MIDLAND,
Mich., April 25, 2023 /PRNewswire/ -- Dow
(NYSE: DOW):
FINANCIAL HIGHLIGHTS
- GAAP loss per share was $0.13;
operating earnings per share (EPS)1 was $0.58, compared to $2.34 in the year-ago period and $0.46 in the prior quarter. Operating EPS
excludes significant items in the quarter, totaling $0.71 per share, primarily due to restructuring
costs and a litigation matter.
- Net sales were $11.9 billion,
down 22% versus the year-ago period, reflecting declines in all
operating segments driven by slower global macroeconomic activity.
Sales were flat sequentially, as gains in Performance Materials
& Coatings and Packaging & Specialty Plastics offset
declines in Industrial Intermediates & Infrastructure.
- Volume decreased 11% versus the year-ago period, led by a 15%
decline in Europe, the
Middle East, Africa, and India (EMEAI). Sequentially, volume increased
by 2%, due to gains in Performance Materials & Coatings and
Packaging & Specialty Plastics.
- Local price declined 10% versus the year-ago period and 4%
sequentially, with declines in all operating segments and regions
due to industry supply additions amidst continued soft global
economic conditions.
- Currency decreased net sales by 1% year-over-year, and
increased net sales by 2% sequentially.
- Equity losses were $48 million,
compared to equity earnings of $174
million in the year-ago period, driven by declines at the
Company's principal joint ventures. Equity losses were $43 million in the prior quarter. Sequentially,
the earnings decline was primarily driven by planned maintenance
activity at Sadara.
- GAAP net loss was $73 million.
Operating EBIT1 was $708
million, down $1.7 billion
versus the year-ago period, with declines in all operating segments
due to lower local prices and reduced operating rates to match
market dynamics. Sequentially, Op. EBIT was up $107 million, primarily driven by Performance
Materials & Coatings.
- Cash provided by operating activities – continuing operations
was $531 million, down $1.1 billion year-over-year and down $1.5 billion compared to the prior quarter. The
Company delivered cash flow conversion1 of 85% on a
trailing 12-month basis.
- Returns to shareholders totaled $621
million in the quarter, including $496 million in dividends and $125 million in share repurchases.
SUMMARY FINANCIAL RESULTS
|
Three Months Ended
Mar 31
|
Three Months Ended
Dec 31
|
In millions,
except per share amounts
|
1Q23
|
1Q22
|
vs.
SQLY
[B /
(W)]
|
4Q22
|
vs.
PQ
[B /
(W)]
|
Net
Sales
|
$11,851
|
$15,264
|
$(3,413)
|
$11,859
|
$(8)
|
GAAP Income (Loss),
Net of Tax
|
$(73)
|
$1,552
|
$(1,625)
|
$647
|
$(720)
|
Operating
EBIT¹
|
$708
|
$2,419
|
$(1,711)
|
$601
|
$107
|
Operating EBIT
Margin¹
|
6.0 %
|
15.9 %
|
(990)
bps
|
5.1 %
|
90 bps
|
Operating
EBITDA¹
|
$1,356
|
$3,171
|
$(1,815)
|
$1,255
|
$101
|
GAAP Earnings (Loss)
Per Share
|
$(0.13)
|
$2.11
|
$(2.24)
|
$0.85
|
$(0.98)
|
Operating Earnings
Per Share¹
|
$0.58
|
$2.34
|
$(1.76)
|
$0.46
|
$0.12
|
Cash Provided by
Operating
Activities – Cont. Ops
|
$531
|
$1,612
|
$(1,081)
|
$2,078
|
$(1,547)
|
- Op. Earnings Per Share, Op. EBIT, Op. EBIT Margin, Op. EBITDA,
and Cash Flow Conversion are non-GAAP measures.
See page 6 for further discussion.
CEO QUOTE
Jim Fitterling, chairman and
chief executive officer, commented on the quarter:
"Team Dow demonstrated its agility and remained disciplined
through challenging macroeconomic conditions – leveraging our
structurally advantaged feedstock positions, focusing on
higher-value products where demand remained resilient, and aligning
our operating rates with market dynamics. Our actions to deliver
$1 billion in cost savings in 2023 are progressing,
reinforcing our low-cost-to-serve operating model and continuing to
maximize cash flow generation. With ample liquidity and financial
flexibility, execution of our strategy is on track as we advance
our disciplined and balanced capital allocation priorities for
long-term value creation.
"Additionally, the annual benchmarking we published today
reflects our differentiated portfolio and our disciplined and
balanced capital allocation track record. Focused on
industry-leading cash generation, Dow delivered best-in-class free
cash flow yield on a three-year average and net debt reduction
since spin. We also achieved above-peer median three-year average
EBITDA margins, return on invested capital, and returns to
shareholders, supported by our investments in higher-return,
faster-payback and lower-risk projects."
SEGMENT HIGHLIGHTS
Packaging & Specialty Plastics
|
Three Months Ended
Mar 31
|
Three Months Ended
Dec 31
|
In millions,
except margin
percentages
|
1Q23
|
1Q22
|
vs.
SQLY
[B /
(W)]
|
4Q22
|
vs.
