EASTMAN CHEMICAL CO Q1 FY2025 earnings call

• Kingsport operations are performing well with high yields and maintained production rates. - Renew segment is impacted by tariff-related end market estimations, with customer engagement still good but slower product launches. - Fibers business has challenges with destocking, but contracts are solid. - CapEx reduced for the Longview project from roughly $750 million to $550 million to optimize for downside scenarios. - March orders held up better than feared, with April orders similar to March.

The Renew segment initially had a revenue guide of $75 to $100 million, but was revised to $50 to $75 million due to tariff impacts. The Fibers business faced destocking issues with stable market growth rates but volume declines due to customer destocking. Advanced Materials segments had varying impacts from tariffs, with some having inventory and ramp-up challenges. For example, the Fibers business has a contract rate of around 90% for the year, but volume declines are due to customer destocking, while the Renew segment's revenue is affected by trade dispute tensions impacting end markets.

• Renew sales guide revised from $75-$100M to $50-$75M due to tariff impacts. - CapEx reduced for Longview project from ~$750M to ~$550M. - Q2 EPS guidance range is $1.70-$1.90, driven by factors including tariff impacts and seasonal growth dynamics. - Tariff impact on Q2 volume, with potential for more in back half if tariffs persist.

• Tariff uncertainties affecting Renew and Fibers volumes, including reduced product launches and volume hits. - Potential extended trade disputes impacting demand and inventory management. - Uncertainty in the resolution of trade tensions between the US and China, affecting various segments' performance.

Q: Patrick Cunningham from Citigroup asked about Renew segment sales and EBITDA contribution, confidence in sales guide, and order book visibility.

A: Mark Costa responded that Renew segment revenue was revised due to tariff impacts on end markets, customer engagement is still good but product launches are slower.

Q: David Begleiter from Deutsche Bank inquired about China sales risk and DOE funding.

A: Greg Riddle and Mark Costa discussed China sales risks across segments and confidence in DOE funding aligning with US manufacturing goals.

Q: Aleksey Yefremov from KeyCorp asked about consumer health impact and tariff mitigation.

A: Mark Costa talked about consumer discretionary demand impacts and mitigating actions across segments.

Q: Vincent Andrews from Morgan Stanley asked about CapEx reduction and March orders.

A: Willie McClain and Mark Costa discussed CapEx reduction for Longview and March orders holding up better than feared.

Q: Jeff Zekauskas from JPMorgan inquired about tariff impact calculation and regions.

A: Mark Costa explained tariff impacts as volume hits rather than duty payments, affecting various segments.

Q: Kevin McCarthy from VRP asked about fiber segment destocking and tariff benefits.

A: Mark Costa discussed fiber segment destocking and tariff benefits in various product lines.

Q: Frank Mitsch from Fermium Research asked about flake sales to China and Q2 guidance.

A: Mark Costa answered about flake sales dynamics and Q2 guidance range factors.

Q: Mike Sison from Wells Fargo asked about recession impact and tariff resolution volume.

A: Mark Costa discussed recession impact differences and volume expectations if tariffs resolved.

Q: James Cannon from UBS asked about turnaround schedule.

A: Willie McClain explained turnaround schedule and its impact on cash flow.