Dow(DOW) - 2025 Q2 - Quarterly Results

Financial Highlights & Overview CEO Quote and Strategic Actions CEO Jim Fitterling outlined aggressive actions to generate over $6 billion in cash and earnings growth by 2026, focusing on margin improvement and portfolio optimization - The company is taking aggressive actions to deliver near-term cash support and earnings growth levers, targeting a total of more than $6 billion by 2026[2] - Actions include improving margins, optimizing the global portfolio, and adjusting the dividend to maintain financial flexibility and shareholder value amidst weak macroeconomic conditions[2] Q2 2025 Financial Performance Summary Q2 2025 saw a broad decline in financial performance, with net sales down 7% to $10.1 billion, a GAAP net loss of $801 million, and negative operating cash flow Q2 2025 Key Financial Metrics | In millions, except per share | 2Q25 | 2Q24 | vs. SQLY | 1Q25 | vs. PQ | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales (in millions) | $10,104 | $10,915 | $(811) | $10,431 | $(327) | | GAAP Income (Loss), Net of Tax (in millions) | $(801) | $458 | $(1,259) | $(290) | $(511) | | Operating EBIT (in millions) | $(21) | $819 | $(840) | $230 | $(251) | | Operating EBITDA (in millions) | $703 | $1,501 | $(798) | $944 | $(241) | | GAAP Earnings (Loss) Per Share | $(1.18) | $0.62 | $(1.80) | $(0.44) | $(0.74) | | Operating Earnings Per Share | $(0.42) | $0.68 | $(1.10) | $0.02 | $(0.44) | | Cash from Operating Activities (in millions) | $(470) | $832 | $(1,302) | $104 | $(574) | - Net sales decreased 7% YoY, with local prices down 7% and volume down 1%; sequentially, net sales were down 3%[4] - GAAP net loss was $801 million, and operating EPS was a loss of $0.42, excluding $0.76 per share of significant items, primarily restructuring and asset-related charges[4] - Cash provided by operating activities was negative $470 million, down $1.3 billion YoY, led by lower earnings from margin compression[4] Segment Performance Packaging & Specialty Plastics Packaging & Specialty Plastics saw net sales fall 9% to $5.0 billion and Operating EBIT plummet to $71 million due to severe margin compression Packaging & Specialty Plastics Financials (in millions) | Metric | 2Q25 | 2Q24 | vs. SQLY | 1Q25 | vs. PQ | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales (in millions) | $5,025 | $5,515 | $(490) | $5,310 | $(285) | | Operating EBIT (in millions) | $71 | $703 | $(632) | $342 | $(271) | - Net sales decreased 9% YoY, driven by a 10% decline in local prices, while volume increased 1%[5] - Operating EBIT fell by $632 million YoY, primarily due to lower integrated margins; sequentially, EBIT decreased by $271 million due to lower margins and higher planned maintenance[6] - The startup of the Poly-7 asset led to lower merchant ethylene sales, impacting sequential results but is expected to drive future margin uplift through full downstream integration[5][7] Industrial Intermediates & Infrastructure Industrial Intermediates & Infrastructure net sales decreased 6% to $2.8 billion, resulting in an Operating EBIT loss of $185 million due to lower prices and higher maintenance Industrial Intermediates & Infrastructure Financials (in millions) | Metric | 2Q25 | 2Q24 | vs. SQLY | 1Q25 | vs. PQ | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales (in millions) | $2,786 | $2,951 | $(165) | $2,855 | $(69) | | Operating EBIT (in millions) | $(185) | $7 | $(192) | $(128) | $(57) | - Net sales fell 6% YoY, with local price down 5% and volume down 2%; sequentially, sales declined 2% due to seasonally lower deicing fluid demand[8] - Operating EBIT decreased by $192 million YoY, driven by lower prices in both businesses and higher planned maintenance activity[11] - The Polyurethanes & Construction Chemicals business saw a YoY sales decrease due to lower volume and price in EMEAI[12] Performance Materials & Coatings Performance Materials & Coatings net sales declined 5% to $2.1 billion, but Operating EBIT increased to $152 million due to margin expansion from lower input costs Performance Materials & Coatings Financials (in millions) | Metric | 2Q25 | 2Q24 | vs. SQLY | 1Q25 | vs. PQ | | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales (in millions) | $2,129 | $2,243 | $(114) | $2,071 | $58 | | Operating EBIT (in millions) | $152 | $146 | $6 | $49 | $103 | - Operating EBIT increased by $6 million YoY, driven by margin expansion from lower input costs, which offset lower volumes[15] - Sequentially, Operating EBIT grew by $103 million, driven by lower input costs, seasonal volume gains, and continued downstream silicones growth[15] - The Coatings & Performance Monomers business saw a YoY sales decrease due to lower demand