Duffy Fischer

Duffy Fischer asked for an overview of growth trends in Linde's end markets and geographies outside of Europe, given the company's conservative growth estimates.

Answer

Sanjiv Lamba, CEO, expressed slightly more positivity about industrial activity for the year but remained cautious. He highlighted the U.S. as a resilient market with sales up across most end markets, particularly electronics and commercial space, while manufacturing remained stable. LATAM sales were stable and growing, with Brazil performing well, but Canada remained flat. In APAC, China's markets were largely bottoming out, with the merchant business growing above the published IP number. India showed strong growth across all end markets and distribution modes, with further momentum expected from trade agreements. The rest of APAC was largely stable, with Australia showing signs of stabilization.

Duffy Fischer inquired about Linde's observations on growth trends across different end markets and geographies outside of Europe, given the company's conservative growth estimates.

Answer

Sanjiv Lamba, CEO, expressed slightly more positivity on industrial activity for the year, while maintaining conservative guidance. He detailed resilience in the US (electronics, commercial space strong, manufacturing stable with automation pickup), stable growth in LATAM (Brazil strong, Canada flat), China markets largely bottoming out with merchant business growth, continued strong growth in India, and stabilizing trends in the rest of APAC (Australia improving, ASEAN flat). Electronics stands out as a strong growth market.

Duffy Fischer asked for an early peek into 2026, specifically regarding project startups and the anticipated benefit from anniversarying current pricing levels.

Answer

Sanjiv Lamba, CEO, stated that the full 2026 guidance would be provided in February after a rigorous planning process. He highlighted the existing project backlog as a strong driver for continued EPS growth and identified the macroeconomic environment as a key variable for the upcoming year.

Duffy Fischer from Goldman Sachs asked for an early look into 2026, specifically inquiring about the expected project startup schedule and the potential benefit from anniversarying current pricing levels.

Answer

CEO Sanjiv Lamba stated that Linde's rigorous planning process for 2026 would be presented in February, providing full visibility and guidance. He highlighted that the strong project backlog under execution is a key input for continued EPS growth into 2026 and beyond, with the macro environment being the primary variable for the upcoming year.

Duffy Fischer of Goldman Sachs asked for a detailed overview of Linde's business performance and outlook by geography and end market for the second half of the year.

Answer

CEO Sanjiv Lamba provided a global tour, noting he remains positive on the U.S. market, particularly in space launches. He expressed a bearish view on Europe due to softening industrial demand but highlighted the team's strong execution on pricing and productivity. For APAC, he described China as a 'mixed bag' and expects flat volumes for the region overall, with India being a bright spot.

Duffy Fischer asked a two-part question: 1) Corteva's market share gains or losses for major seed crops in major geographies in 2025. 2) Clarification on whether Bayer gains access to Corteva's Enlist soybeans as part of the agreement.

Answer

Judd O'Connor (EVP, Seed Business Unit, Corteva) reported market share gains in North America for corn and soy, mid-single-digit gains in Latin America for summer and Safrinha crops, and nice recoveries/gains in India and EMEA. Chuck Magro (CEO, Corteva) clarified that Enlist E3 on soy was not part of the Bayer agreement discussions.

Duffy Fischer asked for an overview of Corteva's market share gains or losses in major seed crops and geographies in 2025. He also sought clarification on whether the Bayer deal grants them access to Corteva's Enlist soybeans.

Answer

CEO Chuck Magro reported market share gains in North America corn and soy, mid-single-digit gains in Latin America summer and Safrinha seasons, and positive impacts in India and EMEA (sunflower and corn). He clarified that Enlist E3 on soy was not part of the Bayer agreement discussions.

Duffy Fischer requested an update on Corteva's market share performance in the northern hemisphere for major crops like corn, soy, cotton, and canola, now that the season is largely complete. He also asked about the growth and projected size of Conkesta in Latin America.

Answer

EVP of Seed Business Unit Judd O'Connor expressed confidence in gaining market share in corn while holding price through mix, and even more share in soy, attributing this to strong germplasm and product performance. Regarding Conkesta, he stated that trait penetration is expected to reach double digits next year (2026) from 8-10% in 2025, with a long-term projection of capturing a third of the Brazilian market by 2030 with E3 and Conkesta.

