Eastman Chemical (EMN) 28 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Greg Riddle	IR
Mark Costa	CEO
William McLain	CFO
David Begleiter	Deutsche Bank
Vincent Andrews	Morgan Stanley
Josh Spector	UBS
Jeff Zekauskas	JPMorgan
Aleksey Yefremov	KeyBanc Capital Markets
Michael Leithead	Barclays
Matthew DeYoe	Bank of America
Kevin McCarthy	Vertical Research Partners, LLC
Michael Sison	Wells Fargo
Arun Viswanathan	RBC Capital Markets
John Roberts	Credit Suisse

Call transcript

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Operator

Good day, everyone, and welcome to the First Quarter 2023 Eastman Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman 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

good and and us. for morning, Brenda, thanks everyone, joining Thanks,

CFO; Manager, the are McLain, CEO; and today with Senior Jake Costa, President On me and Mark call Relations. Investor Board Chair Vice and LaRoe, Willie

first Yesterday, results XXXX filing. news posted X-K financial SEC quarter after and we market closed, our release

prepared the Our the section slides related and of Investors in remarks our website, eastman.com.

cover two items. I'll begin, we Before

materially. concerning this or our our results will be forward-looking factors differ plans results expectations. you hear will First, release. presentation, news future statements during first to events and Actual could or financial expectations Certain related certain quarter are XXXX in detailed

filed slides filings the and full XX-Q During this and year to including Securities Form preceding first for be remarks XX-K and Commission, XXXX. and with the quarter for the in of our call, XXXX Exchange in filed Form prepared the

other most description XXXX items, to earnings in quarter GAAP financial financial this items. Second, in the release. are referenced results and Reconciliations disclosures, exclude certain unusual and directly first adjusted comparable the and excluded associated noncore including the available presentation news measures of a

As into posted go website we'll last the straight on accompanying slides night, remarks we prepared our questions. and

let's start please first question. with our Brenda,

Operator

of from line comes question first Our of Deutsche David the Begleiter Bank.

David Begleiter

on is high I level earnings full the Mark, of how the just is what fibers, new this saw fibers? high guidance, And year increased you sustainable in that? in

Mark Costa

enough business and making significant in secure key see increase fantastic and year to sure which What be cash this and a kind flow drivers we're for future. we're going we price in structural really is pretty to improvement this the the this think stable in into excited associated just It's improvement fibers invest The supplier. do a it it. of from obviously the with business, earnings about providing beyond were

our raised relationship. has better our turned better expected because showing have model value improvements driving operational out We've also So Even this of on in relative of the that we've really pretty creates though than business, a in million lot right we of business $XXX growth price sustainable markets. cost $XXX textile innovation propositions in we've got to our be being markets. improvements to got tough being depressed, really million example price/cost is to of lot a the operational better, are for It's guide the a lot improvements from overall performance, underlying which growth how the just another and growth even now. our us market cost

comes it what a feared January, that is really a quickly. it uses That hit stability are over X%. X% there not XX% fact The year, creating cigarette much didn't again the year fundamentally filter a stability more we've burn heat really strongly. over declined only has as about the than X% of just last as filter growing And facing that we structure also we've been changed last in traditional decade. factors from question, XX market. the years, versus quite tows, business, Part the When the demand to decline some I and in in nearly market tow the them discussed I'll still segment toes had growing to in decline over

even market X% of decade, showing last XX% global the which the sort is market. now half of the modest at about and So only the in is cigarette look you range, growth when down about some is China

that's been So helpful. really

on not just to on up us see and focus growth PI in fill towards of to assets market. sort repurpose textiles allowed and the our in a our assets focusing textiles addition, In way value

pretty side, fronts. two in significant supply reduction also the on On we've seen supply

our to of XX% complicated the to the in of down filters and as And on slim items, number the assets. we've run a repurposing by specialty been industry, has XX% players about the slower more well some the tows capacity of textile more range effective as probably lost towards in shut capacity burn including the gone business. capacity First, making heat much as all and we've are XX% two free, us

So a lost lot effective capacity. we've of

reduction at putting you're range a in utilization. So least us the XXX% net on XX% XX% in capacity, to

of that's markets So supply, a the cost being and a of the on small very of focused filter customers cigarette. security the are tight, percent resulted of is the in price tow again,

summer, want So market we've do very the place, to by for sure you working contracts item. got we this such we're small make the the kind contracts between of beyond improvements missing in sort in next the supplying to and place. one. that don't And X closely be this year for years which And these best out will the a be cost and puts probably completed for of

cash the really of growth So invest feel of flow we and at, this the good is we're overall source in about earnings and a to great where portfolio.

