| Revenue of $1.80B (12.26% Y/Y) misses by $29.65M
Somnigroup International Inc. (SGI) Q1 2026 Earnings Call May 7, 2026 8:00 AM EDT
Company Participants
Lauren Avritt – Director of Investor Relations Scott Thompson – Chairman of the Board, CEO & President Bhaskar Rao – Executive VP & CFO
Scott Thompson Chairman of the Board, CEO & President
Good morning. Thank you for joining us on our first quarter 2026 Earnings Call. I’ll begin with some highlights from the quarter and then turn the call over to Bhaskar to review our financial performance in more detail and discuss our reaffirmed 2026 earnings guidance. After that, we’ll open up the call for Q&A.
In the first quarter of 2026, net sales increased a healthy 12% to $1.8 billion. Adjusted EBITDA increased 20% to $297 million, and adjusted EPS increased a robust 20% to $0.59 per share. We are pleased with these results, particularly against the backdrop of heightened geopolitical tensions and winter weather disruptions in the U.S., all of which weighed on the industry demand.
We believe global bedding demand declined mid-single digits in the first quarter, which was below our expectation that demand would be flat to slightly positive during the quarter. We believe our performance reflected the strength of our business model and its ability to perform across varying market conditions. This has allowed us to continue to extend our leadership position in the industry.
Turning to our first highlight. We expanded EBITDA margin by over 100 basis points and grew adjusted EPS by 20%. We accomplished this on 12% sales growth, demonstrating the operating leverage embedded in our business model. We also delivered record first quarter operating cash flow, which we deployed towards debt reduction. We ended the first quarter at 3.1x leverage, and are on track to return to our targeted range of 2 to 3x adjusted EBITDA in the next few months.
Our second highlight. Our North American Tempur Sealy business outperformed the broader market. Tempur Sealy North America delivered mid-single-digit wholesale sales growth year-over-year on a like-for-like basis, driven by investments in high-quality advertising, continued momentum in Sealy Posturepedic line and increased balance of share at Mattress Firm. Looking to the back half of the year, we expect the launch of our new Stearns & Foster lineup to optimize price architecture within the broader portfolio, support higher average selling price for our retail partners, strengthen our position at higher pricing points.
We expanded our offering with additional SKUs at the top of the price range, targeting the customer who has demonstrated continued resilience through this cycle, and represents a significant growth opportunity. We’ll support the launch with new national campaign advertising focused on differentiated luxury product and on broader health and wellness benefits with sleep.
Our third highlight, our international business continued to capitalize on long-term growth opportunities, delivered double-digit growth on a reported basis and mid-single-digit growth on a constant currency basis. Tempur International outperformed the broader industry in the quarter, extending a multiyear track record of solid growth across our key markets. This performance reflects continued disciplined investment in distribution and marketing, a resilient supply chain, strong local execution and the strength of our Tempur brand. We’re pleased with our results in a challenging environment, and our international business remains well positioned for continued growth over the long term.
Our U.K.-based bedding retailer, Dreams, once again outperformed the market this quarter, reinforcing its position as a category leader. Strong brand awareness and share of voice, combined with effective execution drove solid customer engagement and healthy order volume. Our ongoing operational discipline and a continued focus on product quality and customer experience supports further growth in this very competitive U.K. market.
Our fourth highlight, Mattress Firm outperformed the broader U.S. market, supported by its scale, depth of category expertise, and a well-curated merchandising assortment. Merchandising actions taken over the past year have better positioned Mattress Firm business to meet customer needs across price points while maintaining a strong focus on quality and innovation. During the quarter, we further deepened relationships with suppliers aligned with our quality standards and marketing commitment.
Our proprietary sleep expert model continues to differentiate the in-store experience, supported by one of the industry’s largest and most highly trained sales force, which has been augmented by ongoing technology investments. We remain on track with our previously announced $150 million store refresh program targeting completion in 2027. To date, we have spent approximately $40 million on the store refresh program, all funded operating cash flow. Additionally, the rollout of Tempur brand walls is progressing well with national completion expected by year-end.
Scott Thompson Chairman of the Board, CEO & President
Thank you, Bhaskar. Well done. Before opening the call up for Q&A, I want to quickly address our recent announced agreement to combine Leggett & Platt. As we announced last month, we signed a definitive agreement to combine with Leggett, an all-stock transaction valued at approximately $2.5 billion, including the assumption of debt. We expect this transaction to close by year-end, subject to satisfactory customary closing conditions.
Following the close of the transaction, Leggett is expected to operate as a separate business unit within Somnigroup, similar to Tempur Sealy, Mattress Firm and Dreams. And to maintain its offices, including its primary location in Carthage, Missouri. We’re proud to have Leggett & Platt join us and believe the combination is beneficial to all stakeholders of both companies. We expect the combination to leverage the individual strengths of Somnigroup and Leggett & Platt to realize 5 strategic benefits.
First, this combination continues our vertical integration strategy and enables us to closer collaborate between component engineering, manufacturing design, and customer trends, supporting accelerated innovation cycle and more cost-effective consumer-centric product construction. Second, this combination provides access to incremental addressable markets beyond bedding, expanding Somnigroup’s long-term growth opportunities and cash flow generation. Third, the combination is expected to lower Somnigroup’s net financial leverage and increase its flexibility. Fourth, the combination is expected to be accretive to adjusted earnings per share before synergies and in the first year post closing, and significantly increased SGI’s peak earnings in a normalized bedding market. And fifth, the combination presents cost synergy opportunities. In total, we expect synergies to result in at least $50 million of EBITDA on a fully implemented annual run rate basis.
Susan Maklari Goldman Sachs Group, Inc., Research Division
I want to focus on demand, Scott, especially with the comments around pricing and consumer confidence. Can you talk about price elasticity across the business and how you’re thinking of your ability to continue to drive industry relative outperformance despite all the headwinds that we are seeing on the consumer?
Scott Thompson Chairman of the Board, CEO & President
Sure. And thank you for your question, Susan. I think when you look at elasticity, I guess the best thing to look at is really the closing rate. And if we look at closing rate, either whether it be in our own Tempur stores or you look at Mattress Firm, it continues to improve. So what that tells me is, when customers show up at the store, they’re looking for products. They then get full discovery of price, and we’re — the closing rates going up. So it doesn’t appear the elasticity is very high. I think that’s probably the best evidence in looking at that particular issue.
As far as outperforming the industry, as we’ve talked about numerous times, over the years, we continue to improve our competitiveness in the marketplace. And where I look, whether it be in our recent price increase, which I think will be among the lowest by any of the manufacturers, and that has to do with the way we handle the inflation is certainly a competitive advantage.