Duffy Fischer requested an update on Corteva's market share performance in the northern hemisphere for major crops (corn, soy, cotton, canola) after the season, and details on Conkesta's growth and projected market penetration in Latin America.

Answer

EVP of Seed Business Unit Judd O'Connor expressed confidence in gaining market share in both corn and soybeans in the northern hemisphere, maintaining price through mix in corn, and highlighted strong product performance. For Conkesta in Latin America, he stated it's currently at 8%-10% of the market in 2025, projected to reach double digits in 2026, and potentially a third of the Brazil market with E3 and Conkesta by 2030.

Duffy Fischer inquired about the ongoing performance of the helium business, the impact of a prior year's one-time sale on current comps, and the expected helium headwind for Q2 and the remainder of the fiscal year. He also asked about the financial benefit from reclassifying China gasification plants as 'held for sale,' the expected timing of their sale, and potential proceeds.

Answer

Eduardo Menezes, Chief Executive Officer, stated that while the aerospace segment showed strong helium volume, the overall forecast for helium headwinds remains consistent with the initial guidance of a 4% EPS effect for the year. Regarding the China gasification plants, he noted a 1% benefit to overall results for the quarter from the reclassification and expects the sale to be completed within the fiscal year, hopefully sooner.

Duffy Fischer inquired about the ongoing helium business performance, specifically how much the continuing business is still down after accounting for a prior year's one-time sale, and the expected headwind for Q2 and the rest of the fiscal year. He also asked about the benefit and timing of selling gasification plants in China.

Answer

Eduardo Menezes, Chief Executive Officer, noted stronger-than-expected helium volume from the aerospace segment but maintained the forecast of a 4% EPS effect for the year. Regarding the China gasification plants, he stated the benefit was about 1% of overall quarterly results and they expect to complete the sale within the fiscal year, hopefully sooner.

Duffy Fisher of Goldman Sachs sought clarification on the components of Air Products' projected 11% underlying growth for the upcoming fiscal year, specifically asking about the contributions from new projects, pricing, and efficiencies, and the timing of these contributions. He also inquired about the long-term outlook for the helium industry, questioning if the current headwinds are expected to stabilize or persist into 2027 and 2028.

Answer

CEO Eduardo Menezes detailed that 2-3% of the growth is anticipated from new assets in Asia and the Americas, with the remainder split between price and productivity, and new assets ramping in the latter half of the year. Regarding helium, Menezes acknowledged structural changes in the market, including the impact of the BLM's role and new storage capacities, projecting some decline in 2027 but at a reduced rate, with stabilization expected thereafter.

Duffy Fisher asked for a breakdown of the underlying 2026 EPS growth drivers, including new projects, price, and efficiencies, and whether the contribution would be smooth or back-end loaded. He also asked for Air Products' view on the future of the helium industry, specifically if stabilization is expected after 2026.

Answer

Eduardo Menezes, CEO, projected 2-3% growth from new assets in Asia and the Americas, ramping up in the second half of 2026, with the remaining growth split evenly between price and productivity. On helium, Mr. Menezes noted structural changes due to the BLM's role and major players installing storage. He anticipates some decline in 2027, but at a lower rate than 2025, with stabilization expected thereafter.

Duffy Fischer of Goldman Sachs Group Inc. asked for management's view on the helium market cycle, including when current headwinds might anniversary and whether the downturn is cyclical or structural.

Answer

CEO Eduardo Menezes described a market undergoing significant change, with new supply sources and new market players. While acknowledging the current down cycle, he expressed a belief that the market's fundamental volatility remains and that a future supply event will eventually cause the pendulum to swing back. He noted that margin impacts should lessen as lower raw material costs are realized.

Duffy Fischer from Goldman Sachs asked for the current earnings contribution from the volatile helium business and its expected progression. He also sought to confirm if the Neom project would generate significant positive cash flow in its early years by selling ammonia on the spot market.

Answer

CEO Eduardo Menezes noted that while helium is facing headwinds, its current operating income remains significantly higher than pre-COVID levels, though he could not disclose specific figures. Regarding Neom, he confirmed the forecast is for the project to be cash flow positive starting in 2027, with profitability increasing over time as they sell the ammonia before downstream facilities are built.

