DOW - Earnings call transcript Q2 2021

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Operator

Good day and welcome to Dow’s 2Q 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 second 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 Vice I Gupta, Officer. the today Ungerleider, Executive Jim am are President Chief joining Dow’s and and Dow Relations call Chairman Pankaj Fitterling, Officer; me President, Investor and on and Howard Financial Chief and statement read in release contained forward-looking news disclaimer slides. the Please earnings the

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

X, measures. financial disclosures most to comments the A today supplement refer of also our in contained and the is and will measure release, slides the Dow that the Slide website. non-GAAP We On in reconciliation Dow earnings GAAP other the will on by comparable and and our drivers. directly associated then call. our with update agenda our close begin an modeling highlights you Howard on operating earnings second outlook Jim quarter will performance. going forward, see reviewing segment share will and for guidance Jim will

take your will we questions. that, Following

the turn Jim. me let Now, call to

Jim Fitterling

fundamentals quarter. and is history, enabled and in businesses. quarterly today. on operating We with volume XX% onset substantial year-ago in sequentially. on the relative Robust segments a XX% and X% to all to sales strong value pandemic. demand and the spin both of was year-over-year price the and capture tight the us local achieved of sales net demand to higher deliver led with continues gains by strong earnings and sales were of Thank COVID-XX underpinned the billion $X.X double-digit by chain. in billion discipline the combined performance increased increase. Sales year-over-year all from recovery XX% value chains our you, to continue These sequentially, with period, earnings by our We and allocation, gains pre all businesses. Team global strongest and economy Dow growth of in improvement capital A focused post Pankaj the company's delivered Slide of line demand X, operating supply joining Dow and segments our cost for second Starting thanks execution, top balanced margin expansion. everyone $X.X across across sequentially, growth us improvements in EBIT and fueled and during increase

more also ventures. the Sadara up $XX equity were benefited joint from allocation Thai million a up joint both flow free margins $XXX earnings our cash We Kuwait of earnings, was billion capital $X.X than higher and execution the enabled ventures. increased This at valid significantly primarily by million from Cash flow from led up and and sequentially. operations year-over-year priorities. was billion, $X year-over-year, equity Sequentially,

billion until continued has Dow liability million. quarter, proactive substantial than our XXXX. more by reducing debt no and by debt actions long-term annual $XX end Today expense $X in We maturities management by interest gross of due reducing our the the

and shareholders to We the cover our we program $XXX our in quarter to dilution. million also buyback through more dividend share returned resumed than industry-leading

lingering increasing a supply relentless and many priorities. social Dow's a from and strong Storm to on customer releasing governance our ESG ESG advance The enhanced environmental, we report our INtersections, Finally, continue despite can our Team be consolidated top digital summary, In at focus marking Winter demand rebound value website. Uri. of meeting corporate across maintained impacts Dow on interactive provides which found by report, the transparency priorities chains

We and execute on half operational a performance. continue and strong solid first playbook, to another delivering financial quarter our

& more operating in from the businesses to sequentially. earnings. Slide in X, driven packaging $XXX Plastics Specialty and Price and integrated and year-over-year, expanded to year-over-year by applications. food in the billion and on margin margins all segment, improvement XXX points Specialty and declined applications than supply business own year-over-year led industrial performance EBIT packaging polyethylene olefins Storm all markets. both and quarter, sequentially and our Winter sales and regions million in The lower in up local sequential gains the regions. flexible price prior for was increased reported in segment the Uri and a gains On consumer Turning price Packaging of local continued basis in Volumes and turnarounds. nearly the delivered Packaging Plastics on $X beverage Compared by to equity EBIT $X.X packaging, gains the operating improvement to basis, and packaging lingering our effects segment gains due billion, maintenance planned business

business Construction tight Infrastructure & growth Coating strong seasonal million, primarily million than margins due demand Intermediates higher and construction to to nearly led million and continued and on year-over-year industrial personal & from year-ago The compared by price and $XXX expanded care, sales up delivered some basis compared both Uri. also of volume in broad all supply Materials increase & on regions. the notable regions. business Sequentially, driven driven Consumer return maintenance price materials in silicones operating a as markets, as social recovery a activities application all offset The growth price finally, improvements consumer year-over-year, and supply by supplier $XXX improvement all as Performance industrial The industry local offerings Solutions Industrial price products industrial to a was logistical in from up appliances demand net and to more delivered Polyurethanes net certain sales Monomers chains, sequentially on the demand period and local Moving lower on $XXX by goods gains tight operating planned due regions. sales sequential achieved end in silicones to in the of for recovery recovery all and achieved lower year-over-year, by and million, net material and electronics & Performance EBIT to and lingering end demand in as delivered workplace offset and strong coatings period. and points price EBIT an up million maintenance third-party travel manufacturing. points, currency and price Storm Operating strong Winter of increased combined improvement for with gains for for business price coatings, business gains margin strong Net momentum began markets demand end number period constraints and Sequentially, more architectural experience Sequentially, sales activity operating Industrial demand Sequentially, by gains well demand from net year-ago pandemic local the operating maintenance tailwinds. sales the margins XXX to $XXX based volumes. and gains Chemicals and $XXX up in the turnarounds costs. applications, material segment and price China. with and in regions. Increased business supply across reported from increased year-ago supply all local basis fundamentals sales And and across durable local increased were mobility, EBIT more recovery. million constraints value increased the planned as segment, in Improved increased was including than achieved offset price was higher demand to strong business by for local EBIT $XXX nearly infrastructure coatings. EBIT Despite Uri. XXX the and than geographies was on operating coatings challenges due a volume the and limitations. strong to markets somewhat industrial in costs, EBIT businesses. Solutions including The chain Coatings raw business demand result Storm volume used planned Winter increased raw gains

