Dow Provides Update on Third Quarter 2024 Earnings Guidance

Rhea-AI Summary

Dow Inc. (NYSE: DOW) has updated its Q3 2024 earnings guidance, expecting revenue of approximately $10.6 billion and Operating EBITDA of about $1.3 billion. The revised outlook is primarily due to an unplanned event at a Texas ethylene cracker in late July and higher input costs and margin compression in Europe. These challenges are partially offset by improved North America pricing and feedstock costs in Packaging & Specialty Plastics. For Q4, Dow anticipates typical seasonal demand, but expects benefits from lower turnaround costs, higher operating rates at the Texas cracker, and fewer weather-related events in the U.S. Gulf Coast.

Positive

• Improved North America pricing and feedstock costs in Packaging & Specialty Plastics
• Expected lower turnaround costs in Q4
• Anticipated higher operating rates at Texas cracker in Q4
• Projected fewer weather-related events in U.S. Gulf Coast for Q4

Negative

• Significant unplanned event at Texas ethylene cracker in late July
• Higher input costs and margin compression in Europe
• Q3 revenue guidance of $10.6 billion
• Q3 Operating EBITDA guidance of $1.3 billion

Insights

Financial Analyst

Dow's Q3 2024 guidance update reveals significant challenges. The projected $10.6 billion revenue and $1.3 billion Operating EBITDA indicate potential headwinds. The unplanned event at the Texas ethylene cracker is a major concern, likely impacting production capacity and efficiency. European operations face a double whammy of higher input costs and margin compression, suggesting potential market share loss or pricing pressures. However, there are some silver linings: improved North American pricing and lower feedstock costs in Packaging & Specialty Plastics could partially offset these negatives. Looking ahead to Q4, while seasonal demand fluctuations are expected, reduced turnaround costs and higher operating rates as the Texas cracker ramps up could provide some relief. Investors should closely monitor the company's ability to maintain financial discipline and execute growth strategies amidst these challenges.

Chemical Industry Expert

The unplanned event at Dow's Texas ethylene cracker is a significant setback. Ethylene is a important feedstock for many downstream products and disruptions can have far-reaching effects on the supply chain. The European situation is equally concerning, with higher input costs and margin compression indicating potential structural issues in the region's chemical industry. However, the improved conditions in North America, particularly in Packaging & Specialty Plastics, suggest a geographical shift in market dynamics. The expected Q4 improvements, including lower turnaround costs and higher operating rates, hint at Dow's operational resilience. The focus on long-term growth levers amid these challenges is commendable, but execution will be key. Investors should watch for updates on the Texas cracker's recovery timeline and any strategic shifts to address the European market challenges.

Market Research Analyst

Dow's Q3 guidance update offers a mixed bag for investors. The $10.6 billion revenue projection, while substantial, may fall short of previous expectations due to the Texas cracker incident. The $1.3 billion Operating EBITDA forecast suggests compressed margins, likely impacting profitability. The contrasting regional performance—challenges in Europe versus improvements in North America—highlights the importance of geographic diversification. The mention of "typical seasonality" for Q4 demand indicates no anticipated market surprises, which could be viewed positively in an uncertain economic environment. The company's focus on financial discipline and long-term growth levers amidst these headwinds is crucial. Investors should pay attention to how Dow navigates these challenges, particularly its strategies to mitigate European market pressures and capitalize on North American strengths. The upcoming Morgan Stanley Laguna Conference presentation may provide additional insights into Dow's strategic direction.

MIDLAND, Mich., Sept. 12, 2024 /PRNewswire/ -- Dow Inc. (NYSE: DOW) today provided an update to its third quarter 2024 earnings guidance. The Company expects third quarter revenue to be approximately $10.6 billion and Operating EBITDA¹ to be approximately $1.3 billion.

"The updated third quarter outlook is largely driven by a significant unplanned event that occurred in late July at one of our ethylene crackers in Texas. In addition, we are currently experiencing higher input costs and margin compression in Europe. These headwinds are partially offset by improved North America pricing and feedstock costs in Packaging & Specialty Plastics," said Jim Fitterling, chair and chief executive officer. "As we look to the fourth quarter, we expect typical seasonality in demand. However, we expect a positive impact from lower turnaround costs, higher operating rates as we ramp up our Texas cracker, and fewer weather-related events in the U.S. Gulf Coast. We remain focused on maintaining our operating and financial discipline while executing on our long-term growth levers."

