Dow Inc. · NYSE:DOW
Dow — The Dow Chemical Company — Q4 2016 Earnings Presentation
28 slides from Dow's earnings presentation, Jan 26, 2017
Slide 1: 4Q 2016 Earnings Conference Call
The Dow Chemical Company 4Q 2016 Earnings Conference Call January 26, 2017 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 expectati
Slide 3: 4Q16 Caps Strong Year of Performance
4Q16 Caps Strong Year of Performance • 17th consecutive quarter of YoY operating EPS growth – Up 6% year-over-year, rising to $0.99 • 13th consecutive quarter of YoY volume growth ex. M&A – Volume growth led by Consumer Solutions, Agricultural Sciences and Performance Plastics • Record quarterly ope
Slide 4: 2016: Delivering on Our Priorities & Showcasing Power of Business Model
2016: Delivering on Our Priorities & Showcasing Power of Business Model Financial Operational Strategic • Op. EPS up 7% YoY; 4th • >$300MM in productivity • DowDuPont: overwhelming consecutive year of growth savings in 2016; $2.7B savings shareholder support; accel. since 2012 timing of intended spi
Slide 5: Agenda
Agenda • Financial Highlights • Business Highlights • Outlook & Priorities 5
Slide 6: 4Q16: Dow Delivers Op. EPS Growth & Record Quarterly Op. EBITDA
4Q16: Dow Delivers Op. EPS Growth & Record Quarterly Op. EBITDA Financial Performance Snapshot 4Q16 4Q15 B/(W) Net Sales ($MM) $13,020 $11,462 +$1,558 Sales ex. Acquisitions ($MM) $11,749 $11,462 +$287 Price -% Volume +3% Operating EBITDA ($MM) $2,620 $2,390 +$230 Operating EPS ($/share) $0.99 $0.93
Slide 7: Agenda
Agenda • Financial Highlights • Business Highlights • Outlook & Priorities 7
Slide 8: Agricultural Sciences: Record 4Q & Full-Year Operating EBITDA
Agricultural Sciences: Record 4Q & Full-Year Operating EBITDA Record 4Q Operating EBITDA and Seeds Sales Quarterly Segment Performance ($MM) 4Q15 4Q16 • Strong corn seeds growth in Latin America $1,716 $1,603 $239 $220 • Crop Protection volume higher on double-digit increases in 13.7% 13.9% Latin Am
Slide 9: Consumer Solutions: Record Quarterly & Full-Year Operating EBITDA
Consumer Solutions: Record Quarterly & Full-Year Operating EBITDA Dow Automotive Systems: 8th Consec. Quarter of YoY Op. EBITDA Growth Quarterly Segment Performance • Double-digit volume gains in China & Brazil in 4Q ($MM) 4Q15 4Q16 • Structural adhesives volume grew ~4x the global auto market in ‘1
Slide 10: Infrastructure Solutions: Record 4Q Op. EBITDA Driven By I.S. – Silicones
Infrastructure Solutions: Record 4Q Op. EBITDA Driven By I.S. – Silicones Dow Building & Construction: 2nd Consecutive Year of Record Op. EBITDA Quarterly Segment Performance • Double-digit volume growth in 4Q for cellulosics-based construction ($MM) chemicals 4Q15 4Q16 • Continued penetration of in
Slide 11: Performance Materials & Chemicals: Double-Digit Volume Gains
Performance Materials & Chemicals: Double-Digit Volume Gains, Higher Equity Earnings Offset by Margin Compression Quarterly Segment Performance Polyurethanes: Double-Digit Increase in Demand for Systems Applications ($MM) 4Q15 4Q16 • Volume grew year-over-year for the 15th consecutive quarter $2,381
Slide 12: Performance Plastics: Record Sales Volume in Most Businesses
Performance Plastics: Record Sales Volume in Most Businesses Offset by Planned Turnaround Activity and Higher Feedstock Costs Quarterly Segment Performance Dow Packaging and Specialty Plastics: Record Quarterly Sales Volume ($MM) 4Q15 4Q16 • Volumes rose on double-digit growth in Greater China as we
Slide 13: Agenda
Agenda • Financial Highlights • Business Highlights • Outlook & Priorities 13
Slide 14: Outlook
Outlook • Early signs of positive momentum • U.S. expansion continues, driven by consumer demand • EUR gradual recovery • APAC demand driven by emerging middle class growth • LAA returns to growth mode • Demand for Dow’s portfolio will continue to be strong in 2017 • Geographic reach, innovations an
Slide 15: Business Model Transformation Drives Greater Shareholder Returns
