Epoxy

January 27, 2022

Dow Q4 2021 Results

Dow reports fourth quarter 2021 results
FINANCIAL HIGHLIGHTS


• GAAP earnings per share (EPS) was $2.32. Operating EPS1 was $2.15, compared to $0.81 in the year-ago
period. Operating EPS excludes certain items, totaling $0.17 per share, primarily due to certain tax-related
items.


• Net sales were $14.4 billion, up 34% versus the year-ago period, with improvement in every operating segment,
business and region. Sequentially, net sales were down 3% primarily driven by decreased polyethylene volume
due to supply constraints as well as lower olefin and co-product prices.


• Local price increased 39% versus the year-ago period, reflecting gains in all operating segments, businesses
and regions. Sequentially, price increased 1% with gains in Performance Materials & Coatings and Industrial
Intermediates & Infrastructure, led by industrial, construction and personal care applications along with
continued tightness in siloxane supply.


• Volume decreased 4% versus the year-ago period and 3% sequentially, primarily driven by supply constraints
from maintenance and lingering effects from Covid and weather-related outages, as well as global logistics
constraints across several key value chains.


• Equity earnings were $224 million, up $118 million from the year-ago period due to margin expansion at Sadara
and the Thai and Kuwait joint ventures. Sequentially, equity earnings were down $25 million driven by impacts
from planned maintenance turnaround activity at Sadara.


• GAAP Net Income was $1.8 billion. Operating EBIT1 was $2.3 billion, up $1.2 billion from the year-ago period,
with gains in every operating segment due to margin expansion and increased equity earnings. Sequentially,
operating EBIT declined $621 million as price gains in Performance Materials & Coatings and Industrial
Intermediates & Infrastructure were more than offset by increased raw material and energy costs and supply
constraints.


• Cash provided by operating activities – continuing operations was $2.6 billion, up $901 million year-over-year
and a decrease of $162 million compared to the prior quarter. Free cash flow1 was $2.1 billion.


• Returns to shareholders totaled $912 million in the quarter, comprised of $512 million in dividends and
$400 million in share repurchases.


CEO QUOTE
Jim Fitterling, chairman and chief executive officer, commented on the quarter:


“In the fourth quarter, Team Dow once again delivered top- and bottom-line growth year-over-year across all
operating segments. Underlying demand strength and continued operating discipline enabled us to overcome
supply and logistics constraints as well as higher raw material and energy costs.


“Our performance in the fourth quarter capped a record year for Dow in 2021. We achieved full year sales of
$55 billion and operating EBIT of $9.5 billion, with growth and margin expansion across all operating segments, as
well as $7.1 billion of cash flow from operations and annual ROIC of more than 22%. We delivered on our financial
priorities with proactive liability management actions through the year, including reducing gross debt by $2.4 billion
and a $1 billion elective pension contribution, while returning a cumulative $3.1 billion to shareholders. Importantly,
we also announced our plan to decarbonize our assets while growing our earnings, positioning Dow to continue on
a path to deliver more than $3 billion of accretive underlying earnings growth, advance our sustainability leadership,
and create long-term value for our shareholders.”



Industrial Intermediates & Infrastructure segment net sales in the quarter were $4.5 billion, up 30% versus the year ago
period. Local price improved 38% year-over-year with gains in both businesses and in all regions on continued
strong industry demand. Volume declined 7% year-over-year due to a planned transition away from a low-margin
coproducer contract and planned maintenance turnaround activity. On a sequential basis, the segment recorded a
net sales increase of 1%, with local price gains in both businesses and all regions. Volume declined 2% sequentially
as improved supply availability in Industrial Solutions was more than offset by planned maintenance turnaround
activity in Polyurethanes & Construction Chemicals.


Equity earnings were $90 million, an increase of $54 million compared to the year-ago period, driven by margin
expansion at the Kuwait joint ventures. On a sequential basis, equity earnings decreased by $32 million, primarily
from lower supply availability at the Sadara joint venture due to planned maintenance turnaround activity.
Operating EBIT was $595 million, an increase of $299 million compared to the year-ago period, primarily due to
continued price strength in both businesses, driving Op. EBIT margins up 460 basis points year-over-year.
Sequentially, Op. EBIT was down $118 million, and Op. EBIT margins declined by 280 basis points, primarily driven
by energy cost increases in Europe and planned maintenance turnaround activity.


