Oct 22, 2026 earnings call — Self help actions and fourth-quarter outlook
Dow reported operating EBITDA was more than $1.5 billion in the third quarter, as pricing and self help offset higher raw material and logistics costs.
Revenue $11.3B (est $11.2B) · EPS $0.71 (est $0.64)
Key quotes
"And we remain focused on our commitment to implement approximately $1.3 billion in net benefits this year as well as $1.3 billion in 2027."
"If we are able to achieve the 7 cents that we have on the table for October and the 5 cents in November, that will provide an upside to our fourth quarter guide."
"We have approximately $14 billion of liquidity and no substantive debt maturities until 2029."
Analyst Q&A 14
Polyethylene price and margin outlook
Q (Hassan Ahmed · Alembic Global Advisors): Why does Q4 guidance only include $0.02 per pound margin improvement? And are current higher prices sustainable into 2027 if Middle East normalizes and China adds capacity?
A: They said the 2 cents assumes September increases averaged through the quarter. They noted additional October and November increases are on the table and could add upside (about $200 million) but feedstock moves could offset some gains. They expect to end the year with momentum and cited self-help actions as a tailwind into 2027.
"And so if we are able to achieve the 7 cents that we have on the table for October and the 5 cents in November, that will provide an upside to our fourth quarter guide." — Karen S. Carter (CEO)
Ethane feedstock cost for Q4
Q (Vincent Andrews · Morgan Stanley): Why have US ethane prices moved up, how durable is that move versus natural gas, and what is baked into Q4 guidance?
A: They said ethane has risen faster than natural gas due to growing exports, new cracker starts on the US Gulf Coast, and international crackers using more ethane given high oil. They said current ethane levels remain below 2022 peaks and near five-year averages, and the Q4 guide assumes ethane in the mid to high 20s per gallon. They also noted a rule of thumb: every 3 cents per gallon of ethane equals about 1 cent per pound of polyethylene needed to cover that cost, and naphtha/oil keep the oil-to-gas spread constructive.
"So our guide, our fourth quarter guide, contemplates that ethane will be in the mid to high 20s per gallon range." — Karen S. Carter (CEO)
Free cash flow conversion into 2027
Q (Patrick Cunningham · Citi): Can you help with expectations for free cash flow conversion into 2027, any working capital tradeoffs this year, and possible restructuring costs next year?
A: They said third quarter free cash flow of $1.1 billion reflected strong working capital discipline and a $1.3 billion sequential working capital improvement from Q2 to Q3. They reiterated a second-half commitment of at least $500 million working capital release and said they will maintain discipline, expecting cash conversion in the range of 70% to 80% next year. They also pointed to the $1.3 billion self-help tailwind for 2027.
"Should continue to give us a cash conversion rate that is gonna be in the range of anywhere from, let's say, 70% to 80%." — Jeffrey L. Tate (CFO)
Split settlement for PE grades
Q (Abigail Eberts · Wells Fargo): Has the idea of a split settlement for low-density polyethylene changed?
A: They said no. They are moving forward with price increases across all polymers at the same time: 7 cents per pound in October and 5 cents in November. They also noted spot prices are rising globally for all polymers.
"No. You know, we are we are moving forward with all of the polymers at the same time." — Karen S. Carter (CEO)
Meaning of $1.3 billion savings
Q (Jeffrey Zekauskas · JPMorgan): Does the $1.3 billion self-help mean EBITDA would rise by that amount if business stays the same?
A: They said the $1.3 billion of earnings tailwinds entering 2027 are largely within their control via self-help actions. They broke it into about $1.2 billion of incremental "outperform" uplift and roughly $100 million from asset actions, including the Barrie siloxanes shutdown and recent growth investments. They noted global pricing dynamics are not fully in their control and did not give a 2027 EBITDA number on the call.
"So that is $1.2 billion of incremental to outperform uplift in 2027." — Karen S. Carter (CEO)
Segment split of $1.3 billion
Q (David Begleiter · Deutsche Bank): Can you break the $1.3 billion benefit down by segment and mention other known tailwinds or headwinds for 2027?
A: They said the $1.3 billion is an enterprise-level tailwind impacting every function, business, and geography, and they are confident in it. They will share more details early next year on the segment breakdown. Karen added a rough split today: about 50% in P&SP and about 25% in each of the other two segments.
"And, David, maybe just to tack on to that, you should think about it probably in 50% in P&SP, and 25% in the other 2 is how I would categorize it. Today." — Karen S. Carter (CEO)
SG&A and R&D spending
Q (Matthew DeYoe · BofA): Why is overhead not showing more dramatic cuts quarter-to-quarter, and what should R&D spending be at Dow?
