KINGSPORT, Tenn., July 28, 2022 – Eastman Chemical Company (NYSE:EMN) announced its second-quarter 2022 financial results.

•Second-quarter revenue increased 15 percent excluding the impact of the divested rubber additives and adhesives resins product lines.

•Adjusted EPS growth of 15 percent year over year due to:

◦Innovation-driven growth model delivering strong growth across diverse portfolio of specialty products

◦Strong price increases in specialty businesses to recover spread compression from 2021 and keep pace with higher raw material, energy, and distribution costs

◦Continued strong performance in Chemical Intermediates.

•Solid adjusted EPS growth expected in the third quarter year over year driven by the specialty businesses.

*For non-core and unusual items excluded from adjusted diluted EPS and for adjusted provision for income taxes, segment adjusted EBIT margins, and net debt, and reconciliations to reported company and segment earnings and to cash provided by operating activities and total borrowings for all periods presented in this release, see Tables 3A, 3B, 4A, 4B, 5, and 6.

"Our record second-quarter revenue and adjusted EPS reflect strong performance across the company despite a challenging and dynamic global economic environment," said Mark Costa, Board Chair and CEO. "We are doing an outstanding job of implementing price increases to recover spread compression from significantly elevated costs of raw material, energy, distribution, and other inflationary pressures. We also continue to benefit from our innovation-driven growth model, which is driving growth above our underlying end markets in our specialty product lines. Going forward, we remain focused on delivering strong financial results while also making great progress on our circular initiatives, which we expect will be a meaningful accelerator to our growth in the coming years."

Advanced Materials – Sales revenue increased 10 percent due to 13 percent higher selling prices, partially offset by an unfavorable foreign currency exchange impact.

Higher selling prices across the segment were led by specialty plastics, and to a lesser extent, advanced interlayers. Both product lines faced significantly higher raw material, energy, and distribution prices, including for paraxylene and poly vinyl alcohol.

Sales volume/mix was relatively unchanged as strong underlying demand across key end markets including consumer durables and medical was limited by supply chain constraints and worsening conditions in the automotive end market for advanced interlayers products.

Adjusted EBIT increased slightly as strong pricing across the segment recovered spreads, partially offset by continued investment in growth.

Additives & Functional Products – Sales revenue increased 27 percent due to 20 percent higher selling prices and 11 percent higher sales volume/mix, partially offset by an unfavorable foreign currency exchange impact.

Higher selling prices, led by care additives and coatings additives, were due to higher raw material, energy, and distribution prices. Cost pass-through contracts contributed approximately 40 percent of the selling price increase in the segment. Higher sales volume/mix was driven by strong underlying demand across resilient, attractive end markets, including animal nutrition, personal care, and semiconductors, and improved product availability in care additives, which had a large, planned manufacturing maintenance shutdown in the prior-year period.

Adjusted EBIT increased due to higher sales volume/mix and lower planned manufacturing maintenance costs. Higher selling prices fully recovered spreads.

Chemical Intermediates – Sales revenue increased 17 percent due to 19 percent higher selling prices across the segment, attributed to higher raw material, energy, and distribution prices as well as continued tight market conditions. Sales volume/mix was flat as strong demand in end markets including food, feed and agriculture and pharma was offset by weakness in transportation and building and construction.

Adjusted EBIT increased due to lower planned manufacturing maintenance costs and higher spreads in functional amines and acetyl product lines, mostly offset by lower spreads in certain olefins product lines.

Fibers – Sales revenue increased 9 percent as 12 percent higher selling prices due to higher raw material, energy, and distribution prices were partially offset by modestly lower sales volume/mix.

EBIT was unchanged as higher selling prices offset higher raw material, energy, and distribution costs, lower sales volumes, and higher manufacturing costs.

In first-half 2022, cash from operating activities was $262 million, compared to $642 million in first-half 2021. The decline was primarily due to an increased use of cash in working capital, driven by continued inflationary pressures, variable compensation payouts, and reduced cash earnings resulting from divested EBITDA. On April 1, 2022, the company received approximately $1 billion of cash proceeds from the sale of its adhesives resins product lines. In first-half 2022, the company returned $948 million to stockholders through share repurchases and dividends. See Table 5. The company continues to expect share repurchases for the full year to be greater than $1 billion. Priorities for uses of available cash for the remainder of 2022 include organic growth investments, payment of the quarterly dividend, bolt-on acquisitions and share repurchases.

