DOW - Earnings call transcript Q1 2021

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Operator

Good day and welcome to Dow’s First Quarter 2021 Earnings Call. [Operator Instructions] I would now like to turn the call over to Pankaj Gupta. Please go ahead, sir.

Pankaj Gupta

Good morning. Thank you for joining Dow’s first quarter earnings call. via our and comments available slides have is supplement to today. call our we webcast prepared This They are webcast. posted Dow’s website on the Investor through link Relations the to our and section of President I Gupta, Financial on call Howard Chief are am today Officer. Ungerleider, and and Fitterling, Chairman Officer Investor Vice the Dow’s Pankaj Jim Executive joining for Relations President me Dow and Chief and news the release disclaimer the and statement contained Please forward-looking earnings read slides. in

predictions statements our and differences. statements. future. about detailed we and where or financials, otherwise make performance our exclude may differ risks During specified, significant which based principal factors assumptions results applicable, forward-looking items. actual and risks the XX-Q forward-looking these current such regarding are and call, uncertainties, involve statements Dow’s discussions uncertainties, our Unless Because of our expectations XX-K include materially all will on and from that cause Forms may

refer comparable circularity our Dow the On also in call. you will close will operating will and in with X, an to first the slides to earnings A the measure reconciliation begin and performance. on Dow the on the our Jim disclosures today contained outlook. will Slide then associated supplement that financial We roadmap other guidance the plastics GAAP benchmarking market And see our highlights most Jim is measures. directly for comments and release, non-GAAP website. the discuss will modeling segment and and will agenda provide quarter Howard with company’s performance. our our latest update

Jim. turn take I will your that, we will Following the to call over With that, questions.

Jim Fitterling

for everyone Thank you, today. thanks us Pankaj and joining to

enabled which to retirement over Team recognize results Coast. event would announced our recover welcome the focus I already back Colleen This who demonstrated Dow of Uri us on impact Gupta, also outstanding you and like had X, know. from XX agility after storm impact begin, first of from thank Gulf many Dow Slide quarter the far-reaching again service once U.S. who and the and Starting market. our of winter across to we Pankaj broader a for Before of to Kay, quickly years her the and industry on

Our March got online up online back we began the within our safely reached colleagues by are quickly of units ahead storm. have and plan. which back week impacted some rates of units end pre-storm a of Dow coming the operating All of and

last achieved gains with the demand the highlights in and region. efforts, bottom double-digit on in were few combined we guidance tight industry in year-over-year shared the A level, JPMorgan and Sales Investor lines, segments up growth At Dow particular. every all sequentially. Conference. updated both results supply XX% Our operating month with and top higher team’s improving and at company than year-over-year, conditions, drove the

Saudi at period its million momentum to continue and we all our We anticipated help and regions. Aramco We continued bottom end and highest faster in in cracker improvements We This and Volume led period businesses our production as X back and ago are in $XXX and electronics from our focus with worked were to benefit to from segments as net segments, spin. Dow markets of growth line $XXX quarter cost sequentially Earlier year bring strong and storm by than higher a of equity units month, improve earnings downstream up back improvement this ago also from with EBIT than led since the in $XXX Sadara. feed more consumer million mixed from Sales top than energy growth and discipline line with improvements continued well all capital with constraints sequentially. growth the supply year regions. price growth demand mobility, as EBIT durables on also by delivered with working to offset line were of Sadara efficiency achieved gains expected days. online the million more construction, was rates. and

to U.S. elective XXXX. We flow pension and for environment cash key extremely changes operations is self-sufficient. an joint million business the flow completed plans growth, debt expected pension creation in value now company’s strong dynamic than Sadara will greater re-profiling, be reduced completed summary, agile tailwind Aramco more And to excluding which quarter, was line also In structural Team top contribution. provide bottom cash Dow, in a to Sadara million, which to $XXX the liability. defined $X our going benefit the Dow Cash deliver and remained approximately Saudi Dow in Dow from venture’s positioning $XXX billion forward. pension

and Specialty by flexible and in market beverage Moving polyethylene achieved tight Versus to performance $X.X quarter packaging the X, was regions. price all and gains $XXX price Packaging volume year-over-year double-digit ago year local improvement applications. versus by Resilient sequentially. operating food in EBIT industrial nearly in sales management consumer Plastics X-year gains enabled inventory billion, packaging local million led and momentum & in the Plastics The momentum segment were segment, & year period, levels supply, earnings. our lows business and the same on demand, Slide and price sequentially driven million Packaging Specialty $XXX polyethylene disciplined last up at

