Slide 1: 1Q 2023 Results
1Q 2023 RESULTS April 25, 2023
Slide 2: Agenda
AGENDA 1Q 2023 • Quarterly Results • Operating Segment Performance R ES U LT S • Outlook • Strategy Enables Continued Value Creation 2
Slide 3: 1Q 2023 Performance Overview
1Q 2023 PERFORMANCE OVERVIEW ▪ Net sales were $11.9B ➢ Volume down 11% YoY, but up 2% QoQ on gains in PM&C and P&SP $11.9B ➢ Price declined 10% YoY and 4% QoQ due to soft global economic NET SALES conditions $1.4B ▪ Net loss was $73MM and Operating EBIT was $708MM O P E R AT I N G E B I T D A ➢ Sequ
Slide 4: 1Q 2023 Operating Segment Performance
1Q 2023 OPERATING SEGMENT PERFORMANCE REVENUE ($MM) Sales ↓ 20%; Price ↓ 11%; Volume ↓ 8% Op. EBIT ($MM) & Op. EBIT Margin % Op. EBIT ↓ 48%; Margins ↓ 570 bps Specialty Plastics Y-o-Y Y-o-Y Functional polymers resilience more than 8,0 00 180 000% Packaging & Results driven primarily by lower 7,5 00
Slide 5: Proactively Navigating Challenging Market Conditions
PROACTIVELY NAVIGATING CHALLENGING MARKET CONDITIONS Implementing Targeted Actions to Achieve $1B of Cost Savings in 2023 Industrial 1H23 Intermediates Packaging APAC & Infrastructure NAA LAA EMEAI China & Specialty (excl. China) Plastics $1B Savings $1B Savings Packaging Packaging in 2023 by Segmen
Slide 6: 2Q23 Modeling Guidance
2Q23 MODELING GUIDANCE Sequential Improvement Driven by Proactive Cost Actions and Seasonality Net Sales ~$11.75 – $12.25B Depreciation & Amortization ~$675MM Quarterly Operational Tax Rate ~25 – 29% Net Interest Expense (Net of Int. Income) ~$125MM Net Income Attrib. to Non-Controlling Int. ~$25MM
Slide 7: Advancing Near-Term Growth Investments
ADVANCING NEAR-TERM GROWTH INVESTMENTS Underlying Trends Driving Demand Growth in Attractive Market Verticals 1 Near-Term Growth Investments Expected Packaging Infrastructure to Generate ~$2B Underlying EBITDA by Mid-Decade ~30% ~35% ▪ P&SP: FCDh start-up underway; incremental investments in PE Dema
Slide 8: Sustainability Investments Unlock Long-Term Growth Opportunities
SUSTAINABILITY INVESTMENTS UNLOCK LONG-TERM GROWTH OPPORTUNITIES Decarbonize & Grow: Expect to grow capacity and underlying earnings by >$3B/year, while reducing CO2 emissions by ~30%1 by 2030. Innovation, Renewable Energy Alberta Net-Zero Terneuzen 2030 & Efficiency Scope 1 & 2 CO2 Emissions Site R
Slide 9: Delivering on Disciplined and Balanced Capital Allocation Strategy
DELIVERING ON DISCIPLINED AND BALANCED CAPITAL ALLOCATION STRATEGY Operating Return on Capital (%) Free Cash Flow Yield1 (%) 2020-2022 Annual Average 2020-2022 Annual Average 15% 15% Median Excl. Dow ~10% Median Excl. Dow ~7% Peer 1 Peer 2 DOW Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 DOW Peer 2 Peer 1 Pee
Slide 10: Dow Remains a Compelling Investment Opportunity
DOW REMAINS A COMPELLING INVESTMENT OPPORTUNITY Leading Cash Flow Generation Growing enterprise value while driving zero-carbon emissions Current Valuation Across the Economic Cycle • Global scale in key value chains, with low-cost positions and 2020-2022 Avg. EV / 2024 Op. EBITDA2 advantaged deriva
Slide 11: Executing with Agility and Discipline
EXECUTING WITH AGILITY AND DISCIPLINE ✓ Implementing targeted actions to achieve $1B in cost savings in 2023 ✓ Focus on cash flow generation – TTM cash flow conversion of 85% Strong financial position – ample liquidity of >$13B with no substantive long-term debt ✓ maturities due until 2027 ✓ Advanci
