DOW - Earnings call 4 2023

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Operator

Greetings, and welcome to the Dow Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

Pankaj Gupta

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

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

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

[ will operating fourth highlights the On full provide year performance. results, growth key segment guidance. macroeconomic review financial cycle our shareholder the ] To an modeling value. Slide through our road sustainability environment, call. and for Jim X close, is continue update and milestones which map, as quarter to position will will drive on agenda Jeff provide of update strong on our our Jim the today's an long-term

we your take that, questions. Following will

the Now call Jim. me to turn let over

James Fitterling

Coatings. X% which gains with Packaging more offset period, In declines Thank $XX.X regions billion, than the was down operating all to our Materials in you, demand long-term segments. declines down environment. were sales Pacific, Volume Plastics were Asia year-over-year, Beginning all face macroeconomic reflecting Net ago & by the Specialty in as on increased were flat. strategy of discipline XX% and across sequentially & fourth in X. the Pankaj. quarter, continued Sales gains except X% in with seasonal we Slide execute advance volume a year Performance dynamic versus

to XX% Sequentially, was in with Argentina. including Blanca all X%, declines price an decreased operating modest segments hurricane Category that a from flat, storm lower by unplanned year-over-year feedstock was most Local decreased Bahia price site costs. reflecting of impact in energy event due a to the equivalent regions. X volumes Sequentially, at in and gains

quarter $XX & $XX million lower down offset gains million, Operating year-over-year, million in EBIT was prices. $XXX volumes primarily Plastics Coatings. by as by operating Sequentially, were EBIT more in Packaging for the Materials driven lower Specialty seasonally Performance than & down was

cash flow flow deliver us from enabled in working of billion and management $X.X capital cash Our generation operations the quarter. to

on pursue the We pension and for and of continue billion of cash $X.X pension and additional focus transfer we nonoperating ] of [ to onetime million. a savings reduce $X annuitization billion opportunities in fourth costs cost quarter, for $XXX derisking in risk settlement charge liabilities ] our And year. and [ including our completing generation noncash the plans

returning reached our ] Alberta. PathXZero for $XXX while Saskatchewan, ] advanced investment of with also Board our strategy final our to project Fort long and shareholders [ decision We million [ vectors in

Now to our Slide on performance full X. turning year

the Team strong demonstrate macroeconomic to take actions. Dow a execution to proactive continued -- dynamic Against XXXX discipline. financial Our backdrop, commitment and

of cash flow in the operations flow $X.X cash from year result, a As billion reflecting XX%. we a conversion generated for

We shareholders also share to returned $X.X through dividends billion and repurchases.

value externally for long-term diversity. our and outpace strategy. we communities delivering continue driving as is we and on progress continue recognitions, awards, peers our Dow our and Team efforts industry-leading be through to our supporting how leadership Our proud certifications recognized to customers, of shareholder I'm

prices, a where operating out $X and $XXX million, hit production higher X. Now levels operating up we EBIT ethylene and performance turning million were million. Slide and while was Plastics EBIT quarter the period. Latin global year full by to Packaging closed the led demand, in by activity input U.S., higher on operating $XXX on polyethylene the packaging strong year a basis. operating record planned price Specialty of ago rates, maintenance the revenue. volume ] lower higher to increased third Local and Sequentially, This compared in driven costs primarily licensing Canada was driven by & [ by Results increases America. driven lower declines impact segment the margins, integrated segment, were year were higher In

businesses partially to driven $XX the as in Results as segment. compared by supply availability Operating reduced in Industrial the [ period. lower Moving $XXX ] Intermediates local was & were ago million end EBIT industrial down Infrastructure ] year higher million prices solutions. to both well driven applications. for by was by lower for building which deicing demand seasonally Sequentially, were offset higher $X million, demand and mobility and markets, construction operating seasonally [ in and EBIT volumes fluid

end Coatings Materials million loss the costs & the in Performance of of operating million segment, a maintenance Sequentially, in period, markets. EBIT $XXX Volume activity. loss due compared year-over-year, primarily ] million decreased ago planned ] reduced lower building [ was to and And project-driven a volumes. by to driven EBIT lower year turnaround operating was by higher up $XX driven seasonally construction $XXX and [

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

Jeffrey Tate

Thank you, Jim.

of the I'd Before today, look rejoined I forward so with mention to on how to I excited Dow am last future. to key this connecting analysts November. in call shareholders, others including been have and meeting like I stakeholders, you with and many many I've begin,

the After pleased execution, CFO has demonstrated on four is a see delivering advancing company. an financial our and [indiscernible], exciting priorities ambition culture on to remains. I'm for commitment to that Dow's focus then serving This time in everyone our since of years the

long-term advance to and strategies economic get to deliver and for shareholders. As allocation cycle to we the over disciplined value our CFO, a as maintaining I'm growth commitment approach balanced capital proud Dow's forward

