Good day, everyone, and welcome to the fourth quarter full year 2020 Eastman Chemical Company conference call. Today's conference is being recorded. This call is being broadcast live on the Eastman website, www.eastman.com. We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Company Investor Relations. Please go ahead, sir. Okay. Thank you, Cecilia, Good morning, everyone, and thank you for joining us. On the call with me today are Mark Costa, Board Chair and CEO, William McLain, Senior Vice President and CFO, and Jake LaRoe, Manager Investor Relations. Yesterday after market close, in addition to our fourth quarter and full year 2020 financial results news release and SEC 8-K filing, we posted slides and related prepared remarks in the investor section of our website, www.eastman.com. Before we begin, I'll cover two items. First, during this presentation, you will hear certain forward-looking statements concerning our plans and expectations. Actual events or results could differ materially. Certain factors related to future expectations are or will be detailed in our fourth quarter and full year 2020 financial results news release, during this call, in the proceeding slides and prepared remarks, and in our filings with the Securities and Exchange Commission, including the Form 10-Q filed for third quarter 2020 and the Form 10-K to be filed for full year 2020. Second, earnings referenced in this presentation exclude certain non-core and unusual items. Reconciliations to the most directly comparable GAAP financial measures and other associated disclosures, including a description of the excluded and adjusted items, are available in the fourth quarter and full year 2020 financial results news release, which can be found on our website. With that, I'll turn the call over to Mark. Good morning. Thanks, Greg. Before we answer your questions, I want to take a few minutes to make some comments. We've had a strong recovery in the fourth quarter and robust performance for the full year, despite the challenges associated with COVID-19. I'm incredibly proud of how Eastman employees around the world responded to these challenges and stepped up to help us deliver in 2020. Here are some of the highlights. Early in the year, we took quick and decisive action to adjust our operations to keep employees safe and preserve our operational integrity. We shifted our financial forecast to prioritizing cash and liquidity given the uncertainties, and we delivered another year of outstanding cash flow, our fourth consecutive year of cash flow greater than $1 billion. While we prioritized cash, our earnings performance was resilient, which is a testament to the tremendous investments we've made in our innovation portfolio and our overall business portfolio over the last decade, including enhancing our market development and commercial capabilities. Additionally, we demonstrated we have diverse portfolio of businesses and end markets, which gives us stability. As you know, we are committed to being a leader in the circular economy. We've accelerated progress, and it's paying off with several wins across our portfolio, including Eastman being named as a Wall Street Journal Most Sustainably Managed Company of 2020. In addition, in our 2020 sustainability report, we committed to the ambitious goals of reducing our Scope one and two greenhouse gas emissions by one-third by 2030 and achieving carbon neutrality by 2050. Looking forward to 2021, we entered this year with momentum from our record fourth quarter results, and we're seeing clear signs of recovery across many of our markets, including strong orders in January. That said, visibility remains limited due to continuing effects of COVID-19. This means that we will continue to focus on what we can control. In 2020, we meaningfully reduced capacity utilization as we aggressively managed inventory well beyond the decline in demand to maximize cash. As a result, EBIT declined by about $100 million just related to this additional inventory actions we took. If volume is flat in 2021 compared with 2020, we would have about $100 million tailwind from this improved utilization as we go into this year, or about $0.60 a share. Looking at our cost structure, you'll recall that we reduced costs by approximately $150 million in 2020 versus 2019, and we estimate about $100 million of this was temporary. We also took actions to accelerate our transformation program, and we are on track to reduce costs in 2021 to offset the return of those temporary costs. As a result, in 2021, we expect our cost structure to be about flat when we compare it to 2020. On top line growth, we expect growth from three levers. First, we anticipate market to continue to improve relative to 2020, as we have seen in Q4 and in January. Second, we continue to make progress with our innovation-driven growth model to grow faster than our underlying markets in many of our specialty products. There are a number of examples of this across our portfolio in 2020, and we expect it to continue in 2021. Third, we project a strong improvement in mix with recovery in these high-value markets and the innovation-driven growth of our premium products. A significant portion of our headwinds in 2019 with the trade war, as well as 2020 with COVID-19, were related to mix. As growth in our specialty products accelerates in 2021, improved mix will be a powerful driver of our earnings growth. We've already seen this benefit in Q4 of 2020 and expect it to accelerate through 2021. There are also headwinds, including the lack of visibility related to COVID-19 and other global macroeconomic uncertainties. In addition, we're seeing costs for raw materials, energy, and logistics rising and have competitive pressures in a few products. When we put this together, we expect our 2021 adjusted EPS will increase between 20% and 30% compared to 2020. This means our expected 2021 EPS will be well above 2019, which would further demonstrate the strength of our portfolio. We anticipate a strong start to 2021 with adjusted EPS similar to the first quarter of 2020. You'll recall in the first quarter of 2020, our EPS was up 15% year-over-year, a very strong performance for our industry at that time. Finally, on cash, a high priority for Eastman, we expect 2021 to be our fifth consecutive year of free cash flow above $1 billion. A moment ago, I talked about our intention to be a leader in the circular economy, and as part of that commitment, today we're announcing, along with Tennessee Governor Bill Lee, our plans to build one of the