Earnings call transcript Q3 2022

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Operator

Good day, and welcome to Dow’s Third Quarter 2022 Earnings Call. [Operator Instructions]

I will now hand over to Pankaj Gupta, Investor Relations, Vice President.

Pankaj Gupta

Good morning. Thank you for joining Dow’s third quarter earnings call. via comments we today. available to prepared is our supplement call webcast, have and slides This our They section and to of posted Dow’s are on website through the the Investor Relations webcast. link

Investor Financial Relations am today the Officer. Howard Chief are call Ungerleider, Gupta, and I Fitterling, Chairman Officer; Vice on Dow’s Pankaj Jim Executive And joining President. President me Dow and and Chief

statement release the forward-looking disclaimer and read the news contained Please earnings 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 also will to We measures. non-GAAP

associated measure the A slides most of website. other as in our release, Dow that reconciliation contained well GAAP supplement the the comments directly financial in on Dow earnings today, the and disclosures as comparable is

to operating reviewing On the call. by and term to then agenda discuss Slide value our our quarter will then in how deliver our us our Howard growth performance. strategic for actions third long modeling you results begin will X, guidance. And will Jim will a priorities and dynamic share segment and see outlook close, environment. enable Jim

take we will that you questions. Following

over Now let turn to Jim. call the me

Jim Fitterling

particularly Europe. and impacting proactively Beginning continued the navigate energy you, geopolitical third costs in on demand, Pankaj. quarter, to in are X, that consumer uncertainties Dow Thank higher Slide team

rates and by set the supply demand began enterprise. chain we logistics production responded conditions as actions prioritize higher constraints reduce and align return implementing the across operational quarter, to macroeconomic as to in toward resources well As to a products, of erode quickly costs

Coatings. higher in demand in & in us value advantage performance Packaging to portfolio & strength addition, capitalize Specialty enabled our Plastics, Materials functional In silicones on and polymers Performance

net in X% down billion, Local Coatings quarter all declined Performance X% year-over-year Sequentially, were Infrastructure. $XX.X price was year-over-year with operating & sales segments gains XX% quarter-over-quarter. with sales Intermediates of and declines Third Materials & and regions. price Industrial and across increased X% and

Volume was ago down led volume period declines EMEA more and year offset by or Middle X% Europe, East, Pacific. as versus down growth and the U.S. a in Sequentially, X% India in EMEA. was and volume the Asia than Canada Africa

by year-over-year Continued strength of sales X% the sequentially. and net X% U.S. impacted dollar also

billion. for quarter the $X.X EBIT was Operating

generation and conversion Our of consistent a billion flow on focus and EBITDA or of free cash flow operations cash of quarter the of cash in billion. $X.X flow XXX% $X.X working management from capital supported

repurchases million share and debt $X.X due including in million billion sheet our the dividends. have until quarter, shareholders returned $XXX in And We $XXX substantive balance maturities long-term XXXX. to in continues to no

more lower lower sales Specialty as segment global Turning continued our than with response to lower and pack also X% down pricing. volumes logistics polyethylene reduced resilient marine by XX%, were cargo offset functional in we price in to on & $X.X operating demand were gains operating Sequentially, were constraints driven net rates in decreased polyethylene as and EMEA. prices down X. billion, In segment, Packaging Plastics net the year-over-year polymers by Slide sales performance demand

higher and raw costs for billion in and EBIT material was period year to primarily quarter. lower local by were These compared ago the billion in $XXX $X prices. million, energy results impacted segment the Operating and the $X.X prior

stable offset in X% in from Industrial agricultural, for price polyurethanes declines period strong and the housing due local were decreased in energy offset than Volume by market. currency. Moving X% construction $X.X and demand with inflationary net Sequentially, more consumer the net lower and than to end-markets pharmaceutical, the and were segment, gains by ago price as primarily sales chemicals slowing more down was Industrial in Intermediates sales to durable & businesses. pressures applications in down both Infrastructure volumes down Solutions demand EMEA, year were mobility and billion, were

in Operating the for compared the to $XXX segment $XXX million EBIT was and in prior year year. $XXX ago period million the million

price costs energy and energy operating costs. by demand basis EMEA margins lower on declined and EBIT higher As offset partly and prices. points were increased raw Sequentially, material lower XXX by higher

regions. and as home in care construction. Performance all by declines Coatings the segment, $X.X in building we more end-markets in billion, businesses in was price net Materials up of both demand & down were than resilient sales with reported gains And Volume and year-over-year, and X% mobility offset

net turnaround activity. sales additions primarily to China decreased for driven lower local due and down maintenance as by demand siloxanes in well Sequentially, XX%, price were with as supply planned

expanded the prices XX by $XXX for for siloxanes to gains $XXX lower increased price raw due was period declined EBIT for and by applications. driven ago segment year coatings million both and points Operating material basis Sequentially, million EBIT costs. in compared and $XXX silicones million margins operating to as the energy

