10-QPeriod: Q2 FY2020

DOW INC. Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 24, 2020For Securities:DOW

Summary

Dow Inc. reported a net loss of $225 million ($0.31 per share) for the second quarter of 2020, a significant decline from a net income of $75 million ($0.10 per share) in the same period of the previous year. This downturn was primarily driven by an 18% decrease in net sales to $8.4 billion, largely attributable to the adverse impact of the COVID-19 pandemic on global demand and lower commodity prices. The pandemic led to a 14% decrease in local prices and a 9% decrease in volume across most segments. Despite the challenging environment, the company demonstrated resilience by maintaining strong liquidity, with $3.7 billion in cash and cash equivalents at the end of the quarter. Dow also took proactive steps to reduce costs and optimize operations, including a further reduction in capital expenditure targets and plans for a new restructuring program targeting over $300 million in annualized Operating EBITDA benefit. The company anticipates a sequential improvement in the third quarter, with projected sales growth and expanding margins as economies gradually reopen.

Financial Highlights

53 data points
Beta

Revenue

$8.35B

8.9% Gross Margin

Net Income

-$227.00M

-2.7% Net Margin

EPS (Diluted)

$-0.31

Total Assets

$59.28B

Cash & Equivalents

$3.73B

Free Cash Flow

$1.59B

Financial Statements
Beta
Revenue$8.35B
Cost of Revenue$7.61B
Gross Profit$744.00M
SG&A Expenses$357.00M
Operating Income$41.00M
Interest Expense$200.00M
Net Income-$227.00M
EPS (Basic)$-0.31
EPS (Diluted)$-0.31
Shares Outstanding (Basic)739.30M
Shares Outstanding (Diluted)739.30M

Key Highlights

  • 1Net sales decreased by 24% to $8.4 billion in Q2 2020 compared to $11.0 billion in Q2 2019, largely due to the impact of COVID-19 and lower commodity prices.
  • 2The company reported a net loss of $225 million for Q2 2020, compared to a net income of $75 million in Q2 2019.
  • 3Earnings per share (diluted) were $(0.31) in Q2 2020, down from $0.10 in Q2 2019.
  • 4Despite reduced demand, Dow maintained strong liquidity with $3.7 billion in cash and cash equivalents as of June 30, 2020.
  • 5The company implemented cost-saving measures, including reduced capital expenditure targets and plans for a new restructuring program expected to yield over $300 million in annualized Operating EBITDA benefit.
  • 6Dow anticipates sequential improvement in Q3 2020, projecting sales growth and expanding margins as economic conditions gradually recover.
  • 7The company's Packaging & Specialty Plastics segment, while experiencing price declines, saw flat volume and growth in Asia Pacific.

Frequently Asked Questions

The primary driver was the significant negative impact of the COVID-19 pandemic on global demand and supply chains, leading to lower sales volumes and prices. Lower commodity prices also contributed to margin compression.

Dow is focused on maintaining strong liquidity, evidenced by $3.7 billion in cash and cash equivalents. The company has also implemented cost-saving measures, including reduced capital expenditures, operating expense reductions, and a planned restructuring program aimed at improving profitability and operational efficiency.

Dow expects sequential improvement in its financial results for the third quarter of 2020. This outlook is based on projections of increased net sales (5-10%), driven by recovering demand in consumer and durable goods end-markets, and expanding margins due to recovering energy prices and polyethylene price increases.

The pandemic affected all segments, but Industrial Intermediates & Infrastructure and Performance Materials & Coatings saw notable volume decreases, particularly for products used in durable goods. Packaging & Specialty Plastics experienced flat volume overall, with growth in some areas offset by declines in others.