Dow Inc.

Greetings and welcome to the Dow first quarter 2026 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'd like to ask a question at that time, please press star followed by the number one on your telephone keypad. As a reminder, this conference call 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, Karen S. Carter, Chief Operating Officer, and Jeff Tate, Chief Financial Officer. Please note our comments contain forward-looking statements and are subject to the related cautionary statements 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. The 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 and Karen will start with a summary of our first quarter performance, including details on each of our three operating segments. Karen will then provide an update on current industry dynamics, including how global supply disruptions are influencing market conditions. She will also discuss Dow's competitive advantages, particularly our purpose-built asset footprint and advantage feedstock positions. We will then outline several actions underway to deliver a step-change improvement in earnings across the cycle, including progress on transformed outperform, and our other self-help initiatives. Jeff will close with our outlook for the second quarter in an overview of our capital allocation priorities and focus areas for disciplined financial management, both in 2026 and across the cycle. Following the prepared remarks, we'll open the call for Q&A. Now let me turn the call over to Jim.

Thank you, Andrew. I'd like to first take a moment to step back and recognize our colleagues, neighbors, customers, and partners in the Middle East. who are facing significant turmoil and uncertainty. Our thoughts are with everyone affected by this conflict, and we wish for their safety and well-being during these difficult times. On slide three, I'll now cover additional details from the first quarter. The solid results we delivered reflect our commitment to controlling what we can control. While January and February order books were solid, we experienced a sharp positive inflection in March with the beginning of the conflict in the Middle East. We expect this supply disruption will persist throughout 2026. During this quarter, we focused on Dow's strengths of prioritizing our customers, managing costs aggressively, and operating with safety, reliability, and long-term value creation. We delivered 3% sequential volume growth, net sales of $9.8 billion, and operating EBITDA of $873 million. And with our self-help actions well underway, we delivered approximately $193 million in period cost savings. As we look ahead to the second quarter and beyond, we're taking actions to enhance Dow's agility and resilience. We're also entering a seasonally high demand period, providing additional tailwinds as we move through the next couple of quarters. In addition, an increasingly positive margin backdrop continues to unfold, and we expect the pricing momentum that began in March to continue across every business and every region in Dow's portfolio. On the supply side, The conflict in the Middle East has created constraints that are clearly evident in the near term. This includes supply chain disruption for an extended period of time. We also anticipate impact to future investments, including potential delays or cancellations of planned industry capacity additions, as well as increased pressure for capacity rationalization. And lastly, we expect that the higher global oil and NAFTA prices will steepen the global cost curve. Against this backdrop, our in-flight actions serve to further strengthen Dow's competitiveness and position us to drive margin improvement and capture earnings upside. First, our incremental growth investments are delivering returns, like our new world-scale polyethylene train in Freeport, Texas. And we're making progress on our Alberta project where the overarching merits of this investment in the cost-advantaged Americas are further reinforced by the current global dynamics. In addition, the benefits from our previously announced European asset shutdowns begin this year. And lastly, we are building a DAO that is more agile and resilient through any cycle. A company that delivers through periods of volatility. and one that focuses on capturing upside, improving margins, and outperforming our peers to effectively reset the competitive benchmark. We'll share more details on all of this later in the call, and Karen is going to cover our first quarter operating segment performance. But before that, I'd like to briefly address our recent leadership announcement. Effective July 1st, Karen will assume the role of Chief Executive Officer and I will move to the role of executive chair. This announcement follows a deliberate, multi-year succession process in partnership with our board and ensures continuity as we execute our strategy. Serving as CEO of Dow has been the privilege of a lifetime, and I'm incredibly proud of what our team has accomplished together. This transition comes at the right time as we transform our company for its next phase of growth. I have full confidence in Karen's leadership, her deep operational experience, and her ability to drive performance and value creation. As CEO, she will continue our efforts to transform Dow, positioning us for greater agility and resiliency through any phase of the cycle. She is exactly the right leader to guide our company and deliver on our strategic priorities with discipline and rigor.