MIDLAND, Mich., Oct. 20, 2022 /PRNewswire/ -- Dow (NYSE: DOW):
FINANCIAL HIGHLIGHTS
- GAAP earnings per share (EPS) was $1.02; Operating EPS1 was $1.11, compared to $2.75 in the year-ago period and $2.31 in the prior quarter, reflecting margin compression due to higher energy costs, primarily in Europe, the Middle East, Africa and India (EMEAI).
- Net sales were $14.1 billion, down 5% versus the year-ago period, as gains in Performance Materials & Coatings were more than offset by declines in Industrial Intermediates & Infrastructure and Packaging & Specialty Plastics. Sequentially, sales were down 10% with declines in all operating segments and regions.
- Local price increased 3% versus the year-ago period, driven by Performance Materials & Coatings and Industrial Intermediates & Infrastructure. Sequentially, local price decreased 6% with declines in all operating segments and regions.
- Currency decreased net sales by 4% year-over-year and 1% versus the prior quarter due to broad-based strength of the U.S. dollar.
- Volume was down 4% versus the year-ago period, as a 12% decline in EMEAI more than offset 2% volume growth each in the U.S. & Canada and Asia Pacific. Sequentially, volume was down 3%, led by an 8% decline in EMEAI.
- Equity losses were $58 million, compared to equity earnings of $249 million in the year-ago period and $195 million in the prior quarter, led by margin compression in polyurethanes at Sadara and MEG at the Kuwait joint ventures.
- GAAP Net Income was $760 million. Operating EBIT1 was $1.2 billion, down from $2.9 billion in the year-ago period, as gains in Performance Materials & Coatings were more than offset by higher raw material and energy costs as well as lower equity earnings. Operating EBIT decreased from $2.4 billion in the prior quarter due to margin compression across all operating segments.
- Cash provided by operating activities – continuing operations was $1.9 billion, down $779 million year-over-year and up $84 million compared to the prior quarter. Free cash flow1 was $1.5 billion.
- Returns to shareholders totaled $1.3 billion, comprised of $800 million in share repurchases and $493 million in dividends in the quarter.
SUMMARY FINANCIAL RESULTS
|
Three Months Ended September 30
|
Three Months Ended June 30
|
|
In millions, except per share amounts
|
3Q22
|
3Q21
|
vs. SQLY
[B / (W)]
|
2Q22
|
vs. PQ
[B / (W)]
|
|
Net Sales
|
$14,115
|
$14,837
|
$(722)
|
$15,664
|
$(1,549)
|
|
GAAP Income, Net of Tax
|
$760
|
$1,706
|
$(946)
|
$1,681
|
$(921)
|
|
Operating EBIT¹
|
$1,195
|
$2,886
|
$(1,691)
|
$2,375
|
$(1,180)
|
|
Operating EBIT Margin
¹
|
8.5 %
|
19.5 %
|
(1,100) bps
|
15.2 %
|
(670) bps
|
|
Operating EBITDA¹
|
$1,863
|
$3,611
|
$(1,748)
|
$3,059
|
$(1,196)
|
|
GAAP Earnings Per Share
|
$1.02
|
$2.23
|
$(1.21)
|
$2.26
|
$(1.24)
|
|
Operating Earnings Per Share¹
|
$1.11
|
$2.75
|
$(1.64)
|
$2.31
|
$(1.20)
|
|
Cash Provided by Operating
Activities – Cont. Ops
|
$1,940
|
$2,719
|
$(779)
|
$1,856
|
$84
|
- Op. Earnings Per Share, Op. EBIT, Op. EBIT Margin, Op. EBITDA, and Free Cash Flow are non-GAAP measures. See page 6 for further discussion.
CEO QUOTE
Jim Fitterling, chairman and chief executive officer, commented on the quarter:
"In the third quarter, Team Dow managed significant macroeconomic headwinds as we swiftly initiated actions and aligned production with supply chain and logistics constraints, prioritized resources toward higher-value products, and reduced operational costs across the enterprise. As a result, we maintained our focus on cash flow generation and continued to execute on our capital allocation strategy, returning $1.3 billion to shareholders.
"Underlying demand remains resilient in the U.S., while high energy and feedstock costs are driving record inflation and impacting demand in the Eurozone, and ongoing lockdowns in China continue to pressure both consumer spending and infrastructure investments. Moving forward, our global scale, geographic diversity, and advantaged feedstock and derivative flexibility will continue to be the source of our distinct advantages. Our track record of employing a disciplined and balanced approach to capital allocation, focus on cash flow generation, and our strengthened balance sheet provide a solid foundation as we continue managing through these dynamic global conditions."
