Good day and welcome to The Dow Chemical Company Second Quarter 2017 Earnings Call. Also, today's call is being recorded. I would now like to turn the call over to Mr. Neal Sheorey. Please go ahead, sir.

Thank you and good morning. Welcome to The Dow Chemical Company's second quarter earnings conference call. I'm 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 page. You can also access the slides through the link to our webcast. I would like to direct your attention to the forward-looking statement disclaimer contained in both the press release and in the slides. In summary, it says that statements in the press release, the presentation and on this conference call that state the company's or management's expectations or predictions of the future are forward-looking statements intended to be covered by the Safe Harbor provisions under federal securities laws. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of principal risks and uncertainties, which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled Risk Factors in our most current Annual Report on Form 10-K. In addition, some of our comments reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website. Unless otherwise specified, all comparisons presented today will be on a year-over-year basis. Sales comparisons exclude divestitures and acquisitions. EBITDA, EBITDA margins and earnings comparisons exclude certain items. I will now turn the call over to Andrew. Andrew N. Liveris: Thank you, Neal, and good morning. If you could look at slide 3. Our results in the second quarter further extended Dow's unparalleled track record of performance. The strategy we put in place more than a decade ago continues to prove its ability to deliver short and long term sustainable shareholder value under all business conditions. Here are some highlights from the quarter. 19 consecutive quarters of EPS growth, nearly five years. Only two other companies in the Fortune 100 can claim such a consistent track record of bottom-line growth and no other company in our industry. 15 consecutive quarters of volume growth, nearly four years. Our third consecutive quarter of all-time record EBITDA and broad-based top line growth as sales grew in every segment and in every geography. I'll come back to this in a minute. And we have achieved this while also driving the most comprehensive slate of growth investments in our industry which are now on the cusp of becoming earnings tailwind. In the Middle East, our Sadara joint venture has now achieved commercial operations at 25 of its 26 production units. On the U.S. Gulf Coast, startup of our ELITE enhanced polyethylene unit and our new world-scale cracker are imminent, and we advanced our proposed merger with DuPont, achieving conditional regulatory clearances, announcing the Board of Directors for DowDuPont and reaffirming our expectation to close in August. Turning to slide 4, I want to take a moment to expand on Dow's strong top-line performance in the quarter. We grew organic sales 8% in the quarter with gains in every operating segment and in fact in nearly every Dow business as well as in every geography. This is a testament to the increase in consumer-led demand that we continue to see for Dow products around the world driven by our strategic mix shift to downstream, high growth end-markets that are growing in a slow growth world, markets such as packaging, transportation, infrastructure, and consumer goods. Growth was particularly strong in key regions of North America and Europe where we grew sales greater than twice GDP as well as throughout Asia Pacific where new product from our Sadara joint venture is enabling us to meet the need of a growing middle class. Simply put, Dow again delivered in the second quarter as we have these last many quarters and we're entering merger close from a position of strength. I will spend some time later on the call discussing the exciting future we see as we embark on the next steps in our evolution into the world's leading material sciences company. But first I'll turn over the call to Howard and Jim to discuss our quarterly performance. In addition, they will describe the status of our growth projects and in response to recent question on the value creation of our integrated portfolio in both assets and markets, Howard will reveal new information on how the silicones platform has been a hand-in-glove fit to the Dow portfolio and Jim will discuss and show the value embedded in our integration. We have not shared this information before, but I feel it's time we show these numbers to you, our owners. First, the quarter. Howard? Howard I. Ungerleider: Thanks, Andrew, and good morning, everyone. Turning to slide 6 and a summary of our results. We delivered earnings per share of $1.08 which represents our highest second quarter EPS since 2005. Sales grew to $13.8 billion, volume and price both grew in all geographies for the second consecutive quarter. Price rose 5% as we drove pricing initiatives across many businesses in response to value and use as well as higher raw material costs. Volume grew 3% reflecting gains in all segments with notable strength in our downstream consumer-led sectors. EBITDA increased 12% to $2.8 billion with increases in all segments except Performance Plastics. Key earnings drivers in the quarter included broad-based consumer-driven demand, higher prices, improved mix including the benefit of new product introductions, and cost savings from both productivity and synergy. These gains more than offset higher feedstock costs, commissioning and startup expenses at Sadara and the U.S. Gulf Coast along with planned maintenance spending. These commissioning costs were in line with our modeling guidance and will continue into the third quarter. I encourage you to review the updated model and guidance in the appendix for more detail. After we close the DowDuPont transaction, we do plan to provide additional info to assist in building out your models. Moving to our business highlights, starting on slide 8. Despite a persistently soft ag market Dow AgroSciences continues to deliver. EBITDA was $326 million on strong demand for our novel Seeds and Crop Protection technologies and on benefits from lower operating cost. Seeds delivered double-digit volume gains led by higher demand for corn seed in Latin America and demand for cotton seed in North America. Our highly successful launch of ENLIST cotton in the quarter was a significant driver of the increase in demand. We also achieved import approvals, specifically in China, enabling the full commercial launch of ENLIST corn seed in the U.S. and Canada for the 2018 growing season. Crop Protection volume increased on higher demand for herbicide and insecticide which more than offset lower demand for fungicide. Dow Ag's robust Crop Protection innovations were, again, a key driver of growth in the quarter with notable contributions from ARYLEX broadlleaf herbicide, ISOCLAST insecticide and new corn herbicide formulations in North America. The business also benefited from accompanying sales of ENLIST DUO herbicide resulting from the launch of ENLIST cotton seed. Farmer reaction to ENLIST DUO has been overwhelmingly positive based on its highly effective volatility and drift profile when compared to traditional 2,4-D and glyphosate. We continue to expect $600 million of additional revenue from our new seed pipeline by 2020 of which ENLIST is a key driver. Moving to Consumer Solutions on slide 9. The segment delivered record quarterly EBITDA of $541 million and its eighth consecutive quarter of earnings growth. Volume gains were reported in all businesses and all geographies. Dow Automotive achieved record second quarter EBITDA and a 17th consecutive quarter of volume growth. The business continues to outpace the automotive end market largely due to strong demand for our innovative platform of structural adhesives. Consumer Care reported volume growth in all geographies as well as double-digit gains in pharma and food applications and Dow Electronic Materials delivered its eighth consecutive quarter of EBITDA growth and an all time record EBITDA. The business drove double-digit volume gains in most geographies with strong demand in semiconductor, OLED and printed circuit board applications. Electronic Materials also had a one-time benefit from the sale of Dow's share in a non-core joint venture. And with the addition of our silicones platform, we were able to achieve new commercial wins and market share gains across each of our Consumer Solutions businesses. Infrastructure Solutions on slide 10 achieved record EBITDA of $556 million, driven by volume growth, the contribution from silicones and a one-time benefit from a building sale resulting from the integration. Dow Building & Construction delivered volume gains on strong demand for methyl cellulosics and acrylics-based construction chemicals. Dow Coating Materials reported higher sales as price increases gained traction in most geographies and Performance Monomers reported price and volume growth on opportunistic sales of acrylates and methacrylates. On slide 11, Performance Materials & Chemicals delivered EBITDA of $347 million as broad-based sale gains in all businesses and geographies more than offset the impact of higher raw material costs. Polyurethane sales grew double digit and the business recorded its 15th consecutive quarter of volume growth led by strong demand in