Thank you. Ladies and gentlemen, we will now begin our Q&A session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad. If you would like to withdraw your question, please press 1 again. We kindly ask that everyone limit themselves to 1 question. Please stand by while we compile the Q&A roster. Your first question comes from the line of Hassan Ahmed from Alembic Global Advisors. Please go ahead.

Morning, Karen and Jeffrey. A 2 part question on polyethylene pricing. If I heard you guys correctly, you are talking about a 2 cents a pound sequential margin improvement sort of embedded in your Q4 guidance. I mean it seems there is been a series of price hikes for October as well as November. So the first part of the question is, why are you guys only factoring in a $0.02 a pound margin improvement? And then as you look at 2027, how sustainable are the current sort of higher prices particularly sort of in a scenario where The Middle East normalizes, Let's assume sort of more Chinese capacity comes online as well.

Thanks, Hassan, for the question. Good to hear from you. Let me talk about the 2 cents per pound global integrated margin improvement first. So that assumes, that the September price increases averaged throughout the quarter. And you are absolutely right. We have additional on the table, and we believe that the market dynamics that we are currently facing you know, we will get those in. Into the books. I mean, you think about the higher feedstocks. So I am not just talking about oil, but naphtha. We are seeing ethane a bit on the rise as well. And so if we are able to achieve the 7 cents that we have on the table for October and the 5 cents in November, that will provide an upside to our fourth quarter guide. I mean. And that is going to also, you know, depend on how far the feedstock costs rise. So if we are able to get all of that, and get additional margin, think about that upside in the range of $200 million. So 1 cent per pound price increase is about $50 million per quarter. Let me go to the second part of your question, and then, Jeffrey, if you have any other comments that you want to make. Listen. We are planning to end the year with momentum. We came out of third with momentum. You know, we think about September getting the 5 cents. But also ACC data. You know, DDI, the declined by more than 5 days. Inventory declined by over 400 million pounds. China's back in the market. And so from a Dow perspective, our sales grew double digits from a polyethylene perspective as we ended third quarter. We are getting more growth, in the fourth quarter as well. Spot prices are also on the rise. So we expect that we are gonna end the fourth quarter with momentum going into 2027. And that is also why our guide in fourth quarter is flat with the first quarter. So it is not just about polyethylene price and market dynamics. But the story is also about our self help. So the reason that we have a guide of flat to third quarter is because lower turnarounds, but also our self help is going to offset, the typical seasonality that we So we should go into 2027, you know, with that momentum. And we expect from an oil to gas ratio that will. It will remain constructive. And, of course, we are gonna continue to double down on our advantaged feedstock capacity here in North America. Jeffrey, anything else you wanna say about 2027?

Yeah. Good morning, Hassan. The only other thing that I would add to 2027 is the fact that our self help actions will be a key tailwind going into the new year. You heard in my prepared remarks our expectation is that our tailwind purely on self help deliver about $1.3 billion in 2027. So that will be something that we can control as Team Dow. That will be part of our bottom line value generation going from 2026 to 2020 Your next question comes from the line of Vincent Andrews from Morgan Stanley.

Please go ahead.

Thank you, and good morning, everyone. I wanted to follow-up on the feedstock cost side of the equation. Karen, you did mention ethane had a bit of a move it is propane and butane in the US. Wonder if you could just sort of put some characterization around that move What do you think is causing it? And how durable is it versus a slightly lower move up in natural gas prices? And just what in particular do you have baked in for the fourth quarter?

Hi, Vincent. Thanks for the question. So you are right. US ethane prices have moved higher in recent weeks, and it is actually outpacing natural gas. that is driven by a few factors. First of all, you know, growing at exports. You got the new cracker capacity on the US Gulf Coast, preparing to start up. You know, that is another reason. But, also, you are seeing that international crackers are leaning more heavily on ethane, in their mix given elevated oil prices. But I do wanna highlight that even with that, current levels really do remain below the peaks that we saw back in 2022. And, also, it is roughly in line with 5 year averages. So, you know, the market here remains really well supplied. You are seeing US production of 2.3 million barrels per day. that is record. And inventories also still remain above historical norm. So our guide, our fourth quarter guide, contemplates that ethane will be in the mid to high 20s per gallon range. So that is marginally lower than where we sit today. Maybe just a rule of thumb, every 3 cents per gallon of ethane translates to about 1 cent per pound of polyethylene price needed to cover that cost. And as you heard on my last answer, we have much larger price increases on the table for fourth quarter. So that is the 7 cents per pound in October. And the 5 cents per pound in November. Maybe just another important point is global polyethylene prices, of course, are set by naphtha-based production. And so with oil and naphtha still elevated, that oil to gas spread is gonna remain constructive, and it continues to sit well above, you know, prior year averages. So that makes, of course, ethane the lowest cost feedstock in the world. And that is where, you know, the majority of our capacity sits. So it is an advantage for now.

