Good day, everyone, and welcome to the third quarter 2023 Eastman Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman website, www.eastman.com. We'll now turn this call over to Mr. Greg Riddle of Eastman Investor Relations. Please go ahead, sir. Thank you, Jordan. Good morning, everyone, and thank you for joining us. On the call with me today are Mark Costa, Board Chair and CEO, Willie McLain, Executive Vice President and CFO, and Jake LaRoe, Manager, Investor Relations. Yesterday, after market close, we posted our third quarter 2023 financial results news release and SEC 8-K filing. Our slides and the related prepared remarks in the investor section of our website, which is 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 our future expectations are or will be detailed in our third quarter 2023 financial results news release. During this call, in the preceding slides and prepared remarks, and in our filings with the Securities and Exchange Commission, including the Form 10-K, filed for full year 2022, and the Form 10-Q, to be filed for third quarter 2023. 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 third quarter 2023 financial results news release. As we posted the slides and accompanying prepared remarks on our website last night, we will now go straight into Q&A. Jordan, please, let's start with our first question. Thank you. As a reminder, that's Star followed by one to register a question. If you change your mind, please press star followed by two, and please ensure you're unmuted when speaking. We'd ask all participants to limit themselves to one question with an additional follow-up. Our first question comes from David Begleiter of Deutsche Bank. David, the line is yours. Thank you. Good morning. Mark, thanks for the comments on 2024 in the prepared comments. Can you provide a little more color on the potential, you think, for 2024 earnings in this macro? Sure, David, and great question. We're obviously spending a lot of time focusing on putting this year behind us and focusing how we recover and deliver a lot of earnings and growth next year. When you think about it, and the way we built our forecast, or if you will, a scenario, was to intentionally be somewhat neutral on where markets recover or don't recover or what oil prices or energy prices are going to do. So we want to serve a neutral case to focus first on, you know, what are the things that are more in control or math, that deliver a better year next year than this year. And the biggest driver, of course, in the decline in earnings this year was volume and mix. And when you look at the extent of that across the portfolio, we're probably down about $450 million in volume and mix from a variable margin point of view, excluding capacity utilization. And then as we look at how that can recover next year, we sort of think of it in three buckets. The first is obviously a lack of destocking. There's a lot of conversation around that, and it was certainly a very significant element to our business. And, you know, we generally think destocking was probably about 40% of the decline in volume this year, but let's be conservative and we'll call that sort of one-third, you know, comes back next year from destocking. So $150 million there on variable margin. And that's just a lack of destocking. So that doesn't include restocking, it doesn't include any markets getting better. You know, the second element is innovation. We are very excited about our innovation portfolio. It's been the center of our growth story as a company, and the biggest element, of course, will be the Kingsport methanolysis plant coming online, delivering an incremental $75 million in EBITDA to next year relative to this year. And that's all in with costs and revenue and margins considered. So that's, you know, pretty considerable. So you've got that on top of the lack of destocking. And then you've got innovation that's happening across our portfolio. It's not just Kingsport and, you know, methanolysis. We've had great success with premium interlayers, delivering a lot of value with the growth in the automotive market and extreme leverage of 3.5 x the material per car in EVs versus ICE cars. That's a great business, and we'll continue to deliver above-market growth. We've got the Aventa products we've been telling you about, where we've had great success, adoptions in straws and some brands going, you know, national, as well as now making great progress in our polystyrene replacement for protein packaging and food packaging, et cetera. You're going to see some real nice growth out of that business. The Naia textile business has been great this year, and it'll continue. Tetrashield's picking up more business in food, food cans, and we're starting to, you know, move into the beverage side. So there's a lot of growth happening throughout the portfolio through innovation, even in a flat market. And we're going to see more benefit really next year when you're in a more stable market situation, and people are focusing on new launches. The third element, of course, is the, you know, the markets. And, you know, as you saw in our guidance, we're being pretty cautious about where the markets might go. I think there's lots of debate around markets could recover, or markets could go down. I think it's fair to say none of us really know. But I think it's reasonable to expect that our stable markets will probably stabilize because the end market demand there is, you know, sort of not as discretionary. So pharma, personal care, you know, packaging for food, those kind of markets are all going to stabilize and probably have some modest growth when you look at those dynamics. You know, automotive is expected to grow, and we think that's a reasonable assumption. Building construction, we think, is flattened down a little bit. So when you put all this together, you've got some additional volume growth, you know, out of that on top of those, you know, numbers from destocking and Kingsport methanol. So considerable value there. The second part is asset utilization. So we've been extremely aggressive in managing our assets, and pulling the utilization rates down to free up cash. We saw great success in over $500 million of cash generated in the third quarter by the actions we took. Unfortunately, it comes with a, you know, accounting headwind. It's not a cash headwind, but you take a $75 million utilization headwind hit in the third quarter alone, for that, or $75 million really on a full year basis, when you think about the tailwind for next year. So you get to add that back if volumes are flat, that comes back. Obviously, there's actions we're taking to keep our cost structure flat. So all that revenue growth we're talking about above, in the volume side of things flows straight to the bottom line. So the incremental margins on