Dow Inc. · NYSE:DOW
Dow — Q1 2024 Earnings Presentation
29 slides from Dow's earnings presentation, Apr 25, 2024
Slide 1: 1Q 2024 Results
1Q 2024 RESULTS April 25, 2024
Slide 2: Agenda
AGENDA ▪ QUARTERLY RESULTS ▪ OPERATING SEGMENT PERFORMANCE ▪ OUTLOOK ▪ DRIVING GROWTH THROUGH THE CYCLE ▪ ADVANCING SUSTAINABILITY-DRIVEN VALUE CREATION
Slide 3: 1Q 2024 Performance Overview
1Q 2024 PERFORMANCE OVERVIEW Driving Volume and Value Growth while Maintaining Operational and Financial Discipline ▪ Net sales of $10.8B, down 9% YoY and up 1% QoQ $10.8B ▪ Delivered 2nd consecutive quarter of YoY volume growth; volume up 1% NET SALES YoY (up 5% excluding Hydrocarbons & Energy); vo
Slide 4: 1Q 2024 Operating Segment Performance
1Q 2024 OPERATING SEGMENT PERFORMANCE Packaging & Specialty Plastics Ind. Intermediates & Infrastructure Perf. Materials & Coatings 6,5 00 REVENUE ($MM) REVENUE ($MM) REVENUE ($MM) 6,0 00 Y-o-Y Y-o-Y 2,4 00 Y-o-Y Sales ↓ 5% 3,4 00 Sales ↓ 11% 2,2 00 Sales ↓ 11% Price ↓ 9% 5,5 00 3,2 00 Price ↓ 8% Pr
Slide 5: Market Conditions Showing Signs of Improvement
MARKET CONDITIONS SHOWING SIGNS OF IMPROVEMENT Select Macroeconomic Indicators U.S. – Industrial activity is increasing as destocking has run its course Current Market Snapshot: U.S. chemical railcar average shipments have increased by 4.3% YTD, as of April 13 China Rest of NAA LAA EMEAI World S&P M
Slide 6: 2Q24 Modeling Guidance
2Q24 MODELING GUIDANCE On Track to Capture Early Market Improvement Net Sales ~$11.0B Depreciation & Amortization ~$720MM Quarterly Operational Tax Rate ~23% – 27% Net Interest Expense (Net of Int. Income) ~$150MM Net Income Attrib. to Non-Controlling Int. ~$25MM Average Share Count ~705MM Top-Line
Slide 7: Dow Remains a Compelling Investment Opportunity
DOW REMAINS A COMPELLING INVESTMENT OPPORTUNITY Leading Cash Flow Generation Current Valuation Attractive shareholder remuneration Across the Economic Cycle EV / 2025 Op. EBITDA2 ▪ Dividend yield well covered by free cash flow generation 2021-2023 Avg. Annual Free Cash Free Cash Flow Yield1 7.1x ▪ E
Slide 8: Well-Positioned to Capture Growth Through the Cycle
WELL-POSITIONED TO CAPTURE GROWTH THROUGH THE CYCLE Global Reach with Strategically Advantaged Positions On-Track to Deliver ~$2B/year EBITDA1 Growth by Mid-Decade 28% Europe 27% Silicones Growth Amines Growth Coatings Capacity P&SP 26% FS-1 Expansion Expansion LPG advantage 25% (Canada) 24% Additio
Slide 9: Our Value Growth Roadmap to 2030
OUR VALUE GROWTH ROADMAP TO 2030 Decarbonize & Grow Transform the Waste Grow underlying earnings by ~$3B/year, and reducing GHG emissions by Disciplined organic Commercialize 3MM mta of ~5MM mta by 20301 circular & renewable solutions growth investments Near-Term Growth and → Strategic Partnerships
Slide 10: Capital Structure: A Proven Playbook to Deliver Disciplined Value Growth
A PROVEN PLAYBOOK TO DELIVER DISCIPLINED VALUE GROWTH Enhanced Financial Performance and Capital Structure Delivering >$3B/yr through High-Value Growth Investments Key Metrics At Spin 1Q24 Operating EBITDA (3-Year Avg.)1 $8.2B $8.7B On track to grow underlying EBITDA Cash Conversion Rate (TTM) 42% 9
Slide 11: Please Join Dow's 2024 Investor Day
PLEASE JOIN DOW’S 2024 INVESTOR DAY We’re excited to share: ▪ How we’re on track to deliver >$3B of earnings JOIN US growth that will enable higher shareholder returns through the cycle. MAY 16, 2024 ▪ Details about the execution of our strategic 10:00 AM – 12:30 PM ET vision across Dow’s operating
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Slide 13: 1Q 2024 Financial Highlights
