Dow Inc. · NYSE:DOW
Dow — The Dow Chemical Company — Q1 2011 Earnings Presentation
42 slides from Dow's earnings presentation, Apr 28, 2011
Slide 1: Q1 2011 Earnings Conference Call
The Dow Chemical Company Q7 2077 Earnings Conference Call Dow April 28, 2011
Slide 2: SEC Disclosure Rules
SEC Disclosure Rules Some of our comments today may 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 expect
Slide 3: Agenda
Agenda = 1Q11 Overview « Financial Update = Strategy In Action = Outlook & Priorities (i) Within this presentation ~All sales, price and volume comparisons are presented excluding divestitures, unless otherwise noted. —-Alireferences to earnings per share, EBITDA®) and EBITDA margin’) ava presented
Slide 4: Focus on Execution Drives Earnings Growth
Focus on Execution Drives Earnings Growth = Earnings per share grows 90% to $0.82 " EBITDA reaches second highest quarter on record — EBITDA margin up 300 basis points — Eighth consecutive quarter of year-over-year margin expansion " Sales up 20% — Double-digit gains in every geographic area and ope
Slide 5: 1Q11 Financial Performance
1011 Financial Performance Dollars in millions, except per share amounts — Qt ' on 1a : | -_ Net Sales Net Sales excluding divestitures Price change in percent excluding divestitures Volume change in percent excluding divestitures EBITDA excluding certain items Net Income Available for Common Stockh
Slide 6: Year-Over-Year Volume Trends
Year-Over-Year Volume Trends Electronic & a Volume up 8% Specialty Materials infant = Growth across every Health & Ag hi d Sciences geograp IC elie) an Performance every operating segment Systems oo Prose . Double-digit gains in plastics Electronic & Specialty chemicals & Materials and Health & Ener
Slide 7: Year-Over-Year Price Trends
Year-Over-Year Price Trends Electronic & Specialty Materials = Price up 12% Coatings & Infrastructure = Up in all operating geal fg segments Performance . Systems - Notable gain in Performance Performance Products Products Plastics = More than offset $700MM Chemicals & . . Energy increase in feedsto
Slide 8: Operating Segment View
Operating Segment View Electronic and Specialty Materials = Volume up 11% = Dow Electronic Materials posted 15% demand growth, with increases across all business units = Volume gains of >40% in Growth Technologies, driven by wins from new product introductions = Specialty Materials volumes rose in a
Slide 9: Operating Segment View
Operating Segment View Health and icultural Sciences = Record sales and EBITDA, driven by volume growth of 14% = Double-digit volume gains for agricultural chemicals in EMEA = Continued ramp up of SmartStax® = Cottonseed volume grew >90% on sales of Phytogen® = Sales up 16%, with volume up 6% and pr
Slide 10: Operating Segment View
Operating Segment View = Price gains of 14% and 5% volume growth §) = Price gains in all geographic areas, with double-digit increases in EMEA i and Latin America | = Volume growth of >30% in Asia Pacific with new Thailand investments = Growing demand in emerging geographies drove double-digit sales
Slide 11: Additional Financial Highlights
Additional Financial Highlights = Equity earnings at ~$300 million = 1Q11 working capital vs. 1Q10 — DSO: down 2 days to 43 days — DSI: rose to 70 days due to seasonal builds and turnaround prep = CapEx of $405 million for the quarter = Net Debt to Capital essentially flat with 4Q10 at 42.8% — Retir
Slide 12: Catalysts Will Further Enhance Earnings Trajectory
Catalysts Will Further Enhance Earnings Trajecto = Renewed Portfolio $ billions EBITDA Annual Run Rate = Integration Strength = Growth Initiatives of his: " Financial Flexibility 110 2a10 gato 4ato 1011 = Efficiency Drive nation of Dow = Shed non-core assets = Tilt portfolio toward higher-growth end
Slide 13: Reshaping Plastics Portfolio for Long-Term Success
Reshaping Plastics Portfolio for Long-Term Success | JV PET Styrene Monomer Polystyrene ABS suoyjnjos pue syonpoig Ayeiseds Polycarbonate Right- Polypropylene Sized HDPE sjonpald PayenuUsisysiq ABojouyos | Performance Plastics will be reflected in future segment reporting. Strategic Intent = Shed no
Slide 14: Performance Plastics: An End-Market Orientation
