Goldman Sachs Basic Materials Conference. Brad Lich, EVP and Chief Commercial Officer May 15, 2018

Transcription

1 Goldman Sachs Basic Materials Conference Brad Lich, EVP and Chief Commercial Officer May 15, 2018

2 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 our Form 10-Q for first quarter 2018 filed with the Securities and Exchange Commission for risks and uncertainties which could cause actual results to differ materially from current expectations. Non-GAAP financial measures Earnings referenced in this presentation exclude certain non-core and unusual items. In addition, earnings per share are calculated with an adjusted tax rate that is the forecasted full year tax rate that excludes the provision for income taxes for non-core and unusual items. EBITDA is net earnings or net earnings per share before interest, taxes, depreciation and amortization adjusted to exclude the same non-core and any unusual or non-recurring items as are excluded from the Company's other non-gaap earnings measures for the same periods. EBITDA Margin is EBITDA divided by the GAAP measure sales revenue in the Company s income statement for the period presented. Free Cash Flow is cash provided by operating activities minus capital expenditures (typically cash used for additions to properties and equipment and in first quarter 2018, net of proceeds from property insurance). 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 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. Projections of future earnings exclude any non-core, unusual, or non-recurring items and assume that the adjusted tax rate for the most recent completed period will be the actual tax rate for the projected periods. 2

3 Strong value creation expected going forward Core sales revenue growth in line with end markets Specialty products growing >2x underlying markets 23% CORPORATE EBITDA MARGIN and increasing with improved product mix >$1 billion ANNUAL FREE CASH FLOW and growing 10% 15% RETURN ON INVESTED CAPITAL (ROIC) creating value above cost of capital and growing over time 8% 12% EPS CAGR

4 Unique innovation-driven growth model delivers consistent, sustainable value World-Class Technology Platforms Differentiated Application Development Relentlessly Engage the Market Significant integration and scale enable innovation, reliability and cost advantage Advantaged growth and execution capability and culture Aggressive and disciplined portfolio management 4

5 Advanced Materials: A material solutions business with a diverse footprint $2.6B REVENUE $494M EARNINGS BEFORE INTEREST & TAX 19% EBIT MARGIN 2017 REVENUE BY END-USE MARKET Portfolio of engineering polymers and specialty films Products sold in final form or processed through single conversion step End-use functionality primarily derived from the material we sell Focused on niche applications with opportunities for continuous innovation Personal Care/ Health & Wellness 9% Consumer/ Medical Durables 15% Building & Construction 15% Electronics 7% 2017 REVENUE BY REGION 2017 REVENUE BY PRODUCT LINE 26 % 36 % 33 % Other 2% Specialty Plastics Transportation 33% Consumables 19% Performance Films 16% 5 % 51% 33% Interlayers 5

6 Advanced Materials: A great specialty business CORE VOLUME GROWTH MIX UPGRADE FIXED COST LEVERAGE GROWTH RATE 1 AVERAGE PRICE VOLUME GROWTH RATE FIXED COST PER UNIT 5.0% $10 10% $8 2.5% $6 $4 5% 0.0% $2 $0 0% Premium (1) Eastman internal estimates 6

7 Fibers: Expanding from a tow supplier to a textiles innovation partner $852M REVENUE $231M EARNINGS BEFORE INTEREST & TAX 27% EBIT MARGIN Leading cost position based on scale and integration Strong customer relationships in filter media underpinned by specificationdriven applications Unique fiber spinning and process capabilities Focused on growing in niche applications Relentlessly pursuing productivity Health & Wellness 1% Consumables 7% 22 % 37 % 4 % 2017 REVENUE BY END-USE MARKET 37 % Filter Media 92% 2017 REVENUE BY REGION 2017 REVENUE BY PRODUCT LINE Yarn 8% Intermediates 15% Tow 77% 7

8 A sustainable cellulosic fiber growing up to 5X the market rate World-Class Technology Platforms Differentiated Application Development Relentlessly Engage the Market Prototyping Pilot Scale Knitting Machine Sustainability Comfort Ease of Care Laboratory Tenter Oven Fast Fashion Women s Wear Intimate Apparel End-use testing

9 Two great businesses driving value creation ADVANCED MATERIALS REVENUE GROWTH mid-single digits >20% EBIT MARGIN 7% 10% EBIT CAGR FIBERS REVENUE GROWTH low-single digits >25% EBIT MARGIN 1% 3% EBIT CAGR

10 Questions?