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:

Net sales in the second quarter of 2026 were $12.1 billion, up 20 percent from $10.1 billion in the second quarter of 2025, with local price up 20 percent, a favorable currency impact of 1 percent, and volume down 1 percent. Net sales increased in all operating segments and all geographic regions. Local price increased in all geographic regions and all operating segments, with Packaging & Specialty Plastics up 30 percent, Industrial Intermediates & Infrastructure up 15 percent, and Performance Materials & Coatings up 4 percent. Volume decreased 1 percent, driven by Asia Pacific (down 9 percent) and EMEAI (down 4 percent), partially offset by increases in Latin America (up 9 percent) and U.S. & Canada (up 3 percent). Volume decreased in Packaging & Specialty Plastics (down 4 percent) and Industrial Intermediates & Infrastructure (down 2 percent) and increased in Performance Materials & Coatings (up 6 percent). Currency favorably impacted net sales by 1 percent, driven by EMEAI (up 3 percent). Excluding the Hydrocarbons & Energy business, net sales increased 19 percent.

Net sales in the first six months of 2026 were $21.9 billion, up 7 percent from $20.5 billion in the first six months of 2025, with local price up 6 percent, a favorable currency impact of 2 percent, and volume down 1 percent. Net sales increased in all operating segments and all geographic regions except Asia Pacific. Local price increased in all geographic regions and in Packaging & Specialty Plastics (up 10 percent) and Industrial Intermediates & Infrastructure (up 3 percent) and was flat in Performance Materials & Coatings. Volume decreased 1 percent, driven by Asia Pacific (down 5 percent), EMEAI (down 4 percent) and U.S. & Canada (down 1 percent), partially offset by increases in Latin America (up 9 percent). Volume decreased in Packaging & Specialty Plastics (down 3 percent) and Industrial Intermediates & Infrastructure (down 3 percent) and increased in Performance Materials & Coatings (up 4 percent). Currency favorably impacted net sales by 2 percent, driven by EMEAI (up 6 percent) and Asia Pacific (up 1 percent). Excluding the Hydrocarbons & Energy business, net sales increased 8 percent.

Cost of Sales

Cost of sales ("COS") was $9.9 billion in the second quarter of 2026, compared with $9.5 billion in the second quarter of 2025. COS increased in the second quarter of 2026 primarily due to the impact of performance-based compensation costs, higher logistics costs, and higher raw material, feedstock and energy costs, partially offset by the Company's cost reduction initiatives. For the first six months of 2026, COS was $19.1 billion compared with $19.3 billion in the first six months of 2025. COS for the first six months of 2026 decreased primarily due to the Company's cost reduction initiatives and lower raw material, feedstock and energy costs, partially offset by higher performance-based compensation costs and higher logistics costs. COS as a percentage of net sales was 82.1 percent in the second quarter of 2026 (94.2 percent in the second quarter of 2025) and 87.2 percent for the first six months of 2026 (93.9 percent for the first six months of 2025).

Research and Development Expenses

Research and development ("R&D") expenses totaled $207 million in the second quarter of 2026, compared with $188 million in the second quarter of 2025. R&D expenses increased in the second quarter of 2026 primarily due to higher performance-based compensation costs which more than offset the impact of the Company’s cost reduction initiatives. R&D expenses for the first six months of 2026 and 2025 were $388 million as higher performance-based compensation costs were offset by the Company's cost reduction initiatives.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses totaled $535 million in the second quarter of 2026, compared with $347 million in the second quarter of 2025. SG&A expenses increased in the second quarter of 2026 primarily due to costs to achieve Transform to Outperform and higher performance-based compensation costs which more than offset the Company's cost reduction initiatives. For the first six months of 2026, SG&A expenses were $952 million, compared with $713 million in the first six months of 2025. SG&A expenses for the first six months of 2026 increased primarily due to costs to achieve Transform to Outperform and higher performance-based compensation costs, partially offset by the Company's cost reduction initiatives.

Amortization of Intangibles

Amortization of intangibles was $40 million in the second quarter of 2026 compared with $63 million in the second quarter of 2025. In the first six months of 2026, amortization of intangibles was $86 million, compared with $139 million in the first six months of 2025. Amortization of intangibles decreased primarily due to certain intangible assets becoming fully amortized in 2025.