Polyurethanes & Construction Chemicals business increased net sales compared to the year-ago period as tight
supply and demand balances in key value chains led to broad-based price gains in all regions. Volume declines
year-over-year were primarily driven by a planned transition away from a low-margin coproducer contract and our
planned maintenance turnaround activity. Sequentially, net sales declined as local price increases in all regions
were more than offset by planned maintenance turnaround activity.


Industrial Solutions business net sales increased from the year-ago period with local price gains in all regions.
Volume was flat year-over-year as higher volume from a renewable energy contract was offset by fewer licensing
and catalyst sales. Net sales increased sequentially on volume growth from improved supply availability and local
price gains in all regions.



Performance Materials & Coatings segment net sales in the quarter were $2.6 billion, up 26% versus the year-ago
period. Local price increased 30% year-over-year, with gains in both businesses and in all regions. Volume declined
4% year-over-year as stronger demand for performance silicones applications and architectural coatings in the U.S.
& Canada was more than offset by lower siloxane supply availability due to a pull forward of maintenance activity
to coincide with dual-control actions in China. On a sequential basis, net sales were up 1% with local price gains in
both businesses and in all regions. Volume declined 8% sequentially as increased supply availability of acrylic
monomers was more than offset by maintenance activity at a siloxane facility in China and lower seasonal demand
for coatings applications.


Operating EBIT was $295 million, compared to $50 million in the year-ago period, as Op. EBIT margins increased
900 basis points due to strong price momentum for silicones and coatings offerings. Sequentially, Op. EBIT
improved $11 million, as price gains were partly offset by planned maintenance turnaround activity.
Consumer Solutions business achieved higher net sales, with local price gains in all regions and end-market
applications year-over-year. Volume declined versus the year-ago period, as strong demand particularly for
industrial, electronics and personal care applications was offset by lower supply availability due to a pull forward of
maintenance activity to coincide with dual-control actions in China. Sequentially, net sales were up as local price
increases in all regions and end-market applications more than offset volume declines, primarily due to maintenance
activity at a siloxane facility.


Coatings & Performance Monomers business achieved increased net sales compared to the year-ago period, led
by local price gains in all regions on tight supply and demand balances and higher raw material costs. Volume
declined year-over-year as stronger demand for architectural coatings and industrial coatings primarily in the U.S.
& Canada was more than offset by lower merchant sales of acrylic monomers partly due to Dow’s own higher-value
captive use. Sequentially, the business delivered local price gains in all regions. Volume declined sequentially due
to seasonal demand declines for coatings applications in the Northern Hemisphere.


OUTLOOK
“In 2022, we expect continued demand strength across our end markets, supported by growing industrial production
and sustained consumer spending,” said Fitterling. “We are working hard to normalize operating rates, inventory
and service levels following a year of supply constraints and Covid-related logistics challenges.


“While the global economy continues to be impacted by supply chain pressures, these logistics constraints are
expected to ease throughout the year to fulfill elevated order backlogs and pent-up customer demand. As we
navigate these near-term dynamics, we will continue to be disciplined in the implementation of our strategy and
progress on our higher-return, lower-risk growth projects and efficiency programs. We will also further advance our
key sustainability initiatives to decarbonize our assets and capture increasing demand for lower carbon and circular
solutions.”

https://corporate.dow.com/en-us/news/press-releases/dow-reports-fourth-quarter-2021-results.html

January 27, 2022

Dow Q4 2021 Results

Dow reports fourth quarter 2021 results
FINANCIAL HIGHLIGHTS


• GAAP earnings per share (EPS) was $2.32. Operating EPS1 was $2.15, compared to $0.81 in the year-ago
period. Operating EPS excludes certain items, totaling $0.17 per share, primarily due to certain tax-related
items.


• Net sales were $14.4 billion, up 34% versus the year-ago period, with improvement in every operating segment,
business and region. Sequentially, net sales were down 3% primarily driven by decreased polyethylene volume
due to supply constraints as well as lower olefin and co-product prices.


• Local price increased 39% versus the year-ago period, reflecting gains in all operating segments, businesses
and regions. Sequentially, price increased 1% with gains in Performance Materials & Coatings and Industrial
Intermediates & Infrastructure, led by industrial, construction and personal care applications along with
continued tightness in siloxane supply.


