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.

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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.

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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.

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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 Third Quarter 2026 Eastman Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman website at www.eastman.com. I will now turn the call over to Mr. Greg Riddle, Eastman Investor Relations. Please go ahead, sir.

Thank you, Joel, and good morning, everyone, and thanks for joining us. On the call with me today are Mark Costa, Board Chair and CEO, William McLain, Executive Vice President and CFO, Jake LaRoe, Director of Corporate Finance and Investor Relations, and Mason Tincher, Investor Relations Manager. Yesterday after market close, we posted our third quarter 2026 financial results news release and SEC 8-K filing, our slides, and the related prepared remarks in the investor section of our website, eastman.com.

Before we begin, I will 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 third quarter 2026 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-K filed for full year 2025 and the Form 10-Q to be filed for third quarter 2026.

Second, earnings referenced in this presentation exclude certain non-core and unusual items. 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 third quarter 2026 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&A. Joel, please, let's start with our first question.

Thank you so much. We will now take our first question from Vincent Andrews with Morgan Stanley. Your line is now open. Please go ahead.

Thank you, and good morning, everyone. Congratulations on getting the DOE grant back together. We would be curious to hear a little more details on how that can be allocated in terms of how much can you put towards the Kingsport expansion. Then there was some discussion of restoring underutilized American recycling assets. What does that actually entail? Are those going to be also chemical recycled or methanolysis assets that you are going to somehow be able to do, or is that the more traditional recycling? Thank you.

Good morning, Vincent, and we are very excited to get the grant back. I would say that the Department of Energy has been a phenomenal partner in coming back to us and talking about how we could collaborate on a reinstatement. I think we are fully aligned in their vision, which is priority on re-industrializing U.S. supply chains to America, building resiliency. When you look at this project, it is creating U.S. manufacturing jobs directly, as well as in all the collection recycling industry that feeds into it. It is providing security on a critical material without security on things like PET, when China is getting to be 75% of the industry. You have a serious issue about how you can put food and water on the shelves, so security is incredibly important.

It also allows us to be another leader and demonstration of technology leadership in creating a unique position in this that allows us to also create a regional economy. When you think about the grant coming back at the full value, it is really exciting. The grant does require Eastman to provide at least sort of 50% of the CapEx, but it is structured where up to 50% of the capital, if we can get the number at the right target, can be paid for by the DOE. So, that is a great place for us to be. As you mentioned, the scope has materially changed. The original scope was centered around building the second plant, and all the capital would have been sort of devoted to that in their support. This actually pulled in the scope of the current plant.

So, all the debottlenecking of the current methanolysis plant to get to that 30% extra production, the expansion of the feed processing capability in front of it, the additional add of polymer and infrastructure that goes around producing more product and getting it to the market across both specialty and in the PET section, those kind of incremental expansions are covered under DOE, where we would get a 50% share from them on those investments. So, that is great. It helps us minimize CapEx in the short term in this environment, and it allows us to build momentum to the second plant. Then it also, of course, covers the second plant, and that will be a project that I think will have substantially less CapEx than what we talked to you about in Longview, Texas, for one of the reasons that you just mentioned.

We are looking at You have to remember that the Longview project was not just a methanolysis plant. It was also a polymer line. It was feedstock processing the front end. It was infrastructure to support all that together. About 40%-50% of the capital is actually not the methanolysis plants. It is all the other things, the processing, the polymer lines, the infrastructure, et cetera. So, those kind of assets exist today. There are recycling plants that have shut down in this country that we can purchase for a very low price. There are polymer lines that have been shut down, and there is infrastructure around both of them that are sitting there in those sites.

We have made great progress in finding a way to acquire those sites at very low capital order and have that replace a significant amount of new build capital associated with the second plant. We are very excited about that, and we will tell you more about that once we get it fully completed. Also, I would mention on the methanolysis plant itself, we believe we can build it at a much lower capital cost than the first plant, because of all the learnings we have had in how to design it better, how to execute the construction better. I would also note that the solar facility is out of the scope of the project.

