Aleksey Yefremov

Aleksey Yefremov inquired about the strategic review process, specifically if there have been any discussions or inbound inquiries regarding a potential sale of the entire company.

Answer

Pierre Brondeau, Chairman, CEO and President, clarified that the strategic review was a normal board process, initiated to explore ways to increase shareholder return and potentially accelerate growth under different ownership, not prompted by inbound inquiries. He stated that the company is pursuing two paths: the base plan (including debt reduction and asset sales) and a potential full sale, with advisors now engaged.

Aleksey Yefremov inquired whether the decision to explore a sale of the entire company was prompted by inbound inquiries and sought an update on any discussions or interest received so far.

Answer

Pierre Brondeau, Chairman, CEO and President, clarified that the strategic review was a normal board process, not initiated by inbound inquiries. He explained it's a dual-path approach: executing the base business plan (including $1 billion debt reduction, core portfolio improvement, Rynaxypyr strategy, and new active ingredient growth) while simultaneously exploring a full sale to maximize shareholder value and potentially accelerate portfolio development.

Aleksey Yefremov of KeyBanc Capital Markets questioned the pricing performance of branded diamides, specifically Rynaxypyr and Cyazypyr, outside of the partner agreements during the current year.

Answer

Chairman and CEO Pierre Brondeau and EVP and CFO Andrew Sandifer clarified that Cyazypyr is not facing the same competitive pressure due to data protection. For branded Rynaxypyr, pricing was relatively flat in Q2. They emphasized that the primary pricing headwind for the diamide franchise currently stems from the cost-plus partner contracts, as branded Rynaxypyr remains protected by process patents in most markets for 2025.

Aleksey Yefremov of KeyBanc Capital Markets asked about pricing trends in the crop protection market, questioning if prices have bottomed and what the outlook is for the remainder of the year.

Answer

CEO Pierre Brondeau explained that Q1's high single-digit price decline was driven by a tough year-over-year comparison and a higher sales mix in the competitive Brazilian market. He anticipates more price stability for the rest of the year, especially in the second half, as comparisons ease significantly following the major price corrections made in H2 2024.

Aleksey Yefremov from KeyBanc Capital Markets inquired about the underperformance in Latin America during Q3, asking whether it was driven by weather, low crop prices, or other market fundamentals, and if conditions were improving in Q4.

Answer

Pierre Brondeau, Chairman and CEO, attributed the Q3 weakness in Latin America to a combination of delayed rains, persistent channel inventory, and challenging pricing. He added that FMC-specific issues included being slower than peers to adjust prices and the bankruptcy of a large distributor, which necessitated aggressive actions to maintain market share.

Aleksey Yefremov asked for a discussion of the share of off-patent versus patented and new products in Corteva's Crop Protection (CP) business for 2026, considering growth differences between these categories.

Answer

Robert King (EVP, Crop Protection Business Unit, Corteva) stated that the CP portfolio will remain about two-thirds differentiated, similar to the past, with no major shifts due to off-patent molecules. He noted strong growth from new products and biologicals and mentioned the anticipated launch of the Visa fungicide later in the year, which will further augment the differentiated portfolio.

Aleksey Yefremov asked about the proportion of Corteva's Crop Protection business that will be off-patent versus patented and new products in 2026, given the differing growth rates.

Answer

EVP Robert King stated that the portfolio split would remain flat, with approximately two-thirds differentiated products. He noted strong growth from new products and biologicals, with no major shifts off-patent for Corteva. He also mentioned the anticipated launch of a new fungicide, Visa, later in the year, which will augment the differentiated portfolio.

Aleksey Yefremov from KeyBanc Capital Markets asked if Corteva is seeing increased demand for its products as an alternative to Chinese generics, given recent market dynamics.

Answer

CEO Chuck Magro clarified that Corteva does not compete head-to-head with generics, as it serves a different customer base seeking differentiated technology. However, he and EVP Robert King noted that the stabilization of the generic price floor is a healthy indicator for the overall market, particularly in Latin America.

Aleksey Yefremov asked about the company's assumption for Argentina's corn planting area in 2025 and whether a significant rebound is expected.

Answer

EVP Timothy Glenn stated that Corteva is taking a prudent approach and is not assuming a significant rebound from the 20% decline seen in 2024. He noted it is too early to know if the leafhopper pest issue was a one-time event. For 2025 planning purposes, the company is assuming a market that is essentially flat with 2024.

Aleksey Yefremov asked for LyondellBasell's latest assessment of China's anti-involution policies, inquiring about potential specific news in the coming quarters and any changes in the company's outlook over the last three months.

Answer

CEO Peter Vanacker observed modest price increases in China in January due to inventory depletion and polyolefins growth around 4%. He indicated significant discussion and diligent evaluation by the NDRC regarding anti-involution policies, expecting an outcome, possibly with criteria like a 500 KT minimum for cracker rationalizations. Vanacker also highlighted other policies, such as a new naphtha consumption tax, which could impact non-integrated players. He updated the global ethylene capacity rationalization figure (since 2020, excluding anti-involution) to over 23 million tons, including anticipated closures in South Korea, Europe, China, Southeast Asia, and Japan.

Aleksey Yefremov asked about LyondellBasell's latest thinking on China's anti-involution policies, potential specific news in the coming quarters, and any changes in their perspective over the last three months.

Answer

CEO Peter Vanacker observed modest price increases in China in January due to inventory depletion and polyolefins growth around 4%. He indicated significant discussion and diligent evaluation by the NDRC regarding anti-involution policies, with expectations for an announcement, potentially including criteria like a 500 KT minimum for cracker rationalizations. Vanacker also pointed to other policies, such as a new naphtha consumption tax, all suggesting a push towards market rationalization. He updated the global ethylene capacity rationalization estimate to over 23 million tons since 2020, excluding anti-involution.

Aleksey Yefremov from KeyBanc Capital Markets asked for an update on the pyrolysis market, including current margin trends and the economic outlook for pyrolysis-based recycling over the next 12-18 months.

Answer

CEO Peter Vanacker described pyrolysis margins as 'extremely high' and above the levels communicated at the 2023 Capital Markets Day. He attributed this to demand significantly outpacing supply, a situation exacerbated by delays and failures among startup producers. He expects the market to be priced on value, not supply/demand, for a long time.

