Matthew Deyoe

Matthew DeYoe asked if Westlake's observed signs of an industrial recovery were based on specific order books or primarily on PMI readings. He also questioned if the adjusted outperformance in Q4 was due to faster savings from asset closures or creative accounting, and whether this implied a reduced tailwind for the $600 million savings in 2026.

Answer

Steve Bender, Executive Vice President and Chief Financial Officer, Westlake Corporation, confirmed that signs of industrial recovery were based on both positive PMI signals and volumes in the infrastructure business, though it's still early in Q1. He attributed the Q4 outperformance to decisive actions taken in December to reduce costs and shutter non-value-creating assets, affirming confidence in the three-pillar strategy. He reiterated that the $600 million guidance for 2026 would be fully contributed, despite some savings realized in Q4.

Matthew DeYoe followed up on signs of industrial recovery, asking if Westlake was seeing specific order book improvements or just relying on PMIs. He also questioned if the Q4 adjusted outperformance was due to faster savings from asset closures or creative accounting, and if this meant a smaller tailwind for 2026.

Answer

Steve Bender, Executive Vice President and Chief Financial Officer, confirmed that the industrial recovery signs were based on both PMI readings and constructive volumes in the infrastructure business. He clarified that the Q4 outperformance was a direct result of taking decisive actions announced in December to reduce costs and shutter non-value-creating assets. Mr. Bender reiterated confidence in delivering the full $600 million from the three-pillar strategy throughout 2026, despite some Q4 savings.

Matthew Deyoe from Bank of America questioned if Westlake's long-term strategy as a net short ethylene buyer is changing given rising prices and peers securing supply. He also asked for an explanation for the high decremental margin in the HIP segment, which appeared to be around 80%.

Answer

President & CEO Jean-Marc Gilson responded that while Westlake is currently comfortable with its short ethylene position, the company remains open to opportunities to reduce that short position depending on market conditions. EVP & CFO Steven Bender attributed the year-over-year HIP volume decline, which drove the decremental margin, to lower activity in the Compounds and Exterior Building Products businesses.

Matthew DeYoe asked about the status of Brazilian urea plant restarts, their impact on import expectations for 2026, and general challenges in recommissioning idle plants.

Answer

Martin Jarosick, Vice President of Investor Relations, CF Industries, detailed Brazil's significant growth in urea imports over 25 years and the historical struggles of its older, inefficient domestic plants. He noted that while Brazil has the capability and government initiatives to restart plants, gas availability remains an issue. Chris Bohn, President and CEO, CF Industries, expressed skepticism about the feasibility and efficiency of bringing long-idle plants back online, citing high upfront capital costs and operational challenges.

Matthew DeYoe asked about Brazil's restarted plants, which represent about 1 million tons of urea capacity, and how this impacts CF Industries' expectation for Brazilian urea imports to be flat year-over-year. He questioned if these plants are being treated as zero contribution, or if demand will offset their slow ramp-up, and sought general thoughts on recommissioning cycles and potential supply gaps.

Answer

Bert Frost, SVP of Sales and Market Development, discussed Brazil's significant growth in urea imports over 25 years. He noted the age, inefficiency, poor logistical placement, and gas supply issues of the plants being restarted, concluding that Brazil will remain a major importer. Chris Bohn, President and CEO, expressed skepticism about the cost and efficiency of bringing long-idle plants back online, preferring a 'wait-and-see' approach regarding their actual contribution.

Matthew DeYoe asked for commentary on the outlook for European ammonia plant closures, specifically regarding the 3-4 million ton reduction, the current operating rates of these plants, and the challenges of closing them.

Answer

Chris Bohn (EVP and COO) referred to a prior study that identified 'red, yellow, green' plants in Europe, noting that 'red' plants have closed as expected, reducing assets from 48 to around 30-31, with an expectation of another 4-5 closures. He explained that high turnaround costs and current TTF gas prices make it difficult for European plants to operate profitably year-round. He also highlighted the lack of new global supply, further tightening the market and supporting a strong gas differential and S&D balance through 2030.

