Lydia Huang

Lydia Huang from JPMorgan Chase & Co. asked about the impact on margins from selling to different tiers of tires and any recent changes in customer mix, as well as the quarter-to-date volume trends for Reinforcement Materials in the Americas compared to the December quarter, noting regional differences.

Answer

Sean Keohane, CEO and President, stated there have been no major changes to the customer mix for 2026. He explained that profitability varies by carbon black grade and tire segment, with higher performance reinforcing grades typically yielding better margins due to their critical role in tire wear and fuel economy. Regarding volumes, Keohane noted that January volumes in the Americas are up slightly year-over-year and significantly sequentially (around 15%) compared to a seasonally weaker December quarter, which was impacted by customer inventory management.

Lydia Huang asked about the amount spent on the second methanolysis project, the factors for a go/no-go decision, and if Eastman is seeking another baseload contract given Pepsi's accelerated purchases.

Answer

Mark Costa (Board Chair and CEO) stated that engineering expense for the second project is on hold after losing the DOE grant, with no current capital headwind. He highlighted that Kingsport's 130% debottlenecking allows for more growth from the first plant, improving ROIC and serving rPET demand from customers like Pepsi who are pulling purchases forward due to mechanical material degradation. This provides time to develop a more capital-efficient second plant, leveraging existing assets, and moderates CapEx in the short term.

Lydia Huang asked about the expenses incurred on the second methanolysis project, the criteria for a go/no-go decision, and if another baseload contract is being sought given Pepsi's pull-forward. She also asked if the Pepsi contract is the main contributor to the $30M incremental earnings in 2026 for the Kingsport project.

Answer

Mark Costa (Board Chair and CEO, Eastman Chemical Company) stated that engineering expenses for the second methanolysis project are on hold after losing the DOE grant, with efforts focused on a more capital-efficient approach leveraging existing assets. He highlighted the Kingsport plant's 130% debottlenecking, allowing for more growth and better ROIC, serving rPET customers sooner. He confirmed that rPET, including Pepsi and other strategic brands, is a significant contributor to the 4%-5% revenue increase for the Kingsport project in 2026, with specialty business growth dependent on macroeconomic recovery.

Lydia Huang requested insights into the pricing trends expected for H.B. Fuller's segments in the fourth quarter.

Answer

CEO Celeste Mastin indicated a supportive pricing environment, noting positive year-on-year pricing across all three GBUs in Q3. She cited an industry survey where 84% of adhesives and sealants companies were raising prices due to inflation and tariffs, expecting this trend to continue through Q4.

Lydia Huang asked for insights into the pricing trends for H.B. Fuller's segments in the fourth quarter.

Answer

Celeste Mastin, President and Chief Executive Officer, noted that all three GBUs achieved positive price year-on-year in Q3, indicating a supportive pricing environment due to inflation and tariffs. She cited an industry survey where 84% of adhesives and sealants companies were raising prices, expecting this trend to continue through Q4.

Lydia Huang asked for insights into the pricing trends across H.B. Fuller's segments for the fourth quarter.

Answer

Celeste Mastin, President and Chief Executive Officer, confirmed that all three GBUs achieved positive year-on-year pricing in Q3. She noted a supportive pricing environment in the market due to inflation and tariffs, expecting this trend to continue throughout Q4, citing an industry survey where 84% of adhesives and sealants companies were raising prices.