Dow reported earnings of $0.84 per share. This compares with reported earnings of $0.50 per share in the same period last year. The Company delivered earnings of $0.85 per share excluding certain items(2), compared with $0.54 per share on the same basis in the year-ago period.
EBITDA increased 24 percent year-over-year to $2.3 billion, with gains in every operating segment. This contributed to a record first-half EBITDA excluding certain items. On the same basis, Electronic and Specialty Materials and Performance Systems each achieved quarterly records. Health and Agricultural Sciences and Chemicals and Energy grew more than 40 percent.
EBITDA margin(3) excluding certain items expanded for the ninth consecutive quarter on a year-over-year basis, with improvements in excess of 200 basis points in Health and Agricultural Sciences, Performance Systems, and Chemicals and Energy. On the same basis, Plastics delivered the eighth consecutive quarter in excess of 20 percent.
On a reported basis, sales were $16 billion, the second highest quarter in the Company’s history. Sales excluding the impact of divestitures increased 28 percent year-over-year, with double-digit gains in all operating segments and geographic areas.
In emerging geographies, sales reached $4.9 billion, a new quarterly record for the Company. Volume growth in these regions was 14 percent excluding the impact of divestitures. Sales in Asia Pacific reached a new quarterly record of $2.7 billion, and grew 23 percent excluding divestitures.
Health and Agricultural Sciences set a new sales record for the first half of the year, surpassing $3 billion. In the quarter, EBITDA margin rose more than 370 basis points versus the year-ago period.
Volume rose 9 percent versus the same quarter last year excluding the impact of divestitures, with gains across nearly all operating segments. On the same basis, demand grew in all geographic areas.
Price was up 19 percent excluding the impact of divestitures, with increases in all operating segments and double-digit gains in all geographic areas.
Equity earnings were $291 million. The Company’s year-to-date equity earnings of $589 million represent a new record for the first half of the year.
Dow retired $1.5 billion of gross debt in the quarter and reduced net debt(4) to total capitalization to 41.6 percent. In the first half of the year, the Company retired $4 billion of gross debt.
(1) EBITDA is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" is provided following the Operating Segments table.
(2) See Supplemental Information at the end of the release for a description of these items.
(3) EBITDA margin is EBITDA as a percentage of reported sales.
(4) Net debt equals total debt (“Notes payable” plus “Long-term debt due within one year” plus “Long-Term Debt”) minus “Cash and Cash equivalents.”
Comment
Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:
“This marked another quarter of tremendous progress for Dow. We delivered significant and broad-based top-line growth, and reached a new quarterly sales record in emerging geographies. The performance of our diverse and balanced portfolio once again overcame continuing headwinds in certain sectors. More importantly, we remain firmly on the trajectory to reach our near-term earnings targets, as evidenced by EBITDA growth of nearly 25 percent – up in every operating segment – as well as overall margin expansion for the Company. Further, our year-over-year EPS growth and our EBITDA run-rate of $9 billion are approaching our near-term target.
“Our transformed portfolio, underpinned by our cost-advantaged and flexible operations, is now performing at a new level. This is fueling higher-growth, higher-margin performance through superior market-reach, customer intimacy and innovation. We’re delivering all of this while maintaining our steadfast commitment to enhance financial flexibility by paying down debt, and increasing shareholder remuneration. Coupled with the strength of our integrated business model, Dow is firmly on the right strategic path of sustained earnings growth.”
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