Good day, everyone, and welcome to the fourth quarter full year 2023 Eastman 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 Investor Relations. Please go ahead. Thank you, Alex, and good morning, everyone, and thanks for joining us. On the call with me today are Mark Costa, Board Chair and CEO; William McLain, Executive Vice President and CFO; and Jake LaRoe, Manager, Investor Relations. Yesterday, after market close, we posted our fourth quarter and full year 2023 financial results news release and SEC 8-K filing, our slides, and the related prepared remarks in the investor relations section of our website, www.eastman.com. Before we begin, I'll cover two items. First, during this presentation, you will hear 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 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-K to be filed for full year 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 fourth quarter and full year 2023 financial results news release. I'd like to now turn the call over to Mark for some remarks. Before I jump into the Q&A, I did want to take the opportunity to recognize the team that's been working on the methanolysis plant. There's a huge team out there that's been working tremendously since our last call in October to commission and start up this facility and get us to the point where we're introducing feedstock. That's a real remarkable accomplishment when you look over this timeframe. They've worked incredibly hard through the holidays. They've made a lot of personal sacrifice, and they've got us to this stage, and it's a real testament to their dedication and belief in the company and the excitement that everyone at this company has around building the circular economy. It's also a real great example of the power of our Tennessee site. It's scale and integration has really enabled this startup process to go this quickly and well, because we have such a huge, vast set of resources and capabilities. It really allowed us to swing a lot of those people from different parts of the plant into this startup process and make a significant difference. So I just wanted to express my thanks to all of the people who've been involved in this process. It's been a tremendous program, and one that they really did make a lot of sacrifice, and we deeply appreciate it. With that, we'll open it up to Q&A. Thank you. As a reminder, if you would like to ask a question, you can press star followed by one on your telephone keypad. Please ensure you're unmuted locally when asking your question. Our first question for today comes from Josh Spector of UBS. Josh, your line is now open. Please go ahead. Yeah, hi. Good morning. I actually wanted to follow up on the methanolysis facility first. So you know, you're near getting on-spec product out, but I was wondering if you could talk through kind of the milestones as you go through this year. So when do you get to the point where you say yields are as expected, you think you can get to the full operational capacity and the cost structure, and therefore the EBITDA becomes in line with your long-term expectations? Yeah, it's a great question, one we're very focused on. And we are very excited to be at the stage we're at right now. As we said in our comments, we're at the point where we're been starting up the facility, completed all the commissioning, introducing feedstock, and that will start to be processed in the front end of the plant. Takes a little bit of time to do that, to get the system properly charged, and then it starts going through the plant. So we feel, you know, that we're in good shape to be, you know, on spec here soon with material and recognizing revenue and getting that process going and serving our customers who are very eager to get product from us. And when I say soon, I mean sort of days or weeks, in where we sit right now. So we feel like we're on track with starting up the plant and serving customer demand relative to that $75 million. Now, as you talk about the plant side of this, you know, it's you don't go from, you know, the plant's producing on-spec material to full ramp-up rates overnight. It takes you know a few months to line out the facility, optimize its operations and make sure that everything's working properly as you scale it up. And so we'll be doing that and ramping up the production. But, you know, the way this plant works and the way, you know, we can get the recycled content out, we should be able to start getting revenue relatively soon. When it comes to the demand side of things. By the way, cost structure will line out over time. Right now, we're still in that pre-production phase. Expenses are a bit higher than when you just are pulling the operating resources back to sort of steady state. So front end of this, from a cost point of view, is a little loaded, as you would expect. The demand side, I'd say, is actually quite good. So what's different than most plants in this situation is, we didn't start selling recycled content when the plant starts. We started it over a year ago. We have a technology called glycolysis. It's a bridging technology where we can use our existing assets. You can use sort of clean, clear bottles, which is what you have to have with glycolysis to then make recycled content. So long term, it's not a great strategy 'cause it's very high cost to buy those clean bottles, and it's not a very efficient process in using your existing assets. But what it did allow us to do is supply recycled content polymer to a number of brands. In fact, the brands that you can see on that slide in the presentation we provided have already been selling our recycled content from that technology into the marketplace. So we're not trying to, you know, ramp them up. They're already, you know, ready to go in the market and very anxious to get material from us to sort of accelerate volume build into this year. So that really helps us both know that we can get the price premiums we want to support our economics, as well as we have a number of customers that are, you know, gonna sort of buy the moment we have product coming out of the plant. And then there are a bunch of other brands we've been working on that we just didn't have the capacity to serve last year that are also very interested in the product, and so we'll be qualifying them and ramping them up. So what you have is a situation where the ramp up, you know, will start to help Q2 relative to Q1, but really sort of make a big difference in the second half relative to the first half of, you know, where you see this incremental EBITDA. The last point I would mention is on the cost side, normally, when you build a big specialty plant, you have a huge headwind in operating costs as you start up, and we certainly have operating costs with this plant. But they are really sort of offset by the pre-production expense of last year and the higher cost of this glycolysis process I just mentioned. So the costs are relatively neutral. And so that helps the revenue be flow pretty fast to EBITDA through that sort of year-over-year, sort of steady cost structure, if you will. So that's sort of the key components of it. We're very focused on just keeping the process going right now, and as I