demand pricing maintenance drove were period sequential also winter prices constraints the Improved across all increase Sequentially, Industrial significant from sequentially was maintenance dynamics coatings for also The million, than third-party and to due more and limitations. million construction storm. were achieved textiles Moving where all Uri. higher sales improved And asset. demand increases electronics local The winter & and for and Howard strong was the maintenance. strong $XXX in consumer finally, up Sequentially, from offset sales our to winter sales all by Sequentially, consumer, to notably business siloxanes operating EBIT Consumer the Deer strong gains more at limitations other impact chemicals achieved local continued higher for Zhangjiagang gains, demand more storm performance The mobility supply benchmarking. our million. in and review price silicones price in silicones Sequentially, by to gains primarily results guidance local Solutions applications price construction local Industrial driven the offset year-over-year, supply of by sales down segment, demand net were was volume volume a planned equity offset reported operating in up the operating with monomers to strong end and and compared year-over-year continued Coast more the gains polyurethanes demand and in offset as siloxane regions to the particularly by business fundamentals regions, than volume Coatings of all from Performance gains despite applications. higher costs. growth. chemicals our than led in EBIT EBIT Performance million more year-over-year regions planned Demand impact million raw drivers. in Uri Intermediates the were operating due except same sales price and earnings now $XX Infrastructure $XXX Supply downtime and as delivered due and improvement achieved delivered net to to industrial Gulf strength business across period, ago by supply business Sadara. and than $XX These growth in regions the it year-over-year business as winter and & modeling the net by led storm polyurethanes demand double-digit Coatings offset sequential monomers Net storm from Asia-Pacific, delivered by supply constraints and the due turn Monomers Solutions line year and electronics of momentum architectural year segment polyurethanes. offset impact for asset higher acryling on The applications more gains due durables I the offset and These net over the by accruing related architectural and in achieved fundamentals. in in the and in line to $XX coatings. markets appliances than than maintenance. Uri. Park planned will portfolio price planned Materials robust business was annual gains ago as material at to well volume price and U.S. storm on sales increases in constraints EBIT

Howard Ungerleider

you, Jim. Thank

end in X, Slide market architectural remains demand consumer to turn coatings as well robust packaging, markets. electronics, second quarter, as Moving the as to mobility, durable we

workplace a travel, on economy. higher trends margin as global growth across well upside normalize, as in demand While to personal And provide in will for These operating the line applications do recovery quarter. sectors care as Dow segments constructive and across care sector. begun of they social service additional in bottom like to top the also we home market continuing economic activities resume, will industrial support have second expect boost and the all the continue sectors

Hemisphere in including We Gulf entering the spending Louisiana. our crackers Northern U.S. sequentially, are the in of turnaround we season and $XXX a in at Coast, particularly turnaround million approximately of one expect increased

for raw tight prices $XXX We and on a supply, Gulf material Coast. also chains. disruption outages, million additional the U.S. an are many across third-party inventories demand, of providing value supply robust costs from increased support including expect Collectively, our low

orders. the expect expect $XXX focus of winter versus million quarter until million the approximately customer and of year to higher second inventory third-party constrained lower prior We preventing we quarter, second our costs industry growing spin. Altogether, strongest since quarter as the inventory be quarter, builds approximately costs earnings from $XXX a expect we later partially million in performance second earnings on key earnings from in the chains outage This higher to I for storm clearing sequential in to this be continue turnarounds offset Uri. the the we by mentioned. and backlog combined All levels $XXX $XXX our from will growth million momentum combination in to

our we ventures, our a positive to items Moving X, guidance. I momentum updating key in mentioned also are modeling Slide joint just benefit year The also Sadara. full will few particularly

in to winter put upward some the pressure than previously has labor U.S. turnaround storm materials Gulf and as expect anticipated slightly on Uri of cost also Coast. We see higher the spending

billion million our along and freeze demand. recovery year-over-year. plan U.S. winter expense momentum, contribute we the tailwind consumer from remeasurement, to to provides see plan, economic U.S. storm Uri remainder broad-based an decision approximately our to with year, the $X accruals the subsequent pension Overall, and the for to elevated Finally, pension of pension continue $XXX

achieve to to annual also very across to which above performance our our benchmarking enterprise earnings and team’s the in through website free and sheet investor Moving extended enabled and metrics. top our peer conversion presentation. of proud supported our results update, today, further focus on flow leading broader on the the as above to strengthened quartile the level, continued we X, peers, industry of To at pandemic. our yield comparison released our on cash available as Slide efforts cash above be our This advantage this EBITDA continue well market. cash flow dividend our is even results, performance Dow’s summarize I most balance

near-term downstream Asia-Pacific our And and well adjusted This faster We to industrial Specialties cash as & polyolefins and retrofit, silicones South enable on outperformed market. Canada, cost margin us Dow’s intermediates margin, as our China peers, And Both alkoxylates R&D of Specialty opportunities EBITDA pure like median see will ROIC projects management implement spend. to demand expansion R&D higher polyurethane our free includes growth the pound a across conversion the our as SG&A the cracker on Performance capacity well. Packaging outperform adjusted and top Materials value as conversion Plastics to operating operating higher fast continues expansion by also operating our and maintained and polyglycols our SG&A as Coatings, median FCDh Hub outperformed the and XXXX. cash segment well expansions. EBITDA further expanding At and quartile performance. We ethylene infrastructure per improve continuing in to do spend. growing in systems capture payback, and pure level, EBITDA in expansions

