Dow Inc.'s Performance Amidst Macroeconomic Conditions

Macroeconomic Impact on Financial Performance

Dow Inc. is leveraging its financial flexibility to invest in growth areas, despite challenging macroeconomic conditions and interest rates impacting EBITDA. Improved macroeconomic conditions and demand fundamentals are expected to drive better performance and higher shareholder returns, with cautious optimism for a seasonally strong quarter.

"We have significant financial flexibility to continue investing in areas that will raise underlying earnings, reduce emissions and drive circularity. And as the cycle dynamics improve and we unlock the full benefit of these growth investments, we see significant upside to generate higher shareholder returns." --- (DOW, event transcript, 2024/05/16)

"Additionally, as we see in the first half of the year, we've had some impacts of volumes and chemical intermediates, and we see better performance on that front due to just product availability and overall just demand fundamentals." --- (EMN, conference, 2024/06/06)

"Recent Developments Macroeconomic Conditions The Company anticipates volume improvement throughout the remainder of the year driven by further electronics market recovery as semiconductor and printed circuit board utilization rates are expected to increase, as well as reduced destocking impact in areas such as water, medical packaging and biopharma." --- (DD, sec filing, 2024/Q1)

"So I'd like to start with some background on the PM and C segment. In 2023, the businesses delivered EBITDA of $1,000,000,000 and this was a level that frankly was reflective of a challenging macro and the impact of interest rates in some of our applications. But as we turn the page and look ahead, we see demand drivers like those that you see on this page such as connectivity and green building that are increasingly requiring more advanced silicones and acrylics to achieve higher sustainability and performance requirements." --- (DOW, event transcript, 2024/05/16)

"Turning to our outlook on Slide 5. We are seeing signs of improving macroeconomic conditions in several regions, which gives us cautious optimism heading into what is typically a seasonally strong quarter." --- (DOW, earning call, 2024/Q1)

Operational Adjustments to Economic Challenges

Dow Inc. is committed to operational and financial discipline, adjusting spending as economic conditions evolve. The company focuses on growth through customer collaboration, safety, performance technologies, and sustainability initiatives like decarbonization and circularity, which are crucial for navigating economic challenges and ensuring profitable growth.

"We will demonstrate our consistent commitment to operational and financial discipline, our capital allocation priorities and our leadership in attractive market verticals." --- (DOW, earning call, 2024/Q1)

"in order to deliver that value. So that's, I don't think changed. They're not on track to hit their targets for 2025, partly because the economic situation had them moving a little bit slower, just like I explained with specialty customers where they're trying to manage costs in a difficult environment, partly because mechanical recycling isn't available to solve the problems." --- (EMN, earning call, 2024/Q2)

"As evidenced across prior economic cycles, the Company will adjust its spending as economic conditions evolve." --- (DOW, sec filing, 2024/Q2)

"Helping us identify opportunities for deeper collaboration with customers than ever before.Here's how we're pushing the accelerator on growth our scientists are focused on unlocking solutions that prioritize safety and performance technologies like silicones polyurethane foams and adhesives are helping solve crucial industry challenges like battery fire protection In line with our decarbonize and grow strategy, we're also working with partners to push the bounds of what's possible in circularity and carbon reduction." --- (DOW, Investor Day, 2024/05/16)

"Decarbonization and circularity are good for our business. They will enable us to have a clear path to deliver shareholder returns and profitable growth over the next economic cycle." --- (DOW, event transcript, 2024/05/16)

Market Demand and Customer Behavior Trends

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"Of course, we'll have to watch the trends as we go there. Industrial markets have been weak as in some cases you still got customers that are a little cautious." --- (MMM, conference, 2024/06/11)

"There's this end-market demand discussion that we're all having. And I think we see the end market demand situation similar to our customers on coatings, but you got to remember, there was a lot of destocking that those coatings customers did with us, right?" --- (EMN, earning call, 2024/Q2)

"Looking across our four market verticals, packaging demand is seeing global growth, primarily in the U.S. and Canada as the industry experiences robust domestic and export demand for polyethylene." --- (DOW, earning call, 2024/Q2)

"And we did see a step down in China production plans as soon as the EV tariffs were announced and I think some of our customers are playing it cautious here until they see how that scenario plays out because, as you know, particularly the largest producer there is exporting quite a bit there, so we do think that's a transitory item that will play out." --- (PPG, earning call, 2024/Q2)

"We will also increase investments to support end-market demand and drive growth and productivity." --- (MMM, earning call, 2024/Q1)

Cost Management and Efficiency Strategies

Dow Inc.'s cost management and efficiency strategies include a capital-efficient approach expected to add $500 million in earnings by 2030, significant restructuring and efficiency costs totaling $46 million in Q1 and $102 million in H1 2024, and organic growth investments projected to boost annual earnings by $3 billion by decade's end.

