DOW INC

RESULTS OF OPERATIONS

Net Sales

The following tables summarize net sales and sales variances by operating segment and geographic region from the prior year:

1. Portfolio & Other includes the sales impact of the flexible packaging laminating adhesives business, which was sold to Arkema S.A. in the fourth quarter of 2024.

Net sales in the first quarter of 2025 were $10.4 billion, down 3 percent from $10.8 billion in the first quarter of 2024, with local price down 3 percent, volume up 2 percent, and an unfavorable impact of 1 percent from both portfolio & other and currency. Net sales decreased in all operating segments and all geographic regions, except the U.S. & Canada. Local price decreased in all geographic regions and in Packaging & Specialty Plastics (down 4 percent), Industrial Intermediates & Infrastructure (down 4 percent), and Performance Materials & Coatings (down 2 percent). Volume increased 2 percent, driven by the U.S. & Canada (up 5 percent), Asia Pacific (up 4 percent), and EMEAI (up 1 percent), partially offset by a decline in Latin America (down 5 percent). Volume increased in Packaging & Specialty Plastics (up 4 percent) and Industrial Intermediates & Infrastructure (up 1 percent), and decreased in Performance Materials & Coatings (down 1 percent). Currency unfavorably impacted net sales by 1 percent, driven by EMEAI (down 3 percent) and Asia Pacific (down 1 percent). Excluding the Hydrocarbons & Energy business, net sales decreased 5 percent.

Cost of Sales

Cost of sales ("COS") was $9.8 billion in the first quarter of 2025, compared with $9.5 billion in the first quarter of 2024. COS increased in the first quarter of 2025 primarily due to higher raw material, global energy and feedstock costs and a charge related to an arbitration settlement agreement for historical product claims from a divested business, partially offset by decreased planned maintenance turnaround spending. COS as a percentage of net sales was 93.6 percent in the first quarter of 2025 (88.1 percent in the first quarter of 2024).

Research and Development Expenses

Research and development ("R&D") expenses totaled $200 million in the first quarter of 2025, compared with $204 million in the first quarter of 2024.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses totaled $366 million in the first quarter of 2025, compared with $442 million in the first quarter of 2024. SG&A expenses decreased in the first quarter of 2025 primarily due to reduced performance-based compensation costs and decreased bad debt expense, including the impact of a favorable resolution of a dispute with a customer.

Amortization of Intangibles

Amortization of intangibles was $76 million in the first quarter of 2025 compared with $81 million in the first quarter of 2024.

Restructuring and Asset Related Charges - Net

2025 Restructuring Program

On January 27, 2025, the Board approved targeted actions to further achieve the Company's cost reduction initiatives in response to ongoing macroeconomic uncertainty, while reinforcing its long-term competitiveness across the economic cycle. As a result of these actions, in the first quarter of 2025 the Company recorded pretax charges of $207 million for severance and related benefits costs, related to Corporate. These actions are expected to be substantially complete by the end of 2026. See Note 4 to the Consolidated Financial Statements for additional information.

Actions related to the restructuring program approved by the Board on January 25, 2023 were substantially complete at the end of the first quarter of 2025, with the exception of certain cash payments that will continue primarily through the second quarter of 2025. In the first quarter of 2025, the Company recorded an additional pretax restructuring charge of $5 million for asset write-downs and write-offs and an asset related credit adjustment of $4 million, related to Industrial Intermediates & Infrastructure. See Note 4 to the Consolidated Financial Statements for additional information.

Equity in Earnings (Losses) of Nonconsolidated Affiliates

The Company's share of equity in losses of nonconsolidated affiliates was $20 million in the first quarter of 2025, compared with equity in earnings of nonconsolidated affiliates of $17 million in the first quarter of 2024, primarily due to lower results at the Company's Thai, Kuwait and Sadara joint ventures, partially offset by improved results at the Company's non-principal joint ventures. Cash dividends from nonconsolidated affiliates were $113 million in the first quarter of 2025, compared with $92 million in the first quarter of 2024.

Sundry Income (Expense) – Net

Sundry income (expense) - net for the three months ended March 31, 2025 was income of $13 million for Dow Inc. and TDCC, compared with income of $61 million, respectively, for the three months ended March 31, 2024. The decrease in sundry income is primarily due to a loss on early extinguishment of debt and a decrease in non-operating pension and postretirement benefit plan credits, partially offset by foreign currency exchange gains.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $216 million in the first quarter of 2025, compared with $199 million in the first quarter of 2024. The increase in interest expense is primarily due to increased issuances of commercial paper during the quarter and a full quarter impact of interest expense in the first quarter of 2025 related to the $1.25 billion senior unsecured notes issued in the first quarter of 2024, slightly offset by lower interest expense on borrowings outside of the United States. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 9 to the Consolidated Financial Statements for additional information.

Credit 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 first quarter of 2025, the Company reported a credit for income taxes of $84 million, resulting in an effective tax rate of 22.5 percent and 22.6 percent for Dow Inc. and TDCC, respectively. In the first quarter of 2024, the Company reported a credit for income taxes of $89 million, resulting in a negative effective tax rate of 19.8 percent and 19.6 percent for Dow Inc. and TDCC, respectively. The credit for income taxes for the first quarter of 2025 was primarily due to the geographic mix of earnings. The credit for income taxes for the first quarter of 2024 was primarily due to a reassessment of interest and penalties related to a tax matter in a foreign jurisdiction, for which the Company recorded a tax credit of $194 million.