Howard I our actions outlook to it Slide on turn to will and review X. now over

Howard Ungerleider

you, Jim. Thank

supply record and Slide to impact driving of a costs new Europe, in In reaching feed tensions. high inflation, of fourth in expect Eurozone energy to stock chain are high quarter, continue constraints the September. and Turning navigating we XX% geopolitical inflation, X, high the

we As spending. a production consumer see result, and industrial reduced

than than up regional September said, lockdowns COVID-XX-related economic activity sector, continue automotive hinder seeing with XX% in year-over-year. That investments. infrastructure continued we’re to spending in mobility expected China, and strength the weaker sales consumer more In with

despite low consecutive In rising underlying for September the resilient inflation, in have supported rates high month. with the U.S. and consumer demand third spending confidence consumer unemployment healthy U.S.

rates Looking forward, the we’re closely of rising interest monitoring impact on demand.

continue and and evolving as business. business Latin food flexible To end transportation taking America, And as continue and actions consumer by region region packaging dynamics, in markets. durables, see by manage for we demand well robust infrastructure to these we

by our implemented plans quarter, nameplate the a natural implemented consumption cold furnace fixed due XX% polymers Throughout lowered than strength ease have continue in functional In now for capacity by Europe to temporarily more capitalize to at August, and constraints we XX% margin In parallel, energy the cost continued U.S. gas costs. third our Dow savings. high reduce sites to our polyethylene while crackers to working higher along program idling Coast. demand logistics to and prioritize on we at Gulf energy also

to than shifting plan our to polyurethane, spending, rate We’re production reducing as costs operating monomer for and rates on have actions billion and siloxane we on across also Europe and with inventory our deliver in purchase cost in levels. and we assets And run year, acrylic savings manage next $X in focused more turnaround optimization, basis. services a reductions the additional potential production

expectations We fourth energy volatile for to Plastics quarter. primarily Slide X, In continue anticipate the packaging to segment, expect & well spending see hemisphere consumer markets demand stable food in Specialty to to our Packaging remain you’ll northern in the lower global as Turning and current applications. for we dynamics weather geopolitical the in see and response consumables as Europe.

in will the headwind While costs for lower seasonal the tailwind, turnaround quarter. versus a million we expect $XXX segment total, prior be sequential

in a for the demand seasonal Industrial and to the particularly energy consumer durables applications, quarter. and Infrastructure & pressures In U.S. positively expected the Europe. demand continue building are segment, a fluid particularly impact to Inflationary increase construction however demand Intermediates in deicing impact in

a also MEG on Asia. a due from activity plan with prior producers increased similar continued basis, After sequential on dynamics a net major quarter oxide We margins in seasonality and typical completing propylene to maintenance expect the supply pressure expect on in we basis.

stable as the In Materials season personal & Performance mobility buying move applications consumers toward holiday segment, patterns. demand for Coatings care remain and

for anticipate supply will offset monomers of However, we on from both a pressure from particularly Europe. segment. the a million in $XXX in, seasonal applications. demand spending for we siloxane also and Lower maintenance planned Asia margin to decline anticipate activity All partially coating acrylic headwind

quarter, in a $XXX for expect the the to fourth million net So compared headwind third EBITDA total, quarter. we

the Equity margins align revised in of the market We have modeling have updates Asia. current conditions in to and year earnings the also appendix provided presentation. weaker been the inputs the with to full

from guidance account also year earnings. to geographic and full rate the for the year to rate and mix to full tax upward expected This equity slightly quarter full year-to-date increase the lower to and to $X.X be expected up. the true billion lowered due is rate We’ve is pressure higher the now typical prior our tax $X.X CapEx billion, year than fourth

With that, I’ll turn it Jim. back to

Jim Fitterling

you, Thank Howard.

Slide Turning X. to

of through the result our levers a backdrop. over a macro we’ve current As last streamlined manage years, with several portfolio created to actions unique the

have global geographies, verticals, and set positions scale chains. We across of diverse attractive the value market and leading

and we versus production more This and in peers. capture X flexibility to in X XX% our to the trends Americas, peers. advantage in to respond evolving gives Europe us better LPG our than demand cost flexibility our quickly capacity is significant of times have demand

optimize us operating our unmatched in a Our position model of conversion. cost advantaged to by low and and best operational our enables strong feedstock margins cost and derivative and a have cash and culture owner commitment resulted discipline and a underpinned financial benchmarking to mindset flexibility

served us the unprecedented spin, creation events despite current since providing These that impacting the solid foundation financial well advantages have market. supports value a long-term

solid and including flow, cash capital a my joint interest our macro the We’ve cycle our early raise and it’s efficiency savings. working the to trailing flow mid-cycle we’ll balance in years above XX cumulative across been venture levels. free execute higher enabling cash creating significant earnings strongest three-year with our investments a spin sheet even us improvements, drive cash that to than flexibility. underlying our and on now programs And tripled is offers levers dividends growth our Importantly, continue company are position of nearly financial more to pre-pandemic environments, since variety

