Eastman Chemical : 3rd Quarter - 2020 Presentation

Third-Quarter 2020 Financial Results

Mark Costa, Board Chair & CEO
Willie McLain, SVP & CFO	October 29, 2020

Prepared Remarks

These slides should be reviewed with the accompanying prepared remarks posted on our website.

Forward-looking statements

During this presentation, we make certain forward-looking statements concerning plans and expectations for Eastman Chemical Company. We caution you that actual events or results may differ materially from our plans and expectations. See these slides, the accompanying prepared remarks posted on our website, the remarks during the conference call and webcast, the third quarter 2020 financial results 8-K and news release, and our Form 10-Q filed for second quarter 2020 and Form 10-Q to be filed for third quarter 2020 for risks and uncertainties which could cause actual results to differ materially from current expectations.

GAAP and Non-GAAP financial measures

Earnings referenced in this presentation and the accompanying prepared remarks exclude certain non-core and unusual items. In addition, third quarter 2020 and 2019 earnings use an adjusted effective tax rate that is the forecasted tax rate for the full year as of the end of the interim period and earnings per share are calculated with an adjusted tax rate that excludes the provision for income

taxes for non-core and unusual items. "Free Cash Flow" is cash provided by operating activities minus net capital expenditures (typically cash used for additions to properties and equipment). "EBIT Margin" is Earnings Before Interest and Taxes ("EBIT") adjusted for non-core and unusual items divided by GAAP sales revenue. "EBITDA" is Earnings Before Interest, Taxes, Depreciation, and Amortization adjusted for non-core and unusual items. "Net Debt" is total borrowings less cash and cash equivalents. 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 our third quarter 2020 financial results news release which is posted in the "Investors" section of our website and in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Forms 10-K and 10-Q filed with the SEC for the periods for which non-GAAP financial measures are presented.

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Third-quarter 2020 highlights

First nine months free cash flow at record levels

Strong sequential earnings increase driven by innovation and end-market diversification

Focused execution on controllable items including cost reductions and technology licensing

Innovation driving several wins across our sustainable product offerings leveraging molecular recycling

Named by The Wall Street Journal as one of the "100 Most Sustainably Managed Companies"

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Architectural coatings

• Low odor, low-emissive specialty products well-positioned to meet do-it-yourself demand growth in 2020

• Significant investment in application development capabilities focused on long-term macro trends

• Consumer sensitivity about indoor air quality serving as ongoing growth catalyst for our innovation investments

Innovation and market development driving resilience during pandemic

Performance films

• Significant 3Q20 performance ahead of underlying end- markets across all major regions
• Eastman team enabled our dealers to reopen for business with best-in-class industry practices and new digital campaigns
• New product and digital offerings in 2021 to support

continued strength in this business	4

3Q 2020 financial results - Corporate

	Sequential			3Q20		2Q20	$2,325
$2,122
				$2,122
			($ in millions,
$1,924				except EPS)
	$310
10%							(9)%
						change
change	$1.57
		(5)% volume/mix effect
10% volume/mix effect	$195					(5)% price effect
(1)% price effect							1% FX effect
1% FX effect

$0.85

Year over year

3Q20 3Q19 ($ in millions, except EPS)

$369

$310

$1.94

$1.57

Sales revenue

Adjusted EBIT

Adjusted EPS

Sales revenue

Adjusted EBIT

Adjusted EPS

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3Q 2020 financial results - Advanced Materials

Sequential

Year over year

3Q20

2Q20

$697

3Q20

3Q19

$668

$ in millions

$668

$ in millions

$567

$159

$139

$139

(4)%

18%

change

change

18% volume/mix effect

(2)% volume/mix effect

(1)% price effect

$64

(3)% price effect

1% FX effect

1% FX effect

Sales revenue

Adjusted EBIT

Sales revenue

Adjusted EBIT

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3Q 2020 financial results - Additives & Functional Products

									Year over year
	Sequential							$
$742					3Q20		2Q20	832				3Q20		3Q19
$685				$ in millions	$742					$ in millions
										$144
8%		$109				(11)%		$109
				change
change
						(8)% volume/mix effect
8% volume/mix effect	$72
(4)% price effect
(1)% price effect
						1% FX effect
1% FX effect

Sales revenue

Adjusted EBIT

Sales revenue

Adjusted EBIT

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3Q 2020 financial results - Chemical Intermediates

	Sequential							Year over year
$506				3Q20		2Q20					3Q20		3Q19
				$579
			$ in millions			$ in millions
$461							$506
							$32				$34
10%
						(13)%
change	$32					change
8% volume/mix effect					(5)% volume/mix effect
2% price effect					$22	(8)% price effect

Sales revenue

Adjusted EBIT

Sales revenue

Adjusted EBIT

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3Q 2020 financial results - Fibers

Sequential

	$211		3Q20		2Q20
$206		$ in millions

$46

$41

(3)% change

(3)% volume/mix effect

Sales revenue

Adjusted EBIT

Year over year

3Q20 3Q19

$206	$217	$ in millions

$51

(5)%	$41
change
(3)% volume/mix effect
(2)% price effect

Sales revenue

Adjusted EBIT

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First nine months 2020 cash flow and other financial highlights

$1.05	Returned
billion	$269
million
cash from operations
$771	to stockholders
by dividends
million
Free cash flow

On track to use	9M 2020
greater than	effective tax rate
$600	~15.5%
million
of free cash
flow for net
debt reduction

$363

million

net debt

decreased

through 9M

2020

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End markets are recovering

Volume (kg) change by month (2020 vs 2019)

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

-60%

Jan Feb Mar Apr May Jun Jul Aug Sept

Eastman revenue by end market1

40%			25%			35%
		Resilient		Most impacted		Mixed impact over time

• Volume increased 9% in 3Q20 vs. 2Q20
• • Strong 75% recovery in 'most impacted' end markets led by auto
  • 35% increase in 'mixed impact over time' end markets with strong building and construction growth
  • 'Resilient' markets moderated as expected, but are about flat YTD versus 2019
• Fourth-quartervolume / mix expected to approach year-ago levels

1. See slide 9 of Eastman's first-quarter financial results presentation for a list of end markets in each category

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2020 outlook

• Eastman team doing an outstanding job navigating a challenging global business environment
• Volume / mix improvement approaching 2019 levels in fourth quarter
• Solid recovery in certain end markets: auto, tires, building & construction, consumer durables
• Overall visibility remains limited due to increased uncertainty related to COVID-19
• On track to reduce short-term costs by ~$40 million in 4Q20 and ~$150 million for FY2020

Project > $1 billion free cash flow in 2020

Project 4Q20 adjusted EPS to be similar to 4Q19 adjusted EPS of $1.42;

expect to provide mid-quarter update as we gain more insight

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Innovation-driven growth model enabling superior performance

World-Class	Differentiated	Relentlessly
Technology	Application	Engage
Platforms	Development	the Market

Significant integration and scale enable innovation, reliability and cost advantage

Advantaged growth and execution capability and culture

Aggressive and disciplined portfolio management

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