David Begleiter

on of from or just the drag in updated delay highlighted And business project losses have EBITDA the forecast this Kingsport, given in metanalysis, you an today you in do XXXX?

William McLain

track highlight One this we'll gross and have year-end. don't in produce expect I significant a spend increase for revenue highlight commercial I key the quantities is we're year. the point before is I the to would fall, on full would

would project. we XXXX highlight the for cost construction within expectations I the impact. million. capital $XXX committed our that as significant that of at spend that deliver overall investment the level investment on able not be we'll So And complete well. will for we've to I'm basis, returns a this confident to

Operator

Andrews Vincent Our next question Stanley. from with Morgan comes

Vincent Andrews

of saw for you waste. successful the talking I sort had that recycling this automotive of completion project Mark, plastic about mixed an article week

cycle? call life talk its on think equation? Just a to this side you set what Is they what you're here? automotive little it residue. you the you consumer it doing Could about And is for is shredder that? bit of I the opportunity think where similar in the

Mark Costa

highlights cellulosic a growth. all And our the and and at polyester and looking how opportunity. markets we of and our beyond of growth into this lot fashions it disrupting trend We're question. lean great grow that's creating just that go forms to cycling opportunities can well sustainability Vince, portfolio

you the has these the do the cars market need and the in as all process cars of before car. how to as As all well the huge know, it the making waste a recycle to components automotive through making with

have can so we U.S. every the place that. several in looking lean And that programs Europe at and both going we on into

of project. for that the polyester our do polyester So we that's program, all the in effectively involved a or is for of the the can recycling all interiors take-back with polyester making example, interiors, recycling technology that

as as on we in to a program. recycle about it's auto to PVB back We we the materials sector a processes waste, We're that can glass. and more all supplier it and stunning It's molecular the for unique our the bit close circular of interlayers polymer in and earlier developing loop the own also talk the PVB how are and recycling and a development. both much But on be how working another don't interlayers much to glass around how industry. it's take little that the another with driver advanced auto amount that

a pretty the delivering planet. those We're part leader else are the engaging part as really interesting versus on programs car glass to of for positioned solutions anyone as reasons. these companies in of the for well uniquely be the all Lots textile the

So space. a going in that on lot is

Vincent Andrews

that other maybe the were that lot some as in of you folks of trying the that just anticipate just pull regular auto that quarter, being business, the compare And little I'm forward follow-up being builds, then and sequentially. as and XQ from also a to growth XQ. contrast maybe a strong out in quarter your have out exposure, called you there auto a in thought bit are a there second of

from on Or build sort So portfolio in products comments seeing? not reflective industry just more is is what's of perspective. that what the of broader than you're of rather your a your going

Mark Costa

our sequential of QX. a say very total different improvement Yes. basis, QX From a mean think production different But QX data. is just than I a certainly from holding. perspective, Vincent, broad a I in what highlighted. market all we seeing than you expected it's big said. than better. position this we're in I'd think was It's better view production bit incrementally don't I trend our that don't build to is the as total

it's when about much the think high films window you end, whether into Materials or pay really premium films higher films in So the interlayers the the into high-value, positioned Advanced protection the making, the or going business, high products EVs, we're that multifunctional it's marketplace. we're the or

sort at single about part high-value XX% of very And actually XX% growing digits. products the high-end auto the in is market premium which of So high are that builds. about these of is of targeted market,

the than better up So those lot are markets holding market. a overall

in so at And of unique lift double-digit the getting that of growing a we're our space, because level. lot focus

of a applications growing only are not So lot space. very winning with high-value markets, we mix in those that we're

what the helps And not engine losing us drivetrain combustion we're in because we're also all. any is at volume not

engines coatings, any We to growth, have being and these markets absolute don't are in of so over there, the We're we the sort and glass. in have well, We're exposure presence get that electric. don't as no we do have right? offsets to switched we because

volume really get cetera. told we're a and leverage with about that think you good And that. I additional net, et in the you, times we've as So position X.X EVs,

because because And of strategy, is I market. because position note well broad So we're of AFP that a and the connected really would we have good doing production to the that's auto the innovation market. of pretty our for AM. in our more

broad rates high growth a So market spectrum versus their more the modest the the they because of serve little just end.

Operator

Josh have Spector from now We UBS.

