With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are diversified and specialty chemical manufacturers.

Fortune Sector Leaders: Chemicals

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

These companies use the creative tools of capitalism—including the profit motive—to address society’s unmet needs.

CTW-2021-22-Eastman

<span style="font-weight: 400">In 2019, Eastman began updating some plants to accept plastic waste, in processes it calls “carbon renewal technology” and “polyester renewal technology," through which feedstocks are broken down to the molecular level and used to make products that can theoretically be infinitely recycled, and waste polyester is made back into raw material. Some 25 brands and companies, including fashion retailer H&amp;M, now sell products made with Eastman materials derived from plastic waste—including packaging and carpet fibers. Eastman aims to recycle 500 million pounds of plastic a year by 2030. </span>

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This year’s Fortune 500 marks the 67th running of the list.

Created from a branch of Kodak in 1920, the company now works independently to produce chemicals for use in products such as tires, windows, and cigarette filters.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-343-Eastman-Chemical

The global chemical company spun out from parent Eastman Kodak in 1994 is headquartered in Kingsport, Tenn. and makes specialty chemicals and fibers found in a number of everyday items from product packaging to automotive tires. Eastman employs approximately 14,500 people and serves customers in more than 100 countries.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Eastman Chemical is a global specialty materials business that produces advanced materials, chemicals, and fibers. The company was founded in 1920 by inventor and high school dropout George Eastman, most known for his revolutionary innovation of the Kodak camera. Eastman Chemical Company was launched in order to provide Kodak’s business with raw materials such as photographic paper, optical glass, gelatin, and chemicals after a scarcity following World War I. Today, Eastman Chemical serves clients in a range of industries including agriculture, construction, water treatment, energy, wellness, electronics, and more.

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Eastman Chemical (EMN): Company Profile, Stock Price, News, Rankings

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Eastman Chemical

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Good day, everyone, and welcome to the First Quarter '20 '20 '5 Eastman Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman website, www.eastman.com. We'll now turn the call over to Mr. Greg Riddle, Eastman Investor Relations.

Thank you very much, Becky, and good morning, everyone, and thanks very much for joining us today. On the call with me are Mark Costa, Board Chair and CEO Willie McClain, Executive Vice President and CFO and Jake LaRoe and Emily Alexander from the Investor Relations team. Yesterday, after market close, we posted our first quarter twenty twenty five financial results news release and SEC eight ks filing, our slides and the related prepared remarks in the Investors section of our website, eastman.com. Before we begin, I'll cover two items. First, during this presentation, you will hear certain forward looking statements concerning our plans and expectations.

Actual events or results could differ materially. Certain factors related to future expectations are or will be detailed in our first quarter twenty twenty five financial results news release, during this call, in the preceding slides and prepared remarks and in our filings with the SEC, including the Form 10 ks filed for full year 2024 and the Form 10 Q to be filed for first quarter twenty twenty five. Second, earnings referenced in this presentation exclude certain non core items. Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures, including a description of the excluded and adjusted items, available in the first quarter twenty twenty five financial results news release. As we posted the slides and accompanying prepared remarks on our website last night, we will now go straight into Q and A.

Becky, please let's start with our first question.

Thank Our first question comes from Patrick Cunningham from Citigroup. Your line is now open. Please go ahead.

Hi, good morning. First, just on the lower sales guide for Renew. I guess, first, what has been the sales and EBITDA contribution in the first quarter? And I'm just curious on the level of confidence in the low end of the sales guide. How much visibility do you have into order books?

And is there a floor for that EBITDA contribution just based on cost performance and volume that's already contracted?

Certainly. And good morning, Patrick. When it comes to the overall Methanalysis program with Kingsport, things are actually going quite well on the operational side. We've had a very successful quarter of running the facility at high rates. We've maintained an 85% yield on the DMT feedstock from the hard recycle stream or we're finding ways to use even cheaper versions of feedstock.