world's largest methanolysis facilities here in Kingsport. Through methanolysis, this world-scale facility will convert waste plastic, polyester plastic, that often ends up in landfill and waterways, into durable products. Over the next two years, Eastman will invest approximately $250 million in the facility, which will support Eastman's commitment to addressing the global waste crisis and mitigating challenges created by climate change, while also creating value for shareholders. Using the company's polyester renewal technology, the new facility will use 110 KMT of plastic waste to produce premium, high-quality specialty plastics made with recycled content. This will not only reduce the company's use of fossil fuels feedstocks, but it will also reduce our greenhouse gas emissions by 20%-30%. This is incredibly exciting news. We're only just beginning. I'll close where I began, with appreciation for the men and women of Eastman that make all this happen and do it with a bias for action, adaptability, and optimism for the future. I share their optimism. This is an exciting time for Eastman. Our strengths have never been clearer. It gives me the confidence that we are well-positioned to manage in this uncertain environment and deliver long-term attractive earnings growth and sustainable value creation for our owners and all of our stakeholders. With that, I'll turn it back to Greg. Thank you, Mark. Cecilia, we are now ready for questions. Thank you. We will now take our first question from Vincent Andrews from Morgan Stanley. Your line is open. Please go ahead. Thank you, good morning, everyone. Mark, I'm wondering if we could just talk a little bit about the molecular recycling plan. I can't pronounce methanolysis whatever it is. Help us understand, it sounds like you're saying this is going to be the world's largest, but what is the scalability of these in terms of how much larger could it be? Where are you in terms of customer demand in terms of filling it out? In the script, you talked a little bit about there being clear evidence of willingness to pay price premiums for renewable products. How are you going to be pricing this product? Maybe we could just start there. Sure, Vincent, it's methanolysis. It's a technology that's been around for a long time. Kodak developed it decades ago to recycle actually polyester X-ray material, and then they learned and saw the opportunity to take municipal waste and broaden the operating capability of this technology back then. It's something that I actually wanted to start in 2010. We actually had the plans and developing the engineering of it at that time, but the market wasn't ready for it. We're really excited because the market is very much ready for it now. Climate, circularity, sustainability is obviously becoming an incredible priority around the world. Even with COVID, it's just become stronger, not less. We think we're in a great position to be a leader here. When you think about the technology and the opportunity that it has from a market point of view, it's tremendous around a wide range of specialty plastic businesses, from hydration to consumer durables to electronics, ophthalmics, et cetera. It's a wide range of markets. A lot of customers are very interested in this as they are making aggressive commitments to improve their recycled content. There's just a lot of engagement. We have over 100 customer trials going on right now across a wide range of different applications. The ability to grow is there. We've already seen great success in launch with CamelBak and Nalgene, where they've put in our recycled content into our Tritan Renew, and you'll see a lot more announcements as we go through this quarter. The demand's there. From a value point of view, as we showed you on that chart, retail products are commanding a premium for recycled content and sustainability. PET, food-grade PET, is trading at a substantially higher premium in Europe as people are trying to work towards their recycled content goals. I think customers recognize that there has to be some amount of premium that we have to achieve to make these kind of investments to solve such a serious challenge we face around the world. Obviously, everyone wants to keep this as affordable as possible, and so we don't expect our premiums to be significant, but sufficient to give us an attractive return. Our primary goal of getting a return is on the growth in this business. We're able to load this plant really fast, is another advantage on the economic side, because we can take a balance of slowly growing the specialty conversions like we do in any specialty product, but fill in the rest of the capacity with PET into the packaging market where there's strong demand, then just keep on valuing that up over time. The economics here are quite attractive. A lot of different ways to sort of win in both existing applications through premiums and accelerated growth, getting into new applications like electronics and automotive as some key examples. Our scale and integration gives us a huge advantage in how we can do this. We've got some significant advantages in how we can manage our feedstocks. Thanks. Just as a follow-up, the $600 million of revenue, is that just sort of assuming from this plant, or is that assuming additional capacity down the road? Right. You asked about the scalability of this in additional plants. Sorry, Vincent. To be clear, the $600 million in new business from innovation is for the total corporation of all of our products, not just methanolysis. When you think about methanolysis, and we look at it as a standalone opportunity, both the polyester renewal technology and the carbon renewal technology combined, we think is between a $500 million and a $1 billion revenue platform for the company. Obviously, that doesn't happen in one year. It takes years to build that out. A very substantial platform, frankly, the biggest platform after Tritan before this, and this would be the two biggest platforms we have. That doesn't include scalability. That's building plants to serve the demand that we think we can make with our specialty products. We also think this is scalable in partnerships with other people around the world who are very interested in recycled content for their needs, and are pursuing a business model around how we scale this into multiple plants around the world, focused on doing the methanolysis. It's very scalable to build these plants and economic. There's an advantage to having them in different regions. We think there's a whole another vector