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 third quarter of 2026 were $11.3 billion, up 13 percent from $10.0 billion in the third quarter of 2025, with local price up 14 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 all operating segments, with Packaging & Specialty Plastics up 17 percent, Industrial Intermediates & Infrastructure up 16 percent, and Performance Materials & Coatings up 5 percent. Volume decreased 1 percent, driven by Asia Pacific (down 12 percent), partially offset by increases in Latin America (up 3 percent) and the U.S. & Canada and EMEAI (both up 2 percent). Volume increased in Packaging & Specialty Plastics (up 1 percent), decreased in Industrial Intermediates & Infrastructure (down 7 percent), and increased in Performance Materials & Coatings (up 3 percent). Excluding the Hydrocarbons & Energy business, net sales increased 10 percent.

Net sales in the first nine months of 2026 were $33.2 billion, up 9 percent from $30.5 billion in the first nine months of 2025, with local price up 9 percent, volume down 1 percent, and favorable currency impact of 1 percent. Net sales increased in all operating segments and all geographic regions except Asia Pacific. Local price increased in all geographic regions and all operating segments, with Packaging & Specialty Plastics up 12 percent, Industrial Intermediates & Infrastructure up 8 percent, and Performance Materials & Coatings up 2 percent. Volume decreased 1 percent, driven by Asia Pacific (down 8 percent) and EMEAI (down 2 percent), partially offset by increases in Latin America (up 7 percent) with the U.S. & Canada flat. Volume decreased in Packaging & Specialty Plastics (down 1 percent) and Industrial Intermediates & Infrastructure (down 5 percent) and increased in Performance Materials & Coatings (up 4 percent). Currency favorably impacted net sales by 1 percent, driven by EMEAI (up 4 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 third quarter of 2026, compared with $9.2 billion in the third quarter of 2025. COS increased in the third quarter of 2026 primarily due to higher raw material, feedstock and energy costs, higher logistics costs, and increased planned maintenance turnaround spending, partially offset by the Company's cost reduction initiatives. For the first nine months of 2026, COS was $29.0 billion compared with $28.5 billion in the first nine months of 2025. COS for the first nine months of 2026 increased primarily due to the impact of performance-based compensation costs, higher logistics costs, higher raw material, feedstock and energy costs, and increased planned maintenance turnaround spending, partially offset by the Company's cost reduction initiatives. COS as a percentage of net sales was 87.8 percent in the third quarter of 2026 (92.7 percent in the third quarter of 2025) and 87.4 percent for the first nine months of 2026 (93.5 percent for the first nine months of 2025).

Research and Development Expenses

Research and development ("R&D") expenses totaled $180 million in the third quarter of 2026, compared with $191 million in the third quarter of 2025. R&D expenses decreased in the third quarter of 2026 primarily due to the impact of the Company’s cost reduction initiatives. R&D expenses for the first nine months of 2026 were $568 million, compared with $579 million for the first nine months of 2025. R&D expenses for the first nine months of 2026 decreased primarily due to the Company’s cost reduction initiatives, partially offset by higher performance-based compensation costs.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses totaled $408 million in the third quarter of 2026, compared with $340 million in the third quarter of 2025. SG&A expenses increased in the third quarter of 2026 primarily due to costs to achieve Transform to Outperform which more than offset the Company's cost reduction initiatives. For the first nine months of 2026, SG&A expenses were $1,360 million, compared with $1,053 million in the first nine months of 2025. SG&A expenses for the first nine 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. Costs to achieve Transform to Outperform will continue to be incurred through 2027.

Amortization of Intangibles

Amortization of intangibles was $40 million in the third quarter of 2026 compared with $46 million in the third quarter of 2025. In the first nine months of 2026, amortization of intangibles was $126 million, compared with $185 million in the first nine 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, the Company recorded pretax charges of $27 million and $445 million in the first and second quarters of 2026, respectively, for severance and related benefit costs, related to Corporate. In the third quarter of 2026, the Company recorded pretax charges of $9 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 benefit 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 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. 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 (losses) of nonconsolidated affiliates was earnings of $12 million in the third quarter of 2026, compared with equity in losses of nonconsolidated affiliates of $72 million in the third 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 $255 million for the first nine months of 2026, compared with equity in losses of nonconsolidated affiliates of $122 million for the first nine months of 2025. The increase in equity in losses of nonconsolidated affiliates was primarily related to an adjustment to the Company's liability associated with its guarantee of Sadara's project financing debt, related to Packaging & Specialty Plastics ($81 million) and Industrial Intermediates & Infrastructure ($211 million), and lower results at the Company's Kuwait joint ventures. 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 $279 million for the first nine months of 2026, compared with $190 million for the first nine months of 2025. See Notes 9 and 12 to the Consolidated Financial Statements for additional information.

