Salvator Tiano

Salvatore Tiano with Bank of America inquired about the reasons for Q4 cash flow from operations before working capital being significantly lower than EBITDA, the drivers behind the massive working capital tailwind in Q4, and its implications for 2026 net working capital. He also asked for the outlook on Q1 ethanol EBITDA and the 2Q market.

Answer

Will Joekel, VP and Treasurer, explained that the full cash receipt for carbon earnings is expected in Q1, and the working capital tailwind resulted from accelerated receivables/inventory from the eco transaction and increased farmer payments. Emre Havasi, SVP of Trading and Commercial Operations, noted that Q1 is seasonally low but in much better shape than last year, citing strong operational efficiency, good production volumes, inexpensive corn, better corn oil prices, and resilient simple crush margins, expressing confidence in a strong Q1 performance compared to the prior year.

Salvator Tiano sought clarification on Q2 cash flows, specifically regarding the inclusion of RIN sales and the timing of proceeds from the Farrellsson JV sale. He also asked for an updated outlook on the carbon capture opportunity and the status of negotiations for credit monetization.

Answer

CFO Phil Boggs confirmed the RIN sales were in operating cash flow as a one-time item and that Farrellsson proceeds were received in Q3. Boggs increased the 2026 carbon EBITDA forecast for Nebraska plants to over $150 million, citing favorable policy changes, with further upside potential. Interim Principal Executive Officer Michelle Mapes added that monetization discussions are progressing well and they expect to realize their proposed credit values.

Salvator Tiano sought clarification on Q2 cash flows, specifically regarding RIN sales and the timing of Farrellsson sale proceeds, and asked for an updated outlook on the carbon capture opportunity given recent regulatory changes.

Answer

CFO Phil Boggs confirmed the non-recurring RIN sales were in operating cash flow and that Farrellsson proceeds were collected in Q3. Boggs also detailed that the 2026 carbon opportunity for Nebraska plants increased from $100M to over $150M annually due to policy changes, with Interim CEO Michelle Mapes adding that monetization discussions are progressing favorably.

Salvator Tiano asked for details on the new commercial strategy with Eco-Energy, questioning if it signaled an end to Green Plains' own trading operations and how realizations would track margins. He also sought clarification on corporate liquidity and the rationale for a short-term loan from Ancora.

Answer

Imre Havasi, SVP of Trading, clarified that Green Plains retains all pricing and risk management decisions, with Eco-Energy acting as a marketing and logistics partner to leverage scale and improve basis. Phil Boggs, an executive, added the partnership improves working capital by approximately $50 million. Mr. Boggs also explained the Ancora loan demonstrates shareholder support and provides flexibility as the company executes its cost reduction and asset sale plans.

Salvator Tiano of Bank of America asked about the reasons for low high-protein production volumes, the timing of the major SG&A restructuring, and the current assessment and outlook for the Clean Sugar initiative.

Answer

Todd Becker, President and CEO, attributed lower protein production to planned downtime at Mount Vernon and a strategic 'rebaselining' at Wood River ahead of carbon capture startup. He explained the SG&A cuts are timed with the company's shift from a costly innovation phase to commercialization. He noted the Clean Sugar contribution is delayed by a wastewater issue but the core technology is proven.

Salvator Tiano questioned the status of the Blue Blade Energy venture for sustainable aviation fuel (SAF) and asked for the company's outlook on 2025 ethanol exports.

Answer

CEO Todd Becker stated that Green Plains has decided not to proceed with its initial catalyst for Blue Blade, opting to focus on being a key supplier of low-carbon alcohol to other, faster-to-market SAF technologies. He expressed a bullish outlook on 2025 exports, citing increased global blend rates, strong demand, and the competitiveness of U.S. ethanol.

Salvatore Tiano sought clarification on the $190 million synergy figure for 2026 and questioned why the full-year guidance, even at the high end, appears lower year-on-year despite these synergies and a seemingly better operating environment. He also asked about the implied Q1 EPS of $0.80, noting it would be the lowest in a long time, and how the second half EPS of around $2.70 is achieved without major improvements in forward curves, and the potential for higher EPS with RVOs.

