Eastman Investor Day Highlights Portfolio Transformation, Strong Free Cash Flow and Sustainable Earnings Growth

                                                                                           

Expects 8%-12% long-term EPS growth, >12% in 2015

Expects to generate more than $3 billion of free cash flow between 2015 and 2017

KINGSPORT, Tenn., November 6, 2014 - At Eastman Chemical Company's EMN 2014 Investor Day, Chairman and Chief Executive Officer Mark J. Costa and senior executives discussed the company's strategy for delivering consistent and superior value to stockholders.

"We have made significant progress positioning the company for sustainable, long-term growth and we remain on track to achieve our fifth consecutive year of earnings growth," said Costa. "Over the past ten years, we have transformed our business to focus on a high-value, diverse portfolio of specialty and special position products that can deliver increasing earnings and free cash flows. To deliver this growth, we have sustained and expanded our leadership positions in key markets, driven improved product mix through innovation, and leveraged our advantaged cost positions. As a result, we have built a track record of consistent and superior results across all of our businesses and are pleased with the progress we have made to date. We believe Eastman remains well-positioned to meet the unique and growing needs of our customers and generate significant value for stockholders."  

"Looking ahead, we see many opportunities to continue leveraging our world-class technology platforms for further growth," said Costa. "We believe we can achieve eight consecutive years of consistent EPS growth with strong free cash flow and attractive return-on-invested-capital with an eight to 12 percent earnings per share compound annual growth rate.  In 2015, we expect to deliver greater than 12 percent EPS growth as we add to our strong organic growth with accretion from the Taminco acquisition."

Financial Outlook:  A Position of Strength

Curt Espeland, executive vice president and chief financial officer, stated that Eastman's financial position is a point of strength for the company. Espeland highlighted the strength of Eastman's balance sheet and free cash flow generation, which together provide a strong foundation to pursue both organic and inorganic growth opportunities. Eastman expects to generate more than $3 billion in free cash flow from 2015 to 2017 with return-on-invested capital (ROIC) of 12 to 15 percent. Capital deployment will remain disciplined and balanced among capital expenditures, joint ventures and acquisitions, and returning cash to stockholders. He also reiterated the company's commitment to maintaining its investment-grade credit rating. The company has increased its dividend for three consecutive years and expects continued dividend increases as earnings grow.

Espeland affirmed that the Taminco acquisition is expected to close in the fourth quarter of 2014 and that Eastman expects cost, operational, and revenue synergies totaling approximately five percent of Taminco's sales revenue. 

Additives & Functional Products: Leveraging Leadership Positions for Innovation and Growth

Brad Lich, executive vice president, discussed the company's strategy to deliver consistent growth in the Additives & Functional Products business segment, which manufactures chemical additives for coatings, tires and other formulated products industries. He stated that Eastman's strong portfolio is leveraged to end markets with solid underlying fundamentals and is well-positioned to benefit from the growing middle class in developing countries. Lich also outlined how Eastman is leveraging its key leadership positions and strategic relationships in the coatings and tires markets to create innovation opportunities across its product platform. Lich stated that the company expects its Additives & Functional Products segment to deliver three to five percent annual sales revenue growth and five to seven percent annual operating earnings growth from 2014-2017.

Lich also detailed the company's growth strategy for tires, coatings and other formulated products. For tires products, Eastman is focused on accelerating innovation to sustain its market leadership in insoluble sulfur. Lich discussed how the company is transforming the cost position of its Crystex^® insoluble sulfur rubber additive by expanding its Kuantan, Malaysia, manufacturing facility and optimizing its current asset base. The company is also broadening its portfolio of performance additives by leveraging Eastman's leadership in hydrocarbon resins and cellulosics to develop new additives that will drive growth. In coatings, Lich stated that the company's leadership positions in Texanol(TM) ester alcohol, cellulose esters and specialty solvents support the company's innovation efforts and allow Eastman to extend its portfolio of film-forming additives. He also shared that the company continues making good progress in developing new polyester products for coatings based on Eastman proprietary TMCD monomers. In other formulated products, Eastman is focused on developing new applications for cellulose esters other than tires and coatings and building niche leadership positions in care chemicals.

Advanced Materials: Favorable Macro Trends Accelerating Growth and Improving Product Mix

Eastman's Advanced Materials segment, which comprises Eastman's specialty plastics, advanced interlayers and performance films product lines, has a portfolio of differentiated materials with leadership positions in niche markets. Lich discussed how Eastman is leveraging its strong competitive advantage in research and development to innovate new products and enter new markets. He said that the combination of Eastman's high-margin, innovation-driven growth with excess manufacturing capacity and vertical integration is expected to drive strong operating earnings growth. Lich stated that the company expects Advanced Materials to deliver five to seven percent annual sales revenue growth and nine to 12 percent annual operating earnings growth from 2014-2017.

In specialty plastics, Eastman Tritan(TM) copolyester continues to deliver strong margin growth, driven by market penetration and brand adoption. The company expects future Tritan growth to be driven by deeper, global penetration of existing markets and evolving macro trends in medical end-product markets. In advanced interlayers, the company believes core end markets are recovering in Europe and expects earnings growth beyond the underlying market by growing its specialties product lines. In performance films, Lich highlighted Eastman's ability to accelerate growth and market penetration especially in the United States and China, the world's two largest car markets. He also said that the company expects the acquisition of Commonwealth Laminating & Coating will be completed in fourth quarter 2014 and will strengthen Eastman's position in key window and protective film markets by expanding the product portfolio and channel network. 