X. outlook for Now on our Slide

inflation, rates expect XXXX, durable enter goods and we we markets. positive we building As construction particularly seeing demand That tension, in are geopolitical to by end some elevated pressured initial near-term and remain high interest said, indicators. and

moderating, rate supporting levels more stable While conditions. inflation -- compared is to still economic elevated is pre-COVID

industrial its inventory levels the consumer in And recent retail in from low course, are and also largely approximately of grow production began to prior in throughout following X.X% X% In sales year-over-year X.X% January our which trade December. December railcar destocking years in XXXX our year. resilient consecutive continues addition, encouraged XXXX U.S., increased of declines. by industrial most demand the U.S. chains. that In remained American We're up the of loadings Coatings with be resulting value late to [indiscernible] has the in forecast run market versus chemical moderate. expects Association, X% three activity

sales with PMI growth. In year-over-year registrations Europe, while inflation contractionary and trade retail down year-over-year in November. new car X.X% in has XX demand consecutive remains territory December, months weak manufacturing after fell X.X% consumer remains moderated, In of

of to we We China estimates of X.X%. in year-end demand supported continue December to could continue also where Year. up recovery monitor China, improving following New production provide Lunar the sales X.X% year-over-year exceeding was a auto conditions, source be Industrial by which last market see month, strong incentives.

remains In other regions the world, constructive. activity around industrial

in While month remains contractionary the ASEAN November In manufacturing Mexico, month. last production PMI India PMI territory a manufacturing growth. consecutive of expansionary, marked industrial XXth

Slide capitalize us deliver operational cycle when investments conditions and and improve. a our to on growth On competitive growth early recovery well discipline economic position X, advantages,

assets, enable global competitively advantaged cycle. structurally us global over the support growth cost demand scale to was portfolio -- and Our strong positions

also to mid-decade. ability production Healthy the in the and in actions to that cost of underlying oil gas momentum. EBITDA roughly supported near-term company and We've margin U.S. brands inco growing billion advantage growth, favor by profitable capture to expected taken for to by natural deliver NGL including position our investments execution gas are $X

profile, structural cost that our improved delivering in savings maintenance we've to logistics addition, utility spending, costs. improvements materials, raw targeted in and XXXX In $X planned lower billion included

addition, roles by year-end. more of X,XXX the In exited XX% than impacted

the cycle to upside of capitalize navigate and on Our the global the have strong us balance strength and allows sheet the to economy. bottom the next

will first more our lower from to Slide on & outlook feedstock energy Packaging from Specialty in million segment, Turning than by the resulting nonrecurring for a quarter, prior $XX and headwind. licensing costs earnings the X. In offset activity quarter be the lower Plastics

in activity U.S. -- Additionally, due higher the $XX we maintenance Coast. Gulf a headwind expect planned the energy million at assets to

Intermediates costs, consumer million demand $XX million Industrial expected to durables demand. weakness deicing provide for is in despite season Infrastructure and on & breadth MDI by well being partly ] in segment, as expansion we tailwind margin resulting MEG's [ $XX a tailwind. Increased fluid as a energy European continued the In expect higher lower offset

We primarily quarter, also due a headwind expect related to to ] turnaround the million PDH $XX activity of change. planned in [ and catalyst a maintenance

to pressure expected at Materials is segment, due additions continue supply supply to keep In margins that the from excess will depressed competitive downward levels. & Performance Coatings

higher construction to the we in for contribute However, million tailwind $XXX segment. seasonal markets expect and building end demand

to PDH to in approximately million With Deer turnaround we million puts fourth activity maintenance million We and quarter acrylic also site $XX expect first at the be in higher -- the $XX Park ] and earnings [ above to quarter our performance. expect headwind a quarter. all takes, $XX planned result

it I'll to turn Next, back Jim.

James Fitterling

Jeff. you, Thank

to Slide X. Moving

to and for market these to and attractive demand XXXX, us across verticals. us more grow an sustainable solutions deliver decarbonized waste on by the and to Our capitalize of while billion solutions the and through commercializing metric reducing circular X by more million renewable metric of increase cycle underlying and X X earnings tons million emissions our X $X Scope than strategies uniquely to transform investments our position tons circular annually. Altogether, and enabled

achieved as our final in Fort decision PathXZero by of reached our and we milestone In Directors. investment November, Saskatchewan Alberta, a Board project key

recycling also to half [ in U.K. year expected agreements. year. XX,XXX commercial capacity. in mechanical and recycling fourth mechanical year via tons We is advanced advance the partnerships completion commissioning, actions, continue and first addition contribute ton expect quarter, and strategic Technologies offtake per this reach In largest waste Valoregen the France ] strategy the Mura to Mura our intentional of XX,XXX achieved the per commenced in which Both line transformed of to

part the confident allows in while focus sustainability disciplined and opportunity of Dow our allocation. maintaining funding the strategy, our we community finance a growth, continued [ balanced for And approach ] published our long-term take the investor us sustainability Altogether, step future also to a of was an on while the website providing our Investor framework, in This goals green more on further align next execution a remain earnings with to which sustainable established targets today. our to has strategy. capital and

to this, low grow customers continue is our X.Xx carbon increasing XX. emission growing to consumer products. have preferences Now GDP need X.Xx to Polyethylene Slide approximately for circular expected XXXX. expressed at population, and zero turning an regulations through and A demand and to support and

custody As supply-demand in balance no expected the which global come the new in North is time cost-advantaged late tighten term. -- America near XXXX to demand the until frame, is to ethylene to grows, online expected

