# DEAR FELLOW EASTMAN STOCKHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/basic-materials-specialty-chemicals/NYSE_EMN_2021/NYSE_EMN_2021.mmd` · pages 1-7_

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DEAR FELLOW EASTMAN STOCKHOLDERS,

Last year was a very challenging yet rewarding year for Eastman. We delivered record sales revenue and adjusted EPS and laid out exciting plans for the future as a world-leading material innovation company. The global Eastman team did an outstanding job navigating through a very difficult operating environment that included unprecedented logistics and supply chain challenges; rapid, broad-based inflation; and labor shortages. The Delta and Omicron variants reminded us that we are not yet free of the ongoing threat of COVID-19 and the disruption and uncertainty it causes.

Even in this dynamic environment, we continued to deliver compelling revenue and earnings growth, advance our innovation programs and transformational initiatives, strengthen our business portfolio, achieve milestones toward our ambitious sustainability goals, and so much more. Here are just a few of our highlights from the year:

• Delivered record full-year revenue and adjusted earnings per share

• Generated approximately $600 million in new business revenue from innovation, driven by strong growth of specialty products across the company

• Accelerated leadership in the circular economy with plans to build multiple world-scale material-to-material molecular recycling facilities

• Generated $1.05 billion of free cash flow, marking our fifth consecutive year of delivering greater than $1 billion in free cash flow and demonstrating resilience in both good and challenging environments

• Returned approximately $1.4 billion to stockholders through dividends, which we increased for the twelfth consecutive year, and share repurchases

• Successfully divested our tire additives product lines and announced the divestiture of our adhesives resins product lines, resulting in a more strategic Additives & Functional Products segment

• Recognized by Fortune magazine as a "Change the World" company and named by Barron's as one of the 100 Most Sustainable Companies

These results show that momentum is building across the company and demonstrate the value we are creating along these five themes:

## 1. OUR INNOVATION-DRIVEN GROWTH MODEL IS SUCCEEDING

Our innovation-driven growth model is at the heart of who we are and how we win in the marketplace every day. This model is delivering results, and we are demonstrating that our portfolio can grow above our underlying markets with products that have higher margins and drive strong mix upgrade. By leveraging this model, we expect to have delivered greater than $2 billion of new business revenue from 2018 through 2022.

As we look ahead, we are well positioned to leverage our model to drive not only meaningful growth but also meaningful change. One hundred percent of our top innovation programs are linked to disruptive, sustainably focused macro trends aimed

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at solving the triple challenge of caring for the health and wellness of a growing society, reducing our impact on the climate, and addressing the plastic waste crisis.

Growth from these programs is at higher margin than company average. This significant mix upgrade is key to delivering growth in Advanced Materials and the performance that we expect in the more focused Additives & Functional Products.

## 2. CIRCULAR ECONOMY IS A NEW VECTOR OF SIGNIFICANT GROWTH

In my last letter to you, I described the circular economy as a new vector of significant growth for Eastman. We have a great opportunity to deliver attractive growth by addressing the plastic waste crisis and reducing our impact on climate at the same time. It starts with the global brands that are making significant commitments to reduce plastic waste and their carbon footprint. They are working with Eastman as a leader to help them meet their commitments for improving the environment without compromising on the quality of their products. We are well positioned to deliver solutions and create growth with our molecular recycling technologies for our world-class polyester platforms and with our biodegradable cellulosic biopolymers.

We are making great progress in scaling up our polyester renewal technology (PRT) with our two announced projects. In 2021, we began construction on our first project — a world-scale, material-to-material molecular recycling facility in Kingsport.

For our second PRT project, earlier this year, we announced plans alongside French President Emmanuel Macron to build the world's largest material-to-material molecular recycling facility in France. The facility, which will process up to 160 KMT of hard-to-recycle plastic waste annually, is expected to be operational in 2025. With the technology's inherent efficiencies and the renewable energy sources available in France, materials can be produced with carbon emissions up to 80% less than traditional methods. We also plan to establish an innovation center for molecular recycling and sustainable product development that will assist France in its effort to sustain a leadership role in the circular economy.

