Dow Inc. · NYSE:DOW
Dow — The Dow Chemical Company — Q1 2015 Earnings Presentation
34 slides from Dow's earnings presentation, Apr 23, 2015
Slide 1: The Dow Chemical Company 1Q 2015 Earnings Conference Call
The Dow Chemical Company 1Q 2015 Earnings Conference Call April 23, 2015 The Dow Chemical Company
Slide 2: SEC Disclosure Rules
SEC Disclosure Rules Some of our comments today include statements about our expectations for the future. Those expectations involve risks and uncertainties. Dow cannot guarantee the accuracy of any forecasts or estimates, and we do not plan to update any forward-looking statements if our expectatio
Slide 3: SEC Disclosure Rules: Important Notices and Additional Information
SEC Disclosure Rules Important Notices and Additional Information In connection with the proposed transaction, Blue Cube Spinco Inc. (“Spinco”) will file a registration statement on Form S-4/S-1 containing a prospectus and Olin will file a proxy statement on Schedule 14A and a registration statement
Slide 4: Agenda
Agenda 1Q 2015 Overview Segment Highlights Progress on Commitments 4
Slide 5: Dow Reports 1Q 2015 Results
Dow Reports 1Q 2015 Results Achieves Tenth Consecutive Quarter of YoY Operating EPS, EBITDA and EBITDA Margin Expansion Operating EPS rises to $0.84 Operating EBITDA of $2.4B – all-time record posted in Dow Automotive Systems; 1Q records posted in Dow Electronic Materials, Energy & Water Solutio
Slide 6: 1Q15 Financial Performance
1Q15 Financial Performance Dollars in millions, except per share amounts 1Q15 1Q14 Net Sales $12,370 $14,461 Adjusted Net Sales $12,370 $14,394 Volume change in percent +1% -- Price (including currency) change in percent -15% -- EBITDA $3,063 $2,396 Operating EBITDA $2,401 $2,396 Net Income Availabl
Slide 7: Agenda
Agenda 1Q 2015 Overview Segment Highlights Progress on Commitments 7
Slide 8: Agricultural Sciences
Agricultural Sciences Dow’s Momentum Limits Impact of Market Conditions 1Q15 Sales: $1.9B, down 12% 1Q15 EBITDA: $409MM, down 19% Competitive environment with weak commodity prices Seeds and Crop Protection sales down in line with industry across most regions except Asia Pacific, on headwinds from
Slide 9: Consumer Solutions
Consumer Solutions Differentiation Drives Record EBITDA 1Q15 Sales: $1.1B, down 1% 1Q15 EBITDA: $286MM, up 10% Dow Automotive Systems – All-time record quarterly EBITDA Continued global demand growth (especially in premium markets) New technologies drove volumes and margins and offset currency h
Slide 10: Infrastructure Solutions
Infrastructure Solutions Innovation-Led Earnings Growth 1Q15 Sales: $1.8B, down 10% 1Q15 EBITDA: $295MM, up 10% Energy & Water Solutions – Record Q1 EBITDA Demand strength in water market sectors more than offset difficult conditions in energy market sectors Double-digit percentage reverse osmos
Slide 11: Performance Materials & Chemicals
Performance Materials & Chemicals Volume Up in All Geos, Epoxy, PU & Industrial Solutions1 1Q15 Sales: $3.2B, down 8% excluding divestitures 1Q15 Op. EBITDA: $535MM, up 4% Polyurethanes – Margin and volume drive record Q1 EBITDA Strong demand across all market sectors in North America, with tight
Slide 12: Performance Plastics
Performance Plastics Global Reach and Differentiation Drive Resiliency 1Q15 Sales: $4.3B, down 23%, down 11% excluding Hydrocarbons & Energy 1Q15 EBITDA: $985MM, up 2% Dow Packaging and Specialty Plastics – Record Q1 EBITDA Strong volume YoY, across every geography, hygiene and medical, food and s
Slide 13: Modeling Guidance
Modeling Guidance End-markets – YoY demand growth expected in most businesses Raw Materials – feedstock costs increasing in Europe & Asia Pacific somewhat offset by expanding LPG margins in Europe, narrowing propane/ethane spread on the USGC Equity earnings expected down due to Sadara costs, more th
Slide 14: Agenda
Agenda 1Q 2015 Overview Segment Highlights Progress on Commitments 14
Slide 15: Ongoing, Proactive Portfolio Management
Ongoing, Proactive Portfolio Management Portfolio Management Actions Since 2013 Exceed $11B In Progress Kuwait JVs ~$3B Tax Eq. Pre-Tax Proceeds ($B) Other Small Divestitures and Additional >$7B‒$8.5B Corporate Actions Announced/Signed Chlorine Carve-Out ($8B1) >$5B ANGUS ($1.2B) Sodium Borohydr
Slide 16: Constant Productivity Focus
Constant Productivity Focus 2012 Program $1.75B Shut down 28 assets since Headcount reduction of ~3,000 to early 2012 offset hiring for growth projects Reduced CapEx in 2013 (Agricultural Sciences, U.S. Gulf Coast, from 2011 by ~$400MM Sadara) since early 2012 Exceeded 2013 cost target Red
Slide 17: Levers Affecting Cash Flow
Levers Affecting Cash Flow Cash-Out Decreases Cash-In Increases PDH CapEx reverts to USGC projects depreciation levels Sadara Pension headwinds fade Innovation Conversion of preferred Crop protection, shares pharma, automotive, seeds, electronic materials, consumer Productivity O
Slide 18: Financial Priorities Moving Forward
