# Dear fellow Eastman stockholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_EMN_2022/NYSE_EMN_2022.mmd` · pages 1-7_

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Dear fellow Eastman stockholders,

As I reflect on 2022, first and foremost I want to thank the global Eastman team. Demonstrating agility, resilience and determination, the team progressed our long-term strategy of growth through innovative, sustainable materials while navigating a dynamic macroenvironment. I am tremendously proud of how the team worked to deliver for our customers and drive value for our stockholders.

Against a challenging economic backdrop, we advanced our innovation programs and transformational initiatives and made progress on our ambitious environmental, social and governance (ESG) and safety performance goals. We achieved a number of milestones in our circular platform, further establishing ourselves as a leader in building a circular economy. Our work in this area is just beginning as we aim to help solve the world's biggest problems while creating a new vector of attractive growth for Eastman.

## 2022 review

Last year started with strong demand driven by a growing economy. Through the first half of the year, we delivered strong financial performance, including the best second-quarter results in Eastman history. In the back half of the year and particularly in the fourth quarter, global dynamics in the macroenvironment began to quickly shift, resulting in economic uncertainty and broad demand challenges that were widespread across key end markets and geographies. The conditions escalated in the fourth quarter due to exceptional challenges in demand, aggressive inventory destocking and the impact of Winter Storm Elliott. In addition, our growth in the first three quarters of 2022 was limited by operational and supply chain disruptions, resulting in 2022 sales revenue of approximately $10.6 billion and adjusted earnings per share (EPS) of $7.88, which is a solid result in this context but short of the growth we had expected as the year began.

Despite these challenging circumstances, the Eastman team achieved numerous accomplishments worth highlighting:

• Returned cash to stockholders — We returned approximately $1.4 billion to stockholders through share repurchases and dividends. We have raised our dividend for 13 consecutive years, a tangible reflection of our strong financial position and our commitment to returning cash to our stockholders.

• Generated strong operating cash flow — We generated approximately $1 billion in operating cash flow, demonstrating resilience in a challenging environment and delivering above prior-year levels in the fourth quarter.

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• Leveraged our innovation-driven growth model to generate growth — Our commercial teams did an outstanding job of driving new business wins across our portfolio of specialty products. In 2022, we closed more than $550 million of new business revenue from market development and innovation despite challenging economic conditions. Our continued focus on innovation should contribute to recovery in 2023.

• Demonstrated commercial excellence — In a year where raw material, energy and distribution costs increased by approximately $1.3 billion, our business teams demonstrated commercial excellence by raising our selling prices to keep pace with extraordinary inflation.

• Achieved milestones on our circular platform, Eastman's new vector of growth — We celebrated a number of achievements on each of our planned methanolysis projects, going from one facility under construction to all three projects fully in development, including site selection of our France project and a signed agreement with PepsiCo to baseload a second U.S. project.

• Strengthened portfolio — We completed the divestiture of the adhesives resins product lines in second quarter 2022 for a total selling price of $1 billion, giving us the opportunity to drive results in a more stable, focused Additives & Functional Products segment.

• Further integrated sustainability and ESG into how we win — We further increased transparency and accountability in how we drive ESG throughout our organization. We published our 2022 Sustainability Report, "A Better Circle," reporting our progress toward our 2030/2050 sustainability commitments and detailing how we are endeavoring to enhance the quality of life through material innovation. We also launched our second Inclusion and Diversity (I&D) report, "Globally United," in which we reported progress on our I&D strategy of shaping a more diverse culture that creates opportunities and brings out the best in everyone.

## Pathway to success in 2023

Success begins with commitment to safety and reliability
As always, laying the foundation for our pathway to success
starts with the safety of our teams and communities. We have
much to accomplish across the company in 2023, and that work
begins with the global team's commitment to a zero-incident
mindset — the resolve that zero means zero. A safe work
environment, free of incidents and injuries, is of paramount
importance to us. In 2022, we renewed our commitment
to safety and operational reliability by setting even higher
standards for ourselves. The progress we have made in this area
has encouraged us to challenge ourselves even further in 2023.

## Path to strong financial performance

Although we entered the year in a period of uncertainty due to challenges in the macroenvironment, we are optimistic in our ability to deliver strong financial performance in 2023. For the year, we expect to grow adjusted EPS by between 5% and 15%, excluding an approximately 75-cent pension headwind. In a volatile economic environment, cash flow continues to be a priority for us, and we expect operating cash flow to be approximately $1.4 billion for the year.

In keeping with our balanced capital allocation strategy, priorities for uses of available cash in 2023 remain organic growth investments, payment of our quarterly dividend, bolt-on acquisitions and share repurchases. This includes our recent acquisition of Ai-Red Technology (Dalian) Co. Ltd., which supports growing demand for our performance films business.

There are a number of tailwinds that we expect will contribute to positive momentum as the year progresses. First, we believe destocking has mostly ended in many of our stable end markets and will modestly improve in the automotive end market, and we expect most of the aggressive destocking in consumer durables and building and construction will end in the first quarter. Second, we expect margins to recover substantially by maintaining commercial excellence and pricing discipline as variable costs decline.

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Third, we are taking decisive actions to reduce our cost structure by more than $200 million net of inflation in 2023. Over the last couple years, certain costs have increased significantly as a result of supply chain inefficiencies attributed to strong demand after the COVID-19 pandemic. These inefficiencies were compounded by operational challenges in the early part of 2022 during a period of very strong demand. As a result, we aim to return our cost structure to a more normal level, which will benefit earnings, particularly in the final nine months of 2023.

