DOW Dow Inc

MIDLAND, Mich., Jan. 30, 2025 /PRNewswire/ -- Dow (NYSE: DOW):

FINANCIAL HIGHLIGHTS

• Net sales were $10.4 billion, down 2% year-over-year, reflecting declines in Packaging & Specialty Plastics. Sequentially, net sales were down 4%, led by seasonal declines in Performance Materials & Coatings.
• Volume increased 1% compared to the year-ago period, with gains in most regions. Sequentially, volume decreased 1%, led by seasonally lower demand in Performance Materials & Coatings, partly offset by improved supply availability in Packaging & Specialty Plastics and Industrial Intermediates & Infrastructure.
• Local price was down 3% year-over-year and sequentially, with declines in all operating segments.
• Equity losses were $51 million, down $44 million compared to the year-ago period, primarily driven by lower integrated margins at our Thai joint ventures. Sequentially, equity earnings were down $53 million, driven by lower earnings at our principal joint ventures.
• GAAP net loss was $35 million, or $0.08 per share, including significant items totaling $0.08, primarily from restructuring and efficiency costs. Operating earnings per share¹ was $0.00. Both earnings per share and operating earnings per share include higher-than-expected non-cash tax adjustments of $0.27, primarily related to Argentina, amplified by inflation.
• Op. EBIT¹ was $454 million, down $105 million year-over-year, primarily driven by lower prices, which were partly offset by higher operating rates and lower spending. Sequentially, Op. EBIT was down $187 million, reflecting lower integrated margins in Packaging & Specialty Plastics and seasonally lower demand in Performance Materials & Coatings.
• Cash provided by operating activities – continuing operations was $811 million, down $817 million year-over-year, primarily driven by a significant prior period working capital release from destocking. Sequentially, cash from operating activities was up $11 million.
• Returns to shareholders totaled $492 million of dividends in the quarter.
• The Company delivered 2024 full year net sales of $43.0 billion compared to $44.6 billion in 2023. GAAP net income was $1.2 billion, up from $660 million in 2023. Operating EBIT was $2.6 billion, down from $2.8 billion last year. Cash provided by operating activities – continuing operations was $2.9 billion compared to $5.2 billion in 2023. The Company delivered returns to shareholders of $2.5 billion, comprised of $2 billion in dividends and $0.5 billion in share repurchases in 2024.

SUMMARY FINANCIAL RESULTS

CEO QUOTE
Jim Fitterling, chair and chief executive officer, commented on the quarter:

"Despite persistently weak macroeconomic conditions, Team Dow delivered our fifth consecutive quarter of year-over-year volume growth, leveraging our cost-advantaged footprint to capture resilient demand for high-value applications. In December, we signed a definitive agreement for the sale of a minority stake in select U.S. Gulf Coast infrastructure assets for expected cash proceeds of up to approximately $3 billion. The partnership represents a new business model designed to drive operational efficiencies and growth with new customers, while providing near-term financial flexibility. We also announced a strategic review of select European assets, and today we are announcing additional actions to deliver $1 billion of targeted cost reductions. These collective actions represent a continuation of Dow's commitment to maintaining our strong financial foundation and supplementing near-term cash flow."

SEGMENT HIGHLIGHTS

Packaging & Specialty Plastics

Packaging & Specialty Plastics segment net sales in the quarter were $5.3 billion, down 6% versus the year-ago period. Local price decreased 5% year-over-year, primarily driven by lower functional polymers and polyethylene prices. Segment volume was down 1% year-over-year, as polyethylene demand growth was more than offset by lower merchant hydrocarbons and non-recurring licensing revenue. On a sequential basis, net sales were down 4%, primarily driven by lower polyethylene prices.

Equity losses were $15 million, a decrease of $55 million compared to the prior year, led by lower integrated margins at the Thai joint ventures. Sequentially, equity earnings were down $31 million, driven by lower earnings at our principal joint ventures.

