Good day, everyone, and welcome to the Eastman Chemical Co. Second Quarter 2014 Earnings Conference Call. Today's conference is being recorded. This call is being broadcast live on the Eastman's website, www.eastman.com. We will now turn the call over to Mr. Greg Riddle of Eastman Chemical Co., Investor Relations. Please go ahead, sir.

Thank you, Adam, and good morning, everyone, and thanks for joining us. On the call with me today are Mark Costa, Chairman and CEO; Curt Espeland, Executive Vice President and CFO; and Josh Morgan, Manager of Investor Relations. Before we begin, I'll cover 3 items. First, during this presentation, you will hear certain forward-looking statements concerning our plans and expectations. Actual events or results could differ materially. Certain factors related to future expectations are or will be detailed in the company's second quarter 2014 financial results news release and our filings with the Securities and Exchange Commission, including the Form 10-K filed for 2013 and the Form 10-Q to be filed for second quarter 2014. Second, earnings per share and operating earnings referenced in this presentation excludes certain non-core or nonrecurring costs, charges and gains. A reconciliation to the most directly comparable GAAP financial measures and other associated disclosures, including a description of the excluded items, are available in our first quarter 2014 financial results news release, which can be found at eastman.com in the Investors section. Projection of future earnings in the presentation also exclude such items as described in the second quarter news release. Lastly, we have posted slides that accompany our remarks for this morning's call on our website in the Presentations and Events section. With that, I'll turn the call over to Mark.

Good morning, and thank you for joining us. I'll start on Slide 3, and I'll begin this morning with the key highlights from our second quarter. We delivered solid EPS in the -- both the second quarter and the first half despite the challenges we faced, and we are on track for another year of solid earnings growth in 2014. We continue to expect this will be our fifth consecutive year of earnings growth and remain confident we will continue to grow earnings in 2015 and beyond. Earnings growth is a reflection of our leadership position in key markets, the diversity of the end markets we serve and our broad geographic footprint, as well as the value of our vertical integration. I've spoken to you previously about Eastman's specific actions we're taking to increase our earnings in 2014. We continue to see strong growth in our high-value products, driven by favorable macro trends, and expect this growth will accelerate in the second half of the year. And we continue to benefit from the integration of Solutia, including the impact on our effective tax rate. However, we also have some actions that are taking longer than we had expected. I have previously mentioned that the technology licensing we have been expecting in 2014 is more likely to be completed in 2015. While we are seeing good growth with the switch to non-phthalate plasticizers, this growth is currently being offset by competitive pricing pressure, and we're experiencing some softness in demand in our heat transfer fluids due to delays and cancellations of industrial products -- projects. As a result, on balance, we're moving a little slower than we'd expected on these actions, meaning, some of the benefit will spill over into 2015. But despite this and the other challenges we have faced…

Okay. Thanks, Mark, and good morning, everyone. I'll begin on Slide 5 with a review of Additives & Functional Products results. Sales revenue was higher by 5%, primarily due to higher sales volume for coatings product lines, which was attributed to strong demand across multiple end markets. Tire demand improved sequentially, and was flat year-over-year, as growth in Europe and North America was offset by continuing destocking in China, particularly towards commercial tires. Operating earnings were down slightly, as higher raw material and energy cost, particularly for propane, more than offset higher sales volume. Looking at the second half and full year of 2014. We expect volume will be stronger in the second half of the year compared with the first half, as we won't have the impact of colder weather that impacted our North America business in January and February of 2014, and the destocking of commercial tires in China seems to be running its course. We also expect the impact of propane to moderate in the second half of 2014. These factors, coupled with continued solid demand in the coatings market should more than offset normal seasonality for this business. We are also continuing to invest enhancements to the technology for our market-leading Crystex product line with a full year cost of approximately $10 million higher mostly in the second and third quarters, and we continue to see increasing competition for solvent, primarily due to economic weakness in China. As a result, we expect both revenue and earnings in the second half of the year will be higher than the first, and continue to expect operating earnings will be between $410 million and $430 million for the year, albeit more towards the lower end of that range. Adhesives & Plasticizers is on Slide 6. Sales revenue was higher…