PQ
[B /
(W)]
|
Net
Sales
|
$6,114
|
$7,627
|
$(1,513)
|
$6,073
|
$41
|
Operating
EBIT
|
$642
|
$1,234
|
$(592)
|
$655
|
$(13)
|
Operating EBIT
Margin
|
10.5 %
|
16.2 %
|
(570)
bps
|
10.8 %
|
(30) bps
|
Equity
Earnings
|
$21
|
$110
|
$(89)
|
$56
|
$(35)
|
Packaging & Specialty Plastics segment net sales in the
quarter were $6.1 billion, down
20% versus the year-ago period. Local price decreased 11%
year-over-year, as continued resilience in functional polymers was
more than offset by lower polyethylene and olefin prices. Currency
decreased net sales by 1%. Volume decreased 8% year-over-year,
driven by lower consumer demand in EMEAI and lower Sadara export
volumes due to planned maintenance activity. On a sequential basis,
net sales increased by 1%, with volume gains in olefins and
polyethylene partly offset by lower sales from non-recurring
licensing activity.
Equity earnings were $21 million, down $89 million
compared to the year-ago period, primarily due to lower integrated
polyethylene margins at the Company's principal joint ventures.
Equity earnings were down $35 million on a sequential basis,
primarily due to planned maintenance activity at Sadara.
Operating EBIT was $642 million, compared to $1.2 billion in the year-ago period,
primarily due to lower integrated polyethylene margins.
Sequentially, Op. EBIT was slightly down by $13 million as
improved input costs and higher operating rates were more than
offset by lower sales from non-recurring licensing activity and
lower equity earnings.
Packaging and Specialty Plastics business reported a net
sales decrease versus the year-ago period, as gains in functional
polymers – primarily for renewable energy applications – were more
than offset by lower local polyethylene prices and lower industrial
and consumer packaging sales volumes in EMEAI and Asia Pacific. Sequentially, net sales
decreased primarily due to non-recurring licensing activity in the
prior quarter.
Hydrocarbons & Energy business reported a net sales
decrease compared to the year-ago period, driven primarily by lower
olefin and aromatic sales in EMEAI. Sequentially, net sales
increased primarily due to higher olefin volumes in EMEAI and the
U.S. & Canada.
Industrial Intermediates & Infrastructure
|
Three Months Ended
Mar 31
|
Three Months Ended
Dec 31
|
In millions,
except margin
percentages
|
1Q23
|
1Q22
|
vs.
SQLY
[B /
(W)]
|
4Q22
|
vs.
PQ
[B /
(W)]
|
Net
Sales
|
$3,378
|
$4,524
|
$(1,146)
|
$3,653
|
$(275)
|
Operating
EBIT
|
$123
|
$661
|
$(538)
|
$164
|
$(41)
|
Operating EBIT
Margin
|
3.6 %
|
14.6 %
|
(1,100)
bps
|
4.5 %
|
(90)
bps
|
Equity Earnings
(Losses)
|
$(73)
|
$62
|
$(135)
|
$(96)
|
$23
|
Industrial Intermediates & Infrastructure segment net sales
were $3.4 billion, down 25%
versus the year-ago period. Local price decreased 6% year-over-year
and currency decreased net sales by 2%. Volume was down 17%
year-over-year, primarily driven by lower demand for industrial,
building & construction, and consumer durables applications. On
a sequential basis, the segment recorded a net sales decline of 8%,
driven by lower volumes in Industrial Solutions and local price
declines in Polyurethanes & Construction Chemicals.
Equity losses for the segment were $73 million, compared to
equity earnings of $62 million in the
year-ago period, driven by lower demand and competitive pricing
pressures in MEG and propylene oxide derivatives due to supply
additions in China. On a
sequential basis, equity losses improved by $23 million, with
better results at the Company's principal joint ventures.
Operating EBIT was $123 million, compared to
$661 million in the year-ago period, driven by lower pricing
and demand as well as higher energy costs particularly in EMEAI. On
a sequential basis, operating EBIT was down $41 million as
lower energy costs versus the prior quarter were more than offset
by lower pricing and volumes.
Polyurethanes & Construction Chemicals business
reported a net sales decrease compared to the year-ago period,
primarily driven by lower demand for building & construction,
consumer durables, and industrial applications. Sequentially, net
sales declined primarily driven by lower local price for propylene
oxide and its derivatives and isocyanates.
Industrial Solutions business reported a decrease in net
sales compared to the year-ago period, as resilient demand in
pharmaceutical and energy end-markets was more than offset by lower
demand for coatings and industrial applications. Sequentially, net
sales decreased as improved demand for home care and cleaning
applications was more than offset by reduced supply availability
from weather-related impacts and a third-party outage, combined
with lower demand in industrial end-markets.
Performance Materials & Coatings
|
Three Months Ended
Mar 31
|
Three Months Ended
Dec 31
|
In millions,
except margin
percentages
|
1Q23
|
1Q22
|
vs.
SQLY
[B /
(W)]
|
4Q22
|
vs.