said earlier, it's just a tremendous example of teamwork out there, who are doing this through winter weather and freezing conditions, et c., to get this plant running. Thanks. Maybe just quickly, so as you go through all that, you made some comments that you wouldn't FID the next plant until this plant's done. I guess, is that just on spec product, or is there some point production yield or some other metric you're looking at to say, "We're good, the design's fine, there's, like, we're gonna move ahead with that project?" Because you seem pretty bullish about getting the customer commitments to that second plant soon, so I'm just wondering what's the limiting factor there. Thanks. Yeah, there are, you know, a couple limiting factors. One, obviously, is we want to see the Kingsport plant technology up and running, and as you said, we want to see that the, you know, the yields and efficiency are what we expect them to be, the plant's running, operationally well, and as I said, that's in the next couple of months that we'll sort of get those insights and knowledge to feel comfortable about the quality of this plant. Because it's important to keep in mind that to minimize capital risk and construction risk, we're gonna leverage and build the same plant, right, in France and the second plant. There's obviously improvements we'll learn through this process, but same scale, same design, so that, you know, really leveraging all the learning that we've gone through in this plant to do, you know, a better job in how we build the second and third plants. So that, I think, is you know, in the timeframe of what we're talking about right now from an FID point of view. The customer contracts are obviously the second component of that, of making that decision, and the incentives for the project getting finalized is the third part. We feel good about all those, and we think, you know, again, in the same kind of timeframe, in the next several months, we should be in a position to, you know, have FID. When construction starts is a little bit different than declaring FID. You know, we're still completing the engineering, and we have permitting to do on the environmental side and building permitting that, you know, is ongoing, as we speak. So we're not talking about starting actual construction until, you know, as soon as probably late summer, with the path that we're on right now. And that gives us the all of that time to make sure we believe in how the plant's operating before you start turning dirt on the second and third plants. Got it. Thank you. Thank you. Our next question comes from David Begleiter from Deutsche Bank. David, your line is now open. Please go ahead. Thank you. Good morning. Mark, some of your customers and peers this earnings season have noticed some modest stabilization improvement in certain markets, underlying demand. Are you seeing any of that in any of your geographies or key markets? Certainly, David, what I'd say is, we are seeing stable, I mean, stabilization, absolutely. So our guidance is built on thinking that primary demand, this year is gonna be similar to last year in the sort of discretionary markets. In the stable markets, like personal care, water treatment, consumer packaging, et c., we would expect sort of modest growth from last year. Now, to be clear, last year's demand was, primary demand was low. We're not predicting an improvement in any meaningful way from those sort of low levels we were at from through last year. What I would say is, in automotive, we actually are. You know, was growing last year, and we think it's gonna be more flattish this year. So that's sort of where we are on the primary demand, as we sort of showed on the slide that we provided to you guys. You know, the key driver for, you know, pretty significant volume increase for us this year versus last year, is really the sort of lack of destocking. When you think about you know, the sort of volume mix impact of last year, driving earnings down about $450 million. And, you know, what we said in October, I think is still true. You assume about a third of that is destocking. It's probably a bit more than that, but to play it safe, we'll call it a third. That's $150 million of, you know, a lack of a demand headwind from last year relative to this year. It's like an easy comp, and we can see the evidence of that playing out already in the fourth quarter in some markets and certainly into the first. So for example, you know, the consumer durables business, which is the one that was most impacted from a demand drop last year, you know, the second half of last year was 40% higher in volume than the first half of last year. So we've already seen a lot of the end of destocking, you know, that's occurring there. You know, we're still not where we want to be, of course, from a market demand point of view, but it's very clear destocking is over. You know, same is true in a lot of the stable markets, right? Destocking occurred in personal care, water treatment, things like that in the first half of the year. By the time we get to the back half of the year, we're already getting to sort of some modest market growth. So for the overall year, demand was relatively flat to 2022 in some of those markets. Building construction, I think, is probably still the most challenged. It was tough last year. The expectation is it's going to be tough this year, maybe even slightly down in primary demand. And, but again, I think most of the destocking in that market has played out by the end of the fourth quarter. There may be little pieces and parts into the first quarter, so you still get that lack of destocking lift in coatings and interlayers across AFP and AM. So I think that, you know, that's sort of on a full year basis, sort of how we look at it, and I would note of that $150 million of lack of destocking, two-thirds of it is in Advanced Materials. The progression, I would say, through the quarter is looking good. So we had a soft start to January. February is already stronger orders than January, and March looks good at this point, with what we can see. So that's another point to keep in mind, is the first quarter is a pretty slow start, you know, as you can clearly see in our guide. But there's a lot of upside as you move into the second quarter, from seasonal build. So we do expect a normal seasonal pattern to demand this year. So even though we're not saying primary demand is going to be a lot better, you know, first quarter is always softer, second, third quarter, stronger, fourth quarter obviously comes off in a normal pattern for us, and that is how we've built our forecast around that. So that helps a lot for why things get better in the second quarter. And then there's some timing issues, as we identified in Fibers and fluids, where particularly low orders in fluids for especially heat transfer fluids and then Fibers, it's a customer buying pattern thing. So those orders get a lot better in second quarter. So there's several things that come together, along with some better spread improvements that make second quarter a lot better than first quarter. Because I'm sure a lot of people have questions on that as you look at our forecast. Very good. And