Q3 2024 Dow Inc Earnings Call

Yeah.

Unknown Executive: Greetings and welcome to the Dow Third Quarter 2024 Earnings Conference call. At this time, all participants are in listen-only mode.

Speaker Change: Greetings and welcome to the Dow third quarter 'twenty 'twenty four earnings conference call. At this time all participants are in listen only mode. A brief question and answer session will follow the formal presentation. If you would like to ask a question at that time. Please press star followed by number one on your telephone keypad.

Unknown Executive: A brief question and answer session will follow the formal presentation. If you would like to ask a question at that time, please press star followed by number one on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: As a reminder, this conference is being recorded I will now turn it over to Dow Investor Relations Vice President Andrew Reicher. Mr. Baker, you may now begin.

Andrew Riker: I will now turn it over to Dow Investor Relations Vice President Andrew Riker, Mr. Riker, you may now begin. Good morning. Thank you for joining today. The accompanying slides are provided through this webcast and posted on our website. I'm Andrew Riker, Dow's Investor Relations Vice President. Leading today's call are Jim Fitterling, Chair and Chief Executive Officer, and Jeff Tate, Chief Financial Officer. Please note our comments contain forward-looking statements and are subject to the related cautionary statement contained in the earnings news release and slides. Please refer to our public filings for further information about principal risk and uncertainty.

Andrew Reicher: Good morning, Thank you for joining today the accompanying slides are provided through this webcast and posted on our website I'm, Andrew Reicher Investor Relations Vice President leading today's call are Jim Fairley Chair, and Chief Executive Officer, and Jeff <unk> Chief Financial Officer. Please note our comments contain forward looking statements and <unk>.

Andrew Reicher: Object to the related cautionary statement contained in the earnings news release and slides. Please refer to our public filings for further information about principal risks and uncertainties, unless otherwise specified all financials, where applicable exclude significant items.

Andrew Riker: Unless otherwise specified, all financials, where applicable, exclude significant items. We will also refer to non-GAAP measures. The reconciliation of the most directly comparable GAAP financial measure and other associated disclosures are contained in the earnings news release and slides that are posted on our website.

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

Andrew Riker: On slide two is our agenda for today's call. Jim will review our third quarter results, operating segment performance, and some key updates regarding the strategic asset review we announced today. Jeff will then share an update on the macroeconomic environment and provide fourth quarter modeling guidance, followed by a discussion on our financial position and progress on Dow's growth investment.

Speaker Change: On slide two is our agenda for today's call Jim will review, our third quarter results operating segment performance and some key updates regarding the strategic asset review, we announced today.

Speaker Change: Jeff will then share an update on the macroeconomic environment and provide fourth quarter modeling guidance, followed by a discussion on our financial position and progress on growth investments.

Andrew Riker: Jim will close the call, and following that, we will take your questions.

Speaker Change: Jim will close the call and following that we will take your questions now let me turn the call over to Jim.

Unknown Executive: Now, let me turn the call over.

Jim Fitterling: Thank you, Andrew. Beginning on slide three, our cost advantage footprint in the Americas continues to provide strong competitive edge, capturing demand growth in attractive markets and retail. In the third quarter, Team Dow delivered our fourth consecutive quarter of year-over-year volume growth. We delivered this despite a soft macroeconomic environment, primarily in Europe and China, as well as an unplanned cracker outage in Texas, which has been successfully restarted and is running well. Net sales in the third quarter were $10.9 billion. This is up 1% versus the year ago period, led by higher demand and local prices in the United States and Canada.

Jim: Thank you Andrew beginning on slide three our cost advantaged footprint in the Americas continues to provide strong competitive edge, capturing demand growth in attractive markets and regions.

Jim: In the third quarter team Dow delivered our fourth consecutive quarter of year over year volume growth.

Jim: We delivered this despite a soft macroeconomic environment, primarily in Europe, and China as well as an unplanned cracker outage in Texas, which has been successfully restarted and is running well.

Net sales in the third quarter were $10 9 billion. This is up 1% versus the year ago period led by higher demand and local prices in the United States and Canada.

Jim Fitterling: Volume increased 1% versus the year ago period and prior periods. Sequentially, we saw gains in packaging and specialty plastics and industrial intermediates and infrastructure. Local price was flat year over year, as gains in packaging and specialty plastics were offset by decreases in performance, materials, and coating. Sequentially, local price was down 1% due to minor declines across all sectors. Operating EBIT was $641 million, up $15 million year over year, reflecting higher integrated margins in packaging and specialty plastics, which were partly offset by the impact of the unplanned cracker outage in Texas and higher planned maintenance activity.

Jim: Volume increased 1% versus the year ago period, and prior periods sequentially, we saw gains in packaging and specialty plastics and industrial intermediates and infrastructure.

Local price was flat year over year as gains in packaging and specialty plastics were offset by decreases in performance materials and coatings sequentially.

Jim: Sequentially local price was down 1% due to minor declines across all segments.

Jim: Operating EBIT was $641 million up $15 million year over year, reflecting higher integrated margins in packaging and specialty plastics, which were partly offset by the impact of the unplanned cracker outage in Texas and higher planned maintenance activity.

Jim Fitterling: Cash flow from continuing operations was $800 million, down year-over-year, primarily due to higher inventories to support both sales growth and labor-related supply chain disruption. Shareholder remuneration for the quarter was $584 million, including dividends and share repurchase.

Jim: Cash flow from continuing operations was $800 million.

Jim: Down year over year, primarily due to higher inventories to support both sales growth and labor related supply chain disruptions.

Jim: Shareholder remuneration for the quarter was $584 million <unk>.

Jim: Including dividends and share repurchases.

Jim Fitterling: In addition, we progressed our long-term growth strategy, including signing a long-term agreement with Lenday for the supply of clean hydrogen for our Path to Zero project in Fort Saskatchewan. We also completed the acquisition of U.S.-based polyethylene recycler, Circulum. This will add capacity of 50,000 metric tons of recycled materials annually to Dow's portfolio.

Jim: In addition, we progressed our long term growth strategy, including signing a long term agreement with Linda or the supply of clean hydrogen for a path to zero project imports Saskatchewan.

Jim: We also completed the acquisition of U S based polyethylene recycler circulars. This will add capacity of 50000 metric tons of recycled materials annually to Dallas portfolio.

Jim Fitterling: Now turning to our operating segment performance on slide. In the packaging and specialty plastic segment, local price increased year over year, led by higher polyethylene prices in all regions except Latin America, which was flat. Volume was flat year over year, as higher demand for functional polymers in all regions was offset by lower polyethylene volume. Operating EBIT was $618 million, an increase of $142 million year over year. This was primarily driven by higher integrated margins, which were partly offset by the impact of the unplanned cracker outage I mentioned earlier. Moving to the industrial, intermediates, and infrastructure segment, local price was flat year over year.

Jim: Now turning to our operating segment performance on slide four in.

Jim: In the packaging <unk> specialty plastics segment local price increased year over year led by higher polyethylene prices in all regions, except Latin America, which was flat.

Jim: Volume was flat year over year as higher demand for functional polymers and all regions was offset by lower polyethylene volumes.

Jim: Operating EBIT was $618 million, an increase of $142 million year over year.

Jim: This was primarily driven by higher integrated margins, which were partly offset by the impact of the unplanned cracker outage I mentioned earlier.

Jim: Moving to the industrial intermediates and infrastructure segment.

Jim: Local price was flat year over year.

Jim Fitterling: In addition, volume was down 2%. This was driven by lower volumes in polyurethanes and construction chemicals, which were primarily due to a force majeure in MDI following a third-party supplier outage. Operating EBIT decreased $74 million versus the year-ago period. Results were driven by higher planned maintenance activity and lower integrated margins, which were partly offset by improved equity earnings. And in the performance materials and coding segment, local price declined year over year, while volume was up 5% with gains in both businesses and across all geographic regions. Operating EBIT was $140 million, down $39 million compared to the year-ago period, driven by higher raw material costs, which were partly offset by higher volume.

Jim: In addition volume was down 2%.

Jim: This was driven by lower volumes in polyurethane and construction and chemicals, which were primarily due to a force majeure in MDI following a third party supplier outage.

Operating EBIT decreased $74 million versus the year ago period.

Jim: <unk> were driven by higher planned maintenance activity and lower integrated margins, which were partly offset by improved equity earnings.

Jim: And in the performance materials and coatings segment local price declined year over year, while volume was up 5% with gains in both businesses and across all geographic regions.

Jim: Operating EBIT was $140 million down $39 million compared to the year ago period, driven by higher raw material costs, which were partly offset by higher volumes.

Jim Fitterling: Moving to slide five. The strength of Dow's differentiated portfolio is defined by our strategic and purpose-built asset footprint, which leverages low-cost feedstock positions, primarily in the Americas. Our growth investments are concentrated in higher value businesses and regions, particularly where demand is resilient and we have a competitive cost. Over the past few years, we've demonstrated our commitment to operating with the best owner mindset by taking proactive actions with select higher cost assets aligned with the evolving market dynamics. Since 2023, we have undertaken more than 20 asset These include targeted rationalization of our global polyols capacity. Shutting down our propylene oxide unit in Freeport, Texas in 2025 to reduce lower value merchant CO exposure.

Jim: Moving to slide five.

Jim: The strength of <unk> differentiated portfolio is defined by our strategic and purpose built asset footprint, which leverages low cost feedstock positions primarily in the Americas.

Jim: Our growth investments are concentrated at higher value businesses and regions, particularly where demand is resilient and we have a competitive cost advantage.

Jim: Over the past few years, we've demonstrated our commitment to operating with a best owner mindset by taking proactive actions with select higher cost assets.

Jim: Aligned with the evolving market dynamics.

Jim: Since 2023, we have undertaken more than 20 asset actions.

Jim: These include targeted rationalization of our global <unk> capacity.

Jim: Shutting down our propylene oxide unit in Freeport, Texas in 2025 to reduce lower value merchant exposure.

Jim Fitterling: Strengthening our coatings footprint with select asset closures, and announcing the sale of our laminating adhesives business for $150 million, including two manufacturing sites in Italy, which we expect to finalize in the fourth quarter of this year. Overall, these actions have been primarily focused on our industrial, intermediates, and infrastructure segment and in the EMEA region.

Jim: Strengthening our coatings footprint with select asset closures and announcing the sale of our laminating adhesives business for $150 million, including two manufacturing sites in Italy, which we expect to finalize in the fourth quarter of this year.

Jim: Overall these actions have been primarily focused on our industrial intermediates <unk> infrastructure segment and in the EMEA region.

Jim Fitterling: On slide six, current market dynamics are impacting Europe, including continued soft demand, coupled with a persistent lack of long-term regulatory policy. This ongoing absence of clear, consistent, and competitive regulatory policy in Europe has resulted in many challenges for our end. These challenges have been acknowledged in statements by EU government leaders, top economists, and our And while a demand recovery in other parts of the world is expected to provide swift upside across the markets we serve, This alone is unlikely to be enough in Europe.

