Vincent Andrews

Vincent Andrews inquired about the increase in CapEx for 2026, what triggered this change, and the company's confidence that it won't extend into 2027 and beyond. He also asked about the reasons for excess phosphate rock inventory and plans to reduce it.

Answer

President and CEO Bruce Bodine explained the 2026 CapEx increase is due to an unusual confluence of waste disposal projects (gypstacks, clay settling areas, tailings dam) hitting simultaneously, but confirmed $1.5 billion is a ceiling and expressed confidence in trending down to $1 billion by 2030. He stated excess phosphate rock inventory resulted from lower-than-expected fertilizer production in 2025, leading to less consumption of mined rock, and expects reduction as production rates improve. EVP and CFO Luciano Siani Pires added that raw material inventory increased by $346 million, split between sulfur/ammonia and rock, with $170-$180 million potential release from excess rock.

Vincent Andrews questioned the increase in CapEx for 2026, asking what triggered the need for it and the confidence that it won't extend into 2027 and beyond. He also asked about the accumulation of excess phosphate rock inventory and plans to reduce it.

Answer

President and CEO Bruce Bodine explained that the CapEx increase is due to an unusual confluence of waste disposal projects (gypstacks, clay settling areas, tailings dam) hitting simultaneously in 2026, but expressed confidence in the long-term trend down to $1 billion by 2030. He noted that excess phosphate rock inventory accumulated because fertilizer production didn't consume as much as anticipated due to asset reliability work, and it will be reduced as run rates improve. EVP and CFO Luciano Siani Pires added that raw material inventory increased by $346 million, with roughly half being excess rock inventory.

Vincent Andrews of Morgan Stanley sought to clarify the 'Asset Health' target on Slide 8, asking if the 85-95% range reflects planned turnaround timing and if it assumes that significant unplanned outages will be minimal going forward.

Answer

Bruce Bodine, CEO, President & Director, confirmed this interpretation. He stated the 85-95% range accounts for natural asset degradation between planned turnarounds and includes allowances for normal, minor unplanned downtime. He affirmed the expectation that the extraordinary unplanned outages recently experienced will not be a recurring issue now that the major reliability work is complete.

Vincent Andrews asked about any material headwinds or tailwinds to cash flow from operations beyond working capital and requested a potential range for free cash flow conversion of EBITDA.

Answer

EVP and CFO Luciano Pires stated he anticipates no abnormal components in cash flow this year. While declining to give a specific conversion percentage, he guided that incremental EBITDA, excluding the guided working capital increase, should convert to free cash flow after taxes.

Vincent Andrews asked for the CFO's perspective on the current capital expenditure level, its future trajectory, and whether there were opportunities for working capital optimization, particularly within the Fertilizantes business.

Answer

Luciano Pires, EVP and CFO, stated he is 'not happy' with the current CapEx level and aims to reduce sustaining CapEx by $200-$300 million over the next few years. He also noted that working capital will be a use of cash in 2025 due to business growth, with a build-up expected in the second half of the year.

Speaking on behalf of Vincent Andrews, Justin Pellegrino asked for commentary on the unmet phosphate demand in India, the outlook for government subsidies, and the potential volume that could shift from 2024 into 2025.

Answer

Jenny Wang, EVP of Commercial, explained that strong farmer demand for DAP in India was unmet due to unfavorable importer economics, caused by a large gap between low domestic prices and high international prices that government subsidies did not cover. She estimated this resulted in a 2-million-ton shipment reduction in 2024, creating significant pent-up demand for 2025. Management expects either farmer prices or subsidies to be adjusted next year to address the shortage.

Vincent Andrews from Morgan Stanley inquired about residential HVAC customers reducing production, asking if it was leading to destocking from Chemours and the volumetric contribution of different TSS business parts.

Answer

President and CEO Denise Dignam stated that inventory was drawn down in Q4, expecting some replenishment in H1, along with the HFC to HFO transition mix and aftermarket installations, projecting solid double-digit growth for TSS in H1. Andrews also asked SVP and CFO Shane Hostetter about the cash flow target of at least 25% conversion, specifically what factors might inhibit reaching 40-50% and important lines on the cash flow statement. Hostetter confirmed the 'at least 25%' target, acknowledging that inventory reduction (DIOs improvement), navigating DPO, efficient collections, and increased CapEx for planned maintenance would be key factors, while committing to reducing excess inventory.

Vincent Andrews asked about residential HVAC customers reducing production, whether it's leading to destocking from Chemours, and the current mix of the TSS business (residential vs. data centers/aftermarket) and their volumetric contributions. He also questioned the factors inhibiting Chemours from achieving higher free cash flow conversion (40-50%) beyond the 25% target, asking for a reconciliation of important cash flow statement lines.

Answer

CEO Denise Dignam stated that inventory was drawn down in Q4 and is expected to return in H1, along with the HFC to HFO transition mix and aftermarket installations, anticipating solid double-digit growth for TSS in H1. CFO Shane Hostetter affirmed the 'at least 25%' FCF target, noting that inventory reduction (DIOs), navigating cash conversion (DTO, collections), and increased CapEx for planned maintenance are key focus areas and factors impacting higher conversion. He acknowledged headwinds from mandated high-grade ore contracts but expects inventory reductions elsewhere.

Representing Vincent Andrews of Morgan Stanley, an analyst asked for the assumptions behind the H2 2025 free cash flow conversion guidance of 60-80%, specifically the drivers of the range. He also sought clarification on the 'lower investments in 2H' comment, asking if this was a change from prior plans.

Answer

SVP and CFO Shane Hostetter explained the free cash flow conversion range is influenced by both the execution of working capital unwind initiatives and the level of earnings achieved within the guidance range. He clarified that 'lower investments' refers to reduced working capital needs in H2 compared to H1 and a fine-tuned, slightly lower full-year capital expenditure plan, reflecting a focus on only essential and strategic spending.

Vincent Andrews asked for quantification of the non-recurring benefits in Q4 from inventory true-ups in APM and cost benefits in TSS, including what triggered them. He also inquired about the destination of Chinese TiO2 exports that are no longer going to Europe and Brazil.

Answer

CFO Shane Hostetter quantified the one-time benefits in APM and TSS at approximately $5-$10 million, which were primarily related to inventory valuation and reserve changes. He noted these were offset by a $10-$15 million one-time increase in corporate costs for legacy asbestos matters. CEO Denise Dignam stated that the displaced Chinese TiO2 exports are now primarily going to Asia and the Middle East.

Vincent Andrews sought more detail on Freon inventory levels and the potential range of pricing outcomes in 2025, questioning how macroeconomic factors like interest rates might impact demand and pricing.

Answer

CFO Shane Hostetter reiterated that elevated HFC inventories are the primary factor keeping Freon prices low and that this dynamic is expected to continue into 2025. While lower interest rates could help demand, inventory levels remain the key pricing driver. CEO Denise Dignam emphasized that the regulatory-driven transition under the AIM Act, which mandates quota reductions, provides a strong foundation for continued double-digit growth in Opteon, partially insulating it from economic cycles.

Vincent Andrews inquired about current customer inventory levels and behavior, particularly concerning ESS shipments outpacing installations, and the outlook for working capital items in 2026 given rising prices.

Answer

Kent Masters, Chairman and CEO of Albemarle, stated that lithium inventories are generally low across the board. He noted that ESS installations appear to be keeping pace with shipments, with batteries typically shipped 6 months to a year before installation, indicating real demand. Neal Sheorey, CFO, Albemarle, added that while production levels are up for restocking, rising prices could make working capital a short-term cash flow headwind, with working capital generally sitting at about 25% of sales.

Vincent Andrews asked about Albemarle's assessment of current customer inventory levels and behavior, particularly in the context of ESS shipments versus installations, as lithium prices have fluctuated, and requested details on other working capital items for 2026, including accounts payable, accounts receivable, and inventories, given the changing price environment.

Answer

Kent Masters, Chairman and CEO, stated that across the board, lithium inventories are at a pretty low level, especially in batteries. He noted that ESS installations appear to be keeping pace with shipments, with a typical 6-12 month lag between battery shipment and installation, suggesting a reasonably balanced market. Neal Sheorey, CFO, explained that while strong demand in late 2025 helped reduce inventories, 2026 production increases will partly go towards restocking. He cautioned that in a rising price environment, working capital could be a short-term cash flow headwind, providing a general rule of thumb that working capital balances typically sit at about 25% of sales.

Vincent Andrews sought clarification on whether the 30% or greater adjusted EBITDA margin potential at $15/kg lithium refers to the energy storage segment or the company overall, and what the 'liability management opportunity' in the capital allocation slide refers to.

Answer

Kent Masters, CEO, clarified that the 30% adjusted EBITDA margin potential refers to the overall company. Neal Sheorey, CFO, explained that 'liability management opportunity' refers to looking at a combination of actions beyond gross deleveraging, such as managing debt towers across the entire debt stack, without sharing specific details.

Vincent Andrews sought clarification on whether the full-year Adjusted EBITDA margin potential of 30% or greater at $15/kg lithium refers to the energy storage segment or the company overall, and the meaning of 'liability management opportunity' in capital allocation.

Answer

CEO Kent Masters clarified that the 30% or greater Adjusted EBITDA margin potential refers to the overall company. CFO Neal Sheorey explained that 'liability management opportunity' refers to looking at a combination of actions beyond gross deleveraging, such as managing debt towers across the entire debt stack responsibly, without sharing specific details.

