Dow Inc.

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dow, Inc. 2024 Earnings Report. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. And if you'd like to withdraw that question, again, press star 1. Thank you. I will now like to turn the conference over to Andrew Riker. Andrew, the floor is yours.

Good morning. Thank you for joining today. The accompanying slides are provided through this webcast and posted on our website. I'm Andrew Riker, Dow's Investor Relations Vice President. Leading today's call are Jim Sitterling, Dow's Chair and Chief Executive Officer, and Jeff State, Chief Financial Officer. Please note our comments contain forward-looking statements and are subject to the related cautionary statement contained in the earnings news release and slides. Please refer to our public filings for further information about principal risks and uncertainties. Unless otherwise specified, all financials, where applicable, exclude significant items. We will also refer to non-GAAP measures. The reconciliation of the most directly comparable GAAP financial measure and other associated disclosures are contained in the earnings news release and slides that are posted on our website. On slide two is our agenda for today's call. Jim will review our second quarter results and operating segment performance. Jeff will then share an update on the macroeconomic environment and modeling data, followed by a discussion on how our proven playbook will advance our near-term priorities and support growth. Jim will then provide more color on key milestones for our long-term strategy. including how we will capture earnings upside as microeconomic conditions improve. Following that, we will take your questions. Now, let me turn the call over to Jim.

Thank you, Andrew. Beginning on slide three, in the second quarter, Team Dow delivered sequential top and bottom line growth, as well as a third consecutive quarter of year over year volume growth. We achieved this despite a slower than expected global macroeconomic recovery. particularly in areas like building and construction and consumer durables. Net sales were $10.9 billion, down 4% versus the year-ago period and up 1% sequentially, driven by gains in packaging and specialty plastics and performance materials and coatings. Volume increased 1% versus the year-ago period with gains led by the United States and Canada. Excluding hydrocarbons and energy sales, which were down primarily due to lighter feed slate cracking in Europe, volume increased 4%. Sequentially, volume increased 1% with gains in all regions except Asia Pacific, which was flat. Local price decreased 4% year over year. Sequentially, local price increased 1% led by gains in Europe, the Middle East, Africa, and India, or EMEA. Operating EBIT was $819 million, up $145 million sequentially, reflecting gains in packaging and specialty plastics and performance materials and coatings. Cash flow from operations was $832 million on higher earnings and an efficient release of working capital, resulting in an 85% cash flow conversion on a trailing 12-month basis. Our focus on cash flow generation enabled $691 million in returns to shareholders, including $491 million through dividends and $200 million in share repurchases. In June, we published our 2023 intersections progress report. This report showcases the positive impact that we are making on the environment and society, and importantly, how those actions support long-term profitable growth. Now turning to our operating segment performance on slide four. In the packaging and specialty plastic segment, operating EBIT was $703 million, down $215 million year-over-year. This was driven by lower integrated margins, higher planned maintenance activity, and lower non-recurring licensing sales. Local price declines were due to lower downstream polymer prices, primarily in Asia Pacific. volume decreased year over year as higher demand for functional polymers and polyethylene was more than offset by lower merchant hydrocarbon sales, primarily due to lighter feed slate cracking in Europe. Sequentially, operating EBIT increased by $98 million, primarily due to higher integrated margins behind both price and volume gains. Moving to the industrial and immediate and infrastructure segment, operating EBIT was $7 million, an improvement of $42 million versus the year-ago period. Results were driven by improved equity earnings, partly offset by lower integrated margins. Local price declined year-over-year, but volume was up, driven by gains in polyurethane and construction chemicals. Sequentially operating decreased $80 million, driven by higher planned maintenance activity and higher equity losses, as well as lower volumes. And in the performance materials and coding segment, operating EBIT was $146 million, up $80 million compared to the year-ago period, driven by broad-based business and geographic volume growth. Local price declined year-over-year, but volume was up, driven by gains in both businesses and all geographic regions. Sequentially operating EBIT increased $105 million, driven by volume and price gains in both businesses and lower plan maintenance activity. Now I'll turn it over to Jeff to review our outlook and share some examples of our playbook in action.