Jim: On slide six.

Jim: Market dynamics are impacting Europe.

Jim: Including continued soft demand.

Jim: With the persistent lack of long term regulatory policy.

Jim: This ongoing absence of clear consistent and competitive regulatory policy in Europe as a result of the many challenges for our industry.

Jim: These challenges have been acknowledged and statements by EU government leaders top economists and our peers.

Jim: And while the demand recovery in other parts of the World was expected to provide swift upside across the markets we serve.

Jim: This alone is unlikely to be enough in Europe.

Jim Fitterling: Given these dynamics, we've begun a strategic review of select European assets, primarily those in our polyurethane. This review includes all value-creating options for these assets and currently consists of approximately 20% of our sales in the EMEA region. We expect to complete this review by mid-2025. We continue to engage with governments both directly as well as through our leadership and trade associations to improve the industry's overall competitiveness in the region. Decisions regarding the strategic review, similar to our prior actions, will focus on strengthening Dow's global portfolio. This enables us to invest in the most attractive opportunities and create long-term value growth for our shareholders.

Jim: Given these dynamics, we have begun a strategic review of select European assets, primarily those in our polyurethane business.

Jim: This review includes all value, creating options for these assets.

Jim: Currently consists of approximately 20% of our sales in the EMEA region.

Jim: We expect to complete this review by mid 2025.

Jim: We continue to engage with governments, both directly as well as through our leadership in trade associations to improve the industry's overall competitiveness in the region.

Jim: Decisions regarding the strategic review similar to our prior actions will focus on strengthening Dallas global portfolio.

This enables us to invest in the most attractive opportunities and create long term value growth for our shareholders now.

Jeff Tate: Now I'll turn it over to Jeff to review our outlook and guidance.

Now I'll turn it over to Jeff to review, our outlook and guidance.

Jeff Tate: Thank you, Jim, and good morning to everyone joining our call today. Moving to slide seven, we continue to experience muted demand across some markets and regions with the greatest pressure in Europe and China. Global manufacturing PMI has been decelerating over the past three months and consumer spending remains pressured by persistent inflation. That said, we're monitoring the impact of rate cuts in the US and Europe, as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025. Looking specifically across our four market verticals and packaging, domestic demand in North America is resilient and exports are robust, despite decelerating last month.

Jeff: Thank you, Tim and good morning to everyone joining our call today.

Jeff: Moving to slide seven we continue to experience unit demand across some end markets and regions with the greatest pressure in Europe and China.

Jeff: Global manufacturing PMI has been decelerating over the past three months and consumer spending remains pressured by persistent inflation.

Jeff: That said, we're monitoring the impact of rate cuts in the U S and Europe as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025.

Jeff: Looking specifically across our four market verticals and packaging domestic demand in North America is resilient and exports are robust despite decelerating last month.

Jeff Tate: Demand in Europe remains soft, consistent with manufacturing PMI at the lowest point year to date. In addition, China's manufacturing PMI returned to contractionary levels in September after improving in August. Infrastructure demand, primarily in residential construction, remains low. In the U.S., housing starts decelerated to negative 0.7 percent year-over-year in September. Eurozone construction PMI remained soft and new home prices in China declined year over year for the 15th consecutive month. Consumer spending has slowed across the globe, reflecting affordability challenges. We've seen consumer confidence weaken in the United States, remain negative in Europe, and decline in China for the fifth consecutive month.

Demand in Europe remained soft consistent with manufacturing PMI at the lowest point year to date.

Jeff: In addition, Chinas manufacturing PMI returned to contractionary levels in September after improving in August.

Jeff: Infrastructure demand primarily in residential construction remains low in the U S housing starts decelerated to negative 0.7% year over year in September.

Jeff: Eurozone construction PMI remains soft and new home prices in China declined year over year for the 15th consecutive month.

Jeff: Consumer spending has slowed across the globe, reflecting affordability challenges, we've seen consumer confidence weakened in the United States remained negative in Europe and decline in China for the fifth consecutive month.

Jeff Tate: And in mobility, demand has softened globally. In the U.S., auto sales were slightly up year over year in September after decreasing in August. And in the EU, new car registrations declined in September after reaching a three-year low in August. China auto production declined for the fourth consecutive month, reflecting weak domestic demand as well as exports due to tariffs imposed in Europe.

And then mobility demand has softened globally in the U S. Auto sales were slightly up year over year in September after decreasing in August.

Jeff: And then the EU new car registrations declined in September after reaching a three year low in August.

Jeff: China Auto production declined for the fourth consecutive month, reflecting weak domestic demand as well as exports due to tariffs imposed in Europe.

Jeff Tate: Now turning to our outlook on slides. We expect fourth quarter earnings to be approximately $1.3 billion, up year over year, and lower quarter over quarter as normal seasonality plays out. Now looking into the sequential drivers by segment. And the packaging and specialty plastic segment, lower integrated margins stemming from higher feedstock costs and lower licensing revenue, will be ahead. Following an unplanned event in July, we restarted our Texas Bay Cracker at the end of the third quarter, and we expect to ramp operating rates steadily throughout the fourth quarter. This will generate an ad back of approximately $100 million in the fourth quarter.

Jeff: Now turning to our outlook on slide eight.

Jeff: We expect fourth quarter earnings to be approximately $1 3 billion.

Jeff: Year over year, and lower quarter over quarter as normal seasonality plays out.

Jeff: Now looking into the sequential drivers by segment.

Jeff: And the packaging and specialty plastics segment, lower integrated margins stemming from higher feedstock costs and lower licensing revenue will be a headwind.

Jeff: Following an unplanned event in July we restarted our Texas based cracker at the end of the third quarter, and we expect to ramp operating rates steadily throughout fourth quarter.

Jeff: This will generate an add back of approximately $100 million in the fourth quarter.

Jeff Tate: We also expect lower plant maintenance activity across multiple sites along the U.S. Gulf Coast and in Europe to provide a tailwind sequence. In the Industrial, Intermediates, and Infrastructure segment, conditions remain mixed. Demand in building and construction and markets will be seasonally lower, but we expect the ongoing ramp of our plan at Louisiana operations, as well as the seasonal uptick in demand for de-icing fluid to offset this decline. In addition, we anticipate a $50 million tailwind due to lower plant maintenance activity along the U.S. Gulf Coast. In the performance materials and coating segment, we see continued growth in downstream silicone applications across most end markets.

Jeff: We also expect lower plant maintenance activity across multiple sites, along the us Gulf coast and in Europe to provide a tailwind sequentially.

Jeff: And the industrial intermediates and infrastructure segment.

Jeff: Conditions remain mixed.

Jeff: Demand in building and construction and markets will be seasonally lower but we expect the ongoing ramp of our planet, Louisiana operations as well as the seasonal uptick in demand for Deicing fluid to offset this decline.

Jeff: In addition, we anticipate a $50 million tailwind due to lower plant maintenance activity, along the us Gulf Coast.

Jeff: In the performance materials and coatings segment, we see continued growth in downstream silicones applications across most end markets.

Jeff Tate: However, this is expected to be offset by ongoing weakness in the China property. In addition, lower seasonal demand for building and construction in markets is expected to be a headwind of approximately $125 million.

Jeff: However, this is expected to be offset by ongoing weakness in the China property sector.

Jeff: In addition, lower seasonal demand for building and construction end markets is expected to be a headwind of approximately $125 million.

Jeff Tate: Moving to slide nine. Dean Dow has built a very compelling investment opportunity, even as our industry has faced volatile market conditions over the past few years. By continuing to execute our playbook, deliver on our financial priorities, and advance our strategy, we are positioning Dow for long-term value growth. Importantly, we have built the financial flexibility to continue disciplined investment in areas that will raise our underlying earnings, reduce emissions, and advance customer circularity needs to drive growth. As it relates to our financial strengths, Dow has ample liquidity and a strong investment-grade credit profile. Nearly all of our long-term debt is at a fixed rate, and we have no substantive maturity until 2027.

Jeff: Moving to slide nine.

Speaker Change: Being down has built a very compelling investment opportunity, even as our industry has faced volatile market conditions over the past few years.

Speaker Change: Continuing to execute our playbook to deliver on our financial priorities and advance our strategy. We are positioning <unk> for long term value growth.

Speaker Change: Importantly, we have built a financial flexibility to continue disciplined investment in areas that will raise our underlying earnings reduce emissions and advanced customer circularity needs to drive growth.

Speaker Change: As it relates to our financial strength, Dow have ample liquidity and a strong investment grade credit profile.

Speaker Change: Nearly all of our long term debt is at a fixed rate and we have no substitute maturities until 2027.

Jeff Tate: We also expect to enhance our near-term cash flow generation through the execution of unique-to-Dow cash flow leverage. And we are making solid progress on the evaluation of strategic options for our non-product producing infrastructure assets. As previously mentioned, we anticipate generating over $1 billion in proceeds from the transaction. And we expect to share further progress yet this year. Dow's strong financial flexibility allows us to advance our long-term growth strategy. Notably, in the third quarter, the team is making good progress on the construction of our Path to Zero project in Fort Saskatchewan. Major foundation work began and approximately 40% of cracker pilings are Aligned to our capital deployment schedule for the project, we expect to receive more than $1.5 billion in cash and tax incentives, with more than 80% received by 2030.

Speaker Change: We also expect to enhance our near term cash flow generation through the execution of unique to Dow cash flow levers.

Speaker Change: And we are making solid progress on the evaluation of strategic options for our non product reducing infrastructure assets.

Speaker Change: As previously mentioned, we anticipate generating over $1 billion in proceeds from the transaction and.

Speaker Change: And we expect to share further progress yet this year.

Speaker Change: Our strong financial flexibility allows us to advance our long term growth strategy.

Speaker Change: Notably in the third quarter.

Speaker Change: Team is making good progress on the construction of our path to zero projects in Fort Saskatchewan.

Speaker Change: Major Foundation work began and approximately 40% of cracker pilings are complete.

Speaker Change: Our launch of our capital deployment schedule for the project, we expect to receive more than one 5 billion in cash and tax incentives with more than 80% received by 2030.

Jeff Tate: Our near-term growth projects remain on track to deliver more than $2 billion of underlying EBITDA. This includes capacity expansions in silicones this year that will deliver approximately $70 million of annual EBITDA at full run. And our transform the way strategy is expected to deliver more than $500 million of EBITDA by 2030. In the third quarter, we added new products to our growing circular portfolio. This includes Revolute Recycled Plastics Resins that incorporate post-consumer recycled material into cable jackets. We also introduced the first biocircular engaged REN polyolipid elastomers for carpet towel vacuum.