Vincent Andrews from Morgan Stanley inquired if contract volumes are skewed towards specific production geographies like Atacama and asked for details on which projects were cut in the latest CapEx reduction.

Answer

CEO Kent Masters stated that long-term agreements are with Western players but are not tied to a single production location. He declined to specify which projects were cut, explaining the reduction came from "a lot of small places" through general capital discipline, and did not provide an updated maintenance CapEx figure.

Vincent Andrews of Morgan Stanley questioned how credit rating agencies treat the $350 million customer prepayment in leverage calculations and asked about expected cash outflows from financing activities.

Answer

An executive, likely CFO Neal Sheorey, confirmed that rating agencies give them credit for the prepayment due to its structure and view it as part of a broader set of actions to improve financial flexibility. For financing cash flows, he suggested that assuming a similar level of 'other' outflows as last year was reasonable.

Vincent Andrews from Morgan Stanley asked for clarification on the $350 million customer prepayment's impact on cash flow guidance and inquired about a new cash flow statement line item, 'inventory net realizable value adjustment'.

Answer

CFO Neal Sheorey confirmed the $350 million prepayment is included in the 2025 cash flow guidance. While it won't recur in 2026, he noted cash flow will benefit from the expected resumption of Talison dividends. He explained the inventory adjustment line primarily reflects the non-cash lower of cost or market charge taken in Q4 2023.

Vincent Andrews questioned the reason for the wide $300-$400 million range in the new cost savings plan and asked about Albemarle's long-term lithium strategy post-cycle.

Answer

CFO Neal Sheorey explained the cost savings range reflects that some initiatives are still being detailed, with the low end being conservative and the high end a stretch goal. CEO Kent Masters addressed strategy, stating that while the core strategy is unchanged, the execution has pivoted. He stressed that the company will be conservative and wait for a sustained price recovery before re-accelerating major growth investments.

Vincent Andrews asked if the latest increase in the One Ecolab cost savings target would be the last, if there's conservatism in the number, and how the cash costs associated with achieving these benefits compare to the benefits themselves, particularly looking towards 2027.

Answer

Christophe Beck, Ecolab's Chairman and CEO, stated that the increased savings target is not due to conservatism but leveraging advanced AI agentic technology, where Ecolab is a leader. He expects continued improvement as the technology evolves. Scott Kirkland, Ecolab's CFO, confirmed the savings momentum is better than expected, with the target now at $325 million by 2027. He anticipates the incremental $200 million (beyond what's already realized) to be evenly distributed over the next two years, enabling the long-term target of 25-50 basis points of SG&A leverage.

Vincent Andrews inquired about the One Ecolab cost savings, asking if the latest increase would be the final one, if there's conservatism in the numbers, and how cash costs associated with achieving benefits compare to the benefits themselves, particularly looking towards 2027.

Answer

Chairman and CEO Christophe Beck stated that the increased savings are not due to conservatism but leverage of AI agents and technology. CFO Scott Kirkland reiterated that savings momentum is better than expected, with the target moving from $225 million to $325 million by 2027. He noted that the incremental $200 million will be realized evenly over the next two years, enabling 25-50 basis points of SG&A leverage, effectively doubling historical rates.

Vincent Andrews requested an update on the One Ecolab strategy, specifically regarding progress with the initial focus on the top 35 customers by year-end 2025, and plans for expanding the initiative to additional customers in 2026.

Answer

Christophe Beck, Chairman and CEO of Ecolab, outlined the phased rollout of One Ecolab, starting with three customers in major industries, moving to 'max seven' in 2025, and then targeting the 'top 20 E15' (top 20 customers and emerging 15) in 2026. He noted strong customer receptiveness and cited the Food and Beverage business in North America, where combining hygiene and water services under One Ecolab has significantly shifted growth trends, demonstrating the strategy's effectiveness.

Vincent Andrews requested an update on the One Ecolab strategy, specifically regarding progress with the top 35 customers by year-end 2025 and plans for expanding efforts to additional customers in 2026.

Answer

Christophe Beck, Ecolab's Chairman and CEO, outlined the phased rollout of One Ecolab, starting with three customers in three major industries, moving to the 'max seven' in 2025, and then to the top 20 and emerging 15 (T20 E15) in 2026. He reported very good progress and customer receptiveness, citing the Food and Beverage segment in North America as a prime example where combining hygiene and water services has shifted growth trends positively. Beck confirmed that the strategy is working in terms of growth and will expand in 2026.

Vincent Andrews of Morgan Stanley sought clarification on capacity constraints in the water business and asked about the implementation timeline and potential constraints for the new Pest Intelligence technology.

Answer

Christophe Beck, Chairman & CEO, clarified that the capacity limitation was temporary and specific to the Water Purification business within Life Sciences due to planned plant maintenance, not a demand issue. For Pest Intelligence, he projected a multi-year rollout (less than five) to transition the entire business, emphasizing a deliberate, pilot-first approach to ensure value delivery.

Vincent Andrews from Morgan Stanley inquired about the profitability impact from safety issues in the Pest Elimination division, asking if adverse costs persisted in Q1 and if any are expected in the back half of the year.

Answer

Christophe Beck, Chairman and CEO, confirmed that while some safety insurance costs carried into Q1, the issue is now largely behind them. He noted that safety performance has improved dramatically after installing dash cams and other measures, with best practices now being leveraged across the company. Beck stated that the business is shifting focus to 'Pest Intelligence,' and while this transformation has a near-term impact on growth and margins, he expects the segment's operating margin to improve substantially and approach 20% in Q2.

Vincent Andrews asked about the investment cycle and potential leverage point for the high-growth data center and microelectronics businesses.

Answer

Christophe Beck, Chairman and CEO, explained that while it's still early, these businesses are already profitable. He detailed the significant opportunity in new technologies like direct-to-chip cooling for data centers and water recycling for fabs. Beck emphasized that Ecolab is making smart, 'pay-as-you-go' investments and is working closely with the world's largest technology companies to develop these solutions.

Vincent Andrews asked about the pace of market share gains, comparing new business wins versus increased share of wallet, and how that pace has changed compared to a year ago.

Answer

CEO Christophe Beck responded that share gains are improving over time, as evidenced by healthy growth in soft markets. He noted that both new business generation and the innovation pipeline are at record levels, serving as strong leading indicators for future momentum. He views new business and wallet share as intertwined, with both contributing to the positive trend.

Vincent Andrews asked about the expected mid-single-digit growth in healthcare surgical procedures for 2026, comparing it to 2025 trends and inquiring about DuPont's portfolio representation across this cohort. He also sought clarification on the minimum cash level and the capital allocation strategy for remaining divestiture proceeds versus free cash flow generation.

Answer

Lori Koch, CEO, indicated that the 2026 growth rate for surgical procedures is similar to 2025, excluding the Q1 de-stock, and that DuPont is well-positioned in areas driving above-average growth, such as cardiovascular. Antonella Franzen, CFO, stated that the typical cash balance is around $1 billion. She confirmed expectations for strong free cash flow conversion (>90%) in 2026, along with Aramids proceeds, and emphasized a shareholder-friendly capital allocation approach, considering both M&A and share repurchases without specific earmarks.

Vincent Andrews from Morgan Stanley asked about the expected mid-single-digit growth in surgical procedures for 2026, comparing it to 2025 and inquiring about DuPont's portfolio representation. He also sought clarification on balance sheet management, specifically the minimum cash level and the allocation strategy for Aramids divestiture proceeds versus free cash flow.

Answer

CEO Lori Koch indicated that the 2026 surgical procedure growth rate is similar to 2025 (excluding Q1 de-stocking), with DuPont well-positioned in above-average growth areas like cardiovascular. CFO Antonella Franzen stated that DuPont typically carries around $1 billion in cash. She clarified that capital allocation, including Aramids proceeds and 2026's strong free cash flow (greater than 90% conversion), is viewed through a shareholder value lens, without specific earmarks for M&A versus share repurchases, but with an active M&A pipeline.

Vincent Andrews of Morgan Stanley inquired about the sustainability of the Electronics Co's Q2 margin expansion, given negative pricing, and asked for clarification on the large swing in sundry expenses.

Answer

Jon Kemp, President of the Electronics division, explained the negative price was a mix effect from higher ICS sales and that underlying margins remain healthy due to productivity and volume leverage. CFO Antonella Franzen clarified that the sundry expense swing is driven by mark-to-market on swaps, which is excluded from adjusted results.

Vincent Andrews of Morgan Stanley questioned the sustainability of ElectronicsCo's Q2 margin performance and asked for clarification on the large year-to-date swing in sundry expenses.

Answer

Jon Kemp, President of the Electronics division, expressed confidence in maintaining healthy margins, attributing the Q2 price decline to mix but noting strong productivity. CFO Antonella Franzen clarified the sundry expense swing is driven by mark-to-market on swaps, which is excluded from adjusted earnings.

Vincent Andrews requested an update on the status of PFAS litigation and asked whether any material developments are anticipated before the planned November spin-off.

Answer

Executive Chairman Ed Breen stated that no significant developments are expected before the end of the calendar year. He noted that the first bellwether cases for personal injury litigation are scheduled for October, representing the next major milestone.

Vincent Andrews asked about the possibility of divesting assets before the November 1st spin to avoid assigning liabilities and inquired about the free cash flow conversion outlook for 2025.

