Eastman Chemical Company (EMN) Earnings Call Transcript & Summary

[Presentation] So good morning, and good afternoon and good evening for people who are joining us virtually around the world. It's great to have a live audience. I've got to say, it's exciting, first time I'm presenting to not a camera. And this is a great way to launch getting back to normal. We have an exciting day today to cover around where we are in our strategy and the value that we think we're going to create. Before we get started, there's the obligatory forward-looking statements. Please read that. And I'm going to introduce our executive team who are here today and very interested and eager to meet with all of you. I'm going to start with William McLain, as most of you know, our CFO. We have our -- I'm going to ask them all to stand up at once when we're done. There are our two P&L leaders. We have Brad Lich, who runs our Advanced Materials and Fibers business as well as our Chief Commercial Officer; we have Lucian Boldea, who is running our Additives & Functional Products business and CI as well as procurement; we then have our Executive Vice President of technology as well as our CSO, Steve Crawford; then we have Mark Cox, who runs our manufacturing; we have Perry Stuckey, who is our Chief Human Resource Officer; Julie McAlindon, who you just saw wrap up our video, who is our Head of Transformation, supply chain in our regions. And we also have a number of our members of our senior leadership team, in particular, our business leaders here available to talk to you on the breaks. So if all of you could stand up, please. I should also mention, Kelly Walker, obviously a member of our team, but she couldn't make it today, and she certainly wishes she could be here. So with that -- oh, Chris Killian, too. I forgot Chris. There we go, Chris. So a number of people are here, and we're really excited about this. I'm going to kick this off with an overview of our strategy, the progress we're making on it and how that translates into value creation for our customers as well as our shareholders. Steve will then dive into the innovation and sustainability section and spend some time talking about how we bring our growth model to life, particular emphasis on the circular economy as well as what we're doing on the ESG front, in particular, the carbon footprint front. After that, Brad will then hit on how we're building on a decade of very impressive growth in Advanced Materials and how we're going to accelerate that growth going forward with the specialty work that we have going on as well as the circular economy as an accelerant. Lucian will then cover the new AFP, a more focused AFP and how we're driving growth from that business as another great specialty business, and talk about some of the actions we are taking to continue to improve and stabilize our CI segment. And then Willie will bring it all together from a financial point of view, and then we'll have Q&A. There will be a 20-minute break as well just before -- just between Brad and Lucian. Now today, we're going to be focused on long-term value creation. Obviously, it's a chaotic time. There's lots of things going on in the short term. But we're not going to be trying to get into that today. Just to get that aspect out of the way, I would tell you that the fourth quarter guide is still a range that we believe in. And that the guide that we gave you around 2022, in the third quarter call, is one that we continue to believe is directionally accurate. Obviously, a lot of uncertainty to next year. But presuming those underlying assumptions exist, we still think that's an accurate look at '22. So with that said, we're going to move on to how we create value over the next 3 years and beyond, as we go through this presentation. All right. So first, it's always helpful to start with a little bit of look back in what have we achieved since our last Investor Day, which was back in February of '18. And we've accomplished a lot. It's hard to see it sometimes because we've had a few things get in the way like a global trade war, a pandemic and then a supply chain crisis with rapid inflation. But through all of it, we've been incredibly -- my slides are out of control. We've been incredibly successful in what we've been able to achieve. When you look at the new business revenue growth from innovation, from our growth programs, $1.5 billion, that's a real testament of the strength of our value proposition, even in difficult times and key to allowing us to grow faster than the underlying markets, offsetting some of the headwinds that we faced. We've also made tremendous progress in a very short time frame around the circular economy platforms, and I'm really excited to talk about how that progress builds into a lot of value creation as we look forward. We've made aggressive commitments last year in our sustainability report about what we're going to achieve in reducing our carbon footprint and the impact on climate. Getting carbon neutrality by 2050, more importantly, a very detailed plan about how to get it 1/3 down by 2030, which puts us on a credible glide slope to get there. We've invested a lot in our capabilities. It's great to have a strategy, great to have a lot of innovation, but if you can't execute it, convert it to orders and translate to value at the bottom line, it doesn't really matter. And we continue to always keep our eye in building those capabilities to succeed. We've generated a significant amount of cash in this company, and we'll continue to do so and being incredibly disciplined in how we've deployed it. We've been responsible on how we've managed our portfolio, divesting 2 nonstrategic businesses that have better owners than us. And we've looked at every aspect of who we are from top line growth, through how we manage our employees, to how we manage our environmental footprint, embed ESG in everything that we do, and we think we're a leader in the space from that direction. So a lot is going on in the company. And as you think about value creation, going forward, we want to leave you with 5 key themes on what we think are the hallmark of what Eastman is going to be -- been doing, what's it going to do going forward and how it's going to create value for all of you. Now, some of these themes have been around since 2018 and some are new. It starts with our innovation-driven growth model. You will hear this to the point where you don't want to hear anymore, but that is the heart of who we are and how we win in the marketplace every day. And then, of course, we had this entirely new additional vector of growth in the circular economy that we're very excited about. More importantly, our brands are very excited about what we can do for them. We continue to make investments in strengthening our execution capability to drive the top line and translate it to the bottom line. As I said, we're embedding ESG in everything that we do. And when you put these 4 together, we generate a lot of cash. And we're going to continue to have a very disciplined and balanced approach to how we deploy it. So you're going hear that from me, as I double-click on each of these themes to give you a high-level overview, and then you're going to see these themes throughout the rest of the presentations today. Let's start with the first one, which is the innovation-driven growth model. This is not a new concept. We talked about it a lot in 2018, and we've been investing in this idea since 2014. So once we have fully integrated the significant acquisitions we did to upgrade our portfolio with Eastman, we then consolidated our efforts and our focus, really, on driving organic growth from this very attractive portfolio of businesses. And it is working. It's delivering significant value, and it will accelerate as we go forward. And in addition to that, as I said, we're also focused on sustainability. So what you're going to see is a focus on disruptive trends in the sustainability side of the macro economy that's driving pretty much all of our growth these days. And that translates into high-value growth from these products. That's a mix upgrade that's important in understanding our economics. So I'm not going to spend a lot of time on the growth model, but I do want to spend a little bit just to frame it because you're going to see it through the different presentations today, as Steve, Brad, Lucian bring it to life. The model starts with these 3 links. And the first link about world-class technology is fundamental to who Kodak was, all the way back to our birth as a company to who we are today. We believe that we should only be in places where we have world-class technology platforms, which means we have advantage R&D, advantage application development to innovate far quicker than our direct competitors, as well as scale, both in our connect to the marketplace and our operations to win against any competition that we see in the marketplace and accelerate our growth. So that's fundamental, but that, by itself, doesn't work. In the old days, it would work. It was a field of dreams. You could build if they come, but now we know that we have to relentlessly engage in the marketplace to drive that growth from innovation. And it's not just our direct customers. We know we have to be engaged with them and not just in procurement, but in R&D, in the P&L, where we ensure that our innovation is of value to them and how they think about us helping them win. We realize we have to play forward, to play forward down to the brands, play forward down to the retail channel, where we can demonstrate the value creation we can bring to them, and that allows us to have more insight on innovation, as well as create market pull for our product through the value chain. Those two, in themselves, sound great, but still not enough, right? The secret sauce of Eastman is actually the application development capability in the middle here that link these two things together. And that's essential to our success. And AD, which you'll hear a lot about today, is how we can actually do what our customers do. So we can prototype a product with our materials in it, and show them how we create value in their product, and we have all the testing capability that they use to validate that it is creating the value that they want. And we can use that to demonstrate to our direct customers, to our brands, to the channel, of what we can do. And allows us to accelerate innovation, allows us to know our value and make sure we price and get what we deserve. Now these three links are great, but they also have to have a foundation underneath of them. And it starts with advantaged significant scale and integration that gives us a competitive advantage as a foundational capability, combined with the capability investments we're making across the company, combined with disciplined portfolio management so that we are sure that we're focusing on where we can create value. So you put all that together, that's great. Where are you going to point this engine? Well, you got to figure that out, too. And when you think about the world we live in today, there are 3 crises that we're focused on. The first, and we've been focused on this for decades, is there's an emerging middle class around the world that deserves a higher quality of life. And it's a growing population. So there's a lot to be done in innovating better materials and advancing the development of the world. On top of that, especially in the last decade, much more awareness of climate. We're all committed to doing everything we can to reduce our impact, both directly in our operations and what our products can enable our customers and consumers to do in reducing their carbon footprint. In the last 3 years, even more awareness around plastic waste, which is a serious problem, both for the waste and the climate associated with it that we need to address. So when you look at these 3 things, and when you think about Eastman, we have sustainability occurring across all of these challenges. We think of it as the triple challenge, because while you're solving these problems, you can't just solve one, right? No one wants to give up their quality of life as we address climate and plastic waste. So, you have to solve all 3 at the same time, and that creates significant innovation opportunities for us. And otherwise, you can't solve these problems. And what you see is, we have innovation happening everywhere throughout the company on these themes. It starts with our long-term history where we've been focused on caring for society with a heavy emphasis on health and wellness. So we're bringing BPA-free, styrene-free polymers to the marketplace. Replacing antibiotics with organic acids and animal feed. We have low VOC coating additives and we make much more durable products. We enable durability in many of the products that obviously extends their life and reduces the -- improves the quality, it also helps climate. We also have a lot going on in climate. We have products for -- especially for cars, especially for EVs, that lightweight glass, that improved thermal management and the draw on HVAC. We have energy efficiency projects that we're doing around building and construction in homes and buildings. And of course, durability continues to come up as an important theme in the reduce, reuse, recycle theme of what we should be doing in the environment. And circular is a big opportunity with our 2 molecular recycling technologies and the fact that our cellulosic biopolymers can also be tuned to biodegrade in a variety of different applications. We'll be spending a lot of time on that third column. When you think about this, we're succeeding on this. This isn't just an idea. It's not just platforms. They're actually converting to commercial orders. So new business revenue from innovation, just innovation, is on track and doing really well. We're on track to doing about $600 million this year, which is well above our target range. Some of that is catching up from last year, but a lot of it is just the momentum we have in our specialties as well as our circular activities. And you'll see from Steve that 100% of these programs and our top programs all connect to at least one of the sustainability drivers. And it's important to remember that when these are growing, these are very high margin compared to the company average and even the segment averages inside AM and AFP, so you're getting a significant mix upgrade. And mix is important. It's how we drive our company, and we talked about this in '18, and I want to bring this slide back and talk about it now because it is fundamental to who we are. When we're growing AM and AFP faster than a normalized CI, you're mixing -- you're valuing the mix up. Importantly, inside AM and AFP, and you'll hear these stories from Brad and Lucian, we're dramatically growing high-value products in those segments that have much higher margins inside those segments. That's part of how we deliver so much growth within AM, and what AFP will continue and really, accelerate doing with their growth programs. And so, when you look at it on a corporate basis, on the right-hand side, what you see is tremendous variable margin growth in the mountain chart of CI -- I'm sorry, not CI -- of AM and AFP growing dramatically over the last decade. And you can see the role that mix playing in it, which is that red line where the unit variable margin has doubled in the last decade, as we've continued to improve our mix. In the beginning, that was partly done through the divestiture to commodities and the acquisition of specialties, and then it was accelerated through the organic investments we've been -- growth that we've been delivering since '14. And scale and integration, as I mentioned earlier, is critical to our success. The scale that we have as a company enables us to win in innovation. It allows us to have advantaged fundamental R&D and local capabilities, application capabilities that our competitors cannot afford. And that gives us a huge advantage. It also allows us to mix technologies on horizontal integration. So Steve will cover this, but when we have multi-technology platforms that are world class, our margins are, on average, 2x a single technology. So, significant value creation through that. And then, of course, the vertical integration gives us additional advantages. It's our now -- it's critical to our innovation now, around circular, leveraging all that infrastructure and expertise that we've developed, to enable all of the circular platforms that we're pursuing. And it, of course, gives you a stabilized earnings position when you look at the value across the chain and a very advantaged cost position. When you put all that together, it translates to more top line growth. It translates to better margins, and importantly, translates to a lot of cash flow that funds all the growth in the specialties, as well as our ability to return a significant amount of cash to shareholders. So the second theme is -- okay, that's a great strategy, and that strategy in itself, I think, is incredibly compelling. But then you can add to it with the circular economy. And here, we've got brands highly engaged with setting aggressive targets on recycled content and addressing the plastic waste problem, as well as aggressive targets on climate. And at the same time, they don't want to give up the quality of their products on the shelf at all. And we provide solutions where that can be done with our 2 molecular recycling technologies. And in addition to the recycling technology, there are applications where recycling isn't really an option, think food service or microbeads in cosmetics, and tunable biodegradation of our cellulose polymers have now got very significant interest. So that's an additional vector, just on top of the recycling. And this all comes together in ways we can solve these serious challenges. And as you will see, provide very attractive returns to our owners at the same time. I'm going to start with the polyester renewal technology, which is also methanolysis. And that's very compelling. It's a very compelling technology and it's not a new idea to us. We've had 30 years of practice and experience at Eastman of using this technology. It's not a lab experiment or a start-up. That's incredibly important to the brands because they want reliable supply. And we start with waste that cannot be mechanically recycled, that's destined for incineration, landfill or unfortunately, sometimes the environment. And we unzip it with this technology back into its building blocks, then we purify it, which is complicated when you're starting with garbage, into then, pure monomers that are available to our current assets to make the same polymers we make today. So it's a drop in replacement, brands don't have to change anything, how they do their products, and they can retain the exact same quality that they have now, which is not really that easy to do with mechanical recycling. And it's infinite, and that's important. This is an infinite loop. There's no degradation when you do this type of process. In addition to that, it solves climate. So it's 20%, 30% lower carbon footprint when you look at it just from the process and efficiencies. We're not including green energy and how to make that number lower, that's additive. So if you add in green energy, the carbon footprint drops dramatically from this 20% to 30%. So it's compelling on the waste problem, compelling on climate and leverages the expertise that we have, and it's led to dramatic interest from our brands that are exceeding our expectations and fill-out rates. So, Brad is going to tell you about how we have to pull our Tritan polymer line forward and start constructing it now to keep up with demand. So that $250 million for the methanolysis plant is going to pick up with our Tritan line because of accelerated growth, that will be about $425 million for the first plant, with greater than 15% ROIC, it is a very attractive investment. And on top of that, there's interest that goes beyond this first plant on this bottom chart. Brands want us to solve this problem beyond just the specialties that we make. They want us to provide circular PET packaging. They want us to provide recycled content and polyester textiles. And so we've got brands as well as countries highly engaged, and we've been working with them very successfully for the last year about building additional projects, and we're making very good progress on 2 additional projects. One in Europe, and 1 additional plant here in North America. And we're really excited about this, because it's a way to scale up and solve this problem and provide very attractive capital deployment and return on invested capital for our investors. But to be clear, and Brad will spend more time on this, we only do it if it meets our terms and conditions in the contracting model for the circular packaging and textiles, which is we have to have long-term offtake agreements with stable spreads, think cost pass-through contracts, secure feedstock, and then we will leverage our advantage, technology, our scale-up ability and our operations and construction ability to solve this problem for our brands. And when you put it all together, these investments represent potentially $450 million of additional EBITDA on top of our specialty strategy. So this is really exciting, and it's a serious capital deployment for us at very attractive ROICs. But that's not the end of it, right? The circular technology idea extends to our biopolymer stream, right? So we've been in biopolymers for the existence of Eastman, you can go back 100 years, to acetate film. And then we've developed all these specialty applications in AM, in AFP. in Fibers that are very high value, and they've been historically only sold on functionality. But today, they're actually sold with that in mind, but on the sustainability drivers, right? We've had a polymer that is 60% bio content from sustainably-grown force, and it's been biodegradable for a long time. But now, that's really interesting and important in many applications. And with the second molecular recycling technology here, which we call the carbon renewal technology, we can replace the fossil fuels with waste plastic and we can use any waste plastic except PVC as feedstock, so it gives us very robust capability in managing the total waste stream. And add, now, the acetic anhydride being made from waste plastic instead of fossil fuels. It's a very compelling set of opportunities and new applications that you'll hear about today, and this is another $200 million plus of EBITDA potential on top of the polyester, on top of the specialty growth. So the third element is execution. And we continue to invest both in our growth execution and our ability to translate that to value, to the bottom line and optimizing our cost structure. We're very proud of the fact that we're a very low-cost company, and we're constantly driving to be efficient. And we do that to fund growth, as well as make sure we're translating value to our owners. And the execution really falls into sort of 2 main columns. The first one is on the innovation side. We continue to invest and add around our R&D, our application development capability, our process improvement capability, and Steve will talk to you about that. In addition, we continue to improve our operating capability, right? We have functional excellence to make sure we're delivering products on time to our customers and making those products. We have functional excellence in making sure we do everything very low cost in a very disciplined and matrixed organization. And we are significantly improving our cost structure and operations. In addition to all this capability investment, there are digital tools being implemented to support and enhance this. We just completed a $30 million investment in our integrated business planning system to make us much more effective, both in cash management, as well as earnings. And our culture lays underneath all of this, that is probably the most important element of Eastman's success. We have a team culture of everyone coming together to see the company succeed no matter what. And that's been essential in fighting through all the chaos over the last 3 years. It's essential to keep growth programs going at the same time. And it's essential to what we're going to do in building this future. In addition to this, we're obviously focused on ESG like most companies. We have aggressive plans in place to manage our climate footprint, aggressive plans to improve the effectiveness of our organization every day, through D&I and having good strong governance. On the carbon side, we have a very detailed plan. Steve is going to provide lots of detail on that around how we're going to get our carbon footprint down between now and 2030, and the breakthrough technologies we're focusing on to get to a neutral position in 2050. But it does fall into these categories, as you expect, from energy efficiency to process improvements, to renewable energy and breakthrough technologies. D&I is also incredibly important to us. It's essential to how we win. When you think about a challenged labor market and a global strategy that's about innovation and all that connection that we have to have in the marketplace, we need teams that are very engaged, very effective every day. And if you're not getting the best out of your entire team, chances are not good. If you're not embracing the entire population to hire from, chances are not good. So we're very focused on improving our leadership with women in our organization, substantially increasing the participation in our organization from racially and diverse backgrounds. Making sure LGBTQ community feels that they are welcome and can be their authentic selves and how they create value for the company, and addressing any pay gaps we see across the demographics. And it's nice to have all these strategies. But in the chemical industry, we have metrics for everything, and you got to have metrics for this, too. So we have aggressive targets that we've laid out in our D&I report in April that our Board manages with me, the teams are held accountable for, and we'll have an annual public transparent report every year like our sustainability report about the progress that we're making. All this, as I said, translates to very significant and attractive cash and we're proud of what we've been able to do on that front. And as we look forward, the cash generation is going to accelerate. So roughly $5 billion of operating cash flow in the next 3 years, combined with -- we're finally done with delevering. And so, if we stay at a 2.5x EBITDA ratio, that provides another $1 billion of cash. And so, that $6 billion needs to be deployed in a disciplined manner, and it will be disciplined like it always has been across organic, M&A, returning cash to shareholders. And when you look at the history and how the future is going to be a bit different, what you can see is, about $1.4 billion of CapEx in the history, the last 3 years, $1 billion going to delevering. And the remainder going to shareholders and M&A, about $1.9 billion going to the shareholders. As we go forward, we're going to have more cash, $4.5 billion going to $6 billion. And the CapEx is going to increase, right? Now, the specialty CapEx is staying the same. It's always in that $500 million to $600 million range, which includes $300 million of maintenance. But when then, you add on the circular economy investments. You've got that first plant, including the new Tritan line, that adds up to roughly $2 billion, if you will, over the first 3 years. And then you've got $4 billion available for deployment. And even if we do these 2 additional plants, which would be, together, roughly $1.5 billion in cash to build them, you still have $2.5 billion left over for share repurchases and increasing dividend, returning cash to shareholders, or bolt-on M&A. So a very compelling cash story. We also wanted to take a moment to talk about sort of how we've stabilized our portfolio and how well we're performing. So as you all know, who know our history, we did a lot of portfolio change. We divested $3.5 billion of revenue in commodities leading up to 2012. Then we did a series of acquisitions from '12 to '14 of great specialty businesses, that was a huge structural upgrade to our portfolio. And then we had all this innovative growth going that created a lot of value. From that, there was great questions and excitement about that, but the big question we got from many of you in this room was, yes, great. But stress test, how are you can to hold up? Because that's the real test of the quality of a portfolio. Well, here's your answer: the EBITDA margins of Eastman are directly in line with the specialties. And those are who we view as our peers as we have been building our strategy and certainly, as we move forward, which is much more stable than some of the other commodity chemical companies in the industry. So we have shown, not just promised, but shown, we have a very stable portfolio. And that's because of these 4 reasons, right? We have innovation, allowing us to grow faster than the underlying markets. That mix improvement that I talked about, also improves your margins, not just the volume and asset utilization. And we've been exceptionally good at managing spreads over time in our specialty business, and doing an excellent job of that right now. And of course, there's always aggressive cost management, and Willie will tell you more about that, that also helps in stabilizing these spreads. So we're very proud of how we've actually proven this portfolio is quite stable. And so, when you think about this from a growth algorithm point of view, we had this algorithm up, more or less, in 2018. And even though we had a few derailments in the macro economy, this equation is still very much in place. It's going to be driving 8% to 12% growth next year and compound from there. And it starts with 2x the growth in the specialties, relative to the underlying markets through the innovation. It's then followed by that growth, combined with cost management, leading to improving EBITDA margins as we move to 23%. Of course, there's a lot of cash, roughly $1.6 billion a year and how this strategy can generate cash, and how we deploy that in organic, in M&A and in share repurchases. And you've seen already, a very large announcement last night and commitment of share repurchases that we will explain in a little bit more detail later on. So we're going to start out aggressively on that front. And this translates to an improving ROIC, which ultimately, is one of the key drivers to returns for shareholders in all these investments. These circular investments are particularly attractive on the ROIC front. So when you think about this in review, we have a very robust strategy and we have a long history to be proud of. The centennial, celebrated last year, virtually, unfortunately, was the start of how we got into this, of 100 years of world-class technology and innovation and growth and improving our portfolio -- last 10 years, dramatically improving our portfolio. The last 3 years, fighting through a lot of challenges and demonstrating the strength of our team to manage that chaos, the innovation to offset challenges and deliver solid and strong performance. And as we look forward, all those momentums will continue into delivering significant value going forward with these 5 themes on the left. So with that, I think it's a really exciting strategy. This is just the overview. We want Steve, Willie, Lucian and Brad to bring this to life, and how it really translates to value and the next level down. So with that, I'm going to hand it over to Steve.