Duffy Fischer asked whether the price decline in the Asia segment was driven more by supply/demand dynamics or the impact of falling helium prices. He also requested a breakdown of the recent headcount increase between capitalized project costs and expenses running through the P&L.

Answer

Chairman, President and CEO Seifi Ghasemi confirmed the pricing pressure in Asia is a combination of both supply-demand imbalance and the impact of Russian helium. CFO Melissa Schaeffer explained that while a large portion of the headcount growth is capitalized due to its project delivery focus, a portion for development and support is expensed. She also highlighted that productivity actions have reduced headcount by nearly 1,000.

Duffy Fischer asked for clarification on the margin implications for the Consumer Brands Group, specifically how Suvinil and cost-cutting programs would affect margins, whether to model a year-over-year decline until Suvinil is anniversaried, and the outlook thereafter.

Answer

VP of Investor Relations Ben Meisenzahl explained that Q4 is typically a lower margin quarter, and Consumer Brands Group experienced supply chain inefficiencies due to targeted production volume reductions to manage inventory. He noted that Suvinil adds noise but expects the core business to have similar operating margins to existing Sherwin businesses. He cautioned that integration costs for Suvinil will be present throughout 2026, suggesting muted margins until the acquisition is anniversaried in Q3 2026.

Duffy Fischer asked about the acceleration in growth rates for four specific SBUs within the Paint Stores Group in Q3 2025, inquiring if it was due to delayed pricing, market acceleration, or competitive advantage.

Answer

President and CEO Heidi Petz clarified that the acceleration was not due to pricing but rather the company's ability to demonstrate value and leverage its differentiation in an unprecedented competitive environment. She emphasized the teams' rapid adaptation to customer needs, commitment to strategy, and focus on customer success, which allowed Sherwin-Williams to weather the softer-for-longer environment and achieve strong performance.

Duffy Fischer observed that within the Paint Stores Group, residential businesses showed sequentially flat improvement, while commercial, property maintenance, new residential, and protective/marine businesses all accelerated their growth rates in the third quarter. He asked what factors drove this acceleration: delayed pricing, an actual acceleration in market demand, or the company's competitive advantage leading to share gains.

Answer

Heidi Petz, President and CEO, clarified that the acceleration was 'not the pricing piece.' She attributed it to Sherwin-Williams' ability to 'demonstrate the value' in an 'unprecedented environment,' with teams rapidly adapting to customer needs. She emphasized their 'differentiation on display' through commitment to strategy, customer focus, and bringing new solutions, enabling them to 'weather this softer for longer environment.'

Duffy Fischer from Goldman Sachs asked about the impact of transfer accounting, questioning if the financial pain from lower production volumes would be disproportionately borne by the Consumer Brands Group.

Answer

SVP of Finance & CFO Al Mestyshin confirmed that in the short term, the negative impact from lower production gallons will reside within the Consumer Brands Group's results for the remainder of the year. A cost true-up will occur in January with new standard setting, at which point costs will be allocated more broadly across the other segments.

Duffy Fischer of Goldman Sachs asked about the impact of transfer accounting, questioning if the financial pain from lower factory operating rates would be disproportionately absorbed by the Consumer Brands Group (CBG).

Answer

CFO Allen Mistysyn confirmed that in the short term, the deficit from lower production gallons will indeed remain within the Consumer Brands Group. A true-up of these costs will occur in January, at which point some of the impact will be allocated to the Paint Stores and Performance Coatings groups. He also noted a focus on retaining factory headcount despite lower volumes.

Duffy Fischer asked for details on Sadara's operational status and the implications of its mid-year 2026 debt refinancing for Dow. He also inquired about the Canada Path2Zero project's potential earnings in today's market environment, given the $1 billion mid-cycle uplift target.

Answer

Jim Fitterling, Chair and Chief Executive Officer, stated Sadara is running safely and reliably, with assets in a good global cash cost position. He noted an ongoing strategic review with Aramco, targeting completion in H1 2026, and anticipates no cash payments to Sadara lenders in 2026 due to ample liquidity. He did not provide an instantaneous earnings number for Path2Zero in today's environment but reiterated the $1 billion uplift target.