Aleksey Yefremov from KeyBanc inquired about the maturity of the newly acquired APK recycling technology and its readiness for near-term capacity expansion investments.

Answer

CEO Peter Vanacker stated that the acquisition adds a unique, advanced solvent-based recycling technology for laminated films. He confirmed that LyondellBasell is integrating the company with a clear plan to scale up the technology, similar to its MoReTec strategy, making it a key part of its circular solutions offering by 2030.

Aleksey Yefremov asked about the sharp decline in chlorine pipeline demand in Q4, whether it persists as a headwind in Q1, and the expected recovery timeline. He also inquired if this trend is idiosyncratic to Olin's customers or indicative of a broader competitive merchant chlorine market.

Answer

Ken Lane, Olin's President and CEO, explained that the Q4 decline occurred late in December, likely due to destocking and seasonal factors. He anticipates Q1 2026 will remain seasonally low, with no significant demand bounce back until Q2 with warmer weather and increased water treatment demand. Lane also noted healthy global caustic soda demand, but Olin faces volume availability issues, suggesting a tighter market than generally perceived.

Aleksey Yefremov asked about the sharp decline in chlorine pipeline demand in Q4, inquiring if it remains a significant headwind in Q1 and when a recovery is expected. He also questioned whether this trend is part of a broader competitive merchant chlorine market or specific to Olin's customers.

Answer

Ken Lane, Olin's President and CEO, explained that the Q4 decline in chlorine pipeline demand, primarily in December, was likely due to destocking and seasonal weakness, with costs being a larger contributor to the earnings decline. He anticipates continued seasonally low demand in Q1 2026, with a larger bounce back not expected until Q2 with warmer weather. Lane also noted healthy caustic soda demand, but Olin faces an availability issue in Q1 due to low inventories, not a demand issue.

Aleksey Yefremov asked about Olin's progress on signing new EDC supply agreements, the current exposure to the spot market, and any agreements nearing completion, especially following the dissolution of the Blue Water Alliance joint venture.

Answer

Ken Lane, President and CEO, stated that Olin is actively pursuing more structural term agreements for EDC, aiming to reduce spot market exposure after unwinding the Blue Water Alliance JV. He confirmed continued collaboration with Mitsui as a counterparty and anticipated more news on larger volume placements in the coming weeks.

Aleksey Yefremov asked about Olin's strategy for ECU supply agreements, inquiring about the current mix of spot versus contracted volumes and the progress in securing new structural agreements following the dissolution of the Blue Water Alliance joint venture.

Answer

President and CEO Ken Lane confirmed Olin is actively pursuing more structural term agreements for ECU, noting the unwinding of the Blue Water Alliance JV was driven by a desire to control the market channel exclusively. He stated that while Olin will still have some spot market exposure, it will be less than in the past, with more details on new opportunities expected soon.

Aleksey Yefremov of KeyBanc Capital Markets questioned the risk of the Winchester business deteriorating further and whether costs would continue to increase in the second half of the year.

Answer

President and CEO Ken Lane stated it is difficult to see the situation worsening, describing the current environment as a non-structural 'perfect storm' of destocking, high costs, and weak consumer spending. CFO Todd Slater added that higher copper costs, driven by tariff threats, will impact results in the second half, although Olin's hedging program will moderate the pace of this impact, reinforcing the need for price increases.

Aleksey Yefremov from KeyBanc Capital Markets Inc. asked for confirmation that Olin's PVC tolling arrangement is cash positive and inquired about the planned ramp-up of Kem One volumes for the rest of the year.

Answer

President and CEO Kenneth Lane confirmed that PVC sales tolled through Kem One are indeed cash positive, which he attributed to Olin's advantageous cost structure. He stated that volumes will ramp up through the end of the year, noting a very positive market reception and expressing pride in the team's ability to quickly establish a customer portfolio, setting up a positive future for the business.

Aleksey Yefremov inquired about Olin's Q1 chlor-vinyls volume outlook, asking if any contract business was lost and whether the expected volume decline is temporary.

Answer

CEO Kenneth Lane explained that Q1 volumes will be lower due to a planned turnaround, customer outages from Winter Storm Enzo, and a tough comparison to Q4's post-hurricane rebound. He emphasized that Olin will maintain disciplined operating rates, noting strong caustic demand is expected to keep the market tight and support pricing, leading to relatively flat ECU values quarter-over-quarter.

Aleksey Yefremov of KeyBanc Capital Markets asked about the likelihood of needing to replace Shintech as a customer post-2030 and the success of the recent epoxy price increase.

Answer

President and CEO Kenneth Lane described the Shintech situation as too far out to predict, stating Olin will evaluate options for its Freeport vinyls position as developments unfold. Regarding the epoxy price increase announced for October 1, Lane noted they are seeing some traction and are optimistic, but it's too early to quantify the full impact for the quarter, especially with continued high import volumes from Asia.

Aleksey Yefremov inquired if a crude EPS estimate of $5.50-$6 for the year was close to Eastman's thinking, and asked for comments on macroeconomic uncertainty and potential upside/downside.

Answer

Mark Costa (Board Chair and CEO) confirmed that the upper end of the $6/share range is possible but emphasized significant macroeconomic uncertainty. He noted consumer struggles, geopolitical risks, and the impact of GDP growth being flat when excluding data centers, AI, and healthcare. He also highlighted potential upside from pent-up demand in housing, consumer durables, and auto, along with potential government policies to stimulate consumer spending.

Aleksey Yefremov asked if an EPS range of $5.50-$6 was close to what management was thinking for the year.

Answer

Mark Costa (Board Chair and CEO, Eastman Chemical Company) confirmed that the upper end of the range, around $6 a share, is possible, but emphasized the wide range due to macroeconomic uncertainty. He highlighted internal actions (cost reduction, volume growth, asset utilization, FX tailwinds) and headwinds (CI/fibers recovery, variable comp reset). He also discussed potential upside from pent-up demand in consumer durables and housing, and potential government policies.

