- Earnings Per Share Increases to $0.72;
Operating Earnings Per Share of $1.04, up 17%
- Sales Climb to $13.2 Billion; Ex.
Acquisitions Sales Rise 11% with Gains in all Geographic Areas
- Price Increases 7%; Volume Growth of
16%, or 4% Excluding Acquisitions, with both Price and Volume Gains
in all Geographic Areas
- EBITDA of $2.1 Billion; Operating
EBITDA Increases 20%, or $451 Million, to $2.7 Billion
- Cash Flow from Operations Rises $337
Million
The Dow Chemical Company (NYSE: DOW):
First Quarter 2017 Highlights
- Dow reported earnings per share of
$0.72, or operating earnings per share of $1.04(1). This compares
with earnings per share of $0.15 in the year-ago period, or
operating earnings per share of $0.89. Certain Items in the quarter
reflected a $0.24 per share charge related to an arbitration matter
in Dow AgroSciences and an $0.08 per share charge for transactions
and productivity actions. The tax rate was impacted by Certain
Items. Excluding these, the tax rate was within the Company’s
modeling guidance.
- Sales were $13.2 billion, up 23 percent
versus the year-ago period, reflecting the addition of Dow
Corning’s silicones business. Excluding this transaction, sales
rose 11 percent, with increases in all segments except Agricultural
Sciences and reflecting gains in both price (up 7 percent) and
volume (up 4 percent). The Company generated sales growth
across all geographic areas.
- Price rose 7 percent, reflecting
broad-based actions that led to increases in all geographic areas.
Price gains were achieved in Performance Plastics, Performance
Materials & Chemicals and Infrastructure Solutions.
- Volume grew 4 percent, excluding the
impact of acquisitions, reflecting continued demand drivers in
Dow’s key end-use markets of packaging, transportation,
infrastructure, consumer care and electronic materials. Growth was
broad-based, with gains in all geographic areas. Regional
highlights included Greater China (up 7 percent), the United States
(up 6 percent) and Europe (up 4 percent).
- Operating EBITDA(2) rose 20 percent to
$2.7 billion, driven primarily by broad-based consumer-driven
demand; increased pricing; cost controls and productivity measures;
the contribution of Dow Corning’s silicones business; and higher
equity earnings. These gains more than offset higher feedstock
costs, planned turnaround activities and commissioning costs at
Sadara and in the U.S. Gulf Coast.
- Dow delivered $337 million higher cash
flow from operations versus the year-ago period(3), primarily
driven by higher earnings.
- Dow achieved several milestones with
its strategic growth investments. The Company delivered the full
two-year $400 million cost synergy run-rate for the Dow
Corning silicones integration within 10 months after
transaction close. Dow completed the construction phase of its new
world-scale ethylene facility in Texas. The Sadara joint venture
further progressed its startup activities and now has 16 of its 26
production units in operating or startup mode.
- Dow and DuPont progressed their
proposed merger transaction. The companies achieved key regulatory
approvals; reiterated their commitment to the $3 billion cost
synergy target; and mutually agreed that all the intended spin-offs
will occur within 18 months of closing, with the post-merger
Materials Science Company expected to be the first spin-off if it
would not adversely impact the value of the intended spin-off
transactions.
Comment
Andrew Liveris, Dow’s chairman and chief executive officer,
stated:
“This quarter we delivered an all-time record in operating
EBITDA. Our results underscore the strength of Dow’s portfolio and
the levers we have in place to maintain agility in a rapidly
changing business environment. Simply put, Dow’s business model –
underpinned by our industry-leading integration and world-class
innovation – showed once again its ability to deliver under all
conditions.
“Dow’s operational and financial results reflect the strength of
our broad geographic footprint, robust consumer-driven demand
aligned with our core material science markets and a focused
productivity agenda. Our disciplined execution against our strategy
continues to deliver a fundamental shift in our growth trajectory.