We with our and demand assets are well growing partnership positioned to and capture new existing agreements.

low carbon on growing demand in investing you Slide as are XX. polyethylene, -- infrastructure will we see to addition, In capture for

upon best-in-class to project world, have Fort of -- Our emissions where our Saskatchewan will the provides reduction. the cracker efficiency, reliability proven advantage with more than compared Dow the [ build execution, Gulf [ Coast. capital foundation ] of our U.S. PR Canada's and we advantaged Texas cost rest even the ] lower X strong

return as We and on billion also of We ] project, to to enterprise with CapEx zero ramp through exceed from annually growth XXXX. expected Total across our and amortization emissions depreciation the billion XXXX $X products. M&A any Dow's excluding and levels to [ this keeping $X.X to levels in low to commercialization project. total potential and economic to complete with incentives committed expect anticipate we CapEx upside is ] the cycle this key [ spend be those remain approximately CapEx

closely our the this cash for capital tax more in receive billion to The net expected the $X.X CapEx for that governmental majority deployment support project these expect received bring incentives with will by which incentives through and is XXXX, to are to billion. be $X outlay Dow We project. totaling than of aligned

retrofit X, expected of We XXX,XXX X and add X Phase tons XXXX. will the XXXX. X net we and first million Phase is approximately reducing another of capacity, year XXXX, includes of million X start Phase in emissions. COX Scope cracker, construction In with in per capacity will tons X X.X half metric begin of the year expected which also of to start-up in our of tons per existing up

that our billion have Closing the $X we increased balance flexibility financial taken Slide swiftly since The spin to in on cash savings business. [ foundation, we've sheet, of ] our In and economic resilience cost flow and strengthened as XX. on challenging. visions enhance moving XXXX, built on remain focus and cash generation actions deliver

at $XXX dividend, the capital while had balance we've our sheet fully As of all part growth priorities, funded of a result, including cycle. all the a of share ever on investments, million we and allocation this delivered maintaining strongest repurchases

at fixed due until of have all substantive $XX of no billion our available liquidity. we -- With maturities debt debt rate, and

returned have attractive and net our early-stage advantaged economic spend we income growth end markets growth [indiscernible] Additionally, cycle. our XX% approximately target above in positioned well of shareholders opportunities cost are conditions investments attractive XX% recover. capture presence flight, and we economic position to to the as of well in

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

Pankaj Gupta

Thank you, Jim.

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

Operator

of comes Your from line the Global. from question [Operator Instructions] Amed first Hassan Alembic

Hassan Ahmed

thought a out to two the what with views through the about like. in prepared you Jim, that. It of of regards talked remarks, camps seems are a restocking potential I'd [indiscernible] couple your look hear process terms And about love may just to there that there times

patents you maybe of the quite one on restock." But of the debating a sitting debate, the then change coming not destocking pandemic equally when of significant, -- half are buying other that -- the and could and of folks as chains out side saying, the impressive can, look, side restock of and there sort On we should are the and ] impressive. the XXXX, was an people look expect have dramatically supply some that that since second maybe of [ across "Hey, the

sort on elaborate polyurethanes within polyethylene, also like. that views. And and you main the So could I'd if product your change of some of [indiscernible] hear to love the

James Fitterling

that's I question. great a think

you in the down up things cash sometimes Packaging of a fourth year example, not mixed we one last slow use through December, what the half think don't demand experienced December, strong quarter And stronger [indiscernible]. behavior December. see and people & Plastics as I reasons because and December I'll that [ you that ended actually they month. an in expected, the than experienced Specialty of was pretty right was especially can manage and the We ] That buy. had

supply an that's was I think through indication demand I restocking, do but don't the that the chain are of low resilient. an inventories indication think and it's consumer

had to supply so people moving. chains their And to buy keep

it excess the looks are value demand chain inventory out is the So like buy would today the through there. I say to there's chains not an full. and as people having all almost keep of businesses, And to coming,

footprint Secondly, arbitrage cracking own in been because highly have propane, inventories crack P&SP, are advantaged. areas like and of which low we Solutions XX% jurisdictions own Industrial footprint, the our light in global is open where our is ethane and

the And allowed so ethylene record year. set what to for an us that's

we're say think we're would I cycle I in a don't not restocking yet. --

a maybe half doesn't some until start we're people more signs say, pickup housing start I quarter, in soft mean same think demand on the interest permits. year. up maybe around we of the coming I to to are interest That landing you rates If to and toward housing together that into in starts construction, seeing housing see, here. down show back down. positive come come the rates see turn

got remember energy costs low. You've to are that

as restock demand, just potential right wise what's people start our them that think be the restock. so are It a right with starts big forward, I little that a low at slow complex point, may eye I'm move for and to at still this keep on to are up to going And happening for now. and reason thinking think But a might be up we costs if energy the move be able would to reasonable turn whole and ] not prices with I do to will [ energy there buy now. costs