just briefly on AFP, you mentioned some negative price costs in 2024. Where are you expecting to see the pricing pressure in AF P? So first of all, the spread management last year was great in AFP. So we do have a lot of business on price, sort of cost pass-through contracts that give us very stable margins. So it was very helpful in 2022 as raw materials were shooting upward. Our prices kept track, and then as prices came off last year, you know, raw material prices came off, the price contracts followed, but there's a lag. So we had an improving spread last year for AFP, for the year. And so that was a helpful tailwind to offset some of the volume headwinds we had in that segment. When you look at this year, you know, there's just a bit of that lag problem again. So you've now got, prices sort of stabilizing off, and so if you look at spreads this year relative to last year, there's going to be a bit of a headwind just in the way those sort of cost pass-through contracts work. So that's the primary driver, you know, of the sort of modest spread compression we expect this year relative to last year on AFP. Thank you. Thank you. Our next question comes from Frank Mitsch of Fermium Research. Your line is now open. Please go ahead. Thank you. And if I could follow up just in general on pricing, you know, as you indicated in terms of the cost through the pass-through contracts, 2022 was a very good year. You know, and as we're entering 2023 here, you know, pricing has been taking a bit of a hit. So how are you thinking overall about, you know, Eastman's pricing ability in 2024 for the overall enterprise? Yeah, so first of all, I think it's important to have a little history around pricing because it really is a pretty impressive story. So if you think about 2020 - 2022, our company had $2.4 billion of inflation. And so we had, you know, CPT is trying to keep up to it, but there was still a lag that creates a compression in the prices catching up to the increases. But overall, we did an excellent job of getting prices to catch up to all that inflation by the end of 2022, but it did create a compression headwind in chasing it, and especially in particular in 2022. So that's sort of how we entered 2023, is at a pretty high elevation with that inflation. You know, the accomplishment, you know, you know, to 2022 was compression, and we moved into really doing a phenomenally good job. Our teams were just really demonstrated great commercial excellence and the real strength of the value proposition of our specialty products, in holding prices outside of the cost pass-through contracts in the specialties. Not to mention, we dramatically improved our pricing in Fibers. So when you think about that $450 million of volume headwind we had in 2023, and $50 million of currency, we were able to manage price in 2023 in a very difficult economic environment, entirely offset that in improvements in price relative to variable cost. And a lot of it is structural, so about $300 million of that is in Fibers. You know, based on all the descriptions we've given you around where that industry is at, as well as a good portion of that is in A dvanced Materials in the interlayer business, where we had extraordinarily high raw materials in 2022, that we were able to, you know. You know, those material, raw material prices dropped off, our prices held and, and, and, and we got a lot of just recovery back to normal margins in that business. So we feel really good about that, and, and that basically means there's sort of $200 million of spread expansion beyond the sort of Fibers interlayers that you're managing. So our expectation this year is on the specialties, Fibers is fully contracted, so the prices there are locked, and as we've said, that business will do a little bit better in earnings versus 2023. In the specialties, what I'd say is that we expect some modest price reductions, you know, reflecting how the raw material and energy environment has improved. But overall, we would say the spreads, you know, in AM and AFP will be similar to last year, so we're not going to get a tailwind out of it. Maybe there's a slight compression, you know, across those two businesses. But you know, we really believe we'll hold on to our margins with what we see so far. Certainly will in the first quarter. And then we, you know, expect to, you know, have volume and capacity utilization be the key drivers for the recovery in earnings, which are, you know, pretty substantial. The destocking number I just gave you, $100 million of asset utilization tailwind, you know, are pretty significant drivers of recovery this year. I got you. All right. Terrific. And then, perhaps if you could, I took a look, year-over-year, Europe actually declined less than the United States. Is that really a, is that just a function of Europe entered the year in a worse position? Or is there anything that you can talk about in terms of, perhaps any sort of green shoots or what have you, in that part of the world? So, part of the reason North America is down as much as it was is just all Chemical Intermediates sits in North America, predominantly. So you know, when you look at all the revenue that came off Chemical Intermediates, you know, it's, you know, sort of. Mm-hmm. Almost all in, you know, in this country. You know, when it comes to the rest of the portfolio, I'd say, you know, we're more globally diverse, and we saw, you know, really demand come off and especially sort of across the globe, as well as the destocking across the globe. So that was more evenly dispersed. You know, China has got its challenges, and so does Europe, and U.S. probably a little bit stronger in the economy than the other two. From a green shoots point of view, Frank, I wouldn't say, you know, from a, you know, we have this end-of-destocking, which is our primary focus right now. You know, I think it's way too early to call, you know, markets recovering in the consumer discretionary world. You know, so cars, building construction, consumer durables, electronics. There may be some improvement there, but, you know, I don't think I have enough data to sort of make that declaration. But the stable markets are definitely, you know, growing. You know, medical is probably going to grow 4%-5%. I mean, there's still destocking in the first quarter, but the underlying market is going to grow 5%. You know, ag is growing, you know, personal care, water treatment, you know, a lot of the packaging sector, as a lot of the consumer brands are now pivoting from price to recovering volume, you know, will benefit from that. So, you know, that's about half our revenue, where you get that modest growth in these markets that are sort of more stable. Gotcha. Gotcha. Thanks so much. Thank you. Our next question comes from Patrick Cunningham of Citigroup. Patrick, your line is now open. Please go ahead. Hi, thank you. Good morning. Maybe just first on Advanced Materials. Can you help us understand the $450 million guide there, and maybe the degree of upside beyond that? I think you get, you know, $50 million from Kingsport, and you're guiding to $100 million for the first quarter. You know, just given the extremity of the demand decline, utilization