Third Quarter 2014 Highlights
•Dow reported earnings of $0.71 per share or $0.72 per share on an adjusted basis(1)
. This compares with earnings of $0.49 per share, or adjusted earnings of $0.50 per share, in the same quarter last year.
•Sales rose 5 percent versus the year-ago period, reaching $14.4 billion, driven by price increases associated with tightening demand conditions in key regions, with gains in most operating segments. Sales gains were led by Performance Plastics (up 9 percent on an adjusted basis(2)

), and Performance Materials (up 8 percent).
•The Company reported increased sales in all geographic areas. Sales in developed geographies grew 4 percent, led by gains in North America, where sales rose 7 percent. Sales in emerging geographies increased 6 percent, due primarily to strength in Performance Plastics in Latin America.
•EBITDA(3)

grew to $2.3 billion, up 24 percent versus the prior year, driven by ongoing productivity actions and improved market fundamentals.
•Performance Plastics achieved record quarterly adjusted EBITDA results (up 31 percent versus the year-ago period). Performance Materials EBITDA grew 61 percent with increases in most businesses, notably in Polyurethanes and PO/PG. Electronic and Functional Materials also delivered record quarterly EBITDA (up 11 percent).
•Adjusted EBITDA margin(4)

expanded more than 240 basis points to 15.9 percent year over year.
•Dow reported an operating rate of 88 percent, up 6 percent versus the same quarter last year, driven primarily by productivity improvements in Performance Materials and Feedstocks and Energy, coupled with higher operating rates in Performance Plastics.
•Cash flow from operations was $1.8 billion for the quarter, and $3.7 billion year-to-date. Dow rewarded shareholders with $1.3 billion in declared dividends and $3.1 billion in share repurchases year to date.

Comment
Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:

“Dow delivered a strong quarter of top- and bottom-line growth. Our low-cost positions and geographic diversification enabled growth and improving operating rates in the quarter. Record EBITDA in Performance Plastics and Electronic and Functional Materials, coupled with significant improvement in Performance Materials again this quarter, demonstrates the value of our strategy to be low cost and fully integrated in key products while adding value through technology in key markets. We continued to achieve major milestones in Agricultural Sciences – such as the recently announced regulatory approvals for our Enlist™ Weed Control System – despite lower crop prices in a seasonally weak quarter.

“This consistent execution against the plans we have firmly set – using ROC to drive self-help actions such as prioritizing spending, further enhancing productivity and liberating capital by applying a best-owner mindset to our entire portfolio – is enabling us to deliver increasing returns and maximize shareholder value creation. This remains our singular focus.”

Three Months Ended
In millions, except per share amounts
Sept. 30, 2014 Sept. 30, 2013
Net Sales $14,405 $13.734
Adjustes Sales $14.405 $13,703
Net Income Available for Common Stockholders $852 $594
Net Income Available for Common Stockholders,
excluding Certain Items $860 $599
Earnings per Common Share – diluted $0.71 $0.49
Adjusted Earnings per Share $0.72 $0.50


Review of Third Quarter Results

The Dow Chemical Company (NYSE: DOW) reported sales of $14.4 billion, up 5 percent versus the year-ago period. Gains were driven by price increases associated with tightening demand conditions in key regions, with increased sales reported in most operating segments. Sales gains were led by Performance Plastics (up 9 percent on an adjusted basis) and Performance Materials (up 8 percent).

The Company reported increased sales in all geographic areas. Sales in developed geographies grew 4 percent, led by gains in North America, where sales rose 7 percent. Sales in emerging geographies increased 6 percent, due primarily to strength in Performance Plastics in Latin America.

EBITDA grew to $2.3 billion, up 24 percent versus the prior year, driven by ongoing productivity actions and improved market fundamentals.

Earnings for the quarter were $0.71 per share, or $0.72 per share on an adjusted basis. This compares with earnings of $0.49 per share, or adjusted earnings of $0.50 per share in the same quarter last year.

Dow reported equity earnings of $229 million, down 29 percent versus the same period last year. Decreases reflect higher spending at Sadara, lower styrene prices and adverse impacts associated with the unplanned outage of an ethylene production facility in Canada.

Certain Items in the current quarter included pretax charges of $12 million for nonrecurring transaction costs associated with the planned separation of a significant portion of the Company’s chlorine value chain. (See Supplemental Information at the end of the release for a description of Certain Items affecting results.)

Research and Development (R&D) expenses were down 2 percent versus the same period last year, reflecting the Company’s execution against its strategy to prioritize R&D resources on high-return market sectors.

Selling, General and Administrative (SG&A) expenses increased 8 percent as compared with the year-ago period, driven primarily by growth initiatives – including commercial activities in Agricultural Sciences.

Cash flow from operations was $1.8 billion for the quarter, and $3.7 billion year to date. Dow rewarded shareholders with $1.3 billion in declared dividends and $3.1 billion in share repurchases year to date.

Electronic and Functional Materials+
Coatings and Infrastructure Solutions+
Agricultural Sciences+
Performance Materials +
Performance Plastics+
Feedstocks and Energy+

Outlook
Commenting on the Company’s outlook, Liveris said:

“Delivering shareholder value is ingrained across the enterprise, and as we look ahead, our priorities are clear: Improve return on capital, increase cash flow by managing our portfolio of integrated value chains, and innovate and commercialize technologies that our customers value.

“We remain committed to achieving our financial targets and ongoing shareholder remuneration, and are taking targeted steps across our businesses to navigate through persistently slow and volatile global macroeconomic conditions. Looking ahead, we will continue leveraging the power of Dow’s global reach and industry-leading feedstock and operational flexibility to manage our portfolio in the midst of volatile energy markets. Our low-cost positions in key products such as ethylene and our deep integration with downstream, value-added products that create value for ourselves and our customers will uniquely position us to continue driving profitable growth. In these conditions, having global scale and flexibility is the best hedge against volatile markets.”

Dow will host a live webcast of its third quarter earnings conference call with investors to discuss its results, business outlook and other matters today at 9:00 a.m. ET on www.dow.com