We have now extended our streak of year-over-year operating EPS
growth to 18 consecutive quarters and achieved
14 consecutive quarters of year-over-year volume gains.
“Equally important, we have delivered all of this while in
parallel making significant progress on our long-term strategic
growth drivers. We advanced our U.S. Gulf Coast projects with the
completion of the Texas cracker, which will be the first
world-scale ethylene unit to start up on the U.S. Gulf Coast,
considerably ahead of our competition. And Sadara, the largest
chemical complex ever built in a single phase, has 16 of its 26
production units in operating or startup mode.
“We have also announced that we have completed the two-year cost
synergy program of our Dow Corning integration in 10 months, as
well as setting in motion many revenue synergy programs in our core
markets. This over-achievement exemplifies Dow’s strong project
management skills in delivering synergies and bodes positively for
our DowDuPont merger. Additionally, receiving conditional clearance
for the merger from the European Commission in the quarter marked a
significant milestone and, together with the August closing date
and the announcement that the Materials Science Company will be the
first to spin, marked huge progress for this game-changing
deal.
“The Dow team’s ability to deliver on these multiple fronts is a
clear proof point that we are now positioned better than ever to
deliver innovative products for our customers, economic expansion
for our communities, and earnings and cash flow growth for our
shareholders.”
Three Months Ended Mar 31, Mar 31,
In millions, except per share amounts
2017 2016 Net Sales $13,230 $10,703
Adjusted Sales(4) $11,942 $10,703 Net Income Available for
Common Stockholders $888 $169 Net Income Available for Common
Stockholders,
Excluding Certain Items
$1,274 $993 Earnings per Common Share – Diluted $0.72 $0.15
Operating Earnings per Share $1.04
$0.89
Agricultural Sciences
Agricultural Sciences reported first quarter sales of $1.6
billion, down 5 percent versus the year-ago period driven by a
volume decline of 5 percent.
Crop Protection volume declined despite higher demand for
insecticides in most geographic areas and continued adoption of
Arylex™ broadleaf herbicide. These gains were more than offset by
reduced demand primarily for herbicides and insecticides in Asia
Pacific, driven by lower demand for rice herbicides in China where
flooding during last year’s season led to high channel inventories
that continued into this year. Seed volumes declined primarily due
to lower demand for corn seeds in North America on projected
reduced acreage and lower demand for sunflower seed in EMEAI and
Latin America. These factors were mostly offset by volume gains in
corn in Latin America and in cotton in the United States,
reflecting the successful launch of ENLIST™ cotton and early grower
adoption.
Operating EBITDA was $351 million, down from $403 million in the
year-ago period as a higher contribution from the Seeds business,
driven by demand for ENLIST™ cotton and growth in corn in Latin
America, was more than offset by lower volume in Crop Protection,
particularly in Asia Pacific.
Equity losses for the segment were $1 million, compared to
equity earnings of $7 million in the year-ago period.
Consumer Solutions
Consumer Solutions reported first quarter sales of $1.6 billion,
up from $1.1 billion in the year-ago period, with gains in all
businesses. The sales increase was driven by the contribution of
Consumer Solutions – Silicones and broad-based geographic volume
growth, which more than offset a modest price decline in the
segment. Volume increased 53 percent, driven by the addition of
Consumer Solutions – Silicones.
Excluding acquisitions, segment volume grew 8 percent, with
gains in all businesses and double-digit growth in Asia Pacific and
Latin America. Dow Automotive Systems achieved double-digit volume
gains, continuing its trend of growing above the global automotive
end-market. The business’s growth was driven by further adoption of
its light weighting technologies that improve fuel efficiency, as
well as its broad geographic reach, with notable growth in Greater
China, Mexico, Brazil and EMEAI. Consumer Care delivered volume
gains on robust demand for personal hygiene applications. The
business achieved growth in all geographic areas except EMEAI,
which reflected the sale of SAFECHEM™ in the fourth quarter of
2016. Dow Electronic Materials continued its above-market volume
growth trend, delivering increases in most geographic areas, led by
strong demand in semiconductor and printed circuit board
applications. Growth was also driven by new business wins across
the portfolio, including chemical mechanical planarization (CMP)
polishing pads, lithography and organic light emitting diode (OLED)
technologies.
