Slide 1: 1Q 2019 Results for Materials Science Division of DowDuPont
1Q 2019 RESULTS FOR MATERIALS SCIENCE DIVISION OF DOWDUPONT May 2, 2019
Slide 2: Agenda
AGENDA Quarterly Highlights Segment Results Financial Overview Outlook 2
Slide 3: 1Q 2019 Highlights
1Q 2019 HIGHLIGHTS Net sales of $10.8B, in-line with guidance Volume grew 1%; excluding H&E, volume up 3% Local price declined 9%; currency decreased sales by 2% Op. EBITDA of $1.9B, in-line with guidance Delivered >$125MM of YoY cost synergy savings $1.365B cost synergy run-rate Elimi
Slide 4: Performance Materials & Coatings
PERFORMANCE MATERIALS & COATINGS Net Sales by Business Coatings & Financial Performance Snapshot 1Q19 1Q18 B/(W) Consumer Perf. Solutions Monomers Net Sales ($MM) $2,255 $2,304 $(49) (2)% Op. EBITDA ($MM) $481 $586 $(105) (18)% Op. EBITDA Margin (%) 21.3% 25.4% (410) bps Variances vs. SQLY Net Sales
Slide 5: Industrial Intermediates & Infrastructure
INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE Net Sales by Business Financial Performance Snapshot 1Q19 1Q18 B/(W) Net Sales ($MM) $3,402 $3,715 $(313) (8)% Industrial Solutions Op. EBITDA ($MM) $448 $654 $(206) (31)% Op. EBITDA Margin (%) 13.2% 17.6% (440) bps Op. EBITDA ex. Eq. Earn. ($MM) $496 $505 $
Slide 6: Packaging & Specialty Plastics
PACKAGING & SPECIALTY PLASTICS Net Sales by Business Financial Performance Snapshot 1Q19 1Q18 B/(W) Hydrocarbons Net Sales ($MM) $5,110 $6,010 $(900) (15)% Packaging & Energy and Op. EBITDA ($MM) $993 $1,301 $(308) (24)% Specialty Op. EBITDA Margin (%) 19.4% 21.6% (220) Bps Plastics Op. EBITDA ex. E
Slide 7: 1Q 2019 Financial Highlights
1Q 2019 FINANCIAL HIGHLIGHTS DWDP MatCo Division – YoY Operating EBITDA ($B) Recon Key Drivers in the Quarter $0.74 • >$125MM of YoY cost synergy $2.5 savings • Growth in silicones, polyurethanes $1.9 systems and packaging applications Core Growth 1Q18 Synergies Earnings 1Q19 Investments Compression
Slide 8: Principal Joint Venture Details
PRINCIPAL JOINT VENTURE DETAILS Dow’s Proportionate Share of Principal JV Financial Results 1Q 2019 1Q 2018 Kuwait Thai Kuwait Thai $ millions (unaudited) Sadara JVs JVs Sadara JVs JVs EBITDA $27 $128 $34 $96 $272 $53 EBIT $(58) $93 $24 $5 $238 $43 Net Income $(120) $81 $21 $(50) $212 $39 (i.e., Equ
Slide 9: Bridge to Preliminary Pro Forma Financials & Other Reporting Changes
BRIDGE TO PRELIMINARY PRO FORMA FINANCIALS(1) & OTHER REPORTING CHANGES 1 Profit Metric 2 Transfer at Market 3 Service Agreements • Shifting to Op. EBIT as profit metric • Shifting to mkt-based internal transfers • Will incorporate arms-length manufacturing, supply and service • Op. EBIT will includ
Slide 10: 2Q 2019 Modeling Guidance
2Q 2019 MODELING GUIDANCE Stable-to-expanding margins sequentially, offset by seasonal turnaround spending and a one-time item Revenue $11.0B – $11.5B Depreciation & Amortization $720MM – $750MM Operational Tax Rate 20 – 23% Net Interest Expense (net of Int. Income) $220MM – $240MM Net Income Attrib
Slide 11: Improving Value Chain Fundamentals
IMPROVING VALUE CHAIN FUNDAMENTALS Consumer Indicators Pointing Higher Naphtha-Ethane Spread is Widening Industrial Production US +3.7% China +5.3% year-over-year EU -1.1% 15 75 Europe Naphtha & Auto Production US: Up Brent Crude Oil China: Down USGC Ethane month-over-month EU: Down ($/m
Slide 12: Consumer-Driven Demand Growth
CONSUMER-DRIVEN DEMAND GROWTH Robust Silicones Demand Continues to Grown PE Sales Volume by ~20% Over Last 2 Years PU Systems Growing at ~1.5X GDP Displace Volatile Merchant Siloxanes Sales 8% 2x GDP 100% 6% Avg: 4.5% 4% Differentiated Use Growing at >1.5x Global GDP 2% 0% 2016 2017 2018 2019E 2020E
Slide 13: Near-Term Priorities
NEAR-TERM PRIORITIES PROFITABLE DISCIPLINED CAPITAL LOW-COST OPERATING GROWTH ALLOCATION MODEL BEST OWNER MINDSET Capitalize on growth and Prioritize lower-risk, faster- Achieve best-in-class Implement most value- value-add materials science payback projects, with capex cost structures creating stra
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Slide 15: Appendix
APPENDIX
Slide 16: 2Q 2019 Modeling Guidance: Year-over-Year
2Q 2019 MODELING GUIDANCE: YEAR-OVER-YEAR Revenue $11.0B – $11.5B Depreciation & Amortization $720MM – $750MM Operational Tax Rate 20 – 23% YoY Synergy Savings Realized >$125MM Net Income Attrib. to Non-Controlling Int. $30MM – $40MM YoY Stranded Cost Removal >$30MM Share Count ~750MM Net Interest E
Slide 17: General Comments & Definitions
GENERAL COMMENTS & DEFINITIONS General Comments Unless otherwise specified, all financial measures in this presentation, where applicable, exclude significant items. Dow Inc. successfully separated from DowDuPont Inc. on April 1, 2019. Further details for the Materials Science Division may be found
Slide 18: 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 19: Safe Harbor (Continued)
SAFE HARBOR (CONTINUED) 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 prov