Slide 1: 3Q 2023 Results
3Q 2023 RESULTS October 24, 2023
Slide 2: Agenda
AGENDA 3Q 2023 • Quarterly Results • Operating Segment Performance R ES U LT S • Outlook • Growth and Sustainability Roadmap Enables Value Creation 2
Slide 3: 3Q 2023 Performance Overview
3Q 2023 PERFORMANCE OVERVIEW ▪ Team Dow continued to advance our long-term strategy while reducing costs and maximizing cash generation, despite slow macroeconomic environment $10.7B NET SALES ▪ Net sales were $10.7B reflecting slower global macroeconomic activity $1.3B ➢ Volume down 6% YoY; up 1% Q
Slide 4: 3Q 2023 Operating Segment Performance
3Q 2023 OPERATING SEGMENT PERFORMANCE REVENUE ($MM) Sales ↓ 26%; Price ↓ 20%; Volume ↓ 7% Op. EBIT ($MM) & Op. EBIT Margin % Op. EBIT ↓ $309MM; Margins ↓ 200 bps Specialty Plastics Y-o-Y Y-o-Y Price declines driven by lower global energy 8,0 00 Packaging & 7,5 00 100 000% 918 Results driven primaril
Slide 5: Macroeconomic Outlook Remains Challenging
MACROECONOMIC OUTLOOK REMAINS CHALLENGING U.S. – Industrial activity remains slow; consumers more cautious Retail sales growth remained positive, up 3% YoY in September S&P Manufacturing PMI improved to 49.8 in September China Rest of NAA LAA EMEAI World Consumer confidence continued to decline MoM,
Slide 6: Financial and Operational Discipline Enables Value Capture
FINANCIAL AND OPERATIONAL DISCIPLINE ENABLES VALUE CAPTURE Extending our Low-Cost-to-Serve Advantages Efficient Working Capital Management Inventory ▪ Matching operating rates and inventory 2Q23 13.0 (in MM of lbs) levels with current market dynamics 12.0 Avg. 2019-2021 ▪ Leveraging digital tools to
Slide 7: 4Q23 Modeling Guidance
4Q23 MODELING GUIDANCE Continued Focus on Operational and Financial Discipline Net Sales ~$10.0 – $10.5B Depreciation & Amortization ~$675MM Quarterly Operational Tax Rate ~22 – 26% Net Interest Expense (Net of Int. Income) ~$175MM Net Income Attrib. to Non-Controlling Int. ~$25MM Average Share Coun
Slide 8: Our Growth and Sustainability Roadmap to 2030
OUR GROWTH AND SUSTAINABILITY ROADMAP TO 2030 Decarbonize and Grow Transform the Waste Grow underlying earnings by ~$3B/year, while reducing GHG emissions by ~5MM mta by 20301 Commercialize 3MM mta of circular & renewable solutions Near-Term Growth Investments ✓ Successfully leveraged USGC assets fo
Slide 9: Advancing Progress on Alberta Path2Zero
ADVANCING PROGRESS ON ALBERTA PATH2ZERO Alberta Net-Zero World’s First Cracker & Derivatives Complex with Net-Zero CO2 Emissions Scope 1 & 2 Emissions Site ▪ Builds on TX-9 best-in-class capital intensity, conversion cost, and low emissions intensity – which has delivered >15% ROIC since start-up ✓
Slide 10: Accelerating Circularity by Transforming the Waste
ACCELERATING CIRCULARITY BY TRANSFORMING THE WASTE A Holistic and Capital-Efficient Circularity Strategy Transform the Waste ▪ Breakthrough Value Chain Partnerships – Enabling waste transformation through value chain partnerships with innovative industry leaders Successfully leveraged USGC assets fo
Slide 11: Transforming the Waste Through Value Chain Partnerships
TRANSFORMING THE WASTE THROUGH VALUE CHAIN PARTNERSHIPS Commercialize 3MM mta of circular and renewable solutions while generating >$0.5B of EBITDA by ~2030. Building a Delivering Meeting Increasing Materials Ecosystem Innovative Solutions Brand-Owner Demand ▪ REVOLOOP™ Post-Consumer Recycled ▪ Foun
Slide 12: Well-Positioned to Continue to Drive Shareholder Value
WELL-POSITIONED TO CONTINUE TO DRIVE SHAREHOLDER VALUE Enhanced Financial Performance and Capital Structure Distinct Competitive Advantages Drive Long-Term Value Key Metrics At Spin 3Q23 ▪ Global Scale and Leading Positions in key value chains Operating EBITDA (3-Year Avg.)1 $8.2B $9.2B ▪ Diverse En
