DOW INC. (DOW)·Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue was $9.97B (down 8% YoY; down 1% QoQ), GAAP EPS was $0.08, and operating EPS was -$0.19; Operating EBITDA improved sequentially to $868M as cost actions and lower planned maintenance offset price pressure . Management emphasized “sequential earnings and cash flow improvement despite continued pressure across our industry” .
• Versus S&P Global consensus, DOW modestly missed revenue ($9.97B vs $10.23B*) but delivered a smaller operating EPS loss (-$0.19 vs -$0.30*) and an EBITDA beat ($868M vs $761M*), reflecting cost reductions and new USGC assets ramp .
• Cash from operations rebounded to $1.13B, aided by working capital and advance payments; free cash flow was $566M in Q3, versus -$1.13B in Q2 .
• Q4 outlook: company guided to ~ $725M EBITDA; expects global PE margin compression of ~$0.01/lb, a ~$25M tailwind from lower maintenance and ~$25M from cost actions in P&SP, offset by ~$25M headwind from a Texas Poly6 fire; II&I and PM&C expected down ~$20M and ~$100M respectively .
• Strategic actions: on track for >$6.5B near-term cash support; 2025 CapEx cut by ~$1B (to $2.5B vs original $3.5B) and 2025 cost savings run-rate lifted to ~$400M (from $300M) as European footprint rationalization progresses; dividend was reset to $0.35 in July (50% reduction) to preserve flexibility .

What Went Well and What Went Wrong

• What Went Well

  • Sequential earnings and cash flow improvement: Op EBITDA rose to $868M (from $703M in Q2) and cash from ops swung to +$1.13B on working capital and advance payments . CFO: “cash from operations came in at $1.1B…driven by…working capital improvement…and improved earnings” .
  • Growth investments contributing: New polyethylene (Poly-7) and alkoxylation units drove volume and earnings gains; management quantified ~$40M contribution in Q3 and a $100–$200M annual run-rate .
  • Cost actions tracking ahead: 2025 savings now ~$400M (vs $300M plan), visibly helping margins and segment Op EBIT sequentially .

• What Went Wrong

  • Price pressure persists: Local price down 8% YoY and 3% QoQ; segment prices down across P&SP, II&I, and PM&C, weighing on year-over-year earnings .
  • Upstream headwinds and JV equity losses: Equity losses worsened to -$72M (vs +$2M LY), driven by Sadara/Kuwait JV margin pressure and an unplanned July event; P&SP equity losses were -$6M (vs +$16M LY) .
  • PM&C margin compression: Segment Op EBIT fell QoQ ($80M vs $152M) on upstream siloxanes and seasonal coatings demand softness; management flagged ongoing pressure into Q4 .

Financial Results

Overall results vs prior year and prior quarter

Consensus vs Actual (Q3 2025)

Values marked with * retrieved from S&P Global.

Segment net sales ($USD Millions)

Segment Operating EBIT ($USD Millions)

Cash flow and investment KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “In the third quarter, we delivered sequential earnings and cash flow improvement despite continued pressure across our industry…We remain on track to deliver more than $6.5 billion in near-term cash support, with over half already achieved.” — Jim Fitterling, CEO .
• “We are progressing the delivery of at least $1 billion in targeted cost savings by 2026. We are on track to deliver approximately $400 million of the cost savings this year, which was clearly visible in our third quarter performance.” — Karen S. Carter, COO .
• “As of the end of the third quarter, our cash and cash equivalents balance is above $4.5 billion…we’re making solid progress on several additional actions that support our near-term cash generation.” — Jeff Tate, CFO .
• On industry supply: “Announcements to date include significant rationalization of global ethylene, propylene oxide and siloxane capacities…paving the way for improved operating rates.” — CEO .

Q&A Highlights

• Drivers of upside vs intra-quarter caution: Better integrated margins in P&SP and II&I plus ~$75M Q3 cost-reduction benefit (vs $50M guided) led to sequential outperformance .
• Q4 color: Guide to ~$725M EBITDA; P&SP margin -$0.01/lb globally, +$25M maintenance tailwind and +$25M from cost actions, offset by a ~$25M Poly6 fire headwind; II&I -$20M QoQ; PM&C -$100M QoQ .
• Polyethylene demand/pricing: Industry inventories drew down in September; October price hikes of $0.05/lb targeted though higher feedstock costs may compress integrated margins .
• Alberta project: Still a delay (not cancellation); JV structure is a possibility by analogy to Texas-9; timing to align with demand; update expected in January .
• MDI anti-dumping: Preliminary US finding reduced Chinese imports (historically ~20% of US MDI); seeing incremental volumes though limited pricing benefit so far .

Estimates Context

• Revenue modestly missed consensus ($9.97B vs $10.23B*), while operating EPS (-$0.19) and EBITDA ($868M) beat (-$0.30* and $761M* respectively), reflecting sequential margin/volume improvement and cost actions . Values marked with * retrieved from S&P Global.
• Street models may need to trim near-term revenue on persistent price pressure and Q4 margin headwinds (higher feedstocks, seasonality, Poly6), while lifting EBITDA on demonstrated cost savings and new-asset ramp .

Key Takeaways for Investors

• Sequential stabilization with EBITDA and FCF improvement signals early benefits from cost actions and USGC growth projects; watch for sustainability amid Q4 feedstock headwinds .
• Mixed print vs consensus: revenue miss but EBITDA/EPS beats—cost control and integration benefits are offsetting weak pricing; narrative shifts to execution on costs and asset ramp .
• Q4 setup is tougher—explicit EBITDA guide (~$725M) embeds PE margin compression, seasonal demand and a Poly6 hit; delivery vs this bar will drive near-term stock moves .
• Structural moves (European rationalization, Alberta deferment, dividend reset, balance sheet liquidity) position DOW for stronger trough-to-peak earnings power as rationalizations tighten global operating rates .
• Monitor trade actions (MDI duties) and data center/electronics-led demand pockets for incremental upside, while EMEAI remains a drag near term .
• Cash discipline remains a support: $1.13B CFO and $566M FCF in Q3; continued working capital release and CapEx restraint can bridge the downcycle .

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Notes: All financials and management commentary reflect company disclosures; consensus figures (denoted with *) are from S&P Global. Sources: Q3 2025 8‑K/press release and earnings call ; prior quarters Q2/Q1 2025 8‑Ks/press releases ; dividend release .