We believe in the resiliency of our portfolio and fully expect our innovation-driven growth model to continue delivering growth in 2023. At its heart, our growth model succeeds by leveraging our deep customer connection, application development expertise, and world-class technology platforms to drive growth above our underlying end markets. Even when the global economy is under pressure, we continue to focus heavily on winning new business and positioning ourselves for growth

Building on new business revenue from innovation wins
In 2022, we closed more than $550 million of new business revenue from innovation, which will contribute to 2023 results. For example, Eastman Tritan™ copolyesters are growing strongly in food service in Europe as restaurants shift away from single-use plastics, driven in part by consumer preferences and regulations. Food contact applications are ideal for Tritan, which is clear, tough, temperature resistant, chemically resistant and bisphenol A (BPA)-free.

Paint protection films are another example of products that are growing globally due to consumer preferences coupled with our strong customer connect, leading brands and unique service offerings.

Our head-up display interlayers continue delivering strong growth, leading to improved product mix as our exposure to premium vehicles and auto electrification provides resilience in an overall auto market that is under pressure. Eastman's leverage to electric vehicles (EV) is increasing, with approximately 12 percent of our automotive revenue tied to EVs. And we're growing rapidly, with EV-related revenue up over 70% in 2022 compared to 2021.

Another example is Eastman Naia \( ^{™} \)  cellulosic fibers, which continues to win in the marketplace as a leading sustainable textile offering for brands. Last year, Eastman announced that Patagonia \( ^{®} \)  is offering a limited run of T-shirts made with Naia \( ^{™} \)  Renew ES — Eastman's latest fiber offering made with increased recycled content — for the outdoor apparel retailer's Workwear line. Naia \( ^{™} \)  is a preferred choice for customers because of its sustainability, comfort, luxury appearance and ease of care.

We've also had good wins in Tetrasheid \( ^{™} \)  for metal food packaging. The world is moving away from BPA, and Tetrasheid is providing customers an answer to package canned foods, vegetables or beverages with the same kind of durability as epoxy coatings, but with a BPA-free profile.

And finally, an example of where we are supporting our customers to meet new regulations is our innovative Tetrasheld industrial coating resins, which we are preparing to launch in 2023. Thanks to the long-term weathering performance that we demonstrated in 2022 trials, our solution provides an alternative for our customers to move away from current solutions containing materials of concern that have come under increasing regulatory pressure. Tetrasheld liquid and powder coating resins leverage the strong performance of our Tritan monomer platform and were recently highlighted as an alternative in the European Union's proposed regulation.

These are just a few proof points of our many wins in 2022 and opportunities for future growth. As 2023 unfolds, we plan to leverage the groundwork we've built to drive specialty product growth above our underlying markets and deliver differentiated performance for all our stakeholders.

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## A leader in the circular economy

As we look ahead, we are unwavering in our commitment to creating A Better Circle. I am proud of the work that we have done to institute meaningful and measurable goals that ensure progress toward the ESG expectations of our stakeholders — designing sustainable solutions and scaling positive societal impact while also delivering financial value to our stockholders. Our goals and objectives are structured across the three pillars of mitigating climate change, mainstreaming circularity, and caring for society, which we call "the triple challenge."

Through our proven polyester renewal technology, or methanolysis, we are able to address the triple challenge by providing true circularity for both durable and food-grade applications for hard-to-recycle polyester plastic waste that is typically incinerated, sent to a landfill or ends up in the environment. The hard-to-recycle waste is broken down into its molecular building blocks and then reassembled to become first-quality material without any compromise in performance. With the technology's inherent efficiencies, polymers can be produced with greenhouse gas emissions substantially lower than traditional methods.

We expect 2023 to be a pivotal year for our circular economy platform as we are set to achieve a number of significant milestones on each of our three projects currently underway. These projects will represent an Eastman investment of approximately $2.25 billion to bring circularity into the mainstream.

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• First project in Kingsport, Tennessee – We expect to complete our first methanolysis facility later this year, ramping up to commercial quantities in the fall and delivering copolyester with recycled content to our customers before the end of the year

• France project – We expect to have definitive agreements in place for the majority of the volume before the end of the year. Given the progress we've made commercially with the site and with procuring feedstock, we expect to break ground on the facility before the end of the year.

• Second U.S. project – We expect to reach additional definitive agreements for the remaining capacity of the facility in 2023. We expect to announce a location in the first half of the year and break ground on the project before year-end.

Combined EBITDA from the first phase of these projects is expected to exceed $450 million in 2027, significantly contributing to Eastman's growth. This will start with the Kingsport methanolysis facility contributing to EBITDA growth in 2024 and will continue with the contribution from the second U.S. facility and the French facility beginning in 2026.

The pace at which we are progressing and the strong brand engagement give us great confidence in the ability of our circular platform to create significant value for our customers and our stockholders.

## Committed to delivering long-term growth

I would like to close by thanking our customers, suppliers and partners for their collaboration, our stockholders for their support, and the global Eastman team for their hard work in 2022. It was a tough year that challenged us as never before. I am so proud of how our team navigated a very dynamic environment while maintaining our company values of safety and wellness, honesty and integrity, and inclusion and diversity. Our outcome-oriented team sustains the unique culture that is and has been the Eastman advantage for more than 100 years.

On behalf of all of us at Eastman, thank you for your investment in our company. We are grateful for your belief in us and in the future we are creating.

Sincerely,

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March 22, 2023

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## Forward-Looking Statements