Greetings, and welcome to the Dow Third Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now turn it over to Dow Investor Relations' Vice President, Andrew Riker. Mr. Riker, you may now 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; and Jeff Tate, 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. A 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 2, is our agenda for today's call. Jim will review our Q3 results, operating segment performance and some key updates regarding the strategic asset review we announced today. Jeff will then share an update on the macroeconomic environment and provide fourth quarter modeling guidance, followed by a discussion on our financial position and progress on Dow's growth investments. Jim will close the call and following that we will take your questions. Now, let me turn the call over to Jim.

Thank you, Andrew. Beginning on Slide 3, our cost advantage footprint in the Americas continues to provide a strong competitive edge capturing demand growth in attractive markets and regions. In the third quarter, Team Dow delivered our fourth consecutive quarter of year-over-year volume growth. We delivered this despite a soft macroeconomic environment, primarily in Europe and China, as well as an unplanned cracker outage in Texas, which has been successfully restarted and is running well. Net sales in Q3 were $10.9 billion, this is up 1% versus the year-ago period led by higher demand and local prices in the United States and Canada. Volume increased 1% versus the year-ago period and prior periods. Sequentially, we saw gains in Packaging and Specialty Plastics and Industrial Intermediates and Infrastructure. Local price was flat year-over-year as gains in Packaging and Specialty Plastics were offset by decreases in Performance Materials and Coatings. Sequentially, local price was down 1% due to minor declines across all segments. Operating EBIT was $641 million, up $15 million year-over-year, reflecting higher integrated margins in Packaging and Specialty Plastics, which were partly offset by the impact of the unplanned cracker outage in Texas and higher planned maintenance activity. Cash flow from continuing operations was $800 million down year-over-year, primarily due to higher inventories to support both sales growth and labor-related supply chain disruptions. Shareholder remuneration for the quarter was $584 million including dividends and share repurchases. In addition, we progressed our long-term growth strategy including signing a long-term agreement with Linde for the supply of clean hydrogen for our Path2Zero project in Fort Saskatchewan. We also completed the acquisition of US-based polyethylene recycler Circulus. This will add capacity of 50,000 metric tons of recycled materials annually to Dow's portfolio. Now turning to our operating segment performance on Slide 4. In the Packaging and Specialty Plastics segment, local price increased year-over-year led by higher polyethylene prices in all regions except Latin America, which was flat. Volume was flat year-over-year as higher demand for functional polymers in all regions was offset by lower polyethylene volumes. Operating EBIT was $618 million, an increase of $142 million year-over-year. This was primarily driven by higher integrated margins, which were partly offset by the impact of the unplanned cracker outage I mentioned earlier. Moving to the Industrial Intermediates and Infrastructure segment, local price was flat year-over-year. In addition, volume was down 2%. This was driven by lower volumes in Polyurethanes and Construction chemicals, which were primarily due to a force majeure in MDI following a third-party supplier outage. Operating EBIT decreased $74 million versus the year-ago period. Results were driven by higher planned maintenance activity and lower integrated margins, which were partly offset by improved equity earnings. And in the Performance Materials and Coatings segment, local price declined year-over-year, while volume was up 5% with gains in both businesses and across all geographic regions. Operating EBIT was $140 million down $39 million compared to the year-ago period, driven by higher raw material costs, which were partly offset by higher volumes. Moving to Slide 5. The strength of Dow's differentiated portfolio is defined by our strategic and purpose-built asset footprint which leverages low-cost feedstock positions, primarily in the Americas. Our growth investments are concentrated in higher-value businesses and regions, particularly where demand is resilient and we have a competitive cost advantage. Over the past few years, we've demonstrated our commitment to operating with the best owner mindset by taking proactive actions with select higher cost assets aligned with the evolving market dynamics. Since 2023, we have undertaken more than 20 asset actions. These include targeted rationalization of our global polyols capacity, shutting down our propylene oxide unit in Freeport, Texas in 2025 to reduce lower value merchant PO exposure, strengthening our coatings footprint with select asset closures and announcing the sale of our laminating adhesives business for $150 million including two manufacturing sites in Italy, which we expect to finalize in the fourth quarter of this year. Overall, these actions have been primarily focused on our industrial, intermediates and infrastructure segment and in the EMEA region. On Slide 6, current market dynamics are impacting Europe, including continued soft demand, coupled with a persistent lack of long-term regulatory policy. This ongoing absence of clear, consistent, and competitive regulatory policy in Europe has resulted in many challenges for our industry. These challenges have been acknowledged in statements by EU government leaders, top economists, and our peers. And while a demand recovery in other parts of the world was expected to provide swift upside across the markets we serve, this alone is unlikely to be enough in Europe. Given these dynamics, we've begun a strategic review of select European assets, primarily those in our polyurethane business. This review includes all value-creating options for these assets and currently consists of approximately 20% of our sales in the EMEA region. We expect to complete this review by mid-2025. We continue to engage with governments both directly as well as through our leadership in trade associations to improve the industry's overall competitiveness in the region. Decisions regarding the strategic review, similar to our prior actions, will focus on strengthening Dow's global portfolio. This enables us to invest in the most attractive opportunities and create long-term value growth for our shareholders. Now, I'll turn it over to Jeff to review our outlook and guidance.

