DOW Financial Analysis

Analysis Date: 1/31/2025

Business Model

Dow generates revenue through its three primary operating segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure, and Performance Materials & Coatings

Revenue Sources

• Packaging & Specialty Plastics (51% of Q4 2024 revenue)
• Industrial Intermediates & Infrastructure (28% of Q4 2024 revenue)
• Performance Materials & Coatings (19% of Q4 2024 revenue)

Income Statement Analysis

• Net sales decreased 2% year-over-year due to 3% lower local price and product mix, partially offset by 1% higher volume
• Cost of sales decreased 1.8% year-over-year, slightly less than the sales decline
• Operating expenses decreased 2.9% reflecting cost control initiatives

Balance Sheet Analysis

• Cash position decreased 26.7% year-over-year to $2.2B
• Total assets declined slightly by 1.1% to $57.3B
• Total equity decreased 6.6% to $17.9B

Cash Flow Analysis

• Operating cash flow declined 50.2% year-over-year to $811M
• Free cash flow decreased 94.9% to $44M due to lower operating cash flow
• Capital expenditures remained relatively flat at $767M

Capital Allocation

In Q4 2024, Dow maintained its dividend payments at $492M while announcing plans to reduce 2025 CapEx by $300-500M compared to prior target. The company also announced sale of minority stake in select U.S. Gulf Coast infrastructure assets for up to $3B to enhance financial flexibility.

Management Commentary

Delivered fifth consecutive quarter of year-over-year volume growth despite weak macroeconomic conditions

Signed agreement for sale of minority infrastructure stake for up to $3B

Announced $1B cost reduction target and $300-500M CapEx reduction

Continued weak macroeconomic conditions and pricing pressure across segments

Overall Sentiment: Cautiously optimistic while taking proactive steps to address challenging market conditions

Recommendation

Rating: Hold

Reason for Rating: While near-term headwinds persist, management is taking appropriate actions to preserve financial strength

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 5:57:23 AM