So operations are really good. If you annualize sort of the production rate that we had in the first quarter, we're very much on track for that 2.5 greater production volumes. So when you put that together with the absence of the startup costs in the first quarter, it's generated a considerable amount of earnings in the corporate other area around $25,000,000 in that absence. When you look at the overall cost program we're on for a full year basis, we're pretty much on track to get our $50,000,000 of EBITDA from the manufacturing cost side of the equation out of the original 75,000,000 to $100,000,000 guide. So I'd say on the operational side that $50,000,000 certainly showed up in the first quarter as expected and expect will continue to show up through the year.

When it comes to the renew side of things, on the revenue side, we originally had given you a guide back to the deep dive of 75,000,000 to $100,000,000 of renewed revenue. That was based on the assumption around the economy being relatively stable in consumer durables, stable modest growth in packaging for food applications etcetera. So basically a continuation of the dynamics we had for 2024 would continue into 2025. And that was for sure true through the first quarter. But what happened is with the trade dispute tensions developing and the discussions of tariffs, especially the tensions between China and The U.

S. And where the tariffs have now gone. The rate and growth of the consumer durable market that is largely made in China and shipped to The U. S. Is now in question about how that market is going to hold up, right?

With the level of tariffs that we currently have, it's not economic to import those kind of products. So the revision that we've given you from 50,000,000 to 75,000,000 of revenue now versus the higher rate is purely an end market estimation of the impact of tariffs. It has nothing to do with the engagement we're seeing in the marketplace, but we certainly don't expect the same kind of growth in those kind of products for the year. When it comes to engagement, customers are still very much engaged as we said on the durable side. We have over 100 customers.

The economic tensions are certainly slowing the rate of product launches. If you can't import a product from China, you can't launch a new product. So that reduces the rate at which the new product launches or the new content can be brought to market. So that factor is being managed. We've only had a few customers revert back to normal Triton because of the premium that they're trying to avoid in this economic time.

So I would say market engagement there is still good. It's just a question of where these tariff disputes go. If they're resolved soon this quarter then things would start to recover and get back to normal. They'll actually have to restock because they're pulling inventory down below normal levels right now to avoid paying the tariff. So we certainly aren't sitting on a big amount of finished good inventory in the plant given we've been in a recession for a while.

And then what I'd say on the food packaging side on our pet engagement is also good. The brands are really facing some significant limitations on mechanical recycling in a variety of applications and are very much engaged in trying to find ways to buy some ARPAT for us and applications where there's high quality aesthetics required or certain technical performance requirements that mechanical can't meet. So we're still making good progress to be able to sell ARPAT in the back half of the year as we convert that Triton line over to making PET that we discussed before. So overall, say we're in good shape and it's just a market question around tariffs.

Very helpful, Mark. And then maybe just on fiber, it seems to be getting double hit on some tariff related impact and persistent destocking. How long do you anticipate this destocking to persist? And how should we think about contract performance in the next couple of years and potential further normalization from here?

Yes. So certainly, the overall Fibers business has some challenges to it. As you said, there are sort of two separate challenges. I'll start with the destocking one first. First, there's no change we've seen in the in market growth rates.

So that is not part of what's going on as far as we can tell. So market growth rates are still modest in the one to 2% rate as the traditional cigarette market is declining in the 2% to 3% range, but the heat not burn cigarettes offsetting it. We've talked about that in the past. So that part is actually quite stable. Our contract rate for the year of this year is around 90%, which has put the prices in place for the year.

So we're in very solid shape on a pricing point. So as you said, you know, it's really a question of, you know, what's driving the volume decline. But if the markets are stable, then by definition, you know, it's a dynamic around customer destocking as the principal driver of what's going on. You know, as I said before, tow is incredibly small percent of the final price of a cigarette, about 2%. So the cost of it is not a high priority when you're selling cigarettes that are greater than six 60% gross margins.

You know, the focus always starts with security of supply. And when the market got incredibly tight in that 2122 time frame, customers were building inventory. And as we've now discovered, building a lot more inventory than we fully understood. One of the challenges with customers when you're in situations like a very tight market is no one wants to tell you how much inventory they have because they're afraid you will not supply material to them, you know, as much as they might need going forward. So you get this dislocation of, you know, inventory, and we certainly lived through that in the 2223 time frame where we discovered just how much inventory people had built over time.