Financial Priorities Moving Forward Continue to improve ROC with a goal to return 3% above our cost of capital Drive 10% average annual EPS growth over the long term Maintain capital structure that provides financial flexibility to invest for organic growth, reward shareholders —Convert prefer
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Slide 20: Agricultural Sciences
Agricultural Sciences Dollars in millions 1Q15 1Q14 Sales $1,864 $2,119 Price (7%) Volume (5%) EBITDA $409 $506 Equity earnings (losses) (included in EBITDA) $0 $0 1Q15 Sales Crop 1Q15 Trends Protection vs. 1Q14 Seeds Sales Price Volume Crop Protection Seeds 20
Slide 21: Consumer Solutions
Consumer Solutions Dollars in millions 1Q15 1Q14 Sales $1,123 $1,137 Price (6%) Volume 5% EBITDA $286 $259 Equity earnings (included in EBITDA) $20 $30 1Q15 Sales Dow Consumer 1Q15 Trends Electronic Care vs. 1Q14 Materials Sales Price Volume Consumer Care Dow Automotive Systems Dow Elect
Slide 22: Infrastructure Solutions
Infrastructure Solutions Dollars in millions 1Q15 1Q14 Sales $1,828 $2,035 Price (10%) Volume 0% EBITDA $295 $268 Equity earnings (included in EBITDA) $76 $71 1Q15 Sales 1Q15 Trends vs. 1Q14 Dow Building & Sales Price Volume Performance Construction Monomers Dow Building & Construction Dow Coa
Slide 23: Performance Materials & Chemicals
Performance Materials & Chemicals Dollars in millions 1Q15 1Q14 Sales $3,209 $3,550 Adjusted Sales $3,209 $3,483 Price (13%) Adj. Volume 5% EBITDA $1,223 $514 Operating EBITDA $535 $514 Equity earnings (losses) (included in EBITDA) $55 $91 1Q15 Sales 1Q15 Trends Chlorinated vs. 1Q14 Chlor-Alkali Org
Slide 24: Performance Plastics
Performance Plastics Dollars in millions 1Q15 1Q14 Sales $4,269 $5,522 Price (25%) Volume 2% Price (17%) excluding Hydrocarbons & Energy Volume 6% EBITDA $985 $966 Equity earnings (included in EBITDA) $23 $68 1Q15 Sales 1Q15 Trends vs. 1Q14 Energy Dow Packaging and Hydrocarbons Specialty Plastics Sa
Slide 25: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Three Months Ended In millions 03/31/2015 03/31/2014 Operating EBITDA $2,401 $2,396 Certain Items 662 - EBITDA $3,063 $2,396 - Depreciation and amortization 634 672 + Interest income 17 13 - Interest expense and amortization of debt discount 241 246 Inco
Slide 26: Supplemental Information - 1Q15
Supplemental Information- 1Q15 Certain Items Impacting Results In millions, except per share amounts (unaudited) Pretax Impact (1) Net Income (2) EPS - Diluted (3) (4) Three Months Ended Three Months Ended Three Months Ended 03/31/2015 03/31/2014 03/31/2015 03/31/2014 03/31/2015 03/31/2014 Operating
Slide 27: Certain Items Affecting Results - 1Q15
Certain Items Affecting Results- 1Q15 Certain items increasing (decreasing) EBITDA by operating segment In millions Three Months Ended 03/31/15 03/31/14 Agricultural Sciences $ - $ - Consumer Solutions - - Infrastructure Solutions - - Performance Materials & Chemicals 688 - Performance Plastics - -
Slide 28: Supplemental Information
Supplemental Information Results in the first quarter of 2015 were impacted by the following items: • Pretax gain of $670 million on the February 2, 2015, divestiture of ANGUS Chemical Company, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Perf
Slide 29: Emerging Geographies
Emerging Geographies Dow defines emerging geographies as the following: Eastern Europe, including Russia Asia Pacific, excluding Japan, Australia and New Zealand Latin America India Middle East Africa 29
Slide 30: Principal Joint Ventures
Principal Joint Ventures Although Dow participates in many joint ventures, the most significant joint ventures from a financial perspective are: Dow Corning Corporation EQUATE Petrochemical Company K.S.C. The Kuwait Olefins Company K.S.C. The Kuwait Styrene Co. K.S.C. MEGlobal Sadara Chemical Compan
Slide 31: Preliminary Results for Principal Joint Ventures
Preliminary Results for Principal Joint Ventures Principal Joint Ventures - Total Dow Proportionate Share Dollars in millions (unaudited) 1Q15 1Q14 Dollars in millions (unaudited) 1Q15 1Q14 Sales $3,838 $4,577 Sales $1,730 $2,065 Adjusted Sales(1) $2,889 $3,482 Adjusted Sales(1) $1,328 $1,603 EBITDA
Slide 32: Reconciliation of Equity Earnings
Reconciliation of Equity Earnings 2005 2006 2007 2008 2009 2010 2011 2012 Quarterly Average Equity Earnings excluding certain items $241 $240 $281 $197 $181 $278 $259 $175 Equity Earnings excluding certain items, for the year 964 959 1,122 787 724 1,112 1,137 698 Certain items: Dow Corning Restructu
Slide 33: Global Operating Rates as a Percent of Capacity
Global Operating Rates as a Percent of Capacity Year QTR YTD 2011 1Q 83% 83% 2Q 84% 83% 3Q 83% 83% 4Q 72% 80% 2012 1Q 83% 83% 2Q 78% 81% 3Q 83% 81% 4Q 78% 81% 2013 1Q 82% 82% 2Q 78% 80% 3Q 82% 81% 4Q 82% 81% 2014 1Q 83% 83% 2Q 82% 83% 3Q 88% 85% 4Q 86% 85% 2015 1Q 84% 84% 33
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The Dow Chemical Company — Q1 2015 Earnings Presentation on 6ix