the recovery are gonna be quite strong. So all that, you know, creates a good situation. You know, offsetting that, you know, could be some specialty pricing starting to moderate in a few places. We still have a lot of raw material in inventory that is lower and still needs to flow through. We're about 50% FIFO in our company, so you're gonna see some benefits of that flowing through into next year that will sort of, you know, offset especially pricing. So we don't really see, you know, raw materials as a tailwind, but we also don't really see it as much of a headwind. So all those, you know, factors put together delivers quite a bit of improvement in earnings and earnings from our operating in the cash side as well. So we're pretty excited about focusing on all these actions that we can control in this uncertainty and delivering success for our owners. You know, very, very helpful. Just lastly, in the areas where you are still seeing destocking, like crop protection, when do you think it will end, or how long do you think it will persist? Thank you. On the ag market, you know, which is more than crop protection, but a number of different products, obviously, the destocking didn't start until the second quarter of this year. You know, very different timing stories like consumer durables or building construction started, you know, aggressively in the fourth quarter of last year, but ag didn't start until the second quarter. So the, you know, destocking started, it got more aggressive from the second to the third quarter, you know, and it continues into the fourth quarter. We do think it'll be played out by the end of the fourth quarter from what our customers are telling us as they start looking to the next planting season. But normally you'd have a build in inventory is starting in the fourth quarter and through the first quarter for the planting season. This year, you know, we're gonna see destocking through the fourth quarter and then a ramp-up of building inventory in the first quarter of next year. So that's part of that headwind relative to what is, quote, "normal," for a fourth quarter, is that delta between building versus, you know, pretty aggressive destocking. Thank you very much. Our next question comes from Frank Mitsch of Fermium Research. Frank, please go ahead. Good morning, and I did appreciate the video on methanol, so thanks for giving us the link there. Mark, you know, Advanced Materials has had a difficult 2023, on the backs of a difficult 2022, where you're now expecting 2023 to come in below $400 million of EBIT. I took a look back, the last time that happened, that you were below $400 million of EBIT, it was back in 2014. So, you know, I know it's been a difficult couple of years. What sort of confidence might you have that that business can get to $500 million or better in 2024? Yeah. So Frank, we feel very good about really do what you just said, and getting this business to come back, you know, considerably from where it is now. You know, the bridge I just laid out at the corporate level is very true at the at the AM level in all of those elements. So if you think about this year, just as context before we get to next year, the extremity of the demand decline was, you know, more than, you know, anything we've ever seen before. So we've, you know, seen difficult demand environments in 2009, in 2020, but those were over in, you know, three quarters in 2009 and two quarters in 2020. We're now in our fifth quarter of, you know, low demand and, and in some applications, you know, continued destocking. So this is something we've never really seen before. You know, but it is all demand related, and it's a lot of destocking that, you know, where people got out of control in building inventory, during the supply chain crisis. And some of the markets that we're in have very long supply chains. When you think about consumer durables, where we're making the, you know, polymers here, having to ship it all the way to China, go through multiple steps to get a, you know, an appliance or a TV or something made, and then shipping it back to the U.S. and Europe, you know, you've got six to 10 steps. You know, it's a long supply chain to deplete, when there's such a significant step down in demand that's, you know, as, as bad as, you know, 2009, when you think about consumer durables, or housing for that matter. And so the good news is we can see some markets bottoming out and recovering really well. So, you know, durables was down 40% in the fourth quarter of last year, was even worse in the first quarter. Came back 30% in the second quarter relative to the first, another 15% back in the third quarter. Now it's gonna be a little softer in the fourth quarter because of, you know, normal seasonality of activity and what customers do. But, you know, that you can see that the bottom of that market was the first quarter. And it's certainly in better shape, you know, as the destocking has, you know, definitely played out, we think at the end of the third quarter. You have some other markets where the destocking is also still pretty extensive, like medical and packaging. It didn't start like ag until the second quarter of this year, and it's finishing out through this quarter as we can see it. So there's different timing and different levels of drop, across the segment, when it comes to especially plastics, but we are pretty confident that the destocking part will be over by the end of this year. When you think about that $450 million of variable margin down for volume and mix, you know, about half of that is in the AM segment. So you can start seeing how that on the destocking part comes back. That's just on the destocking part. Then you've got the $75 million of EBITDA coming from the methanolysis to, you know, add back to next year on top of this year. Remember, only $50 million of that's gonna show up in AM, and the other $25 million in other. And then you've got a lot of these stable markets that are gonna have some amount of very, you know, modest growth in the sort of packaging, medical. You know, all we're going through this year isn't a decline in demand in medical. You know, surgeries are steady enough. It's just a lot of destocking, but it's very high value and painful way, where you get past it. So we feel good about that. About $40 million of the $75 million of the asset utilization headwind from inventory management comes back as a tailwind. You know, $35 million of FX is a headwind this year. I don't know where currency will go next year, so that could be up or down, but it's a significant headwind this year when you think about, you know, looking at the total decline. So, you know, you've got the destocking coming off, you got the markets, you have the utilization tailwind, Kingsport, you got innovation, you got the auto market, which