And so the destocking is going a bit longer than than we expected. And the reason the destocking started, I should have mentioned, is the market has loosened up a little bit. So there's some capacity that's been added in China. If you look at it from a 23 to 25 of view, that capacity is around 5% of the ex China market. So the capacity utilizations have now moved down into that lower, you know, 90% range 95% range.

And with that room, the customers feel safe in destocking. And that's what we see going on. And and what we're going to see in the second quarter is something similar to the first quarter. I've learned my lesson around predicting how long destocking is going to last. Certainly, we expect some of it to continue in the back half of the year.

And we're still working with our customers to truly understand exactly where, you know, where this all sits. But the good news is the fundamentals are there. The capacity utilization is still, you know, in the nineties. You know, the markets are not declining in some significant way, And I think that gives us stability. The contracts, as you asked, are about 80% for next year.

You know, most of those are multiyear contracts, some are annual. They generally include pricing, a lot of it's CPT pricing that actually gives customer protection on, you know, making sure the margins are tracking with, you know, raw materials. So overall, I'd say we feel like the market, you know, is certainly facing that challenge and it's going to continue a bit more than we expected. It's good to remember there are a couple of other dynamics driving earnings down. We had a discontinued product from customers of about $10,000,000 and energy is a bit of a headwind this year relative to last year and outflows in.

The second part of this discussion of course is around the impact on the tariffs with China. We do have two products that go into China. One is the textiles, the naya product, which has been a great growth story for us and half of nai that we sell is in China, the other half is outside of China. It's a huge market. So it's a time based issue for us to if these tariffs last for a period of time of just winning market share in mills outside of China to replace what we do in China.

So that one is manageable and we have some inventory in place to mitigate some of those issues now. When it comes to the flake, this is, you know, cellulose flake that you spin into fiber, and we do this with the Chinese national tobacco company. Obviously, the rates are, you know, pretty high there, and and so we'll have to just see how those tariffs evolve over time. So that's a more specific thing around, you know, what's going on with the tariffs, and we'll have to just see how long the tariffs last with China. When you put them together, obviously, creates a bit more challenge for this year.

It's still extraordinary earnings compared to our past and great cash flow that comes out of this business.

Thank you. Our next question comes from David Begleiter from Deutsche Bank. Your line is now open. Please go ahead.

Thank you. Good morning. And first, congrats on being recognized for your support of veterans and active duty service members. Very well done.

Mark, on your China sales of the portion roughly 60% supply from The U. S, if these tariffs stay in place, how much is at risk do you think of perhaps just going away? I know you addressed Fibers, but how about AM and AF and P? Thank you.

David, a lot of these questions are really sort of situational specific to the segment. So I just suggest that address the fibers part, where half of it is very much adjustable to move out of the country, rather mitigating actions we're pursuing around the flake supply. So I think there's lots of different ways over time to manage the fiber side of the equation. When it comes to CI, just to be clear, no exposure. Nothing to worry about there, frankly, probably upside in CI, which is primarily selling in North America and the tariffs that we have coming in this country from products around the world that sort of set the price in the marketplace, you know, over time will give us some some lift there.

But in the short term, modest just because of the competitive situation. When it comes to AFP, the exposure in AFP is more limited. Similar to Fibers, it's around $200,000,000 of revenue in 2024. But a lot of the segment does not have exposure to China from a U. S.

Production point of view. So our Specialty Fluids business, have production outside Europe. When it comes to all of our amines business in Care and Ag, we've got assets in The US, but, you know, our largest assets in Europe, so we have more and assets in China. So we have lots of different ways to serve those markets locally around the world. And a lot of the coating related products, we don't really sell into China.

But there are a couple of very high value specialty products like our cellulose additives that go into a wide range of coatings from, you know, cars to pharmas to some other packaging applications, and that that is exposed. It is a proprietary product that only we make. The margins on this business are pretty high. So short term, it's hitting us in Q2 because our customers are well stocked on inventory because it's so important they carry a lot of inventory in their formulations. And so we certainly see them not buying this quarter hoping for a resolution between The US and China discussions.