Answer

CEO Lori Koch acknowledged that a pre-spin divestiture is technically possible but stated the company's full focus is on the November 1st separation. CFO Antonella Franzen guided for free cash flow conversion to be greater than 90% in 2025, excluding transaction costs, while noting some working capital usage due to expected growth.

Vincent Andrews from Morgan Stanley asked for an update on the destocking situation in the Kalrez business and inquired about how different parts of DuPont's portfolio would be affected by changes in short-term versus long-term interest rates.

Answer

CEO Lori Koch confirmed that the Kalrez business is at the bottom of its destocking cycle, with sequential improvement seen and further recovery expected in 2025, tied to semi-CapEx. Regarding interest rates, she identified the North American residential construction market as most sensitive to front-end rate cuts, while noting that lower rates more broadly would benefit all businesses by stimulating economic activity.

Vincent Andrews sought clarification on the strategic alternatives, asking if permutations beyond a full sale or a licensing deal are possible, such as selling specific product lines like new molecules or diamides.

Answer

Pierre Brondeau, Chairman, CEO and President, stated that while the company is structured to allow for multiple outcomes, the two highest probabilities currently being focused on are the base plan (including licensing and asset sales) and a full company sale. He added that the company would listen to other interesting ideas but is primarily focused on these two paths.

Vincent Andrews asked for clarification on the strategic alternatives, specifically whether it's only possible to do a licensing deal or sell the entire company, or if permutations like selling new molecules, diamides, or other business segments are feasible, considering manufacturing setup limitations.

Answer

Pierre Brondeau, Chairman, CEO and President, stated that the company's structure allows for multiple possibilities and he would not close any option beneficial to shareholders or operations. However, he noted that the two highest probabilities currently being focused on are the base plan (which includes licensing, asset sales, and the India sale) and the full sale of the company. He confirmed they would listen to other interesting ideas but are primarily focused on these two paths.

Vincent Andrews from Morgan Stanley asked for an update on the Q3 order book for Brazil and commentary on local farmer economics and credit conditions.

Answer

Chairman and CEO Pierre Brondeau reported that booked orders for the second half in Brazil represent 35-40% of the total target, a significantly higher level than in recent years. President Ronaldo Pereira added that farmer economics are stable, with a strong corn harvest incentivizing a full planting season. He noted that while margins are tighter, they are not expected to negatively impact planted area decisions.

Vincent Andrews from Morgan Stanley asked for a comparison of the economics, including margins and cash conversion, between selling directly to large farms in Brazil versus the traditional retail channel.

Answer

CEO Pierre Brondeau and President Ronaldo Pereira clarified that the net profit contribution is 'very, very similar' between the two channels. While the direct-to-farm model requires SG&A investment for a dedicated sales force, the net price FMC receives is comparable to the average net price from the retail channel, and payment terms are also similar.

Vincent Andrews of Morgan Stanley inquired about the long-term evolution of FMC's Rynaxypyr sales from 2026 onward, specifically asking about the expected trajectory of volume and price as generic competition increases.

Answer

CEO Pierre Brondeau outlined a dual strategy for Rynaxypyr post-patent. He explained that FMC will compete with generics on price for the solo molecule by leveraging its lower manufacturing costs to capture new, lower-cost acreage. Simultaneously, the company will introduce premium-priced, high-end formulations and mixtures that offer superior efficacy and resistance management, allowing FMC to differentiate itself and maintain value.

Vincent Andrews from Morgan Stanley sought clarity on the fourth quarter, asking how much of the incremental cost savings would be realized in Q4 and what level of visibility the company has on new product sales.

Answer

Pierre Brondeau, Chairman and CEO, estimated that of the $50 million in H2 cost savings, about $20 million would be realized in Q4 after $30 million in Q3. Ronaldo Pereira, President, added that for Brazil, they have about 40% of the quarter's forecasted orders in hand, which is ahead of last year but below peak levels, indicating a market in recovery.

Vincent Andrews inquired about the impact of the $400 million bolt-on acquisitions completed in 2025 on the 2026 top line, and whether M&A is becoming a more significant growth lever, particularly at the bottom of the cycle.

Answer

Matt White, CFO, stated that the 2025 acquisitions contributed about 1% to sales variance, a trend expected to continue into 2026. He emphasized Linde's disciplined approach to M&A, focusing on density and synergies (headcount, real estate, supply), with full run-rate synergies typically achieved within 12-24 months. Acquisitions are concentrated in North America and parts of Asia, and while integral to growth, Linde maintains its investment criteria.

Vincent Andrews asked about the impact of the $400 million in bolt-on acquisitions completed in 2025 on the 2026 top line, and whether the current cycle presents increasing opportunities for such acquisitions, making it a more significant growth lever.

Answer

Matt White, CFO, stated that the 2025 acquisitions contributed about 1% to sales variance and are expected to maintain that contribution in 2026. He explained that Linde focuses on density and synergies, primarily acquiring smaller independents in North America and parts of Asia. Full run-rate synergies are typically realized within 12-24 months, with a significant portion within the first 0-12 months. He affirmed that acquisitions are integral to growth but emphasized maintaining discipline and investment criteria.

Vincent Andrews asked if Linde is observing earlier than normal seasonal shutdowns in Europe for Q4 and if there's less pessimism due to recent trade deals.

Answer

Sanjiv Lamba, CEO, expects Q4 Europe to be largely flat sequentially, with negative volumes continuing due to a soft industrial market and no near-term catalysts for fundamental change. He noted slow economies in Germany (with hope for infrastructure spend by mid-2026) and the UK, while the Nordics show growth but are too small to impact the overall European context.

Vincent Andrews from Morgan Stanley asked if Linde anticipates earlier-than-normal seasonal shutdowns in Europe for Q4 and if there's less pessimism due to recent trade deals.

Answer

CEO Sanjiv Lamba stated that Q4 in Europe is expected to be largely flat, with negative sequential volumes and no near-term catalysts for fundamental change. He noted slow economies in Germany and the UK, but a bright spot in the Nordics. He expects the declining volume trend to remain consistent for the rest of the year.

Vincent Andrews of Morgan Stanley asked for an explanation for the flat year-over-year margins in the Americas, despite positive pricing and volume, when other regions saw expansion.

Answer

CFO Matt White explained that quarterly results can have some noise and that business mix, particularly with home care, could be a factor. CEO Sanjiv Lamba added that the company's expectation for 30-50 basis points of margin expansion across all segments remains unchanged, suggesting the quarterly result was not indicative of a new trend.

Vincent Andrews inquired about the recent decaptivation of two ASUs in India, asking if this signals a broader trend of customers offloading assets due to economic weakness.

Answer

CEO Sanjiv Lamba explained that the specific India project was an attractive opportunity because the assets could be integrated into Linde's extensive local network, providing an innovative and reliable supply solution. He clarified that while Linde assesses 8-10 decaptivation opportunities annually, the company is highly selective, pursuing only those that enhance network density and meet its strict investment criteria.

Vincent Andrews sought clarification on the Bayer agreement, asking if the $610 million payment eliminates existing licensing expenses and if this was factored into original guidance. He also asked if future use of HT4 would incur per-acre royalties or if it's covered by the $610 million.

Answer

EVP and CFO David Johnson confirmed that a portion of the $120 million net royalty benefit in the 2026 guide is due to not paying certain Bayer royalties, accelerating net-neutrality by two years. He clarified that the broader agreement's financial benefits, exceeding $100 million annually, are expected post-2027. EVP Judd O'Connor stated that HT4 access is not royalty-free and would involve associated royalties.

Vincent Andrews sought clarification on the Bayer agreement, asking if existing licensing expenses were eliminated by the $610 million payment, its amount, and if it was contemplated in original guidance. He also inquired if future HT4 use would incur per-acre royalties or if it was fully covered by the $610 million.

Answer

David Johnson (EVP and CFO, Corteva) confirmed that a portion of the $120 million net royalty benefit in 2026 is due to not paying certain Bayer royalties, accelerating net-neutrality by two years, with the $610 million payment primarily covering offensive licensing income beyond 2027. Judd O'Connor (EVP, Seed Business Unit, Corteva) clarified that HT4 access is not royalty-free and would involve associated royalties.

Vincent Andrews asked if Corteva plans any further pruning or additions to its active ingredient (AI) portfolio for crop protection, either through wholly-owned assets, joint ventures, or other collaborations, ahead of the separation.

Answer

CEO Chuck Magro stated that Corteva is satisfied with its current portfolio, which includes new actives like Rinskor, Arylex, and Reklemel. He expressed openness to partnerships, M&A, or R&D collaborations to address industry challenges and bring affordable next-generation technology to farmers, without implying dissatisfaction with the existing portfolio.

Vincent Andrews inquired whether Corteva plans any further pruning or additions to its Active Ingredient (AI) portfolio, either through wholly-owned assets, joint ventures, or other collaborations, ahead of the upcoming separation, or if the company is comfortable with its current portfolio.

Answer

CEO Chuck Magro stated that Corteva is very pleased with its current portfolio, citing recent new product introductions like Rinskor, Arylex, and Reclamec, and upcoming actives. He affirmed openness to partnering, M&A, collaborations, or R&D relationships to address industry challenges like disease and insect resistance and the rising cost of new active ingredients, emphasizing that such collaborations benefit both companies and farmers.