When I look at our advertising share of voice in the marketplace, this would be around the world. It continues to be, call it, top of class. What information I get informally on other manufacturers, they would appear to be not dealing with the current market conditions as well and maybe being a little challenged from a capital standpoint. So certainly, our cash flows and balance sheet are a competitive advantage. So I think we’ll continue to outperform the industry, and I think the industry will normalize once you get through some of the geopolitical issues that we all know about.
Robert Griffin Raymond James & Associates, Inc., Research Division
Scott, I wanted to first — I want to ask on the Stearns & Foster launch in 2H. We’ve been around the business a lot. We’ve seen a few different launches from Stearns, some starts and go kind of in the product. But the structure of SGI is much different today with all the advantages you’ve highlighted. So can you maybe unpack how that launch is set up to play out and how this launch might be a little different and where that opportunity is for that product?
Scott Thompson Chairman of the Board, CEO & President
Sure. Great question, Bobby. First of all, we talked about Stearns, you have to realize that we have cannibalized some of Stearns as we moved Sealy Posturepedic up from a price standpoint. So we self did that. And so this is the last piece of getting our pricing architecture right between all 3 brands. Tempur, Sealy and Stearns. And so that opens up some more addressable market, and we also moved the price bracket up at Stearns & Foster. Primarily, you might find interesting, we’re being pushed by our retailers who wanted a higher-price Stearns & Foster. So that is new. We also leaned into hybrids in that area, and hybrids have been good in the bedding market in the U.S., as I know you know. And quite frankly, the last Stearns & Foster hybrid, we didn’t hit the mark perfectly. So that’s a major upgrade.
I think the other thing I would point to is with Mattress Firm as part of the family, we have very strong support from Mattress Firm, from an advertising, slot commitment, training and probably a higher degree of support than we would have had without having them in the family. I think those factors probably combined with some national advertising gives us more momentum on this launch than we’ve probably had in any launch in Stearns & Foster’s history.
Scott Thompson Chairman of the Board, CEO & President
So I think the other thing I’d point out when you talk about the inflation is when you look at the price increase that we took, it’s probably overall about a 4% increase, and a 4% increase in this business is not disruptive to customers. Because quite frankly, customers don’t shop for the product but once every 8 years. So it’s not nearly as sensitive as something like gas prices.
Bradley Thomas KeyBanc Capital Markets Inc., Research Division
I wanted to ask, Scott, about the performance at the non-Mattress Firm third-party channels that you sell into in North America. I believe you said that, that was down 4% in the quarter. So it looks like maybe in line to slightly better than how the market performed. But can you just give us a sense of what you’re hearing from those partners? And any specific strategies, or goals as you think about partner growth, door growth, slot growth, et cetera?
Scott Thompson Chairman of the Board, CEO & President
Sure. We call those the other, other. And to be clear, that would be U.S. retailers, non-Mattress firm, doesn’t include Canada and Mexico. That number was up 4%, I guess? Yes, up 4% — excuse me, down 4%. And so I think you said it right, with a market that was probably down 5% plus a little is probably a slight outperformance in the other, other category.
I think those retailers are focused — what they’ve always been focused on the success of their business, which is giving them a popular product, help drive customers into their showroom, deliver on time and all those things. I think they’re excited to see Stearns & Foster come. I think they know there’s some upside there. The Sealy Posturepedic line continues to do very well. Constant frustration with the other, other retailers just on traffic, and I think that’s universal. And they certainly appreciate the strength of our advertising.
As far as additional slots, we will get some incremental slots in the new Stearns launch, but they aren’t going to be material to the total revenues of North America. But those would be — we’ll get some incremental slots there. Haven’t seen any deterioration in our positions at any of the other, other retailers. And I think on the go forward, it’s really about velocity. And that goes to having a great sales force, with quality and quantity of our advertising. And quite frankly, what our competitors do and how they perform.
Peter Keith Piper Sandler & Co., Research Division
I wanted to circle back on the chemical shortage. We’ve been getting a lot of questions on it. So it was only a $10 million impact for Q2, which I think is a positive. But could you address two things. Number one, how much inventory of chemicals in terms of months of supply, are you keeping on hand now? And then secondarily, with this polyol shortage, could that play out into the back half of the year, perhaps with some shipment delays or product outages. I know in the past, you lean more towards high-end product like back in 2021. So if you could just address the kind of the puts and takes around this polyol shortage. I’d appreciate it.
Scott Thompson Chairman of the Board, CEO & President
Yes. I’m going to take a crack at it. I think when it first showed its ugly head, there was a worst-case scenario that was worked through and mitigated and the word shortage was probably an appropriate possibility. I think with what we know today, I don’t think the industry is going to have shortages as far as outages from a supply standpoint. There is pricing impact, okay? And that’s been rolled through the industry. But I’m not nearly as concerned about shortages, and I’m not hearing comments about shortages. And that’s an industry comment.
When you then go to Tempur Sealy specifically, obviously, we have an advantaged situation because of our volumes. And then obviously, we have a large amount of safety stock safety stock is in place for one, these kind of events, which you’ve referenced, but also possible hurricane issues and stuff, what do you want to say? 3, 4 months?
Bhaskar Rao Executive VP & CFO
That’s fair, yes.
Scott Thompson Chairman of the Board, CEO & President
Yes. It varies a little bit, but for talking terms, I think, 3 or 4 months. Also you can bend in your volumes to products that don’t use as much foam at times. But I think from where it was, what would that happened about 1.5 months ago?
Bhaskar Rao Executive VP & CFO
A couple of months ago.
Scott Thompson Chairman of the Board, CEO & President
A couple of months ago. That situation continues to get better and better. in my outlook on that right now is that it’s a pricing event, and the pricing event has generally run through the industry.
| Revenue of $1.58B (-3.72% Y/Y) misses by $38.33M
Olin Corporation (OLN) Q1 2026 Earnings Call May 8, 2026 9:00 AM EDT
Company Participants
Steve Keenan – Director of Investor Relations Kenneth Lane – President, CEO & Director Todd Slater – Senior VP & CFO
Kenneth Lane President, CEO & Director
Thanks, Steve, and thank you to everyone for joining us today. We appreciate your time and your continued interest in Olin.
Let’s start on Slide 3 for a review of our first quarter highlights. Amid a very dynamic operating environment in the first quarter, the Olin team executed with discipline, maintaining focus on running our assets safely and reliably, removing structural costs through our Beyond250 program and preserving liquidity, all while staying firmly committed to our value-first commercial approach. That discipline translated into positive results in the first quarter and sets the stage for stronger earnings in the coming months.