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 (Loss) Available for Common Stockholder(s)

Dow Inc.

Net income (loss) available for Dow Inc. common stockholders was a loss of $307 million, or $0.44 per share, in the first quarter of 2025, compared with income of $516 million, or $0.73 per share, in the first quarter of 2024. See Note 6 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

TDCC

Net income (loss) available for the TDCC common stockholder was a loss of $305 million in the first quarter of 2025, compared with income of $521 million in the first quarter of 2024. TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS

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, 2024 ("2024 10-K"), filed with the SEC on February 4, 2025.

Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the chief executive officer, chief operating officer, chief financial officer, general counsel and corporate secretary, and senior vice president of corporate development, together the "executive committee" and chief operating decision maker ("CODM"), assesses performance and allocates resources. The CODM compares quarterly results to both the year-ago and sequential periods to assess performance and allocate resources to each segment. The Company defines Operating EBIT as earnings (i.e., "Income (loss) 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. See Note 18 to the Consolidated Financial Statements for reconciliations of these measures.

PACKAGING & SPECIALTY PLASTICS

1. Portfolio & other includes the sales impact of the flexible packaging laminating adhesives business, which was sold to Arkema S.A. in the fourth quarter of 2024.

Packaging & Specialty Plastics net sales were $5,310 million in the first quarter of 2025, down 2 percent from net sales of $5,430 million in the first quarter of 2024, with local price down 4 percent, volume up 4 percent and unfavorable impact of 1 percent from both currency and portfolio & other. Local price decreased in Packaging and Specialty Plastics in all geographic regions except EMEAI, which was flat, and was driven by lower pricing of downstream polymers and polyethylene. Local price decreased in Hydrocarbons & Energy, with lower pricing in EMEAI partially offset by higher pricing in the U.S. & Canada. Volume increased in Packaging and Specialty Plastics, primarily driven by Asia Pacific, and was due to an increase in nonrecurring licensing sales partially offset by lower downstream polymers and polyethylene volumes. Volume increased in Hydrocarbons & Energy in all geographic regions, led by the U.S. & Canada, primarily driven by higher energy and merchant olefins sales. Currency had an unfavorable impact on sales in both businesses and was primarily driven by EMEAI.

Operating EBIT was $342 million in the first quarter of 2025, down $263 million from Operating EBIT of $605 million in the first quarter of 2024. Operating EBIT decreased primarily due to lower integrated margins, which were partially offset by lower planned maintenance costs and an increase in non-recurring licensing sales.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

Industrial Intermediates & Infrastructure net sales were $2,855 million in the first quarter of 2025, down 5 percent from net sales of $3,008 million in the first quarter of 2024, with local price down 4 percent, an unfavorable currency impact of 2 percent and volume up 1 percent. Local price decreased in both businesses and across all geographic regions, led by industrial and consumer durables applications. Currency had an unfavorable impact on sales in both businesses and was primarily driven by EMEAI. Volume increased in Industrial Solutions in all geographic regions except Latin America, primarily driven by higher volumes from improved supply availability following the outage at Louisiana Operations in the prior year. Volume decreased in Polyurethanes & Construction Chemicals in all geographic regions, driven by lower demand, particularly in industrial and consumer durables applications.

Operating EBIT was a loss of $128 million in the first quarter of 2025, down $215 million from Operating EBIT of $87 million in the first quarter of 2024. Operating EBIT decreased primarily due to lower integrated margins and lower results at the Sadara and EQUATE joint ventures, partially offset by higher volumes in Industrial Solutions.

PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings net sales were $2,071 million in the first quarter of 2025, down 4 percent from net sales of $2,152 million in the first quarter of 2024, with local price down 2 percent, volume down 1 percent, and an unfavorable currency impact of 1 percent. Consumer Solutions local price decreased across all geographic regions and was broad-based across end-markets. Local price decreased in Coatings & Performance Monomers, primarily in industrial coatings and acrylic monomers in the U.S. & Canada. Volume increased in Consumer Solutions with gains in EMEAI and Asia Pacific, which were partially offset by declines in Latin America and the U.S. & Canada. Volume increased in downstream silicones, led by consumer and electronics and home care applications, which were partially offset by declines in upstream siloxanes. Volume decreased in Coatings & Performance Monomers in all geographic regions except the U.S. & Canada, driven by lower demand in acrylic monomers, primarily in EMEAI. The unfavorable currency impact was driven by EMEAI and Asia Pacific in both businesses.

Operating EBIT was $49 million in the first quarter of 2025, up $8 million from Operating EBIT of $41 million in the first quarter of 2024. Operating EBIT increased primarily due to lower selling, general and administrative and research and development expenses and lower planned maintenance costs, partially offset by lower selling prices in both businesses.

CORPORATE

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $195 million in the first quarter of 2025, anincrease from net sales of $175 million in the first quarter of 2024.

Operating EBITwas a loss of $33 million in the first quarter of 2025, compared with a loss of $59 million in the first quarter of 2024. Operating EBIT improved primarily due to lower environmental costs.