EMN 10-K & 10-Q changes, risk factors and insider trading

The Company's business and operating results are impacted by global recessions, and the related impacts, such as the credit market crisis, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, increasing interest rates, and other challenges that impacted the global economy. Similarly, as a company that operates and sells products worldwide, uncertainty in the global economy, labor market, and capital markets (including impacts from inflation, higher interest rates, changes in governing and legislative bodies, and subsequent changes and disruptions in business, political, and economic conditions) havehas impacted and may adversely impact demand for and the costs of certain Eastman products and accordingly results of operations,operations. andThese events may in turn adversely impact the Company's financial condition and cash flows and ability to access the credit and capital markets under attractive rates and terms andterms, negatively impactimpacting the Company's liquidity or ability to pursue certain growth initiatives.

Eastman is reliant on certain strategic raw material and energy commodities for its operations and utilizes certain risk management tools to mitigate market fluctuations in raw material and energy costs. The cost and availability of these raw materials and energy commodities can be adversely impacted by factors such as business and economic conditions, anomalous severe weather events, natural disasters, global pandemics, plant interruptions, supply chain and transportation disruptions, changes in laws or regulations, levels of unemployment and inflation, currency exchange rates, higher interest rates, war or other outbreak of hostilities or terrorism (such as the ongoing Russia/Ukraine and Middle East conflictsconflict), and breakdown or degradation of transportation and supply chain infrastructure.

The Company is subject to operating risks related to its information technology infrastructure, including service interruptions, data corruption, cyber-based attacksattacks, or network security incidents, which could cause operations to be disrupted, product manufacturing to be delayeddelayed, or data confidentiality to be impaired.

Despite the Company's efforts to mitigate cybersecurity risk, its business may be impacted by system shutdowns, service disruptions, or cybersecurity incidents. Cybersecurity incidents, data breaches, and operational disruptions are constantly evolving, becoming more sophisticated, and conducted by groups and individuals with a wide range of expertise and motives, including foreign governments, cyber terrorists, cyber criminals, malicious employees, and other insiders and outsiders. Such an incident could result in unauthorized access or disclosure of confidential or personal information, and loss of trade secrets and intellectual property. In addition, the Company may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to the Company, its current or former employees, customers, or suppliers, and may become exposed to legal action, governmental investigations, enforcement actionsactions, and regulatory fines. The Company may also be required to spend additional resources to restore systems or repair damage caused by a cybersecurity incident. These risks may also be present for the Company's joint venture partners, suppliers, or acquired businesses.

The Company has been in the past, and likely will be in the future, subject to cyber-attacks related to its information systems. Although none of the previous cyber-attacks have had a material adverse impact on the Company's operations or financial results, no assurances can be provided that any future disruptions due to these, or other,other circumstancescircumstances, will not have such an impact. See "Cybersecurity" in Part I, Item 1C of this Annual Report.

Eastman continues to identify and pursue growth opportunities through both organic and inorganic initiatives, such as Eastman's sustainable innovation initiatives, which aim to develop a more "circular economy." These and other growth opportunities include development and commercialization or licensing of innovative new products and technologies, expansion into new markets and geographic regions through, among other means, alliances, ventures, and acquisitions that complement and extend the Company's portfolio of businesses and capabilities. Such initiatives are necessarily constrained by availability and development of additional resources.

There can be no assurance that such innovation, development and commercialization or licensing efforts,commercialization, investments, or acquisitions and alliances (including integration of acquired businesses) will receive necessary governmental or regulatory approvals, or result in financially successful commercialization of products, or acceptance by existing or new customers, or successful entry into new markets or otherwise achieve their underlying strategic business objectives or that they will be beneficial to the Company's results of operations. There also can be no assurance that capital projects for growth efforts can be completed within the time or at the costs projected due to, among other things, demand for and availability of construction materials and labor, obtaining regulatory approvals and operating permits, and reaching agreement on terms of key agreements and arrangements with potential suppliers and customers. Any such delays or cost overruns or the inability to obtain such approvals or to reach such agreements on acceptable terms could negatively impact the returns from any proposed or current investments and projects.