Josh Spector

really of half excluding you the uplift the you're kind first Just second quarter for? what that thinking of to declines volumes your developing see you're from drive destocking level today, portfolio and you think looking into in what's talk second baked about EPS to could volume curious the some if how quarter, and of underlying and about trying

Mark Costa

Sure.

start on down to I your question. I'll it's try the important and to it specifics bring the So of then sort total volume with and think numbers,

markets plus markets, the being times an in that goes pull durables, of to about and the XX%. apart, it X significant market consumer amount destocking, retail change have electronics you in sales area story think down led demand seen from drop kind markets, if X in and first to and we consumer and to retail channel back the January inventory a primary being this sort of to a like then the of those that XX% about demand amount So going that the overstocked B&C, down huge of well about significant fourth massively a just as quarter times told ratio sales quarter, as discretionary

dollars. retail is You remember, sales got to

drop significant in you on back for been reasons a about if have inflation, basis, talking cetera. about, all a supply out the So demand XX% think discussed you're et XX%, well down COVID volume pretty I and being chain, it's volumes

And came continued, in fourth from the that quarter when worse the destocking. in the fact, to little trend a got quarter first it bit

So because especially for supply that see continuing very playing just to chains North manufacturing. this phenomenally in we space, manufacturing. centric there's on, that and destocking and American and durables out go -- long us we're We're our

So and to all typically U.S. China they into then made plastics and back then Europe. and and at brands to components to the specialty here, in are the makers retail then our have and and go warehouses then different be through of component warehouses made finally then be shipped

just it's destock. to chain supply a long So very

the May. have of there demand, of just about and the forecast. those low on durables in Europe discretionary year. whether none in of we're world what levels in in the would of same that's story stay markets. you our stabilize that better It's while assuming some of get we get note that for it's building We is forecasting at And restocking, and destocking end rest see a in now to been these signs or going will be for primary destocking bad these what trends possible discretionary the in the have will but construction, say Asia. ending and would I of We things kind these sort on. do markets, are construction, the But see building we

not in do of things see sort decelerate really that's coating factored with But So that a just our low customers. in destocking the demand. U.S. consistent we have and

care personal cetera, played off. they think, different stable, even in they markets, the and because Low they quarter. lower that demand destocking note in and single-digit a obviously, treatment, in doing et is are yes, space out And are that, first On water at pressure. very additional still the you have look some that when has their stable the demand I I are mostly would but under of customers we situation

the back as we sort into And lower second moving so demand just primary go we're now to quarter. more of

I comments recovering the well of on and those note would which dynamics strength. source the up a I sort market, the just and of across I'd market, of source auto strength obviously So well. is is and are And source of aviation a note also a holding strength. is made that ag

are going stable. medical -- places pharma, then So just there these And story really that and you've few are a are well, things like places got demand situations. things where hit on the

half So destocking as look demand to year that these at the demand rest the of the moved really primary second is challenge, of continue you half, the the the to part forecasting going first of half in for the stay the only half our back end into second that's first half. in new lift challenged is we've and doesn't at to levels

Josh Spector

to if guess that. I I some maybe could quantify of try

volumes your single the first demand down in X% quarter, were digits. your primary So is down low

when about at XX, about Just But number don't to looking in you just and we of some roughly of half, a I first there talk need terms second those consistent you half, of demand what all your through that. Slide markets talked going markets? rehash are weak number

Mark Costa

Yes.

there probably that every think little to story first you've out, got down primary different. we're third to a a story XX%, let's -- And that's story, then of it, total XX% little So keep the the explaining but I in share. a that the simple, destocking tough is where half and of is seeding the places quarter. third bit a break demand XX% to decline a it's call it's aggregate, But of probably is is it

markets have don't like in every chasing sort is with what low. products incredibly And chase low-value AFP price not not just hits case, their market that going volume, are serve it where hit very and margins We're now doesn't hitting CI, to place to the you competition big and very in we're and -- earnings. not of China they in Chinese because we're So is offers, it in share. earnings we some values different exports very Chinese discipline because that KG. just means true that doesn't -- in share, and for actually we products, an in low those low. it low-value exacerbate Europe in of market than Architectural rather us market for choosing on compete the low Same right meet applications on low we'd of have really price but sort that export impact of

So regions. excellence some the these described, it, X% kind we of smaller valuable some driven, stability is customers and portion that's I make a mix price which because is maintain you is that important much how choices of of your volume commercial to market as have discipline certainly in and markets and of

So we that's how this down break plan.