headwinds, destocking of 2023, is there a path to, you know, $500 million or more, even in just a modestly positive demand environment from here? So first, given sort of the challenges we've had in Advanced Materials with, you know, pretty, pretty rough demand in the fourth quarter of 2022 and the full year of 2023, you know, we're starting with earning our way in our recovery and getting back above $450 million, and then working to make it better than that. But just to give you the sort of key tailwind to go with it, the biggest driver for Advanced Materials recovery is, volume and mix. As I've sort of pointed out, the corporate level, you know, the story is pretty, pretty much an AM story. So, you know, two-thirds of that $150 million of a lack of destocking, you know, is sort of in the outlook for this segment. I told you durables has already had significant recovery. Medical has great underlying growth. It just has a lot of destocking from a lot of caution in the supply chain crisis that's still finishing itself out in the first quarter here, but we can see that it'll be less in the second quarter. And then, you know, we'll just have the growth in the back half of the year. So you've got markets that, you know, have done a lot of destocking, sort of stabilizing, and the lack of destocking, you know, helping you. Then you've got the return to normal seasonality. So even though the first quarter is still in recovery mode, when you look to the second quarter and beyond, you've got this return of normal seasonality to this segment. So Q2, Q3 is always stronger, and we expect that to be there. That order pattern I was talking about, about January, February, March, is very much true in Advanced Materials, where you can see that progression getting better. You've also got the ramp-up of the methanolysis plant, as you noted. So that's gonna get you that incremental $50 million EBITDA that you just mentioned, that shows up in Advanced Materials. The other $25 million is a benefit for corporate other, for just to be clear, which is where the pre-production expenses of last year have been sitting. And then you got the automotive market, though, even though it's gonna be flat, we have a tremendous track record of growing above that market with our great strength in HUD going into more and more cars, great strength of other premium products, the acoustics, et c. And then importantly, even though EVs may be not growing as fast as everyone hoped, they're still growing relatively much faster than ICE cars. And we get over 3x the amount of square meters in an EV than we do in an ICE car. Very high value products, 'cause there's a lot of functionality in those products that we sell to them earlier. So there's a lot of leverages there that goes beyond just destocking, where we're creating our own growth through innovation in circular and automotive, that'll drive it. As I said earlier, we expect this sort of price cost relationship, you know, to be somewhat neutral to last year. So that won't be a source of, you know, a tailwind, but we don't expect it to really be a significant headwind either. But all that volume shows up, and then with that, you get utilization, right? So you've got a $100 million asset utilization headwind for managing inventory last year. That becomes a $50 million tailwind this year, with the, you know, with this segment. So that also will be a driver for, you know, how you get above $450 million. So if you put all that math together, you know, you can get to $450 million, you could get something greater than that, but I'd like to see proof in how the market's recovering and ramps up, you know, into the spring, before we start getting, you know, beyond that. And Mark, the only thing I would add is, as we think about the year-over-year increase in our depreciation expense, a substantial portion that'll go to the Advanced Materials segment. Got it. Thank you. That's very helpful. And maybe just to follow up, you know, on EVs, you know, how much, you know, outperformance relative to the market did you see from, you know, EV and premium, you know, volume mix impact? And given that we've seen some of that headline deceleration in EVs and maybe sort of looming consumer weakness, you know, do you see potential that, you know, mix improvement, you know, outperformance is, you know, decelerating into 2024? Well, certainly, I think the rate of year-over-year improvement in 2024-2023 will be less than it was in 2023-2024 for the sort of data you're citing around EV growth rate. But I don't think it's, you know, significant, right? There's still a lot of applications we're winning, so there's a primary demand issue that's slowing down, but we're also just starting to penetrate all these EV accounts and win, you know, share relative to standard interlayers and ICE cars. So you get this leverage within the market, within the EV segment itself, that helps. So I don't want to oversell it. I mean, we're, you know, we, we expect an overall flat production market, you know, which I think is sort of consistent with what everyone else is saying. But the growth we can get in these premium products is very meaningful in helping us grow above that market. Great. Thank you. Thank you. Our next question comes from Vincent Andrews of Morgan Stanley. Your line is now open. Please go ahead. Thank you. Mark, could you talk a little bit about plants two and plants three? There were some comments in the prepared remarks talking about methanolysis, obviously, and the prepared remarks about the teams working to sort of, you know, make sure they can stay ahead of inflation. And I'd just kind of be curious, you know, how you're feeling about the CapEx estimates for those plants. We all know it's obviously an inflationary environment, and we've seen some cost overruns at non-related large-scale projects that other folks are doing. So how are you going to stay on top of that? Is it something that you can do technically, or is it going to be something you're going to have to do in terms of how you price the product? Yeah. So, you know, Vincent, you're absolutely right that it's an inflation environment. Certainly, if you go back to Investor Day, you know, in December 2021, the capital estimates we had there for both Kingsport as well as these projects, you know, have gone up, right? You know, which is true for every construction project I've seen in the chemical industry and probably everywhere else. So we're all managing and dealing with, you know, that inflation. And a lot of, you know, what we saw happen in Kingsport went beyond just normal inflation, right? So we had a huge issue with the contractor not having properly skilled labor, and that productivity issue was the biggest issue we faced. We also had just an endless series of severe weather events along the way. There was a lot of engineering work we were doing in that project, and piloting of how to optimize the design of the project while we were building it, which is never ideal, but, you know, allowed us probably to get two years ahead of the market, in getting the project online. So, you know, we have a lot of learnings, you know, from the methanolysis project here that we're incorporating into