to decarbonize credit to and the combination cash balanced advance also shareholders a grow cycle. manner robust profile cash in economic consistently deploy and flow a as enables returning capital we The our of us and our disciplined strategy, generation while strong through

from approximately expect Moving X. In as levers. well underlying Slide comprised rate deliver across operating $XXX our run we XXXX, of from segments, efficiency as initiative EBITDA incremental $XXX million of an to $XX million to million $XXX $XXX to million, growth million to

high investments this markets. Alkoxylation year to serve two pharma home value care have end coming We and online

in Our on third to XX kiloton start in in United fourth started the quarter. the States XX track project kiloton Spain up and quarter, project is in the up our

in up track start in Louisiana the Our XXX kiloton fourth pilot FCDh on quarter. also is to plant

downstream billion our And XX% by have to grow reducing silicones by on by XXXX carbon underlying our projects. greater than baseline. track XXXX we Longer-term, EBITDA debottlenecking versus XX we completed remain year-to-date, while emissions $X

demand increasing in Our middle suite also and this that metric rate $X more and decade. capitalize deliver payback billion of of higher applications for tons return, X run additional These approximately EBITDA, our faster enable investments lower investments carbon solutions. value while to target the million on by us emissions circular reduce sustainable risk, we will by higher

Let me couple a examples. of highlight

ENGAGE launched Bridgestone And and name solar the in the solar power that increase the be generation the tires self-sealing gigawatts we of can being upcoming is technology solution silicone-based of which XX SiLASTIC, Elastomers world’s easily recently tire first Our lifetime panels enable under B-SEALS. recycled, world. commercialized over around

also and derivatives will cracker our to end We reach world’s global carbonizing decision year our polyethylene while XX%, build to project carbon global of Alberta the ethylene by complex, remain PathXZero XX% which capacity. investment our on ethylene first preliminary zero grow in supply for by the track emissions,

additional XXXX. $X by an underlying billion generate will project EBITDA of This

spin. on remain since to capital that has to the deliver our we As balanced approach us discipline we served and allocation committed strategy, well growth

operations. priority is first to and reliable Our safe maintain

shareholder We continue of inside XX% and income this range XX% capital flexibility cash across to to long-term financial of an maximize to at operating average deploy returning greater targeting our to With economic return the to shareholders. spin, drive with we our target than we’ve long-term cycle. and D&A the or net growth value on Since X debt-to-EBITDA to we’re advance have return creation, our of target exceeded invested X.X times, investments CapEx XX%. adjusted below

a despite will longer-term significant Turning grow demand aspect our that products, see strategy. support near-term Dow sustainable these and of challenges, increasing higher innovating a remains quality growth to We attractive pricing which opportunity Slide macroeconomic with decarbonize for solutions for key long-term X, earnings. represent circular and

for sustainability more a advancing plastic circular our by recently to circular to products annually the plastics plastic demands We citing million expands recent Goods customers advanced platform business targets letter have the and our XXXX. and we commitment on announced accelerate And circular commercialize to solutions opportunity goal continued published Consumer evidenced X our material. this and circular in capitalize demand increasing tons to focus meet for new our sustainable Forum, of a and metric on This by create recycled actions renewable as new a economy.

recycling enable plastic our this robust as to or million goal, to to reused achieve help exceed management strategic more tons and across bring chain XX and on of recycled, collected, To we partner well hard metric used, a we pipeline into the our than to value target waste collaborations economy we’re way be and waste recycle the to infrastructure to of communities X gaps. scale enable will recycling address waste original circular to

globally. our with to-date Mura scale most significant feed to largest commitment of recycling recent and includes positions be stock This Technology, to which recycled the advanced for polyethylene Dow consumer plastic

renewable our comprise zero a will than demand from circular circular this capacity. sales additional and Alberta and polyethylene renewable in consider together greater for circular, emissions to along solutions capacity of our These advantage our global grow. as are XX% capacity When the collaborations carbon unique Project, with combined target XXXX, continues you

on I’ll close Slide XX.

priorities Our unchanged. strategic remain

market agility to while continue positioned the to demand conditions we actions market long-term on as with our strategy, success. as focused as will to on and priorities well our our time, the position by current evidenced remain we our expanding advantages ensuring navigate company delivering improve. At long-term balance operate the executing We to competitive we recent for remain dynamics same production financial capture growth

to Q&A. With that, to up back Pankaj the it I’ll turn open

Pankaj Gupta

you, Thank Jim.

