Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Dow Second Quarter 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn the call over to Dow, Investor Relations, Vice President, Pankaj Gupta. Mr. begin. may you Gupta,

Pankaj Gupta

President. you Chief provided our posted through Pankaj President Fitterling, Financial Relations website. Thank the Chief today accompanying are and Officer; call on today. and slides I'm Jim Vice Investor Dow are this Chair Gupta, joining for morning. me webcast on and joining Dow's The our And Executive Good Officer. webcast Ungerleider, and Howard

in information related the contain comments statements are cautionary forward-looking where slides. statement significant the refer Unless filings contained risks applicable, news Please our note, our items. financials uncertainties. Please earnings subject and specified, and about release public to all and excludes otherwise to for principal further

GAAP financial and disclosures also the news contained website. associated refer earnings measure in non-GAAP are will our and posted reconciliation on to are comparable slides of and release A other We directly measures. the most

results actions Transform savings will Howard while call. reviewing challenging modeling On our cost agenda for outlook term update our then Slide our guidance quarter continuing operating will the and short and and close, X, dynamics. provide long position. well begin by advance see then financial how strategies, we our on are Jim will to as Grow, Decarbonize the share our and an To Jim Waste segment you second as outline will performance. and term navigating

Following questions. that, we will your take

Jim. to Now over let me the turn call

Jim Fitterling

delivered in Slide gains capitalize modestly seasonal in higher packaging improvement X, our sales our sequential This quarter. slow volume. financial year-over-year on Beginning and sequential continued executing Despite construction. and Thank with and leveraged second Dow playbook. global in challenging We improvement by earnings, on in building a you, the resulted environment diverse to portfolio on operational Team earnings demand and navigate in Pankaj. we to a growth macroeconomic lower

the quarter to targeted delivering date. to million and and in continue cost $X $XXX billion implement $XXX we of addition, actions savings savings year In our of proactive

and sales India, lower XX% led to than year XX% macroeconomic sequentially, decline decreased Sales in Pacific to material billion, a demand sequentially, activity. local offset versus due or by prices industrial up Latin Europe, more were Middle EMEA. lower Volume gains X% in lower coatings. East, global X% by lower the and costs. reflecting year-over-year, raw and Africa, driven as and year-over-year by $XX.X weak in was slower activity, sequentially Volume the prices. were infrastructure volume down X% X% performance and Net well XX% and down as as ago as period, due macroeconomic price gains demand well materials decreased as intermediates Local Asia America, and on were

flow million, generated month of flow $X.X operations capital. trailing working prior We quarter, the by was more prices. a basis, by primarily Operating sequentially, On improved EBIT from than $XXX $XXX local from million billion, is ago specialty conversion $X.X $XXX increased cash EBIT versus up XX cash for lower down million the our driven more XX%. than plastics. year in driven period, the by driven gains in billion and quarter Operating packaging

billion. quarter, date, by Our strategic investment and supported allocation supported dividends $X.X share we've priorities, through strong advance to financial grade us continue to shareholders our disciplined Year the remains and ratings. sheet our healthy, In position And balanced to our long returned by credit strategy. gives balance flexibility nearly the repurchases. strong million term to returned capital $XXX we

centric, ambition sustainable world. in report most in Dow's once Report published inclusive limited the innovative company the to progress material June. by and external The our XXXX again INtersections our customer assurance continued received showcases our audit firm also We and on science be

turn EBIT was compared energy the In Now the global were on segment, to operating lower billion performance year by ago segment $X.X Packaging Local declines Specialty operating $XXX driven period. turning X. price million Slide our impacted Plastics to improved by for $XXX in and all declines, feedstock Sequentially which across and EMEA, lower costs, operating feedstock polyethylene regions. olefins and driven prices by were in aromatics. energy million, by driven EBIT Volume primarily and costs. lower demand in

durables, both activity. businesses. due to a applications. driven and planned of Infrastructure Volume million and lower Industrial down by increased primarily operating Sequentially, demand ago EBIT segment, prices prices million turnaround industrial compared local building in and were and lower Moving the to Results XXX the in consumer of by demand and maintenance operating construction, $XXX to Intermediates million, declines were driven year for $XX was was local EBIT lower loss earnings period.

increased to And on seasonally lower higher period. primarily global $XX the demand compared Performance EBIT was driven was million price ago primarily the declines in and Volume $XXX for $XX operating by year Materials siloxanes driven volumes. operating silicones acrylic in Sequentially, down EBIT and Local by coatings decreases million, million monomers. applications. segment, and were Coatings for

Howard it Next, I'll Slide turn to X. to our outlook actions and review on over

Howard Ungerleider

Thank you, good everyone. Jim, morning, and

in expect quarter. macroeconomic the to environment continue challenging We a third

activity is moderate, demand the in slower and slowdown world. policy have effects expected a China beginning around lagging to consumer than inflation a the demand recovery resulted on While monetary of industrial of in higher economic

manufacturing activity in In June contraction remains PMI XX.X. weak with industrial the at US,

inflation starting early ease, confidence now has since is June resilient With levels. in highest demand to unemployment supported low the remained consumer consumer at levels by XXXX. However,

lowest materialize. In to inflation low. May by pace the growth, zero are level end PMI Europe, month energy we despite neutral declining are has since at expected June exports experiencing of the a to In while manufacturing contracting hover to COVID XXXX. were around anticipated following yet conditions beginning continues the XX, China's pandemic. rebound the the prices to slowdown, level restrictions and the the demand persist region XX since economic of the continues fastest with lower of global contract China, fully to activity recessionary in reaching and Industrial continue, and PMI impacted