Speaker Change: Our near term growth projects remain on track to deliver more than $2 billion of underlying EBITDA.

Speaker Change: This includes capacity expansions in silicones this year that will deliver approximately $70 million of annual EBITDA at full run rates.

Speaker Change: And our transform the way strategy is expected to deliver more than $500 million of EBITDA by 2030.

Speaker Change: In the third quarter, we added new products to our growing circular portfolio.

Speaker Change: This includes revenue recycled plastics resin that incorporate post consumer recycled material and to cable jaconet.

Speaker Change: We also introduced the first vial circular engaged Orient polyolefin elastomers for carpet tile backing.

Unknown Executive: And with that, I will turn the call back over.

Speaker Change: And with that I will turn the call back over to Jim.

Unknown Executive: Closing on slide 10. Despite persistent softness across many end markets and regions. Dow continues to leverage our advantaged cost positions to capture areas of demand strength, operate with discipline, and invest for long-term profitable growth.

Jim: Closing on slide 10 despite.

Jim: Despite the persistent softness across many end markets and regions now continues to leverage our advantaged cost positions to capture areas of demand strength.

Operating with discipline and invest for long term profitable growth.

Unknown Executive: Building on the more than 20 asset related actions we've taken since 2023, today's announcement that we're undertaking a strategic review of select European assets is consistent with our best owner mindset and focused on long term shareholder value creation. In addition, we're actively progressing unique to Dow Cash flow levers and expect to share more by the end of the year. Our solid financial foundation allows us to advance our long-term strategy, which is poised to deliver more than $3 billion in additional annual earnings growth by 2030. Dow is in a strong position to boost our core earnings as market conditions improve and we begin capturing the full benefits from our growth investments, thereby enabling greater returns to shareholders.

Jim: Building on the more than 20 asset related actions. We've taken since 2023 today's announcement that we are undertaking a strategic review of selected European assets is consistent with our best owner mindset and focused on long term shareholder value creation.

Jim: In addition, we're actively progressing unique to Dow cash flow levers and expect to share more by the end of the year.

Jim: Our solid financial Foundation allows us to advance our long term strategy, which is poised to deliver more than $3 billion in additional annual earnings growth by 2030.

Speaker Change: That was in a strong position to boost our core earnings as market conditions improve and we begin capturing the full benefits from our growth investments, thereby enabling greater returns to shareholders with that I'll turn it back to Andrew to get us started with the Q&A.

Andrew Riker: With that, I'll turn it back to Andrew to get us started with the Q&A.

Andrew Riker: Jim. Now let's move on to your questions. I would like to remind you that our forward-looking statements apply to both the prepared remarks and the following Q&A.

Andrew Reicher: Thank you Jim now, let's move on to your questions I would like to remind you that our forward looking statements apply to both our prepared remarks and the following Q&A operator, please provide the Q&A instructions.

Unknown Executive: Operator, please provide the Q&A instructions. We are now opening the floor for question and answer session. If you would like to ask a question, please press star followed by number one on your telephone keypad. Please limit your questions to one question.

Speaker Change: We are now opening the floor for a question and answer session. If you would like to ask a question. Please press star followed by number one on your telephone keypad. Please limit your questions to one question. Your first question comes from Vincent Andrews from Morgan Stanley.

Vincent Andrews: Your first question comes from Vincent Andrews from Morgan Stanley.

Jim Fitterling: Your line is now open. Thank you and good morning, everyone. Wondering if I could just ask about the outlook for packaging and specialty plastics in terms of in terms of pricing? If I'm reading the guidance correctly, it looks it looks like on a net basis, pricing should be flat for the fourth quarter. Is that correct? And is there sort of a cadence of pricing you're expecting maybe up in October and then give a little bit back as traditional in November and December? How are you thinking about it?

Speaker Change: Your line is now.

Vincent Andrews: Thank you and good morning, everyone I'm wondering if I could just ask about the outlook for packaging and specialty plastics in terms of in terms of pricing.

Vincent Andrews: If im reading the guidance correctly it looks it looks like on a net basis pricing should be flat for the fourth quarter is that correct and is there sort of the cadence of pricing Youre expecting maybe up in October and then give a little bit back as is traditional in November and December how are you thinking about it.

Jim Fitterling: Good morning, Vince. Yeah, I think you're reading it overall correctly. We've got an outlook for flat pricing for the quarter. We've got some obviously expectations that we might see some higher feedstock costs, but still very competitive feedstocks here in the US Gulf Coast. I would think we've got moves out there announced for $0.03 in October and $0.03 in November. And I think our view is typically that's when we tend to see the move in pricing up and then things soften toward the end.

Speaker Change: Good morning, Vince I think Youre reading it overall correctly, we've got an outlook for flat pricing for the quarter. We've got some obviously expectations that we might see some higher feedstock cost, it's still very competitive feedstocks here in the U S Gulf Coast.

Speaker Change: I would think we've got moves out there announced for <unk> in October and three in November.

Speaker Change: And I think our view is typically that's when we tend to see the move in pricing up and then things soften towards the end of the year.

Hassan Ahmed: Your next question comes from Hassan Ahmed from Alembic Global. Your line is now open. Morning, Jim. You know, just a question around some of the sort of review work that you guys are doing in Europe. You know, you guys specifically talked about polyurethanes, and I'm just trying to sort of get a better sense of all the moving parts with regards to how you see the polyurethane cycle sort of panning out. Obviously, you know, we've seen or are about to see some assets change hands within the global polyurethane market. The destocking was particularly severe in polyurethanes, but, you know, the supply side seems, you know, a bit tepid.

Speaker Change: Your next question comes from Hassan Ahmed from Alembic Global Your line is now open.

Hassan Ahmed: Good morning, Jim.

Hassan Ahmed: Just a question around some of the sort of review work that you guys are doing in Europe.

Hassan Ahmed: You guys, specifically talked about polyurethane and I'm, just trying to sort of get a better sense of all the moving parts with regards to how you see the polyurethane cycles sort of planning out obviously you know.

Hassan Ahmed: We have seen.

Hassan Ahmed: About to see some assets change hands within the billable polyurethane market. The destocking was particularly severe in polyurethane, but.

The supply side it seems.

Hassan Ahmed: A big debate, so as sort of you sift through all of these moving parts, how do you see the polyurethane markets sort of.

Jim Fitterling: So you know, as sort of you sift through all of these moving parts, how do you see the polyurethane market sort of coming out on the other side?

Hassan Ahmed: Coming out on the other side.

Jim Fitterling: Good morning, Hassan. Actually, we're still poised for a very good recovery in construction and durables markets, which really drive a lot of what's going on in polyurethanes. I would add automotive on top of that, because I think automotive has been under some pressure in Europe. So I agree with you. There's no signs that there's Stalking and destalking has run its course, but I think we're waiting for that obvious turn in the economy that gets people moving into those segments. And those assets of Europe is really a portfolio shift move. It really has nothing to do with the business.

Speaker Change: Good morning Hassan.

Hassan Ahmed: Actually we are still poised for a very good recovery in construction and durables markets, which really drive a lot of what's going on in polyurethane and automotive on top of that because I think automotive has been under some pressure in Europe.

Hassan Ahmed: So I agree with you there's no signs that there is any stocking and Destocking has run its course.

Hassan Ahmed: We're waiting for that obvious turn in the economy that gets people moving into those segments.

Hassan Ahmed: Assets of Europe is.

Hassan Ahmed: Really a portfolio shift move and really has nothing to do with.

Hassan Ahmed: The business polyurethane, just good business pretty diverse downstream markets.

Jim Fitterling: Polyurethanes is a good business, pretty diverse downstream markets. We've got good positions there. And as I mentioned, we've taken about 20 asset actions so far across the globe, mostly in II&I, which is really to tighten up the footprint and get our https://www.youtube.com.uk both polyurethanes and also the coating.

Hassan Ahmed: We've got good positions, there and as I mentioned.

Hassan Ahmed: Thinking about 'twenty asset actions.

Hassan Ahmed: So far across the globe, mostly in ini, which has really tightened up the footprint and get our.

Hassan Ahmed: Capacity is focused on our lowest cost assets. There. So I think it's strengthened.

Hassan Ahmed: Both polyurethane business and also the coatings business as well.

Michael Fison: Your next question comes from Michael Fison from Wells Fargo. Your line is now open.

Speaker Change: Your next question comes from Michael.

Speaker Change: From Wells Fargo. Your line is now open.

Richard Garchitorena: Good morning, this is Richard also my If I could just shift back to PNSP, I know it might be early, but given your comments on global integrated margins that are declining on a sequential basis in 4Q, how should we think about where margins in EBITDA for PNSP should be headed into 2025? What are the key puts and takes that we should look at, and, you know, how are you thinking about? your global footprint and export growth rate.

Speaker Change: Good morning, this is Richard on for Mike.

Richard: If I can just shift back to PSP.

Speaker Change: Be early but given your comments on global integrated margins.

Speaker Change: On a sequential basis for Q, how should we think about where margins and EBITDA for peanuts.

Speaker Change: As we head into 2025, what are the key puts and takes.

So we should look at and.

Speaker Change: How are you thinking about.

Speaker Change: You have a global footprint and export growth rates. Thank you.

Jim Fitterling: Yeah, Michael, good question.

Speaker Change: Yes, Michael Good question, Richard I'm, sorry, good question.

Jeff Zekauskas: Richard, I'm sorry. Good question. On PNSP, we, you know, even despite the issues we have at Texas AIDS in the third quarter, we still see strong volume growth downstream. So we're able to Demand is still good. I would say we had a little bit of a slowdown at the end of the quarter with exports because of the dock strikes that were going on at the time. But overall, downstream demand and volume has been good. So operating rates are continuing to tighten up and the cost advantage assets are running strong. As we look forward into 2025, I think you're going to see some continued growth and volume.

Speaker Change: On <unk> SP.

Speaker Change: Even despite the issues, we had but Texas state in the third quarter, we still see strong volume growth downstream, so we're able to.

Speaker Change: Paul a lot of levers to make that happen dimmed.

Speaker Change: The demand is still good.

Speaker Change: I'd say, we had a little bit of a slowdown at the end of the quarter.

Speaker Change: With exports because of the dock strikes that were going on at the time.

Speaker Change: But overall downstream demand in volume has been good.

So operating rates are continuing to tighten up and net cost advantaged assets are running strong as we look forward into 2025.

Speaker Change: Youre going to see some continued growth in volumes. So we're looking at.

Jim Fitterling: So we're looking at about 3% organic growth and volume going into next year. We're going to see some benefit from higher operating rates. So from a basis of about 5.6 billion consensus for 2024, you know, that would add maybe 400 million to that. We have ad back for two unplanned events. We've got the full year of glycol two being fully ramped up as well as the Texas eight unplanned outage we had in the third quarter. So the ad back of those two is about 300 million. And then from our growth investments, we've got about 150 million from polyethylene and functional polymers, deep bottlenecks, incremental growth projects there, about 75 million from alkoxylates capacity that's coming on in the US Gulf Coast and the full ramp up of Thailand PG in Asia.