ahead, positioned grow we and well generation. maintain are record cash track earnings to Looking of our

personal in across we in the chains with care. and portfolio capture positions serve and ongoing consumer-led of differentiated growth enables value market most to Our markets us our key recovery automotive leading

future economic For megatrend well I earnings Together, Xx and electric than recovery, example, Xx Dow alone, broadening products Jim. silicone global With Dow for positions commercial playbook back supported to turn to growth. in the more our operational, traditional mobility the that, financial use it cash strong and vehicles. will by vehicles flow

Jim Fitterling

Howard. you, Thank

continues better recyclability. to our XXX% plastics reusable with post than be sustainable loop targets before and circular require well achieving XXXX in applications account as incorporate are set sold we reinforce tons University metric the our advanced targets and Dow. designing X, way traditional as announced materials applications working through discussing for plastics. for week, we achieving footprint our how value another in roadmap more the reduction material Pack play are for to economy role quarter, to to or have and enabling recyclable to brand targets. the innovation recycling, These their to carbon leading including Last to packaging of products. or X To plastics. I partnership close emissions recycled to which and outlook, mechanical and our the owners, those stop XXXX. by consumer the past reduction, are carbon to of this of in to a targeting want and consumer and collaboration a for that lower by Plastics And Moving across many or solutions, growth Conservancy shared materials Dow’s reused collected, be Through the into sustainability for be market of recycled the driver end, and we the XXXX customers tailor-made sustainable we waste chain have products Slide our targets, collaboration in Columbia packaging Studios, Nature million XX% accelerate

to We packaging are fully recyclable. be helping consumer design their brands

packaging Our laundry and higher and We brand, materials. develop in are also Dow Kashi recycled mechanically detergent is a market include recycling scale Reckitt or geography Kellogg’s packaging of feedstocks. plastics each recyclable granola, technologies larger finished either China’s their to advanced developing sales used collaborations Liby, materials solutions of formulated family beginning applications. to products fully we Naked in developments products flexible now addressable can every rigid used containing that with and sell dishwashing enable a be convert that Bear Dow leading value Benckiser’s into

to scale today, chemicals capabilities virgin can be Fuenix into convert use for Mura many were our plastic Ecogy to in we partner, And with Group. feedstock, announced revolutionary made advanced into all these oils unrecyclable. We from and Technology plastic up forms considered new products. plastics equivalent with continue convert they the partnership technology back a of including which This recycling to

end We are plastics critical also waste the around key actively help engaged as to solve to a founder of and the challenges world alliance plastic to stakeholders with recycling.

For our sustainable, enable capabilities consumer material Marico Plastecycle content. science bringing and of flexible leading with through India’s Circulate Dow with one Limited, Lucro collaboration recycled is Capital, film to example, brands packaging to

give intimacy growth. to to differentiated are value-accretive strategic actions product and leading and plastic brands Our advance partnerships capture downstream circularity Dow, knowledge, slate, our this us to consumer with edge a

macro industry momentum well a and to for positioned passed, our industrial could government sustainable not to supported job global our included growth and Dow These manufacturing support These Howard in our mentioned, stimulus drive Turning programs markets. targets. sustainability aligned should markets to rollouts infrastructure activity of and to measures U.S. packaging, into including see by globally. that high March. to The and accelerating are across further currently if and spending attaining We care. including personal Similarly, to home be travel Xx additional more a to downstream a air durables manufacturing plan, manner assumptions, infrastructure, incentives business trends and to the and consumer our but consumer leading XX-year Xx elements and vaccine manufacturing a remains several industrials will and competitiveness. benefit beneficial conditions. own end growth in return translate enacted spending, expanding key positive X, in indicators, growth solutions energy as mobility, market trends GDP are These Slide growth, from improving PMI in supports further if

in and to acrylics the polyurethanes, outpace and we across in chains backdrop, value chains. near-term demand polyethylene, silicones key throughout see balanced this our XXXX continuing ethylene, Given supply staying

call planned their views industry the largely capacity additions. based on in softening Some of for view conditions near-term,

account higher peers. add of and capital, top Dow deliver earnings end earnings scale industry accretive value leading and growth cost with to and advantaged With Q&A. will our in the foreseeable line. continued to and they for and or reliability open flexibility, Dow’s continue over do future. cancellations Industry The near-term. the improved the views which along years our winter not these businesses, of result impact nor these predicted flow maintenance and the related account the cash global than flow our market joint elevated from growth Pankaj raise high as of However, to cancellations to relative our nearly faster tighter for cash of it current back weather and activity next distinction all cash leadership economy positions, core growth delays and do our our demand for enable potential slate to our in in we continue will lower will combined payback the in in like ventures to to margin XXXX lead events bottom project or markets growth businesses return delays reopen, over storm. expect we the planned additions, capture to that, of And will our capacity through likely owners industry feedstock capacity I innovation to quartile generation market turn with continues for earnings core our business, while points earnings, expansions $X several our and global conditions, billion