Now, I'll Howard over our to it turn outlook. to review

Howard Ungerleider

everyone. Thank and good you, morning, Jim,

trends modeling across housing of and consumer retail, our third most X, in to Moving Slide demand the levels inventory low chains. sectors, value quarter remain guidance manufacturing our strong and on continue

day these to work demand. expect a in demand tight continues month-over-month the inventories support producer to downstream domestic fulfill declined continue to and increases to converter increase to an turnaround industry reached demand inventories domestic to and lows supply, activity, due the turnaround crackers sequentially a This inventory in are industry Recent days And season on lower very quarter. approximately increased X% dynamics strength export continuation in history expect are data third packaging in strongest the for our well we applications licensing which where at in includes and XX million its the as non-recurring second positive June data XX Dow ACC planned we nearly yet We price actually demand. for earnings our backlogs. industry these heavy with balances level indicates in customers expect in with quarter as quarter in occurred million Packaging and as owner coupled Spain $XXX tight. small reporting and demand In remained third Plastics spending pent-up from the trends maintenance segment, $XXX of at all-time brand Canada for Specialty as &

and & Intermediates by consumer other solutions. additional U.S solvents gradual continue strong chain. for durable particularly are Infrastructure, for construction underpinned the support expected robust order support in demand Industrial for applications. demand to Industrial markets Housing continues throughout and and industrial Moving sequentially, strength to and to value markets to the goods recovery see polyurethane providing related oil continue

joint a infrastructure We for solutions. turnaround at Performance we electronics, quarter. mobility with Materials also additional silicone planned the continuation ventures spending million and & in Coatings, maintenance expect of our in And strong $XX expect demand

are slide found be the in of Altogether resume. now Notably our inflow cash and profile we with increase updated full continue, Sadara, Dow the to engagements XXXX. to of to expect with our moving social coatings Barry. items anticipate spending forward. few solutions increased and and pandemic earnings in portfolio approximately robust to social new the plant home which builds at begin robust, remains million in sequential consumer is higher advantage to improvement value year an silicones million We and we in see do-it-yourself applications. for in the turnaround supporting siloxane including related a we increase anticipate as for in chain, on to $XX including architectural as Demand related care personal trends easing our pillar expect momentum demand restrictions, value business we and activity can capture approximately are $XX the quarter, expecting appendix presentation. These a significant turnaround earnings across improved expected positioned demand contractor of equity at increases price home benefit We've consumer

Turning the to positive around the growth. for with remain an in we recovery early Slide stages runway X, economic increasingly world trends indicate extended of

increased the decades production and demand is its has restocking near-term pre-pandemic inventory GDP to and due industrial low, homes supported of levels. estimates to are up to the world. nearly than lowest XX% rising, And housing around more levels elevate three over year-ago single-family not efforts. building. to in starts limited again continue it projected further reached While potential sales at the counter already U.S potential in is by bill Retail strong continues to still proposed strong has under a U.S May, the infrastructure decade projected the supply of

anticipate reopen, and the to Business world confidence over the pent-up savings goods. beauty The to other international economic the in the additional around resume and borders that the travel we're on and year economies climb improve, X rise of Along conviction these we products variations regional pace quarter provide rates experienced across improve favorable key with increase capacity sales the continue there on slowest Altogether, sustained boost consumer supporting coming consumer the should an should be to absolutely within to than automobiles in been personal majority adds with also domestic timing curve. U.S mindful we as demand in to some industry will demand one second the recovery. dynamics, and and travel with demand. to expect next trends, will the past fundamentals personal Consumer also has pricing recover built demand market recreational purchases The I'll global which strong to economic ongoing cash we and supply the of that it second planning strength continued to our and Jim. continue near-term travel the to boost outpace to see chains more economy. extend growth, half chains activity, ratio tight while increases polyurethane, homes, vaccination of sentiment to continued durable of that, strong conditions and margins cost end a additions polyethylene, XXXX. to the increased acrylic on activities continues oil May supply these With of projected care of a is And economic and Polyethylene As and of across our higher rebound silicone business to reopen, growth. continue U.S for in back example, months. second the and expansion drive gas companies the in turn quarter. to flow through the market, resilient in with earnings cosmetics the demand in began in half

