David Begleiter

David Begleiter asked whether the weakening construction environment mentioned by H.B. Fuller was more prevalent in the U.S. or Europe. He also inquired about the competitive intensity in the packaging market as volumes decline and whether H.B. Fuller has maintained its market share. In a follow-up, he asked for the expected volume decline in the BAS segment for Q1 2026.

Answer

President and CEO Celeste Mastin confirmed that the construction market weakness is evident in both the U.S. and Europe, noting Europe has been particularly weak. She added that H.B. Fuller's success in penetrating the data center market in the U.S. helps offset some commercial construction weakness there. Regarding packaging, Ms. Mastin acknowledged it's a competitive market, becoming more intense, which aligns with H.B. Fuller's strategy to focus on customers seeking value and innovation, while organically de-emphasizing other segments. She emphasized that service delivery and innovation are key differentiators. EVP and CFO John Corkrean stated that BAS Q1 2026 volumes are expected to be not dissimilar to Q4 2025, facing macro headwinds and the impact of annualized customer gains from the previous year.

David Begleiter from Deutsche Bank asked if the weakening construction environment mentioned by H.B. Fuller was more of a U.S. or European comment. He also inquired about the competitive intensity in the packaging market as volumes decline and whether H.B. Fuller has maintained its market share. In a follow-up, he asked for the expected volume decline in the BAS segment for Q1.

Answer

President and CEO Celeste Mastin confirmed that the weakening construction market is evident in both the U.S. and Europe, though H.B. Fuller's success in penetrating data center construction in the U.S. helps offset some commercial construction weakness there. Regarding packaging, Mastin acknowledged it's a competitive market with increasing intensity. She stated that H.B. Fuller is strategically optimizing its portfolio to work with customers seeking value and innovation, while organically de-emphasizing less differentiated parts of the market, implying a focus on profitable share rather than just volume. EVP and CFO John Corkrean stated that H.B. Fuller would not provide that level of detail for BAS Q1 volumes but expected it to be not dissimilar to Q4, facing macro headwinds and annualized customer gains from the previous year.

David Begleiter inquired about demand trends in March, asking if the company was seeing a normal seasonal uptick or any demand shifts due to trade uncertainties. He also asked how management is prioritizing debt reduction versus share buybacks given the 3.5x leverage and uncertain macro environment.

Answer

President and CEO Celeste Mastin described a steady volume progression through the first quarter without notable pull-forwards or push-outs from customers. EVP and CFO John Corkrean clarified that the full-year guidance assumes flat volume, making any further growth an upside. On capital allocation, Mastin stated that due to the current leverage, the company has temporarily slowed M&A activity and is opportunistically accelerating share repurchases.

David Begleiter questioned the 2025 forecast for the Engineering Adhesives (EA) segment, asking why volumes were not expected to grow after a significant decline in 2023. He also asked why HHC volumes were projected to be down in 2025, considering the rapid deceleration in Q4 should create an easier comparison.

Answer

CFO John Corkrean clarified that EA volumes are projected to be flattish for 2025. CEO Celeste Mastin highlighted that while there are macro headwinds, EA is seeing strong growth in electronics and automotive due to innovation. For HHC, she cited continued weakness in packaging and a non-growth environment in Europe. John Corkrean added that aggressive pricing actions in HHC might lead to some planned volume attrition, which is factored into the forecast.

David Begleiter of Deutsche Bank asked for specifics on the size of H.B. Fuller's solar business, its concentration in China, and the magnitude of its volume decline. He also inquired about the root causes, such as destocking or competitive threats.

Answer

CEO Celeste Mastin and CFO John Corkrean clarified that the solar business is less than 5% of total revenue, likely 2-3%, with about 60% of it in China. They reported that solar volumes were down significantly, almost by half in China. Mastin explained the weakness was due to a 'double whammy' in China: overcapacity in the end market and the redeployment of silicon sealants from the slowing construction industry into the solar market, increasing competition.

David Begleiter at Deutsche Bank inquired about the forecasted decline in highway de-icing volumes, seeking clarification on whether it represents a structural or cyclical trend and how management views its future trajectory. He also asked about the key drivers influencing the upper and lower ends of the full-year EBITDA guidance range.

Answer

Ben Nichols, Chief Commercial Officer, clarified that the forecasted volume decline is a reversion to more typical winter assumptions, not a structural decline, as the prior winter operated at over 95% of commitment levels. For the EBITDA guidance, Mr. Nichols stated that the primary driver for the upper end would be stronger winter weather and associated market demand efficiencies. Edward Dowling, President and CEO, added that consistent operations and successful ongoing improvement efforts at the mines would also contribute.

David Begleiter asked about the forecasted decline in highway de-icing volumes for the upcoming year, seeking clarification on whether it represents a structural or cyclical trend, and inquired about the key drivers influencing the upper and lower bounds of the full-year EBITDA guidance range.

Answer

Ben Nichols, Chief Commercial Officer, explained that the forecasted volume decline is a reversion to more typical winter assumptions, as commitment levels were slightly up year-over-year. He identified upside in winter weather as the primary driver for reaching the upper end of the EBITDA guidance. Edward Dowling, President and CEO, added that consistent operations and successful improvement efforts at the mines would also contribute.

David Begleiter of Deutsche Bank asked for clarification on the fiscal 2025 guidance, where committed highway deicing volumes are down 9% but forecasted sales are up 9%. He also sought an update on the Fortress fire retardant business, asking if a new, effective formulation has been developed and when a resolution on a new contract might be expected.

Answer

CEO Edward Dowling and CSO Ben Nichols explained the volume forecast discrepancy is due to using a moving average sales-to-commitment ratio that is influenced by recent weak winters, and that the year-over-year comparison is against an artificially low base from the prior year. Regarding Fortress, Chief Supply Chain Officer Jenny Hood confirmed an alternate, non-magnesium chloride product is under consideration with the U.S. Forest Service, but stated it was too soon to comment on the timeline for a resolution.

David Begleiter asked about Celanese's 2026 earnings outlook, focusing on controllable and uncontrollable factors, and the remaining potential for Engineered Materials (EM) pricing improvement.

Answer

President and CEO Scott Richardson outlined 2026 priorities including cash flow, cost improvements, and EM pipeline growth, projecting $1-$2 EPS growth even with flat demand, driven by cost actions and EM success, offsetting Micromax EBITDA loss and avoiding auto destocking. He noted continued opportunities for EM pricing, especially from new pipeline launches.

David Begleiter asked for an early outlook on Celanese's controllable and uncontrollable factors impacting 2026 earnings, and inquired about further pricing opportunities in Engineered Materials (EM).

Answer

Scott Richardson, President and CEO, outlined 2026 priorities: increasing cash flow, intensifying cost improvements, and driving top-line growth from the EM pipeline. He projected $1-$2 EPS growth even with flat demand, driven by cost actions and EM pipeline success, offsetting the absence of Micromax impact and significant auto destocking. Regarding EM pricing, Mr. Richardson stated there are always opportunities, noting recent price gains in standard-grade materials in the Western Hemisphere and from new pipeline launches.

David Begleiter from Deutsche Bank inquired about the specific end markets experiencing weakening order books in June and July and asked for a detailed bridge to the company's target of a $2 per share quarterly EPS run rate.