"We anticipate our capital efficient approach to our transform the waste strategy to result in more than $500,000,000 in incremental earnings by 2,030 as we commercialize 3,000,000 metric tons of circular and renewable solutions annually." --- (DOW, event transcript, 2024/04/11)

"Restructuring implementation and efficiency costs totaled $46 million in the first quarter of 2024." --- (DOW, sec filing, 2024/Q1)

"Restructuring implementation and efficiency costs totaled $56 million and $102 million for the three and six months ended June 30, 2024, respectively." --- (DOW, sec filing, 2024/Q2)

"Altogether, our organic growth investments will raise underlying earnings by more than $3,000,000,000 per year by the end of the decade. This includes the approximately $2,000,000,000 from the near term organic growth investments, another $1,000,000,000 from the path to 0 project in Fort Saskatchewan, and more than $500,000,000 from our transform the waste strategy." --- (DOW, event transcript, 2024/05/16)

"Dow Inc. and Subsidiaries Selected Financial Information and Non-GAAP Measures Significant Items Impacting Results for the Three Months Ended Mar 31, 2024 In millions, except per share amounts (Unaudited) Pretax 1 Net Income 2 EPS 3 Income Statement Classification Reported results $ 449 $ 516 $ 0.73 Less: Significant items Restructuring, implementation and efficiency costs, and asset related charges - net 4 (91) (72) (0.10)" --- (DOW, press release, 2024/07/25)

Competitive Positioning and Market Share Analysis

Dow Inc. is leveraging cost competitiveness and circularity initiatives to strengthen its market position. The company plans to transform its central Germany facility into a circularity hub, enhancing its competitive edge. Additionally, Dow's strong balance sheet allows for strategic investments, further solidifying its market share.

"So, the material finds its way then into other markets, markets where maybe also, again, older facilities, not backward integrated, not flexible, fully dependent on naphtha, these are the facilities, of course, that have been very difficult to be competitive." --- (LYB, earning call, 2024/Q1)

"So we have a good line of sight to keeping cost competitiveness. Down central Germany, I think our view there is that's going to become more of a circularity hub. So we'll look at alternatives and how to feed alternatives into that cracker and probably see that entire pocket turn into recycled content and circularity." --- (DOW, Investor Day, 2024/05/16)

"As we think about Circular Solutions, what I would say is, 1, we want to prove that the model is a business model, which gives us then the leverage of as you think about brands and the commitments that they want to make, we will look at models that create the most value for our shareholders." --- (EMN, conference, 2024/06/06)

"China markets are exhibiting very slow, but steady improvement. We're encouraged by China's targeted stimulus efforts and remain watchful for indications that these measures will deliver meaningful improvements in demand for LYB's products." --- (LYB, earning call, 2024/Q1)

"As a result of our action, the balance sheet strength gives us the flexibility to strategically invest while returning cash to shareholders." --- (DOW, event transcript, 2024/05/16)

Innovation and Product Development

Dow Inc. emphasizes collaboration and high-quality data to drive innovation in product development, focusing on sustainability, energy transition, and creating a circular economy. Their commitment to these areas is evident in their efforts to enhance industry connectivity and promote environmentally sound practices.

"anonymous: We're also increasing industry connectivity by bringing mobility leaders innovation is so fast, none of us can be successful on our own. Collaboration is the key. At Dow Mobility Science, we are energized" --- (DOW, Investor Day, 2024/05/16)

"This award speaks to our shared commitment to innovation, sustainability, and inclusion." --- (DOW, Twitter, 2024/05/10)

"With the conclusion of INC-4 yesterday, I look forward to continuing the conversation on the importance of an agreement that will drive innovation, promote environmentally sound recycling & build an inclusive financial model to enable a circular ecosystem." --- (DOW, Twitter, 2024/04/30)

"We need everyone working together to accelerate positive change, to meet the global demand for the energy transition and decarbonization, eliminate plastic pollution, and create a circular economy for plastics." --- (DOW, Twitter, 2024/04/17)

"We're focused on internal and using that high quality data to improve the way we serve customers or the way we operate plans or the way we develop new products." --- (DOW, event transcript, 2024/05/16)