Adhesives and Plasticizers: Solid Sales Revenue and Operating Earnings Growth from Favorable Competitive Positions

Ron Lindsay, chief operating officer, highlighted the strong growth trends in key markets and leading cost positions as key factors driving expected earnings growth for the Adhesives & Plasticizers segment. For adhesives resins, the global hygiene market is expected to grow five to seven percent due to consumer preferences and increased disposable incomes in fast-growing economies. In addition, Eastman has taken actions to reduce the impact of raw material variability in this business. For plasticizers, the company expects strong volume growth from continued switching to non-phthalate plasticizers from plasticizers with phthalates driven by regulatory requirements and customer preferences. Eastman also benefits from integration to large-scale upstream manufacturing assets and low-cost capacity additions that enable growth at attractive margins. As a result, Lindsay stated that the company expects the Adhesives & Plasticizers segment to deliver three to five percent annual sales revenue growth and five to seven percent annual operating earnings growth from 2014-2017.

Fibers: A Consistent, Long-Term Earnings Base for the Company Through 2017

The Fibers segment is well positioned to continue delivering solid earnings and strong cash generation to fund corporate growth. Lindsay stated that the company expects global acetate tow demand to be stable through 2017 with some risk of customer inventory de-stocking in 2015.  He also emphasized Eastman's strong competitive position in Fibers due to its integrated manufacturing and technology platforms in Kingsport, low cost production of acetate tow, and its highly effective and responsive technical support. Together, these factors provide Eastman with a strong cost position and enable a broad range of product mix with a wide range and reliable supply of high quality products. Lindsay said that Eastman is prepared to take further actions to manage its costs  to continue to deliver reliable earnings from this segment, and that the company expects Fibers to continue to provide a source of stable sales revenue and operating earnings from 2014-2017.       

Specialty Fluids & Intermediates: Asset Optimization Supports Earnings Growth

Eastman's Specialty Fluids & Intermediates business, which is comprised of specialty fluids, chemical intermediates, and other intermediates products, is leveraging its special positions to grow in select markets while optimizing corporate asset utilization. According to Lindsay, specialty fluids benefits from market leadership with global brands, product development in businesses including high-performance turbine oil, and highly efficient operations. Chemical intermediates benefits from strong market positions in diverse, regional markets, low-cost capacity expansions timed and sized to avoid excess capacity, and a low-cost raw material position. Sales of other intermediates drive manufacturing stream utilization, which serves diverse internal demands and external markets. The segment also benefits from a high level of asset reliability and corporate actions taken to reduce costs and volatility. Eastman expects annual sales revenue growth in Specialty Fluids & Intermediates of two to four percent and annual operating earnings growth of five to seven percent from 2014-2017.

A webcast replay of the Investor Day presentations and the accompanying slides are available at http://www.investors.eastman.com, Events & Presentations.
Non-GAAP Financial Measures

All earnings measures in this release and in the Investor Day presentation and accompanying slides are non-GAAP and exclude certain non-core and non-recurring items. Reconciliations to GAAP earnings per share and operating earnings and other associated disclosures, including a description of the excluded items, are available in the Company's Forms 10-K and 10-Q for the periods presented. Projections of future earnings also exclude any non-core or non-recurring items.

"Return on Invested Capital" (or "ROIC") is net income plus interest expense divided by average long-term borrowings plus stockholders' equity for the period presented, each derived from the GAAP measures in the Company's financial statements for the periods presented. Calculation of historical ROIC for each of the periods presented is in the Appendix to the Investor Day presentation slides. Information concerning use of the non-GAAP measure ROIC is available in the Company's Form 10-Q for third quarter 2014.

"Free cash flow" is cash provided by operating activities less cash used for additions to properties and equipment, both the GAAP measures in the Company's statements of cash flows for the periods presented. Calculation of historical free cash flow for each of the periods presented is in the Appendix to the Investor Day presentation slides. Information concerning use of the non-GAAP measure free cash flow is available in the Company's Form 10-Q for third quarter 2014.

Forward-Looking Statements

This news release and the Investor Day presentation and accompanying slides include forward-looking statements concerning plans and expectations for Eastman Chemical Company business and financial results. Such expectations are based upon certain preliminary information, internal estimates, and management assumptions, expectations, and plans, and are subject to a number of risks and uncertainties inherent in projecting future conditions, events, and results. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations prove to be inaccurate or are unrealized. Important factors that could cause actual results to differ materially from such expectations are and will be detailed in the company's filings with the Securities and Exchange Commission, including the Form 10-Q filed for third quarter 2014 available on the Eastman web site at www.eastman.com in the Investors, SEC filings section.

Eastman is a global specialty chemical company that produces a broad range of products found in items people use every day. With a portfolio of specialty businesses, Eastman works with customers to deliver innovative products and solutions while maintaining a commitment to safety and sustainability. Its market-driven approaches take advantage of world-class technology platforms and leading positions in attractive end-markets such as transportation, building and construction and consumables. Eastman focuses on creating consistent, superior value for all stakeholders. As a globally diverse company, Eastman serves customers in approximately 100 countries and had 2013 revenues of approximately $9.4 billion. The company is headquartered in Kingsport, Tennessee, USA and employs approximately 14,000 people around the world. For more information, visit www.eastman.com.

Media:
Tracy Kilgore, 423-224-0498
tjkilgore@eastman.com

Investors:
Greg Riddle, 212-835-1620
griddle@eastman.com

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