Good day and welcome to the Dow Chemical Company’s Second Quarter 2014 Earnings Results conference call. You may signal to ask a question by pressing star, one at any time during today’s presentation. Also, today’s call is being recorded. I would now like to turn the call over to Mr. Doug May, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Lauren. Good morning everyone and welcome. As usual, we’re making this call available to investors and the media via webcast. The call is the property of the Dow Chemical Company. Any redistribution, retransmission or rebroadcast of this call in any form without Dow’s written consent is strictly prohibited. On the call with me today are Andrew Liveris, Dow’s Chairman and Chief Executive Officer, and Bill Weideman, Executive Vice President and Chief Financial Officer. Around 7:00 am this morning, July 23, our earnings release went out on business wire and was posted on the internet on dow.com. We have prepared slides to supplement our comments on this conference call. These slides are posted on our website and through the link to our webcast. Some of our comments today include statements about our expectations for the future. Those expectations involve risks and uncertainties. We cannot guarantee the accuracy of any forecast or estimates, and we don’t plan to update any forward-looking statements during the quarter. If you’d like more information on the risks involved in forward-looking statements, please see our SEC filings. 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, al comparisons presented today will be on a year-over-year basis. Sales comparisons exclude divestitures, EBITDA, EBITDA margin, return on capital, and earnings comparisons exclude certain items. The agenda for today’s call is on Slide 3. I will now hand the call over to Andrew.

Thank you, Doug. Good morning everyone and thank you for joining us. As you noted from our release this morning, Dow delivered another quarter of earnings growth, achieving impressive results on both the top and bottom line. Our foundation is solid. We’re delivering consistent earnings growth, driving strong cash flow from operations, improving return on capital, and aggressively pursuing portfolio rationalization, all the while increasingly rewarding our shareholders. Specifically on Slide 3, you’ll see that earnings per share grew 16% year-over-year; in fact, this represents our seventh consecutive quarter of EPS, EBITDA and EBITDA margin growth. On the top line, we delivered sales increases across all operating segments, and this included a first half sales and EBITDA record in Dow Agricultural Sciences. When coupled with the company’s ongoing productivity improvements, these sales gains drove EBITDA margin expansion of 40 basis points, reaching 15%. In particular, we delivered a significant improvement in performance materials. EBITDA was up 36%, a strong example of our productivity actions taking hold. We also achieved EBITDA increases in other key segments such as electronic and functional materials and performance plastics. Importantly, we achieved the results even in the midst of a continued slow growth environment and with some meaningful headwinds from purchase feedstocks and energy costs as well as planned and unplanned outages. Our results this quarter represent steady and continuous improvement in return on capital and illustrate progress against our strategic priorities which are clearly focused on rewarding shareholders. We’re delivering our results as promised – this is our commitment and our top priority. We’ll update you on all these priorities later in the presentation. For now, let me turn it over to Bill Weideman who will discuss this quarter’s financials. Bill?

Thank you, Andrew. Let me begin on Slide 5 with the highlights for the second quarter. Adjusted earnings per share were $0.74 per share. This compares with $0.64 per share in the same quarter last year. Earnings grew 16% as a result of increased sales and lower costs. Sales were up 3% to $14.9 billion. Increases were reported in all operating segments led by performance plastics, as well as sales gains in electronic and functional materials and ag. EBITDA was $2.2 billion. EBITDA gains were led by performance materials with notable increases also reported in electronic and functional materials and performance plastics, reflecting our business-by-business approach to driving both growth and productivity. I will now turn to Slide 6 where you can see the drivers of our performance this quarter where we increased margins and drove sales growth in all operating segments. The company also benefited from ongoing productivity measures which enabled higher asset utilization and additional cost reductions. These efforts overcame the headwinds Andrew mentioned earlier in the call, including more than $100 million from the outages in Plaquemine. Further, we remain on track with our commitment to associate with our restructuring actions. Before turning the call back to Andrew, I will close with some insights regarding what we expect to see in the third quarter. Overall, we are not planning on any meaningful macroeconomic improvement in the back half of the year. We expect ag sales to decline sequentially in line with typical seasonal patterns, and we expect ongoing market demand and positive pricing dynamics to drive continued strong results in performance plastics. Planned turnaround spending will decline about $50 million versus the second quarter levels; however, these costs will increase about $75 million to $100 million versus the third quarter of last year with the planned turnarounds. The majority of this increased spend is expected to impact feedstock and energy, performance plastics, and performance materials. Capital expenditures for the year are estimated to be between $3.4 billion and $3.6 billion, reflecting a deliberate effort to accelerate the start-up of our key growth projects. Now I’d like to turn the call back over to Andrew.