Matthew DeYoe asked for further commentary on the outlook for European ammonia capacity closures, specifically the projected 3-4 million tons, how much has already been announced, current operating rates, and the inherent challenges in closing plants.

Answer

Christopher Bohn (EVP and COO) referenced a prior study identifying 48 European ammonia assets, noting that 'red' plants have already come offline, reducing the total to 30-31, with another 4-5 expected to close in the next few years. He explained that high turnaround costs ($50M-$60M) and TTF gas prices make year-round profitable operation difficult for European plants, leading to curtailments and eventual closures. He also highlighted the limited new global supply, contributing to a tight supply/demand balance through 2030.

Matthew De Yoe from Bank of America asked about the impact of potential new urea capacity in China and the ultimate market size for blue and green ammonia in Asian energy and shipping markets.

Answer

EVP & COO Christopher Bohn (Note: The transcript attributes this to Bohn, but it was likely Bert Frost and others) noted that new Chinese capacity often replaces older, inefficient plants. He reiterated that global demand growth outpaces new supply, tightening the market. Regarding low-carbon ammonia, he estimated a 3-million-ton market by 2030 for Asian power generation, with growing interest from marine and other sectors.

Matthew DeYoe asked two questions: first, about Nutrien's outlook on the Trinidad asset, considering the political changes in Venezuela and the potential implications of the Dragon pipeline on Trinidadian gas supply; second, he inquired about the reasons behind the decline in retail seed sales, noting a 7.5% decrease on a two-year stack and potentially a 10% volume drop.

Answer

Ken Seitz, Nutrien's President and CEO, expressed uncertainty regarding ample gas supply from Venezuela to Trinidad in the near to medium term. He noted that the Trinidad plant, which contributes only 3% of earnings and 1% of cash flow, was throttled at 80% due to gas shortages and now faces increased gas costs, making its operation untenable. The plant is currently shut down, and Nutrien is engaging with the Trinidad government to explore options for affordable gas access and fees that would allow for even a slim margin operation. Mark Thompson, Nutrien's CFO, addressed the decline in retail seed sales, attributing it to two main factors: an intentional strategic decision to move away from lower-margin seed business in Brazil as part of a margin improvement plan, and historic weather events in the U.S. South during the first half of 2025, which caused significant washouts in areas with high seed share. He expects some reversal of the weather-related impact this year and highlighted that despite these challenges, the broader retail business grew EBITDA by $300 million over two years, with proprietary business growing 5% in 2025 and projected for high single-digit growth in 2026.

Matthew DeYoe asked about the Trinidad asset, specifically the potential implications of the Venezuela Dragon pipeline on gas supply, and also about the headwinds in retail seed sales, which are down 7.5% on a two-year stack.

Answer

Ken Seitz, President and CEO, expressed uncertainty about ample gas supply from Venezuela to Trinidad in the near to medium term, citing geopolitical factors. He explained that the Trinidad plant is shut down due to throttling at 80% capacity, increased gas costs, and its minimal contribution (3% of earnings, 1% of cash flow). Mark Thompson, CFO, addressed seed sales, attributing the decline to an intentional strategic move away from lower-margin seed business in Brazil as part of the margin improvement plan, and historic weather events in the U.S. South in H1 2025 that impacted areas with high seed share.

Matthew Deyoe of Bank of America sought clarity on the weak retail seed sales in the first half, asking about the price versus volume dynamics and the likelihood of recovering that volume next year.

Answer

EVP & President - Global Retail Jeff Tarsi attributed the weakness entirely to two volume-related factors: significant 'prevent plant' acres in the Southern U.S. due to historic wet weather and a crop mix shift from cotton to lower-revenue sorghum. He stated he expects 100% of the 'prevent plant' volume to return next year with normal weather, while the cotton acreage recovery will depend on commodity prices.

Matthew DeYoe asked if the Taiwan Printed Circuit Board Association's forecast of 14% PCB market growth in 2026 is a reasonable base case for Element Solutions' associated volumes, and how the company factors such an outlook into its business performance. He also inquired about the 7% organic growth in energy solutions, requesting a breakdown of price and volume, and whether the price component is expected to annualize in 2026 or is in excess of raw material costs.