Eastman's future success in achieving its performance and growth goals depends on its ability to attract, retain, developdevelop, and motivate highly skilled personnel. The Company has experienced, and continues to experience, an increasingly competitive hiring environment for skilled employees at its manufacturing and other sites, which has generally increased the cost of hiring or retaining talented employees essential to its success. In addition, effective succession planning is paramount to its long-term success. It is critical that Eastman identifies and develops succession candidates for senior management and other key positions throughout the organization. Failure to timely identify and develop succession candidates heightens the risk associated with the unexpected departure of key employees. Eastman's inability to ensure effective transfer of knowledge and transitions involving key employees could adversely impact its strategic planning and execution, which could adversely affect Eastman's business, financial condition, and results of operations.

Eastman, its facilities, and its businesses are subject to complex health, safety, and environmental laws, regulations, and related voluntary actions, both in the U.S. and internationally, which require and will continue to require significant expenditures to remain in compliance with such laws, regulations, and voluntary actions. The Company's manufacturing activities, both inside and outside of the U.S., are subject to regulation by various federal, state, locallocal, and foreign laws, regulations, rulesrules, and government agencies concerning, among other things, air emissions, discharges to land and water, and the generation, handling, treatment, and disposal of hazardous waste and other materials. Actual or alleged violations of environmental, healthhealth, or safety laws and regulations could result in restrictions or prohibitions on manufacturing operations as well as substantial damages, penalties, fines, civilcivil, or criminal sanctions and remediation costs. Eastman has incurred, and will continue to incur, significant costs and capital expenditures to comply with these laws and regulations, which may adversely impact its business and financial results. Future developments and more stringent environmental regulations may require the Company to make significant expenditures for environmental protection equipment, compliance, and remediation.

The multinational nature of Eastman's business subjects it to taxation in the United States and other foreign jurisdictions. Changes to income tax laws and regulations or in the interpretation of such laws in any of the jurisdictions in which it operates, including new legislation, such as the One Big Beautiful Bill Act, or the unfavorable resolution of tax matters could significantly increase the Company's effective tax rate and adversely impact its financial condition or results of operations. Eastman could also be affected by, among other things, changes in the mix of earnings in countries with differing statutory tax rates, expirations of tax holidays, changes in the valuation of deferred tax assets and liabilities, and changes in liabilities for uncertain tax positions. In addition, the U.S. and foreign countries may impose additional taxes or otherwise tax Eastman's income. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Income Taxes" in Part II, Item 7 of this Annual Report. For example, the Organization for Economic Co-operation and Development ("OECD") has introduced a framework to implement a global minimum tax. Several jurisdictions in which Eastman operates have enacted laws effective January 1, 2024, consistent with the OECD's framework. Details around the global minimum tax in eachmost jurisdictionjurisdictions remain uncertain. The Company has so far experienced a modest increase in tax obligations in jurisdictions it conducts businessbusiness, anda large portion of which is expected to be temporary due to the OECD's January 5, 2026 "side by side" arrangement. Eastman will continue to monitor and evaluate impacts.

Indefinite-lived intangible assets, consisting primarily of tradenames, are tested for potential impairment by comparing the estimated fair value to the carrying amount. The Company elected to perform a qualitativequantitative impairment assessment of indefinite-lived intangible assets in 2024.fourth quarter 2025. The qualitative assessment did not identify indicators of impairment, and it was determined that it is more likely than not the fair value of indefinite-lived intangible assets was greater than their carrying value. When a quantitative impairment assessment is performed, the Company uses an income approach, specifically the relief from royalty method, to test indefinite-lived intangible assets for potential impairment. The estimated fair value of tradenames is determined based on projections of revenue and an assumed royalty rate savings, discounted by the calculated market participant WACC plus a risk premium. The Company had $349$351 million in indefinite-lived intangible assets at December 31, 2024.2025. There waswere no impairmentimpairments of the Company's indefinite-lived intangible assets as a result of the tests performed during fourth quarter 2024.2025. Declines in market conditions or forecasted revenue could result in a future impairment of indefinite-lived intangible assets.