Thank you, Bill. In summary, the second quarter is another solid proof point of Dow’s progress and the outcome of focused actions we continue to take on the top and bottom line to drive earnings increases across our portfolio. We are delivering on our strategic priorities, which are shown on Slide 8. These priorities are bridging our near-term execution in 2014 with our near-term strategy of generating sustainable returns once our key projects start up in 2015. I will now describe how we are tracking on priorities 1, 2 and 3 by segment, then I’ll update you on priorities 4 through 6. So turning to Slide 9, by driving productivity actions across the businesses, targeting certain businesses for growth, being strict stewards of capital, and driving EVA and ROC, we are growing margins in all of our segments. For example, in electronic and functional materials and performance plastics, businesses that we have committed to grow, we are growing and our EBITDA margins are expanding as we continue to further penetrate attractive markets such as the ones shown on this slide. In performance materials, a segment that we have committed to improve, our consistent actions over the last many quarters continue to gain traction, resulting in significant EBITDA increases this quarter. We are taking aggressive cost actions and implementing a broader productivity focus to enhance results, particularly in polyurethanes and epoxy. We are seeing the benefit of these collective actions which we put in place 12 months ago now, and with more upside to come. Our polyurethanes and epoxy teams are hard at work delivering new EBITDA despite business-specific and industry challenges, and when coupled with the upcoming start-up of our PDH investment and our Sadara joint venture, we are well positioned to further restore and enhance our earnings profile across…

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

[Operator instructions] Our first question comes from PJ Juvekar with Citi.

Yes, thank you and good morning. In coating and infrastructure, your results were kind of flattish while your customers are reporting some really good numbers, so it seems that they are getting a disproportionate amount of value while the suppliers are not getting that. So what can you do about that and what kind of discussions are you having with them?

Yes PJ, actually Dow coatings and materials has now had several consecutive quarters of good revenue growth; in fact, this particular quarter, plus 5%. If you look at some of our downstreams, they have revenue growth of 5%, 7%, and one had actually a bang-up quarter at double digits. They have a different operating model – I think there was newspaper article about that yesterday in the Wall Street Journal. Each of their operating models vary – some are heavy industrial, some are heavy architectural, some are in stores, some are not in stores with OEMs, some at the discount stores, some are not. What we’ve got is a group of customers that are actually in all of those, and what we’re doing with them is two things to get our share of the value. One is innovation, clearly, and our launch of Formashield is a good example of that. Formashield, as you may know, is to take formaldehyde out of the air to improve indoor air quality. That gives us premium pricing at customers accounts who want to pay for that based on their brand promise. A very notable paint company on the west coast has a premium brand just purely based on brand promise of quality, including air quality. But it’s not just innovation. It also has to be low cost to serve, and there we are really, if you like, working hard on the input costs. Now, we’ve had some issues on monomers in terms of outages, and that hurt the results a little bit in this past quarter for coatings and monomers – I indicated that in my script. But we are fixing those – Deer Park has been quite a challenge these last many years to operate with consistency, but it’s getting there; and of course SAMCo, our JV in Saudi Arabia, is really helping our position in the Far East and the Middle East. Europe has been a drag, but it’s now starting to improve. All of that to tell you between innovation and lower cost to serve, we believe we can get our piece of the value pie; but we’ll never be a paint company, and of course just like every downstream from us, whether it’s a consumer goods company like Procter and Gamble, they have their value proposition, we have ours. We need to improve our ROC, and we’re doing that in our part of the envelope.

PJ, this is Bill. Just to add one thing on the bottom line, as Andrew alluded to, this is a big turnaround quarter also for chemicals, for coatings and infrastructure, and our turnaround expense there year-over-year was up about $20 million due to planned turnaround, so that affected the bottom line.

Thank you. Andrew, quickly on ag, you’ve said in the past that the real (indiscernible) value, you would think about expanding or a combination. Any further thoughts on that?

