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EASTMAN CHEMICAL CO - Quarter Report: 2025 March (Form 10-Q)

 $ Other comprehensive income (loss), net of tax:Change in cumulative translation adjustment ()Defined benefit pension and other postretirement benefit plans:Amortization of unrecognized prior service credits ()Derivatives and hedging:Unrealized gain (loss) during period() Reclassification adjustment for (gains) losses included in net income, net()()Total other comprehensive income (loss), net of tax()()Comprehensive income including noncontrolling interest  Less: Comprehensive income attributable to noncontrolling interest  Comprehensive income attributable to Eastman$ $ Retained Earnings  Retained earnings at beginning of period$ $ Net earnings attributable to Eastman  Cash dividends declared()()Retained earnings at end of period$ $ 

The accompanying notes are an integral part of these consolidated financial statements.
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UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31,December 31,
(Dollars in millions, except per share amounts)20252024
Assets
Current assets
Cash and cash equivalents$ $ 
Trade receivables, net of allowance for credit losses  
Miscellaneous receivables  
Inventories  
Other current assets  
Total current assets  
Properties
Properties and equipment at cost  
Less: Accumulated depreciation  
Net properties  
Goodwill  
Intangible assets, net of accumulated amortization  
Other noncurrent assets  
Total assets$ $ 
Liabilities and Stockholders' Equity
Current liabilities
Payables and other current liabilities$ $ 
Borrowings due within one year  
Total current liabilities  
Long-term borrowings  
Deferred income tax liabilities  
Post-employment obligations  
Other long-term liabilities  
Total liabilities  
Stockholders' equity
Common stock ($ par value – shares authorized; shares issued – and as of March 31, 2025 and December 31, 2024, respectively)
  
Additional paid-in capital  
Retained earnings  
Accumulated other comprehensive income (loss)()()
  
Less: Treasury stock at cost ( shares as of both March 31, 2025 and December 31, 2024)
  
Total Eastman stockholders' equity  
Noncontrolling interest  
Total equity  
Total liabilities and stockholders' equity$ $ 

The accompanying notes are an integral part of these consolidated financial statements.
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
First Three Months
(Dollars in millions)20252024
Operating activities
Net earnings$ $ 
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization  
Benefit from deferred income taxes()()
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
(Increase) decrease in trade receivables()()
(Increase) decrease in inventories()()
Increase (decrease) in trade payables() 
Pension and other postretirement contributions (in excess of) less than expenses()()
Variable compensation payments (in excess of) less than expenses()()
Other items, net()()
Net cash used in operating activities
()()
Investing activities
Additions to properties and equipment()()
Government incentives
  
Other items, net  
Net cash used in investing activities
()()
Financing activities
Net increase in commercial paper and other borrowings
  
Proceeds from borrowings  
Repayment of borrowings ()()
Dividends paid to stockholders()()
Other items, net
()()
Net cash (used in) provided by financing activities
() 
Effect of exchange rate changes on cash and cash equivalents ()
Net change in cash and cash equivalents()()
Cash and cash equivalents at beginning of period  
Cash and cash equivalents at end of period$ $ 

The accompanying notes are an integral part of these consolidated financial statements.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.



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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
million and $ million, respectively.

 million and $ million at March 31, 2025 and December 31, 2024, respectively, are included in "Payables and other current liabilities" on the Unaudited Consolidated Statements of Financial Position.

2. $ Work in process  Raw materials and supplies  Total inventories at FIFO or average cost  Less: LIFO reserve  Total inventories$ $ 

percent of total inventories at both March 31, 2025 and December 31, 2024.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
3.
  %$  %

First quarter 2025 provision for income taxes includes an increase related to the foreign rate variance due to the Company's mix of earnings and an increase related to adjustments of certain prior year income tax returns. First quarter 2024 provision for income taxes included a decrease related to the foreign rate variance due to the Company's mix of earnings, partially offset by an increase related to uncertain tax positions.

 million and $ million, respectively, in unrecognized tax benefits.

4.% notes due
$ $ 
% notes due (1)
  
% debentures due
  
% notes due
  
% notes due
  
% notes due
  
% notes due
  
% notes due
  
% notes due
  2027 Term Loan  Commercial paper and short-term borrowings  Total borrowings  Less: Borrowings due within one year  Long-term borrowings$ $ 

In first quarter 2025, the Company issued an additional $ million aggregate principal amount of the 5.0% notes due August 2029 in a registered public offering (the "2029 Notes"), which was originally issued in August 2024, resulting in an aggregate principal amount of $ million. The net proceeds from first quarter 2025 issuance were $ million. The Company also repaid the $ million 3.80% notes due March 2025. There were no debt extinguishment costs associated with the repayment of this debt. All proceeds from the issued notes and the redemption of the 3.8% notes are reported under financing activities on the Unaudited Consolidated Statements of Cash Flows.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
billion revolving credit agreement (the "Credit Facility") that matures in February 2029. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility includes sustainability-linked pricing terms, provides available liquidity for general corporate purposes, and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. At March 31, 2025 and December 31, 2024, the Company had outstanding borrowings under the Credit Facility. At March 31, 2025, the Company's commercial paper borrowings were $ million with a weighted interest rate of %. At December 31, 2024, the Company had commercial paper borrowings.

In first quarter 2025, the Company repaid $ million of the remaining $ million five-year term loan (the "2027 Term Loan"). There were no extinguishment costs associated with the partial repayment of the loan. The outstanding balance on the 2027 Term Loan was $ million at March 31, 2025 and $ million at December 31, 2024, with variable interest rates of % and %, respectively. The 2027 Term Loan is subject to interest at a spread above quoted market rates.

The Credit Facility and the 2027 Term Loan contain customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all applicable covenants at both March 31, 2025 and December 31, 2024.

