Slide 1: Dow 1Q 2021 Results
Dow 1Q 2021 Results April 22, 2021
Slide 2: Agenda
AGENDA 1. Quarterly Highlights 2. Operating Segment Performance Positioned for Long-term 3. Outlook 4. Value Creation 2
Slide 3: 1Q 2021 Highlights
1Q | 2021 HIGHLIGHTS Net Sales up YoY Double-digit gains in Net Sales and Op. EBIT both YoY and sequentially Net Sales up in all segments and regions 22% YoY and sequential sales increase led by pricing gains in all segments and regions +450 bps Volume in-line YoY – gains in construction, mo
Slide 4: 1Q21 Operating Segment Performance
1Q21 OPERATING SEGMENT PERFORMANCE REVENUE ($MM) Sales ↑ 32%; Volume ↑ 5%; Price ↑ 24% Op. EBIT ($MM) & Op. EBIT Margin % Op. EBIT ↑ 112%; Margin ↑ 760bps Specialty Plastics Y-o-Y Y-o-Y 6,5 00 Strong supply/demand fundamentals; local 1,228 140 000% Driven by margin improvement and increased Packagin
Slide 5: 2Q21 Modeling Guidance
2Q21 MODELING GUIDANCE Recovery from Winter Storm Uri and continuation of robust demand leading to favorable market fundamentals Net Sales ~$12.4 – $12.9B Depreciation & Amortization ~$715MM Quarterly Operational Tax Rate ~21 – 25% Net Interest Expense (Net of Int. Income) ~$185MM Net Income Attrib.
Slide 6: FY 2021 Modeling Considerations & Latest Updates
FY 2021 MODELING CONSIDERATIONS & LATEST UPDATES [POSITIVE / NEGATIVE] Operating EBIT Drivers vs. FY20 Cash Flow Considerations in 2021 Equity Earnings Up ~$400-500MM YoY (net of T/As) Dividends from ~$200MM (down ~$200MM YoY) Pension Expense ~$200MM tailwind YoY Equity Companies Corporate Op. EBIT
Slide 7: Points of Distinction Enable Continued Outperformance
POINTS OF DISTINCTION ENABLE CONTINUED OUTPERFORMANCE Leading Cash Flow and Differentiated Portfolio with Attractive End Market Growth Shareholder Remuneration Yield Leading Positions Packaging ~1.5x GDP Consumer ~1.5x GDP • ~$9B in Free Cash Flow1 generated #1 Siloxanes #1 Solvents #1 Acrylic Binde
Slide 8: Plastic Circularity Roadmap Drives Near- and Long-Term Growth
PLASTIC CIRCULARITY ROADMAP DRIVES NEAR- AND LONG-TERM GROWTH Stop the Waste Close the Loop By 2030, Dow will STOP THE WASTE by enabling 1 million metric tons of plastic By 2035, Dow will CLOSE THE LOOP by enabling 100% of Dow products sold into to be collected, reused or recycled through its direct
Slide 9: Market Fundamentals, Incremental Investments Drive ~$1B Earnings Growth
MARKET FUNDAMENTALS, INCREMENTAL INVESTMENTS DRIVE ~$1B EARNINGS GROWTH Packaging & Specialty Plastics Ind. Intermediates & Infrastructure Perf. Materials & Coatings Polyethylene 16,000 MDI 100% 6,000 Siloxane 100% 250,000 100% 90% 90% Key Product Fundamentals 90% 5,000 200,000 80% 80% 12,000 80% 70
Slide 10: Seek Together
<r Seek Together"
Slide 11: 1Q 2021 Financial Highlights
1Q 2021 FINANCIAL HIGHLIGHTS YoY Operating EPS Reconciliation Key Drivers in the Quarter YoY • Pricing momentum across all segments and regions led by polyethylene and polyurethane applications $1.36 • Resilient demand in packaging and demand growth in construction, mobility, electronics $0.59 and c
Slide 12: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportional Share of Principal JV Financial Results Drivers of 1Q 2021 1Q 2020 4Q 2020 YoY and PQ Changes Kuwait Thai Kuwait Thai Kuwait Thai Kuwait JVs: Margin expansion $ millions (unaudited) Sadara JVs JVs Sadara JVs JVs Sadara JVs JVs from price increases
Slide 13: Dow FY20 Benchmarking Update
Dow FY20 Benchmarking Update
Slide 14: Benchmarking Peers
BENCHMARKING PEERS Benchmarking conducted against segment level peers if sufficient information disclosed, otherwise corporate level 14
Slide 15: Total Dow Benchmarking: Summary of Observations
TOTAL DOW BENCHMARKING: SUMMARY OF OBSERVATIONS Benchmarking: Strengths & Gaps FY20 YoY Adj. Op. EBITDA growth trailed the peer median as resilient demand for packaging applications and recovery in durable good end markets was more than offset by upstream pricing pressures in siloxanes and acrylic
Slide 16: Total Dow Benchmarking Snapshot
TOTAL DOW BENCHMARKING SNAPSHOT (1,2,3,4) FY20 UPDATE & FY19 Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D CORE STRENGTHS Growth Margin Cash Flow Conversion (as a % of Sales) FOCUS AREAS FY20 vs. FY19 vs. • Hallmark safety FY19 25% FY20 FY19 150% FY20 FY19 25% FY20 FY19 • Maintain focus on cash FY18 pe