But it's a very important functional product where there really isn't a substitute. And then so we have an ability to pass on some of that duty cost if we need to and find ways to work with our customers, you know, when they get back to, you know, ordering after they've used up their their stock. So I think that one is also the category of of manageable over time. In advanced materials, is obviously the largest segment from a revenue point of view in China, there are really three businesses that have different stories. Interlayers makes the products in China, so no issue there.

Performance Films historically has used a lot of product made in The U. S, but that's why we did the acquisition of DaiLand to have our own Performance Films manufacturing capability in China. We also did an expansion of our capability in Germany. And so those two assets are in the middle of ramping up for this specific reason of being more local and diversified how to serve the market. And so we'll have some that we're not going to have that much impact this quarter because of the inventory in place for performance films.

We'll have some impact as we balance out the ramp up of these assets relative to what we make in The U. S. But we can supply that market long term from other locations in The U. S. And then Specialty Plastics clearly has exposure when they're made here in The U.

S. And those products were sent to China. On that front, we're also not getting that much of an impact this quarter because the customers are sitting on inventory. And the real question in especially plastics is a lot of what we sell into China, especially Triton, is then re exported back to The U. S.

And Europe and other markets, and a lot of it into The U. S. So the main issue is how long do the tariffs stay in place that make it very expensive to buy an appliance or water bottle or whatever else in The U. S. That's made in China.

So there's some uncertainty and risk around how those supply chains adjust to that. All these companies that make all these appliances have to get the product from somewhere. The retail clients need products from somewhere. A huge amount of effort going on around the world right now to, you know, find ways to source and make these products, you know, ramp up production, and we'll follow the customers wherever they move around the planet, you know, because Triton is a unique product. There is no easy substitute for Triton.

There are different plastics you can use, but they all come with significant compromise. You either if you go to polypropylene, it's very cloudy and not clear. If you go to a variety of different styrenics, the toughness or the chemical resistance, you know, from other products all create failure modes in how well the product performs in the market. So you can go if you want to compromise your product on the shelf, but otherwise, you really want to keep using Triton. And so we'll certainly feel some of that risk and impact if these tariffs stay in place through the back half of the year as these supply chains move around and the market here in The U.

S. Has been impacted. So overall, that's sort of where we stand. When you put it all together, we've told you there's about a $30,000,000 impact in Q2. It's honestly with all these uncertainties around tariffs and where they may negotiate, it's hard to predict what this impact is in the back half of the year.

Very good. And just lastly on Longview and the DOE funding. I know you've been getting some funding every quarter the last couple of quarters. What's your level of confidence in this funding continuing under the current administration?

We feel good about the executive order. Sorry, I just lost my track of thought. We feel very good about where we are with the DOE. They have been highly engaged with us. We think that we've got a good relationship there and we think that our project actually holds up well in the way President Trump thinks about US manufacturing.

When you look at it, we're focused on growing U. Manufacturing. It is a serious issue. Manufacturing hasn't grown here in this country. It's been growing around the world.

And the vertical integration and all the products that go into manufacturing of finished products is equally important if you want to have national and economic security. So there's actions that I think we should be taking. Strategic transactions that are focused on specific issues around this topic make a lot of sense. We need a lot of regulation that reduces, you know, the difficulty and cost of building here, you know, tax and other incentive policy workforce. A variety of things I think we're very aligned with, You know, the current administration is important, and this project fits all of these criteria.

When you look at these circular investments, we're building infrastructure to deal with plastic waste. Right? And it's also a national security way to make raw materials for food packaging, medical, etcetera. It's on touring jobs from Asia because most of all the PET business has now gone to China. And you're creating revenue way beyond just our facility and supporting it to grow the recycling infrastructure behind us and being a better supplier to local manufacturing of plastic related products in the market.