Operator

now We Jeff with Zekauskas JPMorgan. have

Jeff Zekauskas

year is all the early on recycling or facility Tritan? will next With late be that's going of to material this made come molecular your that year,

Mark Costa

No.

facility, fall coming but recycled the be be into this with also will copolyesters. number that of goes right, that providing molecular current a we'll schedule we into which it the have, on content So goes

people, So traveling. the right demand great with is example, actually copolyesters, uses for into now actually getting our it's sector, another Chinese better back the cosmetics where place especially market. a It's

Clarins, their consumers most achieve that that et have the frankly, they're the position with targets space. all and most those L'Oreal, that cetera, serve. LVMH, And leaders, They they brands, of working targets, on aggressive front with luxury determined the we're sustainability. content in those given to recycle brands, some the the Chanel, They're

space growth see that in lot content. recycled with we opportunity of and a so And

obviously of IDE, high opportunity. all opportunities high-growth value, water for it's single-use huge mean away back, to of Tritan amount now and -- whether market cetera. best very right, I has a Tritan is including a very the bottles, these is one sustainability to from get bottles market, hydration reusable move plastic et came gene

didn't as show and market off lot to other the actually a much growth. it's some that come consumer durable as going more And markets, of

to that that's & their like you sustainability focused brands durability price including a in other like winning. position, applications goes can the bit other a of the everything that, electronics, the still commands a that on product But content Opaque are very we products it we would that you think wider gamble with recycle and Decker normally Tritan some propositions are are where and into I clarity and and not now power value us, applications, is chemical because our think Black resistance, high being getting going match applications these of we're one of winning no strength with tools So from applications told and we're where new very natural market BPA that play free. because where in has

both. cetera. to also France So other half in it's a of Europe That's et including packaging, and plant applications, serve high-value shrink market cosmetics combination that in why will the be specialty

it's broad-based. So

Jeff Zekauskas

So maybe again. try it I'll

it for demand durable your negative given this in up to is So take more I or on XXXX, it utilization it capacity, market how the you Tritan rates right? to polyesters, weakness to difficult maybe goods overall market. bring in year goods think may to ramp Is get years mightn't weak over polyester was durable XXXX. It's of be wants demand And high and or capacity. time, now demand market three will up which but other that the Tritan you're really negative because the in the going

Mark Costa

Yes.

related that's good answer. and question Jeff, to very my a So

grow of the a We volume total you, a in company. are told sort Tritan, to way as significant is we've capacity adding that for

durables, seeing end demand. and significant of quarter and last year is the in Tritan goes this very certainly fourth you're correct, its demand one markets of -- sort year. that strong pressure consumer drive And into And of key

we address expansions now. not we I'll about Something our our may in have right clear been and manage how that assets

flexibility that Tritan we we Tritan. But different right? flexibility modified in They make these were swing back to they originally if assets lines -- then to our products. to PET always are in we history, them specialty to to make we've to have copolyester, again go you make and modify So want lines back our copolyesters originally retained

to smaller So to on we of the brought always capacity chunk swing very back when was large our one copolyester. strategy this lines Tritan of making

So Tritan because when we've online making of how serve. be copolyester will the to comes capacity effective that this swung much net about markets And set bigger to line have of markets to because wider markets and we there are XX% copolyesters. it of the add other back a works serve

I content bottles of was the as market much a targets business have the And just applies to recycled very those hit people going content oil, that recycle sustainability It constrained packaging, needs shrink bottles. as in explained, cosmetics. isn't to to on there their Tritan. which too very to It value where applies big part

full so huge of a to that all range adjust And to end face. those markets balanced. of strategy, to swing going assets a is in wide in methanols whatever will our to on the our dynamics is this advantage asset the we we'll market capacity of be serving And make plant run flexibility the products

time that a get whole expansion. end, make you But paying then to, asset to bottom as not XX% getting Tritan and that and sure you variable problem. back we'll it's to a And volume in that out the the fixed have we can over fill that leverage do first cost line. capacity for no, margin XX%, swing So

Operator

from Yefremov Aleksey from Capital Markets. comes KeyBanc question next The

Aleksey Yefremov

the Mark, towards were last annual this update? the guidance. case said quarter, lower remember end of Is you for I this correctly, you looking still if the

Mark Costa

if that volume the it. range how relative the changed, we taking, hit see is know price we're the trends price very in improvement January, No, to think a about and obviously cost cost to improvement distribution about but materials, about recovery, costs those obviously the our and of good were that we we guidance. improvement guidance pretty two you first substantial January feeling in raw it and energy and was gave think And substantial balance with our is positives the you we fibers actions

that $X for look or in the in of shown it's already -- And the at in if about the our $X and the the the in year. you of per improvement, specialties. on have That's improvement specialties at how think improvement rest rolls and through fibers strength fibers least spreads outlook in share spread the what about we

So that's a tailwind.

