Slide 1: 2Q 2023 Results
2Q 2023 RESULTS July 25, 2023
Slide 2: Agenda
AGENDA 2Q 2023 • Quarterly Results • Operating Segment Performance R ES U LT S • Outlook • Advancing Long-Term Strategy while Navigating Short-Term Dynamics 2
Slide 3: 2Q 2023 Performance Overview
2Q 2023 PERFORMANCE OVERVIEW Net sales were $11.4B reflecting lower demand and prices due to slower macroeconomic activity $11.4B Volume down 8% YoY, and up 1% QoQ on gains in APAC and LAA NET SALES Price declined 18% YoY and 5% QoQ due to lower demand and global energy and feedstock costs $1.
Slide 4: 2Q 2023 Operating Segment Performance
2Q 2023 OPERATING SEGMENT PERFORMANCE REVENUE ($MM) Sales ↓ 28%; Price ↓ 21%; Volume ↓ 7% Op. EBIT ($MM) & Op. EBIT Margin % Op. EBIT ↓ 36%; Margins ↓ 190 bps Specialty Plastics Y-o-Y Y-o-Y 9,0 00 Price declines driven by lower global energy 180 000% Results driven primarily by lower Packaging & 160
Slide 5: Continued Challenging Market Conditions Entering 2H23
CONTINUED CHALLENGING MARKET CONDITIONS ENTERING 2H23 U.S. – Industrial activity remains weak but consumers still spending Consumer confidence rose to 109.7 in June, the highest level since early 20222 Core consumer price inflation eased to 4.8% in June, yet remains high Rest of NAA LAA EMEAI China
Slide 6: 3Q23 Modeling Guidance
3Q23 MODELING GUIDANCE Continued Implementation of Cost Savings in Slower Macroeconomic Environment Net Sales ~$10.25 – $10.75B Depreciation & Amortization ~$675MM Quarterly Operational Tax Rate ~22 – 26% Net Interest Expense (Net of Int. Income) ~$150MM Net Income Attrib. to Non-Controlling Int. ~$
Slide 7: Financial and Operational Discipline Enables Value Capture
FINANCIAL AND OPERATIONAL DISCIPLINE ENABLES VALUE CAPTURE Extending our Low-Cost-to-Serve Advantages Further Enhancing our Financial Position 2Q23 Cash & Cash Revolver Reduced net debt and pension liabilities by Equivalents >$10B since Spin 1Q23 ~$13B No substantive debt maturities due until 20
Slide 8: Sustainability Investments Unlock Long-Term Growth Opportunities
SUSTAINABILITY INVESTMENTS UNLOCK LONG-TERM GROWTH OPPORTUNITIES Decarbonize & Grow: Expect to grow capacity and underlying earnings by >$3B/year, while reducing CO2 emissions by ~30%1 by 2030. Innovation, Renewable Energy Alberta Net-Zero Terneuzen 2030 & Efficiency Scope 1 & 2 CO2 Emissions Site R
Slide 9: Advancing Progress on Alberta Path2Zero
ADVANCING PROGRESS ON ALBERTA PATH2ZERO Alberta Net-Zero World’s First Cracker & Derivatives Complex with Net-Zero1 CO2 Emissions Scope 1 & 2 CO2 Emissions Site Builds on TX-9 best-in-class capital intensity, conversion cost, and low-CO2 emissions intensity – Achieved which has delivered >15% RO
Slide 10: Advancing Long-Term Strategy while Navigating Short-Term Dynamics
ADVANCING LONG-TERM STRATEGY WHILE NAVIGATING SHORT-TERM DYNAMICS Enhanced Financial Performance and Capital Structure Underlying Trends in Attractive Market Verticals Driving Addressable Market Growth to >$800B by Mid-Decade Key Metrics At Spin 2Q23 Operating EBITDA (3-Year Avg.)1 $8.2B $9.3B Packa
Slide 11: Appendix
APPENDIX
Slide 12: 2Q 2023 Financial Highlights
2Q 2023 FINANCIAL HIGHLIGHTS QoQ Operating EPS Reconciliation Key Drivers QoQ • Lower feedstock and input costs, particularly in the cost-advantaged Americas $0.75 $0.58 • Implementing cost savings actions in response to challenging 1Q23 Raw Material Cost Savings Volume Turnarounds Pricing 2Q23 macr
Slide 13: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportional Share of Principal JV Financial Results Drivers of 2Q 2023 2Q 2022 1Q 2023 JV Performance $ millions (unaudited) Kuwait Thai Kuwait Thai Kuwait Thai Sadara: Lower product pricing and Sadara JVs JVs Sadara JVs JVs Sadara JVs JVs impact of planned ma