Fair Value of Borrowings

Eastman has classified its total borrowings at March 31, 2025 and December 31, 2024 under the fair value hierarchy as defined in the accounting policies in Note 1, "Significant Accounting Policies", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K. The fair value for fixed-rate debt securities is based on quoted market prices for the same or similar debt instruments and is classified as Level 2. The fair value of the Company's other borrowings, including the 2027 Term Loan and commercial paper, equals the carrying value and is classified as Level 2. The Company's fair value of total borrowings was $ billion at both March 31, 2025 and December 31, 2024. The Company had borrowings classified as Level 1 or Level 3 as of March 31, 2025 and December 31, 2024.

5.


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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 million (¥ billion) maturing December 2028, $ million (€ million) maturing December 2028, $ million (€ million) maturing August 2029, and $ million (€ million) maturing February 2034.

Additionally, Eastman voluntarily terminated and reentered into fixed-to-fixed cross-currency swaps of $ million (€ million terminated; € million reentered) maturing December 2028, and $ million (€ million terminated; € million reentered) maturing March 2033. The Company also voluntarily terminated fixed-to-fixed cross-currency swaps of $ million (¥ billion) maturing March 2025, and $ million (€ million) maturing March 2025. The termination of cross-currency swaps in first quarter 2025 resulted in a $ million loss recognized in CTA. The related cash flows were classified as investing activities in the Unaudited Consolidated Statements of Cash Flows.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
€Commodity Forward and Collar ContractsEnergy (in million british thermal units)  Derivatives designated as net investment hedges:Cross-currency interest rate swaps (in millions)EUR/USD (in EUR)€€JPY/USD (in JPY)¥¥Non-derivatives designated as net investment hedges:Foreign Currency Net Investment Hedges (in millions)EUR/USD (in EUR)€€

Fair Value Measurements

All the Company's derivative assets and liabilities are currently classified as Level 2. Level 2 fair value is based on estimates using standard pricing models. These standard pricing models use inputs that are derived from or corroborated by observable market data such as interest rate yield curves and currency spot and forward rates. The fair value of commodity contracts is derived using forward curves supplied by an industry recognized and unrelated third party. In addition, on an ongoing basis, the Company compares a subset of its valuations against valuations received from the counterparties to validate the accuracy of its standard pricing models. The Company had derivatives classified as Level 1 or Level 3 as of March 31, 2025 and December 31, 2024. Counterparties to these derivative contracts are highly rated financial institutions which the Company believes carry minimal risk of nonperformance, and the Company diversifies its positions among such counterparties to reduce its exposure to counterparty risk and credit losses. The Company monitors the creditworthiness of its counterparties on an ongoing basis. The Company did not realize a credit loss related to these counterparties during first quarter 2025 or 2024.

All the Company's derivative contracts are subject to master netting arrangements, or similar agreements, which provide for the option to settle contracts on a net basis when they settle on the same day and in the same currency. In addition, these arrangements provide for a net settlement of all contracts with a given counterparty in the event that the arrangement is terminated due to the occurrence of default or a termination event. The Company does not have any cash collateral due under such agreements.

The Company has elected to present derivative contracts on a gross basis within the Unaudited Consolidated Statements of Financial Position.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 $ Foreign exchange contractsOther current assets  Foreign exchange contractsOther noncurrent assets  Derivatives designated as net investment hedges:Cross-currency interest rate swapsOther current assets  Cross-currency interest rate swapsOther noncurrent assets  Total Derivative Assets$ $ Derivatives designated as cash flow hedges:Commodity contractsPayables and other current liabilities$ $ Foreign exchange contractsPayables and other current liabilities  Foreign exchange contractsOther long-term liabilities  Derivatives designated as net investment hedges:
Cross-currency interest rate swaps
Payables and other current liabilities  Cross-currency interest rate swapsOther long-term liabilities  Total Derivative Liabilities$ $ Total Net Derivative Assets (Liabilities) $()$ 

In addition to the fair value associated with derivative instruments designated as cash flow hedges, fair value hedges, and net investment hedges, the Company had a carrying value of $ million at March 31, 2025 and $ million at December 31, 2024 associated with non-derivative instruments designated as foreign currency net investment hedges. The designated foreign currency-denominated borrowings are included as part of "Borrowings due within one year" and "Long-term borrowings" on the Unaudited Consolidated Statements of Financial Position.

For additional fair value measurement information, see Note 1, "Significant Accounting Policies", and Note 10, "Derivative and Non-Derivative Financial Instruments", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
million during first quarter 2025, and recognized a net loss of $ million during first quarter 2024.

Pre-tax monetized positions and mark-to-market gains and losses from raw materials and energy, currency, and certain interest rate hedges that were included in AOCI resulted in a net unrealized gain of $ million and a net unrealized gain of $ million at March 31, 2025 and December 31, 2024, respectively. Unrealized gains in AOCI decreased between December 31, 2024 and March 31, 2025 primarily as a result of an increase in euro to U.S. dollar exchange rates. If realized, approximately $ million in pre-tax losses as of March 31, 2025, would be reclassified into earnings during the next 12 months, including foreign exchange contracts prospectively dedesignated and monetized in 2024.

6.

 $ $ $ $ $ Interest cost      Expected return on assets()()()()()()Amortization of:Prior service credit, net     ()Net periodic benefit (credit) cost$ $ $()$ $ $ 

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
7.

 $ Environmental contingencies, long-term  Total$ $ 

Environmental Remediation

Estimated future environmental expenditures for undiscounted remediation costs ranged from $ million to $ million and from $ million to $ million at March 31, 2025 and December 31, 2024, respectively. The best estimate or minimum estimated future environmental expenditures are considered to be probable and reasonably estimable.

Reserves for environmental remediation include liabilities expected to be paid within . The amounts charged to pre-tax earnings for environmental remediation and related charges are recognized in "Cost of sales" and "Other (income) charges, net" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings.

 Changes in estimates recognized in earnings and other Cash reductions()
Balance at December 31, 2024
 Changes in estimates recognized in earnings and other Cash reductions()Balance at March 31, 2025$ 

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
million at both March 31, 2025 and December 31, 2024.