Thank you, Jim, and good morning to everyone joining our call today. Moving to Slide 7, we continue to experience muted demand across some end-markets and regions with the greatest pressure in Europe and China. Global manufacturing PMI has been decelerating over the past three months and consumer spending remains pressured by persistent inflation. That said, we're monitoring the impact of rate cuts in the US and Europe, as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025. Looking specifically across our four market verticals, in packaging, domestic demand in North America is resilient and exports are robust, despite decelerating last month. Demand in Europe remains soft, consistent with manufacturing PMI at the lowest point year-to-date. In addition, China's manufacturing PMI returned to contractionary levels in September after improving in August. Infrastructure demand primarily in residential construction remains low. In the US, housing starts decelerated to negative 0.7% year-over-year in September. Eurozone construction PMI remained soft and new home prices in China declined year-over-year for the 15th consecutive month. Consumer spending has slowed across the globe, reflecting affordability challenges. We've seen consumer confidence weaken in the United States, remain negative in Europe, and decline in China for the fifth consecutive month. And in mobility, demand has softened globally. In the US, auto sales were slightly up year-over-year in September after decreasing in August. And in the EU, new car registrations declined in September after reaching a three-year low in August. China auto production declined for the fourth consecutive month, reflecting weak domestic demand, as well as exports due to tariffs imposed in Europe. Now turning to our outlook on Slide 8. We expect fourth quarter earnings to be approximately $1.3 billion, up year-over-year and lower quarter-over-quarter, as normal seasonality plays out. Now looking into the sequential drivers by segment. In the packaging and specialty plastic segment, lower integrated margins stemming from higher feedstock costs and lower licensing revenue will be a headwind. Following an unplanned event in July, we restarted our Texas-8 cracker at the end of the third quarter, and we expect to ramp operating rates steadily throughout fourth quarter. This will generate an add-back of approximately $100 million in the fourth quarter. We also expect lower planned maintenance activity across multiple sites along the US Gulf Coast and in Europe to provide a tailwind sequentially. In the industrial, intermediates, and infrastructure segments, conditions remain mixed. Demand in building and construction end-markets will be seasonally lower, but we expect the ongoing ramp of our plant at Louisiana operations, as well as the seasonal uptick in demand for deicing fluid, to offset this decline. In addition, we anticipate a $50 million tailwind through the lower planned maintenance activity along the US Gulf Coast. And in the Performance Materials and Coatings segment, we see continued growth in downstream silicone applications across most end-markets. However, this is expected to be offset by ongoing weakness in the China property sector. In addition, lower seasonal demand for building and construction end markets is expected to be a headwind of approximately $125 million. Moving to Slide 9. Team Dow has built a very compelling investment opportunity even as our industry has faced volatile market conditions over the past few years. By continuing to execute our playbook, deliver on our financial priorities and advance our strategy, we are positioning Dow for long-term value growth. Importantly, we have built the financial flexibility to continue disciplined investment in areas that will raise our underlying earnings, reduce emissions and advance customer circularity needs to drive growth. As it relates to our financial strength, Dow has ample liquidity and a strong investment grade credit profile. Nearly all of our long-term debt is at a fixed rate and we have no substantive maturity until 2027. We also expect to enhance our near-term cash flow generation through the execution of unique-to-Dow cash flow levers. And we are making solid progress on the evaluation of strategic options for our non-product producing infrastructure assets. As previously mentioned, we anticipate generating over $1 billion in proceeds from the transaction and we expect to share further progress yet this year. Dow's strong financial flexibility allows us to advance our long-term growth strategy. Notably in Q3, the team is making good progress on the construction of our Path2Zero project in Fort Saskatchewan. Major foundation work began and approximately 40% of cracker pilings are complete. Aligned to our capital deployment schedule for the project, we expect to receive more than $1.5 billion in cash and tax incentives with more than 80% received by 2030. Our near-term growth projects remain on track to deliver more than $2 billion of underlying EBITDA. This includes capacity expansions in silicones this year that will deliver approximately $70 million of annual EBITDA at full run rates. In our Transform the Waste strategy is expected to deliver more than $500 million of EBITDA by 2030. In the third quarter, we added new products to our growing circular portfolio. This includes REVOLOOP Recycled Plastic Resins that incorporate post-consumer recycled material into cable jacketing. We also introduced the first Bio Circular Engage REN polyolefin elastomers for carpet tile backing. And with that, I will turn the call back over to Jim.