Answer

CEO Ben Gliklich stated that Element Solutions benchmarks against Prismark data, which forecasts 6% PCB growth in 2026 and a 9% CAGR from 2024-2029, noting the distinction between meter squared volume and higher-value, complex boards. He confirmed Element builds its outlook off the 6% number. For energy solutions, Mr. Gliklich indicated that the 7% organic growth was roughly half price and half volume, with a pricing lever available. He expects the offshore business to be a mid-single-digit grower in 2026, combining price and volume, despite some caution on volumes due to energy prices.

Matthew DeYoe asked how Element Solutions factors in the Taiwan Printed Circuit Board Association's forecast of 14% PCB market growth in 2026, and if this could be considered a base case for Element Solutions' associated volumes, with an expectation to outgrow it. He also requested a breakdown of price versus volume for the 7% organic growth in energy solutions, and whether this pricing would annualize in 2026, specifically if it was in excess of raw material costs.

Answer

CEO Ben Gliklich stated that Element Solutions benchmarks against Prismark data, which forecasts 6% PCB growth in 2026 and a 9% CAGR from 2024-2029, noting that high-value, complex boards drive dollar value growth more than volume. He indicated that the 7% organic growth in energy solutions was roughly half price and half volume, with a pricing lever available. Mr. Gliklich expects the energy solutions business to be a mid-single-digit grower in 2026, combining price and volume.

On behalf of Matthew Deo from Bank of America, a question was asked for clarification on the assumptions behind the updated guidance range and for an update on resolving production bottlenecks for Cuprion.

Answer

EVP & CFO Carey Dorman explained the guidance range is wide due to uncertainty around potential tariff impacts, with the high end assuming strong EV and smartphone activity. President & CEO Benjamin Gliklich added that the primary focus for Cuprion is scaling manufacturing, with the first production line expected to be commissioned by year-end to relieve the initial bottleneck.

Matthew DeYoe inquired about the feedback, wins, and learnings from the first year of the One Ecolab rollout to the top 3 largest customers, and how these insights will be applied to the deployment to an incremental 20 customers in 2026, asking when it will become a more significant top-line driver.

Answer

Chairman and CEO Christophe Beck clarified that One Ecolab targets 35 customers (top 20 largest and 15 emerging), representing a $3.5 billion share increase potential. He noted that growth with these 35 customers is 2 percentage points higher than the company average, demonstrating its effectiveness. Beck added that the program helps customers achieve best-in-class performance, and customers are actively seeking even more from Ecolab.

Matthew DeYoe asked about the feedback, wins, and learnings from the first year of the One Ecolab rollout to the top 35 customers, its deployment to an incremental 20 regional customers in 2026, and when it will become a more significant top-line driver.

Answer

Christophe Beck, Ecolab's Chairman and CEO, explained that the One Ecolab initiative, focused on the top 35 global customers (with $3.5 billion share increase potential), has resulted in growth that is two percentage points higher than the rest of the company. He noted that the organization is structured to help these customers achieve best-in-class performance across their operations and industries. Beck added that customers are actively requesting even more than what Ecolab currently delivers, indicating strong demand and future top-line potential.

Matthew Deyoe from Bank of America asked for details on the strong Life Sciences margin in Q2 and the reason for the expected decline back to the mid-teens level in subsequent quarters.

Answer

Christophe Beck, Chairman & CEO, attributed the strong Q2 margin to a favorable mix from high-growth, high-margin biopharma sales. He explained the expected moderation is a deliberate strategy: the business's underlying margin is in the mid-20s, but Ecolab is reinvesting the difference to fuel long-term growth in R&D, capacity, and sales capabilities to capture its significant market opportunity.

Matthew DeYoe asked if there was hope to establish annual pricing initiatives that could drive structural pricing gains across consolidated DuPont, and what the average margin uplift looked like from products within the Vitality Index.

Answer

Lori Koch, CEO, confirmed expectations for structural price lift going forward, although 2026 organic growth is primarily volume-driven. She noted some price gains in certain businesses, but anticipated some give-back in Shelter due to the unwinding of prior large price increases. She declined to comment on product-line specific margin lift but stated that products within the 30% Vitality Index introduced in the past five years have contributed about 145 basis points of margin lift overall.