Thank you, Mark, and good morning. So I'm very excited to have the opportunity to come and talk to you about the progress that we've made with both our sustainability and our innovation strategy. And more importantly, have the opportunity to talk to you about the great outcomes that are being driven by the talented Eastman team on a global basis. So Mark mentioned it, and you'll hear it through my conversation with Lucian and Brad as well. And that is the fact that the world's changed. There are significant sustainability-related issues that just no longer can be ignored, and they're creating substantial innovation drivers for Eastman. And what I hope to approve today is that our portfolio is inherently advantaged. Our technologies, our products and certainly, our asset base as we think about circularity. So, we're excited about the future in front of us. And going forward, our sustainability strategy and our innovation strategy has now become one and the same. And so, our ESG framework governs everything that we do, from how we innovate, to how we operate and to how we come together as a diverse and inclusive global Eastman team to provide practical solutions. So Mark hit the innovation-driven growth model. We've spoken about it extensively and consistently for several years. It's not changed. The one thing that has occurred is our teams have gotten better and better at going out and relentlessly engaging the market, understanding what are those macro drivers, those innovation drivers. And also, understanding where does that intersect with our world-class technology platforms. And where that occurs, we've now completed the build-out of what we call differentiated application development, and that has really unlocked our innovation potential. And it's also improved dramatically our ability to execute. So, the model has not changed. But what has changed, as Mark covered, is the fact that the innovation drivers are much stronger. So let's break that down. That's happened because the global society has continued to grow. As it grew, energy consumption goes up, with that energy consumption going up, we now face a significant climate issue. And you're seeing it in every market, in every industry, the discussion around decarbonization, certainly true in automotive, certainly true in building and construction that relates directly back to us. On top of that, we have another issue, which is our overall economy is a linear economy. So we go out and get our nonrenewables. We bring them in, make products, use them and then we discard them. That is not a sustainable solution. Circularity is a must and it's going to have to be closed. And we've got to do both, as Mark said, while we continue to actually care for society, because no one should have to compromise as we go through this process. So if you look at our top 10 corporate growth platforms, this emergence or acceleration of the overall market drivers has actually focused us. So there's 3 critical impact areas. Mark called it the triple challenge, which is, how do you solve for climate, how do you provide circularity and why do you do -- how do you do it, why you still care for society. And if you look across these platforms and look at those 3 areas, we are now 100% aligned. So this is not a new concept for Eastman. We've always aligned our portfolio with innovation drivers. And if you look at the track record, we are on track, and we are delivering new business from the innovation and from the launches that we talked about back in 2018. The one thing that I will say is, that acceleration in the drivers is doing a couple of things: one, it's actually expanding our addressable market, and it's also accelerating the launch pace of those new products that we have just put into the market themselves. And that's happening in several different places. So in the plastic arena, there is a big push around product safety, around green chemistry, and our copolyesters are just preferred. Inside of our interlayers business, the innovations that we've had around acoustic, heads-up to play -- heads-up display, and solar is actually helping the transition to EV and driving the climate improvements. And then, the circular technologies that Mark just talked about, we now have recycled content in products, not just in Advanced Materials, but in Additives & Functional Products, and also in textiles. And so, we're on track to deliver new business revenue that is going to approach $700 million by 2024. So the portfolio, very much on track. So I talked about improving our execution and the fact that application development has unlocked that capability, so let me define it for just a second. So your application capability is really just your ability to understand how your product performs down the channel all the way at the consumer where the value is ultimately created. So in interlayers, our team can take our PVB resin, extrude it into a film, just like what we do in our commercial plants. We can then take that film, laminate it into a windshield at the same specification as our customer. And then we can also test, just like an OEM would, around acoustic properties, the solar blocking. And their optical physicists can also modify the film to get to the really sophisticated heads-up display. So how does that help us? It first helps us accelerate how we innovate with our customer, because we can now run in parallel. And then we can -- bring together prototypes that we can go to the OEM and actually create collaboration down the value chain. And probably, most important, it also tells us what is the value that we're creating inside of the channel. And so through our journey, we looked at the macro trends and as we looked at our world-class technology platforms, we have chosen strategically 6 areas to build out deep application development competence. And through this journey, we have more than doubled the scientists and engineers that are now sitting inside of our application development labs. And we did it in a way where we now have thousands of years of experience inside the specific strategic industries that we're interested in. So that has been a massive capability build for our organization. And we've also brought with it the equipment. Many of you have seen it, who just visited Eastman, to do the prototyping. And so we have multiple labs in the U.S., in Europe, as well as in Asia Pacific. So, I'm going to bring the model together by leveraging our cellulosic stream and how it's being reinvented. So Mark talked about that we've had this technology inside of our portfolio for more than 100 years. We've always sold just on functionality. But the sustainability profile of this technology has changed the game completely in terms of entitlement. So the polymer has always been bio-based, 60% content from wood pulp that's sustainably forced. But when we commercialized the carbon renewal technology, the other part of the molecule is now made up of waste plastic, waste plastic that would have either been incinerated or went into landfill. So 60% bio-based, 40% waste plastic, there is no better beginning-of-life story. From an end-of-life perspective, this same cellulosic biopolymer has always been biodegradable. But today, we have biodegradation certifications, both in water and in soil. And our application competency has allowed us to build formulations where we can now make articles that actually compost, both in home composting as well as industrial composting. And then the data on the right is the data that I'm most excited about. It just came out the last couple of weeks ago. So it's an oceanographic or an ocean biodegradation study, done by Woods Hole Oceanographic Institute, which they are the world leaders. And basically, they took several polymer families and they made articles, either films or fabrics. And then they basically study biodegradation over time. So the data on the very bottom is actually our textile's Naia fabrics, and you'll see that the fabric actually biodegraded in less than 13 weeks. I mean, that is phenomenal and actually, very similar to the same cotton fabric that was tested by Woods Hole in the exact same environment. So, great outcome, but that's not what we're excited about. The reason we're excited about it is, as you would expect from a great research institution like Woods Hole, they also fundamentally explained the mechanism for both the disintegration and the biodegradation through a natural enzymatic process in great detail. And so, that translates into the fact that our Naia fibers will not persist as a microplastic. And so that is a game changer for this platform overall. So how do we leverage that through our application competency? So we've talked for the last couple of 3 years about building that out inside of textiles. So, inside the textiles industry, that is an industry that is very, very focused on sustainability. They care about beginning-of-life. They care about end-of-life. They want recycled content. We can now give them all the 3. But what's more important than that, and what my team often says is, that's great, but the fabrics have to perform. But as we build out our application competency, working with our market development team, working with our customer base, we now have a slate of fabrics that are very unique. They're very luxurious in terms of how they actually look. They have ease of care through some of the modifications that we've made, yet they have extreme comfort like a natural. And so that's opening up segments. Especially if you think about the fashion area and the comfort area inside of womenswear. And so the platform is gaining momentum. We actually grew variable margin by more than 40% from 2018 through 2021, and that was through the COVID period. And now, this platform is at scale. So the growth of Naia is now actually outpacing the decline that we have in tow, which was the strategic imperative of this program since the very beginning. But if you say, okay, if you know the inherent capability of the technology and you know the macro trends, where else can this be leveraged? And so a coworker of mine who leads, actually, our corporate innovation group, is going to give you her version of how we can take advantage of this platform to actually make the world a better place. [Presentation]