Closing on Slide 10. Despite persistent softness across many end-markets and regions, Dow continues to leverage our advantaged cost positions to capture areas of demand strength, operating with discipline, and invest for long-term profitable growth. Building on the more than 20 asset-related actions we've taken since 2023, today's announcement that we're undertaking a strategic review of select European assets is consistent with our best owner mindset and focused on long-term shareholder value creation. In addition, we're actively progressing unique to Dow cash flow levers and expect to share more by the end of the year. Our solid financial foundation allows us to advance our long-term strategy, which is poised to deliver more than $3 billion in additional annual earnings growth by 2030. Dow is in a strong position to boost our core earnings as market conditions improve and we begin capturing the full benefits from our growth investments, thereby enabling greater returns to shareholders. With that, I will turn it back over to Andrew to get us started with the Q&A.

Thank you, Jim. Now let's move on to your questions. I would like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instruction.

We are now opening the floor for the question-and-answer session. Your first question comes from Vincent Andrews from Morgan Stanley. Your line is now open.

Thank you and good morning everyone. Wondering if I could just ask about the outlook for Packaging & Specialty Plastics in terms of pricing. If I'm reading the guidance correctly, it looks like on a net basis, pricing should be flat for the fourth quarter? Is that correct? And is there sort of the cadence of pricing you're expecting maybe up in October and then give a little bit back traditionally in November and December? How are you thinking about it?

Good morning, Vince, yes, I think you are reading it overall correctly. We've got an outlook for flat pricing for the quarter, where you have got some obviously expectations that we might see some higher feedstock costs, but still very competitive feedstocks here in the US Gulf Coast. I would think we've got moves announced for $0.03 in October and $0.03 in November. And I think our view is typically, that's when we tend to see the movement in pricing up and then things soften towards the end of the year.

Your next question comes from Hassan Ahmed from Alembic Global. Your line is now open.

Good morning Jim. Just a question around some of the review work that you guys are doing in Europe. You guys specifically talked about polyurethanes. I'm just trying to get a better sense of all the moving parts with regards to how you see the polyurethane cycle sort of panning out. Obviously, we've seen or about to see some assets change hands within the global polyurethane market. The destocking was particularly severe in polyurethanes, but the supply side seems a bit tepid. So as sort of you sift through all of these moving parts, how do you see the polyurethane market sort of coming out on the other side?

Good morning Hassan. Actually, we're still poised for a very good recovery in construction and durables markets, which really drive a lot of what's going on in polyurethanes. I’d add automotive on top of that because I think automotive has been under some pressure in Europe. So I agree with you, there are no signs that there's any destocking has run its course. But I think we are waiting for that obvious turn in the economy that gets people moving into those segments. And those assets in Europe is really a portfolio shift move. It really has nothing to do with the business. Polyurethanes is a good business, a pretty diverse downstream markets. We've got good positions there. And as I mentioned, we're thinking about 20 asset actions so far across the globe, mostly in II&I, which is really to tighten up the footprint and get our capacity focused on our lowest cost assets there. So I think it has strengthened, both polyurethane business and also the coatings business as well.

Your next question comes from Michael Sison from Wells Fargo. Your line is now open.

