Mike Sison

Mike Sison asked about Eastman's portfolio strategy, given the shift to specialty areas and recent multiple compression, questioning if changes are needed for the next five years. He also inquired if the normalized EBITDA target discussed a year ago is now achievable with less volume due to cost savings, or if significant volume recovery is still required.

Answer

Board Chair and CEO Mark Costa affirmed that the innovation-centric strategy is correct, especially during market chaos, as it defends value and creates growth. He highlighted Eastman's history of portfolio optimization through divestitures (e.g., tires, adhesives) and acquisitions (e.g., Solutia, Taminco) to become a specialty company, indicating ongoing consideration of M&A. Regarding normalized EBITDA, Mark Costa stated that volume stabilization and recovery are crucial, as innovation accelerates in stable environments. He emphasized that significant cost reductions are lowering the cost structure, and while masked by utilization headwinds this year, they will combine with volume recovery to drive attractive incremental margins and achieve the normalized EBITDA target.

Mike Sison asked about Eastman's portfolio strategy for the next five years, specifically if any changes are needed to improve the portfolio given the difficult, unprecedented times and compressed multiples, and thoughts on M&A.

Answer

Mark Costa, Board Chair and CEO, affirmed that the core innovation-centric strategy remains correct, now augmented by aggressive cost management. He highlighted Eastman's history of portfolio discipline, including divestitures and acquisitions like Solutia and Taminco, to shift towards specialties. He stated that the company is always considering how its portfolio should evolve in the current industry context but did not provide specific details.

Mike Sison observed that Sherwin-Williams' pricing capture this year has been stronger than in the past. He asked for management's expectations regarding pricing capture in 2026 and beyond, specifically whether it is structurally better than historical levels.

Answer

Al Mistysyn, SVP of Finance and CFO, focused on the 2026 outlook, stating that the company will aggressively pursue gallon growth while balancing it with price increase effectiveness in a 'softer, for longer' demand environment. He reiterated that the reported price mix metric can be influenced by changes in segment sales, as demonstrated by the difference between Q3 and Q2, where price effectiveness was similar but mix tempered the overall price mix realization.

Mike Sison inquired about the company's pricing capture in 2025 compared to historical trends and asked if it's expected to be structurally better in 2026 and beyond.

Answer

SVP of Finance and CFO Al Mistysyn stated that forecasting beyond 2026 is difficult. He reiterated the strategy of balancing gallon growth with price increase effectiveness in a softer demand environment, noting that segment sales changes (like in Q3 2025 with better performance in commercial, new residential, and property maintenance) can impact the reported price mix realization, even if underlying price effectiveness remains similar.

Mike Sison asked what factors are necessary for a recovery in Olin's chemicals business, if there are any signs pointing to a recovery in 2026, and how the earnings power of potential recovered volume compares to the past.

Answer

President and CEO Ken Lane stated Olin will continue to adjust operating rates to meet demand, with Olin's rates differentially lower than the industry. He identified North American housing as a key driver for recovery, alongside global economic growth, particularly in Asia, to absorb new capacity from China. He noted that China's increased exports of PVC and caustic require significant demand growth.

Mike Sison inquired about the necessary conditions for a recovery in the chemicals market, any signs of recovery for 2026, and the potential earnings power from a volume recovery.

Answer

Ken Lane, President and CEO, stated that Olin will continue to adjust operating rates to meet demand. He identified a housing recovery in North America and global economic growth, particularly in China, as key drivers for chemical market recovery, but noted a current lack of signs for a significant turnaround.

Mike Sison asked about the long-term potential for IFF's EBITDA margin given its current portfolio, and for a retrospective view on the N&B acquisition, including its long-term fit, risks, and synergies with legacy IFF.

Answer

CEO Jon Erik Fyrwald projected that IFF's current portfolio could achieve an EBITDA margin in the low 20s over time, with Health & Biosciences being the highest margin business and Food Ingredients being the most challenged. Reflecting on the N&B deal, he acknowledged the initial complexity but emphasized the significant progress made in clarifying the organization. He described H&B, Scent, and Taste as very strong businesses, while positioning Food Ingredients as a continuing turnaround story. The immediate focus remains on executing the 2025 plan while making strategic investments for future growth.