Jim Fitterling

Howard. you, Thank

is in demand into ago, continued carbon our growth benefit sustainability uniquely that to customers advancing markets value mobility sustainable providing consumer billion $XXX to materials, to and by packaging, attractive across outlined are while Dow an brand care Howard owners to zero approximately products trends our the portfolio GDP Slide economy positioned growing toward X.Xx continue ample fast to with trends targets. a consumer innovate net X. These more and moment driven the circular and demand and opportunities infrastructure, addressable market markets. to translate an to transition accelerated chains, with Turning X.Xx from Dow's our for which our enhance of our underpinned and

sustainable continues based heat and engine vibration solutions, Dow engineering the widely high combustion polyurethanes, silicones noise multiple more traditional autonomous and reduction, chemistries applications. example, more For sector across transition adhesives internal comfort its hybrid and offer including in approximately to XX% vehicles electric mobility drivetrain, battery of upside and revenue management as versus and sealants assembly, used value silicone vehicles,

sustainability. silicone applications introduced automotive Our for products recently a more to reliability electric goals. materials to demand from new vehicle sustainability raw OEMs C, SPECFLEX sourced meet technologies help evolving the help And vehicle advancing needs performance, hybrid automotive new their and while Dow and of and for meet electrification, solution polyurethane circular we recycled OEMs

continue to for growth this to growing sustainable address demand market materials. our We align CapEx also

see priorities of government the joint detail with cracker furnaces a emissions heat funding demonstrated plan This quarter, and and to value together and continue XX% on upcoming you. XXXX our New start creating demand polyethylene, and quarter, we Stay Investor shared will Day engaging be October virtually tuned more on hosted in details, chains, near-term. market we forward balanced XXXX supply to with by further value XXXX last These X, through to electrically we outlined for Terneuzen, pilot long-term progress on our than from we more ethylene, evaluating XXXX. both through our multi COX operations in megawatt polyurethanes, we roadmap stakeholders trends we to will up plant our manufacturing for Netherlands. by person construction market York beyond Dutch in our reduce across X, are continue Shell in by fueled We in Dow all growth On GDP financial the at in from as more which The City. supported discussed. Slide XXXX look outpacing to to just our partial share be acrylic technology and And strategic stay dynamics the silicones steam and receiving our and

based capacity Some additions. industry on softening conditions, announced their for views largely call view of

current faster ahead in earnings billion and earnings year, near-term. the glycol demand progressed will polyethylene close leading CARBOWAX over delivering applications these we for many at $X home and industry owners derivatives expansion, Alberta ingredients. growth result packaging this our conditions, while years, and not of of markets. of lower and schedule the in for tighter global businesses, second likely generate And active Dow polyethylene in of favorable notably, in fundamentals, to coupled leading surfactants several operations, We'll of laundry foreseeable which at forecasted joint expansions industry these capture and our capacity Combined on and our earnings, continued SENTRY, brand X. margin beginning improved such our Dow core And the slate However, lead with deliver pharmaceutical Slide from ventures, future. return further for the economy delays high-performance our and of will significant value incremental already shipments capital, payback projects the supply polyethylene next over higher to as elevated account enable than cash quarter, all will ethylene completing glycol, demand this accretive with with earnings growth projects continued qualification customer we market care Thai additional our for owners to they do flow end and for cancellations our when reopening continue an

of Our spin, response value to over agile that operational our at past shareholders. playbook and strong and enhanced us the financial our steadfast enabled to market performance to execution the we outlined deliver have year conditions combined with

We today. continue are to that strong uniquely positioned foundation on building

Our value provide regions. as markets in leading dynamics. characterized to demand enables us and flexibility an maximize which higher footprint access and that to proposition And supply our margins differentiated high low starts cash product with asset our first is and portfolio our asset drive feedstock utilization scale and with position quickly to second, all and balance base and growth by feedstock and mix global us differentiated supports our cost we major our position, portfolio and

remain recovery silicones this through systems. early polymers, higher formulated in our have achieved part strong performance margin We participation and functional economic in advantage the of and

opportunities the capture from customer's address arising develop trends. continue to and market We innovative to solutions our needs critical

enabling and More opportunities. broadly, our serve. mobility platform, the science vehicle across solutions electric solutions and adhesives value growing are autonomous the carbon Through portfolio, the packaging sector. enhancing of value rapidly support our they targeting we we are low high mobility, innovative and sustainability chains our Our e-commerce

energy in the working of trading, recycled in consumer are concentrated goal. our are teams post operations. enabling carbon for fully applications our and capture the gas and lower design increasing more For remainder that recyclable And solutions packaging And products content XX% achieve research collaboration, on Today, recyclable. same example, deploying power we than at are and carbon reusable products, technical through value or our solar packaging. of chain to Dow actively

innovation allocation critical strength the our are of balanced creation our discipline Beyond approach value on elements our playbook. capital and portfolio and of operating focus our investments, deliberate

We cost efforts will our conversion have achieved while in million earnings, maintaining an top quartile cash restructuring all $XXX and structure additional and owner a mindset. best yield

upgraded sustainability our our our to strong leadership led We ESG through our it a credit return on margin, an by invested operating downstream approximately through rating Dow end grade industry time, leading expand advantaged investment payback in year. expenditures increasing delivered have supporting the XX% value best-in-class by upstream faster profile, balance strong to In We billion back return open investments our and reduced XXXX. to delivering greater At we a by that shareholders than Q&A. prioritized that, operational Pankaj on continue portfolio, financial basis. significant turn and and dividend. discipline. capital resulted opportunities XX-month I'll net our investments to $X the while With strong our uniquely trailing outlook same of and also million continue by cash Fitch, we innovation is our and financial higher in in leading Dow's S&P $XXX since consumer upgrade this closing, performance to a debt this And capital the of year sheet. and