Duffy Fischer asked for an operational update on Sadara, particularly concerning its mid-year debt refinancing and its implications for Dow. He also inquired about the current earnings potential of the Canada Path to Zero project in today's market environment, contrasting it with the previously stated $1 billion mid-cycle uplift.

Answer

Jim Fitterling, Chair and Chief Executive Officer, reported that Sadara is running safely and reliably, with assets in a good position on the global cash cost curve. He noted an ongoing strategic review with Aramco, expected to conclude in H1 2026, aiming to enhance the JV's long-term resilience. Fitterling does not anticipate cash payments to Sadara lenders in 2026 due to ample liquidity and parent guarantees. Regarding the Canada project's current earnings, he could not provide an instantaneous figure but reiterated the $1 billion mid-cycle uplift potential.

Duffy Fischer asked for specifics on Dow's Q4 guidance, including the baked-in U.S. ethane pricing and the expected impact of the $0.05 polyethylene price increase. He also inquired if sequential operating rates were expected to remain flat and sought Dow's view on U.S. natural gas pricing in 2026 given increased exports.

Answer

Chair and CEO Jim Fitterling stated that $0.04 was factored in for ethane in Q4, noting its volatility but good natural gas production. He anticipated assets in the Americas would run hard, influencing operating rates. For natural gas, Fitterling highlighted weather as a major factor, noting recent positive near-term moves due to warmer temperatures and inventory levels. He also mentioned the potential for ethane to be influenced by U.S.-China trade negotiations and exports.

Duffy Fischer asked about the specific assumptions for U.S. ethane pricing and the $0.05 price increase baked into Dow's fourth-quarter guidance, whether sequential operating rates are expected to remain flat, and Dow's view on U.S. natural gas pricing for 2026 given increasing exports.

Answer

Jim Fitterling, Chair and Chief Executive Officer, mentioned a $0.04 impact on ethane in Q3. He noted that while ethane prices are dynamic, U.S. natural gas production is robust, ensuring ample NGLs, with operating rates being a key factor. He expects Americas assets to run hard. Natural gas pricing will largely depend on weather and inventory levels, with recent positive near-term movements. He also highlighted the potential for ethane to become a factor in U.S.-China trade negotiations, as China is a significant importer of U.S. ethane.

Duffy Fischer of Goldman Sachs asked which product chains are most affected by anti-competitive dumping and where legal action has been or might be taken. He also asked to clarify how much of the July polyethylene price increase is included in the Q3 guidance.

Answer

CEO Jim Fitterling identified polyurethanes as a primary area for dumping, with some activity also seen in chlorine, aromatics, and polyethylene. He noted actions have been taken in Brazil. COO Karen Carter confirmed that the full July price increase is factored into the Q3 guidance, as they fully expect to achieve it due to unsustainably low current margins.

Duffy Fisher of Goldman Sachs asked two cash flow questions: the potential for a working capital release in the full year, and for details on the 'other assets and liabilities' line, which was a significant cash use.

Answer

Management responded that for 2025, they actually anticipate a working capital use of cash in the $300M-$400M range. The negative variance in the 'other liabilities' line was explained as being primarily driven by long-term tax payables and related tax audit reassessments during the year.

Duffy Fischer asked about the impact of difficulties in the Ag Chem market, including structural changes and increased Chinese competition, on Eastman's intermediates chemicals business. He also inquired if weakness in the downstream Tow and textiles businesses would lead to lower acetyls chain operating rates or a push into more acetyls derivatives.

Answer

Board Chair and CEO Mark Costa stated that Eastman has a strong position in Ag Chem, primarily in North America, with strong relationships with top companies like Corteva, making it less exposed to South American competition. Regarding the acetyls chain, Mark Costa explained that Eastman has been building an innovation portfolio to diversify cellulosic polymer into new applications like Aventa (foamed cellulose polymer for food service) and other specialties (e.g., biodegradable microbeads, paper coatings). These efforts aim to drive overall company stream utilization and keep the acetyls chain vital, offsetting declines in tow.

