Eastman Chemical (EMN) 27 Oct 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to the Third Quarter 2023 Eastman Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman website, www.eastman.com.

I will now turn this call over to Mr. Investor Eastman of Riddle Relations. Greg sir. Please go ahead,

thank Thank us. joining and you, Good morning, Jordan. you for everyone,

On with President X-K and after XXXX CEO; Jake the financial Board Manager, market Willie Costa, call LaRoe, release our McLain, me closed, today results we Executive third Relations. news filing. Vice Investor and posted and Mark CFO; Yesterday are quarter Chair SEC and

related section www.eastman.com. the and prepared of website, slides in Investors remarks Our the is our which are

items. we begin, X Before cover I'll

will certain Certain detailed results expectations forward-looking you to our presentation, financial and expectations. or remarks Commission, our and for will concerning XXXX in future be release the Securities this events third plans quarter XXXX could results the with including during and First, be hear and third are to or XXXX. our factors in news statements for our during in Actual the materially. and this differ call, full Exchange filings filed quarter XX-K the Form filed preceding XX-Q year Form prepared slides related

and in referenced most XXXX Second, the and items, results items. description noncore unusual presentation including and the certain available quarter news associated exclude to a of excluded this financial are disclosures comparable Reconciliations other the GAAP directly third in measures release. adjusted financial earnings

the Q&A. posted remarks on will into straight our accompanying we slides As prepared we and go website last now night,

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

[Operator Instructions]

Deutsche Bank. question of first David Begleiter Our comes from

potential a in think, comments earnings on more for for the the the comments. macro? you Mark, in you this little thanks prepared Can color on 'XX provide 'XX

you behind and and and you a next focusing of obviously We're to how energy oil lot markets way of forecast recover neutral be intentionally built are we a When or on somewhat the going recover if Sure, spending do. recover prices deliver great question. a what focusing prices David, on putting or, year. about or year where this and we lot time was will, scenario don't to us our it think growth or earnings a and

of are the things case So deliver focus better year. this math want in neutral than that first sort a to year we a year that more or next control are on what

it in next can of we biggest a volume was earnings as mix. that at course, variable view, point the in capacity about how $XXX this when driver, sort look from mix margin of the probably the year you the And volume portfolio, year, of recover excluding down in decline utilization. extent and that across million buckets. And we're And in at X think of we and of then look

obviously that. is And lot of to first certainly our a business. a significant around destocking. conversation The of very There's element was it lack a

year. in this And from But think the about be probably call destocking and comes we generally sort decline that XX% volume we'll of next of destocking. year X/X let's conservative was back

million there on of that's destocking. just $XXX a So And variable margin. lack

So that any doesn't markets better. It include include getting doesn't restocking.

The element innovation. is second

biggest center been And to about with element, and delivering coming and story company. next year revenue all methanolysis considered. -- plant of $XX our growth to a excited are the We the to this relative innovation will EBITDA very as in cost Kingsport It's margins in And incremental the our the million course, year. be portfolio. an of online, that's

So that's pretty considerable.

on destocking. of top lack that So the you've got of

EVs growth with versus across methanolysis. material market got not great that's cars. It's innovation lot of per and just extreme in interlayers ICE of We've happening car value with portfolio. the premium you've our leverage automotive the delivering a had X.Xx then success And Kingsport in

going adoptions We've to and you deliver had products about, some of where and been we've great got a business, we've success we'll brands telling the that's continue above-market great So growth. straws Aventa and as well you're making real packaging going in growth as to see and cetera, out polystyrene et some business. progress now nice and for replacement food our that great packaging, protein national

The Tetrashield, the more up this and non-textile to and beverage food starting move cans has into and year, picking side. we're business, business will been continue. great

growth So market there's market. you're a even throughout a the are we're launches. on next flat lot people to year portfolio more and of more And happening benefit really a in innovation through going new see focusing in stable when situation

guidance, cautious element, go. course, where And is the about saw markets we're of third our markets. pretty The you as the in might being

lots there's think around could debate of could markets go down. I recover, markets

But probably really discretionary. stabilize sort as to it's to stable fair the because that know. it's say of think reasonable end-market our none of not expect think I demand is I will us markets there

personal pharma, all care, of when kind and packaging markets So some those modest food, at have medical, going growth look probably for to stabilize, those you are dynamics.

bit. and think grow, we down to little expected Building that's a think, we is to Automotive a reasonable is flat assumption. construction,

volume you together, methanolysis. out of on additional got numbers Kingsport you've those and this growth of destocking So all from when some put top that

So considerable value there.