of growth on top of this. It's early days, so I don't want to get ahead of ourselves on that. All right. Well, look, thank you very much. Sounds very exciting. We will now take our next question from Jeff Zekauskas from JPMorgan. Please go ahead. Thanks very much. My first question is, you talked about $100 million cost penalty from lower utilization, wasn't the cost penalty $200 million? Why doesn't $200 million come back in 2021? Jeff, good morning. This is Willie. First, what we would highlight is, the $100 million that we're highlighting as a tailwind is specifically related to the $300 million of inventory reduction actions that we took in 2020. You can clearly see the impact of that in our cash flow. The other $100 million as we think about utilization versus volume mix, you can combine those two together. Fundamentally, the lower utilization and volume mix net together with the other $100 million. Okay. In your methanolysis facility, why don't you just buy methanol? Why do you have to make methanol? Jeff, we're not making methanol. I don't know where they came up with the name of the technology. What you basically do is you take polyester waste, and you use methanol and a modest amount of energy to convert that waste or unzip the polyester basically back into its intermediates of DMT and EG and other monomers, and purify it. It's actually an input, not an output, to the process to depolymerize the molecule. That's sort of how it works. It's far more energy efficient than the fossil fuel process. While it takes a bit of energy and methanol, it's a lot less than pulling oil out of the ground and all the steps to get it to being DMT and EG. We're 20%-30% better carbon footprint, by doing this technology. I think that's an important thing we want to emphasize is any technologies we do around recycling, we believe there are two fundamental goals you have to meet at the same time. We have a plastic waste crisis. We need to address it, and we shouldn't be wasting any of that carbon in the environment or letting it impact the environment. At the same time, we got to make sure our carbon footprint is better, otherwise, we're really not improving the overall environment. Every technology we're looking at has a better carbon footprint than the fossil fuel process. That's true of methanolysis or CRT also, 20%-50% better depending on the feedstock. We're addressing both our climate impact, with process innovation, as well as solving a waste crisis. You're buying the methanol, is that it? Well, we make our own methanol and buy some methanol. It's a mixed bag, as you know from the broad portfolio of products we make. Okay, great. Thank you. We will now take our next question from John Roberts from UBS. Please go ahead. Thank you. You talked about a 5% revenue headwind in chemical intermediates in 2021 from the changes that you made at the Singapore Oxo facility. That seems really big. I didn't realize that facility maybe was as big as it was, or is it a significant shutdown or closure you've done there? Yes. Thanks, John. To your point, as we've made the decisions to, I'll call it cease the operations at our Singapore site, fundamentally, it was based on the raw material positions that we have at that facility in Singapore, and roughly it is a world scale equivalent of an Oxo facility. It's about a fifth the size of what we have in Longview, but still significant from a volume output. The key factor as we think about 2021 and going forward is overall that'll give us an opportunity to, I'll call it, continue to debottleneck our facilities in Texas, where we have a much better cost position. From a fixed cost structure standpoint, we expect to improve earnings by about $25 million on a go-forward basis. This is an action we want to take for a while. It's not a profitable position to be with our cost structure that we had in Singapore. We had to wait till the contracts expired to be able to shut it down on the supply side. While the volume's going to be down, the earnings are going to be meaningfully up around $20 million to $25 million net net by taking this action. We've always warned you that CI has a lot of volume volatility to it because of shutdowns or in just planned maintenance shutdowns or this. It's really dangerous to look at volumes in that section. You need to just focus on the earnings. Great. Thank you. We will now take our next question from Matthew DeYoe from Bank of America. Please go ahead. Hi, thanks. Can you just speak a little bit to the confidence in securing feedstock for the methanolysis plant? U.S. garbage infrastructure isn't typically geared to moving product inland to Tennessee. What's your workaround there? Sure. It's a great question. It's one of the strangest questions when you think about the plastic waste crisis that I think everyone can agree needs to be addressed. There's so much of it out there, and yet, one of the biggest challenges for any of these investments is actually getting it delivered to your site, which is very confusing, but a true challenge and a question. We have a lot of partnerships we've developed to supply us with waste, and we have some very unique advantages around how we can handle waste. Because the combination of the PRT using polyester and the CRT being able to use mixed plastic of a wide spectrum as we sort of repurpose our gasifier to reform plastic at the same site, we can actually take a very mixed plastic stream that no one else really can manage. We can take this very low cost and more readily available mixed plastic that doesn't require much separation and do that separation very efficiently here in a unique process we've developed, and feed that then separated stream into these two assets. It allows us to access waste more readily and at a much lower cost because it's lower value when it hasn't been separated. That's one of the big pluses of the scaled integration that we benefit from here. Our CapEx will be probably 10% less with some of the assets what we use here. I think that's important and a real advantage. Takes a lot of work, and we've been devoting the last 18 months in securing a wide range of sources. The other long-term interesting opportunity that's going to come out of this, a lot of our customers, the big brands, both in textiles on the CRT as well as polyester on a variety of end markets, are very interested in a take-back program, right? They want to truly have a circular loop where we go material to material, if they take back used products from their customers and can send it to us, and then we can