Operating EBITDA rose to a first quarter record of $500 million,
the seventh consecutive quarter of year-over-year growth, up from
$310 million in the year-ago period. The increase in operating
EBITDA reflected the contribution from Consumer Solutions –
Silicones, new commercial wins and market share gains.
Equity earnings for the segment were $40 million, up from $20
million in the year-ago period, reflecting a higher contribution
from Dow’s share of settlements of long-term polysilicon sales
agreements at the HSC Group.
Infrastructure Solutions
Infrastructure Solutions reported first quarter sales of $2.5
billion, up from $1.6 billion in the year-ago period. Gains were
driven by the addition of Infrastructure Solutions – Silicones,
broad-based geographic volume growth and a modest increase in
price, up 2 percent. Volume increased 56 percent, primarily
due to the addition of Infrastructure Solutions – Silicones.
Excluding acquisitions, volume grew 5 percent with gains in all
businesses. Dow Building & Construction delivered strong volume
growth driven by STYROFOAM™ insulation, methyl cellulosics in
construction applications and continued adoption of BLUEDGE™
polymeric flame retardant technology. The Energy & Water
Solutions business’s volume growth was led by double-digit gains in
North America on a resurgence of demand in the oil and gas
exploration market sector. Dow Coating Materials volume increased,
driven by gains in Asia Pacific for architectural coatings.
Performance Monomers reported strong volume increase, driven by
merchant sales of methacrylates and vinyl acetate monomers
(VAM).
Operating EBITDA increased to $511 million, up significantly
from $293 million in the year-ago period. The increase reflects the
contribution of Infrastructure Solutions – Silicones, improved
industry fundamentals in Performance Monomers, particularly for
methacrylates, and a benefit from integrated on-purpose propylene
production. These improvements were partly offset by margin
compression, as pricing initiatives lagged the raw material cost
increases.
Equity earnings for the segment were $55 million, compared to
$51 million in the year-ago period.
Performance Materials & Chemicals
Performance Materials & Chemicals reported first quarter
sales of $2.4 billion, up from $2.2 billion in the year-ago
period, with gains across all businesses.
The segment reported volume growth of 7 percent with gains in
all geographic areas and businesses. Polyurethanes sales volume
grew due to continued robust demand for downstream, higher-margin
systems applications and double-digit gains in MDI, where
short-term industry fundamentals remained tight. Industrial
Solutions demand rose in all geographic areas except North America,
which was flat, led by a double-digit gain in Asia Pacific, behind
strength in ethanolamines, glycol ethers and growth in high-value
applications for textiles, lubricants and electronics. Chlor-Alkali
and Vinyl volume increased on steady demand in vinyl chloride
monomer and caustic soda in EMEAI.
Operating EBITDA was $435 million, up from $335 million in the
year-ago period, primarily driven by improved equity earnings. The
impact of higher raw material costs in all businesses
year-over-year was mostly offset by demand and pricing momentum, as
well as the benefit of integrated on-purpose propylene
production.
Equity earnings for the segment were $73 million, an improvement
versus a loss of $31 million in the same quarter last year, on
higher earnings from the Kuwait joint ventures, primarily due to
improved monoethylene glycol pricing.
Performance Plastics
Performance Plastics reported first quarter sales of $5.0
billion, up from $4.2 billion in the year-ago period, with gains in
all businesses except Dow Electrical and Telecommunications, which
was flat. Sales rose in all geographic areas except Latin America,
which was flat. Pricing increased 15 percent, with gains in all
geographic areas.