second is asset utilization. The part

utilization our cash. success for aggressive in you $XXX when million for on over headwind a tailwind Unfortunately, really quarter assets or rates headwind, not It's saw the a down of the year cash but We the think in actions we So that, $XX next took. alone you a utilization it third and comes hit to in year. million by $XX great the about in third headwind. accounting managing pulling been million quarter full generated we've extremely with the an take cash free up basis

back. flat, So you got to if are add that comes back volumes that

to Obviously, flat. there's our keep we're cost structure taking actions

side growth things that the the line. of above straight -- to bottom volume about in talking So flows revenue we're all

margins be So quite the the strong. are to on going recovery incremental

So all a that creates situation. good

We company. that raw be and to in inventory lot still our in some in Offsetting that needs places. through. could lower have Specialty flow starting about a We're XX% moderate FIFO of to a material is few still pricing

into of pricing. offset to going sort some see next through of you're that So Specialty that will flowing benefits year

materials see really but tailwind, really raw of also don't as it a see much don't as we we a headwind. So

earnings improvement cash earnings side in those a all operating together So the our of and put factors well. as in bit from quite -- delivers

about we're we and all in excited these owners. on our can So control actions success uncertainty delivering this pretty focusing that for

are persist? destocking or areas lastly, And protection, think do like the just you end still when long crop we will will how seeing in do think you it it

year, until of products, this stories, in quarter second On a the crop like ag year. the second didn't the or different until consumer of construction last than ag aggressively didn't start quarter fourth Very the but quarter. different market, which building the durables protection, is more started obviously, start destocking number but timing of

quarter. started, second destocking second to it the third -- it into in more quarter So the aggressive the got fourth from continues the the and

it But first fourth the start think as season. have out build quarter next be do quarter season. looking by for planting We the a end customers the the planting and inventory, fourth they of from what quarter in to will normally, played telling us through are the in our you the starting it's

This quarter fourth in year, the the to ramp-up we're building year. going next a see destocking first of then quarter of through inventory and

between that for building a So headwind normal relative delta quarter is what that is fourth that's destocking. to versus of pretty aggressive part

of comes Our Fermium next Frank Mitsch from Research. question

video methanolysis. appreciate did on I the And

'XX us you you're XXXX. below to difficult a the now EBIT. of 'XX, the that in on thanks a for took below in last of look Mark, back Advanced $XXX come was million where giving So of backs you back that there. Materials 'XX expecting length were the a has I difficult time million had happened $XXX

that it's know I -- have $XXX that, couple years, been confidence million what So of what to of a in or can better business get sort might XXXX? you difficult

Yes.

level So this it to back laid Frank, is just you at now. from The is where very what that considerably feel true I those the corporate said all in at we and all out the about very getting level of come good bridge elements. business AM just

think this seen you next just anything ever year, was this more about context get year, if than of demand we've to before. before extremity we decline the the So

'XX some those XXXX. X X seen in quarter continued in We're of and difficult we've in applications, low fifth in in But quarters now environments and, So XXXX. over quarters our demand were destocking. demand in 'XX,

is we've people building lot inventory got of seen during where that it in control crisis. something supply the and of is -- demand-related, out it's never destocking really a this before. But So all chain

think in China, TV an appliance long chains. And very then consumer markets supply the we're that making multiple made, have and to or it about to here, you think all steps demand that about significant bad U.S. X some supply shipping durables you've Europe, durables, matter. having to a housing step as polymers or of get it go And long It's through back or and the in When steps. where they're something ship in when deplete. to a as XXXX you XX the that's chain such a there's to down for consumer got

is news some good well. see the so really we and out And recovering markets can bottoming

So second XX% the to in even the quarter. down quarter quarter first, relative of first XX% in last in year. back third XX% was durables worse It fourth came is quarter, in back the another the the

of of to fourth what we as destocking But going the the of in normal out, definitely the market the quarter. the -- it's customers activity it's certainly you played see was Now do. better first at a be quarter third And can end bottom the quarter. in that in because that that, of think, little seasonality softer shape has

other we have didn't We out like pretty this and see ag destocking is as still it's quarter packaging. can year, the medical it. the of and start It where this quarter finishing like markets some through second also extensive, until

the AM and be levels are part that about it when in think So segment across you of Specialty comes we pretty that different million mix, by that end half will $XXX of there's of this Plastics, the different segment. is about destocking to over the timing variable down confident volume for And the and drop margin when year. of but

comes So on back. you start how seeing that the part destocking can

the That's to just next year then add on other the that coming got of Then in up you've got AM lot of $XX show to $XX year. Other. million only a on of going in and to EBITDA million destocking of you've from methanolysis Remember, $XX is the have million it's And through the is decline this top back medical. stable you demand high that painful growth get markets All year very the a Surgeries It's just to modest past in amount but of in some lot going sort enough. going of a are this packaging, and we're value it. of medical. are destocking, in where these steady very part.