Non-Environmental Asset Retirement Obligations

The Company has contractual asset retirement obligations not associated with environmental liabilities. Eastman's non-environmental asset retirement obligations are primarily associated with the future closure of leased manufacturing assets in Pace, Florida and Oulu, Finland. These non-environmental asset retirement obligations were $ million and $ million at March 31, 2025 and December 31, 2024, respectively, and are included in "Other long-term liabilities" on the Unaudited Consolidated Statements of Financial Position.

8.


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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
9.

 $ $ $()$()$ $ $ Net Earnings        
Cash Dividends Declared (1)
($ per share)
  ()  () ()Other Comprehensive Income (Loss)   () () ()
Share-Based Compensation Expense (2)
        Stock Option Exercises        
Other (3)
 ()   () ()Distributions to noncontrolling interest      ()()Balance at March 31, 2025$ $ $ $()$()$ $ $ 
(Dollars in millions, except per share amount)Common Stock at Par ValueAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury Stock at CostTotal Eastman Stockholders' EquityNoncontrolling InterestTotal Equity
Balance at December 31, 2023$ $ $ $()$()$ $ $ 
Net Earnings        
Cash Dividends Declared (1)
($ per share)
  ()  () ()
Other Comprehensive Income (Loss)   () () ()
Share-Based Compensation Expense (2)
        
Stock Option Exercises        
Other (3)
 ()   ()()()
Distributions to Noncontrolling Interest      ()()
Balance at March 31, 2024$ $ $ $()$()$ $ $ 
(1)Cash dividends declared consists of cash dividends paid and dividends declared but unpaid.
(2)Share-based compensation expense is based on the fair value of share-based awards.
(3)Additional paid-in capital includes the value of shares withheld for employees' taxes on vesting of share-based compensation awards.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
)$ $()$()$()Period change()()   
Balance at December 31, 2024
()  ()()Period change  () ()Balance at March 31, 2025$()$ $()$()$()
Amounts of other comprehensive income (loss) are presented net of applicable taxes. Eastman recognizes deferred income taxes on the CTA related to branch operations and income from other entities included in the Company's consolidated U.S. tax return. No deferred income taxes are recognized on the CTA of other subsidiaries outside the United States because the CTA is considered to be a component of indefinitely invested, unremitted earnings of these foreign subsidiaries.

)$ $()$()Defined benefit pension and other postretirement benefit plans:Amortization of unrecognized prior service credits  ()()Derivatives and hedging:Unrealized gain (loss) during period()()  Reclassification adjustment for (gains) losses included in net income, net()()()()Total other comprehensive income (loss)$()$()$()$()

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
10.

 $ DenominatorWeighted average shares used for basic EPSDilutive effect of stock options and other awardsWeighted average shares used for diluted EPS(Calculated using whole dollars and shares)EPSBasic$ $ Diluted$ $ 

Shares underlying stock options of and for first quarter 2025 and 2024, respectively, were excluded from the calculations of diluted EPS because the grant date exercise price of these options was greater than the average market price of the Company's common stock and the effect of including them in the calculations of diluted EPS would have been antidilutive. shares were repurchased in first quarter 2025 or 2024.

and $ per share for first quarter 2025 and 2024, respectively.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
11.

 $ 
Restructuring and other charges (1)(3)
  Total$ $ 

(1)Severance charges of $ million and restructuring charges of $ million in first quarter 2025 related to the closure of a heat-transfer fluids production line at a North America specialty fluids and energy facility in the Additives & Functional Products segment.
(2)Severance charges in first quarter 2024 related to corporate cost reductions actions which are reported in "Other".
 million related to profitability improvement initiatives which are reported in "Other".

Changes in Reserves

 $ $ $()$ Restructuring and other charges   () Total$ $ $ $()$ 

(Dollars in millions)		Balance at January 1, 2024Provision/ AdjustmentsNon-cash Reductions/
Additions		Cash ReductionsBalance at December 31, 2024
Non-cash charges$ $ $()$ $ 
Severance charges   () 
Restructuring and other charges   () 
Total$ $ $()$()$ 

Substantially all severance charges remaining as of March 31, 2025 are expected to be paid within one year.

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
12.

million and $ million, respectively, of compensation expense before tax was recognized in "Selling, general and administrative expense" in the Unaudited Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings for all share-based awards, of which $ million and $ million, respectively, was for stock options. Compensation expense is recognized over the substantive vesting period, which may be a shorter time period than the stated vesting period for qualifying termination eligible employees as defined in the award notices. For first quarter 2025 and 2024, $ million and $ million, respectively, of stock option compensation expense was recognized due to qualifying termination eligibility preceding the requisite service period. The impact on net earnings for first quarter 2025 and 2024 was $ million and $ million, respectively, net of deferred tax expense related to share-based award compensation for each period.

Stock Option Grants

In first quarter 2025 and 2024, approximately thousand and thousand stock options, respectively, were granted under the 2021 Omnibus Stock Compensation Plan. Options have an exercise price equal to the closing price of the Company's stock on the date of grant and a term of , with vesting periods that vary up to . Vesting generally occurs ratably over the vesting period or, in some cases, at the end of the vesting period. The Company utilizes the Black-Scholes-Merton option valuation model, which relies on certain assumptions to estimate an option's fair value.

%%Expected dividend yield%%Average risk-free interest rate%%Expected term years

The grant date exercise price and fair value of options granted during first quarter 2025 were $ and $, respectively, and first quarter 2024 were $ and $, respectively.

For options unvested at March 31, 2025, $ million in compensation expense will be recognized over the next .