The segment reported volume growth of 5 percent. Dow Packaging
and Specialty Plastics achieved a first quarter sales volume
record, driven by the continued adoption of innovations targeting
the industrial and consumer packaging end-markets, as well as share
gains in food and specialty packaging applications. The business
reported notable demand gains in emerging geographies, including
Eastern Europe, India and Greater China. Dow Elastomers also
achieved a first quarter sales volume record, led by double-digit
demand growth in applications for consumer packaging and high
performance athletic footwear end-markets. The business also
reported continued strength in demand for transportation
applications, aligned with trends toward light weighting. Dow
Electrical and Telecommunications volume declined as the business
ramped its asset in Texas to full operations throughout the quarter
following significant planned maintenance activity in the previous
quarter.
Operating EBITDA for the segment was $984 million, essentially
flat with $991 million in the year-ago period, as trends in the
quarter followed the Company’s previously stated modeling guidance.
Pricing momentum and volume gains in most businesses were offset by
increased feedstock and energy costs, planned maintenance activity
and commissioning costs associated with the new ethylene unit and
derivative facilities.
Equity earnings for the segment were $33 million, up from a loss
of $1 million in the same quarter last year. This increase was
primarily due to higher contributions from the Kuwait joint
ventures, which more than offset planned maintenance activity at
Sadara’s mixed feed cracker.
Outlook
Commenting on the Company’s outlook, Liveris said:
“The global economy is showing signs of positive momentum, with
excellent leading indicators across much of the world – though
geopolitical risks and volatility will persist. The strength and
resilience of our portfolio, combined with our consumer-led market
focus, will continue to serve us well in this environment.
“The United States remains a bright spot, driven by solid
consumer demand and a resurgent manufacturing sector, especially
with the pro-business investment policies from the new
administration. Europe continues its gradual recovery, and we are
encouraged by the return of growth signals aligned to our market
focus – notably in infrastructure, automotive and packaging. In
Latin America, we see early signs of gradual improvements in
consumer-led markets and robust growth in the agriculture sector,
with most economies showing strength, except for Brazil, which
remains in a recessionary mode. And finally, China’s transition to
a consumption economy focused on domestic growth is progressing on
a stable path, with strong growth drivers especially for Dow’s
products, and the rise of the middle class across developing Asia
continues to drive strong demand in the region, particularly in
Southeast Asia.
“With this view in mind, Dow is well positioned with the right
strategy and portfolio for continued success in these market
conditions. Dow’s exceptional performance over these last four and
a half years will continue, based on our relentless and disciplined
focus, delivering consistent earnings growth. This unique ability
to deliver in both the short- and long-term for our shareholders –
balancing all value growth levers – has created a mindset that will
serve us well as we drive toward the close of the DowDuPont
transaction and the intended spins.”
Dow will host a live webcast of its first quarter earnings
conference call with investors to discuss its results, business
outlook and other matters today at 9:00 a.m. ET on www.dow.com.
(1) Operating earnings per share is defined as earnings per
share excluding the impact of “Certain Items.” See Supplemental
Information at the end of the release for a description of these
items, as well as a reconciliation of ‘Operating earnings per
common share – diluted” to “Earnings per common share – diluted.”
(2) EBITDA is defined as earnings (i.e., “Net Income (Loss)”)
before interest, income taxes, depreciation and amortization. A
reconciliation of EBITDA to "Net Income (Loss) Available for The
Dow Chemical Company Common Stockholders" is provided following the
Operating Segments table. Operating EBITDA is defined as EBITDA
excluding the impact of “Certain Items.” (3) Prior year cash flow
changed due to implementation of Accounting Standards Update
2016-09 and applied retroactively. (4) “Adjusted Sales” is defined
as “Net Sales” adjusted for divestitures and acquisitions.
™Trademark of The Dow Chemical Company (“Dow”) or an affiliated
company of Dow.