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Slide 13: 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 ~$300MM Equity Earnings Down ~$300-400MM YoY Companies Pension Impact ~$100MM better YoY Pension contributions ~$150MM Corporate Op. EBIT of ~$(27
Slide 14: 1Q 2023 Financial Highlights
1Q 2023 FINANCIAL HIGHLIGHTS YoY Operating EPS Reconciliation Key Drivers in the Quarter YoY • Growth and efficiency levers improving $2.34 underlying earnings • Implementing cost actions to respond to $0.58 macroeconomic environment • Lower D&A expense, share count and 1Q22 Growth Cost Out Below th
Slide 15: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportional Share of Principal JV Financial Results Drivers of 1Q 2023 1Q 2022 4Q 2022 JV Performance ▪ Sadara: Pricing down YoY and up Kuwait Thai Kuwait Thai Kuwait Thai $ millions (unaudited) QoQ; Volumes impacted by Sadara JVs JVs Sadara JVs JVs Sadara JVs J
Slide 16: Dow FY22 Benchmarking Update
DOW FY22 BENCHMARKING UPDATE April 25, 2023
Slide 17: Continued Focus on Cash Flow Generation
CONTINUED FOCUS ON CASH FLOW GENERATION Enhanced Financial Performance and Capital Structure Stable Cash Flow from Operations (CFFO) Generation Key Metrics At Spin YE22 Operating EBITDA ($B) $12.4 Operating EBITDA (3-Year Avg.)1 $8.2B $9.1B CFFO ($B) $9.3 $7.3 Free Cash Flow (3-Year Cumulative)1 $5.
Slide 18: Benchmarking Peers
BENCHMARKING PEERS Total Dow P&SP Olefins & Polyolefins Chemical Products1 Corporate Polyolefins II&I Intermediates & Derivatives Corporate Corporate Corporate1 PM&C Silicones Acetyl Chain1 Solutions & Corporate Functional Specialties Materials Benchmarking conducted against segment level peers if s
Slide 19: Total Dow Benchmarking: Summary of Observations
TOTAL DOW BENCHMARKING: SUMMARY OF OBSERVATIONS Benchmarking: Strengths & Gaps FY22 Adj. Op. EBITDA margin remained among the top of the peer group with higher resiliency from a differentiated portfolio and leading feedstock flexibility with low-cost-to-serve positions FY22 YoY Adj. Op. EBITDA g
Slide 20: Total Dow Benchmarking Snapshot
TOTAL DOW BENCHMARKING SNAPSHOT (1,2,3) CORE STRENGTHS FY22 UPDATE & FY21 FOCUS AREAS Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D • Hallmark safety Cash Flow Conversion • Execute on Decarbonize Growth Margin (as a % of Sales) performance and FY22 vs. FY21 vs. FY22 FY21 FY22 FY21 FY22 FY21 and Grow St
Slide 21: Culture of Benchmarking: Summary of Observations
CULTURE OF BENCHMARKING: SUMMARY OF OBSERVATIONS Segment Benchmarking: Strengths & Gaps YoY Adj. Op. EBITDA performance was most resilient among the peer group ✓ Adj. Op. EBITDA margin was best-in-class delivered by an advantaged and differentiated portfolio P&SP ✓ Op. EBITDA per pound polyolefin
Slide 22: Packaging & Specialty Plastics Benchmarking Snapshot
PACKAGING & SPECIALTY PLASTICS BENCHMARKING SNAPSHOT (1,2,3) CORE STRENGTHS FY22 UPDATE & FY21 FOCUS AREAS Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D • World-class packaging Free Cash Conversion • Execute on Decarbonize Growth Margin (as a % of Sales) and Grow Strategy to franchise with leading FY22
Slide 23: Dow's Differentiated P&SP Portfolio
DOW’S DIFFERENTIATED P&SP PORTFOLIO Dow P&SP Continues to Deliver Superior Returns Demonstrating Resiliency by Generating Higher Margins vs. Peers Op. EBITDA Per Pound of Annual Op. EBITDA Margins Polyolefins Capacity1 (cpp) 30% 25% Advantage over Peers 21 25 5-Yr Avg. 20 17 20% ~22%. 15 13 8 15% 5-