Your next question comes from the line of Patrick David Cunningham from Citi. Please go ahead.

Hi. Good morning. Just on free cash flow, you know, very, very strong results in 3Q, but can you help us with expectations for conversion into 2027, particularly we have expectations for higher or longer PE margins? I am trying to get a sense of some of the trade offs you have made on working capital this year. And any incremental restructuring expense you expect to incur next year.

Hi. Good morning, Patrick. This is Jeffrey. I appreciate the question. So a couple of comments I would make there. Yeah. First of all, you know, the third quarter free cash flow performance, you know, $1.1 billion was something that team did an excellent job of really focusing on working capital discipline. For 1, and this is 1 of the things that we did signal even coming out of our second quarter call that our anticipation around working capital is gonna see a significant swing. So the sequential improvement that we saw from second quarter to third quarter purely on working capital was about $1.3 billion, so a really strong tailwind there from quarter to quarter. 1 of the things that we did make the commitment on in the second half the year was at least a $500 million release of working capital. And so to deliver over $400 million of that in the third quarter puts us in a really good position to be able to meet that target. By year end. As we go into 2027, as I mentioned, earlier, you know, 1 of the things that we are, you know, definitely looking forward to in planning is around the self help, delivering the $1.3 billion. As we think about our cash conversion going into the next year, we are going to maintain that discipline around working capital which would. Should continue to give us a cash conversion rate that is gonna be in the range of anywhere from, let's say, 70% to 80%. As we go through next year, which will position us well to be able to support our capital allocation framework.

Your next question comes from the line of Abigail Eberts from Wells Fargo. Please go ahead.

Hi there. Thank you for taking my question. Another 1 on polyethylene price increases. There had been talks of a split settlement because of outsized tightness for low density. Has that changed? It sounds like you are not going for that anymore.

No. No, thanks. And, Abigail, it is good to hear you on the call this morning. No. You know, we are we are moving forward with all of the polymers at the same time. So, again, 7 cents per pound in October and then another 5 cents in November. Again, we are seeing spot prices go up around the world. We are also seeing spot prices go up on all of the polymers. And so, you know, that is our plan in terms of executing those price increases as we get into the fourth quarter.

Your next question comes from the line of Jeffrey Zekauskas from JPMorgan. Please go ahead.

Thanks very much. You are earning at a rate of about $1.5 billion a quarter, so call it $6 billion a year. So is the meaning of the incremental cost savings of $1.3 billion for next year is that if business conditions remain the same, your earning. Your EBITDA would go from $6 billion to $7.3 billion or do you mean something else?

Thanks, Jeffrey, for the question. Listen. I do wanna highlight that when we enter. As we enter 2027, to your point, you know, $1.3 billion of earnings tailwinds are gonna be firmly in our control. And that is largely driven by the self help actions, as you mentioned. So that is $1.2 billion of incremental to outperform uplift in 2027. And then about another $100 million of in. Incremental gains from our asset actions And that includes both the shutdown of Barry siloxanes in Europe, so the additional uplift from that. But then also the growing impact of our recent incremental growth investments. So that is alkoxylation. Capacity, here in the US as well as in Europe, and Poly-7. Maybe to your point, you know, global pricing dynamics are obviously not completely in our control. But we do see factors that could provide some support in 2027. So polyethylene market dynamics have momentum going into fourth quarter, as I mentioned. Higher oil baseline. You know you know, our view is that there is gonna continue to be a risk premium on the price of oil going forward. And so, you know, I am not going to call a 2027 number here. But what I can tell you is that we are gonna continue to navigate the market with disciplined execution and double down on our self help that we are committed to delivering next year as additional EBITDA uplift.

