Huntsman Corporation

Greetings and welcome to Huntsman Corporation third quarter 2024 earnings conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I would now like to turn the conference over to your host, Ivan Marcuse. Thank you. You may begin.

Thank you, Robin. Good morning, everyone. Welcome to Huntsman's third quarter 2024 earnings call. Joining us on the call today are Peter Huntsman, Chairman, CEO, and President, Phil Lister, Executive Vice President, CFO. Yesterday, November, yes, last night, November 4th, 2024, after the U.S. equity markets closed, we released our earnings for the third quarter 2024 via press release and posted to our website, Huntsman.com. We also posted a set of slides and detailed commentary discussing the third quarter on our website. Peter Huntsman will provide some opening comments shortly, and we will then move to the question and answer session for the remainder of the call. During the call, let me remind you that we may make statements about our projections or expectations for the future. All such statements are forward-looking statements, and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the SEC for more information regarding the factors that could cause actual results that differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. We will also refer to non-GAAP financial measures such as adjusted EBITDA, adjusted net income or loss, and free cash flow. You can find reconciliations for the most directly comparable GAAP financial measures in our earnings release, which has been posted to our website, Huntsman.com. I'll now turn the call over to Peter Huntsman, Chairman and CEO.

Ivan, thank you very much, and thank you all for taking the time to join us this morning. We've got quite a few people in line for questions, so I'm just going to be very brief. The third quarter ended about where we expected it to finish, and we're now focused on the fourth quarter and year end. We expected the year to be better than it's shaping up to be. There's still a number of positives as we move from quarter three to quarter four and year end. We said to many of you during our investor conferences that An improvement in North American housing and construction will be the single most impactful change in our earnings. I'm heartened to see that interest rates are dropping, and both US presidential candidates are making new housing a major part of their economic platform for improvement. We are hopeful that another rate cut between now and the end of the year will continue to improve the growth we're still seeing today. In addition to falling interest rates over the past few quarters, we've seen a return to more traditional NDI growth that exceeds the rate of GDP growth. As we've said in past quarters, we need to see demand growth improve and capacity utilization rates increase before we see meaningful margin expansion. The demand growth is moving in the right direction, but I was disappointed to see our recent Q4 NDI price increases get little traction with customers. We continue to see very low inventories across the board, and rising demand will eventually support price increases and margin expansion. Additionally, we see a number, we see a record amount of global chemical assets, especially in Europe, that are on the market. I would personally be surprised if all of these assets are sold. So I imagine very few of these are actually making money. Given Europe's desire to rid itself of manufacturing, which I see reflected in its adherence to anti-growth energy and regulatory policies, I doubt the prospects will change anytime soon. We may well see a number of facilities closed due to a combination of regulatory and high-cost structures. Longer term, I think there will be a much-needed consolidation in a number of chemical products in Europe. Having returned recently from visiting government leaders, customers, and partners in Malaysia, China, Saudi Arabia, and Korea, I believe that these markets are seeing relatively low growth, but as they continue to sort out their conflicts and housing bubbles, we'll continue to see opportunities grow. 2025 should be a year of gradual improvement across Asia and the Middle East. We continue to look at all of our production sites and examine our cost structures, supply agreements, and operating rates. Before the end of the year, we will be initiating a further $50 million cost reduction program in our global polyurethane business. This is in addition to the $280 million in costs we've taken out of the entire company over the past few years. We will continue to manage our way through challenges such as the recently settled Boeing strike, which will cost an estimated few million dollars in the fourth quarter. We'll also capitalize on growing EV battery opportunities, tightening insulation standards, and energy efficiency in home and building materials. Well, too early to say much about 2025. I believe lower interest rates, pent-up housing demand, Asian stimulus announcements, lower inventories, and greater political certainty in Europe and the US all work towards improving market conditions. With that, Operator, why don't we open the lineup for any questions?