The Dow Chemical Company (NYSE:DOW) Q3 2015 Earnings Conference Call - Final Transcript

Oct 22, 2015 • 09:00 am ET


The Dow Chemical Company (NYSE:DOW) Q3 2015 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Dow Chemical Company's third quarter 2015 earnings results conference call. [Operator Instructions] I would now like to turn the call over to Mr. Jack Broodo. Please go ahead, sir.

Jack Broodo

Good morning and welcome. I'm Jack Broodo, Vice President of Investor Relations. As usual, we are making this call available to investors and the media via webcast. This call is the property of the Dow Chemical Company; any redistribution, retransmission or reforecast of this call in any form without Dow's express written consent is strictly prohibited.

On the call with me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer; and Howard Ungerleider, Vice Chairman and Chief Financial Officer.

Around 7:00 AM this morning, October 22, our earnings release went out on Business Wire and was posted on the internet on We have prepared slides to supplement our comments in this conference call. These slides are posted on our website and through the link to our webcast.

(Forward-looking Statements)

The agenda for today's call is on Slide 3. I will now turn the call over to Howard.

Howard Ungerleider

Thanks, Jack, and good morning, everyone. Turning to Slide 4, our results this quarter demonstrate once again the value of Dow's integrated structurally hedged portfolio, our focus on execution and the strong financial position the company has built.

Operating EPS rose to $0.82, an increase of 14% year-over-year. Operating EBITDA rose to $2.4 billion versus the same quarter last year on continued demand growth, margin expansion and self-help actions.

Volume grew in nearly all geographic areas, reflecting stable underlying demand for Dow's innovative solutions. And operating EBITDA margins expanded nearly all operating segments, reaching 20%, up 370 basis points year-over-year, the highest quarterly result since 2005.

Our disciplined approach to price volume management enabled us to deliver these results even in the midst of ongoing and significant topline headwinds, with year-over-year price declines in oil of 50% and currency headwinds of 17% for the euro and 51% for the Brazilian real.

The consistent earnings growth, margin expansion and strong cash flow results we delivered in Q3 continue the steady drumbeat over the last 12 quarters, and underpin our ability to return increasing value to our owners, as illustrated on Slide 5. As we have covered in past quarters, we benchmark our quarterly results against our key financial goals that provide a clear view on our performance.

Quarterly EPS has grown at a 21% CAGR over the last three years on an operating basis. And I think it's important to note that the one-time gains resulting from portfolio actions has resulted in an additional $0.71 of as-reported EPS, above the year-to-date operating EPS of $2.58.

ROC is now 11.9%, up more than 170 basis points versus the same quarter last year. And we expect ongoing improvement, as our growth levers particularly on the U.S. Gulf Coast and in Saudi Arabia continue to produce and as we complete our portfolio management actions.

Cash from operations reached $2.5 billion in