Rachel Li

Rachel Li inquired about the implied incremental margins for methanol earnings contribution, the expected growth across Advanced Materials (AM) and Additives and Functional Products (AFP) for 2026, and the drivers behind giving back some price in AM.

Answer

Willie McLain (EVP and CFO) stated that for packaging, volume commitments and cost pass-through deliver reasonable returns, with upside from mix upgrades and specialty markets. Mark Costa (Board Chair and CEO) emphasized macroeconomic uncertainty but highlighted cost reduction ($125M-$150M target for 2025), innovation-driven growth (circular economy, films, solvents, cellulosics), and expanding volume efforts in AM and Fibers. He acknowledged modest price declines in Fibers, CI, and AM, sharing raw material cost advantages with customers while maintaining overall variable margin growth.

Rachel Li asked about the implied incremental margins for methanolysis earnings contribution, whether 25% is the right way to think about non-core applications, and the price-cost trend for specialty businesses in 2026, specifically regarding price give-backs in Advanced Materials.

Answer

Willie McLain (EVP and CFO, Eastman Chemical Company) explained that for packaging, there are volume commitments and cost pass-throughs, delivering reasonable returns, with upside from mix upgrades in specialty markets. Mark Costa (Board Chair and CEO, Eastman Chemical Company) added that 2026 planning assumes stable markets, focusing on cost reduction ($125M-$150M target for 2026, building on $100M in 2025) and volume growth through innovation (circular economy, films, solvents, cellulosics). He acknowledged modest price declines in AM due to sharing raw material cost advantages, but emphasized overall variable margin increase with volume growth.