About 3% organic growth in volume going into next year, we're going to see some benefit from higher operating rates.

Speaker Change: So from a basis of about five 6 billion consensus for 2024.

Speaker Change: That would add maybe $400 to that.

Speaker Change: We have add back for two unplanned events, we've got the full year glycol to being fully ramped up as well as the Texas State unplanned outage, we had in the third quarter. So the add back of those two is about $300 million.

Speaker Change: And then from our growth investments, we've got about $150 million from polyethylene and functional polymers debottleneck incremental growth projects there.

Speaker Change: About $75 million from our <unk> capacity, that's coming on in the U S Gulf Coast and.

Speaker Change: The full ramp up of Thailand, Fiji and.

Speaker Change: Asia.

Jim Fitterling: And then about 75 million from consumer solutions growth investments in deep bottlenecks. And they had a strong third quarter with 6% year over year volume growth in silicones downstream specialty applications. So that's another 300 million there. So all in all, that's about a billion higher.

Speaker Change: And then about $75 million from consumer solutions growth investments and Debottleneck and they had a strong third quarter with 6% year over year volume growth in silicones downstream.

Speaker Change: Specialty applications. So that's another $300 million there so all in all that's about $1 billion higher.

David Begleiter: And then you've got some upsides and downsides, depending things would happen within Your next question comes from Jeff Zekauskas from JP Morgan.

Speaker Change: And then you've got some upsides and downsides depending on.

What happened within that window.

Speaker Change: Your next question comes from Jeff Zekauskas from Jpmorgan. Your line is now open.

Steve Burns: Your line is now open. Thanks very much. When you think about your Saskatchewan project, If you have a different production process in that you'll use. The hydrogen, the order of thermal reactor from. So if ethane costs are the same. Is the production cost in Fort Saskatchewan higher or lower than it is in Freeport? And if so, by how much? And secondly, do you still expect to bring on, I think, 600,000 tons of polyethylene in the U.S. in the second half of 2025?

Jeff Zekauskas: Thanks very much.

Jeff Zekauskas: When you think about your Saskatchewan project.

Jeff Zekauskas: If you have a different production process in that year over us.

The hydrogen the order thermal reactor from.

Jeff Zekauskas: N D.

Jeff Zekauskas: So if ethane costs are the same.

Speaker Change: Is the production cost in Fort Saskatchewan, higher or lower than it is in Freeport.

Jeff Zekauskas: And if so.

Jeff Zekauskas: By how much.

Jeff Zekauskas: And secondly, do you still expect to bring on.

Jeff Zekauskas: 600000 tons of polyethylene.

Jeff Zekauskas: In the U S in the second half of 2025.

Jim Fitterling: Good morning, Jeff answer to your second question. Answer to the second question on 2025 additional incremental growth is yes. In terms of Fort Saskatchewan, I would say you will be advantaged on ething in the fort, and we believe our etheling costs up in Canada will be some of the best in the world that we have. So I think it's going to be very similar. We do have obviously a little higher cost from running the autothermal reformer to produce that hydrogen that will go in to fire the furnaces. However, we do get some of that back through CO2 sequestration.

Speaker Change: Good morning, Jeff the answer to your second question.

Speaker Change: Okay.

Speaker Change: The answer to the second question.

Speaker Change: On 2025 additional incremental growth is yes.

Speaker Change: In terms of Fort Saskatchewan, I would say, we will be advantaged on ethane in the Ford and we believe our ethylene cost up in Canada will be.

Speaker Change: The best in the World that we have so I think it's going to be very similar we do have obviously, a little higher costs from running the auto thermal reformer to produce that hydrogen that will go into fired furnaces.

Speaker Change: However, we do get some of that back through Seo to sequestration and we are going to be able to get some of that back through the market and selling of.

Jim Fitterling: And we are going to be able to get some of that back through the market and selling of ethylene with zero scope one and two emissions. So net net, I think you're going to see returns equal or higher than Texas nine in the U.S. Gulf Coast, which is our lowest cost asset globally.

Speaker Change: Ethylene with zero scope, one and two emissions. So net net I think youre going to see returns equal or higher than Texas nine in the U S Gulf Coast, which is our lowest cost asset globally.

Unknown Executive: Thank you very much.

Speaker Change: Thank you very much.

John Mcnulty: Your next question comes from John McNulty from BMO Capital Markets. Your line is now open. Hi, good morning, Jim.

Speaker Change: Your next question comes from John Mcnulty from BMO capital markets. Your line is now open.

Speaker Change: Hi, Good morning, Jim This is Bob the diaper John.

Bhavesh Lodaya: This is Bhavesh Lodaya for John. So it appears more and more likely that the U.S. and the world in general is going to see more tariffs and duties being put in place. You have a low cost advantage in the U.S., but there are also commodities like polyethylene where you are very reliant on export markets. In Europe, I believe this is what you alluded to when you spoke about the regulatory actions required. So overall, if we if we enter this new era of sorts of more duties across the world, how do you think that plays out for Dow overall?

Speaker Change: Appears more and more likely that the U S and the world in general is going to see more tariffs and duties being put in place.

Speaker Change: You have a low cost advantage in the U S. But that also commodities like polyethylene laid out.

Speaker Change: We are aligned on export markets.

Speaker Change: In Europe I believe this is what you alluded to when you spoke about the regulatory actions required. So overall if feet. If you enter this new eight all sorts of Baltimore duties across the world. How do you think that plays out for dialogue.

Speaker Change: Yeah.

Jim Fitterling: Yeah, good morning, Alvarez. I think, look, we see tariffs today in some of the businesses that we participate in, and we are still a net exporter in general out of the U.S. Gulf Coast because of the very strong competitive advantages that we have here. The large markets, China in particular, is still an importer and is going to be an importer for quite some time, so I think that will exist. In most of the other markets, we're in the market to be a domestic player, so we're in Europe for Europe, and for the assets that we have in China, we're in China for China.

Vincent Andrews: Good morning, Vince.

Speaker Change: I think look we see tariffs today and some of the businesses that we participate in and we are still in that quarter in general out of the U S. Gulf coast because of the very strong competitive advantages that we have here.

Speaker Change: The large markets China in particular is still on that an importer and is going to be an importer for quite some time, so I think that will exist.

Speaker Change: And most of the other markets we're in the market to be a domestic players who are in Europe for Europe.

Speaker Change: And for the assets that we have in China, where in China for China.

Jim Fitterling: There's a lot of discussion going on around tariffs. I think we We're typically not in the crosshairs of some of the issues that are national security related. So I think that have a particular impact on us. And then we'll walk through, you know, what will happen with them, I would say. carbon border adjustment mechanisms are also could be considered a form of a tariff as well. And so we've got to stay eyes wide open.

Speaker Change: There's a lot of discussion going on around tariffs I think we.

Speaker Change: We're typically not in the crosshairs of some of the.

Speaker Change: Issues that are national security related so I think that it doesn't have a particular impact on us.

Speaker Change: And then we will walk through what will happen with them.

Speaker Change: I would say.

Speaker Change: Carbon border adjustment mechanisms are also could be considered a form of a tariff as well and so we've got to stay eyes wide open to that.

Speaker Change: Thank you.

David Begleiter: Your next question comes from David Begleiter from Deutsche Bank. Your line is now. Thank you. Good morning.

Speaker Change: Your next question comes from David Begleiter from Deutsche Bank. Your line is now.

Speaker Change: Thank you good morning.

Steve Burns: Jim, on the European Asset Fund review, are they EBITDA positive, and if so, how much? We do close both of the MDI plans in Europe. This will look to supply Europe with MDI from your plants in Saudi and Texas. Yeah, good morning, David. I have a specific number to give you on the European assets right now, but they are even positive. They're good cost positions in the European market. Again, we're looking at all value creating opportunities. I don't believe I don't want to preclude anything, but I don't believe shutting down MDI assets is going to be a value creating opportunity.

David Begleiter: Jim on the European assets under review are they EBITDA positive and if so how much.

Speaker Change: Do close both MDI plants in Europe would you still look to supply European MDI from your plants in Saudi and in Texas.

David Begleiter: Thank you.

Yes, good morning, David.

Speaker Change: Specific number to give you on a European assets right now, but they are EBITDA positive.

Speaker Change: There are good cost positions in the European market.

Speaker Change: Again, we're looking at all value, creating opportunity side I don't believe.

Speaker Change: I don't want to preclude anything, but I don't believe shutting down MDI assets is going to be a value creating opportunity but.

Jim Fitterling: But we're going to look at everything.

Speaker Change: We're going to look at everything.

Steve Burns: Your next question comes from Steve Burns from Bank of America. Your line is now open. Yes, thank you. Jeff, you made a comment about your customers, you know, for for PNSP have circularity needs. Are those needs in your view, intensifying or are they waning in these days?

Speaker Change: Your next question comes from Steve Byrne from Bank of America.

Speaker Change: Line is now open.

Steve Byrne: Yes. Thank you Jeff you made a comment about your customers. So.

Speaker Change: For for Peanuts, circularity and needs are.

Steve Byrne: Are those needs and your view intensifying or are they waning in these days.

Jim Fitterling: And Is it sufficient to give you the ability to enter into long-term contracts? Your guide for the $3 billion EBITDA gain by 2030 is presumably pulling a chunk out of the Alberta project, but what gives you that confidence to offset those costs with higher returns? Can you get longer-term contracts with your customers for low-carbon polyethylene?

Steve Byrne: Is it sufficient to give you the ability to enter into long term contracts.

Steve Byrne: Your your guide to the 3 billion EBITDA gain by 2030 is presumably pulling a chunk out of the Alberta project, but is what gives you the confidence.

Offsetting those costs, which with higher returns can you can you get longer term contracts with your customers.

Steve Byrne: Customers for low carbon polyethylene.

Jim Fitterling: Good morning, Steve. Yeah, good question. From our standpoint, we still feel very confident in our ability to be able to generate, again, overall, for our Transform the Waste strategy, at least $500 billion of additional earnings by 2030. And there's no assumptions right now that we see in the marketplace that would have us that would look at that any differently.

Speaker Change: Hey, good morning, Steve.

Steve Byrne: Good question from our standpoint, we still feel very confident in our ability to be able to generate again overall for our transform the way strategy at least $500 billion of additional earnings by 2030, and there is no assumptions right now that we see in the marketplace that would have us that we'll look at that any differently.

Chris Parkinson: Your next question comes from Chris Parkinson from Wolf Research. Your line is now open. Great.

Speaker Change: Your next question comes from Chris Parkinson from Wolfe Research. Your line is now open.

