Heidi Petz: Thank you, Jim. I'll begin with the Paint Stores Group, where sales increased 2.3% against a mid-teens comparison. Volume drove the increase as our previous price increase annualized in September. Segment margin improved 210 basis points to 19.3%. Protective & Marine, commercial and residential repaint drove the growth. Strength in these markets was partially offset by decreases in New Residential and property management. From a product perspective, exterior and interior paint sales both increased by low-single digit percentages. Exterior sales grew faster but were a smaller part of the mix. We opened 35 new paint stores in Paint Stores Group in the fourth quarter and a total of 76 new stores in 2023. We also announced a 5% price increase to our customers in the quarter effective February 1. Moving on to our Consumer Brands Group. Sales decreased by 7.1% in the quarter, which was better than our guidance. Sales increased mid-teens percentage in Europe and Latin America. Sales decreased in North America by a low-double-digit percentage as customers managed their inventories lower due to soft paint demand, partially offset by an increase in the pro paint sales. Adjusted segment margin, which excludes acquisition-related amortization expense and impairment charge related to trademarks in Europe and the negative impact from the significant devaluation of the Argentine Peso in December was 10.8%. The decrease from last year's fourth quarter was driven by lower volume and higher nonoperating costs. Sales in the Performance Coatings Group increased slightly with continued choppiness across each of our businesses and regions. Acquisitions and favorable FX were offset by lower volume. Adjusted segment margin, which excludes acquisition-related amortization expense and the Argentine devaluation impact, improved to 17.3%. This is the fourth straight quarter this team has delivered year-over-year segment margin improvement. This performance reflects execution of our strategy, moderating raw material costs and the ongoing value we are providing customers. Industrial wood led the growth, including the impact of recent acquisitions. Coil and Automotive Refinish also delivered solid growth. Packaging was down as expected. General industrial was impacted by lower demand in all regions. PCG sales varied significantly by region with growth in Europe and Latin America and decreases in North America and Asia-Pacific. From a full-year perspective, I'll provide just a few highlights before turning to our 2024 outlook. At this time a year ago, you'll recall an environment of tremendous macro uncertainty with single-family housing starts down an average of more than 20% for seven consecutive months, existing home sales down a similar percentage, soft PMI manufacturing indices in all regions and most economists predicting a hard recession. Against that backdrop, we provided guidance that we believed was appropriate. We also said that if conditions improved, our performance would be better than our initial guidance, and that is exactly what happened. I could not be more proud or thankful for the efforts of our 64,000 employees throughout 2023. On a consolidated basis, our team delivered record full-year sales, adjusted EBITDA, adjusted diluted net income per share and net operating cash. We returned a total of $2.1 billion to our shareholders in the form of dividends and share buybacks in 2023. We delivered these results while reinvesting in the business by design and at an accelerated rate to drive continued above-market growth and enhanced profitability. In terms of CapEx, we invested $590 million, including approximately $205 million for building our future R&D lab projects. We expect to begin occupying these facilities by the end of 2024. We ended the year with a net debt to adjusted EBITDA ratio of 2.3x. Looking at our reportable segment on a full-year basis. Paint Stores grew sales by a high-single digit percentage and expanded its margin. Sales increased in all end markets except New Residential, which was down less than 1%. This New Residential performance was remarkable given the state of the market and reflects our share gains. Performance Coatings also grew its top line while further integrating recent acquisitions and achieving a high teens adjusted segment margin. The full-year adjusted margin performance is the best since the Valspar acquisition in 2017. Consumer Brands had a challenging year on the top line with lower sales resulting from soft DIY demand, but adjusted segment margin expanded. We're confident our aggressive portfolio adjustments completed during the year, including the divestiture of noncore aerosol product lines and the China architectural business, should result in improved future profitability. I am confident that we further separated ourselves from our competitors in 2023, and that's exactly what we intend to do again in 2024. Our success in 2023 stemmed from executing on our strategy, which remains unchanged. We provide differentiated solutions that enable our customers to increase their productivity and profitability and for which they are willing to pay and stay. These solutions center on industry and application expertise, innovation, value-added services and differentiated distribution. We also have momentum in the enterprise strategic priorities that are illustrated in our slide deck and I first described at our Investor Day last August. I am confident the continued execution of our strategy and our enterprise priorities will spur the next era of profitable growth for Sherwin-Williams. So turning to our outlook. We entered 2024 with confidence, energy and a commitment to seize profitable growth opportunities in our targeted end-market segments. We expect to outperform the market just as we have in the past. And while the macro environment feels better today than it did a year ago, it still contains a number of uncertainties. On the architectural side, U.S. New Residential sentiment has improved. Single-family starts have been up year-over-year for six consecutive months. Mortgage rates are expected to begin moderating but will remain well above historic levels. In residential repaint, existing home sales drove a portion of our sales and have declined year-over-year for 28 straight months. The trajectory of recovery is not clear here, and the LIRA index is forecasting negative remodeling spend in 2024. However, there are numerous other drivers for repaint, and our investments and our model give us confidence that we will continue to grow share. In new commercial, starts slowed considerably in 2023, which we expect will impact completions starting midway through 2024. Commercial lending standards have also tightened, and the Architectural Billing Index has been negative for five consecutive months. On the DIY side, we'll remain in share gain mode as we do not currently see a macroeconomic catalyst driving meaningful improvement in consumer demand, though any improvement in existing home sales could be a tailwind. On the industrial side, the PMI numbers for manufacturing in the U.S., Europe and Brazil have largely been negative for multiple months with China being slightly better recently. We expect Automotive Refinish to be our most resilient business in this environment, and we expect to see ongoing benefit from recent share gains. Industrial wood is likely to benefit from recovery in New Residential given the furniture, flooring and cabinetry end markets it serves. We expect Coil will grow driven by significant new account wins over the past year. Protective & Marine should continue to have momentum but will face challenging comps. We expect general industrial demand to remain choppy. In packaging, we expect industry volume for food and beverage cans to be flat to down in 2024. We will also see a negative short-term impact related to temporary volume shifts, which occurred as a result of our Garland production plant incident last August. We fully expect to recover this volume in stages in 2024 and 2025 while also winning new business. Longer term, we remain bullish on our packaging business and our differentiated non-BPA solutions. Our Garland plant is fully back online, and we are bringing on additional capacity in other locations during the first half of the year. We continue to have excellent new account and share-of-wallet opportunities in every business and in every region. The continued growth investments we have made over the past year give us tremendous confidence in pursuing these opportunities and gaining share. Moving to the cost environment. Our outlook assumes our raw material costs will be down by a low-single digit percentage in 2024 compared to 2023. We expect to see the largest benefit occurring in the first half of the year as comparisons become more challenging in the back half, where the entire basket decreased low-double-digits. While raw materials will likely be a benefit for us, other costs, including wages, health care, energy and transportation are expected to be up in the mid- to high-single digit range in 2024. I will remind you that these categories also inflated in 2023. Working with our customers, we delayed additional Paint Stores price increases last year given the pricing actions that we took in 2021 and 2022. We cannot however ignore these escalating costs indefinitely. As I mentioned earlier, Paint Stores Group is implementing a 5% price increase effective February 1st. The Performance Coatings and the Consumer Brands Group are also likely to have some targeted pricing activity in 2024 though at a more modest level than Paint Stores. As for our specific outlook, the slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the first quarter of 2024. The deck also includes our expectations for the full-year, where consolidated sales are expected to be up a low to mid-single-digit percentage and diluted net income per share is expected to be in the range of $10.05 to $10.55 per share. Excluding acquisition-related amortization expense of approximately $0.80 per share, adjusted diluted net income per share is expected in the range of $10.85 to $11.35, an increase of over 7% at the midpoint compared to 2023's adjusted diluted net income per share of $10.35. We've provided a GAAP reconciliation in Reg G table within our press release. Let me provide some additional data points and an update to our capital allocation priorities. Given incremental 2024 pricing, raw material deflation and Paint Stores Group, our largest and highest gross margin segment, growing sales faster than the other two segments, we would expect full-year gross margin expansion. We expect SG&A dollars to increase by a more typical level and increase by a mid-single-digit percentage in 2024, a moderation from the low-double-digit percentage increase we reported in 2023. We expect the investments we made last year and those we plan to make this year will enable us to grow at a multiple of the market. We plan to control costs tightly in noncustomer-facing functions. And we have a variety of SG&A levers we can pull, depending on a material change to our outlook up or down. We expect to open 80 to 100 new stores in the U.S. and Canada in 2024. We'll also be focused on sales reps, capacity and productivity, system improvements and product innovation. Next month, at our Board of Directors meeting, we will recommend an annual dividend increase of 18.2% to $2.86 per share, up from $2.42 last year. If approved, this will mark the 46th consecutive year that we've increased our dividend. We expect to continue making opportunistic share repurchases. We'll also continue to evaluate acquisitions that fit our strategy. We have a manageable $1.1 billion of long-term debt due in 2024 and expect to refinance the debt at higher rates. We expect to be within our current long-term target debt-to-adjusted EBITDA leverage ratio of 2x to 2.5x. In addition, I will refer you to the slide deck issued with our press release this morning, which provides guidance on our expectations for currency exchange, effective tax rate, CapEx, depreciation and amortization and interest expense. Our team is operating with great confidence as we begin 2024. We are extremely well positioned to continue delivering shareholder value. And I want to thank John Morikis for the incredibly strong foundation he leaves with us as he moves into his role as Executive Chair. I'm also grateful for the outstanding executive leadership team surrounding me. Given that there is still a considerable amount of uncertainty in the global economy, we believe our initial 2024 outlook is an appropriate one. Should the demand environment prove to be stronger than we are currently assuming, we would expect to do better than the guidance we are laying out today. Our first quarter is a seasonally smaller one. For that reason, we will not be making any updates to full-year guidance until our second quarter is completed and we have a better view of how the painting season is unfolding. Our strategy is clear, our priorities are focused, and our people are ready. We will continue to win by providing innovative solutions that help our customers to be more productive and more profitable. We expect to deliver meaningful earnings growth in 2024. This concludes our prepared remarks. With that, I'd like to thank you for joining us this morning, and we'll be happy to take your questions.