Yes, look – we’ve indicated multiple times—well firstly, let me start from the top of the headline. There are no sacred cows here – we’re not keeping a business for the sake of keeping it. There is none of that. We are growing this business, as I indicated with the quarterly report here. This quarter, this half there’s been incredible launches of new products. We outperformed the market for a reason. We are developing new products at a pace which is outpacing our competitors, especially in crop protection, but notably even in seeds and traits. So crop protection is outpacing growth here with that 18% increase that I indicated, and as we increase value, this becomes a more valuable property. What we’re doing is shedding from the other end of the Dow enterprise, the low ROC businesses, the businesses we can’t grow; and if we ever did do a deal that releases one-time value, we need to ensure that we can replace it with higher value inside the enterprise. In other words, we’ll upgrade value for value, not for a one-time transaction. But we are open to any sorts of conversations, and I can tell you that this industry probably has one more round of it in the future. We’re an open book, open discussion to anyone who has a good idea.

Our next question comes from John Roberts with UBS.

Good morning. Your stock is bouncing around the conversion level for the preferred shares, and it was hard to tell if there was much net share reduction sequentially when I look at the share count that’s out there. Maybe you could give us a comment on your plans on how you plan to deal with the conversion event and neutralizing those shares with buyback.

Yes John, this is Bill. I’ll give you a little bit of numbers here on the share repurchase program. So as you know, we really ramped that up, if you will, the first of the year, so if you see a comparison versus same quarter a year ago, our shares are up. But if you look at versus this year and you look at prior quarter, our actual share count is down. So in the quarter, second quarter, we purchased about 17 million shares, as you know, at a total cost of about $850 million, and the total program we’ve bought back about 51 million shares now for $2.4 billion. Our share count actually, the average share count for the EPS calculation, as you know, went down 10 million shares this quarter, and you should expect that to continue to occur going forward. The reason is not the full impact, it’s the share is an average number at the beginning of the period and it’s a weighted average, so that’s the reason. But you’ll continue to see that going down. Yes, you are true – our share price is getting close to the conversion price, and as you know, that is the most value-creating option there for us for our shareholders, so our desire there obviously is for our share price to continue to appreciate and then convert those into common.

And then on the chlorine carve-out, your text says by the year end ’15 close the deal. Is the plan still to have a definitive deal announced by the end of ’14?

Yes John, we would aim to do that. Again, we’re not going to run to the wrong answer here because of the stranded cost issue that I mentioned in my remarks. This is a complex carve-out – I can’t emphasize that enough. I made enough comments in the script to let you know how complex it is; but yes, that would be the intent. There’s nothing that tells us right now we can’t do that.

Our next question comes from Bob Koort with Goldman Sachs.

Thank you, good morning. Andrew, I guess you’re on the cusp here of the next ag season, selling your Enlist product. I was wondering if you could talk about the challenges farmers have today with herbicide resistance, and then what sort of costs are you able to save them from using a seed-contained product as opposed to a secondary herbicide treatment.

Yes, this is a very granular question, Bob, so I’ll try and give a couple of quick punchlines here, and of course I’ll follow up with you and anyone else that wants to know more detail. Clearly the efficacy of Enlist Duo, which is the combo, which is of course 2,4-D resistance as well as glyphosate resistance, has embedded in it quite a lot of user-friendliness for the farmer, including the reduction of cost. We have not shared farmer economics with anyone right now, but clearly 2,4-D is so widely used, so ubiquitous, they see it as a solution that they want; but of course, doing this with choline chemistry takes out the VOC issue and the drift issue and any of the issues with 2,4-D, which is why this is such a great introduction. It really is a better, friendlier version of 2,4-D chemistry with, of course, the tolerance and the resistance that you would get from glyphosate as well. Glyphosate resistance is a big issue for farmers and they’re working very hard on finding a reformulation. They are screaming for this one because of their knowledge of 2,4-D chemistry. Clearly the other part of this is that it’s a combo. The fact that we can apply it to soybeans as well as corn is a massive, massive positive for them, and clearly they’ve used 2,4-D for these purposes for over 60 years in more than 70 countries worldwide with thousands of pages of scientific studies, hundreds and hundreds of agencies and regulators giving it its approval, so it really is an in-place substitution for them. So frankly, the farmer economics both on refuge in a bag as well as efficacy of (indiscernible) is very compelling. I won’t speak specifically to pricing.

And you mentioned monetizing some corporate and maybe some JV interest. I think you even implied especially your larger JVs. I was wondering if you could give us an update or assessment on how Dow Corning and maybe how the petrochemical JVs you have are performing and what the outlook there is.

