Financial Highlights

• GAAP earnings per share was $0.62; operating earnings per share (EPS)¹ was $0.68, compared to $0.75 in the year-ago period and $0.56 in the prior quarter. Operating EPS excludes significant items in the quarter related to restructuring and efficiency costs totaling $0.06 per share.
• Net sales were $10.9 billion, down 4% versus the year-ago period. Sales were up 1% sequentially, driven by gains in Performance Materials & Coatings and Packaging & Specialty Plastics.
• Volume increased 1% versus the year-ago period, with gains led by the U.S. & Canada. Sequentially, volume increased 1%, with gains in all regions except Asia Pacific, which was flat. Excluding Hydrocarbons & Energy, volume increased 4% year-over-year and 2% sequentially.
• Local price decreased 4% year-over-year. Sequentially, local price increased 1%, led by gains in Europe, the Middle East, Africa and India (EMEAI).
• Currency decreased net sales by 1% both year-over-year and sequentially.
• Equity earnings were $26 million, an $83 million improvement compared to the year-ago period, driven by gains at the Kuwait and Sadara joint ventures. Sequentially, equity earnings were up $9 million.
• GAAP net income was $458 million. Operating EBIT¹ was $819 million, down $66 million year-over-year, primarily driven by lower integrated margins and higher planned maintenance activity, which were partly offset by improved equity earnings. Sequentially, Op. EBIT was up $145 million, reflecting gains in Performance Materials & Coatings and Packaging & Specialty Plastics.
• Cash provided by operating activities – continuing operations was $832 million, down $515 million year-over-year and up $372 million compared to the prior quarter due to stronger cash flow conversion¹ and a release of working capital.
• Returns to shareholders totaled $691 million in the quarter, including $491 million in dividends and $200 million in share repurchases.

Summary Financial Results 

CEO Quote

Jim Fitterling, Chair and Chief Executive Officer, commented on the quarter:

"In the second quarter, Team Dow delivered sequential earnings improvement and our third consecutive quarter of year-over-year volume growth," said Fitterling. "The pace of the global macroeconomic recovery has been slower than expected. We remain focused on working capital, reducing costs, and matching our operating rates to current demand. We're innovating with our customers, which was evident in the quarter as we captured growing demand in packaging, electronics, and home & personal care. With a continued focus on cash generation, we delivered cash flow from operations of $832 million and free cash flow of $109 million. This enabled us to return $691 million to shareholders while progressing our higher-return growth investments."

Segment Highlights

Packaging & Specialty Plastics 

Packaging & Specialty Plastics segment net sales in the quarter were $5.5 billion, down 7% versus the year-ago period. Local price decreased 4% year-over-year, due to lower downstream polymer prices primarily in Asia Pacific. Currency was flat. Volume decreased 3% year-over-year, driven by lower merchant hydrocarbon sales, partly offset by higher demand for functional polymers and polyethylene. On a sequential basis, net sales increased by 2%, led by gains in EMEAI.

Equity earnings were $55 million, an increase of $36 million compared to the prior year, led by gains at our principal joint ventures, including Sadara which had planned maintenance turnaround activity in the prior year. Sequentially, equity earnings were up $30 million, driven by gains at our non-principal joint ventures.

Operating EBIT was $703 million, a decrease of $215 million compared to the year-ago period, driven by lower integrated margins, higher planned maintenance activity, and lower non-recurring licensing sales. Sequentially, Op. EBIT increased by $98 million, primarily due to higher integrated margins.

Packaging and Specialty Plastics business reported a net sales decline versus the year-ago period as higher demand for industrial, consumer, and flexible food packaging was more than offset by lower prices, primarily in infrastructure and mobility end-markets, and lower non-recurring licensing sales. Sequentially, net sales increased, led by higher polyethylene sales in the U.S. & Canada, EMEAI, and Latin America.

Hydrocarbons & Energy business reported a net sales decline compared to the year-ago period, driven by lower merchant olefin and aromatic sales primarily due to lighter feedslate cracking in EMEAI. Sequentially, net sales decreased slightly due to lower third-party power and steam sales in the U.S. & Canada. 

Industrial Intermediates & Infrastructure 

Industrial Intermediates & Infrastructure segment net sales were $3 billion, down 7% versus the year-ago period. Local price declined 7% year-over-year. Currency decreased net sales by 1%. Volume was up 1% year-over-year, driven by gains in Polyurethanes & Construction Chemicals. On a sequential basis, net sales decreased 2% as volume gains in Industrial Solutions were more than offset by lower volumes in Polyurethanes & Construction Chemicals, primarily in the U.S. & Canada, including the impact of a third-party supplier outage.

Equity losses for the segment were $31 million, an improvement of $52 million versus the year-ago period, driven by improved MEG margins at the Kuwait joint ventures. Equity losses in the prior quarter were $15 million. Sequentially, the earnings decline was primarily driven by lower prices and volumes at Sadara.

Operating EBIT was $7 million, an improvement of $42 million versus the year-ago period, driven by improved equity earnings, partly offset by lower integrated margins. On a sequential basis, operating EBIT decreased $80 million, driven by higher planned maintenance activity and equity losses, as well as lower volumes.

Polyurethanes & Construction Chemicals business reported a net sales decrease compared to the year-ago period, driven by local price declines, which were partly offset by volume gains in EMEAI, led by building & construction. Sequentially, net sales decreased as price gains in all geographic regions except Latin America were more than offset by lower volumes in the U.S. & Canada, including the impact of a third-party supplier outage.

Industrial Solutions business reported a decrease in net sales compared to the year-ago period, driven by local price declines and the impact of an outage at Louisiana Operations, which successfully restarted at the end of June. Sequentially, net sales increased, led by volume gains in Asia Pacific and local price gains in EMEAI and Latin America.

Performance Materials & Coatings 

Performance Materials & Coatings segment net sales in the quarter were $2.2 billion, up 2% versus the year-ago period. Local price decreased 4% year-over-year, with declines in both businesses. Currency decreased net sales by 1%. Volume was up 7% year-over-year, driven by gains in both businesses and all geographic regions. On a sequential basis, net sales were up 4%, driven by higher volumes in both businesses, primarily in the U.S. & Canada and Asia Pacific.

Operating EBIT was $146 million, an improvement of $80 million compared to the year-ago period, driven by broad-based business and geographic volume growth. Sequentially, Op. EBIT increased $105 million, driven by volume gains in both businesses and lower planned maintenance activity.

Consumer Solutions business reported a decrease in net sales versus the year-ago period, as higher volumes in all geographic regions and most end-markets, including home & personal care and consumer electronics, were more than offset by lower prices. Sequentially, net sales increased, driven by volume gains across all end-markets as well as price gains in the U.S. & Canada and EMEAI, which were partly offset by lower prices in Asia Pacific. 

Coatings & Performance Monomers business reported an increase in net sales compared to the year-ago period, driven by volume gains in all geographic regions, which were partly offset by lower prices. Sequentially, net sales increased, driven by seasonally higher demand for pavement markings and architectural coatings.

Outlook

"As we look to the second half of the year, Team Dow is focused on continuing to deliver sequential earnings improvements while navigating through the slower macro environment we remain in," said Fitterling. "While near-term demand in many markets that we serve is growing, building & construction and consumer durables are unlikely to significantly change in 2024. We will continue driving higher sales through our innovation portfolio and diverse product mix. And, through leveraging our global scale, strategically advantaged cost positions, and counter-cyclical growth investments, we remain on track to enable higher earnings and shareholder returns."