Performance Plastics: An End-Market Orientation Electrical & Telecommunications Packaging Hygiene & Medical Elastomers End-Markets / Applications End-Markets /A\ \' Ny ate Weep 1 \ Pinisicere ‘ End-Markets / Applications pplications: End-Markets / Applications + Flexible Packaging * Diapers / Adult
Slide 15: Ethylene Integration Enhances U.S. Feedstock Flexibility
lene Integration Enhances U.S. Feedstock Flexibility = Integration remains a core Dow in 2017 vs Current Industry element of our competitive inaleiy are advantage Dow Ethane = Announcements expand our Industry Propane industry-leading flexibility oWPRapai Scere ---------------}----_ assets increases
Slide 16: Propylene Integration Enhances Growth
Propylene Integration Enhances Growth = Propane supply expected to be long Dow's Sources of Propylene in the U.S. 100% = Positions specialty businesses for profitable growth 80% « Announcements will close Dow’s purchase gap to <10% of total use 60% ~_Dow’s Uses of Propylene 40% = Dow is the largest
Slide 17: Investments in Emerging Regions
Investments in Emerging Regions Thailand update | = Specialty Elastomers plant now online = Solution PE ramps up = Thailand HPPO startup on track for 2H 2011 Also coming in 2011 = Saudi project final investment decision = New electronic materials facility in E. China = New coatings plant in Vietnam
Slide 18: Monetizing the Innovation Pipeline
onetizing the Innovation Pipeline TRANSPORTATION & [io ¢ REFUGE ADVANCED™ powered by SmartStax®: Registration in the U.S. * EVOQUE™ next-generation hiding technology: Commercially launched ¢ POWERCORE™ five-gene trait stack technology: Regulatory approval in Brazil ¢ Industry breakthrough flame-reta
Slide 19: Enhanced Financial Flexibility
Enhanced Financial Flexibility $35 Billion in Cash Flow trom Operations through 2015 Sharp EBITDA Rise Post-Recession Uses of Cash $16 . $14 = Deleveraging — Reduce gross debt ~$4B in 1H11 $12 = Shareholder Remuneration i f — Raised dividend 67% 2* [=) = Invest for Growth z * | 4 — — Megaprojects &
Slide 20: Outlook: Geography and Sector Insights
Outlook: Geography and Sector Insights Significant Acceleration of Demand Growth Flat or Insignificant Demand Growth (+ or -) i Significant Deceleration of Demand Growth DUSTRY April 2010 January 2011 April 2011 NORTH AMERICA LA(EX-BRAZIL) BRAZIL WESTERNEUROPE REGION MIDDLE EAST/ AFRICA INDIA CHINA
Slide 21: On Track to Deliver CEO 2011 Priorities
On Track to Deliver CEO 2011 Priorities =» Maximize margin through price/volume management = Investment decision on Saudi megaproject = Accelerate commercialization of innovation pipeline = Enhance financial flexibility # Maintain Dow’s hallmark reputation for safe and reliable operations
Slide 22: N N — ° rs © ne =
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Slide 23: Appendix
Appendix <> tre [ Rt] Fx 23
Slide 24: Electronic & Specialty Materials
Electronic & Specialty Materials Dollars in millions | tai] | 1a10 | Sat Fsis46 | | 51.179] Price 3% Volume EBITDA, excluding Certain Items‘") Equity earnings included in EBITDA () See Supplemental Information regarding these items. 1Q11 Sales 1Q11 Trends vs. 1Q10 Price Dow Electronic Materials Spec
Slide 25: Coatings & Infrastructure
Coatings & Infrastru Dollars in millions 1Q11 | | 1010 | Sales Reported Price Reported Volume Price excluding divestitures Volume excluding divestitures EBITDA, excluding Certain Items‘) Equity earnings included in EBITDA (1) See Supplemental Information regarding these items. 1Q11 Sales 1Q11 Trends
Slide 26: Health & Agricultural Sciences
Health & Agricultural Sciences [emcee [sees isn | | 880 Price 3% | Mine feerroaS* Ca | | [Equity emings ncwsesneerToa | sa] | 32) 1Q11 Sales Other 1Q11 Trends vs. 1Q10 Dow AgroSciences Dow AgroSciences <> tre| Ft romut 26
Slide 27: Performance Systems
Performance Systems Dollars in millions Sas F siser | | st.e75| Reported Price Reported Volume Price excluding divestitures Volume excluding divestitures EBITDA [scar | [05 $(4) ° Equity earnings included in EBITDA 1Q11 Sales 1Q11 Trends vs. 1Q10 Dow Automotive Systems Lt t L Dow Wire & Cable t t t
Slide 28: Performance Products