• Volume decreased 4% versus the year-ago period and 3% sequentially, primarily driven by supply constraints
from maintenance and lingering effects from Covid and weather-related outages, as well as global logistics
constraints across several key value chains.


• Equity earnings were $224 million, up $118 million from the year-ago period due to margin expansion at Sadara
and the Thai and Kuwait joint ventures. Sequentially, equity earnings were down $25 million driven by impacts
from planned maintenance turnaround activity at Sadara.


• GAAP Net Income was $1.8 billion. Operating EBIT1 was $2.3 billion, up $1.2 billion from the year-ago period,
with gains in every operating segment due to margin expansion and increased equity earnings. Sequentially,
operating EBIT declined $621 million as price gains in Performance Materials & Coatings and Industrial
Intermediates & Infrastructure were more than offset by increased raw material and energy costs and supply
constraints.


• Cash provided by operating activities – continuing operations was $2.6 billion, up $901 million year-over-year
and a decrease of $162 million compared to the prior quarter. Free cash flow1 was $2.1 billion.


• Returns to shareholders totaled $912 million in the quarter, comprised of $512 million in dividends and
$400 million in share repurchases.


CEO QUOTE
Jim Fitterling, chairman and chief executive officer, commented on the quarter:


“In the fourth quarter, Team Dow once again delivered top- and bottom-line growth year-over-year across all
operating segments. Underlying demand strength and continued operating discipline enabled us to overcome
supply and logistics constraints as well as higher raw material and energy costs.


“Our performance in the fourth quarter capped a record year for Dow in 2021. We achieved full year sales of
$55 billion and operating EBIT of $9.5 billion, with growth and margin expansion across all operating segments, as
well as $7.1 billion of cash flow from operations and annual ROIC of more than 22%. We delivered on our financial
priorities with proactive liability management actions through the year, including reducing gross debt by $2.4 billion
and a $1 billion elective pension contribution, while returning a cumulative $3.1 billion to shareholders. Importantly,
we also announced our plan to decarbonize our assets while growing our earnings, positioning Dow to continue on
a path to deliver more than $3 billion of accretive underlying earnings growth, advance our sustainability leadership,
and create long-term value for our shareholders.”



Industrial Intermediates & Infrastructure segment net sales in the quarter were $4.5 billion, up 30% versus the year ago
period. Local price improved 38% year-over-year with gains in both businesses and in all regions on continued
strong industry demand. Volume declined 7% year-over-year due to a planned transition away from a low-margin
coproducer contract and planned maintenance turnaround activity. On a sequential basis, the segment recorded a
net sales increase of 1%, with local price gains in both businesses and all regions. Volume declined 2% sequentially
as improved supply availability in Industrial Solutions was more than offset by planned maintenance turnaround
activity in Polyurethanes & Construction Chemicals.


Equity earnings were $90 million, an increase of $54 million compared to the year-ago period, driven by margin
expansion at the Kuwait joint ventures. On a sequential basis, equity earnings decreased by $32 million, primarily
from lower supply availability at the Sadara joint venture due to planned maintenance turnaround activity.
Operating EBIT was $595 million, an increase of $299 million compared to the year-ago period, primarily due to
continued price strength in both businesses, driving Op. EBIT margins up 460 basis points year-over-year.
Sequentially, Op. EBIT was down $118 million, and Op. EBIT margins declined by 280 basis points, primarily driven
by energy cost increases in Europe and planned maintenance turnaround activity.


Polyurethanes & Construction Chemicals business increased net sales compared to the year-ago period as tight
supply and demand balances in key value chains led to broad-based price gains in all regions. Volume declines
year-over-year were primarily driven by a planned transition away from a low-margin coproducer contract and our
planned maintenance turnaround activity. Sequentially, net sales declined as local price increases in all regions
were more than offset by planned maintenance turnaround activity.


Industrial Solutions business net sales increased from the year-ago period with local price gains in all regions.
Volume was flat year-over-year as higher volume from a renewable energy contract was offset by fewer licensing
and catalyst sales. Net sales increased sequentially on volume growth from improved supply availability and local
price gains in all regions.