Op. EBIT was $447 million, a decrease of $217 million compared to the year-ago period, driven by lower integrated margins, licensing revenue, and reduced equity earnings. Sequentially, Op. EBIT decreased by $171 million, due to lower integrated margins and equity earnings, partly offset by the restart of a cracker in Texas and lower planned maintenance activity.

Packaging and Specialty Plastics business reported a net sales decrease versus the year-ago period, driven by lower functional polymers and polyethylene prices, primarily in Asia Pacific, partly offset by higher demand for flexible food and specialty packaging in all regions except Latin America. Sequentially, net sales decreased, as higher demand for industrial and consumer packaging was more than offset by lower prices.

Hydrocarbons & Energy business reported a net sales decline compared to the year-ago period, driven by lower merchant olefins demand and aromatics prices. Sequentially, net sales decreased, as higher third-party olefins demand from improved supply availability after the restart of a cracker in Texas was more than offset by lower olefins and aromatics prices.

Industrial Intermediates & Infrastructure

Industrial Intermediates & Infrastructure segment net sales were $2.9 billion, flat versus the year-ago period. Local price declined 1% year-over-year. Volume increased 1% year-over-year, driven by improved supply availability in Industrial Solutions, partially offset by lower volumes in Polyurethanes & Construction Chemicals. On a sequential basis, net sales were flat as seasonal increases in deicing fluid demand offset local price declines and seasonally lower volumes in building & construction.

Equity losses for the segment were $39 million, an improvement of $18 million versus the year-ago period, driven by improved MEG margins at the Kuwait joint ventures. Equity losses in the prior quarter were $17 million. Sequentially, the earnings decline was primarily driven by price declines in Asia Pacific at Sadara.

Op. EBIT increased $69 million versus the year-ago period, primarily driven by higher operating rates and improved supply availability in our Industrial Solutions business. On a sequential basis, Operating EBIT increased by $137 million, driven by lower planned maintenance activity and higher operating rates that were partially offset by local price declines.

Polyurethanes & Construction Chemicals business reported a decrease in net sales compared to the year-ago period, driven by lower volumes primarily in Asia Pacific and Europe, the Middle East, Africa and India (EMEAI). Sequentially, net sales decreased, driven by seasonally lower demand in building & construction applications.

Industrial Solutions business reported an increase in net sales compared to the year-ago period, as local price declines were more than offset by volume gains in all regions on improved supply availability following the restart and continued ramp-up from an outage at Louisiana Operations. Sequentially, net sales increased, driven by higher ethylene oxide project-related catalyst sales and seasonally higher demand for deicing fluids, partly offset by local price declines.

Performance Materials & Coatings

Performance Materials & Coatings segment net sales in the quarter were $2 billion, up 4% versus the year-ago period. Local price decreased 2% year-over-year, primarily driven by lower prices in Consumer Solutions. Volume was up 5% year-over-year, driven by gains in both businesses. On a sequential basis, net sales were down 11%, primarily from seasonally lower demand.

Op. EBIT increased $52 million versus the year-ago period, driven by volume gains as well as lower fixed costs. Sequentially, Op. EBIT decreased $149 million, driven by seasonally lower demand and operating rates.

Consumer Solutions business reported an increase in net sales versus the year-ago period, driven by volume gains across all downstream end markets, led by infrastructure, home care, and electronics, as well as in upstream siloxanes. Sequentially, net sales decreased primarily driven by lower seasonal demand.

Coatings & Performance Monomers business reported an increase in net sales compared to the year-ago period, driven by higher merchant monomers volumes in the U.S. & Canada, which were partly offset by lower volumes in EMEAI. Sequentially, net sales decreased, primarily from seasonally lower demand for pavement markings and architectural coatings.

OUTLOOK

"We remain confident that Dow will benefit from the completion of our near-term incremental growth projects and an enhanced focus on operational discipline in 2025. In addition, we are optimistic that we will see further demand growth in attractive end markets such as packaging, energy and electronics," said Fitterling. "Our differentiated portfolio and strong balance sheet enable us to deliver on all our capital allocation priorities, including an industry-leading dividend. Until we see more definitive indications of a true recovery taking hold – and in order to deliver improved margins – we are taking actions to reduce our costs by $1 billion as well as our 2025 CapEx plans by $300 - 500 million. We will complete these actions while staying the course on our long-term strategic priorities. Our proactive interventions are necessary for Dow to continue to successfully navigate this economic downcycle."