Yes, look – I would say QHJVs in general have been Kuwait JVs in general have been good, steady earners for Dow. They’ve got a low-cost position, whether it’s in Kuwait or Canada, and as a consequence of that, they’ve been contributing to our equity earnings quite handily here these last—well actually, over a decade but certainly these last five years. Dow Corning has gone through its major bump with polysilicon – that obviously was a mess of recalibration of their earnings capability. They’re doing the best in the polysilicon world because they are the low-cost producer. They don’t have the margins they used to have, so Hemlock is not doing as well as it did a few years ago. Now if you look at both of those sets of JVs and you look at my statement, the product mix in the Kuwait JVs is a commodity product mix in the main. Dow Corning is a downstream value-add company that needs low cost to serve. What we need to do is get very transparent on how you see those results so they don’t get lost in our reporting, and that’s what we’re working on – trying to figure out ways to do that and of course be value creating and accretive. So our focus is on both of those; and Bill, I don’t know if you want to add anything.

Yes, overall—just to add, overall our equity earnings, as you know, were flat year-over-year; but as Andrew alluded, the greater Kuwait JVs earnings are up year-over-year, Dow Corning earnings are up year-over-year, and then those are offset in terms of increased cost in Sadara as we ramp for production here next year. So overall, our base joint ventures continue to drive earnings increases, including Dow Corning.

Our next question comes from Peter Butler with Glen Hill Investments.

Yes, good morning. Do you have—have there been any significant developments in your Dow AgroSciences research pipeline, looking beyond the Enlist coming next year?

Absolutely, Peter. One of the things I implied in the answer to PJ’s question is we have Enlist, but we have a strong pipeline of other products being launched as we speak. I would tell you that our launches in the crop protection side have been as impressive as anything on the trait side. Having said that, we just had a novel USDA deregulation of a novel insect-resistant trait, and this is going to provide soybean farmers with a broad spectrum for insect control against something called lepidopteran. I want you to understand that – that’s a pest, okay, so a bad thing. So this is now being part of our comprehensive soybean strategy, and this is really the key thing I want to say, that apart from our crop protection, new herbicides and new insecticides, our focus on soybeans and between Enlist and this new novel insecticide technology (indiscernible) just mentioned, these are massive new products and will enable us to double the value of Dow AgroScience these next few years. These are broad spectra weed control as well as pest control, lower drift, lower volatility with Enlist, and user friendly to the farmer. We’ve never been as excited about our pipeline in Dow AgroScience. This has been actually an eight-year effort that is bearing fruit today, and you saw it in the first half results of AgroScience.

Andrew, you’ve been discussing this possible next consolidation step for it seems like several years now. Is anything coming into view?

Yes, I mean look – I’d say there is quite a few things coming into view. One is that the European market and its maybe acceptance of GMO is an accelerator with 28 countries now potentially looking at listing, allowing GMO. That’s going to change the landscape and really bring North America and Europe more in line and create new value for the in-place players that have the technology. European standards will be very strict, so—and we’ll say that you’ve got to have a combination of crop protection strength and trait strength, and the single-line players, they’re going to realize that with time they just can’t rely on one or the other. I think the mythology of everything moving to biology is gone. I think it’s a combination of biology and chemistry that’s going to play, and we’re very proud of the fact that we have both crop protection and biology, that combo, and the crop protection is truly based on Dow’s strengths. So look – you can see that what’s going to happen here is the five or six top guys are going to look at ways to combine. Obviously, the early way to do that is through licensing and exclusive licenses, but clearly there’s a model out there for releasing value through consolidation and bulking up on both sides of the house.

Our next question comes from Frank Mitsch with Wells Fargo Securities.

Hey, good morning gentlemen. Obviously the performance plastics business was a star here in the quarter despite the $100 million outage from Plaquemine. Bill, I think when you were talking about the business, it was sounding like third quarter could even be better. Can you talk about the sequential price increase – I know price was up 7% year-over-year. Can you talk about the sequential price increase and what sort of momentum you’re carrying in that business into Q3?

Yes Frank, so you’re exactly right. Plastics, as you pointed out, performance plastics overcame $100 million headwind on the two outages we had in the crackers in Plaquemine. From an overall performance plastics standpoint, industry dynamics are very strong. There is very low inventory levels. There is pricing momentum – you saw that in this quarter. It’s our belief that will continue. On top of that, you’re seeing ethane costs down now around $0.23, $0.24, so we expect margins going into the third quarter to remain very strong.