A: They said Dow's SG&A as a percent of revenue is strong at 5% versus a best-in-class median of 12%, putting them top quartile. Sequentially SG&A was down $130 million excluding significant items, driven by transformation savings and performance compensation adjustments. They expect cost savings to continue through year-end and 2027, with most headcount savings coming from manufacturing and support functions and about 15% from SG&A.
"If you look at quarter over quarter, so sequentially, our SG&A was actually down $130 million excluding significant items." — Jeffrey L. Tate (CFO)
Sadara partnership and asset status
Q (Frank Mitsch · Fermium): Are you exiting the Sadara partnership and how are those assets running given the conflict?
A: They said they remain engaged with Aramco and are negotiating a long-term solution while having established a financial boundary around Sadara. They suspended further recognition of Sadara equity losses and limited their funding commitment to about $1.3 billion, which they plan to reduce at roughly $100 million per year. On operations, some Sadara assets are running but some at reduced rates due to logistics and conflict-related constraints.
"We have been really clear, I think, on the last call that we have established a financial boundary around Sadara." — Karen S. Carter (CEO)
Path2Zero Canada project status
Q (Kevin McCarthy · Vertical Research Partners): Update on Path2Zero execution, next milestones, and whether you're still open to a partner for the project?
A: They said the project is about 45% complete, much long-lead equipment is on site, and most remaining equipment has been ordered. Construction will peak in 2027 with on-site workers increasing from about 3,000 to 6,000 next year, and the first phase is slated to start at the end of 2029 with the second phase in 2030. They are confident on time and budget and remain open to value-creating partner options, provided they meet returns and value hurdles.
"And so we are maintaining that really sharp emphasis on execution discipline, holding our ourselves accountable to the timeline with that first phase slated to come up at the end of 2029 and then the second phase coming up in 2030." — Karen S. Carter (CEO)
Middle East and Asia cracker operations
Q (Matthew Blair · TPH): Which Middle East and Asia crackers are fully running versus constrained?
A: They said at Equate in Kuwait they have one cracker running at full rates while several derivative units are idled due to storage limitations. In Thailand one cracker was restarted and is recovering feedstock availability while the second cracker has a planned turnaround. At Sadara some crackers and polyethylene trains are online but liquids remain down because of logistics constraints.
"So there we have 1 cracker running at full rates, and several derivative units are idled due to storage limitations." — Karen S. Carter (CEO)
Could constrained JVs have sold more?
Q (John Roberts · Mizuho): If JVs had been running normally, could you have sold a lot more volume in the quarter?
A: They said yes, they could have sold more and Q3 volume was down 1% partly because of capacity constraints from the Middle East. They noted P&SP grew 2% excluding those constraints and cited ACC data showing inventories fell and domestic plus export sales rose in September, indicating stronger demand. Management concluded there was more demand to be had but they were limited by available capacity.
"So I think that those are those are important proof points that there is more demand to be had." — Karen S. Carter (CEO)
MDI market outlook
Q (Christopher Parkinson · Wolfe): Outlook for MDI given weak building and construction demand?
A: They said they expect the market to move back to a longer market in Q4 as industry supply disruptions resolve and recent North American startup completes. They emphasized MDI remains challenging now due to weak building and construction demand and new capacity additions, and they expect gradual operating rate improvement through 2030.
"And so our expectation is in fourth quarter, we do expect to move back to a longer market with the resolution of industry supply disruptions." — Karen S. Carter (CEO)
Industry utilization and China capacity
Q (RBC): Do you agree global utilization is mid-80s and China has added significant capacity affecting pricing?
A: They said ethylene and polyethylene operating rates are in the low eighties today and they expect mid-cycle rates by the end of the decade, noting capacity rationalizations and some closures. On silicones they said China added capacity, which contributed to taking out high-cost siloxane capacity in Barrie, but downstream silicones demand is growing strongly and many end markets are growing double digits.
"I would call industry operating rates on the ethylene side today in the low eighties." — Karen S. Carter (CEO)
US PE export logistics
Q (Barclays): Are there logistics constraints or freight issues for US polyethylene exports given Asia strength?
A: They said they are not seeing logistics constraints out of the US Gulf Coast and operating rates there remain above 90%. They pointed to ACC data as proof of North American feedstock advantage and said order books are strong while spot prices are rising globally, which supports their planned price increases.
"No. We are not seeing any logistics constraints coming out of the US Gulf Coast as a matter of fact, you know, operating rates there remain above 90%." — Karen S. Carter (CEO)