Matthew DeYoe from Bank of America Securities inquired about the potential for establishing annual pricing initiatives to drive structural pricing gains across consolidated DuPont. He also asked for the average margin uplift from products within the Vitality Index, specifically referencing new advanced Tyvek garments.

Answer

CEO Lori Koch confirmed expectations for structural price lift going forward, despite 2026 organic growth being primarily volume-driven with some price give-back in shelter. She stated that the Vitality Index, comprising products introduced in the past five years, contributes about 145 basis points of margin lift overall.

Matthew DeYoe asked for more granularity on Industrial Co.'s organic sales, specifically breaking down volume and price in healthcare/water versus diversified industrials, and the performance of the construction business in Q3 and Q4.

Answer

CFO Antonella Franzen clarified that on a reported basis, healthcare and water were up high single digits (mid-single digits adjusted for pull-forward), while diversified industrials were up low single digits (relatively flat adjusted for pull-forward). She noted the shelter business was down around 2% in Q3 and is expected to be down 3-4% in Q4, with the full year down about 4%.

Matthew DeYoe requested a more granular breakdown of the pro forma Industrials Co. organic sales, specifically parsing out volume and price in healthcare and water versus diversified industrials, considering the pull-forward effect. He also asked for the construction business's comping rate in Q3 and Q4.

Answer

Antonella Franzen, Chief Financial Officer, stated that on a reported basis, healthcare and water were up high single digits (mid-single digits adjusted for pull-forward), while diversified industrials were up low single digits (relatively flat adjusted for pull-forward). She added that the shelter business was down around 2% in Q3 and expected to be down 3-4% in Q4, with the first half of the year seeing a larger decline than the second half.

Matthew DeYoe asked about Corteva's plans to expand its seed business beyond corn and soy, how it prioritizes new markets, if it's considering fruits and vegetables, and if acquisitions are needed for its 5-10 year portfolio goals.

Answer

CEO Chuck Magro indicated significant growth opportunities in core corn and soybean businesses, with seed licensing becoming a major growth platform. He mentioned cotton as a new market and gene editing as a capability to enter tangential or adjacent crops if unique technology can be provided. He emphasized short-term focus on seed licensing in cotton, corn, and soybeans, and entering the hybrid wheat market (conventionally and gene-edited), which is the largest crop market globally. He deferred a full strategy discussion to the September investor day.

Matthew DeYoe asked about Corteva's seed business expansion beyond corn and soy, specifically prioritizing new markets, looking at fruits and vegetables, and the potential need for acquisitions to achieve 5-10 year portfolio goals.

Answer

Chuck Magro (CEO, Corteva) indicated significant opportunities in core corn and soybean businesses, with seed licensing as a major growth platform. He mentioned cotton as a new market and gene editing's potential for tangential/adjacent crops if unique technology can be provided. He highlighted the focus on hybrid wheat (conventional and gene-edited) as the largest crop market globally, suggesting a full plate for now but future possibilities with gene editing acceptance.

Matthew Deo asked about the strong incremental margins on volumes for crop chemicals despite price mix headwinds. He also posed a long-term strategic question about the seed company business model 15 years out, considering lower barriers to entry with gene editing, and whether it might evolve to resemble a CPG company that acquires and markets smaller technology brands, and how this aligns with R&D budgeting.

Answer

EVP of Crop Protection Business Unit Robert King attributed strong incremental margins to the strategic shift towards profitability, focusing on growth levers like new products and biologicals, which offer 10-15% margin advantages and are growing faster. He also cited significant productivity gains from network optimization, delivering $200 million in productivity this year. CEO Chuck Magro addressed the gene editing question, stating that while gene editing tools will be widely available, differentiation will come from germplasm, the capability to gene edit, and the expensive, difficult global seed production supply chain. He anticipates more partnerships due to these requirements, transforming farming and helping farmers, rather than a CPG-like model.