recycle it back into materials for their products. It's a true absolute closed loop. It'll take a while for that to obviously develop, but I think for a number of brands, it's incredibly important. Patagonia is a great example where they've been doing this for a while and fully endorsing molecular recycling as the only way they can actually close the loop. You'll see some number of other customers making similar announcements. It sounds like a lot of the press release talked about the PRT side of things, but it sounds like you are also going to do the carbonylation kind of gasification of the fiber or the waste stream as well directly into the gasifier. Did I read that correct, or is it really just the PRT that you're going to be pursuing? No, we're commercial in both now. Okay. We're doing both now. We've just talked a lot about the CRT, which we call the carbon renewal technology. Basically, we're changing our technology, if you will, from gasification to reforming when you go from coal to waste plastic, and replacing that coal with the waste plastic with a carbon footprint that's 20%-50% lower. It's a very compelling technology that goes into our textiles, our Naia fabrics that we're growing quite strongly, as well as into some thermoplastics in the specialty plastics business, and a new growth opportunity we see in AFP around foamed insulation that would be cellulosic based and very sustainable offering versus EPS. A lot of different applications in CRT going on at the same level. That's part of that $500 million to $1 billion platform, combined with the PRT. A lot going on. All right, thanks. We will now take our next question from David Begleiter from Deutsche Bank. Please go ahead. Thank you. Mark, on the 2021 guidance, could you walk through the earnings bridge from 2020 to 2021? That would be helpful. Thank you. Sure, good morning. I'd start with, as we said, what is it that we can control? Our fixed costs, as we said, are going to be neutral in 2021 relative to 2020. We took $150 million out that were sort of temporary cost actions through last year. Many of those costs are coming back, especially on the operations. We're running our plants incredibly hard as we're trying to serve the demand that we've seen in the fourth quarter. It's increasing in January. Those costs are obviously coming back. There's still a lot of other costs of efficiency and structural costs or travel with COVID that is not going to come back, certainly not in the first quarter. We would expect it to start coming back through the year. Cost relatively flat on the fixed basis. As Willie just mentioned in a prior answer, you've got this $100 million utilization tailwind just at 2020 volumes without volumes being greater than last year. Put all that together, that's $0.60 a share in just the sort of cost utilization side of things before you get the volume growth. We've got volume growth in three categories. The first just being market recovery as we're seeing in the fourth quarter and January. That is what we're presuming is going to continue through the rest of this year, that the economy continues to recover and that COVID's not going to have some big negative impact. The second is innovation, creating our own growth. A lot of growth that we had last year wasn't just what markets did, but how we create our own growth. We had phenomenal success in Performance Films in a very down auto market for the year, yet their revenue was basically flat for the year. They had strong growth year-over-year in the fourth quarter. That's a great example of innovation creating growth, great success in acoustics and heads-up display, creating growth in interlayers. Tritan delivering a lot of growth where especially Plastics actually grew earnings in total for 2020 over 2019. A lot of things going well on the innovation side and a lot of traction developing in AFP, like amino antioxidant. It's important to remember that both of the markets that are coming back are high-value mix, like automotive, and as well as the innovation having much higher margins than segment average. There's a huge mix-up grade impact that isn't just about 2019- 2020, but it goes all the way back to 2018 when you think about, first we had a trade war that really hit some high-value markets for us, and impacted earnings. We piled on a pandemic, and we see us recovering back to 2019 volumes and mix and hopefully better than that. That all helps. There are some headwinds. Obviously, aviation's not recovering as well this year, and so that's still going to be probably a $30 million headwind in earnings relative to 2019. We expect raw materials to go up, and there's some lag always been specialties in catching up to raws. We have the competitive pressure we've called out in tires, adhesives, and acetyls. A variety of different things going on there, but when you net it all out, it's a very attractive recovery in earnings. I do want to emphasize, though, that 20%-30% range is a genuine range. There is a lot of uncertainty. While it's great to have growth in January, great to have the recovery in the fourth quarter, it's January. We've learned this lesson in 2019 and 2020 about what can happen through a year. While we remain optimistic that these trends will continue, we really don't know the impact of COVID, and how it's going to impact the economies yet this year. We certainly are seeing operational limitations about how demand's recovering, especially in logistics, and getting products to our customers. That's limiting us a bit here, certainly in the first quarter. There's just those things and factors you have to keep in mind when you think about this range. I think it's reasonable to be a bit cautious as you start the year in this range, and we build to success through the year. Got it. Will, just on the free cash flow guidance, can you walk through some of the components there? I assume we'll see a fairly big build in working capital in 2021. Well, we've got a pretty simple bridge, David, for free cash flow to 2021 to 2020, actually it doesn't include a big build on the working capital front. As I think through this, let me start at a high level, which is we expect cash earnings that's consistent with the 20%-30% that Mark just walked you through. Also as business activity does pick up on the inventory front, we believe that we can offset that. What I would highlight is as part of our transformational efforts, we're investing in advanced integrated business planning processes to enable us to keep the DQO on the inventory side intact and maintain