XX.X outpaced in retreated higher demand contractionary consecutive in following as in expanded and the levels input for of rest months. ASEAN three the PMI activity manufacturing to costs territory. expansionary in PMI Around improvements back remained world, June India's manufacturing Japan, PMI to Manufacturing however,

Given our to disciplined operations managing these business the continue realities. our to dynamics, we and adapt take a regional market approach will evolving to

we sequentially. headwind third we will increased We're price Slide to for be to outlook the drive a on these market driven higher lower X. primarily in Turning US quarter in, the prices Packaging second ethane quarter. are In the experiencing feedstock costs, June. Plastics the All demand the levels, by X% also expected Gulf anticipate on polyethylene dynamics tailwind, increased Coast. our and at million industry quarter Despite Specialty in $XX this segment, prices which lower exited average

expected which Additionally, turnaround see project based licensing occur. order, sales to in a increased prior headwind, our and Charles, we Louisiana be St. cracker maintenance $XXX the planned is $XXX lack another from million headwind will million activity from of at the not

we to million to However, continue tailwind savings implement as cost $XX expect generate do quarter actions. a our in the we

turnaround and the million as savings second Intermediates while quarter. continued a the demand remains segment, end $XX tailwind Infrastructure $XX Industrial following markets. completion our demand actions, durable anticipate from markets energy in pressuring a maintenance as cost from resilient, We end tailwind well the a In planned consumer million of we expect

a unplanned please preliminary estimate I headwind reinforce want Additionally, Louisiana event $XXX only to million our at is to month, estimate point. operations following an this that reflects at earnings. preliminary this this our

get we update estimate, As needed. refined a will we if more

a together In price and contributing for normal and construction Coatings continued while Materials markets, building siloxanes, segment, the expect demand end Performance headwind. seasonal $XX we in pressure remains below million

segment. cost deliver savings on the a to from Our are million tailwind track $XX

completion second quarter tailwind Carrollton the third. are our siloxanes contribute anticipated Zhangjiagang the and $XX million to at of Additionally, facilities our turnarounds a in

result as self-help of impact the be is million the estimated the not in, million Plaquemine are expected prior the $XX before quarter and compression. the sales, earnings quarter expense of licensing a we to earnings expect sequentially recur. driven million flat our margin will offset $XXX in $XXX to outage Operationally, turnaround with down our the project be third All expected higher to which as fully a approximately

the commitment our navigate discipline and financial Dow while term to to for operational near market Turning Slide invest enables future. to challenges, continuing to X, the

global to achieved year. savings year program. We of continue second savings reduction our exited half. XX% the will announced half the previously and deliver on of of first the We workforce are the of of XXXX. XX% quarter in X,XXX impacted the track are end we the roles billion expect cost our at and more $X second includes the to exit by This to deliver of XX% the the end the remaining than in in expected XX%

logistics, reduction remains and in $XXX maintenance costs. improvements we're Our to execute continuing our in track million spending materials, turnaround and utility on raw planned

lower that return Dow cost, rationalize also support fundamentals. line industrial coatings, These to execute to in continuing market actions Team businesses, purposely select solutions polyurethanes, then. higher strong in the We're our financial since position built with assets actions has and

debt profile count, pension a interest billion our allowed reduce significantly share have venture approximately strategic contributions. to to our optionality our priorities since continue Our to cash driven spin, and commitments economic and our cash advance significant cash actions no credit All across and by flexibility us liabilities, cycle. in, lower and the gives by lower $X joint

expense expect interest XXXX, we For our net annual contributions.

than due our improvements, we For intervention debt until to XXXX have And of resolution annual XX% working be and see and pending our structural expect litigation, actions. expense Unique-to-Dow including more we our more levers cash $X Nova billion substantive additional going of than interest down net XXXX, versus we XXXX. maturities no forward, capital

for turn strategy. it to an long our I'll Jim back update Next, term on

Jim Fitterling

Howard. you, Thank

confident priorities. as balanced disciplined Slide future a with our focus transition on in capital sustainable remain and X. to and drive growth our long to maintaining profitability more the Moving a allocation We term we

Our annually, decarbonizing reducing while XX% levels. $X also by expected versus billion gas increase growth by to by emissions is underlying greenhouse XXXX strategy XXXX earnings

lower construction our the site low steam. the to gas modular the and conventional small Commission is include, operational with provide while X-energy, unit plan up is quarter safe, nuclear Seadrift, expected this We project updates power application technology, reliable, ground unit to XXXX, capital our FCDH emissions and breakthrough to in for with permit the and Texas. preparing and our are carbon relative expands US Regulatory to rates. at units. usage PDH ramping cost intensity, Notable is energy reducing Leveraging fully Nuclear greenhouse to in In we capacity energy submit and now facility a collaboration break

scale solutions. and grow per In expect strategy commercializing million our and products. recycled of based X Transform parallel, to capital a tons metric to circular utilizing approach of renewable and supply Waste we bio By XXXX, are by production we year the efficient our quickly advance

long Technology facilities Together, we term growth mechanical and fourth respective and their start Mura Our recycling circular brand these remain collaborations demand unlock with quarter. help both investments solutions. and advanced will owner customer up the track as for to increasing opportunities Valoregen and more us meet on in sustainable