•Non-coreNon-core, unusual, or non-recurring items include transactions, costs, and losses or gains relaterelating to, among other things, cost reductions, growth and profitability improvement initiatives, changes in businesses and assets, and other events outside of the Company's core business operations, and have included asset impairments, restructuring, and other charges and gains,gains; costs of and related to acquisitions,acquisitions; gains and losses from and costs related to dispositions, closures, or shutdowns of businesses or assets,assets; financing transaction costs,costs; environmental and other costs related to previously divested businesses orbusinesses, non-operational sites and product lines, and discontinued programs; mark-to-market losses or gains for pension and other postretirement benefit plans.plans; the impact from significant tax law changes; and unusual or non-recurring income tax reserves or adjustments.

•Mark-to-market pension and other postretirement benefit plans gains and losses resulting from the changes in discount rates and other actuarial assumptions and the difference between actual and expected returns on plan assets during the period; and

•Environmental and other costs from previously divested orbusinesses, non-operational sites and product lines;lines, and discontinued programs.

Eastman's products and operations are managed and reported in four operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. Eastman uses an innovation-driven growth model which consists of leveraging world class scalable technology platforms, delivering differentiated application development capabilities, and relentlessly engaging the market. The Company's world class technology platformsplatforms, scale advantage, and sustainability macrotrends form the foundation of sustainablethe growth by differentiated products through significant scale advantages inCompany's research and development ("R&D") and advantagedinnovation global market access.initiatives. Molecular recycling technologies continue to be an area of investment focus for the Company and extends the level of differentiation afforded by itsour world class technology platforms. Eastman began operating the world's largest polyester molecular recycling facility in 2024. Differentiated application development converts market complexity into opportunities for growth and accelerates innovation by enabling a deeper understanding of the value of Eastman's products and how they perform within customers' and end-user products. Key areas of application development include thermoplastic conversion, functional films, coatings formulations, textiles, and personal and home care formulations. The Company engages the market by working directly with customers and downstream users, targeting attractive niche markets, and leveraging disruptive macro trends. Management believes that these elements of the Company's innovation-driven growth model, combined with disciplined portfolio management and balanced capital deployment, will result in consistent, sustainable earnings growth and strong cash flow from operations.

Sales, EBIT, and EBIT excluding non-core and unusual items were as follows:

Sales revenue increaseddecreased in 20242025 compared to 20232024 due to higherlower sales volume partiallyprimarily offsetdriven by loweracetate selling prices. Higher sales volume was primarily attributed to the end oftow customer inventory destocking and industry capacity share adjustments as well as end-market weakness in most end-marketsconsumer anddiscretionary innovation-drivenend growth above end-market demand. Lower selling prices were primarily attributed to lower raw material and energy prices.markets. EBIT excluding non-core and unusual items increaseddecreased in 20242025 compared to 20232024 primarily due to higherlower sales volume, includinglower higherselling capacity utilization,prices and lowerhigher raw material and energy costs, net ofand lower sellingasset prices.utilization. These factors were partially offset by cost reduction initiatives, lower manufacturing costs, and lower variable compensation costs.

The Company generated $1.3$970 billionmillion and $1.4$1.3 billion of cash from operating activities in 20242025 and 2023,2024, respectively.

Sales revenue increased as a result of increasesdecreased in the2025 AM,compared AFP,to and2024 Fibersdue segments,to partiallydecreases offsetacross byall aoperating decreasesegments inexcept the CIAFP segment. Further discussion by operating segments is presented in "Summary of Operating Segment" in this MD&A.

Excluding these non-core and unusual items, gross profit increased as a result of increasesdecreased in the2025 AM,compared AFP,to 2024 due to lower sales volume and Fibershigher segments,raw partiallymaterial offsetand byenergy acosts decreaseand inlower theselling CI segment.prices. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.

Selling, general and administrative ("SG&A") expense increaseddecreased in 20242025 compared to 20232024 primarily as a result of highercost reduction initiatives and lower variable compensation costs, partially offset by cost reduction initiatives.costs.