the gains that we've been able to accomplish. Also, we continue to have our programs in AR and accounts payable to offset and continue to make progress on that front. Our base assumption is that working capital will be neutral in 2021, even in an economic environment that has momentum. On the capital front, we do expect in 2021 that CapEx will be $500 million-$525 million, so at least $100 million-$125 million greater than prior year. Obviously, we expect to more than offset that with the cash earnings. All in all, we've, I think, developed a track record that demonstrates that we can maintain cash flows greater than $1 billion in basically about any environment. Our long-term focus is to continue to grow that and not just be at greater than $1 billion. One, I'd also like to recognize how the Eastman team stepped up in 2020 to deliver that $1.1 billion of free cash flow. It took everyone and it took focus, and the team delivered. Thank you. We will now take our next question from Kevin McCarthy from Vertical Research Partners. Please go ahead. Yes, good morning. Mark, I heard the comments regarding volume growth. You talked about market recovery and innovation, and it sounds like mix is going to be important as well. Is there a way you can help us better understand the level of volume growth that's embedded in your EPS guidance? Looks like in the pandemic year went down 5%. How should we think about the high end and the low end, whether it's an absolute level or relative to GDP or another macro metric? How would you have us process that? Kevin, from a KMT point of view, I think you would think about our volume recovery as being similar to GDP. You get some leverage from mix. As you look at this, you've got a variety of markets that are sort of still recovering relative to 2020, that are going to have volumes up in a meaningful way, like transportation or autos to be specific, not aviation. Even though aviation will be better this year, but not by much. You've got markets like that that are recovering. Textiles, we expect a very strong recovery. Those will continue to drive value, and those are all very high value relative to corporate average when it comes to variable margins. Then you've got other markets that are not going to grow as fast because they were really strong last year, like packaging, and some hygiene applications, and care chemicals. We still see them probably growing, as opposed to going backward, but not by much given the strength they had last year. So you can't sort of treat all markets the same way, obviously, as we look at all these different parts of our portfolio. But what's nice is the stability you get from this, right? So these resilient markets that we were in provided a great stabilizer to the headwinds we saw in automotive last year, where our volume mix, as you noted, was only down 5%, which was quite good for our industry and quite stable because of all these different resilient markets. Now this year, you're going to sort of have the reverse of that, of some of these high-value markets that were impacted last year are going to do much better, and these resilient markets are not going to be a big driver of growth. It's hard to give you a specific number because a lot of it that's driving the earnings is mix versus KGs, and I don't want to get into the breakdown of that. Okay. Thank you for that. Second question I had related to methanolysis. My understanding is that you can use different sorts of waste streams, such as old PET bottle resin and maybe polyester from carpet and so on. My question is, what testing have you done already regarding the issue of variability of waste streams, and does it matter? In other words, if I'm unzipping it, as you say, into ethylene glycol and DMT, is it the case that the output is entirely fungible, and the variability is a non-issue? Do you have to go through customer approval processes, et cetera, as you implement the new process? Sure. Let me sort of break this down into the operations part and then the, as you just said, the customer qualification part. The technology methanolysis is a pretty robust technology, and methanolysis as a process is not exactly novel. When Kodak developed this process a long time ago, as I mentioned, when they switched from using a very consistent stream of polyester X-ray films to municipal waste, they discovered that it is challenging to manage a diverse waste stream that also can vary day to day based on the mix of plastic you're getting in there. What's great about this technology is it does not compete with mechanical recycling, right? Mechanical recycling, where you can do it, is a better answer. It has a very low carbon footprint, but it's restricted to only using very clean feedstock. Most of what they do, very clean and clear feedstock from bottles is really what they can handle. Even then, they have problems with limitations to some degree on performance, and the polymer degrades over time. There's a limitation to how long you can mechanically recycle plastic, period. Molecular recycling, like methanolysis, is essential as a complement to mechanical with the raw material, the plastic that they cannot use that ends up in landfill and giving infinite life to plastic, because we can constantly recycle this plastic with no degradation. The key, though, is you have to have a lot of operating experience on how to manage this process, and it's not the methanolysis step that's hard, it's the purification step that you just got at, Kevin, that requires a lot of capability experience and a lot of trade secrets that we've developed over the years on how to do this to make sure that the intermediates that come out of the plant are purified and basically identical to the ones based on fossil fuels. When we get to making the polymer, the polymer is exactly the same. There is no profile or impurities that is an issue. That's what's so great about customer qualification, is they have to wrap their head around that it's the same, and that's tough for them to buy into given the process. Once we sort of walk them through the technical details, the great thing is they don't have to change molds or process conditions or anything else. They can just suddenly have recycled content in their product because it is literally identical. It has the same quality, same performance, won't degrade over time in the recycle loop. That's what's so compelling about this technology, is it really is a long-term infinite solution, much more similar to aluminum. Perfect. Thank you so much. We will now take our