Sundry Income (Expense) – Net

Sundry income (expense) - net in the third quarter of 2026 was income of $50 million for Dow Inc. and TDCC, compared with income of $185 million and $184 million, respectively, in the third quarter of 2025. The third quarter of 2026 included a gain associated with the Nova ethylene asset matter, 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 2025 included a gain from the divestiture of the Company's ownership interest in a nonconsolidated affiliate, 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.

Sundry income (expense) - net for the first nine months of 2026 was income of $296 million and $289 million for Dow Inc. and TDCC, respectively, compared with income of $345 million and $360 million, respectively, for the first nine months of 2025. The first nine months of 2026 included a gain associated with the Nova ethylene asset matter, foreign currency exchange gains, gains on the sales of other assets and investments, and non-operating pension and postretirement benefit plan credits, partially offset by a loss on early extinguishment of debt. The first nine months of 2025 included gains from the divestiture of the Company's soil fumigation product line and its ownership interest in a nonconsolidated affiliate, 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 $211 million in the third quarter of 2026, compared with $221 million in the third quarter of 2025. Interest expense and amortization of debt discount was $640 million in the first nine months of 2026, compared with $646 million in the first nine 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 (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 2026, the Company reported a provision for income taxes of $117 million, resulting in an effective tax rate of 18.2 percent. 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. For the first nine months of 2026, the Company reported a provision for income taxes of $241 million, resulting in an effective tax rate of 21.5 percent. 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. The reported provision (credit) for income taxes and effective tax rates for TDCC are substantially similar.

The credit for income taxes in 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 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 benefit of $89 million related to the initial sale of a portion of the Company's membership interests in Diamond Infrastructure Solutions. These factors resulted in a negative effective tax rate for both periods.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $67 million in the third quarter of 2026, compared with $62 million in the third quarter of 2025. Net income attributable to noncontrolling interests was $236 million in the first nine months of 2026, compared with $113 million for the first nine months of 2025. The increase in net income attributable to noncontrolling interests reflects the ownership interest in Diamond Infrastructure Solutions held by InfraPark Holdings, LLC, 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 available for Dow Inc. common stockholders was $458 million, or $0.62 per share, in the third quarter of 2026, compared with $62 million, or $0.08 per share, in the third quarter of 2025. Net income (loss) available for Dow Inc. common stockholders was income of $646 million, or $0.88 per share, in the first nine months of 2026, compared with a loss of $1,080 million, or $1.53 per share, in the first nine months of 2025. See Note 7 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

TDCC

Net income available for the TDCC common stockholder was $459 million in the third quarter of 2026, compared with $62 million in the third quarter of 2025. Net income (loss) available for the TDCC common stockholder was income of $643 million in the first nine months of 2026, compared with a loss of $1,059 million in the first nine 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 nine months ended September 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 $5,778 million in the third quarter of 2026, up 18 percent from net sales of $4,891 million in the third quarter of 2025, with local price up 17 percent and volume up 1 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 EMEAI and the U.S. & Canada. Volume decreased in Packaging and Specialty Plastics, driven by polyethylene, which was impacted by the Middle East conflict. Volume increased in Hydrocarbons & Energy, driven by olefins and aromatics in EMEAI, which benefited from the restart of an ethylene cracker that was idled in mid-2025.

Operating EBIT was $585 million in the third quarter of 2026, up $386 million from Operating EBIT of $199 million in the third 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 raw material and planned maintenance activity costs.

Packaging & Specialty Plastics net sales were $17,082 million in the first nine months of 2026, up 12 percent from net sales of $15,226 million in the first nine months of 2025, with local price up 12 percent, currency up 1 percent, and volume down 1 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 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 nonrecurring licensing sales. Volume decreased in Hydrocarbons & Energy due to planned maintenance activity in the U.S. Gulf Coast.

Operating EBIT was $2,071 million in the first nine months of 2026, up $1,459 million from Operating EBIT of $612 million in the first nine 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 raw material, planned maintenance activity and performance-based compensation costs.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

1. The nine months ended September 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 $3,058 million in the third quarter of 2026, up 8 percent from net sales of $2,834 million in the third quarter of 2025, with local price up 16 percent, currency down 1 percent, and volume down 7 percent. Local price increased across both businesses and all geographic regions. Currency had an unfavorable 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. Volume increased in Industrial Solutions, primarily in the U.S. & Canada, driven by increased demand for artificial intelligence infrastructure and energy applications as well as higher catalyst sales, which more than offset declines in Asia Pacific and EMEAI primarily due to the impact of the Middle East conflict.