downstream higher-margin system applications. Industrial Solutions sales increased in all geographies on pricing momentum and higher demand into lubricants, crop defense and electronic processing applications. Chlor-alkali and Vinyl sales increased, led by double-digit gains in caustic soda and vinyl chloride monomer in EMEAI. On slide 12, Performance Plastics achieved its fourth consecutive quarter of year-over-year sales growth. EBITDA was $1.1 billion, down from a second quarter record of $1.2 billion in the year-ago period. Price gains were more than offset by increased feedstock and energy costs, commissioning and startup expenses and the impact of higher maintenance activity, all of which were in line with our modeling guidance. Packaging and Specialty Plastics delivered record second quarter sales volume and the 12th consecutive quarter of volume growth, led by double-digit increases in EMEAI and Asia Pacific, partially supported by Sadara volume. Elastomers achieved volume gains led by a double-digit increase in EMEAI on demand growth in automotive and infrastructure applications. Now let's turn to an update on our value drivers beginning with slide 14. Throughout our nearly five years of delivering consistent bottom line growth and increasing shareholder returns, we have also continued to build for our future. Dow's comprehensive growth investments are fundamentally rooted in the key pillars of our business model, aligning to our key chemistries and value chains where we hold industry-leading positions, leveraging our world-class innovation expertise across technology platforms to serve our core material science market, combining scale and operational excellence, optimizing value through operational reliability as well as feedstock flexibility, and enhancing our global reach to capture consumer driven demand and grow where growth exists. On slide 15, I'd like to start with the successes we have achieved in our first full year following the Dow Corning ownership restructure. The silicones integration continues to exceed all of our expectations. First, we have reinvigorated the financial performance of the business. Prior to the restructure, Dow Corning's revenue and earnings had plateaued. In the past year, we have accelerated the business' bottom line growth by double-digit, while at the same time broadening the addressable market for silicone, expanding its customer base, and bringing Dow's sell-out and sell-up mindset into its operational discipline. We have also significantly outperformed on the cost synergies. After raising the initial target to $400 million, we achieved a full two-year run rate in just 10 months, as you know. And today, I am pleased to report that we have uncovered even more opportunity. As a result of implementing Dow's unique business model and our work processes into the and across the silicones platform, we now see a total cost synergy opportunity of more than $650 million across Dow, up more than 50% from our previously stated target. We expect to achieve this higher run rate by the end of 2018. And today, we are already at a run rate of more than $500 million. We're also making strong progress to accelerate growth utilizing our silicones platform. In addition to our $100 million growth synergy target, we now see more than $500 million of additional Dow-enabled bottom line growth across the enterprise, driven by volume and mix benefit from integrating silicones into the Dow portfolio, and going narrower and deeper into our four market verticals. Taken together, these cost and growth drivers greatly enhance silicones' profitability. We now see EBITDA increasing to more than $2 billion at full run rate by the end of 2019, more than double our initial projection. The vast majority of these benefits are exclusive to Dow, uniquely enabled by our capabilities, our infrastructure, our scale, our value chain focus and application development leverage at the customer interface. Turning to slide 16. Our successes to-date have been achieved due to the strategic hand-in-glove fit between Dow and our silicones platform, not just in our markets and applications, but in the very essence of our business model and our asset footprint. Silicones as a platform is rooted in integration and innovation. It is at its core an organic chemistry capability. And as you can see on this slide, the manufacturing is a multi-step, asset-intensive process. Our silicones manufacturing is back integrated into the key building block, including silicon metal, which are used to produce basic silicones or siloxanes at key sites globally. These are then fed to our downstream systems and finishing units, often at the same integrated site, to produce high-value formulations in our core material science markets of packaging, transportation infrastructure, and personal care. The end result is a financial profile of the silicones platform that is nearly identical to Dow's, especially now that we've captured cost synergies as we've integrated silicones into the Dow business model. The integration of silicones, however, goes beyond assets to the growth side of the equation, as you can see on slide 17. Here you see why we continue to be so excited about this transaction. The hand-in-glove fit with silicones is a growth accelerator. We're already seeing it, as the silicones platform captured demand growth at nearly 2 times GDP in 2016 and the first half of this year. Going forward, the value of our combined chemistry platforms, broader channels to market, and multiple touch points through the value chain, is enabling $7 billion of addressable market expansion in our key market verticals through 2020. This is why we are so confident in continuing our top line growth trajectory and further extending our leadership position. No one in our space can match the deep capabilities, differentiation, and material science expertise that we now bring to bear in these sectors. But the benefits don't stop at our growth or cost synergy capture. We've also started to capture benefits from key operational improvements that have been released as a result of being integrated into Dow's business model. From improvement in safety performance to working capital efficiencies to increased productivity, all of these improvements enhanced our unique ability to drive efficient earnings growth and deliver the step change in financial performance I showed on the last slide. To sum it up, the first year of the integration has gone faster and better than even our highest expectations. The transaction was immediately accretive, and the progress we continue to make will further enhance shareholder value in ways that are truly unique to Dow. With that, Jim will cover the rest of our value driver. James R. Fitterling: Thanks, Howard. Let's turn to our Sadara joint venture on slide 18. I cannot stress enough the magnitude of the progress that the Sadara team has made since our last earnings call. The JV brought online nine additional units, including PO/PG, polyols, amines, and glycol ethers. Year-to-date, we have started up 21 units. And today, Sadara is commercially operating 25 of its 26 production units, with the final unit preparing for startup. Product marketing and distribution have gone well, and the work we've done to establish channels to market and generate customer excitement is paying off. In the second quarter, Sadara sold nearly 0.5 billion pounds and was a tangible growth driver in our Performance Plastics franchise. All plastics unit, as well as the cracker, have demonstrated at or above their design capability. Looking ahead, we still see 2017 as a startup year, as the units continue to increase production rate, optimize integration reliability, build inventory, and qualify products with customers, and the JV remains on track to achieve the financial targets we set out for the year. Moving to the U.S. Gulf Coast on slide 19, we have completed construction of our new world-scale ELITE enhanced polyethylene train, and the startup is imminent. Once online, we will ramp toward full prime production and begin qualifying material with customers and replenish our supply chain in the Americas. You should expect this unit to deliver earnings contribution starting in the fourth quarter. Startup of our new Texas-9 facility, the ethylene cracker, is also imminent. In fact, we've begun to introduce hydrocarbons into the unit. Once online, the cracker will ramp as derivative production increases throughout this quarter. The next unit online will be our new tubular high-pressure low-density polyethylene facility in Clacama, (19:06) which is the same design as the one in Sadara. This train is on track for mechanical completion in the fourth quarter and is expected to begin contributing to earnings in the first quarter of 2018. These new facilities will build on the successes and the benefits of those investments that we've already completed. The recent expansion of our Louisiana-3 cracker has been a huge success. This project increased the ethane cracking flexibility of the unit while maintaining our propane and our naphtha flexibility. We've tested the full capabilities of the unit and we're already seeing results. This past quarter, Clacama (19:42) achieved its second consecutive quarterly ethylene production record and for the first time ever, the site produced over half a billion pounds of ethylene in a single quarter. Our PDH unit also delivered another quarter