So it checks all the boxes on that front. It also is a version of energy independence. Plastic waste is basically oil sitting above ground and you're reusing it instead of throwing it away. And this process is advantaged relative to Paris Island at any oil price above $60 So economically advantaged as well. And from a voter point of view, there's no one there's lot of debate on climate, but there's no debate that people don't like plastic waste in their environment no matter which side of the aisle they sit on.

So we think we're in really good shape on this. The so far everything I just said seems to be aligned with what the DOE is looking for in the conversations we've had with them. We've been receiving our funds in Q4 and Q1. There's a lot of staff change going on in the DOE right now. So we're moving a little slow in how we sort of finalize the next phases of the contract.

But we're not getting any indication that the project is at risk.

Thank you. Our next question comes from Aleksey Yefremov from KeyCorp. Your line is now open. Please go ahead.

Thank you. Good morning. I wanted to ask you, there's a lot of concern about consumer health in the businesses where your products end up in consumer, I guess, such as auto films. Are you seeing any meaningful slowdown in demand?

On auto demand? Just consumer discretionary demand across

Look, in our Q2 guide, we basically called out two dynamics that took us from where we were originally to now, both of which are trade related. So I already covered the impacts the direct impacts of trade, which is at $30,000,000 But the other impact, as we tried to explain in our prepared remarks, is seasonal growth is typically really strong for our portfolio when you go from Q1 to Q2. And that is what drives going from 1.9 dollars to some higher EPS in a normal situation. We still see seasonal growth now, but we don't expect it to be as strong as what would have been normal. And that is very much related to consumers being concerned about the world and what's going on.

You can see the confidence decline. You can certainly see consumer purchases on discretionary items right now increasing, right? People are buying cars, people are buying blenders, whatever else because they're worried about tariffs coming. So the consumer data would lead you to believe that there's a certain amount of growth going on. But in some sense, what you're doing is you're pulling forward consumer demand from the second half into now.

And there's people worried and being cautious about what they want to spend in general. That's creating a lot of fog in what's really going on. But as a company, whether it's us or our customers, you have to be considering multiple scenarios right now, one of which is freight gets resolved quickly and everything's okay. But you also have to prepare the more difficult scenario where these tariffs stay in place for a longer period of time and impact demand. And so we can see customers being a little bit more cautious on just how much inventory they want to build.

And that's sort of the dynamic we're looking at here in the second quarter is not seeing as much growth. I mean there is a risk where we don't make much progress on some of these trade issues and you start getting people more nervous about when this is going to get resolved and you could see some more destocking towards the back end of the quarter. But we'll just have to see how that all plays out.

Thanks, Mark. And just listening to your remarks about how tariffs are impacting your businesses, it seems like initially you maybe had some inventory in China that allowed you to mitigate it. Is it fair to say that if this tariff does not change in the second half, you may see a larger negative impact, direct negative impact from the tariff? That is not the case because you have some other mitigating measures? I just couldn't quite understand the net result of these two.

Sure. So again, guys, but I got to go segment by segment because it's a different story. So I don't think there's any additional risk in the Fibers business. With the mitigating actions we have in place, I would expect that number to be relatively steady as you go through the rest of the year if things are not resolved. Same is really true of AFP.

I think there may be some modifications or mitigations there, but where things are a bit better in the back half of the year versus where we are now where the customers aren't buying at all. And then so it's got probably some moderate upside. And then when it comes to the Advanced Materials segment, that's a little bit more complicated, right? Again, Interlayer is fine. Performance Films does have inventory in the marketplace right now, so that will run out at some point as you go in the back half of the year.

But they're ramping up plants to replace a bunch of inventory from being made in China or in Europe. So hard to say exactly how that balances out, but I'd say that the headwind in back half is a little bit more than the first half on And then on Specialty Plastics, you know, the headwind there would be more than where we are now, you know, with the second quarter. You know, people stop buying, you know, all these appliances and consumer durables. We'll have downside on the durable side, and then we'll have upside on selling more PET in the back half versus the first half as we start taking that to market. Obviously, that's lower margin, so it's not gonna be a total offset.

So some more exposure on SP in the back half versus the first.