Matthew Deo asked about the strong incremental margins on volumes for crop chemicals despite price mix headwinds, and how the seed company business model might evolve over the next 15 years with gene editing, potentially becoming more like a CPG company that acquires and markets smaller technology brands, and its implications for R&D budgeting.

Answer

CEO Chuck Magro addressed the gene editing question, expressing excitement for its potential to transform farming, but emphasized that differentiation will remain in germplasm and global supply chain capabilities, likely leading to more partnerships rather than a CPG-like model. He highlighted the disease super locus as an example. EVP of Crop Protection Business Unit Robert King explained the strong incremental margins on volumes by pointing to the strategy shift towards profitability, growth in higher-margin new products and biologicals (both double-digit growth), and significant productivity gains from network optimization, delivering $200 million in productivity this year.

Matthew Deyoe of Bank of America asked if Corteva benefited from the absence of dicamba, its view on a potential return, and whether the strong Crop Protection margin is sustainable into the third quarter.

Answer

EVP Judd O’Connor stated that while there was likely a benefit, the Enlist system was already gaining significant share and can compete effectively if dicamba returns. EVP Robert King affirmed that CP margins are sustainable, supported by ongoing cost reductions and a favorable mix shift to new products and biologicals.

Matthew DeYoe sought clarification on Epoxy cost savings for 2026, noting the Investor Day target of $80 million by 2028 and current expectations for modest profitability in 2026. He asked if productivity was being lost to the cycle or if savings would be more ratable in 2027.

Answer

Ken Lane, Olin's President and CEO, clarified that the $80 million was a 2028 target, with $40 million to $50 million expected to be realized in 2026. He stated that the Epoxy business, which was approximately $50 million EBITDA negative in 2025, is projected to be positive in 2026, representing a meaningful improvement. This improvement is attributed to Olin's self-help actions (cost reduction, efficiency) rather than a significant improvement in the Epoxy market, where demand remains subdued and margins weak.

Matthew Deyoe from Bank of America challenged the company's value creation narrative by pointing out that the ECU index in Q2 2025 was not far below 2021-2022 levels, yet segment EBITDA was dramatically lower.

Answer

President and CEO Ken Lane clarified that the index is intended to demonstrate the stability of ECU values at the trough, which is a key goal of the company's value-focused commercial model. He attributed the EBITDA difference to being at trough demand levels for seven consecutive quarters, a stark contrast to the market ramp-up seen in late 2021. The current strategy is to maintain discipline and value through these prolonged trough conditions.

Matthew DeYoe asked if Air Products bid on the AM Green green hydrogen project in India, and if not, why, given the profile of NEOM, and shared his perspective on the project's economics. He also inquired about the strategy of bidding the Darrow project's construction across multiple EPCs to lock in fixed economics, and its potential effectiveness compared to using a single EPC.

Answer

Eduardo Menezes, Chief Executive Officer, expressed skepticism about the economics of exporting green ammonia from India at reported prices, noting that it implies exporting power at rates lower than local prices, unlike Air Products' NEOM project in Saudi Arabia with its low renewable power costs. He stated that Air Products is not commenting on specific bidding processes. Regarding the Darrow EPC strategy, he explained that the project consists of well-defined blocks (air separation, hydrogen, ammonia plants), allowing for different approaches, and the company is evaluating all options to ensure the best outcome for shareholders and Yara.

Matthew DeYoe asked if Air Products bid on the Uniper/AM Green green hydrogen project in India and, if so, why they didn't win, or if not, why they didn't bid, considering the NEOM profile. He also asked if bidding Darrow's construction across multiple EPCs is a more successful strategy than choosing one.

Answer

Eduardo Menezes, Chief Executive Officer, expressed skepticism about the economics of green ammonia projects in jurisdictions like India, citing high power costs compared to Saudi Arabia's low renewable power prices, and highlighted NEOM as the only real project under construction. Regarding Darrow's EPC strategy, he stated they are exploring different directions and understanding the local market and EPC appetite to ensure the best outcome for shareholders and Yara.

Matthew DeYoe from Bank of America raised concerns about Air Products' European pricing performance relative to Linde, suggesting price underperformance when electricity costs declined, and asked if there's an opportunity to close this gap. He also inquired about the possibility of monetizing the $2 billion sunk cost in the Darrow (Louisiana) project to another company if Air Products decides not to proceed.