Answer

CFO John Neppl explained that the lower year-on-year guidance reflects the full-year impact of Viterra's outstanding shares, interest costs, and depreciation, along with some parts of the business not yet performing optimally. CEO Greg Heckman clarified that $120 million of the $190 million synergy is incremental for 2026. Regarding Q1 EPS, John Neppl confirmed it would be a light quarter due to RVO delays and a very spot transactional market. Greg Heckman added that Q4 execution was strong despite market challenges, and this environment is carrying into Q1, with Australian harvest delays also impacting.

Salvatore Tiano questioned the apparent discrepancy between the $190 million in expected 2026 synergies (implying significant EPS growth) and the lower year-on-year EPS guidance, asking if this implies a material decline before synergies and why. He also asked about the implied EPS cadence ($0.80 in Q1, $1.15 in Q2, $2.70 in H2), questioning why Q1 would be so low despite better market conditions, and if RVO clarity could push H2 EPS significantly higher.

Answer

CFO John Neppl clarified that the $190 million synergy includes a full year impact of Viterra's outstanding shares, interest costs, and depreciation, which offset some of the synergy benefits. He also noted that parts of the business, particularly grains and merchandising, are not yet performing at their full potential. CEO Greg Heckman specified that $120 million of the $190 million is incremental to 2025. Regarding EPS cadence, CFO John Neppl confirmed the Q1/Q2 breakdown and noted that Q1 is expected to be light due to delayed RVO resolution and spot market conditions. He stated that while Q1 is largely baked, RVO clarity could provide upside for the balance of the year. CEO Greg Heckman added that Q1 faces lower average margins in soy and soft crush compared to Q4, and the Australian harvest delay also impacted Q1.

Salvatore Tiano asked for clarification on Viterra's impact on Bunge's Q3 EPS and full-year guidance, specifically whether it was accretive or dilutive, and how much of the Q3 EBIT growth was attributable to Viterra versus legacy Bunge. He also inquired about the timing and materiality of synergy capture from the $341 million target.

Answer

CEO Gregory Heckman emphasized running the combined entity as one company to maximize profitability, noting Viterra's strong footprint in soy and soft crush. CFO John Knepel stated Viterra was mildly dilutive to the full year but contributed well in Q3, particularly in processing, with grain merchandising expected to improve in Q4. Regarding synergies, Mr. Knepel expects a bigger jump in benefits in 2026, peaking in 2027, with early actions in Q3/Q4 2025. Mr. Heckman added that commercial synergies, previously unquantified, are just beginning to build.

Salvatore Tiano from Bank of America sought clarification on Viterra's impact on Bunge's Q3 2025 EPS and full-year guidance, specifically whether it was accretive or dilutive, and asked about the timing and materiality of synergy capture from the acquisition.

Answer

Gregory Heckman, Bunge's Chief Executive Officer, emphasized running the combined entity as one company to maximize profitability. John Knepel, Chief Financial Officer, noted that Viterra was mildly dilutive to the full year forecast but contributed well in Q3, particularly in soy and soft processing. He added that while some synergy benefits might be seen by year-end 2025, a bigger jump is expected in 2026, with a significant step change in 2027, and commercial synergies are just beginning to build.

Salvator Tiano from Bank of America requested an update on key organic growth projects, including Morristown and Destrehan, and asked for an outlook on U.S. soybean meal supply and demand dynamics.

Answer

CFO John Neppl provided timelines, stating the Morristown plant is expected to go live in mid-Q4 2025, the Destrehan crush project in late Q2 2026, and the West Sawn plant in early 2027. CEO Greg Heckman addressed the meal outlook, citing strong demand from the animal protein sector and enhanced U.S. export competitiveness as key supportive factors.

Salvator Tiano inquired about the Viterra acquisition's approval timeline, the rationale for terminating the CJ Selecta deal, and a breakdown of processing margins for soy and canola across different regions in Q1.

Answer

CEO Greg Heckman expressed confidence in the Viterra deal's eventual approval, citing constructive regulatory dialogue. CFO John Neppl clarified the CJ Selecta termination resulted from passing the long-stop date without all approvals. Heckman and Neppl then detailed that while Q1 processing margins were strong, especially in Europe, the outlook for Q2 is softer, and North American softseed margins were a key headwind year-over-year.