SEGMENT HIGHLIGHTS
Packaging & Specialty Plastics
|
Three Months Ended September 30
|
Three Months Ended June 30
|
|
In millions, except margin
percentages
|
3Q22
|
3Q21
|
vs. SQLY
[B / (W)]
|
2Q22
|
vs. PQ
[B / (W)]
|
|
Net Sales
|
$7,327
|
$7,736
|
$(409)
|
$8,233
|
$(906)
|
|
Operating EBIT
|
$785
|
$1,954
|
$(1,169)
|
$1,436
|
$(651)
|
|
Operating EBIT Margin
|
10.7 %
|
25.3 %
|
(1,460) bps
|
17.4 %
|
(670) bps
|
|
Equity Earnings
|
$55
|
$124
|
$(69)
|
$138
|
$(83)
|
Packaging & Specialty Plastics segment net sales in the quarter were $7.3 billion, down 5% versus the year-ago period. Local price decreased 2% year-over-year, as gains in functional polymers were more than offset by lower polyethylene prices. Volume was flat year-over-year and currency decreased net sales by 3%. On a sequential basis, net sales decreased by 11%, primarily driven by lower polyethylene prices and reduced volumes due to continued global logistics constraints and dynamic market conditions in EMEAI.
Equity earnings were $55 million, down $69 million compared to the year-ago period and down $83 million versus the prior quarter, primarily due to lower integrated polyethylene margins at the Company's principal joint ventures.
Operating EBIT was $785 million, compared to $2 billion in the year-ago period, down primarily due to higher raw material and energy costs. Sequentially, Op. EBIT was down $651 million and Op. EBIT margins decreased by 670 basis points primarily due to lower local prices.
Packaging and Specialty Plastics business reported a net sales decrease versus the year-ago period as price gains and resilient demand in functional polymers were more than offset by lower polyethylene prices and reduced demand for industrial and consumer packaging in EMEAI. Sequentially, net sales decreased on lower polyethylene prices and reduced volumes due to continued global logistics constraints and dynamic market conditions in EMEAI.
Hydrocarbons & Energy business reported a net sales increase compared to the year-ago period, driven primarily by higher electricity sales and partly offset by currency impacts. Sequentially, net sales decreased due to lower olefin prices in EMEAI and the U.S. & Canada.
Industrial Intermediates & Infrastructure
|
Three Months Ended September 30
|
Three Months Ended June 30
|
|
In millions, except margin
percentages
|
3Q22
|
3Q21
|
vs. SQLY
[B / (W)]
|
2Q22
|
vs. PQ
[B / (W)]
|
|
Net Sales
|
$4,059
|
$4,481
|
$(422)
|
$4,370
|
$(311)
|
|
Operating EBIT
|
$167
|
$713
|
$(546)
|
$426
|
$(259)
|
|
Operating EBIT Margin
|
4.1 %
|
15.9 %
|
(1,180) bps
|
9.7 %
|
(560) bps
|
|
Equity Earnings (Losses)
|
$(114)
|
$122
|
$(236)
|
$57
|
$(171)
|
Industrial Intermediates & Infrastructure segment net sales were $4.1 billion, down 9% versus the year-ago period. Local price improved 5% year-over-year with gains in both businesses. Currency decreased net sales by 5%. Volume was down 9% year-over-year, as declines in Polyurethanes & Construction Chemicals were partly offset by gains in Industrial Solutions due to demand strength in pharmaceutical, agricultural, and energy applications. On a sequential basis, the segment recorded a net sales decline of 7% on lower local price and currency with stable volume.
Equity losses for the segment were $114 million, a decrease of $236 million compared to the year-ago period. Competitive pricing pressures in propylene oxide derivatives and MEG due to supply additions in China, as well as lower demand in EMEAI were the main impacts. On a sequential basis, equity earnings decreased by $171 million primarily due to lower price at Sadara and the Kuwait joint ventures.
Operating EBIT was $167 million, compared to $713 million in the year-ago period and $426 million in the prior quarter, as lower EMEAI demand and increased energy and raw material costs were partly offset by higher prices. On a sequential basis, operating EBIT margins declined 560 basis points on lower price and higher energy costs.
Polyurethanes & Construction Chemicals business reported a net sales decrease compared to the year-ago period, as local price gains were more than offset by lower volumes due to inflationary pressures on demand in EMEAI and currency impacts. Sequentially, net sales declined as improved demand in mobility end-markets was more than offset by lower price and inflationary impacts on demand for consumer durables, industrial, and building & construction applications.
Industrial Solutions business reported a net sales increase compared to the year-ago period, driven by local price gains and strong demand for pharmaceutical, agricultural, and energy applications. Sequentially, net sales decreased as strong demand in energy, pharmaceutical, and mobility end-markets and increased catalyst sales were more than offset by price declines and currency impacts.