$XX asset this a headwind this year headwind go feel that. tailwind. don't utilization the up you of headwind we million decline. looking be $XX as about inventory FX back About I management from currency $XX total is next million a or know think good comes could where of of about So down, the when that the significant year. so it's but at will year, a million

So you've got coming the destocking off.

markets. You got the

got the utilization you have You Kingsport, innovation. tailwind,

continue auto there. grow got we innovation You and to market, the a expect in lot happening which of that's to the

that the market once There's portfolio a the create stabilizes and new confident innovation lot in doing growth will launches. of throughout are our AM customers

feel to great, margins keep we impressive structure the cost will going incremental the we're and So because be flat.

utilization. on asset If the I could follow up

assume higher? million Just $XX $XX a the the you're expecting million. utilization I utilization is we we is 'XX half to on number asset at million first Shouldn't are be 'XX. benefit a half prior the you utilization, headwind updated -- $XXX clarification. In if asset in expecting assuming benefit lower you're wouldn't that versus on run going on 'XX appendix, second it's lower as in asset XXXX? And headwind start the mean, I the $XXX million the for versus

Willie. Frank, this is

'XX into taking expect to to as we that on With we first bit improve look momentum, go $XX quite from from you've reference So has to correct half, million. QX. as headwind And increased to doesn't million it full as QX. it year, the 'XX. highlighted, to you million half, was a it effect $XX obviously, sequentially, got But come the QX that $XXX Mark the second would you're a and that 'XX

million $XX little may But higher. bit right a a So $XX estimate. be is close now, is million reasonable enough. It

it we of a part little Frank, built the inventory is in first quarter.

that to because offset you first the so second to got half. million that's half, $XXX the And

So get year in million assets tailwind. manner we're that running next similar $XX our a and implies

of Stanley. Our Andrews next Vincent Morgan comes question from

methanolysis plant? Mark, your for for federal available sort prepared of and about know? what will the potential some incentives or and might U.S. the state be when of magnitude talked the comments What's you order

our U.S., investments, When program to So Inflation plant that it second here projects -- the certainly for. application. baseload, see about yes, inspiring is be the and we mean in we're to capital That investing That's that get. that of Act $XXX Pepsi several the sustainable and a what for of credit. the could we're doesn't methanolysis we're Reduction the funding comes the going great million we're what's what with one available in doing is for in doing that's asking

we're And rounds also a good pursuing get the continue news through program. is is that credits of very so should well. been competitive tax our told. And of requests what have some all to as we've they for out a in been what process. of first be the to It's of we've on we now, There's we and couple us next that insight quarter choose year considered

significant, Who also considerable process. incentives that not Europe in it's it's scale, the But you in will additional But knows incentives. project pursuing additional France, a how there at never government work. with We're but some a timing help. know it's our

the sort up could of just INEOS? came anything that assets time? talk like And Okay. that, that's year? being Or is something working been this a you've of long contemplated? that And else Is to you plant there is just about the for on something this that sale

XX we've Thanks for had with acquisition assets their of ongoing BP And and obviously, years through the question. for INEOS Acetyls, the now. relationship an

through So at that ongoing I just the City Texas site. would it's we've say, had that partnership

the for term. as best Specialty we highest that. long use, the Materials term And think feedstocks best increasing strategically is we about Advanced about in segment as longer for both INEOS our As well as of owner percentage Eastman and think also, at the

this So provides we in use million job and into here for We're debt cash, in close those pipeline. a the all be items the play. to team portfolio, $XXX no here, to evaluating always we imminent. paydown accretive. immediately it in great and expect that all, there's Right other term about I here And all to came factors And to the like in and say that that did now, near basically would nothing but expect of QX. the

question Citi. from next of Cunningham Patrick comes Our

relatively what you for construction of second XXXX your there is meaningful with -- Do time means I'm any this recycling hold flat You your site and selection be CapEx towards any site next year. this additional sort line updated CapEx expect curious facility? Or deployed guide the to facilities. year? on for

external -- would be similar be XXXX, slightly choices we to again, -- to I our expect CapEx it below Yes. on will environment. influenced by the

environment. that has Mark on down highlighted, And the And take or that time. As external we needed. demonstrated can think over we've ramp discipline up we're I pretty it neutral as

project project, U.S. committed as for We just France the we well are beginning construction as to the second discussed. as

that frame. We year middle time to in construction expect start of probably the

Also, we're set we to the have and specialty growth some ultimately within the macro environment other investments the of year, those. waiting pace on

disciplined. just be about we we're the from from of flow cash the to that flows going strong we cash finishing So talked hearing I in Also, divestiture. is about QX. seeing have and what We're expect million year to you're with think free us $XXX here the

be So will we're positioning look of ourselves as as on share a disciplined allocation, repurchases growth be capital to XXXX. mix as well organic into we which