of bottom-line benefits. We recently took the unit down for planned maintenance after more than a year of operation and implement best practices and make improvements to ensure long-term reliability. PDH is back on line and ramping to rate. We continue to make improvements to the process to take this technology to higher reliability levels. And finally, we continue to put in place future growth drivers. Last quarter, we announced the next phase of comprehensive investments. Approximately $4 billion over the next five years involving a series of low capital intensity, fast payback, high return on capital projects. These investments are expected to start coming online in 2020. Taken on the whole, Dow's program of near-term and long-term growth projects further enhances our strategic pillars of integration strength and innovation capabilities deployed into a focused set of core end markets. On that note, I would like to discuss the future of the Material Science Company and the value creation from our unique integration plus innovation strategy on slide 20. Let's start with the depth and breadth of our integration across the value chain which continues to serve as a key differentiator and competitive advantage for Dow. Market dynamics can shift significantly over time and the last several years bear witness to that. Dow's strategic choice to own entire value chain gives us a competitive advantage to manage volatility through unmatched feedstock flexibility, geographic diversification, and a differentiated product and market portfolio. As I've said before, no one rivals Dow in these capabilities. In contrast to commodity chemicals companies that typically run our cracker plus one model, Dow is a cracker plus five, downstream value-add player. In fact, in some cases, we reach as high as cracker plus nine as is the case for our Texas operations in Freeport. The power of our key building blocks of ethylene, propylene and silicone is amplified by our market-back approach and by leveraging the complexity of molecular and physical integration. This, coupled with our deep material science expertise makes us the preferred partner to our customers by delivering high-tech solutions from these industry-leading technology platforms. The result of this industry-leading physical integration is a more agile and robust enterprise ready to adapt at the speed of business today. On slide 21 while product and asset integration are important foundational elements, there are other aspects of integration that are equally critical in enabling Dow's competitive advantage. Dow's integrated ecosystem leverages functional and business collaboration in critical areas including purchasing and procurement, leveraged services, information technology, operations and engineering, and it unlocks immense value. We believe that our level of integration is unique and therefore holds tremendous value. We've done an enormous amount of work over the last decade both within Dow as well as with independent third parties including banks and consultants to quantify the value of Dow's integration. These multiple comprehensive analysis, some of which have been completed very recently, have shown the intrinsic value of our integration approaching $1.7 billion to $1.9 billion per year. This is the power of scale and leverage and something that we continuously refine. It provides a formidable source of sustainable and stable competitive advantage and it is a benefit that Dow enjoys as a result of our business model as well as the source of value to our shareholders. That brings me to innovation, which is at the heart of everything we do at Dow. As we've pivoted our businesses to a consumer-led model, we have reinvigorated the innovation engine and we've enhanced the value the customers enjoy from our material science expertise earning us a seat at the design table in our core markets around the world. This did not happen overnight. It was methodically built through disciplined investment. More than $8 billion in R&D investment over the past five years coupled with a sharp focus on developing proprietary capabilities to innovate faster and partner more closely throughout the value chain. We also established core technology platforms that stretch across the enterprise. You can see how we leverage these platforms across multiple businesses and in some unexpected places. Elastic adhesives in Dow Automotive, polyurethane's chemistry in Dow Electronic Materials, cellulosic and acrylic technologies in Dow Building & Construction. We received a huge boost last year with the silicones addition, which brought an additional platform to unlock new to the world solutions in high-growth end-markets, combining silicones with acrylates with urethane with polyolefins, and with our cellulosics chain. These chemistry innovations are fueled by our proprietary high throughput research engine and our application development capabilities. And turning to slide 23, you can see that the results of our efforts are evident, from 2010 through 2016 our innovation revenue has nearly doubled while at the same time, our innovation EBITDA has tripled, and year-to-date our new innovation EBITDA is now more than one-third of Dow's total EBITDA. In summary, market-driven innovation derived from interconnected technology platforms is in Dow's DNA. It is not something siloed in individual business units, but rather the strong technology platform developments are leveraged across the entire enterprise. We strongly believe that this unique innovation model delivers greater value than any individual business could on its own and our track record of success speaks to this achievement. With that, I'll now turn the call back over to Andrew. Andrew N. Liveris: Thank you, Jim and turning to slide 25. I'd like to take a moment now to look back on the track record that Jim and Howard have both spoken of, of execution that Dow has delivered these last many years. It's a track record of consistent and reliable financial and operating performance that no other company in our industry can match. As I've mentioned, only two other companies in the entire Fortune 100 have. It's a track record achieved through the foresight result of a highly dedicated board and management team who've put in place more than a decade ago the strategy you heard Howard and Jim speak to today. We have thoughtfully and consistently executed against this strategy through a business model that emphasizes long-term value creation and in doing so have delivered impressive EPS growth, significant volume gain, greater quality and consistency in our earnings, and ultimately, increasingly rewarding our shareholders. Turning to slide 26, we have achieved this through aggressive portfolio management, divesting low ROC, non-strategic assets, totaling more than $15 billion of revenue since 2009. We have shifted our earnings mix to more consumer-driven exposure from 35% in the early 2000s to now more than 60% of our portfolio. This has significantly enhanced our ability to generate consistent earnings growth across the cycle. Our beta as a company has significantly reduced as a result, as you can see on the slide. Today it is about half of what it was five years ago and even more so when you compare it to the early 2000s. On slide 27, we have highlighted some of our successes in the past and that I'll be repeating. An EBITDA growth CAGR of 8% over last four years with more than $10.5 billion delivered over the last four quarters, an EPS CAGR of 18% over the last four years and with tangible drivers in place to push this to higher in the near term. A market cap that we have more than doubled and nearly $18 billion returned to shareholders since 2012 through share buybacks and a record high annual dividend. These numbers have not come by accident. Dow's ability to integrate silicones and achieve greater than $650 million in synergy plus our embedded integration value of $1.7 billion to $1.9 billion as articulated by both Howard and Jim is a differentiator compared to our peers. These results have earned us the right to be where we are today at a turning point in our history. And with that, let's look forward to the upcoming close of our merger with DuPont as we stand on the cusp of this seminal transaction and the next chapter in Dow's growth story. All remedy actions are on track. We still have a few more select approvals from key jurisdictions which we believe are imminent and we still expect to close in August. Going into merger close, the Dow team is coming from a position of incredible strength with a proven track record of success. We are ready for day one. Our teams will be immediately mobilized to capture the $3 billion of cost synergies. Our playbooks are ready with clear line of sight to milestone and accountability. We'll also move quickly on the intended spins which we still expect to complete within 18 months of close with the intended Material Science Company expected to spin first. Our team remains focused and disciplined with a sharp execution mindset on continuing to control what we can control. We have the right strategy, the right long-term growth drivers and the right portfolio and we have proven it over and over again. We have never been better positioned to continue to deliver for our customers, employees, communities and our owners. We enter the merger strong and we will exit the merger stronger. With that, Neal, let's turn to Q&A.