Heidi Petz : Thank you, Jim. First, I want to thank all 65,000 of our employees around the world for their efforts in the quarter and for their ongoing passion for our company and for our customers. I continue to be humbled and inspired by all that you do. I believe our second quarter results demonstrate three things: One, we have the right strategy. Two, our team continues to execute and adapt. And three, we continue to see returns from our ongoing investments in the business. At the same time, we're not content with where we are by any means and our team understands that we must continue to operate with determination and urgency. We're delivering strong results in a choppy demand environment while executing on initiatives that will put our customers and our company in position for even greater sustained success. As far as specifics on the second quarter, I'll begin with the Paint Stores Group where sales increased by mid-single digits against a double-digit comparison. Volume and price were both up low-single digits. As we expected, price realization improved as the quarter progressed. Segment margin increased to 25.1%, driven by higher sales and moderating raw material costs. Pro sales were led by residential repaint which was up by a mid-single digit percentage. Strong evidence that we are continuing to take share in a down market. We're clearly seeing a return here from the investments in dedicated sales reps we made in the back half of last year. New residential returned to growth in the quarter as we are seeing improving single family starts turn to completion. Commercial grew by low-single digits against a double-digit comparison. Property management was down less than 1% with continued delays in CapEx projects. Protective and marine was up mid-single digits against a low-20s comparison. And while we acknowledge that there have been project delays, we feel very good about the pipeline. DIY increased low-single digit increased compared to a high-teens comp. From a product perspective, interior paint sales grew faster than exterior paint sales. We have opened 26 net new stores year-to-date and expect to open 80 to 100 for the full year. Moving on to our Consumer Brands Group, sales underperformed our expectations in a market that was softer than we anticipated. Lower volume, the impact of the China architectural divestiture and unfavorable currency translation were partially offset by selling price increases primarily in Latin America. Sales in North America decreased by a high-single digit percentage where weakness in existing home sales remains a headwind. Inflation, depleted savings and household debt also continue to pressure consumers who currently appear to be spending their modest available discretionary dollars elsewhere. We understand where we are in this cycle and eventually expect to see an upturn in DIY demand. We're confident that we are well positioned with our growing partnerships over the long-term. Outside of North America, sales decreased by a high-single digit percentage in Latin America and a double-digit percentage in Europe. Adjusted segment margin expanded to 26.1%. This was primarily driven by improvements in manufacturing and distribution fixed cost absorption within the segment and moderating raw material costs partially offset by net sales that were below expectations and higher employee related costs. In the Performance Coatings Group, modest sales growth was driven by an acquisition which was partially offset by unfavorable currency translation. Adjusted segment margin improved to 19.4%. This continued strong margin performance reflects our ability to drive our customer success in end markets that value differentiation. It also reflects the ongoing hard work of our team to optimize this business. We continue to see choppy demand by division and region. Industrial wood led the growth including the impact of an acquisition. Coil also delivered solid growth driven by share gains. Auto refinish was up low-single digits in North America and down less than 1% overall. Share gains are offsetting softness in our core business where consumer reluctance to pay deductibles is resulting in lower insurance claims. Packaging was down less than expected and we have a good line of sight to improvement in the back half of the year. General industrial demand was lower in all regions. Heavy equipment and transportation were down more significantly, while energy infrastructure was a bright spot. Regionally, sales in the group were down low-single digits in North America, but positive in other regions. Moving on to our guidance for the third quarter and full year, it's clear that the macroeconomic environment has been softer for longer than many economists anticipated at the start of the year. We don't expect to get material help from the market in our back half. We are unwilling to simply accept these conditions and you can count on us to continue being very aggressive in our pursuit of new business and share of wallet gains. Sherwin-Williams have incredibly well positioned in each of our targeted end markets. Comparisons ease in our second half, competitive dynamics are a tailwind and we are confident share gains will become more apparent over time as market conditions improve. As for our specific outlook, the slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the third of 2024. For the full year 2024, consolidated sales are expected to be up a low-single digit percentage compared to our previous guide of up low- to mid-single digits. Full year sales guidance for the Paint Stores Group and the Performance Coatings Group remain unchanged. We have reduced our Consumer Brands Group guidance meaningfully following the softer than expected first half and continued weak demand in the North American DIY market. We are increasing our full year earnings guidance given our better than expected results in the second quarter. The midpoint of our previous guidance now becomes the low end of our revised guidance. On an adjusted basis, we are now guiding diluted EPS in the range of $11.10 to $11.40 a share, an increase of 8.7% at the midpoint over the prior year. As we have often said, should our sales prove to be better than we are currently anticipating, we would expect EPS to be better. Our slide deck also provides guidance on our expectations for raw material costs and other items helpful for modeling purposes. As we enter our second half, we know that we are not immune from choppy market conditions. This leads us to focus even more intensely on our strategy. In periods of uncertainty and competitive disarray, customers are looking to Sherwin-Williams for consistency, reliability, dependability and differentiated solutions that will drive their productivity and their profitability. We have a deep and experienced team that knows how to do just that. We believe in success by design and we do expect to win. This concludes our prepared remarks. With that, I'd like to thank you for joining us this morning and we'd be happy to take your questions.


John Morikis : Well, we've talked about our -- speaking to the margin -- gross margin, we expect we'll be in the range of the 45% to 48%. We've I think demonstrated the incremental sequential margins in this quarter, getting close to that bottom level of the range, and we expect to poke through that. And the reason we do expect that is, is that we believe we're focused on the right customers with the right solutions. Our focus is really simple. I mean we want to help them make more money, help them to be successful. And as a result, we are in a position to be able to build that combined success. And as a result, we expect to be able to provide margins for both our customers and our shareholders. And the combination of the right customers with the right solutions, we believe will lead us to that.


Greg Melich: Got it. And I guess my second question is on getting back to those that margin range, the 46% gross margin. Could you remind us of the range you were targeting? And is there a potential to be above that in the cycle, given that it sounds like at least the pricing environment is remaining quite rational?


Allen Mistysyn: Yes, Jeff, if you look at our pricing because you annualize pricing throughout each of the segments as we've gone. I know we've talked about Performance Coatings through basically, at some point, through on a 90-day cycle. So price was still up in the quarter, in the third quarter, up low single digit. But if you look at that compared to our second quarter, price would have added a mid single-digit percentage in the second quarter. So -- and as you get into our fourth quarter, you'd be at a lower single-digit impact on our fourth quarter. So that's just annualizing the price increases we've taken throughout '22. But I would argue and say, we have not given that price back. And you can see that in our gross margin performance in the second quarter, up -- 440 up in the third -- third quarter of 490 basis points, and we expect to be up again in our fourth quarter, along with the moderating raw material cost sequentially.


Al Mistysyn: Yes, Greg, this is Al Mistysyn. And we’re really pleased with the performance of our gross margin. As a reminder, our target is midterm, 45% to 48%. As we have talked about in the past, we – in our raw material inflationary environment, we put price in to offset those dollars. And then as raw materials moderate, we start seeing the benefit of that pricing to increase our gross margin and helps us cover the continued investments we make to help our customers drive value in their business. So I’d expect the sequential gross margin to be similar to what I saw in this – what we saw in the second quarter. Price, as you know, we’ll start annualizing the price increases in our third quarter, specifically the September 10% in Paint Stores Group plus the other items, other segments that have put pricing in. So for the full year, I think our gross margin, depending on where Paint Stores Group volume is could be in that 45% to 46% range. And then as you know, we’ll evaluate that 45% to 48% range over time. And as we get consistency in that range, look to raise the bar and move that target up.


Greg Melich: Okay. Great. No, it's good to be back. So I just wanted to frame a little bit differently how important mean the gross margins back up to the middle upper part of your range. And if I take your guidance, it seems like there's another 100 bps of gross margin expansion assumed this year. How important is volume versus price raws and mix for that 100 improvement this year? And I guess that, how long do you wait before you end up raising that long-term goal?


John McNulty : So on the gross margin front, you put up this [488] number really high despite some soft volumes. I guess, was the bulk of this price versus raws in terms of the improvement? And if not, how should we be thinking about some of the efficiency and some of the simplicity measures that you've been making? Because obviously, volumes really didn't drive this one entirely. So I guess, how should we be thinking about the big drivers there?