Chris Parkinson: Great. Good morning, everyone can we just take a step back and take a look at the balance sheet and cash flow in just a year to date trends some of your commentary pertaining towards the end of the third quarter going into the fourth in terms of.

Chris Parkinson: Good morning, everyone. Can we just, you know, take a step back and, you know, take a look at the balance sheet and cash flow and just the year to day trends, some of your commentary pertaining towards the end of the third quarter going into the fourth in terms of, you know, facilitating growth and just any framework in terms of the puts and takes that the street should be considering, you know, as we progress, you know, into 2025. Thank you so much.

Chris Parkinson: Facilitating growth and just any framework in terms of the puts and takes that the street should be considering as we progress into 2025. Thank you so much.

Jeff Tate: Good morning, Chris. Thanks for the question. You know, for us, when we look at third quarter, we generated $800 million in cash flow from operations, which gave us an almost 60% conversion rate, which led to actually positive free cash flow in the quarter, which is pretty similar in terms of the range that we had for second quarter. So we've seen some stability there. A couple of other puts and takes that I think are important is that we've been able to maintain our cash conversion cycle at 42 days, which is top quartile in comparison to our peers.

Speaker Change: Hey, good morning, Chris Thanks for the question for Us, but when you look at third quarter, we generated $800 million in cash flow from operations, which gave us and almost 60% conversion rate, which led to actually positive free cash flow in the quarter, which is pretty similar in terms of the range that we had for second quarter. So we've seen some stability there.

Speaker Change: Couple of other puts and takes that I think are important is that we've been able to maintain our cash conversion cycle at 42 days, which is top quartile in comparison to our peers and so thats an eight day improvement.

Jeff Tate: So that's an eight-day improvement that we've been able to achieve versus pre-COVID levels.

Jeff Tate: Another thing that's important here is that our cash balance at almost $3 billion, as well as the additional liquidity that we have of another $10 billion, gives us total liquidity of $13 billion today, and we have no substantive debt maturities due until 2027. And the other thing I would also remind you of, Chris, is the fact that we continue to make the commitment of unique to Dow cash levers and being able to deliver at least $1 billion of those cash levers here each and every year, and we still maintain that commitment moving forward.

Joshua Spector: Your next question comes from Josh Spector from UBS. Your line is now open. Yeah, hi, good morning. I was wondering if you could talk about, you know, all the actions that you've done around some of the portfolio changes and some of the asset closures, and just talk about the earnings impact combined. I'm thinking about this more in relation where Dow talks about the earnings corridor, eight to nine billion and EBITDA potential. If we look at what you've done versus the last five, 10 years of earning those assets, how much of a negative is there in that bridge that we should be building?

Jim Fitterling: Or, you know, maybe it's smaller or less than what we expect. Thanks.

Jim Fitterling: Yeah, Josh, good question. I think you should look at it in terms of what are we doing to keep our cost position low? We've typically been able to bring all that capacity into lower cost assets and run them at higher rates. And so you'll see that improvement in operating rate lead to bottom line improvements. And although some of these have happened in 2023 and 24, we've had some costs associated with getting out of these assets. You'll start to see some positive impact of that as we move forward into 2025. We're typically able to supply all of that, run the existing assets harder.

Speaker Change: Yes, Josh Good question I think you should look at it in terms of what are we doing to keep our cost position low.

Speaker Change: We've typically been able to bring all of that capacity into lower cost assets and run them at higher rates and so youll see that improvement in operating rate lead to bottom line improvements.

Speaker Change: And although some of these have happened in 2023 and 24, we've had some cost associated with getting out of these assets you'll start to see some positive impact in that as we move forward into 2025.

Speaker Change: We're typically able to supply all of that run the existing assets harder those are lower cost assets as we move forward. So I think it's more.

Jim Fitterling: Those are lower cost assets as we move forward. So I think it's more of tightening up the footprint, making the portfolio more attractive. If you look at where we are year over year, we've had an improvement in operating rates of about 500 basis points. In the third quarter, we were up about 100 basis points, and that was because we moved out some maintenance activity in the quarter. So continuing to move that operating rate up will have an impact on bottom line.

Speaker Change: The footprint, making the portfolio more attractive.

Speaker Change: If you look at where we are year over year.

Speaker Change: Had an improvement in operating rates of about 500 basis points.

Speaker Change: And third quarter, we were up about 100 basis points.

Speaker Change: And that was because we moved out some maintenance activity in the quarter.

Speaker Change: Continuing to move that operating rate.

Speaker Change: We will have an impact on bottom line.

Kevin Mccarthy: Your next question comes from Kevin McCarthy from Vertical Research Partners. Your line is now open. Thank you, and good morning.

Speaker Change: Your next question comes from Kevin Mccarthy.

Speaker Change: From vertical research partners. Your line is now open.

Operator: Thank you, and good morning.

Speaker Change: Yes, thank you and could morning.

Jim Fitterling: Tim, two questions on Europe, maybe one broad one and one more narrow. Just broadly, I think it stands to reason that margins are lower in the region due to higher energy costs and emic demand and some of the onerous regulations that you spoke to in the prepared remarks. And in the press release. So I guess my general question would be, if you were to report margins on a regional basis, rather than on a segment basis, how much lower would Europe be, you know, relative to the Americas or even Asia, number one, and then number two, you know, as you go through the strategic review, do you have in mind, you know, potential financial consequence of that in terms of the EBITDA uplift or narrowing, that margin gap?

Kevin Mccarthy: Tim, two questions on Europe, maybe one broad one and one more narrow. You're just broadly, I think it's fancy reason that margins are lower in the region due to higher energy costs and they make demand in some of the owners' regulations that you spoke to in the prepared remarks.

Kevin Mccarthy: Two questions on Europe, maybe one broad one and one more narrow just broadly.

Kevin Mccarthy: I think it stands to reason that margins are lower in the region due to higher energy costs and they make demand in some of the onerous regulations that you spoke to in the prepared remarks.

Kevin Mccarthy: And in the press release, so I guess my general question would be if you were to report margins on a regional basis rather than on a segment basis, how much lower would Europe be relative to the Americas or even Asia. Number one, and then number two, you know, as you go through the strategic review, do you have in mind, you know, the potential financial consequence of that in terms of the EBITDA uplift or narrowing that margin gap.

Kevin Mccarthy: And in the press release.

Kevin Mccarthy: I guess my General question would be if you were to report margins on a regional basis, rather than on a segment basis, how much lower would Europe be relative to the Americas or even Asia.

Speaker Change: Number one and then number two.

Speaker Change: I'll go through the strategic review do you have in mind.

Speaker Change: The potential financial consequence of that and in terms of the EBITDA uplift or narrowing that margin gap. Thanks.

Jim Fitterling: Thanks.

Jim Fitterling: Yeah, good morning, Kevin. Good question on Europe. While energy costs are higher, they have come back down and moderated a bit. And so they are going to, I think you're going to see that new kind of relative competitive floor being based on import LNG into Europe. And we're kind of at that level right now. And they've got, they've diversified, you know, their base away from just the Russian gas that they've had before. So I think that's a positive relative positive. We've got a good line of sight what the energy costs will be the Demand has been lower.

James Fitterling: Yeah, good morning, Kevin. Good question on Europe. Well, energy costs are higher; they have come back down and moderated a bit. And so they are going to, I think you're going to see that new kind of relative competitive floor being based on import LNG into Europe. And we're kind of at that level right now, and they've diversified, you know, their base away from just the rushing gas that they had before. So I think that's a positive relative positive; we've got a good line of sight, what the energy costs will be there. The man has been lower, I think; instruction obviously has been slower. The consumer has been slower; automotive has seen some pressure from import EEDs, as we know.

Speaker Change: Yes.

Speaker Change: Good morning, Kevin Good question on Europe.

Jim Fitterling: I think construction obviously has been slower. The consumer has been slower. Automotive has seen some pressure from import EBs, as we know, but I think obviously they will have to adjust to that.

James Fitterling: But I think, obviously, they will have to adjust to that. I would say when you look at the businesses, obviously, I think the biggest delta and where we are right now versus where we were say in 2020 at the low point in cycle is the higher cost position of Europe. I think that's a pretty easy way to take a look at it. These businesses, you know, mid cycle and polyurethanes and construction chemicals, their mid cycle, even dot margins are about 15%.

Jim Fitterling: I would say when you look at the businesses, obviously, I think the biggest delta in where we are right now versus where we were, say, in 2020 at the low point in the cycle is the higher cost position of Europe. I think that's a pretty easy way to take a look at it.

Jim Fitterling: These businesses, you know, mid-cycle in polyurethanes and construction chemicals, their mid-cycle EBITDA margins are about 15%, and so I think our view here is to look at portfolio options where we can invest more money in businesses that have higher returns and higher downstream growth rates. The European assets that we're talking about with polyurethanes make up about 20% of our existing MESA.

James Fitterling: And so I think our view here is to look at portfolio options where we can invest more money in businesses that have higher returns and higher downstream growth rates. The European assets that we're talking about with polyurethanes make up about 20% of our existing immune sales.

Operator: Your next question comes from Patrick planning him from city, your line is now.

Patrick Cunningham: Your next question comes from Patrick Cunningham from Citi. Your line is now open. Yes, hi, good morning. So just on the review of the European assets, you know, what would you need to see from a policy perspective to maintain and run these assets?

Patrick Cunningham: Yeah, hi, good morning. So just on the review of the European assets, you know, what would you need to see from a policy perspective, maintain and run these assets. And then across.

Speaker Change: Few of the European assets, what would you need to see from a policy perspective to maintain and run these assets.

Speaker Change: And then across.

Patrick Cunningham: Are you positioning with governments and trade organizations regarding this sort of any idiosyncratic risk related to US backing the UN global plastic treaty, particularly the plastics production cab?

Jim Fitterling: Are you positioning with governments and trade organizations regarding the sort of idiosyncratic risk related to U.S. backing the U.N. Global Plastics Treaty, particularly the plastics production cap?

Speaker Change: Are you positioning with governments and trade organizations regarding the sort of idiosyncratic risk related to U S backing the UN global plastics treaty, particularly the plastics production cab.

James Fitterling: Morning, Patrick. Good, good questions. First on European policy. Clearly, I think there are a couple of differences, so on energy. I think a forward focus on what you're needs to do to be energy competitive is critical. Also, I think a look at and a good comparison would be Canada with forward Saskatchewan and Europe's position on hydrogen. You know, we call the Ford Project Circular Hydrogen in order for on and we're able to make ethylene from that circular hydrogen at competitive cost with U.S. called Coast Economics and also get a benefit from selling zero scope one and two emissions products into the market.