Your next question comes from the line of David Begleiter from Deutsche Bank. Please go ahead.

Thank you. Good morning. Karen and Jeffrey, just on the $1 billion for 2027, can you just break down the benefit by segment? And are there any other tailwinds or headwinds that you would call out, either maintenance, higher or lower, or other costs that could be in 2027 that you know about today? Thank you.

Hi. Good morning, David. This is Jeffrey. You know, for us right now, continuing to work through the 1.3 billion as we go through the transform to output outperform again, which is the key driver of that tailwind that we anticipate from 2026 to 2027. You know, 1 of the things that we are really, really pleased about is that it is impacting every function. Every business, and every geography across the enterprise. And as I mentioned in my prepared remarks, the self help ownership and accountability is something that we have. From a cultural perspective. So we have a great level of confidence in the 1.3 billion for 2027. As we get into the early part of next year, we will have more details to share around the breakdown of that as we move forward here. But at an enterprise level, the 1.3 is the tailwind.

And, David, maybe just to tack on to that, you should think about it probably in 50% in P&SP, and 25% in the other 2 is how I would categorize it. Today.

Your next question comes from the line of Matthew DeYoe from Bank of America. Please go ahead.

Sorry. I was on mute there. Corporate overhead looks better quarter over quarter, but you know, probably somewhat in line year over year. 1, I am assuming some compensation accruals came back in 3Q given the big 2Q move. But I why is not there more evidence of like, the dramatic cost cuts moving through overhead? Like, R&D and SG&A. And I appreciate the doubt has a heritage in material science, but, like, what do you think the right absolute dollar spend is for R&D at Dow? Because it kinda feels like 700 is 2 I.

Hi. Good morning, Matthew. This is Jeffrey. I will I will I will take that question. You know, for us, first of all, on the overall SAR, we continue to be very pleased with the progress we are making on our SG&A as percent of revenue. Versus best in class peers. I mean, right now, we are at 5% of revenue versus best-in-class-- best in class pure median of 12%, so we are top quartile overall. On our cost structure from that perspective. If you look at quarter over quarter, so sequentially, our SG&A was actually down $130 million excluding significant items. A lot of that is reflected in our transformation. Savings as well as, to your point, the performance based compensation adjustment as well. You know, we expect our cost savings to continue to build through the remainder of this year as well as through 2027. As we continue to change how we are working across the operating model that spending will be lower not only in our SG&A line items, but also in our cost of goods sold. You know, obviously, being a manufacturing company, over 80% of the headcount savings that we expect to get from our transformation will come from not only manufacturing, but those support functions such as supply chain, procurement, and about 15% of those headcount savings will actually come out of SG&A, which we are starting to see reflected net.

Your next question comes from the line of Frank Mitsch from Fermium Research. Please go ahead.

Thank you. I was curious if you could update us on Sadara. There were obviously press reports early last month that suggested you were looking to exit the partnership. So I was wondering if you could comment on what the future is of Sadara within Dow's portfolio? And also, if you could provide any update in terms of how those assets are running given the current conflict? Thank you.

Yeah. Thanks, Frank, for the question. You know, I think our message is the same as we shared on the call. Last quarter. We remain really engaged with Aramco. He is leading that negotiation team in his new role as exec chair. You know, we have been really clear, I think, on the last call that we have established a financial boundary around Sadara. And we are working diligently to identify the best long term solution. Obviously, we have already made progress on 2 really important fronts in the first quarter, as you know, we suspended further recognition of Sadara equity losses. And then we also limited our funding commitment to about $1.3 billion, and that continues to come down. So we think about that at $100 million a year. As we move that down. So that is that is where we are. And, again, those negotiations continue. What I would say about the asset there is that they are running, not all of them. Some of them are running at reduced rates as you can imagine for the obvious reasons.

Your next question comes from the line of Kevin McCarthy from Vertical Research Partners. Please go ahead.