Thank you, Andrew. Now we will move on to your questions. I ask that you please keep to one question so that we can allow as many people as possible the opportunity to ask a question. First, however, I would like to remind you that my comments regarding forward-looking statements and non-GAAP financial measures apply to both our prepared remarks and the following Q&A. Rochelle, would you please explain the Q&A procedure?

Thank you. We'll take our first question from P.J. Juvekar with Citi. P.J. Juvekar: Yes, thank you and good morning. Andrew N. Liveris: Good morning. P.J. Juvekar: You know, a question on sort of ethylene industry. There's an expectation that there's an industry downturn in 2018 driven by all this new crackers, but you have Texas mine starting up, Sadara starting up. Is it possible that Dow's Performance Plastics EBITDA will continue to grow through a potential downturn? Andrew N. Liveris: Jim? James R. Fitterling: Hi, P.J. Yes, we think it will. As a matter of fact, demand has been solid for all those products and as we noted for this year, through the first half of the year, price has been up. Packaging and Specialty Plastics, for example, is up 5% year-over-year and if you look at both North America and Europe, both pricing and margins have been up. We have a couple of things in the quarter that I think point up to some deltas. We have some higher input costs and feedstock costs, so gas and some of the natural gas liquids are up year-over-year. In this particular quarter and going into third quarter, we'll have some higher startup costs as we're bringing on the Gulf Coast asset, and the Sadara volume is there, so you could see that show up in the earnings growth or the volume and revenue growth in Sadara. I would say that those volumes are not yet carrying EBITDA as we're bringing up the entire asset and the entire complex so that will start to add value. Look, I think that we've got a couple of things happening. One of the reasons that we have this full integration is to capture the margin shift, which moves all the time between ethylene and polyethylene and that vertical integration, that feedstock flexibility, enables us to have that, plus these investments are not all geared to one homogeneous polyethylene market. They're four different technologies that we're building, similar to what we're building in Sadara. Sadara is focused on growing the developing world. We're focused on growing our Americas market tier. (33:25) Both of those markets, at these growth rates, these GDP growth rates today, have the ability to take that kind of increase. Globally, it still takes two to three world-scale crackers per year to keep up with the GDP rate growth, and if the GDP increases, it'll take more than that.