R&D expenses slightly increased in 20242025 compared to 20232024 primarily due to strategic investment in innovation.

Other (income) charges, net in 20242025 and 20232024 included environmental and other costs related to previously divested businesses orbusinesses, non-operational sites and product lines.lines, and discontinued programs. Excluding these non-core items, Other (income) charges, net increaseddecreased in 20242025 compared to 20232024 primarily due to thelower absencefactoring offees gainsand onforeign investmentsexchange intransaction 2024.losses. For more information regarding components of foreign exchange transaction losses, see Note 10, "Derivative and Non-Derivative Financial Instruments", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Net interest expense decreasedincreased in 20242025 compared to 20232024 primarily as a result of lower average interest rates on outstanding debtincome and higherlower interestcapital income.expenditures.

(1)Provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

Provision for income taxes and effective tax rate in 2025 and 2024 included tax expense associated with previously divested business. Thethe tax effect of non-core and unusual items were included in both 2024 and 2023.other income tax related items. Excluding these items, adjusted provision for income taxes increaseddecreased in 20242025 compared to 20232024 primarily as a result of changes in unrecognized tax benefits and the tax effect of increaseddecreased adjusted earningsearnings, andpartially theoffset by foreign ratetax varianceeffects due to the Company's mix of earnings,earnings partiallyand offseteffects byof across decrease in the reserves forborder tax contingencies.laws, net of credits.

(1)The provision for income taxes for non-core and unusual items is calculated using the tax rate for the jurisdiction where the gains are taxable and the expenses are deductible.

EBIT in 20242025 included inventory adjustments and asset impairments, restructuring, and other charges, net, and inventory adjustments,net related to the planneddecommissioning of certain assets at performance films facilities in North America and certain terminated capital projects within the performance films product line. EBIT in 2024 included inventory adjustments, and asset impairments, restructuring, and other charges, net related to the closure of a solvent-based resins production line. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding thisthese non-core item,items, EBIT increaseddecreased in 20242025 compared to 2023 primarily2024 due to $32$116 million lower sales volume and $9 million higher raw material and energy costs and distribution costs, net of lower selling pricesprices. This was partially offset by cost reduction initiatives and $25lower millionSG&A higher sales volume.expenses.

Sales revenue wasremained relatively unchanged in 20242025 compared to 20232024 primarily due to lowerhigher selling prices being mostly offset by higherlower sales volume. LowerHigher selling prices were driven by changescost-pass-through incontracts. raw material and energy prices. HigherLower sales volume was primarily attributed toin the endbuilding ofand customerconstruction inventoryand destockingautomotive acrossend-markets mostwere partially offset by growth in the water treatment, medical and pharma, and electronics end-markets.

EBIT in 20232025 included accelerated depreciation and asset impairments, restructuring, and other charges, net,net fromrelated to the closure of a manufacturingheat-transfer fluids production line at a specialty fluids and energy facility closure.in North America. EBIT in 2024 included inventory adjustments related to the closure of a solvent-based resins production line. For more information regarding asset impairments, restructuring, and other charges, net, see Note 16, "Asset Impairments, Restructuring, and Other Charges, Net", to the Company's consolidated financial statements in Part II, Item 8 of this Annual Report.

Excluding thisthese non-core item,items, EBIT increased in 20242025 compared to 2023 primarily2024 due to $48lower millionSG&A higherexpenses selling prices, net ofand lower raw material and energyoperating costs, partially offset by $15$19 million lower sales volume.