next question from Mike Sison from Wells Fargo. Please go ahead. Hey guys, nice end of the year there. Thank you. One quick follow-up on the methanolysis facility. Are you going to be able to brand it like Tritan? Meaning, is there going to be a name or a labeling where a customer can sort of showcase that it's used from recycling material and, if I wanted to go to Amazon or something and search for it would pop up? Yes, you can. We've tried to keep our core product brand names and add a recycled name to it. Tritan Renew is actually the formal brand name, Mike. There'll be Naia Renew in textiles and a series of other products for cosmetic packaging. There'll be Cristal Renew, et cetera. Those signify that there's recycled content in it. Nalgene and CamelBak are marketing it that way already, so you can go look at those products. Yeah, no, I think it's important that we get some sort of identification of it. Every customer is different. A lot of customers switch to our product and don't declare what it is. It'll be a mixed bag depending on how customers want to manage their marketing position on the shelf. We don't mandate a certain approach. Got it. Just in terms of Tritan overall, it does seem like the fundamental demand or growth rate for that business has gapped up over the last couple of years. Can you maybe give us a sense of what you think this business can grow over the next three to five years? When will you need to add some capacity to meet that growth? Yeah. Tritan's been a phenomenal success story over a decade now, right? It's just a business that has continually delivered strong performance and growth in a wide range of applications. It started out with hydration, where we have these reusable water bottles replacing single-use plastic. One of the great things about our recycled content is it's going into durable products predominantly. We got out of PET a long time ago, I'm not trying to defend the PET business. I'm actually taking single-use plastic, I'm taking carpet, I'm taking textiles, a very wide range of supply on the raw materials, turning them in to durable products predominantly. It goes into a lot of consumer durable appliances, et cetera. We're now going into toys in a variety of different applications. It's positioned in a lot of markets that already care about being BPA-free and products being safe as one of our drivers. The performance is far superior to the competing plastics in its durability and resilience in how it holds up over time. Now we got recycled content that we can add in it that just gives us one more level of differentiation. We have a long runway of very attractive growth in this business. From when we need to add more capacity, we're still a couple of years out. You have to remember that in 2018, we added a significant chunk of capacity in Tritan that we're certainly making progress in filling out, but we still have a few years before we have to add more capacity. Great. Thank you. Operator, are you there? We will now go to the next question from Frank Mitsch from Fermium Research. Please go ahead. It always pays to wait. Good morning, folks. Morning. Listen, you called out the biggest source of upside for the fourth quarter came from transportation ex aerospace, and obviously you're continuing to see some issues on the tire additive side. I was wondering if you could offer a little more granularity on how that played out for you with your various products, how it's starting out this year, and what's your expectations as we progress through 2021. You're talking about automotive, just to be clear? Correct. Yeah. Automotive, which I'll roll tires into as well, demand came back strongly across the automotive space, whether it's our interlayers, Performance Films logging in significant record earnings in the fourth quarter, or tires demand actually coming back quite strongly in the third and fourth quarter. Demand's come back across the board in that sector, as you can see from a lot of external reports. We're advantaged that a lot of our products go into the luxury market, especially in advanced materials. We benefited from that market, frankly, holding up a bit better last year than the overall market did and how that's continuing to accelerate for us. You've got accelerated growth with acoustics and heads-up display doing really well. Our new next-gen paint protection film and Performance Films doing incredibly well. A service channel strategy that allowed us to grow a lot of market share in China this year, or I should say in 2020, I mean, that's going to continue to provide growth. It is a real combination of market and innovation and service model that's driving a lot of that growth. You know that the margins of these businesses are above segment average and above company average, you get a lot of mix lift when these things sort of come back. We've been saying that the volume and mix hit that we took in 2019 relative to 2018 and 2020 versus 2019 has a mirror image when it starts coming back, you started to see that in the fourth quarter, we'll continue to see it now. I will note, though, that demand is exceptionally strong across the auto supply chain. We are running into logistics constraints and capacity limits in serving all of it. We're still happy to serve as much as we are, but it's a bit challenging out there on the logistics front right now for a lot of products. Got you. Very helpful. If I could ask about AFP, it was really interesting to read about the retinol sunflower rate, and I was wondering where I could get some of that at some point. I know Greg uses it because he looks fantastic. Yeah. I certainly need to. Yeah. You continue to call out the third of the business that's challenged. Where do you stand on the strategic review, and what do you think your ability is to execute something in 2021? Thanks for the question, Frank. First, I'd say the pandemic has accelerated some of the issues that we're facing in the one-third, particularly as we highlighted in the first half of the year in tire additives. Also, I'd say the environment has made it more challenging to, I'll call it, complete some of the alternatives that we're considering for the businesses. We're committed to addressing the performance. We've announced that we're shutting down one of the tire additives facilities, and you can expect us to continue to look at the footprint of tire additives, adhesives, and also the contract structures within those businesses. Considering the types of actions that make sense, it could also include joint ventures and