The Dow Chemical Company (NYSE:DOW) Q2 2016 Earnings Conference Call - Final Transcript

Jul 28, 2016 • 09:00 am ET


The Dow Chemical Company (NYSE:DOW) Q2 2016 Earnings Conference Call - Final Transcript


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Good day and welcome to the Dow Chemical Company Second Quarter 2016 Earnings Results Conference Call. (Operator Instructions) Also today's call is being recorded. I would now like to turn the call over to Mr. Neal Sheorey, Vice President Investor Relations. Please go ahead, sir.

Neal Sheorey

Good morning and welcome to the Dow Chemical Company's second quarter earnings conference call. I am Neal Sheorey, Vice President of Investor Relations. As usual, we are making this call available to investors and the media via webcast. This call is the property of the Dow Chemical Company. Any redistribution, retransmission or rebroadcast of this call in any form without Dow's expressed written consent is strictly prohibited.

On the call with me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer; Howard Ungerleider, Vice Chairman and Chief Financial Officer; and Jim Fitterling, President and Chief Operating Officer. We have prepared slides to supplement our comments in this conference call. These slides are posted on our Investor Relations' Financial Reporting web page and you can also access the slides through the link to our webcast.

(Forward-looking Cautionary Statements) Unless otherwise specified, all comparisons presented today will be on a year-over-year basis. Sales comparisons exclude divestitures and acquisitions. EBITDA, EBITDA margins, return on capital and earnings comparisons exclude certain items.

I will now turn the call over to Andrew.

Andrew Liveris

Thank you, Neal. If you turn to Slide 3 -- and good morning, everyone. Let me open the review of the quarter by stepping back and just looking at our three simple and very focused goals of the year. First one, achieve our plans. Second one, close Dow Corning by midyear. And third, drive the merger milestones with DuPont for a year-end close; simple, clear and focused.

Let's start with the plan. Dow's relentless and disciplined execution once again delivered another quarter of operating earnings growth and margin expansion, and the Dow team has again done it through a variety of challenging geopolitical and market conditions, and outpacing our peers in the process. You can see that in our results; 15 consecutive quarters of earnings growth and margin expansion; 11 consecutive quarters of volume growth; notably, we delivered gains in all geographies, with particular strength in the United States, China and Europe.

Cash flow from operations of $2.2 billion, up nearly 60% versus the year-ago period. We are focused on every aspect of the P&L and balance sheet to deliver these numbers, with weekly operations meetings and very strong self-help actions. Our unique combination of world class innovation, diversified integration, and a narrower and deeper market focus enabled operating earnings growth in every business in our Consumer Solutions and Infrastructure Solutions segments, while the strength of our Plastics franchise was again on display.

We have built Dow's portfolio to grow both the top and bottom line, even though market and economic conditions remain challenging. In those markets that are challenged, we have been implementing proactive and targeted self-help measures.

You can see this in our Ag segment, where