Vincent Andrews of Morgan Stanley asked for confirmation on the key variables influencing the second-half forecast, including Crop Protection comps, Brazil pricing, seed acreage, and cash flow prepays.

Answer

EVP & CFO David Johnson confirmed these factors were central to the outlook, noting the back half is a small portion of annual EBITDA and will be impacted by tough comps and FX. EVP Judd O’Connor added that Corteva expects mid-single-digit seed acreage increases in Latin America.

Vincent Andrews asked for more detail on the Crop Protection price environment, including the drivers behind the pricing cadence and any differences observed between markets, products, or competitors.

Answer

Robert King, EVP, Crop Protection business unit, noted that pricing pressure will lessen in the second half as the company laps prior-year declines and that generic pricing from China is stabilizing. He highlighted that Corteva's growth is driven by higher-margin new products and Biologicals. CEO Chuck Magro added that market fundamentals are improving, with healthier channel inventories and strong on-farm demand, and noted the recovery in Brazil is well underway.

Vincent Andrews inquired about the production cost dynamics in Q4, noting lower-than-expected costs in Crop Protection and higher-than-expected costs in Seed, and asked about the implications for 2025.

Answer

CEO Charles Magro confirmed these trends, attributing the Crop Protection cost improvement to a structural optimization program that is ahead of schedule. He explained the higher Seed costs were a deliberate decision to clear high-cost inventory from Latin America. EVP Robert King (Crop Protection) added that cost take-out is on track for 2025, while EVP Judd O'Connor (Seed) stated the cost of goods sold position in Brazil will materially improve in 2025.

Vincent Andrews asked for a breakdown of the projected $150 million in 2025 inflation and other costs, with a specific focus on the seed trade transition costs.

Answer

EVP and CFO David Johnson explained that about two-thirds to 75% of that cost is within the Seed business, primarily for trait transitions. EVP of the Seed Business Unit, Timothy Glenn, added that these costs are temporary, spanning the next couple of years, and are due to the rapid transition to new technologies like PowerCore, which requires more expensive production methods until a steady state is reached.

Vincent Andrews asked for LyondellBasell's assessment of the oxyfuels market for 2026, comparing it to the peculiarities and volatility seen in 2025, and inquiring about the opportunities for the segment.

Answer

CEO Peter Vanacker noted that 2025 was volatile for oxyfuels, but average margins were slightly above historical levels. EVP of Intermediates and Derivatives Aaron Ledet expects the oxyfuels market to normalize in 2026 with typical seasonal improvements during the summer. He mentioned monitoring crude volatility, starting the year with low inventories, and observing some upward price movement due to freeze outages in the US Gulf Coast, despite seasonally low Q1 demand.

Vincent Andrews asked for an assessment of the oxyfuels market for 2026, considering the peculiarities and volatility experienced in 2025, and the potential opportunities compared to the previous year.

Answer

CEO Peter Vanacker noted that 2025 was volatile but with slightly above historical average margins. EVP of Intermediates and Derivatives Aaron Ledet expects oxyfuels to normalize in 2026 with typical seasonal improvements in summer. He mentioned monitoring crude volatility due to geopolitical unrest and noted low inventories at the start of the year, with freeze outages causing some upward price movement despite seasonally low Q1 demand.

Vincent Andrews from Morgan Stanley asked for clarification on the 2026 CapEx forecast and sought details on the precious metals monetization opportunity within the Intermediates and Derivatives (I&D) segment.

Answer

CFO Agustin Izquierdo clarified that the $1.4 billion CapEx forecast for 2026 does not yet include the potential reduction from the European asset sale. EVP of I&D, Aaron Ledet, confirmed a $35 million precious metal sale in Q2 and explained the new VAM catalyst transition will occur through 2028, so its benefits are not immediate.

Vincent Andrews of Morgan Stanley asked for details on the potential impact of European stimulus, inquiring which products might see a direct benefit and the expected timeline for these effects.

Answer

CEO Peter Vanacker expressed cautious optimism, noting that while politicians are listening to the industry's concerns about high energy costs and regulatory burdens, it will take time for stimulus to become legislation. He is much more positive about the impact of circularity regulations, like the PPWR, which he believes will create a legally enforceable market for recycled products by 2026, perfectly timed for the startup of the MoReTec 1 facility.

Vincent Andrews sought more detail on management's comments regarding potential capacity rationalization in Europe and a slowdown in new project licensing within the Technology segment.

Answer

CEO Peter Vanacker confirmed that capacity rationalization in Europe is ongoing, driven by high energy costs, and noted that LyondellBasell's own strategic review is making good progress. Regarding the Technology segment, he affirmed that they are observing a slowdown in demand for new licenses, which aligns with the company's expectation of fewer large-scale capacity additions globally in the coming years.

Vincent Andrews of Morgan Stanley asked about the apparent contradiction between very strong October polyethylene orders and management's expectation for a typical seasonal slowdown that could hinder price increases.

Answer

CEO Peter Vanacker explained that the strong October orders were partly due to an overhang from a slower September. EVP Kimberly Foley added that customers had delayed purchases in September anticipating falling crude prices, which did not materialize. With crude prices stabilizing and solid underlying demand, those delayed orders came through in October, creating a temporary surge.

Vincent Andrews questioned the potential recovery of the $2 billion invested in the Darrow project if Air Products decides not to proceed, asking about other potential costs. He also asked if the mid-year go/no-go decision date for Darrow is firm, given CBAM uncertainty.

Answer

Eduardo Menezes, Chief Executive Officer, stated that the recovery value of invested capital in Darrow is uncertain and depends on market value to a potential buyer, noting that assets are specific to the project. He clarified that while no date is 100% firm, the main focus for the decision remains capital cost certainty, with CBAM being an indirect risk primarily for Yara.

Vincent Andrews asked about the potential recovery of the $2 billion already invested in the Darrow project if Air Products decides not to proceed, and whether there would be additional costs beyond equipment sales. He also questioned the firmness of the mid-year go/no-go decision timeline for Darrow, considering the uncertainty surrounding CBAM tariffs and their potential impact on Yara's economics.

Answer

Eduardo Menezes, Chief Executive Officer, stated that estimating the exact recovery value for the Darrow project's assets if it doesn't proceed is impossible, as it depends on market value to potential buyers. He noted that many assets are project-specific, limiting their market. Regarding the FID timeline, he clarified that while a mid-year goal exists, it's not 100% firm, with capital cost certainty being the primary driver. He explained that CBAM's impact on Yara is indirect and that Yara views the probability of significant changes as low, but it's a factor in their decision-making.

Vincent Andrews of Morgan Stanley asked for clarification on the increase in Air Products' fiscal 2026 capital expenditure forecast from $3.1 billion to $4 billion, seeking confirmation and reasons for the change. He also inquired about the meaning of "lower changes of sale of equipment project estimates" contributing to the better-than-expected performance in the corporate segment.

Answer

CFO Melissa Schaeffer confirmed the CapEx increase, attributing it to a refined, bottom-up forecast incorporating new project wins across regions and part of the annual operational planning review. Regarding the corporate segment, Schaeffer explained that "lower changes of sale of equipment project estimates" refers to reduced cost increases on short-term equipment sale projects, which are accounted for on a percentage-of-completion basis, leading to improved financial results compared to the prior year.

Vincent Andrews asked for clarification on the increase in the fiscal 2026 CapEx forecast from $3.1 billion to $4 billion and the reasons behind this change. He also requested an explanation for 'lower changes of sale of equipment project estimates' in the corporate segment, which contributed to better performance.

Answer

Melissa Schaeffer, CFO, explained that the $4 billion CapEx forecast for 2026 is a refined, bottom-up estimate based on new project wins and the annual operating plan review, adjusting from the earlier estimate. She clarified that 'lower changes of sale of equipment project estimates' refers to a small part of their business where cost increases on these percentage-of-completion projects were lower in the current year compared to the previous year, leading to improved segment performance.

Vincent Andrews asked for a bridge from Consumer Brands' Q4 performance (up 25% with Suvinil) to the 1Q and full-year 2026 expectations, implying existing business performance and FX assumptions.

Answer

Ben Meisenzahl, VP of Investor Relations, explained that Suvinil's annualization will impact results through Q3 2026, and the underlying North American DIY market remains challenged. He noted that all businesses have targeted pricing embedded, and FX is expected to be a low single-digit headwind for Consumer Brands Group in 2026, mainly in H2 from Latin America. Heidi G. Petz, Chair, President, and CEO, expressed excitement about the Suvinil acquisition's progress and integration.

Vincent Andrews asked for help bridging the Consumer Brands Group's Q4 top-line performance (up 25% with Suvinil) to expectations for Q1 and the full year (Q1 up low-to-mid-teens, full year up high single to low doubles), inquiring about the implied volume/price mix for the existing business and FX assumptions.

Answer

VP of Investor Relations Ben Meisenzahl noted that the annualization of Suvinil will significantly impact comparisons through Q3 2026. He stated that the North American DIY market remains challenged, and the underlying business is not expected to overperform until housing catalysts emerge. He confirmed targeted price increases across all businesses, including Consumer Brands Group, and projected a low single-digit FX headwind for Consumer Brands Group for the full year, mainly in the second half from Latin America. Chair, President, and CEO Heidi G. Petz expressed excitement about the Suvinil acquisition and the integration team's focus on driving innovation and demonstrating brand synergy in Brazil.

