截至2024年9月30日，公司在Sadara Chemical Company擁有一筆負面投資餘額爲美元。420百萬美元，包括在「其他非流動負債」（2014年12月31日負$百萬）中。負面投資餘額128Sadara Chemical Company於2024年9月30日的負面投資是由於2024年前九個月受到具有挑戰性的宏觀經濟狀況影響而產生的股權虧損。
The following tables provide earnings per share calculations for Dow Inc. for the three and nine months ended September 30, 2024 and 2023. Earnings per share of TDCC is not presented as this information is not required in financial statements of wholly owned subsidiaries.
Separately, on October 10, 2024, the Company executed a settlement agreement related to arbitration for historical product claims from a divested business. As a result, the Company recorded a pretax charge of $75 million in the third quarter of 2024, which is included in "Cost of sales" in the consolidated statements of income, related to Corporate, and included in "Accrued and other current liabilities" in the consolidated balance sheets at September 30, 2024. This is management's best estimate of the loss for which the Company has accrued a liability, although the amount is subject to further arbitration and it is reasonably possible that the total loss could range up to approximately three times that amount.
Indemnifications with Corning Incorporated
The Company had indemnification assets with Corning Incorporated of $58 million at September 30, 2024 ($100 million at December 31, 2023) related to the 2016 ownership restructure of Dow Silicones, which were included in "Other current assets" and "Noncurrent receivables" in the consolidated balance sheets.
TDCC has entered into guarantee agreements related to Sadara, a nonconsolidated affiliate. Sadara reached an agreement with its lenders to re-profile its outstanding project financing debt in the first quarter of 2021. In conjunction with the debt re-profiling, TDCC entered into a guarantee of up to approximately $1.3 billion of Sadara’s debt, proportionate to the Company's 35 percent ownership interest. The debt re-profiling also includes a grace period until June 2026, during which Sadara is obligated to make interest-only payments which are guaranteed by TDCC in proportion to the Company’s 35 percent ownership interest. As part of the debt re-profiling, Sadara established a $500 million revolving credit facility guaranteed by Dow, which would be used to fund Dow’s pro-rata share of any potential shortfall during the grace period.
NOTE 14 – LEASES
For additional information on the Company's leases, see Note 15 to the Consolidated Financial Statements included in the 2023 10-K.
The components of lease cost for operating and finance leases for the three and nine months ended September 30, 2024 and 2023 were as follows:
Lease Cost
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Operating lease cost
$
112
$
118
$
329
$
319
Finance lease cost
Amortization of right-of-use assets - finance
31
26
86
77
Interest on lease liabilities - finance
11
8
33
24
Total finance lease cost
42
34
119
101
Short-term lease cost
80
62
242
194
Variable lease cost
280
241
803
683
Sublease income
(2)
(2)
(7)
(6)
Total lease cost
$
512
$
453
$
1,486
$
1,291
The following table provides supplemental cash flow and other information related to leases:
Other Lease Information
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases
$
334
$
320
Operating cash flows for finance leases
$
33
$
24
Financing cash flows for finance leases
$
95
$
83
Right-of-use assets obtained in exchange for lease obligations:
The changes in each component of accumulated other comprehensive loss ("AOCL") for the three and nine months ended September 30, 2024and 2023 were as follows:
Accumulated Other Comprehensive Loss
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Unrealized Gains (Losses) on Investments
Beginning balance
$
(198)
$
(161)
$
(253)
$
(253)
Unrealized gains (losses) on investments
59
(33)
139
55
Tax (expense) benefit
(15)
9
(35)
48
Net unrealized gains (losses) on investments
44
(24)
104
103
(Gains) losses reclassified from AOCL to net income 1
(12)
4
(19)
(41)
Tax expense (benefit) 2
2
—
4
10
Net (gains) losses reclassified from AOCL to net income
(10)
4
(15)
(31)
Other comprehensive income (loss), net of tax
34
(20)
89
72
Ending balance
$
(164)
$
(181)
$
(164)
$
(181)
Cumulative Translation Adjustment
Beginning balance
$
(2,056)
$
(1,936)
$
(1,891)
$
(1,934)
Gains (losses) on foreign currency translation
197
(122)
42
(122)
Tax (expense) benefit
8
(6)
5
(16)
Net gains (losses) on foreign currency translation
205
(128)
47
(138)
(Gains) losses reclassified from AOCL to net income 3
(6)
(19)
(13)
(11)
Other comprehensive income (loss), net of tax
199
(147)
34
(149)
Ending balance
$
(1,857)
$
(2,083)
$
(1,857)
$
(2,083)
Pension and Other Postretirement Benefits
Beginning balance
$
(5,452)
$
(4,875)
$
(5,486)
$
(4,877)
Gains (losses) arising during the period
2
(4)
2
(7)
Amortization of net loss and prior service credits reclassified from AOCL to net income 4
21
3
64
8
Tax expense (benefit) 2
(5)
(1)
(14)
(1)
Net loss and prior service credits reclassified from AOCL to net income
16
2
50
7
Other comprehensive income (loss), net of tax
18
(2)
52
—
Ending balance
$
(5,434)
$
(4,877)
$
(5,434)
$
(4,877)
Derivative Instruments
Beginning balance
$
(79)
$
(95)
$
(51)
$
(75)
Gains (losses) on derivative instruments
37
(58)
(9)
(242)
Tax (expense) benefit
(9)
(2)
2
34
Net gains (losses) on derivative instruments
28
(60)
(7)
(208)
(Gains) losses reclassified from AOCL to net income 5
4
45
13
209
Tax expense (benefit) 2
(1)
(10)
(3)
(46)
Net (gains) losses reclassified from AOCL to net income
3
35
10
163
Other comprehensive income (loss), net of tax
31
(25)
3
(45)
Ending balance
$
(48)
$
(120)
$
(48)
$
(120)
Total AOCL ending balance
$
(7,503)
$
(7,261)
$
(7,503)
$
(7,261)
1.Reclassified to "Net sales" and "Sundry income (expense) - net."
2.Reclassified to "Provision for income taxes."
3.Reclassified to "Sundry income (expense) - net."
4.These AOCL components are included in the computation of net periodic benefit cost (credit) of the Company's defined benefit pension and other postretirement benefit plans. See Note 17 for additional information.
5.Reclassified to "Cost of sales," "Sundry income (expense) - net" and "Interest expense and amortization of debt discount."
Ownership interests in the Company's subsidiaries held by parties other than the Company are presented separately from the Company's equity in the consolidated balance sheets as "Noncontrolling interests." The amount of consolidated net income attributable to the Company and the noncontrolling interests are both presented on the face of the consolidated statements of income.
The following table summarizes the activity for equity attributable to noncontrolling interests for the three and nine months ended September 30, 2024 and 2023:
Noncontrolling Interests
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Balance at beginning of period
$
482
$
512
$
501
$
529
Net income attributable to noncontrolling interests
26
25
67
61
Distributions to noncontrolling interests 1
(2)
(15)
(41)
(43)
Cumulative translation adjustments
24
(9)
4
(34)
Other
—
—
(1)
—
Balance at end of period
$
530
$
513
$
530
$
513
1.Includes dividends paid to a joint venture of $8 million for the three and nine months ended September 30, 2024 ($8 million for the three and nine months ended September 30, 2023) which were reclassified to "Equity in earnings of nonconsolidated affiliates" in the consolidated statements of income.
NOTE 17 – PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
A summary of the Company's pension and other postretirement benefit plans can be found in Note 18 to the Consolidated Financial Statements included in the 2023 10-K. The following table provides the components of the Company's net periodic benefit cost (credit) for all significant plans:
Net Periodic Benefit Cost (Credit) for All Significant Plans
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Defined Benefit Pension Plans
Service cost
$
14
$
71
$
42
$
212
Interest cost
252
280
754
838
Expected return on plan assets
(345)
(391)
(1,034)
(1,170)
Amortization of prior service credit
(3)
(7)
(10)
(20)
Amortization of net loss
34
24
105
71
Net periodic benefit credit
$
(48)
$
(23)
$
(143)
$
(69)
Other Postretirement Benefit Plans
Service cost
$
1
$
1
$
3
$
3
Interest cost
11
11
33
34
Amortization of net gain
(10)
(14)
(31)
(43)
Net periodic benefit cost (credit)
$
2
$
(2)
$
5
$
(6)
Net periodic benefit cost (credit), other than the service cost component, is included in "Sundry income (expense) - net" in the consolidated statements of income.
A summary of the Company's stock-based compensation plans can be found in Note 19 to the Consolidated Financial Statements included in the 2023 10-K.
Stock Incentive Plan
The Company grants stock-based compensation to employees and non-employee directors under the 2019 Stock Incentive Plan, as amended. Most of the Company's stock-based compensation awards are granted in the first quarter of each year.
In the first quarter of 2024, Dow Inc. granted the following stock-based compensation awards to employees:
•1.3 million stock options with a weighted-average exercise price of $55.17 per share and a weighted-average fair value of $10.94 per share;
•2.0 million restricted stock units with a weighted-average fair value of $55.18 per share; and
•1.4 million performance stock units with a weighted-average fair value of $58.42 per share.
There was minimal grant activity in the second and third quarters of 2024.