Heidi Petz : Thank you, Jim. I'll begin with the Paint Stores Group, previously known as The Americas Group. We described this change on our last call and in this morning's press release. There is no impact to prior year consolidated results related to this change. Current and prior year segment results have been restated to reflect this change. First quarter Paint Stores Group sales were ahead of our expectations and increased 14.8%, driven by high single-digit volume growth and continued effective pricing. Segment profit increased by $97.9 million and segment margin improved 120 basis points to 18.4%. Our Pro architectural sales grew by a mid-teens percentage in the quarter. All Pro market segments increased by double digits, led by property management and followed by commercial, residential repaint and new residential, respectively. Sales in protective & marine and DIY also increased by double-digit percentages. From a product perspective, interior and exterior paint sales were both strong, with interior sales growing faster and representing a larger part of the mix. Moving on to results in our Consumer Brands Group, which again now reflects the addition of a Latin America architectural business in the current quarter and prior year. Sales were well ahead of our guidance and increased by 2.4% in the quarter. Performance was better than expected in North America, where sales were down less than 1%; and in Europe, where sales were down low single digits. In other regions, sales were up strong double digits in Latin America and down double digits in Asia. Effective pricing led by Latin America was partially offset by a mid-single-digit decrease in volume and low single-digit FX headwinds. The tightness in alkyd resins impacting our ability to produce stains and aerosols, improved significantly during the quarter, and we expect this issue to be behind us by the end of the second quarter. Adjusted segment margin was 13%, up 120 basis points year-over-year. As Jim mentioned, we divested a noncore aerosol business at the beginning of this month, and we also entered into an agreement to divest our China architectural business. We expect these actions will benefit segment margin over time as we drive a return to our high teens, low 20s adjusted margin target. Onetime restructuring costs in the quarter were immaterial. Sales in the Performance Coatings Group increased 3.4% against a 20.4% comparison. The increase was driven by low teens pricing and mid-single-digit sales from acquisitions, partially offset by a low teens decrease in volume, which included the impact from discontinued operations in Russia and a low single-digit unfavorable FX impact. Adjusted segment margin increased 390 basis points to 15.7% of sales. This is the fourth straight quarter this team has delivered year-over-year segment margin improvement, driven by execution of our strategy, including effective pricing. Sales in PCG varied significantly by region. In North America, sales increased high single digits against a nearly 30% comp. Latin America sales increased by double digits, also against a strong comp. Sales in Europe were up mid-single digits, while sales in Asia were down double digits. From a division perspective, growth was strongest in Auto Refinish, which was up by a mid-teens percentage, followed by Coil and General Industrial, which were both up mid-single digits. All three of these divisions grew against double-digit comparisons. Industrial Wood sales were down mid-single digits as expected due to slowing in furniture, cabinetry and flooring related to new residential softness. Packaging sales also were down mid-single digits against a 30-plus comp with volume down about 1 point in the remainder due to our exit of Russia and unfavorable FX. We continue to feel very good about our position and growth prospects in this end market. With that, let me turn it over to John for his comments on our outlook for the second quarter and the full year.


Heidi Petz: Thank you, Jim. I’ll begin with the Paint Stores Group. Second quarter Paint Stores Group sales were ahead of our expectations and increased 10%, driven by mid-single-digit volume growth and continued effective pricing. Segment margin improved 280 basis points to 24.3%. Growth was led by our protective & marine business, which was up strong double digits and was driven by industrial flooring infrastructure and oil and gas applications. In our pro-architectural end markets, the strongest performers were commercial and property maintenance, both of which increased by double-digit percentages. Residential repaint was close behind with sales up by a high single-digit percentage. Demand in this market is being somewhat tempered by the extended period of weak existing home sales. New residential sales were flat against a double-digit comparison, reflecting the softer start that we saw at the end of last year, which have continued into this year. As we’ve previously noted, we anticipated new residential would be challenging in 2023, though we are performing better than the market as we continue to focus on new accounts and share gains. Our DIY business was up strong double digits, albeit against a softer comparison where sales were impacted by supply chain challenges. From a product perspective, interior and exterior paint sales were both up high single digits, with interior sales growing faster and representing a larger part of the mix. Sales in our Consumer Brands Group also exceeded our guidance and increased by 5.1% in the quarter, primarily driven by mid-single-digit pricing. Sales in North America, our largest region, increased by a low single-digit percentage. We continue to invest here with our strategic retail partners for growth. In other regions, sales were up strong double digits in Latin America and Europe. Sales in China were down double digits, and we expect the previously announced divestiture of the China business to be completed in the third quarter. Adjusted segment margin was 15.7%, up 470 basis points year-over-year. Sales in the Performance Coatings Group increased less than 1% against a strong 15.2% comparison. Volume decreased low single digits but was offset by mid-single-digit increases in price. Adjusted segment margin increased 420 basis points to 18% of sales, which is within the range we have been targeting for this business. Sales in PCG varied significantly by region. In North America, sales increased low single digits against a nearly 30% comp. Sales in Europe were up mid-single digits. Latin America sales were down less than 1%, also against a strong comp of over 20%. Demand in Asia remained weak with sales down double digits against a soft period a year ago. From a division perspective, growth was strongest in Auto Refinish, which is up by a high single-digit percentage followed by General Industrial, which was up mid-single digits. Industrial wood sales were up less than 1% as softness in new residential continued to impact demand for furniture, capetry and flooring. Coil sales were down mid-single digits driven mainly by Europe, which was impacted by last year’s Russia exit and against the nearly 40% comparison. Packaging sales were also down low double digits against a 20%-plus comp. We anticipated this decline given the near-term destocking by brand owners that we described on our last call. We continue to feel very good about our position and growth prospects in this end market. With that, let me turn it to John for his comments on our outlook for the third quarter and the full year.


Michael Harrison: You have opened 36 new paint store locations so far this year. Is the target still 82/100? And are you seeing any delays in either the permitting process or the construction process?


Heidi Petz: Thank you, Jim. I'll begin with the Paint Stores Group. Third quarter Paint Stores Group sales increased 3.6% against the challenging 21.5% comp. The increase was driven by continued effective pricing and higher Pro architectural volume, excluding New Residential. Segment margin improved sequentially and year-over-year to 25.9%, driven by pricing discipline and moderating raw material costs. Protective & Marine was the fastest growing in the quarter, driven by strong volume as sales increased by a double-digit percentage against the mid-teens comparison. Industrial flooring, infrastructure and oil and gas applications remain key drivers. In our Pro architectural end markets commercial sales were strongest, increasing by a high single-digit percentage versus a high teens comparison. Residential repaint sales increased by a mid-single-digit percentage amid continued softness in existing home sales and against a 20% comparison. While this is a solid performance in the current environment, we are not satisfied, and res repaint continues to be our largest opportunity for growth. Property maintenance sales grew by a low single-digit percentage against a mid-20s comparison. New Residential sales were down mid-single digits with volume down high single digits against the mid-20s comparison. As we've previously noted, we anticipated New Residential would be challenging near term, given prior softness in single-family starts. We expect our continued share gains and new account wins to become more and more apparent as starts improve. Our DIY business was down low single digits against a very difficult low 30s comparison. From a product perspective, interior paint sales were up low single digits and exterior paint sales were flat, both against double-digit comparisons in last year's third quarter. Sales in our Consumer Brands Group decreased by 4% in the quarter, primarily due to the divestiture of the China architectural business and softer DIY demand in North America, which was partially offset by selling price increases. Sales in North America, our largest region, decreased by a mid-single-digit percentage against a double-digit comparison. The Pros Who Paint category continued to grow, while DIY demand remained muted by inflationary pressures on consumers. We continue to invest here with our strategic retail partners for growth. In other regions, sales were up high single digits in Latin America and low double digits in Europe. Sales in China were down high double digits as we completed divestiture of the business on August 1. Adjusted segment margin was 13.8%, which was lower than a year ago, primarily due to lower sales volume and lower fixed cost absorption due to lower production volumes. Sales in the Performance Coatings Group decreased 1% against a low teens comparison. Volume decreased by a high single-digit percentage, but was partially offset by positive low single-digit contribution from pricing, FX and acquisitions. Adjusted segment margin increased to 19.1% of sales, primarily due to pricing discipline and moderating raw material costs. Sales in PCG varied significantly by region. Sales were strongest in Europe and increased by a mid-teens percentage. Latin America sales increased by low single digits against a mid-teens comp. North America sales decreased mid-single digits against a 20% comp. Demand in Asia remained weak, with sales down double digits against high single-digit growth a year ago. From a division perspective, growth was strongest in our Industrial Wood business, which was up by a low double-digit percentage against a mid-single-digit comparison. This growth reflects our ICA acquisition, share gains and a potential bottoming of New Residential construction. We expect to gain further momentum in this business. As we closed October 1st on the previously announced acquisition of Germany-based specialized industrial coatings holding comprised of the Oskar Nolte and Klumpp Coatings businesses. We are gaining share and seeing steady demand in Auto Refinish, where sales increased by a mid-single-digit percentage against a high single-digit comparison. Sales in Coil and General Industrial both decreased by low single-digit percentages against challenging comparisons and vary widely by region. Packaging sales were down by a mid-teens percentage against the high single-digit comparison. We anticipated this decline given the near-term destocking by brand owners that we described earlier this year. Packaging sales in the quarter were also slightly impacted by the fire at our Garland, Texas plant. Our business continuity team is executing our contingency plans to minimize customer impacts from this event near term. Longer term, we continue to feel very good about our position and growth prospects in this end market, and we expect to bring additional capacity online at our , France plant by early 2024. With that, let me turn it to John for his comments on our outlook for the fourth quarter and the year.