Performance Products Dollars in millions Sales $2,789 Reported Price 14% Reported Volume (10%) Price excluding divestitures 16% Volume excluding divestitures 2% EBITDA, excluding Certain Items'') $291 Equity earnings included in EBITDA (See Supplemental Information regarding these items. 1Q11 Trends
Slide 29: Plastics
Plastics Dollars in millions Sales Reported Price Reported Volume Price excluding divestitures Volume excluding divestitures 11% (12)% 14% 5% EBITDA $718 Equity earnings included in EBITDA Polyethylene Polypropylene Polycarbonate & Compounds & Blends — partially divested Plastics Licensing & Catalys
Slide 30: Chemicals & Energy
Chemicals & Energy Dollars in millions Sas [sero] [eso] Price Volume EBITDA Equity earnings included in EBITDA vs. 1Q10 Chlor-Alkali/Chlor-Viny! t + t Energy t + t Ethylene Oxide/Ethylene Glycol (EO/EG) t t L Other 1Q11 Sales Other Chlor- Alkali/Chlor- Vinyl <> tre| Ft romut 30
Slide 31: Reconciliation of Non-GAAP Financial Measure
Reconciliation of Non-GAAP Financial Measure Three Months Ended Potfars in millions 03/31/11 03/31/10 - Depreciation and Amortization 731 757 + Interest income 7 7 - Interest expense and amortization of debt discount 377 376 Income Before Income Taxes $841 $655 <> tre| Ft romut Sil
Slide 32: Supplemental Information
Supplemental Information Results in the first quarter of 2011 were unfavorably impacted by two items: + Pretax charges totaling $31 million for integration costs related to the April 1, 2009 acquisition of Rohm and Haas Company (“Rohm and Haas”). The charges are included in “Acquisition and integrat
Slide 33: Supplemental Information
Supplemental Information Certain Items Impacting Results In millions, except per share amounts Restructuring charges Acquisition related integration costs Loss on early extinguishment of debt Total Dow (1) Impact on “Income Before Income Taxes” Pretax Impact on Impact Impact (1) Net Income (2) on EP
Slide 34: Certain Items Affecting Results
Certain Items Affecting Results Certain items reducing EBITDA by operating segment In millions Three Months Ended Electronic & Specialty Materials Coatings & Infrastructure Health & Agricultural Sciences Performance Systems Performance Products Plastics Chemicals & Energy Hydrocarbons <> tre| Ft rom
Slide 35: 1Q11 Earnings Per Share Reconciliation
1Q11 Earnings Per Share Reconciliation U.S. $ Earnings per common share — diluted $0.54 Acquisition related integration costs Loss on early extinguishment of debt Earnings per common share — diluted, excluding certain items See Supplemental Information regarding these items. <> tre| Ft romut 31)
Slide 36: 1Q10 Earnings Per Share Reconciliation
1Q10 Earnings Per Share Reconciliation See Supplemental Information regarding these items. <> tre| Ft romut 36
Slide 37: Principal Joint Ventures
Principal Joint Ventures Although Dow participates in many joint ventures, the most significant joint ventures from a financial perspective are: Compania Mega S.A. Dow Corning Corporation EQUATE Petrochemical Company K.S.C. Equipolymers The Kuwait Olefins Company K.S.C. MEGlobal The SCG-Dow Group Un
Slide 38: Preliminary Results for Principal Joint Ventures
Preliminary Results for Principal Joint Ventures Principal Joint Ventures - Total Dow Proportionate Share Dollars in millions 1 Q 1 1 1 Q1 01) Dollars in millions 4 Q 4 1 1 Q 1 01) $4,005] $9,724 $1.91 Adjusted Sales) $3,107] $2,973] | Adjusted Sales) $1,517 EBITDA®) $919 | | EBITDA®) Depreciation &
Slide 39: Global Operating Rates as a Percent of Capacity
Global Operating Rates as a Percent of Capacity YTD 86% 84% 82% 11% 68% 1% 14% 14% 83% 82% 83% 83% 83% <> tre| Ft romut Sk)
Slide 40: Hydrocarbon / Energy Price Index
Hydrocarbon / Energy Price Index U.S NON U.S. GLOBAL | YEAR | QTR | YTD | QTR | YTD | QTR | YTD_| | i976] 100 TT 400 | 1977 99 _ Hare} ne} 90] 1976 = 100 [ig7o TT 16 TT 420] 250 230 240 190 170 150 130 a 110 253 166 [263 [| 166_| a 90 ee ‘76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 ‘00 ‘02 ‘04 ‘0
Slide 41: Global Hydrocarbon / Energy Purchased Unit Cost Index
Global Hydrocarbon / Energy Purchased Unit Cost Index 1976 = 100 700 600 500 400 300 200 100 Qt ‘76 ‘78 ‘80 '82 '84 '86 ‘88 '90 '92 '94 '96 '98 ‘00 ‘02 ‘04 ‘06 ‘08 ‘10 <> tre| Ft romut Al
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The Dow Chemical Company — Q1 2011 Earnings Presentation on 6ix