DOW CHEMICAL CO /DE/

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 third quarter of 2025 were $10.0 billion, down 8 percent from $10.9 billion in the third quarter of 2024, with local price down 8 percent, volume down 1 percent, and a favorable currency impact of 1 percent. Net sales decreased in all operating segments and all geographic regions. Local price decreased in all geographic regions and all operating segments, with Packaging & Specialty Plastics down 10 percent, Industrial Intermediates & Infrastructure down 8 percent, and Performance Materials & Coatings down 5 percent. Volume decreased 1 percent, driven by EMEAI (down 8 percent) and Latin America (down 3 percent), partially offset by increases in Asia Pacific (up 6 percent) and the U.S. & Canada (up 3 percent). Volume decreased in Packaging & Specialty Plastics (down 1 percent), increased in Industrial Intermediates & Infrastructure (up 2 percent) and decreased in Performance Materials & Coatings (down 2 percent). Currency favorably impacted net sales by 1 percent, driven by EMEAI (up 4 percent). Portfolio & other unfavorably impacted net sales in Packaging & Specialty Plastics (down 1 percent). Excluding the Hydrocarbons & Energy business, net sales decreased 7 percent.

Net sales for the first nine months of 2025 were $30.5 billion, down 6 percent from $32.6 billion in the same period last year, with local price down 6 percent, and volume and currency both flat. Net sales decreased in all operating segments and all geographic regions. Local price decreased in all geographic regions and all operating segments, with Packaging & Specialty Plastics down 8 percent, Industrial Intermediates & Infrastructure down 5 percent, and Performance Materials & Coatings down 3 percent. Volume was flat, with gains in Asia Pacific and the U.S. & Canada (both up 3 percent) offset by declines in Latin America (down 4 percent) and EMEAI (down 3 percent). Volume increased in Packaging & Specialty Plastics (up 1 percent), was flat in Industrial Intermediates & Infrastructure, and declined in Performance Materials & Coatings (down 2 percent). Portfolio & other unfavorably impacted net sales in Packaging & Specialty Plastics (down 1 percent). Excluding the Hydrocarbons & Energy business, net sales decreased 7 percent.

Cost of Sales

Cost of sales ("COS") was $9.2 billion in the third quarter of 2025, compared with $9.8 billion in the third quarter of 2024. COS decreased in the third quarter of 2025 primarily due to lower raw material, feedstock and energy costs, lower planned maintenance turnaround spending, the impact of the Company's cost reduction initiatives and the absence of a charge in the third quarter of 2024 related to an arbitration settlement agreement for historical product claims from a divested business. For the first nine months of 2025, COS was $28.5 billion, compared with $28.9 billion in the first nine months of 2024. COS for the first nine months of 2025 decreased primarily due to lower raw material, feedstock and energy costs, lower planned maintenance turnaround spending, adjustments to legacy groundwater contamination matters and the absence of a charge in the third quarter of 2024 related to an arbitration settlement agreement for historical product claims from a divested business. COS as a percentage of net sales was 92.7 percent in the third quarter of 2025 (90.2 percent in the third quarter of 2024) and 93.5 percent for the first nine months of 2025 (88.7 percent for the first nine months of 2024).

Research and Development Expenses

Research and development ("R&D") expenses totaled $191 million in the third quarter of 2025, compared with $208 million in the third quarter of 2024. R&D expenses for the first nine months of 2025 were $579 million, compared with $608 million in the first nine months of 2024. R&D expenses for the three and nine months ended September 30, 2025 decreased primarily due to the Company's cost reduction initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses totaled $340 million in the third quarter of 2025, compared with $396 million in the third quarter of 2024. For the first nine months of 2025, SG&A expenses were $1,053 million, compared with $1,228 million in the first nine months of 2024. SG&A expenses for the three and nine months ended September 30, 2025 decreased primarily due to the impact of lower third-party purchased services, the impact of the Company's cost reduction initiatives, as well as decreased bad debt expense. The first nine months of 2025 also included the impact of a favorable resolution of a dispute with a customer.

Amortization of Intangibles

Amortization of intangibles was $46 million in the third quarter of 2025 compared with $76 million in the third quarter of 2024. In the first nine months of 2025, amortization of intangibles was $185 million, compared with $234 million in the first nine months of 2024. Amortization of intangibles decreased primarily due to certain intangible assets becoming fully amortized in 2025.

Restructuring and Asset Related Charges - Net

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.

