Arun Viswanathan

Arun Viswanathan from RBC Capital Markets questioned GrafTech International's strategy amid disciplined pricing versus competitors' irrational tactics, especially with capacity additions from India and China. He asked how GrafTech plans to win back market share if customers are accepting subpar electrodes and if there's a heightened focus on repurposing needle coke capacity for EV/ESS batteries, including any timelines or milestones. He also inquired about GrafTech's liquidity to navigate the downturn and its financial capacity to pursue EV battery development.

Answer

Timothy Flanagan, CEO, addressed the oversupply, noting no incremental supply in 2025 but unfavorable future announcements. He emphasized GrafTech's strategy to focus on U.S. and European markets, aiming for 5-10% volume growth in 2026 with discipline, walking away from low-margin opportunities. Mr. Flanagan highlighted GrafTech's value proposition through R&D, customer technical service, and quality. He confirmed a heightened focus on both core business and becoming a significant player in ex-China anode material supply chains, leveraging Seadrift's capabilities and potential partnerships. Rory O'Donnell, CFO, added that GrafTech's $340 million liquidity as of December 31st, 2025, combined with decisive actions over the past two years, supports navigating the downturn.

Arun Viswanathan from RBC Capital Markets questioned GrafTech's discipline amidst competitors' irrational pricing, the perceived quality improvement of Indian/Chinese electrodes, and strategies to win back market share, particularly regarding service. He also asked about the potential to pivot needle coke capacity towards EV/ESS battery markets and the company's liquidity to navigate the downturn and fund new developments.

Answer

CEO Timothy Flanagan addressed the oversupply, noting no incremental supply in 2025 but unfavorable announcements for future capacity. He emphasized GrafTech's strategy to grow volumes in the U.S. and Europe with discipline, walking away from low-margin opportunities in other regions. Flanagan highlighted GrafTech's value proposition through R&D, new products, and customer technical service. Regarding EV/ESS, he confirmed a heightened focus, leveraging Seadrift's capabilities and seeking partnerships for multi-billion dollar investments. Flanagan reiterated GrafTech's $340 million liquidity and decisive actions taken to preserve and enhance it.

Arun Viswanathan with RBC Capital Markets inquired about the nature of deferred revenue benefits, the current demand and pricing dynamics for graphite electrodes, including utilization rates and petroleum needle coke trends. He also asked about GrafTech's strategy and timeline for accelerating commercial applications in the battery-related materials market, particularly concerning the utilization of latent capacity.

Answer

CFO Rory O'Donnell clarified that the deferred revenue benefit was a one-time, non-recurring event related to a long-collected receivable. CEO Tim Flanagan addressed pricing, noting the oversupplied market but expressing optimism for positive momentum in steel demand and production due to infrastructure spending and trade actions. He also discussed the stable petroleum needle coke pricing, anticipating tightening and improvement with the finalization of the active anode material trade case. Regarding the battery market, Mr. Flanagan highlighted GrafTech's vertical integration advantage and graphitization expertise, emphasizing that market development is contingent on non-Chinese battery production and the finalization of trade cases to support financing.

Arun Viswanathan inquired about the nature of deferred revenue benefits, the current demand and pricing environment for graphite electrodes, including global utilization rates and petroleum needle coke trends, and the company's strategy and timeline for accelerating commercial applications in the battery-related materials market, leveraging latent capacity.

Answer

CFO Rory O'Donnell clarified that the deferred revenue benefit was a one-time, non-recurring event. CEO Tim Flanagan discussed the oversupplied graphite electrode market, noting positive momentum in the steel industry due to infrastructure spending and trade actions, and anticipated an influx of EAF production. He also addressed the flat petroleum needle coke pricing, expecting tightening due to the active anode material trade case. Regarding battery materials, Mr. Flanagan highlighted GrafTech's vertical integration advantage and excess graphitization capacity, emphasizing the importance of the trade case finalization to unlock the market for non-Chinese battery material producers and GrafTech's potential role as a partner for raw material supply and graphitization expertise, including for energy storage systems.

Arun Viswanathan from RBC Capital Markets asked about the graphite electrode pricing environment, the supply-demand dynamics for needle coke, and the company's outlook for sustained positive adjusted EBITDA.

Answer

CEO Timothy Flanagan stated that while the pricing environment remains competitive, it is showing signs of stability, and the company will continue pushing for higher prices into 2026. COO Jeremy Halford described the needle coke market as flat with no near-term catalysts. CFO Rory O'Donnell projected full-year EBITDA to be around breakeven, citing some second-half cost headwinds, while Flanagan emphasized building momentum for 2026.

Arun Viswanathan requested an update on market share recovery, sought the near-term outlook for steel utilization rates, and asked for guidance on the future evolution of pricing for both graphite electrodes and needle coke.

Answer

CEO Timothy Flanagan reiterated the low double-digit volume growth guidance for the year, noting the company will be more heavily weighted towards the Americas (north of 50%). He expressed cautious optimism about the market, highlighting that while uncertainty exists, GrafTech is well-positioned to capitalize on disruptions. On pricing, he stated that needle coke prices have found firm support and that electrode pricing is showing stability after declines in 2024, with the company's price increase aimed at restoring profitability.

Arun Viswanathan of RBC Capital Markets asked about the progress of market share recovery, the strategy for culling unprofitable customers, the logistics of the regional production network, and the long-term drivers for price recovery.

Answer

CEO Timothy Flanagan described market share recovery as an ongoing journey focused on customer engagement and technical service, particularly in the U.S. He confirmed GrafTech is strategically walking away from business in regions where customers are solely price-focused. He explained that needle coke from the U.S. feeds all global plants, which have overlapping capabilities, providing flexibility to shift production between Mexico and Europe to serve various markets. Long-term optimism is based on EAF steelmaking growth and future needle coke demand for EVs.

Arun Viswanathan from RBC Capital Markets questioned the Q3 production pullback relative to sales, inventory levels, and the outlook for production rates. He also asked about global steel utilization trends, volume growth expectations for 2025, the path to profitability, and the company's view on its current asset footprint.

Answer

COO Jeremy Halford explained that the Q3 production decrease was a planned action to perform maintenance, manage costs, and reduce inventory to target levels, with production and sales expected to align going forward. CEO Timothy Flanagan added that new liquidity provides flexibility to rebuild inventory in 2025. Flanagan projected low double-digit sales volume growth for 2025, driven by market recovery, new 800mm electrode sales, and regaining market share. He also confirmed the current asset footprint is considered appropriate for the company's long-term market view.

Arun Viswanathan asked about Crown Holdings' position with North American CSD customers, including any discussions about promotions to drive volume, and concerns regarding demand stability amidst rising aluminum prices and the Midwest Premium. He also sought the outlook for the transit packaging business, inquiring about macro factors, potential for consolidation, and other market drivers for better volume.

Answer

Tim Donahue, Chairman, President and CEO, noted that major soft drink companies are investing in advertising, with one showcasing the can, which he hopes will boost can consumption. For transit packaging, Donahue stated that the business is managed to generate significant cash flow (over $250 million annually) with minimal resources. He highlighted that transit's margins, even in a down cycle, exceed many 'high-value packaging franchises' and that the business is well-positioned for future income growth when industrial markets return and tariff clarity is achieved.

Arun Viswanathan asked about Crown Holdings' position with its North American CSD customers and any commentary on promotions to drive volume, especially in light of rising aluminum prices and the Midwest Premium. He also sought an outlook for the Transit Packaging business, inquiring if there are opportunities like consolidation or bolt-on acquisitions that could improve its volume outlook beyond macro-driven factors.

Answer

Tim Donahue, Chairman, President and CEO, highlighted upcoming Super Bowl commercials from major beer and soft drink companies, one of which prominently features the can, anticipating these will boost can consumption. For Transit Packaging, he stated that the business is focused on generating significant cash flow (over $250 million annually) with minimal resources. He emphasized that even in a down cycle, Transit Packaging generates strong margins, and he foresees significant upside to its profitability when industrial markets recover and tariff clarity improves, given the cost reductions already implemented.

Arun Viswanathan asked for clarification on North American volume performance, specifically if the portfolio (excluding the pruned customer) was in line with or ahead of the industry, considering under-indexing to energy and beer. He also inquired about expected growth in other segments for 2026, particularly European beverage, and if transit and non-reportables have achieved a structurally higher earnings power level.

Answer

President and CEO Tim Donahue explained that excluding the pruned customer, North American volumes would be close to flat year-over-year, with slight underperformance potentially due to under-indexing to energy and beer, which saw stronger alcohol sales in Q3. He expects continued volume and income growth in European beverage due to penetration and substrate shift. Donahue confirmed that transit's cost structure is significantly lower, positioning it for embedded gains when industrial demand recovers, and that the food business is stable with a shift towards pet food, while 'other' segment growth will come from efficiencies and can-making equipment recovery.

Arun Viswanathan inquired about North America's volume performance, specifically the impact of customer pruning and under-indexing to energy/beer. He also asked about growth expectations for European beverage, Signode/non-reportables, and food in 2026, and the potential demand impact of the Midwest premium and aluminum inflation in Europe.

Answer

President and CEO Tim Donahue attributed North America's underperformance primarily to customer pruning, with slight additional impact from under-indexing energy and beer. He expects continued European growth, embedded gains in Signode (Transit) awaiting industrial recovery, and stable food business with a shift to pet food. He differentiated the Midwest premium's inflationary impact on North American demand from Europe, where the delivery premium is less elevated.

Arun Viswanathan sought clarification on the math behind the updated guidance, noting an implied slowdown in the second half. He also asked about potential upside to the free cash flow forecast and whether any footprint actions are needed in the tight North American beverage can market.

Answer

CEO Timothy Donahue clarified that the $30 million tariff impact was specific to the Transit segment and the guidance reflects broader caution. He offered an alternative view: hitting the Q2 guidance midpoint and matching last year's H2 results would place them at the high end of the new range. He sees no downside to the $800 million free cash flow forecast. Regarding the North American footprint, he stressed the need for the industry to remain disciplined on capacity to ensure responsible capital deployment.

Arun Viswanathan of RBC Capital Markets asked for an outlook on pricing and returns in North America, considering potential overcapacity and changes in plant ownership. He also inquired about the stability and growth prospects for the Asia Pacific business.

Answer

President and CEO Timothy Donahue emphasized that the industry should not let small pockets of overcapacity dictate pricing for the entire market, expressing hope that the failure of some new entrants serves as a lesson. For Asia Pacific, he stated the business is now stabilized and focused on income growth and cash flow rather than just volume growth. He believes the region is well-positioned for when the consumer eventually recovers, which he estimates is about a year away.