During the first quarter, our Epoxy business returned to profitability, and we saw early signs of demand growth for Winchester commercial ammunition. The Iran conflict introduced significant disruption across global petrochemical supply chains. Sharply higher crude oil prices and freight rates disproportionately impacted non-U.S. producers, further reinforcing the structural cost advantage of U.S. Gulf Coast assets such as Olin’s. While these dynamics did not materially benefit our first quarter results due to normal pricing lags, they meaningfully improved the outlook for the second quarter.
Looking ahead, the near-term backdrop has shifted more in favor of U.S. producers than where we were at the beginning of the year. While the duration of Middle East disruptions remains uncertain, we believe the full impact is still unfolding as global supply chains continue to tighten. We’re seeing significant inventory drawdowns and deferred maintenance temporarily helping bridge supply gaps. This creates a more constructive environment as the year progresses. Olin is well positioned to navigate this dynamic environment, supported by our advantaged asset base, improving cost structure and strong cash generation. As regional customers increasingly prioritize security of supply, we have the flexibility to increase operating rates and capture value while maintaining our value-first commercial approach.
Slide 5 provides a look at our Epoxy results. First quarter 2026 marks an important milestone as our Epoxy business returned to profitability. We expect full year Epoxy performance to be meaningfully improved with our return to profitability driven by several well-executed actions. Our Epoxy team has grown our European business in the wake of regional rationalizations. Our new European cost structure is on course to deliver $40 million to $50 million of annual cost improvement. Our formulated solutions portfolio continues to provide a high-margin platform for growth with a strategic focus on electronics, semiconductors and power generation. And our recent plant closure in Guarujá, Brazil, will further improve our cost structure and strengthen supply integration.
In addition to these actions, we are focused on raising prices, which have been significantly depressed due to subsidized Asian supply. Olin announced March and April Epoxy resin price increases totaling more than USD 1,200 per ton in North America and EUR 1,300 per metric ton in Europe. We expect these increases to offset the higher feedstock and transportation costs.
An aerial view of GE Appliances’ Decatur plant. Photo courtesy of GE Appliances.
GE Appliances, a Haier company, has invested $28 million in its refrigeration plant in Decatur, bringing the company’s five-year total in U.S. manufacturing to $3 billion.
The most recent investment in the Alabama plant includes equipment upgrades and the opening of a new primary care clinic for its employees and their families. The plant produces 16-22-cubic-foot refrigerators.
A significant portion of the $28 million investment went to fund highly automated thermoforming machines that produce interior liners for fresh food and freezer sections of top-freezer refrigerators. The technology improves efficiency and expands production capacity across multiple models, supporting the plant’s three-shift operation. Upgrades to lighting and air-conditioning units also were made.
“Investing in advanced manufacturing and employee health is a winning combination that strengthens our business,” said Rocki Rockingham, chief human resources officer at GE Appliances. “How we show up matters. At GE Appliances, we are creating appliances our consumers love in an environment where our employees can do their best work and build lasting careers.”
The investment is part of GE Appliances’ work to expand its manufacturing footprint and increase investment in American communities. The Decatur plant opened in 1977. It is the highest-volume refrigeration plant in the country, according to GE Appliances.
Part of the company’s $28 million investment is in a primary care clinic for employees and their families. Photo courtesy of GE Appliances.
GE Appliances also is investing in employees’ health with a primary care clinic on the Decatur site. It is the company’s fourth onsite advanced care clinic at its manufacturing facilities. Care will be provided by CareATC and will be free to employees on the company’s health plan.
“At GE Appliances, investing in the health of our people is investing in the success of our business,” said Michele Clark, senior health services manager at GE Appliances. “This new clinic gives employees access to high-quality primary care that fits into their everyday lives.”
According to the company, GE Appliances contributes more than $2.1 billion annually to Alabama’s gross domestic product, directly employing 1,600 people in Alabama and supporting additional jobs across the state through its suppliers and operations.
Huntsman Corporation (HUN) Q1 2026 Earnings Call May 1, 2026 10:00 AM EDT
Company Participants
Ivan Marcuse – Vice President of Investor Relations & Corporate Development Peter Huntsman – Chairman, President & CEO Philip Lister – Executive VP & CFO
Peter Huntsman Chairman, President & CEO
Ivan, thank you very much. Thank you all for taking the time to join us this morning. Before I begin my remarks about our company and recent events, I want to simply say that I hope there is a quick and peaceful resolution to the ongoing conflict in the Middle East. Over the past 40 years, I’ve had the opportunity to visit every country bordering the Persian Gulf with the exception of Iraq. I have always been treated warmly and fairly by the people I’ve encountered. I hope that my comments do not come across as being callous in any way to the suffering and fear emanating from this region as I address the economic impact of these events to our bottom line and industry.
From the first hours of this conflict, our #1 commercial priority has been to increase prices enough to offset rising costs. I believe we’ve been successful in doing this. This will require continued communications with our customers and suppliers and also the discipline to make sure that we are not a shock absorber between raw material costs and finished product pricing. Our next priority is operating our plants in a reliable manner to make sure that we have the product to meet our demand. Our operations during the first quarter and going into the second quarter have been excellent.
From a sales perspective, we are seeing stronger-than-expected demand going well into the second quarter. I would say that this is being brought about by 3 factors: number one, seasonality as we move into the second quarter and the building season resumes across North America, Europe and Asia. Number two, customers who are buying ahead of the expected price increases that are being announced; and number three, disruptions that have been seen in certain trade flows that have impacted supply. An example of this would be some of our maleic customers in Europe who have become overly dependent on Chinese supply of maleic have seen a disruption in supply as raw materials and shipping costs have increased from that region. These 3 factors are also happening at a time when most inventory levels are very low across many supply chains.
These improved order patterns are being seen as we enter into the second quarter in most of our regions and across many of our products. The obvious countervailing point to all of this is how long does it continue? I can’t see order patterns that go through the month of June, but the guidance that we have shared from each division in Q2 reflects what we’ve seen to date. Today, that visibility is less clear as we look further into the quarter. I struggle to see how inflationary pressures, particularly in areas reliant on imported energy like much of Asia and Europe, will not see an inevitable downward pressure later in the year as consumer spending gradually shifts towards higher prices. To what degree this occurs is yet to be seen.