The other thing to keep in mind is, given the insights we have about building a 130,000-ton plant, we built a 130,000-ton plant, not a 100,000-ton plant, with incremental extra capital from all the learnings we have had for the first plant. So, the output you are going to get out of this plant is far greater for a similar amount of capital. So, you can get the capital number down a lot, and when you put it all together, it basically says to complete the expansion and debottlenecking of the first plant and building this second plant, the DOE would probably cover 30%-50% of the capital cost associated with that combined investment.

Well, that is great news. I will pass it along. Thanks so much.

Your next question is from Patrick Cunningham with Citi. Your line is now open. Please go ahead.

Hi, good morning. I guess just on Advanced Materials, where do you stand in terms of price-cost for the business? How much of the planned price recovery have you gotten year to date? Is this more of a headwind in Q4 as costs start to ramp up and prices start to stick in other areas? Just in terms of the January 1 price increases, how should we think about the levels that you're targeting there?

Yeah. I'll start with just on a full-year basis, then I'll talk about Q4. The commercial teams have done a phenomenal job on managing price in this environment. As we talked about back in April, when the Iran conflict was driving raw material prices up in a significant way, we leapt into action across the whole company, including AM, and started increasing prices in a pretty significant way to keep up with that higher raw material cost, as well as distribution costs that come with this crisis. I think we've done a great job in the implemented prices that we did, especially the specialty plastics side of things. I think what was keeping up with those raw material increases, with the actions we took through July. I think we've made very good progress on that.

When it comes to the SP side of it, we're pretty much catching up in September, and then, of course, with the Iran conflict escalating, had a new spike up in PX prices, because back in the July, August timeframe, when prices of oil were down in the $80s, we were expecting a raw material tailwind in the back half of the year in our guidance back in the second quarter call, as prices sort of got implemented at a higher level and raw materials were expected to come off. Obviously, that didn't happen. The prices have held, but we have a much higher level of PX that's really impacting Q4. We are taking actions, but it's a little difficult in the middle of the quarter to sort of address the problems that higher cost creates.

We will probably have about a $15 million headwind that is really associated with a bit in Q3 at the end of the quarter, and mostly in Q4. We have a $15 million headwind relative to what we expected would have been a greater than $15 million tailwind, so it is quite a swing from where we were in July. On the film side, there were some prices that were locked in annual contracts on the interlayer side, and some adjustments we had made in prices to regain some share in a few places. We talked about that to you in the beginning of the year. That has been an all-year thing. Of course, raw materials higher there. That has led to some compression, and some of that has been offset by some price-cost expansion of performance films.

When you put all that together, it is about a net $15 million. You have, on a full-year basis, about a $30 million headwind in price-cost for the segment. Half of that is really a Q4 thing, with specialty plastics, and the other half is spread across the entire year. But the January 1 price increases that we will put in place will address that raw material cost challenge that we are facing, and we feel confident we can sort of cover the raw materials as we go into next year.

I would mention, If the war comes off, and prices go back to the 80s, we will be in a position to have a pretty significant tailwind in price-costs next year relative to this year.

Great. That is helpful. Then maybe just on some of the operational constraints with the delays on the Tritan startup and the polymer line conversion. I guess, how substantial are these delays? Does this persist into next year? Maybe just in terms of the size of the planned shutdown, in terms of the earnings impact, pushing that from 3Q to 4Q, if you could help size that would be helpful as well.

Sure. The line delays are solely an impact in third quarter. So, we had two lines. One was the large Tritan line that we have been constructing as part of the circular program, and we had finished the construction of it, and desperately needed it to ramp up and serve the Tritan demand that we had in the quarter. So, we were pushing hard to start it up, and we ran into some issues with some bad pumps that had to be replaced, and it delayed us by about a month in getting the line started up. That impacted both the cost of fixing that, as well as missing some orders at the end of the quarter.