Arun Viswanathan sought a preliminary framework for 2025, asking about potential EBITDA and EPS growth, the nature of the $450 million capex level, and the state of customer promotional activity.

Answer

President and CEO Timothy Donahue declined to provide a specific 2025 forecast, stating it was too early and noting the pending loss of equity earnings from the Eviosys sale. He characterized the $450 million capex level as sufficient, with increases only likely if a significant market shift required new capacity. Regarding promotions, Donahue described activity as 'lackluster' compared to historical levels but possibly the 'new norm,' stating the company must adapt to its customers' business models.

Arun Viswanathan sought to understand the EPS guidance of 6-9%, which is slightly below the 10%+ discussed in December, and what factors (e.g., Europe, backlog, space, electronics) would need to improve to reach that higher growth level.

Answer

Matt White, CFO, described the guidance as early and prudent, acknowledging that the upper end of the 6-9% range approaches the lower end of the long-term 8-12% economic impact. He expressed confidence in the capital contribution from project backlog and acquisitions, as well as management actions like pricing and productivity, to deliver within the expected range. Sanjiv Lamba, CEO, reiterated that the guidance is guarded, prudent, and conservative, with the long-term goal remaining double-digit EPS growth.

Arun Viswanathan inquired about the EPS guidance of 6%-9%, which is below the 10%+ possibility discussed in December, and asked what factors, such as Europe, backlog, space, or electronics, would need to improve to reach that higher level.

Answer

Matt White, CFO, acknowledged that the guidance is early, guarded, prudent, and conservative. He stated that while the upper end of the 6-9% range might approach the previously discussed economic impact, Linde feels strong about its capital contribution (project backlog, acquisitions) and management actions (price, productivity, restructuring). He reiterated that the long-term goal is double-digit EPS growth, and the company will work to achieve it.

Arun Viswanathan asked for an update on Linde's thoughts regarding disinvestment in Europe, which was mentioned last quarter as potentially not continuing. He also asked for elaboration on the path forward for industrial and investment standpoints in both Europe and the U.S., given strong opportunities in the U.S. but also some rollbacks.

Answer

Sanjiv Lamba, CEO, clarified that most of Linde's current opportunity pipeline is in the Americas and Asia, with robust opportunities in the U.S. across electronics, steel, and other end markets. He noted that Europe's opportunity pipeline (EMEA) is lighter due to industrial weakness but still contains projects, including some related to decarbonization, that are progressing and will convert into backlog or base growth over time.

Arun Viswanathan from RBC Capital Markets asked for an update on thoughts regarding disinvestment in Europe and how strong opportunities in the U.S. contrast with potential rollbacks, seeking clarification on the path forward for industrial investment in both regions.

Answer

CEO Sanjiv Lamba clarified that Linde's opportunity pipeline is robust in the Americas and Asia, spanning electronics, steel, and other end markets in the U.S. He noted that the opportunity pipeline for Europe (EMEA) is lighter due to industrial weakness but still contains projects related to decarbonization and other growth areas that will convert over time.

Arun Viswanathan asked for a breakdown of the $200 million productivity benefits between the seed and crop protection businesses and an update on Corteva's ongoing productivity opportunity and journey.

Answer

EVP and CFO David Johnson stated the $200 million is split somewhat equally between the two businesses and represents a running rate with ongoing opportunities in seed production efficiency and typical year-over-year improvements in crop protection. CEO Chuck Magro added that the company is on track to far exceed the original $700 million net productivity and cost improvement framework for 2027, with a very healthy pipeline for cost and productivity across the company.

Arun Viswanathan asked for a breakdown of the $200 million productivity benefits between seed and CP, and an update on the ongoing productivity opportunity and where Corteva stands in that journey.

Answer

David Johnson (EVP and CFO, Corteva) stated the $200 million is split somewhat equally between seed and CP, representing a running rate of annual improvements. Chuck Magro (CEO, Corteva) added that Corteva is on track to far exceed the original $700 million net productivity and cost improvement framework for 2027, having overachieved in 2025, and that the pipeline for cost and productivity remains very healthy.

Arun Viswanathan asked for clarification on the 2025 outlook for the exchange gains/losses line and whether FX impacts could alter the planned $1 billion share buyback.

Answer

An executive, likely CFO David Johnson, stated the exchange gains/losses line would likely be proportionate to EBITDA and thus slightly higher in 2025. He confirmed the plan remains to execute the $1 billion buyback somewhat evenly throughout the year, similar to 2024. He also noted the company has flexibility due to a higher-than-normal year-end cash balance.

Arun Viswanathan asked if Corteva would consider taking on debt to alter its capital structure.

Answer

CEO Chuck Magro and another executive reiterated that the company's capital allocation philosophy remains consistent. They highlighted the company's strong cash generation and investment-grade balance sheet, stating there are no plans for a meaningful change. The focus remains on internal investment for growth and returning capital to shareholders through dividends and buybacks.

Arun Viswanathan asked about the volume guidance for Dispensing and Specialty Closures (DSC) and Metal Containers, specifically inquiring about the drivers of pet food growth given tough comparisons and penetration in wet pet. He also asked if DSC has stabilized after a choppy year, and whether any execution issues were addressed or if challenges were primarily market impacts. Finally, he questioned the $450 million free cash flow guide, asking about any inventory impact and potential for upside.

Answer

Adam Greenlee, President and CEO, clarified that DSC's challenges in 2025 were primarily market-related (food/beverage destocking in Q2, personal/home care destocking in Q4), not execution issues. For Metal Containers, he explained that wet pet food has been a consistent annual grower for decades, driven by growing cat/small dog populations, its premium product status, and high consumer stickiness. Sean Fabry, EVP and CFO, stated that the $450 million free cash flow guide for 2026 includes modest working capital improvement initiatives, with operating earnings growth largely offset by higher cash interest and taxes.

Arun Viswanathan asked about the volume guidance for Dispensing and Specialty Closures (DSC) (low to mid-single digits) and metal containers (low single digits, driven by pet food), specifically inquiring about the drivers for pet food growth given tough comps and volatility, and the penetration in wet pet. He also asked if the choppy year for DSC in 2025 was due to execution issues that have been addressed or mainly market impacts. Additionally, he questioned the variability and potential upside for the $450 million free cash flow guidance for 2026, including any inventory impact.

Answer

CEO Adam Greenlee clarified that DSC's choppy year in 2025 was primarily due to market-related activities like food and beverage destocking in Q2 and personal care/home care destocking in Q4. For metal containers, he explained that wet pet food has been a decades-long annual grower, driven by growing cat and small dog populations, its premium product status, and the high stickiness of the product once adopted by pet owners. CFO Sean Fabry stated that the $450 million free cash flow guidance for 2026 includes modest working capital improvement initiatives, with operating earnings growth largely offset by higher cash interest and taxes, indicating a degree of variability.

Arun Viswanathan asked if Silgan considered pre-announcing recent discrete items to frame them as one-time events. He also sought clarification on segmenting the Dispensing and Specialty Closures business into cyclical versus higher-growth, less cyclical components, and inquired if the proactive Q4 inventory reduction would fully address the issue, potentially leading to more aggressive share buybacks given current stock valuation.

Answer

Adam Greenlee, President and CEO, Silgan Holdings, reiterated that full forecast clarity and internal response planning for Q4 didn't finalize until early-to-mid October, making a pre-announcement impractical. He stated that Silgan views all DSC products as consumer staples, not cyclical, clarifying that the current inventory correction is an adjustment to growth expectations, not a decline, driven by a bifurcated consumer market. Greenlee confirmed the Q4 inventory reduction is expected to be limited to Q4 and is key to achieving free cash flow. He noted Silgan's Q3 share repurchases due to market dislocation and flexibility for M&A or share repurchases as leverage returns to the midpoint.

Arun Viswanathan asked if the recurring customer disruptions in Metal Containers signal broader structural issues in the food can market. He also inquired about strategies to offset lost volumes and whether the company would pivot to more aggressive share buybacks given the stock's decline.

Answer

President & CEO Adam Greenlee clarified that both last year's disruption and the current one are related to the same customer, not a broader market issue, highlighting that the rest of the business, especially pet food, is strong. He noted the company is prepared for various outcomes post-bankruptcy. EVP Robert Lewis reiterated that the capital allocation strategy remains unchanged: M&A is the priority, followed by deleveraging, with share repurchases considered when the market is dislocated.

Arun Viswanathan asked for a reconfirmation of the full-year volume expectations and sought details on the free cash flow outlook, including the path to a normalized $500 million level. He also inquired about the priority for capital deployment between M&A and share buybacks.

Answer

CEO Adam Greenlee reconfirmed the guidance for mid-single-digit volume growth in each segment. CFO Kimberly Ulmer affirmed the $450 million free cash flow forecast for the year. Both Mr. Greenlee and EVP Robert Lewis emphasized that M&A remains the clear priority for capital allocation, highlighting the company's disciplined approach to acquisitions.

Arun Viswanathan asked about customer sentiment regarding promotional activity and demand trends heading into 2025. He also sought clarification on the drivers of elevated corporate costs and the outlook for free cash flow growth relative to EBITDA.

Answer

CEO Adam Greenlee noted that learnings from successful targeted promotions in pet food and soup are being applied to 2025 plans. CFO Kimberly Ulmer explained that the higher 2025 corporate cost forecast of approximately $40 million is primarily due to corporate development activity. She also expressed confidence in strong free cash flow growth, targeting $500 million in the coming years.

Arun Viswanathan asked for clarification on the strength in the beauty segment, sought confirmation that destocking has concluded, and inquired about customer sentiment regarding a return to at-home consumption.

Answer

President and CEO Adam Greenlee attributed the beauty segment's strength to Silgan's focus on the high-end prestige market, not the mass market. He confirmed that destocking has ended, with the company seeing two consecutive quarters of positive volume inflection. He added that underlying consumer demand, particularly for pet food, remained strong throughout the destocking period, and customers are noticing this sustained demand.

Arun Viswanathan sought insights into customer discussions regarding derationalization, evolving packaging strategies, responses to MAHA, and changes in consumer behavior impacting food and food service volumes. He also inquired if the oversupply in SBS is pressuring unbleached grades, leading customers to switch to SBS due to minimal price premiums, and if this trend will continue to affect other paperboard grades.