1Q 2024 FINANCIAL HIGHLIGHTS QoQ Operating EPS Reconciliation Key Drivers QoQ ▪ Higher sales volumes and operating rates primarily driven by seasonality ▪ Lower energy costs, primarily in EMEAI $0.43 $0.56 ▪ Improved results at all Dow’s principal joint ventures 4Q23 Higher Energy Costs Equity Freig
Slide 14: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Drivers of Changes in Dow’s Proportional Share of Principal JV Financial Results Equity Earnings 1Q 2024 4Q 2023 1Q 2023 ▪ Sadara: YoY higher sales volumes Kuwait Thai Kuwait Thai Kuwait Thai due to a planned turnaround in $ millions (unaudited) Sadara JVs JVs Sadara J
Slide 15: FY 2024 Modeling Considerations
FY 2024 MODELING CONSIDERATIONS [BETTER / WORSE SINCE LAST UPDATE] Operating EBIT Drivers vs. FY23 Cash Flow Considerations in 2024 Equity Earnings Up ~$50-100MM YoY Dividends from Equity ~$200MM Companies Pension and Defined ~FLAT YoY Contribution Impact Pension contributions ~$150MM (~Flat YoY) Co
Slide 16: Appendix
APPENDIX
Slide 17: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Mar 31, 2024 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 449 $ 516 $ 0.73 Less: Significant items Restructuring, implementation and ef
Slide 18: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Three Months Ended Dec 31, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ (352) $ (105) $ (0.15) Less: Significant items Restructuring, implementation and eff
Slide 19: 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 and "Operating EBITDA" In millions (Unaudited) Mar 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Net income (loss) $ 1,552
Slide 20: Reconciliation to Pro Forma Operating EBIT and EBITDA
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 21: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Three Months Ended Ended In millions (Unaudited) Dec 31, 2023 Mar 31, 2024 Mar 31, 2023 Packaging & Specialty Plastics $ 5,641 $ 5,430 $ 6,114 Industrial Intermediates & Infrastructure 2,948 3,008 3,378 Performance Materials & Coatings 1,894 2,15
Slide 22: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating EBIT by Segment Three Months Three Months Ended Ended In millions (Unaudited) Dec 31, 2023 Mar 31, 2024 Mar 31, 2023 Packaging & Specialty Plastics $ 624 $ 580 $ 621 Industrial Intermediates & Infrastructure 72 102 196 Performance Materials & Coatin
Slide 23: 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) Mar 31, 2019 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Dec 31, 2023 Mar 31, 2024 Cash provided by operating activities - continuing operations (GAAP) $ 1,043 $ 531 $ 1,347
Slide 24: Free Cash Flow Reconciliation (Continued)
FREE CASH FLOW RECONCILIATION (CONTINUED) Reconciliation of Free Cash Flow Three Months Ended In millions (Unaudited) Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Cash provided by operating activities - continuing operations (GAAP) $ 2,557 $ 2,078 $ 1,628 Capital expenditures (466) (599) (758) Free Cash F
Slide 25: 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) Mar 31, 2024 Mar 31, 2023 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Net income (loss) available for Dow Inc. common stockholders (GAAP) $ 516 $ (93) $ (105)
Slide 26: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Mar 31, 2024 Dec 31, 2023 Jun 30, 2019 Mar 31, 2019 Notes payable $ 55 $ 62 $ 544 $ 295 Long-term debt due within one year 118 117 297 2,367 Long-term debt 16,170 14,907 17,155 17,158 Gross debt (GAAP) $ 16,343 $ 15,086 $
Slide 27: 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 28: 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 29: Non-GAAP Financial Measures & Definitions
NON-GAAP FINANCIAL MEASURES & 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 segment