The conversion of a polymer line to make PET, which we talked about to you guys a long time ago, for making PET to serve all the Pepsi demand and other customers- that really wanted the product in Q3. We ran into some startup issues in that line, which also delayed us about a month. Both lines are up and running and running incredibly well, so it is no issue for Q4, but it did impact creating some additional expense in the quarter. Then it also impacted some of the volume we could have sold in the quarter. That was part of why we were a little bit below Q2 as opposed to being above Q2 in our original guidance.

Your next question is from Josh Spector with UBS. Your line is now open. Please go ahead.

Yeah. Hi, good morning. I mean, this is related with the prior question, but just your commentary around reiterating 3% volume mix growth this year. I mean, it implies fourth quarter, you need about high single-digit volume growth. Understanding it's an easy comp in fourth quarter, but Q3 was an easy comp as well. I imagine it's more than just the polymer lines that you need to pick up to get there. So, what drives that confidence to say that now?

Yeah, that's a great question. I mean, I'm going to answer it first on a sort of full-year basis and then come back to sort of Q4 specifically, because I think context matters. Overall for the full year, we expect to be about 3% up in volume mix in Advanced Materials, which is a really impressive performance in the context of the year that we are in. 2/3 of our revenues in discretionary markets in Advanced Materials, and you've got challenges in auto, of course, where automotive demand is challenged both on the sales and the production side, especially in China, which is extraordinarily challenged. And the innovation has just done a great job on the interlayer side of holding revenue flat when the market is probably down sort of 2%, 3%, 4%, depending on who you ask.

But it's certainly down, and that innovation in HUD and getting more territory on an EV versus an ICE car that we have told you about before, et cetera, is certainly playing out. And then on the performance films side, that has been the more challenged part. The majority of our profit in performance films is sort of split between North America and China. Obviously, things have been fine and holding up well in North America, but in China, with the market being down about 20% in sales, that's a pretty material headwind. And so we faced that headwind, and it really impacted us in Q1, where we serve the high-end market, and we responded and told you about this back in the Q1 call of broadening our position into the mid-tier because our low-cost asset we brought online in China allowed us to penetrate that market.

And we had a significant headwind with low demand, dealers destocking in Q1, then a significant improvement in business as we went from Q1 into Q2 with the actions that we took along with optimizing the cost structure of that business in Q2. All that carries forward into Q2, which was very strong. Q3 was a little less strong because Q2 was very strong in how the dealers had loaded some inventory, and they were expecting the market to grow, and it didn't sequentially. They were managing inventory, and that's a big part of the story on Q3. Overall, when you look at it, that momentum still continues with that broader market position into Q4. We have a broader market position in a tough market. We have innovation delivering growth in autos.

We'll be a contributor year-over-year in Q4, but also on a full-year basis. It's lumpy across the quarters. On consumer durables, same story, mid-single-digit growth in a down market, and that's all about winning applications in Tritan. That's part of the Renew value proposition that's allowing us to win with customers and just the great performance Tritan has. Our team's just out there fighting every day, picking up market share versus other materials. Great story, volume growth there. Steady markets are obviously giving modest growth. On a full-year basis, I would note there's also about a $50 million revenue loss relative to last year of some business that we walked away from last year. This is not Iran conflict-oriented, but just walked away from in medical that just didn't have much value.

That sort of masks some of the growth that you're seeing across all these other areas. In Q4, you just have the momentum and pickup of all the Renew volume going into the quarter, which is pretty significant as we're driving to our up to $100 million of revenue. A lot of that's in Q4, so that's part of how Q4 is better. You've got the continued innovation across the durables that's delivering value, and you've got some more stability in market presence in PF. All those come together to give you the ability to have some better volume growth year-over-year and not as much of a sequential decline as you would normally expect.

Your next question is from Frank Mitsch with Fermium Research LLC. Your line is now open. Please go ahead.

Thank you. If I could piggyback on a couple things. One, congratulations on getting the DOE grant. Mark, obviously, you're saying that you're going to grow the circular sales in 2026 up to or approaching $100 million, and I believe in the prepared remarks, it was expecting another $100 million in 2027. I guess I would have thought that 2027 would have been higher than 2026. Can you speak to the expectations there and what we can expect in 2027 and beyond?