Restructuring and Asset Related Charges - Net

Transform to Outperform

On January 26, 2026, the Dow Inc. Board of Directors ("Board") approved Transform to Outperform, a comprehensive set of actions designed to improve near-term Operating EBITDA by simplifying the Company's operating model, reducing its cost structure and delivering faster growth. As a result of these actions, in the first quarter of 2026, the Company recorded pretax charges of $27 million for severance and related benefit costs, related to Corporate. In the second quarter of 2026, the Company recorded pretax charges of $445 million for severance and related benefit costs, related to Corporate. See Note 4 to the Consolidated Financial Statements for additional information.

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.

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 second quarter of 2026, the Company recorded additional pretax restructuring charges of

$58 million, consisting of asset write-downs and write-offs of $8 million and costs associated with exit and disposal activities of $50 million. Restructuring charges by segment were as follows: $1 million in Industrial Intermediates & Infrastructure and $57 million in Performance Materials & Coatings. See Note 4 to the Consolidated Financial Statements for additional information.

2023 Restructuring Program

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 4 to the Consolidated Financial Statements for additional information.

Equity in Earnings (Losses) of Nonconsolidated Affiliates

The Company's share of equity in earnings of nonconsolidated affiliates was $36 million in the second quarter of 2026, compared with equity in losses of nonconsolidated affiliates of $30 million in the second quarter of 2025, driven by the Company's suspension of the recognition of its share of equity losses from the Sadara joint venture in 2026. The Company's share of equity in losses of nonconsolidated affiliates was $267 million for the first six months of 2026, compared with equity in losses of nonconsolidated affiliates of $50 million for the first six months of 2025. The increase was primarily related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt and was related to Packaging & Specialty Plastics ($81 million) and Industrial Intermediates & Infrastructure ($211 million). This was partially offset by the Company suspending recognition of its share of equity losses from Sadara in 2026. Cash dividends from nonconsolidated affiliates were $276 million for the first six months of 2026, compared with $170 million for the first six months of 2025. See Notes 9 and 12 for additional information.

Sundry Income (Expense) – Net

Sundry income (expense) - net for the three months ended June 30, 2026 was income of $125 million and $118 million for Dow Inc. and TDCC, respectively, compared with income of $147 million and $163 million, respectively, for the three months ended June 30, 2025. The second quarter of 2026 included gains on the sales of other assets and investments, foreign currency exchange gains, and non-operating pension and postretirement benefit plan credits. The second quarter of 2025 included a gain from the divestiture of the Company's soil fumigation product line, non-operating pension and postretirement benefit plan credits, and foreign currency exchange gains. See Notes 5 and 16 to the Consolidated Financial Statements for additional information.

Sundry income (expense) - net for the six months ended June 30, 2026 was income of $246 million and $239 million for Dow Inc. and TDCC, respectively, compared with income of $160 million and $176 million, respectively, for the six months ended June 30, 2025. The first six months of 2026 included gains on the sales of other assets and investments, foreign currency exchange gains, non-operating pension and postretirement benefit plan credits, and a gain associated with the Nova ethylene asset matter. The first six months of 2025 included a gain from the divestiture of the Company's soil fumigation product line, non-operating pension and postretirement benefit plan credits, and foreign currency exchange gains, partially offset by a loss on early extinguishment of debt. See Notes 5, 12 and 16 to the Consolidated Financial Statements for additional information.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $210 million in the second quarter of 2026, compared with $209 million in the second quarter of 2025. Interest expense and amortization of debt discount was $429 million in the first six months of 2026, compared with $425 million in the first six months of 2025. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information.

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 second quarter of 2026, the Company reported a provision for income taxes of $69 million, resulting in an effective tax rate of 7.9 percent. In the second quarter of 2025, the Company reported a provision for income taxes of $142 million, resulting in a negative effective tax rate of 21.5 percent. For the first six months of 2026, the Company reported a provision for income taxes of $124 million, resulting in an effective tax rate of 25.8 percent. For the first six months of 2025, the Company reported a provision for income taxes of $58 million, resulting in a negative effective tax rate of 5.6 percent. The reported provision for income taxes and effective tax rates for TDCC are substantially similar.