•Cost of sales impact from restructuring activities, and

•Asset impairments, restructuring, and other charges, net.net, and

Eastman's products and operations are managed and reported in four operating segments: Advanced Materials ("AM"), Additives & Functional Products ("AFP"), Chemical Intermediates ("CI"), and Fibers. Eastman uses an innovation-driven growth model which consists of leveraging world class scalable technology platforms, delivering differentiated application development capabilities, and relentlessly engaging the market. The Company's world class technology platforms, scale advantage, and sustainability macrotrends form the foundation of the Company's research and development ("R&D") and innovation initiatives. Molecular recycling technologies continue to be an area of investment focus for the Company and extendsextend the level of differentiation afforded by our world class technology platforms. Eastman began operating the world's largest polyester molecular recycling facility in 2024. Differentiated application development converts market complexity into opportunities for growth and accelerates innovation by enabling a deeper understanding of the value of Eastman's products and how they perform within customers' and end-user products. Key areas of application development include thermoplastic conversion, functional films, coatings formulations, textiles, and personal and home care formulations. The Company engages the market by working directly with customers and downstream users, targeting attractive markets, and leveraging disruptive macro trends. Management believes that these elements of the Company's innovation-driven growth model, combined with disciplined portfolio management and balanced capital deployment, will result in consistent, sustainable earnings growth and strong cash flow from operations.

EBIT excluding non-core items decreasedincreased in firstsecond quarter 2026 compared to firstsecond quarter 2025 primarily due to lowerhigher selling prices, lowernet salesof volume,slightly lowerhigher assetraw utilization,material and increased energy costs across our businesses resulting from Winter Storm Fern. These factors were partially offset byand the benefit of continued cost reduction initiativesinitiatives. These impacts were partially offset by higher selling general and recognitionadministration of an expected refund of U.S. tariffs paid in 2025("SG&A") and 2026planned undermaintenance the International Emergency Economic Powers Act ("IEEPA").expenses.

Cash usedprovided inby operating activities was $137$87 million in first threesix months 2026 compared to $167$66 million in first threesix months 2025.

Sales revenue decreasedincreased in second quarter and first quartersix months 2026 compared to firstsecond quarter and first six months 2025 primarily due to decreasesincreases in all segments except the Fibers and CI segments.segment. Further discussion by operating segments is presented in "Summary by Operating Segment" in this MD&A.

Gross profit increased in second quarter 2026 compared to second quarter 2025 due to increases in the CI and AFP segments partially offset by decreases in the Fibers and AM segments. Gross profit in first quartersix months 2026 included inventory adjustments related to the closure of a production line at a German performance films facility in the AM segment. Excluding this non-core item, gross profit decreased in first quartersix months 2026 compared to first quartersix months 2025 due to decreases in all segments.segments except the CI segment. Further discussion of sales revenue and EBIT changes is presented in "Summary by Operating Segment" in this MD&A.

Selling, general and administrative ("SG&A") expenses decreasedincreased in second quarter and first quartersix months 2026 compared to second quarter and first quartersix months 2025 primarily due to costhigher reductionvariable initiatives,compensation costs partially offset by highercost variablereduction compensation costs.initiatives.

R&DResearch and development expenses decreased in second quarter and first quartersix months 2026 compared to second quarter and first quartersix months 2025 primarily due to targeted reductions in corporate R&D projects.

Other components of post-employment (benefit) cost, net decreasedwere more favorable in second quarter and first quartersix months 2026 compared to second quarter and first quartersix months 2025 due to a prior service credit related to the Company’sCompany's 2025 other postretirement benefit plan amendment. For more information regarding other components of post-employment (benefit) cost, net see Note 6, "Retirement Plans", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Other (income) charges, net increasedin second quarter and first six months 2026 and 2025 included environmental and other costs related to previously divested businesses or non-operational sites and product lines, and in second quarter and first six months 2026 also included associated gains and losses. Excluding these non-core items, Other (income) charges, net decreased in second quarter 2026 compared to second quarter 2025 primarily due to lower foreign exchange transaction losses, and increased in first quartersix months 2026 compared to first six months 2025 primarily due to an increase of indirect taxes. For more information regarding components of foreign exchange transaction losses, see Note 5, "Derivative and Non-Derivative Financial Instruments", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Net interest expense increased in second quarter and first quartersix months 2026 compared to second quarter and first quartersix months 2025 primarily due to lower capitalized interest and lower interest income.

(3)FirstSecond quarter 2026 provision for income taxes was adjusted to reflect the current forecasted full year effective tax rate. FirstSecond quarter 2025 provision for income taxes was adjusted to reflect the then current forecasted full year effective tax rate.