XX% term Slide capacity, capacity long closer growth polyethylene project at derivatives a Alberta supply through look zero of will emissions our on our value expanding project and world's at polyethylene the Taking ethylene XX% to create XXXX, the Saskatchewan, our X. By sustainability. will global flagship delivering This first path site. tripling and net Fort global example while zero our COX we're ethylene another decarbonize complex, by how of Alberta project

secure half board We by final year a regulatory the year and during end. and targeting are with are track decision partner this to along agreements of subsidies on approval investment and we second

will annually Phase Phase kilotons by project projected the is phases. will another X,XXX begin X two annually and approximately approximately XXXX in by polyethylene contribute ethylene and to will XXX Construction XXXX. kilotons capacity occur XXXX. of X of in add start-up

project average, to beginning spend, committed the billion Alberta through project. between D&A target roughly to this the above to XXXX our implement fully CapEx D&A on keep on first cycle our project the those mid-decade, of next Phase expect total the XXXX CapEx we of levels within to those the economic remain to return of completion phase is across as X CapEx project. projected $X for the and of -- expect and after We completion. We year company By ramp annually

with of advantaged the advantage, X leading driven $X annually EBITDA targeted cycle, even of enterprise efficiency, our with capital At which project Alberta world, Gulf goal cost expect on returns by provides of which as full value run value Industry low rest on which investments US compared third A above has the to customers higher and startup rates, which assets, zero ethane over economic billion success capital feedstock deliver our for Dow with sustainable decarbonization delivered the our capitalize leveraging COX with XX% costs drives we reduce on of the COX over the building invested spend and emissions. capital will to more COX costs our party than intensity, and and return XX% that Coast. capital by infrastructure Texas consistent investments, lower for our the best the and best-in-class invested deliver mindset. we since emission solutions offering product enhanced technologies owner performance capital conversion on

needs meet as seek Altogether, a footprint. we are lead owners they to the of carbon well the brand and products industry positioned lower and customers with

Our disciplined enable keep across CapEx will our grow decarbonize and phased D&A assets, to and approach us the within cycle. earnings

our costs XX. a focused term proactively We're market dynamics. focus long generation strengthen navigating financial balance our strategy, since resilient allocation flow, remains we Dow as maintaining priorities are broad maximizing challenging spin taken cycle. deliver advancing and while profile sheet on Closing more short on improve cash on Slide reducing across economic be to and on we've while operating term The flexibility our and discipline. to cash the capital actions us enabling our

we economic As billion earnings raised of shareholders and by result, pandemic $XX around cycle. pension than target of substantially delivered levels, the our back cash well net and a three XX% have year across free our net improved income liabilities cumulative our reduced above debt above flow, our XX% pre more our spin, since to underlying

demand At same positioned increasing gas and more the our time, and diverse, global strategies, Transform Waste to growth we'll Grow circular market GDP attractive the capture above advance sustainable differentiated demand portfolio is more the greenhouse and well profile, our raise economy. our and verticals. customer solutions, and earnings which across With our our product will Decarbonize create continue emissions circular a reduce for to

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

Pankaj Gupta

Jim. you, Thank

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

Operator

line you. Stanley. Andrews [Operator first Instructions] Thank of Morgan Your Vincent from ahead. question the go of comes Please

Vincent Andrews

region and you, more you headwind pricing. just could Wondering play a third bit million the That do on good see little you packaging, net out costs plastics $XX basis morning especially in and higher average in Thank between by each How us perhaps if everyone. those a the the dynamics feedstock give in for quarter? color lower region?

Jim Fitterling

in volume regions of plastics world. increases volume the And Great was strong overall all in biggest Good all them. question. saw We morning, especially across Vince. saw Packaging, we the P&SP four businesses all increases for four of the in the quarter.

softer $XX In bit came had obviously, during time. a that's And capacity June you've because million terms of headwind, new American the closed out price that pricing. online North down June. some on settled that has in little $X.XX

down Inventories June. of came actually the during month

exports a reflection All is are China, which think, to of those Mexico. three India, of strength also strong. the regions relatively I in also

was regions. the America Asia the led obviously, Pacific the of Europe -- three And, four Latin of and weakest in terms volume. of

lot we've a bit and third come will feedstocks see have So breaks, had The quarter, due that, really of obviously if that in is my the natural weather projection of staying then hot up to North is gas. in that through the is, continue weather the while that out. but come expectations that we'll some ethane America, a

for $X.XX that $X.XX July actions But our start a $XX and metric in then about we speak, in of up with lower increasing as $XX there August. up expectation we'll got is July, out ton Asia pricing we've July. is, to in And

Operator

you. Thank

of go Your the ahead. Begleiter next Bank. from question of Deutsche David comes line Please

