Slide 1: 3Q 2022 Results
3Q 2022 RESULTS October 20, 2022
Slide 2: Agenda
AGENDA • Quarterly Results 3Q 2022 • Operating Segment Performance R E S U LT S • Outlook • Strategic Priorities for Long-Term Value Creation 2
Slide 3: 3Q 2022 Performance Overview
3Q 2022 PERFORMANCE OVERVIEW Net sales were $14.1B Market conditions in EMEAI led sales and volume declines YoY and QoQ $14.1B Strength in higher-margin functional polymers and performance silicones NET SALES Local price increased 3% YoY and declined 6% QoQ U.S. dollar strength impacted sa
Slide 4: 3Q 2022 Operating Segment Performance
3Q 2022 OPERATING SEGMENT PERFORMANCE REVENUE ($MM) Sales ↓ 5%; Volume flat; Price ↓ 2% Op. EBIT ($MM) & Op. EBIT Margin % Op. EBIT ↓ 60%; Margins ↓ 1460 bps Specialty Plastics Y-o-Y Y-o-Y 9,0 00 Price gains in functional polymers more 1,954 Results due to lower polyethylene prices Packaging & 200 0
Slide 5: Proactively Navigating Evolving Market Dynamics
PROACTIVELY NAVIGATING EVOLVING MARKET DYNAMICS BUSINESS & OPERATIONAL ACTIONS Current snapshot of end-market demand by region Maintain 15% reduction in capacity across polyethylene assets; APAC prioritizing higher-margin functional polymers NAA LAA EMEAI China (excl. China) Capture fixed cost a
Slide 6: 4Q22 Modeling Guidance
4Q22 MODELING GUIDANCE Maintaining Operational Discipline in Dynamic Macroeconomic Environment Net Sales ~$11.5 – $12.0B Depreciation & Amortization ~$675MM Quarterly Operational Tax Rate ~29 – 33% Net Interest Expense (Net of Int. Income) ~$125MM Net Income Attrib. to Non-Controlling Int. ~$25MM Av
Slide 7: Well-Positioned in a Dynamic Macro Environment
WELL-POSITIONED IN A DYNAMIC MACRO ENVIRONMENT Distinct Competitive Advantages Solid Financial Position Cash & Cash Revolver Equivalents Diverse End-Market Participation Committed Healthy Debt and Credit Profile Global Scale and Leading Positions A/R ~$12B No substantive debt maturities due Dive
Slide 8: Advancing Our Decarbonize & Grow Strategy
ADVANCING OUR “DECARBONIZE & GROW” STRATEGY Improving Underlying Earnings Growing Annual Underlying Earnings by >$3B by 2030, by ~$300-400MM1 in 2022 while Reducing CO2 Emissions by ~30%2 Near-Term Growth Levers Efficiency Levers Efficiency Levers Near-Term Growth Alberta Project EBITDA P&SP: 4Q22
Slide 9: Raising the Bar to Commercialize 3MM MTA of Circular & Renewable Solutions by 2030
RAISING THE BAR TO COMMERCIALIZE 3MM MTA OF CIRCULAR & RENEWABLE SOLUTIONS BY 2030 Building an Delivering Meeting Increasing Industrial Ecosystem Innovative Solutions Brand-Owner Demand Founding member of the REVOLOOP™ Post-Consumer Recycled Resins for Dow technology to support Crocs Alliance to
Slide 10: Consistent Strategic Priorities for Long-Term Value Creation
CONSISTENT STRATEGIC PRIORITIES FOR LONG-TERM VALUE CREATION DISCIPLINED CAPITAL PROFITABLE LOW-COST BEST-OWNER ESG LEADERSHIP ALLOCATION GROWTH OPERATING MODEL MINDSET Execute lower-risk, faster- Maintain and grow Decarbonize assets to Maintain top-quartile Maintain culture of payback projects, lea
Slide 11: Appendix
APPENDIX
Slide 12: FY 2022 Modeling Considerations & Latest Updates
FY 2022 MODELING CONSIDERATIONS & LATEST UPDATES [POSITIVE / NEGATIVE] Cash Flow Considerations in 2022 Dividends from Operating EBIT Drivers vs. FY21 ~$900MM (up ~$600MM YoY) Equity Companies Equity Earnings Down ~$600-700MM YoY (net of T/As) Pension ~$250MM (~$1B lower YoY) Pension Expense ~$FLAT
Slide 13: 3Q 2022 Financial Highlights
3Q 2022 FINANCIAL HIGHLIGHTS YoY Operating EPS Reconciliation Key Drivers in the Quarter YoY • Growth and efficiency levers improving $2.75 underlying earnings $1.11 • Lower SARD cost due to continued focus on cost efficiency 3Q21 SARD Growth Equity Turnarounds Raw Below the 3Q22 /Efficiency Earning