I am heartened to see the housing starts and durable goods orders in the United States better than expected for the month of March. But I’m also keeping an eye on residential permits, a step that precedes construction starts down 11% for the month of March. There will also be some longer-term dislocation of traditional economics. If you were a producer that enjoyed discounted raw materials coming out of Venezuela, Iran and Russia a few months ago, it is likely that you’re not seeing such discounts today, and I highly doubt you’ll see them in the foreseeable future. Many customers are looking for closer and more secure sources of supply. Supply chains are shifting and being reassessed. I believe that there will be some lasting impact for certain regions and products that may not seem too apparent today. It is simply too early to know how lasting some of these will be.
In short, we are aggressively raising our prices to both cover our cost of our raw materials while also expanding margins from the trough economics that we’ve been experiencing for the past 3 years. We will continue to manage our costs and deliver these objectives on budget. We will be focused on volumes and make sure that spot buying also comes with longer-term volumes and obligations. I’m glad to see the trends that we’re seeing in the second quarter, but we still have a ways to go to get to our normalized margin levels. This will require stable and longer-term demand trends to continue. I feel that we are in a strong position today to capitalize on such changes going forward. Thank you. Operator, with that, we’ll turn — open the time up for Q&A.
Patrick Cunningham Citigroup Inc., Research Division
In the release, you talked about the potential for a more durable return to mid-cycle profitability. This likely depends on both supply and demand side at this point. But can you give us the latest view on what this crisis may do in terms of supply side rationalization for MDI and polyurethanes? How do you see this playing out in terms of structural energy cost pressure, feedstock availability or potential closures at this point?
Peter Huntsman Chairman, President & CEO
I don’t see a great deal of structural change as we look at MDI. I do see pressures continuing in Europe. If you’re a European producer now having to put up with natural gas that’s priced somewhere in the mid-teens versus where we are today, I noticed in the Houston Ship channel Price this morning was under $2 per MMBtu. These are real material gaps in shifts. I can’t help but think that there’s going to be continued pressure on petrochemical producers across the board and in MDI across Europe.
But having said that, I also think that there are probably some structural issues that may make Chinese exports in certain products. I won’t get into exactly which products those are, but I think that they’re varied across the board. if you’re relying on coal as a raw material in China, you’re probably doing quite well. If you’re integrated into a world-scale refinery and integrated system in China, you’re probably doing quite well. If you’re part of what they call the teapot collection of refineries integrated into export-bound chemical facilities, you may be under some cost pressures as you see some of the discounted crude products.
So it’s not just what we see from a competitive point of view. It’s also what we see from the raw material that many of our customers and many of our competitors and the industry in general will be facing. And I think those are some of the longer-term issues that we’ll be dealing with even after the Strait of Hormuz hopefully open soon here.
Kevin McCarthy Vertical Research Partners, LLC
Peter, can you speak to operating rates in MDI, both for Huntsman and also what you’re observing at the industry level? And related to that, how are things changing post-war versus pre-war?
Peter Huntsman Chairman, President & CEO
I think that as we look at the industry in general, you’re probably looking at the low to mid-80s. And I think now from where we are, we would be in the high 80s. We’re sold out completely in our Chinese operation. Our U.S. operation for the most part is sold out. Europe, as we said in the — when we announced our first quarter earnings before the Middle East conflict, we’re starting to see some green shoots there. We continue to see some opportunities in Europe. And I would say that we’re operating at pretty good levels across the board.
There have been a number of outages and I would say, short term and also planned disruptions in the industry, not to be too unexpected. When you go have an industry that’s been operating kind of at a low probably 70%, 80% for the last couple of years. And now all of a sudden, you see an increase in demand and pull-through, you typically have operating issues. So I can’t speak about the competition, but I can just say in our facilities, all 3 of our MDI facilities, our associates there have done a fantastic job in their operations.
Kevin McCarthy Vertical Research Partners, LLC
And then secondly, I imagine your PO/MTBE joint venture in China has become more profitable. Maybe you can talk about what you might expect for equity earnings trajectory moving forward.
Peter Huntsman Chairman, President & CEO
Yes. Certainly, in the past, it’s been a little bit of a drag on us. I think today, we’re probably in the low to mid-single-digit millions of dollars of impact on that business. So certainly doing better than it has been in the past. And I would hope that MTBE, that C-Factors should improve as you get more into the driving season, but that’s — there’s just so much volatility right now in the whole refining chain and what’s going on with PO economics. That would be probably be one of the murkier businesses that we have as far as looking into the future.
Philip Lister Executive VP & CFO
Remember, Kevin, the price of gasoline is managed differently in China than elsewhere in the world. So MTBE margins aren’t what you would expect in China, where the Chinese joint venture is making money today is on propylene oxide and the margins that we’re seeing there over and above propylene.
Frank Mitsch Fermium Research, LLC
That’s interesting. So PO is doing better than MTBE in China. Thanks for that enlightenment. Peter, I was wondering if you could speak to the polyurethane and MDI pricing initiatives that are underway, how that relates to underlying benzene costs and what sort of successes are you seeing or not on that front?
Peter Huntsman Chairman, President & CEO
Well, I’d say that we’re seeing a — we’re certainly staying ahead of the benzene curve never as far ahead as I would like to see it. I’d like to see it multiple times better than what we’re seeing. But I highly compliment our sales and marketing groups on their aggressiveness and making sure that we’re covering our raw material costs and staying ahead of that. So yes, both from a volumetric basis, we’ll see a positive influence on it and also margin expansion above and beyond raw materials, we should see expansion on that.
Frank Mitsch Fermium Research, LLC
All right. Terrific. So margin expansion. So if I think about the price/mix for Huntsman overall, it’s been negative for several quarters here. Given these initiatives that you have underway, is the expectation for the full company to show positive price/mix here in 2Q and hopefully beyond?
Peter Huntsman Chairman, President & CEO
Certainly, in Q2, hopefully, beyond, I would reinforce that as well. I mean, as I look at some of the pricing trends that we’re seeing going into the second quarter, just to give you an idea in North America, I’m talking about all products, all prices. So I’m not talking about any one division, but we have not seen a quarter-on-quarter growth in pricing trends. I mean unfortunately, you’re right in what you said earlier. We haven’t seen that since 2022. So the trends that we’re seeing right now and the jump that we’re seeing on a quarterly basis right now in North America, we haven’t seen that in years now. Europe isn’t too dissimilar.
We’ve seen a few quarters here and there where we’ve seen some up pricing, but that’s more to do because of the strength of our Advanced Materials business in Europe, not because of the macro trends there. So yes, I like where we’re going into the second quarter. And my only question is how sustainable is it? But it’s — look, it’s a lot better than where we were a quarter ago.