Jim Fitterling: Good morning, Patrick. Good, good questions. First on on European policy. Clearly, I think there are a couple of differences. So on energy, I think a forward focus on what Europe needs to do to be energy competitive is critical. Also, I think a look at and a good comparison would be Canada with Fort Saskatchewan, and Europe's position on hydrogen. You know, we we call the Ford project circular hydrogen in order for us and we're able to make ethylene from that circular hydrogen at competitive costs with US Gulf Coast economic And also get a benefit from selling Xero Scope 1 and 2 emissions products into the market.

Speaker Change: Good morning, Patrick good good questions.

Speaker Change: First on on European policy.

Speaker Change: I think there are a couple of differences.

Speaker Change: On energy I think are forward focused on when Europe needs to do to be energy competitive is critical.

Speaker Change: Also I think.

Speaker Change: Look at and a good comparison would be Canada with foreign substantial one and Europe.

Speaker Change: Physician on hydrogen.

Speaker Change: We call them forward projects circular hydrogen.

Speaker Change: In order for us and we're able to make.

Speaker Change: Leanne from that circular hydrogen at competitive costs with U S Gulf Coast Economics.

Speaker Change: And also get a benefit from selling zero scope, one and two emissions products into the market.

James Fitterling: The way you green deal is written today, it says that you can only get credit for green hydrogen, which means made by electrolysis, made with alternative energy or low carbon energy. If I give you a comparison on what would have to happen in Ford's sketch one, if I were to have to make green hydrogen to run that answer, I'd have to have seven gigawatts of electricity running electrolyzers to make all the green hydrogen to run the Ford.

Jim Fitterling: The way the EU Green Deal is written today, it says that you can only get credit for green hydrogen, which means made by electrolysis, made with alternative energy or low carbon energy. If I give you a comparison on what would have to happen in Fort Saskatchewan if I were to have to make green hydrogen to run that asset, I'd have to have 7 gigawatts of electricity running electrolyzers to make all the green hydrogen to run the fort. It's just simply not economical and it won't happen. And so now you've seen there are no projects now moving forward on blue hydrogen.

Speaker Change: The new Green deal as written today.

Speaker Change: It says that you can only get credit for green hydrogen, which means made by electrolysis made with alternative energy or low carbon energy.

Speaker Change: If I give you a comparison on what would have to happen in Fort Saskatchewan, If I were to have to make green hydrogen, but Ron that asset I would have to have seven gigawatts of electricity running electrolyze yours to make all the green hydrogen to run the fourth.

James Fitterling: It's just simply not economical, and it won't happen. And so now you've seen there are no projects now moving forward on blue hydrogen; there's no projects moving forward for carbon capture, and all those things that were on the table in terms of helping European industry decarbonize are just so far uncompetitive that not only will the industry not decarbonize, they'll probably have to consider other alternatives.

Speaker Change: Just simply not economical and at what would happen and so now you have seen there are no projects now moving forward on blue hydrogen there's no projects moving forward for carbon capture and all of those things that were on the table in terms of helping European industry Decarbonize.

Jim Fitterling: There's no projects moving forward for carbon capture and all the things that were on the table. helping European industry decarbonize. are just so far uncompetitive that not only will the industry not decarbonize, They'll probably have to consider other.

Speaker Change: Just so far uncompetitive.

James Fitterling: In the United States, well, in terms of the international legally binding agreement on plastics, I think we're making tremendous progress. There is certainly no alignment around the world on production caps or bands in that agreement. We think we're all surprised by the shift in positioning of the administration, but we're not at the end of this process yet, so we continue to advocate that we focus on the issue, which is plastic pollution, focus on the solutions, which are circularity policies, recycle content mandates, extended producer responsibility schemes, all forms of recycling, and dealing with the pollution part of the situation.

Jim Fitterling: In the United States, well, in terms of the international legally binding agreement on plastics, I think we're making tremendous progress. There is certainly no alignment around the world on production caps or bans in that agreement. I, we think we're all surprised by the shift in positioning of the administration, but we're not at the end of this process yet. And so we continue to advocate that we focus on the issue, which is plastic pollution, focus on the solutions, which are circularity policies. Recycle content mandates. Extended Producer Responsibility Schemes, all forms of recycling and dealing with the pollution part of the situation.

Jim Fitterling: Plastics are the lowest carbon footprint product that are out there. They're the easiest to use, they're the cheapest to use, they have the best sustainability footprint. And as we convert to making them with zero scope one and two emissions like we're going to do with the four. Nothing, no alternative will be able to touch the sustainability.

James Fitterling: Plastics are the lowest carbon footprint products that are out there; they're the easiest to use, they're the cheapest to use, they have the best sustainability footprint. And as we convert to making them with zero scope one and two emissions like we're going to do with the fort, nothing, no alternative will be able to touch the sustainability footprint.

Operator: Your next question comes from Frank Mitch, from Fermion Research; your line is now open.

Frank Mitsch: Your next question comes from Frank Mitsch from Firmium Research. Your line is now open. Hey, good morning. Hey, Jim, I appreciate your answer to the question on tariffs earlier in the Q&A with the US Gulf Coast Competitive Advantage.

Frank Mitsch: Hey, good morning. Jim, I appreciate your answer to the question on tariffs earlier in the Q&A with the US Gulf Coast competitive advantage. I'm curious: Brazil just enacted an increase from 12.5% to 20% on polyethylene imports.

Jim Fitterling: I'm curious, you know, Brazil just impact enacted an increase from 12 and a half to 20% on polyethylene imports, what what specifically may you be seeing in that region?

Frank Mitsch: What specifically may you be seeing in that region, and perhaps if you could also offer an early look at 2025 in terms of siloxines, the interplay between supply and demand that will be helpful. Thank you.

Jim Fitterling: And perhaps if you could also offer a An early look at 2025 in terms of siloxanes, the interplay between supply and demand, that would be helpful. Thank you.

James Fitterling: Morning Frank, good question. Sorry about the meds; I'm with you there, with the royals not making it as well. 12.5 to 20%, I think in the case of Brazil, I think you have to look at tariffs in terms of, are you trying to protect manufacturing in a domestic economy so that you keep a manufacturing base? And I think tariffs of 12.5 to 20% like you see in Brazil are meant to do that. I think when you've heard reference to tariffs here in the United States, maybe a base tariff of 10% for anything that's important. Yeah, I think that's driven by a mindset that we're trying to get manufacturing into the United States, not re-short to a neighboring country, but into the United States.

Jim Fitterling: Morning, Frank. Good question. Sorry about the Mets. I'm with you there with the Royals not making it as well. Twelve and a half to 20%, I think, in the case of Brazil, I think you have to look at tariffs in terms of, are you trying to protect the manufacturing in a domestic economy so that you keep a manufacturing base? And I think tariffs of twelve and a half to 20%, like you see in Brazil, are meant to do that. I think when you've heard reference to tariffs here in the United States, it may be a base tariff of 10% for anything that's imported.

Speaker Change: Yeah.

Speaker Change: <unk>.

Speaker Change: 12, 5% to 20% I think in the case of Brazil, I think you have to look at tariffs in terms of are you trying to protect the manufacturing and the domestic economy. So that you keep a manufacturing base and I I think tariffs was 12, 5% to 20% like you see in Brazil are meant to do that.

Speaker Change: I think when you've heard reference to tariffs here in the United States that maybe a base tariff of 10% for anything that's imported yes, I think that's driven by a mindset that we're trying to get manufacturing.

Jim Fitterling: Yeah, I think that's driven by a mindset that we're trying to get manufacturing. into the United States, not reshore to a neighboring country, but into the United States. And so we see, we see tariffs around the world for countries that are trying to protect local manufacturing, and try not to be completely at the mercy of import materials for all the needs for their economy. I think we're going to continue to see a lot of focus on that and actions like that. On siloxanes, we saw a little bit of tightening and a little bit of pricing improvement.

Speaker Change: Into the United States, not resort to a neighboring country, but into the United States and so we see we see tariffs around the world.

James Fitterling: And so we see tariffs around the world for countries that are trying to protect local manufacturing and trying not to be completely at the mercy of import materials for all of the needs for their economy. I think we're going to continue to see a lot of focus on that and actions like that.

Speaker Change: For countries that are trying to protect local manufacturing and trying not to be completely.

Speaker Change: At the Mercy of important materials for all of their needs for their economy. I think we're going to continue to see a lot of focus on that and actions like that.

James Fitterling: I'm so excited. We saw a little bit of tightening and a little bit of pricing improvement. I think we're a ways away. I think we're still in the area where there's opportunity for some rationalization; we've got Chinese capacity that's at negative cash margins right now. The downstream is growing well. As I mentioned, we were up 6% year over year in the downstream. The continued outlook for the downstream market is good, even though automotive has been slow. Like vehicle production, this year is going to be projected to be about 2% lower year over year. The growth in electric vehicles is strong, like 13, 14%.

Speaker Change: Siloxane, we saw a little bit of tightening and a little bit of pricing improvement I think we're a ways away I think we're still in.

Jim Fitterling: I think we're a ways away. I think we're still in the area where there's opportunity for some rationalization. We've got Chinese capacity that's at negative cash margins right now. The downstream is growing well. As I mentioned, we're up 6% year over year in the downstream. The continued outlook for the downstream markets is good. Even though automotive has been slow, light vehicle production this year is going to be projected to be about 2% lower year over year.

Speaker Change: The area, where there's opportunity for some rationalization, we've got Chinese capacity Thats negative cash margins right now.

Speaker Change: The downstream.

Speaker Change: Stream is growing well.

Speaker Change: As I mentioned, we were up 6% year over year in the downstream the continued outlook for the downstream markets is good even though.

Speaker Change: Motive hasnt been slow light.

Speaker Change: <unk> production this year is going to be projected to be about 2% lower year over year.

John Roberts: The growth in electric Don't forget Your next question comes from John Roberts of Missoula.

Speaker Change: The growth in electric vehicles is strong like 13%, 14% and when you look at that that drives a lot of silicones demand.

James Fitterling: And when you look at that, that drives a lot of silicone demand. And when we start to see construction come back, that's a high-volume use. And I think you're going to see that pull on it as well. So I think it's a combination of those big volume markets coming back as well as some assets are in the cash negative territory, having to be taken down.

John Roberts: Your next question comes from John Newroverage of Visual. Your line is now. Thank you. Jim, you've got chlorine integration in Europe. So how separable are the decisions you're looking at in Europe for polyurethanes versus the CAB assets? They're not John. Obviously, we're not going to do anything without close contact with our own chlorine assets, but also with our partners in Europe. And so we'll keep a close eye on that chlorine. PO integration is critical for us. And so we'll make sure we're eyes wide open to that.

Jim Fitterling: Your line is now. Thank you. Jim, you've got chlorine integration in Europe.

Jim Fitterling: So how separable are the decisions you're looking at in Europe for polyurethanes versus the cab acid? Um, they're not, John, obviously, we're not going to do anything without close contact with our own chlorine assets, but also with our partners in Europe. And so we'll keep a close eye on that chlorine PO integration is critical for us.