Duffy Fischer asked about the difficulties faced by Ag Chem customers and potential structural changes in the market due to Chinese competition, inquiring if Eastman has the right position or needs to change its business model for intermediates chemicals.

Answer

Mark Costa, Board Chair and CEO, stated that Eastman is fortunate to have strong relationships with top Ag companies, with most business in North America, aligning with market leaders like Corteva. He noted less exposure to South American competition and tariffs helping in the U.S., indicating a relatively good position without current concerns from customers about their North American standing.

Duffy Fischer asked for clarification on the HIP segment's Q4 numbers, suggesting they might be under $150 million and down 20% year-over-year, and whether this serves as a base for 2026 growth, implying HIP numbers could be down next year. He also followed up on the PEM chlorovinyls write-down, asking what changed in the 10-year outlook given its forward-looking nature, and the proportion of the hit between downstream and chlor-alkali levels.

Answer

Steven Bender, EVP and CFO, explained that Q4 typically sees a seasonal slowdown in construction. He reminded that half of HIP's business is repair and remodeling, which continues to perform well, leading to a constructive outlook for 2026 despite seasonality. Regarding the write-down, Mr. Bender stated it was a mechanical process on the Chloralkali base, triggered by the extended trough, but emphasized that no assets were impaired, signaling belief in the business's medium-to-long-term performance.

Duffy Fisher asked about the HIP segment's Q4 performance, projecting it to be under $150 million (down 20% year-over-year), and whether this lower figure should be considered a base for 2026 growth, given seasonality.

Answer

Steve Bender (EVP and CFO) acknowledged the seasonal slowdown in new construction activity typically seen in Q4. He reminded that half of HIP's business is stable repair and remodeling, which helps mitigate new construction fluctuations. He maintained a constructive outlook for 2026, based on ongoing dialogue with nationwide builders who are moving forward with construction plans despite working down completed and unsold inventory.

Duffy Fischer from Goldman Sachs asked about the Housing and Infrastructure Products (HIP) segment, seeking to understand what portion of the portfolio is facing pricing pressure and why margins are stable despite lower revenue. He also inquired about the financial impact of downtime in the PEM segment in Q3 versus Q2 and the expected improvement in chlorovinyls operating rates.

Answer

EVP & CFO Steven Bender addressed the HIP question by highlighting the strength of the broad portfolio, particularly the large-diameter pipe business for water infrastructure supported by the Infrastructure Act. Regarding the PEM segment, he noted that while there will be improvement in Q3, the company's core vinyl businesses are still ramping up, so they will not be fully clear of the production disruption impacts.

Duffy Fischer from Goldman Sachs asked for clarification on the $120 million outage impact, questioning if it was entirely unplanned, requesting a cost breakdown, and seeking to quantify the volume of Q3 sales deferred into Q4.

Answer

EVP and CFO Steve Bender confirmed both major outages were unplanned. He declined to provide a detailed cost breakdown of the $120 million impact. Regarding deferred sales, he stated it was difficult to quantify the exact amount but expects the sales to be realized in Q4 or Q1 2025, contingent on weather.

Duffy Fischer from Goldman Sachs followed up on aerospace and protective and marine coatings, asking about their current margins relative to the company average, their incremental margin outlook for the next two to three years, and the expected duration of the increased spending before reaching a 'cruising altitude.'

Answer

Chairman and CEO Tim Knavish stated that performance coatings is PPG's highest margin segment, with refinish and aerospace being 'nicely above segment average,' implying protective and marine coatings are below. He expects aerospace investments to continue for a couple more years due to significant profitable growth, while protective and marine investments are more incremental and shorter-term. CFO Vince Morales emphasized that these front-end investments in mid-to-long cycle businesses will provide benefits in 2026 and 2027, with OpEx continuing in 2026 and CapEx longer. Knavish assured that all investments have IRRs significantly above WACC.

Duffy Fischer followed up on Aerospace and Protective & Marine Coatings, asking about their current margins relative to the company average, their incremental margins over the next 2-3 years, and the expected duration of the increased investment spending.

