Executive Summary
Dow Inc reported Q3 2025 results with a revenue of $9.973 billion and a gross profit of $689 million, translating to a gross margin of roughly 6.9%. Despite a 8.3% YoY decline in revenue and a material drop in gross profit YoY, operating income rose to $159 million for the quarter, yielding an 1.6% operating margin. Net income was $62 million, an improvement from the prior quarter but a -71% YoY comparison driven by lower top-line and higher financing costs, with EPS of $0.087 (diluted $0.08). The quarter also featured a meaningful swing in quarterly profitability from Q2 to Q3, as operating income expanded from roughly $9 million in Q2 to $159 million in Q3, suggesting a constructive seasonality or one-off offsetting factors that improved operating performance. However, the company continues to contend with a high capital structure (interest expense of $221 million vs. EBITDA of $979 million) and a negative tax line, yielding a negative reported tax benefit of $54 million.
From a cash flow and liquidity perspective, Dow generated operating cash flow per share of $1.605 and free cash flow per share of $0.802, supported by a cash balance per share of $6.56. The balance sheet remains solid on liquidity metrics (current ratio ~1.94; quick ratio ~1.28) but exhibits leverage characteristics (debt ratio ~0.322; debt to capitalization ~0.528; interest coverage ~0.72). Free cash flow generation and modest dividend yield (~1.55%) provide a reasonable balance sheet cushion, but the market’s elevated P/E (~65x) versus sector peers highlights investor skepticism about margin recovery and ongoing cyclicality.
Looking ahead, management did not publish formal forward guidance in the provided dataset. Investors should monitor commodity feedstock costs (ethylene/propylene), energy prices, end-market demand (coatings, packaging, and durable goods), and the company’s cost optimization programs and price/mix dynamics as key drivers of margin trajectory and cash generation.
Key Performance Indicators
QoQ: 26.65% | YoY:-35.61%
QoQ: 1 666.67% | YoY:-59.23%
QoQ: 107.43% | YoY:-71.03%
QoQ: 107.38% | YoY:-70.97%
Key Insights
Revenue: 9,973,000,000 (YoY -8.33%, QoQ -1.30%)
Gross Profit: 689,000,000 (YoY -35.61%, QoQ +26.65%)
Operating Income: 159,000,000 (YoY -59.23%, QoQ +1,666.67%)
Net Income: 62,000,000 (YoY -71.03%, QoQ +107.43%)
EPS: 0.087 (YoY -70.97%, QoQ +107.38%)
Gross Margin: 6.91%
Operating Margin: 1.59%
Pretax Margin: 0.70%
Net Margin: 0.62%
EBITDA: 979,000,000 (EBITDA Margin ~9.8%)
Effective Tax Rate: -77.1% (tax benefit)
Interest Expense: 221,000,000
Debt to Capitalization: 0.528; Long-term debt to capi...
Financial Highlights
Revenue: 9,973,000,000 (YoY -8.33%, QoQ -1.30%)
Gross Profit: 689,000,000 (YoY -35.61%, QoQ +26.65%)
Operating Income: 159,000,000 (YoY -59.23%, QoQ +1,666.67%)
Net Income: 62,000,000 (YoY -71.03%, QoQ +107.43%)
EPS: 0.087 (YoY -70.97%, QoQ +107.38%)
Gross Margin: 6.91%
Operating Margin: 1.59%
Pretax Margin: 0.70%
Net Margin: 0.62%
EBITDA: 979,000,000 (EBITDA Margin ~9.8%)
Effective Tax Rate: -77.1% (tax benefit)
Interest Expense: 221,000,000
Debt to Capitalization: 0.528; Long-term debt to capitalization: 0.502
Current Ratio: 1.944; Quick Ratio: 1.284; Cash Ratio: 0.456
Days Sales Outstanding: 64.62; Days Inventory Outstanding: 64.71; CCC: ~69.15 (cash conversion cycle)
Asset Turnover: 0.164; Equity Multiplier: 3.48; ROA: 0.10%; ROE: 0.35%; ROCE: 0.31%
Free Cash Flow per Share: 0.802; Operating Cash Flow per Share: 1.605; Cash per Share: 6.56
Dividend Yield: 1.55%; Payout Ratio: 4.02%
Price/Earnings: 64.93x; Price/Book: 0.918x; Price/Sales: 1.615x; EV/FCF: Not provided; FCF/Revenue: ~5.0%
Capex Coverage Ratio: 1.998; Dividends/Capex Coverage: 1.386
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
9.97B |
-8.33% |
-1.30% |
| Gross Profit |
689.00M |
-35.61% |
26.65% |
| Operating Income |
159.00M |
-59.23% |
1 666.67% |
| Net Income |
62.00M |
-71.03% |
107.43% |
| EPS |
0.09 |
-70.97% |
107.38% |
Key Financial Ratios
operatingProfitMargin
1.59%
operatingCashFlowPerShare
$1.61
freeCashFlowPerShare
$0.8
Management Commentary
Note: Earnings call transcript data were not provided in the current dataset. As a result, management-specific quotes or theme quotes could not be extracted from the source text. The synthesis here relies on the disclosed quarterly financials and standard industry considerations.
Forward Guidance
No explicit forward guidance was contained in the provided data for Q3 2025. Investors should assess management’s likely emphasis on cost optimization, portfolio discipline, and capital allocation given the leverage profile and cyclicality of the Basic Materials sector. Key factors to monitor include:
- Commodity price and energy cost trajectory (ethylene/propylene feedstocks and energy intensity of Dow’s operations).
- End-market demand across packaging, coatings, and durable goods; any signs of volume recovery or mix improvements that could lift margins.
- Cost-savings programs and any accelerated operating leverage from improving plant reliability or asset utilization.
- Balance sheet discipline: tracking net debt, interest expense, and coverage ratios as Dow optimizes capital structure.
- Cash flow generation and dividend policy alignment with FCF growth, as well as any share repurchase activity if pursued.
Overall, the investment thesis hinges on whether Dow can translate its nearly $1.0B EBITDA into meaningful, sustainable margin expansion and deleveraging in a cyclical environment while maintaining robust free cash flow.