we expect to continue to grow, and a lot of the, you know, innovation that's happening in there. There's a lot of innovation throughout the portfolio in AM that'll create organic growth once the market stabilizes and customers are confident doing new launches. We feel great, and the incremental margins will be impressive because we're gonna keep the cost structure flat. Very, very helpful. If I could follow up on the asset utilization, just a clarification. In the appendix, the updated number on the headwind is $100 million on the lower asset utilization. It says first half versus second half, versus the prior $75 million, and you're expecting a $75 million benefit in 2024. Shouldn't we be expecting a $100 million benefit in 2024 on asset utilization if it's a, if the headwind for 2023 is higher? I mean, I wouldn't assume-- Are you assuming that you're going to run at lower asset utilization as we start 2024? Frank, this is Willie. So you've got it correct on the first half, second half. That increased from $75 million to $100 million, and sequentially, as Mark has highlighted, it was a $75 million headwind to Q2. With that momentum, we would expect it to improve quite a bit as we go from Q3 to Q4. But the full year, obviously, you're taking into reference 2022, and that doesn't come into effect as you look 2023 to 2024. So $75 million is a reasonable estimate, and maybe a little bit higher, but right now, $75 million is close enough. Part of it- So you're not in- -built a little inventory. Hey, Frank, part of it was we built a little inventory in the first quarter, and so you got to offset that to the $100 million, 'cause that's the first half, second half. So $75 million implies we're running our assets in a similar manner next year and get that tailwind. Okay. Thank you so much. Our next question comes from Vincent Andrews of Morgan Stanley. Vincent, please go ahead. Thank you. Good morning, everyone. Mark, your prepared comments talked about the potential for some state or federal incentives for the U.S. methanolysis plant. What's the sort of order of magnitude, and what might be available, and when will you know? The Inflation Reduction Act is a great program for investing and inspiring, you know, sustainable investments, and we certainly see several of our projects that we're doing available for credit. When it comes to the second methanolysis plant here in the U.S., the one that we're doing with the Pepsi baseload, you know, that funding could be... the incentive is about $350 million of capital is what's in the application. That doesn't mean that's what we're gonna get. That's what we're asking for. The good news is, we've been through a couple of rounds now, and we continue to be considered for that program. It's a very competitive process. There's also some tax credits that we're pursuing as well, and we should have insight on, you know, what they choose to give all of us, out of our requests, in the first quarter of next year, you know, is what we've been told. But you never know, it's a government process, so who knows how the timing will work. But it's significant. Okay. It's a considerable help. We're also pursuing additional incentives in Europe with our project there, in France. Not at that scale, but some additional incentives. Okay. And could you just talk about the sale of the plant assets to INEOS? Is that something that you've been working on for a long time, or is it something that just sort of came up this year? And is there anything else like that that's being contemplated? Thanks for the question, and obviously, we've had an ongoing relationship with INEOS Acetyls, and through their acquisition of the BP assets for 10 years now. So I would say it's just through that ongoing you know, partnership that we've had at the Texas City site. As we think about longer term, you know, in both you know increasing the percentage of Eastman, that specialty, as well as the highest and best use, INEOS is the best owner for that. And also, as we think about strategically, feedstocks for our Advanced Materials segment long term. So all in all, all those factors came into play, and the team you know, did a great job here, and we expect to close that here in Q4. You know, that provides about $400 million of cash, and we expect to use that to pay down debt here in the near term and for it to be basically immediately accretive. Right now, I would say, there's no other items like this in the pipeline. We're always evaluating the portfolio, but nothing, you know, imminent. Thanks very much. Our next question comes from Patrick Cunningham of Citi. Patrick, please go ahead. Hi, good morning. You held your 2024 CapEx guide relatively flat with this year, and I'm curious what this means for your additional recycling facilities. Do you expect any meaningful CapEx to be deployed towards site construction next year, or and is there any sort of updated timeline on site selection for the second facility? Yeah, I would, again, 2024, we expect it to be similar to slightly below. You know, our choices on CapEx will be influenced by the external environment. As Mark has highlighted, we're pretty neutral on the external environment, and we can, you know, ramp that up or take it down as needed. And I think we've demonstrated that discipline over time. We are committed to beginning construction for the France project as well as the second U.S. project, as we just discussed. We expect to start construction, you know, probably in that middle-of-the-year time frame. Also, we have some other specialty growth investments within the year, and, you know, we're waiting on the macro environment to ultimately set the pace of those. So I think what you're seeing and hearing from us is, you know, we're gonna be disciplined. You know, we're finishing the year strong, with the cash flows that we just talked about from the divestiture. Also, we expect to have about $250 million of free cash flow, you know, here in Q4. So we're positioning ourselves, to be disciplined on capital allocation, which will be a mix of organic growth, as well as share repurchases as we look into 2024. Yeah, we, we feel good about our organic growth strategy. We think, you know, that kind of growth clearly creates a lot of, you know, shareholder value with great returns on capital. It's unfortunate the macro environment took a turn on us, just as we were launching into the circular programs and a lot of other specialty growth. But as we've talked about with our view of 2024, and, you know, the expectation that markets will normalize as you go into 2025 and 2026, you know, we believe our earnings and our cash will come back, you know, significantly, as we move forward. You got to remember, this year, a lot of our headwind in earnings to 2022 is non-cash. You know, $110 million of pension, $75 million of asset