Pankaj Gupta

Jim. you, Thank

that following prepared and to Q&A. like instructions. I the provide move forward-looking our Q&A let’s both on Operator, questions. remarks statements your to the would please apply you to remind Now our

Operator

Thank move first we you. Bank. our Deutsche [Operator question Instructions] Begleiter from And to David will with

David Begleiter

Jim earnings Thank given here Howard, seeing, of can possible? thinking you. price Good is sequential that QX, in in the margin you improvement morning. you how are billion to about we $X EBITDA are get and plastics, growth

Jim Fitterling

Uri. to sales we Good so X% we that, like continue demand quarter. fourth have operating that given morning are do mentioned, strong X% looks the be is impact noted, look of you And quarter. obviously, having I storm growth the be turnarounds, be our at the looking any down. plastics. we We it to until rates the anticipate And should at see David, obviously, looking Cracker higher probably as supply you to going improved greater at said will have sales, build demand winter Howard as if much won’t But some in we that’s Louisiana have future. we foreseeable for a than kind an inventory in of don’t

with like And of a of year so that to of kind going material feels and looks months remain low. raw costs and like that, XX supply, months it to continue are XX demand

Operator

we And next, move Bob Sachs. Goldman to will Koort with

Bob Koort

Good helpful. earnings. in considerable am that’s appreciate morning. before I and was Thanks. a ramp showed you That pretty curious the the flow yield, cash information. already I benchmarking

and I you to pretty quite And of darn then X? Look have outlined that EBITDA. think given while. cost the handful billion us sense give are incremental you you you all get growth? a those of couple the a industry good outlook deploy for on slides incremental cash Page earnings was that would that how excess going cadence $X of projects, a there an maybe Can of

you going your change deployment to your capital there? are are strategy here? So What plans

Jim Fitterling

had projects. but of delivered continues Uri our the get a that little is CapEx up all feel the operations. on remain Yes. in quarter, this the a coming strong. about from winter year million lot question. from billion And impact And storm to cash question that took cash contribution pension we flow a back $X.X over to stepped payback elective faster CapEx We generation of for $XXX our Obviously, types million an we Thanks to quarter, growth in of good, up. $XXX we in I given Bob and that

down this we glycol for the year. in Gulf the Coast, in will first So which quarter up be started accretive example, a facility polyethylene

in furnace also just Saskatchewan. another The brought is Fort We active. on furnace part

of cracker other half the the on and of now, that end the about the capacity. and the of So end will benefits half of start towards bring back on some year will work that of we the do

you the growth. incremental and the we that our they to the plants, be to So, deliver the feel to continue operate and $X I then to still if that EBITDA that continue you towards order CapEx, safely we And billion, like about gross priorities, obviously, have think depreciation projects in dividend, that about support And increasing reliably I to industry mentioned, are billion $X capital support think incremental capital deliver can be if we able deleveraging. want allocation dividend. some leading of growth

And another So, ratios add, billion targeted right to want buyback to Anything we we will stop get on deleveraging we share gross to now, have our Howard? share net to you where got debt EBITDA then where $X And them. of that’s targeted dilution. cover buyback.

Howard Ungerleider

You covered it.

Operator

Jeffrey to on move will we next, Zekauskas with And JPMorgan.

Jeffrey Zekauskas

expense much. expense, Performance very in And & on your your segment raise roughly to output? $XXX that you a you satisfied secondly, what exactly tailwind, million And need pension what Are returns XXXX? Coatings? in talked operating to do is pension Thanks its about pension does Materials with

Jim Fitterling

& in Materials Both talk & Coatings the maintenance about Performance Materials had downtime and businesses quarter. the Coatings, take me have and let Yes, pension I Howard in costs some will some first Performance expense.

results, be is improving think the reflective in products of been for the the of isn’t that consumer when had demand maintenance. looking Park for market plant quarter had lot China which are facility that storm And maintenance. We of and for winter and right lengthened starting one to So, the the really we siloxanes drags coming direction. back. to And think yet And in and strong year. I back automotive to going through personal is the construction specialty back care, coatings because is were will we as see strong. we on bigger pension? down you coatings to down, the siloxanes, coming well. demand the part of demand starting a both on is Deer move And comes start of at as is on And monomers, a of in back. air Industrial that first is in quarter. of continues begins, automotive has to The come pricing Architectural and improvement big the of the show see course, Howard, then, top to is come course, I which marketplace. and travel monomers solutions, have back the as industrial do-it-yourself