Operator

question from next Your Fargo. the Wells Sison comes from line Mike of

Michael Sison

Nice the end year. of

rates how in curious, into your maybe improve quarter. the on PSP to Just the for thoughts of continue year? operating and sort [indiscernible] Do you -- growth you the first expect had volume any good your that fourth of sequentially the in and

James Fitterling

year. an end those rates the Good through And record, mentioned Canada, of fourth regions, Michael. rates situation in for would above Operating in XX% strong ethylene Thanks, the as Argentina Coast, Yes. much especially I the into a were Europe. I question. we Gulf regions advantaged saw U.S. in we of say the from is means not saw improvement the flowing quarter. Canal the Europe. obviously, little Middle Suez bit material East production

a we course, LPGs quarter. And propane given go into And [indiscernible] and Europe so a that's of a we've first rates and that's -- operating we're bit as cracking of [ out helping lift where with being it in bit TeraGo is, on ] the there. little

I think good what see Industrial to volume is outlook growth. say would well. holding going is Solutions up I The continue to our forward. is relatively P&SP That's going

I'm [indiscernible] second our watching We up we some goods chemicals carefully issue own glycol [ ] to quarter. uptick good demand expecting plant, an we're see back there. saw movement electronics. the have see with if durable self-inflicted and that but in consumer We on in construction And

And so that's optimistic. got a little bit

Operator

comes Your Morgan from Andrews the Stanley. next from line Vincent of question

Vincent Andrews

ones Maybe me. for two quick

the on might Slide update And about going give then to have if some project for year. Talk that that 'XX the you just you an on how did 'XX. could X, you Just starts also, with some XXXX. what from be material of pension are ending

James Fitterling

that's Yes. facility up starts, consolation is obviously, 'XX 'XX, in the running quarter. got somehow well. third started things really in in On got project got that we've we've distillation MDI that up came capacity We up, the we've Freeport coming and

footprint, and distillation show will site. positive to move XX% of is that That a we as increase think forward. Laporte us out ] to the a also start [ reduction benefit MDI us getting I some of in about

quarter quarter of fourth [indiscernible] in growing and sort in also then XXXX, and and year Solutions demand [indiscernible] got of the and fourth expansion business. second Consumer that supports We've this wave Pharma both energy

is business [indiscernible] well. good. capture that's carbon So growing for

that's And good. so

look in say there's the year-over-year in on market, Shell growth in If one volume all at the is plant running inventories new plastics capacity fourth the States. strong Otherwise, we export you United the industry, plastics, saw capacity train are is and at really no the low, channel plastics quarter.

good XXXX. outlook going as feel the we're overall I into about for plastics So

China. capacity When had you in and our polyurethanes different [ story oxide, on last come ] in polyolefins [ siloxanes a ] little seen ], get year. bit the into propylene [ same We've

you silicones is propylene capacity, to Propylene got that going PO. think we've as side up we're through housing we're The lot, the markets, back that. see has growth them. to working the housing and goods come eat two close to the ] going up I market eye [ to a glycol PP on and But things drugs tighten siloxane strong. keep but [ market drive a automotive ] know, been those and durable

and Jeff, do to want did? you what cover pension we

Jeffrey Tate

the do And our transfer risk look Sure, Street risk our our communicating financial we're we're Jim. one do liability. pension recent annuitization position solidifying as around is way the here plan. for consistently that been quarters, to of well looking If we've could is to in things to one be of as those of

nonoperating The [ transactions of actually his not in quarter. some the end of $X.X pension from additional quarter, onetime reduce specifically Jim mentioned noncash So did liabilities charge the settlement of that to those fourth opening we remarks, million cash ] $XXX billion. the was in our a any able in were require execution as company, of by

Operator

of from from next line Zekauskas Our question JPMorgan. the comes Jeff

Jeffrey Zekauskas

there in your the And first what pulled was for you in some Texas. do then might you notice allocate didn't Can the Really, assessing the Or that Are it's out any be? was billion amounts think $X I zero? you segments? $X you that cold across costs. there secondly, EBITDA quarter. Thanks. in penalty And snap three still billion

James Fitterling

that Jeff, I'll consecutive third just you costs. the on I'll back. at go I that. year year this be cold the on Sure. take the the Two [ to This plans have the year we had ready on be then for Gulf of able the look the we've want snap and every is will ]. to Look, improved any players Coast. a ago, years be And impact lowest freeze, Jeff, take to

hit and down. at Seadrift that is back impacts were at all big the that Park up us ] almost running Deer so but and of And [

were quickly. to we So able rebound pretty

], well. but I through You never think go completely it managed pretty we [ unscaled

disrupting And the to to of going had think downtime. be haven't because I recover of here and We by we're hard pretty running end customers strong the month.

We impact that I navigated we've that enough estimates. quarter see first put well. pretty feel into So that an of we it didn't

is the in first our got we've a quarter. think quarter -- few first quite I biggest turnarounds

$XXX million. turnarounds And about $XXX on impact, the so and And the million that's million turnarounds in our first quarter, -- we margins some expect holiday then on margin quarter. the million quarter biggest $XXX in $XXX some and in minus [indiscernible]

first that's net-net biggest So the the quarter 'XX guidance. on

Jeff, $X do you want the cost fell across billion to get how the business?