Performance Materials & Coatings
|
Three Months Ended September 30
|
Three Months Ended June 30
|
|
In millions, except margin
percentages
|
3Q22
|
3Q21
|
vs. SQLY
[B / (W)]
|
2Q22
|
vs. PQ
[B / (W)]
|
|
Net Sales
|
$2,654
|
$2,526
|
$128
|
$3,003
|
$(349)
|
|
Operating EBIT
|
$302
|
$284
|
$18
|
$561
|
$(259)
|
|
Operating EBIT Margin
|
11.4 %
|
11.2 %
|
20 bps
|
18.7 %
|
(730) bps
|
|
Equity Earnings
|
$1
|
$3
|
$(2)
|
$2
|
$(1)
|
Performance Materials & Coatings segment net sales in the quarter were $2.7 billion, up 5% versus the year-ago period. Local price increased 15% year-over-year, with gains in both businesses and all regions. Currency decreased net sales by 5%. Volume declined 5% year-over-year, as resilient demand in mobility and home care end-markets was more than offset by declines in building & construction. On a sequential basis, net sales were down 12% driven primarily by lower demand and decreased local price for siloxanes due to supply additions in China along with planned maintenance turnaround activity.
Operating EBIT was $302 million, compared to $284 million in the year-ago period, as Op. EBIT margins expanded by 20 basis points due to price gains for both silicones and coatings applications. Sequentially, Op. EBIT declined $259 million driven by lower prices for siloxanes and increased raw material and energy costs.
Consumer Solutions business reported higher net sales versus the year-ago period, with local price gains across all regions and end-markets. Volume declined year-over-year as lower siloxane demand and planned maintenance turnaround activity was partly offset by resilient demand for performance silicones applications. Sequentially, net sales declined due to lower siloxane demand and pricing as well as planned maintenance turnaround activity, which more than offset demand strength for performance silicones in electronics, home care and mobility end-markets.
Coatings & Performance Monomers business reported lower net sales compared to the year-ago period, as local price gains were more than offset by lower demand primarily in EMEAI and Asia Pacific. Sequentially, net sales declined as increased demand for monomers was more than offset by lower demand for coatings applications in the U.S. & Canada and EMEAI.
OUTLOOK
"In the near-term, we expect the macro environment to remain dynamic. As a result, we have outlined a playbook of actions that have the potential to deliver more than $1 billion in cost savings in 2023 while we continue to leverage our scale, geographic diversity and feedstock and derivative flexibility," said Fitterling. "At the same time, we remain focused on advancing our Decarbonize and Grow strategy with higher-return investments that will extend our competitive advantages and industry leadership positions. Our strong financial position and balance sheet as well as our continued focus on cash flow generation give us ample flexibility to execute on our capital allocation priorities, including attractive shareholder remuneration, as we maximize value creation over the longer-term."
Conference Call
Dow will host a live webcast of its third 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 (ESG) leadership to achieve profitable growth and 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 104 manufacturing sites in 31 countries and employs approximately 35,700 people. Dow delivered sales of approximately $55 billion in 2021. 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 report 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," "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 sanction, 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, 2021 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 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.
Non-GAAP Financial Measures