utilization to generate cash. You know, so when you're just looking at earnings, you know, a lot of it is a non-cash hit relative to 2022. So we feel very good about our cash earnings, you know, and how we're doing in this environment, as well as how we look forward to the future. And maybe just to build on that, Mark, on the cash. As we think about 2024 cash, as Mark's highlighted, our baseline is starting at approximately $1.4 billion of operating cash flow. That's through the combination of higher cash earnings, call that roughly $250 million. We always assume working capital is flat, so that would be a reduction of about $100 million year-over-year. And then we've got higher cash taxes, which also includes some of the taxes on the Texas City divestiture. Got it. That's very helpful. And then I appreciate that the sort of forward outlook doesn't have any restocking expectations embedded, but based on your conversations with customers coming out of this destocking, do any end markets have, you know, precariously thin inventories, or do you get the sense that this has just been a trimming of safety stocks built over the last couple of years? No, it's definitely both. There's definitely safety stocks that were built up in the supply chain crisis, more than customers were sharing with us. And so they're, you know, hence, the sort of destocking we're seeing this year. But we're seeing signs where suddenly we get an order from a customer, you know, some of our big customers, where they've, you know, brought inventory down so low they can't actually make product, and they need an urgent shipment sent to them. So you're starting to see sort of people hitting bottom, which is encouraging. You know, if you look at all the data we put together here around destocking and the underlying markets, you know, you definitely can see that, you know, that we're turning, you know, in the back half of this year, where the destocking has played out. As you look at next year, when you get into this question of restocking, you know, we wanted to build a really conservative view of how we could perform next year because the macroeconomy, frankly, is so uncertain. So we don't have any restocking in there, but it's reasonable to expect that some restocking is gonna have to happen with some of these customers if the markets start to stabilize and grow at all. And so, you know, that'll happen. That would be upside to sort of how we look at next year. Thank you. It's certainly gonna happen in ag, as I think about it. That's one place we know for sure that a rebuild of inventory will occur. Our next question. Can we go to our next question, please? Yep. Yeah, Yeah, our next question comes from Jeff Zekauskas of JP Morgan. Jeff, please go ahead. Thanks very much. How much did the methanolysis plant in Kingsport cost? So, Jeff, on the methanolysis in Kingsport, I think, as we've highlighted earlier this year, we had a range of, you know, $700 million-$800 million as we started the year, and we went to the higher end of that estimate. We've been able to, to manage the increase for the Kingsport methanolysis, within that, disciplined budget, that we've been able to demonstrate through the year. That's how I would summarize that. We don't disclose specific project capital for competitive reasons. The additional thing that I would continue to highlight, Jeff, is, you know, as we think about, you know, $450 million of EBITDA, also the fact that we're going to be generating $75 million of EBITDA on the first plant here, from a year-over-year basis in 2024, I think that demonstrates, you know, that velocity of EBITDA and, you know, we think that that's at $150 million by the end of 2024. That sets us up well for strong returns on this investment. So, my memory is that you had planned to expand your Tritan capacity in Kingsport, with the building of the methanolysis plant, but chose not to do that. In your Normandy- No, we didn't choose to... I'm sorry, go ahead. No, finish your question. I thought you were done. I'm sorry. Go ahead. Go ahead, Jeff. Thank you. Thank Thank you very much. Yep. In the Normandy plant, I thought that there was also a Tritan component there as well. Since you didn't build the Tritan, the extra Tritan capacity in the United States, are you still going to build the Tritan capacity in Normandy? And that I would think that Tritan would be more favorably made in the United States. That is, are you going to scale back whatever it is that you thought you were going to build in Normandy, given the way that economic conditions have evolved? Yeah, let me clarify a couple of points there, Jeff. Thank you. First, with the Kingsport methanolysis plant and the Tritan expansion that we intend to do here at Kingsport, we're still doing it, right? We've just pushed the construction timeline of that plant out to better align with the macroeconomy. So our intention here is to still have 85,000 tons of capacity being brought online of additional Tritan capability. It's just going to come online more in 2025 than in 2024 because, you know, the durable market, where a lot of that Tritan is sold, is obviously down. So there's no change in our strategy whatsoever. It's just an adjustment of timing, and that's part of what Willie was getting at in sort of how we adjusted our spend rate on capital this year to make room for the higher cost of finishing methanolysis by pushing that capital on the Tritan project out into the next year. And so that's what we've done here. So no changes at all in how we think about the value creation from the first investment. It's just a shift a little bit in timing in the short term. The good news around our assets in Tennessee is they're flexible, right? We can swing our Tritan lines between Tritan and making copolyester. We can make PET. We can assign that recycled content to whatever products we want across our integrated system. So that allows us to monetize the value of the recycled content as quickly as we can make it as we ramp up the facility. So that's not going to be, you know, hindered by the macroeconomic environment and durables, because there's plenty of packaging out there that we can make both in our copolyester applications, like our shrink or in some PET. So we'll be monetizing the full value of all the DMT as fast as we can make it, and driving that utilization rate up as fast as we possibly can. And then, as you know, higher value markets like Tritan come back, you know, we'll shift the mix in how we assign the recycled content, you know, to the higher value markets. So we got a great flexibility that's created a huge amount of value and mix upgrade over the last decade as we grew Tritan on the same assets that once made PET, you know, over a decade ago, and, you know, we can take advantage of that now. In regards to the French plant, we're