Commenting on the outlook for full-year 2022, Costa said: "Our second-quarter results demonstrated the resilience of our portfolio as we delivered record revenue and adjusted EPS despite a challenging and dynamic global business environment. Looking to the second half of the year, we expect to leverage our innovation-driven growth model to deliver above end-market growth in our specialty product lines. We also expect to continue raising prices, particularly in our specialty product lines, in response to persistently high inflation. In addition, we remain committed to investing in growth across the company, including for our circular initiatives. We also expect a number of headwinds, including slowing global economic growth, higher costs for energy and some raw materials, continued supply chain challenges for the global auto market and a stronger U.S. dollar. With these increasing challenges, we are taking actions to drive growth and recover spreads to maintain our expectation for 2022 adjusted EPS to be between $9.50 and $10.00, which at the midpoint would be 10 percent growth year over year. We also expect operating cash flow to be approximately $1.5 billion."

The full-year 2022 projected adjusted diluted EPS excludes any non-core, unusual, or nonrecurring items. Our financial results forecasts do not include non-core items (such as mark-to-market pension and other postretirement benefit gain or loss, and asset impairments and restructuring charges) or any unusual or non-recurring items because we are unable to predict with reasonable certainty the financial impact of such items. These items are uncertain and depend on various factors, and we are unable to reconcile projected adjusted diluted EPS excluding non-core and any unusual or non-recurring items to reported GAAP diluted EPS without unreasonable efforts.

This news release includes forward-looking statements concerning current expectations and assumptions for future global economic conditions; logistics challenges, supply chain issues for customers and suppliers, and raw material and energy costs; competitive position and acceptance of specialty products in key markets; mix of products sold; cost reductions; and revenue, earnings, adjusted diluted EPS, cash flow, and cash and cash equivalents for full-year 2022. Such expectations and assumptions are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations and assumptions expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company’s filings with the Securities and Exchange Commission, including the Form 10-K filed for 2021, and the Form 10-Q to be filed for second-quarter 2022, both of which are or will be available, on the Eastman web site at www.eastman.com in the Investors, SEC filings section. These statements are based on our current beliefs and expectations and speak only as of the date of this release. We do not undertake any obligation to publicly update any forward-looking statements.

Eastman will host a conference call with industry analysts on July 29, 2022, at 8:00 a.m. ET. To listen to the live webcast of the conference call and view the accompanying slides and prepared remarks, go to investors.eastman.com, Events & Presentations.

The slides and prepared remarks to be discussed during the call and webcast will be available at investors.eastman.com at approximately 5:00 p.m. ET on July 28, 2022. To listen via telephone, the dial-in number is 323-794-2093, passcode number 6532485. A web replay, a replay in downloadable MP3 format, and the accompanying slides and prepared remarks will be available at investors.eastman.com, Events & Presentations. A telephone replay will be available continuously from 11:00 a.m. ET, July 29, 2022, to 11:00 a.m. ET, August 8, 2022, at 888-203-1112 or 719-457-0820, passcode 6532485.

Founded in 1920, Eastman is a global specialty materials company that produces a broad range of products found in items people use every day. With the purpose of enhancing the quality of life in a material way, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. The company’s innovation-driven growth model takes advantage of world-class technology platforms, deep customer engagement, and differentiated application development to grow its leading positions in attractive end markets such as transportation, building and construction, and consumables. As a globally inclusive and diverse company, Eastman employs approximately 14,000 people around the world and serves customers in more than 100 countries. The company had 2021 revenue of approximately $10.5 billion and is headquartered in Kingsport, Tennessee, USA. For more information, visit www.eastman.com.

# # #

Contacts:

Media: Tracy Kilgore Addington

423-224-0498 / tracy@eastman.com

Investors: Greg Riddle

212-835-1620 / griddle@eastman.com

For Eastman Chemical Company Second Quarter 2022 Financial Results Release

(1)Second quarter and first six months 2022 includes $17 million and $42 million, respectively, costs, net of insurance proceeds, from the previously reported steam line incident at the Kingsport, site. See Tables 3A and 4A.

(2)Second quarter and first six months 2022 relates to the sale of adhesives resins (including hydrocarbon resins, pure monomer resins, polyolefin polymers, rosins and dispersions, and oleochemical and fatty-acid based resins product lines) previously reported in the Additives & Functional Products ("AFP") segment.

(3)Second quarter and first six months 2021 related to the sale of rubber additives (including CrystexTM insoluble sulfur and SantoflexTM antidegradants) and other product lines and related assets and technology of the global tire additives business previously reported in the AFP segment. See "Management's Discussion and Analysis of Financial Condition" and "Overview" of the 2021 Annual Report on Form 10-K.

(1)"Other" includes sales revenue and earnings before interest and taxes ("EBIT") from the divested rubber additives and adhesives resins businesses previously part of the AFP segment. See Quarterly Report on Form 10-Q for first quarter 2022 for details.