Thanks, Curt. I'll review our outlook for 2014, which is on Slide 12. Given the results in the first half of the year, we are on track for a fifth consecutive year of solid earnings growth. As I look at the second half of 2014, we expect sales revenue year-over-year to increase roughly in line with global GDP, reflecting acceleration of growth in our premium products and Advanced Materials, the stronger coatings market benefiting the ASP segment, the continuing benefit for macro trends such as the move to non-phthalate plasticizers from phthalate-based plasticizers. These should be partially offset by lower acetate tow demand and normal seasonality. Sequentially, we expect revenue will be similar to the first half levels. Operating earnings in the second half should be up year-over-year and down sequentially. The year-over-year improvement is expected to be driven by growth in Advanced Materials as growth accelerates for premium products, including Tritan copolyester, displays, interlayers with acoustic properties and window films, and we expect the sequential decline will be due to costs from a high level of planned outages in the second half of the year, including the major maintenance turnaround at our largest cracker in Longview, Texas, which Curt mentioned in the SFI section. We also expect to benefit from the capital deployment, including both the acquisition that we've completed and share repurchases. As a result, we continue to be on track for 2014 earnings per share in the range of $6.70 to $7, which would be strong growth. And as I think about the cadence of the second half, I would expect year-over-year EPS growth in both quarters -- both for the growth to be more significant -- for the growth to be more significant in the fourth quarter. Next is capital allocation, Slide 14. In the second…

Okay. Thanks, Mark, and we have a number of people on the line this morning. We'd like to get to as many questions as possible. [Operator Instructions] And with that, Adam, we are ready for questions.

[Operator Instructions] And we'll take our first question from Frank Mitsch with Wells Fargo.

Mark, you guys lowered your outlook for Fibers down from 520 down to 480, and you mentioned that destock is having an impact. You also mentioned demand falling as part of a cause. Are we near peak here? Is the impact of e-cigs capping future growth in that business? How should we think about that business into the future?

Thanks, Frank, and good to hear you this morning. Fibers is a great business. It's delivered 11 years of consecutive earnings growth, and it produces a tremendous amount of [ph] cash flow. So we certainly are very pleased with this business. But as you noted, we think about the business as plateauing. I don't like the word peak. So what we're seeing is demand flattening out, not declining. But that does really create some problems for 2014, and potentially '15, specifically in China. So they were building a lot of inventory in 2013, expecting sort of normal growth in '14, which didn't materialize. And so they're going through some inventory corrections in production, and that's sort of the demand correction we're seeing in the back half of this year. What we don't know is, in 2015, to the extent that there is continued destocking to further correct demand, but I wouldn't call it peaking, but it's certainly plateauing.

All right, that's very helpful. And obviously, in a similar vein, you maintained -- you did maintain your 2014 outlook. I'm curious if you have any updated thoughts on your targets for 2015, the $8 number and what might it take to get there?

Frank, I can't believe you asked that question. I mean, I never thought it would come. So as we think about 2015, and we certainly are spending a lot of time thinking about it and doing everything we can to deliver great results, what I'd say is we're committed to still driving towards $8 a share in '15, but getting to $8 is becoming more of a stretch. Given what we know at this point, we can see that -- we can definitely see it delivering double-digit earnings growth in the $7.50 to $8 range. There's a number of factors that are really still very much going in Eastman's way, driving our revenue and our earnings growth. We expect the economy to continue to grow. In particular, we have some favorable positions in our top 2 end markets of transportation and building, construction, where we can see better than GDP sectorial growth there, and we continue to be very excited about seeing how we're valuing up the mix in our company. We have a number of high-value products across the company, like Tritan, acoustic interlayers, window films, coatings additives, non-phthalate plasticizers, resins. We're now taking into tires. They give us very strong high-value growth, improving our mix. I think we also have a different strategy going into '15 versus '14. On our propane cost side, we've gone with a much more aggressive hedging strategy. We've shifted our mix towards 30% ethane on our crackers from 20%. So I think we're in a much better cost position to avoid that sort of spike and hit that we went through this year. And we certainly intend to have improved operational performance next year, so we have more product available to sell. And we've also got pretty aggressive productivity programs across the country,…

And we'll take our next question from Vincent Andrews, Morgan Stanley.