Yes. Thank you, and good morning. Maybe a 2 part question on your Path2Zero project in Canada. Can you maybe provide an update on the execution and the next milepost we should be looking for? And then secondly, at 1 time, I think there was interest on the part of Dow to explore the notion of bringing in a partner for that project. Is that still the case today, or perhaps as the sense of urgency diminished given, you know, the improvements in the markets that we have seen in recent quarters as well as your balance sheet So on Alberta, we are squarely in the middle of-- Our focus remains on completing that project.

You know, not only on time, but also on budget. So we are about 45% of the way through. You know, there is a lot of long time. Long lead time equipment that is already on the site. And most of the rest has been ordered. We are gonna move into the, really, the peak of construction as we get in. Into 2027. So there. We will we will move from about 3 thousand that are on-site today to about 6 thousand that will be on-site, next year. And so we are maintaining that really sharp emphasis on execution discipline, holding our ourselves accountable to the timeline with that first phase slated to come up at the end of 2029 and then the second phase coming up in 2030. You know, we are we are really confident at this point in the project on both the timeline and the budget because it is really grounded in tangible progress that we have already made. Of course, we are leveraging the learnings from other projects, that we have completed in recent history. In terms of a partner, listen. We are very open to all value-creating options as we go forward. I think I have mentioned that before. But what is really important is that it clears the hurdle on returns and that it clears the hurdle on value creation. And so what I would say is that, you know, right now, what the team is working on doing and is prepared to do is to move the project over the goal line, you know, as ourselves. But we remain open to any options that are available.

Your next question comes from the line of Matthew Blair from TPH. Please go ahead.

Hey. Good morning, Karen, and thanks for the update on the Sadara operations. Could you share the operational update on the rest of your Middle East and Asia crackers Which ones are fully running? Which ones are still constrained? Thanks.

Sure. Thanks for the question. So I will start, you know, with Equate. So, of course, that is our JV that is in, Kuwait. And so we do have assets that are up and running, there, but they remain constrained. So there we have 1 cracker running at full rates, and several derivative units are idled due to storage limitations. You asked about the JV that is in Thailand. So 1 cracker was restarted, and it is recovering as feedstock-- to feedstock availability before. And then we have a planned turnaround for the second cracker that is that is there. And I already mentioned, from a Sadara perspective, it is partially restarted, with a cracker and polyethylene plastic trains that are online, but the liquids remain down. And that is really part due to the logistics constraints that persist.

Your next question comes from the line of John Roberts from Mizuho. Please go ahead.

Yeah. Maybe if we could kinda roll that answer into kind of a quantitative. Could you have sold a lot more volume in the quarter if your JVs had been running normally and your export? From many of the JVs. Is it such that the markets just are not strong enough that even if the JVs were running normal, you have kind of made up for that. From your other operations, and you could not have sold much more.

Yes. We could have. And even if you look at our third quarter results, I know that press release said that we were down 1% in volume year over year. That is in part because we were constrained on the capacity and the product that was coming out of the Middle East. But if you take that out just in P&SP alone, that business grew 2%. And so, yes, there is. There was more demand out there to be had. And we were constrained by the amount of capacity each I think that, you know, 1 of the proof points was in the September ACC data, and you see where we landed at the end of third quarter. Again, inventories declined. You know, delivering the largest draw in over a year, but total sales So domestic plus exports, you know, rose in September. They increased over 3% month-over-month, and that was the second highest month of the year. But also the third highest month on record. So I think that those are those are important proof points that there is more demand to be had. And if we have more capacity, we would have sold it.

Your next question comes from the line of Christopher Parkinson from Wolfe Research. Please go ahead.

Hey. This is Harris Fine on for Christopher. Just a quick 1 on II and I. Just thinking about the outlook for 40 of the NDI end market is around building and construction, and that continues to be the weakest end market for us across the company.

And so our expectation is in fourth quarter, we do expect to move back to a longer market with the resolution of industry supply disruptions. But also the recent startup of new capacity here in North America. So you know, the bottom line on MDI is that the market still remains challenging. Mainly driven by the weak demand in building and construction. And just a low, you know, demand environment you know, overall for that segment, which is exacerbated by the new capacity additions. And so, you know, longer term, we expect gradual operating rate improvement through 2030, but that is our view on the fourth quarter right now.

Your next question comes from the line of Arun Viswanathan from RBC Capital Markets. Please go ahead.