Michael Leithead: And so we'll make sure we're eyes wide open to Your next question comes from Mike Leithead of Barclays. Your line is now open. Great. Thank you. Good morning, guys.

Operator: Your next question comes from Mike Lighthead of Barclays. Your line is now open. Great. Thank you. Good morning, guys.

Michael Leithead: Question maybe for Jeff around 2025. It seems like Jim earlier talked about a billion dollars of Europe, your improvement in EBITDA. 6.6 billion. I have a firm budget for you in our show of cash outflows in 2025, between $3.5 million, $2.2 million dividend interest taxes in the life. So, are there further you need to sell cash? I don't know if you'd expect next year, or should we expect that to remain relatively flat? Just how should we think about net cash flow next year and sort of how does this impact the pacing of your buyback activity from here?

Jeff Tate: Question maybe for Jeff around 2025. It seems like Jim earlier talked about about a billion dollars of year-over-year improvement in EBITDA. Next one. Next billion.

Jeff Tate: I have a firm budget of $1 billion or so of cash outflows in 2025, between $3 billion in capex, $2 billion in dividends, interest taxes and the like. So are there further unique cash items you'd expect next year? Should we expect net debt to remain relatively flat? Just how should we think about net cash flow next year and sort of how does this impact the pacing of your buyback activity from here?

Jeffrey Tate: Yeah, good morning, Mike. Thanks for the question. Short after all the unique to Dow cash levers is, yes, we would expect to have a similar type of, you know, proceed coming back from some of the activities that we're focused on.

Jeff Tate: Yeah, good morning, Mike. Thanks for the question. Short after all the unique to Dow cash levers is yes, we would expect to have a similar type of, you know, Coming back from some of the activities that we're focused on, you know, some of those that we've mentioned in the past that we're still working on besides the non-product-producing infrastructure assets would be, you know, looking at our NOVA judgment and continuing to make progress on that, as well as looking at some of our joint venture restructuring activities that could also give us some cash opportunities.

Jeffrey Tate: You know, some of those that we've mentioned in the past that we're still working on, besides the non-product producing infrastructure assets, would be, you know, looking at our know-what judgment and continuing to make progress on that, as well as looking at some of our joint venture restructuring activities that could also give us some cash opportunities. And so with those unique to Dow cash levers, plus, you know, expecting our cash conversion rates to be, you know, similar a higher versus what we had this year, you know, coming off of whatever our 2025 ultimate EBITDA plan is, we'll give us the opportunity to be able to support our cash uses for 2025.

Jeff Tate: And so with those unique to Dow Cash levers, plus, you know, expecting our cash conversion rates to be, you know, similar or higher versus what we had this year, you know, coming off of whatever our 2025 ultimate EBITDA plan is will give us the opportunity to be able to support our cash uses for 2025.

Speaker Change: Our cash usage for 2025.

Operator: Sure.

Patrick Fischer: Fischer from Goldman Sachs, your line is now open. Yeah, good morning. Just a couple questions around the licensing income. So one, how much bigger was it than you expected when you gave guidance after Q2? And then two, was it an unexpected project that came in? Or is it just pulling forward either from the Q4 or next year's cycle?

Speaker Change: Fisher from Goldman Sachs. Your line is now open.

Operator: From Goldman Sachs, your line is now open.

Duffy: Yeah, good morning. Just a couple of questions around the licensing income. So, one, how much bigger was it than you expected when you gave guidance after Q2? And then two, was it an unexpected project that came in, or is it just pulling forward either from the Q4 or next year's cycle?

Fisher: Yes. Good morning, just a couple of questions around the licensing income so one how much bigger was it than you expected. When you gave guidance. After Q2 and then two was it an unexpected project that came in or is it just pulling forward either from the Q4 or next years.

Fisher: Cycle.

Jeffrey Tate: Yeah, good morning, Duffy. It's just timing on those are driven by delivery of engineering packages and timing on milestones. I'd say it's relatively small in terms of the beat on PNSP. A big chunk as well was, you know, moving the St. Charles cracker turn around out. As you remember, we were coming off of Hurricane Act; that turn around was due to start around the time we were having all the hurricane activity. So we just decided to move it into first quarter just, you know, so we could deal with hurricane-related issues, you know, not have to focus on that while we were trying to make the quarter.

Jim Fitterling: Yeah, good morning, Duffy. And it's just timing on those are driven by delivery of engineering packages and timing on milestones, I'd say is relatively small in terms of the beat on on PNSP. A big chunk as well was, you know, moving the St. Charles cracker turnaround out as you remember, we were coming off of hurricane activity that Turnaround was due to start around the time we were having all the hurricane activity. So we just decided to move it into first quarter just, you know, so we could deal with hurricane related issues. You know, not have to focus on that while we were trying to make the quarter, but I think it was it was relatively small on the ground.

Speaker Change: Good morning Duffy.

Speaker Change: Timing on those are driven by delivery of engineering packages and timing on milestones.

Speaker Change: <unk> is relatively small in terms of the b on P&L Sp.

Speaker Change: A big chunk as well was move into St. Charles Cracker turnaround out as you remember we were coming off of hurricane activity.

Speaker Change: Its turnaround was due to start around the time, we were having all the hurricane activity.

Speaker Change: Just decided to move it into first quarter, just so we can deal with a hurricane related issues.

Speaker Change: Not have to focus on that while we were trying to make a quarter.

Jeffrey Tate: But I think it was it was relatively small on the grand scheme of things.

Speaker Change: But I think it was it was relatively small in the Grand scheme of things.

Matthew Blair: Your next question comes from Matthew Blair.

Matthew Blair: Your next question comes from Matthew Blair.

Speaker Change: Your next question comes from Matthew Blair from T. P. F. Your line is now open.

Jim Fitterling: From TPF, your line is now open. Thank you and good morning. You mentioned you're expecting higher cracking feedstocks in the fourth quarter. I was hoping you could expand a little bit on what you're seeing in the U.S. ethane market.

Matthew Blair: From TPS, your line is now open. Thank you, and good morning. You mentioned you're expecting higher cracking feedstocks in the fourth quarter. Let's hope that you could expand a little bit on what you're seeing in the U.S. F.A. market. Do you think that the wider fracks spreads that we're seeing so far this quarter are temporary or perhaps structural? And then would Dow expect to enjoy a little bit of an offset here in the Devon JV and is there any appetite to expand that JV with Devon? Thanks.

Matthew Blair: Thank you and good morning, you mentioned, you're expecting higher cracking feedstocks in the fourth quarter I was hoping you could expand a little bit on what youre seeing in the U S. Ethane market do you think that the wider frac spreads that we're seeing so far this quarter are temporary or perhaps structural and then with Dow expect too.

Jim Fitterling: Do you think that the wider frack spreads that we're seeing so far this quarter are temporary or perhaps structural? And then would Dow expect to enjoy a little bit of an offset here from the Devin JV? And is there any appetite to expand that JV with Devin? Thanks.

Matthew Blair: To enjoy a little bit of an offset here from the Devon JV and is there any appetite to expand that JV with Devin. Thanks.

Jim Fitterling: You know, good, good questions. And I would say, as we look forward, you know, the winter strip on ethane is very similar to where the summer was. Our range on ethane, probably for the quarters in 19 to 23 cents range, the frac spreads have been consistently at 50 cents or below. So I think we're probably going to see that continue. Natural gas has obviously been very positive for this as we've had good production. And the, you know, the hurricanes in the third quarter took some export capability out. I think we're going to see some of that export capability come back in, which is why I think you're going to see some competition for that gas that we didn't see in the third quarter.

James Fitterling: Good questions. I would say as we look forward, the winner's strip on ethane is very similar to where the summer was. Our range on ethane probably for the quarters in 19 to 23 cents range. The Frank spreads have been consistently at 50 cents or below. So I think we're probably going to see that continue. Natural gas has obviously been very positive for this as we've had good production, and the hurricanes in the third quarter took some export capability out. I think we're going to see some of that export capability come back, and which is why I think you're going to see some competition for that gas that we didn't see in the third quarter.

James Fitterling: Well, all that I think is around the edges. I think we still got very, very cost advantage positions.

Jim Fitterling: All that, I think, is around the edges. I think we've still got very, very cost advantage positions.

Operator: And then what was the second half?

Jim Fitterling: And then what was the second half? Oh, and Devin. Yeah, look, we've been very happy with the partnership of Devin. We started that back in 2021 and continue to ramp that up in 2023. You know, right now we've done 114 wells with them and we've got a 15 additional ones expected to come online this year. It continues to grow to help us offset our exposures. Obviously, the way we work that deal is, you know, we trade that into the market. So it's a net offset to our costs coming in. And, you know, we continue to be very happy with it.

James Fitterling: Oh, I'm Devon. Yeah, look, we've been very happy with the partnership of Devon. We started that back in 2021 and continued to ramp that up in 2023. Right now, we've done 114 wells with them, and we've got 15 additional ones expected to come online this year. It continues to grow to help us offset our exposures. Obviously, the way we work that deal is we trade that into the market. And so it's a net offset to our cost coming in. And we continue to be very happy with it. It's worked well for both of us on the strong partnership.

Jim Fitterling: It's worked well for both of us. It's a strong partnership.

Aleksey Yefremov: And I think we're looking forward to Your next question comes from Aleksey Yefremov from KeyBank Capital Markets.

James Fitterling: And I think we're looking forward to continuing.

Alex Say: Your next question comes from Alex, say, yeah, from from key bank capital markets. Your line is now open. Thanks. Good morning, everyone.

Jim Fitterling: Your line is now open. Thanks. Good morning, everyone. Jim, I was quite surprised to see about 100 million EBITDA for IINI this quarter. This segment started the year pretty strongly with 234, and then EBITDA continued to soften.

James Fitterling: Jim, I was quite surprised to see about a hundred million EBITDA for I and I in this quarter. The second started the year pretty strongly with 234, and they needed to continue to stop them. Could you give us, you know, just to reflect on this year. What products, specifically our regions maybe did not perform as well in what do you expect next year here? Yeah, so obviously we had glycol two up and running, so that was to the positive. We had price pressure on PO Polyels. And we had lower volumes, and MBI mentioned in the opening that we had a third-party outage in North America, which supplied industrial gas to our MBI process there. That plant's back up but still running at lower rates.

Jim Fitterling: Could you give us, you know, just to reflect on this year, what products specifically or regions maybe did not perform as well, and what do you expect next year here? Yeah, so obviously, we had glycol two up and running. So that was to the positive. We had price pressure on PO polyols. And we had lower volumes in MDI. I mentioned in the opening that we had a third party outage in North America, which supplied industrial gas to our MDI process there, the plants back up, but still running at lower rates. And then look, the other thing that happened when Texas Eight was out, Texas Eight produced Propylene for us as well.