Salvator Tiano sought clarity on the financial impact of the Viterra and CJ Selecta acquisitions, including potential first-year dilution from Viterra, and inquired about capital allocation plans for buybacks and the revised, lower 2025 CapEx.

Answer

CFO John Neppl stated that a precise 2025 impact for Viterra is pending post-close analysis but reaffirmed that CJ Selecta is expected to generate mid-teen returns. He confirmed $800 million remains on the share buyback authorization. The lower 2025 CapEx forecast is a result of both pushing some project timelines into 2026 and deciding to forego other planned projects.

Salvator Tiano asked for comments on a report about Bunge slowing soybean purchases due to lower fuel demand and inquired about the demand outlook given changes in tax credits. He also questioned the supply availability of low-CI feedstocks.

Answer

CEO Greg Heckman refuted the report, stating that farmer purchases remain strong. He acknowledged U.S. policy uncertainty but highlighted positive global biofuel trends in Brazil and Indonesia. He expressed confidence that U.S. policy will be resolved, supporting feedstock demand. CFO John Neppl added that potential changes to the 45Z tax credit could create a more level playing field for U.S. agricultural feedstocks versus imported ones.

Salvatore Tiano of Bank of America asked if the high end of ADM's 2026 guidance ($4.25 EPS) implies a specific quarterly EPS uplift from RVO benefits starting in July, and whether this could lead to a full-year run rate EPS in the low fives for 2027.

Answer

Executive Vice President and CFO Monish Patolawala explained that it's difficult to predict exact numbers due to multiple factors influencing the high end of the guidance, including crush margins, consumer demand strength, and ethanol margins. He emphasized ADM's long-term growth pillars and commitment to shareholder value but refrained from providing specific quarterly or 2027 EPS predictions due to market uncertainties.

Salvatore Tiano of Bank of America asked if the high end of ADM's 2026 guidance ($4.25 EPS) implies a new quarterly EPS run rate of $1.30-$0.30 starting in July, and whether this suggests a 2027 EPS in the low fives.

Answer

EVP and CFO Monish Patolawala stated that it's difficult to predict exact numbers due to multiple influencing factors beyond just crush margins, including consumer demand and ethanol margins. He highlighted ADM's five long-term growth pillars and commitment to shareholder value but refrained from providing specific 2027 EPS predictions.

Salvatore Tiano asked about the potential for the U.S. to become a net importer of soybean oil next year, considering trade dynamics and higher demand if RVOs are approved as proposed. He also inquired about the potential impact on domestic soybean oil prices, given existing tariffs, should such a scenario unfold.

Answer

Juan Luciano, Chairman and CEO of ADM, acknowledged that ADM runs scenarios for such possibilities. He confirmed that enacted RVO policies would lead to increased crushing and higher soybean oil demand, which the U.S. currently has the beans to address. However, he noted that potential large exports to China could alter the equation. Mr. Luciano explained that markets tend to adjust, with strong crush expected in Argentina and Brazil. If U.S. demand exceeds internal supply, prices would rise, attracting imports of soybean oil. He emphasized that ADM's operations are prepared to handle increased export commitments and domestic policy demands, expressing optimism for 2026 and 2027.

Salvator Tiano asked about the potential trade dynamics resulting from higher demand due to proposed RVOs, specifically whether the U.S. could become a net importer of soybean oil and the potential impact on domestic soybean oil prices for ADM as a domestic producer.

Answer

Juan Luciano, Chairman and CEO, ADM, acknowledged that if U.S. demand for soybean oil, driven by RVOs and potential China exports, exceeds internal supply, prices would rise, attracting imports, which would be a significant policy-driven change from the current export position. He emphasized that ADM is prepared to crush very hard and supply domestically before imports become necessary. He reiterated ADM's readiness and optimism for 2026 and 2027 due to improved operations, cash, and cost management.

Salvator Tiano of Bank of America asked for clarification on the financial benefit of the Decatur plant restart and questioned the potential impact on ADM's high-fructose corn syrup (HFCS) business from reports of major customers potentially shifting to cane sugar.