Good morning. This is Richard on for Mike. If I could just shift back to P&SP, I know it might be early, but given your comments on global integrated margins declining on a sequential basis in 4Q, how should we think about where margins and EBITDA for P&SP should be headed into 2025? What are the key puts and takes that we should look at? And how are you thinking about your global footprint and export growth rates? Thank you.

Yes, Richard, good question. On P&SP, despite the challenges we faced at Texas-8 in the third quarter, we continue to see strong volume growth downstream. We were able to leverage several strategies to achieve this. Demand remains strong, although there was a slight slowdown at the end of the quarter due to dock strikes affecting exports. However, overall downstream demand and volume have been good, leading to tighter operating rates and strong performance from our cost-advantaged assets. Looking ahead to 2025, we anticipate continued growth in volume, projecting around 3% organic growth as we move into next year. This growth is expected to benefit from higher operating rates. Starting from a consensus of approximately $5.6 billion for 2024, we could see an increase of about $400 million. We have accounted for two unplanned events: the full ramp-up of Glycol-2 and the Texas-8 unplanned outage from the third quarter, which adds back roughly $300 million. Our growth investments are expected to contribute about $150 million from polyethylene and functional polymers debottlenecks, an additional $75 million from alkoxylates capacity coming online in the US Gulf Coast, and the complete ramp-up of Thailand PG in Asia. We also project about $75 million from Consumer Solutions growth investments in debottlenecks. They achieved a strong third quarter with 6% year-over-year volume growth in silicones for downstream specialty applications, contributing another $300 million. In total, that's about $1 billion higher, with potential upsides and downsides depending on various factors.

Your next question comes from Jeff Zekauskas from JPMorgan. Your line is now open.

Thanks very much. Regarding the Saskatchewan project, considering that you will utilize a different production process with hydrogen and the autothermal reactor from Linde, if ethane costs remain the same, is the production cost in Fort Saskatchewan higher or lower than that in Freeport? If there is a difference, can you specify how much? Additionally, do you still anticipate launching approximately 600,000 tons of polyethylene in the US in the second half of 2025?

Good morning, Jeff. To answer your second question about additional growth in 2025, yes. Regarding Fort Saskatchewan, we believe we have an advantage with ethane there, and our ethylene production costs in Canada will be among the lowest globally. I expect it will be quite comparable. We do incur slightly higher costs due to the autothermal reformer used to produce hydrogen for the furnaces. However, we can recover some of those costs through CO2 sequestration, allowing us to sell ethylene with zero Scope 1 and 2 emissions. Overall, I anticipate that the returns will be equal to or greater than those of Texas-9 in the US Gulf Coast, which is our most cost-effective asset worldwide.

Thank you very much. Your next question comes from John McNulty from BMO Capital Markets. Your line is now open.

Hi, good morning Jim, this is Bhavesh Lodaya for John. So it appears more and more likely that the US and the world in general, is going to see more tariffs and duties being put in place. You have a low-cost advantage in the US, but there are also commodities like polyethylene, where you are very reliant on export markets. In Europe, I believe this is what you alluded to when you spoke about the regulatory actions required. So overall, if we enter this new era of sourcing more duties across the world, how do you think that plays out for Dow overall?

Yeah, good morning Bhavesh. I think, look, we see tariffs today in some of the businesses that we participate in. And we are still a net exporter in general, out of the US Gulf Coast because of the very strong competitive advantages that we have here. The large markets, China in particular, is still an importer and it's going to be an importer for quite some time. So I think that will exist. In most of the other markets, we are in the market to be a domestic player. So we're in Europe for Europe, and for the assets that we have in China, we are in China for China. There's a lot of discussion going on around tariffs. I think we are typically not in the crosshairs of some of the issues that are national security related. So I think that doesn’t have a particular impact on us. And then we’ll walk through what will happen with them. I would say, carbon border adjustment mechanisms are also – could be considered a form of a tariff as well, and so we’re going to stay eyes wide open to that.

Thank you. Your next question comes from David Begleiter from Deutsche Bank. Your line is now open.

Thank you, good morning. Jim, on the European assets under review, are they EBITDA positive? And if so, how much? And if you do close both of your MDI plants in Europe, would you still look to supply Europe MDI from your plants in Saudi and Texas? Thank you.