Answer

CEO Eduardo Menezes disputed the direct comparison on European pricing, citing the fragmented nature of European markets and differing competitive positions, while affirming that Air Products is actively managing pricing and not conceding ground. Regarding the Darrow (Louisiana) project, Menezes confirmed that if the project were canceled, Air Products would seek to monetize the sunk costs, suggesting that a 50% recovery estimate is reasonable.

Matthew DeYoe asked about Air Products' performance in Europe compared to Linde, specifically regarding pricing and margin differentials, and the potential to close this gap. He also asked if the $2 billion sunk cost in the Darrow (Louisiana) project could be monetized to another company, potentially recovering 50% of the investment.

Answer

Eduardo Menezes, CEO, acknowledged reports on European pricing but suggested that comparisons can vary based on calculation methods. He explained Europe's fragmented market structure influences margin differences and affirmed that Air Products is not giving back price. Regarding Darrow, Mr. Menezes confirmed that if the project is canceled, monetizing the critical equipment and assets is a definite possibility, and a 50% recovery estimate is not unreasonable, though the exact amount would need assessment.

Matthew Deyoe of Bank of America asked for clarification on the company's five-year roadmap, questioning why the NEOM project, which starts in 2027, is shown as a key driver for the 2030 financial profile.

Answer

CEO Eduardo Menezes clarified that the 2030 earnings potential is more significantly driven by the Total Energies contract, which is scheduled to come online in 2030. He confirmed the NEOM project remains on track for a 2027 startup, and the company is actively working to commercialize its green ammonia output.

Matthew DeYoe asked if the company would consider or participate in asset sales or new market entry/expansion in core industrial segments, such as powder coatings, in light of a recent peer merger.

Answer

Chair, President, and CEO Heidi G. Petz stated that the company loves to grow and expand, with an organic focus first. She explained that inorganic activity involves a disciplined portfolio review. While acknowledging that some businesses might be attractive if they 'fell out of the air,' the current focus is on organic growth and competing in the market.

Matthew DeYoe asked if Sherwin-Williams would consider participating in asset sales, such as powder coatings, or new market entry/expansion in core industrial segments, in light of a peer merger.

Answer

Heidi G. Petz, Chair, President, and CEO, affirmed the company's desire for growth and expansion, prioritizing organic focus. She stated that inorganic activity involves a disciplined portfolio review, and while certain businesses would be attractive, the current focus is on organic growth and market competition.

Matthew DeYoe asked for an explanation of the implied fourth-quarter guidance, specifically addressing the expected deceleration in year-over-year growth. He questioned whether this deceleration is primarily due to seasonal factors, regional mix issues, or other factors such as higher costs or a general slowdown.

Answer

Al Mistysyn, SVP of Finance and CFO, stated that consolidated sales for the fourth quarter are expected to be up low to mid-single digits, with the Paint Stores Group also in that range. He attributed the third-quarter beat to stronger exterior gallon sales and noted that the fourth quarter is seasonally smaller, with exterior sales heavily dependent on weather in the Southeast and Southwest. He concluded that there is 'nothing dramatically changed' or to 'read into that' beyond these exterior sales dynamics.

Matthew DeYoe asked for clarification on the implied Q4 2025 guidance, specifically the deceleration in year-over-year growth, and whether it's due to seasonality, regional mix, or higher costs.

Answer

SVP of Finance and CFO Al Mistysyn explained that the Q4 sales guide (consolidated up low to mid, Paint Stores Group up low to mid) reflects normal seasonality. He noted that Q3's stronger exterior gallon sales contributed to beating forecasts, and Q4's smaller sequential size means exterior sales will be dependent on Southeast and Southwest performance. He indicated no dramatic changes are expected, with a similar outlook across other segments.

Matthew DeYoe questioned how the $2 billion Transform to Outperform productivity initiatives will tangibly register, asking where the $400 million in 2025 savings were seen. He also inquired if SG&A will decrease on an absolute basis and which segments will experience the most uplift from the $2 billion program.