Vincent Andrews asked for a look-back analysis on the efficiency of investment spending over the past two years, how the company defines the right level of spend, and what drives continued incremental investments in a choppy 2026 environment.

Answer

SVP of Finance and CFO Al Mistysyn explained that investment decisions are disciplined, focusing on return, with new stores reaching profitability faster and reps driving mid-single-digit growth in residential repaint. He noted that the company adjusts investment levels based on performance and outlook, particularly for reps. President and CEO Heidi Petz added that the investments are a testament to the team's ability to outperform in an unprecedented competitive environment, seizing gallons up for grabs.

Vincent Andrews inquired about how Sherwin-Williams assesses the efficiency of its investment spending over the past two years, asking what metrics define the optimal spend level and what factors lead to increasing or decreasing these investments. He also questioned what would drive continued incremental investments if choppy market conditions persist into 2026.

Answer

Al Mistysyn, SVP of Finance and CFO, outlined a disciplined process for new store and sales representative additions, focusing on the time to achieve steady-state profit and overall return on investment. He cited the mid-single-digit growth in residential repaint as evidence of successful investments. He explained that investment levels are adjusted based on performance, with a willingness to invest more if sales and gross margins are stronger. Heidi Petz, President and CEO, added that these investments are critical for capturing market share in an 'unprecedented competitive environment' where 'gallons are up for grabs.'

Vincent Andrews from Morgan Stanley asked for insight into which sub-segments within the Paint Stores Group (PSG) are expected to gain the most market share over the next year due to the current competitive dynamics.

Answer

Chair, President & CEO Heidi Petz stated that while all segments present opportunities, the most significant potential for share gains lies in commercial, new residential, and property maintenance, given competitors' historical focus in these areas. CFO Al Mestyshin added that historical investments in stores and sales reps provide confidence in gaining share across all pro architectural segments.

Vincent Andrews from Morgan Stanley inquired which sub-segments within the Paint Stores Group (PSG) are expected to gain the most market share over the next year due to recent competitive dynamics.

Answer

CEO Heidi Petz stated that while there is opportunity in all segments, the most significant gains are expected in commercial, new residential, and property maintenance, given competitors' historical focus. CFO Allen Mistysyn added that ongoing investments in stores and sales reps have driven a multi-year trend of volume outperformance versus the industry.

Vincent Andrews questioned the drivers of strong gross margin performance despite volume declines and flat raw material costs, and also asked about the SG&A cadence.

Answer

Executive Allen Mistysyn attributed the gross margin expansion to three factors: selling price increases in the Paint Stores Group (PSG), a favorable mix as PSG outgrew other segments, and supply chain efficiencies. Regarding SG&A, he explained that the Q1 decrease resulted from proactive cost controls initiated last year, not a temporary flex, and that full-year SG&A will still rise due to strategic investments like new stores.

Vincent Andrews asked for clarification on the $80 million in incremental costs associated with the new headquarters and the reasons for the step-up in environmental spending in the 2025 guidance.

Answer

SVP & CFO Allen Mistysyn detailed that the $80 million for the new building includes transition costs like moving and decommissioning, plus operating expenses for the new facility while still maintaining the old one. He clarified the environmental spending is a return to normal levels after one-time credits in 2024, not a fundamental increase in the provision.

Vincent Andrews inquired about the tactical decision to increase SG&A spending in the third quarter, asking what prompted the shift in cadence from the fourth quarter and what specific investments were made.

Answer

Heidi Petz, an executive, framed the spending as a strategic decision to invest ahead of the cycle and widen Sherwin-Williams' competitive moat. Allen Mistysyn, an executive, added that higher-than-expected gross margins in the second half funded these long-term growth investments, particularly in the Paint Stores Group. He confirmed the total second-half SG&A spend remains in line with prior forecasts, with the change being primarily one of timing.

Vincent Andrews sought clarification on the Alberta Path to Zero project, asking if the current two-year delay is final or if further off-ramps are possible. He also inquired about Dow's openness to bringing in a partner or exploring creative financing opportunities for the project, and whether there has been any incoming interest.

Answer

Jim Fitterling, Chair and Chief Executive Officer, confirmed that the two-year delay for the Alberta project is final, with the cost impact primarily from capitalized interest. He stated that an "Armageddon scenario" would be required to consider a different path. Fitterling reiterated Dow's openness to value-creating opportunities, including creative financing, but noted no serious inquiries from potential partners to date.

Vincent Andrews asked for clarification on the Alberta Path2Zero project, specifically if the two-year delay is final and if there are any potential off-ramps. He also questioned if Dow is open to bringing in partners or exploring creative financing opportunities for the project.

Answer

Jim Fitterling, Chair and Chief Executive Officer, confirmed the two-year delay is largely final, with the primary impact on returns being capitalized interest. He stated that Dow remains open to value-creating opportunities, including creative financing, as long as they benefit shareholders, but noted no serious inquiries from partners.

Vincent Andrews inquired about the factors contributing to Dow's third-quarter results exceeding expectations, particularly the strong performance in packaging and specialty plastics (PSP) and industrial intermediates and infrastructure (IINI). He asked if September's performance, better cost management, or other elements were key.

Answer

Chair and CEO Jim Fitterling initiated the response, with COO Karen S. Carter highlighting two main drivers: higher integrated margins in both PSP and IINI, partly due to new growth assets and better-than-expected volume, and accelerated cost reduction efforts, which delivered $75 million in Q3. CFO Jeff Tate added that cash from operations improved by $1.6 billion sequentially, driven by significant working capital improvements, strategic supply agreements, and enhanced earnings.

Vincent Andrews asked about the reconciliation of Dow's third-quarter 2025 results, which exceeded expectations, particularly in the Packaging and Specialty Plastics (P&SP) and Industrial Intermediates & Infrastructure (II&I) segments, inquiring if better September performance, cost management, or other factors were responsible.

Answer

Karen S. Carter, Chief Operating Officer, attributed the sequential improvement to higher integrated margins in P&SP and II&I, driven by new growth assets and better-than-expected volume, along with accelerated cost reduction efforts. Jeff Tate, Chief Financial Officer, added that cost reductions contributed $75 million (exceeding the $50 million expectation) and cash from operations improved by $1.6 billion sequentially, primarily due to working capital improvements, strategic supply agreements, and enhanced earnings.

Vincent Andrews of Morgan Stanley questioned the rationale behind Dow's dividend reduction, asking why the target of 45% of operating net income remains appropriate given today's lower earnings compared to 2019 and inquired about the outlook for mid-cycle earnings.

Answer

Chairman and CEO Jim Fitterling explained that the dividend cut was a prudent measure to ensure financial flexibility during a prolonged industry downturn. He affirmed that while the company's mid-cycle earnings potential remains unchanged, the timeline to achieve it has been extended by trade uncertainties. Fitterling stressed that this move is part of a broader strategy that includes cost reductions and actions to restore earnings growth.

Vincent Andrews asked for context on the decision to delay the Alberta project, questioning the drivers behind the 'lower-for-longer' environment outlook and the specific KPIs that would signal a project restart.

Answer

Chair and CEO James Fitterling explained that uncertainty around tariffs and their impact on demand prompted the 'lower-for-longer' view. The delay was timed to occur before a major labor ramp-up to minimize costs. He stated that Dow will re-evaluate the project regularly, likely after year-end, looking for tightening supply/demand balances and more clarity on the global tariff landscape before proceeding.

Vincent Andrews of Morgan Stanley asked for an update on Dow's key bridge items for 2025, including expectations for operating rates, the year-over-year impact of planned maintenance, and contributions from new project startups.

Answer

CEO James Fitterling explained that while overall industry operating rates are not yet expansionary, with Europe being a drag, rates in the Americas remain strong. He announced that planned maintenance spending for 2025 is now targeted to be flat year-over-year, aided by the deferral of a European cracker turnaround. Fitterling also confirmed that new growth projects in polyethylene and Industrial Solutions are on track for a mid-year startup.

Vincent Andrews inquired about the fourth-quarter pricing outlook for the Packaging & Specialty Plastics (P&SP) segment, asking for confirmation of a flat pricing forecast and the expected cadence of price changes through the quarter.

Answer

James Fitterling, Chair and CEO, confirmed the overall flat pricing outlook for the quarter. He noted that while higher feedstock costs are anticipated, U.S. Gulf Coast feedstocks remain competitive. Fitterling also mentioned announced price increases for October and November, aligning with the typical seasonal pattern of prices rising before softening at year-end.

Vincent Andrews asked for a detailed update on the Refinish business, specifically how recent claims data (December down 2%) and customer feedback align with the anticipated second-half 2026 recovery and normalization of shipments.

Answer

Chairman and CEO Tim Knavish provided a comprehensive update, confirming that the situation is playing out as expected with reinforcing 'green shoots.' He noted PPG is gaining market share due to productivity solutions and industry anxieties. Insurance rate spikes led to claims drops and destocking, with normalization expected in H2 2026. He highlighted December claims being down only 2% and the start of distributor fill-in orders, along with new digital tools and AI-formulated products enhancing productivity.

Vincent Andrews asked for a deeper understanding of the Refinish business, specifically how claims data (Q3 mid-single digits down, Q2 high single digits down, December -2%) aligns with the anticipated second-half 2026 recovery and current customer feedback.

