Dow Inc. (DOW) Q3 2011 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Dow Chemical Company Third Quarter 2011 Earnings Results Conference Call. [Operator Instructions] Also today's call is being recorded. Now I'd like to turn the call over to Doug May, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Laura. Good morning, everyone, and welcome. As usual, we're making this call available to investors and the media via webcast. This call is the property of the Dow Chemical Company so any redistribution, retransmission or rebroadcast of this call in any form without Dow's written consent is strictly prohibited. On the call with me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer; Bill Weideman, Executive Vice President and Chief Financial Officer; and Dave Johnson, Director in Investor Relations. Around 6:30 this morning, October 27, our earnings release went out on Business Wire and was posted on the Internet on dow.com. We have prepared slides to supplement our comments in this conference call. These slides are posted on our website on the Presentations page of the Investor Relations section and through the link to our webcast. Now some of our comments today include statements about our expectations for the future. Those expectations do involve risks and uncertainties. We can't guarantee the accuracy of any forecasts or estimates, and we don't plan to update any forward-looking statements during the quarter. If you'd like more information on the risks involved in forward-looking statements, please see our SEC filings. Additionally, some of our comments reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website. Unless otherwise specified, all comparisons presented today will be on a year-over-year basis. EBITDA, EBITDA margins and earnings comparisons exclude certain items. Our earnings release, as well as our recent SEC filings are available on the Internet at dow.com. The agenda for today's call is on Slide 3. And I'll now hand it over to Andrew.

Thank you, Doug. Good morning, everyone. Thank you for joining us. If you turn to Slide 4, 3 weeks ago at our Investor Day in New York, I shared with you our view on the macroeconomic environment and our confidence in our growth strategy. Our results announced this morning reflect the trends and data we provided during our event and clearly demonstrate why our confidence is steadfast. We’ve delivered another quarter of robust earnings. Our EBITDA reached a third quarter and year-to-date record. Our sales gains were broad-based, powered by the strength of our transformed and diversified portfolio. Every single one of our operating segments and geographies grew in revenue and our Agricultural Sciences segment delivered record sales in the quarter. Price rose in all operating segments, more than offsetting a significant increase in purchased feedstock and energy costs. And on the demand side, our diversified geographic presence served us well. We delivered record sales in the emerging regions with a specially robust growth in Latin America and Asia Pacific. In fact, the large fast-growing countries of China, India and Brazil all delivered impressive double-digit volume growth. And once again this quarter, we delivered record sales in China. This really enabled us to offset soft demand in the United States and Europe. Our joint ventures also continued their strong performance and we achieved a year-to-date record. And finally, our innovation strength continued as we delivered nearly 1/3 of our sales from products launched in the last 5 years. This performance is a clear proof point that our focus on execution, on controlling the things we can control, is enabling us to deliver even in the midst of these uncertain times. We are operating from a position of financial strength, evidenced by our continued progress in reducing debt. And importantly, we…

Thank you, Andrew. I'd like to remind you that my comments will be on a year-over-year basis; EBITDA, EBITDA margins and earnings comparison will exclude certain items; and sales, volume and price comparisons will be on a reported basis as we did not have any divestitures in this quarter or the same quarter last year. Now turning to Slide 6. Sales rose 17% in the quarter to over $15 billion and we delivered more than $2 billion in EBITDA. On a reported basis, earnings were $0.69 per share or $0.62 per share, excluding a $0.07 certain item related to the recovery of our previously impaired note receivable from Equipolymers, one of our joint ventures. We believe this represents a strong result and reflects our focus on execution even amidst of dynamic market conditions. Now let me turn to our volume and price trends. Dow's diversification was on full display in the quarter as strong demand in Ag sciences and modest volume gains in Electronics and Function Materials, and Performance Plastics offset moderate declines in other segments. Geographically, our fast-growing regions of Latin America and Asia Pacific led growth in the quarter with strong double-digit growth performance in China, India and Brazil. Collectively, our emerging geographies grew volume 7% and these gains offset softness in the developed regions, particularly the United States and Western Europe. Now moving to price on Slide 8. Again, this quarter, price was up across all operating segments in all geographies. Double-digit gains were achieved in 4 of our 6 operating segments and we saw double-digit increases across all regions, led by EMEA up 21% and North America up 17%. Now turning to our operating segments, starting with Electronic and Functional Materials, which delivered record EBITDA performance. Even in the face of well-recognized second half headwinds in…