Performance Materials & Coatings segment net sales in the quarter were $2.6 billion, up 26% versus the year-ago
period. Local price increased 30% year-over-year, with gains in both businesses and in all regions. Volume declined
4% year-over-year as stronger demand for performance silicones applications and architectural coatings in the U.S.
& Canada was more than offset by lower siloxane supply availability due to a pull forward of maintenance activity
to coincide with dual-control actions in China. On a sequential basis, net sales were up 1% with local price gains in
both businesses and in all regions. Volume declined 8% sequentially as increased supply availability of acrylic
monomers was more than offset by maintenance activity at a siloxane facility in China and lower seasonal demand
for coatings applications.


Operating EBIT was $295 million, compared to $50 million in the year-ago period, as Op. EBIT margins increased
900 basis points due to strong price momentum for silicones and coatings offerings. Sequentially, Op. EBIT
improved $11 million, as price gains were partly offset by planned maintenance turnaround activity.
Consumer Solutions business achieved higher net sales, with local price gains in all regions and end-market
applications year-over-year. Volume declined versus the year-ago period, as strong demand particularly for
industrial, electronics and personal care applications was offset by lower supply availability due to a pull forward of
maintenance activity to coincide with dual-control actions in China. Sequentially, net sales were up as local price
increases in all regions and end-market applications more than offset volume declines, primarily due to maintenance
activity at a siloxane facility.


Coatings & Performance Monomers business achieved increased net sales compared to the year-ago period, led
by local price gains in all regions on tight supply and demand balances and higher raw material costs. Volume
declined year-over-year as stronger demand for architectural coatings and industrial coatings primarily in the U.S.
& Canada was more than offset by lower merchant sales of acrylic monomers partly due to Dow’s own higher-value
captive use. Sequentially, the business delivered local price gains in all regions. Volume declined sequentially due
to seasonal demand declines for coatings applications in the Northern Hemisphere.


OUTLOOK
“In 2022, we expect continued demand strength across our end markets, supported by growing industrial production
and sustained consumer spending,” said Fitterling. “We are working hard to normalize operating rates, inventory
and service levels following a year of supply constraints and Covid-related logistics challenges.


“While the global economy continues to be impacted by supply chain pressures, these logistics constraints are
expected to ease throughout the year to fulfill elevated order backlogs and pent-up customer demand. As we
navigate these near-term dynamics, we will continue to be disciplined in the implementation of our strategy and
progress on our higher-return, lower-risk growth projects and efficiency programs. We will also further advance our
key sustainability initiatives to decarbonize our assets and capture increasing demand for lower carbon and circular
solutions.”

https://corporate.dow.com/en-us/news/press-releases/dow-reports-fourth-quarter-2021-results.html

January 27, 2022

Business Travel Still Lagging

Consumers Are “Going Everywhere…Except The Office”, AmEx CEO Says This Week

by Tyler DurdenThursday, Jan 27, 2022 – 05:45 AM

According to American Express, spending is still almost “everywhere you want to be”. Except in the office and for business travel, that is…

The company’s Chief Executive Officer Stephen Squeri said this week that “corporate travel will never be the same” after the pandemic, Bloomberg reported. This is despite the fact that U.S. consumers “staged a robust comeback” in the last quarter of 2021, he said.

In fact, spending on travel and entertainment has actually passed pre-Covid levels. But business spending is still about 33% of what it once was, the report says. 

On Tuesday, the AmEx chief said: “People are skeptical about business travel because of all the remote workforce.”

He continued: “Business travel is going to be completely different. And, I think, as you have more people in more remote locations, they may need to get together three, four, maybe five times a year to come to headquarters.”

Squeri, talking about how the climate for work has changed since employees abandoned their offices in 2020, concluded about Covid: “Consumers are learning to live with it — we’re over it. They’re going everywhere right now except the office.”

https://www.zerohedge.com/markets/consumers-are-going-everywhereexcept-office-amex-ceo-says-week

January 27, 2022

Business Travel Still Lagging

Consumers Are “Going Everywhere…Except The Office”, AmEx CEO Says This Week

by Tyler DurdenThursday, Jan 27, 2022 – 05:45 AM

According to American Express, spending is still almost “everywhere you want to be”. Except in the office and for business travel, that is…

The company’s Chief Executive Officer Stephen Squeri said this week that “corporate travel will never be the same” after the pandemic, Bloomberg reported. This is despite the fact that U.S. consumers “staged a robust comeback” in the last quarter of 2021, he said.