Yeah, it's a great question, Frank, and we are seeing a lot of great revenue momentum in the circular economy, as you're highlighting. I think that it's important to keep in mind that it's sort of half specialty, half PET. I think on the specialty side, it's going to be continuing to deliver the performance we delivered this year, right? So mid-single-digit growth in a challenged market is great. That momentum should just continue as we go through next year and continue to build in the specialty side of things. When it comes to packaging, I think that's where the big step-up in volume is. This line that we just converted in Q3 is now available for a full year next year.

We certainly have more capacity to support growth in the rPET space with Pepsi, with some other major brands that are very engaged with us. When we get to January, we'll be able to talk more about some of those customers and what we're doing with them as we get their commitments finalized. But we have a very clear line of sight that the revenue there will be stronger. So, I would say $100 million is a minimum for what we need to deliver next year relative to this year when you look at that momentum. But it's early, and we don't know what the state of the economy is going to be with the Iran war. So at this stage, it's good to be a bit conservative until we have clarity on the economy and can give you better insight in January.

That is very helpful. Makes sense. Then, Willie, the expectations on operating cash flow for the full year went from $900 million to $850 million. I was just wondering what accounted for that decline and if you care to offer a sneak peek on your expectations for 2027. Thank you.

Thanks, Frank, for the question. As Mark has already highlighted, we have had continued inflationary pressures with the Iran conflict and what is going on in the Middle East. So that is putting a little bit more pressure on working capital as we wrapped up Q3 and early Q4. We expect a release as you think about how much working capital has been built through the year. That is almost $500 million year-to-date, $560 million to be exact, and we expect that to release in Q4 and have our traditional strong Q4 cash flows.

Again, we think that is around $850 million, but that also sets us up for stronger cash in 2027. Even if you do not even have to release cash next year, as long as we avoid a headwind or re-escalation and things normalize, we will have significant cash flow above the $850 million in 2027, and we will be talking more about that on the year-end call when we have, I will call it our complete outlook pulled together.

Your next question is from John Roberts with Mizuho. Your line is now open. Please go ahead. Hey there, John. Your line is now open. You can go ahead.

Sorry, I was on mute there. Yes, my apologies. I think you initially announced the ethylene propylene flex unit at the December 2021 Investor Day. What took so long for that project to reemerge? If you had had it up for 2026, would the EBITDA benefit had been at the lower or higher end of that $75 million-$125+ million range you gave on slide 10?

John, first of all, the E2P project, the metathesis unit that we are talking about, is a phenomenally great project and a huge value-adding investment, and it is a fair question around when you do it sooner. Back when we originally had this idea and the concept we were trying to create, do was sort of limited, and we were very focused on CapEx when we were driving the organic investments in circular and some other growth projects across the company. Being responsible about capital allocation, as we always are in our discipline, and not spending more than we have, we had to make some tough trade-offs there, and we focused on the circular economy versus this investment.

I still believe that was the correct choice to do in the information we had at the time when we were making the decision. We did not exactly see four years of stagflation ahead of us when we were making this choice. But where we are today, this is a great investment. Actually, because of the way time has gone by, we have developed more insight around the technology and realized that we could double the scale of the investment from what we were intending to do in the beginning to create a lot more value for shareholders from that investment. To get $100 million of earnings, sort of on average, $75 million-$125 million in range, for something that is repurposing existing cracker that is very capital-efficient approach and a payback in one to two years is great, especially in this business that certainly has its volatility.

It not only delivers $100 million roughly in value, it also takes a lot of volatility out of the earnings, because a lot of the volatility in our earnings comes from the ups and down of the vol ethylene sales. We sort of now minimize that and take that volatility out. So, it is great both in volatility and value. We did actually run the numbers, because we thought someone might ask, of what the value would have been in 2026. If the capacity had been online all year, it would have added, coincidentally, about $100 million of earnings to this year in this current volatile context. It is a great investment over time. It is very capital-efficient, reduces volatility. We are looking forward to having it online in the middle of 2028.