Thank you, Bill. If you turn to Slide 14, you can see we continue to advance our strategy, a strategy that starts with the formidable advantage we have in feedstocks, bringing significant cost advantages to our well-balanced and integrated portfolio. The growth of our market-driven businesses in this portfolio is accelerated for the commercialization of our innovation pipeline, synergies between our divisions and our geographic growth investments. And finally, our initiatives to drive efficiencies, reduce costs and enhance our financial flexibility are strengthening our foundation in providing significant levers for stability, which is especially important in today's environment. On every front, we continue to make tremendous progress. And you can see on Slide 15, our integrated portfolio. It's diverse, well-balanced and really designed to deliver sustainable growth. So let's go through it. On Slide 16, our strength begins with our advantaged-feedstocks. 70% of our global ethylene production is in regions with cost-advantaged feedstocks. Couple this with the fact that shale gas dynamics have brought U.S. Gulf Coast ethane-based assets down the cost curve and it is clear to see that long-term dynamics are very positive for Dow. After all, we are the world's largest, most flexible and most experienced ethylene producer. Right now, however, as predicted, we are facing trough-like supply-demand conditions in the ethylene chain due to weaker demand. We expect high cost crackers in Asia and Western Europe to begin to feel the margin compression in the very near term. On Slide 17, despite this, we continue to remain bullish on our Performance Plastics portfolio, which has already delivered 10 consecutive quarters of EBITDA margin north of 20%. And even in this current climate, is still near that range. However, economic worries in Western Europe and an expectation that polyethylene demand would weaken, have driven a pause in…

Thank you, Andrew. Now we’ll move to all of your questions. First however, I would like to remind you that my comments regarding forward-looking statements and non-GAAP financial measures apply to both our prepared remarks and the following Q&A. Laura, would you please explain the Q&A procedure?

[Operator Instructions] We'll turn first to John McNulty with Crédit Suisse.

With regard to the Electronics and Functional Materials business, you seem to be doing noticeably better than what some of the end markets are reflecting at this point and I guess I'm wondering if you can flush out what's driving the strength in pricing, as well as the potential share gains that seem to be driving the volumes?

Yes, John. Certainly, the Dow portfolio that I referred to in the script and our slides, we have good positive exposure to what's growing and tablets and mobile phones are still growing and growing quite significantly. And even in the weaker segments, in LCD TVs, for example, our display films are the right type of films that are ubiquitous across all displays and not in certain types of, for example, high-end LCD TVs. So it's mostly our portfolio point plus of course, in semiconductor, where we have a very big set of businesses, we've been having big wins with new technology launches in particular, in 193 nanometer photoresists and for advanced nodes and of course, our slurry pads with our new technology there. So it's really our portfolio.

Great and just as a follow-up, on the cash flow interventions that you had highlighted, in terms of opportunities to cut back if you need to, what would you need to see to actually execute the enhanced $750 million Cost Reduction Program, what would you need to see in the end markets for that to actually happen?

Well in brief, what we are watching for and what we said on our Investor Day is that if you see the macros and the micros start to mirror each other and consumer demand and business confidence start to deteriorate further from here, we will accelerate. Obviously, there are conditions like that out there right now, especially in Europe. Hopefully, today's announcement will start to reverse that. We're not going to do anything stupid. We're going to basically intervene where intervention can be done and really, it will be to slow the growth rate of increased costs based on the numerator not being appropriate. In other words, in the next 12 months, but what we said on Investor Day stays true, we will deliver the earnings that we talked about and our minimums on our road to $10 billion.