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

Operator

Citi. from ahead. go question [Operator the you. first Juvekar will take P.J. Please Thank from We Instructions]

P.J. Juvekar

morning, good Howard. and Jim Yes,

the how With before? then per deploy on there in your secondly, credit And accelerate any is incrementally building that in? your - Thank CCS weren’t and businesses the impact the that CapEx would ton, there Europe? Europe, projects you into the then that plants does at in going not Europe downstream given if automotive IRA $XX now producing to mind are that U.S. sort And and you Europe you. is could construction would chemicals, you the CCS existing in come accelerate situation much money in of

Jim Fitterling

really Good Two morning, P.J. questions. good

and in when of nuclear. think which IRA, both the advanced we the CCS of have has project in have we good is I well now look hydrogen CCS sustainability challenge for agenda where The lot it our a at as do elements you the there. That’s an availability the right asset of into carbon because put a first, existing why existing get pipeline existing Alberta we to off in the category. capacity and project infrastructure Terneuzen as

got here say think help possible. probably Coast, more And And has should in to I say $XXX in And Gulf place higher. a going that CCS. we’ll Coast. in get available, are $XX ton, some a place becomes hydrogen really going should accelerate place. at look but towards deployment make ton we Terneuzen that in the or get a accelerating those I in numbers that U.S. a and help so in U.S. us And plan would infrastructure long-term, yet, it the Gulf to is not Terneuzen as This will

Europe future has in were electricity footprint half electricity-related, Europe, has third On the as the advantaged quarter megawatt and you European challenges as come now About because of – hour, of cost off off. quarter, big we CapEx U.S. the a saw biggest in go of chemicals gas little primarily and was come two high natural our had the in bit they’ve electricity. €XXX third

demand. Europe did advantaged in load other and even down assets or to of and with positions obviously quarter break we bring the So rates that kind was run in the

China. Middle into I Europe the some right from now product and think more flow you’re East the short-term, in from seeing

working that policy term governments longer changes the are to energy with going through think we’re help. I

help reasons the One put that’ll Germany we project from of of units Germany one five the in announced really Russian diversify solely in just STADA the gas. away be regas floating to

we’ve XXXX. in reductions got and the of winter will plan dollars I billion long-term next the and that’s the cost think game of in navigate to for short-term, navigate front year, European but next worth through announce we question, the why us a to year, good be

Operator

take go question Hassan We now Advisors. Alembic next will Ahmed Global Please ahead. from the from

Hassan Ahmed

Howard. Good morning, and Jim

to Just trying into billion. baking those going of the of doubting that you’re an is that the to table, understand have guiding hikes there’s are guidance you’re you there seems if EBITDA you out hikes some just price on that? so through, I’m guidance. sort If it that color guys seems sort just consultants sort some Because around me QX provide of price reconcile $X.XX of what to any given, some could trying roughly it case, of pricing polyethylene to the

Jim Fitterling

Hassan. Good the quarter get beginning averaging started through pricing quarter. quarter, polyethylene start Thank outlook you, It quarter that, we more fourth in is in lower decline. pricing of that to polyethylene, in third the we quarter. and carries the fourth what’s saw pricing Most it the Obviously, dollar you through question. happens stable so the through of stabilize the but the

Inventories We high Gulf and the came volumes were the down helping and from they down in have had on we’ve quarter. good quarter, the Marine logistics. Cargo could that’s done We more. third third Packed so the that stepped Coast, in some out seen levels better

to the on logistics to And work try constraints. we’re so continuing

a turnaround costs what’s And in polyethylene. for averaging, quarter have fourth of there dollar so of the we then most little tailwind more because into is pricing, stabilized bit and lower

higher. bit the – are thing Oil to to continue to starting is more and be obviously I other a chain. costs started see be would production low is We’ve natural mention of inventories in continues little ethylene oil The look input favorable. that to gas improvement

to if gas trends. that’s continue these skewed, estimate I’d upside the oil skew and positive on so And the say

Operator

now JPMorgan. from the next Zekauskas Jeff will question take from We

Jeff Zekauskas

volumes kind downturn of talk what business? siloxane Two relatively your fourth level secondly, questions. And forward. we so be general and you of fair much. and in sequentially prices. amount about that should in some in of we there Are entering is quarter Materials, earnings prices from pressure Thanks seems to MDI expectations? a Performance going Can And a cyclical expect the very

Jim Fitterling

where housing Jeff. quite also question. are durables, of biggest the pretty I Electric balances the decade where & consumer in that footprint would vehicles to MDI good we’ve Intermediates in Infrastructure, margins probably on middle then it’s there the in the weakness. MDI, Yes. seen on with closely demand star really and the Good of what part On just seen And energy we’ve there. see appliances the in what guide, through situation growth the have look up and the But morning, held space. Thank a bit of weaknesses related the is you really and for market mobility supply construction well. Industrial remember in we that numbers Europe, course, that. in compresses you the that see you say, so shining

cost less pricing issue it’s think I less is that it than and issue. the input

that’s in China So brought Europe. levels we construction housing seeing low slow. also rates to and why down

really see China And and has Congress of that back that the in would long-term that’s and average of out continue think whether prices we be yes, we XXXX siloxanes come In really will restrictions brought come into this in I expect party so that the and XXXX. marketplace, to the we’re mid-cycle change siloxanes the kind for And what on prices what’s down. we COVID capacity signal happens after we’ll see in might better. a