This earnings release includes information that does not conform to U.S. 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 U.S. GAAP disclosures and should not be viewed as alternatives to U.S. 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 U.S. GAAP are provided in the Selected Financial Information and Non-GAAP Measures section starting on page 11. Dow does not provide forward-looking U.S. GAAP financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most comparable U.S. 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 U.S. GAAP results for the guidance period.
Operating Earnings Per Share is defined as "Earnings per common share - diluted" excluding the after-tax impact of significant items.
Operating EBIT is defined as earnings (i.e., "Income 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 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
|
Nine Months Ended
|
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Net sales
|
$ 14,115
|
$ 14,837
|
$ 45,043
|
$ 40,604
|
|
Cost of sales
|
12,381
|
11,611
|
37,682
|
32,413
|
|
Research and development expenses
|
191
|
210
|
626
|
632
|
|
Selling, general and administrative expenses
|
356
|
403
|
1,289
|
1,209
|
|
Amortization of intangibles
|
83
|
100
|
256
|
301
|
|
Restructuring and asset related charges - net
|
—
|
—
|
186
|
22
|
|
Equity in earnings (losses) of nonconsolidated affiliates
|
(58)
|
249
|
311
|
751
|
|
Sundry income (expense) - net
|
69
|
(350)
|
292
|
(225)
|
|
Interest income
|
41
|
14
|
105
|
35
|
|
Interest expense and amortization of debt discount
|
155
|
178
|
487
|
561
|
|
Income before income taxes
|
1,001
|
2,248
|
5,225
|
6,027
|
|
Provision for income taxes
|
241
|
542
|
1,232
|
1,383
|
|
Net income
|
760
|
1,706
|
3,993
|
4,644
|
|
Net income attributable to noncontrolling interests
|
21
|
23
|
24
|
69
|
|
Net income available for Dow Inc. common stockholders
|
$ 739
|
$ 1,683
|
$ 3,969
|
$ 4,575
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
Earnings per common share - basic
|
$ 1.03
|
$ 2.25
|
$ 5.45
|
$ 6.11
|
|
Earnings per common share - diluted
|
$ 1.02
|
$ 2.23
|
$ 5.41
|
$ 6.06
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
714.3
|
744.5
|
724.9
|
745.4
|
|
Weighted-average common shares outstanding - diluted
|
718.1
|
750.0
|
729.8
|
750.9
|
|
Dow Inc. and Subsidiaries
Consolidated Balance Sheets
|
|
|
In millions, except share amounts (Unaudited)
|
Sep 30,
2022
|
Dec 31,
2021
|
|
Assets
|
|
|
|
Current Assets
|
|
|
|
Cash and cash equivalents
|
$ 2,216
|
$ 2,988
|
|
Accounts and notes receivable:
|
|
|
|
Trade (net of allowance for doubtful receivables - 2022: $212; 2021: $54)
|
6,407
|
6,841
|
|
Other
|
2,123
|
2,713
|
|
Inventories
|
7,571
|
7,372
|
|
Other current assets
|
1,460
|
934
|
|
Total current assets
|
19,777
|
20,848
|
|
Investments
|
|
|
|
Investment in nonconsolidated affiliates
|
1,785
|
2,045
|
|
Other investments (investments carried at fair value - 2022: $1,685; 2021: $2,079)
|
2,732
|
3,193
|
|
Noncurrent receivables
|
499
|
478
|
|
Total investments
|
5,016
|
5,716
|
|
Property
|
|
|
|
Property
|
56,931
|
57,604
|
|
Less: Accumulated depreciation
|
36,899
|
37,049
|
|
Net property
|
20,032
|
20,555
|
|
Other Assets
|
|
|
|
Goodwill
|
8,524
|
8,764
|
|
Other intangible assets (net of accumulated amortization - 2022: $4,888; 2021: $4,725)
|
2,483
|
2,881
|
|
Operating lease right-of-use assets
|
1,231
|
1,412
|
|
Deferred income tax assets
|
1,136
|
1,358
|
|
Deferred charges and other assets
|
1,358
|
1,456
|
|
Total other assets
|
14,732
|
15,871
|
|
Total Assets
|
$ 59,557
|
$ 62,990
|
|
Liabilities and Equity
|
|
|
|
Current Liabilities
|
|
|
|
Notes payable
|
$ 185
|
$ 161
|
|
Long-term debt due within one year
|
364
|
231
|
|
Accounts payable:
|
|
|
|
Trade
|
5,008
|
5,577
|
|
Other
|
2,599
|
2,839
|
|
