10-KPeriod: FY2019

DOW INC. Annual Report, Year Ended Dec 31, 2019

Filed February 7, 2020For Securities:DOW

Summary

Dow Inc. reported significant changes in its business structure during the fiscal year ended December 31, 2019, marked by its successful separation from DowDuPont on April 1, 2019, establishing itself as an independent, publicly traded materials science company. The company's net sales decreased by 13% to $43 billion compared to the prior year, primarily driven by lower local prices across all segments and regions, and a 2% decline in volume, partially offset by a 1% increase in 'Portfolio & Other'. Despite the revenue dip, Dow reported progress on its strategic initiatives, including investments in capacity expansion and a focus on sustainability, such as agreements to incorporate recycled plastics into its product offerings. The company also incurred significant restructuring, goodwill impairment, and asset-related charges totaling $3.2 billion, largely due to post-merger restructuring actions and a $1.04 billion goodwill impairment charge related to its Coatings & Performance Monomers reporting unit. This indicates a challenging year of integration and strategic repositioning following the separation.

Financial Highlights

53 data points
Beta

Revenue

$42.95B

14.7% Gross Margin

Net Income

-$1.36B

-3.2% Net Margin

EPS (Diluted)

$-1.84

Total Assets

$60.52B

Cash & Equivalents

$2.38B

Free Cash Flow

$5.93B

Financial Statements
Beta
Revenue$42.95B
Cost of Revenue$36.66B
Gross Profit$6.29B
SG&A Expenses$1.59B
Operating Income-$1.72B
Interest Expense$933.00M
Net Income-$1.36B
EPS (Basic)$-1.84
EPS (Diluted)$-1.84
Shares Outstanding (Basic)742.50M
Shares Outstanding (Diluted)742.50M

Key Highlights

  • 1Dow Inc. completed its separation from DowDuPont on April 1, 2019, becoming an independent materials science company listed on the NYSE under the ticker "DOW".
  • 2Net sales decreased by 13% to $43 billion in 2019, attributed to an 11% decrease in local prices and a 2% decrease in volume, with declines across all segments and geographic regions.
  • 3The company incurred significant restructuring, goodwill impairment, and asset-related charges of $3.2 billion in 2019, including a $1.04 billion goodwill impairment for the Coatings & Performance Monomers segment.
  • 4Dow announced plans to enhance competitiveness through strategic investments, including expanding ethylene production capacity and retrofitting cracker technology for on-purpose propylene.
  • 5The company is advancing its sustainability goals, with agreements to incorporate recycled plastics and utilize wood-based renewable naphtha into its feedstock.
  • 6Equity in earnings from nonconsolidated affiliates turned into a loss of $94 million in 2019, primarily due to increased losses from Sadara and lower earnings from Kuwait and Thai joint ventures.
  • 7Dow Inc. repurchased $500 million of its common stock in 2019 and reduced its gross debt by nearly $3 billion.

Frequently Asked Questions

Following its separation from DowDuPont on April 1, 2019, Dow Inc. reported net sales of $43 billion for the year ended December 31, 2019, a decrease of 13% from $49.6 billion in 2018. This decline was driven by lower prices and reduced volumes across its operating segments. The company also recorded substantial charges related to restructuring, goodwill impairment, and asset impairments.

The decrease in net sales was primarily attributed to an 11% decrease in local prices and a 2% decrease in volume. These factors were observed across all operating segments and geographic regions, reflecting challenging market conditions and pricing pressures.

Dow Inc. incurred significant charges totaling $3.2 billion in 2019, primarily related to restructuring programs, a goodwill impairment of $1.04 billion for the Coatings & Performance Monomers reporting unit, and asset-related charges, including a $1.76 billion charge related to its Sadara Chemical Company investment.

Dow is advancing its strategic initiatives for future growth and sustainability. This includes announced investments to expand ethylene production capacity in Freeport, Texas, and Alberta, Canada, and retrofitting its Plaquemine, Louisiana facility to produce on-purpose propylene. On the sustainability front, Dow has entered into agreements to incorporate recycled plastics and utilize wood-based renewable naphtha as feedstock, aligning with its commitment to a circular economy for plastics.