Okay. So great video by Shelley and the team. And you can imagine that type of opportunity to drive change really excites the Eastman employees and rallies them around our innovation model. So, let me bring this entire model to life. So, world-class technology platform, textiles industry with a great significant macro drivers, especially in the sustainability space. So we're able to leverage our application competency in textiles to pull those solutions through. Except, we're not done. Everything that, that team learned along the journey around biodegradation, we then translated into our care additives application platform. And so inside of that segment, especially in cosmetics, there's a significant microplastic issue, with regulation soon coming, and Lucian will tell you about the way we've been able to formulate products to actually solve that problem. We also translate it into our engineering thermoplastics application platform as a model, right? So we're now leveraging across the different application areas that we have. And that's what allowed, very quickly, our team to actually formulate a set of materials that will compost, home and industrial. And so we've now launched in food service, because they've got a significant issue around food waste, food waste that goes into landfill. Landfill is unmanaged, creates methane and everybody reads every day about methane and the overall relationship with greenhouse gas. And so, when you look at a platform like that, that biodegrades, it's extremely tunable. If you think about controlled release, you can imagine where we're going with the platform, overall. So we certainly expect high growth here, generating greater than $200 million of EBITDA by 2027 and accelerating and reinventing and resetting the life cycle of a world-class technology platform. So let me talk about -- we use the term world-class technology platform a lot, so let me kind of bring it to life in terms of what it is. So at Eastman, with our technologies, we're looking for 3 things. We want our technologies to be able to solve problems in multiple markets so that we can leverage our model. And we just provided an example of that in cellulosics. But we also want our technologies to be tunable and control functionality so we can create differentiated value. It also allows us to build robust multigenerational technology plans, and that's important, because it allows us to be predictable in terms of the value creation around our R&D investments overall. But we really like it when we can start blending technologies across our streams. So if you look at our cellulosic stream and you look at our copolyester stream, both have scale, just in terms of overall volume, which gives us a great cost position. But they're both also integrated with other streams inside of Eastman. And so for example, in our say cellulosic stream, it's not just the cellulosic stream itself, we actually pull from acetyl, we pull from oxo and we pull from olefin, and that gives us a very unique set of combination of chemistries, where we can quickly customize products and fragment our product portfolio, and do it at a scale that provides a cost position that cannot be replicated. So that is the way we leverage integration across the streams themselves. And that creates superior value. As Mark mentioned, the variable margin, where we combine -- can combine multiple technology platforms, we actually have variable margins that are 2x where we have technologies or products that come off single platforms. The good news is, we do it in several places. We do it across all of our cellulose ester product lines, all of copolyesters. We also do it in our specialty ketones, which is sold through our coatings segment. We do it in our interlayers, through our PVB stream, and we also do it in performance films. So the list just goes on and on. But when it comes to circularity, which I want to take a deeper dive in, it's actually our vertical integration that has provided the advantage. And so there's a lot of discussion around circularity in the press today and a lot of companies participate. The one thing that's unique about Eastman is we're a specialty materials company who basically compete on functionality and performance, except for integrated all the way back to fossil feedstock. And so why that's critical is when we go out and get waste plastic and replace that fossil feedstock, the monomers that we make from that waste plastic is actually the monomers that we need to actually grow our specialty businesses, which give us a unique asset advantage overall. So let's talk about circularity and the problem that we're trying to solve, and this is McKinsey data. So on an annual basis, globally, there's 260 million metric tons of plastics that gets disposed of. So think of that number, that's a tremendous number. There's 16% of it that gets collected for recycle. And that's only recycled through mechanical recycling, because that's the only recycling technology that's scaled today. Unfortunately, 40% gets landfilled. And on a global basis, 25% gets incinerated, and the number that's probably most concerning is there's 20% that's unmanaged. So the problem, absolutely, has to be solved. And so you'll often hear people say, well, we just need to ban plastics, except that is not the right answer. So at Eastman, we believe in reduce any place where you can that doesn't harm quality of life, and reuse. And if you think about Tritan hydration bottles through Nalgene and CamelBak, that actually go into a durable application replacing single-use plastic. That's a great example of reuse, right? But you also will have to recycle. And that's a key point that I want to make here, and that is Eastman fully believes that solving the waste plastic issue should not hurt climate. And so the data on the left is data that our team pulled, that's third party, where we basically looked at energy intensity, right? And in the given application, we compare PET to aluminum to glass. And PET grossly outperformed. Aluminum being 2x the overall energy intensity, glass being 4x. And we went and got this data without renewables. So you may ask, why do you look at it without renewables? We look at it without renewables because, as we decarbonize and as the industry decarbonize, everyone is going to be trying to leverage solar, wind, clean hydrogen, there is going to be a limit on how much renewable energy is out there. We, as a society, is going to have to allocate that renewable energy to the most energy-efficient processes and get more sophisticated as we look across the entire ecosystem. The data on the right just basically shows the power of recycled content. And so the recycled content in glass lowers its greenhouse gas footprint, so does that occur in aluminum. But if you look at PET, and this is an Eastman estimate, if you could actually combine molecular recycling with mechanical recycling, you can get the recycling rates much higher. At this data point, at just 50%, there is a tremendous impact on the overall greenhouse gas footprint of PET overall. So we need to bring molecular recycling into the mix. Okay. So, why is it that mechanical recycling actually needs a complementary technology? So first and foremost, mechanical recycling is a great process that should be used everywhere it can be used, because it has a low carbon footprint, but it has limitations. Mechanical recycling can only take the cleanest and clearest of waste plastic back. So for PET, think bottle to bottle. Except, when you go bottle to bottle, in a lot of cases, it doesn't actually go back to the bottle. In a lot of cases, it actually gets downcycled into strapping, park benches, other materials, and there's a fundamental reason for that. And that is, when you look at mechanical recycling and you bring a polymer back through it, the polymer actually degrades. And so, as it degrades, you have a couple of issues. One is you can only -- if you basically close that entire bottle-to-bottle loop, there would be a certain amount of that polymer that would have to be purged and you got to bring fresh material in. The other limitation is, there's a material out there that's just hard to recycle waste plastic. So think of multilayer or materials that have colorants or additives, that has no outlet today. And so you need a complementary technology that comes in and partners with mechanical recycling to close the entire loop. And that technology needs to be able to take the hard to recycle waste plastic, and it needs to be able to turn it into materials that have no compromise in quality, okay? And it also needs to do it at a lower greenhouse gas footprint than the heritage processes. That's the way we'll solve the waste plastic issue and the climate issue simultaneously. Okay. So many people say, well, that's not possible. Except, the reality is, it is very possible, because if you look at molecular recycling processes, they have a head start. They start with waste plastic as a raw material. They don't go all the way back to fossil feedstocks. And so if you look at the 2 Eastman technologies, the CRT and PRT, Mark shared with you CRT's carbon footprint, at the monomer levels, 20% to 50% lower. And with methanolysis, 20% to 30% lower. But methanolysis is even more unique than that, because methanolysis is the polyester family of polymers, and they quickly and simply unzip back to DMT and EG, which is basically the monomers that Eastman use today. So they don't fragment back into small molecules that you then have to go refine and clean up and bring back through the process. And the reason that's important, the fact that they go directly back to the monomer means that all those processes before it, which there's 10 unit ops, get eliminated. And all the energy that you would have to use to clean up gets eliminated as well as the emissions. And that's what makes the environmental footprint of methanolysis specifically unique to any other molecular recycling technology that's out there. Okay. So I just made molecular recycling seem easy, right? I'm now going to tell you why Eastman is competitively advantaged. Any molecular recycling technology that gets commercialized, society ought to make sure that they're only getting -- they're only taking the hard to recycle waste plastic. We want the mechanical recyclers to do what they do, and we want to complement them. If that occurs, what it means is that your feedstock is going to be very variable. It's going to have multiple polymer families, it's going to have different additives, which means the overall process of how you depolymerize the polyester and then purify it becomes the critical 2 steps. Okay. So Eastman is advantaged because we've actually done this for 30 years. As we partnered with Kodak, Kodak started out with a process where they went out and got X-ray film, brought it in, did methanolysis to depolymerize it to get back to the PET substrate, but they did it because there were precious metals on that x-ray film. And so, what they were focused on was how can I, at really high efficiencies, get that precious metal off but also keep the quality of the DMT and EG such that I can build it back into the X-ray film, which is an optical application where clarity is critical. So, 30 years of focusing on how do I depolymerize so that I can efficiently purify and get to a polymer that has no compromise in quality overall. So that is our heritage. There's also another reason, which is 70 years, Eastman has been into, what I will call, the integrated polyester manufacturing area. So we don't -- back when we led the industry from a PET perspective, we didn't just make PET, we were -- paraxylene, all the way through the intermediates, all the purification of 70 years of process chemistry and research to build out that competency, and it has been one of our top competencies in the company. All the way up, including today, because of our copolyester line. So long history inside of intermediates and PET itself. And then, there is the 100 years. As Mark mentioned, we celebrated our centennial last year. And I would argue and I may be a little bit biased, but Eastman's history is one of -- we are one of the world's best at developing processed chemistry, and scaling it and industrializing it at the commercial level. So we're not a start-up, right? We have that capability. So our first plant has been built in Kingsport, Tennessee, about 500 yards from our corporate R&D organization. Mechanical complete in 2022, we'll start up in 2023. When we go into startup, we will leverage the full scale of Eastman's process chemistry and process engineering to bring it to commercial success and carry forward that learnings into the other projects as well. Okay. So I hit competitive advantage as it relates to the environmental impact of methanolysis to the advantages from a technology and operations side. Brad will give you great detail on what's going on, on the commercial front. What I will say, is the need here is phenomenally strong. I mean, the brands are just like us. They're very sustainability-oriented. They are absolutely focused on really aspirational commitments around recycled content, but they need security of supply to make that come through, and they need it to be a drop-in replacement so they don't have to change their entire value chain. And they also need it to be a type of technology where there's no compromise in the overall performance of the end-use polymer. So, as you can probably tell, we're very excited about what's in front of us and our innovation opportunity, and we are excited about -- we know we can actually build a better world through how we innovate. But it's also important in terms of how we operate as a company as well. And so Mark talked to you about our focus on inclusion and diversity. So our sustainability strategy follows the same model as our innovation strategy. So that's in what we consider to be caring for society. It's very important that we create a culture in our company, where our team members show up every day, be them full selves and do their best work to drive the strategy forward. We also talked about circularity, and Brad will continue it. If you look at our sustainability report, you'll see that we had some aggressive goals of basically recycling 250 million pounds of waste plastic by 2025, 500 million pounds by 2030. As Brad talks about the additional projects, you can expect those numbers are going to go substantially up. I mean, they may even double over a specific time frame depending on the pace of the programs themselves. Okay. So, I do want to hit climate. So we also said that we're committed to carbon neutrality by 2050, but Eastman is not just starting today. We have had energy reduction programs in place for the past decade. And if you go back to 2008, and look at our performance through 2020, while we've grown the company, we've actually already reduced our absolute Scope 1, Scope 2 greenhouse gas emissions by 20%. Very few companies can say that across that time frame. So we have momentum. We not only set the 2050 carbon neutrality goal, but we also were very aggressive in the short term. So, carbon neutrality from 2020 to 2050, but we want to be 1/3 of the way there by the time that we get to 2030. And so our climate group -- our climate operating group inside the company has a very detailed plan that they're working today, and they're pulling multiple levers. The first thing that we're doing is we're working very hard to convert all of our steam boilers to less carbon-intensive fuel sources. If you look from 2015 to 2020, we actually reduced our dependency on coal by more than 50%. Now if you look across the entire corporation at our energy mix, it's less than 20%. And we're fully committed to getting -- or completing all of those transitions. We've also leveraged digital quite extensively. So we have integrated heat and power at our 2 largest sites where we make our own steam and electricity. They're already 40% more efficient than if you bought steam and electricity over the fence. But we're now using digital tools and digital modeling to further optimize those individual systems. That's dramatically impacting our greenhouse gas footprint, but also our cost structure. And we're not only doing it at that level, but we're doing it at the unit op level. So even areas like inside of distillation, we now have the ability, from a digital perspective, for our operations team to see their carbon impact, if you will, moment by moment as they operate. So that's not only driving efficiency. It's also driving the culture of decarbonization across the entire company. You can expect in 2022, we'll come out with some really aggressive goals around renewables and how we plan to leverage that across the Eastman fleet of sites. And for sure, we're going to continue to be investing in the molecular recycling technologies, and that helps us both ways: both Scope 1 and 2, but also Scope 3, because we're actually replacing fossil feedstock directly. When it comes to Scope 3, our team is working really hard right now to quantify the entire scope of what we would consider to be our Scope 3 accountability. We're not waiting on that qualification. We're actually working now with our suppliers and customers to decarbonize our entire value chain. And we're very committed to working with the industry to set up industry-wide framework that will provide transparency and hopefully, a simple method for both measuring and quantifying our Scope 3, as we set targets and drive them down. So everything we just talked about in the first 10 years, we feel very good about. We have a road map. It's very detailed. It's Board-governed. Our environmental sustainability and safety committee at our Board basically reviews progress. Actually, in 2021, they reviewed twice within the year. And so, that level of accountability is being driven down through our teams, but also at our management team as well. But 2050 is not that far away. And so carbon neutrality for our industry is going to mean we're going to have to bring on emerging technologies. And so we have working teams now that's out looking at technology readiness, also looking at how those emerging technologies would actually integrate into the Eastman system. We guarantee that carbon recovery is going to be a key part of our journey, as well as electrification, but only electrification where it makes sense and it can actually be efficient as we talked about earlier. And hydrogen, because of the nature of our assets, will certainly be a part of our solution set. So work to do here. No company is going to solve these issues completely on our own. So we're partnering aggressively with our trade groups, with our university network and with our overall national labs. So we're both excited and very proud of what the Eastman team has accomplished, and we're excited about the future. And as Mark called out, we're being noticed. So with that, I'll turn it over to Brad to talk about AM.

Good morning. So very excited to be with you this morning. I hope you're excited about what you've heard from Mark and Steve. I mean, tremendous momentum on our innovation programs, great progress on building capabilities across the company. And as you just saw, truly a transformation of our position in the industry. I joined this company 20 years ago, and I would never imagine we could put up a slide like what Steve just put up. I certainly wouldn't have dreamed that we would be on the list of the top 50 companies changing the world, and the only materials company. So as Steve just said, we're all incredibly proud of what we've accomplished, but we're even more excited about the future. So what I'm going to tell you over the next 35 minutes is how we're going to translate that momentum into industry-leading earnings growth in AM. And so what I want to do is start by giving you a bit of an understanding of our foundation for success. Really, 2 simple things: the strength of our portfolio and the power of our innovation-driven growth model. I'll spend some time then talking about how we're evolving both, but mainly, I want to spend the bulk of our time bringing to life some examples. You've heard a lot about the technologies. I'm going to show you how that comes to fruition in the market. And then finally, I'll wrap up with giving a line of sight to how that turns into industry-leading earnings growth in this segment. And then very excited to spend some time on what Mark talked about, the opportunity beyond '24 to really scale up our circular platform and deliver $450 million plus in EBITDA. So a lot to talk about. Let me start by giving you a bit of a profile of the business, very appropriate given what I just said on earnings, to start with the bar chart you see here on the screen. Truly exceptional performance from 2012 to 2018. If I think about 16% compounded annual growth in that long a time period, that's really unparalleled in our space. But I would argue that, that next set of bars is equally impressive. 8% to 10% growth during the time period that we've been, trade war, unprecedented supply chain issues, global pandemic, and then put on top of that, what you see in the upper left-hand side of that slide, 1/3 of our revenue is coming from transportation. So we truly have had to create our own growth in this segment during that time period. So you asked, how did we do that? Well, when you think about the reverse market footprint, what it gives us the opportunity to do is go out and identify the applications that are poised for disruption, poised for exceptional growth. And so then we leveraged that portfolio of specialty films and specialty plastics to deliver strong, compelling material solutions to those unmet needs. Now one of the important things to note about this set of businesses that's common across all of them is we truly are delivering a material solution. In the performance films business, we put our product in the box and ship it directly to a dealer, it then goes to the consumer. But even in the films business and the plastics business, although we're selling through a converter, it's a fairly simple conversion step. So it could be a glass laminator, taking our film, laminating glass around it or in plastics and injection molder. So why is that important? Well, it gives us a high degree of control over the functionality that we delivered. Equally important, it's how you get paid for innovation. So I feel very good about this as a starting point. You've already heard we feel exceptionally good about our innovation-driven growth model. You've heard both Mark and Steve define it. So I'm not going to try and define it again for you, but what I want to do is call out a few unique things in AM. The first is this model always starts and gets its foundation from having world-class positions. And we truly have that across our technologies, true global leadership in polyesters, PVB films, in our cellulosic biopolymers and across the board on our premium auto window films and paint protection. Now as we've already established this morning, that's insufficient to create superior value. So you move over to that right-hand side, as you heard from Mark, and that's where everything starts in terms of how we connect those platforms to the end markets. One thing that's very different about our business than most material businesses, is we deploy over 50% of our external facing resources all the way at the end of the chain, so either at leading brands or OEMs. Now what that gives us is really what you see down at the bottom, the ability to find that intersection between applications and customers that can fuel growth greater than 2x in the underlying market. And then, as you heard from Steve, and I think Mark called it the secret sauce, what's in the middle. That allows us to take those platforms, fine-tune them, tweak them to deliver on those unmet needs, and equally important, demonstrate the benefits in use and be able to defend the value that ultimately ends up in a 3x premium relative to our standard products. So truly a strong foundation for success between those 2. And throughout the rest of my conversation, you're not going to hear us make any shifts in that strategy. Instead, what you're going to hear us do is continue to evolve that. And that is, in fact, what we've done since 2018. I won't go back over the earnings growth, I've already made that pitch. What I do want to talk about is that next bullet. I said creating our own growth, here's the evidence of what that looks like. Those are our top 3 markets. I think all of you are well aware of what transportation looks like during that time period, down 15%, 20%, you could pick your number. We're up 10%. And note, this is volume and mix. So there's no price impact in there. That truly is creating your own growth. The same is true in durable and electronics. And even though B&C may not look as impressive, I'll take 200 basis points over the market anytime when it comes to growth. You compound that out, it makes a big difference. So I said evolving that model is important. So one of the key things is how do we build new platforms. You've already heard what we're doing in the way of circularity, truly a leadership position that we're building in the circular platform. Also, I think most speakers touched on digital services. We're doing a lot of things to wrap services around our products. But increasingly, we're doing that both via organic efforts, but increasingly, also using bolt-on. So very happy with what we've been able to do in the performance films arena with a recent acquisition, and I'll show you -- bring that to life in a few slides. And then finally, in the past, when I've had discussions with a lot of you, people say, well, is your premium products really a big part of your portfolio? Very pleased with -- to share today that, that has now become 40% of our revenue in this segment. Equally pleased to share that, despite all the chaos in the external world, we've been able to successfully execute capacity additions to make sure that we can sustain that double-digit growth in this portfolio over the next several years. So in a great position. And the reason I'm very pleased to say that, is this is the kind of growth we've been delivering. Just wanted to bring it to life with 3 premium products. If you take a look at paint protection film, almost doubled the business in a 3-year time period. Tritan, all of you know, we're growing from a very big base. We've grown by more than 50% in this 3-year time period. And then in the middle, our head-up display, 20% plus growth at a time period when the markets are down. So very strong portfolio, very powerful, innovation-driven growth model, lots of momentum. I want to now shift to talk about how we are going to sustain and accelerate that momentum going forward. And I'm going to do that by sharing some examples. I want to start, and you'll see every one of these examples, start with a category that's poised for disruption or some significant compelling unmet needs that we think we can fuel growth off of. So paint protection is certainly one of those categories. When you look at what the drivers are for paint protection and the growth we're seeing, it really starts with 3 key trends: first, people are owning their cars longer; second, they're increasingly spending more on the vehicle; and then third, they're very interested in driving down maintenance costs, and so in this instance, how do I avoid refinish? What that then turns into, is increasing adoption. First, we've gone from just being used on premium vehicles to increasingly being used across a broad make of models. In fact, last year, our most filmed vehicle was the Toyota. That was quickly followed by Tesla. So very much a mainstreaming of this product line. The other thing that's happened is, as that mainstreaming occurred initially, it was primarily on the front bumper or the side mirrors. Today, you now see us across the hood, front quarter panels, really anywhere you can think of durability issues. Finally, it's a category that's gone from being very North American to truly a global category. And you can see that in these percentages of growth. Obviously, still good growth in North America, but exceptional growth in Europe and Asia as adoption occurs there. So a strong position from a category standpoint. But the real question always is, how are we positioned to capitalize on that? And so here's where I want to show you the innovation-driven growth model kind of in action in the marketplace. And here, we truly check all 3 boxes. Steve talked about having technologies that cut across the company. This is a great example. Our Gen 3 coating is up there on the left-hand side. You see an OEM paint on the right-hand side. You can see muddy water has been splashed on there. What you see with our coating is hydrophobicity. Now what's -- and so you see that water beading up. What does that mean from a car owner? It means you don't have to watch your cars often. Now how we delivered that technology innovation is that is our Tetrashield coating from our coatings business, and it's underpinned by the TMCD monomer that actually is in Tritan. So just a great example of the integration that Steve had touched on a few minutes ago. In the middle, you see our digital services were wrapped around it. In the video, you saw Julie talk a little bit about that. Here, what we basically have is a software program that houses all the patterns that you have out there on vehicles. And so when a car comes into a dealer, they can scan them in, that then sends a pattern to their digital printer, prints out the pattern, the installer can take it, put it on with very limited cutting. And so that's always been a winning value proposition for our customer base. But you can imagine, in today's constrained labor market, an even stronger value proposition. Finally, we've got a team of professionals out in the marketplace that truly are obsessed on winning with the customer and helping them win in the market. And that's always an ingredient for success. But here, we're selling to family businesses, small to medium-sized businesses. So if you can help put more money in their pocket, you drive loyalty up in a very big way. And that's what you see in this particular instance. We have a 3x preference using Net Promoter Score to the next best brand in the marketplace. So truly a strong position and gives me the confidence of what you see on the top, that we're positioned to grow more than 3x the underlying mark. And again, automotives have pretty good growth rates going forward. So I want to pivot now and I'll switch over to interlayers, and here's another category ripe for transformation. I don't think I have to make a pitch about what you see happening in electric vehicles. Certainly a lot of growth, but that's not what our growth equation really emanates from. What we have here is the opportunity for a lot more laminated glass to be used in this market. So 3.5x more glass on an average EV than a standard vehicle. Now that may not be obvious as to why that would be the case. But if you think about it, when you're in an electric vehicle, the way it's designed, both the driver and the passenger are sitting up very high. So the design engineers want to create a feeling of space. That starts with having a very large sunroof, actually 50% larger than what you'd see on a windscreen. Also, larger front-windscreens. And then finally, more laminated glass used on the side windows. So 3.5x the square footage of laminate glass. And then equally important, the opportunity to impart a lot more functionality into that. So you can imagine, most of the buyers of these vehicles are very technology savvy individuals. So more head-up display. Second, a lot more glazing here. So you can imagine solar control becomes very important in any vehicle in that situation. But given that these are EVs, obviously, you want to reduce the air conditioner load. So solar management becomes even more important. And then finally, I touched on the importance of acoustics, again, with no engine noise, very important to control the cabin environment. So instead of me telling you about how we win in this marketplace, I want to use a little video as well, introduce you to Travis Smith, who's here in the room, our division President. He'll share a little bit of his passion for EV and more importantly, kind of how our teams are winning in the marketplace. [Presentation]