Slide 17: Top-Quartile Cash, Remuneration Yield and Debt Reduction
TOP-QUARTILE CASH, REMUNERATION YIELD AND DEBT REDUCTION Operating Cash Flow (2019-2020) Average Annual Free Cash Flow (2019-2020) as % of Operating EBITDA as % of 2020 Market Cap 93% Median 11% Excl. Dow ~84% Median Excl. Dow ~6% 5% 4% Peer 1 DOW Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 DOW Peer 1
Slide 18: Culture of Benchmarking: Summary of Observations
CULTURE OF BENCHMARKING: SUMMARY OF OBSERVATIONS Segment FY20 Benchmarking: Strengths & Gaps FY20 YoY Adj. Op. EBITDA growth tracked the peer median as peers with more exposure to naphtha rebounded from a lower 2019 performance from cost pressures FY20 Adj. Op. EBITDA margin more resilient than
Slide 19: Packaging & Specialty Plastics Benchmarking Snapshot
PACKAGING & SPECIALTY PLASTICS BENCHMARKING SNAPSHOT (1,2,3,4,5,6) FY20 UPDATE & FY19 Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D CORE STRENGTHS Growth(7) Margin Free Cash Conversion (as a % of Sales) FOCUS AREAS FY20 vs. FY19 vs. • World-class packaging FY19 25% FY20 FY19 FY20 FY19 FY20 FY19 • Maint
Slide 20: Return on Polyolefin Capacity
RETURN ON POLYOLEFIN CAPACITY Op. EBITDA Per Pound Dow’s P&SP Returns Remain Polyolefins Capacity1 (cpp) Ahead of Peers 19 • Full feedstock-to-polymer integration continues 16 to deliver enhanced value 14 • Differentiated portfolio provides margin resiliency 10 • Functional Polymers portfolio provid
Slide 21: Industrial Intermediates & Infrastructure Benchmarking Snapshot
INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE BENCHMARKING SNAPSHOT (1,2,3,4,5) FY20 UPDATE & FY19 Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D CORE STRENGTHS Growth Margin Free Cash Conversion (as a % of Sales) FOCUS AREAS FY20 vs. FY19 vs. • Top global producer of FY19 FY18 FY20 FY19 FY20 FY19 FY20 FY19
Slide 22: Performance Materials & Coatings Benchmarking Snapshot
PERFORMANCE MATERIALS & COATINGS BENCHMARKING SNAPSHOT (1,2,3,4) FY20 UPDATE & FY19 Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D CORE STRENGTHS Free Cash Conversion FOCUS AREAS Growth Margin (as a % of Sales) FY20 vs. FY19 vs. • World-class 10% 35% FY20 FY19 80% FY20 FY19 20% FY20 FY19 • Maintain focu
Slide 23: Appendix
Appendix
Slide 24: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Mar 31, 2021 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 1,323 $ 991 $ 1.32 Less: Significant items Restructuring implementation costs
Slide 25: 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" and Three Months Ended "Operating EBITDA" In millions (Unaudited) March 31, 2020 June 30, 2020 Septemb er 30, 2020 Decemb er 31, 2020 March 31, 2021 Net income (loss) $
Slide 26: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Ended Three Months Ended In millions (Unaudited) Dec 31, 2020 March 31, 2021 March 31, 2020 Packaging & Specialty Plastics $ 5,126 $ 6,082 $ 4,609 Industrial Intermediates & Infrastructure 3,501 3,607 3,045 Performance Materials & Coatings 2,029
Slide 27: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating EBIT by Segment Three Months Ended Three Months Ended In millions (Unaudited) Dec 31, 2020 March 31, 2021 March 31, 2020 Packaging & Specialty Plastics $ 703 $ 1,122 $ 575 Industrial Intermediates & Infrastructure 260 211 251 Performance Materials &
Slide 28: Cash Conversion and Free Cash Flow Reconciliation
CASH CONVERSION AND FREE CASH FLOW RECONCILIATION Reconciliation of Cash Flow Conversion Three Months Ended In millions March 31, 2020 June 30, 2020 Septemb er 30, 2020 Decemb er 31, 2020 March 31, 2021 Cash provided by (used for) operating activities - continuing operations (GAAP) $ 1,236 $ 1,599 $
Slide 29: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) March 31, 2021 Decemb er 31, 2020 Notes payable $ 152 $ 156 Long-term debt due within one year 492 460 Long-term debt 16,200 16,491 Gross debt (GAAP) $ 16,844 $ 17,107 - Cash and cash equivalents 4,133 5,104 - Marketable s
Slide 30: 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 31: Safe Harbor
SAFE HARBOR Cautionary Statement about Forward-Looking Statements This presentation contains “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 ame
Slide 32: 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