10-QPeriod: Q2 FY2021

DOW INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 23, 2021For Securities:DOW

Summary

Dow Inc. reported a significant financial turnaround in the second quarter of 2021 compared to the same period in 2020. Net sales surged by 66% year-over-year to $13.9 billion, driven by broad-based price increases (up 53%) and volume growth (up 9%) across all operating segments and geographic regions. This strong performance resulted in a substantial net income of $1.9 billion available to common stockholders, a stark contrast to the net loss of $225 million in Q2 2020. The company also demonstrated improved profitability with Operating EBIT up significantly year-over-year across all segments. Key drivers for this improved performance include robust demand recovery post-pandemic, tight supply and demand fundamentals across various value chains, and the positive impact of Winter Storm Uri on pricing. Dow also continues to focus on financial discipline, evidenced by a $1.1 billion reduction in gross debt and a share repurchase program. The company's credit ratings were upgraded by S&P and its outlook revised to stable by Fitch, reflecting its strengthening financial position and operating performance.

Financial Highlights

52 data points
Beta

Revenue

$13.88B

22.7% Gross Margin

Net Income

$1.89B

13.6% Net Margin

EPS (Diluted)

$2.51

Total Assets

$61.77B

Cash & Equivalents

$3.54B

Free Cash Flow

$2.00B

Financial Statements
Beta
Revenue$13.88B
Cost of Revenue$10.74B
Gross Profit$3.15B
SG&A Expenses$440.00M
Operating Income$2.94B
Interest Expense$187.00M
Net Income$1.89B
EPS (Basic)$2.53
EPS (Diluted)$2.51
Shares Outstanding (Basic)747.00M
Shares Outstanding (Diluted)752.90M

Key Highlights

  • 1Net sales increased by 66% year-over-year to $13.9 billion in Q2 2021.
  • 2Net income available to common stockholders was $1.9 billion in Q2 2021, a significant improvement from a loss of $225 million in Q2 2020.
  • 3Earnings per share (diluted) was $2.51 in Q2 2021, compared to a loss of $0.31 in Q2 2020.
  • 4Operating EBIT for the company showed strong year-over-year improvement across all segments, indicating enhanced profitability.
  • 5Gross debt was reduced by $1.1 billion in Q2 2021.
  • 6Share repurchases of $200 million were made in Q2 2021.
  • 7Credit ratings were upgraded by S&P and outlook revised to stable by Fitch.

Frequently Asked Questions

The substantial increase in net sales was primarily driven by a 53% increase in local price and a 9% increase in volume. This was fueled by strong demand recovery following the pandemic, tight supply and demand fundamentals across key value chains, and pricing momentum resulting from industry-wide supply disruptions like Winter Storm Uri.

Profitability saw a dramatic improvement. Net income available for common stockholders swung from a loss of $225 million in Q2 2020 to a profit of $1.9 billion in Q2 2021. Similarly, diluted Earnings Per Share improved from -$0.31 to $2.51. This enhanced profitability is reflected across all operating segments, with significant increases in Operating EBIT.

The company actively manages its debt, evidenced by a $1.1 billion reduction in gross debt in Q2 2021. It also continues to return capital to shareholders through dividends ($0.70 per share declared) and share repurchases, with $200 million in common stock repurchased during the quarter. The company has no substantive long-term debt maturities until the end of 2025, demonstrating a strong liquidity position.

Dow expressed optimism for continued earnings momentum driven by improving consumer spending, international travel, and industrial production. The company believes it is well-positioned to capture value due to its differentiated materials science portfolio and participation in fast-growing end-markets as the economic recovery broadens globally.