During its 2021 Innovation Day, which was hosted in-person and virtually Dec. 7, Eastman Chemical Co.’s executive management team highlighted key elements of the company's business strategies and detailed its pathway to deliver growth through 2024, which includes the company’s molecular, or chemical, recycling technologies.
"Over the past several years, we have executed a strategy to position Eastman as a leading material innovation company,” Mark Costa, Eastman board chair and chief executive officer, said. “Central to our strategy is our compelling, innovation-driven growth model, which is succeeding in creating consistent, sustainable value for all our stakeholders. We are leveraging our unique model to create value from disruptive macro trends, which we expect to be a strong contributor to Eastman's growth over the next three years."
Costa said the company is excited about the leadership position it has in the circular economy. “Through our competitively advantaged molecular recycling capabilities, we are providing solutions for the plastic waste and climate crises while also creating a new vector of growth that has the potential to deliver greater than $450 million of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) by 2026."
Eastman says it is expecting an adjusted earnings per share compounded annual growth rate of 8 to 12 percent over the next three years; an increase in corporate adjusted EBITDA margin to approximately 23 percent; more than $1.6 billion of annual operating cash flow; and return on invested capital to be between 12 to 15 percent, which is significantly above cost of capital.
Costa said environmental, social and governance (ESG) are integrated into the company's growth plans and detailed the company's path to achieve carbon neutrality by 2050. This includes increased energy efficiency, process transformation, focus on renewable energy and leveraging technology breakthroughs.
Steve Crawford, executive vice president, technology and chief sustainability officer, said, "The triple challenge created by the climate, plastic waste and growing population crises has intensified the need for sustainable innovations. To address these issues, we have aligned our top innovation platforms with these significant sustainability drivers.”
He said the company is on track for new business revenue from innovation that will approach $700 million in 2024, noting that depolymerization and intermediate purification are competitive advantages for Eastman.
Crawford also detailed the sustainable and competitive advantages to Eastman's molecular recycling technologies, including a lower carbon footprint, the ability to recycle hard-to-recycle material, no compromise in performance and security of supply.
He said both mechanical and molecular recycling will be needed to eliminate waste and create a truly circular economy, with mechanical recycling offering the most carbon efficiency when possible.
Brad Lich, Eastman’s executive vice president and chief commercial officer, detailed the company’s business strategies to build on the performance of the Advanced Materials segment, which consists of specialty plastics, advanced interlayers and performance films product lines.
"Advanced Materials is a great specialty business that is well-positioned to accelerate its strong track record of growth as global sustainability macro trends gain momentum," he said. "In response to the global plastic waste and climate crises, customers and brands are looking to increase materials with recycled content. Through our circular recycling technologies, we are uniquely positioned to take materials that were otherwise bound for the landfill and deliver high-quality products without compromising quality or performance."
At the start of this year, Eastman said it was moving forward with its circular economy project in Kingsport, Tennessee, which includes building the world's largest polyester material recycling facility and a Tritan polyester polymerization plant. This facility will contribute to Eastman achieving its sustainability commitments for addressing the plastic waste crisis, which includes recycling more than 500 million pounds of plastic waste annually by 2030 via molecular recycling technologies and becoming carbon neutral by 2050, according to the company. Eastman says it has committed to recycling more than 250 million pounds of plastic annually by 2025.
The Kingsport project is expected to begin producing at commercial quantities in 2023. In addition, Lich said the company is in active discussions for additional projects in Europe and the U.S. and expects to announce at least one additional circular economy project in the first half of 2022.
Lucian Boldea, executive vice president, Additives & Functional Products and Chemical Intermediates, discussed actions taken in the Additives & Functional Products segment over the past year that have resulted in a more focused and resilient portfolio. These actions include the divestiture of nonstrategic businesses with approximately $1.1 billion of revenue expected to be completed in first quarter 2022. The focused, more streamlined segment now consists of coatings additives, care additives, animal nutrition and specialty fluids businesses.
He also discussed the role the Chemical Intermediates segment plays in supporting specialty growth through scale and integration, feedstocks for circular recycling facilities and its contribution to Eastman's strong cash flow generation.
Eastman’s total capital expenditures on the project are roughly $425 million and its projected return on invested capital is 15 percent, Costa confirms in an interview with Recycling Today following the event.
Costa says the methanolysis plant in Kingsport is on track for completion at the end of 2022 and that the company has committed to additional production of polyester polymers with recycled content.
Eastman has pulled forward its Tritan expansion with a new 80,000 metric ton per year line in Kingsport that will be fed in part by its methanolysis facility, which will be able to process 110,000 metric tons of postuse plastics annually, including hard-to-recycle polyethylene terephthalate (PET), carpet and textiles that cannot be mechanically recycled. The company will produce 150,000 to 200,000 metric tons of its Tritan Renew polymer with recycled content annually, he adds.
Tritan Renew does sell at a “small” premium relative to the company’s legacy Tritan product, he adds.
Costa says Eastman is seeing “tremendous interest” in its circular products across many industries, including cosmetics and tools. Black & Decker is a new customer that is using Tritan Renew in its Reviva line of power tools, marking the world’s first power tools made from recycled material. The line, which will launch in early 2022, will be made using Tritan Renew with 50 percent certified recycled content.
“It is really important for the industry to prove there is a circular life for plastics,” Costa says, adding that Eastman’s molecular recycling technology is scalable and economical and lowers the company’s carbon footprint. “It is the right answer for the climate combined with addressing the plastic waste crisis.”
He says the company is working with some of the world’s largest waste and recycling companies to source material for its methanolysis plant. According to the company’s Innovation Day presentation, it is in discussions with more than 125 potential suppliers. “We are not competing for material that can be mechanically recycled,” he says. “We want what is going to landfill or incineration.” He adds that the company pays for this feedstock, which companies otherwise would have to pay to dispose of.
Eastman has secured about half of the feedstock needed for its Kingsport facility, Costa says, acknowledging that securing offtake agreements for its recycled-content products has been easier than securing feedstock.