Aleksey Yefremov questioned the real interest and willingness of customers to pay for Renew products, given soft consumer durable markets. He also asked why fibers volumes are expected to be stable next year, despite prior weakness in textiles and customer destocking.

Answer

Board Chair and CEO Mark Costa explained that Renew's value is tied to product differentiation, which is constrained by soft consumer durable markets (5-15% below 2019 levels). Despite this, over 100 customers remain committed, indicating underlying interest. For fibers, Mark Costa attributed 40% of challenges to non-tow businesses like textiles, which faced a $30 million tariff-related headwind in H2 2025. He expects textiles to recover cyclically and asset utilization to improve, while tow destocking will continue but not worsen, leading to stable overall fibers volume.

Aleksey Yefremov asked about the dynamic with Renew, specifically how Eastman gauges customer interest and willingness to pay for specialty applications, given that volumes are not currently being purchased as expected.

Answer

Mark Costa, Board Chair and CEO, explained that Renew's value lies in product differentiation, but soft consumer durable markets and weak triggering events like home sales have limited new product launches. He noted that over 100 customers remain committed, with only one cancellation, indicating pent-up demand and confidence in future resurgence once the economy stabilizes.

Aleksey Yefremov asked about the reasons for a perceived shift in tone on Methanolysis—slower in 2025 but more optimistic for 2026. He also requested an earnings outlook for the Fibers segment for 2026.

Answer

Chairman and CEO Mark Costa explained the slower 2025 Methanolysis ramp is due to challenged end markets (durables, cosmetics), which slows customer adoption. He is more confident for 2026 because the underlying demand for plastic waste solutions remains strong, and they are seeing increased interest in rPET due to performance issues with mechanical recycling. For Fibers, he expects to stabilize earnings in 2026, as tailwinds from utilization recovery and a rebound in textiles should offset ongoing pressures in the tow business.

Aleksey Yefremov asked about the health of the end consumer, inquiring if Eastman is observing a meaningful slowdown in demand for its consumer-facing products. He also sought clarity on whether the negative impact from tariffs could worsen in the second half of the year as initial inventory buffers are used up.

Answer

Mark Costa, Board Chair and CEO, acknowledged that weaker-than-normal seasonal growth is expected in Q2 due to consumer caution related to trade tensions. Regarding the second-half tariff impact, he explained the risk varies by segment. While the impact on Fibers and AFP is expected to be steady or improve, the Advanced Materials segment could face a larger headwind as customer inventories are depleted, though this is partially offset by new plant ramp-ups and other mitigating actions.

Aleksey Yefremov of KeyBanc Capital Markets sought clarity on the Advanced Materials outlook, asking if first-half earnings would be below the full-year run rate due to costs, and requested an update on filter tow contract visibility beyond 2026.

Answer

Board Chair and CEO Mark Costa confirmed a complex earnings cadence for Advanced Materials, with Q1 impacted by a $25 million cost reallocation and H1 facing natural gas headwinds, while benefits from circular and cost actions are more back-half loaded. He also stated that multiyear contracts provide good visibility for Fibers, with approximately 70% of 2027 volume already under contract.

Aleksey Yefremov of KeyBanc Capital Markets requested a performance breakdown of key product lines within the Advanced Materials segment, such as auto films and interlayers. He also asked about Eastman's strategy for preserving margins in its coatings business for 2025 amidst customer negotiation pressure.

Answer

CEO Mark Costa reported that within the Advanced Materials segment, the auto interlayer business is significantly outperforming a weak auto market with high single-digit growth, driven by favorable design trends like larger sunroofs and laminated side glass. Regarding coatings, Costa expressed confidence in maintaining price-cost stability, citing the company's track record and the differentiated value of its specialty products. He acknowledged a potential minor lag in passing through higher energy costs but expects to defend margins effectively.

Aleksey Yefremov asked about Sherwin-Williams' strategy of focusing more on volumes than price this year, questioning if the competitive environment is different or if competitors cannot afford lower prices.

Answer

Heidi G. Petz, Chair, President, and CEO, clarified that the strategy is about being balanced, not prioritizing volume over price, in a 'jump ball' competitive environment. She emphasized disciplined pricing while empowering teams to convert new business. Ben Meisenzahl, VP of Investor Relations, highlighted that volume is the number one driver of long-term operating margin, and the company helps contractors trade up to premium products for efficiency.

Aleksey Yefremov asked for clarification on the company's strategy of focusing more on volumes than price this year, questioning if the competitive environment is different, perhaps with competitors unable to afford lower prices, making this strategy effective.

Answer

Chair, President, and CEO Heidi G. Petz reframed the strategy as a balanced approach, not prioritizing volume *above* price, but being aggressive in a 'jump ball' competitive environment to convert larger customers and gain market share. VP of Investor Relations Ben Meisenzahl emphasized that volume is the number one driver of operating margin long-term, and securing the 'right volume' helps achieve midterm and long-term goals. Heidi G. Petz added that premium products help contractors make more money by improving productivity, making them willing to pay a premium.

Aleksey Yefremov asked if Heidi Petz's comments about the second half of next year being less hopeful for recovery were based on specific observations or a conservative outlook.

Answer

President and CEO Heidi Petz clarified that her comments were a function of the current sightline, backlogs, and overall business pipeline, rather than conservatism. She stated that the company is not yet seeing consistent data points indicating an imminent catalyst for recovery, describing the outlook as pragmatism, while assuring preparedness if the market rebounds faster.

Aleksey Yefremov sought clarification on management's outlook for the second half of next year, asking whether the seemingly less hopeful tone regarding market recovery stems from specific observations or a conservative forecasting approach.

Answer

Heidi Petz, President and CEO, clarified that the outlook is a function of their current visibility into backlogs and the overall business pipeline, rather than conservatism. She stated that the company is not yet seeing consistent data points indicating an imminent market catalyst and described their approach as 'pragmatism,' assuring that they would be prepared if the market rebounds faster than anticipated.

Aleksey Yefremov from KeyBanc Capital Markets questioned the outlook for new construction markets within the Paint Stores Group, asking if current sales levels are sustainable or if a sharper decline is expected in the second half.