Answer

CEO & President Scott A. Richardson identified China automotive and European demand in Engineered Materials, as well as the Western Hemisphere acetyl chain, as areas of recent weakness. He outlined a path to the $2 EPS target, starting from the Q3 guide, adding contributions from inventory movements, cost actions, and four controllable areas: further cost/footprint actions, high-impact programs, additional pricing in Engineered Materials, and opportunities in the acetyl chain.

David Begleiter from Deutsche Bank inquired about the specific end markets experiencing weakening order books and the company's strategic path to achieving its $2 quarterly EPS run rate.

Answer

CEO & President Scott A. Richardson identified weakening demand in China automotive and European Engineered Materials, as well as in the Western Hemisphere's Acetyl chain. Richardson outlined a concrete plan to reach the $2 quarterly EPS target, starting from the Q3 guide and adding contributions from inventory normalization (~$0.25-$0.30) and future cost actions (~$0.10). He stated the remainder would be closed through controllable initiatives like pricing, footprint actions, and high-impact programs, noting the timeline may be slightly delayed but the path is clear.

David Begleiter of Deutsche Bank inquired about the specific end markets and severity of weakening order books seen in June and July, and asked for a detailed bridge to the company's $2 per share quarterly EPS run rate target.

Answer

CEO & President Scott A. Richardson identified weakening demand in China automotive, European Engineered Materials, and the Western Hemisphere acetyl chain. He outlined a path to the $2 EPS target starting from the Q3 guide, adding back approximately $0.25-$0.30 from inventory and order timing normalization, plus $0.10 from future cost actions. The remainder, he explained, would come from four controllable areas: additional cost actions, high-impact programs, targeted price increases in Engineered Materials, and value opportunities in the acetyl chain.

David Begleiter inquired about the potential size and timing of divestitures mentioned in prepared comments and asked for thoughts on a potential equity raise to deleverage the balance sheet.

Answer

CEO Scott Richardson indicated that potential divestitures would be similar in size to the past Food Ingredients sale, with some smaller and some slightly larger. He stated that an equity raise is not considered necessary due to its dilutive nature, emphasizing that the company's capital structure funds acquisitions with debt and that cash is being unlocked through other actions. CFO Chuck Kyrish added that Celanese will be proactive in managing debt maturities by accessing strong debt markets to extend near-term maturities.

David Begleiter of Deutsche Bank questioned the status of the Engineered Materials project pipeline, asking why a traditional strength now needs to be 'supercharged,' and inquired about restarting the Singapore acetyls plant.

Answer

COO Scott Richardson clarified that the project pipeline remains a core strength but needs to generate more volume to offset current market headwinds. CEO Lori Ryerkerk stated the Singapore plant remains economic, particularly for non-China Asia, and will be brought back online to serve as a key 'swing' production facility.

David Begleiter inquired about the target headcount of 20,000, asking if it represents a new base or if further reductions are possible, and also sought clarification on the remaining capital expenditure for Air Products on the Louisiana project if off-taker partners are secured.

Answer

Eduardo Menezes, CEO, indicated that while 20,000 is the current year-end expectation, Air Products continues to seek optimization, aiming for staffing levels similar to 2018 (around 18,500) plus necessary additions for new assets. Regarding Louisiana CapEx, Mr. Menezes stated that specific figures would be provided with the project update before year-end, emphasizing that no off-take deals mean no final investment decision (FID).

David Begleiter from Deutsche Bank asked about Air Products' target employee headcount, questioning if 20,000 represents a new base or if further reductions are anticipated. He also inquired about the remaining capital expenditure for Air Products on the Louisiana project if it proceeds with off-taker partners.

Answer

CEO Eduardo Menezes indicated that while 20,000 is the expected headcount by year-end, the company continuously seeks optimization, aiming closer to 2018 levels adjusted for new assets. For the Louisiana project, Menezes stated that specific CapEx figures would be provided with the project update before year-end, reiterating that firm off-take agreements are a prerequisite for a final investment decision (FID) due to the project's favorable economics.

David Begleiter from Deutsche Bank inquired about the financial savings and timeline associated with the company's headcount reductions. He also pressed for details on when the company became aware of the major cost overruns and delays at the Alberta project.

Answer

Executive Melissa Schaeffer detailed the savings, noting that actions on ~2,400 individuals since FY23 are nearly complete. The FY25 actions are expected to deliver about $25 million in savings in the current fiscal year, with a full run-rate savings of around $100 million in FY26. CEO Eduardo Menezes stated that as a new CEO of 90 days, he could not precisely comment on when the company became aware of the full extent of the Alberta project's issues.

David Begleiter from Deutsche Bank AG questioned the Americas segment's volume performance excluding the one-time helium sale and asked for the reason behind the decline in equity affiliate income in the Middle East and India segment.

Answer

Chief Financial Officer Melissa Schaeffer clarified that despite helium being a headwind, underlying merchant and HyCO volumes in the Americas were strong. She attributed the lower equity affiliate income to normal quarter-to-quarter fluctuations in the Jazan joint venture, stating the project's full-year contribution is expected to be on par with 2024.

David Begleiter inquired about the current curtailment of Chinese lepidolite supply compared to its peak production and any changes or upward bias in the 2030 lithium demand outlook.

Answer

Neal Sheorey, CFO, explained that about a third of lepidolite production, or 30,000 tons annually, has been impacted since mid-year due to repurposing or idling, including CATL. Kent Masters, CEO, noted that the 2030 lithium demand outlook range has not changed but has likely moved up slightly within that range due to stronger-than-expected demand from both EVs and fixed storage.

David Begleiter inquired about the amount of Chinese lepidolite supply currently curtailed, production down versus its high, and any changes to the 2030 lithium demand outlook, specifically if the bias has moved to the upper end of the range (3 million tons or above).

Answer

CEO Kent Masters noted the overall impact from Chinese lepidolite curtailments hasn't been huge. Chief Commercial Officer Eric Norris specified that about a third of production (approx. 30,000 tons annually from 8 operations) was impacted since mid-year due to repurposing or idling for permitting, representing a minor blip. Kent Masters added that the 2030 lithium demand outlook hasn't changed but has likely moved up within the previously stated range due to stronger-than-expected demand in both EV and fixed storage.

David Begleiter from Deutsche Bank inquired about the current state of global lithium supply, including capacity curtailments in China, and asked for Albemarle's perspective on the drivers of recent price volatility.

Answer

CEO Kent Masters commented that while more supply capacity needs to come offline, there haven't been dramatic changes recently, though some Chinese sites have shut down for unclear reasons. He attributed recent price volatility in the speculative Chinese market to uncertainty around supply and government policies.

David Begleiter from Deutsche Bank asked for the price spread between spot and contract sales in Q4 and inquired about the current percentage of global lithium supply that is curtailed or shut down.

Answer

CEO Jerry Masters declined to provide specific pricing details for contract sales. Regarding supply, he reiterated the belief that about 25% of global production is operating at or below breakeven, with approximately half of that volume, or around 12.5% of total supply, being actually curtailed or shut down.

David Begleiter asked about Corteva's biologicals business, noting its 7% year-over-year sales growth, and questioned why the growth rate isn't higher.