Jeffrey Tate

have Absolutely, in about Jim. well. -- terms, corporate those savings XX% also and two little XX% a In to XX% the in we cost as segments, are simplest bit the are of respectively, other in

pretty So our and distributed on based operations well. as our revenues well

James Fitterling

billion year ended We at on a run that. rate the $X.X

million 'XX, covers $XXX we of 'XX, So But 'XX. $XXX another look full you're savings million higher at for have for. got net-net still in if the into million I looking coming in -- Jeff, that turnaround hope of terms in, you coming we what 'XX. cost year $XXX

Operator

Your from America. of Byrne next the of comes question Bank line Steve from

Steve Byrne

] me I that higher third Would lower much would lower pricing, in expecting, what earnings cost, could attribute PMC get is were the just some quarter [ deck. help the -- propylene help on one. What's are so Why were on you on you And in from to this to why lower for than you say, or slide you outlook maybe price price in line. targeting rates the this not higher. or in operating along your back push more costs segment able particular, customer cut key Coatings, something and in your mid-single-digit a segment? got

James Fitterling

and and and socaoxanes ] Yes. silicone monomers are coatings Starting at and both Good monomers the Steve. in demonomers the top, oversupplied. [ siloxanes question,

put you in obviously was the not that that's regions volume quarter in pressure decrease that. that volumes would a pretty on But And all in both monomers, And and so in bit had and that's we quarter. fourth sequentially across coatings typical little pricing all markets. softer. silicones see And unusual, especially

think biggest that because I was fourth the The quarter. binders was which supply-demand acrylic of coating up both on business And that there. for siloxane down had downstream price, actually delta of well and decent in the the were volumes they -- terms Year-over-year, and held monomers. relatively and in

So what we supply to to the downstream is silicones year coatings customers forward this look And going say good. in downstream And continues as demand about up coatings. we mentioned, I'd our view increase X% pretty downstream hold well. a

I'd EV what one a production. EV on silicon of lot content, thing batteries. say with happens an keeping a volume lot eye the into is drives we're

will eye substantial keep segments eye will that up growth things start a upstream I bit keep the siloxanes. monomers And for on to markets in and help that. we need But think in to an Silicones And tighten so XXXX. we're on -- Those on. going other an China, that to

Operator

Your next question comes UBS. from Spector from the of Josh line

Joshua Spector

was bridge, other there's wondering not then pieces, price. first assumptions lower polyethylene anything moving costs there talk quarter. could you the your price And I on and some really in comment in about but you if on your

shows? some March, the assuming of that pricing you assuming in data you are So and you like something different? pop February Are get

James Fitterling

pretty a looking Suez increases had going I'm see table the see up. price going for up Canal I EMEA. and We've got mentioned on bit. to into in expecting that $X.XX we're flat February. on January pricing. ] Middle globally, quarter-over-quarter the some up [ I the say volumes East on we're So think I to that impact price and would

think it relatively price the flat where to Europe going for quarter. to see margins in cents. we're I Americas Integrated fourth the Asia would the market they margins were And up be now. up markers the in think at That's should in Americas. what see look right few Integrated be in going I a Pacific. to we're -- ought

been mean, a I bit cold bit demand, costs competitive off had come through heating may line. this competitive. are that think because that little very costs to even of are -- high in snap, move costs we I cold little gas the but snow. Propane, though natural input And at very we as start are a

Operator

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

David Begleiter

do Jim, you Thank What quarter, do all to Chemical is you expect think in U.S. three highlight strong the given loadings to you you. be driving the QX? start up segments railcar And XX%. volumes in up that? the

James Fitterling

Yes. to Look, that the has visibility -- the December being loadings of starting destocking in think back. come have on the I a I are chemical saw I it's U.S. most Operating railcar has in industrial the advantage. up. And think U.S. in to cost sectors production tremendous rates of always enough think hard worked call were that, to end we what But it. through. signs destocking is

railcar loadings. and I you're what the seeing So any into think downstream demand with orders, that's turning is

remember, Mexico [ strong. They've been a from market as lot well. ]. nearshore benefited has the Mexican railcar service Also very

And up, having and here. a so volumes both up positive I Mexico volumes think, China is

all expectations, on XXXX. we say my volumes, for would I three growth have segments for volume

materialize. I that's to start going think to

right think I now. is plastics underway

year. on demand back towards the probably will polyurethanes half of the more construction think housing-related geared chemicals, be I

I we'll Solutions have then here I year. step-up that silicones, it a throughout plant Solutions out. the the And to have that for glycol get think as back Industrial I sold soon we'll [indiscernible] downstream And will when as back can in in we business be plant up, the we speak Industrial think get

that thing online. to So get hard we're working back really

Operator

of Jefferies. from from Laurence the line question comes next Alexander Our

Unknown Analyst

longer ] XXXX? do This the outgrow And Dan [ your term, Rizzo you strategy What just Can for you expect market? is expect discuss Laurence. we on by on do to that mechanical recycling.