David Begleiter

$XX Jim, morning. staying decline pricing. and million Good feedstocks the you. in Thank on

million. down suggest it Integrated be would worse at Looking than $XX would margins, that

consultant you your you. headwinds $XX margins down in Thank versus the greater to are million? the perhaps what forecast offset So least at doing

Jim Fitterling

second margins I good North slightly than Look David. was on first the in morning, think Good were quarter. the we they integrated ended for quarter, news that America. higher where in And

capacity has the liquids Our I both going improve in North in to in from on third -- the expectation long coming where think frac are. Europe feedstock will that's feedstock how the been gas hard I cost. as that, natural know here in there's to mentioned, capacity. obviously, is been America We costs pressure new And they it's they in And the quarter. project really and stay are

to going barrels than a today. day XXX,XXX ethane that's of rejection There's mean plenty so, more ethane in And there's of available.

natural stayed be break to demand an I rejection are think Frac some to spreads of has much because it will of gas out. in but that so strong there it because turn, been doesn't warm and that weather, right now. take good incentive the for

with about even And reflection gas also so ethane five of I NGLs we've in weather. had natural the that's warmer record above average, production are on productions, year XX% think above record average, far. year this inventories five that year a that the

while during at we've And can is, they reality that pressures be things the very The those us. dynamic, coming cost so, seems and like got change can quarter.

be Exports to strong. continue

see to relatively still month-over-month exports standpoint which quarter-over-quarter X% GDP It's growth continue range, out good. China, is than slower move is move a China relatively in And in experience previous our to volume from though to with even been We into good improvements X.X% we've and ability GDP China. to able the years.

Howard Ungerleider

marine delta second the level of compensate you and the you self-help perspective, continue at came sequential A of tailwinds terms enterprise I a self-help talked almost what of a QX. in big of chunk, in high it's it, our interventions. -- all if from look the QX to expect that big chunk a if also team are an quarter. shipments, then sequential from all the from the so headwinds the mean, And delivered volume of at improvement that some P&SP in should about. Dave, And there pack help or additional you those cargo to offset ramp of growth and our we to not,

the about June, at enterprise of of so, we X,XXX roles those and exit. numbers either And end XX% level had

impacted mean And about to so, think P&SP. I of that is half in

and So interventions P&SP. a will for tailwind be also sequentially the self-help

Operator

Thank you.

Your Ahmed ahead. of next of question comes from Hassan Please line go Alembic Global the Advisors.

Hassan Ahmed

Good morning, and Howard. Jim

of ethylene, in considering sort around wanted a polyethylene been of supply potentially side quick things: ask press inefficient rationalizing facilities. There China Just addition rumblings question to about the the specifically. have some

that are the your the the around thoughts around what additions of pace macro given So also way is? it capacity and

Jim Fitterling

versus if going now. capacity mean, really on Hassan. is capacity demand I you the pace I is be the of near think Look, morning, additions that the increases look Good short. term, most over of to

I so, leading to pricing seen. And is some But that's what that we've there. think obviously growth the of the pressure volume

that so, obviously, as China, that increases, China has than a higher. And volume relatively of has we're But able the lower been we've cost growth that that supply able on still NAFTA a to China because the they've become means And into an moved overall has so export position, the to the to that benefit in Europe US capacity supplement going eat cost position been has had see position. to has Cost China moved US Europe. and Obviously, crack. snapped to a On from cost better quickly. more standpoint, up position better domestically. out

high about industry to really those footprint, on there. little than the bit. high plenty speaks there's So any I are highly but that carbon usually pressure XX capacity is and think pressure. today, of think the MTO be of if about announcements a And think that industry producers assets I lag they're aren't I And shut I old. methanol cost greater to under years NAFTA high a in those available at down, the look assets are are things There's I then position, seen suspect, haven't advantage you think running, to quarter capacity, going you obviously if but think producers. which cost

holds true economic that, polyethylene My the expectation up today. best an be that continues slowdown, is through typically to

the we're Our more through carry Europe our that and back is maxing that's our improves the We're I now, of through cracking and half advantage advantage European feedstock in out right seeing showing think cost results. LPGs And our position. cost going even to that the on LPGs, where with flexibility year. in

Operator

Thank you.

from line comes the Zekauskas of JPMorgan. Please ahead. go Jeff Your of next question

Jeff Zekauskas

Thanks shares went MDI the that's million for on very comment much. quarter. bought maybe in trends shares, sequentially, shares United you third Can Two them secondly, in and the you X up back So part but your $XXX million flat you question. States? million sequential about X price have And,

issuance what's share this magnitude the of year? So

Jim Fitterling

things in at in a down on be be Howard are the is seen and have seen good relatively automotive where has take strong to obviously, durable strong. We've obviously MDI continue relatively get I'll the MDI, Look, MDI impact, Yeah. like goods look part share I'll think appliances. to that. market MDI continued of buyback demand then we've position. in Where I

prices. so, And offering pressure has that put systems some has in that there some on

to in of we the is La which Porte starting off of in are down allows Porte distillation think the the an up expansion but I process retire capacity, Freeport, MDI us La asset.

so, And tighter be predicting. analysts speaking, capacity And I relatively holding think expected. going later might relatively expectation supply the on to there a what than to bit come rates some offer I our is demand than the MDI that, And little of a that's is out from that’s up think well. announced balance operating going industry think I been standpoint, is

