10-QPeriod: Q1 FY2021

DOW INC. Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 23, 2021For Securities:DOW

Summary

Dow Inc. reported a significant improvement in financial performance for the first quarter of 2021 compared to the same period in the prior year. Net sales surged by 22% to $11.9 billion, driven by a 19% increase in local prices across all segments, reflecting strong supply and demand fundamentals and recovery from pandemic-related impacts. This top-line growth, coupled with effective cost management and favorable equity earnings from nonconsolidated affiliates, translated into a substantial increase in profitability. Net income available for common stockholders more than quadrupled to $991 million, resulting in diluted earnings per share of $1.32, a significant jump from $0.32 in Q1 2020. The company's operational performance was robust, despite some volume constraints attributed to the severe winter storm in the U.S. Gulf Coast. The Packaging & Specialty Plastics segment, in particular, showed strong growth. The company also benefited from improved equity in earnings from nonconsolidated affiliates, notably Sadara Chemical Company, and positive currency impacts. Dow maintained a strong liquidity position and managed its debt effectively, with no significant long-term debt maturities until the latter half of 2024.

Financial Highlights

50 data points
Beta

Revenue

$11.88B

15.3% Gross Margin

Net Income

$986.00M

8.3% Net Margin

EPS (Diluted)

$1.32

Total Assets

$60.44B

Cash & Equivalents

$4.16B

Free Cash Flow

-$291.00M

Financial Statements
Beta
Revenue$11.88B
Cost of Revenue$10.06B
Gross Profit$1.82B
SG&A Expenses$366.00M
Operating Income$1.01B
Interest Expense$196.00M
Net Income$986.00M
EPS (Basic)$1.32
EPS (Diluted)$1.32
Shares Outstanding (Basic)744.80M
Shares Outstanding (Diluted)749.80M

Key Highlights

  • 1Net sales increased by 22% year-over-year to $11.9 billion, driven by a 19% rise in local prices.
  • 2Net income available for common stockholders surged to $991 million, up from $239 million in Q1 2020.
  • 3Diluted earnings per share (EPS) rose to $1.32 from $0.32 in the prior year's quarter.
  • 4Equity in earnings of nonconsolidated affiliates turned positive at $224 million, a significant improvement from a loss of $89 million in Q1 2020.
  • 5The Packaging & Specialty Plastics segment saw net sales grow by 32% year-over-year.
  • 6The company maintained a strong liquidity position with $13.6 billion in cash and available liquidity.
  • 7Effective tax rate decreased to 24.0% from 34.8% in the prior year's quarter.

Frequently Asked Questions

The primary driver of Dow's revenue growth was a substantial increase in local prices across all operating segments and geographic regions, up 19% year-over-year. This was attributed to strong supply and demand fundamentals, recovery from the COVID-19 pandemic, and the impact of events like Winter Storm Uri which tightened supply.

Winter Storm Uri caused temporary production outages and supply shortages, particularly in the U.S. Gulf Coast. This led to volume decreases in certain segments like Industrial Intermediates & Infrastructure and Performance Materials & Coatings, as well as in the U.S. & Canada and Latin America regions. However, the industry-wide impact also contributed to pricing momentum.

Dow expects continued profitable growth, driven by the broadening economic recovery, vaccine distribution progress, and tight market fundamentals. The company is well-positioned for value creation due to its differentiated feedstock flexibility, geographic scale, cost advantages, and strong cash generation capabilities.

Dow maintained a strong financial position with $13.6 billion in cash and available liquidity at the end of the quarter. The company has no significant long-term debt maturities until the second half of 2024 and benefits from fully undrawn committed credit facilities. Its focus on net debt as a key financial leverage metric shows a trend towards improved capital structure.