Union Carbide Swings to Profit on Sundry Income Boost

TL;DR

**UCC's massive sundry income is a one-time windfall, but the underlying sales decline and reduced capex suggest a cautious outlook for its core business.**

AI Summary

Union Carbide Corporation (UCC) reported a significant turnaround in its financial performance for the three and nine months ended September 30, 2025. Net income attributable to UCC surged to $782 million for the three months ended September 30, 2025, compared to a net loss of $26 million in the same period of 2024. For the nine months ended September 30, 2025, net income reached $660 million, a substantial increase from $204 million in the prior year. This improvement was largely driven by a massive $704 million in sundry income (expense) - net for the three months ended September 30, 2025, a stark contrast to a $26 million expense in 2024. Total net sales saw a modest increase to $1,087 million for the three-month period, up from $1,061 million, but decreased to $3,100 million for the nine-month period from $3,253 million. Cost of sales decreased to $1,010 million for the three months ended September 30, 2025, from $1,095 million in 2024, contributing to improved profitability. Capital expenditures significantly decreased to $129 million for the nine months ended September 30, 2025, from $262 million in the prior year, indicating reduced investment. The company also recorded a $735 million distribution to its parent, The Dow Chemical Company, during the nine-month period.

Why It Matters

This filing reveals a dramatic financial recovery for Union Carbide, primarily driven by a substantial sundry income event. For investors in The Dow Chemical Company, UCC's parent, this indicates a strong contribution from a key subsidiary, potentially bolstering Dow's overall financial health and dividend capacity. Employees might see increased stability, though reduced capital expenditures could signal a more conservative growth outlook. Customers, primarily Dow, benefit from UCC's operational efficiency, as evidenced by lower cost of sales. In the broader chemical market, UCC's performance, especially its ability to generate significant non-operating income, highlights the complex financial structures within large conglomerates and their impact on reported earnings, potentially influencing competitive dynamics and M&A valuations.

Risk Assessment

Risk Level: medium — The significant swing in net income is heavily reliant on a $704 million sundry income (expense) - net for the three months ended September 30, 2025, which is an extraordinary item and not indicative of sustainable operational performance. While net income is up, total net sales for the nine months ended September 30, 2025, actually decreased to $3,100 million from $3,253 million in the prior year, indicating potential weakness in core revenue generation. The company also faces ongoing asbestos-related liabilities, with current liabilities at $81 million and non-current at $645 million as of September 30, 2025.

Analyst Insight

Investors should scrutinize the nature of the $704 million sundry income to understand its one-time impact and not extrapolate this profitability. Focus on the underlying sales trends and operational efficiency, as the nine-month sales decline suggests core business challenges. Monitor future filings for sustained operational improvements rather than relying on non-recurring gains.

Financial Highlights

debt To Equity

N/A

revenue

$3,100M

operating Margin

N/A

total Assets

$4,844M

total Debt

N/A

net Income

$660M

eps

N/A

gross Margin

-0.9%

cash Position

$11M

revenue Growth

-4.6%

Revenue Breakdown

Key Numbers

• $782M — Net income attributable to Union Carbide Corporation (for the three months ended Sep 30, 2025, up from a $26M loss in 2024)
• $660M — Net income attributable to Union Carbide Corporation (for the nine months ended Sep 30, 2025, up from $204M in 2024)
• $704M — Sundry income (expense) - net (for the three months ended Sep 30, 2025, a significant positive swing from a $26M expense in 2024)
• $1,087M — Total net sales (for the three months ended Sep 30, 2025, a slight increase from $1,061M in 2024)
• $3,100M — Total net sales (for the nine months ended Sep 30, 2025, a decrease from $3,253M in 2024)
• $129M — Capital expenditures (for the nine months ended Sep 30, 2025, a decrease from $262M in 2024)
• $735M — Distribution to parent (for the nine months ended Sep 30, 2025)
• $81M — Asbestos-related liabilities - current (as of Sep 30, 2025)
• $645M — Asbestos-related liabilities - noncurrent (as of Sep 30, 2025)

Key Players & Entities

• UNION CARBIDE CORP /NEW/ (company) — registrant
• The Dow Chemical Company (company) — parent company and primary customer
• Dow Inc. (company) — ultimate parent of TDCC
• SEC (regulator) — U.S. Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• U.S. Court of Appeals for the Eighth Circuit (regulator) — court handling climate disclosure challenges
• Board of Directors (person) — chief operating decision maker for UCC