I would note there are mitigating actions, you know, that we're taking that are a lot broader across, you know, just, you know, inventory. So we certainly have done that. We're ramping up plans. We're definitely working with a lot of customers around how they're moving to other parts of the world to make products. So there's a lot of that going on right now.

You know, if we're under pressure, imagine what it's like being someone sourcing a blender, you know, from China right now. You know, they're highly motivated to find solutions and we'll follow them where they go. There's gonna be pricing opportunities that we're gonna find across the portfolio. And there's gonna be volume growth opportunities that we've you know, that we can realize here in The US. We've got opportunities when it comes to, you know, direct competition being a bit more expensive as it's being imported.

You know, so we're gonna see some benefits, you know, in in those kind of areas. You know, for example, in specialty plastics, we'll see some of those benefits when it comes to, you know, thinking about parts of the portfolio in in AFP. We'll see some benefits around ag and even things in CI we'll see benefits like FloorTile. So there's a bunch of different examples moving around where there'll be some growth we should realize in The U. S.

I mean we are the ultimate company with a low cost structure to serve the North American market across all these different products that we make.

Thank you. Yes. Our next question is from Vincent Andrews from Morgan Stanley. Your line is now open. Please go ahead.

Thank you and good morning. Mark, could you talk a little bit about the CapEx reduction and sort of what triggered the decision you made on, I guess, of deferring that CapEx at Longview? And are there any sort of costs associated with doing that in terms of the overall cost of the plant? Seems like timing is not changing, but just curious there.

Morning, Vincent. Thanks for the question. So as we're looking across the scenarios that Mark has outlined, obviously being prepared for the potential downside of an extended trade dispute, we looked at now as the right time to optimize both efficiency and effectiveness of the CapEx reduction. Obviously, we're in the engineering phase of the Longview, Texas project. And we can go through that detailed engineering and basically get more complete before we start to solidify the commitments without affecting the timelines of the completion of the project.

So as you think about the midpoint, we reduced our capital from roughly $750,000,000 to $550,000,000 I would again note that our CapEx from a maintenance standpoint is about $350,000,000 and we're still investing in this environment slightly above our DNA. So we're confident in our strategy, but we want to make sure that we're also prepared for those downside scenarios and making sure we deploy it efficiently. I would also highlight that the Texas project is the largest project, but it's still a little bit less than half of the reduction. And most of that is the remainder is across a combination of other business growth and timing the key maintenance.

Okay. And then if I could ask you, I know in the sort of March conference season, you had some concern over March orders, then it sort of turned out that they were, I guess, better than feared or better than expected. I'm not sure which it is. But just curious what happened there because usually when there starts to be hiccups in the order book, they don't reverse. So what any color there?

Yes. So we are certainly with all the trade talk even in the first quarter, you have to remember, we still had 20% tariffs being put on place in China, etcetera. There was a lot of caution that developed around customers and what they wanted to order. And so we're reading into that as we were getting into March and then frankly just surprised in how people sort of bought more. Think it wasn't really a lot of pre tariff buying.

I'm sure there was a little bit of that at the March. But what's comforting around that question is April orders are are similar to March. So if they were really pre buying, you know, you would have seen a drop off in in May in in April as you as you as you've gone from March. We've seen that before in our past, and right now we're not seeing that. So that's that's encouraging.

And the order books are holding up in in in April. May looks okay. You know, June 2 June is just too far away for us to really assess when it comes to sort of our order visibility. But I do think, you know, we're we're in solid shape, but there is, you know, uncertainty risk, obviously, in June with with how all these discussions around the world go.

Thank you. Our next question comes from Jeff Zekauskas from JPMorgan. Your line is now open. Please go ahead.

Thanks very much. You abandoned your annual earnings guidance,

didn't but you're still guiding for annual cash flow. Why is that? Why would the cash flow for the year be more forecastable than the earnings? Or why do you have more certainty around the cash flow?

Yes. Good morning, Jeff. Thanks for the question. Obviously, as we've highlighted in our prepared remarks and even in the Q and A this morning, it is highly uncertain and we pivoted to an emphasis on cash generation ahead of a potential recession. As I think through the levers that we have, whether it be the cash earnings obviously, but we have a broader set of working capital and operating set of solutions and also how we manage variable resources across our global asset base.