So, certainly, you see all that innovation driving a lot of new complex problems. But what you also see is the investments we've made in application development are giving us a differentiated capability to solve those problems. That's getting recognized by the brands downstream, the OEMs, you can see that in this quote, but perhaps more evidence of that, is the win rate you see below it. Last year, at a time when we're already winning a lot in this business, by the evidence I showed you on the outgrowing the market, 25% of our wins were actually in the EV segment. So here, again, very well positioned to outgrow the market, we would estimate about 2x the underlying market in interlayers. So I want to pivot again from the films area and talk about a whole industry that is poised for disruption. You've already heard about this from both Mark and Steve. But when you think about the plastics industry, it truly will have to transform over the next 10 years, and it has to happen now. Plastic waste crisis, the climate crisis we're facing around the globe, it's causing consumers demand very different things from the brands. And the brands are stepping up with very bold commitments on recycled content. What you see on this page is data from the Ellen MacArthur Foundation, EMF, I'll refer to it throughout the presentation, leading NGO. These are just the commitments these brands have made to have a minimum of 25% recycled content, as much as 50% recycled content by 2025. Those commitments, in fact, increase over time and, in some instances, go up to 100% by 2030. So what does that mean? Well, a true step change in the polyester space. When you think about what's going to have to happen to deliver on that, you need 950 KMT of additional supply in Europe just to serve that, 50% more in North America than that. So incredibly large amount of supply needs to come online by 2030 to have a chance to deliver on those expectations. Now Steve already touched on the only commercially available technology to do that today is mechanical recycle content. And so what you already see happening in Europe where the move has already shifted over time or has been a little bit more at work in terms of the adoption, you see a supply-demand imbalance occurring and you see these premiums developing. So if you look at the data on the left-hand side of that chart, you see that recycled content from mechanical is commanding a 40% to 50% premium. And we're far from the 25% commitment levels I just talked about. I'd say, the industry is about 4% to 5%. So what's going to have to happen to solve that? That's what Steve talked about: innovation in molecular recycling. And I'm very pleased with where we sit today to play a leadership role in making that happen. That starts with the announcement we've previously made around building the world's largest polyester recycling facility. Again, if you're not familiar with it, I'll just hit a few key facts. Most important, we start with 110,000 tons of hard-to-recycle plastics. So we're not going after mechanical grade or the model grade. We're going after the stuff that doesn't traditionally have any value. We're then using our very innovative technology to unzip that waste into its basic intermediates, then using our polymer plants to rebuild that up into food-grade, medical-grade polymers. And that turns into 150,000 to 200,000 tons of polymer. Now what we can do with that in the marketplace is really 3 things: much further penetrate our markets; two, value up our overall business; and three, we're seeing some exciting opportunities to get into completely new markets. Now I want to hit a few things -- a few other things. You already heard some of this from Mark and Steve, but just want to highlight that the great growth that I showed earlier on Tritan, that 50% growth, has allowed us to pull forward our investment on the next Tritan line. So today, we're announcing the addition of 80,000 tons of Tritan capacity. That will be online by 2023. The second thing is, I want to reiterate our commitment to having this plant mechanically complete by the end of the next year, and then it will be operational in 2023. And finally, as we touched on earlier, very large investment, but very attractive returns. So I feel very good about our position to lead the industry and show what is possible. I do want to take a minute to highlight where we're at on feedstock. Again, as we've touched on, there's a lot of waste out there. And so when it comes to the polyester side, 9 billion kg. So, we're not really in need of a lot of this. It hasn't historically been developed because there wasn't value for it. So our strategy is really to use the technology that Steve talked about. Two key things to remember: our unique ability to depolymerize, and our unique ability to purify. Now what that allows us to do is then go out and see -- do what we have in the bottom there, create completely new streams. We're then able to turn those into partnerships. A great example of that is what we've done with circular polymers. We went out to help them show the value of what you could get out of carpet and we turned that into a partnership where that carpet's now come to the front of the plant and turning into, again, medical-grade, food-grade product. Today, we went through the qualification process with some 125 suppliers. Very pleased to share that we've got over 50% of our annual requirement covered. We'll push that number up some, as we get closer to startup, but you won't ever expect us to get close to 100%. Because this is all about managing that mix to make sure we have the most advantaged feedstock. And we've got the technology to do that. So I want to leave you with we're in a good position on the feedstock side. Customers, equally strong position here. If you would have told me we would have the breadth and depth of brands that are listed on this slide 12 months before we actually start up, I would have never thought that would be possible. It's very hard in our industry to get brands to allow you to attach our name or a supplier's name to them. To do this 12 months before startup is a terrific indicator of the strength of our value proposition. So let me show you some examples of why brands are willing to do that. I think cosmetics is perhaps one of the best places to start as it really gives you an idea of the breadth of the products we can bring to the market. What you see across here is a variety of polyester polymers. What's important to know about those is we can tune them from anywhere from 25% to 50% to 100% recycled content. As Steve touched on before, they're drop-ins. So really no specification work. No processing work needed on their part. And then finally, no compromise in performance, and that's exceptionally important. I put this up here because you can imagine that level of clarity, that level of mechanical property, very hard to do with mechanical recycling, arguably not possible to be done. So, when you add all those together, I feel very confident in our ability to grow 4x the underlying market in cosmetics. Again cosmetics is a good starting point in terms of growth, always GDP plus. So an example on how we go after existing markets. We've got a lot of other existing market, examples I could share, but I wanted to take an opportunity to talk about new markets and how this is creating access to markets we hadn't seen and partnerships we would have never thought. And again, for this, I want to take an opportunity to introduce you, via video, to Scott Ballard, our Division President for this area. He's in the room, and I'll turn it over here. [Presentation]

So in that video, you could see that somebody like Black & Decker is looking for both a corporate partner that has a strong track record on sustainability, but also an offering that actually meets their requirements. We're finding more and more of those opportunities in new markets, very exciting. I want to show you how we take an alpha customer relationship like that and show you how we transform a whole category. And so on the next slide, here, I wanted to talk about phone cases. This is an example or a growth story that started with Verizon deciding to make a different move in their phone case category. They decided to go with selling 50% of their phone cases with recycled content. We then forged a partnership with Lander, very similar to what we just did with Black & Decker, developed and launched a new product using Tritan Renew 50% recycled content. What you can see happened after that, is with the success in the market, the share they gained, broad adoption across the rest of the players in the category in '21, and now even new innovation programs scaling up in 2022. So truly a flywheel. And I share this, because this is a good testament to the market and application development expertise and capabilities we've built over many, many years. This is actually what's allowed us to build Tritan into a $500 million-plus business. So a great testament to our execution capabilities, gives me great confidence in our ability to seize these opportunities that are coming our way in new markets. So giving you a lot of examples. I now want to elevate back and say, well, what does that mean at the Advanced Materials segment level? And what it means is we're going to leverage this proven formula for success that we showed you in 2018 that's continued to build momentum to deliver industry-leading earnings growth. Again, we start with markets that have good underlying growth. As I stand in front of you today and think about the period going forward, we have the benefit of the auto recovery. We can all have a debate about when that's going to happen, but it will certainly happen over the next 3 years. In the middle is the real power of the model, the mix upgrade that I've just shown you lots of examples. Again, when you net that whole portfolio of premium products, they're growing about 2x the underlying markets. When you net that portfolio of premium products together and think about their selling price relative to our average selling price, 3x our standard selling price, truly an opportunity to drive a lot of leverage on the P&L. And then finally, on the right-hand side, we've benefited over the years by fixed cost leverage, and quite significant fixed cost leverage, because we're growing from a small base. Going forward, we won't have such a fixed cost leverage benefit but very pleased to say we don't have a headwind. Bringing on this kind of high-value business and being able to say you have a modest improvement in fixed cost is a tremendous equation. So you net all that together and you take 4% to 5% market growth and turn it into double-digit earnings growth. And 12 months ago, I would have said this is where we stop the conversation. And I would have been equally confident in saying that we can deliver industry-leading earnings growth. But as you heard from Mark and Steve today, we're incredibly excited to be able to build on this. And we want to build on this by going beyond durables. And you ask, well, why do we -- what's driving us to move forward as fast as we are on these circular platforms? Well, it starts with what you see on the right-hand side of this slide, tremendous market pull. Companies like Procter & Gamble coming to us and saying, you have a unique offering, you have a unique capability. And you can see how they're leveraging in their leading brands, in this instance, Herbal Essences and a relaunch around sustainability. I won't go back over all the reasons they're coming to us, because I think Steve did that in quite -- a very good manner and in an in-depth manner. But I want to hit the kind of high points. Number one, 100 years in the business. That's important to them. They're worried about getting caught greenwashing or having other negative issues come up, so our 100-year track record is incredibly important to them. 70 years in polyesters, certainly important. The fact that we've operated these kind of plants for 30 years, that's unparalleled. Finally, in the middle, we've touched on it, but the idea that we can deliver performance without compromise. These category managers don't really want to spend their time on packaging. So as they go through this change, they're not excited about sometimes paying for the value. They also don't want to have to go through a whole requalification process. And so the fact that we're a drop-in replacement, no concern about the mechanical integrity, the clarity that's needed in these, a winning equation. Now we're keenly aware that packaging is a highly competitive market. We certainly lived through the commoditization of PET. I would suggest that based on all the dynamics that we're talking about today, packaging won't be viewed like that over the next decade, but we're not going to bet on that dynamic holding true, because we don't need to. We've got such a unique offering that we're going to take a very different approach to contracting. And what we're going to do is really 3 key things: first, when it comes to customer contracts, long-term contracts, but more importantly, take-or-pay contracts and cost plus; second, certainly, long-term feedstock supply here. So as we build out these plants, you'll see us talk about the feedstock positions; and then finally, getting advantaged energy positions on these. So what that gives us is certainly stability of earnings and incredibly impressive returns. And I'll talk about that in a couple of slides. For the customers, it gives them much better transparency into what their pricing is going to be, because we've got a cost plus model very different than what they're experiencing in that mechanical PET arena that I showed. So just again to put these projects in context for you in terms of investment and what it will look like. Very similar to what I showed around our Kingsport facility. But what's different here is we are going to not only need to invest in the methanolysis portion of the plant, but also in the polymer lines. These will also be either brownfield or greenfield sites. So when you think about the investment here and so that $450 million I showed before, $425 million, we're talking about $600 million to $800 million when you think about it, and greater than 12% ROIC. So very attractive returns. I would also note that when you think about the accretion from these plants, very easy to see it under 12 months, but realistically -- under 24 months, realistically under 12 months. And the reason is, is because of that contracting strategy, we're in a position to fill out that plant much faster than you would when you're growing a specialty business. So how do we turn that into reality? We've touched on this as well. We've got 2 very active projects, one in the U.S., one in Europe. These aren't just concepts. We're actually negotiating LOIs. We're negotiating with customers. We're negotiating the supply side. In many instances, we're looking at the site locations. At this point in time, obviously, there's always -- a lot can change on a project this size, but we feel very good about the potential to at least announce one of these in the first half of next year, if not both of them. If we are successful to the point where we really announce both of them, we will stagger them a little bit, but it's important to note the market demand is there and the customer demand is there for 2025. So we'll be driving to get them both up and running by 2026 at the very latest. So exciting opportunity to add $450 million in EBITDA by 2026 on top of what I just already talked about in terms of our proven model in the specialty side of this business. So bringing that back in terms of helping you understand the sources of growth. When you think about now to 2024, shouldn't be a surprise what you've seen in that first bar, very good volume and mix growth. That stems from all of the innovation that I just showed you, those market development and innovation programs of power, very consistent with what we've demonstrated really over the last 10 years, just from a larger base. The next bar, spread normalization might be more of a question for some of you, but those of you that have followed us know that our pricing strategy in this segment has always been to deliver very stable pricing. So when raw materials go down, we lag. When raw materials go up, we lag. So we've been chasing the raw materials up through the course of this year with our pricing actions at the end of the third quarter, pricing actions through the fourth quarter, and the annual contract negotiations that we have in this business will kick off January with spreads normalizing. So we have a $100 million tailwind as you go through next year just on spreads returning to their normal levels. That's not betting on future pricing actions. That's actually what we already have in place. Again, just to put that in perspective, you can think about what that means just short of 20% earnings growth from that alone. So then when you think about the cost management, we will have some tailwinds just from our overall optimization efforts across the enterprise. But obviously, to support the growth that I've just outlined, we will be investing heavily and making sure we're in a position not just for 2024, but as I highlighted '25 and '26. So very exciting story. I would be remiss if I didn't do 2 things. First, I want to thank the women and men across Eastman that built this business and continue to set it up for success, that have us in a position to deliver these kind of superior outcomes for all of our stakeholders. I'm always appreciative of their efforts, but you can imagine these last 2 years have been exceptionally tough. So to battle through all the day to day and get us into this position, just couldn't be more appreciative of their efforts. Second, thank you for your engagement. Let me share their great story. We're now to a break. I'm sure you're ready for that break. We'll give you 20 minutes, and then I'm going to turn it over to Lucian Boldea. He will come back and talk about the transformation of and CI, some very exciting stuff going on. So please come back and join us on time. Thanks. [Break]