divestitures that we've highlighted in addition to just transforming within the Eastman portfolio. We continue to work on reducing the cost without sacrificing also some of the innovation. We continue to make progress in the transition to, I'll call it the Crystex Cure Pro Next Generation. We're also very active here on all of the options as we start 2021, and we'll update you when we make progress on that. Great. Thanks so much. We will now take our next question from Bob Koort from Goldman Sachs. Please go ahead. Thanks very much. Mark, I was hoping you could answer a question I get in fumble when my clients ask me, and that is: what is the trends in propylene and refinery-grade propylene mean to your business from a profit or advantage or disadvantage standpoint relative to your competition? Bob, from what we see, demand is strong across many of the end markets, and I think also you're probably referencing what we've seen here in the near term of propylene, I'll call it surging and increasing, I think it was roughly $0.12. Fundamentally, we're happy to have propylene rising driven by demand and some of the outages. Refineries are running at lower rates, and it's unclear how long this is going to last. Some of the feedstocks have risen. Spreads have moved back to more normal levels, but they're not fully back to 2018 types of levels. As we said in the past, we're not in the olefins forecasting business. Again, the spread that we've seen with our transition to RGP and PGP, those margins are very strong right now as well. The big spikes can be tricky for our chemical intermediates business to manage, but they're reacting quickly to those market dynamics. Again, we see upside, at least in the olefin and derivative margins, compared to 2020. Willie, is the cliff notes then that if the raw material inflation is demand-based, then you're okay with that because it allows you to pass it through more easily? Yes, that's correct, Bob. Got it. Mark, I'm sure it's refreshing to not have to talk about olefins and those things and talk about next-generation technology. Look at the number of questions on the call about it. Is there any way to ring-fence it and then put it into a SPAC at a sales multiple that rivals your earnings multiples? Conceptually, could you do that? We could just change our name to GameStop. Not really, Bob. I think what we're doing is dramatically changing the portfolio of this company to, I know it's the trend that everyone's saying this right now, but genuinely be more of an ESG play. When you look at, for the last decade, we've been launching a wide range of products that are sustainable and much better for the environment across our portfolio. Now you add on the circular economy, and what we can do and how we could scale this up through partnerships. I think we can really pivot the nature of who we are and the significant improvements we can make in our carbon footprint and drive towards that 30% reduction in 2030 is a huge change in our footprint, not to mention where we want to all get by 2050. I think we are really repositioning the company in a pretty significant way. The whole value of what we can do that's so unique and so powerful in the circular economy is leveraging our integration of our site here in Tennessee. We've talked a lot about scale and integration being a huge competitive advantage for us. A lot of people have thought about that being cost. I've always thought about that being about enabling innovation and growth. Here's another example where this vastly interconnected and complicated infrastructure that we have here is going to be a key to differentiating us and doing something that very few other people can do at our economic efficiency. We can definitely do methanolysis around the world, but the way we can do it here is going to be uniquely advantaged relative to a standalone plant. Both are attractive. This is just really attractive, and the other ones are still going to be more attractive than a 15% ROIC. No isolating it off in a SPAC. Feel free to buy Eastman as a great environmental play. Touche. Thank you. Our next question is from Aleksey Yefremov from KeyBanc. Please go ahead. Thank you. Good morning, everyone. Mark, if you're investing about $250 million of capital in this methanolysis project, your ROIC is about 15%, so let's say 20% for the sake of the argument. Does this mean this project could contribute somewhere north of $50 million of after-tax cash flow? Is this a fair math? No, Alex, this is Willie. Yes, your math is correct at the 20% levels. To your point. All right, great. We're focused. Yeah, I would emphasize the ROIC in this one is unique compared to normal specialty environment investments because we can load the plant so fast. The payback period's a lot faster for us in this one compared to normal, where you're filling out a Tritan plant over time, because we can base load it with PET, because we do still have some PET assets left that are dual purpose with our specialty plastics. That gives us a lot of leverage in how we gain returns on the economics. 20% is not necessarily the limit here, is a fair to say as well? Well, we don't want to get into details. Let's just leave it at that it's a very attractive investment. Just as a follow-up, you're talking about using 250 million pounds of plastic waste by 2025, 500 million by 2030. Should we think about this as a lower limit for growth that you're thinking about this business? Is it most likely scenario, or is this the upper limit? How high can it go within the next four years to nine years? Just the second part to this question, you were talking about $500 million- $1 billion in sales. Does this correspond to these two numbers, 250 and 500? Yeah. Those are interconnected. The type of waste plastic we're talking about getting to, if you think about the first methanolysis plant and what we think we're going to do with the CRT, that is what drives us towards that platform revenue value of the $500- $1 billion. If we partner with companies around the world to do additional plants, that would be additive to those numbers. As far as fill out rate goes, it's a little hard to say. We're highly confident we can sell the plant in a mix of specialties and packaging. The rate at which we can upgrade into the specialties, we're seeing huge customer engagement right now, so we're really excited. We still have a lot of work to do. I mean, the great thing, by the way, is we are using a sort of a high-cost approach to using our existing assets to make recycled content today, right? That's