Slide 24: Industrial Intermediates & Infrastructure Benchmarking Snapshot
INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE BENCHMARKING SNAPSHOT (1,2,3) CORE STRENGTHS FY22 UPDATE & FY21 FOCUS AREAS • Leading producer of Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D • Execute on Decarbonize Free Cash Conversion Purified Ethylene Oxide, Growth Margin (as a % of Sales) and Grow Strat
Slide 25: Performance Materials & Coatings Benchmarking Snapshot
PERFORMANCE MATERIALS & COATINGS BENCHMARKING SNAPSHOT (1,2,3) CORE STRENGTHS FY22 UPDATE & FY21 FOCUS AREAS Adj. Op. EBITDA Adj. Op. EBITDA SG&A + R&D • Leading producer of Free Cash Conversion • Execute on Decarbonize and Siloxanes & Silicones and Growth Margin (as a % of Sales) Grow Strategy to d
Slide 26: Appendix
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Slide 27: Operating Earnings Per Share (EPS) Reconciliation
OPERATING EARNINGS PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Mar 31, 2023 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ (120) $ (93) $ (0.13) Less: Significant items Restructuring, implementation a
Slide 28: 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) Dec 31, 2020 Dec 31, 2021 Mar 31, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Net income (
Slide 29: 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 30: Segment Information
SEGMENT INFORMATION Net Sales by Segment Three Months Three Months Ended Ended In millions (Unaudited) Dec 31, 2022 Mar 31, 2023 Mar 31, 2022 Packaging & Specialty Plastics $ 6,073 $ 6,114 $ 7,627 Industrial Intermediates & Infrastructure 3,653 3,378 4,524 Performance Materials & Coatings 2,058 2,27
Slide 31: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating EBIT by Segment Three Months Three Months Ended Ended In millions (Unaudited) Dec 31, 2022 Mar 31, 2023 Mar 31, 2022 Packaging & Specialty Plastics $ 599 $ 621 $ 1,124 Industrial Intermediates & Infrastructure 260 196 599 Performance Materials & Coa
Slide 32: 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, 2022 Jun 30, 2022 Sep 30, 2022 Dec 31, 2022 Mar 31, 2023 Cash provided by operating activities - continuing operations (GAAP) $ 1,612 $ 1,856 $ 1,940 $ 2,078 $
Slide 33: 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 34: 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, 2023 Mar 31, 2022 Net income (loss) available for Dow Inc. common stockholders (GAAP) $ (93) $ 1,569 - Significant items, after tax (511) (211) O
Slide 35: Reconciliation of ROC (Continued)
RECONCILIATION OF ROC (CONTINUED) Reconciliation of Operating Return on Capital (ROC) Three Months Ended In millions (Unaudited) Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Net income available for Dow Inc. common stockholders (GAAP) $ 613 $ 1,736 $ 1,236 - Significant items, after tax 289 124 629 Operat
Slide 36: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Mar 31, 2023 Dec 31, 2022 Mar 31, 2019 Notes payable $ 278 $ 362 $ 295 Long-term debt due within one year 247 362 2,367 Long-term debt 14,739 14,698 17,158 Gross debt (GAAP) $ 15,264 $ 15,422 $ 19,820 - Cash and cash equiv
Slide 37: 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 38: 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 39: 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