I think that’s more, of it’s the timing that on. so on pressure the supply And coming put

Operator

We Begleiter from Bank. next from will Deutsche now take David question the

David Begleiter

just in of $XXX on EBIT fully the savings QX cost in billion and seasonality of and Thank the today guidance million Good well? any Howard, modeling is morning, from benefit Jim you. headwinds you the you. the $X sequential highlight Does Thank as capture guidance. Howard.

Howard Ungerleider

Yes, good morning, David.

an So does. at short level, is yes, your question the look enterprise answer to it

each QX So that decline and or Jim half then QX mentioned quarter. seasonality The the the And we’re the would is of pieces higher lower enterprise – offset of half of more that headwinds currency other. seasonality, third really million level that other the by are typical getting the call, $XXX is margin offsetting decline, favorable the turnarounds that through net or the EBITDA averaging that turnarounds two we seeing effect kind some that to you’ve I saw of got sequentially. are

some slide the of that, Embedded in in listed those deck. the are that that’s interventions we in earnings

third have the already since are we of So, intervening been beginning the and quarter.

going So, and obviously through quarter see then continue year. that to bigger in fourth next we’re way a the

Operator

Andrews from take now the Morgan will Vincent We next question Stanley. from

Vincent Andrews

good you, everyone. and morning Thank

Just is, to we of maybe a of can wondering macro sort between have to talk is there. think pull of demand you understand, some if happened at seasonality out some what of XQ been just destocking and the just December. demand what have previously obviously forward underlying terms more in much how in seen little that’s more given made And getting November assumptions bit on about sequentially the going might from I’m versus might of you delta and part XQ all what uncertainty weak already trying what a have traditionally we’ve could thought you’ve

of sort weak versus sort bridge, you any the would have helpful. demand just helping with us be volume So of underlying destocking comments

Jim Fitterling

primarily question, say probably are have the by but of the good restricted Vince. more been things auto a China back. a those deliveries. EV really, pulled on still can internal growth saw all I sector inventories chains on U.S. coming strong. vehicles, shows in various That parts EVs, in the so growth would their supply and EV lot of companies higher automotive retail up and combustion engine That’s Obviously in somewhat really together make different the

to So, to good. that’s going continue be I think

much of stronger because and significant operating lower pressures even XX% EMEA. a was consumer adjustment Packaging, they’re saw good. next EMEA say, would in destocking Our are saw in year being EMEA don’t XX this market. we off of the for of automotive projection a rates than I million million XX here, lot think significant. packaging demand slowdown the in is slowdown. year in vehicles we Consumer I the think up light outlook that’s to from I pressures

call. pretty XX% down durable starts is housing and to tough a to is housing. consumer China Their the goods The connected one tightly XX%. year-over-year. housing electronics They’re are down

level. So working of I’d there’s but of under off that finishes construction. down, pretty upside U.S. has The into that’s low next for going are we’re houses say still year. a opportunity slowed

little is And consensus for XXXX is on slower a housing demand so I here. think bit the general

other bright infrastructure for infrastructure, and tied The infrastructure to spot good still is businesses those so that see very we are spending.

Operator

will the from now take We Fargo. question from next Wells Sison Michael

Unidentified Analyst

for this Mike. Richard Hi, is on

$X additional part billion earnings Just reductions wanted billion that in in the of $X.X through – cycle? on the also potentially this some is in that XX% color – in the range maybe targeting also $X temporary in increase of billion II&I. the maybe your cost capacity, And to you’re savings for to polyethylene and embedded XXXX. that any include does reductions Is sort the

Jim Fitterling

a that’s Richard. question, Yes, good

we for So, up flexing you. more is, do different product it is break One than buckets application come with when so down our mix, what improve the in a with target assets optimizing mix and to tax geographies into a I and cost would few margins. our can $billion saves. across

about that, Europe The cost what higher up we’ll plants, but they you to now we as high we in reduce be rates have as idlings in obviously plant especially second shutdowns. lined remain were talked for energy do terms shutdowns, costs anything Right while don’t would of continue are. and for

to turnaround And moving other year next excellence. the And big then going to spending. drive part we’re on we’re working reduce things operational is, always

and input commodities costs come down and and to come on see costs. down some logistics starting We’re freight relief

costs delivers and and labor. a of So, finishing and margins also we’ve productivity we’ve materials implementing us. down effort to purchased to get been logistics digital And line purchased then got and big acceleration including freight on projects contract those on bottom and services

