Dow (NYSE:DOW) released first-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.
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The full earnings call is available at https://events.q4inc.com/attendee/893685223#xd_co_f=ZTcwNWM0NWEtZmRkZS00ZGE4LTk0ZjMtOTAyNjViNzA4NGZm~
Summary
Dow reported first quarter net sales of $9.8 billion and operating EBITDA of $873 million, alongside $193 million in cost savings.
Future guidance includes expected second quarter revenue of $12 billion and EBITDA of $2 billion, driven by pricing gains and increased asset utilization.
Strategic initiatives focus on Transform to Outperform and self-help actions, with expectations of $2 billion in near-term EBITDA improvement.
Operational highlights include a 3% sequential volume growth and the completion of a turnaround in the US Gulf Coast, as well as progress on the Alberta project and European asset shutdowns.
Management is confident in the company’s ability to navigate market volatility, citing Dow’s cost advantage and agility, and announced leadership changes with Karen S. Carter set to become CEO in July.
Full Transcript
OPERATOR
Greetings and welcome to the Dow first quarter 2026 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If you’d like to ask a question at that time, please press STAR followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I’ll now turn it over to Dow Investor Relations Vice President Andrew Ryker. Mr. Riker, you may begin.
Andrew Ryker
Good morning. Thank you for joining today. The accompanying slides are provided through this webcast and posted on our website. I’m Andrew Riker, Dow’s Investor Relations Vice President. Leading today’s call are Jim Fitterling, Chair and Chief Executive Officer Karen S. Carter, Chief Operating Officer and Jeff Tate, Chief Financial Officer. Please note our comments contain forward looking statements and are subject to the related cautionary statement contained in the earnings News release and slides. Please refer to our public filings for further information about principal risks and uncertainties. Unless otherwise specified, all financials, where applicable, excludes significant items. We will also refer to non GAAP measures. A reconciliation of the most directly comparable GAAP financial measure and other associated disclosures are contained in the earnings news release that is posted on our website. On Slide two is our agenda for today’s call. Jim and Karen will start with a summary of our first quarter performance, including details on each of our three operating segments. Karen will then provide an update on current industry dynamics, including how global supply disruptions are influencing market conditions. She will also discuss Dow’s competitive advantages, particularly our purpose built asset footprint and advantaged feedstock positions. We will then outline several actions underway to deliver a step change improvement in earnings across the cycle, including progress on Transform to Outperform and our other self help initiatives. Jeff will close with our outlook for the second quarter in an overview of our capital allocation priorities and focus areas for disciplined financial management both in 2026 and across the cycle. Following the prepared remarks, we’ll open the call for Q and A. Now let me turn the call over to Jim.
Jim Fitterling (Chair and Chief Executive Officer)
Thank you Andrew. I’d like to first take a moment to step back and recognize our colleagues, neighbors, customers and partners in the Middle east who are facing significant turmoil and uncertainty. Our thoughts are with everyone affected by this conflict and we wish for their safety and well being during these difficult times. On slide 3, I’ll now cover additional details from the first quarter. The solid results we delivered reflect our commitment to controlling what we can control. While January and February order books were solid, we experienced a sharp positive inflection in March with the beginning of the conflict in the Middle east, we expect this supply disruption will persist throughout 2026. During this quarter, we focused on Dow’s strengths of prioritizing our customers, managing costs aggressively and operating with safety, reliability and long term value creation. We delivered 3% sequential volume growth, net sales of $9.8 billion and operating EBITDA of $873 million and with our self help actions well underway, we delivered approximately $193 million in period cost savings. As we look ahead to the second quarter and beyond, we are taking actions to enhance Dow’s agility and resilience. We’re also entering a seasonally high demand period, providing additional tailwinds as we move through the next couple of quarters. In addition, an increasingly positive margin backdrop continues to unfold and we expect the pricing momentum that began in March to continue across every business and every region in Dow’s portfolio. On the supply side, the conflict in the Middle east has created constraints that are clearly evident in the near term. This includes supply chain disruption for an extended period of time. We also anticipate impact to future investments, including potential delays or cancellations of planned industry capacity additions as well as increased pressure for capacity rationalization. And lastly, we expect that the higher global oil and naphtha prices will steepen the global cost curve. Against this backdrop, our in flight actions serve to further strengthen Dow’s competitiveness and position us to drive margin improvement and capture earnings upside. First, our incremental growth investments are delivering returns like our New World Scale Polyethylene train in Freeport, Texas. And we’re making