not changing anything there either. The design of that plant is to have two polymer lines, both of which are flexible to put between making PET or textiles, or what we said is specialties, but that's actually copolyester, it's not Tritan. To your point, Tritan is much more economically made here in the U.S. with the integrated systems and monomers that we have to make that very unique polymer. So this will be just more PETG products that go into packaging, cosmetics, bottles and things like that, and a variety of other applications that we make into with our traditional PETGs. Great. Nothing's changed in our asset strategy whatsoever from a product mix point of view. Kingsport's all specialties, France is half, half, you know, PET, half specialty, and the second U.S. plant here is all PET or textiles. Okay, great. Thank you. Our next question comes from Salvator Tiano of Bank of America. Salvatore, please go ahead. Yes, thank you very much. Firstly, I want to ask a little bit about your plasticizers footprint. How much would you say of your total sales earnings was coming from the Texas facility that you're selling, and c an you discuss a little bit what are the economics of the agreement, where INEOS will actually operate the asset, but technically, you're still the owner of it? Yes. So we retain the ownership of the Texas City plasticizers. That was the original strategic intent of buying the Texas City facility, along with the, I'll call it, the infrastructure that the site had. So first, we're retaining the ownership and the sales. Second, I would say the economics around that are substantially the same as it operated today within Chemical Intermediates. So the only thing that you're gonna see is reduced sales of acetyls out of the Texas City site within Chemical Intermediates. The remaining plasticizer business is and remains intact. Okay, perfect. I also want to ask about pulp prices. I think, there has been some traction with increases in the past one or two months max. What are you seeing there, and could this be a headwind in the end for 2024? No, we're not expecting any headwinds from pulp. Part of what we did in our tow contracts is improve our pricing, obviously, to get our margins back to being able to reliably supply our customers, because this is an extremely valuable product for them, and reliability is a priority for them. But we also, you know, changed the contracts. It used to be fixed price contracts, and we had to, you know, ride the benefit or the headwind associated with pulp prices or energy. We've now adjusted those contracts to be more like our amines business, where they're more cost pass-through and adjust for changes in energy or pulp. So that's not a concern as we go forward. It's not perfect, but it's a significant improvement from where we were in the past. Perfect. Thank you very much. Our next question comes from Mike Leithead of Barclays. Mike, please go ahead. Thank you. Good morning, guys. First, Mark, I wanted to follow up on Fibers. In January, when we started the year, when you had the annual prices sort of locked in, you expected to make about $275 million this year in EBIT. Now we're looking north of $410 million. So can you maybe just talk about what's changed versus starting the year? Is it largely cost? And just help us with your confidence in the sustainability of this higher level here. So what I would highlight is the fact that, you know, one, we're confident in the base of where we've gotten to at this point in time. So we're at, you know, greater than $410 million for this year. The business team has done a tremendous job of getting the contract structure in place. That's what Mark just highlighted. You know, from our confidence of both the margins within this business, also, as we think about Fibers more broadly, with the textiles and the textiles growth, as we go from 2023 to 2024. I guess I would just highlight that right now, you know, we're substantially complete with the contracts for 2024 and, you know, have a high commitment level, as we highlighted in the prepared remarks for 2025. Going back to the first part of your question, you know, ultimately part of that was growing in confidence. We do have lower energy costs than we had expected at the beginning of the year, and as we gained momentum and seeing how the contracts and the contract structures were working, we just reconfirmed that as we grew the earnings and grew the confidence by year-end. A lot of it is- Great business, and we're happy with where it's headed, and will be a strong contributor to cash as we go forward. The cost structure and utilization benefits, and we are being conservative about how well some of the investments we were making in running the plant efficiently, you know, we're going to play out until we had that proven out, and so all that came together. So it's not just price. You know, we've made investments and are operating our facilities a lot better. That, you know, we didn't want to sort of count on until we proven it to ourselves. Great. That's super helpful. And then second, I just wanted to follow up on the trajectory of CapEx. Obviously, you've given us some numbers about CapEx going somewhat lower next year, but when I just think about your large growth projects, you've got about two more methanolysis projects on the horizon. You mentioned earlier to Jeff about the new timing on Tritan. So just high level, should we expect CapEx to roughly stay around this $800 million range the next few years? Should it trend higher or lower overall? Yeah, what you would expect is, again, that we expect around $800 million, or less in 2024. To your point, obviously, we're in the detailed engineering phases right now. And then, you know, France would be probably first out of the gate on long lead and, and then construction, you know, closely followed by, the second U.S. So, we would expect 2025, you would be building CapEx, and it's just gonna depend on the timeline. So what I would say is it'll be above, $800 million, and we'll give you, more firm answers on how we see 2025 when we actually get the project schedule set. Great. Thank you. Our next question comes from Josh Spector of UBS. Josh, please go ahead. Hey, guys, this is James Cannon. I'm for Josh. Thanks for taking my question. In AFP, you called out in your guidance some raws increasing in the fourth quarter. I believe you transferred some propylene from the CI segment. I'm assuming that might be a big part of it, but is there anything else we should be thinking about in that bucket? Yeah, so we buy, you know, buy methanol, we buy ammonia, we buy, you know, and we do have propylene-derived specialty products and coatings. So all those products are obviously impacted by oil and overall market dynamics and creating some headwinds as those are increasing, especially