Employee Stock Purchase Plan
The Dow Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP") was adopted by the Dow Inc. Board on February 11, 2021, and approved by stockholders at the Company's annual meeting on April 15, 2021. Under the 2024 annual offering of the 2021 ESPP, most employees will be eligible to purchase shares of common stock of Dow Inc. valued at up to 10 percent of their annual total base salary or wages. The number of shares purchased is determined using the amount contributed by the employee divided by the plan price. The plan price of the stock is equal to 85 percent of the fair market value (closing price) of the common stock at April 1, 2024 (beginning) or October 4, 2024 (ending) of the offering period, whichever is lower.
In the first quarter of 2024, employees subscribed to the right to purchase shares under the 2021 ESPP. In October 2024, 2.4 million shares were delivered to employees under the plan.
NOTE 19 – FINANCIAL INSTRUMENTS
A summary of the Company's financial instruments, risk management policies, derivative instruments and hedging activities can be found in Note 20 to the Consolidated Financial Statements included in the 2023 10-K.
Refer to Note 20 for a summary of the fair value of financial instruments at September 30, 2024 and December 31, 2023.
Debt Securities
The Company's investments in debt securities are primarily classified as available-for-sale. The following table provides investing results from available-for-sale securities for the nine months ended September 30, 2024 and 2023:
Investing Results
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Proceeds from sales of available-for-sale securities
The following table summarizes contractual maturities of the Company's investments in debt securities:
Contractual Maturities of Debt Securities at Sep 30, 2024
Cost
Fair Value
In millions
Within one year
$
90
$
79
One to five years
1,244
1,166
Six to ten years
422
412
After ten years
537
464
Total
$
2,293
$
2,121
Equity Securities
There were no material adjustments to the carrying value of the not readily determinable investments for impairment or observable price changes for the three and nine months ended September 30, 2024. There was $1 million of net unrealized losses recognized in earnings on equity securities for the three and nine months ended September 30, 2024 ($4 million of net unrealized losses for the three months ended September 30, 2023 and $6 million of net unrealized gains for the nine months ended September 30, 2023).
Investments in Equity Securities
Sep 30, 2024
Dec 31, 2023
In millions
Readily determinable fair value
$
14
$
17
Not readily determinable fair value
$
173
$
171
Derivative Instruments
The notional amounts of the Company's derivative instruments at September 30, 2024 and December 31, 2023 were as follows:
Notional Amounts 1
Sep 30, 2024
Dec 31, 2023
In millions
Derivatives designated as hedging instruments:
Interest rate contracts
$
1,745
$
3,000
Foreign currency contracts
$
6,207
$
2,316
Derivatives not designated as hedging instruments:
Interest rate contracts
$
286
$
59
Foreign currency contracts
$
14,798
$
5,824
1.Notional amounts represent the absolute value of open derivative positions at the end of the period. Multi-leg option positions are reflected at the maximum notional position at expiration.
The notional amounts of the Company's commodity derivatives at September 30, 2024 and December 31, 2023 were as follows:
Commodity Notionals 1
Sep 30, 2024
Dec 31, 2023
Notional Volume Unit
Derivatives designated as hedging instruments:
Hydrocarbon derivatives
4.7
3.7
million barrels of oil equivalent
Derivatives not designated as hedging instruments:
Hydrocarbon derivatives
1.6
1.4
million barrels of oil equivalent
1.Notional amounts represent the net volume of open derivative positions outstanding at the end of the period.
Maturity Dates of Derivatives Designated as Hedging Instruments
The following table provides the fair value and balance sheet classification of derivative instruments at September 30, 2024 and December 31, 2023:
Fair Value of Derivative Instruments
Sep 30, 2024
Dec 31, 2023
In millions
Gross
Counterparty and Cash Collateral Netting 1
Net 2
Gross
Counterparty and Cash Collateral Netting 1
Net 2
Asset derivatives
Derivatives designated as hedging instruments:
Interest rate contracts 3
$
107
$
(68)
$
39
$
73
$
(73)
$
—
Interest rate contracts 4
—
—
—
59
(56)
3
Foreign currency contracts 3
29
(21)
8
21
(5)
16
Foreign currency contracts 4
8
—
8
5
—
5
Commodity contracts 3
38
(17)
21
27
(21)
6
Commodity contracts 4
45
(39)
6
2
(1)
1
Total
$
227
$
(145)
$
82
$
187
$
(156)
$
31
Derivatives not designated as hedging instruments:
Interest rate contracts 3
$
2
$
(2)
$
—
$
4
$
(3)
$
1
Foreign currency contracts 3
20
(10)
10
33
(16)
17
Commodity contracts 3
20
(11)
9
33
(28)
5
Commodity contracts 4
8
(3)
5
—
—
—
Total
$
50
$
(26)
$
24
$
70
$
(47)
$
23
Total asset derivatives
$
277
$
(171)
$
106
$
257
$
(203)
$
54
Liability derivatives
Derivatives designated as hedging instruments:
Interest rate contracts 5
$
68
$
(68)
$
—
$
95
$
(73)
$
22
Interest rate contracts 6
—
—
—
56
(56)
—
Foreign currency contracts 5
61
(21)
40
8
(5)
3
Commodity contracts 5
25
(17)
8
34
(22)
12
Commodity contracts 6
42
(39)
3
2
(1)
1
Total
$
196
$
(145)
$
51
$
195
$
(157)
$
38
Derivatives not designated as hedging instruments:
Interest rate contracts 5
$
2
$
(2)
$
—
$
3
$
(3)
$
—
Foreign currency contracts 5
44
(10)
34
38
(16)
22
Commodity contracts 5
21
(11)
10
34
(28)
6
Commodity contracts 6
6
(3)
3
—
—
—
Total
$
73
$
(26)
$
47
$
75
$
(47)
$
28
Total liability derivatives
$
269
$
(171)
$
98
$
270
$
(204)
$
66
1.Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
2.Represents the net amounts included in the consolidated balance sheets.
3.Included in "Other current assets" in the consolidated balance sheets.
4.Included in "Deferred charges and other assets" in the consolidated balance sheets.
5.Included in "Accrued and other current liabilities" in the consolidated balance sheets.
6.Included in "Other noncurrent obligations" in the consolidated balance sheets.
Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding assets or liabilities, when applicable. The Company posted cash collateral of $15 million at September 30, 2024 ($22 million at December 31, 2023). There was zero cash collateral posted by counterparties with the Company at September 30, 2024 and December 31, 2023.
The following table summarizes the gain (loss) of derivative instruments in the consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023:
Effect of Derivative Instruments
Gain (loss) recognized in OCI 1
Gain (loss) recognized in income 2
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate contracts 3
$
—
$
—
$
—
$
—
$
7
$
—
$
(16)
$
—
Excluded components 3, 4
51
(88)
9
(93)
—
—
—
—
Cash flow hedges:
Interest rate contracts 3
—
—
1
5
(2)
(3)
(11)
(7)
Foreign currency contracts 5
16
5
(5)
6
1
—
6
1
Commodity contracts 5
—
4
22
(145)
(2)
(42)
(3)
(203)
Excluded components 4, 5
(2)
—
(8)
—
(1)
—
(5)
—
Net foreign investment hedges:
Foreign currency contracts
(45)
69
(37)
72
—
—
—
—
Excluded components 4, 6
6
4
16
35
5
19
12
26
Total derivatives designated as hedging instruments
$
26
$
(6)
$
(2)
$
(120)
$
8
$
(26)
$
(17)
$
(183)
Derivatives not designated as hedging instruments:
Interest rate contracts 3
$
—
$
—
$
—
$
—
$
—
$
—
$
1
$
1
Foreign currency contracts 6
—
—
—
—
(95)
(101)
(35)
(95)
Commodity contracts 5
—
—
—
—
(2)
(1)
—
3
Total return swap 5
—
—
—
—
23
(16)
49
(13)
Total derivatives not designated as hedging instruments
$
—
$
—
$
—
$
—
$
(74)
$
(118)
$
15
$
(104)
Total derivatives
$
26
$
(6)
$
(2)
$
(120)
$
(66)
$
(144)
$
(2)
$
(287)
1.OCI is defined as other comprehensive income (loss).
2.Pretax amounts.
3.Included in "Interest expense and amortization of debt discount" in the consolidated statements of income.
4.The excluded components are related to the time value of the derivatives designated as hedges.
5.Included in "Cost of sales" in the consolidated statements of income.
6.Included in "Sundry income (expense) - net" in the consolidated statements of income.
The following table provides the net after-tax gain (loss) expected to be reclassified from AOCL to income within the next 12 months:
Expected Reclassifications from AOCL within the next 12 months
A summary of the Company's recurring and nonrecurring fair value measurements can be found in Note 21 to the Consolidated Financial Statements included in the 2023 10-K.