Other Share-Based Compensation Awards

In addition to stock option grants, the Company may award long-term performance shares, restricted stock and restricted stock units, and stock appreciation rights. Long-term performance share awards are based upon actual return on capital compared to a target return on capital and total stockholder return compared to a peer group ranking by total stockholder return over a three year performance period and pay out in unrestricted shares of common stock. Performance share awards vest and are paid out at the end of the three year performance period, contingent upon the achievement of specified performance conditions. The awards are valued using a Monte Carlo Simulation model and are recognized as compensation expense ratably over the service period. In first quarter 2025, approximately thousand long-term performance share target awards were granted for the 2025–2027 performance period, and in first quarter 2024, approximately thousand were granted for the 2024–2026 performance period. The target shares awarded are initially assumed to be 100 percent. At the end of the three-year performance period, the actual number of shares awarded can range from zero to 250 percent of the target shares based on the award notice. The number of restricted stock unit awards, which pay out in unrestricted shares of common stock at the end of the vesting and performance (if any) period, during first quarter 2025 and 2024 were approximately thousand and thousand, respectively. The fair value of a restricted stock unit award is equal to the closing stock price of the Company's stock on the award date and normally vests over a period of . Compensation expense before tax of $ million was recognized in both first quarter 2025 and 2024 for these other share-based awards, and this amount was included in the total compensation expense noted above for all share-based awards. The unrecognized compensation expense before tax for these same type awards at March 31, 2025, was approximately $ million and will be recognized primarily over a period of .

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

13.

operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. The economic factors that impact the nature, amount, timing, and uncertainty of revenue and cash flows vary among the Company's operating segments and the geographical regions in which they operate. This operating segment structure is used by the Chief Operating Decision Maker ("CODM"), who has been determined to be the Chief Executive Officer, to make key operating decisions and assess performance of the Company. The CODM evaluates segment operating performance, and makes resource allocation and performance evaluation decisions, based on Adjusted EBIT, defined as the GAAP measure earnings before interest and taxes ("EBIT"), adjusted for non-core, unusual, or non-recurring items. These adjustments allow the CODM to evaluate segment operating performance excluding the effect of transactions, costs, and losses or gains that do not directly result from Eastman's normal, or "core", business and operations, or are otherwise of an unusual or non-recurring nature. For disaggregation of revenue by major product lines and regions for each operating segment, see Note 20, "Segment and Regional Sales Information", to the consolidated financial statements in Part II, Item 8 of the Company's 2024 Annual Report on Form 10-K. For additional financial and product information for each operating segment, see Part I, Item 1, "Business - Business Segments", in the Company's 2024 Annual Report on Form 10-K.
First Quarter 2025
(Dollars in millions)Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating Segments
Sales$ $ $ $ $ 
Cost of sales     
Selling, general and administrative expenses     
Other segment items (1)
     
Adjusted EBIT
     
Reconciliation of segment Adjusted EBIT to consolidated earnings before income taxes ("EBT"):
Other adjusted EBIT (2)
()
Non-core items impacting EBIT
Asset impairments, restructuring, and other charges, net (3)
()
Net interest expense()
Consolidated EBT$ 
First Quarter 2025
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibers
Total Operating Segments
Other
Total Consolidated
Depreciation and amortization expense$ $ $ $ $ $ $ 
Capital expenditures       
(1)Other segment items for each reportable segment includes research and development expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.
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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 $ $ $ $ Cost of sales     Selling, general and administrative expenses     
Other segment items (1)
     Adjusted EBIT     Reconciliation of segment Adjusted EBIT to consolidated EBT:
Other adjusted EBIT (2)
()Non-core items impacting EBIT
Asset impairments, restructuring, and other charges, net (3)
()Net interest expense()Consolidated EBT$ 
First Quarter 2024
Advanced MaterialsAdditives & Functional ProductsChemical IntermediatesFibersTotal Operating SegmentsOtherTotal Consolidated
Depreciation and amortization expense$ $ $ $ $ $ $ 
Capital expenditures       
(1)Other segment items for each reportable segment includes research and development expenses, other components of post-employment (benefit) cost, net and other (income) charges, net.
(2)Other is not considered an operating segment. Other includes the following which are not allocated to operating segments: 1) sales and costs from growth initiatives and businesses, 2) pension and other postretirement benefit plans income (expense), net, and 3) other income (charges), net.
(3)See Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", for a description of included items.

 $ Additives & Functional Products  Chemical Intermediates  Fibers  Total Sales by Operating Segment  Other  Total Sales$ $ 

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NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 $ 
Additives & Functional Products
  
Chemical Intermediates
  Fibers  Total Assets by Operating Segment  Corporate Assets  Total Assets$ $ 


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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon the unaudited consolidated financial statements of Eastman Chemical Company ("Eastman" or the "Company"), which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"), and should be read in conjunction with the Company's audited consolidated financial statements, including related notes, and MD&A contained in the Company's 2024 Annual Report on Form 10-K, and the unaudited consolidated financial statements, including related notes, included in Part I, Item 1, in this Quarterly Report. All references to earnings per share ("EPS") contained in this report are diluted EPS unless otherwise noted.
 
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures, and the accompanying reconciliations of the non-GAAP financial measures to the most comparable GAAP measures, are presented below in this section and in "Overview", "Results of Operations", "Summary by Operating Segment", and "Liquidity and Other Financial Information - Cash Flows" in this MD&A.

Management discloses non-GAAP financial measures, and the related reconciliations to the most comparable GAAP financial measures, because it believes investors use these metrics in evaluating longer term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess the Company's and its operating segments' performances, make resource allocation decisions, and evaluate organizational and individual performances in determining certain performance-based compensation. Non-GAAP financial measures do not have definitions under GAAP, and may be defined differently by, and not be comparable to, similarly titled measures used by other companies. As a result, management cautions investors not to place undue reliance on any non-GAAP financial measure, but to consider such measures alongside the most directly comparable GAAP financial measure.

Company Use of Non-GAAP Financial Measures

Non-Core Items and any Unusual or Non-Recurring Items Excluded from Non-GAAP Earnings

In addition to evaluating Eastman's financial condition, results of operations, liquidity, and cash flows as reported in accordance with GAAP, management evaluates Company and operating segment performance, and makes resource allocation and performance evaluation decisions, excluding the effect of transactions, costs, and losses or gains that do not directly result from Eastman's normal, or "core", business and operations, or are otherwise of an unusual or non-recurring nature.