Just another question on Fibers on the cost side of things. It looks like wood pulp costs are coming down, and some believe that they may go down a lot more from here. So I'm just curious how that flows through in terms of your contract structure. Do you have some where that's pass through or is there discretion where you could try to hold on to a fair amount, if not, all of it? And I guess the complexity might be just sort of the volume situation that you referenced in your comments earlier.

Thanks, Vince, for the question. The Fibers business is one that is great about its stability, which means we have a fairly predictable demand and price curve for the year because the contracts are done on an annual basis. So we go through those negotiations. We pretty much set our sort of our price in our contract, and then pulp does what it does and then we get those results, and that's certainly been a benefit as we've expanded our margin this year with pulp declining.

So if pulp continues to go lower next year, you would expect to capture that?

Well, I think you have to -- remember, it's always a balance in those contract negotiations going into 2015 of price and where pulp goes, and so we don't discuss those kind of contract negotiations ahead of time, but we'll do our best as we always do. I'll remind you, this industry has been disciplined in its history, and we'd expect that to continue.

And we'll take our next question from P.J. Juvekar, Citi.

Mark, this year [ph], you mentioned increased resin supply. Can you talk about that? And have you seen China rosin prices come down? And then you also talked about new competitor capacity, and can you just tell us how big that is?

Sure, P.J. The adhesive business has got a lot of moving parts as we've discussed on past calls. What we're excited and encouraged about is seeing the solid demand growth continue, especially in things like hygiene and the hot melt adhesive packaging, and that growth rate has sort of gone back to what we would call normal, and strong this year relative to what was relatively weak last year. So the demand side of this equation is to some degree back in gear. On the supply side, the rosin capacity, which is an alternative to hydrocarbon resins, is a bit tighter this year, where it was extremely loose last year with very low prices. And as we look at the -- people climbing up the mountains to pull rosin off the trees this year, it looks like it's going to be more of an average to slightly tight year. So we expect rosin prices to remain where they are, which makes that -- them less attractive to use versus our tackifying resins. So we're encouraged to see that tightening up a bit and giving us some market stability. When it comes to direct competitors in resin capacity, principally, a company in Korea added a hydrogenated resin capacity that created some competitive pressure this year. But so far, that seems to be relatively stable. And I think that, overall, that's led to nice conditions in the first half of the year, which were also further improved by one of our competitors having a serious outage. As we look at the second half of the year, we continue to see attractive growth and what I would call stability, but we do have some favorable things in the first half of the year that won't continue in the second.

And quickly for Curt, with your efforts to bring down tax rate and use of NOLs from Solutia, can you talk about how much NOLs are left and where could your long-term tax rate go?

So if we look at the overall tax rate, we continue to expect that to be 28%. The tax team is still working through different options by which to continue to lower that effective tax rate. I often characterize what the tax department was able to do with some of the Solutia businesses, and legal structures was a triple or home run. Now they're working on singles and doubles, if you don't mind, the baseball analogy. And I'd also remind people that don't be afraid to call your legislators because if they get the tax extenders impacted, that could have a further reduction of our rate of about 1%. So we believe in tax extenders, and what we put in place is permanent tax fixes, tax adjustments. Our rate could be driving more towards 27%. On the NOLs, we pretty much said about 2/3 of the NOLs, $1.5 billion, was going to be used kind of half of '12, '13, '14 and '15. And you just take that number and do some math off those to kind of get you per [ph] kind of pro-rata basis the amount you're going to get from the NOL cash benefit, but we'll continue to have NOL benefit going into 2015.

We'll take our next question from James Sheehan, SunTrust.

Just with respect to the outage at Kingsport. I was wondering if you could discuss us your monthly order trends and how they've progressed through the quarter, and how you would have seen that flowing had the outage not occurred? And also, if you could update us on your order books for July?

So on the order books, if you think about most of our segment, you're able to work through the outage by using your inventory and working with your customers, trying to prioritize shipments, et cetera. So I'd say the order books, while had some delay in them, generally speaking, our order books were still pretty solid through the second quarter for most [ph] segment. The one that we highlighted is Specialty Fluids & Intermediates. As you know, how our integrated streams run, to the extent some of the molecules aren't used by the derivatives, there are certain lower commodity product lines, like acetic acid, that just aren't available for them to sell. And so that's where you saw the declines in the second quarter in volumes. But generally speaking, I think our businesses did a pretty good job working with our customers and keeping revenue going through the outage. As we look at the July order books, everything is on track with the revenue growth outlook that Mark mentioned earlier across all the portfolio.