Pankaj Gupta

Jim. you, Thank

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

Operator

question from you. P.J. Our with Thank first [Operator Citi. Instructions] comes Juvekar

P.J. Juvekar

morning. Jim, commodities that U.S between your of good evident the and Asia Yes, And polyethylene Xx where Asia. that pricing was for is this in pricing versus are arbitrage U.S prices other was growing. in

tightness driven the of is shipping So you. challenges the logistical how or this business? Thank much your And shipping tightness? by impacting is

Jim Fitterling

you in most America producers Good flow days a Obviously, And in it. the saw sales the into North morning, and part had inventory was went China. cost of P.J. down. less was I big ourselves actually part curve. rise Thanks and of think for Also, the cash That what question. you exported

they are China So most the are the are, even where breakeven. though cash and running of producers arbitrages at flow

view be chance are the for demand to or year, And demand next is of X.X%, around outlook our continues build X% is year. number GDP at polyethylene. a for a any I forecasted currently through a still this So to think rates, don't planned fair maybe growth be and There's and you'll going here inventory world the there with that X% these for strong. turnarounds. our us quite see to quarter, third for

Operator

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

David Begleiter

What's Jim, are morning. ethylene, calling on the back declines integrated Good then half and the peak rest to the and these the of you. view be cadence polyethylene the erosion of of July margins your Thank in the consultants for year? year. to margins

Jim Fitterling

soften of do saw Thanks, some as prices probably David. than that stronger book that because Right highest July to quarter. we see dramatically. raw we views, some ethane went is of through stay now, second Good the quarter, we'll order that had expect in expect the we forward. the move fairly up our we'll second spreads quarter. I crack I continue the In the through way material morning.

we natural long-term and think I prices DTU. $X a gas be $X.XX between million to expect

going to that that continue. see gas that's these I to So positive. we're ratios, think And with oil

demand. for things to but another supply One looked at demand obviously, And of they I the oil economy there's going at as as the happened think step up to on, oil. oil, failed with the that be in everybody reopens, coming look

of get for think the to coming. that's demand that just increase supply is ready I in necessary some So

Operator

Fermium question We'll with next our Research. take from Mitsch Frank

Frank Mitsch

we're that rate. at $XX congrats. run Howard, previously EBITDA Jim peak have be the spoken billion the and essentially you Good Dow I of that would look greater. as or at first morning, at guys year, folks and half And

is would is, like if you a we opportunity or and And peak? offer there? upgrade -- sustainable so, are this to an take question how offer So it at

Jim Fitterling

Frank, at run good rate Good morning, thanks. right we're Look, a pretty and now.

only Our one similar. some and is time have cap, more catalysts expectation couple that couple don't given one-time on turnarounds, couple quarter, third that of really just fairly turnarounds negative repeat. looks a for good. that items of a We sales a some of But third more that, are and quarter

In projects, addition, I talked incremental are us starting projects. which a up $X growth add EBITDA Those about year little some the another to billion of of bit ability this already give numbers. to those

we're that and think incremental the India, sheet showing on plus Brazil personal I come the and that service out come work Asia. see And the on we So care, with industrial done the work other and markets as with we've expansions making, the balance of done back. we're pandemic we've like Southeast the these reliability, geographies that

a there's for think potential more. I

Howard Ungerleider

this help. Frank, just that to add I Howard. is would there's also self

over year. this $XXX be So at tailwind least period. into $XXX X-year a be for we've And us in to the another will we're year going tailwind year, to investments total next got making digital, that's expect we and from continue the restructuring million. a the That's million last then

had So of Jim's more organic regardless talking macros. that billion self the help $X.X of about indoor numbers, if you the than you're

are in and macros, that the see Jim earlier, we very near-term. the as very, about With abating talked don't strong

Operator

from question Andrews next our take We'll with Morgan Stanley. Vincent

Vincent Andrews

and you, morning, good everyone. Thank

rate 'XX. utilization of Slide and you I PE Just range at MDI. and opposite S&D it outcomes narrow, very on PE, the the and Whereas for out is just and MDI three ranges on you looking have, it gets the that X siloxane, get to like S&D rates, as wider it the looks it's and look 'XX in at siloxane utilization

term and capacity that utilization it an S&D more is medium of uncertain creates what perspective? siloxane from So an about outlook

