Dow (DOW) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $10.9 billion, down 4% year-over-year but up 1% sequentially, with volume up 1% year-over-year, led by the US and Canada.

• Net income available for common stockholders was $439 million ($0.62/share), down from $485 million ($0.68/share) in Q2 2023; operating EPS was $0.68, with $0.06 per share in restructuring and efficiency costs excluded.

• Cash from operations was $832 million, down $515 million year-over-year but up $372 million sequentially; $691 million was returned to shareholders via dividends and share repurchases.

• Achieved third consecutive quarter of year-over-year volume growth despite a slow global macroeconomic recovery, especially in building, construction, and consumer durables.

• Announced acquisition of Circulus Holdings to expand recycling capacity and divestiture of flexible packaging laminating adhesives business, both expected to close in 2024.

Financial highlights

• Operating EBIT for Q2 2024 was $819 million, down $66 million year-over-year but up $145 million sequentially, driven by gains in packaging, specialty plastics, and performance materials and coatings.

• Operating EBIT margin was 7.5%, down 20 bps year-over-year but up 120 bps sequentially.

• Free cash flow for Q2 2024 was $109 million, down from $786 million year-over-year; cash flow conversion was 55.4% for the quarter.

• Equity earnings were $26 million, an $83 million improvement year-over-year, mainly from Kuwait and Sadara JVs.

• Gross margin for Q2 2024 was 12.1%, down from 13.5% in Q2 2023.

Outlook and guidance

• Management expects continued sequential earnings improvement in H2 2024, with Q3 earnings expected to be slightly above Q2.

• Packaging and specialty plastics to see modest top-line sequential growth, with robust polyethylene demand in North America and typical EMEA seasonality.

• Glycol II facility ramp-up to provide a $75 million tailwind in Q3, increasing to $90 million in Q4.

• Full-year 2024 capital spending expected to be ~$3 billion, with major investments in the Fort Saskatchewan Path2Zero project.

• Building and construction and consumer durables demand expected to remain subdued in 2024.