10-QPeriod: Q1 FY2023

DOW INC. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 26, 2023For Securities:DOW

Summary

Dow Inc. reported a net loss of $93 million ($0.13 per share) for the first quarter of 2023, a significant decline from the $1.57 billion net income ($2.11 per share) reported in the same period of 2022. This downturn was driven by a 22% decrease in net sales to $11.9 billion, attributed to a 10% decrease in local prices and an 11% drop in volume across all operating segments. The company also incurred substantial restructuring charges of $541 million related to a new cost-saving program aimed at enhancing long-term competitiveness and agility. Despite the near-term financial challenges, Dow highlighted its ongoing strategic initiatives, including decarbonization and waste transformation efforts, which are expected to boost earnings. The company also maintained a strong liquidity position with $3.3 billion in cash and cash equivalents and $13.2 billion in total liquidity sources. Management remains focused on navigating the current economic environment while emphasizing the underlying long-term growth fundamentals of its market verticals.

Financial Highlights

50 data points
Beta

Revenue

$11.85B

10.3% Gross Margin

Net Income

-$96.00M

-0.8% Net Margin

EPS (Diluted)

$-0.13

Total Assets

$59.32B

Cash & Equivalents

$3.32B

Free Cash Flow

$535.00M

Financial Statements
Beta
Revenue$11.85B
Cost of Revenue$10.63B
Gross Profit$1.22B
SG&A Expenses$428.00M
Interest Expense$185.00M
Net Income-$96.00M
EPS (Basic)$-0.13
EPS (Diluted)$-0.13
Shares Outstanding (Basic)708.20M
Shares Outstanding (Diluted)708.20M

Key Highlights

  • 1Dow Inc. reported a net loss of $93 million ($0.13/share) in Q1 2023, a significant reversal from a net income of $1.57 billion ($2.11/share) in Q1 2022.
  • 2Net sales decreased by 22% to $11.9 billion in Q1 2023, driven by a 10% decrease in local prices and an 11% decrease in volume.
  • 3The company incurred $541 million in restructuring and asset-related charges in Q1 2023, stemming from a new cost improvement program affecting approximately 2,000 employees.
  • 4Equity in losses of nonconsolidated affiliates was $48 million in Q1 2023, a notable shift from earnings of $174 million in Q1 2022, primarily due to lower demand and margins in joint ventures.
  • 5Operating cash flow from continuing operations was $531 million in Q1 2023, a substantial decrease from $1.61 billion in Q1 2022.
  • 6The company repurchased $125 million of its common stock in Q1 2023 and declared a quarterly dividend of $0.70 per share.
  • 7Dow maintains a strong liquidity position with $3.3 billion in cash and cash equivalents and $13.2 billion in total liquidity sources at the end of Q1 2023.

Frequently Asked Questions

The significant decline in net income was primarily driven by a substantial decrease in net sales, down 22% to $11.9 billion, due to lower local prices (down 10%) and reduced sales volumes (down 11%). Additionally, the company recorded $541 million in restructuring charges in Q1 2023, which negatively impacted profitability.

The $541 million charge is part of a new restructuring program initiated in January 2023 to improve structural costs, enhance agility, and long-term competitiveness. It includes $344 million for severance and related benefits for approximately 2,000 employees globally and $197 million for asset write-downs and write-offs. The program is expected to be substantially complete by the end of 2024.

Dow maintains a strong liquidity position. As of March 31, 2023, the company had $3.3 billion in cash and cash equivalents and total liquidity sources of $13.2 billion, with all committed credit facilities undrawn. Management believes it has sufficient liquidity to meet its obligations.

Dow expects the benefit of its operational and cost actions to continue building throughout 2023. The company anticipates that oil and gas spreads will support its cost-advantaged positions. Dow is also progressing its 'decarbonize and grow' and 'transform the waste' strategies, aiming to increase its underlying earnings profile by $3 billion across the economic cycle.