The provision for income taxes for the second quarter of 2026 was favorably impacted by changes in the Company’s ability to utilize foreign tax credits associated with cash proceeds received in March 2026 related to the Nova ethylene asset matter, partially offset by tax charges related to changes in uncertain tax positions. The provision for income taxes for the first six months of 2026 was primarily impacted by the geographic mix of earnings. The provision for income taxes for the second quarter and first six months of 2025 was unfavorably impacted by the recording of valuation allowances in certain foreign jurisdictions of $242 million and losses attributable to jurisdictions for which no tax benefit can be recognized, partially offset by a tax credit of $89 million related to the sale of a portion of the Company's membership interests in Diamond Infrastructure Solutions, resulting in a negative effective tax rate for both periods.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $81 million in the second quarter of 2026, compared with $34 million in the second quarter of 2025. Net income attributable to noncontrolling interests was $169 million in the first six months of 2026, compared with $51 million for the first six months of 2025. The increase in net income attributable to noncontrolling interests reflects the ownership interest in Diamond Infrastructure Solutions held by InfraPark, which purchased 40 percent of the membership interests in Diamond Infrastructure Solutions in the second quarter of 2025 and an additional 9 percent in the third quarter of 2025. See Notes 15 and 20 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 $721 million, or $0.99 per share, in the second quarter of 2026, compared with a loss of $835 million, or $1.18 per share, in the second quarter of 2025. Net income (loss) available for Dow Inc. common stockholders was income of $188 million, or $0.25 per share, in the first six months of 2026, compared with a loss of $1,142 million, or $1.62 per share, in the first six months of 2025. See Note 7 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 $715 million in the second quarter of 2026, compared with a loss of $816 million in the second quarter of 2025. Net income (loss) available for the TDCC common stockholder was income of $184 million in the first six months of 2026, compared with a loss of $1,121 million in the first six months of 2025. 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, 2025 ("2025 10-K"), filed with the SEC on February 3, 2026.

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 financial officer, general counsel, and senior vice president of corporate development, together the chief operating decision maker ("CODM"), assesses performance and allocates resources for the three operating segments. 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 21 to the Consolidated Financial Statements for reconciliations of these measures.

PACKAGING & SPECIALTY PLASTICS

1. The six months ended June 30, 2026 includes a significant item for $81 million of losses related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt.

Packaging & Specialty Plastics net sales were $6,385 million in the second quarter of 2026, up 27 percent from net sales of $5,025 million in the second quarter of 2025, with local price up 30 percent, currency up 1 percent, and volume down 4 percent. Local price increased in Packaging and Specialty Plastics in all geographic regions, driven by higher polyethylene prices. Local price increased in Hydrocarbons & Energy, driven by olefins and aromatics in the U.S. & Canada and EMEAI. Currency had a favorable impact on sales in both businesses and was driven by EMEAI. Volume decreased in Packaging and Specialty Plastics, driven by polyethylene declines in Asia Pacific and EMEAI impacted by the Middle East conflict. Volume decreased in Hydrocarbons & Energy due to planned maintenance activity in the U.S. Gulf Coast and the impact of idling an ethylene cracker in EMEAI in mid-2025, which successfully restarted in June 2026.

Operating EBIT was $1,278 million in the second quarter of 2026, up $1,207 million from Operating EBIT of $71 million in the second quarter of 2025. Operating EBIT increased primarily due to higher selling prices and the impact of the Company's self-help initiatives, partially offset by higher planned maintenance and performance-based compensation costs.

Packaging & Specialty Plastics net sales were $11,304 million in the first six months of 2026, up 9 percent from net sales of $10,335 million in the first six months of 2025, with local price up 10 percent, currency up 2 percent, and volume down 3 percent. Local price increased in Packaging and Specialty Plastics in all geographic regions, driven by higher pricing of polyethylene. Local price increased in Hydrocarbons & Energy, driven by olefins and aromatics in EMEAI and the U.S. & Canada. Currency had a favorable impact on sales in both businesses and was primarily driven by EMEAI. Volume was flat in Packaging and Specialty Plastics as higher volumes in polyethylene were offset by lower non-recurring licensing sales. Volume decreased in Hydrocarbons & Energy due to planned maintenance activity in the U.S. Gulf Coast and the impact of idling an ethylene cracker in EMEAI in mid-2025, which successfully restarted in June.

Operating EBIT was $1,486 million in the first six months of 2026, up $1,073 million from Operating EBIT of $413 million in the first six months of 2025. Operating EBIT increased primarily due to higher selling prices and the impact of the Company's self-help initiatives, partially offset by higher planned maintenance and performance-based compensation costs.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

1. The six months ended June 30, 2026 includes a significant item for $211 million of losses related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt.

Industrial Intermediates & Infrastructure net sales were $3,166 million in the second quarter of 2026, up 14 percent from net sales of $2,786 million in the second quarter of 2025, with local price up 15 percent, currency up 1 percent, and volume down 2 percent. Local prices increased across both businesses and all geographic regions. Currency had a favorable impact on sales and was driven by EMEAI. Volume decreased in Polyurethanes & Construction Chemicals, primarily in Asia Pacific and EMEAI due to the impact of the Middle East conflict, which more than offset increased volume in industrial market applications. Volume increased in Industrial Solutions, primarily in the U.S. & Canada, driven by increased demand for energy applications and higher volumes from recent alkoxylation investments, which more than offset declines in Asia Pacific and EMEAI primarily due to the impact of the conflict in the Middle East.

