EASTMAN CHEMICAL CO
For the period ended Sep 30, 2026. Filed Oct 30, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Oct 30, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 2. Results of Operations
Sales
| Third Quarter · First Nine Months | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change · Change | ||||||||||||
| (Dollars in millions) · 2026 · 2025 · $ · % · 2026 · 2025 · $ · % | ||||||||||||
| Sales | $2,385 | $2,202 | $183 | 8% | $7,075 | $6,779 | $296 | 4% | ||||
| Volume / product mix effect | 30 | 1% | 68 | 1% | ||||||||
| Price effect | 144 | 7% | 136 | 2% | ||||||||
| Exchange rate effect | 9 | —% | 92 | 1% | ||||||||
Sales revenue increased in third quarter 2026 compared to third quarter 2025 due to increases in all segments, except the Fibers segment. Sales revenue increased in first nine months 2026 compared to first nine months 2025 due to increases in the AM, AFP, and CI segments, partially offset by a decrease in the Fibers segment. Further discussion by operating segments is presented in "Summary by Operating Segment" in this MD&A.
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Gross Profit
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change | 2026 | 2025 | Change |
| Gross profit | $532 | $433 | 23% | $1,523 | $1,506 | 1% |
| Cost of sales impact from restructuring activities | — | 2 | 3 | 2 | ||
| Gross profit excluding non-core item | $532 | $435 | 22% | $1,526 | $1,508 | 1% |
Gross profit increased in third quarter 2026 compared to third quarter 2025 due to increases in the AM, CI, and AFP segments partially offset by a decrease in the Fibers segment. Gross profit in first nine months 2026 included inventory adjustments related to the closure of a production line at a German performance films facility in the AM segment. Gross profit in first nine months 2025 included inventory adjustments related to the decommissioning of certain assets at performance films facilities in North America in the AM segment. Excluding these non-core items, gross profit increased in first nine months 2026 compared to first nine months 2025 due to increases in the CI and AFP segments, partially offset by decreases in the Fibers and AM segments. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.
Selling, General, and Administrative Expenses
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change | 2026 | 2025 | Change |
| Selling, general, and administrative expenses | $171 | $160 | 7% | $534 | $499 | 7% |
Selling, general, and administrative expenses increased in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 primarily due to higher variable compensation costs partially offset by cost reduction initiatives.
Research and Development Expenses
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change | 2026 | 2025 | Change |
| Research and development expenses | $63 | $63 | —% | $188 | $197 | (5)% |
Research and development expenses decreased in first nine months 2026 compared to first nine months 2025 primarily due to targeted R&D project reductions as we focused on the top corporate programs.
Asset Impairments, Restructuring, and Other Charges, Net
| Third Quarter | First Nine Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 |
| Severance charges | $— | $14 | $7 | $25 |
| Restructuring and other charges | — | 6 | 3 | 17 |
| Total | $— | $20 | $10 | $42 |
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.
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Other Components of Post-employment (Benefit) Cost, Net
| Third Quarter | First Nine Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 |
| Other components of post-employment (benefit) cost, net | $(17) | $(1) | $(50) | $(4) |
Other components of post-employment (benefit) cost, net were more favorable in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 due to a prior service credit related to the Company's 2025 other postretirement benefit plan amendment. 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
| Third Quarter | First Nine Months | |||
|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | 2026 | 2025 |
| Foreign exchange transaction losses, net | $3 | $2 | $4 | $6 |
| (Income) loss from equity investments and other investment (gains) losses, net | 1 | — | 2 | 2 |
| Environmental and other costs | — | — | 8 | 40 |
| Other, net | 6 | 1 | 23 | 12 |
| Other (income) charges, net | $10 | $3 | $37 | $60 |
| Environmental and other costs | — | — | (8) | (40) |
| Other (income) charges, net excluding non-core items | $10 | $3 | $29 | $20 |
Other (income) charges, net in first nine months 2026 and 2025 included environmental and other costs related to previously divested businesses or non-operational sites and product lines, and in first nine months 2026 also included associated gains and losses. Excluding these non-core items, Other (income) charges, net was unfavorable in third quarter and first nine months 2026 compared to third quarter and first nine months 2025 due to sales of catalysts in 2025 and additionally in first nine months 2026 compared to first nine months 2025 due to an increase of indirect taxes. 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
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change | 2026 | 2025 | Change |
| Earnings before interest and taxes | $305 | $188 | 62% | $804 | $712 | 13% |
| Cost of sales impact from restructuring activities | — | 2 | 3 | 2 | ||
| Asset impairments, restructuring, and other charges, net | — | 20 | 10 | 42 | ||
| Environmental and other costs | — | — | 8 | 40 | ||
| Earnings before interest and taxes excluding non-core items | $305 | $210 | 45% | $825 | $796 | 4% |
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Net Interest Expense
| Third Quarter | First Nine Months | |||||
|---|---|---|---|---|---|---|
| (Dollars in millions) | 2026 | 2025 | Change | 2026 | 2025 | Change |
| Gross interest costs | $61 | $60 | 2% | $178 | $177 | 1% |
| Less: Capitalized interest | 3 | 4 | 9 | 12 | ||
| Interest expense | 58 | 56 | 169 | 165 | ||
| Less: Interest income | 2 | 2 | 6 | 9 | ||
| Net interest expense | $56 | $54 | 4% | $163 | $156 | 4% |
Net interest expense increased slightly in third quarter 2026 compared to third quarter 2025 due to higher gross interest costs and less capitalized interest. Net interest expense increased in first nine months 2026 compared to first nine months 2025 due to less capitalized interest and less interest income.