And next we'll hear from Vincent Andrews with Morgan Stanley.

Thank you and good morning, everyone. Andrew N. Liveris: Good morning.

China has filed with the WTO to ban the import of a variety of plastics, but in particular polyethylene, at least certainly by the beginning of next year, and maybe phasing it in by the end of last year. I'm just wondering what your thoughts are on that generically, in terms of whether you think it'll be implemented and what impact it will have on the balance as we move into 2018? Thank you. Andrew N. Liveris: Go ahead, Jim. James R. Fitterling: Good morning, Vince. We saw that news and that announcement and are aware of it, and I would just clarify a couple of things. So I think the big driver for what China announced is maybe not what we typically think of as recycling of neat resins and compounds, but it was the shipment of what I would call foreign garbage into China, and so they're banning kind of some of those streams of materials coming in, and the real driver was to protect community health and the environment. So countries were sending all kinds of stuff into China, and it wasn't going in to be recycled and put into food packaging. They just want to make sure that it doesn't get recycled and put into food packaging. If you look at all that trash that went into China in 2016, PET was the top volume for most of that scrap, two-thirds of it. 35% was polyethylene, I would say. It's mostly into applications like garbage bags, some injection molding, or some compound related stuff. So yeah, it might have an impact around the margins, but that trash is going to go somewhere else, and I think, if we'll move it out of China, we'll move it into some other market, probably in the ASEAN region, so we'll probably have to watch what happens out there.

And next we'll move on to Alex Yefremov with Nomura Instinet.

Good morning, thank you. You're making a case for benefits of various integrations throughout the company. If you look at vertical integration from building blocks to higher-end specialty chemicals, and then the horizontal integration was deep market understanding and R&D expertise, so which one do you think is more important, the horizontal one or the market integration? Andrew N. Liveris: Well, I think you've seen some material today, Alex, that we haven't shown before that basically says both. In essence, the change in the portfolio of the company is the reason we've had this five straight years of earnings growth, it's a mix question, but it's also an integration, innovation question that combined, we no longer are a seller of outputs that are commodity products, very little bit of our mix, so we're in control of our own destiny about where value gets created, and value gets created in different parts of the value chain depending on the market condition, and what Jim articulated on the answer to, I think, P.J.'s question, is true right through our system integration, and so this ability to do both vertical and horizontal with equal impact is in the hands of only, I'm going to use, say, two companies in the entire sector, and you know the other one. It's in Europe, and so there is no benchmark we have any more, which is where people start to fail when they do some of the past comparison. And in fact, our intrinsic value more than beats some of the past comparison, so we are all for displaying where value gets created in both parts of your question right now, and I think it's being highlighted of course through many things, not the least of it being the portfolio review that's been initiated.

And we'll move on to Frank Mitsch with Wells Fargo. Frank J. Mitsch: Good morning, gentlemen, and Neal, I just want to say, I look forward to our follow-up and discussing slide 20 in great detail through all of the product flows, so I'm looking forward to that. Andrew and team, you guys made a compelling case for the inclusion of silicones into MaterialsCo, laying out some new data for us. I'm assuming that that has also been shared with your soon-to be-marriage partner, as well as McKenzie, that's doing a deep dive into the structure of DowDuPont, et cetera. What has been the initial feedback from those parties, if you can share that with us? Andrew N. Liveris: Let me give you a quick answer, and I'll pass it over to Howard. So the answer is yes, it's been shared. There is no feedback loop yet and the parties are very aligned that we're going to do this very thoroughly, Frank, and then go out to the marketplace with the outcome, so we're not in the business of jump-starting or gun-jumping that, but I think it's very important that we get this deeply grounded and satisfy every investor, not just a few, and so that's where we are and I think, Howard, did you want to add anything to that? Howard I. Ungerleider: Frank, good morning. I mean, I think the prepared commentary really speaks for itself. I just couldn't be prouder of team Dow. Remember where we started with the cost synergies. When we announced the transaction in 2015, we were talking about $300 million. When we did day 1 of Dow Corning restructure, we increased that to $400 million. Now we're saying that number is more than $650 million, and we're already at a $500 million run rate. So that's exciting, and that's one of the key reasons – that was the key reason why it was accretive on day one to Dow, but the growth side, I think, is equally compelling, in terms of the market verticals that we talked about. So we'll see where the portfolio review takes us, but we feel very good about the hand-in-glove fit with Dow and in MaterialsCo.

And next we'll move on to John Roberts with UBS.

Thank you. At the bottom of slide 31, you talk about additional guidance post-merger. Will you have pro forma third quarter results in time for the third quarter reporting, or will pro forma third quarter come after the initial results that might exclude DuPont during July? Andrew N. Liveris: Howard. Howard I. Ungerleider: Hey, John. So look a couple of things on that and I appreciate the question. Both Dow and DuPont at a company level will continue to file Qs and Ks with the SEC, so I would say similar to what you see as a Carbide filing today. We will get DowDuPont high level filings on a pro forma basis. These are high level combined company and they'll reflect the purchase accounting impact. Those should come within 75 days of close. Our plan right now is to provide pro forma segment information, so sales and EBITDA for DowDuPont by quarter. For the full year 2016 and most likely through June 30, through the second quarter and the plan would be to release those if we can in the month of October and a separate 8-K filing to give you at least a couple of weeks if you want to update your model before earnings. We've got a lot of work to do, so I can't commit to that but that is the intent.