Answer

SVP of Finance & CFO Al Mestyshin indicated that the new residential market has softened, which is a key factor in the forecast for a low single-digit volume decline for the Paint Stores Group in the second half. He characterized several segments as "bouncing along," suggesting a period of stabilization at lower levels rather than a sharp deterioration.

Aleksey Yefremov of KeyBanc Capital Markets inquired about the outlook for new construction markets within the Paint Stores Group, asking if sales would hold at current levels or deteriorate further in line with housing completion data.

Answer

CFO Allen Mistysyn indicated that the new residential market has softened, which is a key driver of the revised low-single-digit volume decline forecast for the Paint Stores Group in the second half. He described the environment as "bouncing along," suggesting it is not getting significantly better or worse at this time.

Aleksey Yefremov followed up on the residential repaint segment, asking how consumers are reacting to economic uncertainty and about the underlying market dynamics.

Answer

Executive Heidi Petz described the underlying market as 'flat' and tied to existing home sales, but noted paint remains an affordable home improvement project. She said Sherwin-Williams is outpacing the market by leveraging its controlled distribution model and providing productivity-enhancing solutions to contractors. Executive James Jaye added that consumer caution is also visible in the auto refinish market, where some are delaying repairs.

Aleksey Yefremov inquired about how much of a demand improvement the current footprint of stores and sales associates could accommodate before requiring a significant ramp-up in SG&A investments.

Answer

CEO Heidi Petz asserted that the company currently has the capacity for growth and will continue its disciplined expansion of 80-100 new stores annually. SVP & CFO Allen Mistysyn added that the sales rep force is a variable cost that can be scaled with demand, and the existing store network provides ample capacity to handle volume increases.

Aleksey Yefremov asked for commentary on the current backlog trends for professional painting contractors.

Answer

Executive James Jaye described backlogs in Residential Repaint as 'fairly normalized' but choppy due to recent hurricanes. He expressed cautious optimism for New Residential. For the Commercial segment, he noted that while the business is still growing, the existing backlog is being worked through and is expected to diminish heading into next year.

Aleksey Yefremov requested details on the expected total volumes and pricing components contributing to organic growth in 2026.

Answer

Chairman and CEO Tim Knavish outlined expectations for positive pricing in performance and architectural businesses, with flat-ish pricing in industrial segments, partially offset by slight declines in automotive (China). Volume growth is anticipated in aerospace, PMC, packaging, architectural (modest), and auto OEM, with general industrial seeing more volume growth in the latter half of 2026.

Aleksey Yefremov requested detailed information on the expected total volumes and price components contributing to PPG's organic growth in 2026.

Answer

Chairman and CEO Tim Knavish outlined expectations for positive pricing across performance and architectural businesses, noting 39 consecutive quarters of price increases in European architectural coatings. He indicated flat-ish pricing for industrial segments, with minor declines from index pricing and China automotive. Volume growth is anticipated in Aerospace, Protective and Marine Coatings, packaging, modest architectural, and Automotive OEM due to share gains, with general industrial volumes improving later in 2026.

Aleksey Yefremov of KeyBanc Capital Markets questioned the Performance Coatings margin performance, noting that a 20 basis point improvement seemed low given the 3% price and 6% volume increases.

Answer

CEO Timothy Knavish explained that the company has increased its growth-related investments in the segment to capitalize on long-term opportunities. He cited spending to increase output in Aerospace, support growth in Protective & Marine, and develop next-generation productivity tools and allied products for the Auto Refinish business as the primary reasons for the moderated margin leverage in the quarter.

Aleksey Yefremov's team asked for an update on the China automotive market, including customer feedback and the 2025 outlook.

Answer

CEO Tim Knavish pointed to strong Q4 retail auto sales in China (+19%) and ongoing government support as positive indicators. He emphasized that PPG is gaining share with domestic Chinese automakers. He also highlighted that with EVs now representing 37% of cars built in China, PPG benefits from higher content per vehicle, a trend that continues despite a cooling of the global EV narrative.

Aleksey Yefremov requested clarification on the dynamics in the Automotive Refinish business, which grew mid-single digits in Q3 but is guided to be flat in Q4.

Answer

Chairman and CEO Timothy Knavish reiterated that the Q4 outlook is not due to a slowdown in end-market demand but is a result of inventory management by channel partners and a difficult year-over-year comparison. SVP and CFO Vince Morales specified that the tough comp relates to a significant customer pre-buy in Q4 2023 ahead of a January 1, 2024 price increase.

Aleksey Yefremov asked if rationalization of polymer capacities (buy versus make) is still being considered, and if there are signs of more rational competition or an improved competitive environment in Engineered Materials pricing.

Answer

President and CEO Scott Richardson clarified that Celanese is taking bold actions across all business elements, including footprint, if value creation opportunities exist. He stated that while they cannot control competitors, the EM commercial team is focused on differentiated spaces, leveraging their unique portfolio, and innovation to drive new solutions and improve price/mix.

Aleksey Yefremov asked if previous discussions about polymer capacity rationalization (buy versus make) were still on the table, and if Celanese was observing any signs of more rational competition or an improved competitive environment in Engineered Materials pricing.

Answer

Scott Richardson, President and CEO, affirmed that Celanese is taking bold actions across all business elements and will pursue cost-reduction opportunities, including footprint rationalization, if they create value. Regarding EM pricing, Mr. Richardson stated that while Celanese cannot control competitors, its EM commercial team is focused on differentiated solutions, partnering with customers, and leveraging its unique portfolio to drive price and mix improvement, a trajectory he expects to continue despite volume challenges.

Aleksey Yefremov of KeyBanc Capital Markets asked for the underlying reason for the demand shift from Q2 to Q3 in Engineered Materials, questioning the role of tariffs. He also sought confidence that the weakness in Filter Tow is due to destocking rather than market share loss.

Answer

CEO & President Scott A. Richardson attributed some of the Q2 pull-forward to tariff timing but characterized the broader environment as one of uncertainty, leading customers to lower inventories. On Filter Tow, he stated that based on current visibility, he does not believe there has been significant share loss, attributing the dynamic to customers operating with lower inventory levels.

Aleksey Yefremov of KeyBanc Capital Markets inquired about the underlying reasons for the stronger Q2 and weaker Q3 demand pattern in Engineered Materials and asked for assurance that the weakness in Filter Tow is due to destocking rather than market share loss.