(1)Effective tax rate percentages are rounded to the nearest whole percent. The forecasted full year effective tax rates are 14.5 percent and 15.5 percent for first threesix months 2026 and 2025, respectively.2025.

(2)"Discrete tax items" are items that are excluded from the Company's estimated annual effective tax rate and recognized entirely in the quarter in which the item occurs. Discrete tax items for first threesix months 2026 and 2025 are related to share based compensation expense and adjustments to certain prior year tax returns.

Sales revenue decreased slightlyincreased in firstsecond quarter 2026 compared to firstsecond quarter 2025 due to lowerhigher sellingsales pricesvolume whichmix were mostly offset byand a favorable foreign currency exchange impact. LowerHigher sellingsales pricesvolume weremix attributedwas todriven lowerby rawgrowth materialacross prices.the segment.

EBIT in first quartersix months 2026 included inventory adjustments and asset impairments, restructuring, and other charges, net related to the closure of a production line at a German performance films facility. For more information see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Excluding these non-core items, EBIT decreased in first quartersix months 2026 compared to first quartersix months 2025 primarily due to unfavorable sales volume mix and unfavorable capacity utilization of $45 million and lower selling prices ofand $12higher million,manufacturing netcosts, as a result of lower rawasset material costs. These impacts wereutilization, partially offset by a favorable foreign currency exchange impact of $7 million. Additionally the negative impacts of Winter Storm Fern on energy as well as tariffs in distribution were offset by the recognition of IEEPA tariff refunds in first quarter 2026.impact.

ExcludingSales thisrevenue non-core item, EBIT was favorableincreased in firstsecond quarter 2026 compared to firstsecond quarter 2025 asprimarily favorabledue costto reduction initiatives and foreign currency exchange impacts were mostly offset by lowerhigher selling prices fromdriven by cost-pass-through contracts.

EBIT decreasedincreased in firstsecond quarter 2026 compared to firstsecond quarter 2025 primarily due to $44$83 million of lowerhigher selling prices and the negative impacts of Winter Storm Fern on energy prices. These impacts were partially offset by lower raw material prices.and energy costs.

Sales revenue decreased in second quarter and first quartersix months 2026 compared to second quarter and first quartersix months 2025 due to lower sales volume mix driven by continued customer buying patterns to continue with inventory destocking in the acetate tow product line and thecontinued impact of the conflictweakness in the Middletextiles East.end Lowermarket selling prices were duerelative to modestlytariff-driven lowervolume contractstrength pricing.last year.

EBIT decreased in firstsecond quarter 2026 compared to firstsecond quarter 2025 primarily due to $38$36 million lower sales volume.volume mix and lower selling prices and higher raw material and energy costs.

Loss before interest and taxes in second quarter and first quartersix months 2026 and second quarter and first quartersix months 2025 included environmental and other costs from previously divested or non-operational sites and product lines, and severance charges related to corporate cost reduction initiatives.initiatives, Excludingand in second quarter and first six months 2026 also included associated gains and losses. For more information regarding non-GAAP items, see "Non-GAAP Financial Measures" in this non-core item, loss before interest and taxes decreased primarily due to targeted reductions in corporate RMD&D projects.A. For more information regarding asset impairments, restructuring, and other charges, net, see Note 11, "Asset Impairments, Restructuring, and Other Charges, Net", to the unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Sales revenue decreasedincreased 510 percent in firstsecond quarter 2026 compared to firstsecond quarter 2025. LowerHigher sales revenue was due to lower selling prices across all regions and lowerhigher sales volume across all regions except the Latin America region. These decreases were partially offset by favorable foreign currency exchange impacts in the Europe, Middle East, and Africa,Africa region ("EMEA") and higher selling prices across all regions except the Asia Pacific regions.region.

Cash usedprovided inby operating activities decreasedincreased $30$21 million in first threesix months 2026 compared to first threesix months 2025 primarily due to lower variable compensation payout and reduced working capital cash outflows partially offset by lowerunfavorable netOther earnings.items, net, including higher cash tax payments.

Cash used in investing activities decreased $27$75 million in first threesix months 2026 compared to first threesix months 2025 primarily due to lower capital spend.