Paint Stores Group sales mid-teens comparison


Heidi Petz: Thank you, Jim. We are successfully implementing our strategy, which at Sherwin-Williams we do with a very forward looking and aggressive approach. While market conditions are choppy and may give others in our industry a moment of pause, let me be clear, we are not pausing. So this morning, I'm going to talk as much about our results as I am about what we're doing to ensure the momentum of our company not only continues but accelerates our ability to widen the gap between us and our competition. So let me start with the results of the first quarter. As Jim mentioned, our first quarter is a seasonally smaller one and our results do not necessarily dictate how our full year will unfold. While our sales came in within our guidance, it was at the lower end of our range. Going forward, I believe in our differentiated strategy, our deeply experienced leadership and our team's ability to execute in lockstep with our customers to deliver above market growth. Here are several of the leading indicators that give me great confidence that we continue to strengthen our position. For example, we increased the number of exclusive national contracts we have with homebuilders and property management customers in the quarter. New accounts and active purchasing accounts in our stores are up significantly from a year ago. Paint Stores Group rep call activity and unique accounts calls are also up in the quarter. Foot traffic in our stores is up and our net promoter score is at an all-time high. And we're seeing multiple share of wallet and meaningful new customer wins across our industrial businesses. These are just some of the factors we expect will translate into strong performance as the year unfolds. As far as specifics on the first quarter, I'll begin with the Paint Stores Group, where sales increased by 0.5 percentage against a mid-teens comparison. We are not satisfied with this level of performance as volume was basically flat in the quarter. Exterior paint sales were exterior paint sales were pressured by challenging outdoor painting conditions in some geographies. As we've demonstrated in the past, we expect to see the benefit of our focused investments unfold throughout the balance of the year. A few strong weeks in June can more than offset first quarter challenges. Price was up modestly related to our February 1 announced increase. We are now seeing a ramp to typical effectiveness as our second quarter moves forward. Segment margin decreased to 17.2%, reflecting flat volume and the higher year-over-year planned growth investments. As a reminder, Paint Store sales were up by a double-digit percentage in every customer segment in the first quarter a year ago. In this year's first quarter, pro sales were led by residential repaint where gallons were up mid-single-digits. We see this above market growth as evidence that our increased investments in this segment are already beginning to deliver a return. Commercial and protective and marine grew modestly in the quarter. New residential was down as expected, but there is momentum in single family starts that will increasingly turn to completions as the year progresses. Property management was also down driven by delays in CapEx projects even as apartment turns remained steady. From a product perspective, interior paint sales increased by a low-single-digit percentage while exterior sales decreased modestly. Encouragingly, spray equipment sales were up mid-single-digits in the quarter. We opened seven net new stores in the quarter and expect to open 80 to 100 for the full year. Our doors are open. We are laser focused on the momentum we have created serving both existing and new customers. We'll continue to win business and take share based on our differentiated solutions. Moving on to our consumer brands group, sales decreased by 7.1% in the quarter. Lower volume and the impact of divestitures were partially offset by selling price increases primarily in Latin America. Sales in North America decreased by a high single-digit percentage, as our strategic partners manage the timing of their seasonal inventory build. Outside of North America, sales increased by a double-digit percentage in Europe and a low-single-digit percentage in Latin America. Adjusted segment margin which excludes acquisition related amortization expense expanded to 20.9%. This was primarily driven by improved manufacturing and distribution fixed cost absorption, moderating raw material costs and improved results in Latin America and Europe, partially offset by lower North America sales volume. Sales in the Performance Coatings Group were in the range we expected with continued choppiness across each of our businesses and regions. Lower volume was partially offset by growth from acquisitions. Sales growth in Europe and Asia was offset by decreases in North America and Latin America. Adjusted segment margin, which excludes acquisition related amortization expense improved to 17.1%. This is the fifth straight quarter this team has delivered year-over-year segment margin improvement and again reflects the disciplined strategy to growing operating margin in the industrial business to mirror that of our architectural business. Industrial wood led the growth including the impact of recent acquisitions. Coil also delivered solid growth. Auto Refinish was flat against a mid-teens comparison. We are confident recent share wins driven by our differentiated service and technology will begin to show up more meaningfully as the year progresses. Packaging was down as expected with improvement expected in the back half of the year. General industrial was impacted by lower demand in all regions. Moving on to our guidance for the second quarter and full year. First, I want to talk about our global team. It always comes down to our people. Our team is highly engaged, aggressive and acting with determination and urgency. They are focused on the right priorities and this will become more and more visible in our results. I would bet on this team all day every day. Second, on our January call, we acknowledged there are uncertainties in the economy. We don't expect to get material help from the macro environment this year, but a few bright spots are emerging. Single family housing starts have improved and this will increasingly turn to completions as the year progresses. Existing home sales are unlikely to get much softer. Last week's LIRA report from Harvard indicates that the remodeling outlook continues to improve with declines easing and momentum building later in the year. On the industrial side, the manufacturing PMI has stabilized or improved in several regions. Third, we are tilting the table in our favor by controlling what we can control. Year-to-date, we have signed 56 new exclusive national account agreements in Paint Stores Group primarily in new residential and property maintenance. We also have increased sales rep call activity and unique accounts called significantly. We have a robust plan and aggressive field activity to engage customers of competitors who have recently closed their doors or are otherwise distracted. As I said earlier, our doors are open. We are not distracted. You can expect us to be very aggressive here. In addition to our stores platform and team of experienced reps and store managers, we're driving customer stickiness through our digital initiatives. In March, we had the highest number of pro plus users ever engaging with our platform, along with a near record number of new registrations. We have opened our Tournus France packaging plant which will support customers converting to non-BPA coating to meet the European Commission's 2026 mandate. We expect on multiple new infrastructure and mega projects that are gaining momentum. And we're introducing multiple new products in both the architectural and industrial businesses to drive our customers' success. Obviously, we're not going to share everything that we're doing for competitive reasons, but you can be certain that there's a long list of actions that we are taking in addition to these items. The key takeaway is this, at some point the demand logjam in multiple end markets is going to break. We will be there to capitalize. We're very confident it's a matter of when, not if. As for our specific outlook, the slide deck issued with this morning's press release includes our expectations for consolidated and segment sales for the second quarter of 2024. The deck also contains our full year sales and earnings per share outlook, which again is unchanged from what we provided in January. We expect to provide an update on our 2024 full year outlook when we report our second quarter results in July. Our slide deck also provides guidance on our expectations for raw material costs and other items helpful for modeling purposes. All of these remain unchanged from our January call as well. As you can see, we have high expectations of ourselves. Our team is aggressive, determined and focused on the right priorities. I want to be clear, we are playing to win. We know our strategy is the right one and we have demonstrated for decades that it works. We expect to outperform the market and we are confident our differentiated solutions will continue to drive our customers' success, while also rewarding our shareholders. This concludes our prepared remarks. And with that, I'd like to thank you all for joining us this morning. We'll be happy to take your questions.


Allen Mistysyn : Yes, Greg, if you look at our second quarter with our sales up 0.5% volume and price were up slightly, acquisitions at less than 1%. And we also had the headwind of the divestitures and FX. But really the driver in the quarter was our Paint Stores Group up 3.5%, both segment that segment of PCG segment was where we expected, and we talked about the miss on consumer. If I look at the second half, kind of a little bit up low-single-digits guide compared to low-single-digit comparison last year. I think price is expected to be up low-single-digit percentage. And when you look at -- that would tell you that volume is expected to be up or down low-single-digits. And then all the other impacts are, I'd say, immaterial, less than 1%. FX is unfavorable. A little bit of tailwind in acquisitions and again, a little bit of a headwind on the divestitures, but not material. I'd call out Paint Stores Group, just to be clear, and I said this before, second half, we expect volume and price to be up low-single-digits. Consumer down high single to low-double digits, really the continued softness in DIY. We do expect the price to be flat and that's primarily increases we see in Latin America. FX will be a headwind of about [1.5] and then the remainder is volume down high-single-digits and then within PCG for the second half, I expect up low-single-digits. Acquisitions will be a tailwind of the low-single-digits and then FX, about 1% headwind in price because of the small number of accounts we have on index will actually be a small headwind.