Next, we'll move to Don Carson with Susquehanna International.

Question on Ag, you had very strong results. I'm just wondering to what extent -- given your strong position in Latin America and the early planting and pipeline fill that went on there that you may have pulled results forward from the fourth quarter. And should we expect a reversal of last year's pattern where Q3 was relatively low and Q4 was stronger?

Yes, Don, we -- very minimal for us. I know others talked about that. We have very minimal pull forward. And really, it's our portfolio difference I think, and our new product launches that have given us a very strong Ag result and we don't see any particular delta then as you relate Q4 to last year.

And I know you've got a pretty strong position in seeds in South America unlike the U.S. I mean, what is your exact position in Argentina and Brazil, in terms of corn market share?

Yes, it's heading to around -- for Brazil, we gain share, it's heading around 16% in Brazil and around 10% in Argentina.

Next, we'll move to Kevin MacCarthy with Bank of America Merrill Lynch.

Andrew, 2 part question if I may, on the ethylene chain, if we think about it broadly from the wellhead all the way down to the consumer. As we look upstream, can you comment on U.S. Gulf Coast, ethane cost, which have been stubbornly high, I would say, in recent weeks, in the low-to-mid $0.90 per gallon range? What's your view of the future there and how long that cost pressure might persist? And then looking further downstream, let's say the polyethylene resin, would you comment on your perception of inventory levels by region of the world?

Kevin, so polyethylene first. Inventories -- your second question first, inventories are low right across the chain. In fact, we're beginning to see that the anticipation of price declines, which is of course, what caused inventories to go very low versus demand is really the driver of what we've seen late Q3 and into Q4. So we already can see some positive signs. The shipments to China are increasing at a higher prices on a spot basis as the demand starts to pick up there based on very low inventories. So -- and I can go region by region but for the sake of the time, I won't. In essence, it's basically low across most of the geographies, most of the segments. Some variation between pipe and some variation between film. Now in particular, on ethylene and ethane price, ethane price of course, has spiked in the short-term based on pipeline restrictions. You know that the go-to market on key plays like the Marcellus needs pipelines. As you know, the futures are all very low because this access will be sold as we go into next year but ethane is still by far, the preferred feed here in the United States, and it's much more cost competitive than all of its equivalents, and you're going to start to see, as you know, as naphtha starts to go back up and ethane is the favored fuel here in the United States, the coproduct credits of naphtha are starting to hurt anyone who produces ethylene off of naphtha as coproduct prices drop dramatically. In particular, propylene and benzene. So this is a temporary compression. There will be some of it in the fourth quarter for sure, but beyond that, early next year, you'll start to see that gap widen.

Just a follow-up, Andrew, on Europe, could you comment on operating rates there and I thought I heard you make a comment about LPG flexibility, are you changing feed mix at this point in Europe?

Absolutely, totally, we are. And yet, clearly, Europe and for that matter, Asia, pure naphtha plays are the most squeezed right now. We anticipate to see a couple of million tons of idling to happen if not shutdowns based on this squeeze happening through Q4, that will help price environments going into Q1.

Now we'll move to Jeff Zekauskas with JPMorgan.

I was wondering if you could analyze the propylene market a little bit. In that propylene inventories in the United States, I think you're now at about 3.5 million barrels, which is sort of the highest that they've been since early 2009, and sort of more than double where they were earlier this year. And so do you think that, that's a function of demand or a difference in supply? And how do you -- do you think that that's an inventory number that can be worked down quickly or slowly?