returns a will about growth programs, back the our view the normalize just were on forward. and think circular talked and we shareholder will turn and good great into as you about environment value unfortunate a of macro come a with We creates lot launching that feel that we kind us our as lot organic expectation of into cash clearly of 'XX strategy. we We with as It's other specialty growth the took capital. and go move significantly believe as of 'XX earnings 'XX, we've our growth. But markets on

generate a You got cash. $XX earnings to lot to is to utilization year, this noncash. million in pension $XXX our million of asset headwind 'XX of of remember and

at noncash looking of relative to 'XX. when is earnings, So it just a we're lot hit a

environment cash future. feel the we're how very as and doing we forward about to we how good look our as in So earnings well this

on build to just on that, maybe cash. And Mark, the

about As is a that combination we That's at our working through flat, million City Mark got which of year-over-year. about we've of also always the at XXXX assume in capital reduction so $XXX Texas think roughly flow. starting $X.X We be taxes approximately includes of the $XXX divestiture. higher cash of And would million. as has some operating is baseline comp then earnings, highlighted, cash billion cash, taxes, higher the cash

that coming outlook any end your get Got last But forward on been customers this expectations has precariously thin conversations embedded. then it. of And have couple of any the have over sort years? helpful. That's based doesn't appreciate it, I restocking built of very the trimming the just sense a out of you do markets stocks do inventories? destocking, Or safety that with

built both. with definitely that sharing definitely it's than No, us. stocks There's up safety supply more were chain customers crisis in were

destocking -- sort order can't product actually some seeing suddenly But we're they customer, big where And need hence, so shipments so signs of this urgent where year. seeing brought our and the customers sent they've they of the get from make to a them. inventory an low, down did we we're

see bottom, has together this in hitting turning that where destocking you look you played which underlying all definitely here When out. of in of So the people put sort is back we're encouraging. see the year at starting around you're data the can to markets, destocking the half we

frankly, economy, build the restocking, next wanted of could this because at is so of perform it how to next really view you into As year, we conservative look get year macro question uncertain. when a you

restocking markets some if to these to to any we But customers the there. restocking grow happen all. to stabilize start have it's of don't is expect going have some and reasonable in at that So with

look will as that so And going about better how place next of inventory think in It's build That's to that would I curve. one be ag, we upside happen, for it's certainly to happen an sure, we at know sort we year. it.

of Our next JPMorgan. question Zekauskas comes Jeff from

the did much cost? methanolysis plant How in Kingsport

to that So Jeff, higher methanolysis that. we to million That's been disciplined million budget able we estimate. Kingsport on year, the summarize went for $XXX I in within the to And started to year. $XXX able We've that had the as methanolysis a how we increase earlier end that highlighted of think we've through of range Kingsport, would as manage the the been we've the I year. demonstrate this

We don't disclose specific reasons. project capital for competitive

thing up a we're here year-over-year that I I would of on think Jeff, continue That sets that, additional The from think EBITDA, of $XXX fact well gets about highlight, the is first that EBITDA us demonstrates And by XXXX, EBITDA. going generating million of $XX plant basis the also to for that million to be that we velocity on of in as strong to end that million we think $XXX this investment. returns the XXXX.

had not capacity chose methanolysis memory my expand building do to Kingsport plant is but to planned Tritan your of that the you in with Normandy... So your that. In

-- Jeff. No, I your you're thought we go choose ahead, didn't to sorry, I'm go question. ahead. Finish sorry, done.

Normandy there was build in In didn't as that plant, in Normandy it build the States. conditions Yes. the United Tritan United still favorably way -- I That I -- to to you States, you are Normandy that Tritan capacity you economic the whatever are made to Since the going also well. scale that in there have Tritan were that Tritan build would back in going capacity you extra is thought the component that a thought in be the more given evolved? Tritan the you is think going would

couple clarify points me let yes, Jeff. a there, So of

expansion methanolysis with First, and that to still we Tritan at Kingsport Right? here intend do the Kingsport, it. we're the plant doing

with We've just economy. the line align time pushed construction of plant that the to out better macro

that Tritan being 'XX than where XX,XXX brought lot is Tritan of It's still in because here of our the is online down. obviously intention online just more of a So is durable sold, in capability. additional to have going come capacity to 'XX tons market,

out methanolysis whatsoever, capital higher the year strategy of it's was our our in adjustment make on of timing. And getting rate part on room how that's at an for spend what change this to into cost the next Willie capital no just there's pushing by the of sort finishing year. we So Tritan that and of adjusted project

done what so here. we've And that's

at So timing creation in a value think It's the we a first no term. how in all short the from just changes investment. about shift the bit little in

our our can We Tritan news to make flexible, We making we assets PET. is Tritan products and integrated our between content assign right? Tennessee, The copolyester. We that want lines can good can around system. in swing they're across recycled whatever

value as So as up we us we monetize to the ramp make as recycled that allows of content it the the can quickly facility.