from the oil change. You know, it flows through, and there's just a lag in how the contract prices catch up to it. And so you'll have a headwind in the fourth quarter, and that sequentially will then turn to a tailwind in the first quarter from the fourth quarter, when those pricing adjustments catch up. All right. Great, thanks. And then just on the specialty fluids that you called out some pull forward, can you give a little bit more color on what you saw there and kinda how much you expect to get pulled out of Q4? Yeah. So original guidance was, we had some great fills on some LNG plants in the, in the second quarter. We had originally expected that to be a bit more in the third, you know, at the beginning of the year. So that—those fills were made. And so when you looked at the sequential drop from Q2 to Q3, we thought it'd be about $30 million. But we had some additional fills show up in the third quarter, so that drop turned out to only be about $20 million. But the fluids sales for the year aren't changing, so that just means now that there's an additional $10 million drop of that $30 million that'll happen from Q3 to Q4. So that's part of, you know, why AFP is, you know, declining, sequentially into the fourth quarter. But overall, you know, great business. And we really like these LNG fills. You know, there's obviously a lot of construction... sort of traditional chemical construction activity, uncertainty, you know, especially with PET plants in China, where a lot of these fills go. And it's been great to diversify our exposure to that cycle with these LNG plants that also use a lot of heat transfer fluids. And I think as we look at that set of the markets, we see a lot of LNG facilities being built with the Ukraine-Russia situation, and are very well positioned with our products for those fills, which also turn out to be pretty high value products for what they need to do. We continue to really, you know, diversify our exposure, you know, into these places that are not as connected to what's going on in China, which is great. Great. Thanks. Our next question comes from Kevin McCarthy of Vertical Research Partners. Kevin, the line is yours. Yes, good morning. Mark, I didn't see anything in the prepared remarks that you released on the subject of the UAW strike. Can you speak to whether or not that's having any material impact? And if so, what you might be baking into the fourth quarter, or any, you know, auto-related commentary in general would be welcome. Sure. So specifically, UAW, the math on that is it's a pretty limited impact on us. About 20% of our auto and interlayer business globally is in the United States. So just overall exposure is not that high. And then you're just talking about three brands of many, you know, that are in the US that are being impacted by the UAW. So it's not a material impact. I would say that overall, the auto business obviously has been a solid business for us. We've seen a lot of growth in the business in the US and Europe in particular for the interlayer business as well as the films business. I would note that China has been a challenge all year long, so we haven't seen the growth we expected. We definitely thought we'd see some improved growth in the back half of the year, and that's one of the things that, you know, didn't play out as we thought, you know, from July to now, and how we've adjusted our outlook down a bit. And that's particularly impacting our Performance Films business, which has an important business in China, and we're not seeing as, you know, the sort of the growth that we expected there, and even some contraction right now at the sales level in some parts of that Chinese business. So, you know, overall, I'd say it's been a great business. We expect it, you know, to be better next year than this year. But it's, you know, there's a lot of ups and downs going on across the different markets. Thank you for that. And then secondly, if I may, perhaps for Willie, I think earlier this year, you had guided to a cost headwind related to pension and OPEB of $110 million, if my notes are correct. Is that still the case? And more importantly, what happens to that line item moving forward into 2024? Does it come back down, or would you point to a different trajectory? Yes. So, ultimately, that number is set for the year at the beginning of the year. So the $110 million is just coming through quarterly, as we expected. That gets marked to market at the end of the year, so there will be a, call it a gain loss from asset returns as well as interest rates. And right now, as we look at where rates are, assets and returns. It 's probably a modest headwind if you were to mark-to-market right now. But, again, we'll give you an update. We don't expect anything material, but we'll update you at year-end. Mm-hmm. And any insight on 2024, Willie? From a pension standpoint, we expect it to be a modest headwind if we look at it right now. That will change a lot depending on how rates finish up for the year. Our next question comes from Laurence Alexander of Jefferies. Laurence, please go ahead. Hi, good morning. This is Dan Rizzo on for Laurence. Thank you for taking my question. I don't know if I missed this or not, but so for the second plant in the U.S. and the plant that you're building in France, do we think of those as when they are up and running to be $150 million in EBITDA additions as well? Or is it greater scale or less than that, or how should we think about it long term? Yeah, we've never given a, I'll call it plant by plant. We said greater than $450 million, and you know, as Mark highlighted earlier in some of our conversations, the first plant is more specialty with our Tritan portfolio, so you can expect it to be higher than the other two. Okay. Thanks. And then if we think about you saying, you know, medical, medical demand, there being some destocking, but getting back to more, I guess, normalization. I was just wondering if that end market is at pre-COVID levels in terms of elective surgeries and the actual overall demand versus, you know, some of the inventory adjustments we're seeing right now? Yeah, the elective surgeries that are occurring are certainly, you know, growing roughly 5% a year, and definitely, you know, above sort of pre-COVID levels, if you look at it. Not a lot, but a little bit. You know, the issue we're having in medical is not about demand at all, right? You know, like in consumer durables, so you know, laptops, TVs, appliances are not being sold, you know, nearly as much as they were. Medical is really stable in market. The customers, though, were very nervous during the supply chain crisis about having enough material, and so they built a lot of inventory to be, you know, safe. And because you cannot have a problem in getting medical devices, you know, delivered in