Slide 13: Appendix
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Slide 14: FY 2023 Modeling Considerations
FY 2023 MODELING CONSIDERATIONS [BETTER / WORSE SINCE LAST UPDATE] Cash Flow Considerations in 2023 Operating EBIT Drivers vs. FY22 Dividends from Equity ~$250MM Equity Earnings Down ~$300-400MM YoY Companies Pension Impact ~$100MM better YoY Pension contributions ~$150MM Corporate Op. EBIT of ~$(27
Slide 15: 3Q 2023 Financial Highlights
3Q 2023 FINANCIAL HIGHLIGHTS QoQ Operating EPS Reconciliation Key Drivers QoQ • Continued implementation of cost $0.75 savings actions • Improved volumes primarily from gains $0.48 in Industrial Intermediates & infrastructure and Performance 2Q23 Cost Savings Volume Equity Below the Louisiana Margin
Slide 16: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportional Share of Principal JV Financial Results Drivers of 3Q 2023 3Q 2022 2Q 2023 JV Performance $ millions (unaudited) Kuwait Thai Kuwait Thai Kuwait Thai Sadara JVs JVs Sadara JVs JVs Sadara JVs JVs ▪ Sadara: Higher volumes after planned maintenance in 2Q
Slide 17: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Sep 30, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 417 $ 302 $ 0.42 Less: Significant items Restructuring, implementation and ef
Slide 18: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Nine Months Ended Sep 30, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 1,008 $ 694 $ 0.97 Less: Significant items Restructuring, implementation and efficien
Slide 19: Operating (EPS) Reconciliation (Continued)
OPERATING (EPS) RECONCILIATION (CONTINUED) 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 efficienc
Slide 20: Reconciliation of Net Income (Loss) to Operating EBIT and EBITDA
RECONCILIATION OF NET INCOME (LOSS) TO OPERATING EBIT & OPERATING EBITDA Reconciliation of "Net income (loss)" to "Operating EBIT" Three Months Ended Nine Months Ended and "Operating EBITDA" In millions (Unaudited) Dec 31, 2020 Sep 30, 2021 Dec 31, 2021 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30,
Slide 21: 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 22: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Three Months Ended Nine Months Ended Ended In millions (Unaudited) Jun 30, 2023 Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2022 Packaging & Specialty Plastics $ 5,940 $ 5,454 $ 7,327 $ 17,508 $ 23,187 Industrial Intermediates & Infrastructure
Slide 23: 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, 2023 Sep 30, 2023 Sep 30, 2022 Sep 30, 2023 Sep 30, 2022 Packaging & Specialty Plastics $ 899 $ 426 $ 730 $ 1,946 $ 3,152 Industrial Intermediate
Slide 24: 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 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Jun 30, 2023 Sep 30, 2023 Cash provided by operating activities - continuing operations (GAAP) $ 1,043 $ 1,940 $ 2,0
Slide 25: 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 26: 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, 2023 Sep 30, 2022 Net income available for Dow Inc. common stockholders (GAAP) $ 302 $ 739 - Significant items, after tax (43) (63) Operating Net
Slide 27: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Sep 30, 2023 Dec 31, 2022 Jun 30, 2019 Notes payable $ 223 $ 362 $ 544 Long-term debt due within one year 110 362 297 Long-term debt 14,592 14,698 17,155 Gross debt (GAAP) $ 14,925 $ 15,422 $ 17,996 - Cash and cash equival
Slide 28: 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 29: 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 30: 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