the France and second U.S. projects, where we're pretty clear on how to build them a lot more efficiently than this first one. So what I'd say is, you know, from a CapEx point of view, there is inflation, that's occurred. There is some deflation that's now in front of us in materials, even contractor labor availability is improving, as we sort of are in this sort of more recessionary, you know, cycle for the materials industry. So it'll help sort of offset or slow down or maybe even decline some of that inflation. We are building the same plant again, you know, as I said earlier, same scale, same design. Obviously, whatever learnings we have in Kingsport, we'll incorporate into it, but we're not trying to, you know, build something new. We're just building the same, and you get a lot of capital efficiency, you know, when you're building, you know, serial number two and serial number three of the same plant. So there will be benefits in controlling capital, you know, both the cost and the predictability with from that. The scopes will first be completely locked up before we start building, and that will help us control CapEx relative to what I just described in Kingsport. And we're using, you know, great firms, Technip, Fluor, you know, for this, these projects, and they've got access to an excellent set of contractors to do this. So we feel good about controlling the capital costs. They will certainly be a bit higher, and that's why we're also pursuing more incentives, in both France and in the U.S., as part of the projects. So I think we feel good about that. What I would say is when we came up with the original economics and talked about returns on these projects, we gave ourselves some room for inflation and other challenges we might encounter. So the Kingsport project still, you know, at 15% return on capital, despite the capital increases. And these projects are still with, you know, the proper customer contracts and incentives, you know, above 12% return on capital. So, you know, even with inflation, we feel good about the returns and feel that we're on track, you know, to get these two projects started this year, assuming we, you know, hit our requirements that I mentioned earlier. We got to still get those three things: customers, incentives, and finalize the capital number. Thanks very much. Thank you. Our next question comes from Mike Leithead from Barclays. Mike, your line is now open. Please go ahead. Great. Thank you. Good morning, guys. First question, I want to circle back on the EPS outlook. I think the last number of years, the first quarter is roughly 25% of what Eastman's full-year EPS turns out to be. This year, 1Q is maybe 18% or so of the full-year guide. So can you talk through why this year's 1Q is a bit different? Is it mainly the lingering destocking that gets you a bit better into 2Q there? Thank you. Yeah, I think as Mark has outlined, you know, we expect a traditional curve, right? We're growing earnings through Q1. Traditionally, Q2 and Q3 are our best quarters, and then there's a seasonal decline in Q4. Also, as we've highlighted, and also on a year-over-year basis, we expect the second half is where we'll pick up most of the utilization benefits, as well as the benefits from our Kingsport methanolysis facility. So there's a combination of factors of the pace that we're seeing in the order books, traditional seasonality, as well as the specific items that impact us in 2023 that are turning into tailwinds in 2024. Those are the key items, Mike. I would just add, there's a couple unique elements of Q1, beyond just the seasonal pattern, where you've got oddly low orders from the Fibers customers. No, no volume risk on the contract, but they're just not buying as much in Q1 as they will do in Q2, Q3. And so that's sort of putting some pressure on there that's sort of beyond seasonality. Same is true in just the timing of fluid fills. Not much going on at all in Q1, but, you know, we have more in Q2. So there's a few, you know, aspects, you know, beyond just sort of normal that's sort of impacting the, and continued destocking in ag and medical, beyond just the seasonal pattern that, you know, mostly will play out in Q1. Great. That's helpful. Then just briefly on methanolysis plants two and three, again, Mark, if I take some of your commentary about if all goes to plan, hopefully breaking ground, I think by later this year, is it fair to say these plants obviously will have a little bit of efficiency or a lot of efficiency gains from rebuilding the first plant, but is it fair to say that these plants commercially would be running something like in mid-2026 as a starting point? I know with the schedule we're on now, we're more into 2027 than 2026 for when these projects will start, if you go back to sort of our original estimates. There's certainly efficiency and timing we're pursuing that will allow us, you know, to build these plants more efficiently, but we're also building a lot more plant in this case, right? Because it's not just a methanolysis plant we're building, we're building infrastructure on our greenfield side in France. You know, we've got polymer lines that we're also building all at the same time. So when you put it all together, it's just, you know, it takes a certain amount of time to get it done. But the key is, you know, the market's very certainly very eager for the product. They have very significant deadlines in 2030 that they have to hit, so we're certainly well within, you know, you know, making sure that we're ramping up and helping them get to their, their targets. But we want to make sure we've really learned everything we can from Kingsport before we start the construction. And then so that's sort of that, that six, nine month delay that sort of occurred from what we were originally thinking. Great. Thank you. Thank you. Our next question comes from Jeff Zekauskas of JP Morgan. Your line is now open. Please go ahead. Thanks v ery much. I think in the Advanced Materials discussion, there was some noting of weak fourth quarter demand. And Asian auto production is always very strong in the fourth quarter, especially EV production. So is it the case that your EV exposure in Advanced Materials is more with domestic and European companies rather than with Chinese companies? So, Jeff, when it comes to the fourth quarter, there was a lot of moving parts for AM as a segment involved in that. So on the auto side, we do have, you know, good relationships and positions with some of the Chinese EV makers as well as the Western EV makers. You know, that has nothing to do with sort of the quarter. Auto demand was better. You got to remember, performance films is, you know, a key part of that, not just interlayers, where we're going on the, you know, both EVs as well as ICE cars and our paint protection film. And so it's only the interlayer part that really applies to your question around sort of the OEM manufacturers from a interlayer point of view. So I think that, you know, that's, that's not a significant factor. The bigger factors were it's just destocking continued longer than we expected in medical and packaging, on the specialty plastic side, that caused volume mix to be a little