James Fitterling: And then look, the other thing that happened when Texas Eight was out Texas Eight produces propylene for us as well. And so when we had Texas eight out, we had to go into the market to get some of that propylene until that was a higher cost. I think that's a one time. The MBI issues a one time, which will correct itself the PO polyels that that was the big driving force around the decision to tighten up the footprint and free port. So, as we go forward, we don't have as much length in PO, which brings the North American market more.

Speaker Change: I mean for us as well and so when we add techs and say that we had to go into the market.

Jim Fitterling: And so when we had Texas 8 out, we had to go into the market to get some of that propylene. And so that was a higher cost. I think that's a one-time, the MDI issue is a one-time, which will correct itself. The P.O. polyols, that was a big driving force around the decision to tighten up the footprint in Freeport. So as we go forward, we don't have as much length in P.O., which brings the North American market more into balance. So I think as we move forward, it's polyurethanes and North America that was the bigger slowdown and drag in the quarter.

Speaker Change: Get some of that propylene and so that was a higher cost. So I think that's a one time.

Speaker Change: The MDI issues at one time, which will correct itself.

Speaker Change: T O <unk>.

Speaker Change: That was the big driving force around the decision to tighten up the footprint and Freeport.

Speaker Change: So as we go forward, we don't have as much links.

Speaker Change: NPL, which brings the north American market more balanced.

James Fitterling: Collins. So I think as we move forward, it's probably your things, and you know, Mary, that was the bigger slowdown and drag in the corner.

Speaker Change: So I think as we move forward it's polyurethane.

Speaker Change: North America was the bigger slowdown a drag in the quarter.

Laurence Alexander: Your next question comes from Laurence Alexander, from Jeffrey; your line is now open. So good morning, just on the unique to Dow cash lovers. Can you give a sense for what the longer term pipeline looks like face through 2030 or even farther out, you know, after the one that you've publicly disclosed? I mean, how bare is the cupboard?

Lawrence Alexander: Your next question comes from Lawrence Alexander from Jeffreys. Your line is now.

Speaker Change: Your next question comes from Laurence Alexander from Jefferies. Your line is now.

Jeff Tate: So good morning, just on the unique to Dow cash levers, can you give a sense for what the longer term pipeline looks like, say, through 2030, or even farther out? You know, after the ones that you've publicly disclosed, I mean, how bare is the cupboard?

Laurence Alexander: Good morning, just on the unique to Dow cash levers can you give us a sense for what the longer term pipeline looks like phase through 2030 or even farther out.

Laurence Alexander: After the ones that you've publicly disclosed I mean, how Bayer is the cupboard.

Jeffrey Tate: Well, Laurence, this is Jeff. You know, going out to 2030, we wouldn't be able to get too definitive at this stage. I mean, if we continue to go through our annual reviews of all of our assets and all of our opportunities, we'll continue to identify, you know, those things that could create more value across the enterprise and have a best on our mindset as we approach it. But the ones that I've noted in the earlier question around some of the things that are more near term are the ones that we specifically identified that will bring us more of that near term impact. But going out to 2030, you know, I couldn't give you anything specific at this point, but we'll continue to again maintain that commitment of well over a billion dollars on an annual basis.

Jeff Tate: Lawrence, this is Jeff. You know, from going out to 2030, we wouldn't be able to get too definitive at this stage. I mean, if we continuously go through our annual reviews of all of our assets and all of our opportunities, you know, we'll continue to identify, you know, those things that could create more value across the enterprise and have a best owner mindset as we approach it. But the ones that I've noted in the earlier question around some of the things that are more near-term are the ones that we specifically identified that will bring us more of that near-term impact.

Jeff Zekauskas: Laurie this is Jeff.

Jeff Zekauskas: Going out to 2030, we wouldn't be able to get to definitive at this stage I mean, as we continuously go through our annual reviews of all of our assets and all of our opportunities will continue to identify those things that could create more value.

Jeff Zekauskas: Across the enterprise and have a best owner mindset as we approach it but.

Jeff Zekauskas: But the one that we have noted in the earlier question around some of the things that are more near term are the ones that we specifically identified that will bring us more of that near term impact, but going out to 2030 I couldn't give you anything specific at this point, but we'll continue to again maintain that commitment of well over $1 billion on an annual.

Jeff Tate: But going out to 2030, you know, I couldn't give you anything specific at this point, but we'll continue to, again, maintain that commitment of well over a billion dollars on an annual basis.

Jeff Zekauskas: Yes.

Arun Viswanathan: Your next question comes from Arun Viswanathan from RBC Capital Markets. Your line is now open. Hey guys, great. Thanks for taking my question. So I guess I just wanted to ask about, you know, there's been a lot of portfolio reviews, especially of European assets at this point. So just wondering if you've gone through some kind of analysis here.

Arun Viswanathan: Your next question comes from Arun Viswanathan from RBC Capital Markets. Your line is now open. Hey, guys, great. Thanks for taking my question. So I guess I just wanted to ask about, you know, there's been a lot of portfolio reviews, especially of European assets at this point.

Speaker Change: Your next question comes from this one is from.

Speaker Change: From RBC capital markets. Your line is now open.

Speaker Change: Hey, guys great. Thanks for taking my question.

Jim Fitterling: So just wondering if you've gone through some kind of analysis here, assuming any of those shutdowns happen, or potentially, our portfolio reviews result in shutdowns, how much maybe capacity could be coming out of the industry and ENSP in, as you look into 2025? And maybe if you can give us your thoughts as well on PMC, you know, kind of global supply and demand as well, just because, you know, we've been mired in weakness on the coding side for a while, from a demand standpoint, but, you know, maybe there's some green shoots with rates coming down.

Arun Viswanathan: Assuming any of those shutdowns happen or potentially portfolio reviews result in shutdowns, how much maybe capacity could be coming out of the industry in DNSP in as you look into 25 and maybe if you can give us your thoughts as well on EMC, you know, kind of global supply demand as well, just because you know, we've been mired in weakness on the coding side for a while from a demand standpoint, but, you know, maybe there's some green shoots with lip rates coming down. So you see any improvement in offering rates on the PMC side as well.

Jim Fitterling: So do you see any improvement in operating rates on the PMC side as well? So just maybe could get your comments on both PNSP and PMC utilization as you look into 2025. Thanks.

Arun Viswanathan: So just maybe you could get your comments on both DNSP and PMC utilization as you look into 25. Thanks.

James Fitterling: Yeah, morning room. Look, I think again, our portfolio work in Europe is around all your things. And, as I mentioned before, it really isn't driven primarily by shutdowns. We'll look at that. But I think we've done a lot to bring smaller assets down and bring that capacity into our low-cost locations.

Jim Fitterling: Yeah, morning, Arun. Look, I think, again, our portfolio work in Europe is around polyurethanes. And as I mentioned before, it really isn't driven primarily by shut downs, we'll look at that. But I think we've we've done a lot to bring smaller assets down and bring that capacity into our low cost locations.

James Fitterling: It's really looking at what is there a better owner for the portfolio, does that allow us to continue to focus on our investment for growth businesses, which from Investor Day, you'll remember work in SPS, our silicon business, and also our industrial solutions business. In PNSP and Europe, we have good positions and we're focused on the domestic market there. So I think our focus there is continuing to make those assets more competitive. There has been about, and I'm doing this off the top of my head, about a million and a half metric tons of announcements made already in the industry on shutdowns that are coming in Europe.

Jim Fitterling: It's really looking at what is there a better owner for the portfolio? Does that allow us continue to focus on our Invest for Growth businesses, which from Investor Day, you'll remember were PNSP, our silicones business. and also our industrial solutions business. In PNSP and in Europe, we have good positions and we're focused on the domestic market there. So I think our focus there is continuing to make those assets more competitive. There has been about, and I'm doing this off the top of my head, about a million and a half metric tons of announcements made already in the industry on shutdowns that are coming in Europe.

James Fitterling: I think we'll probably continue to see that in isolated standalone cases where, you know, you may be facing an older asset that has some high-cost maintenance or our other life extension work that needs to happen. So that'll be a challenge. I think in most of those asset cases, there was discussion of cash flow losses for a number of years before those decisions were taken. We're not in that situation in PNSP in Europe.

Jim Fitterling: I think we'll probably continue to see that in isolated standalone cases where, you know, you may be facing an older asset that has High cost maintenance or other life extension work that needs to happen. So that will be a challenge. I think in most of those asset cases, there was discussion of actual losses for a number of years before those decisions were taken. We're not in that situation in P&SB in Europe.

Jim Fitterling: I think on coatings, even though coatings has been slow, we've had really good volume growth this year, growing with our strategic customers. I'm well ahead of what was expected in the marketplace, and I think that'll mostly shift as we start to see things pick up in the housing sector and the architectural coatings pick up. You know, we've had a lot of growth. Traffic paint coatings this year, infrastructure related, there's a lot of development going on in space there to make road markings that can actually communicate with the future for autonomous vehicles or the The autonomous and lane assist type of devices that are put on your vehicles today are requiring some better road markings to be able to for them to react with the cars.

James Fitterling: I think on coatings, even though coatings has been slow, we've had really good volume growth this year, growing with our strategic customers well ahead of what was expected in the marketplace. And I think that'll mostly shift as we start to see things kick up in the housing sector and the architectural coatings pick up. You know, we had a lot of growth and graphic paint coatings this year infrastructure related. There's a lot of development going on in space there to make road markings that can actually communicate with the future for autonomous vehicles or the autonomous and lane assist type of devices that are put on your vehicles today are requiring some better road markings to be able to for them to react with cars.

Jim Fitterling: So I think we'll continue to see growth in both of those.

James Fitterling: So I think we'll continue to see growth in both of those, but the housing market will be the big pickup on the coatings business. Coatings is doing well.

Unknown Executive: But the housing market will be the big pickup on the coatings business coatings is, is doing well, I'd say monomers is where things need to tie This concludes our question and answer session.

James Fitterling: I'd say monomers is where things need to tighten up.

Operator: This concludes our question and answer session.

Andrew Riker: I'd now like to hand back over to Andrew Riker for closing remarks. Thank you everyone for joining our call and we appreciate your interest in Dow. For your reference, a copy of our transcript will be posted on Dow's website within 48 hours.

Andrew Riker: I'd now like to hand back over to Andrew Record for posing remarks. Thank you, everyone, for joining our call, and we appreciate your interest in Dow. For your reference, a copy of a transcript will be posted on Dow's website within 48 hours.

Unknown Executive: This concludes our call. Thank you again. Thank you for attending today's call.

Operator: This concludes our call. Thank you again. Thank you for attending today's call.

Unknown Executive: You may now disconnect. Have a wonderful day.

Operator: You may now disconnect. Have a wonderful day.

Speaker Change: [music].