change due adjusted in being when guess, didn't you about front So pretty then around investors. with you we've the look at substantial. conversation had think our market the the the in get when to And the just weakness on And to quarters, we've you our of three the demand XXX guidance -- we range mean. I you're about how sort that's next

of is So our QX range our for guidance X. midpoint

So not of being pretty for offset out netting partially sequentially quarter it's modest of in adjustment second XQ that some number. being better to demand a spread the that better sort by

the weaker really in seeing really And as predominantly dollar hit QX sure of rates, got in outlook pulled headwind and this of that our back our sort cash the associated half that we're identified that second we're utilization headwind of sort share operating And generation. reduce it. vast actions we $X.X occurs that then led demand, And per to asset the full you've and to the year. in utilization and volume we mix asset comes into that million is -- and about we've inventory with the the of of that year, of majority the cost of flow that of make half down, rest $XX our in taking half billion and improvement

So of into mix. this that's sort all fed

derisk you the into is the much that the does don't have of what in step-up January. year of guidance, half as second had a But it really we

more a it's So I balanced much forecast. think

mean environment. we'll pretty at focus uncertain what feel can and ability. We're certainly very the I the a range good about not low control. it end I on anymore, think we it's we and our of

on want the look conservative to optimistic. forecast But you certainly pretty is not based or volume world. at the think balanced I how now

discipline, going markets on create innovation And we're to our above flow. underlying value make our deliver on controlling growth sure price focus cash costs, to on our and the focus focus we and

Aleksey Yefremov

And positioned the content vehicles ICE and better slides, about talking you're thought versus is this? on I in interlayers a or use ICE one content of being especially premium cars. Could about EVs and electric you the gaining ICE. gain? interlayers there both talk Why

Mark Costa

So EVs of windows ICE detail this walked about both sure. EV times car the comes They a make your X.X But ceiling. and than cars, in times car into day the versus when safety sunroof bigger. in they a the outside for for of EVs through There's on couple on this. of we've up a more innovation on there's the content on a it Part sitting heads batteries, ICE higher the efficiency, the can't it pushed aerodynamic they interlayers. lot ceiling you're so to raise is lot

So now the ready bubble. around you're

is side it. the glass And the steel summer want back way more the there's laminated wind out car from take to also functionality in the it's going the a strength getting more the structural lot more wind, with because they glass to laminate, of by so a

So they on want solar to HVAC. display. rejection the more load the reduce heads-up want They

solar et style doesn't lot need inside So heated of colors, specific rejection we're cetera. get properties the putting up. that so a They car more

year an And sales it's exposure tremendous of EV. leading is with our XX% square already increase lot to seen when a we've go this of business. our So last to all addition meters over to 'XX lot up meter more more in a in XX% in sort now to value per you from and EVs success square that a

parts losing story. So car. not being -- with in transition fortunately, other of it's great the just -- we're the it's the And a in anything

Operator

with Michael Leithead now Barclays. We have

Michael Leithead

First, just around inventory and capital. to working

year? First, you from are business utilization Willy, second, capital just about there? businesses this or to inventory. the just assumption most headwinds speak manage what seeing pain guide million Can to of And then you the $XX incremental flow your working your and cash talked what's lower asset

William McLain

Yes.

are standpoint, pressure. a Mark from construction ones So of as what the I business durables, highlighted, would has under are that building markets highlight the end and most

-- the have year be businesses level that remaining achieve beginning the we've impact said So of we were parts about specialty to $X.X it, and the think the being call in out what expecting, of fixed hopefully, year-over-year flat. the you billion our we working Ultimately, as at of year. cash cost can I'll capital to the

of bottom You through call to off guide the as and that focused that we we're it beginning that full we delivered of I'll can earnings driving a see net year, the net our that the flat being cash at the on and for we're line. hold year usage cash the

we're back see so So three the is not waiting last it across now to We're taking that half action to how quarters. unfold. the

Michael Leithead

then Mark, quickly, methanolysis. just And on

kind where of year-end. before from the seen rate run when revenue normalized just of think mentioned a be You But you -- plant? to see point EBITDA a we'll will sort do that facility ramped up

Mark Costa

the to quite be by So of customers. full will content capacity the sort be will getting our ramp-up the priority of recycled valued fast and facility

start range facility going expect of and the into XXXX. the through we So content to products quickly pretty a recent wide

Tritan the as obviously, of a run to out want have of if we discussed capacity, filling some take it time sort flex sort a way ago, moment to will full. to widening BT markets, Jeff's our assets recycled of to -- we including range the question, capacity I content but into of Now sell

So relative PET unlimited there's demand plenty capacity. this market of market to demand in --

time. continue we'll up as of grow that good over mix, do spectrum we then to and feel markets in a will time, higher to quickly. like penetrate Triton value we pretty those over the across and value be about like the deploying always It capacity specialties markets we So and higher

out in to the get we'll recycled So XX to the on pretty a investment within months. fill rate actual content good XX