PQ
[B /
(W)]
|
Net
Sales
|
$2,276
|
$3,049
|
$(773)
|
$2,058
|
$218
|
Operating
EBIT
|
$35
|
$595
|
$(560)
|
$(130)
|
$165
|
Operating EBIT
Margin
|
1.5 %
|
19.5 %
|
(1,800)
bps
|
(6.3) %
|
780
bps
|
Equity
Earnings
|
$3
|
$3
|
-
|
$4
|
$(1)
|
Performance Materials & Coatings segment net sales in the
quarter were $2.3 billion, down
25% versus the year-ago period. Local price decreased 12%
year-over-year, primarily driven by lower local prices for
siloxanes due to competitive pricing pressure from supply additions
in China. Currency decreased net
sales by 2%. Volume declined 11% year-over-year, with declines in
both businesses and in all regions. On a sequential basis, net
sales were up 11% due to improved supply availability and
seasonally higher volumes for silicones and coatings in building
& construction end-markets.
Operating EBIT was $35 million, compared to
$595 million in the year-ago period, driven by local price
declines in siloxanes and lower demand for silicones and coatings
applications. Sequentially, Op. EBIT increased $165 million,
driven by improved supply availability, seasonally higher volumes,
and reduced value-chain destocking pressure.
Consumer Solutions business reported a decrease in net
sales versus the year-ago period, driven by lower local price and
volumes for siloxanes that more than offset resilient demand for
commercial building and construction and mobility
applications. Sequentially, net sales increased as improved
supply availability for siloxanes, seasonally higher demand in
building & construction, and reduced value-chain destocking
pressure were partly offset by lower local prices for
siloxanes.
Coatings & Performance Monomers business reported a
decrease in net sales compared to the year-ago period, as improved
monomer supply availability and resilient demand for industrial
coatings were more than offset by lower demand for architectural
coatings and local price declines. Sequentially, net sales
increased as seasonally higher volumes in the U.S. &
Canada and EMEAI were partly
offset by lower local prices.
OUTLOOK
"Looking to the remainder of the year, our consistent and
disciplined execution enhances our ability to navigate the impact
of higher inflation on consumer demand and soft global economic
activity. We expect the benefit of our operational and cost actions
to continue to build as we progress through 2023. We will remain
flexible, responding quickly as conditions evolve and expect oil
and gas spreads to further support our strategic cost-advantaged
positions," said Fitterling. "Importantly, the underlying
long-term growth fundamentals in our market verticals remain
intact, as we advance both our Decarbonize and Grow and Transform
the Waste strategies to raise our underlying earnings profile by
$3 billion across the economic cycle."
Conference Call
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
8:00 a.m. ET. The webcast and slide
presentation that accompany the conference call will be posted on
the events and presentations page of investors.dow.com.
About Dow
Dow (NYSE: DOW) combines global breadth;
asset integration and scale; focused innovation and materials
science expertise; leading business positions; and environmental,
social and governance leadership to achieve profitable growth and
help deliver a sustainable future. The Company's ambition is to
become the most innovative, customer centric, inclusive and
sustainable materials science company in the world. Dow's portfolio
of plastics, industrial intermediates, coatings and silicones
businesses delivers a broad range of differentiated, science-based
products and solutions for its customers in high-growth market
segments, such as packaging, infrastructure, mobility and consumer
applications. Dow operates manufacturing sites in 31 countries and
employs approximately 37,800 people. Dow delivered sales of
approximately $57 billion in 2022.
References to Dow or the Company mean Dow Inc. and its
subsidiaries. For more information, please
visit www.dow.com or follow @DowNewsroom on
Twitter.
Cautionary Statement about Forward-Looking Statements
Certain statements in this press release are "forward-looking
statements" within the meaning of the federal securities laws,
including Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Such statements often address expected future
business and financial performance, financial condition, and other
matters, and often contain words or phrases such as "anticipate,"
"believe," "estimate," "expect," "intend," "may," "opportunity,"
"outlook," "plan," "project," "seek," "should," "strategy,"
"target," "will," "will be," "will continue," "will likely result,"
"would" and similar expressions, and variations or negatives of
these words or phrases.
Forward-looking statements are based on current assumptions and
expectations of future events that are subject to risks,
uncertainties and other factors that are beyond Dow's control,
which may cause actual results to differ materially from those
projected, anticipated or implied in the forward-looking statements
and speak only as of the date the statements were made. These
factors include, but are not limited to: sales of Dow's products;
Dow's expenses, future revenues and profitability; the continuing
global and regional economic impacts of the coronavirus disease
2019 ("COVID-19") pandemic and other public health-related risks
and events on Dow's business; any sanctions, export restrictions,
supply chain disruptions or increased economic uncertainty related
to the ongoing conflict between Russia and Ukraine; capital requirements and need for and
availability of financing; unexpected barriers in the development
of technology, including with respect to Dow's contemplated capital
and operating projects; Dow's ability to realize its commitment to
carbon neutrality on the contemplated timeframe; size of the
markets for Dow's products and services and ability to compete in
such markets; failure to develop and market new products and
optimally manage product life cycles; the rate and degree of market
acceptance of Dow's products; significant litigation and
environmental matters and related contingencies and unexpected
expenses; the success of competing technologies that are or may
become available; the ability to protect Dow's intellectual
property in the United States and
abroad; developments related to contemplated restructuring
activities and proposed divestitures or acquisitions such as
workforce reduction, manufacturing facility and/or asset closure
and related exit and disposal activities, and the benefits and
costs associated with each of the foregoing; fluctuations in energy
and raw material prices; management of process safety and product
stewardship; changes in relationships with Dow's significant
customers and suppliers; changes in consumer preferences and
demand; changes in laws and regulations, political conditions or
industry development; global economic and capital markets
conditions, such as inflation, market uncertainty, interest and
currency exchange rates, and equity and commodity prices; business
or supply disruptions; security threats, such as acts of sabotage,
terrorism or war, including the ongoing conflict between
Russia and Ukraine; weather events and natural disasters;
disruptions in Dow's information technology networks and systems;
and risks related to Dow's separation from DowDuPont Inc. such as
Dow's obligation to indemnify DuPont de Nemours, Inc. and/or
Corteva, Inc. for certain liabilities.