to macroeconomic going not the hindered durables. that's by in be environment So

applications, there's there shrink can of we packaging or our in like plenty out both in make Because that copolyester PET. our some

as So the make as writing monetizing can. as the driving up utilization can as fast fast full we'll of possibly rate and we be all it, we -- value that DMT and

like And markets sign mix we'll back, higher-value markets. higher-value content then the in recycled come we to the the as how shift Tritan

on once now. a great made advantage decade over ago, of So we amount that we assets value PET can mix that grew upgrade Tritan take and flexibility decade over same of and the last created the got a huge as we that's

not French there the changing anything regards In either. to plant, we're

very we So lines, PET polymer. U.S. is copolyesters, what which more the unique economically here the point, with polymer have Tritan. your much integrated plant textiles. systems of actually specialties, that design is have but in to said both to make or is making the Or that between X monomers that's and of To that Tritan flexible we made not are

products other with we PETGs. applications cosmetics, of be PETG a into -- like go So into bottles this traditional make things packaging, and our and just that that more that will variety

France's, from and or plant all So strategy whatsoever half all textiles. Specialties; half the a here PET, PET our U.S. Kingsport's, point in nothing's asset product is changed mix second Specialty; view. of

Tiano Bank next of Our of Salvator comes from America. question

say little City discuss will your bit about bit of to the footprint. that would facility it? plasticizers agreement but of of you actually from can or technically, little earnings want was I owner you your much Texas the And economics sales where selling? ask the a what How the operate coming total are asset, e-mails you're a Firstly, the you're still

Yes.

the the That So buying plasticizers. intent I'll we original City had. infrastructure the ownership with, site the was the the Texas facility of retain strategic along of it, City call that Texas

So sales. first, we're retaining and the ownership the

Second, around Intermediates. I that substantially are the say, economics as same would the it operated Chemical today within

the sales Intermediates. So remaining thing acetyls to that Texas going the only within you're site of of is out plasticizer and see reduced remains is City The Chemical business intact.

I ask about pulp Perfect. prices. Okay. also And want to

the there has in been headwind months for in max. there this you a What could past or I increases seeing traction there? some X XXXX? be X are think And with

extremely being our expecting headwinds able did reliably any back contracts to what to to contracts. for is priority because our the pulp. But a product them get No, we margins supply our is Part is we're from obviously, reliability pricing, them. not we customers, an change of for in valuable also tow improve and our this

pass-through we It with there pulp used or the to cost and more contracts pulp. We've like adjust prices ride where for those energy headwind benefit our changes business or adjusted in amines energy. to now had be fixed-price are be more to associated contracts, and or the

a improvement where were past. significant it's not that's in from perfect, forward. a not we but So we concern as the go It's

comes of from Our Mike Barclays. Leithead next question

you In when locked on make the sort EBIT. follow I had we million January, expected prices this $XXX Fibers. of Mark, wanted to in annual in, about year you to year, First, the up started when

million. looking $XXX we're of north Now

help starting can largely changed your in So what's here? level of year's sustainability with talk maybe And the just about just higher confidence versus you cost? this us

would base in So at highlight point this one, I where we've that, to what in of gotten is we're time. the fact the confident

textiles at for both done team tremendous greater what about confidence the business. the we're from million structure go would margins this of from remarks 'XX, the a in we that's with level, XXXX think for contract contracts and the right for our as just as highlighted, Mark high more has I that I had prepared complete a this the we're highlighted Fibers to than now, So textiles $XXX the job we Also, getting with broadly 'XX. of place, within as highlight we growth just business guess, substantially commitment in 'XX year. The and

to the part do and lower energy And part as first at than the growing that your of momentum had of confidence. was back the the gained have in seeing contracts of year. ultimately, question, cost and beginning how Going we we cash We the we will as forward. and the a to it's reconfirmed by were strong grew and that business, earnings working, just contract happy grew with we structures we're It's where the confidence and year-end. we contributor great as a be headed go expected

running to the some The had we were out. investments in until were going cost play plant that structure and well of the proven efficiently, how utilization benefits, and we making about are being we the out conservative

all that so came of And together.

made So count ourselves. we operating it's to didn't And that proven want lot and not until of we've just it investments better. our price. are facilities We've sort a to on

wanted follow CapEx. And you've Obviously, somewhat going up of to some Great. I us next lower just second, year. given trajectory on numbers the That's helpful. CapEx super then about

projects, when So just large got think methanolysis horizon. projects I about your you've about on the growth more X

You Tritan. about mentioned Jeff new the timing earlier to on

around $XXX higher trend the years? high to level, this roughly it lower overall? next just CapEx should million range or expect So stay Should few we

U.S. on in detailed the XXXX. then engineering would second phases then in gate point, long and you To construction, less $XXX we're be France expect right lead the the what we closely obviously, would or your out million expect by again, is, And around that of followed now. Yes, probably first

building to depend would we on So expect it's and we XXXX, going time be CapEx just the would line.