(1)Contribution to sales revenue of businesses divested which are not in 2022 comparable periods.

(2)Sales revenue from divested businesses makes up 100 percent of Other. See Table 2A Note 1.

Non-GAAP Earnings (Loss) Before Interest and Taxes Reconciliations (1)

						Second Quarter												First Six Months
(Dollars in millions, unaudited)						2022						2021						2022						2021
Additives & Functional Products
Earnings before interest and taxes (2)						$	148					$	109					$	293					$	216
Asset impairments and restructuring charges, net						—						2						—						2
Excluding non-core and unusual items						148						111						293						218
Advanced Materials
Earnings before interest and taxes						141						150						202						296
Asset impairments and restructuring charges, net (3) (4)						17						3						18						4
Accelerated depreciation						—						—						—						4
Excluding non-core items						158						153						220						304
Chemical Intermediates
Earnings before interest and taxes						154						137						288						206
Asset impairments and restructuring charges, net (5)						1						7						2						11
Excluding non-core items						155						144						290						217
Fibers
Earnings before interest and taxes						37						37						61						82
Other
Earnings (loss) before interest and taxes (2)						(54)						(489)						(85)						(467)
Mark-to-market pension and other postretirement benefit plans (gain), net (6)						(3)						—						(3)						—
Asset impairments and restructuring charges, net (7)						1						3						1						5
Steam line incident costs, net of insurance proceeds (8)						17						—						42						—
Net (gain) loss on divested businesses and transaction costs (9)						(5)						495						1						495
Environmental and others costs (10)						15						—						15						—
Excluding non-core and unusual items						(29)						9						(29)						33
Total Eastman Chemical Company
Earnings (loss) before interest and taxes						426						(56)						759						333
Mark-to-market pension and other postretirement benefit plans (gain), net						(3)						—						(3)						—
Asset impairments and restructuring charges, net						19						15						21						22
Net (gain) loss on divested businesses and transaction costs						(5)						495						1						495
Steam line incident costs, net of insurance proceeds						17						—						42						—
Accelerated depreciation						—						—						—						4
Environmental and other costs						15						—						15						—
Total earnings (loss) before interest and taxes excluding non-core and unusual items						$	469					$	454					$	835					$	854

(1)See "Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Quarterly Report on Form 10-Q for second quarter 2021 for description of second quarter and first six months 2021 non-core items.

(2)See Table 2A Note 1.

(3)Loss on transfer of previously impaired assets to a third party of $16 million in second quarter and first six months 2022 relates to the previously reported closure of an advanced interlayers manufacturing facility in North America as part of ongoing site optimization.

(4)Severance charges of $1 million and $2 million in second quarter and first six months 2022, respectively, from the previously reported closure of a performance films manufacturing facility in North America as part of ongoing site optimization.

(5)Site closure costs from closure of the Singapore manufacturing site.

(6)Net gain of $3 million in second quarter and first six months 2022 relates to the curtailment and remeasurement of a Non-U.S. pension plan, triggered by the sale of the adhesives resins business and remeasurement of a U.S. pension plan triggered by settlements.

(7)Severance charges as part of business improvement, offset by site closure costs, net, from the previously reported closure of a tire additives manufacturing facility in Asia Pacific as part of ongoing site optimization.

(8)See Table 1 Note 1.

(9)See Table 1 Note 2.

(10)Environmental and other costs from previously divested or non-operational sites and product lines.

Table 3B - Segment Non-GAAP Earnings (Loss) Before Interest and Taxes Margins(1)(2)

 

(1)For identification of excluded non-core and unusual items and reconciliations to GAAP EBIT, see Table 3A.

(2)Adjusted EBIT margin is non-GAAP EBIT divided by GAAP sales. See Table 2A for sales.

(3)See Table 2A Note 1.

(1)See Table 3A for description of second quarter 2022 and 2021 non-core and unusual items excluded from non-GAAP EBIT. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

(2)The adjusted provision for income taxes for second quarter 2022 and 2021 is calculated applying the forecasted full year effective tax rate as shown in Table 4B.

(3)Second quarter 2021 EPS calculated using diluted shares of 137.6 million.

(1)See Table 3A for description of first six months 2022 and 2021 non-core and unusual items excluded from non-GAAP EBIT. Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

(2)The adjusted provision for income taxes for first six months 2022 and 2021 is calculated applying the forecasted full year effective tax rate as shown in Table 4B.

(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 15.5 percent for both first six months 2022 and 2021.

(2)Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

(1)Includes non-cash decrease of $119 million in 2022 and non-cash decrease of $113 million in 2021 resulting from foreign currency exchange rates.