And we'll move on to David Begleiter with Deutsche Bank. David I. Begleiter: Thank you, good morning. Andrew, on the review of the portfolio, what is the timing of the completion and what's the potential to see more than three companies being created from this new DowDuPont organization? Andrew N. Liveris: Yeah, look – thank you, David. So as I said in the answer to the earlier question, the timing is as soon as we can. I mean, I think it's very important that we get transparency and output on a portfolio review. We had agreed to this back at the signing of the original agreement, so this is not new news to us that we knew we would do this based on better facts, and using a third-party as announced by the two parties, Dow and DuPont, a few weeks ago and that McKenzie has stated. We'll have an output hopefully in the next 30 or so days maybe 45 days, so we don't want to rush it, but clearly as we showed today on the call, there's a lot of compelling information both parties have that are now being turned by our friends at McKenzie. I would say to you that everything is on the table, as I've said many times and we're open-minded for shareholder value-based on better fact and if it results in more than three companies so be it and there's a trade-off on value here that has to be explained to all of our owners and that is do you delay getting some of the synergies to make room for more companies, but that's the sort of work that we're going to get feedback on and the combined board will see that hopefully no later than that timeframe I indicated.

And Jeff Zekauskas with JPMorgan will have our next question. Jeffrey J. Zekauskas: Thanks very much. Your cash flow from operations for the first half was about $500 million lower year-over-year, and it seems the primary source of that was an elevation in receivables which were up $1.1 billion sequentially and maybe $1.6 billion year-over-year. I'm sure that you'll be able to get your receivables lower by the end of the year, but can you get them under $10 billion or under $10.5 billion? Can you explain what will happen in the receivables area? And secondly, was the point of Howard's discussion of the strength of silicones and the point of Jim's discussion about the strength of Dow's vertical integration will exemplify the progress that the company has made over time or was it a commentary that to split material sciences into pieces would be value-destructive? Andrew N. Liveris: Jeff, you asked two questions which is very good of you, so the second question let me tackle and then give you the first question to Howard. Look, there is no intent other than transparency. I think it's very clear that over time market conditions and shareholder conditions change and where one makes money can't be opaque, we worry about competitive information all the time and what we reveal to our competitors. But it's very important that all the facts get out on the table through this review. And frankly, we've been sitting on a lot of facts here for a long time. You yourself asked us for those on a constant basis, so we are very prepared to let all of our owners know what the consequences are of where money gets made in an enterprise, as I said earlier, very unique in this sector. There is no comparator other than our friends in Germany. So Howard, first question? Howard I. Ungerleider: Yeah. Thanks, Jeff for the question. So look on cash from ops, first quarter cash from – working capital is usually a use of cash, second quarter it usually starts to be a source. It wasn't this quarter as you highlighted. A key reason for that is the sales growth. Remember, we had 8% organic sales growth, so a 3% volume, 8% price. Of the $900 million increase in working capital, you've got $800 million of that was receivables, $200 million of that was higher inventory, that was offset by more than $250 million in net income. One of the key reasons for that is we were building out the Sadara value chain, so once all the 26 unit operations are stabilized, Sadara should be a net neutral to us on a total working capital, but obviously, we're building out the supply chain throughout the world, so that was a little bit of the use. The other thing that was unfavorable from a year-ago, we had $200 million in one-time legal settlement that weren't in the year-ago period, so that's the other factor. I would expect that we will continue to see a source of cash from working capital in the back half of the year. In fact, I would expect the third quarter numbers to be very positive.

And next we'll move on to Hassan Ahmed with Alembic Global. Hassan I. Ahmed: Good morning, Andrew. A decent set of numbers in Performance Plastics despite some of the headwinds that you guys talked about be it startup costs of the Gulf Coast crackers and Sadara, be it some of the movements that we've seen in oil and NGL prices. Question around sort of declining oil prices, as I take a look – and this is for your rest of the world, non-north American assets, as I take a look at naphtha, the naphtha to crude oil ratio seems to be at 20 year lows. It seems that there is copious amount of naphtha out there. Just, a, wanted your views on how that impacts your non-North American assets. I mean, are we in this sort of pricing regime now going forward where there will be an oversupply of naphtha, maybe potentially if ethylene remains tight, your naphtha-based ethylene facilities could actually start generating outsized returns? Andrew N. Liveris: Go ahead, Jim. James R. Fitterling: Hi, Hassan. It's a good question because through the quarter and second quarter, we were in a position where at any given point in time, there wasn't a lot of difference between naphtha, ethane and propane in terms of what the (47:32) crackers. You had some times when naphtha by-products drove naphtha cracking, obviously with styrene and butadiene and the aromatics chain that drove that for a while, and then with all of the exports of NGLs going out of the U.S. Gulf Coast, you had periods where there was no difference between ethane and propane. So we didn't get the normal kind of feedstock flex advantage that you see in the quarter. I would say, it's a little bit like ships passing in the night. Something is going to become favored here as we move into the third quarter. If it's naphtha, we're in a position to take advantage of that, obviously, in Thailand, in Sadara and obviously in our European assets. If it's propane, that's huge Dow advantage, and if it's ethane we've got increased volume out of our ethane cracking flexibility on the plant. So I think in any of the scenarios we'll be okay. We're looking at longer term and I think everybody is trying to get their hands-on what's going to happen with the oil pricing. What's happening with the fundamentals versus what's happening in the speculative market on that. If the available production that's out there for oil continues to reduce, then you could see a scenario where this start to turn with oil becoming constructive and that's a very different scenario than we're in right now. Obviously, what we're going to do for the rest of the year is make sure that we protect ourselves in the case that oil continues to keep pressure on naphtha, and we'll max our naphtha cracking if we need to.

And next we'll move to Steve Byrne with Bank of America.