Howard Ungerleider

Howard. is Yes, Jeff. this Look, morning. Good

have look, to share say [XXX] doing else a opportunistic. in if and or period, count QX, worth a be continue had to in is, we're $XXX had shares. (ph) X share say to buy at what you been least the QX. going the were use opportunistically million the eyes, to we I’d will we what is, repurchased not to diluted issue, equal, On And apples we quarter apples an dilution, continue the In back million in we it we count, GAAP the good would count. basic because loss All first share

say should another stock would of expect $XXX you at I in million QX. mean, buyback least I So

current left open on what’s on share terms of program, left repurchase In we've the billion the got program. $X.X

Operator

Thank you.

go Mike Securities. ahead. Please Sison comes question from of the next Wells of Fargo Your line

Mike Sison

morning. guys. Good Hey,

XQ. Your volumes in are X% down

seeing And you [indiscernible] the will you bottoming maybe third quarter year-over-year the well. think think at basis will sounds the markets? any some on quarter end it like point? as be down in Are of fourth a in half of I second do your improve any it's volumes

Jim Fitterling

that's being Mike. obviously, down. off X%, down Good XX%, morning, Europe of a question. significant Good pretty Volumes was part volume were that so

Latin and America so on were Asia held volumes America stronger, relatively X% Pacific they've up relatively about has North and volume. been well. flat

you in think the on of see, I those up So can obviously, pressure showing markets. Europe some

last year. look up of my in terms half down a macro GDP this is it'll decline this, we back really And feeling the through It QX. expectation economy, we're slowdown. down In know the year, been saw started in saw but spike at of in little QX. year. a be is, We QX economic the global We QX last of and the in mid it's

the recession look caustic to be and, And and that is slowdown obviously, glycol in slowdown. last control. ramp think electrochemical a led or inventories of I lagging when then a happen in into back recession? we'll the if not slowdown. mirror. the leads good a fourth the quarter a sides I into the unit. indicators, destocking determine XXXX. we're in we for it's in up we think happened People and a in setting But in lot relatively the quarter of ask leading into times, are are chlorine, first both We that a saw rearview it over MEG typically indicator into year a ethylene this appears

was chlorine a off, was strong. and chlorine caustic stay relatively a demand strong and a chlorine but saw caustic now that's caustic relatively that demand indicator Then where we see off. And fall high. lagging slowdown. into we you're both we time Obviously, fall saw And

feels would we be to it And be of back from it point, shoots in housing, I to to the the the rate going Fed little a all moving people bit And ending with like quarters that there. say to into ramp increases, market. of green now. housing me nearing the back seem third, and in say So start we're indicators are right fourth low then

is think I there XXXX. optimistic be areas to some for

Operator

you. Thank

Please question next the Vertical Your of go Partners. from Kevin McCarthy comes line ahead. of Research

Kevin McCarthy

regards to bottom with on-site to industrial propylene Jim, arrangements And with actions two in way the [Olin] morning. intermediates you're more that and broadly, maybe terms you're think then guiding would Industrial Good of can of earnings near in oxide XQ of of speak how in (ph) bigger a you you little XQ some there to segment, as kind you terms a follow-up resupply Intermediates your at Yes. bit taking question, there. Mike's frame your or you're Do picture there? in or an the that lower. cycle

Jim Fitterling

morning, Good questions. Good Kevin.

just break differently. at time. solutions industrial isocyanates been and into overweight the chemicals construction polyurethanes or it polyurethanes oxide me look and Let up them some and underweight construction In propylene and chemicals, we've for

far. trying the And So we're what is Freeport, capacity happening been doing right the been asset business. with increase also And MDI market PO Porte so you that's retiring in La bit what has have size the which moves see announced what's and then to a on PO distillation and asset. exit the merchant

the with in where balances the growth polyurethanes, that out in think value. us make higher we downstream better I systems is businesses which

that. continue And see do us so, to I think you'll

US the the relationship, supply continue Gulf in ethylene, both to completed the Germany. of we're series which means negotiation remain energy of that to place. Olin terms the now parties and Olin, services economics through a sustainability in contracts the for Gulf that Coast XXXX, going US Coast integrated and And In we've to the and extends value in that and site

in to to ethylene MDI good Plaquemann Olin. PO chlorine us businesses going there. feel to about is to is sell assets and affected I with We're Freeport. the the STADA and continue in going the relationship site Olin for the So supply working primarily also chlorine

and understand for alive. each integrated well, this manage company to to together to work continued economics and we've think that I the value think both keep that best is continue I we

it In been terms I well. of growing has say industrial would intermediates,

of in Our that the oil focus alkoxylates continue applications solvents gas treatment, drivers. to higher still people gas glycol. the ethylene and low Longer industries, paints of coatings there scrubbing, things with deemphasize make Global. couple here glycol for term, downstream make like all pharma ethylene in agricultural and and to is sector. had and for the scale deal assets means growth did the growth our all commodity. sense the make invest in which which small go most ME for is and And, and to glycol, And to exposure intermediates it energy, we to BOC home derivatives that support the us great areas assets. to And obviously, think have made We gas remember care, a value ethylene like won't that doesn't when we probably personal