Operating EBIT was $246 million in the second quarter of 2026, up $431 million from an Operating EBIT loss of $185 million in the second quarter of 2025. Operating EBIT increased as higher margins, the impact of the Company’s self-help initiatives, lower planned maintenance activity and the suspension of the recognition of equity losses from Sadara more than offset the impact of higher performance-based compensation costs.

Industrial Intermediates & Infrastructure net sales were $5,792 million in the first six months of 2026, up 3 percent from net sales of $5,641 million in the first six months of 2025, with local price up 3 percent, currency up 3 percent, and volume down 3 percent. Local price increased in both businesses and across all geographic regions. Currency had a favorable impact on sales in both businesses and was driven by EMEAI. Volume decreased in Polyurethanes & Construction Chemicals due to the impact of the Middle East conflict, which more than offset increased volume in industrial market applications. Volume decreased in Industrial Solutions as the impact of the conflict in the Middle East more than offset increases in energy applications and higher volumes from recent alkoxylation investments.

Operating EBIT was $128 million in the first six months of 2026, up $441 million from Operating EBIT loss of $313 million in the first six months of 2025. Operating EBIT increased primarily due to higher margins, the impact of the Company’s self-help initiatives, lower planned maintenance activity and the suspension of the recognition of equity losses from Sadara, which more than offset the impact of higher performance-based compensation costs.

PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings net sales were $2,361 million in the second quarter of 2026, up 11 percent from net sales of $2,129 million in the second quarter of 2025, with volume up 6 percent, local price up 4 percent, and a favorable currency impact of 1 percent. Coatings & Performance Monomers volume increased across all geographic regions, driven by higher demand for acrylic monomers. Volume increased in Consumer Solutions in all geographic regions, primarily in downstream silicones, led by home care and consumer and electronics. Local price in Coatings & Performance Monomers increased across all geographic regions, primarily in acrylic monomers and architectural coatings. Local price was flat in Consumer Solutions with gains in Asia Pacific and EMEAI offset by declines in the U.S. & Canada and Latin America. Local price gains in downstream silicones, driven by consumer and electronics, were offset by declines in upstream siloxanes.

Operating EBIT was $133 million in the second quarter of 2026, down $19 million from Operating EBIT of $152 million in the second quarter of 2025. Operating EBIT decreased as higher performance-based compensation costs, planned maintenance activity, and fixed costs impacted by the closure of the Barry, U.K., siloxanes plant more than offset higher demand, reduced intangible asset amortization expenses in Consumer Solutions, and the impact of the Company's self-help initiatives.

Performance Materials & Coatings net sales were $4,441 million in the first six months of 2026, up 6 percent from net sales of $4,200 million in the first six months of 2025, with volume up 4 percent, a favorable currency impact of 2 percent, and local price flat. Coatings & Performance Monomers volume increased across all geographic regions, driven by higher demand for acrylic monomers. Volume increased in Consumer Solutions in all geographic regions except EMEAI. Volume increased primarily in downstream silicones, led by consumer and electronics and home care. The favorable currency impact was driven by EMEAI and Asia Pacific in both businesses. Local price in Coatings & Performance Monomers increased across all geographic regions except Asia Pacific, primarily in acrylic monomers. Local price decreased in Consumer Solutions due to declines in upstream siloxanes.

Operating EBIT was $250 million in the first six months of 2026, up $49 million from Operating EBIT of $201 million in the first six months of 2025. Operating EBIT increased in both businesses primarily due to higher sales volume, the impact of the Company's self-help initiatives, and reduced intangible asset amortization expenses in Consumer Solutions, which more than offset higher performance-based compensation costs.

CORPORATE

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $180 million in the second quarter of 2026, an increase from net sales of $164 million in the second quarter of 2025. Net sales were $349 million in the first six months of 2026, a decrease from net sales of $359 million in the first six months of 2025.

Operating EBIT was a loss of $9 million in the second quarter of 2026, compared with a loss of $59 million in the second quarter of 2025. Operating EBIT increased primarily due to increased investment gains and the benefit of the Company's cost reduction initiatives. Operating EBIT was a loss of $62 million in the first six months of 2026, compared with a loss of $92 million in the first six months of 2025. Operating EBIT increased due to increased investment gains and the impact of the Company's cost reduction initiatives, partially offset by higher environmental expenses.