Fair Value Measurements on a Recurring Basis
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis:
Fair Value Measurements on a Recurring Basis
Sep 30, 2024
Dec 31, 2023
In millions
Fair Value Level
Cost
Gain
Loss
Fair Value
Cost
Gain
Loss
Fair Value
Assets at fair value:
Cash equivalents:
Held-to-maturity securities 1
Level 2
$
105
$
—
$
—
$
105
$
485
$
—
$
—
$
485
Money market funds
Level 2
1,190
—
—
1,190
663
—
—
663
Marketable securities 2
Level 2
403
—
(42)
361
1,361
—
(61)
1,300
Nonconsolidated affiliates 3
Level 3
—
7
Other investments:
Debt securities: 4
Government debt 5
Level 2
1,101
14
(92)
1,023
766
3
(107)
662
Corporate bonds
Level 1
18
—
—
18
24
—
(3)
21
Corporate bonds
Level 2
974
10
(77)
907
1,148
17
(99)
1,066
Corporate bonds
Level 3
200
—
(27)
173
200
—
(89)
111
Equity securities 4, 6
Level 1
4
10
—
14
5
12
—
17
Derivatives relating to: 7
Interest rates
Level 2
—
109
—
109
—
136
—
136
Foreign currency
Level 2
—
57
—
57
—
59
—
59
Commodities
Level 1
—
8
—
8
—
2
—
2
Commodities
Level 2
—
103
—
103
—
60
—
60
Total assets at fair value
$
4,068
$
4,589
Liabilities at fair value:
Long-term debt including debt due within one year 8
Level 2
$
(16,460)
$
1,029
$
(764)
$
(16,195)
$
(15,024)
$
1,089
$
(747)
$
(14,682)
Guarantee liability 9
Level 3
(161)
(178)
Derivatives relating to: 7
Interest rates
Level 2
—
—
(70)
(70)
—
—
(154)
(154)
Foreign currency
Level 2
—
—
(105)
(105)
—
—
(46)
(46)
Commodities
Level 1
—
—
(4)
(4)
—
—
(2)
(2)
Commodities
Level 2
—
—
(90)
(90)
—
—
(68)
(68)
Total liabilities at fair value
$
(16,625)
$
(15,130)
1.The Company's held-to-maturity securities are primarily treasury bills and time deposits. At September 30, 2024, $66 million is included in "Cash and cash equivalents" ($485 million at December 31, 2023) and $39 million is included in "Other current assets" (zero at December 31, 2023) in the consolidated balance sheets.
2.The Company’s investments in marketable securities are included in “Other current assets” in the consolidated balance sheets.
3.Estimated asset for an investment in a limited liability company included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.
4.The Company’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.
5.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities’ obligations.
6.Equity securities with a readily determinable fair value.
7.See Note 19 for classification of derivatives in the consolidated balance sheets.
8.Cost includes fair value hedge adjustment gains of $70 million at September 30, 2024 and $49 million at December 31, 2023 on $5,129 million of debt at September 30, 2024 and $4,479 million at December 31, 2023.
9.Estimated liability for TDCC's guarantee of Sadara's debt which is included in "Other noncurrent obligations" in the consolidated balance sheets.
Cost approximates fair value for all other financial instruments.
For equity securities calculated at net asset value per share (or its equivalent), the Company had $90 million in private market securities and $16 million in real estate at September 30, 2024 ($86 million in private market securities and $18 million in real estate at December 31, 2023). There are no redemption restrictions and the unfunded commitments on these investments were $84 million at September 30, 2024 and $75 million at December 31, 2023.
For assets classified as Level 3 measurements, fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The level 3 asset values represent the fair value of an investment in a corporate bond, accounted for as a debt security. At December 31, 2023, the level 3 asset values also included an investment in a limited liability company, accounted for as an investment in nonconsolidated affiliates, and with no unfunded commitment.
For liabilities classified as Level 3 measurements, fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The fair value of the Company’s accrued liability related to the guarantee of Sadara’s debt is in proportion to the Company’s 35 percent ownership interest in Sadara. The estimated fair value of the guarantee was calculated using a "with" and "without" method. The fair value of the debt was calculated "with" the guarantee less the fair value of the debt "without" the guarantee. The "with" and "without" values were calculated using a discounted cash flow method based on contractual cash flows as well as projected prepayments made on the debt by Sadara.
Fair Value Measurements on a Nonrecurring Basis
In the first quarter of 2024, the Company recognized impairment charges of $37 million related primarily to write-downs of certain manufacturing assets in the United States and Italy. The assets, classified as Level 3 measurements, were valued at $60 million using unobservable inputs. The impairment charges were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics.
In the first quarter of 2024, as part of the 2023 Restructuring Program, the Company recorded impairment charges of $8 million for asset write-downs and write-offs related to the shutdown of certain polyurethanes assets, included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Industrial Intermediates & Infrastructure.
In the third quarter of 2024, as part of the 2023 Restructuring Program, the Company recorded impairment charges of $7 million for asset write-downs and write-offs related to the shutdown of certain silicones assets, included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings. Additionally, the Company recorded impairment charges of $1 million for asset write-downs and write-offs, included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Corporate.
Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the Company's chief operating decision maker assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate.
Segment Information
Pack. & Spec. Plastics
Ind. Interm. & Infrast.
Perf. Materials & Coatings
Corp.
Total
In millions
Three months ended Sep 30, 2024
Net sales
$
5,516
$
2,962
$
2,214
$
187
$
10,879
Equity in earnings (losses) of nonconsolidated affiliates
$
16
$
(17)
$
1
$
2
$
2
Dow Inc. Operating EBIT 1
$
618
$
(53)
$
140
$
(64)
$
641
Three months ended Sep 30, 2023
Net sales
$
5,454
$
3,035
$
2,130
$
111
$
10,730
Equity in earnings (losses) of nonconsolidated affiliates
$
50
$
(63)
$
5
$
1
$
(7)
Dow Inc. Operating EBIT 1
$
476
$
21
$
179
$
(50)
$
626
Nine months ended Sep 30, 2024
Net sales
$
16,461
$
8,921
$
6,609
$
568
$
32,559
Equity in earnings (losses) of nonconsolidated affiliates
$
96
$
(63)
$
9
$
3
$
45
Dow Inc. Operating EBIT 1
$
1,926
$
41
$
327
$
(160)
$
2,134
Nine months ended Sep 30, 2023
Net sales
$
17,508
$
9,590
$
6,603
$
300
$
34,001
Equity in earnings (losses) of nonconsolidated affiliates
$
90
$
(219)
$
14
$
3
$
(112)
Dow Inc. Operating EBIT 1
$
2,036
$
109
$
280
$
(206)
$
2,219
1.Operating EBIT for TDCC for the three and nine months ended September 30, 2024 and 2023 is substantially the same as that of Dow Inc. and therefore has not been disclosed separately in the table above. A reconciliation of "Net income" to Operating EBIT is provided in the following table.
Reconciliation of "Net income" to Operating EBIT
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Net income
$
240
$
327
$
1,236
$
755
+ Provision for income taxes
84
90
145
253
Income before income taxes
$
324
$
417
$
1,381
$
1,008
- Interest income
36
44
143
186
+ Interest expense and amortization of debt discount
The following tables summarize the pretax impact of significant items by segment excluded from Operating EBIT:
Significant Items by Segment
Three Months Ended Sep 30, 2024
Nine Months Ended Sep 30, 2024
Pack. & Spec. Plastics
Ind. Interm. & Infrast.
Perf. Mat. & Coatings
Corp.
Total
Pack. & Spec. Plastics
Ind. Interm. & Infrast.
Perf. Mat. & Coatings
Corp.
Total
In millions
Restructuring, implementation and efficiency costs, and asset related charges - net 1
$
—
$
—
$
(7)
$
(72)
$
(79)
$
(37)
$
(8)
$
(7)
$
(174)
$
(226)
Indemnification and other transaction related costs 2
—
—
—
(75)
(75)
—
—
—
(75)
(75)
Total
$
—
$
—
$
(7)
$
(147)
$
(154)
$
(37)
$
(8)
$
(7)
$
(249)
$
(301)
1.Includes restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. The three and nine months ended September 30, 2024 also include impairment charges related to the write-down of certain manufacturing assets. See Note 5 for additional information.
2.Includes a charge related to an arbitration settlement agreement for historical product claims from a divested business. See Note 13 for additional information.
Significant Items by Segment
Three Months Ended Sep 30, 2023
Nine Months Ended Sep 30, 2023
Pack. & Spec. Plastics
Ind. Interm. & Infrast.
Perf. Mat. & Coatings
Corp.
Total
Pack. & Spec. Plastics
Ind. Interm. & Infrast.
Perf. Mat. & Coatings
Corp.
Total
In millions
Restructuring, implementation and efficiency costs, and asset related charges - net 1
$
—
$
—
$
—
$
(82)
$
(82)
$
(1)
$
(48)
$
(67)
$
(572)
$
(688)
Litigation related charges, awards and adjustments 2
—
—
—
—
—
—
(177)
—
—
(177)
Indemnification and other transactions related costs 3
—
—
—
21
21
—
—
—
17
17
Total
$
—
$
—
$
—
$
(61)
$
(61)
$
(1)
$
(225)
$
(67)
$
(555)
$
(848)
1.Includes restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. The nine months ended September 30, 2023 also includes certain gains and losses associated with previously impaired equity investments.
2.Includes a loss associated with legacy agricultural products groundwater contamination matters. See Note 13 for additional information.
3.Primarily related to charges associated with agreements entered into with DuPont and Corteva as part of the separation and distribution which, among other matters, provides for cross-indemnities and allocations of obligations and liabilities for periods prior to, at and after the completion of the separation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Quarterly Report on Form 10-Q is a combined report being filed by Dow Inc. and The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the "Company") due to the parent/subsidiary relationship between Dow Inc. and TDCC. The information reflected in the report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted. Each of Dow Inc. and TDCC is filing information in this report on its own behalf and neither company makes any representation to the information relating to the other company.