Darren Woods: Good morning. Thanks for joining us today. Following a record year, ExxonMobil delivered the highest first quarter earnings in our history even as energy prices and refining margins moderated from the fourth quarter. This ongoing success reflects the hard work of our people, executing our strategic priorities and fully leveraging our competitive advantages. Through investments in advantaged assets, mix improvements and cost and operating discipline, we are delivering the structural earnings improvements outlined in our corporate plan update last December and expanding the energy supplies needed to meet growing global demand. Compared to the first quarter of 2022, we added about 300,000 oil-equivalent barrels per day to global supply, primarily from a 40% increase in production from Guyana in the Permian Basin, increase more than offset our divestments in the expropriation of Sakhalin-1, which we no longer account for, but which importantly remains part of global supply. In addition, our Beaumont refinery expansion reached nameplate capacity in the quarter. This 250,000 barrel a day expansion is the largest US refinery addition in a decade, helping meet society's ongoing need for transportation fuels. Guyana, we're pleased to announce that we reached final investment decisions for Uaru, fifth offshore project, which will bring on even more production from this low-cost, low-carbon intensity resource. Uaru will provide an additional 250,000 barrels a day of gross capacity with start-up targeted for 2026. Earnings in our Product Solutions business benefited from the team's solid operational execution with top quartile turnaround cost and schedule performance during a particularly heavy planned maintenance period. Low Carbon Solutions, we're building momentum across several fronts. In early April, we announced a long-term agreement with Linde to capture, transport and permanently store up to 2.2 million metric tons CO2 annually. Hydrogen, we announced front-end engineering and design contract for the world's largest low carbon hydrogen facility in Baytown, ahead of agreement with SK Group of Korea for offtake of blue ammonia from that facility. As we said during our Low Carbon Solutions spotlight earlier this month, our low carbon projects must be advantaged and deliver competitive returns. The ability of our low-carbon projects to compete successfully for capital is important if the world is going to meet its emissions aspirations. Incentives included in the Inflation Reduction Act are a positive step forward, although permitting and other regulatory improvements are still needed. Europe, by contrast, policy approach remains far more prescriptive and punitive. This is true whether we're talking about the emissions reductions needed to put the world on a path to net-zero or the production needed to provide Europe with affordable and reliable energy. The progress we're making across the company is underpinned by the continuing evolution of our business model. Effective on May 1, two new enterprise-wide organizations will be up and running. Global Business Solutions will centralize the majority of our finance procurement operations, enabling us to deliver simplified corporate-wide processes. ExxonMobil Supply Chain will consolidate supply chain activities globally. The organizations will focus on leveraging our scale to drive efficiencies, improve operating and financial results and, importantly, deliver an improved experience for customers, vendors and our people. On June 1, we plan to launch our new enterprise-wide trading organization. Global Trading will bring together expertise from across the company in crude, products, natural gas, power and marine freight trading, plan to build on our record 2022 results, leveraging the unique insights we gain from participating across each of our value chains and all along their entire length, with a global operating footprint larger than any of our competitors. Now, let me cover the quarter's headlines. We're pleased to have delivered $11.4 billion of earnings, a record first quarter following a record year. A significant contributing factor was structural cost savings that now total approximately $7.2 billion, keeps us on track to meet our target of $9 billion by the end of this year. Cash flow from operations totaled $16.3 billion, and our net debt-to-capital ratio declined to 4%, further increasing the strength of our balance sheet, while supporting shareholder distributions of $8.1 billion in the quarter, including $3.7 billion in dividends. Biodynamic market, our underlying performance remains rock solid and well ahead of our competition, reflecting the many improvements we've made over the last six years and, of course, the hard work of our people. Our diverse portfolio of advantaged businesses, improvements in mix, structural cost savings, excellence in execution are driving industry-leading earnings, cash flow and shareholder value. Combined with the strength of our balance sheet, we have the capability to win across a wide variety of market conditions to deliver strong returns, while meeting the evolving needs of society, including the need to reduce emissions. Leveraging the capabilities and advantages developed in our traditional businesses, we're building an advantaged new business, Low Carbon Solutions, which is positioning us as a leader in the energy transition, in our own and other's emissions and establishing long-term value-accretive growth opportunities that will underpin continued growth in shareholder returns. With that, let me turn the call over to Jennifer.


Darren Woods: Good morning. Thanks for joining us today. I'm pleased to be conducting our earnings call from our Houston campus. As of July 1st, our corporate headquarters is now located at the campus, alongside the senior managers of our businesses and centralized organizations. This is the first time in the company’s history that the senior leadership team of the corporation is located on one site and represents a critical step in continuing the transformation of our business enabling us to improve collaboration and alignment and further leverage synergies across our integrated businesses. The ongoing efforts to structurally improve our company and drive sustained, industry-leading performance was clearly demonstrated in our second-quarter results. We delivered earnings of almost $8 billion, two times higher than what we earned in the second quarter of 2018, under comparable industry commodity prices. That doubling of earnings reflects our work in the intervening years to reshape our portfolio of businesses, invest in advantaged projects, and drive a higher level of efficiency and effectiveness in everything we do. With these results, I would like to take a moment to recognize our people. Starting with all those that made the move to Houston. I’m sure you know moves like this are not easy and that many personal sacrifices are made. I’m very thankful for all who did this. Their willingness to disrupt their lives for the benefit of our company is a testament to the dedication of our people whose commitment and hard work underpin all the improvements we are making. I hope our shareholders take comfort in this one, small example of our people’s commitment to the company and have confidence in their resolve to further strengthen our position as an industry leader in all that we do. Our achievements this quarter also demonstrate the progress we’re making in solving the “and” equation: meeting the world’s needs for energy and essential products and reducing emissions, both our own and others’. In the Permian, we set another production record and remain on track for an overall growth in production of 10% this year. As I said last quarter, our growth won’t be linear as we execute our development plans that balance and optimize capital efficiency, resource recovery, and production rates. Our priority will remain on driving value, not volumes. In Guyana, we achieved a record quarterly gross production rate of 380,000 barrels per day. Our team in Guyana continues to deliver excellent operating, environmental and safety results, while optimizing and growing production. In fact, we see the potential to increase the combined gross capacity of these two FPSOs to above 400,000 barrels a day with further debottlenecking, which is nearly a 20% increase above the investment basis and a testament to the ingenuity of our people. In the Gulf Coast, we continue to profitably grow our business. In the second quarter we achieved mechanical completion of the Baytown chemical expansion. The project grows volume and improves mix with 750,000 tonnes per annum of additional performance chemical products. The Baytown expansion is the final Product Solutions component of the Growing the Gulf initiative announced in 2017. If you recall, the initiative committed to investments of $20 billion over ten years to capitalize on the US’s advantaged resources, economic growth, and strong regional support for our businesses and the jobs we create. 11 of the 13 projects are up and running. The Baytown expansion, after product qualifications, should begin contributing by the fourth quarter. And Golden Pass, the last of our Growing the Gulf projects, should have its first train up at the back end of 2024. The Growing the Gulf initiative is another example of executing our strategy, investing in advantaged, high-value growth, and delivering on our commitments. Improving the earnings power of our businesses also requires divestments. In the second quarter we completed the divestment of the Billings refinery. Including this sale, cash proceeds from divestments of non-strategic assets have totaled roughly $2 billion year-to-date. In advancing our efforts to better leverage corporate scale and integration, we established three new centralized organizations in the quarter. Consolidating activities previously embedded in each of our businesses: Global Business Solutions, ExxonMobil Supply Chain, and Global Trading. They’re all off to a good start and have clear lines of sight to improve performance and lower cost. Our Low Carbon Solutions business continues to make progress in building an advantaged, low cost, high-return business in capturing, transporting, and storing carbon. We announced a CO2 offtake agreement with Nucor, one of North America’s largest steel producers. And we signed an agreement to acquire Denbury, which will provide ExxonMobil with the largest owned and operated network of CO2 pipelines in the United States. Combining Denbury’s assets and experience with our capabilities will significantly accelerate and expand our ability to profitably help customers reduce their emissions and allow ExxonMobil to play an even greater role in a thoughtful energy transition. It significantly enhances our competitive position and offers a compelling customer proposition to economically reduce emissions in hard-to-decarbonize heavy industries which, today, have limited practical options. Of Denbury’s 1,300 miles of CO2 pipeline, roughly 70% are in the Gulf Coast states of Louisiana, Texas, and Mississippi, one of the largest US markets for CO2 reduction and home to some of ExxonMobil’s largest integrated refining and chemical sites and nine of their 10 strategically-located CO2 storage sites are also in this region. We believe the transaction synergies will drive strong growth and returns. A cost-efficient transportation and storage system accelerates CCS deployment for both ExxonMobil and our third-party customers. It supports multiple low-carbon value chains, including CCS, hydrogen, ammonia, and biofuels. Ultimately, we see an opportunity to create a CCS business with the capacity to reduce emissions across the Gulf Coast by up to 100 million tons per year. This transaction will help us do that at a lower cost and faster pace. In fact, we see the potential for a third of the opportunity being actionable in the near term. Which takes us to our customers. Our latest offtake agreement extends our CCS customer base beyond industrial gas and fertilizers into steel. This project will tie into the same CO2 transportation and storage infrastructure we’ll use to serve CF Industries, located just 10 miles from Nucor. Focusing our efforts and investments in areas with concentrated sources of emissions allows us to capture the benefits of scale, reduce our spend per ton of CO2 captured and improves returns. Our work with Nucor supports Louisiana’s goal of reaching net-zero greenhouse gas emissions by 2050 and it increases the total amount of CO2 we’ve agreed to transport and store for customers to 5 million metric tons per year, equivalent to replacing 2 million cars with EVs, roughly the same number of electric vehicles on the road in the United States today. With the planned Denbury acquisition, the potential reduction could be up to 20 times that. As demonstrated by these new developments, we’re continuing to make significant progress in our plans to lead industry in helping society reduce emissions. A major component of our improved earnings is the structural cost savings that we’ve achieved, currently at $8.3 billion. We remain on track to reach our target of $9 billion in savings by the end of this year. As we develop plans for future years, we’re committed to finding additional savings. Cash flow from operations totaled $9.4 billion in the quarter, or $13 billion excluding the change in working capital. Our year-to-date production of 3.7 million oil-equivalent barrels per day is on track with the full-year guidance we shared last year as part of our Capex investments totaled $12.5 billion year-to-date, also in line with our full-year guidance. And, consistent with our capital allocation philosophy, we continue to share our success with shareholders, distributing $8 billion in cash during the quarter, including $4.3 billion in share repurchases and $3.7 billion in dividends. Before we go to Q&A, I’ll leave you with a few key takeaways from the quarter. First, our work to structurally improve earnings power is paying off, demonstrated this quarter as we doubled earnings versus a comparable price environment in the second quarter of 2018. Our reorganizations, aggressive investments in advantaged projects, and significant reductions in cost are driving value and improving our competitive position. We’ve made great progress and have a clear line of sight to much more. In the back half of this year alone, we expect to bring on two advantaged projects: Baytown Performance Chemicals and the Payara FPSO in Guyana, further growing our capacity to generate industry-leading earnings. The company’s ongoing business transformation is giving the organization a better view of end-to-end value creation and focusing us on the highest value opportunities. Today, we are better positioned than ever to realize the value of our scale and the synergies from improving the integration of our businesses. For the first time in our history, we have a corporate technology, projects, trading, supply chain, and business solutions organization allowing us to apply the best solutions and talent to our biggest opportunities. And, importantly, we are developing the most talented people in the industry, providing unrivaled opportunities to meet some of society’s greatest challenges. Their work is delivering exceptional results, driving industry-leading returns on investments, and growth in earnings and cash flow. This, in turn, allows us to distribute cash to shareholders through share repurchases and a sustained, competitive, and growing dividend while maintaining investments in industry advantaged projects including investments in our Low Carbon Solutions business. By leveraging the advantages developed in our traditional businesses, we are laying the foundation for a world-scale, competitively-advantaged, low carbon business with industry-leading returns. The planned acquisition of Denbury is a step in that direction, improving our decarbonization proposition for customers, while generating attractive returns. In summary, we’re pleased with the quarter, the progress it represents and the improved earnings power of the company. We’re confident that we have the right strategy with the right leadership and best people to effectively execute it, delivering sustained growth in shareholder value. With that, I’ll turn it over to Jennifer.