Yes, good morning David. I don't have a specific number to give you on the European assets right now, but they are EBITDA positive. They are good cost positions in the European market. Again, we are looking at all value-creating opportunities. I don’t believe – I don’t want to preclude anything, but I don’t believe shutting down MDI is going to be a value-creating opportunity, but we’re going to look at everything.

Your next question comes from Steve Byrne from Bank of America. Your line is now open.

Thank you. Jeff, you mentioned that your customers for P&SP have circularity needs. Do you think those needs are becoming more urgent or less so lately? Is it enough for you to secure long-term contracts? Your projection for a $3 billion EBITDA increase by 2030 likely draws from the Alberta project, but what gives you the assurance to balance those costs with increased returns? Can you establish longer-term contracts with your customers for low-carbon polyethylene?

Good morning Steve. Yes, good question. From our standpoint, we still feel very confident in our ability to be able to generate, again overall for our Transform the Waste strategy, at least $500 million of additional earnings by 2030. And there's no assumptions right now that we see in the marketplace that would have us that would look at that any differently.

Your next question comes from Chris Parkinson from Wolfe Research. Your line is open.

Great. Good morning everyone. Can we just take a step back and take a look at the balance sheet and cash flow and just the year-to-date trends? Some of your commentary pertaining towards the end of the third quarter going to the fourth in terms of facilitating growth. And just any framework in terms of the puts and takes that the Street should be considering as we progress into 2025? Thank you so much.

Hi, good morning Chris, thanks for the question. For us when we look at the third quarter, we generated $800 million in cash flow from operations, which gave us an almost 60% conversion rate, which led to actually positive free cash flow in the quarter, which is pretty similar in terms of the range that we had for the second quarter. So we've seen some stability there. A couple of other puts and takes that I think are important is that we've been able to maintain our cash conversion cycle at 42 days, which is top quartile in comparison to our peers. And so that's an eight-day improvement that we've been able to achieve versus pre-COVID levels. Another thing that's important here is that our cash balance at almost $3 billion, as well as the additional liquidity that we have of another $10 billion, gives us total liquidity of $13 billion to-date, and we have no subsequent debt maturities due until 2027. And the other thing I would also remind you of Chris, is the fact that we continue to make the commitment of unique to Dow cash levers and being able to deliver at least $1 billion of those cash levers here each and every year, and we still maintain that commitment moving forward.

Your next question comes from Josh Spector from UBS. Your line is now open.

Yeah, hi good morning. I was wondering if you could talk about all the actions that you've done around some of the portfolio changes and some of the asset closures? And just talk about the earnings impact combined. I'm thinking about this more in relation to where Dow talks about the earnings corridor, $8 billion to $9 billion in EBITDA potential. If we look at what you've done versus the last 5 years, 10 years of earning those assets, how much of a negative is there in that bridge that we should be building in? Or maybe it's smaller or less than what we expect? Thanks.

Josh, good question. I think you should look at it in terms of what are we doing to keep our cost position low. We've typically been able to bring all that capacity into lower-cost assets and run them at higher rates, and so you'll see that improvement in operating rate lead to bottom line improvements. And although some of these have happened in 2023 and '24, we've had some costs associated with getting out of these assets. You'll start to see some positive impact of that as we move forward into 2025. We're typically able to supply all of that, run the existing assets harder. Those are lower cost assets as we move forward. So I think it's more of a tightening up the footprint, making the portfolio more attractive. If you look at where we are year-over-year, we've had an improvement in operating rates of about 500 basis points. In the third quarter, we were up about 100 basis points, and that was because we moved out some maintenance activity in the quarter. So continuing to move that operating rate up will have an impact on bottom-line.

Your next question comes from Kevin McCarthy from Vertical Research Partners. Your line is now open.

Yes, thank you and good morning. Jim, two questions on Europe, maybe one broad one and one more narrow. Just broadly, I think it stands to reason that margins are lower in the region due to higher energy cost and demand and some of the onerous regulations that you spoke to in the prepared remarks and in the press release. So I guess my general question would be, if you were to report margins on a regional basis rather than on a segment basis, how much lower would Europe be relative to the Americas or even Asia? Number one. And then number two, as you go through the strategic review, do you have in mind, potential financial consequences of that in terms of the EBITDA uplift or narrowing that margin gap? Thanks.