Answer

CEO Chuck Magro expressed satisfaction with the biologicals business's growth, noting its revenue increased from approximately $400 million to nearly $600 million this year, despite the overall crop protection market backdrop. He highlighted successful product launches in North America, Brazil, and Europe, attributing the current growth rates to the time required to expand these products globally. Magro anticipates continued strong high single- to low double-digit growth rates for biologicals in the foreseeable future.

David Begleiter questioned why Corteva's biologicals sales growth, currently around 7% year-over-year, isn't faster, especially given their importance to the new Crop Protection business.

Answer

CEO Chuck Magro expressed satisfaction with the biologicals business, noting its growth from $400 million to nearly $600 million in revenue this year. He attributed the current growth rate to the time required to expand product availability globally, including recent launches in North America, Brazil, and Europe. He anticipates continued strong high single- to low double-digit growth rates for biologicals in the foreseeable future.

David Begleiter from Deutsche Bank asked about pricing trends for generic crop protection products from China and India and whether overall pricing is stabilizing or worsening in the second half.

Answer

EVP Robert King stated that while Brazil remains competitive, generic pricing from China has been stable for four consecutive quarters, a positive sign. CEO Chuck Magro added that the overall market is slowly improving, destocking is complete, and pricing has stabilized in most regions outside of Brazil.

David Begleiter asked whether it could make sense for Corteva to separate its Crop Protection and Seed businesses to enhance equity value, given the widening valuation gap between the two asset types.

Answer

CEO Charles Magro responded that while the company evaluates all options for value creation, it is currently built around providing an integrated solution to the farmer. He emphasized the significant synergies in R&D and go-to-market strategies, stating his confidence that the integrated offering of seed, crop protection, and biologicals is a powerful and value-creating approach.

David Begleiter asked why the projected improvement in seed royalties for 2025 is lower than in 2024 and inquired about the company's progress toward royalty neutrality.

Answer

CEO Chuck Magro explained that Corteva is ahead of schedule on its path to royalty neutrality and over-delivered on improvements in 2024, which makes the 2025 figure appear smaller but keeps the multi-year average on track. EVP Timothy Glenn added that 2025 is a transition year where royalty income growth will exceed royalty expense reduction, highlighting progress with Conkesta E3 soybeans in Brazil.

David Begleiter inquired about the Kingsport plant, specifically the rPET capacity conversion, its impact on next year, the cost and timeline for debottlenecking, and the status of plans for a second plant, including whether Longview is still a potential location.

Answer

Mark Costa, Board Chair and CEO, confirmed the Kingsport plant is on track, with 90% yields and a feasible 30% capacity expansion with modest capital. He noted significant customer interest in rPET, expecting a substantial volume step-up next year. For the second plant, he mentioned progress on three capital-efficient options leveraging existing assets, allowing for a delay in capital expenditure, but did not disclose specific locations or rule out Longview.

David Begleiter asked for an update on Kingsport's ARPET capacity conversion, bottlenecking costs, and the status of plans for a second methanolysis plant, including potential locations. He also inquired about the expected earnings ramp from Q4 2025 to Q1 2026, particularly regarding asset utilization headwinds.

Answer

Board Chair and CEO Mark Costa confirmed Kingsport's plant is on track, with 90% yields and feasible 30% capacity expansion at modest capital. He noted significant customer interest in ARPET, expecting a substantial volume step-up in 2026. For the second plant, Eastman is exploring three capital-efficient options, delaying a large capital step-up. Regarding Q1 2026, Mark Costa anticipates an earnings ramp from Q4 2025 due to the asset utilization headwind turning into a tailwind, normal seasonality, depletion of pre-bought inventory, and increased ARPET and methanolysis revenue.

David Begleiter sought confirmation that Q4 earnings would be similar to the Q3 guidance of around $1.25 per share and asked why Eastman's volume outlook appears more severe than some of its peers.

Answer

Chairman and CEO Mark Costa stated the Q4 EPS outlook was 'directionally correct' and 'somewhat similar' to Q3, as a utilization tailwind would offset normal seasonality. Regarding the volume outlook, he explained that after adjusting for a $50 million utilization headwind, Q3 earnings are essentially flat sequentially with Q2. He attributed the volume decline in specialty segments to a combination of market weakness in consumer-facing areas (autos, durables) and the reversal of pre-buying that occurred in Q2 ahead of tariffs.

David Begleiter questioned the potential risk to Eastman's China sales originating from the U.S. if current tariffs persist, focusing on the Advanced Materials and Additives & Functional Products segments. He also asked about the company's confidence in securing continued Department of Energy (DOE) funding for its Longview project.

Answer

Mark Costa, Board Chair and CEO, provided a segment-by-segment breakdown of tariff exposure, concluding that the impact is manageable over time through strategies like shifting production and leveraging the value of proprietary products. Regarding the Longview project, Costa expressed strong confidence in continued DOE support, arguing that the project's focus on U.S. manufacturing, waste reduction, and national security aligns well with the administration's priorities.

David Begleiter of Deutsche Bank asked about potential risks to the Texas project's Department of Energy (DOE) funding under the new administration and concerns over potential retaliatory tariffs on U.S. exports.

Answer

Board Chair and CEO Mark Costa expressed confidence in the DOE funding, stating the project is under contract and aligns with the new administration's focus on U.S. manufacturing, supply chain resiliency, and energy independence. Regarding tariffs, he acknowledged the uncertainty but noted the current weak global manufacturing environment might limit aggressive actions, and the company's forecast does not include significant negative impacts from potential trade actions.

David Begleiter of Deutsche Bank inquired about Eastman's 2025 volume growth outlook, seeking clarity on the balance between modest market recovery and innovation-driven growth. He also asked for specifics on the sources and potential magnitude of cost-saving initiatives planned for 2025.

Answer

CEO Mark Costa detailed the 2025 outlook, noting that while macro recovery is uncertain, customer destocking is complete. He anticipates modest growth in stable markets and significant upside in discretionary markets (auto, housing) as they normalize. Costa highlighted innovation programs like the Kingsport methanolysis facility and new cellulosic products as key accelerators. CFO Willie McLain added that cost savings beyond the typical $75 million will come from operational optimization, asset base adjustments like the Massachusetts facility shutdown, and energy efficiency initiatives.

David Begleiter from Deutsche Bank asked if Linde requires base or organic volume growth to achieve its EPS growth algorithm in 2026.

Answer

CEO Sanjiv Lamba and CFO Matt White clarified that two parts of the EPS algorithm—capital allocation and management actions—do not require economic help and contribute mid-single digits individually, aiming for 10% or more combined. The third part, macro (FX translation and base volumes), has been a headwind, but the rest of the model continues to deliver, allowing growth even with negative base volumes.

David Begleiter asked if Linde requires base or organic volume growth to achieve its EPS growth algorithm in 2026.

Answer

Matt White, CFO, clarified that the capital allocation and management action components of the EPS algorithm (which contribute mid-single digits individually, totaling about 10%) do not require economic help. He noted that base volumes, part of the macro component, have been a drag, but the other parts of the model continue to deliver. A more detailed macro update for 2026 will be provided in February.

David Begleiter of Deutsche Bank inquired about the potential risk to achieving future price increases, considering the current weak macroeconomic environment.

Answer

CEO Sanjiv Lamba expressed confidence in achieving positive pricing, stating that Linde has consistently done so through all economic cycles for 25 years. He noted that pricing generally tracks globally weighted CPI, with the exception of some pressure in China, particularly on helium. He reiterated that the value Linde provides to customers supports their pricing conversations.