All right. Well, good morning, good afternoon and good evening, and welcome all of you back. Certainly very excited to be with you here today. I think you can sense the excitement from all of us, the presenters before me, myself as well about the story that we have to tell today at Eastman. In my 25 years with the company, we've certainly never had a more exciting set of growth opportunities than what you see today here. I'm very excited about that, very excited to be part of our future, but I'm equally proud and excited about the work that our teams around the world in AFP and CI have done over the last 3 years to position these businesses for a very bright future. I'll spend the next 30 minutes covering that with you. So let's go ahead and get started. So first, let's talk about AFP. So AFP, we've been through a significant amount of transformation recently, as I've just said. But it's important to take a historical perspective first. So if you look at the AFP performance, you saw that in Mark's presentation. Over the last decade, AFP has delivered a significant amount of growth for our company. We've also had our challenges. Two years ago, we shared with you that 1/3 of AFP is not strategically aligned with the rest of the business and with the future of our company. And we started taking action on that. I'm pleased to report to you today that a year later, we've been able to, during 2021, execute 2 definitive agreements on our tire additives business as well as our adhesives business. And really, what we have left is a business that is far more focused. You see the financials on the slide in front of you. So about a $2.5 billion business with high teens EBIT margins that are positioned very nicely for growth. So more important, of course, is on the left, a very resilient business, and we'll talk about that performance and what underpins that performance in a later slide. But part of that resiliency comes from a new market footprint. So AFP had very heavy exposure to transportation. Transportation was 25% of the market. What you see now is transportation is still the largest, but by a very small margin. So you really see more than half the business in AFP represented by 3 market segments: transportation, personal care and wellness moving into second place then food agriculture, followed by building and construction of 4 total markets that constitute the majority of that business. A very balanced footprint. It's very important in a wide variety of macroeconomic scenarios. But much more importantly, a footprint that's very well aligned with macro trends, is very well aligned with opportunities to innovate, which is what we are about. So if we -- since 2018, resilient performance, how do you define resilient performance? Well, if we were to define a test for resilient performance, starting out with the trade war, [ KF, ] that's a good test. But you wouldn't add a once-in-100-year pandemic to a standard test and then let's do a once in 100-year freeze in Texas, and let's constrain a supply chain like it's been constrained and then let's see how you do. Well, that actually did happen, ladies and gentlemen, and that's the performance behind you in this business. So certainly, when we say resilient performance, we have the numbers to prove it as you look at the historical performance of this more focused AFP. So you might ask, how did we do that? The same way AM did that, which has outperformed in our key markets. So you look at our top 3 key markets, and we try to go broad at the overall market level. So you see all the puts and takes of coatings and additives, when you put transportation together, that's a declining market, when you put architectural together, that's a growing market. We outperformed that market. Likewise, for personal care, likewise, for animal nutrition. At the same time, I mentioned earlier, we completed 2 definitive agreements, and we actually closed on the divestiture of tire additives on November 1, and we're positioned to close on adhesives during Q1 of 2022. So a significant amount of revenue, a significant amount of work and the disruption that comes from that, that happened by our teams during 2021, but very pleased with the outcome of that also with the multiple that we were able to generate from those 2 transactions. What's also happened during that time is our brand engagement has continued to evolve and continue to strengthen. Our innovation platforms have progressed and we'll talk about that in a more quantitative way in a later slide. So let's first do the recap of our innovation model. We're not going to repeat what you've heard about this up until now, whether it was in Mark's presentation or Steve's or in Brad's. But I do want to tell you how this has changed from 2018. And the short answer for the next minute of my presentation, it's all changed for the better. So let's talk about how. So the technology platforms that we have in AFP, cellulosic-based biopolymers, polyesters that are used in coatings and in our amines technology. Materials that compete with these products are being deselected by the marketplace, not necessarily only through our efforts, but in general, consumers are moving and customers are moving away from competing materials. This creates a growth opportunity for us that is only accelerating as we move forward. You've heard a lot this morning on the right-hand side of this, about brand owner engagement. Brand owners are highly motivated. They're under a lot of pressure, whether it's from NGOs, whether it's from their customers, whether it's from the consumers, from their own goals and their obligations that they have put on themselves towards society, but they are highly motivated to innovate. They're looking for solutions, they're looking for partners. What's not changed is what's in the middle, which is we're on the same trajectory on investment, but we have that brand, we have that presence, we have the applications development to be able to link our technology platforms to the market need, and you'll see that in the several stories that I will share with you today. So when we look at this growth model, we look at how that translates and how do we outperform markets at the product level. And at the product level in our key markets, we see strong growth. So whether we're talking about automotive coatings, driving our specialty ketones that are used in refinish in waterborne coatings also in other applications in coatings or care additives or animal nutrition. Our multigeneration product planning, our growth efforts in this area really have paid off. You see some of this growth is higher than the market growth. I know a lot of you are very quick with math. Why is that? It's what we talked about earlier. We are solving not only new problems with new applications where this growth is additive to the total or, in some cases, it's bringing a better solution to an existing problem. The net result is still the same. It increases our relevance with our customers. It increases the resiliency of our business, the sustainability of our margins. The pricing power that we have that comes from that, all those things come from good multigeneration product planning and being able to maintain that relevance. To move into the businesses in AFP, I want to talk first about coatings additives. So Coatings Additives is our largest segment. It's a segment where we have the most history. In this business, our relationship with coating formulators because that, for all [ begins ] is that engagement in the marketplace in our innovation-driven growth model. Our relationship and our brand as a reliable, stable, consistent, high-quality supplier is second to one. That brand goes back decades, and that brand was only strengthened when we had a Texas freeze storm where we came through flying colors from that, did much better than many of our competitors in stepping up and serving our customers. What I'm most proud of, though, is a brand that we've added over the last 5 years and the brand that we've added over the last 5 years is built around being an innovation partner. We are now viewed by the coatings formulators as a key partner that is at the table with them solving their most burning problems. So if you look at what those are, what some of those solutions are, you see them behind me on this slide. So it begins with offering solutions on metal packaging for food packaging. The world is moving away from BPA and Tetrashield is providing an answer to that for them to be able to still package canned foods or vegetables or drinks with the same kind of durability that they're used to with epoxy coatings. Tetrashield is offering industrial coatings that have more durable coatings that require less service, less frequent painting. We bring that solution to the table. I talked about specialty ketones that enable waterborne finished coatings our full line of Optifilm products that are used in architecture coating, these are paint coalescents that our consumers can now choose a wide variety of products where they can control odor, they can control emissions, they can control properties in general of their coatings. That's aligned -- again, that's growing very nicely, experienced significant growth. Newer trends that we're seeing is one that you see in the middle, this plastic film free that you see behind me. So if you think of a packaging of a premium perfume bottle that comes in a box or if you think of your iPhone case or if you think of a bottle of an alcoholic beverage, they usually have a clear film on the outside. That's a secondary package. That's a film that's a single-use package. That's something that there is a strong desire to be able to eliminate. The way you eliminate that and you still have a premium package with this transfer metallized packaging, and it's really making that paper package have that metallic look and a premium feel. That's a technology that has been in use for the last few years. We've developed that working with customers, but really the latest trend on eliminating single-use packaging has been a substantial amount of growth in that arena. And then last but not least, on the right, the digitization of everything and the relocation of semiconductor supply chains into the Western world is driving a lot of growth in our EastaPure family of semiconductor treatment products. That's another area we're very excited about. So you put it all together and a very exciting story for a business that has very high and stable margins in our portfolio is key to AFP success, and it's one that continues to be positioned well for the future. So let's talk about one such platform that drives this growth. We've talked to you a little bit about this before, and this is our Tetrashield platform. You've heard about our Tritan growth and you've seen how substantial that growth in Tritan is. That growth has come from replacing BPA-containing alternate materials. When you look today on the shelves, products that contain BPA are no longer used a very high degree, if any, in food packaging. Products that contain BPA as in epoxy resins are still used in can coatings that are used for beverage or for foods. The reason that adoption has not happened as quickly is if you think of a water bottle, it contains a liquid in it for a short period of time. A can that sits on the shelf maybe 1 to 2 years that it has to have shelf life. So that testing, that production is much, much more stringent and the qualification cycle is much longer. However, the desire is just as strong to move away from BPA. Solutions to date have required customers to make trade-offs have required customers to either shorten the shelf life or adapt the manufacturing process because the products are not as flexible in the manufacturing process. We at Eastman, I think if you've picked up one theme so far this morning, we're not about asking our customers to make trade-offs. We try to offer these trade-off-free solutions, and that's where Tetrashield comes in. The market opportunity is still significant, more significant than it was last time we talked to you, our progress continues to be made in this area, but I want to turn it over to Mahindra Dorairaj, who you'll -- I'll introduce via video, our Business President for our Coatings business to talk to you about the Tetrashield story. [Presentation]

So with that, let's spend a moment talking about the business model. So how do we develop a technology like Tetrashield? How do we monetize this? And how do we actually engage in the market? So if I wanted to explain our innovation growth-driven model to a new audience, I would use Tetrashield or Tritan as the example because they both are the textbook example of how this works. So it starts out with advantaged technology platforms. So in this case, 3, just like in the case of Tritan, acetyls, polyesters and olefins coming together. The outcome is unique, new to the world and IP-protected monomers. From new monomers, you make new polymers. But when you make new polymers, you end up with what a colleague of mine used to call wonder polymers, which is I wonder what it's good for. And how do you get from a wonder polymer to actually making money on it is you need 2 more things. You need relentless market engagement, being in the application, understanding what the market actually needs what are the end users in the market. And then especially in the case of Tetrashield, you need application development formulation. If you think of a can coating, you may think that's a pretty boring application. Well, if you think how you end up from a flat sheet of metal that's coded into a can, there's a whole lot of abuse that coating goes through in that manufacturing process at a speed that you really can't see with the naked eye. So there's a lot of resistance there. Then you put something in a can, you put it on the shelf for 2 years. It's got a -- you can't look inside until 2 years later. So that's another place where you really need a lot of applications develop that. And again, different foods have different properties. So what works for an easy-to-hold food doesn't work for a hard-to-hold food. The easy open ends on a beverage can, same story, those need to tear just right and the coating needs to tear just right. So a lot of applications development know-how that needs to be brought to bear there. That all has been brought to bear in Tritan with a lot of engagement, you saw a testimonial from one of our customers, [indiscernible]. And with that, obviously, the proof is in the pudding. But what we're pleased to report to you is 2021 volumes for Tritan were 3x 2020. Now 2020, on an absolute basis, of course, we're starting off of a lower base, but we're starting to become material to Tritan as we go through this plan to AFP as we go through the planning period, we're going to see these volumes continue to grow. I would also remind you that 2020, this is the one business where 2020 is not an easy comp. The canned foods business was very strong in that period. And so comparing and continue to grow from that base is certainly something that has us very excited. So shifting gears from coatings to care additives. Care Additives is a business that really came together as a business, as an industry vertical, so to speak, our market vertical in Eastman by the acquisition of Taminco. Eastman had a lot of history themselves in personal care ingredients, in food ingredients and in pharmaceutical excipients. Taminco had their own history. But none of us had that critical mass to be able to really be relevant with those formulators, with those brand owners. So about 4, 5 years ago, we started investing deliberately in this business, started building that application development competence and really leveraging the individual positions that the 2 businesses had with the major formulators, major brand owners and start to grow from that. So it's certainly a business that's earlier on in its growth trajectory than coatings, but the future is just as exciting. And just to give you an example of a very exciting part of that future, that starts with the challenge that the world is facing today. I think all of you have heard about the microplastics challenge. Micro plastics are defined as less than 5-millimeter little fragments of plastic. But these microplastics are really present in a lot of products that we use today. So if you just think of home care, personal care, Europe alone has 42,000 tonnes of microplastics that are being used. What we're focusing on here is cosmetics and personal care. So in cosmetics and personal care, these little beads are being used and they really help with the properties of the cosmetic and personal care products, whether it's anti-aging, whether it's exfoliating, whether it's moisturizing, they're an essential part of that formula. Especially when it's a leave-on cosmetic where sensory feel is very, very important, there are a few alternatives. These products eventually, obviously, after they get used, they end up in the water system, from the water system, they end up into marine life, end up in the food chain and then the whole thing ends up in a circle. So obviously, that's something undesirable for society, and that creates a challenge that results in a significant opportunity. Consumers are aware of this. So there's a lot of consumer sentiment on this, but there's also a ban that's being talked about in Europe. So as you can imagine, what this does is this creates a huge disruption to a very, very large industry. And when a large industry is disrupted like that, it certainly creates that persistent unmet needs. If you have a societal macro trend and you have a persistent unmet need, for us at Eastman, there's one more thing that's needed for us to get excited, and that is that intersection with a technology platform we have. The intersection for Eastman for that technology platform is with our bio-based cellulosic materials that really offer the balance of properties that are needed, and I'll talk about what that is later. But what's the price? The price here at maturity is $100 million of EBITDA opportunity for solving this problem, and that's what we view our share can be of that solution. So why do we think we can solve this problem? So first, let's define the problem. What is the problem? So the problem is these products end up this microbeads end up in marine life. The way you take care of that, if you remember from Steve's slide, he talked about Naia degradation and the work that we've done with Woods Hole is biodegradability. So if the products completely biodegrade not as in break into smaller particles, but actually completely biodegrade. That is the solution. The equivalent of the EPA in Europe has developed -- the European Chemicals Agency has developed a test or has adopted a test where biodegradability is defined because it means a lot of things to a lot of people, but now we actually have a test. And it's referred to as a 60-60 test. So 60 days, 60% biodegradability is the name of the game, and it's what is required to be able to be used in the application to be considered biodegradable. Cellulosic materials in general are known to be biodegradable. So the fact that we can make a cellulosic material that's biodegradable, I wouldn't be here talking to you about that, that would not be news to anybody. The fact that the existing product used for microbeads, whether that's PMMA or the best-in-class product, nylon 12, the fact that they're not biodegradable, that's not news either. We know both of those things. However, that's not where the story ends, clearly, and that's not why we have a growth opportunity. The reason we have that is because there are more performance requirements than just biodegradability. A good proxy for the performance requirement is all absorption. All absorption not only is a good proxy for how the product is going to work, how much ingredients you can load into the product, but the sensory feel of the leave-on cosmetic is what's driven by that all absorption. Best-in-class is nylon 12. And since we're all about no trade-offs for customers, we basically took it upon ourselves as a challenge to make a cellulosic formula that absorbs the same amount of oil as nylon 12 yet passes the biodegradability test. So as you can see, the formula on the right does that our Eastman cellulosic material. And then you can see on the graph on the left-hand side that we are able to pass the biodegradability test. Obviously, there's a lot of tuning that can be done and trading off between those properties, and that's also what we can do working with our customers in specific formulas. But we have demonstrated that we can have a solution for our customers that requires them to make no trade-offs in their applications. So we're certainly very excited about this project. Shifting gears slightly to feed additives. So our Animal Nutrition business. I think you saw that on the product growth chart that I showed earlier that it's starting to show up on the same scale in a material way with products where we've been around for many years in our Coatings business and what underpins that. What underpins our animal growth? Well, we started out with organic acids. So the world is moving away from antibiotics. It's moving away in Europe due to regulatory pressure in the U.S. consumer sentiment. To maintain gut health, to maintain preservation and hygiene of grain, organic acids are being used. Eastman has had a history with organic acids. So we've sold we have a very broad portfolio of organic acids with the Taminco acquisition, we added more products to our product slate. So we were this product provider up until a few years ago when we started investing in application development. These are rapidly growing markets but ultimately, to access that $2 billion market on the right need way more than just organic acids, need the knowledge of formulation, need the knowledge of how all this works in the animal, what the impact is. And that's what the acquisition of 3F that we have announced is starting to put us on that trajectory. That in addition to continued organic investment into our own capabilities. Obviously, we'll continue to look for bolt-on opportunities in this space, but this is certainly one that we're very excited about. And rather than hear it from me, Sandeep Bangaru, the leader of our business for Animal Nutrition and our Marketing Director will be sharing with you some of their excitement and also their plans for the business via video. [Presentation]