John, I would just add, as we think about capital efficiency that Mark just referenced, I think we highlighted also that on the high end, the simple payback is a year, and on the low end, it is about two years, which is great as we think about capital going forward.

Your next question is from Salvator Tiano from KeyBanc Capital Markets. Your line is now open. Please go ahead.

Yes, thank you very much, and good morning. I wanted to understand a little bit better the A&FP price-cost situation. There are a lot of comments about how you have contractual pass-throughs, but the implied, I guess, price-cost spread seems to be widening every single quarter. Firstly, when it comes to your pricing mechanisms, how do we reconcile the view that most are just contractual for the cost versus the widening spread? Secondly, specifically on Q3, when we look sequentially versus Q2, you have 4% more price, 7% lower volume. It seems that this is pretty much resulting in the sequential EBITDA increase, and there was no incremental sequential cost. That's at least what a model would spit out. How were you able to get sequentially 4% more price when your inflation didn't rise materially Q3 versus Q2?

Yeah. First of all, it's not all cost pass-through in this business. Roughly half is CPT, if you will, and the other half is where we make price choices like everywhere else in the portfolio. The team has just done a phenomenally good job in commercial execution across the entire portfolio, managing price in this context. Their ability to sort of be commercially excellent is also supported by being in a lot of very stable markets, right? 2/3 of AFP are in stable markets that don't have as much economic stress in them as B&C or auto or durables does. You have a calmer, more sort of straightforward relationship with customers in that market as they're delivering steady growth year-over-year. That helps.

The CPTs certainly do help, and the nature of those CPTs, with the level of volatility in raw materials that we're dealing right now, certainly continues to create some tailwind. I think that as we go into next year, it won't turn into a headwind, just to be clear, but I think it'll stabilize out as we're catching up to these raw materials, or in this case, in this quarter, getting ahead of them. I think that we're in good shape, that this is a durable improvement this year, and that we can hold onto it next year from what we can see. Then, of course, the volumes being stable gives you a certain amount of growth on a full-year basis.

On a sequential basis, there's obviously seasonality that you see in the numbers on the volume coming off, and that's just seasonality as far as we can tell from Q2 to Q3. But it's just excellent performance. Operations have run really well. There was a big shutdown in Q2, and so they have a lack of shutdown headwind that was in Q1 to Q2, and then we have that as a tailwind across two large shutdowns that are giving us some help there.

Your next question is from Aleksey Yefremov with Barclays. Your line is now open. Please go ahead.

Thanks, and good morning. This is Ryan Weiss on for Aleksey. Mark, couple questions for you, all related to acetate tow. So, I believe in the prepared remarks, you guys are talking about some form of price degradation in 2027. So, I guess just how much are you kind of expecting there? And then, I believe you also mentioned that you have some confidence that you can grow volumes in acetate tow next year. I guess I recall this is a pretty competitive market, and some of your customers have been comfortable running it at lower inventory levels. So, just trying to level set kind of what's going on there.

And then lastly, just in this market, I think a competitor in the East recently acquired some assets that are in Europe. So, any commentary there? Thank you.

Sure. Well, you embedded about three questions in there, so we'll try and answer all of them. On the tow side, I just want to talk a little bit about context for this year before we get into next year. This year, as we went into it, about 20% of the industry contracts were open for competition, if you will, as we went into the year. And a lot of those contracts were at relatively high prices compared to sort of the market average, if you will, and that led to a certain amount of price degradation as we held onto our volume. So, the good news is, our tow volumes are stable in 2025, but it came with mid-single-digit declines. And so, that is a context.

We also were expecting textiles to grow this year, which obviously they didn't, as we had hoped, and we didn't realize that stream utilization benefit for that reason, as well as some slower demand in a few other places across the company on the stream. Those were sort of what drove the challenges, as we think about market context. Something we also mentioned last call is that Eastman is by far the low-cost leader in the industry with the scale and integration that we have with our site in Kingsport, given the nature and scale of the entire site benefiting our cost position. But it does come with a need for the stream to run at a certain level of utilization for it to be economic and for other operational reasons.