Hassan Ahmed Alembic Global Advisors
Peter, I just wanted to revisit some of the earlier commentary around MDI supply, both as it pertains to the product as well as the feedstock. I mean there’s at least one facility in Saudi Arabia that seems to be offline. And then obviously, I would imagine there would be sort of broader issues in terms of the availability and pricing of benzene as well as methanol. So could you comment a bit about sort of operating rates for MDI, keeping in mind some of these outages as well as some of the feedstock availability issues the world may be encountering and how long it may take for some of these bottlenecks, if peace was declared tomorrow to sort of be ironed out of the system?
Peter Huntsman Chairman, President & CEO
Yes. I think that as we look, you made reference to a Middle East producer. That’s roughly about 4% of global capacity. So if you kind of think that the industry is operating in the low to mid-80s, that would say that we’re kind of pushing the mid- to upper 80s at 90% capacity utilization globally. Now again, that’s not across the board. There’ll be parts that are better than that and parts that are worse than that. But just globally, across the board, when you reach 90% in the MDI industry, given what people have a stated capacity and the outages that take place on a yearly basis for maintenance and so forth, you’re really in an industry that starts to strain at 90-plus percent capacity.
So I mean, statistically on paper, you can see where the industry is now moving into the upper 80s. In some region of the world, it’s going to be, again, better and worse. I’ve not seen or heard of any problems with the procurement of raw materials in MDI around the world. And the pricing of that raw material so far has been pretty much in line with oil. So that would tell me that there’s a pretty decent supply of it that’s available. But — longer term, my biggest question on MDI is going to be the sustainability of the demand because, again, previous to February 28, I would say that — I don’t want to say that we were going great guns.
So we’re starting to see some green shoots in Europe as we reported earlier. We are moving into the North American housing season. And China was stable and in pretty decent shape. So my whole question is really around sustainability of demand as you start looking out in the third and fourth quarter. And like I said, Hassan, it’s just too early to start looking at those order trends.
Hassan Ahmed Alembic Global Advisors
Understood. And as a follow-up, you mentioned the polyurethane market in Europe, obviously, was volumes-wise up 4%, which obviously is decent. But in your prepared remarks, you obviously talked about easier compares as well because last year, you obviously had the sort of Rotterdam sort of turnaround. What green shoots are you guys seeing volumes-wise in Europe? And over the last couple of quarters, obviously, along EBITDA lines, it seems for the PU business, EBITDA was negative. Have you guys currently sort of turned that around? Is it actually generating positive EBITDA now?
Peter Huntsman Chairman, President & CEO
Yes. To look at your first area, I would think that CWP composite wood products in Europe is looking pretty good. Technical insulation is — and that would be your sandwich boards and so forth that are going into data centers, warehouses, prefabricated buildings and so forth. Your ACE business, adhesions, coatings, elastomers business is doing. Again, I don’t want to paint the details of going through the roof in Europe, but we’re seeing some green shoots in these areas, badly needed, by the way. And so yes, I think that certainly is moving towards an area where we don’t just want to see a positive EBITDA coming from Europe, but we want to see positive cash coming out of Europe. And so yes, we’re at that precipice and seeing things improve.
Philip Lister Executive VP & CFO
And Hassan, as we sit here today, we would expect Europe to be positive from an EBITDA perspective.
Michael Sison Wells Fargo Securities, LLC, Research Division
When I take a look at your outlook for Polyurethanes for 2Q, margins look like they’re going to improve a little bit, but not a lot. So what do you think needs to happen to get the EBITDA margins for polyurethanes at better levels going forward? And just curious what the pricing for the segment should imply for 2Q year-over-year?
Peter Huntsman Chairman, President & CEO
I think the 2 things that we need more than anything else are demand and raw material stability. We’re projecting in the second quarter that we’ll take in well in excess of around $100 million of raw material costs, and we expect to offset that and get prices higher than that. But that’s a tremendous amount of raw material costs that we’re absorbing in one quarter. And of course, in order to have any sustainability in pricing and pull-through pricing, we’ve got to see the demand. So I did note in my prepared remarks, a cautionary note on inflation and what inflation factors may play in Europe. But there’s also — I’d say on one hand, there’s those inflation factors that give me concern. On the other hand, Europe has been so lethargic for so long.
I can’t help but think that there is pent-up demand, whether it be in housing or remodeling and just industrial demand, defense rebuild and so forth across the board. So that’s going to be for the second half of the year, the single biggest variable in my opinion, is going to be demand.
Vincent Andrews Morgan Stanley, Research Division
Just want to try to piece together a couple of the comments you made, Peter, as it relates to polyurethanes. And if I’m conflating things, please obviously correct me. But you’re talking about how you’ve been able to get pricing ahead of benzene, and we traditionally think of you having about a 2-month lag of benzene flowing through. And then maybe later in the year, we may see some negative demand elasticity from the consumer at the end market working its way back up the supply chain. So do we think about 2Q, your spreads being strong because you’re ahead of that benzene and then maybe benzene catches up with you in 3Q, and then we have to see how much more pricing you can get and that, I guess, would be a function of demand. So are we thinking 2Q and 3Q may be flattish in terms of profitability in polyurethanes? Or do you think 3Q could actually be up a little bit or maybe it would be down a little bit? What’s your latest thinking on that?
Peter Huntsman Chairman, President & CEO
Well, far too early to comment on Q3. Again, I believe Q3 is going to be more demand-driven than anything else. I do — the trends that I’m seeing today, we are staying ahead of the price on benzene. We also are picking up some volume that we see on a year-to-year sort of growth basis. And we’re going to continue to be pushing prices through. Now again, the ability to push those prices through will be predicated on macro demand and so forth. And as I get into the third quarter, and again, I don’t want to be overly pessimistic about that. I merely say that is right now, there’s — I feel there’s a bit of euphoria in the industry, and I love seeing it. I think it was long overdue. I hope it continues into the third and fourth quarter, but a lot of that is just too early to tell on demand.
Matthew Blair Tudor, Pickering, Holt & Co. Securities, LLC, Research Division
I was hoping you could talk a little bit more about just underlying construction activity. One of your peers mentioned that it has been weakening. You talked about the diversion in March data between starts and permits. Are there any trends in Q2 on construction activity that you can share so far?