And in that, we've got flexibility that I think gives us a narrower range on the cash outcomes versus all the accounting ramifications that comes in with an earnings estimate when you're trying to deal with these choices. As we've highlighted, if the trade dispute is resolved in the short term, ultimately we'll have higher cash earnings and less working capital actions. If it's drawn out, then ultimately it could cause a recession. But the dynamic between EBITDA and the OCF that we're going to deliver ultimately will be based on that trade scenario. But we do have higher confidence and I think we've done that across multiple economic environments in the past.

Yes. I think that we're really proud of the fact that we try and look forward and see what's coming and be prepared to take whatever actions are necessary to sort of weather storms. I mean, this industry has been, you know, facing a lot of storms over the last, you know, seven years, and it's well over machine on how to react to it at at at Eastman. You know, the reality is if if if the focus on cash is is not needed because the economy is snapping back and recovering, then that's upside. It's easy to run the plants, you know, harder in the back half of the year and catch up.

We have the excess capacity at this point. So, you know, I think this is the prudent way to approach things and we'll, you know, obviously adjust as the macro economy and sort of trade related matters sort of evolve.

Okay. And then secondly, what you did is you estimated the tariff impact at $30,000,000 in the second quarter. How do you calculate that? Is that lost sales? Is that tariffs that you're paying?

What and could you describe where it seems that you're paying the tariffs or whether you're being reimbursed for your customers? Where are the tariffs actually touching you? And is it China mainly? Or is it other regions as well? Can you sort of get to the bottom of this $30,000,000 number and what it might be in the third quarter if things continued?

So Jeff, when it comes to the impacts on tariffs in the second quarter, it is an impact on volume as opposed to an impact on duty. Right? So when you have a 25% duty into China, and there's a hope that the trade it will get settled in between the two countries. Customers, you know, don't wanna buy a lot with that adder. So that's the impact you're seeing in fibers where we're projecting less sale of, you know, of flake for the tow JV, less Naya textile fibers being purchased while people wait to see what plays out in this quarter.

So that's what happened there. Same thing I said in AFP, the high value cellulosic additives that go into all these coatings and pharma applications, some other applications. Those customers carry a huge amount of inventory because it is such an important product for them for them the product they make, and it's such a small percentage of the total cost of these products in in these sales additives and AFP that, you know, they're not gonna take any risk. And so they had inventory, months of it, and so they can, you know, through this quarter, just not order. So they, you know, are pulling inventory down.

Right? And then it's the same dynamic in in in Advanced Materials, but just less because we have a lot of inventory available in that marketplace, you know, for we make it in interlayers there. We, you know, already explained everything around and and and SP. The real risk there is ability to sell what they make as a finished product back to China, and I think people are everyone in that whole supply chain is sort of trying to figure out what they're gonna do on on that dynamic. So it's a it's a volume hit as opposed to a tariff hit.

I mean, what I'd also notice Yep. You know, while we have this exposure because we're you know, we make a lot of product here in The US and we export around the world. We're also vertically integrated, and this is a very unique competitive advantage for us on that integration, which is most of the material raw materials that we use across the company are sourced in North America. So we're not facing much tariff risk of what we have to pay for on the raw material side of things. Even PX, which we buy around the world, we have sourcing from all countries around the world so that we can flex on where we get our PX.

And obviously, PX prices are very low right now. So, you know, we don't like a lot of companies who buy a lot of raw materials, but may not have as much exports to China where they're having that problem they have to manage or if we're buying auto parts and the auto industry or whatever else, you know, we don't have that issue. Our issue is, you know, this primarily China related matter right now as far as the second quarter is concerned. And I think I already addressed, you know, how it trends, you know, into the back half of the year in my answer ahead of you.

Thank you. Our next question comes from Kevin McCarthy from VRP. Your line is now open. Please go ahead.

Eastman Chemical (EMN) Q1 2025 Earnings Call Transcript

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