Slide 14: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportional Share of Principal JV Financial Results Drivers of 3Q 2022 3Q 2021 2Q 2022 JV Performance Kuwait Thai Kuwait Thai Kuwait Thai $ millions (unaudited) Sadara JVs JVs Sadara JVs JVs Sadara JVs JVs Sadara: Driven by margin compression in polyurethanes
Slide 15: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Sep 30, 2022 1 2 3 In millions, except per share amounts (Unaudited) Pretax Net Income EPS Reported results $ 1,001 $ 739 $ 1.02 Less: Significant items Digitalization program costs (62)
Slide 16: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Nine Months Ended Sep 30, 2022 1 In millions, except per share amounts (Unaudited) Pretax Net Income 2 EPS 3 Reported results $ 5,225 $ 3,969 $ 5.41 Less: Significant items Digitalization program costs (154) (119)
Slide 17: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Three Months Ended Jun 30, 2022 1 In millions, except per share amounts (Unaudited) Pretax Net Income 2 EPS 3 Reported results $ 2,169 $ 1,661 $ 2.26 Less: Significant items Digitalization program costs (51) (40)
Slide 18: Reconciliation of Net Income to Operating EBIT & Operating EBITDA
RECONCILIATION OF NET INCOME TO OPERATING EBIT & OPERATING EBITDA Reconciliation of "Net income" to "Operating EBIT" and Three Months Ended Nine Months Ended "Operating EBITDA" In millions (Unaudited) Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Sep 30, 2022 Sep 30,
Slide 19: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Three Months Ended Nine Months Ended Ended In millions (Unaudited) Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 Packaging & Specialty Plastics $ 8,233 $ 7,327 $ 7,736 $ 23,187 $ 20,939 Industrial Intermediates & Infrastructure
Slide 20: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating EBIT by Segment Three Months Three Months Ended Nine Months Ended Ended In millions (Unaudited) Jun 30, 2022 Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021 Packaging & Specialty Plastics $ 1,298 $ 730 $ 1,830 $ 3,152 $ 4,836 Industrial Intermed
Slide 21: Cash Conversion and Free Cash Flow Reconciliation
CASH CONVERSION AND FREE CASH FLOW RECONCILIATION Reconciliation of Cash Flow Conversion Three Months Ended In millions (Unaudited) Sep 30, 2021 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Cash provided by operating activities - continuing operations (GAAP) $ 2,719 $ 2,557 $ 1,612 $ 1,856 $
Slide 22: Reconciliation of Operating Return on Capital (ROC)
RECONCILIATION OF OPERATING RETURN ON CAPITAL (ROC) Reconciliation of Operating Return on Capital (ROC) Three Months Ended In millions (Unaudited) Sep 30, 2022 Sep 30, 2021 Net income $ 739 $ 1,683 - Significant items, after tax (63) (390) Operating Net Income (non-GAAP) $ 802 $ 2,073 Net income att
Slide 23: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Sep 30, 2022 Dec 31, 2021 Notes payable $ 185 $ 161 Long-term debt due within one year 364 231 Long-term debt 12,921 14,280 Gross debt (GAAP) $ 13,470 $ 14,672 - Cash and cash equivalents 2,216 2,988 - Marketable securitie
Slide 24: General Comments
GENERAL COMMENTS Background On April 1, 2019, DowDuPont completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC, owning all of the outstanding common shares of TDCC. For filings related to the period commencing April 1, 2019 and thereafter, TD
Slide 25: Safe Harbor
SAFE HARBOR 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 1
Slide 26: Non-GAAP & Definitions
NON-GAAP & DEFINITIONS Non-GAAP Financial Measures This presentation 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 a