James Fitterling

Yes.

the if we of end of to drivers There's on segments. grow. April, polyethylene plastics middle a that grow of beginning There's -- the at of demand continue are demand, in look all discussions another mechanical view and we in got both when year. the to treaty those to going one think going be of put on recycling conference I at We've look big deck in in toward May. the what to recycling the Ottawa now. our end you We're Korea a advanced global is at right

And and drive or [indiscernible] a recycling from that bio-based work some and mandates, made the -- corn waste and [ the all production. are Corns part products also of it I convert as ] producer the recycle some cases, project think bio-based we that's content industry feedstocks over that what's on coalescing into of making of NGOs with circularity, focus consumer on from around forms like responsibility band a and materials focus waste owners on feedstocks. in to focus from bio enhanced alternative is

to in all going there in that We've enhanced place. And the for You're got coming schemes we there. Europe. up started forms capacity some are responsibility producer demand of see because

Some mandates are is there. downstream of demand strong. the the for very And

coming coming look that's the around you Canada. in That's states United the in when States,

I think we're going come globally. it to see

like feel time, going that I low-carbon with doing over to more see you're approaches focus we're So fossil on Alberta.

customers. [indiscernible] that can right So at dictates. of different [ make regions growth ahead the on to above, pricing for now. you virgin by and of volume ISCC you're place what work we going our advanced and ] continue certified customers, the so We how we and fuels recycled uptake good virgin of low see bets demand that we plus going just certify with relatively course, materials focus the there. are Good COX materials content And to can see market plants recycling to plastics have All emissions, that zero fossil from see we're in from

Operator

of Our from Partners. Kevin next question from line McCarthy Vertical comes the Research

Kevin McCarthy

able up then a Coast any say, outages, might might as trying emerged the would seen to do driving export as perhaps $X.XX challenges unplanned maybe in on ounce of polyethylene that, question, be factors? Sea Red is think of that you better Just market if ]. quarter? you pattern some assets U.S. what market. ethyl-linked a year-to-date think the prices have run hard how by whether rise to or get attribute you [ or basis, related that strong Jim, the to sense don't enough U.S. And $X.XX Gulf demand a lift curious your be export the to let's first you domestic you I'm the logistics to we've in to have other

James Fitterling

question, Good volume were just the the say through work supply half first on and on export get at back the XXXX, was year. it side, That limit I the the the [ if side, we on Kevin. more chain considerably PE volumes really look you to of the would as year, prices in improved ] ability [indiscernible].

Canada, in the months we've export States, especially In sales. as as was the at end PE we fact, back rates one the fourth the on for hard Argentina quarter. part ran the overall, export and of of we're And year, can. We highest the full United year above channel And XX% up. the running got of December for crackers

else, And your there. I as P&SP [ in going up Coatings, year-over-year into year volumes well we're And We plastics there's ] I'm arbitrage Solutions. are in Solutions, China. no in in think Consumer so freeze China actually anything little open. impact the We if to a to up be The part. on double-digit bit or point, Consumer had sorry, were volumes unconstrained, running Industrial as the The is for Solutions. go

were digits but because up slightly of So Solutions in we P&SP. the -- in in are [indiscernible] PU, slightly we up and Consumer up up outage, in off Industrial in Solutions double

that GDP better. help to volumes. China are going move being about is taking So is I year, talking are last light think everybody there, and -- relatively kind those expectations is XXXX actions can be we the of My and market that

we got million for EBITDA full $XXX do about expansion. on we've As the of year the XXXX walk margin lock,

$X.X start we billion in EBITDA. XXXX So with

] -- about We We've all expansion. million got three $XXX It's got million segments. then got [ of we've growth. million $XXX margin JVs. volume $XXX from about turns for in and million improvement in We've earnings from about equity the have $XXX

walking saw for domestic you're [ it ] net-net, good market. I in to So with X.X scenario of kind XXXX. We will volume a PE And in well that think United landing States, help X.X, the as soft range here. domestic up the

Operator

comes next Mitsch from the Fermium Your Research. of question from line Frank

Frank Mitsch

anticipating suggest look you your hear that in 'XX started appreciate really the worth just should started Slide to in voice million going X, up they're the $XXX projects again. that where that back at a up million. those to and XXXX. million, $XXX you Can up I you're to contribute 'XX what nice should walk contribute in $XXX projects contribute XXXX? step Jim, mid-cycle talked take Jeff, to about want into earnings mid-cycle another of

James Fitterling

Yes.

think, I Vince beginning. back coming well and I that, was asking Frank, think I the didn't at probably what answer very

this of types demand rates not think returns, to obviously, probably mid-cycle first in some off there. and stimulates start I the we're year yet. XXXX, amount the bottom interest see probably I that -- mid-cycle coming think some mid-cycle half mean, you I half But to year, with of we're here. potentially the you're of before the back get looking

$XXX million XXXX that So you'll in of to see maybe the into $XXX XXXX. balance million

Operator

question from ] the comes [ Fisher Duffy next of Your Goldman line Sachs. from

Unknown Analyst

say income could, you $XXX the kind that major the just to your subtractive just from walk $XX on improvement, number? If on what's million equity can through JVs of million you and additive, what's