Operator

from DeYoe America. next of Bank Your comes question with Matthew

Matthew DeYoe

is XQ high range, versus Just wondering quickly commentary to end range. segment it, guidance mean, I'm you what maybe but on end the fairly kind of wanted I just at tight XQ to the ex-AM, at like ask guidance. The low the the look takes of we as

Mark Costa

obviously from gas which second see we did the a we especially expected can So price/cost sequentially principally when sequential than you think lot about quarter. by driven quarter, that favorability trends, in into the natural the was first better continuing

think, that clear. cost going see we're second first show how to in that up to out. So and more The the some the that's the help and play in help actions elements up but on is of how are part, quarter, pretty million showed those taking cost of easy that certainly to pretty will I predict and quarter, reduction $XXX program

consumer I being is is do to stable When is how big to There's the care personal at where what associated markets in when wildcard treatment destocking markets, that's more trends purely destocking and sit. of got in volume play that weak mean really March. also books comes in rate. and that things in And does And it are where see discretionary we've and headed. ends an still little if understanding the of going the a think AFP and bit mix sort I these So the asset back revenue durables half similar out? on is to and we the question and how year, full And water that of markets impact -- that's good that those order and then of of uncertain. which what's going sort our AM pretty with a utilization? to

steady when lot order do world. of it up in we but didn't So books And -- March comes see to the normally, that of month see sort a stronger out play plastics now. the you'd in May through real step a specialty was being sort

that And to marketplace, guidance. we're encouraging. So starting is some into turn see our actual turn that in built finally here is which

see getting do now that's et the wildcard, that things I worse getting think really at home on China starts existing more is we market to I think the a and building better. lower bit cetera. but And Europe were face other presuming in be construction building levels challenging then much little U.S. stable housing relatively starting getting not construction, to the in not and the sales, as finally And

we've when pretty it really we're good of not, we quarter good we're et comes yet the range and about pretty to a this where a range, pulled or down to sort we is this our think of much feel destocking we going be and lever played time bit. pull -- cetera. why demand out got feel sort to this I that's how going about in wildcard view to And head. has every volatile But So with

Matthew DeYoe

And the is can, know on paint like business but know protection and I I a this like the if small, Tech I is film Ai-Red I'm Asia growing pretty assuming acquisition, lot, quickly. you

if paint next market, the versus look we fragmented big over mean, margin an I the that Eastman protection there what's as for few So of U.S.? is day and the of look years? could for differential opportunity the old how you how And kind expansion be

William McLain

Yes.

about Materials. we're business Functional sales Additives So we're our excited we & in always in very To the for performance Products. AM Advanced that your well bolt-on bolt-ons in point, added looking as as

Our two end within specifically in the China and markets U.S., this are key space Americas. Asia,

the is AM the this long achieve to term better a to set footprint grow asset global help premium of and specifically a have we're serve rate. about this And films we the in Ultimately, and really going business. to is growth excited how products. higher Now

Operator

Kevin have now Vertical Research Partners. We McCarthy of

Kevin McCarthy

north quarter sorts it the disclosures of slightly sales XX%. the sort retrospective of Mark, of what first earnings sales to with with the reported from amines XXXX. associated to the Are quarter, you A&FP margin reporting in you It you were segment. business? with to your that for apply about and as over business just Can rates moved was for that talk saw well? million did $XXX why that? those reasonable the you purposes first annual regard to I like looks Intermediates Chemical run functional And the EBIT

Mark Costa

a is with Functional business. And back an just the we fantastic one the other that sits that care business Taminco saw sort it's sort in of business operate absolutely of that's together to and band integrating half it of lot manage better by again. amines and the opportunities personal AFP bring of

business of efficiency, view, sense asset And management so made operational together. them to point from bring

difficult business. water doesn't this safety businesses. also around business its in XX% ship world of stable, ag to study us intermediates face very pharma to got It's to for markets I competition it from The quality mean help it's treatment, reasons. nature of to solid from And understand really very investors allowed this of the revenue Asia. attractive better really these the

strongest in a these by position compete Asia in America with And the in and we're markets. don't against North products So competitive these we leader far great Europe.