Answer

Chairman and CEO Tim Knavish stated that the Refinish outlook remains consistent with Q3, with reinforcing 'green shoots.' He highlighted PPG's strong position due to productivity solutions and market share momentum, particularly in the U.S. and Europe. He explained that insurance rate spikes drove claims drops and channel destocking, with normalization of buying patterns expected in H2 2026. Recent positive signs include normalizing insurance premiums, new digital tools (Mix'n'Shake), an AI-formulated product launch, December's -2% claims, and initial 'fill-in orders' from distributors.

Vincent Andrews from Morgan Stanley asked about PPG's M&A environment strategy, encompassing both large and small opportunities, and how the company is thinking about acquisitions going into 2026, given its balance sheet flexibility.

Answer

Chairman and CEO Tim Knavish reiterated that PPG's primary focus is building an organic growth and margin machine, but M&A remains part of the long-term growth algorithm. He confirmed that PPG evaluates all opportunities, including bolt-ons, but acquisitions must be the 'right asset at the right price and at the right time' relative to the organic strategy. Knavish mentioned recent close looks at Brazil architectural and auto refinish/pretreatment opportunities, emphasizing disciplined cash deployment for shareholder value.

Vincent Andrews asked about the M&A environment, both large and small, in light of competitors' actions and discussions of industry consolidation, and how PPG is thinking about its balance sheet flexibility and M&A strategy for 2026.

Answer

Chairman and CEO Tim Knavish reiterated PPG's primary focus on organic growth and margin, with M&A as part of the growth algorithm but not the 'tip of the spear.' He confirmed that PPG evaluates all opportunities, including bolt-ons, but only pursues those that are the 'right asset at the right price and at the right time' to maximize shareholder value. He emphasized continued cash deployment through dividends, buybacks, and organic investments.

Vincent Andrews from Morgan Stanley requested more detail on the Mexico architectural market, specifically what provides confidence that large project volumes will pick up in the second half.

Answer

Chairman & CEO Timothy Knavish cited close connections with government and project owners, noting that many projects that were paused are now restarting. He expressed long-term confidence in Mexico's advantaged position due to its proximity to the U.S. CFO Vince Morales added that the full-year guidance incorporates a modest to mid-single-digit growth expectation for the Mexico business in the second half.

Vincent Andrews from Morgan Stanley sought more detail on the Mexico architectural market, asking what provides confidence in a second-half pickup in large project volumes and what level of recovery is assumed in the guidance.

Answer

CEO Timothy Knavish cited direct feedback from project owners and government entities, noting that many paused projects are now restarting. He also highlighted Mexico's enduring strategic advantage of proximity to the U.S. CFO Vince Morales clarified that the guidance assumes a modest to mid-single-digit growth for the Mexico business in the second half, representing a sequential improvement.

Vincent Andrews of Morgan Stanley sought to confirm if the full-year segment margin guidance was still for a 50 basis point improvement and whether the EPS guidance includes the benefit from share repurchases.

Answer

CFO Vince Morales confirmed both points. He stated that PPG is still holding to its full-year margin profile guidance, though the mix may move around within segments. He also affirmed that the company typically does not include cash deployment, such as share repurchases, in its EPS guidance.

Vincent Andrews asked about the accounting treatment of the operating leases for the divested stores, specifically if they were considered debt and what the impact would be on PPG's financials.

Answer

SVP and CFO Vince Morales confirmed that the store leases, along with nearly all other obligations, are being transferred with the business. He stated this will result in no change to PPG's debt profile and that the lease commitment details in the company's financial filings will be updated accordingly.

Vincent Andrews inquired about Celanese's acetyl chain operating rates, specifically for Singapore and Frankfurt, and anticipated rates for the first half of 2026 compared to the second half of 2025.

Answer

President and CEO Scott Richardson explained that lowest-cost assets run at 100%, while other network assets like Singapore and Frankfurt are block-operated and flexed to meet demand, a strategy expected to continue into 2026.

Vincent Andrews inquired about the operating rates within Celanese's acetyl chain, specifically for the Singapore and Frankfurt facilities, asking for rates in the second half of 2025 and anticipated rates for the first half of 2026.

Answer

Scott Richardson, President and CEO, explained that Celanese's lowest-cost assets, primarily in the U.S., are running at 100% capacity. The rest of the network, outside the U.S., including Singapore and Frankfurt, is being flexed to meet demand and industry conditions, with block operations expected to continue into next year. He highlighted the manufacturing team's success in debottlenecking lower-cost assets.

Vincent Andrews from Morgan Stanley asked for thoughts on potential acetic acid capacity rationalization in China due to new policies and inquired about the specific drivers of recent weakness in the medical end market.

Answer

CEO & President Scott A. Richardson stated he couldn't speculate on market rationalization but noted that rising coal prices will increase costs for all producers. He explained that the weakness in medical was simply due to the timing of volumes, which were stronger earlier in the year, and affirmed that underlying end-use demand remains stable.

Vincent Andrews from Morgan Stanley asked about the potential for capacity rationalization in China's acetic acid market due to anti-involution policies and inquired about the specific drivers of recent weakness in the medical end market.

Answer

CEO & President Scott A. Richardson stated he couldn't speculate on market rationalization but noted that rising coal prices are already increasing costs for all producers in China. He clarified that the weakness in medical was primarily due to order timing, with stronger volumes earlier in the year, and affirmed that underlying end-use demand remains stable and stronger than post-COVID levels without signs of inventory buildup.

Vincent Andrews of Morgan Stanley asked for thoughts on China's acetic acid business, particularly if anti-involution policies could lead to capacity rationalization. He also inquired about the cause of weakness in the medical end market.

Answer

CEO Scott A. Richardson declined to speculate on capacity rationalization but acknowledged the challenging market and noted rising coal prices as a potential early effect of such policies. Regarding the medical market, he explained the recent weakness was merely a matter of timing and that fundamental demand remains stronger than post-COVID levels with no signs of significant inventory issues.

Vincent Andrews requested a bridge for the full-year free cash flow guidance of $700-$800 million to understand the company's conviction, and also asked about the drivers behind auto volume outperformance.

Answer

CEO Scott Richardson and CFO Chuck Kyrish both responded. Richardson stressed the focus on cash generation and inventory reduction. Kyrish provided specifics for the year-over-year improvement, citing working capital turning into a source of cash, lower CapEx at maintenance levels, and reduced cash taxes. Regarding auto volumes, Kyrish attributed the outperformance to strength in the Western Hemisphere, the end of European destocking, and a rebalancing from Q4.

Vincent Andrews asked if the scope of potential divestitures has changed, noting a shift in commentary from multiple small deals to a larger one, and inquired about other asset footprint optimizations.

Answer

CEO Scott Richardson clarified that Celanese is evaluating everything not critical to its core operating models (engineered thermoplastics and the acetyls value chain). He noted the divestiture size could be a series of smaller deals that add up to the size of the Food Ingredients sale, or some opportunities that are larger. Regarding the footprint, he affirmed a long-term history of reducing sites to add capacity at advantaged locations, a principle now being applied to M&M assets, with 8 sites already reduced since the acquisition.

Vincent Andrews of Morgan Stanley inquired about Celanese's deleveraging strategy, requesting a cash flow bridge through 2025, and asked about the earnings ramp-up for the Clear Lake asset.

Answer

CEO Lori Ryerkerk and CFO Chuck Kyrish detailed a deleveraging plan focused on EBIT growth, cost cuts, opportunistic divestitures, and a temporary dividend reduction to reach a 3x net debt-to-EBITDA target. Ryerkerk confirmed the Clear Lake project is on track to deliver its full $100 million annual benefit, with most of it expected in the upcoming year.

Vincent Andrews asked about the Latin American and specifically Brazilian market environment, both for the end of 2025 and into 2026, questioning the confidence in potash shipment growth despite challenging farmer economics and credit conditions, and inquiring about incremental financing terms.

Answer

Ken Seitz, President and CEO, confirmed Nutrien is on track with its Brazil improvement plan, which includes idling blenders, closing unproductive locations, workforce reduction, and a strong focus on credit collection. He noted a 2% increase in Brazilian fertilizer consumption year-over-year, with farmers continuing to maximize yield through appropriate application rates. Nutrien and Canpotex remain the largest potash suppliers to Brazil, and proprietary products are also experiencing growth in the region.

Vincent Andrews asked about the Latin American and Brazilian market environment, specifically regarding credit conditions, financing terms, and the confidence in continued potash shipment growth into 2026 despite challenging farmer economics.

Answer

Ken Seitz, President and CEO, confirmed that Nutrien is on track with its Brazil improvement plan, including closing unproductive locations and focusing on credit collection. He noted that Brazilian farmers continue to maximize yield, leading to increased fertilizer imports, with Nutrien being the largest potash supplier. The company also focuses on proprietary product growth in Brazil.

Vincent Andrews of Morgan Stanley inquired about Nutrien's specific potash production plans for 2026, asking what incremental capacity the company intends to bring online to meet expected market growth and maintain its market share.

Answer

President & CEO Ken Seitz explained that Nutrien has 15 million tons of installed capacity and the flexibility to grow with the market. He reiterated the company's strategy is to maintain its market share by bringing on operators and increasing production as demand grows, in line with the historical 2.5% annual trend. He emphasized they have the operational flexibility to meet growing customer needs without specifying a fixed incremental tonnage for 2026.