Answer

Robbert Rietbroek, President and CEO, detailed customer focus on cost reduction, rationalizing packaging executions for simplification, and strategies to gain share of shelf/queue. He noted reviews of pack price architecture for lower price points, rapid private label innovation, and demand for packaging solutions that reduce material usage, improve palletization, and offer high-quality graphics. He highlighted the growing trend of single-use plastic/foam reduction, especially in Europe and increasingly in the U.S., and QSRs' need for innovation and competitive pricing. Regarding SBS, he acknowledged bleached overcapacity, noting it typically resolves through rationalization. He confirmed some price pressure on recycled packaging from bleached producers seeking volume but stated no lost volume, emphasizing that bleached packaging selling at recycled prices is unsustainable long-term.

Arun Viswanathan asked about customer insights regarding derationalization, changing packaging strategies, and responses to MAHA and evolving consumer behavior, particularly concerning lower food and food service volumes. He also inquired if SBS oversupply is pressuring unbleached grades, leading to customer switching, and if this oversupply will continue to impact other grades.

Answer

Robbert Rietbroek, President and CEO, detailed customer focus on cost, packaging rationalization for COGS reduction, and reviewing pack price architecture for lower price points. He observed private label innovation, demand for reduced material usage, improved palletization, and high-quality graphics. Rietbroek highlighted the growing trend of single-use plastic/foam reduction, especially in Europe and the U.S., and QSRs' need for innovation due to affordability challenges. Regarding SBS, Rietbroek acknowledged bleached overcapacity and its fragmented nature, noting that Graphic Packaging, being highly integrated, sees some price pressure on recycled packaging from bleached producers but has not lost volume, emphasizing that bleached packaging selling at recycled prices is unsustainable.

Arun Viswanathan asked for initial thoughts on 2026, specifically the assumptions underlying the $80 million EBITDA uplift from Waco, including any volume component, and if the confidence in another $80 million uplift for 2027 remains intact, considering it might be volume-dependent. He also inquired about the expected continuation of weakness in beverage and food service into Q4/2026, trends in other markets, and any changes in innovation sales or trade-down.

Answer

President and CEO Mike Doss expressed high confidence in delivering $80 million from Waco in 2026 and another $80 million in 2027, noting that $100 million of the total is from fixed cost savings due to mill closures. He clarified that while volumetric growth is needed for outlying years, the K1 machine can be toggled to match supply and demand, ensuring lowest-cost assets run wide open. He expects Q4 to be similar to Q3, with customers focused on volumetric performance. SVP of Investor Strategy and Development Mark Connelly added that beverage promotions and food market trends show variability but no fundamental change.

Arun Viswanathan asked for initial thoughts on 2026, specifically the assumptions underlying the $80 million EBITDA uplift from Waco (cost per ton, volume component), and if the $80 million uplift for 2027 is also volume-dependent. He also inquired about expected trends for beverage and food service in Q4 and 2026, and for other markets (food, household, health & beauty), including any changes in innovation sales or willingness to adopt innovation-led products due to consumer trade-down.

Answer

Mike Doss (President and CEO, Graphic Packaging) reiterated high confidence in the $80 million EBITDA from Waco in 2026 and another $80 million in 2027, with $100 million of the total $160 million from mill closures. He confirmed that full volumetric run rate for Waco would take 12-18 months and that future volumetric growth is needed for the outlying years, with the K1 machine used to balance supply and demand. He expects Q4 trends to be similar to Q3, noting customer focus on volumetric performance and ongoing restructurings. Mark Connelly (SVP of Investor Strategy and Development, Graphic Packaging) added that Q4 beverage promotions are typical but production schedules are variable, and food business remains uneven with strategic stocking. Mike Doss confirmed that the $80 million next year is primarily from Waco, with other drivers being volume and price.

Arun Viswanathan sought clarification on the financial impact of downtime in Q2 and asked about the expected EBITDA cadence between Q3 and Q4, considering seasonality and the Waco startup.

Answer

EVP & CFO Stephen Scherger confirmed that Q3 is typically the company's strongest seasonal quarter, and they expect EBITDA to be higher in Q3 before a modest seasonal step-down in Q4. He also explicitly stated that they do not expect any positive financial benefits from the Waco facility to be reflected in the Q4 2025 results, as it will be in its initial startup phase.

Arun Viswanathan asked about the ongoing volume decline, the potential for further downtime, and the supply-demand balance across the company's paperboard grades. He also sought clarification on the volume assumptions tied to the updated EBITDA guidance range.

Answer

CEO Michael Doss stated that the company will run its operations to meet demand, which includes taking market-related downtime as reflected in the new guidance. He noted that competitor mill closures are helping to balance the recycled paperboard (CRB) market, de-risking the Waco project. CFO Stephen Scherger clarified the guidance: the $1.4B low end assumes a 4% volume decline and significant inflation, while the $1.5B midpoint assumes a 2% volume decline.

Arun Viswanathan asked for an update on inventory levels and inquired about market concerns regarding new capacity and the threat of paperboard imports from Europe.

Answer

President and CEO Michael Doss stated that finished goods inventories are largely balanced to service customers, with a temporary build in paperboard ahead of the Waco startup. Regarding imports and new capacity, Doss emphasized that their highly integrated system is not materially impacted by open market dynamics. He and EVP & CFO Stephen Scherger expressed confidence in their low-cost, high-quality production model as a significant competitive advantage.

Arun Viswanathan of RBC Capital Markets sought clarification on the 2024 EBITDA base used for the 2025 growth forecast, specifically regarding the Augusta divestiture's impact. He also expressed concern about the pricing outlook, citing rising paperboard imports and new market entrants, and followed up on the confidence in the 2026 CapEx guidance.

Answer

CFO Steve Scherger clarified the 2025 EBITDA growth should be based on a leap-off point of roughly $1.7 billion for 2024, which normalizes for certain items. CEO Mike Doss provided a detailed rebuttal to import concerns, stating that total imports remain a small percentage of the U.S. market and have actually declined year-over-year. He highlighted high European fiber and shipping costs as a barrier to sustained import pressure. Scherger reaffirmed high confidence in the multiyear CapEx step-down, projecting spending to be sub-$500 million by 2026, which will drive a significant free cash flow inflection.

Arun Viswanathan with RBC asked about Ball's management of tariffs and the rising aluminum price environment, including customer reactions to potential price increases, and the outlook for category mix, specifically if energy drinks will continue to outpace other segments like beer and CSD.

Answer

CEO Ron Lewis stated that tariffs have no direct impact on Ball's business beyond ends, which are pass-through. He acknowledged the Midwest Premium spike but noted that the U.S. consumer continues to buy cans as a value package. He emphasized supporting all customers, regardless of category, as many are becoming 'total beverage companies,' and expects energy drinks to continue their winning trend.

Arun Viswanathan asked about Ball's management of tariffs, customer reactions to rising aluminum prices, and the outlook for category mix, specifically energy, beer, and CSDs, in 2026.

Answer

CEO Ron Lewis stated that tariffs have no direct impact beyond the mentioned ends piece, which is a pass-through. He noted that the Midwest Premium has spiked, but the U.S. consumer continues to buy cans, which are seen as value. He expects energy drinks to continue winning due to innovation and functional products, and emphasized supporting all customers as they evolve into 'total beverage companies.'

Arun Viswanathan asked about the category outlook for North America in 2026, specifically if energy drink growth will continue at a similar pace despite tougher comparisons, and how beer weakness is being managed against strong CSD positions. He also inquired if metal supply issues, including logistics and imports, have been addressed. Finally, he asked about any special cash items for next year, such as working capital, cash tax, or minority interest, and thoughts on conversion from EBITDA or net income.

Answer

Daniel Fisher, CEO, confirmed aggressive innovations in health and wellness, and protein categories, with Ball repositioning its portfolio to align with winning brands. For 2026, he expects Ball to grow in line with the low end of the market due to tight capacity, then outpace in 2027-2028. Mr. Fisher stated that metal supply issues have been overwhelmingly addressed, noting that while there's still not enough processed aluminum in the U.S., Ball has managed this for years, and new facilities from Novelis and SDI will help long-term. Daniel Rabbitt, SVP and Interim CFO, stated there are no special cash items to report for next year, and current trends should largely continue.

Arun Viswanathan from RBC Capital Markets asked about the company's path to achieving its 'two-to-one' EBIT leverage algorithm. He also inquired about the expected evolution of the customer and category portfolio in North America over the next 6 to 12 months.

Answer

CEO Daniel Fisher clarified that the EBIT algorithm is viewed on an enterprise-wide basis and that the company is on track when excluding non-repeating items like interest income from the aerospace sale and prior-year insurance proceeds. He confirmed a strategic portfolio shift in North America to be less indexed to beer, a move that is creating positive tailwinds as they pivot towards higher-growth categories.

Arun Viswanathan inquired about the company's path to achieving its 'two-to-one' EBIT leverage target and the evolution of its North American customer portfolio. He also asked for more detail on the strategic shift in category mix.

Answer

CEO Daniel Fisher clarified that his customer concentration comment was specific to South America. He explained that Ball is still on track for its enterprise-wide EBIT leverage goal, despite non-repeating items like prior-year interest income and insurance proceeds. He confirmed the strategic goal in North America is to reduce the portfolio's alcohol exposure from approximately 40% toward 30% over time.

Arun Viswanathan asked about the company's EBIT leverage algorithm and the evolution of its customer and category mix in North America.

Answer

Chairman & CEO Daniel Fisher clarified that the company is on track with its enterprise-wide EBIT algorithm, despite some non-repeating items. He confirmed a strategic pivot in North America to reduce its over-indexed exposure to beer, stating that a move from roughly 40% alcohol exposure towards 30% over time would be 'optimal.'

Arun Viswanathan asked about the primary drivers of the segment EBIT outperformance, the contracting status and volume visibility in North America, and for a confirmation of the full-year volume outlook.

Answer

CEO Daniel Fisher attributed the EBIT outperformance primarily to favorable product mix and operational efficiencies rather than just volume. He explained that near-term visibility comes from a combination of contracts, scanner data, and inventory analysis. He confirmed confidence in the full-year North American volume outlook based on current trends, noting the Florida facility will run at full capacity during peak season.

Arun Viswanathan requested the financial rationale, such as ROIC or payback period, for the new plant investments and asked what it will take for major brewers to re-accelerate beer category growth.

Answer

CEO Daniel Fisher estimated the Florida acquisition would achieve a $25-35 million EBITDA run rate by early 2027, implying a four-year positive EVA. Regarding beer, he emphasized that growth will come from a combination of substrate shift to cans, portfolio optimization, and innovation, as large brewers increasingly operate as broad beverage companies.

Arun Viswanathan sought details on a reported $85 million closure charge, questioned the volume progression outlook needed to achieve 10%+ EPS growth as comps get tougher, and asked if the company's manufacturing footprint is now optimized or if more closures are needed.