In fact, spending on travel and entertainment has actually passed pre-Covid levels. But business spending is still about 33% of what it once was, the report says. 

On Tuesday, the AmEx chief said: “People are skeptical about business travel because of all the remote workforce.”

He continued: “Business travel is going to be completely different. And, I think, as you have more people in more remote locations, they may need to get together three, four, maybe five times a year to come to headquarters.”

Squeri, talking about how the climate for work has changed since employees abandoned their offices in 2020, concluded about Covid: “Consumers are learning to live with it — we’re over it. They’re going everywhere right now except the office.”

https://www.zerohedge.com/markets/consumers-are-going-everywhereexcept-office-amex-ceo-says-week

January 27, 2022

Hexion Results

Hexion Inc. Announces Preliminary 2021 Results from Continuing Operations

January 26, 2022 09:09 PM Eastern Standard Time

COLUMBUS, Ohio–(BUSINESS WIRE)–Hexion Inc. (“Hexion” or the “Company”) today announced preliminary unaudited results for the year ended December 31, 2021.

“2021 was a transformational year for Hexion”Tweet this

As previously announced, on November 24, 2021, Hexion entered into a definitive agreement to sell its epoxy-based Coatings and Composite businesses (the “Transaction”), which includes the epoxy specialty resins and base epoxy resins and intermediates product lines (together, the “Epoxy Business”). The Epoxy Business was formerly included in the Company’s Coatings & Composites reportable segment. As of December 31, 2021, Hexion reclassified its Epoxy Business as held for sale on the Consolidated Balance Sheets and will report its results of operations for the year ended December 31, 2021 and all comparable periods as “Income (loss) from discontinued operations, net of taxes” on the Consolidated Statements of Operations. Following completion of the Transaction, Hexion’s continuing operations will consist of the Company’s existing Adhesives Segment and its Versatic™ Acids and Derivatives product lines.

For 2021, the Company expects to report net sales from continuing operations of approximately $1.9 billion, operating income from continuing operations of $32 million to $42 million, Segment EBITDA of $250 million to $260 million and Pro Forma Segment EBITDA of $260 million to $280 million. Segment EBITDA and Pro Forma Segment EBITDA are non-GAAP financial measures and are defined and reconciled to operating income from continuing operations later in this release.

“2021 was a transformational year for Hexion,” said Craig Rogerson, Chairman, President and Chief Executive Officer. “We saw a strong performance in our Adhesives business reflecting increasing demand from residential housing construction starts and solid gains in our formaldehyde business, as well as a five percent increase in our Performance Materials volumes, in 2021. In addition, we’ve taken actions to strategically optimize our portfolio and position the Company for future success through the sale of our Phenolic Specialty Resins and European Forest Products business in April 2021 and the announced sale of our Epoxy Business.”

Mr. Rogerson added: “As part of our ongoing commitment to drive shareholder value, we remain focused on successfully completing the pending sale of our Epoxy Business and the pending acquisition of the balance of the Company by affiliates of American Securities LLC. Looking ahead to the first quarter of 2022, we expect continued strength in our Adhesives business reflecting residential construction demand, as well as solid demand for architectural coatings to support overall segment growth in the coming year. We believe we are well-positioned for growth in 2022 and going forward.”

The data presented in this press release reflects our preliminary estimated unaudited financial results for the year ended December 31, 2021, based upon information available to us as of the date of this announcement. This data is not a comprehensive statement of our financial results for the year ended December 31, 2021, and our actual results may differ materially from this preliminary estimated data. While we currently expect our results for the year ended December 31, 2021 to be within the ranges set forth above, the audit of our financial statements for the year ended December 31, 2021 has not been completed. During the preparation of our financial statements and the completion of the audit for the year ended December 31, 2021, additional adjustments to the preliminary estimated financial information presented above may be identified and could lead to our actual financial results materially differing from those presented.

Hexion plans to issue a more detailed press release regarding its fiscal year 2021 results, and will file its Annual Report on Form 10-K for the period ended December 31, 2021, in March, with an accompanying investor conference call to follow shortly thereafter.

https://www.businesswire.com/news/home/20220126006098/en/Hexion-Inc.-Announces-Preliminary-2021-Results-from-Continuing-Operations