Jim Fitterling

Thank work of our Yes. as some lot obviously hasn't working assets. and seen doing we've a on own The in reliability you, siloxane business turnaround been Vince. recent capacity

into in think like you lot and downstream as market strong the growth demand the it things side draw I a tremendous is is driven building that electric in positive you've projects vehicles. and seeing of a housing, world. silicones We're for end on around also move got the still large really

going standpoint, going to other able to think allow owners brand our at to silicone our sustainability of some when our Dow. to you demands, and thought that's be I that So is going metals, be look portfolio meet continue. My positive from that's to us the sustainable of is for our sourcing

older assets an there. out about the on is pretty of COX keep to has older, eye to that industry some high high X% got you've got and X% You've footprint. capacity cost a

keeping And so that. we're an eye on

Operator

our Jeff take next with We'll Zekauskas with JPMorgan. question

Jeffrey Zekauskas

you year still than a that Is a different? Thanks Slide million talk used the was something old a normal a second then what that secondly, X, last And that supposed In of in And is, your year. when talked happen cracker the this turnarounds Canada XXXX. you were about expansion. costs on very expanding higher on normal to much. you What's going that year? year, did XX, your is Also Slide you which to half Is days by turnaround previously about said talk about expansion, a XXX,XXX through? or number? PE XXX,XXX tons in ton is $XXX that

Jim Fitterling

Two backend the polyethylene. and Jeff. addition And of convert an Canada, Thanks, that cracker that expansion in the Canada have to we debottlenecking of of work some questions. the In another furnace the up to is there. available good capacity on

you're kt of dusting when we're on terms make right build the that off a and COVID pushed we're we So and that out a kt. U.S now And Gulf year. about decision XXX pounds. of hit, to in that going talking that in is XXX Coast sometime half had There about to that slated that we was available project add probably of this

we And downstream. the Maybe, to year. So last turnarounds, that you ethylene Howard, portfolio we fuel tight that on in is cash are what and on comment our we've done normal can at into more able this got year, make happen. we've forward? being pushed the expanding plastics again, flow On some going continuing with be to to number portfolio a look the with work within reliability,

Howard Ungerleider

lot of a year, turnaround. look, mean, as Jim pushed I Jeff, we Yes, last says,

So $XXX XXXX versus was XXXX million. about down

to the this year, And you do really It know. about year, in be a around million. typical would between three. I I we've assets said, depend. expect you got $XXX we up does We mean, as say cracker as one and world,

year. this And out year. little say turnaround two it's you that tell because That billion so minus. or if would probably you last average, plus in $X push it's be trend is on a going to line want average the to of And range from the above bit of a year,

Operator

next question Duffy Our comes from Barclays. Fischer with

Duffy Fischer

Yes. Good morning.

could. is triangulate quarter to polyethylene to up your that about exited you the average But for X% as wanted for it's up for versus I for QX the segment, growth sales flat we Pricing gave when QX X%. if from Just guidance QX. the

price X% there? over to So flat would volume? of a kept be you should that roughly Or just Can the up and just volume triangulate same, lack X%. in you part back you do as get Is you rolling that you the the the if equal see the quarter us line price missing? that back of

Jim Fitterling

right I Duffy. to real Yes. are tight now. mentioned, able we And anything. build really as Inventories been Thanks, haven't

still seeing density, to And pretty are certain tight. would for I try right Obviously, High the say third we've us beat this we that’s volume in conservative be been now is in grades are that with on upward to So to quarter able positive price on example, turnarounds in quarter, we going a on product. outlook. pricing, front that. of of movement some bit

to And to think move, we plenty third quarter. to to going there. the movement are quarter, of some so price that volume see end start the overall, turnarounds to will through we the But add get upward the of into and the have and in you're going going I toward think I that quarter available fourth as continue see to you're

Operator

our Ahmed next take We'll Hassan Alembic question Global. from with

Hassan Ahmed

Good Howard. Jim morning, and

As debt no strong about I commentary, seems, fundamentals Obviously, it comment heard least. your looking sort then the made you strong, to And due in at reflected medium that’s XXXX. significant very cash term payments are a again, flow. near obviously, until your of

be, But in with now, buybacks? is, significant program? the to around enough my thinking share guys you way fundamentals more about I million about mean, is right did dilution. way balance So the the a you how seem are sheet of question buybacks thinking to $XXX are guys offset the QX, guys you buyback

Jim Fitterling

Hassan. morning, Good

take at Howard in chime as me I'll that, ask shot and Let to a well.

out dividends net since the we've of share spin. income quarter, and XX% second about in buybacks of of As the paid end

cycle million cover So dilution. above our bought brought the quarter. the through shares well about start $XXX XX% what to that’s during just worth And was of to we guideline. we buybacks in And quarter the back

we're This say to remember, that's in So we priority. have going into and of about $X.X projects, billion billion. year, get front need up I lined us, good some years We organic need be to any we and we our growth incremental a so they're to have would depreciation also that, to at up is couple comments? levels, $X.X money do Howard, projects, which that. CapEx. go to growth more will the and other

Howard Ungerleider

as get a of I year, you back as in will Hassan, more the that's run million. to good said, rate the we second that of then quarterly The only the the would XXXX. say talk for with I we would year. Yes. end at reinitiated Investor other purposes, quarter, we thing saw half the you modeling And about say, the Day, $XXX for

Operator

from Markets. We'll with take our question McNulty BMO John next Capital

John McNulty

my Yes, thanks for taking question.

one. and a you can we should And XQ? mirror volumes, assume is that look impact in PSP Uri be clarity XQ? I&I little I that Just and around a rearview that’s all much With quick give nicked you how to in the Because right? regard difficulty] [technical of the on the us in kind to