Answer

CFO Howard Yu confirmed the charge related to previously discussed plant closures and restructuring. CEO Daniel Fisher reiterated confidence in the 10%+ EPS growth target for 2025, driven by 2-3% volume growth, consistent share buybacks, and the compounding effect of a lower share count. Fisher also stated that the company feels good about its current manufacturing footprint and does not anticipate further closures at this point.

Arun Viswanathan sought to understand Olin's earnings trajectory, questioning if his estimate of approximately $60 million for Q1 and $450 million for the full year 2026 was too punitive, given one-time impacts, cost management, and ongoing headwinds.

Answer

Ken Lane, Olin's President and CEO, acknowledged that 2026 is a peak year for turnarounds, presenting a significant headwind. He expects seasonal improvement in Q2 and Q3, particularly in water treatment and caustic pricing momentum, but no significant improvement in vinyls. Lane reiterated Olin's commitment to the Beyond250 cost reduction program, which was discussed at Investor Day 2024, and expressed confidence in exceeding the $250 million savings target by 2028. He also highlighted changes in executive and site leader performance metrics to drive accountability for safety, reliability, cost, and yields.

Arun Viswanathan sought to understand Olin's earnings trajectory from Q1 2026, considering Q4/Q1 impacts, aggressive cost management, and ongoing headwinds in Winchester and Epoxy. He asked if his estimate of ~$450 million for the year was too punitive and what one-time costs might contribute to an increase from that base.

Answer

Ken Lane, Olin's President and CEO, acknowledged that 2026 is a peak turnaround year, presenting a significant headwind. He expects seasonal improvements in Q2 and Q3, particularly in water treatment, and momentum in caustic pricing, but no improvement in vinyls. Lane reiterated that the Beyond250 cost reductions are on track, not new initiatives, with visibility to exceed the $250 million savings commitment by 2028. He emphasized the organization's commitment and new performance metrics driving accountability.

Arun Viswanathan asked Olin to outline the path to bridging its current ~$700 million annualized EBITDA run rate to $1 billion, inquiring about the expected contributions from epoxy, Winchester, and core alkaline products.

Answer

President and CEO Ken Lane highlighted Winchester as the biggest delta versus the prior year, while core alkaline has held up well. He expects ECU values to improve from trough levels, offering significant leverage. He anticipates recovery in Winchester once cost headwinds are addressed and consumer spending improves, and expressed optimism for epoxy due to rationalization, higher glycerin costs, tariffs, and self-help, expecting significant improvement from a low base in 2026.

Arun Viswanathan asked for a bridge to reach $1 billion in EBITDA from the current $700 million annualized run rate, specifically detailing the expected contributions from epoxy, Winchester, and core alkaline.

Answer

Ken Lane, President and CEO, identified Winchester as the largest delta versus the prior year, expecting recovery but not in the short term. He expressed optimism for epoxy due to self-help and industry rationalization, and noted that core alkaline ECU values improving off trough levels offer the biggest leverage for overall portfolio growth.

Arun Viswanathan of RBC Capital Markets sought confirmation of the 'value over volume' strategy, asked about the outlook for Q4 seasonality, and inquired about bridging the 2025 earnings run rate to 2026.

Answer

President and CEO Ken Lane reaffirmed that the company's focus on value is unchanged and will be dynamically adjusted based on market conditions. He confirmed the typical seasonal pattern where Q4 is the weakest quarter, which will also be impacted by higher turnaround costs, particularly in the Epoxy segment. He noted the focus in the second half will be on generating cash by reducing working capital.

Arun Viswanathan of RBC Capital Markets asked about the outlook for caustic soda, questioning if softness could emerge in Q2 and summer due to seasonally higher operating rates and downstream weakness.

Answer

President and CEO Kenneth Lane expressed a continued positive outlook for caustic soda. He explained that the chlorine volume needed for the seasonal bleach market is too small to pressure the much larger caustic market. He noted continued strength in major end-markets like pulp & paper and alumina, and said that while customers express uncertainty, they are not negative about their outlooks, leading him to be cautiously optimistic.

Arun Viswanathan sought preliminary thoughts on full-year 2025 EBITDA, questioning if a range of $1.1 billion to $1.2 billion was achievable.

Answer

CEO Kenneth Lane declined to provide full-year guidance but contextualized the outlook. He highlighted that the Winchester business is the primary headwind in Q1 compared to the prior year, while the CAPV business remains stable. He reiterated that any significant recovery in Winchester is a second-half 2025 story.

Arun Viswanathan of RBC Capital Markets asked for an update on supply/demand dynamics and pricing opportunities in caustic soda, EDC, and epoxy. He also inquired about expectations for the upcoming U.S. ITC antidumping decision on epoxy imports.

Answer

President and CEO Kenneth Lane confirmed continued strength in caustic soda, driven by export market demand, new pulp and paper capacity, and a tight alumina market. For epoxy, he noted that while Olin has achieved some price increases, the market remains challenged by high import volumes from Asia. Lane expressed hope for a favorable ITC ruling in November to level the playing field but refrained from predicting the outcome.

Arun Viswanathan sought to understand the potential conservatism in the company's guidance and what factors could lead to the upper end of the range, specifically mentioning price increase realization, Paint Stores Group volume, existing home sales improvement, and continued softness in commercial and new construction.

Answer

VP of Investor Relations Ben Meisenzahl characterized the outlook as 'realistic,' anchored by economic assumptions detailed in the slide deck. He noted the wide range of existing home turnover forecasts and stated the company's midpoint guidance assumes a low single-digit range. He affirmed that if indicators like rates, existing home sales, consumer confidence, and affordability improve, the company's results would be higher than the midpoint provided.

Arun Viswanathan sought to understand the potential conservatism in the guidance and what factors, such as price increases, Paint Stores Group volume, or existing home sales, could lead to the upper end of the range, as well as assumptions for commercial and new construction.

Answer

Ben Meisenzahl, VP of Investor Relations, characterized the outlook as 'realistic,' based on economic assumptions in the slide deck, particularly anchoring existing home turnover forecasts in the low single-digit range. He stated that if indicators like rates, existing home sales, or consumer confidence improve, results would exceed the midpoint of the guidance.

Arun Viswanathan asked whether a mid-single-digit comparable sales growth is a reasonable expectation for the Paint Stores Group next year, or if it should be pushed to high single digits, considering recent share gains, the announced price increase, and new exclusive contracts.

Answer

Heidi Petz, President and CEO, stated that while they don't anticipate market assistance, they hold themselves to a higher expectation, aiming to outperform the market by 'a minimum of 1.5x-2x.' She highlighted their differentiation and commitment to customer success. Al Mistysyn, SVP of Finance and CFO, added that the 2026 operating plan process, involving discussions with divisions and sales teams, will provide a clearer picture, including customer feedback on the price increase. Heidi reiterated their focus on 'taking share' despite market challenges.

Arun Viswanathan sought an early read on 2026, asking if a mid-single-digit comp is reasonable for the Paint Stores Group, or if high single digits are possible given share gains and the 7% price increase.

Answer

President and CEO Heidi Petz stated that the company doesn't expect market help anytime soon but holds itself to higher expectations, aiming for 1.5 to 2 times market growth and continued share gains. SVP of Finance and CFO Al Mistysyn added that the 2026 operating plan process, involving discussions with divisions and sales teams, will provide a clearer picture for sales volume, with an update expected in January.

Arun Viswanathan from RBC Capital Markets asked for clarification on the company's future growth algorithm, questioning if current investments could increase its long-term volume growth potential beyond historical levels.

Answer

SVP of Finance & CFO Al Mestyshin confirmed this view, drawing a parallel to the company's strategy of investing through the 2008-2009 downturn. He stated that due to their strengthened competitive position, the expectation for market outperformance is now higher, suggesting a potential to grow at 2.5 to 3 times the market rate, up from the historical 1.5 to 2 times.

Arun Viswanathan from RBC Capital Markets inquired about the company's long-term growth algorithm, asking if current investments could enable Sherwin-Williams to grow at a higher multiple of the market's growth rate in the future.

Answer

CFO Allen Mistysyn affirmed this view, drawing a parallel to the post-2009 recovery. He stated that current investments in a down market position the company to achieve growth of 2.5 to 3 times the market rate when demand and housing affordability eventually improve, setting a very high bar for the Paint Stores Group.

Arun Viswanathan asked about near-term sales trends, specifically how March and April shaped up, and whether this performance provided the confidence to reaffirm full-year guidance.

Answer

Executive Allen Mistysyn stated that April started as expected and within the company's Q2 guidance. While March was better than January and February, he downplayed the impact of weather on Q1 results, noting that the two largest divisions in the Southeast and Southwest performed at or above the Paint Stores Group average.

Arun Viswanathan asked if sales growth from Q2 to Q4 is expected to be higher than Q1 levels and whether this acceleration would apply across all business segments.

Answer

SVP & CFO Allen Mistysyn affirmed the expectation for sales to improve as the year progresses, though at varying rates across segments. He expressed high confidence in consistent growth for residential repaint and noted expected improvement in packaging, auto refinish, coil, and industrial wood. However, general industrial is anticipated to remain soft all year.

Arun Viswanathan asked if the combination of market share gains and price increases gives the Paint Stores Group a line of sight to high single-digit growth in 2025.

Answer

Executive Allen Mistysyn advised caution and tempered that expectation. He noted that macroeconomic factors like interest rate changes take time to filter through the economy. He reiterated the company's view that the first half of 2025 will remain choppy and promised a more detailed outlook in January after completing the annual operating plan.

Arun Viswanathan asked about the operating leverage and corporate expense, questioning if the implied flattish to slightly down volumes for 2026 are correct, and whether corporate expenses will structurally mute future EPS growth.

Answer

Chairman and CEO Tim Knavish stated that there is no structural change in corporate expenses going forward. He identified refinish destocking as the primary reason for the lack of operating leverage despite volume growth, expecting stabilization and improved leverage in H2 2026. Incremental volume, pricing, and cost reductions will drive future leverage. Senior Vice President and CFO Vince Morales added that segment earnings are projected to grow mid-single digits or higher in 2026, but higher interest costs and a slight increase in the tax rate will be detractors.

Arun Viswanathan asked about PPG's operating leverage and corporate expenses, noting a projected 4% EPS growth, 3% EBITDA growth, and flat to low single-digit organic growth (implying flattish/slightly down volumes). He questioned if volume is the key driver for operating leverage or if corporate expenses will mute it, and how to achieve higher EPS growth.

Answer

Chairman and CEO Tim Knavish stated there's no structural change in corporate expenses. He identified Refinish destocking as the primary reason for the lack of leverage, overshadowing other gains due to its strong margin profile. He expects normalization in H2 2026 to improve leverage, along with incremental volume, pricing, and cost outs. Senior Vice President and CFO Vince Morales added that segment earnings are projected to grow mid-single digits or higher in 2026, but higher interest costs and a slight increase in the tax rate are detractors.