Slide 14: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Jun 30, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 711 $ 485 $ 0.68 Less: Significant items Restructuring, implementation and ef
Slide 15: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Six Months Ended Jun 30, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 591 $ 392 $ 0.54 Less: Significant items Restructuring, implementation and efficiency
Slide 16: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Three Months Ended Mar 31, 2023 Pretax 1 Net Income 2 3 In millions, except per share amounts (Unaudited) EPS Reported results $ (120) $ (93) $ (0.13) Less: Significant items Restructuring, implementation and effi
Slide 17: Reconciliation of Net Income (Loss) to Operating EBIT & EBITDA
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING EBIT & OPERATING EBITDA Reconciliation of "Net income (loss)" to "Operating EBIT" Three Months Ended Six Months Ended and "Operating EBITDA" In millions (Unaudited) Dec 31, 2020 Jun 30, 2021 Dec 31, 2021 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31,
Slide 18: Reconciliation of Income from Continuing Operations to Pro Forma Operating EBIT
RECONCILIATION OF "INCOME (LOSS) FROM CONTINUING OPERATIONS, NET OF TAX" TO "PRO FORMA OPERATING EBIT" AND "PRO FORMA OPERATING EBITDA" Reconciliation of "Income (Loss) from Continuing Operations, net of Twelve Months Ended tax" to "Pro Forma Operating EBIT" and "Pro Forma Operating EBITDA" In milli
Slide 19: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Three Months Ended Six Months Ended Ended In millions (Unaudited) Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Jun 30, 2022 Packaging & Specialty Plastics $ 6,114 $ 5,940 $ 8,233 $ 12,054 $ 15,860 Industrial Intermediates & Infrastructure
Slide 20: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating EBIT by Segment Three Months Three Months Ended Six Months Ended Ended In millions (Unaudited) Mar 31, 2023 Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Jun 30, 2022 Packaging & Specialty Plastics $ 621 $ 899 $ 1,298 $ 1,520 $ 2,422 Industrial Intermediat
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) Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Cash provided by operating activities - continuing operations (GAAP) $ 1,856 $ 1,940 $ 2,078 $ 531 $ 1,
Slide 22: Free Cash Flow Reconciliation (Continued)
FREE CASH FLOW RECONCILIATION (CONTINUED) Reconciliation of Free Cash Flow Twelve Months Ended In millions (Unaudited) Dec 31, 2017 Dec 31, 2018 Dec 31, 2019 Cash provided by (used for) operating activities - continuing operations (GAAP) $ (6,443) $ 3,096 $ 5,713 Impact of ASU 2016-15 and additional
Slide 23: 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) Jun 30, 2023 Jun 30, 2022 Net income available for Dow Inc. common stockholders (GAAP) $ 485 $ 1,661 - Significant items, after tax (52) (37) Operating N
Slide 24: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Jun 30, 2023 Dec 31, 2022 Mar 31, 2019 Notes payable $ 102 $ 362 $ 295 Long-term debt due within one year 107 362 2,367 Long-term debt 14,735 14,698 17,158 Gross debt (GAAP) $ 14,944 $ 15,422 $ 19,820 - Cash and cash equiv
Slide 25: 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 26: Safe Harbor
SAFE HARBOR Cautionary Statement about Forward-Looking Statements Certain statements in this presentation 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 Ac
Slide 27: Non-GAAP & Definitions
NON-GAAP & DEFINITIONS Non-GAAP Financial Measures This presentation 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 alloca