Operating lease liabilities - current
|
277
|
314
|
|
Income taxes payable
|
579
|
623
|
|
Accrued and other current liabilities
|
3,303
|
3,481
|
|
Total current liabilities
|
12,315
|
13,226
|
|
Long-Term Debt
|
12,921
|
14,280
|
|
Other Noncurrent Liabilities
|
|
|
|
Deferred income tax liabilities
|
716
|
506
|
|
Pension and other postretirement benefits - noncurrent
|
6,541
|
7,557
|
|
Asbestos-related liabilities - noncurrent
|
868
|
931
|
|
Operating lease liabilities - noncurrent
|
1,012
|
1,149
|
|
Other noncurrent obligations
|
6,555
|
6,602
|
|
Total other noncurrent liabilities
|
15,692
|
16,745
|
|
Stockholders' Equity
|
|
|
|
Common stock (authorized 5,000,000,000 shares of $0.01 par value each;
issued 2022: 768,611,564 shares; 2021: 764,226,882 shares)
|
8
|
8
|
|
Additional paid-in capital
|
8,396
|
8,151
|
|
Retained earnings
|
23,068
|
20,623
|
|
Accumulated other comprehensive loss
|
(9,582)
|
(8,977)
|
|
Unearned ESOP shares
|
—
|
(15)
|
|
Treasury stock at cost (2022: 64,852,295 shares; 2021: 29,011,573 shares)
|
(3,773)
|
(1,625)
|
|
Dow Inc.'s stockholders' equity
|
18,117
|
18,165
|
|
Noncontrolling interests
|
512
|
574
|
|
Total equity
|
18,629
|
18,739
|
|
Total Liabilities and Equity
|
$ 59,557
|
$ 62,990
|
|
Dow Inc. and Subsidiaries
Consolidated Statements of Cash Flows
|
|
|
In millions (Unaudited)
|
Nine Months Ended
|
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Operating Activities
|
|
|
|
Net income
|
$ 3,993
|
$ 4,644
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
2,104
|
2,187
|
|
Provision for deferred income tax
|
124
|
488
|
|
Earnings of nonconsolidated affiliates less than (in excess of) dividends received
|
517
|
(519)
|
|
Net periodic pension benefit cost
|
19
|
34
|
|
Pension contributions
|
(156)
|
(1,166)
|
|
Net gain on sales of assets, businesses and investments
|
(11)
|
(67)
|
|
Restructuring and asset related charges - net
|
186
|
22
|
|
Other net loss
|
159
|
874
|
|
Changes in assets and liabilities, net of effects of acquired and divested companies:
|
|
|
|
Accounts and notes receivable
|
323
|
(2,222)
|
|
Inventories
|
(254)
|
(1,502)
|
|
Accounts payable
|
(860)
|
1,487
|
|
Other assets and liabilities, net
|
(736)
|
252
|
|
Cash provided by operating activities - continuing operations
|
5,408
|
4,512
|
|
Cash used for operating activities - discontinued operations
|
(11)
|
(78)
|
|
Cash provided by operating activities
|
5,397
|
4,434
|
|
Investing Activities
|
|
|
|
Capital expenditures
|
(1,224)
|
(1,035)
|
|
Investment in gas field developments
|
(134)
|
(44)
|
|
Purchases of previously leased assets
|
(5)
|
(5)
|
|
Proceeds from sales of property and businesses, net of cash divested
|
16
|
15
|
|
Acquisitions of property and businesses, net of cash acquired
|
(54)
|
(107)
|
|
Investments in and loans to nonconsolidated affiliates
|
(69)
|
—
|
|
Distributions and loan repayments from nonconsolidated affiliates
|
10
|
11
|
|
Proceeds from sales of ownership interests in nonconsolidated affiliates
|
11
|
—
|
|
Purchases of investments
|
(445)
|
(1,004)
|
|
Proceeds from sales and maturities of investments
|
596
|
644
|
|
Other investing activities, net
|
(41)
|
(10)
|
|
Cash used for investing activities
|
(1,339)
|
(1,535)
|
|
Financing Activities
|
|
|
|
Changes in short-term notes payable
|
72
|
(44)
|
|
Proceeds from issuance of short-term debt greater than three months
|
—
|
144
|
|
Payments on short-term debt greater than three months
|
(14)
|
—
|
|
Proceeds from issuance of long-term debt
|
82
|
95
|
|
Payments on long-term debt
|
(957)
|
(2,638)
|
|
Purchases of treasury stock
|
(2,200)
|
(600)
|
|
Proceeds from issuance of stock
|
99
|
212
|
|
Transaction financing, debt issuance and other costs
|
(8)
|
(536)
|
|
Employee taxes paid for share-based payment arrangements
|
(34)
|
(11)
