EASTMAN CHEMICAL CO

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 "Business - Business Segments" in Part I, Item 1 of this Annual Report and Note 20, "Segment and Regional Sales Information", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

In 2023, the Company moved the functional amines product line from the CI segment into the AFP segment. In addition, certain organic acid products and olefin-based products moved from the AFP segment to the CI segment. These product moves are expected to increase efficiency of the Company's assets and commercial teams, and to increase portfolio transparency. To maintain comparability of segment financial statement information, the Company has recast the segment financial information for the AFP and the CI segments for each quarter from first quarter 2019 through fourth quarter 2022. The information presented below is the recast information for all periods presented. For more information, refer to the Current Report on Form 8-K dated April 27, 2023.

Sales revenue decreased in 2023 compared to 2022 primarily due to lower sales volume partially offset by higher selling prices. Lower sales volume is primarily attributed to weak demand and significant customer destocking across key end-markets in the specialty plastics product lines, partially offset by increased sales volume of premium products in the automotive end-market for advanced interlayers product line. Lower sales volume was partially offset by higher selling prices, primarily in the advanced interlayers product line.

EBIT in 2022 included asset impairments and restructuring charges as result of the closure of a North American manufacturing facility. For more information regarding asset impairments and restructuring charges, see Note 16, "Asset Impairments and Restructuring Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT decreased primarily due to $228 million of lower sales volume and higher manufacturing costs, primarily due to lower capacity utilization. These costs were partially offset by $172 million of lower raw material and energy costs and distribution costs, and higher selling prices.

In 2023, the AM segment:

•achieved key milestones for planned molecular recycling facilities (see "Corporate Overview - Business Strategy - Sustainability and Circular Economy - Circularity" in Part I, Item 1 of this Annual Report);

•continued adoption of polyester renewal technology for products, including Tritan™ Renew, Cristal™ Renew, and Cristal™ One Renew across several end-markets, including cosmetic packaging, eyewear and power tools;

•continued to expand portfolio of differentiated post-applied window films and protective films for automotive and architectural applications;

•launched Saflex™ Horizon LVID, a next generation PVB interlayer that enhances the driving experience while enhancing road safety in automotive original equipment manufacturers ("OEM"); and

•completed the acquisition of Ai-Red Technology (Dalian) Co., Ltd., a manufacturer and supplier of paint protection and window film for the auto market in the Asia Pacific region for approximately $75 million, net of cash acquired, which is expected to enhance continued global growth of the AM segment performance films product line.

Sales revenue decreased in 2023 compared to 2022 primarily due to lower sales volume and lower selling prices. Lower sales volume was primarily attributed to deceleration of demand and customer destocking in several key end-markets, including building and construction and agriculture. Lower selling prices were primarily attributable to cost pass-through contracts.

EBIT decreased in 2023 compared to 2022 primarily due to $207 million lower sales volume and higher manufacturing costs, primarily due to lower capacity utilization. These costs were partially offset by $106 million lower raw material and energy costs and distribution costs, net of lower selling prices.

In 2023, the AFP segment:

•invested in additional capabilities of Eastapure™electronic solvents for use in manufacturing of semiconductor chips and other electronic applications with extremely low organic and inorganic impurities;

•received customer approval for Tetrashield™ resins in industrial powder coating applications providing ultradurable, long weathering alternatives to traditional fluoropolymers that are specifically designed to meet the demanding requirements of building and construction, as well as other high-performance outdoor applications;

•developed cellulosic microbeads which offer a higher performance, biodegradable alternative to traditional microplastic alternatives and are engaging alpha-customers in the personal care end-market;

•received prestigious Green Seal verification of coalescents Optifilm™ for use in products that are safer for human and environmental health, in line with Eastman's continued commitment to environmentally friendly products; and

•received Process Heating & Cooling Innovation and Artificial Intelligence Excellence awards for Fluid Genius™, an advanced software that equips end users with predictive insights to optimize heat transfer fluid performance.

Sales revenue decreased in 2023 compared to 2022 primarily due to lower selling prices and lower sales volume across most product lines. Lower selling prices were attributed to lower raw material prices. Lower sales volume was primarily attributed to deceleration of demand and customer destocking across several key end-markets.

EBIT in 2023 included a gain on divested business and EBIT in 2022 included asset impairment and restructuring charges from a manufacturing facility closure. For more information regarding the divested business and asset impairments and restructuring charges, see Note 2, "Divestitures", and Note 16, "Asset Impairments and Restructuring Charges, Net", respectively, to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding these non-core items, EBIT decreased in 2023 compared to 2022 primarily due to $154 million lower sales volume and higher manufacturing costs, primarily due to lower capacity utilization, and $69 million lower selling prices, net of lower raw material and energy costs and distribution costs.

In 2023, the Company completed the sale of its operations located in Texas City, Texas, excluding its plasticizer operations. The total estimated consideration, after estimates of post-closing adjustments, was $498 million, which included approximately $415 million in cash at closing and an additional $38.5 million to be paid on each of the first and second anniversaries of the closing date of the transaction. The final purchase price is subject to working capital and other adjustments post-closing.

Sales revenue increased in 2023 compared to 2022 primarily due to higher selling prices in the acetate tow product line, driven by an increase in industry capacity utilization in addition to higher raw material, energy, and distribution prices throughout 2022.

EBIT in 2023 included accelerated depreciation and EBIT in 2023 and 2022 included asset impairment and restructuring charges, net, all from a previously announced manufacturing facility closure. For more information regarding asset impairments and restructuring charges see Note 16, "Asset Impairments and Restructuring Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding these non-core items, EBIT increased in 2023 compared to 2022 primarily due to higher selling prices in addition to lower raw material and energy costs and distribution costs of $284 million.

In 2023, the Fibers segment:

•implemented contract price increases across the acetate tow customer base, driving growth and returning adjusted EBIT margins and cash flow generation to acceptable performance levels;

•commercialized Naia™ Renew Enhanced Sustainability, an offering sourced from 60 percent recycled content with a global fashion brand known for its sustainability focus; and

•reached over 70 signed trademark licensing agreements with high profile brands from major multinational fashion brands to sustainable champions in outdoor clothing.

Sales and costs related to growth initiatives, including circular economy, R&D costs, certain components of pension and other postretirement benefits, and other expenses and income not identifiable to an operating segment are not included in operating segment results for any of the periods presented and are included in "Other". Full year 2022 included sales revenue of a previously divested business.

In 2023 and 2022 EBIT, the Company recognized severance and related costs as part of business improvement and cost reduction initiatives, insurance proceeds and net costs from the steam line incident, respectively, and environmental and other costs from previously divested or non-operational sites. EBIT in 2022 included EBIT of a previously divested business, a loss, net of transaction costs, on the divested business, and adjustments to contingent considerations. For more information regarding asset impairments and restructuring charges, see Note 16, "Asset Impairments and Restructuring Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.