Pursuant to General Instruction H(1)(a) and (b) for Form 10-Q "Omission of Information by Certain Wholly-Owned Subsidiaries," TDCC is filing this Form 10-Q with a reduced disclosure format.
Except as otherwise indicated by the context, the term "Union Carbide" means Union Carbide Corporation and the term "Dow Silicones" means Dow Silicones Corporation, both wholly owned subsidiaries of the Company. Additionally, the term "EMEAI" refers to the geographic region of Europe, Middle East, Africa and India.
Dow's website and its content are not deemed incorporated by reference into this report.
OUTLOOK
The Company continues to operate with discipline as it capitalizes on areas of demand strength and leverages its global scale and advantaged cost positions. As cycle dynamics improve, the Company remains well-positioned to enable higher returns to shareholders. The Company's financial strength will continue to support its counter-cyclical growth investments, which are focused on higher-value businesses and regions, particularly where demand is resilient and the Company has a competitive cost advantage. Altogether, these investments are expected to deliver more than $3 billion in underlying earnings to the Company by 2030.
OVERVIEW
The following is a summary of the results for the three months ended September 30, 2024:
•The Company reported net sales in the third quarter of 2024 of $10.9 billion, up 1 percent from $10.7 billion in the third quarter of 2023, and mixed by operating segment; Packaging & Specialty Plastics (up 1 percent), Industrial Intermediates & Infrastructure (down 2 percent) and Performance Materials & Coatings (up 4 percent). Net sales increased in the U.S. & Canada and EMEAI (both up 5 percent), partially offset by decreases in Asia Pacific (down 9 percent) and Latin America (down 2 percent).
•Volume increased 1 percent compared with the third quarter of 2023 and was mixed by operating segment; Packaging & Specialty Plastics (flat), Industrial Intermediates & Infrastructure (down 2 percent) and Performance Materials & Coatings (up 5 percent). Volume increased in the U.S. & Canada and EMEAI (both up 3 percent), decreased in Asia Pacific (down 6 percent) and was flat in Latin America.
•Local price was flat compared with the third quarter of 2023, and mixed by operating segment; Packaging & Specialty Plastics (up 1 percent), Industrial Intermediates & Infrastructure (flat) and Performance Materials & Coatings (down 1 percent). Local price increased in the U.S. & Canada and EMEAI (both up 2 percent) and decreased in Asia Pacific and Latin America (both down 2 percent).
•Equity in earnings of nonconsolidated affiliates was $2 million in the third quarter of 2024, compared with equity in losses of nonconsolidated affiliates of $7 million in the third quarter of 2023, primarily due to improved results at the Company's Kuwait joint ventures, partially offset by lower results at the Company's Thai and Sadara joint ventures.
•Net income available for Dow Inc. and TDCC common stockholder(s) was $214 million and $224 million, respectively, in the third quarter of 2024, compared with $302 million and $285 million, respectively, in the third quarter of 2023. Earnings per share for Dow Inc. was $0.30 in the third quarter of 2024, compared with $0.42 per share in the third quarter of 2023.
•Cash provided by operating activities - continuing operations was $800 million in the third quarter of 2024, down $858 million compared with the third quarter of 2023. Cash provided by operating activities - continuing operations was down $32 million compared with the second quarter of 2024.
•Dow Inc. repurchased $94 million of the Company's common stock in the third quarter of 2024.
•On July 1, 2024, Fitch Ratings affirmed TDCC's BBB+ and F1 rating, and affirmed its outlook of stable. Also on July 1, 2024, Standard & Poor's affirmed TDCC's BBB and A-2 rating, and affirmed its outlook of stable.
•On August 1, 2024, the Company acquired Circulus Holdings, PBLLC, a U.S. mechanical recycling company that converts plastic waste into post-consumer resin, for approximately $130 million.
•On August 6, 2024, Moody's Ratings affirmed TDCC's Baa1 and P-2 rating, and affirmed its outlook of stable.
•On August 14, 2024, Dow Inc. announced that its Board declared a dividend of $0.70 per share, payable on September 13, 2024, to shareholders of record as of August 30, 2024.
In addition, the following events occurred subsequent to the third quarter of 2024:
•On October 10, 2024, Dow Inc. announced that its Board declared a dividend of $0.70 per share, payable on December 13, 2024, to shareholders of record as of November 29, 2024.
•On October 24, 2024, the Company announced that it will complete a strategic review of select assets in Europe, primarily certain polyurethanes assets within the Industrial Intermediates & Infrastructure segment, as part of an effort to continue to optimize its global asset footprint.
RESULTS OF OPERATIONS
Net Sales
The following tables summarize net sales and sales variances by operating segment and geographic region from the prior year:
Summary of Sales Results
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Net sales
$
10,879
$
10,730
$
32,559
$
34,001
Sales Variances by Operating Segment and Geographic Region
Three Months Ended Sep 30, 2024
Nine Months Ended Sep 30, 2024
Local Price & Product Mix
Currency
Volume
Total
Local Price & Product Mix
Currency
Volume
Total
Percentage change from prior year
Packaging & Specialty Plastics
1
%
—
%
—
%
1
%
(4)
%
—
%
(2)
%
(6)
%
Industrial Intermediates & Infrastructure
—
—
(2)
(2)
(7)
(1)
1
(7)
Performance Materials & Coatings
(1)
—
5
4
(4)
(1)
5
—
Total
—
%
—
%
1
%
1
%
(5)
%
—
%
1
%
(4)
%
Total, excluding the Hydrocarbons & Energy business
Net sales in the third quarter of 2024 were $10.9 billion, up 1 percent from $10.7 billion in the third quarter of 2023. Volume was up 1 percent and local price was flat. Net sales increased in all operating segments except Industrial Intermediates & Infrastructure. Volume increased 1 percent, driven by the U.S. & Canada and EMEAI (both up 3 percent), partially offset by a decline in Asia Pacific (down 6 percent), and Latin America was flat. Volume was flat in Packaging & Specialty Plastics, decreased in Industrial Intermediates & Infrastructure (down 2 percent), and increased in Performance Materials & Coatings (up 5 percent). Local price remained flat, with gains in the U.S. & Canada and EMEAI (both up 2 percent) offset by declines in Asia Pacific and Latin America (both down 2 percent). Local price increased in Packaging & Specialty Plastics (up 1 percent), was flat in Industrial Intermediates & Infrastructure, and declined in Performance Materials & Coatings (down 1 percent). Excluding the Hydrocarbons & Energy business, net sales increased 2 percent.
Net sales for the first nine months of 2024 were $32.6 billion, down 4 percent from $34.0 billion in the same period last year, with local price down 5 percent and volume up 1 percent. Net sales decreased in all geographic regions and all operating segments except Performance Materials & Coatings, which was flat. Local price decreased in all geographic regions and in Packaging & Specialty Plastics (down 4 percent), Industrial Intermediates & Infrastructure (down 7 percent), and Performance Materials & Coatings (down 4 percent). Volume increased in the U.S. & Canada, and was flat in all other geographic regions. Volume decreased in Packaging & Specialty Plastics (down 2 percent), and increased in Industrial Intermediates & Infrastructure (up 1 percent) and Performance Materials & Coatings (up 5 percent). Excluding the Hydrocarbons & Energy business, net sales decreased 3 percent.
Cost of Sales
Cost of sales ("COS") was $9.8 billion in the third quarter of 2024, compared with $9.6 billion in the third quarter of 2023. For the first nine months of 2024, COS was $28.9 billion compared with $30.1 billion in the first nine months of 2023. COS for the three months ended September 30, 2024 increased on higher volume and a charge related to an arbitration settlement agreement for historical product claims from a divested business, and was partially offset by lower global energy and feedstock costs. COS for the nine months ended September 30, 2024 decreased primarily due to lower raw material costs, lower global energy and feedstock costs and the impact of structural cost improvements, partially offset by increased planned maintenance turnaround spending and a charge related to an arbitration settlement agreement for historical product claims from a divested business. COS as a percentage of net sales was 90.2 percent in the third quarter of 2024 (89.4 percent in the third quarter of 2023) and 88.7 percent for the first nine months of 2024 (88.5 percent for the first nine months of 2023).
Research and Development Expenses
Research and development ("R&D") expenses totaled $208 million in the third quarter of 2024, compared with $197 million in the third quarter of 2023. R&D expenses for the first nine months of 2024 were $608 million compared with $616 million in the first nine months of 2023.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses totaled $396 million in the third quarter of 2024, compared with $380 million in the third quarter of 2023. SG&A expenses increased in the third quarter of 2024 primarily due to higher bad debt expense and performance-based compensation costs. For the first nine months of 2024, SG&A expenses were $1,228 million, compared with$1,216 millionin the first nine months of 2023. SG&A expenses for the first nine months of 2024 increased primarily due to higher bad debt expense, including expense incurred as a result of a resolution of a dispute with a customer, which was partially offset by the impact of structural cost improvements.
Amortization of Intangibles
Amortization of intangibles was $76 million in the third quarter of 2024 compared with $81 million in the third quarter of 2023. In the first nine months of 2024, amortization of intangibles was $234 million, compared with $243 million in the first nine months of 2023.