On June 30, 2025, the Board approved restructuring actions to rationalize the Company's global asset footprint, including certain actions identified as part of the Company's previously announced strategic review of its European assets and certain corporate and other assets, and to enhance the Company's competitiveness over the economic cycle. The program includes asset write-down and write-off charges, severance and related benefit costs and other exit and disposal costs. As a result of these actions, in the second quarter of 2025 the Company recorded pretax restructuring charges of $591 million, consisting of severance and related benefit costs of $154 million, asset write-downs and write-offs of $334 million and costs associated with exit and disposal activities of $103 million. Restructuring charges by segment were as follows: $158 million in Packaging & Specialty Plastics, $89 million in Industrial Intermediates & Infrastructure, $147 million in Performance Materials & Coatings and $197 million in Corporate. In the third quarter of 2025, the Company recorded additional pretax restructuring charges of $23 million, consisting of asset write-downs and write-offs of $8 million and costs associated with exit and disposal activities of $15 million. The additional restructuring charges by segment were as follows: $3 million in Packaging & Specialty Plastics, $6 million in Industrial Intermediates & Infrastructure, $3 million in Performance Materials & Coatings and $11 million in Corporate. See Note 5 to the Consolidated Financial Statements for additional information.

Actions related to the restructuring program approved by the Board on January 25, 2023 were complete at the end of 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 5 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 $72 million in the third quarter of 2025, compared with equity in earnings of nonconsolidated affiliates of $2 million in the third quarter of 2024. The Company's share of equity in losses of nonconsolidated affiliates was $122 million for the first nine months of 2025, compared with equity in earnings of nonconsolidated affiliates of $45 million for the first nine months of 2024. The decrease in both periods was primarily driven by lower results at the Company's Thai, Kuwait and Sadara joint ventures. Cash dividends from nonconsolidated affiliates were $190 million for the first nine months of 2025, compared with $266 million for the first nine months of 2024.

Sundry Income (Expense) – Net

Sundry income (expense) - net for the three months ended September 30, 2025 was income of $185 million and $184 million for Dow Inc. and TDCC, respectively, compared with income of $119 million and $118 million, respectively, for the three months ended September 30, 2024. The third quarter of 2025 included a gain from the divestiture of the Company's ownership interest in DowAksa, non-operating pension and postretirement benefit plan credits and foreign currency exchange gains, partially offset by a loss on early extinguishment of debt. The third quarter of 2024 included non-operating pension and postretirement benefit plan credits, gains on the sales of assets and investments and foreign currency exchange losses. See Note 6 to the Consolidated Financial Statements for additional information.

Sundry income (expense) - net for the nine months ended September 30, 2025 was income of $345 million and $360 million for Dow Inc. and TDCC, respectively, compared with income of $256 million and $253 million, respectively, for the nine months ended September 30, 2024. The first nine months of 2025 included a gain from the divestiture of the Company's soil fumigation product line and its ownership interest in DowAksa, non-operating pension and postretirement benefit plan credits, and foreign currency exchange gains, partially offset by a loss on early extinguishment of debt. The first nine months of 2024 included non-operating pension and postretirement benefit plan credits and gains on the sales of assets and investments, partially offset by foreign currency exchange losses. See Note 6 to the Consolidated Financial Statements for additional information.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $221 million in the third quarter of 2025, compared with $199 million in the third quarter of 2024. Interest expense and amortization of debt discount was $646 million in the first nine months of 2025, compared with $595 million in the first nine months of 2024. The increase in interest expense was primarily due to increased issuances of commercial paper during the first nine months of 2025. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 13 to the Consolidated Financial Statements for additional information.

Provision (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 third quarter of 2025, the Company reported a credit for income taxes of $54 million, resulting in a negative effective tax rate of 77.1 percent. 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. For the first nine months of 2025, the Company reported a provision for income taxes of $4 million, resulting in a negative effective tax rate of 0.4 percent. 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.

The credit for income taxes for the third quarter of 2025 was impacted by the recording of a tax benefit stemming from the U.S. Tax Court's decision in Varian Medical Systems Inc. v. Commissioner of $100 million and a tax benefit of $20 million related to the sale of an additional portion of the Company's membership interests in Diamond Infrastructure Solutions, partially offset by losses attributable to jurisdictions for which no tax benefit can be recognized. The provision for income taxes for the first nine months of 2025 was also impacted by the initial sale of a portion of the Company's membership interests in Diamond Infrastructure Solutions resulting in a tax benefit of $89 million, which was offset by valuation allowances in certain foreign jurisdictions of $242 million. See Note 17 to the Consolidated Financial Statements for additional information related to the Diamond Infrastructure Solutions transaction. In the first quarter of 2024, the Company recorded a tax credit of $194 million related to a reassessment of interest and penalties on a tax matter in a foreign jurisdiction, resulting in a reduced effective tax rate for the first nine months of 2024.