Terrific, thanks so much. Andrew, when you’re talking about Priority 5 on Slide 21, you mentioned that to release value in rail cars over the next six months. Frankly, that’s a faster timeline than I would have anticipated, given the fact that you guys are involved so much in the chlor-alkali carve-out. I think you also mentioned other financial structures as a possibility. Was that a nod to possible MLP-ing of those assets, and just more broadly, where do you stand on the whole topic of MLP?

Yes, I think one more data point that we provided you on this call, Frank, that partly answers your first question on speed and timelines, and that is we have 12 corporate teams actively engaged. I mentioned we have 100 people on the chlorine carve-out. This is a company that’s paralleling execution on the operating side as well as execution on the transaction side to release value and to become more transparent where it makes money, and as a consequence we’re dropping lower ROC activities or activities that are best in the hands of other ownership models. Then to the second part of your question, we believe rail cars can go to another model. We also believe that we’d be quite open to structures that are tax advantaged, such as MLP; but implied in your question is, is there a big MLP structure of the Westlake kind in our future? Probably not, because we’re a very different type of upstream assets operator. We operate 18 upstream assets integrated around machine, and maybe the new assets can be—we can look at them, for example PDH. We are examining all those, but we don’t see any silver bullet in some of these structures for our mainstream businesses yet. But for sure ancillary assets, we’d be definitely looking at them.

Our next question comes from David Begleiter with Deutsche Bank.

Thank you. Andrew, looking at Slide 18, Priority 1, you’re obviously very, very busy; but what’s beyond 2017 as we go through these next couple years? Can you talk a little bit about what drives Dow in the last two, three years of this decade in terms of new projects or innovation, et cetera?

It’s very good to first acknowledge that we’re very busy, and secondly to put us into that timeframe because, quite rightly David, we’ve had 18 months of strategic reviews with our board and we’ve done a five-year plan, we’ve done a 10-year plan, as most companies do. When you put a stake in the ground for years like 2025, you obviously are thinking about projects in 2018, 2020, 2022. We’re not going to disclose those plans to the market quite right now. We have a lot of work to do to get to 2015, 2016, 2017, and I’ve already implied that we’re going to generate a lot of cash and that cash is going to our shareholders. So we’re going through a massive capex bubble right now, we’re using that cash obviously from operations, which has been pretty good and getting better with our productivity focus, and we’re putting that into organic growth such as these big facilities that we’ll be starting up in the first part of this back half of this decade. The second part of the decade, we have a very robust R&D pipeline where we can make choices to go narrower and deeper, and we’ve implied over time that there are markets we want to go deeper in and we’ve given you the five or six that we’re concentrating on. We’ll be looking at ways to keep bulking up and becoming more significant to customers in that part of the marketplace, not all parts of the market. In that sense, the Dow model of if you build it, they will come, or tons-r-us, or build a facility and move rail cars and move pallets, is behind us. We are in the value side of the conversation, which is a bit like the question I got on coatings from PJ – where is the biggest value in the value chains? Where is the biggest ROC in those value chains, and put scarce capital against those. So going narrower, going deeper, making choices in the back half of the decade off of our robust R&D pipeline. We will be looking at projects on an ongoing basis. There is no big M&A in our future – I’ve said that over and over. We are looking at bolt-on M&As to improve capabilities, whether it be in electronics or ag or even some of the businesses like water. These are the sorts of things you can expect from us in the back half of the decade.

And just on Sadara, Andrew, how should we think about the ramp-up in the back half of next year in terms of the ethylene and polyethylene units coming on stream and modeling that for our numbers for next year?

So firstly to get this thing to 70% complete, as you well know, is pretty impressive, and I can’t speak highly enough about the JV, the people in the JV, the project teams in the Dow and Aramco people who are working seamlessly together. Having 55,000 contractors on one site is unimaginable to most, and so as we look at the start-up of these units, it’s complex. I mean, you’ve got all these units being constructed, and in the middle of it you’re going to start up a cracker and you’re going to start up polyethylene units to get early revenues and get early profits, obviously. But those are the right ones to start up first, because obviously they’re off the low-cost inputs that are available in the kingdom and we can see that the EBITDA that will come from those in the 2015-2016 timeframe will help make this project very accretive in a much faster fashion. But we haven’t given you enough information yet to model the earnings, other than you can expect average annual equity earnings contribution to us of half a billion dollars in the first 10 years of operation. I’ll let Bill add anything he wants here, but I would wait another six to 12 months before we get into any specific guidance there, David.