David Begleiter from Deutsche Bank asked about the updated guidance, questioning if the lowered outlook was primarily due to weak manufacturing in the Americas and which specific end markets were showing the most weakness.

Answer

Matt White, CFO, clarified the FX impact on guidance. Sanjiv Lamba, CEO, detailed that U.S. manufacturing was softer in Q1, with weakness in automotive, agriculture, and mining, partially offset by fabrication and chemicals. He noted that while larger customer sentiment has recently turned more negative, this has not yet been reflected in volumes.

David Begleiter sought clarification on the Q4 guidance, asking if the term 'economic contraction' reflects normal seasonal slowdowns or represents weakness beyond typical patterns.

Answer

CFO Matt White clarified that the guidance for a sequential contraction in base organic volumes is over and above any normal seasonal patterns. He noted that extended customer outages around holidays would be viewed as a sign of underlying weakness, not seasonality. He stressed this is a prudent assumption, and better-than-expected conditions would represent potential upside.

David Begleiter from Deutsche Bank inquired about the specific factors that led to the adjustment in PPG's full-year 2025 guidance and the resulting implied fourth-quarter guidance falling below consensus expectations.

Answer

Chairman and CEO Tim Knavish attributed the guidance change primarily to the refinish business, citing earlier-than-expected industry normalization and a 'double whammy' of distributor destocking. CFO Vince Morales added that claims data, which was down high single to low double digits earlier in the year, improved to mid-single digits, indicating a slower recovery than anticipated.

David Begleiter asked about the factors that led to the change in PPG's full-year 2025 guidance and the implied fourth-quarter guidance falling below consensus expectations.

Answer

Chairman and CEO Tim Knavish attributed the guidance adjustment primarily to the refinish business, specifically the delayed industry normalization and a 'double whammy' of destocking by distributors. CFO Vince Morales added that external claims data, while showing improvement, remained negative, contributing to the revised outlook.

David Begleiter of Deutsche Bank asked for confirmation on the expected cadence for volume growth in the second half of the year, suggesting a potential progression from 1.5-2% in Q3 to 2% in Q4.

Answer

CEO Timothy Knavish confirmed that PPG expects volume growth to accelerate in the second half, describing the trajectory as "low single digits and moving up that low single digit ladder." He expressed high confidence in this outlook, attributing it to the tangible benefits now materializing from previously announced market share wins.

David Begleiter from Deutsche Bank asked for clarification on the expected cadence for volume growth in the third and fourth quarters of 2025.

Answer

Chairman & CEO Timothy Knavish confirmed that PPG expects volume growth to accelerate in the second half of the year. He described the anticipated growth as starting at low-single-digits and progressively increasing through the end of the year, driven by the realization of previously announced market share wins.

David Begleiter of Deutsche Bank inquired about the margin outlook for Global Architectural Coatings in Q2 and the performance of the Comex business in Mexico, questioning the basis for confidence in its recovery.

Answer

CEO Timothy Knavish explained that Q2 margins in Global Architectural will benefit from sequential volume improvements, noting Q1's pressure was primarily a volume issue. He expressed confidence in a Comex recovery, citing solid core retail sales and intelligence suggesting project spending will resume in H2. CFO Vince Morales added that a seasonal step-up in Europe will also provide leverage.

David Begleiter's team inquired about the expected trend for segment margins from Q2 to Q4, given the guidance for a full-year increase but a Q1 decline.

Answer

CFO Vince Morales explained that Q1 margins are pressured by raw material inflation from tariffs and lower volumes. He expects margins to improve as the year progresses due to better volume performance. CEO Tim Knavish added that the Industrial Coatings segment is the most volume-sensitive, and its margins will improve significantly with the expected volume recovery in the second half of the year.

David Begleiter asked whether to expect another low single-digit decline in raw material costs in 2025, given the excess supply in the market and lower oil prices.

Answer

Chairman and CEO Timothy Knavish stated that Q4 raw material costs are expected to be flat, similar to Q3. While it is too early for a 2025 forecast, he noted that PPG is entering supplier negotiations with ample upstream supply. SVP and CFO Vince Morales added that suppliers have excess capacity and are willing to work collaboratively.

David Begleiter asked about the realized amount from Ecolab's price surcharge and whether the current 3% pricing level is sustainable for the next two to three quarters, now that the surcharge is fully implemented.

Answer

Christophe Beck, Chairman and CEO of Ecolab, stated that it's difficult to track the exact amount realized from the surcharge because some businesses, like Institutional, integrated it directly into structural pricing. He reiterated that 2-3% value pricing is the company's sweet spot, with the surcharge helping to keep pricing closer to 3%. Beck expressed confidence in maintaining pricing near 3%, though acknowledged it depends on factors like tariffs and the situation in China.

David Begleiter asked about the realized amount from the price surcharge and whether the 3% pricing level is sustainable for the next two to three quarters, now that the surcharge is fully implemented.

Answer

Christophe Beck, Ecolab's Chairman and CEO, stated that it's difficult to precisely track the surcharge's impact as some businesses, like Institutional, integrated it directly into structural pricing. He indicated that with the surcharge, pricing is closer to 3%, and he feels good about the current position. Beck reiterated that 2-3% is the company's sweet spot for pricing, with the objective to stay as close to 3% as possible, depending on future tariffs and global economic factors.

David Begleiter of Deutsche Bank asked about the U.S. trade surcharge, questioning its realization rate, whether competitors were following suit, and the rationale for not implementing it internationally.

Answer

Christophe Beck, Chairman & CEO, confirmed that competitors have announced similar surcharges but noted Ecolab continues to gain market share. He stated the surcharge is working as a net positive for margins. The initiative is U.S.-only because current trade actions are unilateral; however, Ecolab is prepared to deploy similar measures internationally if reciprocal tariffs emerge.

David Begleiter of Deutsche Bank asked for a comparison of the newly announced surcharge to the 2022 energy surcharge, specifically regarding the realized amount versus the announced rate and expectations for this round.

Answer

Christophe Beck, Chairman and CEO, recalled that the 2022 energy surcharge was a success, with an 8% announced rate peaking at a 5% realized rate before being converted into structural pricing. He expressed confidence that the same platform and approach will work well this time for the U.S.-only tariff surcharge. The key objective is to mitigate incremental costs while delivering greater savings to customers, ensuring the price increase is sustainable and ultimately becomes structural.

David Begleiter asked if Ecolab's 2025 volume growth forecast of 2% is faster than the underlying market growth.

Answer

Christophe Beck, Chairman and CEO, asserted that the 2% volume growth forecast is "clearly faster than the market." He pointed to the Institutional segment's 6% growth in a down market as evidence of market share gains. He reiterated that the company's focus is on accelerating this outperformance through its strategic growth initiatives while maintaining a healthy balance of volume and value pricing.

David Begleiter asked for guidance on value pricing for the next year, specifically whether it would be closer to 2% or 3% and what the key drivers would be.

Answer

CEO Christophe Beck reiterated the target range of 2-3%, calling it the new 'sweet spot.' He explained that Q3 is typically the lowest pricing quarter due to the absence of carryover pricing. The ability to achieve this range is based on the 'Total Value Delivered' (TVD) to customers, which significantly exceeds the price increases, making it a net positive for them and ensuring the pricing is sustainable.