Darren Woods: Yeah, good morning, Doug. Thanks for the question. Maybe I'll start with the back end of your question around the CapEx. I mean, it should be clear, hopefully it's clear, we've provided guidance in a range in CapEx to give you a perspective of when we start the year based on the plans that we put together the previous year where we think we're going to end up and spend across the year. Obviously as we're going through the business, each of the businesses are clear on their objective to find value creative opportunities and to capture those as quickly as possible. So we've got an ongoing process. If we see an opportunity that we weren't aware of at the time of putting together the plan, we're not constraining our activities based on some artificial number or the guidance that we've put out. We're very focused on making sure that it's going to be an effective use of capital, that we can efficiently execute what's required for that capital, and then that there's value behind it and there's an advantage in it. So that's how we're managing. What we talked about in the release with respect to our CapEx in 2023 reflects just that, incremental optimizations as we're going through the year. And my view is we'll continue to do that as we go forward into the plan years. Obviously, we've given you some guidance that we believe reflect where we'll end up. But as we work the opportunities, we're very focused on that. I think, the short term, what we've done with Guyana, you're seeing today in Payara, where we brought that online. And frankly, in January, well ahead of our plans, reached nameplate capacity. And part of that was around the optimization of the drilling and making sure that we had what we needed to bring that up quickly. In terms of the broader objective to get to 2027, I mean we're on that plan and we're actually delivering the value that we laid out in 2018. So I feel really good about the progress we've made. We noted in the release that if you look at just from 2019, the year before the pandemic, the advances that we've made in the business, on a flat price, take margin, take price out of it, we've doubled the earnings capacity of the corporation from 2019 to 2023. We've grown earnings at compounded annual basis by 40%, greater than 40%. We've grown cash flow from operations almost 20%, greater than 15%. So I think significant progress we've demonstrated at the work that we're doing, projects that we've put in place, the reorganizations that we've executed, the cost that we're cutting out of the business are all driving us towards this improved valuation and frankly the plans we have going forward are going to continue to do that. So the targets that we've laid out, what we communicated in our December company plan release, basically those are plans and we feel that we're right on track if not slightly ahead of delivering on those. Kathy, anything to add to that?


Kathy Mikells: Yep. And so I'll just speak specifically to cash flow from operations and I think you're referencing the quarter but I'm happy to talk about the quarter and the year. Our cash flow from operations, if you look at the quarter was $13.7 billion. If you exclude working capital, we would have been at $16.9 billion. You're mentioning a beat relative to the street, and so was there anything unusual going on? As I look at people's models, I think sometimes they struggle to get depreciation and amortization right, so that's the only thing I'm going to speak to. And when we have a quarter where we're taking impairments, then we get an increase kind of in terms of a non-cash add back that flows through to cash flow from operations and we obviously took an impairment in the quarter. So that's my best guess as to anything that might be nuanced. Otherwise, no, nothing particularly unusual going on.