FAQ

Risk Factors

• Asbestos-Related Liabilities [high — legal]: The company has significant asbestos-related liabilities, with $81 million classified as current and $645 million as noncurrent as of September 30, 2025. These long-standing liabilities represent a material financial obligation.
• Dependence on Related Company Sales [medium — financial]: A substantial portion of Union Carbide's sales are to related companies ($1,058M for the three months and $3,020M for the nine months ended Sep 30, 2025). Any disruption in these intercompany transactions could significantly impact revenue.
• Cost of Sales Volatility [medium — operational]: Cost of sales exceeded total net sales for the nine months ended September 30, 2025 ($3,137M vs $3,100M), indicating potential margin pressures. For the three-month period, cost of sales was $1,010M, down from $1,095M in 2024, which contributed to improved profitability.
• Significant Distribution to Parent [high — financial]: A $735 million distribution to its parent, The Dow Chemical Company, was made during the nine months ended September 30, 2025. This large outflow of cash impacts the company's liquidity and retained earnings.
• Reduced Capital Expenditures [low — financial]: Capital expenditures were significantly reduced to $129 million for the nine months ended September 30, 2025, down from $262 million in the prior year. This could indicate a slowdown in investment in future growth or maintenance.

Industry Context

Union Carbide operates within the chemicals industry, which is characterized by cyclical demand, significant capital investment, and sensitivity to raw material costs and global economic conditions. The industry faces ongoing scrutiny regarding environmental regulations and sustainability practices. Competition is intense, with major global players vying for market share.

Regulatory Implications

The company's operations are subject to various environmental, health, and safety regulations. Ongoing compliance is critical, and any new or stricter regulations could impact operating costs and product portfolios. The significant asbestos-related liabilities also point to potential ongoing legal and financial scrutiny.

What Investors Should Do

1. Investigate the nature and sustainability of the $704 million sundry income.
2. Analyze the decrease in capital expenditures.
3. Monitor asbestos-related liabilities.
4. Assess the impact of the $735 million distribution to parent.

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the significant turnaround in net income, driven by substantial sundry income.
• 2024-09-30: End of Third Quarter 2024 — Prior year comparison period showing a net loss of $26 million for the three months and $204 million for the nine months.

Glossary

Sundry income (expense) - net

This line item typically includes miscellaneous income and expenses that do not fit into other specific categories, such as gains or losses from asset sales, foreign currency fluctuations, or other non-operating items. (A significant positive swing of $704 million in this category for the three months ended Sep 30, 2025, was the primary driver of the company's net income turnaround.)

Net sales to related companies

Revenue generated from sales to other entities that are affiliated with Union Carbide Corporation, typically through common ownership or control (e.g., parent company or subsidiaries). (This represents a large portion of Union Carbide's total sales, highlighting the importance of intercompany relationships to its revenue stream.)

Asbestos-related liabilities

Financial obligations arising from claims and lawsuits related to exposure to asbestos, a material historically used in various industrial products. (These represent substantial current and noncurrent liabilities for Union Carbide, impacting its financial position.)

Capital expenditures

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, and equipment. (A significant decrease in capital expenditures for the nine-month period suggests a potential shift in investment strategy or a reduction in expansionary activities.)

Year-Over-Year Comparison

Union Carbide Corporation has reported a dramatic improvement in profitability for the nine months ended September 30, 2025, with net income soaring to $660 million from $204 million in the prior year. This turnaround is primarily attributed to a substantial $704 million in sundry income for the three-month period, a stark contrast to a $26 million expense in the prior year. While total net sales saw a slight increase to $1,087 million for the three months, they decreased to $3,100 million for the nine months from $3,253 million. Cost of sales decreased for the three-month period, aiding profitability, but exceeded sales for the nine-month period. Capital expenditures were significantly reduced by over 50% to $129 million for the nine months, indicating a potential shift in investment strategy.