Answer

CEO & President Scott A. Richardson attributed the Q2/Q3 demand shift partly to order pull-ins ahead of potential tariffs but emphasized the broader driver is market uncertainty causing customers to lower inventories. Regarding Filter Tow, he stated that based on current visibility, he does not believe there has been significant share loss. Instead, he suggested that some additional market capacity has allowed customers to operate comfortably with lower inventory levels.

Aleksey Yefremov from KeyBanc Capital Markets asked about the underlying reasons for the stronger Q2 and weaker Q3 demand pattern in Engineered Materials. He also sought clarity on whether the filter tow weakness was due to destocking or market share loss.

Answer

CEO Scott A. Richardson attributed some of the Q2 strength to tariff-related order pull-forwards but noted the broader driver is market uncertainty causing customers to reduce inventories. On filter tow, he stated that based on current visibility, Celanese has not seen significant share loss; rather, customers are comfortable holding less inventory due to some additional debottlenecked capacity entering the market.

Aleksey Yefremov asked about the progress in gaining market share in Asia and the realism of the Engineered Materials segment returning to its prior-year EBITDA level of approximately $1.3 billion.

Answer

CEO Scott Richardson confirmed that China is a key focus for margin-accretive growth, particularly with local auto OEMs, targeting a repeat of last year's 20% EV volume growth. Regarding EM EBITDA, he stated that a return to prior levels depends on self-help actions, incremental volume, and crucially, improving pricing from what he described as 'unsustainable margin levels' in standard grade products.

Aleksey Yefremov asked to quantify the EBITDA impact of the deliberate inventory reduction in Engineered Materials (EM) in Q1 and sought an outlook for EM pricing in Q1 and Q2.

Answer

CEO Scott Richardson clarified that the Q1 inventory reduction is not substantial or material like the one seen in Q4. On pricing, he stated that the market is seeing stabilization for the most part. While Celanese has to be competitive in certain standard-grade applications where industry margins are unsustainably low, the team is working tenaciously on offsets, primarily by improving the product mix through success in higher-margin segments.

Aleksey Yefremov of KeyBanc Capital Markets asked whether volumes or prices were the primary headwind for the Engineered Materials segment and inquired about the trajectory of inventory levels.

Answer

CEO Lori Ryerkerk explained that the headwinds are twofold: differentiated products are primarily impacted by lower volumes, while standard grade products face significant price and margin pressure. COO Scott Richardson noted that the company does not expect to draw down inventories below normalized levels by year-end.

Aleksey Yefremov inquired about the dynamics at Talison, specifically how profitability from higher spodumene prices would evolve in the first half of 2026, considering potential higher spodumene costs and offsetting equity income.

Answer

Kent Masters, CEO, stated that the company is indifferent to whether margins stay with salt or move to spodumene due to their integrated network. Neal Sheorey, CFO, explained that in a rising spodumene price environment, immediate benefits come from sales to partners via equity earnings, but the impact on cost of sales has a 6-9 month lag, with overall margin depending on future salt prices.

Aleksey Yefremov inquired about the dynamics at Talison, specifically how profitability from higher spodumene prices would evolve in the first half of 2026, considering potential higher spodumene costs and equity income.

Answer

CEO Kent Masters noted that the market is tightening, and historically, when prices move, most of the margin shifts to the resource (spodumene) due to their integrated network. CFO Neal Sheorey clarified that Albemarle benefits immediately from Talison sales to partners through equity earnings, but their portion of profit flows into inventory, impacting cost of sales with a 6-9 month lag, making the ultimate margin impact dependent on future salt prices.

Aleksey Yefremov from KeyBanc Capital Markets asked if the second-half 2025 guidance could be considered a run-rate for 2026 and whether future CapEx reduction opportunities were pulled forward into the current year's cuts.

Answer

CEO Kent Masters advised against reading too much into quarterly mix shifts, stating the overall 50/50 contract-spot mix is stable into 2026. Regarding CapEx, he noted that while the company is continuously focused on reductions, it is becoming harder to find large cuts, but the focus remains on driving it down.

Aleksey Yefremov of KeyBanc questioned how much new upstream lithium capacity would be added in 2025 and asked for an outlook on mining costs at Wodgina, Greenbushes, and La Negra.

Answer

CEO Jerry Masters stated that while some new capacity will come online, he expects the overall supply/demand balance to remain relatively stable through the year. He detailed that costs at Greenbushes and La Negra are expected to improve with scale and productivity, while Wodgina is currently in a higher-cost phase that is expected to improve over time.

Aleksey Yefremov from KeyBanc Capital Markets questioned if Albemarle could reach maintenance-level CapEx in 2026 under current market conditions and asked for a risk assessment on the CGP 3 project.

Answer

CEO Jerry Masters stated that reaching maintenance capital levels is an aspiration but declined to commit to a 2026 target, noting the company will still pursue small, high-return growth and cost-saving projects. He confirmed the CGP 3 project at Greenbushes is currently on schedule and around budget.

Aleksey Yefremov asked about the 2025 EBITDA outlook, considering lower fixed costs and volume growth, and inquired how the 2025 CapEx cuts would affect near-term and long-term lithium volume growth.

Answer

CEO Kent Masters and CFO Neal Sheorey declined to provide a specific 2025 outlook but offered key factors. Sheorey noted that current market pricing is a significant headwind compared to the 2024 average and pointed out a non-repeating $100 million equity income gain from Q2 2024. However, he highlighted that cost savings and continued plant ramps would be tailwinds. Masters clarified that the CapEx cuts primarily impact longer-term growth, reducing the CAGR through 2027 to about 15% from 20%, with minimal effect on 2025 volumes which are driven by already-built assets.

Aleksey Yefremov asked for clarification on the reasons behind the revised, lower HIP guidance and Westlake's initial outlook for the HIP segment in 2026.

Answer

Steve Bender (EVP and CFO) attributed the lower HIP guidance to a shift in product mix, driven by efforts to address home affordability, and non-recurring period-related costs incurred in Q3 2025. For 2026, he projected similar construction activity levels (1.3 to 1.4 million housing starts) as 2025, emphasizing the continued strong performance of the repair and remodeling business, which accounts for half of the HIP segment.