Our planned investment is being endorsed by several leading global brands, including LVMH Beauty, L'Oréal, Danone, The Estée Lauder Companies, Clarins, and Procter & Gamble. We expect to announce additional milestones in the coming months, including agreements related to sourcing the plastic waste feedstocks, completing commercial agreements, and finalizing the site location.

We expect new business revenue from innovation to accelerate as we advance our leadership in the circular economy. Our two announced PRT molecular recycling projects and a third in development have the potential to deliver greater than $450 million of EBITDA by 2026. We are showing the world what is possible today and that we can do this while delivering an attractive return on our investment.

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## 3. STRENGTHENING EXECUTION TO CONVERT GROWTH TO VALUE

Our aggressive pursuit of productivity is part of the Eastman culture. We continue to make investments in strengthening our execution capability to drive the top line and translate it to the bottom line. This includes strengthening our commercial and product excellence. Our new integrated business planning system will enable us to support growth better while keeping inventory levels low. We are also transforming our operations by modernizing and digitizing our capabilities to improve our reliability and cost competitiveness. We have also optimized our manufacturing footprint around the world to better serve our customers as well as reduce overall costs.

## 4. SUSTAINABILITY AND ESG ARE INTEGRATED INTO HOW WE WIN

At Eastman, sustainability is a business imperative. That is why ESG is integrated into how we do business at Eastman. We have the responsibility and opportunity to lead, join others to address climate change, mainstream circularity as an economic model, and build a more inclusive and equitable world.

We are committed to reducing our greenhouse gas emissions by one-third by 2030 and achieving carbon neutrality by 2050. We have a detailed path to achieve these ambitious goals, which includes energy efficiency, process transformation, renewable energy, and technology breakthroughs.

Regarding our societal goals, we know that our people — combined with our values of safety and wellness, honesty and integrity, and inclusion and diversity — create the unique culture that is the Eastman advantage. We live our values with a zero-incident mindset regarding safety, ethics, compliance, and an inclusive workplace.

On that last point, last year we launched our first-ever I&D Annual Report to increase our transparency and accountability for achieving our goals. We also bolstered our internal resources so that our global team can take an active role in shaping a more diverse culture that creates opportunities and brings out the best in everyone.

## 5. POWER OF CASH FLOW AND THE BALANCE SHEET

We have developed a record of strong cash flow in most any environment. Over the next three years, we expect to deliver approximately $5 billion in operating cash flow, which is a new level of performance for Eastman that we expect to sustain for years to come.

We will continue to put our cash to work in a disciplined manner. We expect to deploy more than $6 billion from 2022 to 2024 for growth investments, capital expenditures, and returning cash to stockholders through dividends and share repurchases. Proceeds from the anticipated divestiture of the adhesives resins business are expected to be deployed early in the year to at least offset the dilutive impact of the divested earnings.

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## BUILDING ON RECORD GROWTH

Together, these five elements position us for another year of growth and value creation. Innovation and market development are expected to drive organic growth above our underlying end markets consistent with what we do every year. Our portfolio of specialty products is expected to deliver strong top-line and bottom-line growth. We also expect our price increases to catch up to higher raw material, energy, and distribution costs. And we expect to benefit from a continued disciplined approach to costs, underpinned by our operations transformation program.

Altogether, we expect to deliver growth again in 2022 with full-year adjusted earnings per share to be between \(9.50 and \)10, which is 7%-13% growth. We are well positioned to create our own growth and build on what was a record year in 2021.

## BUILDING MOMENTUM

Momentum is building. The company is growing in exciting ways, and we are leading in areas that can make a real difference in the world. I am grateful to the global Eastman team for giving us many reasons to celebrate in 2021 and for giving us confidence in what we can deliver this year and in the years to come.

On behalf of all of us at Eastman, thank you for believing in our company and our vision for the future. Our success would not be possible without your trust and support.

Sincerely,

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Mark Costa

March 21, 2022