Business Model Transformation Drives Greater Shareholder Returns Narrower & Deeper Portfolio Focus Higher, More Consistent Earnings Increased Shareholder Rewards Clear Tilt Toward Consumer Markets Reduced Volatility; Record EBITDA in 2016 >$16B Returned Since 2012 % of Sales Consumer Driven Avg. Ope
Slide 16: Forward Focus: 2017 Priorities
Forward Focus: 2017 Priorities Deliver operating and financial plan 1 • Continued focus on earnings, margin and volume growth • Ongoing productivity and manufacturing excellence drive Close the DowDuPont merger 2 • Continue to advance Day 1 readiness • Quickly prep for stand and intended spins Capit
Slide 17: Slide 17
Slide 18: Appendix
™ Appendix
Slide 19: Market Pulse – 4Q16 Heat Map
Market Pulse – 4Q16 Heat Map Eastern Europe, ME, 4Q16 Up 3X global GDP or greater Western Europe Developing Asia Developed Asia Flat Demand Growth Latin America US & Canada Africa, India 4Q16 Down Double-digit or Greater Lower Participation Market Participation (includes Silicones) of ~$1B or more i
Slide 20: 1Q17 Modeling Guidance
1Q17 Modeling Guidance Corporate Dow Revenue $12.25-13.25B D&A $775-825MM Corp. Segment EBITDA $(75)-(100)MM Net Interest Expense $175-225MM Operational Tax Rate 23-27% Sharecount ~1,225MM Segments Key Drivers Agricultural Modest improvement 1H17 vs. 1H16 despite tepid industry macros based on new p
Slide 21: Operating Rates Remain High in Forecast Period
Operating Rates Remain High in Forecast Period Polyethylene Dow’s View on Market Drivers Demand Capacity Operating Rate (%) 300 95% Global operating rates likely stable over next few years Capacity and Demand (B lbs.) • Demand growth in consumer-driven markets Global Operating Rate 250 90% • Industr
Slide 22: Dow's Industry Leading Feedstock Flexibility
Dow’s Industry Leading Feedstock Flexibility Enables Optimized Feedslate Economics Increasing U.S. Ethane Capability More than 50% of European Ethylene from LPG in 2016 90% Dow U.S. Dow Americas 2016 Ethylene from Ethane Volume Capability to Produce Dow North America 80% 2015 70% 2014 60% 2013 50% 2
Slide 23: 4Q16 vs. 4Q15 Sales Trends by Business
4Q16 vs. 4Q15 Sales Trends by Business Agricultural Sciences Consumer Solutions1 Infrastructure Solutions1 Sales Price Volume Sales Price Volume Dow Building & Sales Price Volume Construction - $ # Dow Automotive # $ # Crop Protection # $ # Systems Energy & Water $ $ $ Consumer Care # $ # Solutions
Slide 24: 2016 vs. 2015 Sales Trends by Business
2016 vs. 2015 Sales Trends by Business Agricultural Sciences1 Consumer Solutions1 Infrastructure Solutions1 Sales Price Volume Sales Price Volume Dow Building & Sales Price Volume Construction - $ # Dow Automotive # $ # Crop Protection $ $ $ Systems Energy & Water $ $ $ Consumer Care $ $ # Solutions
Slide 25: Quarterly Preliminary Results for Principal Joint Ventures
Quarterly Preliminary Results for Principal Joint Ventures Principal Joint Ventures1 – Total Dow Proportionate Share Dollars in millions (unaudited) 4Q16 4Q15 Dollars in millions (unaudited) 4Q16 4Q15 Sales $3,207 $2,248 Sales $1,316 $890 Adjusted Sales2 2,265 $1,546 Adjusted Sales2 $957 $608 EBITDA
Slide 26: Annual Preliminary Results for Principal Joint Ventures
Annual Preliminary Results for Principal Joint Ventures Principal Joint Ventures1 – Total Dow Proportionate Share Dollars in millions (unaudited) 2016 2015 Dollars in millions (unaudited) 2016 2015 Sales $9,790 $10,479 Sales $3,897 $4,126 Adjusted Sales2 $6,845 $6,732 Adjusted Sales2 $2,757 $2,614 E
Slide 27: Global Operating Rates as a Percent of Capacity
Global Operating Rates as a Percent of Capacity Year QTR YTD 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% 2Q 84% 84% 3Q 86% 85% 4Q 86% 85% 2016 1Q 88% 88% 2Q 82% 85% 3Q 86% 85% 4Q 82
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Three Months Ended Twelve Months Ended In millions 12/31/16 12/31/15 12/31/16 12/31/15 Net Income (Loss) Available for The Dow Chemical Company Common Stockholders $(33) $3,527 $3,978 $7,345 + Preferred stock dividends 85 85 340 340 + Net income attribut
The Dow Chemical Company — Q4 2016 Earnings Presentation on 6ix