So let's talk again about the business model here and why we're doing what we're doing. So again, this should ring familiar to you. You should see a lot of parallels and similarities between different businesses in Eastman. This is the model Brad was talking about that underpins our films business. So how do you start with the basic product, add more offerings and then build on the value delivered. So we start with organic acids and move where we are today, move we've already moved a lot of our business stores, synergistic formulations. So we add more ingredients, we make a formulation that actually can be used. The value add is significant. From there, the bot control delivery and control delivery at a very simple level here is to get past the aggressive conditions in the stomach into the intestine of the animal and to have the activity occur there. So that's the key when it comes to control release. Once you can do that, which we have technologies already commercialized in that area, more value to be delivered. Ultimately, the prize is to get all the way to the right, where you deliver a complete data package, a complete solution for the animal health to the farmer. That's where we're trying to move. You can see the multipliers on the bottom, and you can certainly understand not only our excitement, but also some of the valuations that you see in the marketplace for pure plays in this space. So to complete the tour of AFP, Specialty Fluids and energy, another segment in AFP, I won't spend a lot of time on this other than to tell you that this is a great business. It's positioned for nice growth. I will remind you, when you compare '21 to '18 in AFP, we're still missing international aviation that's poised to come back. We have leading positions in aviation and in heat transfer fluids that give us very nice growth. And most recently, we've added digital tools with Fluid Genius and our heat transfer fluids that really enable us to do more heat management instead of just selling a fluid and working with our customers to give them a lot of data about their own process and the life of their fluids. So very excited about this. So when we put it all together for AFP, what do you get after all this? So specialty products growing at 2x the market, they should bring -- familiar by now for us is the strategy in Eastman, AFP and especially the new focused AFP well poised with growth programs to deliver on this trajectory. Getting our EBIT margins to approach 20% as we continue to grow through the planning period is certainly something that we are committing to. And to get there, we're committing to deliver 6% to 8% EBIT growth, and you'll certainly see us do better than that as we move into 2022. So with that, let me move to CI real quick. I'm a firm believer that any business needs to know their role in the portfolio. And Erwin Dijkman, our President for CI and the entire CI team know their place in the portfolio for CI. CI is the engine room of the Eastman innovation machine. So when we talk about AM or we talk about AFP monomers that constitute -- Tritan monomers that constitute Tetrashield are born in CI. When we talk about microbeads, the intermediates that make those microbeads are born in CI. When we talk about our personal care products in Care Solutions, same thing, we start out in CI. Most innovations that you talk about require some kind of tweak in our intermediates to make a new molecule that ultimately generates a market solution solving a problem. Our circular feedstocks are another vector that involve CI assets. So again, a lot there that CI brings to the table. We also tend to talk about CI as olefins and acetyls, and we tend to forget that 30% of CI, in fact, is functional amines and specialty plasticizers. These are businesses that have high growth. We invest more capital in these businesses. Our olefins, our asset deals are more consumed to make specialties. We don't look necessarily to grow those. So there is an internal mix here in CI that's happening as well with amines and specialty plasticizers. I'll talk a little bit about that later. But to be a good member of the Eastman family and to be that engine room that we talked about, there are certain requirements that we understand very well. One is that engine room is got to be really efficient and reliable. So what that means, operational cost improvements, absolutely important. We've taken action to improve our global footprint. Singapore site is what we closed that was not an advantaged cost structure, not integrated like the rest of the business, so nonstrategic, so we closed that. Our supply chain as a large North American exporter, CI is certainly one that's been key to make sure that we enable a lot of the performance that we've had in very constrained supply chain. Improving their cost to serve, improving our network is very important, and it's something that continue we work on and we worry about in CI. The mix improvement, we've talked about 2 elements there. One is growing this 30% and then the other one is extracting ourselves from the Asia oxo market, both net improved our mix. But the most important part that I know is near and dear to all of your heart is to not have a whole lot of volatility, a whole lot of noise from the engine room, it needs to be quiet down there. And so that's something else that we have done. We've invested in RGP. RGP has reduced our exposure to merchant ethylene. We've increased our share of cost pass-through contracts in the business. And then what I want to talk to you about today is we have begun a new investment on ethylene to propylene, and yes, it is as exciting as the name makes it sound. So we'll go to that later. But before we get there, let me just touch on the 30% of CI. The larger part of that 30% of CI that's growing is functional amines. This business came to us via the Taminco acquisition. It's a business that has continued to deliver, has continued to grow very stable earnings. One of the reasons that is, is our partnership with Corteva as one of our newest initiatives where we're continuing to invest. We had a recent capital expansion and a start-up during 2021 of additional capacity for this product. Enlist is a herbicide that's very successful in the market. And in our mantra of winning with customers, this is a great example where we are working with Corteva, helping them win in the marketplace. This business is positioned to continue to grow into next year, not only helping CI with the growth, but overall, improving the mix of the business. So now to E2P. So E2P, ethylene to propylene, so what is this? This is exactly what the name says. So this is you have the choice or the flexibility. This is not a change. This is an added flexibility so we can go back and force just like we can with RGP. So we have the choice to make propylene instead of ethylene that's -- the chemical engineers, I apologize for oversimplifying it, but that is basically the simple version of what we are doing here. Why is that so important? Well, let's start back to what is CI's role in the specialty portfolio and it was defined to me by one of our business presidents from our specialty businesses, which is we've got to make the most stable propylene that we can in a very reliable way, in a cost-effective way, pretty simple. Notice one word they didn't mention was ethylene. So it's all about the propylene. That's what we have to do. That actually is easy to do unless you have to produce ethylene along the way, and then you're exposed to the ethylene volatility. So the problem for us historically has been the ethylene volatility because the ethylene market changes significantly. RGP reduced the amount of merchant ethylene that we produce. So that was a good thing, a good step in the right direction. That project has already paid for itself. It's been a great investment. However, there is still an amount of merchant ethylene that's available today. E2P completes that circle. And so the way you should think about this now, if you look at the chart on the right, is we have operating modes for any ethylene market scenario. If ethylene spreads are very high, we can certainly go back to the old way of running, run our crackers in normal cracker mode and be able to produce ethylene and take advantage of that market. If on the other hand, ethylene margins are extremely compressed, we can avoid that downside volatility. We can turn on E2P and not produce any merchant ethylene. And then obviously, if it's in between, we can alternate with RGP and with E2P and with normal cracker operation. Net at least one way you can think about E2P is you almost start running like a PDH unit. The big difference between E2P and the PDH unit is one you guys will appreciate the most, and that is the capital. And the capital for E2P is something around the $50 million range, which if you think of PDH capital, that's orders of magnitude higher than that. So a very big difference, a very cost-effective way to get that volatility out of the system and to really complete our flexibility. So if we put all this together for CI to try to quantify what this means, we started out, and again, these you have to bear with me, we've tried to normalize these EBIT in normal market conditions. But what you can take comfort in is these are like-for-like comparisons. So 2017, 2018, we started out with a plus/minus 30% kind of business. As we've done RGP, as we've done cost savings, asset closures, other things, we've gone to a plus/minus 20% business. As we invest into E2P, as we move with additional cost savings, but also you see the yellow bars give up some capacity to our downstream businesses. We end up with a business that has a normalized EBIT that's actually higher than where we sit today and a far reduced earnings volatility. So certainly, a transformation of the CI business that's very significant, one that we're very, very excited about. So before I wrap up, I want to once again thank my teams around the world, thank the teams in CI, in AFP. As you can see, a lot has happened in the last 18 to 36 months in these businesses, a lot to be proud of. They have positioned these businesses for a very different growth trajectory going forward. You'll meet later the business presidents that are leading these teams. I'm certainly very glad they're here today and you get a chance to talk to them. So with that, I appreciate your attention. I appreciate the opportunity to be able to talk to you today, and I'll turn it over to Willie to wrap it up.

Thanks, Lucian. Hello, everyone. Thanks for joining us today. It's great to be at this in-person event, as I'm sure all of us are a little tired of virtual conferences. While I've been at Eastman for 20 years and had various positions around the world, I became CFO in early 2020. And when you think about becoming CFO in 2020, so far, my entire tenure has been during the global pandemic. I've seen up close and personal, what it takes for the Eastman team to be resilient. And also, we've been steadfast in our focus on innovation and growth. You've heard that today through the new business revenue from innovation, the mix upgrade as well as the exciting growth in the circular economy. This is one of the most exciting times in Eastman's history. As you think about our -- as you look at the top of the slide, you'll see the 5 key themes from today. I hope we brought that to life for you. We've also summarized our reporting segment financial commitments. It's highlighted by the specialty growth above underlying end markets in Advanced Materials and Additives & Functional Products as well as the increased normalized level of earnings in Chemical Intermediates and strong growth in our fibers business driven by textiles and improved margins. This really drives home the final outputs of the key themes today and the attractive specialty growth that we expect to deliver between now and 2024. Eastman has a strong track record for outstanding performance. And this slide is a great example of that. We delivered solid performance since 2018 during a very challenging environment, and we expect to build upon that with growth as we enter 2022. We also have a strong culture of peer benchmarking. And I think this slide will bring that to life for you. Mark highlighted the graph on the upper left-hand corner. Since 2018, our EBITDA margins have been in line with our specialty peers. And it's not just EBITDA margins that are in line. As you look at the EPS CAGR since 2010, Eastman has outperformed our specialty peers. Also, we're a clear leader in free cash flow conversion, outperforming our specialty peers since 2018. And also, we've delivered the strong free cash flow in just about every economic environment. As we transition to ROIC, we've increased that here in 2021, and we're not going to stop there. We expect to increase this over the next 3 years. And while our performance has been in line with our specialty peers, I would say we have a lot of upside from a valuation standpoint, looking at our historical performance as well as the compelling growth that we've outlined here for you today. And that's the opportunity. And it's not just in addition to the compelling growth, we've also done a great job on the cost side. As you look at 2018 into next year, we project that we're going to have greater than $600 million of structural cost savings. And we're going to achieve these -- this productivity through 4 primary areas. First, we're enhancing our business operating model where we are preferentially investing. And we're empowering our business leadership teams and our centers of excellence around the company. As you heard Mark talk about earlier, we've made significant investments in our integrated business planning. This is where we're connecting our business strategies to our operational plans. We continue to transform our operations of modernizing and digitizing our capabilities and strengthening our execution excellence. We've also optimized our manufacturing footprint around the world to better serve our customers as well as to reduce our overall cost. In addition to productivity in 2022, we expect our variable compensation to normalize. Aggressive productivity is in the culture at Eastman. And it's a continuous process across the enterprise. We look to drive EPS growth through top line and our innovation. This efficiency funds our investments in growth as we shift our mix of resources to our robust growth portfolio. Next is one of our favorite topics: Cash flow. And I think we're building a strong record of performance here. The key takeaway of this slide is consistency, and we've delivered this in just about every environment. In 2018, we were at record levels for operating cash flow. In 2019 and 2020, we only dipped slightly despite a global trade war and a global pandemic, and we're rebounding nicely here in 2021. Over the next 3 years, we expect to deliver approximately $5 billion in operating cash flow. That's about $1.6 billion per year and a new level of performance for Eastman. This new level of performance is driven by the earnings growth that we discussed here today. And we expect to be able to deliver this into the future. The operating cash flow is from the new business revenue that we discussed, and we expect to also be disciplined as we invest in capital on the organic side and also to be able to return meaningful cash flow to stockholders. Also, as we grow, we will have sustained working capital discipline in line with our growth. And over the coming years, we will not only be able to fund our attractive organic growth but also return meaningful cash to stockholders. Demand has rebounded quite substantially here in 2021. And as a result, we expect record revenue. Also, as we've outlined today, we expect specialty growth in Advanced Materials and Additives & Functional Products to outpace our underlying markets. On top of that, we plan to add capital for our new vector of growth with a circular economy. As a result, you should expect our capital expense over the next several years to increase to fuel this growth. Additionally, our annual capital expenditures is about $300 million, and this continues to fund our reliability. Also, as you look at recent history, our CapEx has been between $500 million and $600 million. This enables us to expand in our product lines in Advanced Materials and Additives & Functional Products as they outpace the underlying markets. Also, you'll see on this chart a new vector of growth, as highlighted for our circular economy investments. It's about $425 million for our Kingsport facility. And this is both for the methanolysis plant as well as the Tritan polyester facility. And as we make these investments in both the Kingsport facility as well as the potential capital and additional circular economy projects, we expect the returns to be greater than 12% and that our corporate ROIC will be greater than 12% to 15%. Mark highlighted this slide earlier. And when you look at it holistically, it's a strong track record of disciplined capital allocation at Eastman. As you compare our history in the chart on the left, with our future in the chart on the right, 2 things are clear. First, we don't plan to use cash to delever in the future. Second, the pie is much bigger, which means we can invest in organic growth while also stepping up the returns to shareholders at the same time. Over the next 3 years, we expect to deploy greater than $6 billion of cash. This includes $1 billion from balance sheet capacity. This is from growing EBITDA over the forecast period. Additionally, we expect to put $1.8 billion in proceeds from our divestitures to work. As you can see over the upcoming period, we will be able to not only invest in organic growth, we will be able to add bolt-on acquisitions to our portfolio as well as return significant cash to shareholders. As you look at the next slide, over the past 3 years, we've repaid about $1 billion in debt. This has strengthened our balance sheet. And also, with the growing EBITDA, we've been able to improve our leverage metrics in line with an investment-grade credit rating. And we plan to do whatever is necessary in the coming years to maintain a solid investment-grade balance sheet, which is the sweet spot for Eastman. As you look at the upcoming debt maturities, I'm confident these are manageable in the coming years. Also, as you think about what we're doing at Eastman, we expect to be able to tap the green bond market and also have attractive rates. I do not expect that we will need to meaningfully delever any further over the coming years. Another source of value creation at Eastman has been portfolio management, and we've been active here over the last several years. As you heard from Lucian, we've divested our tire additives business, and we've announced the sale of our adhesive resins business. The combined revenue is $1.1 billion, and the EBITDA is $175 million. The proceeds from these transactions are expected to be $1.8 billion, resulting in a transaction multiple of greater than 10x. Also, we plan to put the proceeds to use in 2021 and 2022 to make these transactions neutral to slightly accretive to EPS. I Also, we've added specialty bolt-ons to accelerate the growth in Additives & Functional Products and Advanced Materials. And we've continued to show you our discipline with the multiples being about 8x. In 2022, we expect the revenue to be roughly $100 million from these acquisitions. Also importantly, investing in growth. Organically, we have our Kingsport project as well as the potential for projects in Europe and a second project in the U.S. We also expect to review our portfolio and have the highest and best owner mindset, which I think we've demonstrated recently with our portfolio actions. I would encourage you to look at our long history of returning cash to shareholders. We've developed a strong track record here. And if you look at the dividend chart on the left, we declared and paid a dividend every year since we've been a public company, which is since 1994. Also, we've had a track record for 11 consecutive years of increasing our dividend. And with our announcement last week of a 10% increase in our dividend next year will be the 12th. Also, you can see our history on the right of share repurchases. Last night, we announced a $500 million accelerated share repurchase program. We now expect share repurchases for 2021 to be $1 billion. This will also be from free cash flow and divestiture proceeds. In addition to the $1 billion in 2021, we expect to repurchase another $1 billion in 2022. And with the strong free cash flow and the additional $2.5 billion of board authorized share repurchases, we expect to repurchase meaningful shares in '23 and '24. As you put all of this together, it leads to discipline and balance across the management team and the company as we balance earnings, cash flow and returns with innovation-driven growth at the center of it all. And returns is an important metric to strengthen. We have and are continuing to invest in growth. This is both organic growth and bolt-on M&A. We've also continued to optimize our portfolio. And over the next 3 years, we expect to increase our returns. We expect them to approach 15% ROIC in 2024. As you think about Eastman as an investment option, I would ask you to consider the significant financial flexibility that we have to invest in organic growth and return a significant amount of cash to stockholders. The investment-grade balance sheet that we have and the sufficient liquidity to face any challenges and to serve as a strong foundation for growth. We're increasing our ROIC and expect it to approach 15% by 2024. We are a clear leader in the circular economy, and we're investing to make it a significant vector of growth. And finally, we have increased our consistency and reduced our volatility through strong execution to create value. Thanks for joining us today here in the room as well as online. I think Eastman is an excellent investment opportunity and look forward to discussing that with you at future conferences and events. With that, I'll turn it back over to Mark.