Yes, you're right. Inventories are up despite refinery operating rates even being lower, reflecting in essence, the issue, which is soft C3 demand, some of the more commodity-like markets in [indiscernible] derivatives, like polypropylene, have come down quite a bit with the softening in Europe and the U.S., and so inventories have been building up as refineries cut back. I don't think that will work itself out real quick, which will give us low propylene inputs for the next several quarters, we believe that will be very helpful in downstream derivatives like in Performance Materials and seeing margin expansion. If not in Q4, certainly going into the demand increases early in the year.

Okay. And then you talked about various feedstock volatility and pressure on margins. Dow is very flexible in the feedstocks that it uses. Are you experiencing more margin pressure in the ethylene chain in the United States, or in Europe at this time, which is the area that's more stressed?

Definitely Europe, and that's the earlier question. With cliktane [ph], LPG flexibility but naphtha is already rising in Europe and as I said, there's going to be -- there's oversupply based on weakened demand fundamentals in Europe so in essence, the high cost guys are going to start idling and there's already been some announcements that will help us on price eventually here. But really, price rollovers and margin compression in Europe is a much bigger issue than in the United States.

And next, Bob Koort with Goldman Sachs.

This is actually Brian Maguire on for Bob this morning. I want to follow up on the previous couple of questions on idling in Europe and Asia. You mentioned a couple million pounds could be idled. Do you expect Dow or any of the JV partners to participate in that idling or do you think that it will come more from the competition?

More from the competition. I did actually say a couple of million tons and actually, we've identified -- you know us well when we do this, we've identified about 4 million tons of vulnerable production right now based on pure naphtha cracker plays mostly in Europe but also some in Asia.

Okay. I mean, just to follow-up if I could. On the lower propylene prices, do you expect that to flow through to your earnings and give you some raw material cost relief in the fourth quarter or will it take another quarter or 2 before you see the impact there?

As you know, mostly December quarters are inverted so December is always a very slow month. So we particularly feel that demand environment, certainly in polyurethanes, epoxies, et cetera will be weak-ish through the end of the year, whether it be furniture, bedding, other key market drivers that are very much consumer-driven. So it'll be more likely in the first quarter.

Peter Butler with Glen Hill Investment.

I think you could have relabeled the title of your conference call today to something like “Everything is Going Great Except the Stock Price”. And you've done some really good work improving the fundamentals, but we have the same old problem with the stock. You're underperforming a lot of your peers and it's just totally frustrating, I'm wondering if you're entertaining any new ideas to boast -- to boost Dow's price earnings ratio to a more appropriate level?

Well, obviously, Peter, the continual performance through the quarters as we showed the trajectory towards $10 billion. One, you have to keep performing and show the portfolio performs. Secondarily, people have seen in the past, Dow attract a commodity multiple and so we're outperforming pure commodity peers but obviously, we're underperforming our specialty peers. So really, what everyone's watching for is the makeup of the performance as much as anything else. And as our Performance businesses click in and earn more and our innovation agenda continues to click in, whether it be Agri Science, Advanced Materials, Performance Materials, we don't basically crop the strategy to get a multiple, we earn the multiple with the performance of the portfolio. We believe we're earning it and we'll keep doing what we have to do to show that. Now to your point, we've made some game changing moves and frankly, this company's portfolio is completely remade from just 5 years ago. But we are a management team on the march we have got many things we can still do and we will do them. We will spend the time next 12 months, in particular, on our innovation agenda and we will continue to find ways to grow key businesses like Electronics and Ag in particular, and some of our other downstream businesses, while we continue to rework our upstream portfolio to joint ventures and minimize our asset footprint. So you can continue to -- you can expect us to continue to see Dow work its portfolio to earn the multiple of our specialty peers.

And now we'll move to David Begleiter with Deutsche Bank.

Andrew, in isocyanates, you've been under pressure outside of your peers for a while here with excess capacity. How long will it take to work through this excess capacity, can we ever get back to margins you saw back 3, 4, 5 years ago in MDI in particular?