Equity in Earnings (Losses) of Nonconsolidated Affiliates
The Company's share of equity in earnings of nonconsolidated affiliates was $2 million in the third quarter of 2024, compared with equity in losses of nonconsolidated affiliates of $7 million in the third quarter of 2023, an increase of $9 million, primarily due to improved performance at the Kuwait joint ventures and slightly offset by lower results at the Sadara and Thai joint ventures. The Company's share of equity in earnings of nonconsolidated affiliates was $45 million for the first nine months of 2024, compared with equity in losses of nonconsolidated affiliates of $112 million for the first nine months of 2023, primarily due to improved performance at the Kuwait and Sadara joint ventures and slightly offset by lower results at the Thai joint ventures. Cash dividends from nonconsolidated
affiliates were $266 million in the first nine months of 2024, compared with $188 million in the first nine months of 2023.
Sundry Income (Expense) – Net
Sundry income (expense) - net for the three months ended September 30, 2024 was income of $119 million and $118 million for Dow Inc. and TDCC, respectively, compared with income of $92 million and $71 million, respectively, for the three months ended September 30, 2023. The increase in sundry income is primarily due to higher gains on the sales of assets and investments and lower foreign currency exchange losses, which were partially offset by a decrease in non-operating pension and postretirement benefit plan credits.
Sundry income (expense) - net for the nine months ended September 30, 2024 was income of $256 million and $253 million for Dow Inc. and TDCC, respectively, compared with income of $202 million and $169 million, respectively, for the nine months ended September 30, 2023. The increase in sundry income is primarily due to lower foreign currency exchange losses and higher gains on the sales of assets and investments, which were partially offset by a decrease in non-operating pension and postretirement benefit plan credits.
Interest Expense and Amortization of Debt Discount
Interest expense and amortization of debt discount was $199 million in the third quarter of 2024, compared with $192 million in the third quarter of 2023. Interest expense and amortization of debt discount was $595 million in the first nine months of 2024 compared with $549 million in the first nine months of 2023. The increase in interest expense is primarily due to borrowings outside of the United States and $1.25 billion of senior unsecured notes issued in the first quarter of 2024.
Provision for Income Taxes
The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the level of equity earnings, since most earnings from the Company's equity method investments are taxed at the joint venture level. In the third quarter of 2024, the Company reported a provision for income taxes of $84 million, resulting in an effective tax rate of 25.9 percent and 25.1 percent for Dow Inc. and TDCC, respectively. In the third quarter of 2023, the Company reported a provision for income taxes of $90 million, resulting in an effective tax rate of 21.6 percent and 22.5 percent for Dow Inc. and TDCC, respectively. For the first nine months of 2024, the Company reported a provision for income taxes of $145 million, resulting in an effective tax rate of 10.5 percent and 10.4 percent for Dow Inc. and TDCC, respectively. For the first nine months of 2023, the Company reported a provision for income taxes of $253 million, resulting in an effective tax rate of 25.1 percent and 25.7 percent for Dow Inc. and TDCC, respectively. See Note 7 to the Consolidated Financial Statements for additional information about the Company's income taxes and effective tax rates.
The Company continues to monitor and evaluate legislative developments related to the Global Anti-Base Erosion Proposal Regime ("GloBE") established by the Organization of Economic Cooperation and Development’s ("OECD") Pillar Two framework. Several countries in which the Company operates have adopted GloBE into their legislation and several others are expected to enact these rules in the future. To date, such legislation has not materially impacted the Company's effective tax rate.
Net Income Available for Common Stockholder(s)
Dow Inc.
Net income available for Dow Inc. common stockholders was $214 million, or $0.30 per share, in the third quarter of 2024, compared with $302 million, or $0.42 per share, in the third quarter of 2023. Net income available for Dow Inc. common stockholders was $1,169 million, or $1.65 per share, in the first nine months of 2024, compared with $694 million, or $0.97 per share, in the first nine months of 2023. See Note 9 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.
TDCC
Net income available for the TDCC common stockholder was $224 million in the third quarter of 2024, compared with $285 million in the third quarter of 2023. Net income available for the TDCC common stockholder was $1,186 million in the first nine months of 2024, compared with $672 million in the first nine months of 2023. TDCC's common shares are owned solely by Dow Inc.
For further discussion of the Company's segments, see Part I, Item 1. Business of the combined Dow Inc. and TDCC Annual Report on Form 10-K for the fiscal year ended December 31, 2023 ("2023 10-K"), filed with the SEC on January 31, 2024.
Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the Company's chief operating decision maker assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate.
PACKAGING & SPECIALTY PLASTICS
Packaging & Specialty Plastics
Three Months Ended
Nine Months Ended
In millions
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
Net sales
$
5,516
$
5,454
$
16,461
$
17,508
Operating EBIT
$
618
$
476
$
1,926
$
2,036
Equity earnings
$
16
$
50
$
96
$
90
Packaging & Specialty Plastics
Three Months Ended
Nine Months Ended
Percentage change from prior year
Sep 30, 2024
Sep 30, 2024
Change in Net Sales from Prior Period due to:
Local price & product mix
1
%
(4)
%
Currency
—
—
Volume
—
(2)
Total
1
%
(6)
%
Packaging & Specialty Plastics net sales were $5,516 million in the third quarter of 2024, up 1 percent from net sales of $5,454 million in the third quarter of 2023, with local price up 1 percent and volume and currency flat. Local price increased in Packaging and Specialty Plastics, primarily in EMEAI and the U.S. & Canada, driven by higher pricing of polyethylene which more than offset lower pricing of downstream polymers. Local price increased in Hydrocarbons & Energy, primarily in the U.S. & Canada and EMEAI from third-party olefins sales. Volume increased in Packaging and Specialty Plastics due to higher demand for downstream polymers and an increase in non-recurring licensing sales, which was partially offset by lower polyethylene volumes. Volume decreased in Hydrocarbons & Energy in all geographic regions, led by the U.S. & Canada, primarily driven by lower third-party aromatics and energy sales.
Operating EBIT was $618 million in the third quarter of 2024, up $142 million from Operating EBIT of $476 million in the third quarter of 2023. Operating EBIT increased due to lower raw material costs and higher selling prices, which more than offset the impact of an unplanned ethylene facility outage.
Packaging & Specialty Plastics net sales were $16,461 million in the first nine months of 2024, down 6 percent from net sales of $17,508 million in the first nine months of 2023, with local price down 4 percent, volume down 2 percent and currency was flat. Local price decreased in Packaging and Specialty Plastics in all geographic regions, primarily driven by lower pricing of downstream polymers. Local price was flat in Hydrocarbons & Energy. Volume increased in Packaging and Specialty Plastics, primarily in EMEAI and the U.S. & Canada, due to higher downstream polymers and polyethylene demand. Volume decreased in Hydrocarbons & Energy in all geographic regions, led by EMEAI, primarily driven by higher internal derivative demand and lighter feedslate cracking.
Operating EBIT was $1,926 million in the first nine months of 2024, down $110 million from Operating EBIT of $2,036 million in the first nine months of 2023. Operating EBIT decreased primarily due to lower selling prices, lower volumes in Hydrocarbons & Energy, higher planned maintenance costs and the impact of an unplanned ethylene facility outage, which were partially offset by lower raw material, energy and feedstock costs.
Industrial Intermediates & Infrastructure net sales were $2,962 million in the third quarter of 2024, down 2 percent from net sales of $3,035 million in the third quarter of 2023, with volume down 2 percent and local price and currency flat. Volume decreased in Polyurethanes & Construction Chemicals and in all geographic regions except Latin America and reflected the impact of a force majeure in methylene diphenyl diisocyanatefollowing a third-party supplier outage in the U.S. & Canada. Volume increased in Industrial Solutions, led by EMEAI and Latin America, and included the benefit of increased supply availability following the restart from an outage in 2023 related to a significant unplanned event at the Louisiana Operations Glycol-2 unit in Plaquemine, Louisiana. Local price decreased in Polyurethanes & Construction Chemicals, offset by an increase in Industrial Solutions.
Operating EBIT was a loss of $53 million in the third quarter of 2024, down $74 million from Operating EBIT of $21 million in the third quarter of 2023. Operating EBIT decreased primarily due to higher planned maintenance activity and lower integrated margins, partially offset by improved equity earnings at the EQUATE joint venture.
Industrial Intermediates & Infrastructure net sales were $8,921 million in the first nine months of 2024, down 7 percent from net sales of $9,590 million in the first nine months of 2023, with local price down 7 percent, volume up 1 percent and an unfavorable currency impact of 1 percent. Local price decreased in both businesses and across all geographic regions. Volume increased in Polyurethanes & Construction Chemicals, with gains in EMEAI and Latin America partially offset by declines in Asia Pacific and the U.S. & Canada and led by building and construction and industrial applications. Volume was flat in Industrial Solutions, as increased demand for coatings and mobility applications was offset by declines in the U.S. & Canada, reflecting the impact from an outage in 2023 at the Louisiana Operations Glycol-2 unit in Plaquemine, Louisiana, which successfully restarted at the end of June 2024. Currency had an unfavorable impact on sales in Polyurethanes & Construction Chemicals, driven by EMEAI and Asia Pacific, and was flat in Industrial Solutions.
Operating EBIT was $41 million in the first nine months of 2024, down $68 million from Operating EBIT of $109 million in the first nine months of 2023. Operating EBIT decreased primarily due to lower selling prices in both businesses and an outage in 2023 at the Louisiana Operations Glycol-2 unit in Plaquemine, Louisiana, which successfully restarted at the end of June 2024, which were partially offset by lower raw material, energy and feedstock costs and improved results at the EQUATE and Sadara joint ventures.