Arun Viswanathan from RBC asked about PPG's overall portfolio, the impact of headwinds on industrial businesses, potential capital redeployment into growing areas like aerospace, and whether any businesses where PPG is a number three or four competitor have been addressed.

Answer

CFO Vince Morales noted that divestitures of Architectural Russia and Silicas resulted in a $0.05 decrement year-over-year, but on a like-for-like basis, earnings are up. Chairman and CEO Tim Knavish stated that PPG has been very active in portfolio management, citing divestitures like Architectural U.S., Silicas, Russia, Traffic Solutions, and exiting Africa, which have transformed PPG from a 15% EBITDA company (2018-2022) to a consistently 20% EBITDA company now. He confirmed ongoing pruning but no current plans for exits that would 'move the needle,' emphasizing continuous portfolio review.

Arun Viswanathan asked about PPG's overall portfolio, specifically if further actions are planned to redeploy capital into growing areas like aerospace and deprioritize cyclical businesses, and if any businesses remain where PPG is a number three or four competitor.

Answer

CFO Vince Morales noted the positive impact of recent divestitures (Architectural Russia, Silicas) on segment earnings. Chairman and CEO Tim Knavish highlighted active portfolio management over the past couple of years, including exiting Africa and other pruning, which has improved the company's EBITDA margin from 15% to 20%. He stated that while pruning around the edges will continue, there are no current plans for major exits that would significantly move the needle, affirming a continuous review of the portfolio.

Arun Viswanathan of RBC Capital Markets asked for the outlook on the Automotive OEM business beyond share gains, focusing on other potential drivers like production levels, EV growth in China, and customer mix.

Answer

CEO Timothy Knavish pointed to strong long-term fundamentals, such as an aging vehicle fleet and a global production deficit. CFO Vince Morales added that certain customer-specific headwinds from last year will become tailwinds in H2 2025. He also highlighted PPG's strong positioning in China, where the market is showing double-digit retail sales growth.

Arun Viswanathan of RBC Capital Markets asked for the outlook on the Automotive OEM business, seeking to understand growth drivers beyond production rates, such as EV trends or customer mix.

Answer

Chairman & CEO Timothy Knavish highlighted several drivers: current share gain momentum, strong long-term fundamentals like fleet age, and an eventual stabilization in auto builds. CFO Vince Morales added that PPG expects to outperform the industry in the second half, benefiting from favorable customer-specific comparisons and a strong position in China's auto market, where retail sales have been robust.

Arun Viswanathan of RBC Capital Markets asked if customer mix, such as exposure to EVs in Auto OEM or MSOs in Refinish, was a mitigating factor for current demand trends in those businesses.

Answer

CEO Timothy Knavish explained that customer mix has been a challenge in Auto OEM, but share gains launching in H2 will help rebalance it. He noted strong performance with the #1 EV player in China. For Refinish, he said the Q1 strength was driven by recent share wins and favorable customer order patterns in the U.S., rather than a specific customer mix issue.

Arun Viswanathan asked about the primary risks to achieving the 2025 organic growth target and any impediments to reaching the 8-12% EPS growth goal in 2026.

Answer

CEO Tim Knavish expressed confidence in factors within PPG's control, such as the $100 million in secured business wins and internal organic growth initiatives. He identified the main risks as external and geopolitical, including potential policy shifts after elections and international tensions. He affirmed that based on current information, the company is committed to its full-year guide and feels good about its commercial pipeline for 2025 and beyond.

Arun Viswanathan sought to clarify the EBITDA margin of the divested architectural business, believing it was higher than the implied 2%. He also asked about future volume growth drivers, suggesting a high reliance on industrial and auto production.

Answer

SVP and CFO Vince Morales confirmed the divested business has a ~2% EBITDA margin on a clean-sale basis. Chairman and CEO Timothy Knavish acknowledged the importance of an auto and industrial recovery but emphasized that PPG's growth is broader, with 7 out of 10 businesses already showing positive growth, and he expects that momentum to continue.

Arun Viswanathan sought clarification on the $1-$2 EPS uplift for 2026, including contributions from cost actions and potential restocking, and an update on recent actions to evolve the Engineered Materials commercial strategy.

Answer

President and CEO Scott Richardson reiterated that the $1-$2 uplift is a rule of thumb assuming no market change or restocking, with about half from cost actions and the balance from the EM pipeline and interest expense. He described the EM team's modernization, focusing on differentiated spaces, leveraging their unique portfolio, partnering with customers, and utilizing innovation like the Chemille AI tool to streamline commercialization.

Arun Viswanathan asked for a breakdown of the $1-$2 EPS uplift, specifically if $0.35 was from cost actions, if restocking was included, and the destocking amount for 2025. He also requested an update on recent actions to evolve the commercial strategy within Engineered Materials, particularly regarding the project pipeline.

Answer

Scott Richardson, President and CEO, reiterated that the $1-$2 uplift is a rule of thumb assuming no market change, with no restock element included. He stated that about half comes from cost actions, and the balance from the EM pipeline and other factors like interest expense. Mr. Richardson explained that the EM team is modernizing its strategic orientation to win in differentiated spaces by leveraging its unique, broad portfolio. He highlighted investments in innovation, such as the AI-driven 'Kameel' grade selection tool, to streamline commercialization and partner with customers.

Arun Viswanathan of RBC Capital Markets explored the long-term earnings potential, asking if a return to normalized volumes could push EPS well beyond the $2 target. He also requested more detail on the "high-impact programs" in EM and the catalysts for improvement in the acetyl chain.

Answer

CEO & President Scott A. Richardson focused on the immediate goal of reaching $2 EPS through controllable actions. For the acetyl chain, he identified weak paints, coatings, and construction demand in the West as the biggest opportunity for an uplift. For EM's high-impact programs, he listed diversifying into non-auto areas like drug delivery and clean energy, and within auto, focusing on EV propulsion and batteries.

Arun Viswanathan from RBC Capital Markets sought to clarify the earnings bridge to $2 and beyond, asking if a return to normalized volumes could push earnings significantly higher. He also requested more detail on specific value-based programs and drivers for the Acetyl chain.

Answer

CEO & President Scott A. Richardson reiterated the focus on achieving the $2 quarterly EPS milestone through controllable actions before setting new targets. He noted that a recovery in the very weak paints, coatings, and construction markets would be highly beneficial for the Acetyl chain. For Engineered Materials, he listed high-impact programs in non-auto spaces like drug delivery and clean energy, and in auto areas like EV propulsion and batteries, as key drivers for future growth.

Arun Viswanathan of RBC Capital Markets revisited the EPS bridge, asking if a return to normalized volumes could push EPS toward $3. He also requested more detail on 'high-impact programs' and the key drivers for an acetyl chain recovery.

Answer

CEO Scott A. Richardson maintained focus on achieving the $2 EPS target through controllable actions rather than relying on a volume rebound. He identified a recovery in the weak Western Hemisphere paints and coatings market as a key catalyst for the acetyl chain. For Engineered Materials, he detailed high-impact programs including diversification into drug delivery and clean energy, and deeper penetration into automotive applications like EV propulsion and batteries.

Arun Viswanathan questioned if current actions could recover the $350 million in lost gross profit for the Engineered Materials segment or if that earnings power is structurally impaired. He also asked for a roadmap on leverage reduction.

Answer

CEO Scott Richardson asserted that the company's bold actions are adding to long-term earnings power, noting the $350 million gross profit decline was partially offset by $100-150 million in cost reductions. He stressed that pricing must improve. Regarding leverage, Richardson stated there are no liquidity challenges and the focus remains on debt paydown through free cash flow and divestitures, with the ultimate leverage ratio also being a function of EBITDA.

Arun Viswanathan asked if structural weakness in the auto market and overexposure to Europe were contributing to a persistent inventory overhang, and questioned the path to higher EBITDA through 2025.

Answer

CEO Scott Richardson acknowledged the value chain had too much inventory but stated that based on the current outlook, the rebalancing should conclude in the first quarter. Regarding the 2025 outlook, he emphasized focusing on controllable actions like cost efficiency and customer interactions, particularly driving smaller, faster-to-commercialize projects in Engineered Materials to improve the second-half outlook regardless of the macro environment.

Arun Viswanathan of RBC Capital Markets requested a detailed bridge for the significant drop in Q4 earnings guidance and asked if the associated inventory actions would allow for a rebound in Q1.

Answer

COO Scott Richardson attributed the Q4 decline primarily to actions in Engineered Materials, including a ~$45 million destocking impact and ~$30 million in seasonality effects. While these drags are expected to reverse, CFO Chuck Kyrish emphasized that future production decisions will be driven by the primary goal of generating free cash flow for deleveraging.

Arun Viswanathan sought clarification on the helium headwind for FY25 versus expectations and the confidence in the FY26 projection (Q1 negative 6%, full year negative 4%), including the possibility of it worsening. He also asked about CapEx flexibility for FY26, specifically if it could go down to $3.5 billion, and the timeline for such decisions.

Answer

Melissa Schaeffer, CFO, clarified that the FY25 helium headwind was $0.49, slightly better than forecasted. For FY26, a similar run rate of 4% headwind is expected, with Q1 showing a significant headwind due to a prior-year bulk helium sale. On CapEx, Ms. Schaeffer stated that the $3.5 billion-$4 billion range for FY26 is confident and tied to project execution, with no significant variance or decision point expected to alter this forecast, particularly for Darrow where no new commitments are being made.

Arun Viswanathan from RBC Capital Markets sought clarification on the fiscal year 2025 helium headwind, noting it was slightly better than expected, and questioned the confidence in the fiscal year 2026 helium headwind projection, which shows Q1 at -6% but a full year at -4%, implying improvement. He also asked about the flexibility in fiscal year 2026 capital expenditures, specifically if a reduction to $3.5 billion is possible and the timeline for such decisions.

Answer

CFO Melissa Schaeffer confirmed the fiscal year 2025 helium headwind was $0.49, slightly better than forecast, and projected a similar run rate for fiscal year 2026. She explained the higher Q1 headwind (-6%) is due to a tough year-on-year comparison from a bulk helium sale in Q1 fiscal year 2025, with the full year still forecasted at -4%. Regarding CapEx, Schaeffer stated that the $3.5 billion-$4 billion range for fiscal year 2026 is confident and tied to project execution, with no significant changes or decision points expected to alter this forecast.

