Slide 1: Dow 2Q 2019 Results
DOW 2Q 2019 RESULTS July 25, 2019
Slide 2: Agenda
AGENDA Quarterly Highlights Financial Overview Segment Results Outlook 2
Slide 3: 2Q 2019 Highlights
2Q 2019 HIGHLIGHTS ▪ Net Sales of $11.0B – in line with guidance ▪ Sequentially, grew core earnings (ex-planned turnarounds) ▪ YoY volume declines in part due to feedstock selection in the U.S. & EMEAI, leading to lower co-product sales ➢ Demand gains achieved in packaging applications, PU systems a
Slide 4: 2Q 2019 Financial Highlights
2Q 2019 FINANCIAL HIGHLIGHTS YoY Operating EPS Reconciliation Key Drivers in the Quarter • >$175MM of YoY cost synergy $1.41 savings & stranded cost removal $0.86 • Contributions from USGC 2Q18 Cost Synergies USGC Margin Equity Losses Third Party Currency 2Q19 & Stranded Investments Compression UPE'
Slide 5: Principal Joint Venture Details
PRINCIPAL JOINT VENTURE DETAILS Dow’s Proportionate Share of Principal JV Financial Results 2Q 2019 2Q 2018 Kuwait Thai Kuwait Thai $ millions (unaudited) Sadara JVs JVs Sadara JVs JVs EBITDA $25 $120 $25 $84 $276 $66 EBIT $(48) $80 $16 $(5) $240 $56 Net Income $(107) $75 $16 $(65) $214 $45 (i.e., E
Slide 6: 3Q 2019 Modeling Guidance
3Q 2019 MODELING GUIDANCE Core EBIT improvement offset by impacts from 3rd party outages Revenue $10.5B – $11B Depreciation & Amortization ~$740MM Operational Tax Rate 22 – 23% Net Interest Expense (net of Int. Income) ~$225MM Net Income Attrib. to Non-Controlling Int. $20MM – $30MM Share Count ~747
Slide 7: Performance Materials & Coatings
PERFORMANCE MATERIALS & COATINGS Net Sales by Business Coatings & Financial Performance Snapshot 2Q19 2Q18 B/(W) Consumer Perf. As Reported Pro Forma Solutions Monomers Net Sales ($MM) $2,356 $2,673 $(317) (12)% Op. EBIT ($MM) $214 $292 $(78) (27)% Op. EBIT Margin (%) 9.1% 10.9% (180) bps Variances
Slide 8: Industrial Intermediates & Infrastructure
INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE Net Sales by Business Financial Performance Snapshot 2Q19 2Q18 B/(W) As Reported Pro Forma Industrial Net Sales ($MM) $3,342 $3,972 $(630) (16)% Solutions Op. EBIT ($MM) $154 $502 $(348) (69)% Op. EBIT Margin (%) 4.6% 12.6% (800) bps Op. EBIT ex. Eq. Earn. (
Slide 9: Packaging & Specialty Plastics
PACKAGING & SPECIALTY PLASTICS Net Sales by Business Financial Performance Snapshot 2Q19 2Q18 B/(W) As Reported Pro Forma Hydrocarbons Packaging Net Sales ($MM) $5,205 $6,134 $(929) (15)% & Energy and Specialty Op. EBIT ($MM) $768 $926 $(158) (17)% Plastics Op. EBIT Margin (%) 14.8% 15.1% (30) bps O
Slide 10: Value Chain Fundamentals Are Mixed
VALUE CHAIN FUNDAMENTALS ARE MIXED Current Business Sentiment Mixed Evolving Feedstock Trends Play to Dow’s Strengths Source: Liquidity Partners, as of July 24, 2019 Market U.S. Europe China Brazil 40 October, 2018 Consumer 30 cents / gallon April, 2019 Infrastructure 20 July, 2019 Packaging 10 Indu
Slide 11: Action Plan in Light of Current Market Conditions
ACTION PLAN IN LIGHT OF CURRENT MARKET CONDITIONS ▪ Leveraging our strengths and operational levers ➢ Taking full advantage of our feedstock flexibility in both the U.S. and Europe ➢ Focused on margin management, especially pricing recovery ➢ Instituting select expense controls ▪ Driving greater int
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Slide 13: Appendix
APPENDIX
Slide 14: General Comments
GENERAL COMMENTS Separation from DowDuPont On April 1, 2019, DowDuPont Inc. ("DowDuPont" and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or "DuPont") completed the previously announced separation of its materials science business and Dow Inc. became the direct parent company of The Dow Che
Slide 15: 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 16: 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. Dow’s management believes that these non-GAAP measures best reflect the ongoing performance of Dow during the periods presented and provi
Slide 17: Operating EPS Reconciliation
OPERATING EPS RECONCILIATION Significant Items Impacting Results for the Three Months Ended Jun 30, 2019 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 215 $ 75 $ 0.10 Less: Significant items Integration and separation costs (348) (277) $ (0.37) Rest
Slide 18: Operating EPS Reconciliation (Continued)
OPERATING EPS RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Six Months Ended Jun 30, 2019 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Pro forma results $ 579 $ 251 $ 0.33 Less: Significant items Integration and separation costs (750) (603) (
Slide 19: Operating EBIT & EBITDA Reconciliation
OPERATING EBIT & EBITDA RECONCILIATION Reconciliation of "Income from continuing operations, net Three Months Ended Six Months Ended of tax" to Operating EBIT and Operating EBITDA Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018 In millions (Unaudited) As Reported Pro Forma Pro Forma Pro Forma In
Slide 20: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Ended Six Months Ended Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018 In millions (Unaudited) As Reported Pro Forma Pro Forma Pro Forma Performance Materials & Coatings $ 2,356 $ 2,673 $ 4,676 $ 5,044 Industrial Intermediates & Infrastructur
Slide 21: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Operating EBIT excluding Equity in Earnings (Losses) of Three Months Ended Six Months Ended Nonconsolidated Affiliates Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018 In millions (Unaudited) As Reported Pro Forma Pro Forma Pro Forma Performance Materials & Coating
Slide 22: Cash Conversion Reconciliation
CASH CONVERSION RECONCILIATION Cash Flow Conversion Three Months Ended Six Months Ended In millions Jun 30, 2019 Jun 30, 2018 Jun 30, 2019 Jun 30, 2018 Cash provided by operating activities - continuing operations (GAAP) $ 960 $ 760 $ 2,003 $ 1,504 Impact of ASU 2016-15 and additional interpretive g