Answer

CEO Juan Luciano clarified the Decatur plant outage represented a $20-25 million quarterly cost headwind that will now begin to reverse. Regarding HFCS, he stated that ADM has seen no changes in order patterns from its key, long-term beverage partners. He emphasized that the company manages its wet mill portfolio dynamically across many products and has a long history of adapting to customer needs, positioning them to navigate any potential shifts in the sweetener market.

Salvator Tiano of Bank of America asked for clarification on the financial benefit of the Decatur plant restart and questioned the potential risk to the high-fructose corn syrup (HFCS) business from major customers possibly shifting to cane sugar.

Answer

CEO Juan Luciano clarified the Decatur plant shutdown created a $20-$25 million per quarter cost headwind, which will be eliminated on a run-rate basis from Q4 onward. Regarding HFCS, he stated that ADM has seen no changes in order patterns from key customers and is not planning for any volume shifts. He highlighted ADM's long-term, flexible relationships and the diverse product mix within the stable Carb Solutions business. CFO Monish Patolawala noted that rising insurance and utility costs could be partial offsets.

Salvator Tiano sought to reconcile the Q4 Nutrition results, pointing out that adjusted profits appeared significantly worse year-over-year despite positive commentary on volumes and pricing, and asked about the drivers of the lower margins.

Answer

CEO Juan Luciano explained that the primary headwind remains the Specialty Ingredients business, which is suffering from continued inefficiencies from the Decatur East downtime, higher insurance costs, and lower pricing for texturants. He noted the year-over-year comparison was difficult because the company was selling from existing inventory in Q4 2023, which masked the full impact of the downtime in that period.

Salvator Tiano requested more detail on the comment about China increasing local commodity production and its impact on trade. He also asked about the potential bottom-line impact from the recent depreciation of the Brazilian real.

Answer

Chair and CEO Juan Luciano clarified his comment was primarily about corn, as China's policy to incentivize local production has reduced its corn import needs. He noted soybean imports remain steady. Regarding the Brazilian real, Luciano explained that the primary impact of currency devaluations is on the pace of farmer selling, as a weaker currency can make farmers in the region more reluctant to sell their crops.

Salvator Tiano sought clarification on Fibers volume, specifically how tow volume bounce led to a 19% decline, the typical volume bounds in contracts, and the net impact of flat volumes year-on-year with continued destocking. He also questioned why variable compensation would be a significant headwind given cost reductions and earnings growth targets.

Answer

Mark Costa (Board Chair and CEO) clarified that tow volumes are expected to be stable year-over-year, with some textile growth. He explained that Q1 2024 saw customers buying in contract ranges, but later shifted to minimums and destocking. For 2025, Q1 is modestly lower, requiring more buying later in the year. Willie McLain (EVP and CFO) explained that lower variable comp expense in 2024 (due to not meeting initial high expectations) means a reset to normal levels in 2025 will be a $50M-$75M headwind, assuming delivery on current business scenarios.

Salvator Tiano asked for clarification on fibers volume, specifically how tow volumes could be down 19% given contract bounds, and what 'stable volumes year-on-year' means for this year given continued destocking. He also inquired why variable incentive compensation would be a significant headwind despite cost cuts and expected earnings growth.

Answer

Mark Costa (Board Chair and CEO, Eastman Chemical Company) clarified that full-year tow volumes are expected to be stable to last year, with additional textile volume growth. He explained that last year's Q1 started with customers buying in contract ranges, but later shifted to minimums due to destocking and unmet growth commitments. This year's contracts, at minimums, are stable to last year's realized volumes, with Q1 being modestly lower. Willie McLain (EVP and CFO, Eastman Chemical Company) explained that variable comp expense was lower in 2025 due to unmet expectations, and resetting to expected performance in 2026 would result in a $50M-$75M headwind.

Salvator Tiano asked about structural versus cyclical headwinds, specifically regarding competitive pressure from China in areas like coating additives and interlayers, and if any chemical chains face structural supply issues. He also inquired about Eastman's commitment to share buybacks for next year.