Answer

Chairman and CEO Tim Knavish stated that Performance Coatings is PPG's highest margin segment, with refinish and aerospace being above segment average, and Protective & Marine Coatings (PMC) below. He expects Aerospace investments to continue for a couple more years due to significant profitable growth, while PMC investments will be shorter and more incremental. CFO Vince Morales emphasized that these front-end investments in mid-to-long cycle businesses are crucial for multi-year benefits, with strong IRRs.

Duffy Fischer from Goldman Sachs asked why PPG is experiencing raw material inflation while some peers are reporting flat to down costs.

Answer

Chairman & CEO Timothy Knavish identified two key differentiators: PPG's significant presence in Mexico, where FX rates impact the cost of dollar-denominated raw materials, and the company's higher exposure to epoxy resins, which have seen price increases. CFO Vince Morales added that the business in Mexico is able to pass on this inflation through pricing, mitigating the bottom-line impact.

Duffy Fischer of Goldman Sachs asked why PPG is experiencing raw material inflation while many peers are reporting flat-to-down costs, questioning if it was due to a different product or geographic footprint.

Answer

CEO Timothy Knavish identified two key reasons: PPG's significant raw material purchases in Mexico, where FX rates impact costs, and its higher consumption of epoxy resins, which have seen price increases. CFO Vince Morales added that the company can typically offset the inflation in Mexico with pricing actions, protecting the bottom line.

Duffy Fischer of Goldman Sachs questioned the strategy in the Titanium Technologies (TT) segment, noting a shift towards higher volume at the expense of price compared to a competitor, and asked if this was a structural change. He also asked why the Q2-to-Q3 sequential decremental margin in TSS appears much higher this year despite a smaller sales decline.

Answer

President & CEO Denise Dignam reiterated the TT strategy is to be the lowest-cost manufacturer and gain share in fair-trade markets, expressing confidence in this approach without commenting on competitor responses. SVP & CFO Shane Hostetter explained that the higher decremental margin in TSS for Q3 is primarily due to product mix shift, contrasting with the prior year where a sharp decline in Freon pricing had a more direct impact on the bottom line.

Duffy Fischer of Goldman Sachs asked when the new direct sales program in Brazil would begin contributing and when the pricing headwinds from diamide partner contracts would anniversary.

Answer

Chairman and CEO Pierre Brondeau confirmed that the impact from the new direct sales force in Brazil is expected to be visible starting in Q3 2025. Regarding diamide partner contracts, he explained they are adjusted annually based on manufacturing costs. The most significant price reduction occurred from 2024 to 2025, and any future adjustments are expected to be far more incremental.

Duffy Fischer from Goldman Sachs asked for details on the 1,600 year-to-date body shop wins and sought reassurance that Axalta's weaker Refinish top-line results, relative to peers, were due to temporary mix issues rather than structural problems.

Answer

President and CEO Chris Villavarayan stated the 1,600 wins are part of a consistent trend of adding ~2,500 shops annually, with a strategic focus on the mainstream and economy segments where Axalta is underpenetrated. CFO Carl Anderson added that the weaker top-line was expected and is temporary, driven by a large customer's inventory destocking. Both executives expressed bullishness, citing factors like the eventual repair of a growing number of off-lease vehicles as a future tailwind.

Duffy Fischer of Goldman Sachs requested a breakdown of the Winchester commercial business decline, asking about the split between price and volume, and whether propellants remain a cost headwind.

Answer

President and CEO Ken Lane detailed that the year-over-year decline in the Winchester commercial business was approximately 50% driven by lower volume, with the remainder split evenly between lower pricing and higher costs. He confirmed that both propellants and metals continue to be significant cost headwinds, contributing to unacceptable margin levels that necessitate price increases.

Duffy Fischer of Goldman Sachs asked about the seasonality of the divested graphics business and its financial impact in Q1. He also inquired about the company's approach to share buybacks, asking if they would be opportunistic or more systematic.

Answer

CEO Benjamin Gliklich advised to expect a $3-5 million EBITDA contribution from the graphics business in Q1 2025 before it is fully divested. Regarding buybacks, he stated the approach will remain opportunistic and not formulaic. While it's reasonable to expect repurchases in 2025, it's too early to be specific before the sale proceeds are received.