Great. Thanks for taking my question. I guess I just wanted to get your thoughts on maybe global utilization rates across your 3 main chains. Polyethylene, polyurethanes, and silicones. It appears that we are maybe in the mid eighties. And there has not really been any material closures. Would you would you agree with that? And would you also agree with the statement that China has increased their production pretty significantly in most of those chains, and that is that is also impacting pricing negatively. Thanks.

So let me start with ethylene. And polyethylene. You know, we do feel like and believe that operating rates today are in the low eighties. And so. And I think I have said this before, you know, we believe that we get back to mid cycle rates by the end of the decade. And there is a couple of reasons for that. You know, based on even where we were before the conflict, you needed about 10% of capacity to come out in order to materially get back to mid cycle operating rates. 5 to 6% of that has already been announced, and that includes our cracker in Europe. there is another about 8% that is being speculated. Most to all of that are in high cost regions. And so Asia as well as Europe, recently heard in the last couple of months there is another million tons that is been confirmed to come out, from Karen. So you are you are seeing the rationalizations. And, of course, we know that capacity that is coming online. But the other part of the story is that polyethylene continues to grow at a factor above GDP. So I would call industry operating rates on the ethylene side today in the low eighties. And, again, we believe that we can get back to mid cycle operating rates by the end of the decade. Which also aligns, by the way, with the timing of our Alberta asset that, again, the first phase will come up in 2029. On the siloxanes and the silicone side, you know, it is a bit of a tale of 2 cities. So up you are you are absolutely right. China has added a significant amount of capacity. it is it is 1 of the reasons why we took out our high cost siloxane capacity in Barrie UK in the second quarter of this year. Just as a reminder, that is gonna add $60 million of EBITDA in the second half of the year alone. But it is really important to emphasize that downstream silicones continues to grow significantly. You know, directly aligned with the number of megatrends, you know, whether you are talking about electric electrification, but also, obviously, AI infrastructure. So, you know, we are seeing that. You know, most of our end markets in silicones are growing double digits. And that is showing up not only on our order books, but also on the bottom line. And then I think I just talked about, you know, MDI, you know, 1 of the. Of course, 1 of key value chains where you are seeing, overcapacity, for sure, being built in Europe. We have taken out, both in, you know, PO in particular. We taken out assets there as well. But, again, working to right size our capacity across the entire portfolio, with the profitable demand on. Particularly on the downstream. But we continue to see strength in ethylene and polyethylene in particular. And in downstream silicones and a number of other ethylene, derivatives.

Your next question comes from the line of Yefremov from Barclays. Please go ahead.

Thank you, and good morning, everyone. U. S. Polyethylene export prices seem to have been lagging strength in Asia recently. So related to that, could you discuss if there are any logistics constraints for your P&SP exports or any dynamics with freight rates that are relevant?

No. We are not seeing any logistics constraints coming out of the US Gulf Coast as a matter of fact, you know, operating rates there remain above 90%. I have highlighted the ACC data a couple of times, on this call. And, again, I think that is yet another proof point of both feedstock advantage that we have here in North America, and the fact that we, you know, are not seeing any constraints there. Again, our order books are strong. We are seeing know, China's come back. You have seen that 6 cents, week-over-week of spot prices go up. But spot prices are going up around the world, and that is why we have price increases on the table and believe that the current market dynamics will support us achieving those.

This concludes our Q&A session. I will now turn the conference back over to the Dow team for closing remarks.

Thank you very much. And listen, Jeffrey and I both really appreciate all the questions that we got this morning. I just wanted to end the call, you know, with 1 key message for you to take away, and it is this. We are not standing still. The Dow team is not standing still. Obviously, the market remains, incredibly volatile. But we have the right priorities and we have the momentum to see it through. Our collective actions are delivering really solid results. We saw them in the third quarter, and we firmly believe we are gonna deliver that again in the fourth quarter. And at the same time, you know, we are focused on creating long term value for our customers. For our shareholders, and for all of Team Dow. So thank you for your continued interest in our company, and we appreciate you joining us today. Operator:

Thank you, everyone, for joining, for your reference. A copy of our transcript will be posted on Dow's website within 48 hours. This concludes our call.

Thank you, Dow team. You may now disconnect.