James Fitterling

Yes, sure.

to up, had I don't the part year-over-year on $XXX in see going Remember, JVs Sadara should think say of about they outages the you're million. the some year. know, be first I

that So the of we're part seeing improvements first some the Gulf same arbitrage the U.S. impact of volume they're in And the seeing they in obviously, Coast. had out year.

quarter JVs about run glycol. ability the Kuwait ]. in Obviously, on [ of that's strength see to hard to going a You're the saw million bit up fourth well. and their that ethylene $XX as We

cracking of based I ] pressure, Thai lot they're and on down be think naphtha JVs on cracking. obviously, [ will the naphtha a

about net-net, then So about I $XXX So [ everything million. you're XX ] up down else expect ] to them about and XX. [ be down

Operator

line John Your comes the next question from from Roberts Mizuho. of

Unknown Analyst

smooth pretty in a transition like looks finance. it And

the you you an I So divestments. on additional were stability considering update congratulations on give believe us here. some Could infrastructure that?

James Fitterling

Sure. And welcome number producing John, got evaluate. nice of a to continue call. to your Yes, assets infrastructure we that nonproduct on hear the we've voice back.

competitive year, working same place from marine that additional that rail proceeds liberate our in of of in in than cash this cost greater $X.X greater think successful and than cash, structure. was a to flight We and And infrastructure billion. a And here. I had even billion the have [indiscernible] maybe $X We there very for transactions is mindset keep XXXX some is well. related but idea divestiture that. assets to

to from are unique like then the us other got all kind we that's Dow should proceeds in think, the which forward. assets revenue-generating year. obviously, of and Alberta And settlement [ of levers the project with help going the cash to the up, reinvesting $XXX as move litigation, NOVA And cash-related about for the wind year that million part for is the we've ] the last we

company. to So Nova I'd the pushing [ cash we're levers -- get of unique ] kind say ] north [ the those try plus litigation to X.X of into

Anything add, else to Jeff? you want

Jeffrey Tate

only continue I the working the and The other -- Jim, capital, working improvement opportunities we capital add John. Yes. structural only good morning, on. other focus that thing thing is to would

[ days If conversion X of cash our you since around reduced days -- recall, [ ]. ] improvement cycle spin

So improvement [indiscernible] should tremendous days of at ]. get out We're to us X to look which X work [ of Team going also that, another Dow. to level across least give another

Operator

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

Patrick Cunningham

the size back can we Should on improvement more maybe segment? MEG weighted what's you just direction [indiscernible] turnarounds also in the year exit first that in You preportinging of expect could the throughout spreads distillation. and on sequential if briefly great. increase into XQ, comment XQ, mentioned year quarter, MDI we the and the help towards mentioned would for maybe driving MDI where the earnings ] And be [ your II&I, then significant you

James Fitterling

Yes.

year. see I think I that generically, that's think you'll build true, Patrick, the through that

turnaround. will the we get back positive, expect so half more First ramp -- positive. year. the will of then quarter, quarter, the and But And quarter will be mentioned be to obviously, we glycol second back into [indiscernible] the third

obviously, driver biggest there's in most consumed. impact isocyanate markets. Obviously, the where On well, that goods the is automotive of any durable on gets as some of construction-related and incident, is related rigids volume

the to off. side value entire see And that's So that, portfolio, start those a usually and things. you'll driver across pick the as the up, of to MDI of polyols start both volumes take MDI

the the year. -- we that So some markets, of I to demand China what in think the back half I'm the doing in in it And stimulate in was of start that is financial to markets stimulate interest that in the build of Could and see this year. going in rates half U.S. to be on China momentum back some what's we some try between things.

Operator

of from Mike comes from the question line Barclays. Leithead next Your

Michael Leithead

EBITDA EBITDA a report flat? impact that to input remains or that first. prices. to month needed year there second, Will Sadara relatively get Two or feedstock depressed the raising over Great. more cost further debt restructuring this expect to, expect is we your next Orenco questions ] cash earlier or on quite joint any net Can sufficient at now Or say, there [ right venture was I mid-cycle relative remain to we should believe And infusion back runway is Sadara the the so? type there levels? JV.

James Fitterling

forward. self-help question. of bottom to the We've made on expecting needed at talk do to cycle, look within try when obviously can feedstock pull actions and not I'm about any cash a navigate down. taken is the to 'XX. kingdom no going haven't we Sadara 'XX, There it's so Sadara had Yes, 'XX, you a to levers be focusing costs. that itself, costs contributions and But have it's good like prices, things keep a to just yet. in those that offset to the Sadara raise hold those we'll us,

And very comes market is obviously, oil to the Sadara then back. price. levered

the And that so Pacific especially the for clears oil and because plastics, drives costs. operating market Asia prices