bit less than what we were projecting in October. It was. That was the entirety of the difference. I mean, overall, the market is, you know, sort of moderating a bit, you know, as you can see from the production data in total. That has an impact, but we were still growing above that market in Q4, and we'll continue to grow above that market all year this year. Okay. I think in the original idea for the methanolysis projects, you were going to spend $250 million for the project itself in Kingsport, with an additional $175 million for Tritan. And I don't know if you partly built the Tritan plant or the Tritan plant wasn't built at all, but in the non-Tritan piece, the original idea was $250 million. What did you spend? And in the future plans, I believe the estimate was $600 million-$800 million. What is the estimate now? In that, you know, what you say is that you have a good return on capital, or you think you can work that out with your customer base. But the customer, you know, you need to have an expectation of what the capital expenditures are in order to negotiate a level of a good return on capital. So I think originally, all of this was supposed to cost $1.8 billion. What, what's the number now? Can you help us? So, Jeff, you know, I would start the last update that we gave on all the programs was saying that the three methanolysis facilities would be, approximately, you know, $2.25 billion. Obviously, Mark has also highlighted there was quite a bit of inflation since 2021, and I think that estimate is reflective of that. And every project over this time frame, including ours, you know, is at that level. Also, I would say, you know, we've been able to handle the CapEx increases that have been above our estimate from a few years ago within our capital budgets that we've outlined in expenditures over the last couple of years. It was fully incorporated into our 2022 and 2023 spend. You know, I referenced earlier that we had roughly, you know, $30 million of increased depreciation expense going from 2023 - 2024, and a substantial portion of that is related to the Kingsport methanolysis facility. That directly gives you the magnitude. We're going to be disciplined as we move forward as we think about both from generating the cash flow to fund these, but also on the returns. And we believe that Advanced Materials, you know, return to growth will be accelerated by having this methanolysis facility and our renewed brands with our customers. Did you build the Tritan? But, Jeff, I mean, there's no question that the capital numbers. Okay. All All right. I'm sorry, Jeff. The capital numbers are up. You know, we're also pursuing a lot more incentives to offset some of those capital numbers. So, you know, until we get that all finalized, you know, I don't want to just keep updating numbers. So, you know, once we have clarity on them and the total economics, as well as what we achieve with customers on the pricing premiums, we can get to fund it, you know, we will, you know, be able to sort of give you a more clear answer on your questions. I mean, the incremental $30 million of depreciation, you know, a good portion of, not all, but a good portion of that is Kingsport plants. You guys can work out what the project costs. Sorry, you were saying something, Jeff? Did you, you know, did you partly build the Tritan facility and the Tritan expansion? Oh, sorry. Yeah. Or was it not? Yeah, Jeff, we started the early construction part of the Tritan line and then paused it. And we're going to restart that as we, you know, align it with our outlook on Tritan demand, which is improving a lot this quarter. So, you know. Yeah. W e'll, we'll see how we judge the Tritan demand, you know, in this next quarter, or when we need to, you know, get that going again to make sure we don't short the market. Okay, great. Thank you so much. Thank you. Our next question comes from John Roberts of Mizuho. John, your line is now open. Please go ahead. Thank you. Are the cig tow contracts working as expected in 2024? And do you think you get to a point where the decline in cig tow volume is offset by the new products and Fibers so that the overall segment has flat top volume? Great question. So I'm a big fan of the cellulosic stream these days, John. You know, we've gone through a rough patch for quite some time. It's great to have the structural market of the tow business back to being where it was, very stable and at the profit levels that allow us to reliably supply our customers. And they're very focused on security, supply, and reliability, and they place a lot of value on us in this industry being able to provide that. So our contracts, we're 100% contracted this year for volume and price, and so we feel good about you know, the earnings stability we'll have in that business. This year, as we said, it'll be you know, somewhat better than last year. And then we've got 90% of our contracts in place for 2025 and close to 70% in 2026. So, you know, we feel good about how this tow business is gonna provide stable earnings and cash, a lot of cash, out of this business. And then, as you just noted on top of that, you now have growth in the Fibers business. That's part of that equation that allows us, you know, to sort of, you know, push our assets and utilization and value. And then Aventa, which is something we'll probably talk to you more about, you know, in the spring, is really on a great path. This is where we figured out how to take our cellulose acetate and foam it, where it's a drop-in replacement to polystyrene for, you know, protein tray, you know, chicken and pork trays, you know, in the grocery store that you see all the time, or other sort of foam clamshells, et c. You know, that industry has a serious issue about getting out of polystyrene. We have a great value proposition with the cellulosic material, where it's a drop-in to their existing equipment, and it's certified to biodegrade, not just in industrial settings, but also in home settings, which is equivalent to landfill. So you really have a biodegradable solution to throw this stuff away with all the sort of meat juice and everything else that's with it, that can't be recycled. So, very big market, a lot of opportunity, good margins, and something that we think will be commercial and grow this year and build into something meaningful next year. So we'll tell you a lot more about that once we have, you know, the customer announcements to go with it. But when you put all that together, it does turn the cellulosic stream into a growth stream, along with the polyester stream, both tied to sustainability and circular economy trends, that are, you know, presenting a huge amount of volume growth, like, you know, Tritan replacing polycarbonate BPA. You know, we can have much higher growth rate than the underlying markets as we're replacing polystyrene, or we're replacing other plastics with recycled content, made products, that can give us a lot of levered growth. The one thing you know about Advanced Materials on both sides is there's a lot of fixed cost leverage. So you've seen the sort of pain of that in the fourth quarter of 2022 and 2023, but it looks exactly the same on the way up. So as you get