So so through very solid contracts, are you sort downs the margins and inflation. in as very margin ups pass-through as with of position, very both cost as well personal care mentioned, the business stable of attractive margins, we do and this and here most

of growth We're to had on great ingredient see great a We good to them a we of normal of on base. it's and list hope opportunities be front company, make called great above the partner continue again, Once and us innovation product some also to they're growth. in market. critical market and as partnerships So C ag growth with Corteva leading top and lot for that well. -- a

have of great at So model a they value. here have business integration we're scale, to creates -- integrated. because lot And our vertical

William McLain

add, I QX at our -- about The And strong way the beat to the look we million. of and as I'll Mark, can our look we it is that $XX January call if our at guide. relative performance expectations I results

a Chemical roughly third, look that, you to look at business third our if third, So fibers you AFP guide of of the Intermediates across resegmentation. that's as prior at the and

Kevin McCarthy

earlier. discussion I And David's in question wanted response to Mark, revisit may, to secondly, fibers if I the

dovetailed couple level, about were four 'XXs that lot segment where years, we that and in the if You last mid-teens then a margins I then at And this low in But years. your and it, history, talked very the the, of XXXX. high look inflationary a descended very next what's XX% to XXXX business. through changed year call into the from at stable in range

In first the quarter. we're XX% the up the range, quarter, first back now low XX% your price year-over-year went and in XX% to

for comments regard to about of if you talk if So so, makes that will should your terms understand be what's changed sense? And we with pricing procurement, sustainable future? level and that that, the can foreseeable margin from your contracts in

Mark Costa

Sure.

you're it's great margin require CapEx go importantly, flow a history long So question. cash earnings, been talking because a about business. It's to much back for if was and -- always of source It's the this it historically. journey a doesn't great you

great a part of And very so and demand portfolio, went it a our when came it through difficult of was off time sort just significantly.

hasn't a demand And here And trends is as have I like every said, market, and the it, rates. over lot I'm in best not utilization repeat going the much we're us price. back be and decade price supplier end, than security incremental the requires to But investments. last reliable in the an because of more need situation the some customers focused very to the a we're to changed high does improvements. very in and supply a make key supply a get there to this how industry us industry now the important And in continue loose lot in our on department the been to is to to customers get investment to decade,

that. we've inflation We go cover a obviously to up costs lot. and prices seen So raised

the us, reinvestments this make appropriate expansion in But existing business in margins our reliability. need And we for also assets. capacity to on of asset

and is that service event to growth we have expecting in clear, a because going growth that in line we into but in So much we're be so debottlenecking 'XX. much so and this 'XX textiles to food new product have not go plant,

have the look this opposed in innovation a business of fibers do to which coming growth recycling margins products next $XXX $XXX years. pivot about the an XXX the we're future of stream top that only the on this being of out upside excited and million The that got of we over growth because million to we not a have a we've stream we now you huge wholesale polyester five lot making with opportunity days as list talked cellulose optimization -- incredibly as stream, of improved as about at

altitude So this base exciting growth. higher this build new then for really is and us to with to dimension get on the on it

note, are contracts. product I investment a that there's importance to our But multiyear do highly margins believe And customers. also contracting levels funding to at are supplier. we contracts typically, be lot appropriate our the as said, I'd for reliable our a the of this of

to down to We make have there for provide provisions added how this raw more for adjustments in go business. up some stability and margin materials

fully And -- we've of making so the progress next in we're getting contracted year for place the in we're years. couple contracts and this great got

on we've so that we'll through the how share And more summer. with about progressed you

uncertainty energy bit. a that some and the down move So up costs, the we of for right think number do margins are there's attitude example, will the always

Operator

We Wells now with have Michael Fargo. Sison

Michael Sison

it improve first XS back think reasonably you Materials, get and maybe coming start XX% the a can teens. business? in in did those the Nice year. to volumes Where teens, here high sitting Market the versus your Advanced there? margins margins -- to used back do it you're low And quarter well to be the simply get just is we to

William McLain

that of a of billion, years. has So last two-thirds we've talking We're Mike, our materials. at been level inflation that think I almost highlight, points Mark corporate I before and let over the couple and and specialties would had the just between advanced significant $X.X about, FX, about basis I of about amount respond, XXX that's in

approaching levels of So couple we're look inflation. as we adjusted for going back to over years, pre-COVID a be

Mark Costa

a in in And there's lift just pretty I two front putting think that components, substantial us aside, of from are that Mike. margins

did year energy extraordinary First is obviously, last up we with was year, prices XX%. there's we of being keep have you XX%, through where PX last when inflation up think pretty inflation XX%, which increased up up PVOH

of into AM. So two-thirds specialty years a two billion inflation of into in goes of inflation lot a as the last it lot of the this segment, $X.X over

didn't an XXXX. keep And we've done there compression great certainly of we But a up in amount was with job.