Vincent Andrews asked for an outlook on the wholesale business for the first half, specifically inquiring about the extent of sequential price improvement captured in Q2 potash sales, given that 90% of the domestic book is filled.

Answer

President and CEO Kenneth Seitz described a constructive first-half outlook for the upstream business. He detailed strong global potash demand from China, India, and Southeast Asia, which supports the 71-75 million tonne global shipment forecast. He noted that strengthening prices are a result of demand meeting supply and logistical constraints. For nitrogen, he pointed to strong urea and UAN prices during the planting season, reinforcing a positive view for the first half and the balance of the year.

Vincent Andrews explored a long-term scenario for the potash market, asking if an end to the war in Ukraine and the lifting of sanctions on Belarus could lead to a decline in the global cost curve, or if tight capacity utilization would sustain prices.

Answer

CEO Kenneth Seitz responded that potash prices are just now reaching the marginal cost of production. He noted that Russian volumes are already back in the market. For Belarus, he argued that even if sanctions were lifted, regaining access to the now fully utilized Lithuanian port of Klaipeda is a 'big if.' This would force Belarus to continue using more expensive Russian ports, keeping their delivered costs high. Seitz concluded that strong demand fundamentals and recent supply-side challenges are the primary drivers firming up potash prices.

Vincent Andrews sought more detail on the Brazil crop chemicals market, asking about price competition from generics, Nutrien's inventory cost position, and the portion of the retail EBITDA reduction attributable to crop chemicals.

Answer

Jeff Tarsi, EVP & President of Retail, confirmed intense pressure from generics as growers seek lower-cost options. He stated that Nutrien has successfully reduced its Brazil inventory by approximately $250 million, a large portion of which was in crop chemicals, improving their position. While not quantifying the exact EBITDA impact, he stressed the focus is on margin improvement and tight inventory management.

Vincent Andrews asked about the bridge to 2026 EBIT, including cost savings, asset utilization reversal, and the impact of circular polyester revenue. He also inquired about the strategy behind giving up lower-value business and market share losses, and their implications for future margin performance.

Answer

Board Chair and CEO Mark Costa explained that the 2026 bridge should consider full-year 2025 volumes, not just the back half, due to seasonality, trade disputes, and asset utilization headwinds. He detailed expected low single-digit growth in stable markets, stable volumes in discretionary markets, and increased volume in CI due to less shutdown time. Key drivers for earnings growth include $100 million in cost reductions, $50-$75 million in utilization tailwind, and meaningful revenue increases from circular polyester methanolysis and other innovations. Regarding lower-value business, Mark Costa stated that Eastman continuously optimizes its asset base to move to higher-value products, balancing this with asset utilization needs during soft markets.

Vincent Andrews asked about the bridge to 2026 EBIT, specifically inquiring if it's a simple calculation of full-year EBIT plus $100 million in cost savings and $50-$75 million from asset utilization reversal, and how the anticipated revenue lift from recycling impacts the overall portfolio.

Answer

Mark Costa, Board Chair and CEO, explained that the 2026 bridge should start from full-year 2025 volume numbers, not annualized back-half figures, due to seasonality, trade disputes, and asset utilization headwinds. He detailed expected low single-digit growth in stable markets, stable volumes in discretionary markets, and increased volume in CI due to less shutdown time. He also highlighted $100 million in cost reductions, a $50-$75 million utilization tailwind, and meaningful revenue and EBITDA increases from the circular polyester methanolysis plant and other innovations.

Vincent Andrews asked about the specific trigger for the negative shift in customer dialogue during July and what catalysts, such as the end of trade uncertainty or lower interest rates, are needed for a demand recovery.

Answer

Chairman and CEO Mark Costa explained that the shift was most pronounced in the consumer durables market, which has long, Asia-centric supply chains. He noted that a trade pause in Q2 led to significant pre-buying ahead of potential tariffs. This caused customers to become cautious and 'hold orders' in July to assess the impact of the new tariffs on consumer demand. Mr. Costa stated that the primary catalyst for recovery is a return to certainty in the trade environment, which would stabilize supply chains and customer behavior.

Vincent Andrews inquired about the rationale for the recent CapEx reduction, specifically the decision to defer spending at the Longview facility, and whether this would incur extra costs or delay the project. He also asked for an explanation of the unexpected strength in March orders after earlier management concerns.

Answer

EVP and CFO William McLain explained that the CapEx reduction is a prudent measure to optimize efficiency amid trade uncertainty, allowing for more detailed engineering on the Longview project without affecting its completion timeline. Mark Costa, Board Chair and CEO, added that March orders were stronger than expected and that April's order book was holding up similarly, suggesting it was not just pre-tariff buying.

Vincent Andrews from Morgan Stanley asked about the sales volume and order book for the methanolysis plant, the impact of brands potentially de-emphasizing recycled content targets, and whether Q4 volumes were pulled forward ahead of potential tariffs.

Answer

Board Chair and CEO Mark Costa acknowledged that a weak macro environment has moderated the pace of recycled product adoption but asserted that long-term brand commitment remains strong, driven by consumer sentiment against plastic waste. Executive Vice President and CFO William McLain confirmed a 'modest' volume pull-forward in Q4 but noted that Q1 order books remain strong and fully support the growth outlook.

Vincent Andrews of Morgan Stanley asked for a breakdown of the chemical recycling EBITDA shortfall, questioning the split between operational ramp-up issues and weaker customer demand. He also sought clarity on the mechanics of the DOE grant for the new Texas facility.

Answer

CEO Mark Costa attributed the lower 2024 methanolysis EBITDA forecast primarily to operational factors, stating that roughly two-thirds of the miss was due to higher costs from plant downtime and startup challenges, while one-third was from slower customer adoption in a weak economy. CFO Willie McLain clarified that the $375 million DOE grant for the Texas plant will be disbursed as cash matching capital outlays over the project's timeline, not as a lump sum.

Vincent Andrews questioned Olin's capital allocation priorities, particularly regarding continued share repurchases, given that trailing 12-month leverage is projected to approach 4 by year-end, and its commitment to maintaining an investment-grade credit rating.

Answer

CFO Todd Slater stated Olin expects significant cash flow in Q4 to reduce net debt back to year-end 2024 levels. He noted that share repurchases have been curtailed this year, with a modest pace expected to continue, and emphasized prioritizing Q4 cash flow for debt reduction.

Vincent Andrews inquired about the impact of Olin's trailing 12-month leverage, approaching 4x, on capital allocation priorities, particularly share repurchases, and the commitment to maintaining an investment-grade credit rating.

Answer

Todd Slater, CFO, stated that Olin expects significant cash flow in Q4 to reduce debt to year-end 2024 levels. He noted that share repurchases have been curtailed this year and will continue at a modest pace, with a clear priority on debt reduction from Q4 cash flow.

Vincent Andrews of Morgan Stanley inquired about the nature of recent pricing pressure in the Winchester business and the potential volume risk associated with Olin's planned Q3 price increase if competitors do not follow.

Answer

President and CEO Ken Lane described the recent price erosion as a combination of general price declines and customer rebates. While not commenting on competitor actions, he stressed that Winchester must improve its margins in the face of 'exploding' costs. He affirmed that Olin will apply its value-focused commercial approach to the Winchester business to secure better margins, regardless of the competitive environment.

Vincent Andrews of Morgan Stanley asked if the $25 million reduction in annual capital spending is a one-time 2025 event or a perpetual change, and also inquired about potential capital-light opportunities for Olin's PVC strategy.

Answer

President and CEO Kenneth Lane clarified that the 2025 capital spending reduction does not change the long-term average target of around $250 million annually through 2028; it's a prudent tightening for this year. Regarding PVC, he stated Olin is exploring all options, including extending commercial tolling agreements while also building capabilities and talking to potential partners and technology providers for a future direct investment, possibly a joint venture.

Vincent Andrews asked if Olin has data on retail ammunition sell-through versus its own sell-in to better understand consumer trends and validate the outlook for a second-half recovery.

Answer

CEO Kenneth Lane confirmed that Olin uses multiple data sources, including point-of-sale data and direct intelligence from customers, to estimate inventory levels and sales trends. He stated this comprehensive analysis supports their view that the inventory destocking will continue through the first half of 2025.

Vincent Andrews asked if Axalta expects refinish volume to turn positive in Q2 2026, aligning with the projected positive revenue turn.

Answer

Chris Villavarayan, CEO and President, confirmed that Axalta expects refinish volumes to also turn positive in Q2 2026. He anticipates benefits from new body shop wins, adjacency growth, and the abatement of destocking issues, which will provide a tailwind for volume recovery.

Vincent Andrews of Morgan Stanley asked about the drivers for the weaker-than-expected price/mix in Performance Coatings and sought to reconcile the seemingly contradictory trends of lower claims, body shop backlogs, and distributor destocking.

Answer

President and CEO Chris Villavarayan attributed the negative price/mix to two factors: unfavorable geographic mix due to weakness in high-margin North America, and a strategic mix shift from record wins in lower-priced mainstream and economy segments. He clarified that body shop backlogs are decreasing from their peaks, which increases cost competition and helps stabilize repair prices, aligning all three trends toward an eventual market recovery.

Vincent Andrews asked for details on the revised free cash flow guidance and the components of the 'other accrued liabilities' line on the cash flow statement.