why we're commercial with CamelBak Nalgene, is we do have an alternate process that we're currently using. It's more expensive and it's limited capacity. It's a way to, if you will, have a semi-works to build market momentum adoption that allows us to really hit the ground running when methanolysis comes in line to lower our cost and significantly add our capacity. The CRT, of course, is already being repurposed. It's a very low CapEx way to switch over to reforming plastic. That we just continue to scale up. We got delayed in our progress with the collapse of the textiles market, we just need to catch up now. Thanks, Mark. We will now take our next question from P.J. Juvekar from Citi. Please go ahead. Hi, good morning, Mark. It's Eric Petrie for P.J. Morning. You noted the methanolysis plant has capacity of 150-200,000 tons of polymer per year. I'm assuming most of that'll go into Tritan. At the fill-out point, how much of your Tritan will be renewed versus traditional petro-based? First of all, it's not all Tritan. Tritan, I think, will be one of the big success stories, but it's not limited to that. We have a lot of copolyesters that go into cosmetic packaging, for example that has a significant amount of value for that space, who are very forward-leaning on the sustainability front, who are very interested in adopting recycled content. It's across that. There's even some shrink packaging that we may do. There's a wide range of products and markets. It'll be a good portion of the Tritan mix, but we're not going to call out that percentage right now. Okay. Secondly, how did volumes for your specialty products grow in fourth quarter? What was the comp for full year 2020? Typically, those end markets grow two times underlying. The whole two times math gets a little confusing in a COVID crisis on how to actually measure it. You've seen tremendous growth and progress and success in the advanced materials division. That's all the specialty products delivering that growth, when you look at that volume and mix improvement. When you look at AFP, it's really important to sort of separate out the two-thirds versus the one-third. Obviously, the two-thirds is a lot more stable, margins well above the segment average. Even with the aviation headwind of $30 million this year, we think earnings for the two-thirds will get back to and be slightly better than 2019. That business, coatings is demonstrating a lot of strong growth and market recovery. Care chemicals, water treatment, very strong. Our heat transfer fluid business has been very strong. We got a lot of great businesses doing well there. That comment, by the way, both on earnings and strong growth goes back to 2018. The stability of that segment and the margins are actually quite good, offset, of course, by what we've identified in the tires and adhesives, where we're taking some actions. Overall, the portfolio, on the volume side, is actually holding up quite well. Great. Thank you. Let's make the next question the last one, please. Thank you. We will now take a question from Arun Viswanathan from RBC Capital. Please go ahead. Yeah, thanks for taking my question. Good morning. Congratulations on all the progress. I'm just curious, Mark, you guys laid out an 8%-12% EPS growth rate in the past. I know that 2021 obviously is going to be much above that because of the recovery. When you look long term and you add in the methanolysis gains, do you see a path to returning to that level structurally longer term or maybe even eclipsing that? Right now we're so focused on recovery and getting back to 18 levels, which I do think is a pathway we can see after we get through this year. I think we're already on a strong track with what we've guided for this year. When you think about post-recovery, let's say, and I'm not going to try and predict when that is with COVID, we very much would expect to get back to that growth math that we described on Innovation Day of that 8%-12%. Obviously, circular economy helps that and drives growth. Obviously, we've had things that haven't worked out as well as we had hoped, like tires and adhesives. You've got to sort of do all that net math, which we're not doing at this stage. We definitely see the set of activities, the great things that are happening in many parts of the portfolio, a few things that didn't work out as we had hoped, allows us to still get back to 2018, and grow from there with that math. Then could you just remind us on the capital allocation side, when you expect to kind of maybe pivot more towards buybacks, if at all? Yes. As we think about capital allocation for 2021, first and foremost, obviously we grew our dividend for the 11th year in a row and expect to allocate about $375 million there. We've got some debt coming due in Q4, and we would expect currently to pay that debt down, $300 million of debt reduction. Looking through with the remaining cash from a strategic standpoint, we would expect to allocate roughly $350 million between bolt-ons and share repurchases. Obviously, we're going to be cautious offsetting dilution here in the front half, and we'll see how the economy continues to pick up. Just to sort of wrap things up, one last thing I wanted to say was, I have a deep appreciation to my employees and our leaders throughout the world. The success we had in getting through 2020 in a very stable manner compared to many in the industry, and to emerge and grow like we intend to do this year, is a testament to all the investments we've made in our capabilities. We've made a lot of investment in commercial capabilities, a lot of investments in improving our operational cost structure. We've obviously dramatically changed our portfolio and improved its quality and depth of innovation and ability to create its own growth compared to the last recession we faced in 2009 and 2010. We're seeing the payoff of that in the stability we delivered last year and the strong free cash flow. Actually, quite good earnings, especially if you back out the $100 million of additional inventory actions and feel great about how we're positioned for this year. None of that would have happened without the dedication and effort, even in the extreme situation of how we had to work in COVID to deliver this. Thank you to all my employees. With that, we're going to say thank you very much for joining us this morning. If you have questions, you can reach us through the day. Everybody have a great day. Thank you. That will conclude today's Conference Call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.