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.

Sales revenue increased in 2024 compared to 2023 due to higher sales volume partially offset by lower selling prices. Higher sales volume was primarily attributed to the end of customer inventory destocking across key end-markets, and product growth of premium interlayers products. Lower selling prices were primarily attributed to lower raw material and energy prices.

EBIT in 2024 included asset impairments, restructuring, and other charges, net, and inventory adjustments, related to the planned closure of a solvent-based resins production line. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other 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 2024 compared to 2023 primarily due to $162 million of higher sales volume, including improved capacity utilization, partially offset by $38 million of higher manufacturing costs associated with Kingsport methanolysis and continued investment in growth.

In 2024, the AM segment:

•achieved key milestones within the Circular Economy platform (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, including LLumar™ Protective Wrap Film which integrates the look of car wraps with the resilience of paint protection film, helping elevate vehicle protection; and

•launched Saflex™ LiteCarbon Clear, a premium polyvinyl butyral interlayer that reduces the embodied carbon of laminated glass elements while maintaining the construction of safe buildings, and Saflex Evoca™, a new platform designed to upgrade the glazing potential in electric vehicles that offers acoustic, solar or color options to assist in electric vehicle design.

Sales revenue increased in 2024 compared to 2023 primarily due to higher sales volume, mostly offset by lower selling prices. Higher sales volume was primarily attributed to the end of destocking in the agriculture end-market and growth in certain end-markets, including personal care, aviation, and water treatment. Lower selling prices were primarily attributable to lower raw material prices.

EBIT in 2024 included inventory adjustments related to the planned closure of a solvent-based resins production line. For more information see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT increased in 2024 compared to 2023 primarily due to $32 million lower raw material and energy costs and distribution costs, net of lower selling prices and $25 million higher sales volume.

In 2024, the AFP segment:

•launched electronic grade isopropyl alcohol ("IPA"), the latest addition to the EastaPure™ electronic chemicals line, that offers U.S. semiconductor manufacturers a domestically made solvent as reliable in quality as it is in supply;

•introduced Eastman Esmeri™, a biodegradable cellulosic biopolymer non-persistence personal care ingredient delivering consumer expectations with enhanced performance and ecofriendly benefits;

•introduced Solus™, a biodegradable paper coating additive that enhances the end of life of packaging in food service, by co-creating a flexible, food-safe packaging solution with a specialty papers producer; and

•invested in manufacturing capabilities in Europe, Middle East, and Africa and Asia Pacific regions to support market growth for pharmaceutical applications and wastewater treatment market growth, respectively.

Sales revenue was relatively unchanged in 2024 compared to 2023 primarily due to lower selling prices being mostly offset by higher sales volume. Lower selling prices were driven by changes in raw material and energy prices. Higher sales volume was primarily attributed to the end of customer inventory destocking across most end-markets.

EBIT in 2023 included a gain on a divested business. For more information regarding the divested business, see Note 2, "Divestitures", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding this non-core item, EBIT decreased in 2024 compared to 2023 primarily due to $46 million lower selling prices and higher raw material costs, net of lower energy costs partially offset by $28 million lower manufacturing and operating costs, and $4 million higher sales volume.

In 2023, the Company completed the sale of its operations located in Texas City, Texas, excluding its plasticizer operations. The total estimated consideration, after post-closing adjustments, was $498 million, which included approximately $415 million in cash at closing, $38.5 million received in 2024, and an additional $38.5 million to be received on the second anniversary 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 2024 compared to 2023 primarily due to higher selling prices in the acetate tow product line. Higher sales volume for textiles, attributed to strong growth in Naia™, was offset by a modest decline in acetate tow.

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

Excluding this non-core item, EBIT increased in 2024 compared to 2023 primarily due to $48 million higher selling prices, net of lower raw material and energy costs, partially offset by $15 million lower sales volume.

In 2024, the Fibers segment:

•continued to benefit from and execute multi-year raw material and energy cost pass-through contracts across the acetate tow customer base;

•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 ranging from major multinational fashion brands to sustainable champions in outdoor clothing.

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 included in "Other".

EBIT in 2024 included growth and profitability improvement initiatives, severance charges as part of corporate cost reduction initiatives, and environmental and other costs from previously divested or non-operational sites. EBIT excluding non-core items in 2023 included corporate cost reduction initiatives, insurance proceeds from the steam line incident, and environmental and other costs from previously divested or non-operational sites. For more information regarding Non-GAAP items, see "Non-GAAP Financial Measures" in this MD&A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.