And on propane and the cracking spreads, you had identified about $0.30 to $0.40 of headwind in the first half. Just wondering how you would size that on -- how it reverses in the second half if you can provide any insight.

So if you think about the propane costs and the impact of the spike up in the first quarter and the flow through effect you've seen in the first half of the year, we quantify that to be $0.30 or $0.40 in the early part of the year. I'd say, as we look at the map today, it's on the high end of that range. But now that propane is down at this more modest -- I shouldn't say modest level, at the current levels it's at, and as you can imagine, Mark mentioned our hedging program, we are much more -- before, we used to hedge only 6 months out to kind of give our businesses a little more time to price into it because some of the volatility, as well as we just looked at how the forward curves have behaved, in particular, with propane. We were much more aggressive getting our hedge positions in place, going into this winter season than we had in the past, and we're looking to do that 2 years out as well because of some of that forward curve. So as it relates to the second half of the year, that $0.30 to $0.40 -- that $0.40 roughly headwind is behind us, and should moderate the second half of the year and that's reflected in our outlook.

We'll take our next question from David Begleiter, Deutsche Bank.

Mark, just on the guidance for this year, still a pretty wide range for the back half of 2014. What would it take to make the low end of the range, and what would it take to make the high end of the range?

Good question. We spend a lot of time looking at that. The -- first of all, I think that if I think about this year and the last call I was on, I would have said we were at the top end of the range. Things were clicking along, and I'd say that we feel like we probably moved a little bit more back into the range. I mean -- and what's changed for us is the -- on the positive side, we see Advanced Materials and A&P doing much better than expected, but we also have some new headwinds in Fibers demand, destocking, as we've mentioned, and some of those further slowdown and heat transfer fluids, and of course, the Tennessee outage. The low end of the range would take some other things that we don't know about and creating some challenges for us, like an economy slow down or something else that pops up. But we're working hard to continue to deliver the best earnings growth we can for the year, and we still have strong free cash flow that gives us additional option.

And Mark, just on Longview, can you size the impact of the outage? And also, give us an update on the tariff dispute with West Lake.

We'll let Curt answer this one.

Okay. Let me start with West Lake, and then I'll need a reminder of the first part of the question. But as you know, with West Lake, we continue to explore options with monetizing our excess ethylene. And specifically, in regards to the dispute with Westlake, let me remind you that there's really 3 disputes. The first is the removal of the bidirectional flow with the pipeline. The second is the removal of the exchange rights or what's often referred to as the ability to do swaps. And then the third dispute is around the change in the tariff rates. A hearing was held on the first 2 items back in May, and we are waiting on an examiner's ruling. I can't tell you exactly when that's going to happen. I hear it could happen any day, but we're still waiting for that ruling. The rate tariff is scheduled for review in August. So we're still working through the Railroad Commission to get this resolved. We continue to be very confident that this will be resolved in our -- to our satisfaction.

Dave, the first part of your question was around the Longview outage. Could you elaborate?

Yes, the impact, the dollar impact for the outage in Q3.

Well, on Q2, I think...

Are you talking about the planned shutdown, Dave?

Yes, I'm sorry, the plant shutdown, I'm sorry.

So this is Curt again. So if you look at kind of the impact of that is going to be predominantly in the fourth quarter. If you look at our maintenance cost in the fourth quarter on a year-over-year basis, the difference is going to be roughly about $25 million of higher maintenance cost in the fourth quarter of this year, and about $20 million of that is associated with the Longview turnaround of the cracker.

And we'll take our next question from Bob Koort of Goldman Sachs.

Two quick questions, if I might. Firstly, in the emerging markets, mostly, it's not quite as robust as folks had hoped. I'm just wondering, have you seen any change in underlying trends in what you think has to happen, and particularly in Asia, to get things percolating? And then secondly, I noticed exceptional expense control at the SG&A line. Can you talk about maybe some specifics of what you've done and how much of that has traction to continue or how much of that might have been more short-term oriented?