So only the and And we'll the that downstream then higher emphasize for EO intermediates. move to business of commodity. the purified versus industrial assets side really specialty value all

think And in ag intermediates I missed quarter the slow significant second because intermediate the in moved on more optimistic additional that at did things volume you spray we farmers right bottom of pretty will the of and quarter, on fact construction do do were like you hot say really they we're the in move And drag of that's weather, space. whole in think the being very housing drag now, I saw spray XXXX. the with quarter not I can into why optimistic in them. the -- as we I as bottom That's crops. a think II&I so the the and capacity, feel that second look do at

Operator

you. Thank

the ahead. Frank from Fermium Research. line Please comes of question Mitch of go next Your

Frank Mitch

a Jim. question, and morning. Hey. A Good clarification

to your then less gas near maintenance see is impacted back more going been and term. is clarify, we're of macros, secondly, natural in the quarters. where has relatively come with down balance couple planned in correct? the And expectation Is that Just Sadara the pricing ethane to by that

some us can half? give in are your outlook on for Sadara So expectations the what back you

Jim Fitterling

There's after to I Good additional a and going in XXXX is ethane assets. start-up Yes. on continue the rejection frame, with barrels think -- Look, XX% today supply the morning, Frank. day of is new supply this of XXX,XXX to increase. time coming about there's XXXX,

is there. the So supply I think

load base put with very on left of pull today gas big gas natural fuel in really heat which think I That States. been US is because United some power, it is for strong gas. demand had the natural has in dependent the the in on a the obviously you've

off. come think some will that I of

You're hit season comes. it's seeing think, winter to storage, I its before peak the going

think they see off. On And position. we going They Pacific. ethane to you're so, turnarounds some course, the results. exposure good impacted couple cost a pricing And, had have I you're potential the a Asia they of as in to Sadara, weather to I that see very right, for a strong come moderation have of think

the with remember, and be India So operating. And demand back X%. rates continued fully in above online with strong, now GDP has them to Asia

that see in a Sadara and in the back you'll quarter come I fourth third bit will the think quarter.

Howard Ungerleider

some would intervention. I and including their mix Dow just also underway, that then have own cost self-help, Frank, add enhancements Yes. number operational improvements a Sadara, product structural of increase like and with just they margins to

So build should half to through you as that start see year the of well. the back

Operator

Thank you. [Operator from of Instructions] Alexander line Laurence the of Jefferies. question go comes Your Please ahead. next

Dan Rizzo

Rizzo Good for is on morning. Laurence. This Dan

high the very you've kind we flow should of free of conversion, about how new cash but think expecting terms years through what it was now, you're next of wondering the during projects obviously went the Just call. I it's given few in over in terms

Jim Fitterling

want you do that one? Howard, to take

Howard Ungerleider

Yes. the that quarter XX%. XX is job thanks on management. mean, mean, out. team doing working trailing really a month second I conversion for capital And I cash was great our pointing

JVs some going flow. just overall continued an focus would I got on from our dividends also and cash XX% forward. expect not We

activity, cash number macroeconomic that during to number. Over release the be dollars. a long tend capital high XX% working periods conversion run, because Obviously, low will is an good of we

the bottom at a is as a of probably line. a normalized in XX% the in kind then XX% and top number of using cycle the probably the conversion of XX% cycle number So

Operator

Thank you.

Please the next Fischer of ahead. comes Goldman go Duffy Your of Sachs. from line question

Duffy Fischer

Yes. Good morning.

If just are those you guide versus could, looking what ranges? sequentially. price volume X, on segments line your top Slide each of you the on through walk within the Roughly,

Jim Fitterling

the Good high line, the could It to be be think morning, X%. Well, side. going as on Duffy. the down down much X% obviously, on top obviously, are I as on about sales,

lot packaging, be element. plastics, about you're especially -- think feedstocks we going talked that'll I to obviously, see a one and

just the a We we licensing, million. at about is $XX have is second to savings $XXX third that $XXX just St. related -- million And about we a Charles, repeat quarter million. to turnaround cracker positive. the one so which on won't Cost have time finished then from items that's the quarter the

I'd volume second move seen to to is, quarter. on So is price, in expectation continue my say we've volume -- the going as

positions cost advantaged have advantage and of rates that. We taking around we're export. to the and at world we're They're running able high

the we're headwinds obviously, raw price third have on to material. to going going and take we're so, And quarter, the that the and, that navigate of then in we advantage

some and shifting ethane some slate say to the on got costs. cases flexibility. back I butane would in the mitigate We've propane areas some already team's in the in of higher

impact you the II&I, loss of If glycol capacity be Plaquemann. of big out the look in obviously, will at

about that'll back That's and the actually partly Automotive on activities been lost polyurethane be And operational. the relatively million weak see a margin cost partly construction Cost has $XXX relatively are has up. the on savings asset side. continue we'll getting those demand maintenance of demand a then it to sales $XX tailwind. So million housing how and and rebuilding holds but good, been headwind. and

and volumes going headwind in Coatings, siloxanes hold The price been Materials Performance pressure are the up think has biggest there. I well. to

we it activity may of lower are flat, Although $XX not a much flattened plan tailwind a and see savings if them. and maintenance about maintains million there. then for it's Cost headwind as

weaker. normal the much price end, have been all I'd of see will of coatings to due PM&C, to have architectural in. slower year at And outlook have of for been kind I'd been expect compared start obviously so architectural back seasonal primarily come a outlook other then but power returns, coatings kind will be not strong, say demand relatively coatings, to a That's we'll impact all weaker. last relatively them because the volume. seasonal on So to as on be high return three. the Industrial seasonal down, coatings on pricing three some