Arun Viswanathan asked about spodumene's impact on pricing, if carbon/hydroxide prices are at marginal cost, what would drive spodumene to $1200-$1500, and the supply-demand balance for spodumene. He also inquired about potential commercialization in the energy storage market and demand expectations.

Answer

CEO Kent Masters agreed that conversion in China is at marginal cost, with most value moving to the resource (spodumene) due to overcapacity. He noted the market is tightening due to stronger demand and slower supply growth, with inventories coming down. For energy storage, he stated it uses the same supply chain and materials as EV batteries, with very strong growth driven by grid stability, renewables, and data centers. He believes LFP technology will dominate in the near term due to scale and cost advantage, with sodium ion potentially entering long-term, forecasting 80% of the market to remain lithium-ion.

Arun Viswanathan inquired about the impact of spodumene on pricing, specifically if carbon and hydroxide prices are at marginal cost, what spodumene price would drive robust salt pricing, and the supply-demand balance for spodumene. He also asked about the commercialization and demand outlook for the energy storage market.

Answer

Kent Masters, CEO, agreed that conversion in China is at marginal cost, with value moving to the resource (spodumene) when prices shift due to overcapacity. He noted the market is tightening due to stronger demand and slower supply growth, with inventories decreasing. For energy storage, he explained it uses the same supply chain and technology as EVs, with strong growth driven by grid stability and data centers. He expects LFP to dominate in the near term, with sodium ion potentially entering long-term, forecasting 80% of the market to remain lithium-ion.

Arun Viswanathan of RBC Capital Markets asked for a walkthrough of the dynamics leading to the implied low EBITDA for the second half of 2025 and for an outlook on potential supply curtailments and inventory levels.

Answer

CFO Neal Sheorey and CEO Kent Masters attributed the second-half outlook to the sales mix effect and the impact of lower spot prices on roughly half their business, which cost actions are working to offset. Masters declined to speculate on specific company curtailments but noted that single-asset, cash-negative producers are under the most pressure.

Arun Viswanathan of RBC Capital Markets inquired about the role of grid storage in driving lithium demand and asked about the potential for supply curtailments over the summer.

Answer

CEO Jerry Masters noted that grid storage is a growing and important segment, now approaching 20% of lithium demand, driven by renewables and grid stability needs for AI. Regarding curtailments, he stated that while cost pressures exist for competitors, he could not predict their specific actions or timing.

Arun Viswanathan asked for further details on the water portfolio strategy beyond the China acquisition and how capital allocation is prioritized towards this business.

Answer

CEO Lori Koch stated that DuPont will continue to seek opportunistic acquisitions to enhance water filtration capabilities, potentially exploring systems or services plays beyond traditional filtration, while avoiding high-valuation areas like metering. She reiterated a commitment to differentially invest in healthcare and water through R&D, capital, and M&A to achieve outsized returns.

Arun Viswanathan asked for more details on the water portfolio, specifically what else DuPont is looking at beyond the recent China acquisition, and how capital allocation is prioritized towards this business.

Answer

Lori Koch, CEO, stated that DuPont would be opportunistic in adding to water filtration capabilities, though opportunities are minimal due to consolidation and market leadership. She mentioned looking more broadly into systems or services plays, but not metering due to high valuations. She reiterated that capital allocation (R&D, CapEx, M&A) would be biased towards healthcare and water to ensure outsized returns.

Speaking for Arun Viswanathan of RBC Capital Markets, an analyst asked if the water business is now considered core to the new DuPont and requested more detail on the company's tariff mitigation actions.

Answer

CEO Lori Koch affirmed that the water business is core to the new DuPont's growth strategy and the company intends to invest in it. CFO Antonella Franzen added that over 90% of tariff mitigation comes from supply chain movements, with a small portion from surcharges.

Arun Viswanathan asked about the possibility of any M&A activity before the November spin-off and inquired if there have been any changes in order patterns for the Water business due to tariffs or macro concerns.

Answer

CEO Lori Koch and Qnity CEO-elect Jon Kemp both indicated that while M&A is always under review, no material transactions are expected before the November 1 separation. Lori Koch also confirmed that order patterns for the new DuPont businesses remain normal and consistent with expectations, with no unusual behavior observed.

Speaking for Arun Viswanathan, an analyst asked about the expected cadence of cash outlays for transaction costs and for more detail on potential M&A targets in healthcare and water.

Answer

CFO Antonella Franzen explained that the bulk of the separation costs (estimated slightly below $700 million) will be cash expenses in 2025. CEO Lori Koch added that M&A in Water could expand beyond filtration, while healthcare targets would likely be in the medical device space, similar to the Spectrum and Donatelle acquisitions.

Arun Viswanathan of RBC Capital Markets asked for initial thoughts on 2025 EBITDA growth, considering the E&I pre-buy and W&P recovery. He also inquired about the free cash flow outlook and capital deployment priorities for next year.

Answer

CEO Lori Koch declined to give specific 2025 EBITDA guidance but noted volume and restructuring benefits would be key drivers. CFO Antonella Franzen stated that strong free cash flow conversion is expected to continue. For 2025, the priority for cash deployment will be separation costs, with no additional share repurchases or significant outsized CapEx planned.

Arun Viswanathan asked about the choices Eastman is making regarding giving up lower-value business and market share losses, and what implications this has for future margin performance in 2026.

Answer

Mark Costa, Board Chair and CEO, explained that optimizing the asset base to drive returns and move to higher-value products is a core, ongoing strategy, citing examples like the evolution from PET to Tritan. He noted that while the market is soft, some lower-value applications are being re-added to drive asset utilization, and as the economy recovers, the mix will be valued up again, leading to improved margin performance.

Arun Viswanathan from RBC Capital Markets asked for an update on customer feedback regarding circular efforts and why Eastman's Q1 outlook appears stronger than some peers, also inquiring about any Q4 volume pull-forward.

Answer

Board Chair and CEO Mark Costa reiterated that customer engagement on circular products remains high, though adoption pace is moderated by the weak economy. He attributed the stable outlook for Chemical Intermediates to improved operational reliability providing more volume to sell, which helps offset competitive pressures. He also re-confirmed that any Q4 pull-forward was modest and did not negatively impact the Q1 outlook.

Arun Viswanathan inquired about the caustic soda market, specifically Westlake's view on whether it's well supplied and if a price increase is expected, given reports of a $50 increase announced with potential for $20 to be realized.

Answer

Steve Bender (EVP and CFO) reiterated that the caustic soda market is well supplied. While consultants forecast price increases (around $25 per ton) driven by seasonal slowdowns in chlorine and caustic production, he emphasized that Westlake would act on opportunities to improve pricing if they arise, despite the current supply situation.

Arun Viswanathan asked for further elaboration on the caustic soda market, noting Westlake's view that it is well supplied with no expected price increase, which contrasted with his impression of a $50 increase announced with potential for $20 realization.

Answer

Steven Bender, EVP and CFO, reiterated that the caustic market is well supplied. He acknowledged that consultants forecast price increases (around $25/ton) driven by the normal seasonal slowdown in chlorine and caustic production in Q4. He stated that Westlake would act on opportunities to improve pricing.

Arun Viswanathan from RBC Capital Markets asked about the outlook for caustic soda pricing and how Westlake's operating rates compare to the industry. He also inquired about the medium-term outlook for PVC, considering Chinese production and potential tariff-related export opportunities.

Answer

M. Bender, EVP and CFO, noted that Q1 price traction in caustic should carry into Q2 and that Westlake's Q1 operating rates were unusually low due to planned maintenance. Jean-Marc Gilson, President and CEO, added that while trade patterns are shifting, Westlake's export exposure is limited due to strong domestic demand and internal consumption for its building products.

Arun Viswanathan asked for more detail on demand and pricing in the PEM segment, questioning if price recovery could make up for the 12% decline in 2024. He also inquired about any updates on pending PVC litigation.

Answer

EVP and CFO Steve Bender clarified his earlier comment on higher pricing was focused on caustic soda but noted that price nominations are also in place for PVC and polyethylene, supported by both rising input costs and a reasonably good demand picture. Regarding litigation, Bender stated that because it is an active matter, he could not provide any comment.

Arun Viswanathan of RBC Capital Markets asked for help framing Q4 EBITDA expectations by considering the maintenance add-back and seasonality, and also inquired about the potential for EBITDA growth in 2025 driven by lower interest rates.

Answer

EVP and CFO Steve Bender confirmed no major turnarounds are planned for Q4, making results primarily a function of pricing and typical seasonality. For 2025, he expressed optimism that lower interest rates would be stimulative for both the HIP and PEM segments, though the timing and magnitude of the benefit are uncertain.

Arun Viswanathan asked about the structural factors needed to revive the refinish and industrial markets (e.g., inflation, PMIs) and Axalta's internal initiatives to spur demand, such as innovation or expanding into the economy segment.

Answer

Chris Villavarayan, CEO and President, noted that industrial markets have been down 20-25% since 2022, but Axalta's sales are only down mid to high single digits, driven by pruning customers, pricing for value, and focusing on key segments like Energy Solutions. He expects industrial growth from lower mortgage rates and construction activity. For refinish, he anticipates stability next year as destocking abates, with Axalta driving growth through new body shop wins, adjacencies, and expanding its 9-11% market share in the economy segment.

Arun Viswanathan asked for insights into the 2026 EBITDA and growth outlook, specifically if low single-digit volume growth could translate to mid-single-digit EBITDA growth and if de-leveraging offers further leverage. He also questioned the trajectory of non-alcoholic beverage proliferation in Europe and the potential impact of the new recapitalization structure on operations or capital allocation.

Answer

Oliver Graham (CEO) stated that while 2026 guidance isn't yet available, he expects earnings growth over 2025, driven by growth in Europe and Brazil, operational cost savings, and hopeful input cost trends. He noted that Europe is seeing growth in energy, RTD teas/coffees/wines/waters, and general soft drinks, not solely relying on innovative categories. He added that it's too early to comment on the impact of the recapitalization structure as the transaction has not yet closed.

Arun Viswanathan inquired about the 2026 EBITDA and growth outlook, specifically if low single-digit volume growth would translate to mid-single-digit EBITDA growth and further de-leveraging. He also asked about the trajectory of non-alcoholic beverage proliferation in Europe and the impact of the recapitalization on operations or capital allocation.

Answer

CEO Oliver Graham stated that while 2026 guidance was not yet available, he anticipated earnings growth over 2025, driven by growth in Europe and Brazil, operational cost savings, and hopeful input cost trends. He noted Europe's non-alcoholic beverage growth was strong, not solely reliant on innovative categories, and that it was too early to comment on the recapitalization's impact.