Peter Huntsman Chairman, President & CEO
I would say that we’re not seeing a drop-off, but we’re also not seeing a lot of improvement. And I think that I would say right now, it certainly isn’t shaping to be a bad season for us. It’s just not a lot of growth in that. So I’d say, yes, there’s some stability. But I’m sorry, I probably should be saying it’s either going up or it’s going down, but it seems to be quite stable at the present time. That’s why I say there’s some decent trends on housing starts that feel pretty good. And we’re — I think in the second quarter going into the third quarter, we’ll probably see 2%, 3% low single-digit growth in construction this year. But I’m also concerned when you see a 10% drop in 1 month in housing residential permits. Again, that’s a step before the housing starts. So again, I don’t want to get — I don’t want to read too much into a single quarter of data because February, both of those numbers were the complete opposite. Permits were up and starts were down. So I think we’ll probably see some very gradual growth this year.
Matthew Blair Tudor, Pickering, Holt & Co. Securities, LLC, Research Division
Sounds good. And then I was also intrigued by your comment that you’re seeing some customers that are buying ahead of expected price increases. Is this occurring in some products more than others? And if so, which products? And then also on a regional basis, would this be something that’s more prevalent in Europe relative to the Americas?
Peter Huntsman Chairman, President & CEO
Yes. I would say that as we look at it, you’re probably talking about 2, 3 days of — on MDI. That would be the area where we probably see the most prebuying. So I’m going to just say that there’s — I wouldn’t say that there’s a big wave of capacity that is being pulled through. I think that we’re managing that very carefully as well. So customers coming in and increasing their orders from where they were just a few weeks ago, we’re discouraging that and making sure that we kind of keep an equilibrium on orders and so forth. And in other areas where people are coming in that haven’t bought from us for some time on a spot basis, we’re seeing if we can’t extend contracts from what you need over the next month or 2 to what you need over the next year or so. Some of our Performance Products customers and so forth that may have shifted supplies to China out from Europe and the U.S., for example.
So yes, I think on both of these demand trends, we need to make sure on those that are — there’s a difference between those that are spot buying, panic buying and those that are just trying to buy ahead of a price increase. They all need to be managed a little bit different. Sorry, there’s not one size that fits all. But right now, if there is pre-buying that’s taking place, I would be very worried if we were seeing what would be the equivalent of a week or 2 or 3 of prebuying taking place. I would say right now, we’re seeing low number of days. of inventory that is prebuying at this point.
Jeffrey Zekauskas JPMorgan Chase & Co, Research Division
Can you comment on how much Chinese MDI is coming into Europe?
Peter Huntsman Chairman, President & CEO
It hasn’t been all that much. I wouldn’t say that it’s anything out of the ordinary. It’s been pretty stable with where it’s been the last couple of quarters. And so it’s — I would say, if anything, maybe it’s even a little bit slightly lower than what it’s averaged over the last year or so. So nothing that would be — nothing that would have a material impact on the industry or pricing there.
Michael Harrison Seaport Research Partners
Peter, you mentioned in the prepared remarks there that we’re still meaningfully below mid-cycle margins in the Polyurethanes business. And I was wondering if you can provide any kind of an updated view on where you think mid-cycle margins could be. I’ll hold off on asking you when you think you can get there. But what is the appropriate mid-cycle margin level for Polyurethanes?
Peter Huntsman Chairman, President & CEO
Well, I think that we’re probably — I’ve always thought of it more on what is it on an EBITDA on average basis. And I think that business on average ought to be a mid-teen sort of a business. And how soon do I expect that to happen as soon as possible. Sorry, guys. Yes, it’s long overdue.
Joshua Spector UBS Investment Bank, Research Division
I wanted to see if I could just follow up on kind of the benzene MDI math in 2Q here. Just trying to think about if we say volumes are stable into 3Q, you’re pricing ahead of raws in 2Q, is that a headwind in that your raws are going to catch up a bit more from inventory in 3Q? Or are you exiting with enough price where you’d say that earnings in polyurethanes would be stable sequentially in that scenario?
Peter Huntsman Chairman, President & CEO
Yes. I would say that we are exiting Q2 able to stay ahead of the raw materials that we see going into Q3. And we’re also working towards more price increases to come in that area. So — I mean, as I sit here today, looking at unless there’s a cataclysmic change economically, we will stay ahead of our raw material costs going into Q3.
Philip Lister Executive VP & CFO
Josh, benzene just settled at [indiscernible]. The point is we’re ahead of that, and we’ll stay ahead of it.
Laurence Alexander Jefferies LLC, Research Division
But I guess I appreciate that no one wants the customers to build up inventory, but is it unusual for — with this kind of spike where several companies are out publicly talking about imminent shortages in different molecules that people who may see higher prices in the future aren’t trying to pull forward orders? Is that unusual?
Peter Huntsman Chairman, President & CEO
No, I don’t think that’s unusual at all. I don’t think that we’re at a point — I mean, I’m not saying I don’t wish we were, but I don’t think we’re at a point in MDI at this time where we’re seeing shortages and people saying, I can’t get it. I think that there are people that are concerned as they look at their supplier — with their suppliers with announced turnarounds that have been scheduled for multiple years that are taking place and so forth. Some of the disruptions that you’re seeing in some of the energy flows and shipping flows — but I’m not seeing panic buying at this point, but I am seeing higher capacity utilization. So I think that there’s an improvement in market conditions for the producers, but consumers can still get the product.
Arun Viswanathan RBC Capital Markets, Research Division
I guess we did hear about an outage with Wanhua a couple of days ago. And maybe I can just get your thoughts on that, if you think that, that could tighten up markets. And then I guess maybe you were asked this question earlier, apologies if so. But what is kind of the potential for those utilization rates to remain consistently above 90%? Do you see any permanent kind of supply activities that could arise in the next few months? Obviously, it depends on duration, but — of the conflict. But what are your — are your customers kind of migrating to you in the face of other supply shocks or disruptions? Is there a share gain opportunity as well?
Peter Huntsman Chairman, President & CEO
Yes. Arun, good question. I’m not sure necessarily what’s happened with the competitor facility. When they do have multiyear closures, when I say multiyear, I mean, oftentimes, when you do a large-scale closure on a vast petrochemical site, you’re renting equipment, you’re planning equipment, you’re planning workforces usually 18, 24 months in advance. I mean you know these things are coming and people are exchanging materials. I know that’s happening. I’ve heard — read that a splitter may have gone down or something. I’ve not read that a facility, there’s been a large-scale cataclysmic outage or anything like that.
