Eastman Chemical Company 2026 Q3 Earnings Call

Please go ahead, sir. Thank you, Joel, and good morning, everyone, and thanks for joining us.

On the call with me today are Mark Costa, Board Chair and CEO, William McLain, Executive Vice President and CFO, Jake LaRoe, Director of Corporate Finance and Investor Relations, and Mason Tincher, Investor Relations Manager. Yesterday after market close, we posted our third quarter 2026 financial results news release and SEC 8-K filing, our slides, and the related prepared remarks in the investor section of our website, eastman.com. Before we begin, I will cover two items. First, during this presentation, you will hear certain forward-looking statements concerning our plans and expectations. Actual events or results could differ materially.

Certain factors related to future expectations are or will be detailed in our third quarter 2026 financial results news release, during this call, in the preceding slides and prepared remarks, and in our filings with the SEC, including the Form 10-K filed for full year 2025 and the Form 10-Q to be filed for third quarter 2026. Second, earnings referenced in this presentation exclude certain non-core and unusual items. Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures, including a description of the excluded and adjusted items, are available in the third quarter 2026 financial results news release. As we posted the slides and accompanying prepared remarks on our website last night, we will now go straight into Q&A. Joel, please, let's start with our first question.

Thank you. Good morning, Vincent, and we are very excited to get the grant back.

I would say that the Department of Energy has been a phenomenal partner in coming back to us and talking about how we could collaborate on a reinstatement. I think we are fully aligned in their vision, which is priority on re-industrializing U.S. supply chains to America, building resiliency. When you look at this project, it is creating U.S. manufacturing jobs directly, as well as in all the collection recycling industry that feeds into it. It is providing security on a critical material without security on things like PET, when China is getting to be 75% of the industry. You have a serious issue about how you can put food and water on the shelves, so security is incredibly important.

It also allows us to be another leader and demonstration of technology leadership in creating a unique position in this that allows us to also create a regional economy. When you think about the grant coming back at the full value, it is really exciting. The grant does require Eastman to provide at least sort of 50% of the CapEx, but it is structured where up to 50% of the capital, if we can get the number at the right target, can be paid for by the DOE. So, that is a great place for us to be. As you mentioned, the scope has materially changed. The original scope was centered around building the second plant, and all the capital would have been sort of devoted to that in their support. This actually pulled in the scope of the current plant.

So, all the debottlenecking of the current methanolysis plant to get to that 30% extra production, the expansion of the feed processing capability in front of it, the additional add of polymer and infrastructure that goes around producing more product and getting it to the market across both specialty and in the PET section, those kind of incremental expansions are covered under DOE, where we would get a 50% share from them on those investments. So, that is great. It helps us minimize CapEx in the short term in this environment, and it allows us to build momentum to the second plant. Then it also, of course, covers the second plant, and that will be a project that I think will have substantially less CapEx than what we talked to you about in Longview, Texas, for one of the reasons that you just mentioned.

We are looking at You have to remember that the Longview project was not just a methanolysis plant. It was also a polymer line. It was feedstock processing the front end. It was infrastructure to support all that together. About 40%-50% of the capital is actually not the methanolysis plants. It is all the other things, the processing, the polymer lines, the infrastructure, et cetera. So, those kind of assets exist today. There are recycling plants that have shut down in this country that we can purchase for a very low price. There are polymer lines that have been shut down, and there is infrastructure around both of them that are sitting there in those sites.

We have made great progress in finding a way to acquire those sites at very low capital order and have that replace a significant amount of new build capital associated with the second plant. We are very excited about that, and we will tell you more about that once we get it fully completed. Also, I would mention on the methanolysis plant itself, we believe we can build it at a much lower capital cost than the first plant, because of all the learnings we have had in how to design it better, how to execute the construction better. I would also note that the solar facility is out of the scope of the project.

The other thing to keep in mind is, given the insights we have about building a 130,000-ton plant, we built a 130,000-ton plant, not a 100,000-ton plant, with incremental extra capital from all the learnings we have had for the first plant. So, the output you are going to get out of this plant is far greater for a similar amount of capital. So, you can get the capital number down a lot, and when you put it all together, it basically says to complete the expansion and debottlenecking of the first plant and building this second plant, the DOE would probably cover 30%-50% of the capital cost associated with that combined investment.