Performance Materials & Coatings net sales were $2,214 million in the third quarter of 2024, up 4 percent from net sales of $2,130 million in the third quarter of 2023, with volume up 5 percent, local price down 1 percent and currency was flat. Volume increased in Consumer Solutions and in all geographic regions, primarily in downstream silicones, led by home and personal care and consumer and electronics applications. Volume increased in Coatings & Performance Monomers and in all geographic regions except EMEAI, primarily due to gains in industrial coatings and plastic additives which were partially offset by declines in acrylic monomers. Local price decreased in Consumer Solutions across all geographic regions and was broad-based. Local price increased in Coatings & Performance Monomers, as a result of higher raw material costs, in all geographic regions except Latin America, which was flat.
Operating EBIT was $140 million in the third quarter of 2024, down $39 million from Operating EBIT of $179 million in the third quarter of 2023. Operating EBIT decreased primarily due to higher raw material costs, partially offset by improved demand.
Performance Materials & Coatings net sales were $6,609 million in the first nine months of 2024 compared with net sales of $6,603 million in the first nine months of 2023, with volume up 5 percent, local price down 4 percent, and an unfavorable currency impact of 1 percent. Volume increased in both businesses and in all geographic regions. Volume increased in Consumer Solutions across all end-markets. The volume increase in Coatings & Performance Monomers was led by acrylic monomers and industrial and architectural coatings. Price decreased in both businesses and was broad-based. Local price decreased in Consumer Solutions across all geographic regions and in Coatings & Performance Monomers in all geographic regions except Asia Pacific. Currency unfavorably impacted sales in Consumer Solutions, driven by Asia Pacific, and was flat in Coatings & Performance Monomers.
Operating EBIT was $327 million in the first nine months of 2024, up $47 million from Operating EBIT of $280 million in the first nine months of 2023. Operating EBIT increased primarily due to improved demand and higher operating rates, which were partially offset by lower selling prices and higher raw materials costs.
Net sales for Corporate, which primarily relate to the Company's insurance operations, were $187 million in the third quarter of 2024, an increase from net sales of $111 million in the third quarter of 2023. Net sales were $568 million in the first nine months of 2024, an increase from net sales of $300 million in the first nine months of 2023.
Operating EBIT was a loss of $64 million in the third quarter of 2024, compared with a loss of $50 million in the third quarter of 2023. Operating EBIT was a loss of $160 million in the first nine months of 2024, compared with a loss of $206 millionin the first nine months of 2023. Operating EBIT loss improved primarily due to lower environmental costs and increased income from insurance operations.
CHANGES IN FINANCIAL CONDITION
The Company had cash and cash equivalents of $2,883 million at September 30, 2024 and $2,987 million at December 31, 2023, of which $1,600 million at September 30, 2024 and $1,984 million at December 31, 2023 was held by subsidiaries in foreign countries, including U.S. territories. For each of its foreign subsidiaries, Dow makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.
Cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. Dow has the ability to repatriate additional funds to the United States, which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes and the impact of foreign currency movements. At September 30, 2024, management believed that sufficient liquidity was available in the United States. The Company has and expects to continue repatriating certain funds from its non‑U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company.
The Company's cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table:
Cash Flow Summary
Dow Inc.
TDCC
Nine Months Ended
Nine Months Ended
Sep 30, 2024
Sep 30, 2023
Sep 30, 2024
Sep 30, 2023
In millions
Cash provided by (used for):
Operating activities - continuing operations
$
2,092
$
3,536
$
2,116
$
3,567
Operating activities - discontinued operations
8
4
—
—
Operating activities
$
2,100
$
3,540
$
2,116
$
3,567
Investing activities
$
(1,456)
$
(1,846)
$
(1,456)
$
(1,846)
Financing activities
$
(723)
$
(2,404)
$
(739)
$
(2,431)
Cash Flows from Operating Activities
Cash provided by operating activities from continuing operations in the first nine months of 2024 was primarily driven by the Company's cash earnings and dividends from equity method investments, which were partially offset by cash used for working capital and performance-based compensation payments. Cash provided by operating activities from continuing operations in the first nine months of 2023 was primarily driven by the Company's cash earnings, cash provided by working capital and dividends from equity method investments, which were partially offset by performance-based compensation payments.
Cash provided by operating activities from discontinued operations in the first nine months of 2024 and 2023 reflected cash payments and receipts for certain agreements and matters related to the separation from DowDuPont Inc. ("DowDuPont").
Cash Flows from Investing Activities
Cash used for investing activities in the first nine months of 2024 and 2023 were primarily for capital expenditures and purchases of investments, which were partially offset by proceeds from sales and maturities of investments. In addition, cash used for investing activities in the first nine months of 2024 included the acquisition of Circulus Holdings, PBLLC, a U.S. mechanical recycling company.
The Company's capital expenditures were $2,173 million in the first nine months of 2024, compared with $1,598 million in the first nine months of 2023. The Company expects full year capital spending in 2024 to be approximately $3 billion, which includes the ramp up of the construction of the Fort Saskatchewan Path2Zero project aligned to the Company's Decarbonize & Grow strategy. The Company expects capital spending for this key growth project to average approximately $1 billion annually through 2029. Enterprise-wide capital spending is expected to exceed depreciation and amortization through 2027, during the first phase of the project, and average depreciation and amortization over the economic cycle. As evidenced across prior economic cycles, the Company will adjust its spending as economic conditions evolve.
Cash Flows from Financing Activities
Cash used for financing activities in the first nine months of 2024 for Dow Inc. was primarily related to dividends paid to stockholders, purchases of treasury stock and payments on long-term debt, which were partially offset by proceeds from issuance of long-term debt. Cash used for financing activities in the first nine months of 2024 for TDCC was primarily related to dividends paid to Dow Inc. and payments on long-term debt, which were partially offset by proceeds from issuance of long-term debt. Cash used for financing activities in the first nine months of 2023 was primarily for debt related activities. In addition, Dow Inc. included cash outflows for dividends paid to stockholders and purchases of treasury stock. TDCC included cash outflows for dividends paid to Dow Inc.
Dow Inc. Non-GAAP Cash Flow Measures
Free Cash Flow
Dow defines Free Cash Flow as "Cash provided by operating activities - continuing operations," less capital expenditures. Under this definition, Free Cash Flow represents the cash generated by Dow from operations after investing in its asset base. Free Cash Flow, combined with cash balances and other sources of liquidity, represents the cash available to fund obligations and provide returns to shareholders. Free Cash Flow is an integral financial measure used in the Company's financial planning process.
Operating EBITDA
Dow defines Operating EBITDA as earnings (i.e., "Income before income taxes") before interest, depreciation and amortization, excluding the impact of significant items.
Cash Flow Conversion (Cash Flow from Operations to Operating EBITDA)
Dow defines Cash Flow Conversion (Cash Flow from Operations to Operating EBITDA) as "Cash provided by operating activities - continuing operations," divided by Operating EBITDA. Management believes Cash Flow Conversion is an important financial metric as it helps the Company determine how efficiently it is converting its earnings into cash flow.
These financial measures are not recognized in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should not be viewed as alternatives to GAAP financial measures of performance. All companies do not calculate non-GAAP financial measures in the same manner and, accordingly, Dow's definitions may not be consistent with the methodologies used by other companies.
Reconciliation of Free Cash Flow
Nine Months Ended
Sep 30, 2024
Sep 30, 2023
In millions
Cash provided by operating activities - continuing operations (GAAP)
$
2,092
$
3,536
Capital expenditures
(2,173)
(1,598)
Free Cash Flow (non-GAAP)
$
(81)
$
1,938
Reconciliation of Cash Flow Conversion (Cash Flow from Operations to Operating EBITDA)
Nine Months Ended
Sep 30, 2024
Sep 30, 2023
In millions
Net income (GAAP)
$
1,236
$
755
+ Provision for income taxes
145
253
Income before income taxes
$
1,381
$
1,008
- Interest income
143
186
+ Interest expense and amortization of debt discount
595
549
- Significant items ¹
(301)
(848)
Operating EBIT (non-GAAP)
$
2,134
$
2,219
+ Depreciation and amortization
2,143
1,954
Operating EBITDA (non-GAAP)
$
4,277
$
4,173
Cash provided by operating activities - continuing operations (GAAP)
$
2,092
$
3,536
Cash flow from operations to net income (GAAP)
169.3
%
468.3
%
Cash Flow Conversion (Cash flow from operations to Operating EBITDA) (non-GAAP)
48.9
%
84.7
%
1.The nine months ended September 30, 2024 includes restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program, impairment charges related to write-downs of certain manufacturing assets and activity related to the separation from DowDuPont. The nine months ended September 30, 2023 includes restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program, certain gains and losses associated with previously impaired equity investments, a loss associated with legacy agricultural products groundwater contamination matters and activity related to the separation from DowDuPont. See Note 21 to the Consolidated Financial Statements for additional information.
Liquidity & Financial Flexibility
The Company’s primary source of incremental liquidity is cash flows from operating activities. The generation of cash from operations and the Company's ability to access capital markets is expected to meet the Company’s cash requirements for working capital, capital expenditures, debt maturities, contributions to pension plans, dividend distributions to stockholders, share repurchases and other needs. In addition to cash from operating activities, the Company’s current liquidity sources also include TDCC's U.S. and Euromarket commercial paper programs, committed and uncommitted credit facilities, committed accounts receivable facilities, a medium-term notes program, a U.S. retail note program (“InterNotes®”) and other debt markets.