Where, in any forward-looking statement, an expectation or
belief as to future results or events is expressed, such
expectation or belief is based on the current plans and
expectations of management and expressed in good faith and believed
to have a reasonable basis, but there can be no assurance that the
expectation or belief will result or be achieved or accomplished. A
detailed discussion of principal risks and uncertainties which may
cause actual results and events to differ materially from such
forward-looking statements is included in the section titled "Risk
Factors" contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2022 and
the Company's subsequent Quarterly Reports on Form 10-Q. These are
not the only risks and uncertainties that Dow faces. There may be
other risks and uncertainties that Dow is unable to identify at
this time or that Dow does not currently expect to have a material
impact on its business. If any of those risks or uncertainties
develops into an actual event, it could have a material adverse
effect on Dow's business. Dow Inc. and TDCC assume no obligation to
update or revise publicly any forward-looking statements whether
because of new information, future events, or otherwise, except as
required by securities and other applicable laws.
®TM Trademark of
The Dow Chemical Company ("Dow") or an affiliated company of
Dow
Non-GAAP Financial Measures
This earnings release
includes information that does not conform to GAAP and are
considered non-GAAP measures. Management uses these measures
internally for planning, forecasting and evaluating the performance
of the Company's segments, including allocating resources. Dow's
management believes that these non-GAAP measures best reflect the
ongoing performance of the Company during the periods presented and
provide more relevant and meaningful information to investors as
they provide insight with respect to ongoing operating results of
the Company and a more useful comparison of year-over-year results.
These non-GAAP measures supplement the Company's GAAP disclosures
and should not be viewed as alternatives to GAAP measures of
performance. Furthermore, such non-GAAP measures may not be
consistent with similar measures provided or used by other
companies. Non-GAAP measures included in this release are defined
below. Reconciliations for these non-GAAP measures to GAAP are
provided in the Selected Financial Information and Non-GAAP
Measures section starting on page 11. Dow does not provide
forward-looking GAAP financial measures or a reconciliation of
forward-looking non-GAAP financial measures to the most comparable
GAAP financial measures on a forward-looking basis because the
Company is unable to predict with reasonable certainty the ultimate
outcome of pending litigation, unusual gains and losses, foreign
currency exchange gains or losses and potential future asset
impairments, as well as discrete taxable events, without
unreasonable effort. These items are uncertain, depend on various
factors, and could have a material impact on GAAP results for the
guidance period.
Operating Earnings Per Share is defined as "Earnings (loss) per
common share - diluted" excluding the after-tax impact of
significant items.
Operating EBIT is defined as earnings (i.e., "Income (loss)
before income taxes") before interest, excluding the impact of
significant items.
Operating EBIT Margin is defined as Operating EBIT as a
percentage of net sales.
Operating EBITDA is defined as earnings (i.e., "Income (loss)
before income taxes") before interest, depreciation and
amortization, excluding the impact of significant items.
Free Cash Flow is defined as "Cash provided by operating
activities - continuing operations," less capital expenditures.
Under this definition, Free Cash Flow represents the cash generated
by the Company from operations after investing in its asset base.
Free Cash Flow, combined with cash balances and other sources of
liquidity, represent the cash available to fund obligations and
provide returns to shareholders. Free Cash Flow is an integral
financial measure used in the Company's financial planning
process.
Cash Flow Conversion is defined as "Cash provided by operating
activities - continuing operations," divided by Operating EBITDA.
Management believes Cash Flow Conversion is an important financial
metric as it helps the Company determine how efficiently it is
converting its earnings into cash flow.
Operating Return on Capital (ROC) is defined as net operating
profit after tax, excluding the impact of significant items,
divided by total average capital, also referred to as ROIC.