Yeah, I’ll leave it at that.

Our next question comes from Don Carson with Susquehanna Financial.

Hi Andrew. A question on ag, more the near term. You’re one of the few players in seed that’s actually talked about better first half results, given that corn was down in the Americas. I know you’ve got a small position in the U.S. but a big position down in Brazil, so what is it that’s enabled you to grow your corn seed business? You seem pretty optimistic on the second half outlook despite what appears to be some real headwinds in South America, specifically down corn acreage, so just wondering if you could reconcile some of those conflicting data points.

Yes, it’s a great insight, Don, and something I’d expect from you following ag so closely. I mean, we definitely are beating competition in Latin America corn despite some of the issues that are going on there, mostly and totally because of our technology. It’s the multiple stack, it’s Powercore, and frankly it’s Powercore multiple stack that’s overcoming the issue on one particular trait that’s down there. I think we’ve been able to gain share as a result, and consequently our positioning going forward is that we will continue to be winners down there on corn, even though you mentioned of course the outlook you do, which we of course agree with. But we also not only have that, but we also have bodads (ph) in general – broad spectrum crop protection capabilities, and this is of course pre-Enlist – we’re not totally Enlist yet. As a consequence of that, the combination of Powercore and the broad spectra herbicides we have has made us a winner.

Then moving to a different area, you’ve maintained very good innovation despite R&D being cut – I think this is the first quarter in the last few quarters that R&D has stabilized. So where did you make cuts in R&D, and how were you able to make those cuts and still maintain that innovation track record?

Are you talking in ag particularly or—

No, just R&D overall. It’s been six months flat to year-over-year this quarter for the first time in a long time.

Well very simply, it’s what we’re doing for the entire enterprise, which is bang for the buck. We said about a year ago – I’ve lost track of the time – where we did start to make cuts in the spend of far out projects. We also made cuts in the spend of a lot of alternative energy projects, so we took some bets there and some of those bets were just too far out. I mean, yeah, you could see that out there in the future, alternative energy will have a role, whether it be batteries or biofuels or you name it; but it’s too far out for us, and we were all for R&D but we want to be able to count the R&D productivity just like we count any cost input here at Dow. So near-term MPVs, things that are touchable and visible in terms of the commercialization of the pipeline, working closely with marketing, that’s been the way we’ve prioritized, and I think our pipeline hasn’t suffered as a result. The risk-adjusted MPV is still double-digit billions of dollars - $10 billion or so. A few years ago, that might have been $12 billion, so we haven’t really cut, and that’s all near-term now, the realization of EBITDA from that spend. Bill, did you want to add anything?

It’s re-prioritization, as Andrew mentioned. It’s prioritizing our investments in electronics and ag and performance packaging, and reprioritization of resources.

Lauren, there may be time for one to two more questions.

Our next question comes from Duffy Fischer with Barclays.

Good morning, guys. Question back on the chlorine carve-out, or a couple questions around it. One, do you think it’s going to be one deal, or should we expect a series of deals to solve that issue for you? And then two, obviously this gets around multiple a little bit, but how should we think about dilution from carving off this asset at the end of the day?

Duffy, this is Bill. We’re open and we’re looking at all different structures – one deal, multiple deals, and those could take different forms, so we haven’t nailed that down. We’ll take whatever structure creates the most value. From a dilutive impact, we’re not expecting any dilution on this at all. We’re very focused on stranded costs from a standpoint of making sure we don’t have any stranded costs, and so as Andrew also mentioned in his prepared comments, we are very focused on getting the right structure to maintain our integration in the go-forward. So hopefully that answers your question.

Fair enough. This is a little bit of a rifle shot, but I think Andrew, you had mentioned tangentially kind of the issue that Herculex has had, or at least one version of Herculex has had in Brazil over the last year. Do you see that kind of damaging the Herculex franchise and potentially hitting the revenue there, or was that just kind of a one-off, one-year issue?