progress on our Alberta project where the overarching merits of this investment in the cost advantaged Americas are further reinforced by the current global dynamics. In addition, the benefits from our previously announced European asset shutdowns begin this year. And lastly, we are building a Dow that is more agile and resilient through any cycle, a company that delivers through periods of volatility and one that focuses on capturing upside, improving margins and outperforming our peers to effectively reset the competitive benchmark. We’ll share more details on all of this later in the call and Karen is going to cover our first quarter operating segment performance. But before that, I’d like to briefly address our recent leadership announcement. Effective July 1, Karen will assume the role of Chief Executive Officer and I will move to the role of Executive Chair. This announcement follows a deliberate multi year succession process in partnership with our board and ensures continuity as we execute our strategy. Serving as CEO of Dow has been the privilege of a lifetime and I’m incredibly proud of what our team has accomplished together. This transition comes at the right time as we transform our company for its next phase of growth. I have full confidence in Karen’s leadership, her deep operational experience and her ability to drive performance and and value creation. As CEO, she will continue our efforts to transform Dow, positioning us for greater agility and resiliency through any phase of the cycle. She is exactly the right leader to guide our company and deliver on our strategic priorities with discipline and rigor.
Karen S. Carter (Chief Operating Officer)
Thank you Jim and good morning to everyone joining today, I’m honored to step into the role of CEO of dow. Having spent my entire career with the company, I have a deep appreciation for our people, our innovation capabilities and the critical role we play in enabling our customers growth. As we look ahead, our priorities remain consistent. We will continue to drive operational excellence, maintain disciplined capital allocation and advance high value growth in our core markets. Dow is well positioned with our advantaged global portfolio and a strong balance sheet and a talented global team. My focus will be on driving execution, delivering value for our customers and ensuring consistent long term value for our shareholders. I’m excited about the opportunities ahead and confident in our ability to continue to deliver for all stakeholders. Turning now to our first quarter results by segment as Jim mentioned, Team Dow remains focused on disciplined execution in every business throughout the first quarter. As the situation in the Middle east unfolded in March, we continue to manage costs and cash tightly while also prioritizing our customers. We delivered solid results in January and February and then dynamics in the Middle east quickly impacted industry supply demand conditions. In fact, our operations outside the region continue experienced the largest percent sales gain from February to March that we’ve seen in our company’s history. Our teams remain focused on balancing near term dynamics with discipline while also progressing our long term objectives and this agility continues to be a key differentiator for Dow and packaging and specialty plastics. On slide 4, first quarter net sales were $4.9 billion reflecting price declines versus the same period last year. Polyethylene volumes increased in all regions both versus the prior year and last quarter, supported by continued global growth in flexible food and specialty packaging applications. Polyethylene volume gains were offset by lower merchant olefins sales following a turnaround in the US Gulf coast and lower licensing revenue. With safety and reliability at the forefront of our priorities, this turnaround is now complete, the unit is fully operational and our team is shifting their focus to completing our second cracker turnaround for the year which is planned for the second quarter operating EBIT was $208 million, driven by lower integrated margins and higher planned maintenance activity. This was partly offset by higher polyethylene volumes as well as tailwinds from the company’s cost reduction efforts. Looking ahead, our significant Americas footprint, including our new Poly 7 asset, will enable our teams to capture improved margins. Next, turning to our industrial, intermediate and infrastructure segment on slide five, net sales were $2.6 billion down 8% year over year. This was largely due to lower prices in both businesses as well as lower volumes and polyurethanes as a result of impacts from the Middle east conflict. Our proactive cost savings actions in both businesses provided tailwinds that offset some of the decline. Volume declined in the quarter as well, primarily due to our actions to reset our competitiveness by shutting down our higher cost upstream propylene oxide asset late last year. As a reminder, this action rationalized approximately 20% of North American PO industry capacity and while we are experiencing a prolonged weak demand landscape across building and construction, our new alcoxylation assets are driving growth in industrial solutions which serve attractive end markets such as home care, pharma and energy. Moving to the performance, materials and coatings segment on slide 6, net sales were $2.1 billion which is flat compared to the same period last year with higher volumes in both businesses. Volume increased 2% year over year, largely in downstream silicones, particularly in electronic and and home and personal care. In markets. Notably, downstream silicones continue to be a growth engine