Fitterling will participate in a fireside chat today at 11:45 a.m. ET during the 12^th Annual Morgan Stanley Laguna Conference, as previously announced by the company on September 9, 2024. Interested parties can join the live webcast. A replay and transcript will also be available following the event.

About Dow
Dow (NYSE: DOW) is one of the world's leading materials science companies, serving customers in high-growth markets such as packaging, infrastructure, mobility and consumer applications. Our global breadth, asset integration and scale, focused innovation, leading business positions and commitment to sustainability enable us to achieve profitable growth and help deliver a sustainable future. We operate manufacturing sites in 31 countries and employ approximately 35,900 people. Dow delivered sales of approximately $45 billion in 2023. References to Dow or the Company mean Dow Inc. and its subsidiaries. Learn more about us and our ambition to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world by visiting www.dow.com.

For further information, please contact:
Investors:	Media:
Andrew Riker	Rachelle Schikorra
ajriker@dow.com	ryschikorra@dow.com
+1 989-633-5564	+1 989-638-4090

Cautionary Statement about Forward-Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "may," "opportunity," "outlook," "plan," "project," "seek," "should," "strategy," "target," "will," "will be," "will continue," "will likely result," "would" and similar expressions, and variations or negatives of these words or phrases.

Forward-looking statements are based on current assumptions and expectations of future events that are subject to risks, uncertainties and other factors that are beyond Dow's control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements and speak only as of the date the statements were made. These factors include, but are not limited to: sales of Dow's products; Dow's expenses, future revenues and profitability; any global and regional economic impacts of a pandemic or other public health-related risks and events on Dow's business; any sanctions, export restrictions, supply chain disruptions or increased economic uncertainty related to the ongoing conflicts between Russia and Ukraine and in the Middle East; capital requirements and need for and availability of financing; unexpected barriers in the development of technology, including with respect to Dow's contemplated capital and operating projects; Dow's ability to realize its commitment to carbon neutrality on the contemplated timeframe, including the completion and success of its integrated ethylene cracker and derivatives facility in Alberta, Canada; size of the markets for Dow's products and services and ability to compete in such markets; failure to develop and market new products and optimally manage product life cycles; the rate and degree of market acceptance of Dow's products; significant litigation and environmental matters and related contingencies and unexpected expenses; the success of competing technologies that are or may become available; the ability to protect Dow's intellectual property in the United States and abroad; developments related to contemplated restructuring activities and proposed divestitures or acquisitions such as workforce reduction, manufacturing facility and/or asset closure and related exit and disposal activities, and the benefits and costs associated with each of the foregoing; fluctuations in energy and raw material prices; management of process safety and product stewardship; changes in relationships with Dow's significant customers and suppliers; changes in public sentiment and political leadership; increased concerns about plastics in the environment and lack of a circular economy for plastics at scale; changes in consumer preferences and demand; changes in laws and regulations, political conditions or industry development; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, including the ongoing conflicts between Russia and Ukraine and in the Middle East; weather events and natural disasters; disruptions in Dow's information technology networks and systems, including the impact of cyberattacks; and risks related to Dow's separation from DowDuPont Inc. such as Dow's obligation to indemnify DuPont de Nemours, Inc. and/or Corteva, Inc. for certain liabilities.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled "Risk Factors" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, and the Company's subsequent Quarterly Reports on Form 10-Q. These are not the only risks and uncertainties that Dow faces. There may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business. If any of those risks or uncertainties develops into an actual event, it could have a material adverse effect on Dow's business. Dow Inc. and The Dow Chemical Company and its consolidated subsidiaries assume no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.

1. Operating EBITDA is defined as earnings (i.e., "Income before income taxes") before interest, depreciation and amortization, excluding the impact of significant items.
   ^®TM Trademark of The Dow Chemical Company ("Dow") or an affiliated company of Dow

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SOURCE The Dow Chemical Company

FAQ

What is Dow's Q3 2024 revenue guidance?

Dow expects Q3 2024 revenue to be approximately $10.6 billion.

What is Dow's Q3 2024 Operating EBITDA guidance?

Dow anticipates Q3 2024 Operating EBITDA to be approximately $1.3 billion.

What factors affected Dow's Q3 2024 earnings guidance?

The main factors were an unplanned event at a Texas ethylene cracker, higher input costs, and margin compression in Europe, partially offset by improved North America pricing and feedstock costs in Packaging & Specialty Plastics.

What does Dow expect for Q4 2024?

Dow expects typical seasonal demand in Q4, with benefits from lower turnaround costs, higher operating rates at the Texas cracker, and fewer weather-related events in the U.S. Gulf Coast.