our packaging to the marketplace for obvious reasons. So, you know, they finally got calm, that there's plenty of, you know, supply and reliability, and started destocking in the second quarter of this year. And then they're still doing it through this quarter. But it's just a destocking event. The markets are solid and expected to be better next year than this year. Thank you very much. Our next question comes from Mike Sison of Wells Fargo. Mike, please go ahead. Hi, this is Richard on for Mike. So just a question on the 2024 outlook. Are you assuming any price improvements next year? We've seen prices come down in the third quarter and second quarter despite higher raw material pressures. So just wondering if there's, you know, any price mix improvement that we should expect, you know, new product launches, that type of thing. Well, so from a price on an existing product, you know, sold this year versus next year, on the specialties, we're not really expecting much price increases, except for where we have cost pass-through contracts, and then we'll, the prices will adjust up or down based on where raw materials are going. Now, obviously, for an increasing raw material environment, we will increase prices across the specialties. But in our scenario that we gave you, where raw materials are relatively flat next year to this year, I would not expect to increase prices in the specialties. I do expect prices probably to go up in Chemical Intermediates, because right now we're at the bottom of the market, right? We're at the cash cost in the olefins derivatives, we're at the cash cost of the marginal producer in these markets. You know, it's a pretty, you know, it's a very challenging market situation right now in olefins. And so there is, there is an expectation of some normalization of those prices, you know, getting better. I mean, the value of the price of propylene relative to oil is about 40% lower than normal. That's extreme and never, ever seen before in the past. So that's, you know, a lot of the compression that we're facing due to just excess amount of capacity being added, as well as very low demand in a number of applications that use propylene. So there's some balancing of that that will occur even with just the end of destocking and some stable markets growing. So that's one place where I would expect some prices to improve and margins to improve. Sort of how we look at it at this stage. I would say the teams have done a phenomenally good job of holding prices- Okay, great. At very high levels, in this very challenging market. That's created a lot of improvement in our price to variable costs ratio, offsetting some of the volume challenges. Great. And then as a follow-up, any update on terms of, like, the market for pricing for the product from your Kingsport plant and, you know, circular products? How is that progressing, you know, moving forward with—as you move to develop the other large projects? Yeah, so pricing is holding up really well. We're having no issues with the premiums that we need to get for the recycled content related products on the specialty side, and having good conversations with our customers on the PET side for the premiums that we need to get that, you know, go in line with the economics that we've provided to you. So we feel really, really good about that. You know, it's an exciting time right now with the methanolysis plant coming, being completed and starting up. We have a phenomenal number of people working hard and making sure that startup process goes well. You know, back to Frank's comment, the video is a great, you know, marketing tool with customers. It's an outstanding story when you see these huge piles of garbage, you know, multicolored garbage, all kinds of types of garbage, that we're taking and running through our process and coming out with a clear pellet. Customers are very surprised and impressed by the low-quality material that we're using, that is headed to, you know, cannot be reused with mechanical recyclers at all. You know, this is gonna go to landfill or incineration or really low-end applications. And they're just very impressed that we can take that garbage and turn it into a clear food-grade quality pellet. The customer engagements around that story of getting things truly out of landfill and incineration, you know, not just using a clear bottle, you know, that could have been mechanically recycled, is driving a lot of engagement. The other thing that's important to keep in mind is a lot of the applications we're targeting with this recycled content, but especially in the PET, are applications where mechanical recycling is not really able to meet the specifications in performance, because the quality is just not good enough, right? Our product is identical to virgin material made from fossil fuels. Mechanical is not. It's got integrity issues, color issues. You know, we are really targeting those applications where mechanical is not a choice. That allows us to, you know, command a better premium than mechanical, and support our economics. Thank you. Our next question comes from Aleksey Yefremov of KeyBanc Capital Markets. Aleksey, please go ahead. Thanks. Good morning, and staying with methanolysis: so there have been many projects in the industry where capital cost estimates have been revised higher, you know, over the last year or two, and I believe you presented your return on capital objectives for the two additional methanolysis plants a couple of years ago. So is it reasonable to assume CapEx probably needs to go up versus your initial expectations? And if so, how are you mitigating return on capital on that? Yeah, so it's an important question and one we're very focused on. You know, the capital headwinds that we encountered in the project here in Kingsport were really isolated to construction, quality, and productivity issues around pipe installation. And that was a very specific issue. It had nothing to do about the design of the plant or the scope, you know, of the plant in what we're trying to do, you know, when we got into these issues here in the last six months. And you know, the way we're approaching the next two projects, we're taking a very different approach, using very large contractors, you know, that are very capable of controlling those costs in a much better way than what happened here. So we feel, you know, we're in a far better shape. Also, we're not trying to build a new plant, right? So this is a new first, you know, time, 100,000-ton plant that we're building. You know, the plants that we're gonna build in France and the second one in the U.S. are basically, you know, the same plant we built here, you know, with some sort of modest improvements. So we're not, you know, going into this without already knowing what the capital cost is, you know, for the methanolysis