cash flow from operations excluding working capital


Darren Woods: Good morning, and thanks for joining us. I'll focus my comments this morning on ExxonMobil's 2024 results and the company we've become. In our prepared presentation available on our website, Kathy dives deeper into our results and long-term growth outlook. What our 2024 performance makes clear is that the transformed company we've built is delivering. We strengthened and further capitalized on our unique competitive advantages, technology, scale, integration, execution excellence, and, of course, people. We demonstrated the strength of our consistent strategy now in its eighth year of driving greater value for society and shareholders alike. We set and achieved ambitious objectives. When we say we'll do something, we deliver. And we expanded our unrivaled set of opportunities for profitable growth both now and long into the future. The ultimate source of cash, distributions, and shareholder value is unchanging, investments in advantaged high-return assets and projects. The proof of our transformation shows up in our performance. Operationally, we delivered strong results across the board, including safety, a bedrock commitment underpinning everything we do, reliability, where we achieved record performance in our product solutions business, and emissions, where we've achieved a more than 60% reduction in methane intensity since 2016. Financially, we demonstrated our steadily improving earnings power across a range of metrics. We delivered earnings of $34 billion in 2024, our third highest result in a decade despite softer market conditions. Over five years, we've grown earnings, excluding identified items, a compounded annual growth rate of nearly 30%. We generated cash flow from operations at $55 billion, also our third highest in a decade, to fund profitable growth, maintain our financial strength, and reward shareholders. Excluding working capital, our free cash flow more than covered shareholder distributions. And we delivered a return on capital employed of 13%. Over five years, our average return on capital employed is an industry-leading 11%. When you set aside cash balances in capital and projects that are under construction and yet to start up, our 2024 ROCE rises to roughly 17%, with a five-year average of about 15%. Our disciplined approach to investing continues to generate returns well above our cost of capital. Every part of our business contributed to our success. We built the best upstream portfolio in the industry. In 2024, we achieved the highest-ever production from our advantaged assets and the highest liquid production from our overall portfolio in more than 40 years. In the Permian, we delivered record production from both our Heritage ExxonMobil assets and our Pioneer assets. Together, the two are even stronger. As we said last month, we now see an average of more than $3 billion per year of synergies from our combined assets, with production growing from 1.5 million oil-equivalent barrels per day at the end of 2024 to 2.3 million barrels per day by 2030, a more than 50% increase. This growth will further strengthen U.S. energy security and will do it with even better overall environmental performance. In Guyana, we delivered record production from the world's premier deepwater development. We've gone from discovery to 650,000 barrels per day in just 10 years, a pace for deepwater projects the world has rarely seen. The benefits are tremendous, not just profitable growth for ExxonMobil, but rapidly rising living standards for the Guyanese people. The GDP per capita more than tripling since we started production in 2020. Turning to product solutions, we've further enhanced our already industry-leading portfolio by divesting non-strategic assets and establishing the foundation for new-to-world products that outperform existing alternatives. The advantage projects we brought online over time drove record sales of high-value products in 2024. Our ongoing shift to a more profitable product mix is a key driver of earnings improvement in product solutions. We also advanced our plans to develop and grow new businesses, most notably our Proxxima resin systems and carbon materials, with an estimated total addressable market of $100 billion by 2030. Within low-carbon solutions, we demonstrated strengthened commercial interest through additional customer contracts and equity partnerships. We're the only company in the world today with an end-to-end system capable of capturing, transporting, and storing carbon emissions. At 6.7 million tons per year, we've contracted more CO2 for transport and storage than any other company by far. We're also well-positioned to meet surging demand from data centers for low-carbon power, and on a timetable that alternatives such as nuclear simply can't match. On the hydrogen and lithium fronts, we announced new equity partnerships and off-take agreements that demonstrate the significant market interest these new businesses are generating. Our success in 2024 and every other year is due to our people. It's not just that we recruit the best or that we give them the most challenging assignments to build the best capability. It's our culture, our mindset. When this team takes the field, we expect to win. That drive underpins our value creation in 2025 as well. We'll bring online a full slate of major projects to increase profitable volumes, make more profitable products, and lay the foundation for profitable new businesses. To name a few, we'll start up Yellowtail in Guyana, our fourth and largest development to date. In the Permian, we'll further improve resource recovery using our next-generation cube design and patented lightweight proppant. This is the right kind of growth, low cost of supply, low emissions intensity, and high returns. At our Singapore refining and chemical complex, our residual upgrade project, we use new-to-the-world technology to transform bottom-of-the-barrel molecules into a new grade of high-value lube-based stocks. We'll transform high-sulfur, low-value export fuels into higher-value diesel for the U.K. market at our expanded refinery at Fawley. We'll expand our capacity to produce higher-value performance polyethylene and polypropylene at our petrochemical complex in China. And we'll add new advanced recycling facilities at Baytown to meet the growing demand for certified circular polymers, which has the added benefit of keeping hundreds of millions of pounds of plastic waste from being burned or buried. Earlier this month, we sued the California Attorney General and activist groups for defamation and interference in our advanced recycling business. As our filing made clear, this suit is about abuse of the public trust and the hijacking of the legal system for financial and political gain. I want to emphasize that we don't take these actions lightly. Unfortunately, it's another example of what it takes to defend our company and preserve the value we create for our customers, shareholders, and broader society. Overall, the major projects we start up in 2025 will deliver more than $3 billion in earnings potential in 2026 at both constant and current prices and margins. And this earnings gain excludes the uplift from our Permian growth plans. As we showed at the corporate plan update, ExxonMobil's runway of profitable growth extends along into the future. Our new technology-driven businesses, such as Proxxima Products and Carbon Materials, creates huge opportunities to expand beyond traditional fuels and chemicals into higher growth, higher margin markets that are decoupled from commodity price fluctuations. This year, we expect to start up a new facility that can produce 25,000 metric tons of Proxxima products and plan to grow to nearly 200,000 tons by 2030. We're committed to investing in these new businesses in a stepwise fashion, progresses in tandem with demonstrated success in the marketplace. To change in administrations in the U.S., I want to say a few words about the right policy framework for a successful energy future. I'll begin by noting that through 2030, roughly 90% of our planned CapEx is allocated to established, fully-functioning markets for energy and products that require no policy support. Only about 10% is earmarked for nascent, lower-emissions markets where market forces have yet to fully take hold. The case in point is our Baytown low-carbon hydrogen project, which requires incentives under Section 45B of the Inflation Reduction Act to be economically viable. We believe these incentives are critical to establishing a fully market-based future where hydrogen competes head-to-head with traditional fuels. But the end goal is clear, a system where no energy source remains dependent on government subsidies. Just as energy sources should not be supported by governments in perpetuity, they should not be artificially discouraged either. The prior administration's moratorium on new LNG export facilities and its executive order limiting offshore drilling were policy mistakes that the new administration is right to reverse. Oil and natural gas remain essential to economic growth, jobs, and national security, both for ourselves, and our allies around the globe. Over the longer term, to achieve broad decarbonization, government policy should set carbon intensity standards on products. We believe this is the best way to engage the collective efforts of industry and leverage competitive market forces. To drive further innovation and reduce the most emissions at the lowest cost, policies must remain technology agnostic. Governments should not pick winners and losers. Intensity standards establish a level playing field and have a strong precedent. They were most recently used to successfully and affordably reduce sulfur and marine fuel. In closing, I want to say again how proud I am of the people of ExxonMobil and how pleased I am that we are creating unmatched value for our shareholders. Compared to the IOCs, over the last five years, we've grown cash flow from operations at a roughly 15% compounded annual growth rate, more than double the closest competitor. We've distributed more than $125 billion in dividends and buybacks, $30 billion more than the closest competitor. And we've delivered a total shareholder return compounded annual growth of 14%, 600 basis points higher than the closest competitor. Looking ahead, the value creation arc of the company is equally distinguished. We're going to build an even more advantaged asset portfolio with 60% of our option production from advantaged assets by 2030. That's nearly the same amount as the next largest IOC's total production. We're going to develop an even more profitable product mix with 80% growth of high-value product sales and product solutions by 2030. We're going to be an even more efficient operator, taking an additional $6 billion in costs out of the business. We're going to generate even more earnings in cash on a constant price and margin basis. We're confident we'll deliver 2030 by 2030, $20 billion more in earnings and $30 billion more in cash flow, all of which enables us to keep our commitment to sustainable, competitive, and growing shareholder returns. With that, I look forward to your questions.