In regards to Asia Pacific, in particular, and the emerging market growth, we have to be careful about how we look at that revenue number. The key driver of why the revenue was not what you would normally expect was the intermediate sales from the Specialty Fluids segment. So we have these large engines here where we make a lot of intermediates and we sell what's left over that we don't value up in the Specialties. We focus primarily on selling those in North America and Europe, where the margins are most attractive, and then what's left over, we sell in Asia Pacific. So when they have outages, like we've had in the first half of the year at both Longview and Tennessee, the big impact on the revenue is those intermediate sales in Asia Pacific, which are the lowest margin sales for us. So that's a big driver. When you strip that out, I'd say revenue growth in Asia Pacific in the first half of the year was on track and solid. The broader question around emerging markets, in places like Russia, Latin America, fortunately for us, we don't have much revenue in those regions, and aren't being hurt by the dramatic slowdown on those economies this year, and we continue to be very confident about our goal to continue growing in Asia Pacific.

If I could, Bob, on the SG&A, one of the things I love about the Eastman culture is we've had productivity embedded in our culture across of our operations for years, and that's why you still see us not having to announce big large cost reduction programs because our people are focused on that everyday. If you look at the SG&A line specifically, what you're seeing there is that same productivity mentality being applied to the SG&A line. Where again, we're looking at ways we can keep our cost flat year-over-year as we offset inflations with productivity efforts, et cetera. And then on top of that, what we're working on is where we spend those dollars, and we're focusing a lot of that spend on our growth and our other initiatives to help grow the bottom line. So it's kind of been a shift where we spend it and how we spend it is really -- I think is also going to be in the DNA of Eastman, as you look at us, over the next several years. The one thing that we do see, SG&A tends to increase a little bit in the second half of the year because of some seasonality spending that we have. But generally speaking, what you're seeing in our SG&A line is the focus of Eastman and supports the growth efforts we have.

We will take our next question from John Roberts, UBS.

Could you talk a little bit about how broad your strategy is in your functional fluids area? I mean, there are a lot of other areas, like metalworking fluids or broader presence in de-icing and so forth, how broad should we think about the strategy here?

Well, clearly, I'd say we have sort of 3 main product groups that we currently have to go in the different applications. So we have heat transfer fluids that are principally used for that purpose. We've got significant issues about transporting heat from one location to another. So the polymer and chemical manufacturing plants use a lot of heat transfer fluids, concentrating solar power rays, use a lot of heat transfer fluids, as well as some other energy-related facilities. So that's a market area that we've been a very strong leader in for years, continue to be a strong leader. But as we noted, we've hit some demand slowdown because there's not as many energy investments being made at the moment, although we do see that coming back in the '16, '17 timeframe. And then on the polymer plant side in China, we see a slow down there of PET plants, in particular, because they were significantly overbuilt and demand is catching up, but that fluid gets applied to specifically those areas. And of course, we've got 2 different aviation-related fluids as well. We've been a long-term leader in Skydrol, which is hydraulic fluid for commercial aircraft, and then the acquisition of the BP turbine oil business allows us to also complement that with our customers for the turbine oil. But right now, those are the areas that -- and applications we're in. Those products don’t tend to go into a lot of other applications. Although we like this area in this business, and so we continue to look for other opportunities to add fluids, other potential fluids of this portfolio, is one of the areas we're looking at when we talk about M&A.

Okay. And then -- and your comment about Fibers, and you talked about some stocking that went on in anticipation of Asian growth, and now it's flat, are you saying end consumption of fiber in Asia is flat for 2014, and with the outlook, and be flat again in 2015?

So what we're seeing is flat demand. I would say, specifically, in China. There are other places where we continue to see modest growth in Asia Pacific. But in China, which is the big driver of demand in Asia Pacific, we see demand being basically flat this year relative to last year all the way down to cigarette consumption. It's not just a tow issue. That's what this destocking is about, is continuing to correct cigarette inventory, and therefore, tow inventory for serving the market in China.

And what do you see the actual end consumption, so you're talking about at the cigarette inventory consumption and correction in China? You're not talking about down smoking?

Well, I think that what we're seeing is there's less or flattening of the level of smoking in China. Used to modestly grow for many of the years. But with the austerity measures and some other things going on in China, it's flattened out, the amount of cigarette consumption.

And we'll take our next question from Robert Walker, Jefferies.