About Dow
Dow (NYSE: DOW) combines the power of science and technology to
passionately innovate what is essential to human progress. The
Company is driving innovations that extract value from material,
polymer, chemical and biological science to help address many of
the world's most challenging problems, such as the need for fresh
food, safer and more sustainable transportation, clean water,
energy efficiency, more durable infrastructure, and increasing
agricultural productivity. Dow's integrated, market-driven
portfolio delivers a broad range of technology-based products and
solutions to customers in 175 countries and in high-growth sectors
such as packaging, infrastructure, transportation, consumer care,
electronics, and agriculture. In 2016, Dow had annual sales of $48
billion and employed approximately 56,000 people worldwide. The
Company's more than 7,000 product families are manufactured at 189
sites in 34 countries across the globe. References to "Dow" or the
"Company" mean The Dow Chemical Company and its consolidated
subsidiaries unless otherwise expressly noted. More information
about Dow can be found at www.dow.com.
Use of non-GAAP measures: Dow’s management believes that
measures of income excluding certain items (“non-GAAP” measures)
provide relevant and meaningful information to investors about the
ongoing operating results of the Company. Such measurements are not
recognized in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and should not be
viewed as an alternative to GAAP measures of performance.
Reconciliations of non-GAAP measures to GAAP measures are provided
in the Supplemental Information tables.
Note: The forward looking statements contained in this document
involve risks and uncertainties that may affect Dow’s operations,
markets, products, services, prices and other factors as discussed
in filings with the Securities and Exchange Commission (“SEC”).
These risks and uncertainties include, but are not limited to,
economic, competitive, legal, governmental and technological
factors. Accordingly, there is no assurance that Dow’s expectations
will be realized. The Company assumes no obligation to provide
revisions to any forward-looking statements should circumstances
change, except as otherwise required by securities and other
applicable laws.
Financial Statements (Note A) The Dow
Chemical Company and Subsidiaries Consolidated Statements of
Income Three Months Ended
Mar 31,
Mar 31,
In millions, except per share amounts (Unaudited)
2017
2016
Net Sales $ 13,230 $ 10,703 Cost of
sales (Note B) 10,197 7,951 Research and development expenses 416
361 Selling, general and administrative expenses (Note C) 867 742
Amortization of intangibles 155 103 Restructuring credits (1 ) (2 )
Equity in earnings of nonconsolidated affiliates 196 39 Sundry
income (expense) - net (Note D) (470 ) (1,241 ) Interest income 25
20 Interest expense and amortization of debt discount 219
201 Income Before Income Taxes 1,128
165 Provision (Credit) for income taxes
213 (110 ) Net Income 915 275
Net income attributable to noncontrolling interests
27 21 Net Income Attributable to The Dow
Chemical Company 888 254 Preferred
stock dividends — 85 Net Income
Available for The Dow Chemical Company Common Stockholders $
888 $ 169
Per Common Share Data: Earnings per common share - basic $ 0.74 $
0.15 Earnings per common share - diluted $ 0.72
$ 0.15 Dividends
declared per share of common stock $ 0.46 $ 0.46 Weighted-average
common shares outstanding - basic 1,202.5 1,102.9 Weighted-average
common shares outstanding - diluted 1,222.1
1,117.3 Depreciation $
578 $ 456 Capital Expenditures $ 754 $ 820
Notes to the Consolidated Financial Statements:
Note A: The unaudited interim consolidated financial
statements reflect all adjustments which, in the opinion of
management, are considered necessary for a fair presentation of the
results for the periods covered. These statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2016. Except as otherwise
indicated by the context, the terms "Company" and "Dow" as used
herein mean The Dow Chemical Company and its consolidated
subsidiaries.
Note B: In the first quarter of 2017, the Company
recognized pretax charges of $23 million for costs associated
with transactions and productivity actions ($23 million in the
first quarter of 2016).
Note C: In the first quarter of 2017, the Company
recognized pretax charges of $112 million for costs associated
with transactions and productivity actions ($42 million in the
first quarter of 2016).