All right. So we've had a long history of innovating a long proud history for Eastman or even going farther back than Kodak. We've transformed our portfolio in a dramatic fashion through M&A and divestitures and then through consolidating those acquisitions into a very powerful innovative, growth-driven company. And when you think about the 5 themes that we started this conversation with today, you heard them throughout all the presentations. First, innovation-driven growth model is delivering results historically, and we're demonstrating and proving we can grow above our underlying markets and products that have higher margins that drive mix upgrade. The circular economy is something we're extremely excited about. Sometimes, the world evolves, changes in this case, a focus on driving a better planet is playing straight into Eastman's technologies in an extremely advantaged way for us to exploit across the entire portfolio. The circular recycling technologies are exciting. The biopolymers are exciting, but keep in mind that we have sustainability driven growth throughout the company. And that really gives us a position to be a real environmental leader in how we address and solve these problems that also translates into extremely attractive returns for our investors. We're investing significantly in our carbon footprint to improve it and take that risk off the table and make us a more advantaged provider to our customers. And we're building the capabilities to make sure that we can grow and execute as we move forward. And it produces a lot of cash. And in the end, company's values are based on their cash and ours is compelling. And we're going to continue to be disciplined and balanced in how we deploy it. So when you think about all this together, it's a very attractive return for investors and one we're really excited about. And I would say that the last thing I want to emphasize about this is that you're only as good as your team, right? I have one of the best executive teams in the industry who have made it possible for me to stand up here and talk about this overall strategy and the value creation that's possible. And the teams around the world are what makes this possible. It's just an incredible place to work. And the reason I joined Eastman is because of the way people come together and work as teams and are focused on what makes the company succeed every day. And I can tell you that through all this chaos that we've been through, it's just remarkable how they come to work every day and they solve incredibly difficult problems and at the same time they keep the growth going, and at the same time when they build capabilities for the future. And I just think it's -- for me personally, I'm incredibly fortunate to be able to represent them and represent this story and this investment opportunity to you. So what we're going to do now is shift to Q&A. And what I'm going to do is ask the presenters to join me here on the stage as I try and field questions and hand them out to my team where it makes sense. All right. So let's open it up to questions.

John.

John Roberts from UBS. Mark, margins for Naia fiber and some of the other new cellulosics are lower than cig tow margins that's there. Do the margins continue to come down? Where do they stabilize in the segment as you do the transition?

So Brad, would you take that?

Sure. John, actually, I'm very pleased to share that on Naia, we've actually normalized at about a level roughly close to tow, if not a little bit better Tom. And that's obviously a function of 2 things to be very transparent. Over time, total margins came down, they've stabilized, and we've certainly made dramatic improvement in the Naia margins. It's really the quality of the value proposition. You see it win in the market. We continue to grow double digit, and we've moved prices up over that time period as well and as well launched more innovative offerings. So...

And then secondly, in interlayers, Corning is now getting Gorilla Glass into OEM applications. Do your inner layers work with Gorilla Glass? And is that a substantially higher margin opportunity?

I think it's more of a niche opportunity at this point. It's been talked about for a long time. I have not seen it gain a lot of momentum. We have had some applications where we can work on it. It depends on kind of what the application is. Very early stage.

Great. David.

Dave Begleiter, Deutsche Bank. Mark, you have a growing portfolio of potentially very valuable high-multiple businesses and some very low multiple businesses as well. How do you think about making sure you get paid going forward for these higher-margin, higher multiple businesses not being dragged down by these lower multiple businesses going forward?

Yes, it's a great question, David. We're always focused on how we can be a disciplined manager of our portfolio. And so you just saw that discipline in exiting the tires and adhesive businesses, which we viewed as nonstrategic. We're incredibly excited about the portfolio we're putting forward. When you look at Advanced Materials, AFP and even how we're stabilizing and positioning fibers to start modestly growing, a vast majority of our portfolio is going to be delivering very stable, very high attractive growth that certainly deserves a very good valuation. And the circular economy is just a huge big adder to that. When you think about the circular contracting model, which is very similar to an Airgas model of contracting and securing stable spreads and deploying that level of capital with very high returns. I think it also deserves a very good value. So CI is obviously part of that story. And as Lucian said, it is now becoming a very small percentage of the total story. So it provides -- it actually provides some margin stability when you actually look at flex and value and change so it actually stabilized our earnings and the way it's played out. And it provides an incredibly important value driver for how we grow. So when we focus on everything we're doing today around circular, around specialty, that's where our attention is, and that is the vast majority of our earnings now, and it's going to become a bigger percent every day we move forward. And that's really where our focus is at this time. And we think at this time, it makes sense in how the portfolio is configured.

Great. And just on M&A, how is the bolt-on pipeline looking? What's your focus? And what are your thoughts on something maybe larger transformational down the road for Eastman?

Well, the 2 big questions. So we are very focused on how we deploy capital and disciplined way. As I said, the organic specialty strategy is attractive. The circular plants, we think are extremely attractive. When you look at that EBITDA of $450 million relative to about $2 billion of CapEx around it. And we are always looking for bolt-on M&A, and we'll continue to do so. And then the rest, as we said, is increasing dividends and share repurchases. We are not looking at large M&A at this stage. We look at the opportunities we have organically are the best deployments right now in scale. And if you look at the history of value creation for companies, organic growth is the most powerful way to create value for our owners, and that's what we think we can do. All right, Frank.

Mark, the team put forth a lot of impressive growth areas in the -- using your circular technology. I think the one that stood out for me was in food packaging. The applications there are fairly limitless, I think. And I think it was part of what you were saying that you wanted to get to like $200 million of EBITDA by '26, something like that. I was curious if you could drill down a little bit more into that specific application and how do you see that growing? And where are your price points relative to where the space is today? Is that a limiting factor in terms of what you're offering there? Because it does seem like that could really be a very significant grower.

Yes. We're really excited about it, and we do think it's a significant growth opportunity. I'm going to let Steve cover a bit of it as it's in that earlier stage of development. But tremendous engagement we're seeing from the food service companies.

Yes. So I mean, it is a platform that we're very excited about because we -- as we talk, cellulosics has always been biodegradable, but as we've studied that particular area, we've now learned to formulate that particular product line to where it will actually come post home and industrial, as I mentioned. And so you got big drivers right around food waste, but it's not just food service. It's any type of food packaging. I mean if you go into the grocery store and look at all of the containers itself. So we've continued to invest in the technology, think about ways to provide rigidity and to [ down soccer ] or actually thin out the materials. So we think we're actually cost competitive as well. Foodservice is the first segment, but we are going to translate all the way across. And as you can imagine, that's a massive addressable market.

Yes, there's still this huge opportunity there. I'd also emphasize it where we're building significant capital investment on the polyester side of circular, in the polymer on the cellulosic side, we're leveraging existing infrastructure, right? So we have a lot of growth capability with the infrastructure we have in place to sort of serve that market and the microbeads and everything else. [indiscernible]

Yes. So the other area I wanted to drill into a little bit is, I believe you mentioned you have 125 suppliers of waste plastics already signed up to supply the methanolysis unit, logistics being an area that I don't believe that you have a lot of experience in right now in handling waste plastics into Kingsport. Can you talk about how you envision getting the materials in? I assume that this is in a relatively finite distance around Kingsport. I mean we're probably not shipping from the West Coast to Kingsford in terms of accessing that material. Just to give some more comfort that you will be able to access the waste material you need to run that facility as well as you can.

Sure. I'll let Brad take that.

Yes, sure. So first of all, I mean, I think we have great logistics experience if you think about what we do around the world being such a North American supplier. So we're leveraging that. So you are talking, Frank, a very big supply chain here. We aren't required to kind of bring it from just close by because this stuff has very little value. So I referenced circular polymers where we're bringing carpet. That's a good example. We are bringing that from the West Coast all the way over. using rail, but we can afford to do that. That's a very competitive feedstock relative to fossil fuel and relative to really other sources. We haven't been as transparent as some of you like I realize on what we're doing on feedstocks, and that's for a good reason because it's a big part of our competitive advantage. And so it's really how we bring that mix in. But I feel very good about where we're at. We have the warehousing capability. We've already been leveraging our pilot plant to go through the qualification process. So feel good 12 months out where we sit and very confident we'll be in great position by next year.

I mean one of the advantages to keep in mind here, especially for these sort of first 3 plants we're talking about is we have a huge first-mover advantage, right? So for the world of polyester, there's a lot of people doing sort of pyrolysis for olefins. But in polyester, we're the only large-scale player on the planet doing this, right? There's a bunch of start-ups that are still trying to figure out how scope their technology. And that's why the brands are so connected to us. But it's also a huge advantage in how we work with all the feedstock suppliers is we can show up and commit to contracts a year from now that we can help them scale up that infrastructure. And one of the big problems we have globally, but especially in the U.S. and Europe, is the recycling infrastructure is not where it needs to be. But today, they only make value on the mechanical slice, that 16%. The rest is going to landfill or incineration if you're in Europe. So we can put value on that broader stream and allow them to view their economics in a fundamentally different and better way to sort of get better at investing in technology for separation and making this available. So it creates a very virtuous cycle as companies start to scale up on this for them to be able to serve it. But we feel good in the first plants because we have a sort of first-mover advantage in securing that feedstock. All right. Next question. Kevin.

Kevin McCarthy of Vertical Research Partners. First question is on Tritan. It looks as though that business continues to grow quite rapidly. I think you said 54% over the last 3 years. And so a few questions. What do you think the long-term market opportunity is? I guess, we'll be crossing through $0.5 billion if that hasn't already happened pretty soon. And so do you see this as, I don't know, a multibillion-dollar opportunity over some period of time? How should we think about that? And then with regard to the 80-kiloton plant that you're building, do you need monomer as well? Or can you leverage the building blocks coming out of methanolysis? And maybe you could just talk about what percentage is renewed versus not renew and have those premia are fluctuating?

Sure. So a lot embedded in there, Kevin, let me start with kind of the end in terms of the intermediates. It really goes in hand with that investment in the methanolysis. So we'll see how that plays out over time as we get to the end of the fill out what our monomer situation is. It depends on recycled content. So today, we're really trying to leverage this precious content we have and even as we scale it up more at the 50% recycled content. A lot of demands even in durable -- or a lot of the customers in durables are demanding 100%. So that would push that up a little bit. When you think about the growth trajectory, I think we're still poised for double-digit growth. It's certainly not going to be the kind of growth I just showed you. Some of that was the takeoff as brands start looking for alternatives to materials of concern. But I think we're poised for double-digit growth in the foreseeable future. So think about that 10-plus percent type of range is what I would expect it to continue to grow going forward.

Okay. And then my second question was on the E2P project that you announced. I mean it seems as though that could have an extraordinary impact in diminishing volatility for, I think you said a $50 million investment. And so my simple question would be, what has changed to allow you to do that, that you develop new technology or license it? And how is it different from metathesis? I think there are some companies out there that basically create 2 propylene molecules from 3 ethylene molecules. Is that what you're doing? Maybe you could just elaborate on how you get there from here.

Sure. Lucian.

Yes. So I won't be able to talk about the details of the technology. But what I can tell you is it is a licensed technology that we're using. It's a technology that has been demonstrated. So obviously, it's something that we have a lot of confidence in. In terms of what's changed, the number of things have changed. So again, there's a gradual progression. So we had E2P there was technology in our hands, and why was that available is because of some other investments we made ahead of that, that were frankly unrelated to RGP. So we made those investments, it enabled RGP. And once we had RGP, we deployed that and we learned how to flexibly run the assets. This technology came along on E2P that was available to us via license. So we've taken advantage of that and now we're implementing. But it's been kind of a continual journey of adding flexibility to the stream. The other reason why now, as you can imagine, is we have feedstock contracts that come into the stream so that you have to manage those. So actually, the asset flexibility that we're generating is very quick. We can switch between these very, very quickly. But you have to line up whether you need a whole bunch of RGP to buy or whether you're buying PGP or whether you're running E2P and you have to set up selling ethylene, so all the commercial side needs to work in line with that. And some of those agreements are longer term. So we've had to line all that up, so that it works together with the E2P investment, so that once we have it, we can take full advantage of it.

All right. I can't see who it is in the back, but we'll go to the back. Bright lights up here.

Aleksey Yefremov of KeyBanc. Mark, you're now talking about 3 specific methanolysis projects. What would you say a chance that you'd be having maybe at least 6 projects within 10 years or so? Or any way you can talk about scaling up the business beyond freight?

To infinity and beyond. So look, we're focused on delivering what we have in our sights right now. Clearly, these 3 projects is a substantial deployment of capital for us and it has very attractive EBITDA as you can see. Obviously, these 3 plants are just the start of solving this problem on the planet, and the need to scale up and build additional plans beyond these first 3 is going to be very strong and very present for the next decade. So it's reasonable to expect that we build additional plants. I'm not going to get into how many today. I'd just like to get these first 3 built in producing this EBITDA. But clearly, the level of engagement we're seeing, and it's not just U.S. and Europe, but it's also in Asia, where people want to try and have a solution to this. Mechanical is not a long-term solution. It's a great solution for a specific set of needs in the marketplace as Steve said, but the polymer degrades in that process. So we're necessary just to keep polymer alive for mechanical recycling and revitalizing it. And so there's a role for this. And I think we are really well positioned in the polyester stream to keep doing it. But yes, no, I wouldn't assume there's 3 plants and done. I think there's more plants that come after this. But I think we want to be able to announce and be specific around these 3 and get them built, and then we'll talk more about what comes next.

And as a follow-up, I think you were saying during the presentation that you view methanolysis as a more efficient technology than others, other chemical recycling technologies such as pyrolysis, perhaps. Is that what you're saying that your cost and greenhouse emissions would be much more advantaged versus, let's say, pyrolysis?

Yes, I think that's an important question to understand because there's a lot of technologies running around on this topic, and it's easy to get confused, and people are still -- both investors and customers are still trying to figure it out. And they're not interchangeable technologies at all. They do different things, and I'll let Steve further explain that.

Okay. Yes, so just to first separate the technology. So paralysis is predominantly focused on polyolefins, methanolysis on polyester. And those 2 polymer families usually don't compete in applications. So polyesters like a clear bottle or rigid tray you see in the grocery store, flexible packaging for polyolefins. And so the chemistry it takes to actually break them down to the molecularly recycle them, also very different. So just think polyester molecular recycling relative to Eastman inside of the PET area. It's like the advantage that methanolysis has is that when you do -- when you run the process, based on the nature of the polymer, it actually simply goes back to the monomers, DMT and EG. If you do pyrolysis, you basically fragment to polyolefin into several different polymer chain lengths. But because we go back to the DMT and EG, we actually replace all of the other unit ops that starts with basically extraction through all of the refining, all the way to get to paraxylene, intermediates up. And so those 10 unit ops is a lot of energy, a lot of greenhouse gas, and it's a lot of emissions. And the methanolysis process itself, it was on the slide, but I didn't cover it. It's actually on a polyester level. 93% or higher efficient all the way to the monomer. And you can imagine from monomer to polymers 99% efficient. So very efficient, very low greenhouse gas footprint, and it eliminates like 70-plus percent of the emissions in the process. So both from a greenhouse gas and from a total environmental perspective, very advanced.