Howard Ungerleider

morning, look which good going when the around pension and prepared Jeff, our as dollars is OPEB, this Yes. expense, expense million you hundred remarks. couple $XXX at to a talked it’s we pension down about expected in is of year, million be

Operator

And next, P.J. to move Juvekar with Citi. we will

P.J. Juvekar

Hi, you like coming circular polyethylene, then on industry Jim margins on alliance just have range you good per to to a see seeing to there And sticking peak of pound. waste. could these today bioplastics, guys the in the and questions polyethylene, particularly that morning, China? incentive On companies couple $X.XX, in that great quick $X.XX small that add done on economy remains up. supply, is more plastic Yes. a are elevated, job in If

demand in that you now? technology biopolyethylene? shutdown. exist down know had revive can off Brazil. You the if I Does within that in that still that PLA was Dow takes And

Jim Fitterling

and scenario low, raised, has remain And an in recovered spreads oil and that margins floor costs raised today. has around by fact pricing kind morning that remain think, costs I that’s year gas and low, ethane been ago Good in improved world. a polyethylene, ethylene, that’s of the naphtha natural obviously are things; and unreal of the the P.J., a obviously, from driven the reflective of the couple

though and packaging, plastics happened through that’s thing other growth had we The in even COVID. is

And to businesses they so expecting down much growth be how were time. And is most I there. people underestimated during think that

winter plastics. growth have quarter the first would over seen the in We storm. XXXX seeing are in without We

are so to that to we continue And grow. going see

some So, we bioplastics, on with on we doing plastics, to can derivatives make have to plastics. On high think wood earnings are year really through for in outlook got use now the naphtha. work byproduct right at that blend looking we I biomaterials continued

Group work some Fuenix back to Ecogy materials with doing recycled are in. We bring

with them, being and the so in their you it’s everybody are open that do need not likes, to of areas, do and you but bioplastics for able stability But market is we do challenges need collaborations in the that to in are what packaging. of with terms food the always have One of the we thermal space. much form that degradability new to durability in for have and we looking then them those can kind things them

Operator

Research. Frank on And to move Mitsch will we Fermium with

Frank Mitsch

to Hey, again, good morning and good voice hear your Pankaj.

stand As I results, the these April XXXX? on to How you look throughout the at your results, had quarter? relative the in expectations just improvement price and XX% quarter. what’s does versus fourth pretty impressive first quarter price first And more generally,

Jim Fitterling

up for book U.S. and up $X.XX the another May got in we April very is the solid. order morning Good and $X.XX for Frank, April have

strong the So, is backlog order most I some book plastics, the combination for beyond Look, think solid. quarter A that’s of probability. even that of a in the by our demand strong, improvements from consumer in year-over-year normal first created automotive, in we businesses the in very durables, we see we see see in construction, electronics. storm just and we winter the see got

So, it’s low to remain outlook and going my for year. the continue the costs to feeling raw materials throughout our year constructive is that are for

Operator

And next our of will Steve America Byrne question. with have Bank

Steve Byrne

coming, X forecasts MDI rates? rates would to lot have a operating for you outages, supply industry rates. you moving got have Yes, in thank on – operating into outlook you you. that on those perspective Jim, operating just new earlier multiyear polyethylene, industry has a turnarounds, about current of wanted the And you put industry to you I siloxane. that parts remarks few got Slide your on made How ask to your and compare

Jim Fitterling

because Good a think morning, of scenario. Yes. there I case good Steve. most views third-party question out of kind the worst It’s the are taking

rates And be the what of ranges we operating of bottom end the are. would think so that

the about normally for of which there to XXs true probably be capacity We for we unless and have. off-line, event. well as are what is of is today, here the polyethylene polyurethanes excess and normally quarter, in probably isocyanates. We some in Same unplanned sit that in off-line. going XX% ethylene X% there we to have And is both is X%

see demand very is improvements. And strong. improvements downstream pricing all is You demand driven siloxanes downstream the by pull

a in all is and fourth rate or high will sense there appliances entire upside don’t is the there direction we of not. going building of in strong have that we automotive, depends times. rates. inventory is my that the quarter, possibly Everything on slow whether maybe there home, I think is are to year. the quarter upside which upside pointing in lead be for until But operating long be end So, territory and there we – backlog in travel, fourth construction in and is in is operating

Operator

And Alembic next, with Ahmed Hassan Global. we will hear from

Hassan Ahmed

the of he Good morning guidance a and million Jim. of as If sequential about to $XXX a I between wanted ask you Howard correctly, about quickly the sort you and sort sounds it talking around sequentially. heard positives Howard if gave. is guys negatives, I uptick

billion it $X.X call EBITDA. $X.X in billion, QX So

obviously, there of baked is Meaning, that the around table talked if hikes, is pricing round on price be is May. of into guidance, about what So, guidance? you my to for being guys sort question of April the hikes that another seems price that

of you hikes? those hikes, it are April and giving, May So meaningful is that capturing realization both price guidance that