'XX is investment pre-pandemic. were the oil beyond. market for demand parts we oil above we back There to which oil constructive above comes of that when expectations that, we so back that's as pre where is have big where were move are back yet and of about pandemic, Demand not into in going we the and be a And production. hasn't been price up, are lot

demand is So improve, markets I lag. for as the the to demand is the come supply global the going outlook that but to think going is

firm $XX up. so we're at that here oil, And could sitting

in Sadara. And 'XX line impact substantial could You to the pretty bottom to see you $XXX start end has into pitched oil, toward get frame. more top time be as the the of that a $XX, 'XX,

longer we're obviously as to cost improves. near into those term, feedstock down to So to to going handle market the navigate cost the keep to term, the -- be our able costs and lean economy

Operator

Capital Markets. from the Your from of next line question Alexey comes Yefremov KeyBanc

Aleksey Yefremov

a the next sound comments Do little made be this And you silicones months? XX couple Or to siloxanes see past. a upstream a market could more maybe the that you capacity by just me, margin here ] project? could longer-term within than of absorbed demand you in growth. uplift the positive think Jim, [ is

James Fitterling

Yes.

that's capacity down on quite it's of amount the came on XXXX coming in bit. a at look you 'XX, If versus what in

think to got that projects. been in China to grow, on markets downstream continuing a of The I of XXXX. that's beyond that. of has projects on, and couple the them have could just added been coming continuing delay couple It's upstream are a four amount invest You've There's we've to come in debottlenecking. and

The other come have obviously, positive prices metal happened silicon that's down is, to.

side And so that helps things. of the on input

into continues coming going demand you're continues So to I that see project buildings we're that go into grow. new continues high-rise and as think improve as downstream airports all other It volume construction. that for improve, big pools. into everything. going can schools into as and buildings to go and the are Those see this can to to pipeline remember, of globally goes go to kinds And the

connectivity strong Obviously, activity Data construction a to part start pick of I ramp. in EVs XG that We're up, then of were centers. see demand big think it. and part going and see to seeing you're is big as it. you areas. a

consumer So care in looking growth energy hogs and area products be as the have applications things to then some silicon data well. continues demand big how and centers, That's immersive at dielectrics cooling our which us as normal and efficiency. on are And fluids [ ] good. you're need energy a downstream goods to in for data beauty centers, like cooling

it. mid-cycle into feel do 'XX to and So I'm more 'XX to But I may optimistic, see to XXXX. we're start maybe going toward it in like move take until

Operator

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

Arun Viswanathan

be here [ -- in and kind give X.X maybe the or good gets was that guidance take consider level looks But $X it billion. little EBITDA, for a to that was so little to you segue I to the to ] or that add $X.X about a actually what you're if think annualizing for a then issuing bit that's Would closer to but for seasonality, in thinking you you maybe you And it will of So what bit. get when the trough-like I QX, makes -- move you're conditions? by some excited you things 'XX, guess maybe the that of exiting And year? you if you we'll Obviously, the can forward. going just comment are as X growth likely for slower a years the X expectations through year mid-cycle next that maybe could in on achieve see we or your years. versus X growth are what or environment China X last for billion the

as your on Just thoughts get that to wanted well.

James Fitterling

Yes.

& we're is Packaging in, Specialty in things the coming new are as no Plastics. me that think forward capacity to constructed I moving

really high And us all to export arbitrage the window China, I double-digit open got I And in as you've advantaged operating growth China. cost You've for mentioned, rates our in got regions world. the think of has move been plastics Mexico continue strong. by to product we're strong, view move lot is -- India supply so a Mexico able we're been to We to rail. moving has into India. products. of

I positive. all think that's

in bit some Europe structural big comes But Americas, the Energy weight Pacific on back, we on China then industrial view as push I would helps. demand, weight which lower. if get say costs even issues down and the better is mixed. not Pacific the big got a puts as on which Europe's puts longer consumer, a energy additional weight can't I drag think It economy. the it a big term, was. Europe, short will view in It's as view I Asia in our in so in term a our think of cost Asia our rest is

through So fortunately, that help advantage us, we've think got navigate and positions I we'll there some that. cost

to I of strength see the And that projects got just we're the from polyethylene the in about. on. on talked all the strength. to back Industrial $XXX some oil for volume in that I in spread coming to pricing full that. we've the Solutions our gas that to half year. year, mentioned growth existing just We've and $XXX million million got That's coming our number new margin expansion business going is Back

So strong, -- back of sheet think time going keep like to I been run get Alberta going wave next the kind ourselves ] pull roll. 'XX lock mover time going right we're first ready with to we're low mid-cycle and to we to to we're ramp cash, meantime, to the in were is levers the This doing the do rate a the we're for in cost the with just and to balance we've on to in This manage the construction, like it. the [ Nine to project, Texas is in the

Operator

now Gupta will remarks. back to This Mr. turn for ends our closing I call the question-and-answer over session.

Pankaj Gupta

Yes. Thanks, everyone, XX we Thank you, for This -- transcript Thank your joining ] Rob. interest copy Dow's in Dow. appreciate and again. We hours. a concludes call. our call, on referenced will our [ you of approximately website be posted

Operator

participation. you This concludes today's your for conference call. Thank

You disconnect. now may

Dow (DOW) 25 Jan 242023 Q4 Earnings call transcript