Note D: In the first quarter of 2017, the Company
recognized a pretax charge of $469 million related to the Bayer
CropScience arbitration matter. In the first quarter of 2016, the
Company recognized a pretax loss of $1,235 million related to the
settlement of the urethane matters class action lawsuit and opt-out
cases.
The Dow Chemical Company and Subsidiaries
Consolidated Balance Sheets
Mar 31,
Dec 31,
In millions (Unaudited)
2017
2016
Assets Current Assets Cash and cash equivalents (variable
interest entities restricted - 2017: $99; 2016: $75) $ 5,848 $
6,607 Accounts and notes receivable: Trade (net of allowance for
doubtful receivables - 2017: $111; 2016: $110) 4,991 4,666 Other
4,719 4,358 Inventories 8,210 7,363 Other current assets 872
665 Total current assets 24,640
23,659 Investments Investment in nonconsolidated
affiliates 3,625 3,747 Other investments (investments carried at
fair value - 2017: $2,010; 2016: $1,959) 3,001 2,969 Noncurrent
receivables 841 708 Total investments
7,467 7,424 Property Property 58,359
57,438 Less accumulated depreciation 34,591
33,952 Net property (variable interest entities restricted -
2017: $960; 2016: $961) 23,768 23,486
Other Assets Goodwill 15,334 15,272 Other intangible assets (net of
accumulated amortization - 2017: $4,508; 2016: $4,295) 5,928 6,026
Deferred income tax assets 3,116 3,079 Deferred charges and other
assets 575 565 Total other assets
24,953 24,942 Total Assets $
80,828 $ 79,511
Liabilities and Equity
Current Liabilities Notes payable $ 383 $ 272 Long-term debt due
within one year 616 635 Accounts payable: Trade 4,810 4,519 Other
2,549 2,401 Income taxes payable 409 600 Dividends payable 558 508
Accrued and other current liabilities 3,868
3,669 Total current liabilities 13,193
12,604 Long-Term Debt (variable interest entities
nonrecourse - 2017: $364; 2016: $330) 20,471
20,456 Other Noncurrent Liabilities Deferred income tax
liabilities 934 923 Pension and other postretirement benefits -
noncurrent 11,126 11,375 Asbestos-related liabilities - noncurrent
1,337 1,364 Other noncurrent obligations 5,433
5,560 Total other noncurrent liabilities 18,830
19,222 Stockholders’ Equity Common stock 3,107
3,107 Additional paid-in capital 4,137 4,262 Retained earnings
30,659 30,338 Accumulated other comprehensive loss (9,514 ) (9,822
) Unearned ESOP shares (203 ) (239 ) Treasury stock at cost
(1,126 ) (1,659 ) The Dow Chemical Company’s stockholders’
equity 27,060 25,987 Noncontrolling
interests 1,274 1,242 Total equity
28,334 27,229 Total Liabilities and
Equity $ 80,828 $ 79,511
See Notes to the Consolidated Financial
Statements.