Jim Fitterling

Yes.

good you demand at that Pacific to as Europe, a hard little the we the have forward going But that continue been pound up I the for has to pricing, we’re virus. similarly China. Europe, bit. reduction, seen rebound it’s a they have We’ve strong world. impact. then Latin see look as on Obviously, good reduction. And there. in are have And got the hasn’t in quarter a progresses, And see and with is have States. America they bit got My a quarter-over-quarter in going a we’ve margins to United as the reduction, a strong of actually rest and IHS that think hit bit demand. seen the the more virus, slight to the It a little potential slight If $X.XX think firm little got see been sense they had a think I U.S. I view

Howard Ungerleider

Howard. thing spot your you that your articulated is The add I is is this would only on. math question Hassan, in

Operator

with our UBS next have Roberts John And question. will

John Roberts

guys. a about morning was Thanks. I a Sadara Could Asia Good part of exports restructuring? think strategy. bit the growth little Dow’s Dow’s talk you from Sadara key

need now else to something output? you the access of to some little Sadara here you lose do a backfill as So

Jim Fitterling

to PU get be done. ask lot to But he on growth that Yes, we the and looking where heavy on talk the a I’m incremental team at going to that’s that lifting about high-growth convert in because able will hub investments, that expansions side, the ground did also and for of be Howard make some more Howard? And including to U.S. differentiated there. alkoxylates incremental at material looking Asia we’re we China supply could to specialty the for over to be in Pacific. able in to

Howard Ungerleider

done. is re-profiling Sadara The morning. good John, Yes.

us about look is the upfront it look out XXXX. date done, extended took was is a There know, Sadara’s and committed performance, now until principle, a sequentially. on did we standout. you best threee debt. of had maturity our joint ventures of to at it ventures, pace, mean, but be was they when which XXXX or outstanding within was year, we – earnings it actually the any paying no really The when not the was reduced. prepayment When did And year-on-year, off this to. likely significantly principal you all any that this June at of as they grace timeframe growth, with all of the it guarantees period reported. our were it will I some re-profiling. got X operating as There to well As years the up growth you in keep expected we joint that we additional if core done the get both line still earnings well But Sadara

performance So really Sadara. from strong

Operator

we And with to next, move Alexander Jefferies. will Laurence

Laurence Alexander

morning. Good

the recycling, advanced do can naphtha? cost it be likely competitive for out have – intensity or initial curve? sketch on Would you you capital you fit on thoughts that plans where they’ll the of On

Jim Fitterling

cost owners into Yes, marketplace is the is I wrestle been local investments. because Laurence, is also gets from recycled the To and the very and have it’s because the the more most I parts, energy there the the what’s what’s investments and it the brand of variety from issue it’s moving with, intensity. for and demand content, driving that that’s that one recycling it’s of low pull mechanical materials. say date, a and around low very thanks cost, trying everybody think a to for including of This question. to landfill things would

a what growth there applications But is And so is the to can that do. those in great. limit

other and expensive. you little And you a a recycling. that’s flexible when you need technologies pyrolysis packaging into and advanced few And gasification that more there to bit So happen. make get like into get areas,

into get trying today and talk business I would here piloting discussed will to on to also is in we’re that to and to the So that work. little early works being out going or technologies, need United a think which and then as can doing looks more that to forward, it, drive is it’s in numbers. carbon, numbers huge the EU and has States return. that replicate we what see market-related bit come see gap prove we we’re back we return move price a been different to about going discussed once start will like. What help models investment we what we And will create And capital the value

Operator

will Andrews our Vincent question. And Morgan with next Stanley have

Vincent Andrews

and good you Thank morning.

and advanced you the I’ve game-changing partnership post for Mura put by the the liability housekeeping Howard. the follow-up quick out recycling Jim, billion eyeballing a a is prior been on $X discussion, contribution? just What between And Just press solution. release this then pension a it, on give taking you’re making this Thank of you discussion bit if time just or you. new partnership. maybe a the but and if just us contribution of more what and financial is, it you frame can’t little sort tell I of take could a scalability think the you’re yourselves unfunded and new off just maybe,

Howard Ungerleider

Good is This morning. Hi, Vince. Howard.

XXXX, our on year-end end improvement of that we plus $X.X combination a the of and an or at the voluntary $X.X versus at the the was remeasurement that was contribution the which status end billion, of took the decrease billion a is of So plan the underfunded pension quarter. quarter

Jim Fitterling

all which it’s taking of Mura, to forms really I plastic their use of mentioned waste, Yes, are of some advantage and technology on unrecyclable today.

out. investment The amount So a our as feedstock advanced help in hydrothermal be UK we is of in to the facility recycled own recycling scale we growth the help the we that that will also products plastic the and an will for investment, in perform it’s work that develop material solution And developed a drive going to not will marketplace that make increase them is will in material prove to of to pilot And to assets. by dollars continue Mura. technology, to terms with but it’s sector.