David Begleiter asked why Sherwin-Williams would not pursue a more aggressive price increase next year, given the current challenges faced by Pittsburgh Paint, suggesting it could apply maximum competitive pressure.

Answer

Heidi Petz, President and CEO, reiterated the company's strategy of balancing 'gallon growth with price increase effectiveness,' emphasizing an aggressive pursuit of volume and earning business. She highlighted the strategic importance of timing price increases to allow customers to plan and pass along costs. Al Mistysyn, SVP of Finance and CFO, added that Sherwin-Williams maintains a disciplined approach and will not 'react to each competitor's actions,' sticking to their proven successful formula.

David Begleiter asked why Sherwin-Williams would not raise prices more aggressively in the Paint Stores Group for 2026 to apply maximum pressure on competitors like Pittsburgh Paint.

Answer

President and CEO Heidi Petz reiterated the strategy of balancing gallon growth with price increase effectiveness, emphasizing aggressive pursuit of volume and earning market share. She highlighted the importance of strategic timing for price increases to allow customers to plan and pass along costs. SVP of Finance and CFO Al Mistysyn added that the company has a disciplined approach to pricing and strategy, focusing on managing what it can control rather than reacting to competitor actions, a formula that has proven successful.

David Begleiter of Deutsche Bank inquired about the basis for management's caution regarding potential demand deterioration in the second half of 2025 and which specific end markets are most at risk.

Answer

Chair, President & CEO Heidi Petz identified three key areas of concern contributing to the cautious outlook: the new residential market, which continues to be choppy; the coil coatings end market, facing uncertainty related to steel tariffs; and the DIY market, which remains softer for longer.

David Begleiter of Deutsche Bank asked for clarification on management's caution about potential demand deterioration in the second half of 2025 and which specific end markets are most at risk.

Answer

Chair, President & CEO Heidi Petz identified three key areas of concern for potential further choppiness: new residential construction, the coil coatings end market, and the DIY market. She noted that while the company is staying close to these segments, its partnerships with retailers like Lowe's and Menards remain strong.

David Begleiter requested context on the market share gain opportunity, particularly in relation to PPG's business, and asked about the extent of the Kelly-Moore business captured in the previous year.

Answer

CEO Heidi Petz described the PPG opportunity as 'ripe,' with a focus on quality sales in commercial, property management, and new residential segments. While not providing a specific number for Kelly-Moore, she stated Sherwin-Williams was very well-positioned to capture that business and expects the benefits to continue.

David Begleiter asked about the competitive opportunity presented by PPG's North American business, questioning how much of its roughly $2 billion in sales Sherwin-Williams is targeting.

Answer

Executive Heidi Petz responded that the focus is on winning 'quality sales' rather than commodity business. She contrasted the opportunity with Kelly-Moore, which she called a 'short-term share grab,' describing the PPG situation as a 'long-term' opportunity that requires earning customer loyalty over time. She declined to quantify a specific sales target.

David Begleiter questioned why Olin's ECU profit index was down in Q3 versus Q2, while core alkaline EBITDA (excluding one-time benefits) was up during the same period.

Answer

Ken Lane, President and CEO, attributed the discrepancy to product mix within the portfolio. He emphasized that ECU values are expected to remain stable into Q4, indicating no underlying negative trend despite quarterly fluctuations due to customer operations and volume.

David Begleiter questioned why Olin's ECU profit index was down in Q3 versus Q2, while the core alkaline products and vinyls (CAPV) adjusted EBITDA increased, even after accounting for one-time benefits.

Answer

President and CEO Ken Lane attributed the discrepancy primarily to 'MIX' within the portfolio, noting that the index has many moving parts and fluctuates quarter-to-quarter. He emphasized that Olin expects ECU values to remain stable into Q4 and does not see the index indicating any specific trend.

David Begleiter of Deutsche Bank inquired about the progress of the $30 per ton caustic soda price increase announced in June 2025.

Answer

President and CEO Ken Lane responded that while the supply-demand balance for caustic soda remains tight, the market is facing short-term headwinds from tariff uncertainty, particularly regarding exports to Latin America. He noted this is causing a temporary backup in the system but expects stability to return once there is more clarity on the tariff situation, as underlying demand remains strong for a trough period.

David Begleiter from Deutsche Bank AG asked whether Olin expects to retain any of the spot business it captured in Q1 on a go-forward basis.

Answer

President and CEO Kenneth Lane stated that he does not expect to retain the spot business consistently, as it is by definition opportunistic. While he anticipates future opportunities to sell incremental volume due to market volatility and other industry turnarounds, he clarified that Olin has not contracted this volume and does not intend to.

David Begleiter asked about Olin's natural gas hedging strategy for 2025 and the potential earnings impact from price fluctuations.

Answer

CFO Todd Slater explained that Olin uses a disciplined, rolling four-quarter hedging strategy, with heavier coverage in the near term. He projected that Q1 2025 natural gas and power costs would be relatively flat compared to Q4 2024, mitigating the impact of spot market volatility.

David Begleiter of Deutsche Bank asked how 2024 epoxy import volumes into the U.S. compare to 2023. He also inquired about Olin's target operating rates once its facilities are fully back up and running.

Answer

President and CEO Kenneth Lane confirmed that U.S. epoxy import volumes in 2024 have continued to grow significantly compared to the prior year, with no slowdown observed. Regarding operating rates, Lane stated there is no change to Olin's value-first strategy; the company will not run assets harder to make up for lost volume and will remain disciplined in placing volume at preferred values.

David Begleiter asked about Axalta's Q4 production plans (normal operations vs. inventory drawdown) and the expected year-over-year decline in SG&A expenses for Q4 compared to Q3's 7%.

Answer

Carl Anderson, SVP and CFO, expects Q4 SG&A performance to be very similar to Q3's reduction. Regarding inventory, he anticipates a drawdown in Q4 as part of working capital unwinding, noting that Q3 had higher inventory levels due to tariff uncertainty and new business ramp-ups. He expects Q4 to be a strong free cash flow quarter due to this inventory reduction.

David Begleiter asked about the long-term margin potential for the Mobility segment, questioning if it could reach the upper teens or 20%.

Answer

CEO Chrishan Anthon Villavarayan called the current 16.5% margin a strong performance from a cyclical low point, especially given weakness in the high-margin Commercial Vehicle sector. He noted that growth in the CTS business helped offset this. While he sees opportunity for upside, he wants to see sustained growth in key areas like Latin America and CTS before committing to higher long-term targets.

David Begleiter inquired about the reasons for the volume decline in the Refinish segment during the quarter and what factors could reverse the recent 2-3% downturn in body shop activity.

Answer

CEO Chrishan Villavarayan attributed the Refinish volume decline to temporary factors like distributor destocking and the impact of high insurance rates on repairs, noting it feels like a '1 quarter, 2 quarter issue.' He stated that the underlying market is secular and that repair deferrals due to high interest rates should normalize. He also highlighted the strategic importance of the CoverFlexx acquisition for penetrating the economy segment, which captures customers seeking repairs outside of the traditional insurance framework.

David Begleiter asked about the factors that led RPM International to adjust its full-year guidance to the lower end of the range compared to July's assumptions, and whether the company was satisfied with the timing of price increases to offset tariff costs.