Answer

Board Chair and CEO Mark Costa clarified that fibers' textiles business faces cyclical demand changes, not structural competition, and Eastman is confident in its sustainable Naya yarn. He acknowledged some share loss in lower-value architectural interlayers and intense competition in coalescence from China, but emphasized that most of AM and AFP face strong innovation and competitive positions, with current dynamics driven by inflation, interest rates, and trade wars, not significant new Chinese specialty capacity. EVP and CFO William Thomas McLain stated Eastman completed $50 million in Q3 buybacks, keeping net debt flat. He confirmed confidence in the 2026 dividend and that remaining cash would be used, with an update on buyback range in January.

Salvator Tiano asked if the headwinds in the fibers business are cyclical or structural, and whether Eastman is seeing more structural supply coming from China in other chemical chains like coating additives or interlayers that could lead to lower earnings and volumes.

Answer

Mark Costa, Board Chair and CEO, clarified that textiles in fibers face cyclical demand changes, not structural, with confidence in long-term growth due to sustainability. He acknowledged some share loss in lower-value interlayers (architectural) and intense competition in coalescence from China but stated that for most of AM and AFP, innovation and competitive positions are strong, with no signs of significant new Chinese capacity in specialties. William Thomas McLain, EVP and CFO, also discussed buybacks, stating the company is disciplined and will update in January.

Salvator Tiano sought more detail on the weakness in the automotive end market, noting a contrast with commentary from some auto suppliers, and asked whether the weakness was concentrated in aftermarket films or OEM products like interlayers.

Answer

Chairman and CEO Mark Costa clarified that the aftermarket business was solid in Q2. The weakness was primarily in products sold to OEMs, such as interlayers and automotive coatings. He attributed this to auto producers moderating production rates in anticipation of tariffs impacting consumer demand in the second half of the year. Consequently, Eastman has revised its full-year auto market outlook from flat to low-single-digits down.

Salvator Tiano from Bank of America asked for clarity on the Kingsport plant's earnings contribution timing and what portion is already secured. He also questioned the capital allocation plan, specifically the Longview project's CapEx and the potential for share buybacks to exceed the stated target.

Answer

Board Chair and CEO Mark Costa stated the Kingsport ramp-up is on track, with demand split roughly half-and-half between existing business growth and new business being closed. Executive Vice President and CFO William McLain confirmed the Longview project is the largest component of the $700-$800M CapEx plan (net of DOE grants) and affirmed the company has financial flexibility and will not let cash sit idle, suggesting upside potential for shareholder returns.

Salvator Tiano of Bank of America questioned the timing of the Longview plant's final investment decision (FID), asking what factors prompted the approval now. He also asked if the positive operating leverage seen in 2024 would continue to improve in 2025.

Answer

CEO Mark Costa explained the Longview FID was driven by a combination of securing a large anchor customer (Pepsi), finalizing engineering plans that show an attractive return, and receiving confirmation of government funding. CFO Willie McLain added that the company expects further positive operating leverage in 2025, highlighting the contribution from the Kingsport methanolysis plant as it moves to more stable and higher-uptime operations compared to 2024.

Salvator Tiano followed up on divestitures, specifically asking about the strategic importance of the methanol joint venture, and inquired about the proportion of nylon volumes/sales/profit derived from standard grades versus compounded value-added products.

Answer

President and CEO Scott Richardson declined to comment on specific JVs but reiterated focus on value creation for all joint ventures. He stated that almost all profit in the nylon business is created by compounds, emphasizing that value is derived from the compounding step, regardless of whether the polymer is made or bought.

Salvatore Tiano followed up on divestitures, asking about the strategic importance and potential monetization of the methanol joint venture, and sought clarification on the proportion of nylon volumes, sales, or profit derived from standard grades versus compounded value-added products.

Answer

Scott Richardson, President and CEO, declined to comment on specific joint ventures but emphasized that Celanese's focus on methanol is about leveraging methanol and acetic acid, and that JVs can be harder to monetize. He reiterated that the company prioritizes value creation. Regarding nylon, Mr. Richardson stated that almost all profit in that business is generated by compounds, with the key being optimized economics for the polymer (whether made or bought) as value is created through the compounding step.