Operator

John And Capital we McNulty on move will Markets. with to BMO

John McNulty

Yes. quick I Thanks ones. question. for guess, my maybe taking two

in into as through the $XXX seasonality Is specialty on us area give be cushion the color maybe area inventory you million Mats Just just side, that? that the plastics on just can you’re if we looks some tight tight it the or seeing is there and some think one-time about for up really bit quarter. and the like very the if be as II&I and little then equity more first much. made I in front line, the And just be quarter Thanks it’s there inventory quarter. what specialty you packaging, quicker? did Performance or should or fourth in about thinking year, is thing million to can you mentioned you’re going a guiding equally to I the to there to some Coatings $XXX on guess, two and

Jim Fitterling

when very continue to expect And Polyurethanes through to I rates also will right construction and now, that as think and case. tight automotive II&I, into get Polyols operating grow. have good you to the and this – in I year continues the on be is isocyanates demand

see boost up coatings, then we given the obviously, been could another the side you improvements through to strong. monomers up the in If some downstream coatings of that contract sector. at coatings. in If architectural tight has leg I more And in do-it-yourself a we be or looked expect market, tightness see year and the

Howard Ungerleider

Yes. is And just math is higher MEG but equate, the would seasonality right. is John, there I on, also earnings think on turnaround to line, expenses. of out say There some about equity your

this year, the in So well expenses well you Sadara got as as as a higher turnaround as Thailand, Kuwait.

extra $XXX plus from that So turnaround well. as the you’ve million got subtract to

Operator

with Partners. we Kevin McCarthy And Research Vertical next, will to move

Kevin McCarthy

first power that outlook, that versus How you account take and talked would be of into you I imply sources If of EBITDA you north compare Dow’s your billion. and of in $X peak would you view contrast half margin level guide, look somewhere other more course, sort morning. future your second would $XX Good investments your earnings than it of of the seems for Yes. growth? at and the that that, billion quarter to when annualized earn organic price about

Jim Fitterling

third and well. really result saw quarter, Thanks, so second Obviously, Kevin. quarter the normally, a go first to peak quarter and tighten up as we things strong into when year, first And in we quarters. quarter I think tend our be

to had So to trying gone my mid-cycle we earnings. into back sense is get this year,

that sectors on with And of them some be and payback think spending X of have that way. than ahead really in will projects, these payback fast years. some I which we’re we less our

to think top that the want like? on ability up. the to look what earnings has do on comment I side could peak you the range move Howard,

Howard Ungerleider

Kevin, around million. we out We at we at the came structure $X $X.X Last talked Yes. that was spin, looking earnings billion. look, when whole year, it trough and were about discussion. capital

else. incremental the definitely were between from projects And the billion in $XX We portfolio billion. add we than And there we of with more to growth was peak anything and got additional at spin a So $XX pandemic continue earnings because trough. now there.

have still significant you of a cycle from economic head a with talk amount annualized upside that but that a you up continued you we as So pick hopefully, even half first here, number, about. into,

Operator

Arun to move RBC Viswanathan Capital will we with next, Markets. And

Arun Viswanathan

it in as What really in segments you think America is especially Asia earlier. MDI, Great. in over back to Congrats struggle. Thanks first off months? obviously, a going a it for strong continues resumption business that North that guess, strong here. earlier? question. taking with of with personal take on Thanks. discussed similar to to Do and the the we’ve II&I, normal? I to about of results just to PM&C, When then get question. mobility my to you seen Europe the similarly, care and here, China and And kind Is expect pretty coming in move you come

Jim Fitterling

PM&C. Arun. I comment the to want to morning, Good Look, first on quarter just back go

first is care think high-margin got think hit for Downstream don’t of don’t the personal saw come But to is reflective to part I PM&C. market Silicones year, starting business downstream hard applications. during struggle. pretty also obviously, COVID, we and continues really back. the quarter I last the construction So silicon of the And down it’s

mobility, silicon really Industrial standpoint, us construction. than you’re right about So to combustion Again, is – it’s starting On moving strength engine. Xx we’ve in Howard internal consumer manufacturing overall siloxane, residential engine. but it. EVs strength driving high X electronics see see buildings. is mentioned. it, it’s to in is construction, back combustion Dow on an and driving XX% Mostly to starting been rise now, than you’re into an an get a on internal got for EVs positive We twice about more content more standpoint. a as

there. surges seeing we’re So

going to extension see Park goes much better year obviously, and of due Uri. downtime a the the the And quarter Deer had you’re to think that storm So improve the we’d without through. PM&C I as winter

at I the look progresses. So would as PM&C say, year let’s

good think a I see of to that you’re going coming business. out story

Howard Ungerleider

on Zhangjiagang asset. The point PM&C other really is the

the chunk plants was big pillar world, one the in in out for around of a in So China. and that one in China U.S., quarter. one we big one three siloxanes produce first And have the the Europe

line negative impact, unable as bottom were that you to we dropped fixed a cost had obviously, went unabsorbed that and that we to – the all as produce, So saw. was that