Arun Viswanathan from RBC Capital Markets asked for more detail on the drivers of outperformance in the Americas, questioning the role of promotions and the risk of a future drop-off. He also inquired about the European outlook for H2 2025 and 2026, and whether Ardagh plans any capacity actions across its global footprint.

Answer

CEO Oliver Graham acknowledged strong promotions but emphasized that sustainable innovation in categories like cocktails and gut health was also a key driver, predicting a healthy, though less strong, second half in North America. For Europe, he cited temporary beer weakness but a strong long-term trend. Graham confirmed no capacity decreases are planned and that while Europe is tight, the company has room to grow in the Americas and is evaluating future needs.

Arun Viswanathan asked about the sustainability of 2-3% long-term volume growth in North America, the outlook for the beer category, and the company's plans for free cash flow and deleveraging.

Answer

CEO Oliver Graham expressed optimism that 2-3% growth in North America is achievable, driven by innovation and sustainability trends. CFO Stefan Schellinger added that the company feels good about its increased free cash flow guidance and expects year-end leverage to decline to just under 5x. He emphasized that deleveraging will be driven by EBITDA growth and disciplined capital allocation, with no plans for major asset sales.

Arun Viswanathan of RBC Capital Markets requested a breakdown of North American demand trends by category (beer, energy, non-alcoholic) and asked for a detailed walk-through of the 2025 free cash flow forecast.

Answer

CEO Oliver Graham highlighted strong starts for carbonated soft drinks and sparkling water, a recovery in energy drinks, and ongoing challenges in mass beer. CFO Stefan Schellinger provided the 2025 cash flow outlook, noting a slight reduction from 2024. Key factors include a small working capital outflow, higher maintenance CapEx (around $135M), increased cash taxes (to ~$50M), and higher cash interest (over $200M), partially offset by lower growth CapEx (around $40M).

Arun Viswanathan asked for an update on demand trends in categories beyond energy drinks, such as beer and CSDs, and inquired about the sustainable growth rate in Brazil, particularly regarding the substrate shift between cans and glass.

Answer

CEO Oliver Graham reported that recent scanner data shows improving can sales, with CSDs and sparkling waters being particularly strong. Regarding Brazil, he described a long-term trend of shifting from returnable glass to cans, noting the recent move back to glass was a temporary reaction to high aluminum prices. He views mid-single-digit growth as a sustainable and 'safe' forecast for Brazil.

Arun Shankar Viswanathan asked for clarification on the $90-95 million unmitigated impact from tariffs, including its calculation and mitigation actions, and inquired about RPM's M&A activity, appetite for higher leverage, and focus areas for future acquisitions.

Answer

Frank Sullivan, Chairman and CEO, explained that tariff mitigation strategies include sharing costs with suppliers, passing on price, and shifting production (e.g., The Pink Stuff paste from the UK to the US), with about half of the impact mitigated. He noted RPM spent $600 million in the last five months on Consumer acquisitions (ReadySeal, The Pink Stuff) and smaller strategic acquisitions in the Construction Products Group. With a debt-to-EBITDA ratio of 1.8x, RPM has ample dry powder, and deal flow is currently 2-3 multiple turns below peak due to less private equity activity.

Arun Viswanathan from RBC Capital Markets inquired about the potential for further margin improvement as volumes recover and asked about the company's future M&A strategy, particularly regarding bolt-ons versus larger, adjacent deals.

Answer

Chairman & CEO Frank Sullivan reiterated that the 16% EBIT margin target is still deeply embedded within RPM and that he expects to make progress toward it in fiscal 2026. On M&A, he used 'The Pink Stuff' acquisition as an example of pursuing sizable deals in adjacent categories, but confirmed that the pipeline for traditional bolt-on acquisitions that complement their system sales strategy also remains strong.

Arun Viswanathan inquired about where consumer DIY takeaway is stabilizing and gaining share, and asked about the company's focus for M&A targets by geography and category.

Answer

CEO Frank Sullivan cited new product introductions, share gains in automotive channels, and strong direct-to-consumer growth in Europe as pockets of strength. For M&A, he said the focus is on North America, Europe, and Latin America, targeting small, strategic product lines that can be scaled, but also remaining open to larger opportunities at the right valuation.

Arun Viswanathan asked if the success in CPG and PCG could continue despite a weak commercial construction market and if lower rates would benefit these segments. He also inquired about capital allocation, specifically the appetite for bolt-ons versus larger deals and any potential divestitures.

Answer

Frank Sullivan, Chair and CEO, stated that it would likely take several interest rate cuts to boost broader commercial construction, but in the interim, the company is finding growth in specific areas like panelization and focusing Nudura products on commercial applications. On capital allocation, he confirmed the company constantly reviews its portfolio and has pruned non-core businesses. RPM will continue its effective small- to medium-sized bolt-on strategy and, while open to looking at large transactions, will remain disciplined on value, focusing on getting 'better, not bigger.'

Arun Viswanathan asked for more context on the $260 million synergy target for fiscal 2026, including its phasing throughout the year and the expected cadence for achieving the total synergy goal over time.

Answer

CFO Michael Casamento confirmed the $260 million pre-tax synergy target for FY26, equating to about 9 cents of EPS accretion. He detailed the phasing, with approximately 35-40 million expected in Q1 and more weighting toward the second half of the year. He also reaffirmed the overall cadence of achieving 40% of total synergies in FY26, another 40% in FY27, and the final 20% in FY28.

Arun Viswanathan of RBC Capital Markets asked about the company's long-term target of over 5% sales growth, inquiring about its start date, segment contributions, and any updates on the portfolio review. He also followed up on whether this sales growth, driven by TSS, would translate to even higher EBITDA growth through margin expansion.

Answer

President & CEO Denise Dignam confirmed the >5% sales growth is expected to impact starting in 2026, driven by TSS and commercial excellence efforts in other segments like APM. She noted the portfolio review of European assets and the exit of the SPS portfolio are underway. SVP & CFO Shane Hostetter added that while not providing long-term guidance, the company strives for bottom-line growth to exceed top-line growth, supported by strong TSS margins.

Arun Viswanathan of RBC Capital Markets asked for details on the supply tightness for TSS refrigerants and cylinders, including the timeline for resolution and mitigation efforts. He also requested insight into the capital allocation strategy, specifically the CapEx opportunities that justify the dividend cut, and asked for potential return metrics.

Answer

President and CEO Denise Dignam clarified the cylinder shortage is a broader industry issue, not specific to Chemours, and expects it to normalize in a couple of months as the company adds shifts and third-party operations. She and SVP/CFO Shane Hostetter explained the capital freed by the dividend cut will fund high-priority growth in next-gen refrigerants and immersion cooling, emphasizing balance sheet flexibility and projects with returns well above the cost of capital.

Arun Viswanathan asked for a breakdown of the 2024 to 2025 EBITDA guidance bridge, questioning the sources of growth beyond the reversal of one-time costs from 2024. He also inquired if the company could exit 2025 at an EBITDA run rate that would annualize to over $1 billion for 2026.

Answer

CFO Shane Hostetter acknowledged that 2024 one-time costs would not recur but highlighted new Q1 2025 operational headwinds of $15-$20 million. He stated that for the full year, growth would be driven by Opteon adoption, cost reductions from the Pathway to Thrive strategy, and expected seasonality. He noted it was too early to provide 2026 guidance but pointed to new capacity and a potential second-half market recovery as positive factors for the 2025 outlook.

Arun Viswanathan asked about the timeline for working through high HFC inventory levels in the Thermal & Specialized Solutions (TSS) segment and the potential pricing impact heading into 2025. He also inquired about the demand outlook and utilization rates for the Titanium Technologies (TT) segment.

Answer

CFO Shane Hostetter stated that pricing for HFCs (Freon) is expected to remain at current low levels into 2025 due to inventory dynamics. CEO Denise Dignam added that the company's strategy is focused on leading the transition to HFOs (Opteon), making the Freon portfolio less relevant over time. Regarding the TT segment, Dignam noted that while a market recovery is not yet evident, the company is optimistic about recent interest rate cuts and is well-positioned to capitalize on any demand improvement thanks to strong execution of its transformation plan.

Arun Viswanathan of RBC Capital Markets asked what might cause competitors to decide against building new MDI capacity and whether recent epoxy (BLR) market exits by others would affect Huntsman's sourcing.

Answer

Chairman, President & CEO Peter Huntsman reiterated that he sees no justification for new MDI capacity but could not speak for competitors. On the BLR side, he stated that there are plenty of suppliers and the exits by others will not impact the Advanced Materials business.

Arun Viswanathan noted that the first-half EBITDA run-rate appears to be tracking significantly below initial annual expectations and asked about management's level of confidence for the full year, given the high uncertainty.

Answer

CEO Peter Huntsman acknowledged the uncertainty, stating the outlook is 'far hazier today' than it was three months ago, and thus avoided giving full-year guidance. While he personally hopes for a better second half driven by a rebound from low inventories and pent-up demand in key markets like housing and aerospace, he conceded that he cannot point to a current surge in orders to provide confidence for a specific full-year number.

Arun Viswanathan asked about further portfolio cleanup actions and sought confirmation of Huntsman's commitment to its dividend and leverage targets.

Answer

CEO Peter Huntsman affirmed a strong commitment to the dividend, aiming to cover it with free cash flow. CFO Phil Lister reiterated the focus on ongoing restructuring actions and stated that leverage, currently at 3.6x, is expected to decline as earnings normalize toward mid-cycle levels.

Arun Viswanathan asked about the 2025 outlook, questioning if inventories are lean enough for substantial growth in a recovery. He also sought to clarify if the Q4 EBITDA decline is primarily due to seasonality or other factors like demand weakness or inventory charges.

Answer

Chairman, CEO and President Peter Huntsman confirmed inventories will be lean entering 2025 and expressed optimism for the year, driven by potential recovery in NA housing and Chinese consumer confidence. He attributed the Q4 EBITDA guidance drop mostly to typical seasonality, though he acknowledged it includes some inventory charges that reverse a Q3 benefit.

Arun Viswanathan from RBC Capital Markets questioned the path to achieving the 18% EBITDA margin target, customer sentiment regarding tariffs, and CEO Joe Berquist's commercial strategy and any significant changes implemented since he took the role.

Answer

CEO Joseph Berquist outlined that reaching the 18% EBITDA margin target relies on SG&A cost reductions, manufacturing efficiencies, and pricing actions, not just gross margin expansion. He noted that tariffs are creating uncertainty and customer caution. Regarding strategy, Berquist emphasized reducing customer churn, making operational changes to sales and product management, and disciplined capital deployment, which have collectively enabled growth without major transformational changes.