Aleksey Yefremov asked for a detailed discussion on the revision to Westlake's HIP guidance, including the specific product lines or reasons behind the lower outlook, and initial thoughts on the HIP segment's performance in 2026. He also requested an update on the domestic and export caustic soda market for the rest of the year.

Answer

Steven Bender, EVP and CFO, attributed the lower HIP guidance to a shifting product mix in Q3 (addressing affordability) and period-related costs, which are largely non-recurring. For 2026, he expects similar construction activity (1.3-1.4 million housing starts), lower interest rates, and continued strong performance from the repair and remodeling business. Regarding caustic soda, Mr. Bender stated the market is well supplied, and pricing is expected to remain relatively stable for the rest of the year, similar to chlorine.

Aleksey Yefremov from KeyBanc Capital Markets questioned why the HIP segment's margin guidance was maintained despite a 7% reduction in the sales forecast, asking what factors were offsetting the negative operating leverage. He also inquired about monthly order trends in the HIP segment through the summer.

Answer

EVP & CFO Steven Bender attributed the margin resilience to Westlake's broad and deep product portfolio, which addresses affordability issues, and particular strength in the infrastructure-driven pipes and fittings business. He noted that while construction activity has slowed, the current level of housing starts seen in Q2 is expected to persist through Q3.

Aleksey Yefremov of KeyBanc Capital Markets asked about pricing trends in specific HIP categories, particularly for large versus small diameter pipe and fittings. He also questioned whether lower overall petrochemical prices were providing a margin benefit to the HIP segment.

Answer

M. Bender, EVP and CFO, noted that larger diameter pipe and fittings offer more value and that there can be a lag in passing through PVC resin price changes, causing some temporary margin compression. He clarified that HIP pricing is significantly more stable than commodity materials, so lower input costs do not directly translate to lower selling prices.

Aleksey Yefremov asked for an outlook on free cash flow for 2025, noting its modest level in 2024, and questioned if the growing HIP business is more working capital intensive.

Answer

EVP and CFO Steve Bender expects stronger free cash flow generation in 2025, driven by continued strength in HIP and pricing actions in PEM. He clarified that the HIP business is actually an asset-light model and does not require a large percentage of working capital relative to the more capital-intensive PEM segment.

Representing Aleksey Yefremov from KeyBanc, Ryan Weis asked about the expected sequential EBITDA add-back in Q4 from the $120 million outage recovery and sought an explanation for the decline in HIP segment EBITDA margins.

Answer

EVP and CFO Steve Bender explained that the $120 million impact, if excluded, would have made Q3 results comparable to Q2. For HIP margins, he attributed the sequential decline primarily to an 8.5% drop in sales volume driven by weather and slower demand in the pipe business, while average sales prices remained relatively flat.

Aleksey Yefremov asked for Axalta's initial thoughts on the refinish pricing strategy for 2026, specifically if it will be a typical year or adjusted based on the current environment.

Answer

Chris Villavarayan, CEO and President, stated that Axalta plans to stick to a similar pattern as 2025, targeting a normal 2% net pricing increase for 2026. He believes this model has worked and sees no need for significant adjustments, even with the pivot to more mainstream segments, where pricing dynamics are slightly different but overall growth and adjacency strategies will contribute.

Aleksey Yefremov from KeyBanc Capital Markets asked for the productivity savings outlook for 2026 and sought confirmation that the negative price/mix in Performance Coatings was entirely due to mix, and when it might turn positive.

Answer

CFO Carl Anderson projected that 2026 productivity savings would be at least at the same pace as 2025's ~$20 million, and hopefully better, as the company is in the 'early innings' of its plant productivity initiatives. He confirmed that Refinish pricing remains positive (~2% for the year) and the negative segment result was due to mix. He anticipates the price/mix metric will inflect positively into next year, with a possibility of it occurring in Q4 2025.

Aleksey Yefremov requested more detail on the performance of the Refinish value segment relative to the broader market and Axalta's growth rate within it.

Answer

CEO Chrishan Anthon Villavarayan stated that while the value segment is experiencing weaker demand due to waning consumer confidence, Axalta is outperforming the market. He confirmed that this segment is growing faster than Axalta's premium business, driven by a focused strategy to increase its low market share, which is reflected in the strong Q1 body shop win ratio.

Aleksey Yefremov from KeyBanc Capital Markets Inc. inquired about the evolution of Axalta's mainstream versus premium market strategy in the Refinish segment and whether additional M&A could be used to enhance its mainstream presence.

Answer

CEO Chris Villavarayan clarified that body shop wins are focused on the premium side, while the CoverFlexx acquisition provides a strong entry into the mainstream and economy segments. He noted the business case for CoverFlexx is strong, particularly with the ability to sell adjacent products. He affirmed that there are more opportunities for M&A in adjacencies, especially in Europe and Asia, which the company will be focusing on.

Aleksey Yefremov asked about recent trends in body shop activity across regions and for observations on performance differences between the economy and premium segments of the Refinish market.

Answer

CEO Chrishan Villavarayan described body shop activity as 'stable to softening,' with softness in China and North America, stability in Europe, and strength in Latin America. On market segments, he noted the new CoverFlexx acquisition in the economy space is performing ahead of plan on margin. In the competitive premium segment, he emphasized that Axalta continues to win, securing 2,100 net new body shops year-to-date, driven by its technology and service leadership.

Aleksey Yefremov questioned whether RPM International's guidance of single-digit sales growth and high single-digit EBIT growth represents a normal year or reflects temporary challenges and investments, and later asked about the company's intent to raise prices in the Consumer Group to reflect raw material costs.

Answer

Frank Sullivan, Chairman and CEO, stated that the current year is not normal due to tariff uncertainty, stalled capital investment, and inflation. He emphasized that RPM is making strategic investments to outperform when markets improve, learning from past expense cuts. He confirmed that price increases enacted at the end of Q1 will benefit the Consumer Group in Q2.

Aleksey Yefremov of KeyBanc Capital Markets asked about the growth rate of the fiberglass business, its potential for fiscal 2026, and its current size.