Howard Ungerleider

think just level, Look, flat you it to enterprise if operating think if I you trying on basis, high about really at very say the to. about is what we're an would -- at It and a Duffy. take sequentially. back guide a essentially step

guiding we're in got which $XXX cost our increase million savings. self-help, You've

compression leaves stuff expect talked are that of you that that about the We with up indices in $XXX projecting. that that Begleiter million party quarter by happened that And second either the the eaten that margin be third then will recur. won't

from turnaround continues we're So the and licensing work which another at on $XX $XXX third team we driven million although innovation, quarter then the project enterprise is level, sales not the an the additional don't expect headwind million to in -- the licensing net.

that's got as said. Jim flat. so, operationally And restore to and repair still course, then, of we're And we've glycol -- Plaquemines plant, the

and $XXX cost we're learn million sales rebuild guiding lost implementation a impact one-time we'll a we on that and margin and of the through That's to number and operations. to update. and return the that get the more So root restart and get on to on as then plan kind a investigation recommission give cause preliminary further

Operator

Thank you. ahead. Parkinson Christopher comes the Securities. of line go And your from question Please next of Mizuho

Christopher Parkinson

on just wanted so much. I to X, may. hit back I Slide Great. you Thank if

outlook incremental the the the CapEx coverage period and half you'd activity you have can any the that the comments year? just terms buyback growth D&A throughout on on hit thoughts Alberta, of for Just the given of current on Dividend in second of ratio. some in versus

kind entering XXXX you through Just period? much. Thank XXXX and puts of the and how are what the the takes process your thought so

Jim Fitterling

want hit you to do on Howard, view buybacks?

Howard Ungerleider

be continue to going We're Look. to opportunistic. Yes.

mindset, going think my the half, As is, mindset, dilution. what answer about would which I think I that's on $XXX the I gave million, Jeff's we're to for have we our question. say estimate our back

managing dilution the team sheet we're to cash done tighter flow their was leadership We're and as an of cash much of Dow have things the on also own has working exceptional to leader spin opportunistic a equal, and going will that big every that, the job capital one flow then is in it be decided have QX balance changes continue statement. all just free each cover their quarter cash we make together So also own QX. to team going Remember, way. and P&L as to and we

cash the now rolls every P&L responsible Jim and that leadership So to a in and company I that manages are manages and single the one flow leader the our up for. team that

cash They've job. a been doing XX% conversion. phenomenal

So we buyback QX. of in $XXX did stock million

see And and similar could in potentially kind of we'll so, that number QX. in you QX, see

Dow look, $X more billion it in million. what we've touched unique is every about talked flow $XXX year working $XXX levers. continue other interventions in thing this call, of or Structural cash we we since or -- The and but I would think we've on I is, don't past capital to about had to the call spin, million

ventures, do any we continues a team tax around to examples. at world. the just can We're as Our several our potentially looking job cash extract that great from joint

Canadian is we million several So expect the also have of to fully the win say, final which Nova would that we litigation, that litigation. round $XXX I in,

to over $X will And the as XX, on next be the XX buyback. we months. get another that room, we money out there's billion stock continue So we have and even there more opportunistic

Operator

you. Thank

of line Markets. ahead. from Please of comes the go question RBC next Viswanathan Arun Your Capital

Arun Viswanathan

my taking on Congrats Great. Thanks for question. QX. the

driver the outlook main it to as the get are mentioned would things can as the do [indiscernible] QX main that still China is, we improving you lower should what an demand? we goes, of from in call you across mainly of recovery looks help many you there. That expect looking your As improvement segments out Would like here? days think for better that markets of signal far better. in really drivers China and the sluggish volume when Or

Jim Fitterling

markets, higher-value all part those we been seeing obviously, and China a strong, what global slower GDP. I X.X% than that X% and largest in highly US it's in China, has we and positioned are world than is serve And been I greater well we're Good pretty and GDP both And Mexico Look, what polymers, exports. mean, has second to functional as good still to the global and though X% Gulf profitable need expecting which is even economy the India still we're from India Coast. Arun. are the of we export morning, the relatively think increase good.