Answer

Frank Sullivan, Chairman and CEO, cited challenging gross profit margins, ongoing tariff uncertainty, and an $8 million increase in healthcare costs in Q1 (including $6 million over six months for weight loss drugs, with 1/3 permanent impact) as reasons for the guidance adjustment. He acknowledged that earlier price increases would have been beneficial but noted the on-again, off-again nature of tariffs. He stated that about half of the $90 million-$95 million unmitigated tariff impact has been offset, with Q1 price at 0.5% and Q2 expected at 2%.

David Begleiter of Deutsche Bank asked about the Consumer segment's organic sales decline, specifically the impact of SKU rationalization versus consumer pressure, and questioned the disconnect between RPM's raw material outlook and that of a peer.

Answer

Chairman & CEO Frank Sullivan stated the consumer environment remains challenging, with eight consecutive quarters of no or negative DIY takeaway. He noted the decline was predominantly in the Rust-Oleum business. Regarding raw materials, he reiterated that while some solvents are down, key inputs like epoxy resins, metal packaging, and propellants are up double-digits, creating a different cost basket than some peers might have.

David Begleiter requested an overview of the ongoing strategic review for the Advanced Materials and Catalysts (AMAC) segment and questioned when the company expects to achieve its target leverage ratio.

Answer

CEO Kurt Bitting confirmed the strategic review is exploring a full range of options to maximize shareholder value and is progressing as planned. CFO Mike Feehan explained that while the Q2 leverage ratio rose to 3.5x due to an acquisition and share buybacks, he anticipates it will decrease to around 3.0x by year-end. Achieving the long-term 2.0-2.5x target may be deferred by further opportunistic capital deployment.

David Begleiter of Deutsche Bank requested details on the strategic review process for the Advanced Materials and Catalysts (AMAC) segment and asked when the company expects to reach its target leverage ratio.

Answer

CEO Kurt Bitting stated the AMAC review is exploring a full spectrum of options to maximize shareholder value and that updates would be provided in the near future. CFO Mike Feehan explained that while the Q2 leverage ratio rose to 3.5x due to the acquisition and buybacks, it's expected to fall to around 3.0x by year-end. Achieving the long-term 2.0-2.5x target may be deferred due to opportunistic capital allocation.

David Begleiter from Deutsche Bank requested an update on the strategic review of the Advanced Materials and Catalysts (AMAC) segment, including the process and potential outcomes, and also asked about the timeline for achieving the company's target leverage ratio.

Answer

CEO Kurt Bitting confirmed the strategic review for the AMAC segment is progressing with a full range of options being considered to maximize value. CFO Mike Feehan explained the recent leverage increase to 3.5x was due to the Wagaman acquisition and share repurchases, and while the year-end 2025 target is around 3.0x, achieving the long-term 2.0x-2.5x target may be deferred by other value-enhancing capital allocation.

David Begleiter from Deutsche Bank requested clarification on the strategic review process for the Advanced Materials and Catalysts (AMAC) segment and asked when the company expects to reach its target leverage ratio.

Answer

CEO Kurt Bitting reiterated that the strategic review is exploring a full spectrum of options to maximize shareholder value for the AMAC business and is progressing on schedule. CFO Mike Feehan explained that while the leverage ratio rose to 3.5x due to the acquisition and buybacks, it's expected to return to around 3.0x by year-end. He noted that achieving the 2.0-2.5x target may be deferred due to opportunistic share repurchases.

David Begleiter of Deutsche Bank requested an update on the strategic review of the Advanced Materials and Catalysts (AMAC) segment, including the process and potential options, and asked about the timeline to reach the target leverage ratio.

Answer

CEO Kurt Bitting confirmed the strategic review is exploring a full spectrum of options to maximize shareholder value and is progressing as planned. CFO Mike Feehan addressed leverage, explaining the Q2 increase to 3.5x was due to the Wagaman acquisition and share buybacks. He anticipates the ratio will decrease to around 3.0x by year-end, maintaining the long-term 2.0-2.5x target while balancing growth investments.

David Begleiter questioned the rationale for the Board initiating a strategic review of the Advanced Materials and Catalysts (AM&C) business now and asked what factors would cause Ecovyst to hit the low end of its 2025 EBITDA guidance.

Answer

CEO Kurt Bitting explained the strategic review aims to determine if there are alternative structures to maximize shareholder value for the AM&C business, which he described as a high-value segment with strong core businesses and emerging growth opportunities. He stated that hitting the low end of the guidance would likely be due to the timing of large catalyst orders or potential economic disruption from tariffs or geopolitical issues, rather than a fundamental weakening of the core businesses.

David Begleiter from Deutsche Bank asked about the timeline for achieving the company's target leverage ratio, the financial impact of Hurricane Beryl in Q3, and any other one-off costs in 2024 that would not recur in 2025.

Answer

CFO Michael Feehan projected ending 2024 with a net leverage ratio of approximately 3.0x and noted that a historical deleveraging pace of 0.5x per year puts the 2.0x-2.5x target within reach during 2025. He quantified the hurricane impact at a 'few million dollars' and highlighted that the $5-$10 million step-up in reliability program and turnaround costs seen in 2024 would not repeat at the same magnitude in 2025.

David Begleiter from Deutsche Bank questioned Trinseo's strategy for its European MMA production and inquired about the key drivers for potential EBITDA growth in 2026.

Answer

President & CEO Frank Bozich stated that all assets, including European MMA, are continuously evaluated for restructuring based on speed, benefit, and cost. For 2026 EBITDA, Bozich highlighted that resolving trade uncertainty and lowering interest rates are critical triggers to unlock significant pent-up demand in automotive and construction, noting a 10% volume increase adds approximately $100 million to EBITDA.

David Begleiter asked if a sequential EBITDA improvement from Q1 to Q2 is a reasonable expectation, whether polystyrene assets are now core, and if the AmSty sale process has been halted.

Answer

CEO Frank Bozich confirmed an expected improvement from Q1 to Q2 but cautioned against direct historical comparisons due to a slow start to the year and a Q1 pricing lag. He stated that polystyrene assets are not core and the company continues to explore their sale. He explicitly clarified the AmSty sale process is not halted but is being timed to maximize value.

David Begleiter asked for a timeline on the strategic alternatives evaluation for the Food Ingredients business, whether any portion might be retained, and about the level of interest from strategic and private equity buyers.

Answer

CEO J. Erik Fyrwald detailed the progress made, including separating the business and divesting commodities. He expects to provide an update with the Q4 earnings call and achieve 'absolute clarity' in 2026. Fyrwald confirmed that there has already been 'strong proactive interest' from both private equity and strategic buyers.

David Begleiter from Deutsche Bank asked what scenario would cause sales growth to fall to the low end of the full-year 1% to 4% guidance range and where the company is currently observing the greatest stress on the consumer.

Answer

CEO Erik Fyrwald stated that reaching the low end of the guidance would likely require a significant economic slowdown. He expressed confidence that current order patterns support being 'solidly in that range' and highlighted the team's focus on driving growth through innovation and geographic diversification to achieve its guidance in any economic scenario.

David Begleiter of Deutsche Bank asked CEO Erik Fyrwald to characterize the progress made on the R&D organization and innovation pipeline nine months into his tenure, and what this could mean for new product sales in 2025 and 2026.

