Slide 1: 2Q 2020 Results
DOW 2Q 2020 RESULTS July 23, 2020
Slide 2: Agenda
AGENDA Quarterly Highlights Addressing Current Market Conditions Outlook Competitively Advantaged for Growth 2
Slide 3: 2Q 2020 Highlights
2Q 2020 HIGHLIGHTS ▪ COVID-19 significantly impacted the Company’s financial results for the quarter ▪ Net Sales of $8.4B – near high end of guidance range >$1.3B Free cash flow ▪ Demand for consumer durable goods significantly impacted by extended pandemic-related lockdowns; gradual economic improv
Slide 4: Advancing Our Ambition for Long-Term Value Creation
ADVANCING OUR AMBITION FOR LONG-TERM VALUE CREATION Industry-leading user of clean energy technologies MobilityScience™ improves customer experience Committed to leading inclusion, diversity & racial equality New Sustainability Targets: plastics & carbon neutrality 4
Slide 5: 2Q20 Operating Segment Performance
2Q20 OPERATING SEGMENT PERFORMANCE Packaging & Specialty Plastics • Sales declined 23% vs. SQLY; volume was flat as growth in consumer staple packaging end- market applications was offset by declines from durable end-market exposure • Operating EBIT was down, driven by lower integrated margins and r
Slide 6: Sadara Update
SADARA UPDATE ▪ In a position to declare project completion (PCD) ➢ Considering withholding the final administrative steps as long as meaningful progress on the debt reprofiling is made ▪ Working in good faith on debt reprofiling negotiations with lenders; target completion by year-end 2020 ➢ Negoti
Slide 7: Proactive Measures to Address Current Market Conditions
PROACTIVE MEASURES TO ADDRESS CURRENT MARKET CONDITIONS ➢ Full year cash improvement from working capital (~$500MM) ~$2.6B ➢ Operational expense savings (~$350MM) In-Flight Actions ➢ CapEx target of $1.25B (~$750MM) 2020 vs. 2019 ➢ Integration and separation cost reduction (~$900MM) ➢ Stranded cost
Slide 8: 3Q20 Modeling Guidance
3Q20 MODELING GUIDANCE Based on continued gradual economic recovery and 50% realization of additional $150MM 2H20 cost savings Net Sales $8.5B – $9.0B Depreciation & Amortization ~$705MM Full Year Operational Tax Rate1 ~38 – 42% Net Interest Expense (Net of Int. Income) ~$200MM Net Income Attrib. to
Slide 9: Economic Recovery on the Horizon
ECONOMIC RECOVERY ON THE HORIZON II&I P&SP ex. H&E PM&C Dow 30% Attractive Market Opportunities Growing above GDP Packaging Consumer 0% ~1.5x ~1.5x GDP GDP $650B Year-Over-Year Volume Trend(1) Infrastructure Addressable Market Mobility -30% ~1.3x ~1.1x JAN FEB MAR APR MAY JUN JUL GDP GDP ORDERS EMEA
Slide 10: Why Dow Wins
WHY DOW WINS ▪ Well-positioned to benefit from market Diverse Unmatched recovery End-Markets Feedstock Flexibility ▪ Addressable market exposure that grows well above GDP ▪ Feedstock flexibility underpins lower costs and higher, more resilient margins through the cycle ▪ Diversity of portfolio with
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Slide 12: Appendix
APPENDIX
Slide 13: 2Q 2020 Financial Highlights
2Q 2020 FINANCIAL HIGHLIGHTS YoY Operating EPS Reconciliation Key Drivers in the Quarter $0.86 • Resilient demand in food packaging, home care and health & hygiene applications persisted in the quarter • Higher YoY cash flow from operations every $(0.26) quarter since spin 2Q19 Expense COVID-19 & Ma
Slide 14: Packaging & Specialty Plastics
PACKAGING & SPECIALTY PLASTICS Net Sales by Business Financial Performance Snapshot 2Q20 2Q19 B/(W) In millions, except margin percentages Hydrocarbons Packaging Net Sales $4,001 $5,205 $(1,204) (23)% & Energy and Specialty Op. EBIT $318 $768 $(450) (59)% Plastics Op. EBIT Margin 7.9% 14.8% (690) bp
Slide 15: Industrial Intermediates & Infrastructure
INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE Net Sales by Business Financial Performance Snapshot 2Q20 2Q19 B/(W) In millions, except margin percentages Industrial Net Sales $2,417 $3,342 $(925) (28)% Solutions Op. EBIT $(220) $154 $(374) (243)% Op. EBIT Margin (9.1)% 4.6% (1370) bps Adj. Op. EBIT (ex.