Salvator Tiano from Bank of America asked for a framework for Q4 earnings relative to Q3, considering seasonality and inventory impacts, and inquired about the strategy for addressing 2026-2027 debt maturities with available liquidity.

Answer

CEO & President Scott A. Richardson noted that visibility is very short, making Q4 hard to predict, but suggested it could be similar to or better than Q3. SVP & CFO Chuck Kyrish clarified that the plan is to pay down 2026-2027 debt maturities with free cash flow and divestiture proceeds, not by relying on the revolver, though it provides flexibility.

Salvator Tiano from Bank of America asked for an outlook on Q4 earnings relative to Q3, considering factors like seasonality and inventory, and inquired about the company's ability to address upcoming debt maturities with its available liquidity.

Answer

CEO & President Scott A. Richardson noted that visibility is very short, making Q4 hard to predict, but suggested Q4 could be similar to or better than Q3 as normal seasonality hasn't been observed. SVP & CFO Chuck Kyrish clarified that the company plans to pay down debt maturities through 2027 using free cash flow and divestiture proceeds, not by relying on its recently extended revolver, which is intended for short-term bridging if needed.

Salvator Tiano of Bank of America asked for an outlook on Q4 earnings, considering factors like inventory and seasonality. He also inquired about the balance sheet and whether the new revolver and cash flow could fully address debt maturities through 2027.

Answer

CEO Scott A. Richardson stated that visibility is very short, making Q4 hard to predict, but suggested it could be similar to or better than Q3 as normal seasonality is absent. SVP & CFO Chuck Kyrish clarified that the company plans to pay down debt through 2027 using free cash flow and divestiture proceeds, not by relying on the revolver, which is intended for short-term bridging purposes only.

Salvator Tiano asked to reconcile Celanese's strong acetate tow demand with a competitor's comment on expanding destocking. He also asked about the solidity of the Q2 vinyls improvement and the potential Q3 tailwind from EM price hikes.

Answer

CEO Scott Richardson explained that the acetate tow dynamic is specific to Celanese, as their contracts now have more seasonality, causing a Q1 dip and a Q2 rebound. He expressed confidence in the Q2 vinyls improvement due to lean inventories and favorable pricing arbitrage. On the Q3 EM price hikes, he declined to quantify the potential impact to maintain negotiating leverage but stressed that reversing the negative pricing trend is a key priority.

Salvator Tiano asked for clarification on the various cost savings buckets and whether there was upside from previously delayed synergies, and also inquired about the auto market opportunity in China versus the West.

Answer

CEO Scott Richardson confirmed that Celanese achieved $250 million in synergies by year-end 2024, with more planned for this year. He reiterated that reversing margin compression is critical to realizing the full value of these actions. Regarding China's auto market, he described it as a huge opportunity, as the technical requirements for EVs are becoming more demanding, playing to Celanese's high-performance portfolio. He noted commercialization times in China are much faster (6-12 months) than in the West.

Salvator Tiano of Bank of America questioned the company's forecasting process in light of recent market developments and asked if Acetyl Chain earnings should be expected to decline in 2025.

Answer

COO Scott Richardson acknowledged that in a volatile market, the company must continually adjust its forecasting models. He stated it was too early to make assumptions about 2025 Acetyl Chain performance, as the outcome will depend heavily on demand dynamics, particularly in Asia.

Salvatore Tiano asked for clarification on what 'reconfiguration of the business' means within the phosphate strategic review, specifically if it involves shifting to feed/food markets or purified acid for LFP batteries, and also inquired about Nutrien's phosphate reserves.

Answer

Ken Seitz, President and CEO, confirmed that 'reconfigured operations' could encompass everything described, including assessing life of mine at White Springs and Aurora, exploiting remaining reserves, and considering additional reserves in the area. He reiterated that the company has improved reliability, reduced costs, and diversified its product mix in phosphate, but the segment still contributes only 6% of EBITDA. More details will follow the review.

Salvatore Tiano asked for clarification on the 'reconfiguration' option within the phosphate strategic review, specifically if it involves shifting product focus (e.g., feed/food, purified acid for LFP batteries), and inquired about Nutrien's phosphate reserves.