Dow Inc. and
Subsidiaries
Consolidated
Statements of Income
|
|
In millions, except per
share amounts (Unaudited)
|
Three Months Ended
|
Mar 31,
2023
|
Mar 31,
2022
|
Net sales
|
$
11,851
|
$
15,264
|
Cost of
sales
|
10,629
|
12,402
|
Research and
development expenses
|
214
|
218
|
Selling, general and
administrative expenses
|
428
|
498
|
Amortization of
intangibles
|
81
|
88
|
Restructuring and
asset related charges - net
|
541
|
186
|
Equity in earnings
(losses) of nonconsolidated affiliates
|
(48)
|
174
|
Sundry income
(expense) - net
|
79
|
148
|
Interest
income
|
76
|
28
|
Interest expense and
amortization of debt discount
|
185
|
167
|
Income (loss) before
income taxes
|
(120)
|
2,055
|
Provision (credit) for
income taxes
|
(47)
|
503
|
Net income
(loss)
|
(73)
|
1,552
|
Net income (loss)
attributable to noncontrolling interests
|
20
|
(17)
|
Net income (loss)
available for Dow Inc. common stockholders
|
$
(93)
|
$ 1,569
|
|
|
|
Per common share
data:
|
|
|
Earnings (loss) per
common share - basic
|
$ (0.13)
|
$ 2.12
|
Earnings (loss) per
common share - diluted
|
$ (0.13)
|
$ 2.11
|
|
|
|
Weighted-average common
shares outstanding - basic
|
708.2
|
734.6
|
Weighted-average common
shares outstanding - diluted
|
708.2
|
739.8
|
Dow Inc. and
Subsidiaries
Consolidated Balance
Sheets
|
|
In millions, except
share amounts (Unaudited)
|
Mar 31,
2023
|
Dec 31,
2022
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
equivalents
|
$
3,319
|
$
3,886
|
Accounts and notes
receivable:
|
|
|
Trade (net of
allowance for doubtful receivables - 2023: $110; 2022:
$110)
|
5,740
|
5,611
|
Other
|
2,072
|
2,144
|
Inventories
|
6,825
|
6,988
|
Other current
assets
|
1,400
|
1,848
|
Total current
assets
|
19,356
|
20,477
|
Investments
|
|
|
Investment in
nonconsolidated affiliates
|
1,508
|
1,589
|
Other investments
(investments carried at fair value - 2023: $1,806; 2022:
$1,757)
|
2,815
|
2,793
|
Noncurrent
receivables
|
627
|
666
|
Total
investments
|
4,950
|
5,048
|
Property
|
|
|
Property
|
58,679
|
58,055
|
Less: Accumulated
depreciation
|
38,356
|
37,613
|
Net
property
|
20,323
|
20,442
|
Other Assets
|
|
|
Goodwill
|
8,653
|
8,644
|
Other intangible
assets (net of accumulated amortization - 2023: $5,114; 2022:
$5,022)
|
2,336
|
2,442
|
Operating lease
right-of-use assets
|
1,257
|
1,227
|
Deferred income tax
assets
|
995
|
960
|
Deferred charges and
other assets
|
1,446
|
1,363
|
Total other
assets
|
14,687
|
14,636
|
Total Assets
|
$
59,316
|
$
60,603
|
Liabilities and Equity
|
|
|
Current
Liabilities
|
|
|
Notes
payable
|
$
278
|
$
362
|
Long-term debt due
within one year
|
247
|
362
|
Accounts
payable:
|
|
|
Trade
|
4,575
|
4,940
|
Other
|
1,985
|
2,276
|
Operating lease
liabilities - current
|
304
|
287
|
Income taxes
payable
|
335
|
334
|
Accrued and other
current liabilities
|
2,765
|
2,770
|
Total current
liabilities
|
10,489
|
11,331
|
Long-Term
Debt
|
14,739
|
14,698
|
Other Noncurrent
Liabilities
|
|
|
Deferred income tax
liabilities
|
744
|
1,110
|
Pension and other
postretirement benefits - noncurrent
|
3,799
|
3,808
|
Asbestos-related
liabilities - noncurrent
|
844
|
857
|
Operating lease
liabilities - noncurrent
|
1,007
|
997
|
Other noncurrent
obligations
|
6,979
|
6,555
|
Total other noncurrent
liabilities
|
13,373
|
13,327
|
Stockholders'
Equity
|
|
|
Common stock
(authorized 5,000,000,000 shares of $0.01 par value
each;
issued 2023:
775,463,877 shares; 2022: 771,678,525 shares)
|
8
|
8
|
Additional paid-in
capital
|
8,607
|
8,540
|
Retained
earnings
|
22,584
|
23,180
|
Accumulated other
comprehensive loss
|
(7,065)
|
(7,139)
|
Treasury stock at cost
(2023: 68,149,070 shares; 2022: 66,798,605 shares)
|
(3,953)
|
(3,871)
|
Dow Inc.'s
stockholders' equity
|
20,181
|
20,718
|
Noncontrolling
interests
|
534
|
529
|
Total
equity
|
20,715
|
21,247
|
Total Liabilities and
Equity
|
$
59,316
|
$
60,603
|
Dow Inc. and
Subsidiaries
Consolidated
Statements of Cash Flows
|
|
In millions
(Unaudited)
|
Three Months Ended
|
Mar 31,
2023
|
Mar 31,
2022
|
Operating
Activities
|
|
|
Net income
(loss)
|
$
(73)
|
$
1,552
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
648
|
752
|
Provision (credit) for
deferred income tax
|
(418)
|
253
|
Earnings of
nonconsolidated affiliates less than dividends received
|
102
|
374
|
Net periodic pension
benefit cost (credit)
|
(23)
|
7
|
Pension
contributions
|
(41)
|
(55)
|
Net gain on sales of
assets, businesses and investments