Good morning, Kevin. You raised a good question about Europe. While energy costs have increased, they have also decreased and stabilized somewhat. Therefore, you should expect to see a new level of competitive pricing based on imported LNG into Europe, and we're currently at that level. Additionally, they've expanded their energy sources beyond just Russian gas, which is a positive change. We have a clear view of what energy costs will be there. Demand has decreased, with both construction and consumer activities slowing down. The automotive sector is facing some challenges due to the influx of imported EVs, but adjustments will need to be made. When we compare the current situation to where we were in 2020 at the lowest point in the cycle, it's clear that Europe's cost position is significantly higher. This is a straightforward observation. For mid-cycle businesses like polyurethanes and construction chemicals, the typical EBITDA margins are around 15%. Our strategy is to explore portfolio options that allow us to invest more in businesses with higher returns and stronger growth prospects. The European assets related to polyurethanes represent about 20% of our current sales in the EMEA region.

Your next question comes from Patrick Cunningham from Citi. Your line is now open.

Good morning. Regarding the review of the European assets, what policy changes would be necessary for you to effectively maintain and operate these assets? Additionally, are you engaging with governments and trade organizations concerning the unique risks associated with the United States supporting the UN Global Plastics treaty, specifically the cap on plastics production?

Good morning, Patrick, and thanks for your questions. Regarding European policy, there are some notable differences worth discussing. In terms of energy, it is essential for Europe to focus on becoming energy competitive. A good comparison can be made with Canada's Fort Saskatchewan and its hydrogen initiatives. We refer to the Fort project as circular hydrogen, which allows us to produce ethylene at competitive costs aligned with US Gulf Coast economics while also marketing products with zero Scope 1 and 2 emissions. However, the UGreen deal currently only gives credit for green hydrogen produced through electrolyzers powered by alternative or low-carbon energy. To produce green hydrogen for the Fort asset, we would need 7 gigawatts of electricity, which is just not economically feasible and is unlikely to happen. As a result, there are currently no advancing projects for blue hydrogen or carbon capture, and the initiatives that could assist in decarbonizing European industry are uncompetitive. This may force the industry to explore other options. In the United States, regarding the legally binding international agreement on plastics, we are making significant progress. However, there is currently no consensus globally on production limits or bans within this agreement. We're somewhat surprised by the administration's change in stance, but we are not yet at the conclusion of this process. We continue to emphasize the critical issue of plastic pollution and advocate for solutions such as circularity policies, recycled content mandates, extended producer responsibility schemes, and all forms of recycling to address pollution. Plastics offer the lowest carbon footprint among available products; they are user-friendly, cost-effective, and possess a strong sustainability profile. As we transition to producing plastics with zero Scope 1 and 2 emissions, as we will at the Fort, no alternative will match the sustainability benefits.

Your next question comes from Frank Mitsch from Fermium Research. Your line is open.

Hi, good morning. Jim, I appreciate your answer to the question on tariffs earlier in the Q&A with the US Gulf Coast competitive advantage. I'm curious, Brazil just enacted an increase from 12.5% to 20% on polyethylene imports. What specifically may be seeing in that region? And perhaps if you could also offer an early look at 2025 in terms of siloxanes, the interplay between supply and demand, that would be helpful. Thank you.

Good morning Frank, good questions. Sorry about the Mets. I'm with you there with the Royals, not making it as well. 12.5% to 20% I think, in the case of Brazil, I think you have to look at tariffs in terms of are you trying to protect the manufacturing in the domestic economy so that you keep a manufacturing base. And I think tariffs of 12.5% to 20%, like you see in Brazil, are meant to do that. I think when you've heard reference to tariffs here in the United States, of maybe a base tariff of 10% for anything that's imported, yes, I think that's driven by a mindset that we're trying to get manufacturing into the United States, not resort to a neighboring country, but into the United States. And so we see tariffs around the world for countries that are trying to protect local manufacturing and trying not to be completely at the mercy of import materials for all of the needs for their economy. I think we're going to continue to see a lot of focus on that and actions like that. On siloxanes, we saw a little bit of tightening and a little bit of pricing improvement. I think we're a ways away. I think we are still in the area where there's opportunity for some rationalization. We've got Chinese capacity that's at negative cash margins right now. The downstream is growing well. As I mentioned, we were up 6% year-over-year in the downstream. The continued outlook for the downstream market is good, even though automotive has been slow, like vehicle production this year is going to be projected to be about 2% lower year-over-year. The growth in electric vehicles has been strong, like 13%, 14%. And when you look at that, that drives a lot of silicones demand. And when we start to see construction come back, that's a high-volume use, and I think you're going to see that pull on it as well. So I think it's a combination of those big volume markets coming back, as well as some assets that are in the cash negative territory having to be taken down.