Hard to say if it’s one-year, one-off, Duffy. It could be consistent, it could continue on. It could be pest management practices on single-mode products like Herculex 1 that will be impacted first, but we’re very confident, to kind of get at your point, that our stacked trait product, Powercore, will provide resistance. So even if there’s some erosion there, I think we’ll more than make up for it through the stacks.

Our next question comes from John McNulty with Credit Suisse.

Yes, thanks for taking my question. So with regard to your U.S. Gulf Coast projects, it sounds like you’ve prepared enough so that you expect them to come up on time. Can you give us some color as to how you’re thinking about the industry and the huge amounts of capacity coming on and the talks of labor shortages, et cetera, and how that may impact the cycle specifically?

We’ve been pretty consistent on the supply-demand balances in the timeframe of these projects being announced in the United States. On the slow GDP growth pace, which is a global GDP of 2.5 to 3.5, and one might argue we’re on the lower edge of that right now, then the cycle will start to manifest itself in the late ’14, ’15 timeframe. And by the way, with outages this last quarter, you saw what the effect of tightening could happen very fast on pricing, so to the question we got on pricing earlier in the call. But all of that to tell you that if you look at the world at that sort of growth rate, then you’re going to need world-scale crackers to be built on a ratio, picking your favorite growth rate, of one to three a year, and there’s been, let’s say, seven or eight announced, five to six very likely spread over a five-year timeframe. That five-year timeframe is a five-year timeframe because you’re going to get, to your point, slowing some of them down. So some will come on pretty much like ours – ’16, ’17, probably best is ’17, really – and then you’re going to start seeing a couple more in ’18, ’19, but that’s it. There really isn’t a whole lot more that are going to be built because of the point you made on capital and on labor; and frankly, these are out years now so they’re not going to affect the cycle that you just asked about. So we’re very confident that independent of low-cost imports – you know, the whole point on ethane – that the ethylene cycle and the coincidence of this new capacity are going to be quite well synchronized to advantage companies like ours.

Great, and then just a quick follow-up on the comments around some of the larger JVs. It sounds like you are looking for ways to unlock some value there, and certainly implied in that it may be that some get shaken out of the portfolio. But I’m guess I’m wondering, are there assets of relative size that you have JV partners with where, if the partner was willing to sell, you’d actually be a buyer of assets as opposed to a seller of assets?

Yes, look – we’re working this portfolio to keep bulking up the value-add part of the portfolio, because at the end of the day a commodity is a commodity is a commodity, and if you’re going to run a commodity company, you’re going to run a cycle and that cycle is going to be up and down based on your low-cost position. Nation states are pretty hard to beat, so they’re going to have policies that you can’t have as a private enterprise, so our strategy has been to join them and joint venture with them. But over timeframes, those nation states are more natural owners of those JVs, and we recognize that; so then you say, well, what do we do? Well, you’ve got to take your innovation and then bulk up your market value-add position and still be low cost, so that kind of gives you strategically the answer. There are some more likely to come inside the shop and some more likely to go outside the shop, and we’re not foreshadowing any particular transaction any time soon, but the answer to your question is yes.

Great. Andrew, do you want to maybe wrap up?

Yes, I do. Firstly, I think you’ve now seen now three quarters of execution where execution is our mantra. It’s another strong, solid quarter for Dow across our enterprise. Productivity played a huge role. I want to point performance materials and polyurethanes and epoxy – they delivered. We’ve had an intense amount of pressure on those teams, and they’ve delivered in a fairly difficult market environment. They’re getting it through productivity and cost controls, and you can expect that across our entire enterprise. We’re operating as if that’s condition normal for all our businesses. But having said that, we’re putting a lot of effort into growing, and the projects that you asked about on the call are clear examples of that. The innovations you asked about on the call are other examples of that, all of that moving to improving ROC – 150 basis point increase in ROC year-on-year is going to continue at Dow. All of that to drive shareholder returns and provide more cash remuneration to you, our shareholders. I believe we’re running the best set of integrated businesses on the planet and they will perform to the top of the house expectations on shareholder returns and ROC – that’s our commitment.

Thank you, Andrew. Before we conclude the call, I’d like to give you an update on our investor forum. Due to venue availability conflicts, we’ve moved the date to November 12 and 13. The event will still take place in the Houston-Freeport area, and we’ll have more information coming shortly. In the meantime, please mark your calendars. 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, and we look forward to speaking with you again soon. Thank you.

This concludes today’s conference. Thank you for your participation.