get we above would how we'll schedule give actually we I will 'XX more is answers the million, say project what and it you on see So $XXX firm set. be when

Our comes of Josh from Spector next question UBS.

assuming This that else the propylene But Josh. believe I should some be thinking transferred in might part quarter. is for in the a anything there of guidance be out James Cannon increasing big on about that... you is raws it. from I'm CI in you In we fourth some segment, called AFP, your

Yes.

methanol. buy buy we we Products We do So have -- We coatings. and propylene-derived Specialty buy and ammonia.

obviously change, just So from it. are increasing. prices creating contract the impacted as by the oil to products catch and all up dynamics, are and some a lag in it through how those there's overall headwinds those market and oil flows Especially

when And so headwind from those turn the a the a will sequentially quarter quarter adjustments in you and fourth the that in fourth tailwind up. to quarter have first catch then pricing

the kind pull-forward, then Fluids All what expect out you you on can to bit pulled much give of how QX? just there a out called saw you of on that little you color Specialty get and right. And Great. more some

Yes.

So the on we some the that LNG was fills our guidance plants bit a year. in original the the originally to had of some be expected quarter. third in We more great beginning second had at

that those were made. fills So --

that you we so so additional be And show quarter, we million. third QX, thought $XX the now to from when just turned that that fills there's QX year Fluid to sales million the only will that be that about it some in about drop had drop $XX at the an to for sequential means additional from QX. million. But up so $XX out drop QX million look the of But aren't would happen $XX changing,

these as for -- of use as look diversify these set in with AFP built heat of the fills of which see think into pretty activity plants There's we obviously been is I on it's And really that the of transfer also LNG with with markets, LNG great. with lot a And fourth lot our that really be our quarter. But where we that a our these being of And exposure go. of a plants Ukraine-Russia of are China, out what which that's not construction to business situation, lot going cycle like great part at these need exposure overall, to sort and that the diversify with in uncertainty, to great fluids. into do. fills, well those sequentially we places continue turned to and facilities China, lot to connected also fills. PET they very positioned why construction to especially traditional products high-value a products we are So chemical LNG what's is declining

of next Partners. question McCarthy Vertical Kevin from Research Our comes

Can subject the general Mark, impact? the released fourth quarter? welcome. didn't or would remarks see not you that's be anything commentary the I in into you prepared UAW whether if speak having so, auto-related any any material that you on in strike. to be of the And baking Or might what

Sure.

globally is the that our impact United UAW, States. specifically it's on So interlayer on of us. About pretty math the in business is a XX% auto limited

about So is that as And are X UAW. our exposure that impacted by just just being high. you're brands overall that in then talking the not U.S. are the many

business. impact. overall, solid a a We've in particular us. I in say the lot not and been it's material for interlayer films the business would that, seen business Europe has business well for a auto as So the obviously, U.S. the business, growth the of as in

a challenge been would note China that has all long. So year I

the down we expected. year, We to our in of So didn't a July And bit. we're we contraction sales an there seeing of growth growth business and in the impacting how expected which that at some and some we one in performance some in as particularly that sort we've from in back play China, growth the business, see of Chinese adjusted improved has of that's now things we'd parts level outlook -- business. definitely the out haven't that the we films important the thought not that's thought even and half right our the seen now

I'd overall, say, business. it's a So great been

to this year, ups the next and different on markets. downs than going -- of a better lot it's year there's expect across but be We it

you trajectory? secondly, million, different correct. Does And for you if forward to Willie, come notes more are still would I then line Is if this I earlier the year, think guided a perhaps down? XXXX? happens may, related a Or point cost importantly, had to item that $XXX of case? pension and OPEB And that moving to headwind to it what into back my

Yes.

the is year at So number beginning the that of for ultimately, year. set the

just $XXX expected. So mark-to-market year. the end the coming gets That quarterly the million is through we of at as

returns, we'll But market-to-market probably rates. update as anything look we'll it's again, as year-end. headwind now. you were if at it, now, and will gain-loss there right we well from material update. assets rates as a And returns asset give expect So are, to you where We interest right call at that modest a an don't be, you

And any insight on XXXX, Willie?