Jim Fitterling

morning, Good John.

assumption impacted I would say, materials pretty are hard little The are of to that were back. only running that the right very now. products, backlog. is come couple right. bit cause And sometimes some there XQ, caveat see important raw we should in is are and making a They that, in your still where us those small raw of supply limitations, a assets a hard think I material lines

of was out that capacity month during think I the of April. most

you'll you where of inventory. would hard and out months in quarter about have as three and it so two, production, solid we of go And I QX, say last we think forward pulled had

on the inventories a the if to down. that the depend I are so of chance going all that end economy until have to And would And rebuild maybe think year. slows we don't

backlog. XX those to mentioned, Howard have XX-day As we’ve most customers, them chains that of in and

So hard and XXXX. year of our we're to the going view the be running into through is end right

Operator

UBS. question comes Roberts Our John with from next

John Roberts

has the A if little mitigate same? had Uri. we learnings Storm similar a situation the bit likely related Winter there, had a this? there had much we Jim industry a repeat or been the be and Howard, again, but some Or Dow of and impact that would changes the time would from harder If effect recovering

Jim Fitterling

so question, after weather well together good worked freeze-ups. of Uri obviously, work hurricane and everything different us, in a us, gas we like after a didn't was -- we it We and And what not do it hurricane, at take do it we event, The biggest so widespread. the a we was That's water. little team look damage, and but that get what Yes. production, well. John. a just electricity, upstream was downstream was was every or bit

you some so that, down for you you winterize to things take advanced have can And winterize prepare notice, And some if can them. can't and things. some actually but you protect everything

updated on game the so of we've that got has situation in plan do And we again. team a through gone would that. face what And the like an

they're are do of we through I power think what ERCOT. I is going through a requesting us part and they're a into what the industry supplier it. to the Winterization whole well as big is on that is ERCOT know side. going because doing

of everybody And So I Storm so through. caught it the long and do what has nature widespread think developments some there's taken to Winter work is since Uri. positive

Operator

Wells comes question Michael Sison Fargo. next with Our from

Michael Sison

quarter. Nice guys. Hey,

highs is prices think is at and strong and I obviously, low. PE are demand all-time super supply

do Just three need it Is demand you to just that going And to in post think one there's what curious going possible really fundamental you to a change prices would above forward? pandemic? curious, think basis, that we're be GDP maybe a structural then one though, five fall. for on the polyethylene to for happen

Jim Fitterling

in customers. Thanks the seen We’ve change from Michael. a buying Yes, for question. behavior

the are that some plastic of that. package strong go is going And so that packaging the there, I areas carbon e-commerce which drive continue to lightweight is going footprint is to packaging-like really think that and lowest lot to fact drive so so out also backward. I it a are you don't there think and activity, it see toward a

the the companies, the costs COX and drive most that. For shipping shipping will footprint, cost and

store. And plastic bags shopping would five take in it. bags of paper versus so to of I truckloads truckload replace plastic use paper grocery just to a scenario One four a

move So carbon plastics I to that equation think greatly. think don't as it long-term I into see you're going the X.X. to see above advantages that's comes it going something there's

GDP For decades, been X.X that rate. it's many, many growth of type in

are materials I are that polymers functional polyethylene that of ethylene for think that that There are derivatives out and are to stay. will some construction positive. made continuing grow,

You're applications some going alternative in products and for blades, to of that energy, see panels go both solar other growth types like wind encapsulation, into other applications.

we So of over which long I positive. can think is a time, period sustain that

Operator

with We'll Sachs. take from Goldman our Koort Bob next question

Bob Koort

dovetails to embracing ask of I circular Jim, but you, economy. also Mike's multiplier, in and terms maybe that PE is it Dow wanted on the much. very the growth industry Thanks the in demand question,

initiatives that you think sort Just rates to times of virgin and curious demand growth What effect initiatives X.X multiplier? to recycling out do that there? the might what circular GDP relative

Jim Fitterling

question, Bob. Yes. Good

that are from back that from from material feedstock more to recycled material either demand something biosource recycling get and post-consumer or to is ethylene a or in made real there want back more to advanced want consumers We to seeing pull and a that’s a product. brand made they owners

going side are of the drivers redesign to and to packaging on that the obviously many hard virgin complicated are types think flexible are things help of I on packaging, packages recycle.

of or and the move redesigned. into We portfolio XXX%. to XX% of brand right is Kellogg's, right from package team service across owners are complex with now greater chain. away rest working use different positives [ph] the packages structures. going This now has reusable our are I the team example where portfolio that bare the that to is is recyclable All and fully the than naked today, value the to our think structures working hard tech of of research one of granola get the been on that redesigns simpler on

seeing mechanical advanced We in pick-up. and the recycling are investments recycling

go collect that can team to We that plastic to XXXX recycling and own metric or materials, approving using next that infrastructure We actions long seeing our recycling. local think are the I north. that use plastics. architectural or catch by recycled of faster. of to And level are forward a In with some to of of I into up. lived, that drive demand pushing upgrading the be target products recycle I get next reuse X the done big Europe. set seeing pull and pick and to state end-of-life projects get longer think have number way in We a recycled to a is even all to are of recycling more the at million collection the kinds decking, And things up advanced taking I’m more be for durable partnerships. through we’ve things States, on tell going allow tons XX% you, always building the our impact of still and we're real will that number states plastics go to way to United long packaging more And curbside roadways, of that in are aggregate products. And

over So a be positive. time, I going think to it's real

Operator

with from comes question Jefferies. next The Laurence Alexander

Laurence Alexander

Good do the what that you from evaluating you're considering projects use is types morning. projects? have for of of carbon you otherwise? would skew enough seeing What price that you growth it actually are considered currently And high it