Answer

Jim Fitterling, Chair and Chief Executive Officer, explained that 2025 savings primarily came from cost to manufacture, impacting cost of goods sold amidst declining margins. Karen S. Carter, Chief Operating Officer, highlighted that Transform to Outperform is a structural reengineering touching every aspect of the company, focusing on both productivity and growth, with benefits expected across all businesses. She emphasized a dedicated team, governance, and streamlining end-to-end processes, including management layers, to reduce bureaucracy.

Matthew DeYoe questioned the tangibility of Dow's $2 billion Transform to Outperform program, noting that productivity gains in commodity companies often get obscured by market cycles. He asked where the $400 million in 2025 savings registered across line items, particularly in II&I and P&SP fixed costs, and whether the $2 billion program would lead to absolute SG&A reductions and which segments would see the most tangible uplift.

Answer

Jim Fitterling, Chair and Chief Executive Officer, clarified that the $2 billion Transform to Outperform target is two-thirds productivity and one-third growth. He explained that 2025's $400 million savings primarily impacted cost of goods sold amidst margin pressure. Karen S. Carter, Chief Operating Officer, emphasized that the $2 billion program, unlike previous efforts, is larger in scale and speed, targeting all operations for benefits across all businesses by 2028. She detailed a proactive approach to sustain gains, involving a dedicated team, fundamental changes to work processes, governance for accountability, and a focus on resetting cost structure, streamlining processes, and reducing management layers.

Matthew Deo questioned if the polyethylene (PE) demand multiplier has been diluted, citing domestic sales below expectations and GDP, and how to reconcile lower inventories with industry rate reductions. He also asked if U.S. assets might need to de-rate if European capacity rationalization stalls.

Answer

Chair and CEO Jim Fitterling acknowledged that while the PE multiplier might mature to a lower range (e.g., 1.2x GDP), he doesn't believe it has fundamentally shifted. He emphasized that product mix, with Dow's focus on elastomers, functional polymers, and flexible packaging, plays a role. Fitterling also highlighted that the supply chain is currently operating hand-to-mouth with low inventory, and the larger question involves rebalancing trade and bringing sidelined participants back into the market, rather than a fundamental shift in the multiplier.

Matthew Deo questioned if the polyethylene (PE) demand multiplier has been diluted, citing domestic sales growth below GDP, and sought clarification on inventory drawdowns occurring due to lower industry operating rates. He also asked if U.S. assets might need to de-rate if European capacity isn't removed and new capacity continues to be added elsewhere.

Answer

Jim Fitterling, Chair and Chief Executive Officer, clarified that domestic sales and production are distinct. He believes the PE multiplier remains around 1.4x GDP, potentially maturing to 1.2x. He highlighted Dow's product mix, including elastomers and flexible packaging. He asserted that the world has sufficient isocyanates capacity, and the primary issues are trade rebalancing and market participants remaining on the sidelines. He emphasized a 'hand-to-mouth' supply chain with minimal inventory build and concluded that the high-level GDP multiplier has not fundamentally shifted.

Matthew DeYoe asked for a breakdown of corporate cost inflation sources in Q4 2025, including healthcare, and questioned the alignment of compensation with organic growth if it doesn't lead to commensurate EBITDA accretion.

Answer

Chairman and CEO Tim Knavish identified medical claims and incentive compensation as the primary drivers of corporate cost inflation in Q4. Medical claims exceeded expectations due to PPG's pay-as-you-go model. Incentive compensation accruals increased due to stronger Q4 performance in organic growth and cash flow, though total payout was below target. He clarified that long-term executive compensation did not pay out at target. Senior Vice President and CFO Vince Morales added that Q4 medical costs were significantly up, and some peers might have pulled medical expenses into 2025.

Matthew DeYoe asked about the sources of corporate cost inflation, particularly healthcare and compensation, and whether compensation alignment to organic growth makes sense if it doesn't lead to commensurate EBITDA accretion.