Your next question comes from John Roberts of Mizuho. Your line is now open.

Thank you. Jim, you've got chlorine integration in Europe. So how separable are the decisions you're looking at in Europe for polyurethanes versus the chlorine assets?

They're not, John. Obviously, we're not going to do anything without close contact with our own chlorine assets but also with our partners in Europe. And so we'll keep a close eye on that. Chlorine PO integration is critical for us, and so we will make sure we’re eyes wide open to that.

Your next question comes from Mike Leithead of Barclays. Your line is now open.

Great, thank you. Good morning guys. Question maybe for Jeff around 2025. It seems like Jim earlier talked about $1 billion of year-over-year improvement in EBITDA with $6.6 billion kind of budget cash outflows in 2025. So are there further cash items you'd expect next year? Or should we expect net debt to remain relatively flat? Just how should we think about net cash flow next year, and sort of how does this impact the pacing of your buyback activity from here?

Yeah, good morning, Mike, thanks for the question. Short answer on the unique-to-Dow cash levers is yes. We would expect to have a similar type of proceeds coming back from some of the activities that we are focused on. Some of those that we've mentioned in the past that we're still working on, besides the non-product producing infrastructure assets, would be looking at our Nova judgment and continuing to make progress on that, as well as looking at some of our joint venture restructuring activities that could also give us some cash opportunities. And so with those unique to Dow cash levers, plus expecting our cash conversion rates to be similar or higher versus what we had this year, coming-off of whatever our 2025 ultimate EBITDA plan is, will give us the opportunity to be able to support our cash uses for 2025.

Your next question comes from Duffy Fischer from Goldman Sachs. Your line is now open.

Yeah, good morning. Just a couple of questions around the licensing income. So one, how much bigger was it than you expected when you gave guidance after Q2? And then two, was it an unexpected project that came in? Or is it just pulling forward either from the Q4 or next year's cycle?

Good morning. Duffy, it's just a matter of timing as those are influenced by the delivery of engineering packages and the timing of milestones. I would say it's relatively minor regarding the increase in P&SP. A significant factor was the shift of the St. Charles Cracker turnaround. As you recall, we were coming off a hurricane, and that turnaround was scheduled to begin around the time we experienced hurricane activity. We decided to move it to the first quarter to address hurricane-related issues without being distracted while trying to make the quarter. However, I think it ended up being relatively minor in the overall context.

Your next question comes from Matthew Blair from TPF. Your line is now open.

Thank you and good morning. You mentioned you're expecting higher cracking feedstocks in the fourth quarter. I was hoping you could expand a little bit on what you're seeing in the US ethane market. Do you think that the wider frac spreads that we are seeing so far this quarter are temporary or perhaps structural? And then would Dow expect to enjoy a little bit of an offset here the Devon JV? And is there any appetite to expand that JV with Devon? Thanks.

Good questions. And I would say as we look forward, the winter strip on ethane is very similar to where the summer was. Our range on ethane probably for the quarter is in the $0.19 to $0.23 range. The frac spreads have been consistently at $0.50 or below. So I think we are probably going to see that continue. Natural gas has obviously been very positive for this as we've had good production, and the hurricanes in the third quarter took some export capability out. I think we're going to see some of that export capability come back in, which is why I think you're going to see some competition for that gas that we didn't see in the third quarter. All that, I think, is around the edges. I think we still got very, very cost advantaged positions. And then what was the second?

Devon.

On Devon. Yes, look we've been very happy with the partnership with Devon. We started that back in 2021 and continue to ramp that up in 2023. Right now, we've done 114 wells with them, and we've got 15 additional ones expected to come online this year. It continues to grow to help us offset our exposures. Obviously, the way we work that deal is we trade that into the market, so it’s a net offset to our cost coming in. And we continue to be very happy with it. It's worked well for both of us. It is a strong partnership, and I think we are looking forward to continuing it.