Conference Call

Dow will host a live webcast of its quarterly 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) is one of the world's leading materials science companies, serving customers in high-growth markets such as packaging, infrastructure, mobility and consumer applications. Our global breadth, asset integration and scale, focused innovation, leading business positions and commitment to sustainability enable us to achieve profitable growth and help deliver a sustainable future. We operate manufacturing sites in 30 countries and employ approximately 36,000 people. Dow delivered sales of approximately $43 billion in 2024. References to Dow or the Company mean Dow Inc. and its subsidiaries. Learn more about us and our ambition to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world by visiting www.dow.com.

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. 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," "could," "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; any sanctions, export restrictions, supply chain disruptions or increased economic uncertainty related to the ongoing conflicts between Russia and Ukraine and in the Middle East; 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, including the completion and success of its integrated ethylene cracker and derivatives facility in Alberta, Canada; 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 public sentiment and political leadership; increased concerns about plastics in the environment and lack of a circular economy for plastics at scale; 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, logistics, and supply disruptions; security threats, such as acts of sabotage, terrorism or war, including the ongoing conflicts between Russia and Ukraine and in the Middle East; weather events and natural disasters; disruptions in Dow's information technology networks and systems, including the impact of cyberattacks; 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; and any global and regional economic impacts of a pandemic or other public health-related risks and events on Dow's business.

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, 2023, 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 The Dow Chemical Company and its consolidated subsidiaries 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 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 Invested 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.

1. "Income (loss) before income taxes."
2. "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.
3. "Earnings (loss) per common share - diluted," which includes the impact of participating securities in accordance with the two-class method.
4. Restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. Also includes certain gains associated with a previously impaired equity investments in 2024 and partial offset for a credit from a prior restructuring program in 2023.
5. 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.
6. Related to a gain associated with a legal matter with Nova Chemicals Corporation.
7. Foreign currency losses and inventory valuation impacts related to the devaluation of the Argentine peso by the Argentina government in December 2023.
8. Non-cash settlement charges related to the purchase of nonparticipating group annuity contracts for certain Company pension plans in the United States and Canada.
9. Related to deferred tax assets in a foreign jurisdiction partially offset by an adjustment to certain foreign tax reserves.

1. "Income before income taxes."
2. "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.
3. "Earnings per common share - diluted," which includes the impact of participating securities in accordance with the two-class method.
4. Restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. Also includes certain gains associated with a previously impaired equity investment and impairment charges related to the write-down of certain manufacturing assets in 2024, and certain gains and losses associated with previously impaired equity investments and a credit from a prior restructuring program in 2023.
5. Includes 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. Also includes a charge related to an arbitration settlement agreement for historical product claims from a divested business in 2024.
6. Reassessment of interest and penalties related to a tax matter in a foreign jurisdiction.
7. Includes a loss associated with legacy agricultural products groundwater contamination matters, partially offset by a gain associated with a legal matter with Nova Chemicals Corporation.
8. Foreign currency losses and inventory valuation impacts related to the devaluation of the Argentine peso by the Argentina government in December 2023.
9. Non-cash settlement charges related to the purchase of nonparticipating group annuity contracts for certain Company pension plans in the United States and Canada.
10. Related to deferred tax assets in a foreign jurisdiction partially offset by a remeasurement of uncertain tax positions, and an adjustment to certain foreign tax reserves.

1. "Income before income taxes." 
2. "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.
3. "Earnings per common share - diluted," which includes the impact of participating securities in accordance with the two-class method.
4. Restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. Also includes impairment charges related to the write-down of certain manufacturing assets.
5. Includes charges related to an arbitration settlement agreement for historical product claims from a divested business.

1. Cash flow from operations to net income is not applicable for the fourth quarter of 2024 due to a net loss for the period.

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SOURCE The Dow Chemical Company