Answer

Chairman & CEO Frank Sullivan did not disclose a specific size but confirmed the Fibergrate business has been growing at a double-digit rate, higher than RPM's overall average. He attributed the strong performance to organic growth, past acquisitions, global expansion, and significant benefits from data center construction due to the non-conductive nature of its products.

Aleksey Yefremov asked if planned price increases would cover inflation in the second half of the year and whether the growth in the services business is structural and driving material sales.

Answer

CEO Frank Sullivan stated the company expects to cover anticipated raw material and labor inflation with pricing actions. He confirmed the services business growth is a structural trend that positively impacts mix, and it directly drives material sales by securing projects and maintaining long-term customer relationships for future restoration work.

Aleksey Yefremov asked for elaboration on the 'more effective sales management systems' that were cited as having a positive impact in the Performance Coatings Group (PCG).

Answer

Frank Sullivan, Chair and CEO, explained that the company is now using data more effectively to manage product mix prospectively. This involves incentivizing sales forces with adjusted commission or bonus structures to focus on higher-margin products where RPM has a competitive advantage. He noted this shift to data-driven sales management is a piece of the overall margin improvement, with 80% of MAP savings in the quarter coming from the gross profit line through better conversion costs and improved mix.

Aleksey Yefremov asked about the sensitivity of Ecovyst's biofuels catalyst business to the proposed 67% increase in renewable fuel mandates for 2026 and sought an outlook for the virgin sulfuric acid business, particularly in the nylon and mining end markets.

Answer

CEO Kurt Bitting explained that the proposed mandate reinjects momentum into the renewable fuels market, which will drive long-term growth, but cautioned against a direct 67% correlation in a single year. For sulfuric acid, he noted that while the nylon market remains tepid, Ecovyst expects year-over-year growth. He expressed a very positive outlook for mining, citing new copper projects and strong demand driven by electrification.

Aleksey Yefremov from KeyBanc Capital Markets questioned the sensitivity of the biofuels catalyst business to the proposed 67% RVO growth and sought clarity on the visibility for a pickup in the nylon market for sulfuric acid.

Answer

CEO Kurt Bitting clarified that the RVO change is a long-term positive that reinjects momentum but won't cause an instantaneous 67% growth in their business. On sulfuric acid, he noted that while the nylon market remains tepid, Ecovyst's sales will be up year-over-year, and the mining sector shows tremendous momentum with new copper projects driving strong demand.

Aleksey Yefremov of KeyBanc Capital Markets questioned the sensitivity of the biofuels catalyst business to proposed RVO growth and sought more visibility on the forecasted recovery in nylon and the outlook for mining.

Answer

CEO Kurt Bitting explained that the RVO change should reinject momentum into the renewable fuels market, driving utilization and future growth, but cautioned against a direct year-over-year correlation to Ecovyst's business. He confirmed nylon sales will be up year-over-year despite a tepid market and highlighted the strong, positive long-term momentum in mining driven by electrification and new projects.

Aleksey Yefremov from KeyBanc Capital Markets questioned the sensitivity of the catalyst business to the proposed 67% growth in renewable fuel obligations and asked for the outlook on sulfuric acid demand from the nylon and mining sectors.

Answer

CEO Kurt Bitting clarified that while the proposed RVO growth reinjects momentum into the renewable fuels market, it won't translate to a direct 67% growth for their business. For sulfuric acid, he noted that the nylon market remains tepid despite expected year-over-year growth, but the mining sector shows tremendous momentum, with new copper projects driving strong demand for the rest of the year and beyond.

Aleksey Yefremov of KeyBanc Capital Markets questioned the sensitivity of the biofuels catalyst business to the proposed RVO growth and sought justification for the optimistic outlook on nylon demand, while also asking about the forecast for the mining sector.

Answer

CEO Kurt Bitting clarified that while the proposed RVO growth is a significant long-term positive for the biofuels catalyst business, it shouldn't be seen as a direct year-over-year growth driver for Ecovyst. For sulfuric acid, he noted that nylon sales are expected to be up year-over-year due to their customers' cost advantages, and that the mining sector shows 'tremendous momentum' with new projects supporting a strong second half.

Aleksey Yefremov asked for a historical perspective on the record-low Q1 EBITDA guidance and questioned the seemingly low incremental margins implied by the full-year 2025 sales and EBITDA projections.

Answer

CEO Kurt Bitting and CFO Michael Feehan emphasized that the weak Q1 is purely a timing issue, driven by an unusual concentration of refinery and internal turnarounds in the first half, and is not indicative of a structural problem. Feehan explained the lower incremental margin guidance is due to the negative margin percentage impact of passing through higher sulfur costs (which doesn't affect EBITDA dollars) and an unfavorable product mix, particularly in the AM&C segment.

Aleksey Yefremov of KeyBanc Capital Markets sought clarification on the tangible benefits of the reliability program, given its limited visibility in current EBITDA, and asked if Ecoservices pricing in 2025 would likely outpace cost inflation.

Answer

CEO Kurt Bitting explained that the reliability program is a multi-year initiative that has already enabled higher year-over-year sales of virgin sulfuric acid. He stated the full benefits, in the form of incremental capacity, will materialize over time as demand grows. While not giving specific 2025 guidance, Bitting affirmed that the company's strategy for Ecoservices includes growth from both volume and pricing, supported by strong contractual mechanisms.

Aleksey Yefremov from KeyBanc Capital Markets asked for a breakdown of the 5% year-over-year price decline in polyurethanes by region and product type, and for an update on MDI trade flows into North America.

Answer

EVP & CFO Phil Lister clarified that the year-over-year price decline was primarily driven by polymeric MDI in China. On trade flows, he noted that while Chinese imports to the U.S. have dropped, an increase in European imports, coupled with low demand, has kept pricing relatively stable rather than increasing.

Aleksey Yefremov asked if Chinese MDI exporters could circumvent U.S. tariffs by shipping to Canada and Mexico. He also inquired about the Board's view on the dividend and whether an adjustment might be considered to de-risk the balance sheet amid weaker free cash flow.