in a challenged housing market, but increased sequentially on seasonal demand for architectural coatings[17] Outlook and Corporate Information Outlook Dow's outlook focuses on mitigating oversupply through strategic actions, commissioning Q3 growth projects, and structurally improving cost base and asset footprint for resilient earnings - The company is facing signs of oversupply from new market entrants exporting at anti-competitive prices, requiring broader industry and regulatory engagement[18] - Near-term growth projects are all becoming operational in the third quarter, aiming to increase Dow's position in higher-value applications and less exposed end markets[18] - The company is focused on structurally improving its cost base, optimizing its global asset footprint, and maintaining operational excellence to strengthen its competitive position[18] Disclosures Cautionary Statement about Forward-Looking Statements This section provides a standard legal disclaimer that forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are subject to risks, uncertainties, and other factors beyond Dow's control, which may cause actual results to differ materially[23] - Key risk factors include sanctions, supply chain disruptions, inflation, interest rates, raw material prices, competition, and changes in laws and regulations[23] Non-GAAP Financial Measures Dow explains its use of non-GAAP financial measures like Operating EBIT and Free Cash Flow to provide a more relevant view of ongoing operational performance - The company uses non-GAAP measures to better reflect ongoing performance and provide a more useful comparison of year-over-year results[26] - Key non-GAAP measures are defined, including Operating EBIT (earnings before interest and significant items), Operating EBITDA (Operating EBIT plus D&A), and Free Cash Flow (cash from operations less capex)[27][28][29] Financial Statements & Reconciliations Consolidated Statements of Income Q2 2025 consolidated income statement shows net sales of $10.1 billion, a pre-tax loss of $659 million, and a net loss of $801 million Consolidated Income Statement Highlights (in millions, except EPS) | Metric | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | | :--- | :--- | :--- | | Net sales (in millions) | $10,104 | $10,915 | | Restructuring and asset related charges - net (in millions) | $591 | $— | | Income (loss) before income taxes (in millions) | $(659) | $608 | | Net income (loss) (in millions) | $(801) | $458 | | Earnings (loss) per common share - diluted | $(1.18) | $0.62 | Consolidated Balance Sheets As of June 30, 2025, Dow's balance sheet shows total assets of $59.0 billion, total liabilities of $40.4 billion, and total equity of $18.6 billion Consolidated Balance Sheet Highlights (in millions) | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets (in millions) | $17,712 | $16,590 | | Total Assets (in millions) | $58,991 | $57,312 | | Total current liabilities (in millions) | $10,486 | $10,288 | | Long-Term Debt (in millions) | $16,247 | $15,711 | | Total Liabilities (in millions) | $40,399 | $39,461 | | Total Equity (in millions) | $18,592 | $17,851 | Consolidated Statements of Cash Flows For H1 2025, cash used for operating activities was $366 million, a sharp decline from prior year, driven by a $1.1 billion net loss Consolidated Cash Flow Highlights (Six Months Ended Jun 30, in millions) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Cash provided by (used for) operating activities (in millions) | $(379) | $1,300 | | Cash used for investing activities (in millions) | $(962) | $(765) | | Cash provided by (used for) financing activities (in millions) | $1,341 | $(129) | Selected Financial Information and Non-GAAP Measures This section details financial breakdowns and reconciliations, showing Q2 2025 total Operating EBIT loss of $21 million and negative free cash flow of $1.1 billion Operating EBIT by Segment (Q2, in millions) | Segment | 2Q25 (in millions) | 2Q24 (in millions) | | :--- | :--- | :--- | | Packaging & Specialty Plastics | $71 | $703 | | Industrial Intermediates & Infrastructure | $(185) | $7 | | Performance Materials & Coatings | $152 | $146 | | Corporate | $(59) | $(37) | | Total | $(21) | $819 | - Significant items in Q2 2025 reduced reported results by $538 million net ($0.76 per share), primarily driven by $474 million in net costs from the 2025 Restructuring Program[43] Free Cash Flow Reconciliation (Q2, in millions) | Metric | 2Q25 (in millions) | 2Q24 (in millions) | | :--- | :--- | :--- | | Cash from operating activities (GAAP, in millions) | $(470) | $832 | | Capital expenditures (in millions) | $(662) | $(723) | | Free Cash Flow (non-GAAP, in millions) | $(1,132) | $109 |