Yes, I'd certainly -- isocyanates wherever built, and TDI, as well as MDI, but that is working it's way through, we believe 2012, 2013 will be the beginnings of what you asked, which is 5- or 6-year ago type margins. This big pull that happened in '08, '09 will work its way to the system just like it's doing by the way, in the ethylene chain. So it will be about that timeframe.

Andrew, just on the 4 million tons of at-risk ethylene capacity in Asia and Europe, how much you really think stays shut versus just as a temporary idling here given current conditions?

It really comes down to the whole world at the moment, and whether these confidence-busting issues perpetuate today being such a great step forward out of Europe and hopefully, we'll see more of those steps from the political arena that brings confidence back in the occasion. If demand starts to pick up, we believe we're going through a shallow-like trough conditions right now. We always said, back end of 2011 will be trough-like based on supply, demand got a little weaker so we got shallow trough. We believe demand will come back, GDP growth next year will be somewhere around the 2% mark, if not a little higher depending on how this confidence comes back but 2% is our case, others are a little more bullish than that. With that, I think it will be more idling than shut down.

Mark Connelly, Credit Agricole Securities. Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division Andrew, your Ag business has historically been very heavily weighted towards crop chemicals, now we're seeing crop chemicals seeing some volume pickup across a bunch of markets but obviously, you've got a lot going on in seed. I wonder if you can give us a sense of what that's going to mean for the profit contribution of that segment, are we going to start to see a meaningful shift towards seed or is this new strength in crop chemicals going to leave it more or less where it is?

Proportionally, seed are outpacing crop chemicals both on top and bottom line. Remembering for the longest of times, people saw us as fairly subscale in germplasm in particular. But with our new technology plays, we've gotten the right agreements with the channels that is now causing seed penetration on market share, which is what we promised when we launched SmartStax and in fact, now with Enlist coming. So whether it be the triple stack or whether it be 5 stack or in fact, the 8 stack, we are going to be driven by Seeds and Solutions, farm solutions, which will see seeds outpaced by a very good crop chemicals portfolio. Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division Do you think Seeds can be a third of that segment within the year?

You won't get that number out of me. But it's a pretty -- it's growing to that, I won't give you the timeframe. Mark W. Connelly - Credit Agricole Securities (USA) Inc., Research Division Okay, that's fair. And second question is sort of a similar issue. Despite the strength you talked about in emerging markets, Asia Pacific growth was actually lower than EMEA growth. I would've expected Asia Pacific to look better, given the weakness that you talked about in Europe. Is Asia Pacific just uneven or is it actually weaker than Europe. I'm looking here and seeing that if I have the numbers right, developed regions saw higher prices this past quarter which also seems a little strange?

Yes, great observation and total geographic mix, Japan was way down due to opportunistic sales of commodities that occurred a year ago. So you take those -- remember, we're not in commodities anymore. So when we do opportunistic sales in commodities, it tends to flag itself in some geographies and Japan got some last year at this time. Actually, if you take that out, Asia Pacific mirror basically China and Southeast Asia.

Next, Wells -- we'll go to Wells Fargo Securities and Frank Mitsch.

You guys did a really good job of offsetting raw materials, it looks like it was a positive of about $0.5 billion in the quarter. Would you expect that level of spread price versus raws to remain at that level?

Well, look, the unit margin discussion, Frank, versus volume is really something that we're watching very carefully. And I think Bill said in his comments and I certainly repeat in mine, that we had some tradeoffs like in Coatings where we traded away volume to get margin. And so -- and not really specific to the acrylic chain and what's been going on in paints and coatings in particular. So we've seen some headwinds on margins like in the Epoxy business, especially on materials that go into end uses like wind, et cetera, that got weak in the back half of the year. But long story short, I mean, I think the propylene cost question I got earlier, will help everything in the downstream propylene envelope, not being in propylene right now, which seemed to be a prescient decision for us to get out at about that time, has given us lots of use of propylene in high-value margin business downstream that should be very good fundamentals in the next 6 to 9 months and help margin expansion versus volume.