We have to keep a close eye on that, and we were pretty clear about that in past comments. When you put those two together, we have to think about what is our strategy for going into 2027. We do believe volumes will improve next year. It is a mixture of the destocking seems to have played out with the independents, which are often more on an annual contract basis, and therefore they were more aggressive in their destocking. We still see the multinationals that have more multi-year agreements and contract minimums that are going to have to continue doing more destocking next year. We are certainly going to pick up a tailwind from that destocking finishing.

For the stream reasons, we have been looking at our market position where we lost a lot of market share from 2024 to 2025 when we were being disciplined in our pricing, and we are intending to regain some of that in this context. There is a lot more industry contracts open this year. Unfortunately for us, we have fewer, quite a bit less of our contracts are actually open relative to the overall market. As these contracts are playing out, we are regaining a bit of our share in some places. When you put all that together, we have better volume next year, and then you have got the natural adjustment of these new open contracts where the prices are coming off.

We expect another mid-single-digit decline in prices, but differently, improvement in volume. This combined with a couple other growth programs that are now getting into gear, we expect a pretty meaningful asset utilization tailwind to go with all of this. When you put all that together, it allows us to keep earnings in 2027 stable to this year.

Oh, I'm sorry. You asked me about the [audio distortion] [GenOn-Seraya] combination. I forgot to answer that. We obviously can't comment on what their plans are, and we're certainly still evaluating what they intend to do and how it might impact the industry. A couple high-level industry perspectives I would suggest is, combination of those two would increase their capacity to serve the market, but it will include some high-cost assets. We expect them to be focused on cost synergies, as anyone is in an acquisition, and as they look at integration when they put that together to make sure they're supporting the debt they've taken on and delivering a good return on investment.

When you look at their situation, I think it could lead to higher capacity utilization, and they certainly don't have any reason to add capacity. I think that that could be a stabilizing force in the industry, but it's way too soon to really know, and we're going to have to see how customers respond to this announcement. That's sort of our view on it at this point.

Your next question is from Jeff Zekauskas from J.P. Morgan. Your line is now open. Please go ahead. Hey there, Jeff.

Thank you very much. Now that you have the Yes? Hello?

Hi there. I just was making sure you were unmuted. You can go along with your question.

Thank you very much. Thank you. Now that you've received this DOE grant, is it likely that the trajectory of your capital expenditures will go up or down or stay at the same rate? In other words, will you spend more capital over the next three years, less capital, or the same amount of capital now that you have the grant?

Jeff, thanks for the question. The first phase of the project, as Mark's highlighted, the investment scope is really focused on expanding our Kingsport Methanolysis operations and supporting the collection of feedstock and processing infrastructure. We expect this first phase of investments to be incremental, as we've already previously stated, and now with the DOE support to remain within our planned CapEx for 2027. So, no major changes on 2027. If I think about CapEx overall, while we're doing the Methanolysis project, we also have completed the Tritan project, so we'll be disciplined out of the gate depending on the economic scenario for 2027.

Effectively, the grant cuts the additional investments as we think about going forward in 2028 and the future at roughly 50%. We've also highlighted that we'll be disciplined, and ultimately it'll be a good scenario as we think about moving forward with the second facility as we deliver on the first facility and fill out the expanded capacity. I'm not going to state more about the future, but that'll be a good opportunity for us as we meet those milestones.

Yeah, what I say, it's a great way to sort of reduce the capital and efficiency and our ability to be competitive in the circular economy to drive volume growth and earnings growth, so we're really happy about it. Overall capital allocation depends on your cash flow each year, so we'll have to see how things play out in the economy.

Okay. In terms of your inventories, I think year-over-year, maybe they're up $250 million. Do you have to cut back on your operating rates to bring them down, or do you think you can operate your businesses normally and still work your inventories down through the course of 2027?