Slide 16: Performance Materials & Coatings
PERFORMANCE MATERIALS & COATINGS Net Sales by Business Financial Performance Snapshot 2Q20 2Q19 B/(W) In millions, except margin percentages Coatings & Consumer Perf. Net Sales $1,855 $2,356 $(501) (21)% Solutions Monomers Op. EBIT $27 $214 $(187) (87)% Op. EBIT Margin 1.5% 9.1% (760) bps Variances
Slide 17: Principal Joint Venture Detail
PRINCIPAL JOINT VENTURE DETAIL Dow’s Proportionate Share of Principal JV Financial Results Drivers of YoY Changes 2Q 2020 2Q 2019 Kuwait Thai Kuwait Thai ▪ Kuwait JVs: Continued margin $ millions (unaudited) Sadara JVs JVs Sadara JVs JVs compression in MEG and EBITDA – $72 $41 $30 $120 $25 polyethyl
Slide 18: 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 19: 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 20: Non-GAAP & Definitions
NON-GAAP & DEFINITIONS Non-GAAP Financial Measures This presentation includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures include the Company's pro forma consolidated results and pro forma earnings per share on an adjusted basis. Management use
Slide 21: Operating and Pro Forma Operating EPS Reconciliation
OPERATING AND PRO FORMA OPERATING EARNINGS (LOSS) PER SHARE (EPS) RECONCILIATION Significant Items Impacting Results for the Three Months Ended Jun 30, 2020 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ (183) $ (225) $ (0.31) Less: Significant items
Slide 22: Operating and Pro Forma Operating EPS Reconciliation (Continued)
OPERATING AND PRO FORMA OPERATING EPS RECONCILIATION (CONTINUED) Significant Items Impacting Results for the Six Months Ended Jun 30, 2020 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Reported results $ 213 $ 14 $ 0.01 Less: Significant items Integration and separati
Slide 23: Operating and Pro Forma Operating EBIT & EBITDA Reconciliation
OPERATING AND PRO FORMA OPERATING EBIT & EBITDA RECONCILIATION Reconciliation of "Income (loss) from continuing operations, Three Months Ended Six Months Ended net of tax" to Operating EBIT and Operating EBITDA Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Jun 30, 2020 Jun 30, 201
Slide 24: Segment Information
SEGMENT INFORMATION Net Sales and Pro Forma Net Sales by Segment Three Months Ended Six Months Ended Jun 30, 2020 Jun 30, 2019 Jun 30, 2020 Jun 30, 2019 In millions (Unaudited) As Reported As Reported As Reported Pro Forma Packaging & Specialty Plastics $ 4,001 $ 5,205 $ 8,610 $ 10,343 Industrial In
Slide 25: Segment Information (Continued)
SEGMENT INFORMATION (CONTINUED) Adjusted Operating and Pro Forma Operating EBIT Three Months Ended Six Months Ended Jun 30, 2020 Jun 30, 2019 Jun 30, 2020 Jun 30, 2019 In millions (Unaudited) As Reported As Reported As Reported Pro Forma Packaging & Specialty Plastics $ 298 $ 694 $ 873 $ 1,346 Indus
Slide 26: Cash Conversion and Free Cash Flow Reconciliation
CASH CONVERSION AND FREE CASH FLOW RECONCILIATION Reconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow From Operations Three Months Ended In millions Jun 30, 2019 Sep 30, 2019 Dec 31, 2019 Mar 31, 2020 Jun 30, 2020 Cash flows from operating activities - continuing operations (GAAP)
Slide 27: Reconciliation of Net Debt
RECONCILIATION OF NET DEBT Reconciliation of Net Debt In millions (Unaudited) Jun 30, 2020 Dec 31, 2019 Notes payable $ 853 $ 586 Long-term debt due within one year 451 435 Long-term debt 16,288 15,975 Gross debt (GAAP) $ 17,592 $ 16,996 - Cash and cash equivalents 3,724 2,367 - Marketable securitie