Answer

Chairman and CEO Tim Knavish identified medical claims in Q4 2025 (exceeding expectations for PPG, a pay-as-you-go company) and incentive compensation as the primary drivers. He noted that incentive accruals were drawn down in Q4 2024, making the Q4 2025 comparison higher due to stronger organic growth and cash flow, despite not hitting the EPS target. Senior Vice President and CFO Vince Morales reiterated that total incentive payout was still below target and that longer-term executive compensation metrics (TSR, restricted shares) were significantly below target.

Matthew Deyoe from Bank of America asked for a breakdown of the puts and takes on price, raw materials, and cost cuts for the second half, noting that the expected cost savings seemed like they should drive more margin improvement.

Answer

CFO Vince Morales clarified that the previously announced $75 million in restructuring benefits is a full-year target. With approximately $30 million realized in the first half, the second half will see an incremental benefit, but not the full $75 million. He also noted that some incremental pricing actions taken in Q2 are expected to benefit results in the second half.

Matthew Deyoe from Bank of America requested a breakdown of the puts and takes for margins in the second half, questioning why the previously mentioned cost savings didn't seem to be driving a larger margin uplift.

Answer

CFO Vince Morales clarified that the $75 million in restructuring benefits is a full-year target, not an incremental amount for the second half. With about $30 million realized in H1, the remainder will contribute to H2 performance. He also noted that incremental pricing actions taken in Q2 are expected to benefit the second half.

Matthew DeYoe asked about internal discussions regarding a dividend, board receptiveness, and how Axalta's appetite for acquisitions changes given its current valuation.

Answer

Carl Anderson, SVP and CFO, stated that Axalta sees tremendous value in its stock, leading to significant share repurchases, including up to $250 million in Q4. He noted that a dividend is a board decision, likely to be discussed more when the next plan launches. Anderson added that current trading multiples make M&A more challenging, hence the pivot to share repurchases. Chris Villavarayan, CEO and President, emphasized that confidence in achieving the $1.2 billion adjusted EBITDA target for 2026 reinforces the focus on buying back Axalta stock.

Matthew DeYoe of Bank of America questioned why, given the success of the 'A Plan' and a peer's internal focus, now isn't the time for a more structural portfolio move. He also asked how Axalta achieved positive OEM auto pricing amid reports of index-based declines.

Answer

President and CEO Chris Villavarayan responded that the priority was first to strengthen the company's operational and margin foundation, which has been achieved. He indicated a new strategic plan for 2029 will be unveiled in early 2026, addressing portfolio and growth. CFO Carl Anderson explained the positive OEM pricing resulted from about eight discrete, well-executed actions across all regions, noting that even without these one-time benefits, Mobility margins exceeded 18%.

Matthew Deyoe of Bank of America sought clarification on the O&P Americas operating rate guidance and questioned the reasons for the Technology segment's year-over-year EBITDA decline despite higher volumes.

Answer

EVP Kim Foley clarified that the 90% rate was for crackers, while the 85% target is for the entire segment, allowing for mix optimization. CEO Peter Vanacker explained the Technology segment was impacted by dramatically lower licensing demand and a one-time 'low double million' EBITDA hit from an inventory and currency correction on the catalyst side, which is not expected to recur.

Matthew Deyoe of Bank of America asked for a deeper dive on Europe, questioning if on-site customer volumes are at their contractual minimums and what the long-term impact of regional deindustrialization might be.

Answer

CEO Sanjiv Lamba confirmed a bearish short-term view on Europe but noted that all on-site customers below their minimum take-or-pay volumes are paying as contracted. For the long term, he pointed to Germany's €1 trillion investment in defense and infrastructure and the eventual Ukraine rebuild as potential catalysts that could change the industrial outlook, though he remains cautious on the timing.

Matthew Deyoe from Bank of America inquired about the impact of the data center and AI build-out on the flooring business and sought clarification on the expected revenue and EBITDA contribution from recent acquisitions.

Answer

Chairman & CEO Frank Sullivan acknowledged that RPM is seeing benefits from data center construction, particularly in its Fibergrate business, but feels there are more opportunities to capture. VP & CFO Russell Gordon confirmed the annualized revenue for The Pink Stuff is £150 million and Ready Seal is $40 million, noting that acquisition-related deal costs were elevated in Q4 and will continue to be in Q1.