|
|
Distributions to noncontrolling interests
|
(42)
|
(35)
|
|
Dividends paid to stockholders
|
(1,511)
|
(1,561)
|
|
Cash used for financing activities
|
(4,513)
|
(4,974)
|
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(261)
|
(57)
|
|
Summary
|
|
|
|
Decrease in cash, cash equivalents and restricted cash
|
(716)
|
(2,132)
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
3,033
|
5,108
|
|
Cash, cash equivalents and restricted cash at end of period
|
$ 2,317
|
$ 2,976
|
|
Less: Restricted cash and cash equivalents, included in "Other current assets"
|
101
|
65
|
|
Cash and cash equivalents at end of period
|
$ 2,216
|
$ 2,911
|
|
Dow Inc. and Subsidiaries
Net Sales by Segment and Geographic Region
|
|
|
Net Sales by Segment
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Packaging & Specialty Plastics
|
$ 7,327
|
$ 7,736
|
$ 23,187
|
$ 20,939
|
|
Industrial Intermediates & Infrastructure
|
4,059
|
4,481
|
12,953
|
12,303
|
|
Performance Materials & Coatings
|
2,654
|
2,526
|
8,706
|
7,114
|
|
Corporate
|
75
|
94
|
197
|
248
|
|
Total
|
$ 14,115
|
$ 14,837
|
$ 45,043
|
$ 40,604
|
|
U.S. & Canada
|
$ 5,334
|
$ 5,476
|
$ 16,578
|
$ 14,431
|
|
EMEAI 1
|
4,634
|
5,229
|
15,823
|
14,660
|
|
Asia Pacific
|
2,571
|
2,579
|
7,997
|
7,423
|
|
Latin America
|
1,576
|
1,553
|
4,645
|
4,090
|
|
Total
|
$ 14,115
|
$ 14,837
|
$ 45,043
|
$ 40,604
|
|
Net Sales Variance by
Segment and
Geographic Region
|
Three Months Ended
Sep 30, 2022
|
Nine Months Ended
Sep 30, 2022
|
|
|
Local
Price &
Product
Mix
|
Currency
|
Volume
|
Total
|
Local
Price &
Product
Mix
|
Currency
|
Volume
|
Total
|
|
|
Percent change from prior year
|
|
|
Packaging & Specialty
Plastics
|
(2) %
|
(3) %
|
— %
|
(5) %
|
12 %
|
(3) %
|
2 %
|
11 %
|
|
|
Industrial Intermediates
& Infrastructure
|
5
|
(5)
|
(9)
|
(9)
|
15
|
(5)
|
(5)
|
5
|
|
|
Performance Materials &
Coatings
|
15
|
(5)
|
(5)
|
5
|
29
|
(4)
|
(3)
|
22
|
|
|
Total
|
3 %
|
(4) %
|
(4) %
|
(5) %
|
16 %
|
(4) %
|
(1) %
|
11 %
|
|
|
Total, excluding the
Hydrocarbons &
Energy business
|
4 %
|
(4) %
|
(8) %
|
(8) %
|
15 %
|
(4) %
|
(3) %
|
8 %
|
|
|
U.S. & Canada
|
(5) %
|
— %
|
2 %
|
(3) %
|
12 %
|
— %
|
3 %
|
15 %
|
|
|
EMEAI 1
|
11
|
(10)
|
(12)
|
(11)
|
24
|
(9)
|
(7)
|
8
|
|
|
Asia Pacific
|
2
|
(4)
|
2
|
—
|
12
|
(3)
|
(1)
|
8
|
|
|
Latin America
|
1
|
—
|
—
|
1
|
11
|
—
|
3
|
14
|
|
|
Total
|
3 %
|
(4) %
|
(4) %
|
(5) %
|
16 %
|
(4) %
|
(1) %
|
11 %
|
|
|
Net Sales Variance by Segment and Geographic Region
|
Three Months Ended
Sep 30, 2022
|
|
|
Local
Price &
Product
Mix
|
Currency
|
Volume
|
Total
|
|
|
Percent change from prior quarter
|
|
|
Packaging & Specialty Plastics
|
(7) %
|
(1) %
|
(3) %
|
(11) %
|
|
|
Industrial Intermediates & Infrastructure
|
(5)
|
(2)
|
—
|
(7)
|
|
|
Performance Materials & Coatings
|
(3)
|
(2)
|
(7)
|
(12)
|
|
|
Total
|
(6) %
|
(1) %
|
(3) %
|
(10) %
|
|
|
Total, excluding the Hydrocarbons & Energy business
|
(5) %
|
(2) %
|
(3) %
|
(10) %
|
|
|
U.S. & Canada
|
(4) %
|
— %
|
(3) %
|
(7) %
|
|
|
EMEAI 1
|
(7)
|
(3)
|
(8)
|
(18)
|
|
|
Asia Pacific
|
(7)
|
(2)
|
5
|
(4)
|
|
|
Latin America
|
(4)
|
—
|
2
|
(2)
|
|
|
Total
|
(6) %
|
(1) %
|
(3) %
|
(10) %
|
|
- Europe, Middle East, Africa and India.
|
Dow Inc. and Subsidiaries
Selected Financial Information and Non-GAAP Measures
|
|
|
Operating EBIT by Segment
|
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Packaging & Specialty Plastics
|
|
$ 785
|
$ 1,954
|
$ 3,455
|
$ 5,196
|
|
Industrial Intermediates & Infrastructure
|
|
167
|
713
|
1,254
|
1,687
|
|
Performance Materials & Coatings
|
|
302
|
284
|
1,458
|
571
|
|
Corporate
|
|
(59)
|
(65)
|
(178)
|
(186)
|
|
Total
|
|
$ 1,195
|
$ 2,886
|
$ 5,989
|
$ 7,268
|
|
|
|
|
|
|
|
Depreciation and Amortization by Segment
|
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Packaging & Specialty Plastics