In one of the related businesses, I guess, in the Auto side of things, your commentary was very positive, I thought with respect to your sales in the Auto business and the expectations there. And we'd heard from another competitor about some supply chain destocking in that area. Are you guys seeing any of that? What are your thoughts on the outlook on your Auto business?

Auto is a great example for Dow, of repositioning of the portfolio, it sort of mirrors [ph] the entire company, we're no longer in the commodity side, whether it be polypropyl, polycarbonate or ABS. we're in very big demand applications like lightweighting and fuel efficiency and all the things we do. So we're kind of unnecessary even in -- if you like, rotations of inventory, we're still getting lots of good demand. And frankly, remember, orders are coming off lows right, and especially here in North America. And North America orders are decent and I would tell you that coming off low bottoms, the auto exposure we had is a very positive one and we continue to gain share and our revenue and volume growth actually will continue to be exceeding light vehicle auto builds, off of a lower base.

Bill Young with ChemSpeak.

Couple of quick questions here. Exports, we've seen earlier in the year, really strong exports in say, PVC and polyethylene. Could you give us the recent trends there? As you know, the U.S. cost advantage on raw materials was a major driver there but I guess, there's some inventory shift, so where do we stand on those?

Bill, certainly, PVC is getting weaker and no question that -- of course, you see the exact opposite for us on Caustic Soda, which is doing incredibly strong. So what's going on is the ores in construction and not just in the U.S. and Europe, which is what we reported, but even in the parts of the developing world, especially in China, as they control inflation over there. It really hurt PVC and hurt PVC exports. Polyethylene is the exact opposite. Polyethylene has been weak here in North America. As we've already reported, there's been some demand drop-offs in areas such as films and inventory recalibration, so polyethylene exports have increased, offsetting domestic demand drop. And in fact, that polyethylene export number is very strong and will continue to be strong.

Okay. Great. And one more question about destocking. If you look over, say, your Coatings Materials and your Performance Materials, where do we stand there as far as customer orders due to destocking?

Performance Materials is a good example, inventories are very low, demand is low in the quarter but that's quarterly-based. I've already commented that Automotive is decently strong and they've got very lean inventories. Oxygenated Solvent is -- just to talk about a business we don’t normally talk about, evidence is that customers and distributors are keeping very low inventories, so orders coming through are viewed as truer demand. I've already commented on polyethylene. I've commented VCM. On Coatings, there's reduced inventory, but not too low and given it's a seasonal slowdown, they're worried about shortages going into next year after what they saw last year, in 2010 in particular. And Electronics, yes, in semiconductors, LED, LCD inventories are high but they're beginning to be worked down and we're not expecting dramatic correction. We watch this very, very closely and I'd make my earlier answer to an earlier question, still true that across the chains, geographies, inventories are very low, big lows. So we believe that as a consequence of that, when demand returns post the seasonal slowdown and when confidence starts to reenter the market like in Europe, you're going to see demand really increase.

We'll turn now to Hassan Ahmed, Alembic Global.

A question around -- apologies, I joined the call slightly late. So if this has been answered, apologies for the repeat. But a question about the recent spike in ethane prices. Bit confusing frankly, because we started the year, call it around $0.60 a gallon, and here we are closer to $0.95. So a couple of questions. One, what in your view, has caused this spike. Is it supply constraints, or pipeline bottlenecks? And, if any of these things are applicable, when do you think that these constraints will sort of whither away? So that's one part of it. And the other thing is that, did it catch you by surprise, the spike? And only reason I asked sort of this way is because one of the largest gas processors went from a -- back in March, went from a 50% to 60% hedged position in ethane, to a virtually 0 position for the second half of the year while retaining hedged positions in propane and butane.