Yeah, Jeff, a couple of things. One, I would just highlight that earlier in the year, we talked about how we've added raw materials for security of supply. I would highlight there, it was paraxylene as well as furfural. Also, as you think about in Q2, we did actually reduce some of our finished goods inventory so that we could take on more of that. As Mark has also highlighted here again, the inflation that we've seen here at the end of Q3 going into Q4, we would expect not only the raw materials to go up, but as we convert those raws into finished goods, that'll put pressure across the work stream. We expect to have, and also had a planned turnaround in Q3. That planned turnaround got pushed out into Q4.

Naturally, the key takeaways are inflation, security of supply, as well as the timing of our turnarounds. I see all of that ultimately normalizing. We are going to release inventory in Q4 as we deplete that during our turnarounds, as well as we go into 2027. We have ultimately a level of inventory on raw materials that we can work through and create a tailwind in 2027. I would highlight also that our days inventory from year-end 2025, it was, call it 115 days. At the end of Q3, it was about 105. So, there has been a lot of inflationary pressure. We are working through it, and that is what will give us some additional tailwind in 2027.

Where the real opportunities for inventory reduction are in Advanced Materials and Fibers. Those two places, as we look at next year, we have confidence that volumes are going to be greater next year than this year. You have that volume growth to contribute and manage that. I just addressed the Fibers growth, and then Advanced Materials, if we deliver similar growth as we did this year or better, that gives us some momentum to sort of pull down that inventory as well.

Your next question is from David Begleiter with Deutsche Bank. Your line is now open. Please go ahead.

Thank you. Good morning. Mark, just in CI on the propane-propylene spread, you mentioned in the prepared comments how it should be a temporary condition. Can you talk through why you think it will be temporary, and talk about the impact of the spread, not just in CI, but in the rest of the portfolio in Q4? Thank you.

Sure. Thanks for the question. Good to hear from you, David. In general, high oil is a very good thing for the olefin complex in North America. That has been true in Q2 and Q3 as sort of went through those dynamics driven by the Iran conflict. Q4 has turned into a very sudden and unusual situation. What has happened in the propylene side of the chain, which is where we are concentrated, you had a situation in September where propane was $0.80 a gallon, oil was $80, PGP was $0.40 a pound. In that, economics and the advantage that we have as a North American producer was good. Today, we are at $1.20 propane per gallon and $0.43 in PGP, and this is where it gets interesting.

Asia, principally China, is at $0.61 in the value of propylene. You have got a $0.20 per pound arbitrage that is open between China and the U.S., and that is extremely unusual. In fact, the last time it was this big was in 2004, and it lasted about two months. As you look over the last 20 years, which we did in preparation for this question, every time you see the arb open between Asia and North America in this context, it closes very quickly. You guys can do your own math, but you can see it is pretty clear that these arbs, when they are that wide open, get closed. Today, you have got the cash margins in European crackers, and the naphtha part of the refinery are negative, right?

European production is being materially reduced. I think we are going to start seeing, at these prices, you are going to start seeing even PDH reductions here in the U.S. Supply is going to start getting constrained. That will reinforce the close of this arb. I will admit that time to sort of close it is difficult because the ships to move propylene around are constrained by all the Iran war drama. That is a complexity, and it is also hard to solve in a Q4 dynamic when you are seasonally low in volume. There is a lot of customer caution out there about the future economy. When you put all that together, it is hard to close that arb instantaneously.

But what we are doing is shifting our focus to offset some of this by shipping exports of olefin derivatives into Europe, where the prices are going up because China is disadvantaged at the $0.61+ logistics to get there relative to the U.S. and getting to that market. We are taking actions as much as we can within the quarter to get that export out there and offset some of this arb at the propylene level, because remember, we do not sell propylene, right? We sell propylene derivatives. That is our focus on how we manage that. When you look at this context, it looks very much like this arb will get closed, and that will make a difference.