The Dow Chemical Company and Subsidiaries
Operating Segments Three Months Ended
Mar 31,
Mar 31,
In millions (Unaudited)
2017
2016
Sales by segment Agricultural Sciences $ 1,568 $ 1,646 Consumer
Solutions 1,599 1,054 Infrastructure Solutions 2,525 1,594
Performance Materials & Chemicals 2,442 2,181 Performance
Plastics 5,025 4,165 Corporate 71 63
Total $ 13,230 $ 10,703 EBITDA by
segment Agricultural Sciences $ (118 ) $ 403 Consumer Solutions 500
310 Infrastructure Solutions 511 293 Performance Materials &
Chemicals 435 (900 ) Performance Plastics 984 991 Corporate
(212 ) (144 ) Total $ 2,100 $ 953
Certain items impacting EBITDA by segment (1) Agricultural
Sciences $ (469 ) $ — Consumer Solutions — — Infrastructure
Solutions — — Performance Materials & Chemicals — (1,235 )
Performance Plastics — — Corporate (135 ) (65 ) Total
$ (604 ) $ (1,300 ) Operating EBITDA by segment (2)
Agricultural Sciences $ 351 $ 403 Consumer Solutions 500 310
Infrastructure Solutions 511 293 Performance Materials &
Chemicals 435 335 Performance Plastics 984 991 Corporate (77
) (79 ) Total $ 2,704 $ 2,253
Continued
The Dow Chemical Company and Subsidiaries
Operating Segments (Continued) Three Months
Ended
Mar 31,
Mar 31,
In millions (Unaudited)
2017
2016
Equity in earnings (losses) of nonconsolidated affiliates by
segment (included in EBITDA) Agricultural Sciences $ (1 ) $ 7
Consumer Solutions 40 20 Infrastructure Solutions 55 51 Performance
Materials & Chemicals 73 (31 ) Performance Plastics 33 (1 )
Corporate (4 ) (7 ) Total $ 196
$ 39 (1) See Supplemental Information for a
description of certain items affecting results in 2017 and 2016.
(2) The Company uses Operating EBITDA as its measure of profit/loss
for segment reporting purposes. The Company defines Operating
EBITDA as EBITDA (which Dow defines as earnings (i.e., "Net
Income") before interest, income taxes, depreciation and
amortization) excluding the impact of certain items. Operating
EBITDA by segment includes all operating items relating to the
businesses, except depreciation and amortization; items that
principally apply to the Company as a whole are assigned to
Corporate. A reconciliation of "Net Income Available for The Dow
Chemical Company Common Stockholders" to Operating EBITDA is
provided below.
Reconciliation of "Net Income Available
for The Dow Chemical Company Common Stockholders" to Operating
EBITDA Three Months Ended
Mar 31,
Mar 31,
In millions (Unaudited)
2017
2016
Net Income Available for The Dow Chemical Company Common
Stockholders $ 888 $ 169 + Preferred stock dividends — 85 + Net
income attributable to noncontrolling interests 27 21 + Provision
(Credit) for income taxes 213 (110 ) Income
Before Income Taxes $ 1,128 $ 165 +
Interest expense and amortization of debt discount 219 201 -
Interest income 25 20 + Depreciation and amortization 778
607 EBITDA $ 2,100 $ 953
- Certain items (604 ) (1,300 ) Operating
EBITDA $ 2,704 $ 2,253
Sales by Geographic Area
Three Months Ended
Mar 31,
Mar 31,
In millions (Unaudited)
2017
2016
North America $ 5,238 $ 4,169 Europe, Middle East, Africa and India
4,241 3,524 Asia Pacific 2,415 1,792 Latin America 1,336
1,218 Total $ 13,230 $ 10,703
The Dow Chemical Company and Subsidiaries Sales
Volume and Price by Segment and Geographic Area
Three Months Ended Mar 31, 2017 Percentage change from prior year
Volume Price Total Agricultural Sciences (5 )%
— % (5 )% Consumer Solutions 53 (1 ) 52
Infrastructure Solutions 56 2 58 Performance Materials &
Chemicals 7 5 12 Performance Plastics 5 15
20 Total 16 % 7 % 23 %
North America 16 % 10 % 26 % Europe, Middle East, Africa and India
12 8 20 Asia Pacific 32 3 35 Latin America 7 3
10 Developed geographies 15 % 10 % 25 %
Emerging geographies (1) 18 3 21
Sales Volume and Price by Segment and Geographic
Area,
Excluding
Acquisitions(2)
Three Months Ended Mar 31, 2017 Percentage change
from prior year Volume Price Total
Agricultural Sciences (5 )% — % (5 )% Consumer
Solutions 8 (1 ) 7 Infrastructure Solutions 5 2 7 Performance
Materials & Chemicals 7 5 12 Performance Plastics 5
15 20 Total 4 % 7
% 11 % North America 5 % 10 % 15 % Europe, Middle East,
Africa and India 3 8 11 Asia Pacific 6 3 9 Latin America 1
3 4 Developed geographies 4 % 10
% 14 % Emerging geographies (1) 4 3
7 (1) Emerging geographies includes Eastern
Europe, Middle East, Africa, India, Latin America and Asia Pacific
excluding Australia, Japan and New Zealand. (2) Excludes current
period sales related to the ownership restructure of Dow Corning
announced on June 1, 2016 (Consumer Solutions and Infrastructure
Solutions).