ExxonMobil cash flow from operations 2024


Kathryn Mikells: Thanks, Darren. We've established a consistent track record of improving the earnings power of our business. Across the company, our teams have been laser-focused on investing in competitively advantaged, low cost of supply, high-return opportunities delivering execution excellence in everything we do and driving additional structural cost improvements. Our earnings growth over the past 4 years was more than twice the pace of our closest peer. As of year-end 2023, we more than doubled earnings, bringing an incremental $14 billion to our bottom line on a constant price and margin basis versus 2019. As Darren noted, over the next 4 years, we plan to increase earnings potential by an additional $12 billion or a CAGR of more than 10%. Our ability to deliver industry-leading earnings growth reflects our unique competitive advantages, consistent strategy and the differentiated execution capabilities our people bring every single day. We've demonstrated our ability to improve the profitability of the business by reshaping our portfolio, divesting noncore assets, investing in accretive high profit opportunities and driving structural cost savings. This quarter, we've included a few additional slides to remind you of the plans we discussed during the corporate plan update last December and to demonstrate the progress we've been making. Going forward, we'll provide you with regular updates on these metrics. The drivers of our expected earnings growth are clear. Additional structural cost savings reductions of over $5 billion versus year-end 2023, higher volumes and more profitable barrels from advantaged assets like Guyana and the Permian in the upstream and execution of strategic projects and product solutions that enhance our product mix driving exceptional growth in high-value products. As I said during the corporate plan update in December last year, to win in our business, we must be a low-cost operator. That means continually finding ways to become even more efficient. With more than $10 billion in structural cost improvements as of the first quarter of 2024, split roughly 50-50 between upstream and product solutions, we're making steady progress towards the incremental $5 billion we're working to deliver by 2027. And we are on track to further extend that industry-leading performance. These structural cost savings have not only mitigated the impact of inflation, but have helped to offset the cost of new projects. Our success is meaningfully improving our operating cost and driving higher earnings for both upstream and product solutions. In fact, we ended last year with our cash operating expenses, excluding energy cost and production taxes down $4.5 billion versus 2019. We have a clear line of sight to achieve the roughly $1.5 billion in annual savings contained in our plan, and our team has a track record of beating our targets. We're leveraging our global organizations, including our Global Operations and Sustainability Group and the global business solutions and global supply chain organizations that we stood up last year. These organizations are tasked with realizing savings across all of our businesses. We're optimizing our turnarounds and other scheduled maintenance activities. We're streamlining and automating our order to cash, procure to pay, record to report and our planning processes. And we're better leveraging the scale of our supply chain to improve the efficiency of our logistics movements, enhance our buying power and lower the level of materials and inventory that we need to run our operations. We have a proven track record and a high level of confidence in our plan, and more importantly, in our team's ability to deliver. In the Upstream, on a stand-alone basis, we're on track to double earnings potential by 2027 compared to 2019 on a constant price basis, as we reshape our portfolio, divesting noncore assets and growing production from industry-leading assets that offer lower cost of supply, lower life cycle emissions and higher returns. Between 2019 and 2023, we've pruned Upstream's portfolio of nonstrategic assets, including U.S. flowing gas and focused on developing advantaged assets such as Guyana, the Permian, LNG and Brazil. For example, since 2019, we've more than doubled production volume in the Permian. In Guyana, we started 2019 with 0 production volumes. This quarter, we delivered more than 600 kbd of gross production. These efforts have resulted in a significant Upstream mix improvement. Our share of total production from advantaged assets has risen from 28% to 44%. We expect to grow Upstream earnings by an additional 50% between 2023 and 2027. That growth is driven by further production mix improvement, incremental cost savings and production growth. We expect our stand-alone production in 2024 to be about 3.8 million oil-equivalent barrels per day, rising to about 4.2 million oil-equivalent barrels per day by 2027, as growth from advantaged assets more than offset base depletion. Since 2019, we've nearly doubled Upstream unit profitability at constant price from $5 per oil-equivalent barrel to $9 as of the first quarter of 2024. We expect unit profitability to increase to $13 per oil-equivalent barrel by 2027. Unit earnings from our advantaged assets are expected to be $9 per barrel higher than our base portfolio by 2027 at constant prices. Moving to Product Solutions. We're focused on nearly tripling earnings from 2019 to 2027. We're well on our way to achieving that, having more than doubled earnings potential at the halfway mark at the end of last year. As an Upstream, a key driver of our earnings growth is improving our mix. The strategic projects we're executing do just that. Projects like the China Chemical Complex and the renewable diesel project in Strathcona will increase our high-value product volumes, which command a 10% to 25% margin premium. Projects such as our Singapore Resid Upgrade will also improve our mix without increasing overall volumes by converting low-margin products like fuel oil to higher-margin products like base stocks, diesel and chemical feed. This, in addition to structural cost savings, is the key to further growing our earnings. We have a clear line of sight on the nearly $5 billion in earnings from strategic projects in 2027. Through 2023, we delivered nearly 1/3 of our goal. In 2024, we'll see a full year of earnings benefit from the Beaumont refinery expansion and Permian Crude Venture. On the chart, you can see the annualized first quarter contributions from these and other projects that we brought online since 2019. As we highlighted on our earnings call last quarter, 2025 is a big year for strategic project start-ups, which will provide a further large boost in earnings growth. Given the track record of our global projects and centralized technology organizations, we're confident in our ability to execute this plan, which delivers the capacity needed to double high-value product sales. By 2027, we expect high-value products to deliver about 40% of Product Solutions total earnings. Turning to the quarter, I'll start with a high-level review of sequential earnings. Details by business segments are available in the backup to this presentation. I'm then going to spend a bit of time discussing our earnings year-on-year, which I think better highlights the progress that we're making in the key areas that drive our underlying earnings growth over the medium term. You'll see that we're providing more detail on what impacts our volumes and costs period-to-period to more clearly link our current performance to the earnings growth drivers that I discussed earlier. We provided definitions of these factors and the backup to this presentation. First quarter GAAP earnings were $8.2 billion, excluding identified items, earnings were down $1.8 billion sequentially. Timing effects were $1 billion unfavorable impact this quarter, mostly related to unsettled derivatives mark-to-market impacts consistent with this quarter's increase in oil prices. Other items, largely noncash, were $600 million or $0.15 per share hurt this quarter, driven mainly by noncash impacts from tax and inventory balance sheet adjustments. Base volumes were lower in the quarter as entitlement impacts fewer days in the quarter and the impact of higher scheduled maintenance were partially offset by growth from advantaged assets and strategic projects. Looking at the first quarter performance versus the same quarter last year, you can clearly see the contributions from growing advantaged assets and executing our strategic projects as well as our underlying structural cost improvements. GAAP earnings of $8.2 billion were down more than $3 billion versus our record first quarter earnings reported last year. The decline was driven by lower industry gas prices and refining and chemical margins, as well as higher maintenance and negative timing impacts from higher oil prices and the noncash expenses that I mentioned earlier. We made good progress continuing to improve the underlying earnings power of the business. We saw a strong growth from our advantaged assets like Guyana and projects like the Beaumont refinery expansion, which roughly offset lower base volumes that reflect divestments, entitlements and curtailments in the Upstream and divestments and higher maintenance in energy products. We added $400 million of structural cost savings this quarter, which resulted in an after-tax earnings benefit of $300 million. Now let's turn to the segments to dive further into our performance. In the Upstream, lower gas realizations were partly offset by slightly higher liquid realizations. As Darren mentioned, oil and natural gas prices in the quarter were about at the middle of the 10-year range. Our excellence in execution is delivering results. Higher volumes from advantaged assets more than offset divestment, curtailment and entitlement impacts, contributing $430 million in earnings versus the first quarter last year. In Guyana, we delivered 3 development projects, bringing online over 600 kbd of gross oil production since initial discovery at an industry-leading pace and cost. This quarter, gross production for Payara ramped up to 220 Kbd design capacity well ahead of schedule. We've also announced a new exploration discovery, Bluefin. Earnings also benefited from about $90 million in additional structural cost savings, driven by operational efficiency gains and reduced expenses from divested assets. Our Kearl operation in Canada is a great example of how we're reducing production costs. Last year, we converted our entire fleet of about 80 heavy haul trucks to a fully autonomous operation. The automation program enables us to capture improvements in truck productivity, further enhance safety of our operations and structurally reduce our operating costs. With this program, Kearl now operates the largest autonomous fleet in our industry and one of the largest autonomous mining fleets in the world. And we continue to look at other opportunities to expand automation across our production footprint. Kearl's gross production in the first quarter was 277 Kbd, which was a record for a first quarter. 2023 average gross production of 270 Kbd was also a record annual production. Higher expenses of $160 million were driven by an increase in depreciation rates in U.S. unconventional, while other, which is largely noncash, reflects the absence of favorable tax and divestment adjustments last year and inventory adjustments this quarter. Timing effects in the Upstream had a negative $120 million impact on the quarter, compared to a negative $490 million impact last year, driven by our mark-to-market position on our derivatives portfolio. In Product Solutions, we're high-grading our portfolio by divesting nonstrategic sites and investing where we have competitive advantages. Energy Products delivered roughly $1.4 billion in earnings in the quarter. Our advantaged configuration and commercial logistics capabilities enabled a dynamic response to the changing macro environment, which saw industry margins decline versus last year, primarily due to additional supply and normalizing trade flows. The strategic projects we executed last year, expanding our Beaumont refinery and completing the Permian Crude pipeline, helped us achieve record first quarter refining throughput and contributed to the $140 million earnings improvement. High-grading our portfolio also means making some tough but necessary choices to improve long-term competitiveness. Divestments in the middle of last year impacted volumes, but also contributed to structural cost savings in the period. We recently announced additional rationalizations in France and Germany to further strengthen our portfolio. As Darren mentioned, we saw a high level of turnaround activity in the quarter, which is reflected in expenses. We're really proud of our team who delivered best ever execution of our recent slate of turnarounds. As expected in a rising price environment, we saw negative timing effects which are primarily related to the mark-to-market on unsettled derivatives. Last year, the timing impact was favorable as prices were falling at that time. These impacts unwind over time. Chemical products earned nearly $800 million this quarter, more than double the result from the prior year period. While global polyethylene and polypropylene margins decreased, we drove a sizable margin increase largely due to our advantaged footprint but also due to increased contributions from Performance Products. Higher earnings from high-value product volumes reflect the many investments we've made over the years. Gulf Coast growth ventures in Corpus Christi, North American polypropylene and Baton Rouge and our Baytown Chemical expansion, all contribute to this growth. Base volumes increased on the absence of prior period turnarounds, but also on strong reliability in the U.S. Gulf Coast that enabled additional sales when others in the region were negatively impacted by winter storms in January. Specialty Products continued to deliver consistently strong earnings coming in at $760 million this quarter. Our efforts to grow margins through feed optimization and revenue management were evident this quarter and largely made possible by the differentiated performance of our high-value products. We had a strong contribution from the finished lubricants business, which is celebrating the 50-year anniversary of Mobil 1, our flagship brand. Our rigorous focus on structural cost reductions partially offset higher base expenses. The improved earnings power in our businesses translates to strong cash flow and our consistent capital allocation philosophy enables exceptional long-term shareholder returns. We generated $14.7 billion in cash flow from operations and $10.1 billion of free cash flow during the first quarter, and we continue to deploy that capital, consistent with our allocation priorities. First and foremost, our CapEx deployment supports investments in competitively advantaged opportunities that drive long-term earnings and cash flow growth. To sustain growth, we need to be investing now in low cost of supply, high-return, resilient projects. We're doing just that with multiple project startups planned for 2025 and that will contribute nearly $4 billion in earnings potential in 2027 at constant prices and margins. Our cash CapEx for the quarter came in at $5.3 billion. Secondly, to stay on the offensive through the commodity cycles, we need to maintain a bulletproof balance sheet. During the first quarter, we repaid $1.1 billion of bond maturities, bringing our debt-to-capital down to 16% and our net debt-to-capital ratio down to 3%. This outstanding balance sheet strength gives us ample optionality to capitalize on attractive opportunities regardless of where the market moves. And finally, strong operational results coupled with a healthy balance sheet, not only provide flexibility to invest through the cycles, but also to consistently return excess cash to our shareholders. We distributed $6.8 billion in the first quarter, including $3.8 billion in dividends. And while we briefly paused share repurchases following the Pioneer S-4 filing in January, we resumed in February and are on track to complete our $17.5 billion stand-alone share repurchase program this year. As a reminder, we intend to increase the pace of the program to $20 billion per year after the Pioneer transaction closes, assuming reasonable market conditions. These distributions matter. They help to drive our industry-leading total shareholder return and over a longer period of time, significantly reduce our share count. Since we began the program in 2022, we reduced our share count by about 7% and or 8% excluding the shares issued for the Denbury acquisition. Looking ahead, our team's execution excellence, our stellar balance sheet and our extended reach to new high-value, high-growth markets uniquely positions us to grow long-term value. Turning to the second quarter outlook items. We expect seasonal scheduled maintenance to lower upstream volumes by about 40 KOEBD. This does not impact our 2024 full year production guidance, which is 3.8 million oil-equivalent barrels a day. This guidance excludes Pioneer, which we still anticipate will close in the second quarter. In Product Solutions, we expect lower scheduled maintenance as we exit the peak of the 2024 turnaround season. We expect corporate and financing expenses to total $300 million to $500 million, in line with the first quarter. We also anticipate an unfavorable working capital impact of about $3 billion from seasonal cash tax payments, similar to what we saw in the second quarter of last year. With that, let me go ahead and turn it back to Darren.


earnings $11.4 billion record first quarter