Yes, Hassan, the question was asked earlier so in brief, I'd just -- you've kind of answered it yourself. It was really pipeline supply constraints that has caused us runoff in ethane. I won't comment on speculators but look, there's going to be noise in the system, while fractionation capacity comes online. And all of this is going to come online as the year unfolds next year. And in fact, as you know, from our Investor Day, the Marcellus producers have clearly chosen the U.S. Gulf Coast as a key market, they're committing to large volumes of 10 to 15 years and they will start up in 2014. So between 2012 fractionation, 2013 fractionation, 2014, you're going to get aberrations like hedge plays. But the fundamentals remain intact, and the ethane future speak to lower ethane pricing for the very short- to medium-term here. So look, we can take you off-line on some of the other specifics but that's basically the answer.

And Andrew, really quickly, slightly changing gears as well. You talked about the launch of EVOQUE, obviously, titanium dioxide prices seem to be sort of continuing to go up, more price hikes keep getting announced. What has the early sort of feedback in adoption been like, and where do you see sort of adoption rates over the course of the next year or 2?

Very strong. EVOQUE, number one, if you like, the first EVOQUE is a high-end premium paint so won't have a big effect on pigments. But EVOQUE number 2, which is going to follow very quickly, will have a much more ubiquitous commodity paint effect. Customers are lining up, they want to work with us. This is a big issue for them as you can tell. And so customers are launching their products now on EVOQUE 1, and EVOQUE 2 will be very, very helpful.

We will turn to P.J. Juvekar with Citi.

Andrew, there was a plenty of discussion on ethane prices. In the past year, you said that you would get into the midstream business if you had to, in an asset like threshing [ph]. What is your current thinking about that?

Well, we said at Investor Day that we are going to oversubscribe on uptake, so we can in fact, be a market maker on the U.S. Gulf Coast, just to be sure.

And secondly, Dow and others have reported pretty good pricing power in the quarter but volumes were soft. So given this, you think pricing is coming under pressure as we go into 4Q, or can the producers hold onto pricing?

So depending on the chain. For sure, polyethylene price weakness based on demand weakness. For sure, some of polyurethanes and epoxies, I mentioned MDI, someone asked about MDI. Those are the products we're going to see short-term price pressures. Although the year-on-year, I think, we'll still be okay. I think really, the momentum going sequentially, will pick up especially on those chains in the Q1. But the rest is fine, in fact, the rest will be more margin expansion.

Okay. Thank you very much, Andrew. Maybe I'll turn it back to you as we wrap up?

Yes, please. Thank you very much, everyone, for asking your questions, I appreciate you listening on the call. What you see this quarter and what you're going to see in these next many years, is the continuation of us having the levers to deliver the earnings. We executed against those quite well in the quarter. I believe that every part of the portfolio did what it had to do to deliver its numbers. Clearly, there's some short-term softness in polyethylene, ethylene dynamics that got asked on the call. We are working through that and as inventories get themselves re-corrected in the Q1, the momentum will pick up and the ethylene, polyethylene plastic story will continue to see margin expansions north of 20% up into the 30% range. Every other part of the chain is gunning based on innovation, based on top line growth and based on geographic diversification. Emerging geographies are in great shape and we're investing against those. So our pathway, our 12-month trailing EBITDA of $8.7 billion, our record quarter, our record year-to-date number, our pathway to $10 billion is clearly in our grasp and we are marching our way relentlessly towards that. All despite short-term uncertainties based on confidence issues in the political arena. And of course, affecting the consumer and of course, today's announcement being a very big positive. Your company will continue to deliver, your management's committed to that and we thank you for your time, attention and interest.

Great. Thank you, Andrew. Thank you for your interest in our company, your questions and for joining us this morning in the meeting. We appreciate it. We referenced a copy of our prepared comments will be posted on Dow's website later today. This concludes our call for today. We look forward to speaking to you again soon. Thank you.

Thank you, everyone, for your participation today. You may now disconnect.