So working those Investor target published corridor is about we’re in end back here, looked our buckets XXXX earnings corridor if we big lower Day, that at that the of that billion. the are five you really $X.X on. The

starts lot So path put are zero project, project A to underlying on growth, the project corridor that two comes lower in return, really these that through the will Alberta smaller, to we the $Xbillion risk out corridor driven XXXX, and on as phases our come XXXX That in on is years there. $X projects. between efforts but which growth earnings the EBITDA earnings bring in that protect a higher we billion XXXX. of other here of

Operator

the from We next Kevin from question Research take will now Partners. McCarthy Vertical

Unidentified Analyst

is Cory in this morning, for Kevin. good Hi,

outlook. Turning to a on question back the

market had to mentioned, on the impact you XQ chain. backdrop? plants? to through the as talk your baking your view costs? today’s are program, And ethylene what expect quantify idling What gas in in light And then cold what cost benefits can ethane furnace Thank relates outlook you you is natural or you. it it You have for at fixed absorption your to reduced of

Jim Fitterling

Right. mentioned good on ethane. That’s a question I natural gas earlier.

really down. of barrels continues rejection production gas million spreads frac a So a ethane has the to in be brought high, half that than more day

to day. I back And seen come first, a is and And the of off year quarter. a highs so of right outlook going way. think so available. now. projection And that million be about second we’ve we saw frac that spreads productions Btu, in down Bcf our it’s $X.XX the Natural will XXX Bcf a plenty for next to is There ethane of continue gas to day XXX be some

So, to availability back pricing up to hot what is, gas terms penalize going Essentially, on And higher to demand, winter those on continued of these assets taking And that cold to with keep lower the quarter, the have slower on and then and $X.XX is gallon going no is. I to for practice our don’t really costs, them that. you in happens historically cold That’s $X.XX been I number them the a in $X.XX to year third to to do not through was, but $X.XX think depending we’re it with good and winter, gas ethane. next need go, estimate with warming would’ve there’s standby marketplace. ready this the what and demand. see in I feeling on we a expect think where furnace idling,

Operator

take We BOA. Byrne will from the now Steve from next question

Unidentified Analyst

with Can was polymers margins base think deflating? things do when It’s hold a up look sounds And Thanks. downside about up bit? think does down I we like that commodities we on XQ, quarter-over-quarter for you well? in talk in at should improve trending functional pretty on or Matthew year-over-year, business sequentially. performance Did price but the the still Steve. that maybe catch

Jim Fitterling

Good higher a so demand and are holding residential commercial the areas holding a use prices a you. quarter-to-quarter, and in Obviously takes and in declined that that be that energy, up are in question. is, which are products construction, resilient fair automotive the continues continues lot the wire and relatively Demand holding amount energy to then that the buildings well, and world strong little takes We through mixed pretty really pretty saw material. up around in, cycle into well Yes. material up bit commercial margin costs. like Thank raw energy But Prices from cable and business both in, the flat hold is pretty to of space. well. of up infrastructure good. typically because from

price a little they margins So trends flow I the think can – are volumes ebb strong. bit what but the can very is, and the you’ll and see

Operator

question from next the take Credit Roberts Suisse. John from will We

Matt Skowronski

on morning, for Jim Matt Skowronski Howard. and This is Good John.

are or weakens you America. further further if Some in think reductions to through taken either happen that possible Would lower consultants the production of it’s reduction than reported do early storage here end need you XX% today, North that you’ve operating XXXX? the rates then this have levels and of consider demand sitting taking will the in year polyethylene already high very

Jim Fitterling

question. the for Thanks

into holding get are to around businesses American out. is market, And turn that the isn’t think reduce so magically reason primarily American we to a that A with growth the further. the well. export ports for up product North for that say don’t the also see any product operating the market. demand American storage market, packaged I rates North is in I’d it ships levels arrive Latin the lot I to what to see of going at with product relatively waiting

well. that us some So as gives opportunity

ship times arrival better loading. out and be going worked as better it’s think I we get to

you’re I to see think pretty going numbers quickly. those deplete

Howard Ungerleider

actually ACC add I says levels latest also four X% about or would data by month-on-month. that just days inventory decreased the

mean, demand hanging United there. in Canada see and fundamental think I I the So you in still States

Operator

now Mizuho. will Christopher take from the We from Parkinson next question

Christopher Parkinson

just you a I markets into second the bit, quarter. shift areas the those can and versus fourth you biggest and in saw regions, kind was wondering out Hi, quarter end if the original are good expectations your parse demand trending what how of morning. little in

XXXX? Thank you’re of as there is optimistic we Now, year where end head into more area any you. in more or the the concerned

Jim Fitterling

Chris. question, Good Yes.

pharma that pretty solutions of industrial the compound for there, So rates average think but make XG infrastructure, incipients than strong; growth about and they’re supply industrial to be we’re and can strong. are good. data areas centers continues some looking In X% chain constraints has demand telecom, industry. and strength intermediates That be There electronics pretty through we at been greater XXXX.