Operator

from And next, KeyBank. we hear will Yefremov Alex with

Alex Yefremov

you. just depreciation. costs towards Thank everyone. Jim, you morning capital mentioned trending Good start could

get X, quickly billion consider to there? mean perhaps? just to And the years, Is about or also, next for it? think it or part guiding the year I you’re X of that think depreciation you’ll should how already you Just $X.X do clarify, you D&A next you over do something

Jim Fitterling

pools, think we demand downstream into that as question. also will talking see year. have And going we’ve we if this to downstream into on good about I look Yes, what lot to A demand. we’re on depends to sustainability in that these ramp been to we We’ve post investments got it. see And ramp continue at well.

is level depreciation Our about billion. $X.X

have that. you discussions And here that have level. we we ramp to to that. go be to look at would our think creation And value so get I of And obviously, investors first with beyond then and our as opportunities the

Operator

to will Mike Sison move And with Wells on we Fargo.

Mike Sison

Hey, and outlook. Nice good morning. quarter

relative terms talked outlook bit continue you X, of ‘XX? your these earnings and a the some given I EBITDA In but investments, to from in to know $X in the about grow ‘XX? billion consultants, incremental of of ‘XX on industry little it’s can hit much Slide should And early, that how of

Jim Fitterling

think it comes I is that to the capacity, I answer additional think when to yes. Yes,

the that can demand on Obviously, I is continue to leverage have see grow. to margins. think going the the upside you we to

ago. has month at that just expansions in And first quarter, I Fort things looks million, a for And spread probably $XXX glycols furnace So of equation. $XXX margin ‘XX. the based got these earlier, on new I’ll earnings accretive polyethylene the is ‘XX mentioned incremental additional – like online leave in came and But up out that what we maybe of the about these million the that in in, on at investments we high-margin year, then end it year. of we’ve the more XX materials. We’ve incremental did next another XX got for obviously, than Silicones got some Last investments. II&I. year downstream we’ve silicones. This And its alkoxylation already, will rate of got other rate the its come investments other will half some half get of and the year,

to everywhere then And got to will so incremental out. get on. come And on growth debottlenecking miscellaneous those we’ve try going

Operator

will And Barclays. to move Duffy with Fischer we on

Duffy Fischer

Good housekeeping Yes. Two of morning. questions. kind

on did about And go how will cash winds several agreement your be to new return the over the think more P&L And flow? expect the into is pension visible next should the billion? and the that voluntary you terms, on to then we Sadara in the marketing $X that years? cash First down voluntary, how pension

Jim Fitterling

My be the will that see PMLA expectation you’ll over changes, on Duffy, gradual time. that

I of think a take it years. will number

equity to the side to marketing our and do stake reflect same. for the our Aramco obviously, For

it So happen won’t overnight.

it you that, will over side it other I more side. thoughts the think revenue see Howard? think I Any you’ll will time. about And happen on the on than earnings

Howard Ungerleider

but see say anything, XX% you the volume, unit should improve, plus we our because the of of obviously If right Yes. would own Sadara margins only now, marketing equity. Duffy, we’re XX% I

very get – we only marketing those really fee on very a small – a that get So and very, volumes. we

your equity So specific because JV, margin of what should was question, might back. as that pension unit we shifts – increase more the to And in just the going our actually not our what – that dilution. remind me pension ownership

Duffy Fischer

you X, you more put next cash will Do think X, years? into over voluntary the the X pension

Howard Ungerleider

Yes, last in, to pension in so put mandatory bill, U.S. in I mean, the have look, next pension smoothing plans with the years. several really went we the that need that payments for any with don’t we the

it’s standpoint, am probably that to will believer a – over about savings. voluntary a was time. that From move look, $XXX million about $XXX up I million interest So rates a

get fully to take that to from doesn’t of funded. rate much it so year an perspective EROA and really X plan And interest maybe additional close

that I if billion good company. said, a $X So mean will payment voluntary we was it very opportunistic. sense that economic for And with makes pension decision the economically, be

at economic do we laid but from that out earlier that that to year-by-year Jim we if priorities the other creating, compare continue call. allocation And And will we an value perspective. so it, the look might will it’s to on capital

Operator

today’s turn call additional or to to any And remarks. would will the time, At I question-and-answer conclude that this closing like we back for over Pankaj Gupta session.

Pankaj Gupta

you for call. joining interest our to We your everyone. for Thank Dow. everyone you. appreciate Thank Thank you in

your be hours. of much. reference, Dow’s This our Thank very within concludes posted you call. on XX website will transcript copy a For our

Operator

And participation. that will you conclude thank today’s your for call. We

Dow (DOW) 22 Apr 212021 Q1 Earnings call transcript