I think that we’re probably as an industry operating in the high 80s right now, depending on product flow in the Middle East. That’s going to be a bit volatile right now with some of these large — remember in China, you’ve got single site facilities of 1 million metric ton sites. When those go down, a site that big, you will fill it globally. And if they’re down for an extra couple of weeks because of a problem or whatever, you’ll feel it acutely on a short-term basis. So we’ll continue to take — I think as we look right now, our facilities are operating well, and we’re in a position where we can be a strong and reliable supplier.
Arun Viswanathan RBC Capital Markets, Research Division
Okay. And then the other question I had was just on the PO market. Obviously, there’s some tightness there, but there was also a reduction of capacity by one of the suppliers recently, and I know one of the other plants are down. So are you guys feeling like your own kind of procurement for the Polyurethanes business is intact? Or do you foresee any supply disruptions or rerouting of your supply chain that would be required?
Peter Huntsman Chairman, President & CEO
No, we don’t see any disruption in our PO supply right now. We’ve got a good supplier that’s plant operating, and I feel that we’re covered with that. And we’ve also got an excellent supply source in China as well. So I feel we’re okay with that. Operator, why don’t we take one more question, and we’ll let people get on their way.
| Revenue of $9.79B (-6.11% Y/Y) beats by $124.43M
Dow Inc. (DOW) Q1 2026 Earnings Call April 23, 2026 8:00 AM EDT
Company Participants
Andrew Riker – Vice President of Investor Relations James Fitterling – Chairman & CEO Karen Carter – Chief Operating Officer Jeffrey Tate – Chief Financial Officer
James Fitterling Chairman & CEO
Thank you, Andrew. I’d like to first take a moment to step back and recognize our colleagues, neighbors, customers and partners in the Middle East who are facing significant turmoil and uncertainty. Our thoughts are with everyone affected by this conflict, and we wish for their safety and well-being during these difficult times.
On Slide 3, I’ll now cover additional details from the first quarter. The solid results we delivered reflect our commitment to controlling what we can control. While January and February order books were solid, we experienced a sharp positive inflection in March with the beginning of the conflict in the Middle East. We expect this supply disruption will persist throughout 2026. During this quarter, we focused on Dow’s strengths of prioritizing our customers, managing costs aggressively and operating with safety, reliability and long-term value creation. We delivered 3% sequential volume growth, net sales of $9.8 billion and operating EBITDA of $873 million. And with our self-help actions well underway, we delivered approximately $193 million in-period cost savings. As we look ahead to the second quarter and beyond, we are taking actions to enhance Dow’s agility and resilience.
We’re also entering a seasonally high demand period, providing additional tailwinds as we move through the next couple of quarters. In addition, an increasingly positive margin backdrop continues to unfold, and we expect the pricing momentum that began in March to continue across every business and every region in Dow’s portfolio.
On the supply side, the conflict in the Middle East has created constraints that are clearly evident in the near term. This includes supply chain disruption for an extended period of time. We also anticipate impact to future investments, including potential delays or cancellations of planned industry capacity additions as well as increased pressure for capacity rationalization. And lastly, we expect that the higher global oil and naphtha prices will steepen the global cost curve.
Against this backdrop, our in-flight actions serve to further strengthen Dow’s competitiveness and position us to drive margin improvement and capture earnings upside. First, our incremental growth investments are delivering returns like our new world-scale polyethylene train in Freeport, Texas. And we’re making progress on our Alberta project, where the overarching merits of this investment in the cost-advantaged Americas are further reinforced by the current global dynamics. In addition, the benefits from our previously announced European asset shutdowns begin this year. And lastly, we are building a Dow that is more agile and resilient through any cycle, a company that delivers through periods of volatility and one that focuses on capturing upside, improving margins and outperforming our peers to effectively reset the competitive benchmark.
We’ll share more details on all of this later in the call, and Karen is going to cover our first quarter operating segment performance. But before that, I’d like to briefly address our recent leadership announcement. Effective July 1, Karen will assume the role of Chief Executive Officer, and I will move to the role of Executive Chair. This announcement follows a deliberate multiyear succession process in partnership with our Board and ensures continuity as we execute our strategy.
Serving as CEO of Dow has been the privilege of a lifetime, and I’m incredibly proud of what our team has accomplished together. This transition comes at the right time as we transform our company for its next phase of growth. I have full confidence in Karen’s leadership, her deep operational experience and her ability to drive performance and value creation. As CEO, she will continue our efforts to transform Dow, positioning us for greater agility and resiliency through any phase of the cycle. She is exactly the right leader to guide our company and deliver on our strategic priorities with discipline and rigor.
Karen Carter Chief Operating Officer
Thank you, Jim, and good morning to everyone joining today. I’m honored to step into the role of CEO of Dow. Having spent my entire career with the company, I have a deep appreciation for our people, our innovation capabilities and the critical role we play in enabling our customers’ growth. As we look ahead, our priorities remain consistent. We will continue to drive operational excellence, maintain disciplined capital allocation and advance high-value growth in our core markets. Dow is well positioned with our advantaged global portfolio, a strong balance sheet and a talented global team. My focus will be on driving execution, delivering value for our customers and ensuring consistent long-term value for our shareholders. I’m excited about the opportunities ahead and confident in our ability to continue to deliver for all stakeholders.
Turning now to our first quarter results by segment. As Jim mentioned, Team Dow remains focused on disciplined execution in every business throughout the first quarter. As the situation in the Middle East unfolded in March, we continue to manage costs and cash tightly while also prioritizing our customers. We delivered solid results in January and February, and then dynamics in the Middle East quickly impacted industry supply/demand conditions. In fact, our operations outside the region experienced the largest percent sales gain from February to March that we’ve seen in our company’s history.
Our teams remain focused on balancing near-term dynamics with discipline while also progressing our long-term objectives, and this agility continues to be a key differentiator for Dow.
Operating EBIT was $208 million, driven by lower integrated margins and higher planned maintenance activity. This was partly offset by higher polyethylene volumes as well as tailwinds from the company’s cost reduction efforts. Looking ahead, our significant Americas footprint, including our new Poly-7 asset, will enable our teams to capture improved margins.
Next, turning to our Industrial Intermediates & Infrastructure segment on Slide 5. Net sales were $2.6 billion, down 8% year-over-year. This was largely due to lower prices in both businesses as well as lower volumes in Polyurethanes as a result of impacts from the Middle East conflict. Our proactive cost savings actions in both businesses provided tailwinds that offset some of the declines. Volume declined in the quarter as well, primarily due to our actions to reset our competitiveness by shutting down our higher-cost upstream propylene oxide assets late last year. As a reminder, this action rationalized approximately 20% of North American PO industry capacity. And while we are experiencing a prolonged weak demand landscape across building and construction, our new alkoxylation assets are driving growth in Industrial Solutions, which serves attractive end markets such as home care, pharma and energy.