When you think about that as you think about next year, you cannot use Q4 as a proxy because of this. Even if you closed half of the arb that is open right now in this quarter, per the logic I have laid out, you would add $30 million-$40 million of earnings to next year relative to Q4. Q4 is seasonally very low in volume anyway, so you cannot annualize the volume side of it either. Q4 is not a very good proxy when you are trying to look at how you want to do this.

When you are thinking about next year, I think Q3 is probably a better place to start at some level. If you look at the propylene propane spreads there, they are about $0.27. 10-year average is about $0.28. So, pretty similar to historical average, where Q4 right now is at about $0.14, which is way disconnected from anything that is remotely normal. So, some degree of return on that, I think, is logical to expect. Acetyls will get better next year, because of some of the capacity shutdowns that have been announced.

When we put all that together, I would say that we could be earnings next year somewhat moderately below this year, but it is not likely to be a significant headwind, as we are growing the specialties and the portfolio. I do not expect CI is going to be, from what we know today, a big headwind to sort of offset that.

No, very helpful. Just on circular, you mentioned the incremental earning sales for next year. Can you discuss the incremental earnings you expect with those sales, and maybe total earnings from this platform in 2027? Thank you.

David, what I would first highlight is, with the up to $100 million this year, we think the earnings on an incremental basis is going to be around $20 million. Also, as you think about the current economic environment and the value that we're getting from, I'll call it processing feedstocks versus paraxylene, we would expect to continue to run the plant hard here in Q4 and look to grow that into next year. We will be building upon those and expect it to be at or above those, as Mark has already highlighted. At this point, we're looking at being at the conservative end, but we will be building upon that incremental growth in 2027, and we will be more specific as we get the economic scenarios and plans in place at the beginning of the year.

Your next question is from Matthew DeYoe with Bank of America. Your line is now open. Please go ahead.

Yeah. Good morning, everyone. It feels like, or at least directionally, I've seen some commentary around different degrees of interlayer capacity expansions coming maybe from some of your Japanese competitors. Can you talk a little bit around some of the dynamics around that? I'm not 100% sure if it's the same polymer strains or not, but demand isn't necessarily super robust for some of these markets, so I'm just kind of wondering how you think that plays out.

Yeah, for the markets we play in with the Japanese that we compete against, we do not see any sort of material capacity expansions coming from them. I think in this market, where demand has been pretty challenged, there is not a lot of incentive to add capacity to that market until we have more clarity around market growth.

All right, I appreciate it. Otherwise, all my questions were asked, so it is fine. Oh, wait. I did have another one. If I could drill in on Jeff's question a little bit on CapEx. Willie, I think you had made a comment that 2027 CapEx will kind of be in line with plans. Can you just give me a notion? I think in our model, we had you marked up a bit for 2027 versus 2026, just given some of the ramps. Is your comment that Can you give maybe a little bit more clarity on the absolute dollar spend planned for 2027?

Yeah. A couple of things. As I think about within plan, that was really more around the, I will call it the capacity expansion of our methanolysis facility and the spend on that front, and that now that would be, ultimately, we would receive some funds from the DOE. On the absolute amount, I would expect with this year coming in at $400 million is where we expect to be. Also, as we think about some of the, how do we move forward within the circular, as we think about the broader feedstock assets and we look at the metathesis, I would say the baseline starting point will be around $500 million.

We are always disciplined about our cash flow and our CapEx, and our view of 2027 is we can deliver pretty reasonable growth in earnings and cash flow, and release cash, obviously, out of working capital on top of just the earnings growth. We feel good about where we are headed, but we always are going to be disciplined to look at the situation, and if I am right, we have got that kind of growth, and we will be able to support that kind of CapEx.

Your next question is from Abigail Eberts with Wells Fargo. Your line is now open. Please go ahead.

Morning. Thanks for taking my question. Just a clarification on Chemical Intermediates. It looks like your full-year assumption for Brent crude implies slightly lower pricing over quarter for the fourth quarter, but you are expecting CI spreads to be a tailwind to fourth quarter. If you could just clarify some of your underlying assumptions there. Thanks.

Eastman Chemical (EMN) Q3 2026 Earnings Call Transcript

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