Filing Documents

• ucc-20250930.htm (10-Q) — 642KB
• ucc-93025xq3xex23.htm (EX-23) — 4KB
• ucc-93025xq3xex311.htm (EX-31.1) — 11KB
• ucc-93025xq3xex312.htm (EX-31.2) — 11KB
• ucc-93025xq3xex321.htm (EX-32.1) — 5KB
• ucc-93025xq3xex322.htm (EX-32.2) — 5KB
• 0000029915-25-000033.txt ( ) — 3782KB
• ucc-20250930.xsd (EX-101.SCH) — 26KB
• ucc-20250930_cal.xml (EX-101.CAL) — 61KB
• ucc-20250930_def.xml (EX-101.DEF) — 99KB
• ucc-20250930_lab.xml (EX-101.LAB) — 310KB
• ucc-20250930_pre.xml (EX-101.PRE) — 209KB
• ucc-20250930_htm.xml (XML) — 495KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements . 4 Consolidated Statements of Income . 4 Consolidated Statements of Comprehensive Income . 5 Consolidated Balance Sheets . 6 Consolidated Statements of Cash Flows . 7 Consolidated Statements of Equity . 8 Notes to the Consolidated Financial Statements . 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations . 17 Results of Operations . 17 Other Matters . 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk . 20 Item 4.

Controls and Procedures

Controls and Procedures . 20

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1. Legal Proceedings . 21 Item 1A. Risk Factors . 21 Item 4. Mine Safety Disclosures . 22 Item 6. Exhibits . 22

SIGNATURES

SIGNATURES 23 2 Table of Contents Union Carbide Corporation and Subsidiaries Throughout this Quarterly Report on Form 10-Q, except as otherwise indicated by the context, the terms "Corporation" or "UCC" as used herein mean Union Carbide Corporation and its subsidiaries. CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS Certain statements in this report are "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "opportunity," "outlook," "plan," "project," "seek," "should," "strategy," "target," "will," "will be," "will continue," "will likely result," "would" and similar expressions, and variations or negatives of these words or phrases. Forward-looking statements are based on current assumptions and expectations of future events that are subject to risks, uncertainties and other factors that are beyond the Corporation's control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements and speak only as of the date the statements were made. These factors include, but are not limited to: sales of UCC's products; UCC's expenses, future revenues and profitability; any sanctions, export restrictions, supply chain disruptions or increased economic uncertainty related to the ongoing conflicts between Russia and Ukraine and in the Middle East; capital requirements and need for and availability of financing; unexpected barriers in the development of technology, including with respect to UCC's contemplated capital and operating projects; significant litigation and environmental matters and related

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS Union Carbide Corporation and Subsidiaries Consolidated Statements of Income Three Months Ended Nine Months Ended In millions (Unaudited) Sep 30, 2025 Sep 30, 2024 Sep 30, 2025 Sep 30, 2024 Net trade sales $ 29 $ 32 $ 80 $ 87 Net sales to related companies 1,058 1,029 3,020 3,166 Total net sales 1,087 1,061 3,100 3,253 Cost of sales 1,010 1,095 3,137 3,000 Research and development expenses 5 5 15 17 Selling, general and administrative expenses 1 1 4 4 Restructuring and asset related charges - net — — 6 — Sundry income (expense) - net 704 ( 26 ) 643 ( 70 ) Interest income 24 33 77 104 Interest expense and amortization of debt discount 3 2 5 7 Income (loss) before income taxes 796 ( 35 ) 653 259 Provision (credit) for income taxes 14 ( 9 ) ( 7 ) 55 Net income (loss) attributable to Union Carbide Corporation $ 782 $ ( 26 ) $ 660 $ 204 Depreciation $ 40 $ 29 $ 106 $ 87 Capital expenditures $ 15 $ 94 $ 129 $ 262 See Notes to the Consolidated Financial Statements. 4 Table of Contents Union Carbide Corporation and Subsidiaries Consolidated Statements of Comprehensive Income Three Months Ended Nine Months Ended In millions (Unaudited) Sep 30, 2025 Sep 30, 2024 Sep 30, 2025 Sep 30, 2024 Net income (loss) attributable to Union Carbide Corporation $ 782 $ ( 26 ) $ 660 $ 204 Other comprehensive income (loss), net of tax Cumulative translation adjustments ( 1 ) ( 1 ) ( 2 ) ( 1 ) Pension and other postretirement benefit plans 12 11 33 31 Total other comprehensive income 11 10 31 30 Comprehensive income (loss) attributable to Union Carbide Corporation $ 793 $ ( 16 ) $ 691 $ 234 See Notes to the Consolidated Financial Statements. 5 Table of Contents Union Carbide Corporation and Subsidiaries Consolidated Balance Sheets In millions, except share amounts (Unaudited) Sep 30, 2025 Dec 31, 2024 Assets Current Assets Cash and cash equivalents $ 11 $ 11 Accounts receivable: Trade (net of allowance for do

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