Yes, thanks. I have a question for you, Howard, on ag. Given some of the dynamics that are going on right now in ag, there could be increased demand for your ENLIST soybean product next year. Just wanted to ask if you had any idea what's holding up Chinese import approval for either the two versions of that trait that you have and if you are to get approval on that in the next month or so, are you likely to ramp up seed production this winter in South America and what kind of a launch could you have next year? Howard I. Ungerleider: So Steve, look, thanks for the question. I mean, I agree with your thesis, and I would say that if you think about ENLIST, we had the full system launch both seeds, traits and ENLIST DUO herbicide cotton in the spring of this year. It was a tremendous success. We sold out of the seeds. We exceeded grower expectation on weed control with ENLIST DUO, and we've had near a zero volatility and reduced drift formulation, the applications have stayed on target. Very excited that we received China approval for ENLIST corn, so that launch will happen in the U.S. and Canada in the 2018 season. On soy, I really don't want to get ahead of ourselves. We always knew that soy would be after corn, so we are on track from that perspective. We have done, we believe, everything within the Chinese regulatory process to have that application ready for approval and so at this point, it really is up to the Chinese government as to when that approval will happen. Andrew N. Liveris: I just want to chime in, because besides the obvious on the corn one and now the soy, Steve, you know besides the obvious. It's hugely political, so I'm spending a considerable amount of my time and my capital in China to get this one over the line just like we did with corn. That wasn't easy and it certainly was part of Trump 100 Day plan. We're not pessimistic. We're optimistic we can get the soy, but we don't want to overpromise and under deliver, but we're spending considerable political time on this.

And next we'll move on to Bob Koort with Goldman Sachs.

Thanks very much. Another ag question if I might. I notice that prices were down in both crop chemicals and seeds. Could you talk about how that happened given maybe some expectations, some mix upgrades and then generally, what do you see for that pricing dynamic as corn and soybeans remain somewhat moderate levels here? Thanks. Andrew N. Liveris: Yeah, Bob thanks for the question. Look, we're still in a tough ag macro. I mean, the overall sector is still forecasted to be down on the top line, 1% or 2%. And I think our story this quarter was really about volume and the delivery of new technologies, but we did have price pressure, as you saw in both areas, but we were able to deliver EBITDA up 40% year-on-year, really on the Crop Protection side, the rice herbicide in China, generic impact, off-patent molecule and a high-level of channel inventory. Now, it came closer to normal than it was in the first quarter, but it's still slightly above average is the way I would talk about it. In Seeds, look, it's a highly competitive price environment. Our price cards were in line with the competition and so we're doing what we need to do. We're growing volume, we're delivering the new molecule and we're dealing with continued productivity to keep the EBITDA growing.

And next we'll move to Peter Butler with Glen Hill Investments. Peter E. Butler: More on ag chemicals. Regarding the agricultural situation, the weather is always bad. What is Dow's meteorologists saying about the weather in the corn belt this year and does this impact when you think Dow thinks that the ag cycle is bottoming? Andrew N. Liveris: We have a meteorologist on the call. Howard would you like to try it? Howard I. Ungerleider: Let me channel my meteorology department. I guess, Peter, I would agree with you and of the two of us, Jim is more the ag guy because he's from Missouri and I'm from New York, but what I would say is in ag, I think you're right, but we're always one weather event or one pest event away from a – of a turn. We have been in this kind of ag session probably for two, almost three, growing seasons. So I believe we're at the bottom, and you can see it in our results. You can see it in several of the other peer results that have been published. You're starting to see earnings growth now through the sector, so everybody is right-sizing their productivity side of the equation. And when you look at the new innovations that we're putting out there, we have proven, with the Dow ag portfolio, that they've earned the right to be on the podium, and then when you combine that with DuPont, the weather future for the ag co looks extremely bright.

And next we'll move on to Chris Parkinson with Credit Suisse. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC Thank you. This is just a derivative of Dave's question, but both you and DuPont have clearly done a solid job in purging costs and pruning various segments. That said, could we just get an update on how you would characterize these actions, not only in terms of past execution, but much more importantly, how investors and shareholders should perceive these efforts in terms of the potential future value creation of the separate company spins and what you're actually thinking about portfolio transformation, especially if there's going to be an announcement in the next 30, 45 days, I imagine you have some at least preliminary ideas? Thank you. Andrew N. Liveris: Jim, why don't you take the first chunk of that, and I'll add some comments. James R. Fitterling: Yeah, so just to go back a little bit. I mean, we completed, or we had a program that went back to 2012, that we completed in the first quarter of 2015, which was about a $1.75 billion productivity program, and that was an across-the-board program. It looked at, obviously, the structure of our organization, so how many layers and what were the spans of control in the organization. It also looked at what we could do from a procurement standpoint, what we can do from site management internally. We did a restructuring program, basically in 2015, that we just closed out this quarter, so that's $900 million. It was even more, some levels of automation, retiring old systems, investments in IT capabilities. If you look at where we are in this quarter, we generated greater than $200 million; I think it was $215 million of what I'd call productivity savings in the quarter. You could think about that as about 40% of that was self-help measures and productivity internal to the organization, independent of the deal, and the rest of that was silicones-related cost synergies that came out. And on silicones, you can think about leveraging scale and leveraging location, physical location. It was kind of unique to Dow. Obviously Midland, big locations like Shanghai, São Paulo and places where we had duplicate resources, we could leverage that. And we're just now starting to leverage on to the one IT platform. So I think those are – it's not one spot, you have to look at it as a matrix inside of the organization, but we've done it many different ways, at many different points in time. Andrew N. Liveris: Just the view going post-spin is, you really – if you think about this unique opportunity through this transaction, of the 300 years of corporate history, the rooftop point that Jim made is a good example. There are a lot of redundant processes and a lot of redundancies going inbound into the merger, there's a $3 billion of synergy a year number that we talked to many times. Remember, that's post Remedy, so when we first did the work on this, it was clear that there may be some upside, now that we've got 18 months behind us, the two teams, as I said on my opening remarks, are gun-ready to go. We're at the starting line. We believe we can get the $3 billion and MatCo's portion of that $1.6 million. That's a lot of cost out on what is in essence a very sophisticated asset swap. Under a holding company structure, you are asset swapping in a tax-friendly jurisdiction, and doing this in a way where shareholders will benefit from that cost out. Going forward, the tailwinds of the new MatCo, over $3 billion of new EBITDA coming based on the investments of the last five years, Sadara and the U.S. Gulf Coast assets are tailwinds, not headwinds, so the path of the new MatCo on a cost-out basis through the synergies, as well as these tailwinds based on our investments, not to mention the value-add strategy Jim spoke to and Howard spoke to, including the silicones integration, is what you'll see when we create the world's leading Material Science Company post-spin.

