10-QPeriod: Q2 FY2023

DOW INC. Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 26, 2023For Securities:DOW

Summary

Dow Inc. reported a significant decline in net sales and net income for the second quarter and first six months of 2023 compared to the same periods in 2022. Net sales decreased by 27% in the second quarter and 25% year-to-date, driven by broad-based declines in local prices (down 18% and 14% respectively) and volumes (down 8% and 10% respectively), attributed to slower economic activity. Net income available for common stockholders fell dramatically, with diluted EPS dropping to $0.68 in Q2 2023 from $2.26 in Q2 2022. The company implemented a significant restructuring program initiated in January 2023, recording $541 million in pretax charges primarily for workforce reductions and asset write-downs. Despite the challenging environment, Dow Inc. maintained a strong liquidity position with $2.9 billion in cash and cash equivalents and $12.8 billion in total liquidity sources at the end of June 2023. The company also continued its capital allocation strategy, including $250 million in share repurchases during the second quarter.

Financial Highlights

49 data points
Beta

Revenue

$11.42B

13.5% Gross Margin

Net Income

$482.00M

4.2% Net Margin

EPS (Diluted)

$0.68

Total Assets

$58.29B

Cash & Equivalents

$2.92B

Free Cash Flow

$1.35B

Financial Statements
Beta
Revenue$11.42B
Cost of Revenue$9.88B
Gross Profit$1.54B
SG&A Expenses$408.00M
Interest Expense$172.00M
Net Income$482.00M
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)707.00M
Shares Outstanding (Diluted)709.90M

Key Highlights

  • 1Net sales for Q2 2023 declined 27% to $11.4 billion, and for the first six months of 2023 fell 25% to $23.3 billion, due to lower prices and volumes across all segments.
  • 2Net income available for common stockholders decreased significantly: $485 million ($0.68/share diluted) for Q2 2023 vs. $1.66 billion ($2.26/share diluted) for Q2 2022.
  • 3A 2023 Restructuring Program was initiated, resulting in $541 million in pretax charges for workforce reductions and asset write-downs, expected to be substantially complete by the end of 2024.
  • 4Operating EBIT for Q2 2023 was $885 million, down from $2.4 billion in Q2 2022, reflecting lower sales prices and demand.
  • 5The company reported $1.88 billion in cash provided by operating activities for the first six months of 2023, a decrease from $3.46 billion in the prior year period.
  • 6Dow Inc. repurchased $250 million of its common stock in Q2 2023, as part of its ongoing capital return strategy.
  • 7The company maintained a strong liquidity position with $2.9 billion in cash and cash equivalents and $12.8 billion in total liquidity sources as of June 30, 2023.

Frequently Asked Questions

The decline in net sales and profitability was primarily driven by a challenging macroeconomic environment leading to slower economic activity. This resulted in decreased demand, causing both local prices to fall (down 18% in Q2 and 14% YTD) and sales volumes to decrease (down 8% in Q2 and 10% YTD) across all operating segments and geographic regions.

Dow initiated a restructuring program in January 2023 aimed at structural cost improvements, enhancing agility, and long-term competitiveness. The program involved $541 million in pretax charges for workforce reductions and asset write-downs. These actions are expected to be substantially completed by the end of 2024 and are designed to help the company navigate the current economic climate and improve its operational efficiency.

Dow continues to maintain a strong liquidity position. As of June 30, 2023, the company had $2.9 billion in cash and cash equivalents and access to $12.8 billion in total liquidity sources, including committed credit facilities. Operating cash flow remains the primary source of liquidity, and the company expects to meet its financial obligations and capital allocation priorities, including dividends and share repurchases.

Dow anticipates that the macroeconomic environment will remain challenging in the second half of the year. The company is focused on executing its near-term cost savings initiatives, advancing strategic priorities, and maintaining its disciplined capital allocation. The company's 2023 restructuring program is on track to deliver $1 billion in cost savings.