Jim Fitterling

not dollars Investor I around well. price ton. of about would carbon change €XX the would them. But more the will get at see Day did it that is a the things enough today I talk XX we carbon Yes, high drive to to much is make next the today than we technologies enough the projects expensive is price pressure how there. kind into is the that’s our a made question. XX, to that needs of EU to sure I to we to and the outline a on lower that. approaches back And be say because what carbon on of that that one mean, years us of as would that's have work are €XX the all put good we of translate say lower in to market

look keep talk an front on. capture, more beyond hydrogen two have that. deliver of carbon us to build technologies. are advanced industry as than next And get and in we we think for a to ton low got eye carbon €XX they're about, get Those we at capture and to as step, infrastructure right to But blue to lot now that COX. to I that's the get you’ve cost this we a are our next lowest the Congress step

price so And of than would tax carbon terms from government much market without is a technologies, investment in support the or on need in those that higher you that. right incentive

that That's the We improvement reduction site. attuned talked about hydrogen things we're the to carbon to in are is right with try capture that on make an that’s at we are top very and of that are that and Terneuzen. blue looking of by And one that. we I XX% at piloting XXXX,

Operator

question Viswanathan Capital Markets. from Arun next our take with We'll RBC

Arun Viswanathan

Great. taking on question. my here. strong Thanks results the Congrats for

going what your coming, mentioned 'XX, had us comments assumptions it do is have cost market and additions again, side? sounds at 'XX of rest much be a high-end being new letup the being Could market or You of that to it to how projects remind announced? you And changes be other capacity in are the the -- indicating China is don't regions? And back like demand. see supply expect as for on very little on some like returning being sounds while the It expect for be you then in, polyethylene or maybe potentially on the And longer curve. where whether what tight in added any accelerated you also COVID seen and is do you're just that any to projects you out as were far table? pushed during term, that the you

that we need some looks and for more place capacity like So America looks interesting would an like addition. North potentially

of kind that is Thanks. well? within So your thinking as

Jim Fitterling

dates. global it question. naphtha to About olefins or of I out. olefins, all all methanol Asia. methanol XX% in to or about olefins. are XX% coal coal market And I will XXXX construction are naphtha, Good XX% are phase, remember Arun. to are of so start projects try that of polyethylene in higher-cost olefins. to the in capacity can adds you XXXX XX% About to Thanks, come think around announced will about get up when the or XX% Northeast are Chinese that through adds those the the of through that about to

XX into And China. -- so of XX out obviously that’s tons metric million reduce total. XXXX in to increases about some going to Capacity imports XXXX, are that’s

risk, million crackers you’ve trade so million on And unreliable now, or tons are say that there levels. domestic. Long-term, it's cancellations. tons. view, Demand metric going metric there those be some existing to demand In to about metric X delays million are neighborhood supply X X books. considered million to but of million delays the will an be some And I in don't additions would as also or to tons. only on growth right due exporter are tons million our got being at the we that that in see -- XX is supply on are XX cancellations, XX are metric China that the

frame. to growth term, short going things we're So GDP tight. the these by about with are near going time balanced rates, X metric that in to And to tons be million during be

question to those on in Incremental the polyethylene, a in cards. earlier we're expansion at mentioned ethylene, on that's I cards. kt XXX are the looking So expansions Jeff's growth.

doing our the technology to work our in are on carbon moves to forward. We EDH low FCDh and Gulf own have try technology

the wave trading you one have to States know a before in of that going border of to around what adjustment be those And to perhaps United has we policies next voluntary mechanisms, things are. carbon emissions resolved are the think tax, carbon I the carbon, scheme. what see is a announcements be

play the how have see going is on know how have forward. to we to is China We to Europe global moving footprint. And

make right opportunity. and before next we resolved on step. of for we're working the those can what to But projects, is to the place we be have All that looking right see are

Operator

next Our Alex from comes question Capital KeyBanc Yefremov with Markets.