and would I in industrial have solutions think so say trends going – trends. growth that’s general that’s silicones, general, to silicones And downstream as in good continue good has growth I

Automotives we’re this year; and year-over-year China. flat supply robust really those in some year deliveries sales easing EV growth constraints this are even especially seeing

XX% I at If is China China, in up look automotive and XX% year-over-year; year-over-year bright spot. a you think up that’s EVs are

for there, stimulus expect noise, good engine in pull times materials solutions. to talked EVs more pull for We about. just and an tends things some internal It a to continue amount that Infrastructure’s to harshness. United because three we we lot will construction governments controlling EVs polymers, to and similar many silicone in There’s two materials in also would going pull and and States us the expect the infrastructure materials to vibration world polyurethanes functional that that continue. strong, in and out packages in of combustion and like have our continue I that will some that coatings around to the into industrial be which some strong. space in That’s

gas. pipelines, gas we’ll I in continue it like think pipelines, would In pull see and markets, that tends to to oil plastics things I natural say grow. would be Steady water

very starting a quarter China pools production a in have care has and come see been after in oil and solutions to soft our gas packaging business. uptick We’re food. second industrial means back resilient. an Personal Cosmetics for that from

but in not demand, more higher really And so cost Europe. really the more, slowing are economic issues energy packaging in the activity and

then week I bedding, down home into large devices. before slowed down food a items, and mean, quarter and furniture mentioned slowed as TVs, beverage, places appliances, and beverage housing And well, ticket then PCs big I where are electronic appliances and electronics to bedding related like and so consumer and fourth activities third large And food not furniture quarter. and and

in the and Residential residential has mixed in U.S., relatively cities. commercial in big construction good; softening especially also here China buildings been commercial Europe, but

better through biggest Canada, I think And Coast. – ability the will our more had India, the Russia/Ukraine U.S., and We’ll manage volume impact year-over-year We having had still have bright have then year, in our the X% China. were out to next situation and there. with we we America quarter China of XX% Europe and Latin get best spots. quarter-over-quarter could the to up been Gulf in with be plastics

there’s think I what that reported, a not our So but been they’ve is has been of view about or reported concern demand lot good.

Operator

will now UBS. from Spector question take We from Josh next the

Josh Spector

good Hi, morning. Yes.

are was I costs the So if a about way you energy. in from is there absorbing higher guys to Europe think curious

down or or away move from demand means? not shift XQ flexing play prices how there absorb think to pricing were your of Is that would would Thanks. expectations pricing to production So we the think XQ. you’ve would you So quantify XQ kind environment about level energy similar? feel other to way you like out? remains versus any and to if able be had or How and of through much

Jim Fitterling

third decline quarter Volume and high in or year what our has then versus Simple quarter EMEAI, materials answer high the energy in that two-thirds was that’s in of to down whether previous impact in the on in EMEAI. inflation consumer it done was of XX% and the quarter EMEAI. demand was EBITDA costs last total inflation, elevated raw

Operator

take Arun now from next will question the We Viswanathan from RBC Capital Markets.

Arun Viswanathan

taking Good question. my thanks Great, morning. for

for So inventories and my case just outlook And and Are weakness Maybe that bit weakness concerned was the you now. while of America? for QX in differentiate potential, on little anything your China at likely factors or the emerge I supply you of seeing a a of two-thirds Europe all bit in a around North Europe responsible there. I you’re could North America little North behind America that weakness mean, and been the can would guess there? the little Europe? its touch a is weakness, and and more are demand but, Is what question America North I you’re resilient? keep else. not that but or on seeing China know some Thanks.

Jim Fitterling

advantaged Well, that’s year. especially position The keep have Americas discretionary items, think the good. the that slowed mind. in already mentioned has has thing we important and consumer consumer I most very non-durables, cost is ticket the I big I consumer to been demand in have like strong say so would been this

anything, if for year. So chance there’s next a upside

I true automotive, really automotives same constrained. is think on that been supply

of see start some to get that move up. We’ll so And through that. we

through Dow’s prices prices would into down in of in while and business, a to see those here, a shops talking consumer fabrication get starting see come I’m and product takes to to store. but price starting a the themselves commodities. just buy We’re It work the bulk not the about we’re that

prices have through actually up show year and help to improve. the consumer those in come see next the I year, start So down and those that things think may markets you’ll

situation energy totally can than And is trying governments how help we States. we’re now get will the policy to to United through that work a right out. better different energy the them help European

be globally that’ll economy biggest improvement that’ll the think I help move. the

Operator

go now Please take Yefremov ahead. will question Markets. the KeyBanc Aleksey next We Capital from from

Unidentified Analyst

Hi, this is Paul on for Aleksey.

you the any and U.S. Thanks. the your not both industry? are idling cost potential Europe, assets As assets managing in front do see in you the the for Europe probably guys we but just maybe and of approach winter, in how