•Non-core transactions, costs, and losses or gains relate to, among other things, cost reductions, growth and profitability improvement initiatives, changes in businesses and assets, and other events outside of the Company's core business operations, and have included asset impairments, restructuring, and other charges and gains, costs of and related to acquisitions, gains and losses from and costs related to dispositions, closures, or shutdowns of businesses or assets, financing transaction costs, environmental and other costs related to previously divested businesses or non-operational sites and product lines, and mark-to-market losses or gains for pension and other postretirement benefit plans.

Because non-core, unusual, or non-recurring transactions, costs, and losses or gains may materially affect the Company's, or any particular operating segment's, financial condition or results in a specific period in which they are recognized, management believes it is appropriate to evaluate the financial measures prepared and calculated in accordance with both GAAP and the related non-GAAP financial measures excluding the effect on the Company's results of these non-core, unusual, or non-recurring items. In addition to using such measures to evaluate results in a specific period, management evaluates such non-GAAP measures, and believes that investors may also evaluate such measures, because such measures may provide more complete and consistent comparisons of the Company's, and its segments', operational performance on a period-over-period historical basis and, as a result, provide a better indication of expected future trends.

Adjusted Tax Rate and Provision for Income Taxes

In interim periods, Eastman discloses non-GAAP earnings with an adjusted effective tax rate and a resulting adjusted provision for income taxes using the Company's forecasted tax rate for the full year as of the end of the interim period. The adjusted effective tax rate and resulting adjusted provision for income taxes are equal to the Company's projected full year effective tax rate and provision for income taxes on earnings excluding non-core, unusual, or non-recurring items for completed periods. The adjusted effective tax rate and resulting adjusted provision for income taxes may fluctuate during the year for changes in events and circumstances that change the Company's forecasted annual effective tax rate and resulting provision for income taxes excluding non-core, unusual, or non-recurring items. Management discloses this adjusted effective tax rate, and the related reconciliation to the GAAP effective tax rate, to provide investors more complete and consistent comparisons of the Company's operational performance on a period-over-period interim basis and on the same basis as management evaluates quarterly financial results to provide a better indication of expected full year results.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


Non-GAAP Debt Measure

Eastman, from time to time, evaluates and discloses to investors and securities and credit analysts the non-GAAP debt measure "net debt", which management defines as total borrowings less cash and cash equivalents. Management believes this metric is useful to investors and securities and credit analysts to provide them with information similar to that used by management in evaluating the Company's overall financial position, liquidity, and leverage and because management believes investors, securities analysts, credit analysts and rating agencies, and lenders often use a similar measure to assess and compare companies' relative financial position and liquidity.

Non-GAAP Measures in this Quarterly Report

The following non-core items are excluded by management in its evaluation of certain earnings results in this Quarterly Report:
•Asset impairments, restructuring, and other charges, net.

As described above, the alternative non-GAAP measure of debt, "net debt", is also presented in this Quarterly Report.

Non-GAAP Financial Measures - Non-Core Items Excluded from Earnings and Adjustments to Provision for Income Taxes First Quarter(Dollars in millions)20252024Non-core items impacting earnings before interest and taxes:
Asset impairments, restructuring, and other charges, net
$9 $11 
Total non-core items impacting earnings before interest and taxes
9 11 Less: Items impacting provision for income taxes:
Tax effect of non-core items
1 3 Interim adjustment to tax provision(32)(17)Total items impacting provision for income taxes(31)(14)Total items impacting net earnings attributable to Eastman$40 $25 

This MD&A includes an analysis of the effect of the foregoing on the following GAAP financial measures:

•Earnings before interest and taxes ("EBIT");
•Provision for income taxes;
•Net earnings attributable to Eastman;
•Diluted EPS; and
•Total borrowings.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Eastman's products and operations are managed and reported in four operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. Eastman uses an innovation-driven growth model which consists of leveraging world class scalable technology platforms, delivering differentiated application development capabilities, and relentlessly engaging the market. The Company's world class technology platforms, scale advantage, and sustainability macrotrends form the foundation of the Company's research and development ("R&D") and innovation initiatives. Molecular recycling technologies continue to be an area of investment focus for the Company and extends the level of differentiation afforded by our world class technology platforms. Eastman began operating one of the world's largest molecular recycling facilities in 2024. Differentiated application development converts market complexity into opportunities for growth and accelerates innovation by enabling a deeper understanding of the value of Eastman's products and how they perform within customers' and end-user products. Key areas of application development include thermoplastic conversion, functional films, coatings formulations, textiles, and personal and home care formulations. The Company engages the market by working directly with customers and downstream users, targeting attractive niche markets, and leveraging disruptive macro trends. Management believes that these elements of the Company's innovation-driven growth model, combined with disciplined portfolio management and balanced capital deployment, will result in consistent, sustainable earnings growth and strong cash flow from operations.

Sales, EBIT, and EBIT excluding non-core items were as follows:
 First Quarter
(Dollars in millions)20252024
Sales$2,290 $2,310 
Earnings before interest and taxes302 263 
Earnings before interest and taxes excluding non-core items
311 274 

Sales revenue decreased in first quarter 2025 compared to first quarter 2024 as lower sales volume and an unfavorable shift in foreign currency exchange rates were partially offset by higher selling prices.

EBIT excluding non-core items increased in first quarter 2025 compared to first quarter 2024 primarily due to the absence of start-up costs at the Kingsport methanolysis facility, as well as higher selling prices and lower distribution costs, net of higher raw material and energy costs. These net positive impacts were partially offset by lower sales volume in the Fibers segment and an unfavorable shift in foreign currency exchange rates.

Further discussion of sales revenue and EBIT changes is presented in "Results of Operations" and "Summary by Operating Segment" in this MD&A.