Answer

CEO Peter Huntsman noted that circumventing tariffs via Canada or Mexico would be difficult, as those countries have their own tariffs and finished goods brought into the U.S. would still be subject to duties on their MDI content. On the dividend, Huntsman affirmed it is considered 'very close to sacred' and that the company is confident in its cash generation, balance sheet strength, and future outlook to maintain it. CFO Phil Lister added that the company has $1.3 billion in liquidity and a favorable debt maturity profile.

Aleksey Yefremov asked for the target magnitude of the U.S. MDI price increase and for an update on the commercialization timeline for the company's new materials technology.

Answer

CEO Peter Huntsman specified their announced price increase was for 'at least $0.10 per pound.' He also detailed progress on their new technology, stating they have a 30-ton reactor for commercial qualification, expect sales in 2025 for applications like EV batteries, and plan a larger 5,000-ton reactor for next year.

Aleksey Yefremov requested an explanation of Huntsman's MDI pricing structure, specifically the mix of spot, contract, and formula-based pricing. He also asked how the company is adapting its automotive PU strategy to address the market share shift from European OEMs to emerging players in China.

Answer

Chairman, CEO and President Peter Huntsman detailed the pricing mix, breaking it into spot (region-dependent), formula-based (20% globally), and variable negotiated pricing for formulated products. He explained that Huntsman's strong regional platform in Asia has become its most profitable automotive region, with deep relationships with key Asian OEMs for both traditional and EV applications, effectively navigating the market shift.

Aleksey Yefremov from KeyBanc Capital Markets asked for a timeline on when the company's inventory adjustment process might conclude and its quantifiable impact on gross margins. He also questioned if there were signs of significant demand pull-forward from customers in Q2.

Answer

CFO Linda LaGorga declined to quantify the margin impact or provide a specific timeline, emphasizing that managing inventory is a key lever for achieving their free cash flow margin goal of low-double-digits in 2025. CEO Bertrand Loy addressed the pull-forward question, stating that while it may have been a factor, he does not believe it had a material impact on Q2 results.

Speaking for Aleksey Yefremov, an analyst from KeyBanc asked if Entegris saw any evidence of pre-buying from Chinese customers ahead of the new restrictions. He also requested an update on the size, Q1 growth, and outlook for the advanced packaging business.

Answer

CEO Bertrand Loy stated that the company did not see significant pre-buying in Q1 and that no shipments are currently occurring from the U.S. to China. Regarding advanced packaging, he described it as a small but rapidly expanding market that more than doubled in Q1 year-over-year and is expected to grow over 25% for the full year 2025, driven by dispense solutions and HBM slurries.

Aleksey Yefremov asked for a longer-term view on the company's market outperformance level into 2026 and questioned whether China would remain a growth market given new trade restrictions.

Answer

CEO Bertrand Loy stated it was too early to comment on 2026 outperformance but noted the growing opportunity in moly applications is promising. He affirmed that despite headwinds, China is expected to remain a growth area, having grown from 16% to 21% of sales in 2024, as mainstream fabs there continue to ramp production.

Aleksey Yefremov asked for more detail on the full scope of the molybdenum (moly) opportunity beyond deposition materials and whether the outlook for 2025 node transitions has changed.

Answer

CEO Bertrand Loy detailed that the moly opportunity is a comprehensive solution including the material, ampule, delivery systems, and Moly Etch chemistry for NAND. A future logic application would also include a polishing slurry. He confirmed his view on 2025 node transitions is unchanged, expecting significant activity in advanced logic and 3D NAND, though he noted the timing remains fluid and customer-dependent.

Aleksey Yefremov questioned the drivers for the expected acceleration in IndustrialsCo sales growth through the year and asked for an update on the outlook for China's electronics market in 2025 following a strong 2024.

Answer

CEO Lori Koch clarified that the Q1 organic growth for Industrials was 2%, and the full-year guide of 3-4% represents a consistent trend. Jon Kemp, CEO-elect of Qnity, stated their guidance assumes China's electronics demand normalizes to be flat year-over-year, as strong local demand continues without signs of excessive customer inventory.

Aleksey Yefremov inquired about the portfolio strategy for IndustrialsCo now that it will retain the Water business and asked for the underlying market growth assumptions for Semis and Interconnect in 2025.

Answer

CEO Lori Koch stated that the portfolio strategy for the new DuPont will involve both divestitures and M&A, with a focus on expanding the healthcare and water businesses. She projected underlying market growth (MSI) for semis at around 6% and mid-single-digit growth for the PCB and smartphone markets served by Interconnect.

Aleksey Yefremov of KeyBanc Capital Markets asked for more details on the share gains and AI-driven technology ramps within the Interconnect Solutions business.

Answer

CEO Lori Koch explained that the AI-related growth is concentrated in the packaging space within the Interconnect business. She attributed share gains to securing a greater share of wallet with key customers by expanding product offerings beyond phones to other devices. She also reiterated that thermal management and packaging opportunities are key drivers.

Aleksey Yefremov of KeyBanc Capital Markets sought to clarify whether the $1 billion cost reduction target is inclusive of, or separate from, the potential actions resulting from the European asset review.

Answer

CEO James Fitterling gave a definitive answer, stating that the strategic review of European assets is a separate initiative and any resulting actions would be in addition to the recently announced $1 billion cost reduction program, with potentially minor overlap.

Aleksey Yefremov expressed surprise at the low EBITDA for the Industrial Intermediates & Infrastructure (II&I) segment and asked for specifics on which products or regions underperformed and the outlook for next year.

Answer

James Fitterling, Chair and CEO, attributed the weakness to several factors: price pressure on PO Polyols, lower MDI volumes from a third-party supplier outage, and higher propylene costs due to the Texas-8 cracker outage. He identified polyurethanes in North America as the biggest drag in the quarter and noted the MDI issue was a one-time event that will correct itself.

Inquired about the financing sources for the capital program for the rest of 2024 and 2025, and asked for clarification on how realized prices would behave next year if market indices remain unchanged.

Answer

The capital program will be self-funded through operating cash flow, supplemented by their untapped credit facility (revolver) if needed. If market prices remain flat next year, Arcadium's average realized price would be lower than this year due to a smaller proportion of total volume being under contract, but it would still remain well above the market price.