Answer

CFO Carl Anderson explained that the free cash flow guidance was updated to a range of $475 million to $500 million primarily due to higher cash outlays for restructuring costs from proactive cost-saving measures. He clarified that the large use of cash in 'other accrued liabilities' was mainly related to annual bonus payments and other restructuring accruals.

Vincent Andrews of Morgan Stanley requested a bridge for the 2024 free cash flow, which came in below prior guidance, and asked about the contract structure (index-based vs. fixed) for recent Light Vehicle business wins.

Answer

CFO Carl Anderson explained the free cash flow shortfall was due to working capital timing, specifically related to receivables and lower payables, and expects much of it to reverse in 2025. Regarding contracts, he stated the Light Vehicle wins are a combination of both index-based and fixed-price contracts, depending on the jurisdiction and customer. CEO Chris Villavarayan added that in volatile regions like Latin America, they tend to avoid rigid RMI indexing.

Vincent Andrews sought clarification on price-mix dynamics within Performance Coatings and asked about the outlook for raw material indexed pricing contracts as raw material costs begin to flatten.

Answer

CFO Carl Anderson explained that underlying pricing in Refinish remains strong, with the flat price-mix result being driven by mix changes. He noted that raw material costs, down 6% YoY in Q3, are expected to flatten in Q4 and see normal 2-3% inflation in 2025, which productivity should offset. CEO Chrishan Villavarayan added that all four end markets saw positive pricing. Regarding indexing, Anderson stated it was a headwind in Light Vehicle but is not expected to be significant next year.

Vincent Andrews of Morgan Stanley questioned the company's expectation that China will cease urea exports after the third quarter, asking for the basis of this view.

Answer

EVP & COO Christopher Bohn (Note: The transcript attributes this to Bohn, but it was likely Bert Frost based on role) explained that while China made tons available, they are underperforming on export targets. The view is based on the lack of further export announcements for Q4, as China typically begins building domestic inventory for its own spring season during that period.

Vincent Andrews from Morgan Stanley inquired about the financial reporting plan for the Blue Point JV and the company's strategy for securing offtake agreements for the new volume.

Answer

CFO Greg Cameron explained that CF will consolidate the entire Blue Point JV, reporting its results likely within the existing Ammonia segment, with clear footnote disclosures for comparability. CEO Tony Will stated that they are not looking to pre-contract the majority of their volume, as historically, they have achieved better returns by selling into the market rather than using fixed-price offtake agreements.

Vincent Andrews asked for clarification on the $4 billion Blue Point CapEx estimate, seeking to understand its confidence level and risk mitigation, and questioned the rationale for the 40% to 75% ownership range.

Answer

CEO W. Will clarified the budget is a high-confidence number, not a midpoint, with significant contingency. He noted risk is mitigated by using modular construction, allowing for a large portion to be fixed-price. He explained the ownership range reflects a commitment to partners, which also helps strategically develop the clean ammonia market.

Vincent Andrews from Morgan Stanley asked for an update on the partnership terms for the prospective blue ammonia facility and the company's medium-term outlook on Henry Hub natural gas prices.

Answer

CEO Tony Will indicated that while CF initially targeted over 50% equity in the project, they might accept a lower stake provided they retain operational control, given the high level of partner interest. EVP Bert Frost commented on gas prices, stating that the price spread between Henry Hub and global markets is more critical than the absolute price, and he anticipates U.S. production will meet rising demand, keeping that spread favorable for CF.

Vincent Andrews from Morgan Stanley asked if the initiatives to improve plant reliability in the PEM segment would require additional capital expenditures. He also inquired about the HIP segment's margin outlook, asking if Q3 margins would be similar to Q2's, with Q4 being the main variable for the full-year result.

Answer

EVP & CFO Steven Bender confirmed that existing capital programs are sufficient to address plant reliability without incremental spending. For the HIP segment, he stated that Q3 is expected to follow historical seasonal strength, but Q4 performance is uncertain due to weather, leading them to maintain the full-year margin guidance of 20% to 22%.

Representing Vincent Andrews of Morgan Stanley, Turner Hinrichs asked about the driver for lower chlorovinyl export shipments in Q3 and the impact of antidumping duties on the European PVC market.

Answer

President and CEO Jean-Marc Gilson explained that the reduction in exports was a strategic choice due to low pricing in export markets, making it more advantageous to direct volumes elsewhere in their value chain. He added that European PVC duties have had a limited impact so far because overall demand in the region remains subdued.

Vincent Andrews of Morgan Stanley asked for clarification on what 'trade finality' would mean for Huntsman and its customers, and whether a resolution would truly end uncertainty or if cautious behavior would persist.

Answer

Chairman, President & CEO Peter Huntsman explained that the primary issue is volatility, not the tariffs themselves. He stated that the industry can adapt to stable rules, whatever they may be. He noted that the impact of trade volatility is felt more acutely further downstream in the supply chain, closer to the consumer.

Vincent Andrews asked about volume expectations for the European market and sought clarification on whether recent pricing actions could be achieved without sacrificing volume.

Answer

CEO Peter Huntsman stated he expects European volumes to be 'rather flat,' noting a planned 40-day maintenance turnaround in Rotterdam will impact Q1 and Q2. He confirmed that the goal is to achieve price increases without losing market share, stating he would be unhappy if they had to give up volume for price.

Vincent Andrews asked for commentary on the automotive business performance, noting its year-over-year growth but sequential decline, and inquired about the outlook. He also asked for views on how different movements in short-term versus long-term interest rates might impact the pace of recovery.

Answer

EVP and CFO Phil Lister detailed the auto performance, noting strength in Asia but a slowdown in Europe and North America. Chairman, CEO and President Peter Huntsman addressed interest rates, explaining that lower short-term rates boost consumer confidence, but lower long-term mortgage rates are more critical for stimulating the housing demand that directly benefits Huntsman.

Vincent Andrews from Morgan Stanley asked for clarification on whether a formal 'MAP 3.0' program is forthcoming, when it might be announced, and what its primary focus would be.

Answer

Chairman & CEO Frank Sullivan confirmed that 'yes, there will be a new program.' He indicated that the company is currently working on it and would likely unveil the new plan in the spring or summer of the next year, after gaining more certainty on tariffs and the new three-segment structure. The new program will continue to focus on operational efficiencies and working capital improvements.

Vincent Andrews of Morgan Stanley asked for clarification on March's sequential performance after a weak Jan/Feb and questioned how RPM could leverage The Pink Stuff's distribution channels for its existing product portfolio.

Answer

Chairman and CEO Frank Sullivan clarified that March sales were flat with marginally improved EBIT, an improvement from prior months but still facing tough comps. He highlighted that The Pink Stuff acquisition provides a significant entry into grocery and drugstore channels, where RPM has little presence, and offers social media marketing expertise that can benefit the broader Consumer Group.

Vincent Andrews asked for clarification on whether the $4.4 million bankruptcy charge was in original Q2 guidance and why the full-year EBIT range was narrowed while sales guidance remained unchanged.

Answer

CEO Frank Sullivan confirmed the bankruptcy charge was an unanticipated event not included in the original guidance. He explained the EBIT range was narrowed due to the significant negative impact of winter seasonality in Q3 against a record prior year, creating a wider range of outcomes for Q4 depending on when deferred sales are realized.

Vincent Andrews requested more detail on the SKU rationalization in the Consumer Group, including the types of products and their margin profile. He also asked about the successful new international marketing campaigns mentioned for the same segment.

Answer

Frank Sullivan, Chair and CEO, explained that the SKU rationalization includes closing a branded and private label architectural paint business in Europe with margins meaningfully below the segment average. In the U.S., some small project paint lines were rationalized based on profitability. For international growth, he highlighted the double-digit organic growth of Zinsser specialty primers in the U.K. and Europe and a successful direct-to-consumer internet program for Rust-Oleum in the U.K.

Vincent Andrews sought more context on the downside scenario of a mid-single-digit sales decline and how it would lead to flat earnings. He also asked for clarification on the $53 million cash use for incentive accruals in Q1.

Answer

SVP and CFO Jamie Beggs explained the downside scenario applied only to the second half of 2025 and that flat earnings would be achieved through cost controls. She and President and CEO Dr. Ashish Khandpur clarified that the Q1 cash use was the normal payout for 2024 bonuses, which was larger than the prior year's payout due to better performance, and is a typical seasonal use of cash.

Vincent Andrews asked if the announced reorganization would generate cost savings for the bottom line or be reinvested for growth. He also questioned the drivers of the working capital increase and the components of the 'accrued expenses' line item impacting free cash flow.

Answer

President and CEO Dr. Ashish Khandpur clarified the reorganization is primarily to drive growth and customer-centricity, not for immediate cost savings, with future productivity gains expected from a new digital strategy. SVP and CFO Jamie Beggs explained that Q4 is typically a strong cash generation quarter and the working capital build is due to year-over-year growth. She specified the accrued expenses increase relates to the timing difference between incentive compensation expense and cash payouts.

Justin Pellegrino, on behalf of Vincent Andrews, asked for a breakdown of maintenance versus growth capital expenditures for 2025 and what a typical split looks like in a standard year.

Answer

CFO John Srivisal explained that annual maintenance CapEx typically ranges from $125 million to $150 million and is currently at the higher end of that range. The remainder of the 2025 budget is allocated to growth projects, with mining-related CapEx expected to be slightly below the $130 million spent in the prior year.