for the business, delivering high single digit volume improvement versus last quarter. The business remains focused on advancing our multi year asset and market strategy which will help us grow with key customers. The strategy includes shifting our mix towards higher value products in markets like electronics and mobility while right sizing higher cost upstream capacity and this work is further advanced by our previously announced European asset actions including the shutdown of our Basics Siloxanes plant in Barrett, UK by the middle of this year. This capacity represents approximately 25% of European siloxane industry capacity. Next on slide seven, I’ll take a step back to frame further details on the current macroeconomic environment. The headline is Demand across many markets is steady. At the same time supply is short and arbitrage is increasing. On the demand side for our core polyethylene packaging markets, conditions remain resilient, but we are seeing mixed signals in other key markets that Dow serves. For example, in the US inflationary pressures and higher interest rates are still weighing on existing home sales. This continues to be reflected in our industrial intermediates and infrastructure and performance materials and coating segments, both of which serve the building and construction market. Consumer spending has shown some modest improvement, but the landscape and behaviors are likely to remain cautious until we see a significant inflection in macroeconomic conditions. Moving to supply dynamics, we anticipate that shutdowns, feedstock limitations, and logistical constraints will continue to reshape polyethylene product availability across regions. These conditions are creating ripple effects well beyond the Middle east, including significant impacts to logistics costs and transit times. Supply and feedstocks into Asia and Europe are constrained, which is triggering price increases globally. It is also leading to increased production in the Americas and is providing Dow the opportunity to capture new business in Europe. The duration and severity of these constraints increases the likelihood of lasting industry impacts, including the potential for accelerated capacity rationalization as well as delays or cancellation of planned capacity additions. In this context, expectations for higher US Supply are helping to ease some of the pressure and provide stability. North American LNG markets remain well supplied and regionally insulated from these disruptions. In addition, US Gulf Coast NGOs, including Ethane, continue to be largely unimpacted. All of these factors underscore the benefits of Dow’s cost advantage footprint in the Americas. Next, on slide 8, we’ll unpack some of the current regional and industry impacts in more detail. In the two months since the conflict began, the scale of disruption we have seen is unprecedented. Roughly 20% of global oil capacity is currently offline, and approximately half of global ethylene and polyethylene supply is either offline, constrained, or directly impacted. These are unparalleled numbers, reflecting a combination of physical infrastructure damage, feedstock limitations, and severe logistics disruptions. Transit through the region remains significantly impaired, largely driven by the ongoing disruption in the Strait of Hormuz, and the disruption has been amplified across Asia and Europe, tightening feedstock availability and pushing producers to reduce production or increase prices to cover the rapidly escalating costs occurring from the conflict. Looking across regions, a large portion of Middle east capacity remains offline, with increasing risk of lasting infrastructure damage. In Asia Pacific, feedstock constraints are limiting operating rates and reducing export availability, challenging producers who are operating at uncompetitive levels. And in Europe, high costs will require continued price increases to justify additional production. In contrast, the Americas continue to operate at high rates, highlighting the importance of Dow’s cost and feedstock advantages in the region. Currently, it is estimated that roughly three quarters of announced global capacity additions would be either directly impacted by the conflict or dependent on supply chains that remain highly constrained. The longer these conditions persist, the greater the potential for further industry changes. And lastly, it is not likely that the pricing impact of these events will be temporary. We expect rising global production costs and a steepening global cost curve to continue influencing pricing and spread. Next I’ll turn to slide 9 where we will discuss how Dow Specific Advantages drive Near term value at the beginning of the Middle east conflict, petrochemical prices, especially polyethylene, were at multi year unsustainable lows. Despite broader near term market volatility, we anticipate packaging demand will remain resilient providing meaningful pricing potential as evidenced by recent March settlements. That brings me to our advantaged global asset footprint. Dow operates a large portion of our light cracking capacity in the cost advantaged Americas with assets in the US Canada and Argentina, all of which continue to operate at high rates. Our consistent focus on investing in the Americas gives us reliability, feedstock security and cost stability at a time when global supply chains are strained. In Europe, our feedstock flexibility remains a critical differentiator. With NAFTA supplies impaired and PRONAF spreads increasing, Dow’s ability to optimize across feedstocks provides a clear cost and availability advantage versus peers. This allows us to …
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