Jim Fitterling

Yes, in some half Europe in idling aluminum may energy lot. the pressure some intensive producers cost energy of industries positions jeopardize of Europe, probability a energy scale matters. complete not footprint of About I smaller back starting in complete good assets think advantage on we long-term, But them have and lot of is closure already matters industries, in having like our seen Maybe intensive up. and closure, steel advantaged. Europe especially having

advantage. demand so we’ve loaded that those and more to rates advantage cost locations other that to dialed onto And of take then cost we’ve layer, are back that

We’ll continue do that. to

look a way to longer the lot on put Russia/Ukraine And policy I government this energy a pressure a need they’ve situation, is think industry in shutdowns stay the more pressure’s other it’ll anything. The of be at to longer through the answer to there. situation. going help more see the we They lasts; rationalizing. got situation whether take than we the already

Operator

We take from the from will next Alexander question Laurence Jefferies.

Laurence Alexander

morning. Good

given in required for credit you you in retrench? retrenching, economy forward that or you’re look how flexibility circular tended the we’re pull you the could the what sort in describe at Dow’s other initiatives, look be at you do as cycle of investments expanding people value about opportunistic can chain the as CapEx over years but couple given So thinking next of the, more cycles, to prior

Jim Fitterling

obviously don’t to financial long-term going on trying those consistently those We trends keep on flexibility in going ingredients, are year made to the global more renewable and the of products us see consumer moving products bio-based we’re the and the what’s to think I Laurence projects economy. question, in we’re more investing wanting any Consumer come spite advanced more, mechanical macro Good products of have recycle in. throughout has because and both back demand of what to that’s more recycled, and with change.

Mura it together capital Some capital, with is partners, with I of it’s some like our Technologies. joint of mentioned

We metric million because projects XX of X good and tons circular owners in sight to line had be have those about for those we today. there to it the million a million to demand ton of metric solutions plastics brand and are have able X target XXXX, is telling the who by mainly we increased and X We products. deliver just renewable us of

we so those And will moving keep forward. projects

contracts dollars, engineering go. items We next are pull Canadian long of And keep first that start we with just about on spend Most time and the Gulf Obviously and with we for that will PathXZero And see Project I products right project, moving XXXX. in we’ll U.S. advantage this did like we going the it. be trigger have now PathXZero think right when the and ready our we’re projects projects forward. wave, and the the steel in up and disciplined in see that be monies will lead we decarbonization we those the not until fabricated to range. mover we’ll bulk to started

Operator

next from take Field now Jaideep Research. On question will the We Pandya from

Jaideep Pandya

differential just value do supplies you And The tell the has lot you of we China and siloxane question. rates around what And a normalize is the yourselves, XX China? expect and to extremely U.S. my first chain, if the chain. see XX oxide well could starting of cost next as to come out cost? chain us current China. China that siloxane for done the the just question versus ethylene what That’s as a product given outside months, peers include utilization coming lended freight in of first basis, for are your cost really well. but on Europe is This on not energy the MEG especially Yunnan between you is again, the Xinjiang significant And in in second

Do be XXXX? you a and you or a to you XXXX good? is So what expect going Thanks in do lot. that think continue the demand do EO chain normalization expect to

Jim Fitterling

in available The all in that siloxane are the already. China there available world become the prices around regions

and higher improve. at I that So Silicone to and down, I in back just down up. believe going pick see, But it you’ll do expect And in market construction. I applications see prices the tighten XXXX. steadily is already building which a spot. think will, related because again to things demand think I applications inflation coming levels that as we to it to some higher are these start down, will volume then would mainly back I up metals are it’s demands think bit volume be

some the pressure would why we half second America. North of that’s I UK And slower than that rates was our On facility. question? EO more put took Let’s say demand on in Europe, the

Jaideep Pandya

MEG? and EO

Jim Fitterling

EO and MEG. EO. MEG is spot in the weak

applications. it at look high solutions you keep value investing EO our strategy, If is industrial in to

alkoxylate investing amount value you try away continuing oil do investments increase means see, to those from the well. And And are there to investments purified our those very, gas very to continue of to the that higher so we’re to all MEG. for in for that and business franchise applications going and goes EO

were quarter inventories. actually prices in spot of third at improved low the MEG falling since a and bit because little had a

be dependent on a think the higher part I going big activity they to lockdowns. is zero China after stopped COVID

Pankaj Gupta

Yes. everyone joining our call. for Thanks

have that’s the think all We interest for appreciate we time today. I your in Dow.

on copy For again. our our Dow’s will within concludes a Thanks posted be reference XX-hours. once transcript your of website This approximately call.

Operator

you. disconnect. call. will Thank That gentlemen, for now may conclude today’s you conference Ladies Thank and you participation. your

Dow (DOW) 20 Oct 222022 Q3 Earnings call transcript