So propane will be a tailwind in the second half this year, but what are you assuming in your 2015 outlook? Should it be a tailwind to '15 versus '14 or another headwind or flat?

So if you look at propane, what I'd suggest you do is that we look at the forward curve. And if you look at the forward curve and you believe what it's telling you, is that, on average, the total cost of propane will be lower in 2015 relative to 2014. And because of that forward curve, as I mentioned, we're probably looking at that forward curve and saying that's maybe some -- it would be prudent for us to put in some hedges to lock in some of that lower propane cost for next year.

And as you look at your M&A pipeline, I guess, how does that look and are you happy with your mix of end markets or might you add another value chain?

We continue to look at the M&A market, and we will continue to be disciplined about looking at the M&A market looking for attractive opportunities. But I'd say we look for both. We look for bolt-on acquisitions that reinforce the existing businesses we have, and we are open to attractive additions of new legs to our company as well if they make a lot of sense.

And we'll take our next question from Kevin McCarthy, Bank of America Merrill Lynch.

Mark, you took your guidance up a little bit in Adhesives & Plasticizers. On the plasticizer piece of it, it seems like we've been talking about price erosion for quite a while. Could you comment on what the sequential trend is there, and whether or not the phthalate-based higher cost producers are making any money? Just trying to get a sense of what the residual price risk is there.

So on the plasticizer side, on the growth side, we feel great. We see continued strong growth as people switch from phthalate to non-phthalate plasticizers. But as you noted, we've continued to see increased price pressure last year, and some of that has continued in the first half of this year. Principally, what's going on is that you have some players who make non-phthalate plasticizers in Asia that sold all of it traditionally into China. And with the slowdown of the Chinese economy, they've been pushed out of China and looking for new homes in Europe and North America, and putting price pressure on the market as they try and buy market share. Those prices have come down considerably from the beginning of 2013. And we see that pressure lessening as we go into the second half of the year. So I think we're getting to a price point, where the economics aren't making sense for further aggression by the Asians going after the business here, but it's a little too hard to call that precisely.

Okay. And then switching gears to Longview. As you move through the planned shutdown in the back half of the year, would your feedstock mix remain the same at about 70 propane, 30 ethane through that process? Or is there any opportunity to continue to tweak the ethane ratio a bit higher?

At this point, I think we're at the 30, 70 propane. This shutdown is a true maintenance shutdown. It's not reconfiguring the plant, and we don't see it changing that big [ph].

And we'll take our next question from Jeff Zekauskas with JP Morgan. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: How long is the cracker outage on the fourth quarter? When does it start and when do you expect it to be completed?

It starts towards the end of the third quarter, and I believe, Jeff, that it is a 3-week outage -- oh, 3 to 4, I'm sorry. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: 3 to 4, and this is your billion pound cracker?

This is the largest of the 4 crackers, that is correct. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Okay. And then secondly, in terms of your propane outlook, if I understand what you -- better yet, what was the EBITDA of the acquired BP business?

Well, we haven't given a specific EBITDA, Jeff, for that business. I think what we've talked about is, in 2015, it will be on an earnings per share basis, high-single-digits accretion. It's about $100 million of revenue. And I think people have done some rough math off that. I've heard some numbers thrown around, around $30 million, but we haven't disclosed specifically what the EBITDA is of that group.

And we'll take our next question from Mike Sison with KeyBanc.

In terms of Advanced Materials, you're looking for a pick up in sales growth in the second half of the year. What do you think needs to happen for you to hit those numbers? And is some of it within your control to some degree?

Mike, I do think some of it's in our control. As we look at some of the high value premium products we have in that segment, we've been working hard in a lot of new applications in Tritan, where we've closed those opportunities. As you close them, you can start seeing how that volume's going to roll in, and so we see an acceleration in Tritan volume growth in the second half relative to the first half. It's the other places, like acoustic interlayers, we've had great growth in the first half, and expect that to just continue going into the second half. There's a lot of -- OEMs are switching to acoustic high-performance products versus the standard interlayers to quiet the cabin and pursue light-weighting of the car, and so that's a great macro trend, a great margin improvement -- mix improvement for our business. The window films side of the business also, I think, is one where we had shifted incentives and order patterns intentionally to even-out orders to actual consumption with our market. And so we see good indications of those orders flowing in, consistent with that intentional strategy. There are, of course, always uncertainty as part of the challenge we had in window films this year. There's a little slow down in demand, in places like Indonesia and Thailand, due to macroeconomic factors that are beyond our control. But I think we can see a number of things going our way, and there's always the things you don't expect that can either be favorable or unfavorable that play out. But as long as the economy remains solid, I feel like we should be on a good track there.

