even that story is continue going and be to more compelling next

look with line when you exciting. are and you better year is AFP AFP, other and tremendous really and look at lot a be earnings in at a this levels look coatings the our without that it, customers. When XXXX that’s So, than that portfolio two-thirds words, of just expected at bit growth in to and adhesives tires the in of

In well growth good fluids. and like things I in steady think ag as animal as our to and attrition, chemicals, addition

better that say two-thirds Board of So, and being I across about this AFP. the even that year aviation the the when for XXXX includes than good headwind story

AM, -- But innovation still position. that’s a positioned structure solid in gives nice recovering so also year, stable those both keep through and being fibers growth, still they’re you much grow next to but improving and cycle. delivering because growing two very quite their innovation as not markets earlier well, and quite as So cost

Arun Viswanathan

Thanks.

Greg Riddle

let’s please. the this make Christina, question, last next one

Operator

Begleiter We’ll with take Deutsche Bank. David last our question from

David Begleiter

the won’t a for Could you that additional that either position Thank that XXXX addition to think do investment recycling? Mark, or in be you it you. or an investment on in be as to first molecular in recycling molecular facility new announce facility, capital another after one?

Mark Costa

And we making sooner, a Great and announcement going this customers sort I around question, page David. on additional depends we opportunities, other our first But these countries. running. other going it an one growth progress to of for months in or be you think, at we XXXX, in XXXX, so starting plants. I until discussions the have internal on our new But which with that not next additional up this XX when go need these we’re facility hope look on plant we’re and specialty these could get the needs, what to is for

David Begleiter

How Thank you. achieve just $X.X could cash next flow of year? be you on cash will free you in billion good. XXXX. the achieve EPS attractive do do we billion And Very you much say flow, above if really or which think $X growth,

William McLain

for the Yeah. thanks David, question.

as putting about as So, the think flow we’ve a it, think cash on cash be the year. use being, about as it, now more all we we headwind accretive tire about call next as repurchases. think It’ll content talked about I on to I’ll

business. billion the consideration starting the that’s point that into be divestiture from we’ll to So, it, and to taking $X again, we’re as tires billion headwind see in $X.X looking, I’ll of a the call the

David Begleiter

Thank you.

Mark Costa

wrap ability talk a there every do about lot of and to and to top demand of year, this really is day how only a I employees to year year trying performed up holding to I the phenomenal quick this make year our keep couple had the and can is show the wanted we we but model wish up, job the innovation to testament of They actually just employees. well growth in express a just deep remarkable we’ve just next marketplace. So, growth the wanted to that just work, and they’ve when all of need, fatigue of appreciation done which my have them stress want we here up out raw sit supplied last to how with a $XXX of strong I we they to to for to investors, marketplace, phenomenal sort all and success they and on I you ensuring the in market good top just keeping been and my comes even it environment comments comes chaos to job. engage not this with thank There’s team, has to have day. to the demand get this And done. and this our the for you your way And the through that, questions all against materials working alive. that revenue in the a that from our delivering operating To is also dynamic year to of all on innovation get way from this real deliver million

Operator

for [Technical you Difficulty] participation. your today’s call. Thank

disconnect. now may You

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