Net earnings and EPS and adjusted net earnings and EPS were as follows:
First Quarter
20252024
(Dollars in millions, except EPS)$EPS$EPS
Net earnings attributable to Eastman$182 $1.57 $165 $1.39 
Total non-core items, net of tax
8 0.06 8 0.07 
Interim adjustment to tax provision32 0.28 17 0.15 
Adjusted net earnings$222 $1.91 $190 $1.61 
Cash used in operating activities was $167 million in first three months 2025 and $16 million in first three months 2024.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Sales
First Quarter
Change
(Dollars in millions)20252024 $%
Sales$2,290 $2,310 $(20)(1)%
Volume / product mix effect(23)(1)%
Price effect27 1 %
Exchange rate effect(24)(1)%

Sales revenue decreased in first quarter 2025 compared to first quarter 2024 primarily as a result of decreases in the Fibers and AM segments partially offset by increases in the AFP and CI segments. Further discussion by operating segment is presented in "Summary by Operating Segment" in this MD&A.

Gross Profit
 First Quarter
(Dollars in millions)20252024Change
Gross profit$567 $532 7 %

Gross profit increased in first quarter 2025 compared to first quarter 2024 due to increases in all segments except Fibers. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.

Selling, General and Administrative Expenses
 First Quarter
(Dollars in millions)20252024Change
Selling, general and administrative expenses$182 $191 (5)%

Selling, general and administrative ("SG&A") expenses decreased in first quarter 2025 compared to first quarter 2024 primarily due to lower deferred compensation expenses.

Research and Development Expenses
 First Quarter
(Dollars in millions)20252024Change
Research and development expenses$67 $59 14 %

R&D expenses increased in first quarter 2025 compared to first quarter 2024 primarily due to strategic investment in innovation.

Asset Impairments, Restructuring, and Other Charges, Net

(Dollars in millions)First Quarter20252024
Severance charges
$1 $11 
Restructuring and other charges
8 — Total$9 $11 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

For detailed information regarding asset impairments, restructuring, and other charges, net see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Other Components of Post-employment (Benefit) Cost, Net
 First Quarter
(Dollars in millions)20252024
Other components of post-employment (benefit) cost, net$(1)$(5)

For more information regarding other components of post-employment (benefit) cost, net see Note 6, "Retirement Plans", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Other (Income) Charges, Net
 First Quarter
(Dollars in millions)20252024
Foreign exchange transaction losses, net
$— $5 
(Income) loss from equity investments and other investment (gains) losses, net1 — 
Other, net7 8 
Other (income) charges, net$8 $13 

Other (income) charges, net decreased in first quarter 2025 compared to first quarter 2024 primarily due to the absence of losses on foreign exchange transactions in first quarter 2025. For more information regarding components of foreign exchange transaction losses, see Note 5, "Derivative and Non-Derivative Financial Instruments", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Earnings Before Interest and Taxes
 First Quarter
(Dollars in millions)20252024Change
Earnings before interest and taxes$302 $263 15 %
Asset impairments, restructuring, and other charges, net
9 11 
Earnings before interest and taxes excluding non-core items
$311 $274 14 %

Net Interest Expense
 First Quarter
(Dollars in millions)20252024Change
Gross interest costs$58 $58 — %
Less: Capitalized interest5 5 
Interest expense53 53 
Less: Interest income4 4  
Net interest expense$49 $49 — %

Net interest expense remained unchanged in first quarter 2025 compared to first quarter 2024.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Provision for Income Taxes
First Quarter
20252024
(Dollars in millions)$%$%
Provision for income taxes and effective tax rate
$70 28 %$49 23 %
Tax provision for non-core items (1)
1 3 
Interim adjustment to tax provision (2)
(32)(17)
Adjusted provision for income taxes and effective tax rate$39 16 %$35 16 %
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(2)First quarter 2025 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. First quarter 2024 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.

First Three Months (1)
20252024
Effective tax rate28 %23 %
Discrete tax items (2)
(2)%(1)%
Tax impact of current year non-core items (3)
1 %1 %
Changes in tax contingencies and valuation allowances(2)%(1)%
Forecasted full year impact of expected tax events (4)
(9)%(6)%
Forecasted full year adjusted effective tax rate16 %16 %
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 15.5 percent in both first three months 2025 and 2024, respectively.
(2)"Discrete tax items" are items that are excluded from the Company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. Discrete tax items for first three months 2025 are related to share based compensation expense and adjustments to certain prior year tax returns and first three months 2024 are related to share based compensation expense.
(3)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.
(4)Expected future tax events may include finalization of tax returns; federal, state, and foreign examinations or the expiration of statutes of limitation; and corporate restructurings.

Net Earnings Attributable to Eastman and Diluted Earnings per Share
First Quarter
20252024
(Dollars in millions, except EPS)$EPS$EPS
Net earnings and diluted earnings per share attributable to Eastman$182 $1.57 $165 $1.39 
Non-core items, net of tax: (1)
Asset impairments, restructuring, and other charges, net
8 0.06 8 0.07 
Interim adjustment to tax provision32 0.28 17 0.15 
Adjusted net earnings and diluted earnings per share attributable to Eastman$222 $1.91 $190 $1.61 
(1)Provision for income taxes for non-core items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

SUMMARY BY OPERATING SEGMENT

Eastman's products and operations are managed and reported in four operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. For additional financial and product information for each operating segment, see Part I, Item 1, "Business - Business Segments" and Part II, Item 8, Note 20, "Segment and Regional Sales Information", in the Company's 2024 Annual Report on Form 10-K.
Advanced Materials Segment
First Quarter
Change
20252024 $%
(Dollars in millions)
Sales$719 $748 $(29)(4)%
Volume / product mix effect(7)(1)%
Price effect(13)(2)%
Exchange rate effect(9)(1)%
Earnings before interest and taxes$116 $104 $12 12 %
Sales revenue decreased in first quarter 2025 compared to first quarter 2024 primarily due to lower selling prices across the segment. Lower sales volume was driven by weakened demand in the automotive and building and construction end-markets, partially offset by growth in the specialty plastics product line.