Answer

CEO Jon Erik Fyrwald expressed that he feels very good about the progress, noting that embedding R&D into the business units has created energy and a better connection to customer needs. He cited the Scent team's plan to strengthen its molecule pipeline as an example. Fyrwald believes the main impact from new projects will be seen in 2026 and beyond, but the renewed energy and stronger pipeline are already benefiting customer discussions and will help in 2025.

David Begleiter of Deutsche Bank asked how much of the $110 million outage impact from Q2 could be added back to earnings in Q3. He also inquired whether the new $200 million cost savings plan consists of permanent, structural changes or temporary measures.

Answer

EVP & CFO Steven Bender explained that while there will be improvement, not all of the $110 million impact can be added back in Q3 due to the slow ramp-up of operations, though he did not provide a specific figure. He confirmed that the new $200 million in cost savings are considered to be structural and therefore sticky.

David Begleiter asked for a financial bridge for the PEM segment from Q4 to Q1, considering FIFO impacts, a planned outage, and ethane prices. He also inquired about the performance and outlook for the epoxy business.

Answer

EVP and CFO Steve Bender acknowledged feedstock headwinds and noted that price nominations across polyethylene, PVC, and caustic are intended to address these pressures and improving demand. For the epoxy business, Bender stated that performance is improving, aided by antidumping actions, and he expects the positive trend to continue into 2025, though a full recovery may take longer.

David Begleiter of Deutsche Bank asked about the reason for the slowdown in organic growth for Interconnect Solutions (ICS) and questioned the rationale for buying rights to Chemours' insurance proceeds in the PFAS settlement.

Answer

Jon Kemp, President of the Electronics division, explained the ICS growth rate slowed due to a more difficult year-over-year comparison as the AI-driven recovery began in Q2 2024. CEO Lori Koch stated the insurance rights purchase was to ensure Chemours' liquidity for settlement payments, adding they are confident in recovering the funds.

David Begleiter of Deutsche Bank asked about the reason for the slowdown in organic growth for Interconnect Solutions and questioned the rationale for buying rights to insurance proceeds from Chemours.

Answer

Jon Kemp, President of the Electronics division, explained the ICS growth rate slowed due to a tougher year-over-year comparison. CEO Lori Koch stated the insurance rights purchase was to ensure Chemours' liquidity for settlement payments and expressed high confidence in recovering the funds.

David Begleiter asked whether the Aramids business (Kevlar, Nomex) is considered core to the future DuPont and requested quantification of the semiconductor sales that were pulled forward from Q2 into Q1.

Answer

CEO Lori Koch stated that the new DuPont's strategy is to build around its high-growth Healthcare and Water platforms and reduce complexity over time, but declined to comment on specific speculation about the Aramids business. CFO Antonella Franzen quantified the sales pull-forward at approximately $30 million.

David Begleiter requested more detail on the flat sales outlook for the China semiconductor business in 2025, its overall size, and any signs of progress in North American construction markets.

Answer

CEO Lori Koch explained that the flat outlook for China's semi business is a normalization after 40% growth in 2024, which included pre-buy activity. She sized the China semi market at approximately $600 million. CFO Antonella Franzen noted continued softness in North American construction but anticipates low single-digit growth for the shelter business in 2025.

David Begleiter of Deutsche Bank questioned the sustainability of the Electronics & Industrial (E&I) segment's 30%+ margin into 2025 and asked about the reasons for price declines in the Safety Solutions business.

Answer

CEO Lori Koch indicated that the strong E&I margin was not driven by one-time items and could be sustainable if the top line and productivity initiatives are maintained. Regarding Safety Solutions, she explained that after significant price increases in recent years that more than covered costs, giving back a few points on price is a strategic move to maintain market share.

David Begleiter of Deutsche Bank questioned whether the decision to delay the Moertech II project was driven solely by market dynamics or also by a need to conserve cash, and how this delay affects the company's circular business EBITDA targets.

Answer

CEO Peter Vanacker indicated the decision was influenced by both factors, stating plans were adapted to 'the pace of development in the markets and especially also the prudent allocation of capital.' He emphasized the need for firm brand owner commitments before a final investment decision but did not quantify the impact on long-term EBITDA targets for the circular business.

David Begleiter of Deutsche Bank asked about the potential impact of reduced U.S. polyethylene exports to China on domestic supply and pricing.

Answer

CEO Peter Vanacker emphasized that LyondellBasell is not a large polyethylene exporter from North America due to its differentiated portfolio and strong domestic customer relationships. EVP Kim Foley elaborated that trade flows will simply readjust, with LYB's global network allowing it to shift supply to other regions like Southeast Asia while other producers backfill China's import needs. She expressed confidence in LYB's agility to manage these shifts without significant problems.

David Begleiter of Deutsche Bank asked directly if LyondellBasell expects polyethylene prices to decline in the fourth quarter.

Answer

CEO Peter Vanacker responded that it was premature to say, as discussions for the announced October and November price increases were still ongoing. He remained hopeful for their success, citing strong underlying fundamentals including 6% year-to-date domestic demand growth, high capacity utilization, and robust export demand.

David Begleiter of Deutsche Bank asked if tariffs on Chinese MDI could prompt a competitor to build a new U.S. MDI plant, and also inquired when stronger aerospace build rates might begin to impact Huntsman's business.

Answer

Chairman, President & CEO Peter Huntsman stated a new plant would not come from Huntsman and that he believes the world has sufficient MDI capacity. On aerospace, he projected an impact within the next 3-5 quarters but stressed the important distinction between aircraft delivery rates and actual build rates, noting a large inventory of uncertified planes.

David Begleiter asked for more details on the strategic review of the Moores, Germany maleic anhydride facility and inquired about the drivers of share gains and growth in the Polyurethanes segment for 2025.

Answer

CEO Peter Huntsman stated they are evaluating the maleic facility's future due to inbound inquiries and a competitive European market. For Polyurethanes, he attributed future growth to market recovery and winning back customers with a full value proposition, not just price. CFO Phil Lister added that the Geismar splitter is expected to contribute a $15 million year-over-year benefit.

David Begleiter inquired about the specifics of the new $50 million restructuring program in the Polyurethanes division, asking for details on the functions and regions targeted for cost removal.

Answer

Chairman, CEO and President Peter Huntsman explained that the cost savings will primarily be in Europe, focusing on the automotive and construction sectors. He noted that more details would be provided in the Q4 call, with the majority of the savings expected on a run-rate basis by the end of the following year and a payback period of approximately one year.

David Begleiter of Deutsche Bank inquired about the key variables that will determine whether Tronox achieves the high or low end of its revised full-year EBITDA guidance and asked for an update on the company's rare earth activities.

Answer

CEO John Romano identified sales volume and pricing as the primary drivers for the EBITDA range. He noted that while targeted volume gains are expected in India, this is offset by price erosion in other regions like Europe. Romano also confirmed that rare earth initiatives are progressing, with a related sales opportunity contributing to the second-half outlook.

David Begleiter asked how the new cost improvement program relates to the prior 'Project newTRON' and whether the SG&A component of the new plan includes layoffs.