improving. in on economy I think that. just and it's about again to good housing feel totally America think don't North European it's I the also I things So coming like starting dependent on dependent China back. improve

kind much, much where flattened States, Europe been, have a which a natural million] relief lot prices in United they've obviously, energy than down around improved. BTU, costs Natural Europe. much from handle on So of more come the in still but of gas, have LNG expensive [$XX is still in (ph) three is gas, which

has been in have And and so, back, footprint lot in construction on the ton of most polyurethanes chemicals. is lot our a a economy under coming XX% European Europe, will About we I Europe. in which heavily of a think exposure and it's And of depend pressure. course, of

to a positive North then America, think on we show back, some And in look I signs in for mortgage take applications. to housing has permits new step started which and

had We've of But that of supply off. passage the all already And a in bills strong the I which think demand some I market leading to bright think there's are the it. of in capital on spend along economy lack the CHIPS the people our transmission. think I that back have lag are meant areas States. with high-voltage and other are United with big very more passage moving rents thinking Act, the bill, customers. the going We've high the goes to to infrastructure a housing in. like inflation Act, seen telecommunications coming. There's about downstream those and the Reduction between for impact, already in We and wire here that's obviously, seen don't cable spots and

see that already. you So demand

plane The meant has back return production aerospace production, to that is travel up.

be last to with exposure automotive relatively be strong the stronger Heavy but need existing of in learning happen. and continues this make have of You to we year. of the out because manufacturing about in are sector, parts to we increase that productivity the to to inflation need lot metals get that many manufacturing. more up keep we than it looking especially those coatings continues AI, machinery much, then industry. of and a that Obviously, coatings strong to world, machine see to aerospace for automation to automation, wages, mining don't companies with talk And the on

into going of either So automation construction ones, companies and if right have pretty or revamping new new manufacturing components big you're backlogs and about that thinking existing those lines now. controls are

going to been So pick going construction all up up, pick housing durables, it's mid-last America year. it's up think kind year as of consumer I indicator we had since really weak picks will and that to of be which I turn. well. And That That to indicator in here at be think North an the the as an look indicator will in China. be

Operator

Patrick comes Citigroup. from Cunningham Your of of line the Please ahead. question next go

Patrick Cunningham

you what Hi. are demand Good the of of and morning. be siloxane Price do for your balance How declines fairly in PM&C trends expect continue the substantial. in year? And XXXX? capacity new to expectations sort for

Jim Fitterling

questions Good PM&C. morning. on Good

up. silicones In of are bit last that year are Dow a is primarily look of then higher the and Home are year. but Care slightly Consumer to than slower year, they're last up. buildings end of into that is two The electronics the Solutions commercial in Industrial goes up XXXX. Let's same Personal And mobility, just some Industrial terms a take this is areas extent growth, little Solutions, which and those at and relatively not flat. applications. as

what's on put And and about well China. uses, so, I the that's electronics construction, think siloxanes as the and But mobility are and demand. capacity those when that's driven in pressure you biggest as volume think the the

marking right are dampening In for sector automotive and of undercarriage road liquid the now parts the applications. I coatings monomers, and strongest applied cars think and sound

builds but of where mostly during business it's infrastructure has is off Architectural contractor percent. increases there. couple a COVID, do-it-yourself it off, the obviously, And volume the driving really by was are come business. back So

paper So good has paper business I contractor coatings off side. happen the to got starting we've year-over-year. dynamics, off, think, in been The been have

XXX,XXX about of about beyond another probably then XXX,XXX XXXX new beyond, frame. added. I'd soloxanes siloxanes XXXX, got capacity in in, you've I that tons in beyond of and capacity time think range that in XXXX, XXX,XXX got probably say, tons saw you've on coming and that we tons comes out

and right will siloxanes eat the looking think kind the you're start now on little demand up. I a into XXXX bit So at trough maybe of then that to and

Operator

for Thank Josh line ahead. we the more have And go one you. question time from UBS. of of Spector Please

Josh Spector

Yes. for Hi. in. me squeezing Thanks

the one a on quick Just savings. cost

at looks So remind be And guess, X, if XXXX? really the maybe should sequential of Slide was much that right? expecting large what we is Thanks. can into us like lower look XQ you step-up. I step tranche quarter I So has guess, up? just last there fourth it I

Jim Fitterling

Yes.

for second I quarter, $XXX third the million guide quarter. there's the think when we from looked step-up at

be think to to quarter that million about cost million is a So million basis, of that saves. going I as on $XXX $XXX will fourth be well. year-over-year And in $XXX

of $X carryover the next million billion, some out to sequential Obviously, this year. million the of half $XXX comes year. back two-thirds So there's $XXX in into

about from you next million the quarter sequential carryover. the year got So $XXX of in first

will up So the kind quarter a and first of the as be step year-over-year well.

billion And And the all addition those $X outlined billion portfolios. the to working on unique are just Dow improvement he and the obviously, spending And impacts cash within of are think of I levers. on levers, on question. then cost in to previous cash working the them Howard their $X then businesses saves, margin mentioned, we're

some and mix improving cash, and where in XXXX. our advantage to cash set businesses can we on positions low-cost up focusing both levers the side within on side we're those net-net, can cash ourselves say, running then trimming the the we are ramp-up taking for assets I'd the liberate and and the cost So of high-cost and on where on also

Operator

the to There turn I questions this closing over please for call remarks. time, Pankaj at are no further Gupta

Pankaj Gupta

for Dow. our we in Yes. everyone, interest call, joining and Thanks, appreciate your

of about hours you once within This Thank For our a XX posted will on our copy your be again. website reference, or call. so. concludes our transcript

Operator

today's concludes This call. conference

disconnect. now may You

Dow (DOW) 25 Jul 232023 Q2 Earnings call transcript