EBIT increased in first quarter 2025 compared to first quarter 2024 primarily due to $7 million favorable sales volume mix and $8 million lower SG&A expenses, partially offset by a $5 million unfavorable shift in foreign currency rates.
Additives & Functional Products Segment
First Quarter
Change
20252024 $%
(Dollars in millions)
Sales$733 $704 $29 4 %
Volume / product mix effect15 2 %
Price effect24 3 %
Exchange rate effect(10)(1)%
Earnings before interest and taxes$137 $109 $28 26 %
Asset impairments, restructuring, and other charges, net4 — 4 
Earnings before interest and taxes excluding non-core item141 109 32 29 %

Sales revenue increased in first quarter 2025 compared to first quarter 2024 primarily due to higher selling prices, driven by cost pass-through contracts, and higher sales volume, primarily in the coatings additives and specialty fluids product lines.

EBIT in first quarter 2025 included asset impairments, restructuring, and other charges, net of $4 million related to the closure of a heat-transfer fluids production line at a specialty fluids and energy facility in North America. For more information see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net" to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Excluding this non-core item, EBIT increased in first quarter 2025 compared to first quarter 2024 primarily due to $13 million higher selling prices, net of higher raw material and energy costs, $11 million higher sales volume, and $5 million improved asset utilization.
Chemical Intermediates Segment
First Quarter
Change
20252024 $%
(Dollars in millions)
Sales$545 $523 $22 4 %
Volume / product mix effect8 2 %
Price effect18 3 %
Exchange rate effect(4)(1)%
Earnings before interest and taxes$19 $16 $3 19 %
Sales revenue increased in first quarter 2025 compared to first quarter 2024 due to higher selling prices and higher sales volume, partially offset by an unfavorable shift in foreign currency rates. Higher selling prices and higher sales volume were primarily due to more favorable market conditions in some olefins-based products.

EBIT increased in first quarter 2025 compared to first quarter 2024 primarily due to $15 million higher selling prices and lower distribution costs, net of higher raw material and energy costs, partially offset by $8 million unfavorable product mix and $3 million higher manufacturing costs.

Fibers Segment
First Quarter
Change
20252024 $%
(Dollars in millions)
Sales$288 $331 $(43)(13)%
Volume / product mix effect(40)(12)%
Price effect(2)(1)%
Exchange rate effect(1)— %
Earnings before interest and taxes$88 $117 $(29)(25)%
Sales revenue decreased in first quarter 2025 compared to first quarter 2024 primarily due to lower sales volume attributed to continued customer inventory destocking in the acetate tow product line and the impact of a discontinued product.

EBIT decreased in first quarter 2025 compared to first quarter 2024 primarily due to $25 million lower sales volume.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Other
First Quarter
20252024
(Dollars in millions)
Sales$5 $4 
Loss before interest and taxes
Growth initiatives and businesses not allocated to operating segments$(51)$(68)
Pension and other postretirement benefits income (expense), net not allocated to operating segments1 2 
Asset impairments, restructuring, and other charges, net(5)(11)
Other income (charges), net not allocated to operating segments(3)(6)
Loss before interest and taxes$(58)$(83)
Asset impairments, restructuring, and other charges, net5 11 
Loss before interest and taxes excluding non-core items
(53)(72)
Sales and costs related to growth initiatives, including the cellulosics biopolymer and circular economy platforms, R&D costs, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are included in "Other". First quarter 2024 also included pre-production costs for the Kingsport methanolysis facility.

EBIT in first quarter 2025 included profitability improvement initiatives. First quarter 2024 included severance primarily in accordance with foreign regulatory requirements as a result of cost reduction initiatives in fourth quarter 2023. For more information, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

SALES BY CUSTOMER LOCATION
Sales Revenue
 First Quarter
Change
(Dollars in millions)20252024$%
United States and Canada$1,020 $969 $51 5 %
Europe, Middle East, and Africa610 659 (49)(7)%
Asia Pacific539 564 (25)(4)%
Latin America121 118 3 3 %
Total Eastman
$2,290 $2,310 $(20)(1)%

4,180 
(1)Includes non-cash increase of $21 million in 2025 and non-cash decrease of $32 million in 2024 resulting from foreign currency exchange rates.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Capital Expenditures

Capital expenditures were $147 million and $185 million in first three months 2025 and 2024, respectively. Capital expenditures in first three months 2025 were primarily for the AM segment methanolysis plastic-to-plastic molecular recycling manufacturing facilities, other targeted growth initiatives, and site modernization projects. The Company expects that 2025 capital expenditures will be approximately $550 million, primarily for targeted growth initiatives, including the AM segment methanolysis plastic-to-plastic molecular recycling manufacturing facilities, and site modernization projects.

Stock Repurchases

In December 2021, the Company's Board of Directors authorized the repurchase of up to $2.5 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interest of the Company and its stockholders (the "2021 authorization"). No shares of common stock were repurchased during first quarter 2025. As of March 31, 2025, a total of 11,612,158 shares have been repurchased under the 2021 authorization for $1.1 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders.

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated financial statements in conformity with GAAP, management must make decisions which impact the reported amounts and the related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and assumptions on which to base estimates and judgments that affect the reported amounts of assets, liabilities, sales revenue and expenses, fair value of disposal groups, and related disclosure of contingent assets and liabilities. On an ongoing basis, Eastman evaluates its estimates, including those related to impairment of long-lived assets, environmental costs, pension and other postretirement benefits, litigation and contingent liabilities, and income taxes. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Management believes the critical accounting estimates described in Part II, Item 7 of the Company's 2024 Annual Report on Form 10-K are the most important to the fair presentation of the Company's financial condition and results. These estimates require management's most significant judgments in the preparation of the Company's consolidated financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS

For information regarding the impact of recently issued accounting standards, see Note 1, "Significant Accounting Policies", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Eastman has exposure to various market risks principally due to changes in foreign currency exchange rates, the pricing of various commodities, and interest rates. In an effort to manage these risks, the Company employs various strategies, including pricing, inventory management, and hedging. The Company enters into derivative contracts which are governed by policies, procedures, and internal processes set forth by its Board of Directors.