The Company continues to maintain a strong financial position with all of its committed credit facilities undrawn and fully available at September 30, 2024. Cash and committed and available forms of liquidity were $12.7 billion at September 30, 2024. The Company also has no substantive long-term debt maturities due until 2027. As a well-known seasoned issuer, the Company may issue debt at any time as an additional source of liquidity. Additional details on sources of liquidity are as follows:
TDCC issues promissory notes under its U.S. and Euromarket commercial paper programs. TDCC had no commercial paper outstanding at September 30, 2024. TDCC maintains access to the commercial paper market at competitive rates.Amounts outstanding under TDCC's commercial paper programs during the period may be greater or less than the amount reported at the end of the period. Subsequent to September 30, 2024, TDCC issued approximately $700 million of commercial paper.
Committed Credit Facilities
The Company also has the ability to access liquidity through TDCC's committed and available credit facilities. At September 30, 2024, TDCC had total committed and available credit facilities of $8.4 billion.
Uncommitted Credit Facilities
The Company has entered into various uncommitted bilateral credit arrangements as a potential source of excess liquidity. These lines can be used to support short-term liquidity needs and for general purposes. The Company had no drawdowns outstanding at September 30, 2024.
Accounts Receivable Securitization Facilities
In addition to the above credit facilities, the Company maintains a committed accounts receivable facility in the United States where eligible trade accounts receivable, up to $900 million, may be sold at any point in time. The Company also maintains a committed accounts receivable facility in Europe where eligible trade accounts receivable, up to €500 million, may be sold at any point in time. In the first nine months of 2024, there were $289 million in sales of receivables under the U.S. and Europe committed accounts receivable facilities ($28 million in sales of receivables in the first ninemonths of 2023). At September 30, 2024, approximately $26 million of sold receivables were outstanding.
In addition, the Company has an uncommitted accounts receivable facility in the United States providing additional liquidity. Sales of receivables under this facility were $378 million in the first nine months of 2024 (no sales of receivables in the first nine months of 2023). At September 30, 2024, approximately $19 million of sold receivables were outstanding. See Note 11 to the Consolidated Financial Statements for additional information.
Early Settlement of Letters of Credit
The Company utilizes, from time-to-time, letters of credit discounting programs to manage and expedite the settlement of letters of credit in certain regions. These letters of credit are associated with accounts receivable and the Company retains no interest in the transferred letters of credit or receivables once sold.
Accounts Receivable Discounting Facilities
The Company has access to accounts receivable discounting facilities, under which receivables are transferred with limited recourse. The Company retains no interest in the transferred receivables once sold. Sales of receivables under this facility were $581 million in the first nine months of 2024 (no sales of receivables in the first nine months of 2023). At September 30, 2024, approximately $154 millionof sold receivables were outstanding. See Note 11 to the Consolidated Financial Statements for additional information.
The Company maintains these facilities and also participates in certain customers’ supply chain financing and other early pay programs as a routine source of working capital.
Company-Owned Life Insurance
The Company has investments in company-owned life insurance ("COLI") policies, which are recorded at their cash surrender value as of each balance sheet date. The Company has the ability to monetize its investment in its COLI policies as an additional source of liquidity. At September 30, 2024, the Company had monetized $260 million of its existing COLI policies' surrender value ($97 million at December 31, 2023). See Note 6 to the Consolidated Financial Statements for additional information.
As the Company continues to maintain its strong balance sheet and financial flexibility, management is focused on net debt (a non-GAAP financial measure), as the Company believes this is the best representation of its financial leverage at this point in time. As shown in the following table, net debt is equal to total gross debt minus "Cash and cash equivalents" and "Marketable securities."
Total Debt
Dow Inc.
TDCC
Sep 30, 2024
Dec 31, 2023
Sep 30, 2024
Dec 31, 2023
In millions
Notes payable
$
111
$
62
$
111
$
62
Long-term debt due within one year
296
117
296
117
Long-term debt
16,164
14,907
16,164
14,907
Gross debt
$
16,571
$
15,086
$
16,571
$
15,086
- Cash and cash equivalents
2,883
2,987
2,883
2,987
- Marketable securities 1
361
1,300
361
1,300
Net debt
$
13,327
$
10,799
$
13,327
$
10,799
Total equity
$
18,841
$
19,108
$
19,039
$
19,406
Gross debt as a percent of total capitalization
46.8
%
44.1
%
46.5
%
43.7
%
Net debt as a percent of total capitalization
41.4
%
36.1
%
41.2
%
35.8
%
1.Included in "Other current assets" in the consolidated balance sheets.
The Company may at any time repurchase certain debt securities in the open market or in privately negotiated transactions subject to: the applicable terms under which any such debt securities were issued, certain internal approvals of the Company, and applicable laws and regulations of the relevant jurisdiction in which any such potential transactions might take place. This in no way obligates the Company to make any such repurchases nor should it be considered an offer to do so.
TDCC's public debt instruments and primary, private credit agreements contain, among other provisions, certain customary restrictive covenant and default provisions. TDCC's most significant debt covenant with regard to its financial position is the obligation to maintain the ratio of its consolidated indebtedness to consolidated capitalization at no greater than 0.70 to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement ("Revolving Credit Agreement") equals or exceeds $500 million. The ratio of TDCC's consolidated indebtedness to consolidated capitalization as defined in the Revolving Credit Agreement was 0.44 to 1.00 at September 30, 2024. Management believes TDCC was in compliance with all of its covenants and default provisions at September 30, 2024. For information on TDCC's debt covenants and default provisions, see Note 13 to the Consolidated Financial Statements included in the 2023 10-K. There were no material changes to the debt covenants and default provisions related to TDCC’s outstanding long-term debt and primary, private credit agreements in the first nine months of 2024.
In the first quarter of 2024, the Company issued $1.25 billion of senior unsecured notes. The offering included $600 million aggregate principal amount of 5.15 percent notes due 2034 and $650 million aggregate principal amount of 5.60 percent notes due 2054. The issuance was completed under the Company's Green Finance Framework, which is available on the Company's website. The Company will distribute the proceeds toward projects that support the execution of its sustainability strategy and achieve its targets focused on climate protection and a circular economy, including applicable expenditures and investments related to the Company's Fort Saskatchewan Path2Zero project, which is expected to deliver organic growth while decarbonizing 20 percent of the Company’s global ethylene capacity.
In the second quarter of 2024, the Company redeemed $10 million aggregate principal amount of 2.10 percent notes due November 2030, $30 million aggregate principal amount of 4.25 percentnotes due October 2034, $8 million aggregate principal amount of 5.25 percent notes due November 2041 and $12 million aggregate principal amount of 4.375 percent notes due November 2042. As a result of the redemption, the Company recognized a pretax gain on the early extinguishment of debt of $5 million, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.
In the first nine months of 2024, the Company issued an aggregate principal amount of $71 million of InterNotes®. The Company also issued $122 million of foreign currency loans. Additionally, the Company repaid $77 million of long-term debt.
While taking into consideration the current economic environment, management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its business obligations.
Credit Ratings
At September 30, 2024, TDCC's credit ratings were as follows:
Credit Ratings
Long-Term Rating
Short-Term Rating
Outlook
Fitch Ratings
BBB+
F1
Stable
Moody’s Ratings
Baa1
P-2
Stable
Standard & Poor’s
BBB
A-2
Stable
On July 1, 2024, Fitch Ratings affirmed TDCC's BBB+ and F1 rating, and affirmed its outlook of stable. On July 1, 2024, Standard & Poor's also affirmed TDCC's BBB and A-2 rating, and affirmed its outlook of stable. On August 6, 2024, Moody's Ratings affirmed TDCC's Baa1 and P-2 rating, and affirmed its outlook of stable. These credit agencies' decisions were made as part of their annual review process and reflect the Company's supportive financial policies, scale, liquidity and cost-advantaged footprint.
Dividends
Dow Inc.
Dow Inc. has paid dividends on a quarterly basis since the separation from DowDuPont and expects to continue to do so, subject to approval by the Dow Inc. Board. Dividends declared by the Board align to the Company's strategy announced in 2018 of returning approximately 45 percent of Operating Net Income to shareholders through dividends and total shareholder remuneration of approximately 65 percent, when including share repurchases, over the economic cycle. The Company defines Operating Net Income, a non-GAAP measure, as "Net income available for Dow Inc. common stockholders," excluding the impact of significant items. The following table summarizes dividends declared and paid to common stockholders of record in 2024:
Dow Inc. Dividends Declared and Paid
Declaration Date
Record Date
Payment Date
Amount (per share)
February 15, 2024
February 29, 2024
March 8, 2024
$
0.70
April 11, 2024
May 31, 2024
June 14, 2024
$
0.70
August 14, 2024
August 30, 2024
September 13, 2024
$
0.70
October 10, 2024
November 29, 2024
December 13, 2024
$
0.70
TDCC
TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by the Dow Inc. Board, as well as certain governance expenses. Funding is accomplished through intercompany loans. TDCC's Board reviews and determines a dividend distribution to Dow Inc. to settle the intercompany loans. For the three months ended September 30, 2024, TDCC declared and paid a dividend of $600 million to Dow Inc. ($2,077 million of dividend declared and $1,984 million of dividend paid to Dow Inc. for the nine months ended September 30, 2024). At September 30, 2024, TDCC's intercompany loan balance with Dow Inc. was insignificant.