|
|
$ 337
|
$ 354
|
$ 1,076
|
$ 1,042
|
|
Industrial Intermediates & Infrastructure
|
|
132
|
157
|
418
|
481
|
|
Performance Materials & Coatings
|
|
195
|
207
|
592
|
642
|
|
Corporate
|
|
4
|
7
|
18
|
22
|
|
Total
|
|
$ 668
|
$ 725
|
$ 2,104
|
$ 2,187
|
|
|
|
|
|
|
|
Operating EBITDA by Segment
|
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Packaging & Specialty Plastics
|
|
$ 1,122
|
$ 2,308
|
$ 4,531
|
$ 6,238
|
|
Industrial Intermediates & Infrastructure
|
|
299
|
870
|
1,672
|
2,168
|
|
Performance Materials & Coatings
|
|
497
|
491
|
2,050
|
1,213
|
|
Corporate
|
|
(55)
|
(58)
|
(160)
|
(164)
|
|
Total
|
|
$ 1,863
|
$ 3,611
|
$ 8,093
|
$ 9,455
|
|
|
|
|
|
|
|
Equity in Earnings (Losses) of Nonconsolidated
Affiliates by Segment
|
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Packaging & Specialty Plastics
|
|
$ 55
|
$ 124
|
$ 303
|
$ 360
|
|
Industrial Intermediates & Infrastructure
|
|
(114)
|
122
|
5
|
381
|
|
Performance Materials & Coatings
|
|
1
|
3
|
6
|
5
|
|
Corporate
|
|
—
|
—
|
(3)
|
5
|
|
Total
|
|
$ (58)
|
$ 249
|
$ 311
|
$ 751
|
|
|
|
|
|
|
|
Reconciliation of "Net income" to "Operating EBIT"
|
Three Months Ended
|
Nine Months Ended
|
|
In millions (Unaudited)
|
Jun 30,
2022
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Net income
|
$ 1,681
|
$ 760
|
$ 1,706
|
$ 3,993
|
$ 4,644
|
|
+ Provision for income taxes
|
488
|
241
|
542
|
1,232
|
1,383
|
|
Income before income taxes
|
$ 2,169
|
$ 1,001
|
$ 2,248
|
$ 5,225
|
$ 6,027
|
|
- Interest income
|
36
|
41
|
14
|
105
|
35
|
|
+ Interest expense and amortization of debt discount
|
165
|
155
|
178
|
487
|
561
|
|
- Significant items
|
(77)
|
(80)
|
(474)
|
(382)
|
(715)
|
|
Operating EBIT (non-GAAP)
|
$ 2,375
|
$ 1,195
|
$ 2,886
|
$ 5,989
|
$ 7,268
|
|
Dow Inc. and Subsidiaries
Selected Financial Information and Non-GAAP Measures
|
|
|
Significant Items Impacting Results for the Three Months Ended Sep 30, 2022
|
|
In millions, except per share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
|
Reported results
|
$ 1,001
|
$ 739
|
$ 1.02
|
|
|
Less: Significant items
|
|
|
|
|
|
Digitalization program costs 4
|
(62)
|
(47)
|
(0.07)
|
Cost of sales ($55 million);
R&D ($2 million); SG&A ($5 million)
|
|
Restructuring, implementation costs and
asset related charges - net 5
|
(11)
|
(9)
|
(0.01)
|
Cost of sales ($8 million);
R&D ($1 million); SG&A ($2 million)
|
|
Indemnification and other transaction
related costs 6
|
(7)
|
(7)
|
(0.01)
|
Sundry income (expense) - net
|
|
Total significant items
|
$ (80)
|
$ (63)
|
$ (0.09)
|
|
|
Operating results (non-GAAP)
|
$ 1,081
|
$ 802
|
$ 1.11
|
|
|
Significant Items Impacting Results for the Three Months Ended Sep 30, 2021
|
|
In millions, except per share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
|
Reported results
|
$ 2,248
|
$ 1,683
|
$ 2.23
|
|
|
Less: Significant items
|
|
|
|
|
|
Digitalization program costs 4
|
(40)
|
(32)
|
(0.04)
|
Cost of sales ($36 million);
R&D ($1 million); SG&A ($3 million)
|
|
Restructuring, implementation costs and
asset related charges - net 5
|
(16)
|
(13)
|
(0.02)
|
Cost of sales ($13 million);
R&D ($2 million); SG&A ($1 million)
|
|
Loss on early extinguishment of debt
|
(472)
|
(387)
|
(0.52)
|
Sundry income (expense) - net
|
|
Litigation related charges, awards and
adjustments
|
54
|
42
|
0.06
|
Sundry income (expense) - net
|
|
Total significant items
|
$ (474)
|
$ (390)
|
$ (0.52)
|
|
|
Operating results (non-GAAP)
|
$ 2,722
|
$ 2,073
|
$ 2.75
|
|
- "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.
- Costs associated with implementing the Company's Digital Acceleration program.
- Restructuring charges, asset related charges and costs associated with implementing the Company's 2020 Restructuring Program.
- 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.