The Company determines its exposures to market risk by utilizing sensitivity analyses, which measure the potential losses in fair value resulting from one or more selected hypothetical changes in foreign currency exchange rates, commodity prices, or interest rates. For more information regarding exposures, refer to Part II, Item 7A of the Company's 2024 Annual Report on Form 10-K.

There have been no material changes to the Company's market risks from those disclosed in Part II, Item 7A of the Company's 2024 Annual Report on Form 10-K.

ITEM 4.CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures

Eastman maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. An evaluation was carried out under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that as of March 31, 2025, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed was accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting that occurred during first quarter 2025 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

General

From time to time, Eastman and its operations are parties to, or targets of, lawsuits, claims, investigations and proceedings, including product liability, personal injury, asbestos, patent and intellectual property, commercial, contract, environmental, antitrust, health and safety, and employment matters, which are handled and defended in the ordinary course of business. While the Company is unable to predict the outcome of these matters, it does not believe, based upon currently available facts, that the ultimate resolution of any such pending matters will have a material adverse effect on its overall financial condition, results of operations, or cash flows. Consistent with the requirements of Regulation S-K, Item 103, the Company's threshold for disclosing any environmental legal proceeding involving a governmental authority is potential monetary sanctions that management believes will meet or exceed $1 million.

Solutia Legacy Torts Claims Litigation

Pursuant to an Amended and Restated Settlement Agreement effective February 28, 2008 between Solutia, Inc. ("Solutia") and Monsanto Company ("Monsanto") in connection with Solutia's emergence from Chapter 11 bankruptcy proceedings (the "Monsanto Settlement Agreement"), Monsanto is responsible for the defense and indemnification of Solutia against any Legacy Tort Claims (as defined in the Monsanto Settlement Agreement) and Solutia has agreed to retain responsibility for certain tort claims, if any, that may arise from Solutia's conduct after its spinoff from Pharmacia Corporation (f/k/a Monsanto), which occurred on September 1, 1997. Solutia, which became a wholly-owned subsidiary of Eastman upon Eastman's acquisition of Solutia in July 2012, has been named as a defendant in several such proceedings, and has submitted the matters to Monsanto, which was acquired by Bayer AG in June 2018, as Legacy Tort Claims. To the extent these matters are not within the meaning of Legacy Tort Claims, Solutia could potentially be liable thereunder. In connection with the completion of its acquisition of Solutia, Eastman guaranteed the obligations of Solutia and Eastman was added as an indemnified party under the Monsanto Settlement Agreement.

ITEM 1A.RISK FACTORS

For information regarding the Company's material known risk factors which could materially adversely affect the Company, its business, financial condition, or results of operations, see "Risk Factors" in Part I, Item 1A of the Company's 2024 Annual Report on Form 10-K.
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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c) Purchases of Equity Securities by the Issuer

In December 2021, the Company's Board of Directors authorized the repurchase of up to $2.5 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interest of the Company and its stockholders (the "2021 authorization"). As of March 31, 2025, a total of 11,612,158 shares have been repurchased under the 2021 authorization for $1.1 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders. No shares of common stock were repurchased during first quarter 2025. For additional information, see Note 9, "Stockholders' Equity", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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ITEM 5.    OTHER INFORMATION

(c) Director and Officer Trading Arrangements

A portion of our directors’ and officers’ compensation is in the form of equity awards and, from time to time, they may engage in open-market transactions involving Company securities for diversification or other personal reasons. All such transactions in Company securities by directors and officers must comply with the Company’s Insider Trading Policy, which requires that transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables directors and officers to prearrange transactions in the Company’s securities in a manner that avoids concerns about initiating transactions while in possession of material nonpublic information. The Company’s Insider Trading Policy permits our directors and executive officers to enter into trading plans designed to comply with Rule 10b5-1.

No Rule 10b5-1 trading arrangements or "non-Rule 10b5-1 trading arrangements" (as defined by Regulation S-K Item 408(c)) were entered into, modified, or terminated by the Company's directors or officers during the quarterly period covered by this Report.

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ITEM 6.EXHIBITS

Exhibits filed as part of this report are listed in the Exhibit Index.

EXHIBIT INDEX
Exhibit NumberDescription
  
3.01
3.02
4.01
10.01 *
10.02 *
31.01 *
31.02 *
32.01 *
32.02 *
101.INSInline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH *Inline XBRL Taxonomy Extension Schema Document
101.CAL *Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF *Inline XBRL Definition Linkbase Document
101.LAB *Inline XBRL Taxonomy Label Linkbase Document
101.PRE *Inline XBRL Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*     Denotes exhibit filed or furnished herewith.
**     Management contract or compensatory plan or arrangement filed pursuant to Item 601(b) (10) (iii) of Regulation S-K.

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Eastman Chemical Company
Date:April 25, 2025By:/s/ William T. McLain, Jr.
William T. McLain, Jr.
Executive Vice President and Chief Financial Officer

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See also ALBEMARLE CORP - Annual report 2022 (10-K 2022-12-31) Annual report 2023 (10-Q 2023-09-30)
See also DuPont de Nemours, Inc. - Annual report 2022 (10-K 2022-12-31) Annual report 2023 (10-Q 2023-09-30)
See also HEXCEL CORP /DE/ - Annual report 2022 (10-K 2022-12-31) Annual report 2023 (10-Q 2023-09-30)
See also ROGERS CORP - Annual report 2022 (10-K 2022-12-31) Annual report 2024 (10-Q 2024-03-31)