Alex Yefremov

Europe really you. not you these the carbon that the Thank price currently to enough implement in continue high technologies. is to to just incentive subject, mentioned provide Jim, of on

this neutral in to price that something Europe carbon indirectly As tax or benefit ultimately rises Because industry from domestic the help and you taxes? these higher prices, implements for think of sort these Dow you Europe absorb directly having capacity Chemical? amount do import will to

Jim Fitterling

think it thanks, Aleksey. I --

open to done. to I before and much to it, we about costs I’ve need it do how constructive say will said think I be and this. can it real continue have And dialogue a

this. to the over under also you or drive want make have those and everybody allowances conversion. want they you allowances reduce think, the and and time carbon net we drive idealistically, I What we yet, improvements trade in are they zero. will want will that level they will allowances make nobody's is they and to have emissions up But to incentives get we to prices emissions they government can agreement the will at to carbon, ratchet for any -- a having start is for has that to their And level, do price emitters. if Europe of your put allowances, Europe is back we emissions game works that discussion will start for will carbon and everybody over to that but credits. happen the is the educated the energy the need have in in What -- about trading cost to Europe the doing way

what more number talk the carbon up drive with be is there going to concerned think most to Europe right the in trying and and technologies less ones is effective we to that. the do So able to that to up is to now this, are drive are with trying And are price scale the forward, realistically cost conversion. what cost middle capture the do what the about we today, that hydrogen, and blue them everybody the to concerned

over next to but hydrogen the the as on gas, start production lot other progress that’s And reforming to to methane you heavy the a natural will going this, is means And on a say uses as I economy, that power years, eyes way make it's which we is industry look thing free. most hydrogen, make the is a right X hydrogen steam all the would more at or you to and through need to utility that we effective that. move to wide discussions hydrogen. think are other and are remember gas one work get that that through with to the open X I sector not some which now. taking difficult natural to that of most of make table So And

Operator

comes from of question Steve next Bank Byrne with Our America.

Steve Byrne

you. Thank Yes.

to curious view driving have few U.S. greenhouse your I'm to mean, net you initiative Jim, what’s you So, gas I net zero clearly zero. on really -- this mean, hear policy are I of target the leading are are that. government XXXX. you one as the emission driving not for clearly, that a there's that?

a help to that premium low could really potential or that renewable return is for how, sure self a any revenue from drive on a insufficient describing is that’s a all price opportunity are could that product, it? there there You or for carbon there's carbon downstream this Europe I'm that. Is in But see tax incentivize clearly recycled be that enhanced CapEx, not product. but you ways you product a motivated? to footprint revenue

Jim Fitterling

Good question, Steve.

And accretive. that preference investments We space, the for in owners want we the are starting consumer more are we recyclable those to to value brand ourselves investments brand and be both products. drive to see the that lower in carbon clearly, want area, make and but owners

makes policies we it going we creating value that say, make are are happen. right going that preference forward. I say is to this trying would drive what there right you the set as investments So and the now. to be not thing the are And through the consumer on consumer of work the to policies need

to believe of seeing pull the it strong up premiums that see is, some reality owners materials show to comes premiums. are starting the we from are plastics today. brand to recycled into other post-consumer in a packaging, are we starting and The I the market When

back go seen we decade, a not you If had that.

might get But I sign cost if you've a problem And add are got basis to product basis, a you very want take on address for that the their chain small. that it's down when it. owners It's value who they're cost The at at a level. that’s the think package so the to through brand significant materials. it consumer allocating And materials circularity, announcing and the the to it premiums buy. value down manufacture a you of shelf recycled the to customers comes a package It to per it $X.XX through that isn't the supermarket, you chain. significant per

Operator

Partners. next question Kevin we'll And McCarthy from take our Research Vertical with

Kevin McCarthy

third about or much sequentially. X down X%, less ago? to whether as Yes. How intermediates momentum quarter doubled to sequentially? could you might relative parts. flat given the other be upside flat, months up Good up wanted that versus have strong your your forecast ask and you morning. polyurethanes And chemicals? industrial Jim, then your income where expectations Can to been a view industrial of have wise Two or do today I sales operating talk you to profit about more

Jim Fitterling

we polyurethane for that both demand isocyanates strong a in raw are on going only side, In not larger question. construction those that’s -- from Industrial good for Intermediates but like construction the Infrastructure construction. made and side commercial materials single-family the homes, chemicals saw also & chemicals polyols and Good into polyurethane in

will to demands supply demand are and continue the those think strong going I continue to be tight. to stay

in some both ethylene isocyanates. solvents strong we’ve things polyethylene as well of have a that oxide that PO we saw we’ve coming And business, as the other capacity adds And continuing made You to into a new derivatives expansion of host oxide then in industrial of capacity that VOC in grow. in those called on that, we got coatings and for incipient, space. There's not end pricing just top are sector. coming like in markets portfolio materials new a several are product on, pharmaceutical ethylene go there. And additionally, the on coming that solutions an glycol through that low lot

that away owner your and That and see that same or benefits VOC might you industrial the the trend, around as both coatings solvents that helps cleaning our lower chemicals brand into we world, from solvents, organic by home, way, cleaning side a products in use as an So from move portfolio. traditional us or waterborne in well.

expectation will those third think quarter. I very to businesses similar So continue our second quarter on in those are

Pankaj Gupta

good. concludes We you. appreciate today. Dow. Very in call Thank interest our That your

transcript Thank For on your Dow's reference, be copy posted of website a you. within will hours. our XX

Operator

conference. thank And today’s that does conclude you participation. your We for

You may disconnect. now

Dow (DOW) 22 Jul 212021 Q2 Earnings call transcript