Cash provided by financing activities was $341$241 million in first threesix months 2026 compared to $124$214 million cash used in financing activities in first threesix months 2025. This increase was primarily due to higher proceeds and lower repayment of borrowings. For additional information, see "Liquidity and Other Financial Information - Debt and Other Commitments" in this MD&A.

Priorities for uses of available cash include payment of the quarterly dividend, capital expenditures, net debt reduction, and share repurchases.repurchases while maintaining our solid investment-grade balance sheet.

The Company engages in off-balance sheet, uncommitted accounts receivable factoring programs as a routine part of its ordinary business operations. Through these programs, entire invoices may be sold to third-party financial institutions, the vast majority of which are without recourse. Under these agreements, the Company sells the invoices at face value, less a transaction fee, which substantially equals the carrying value and fair value with no gain or loss recognized, and no credit loss exposure is retained. Available capacity under these programs, which the Company uses as a routine source of working capital funding, is dependent on the level of accounts receivable eligible to be sold and the financial institutions' willingness to purchase such receivables. The total amounts sold were $648$657 million and $676$674 million in firstsecond quarter 2026 and 2025, respectively.and $1.3 billion and $1.4 billion in first six months 2026 and 2025. Based on the original terms of receivables sold for certain programs and actual outstanding balance of receivables under servicing agreements, the Company estimates that $380$406 million and $346 million of these receivables would have been outstanding as of MarchJune 31,30, 2026 and December 31, 2025, respectively,2025 had they not been sold under these factoring programs.

At MarchJune 31,30, 2026, the Company's borrowings totaled $5.2 billion with various maturities. In first quarter 2026, the Company issued $600 million aggregate principal amount of 4.5% notes due February 2031 in a registered public offering (the "2026 Notes"). Proceeds from the sale of the 2026 Notes, net of original issue discounts and issuance costs, were $594 million.

The Company has access to a $1.50 billion revolving credit agreement (the "Credit Facility") that matures in February 2031. Borrowings under the Credit Facility are subject to interest at varying spreads above quoted market rates and a commitment fee is paid on the total unused commitment. The Credit Facility provides available liquidity for general corporate purposes and supports commercial paper borrowings. Commercial paper borrowings are classified as short-term. In February 2026, the Credit Facility was amended to extend the maturity to February 2031 and to temporarily adjust the maximum leverage ratio covenant through fiscal quarter ending June 30, 2027 in the event of further macroeconomic uncertainty impacting operating results. All other material terms of the Credit Facility remainsremain unchanged. At MarchJune 31,30, 2026 and December 31, 2025, the Company had no outstanding borrowings under the Credit Facility and no commercial paper borrowings.

The Credit Facility contains customary covenants, including requirements to maintain certain financial ratios, that determine the events of default, amounts available, and terms of borrowings. The Company was in compliance with all applicable covenants at both MarchJune 31,30, 2026 and December 31, 2025. The total amount of available borrowings under the Credit Facility was $1.50 billion as of MarchJune 31,30, 2026.

(1)IncludesIncluded a non-cash decrease of $12$17 million in 2026 and a non-cash increase of $68 million in 2025 resulting from foreign currency exchange rates.

Capital expenditures were $103$203 million and $147$297 million in first threesix months 2026 and 2025, respectively.2025. Capital expenditures in first threesix months 2026 were primarily for maintenance capital and limited growth capital for projects already in progress. The Company expects that 2026 capital expenditures will be approximately $400 million, primarily for maintenance capital and limited growth capital for projectsstrategic already in progress.projects.

In December 2021, the Company's Board of Directors authorized the repurchase of up to $2.5 billion of the Company's outstanding common stock at such times, in such amounts, and on such terms, as determined by management to be in the best interest of the Company and its stockholders (the "2021 authorization"). As of MarchJune 31,30, 2026, a total of 13,032,926 shares have been repurchased under the 2021 authorization for $1.2 billion. Both dividends and share repurchases are key strategies employed by the Company to return value to its stockholders. The Company did not repurchase shares of common stock in first quartersix months 2026.