|
(49)
|
(6)
|
Restructuring and
asset related charges - net
|
541
|
186
|
Other net
loss
|
347
|
140
|
Changes in assets and
liabilities, net of effects of acquired and divested
companies:
|
|
|
Accounts and notes
receivable
|
(68)
|
(741)
|
Inventories
|
163
|
(443)
|
Accounts
payable
|
(631)
|
86
|
Other assets and
liabilities, net
|
33
|
(493)
|
Cash provided by
operating activities - continuing operations
|
531
|
1,612
|
Cash provided by (used
for) operating activities - discontinued operations
|
4
|
(9)
|
Cash provided by
operating activities
|
535
|
1,603
|
Investing
Activities
|
|
|
Capital
expenditures
|
(440)
|
(315)
|
Investment in gas
field developments
|
(55)
|
(37)
|
Purchases of
previously leased assets
|
(2)
|
(2)
|
Proceeds from sales of
property, businesses and consolidated companies, net of cash
divested
|
57
|
4
|
Acquisitions of
property and businesses, net of cash acquired
|
(23)
|
—
|
Investments in and
loans to nonconsolidated affiliates
|
—
|
(6)
|
Distributions and loan
repayments from nonconsolidated affiliates
|
1
|
—
|
Proceeds from sales of
ownership interests in nonconsolidated affiliates
|
—
|
11
|
Purchases of
investments
|
(165)
|
(148)
|
Proceeds from sales
and maturities of investments
|
512
|
141
|
Other investing
activities, net
|
(35)
|
(15)
|
Cash used for
investing activities
|
(150)
|
(367)
|
Financing
Activities
|
|
|
Changes in short-term
notes payable
|
(91)
|
(21)
|
Payments on short-term
debt greater than three months
|
—
|
(14)
|
Proceeds from issuance
of long-term debt
|
13
|
16
|
Payments on long-term
debt
|
(156)
|
(25)
|
Collections on
securitization programs
|
—
|
141
|
Purchases of treasury
stock
|
(125)
|
(600)
|
Proceeds from issuance
of stock
|
55
|
35
|
Employee taxes paid
for share-based payment arrangements
|
(41)
|
(35)
|
Distributions to
noncontrolling interests
|
(13)
|
(1)
|
Dividends paid to
stockholders
|
(496)
|
(513)
|
Cash used for
financing activities
|
(854)
|
(1,017)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(41)
|
(45)
|
Summary
|
|
|
Increase (decrease) in
cash, cash equivalents and restricted cash
|
(510)
|
174
|
Cash, cash equivalents
and restricted cash at beginning of period
|
3,940
|
3,033
|
Cash, cash equivalents
and restricted cash at end of period
|
$
3,430
|
$
3,207
|
Less: Restricted cash
and cash equivalents, included in "Other current assets"
|
111
|
64
|
Cash and cash
equivalents at end of period
|
$
3,319
|
$
3,143
|
Dow Inc. and
Subsidiaries
Net Sales by Segment
and Geographic Region
|
|
Net Sales by Segment
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Packaging &
Specialty Plastics
|
$ 6,114
|
$ 7,627
|
Industrial
Intermediates & Infrastructure
|
3,378
|
4,524
|
Performance Materials
& Coatings
|
2,276
|
3,049
|
Corporate
|
83
|
64
|
Total
|
$
11,851
|
$
15,264
|
U.S. &
Canada
|
$ 4,450
|
$ 5,537
|
EMEAI
1
|
4,053
|
5,512
|
Asia Pacific
|
2,047
|
2,753
|
Latin
America
|
1,301
|
1,462
|
Total
|
$
11,851
|
$
15,264
|
Net Sales Variance by Segment and Geographic
Region
|
Three Months Ended March 31, 2023
|
|
Local
Price &
Product
Mix
|
Currency
|
Volume
|
Total
|
|
Percent change from
prior year
|
|
Packaging &
Specialty Plastics
|
(11) %
|
(1) %
|
(8) %
|
(20) %
|
|
Industrial
Intermediates & Infrastructure
|
(6)
|
(2)
|
(17)
|
(25)
|
|
Performance Materials
& Coatings
|
(12)
|
(2)
|
(11)
|
(25)
|
|
Total
|
(10) %
|
(1) %
|
(11) %
|
(22) %
|
|
Total, excluding the
Hydrocarbons & Energy business
|
(9) %
|
(2) %
|
(11) %
|
(22) %
|
|
U.S. &
Canada
|
(11) %
|
— %
|
(9) %
|
(20) %
|
|
EMEAI
1
|
(8)
|
(3)
|
(15)
|
(26)
|
|
Asia Pacific
|
(11)
|
(3)
|
(12)
|
(26)
|
|
Latin
America
|
(11)
|
—
|
—
|
(11)
|
|
Total
|
(10) %
|
(1) %
|
(11) %
|
(22) %
|
|
Net Sales Variance by Segment and Geographic
Region
|
Three Months Ended March 31, 2023
|
|
Local
Price &
Product
Mix
|
Currency
|
Volume
|
Total
|
|
Percent change from
prior quarter
|
|
Packaging &
Specialty Plastics
|
(3) %
|
2 %
|
2 %
|
1 %
|
|
Industrial
Intermediates & Infrastructure
|
(5)
|
2
|
(5)
|
(8)
|
|
Performance Materials
& Coatings
|
(5)
|
2
|
14
|
11
|
|
Total
|
(4) %
|
2 %
|
2 %
|
— %
|
|
Total, excluding the
Hydrocarbons & Energy business
|
(5) %
|
2 %
|
1 %
|
(2) %
|
|
U.S. &
Canada
|
(4) %
|
— %
|
6 %
|
2 %
|
|
EMEAI
1
|
(4)
|
4
|
6
|
6
|
|
Asia Pacific
|
(3)
|
2
|
(12)
|
(13)
|
|
Latin
America
|
(5)
|
—
|
2
|
(3)
|
|
Total
|
(4) %
|
2 %
|
2 %
|
— %
|
|
- Europe, Middle East, Africa and India.