volume coming back, the fixed cost leverage of these very high-margin products, you know, across especially plastics and now some of it inside cellulosic, which also has a lot of fixed cost, is very attractive. Thank you. Thank you. Our next question comes from Mike Sison of Wells Fargo. Your line is now open. Please go ahead. Hey, cheers. Nice outlook for 2024 so far. I'm just curious, Mark, you know, your volumes were down a bit, too. Conviction in the fourth. It's been quite some time since we've seen volume growth. When do you think AFP and AM will sort of turn the corner, and what type of volume growth do you think the businesses need to generate to hit the midpoint of your guide? Yeah, it's a great question. I think that, you know, we'll certainly turn the quarter in Q2 and the back half of this year. You know, it's a much closer call on Q1, because of some of these unique things. Yeah. I've talked about overall. You know, this timing on fills and customer buying and Fibers is, you know, a bit bumpy. And you still have some destocking going on in ag and medical, those kind of things that are, you know, certainly weighed on Q4 and will weigh on Q1 to some degree. But, you know, we are seeing volumes improve in sort of the core businesses, the ones, especially the ones that all started destocking earlier, whether it's consumer durables, building construction, et c. You know, you can definitely see, you know, that destocking is over. We just don't have everything, you know, done with that topic. I'll be happy to see it. It is extraordinary when you think about it. You know, we're sort of in a sixth quarter of destocking. You know, 2020 had, like, two quarters, and 2009 had, like, three quarters. So we are in uncharted territory on this destocking thing, and we all need to own that. But you can definitely see it's coming to an end, and we're happy to get our production volumes connected back to markets, and that will give us a nice recovery this year. Got it. And then just quick follow-up on adjusted EBIT margins for AFP and AM. It looks like we'll see some improvement in 2024 versus 2023, but, you know, historically, they've been. You know, both of those have been closer to 20%. Is that sort of where you think margins can get to over time? Mike, this is Willie. As Mark has highlighted, as we get the benefits of that fixed cost leverage, as well as we get the mix upgrades with our circular solution, we definitely believe both AM and AFP can grow back to those and towards those 20% type margins. Great. Thank you. Thanks, Mike. Thank you. Our next question comes from Aleksey Yefremov of KeyBanc Capital Markets. The line is now open. Please go ahead. Thanks. Good morning, everyone. Are you likely to stagger construction of methanolysis number two and number three? Or do you think you're in a strong enough capital position and confidence in this business to build the two simultaneously? I would highlight, we would expect that we would stagger these, Aleksey. There's not gonna be a significant difference, but they will definitely be staggered, with the France project, as Mark said, breaking ground in late summer. And then as we make progress on that, we would look to then shortly after that, to start our second U.S. project. Thanks. And, staying on the same topic, do you have any significant number of customers who might be on the fence right now telling you they'd like to see the Kingsport plant start up, and then if that works well, there could be a lot more customers willing to sign up for the other two? No, we definitely think so. I mean, you know, this industry doesn't have a lot of examples of inventing and having successful environmental technology solutions, whether it's recycled content or carbon efficiency. So customers are cautious about, you know, how much they want to sign up and buy until they really have proof that it's gonna be available reliably, you know, at prices that make sense to them. And so I think, you know, we're already in the market, fortunately, confirming, you know, our price expectations, you know, with the Pepsi contract, with the specialties that we're already selling. So we feel good about that. But I think there is a lot of, you know, potential pent-up demand once the plant is up and running and validated that will certainly help load this plant. Obviously, that's part of our assumption around the $75 million of incremental EBITDA this year, and, you know, that will help, you know, give us upside to it. The downside, of course, is markets are weak, and so there's just a limitation at the rate at which customers are going to launch products in a weak market. And so you have to net those together in trying to come up with the appropriate forecast, which we've attempted to do with this, $75 million dollar EBITDA guide, for the first plant for this year. And then, obviously, that will continue to ramp up and be a significant tailwind in 2025 relative to 2024. Thanks, Mark. Yep. Thank you. Our next question comes from Kevin McCarthy of Vertical Research Partners. Your line is now open. Please go ahead. Yes, thank you, and good morning. Mark, if the methanolysis start up and ramp goes smoothly, such that you earn $75 million in EBITDA, as you've indicated, what could that earnings level become in 2025? Kevin, this is Willie. You know, what I would highlight is, as we've talked about, roughly $50 million of EBITDA will come in the Advanced Materials segment. That's primarily in the second half. So as I think about where we'll be, effectively, we'll be at greater than a $75 million EBITDA run rate within that business. We've got a strong pathway to exiting 2025 as we think about brands and being able to connect into even more brand launches in 2025. That will be at, you know, roughly a $150 million run rate as we exit 2025. And then ultimately, we expect greater than $150 million of EBITDA from this built facility on an annual basis. Perfect. I appreciate that. And, secondly, if I may, Mark, I want to come back to the Fibers discussion. I think it's interesting that you've got so much under contract through 2026. When we talk about, you know, a lot of the output being under contract, can you speak to, d oes that just mean the volume is committed, or can you speak to the degree to which you've got visibility into both pricing and cost? Just trying to get a sense for, you know, kind of the confidence intervals around the economics through 2026. Yeah. So the commitments we have in 2025 and 2026 with the market is both on price and cost. It covers both. Now, there's ranges in the volume side, right? So they have a min and a max on volume, but the pricing formula, which in most cases include a, you know, these prices will then adjust based on changes in energy and raw material. So, you know, the margins, it's sort of cost pass-through, if you will, to some degree. So, you know, these margins, you know, if we get a tailwind, we'll share that with the customers. If costs go up, you know, we'll raise our prices formulaically. But that is the nature of most of these contracts, not all, but most, you know, have some version of pricing it, and a lot of it includes the CPT. So no, that's. But there's always a little bit