(Benefit from) Provision for Income Taxes
| Third Quarter · First Nine Months | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | 2026 | 2025 | |||||
| (Dollars in millions) | $ | % | $ | % | $ | % | $ | % |
| (Benefit from) provision for income taxes and effective tax rate | $(4) | (2)% | $65 | 49% | $97 | 15% | $164 | 30% |
| Tax provision for non-core items (1) | — | 6 | 3 | 21 | ||||
| Income tax related item (2) | — | (22) | (13) | (22) | ||||
| Interim adjustment to tax provision (3) | 39 | (25) | 8 | (64) | ||||
| Adjusted provision for income taxes and effective tax rate | $35 | 15% | $24 | 16% | $95 | 15% | $99 | 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)Resulting from the enactment of OBBBA.
(3)Third quarter 2026 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. Third quarter 2025 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.
| First Nine Months (1) | ||
|---|---|---|
| 2026 | 2025 | |
| Effective tax rate | 15% | 30% |
| Discrete tax items (2) | (1)% | —% |
| Tax impact of current year non-core and unusual items (3) | (1)% | (1)% |
| Changes in tax contingencies and valuation allowances | 3% | (1)% |
| Forecasted full year impact of expected tax events (4) | (1)% | (12)% |
| Forecasted full year adjusted effective tax rate | 15% | 16% |
(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 14.5 percent and 15.5 percent for first nine months 2026 and 2025.
(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 nine months 2026 are related to share based compensation expense and adjustments to certain prior year tax returns.
(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.
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Net Earnings Attributable to Eastman and Diluted Earnings per Share
| Third Quarter | ||||
|---|---|---|---|---|
| 2026 | 2025 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $252 | $2.19 | $69 | $0.60 |
| Non-core items, net of tax: (1) | ||||
| Cost of sales impact from restructuring activities | — | — | 1 | 0.01 |
| Asset impairments, restructuring, and other charges, net | — | — | 15 | 0.13 |
| Unusual item: | ||||
| Income tax related item | — | — | 22 | 0.20 |
| Interim adjustment to tax provision | (39) | (0.35) | 25 | 0.20 |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $213 | $1.84 | $132 | $1.14 |
| First Nine Months | ||||
|---|---|---|---|---|
| 2026 | 2025 | |||
| (Dollars in millions, except EPS) | $ | EPS | $ | EPS |
| Net earnings and diluted earnings per share attributable to Eastman | $542 | $4.70 | $391 | $3.38 |
| Non-core items, net of tax: (1) | ||||
| Cost of sales impact from restructuring activities | 2 | 0.02 | 1 | 0.01 |
| Asset impairments, restructuring, and other charges, net | 7 | 0.06 | 31 | 0.27 |
| Environmental and other costs | 9 | 0.08 | 31 | 0.26 |
| Unusual item: | ||||
| Income tax related item | 13 | 0.11 | 22 | 0.20 |
| Interim adjustment to tax provision | (8) | (0.07) | 64 | 0.54 |
| Adjusted net earnings and diluted earnings per share attributable to Eastman | $565 | $4.90 | $540 | $4.66 |
(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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