Dow Inc. and
Subsidiaries
Selected Financial
Information and Non-GAAP Measures
|
|
Operating EBIT by Segment
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Packaging &
Specialty Plastics
|
$ 642
|
$ 1,234
|
Industrial
Intermediates & Infrastructure
|
123
|
661
|
Performance Materials
& Coatings
|
35
|
595
|
Corporate
|
(92)
|
(71)
|
Total
|
$ 708
|
$ 2,419
|
|
|
|
Depreciation and Amortization by
Segment
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Packaging &
Specialty Plastics
|
$ 320
|
$ 395
|
Industrial
Intermediates & Infrastructure
|
128
|
150
|
Performance Materials
& Coatings
|
196
|
200
|
Corporate
|
4
|
7
|
Total
|
$ 648
|
$ 752
|
|
|
|
Operating EBITDA by Segment
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Packaging &
Specialty Plastics
|
$ 962
|
$ 1,629
|
Industrial
Intermediates & Infrastructure
|
251
|
811
|
Performance Materials
& Coatings
|
231
|
795
|
Corporate
|
(88)
|
(64)
|
Total
|
$ 1,356
|
$ 3,171
|
|
|
|
Equity in Earnings (Losses) of Nonconsolidated
Affiliates by Segment
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Packaging &
Specialty Plastics
|
$
21
|
$ 110
|
Industrial
Intermediates & Infrastructure
|
(73)
|
62
|
Performance Materials
& Coatings
|
3
|
3
|
Corporate
|
1
|
(1)
|
Total
|
$
(48)
|
$ 174
|
|
|
|
Reconciliation of "Net income (loss)" to "Operating
EBIT"
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Net income
(loss)
|
$
(73)
|
$ 1,552
|
+ Provision (credit)
for income taxes
|
(47)
|
503
|
Income (loss) before
income taxes
|
$ (120)
|
$ 2,055
|
- Interest
income
|
76
|
28
|
+ Interest expense and
amortization of debt discount
|
185
|
167
|
- Significant
items
|
(719)
|
(225)
|
Operating EBIT
(non-GAAP)
|
$ 708
|
$ 2,419
|
Dow Inc. and
Subsidiaries
Selected Financial
Information and Non-GAAP Measures
|
|
Significant Items Impacting Results for the Three
Months Ended Mar 31, 2023
|
In millions, except per
share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
Reported
results
|
$
(120)
|
$ (93)
|
$
(0.13)
|
|
Less: Significant
items
|
|
|
|
|
Restructuring,
implementation and
efficiency costs, and asset related
charges - net 4
|
(551)
|
(436)
|
(0.61)
|
Cost of sales ($28
million);
R&D ($1 million);
SG&A ($11 million);
Restructuring and asset related
charges - net ($541 million), offset by
Sundry income (expense) - net ($30 million)
|
Litigation related
charges, awards and
adjustments 5
|
(177)
|
(138)
|
(0.19)
|
Cost of
sales
|
Indemnification and
other transaction
related costs 6
|
9
|
9
|
0.01
|
Sundry income (expense)
- net
|
Income tax related
items 7
|
—
|
57
|
0.08
|
Provision (credit) for
income taxes
|
Total significant
items
|
$
(719)
|
$
(508)
|
$
(0.71)
|
|
Operating results
(non-GAAP)
|
$ 599
|
$ 415
|
$ 0.58
|
|
Significant Items Impacting Results for the Three
Months Ended Mar 31, 2022
|
In millions, except per
share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
Reported
results
|
$
2,055
|
$
1,569
|
$ 2.11
|
|
Less: Significant
items
|
|
|
|
|
Digitalization program
costs
|
(41)
|
(32)
|
(0.04)
|
Cost of sales ($38
million);
R&D ($1 million);
SG&A ($2 million)
|
Restructuring,
implementation costs and
asset related charges - net 8
|
(10)
|
(8)
|
(0.01)
|
Cost of sales ($7
million);
R&D ($2 million);
SG&A ($1 million)
|
Russia / Ukraine
conflict charges
|
(186)
|
(142)
|
(0.19)
|
Restructuring and asset
related charges - net
|
Indemnification and
other transaction
related costs 6
|
12
|
12
|
0.01
|
Sundry income (expense)
- net
|
Total significant
items
|
$
(225)
|
$
(170)
|
$
(0.23)
|
|
Operating results
(non-GAAP)
|
$
2,280
|
$
1,739
|
$ 2.34
|
|
- "Income (loss) before income taxes."