Arun Viswanathan questioned how volumes have remained relatively consistent despite ongoing end-market weakness and asked about the outlook for Q2. He also inquired about the company's line of sight to its 18% or higher EBITDA margin target and the key levers to achieve it, such as demand, price, or cost actions.

Answer

President and CEO Joseph Berquist explained that volumes are being supported by seasonal improvements and strong net new business wins, which are trending at the high end of the company's 2% to 4% annual target. He affirmed the long-term goal of reaching high-teen EBITDA margins, outlining a multi-pronged strategy to get there. This includes selective price increases, the full-year benefit of cost-saving programs, manufacturing footprint optimization, and leveraging a new global procurement approach to source raw materials more cost-effectively.

Arun Viswanathan asked if the price give-back dynamic from 2022-23 has concluded, how the customer-refocus strategy will impact CapEx and capacity, and what factors beyond general industrial production could drive volume improvement.

Answer

President and CEO Joseph Berquist explained that pricing is now stable, with adjustments mainly tied to index-based contracts rather than active price changes. He noted the customer refocus involves targeted CapEx, like the new China plant, but is primarily about reallocating resources to growth regions. He reiterated that diversified industrial production remains the core driver of the business. CFO Tom Coler specified that 2025 CapEx will be elevated at 2.5-3.5% of sales due to the China facility and a Philadelphia consolidation project.

Arun Viswanathan sought to clarify if the revenue decline was primarily price-driven and if that cycle had concluded. He also asked if growth in 2025 is still achievable given market headwinds, and inquired about the potential for larger M&A given the company's strong balance sheet and manageable leverage.

Answer

CFO Tom Coler confirmed that year-over-year price impacts are diminishing as raw material deflation works through index-based contracts, leading to expected margin stabilization. CEO Andrew Tometich stated that while the macro environment is uncertain, the company will focus on executing its strategy to drive growth. On M&A, Mr. Tometich noted that the pipeline includes both bolt-on and larger deals, activity is 'heating up,' and the company is financially prepared to act on value-adding opportunities.

Arun Viswanathan from RBC Capital Markets asked for the key building blocks supporting the implied Q4 EBITDA guidance, particularly the contributions from new products and the Brazil route-to-market strategy.

Answer

Chairman and CEO Pierre Brondeau explained that Q4 growth drivers are consistent with Q3. The growth portfolio, led by strong demand for Fluentapir and Isoflex, will be the primary contributor. The new route-to-market and co-op strategies in Brazil will also drive growth in the core portfolio, though this will be partially offset by Rynaxypyr partner pricing adjustments. He also highlighted the importance of North America wholesaler loading in Q4.

Arun Viswanathan of RBC Capital Markets asked about the key learnings from the channel inventory situation, what further actions are being taken to improve visibility, and whether the Q1 actions would be sufficient to resolve the issue.

Answer

CEO Pierre Brondeau acknowledged underestimating two factors: specific countries like India and Brazil had exceptionally high FMC inventory levels, and customers' own targets for holding inventory have shifted lower, creating a 'moving target.' He stated that corrective actions are country-specific and will be aggressive throughout the first half of the year, implying it will take more than one quarter to fully address.

Arun Viswanathan of RBC Capital Markets asked about the upside potential for the Fit to Win program, whether savings were concentrated in SG&A, and if the lower Q2 corporate cost represents a new sustainable level. He also questioned the expected sequential growth of these benefits in the second half of the year.

Answer

CEO Gordon Hardie stated that Fit to Win is a comprehensive, end-to-end value chain initiative delivering savings across procurement, operations, and logistics, not just SG&A. CFO John Haudrich specified that a sustainable annual corporate cost run-rate is between $100 million and $120 million. He added that while Fit to Win benefits will grow sequentially, the fourth quarter will begin to lap the initial benefits from the prior year, moderating the year-over-year comparison.

Arun Viswanathan asked for an update on customer sentiment in the North American spirits market and about the company's strategy for energy hedging and raw material sourcing.

Answer

CEO Gordon Hardie indicated that spirits customers are in a 'wait and see' period regarding tariffs, with no major bottling location shifts yet. CFO John Haudrich added that the destocking phase in spirits appears to be over. On costs, Haudrich confirmed O-I is well-hedged on energy for 2025, with long-term resets already factored into guidance. Hardie noted O-I is working closely with suppliers on productivity to manage raw material costs.

Arun Viswanathan questioned if 'Fit to Win' benefits are achievable if volumes turn negative and asked how the company plans to combat potential price deterioration in oversupplied European markets.

Answer

CEO Gordon Hardie reiterated that the program is not volume-dependent and is focused on making existing volume more profitable. He stated O-I is prepared to exit unprofitable business, which could slightly lower total volume but would improve economic profit. To combat price pressure, Hardie said the company would adjust its cost base to protect margins. CFO John Haudrich added that the negative net price outlook is partly a timing issue related to inflation pass-through on long-term contracts.

Arun Viswanathan of RBC Capital Markets sought to clarify the 2025 EBITDA bridge, asking about potential headwinds to simply adding the $175M in "Fit to Win" savings to the 2024 base. He also questioned the 2025 free cash flow outlook and future CapEx for the MAGMA program.

Answer

CFO John Haudrich confirmed the logic was sound, with the $175M in savings and production normalization being additive, but pointed to potential headwinds from commercial elements like sales volume and net price. He affirmed expectations for positive free cash flow in 2025, driven by higher earnings, lower CapEx, and working capital normalization. Haudrich also stated he does not anticipate significant MAGMA CapEx in 2025, pending evaluation of the new Bowling Green facility.

Arun Viswanathan questioned the rationale for maintaining full-year guidance despite a strong Q1, asking if this reflected conservatism, a potential pull-forward of demand, or an anticipated slowdown in Food volumes.

Answer

President and CEO Dustin Semach clarified that there were minimal demand pull-forwards in Q1 and that the business has not seen a material slowdown. He explained that the decision to reaffirm guidance reflects caution regarding potential economic headwinds in the second half of the year. While current performance is strong and in line with expectations, the company is proactively planning for potential future market softness.

Arun Viswanathan asked for clarity on the 2025 guidance range, wanting to understand the key factors that would drive results to the upper end, such as macro improvements, continued outperformance in Food, or a faster-than-expected turnaround in Protective.

Answer

CEO Dustin Semach identified three key drivers for reaching the high end of the guidance. First, if the North American beef cycle proves to be better than the currently forecasted 3-4% decline. Second, if the volume inflection in the Protective segment occurs earlier or at a faster pace than the guided second-half target. Third, if additional cost-saving initiatives, currently under review, yield further benefits in the back half of the year.

Arun Viswanathan asked for more color on the 2025 guidance range, seeking to understand the key factors that would drive results toward the upper end. He questioned whether outperformance would be macro-dependent, driven by continued strength in Food, or contingent on a faster-than-expected turnaround in the Protective segment.

Answer

CEO Dustin Semach identified three potential drivers to reach the high end of the guidance range. First, in the Food segment, if the headwind from the North American beef cycle proves to be less severe than the 3-4% decline currently modeled. Second, in the Protective segment, a faster-than-anticipated volume inflection in the second half. Third, the potential for additional cost savings beyond the committed $90 million as the company continues to optimize the cost structures of both businesses.

Inquired about performance trends across the portfolio, the impact of customer promotions, customer trade-down behavior, and the company's leverage reduction trajectory.

Answer

The company is outperforming a weak foodservice market due to its customer mix, while seeing strength in at-home food channels. Customer promotions are helping but not driving major growth. Customer trade-down is occurring within value meals (affecting mix) rather than away from their products. Leverage is on track to hit ~4x by year-end 2024 and fall into the 3x range by the end of 2025.

Inquired about the outlook for the Foodservice segment and its key recovery drivers, and whether the company expects overall EBITDA growth in 2025 despite the Pine Bluff divestiture.

Answer

For Foodservice recovery, the company is focused on product affordability initiatives like lightweighting and portion control, in addition to waiting for improved consumer sentiment. They broadly expect EBITDA growth in 2025, supported by volume growth carrying over from H2 2024 and the fact that about two-thirds of the new cost-saving actions will be transferable to next year.

Inquired about the performance and outlook for the Food and Beverage Merchandising segment, the potential margin impact from resin price volatility, and the company's long-term optimal leverage target beyond the current year-end goal.

Answer

Management stated the Food and Beverage Merchandising segment is seeing benefits from improved pricing discipline and operational stability. On price/cost, they feel insulated from resin volatility due to effective pass-through mechanisms with minimal lag. Regarding leverage, they reiterated their commitment to deleveraging and stated they will not be satisfied with the high 3x range targeted for this year, aiming for substantial improvement over time, supported by their recently enhanced liquidity.

Arun Viswanathan asked about the potential impact of industry-wide European asset shutdowns on P&SP capacity in 2025. He also inquired about the global supply-demand outlook for the Performance Materials & Coatings (PMC) segment.

Answer

James Fitterling, Chair and CEO, clarified that Dow's European review is focused on polyurethanes and finding a better owner, not primarily shutdowns. He noted that about 1.5 million metric tons of shutdowns have already been announced by the industry in Europe. For coatings (PMC), he cited good volume growth and expects a significant pickup when the housing market recovers, while noting that the monomers business needs to tighten.

Inquired about the evolution of volume growth into 2025, the potential for EBITDA growth post-divestitures, and the outlook for free cash flow.

Answer

The company expects low single-digit volume growth to continue in Q4 and accelerate in fiscal 2025, driven by their own performance rather than market recovery. While not providing specific 2025 guidance, they expect this volume growth to drive EBITDA growth. Free cash flow generation is expected to remain strong and consistent, adjusted for portfolio changes like the spin-merge.

Questioned the drivers behind the April volume improvement and the confidence in its sustainability. Also asked for clarification on the strategy of divesting industrial assets and the rationale for using acquisitions versus organic growth to enter new markets.

Answer

The April improvement was driven by more aggressive promotional activity from customers and an increase in consumer consumption levels, which was expected. The company continues to outperform peers on a volume basis. The strategy does involve reducing industrial exposure. While organic growth is pursued, acquisitions can be the fastest path with the highest return in some areas, providing quick access to technology, relationships, or markets that can then be scaled.

Inquired about the expected evolution of volumes by segment, observations on increased promotional activity, and how the free cash flow profile of the remaining company will change after the spin-off.

Answer

The guidance doesn't assume a dramatic change in consumer behavior but relies on easier year-over-year comparisons and early signs of normalization. The volume outlook is consistent across all segments. The free cash flow profile of the remaining company will improve as the spun-off business had marginally lower returns on capital and more volatile, lumpy CapEx projects. The new company (NewCo) is well-invested, so its near-term capital needs should be low.