Your next question comes from Aleksey Yefremov from KeyBanc Capital Markets. Your line is now open.

Thanks good morning everyone. Jim, I was quite surprised to see about $100 million in EBITDA for II&I into this quarter. The segment started the year pretty strongly with $234 million, and then EBITDA continued to soften. Could you give us, just to reflect on this year, what product specifically or regions maybe did not perform as well? And what do you expect next year here?

Yes. So obviously, we had Glycol-2 up and running, so that was a positive. We had price pressure on PO Polyols, and we had lower volumes in MDI. I mentioned in the opening that we had a third-party outage in North America, which supplied industrial gas to our MDI process there, the plants back up but still running at lower rates. And then look, the other thing that happened when Texas-8 was out, Texas-8 produces propylene for us as well. And so when we had Texas-8 out, we had to go into the market to get some of that propylene so that was a higher cost. So I think it was on to one-time, the MDI issue is a one-time, which will correct itself. The PO polyols that was a big driving force around the decision to tighten up the footprint in Freeport. So as we go forward, we don't have as much length in PO, which brings the North American market more in the balance. So I think, as we move forward, it is polyurethanes in North America, that was the bigger slowdown and drag in the quarter.

Your next question comes from Laurence Alexander from Jefferies.

Good morning. Just on the unique to Dow cash levers, can you give a sense for what the longer-term pipeline looks like say through 2030 or even farther out? After the ones that you've publicly disclosed, I mean how bare is the cover?

Well, Laurence, this is Jeff. Going out to 2030, we wouldn't be able to get too definitive at this stage. I mean, as we continuously go through our annual reviews of all of our assets and all of our opportunities, we'll continue to identify those things that could create more value across the enterprise and have a best of our mindset as we approach it. But the ones that I've noted in the earlier question around some of the things that are more near-term, are the ones that we've specifically identified that will bring us more of that near-term impact. But going out to 2030, I couldn't give you anything specific at this point, but we'll continue to again, maintain that commitment of well over $1 billion on an annual basis.

Your next question comes from Arun Viswanathan from RBC Capital Markets. Your line is now open.

Hi, thank you for taking my question. I wanted to ask about the recent portfolio reviews, particularly regarding European assets. Have you conducted any analysis on potential shutdowns or outcomes from these reviews? How much capacity might be taken out of the industry and P&SP as we look toward 2025? Additionally, I would appreciate your insights on the global supply and demand for PMC. We've seen ongoing weakness in demand on the coating side, but with rates decreasing, do you anticipate any improvements in operating rates for PMC? Could you share your thoughts on both P&SP and PMC utilization as we approach 2025? Thank you.

Good morning, Arun. Our portfolio work in Europe primarily focuses on polyurethanes. As I mentioned earlier, this isn't mainly driven by shutdowns, but we are evaluating that. We've made significant efforts to downsize smaller assets and relocate that capacity to our low-cost locations. We're also considering if there might be a better owner for the portfolio, which would enable us to keep concentrating on our Invest for Growth businesses, including P&SP, our silicones business, and our Industrial Solutions division. In Europe, we have strong positions in P&SP and are concentrating on the domestic market there, aiming to enhance the competitiveness of those assets. There have been approximately 1.5 million metric tons of shutdown announcements in the industry in Europe so far. I anticipate we'll continue to see isolated cases of older assets facing high maintenance costs or required life extension work, which will pose challenges. In most instances, cash flow losses were discussed over several years before these decisions were made. However, our situation in P&SP in Europe is different. In terms of coatings, despite some slowdowns, we have experienced significant volume growth this year with our strategic customers, exceeding market expectations. This growth will likely shift positively as the housing sector and architectural coatings gain momentum. We have seen substantial growth in traffic paint coatings this year, driven by infrastructure development, including road markings that can interact with future autonomous vehicles and lane assist systems. I expect continued growth in both areas, with the housing market being a significant driver for the coatings business. Coatings are performing well, although there is a need for improvement in the monomers segment.

This concludes our question-and-answer session. I’d now like to hand back over to Andrew Riker for closing remarks.

Thank you everyone for joining our call, and we appreciate your interest in Dow. For your reference, a copy of our transcript will be posted on Dow's website within 48 hours. This concludes our call. Thank you again.

Thank you for attending today's call. You may now disconnect. Have a wonderful day.