From finish a at the rates it for up be pension year. change how we to standpoint, it right on That will lot a expect if a modest headwind look now. depending we

from Laurence comes Our Jefferies. of next Alexander question

in those less U.S. we greater or the Rizzo is so building France, Or think you're know well? for plant are as $XXX and I Or on as running Laurence. that? not, missed or if be of how but about it they that the do up this it second million scale the for in and term? we EBITDA should than to don't additions is in plant I long This when think Dan

is And the than in our never given, it, We've the other it plant $XXX so be expect portfolio, first plant to by can Tritan Mark our I'll higher Yes. We as X. some greater earlier call Specialty million. conversations, you of more plant. said than with highlighted

of we're guess, market surgeries Okay. overall And in medical saying But we to seeing elective when normalization, -- that at back now? getting demand, the actual if right about just you levels more, destocking. adjustments versus being inventory then wondering terms I some is think pre-COVID demand end the if I of was there some and

market. were. to in having as The medical sort X% marketplace is durables, problem material, The you in being have levels Yes, consumer a above laptops, built we're having issue reasons. is the crisis occurring devices safe, roughly obvious very getting but in pre-COVID a little of they enough so supply at if not much be that it. as the all, lot, the are delivered elective lot cannot stable you really certainly about end Not year of and sold a because look bit. are TVs, right? they Medical customers, not they're medical a inventory about though, and for nervous in during nearly and Like growing we're chain a appliances, definitely our at to demand surgeries packaging

through a that got in year just than this they're destocking So the destocking and started and quarter plenty they markets this it reliability, expected then second finally year, there's and and The of better solid event. are supply still it's quarter. year. But of calm this doing next be to

Our of next Mike question Wells Sison comes Fargo. from

This is for Richard on Mike.

a in outlook. the pressures. We've improvement seen in So higher second year? Are on any down quarter XXXX third prices despite material assuming come and the price quarter you just question next the raw

So price/mix I'm we of should just there's launches, if expect, product wondering any type thing? improvement new that that

for price raw sold price not from or on product versus existing where much really specialties, so a next adjust year except this contracts, will then we and pass-through up have cost we're an Well, the going. on increases are year based expecting the down on materials where prices

to specialties. this an I will Now But relatively raw increase would specialties. the increase in materials where not raw obviously, year our across increasing expect material to environment, for scenario are flat gave we year, we prices you in that next the prices

the derivatives, Chemical the of pretty expect in markets. a the of We're producer do -- Olefins. at very market, to a right right? we're in now Intermediates, Olefin I cash the in now, It's market cost we're at -- marginal cash go at right prices the bottom these it's the challenging in because probably up situation

expectation is relative I That's those there the never seen of prices value extreme the of and XX% some to before so of is oil in normal. an propylene lower than mean ever about price getting past. normalization the better. And of in

facing use lot to of number a amount an a capacity added just that's very that So being as we're the in propylene. of low demand that as compression due excess well of applications

end that, will with some even the occur of some that balancing growing. just stable destocking and of markets there's So

place one to prices of sort that's and margins So look to at I how at expect we improve some it would where stage. improve this

the challenging would a volume have at our this teams to holding created very good some price the very of lot a of improvement high challenges. done say, that's in cost of in levels variable prices I ratio, phenomenally job offsetting market

as your circular for Great. update terms moving to projects? Kingsport any of And plant market the move products? then product the you follow-up, pricing How from develop that other large as for a is and on the progressing forward

Yes.

the in is line with having to really that to with the we PET go conversations need on premiums that pricing for holding with content-related specialty that issues premiums provided need side, no for good having I'm on up the recycled the we the products get We're economics our to get we've well. So you. customers the and that side

that. about methanolysis good plant an with completed exciting really right the time being -- really, up. feel we So coming starting now It's and

working a hard sure that people and of well. phenomenal have We start-up goes number process making

a headed is turn of multicolored comment, when a take marketing Frank's pellet. This all. is piles these incineration process really very to the by And of great just a or to huge are that or types go taking see customers. clear clear, using outstanding into Back story material video cannot going tool out and -- that an surprised and we're coming the with pellet. our is kinds through of with you to Customers low-end we're that landfill they're and and it garbage that running impressed with low-quality that garbage, impressed It's all quality garbage at -- recyclers food-grade can be very to mechanical reused applications. we garbage

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color fossil issues, to identical fuels. from got Mechanical not. It's integrity virgin product issues. made material Our is is

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KeyBanc from Capital Our comes Markets. Yefremov next Aleksey of question

And methanolysis. staying with

X for And return your of have on years there where higher or presented So methanolysis the capital over revised believe couple many the last ago. estimates been industry objections have additional cost capital year projects plants X. in a I you been the

And So return it is your expectations? to so, probably of are capital CapEx to reasonable mitigating go you versus up if now? needs assume how initial

Yes.

in headwinds or the question specific around we're it's quality one we a issue. in those here approaching and issues plant and trying focused X the very capable The So very different encountered got was really project the scope large productivity to that were very in capital into controlling on. here to do to issues contractors very that are projects, much we design these pipe what when and the And costs nothing about plant using do we're the Kingsport happened better and isolated construction an that last of of a important very way of next the installation, the had the what a we're It approach taking months. we're way in X than here.

we far a feel we're So better in shape.

