EASTMAN CHEMICAL CO
For the period ended Dec 31, 2025. Filed Feb 13, 2026.
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FY2025 · Filed Feb 13, 2026
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Item 7. Results of Operations
RESULTS OF OPERATIONS
Eastman's results of operations as presented in the Company's consolidated financial statements in Part II, Item 8 of this Annual Report are summarized and analyzed below.
Sales
| (Dollars in millions) · 2025 · 2024 · Change | ||||
|---|---|---|---|---|
| Sales | $8,752 | $9,382 | (7)% | |
| Volume / product mix effect | (6)% | |||
| Price effect | (1)% | |||
| Exchange rate effect | —% | |||
Sales revenue decreased in 2025 compared to 2024 due to decreases across all operating segments except the AFP segment. Further discussion by operating segments is presented in "Summary of Operating Segment" in this MD&A.
Gross Profit
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Gross profit | $1,844 | $2,290 | (19)% |
| Costs of sales impact from restructuring activities | 2 | 7 | |
| Gross profit excluding non-core items | $1,846 | $2,297 | (20)% |
Gross profit in 2025 included inventory adjustments related to the decommissioning of certain assets at performance films facilities in North America. Gross profit in 2024 included inventory adjustments related to the closure of a solvent-based resins production line at an advanced interlayers facility in North America.
Excluding these non-core items, gross profit decreased in 2025 compared to 2024 due to lower sales volume and higher raw material and energy costs and lower selling prices. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.
Selling, General and Administrative Expenses
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Selling, general and administrative expenses | $658 | $736 | (11)% |
Selling, general and administrative ("SG&A") expense decreased in 2025 compared to 2024 primarily as a result of cost reduction initiatives and lower variable compensation costs.
Research and Development Expenses
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Research and development expenses | $255 | $250 | 2% |
R&D expenses slightly increased in 2025 compared to 2024 primarily due to strategic investment in innovation.
Asset Impairments, Restructuring, and Other Charges, Net
| (Dollars in millions) | 2025 | 2024 |
|---|---|---|
| Asset impairments | $33 | $5 |
| Severance charges | 39 | 25 |
| Restructuring and other charges | 24 | 21 |
| Total | $96 | $51 |
For detailed 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.
Other Components of Post-employment (Benefit) Cost, Net
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Other components of post-employment (benefit) cost, net | $(25) | $(72) | (65)% |
| Mark-to-market pension and other postretirement benefit gain (loss), net | 6 | 54 | |
| Other components of post-employment (benefit) cost, net excluding non-core item | $(19) | $(18) | 6% |
For more information regarding "Other components of post-employment (benefit) cost, net" see Note 1, "Significant Accounting Policies", and Note 11, "Retirement Plans", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Other (Income) Charges, Net
| (Dollars in millions) | 2025 | 2024 |
|---|---|---|
| Foreign exchange transaction losses (gains), net | $9 | $11 |
| (Income) loss from equity investments and other investment (gains) losses, net | 1 | — |
| Environmental and other costs | 62 | 16 |
| Other, net | 12 | 20 |
| Other (income) charges, net | $84 | $47 |
| Environmental and other costs | (62) | (16) |
| Other (income) charges, net excluding non-core items | $22 | $31 |
Other (income) charges, net in 2025 and 2024 included environmental and other costs related to previously divested businesses, non-operational sites and product lines, and discontinued programs. Excluding these non-core items, Other (income) charges, net decreased in 2025 compared to 2024 primarily due to lower factoring fees and foreign exchange transaction losses. For more information regarding components of foreign exchange transaction losses, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Earnings Before Interest and Taxes
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| EBIT | $776 | $1,278 | (39)% |
| Cost of sales impact from restructuring activities | 2 | 7 | |
| Asset impairments, restructuring, and other charges, net | 96 | 51 | |
| Mark-to-market pension and other postretirement benefit (gain) loss, net | (6) | (54) | |
| Environmental and other costs | 62 | 16 | |
| EBIT excluding non-core items | $930 | $1,298 | (28)% |
For more information regarding items that impact EBIT, see "Overview", and items described above in "Results of Operations".
Net Interest Expense
| (Dollars in millions) | 2025 | 2024 | Change |
|---|---|---|---|
| Gross interest expense | $234 | $233 | —% |
| Less: Capitalized interest | 15 | 17 | |
| Interest Expense | 219 | 216 | |
| Less: Interest income | 11 | 16 | |
| Net interest expense | $208 | $200 | 4% |
Net interest expense increased in 2025 compared to 2024 primarily as a result of lower interest income and lower capital expenditures.
Provision for Income Taxes
| (Dollars in millions) | 2025 | 2024 | ||
|---|---|---|---|---|
| $ | % | $ | % | |
| Provision for income taxes and effective tax rate | $93 | 16% | $170 | 16% |
| Tax provision for non-core items (1) | 34 | 1 | ||
| Income tax related items (2) | (33) | (7) | ||
| Adjusted provision for income taxes and effective tax rate | $94 | 13% | $164 | 15% |
(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)Full year 2025 includes a benefit from releasing reserves related to prior tax law changes and charges related to the enactment of the One Big Beautiful Bill Act (the "Act") and unusual macroeconomic conditions impacting certain deferred tax assets in the U.S. Full year 2024 includes tax expense associated with a previously divested business.
Provision for income taxes and effective tax rate in 2025 and 2024 included the tax effect of non-core items and other income tax related items. Excluding these items, adjusted provision for income taxes decreased in 2025 compared to 2024 primarily as a result of changes in unrecognized tax benefits and the tax effect of decreased adjusted earnings, partially offset by foreign tax effects due to the Company's mix of earnings and effects of cross border tax laws, net of credits.
For more information, see Note 8, "Income Taxes", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.
Net Earnings Attributable to Eastman and Diluted Earnings per Share
| 2025 | 2024 | |||
|---|---|---|---|---|
| (Dollars in millions, except per share amounts) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $474 | $4.10 | $905 | $7.67 |
| Non-core items, net of tax: (1) | ||||
| Cost of sales impact from restructuring activities | 1 | 0.01 | 5 | 0.04 |
| Asset impairments, restructuring, and other charges, net | 75 | 0.65 | 41 | 0.36 |
| Mark-to-market pension and other postretirement benefit (gain) loss, net | (3) | (0.03) | (40) | (0.34) |
| Environmental and other costs | 47 | 0.41 | 13 | 0.10 |
| Unusual items: | ||||
| Income tax related items | 33 | 0.28 | 7 | 0.06 |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $627 | $5.42 | $931 | $7.89 |
(1)The 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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