Answer

Ken Seitz, President and CEO, confirmed that 'reconfigured operations' encompasses the possibilities described, such as assessing the life of mine at White Springs and Aurora, optimizing the exploitation of remaining reserves, and considering additional reserves in the area. He reiterated that the goal is to maximize free cash flow, and the review is in its early stages.

Salvator Tiano asked about any other major or discrete items, beyond growth acceleration, that IFF foresees affecting its income statement or cash flow in 2026 compared to 2025.

Answer

CFO Michael DeVeau noted that IFF is in the middle of 2026 planning but highlighted one key item: the divestiture of Pharma Solutions, which closed on May 1st, 2025. This means the first four months of 2025, which included $369 million in sales and $76 million of EBITDA from Pharma Solutions, will not recur in 2026, impacting year-over-year comparisons for the first half. He stated that other items are expected to be normal course operations.

Salvator Tiano inquired about the acceleration of growth in 2026 and any other major or discrete items that IFF foresees affecting its income statement or cash flow next year compared to 2025.

Answer

CFO Michael DeVeau stated that IFF is in the middle of the 2026 planning process and will provide full guidance in February. He reminded listeners that the Pharma Solutions transaction closed on May 1st, 2025, meaning its contribution of approximately $369 million in sales and $76 million of EBITDA from the first four months of 2025 will not be present in 2026. He noted no other big discretionary items to flag at this point.

Salvator Tiano asked what IFF is hearing from customers about potential product reformulations in response to ongoing regulatory discussions in the U.S.

Answer

CEO J. Erik Fyrwald responded that customers have an 'even stronger desire' for cleaner labels and innovations that reduce sugar, salt, and fat. He noted that this trend, amplified by movements in the U.S. and labeling laws in regions like Latin America, is creating significant reformulation opportunities that are 'very good for IFF.'

Salvator Tiano of BofA Securities asked about IFF's exposure to the colors market amid discussions around artificial dyes and whether the company plans to expand its presence in natural colors, either organically or via M&A.

Answer

CEO Erik Fyrwald clarified that colors represent a small part of the Taste portfolio, at less than $50 million in sales, and that IFF's portfolio is entirely composed of natural colors. Therefore, any ban on artificial dyes would be a positive for the company. He stated there are no plans for major acquisitions in this area but noted the broader trend toward 'cleaner labels' presents a significant opportunity across IFF's food portfolio.

Salvator Tiano from Bank of America asked to bridge the disconnect between IFF's strong organic growth and slower end-market demand. He specifically questioned the sustainability of the exceptionally strong growth in the Scent division, particularly in Fine Fragrance.

Answer

CFO Glenn Richter attributed part of the growth to a mathematical bounce-back from last year's destocking. For Fine Fragrance, he cited a post-COVID category explosion driven by new brands, social media, and digital channels. He stated that while this trend should continue to some degree, IFF is also actively winning market share through investments in new geographies, perfumers, and creative centers.

Salvator Tiano inquired about the significant increase in working capital in Q3, the reasons behind it, whether Q3 operating rates in core alkaline were better than expected, and the implications for Q4 operating rates.

Answer

Ken Lane, President and CEO, explained that a $40 million EBITDA penalty in Q4 would free up $150 million in cash, addressing working capital built up across businesses, including Winchester and chemical turnaround timing. Todd Slater, CFO, added that unforeseen payment delays from the U.S. government for the Lake City military business, received in October, were the primary driver for the Q3 working capital increase.

Salvador Tiano asked about the significant increase in Olin's working capital in Q3, its implications for Q3 operating rates, and what this means for Q4 operating rates compared to previous years.

Answer

President and CEO Ken Lane explained that a $40 million EBITDA penalty in Q4 would free up $150 million in cash, addressing working capital built up from earlier demand expectations and turnaround timing. CFO Todd Slater added that unforeseen payment delays from the U.S. government for the Lake City military business were the primary driver for the Q3 working capital increase, with payments subsequently received in October.

Salvator Tiano from Bank of America asked about the decision process to close the European maleic anhydride facility after receiving interest, and also inquired about the long-term future of the European MDI footprint, specifically the Rotterdam plant.