Supplemental Information
Description of Certain Items Affecting Results
The following table summarizes the impact
of certain items recorded in the three-month periods ended March
31, 2017 and March 31, 2016:
Certain Items Impacting Results Pretax
Impact (1) Net Income (2) EPS - Diluted
(3) Three Months Ended Three Months Ended Three Months Ended In
millions, except per share amounts (Unaudited) Mar 31, 2017
Mar 31, 2016 Mar 31, 2017 Mar 31, 2016
Mar 31, 2017 Mar 31, 2016 Reported U.S. GAAP Amounts
$ 888 $ 169 $ 0.72 $ 0.15 - Certain items: Bayer
CropScience arbitration matter $ (469 ) $ — (295 ) — (0.24 ) —
Urethane matters legal settlements — (1,235 ) — (778 ) — (0.70 )
Costs associated with transactions and productivity actions
(135 ) (65 ) (91 ) (46 ) (0.08 )
(0.04 ) Total certain items $ (604 ) $ (1,300 )
$ (386 ) $ (824 ) $ (0.32 ) $ (0.74 ) =
Operating Results (Non-GAAP) $
1,274 $ 993 $ 1.04 $ 0.89
(1) Impact on "Income Before Income Taxes." (2) "Net
Income Available for The Dow Chemical Company Common Stockholders."
(3) "Earnings per common share - diluted."
Results in the first quarter of 2017 were impacted by the
following items:
- Pretax charge of $469 million related
to the Bayer CropScience arbitration matter. The pretax charge was
included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Agricultural Sciences. The
charge was taken after an adverse decision from the U.S. Court of
Appeals for the Federal Circuit; however, Dow AgroSciences is
continuing to pursue its appellate options.
- Pretax charges of $135 million for
costs associated with transactions and productivity actions,
primarily financial, legal and professional advisory fees,
including costs associated with the planned all-stock merger of
equals with E.I. du Pont de Nemours and Company ("DuPont"),
implementation costs associated with the ownership restructure of
Dow Corning Corporation ("Dow Corning"), implementation costs
associated with the Company's restructuring programs and other
productivity actions (collectively, "Costs associated with
transactions and productivity actions"). The charges were included
in "Cost of sales" ($23 million) and "Selling, general and
administrative expenses" ($112 million) in the consolidated
statements of income and reflected in Corporate.
Results in the first quarter of 2016 were impacted by the
following items:
- Pretax loss of $1,235 million related
to the Company's settlement of the urethane matters class action
lawsuit and the opt-out cases litigation. The pretax loss was
included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Performance Materials &
Chemicals.
- Pretax charges of $65 million for costs
associated with transactions and productivity actions, primarily
financial, legal and professional advisory fees, including costs
associated with the planned all-stock merger of equals with DuPont,
costs associated with the ownership restructure of Dow Corning,
implementation costs associated with the Company's 2015
Restructuring program and other productivity actions (collectively
"Costs associated with transactions and productivity actions").
These charges were included in "Cost of sales" ($23 million)
and "Selling, general and administrative expenses"
($42 million) in the consolidated statements of income and
reflected in Corporate.
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version on businesswire.com: http://www.businesswire.com/news/home/20170427005744/en/
The Dow Chemical CompanyKyle Bandlow+1 989 638
2417kbandlow@dow.com
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