Dow Inc.

Greetings and welcome to the Dow First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If you would like to ask a question at that time, please press star, followed by one on your telephone keypad. As a reminder, this conference is being recorded. I'll now turn it over to Dow Investor Relations Vice President, Andrew Riker. Mr. Riker, you may begin.

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 Fitterling, Chair and Chief Executive Officer, Jeff Tate, Chief Financial Officer, and Karen S. Carter, Chief Operating 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 risk and uncertainties. Unless otherwise specified, all financials, where applicable, exclude significant items. We will also refer to non-GAAP measures. A reconciliation of the most directly comparable GAAP financial measure and other associated disclosures are contained in the earnings news release that is posted on our website. On slide two is our agenda for today's call. Jim will review our first quarter results and further actions we are taking to navigate the prolonged downturn. Karen will provide an overview of our operating segment performance and actions we are taking to improve business results through more efficient resource allocation. She will also provide details around how our Advantage footprint once again demonstrated relatively strong performance versus our peers in our full year 2024 benchmark. This includes how we expect it to provide mitigation levers that are unique to Dow against the recent geopolitical volatility we have seen. Jeff will share an update on the macroeconomic environment, our modeling guidance, and details around the progress of our unique cash leverage in the near term. We will close with additional comments about our strategic focus areas. 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 face of volatile macroeconomic conditions, Team Dow focused on operational discipline while taking actions to reduce costs and align capacity to the slower GDP conditions that are impacting our industry. We delivered our sixth consecutive quarter of year-over-year volume growth, and net sales were $10.4 billion, down 3% versus the year-ago period. This reflects declines in all operating segments, largely due to margin pressures. Sequentially, net sales were flat, This reflected lower pricing in industrial intermediates and infrastructure and performance materials and coatings, which was offset by downstream growth in silicones as a result of improvements in home and personal care and electronic and markets, as well as seasonally higher demand in building and construction and DIC. EBITDA was $944 million, which is down compared to the same period last year, as volume gains were more than offset by margin compression. Cash flow from continuing operations was $104 million, and returns to shareholders totaled $494 million of dividends in the quarter. We're taking targeted actions to further reduce costs and support near-term cash flow in response to the ongoing macroeconomic weakness. Our actions include at least $1 billion in annualized cost reductions by 2026 in areas like purchase services, contract labor, and the elimination of approximately 1,500 Dow rolls. We're also delaying construction at our Path to Zero project in Fort Saskatchewan, Alberta, Canada. This will accelerate our CapEx spending reductions this year, reflecting a total decrease of $1 billion for an enterprise spend of approximately 2.5 billion versus our plan of $3.5 billion. In addition, we are expanding the scope of our previously announced review of select European assets, primarily in polyurethanes. Today, we announced that we have identified three initial assets that we expect to idle or shut down. We remain on track to complete the full review by mid-2025, including the best options for our polyurethanes business. We also received regulatory approval from the Committee on Foreign Investment in the United States for our strategic transaction with Macquarie Asset Management for the sale of our minority stake in select U.S. Gulf Coast infrastructure assets. We expect to receive proceeds of approximately $2.4 billion upon closing, which is on track to be completed by May 1st, with the potential for an additional $600 billion later this year. And lastly, we received a final ruling on the pending NOVA litigation for which we expect to receive more than $1 billion later this year. The reality is our industry is in one of the most protracted down cycles in decades, facing a third consecutive year of below 3% GDP growth. This has been further exacerbated by geopolitical and macroeconomic concerns, which are weighing on demand globally. In response, Team Dow remains agile taking quick and decisive actions to reduce our costs, adjust our supply chains, and protect and improve our margins. These proactive actions will help us to outperform our peers and ensure long-term competitiveness. We also remain committed to a balanced capital allocation approach over the cycle. Let me delve deeper into the actions that we announced today, beginning on slide four. Team Dow remains focused on disciplined execution to improve profitability and support cash flow, as evidenced by the additional actions we announced today. First, following a comprehensive review, we have made the decision to delay construction at our Path to Zero project in Fort Saskatchewan until market conditions improve. This decision supports our near-term cash flow and adjusts the project timing to align with a market recovery. We remain committed to the long-term strategic rationale of the project and the growth upside that it will enable in targeted applications like pressure pipe, wiring cable, and food packaging. However, we now see a higher probability of a lower for longer earnings environment, which changes our expectations for when the capacity from this project will be needed. We are steadfastly focused on ensuring returns for the project are above our cost of capital And because of that, now is the time to delay construction before spending ramps up. As a result of this decision, we now expect our 2025 capital expenditures to be $2.5 million compared to the original plan of 3.5 billion. In addition, we're expanding our European asset review to address the ongoing demand challenges and regulatory environment in that region. We have identified three initial upstream assets across each of our operating segments where we expect to either idle or shut down capacity. These actions will help to further enhance Dow's near-term cash flow and align our asset base to the realities of our participation in the region. And importantly, they are additive to our previously announced plans to determine the best strategic option for our polyurethanes business in Europe. The assets we announced today include an ethylene cracker in Bohlen, Germany, and chloralkali and vinyl assets in Stolpa, Germany, that will likely result in an idle or shutdown. Additionally, we expect to shut down our upstream siloxanes plant in Bari, the United Kingdom, to focus that site on specialty downstream silicones production. Each of these assets represents a meaningful portion of our regional capacity, which is either not fully integrated, resulting in excess merchant sale exposure, or is high on our cost curve, where we have better options to supply derivative demand and optimize margins. Next, I'll turn the call over to Karen, who will unpack our first quarter performance across the DOW's operating segment. She will also provide an overview of our business in regard to the current tariff environment.