And of cost we realizing as that from start and a result see so hold as that. in some prices segment, up this our benefits margins improve we'll

through where year. driver of big in a that's this margins So see progressive you'll improvements

that the in that's Advanced and to a $XX lands flow, just Materials good and called an of the utilization going segment. EBIT in we're control generating to hit that asset But demand million have much we as out, assets the margins here as slower factor So when is and term it and off is, to running inventory the is short portion our other cash demand, right?

in improve get people this you inventory, when we and to But you'll then So back assumption of 'XX with normal as progress. bring year. year starts we're got levels much And sort sales through you've economy to the the just restocking year. applications the the demand another next and margins using that will higher circular to then at margins better big premiums in see And of go kicking new existing in step-up next prices.

will to up. margins that So continue drive

the lifting from And so back I and to continue think there. we our margins old margins get

Operator

now Capital We have RBC Arun Markets. Viswanathan from

Arun Viswanathan

you be guidance that half, So you'll if if the just were, Or range is XX%. how assume to exiting next volume? kind into be can And I growth look normal your X% rate. to Is EPS annualize range? 'XX, a to that the guess. for Xs case else XX% will second $X, the year maybe that can then, that you base it the looks not run that at you around build mainly at more should volume that mid some $X you're year a at like but midpoint you expecting, off of? about It's into the which And get back we would you maybe get of main if to what X% that back thinking the if get number, just get growth or we you drivers given EPS into we

William McLain

Yes.

to closer achieving highlight we're in to focused on point, midpoint. would with as back first our your $X.XX be half guide the here we about number the is as $X.XX we're the I to the So in that achieving half think delivering midpoint going

that number, to roughly demand that And to, think environment on an back demand growth. the we focused call to full XX% about getting are as earnings environment, extreme more it normal back getting As EPS take we for you X% I a versus year. $X.XX

Mark Costa

fibers and to hold going it's think I higher No, much think right. mean, you've when a got altitude there. the that's I you portfolio, about

bottom current got this environment. cycle You've CI in of in at spreads margins competitive kind

So stable to maybe up next year.

recession. last grow you've that then question to year in materials, to levels. what in recessionary and have in not destocking And year. low we So a a on because in as service of are and base much to at going amount certainly year. very world is our be an consumers there the yet, we got Well, very I but industry specialties may extraordinary mean we're has this then next the carrying focuses serious versus this with sector got degree demand solid the year live

these you've front you've markets lot stabilization that some So in a on got of of a lot of just volume mix, recovery in upside as or recovery auto of got it. has

performance. that this of version if where the adding year, 'XX you're So any back on to is half this world better definitely in versus

You EPS this but to for in a adjust got seasonality, year it's year versus next macroeconomic in improvement that very scenario. strong

Arun Viswanathan

that And cash the flow could to that free then more capital we point? you be push $X Or 'XX. maybe similarly, at so, side reprioritize possible is does on investment allocating growth And if you then, repurchases? it would share to closer billion, that by

William McLain

So just to highlight.

at this we're back to as definitely of within we think Day this above a on billion normalized of on back environment to flow year. billion we half Innovation the building And yes, our more delivering about that year, the $X.X and of is side. operating and First, cash our demand focused committed $X.X getting

focused again, with I on our been And we've think, discipline capital allocation.

always it and innovation-driven balance this we the one, dividend, when driving and circular So put new and organic to sit not growing And of sheet. on bolt-ons, cash our and growth the vector first, model two, investments. the then growth use our with growth will

yes, over, do dilution left offset with share inflation share there's more with we'll repurchase if than repurchases. or So

Mark Costa

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

Operator

Absolutely.

comes Credit Suisse. John Roberts Our line with on the from question final

John Roberts

auto? in long And window see be Those flex of you bottom construction. glass film can yet commercial also projects. pivoted backlog? in used lead production that the are some Can commercial construction the See is to for laminated time U.S.

Mark Costa

So John, and the make architectural the flexible. interlayer windows the are auto assets that

not glass swing in of that architectural is between building can would in the and our business So much construction. I they actually Europe, here. majority vast laminated auto note very

is occurred forecast. of some So construction sort this sort slowdown quite Europe time, market that's in for of embedded our in

here much residential that laminate industry. lower in laminate where part regulations So glass both really Europe. glass of really in drive levels just to commercial more lot a isolated it's commercial They the that isn't because and to the and we're at

So capacity as recovery that's to off will honestly well. up then market embedded auto much just over in And the there. lead you're right, see improve be not redeployed eventually, It's it. reasonably long will That housing excess that we much. held it's very It's time.

John Roberts

U.S. in pushing in the methanolysis second plant? that the delay announcing you of side? the what's Kingsport the for out delay Are then the because And location

Greg Riddle

it no here. first announcement that anticipated the second and year, had make there's always We expectation half of that is we'll we delay. quarter in in the the do the the would John,

John Roberts

Okay.

Greg Riddle

great us. day. Okay. That's everyone, last joining for appreciate your Thanks We hope I and question. our you again, have a time,

Operator

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

disconnect. may now You

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