unit. And the polymer lines, you know, are built all the time, well established, understand what those capital costs are gonna be. Infrastructure is also pretty straightforward that surround the plant. So we feel good that we can come up with a high-quality estimate for the next two projects, and we can manage the construction process far better than what happened in Kingsport. You know, we're still working those numbers. They're still in line with what we expect to deliver a 12% return or greater for the France and the second U.S. plant. Remember, the first plant here is greater than 15%, even with the higher capital costs. So we feel good about sort of where we are on the capital side of this. And of course, we're pursuing these additional incentives for both projects, as I discussed earlier. Obviously, if we get those, you know, that's gonna help manage, you know, capital risk as well as improve returns. Thanks, Mark, and you've preprocessed a fair amount of materials for the Kingsport plant. Any lessons so far versus your initial expectations in terms of how this front-end technology works and what the costs are? So far, the processing has gone well. I mean, there's always hiccups. It's a proprietary new process that we developed, you know, that takes a lot of steps out of the sortation compared to a mechanical recycler. So, you know, we're excited about taking that approach. Our chemical recycling, you know, allows you to do that because you're not needing, you know, perfect, clear material to sell back to the market, you know, as the big pile suggests in the video. But the process is up and running and working, you know, well at this stage. We feel good about, you know, how that's gonna work. Our overall cost, when we think about sourcing material and processing it into the front of the plant, is a little bit better than we expected. So we're feeling really good on the feedstock side here. Feel great about having 70% of the feedstock already, you know, in long-term contracts in France as well. So, you know, I know feedstock was a big question in the beginning of this whole process as a risk. We've actually managed that one, you know, reasonably well. Customers are going well. Now, the final step is, you know, starting up the technology, improving its economics and its effectiveness as sort of the final big milestone in front of us here over the next, you know, two months. So we're really excited to sort of, like, you know, check all those boxes, keep going forward with this plant, use it to help improve earnings next year, as in a difficult environment and, you know, get these next two projects underway, and create a lot of value for our owners. Thanks. Makes sense. Let's make the next question the last one, please. Thank you. Our next question— Our final question comes from Duffy Fischer of Goldman Sachs. Duffy, the line is yours. Yeah, good morning, guys. If we could, let's stay on methanolysis. If we assume we're kind of at the run rate of our $450 million EBITDA from the three plants, how volatile would that $450 million be over, you know, a typical, let's say, seven-year cycle? And then talk about the volatility you may see on the pricing side and, you know, the volatility you may see on the feedstock side over that seven-year cycle. That is a great question, Duffy, and one that's been sort of a big focus for us. As we've told you from the beginning, the approach we're taking with this plant is to be more of a industrial gas-type project, in how we deliver very stable margins, and attractive margins, when you look at the economics, for these projects. So on the PET side, you know, we're doing contracts that pass through the changes in feedstock and energy costs, delivering stable margins for us. You know, we have no intention of getting back into, you know, the merchant PET market, in going forward. And if we don't get those contracts, as we've said, we won't build the plants. But we're getting the contracts, and we're feeling good about it. So those margins will be stable in the PET side. On the specialty side, you know, we have demonstrated great pricing power around our specialty products and managing the, you know, the price to variable cost ratio really well and keeping those ratios stable. From a demand point of view, what I'd say is, you know, the PET market, the packaging market, is a lot more stable than some of the other, you know, more discretionary markets. So we, you know, think that will actually add stability from these projects as well as to the company portfolio. The other thing I'd note is, you know, it's a regional business, right? So when you're, you know, taking packaging waste out of the environment, you know, the brands and, and even more so, the regulators want to solve the local packaging waste issue in Europe or the US. So they want that waste taken back into polymer and then provided back into the packaging and create a closed loop and food grade, where fossil fuel-based PET is no longer used. So this disconnects us from China. You know, we're not trying to solve China's waste problem in the U.S. or Europe, but we're trying to solve the European and the U.S. waste problems. So it becomes more of a regional business. You know, you know, the brands will have to be really, you know, careful about making sure they're sort of focused on solving the local impact to, you know, protect their brand equity. The regulators are writing policy, especially in Europe. It's already written that, you know, the polymer has to be made from, you know, packaging placed on the European market. So, you know, that regional aspect of this business has been a core reason, you know, we've been interested and excited about making these investments. You know, it's not perfect. You know, you still have macroeconomic demand uncertainty, but, but it's gonna be very stable EBITDA. Great. And then just one technical question about your acetic acid sale. Did you sell the technology for acetic to them as well? Or if you chose to, you could build a plant, or you could do something like that Sipchem licensing deal that you did before, where you actually kept the technology? Duffy, the sale of the Texas City facility is, you know, that is not part of, I call it, the strategic focus for Eastman. As Mark has highlighted, we're about anhydride and anhydride derivatives and cellulosics. So the key thing here is, this is great for INEOS acetyl business and for Eastman as we go forward with our focus on circular and a circular economy. But it has no effect on our rights to use our technology or license our technology. Great. Thank you, guys. Thank you, Duffy. Okay, everyone. Thanks very much for joining us today. We appreciate that, and hope that you have a great rest of your day and a great weekend. Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.