of, you know, potential volume decline in the market that we have to accommodate with them. So that part has room for sort of changes in market demand. Got it. Thank you very much. Thank you. Our next question comes from Laurence Alexander of Jefferies. The line is now open. Please go ahead. Good morning. Can you on the renewable side discuss how the policy landscape is shifting, or, you know, in terms of the potential incentives you may receive for this second and third plant compared to what you had initially expected, or broader policy shifts that might be incentivizing customers? Sure. So two different sets of topics there. On the incentives, you know, the European Union and the governments within it have certain prescribed methodologies around how they do incentives, and we are, you know, working to get the higher end of what's allowed in the European Union. We're in the middle of finalizing that, so I can't talk about it right now. But there are some improvements we expect to get, as the inflationary environment, you know, has impacted the CapEx cost. So we feel good about where we're at on that. When it comes to the U.S., you know, the Inflation Reduction Act is out there, as I think we discussed in the third quarter call. We do have an application in to them. We have not yet been notified about whether or not we'll get that reward, and what the level of the award will be. We've asked for a substantial amount of capital, because it would support some very impressive environmental investments around the plant that would allow that plant to be carbon neutral, which would be extremely attractive. You know, there are two things customers want right now: 100% recycled content, they don't want anything less, because they want to have a bold claim, and they want to be carbon neutral or as close to that as possible. And so the second and third plants are both capable of being carbon neutral, and they are, you know, obviously capable of delivering 100% recycled content. So, you know, there's a lot of, you know, interest and attraction to making sure these kind of plants get built. But, you know, it's a political process, and I never want to guess politics. So until I know what the incentives are, we'll just wait and see what they do. When it comes to the policy for the circular economy, the European policy in place that they're finalizing the rules on as we speak is very attractive for driving demand of the product. So it requires, you know, circularity and certain percentage targets for, like, beverages, 25% by next year. And the industry only probably has half of the capacity mechanically to serve that, so there's a lot of demand and market need in that space. All packaging needs to be 30% by recycled content. As I mentioned earlier, no one wants 25% or 30%. Every customer we're talking to wants 100%. The demand is probably in excess of the regulatory requirements, but there's definitely requirements that will force people to start getting recycled content. It also requires, you know, the content to be made from packaging placed in the European market, so it allows that to be a regional circular business. We're still waiting for all that to be finalized, but that's sort of where it's headed at this point, as we understand it. The U.S. is a patchwork, so every state's, you know, developing a different point of view around circular economy and how they want it to play out. Half the country, that is, the more conservative country's states are all passing various, very sort of favorable circular economy language. The other half, it's, it's a patchwork, but so far, everything we've seen, our technology fits within the definitions of being a solution to the plastic waste crisis. And then just as we start looking towards 2025 and 2026, to what extent have you pulled forward productivity that would make it more difficult to get sort of incremental productivity gains over the next few years? Are you talking about so total company on productivity? I'm sorry, I'm just not sure I understand the question. Are you talking about just general productivity in the company or? Yeah, the kind of structural productivity gains you've been delivering kind of fairly consistently. I guess my impression is that effort ramped up in the more recent period, and so I'm just curious as to have you pulled things forward, or should we be thinking about there's another leg of structural productivity gain through the next couple of years? Just what's the next piece of that story? Yeah, so I think what I'd say happened to us and every company is we had extraordinary inflation in 2021 and 2022, and we lost productivity through COVID and work at home and everything else that I think every company, including us, is working our way through. So we aggressively went after it last year, where we got $200 million of productivity above inflation to start addressing some of that sort of extraordinary inflation and get our cost structure where it should be. This year, as you saw, we're just getting enough productivity to offset inflation, so $100 million of productivity, you know, offsetting total inflation of labor and external spend. So that's, you know, more normal is what I'd say. We have to have productivity every year, where we're offsetting, you know, inflation so that, you know, we have the ability to invest in growth, deliver earnings growth and cash to the shareholders at the, you know, all at the same time. And so that's sort of where we're at. And so you should expect continued productivity, but it's more in the offsetting inflation category going forward than some big additional step up, right? The leverage for our company right now is volume recovery, especially in the specialties where the value, you know, the value per product is much higher than the company average. So you get volume, you get mixed lift, you get fixed cost leverage, which is how we've demonstrated a lot of success in our past, and certainly the strategy we're going to be on this year and leveraging into next year with innovation. Thank you. Let's make the next question the last one, please. Alex? My apologies. Thank you. Our final question for today comes from Salvator Tiano from Bank of America. Your line is now open. Please go ahead. Thank you. I just want to ask about the M&A landscape. What are you seeing here, and, now that it looks like things are finally improving, are you more incentivized to go out and look for specific targets? Yes, Salvator, this is Willie. You know, what I would highlight is I think we've shown that we're disciplined with, with our portfolio overall. As we think about priorities, for bolt-ons, which we're always looking for, those bolt-ons would be within our, Additives and Functional Products and Advanced Materials segment. But our key focus that we have right now is, continuing to execute on our organic growth program. But to your point, there's probably better deal space coming, as there's, you know, both, recovery, from a business standpoint and, the rates environment is changing. Thank you very much. All right. Thank you, thank you, everybody, for joining us. I hope you have a great day. Thank you for joining today's call. You may now disconnect your lines.