The Urethane Blog

Dow Q3 Results

Dow reports third quarter 2021 results


• GAAP earnings per share (EPS) was $2.23; Operating EPS¹ was $2.75, compared to $0.50 in the year-ago
period. Operating EPS excludes certain items in the quarter, totaling $0.52 per share, primarily related to an
early extinguishment of debt.
• Net sales were $14.8 billion, up 53% versus the year-ago period and 7% sequentially, with gains in all operating
segments and regions.
• Local price increased 50% versus the year-ago period and 5% sequentially, reflecting gains in all operating
segments, businesses and regions, driven by tight supply and demand dynamics across key value chains.
• Volume increased 2% versus the year-ago period, driven by gains in Packaging & Specialty Plastics and
Performance Materials & Coatings. Sequentially, volume was also up 2%, reflecting ongoing economic recovery
and continued underlying end-market demand strength, partly offset by supply and global logistics constraints.
• Equity earnings were $249 million, up $189 million from the year-ago period, primarily driven by margin
expansion at Sadara and the Kuwait joint ventures. Equity earnings were down $29 million from the prior quarter
as Sadara gains were more than offset primarily by a planned maintenance turnaround at a Kuwait
joint venture.
• GAAP Net Income was $1.7 billion. Operating EBIT1 was $2.9 billion, up more than $2.1 billion from the yearago
period. Gains were posted across all operating segments and businesses, reflecting margin expansion and
increased equity earnings. Sequentially, operating EBIT increased 2%, on gains in Industrial Intermediates &
Infrastructure and Performance Materials and Coatings.
• Cash provided by operating activities – continuing operations was $2.7 billion, up $958 million year-over-year
and an increase of $698 million compared to the prior quarter. Free cash flow1 was $2.3 billion.
• Gross debt was reduced by more than $1.1 billion in the quarter. Proactive liability management actions to
tender existing notes have resulted in no substantive long-term debt maturities due until 2026 and reduced
annual interest expense by more than $60 million.
• Returns to shareholders totaled $918 million in the quarter, comprised of $518 million in dividends and
$400 million in share repurchases.


Jim Fitterling, chairman and chief executive officer, commented on the quarter:

“The Dow team delivered another quarter of sequential and year-over-year top- and bottom-line growth. Despite
higher energy costs and industry-wide value chain disruptions from hurricanes on the U.S. Gulf Coast, our proactive
storm preparations enabled us to maintain the safety of our team and operations, and recover quickly. Coupled with
our global footprint, feedstock flexibility and structural cost advantages, we continued to capture robust end-market
demand and price momentum. As a result, we generated higher cash flow from operations and achieved sales
growth across all segments and geographies.

Additionally, earlier this month at our 2021 Investor Day we outlined a strategic plan to increase underlying EBITDA
by more than $3 billion across the cycle through the implementation of a phased and disciplined approach to
decarbonize our footprint and grow earnings. Our strategy enables us to capture demand growth for circular and
low- to zero-carbon emissions products; progress our productivity actions; and continue to deliver our financial

Polyurethanes & Construction Chemicals business increased net sales compared to the year-ago period with price
gains in all regions on tight supply and demand dynamics in key value chains. Volume declines year-over-year were
primarily driven by a planned transition of a low-margin coproducer contract, weather-related outages and thirdparty
supply constraints. Sequentially, the business delivered sales growth due to higher local price and volume
increases from additional supply availability to meet resilient demand.

Performance Materials & Coatings segment net sales were $2.5 billion, up 26% versus the year-ago period. Local
price increased 23% year-over-year due to tight supply and demand dynamics, with gains in both businesses and
in all regions. Volume increased 2% year-over-year as stronger demand for mobility, electronics, personal care and
industrial applications was partly offset by supply constraints for acrylic monomers and architectural coatings.
Currency increased net sales by 1% year-over-year. On a sequential basis, the segment recorded a 2% increase
in sales with price gains in both businesses and in all regions. Volume declined 5% sequentially as continued
consumer and industrial demand strength was more than offset by third-party supply and global logistics constraints.
Operating EBIT was $284 million, compared to $75 million in the year-ago period, as Op. EBIT margins increased
750 basis points due to strong price momentum and robust demand recovery for silicones and industrial coatings
offerings. Sequentially, Op. EBIT was up $59 million, expanding Op. EBIT margins by 210 basis points on price
gains leading to margin expansion.
Consumer Solutions business achieved higher net sales year-over-year with local price gains in all regions. Volume
increased versus the year-ago period, led by stronger consumer demand for personal care, mobility, and electronics
offerings. Sequentially, sales were down as price increases in all regions were more than offset by volume declines
from planned maintenance and third-party supply and logistics constraints.
Coatings & Performance Monomers business achieved increased net sales year-over-year as higher raw material
costs and tight supply and demand dynamics led to local price gains in all regions. Volumes were down versus the
year-ago period as demand recovery for industrial coatings was more than offset by supply availability challenges
due to weather-related outages and third-party supply and logistics constraints. Sequentially, the business delivered
local price gains in all regions. Volume increased sequentially due to continued strong demand for acrylic monomers
and architectural coatings and increased supply.


“We continue to see robust end-market demand that is expected to extend into 2022, coupled with near-term
logistics constraints and low inventory levels across our value chains,” said Fitterling. “Looking ahead, Dow is well positioned to increase earnings, cash flow and returns as we decarbonize our footprint and achieve our 2030 and
2050 carbon emissions reduction targets. We will continue to build on our competitive advantage with growth from
higher-margin, sustainability-driven, downstream solutions, and value-accretive investments to replace end-of-life
assets with carbon-efficient and higher-ROIC production. Dow expects to deliver significant long-term value for
shareholders as we continue to apply our balanced capital allocation approach to grow earnings while maintaining
our strong operational and financial discipline.”