Share Repurchase Program
On April 13, 2022, the Dow Inc. Board approved a share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date. The Company repurchased $94 million of its common stock in the third quarter of 2024 ($494 million in the first nine months of 2024). At September 30, 2024, approximately $931 million of the share repurchase program authorization remained available for repurchases. As previously announced, the Company intends to repurchase shares at a minimum to cover dilution over the cycle. The Company may from time to time expand its share repurchases beyond dilution, based on a number of factors including macroeconomic conditions, free cash flow generation, and the Dow share price. Any share repurchases, when coupled with the Company's dividends, are intended to implement the long-term strategy of targeting shareholder remuneration of approximately 65 percent over the economic cycle.
The Company has both funded and unfunded defined benefit pension plans that cover employees in the United States and a number of other countries. The Company's funding policy is to contribute to funded plans when pension laws and/or economics either require or encourage funding. In the second quarter of 2024, the Company received a pension asset reversion of approximately $70 million (approximately $90 million in the second quarter of 2023) for a portion of the excess funding of one of its plans in Europe. These plan asset reversions are included in "Other assets and liabilities, net" in the consolidated statements of cash flows.
As announced in 2021, all U.S. pension plans were frozen for substantially all employees who participated in the U.S. defined benefit pension programs effective December 31, 2023. In the fourth quarter of 2023, the Company spun off a portion of each of the Company’s two existing tax-qualified U.S defined benefit pension plans into two new tax-qualified pension plans, which includes the tax-qualified benefit obligations for substantially all employees hired after January 1, 2008. These employees earned benefits based on a set percentage of annual pay, plus interest, and the spin of these plans provide the Company the ability to separately manage the assets and obligations of these plans with like benefits. In the second quarter of 2024, as part of its ongoing pension de-risking initiatives, the Company initiated the termination of the two new tax-qualified pension plans. As part of the plan termination process, the Company will offer participants of these plans annuity or lump sum distribution options. Final asset distributions are expected to be paid from plan assets in the fourth quarter of 2025, with minimal additional funding, if any, required from the Company, and are anticipated to result in pension settlement charges, with the amounts dependent on various factors, including interest rates, plan asset returns, annuity pricing and participant distribution elections.
See Note 17 to the Consolidated Financial Statements, and Note 18 to the Consolidated Financial Statements included in the 2023 10-K for additional information related to the Company's pension plans.
Restructuring
The actions related to the 2023 Restructuring Program are expected to result in additional cash expenditures of $60 million, primarily through the first quarter of 2025, and consist of severance and related benefit costs. Restructuring implementation costs, primarily decommissioning and demolition activities related to asset actions, and costs associated with the Company's productivity and efficiency actions, are expected to result in additional cash expenditures of approximately $90 million, primarily through the first quarter of 2025. Restructuring implementation and efficiency costs totaled $55 million and $157 million for the three and nine months ended September 30, 2024, respectively.
The Company expects to incur additional costs in the future related to its restructuring activities, which will be recognized as incurred. The Company also expects to incur additional employee-related costs, including involuntary termination benefits related to its other optimization activities. These costs cannot be reasonably estimated at this time. See Note 5 to the Consolidated Financial Statements for additional information on the Company's restructuring activities.
Information related to the Company’s contractual obligations, commercial commitments and expected cash requirements for interest can be found in Notes 13, 14, 15 and 18 to the Consolidated Financial Statements included in the 2023 10-K. With the exception of the items noted below, there have been no material changes in the Company’s contractual obligations since December 31, 2023.
Contractual Obligations at Sep 30, 2024
Payments Due In
In millions
2024
2025-2026
2027-2028
2029 and beyond
Total
Dow Inc.
Long-term debt obligations 1
$
35
$
656
$
1,985
$
14,038
$
16,714
Expected cash requirements for interest 2
230
1,536
1,453
9,269
12,488
Purchase obligations 3
890
3,234
2,330
7,014
13,468
Total
$
1,155
$
5,426
$
5,768
$
30,321
$
42,670
1.Excludes unamortized debt discount and issuance costs of $254 million. Includes finance lease obligations of $961 million.
2.Cash requirements for interest on long-term debt was calculated using current interest rates at September 30, 2024, and includes $154 million of various floating rate notes.
3.Includes a $1.3 billion purchase commitment for the use of a water supply reservoir asset expected to commence in 2028, as discussed in Note 13 to the Consolidated Financial Statements, and outstanding purchase orders and other commitments greater than $1 million obtained through a survey conducted within the Company.
Fair Value Measurements
See Note 20 to the Consolidated Financial Statements for information concerning fair value measurements.
OTHER MATTERS
Critical Accounting Estimates
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1 to the Consolidated Financial Statements included in the 2023 10-K describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. The Company’s critical accounting policies that are impacted by judgments, assumptions and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2023 10-K. Since December 31, 2023, there have been no material changes in the Company’s accounting policies that are impacted by judgments, assumptions and estimates.
Asbestos-Related Matters of Union Carbide Corporation
Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos‑containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc. (“Amchem”). In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to Union Carbide’s products.
The table below provides information regarding asbestos-related claims pending against Union Carbide and Amchem based on criteria developed by Union Carbide and its external consultants:
Asbestos-Related Claim Activity
2024
2023
Claims unresolved at Jan 1
6,367
6,873
Claims filed
3,472
3,097
Claims settled, dismissed or otherwise resolved
(4,469)
(3,428)
Claims unresolved at Sep 30
5,370
6,542
Claimants with claims against both Union Carbide and Amchem
(963)
(1,452)
Individual claimants at Sep 30
4,407
5,090
Plaintiffs’ lawyers often sue numerous defendants in individual lawsuits or on behalf of numerous claimants. As a result, the damages alleged are not expressly identified as to Union Carbide, Amchem or any other particular defendant, even when specific damages are alleged with respect to a specific disease or injury. For these reasons and based upon Union Carbide’s litigation and settlement experience, Union Carbide does not consider the damages alleged against Union Carbide and Amchem to be a meaningful factor in its determination of any potential asbestos-related liability.
For additional information, see Asbestos-Related Matters of Union Carbide Corporation in Note 13 to the Consolidated Financial Statements; Part II, Item 1. Legal Proceedings; and Note 14 to the Consolidated Financial Statements included in the 2023 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Note 19 to the Consolidated Financial Statements and Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the combined Dow Inc. and TDCC Annual Report on Form 10-K for the year ended December 31, 2023, for information on the Company's utilization of financial instruments and an analysis of the sensitivity of these instruments.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, Dow Inc. and The Dow Chemical Company (the "Companies") carried out an evaluation, under the supervision and with the participation of the Companies' Disclosure Committee and the Companies' management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Companies' disclosure controls and procedures pursuant to paragraph (b) of Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Companies' disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There were no changes in the Companies' internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Companies' internal control over financial reporting.
Asbestos-Related Matters of Union Carbide Corporation
No material developments regarding this matter occurred in the first nine months of 2024. For a current status of this matter, see Note 13 to the Consolidated Financial Statements.
Environmental Proceedings
On December 16, 2022, the U.S. Department of Justice filed a complaint and proposed consent decree on behalf of the U.S. Environmental Protection Agency ("EPA") relating to environmental contamination at the Lower Passaic River Study Area Superfund Site in New Jersey. The EPA filed an amended complaint and proposed consent decree on January 17, 2024. The proposed consent decree includes a requirement that 85 settling defendants, including the Company’s Essex Chemical Corporation subsidiary ("Essex"), make a collective payment of $150 million for the EPA’s past and anticipated future response costs, with Essex's share of the group settlement costs being $1.15 million. On January 31, 2024, the EPA filed a motion for approval and entry of the consent decree.
ITEM 1A. RISK FACTORS
Since December 31, 2023, there have been no material changes to the Company's Risk Factors.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information regarding purchases of Dow Inc. common stock by the Company during the three months ended September 30, 2024:
Issuer Purchases of Equity Securities
Total number of shares purchased as part of the Company's publicly announced share repurchase program
Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program 1
(In millions)
Period
Total number of shares purchased
Average price paid per share
July 2024
112,764
$
53.21
112,764
$
1,019
August 2024
1,247,017
$
53.11
1,247,017
$
952
September 2024
419,114
$
51.66
419,114
$
931
Third quarter 2024
1,778,895
$
52.78
1,778,895
$
931
1.On April 13, 2022, the Dow Inc. Board approved a share repurchase program authorizing up to $3.0 billion for the repurchase of the Company's common stock, with no expiration date.
Dow Inc. agrees to provide the SEC, on request, copies of all other such indentures and instruments that define the rights of holders of long-term debt of Dow Inc. and its consolidated subsidiaries, including The Dow Chemical Company, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K.
Cover Page Interactive Data File. The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
* Filed herewith
TRADEMARK LISTING
The following registered trademark of InspereX Holdings LLC appears in this report: InterNotes®
® ™ Trademark of The Dow Chemical Company ("Dow") or an affiliated company of Dow, except as otherwise specified.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DOW INC.
THE DOW CHEMICAL COMPANY
Date: October 25, 2024
/s/ ANDREA L. DOMINOWSKI
Andrea L. Dominowski Controller and Vice President of Controllers (Authorized Signatory and Principal Accounting Officer)