Operating EBIT was $176 million in the third quarter of 2026, up $223 million from an Operating EBIT loss of $47 million in the third quarter of 2025. Operating EBIT increased due to higher selling prices, the impact of the Company’s self-help initiatives and the suspension of the recognition of equity losses from Sadara, partially offset by higher raw material and energy costs.

Industrial Intermediates & Infrastructure net sales were $8,850 million in the first nine months of 2026, up 4 percent from net sales of $8,475 million in the first nine months of 2025, with local price up 8 percent, currency up 1 percent, and volume down 5 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. Volume decreased in Industrial Solutions as the impact of the Middle East conflict more than offset increases in energy applications and higher volumes from recent alkoxylation investments.

Operating EBIT was $304 million in the first nine months of 2026, up $664 million from an Operating EBIT loss of $360 million in the first nine months of 2025. Operating EBIT increased primarily due to higher selling prices, the impact of the Company’s self-help initiatives, the suspension of the recognition of equity losses from Sadara and lower planned maintenance activity, partially offset by higher performance-based compensation, raw material and energy costs in EMEAI.

PERFORMANCE MATERIALS & COATINGS

Performance Materials & Coatings net sales were $2,250 million in the third quarter of 2026, up 8 percent from net sales of $2,082 million in the third quarter of 2025, with local price up 5 percent and volume up 3 percent. Coatings & Performance Monomers local price increased across all geographic regions, driven by acrylic monomers and architectural coatings. Local price increased in Consumer Solutions in all geographic regions and both businesses, led by consumer and electronics applications. Volume increased in Coatings & Performance Monomers across all geographic regions, driven by higher demand for acrylic monomers and architectural coatings. Volume increased in Consumer Solutions, primarily in the U.S. & Canada. Volume increased in downstream silicones, led by home care and consumer and electronics applications, partially offset by declines in upstream siloxanes following the recent shutdown of the Barry, U.K. basics siloxanes plant.

Operating EBIT was $154 million in the third quarter of 2026, up $74 million from Operating EBIT of $80 million in the third quarter of 2025. Operating EBIT increased in both businesses primarily due to higher selling prices and volumes and the impact of the Company's self-help initiatives, partially offset by increased logistics and raw material costs.

Performance Materials & Coatings net sales were $6,691 million in the first nine months of 2026, up 7 percent from net sales of $6,282 million in the first nine months of 2025, with volume up 4 percent, local price up 2 percent, and a favorable currency impact of 1 percent. Coatings & Performance Monomers volume increased across all geographic regions, primarily in acrylic monomers and architectural coatings. Volume increased in Consumer Solutions, primarily in the U.S. & Canada. Volume increased in downstream silicones, driven by consumer and electronics and home care, partially offset by declines in upstream siloxanes following the recent shutdown of the Barry, U.K. basics siloxanes plant. Local price in Coatings & Performance Monomers increased across all geographic regions, led by acrylic monomers and architectural coatings. Local price was flat in Consumer Solutions as price gains in downstream silicones, driven by consumer and electronics, were offset by declines in upstream siloxanes. The favorable currency impact was driven by EMEAI and Asia Pacific in both businesses.

Operating EBIT was $404 million in the first nine months of 2026, up $123 million from Operating EBIT of $281 million in the first nine months of 2025. Operating EBIT increased in both businesses primarily due to higher selling prices and volumes, the impact of the Company's self-help initiatives, and reduced intangible asset amortization expenses in Consumer Solutions, partially offset by higher logistics and performance-based compensation costs.

CORPORATE

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $181 million in the third quarter of 2026, an increase from net sales of $166 million in the third quarter of 2025. Net sales were $530 million in the first nine months of 2026, an increase from net sales of $525 million in the first nine months of 2025.

Operating EBIT was a loss of $28 million in the third quarter of 2026, compared with a loss of $52 million in the third quarter of 2025. Operating EBIT increased primarily due to the benefit of the Company's cost reduction initiatives and the absence of nonrecurring expense items from the prior year. Operating EBIT was a loss of $90 million in the first nine months of 2026, compared with a loss of $144 million in the first nine months of 2025. Operating EBIT increased due to increased investment gains, the impact of the Company's cost reduction initiatives and the absence of nonrecurring expense items from the prior year, partially offset by higher environmental expenses.