Answer

Chairman, President & CEO Peter Huntsman explained the maleic facility was deemed unsellable due to its lack of competitiveness and reliability, making closure the only option. He expressed confidence in the Rotterdam MDI facility, calling it one of the lowest-cost producers in Europe and affirming plans to continue its operation.

Salvator Tiano asked how Huntsman is managing its MDI system and upstream plants like Geismar amid reduced demand, specifically referencing a previously restarted unit. He also requested an outlook for the PO/MTBE joint venture in China and any clarity on the dividend for 2026.

Answer

CEO Peter Huntsman stated that with tariffs now in place, he expects demand for domestically produced MDI to pick up, creating an opportunity for greater capacity utilization at Geismar, not less. He also noted ongoing cost actions in the downstream systems business in Europe. CFO Phil Lister addressed the JV, explaining that MTBE margins are near breakeven, leading to lower equity income in 2025. He said it was too early to guide on 2026 dividends from the JV due to the market's volatility.

Salvator Tiano asked about the real-time effects of China tariffs, how antidumping duties might interact with them, and whether Huntsman would consider divesting strong assets like Advanced Materials to unlock value.

Answer

CFO Phil Lister clarified that the China MDI tariff is now 40% and antidumping duties are typically additive. CEO Peter Huntsman reiterated that the company's M&A strategy is to become more like its Advanced Materials division, not to sell it, valuing its stable, high-margin profile.

Salvator Tiano asked for an update on the new Geismar splitter's EBITDA contribution and its outlook for 2025. He also inquired about Huntsman's end-market exposure in China, particularly how it's affected by stimulus measures that don't seem to be boosting new housing construction.

Answer

EVP and CFO Phil Lister stated that realizing the Geismar splitter's full benefit requires a recovery in consumer-facing markets like furniture, projecting a $10-15 million year-over-year benefit in 2025. Chairman, CEO and President Peter Huntsman noted that in China, Huntsman is strong in automotive and infrastructure, with residential housing being a smaller but growing market. A housing recovery there would be a significant catalyst.

Salvator Tiano asked for 2025 guidance, the reasons for the delay with CapFormer line 1, why this delay pushed back the EBITDA breakeven target, and the rationale behind their manufacturing process (buying PET shapes vs. extruding) and its impact on gross margins.

Answer

The company is not providing specific 2025 guidance due to timing variability but offered a 2026 revenue range. The line 1 delay was due to adding a "knurling" feature based on customer feedback, which had a cascading effect on the schedule and breakeven timeline. They are initially buying PET shapes due to the long lead time for extruders but plan to vertically integrate later; they can still achieve good margins without it, with the target mid-double-digit margin being a medium-term goal for the overall business.

Salvator Tiano from Bank of America asked why Origin Materials did not provide specific 2025 revenue or EBITDA guidance. He also questioned the specific issues that caused the delay with CapFormer Line 1 and why this pushed the EBITDA breakeven target back by at least six months. Lastly, he inquired about the strategy of sourcing PET sheets instead of extruding them in-house and how the company can achieve its targeted mid-double-digit gross margins without that vertical integration.

Answer

CFO and COO Matt Plavan stated that specific 2025 guidance was withheld due to significant variability in the timing and volume of customer onboarding in Q3/Q4, opting instead to provide a 2026 revenue range of $110M-$140M. CEO John Bissell attributed the Line 1 delay to a late-stage decision to add a 'knurling' feature based on key customer feedback. He clarified the EBITDA breakeven shift to 'sometime in 2026' reflects forecasting uncertainty rather than a definitive six-month delay. Bissell also explained that sourcing PET sheets is a near-term tactic to accelerate production, as extruders have long lead times, and that the business can achieve strong margins even before full vertical integration.

Salvator Tiano requested more detail on the product mix shift affecting HIP guidance, questioned the conservatism of the forecast given past performance, and asked about competitive pressures in the Pipe & Fittings business.

Answer

EVP and CFO Steve Bender confirmed the guidance reflects a conservative approach, consistent with past practices, especially given the flat housing start forecast. He noted that the broad product portfolio and geographic footprint allow Westlake to manage competitive pressures and meet demand effectively across different regions, highlighting the strength of Pipe & Fittings and siding.