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.

On July 4, 2025, U.S. legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (“the Act”) and commonly referred to as the One Big Beautiful Bill Act was signed into law. The Act, among other things, extended key provisions of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. Based on the analysis performed by the Company to date, the Act is not expected to have a material impact on the effective tax rate.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $62 million in the third quarter of 2025, compared with $26 million in the third quarter of 2024. Net income attributable to noncontrolling interests was $113 million in the first nine months of 2025, compared with $67 million for the first nine months of 2024. The increase in net income attributable to noncontrolling interests was primarily driven by the initial sale of 40 percent of the membership interests of Diamond Infrastructure Solutions in the second quarter of 2025 and the sale of an additional 9 percent in the third quarter of 2025. See Notes 17 and 22 to the Consolidated Financial Statements for additional information.

Net Income (Loss) Available for Common Stockholder(s)

Dow Inc.

Net income (loss) available for Dow Inc. common stockholders was income of $62 million, or $0.08 per share, in the third quarter of 2025, compared with income of $214 million, or $0.30 per share, in the third quarter of 2024. Net income (loss) available for Dow Inc. common stockholders was a loss of $1,080 million, or $1.53 per share, in the first nine months of 2025, compared with income of $1,169 million, or $1.65 per share, in the first nine months of 2024. See Note 8 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 income of $62 million in the third quarter of 2025, compared with income of $224 million in the third quarter of 2024. Net income (loss) available for the TDCC common stockholder was a loss of $1,059 million in the first nine months of 2025, compared with income of $1,186 million in the first nine months 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 23 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 $4,891 million in the third quarter of 2025, down 11 percent from net sales of $5,516 million in the third quarter of 2024, with local price down 10 percent, both volume and portfolio & other down 1 percent and currency up 1 percent. Local price decreased in Packaging and Specialty Plastics in all geographic regions, driven by lower pricing of polyethylene and functional polymers. Local price decreased in Hydrocarbons & Energy, driven by olefins and aromatics in EMEAI and the U.S. & Canada. Volume decreased in Packaging and Specialty Plastics due to nonrecurring licensing sales in the year ago period, partially offset by higher polyethylene volumes. Volume decreased in Hydrocarbons & Energy, primarily due to lower merchant olefins sales in EMEAI. Currency had a favorable impact on sales in both businesses and was primarily driven by EMEAI.

Operating EBIT was $199 million in the third quarter of 2025, down $419 million from Operating EBIT of $618 million in the third quarter of 2024. Operating EBIT decreased primarily due to lower integrated margins and equity earnings at the EQUATE and Sadara joint ventures, which were partially offset by the impact of the Company's cost reduction initiatives and lower planned maintenance costs.

Packaging & Specialty Plastics net sales were $15,226 million in the first nine months of 2025, down 8 percent from net sales of $16,461 million in the first nine months of 2024, with local price down 8 percent, portfolio & other down 1 percent, and volume up 1 percent. Local price decreased in Packaging and Specialty Plastics in all geographic regions, primarily driven by lower pricing of polyethylene and functional polymers. Local price decreased in Hydrocarbons & Energy, driven by olefins and aromatics in EMEAI and the U.S. & Canada. Volume increased in Packaging and Specialty Plastics, with higher volumes in Asia Pacific partially offset by a decline in EMEAI and Latin America, driven by higher volumes in polyethylene and nonrecurring licensing sales partially offset by lower functional polymers volumes. Volume increased in Hydrocarbons & Energy, primarily due to higher energy sales in the U.S. & Canada.