build that XXX,XXX-ton Also, of to So and France plant we're we're The built plant with we're one U.S. this we here that right? some are sort plant, modest new not trying to the improvements. a new the build plants time the a same first basically is in in going building. second

going this knowing to capital And going cost that not the methanolysis the plant. lines are also unit. straightforward pretty the we're costs be. without built already is polymer is for all well-established those surround time into Infrastructure to what what the are So the understand capital

we we next high-quality a what can estimate with far can feel So we for happened manage X than process come Kingsport. and projects, good the construction up that in the better

greater And so with than the Remember, plant. we here the or XX% capital line France expected costs. second we're the XX% They're in what those U.S. higher numbers. first greater plant to deliver return even working is at and with still still for

And side well help we get earlier. those, the good feel improved sort capital as And pursuing if about on these as of risk to for both that's course, we're So we this. I are we discussed obviously, incentives of capital as going additional of returns. manage where projects,

Thanks, Mark.

what their versus your materials Kingsport in any terms works lessons this the of preprocess expectations You how technology front-end are? so and far that plant, initial the amount costs of for

out mean developed, new gone process well. has So we proprietary of mechanical processing a to a the a I far, compared lot there's that takes the recycler. always of that steps sortation hiccups. It's

market So because up the process you approach. stage, we're the to pile not the do at excited we about and suggests taking good this feel is and Chemical and how going in you're back about big meeting sell perfect the as working to to material work. that video. allows recycling But running that clear well to that's

of front about overall Our the and think plant, expected. processing sourcing the material it we better when cost, is than little into a bit we

great as feeling feedstock of we're about long-term good France in here, feel well. on side the in having really the So XX% contracts feedstock already

know I risk. a beginning of well. So in big process was going feedstock are as managed this We've a question Customers the whole one well. actually that reasonably

us as of its the the here step starting economics front big is months. the in milestone final over technology, sort the final of effectiveness its and improving next up Now X

check we're underway in with use plant, value our environment, projects next of next X all those difficult sort improve for excited a of a earnings going this So to and these year and really it keep boxes, lot owners. help forward to create get

please. last one, the next Let's question make the

question -- Sachs. Fischer Duffy question our from of comes next Our final Goldman

X methanolysis. volatility EBITDA let's million you the assume our over we the then see If And you plants, side from talk we're cycle? be of run that $XXX on rate X-year may over and the at a pricing side volatility see typical, cycle? on the say, If how on feedstock $XXX volatile the X-year stay may could, let's we about million kind of would that the

and great question, big a Duffy, one us. been focus that's a for That's

from told for at in taking an gas-type with the approach we're margins industrial deliver this we've beginning, more As these of economics and look plant project when very stable how margins the to you be you attractive is projects. we the

feedstock and on contracts in the doing pass us. the through costs, we're delivering margins for stable PET side, energy that So changes

those And We plants. market good But into we've we're the build getting have it. forward. getting we the about the we we're if feeling of back going merchant intention won't get contracts, said, don't as and and PET no contracts,

margins those PET will the side. be So in stable

managing our to well price packaging demonstrated point have we side, Specialty From around ratio other the keeping the view, Products markets. stable stable. those more than cost demand a is lot the I'd and PET Specialty ratios variable On of some the pricing really more a discretionary market, market, say is and the of what power great

So as we from portfolio. think these as the that will to actually well stability company projects add

in solve taking out I'd packaging thing local environment, So the regulators waste brands to when note or waste business, it's more U.S. the other so, right? packaging of and, want regional Europe the the a is issue even The the you're

that PET and back packaging then taken for into no fossil into and is grade back loop So a the we a want fuel-based waste and provided food polymer create used. longer closed

to solve U.S. disconnects and or to problem this China's and the we're the solve the So not from waste waste U.S. trying in trying us European problems. China. We're Europe,

brands sort polymer running So their are equity. placed policies, especially have made be has it protect be the solving The market. really packaging on becomes impact, written to on to will more Europe, European of from the regulators focused that in regional business. a brand sure the to making careful it's local about The they're of already

been -- this and aspect investments. regional interested we've making a these about excited reason those So core has that business been of

So it's not perfect.

stable still to You demand going EBITDA. macroeconomic very have uncertainty, be it's but

something as to, the about where SIPCHEM could Or sale. them well? technical acetic licensing to actually then acetic could the did you you question that for plant technology? Did or Great. And you acid like chose you sell build your a kept that you you deal just one before technology do if

that the focus of the strategic of sale facility City Texas the part not is Duffy, -- Eastman. is for

As we're anhydride anhydride cellulosics. has and highlighted, about and Mark derivatives

is economy. any great go our key on a for focus and business thing a and circular is this circular forward with for we the here Eastman as So acetyl

has It use effect on our our our no technology. license rights to Right. technology or

your rest us appreciate you that And and that. for Thanks very everyone. Okay, have today. much of We day hope weekend. a joining a great great

call. Ladies this today's participation. and concludes for gentlemen, you your Thank

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