Next, on Slide 7, I’ll take a step back to frame further details on the current macroeconomic environment. The headline is this. Demand across many markets is steady. At the same time, supply is short and arbitrage is increasing. On the demand side, for our core polyethylene packaging markets, conditions remain resilient, but we are seeing mixed signals in other key markets that Dow serves. For example, in the U.S., inflationary pressures and higher interest rates are still weighing on existing home sales. This continues to be reflected in our Industrial Intermediates & Infrastructure and Performance Materials & Coatings segments, both of which serve the building and construction market. Consumer spending has shown some modest improvement, but the landscape and behaviors are likely to remain cautious until we see a significant inflection in macroeconomic conditions.
Moving to supply dynamics. We anticipate that shutdowns, feedstock limitations and logistical constraints will continue to reshape polyethylene product availability across regions. These conditions are creating ripple effects well beyond the Middle East, including significant impacts to logistics costs and transit times. Supply and feedstocks into Asia and Europe are constrained, which is triggering price increases globally. It is also leading to increased production in the Americas and is providing Dow the opportunity to capture new business in Europe. The duration and severity of these constraints increases the likelihood of lasting industry impacts, including the potential for accelerated capacity rationalization as well as delays or cancellation of planned capacity additions.
In this context, expectations for higher U.S. supply are helping to ease some of the pressure and provide stability. North American LNG markets remain well supplied and regionally insulated from these disruptions. In addition, U.S. Gulf Coast NGLs, including ethane, continue to be largely unimpacted. All of these factors underscore the benefits of Dow’s cost advantaged footprint in the Americas.
Next on Slide 8, we’ll unpack some of the current regional and industry impacts in more detail. In the 2 months since the conflict began, the scale of disruption we have seen is unprecedented. Roughly 20% of global oil capacity is currently offline and approximately half of global ethylene and polyethylene supply is either offline, constrained or directly impacted. These are unparalleled numbers, reflecting a combination of physical infrastructure damage, feedstock limitations and severe logistics disruptions.
Transit through the region remains significantly impaired, largely driven by the ongoing disruption in the Strait of Hormuz, and the disruption has been amplified across Asia and Europe, tightening feedstock availability and pushing producers to reduce production or increase prices to cover the rapidly escalating costs occurring from the conflict. Looking across regions, a large portion of Middle East capacity remains offline with increasing risk of lasting infrastructure damage. In Asia Pacific, feedstock constraints are limiting operating rates and reducing export availability, challenging producers who are operating at uncompetitive levels. And in Europe, high costs will require continued price increases to justify additional production. In contrast, the Americas continue to operate at high rates, highlighting the importance of Dow’s cost and feedstock advantages in the region.
Currently, it is estimated that roughly 3/4 of announced global capacity additions would be either directly impacted by the conflict or dependent on supply chains that remain highly constrained. The longer these conditions persist, the greater the potential for further industry changes. And lastly, it is not likely that the pricing impact of these events will be temporary. We expect rising global production costs and a steepening global cost curve to continue influencing pricing and spreads.
Next, I’ll turn to Slide 9, where we will discuss how Dow’s specific advantages drive near-term value. At the beginning of the Middle East conflict, petrochemical prices, especially polyethylene, were at multiyear unsustainable lows. Despite broader near-term market volatility, we anticipate packaging demand will remain resilient, providing meaningful pricing potential as evidenced by recent March settlements. That brings me to our advantaged global asset footprint.
Dow operates a large portion of our light cracking capacity in the cost advantaged Americas with assets in the U.S., Canada and Argentina, all of which continue to operate at high rates. Our consistent focus on investing in the Americas gives us reliability, feedstock security and cost stability at a time when global supply chains are strained. In Europe, our feedstock flexibility remains a critical differentiator. With naphtha supplies impaired and Pro-Nap spreads increasing, Dow’s ability to optimize across feedstocks provides a clear cost and availability advantage versus peers. This allows us to protect and expand margins through running our assets competitively even in a volatile energy and feedstock environment. And specific to our Packaging & Specialty Plastics segment, Dow has higher North American capacity than our closest peer, further supported by the 2025 start-up of our Poly-7 polyethylene train in Freeport, Texas.
Additionally, in the first quarter, we announced a series of senior leadership changes that delivered an approximately 20% reduction in both headcount and cost at that level. We remain confident that our collective efforts in Transform to Outperform will ramp sharply to $400 million in the second half of the year, creating a Dow that is more resilient across the cycle while consistently delivering growth, customer success and improved shareholder value. And as an important reminder, all of our self-help actions and the upside they provide are additive to the potential upside we anticipate going into the second quarter.
James Fitterling Chairman & CEO
Thank you, Jeff. As I look at Slide 13, it really captures how we position Dow, not just for this quarter or this year, but for long-term value creation through the cycle. First, even in a disrupted industry environment, we are well positioned to navigate market dynamics, which was apparent in our first quarter results. Our order books were solid in January and February, and we saw a sharp positive inflection in March, and we expect that to continue throughout 2026. As a result, the positive momentum from announced pricing actions across every business and every region is taking hold and building.
Patrick Cunningham Citigroup Inc., Research Division
Could you perhaps walk through any impact of the conflict on maybe the 10% to 15% of non-polyolefin derivatives that are exposed to some of these tightening market dynamics and where you might see the biggest potential for additional export opportunities or advantaged footprint taking advantage of some of the higher margins?
James Fitterling Chairman & CEO
Well, ethylene, polyethylene, ethylene glycol has probably been the biggest impact of all of it. And so you see that already showing up in the market response and what’s happening. And those should be able to repair quickly. That’s also one of the things you see in the results with EQUATE’s earnings in the first quarter was, remember, EQUATE has operations in Canada and Texas. And so they have a global footprint on MEG. So they’re able to supply their customers and also take advantage of the price increases and that more than offsets the situation that they have to deal with locally. But they’ll be able to get that back up and moving once the roadblock clears.
I would say on propylene derivatives, there are some — obviously, we have some in the polyurethanes business that will be impacted. There’s some polypropylene that will be impacted. I think in Polypro, you had a little bit different situation in downstream, demand dynamics, auto being slow, appliances being slow, [indiscernible] takes a little demand pressure off of Polypro. So we haven’t seen the same kind of dynamics there. MDI similar. Other things you want to bring in, Karen?
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