EASTMAN CHEMICAL CO

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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 2023 Annual Report on Form 10-K.

Advanced Materials Segment

Sales revenue in second quarter and first six months 2024 increased compared to second quarter and first six months 2023 primarily due to higher sales volume partially offset by lower selling prices. Higher sales volume was primarily attributed to the end of customer inventory destocking, particularly in the consumer durables and packaging end-markets, and premium interlayers product growth in the automotive end-market. Lower selling prices were primarily attributable to lower raw material and energy prices.

EBIT increased in second quarter 2024 compared to second quarter 2023 primarily due to $50 million higher sales volume and lower manufacturing costs, including higher capacity utilization, partially offset by $16 million lower selling prices, net of lower raw material and energy costs and distribution costs.

EBIT increased in first six months 2024 compared to first six months 2023 primarily due to $53 million higher sales volume and lower manufacturing costs, including higher capacity utilization, and $5 million lower raw material and energy costs and distribution costs, net of lower selling prices. These impacts were partially offset by a $9 million unfavorable shift in foreign currency exchange rates.

Additives & Functional Products Segment

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Sales revenue in second quarter and first six months 2024 decreased compared to second quarter and first six months 2023 primarily due to lower selling prices. Lower selling prices were primarily attributed to lower raw material costs, including cost pass-through contracts. Sales volume was relatively unchanged as growth in the coatings additives and care additives product lines were offset by lower sales volume, primarily due to the reduction of heat transfer fluid projects.

EBIT decreased in second quarter 2024 compared to second quarter 2023 primarily due to $21 million unfavorable sales volume and product mix and $8 million lower selling prices, net of lower raw material and energy costs. These impacts were partially offset by $11 million lower manufacturing costs, including higher capacity utilization.

EBIT decreased in first six months 2024 compared to first six months 2023 primarily due to $39 million unfavorable sales volume and product mix, partially offset by $7 million lower raw material and energy costs, net of lower selling prices.

Chemical Intermediates Segment

Sales revenue in second quarter 2024 was relatively unchanged compared to second quarter 2023 and decreased in first six months 2024 compared to first six months 2023 due to lower selling prices partially offset by higher sales volume. Lower selling prices were attributed to lower raw material and energy prices. Higher sales volume was primarily attributed to the end of customer inventory destocking.

EBIT decreased in second quarter 2024 compared to second quarter 2023 primarily due to $37 million lower selling prices, net of lower raw material and energy costs and distribution costs, partially offset by $18 million higher sales volume.

EBIT decreased in first six months 2024 compared to first six months 2023 due to $62 million lower selling prices, net of lower raw material and energy costs. These impacts were partially offset by $19 million lower manufacturing costs, including higher capacity utilization.

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Fibers Segment

Sales revenue in second quarter and first six months 2024 increased compared to second quarter and first six months 2023 primarily due to higher selling prices in acetate tow and higher sales volume in textiles.

EBIT in first six months 2023 included asset impairments and restructuring charges and accelerated depreciation from a previously announced manufacturing facility closure. For more information regarding asset impairments and restructuring charges see Note 12, "Asset Impairments and Restructuring Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

EBIT excluding non-core items increased in second quarter and first six months 2024 compared to second quarter and first six months 2023 primarily due to $10 million and $18 million, respectively, higher sales volume and lower manufacturing costs, including higher capacity utilization, and $6 million and $25 million, respectively, higher selling prices and lower raw material and energy costs.

Other

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Sales and costs related to growth initiatives, including the cellulosics biopolymer platform and 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". First quarter 2024 also includes pre-production costs for the Kingsport methanolysis facility.

EBIT in first six months 2024 and 2023 included severance primarily in accordance with foreign regulatory requirements as a result of cost reduction initiatives in fourth quarter 2023 and 2022, respectively. Second quarter and first six months 2024 and 2023 EBIT included environmental and other costs from previously divested or non-operational sites. In addition, first six months 2023 included insurance proceeds from the steam line incident. For more information, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments and restructuring charges see Note 12, "Asset Impairments and Restructuring Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.