And next we'll move to Arun Viswanathan with RBC Capital.

Great, thanks. Just had a question on – going back to the point of plastics growing over the next couple of years, EBITDA. You had spoken in the past, I think a couple years ago, about all your Gulf Coast investments this time around, adding around $2.5 billion to EBITDA, and that number has changed over the course of a little while, so where is that number now, and what does that kind of embed as far as chain margins in polyethylene? Thanks. Andrew N. Liveris: Yeah, thanks, Arun. I would say that number today, given what's happening in the oil markets, has probably moderated to a $2 billion number. And, again, remember those numbers will be kind of a through the cycle, at the average of the cycle-type of a result. That's the way we look at them. You can get into a peak of a cycle, it may go higher than that, and that's what we've typically experienced on these kind of investments.

And our last question today will come from Kevin McCarthy with Vertical Research Partners. Kevin W. McCarthy: Yes, good morning. A few pieces on Consumer Solutions. Would you comment on the sustainability of high single-digit volumes in the back half, as well as the size of the gain related to your Electronic Materials JV and the future flow through of the silicone synergies, in that segment as well as IS? Andrew N. Liveris: Yeah, I'll take the gain and then maybe Jim can talk about the performance. The gain itself was in the $25 million to $50 million range. And I would say – just one other point on that, just to clarify. Electronics Materials would have had an EBITDA record even without that gain, just to be clear. James R. Fitterling: And Kevin, let me just take the point on the market. So if you look at Consumer Solutions, it's the eighth consecutive quarter of operating EBITDA growth in that sector. Even if you exclude the Dow Corning integration in that sector, so the base business that's in there is performing very well. Automotive is on the 17th consecutive quarter of volume growth. Automotive, even though you've seen in Western Europe and you've seen in North America, things slowdown a little bit, the content per vehicle that we're getting out there, the number of solutions that we're getting on vehicles in the platform is really growing our business above the market and that continues to be the case. In Electronic Materials, it was the eighth consecutive quarter of year-over-year EBITDA growth and that business is constantly retooling to fit the market. We're benefiting – obviously, semiconductors is a big part of the business, so on the CMP pads (1:02:00) side, we're benefiting from that. The whole market is benefits from the Internet of Things, putting more devices on, but also displays and handhelds which we've seen a blockbuster year this year in that area.

And that will conclude today's question-and-answer session. At this time I would like to turn the call back over to Mr. Neal Sheorey for any additional or closing remarks.

Thanks, Rochelle. Before we close the call, Andrew, would you like to make any final comments? Andrew N. Liveris: Yes, I would, Neal. This is a historic moment. We are on what is the current Dow's last earnings call and as already said by Ed on the DuPont call, this is a moment that we've been planning for over a dozen years, and it's hard to look in the past and reflect, but you've got to allow the moment here to come forward which is two historic companies coming together to form an incredible, incredible machine that will create these three incredible divisions and then ultimately the spins that we referred to. If you think about it from the point of view of this earnings call, this quarter is really the highlight reel of the last many years. So I think everything we've done from the revenue line, to the bottom line, to the productivity, to the innovation engine, to the re-crafting of the portfolio, to the bringing on of new assets, historic new assets from the Saudi assets to the U.S. Gulf Coast; we are starting up Texas 9 as we speak. That is in any other part of Dow's history that alone would be the highlight reel, but we have multiple highlight reels and I'm so proud of the Dow team as we've taken Dow, as Jim said, to a cracker plus five or cracker plus nine model to a integrated specialty company, integrated specialty materials company, a preeminent high-growth high-margin customer-facing company with low cost assets and productivity and still on its DNA. No other company has done that. Silicones is my poster child. It's a chemistry platform that's moved right into Dow. The EBITDA run rate of $750 million, moving to $2 billion. Three times is happening because, as Jim said, it's Midland after all. This is such a fit into the Material Science Company, it bears no recognition to what any other company could have done and certainly on its own could never have done. In addition, I want to sort of finish by saying the future not only is bright with the merger in front of us, but it's bright when the materials company gets created. We have an incredible relationship with the Saudi Aramco Company and Sadara. We're so proud of that relationship. It's going to go to another level. We have work we're doing as we speak on the future of Sadara and as we look at silicones being integral to that future as we announced when we were down in Saudi Arabia in May with the President, there is no question, silicones will be in the future of our Sadara/Saudi relationship. We are very, very, very, confident that we will continue to grow what is an incredible franchise through investments of the Saudis. We're strong going into the merger. We're creating a new Dow, a seminal moment and I am personally very excited and very proud of team Dow and my colleagues on the phone, Jim and Howard well done and we look forward to talking to all of you very, very shortly.

Thank you very much, Andrew and thank you, everyone for your questions. As always, we appreciate your interest in The Dow Chemical Company. For your reference, a copy of our prepared comments will be posted on Dow's website later today. This concludes our call for today. We look forward to speaking with you again soon. Thank you.

And that will conclude today's call. We thank you for your participation.