- "Net income (loss) available for Dow Inc. common stockholders."
The income tax effect on significant items was calculated based
upon the enacted tax laws and statutory income tax rates applicable
in the tax jurisdiction(s) of the underlying non-GAAP
adjustment.
- "Earnings (loss) per common share - diluted," which includes
the impact of participating securities in accordance with the
two-class method.
- Restructuring charges and implementation and efficiency costs
associated with the Company's 2023 Restructuring Program. Also
includes certain gains and losses associated with previously
impaired equity investments.
- Includes a loss associated with legacy agricultural products
groundwater contamination matters.
- Primarily related to charges associated with agreements entered
into with DuPont and Corteva as part of the separation and
distribution which, among other matters, provides for
cross-indemnities and allocations of obligations and liabilities
for periods prior to, at and after the completion of the
separation.
- Related to deferred tax assets in a foreign jurisdiction
partially offset by a remeasurement of uncertain tax
positions.
- Restructuring charges, asset related charges and costs
associated with implementing the Company's 2020 Restructuring
Program.
Dow Inc. and
Subsidiaries
Selected Financial
Information and Non-GAAP Measures
|
|
Significant Items Impacting Results for the Three
Months Ended Dec 31, 2022
|
In millions, except per
share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
Reported
results
|
$ 865
|
$ 613
|
$ 0.85
|
|
Less: Significant
items
|
|
|
|
|
Digitalization program
costs
|
(76)
|
(64)
|
(0.09)
|
Cost of sales ($62
million);
R&D ($2 million);
SG&A ($12 million)
|
Restructuring,
implementation costs and
asset related charges - net 4
|
(9)
|
(7)
|
(0.01)
|
Cost of sales ($7
million);
R&D ($1 million);
SG&A ($1 million)
|
Russia / Ukraine
conflict charges 5
|
68
|
56
|
0.08
|
Restructuring and asset
related charges
- net
|
Litigation related
charges, awards and
adjustments 6
|
381
|
288
|
0.40
|
Sundry income (expense)
- net
|
Indemnification and
other transaction
related costs 7
|
7
|
7
|
0.01
|
Sundry income (expense)
- net
|
Total significant
items
|
$ 371
|
$ 280
|
$ 0.39
|
|
Operating results
(non-GAAP)
|
$ 494
|
$ 333
|
$ 0.46
|
|
- "Income before income taxes."
- "Net income available for Dow Inc. common stockholders." The
income tax effect on significant items was calculated based upon
the enacted tax laws and statutory income tax rates applicable in
the tax jurisdiction(s) of the underlying non-GAAP adjustment.
- "Earnings per common share - diluted," which includes the
impact of participating securities in accordance with the two-class
method.
- Restructuring charges, asset related charges and costs
associated with implementing the Company's 2020 Restructuring
Program.
- Partial reversal of certain asset related reserves recorded in
the first quarter of 2022 related to the conflict between
Russia and Ukraine.
- Related to a gain associated with a legal matter with Nova
Chemicals Corporation and a gain related to an adjustment of the
Dow Silicones breast implant liability.
- Primarily related to charges associated with agreements entered
into with DuPont and Corteva as part of the separation and
distribution which, among other matters, provides for
cross-indemnities and allocations of obligations and liabilities
for periods prior to, at and after the completion of the
separation.
Reconciliation of Free Cash
Flow
|
Three Months Ended
|
In millions
(Unaudited)
|
Mar 31,
2023
|
Mar 31,
2022
|
Cash provided by
operating activities - continuing operations (GAAP)
|
$ 531
|
$ 1,612
|
Capital
expenditures
|
(440)
|
(315)
|
Free Cash Flow
(non-GAAP)
|
$
91
|
$ 1,297
|
Reconciliation of Cash Flow
Conversion
|
Three Months Ended
|
In millions
(Unaudited)
|
Jun 30,
2022
|
Sep 30,
2022
|
Dec 31,
2022
|
Mar 31,
2023
|
Cash provided by
operating activities - continuing operations (GAAP)
|
$
1,856
|
$
1,940
|
$
2,078
|
$
531
|
Operating EBITDA
(non-GAAP)
|
$
3,059
|
$
1,863
|
$
1,255
|
$
1,356
|
Cash Flow Conversion
(Operating EBITDA to cash flow from
operations) (non-GAAP)
|
60.7 %
|
104.1 %
|
165.6 %
|
39.2 %
|
Cash Flow Conversion -
trailing twelve months (non-GAAP)
|
|
85.0 %
|
For further information, please contact:
Investors:
Pankaj Gupta
pgupta@dow.com
+1
989-638-5265
|
Media:
Kyle Bandlow
kbandlow@dow.com
+1
989-638-2417
|
Twitter: https://twitter.com/DowNewsroom
Facebook: https://www.facebook.com/dow/
LinkedIn: http://www.linkedin.com/company/dow-chemical
Instagram: http://instagram.com/dow_official
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SOURCE The Dow Chemical Company