And I would also say that the gasification is a similar kind of idea, the existing asset, right, we're not adding a new asset. We're leveraging an existing asset. Instead of using coal, we're going to use waste plastic, right? So -- and waste plastic has a much higher energy value, carbon value. So that's why it's 20% to 50% more efficient than using dirt, right? So that's a big advantage. Pyrolysis is a new unit you're adding in front of a cracker, right? So it's got a very different sort of carbon footprint equation relative to what we're doing. But we're focused on the applications that we're in, in the polyester world, which is replacing like material, replacing styrene-based type polymers and a lot of specialty applications, but olefins just don't intersect with us at all. I think that's Mike back there.

Mike Sison, Wells Fargo. So your first facility coming on in '22, is that sold out within the terms of contracts that you like? And if more folks want material sooner, could you accelerate to like a '24, '25, assuming they're all sold out as well?

Yes. So again, Mike, remember that this first facility is largely there to empower our power up our specialty products, so the Tritan and the copolyesters. So it's not a contracting strategy like I talked about or one that fill out immediately. Very pleased we're using bridge volume right now because we have technology to bring some of this to market on a limited scale today. So we've got -- we're well ahead of what we thought we'd be, and we're sold out on that. We'll ramp up quite quickly, but it won't sell out in year 1. That's never been our goal. Like being a good specialty business, those are going to take time to go out and build up, and so we'll be multiyear kind of fill out rate on that particular plan. But as I said, 15% returns, very attractive returns.

Just to add though, we can sell PET off of some of our lines in the short term. So it's a specialty value, which is the focus grows, we can fill out the asset on a total basis pretty quickly with PET and just titrate that off, especially grows and then switch it into the bigger plants that we're building.

Got it. And as a quick follow-up, when you talk to your customers, when they put recycling or renew or whatever on the bottle or material, do those products sell better than the non-recycled let's say, product. And then when I look on Amazon, I mean, the prices are higher, right? They're not -- they're way higher. So do they sell better, I guess, is the question?

Yes. The very simple answers, yes, I think you see that in that phone case example. You see one brand owner adopting it or manufacturing, adopting it. You see share gains and those are at premium prices, and you saw that whole category switch. Pretty much every one of these brand owners has been working with our marketing teams to think about how to position. And part of that positioning is a premium. They believe they're bringing something much better than the market. Often it's embedded, as I showed some of those examples, if you think the Black & Decker video. But even if you think our Herbal Essence from Procter & Gamble, often our product is embedded in an overall shift in the positioning of that product. So both of those examples are companies trying to shift the positioning on the shelf around sustainability and then the material is a component of that, and that's helping command that premium.

All right. Next question.

Josh Silverstein from Wolfe Research. As you guys are contemplating the second U.S. facility and the Europe facility, do you guys want to go in this 100%? So this is your own capital that you're putting up for this? And you were talking about potentially tapping the green bond market. Is this what it would go for?

Willie?

Yes. So if you think about the profile of the contracts in the business and that level of returns, I believe our investor base wants us to invest in this and on the upside. As you think about the cash flow and also the time horizons, we think this is very manageable given the robust cash flows that we're going to generate over the next several years in addition to the financing being available.

Got it. And then as you're considering a second U.S. project, why not also consider -- or why not think about an expansion of Kingsport first? It seems like given the facility that's already in place, maybe brownfield expansion might be more economic.

You want to take that, too?

Yes, sure. So obviously, we have a lot of facilities around the world. And I think we've talked previously about how we utilize those and we have locations in Texas as well as Kingsport that could be part of that, but we will look at the optimal side.

There's also value in spreading out where you're trying to source feedstock right? So you're not trying to pull from, I think, [indiscernible] too far of a geography in the scale of the facility app. So it's a really complicated equation as you look at it from access to feedstock, leveraging the infrastructure, of course, we have in Tennessee, which is very advantaged to doing this first plant. And then access to green energy and how you're going to tap into that and all those factors go into that second and third plant in those locations. So we really like diversifying our manufacturing footprint from the U.S. into Europe with both specialties and the circular packaging and textile. So you got to weigh all those factors together and how you're trying to balance the returns and the sort of derisking of these projects as you look at them. Jeff. 2 Jeffs.

Edlain Rodriguez from Jefferies. Mark, when you look at the current portfolio, like how much of it would you say -- would you classify as being high-value products? And how big can that proportion be in 5 years?

I'm sorry, you're saying of the total company earnings?

Yes. Sales or earnings.

Yes, I would say right now, I would classify 70% as higher value from an earnings basis today. And that number can be 80% as you look at going forward under our current portfolio.

And that's really AM and AFP, right? So as we stabilize fibers and the textile grows, that puts you beyond the 80%, and there's always how we think about the portfolio in the long term.

Something related. In terms of -- I mean, you've talked about the margin stability of the portfolio, the resiliency of it. And of course, at the same time, the valuation metrics compared to your specialty peers are much lower. Like what do you think you have to do to converge those 2 metrics?

To improve the valuation or the metrics?

Yes. To have the metrics converge.

Yes. Well, first of all, the slide that Willie put up, I think addresses a pretty good set of metrics around how we're performing. So from a financial outcome point of view, the strength and stability of our margins, the growth rates in EPS over time, the free cash flow conversion, the ROIC, I think are all extremely attractive and in line with specialties, if not, frankly, slightly better than the specialty average. So from a pure financial point of view, I think we are already delivering very compelling metrics. When you look at the forecast of what we're giving you going forward, right, those metrics get better, right? The cash gets better, the margins get better. The earnings growth gets better. The ROIC gets better, right? So that seems good. When you look at the credibility underneath of this, this is a proven innovation-driven growth model that is delivering a very compelling organic growth in the specialties. And then we had circular on with this model that we have put forward to provide stable earnings, I think, is extremely attractive organic growth with attractive returns. So I think this portfolio is very much well down its path to specialty transformation and the integrated system of how we do it and leverage businesses like CI to fund the growth and provide advantaged cost positions and enable us to have scale and innovation, and the circular economy is compelling. So our job is to create a very compelling story, which I think we've done. Your job is to decide whether you believe it or not, invest, and that's how valuations get created. But I think we're extremely well positioned to have a far better valuation when we look at where we are today relative to the sort of financial returns we're offering. Jeff.

Jeff Zekauskas from JPMorgan. You're putting a good amount of capital to work over the next several years in service of much higher returns than you've had in the past. You've also, in the past, generated $1 billion or $1.1 billion in free cash flow annually. Are we going to go through a period where the free cash flow generation is more like $800 million or $900 million in service of the longer-term improvement in investment returns?

Great question, Jeff. So to your point, free cash flow has been roughly $1 billion to $1.1 billion. we've been allocating roughly $300 million or $400 million of that to debt. So we've got the opportunity to invest in these high-return projects that would probably increase the CapEx no more than that, probably towards the lower end. So obviously, I think the $900 million to $1 billion would still be our objective as we're growing EBITDA across this time horizon as well. So yes, that's why you also saw us change our focus today to be operating cash flow as we make this transition with the strong and compelling growth case that I think we've presented.

Yes. I mean, Jeff, just the way we think about it is the strategy around our core transformation in our specialty business that requires $500 million to $600 million of capital to support that growth, including $300 million of maintenance is intact and stays the same, and if you will, the free cash flow would still be north of that $1 billion, $1.1 billion. But we're looking at, from an investing activity point of view, if you will, our choices. Big circular plants, M&A, share repurchases as competing for that cash to some degree. And so that's sort of why we switched to OCF and wanted to sort of make sure we're clear about that because that's a shift in what we're doing. We think it's really attractive. When you look at the multiples out in the marketplace today for M&A, these circular plants offer a far better return, and it's leveraging core Eastman world-class technology that's been around for 70 years that we think has a unique opportunity right now with what's going on in the sort of sustainability elements of how we're making a better plan.

It's Matt DeYoe from Bank of America. So the prospects of this Airgas business model for methanolysis are attractive undoubtedly, but it's not particularly new technology methanolysis from itself. So how do you expect competition to evolve here as this becomes a more viable business model as you prove it out? And is the first mover advantage the primary moat, or are there other kind of areas where you should be able to differentiate yourself over time?

Yes. So that's why we created that triangle chart because there are multiple dimensions, layers, if you will, of how we're creating advantage in this that I think are quite significant. We spend a lot of time trying to make sure we're building a defensible long-term platform. And I'll let Steve start by answering some of the more sort of operational technical side of this.

Yes. So I'll go back to the separate -- I mean, there's a lot of people in the molecular recycling space so separate out the polyolefins just think about polyester. I mean today, I would say Eastman is the only company at scale that is investing this heavily into the polyester recycle space. The 30 years is an advantage, but the most significant advantage is the fact that we're not going to disrupt mechanical recycling. So we're going after the harder to recycle waste, that means the feedstock is going to be variable. It means the impurity profile is going to be variable. And our experience over the 30 years focused on that, but the experience that we're gaining today with the piloting facility. So Brad told you how much material that we already knew that we were going to bring in. All that went through lab scale, bench scale, pilot scale, all the qualification. And so we're learning really, really rapidly around that depolymerization, purification step, right? And so we're going to protect that as long as we can. And it will give us a substantial head start where it will be hard to close the gap.

And that's not the only advantage, right? There's also a lot of what we bring on the commercial side, the AD, the polymer connections we have in the market. You might want to hit on that, Brad.

Yes, I think the example that I showed are all those examples the start-up companies just don't have that capability. So it's both a reliable performance we've had in many years plus that application development to really fuel that growth. So I think we're in a very different spot. Probably the best indicator is it's never easy to get these kind of customers to sign up for long-term contracts. When I say things like cost plus and take-or-pay, the only way you're going to get those kind of contracts in this market is if you have something completely different and you're solving a major unmet need, and that's where we're at. And long term, we do need more development because I showed you there's 9 billion kgs of polyester out there. So we've got to solve the world's problem, and Eastman won't do that alone. So we're not afraid of competition. We're just confident we'll be well ahead of them, not only in terms of first mover, but in terms of the cost position we have.

And there's IP we're getting along the way. We'll see how valuable it is, but we're not relying on that as the advantage. It's all the history experience and, frankly, scalability we have that our competitors at this stage just don't have at all.

Okay. And I guess just on all this, and I know it might be early, but do you envision Project 1 to U.S. and Europe being servicing individual customers? Or will that be packaged across many customers operating the same business model?

Yes. So the first plan, like Brad said, will be specialty serving a lot of different customers. You've seen a lot of the brands sign up on that sort of critical icon chart. The circular packaging and textile part of the next plants will probably be larger contracts with a fewer set of customers that are really driving those projects, and then you'll leave some for the market. It will be a little bit different. How about Angel over there in the back?

Angel Castillo on for Morgan Stanley and Vincent Andrews. So I just wanted to follow up on the new plants. I think it was $600 million to $800 million of CapEx. I was wondering, could you break that down across the 3 facilities? I think it were shown on the slide. And will you be building mixed plastic processing? I just want to clarify that.

Yes. So we're not going to break it down. But if you think about the methanolysis plant, we're currently building, that's $250 million, it's not a PET line, but a polymer line. You can see that there's a balance there in the CapEx between those 2 steps. As you look at that larger scale, the reason the CapEx is higher is we don't have all the infrastructure to leverage in Kingsport when we build these new plants and these other locations that are going to be more greenfield/limited brownfield, if you will, in the locations we're looking at. The mixed plastic processing is a much more affordable unit in that total capital expenditure. But it is a proprietary technology, we have to very efficiently separate polyester from other mixed waste plastic. And it is a very significant competitive advantage. We're already going to have it in place in Kingsport that will then split the polyester to methanolysis and split all the other waste plastic to the CRT into the gas fire. And there's ways that makes a lot of sense with other partners in other locations where we can do that in these other 2 plants to keep the polyester for ourself and get that other stream to companies who put a high value on it in these other circular technologies being developed. So there's a natural opportunity of competitive advantage in MPP as well that we can bring to both Europe and the U.S. So -- but that gives you a sort of directional idea.

That's helpful. And then just a quick follow-up to that. Do you foresee yourself licensing that in the future? And a secondary question, just I think you mentioned that as you fill up the specialty side of the business in terms of new contracts, you might be selling into maybe PET. Is that something you do through selling DMT and EG? Or do you see yourself actually making PET? And would you do that through partnerships or...

Yes. So we're not looking at selling intermediates. And we're not, at this point, looking at licensing technology for the recycling technology. The MPP is there, there's opportunities to partner with the waste stream. And so we are looking at sort of licensing and collaboration ideas on that for sourcing feedstock. But to be clear, all these plants are both methanolysis and polymer, right? So in Tennessee, in specialty polymer like Tritan, we have some existing PET assets we can leverage already to fill out the plans and manage pure run rate on that methanolysis plant. But these new plants are, again, methanolysis and polymer. But this time, it will be PET or polyester for textiles and some amount of specialty, especially for the Europe plant will be more of hybrid kind of design, the U.S. plant probably more focused on packaging and textiles. Other questions? John. We're hitting round 2. So...

John Roberts from UBS. Is CO2 sequestration in the future for Kingsport? And if so, how would you do that? I don't know if there's any place to put the CO2?

You can answer that question.

Yes. So as I mentioned in the comments around climate. So we are looking at the emerging technologies, and we call it carbon recovery because we actually think the preferred outlet is carbon recovery and juice. And so we do have some programs looking at how we can actually recycle CO2 back into products. But they're pretty early on at this stage. But it will definitely be part of that strategy that carries us from now to beyond 2030.

So we'll going to take just one last question, and then we're going to wrap it up.

Kishan [indiscernible]. So you've touched on the competitive balance in the environment and [indiscernible] recycling, but what are you seeing in terms of capital deployment for your peers and how they're devoting capital into this market and how that's impacted contracting going forward?

For the circular economy?

Yes.

So right now, this is why we feel sort of confident about moving forward is we don't really have that much competition, right, from an at-scale kind of competitor. We're pretty much the only game in town in polyester. So there are start-ups out there and they are obviously engaging brands. And I think the brands are looking at how they position themselves to support multiple technologies because the need that they have is so excessive in where they are to where they need to get on recycled content, they want to play multiple bets. So there are companies out there, but they're more in the start-up category. And so as we look at the overall opportunity, we just don't see a lot of significant capital deployment in polyester here in the short term, and that's sort of why we're pushing ahead so aggressively. But I think over time, we expect other companies to get in this game. It's obviously just a huge market opportunity that needs to be solved. And that's why we have the circular contracting model in mind of making sure we have secure contracts that give us margin stability or we won't build a plant.

And one last follow-up. So in terms of your fibers business, are you continuing to invest in that? Or is it still possibly under strategic review? Just trying to understand the drivers there on a go-forward basis.

Yes. So Fibers is a great business and generating a lot of cash flow that supported our growth over the last decade. Obviously, it's come off from its highs. What's great about where we are right now, is the textile business is growing faster than the tow business decline and the margins are pretty similar. So we're not actually making a margin trade-off anymore between those 2 businesses. The integration of our Tennessee site is extensive and complex. We've talked about this multiple times in our past. And the way this whole biopolymer chain is integrated into our growth of existing earnings in AM and AFP today along with fibers. And then you throw in the circular economy about how we can accelerate such extensive growth like in foodservice that Frank mentioned or the microbeads that solution businesses is looking at than just the traditional IA textile market that's already growing fast, you can't unwind all that. It's all too integrated. So when you put it together on a net basis, that integrated stream has incredibly high margins and has very attractive net growth on a corporate basis. It just gets divided up in how it shows up across the portfolio. So we're very focused on leveraging that integration and advantage we have because we're the only game in town that starts with a solid feedstock that can use plastic waste to put recycled content in polymer and cellulosic polymers. Every competitor we have is based on natural gas, they can't do that. So we have a huge competitive advantage in the biopolymer side with our [ ask ] configuration that literally no one else has. In addition to all these different polymers we can make with our olefin additives and our -- and modifications to the performance that our competitors also don't have. So it's a great integrated stream. I mean it's a lot of opportunity there, too. It's not just about polyester. All right. With that, I'm going to wrap up the formal Q&A. The Q&A will continue, I hope, as you stick around and have lunch with us. And feel free to reach out and talk to all the team members for that. Thank you so much for coming here today. We do think it's a great opportunity to invest in Eastman. We hope we answered some of your questions, and we view this as just the beginning of our story. We look forward to a lot of the one-on-one conversations with all of you to sort of further answer your questions and help you understand our value proposition. So thank you. Have a good day.