|
Dow Inc. and Subsidiaries
Selected Financial Information and Non-GAAP Measures
|
|
|
Significant Items Impacting Results for the Nine Months Ended Sep 30, 2022
|
|
In millions, except per share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
|
Reported results
|
$ 5,225
|
$ 3,969
|
$ 5.41
|
|
|
Less: Significant items
|
|
|
|
|
|
Digitalization program costs 4
|
(154)
|
(119)
|
(0.16)
|
Cost of sales ($137 million);
R&D ($4 million); SG&A ($13 million)
|
|
Restructuring, implementation costs and
asset related charges - net 5
|
(31)
|
(25)
|
(0.03)
|
Cost of sales ($23 million);
R&D ($5 million); SG&A ($3 million)
|
|
Russia / Ukraine conflict charges 6
|
(186)
|
(142)
|
(0.19)
|
Restructuring and asset related charges
- net
|
|
Loss on early extinguishment of debt
|
(8)
|
(6)
|
(0.01)
|
Sundry income (expense) - net
|
|
Indemnification and other transaction
related costs 7
|
(3)
|
(3)
|
—
|
Sundry income (expense) - net
|
|
Income tax related items
|
—
|
25
|
0.03
|
Provision for income taxes on
continuing operations
|
|
Total significant items
|
$ (382)
|
$ (270)
|
$ (0.36)
|
|
|
Operating results (non-GAAP)
|
$ 5,607
|
$ 4,239
|
$ 5.77
|
|
|
Significant Items Impacting Results for the Nine Months Ended Sep 30, 2021
|
|
In millions, except per share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
|
Reported results
|
$ 6,027
|
$ 4,575
|
$ 6.06
|
|
|
Less: Significant items
|
|
|
|
|
|
Digitalization program costs 4
|
(121)
|
(94)
|
(0.12)
|
Cost of sales ($106 million);
R&D ($2 million); SG&A ($13 million)
|
|
Restructuring, implementation costs and
asset related charges - net 5
|
(69)
|
(55)
|
(0.07)
|
Cost of sales ($39 million);
R&D ($5 million); SG&A ($3 million);
Restructuring and asset related
charges - net ($22 million)
|
|
Loss on early extinguishment of debt
|
(574)
|
(471)
|
(0.63)
|
Sundry income (expense) - net
|
|
Litigation related charges, awards and
adjustments
|
54
|
42
|
0.06
|
Sundry income (expense) - net
|
|
Indemnification and other transaction
related costs 7
|
(5)
|
(5)
|
(0.01)
|
Sundry income (expense) - net
|
|
Total significant items
|
$ (715)
|
$ (583)
|
$ (0.77)
|
|
|
Operating results (non-GAAP)
|
$ 6,742
|
$ 5,158
|
$ 6.83
|
|
- "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.
- Costs associated with implementing the Company's Digital Acceleration program.
- Restructuring charges, asset related charges and costs associated with implementing the Company's 2020 Restructuring Program.
- Asset related charges including inventory write-downs, bad debt reserves and impairments of other assets related to the conflict between Russia and Ukraine.
- 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.
|
Dow Inc. and Subsidiaries
Selected Financial Information and Non-GAAP Measures
|
|
|
Significant Items Impacting Results for the Three Months Ended Jun 30, 2022
|
|
In millions, except per share amounts (Unaudited)
|
Pretax 1
|
Net
Income 2
|
EPS 3
|
Income Statement Classification
|
|
Reported results
|
$ 2,169
|
$ 1,661
|
$ 2.26
|
|
|
Less: Significant items
|
|
|
|
|
|
Digitalization program costs 4
|
(51)
|
(40)
|
(0.05)
|
Cost of sales ($44 million);
R&D ($1 million); SG&A ($6 million)
|
|
Restructuring, implementation costs and
asset related charges - net 5
|
(10)
|
(8)
|
(0.01)
|
Cost of sales ($8 million);
R&D ($2 million)
|
|
Loss on early extinguishment of debt
|
(8)
|
(6)
|
(0.01)
|
Sundry income (expense) - net
|
|
Indemnification and other transaction
related costs 6
|
(8)
|
(8)
|
(0.01)
|
Sundry income (expense) - net
|
|
Income tax related items
|
—
|
25
|
0.03
|
Provision for income taxes on
continuing operations
|
|
Total significant items
|
$ (77)
|
$ (37)
|
$ (0.05)
|
|
|
Operating results (non-GAAP)
|
$ 2,246
|
$ 1,698
|
$ 2.31
|
|
- "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.
- Costs associated with implementing the Company's Digital Acceleration program.
- Restructuring charges, asset related charges and costs associated with implementing the Company's 2020 Restructuring Program.
- 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
|
Nine Months Ended
|
|
In millions (Unaudited)
|
Sep 30,
2022
|
Sep 30,
2021
|
Sep 30,
2022
|
Sep 30,
2021
|
|
Cash provided by operating activities - continuing operations (GAAP)
|
$ 1,940
|
$ 2,719
|
$ 5,408
|
$ 4,512
|
|
Capital expenditures
|
(452)
|
(413)
|
(1,224)
|
(1,035)
|
|
Free Cash Flow (non-GAAP) 1
|
$ 1,488
|
$ 2,306
|
$ 4,184
|
$ 3,477
|
- Free cash flow in the first six months of 2021 reflects a $1 billion elective pension contribution.
|
Reconciliation of Cash Flow Conversion
|
Three Months Ended
|
|
In millions (Unaudited)
|
Dec 31,
2021
|
Mar 31,
2022
|
Jun 30,
2022
|
Sep 30,
2022
|
|
Cash provided by operating activities - continuing operations (GAAP)
|
$ 2,557
|
$ 1,612
|
$ 1,856
|
$ 1,940
|
|
Operating EBITDA (non-GAAP)
|
$ 2,920
|
$ 3,171
|
$ 3,059
|
$ 1,863
|
|
Cash Flow Conversion (Operating EBITDA to cash flow from
operations) (non-GAAP)
|
87.6 %
|
50.8 %
|
60.7 %
|
104.1 %
|
|
Cash Flow Conversion - trailing twelve months (non-GAAP)
|
|
72.3 %
|
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SOURCE The Dow Chemical Company