Operating EBIT was $612 million in the first nine months of 2025, down $1,314 million from Operating EBIT of $1,926 million in the first nine months of 2024. Operating EBIT decreased primarily due to lower integrated margins and equity earnings at the Company's EQUATE and Thai joint ventures, partially offset by lower planned maintenance costs.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

Industrial Intermediates & Infrastructure net sales were $2,834 million in the third quarter of 2025, down 4 percent from net sales of $2,962 million in the third quarter of 2024, with local price down 8 percent, and both volume and currency up 2 percent. Local price decreased in both businesses and across all geographic regions, led by declines in industrial and building and construction applications. Volume increased in Industrial Solutions, driven by higher volumes from improved supply availability following planned maintenance activity and the startup of a new alkoxylation unit in Seadrift, Texas, and was led by energy applications. Volume was flat in Polyurethanes & Construction Chemicals as increased methylene diphenyl diisocyanate volumes following a third-party supplier outage in the prior year were offset by declines in consumer durables applications. Currency had a favorable impact on sales in both businesses and was driven by EMEAI.

Operating EBIT was a loss of $47 million in the third quarter of 2025, up $6 million from an Operating EBIT loss of $53 million in the third quarter of 2024. Operating EBIT increased primarily driven by lower raw material and energy costs, lower planned maintenance activity, increased volume, and the impact of the Company's cost reduction initiatives, mostly offset by lower selling prices in both businesses and lower results at the Sadara and EQUATE joint ventures.

Industrial Intermediates & Infrastructure net sales were $8,475 million in the first nine months of 2025, down 5 percent from net sales of $8,921 million in the first nine months of 2024, with local price down 5 percent. Local price decreased in both businesses and across all geographic regions, led by declines in industrial, consumer durables and building and construction applications. Volume increased in Industrial Solutions, with higher volumes in the U.S. & Canada and EMEAI, primarily in energy and industrial applications. Volume decreased in Polyurethanes & Construction Chemicals, driven by declines in EMEAI and Latin America, primarily in consumer durables and industrial applications.

Operating EBIT was a loss of $360 million in the first nine months of 2025, down $401 million from Operating EBIT of $41 million in the first nine months of 2024. Operating EBIT decreased primarily due to margin compression and lower results at the EQUATE and Sadara joint ventures, partially offset by the impact of the Company's cost reduction initiatives.

PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings net sales were $2,082 million in the third quarter of 2025, down 6 percent from net sales of $2,214 million in the third quarter of 2024, with local price down 5 percent, volume down 2 percent and a favorable currency impact of 1 percent. Coatings & Performance Monomers local price decreased across all geographic regions, primarily in acrylic monomers and architectural coatings. Local price decreased in Consumer Solutions in all geographic regions and was broad-based across end-markets. Volume decreased in Coatings & Performance Monomers in all geographic regions except the U.S. & Canada, driven by lower demand for coatings applications. Volume decreased in Consumer Solutions in all geographic regions except Asia Pacific. Volume decreased in upstream siloxanes, partially offset by an increase in downstream consumer and electronics and home care applications. The favorable currency impact was driven by EMEAI in both businesses.

Operating EBIT was $80 million in the third quarter of 2025, down $60 million from Operating EBIT of $140 million in the third quarter of 2024. Operating EBIT decreased in both businesses primarily due to margin compression and lower volumes, partially offset by the impact of the Company's cost reduction initiatives.

Performance Materials & Coatings net sales were $6,282 million in the first nine months of 2025, down 5 percent from net sales of $6,609 million in the first nine months of 2024, with local price down 3 percent and volume down 2 percent. Coatings & Performance Monomers local price decreased across all geographic regions, primarily in acrylic monomers and architectural coatings. Local price deceased in Consumer Solutions in all geographic regions and was broad-based across end-markets. Volume decreased in Coatings & Performance Monomers in all geographic regions except the U.S. & Canada, driven by lower demand for coatings applications. Volume decreased in Consumer Solutions in all geographic regions except Asia Pacific. Volume decreased in upstream siloxanes, partially offset by an increase in downstream silicones, led by consumer and electronics applications.

Operating EBIT was $281 million in the first nine months of 2025, down $46 million from Operating EBIT of $327 million in the first nine months of 2024. Operating EBIT decreased primarily due to margin compression and lower volumes, partially offset by the impact of the Company's cost reduction initiatives and lower selling, general and administrative expenses.

CORPORATE

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $166 million in the third quarter of 2025, a decrease from net sales of $187 million in the third quarter of 2024. Net sales were $525 million in the first nine months of 2025, a decrease from net sales of $568 million in the first nine months of 2024.

Operating EBITwas a loss of $52 million in the third quarter of 2025, compared with a loss of $64 million in the third quarter of 2024. Operating EBIT was a loss of $144 million in the first nine months of 2025, compared with a loss of $160 million in the first nine months of 2024. Operating EBIT improved primarily due to lower environmental costs.