Okay. And then when you think 2015 for Advanced Materials, it's got a long way to go. Do you think it's just more of a delay to get to that number? Is the profitability potential of that business still where you think it could be longer term?

First of all, we don't see any sort of derailment on strategy in the Advanced Materials segment. It's doing great this year, and likely to perform at the high-end of the range, and I think it's going to deliver very attractive earnings growth next year. It's obviously not going to get to $380 million. If you want to go back to 2012 Investor Day, I think we commented on this in the past. There are certain things that have changed that have slowed down the rate of growth in that business, in particular, the European demand and things like automotive and architectural buildings for the interlayer business. It just hasn't come back from what we would have assumed back in 2012, but the premium products are growing strong, including interlayers. The window film business is growing strong. The main issue this segment has had in getting to that original guidance is just overall macroeconomic growth being off of what we would have assumed. So I see us continuing to deliver consistent earnings growth over several years in this business.

And we'll take our next question from Nils Wallin, CLSA.

A question on outlook for hydrocarbon resins. I know Exxon is building a fairly sizable plant over the next couple of years and wondering what you think about the long-term prospect for that, that part of the business?

The hydrocarbon resin business, obviously, has gone through some serious adjustments if you look at its performance in '12 to '13, and now starting to recover in '14. It's still a great business. It's got attractive EBIT margins. It's got ROIC that is 2 to 3 percentage points above its EBIT margins. So it's creating a lot of value on a cost of capital basis for our shareholders. Certainty, there are questions around demand and supply going forward, like the Exxon announcement you just mentioned, but we see it continue to be a stable good business at this point. Demand trends are very favorable. There's plenty of hygiene and hot melt adhesive packaging and other things that drive demand for this business. We will continue to look at the supply demand balance to make sure that it's going to be value creating going forward, and make decisions as appropriate.

Got it. And then just -- as there seems to be an interplay between pricing for rosin versus hydrocarbon resins and, obviously, you have capacity in both, would you be able to give us a sense of how that might change your margin or mix effect as those 2 play off one another?

I think when we think about rosins, which is lower quality alternative to hydrocarbon resins, especially our hydrogenated hydrocarbon resins, where we have a more differentiated position, they play a factor in creating a price pull, if you will, on the market downward if there's a large excess supply of rosins, and those prices are quite low. Last year was an exceptionally bad year for rosin prices in that they were quite low. What we see now is back to more of a stable situation, but it's a crop, and it will have a certain amount of volatility to it, going forward, in the future. So I don't think anything's changed in that dynamic as we look at this business. And I think that as people go to more high-performance products, we continue to benefit from that trend because, in particular, hydrogenated hydrocarbon resins are the high-quality alternative. So if you want a high-quality diaper, you go hydrogenated resins because rosins have an odor. If you're going to a high-performance packaging facility, you're going to go with hydrogenated resins. So the macro trends is emerging middle-income classes, upscaling what they want, drive favorable demand to our product technology.

So would you say there's a meaningful share shift or share gain by the hydrogenated hydrocarbon resins away from rosin and how large will that be?

Yes, I think it is when rosin prices are sort of stable. When rosin prices become really cheap, like they did last year, and the economy is weak, the customers will make trade-offs and accept a lower quality adhesive formulation in favor of those economics, and make those kind of switching choices in their formulation. So that's going to happen some times. But in general, if you look at a stable relative pricing situation over a long term, we should see some continued share shift. I wouldn't say it's dramatic, but share shift towards our technology.

That concludes today's question-and-answer session. Mr. Riddle, at this time, I'll turn the conference back to you for any additional or closing remarks.

Thank you, Adam. And thanks, again, everyone, for joining us this morning. A web replay and a replay and downloadable MP3 format will be available on our website, beginning at approximately 11 a.m. this morning. Have a great day.

That concludes today's conference. Thank you for your participation.