Answer

CEO John Romano clarified that 'Project newTRON' is ongoing but was more volume-dependent, while the new program focuses on structural cost improvements through technology, operational excellence, and supply chain optimization. Regarding SG&A, both Romano and CFO John Srivisal emphasized that the focus is on improving spending efficiency and resource deployment rather than significant layoffs with large associated cash costs.

David Begleiter questioned if the new efficiency initiatives would result in a formal cost-takeout program for TiO2 assets and if 2025 would see an additional layer of savings from the 'neutron' program.

Answer

CEO John Romano confirmed they are working towards a specific, targeted cost program based on reliability and efficiency improvements, leveraging technology already implemented through the 'neutron' project. He clarified this is not a new initiative on top of 'neutron' but a pivot to extract value from the technology through operational efficiency rather than volume growth. CFO John Srivisal emphasized that these savings would not require significant new capital investment.

David Begleiter of Deutsche Bank sought clarification on the total incremental cost savings expected in fiscal 2026 from both restructuring and manufacturing optimization programs. He also questioned the long-term strategic rationale for remaining in the challenging China market for Specialty Additives.

Answer

CEO Guillermo Novo confirmed that restructuring actions are ahead of schedule but explained that the P&L recognition of the $60M in manufacturing savings is complex due to average cost accounting. CFO William Whitaker specified a $12M carryover from restructuring but stated it was too early to quantify the full FY26 impact of the manufacturing savings, though a 'meaningful step up' is expected. Regarding China, Novo defended the position by highlighting their cost-effective plant, its role in the global export network, and the belief that the market will eventually recover and consolidate. SVP & GM Dago Caceres added that new, innovation-focused segments are emerging in China that play to Ashland's strengths.

David Begleiter from Deutsche Bank questioned the sustainability of the 30% EBITDA margin in Personal Care for the second half of the year and asked about the expected earnings cadence between Q3 and Q4.

Answer

General Manager Jim Minicucci affirmed that the Personal Care business is expected to maintain profitability in the high 20s to 30% margin range, driven by portfolio optimization and cost improvements. CFO John Willis stated that Q4 earnings are anticipated to be stronger than Q3, a counter-seasonal trend, due to the timing of realizing benefits from restructuring initiatives in the latter part of the year.

David Begleiter sought commentary on the reasonableness of Q2 consensus EBITDA estimates and asked for specifics on which products are most affected by Chinese export competition.

Answer

CEO Guillermo Novo declined to provide specific Q2 guidance but stated they expect a 'good pickup' in line with normal seasonality, as March typically marks the start of a stronger volume period. He identified HEC as the product most impacted by Chinese exports, particularly in the Middle East, Africa, and India, while noting the core OSD pharma market for VP&D remains more stable due to its regulated nature.

David Begleiter from Deutsche Bank asked for a reminder of Dow's mid-cycle EBITDA target and the path to achieve it from current levels. He also inquired about how the company is mitigating the impacts of anti-competitive behavior in Latin America and Europe.

Answer

CEO Jim Fitterling reiterated that the mid-cycle EBITDA potential is intact but the timing is delayed, outlining components like near-term growth projects and cost savings. Regarding anti-competitive behavior, he explained it stems from trade flow redirections due to tariffs. Dow is actively managing this through its international trade team's engagement with governments and by pursuing fair trade actions under WTO rules.

David Begleiter asked about the potential impact of Chinese tariffs on U.S. polyethylene imports and the subsequent effect on domestic polyethylene prices if that export channel is disrupted.

Answer

Chair and CEO James Fitterling acknowledged it as a major uncertainty, noting Dow's trade team is actively engaged. COO Karen S. Carter added that Dow is already mitigating risk by reconfiguring its supply chain, increasing exports from Canada, and leveraging its integrated production on four continents, particularly from the Middle East, to serve global markets including China.

David Begleiter of Deutsche Bank inquired about the nature of the newly announced cost savings, asking if they are permanent or temporary and which regions and functions would be most affected by the 1,500 role reductions.

Answer

CEO James Fitterling clarified that the goal is to make the cost savings structural and permanent, with a mix of 75% from third-party costs and 25% from direct costs. He stated the reductions would be spread across regions under economic pressure like Europe and Asia, as well as various functions and businesses. He noted these actions are separate from the ongoing European asset review.

David Begleiter asked if the European assets under strategic review are EBITDA positive and, if so, by how much. He also inquired whether Dow would supply Europe with MDI from other regions if its European MDI plants were closed.

Answer

James Fitterling, Chair and CEO, confirmed that the assets under review are EBITDA positive but did not provide a specific figure. He stated that while all options are being considered, he does not believe shutting down the MDI plants would be a value-creating opportunity.

David Begleiter asked if the 4% year-over-year decline in Q1 SG&A was a sustainable run rate for the full year. He also inquired whether Specialty Engineered Materials (SEM) EBITDA margins could be flat or would decline for the full year.

Answer

President and CEO Dr. Ashish Khandpur clarified that full-year SG&A should be flattish in absolute dollars compared to the prior year, not tracking the Q1 decline. He also stated that SEM EBITDA margins are expected to expand for the full year, as the Q1 decline was primarily due to a difficult comparison with a record quarter for the high-margin defense business in the prior year.

David Begleiter of Deutsche Bank AG inquired about the rationale behind the sub-$600 per ton price point for low-carbon ammonia and the potential market opportunity for U.S. producers if tariffs are imposed on Canadian nitrogen imports.

Answer

Mark Behrman, Chairman and CEO, explained that the sub-$600 price is what market intelligence suggests is necessary to secure long-term offtake contracts. Damien Renwick, Chief Commercial Officer, added that while Canadian tariffs could create a short-term price benefit for U.S. producers of ammonia and UAN, the market would likely find new trade routes and level out over time.

David Begleiter inquired about the outlook for turnaround expenses next year, the financing strategy for the Houston project, and the potential price premium for low-carbon ammonia over the next five to ten years.

Answer

CFO Cheryl Maguire expects next year's turnaround expenses to be in the 'same ballpark' as this year. CEO Mark Behrman detailed the Houston project's financing plan, involving a 60/40 debt-to-equity split with partner INPEX, potentially using project financing or a government loan. For low-carbon ammonia pricing, he suggested a European premium would be tied to an index plus CBAM costs, while noting the advantage of selling upgraded low-carbon products in less competitive markets.

David Begleiter inquired about the company's expectations for raw material costs in 2025, the anticipated volume trends in the Americas segment for the year, and the geographic location of the new manufacturing capacity coming online.

Answer

President and CEO Joseph Berquist responded that Quaker Houghton expects raw material costs to be stable in 2025. Regarding Americas volumes, he anticipates sequential improvement from Q4 to Q1, with Q1 likely being the lowest quarter of the year before conditions improve. He clarified that new production capacity is coming online not only across Asia (China, India, Southeast Asia) but also in the United States.

David Begleiter of Deutsche Bank questioned the change in the 2025 Reinforcement Materials outlook from 'up year-over-year' to 'flat,' asking if contract negotiations were worse than expected. He also asked if benefits from multi-year 2023 contracts were still active.

Answer

CEO Sean Keohane clarified the outlook is for a 'similarly strong level' as 2024, attributing this to a flat global auto and tire market, reasonable contract outcomes, and headwinds from factors like foreign exchange rates. He stated that base pricing was flat and regional volume shifts were as expected. Keohane also confirmed that no multi-year contracts from 2023 extended into 2025.