DuPont Reports Third Quarter Results

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WILMINGTON, Del., Oct. 31, 2019 - DuPont (NYSE: DD) today announced financial results for the third quarter of 2019 and is reiterating its full-year guidance for organic revenue of slightly down versus prior year and narrows the range of pro forma adjusted EPS ⁽¹⁾ to $3.77 to $3.82 versus the prior range of $3.75 to $3.85, maintaining the midpoint of the guide.

“Amid ongoing challenged market conditions and currency headwinds, we delivered earnings per share growth and expanded margins through continued price improvement, cost discipline and portfolio actions,” said Marc Doyle, DuPont Chief Executive Officer. “We saw continued strength in high-growth areas such as Water Solutions, where we recently announced agreements to make two strategic acquisitions and are encouraged by a second consecutive quarter of improving China sales and a strong start to the second half in our electronics business.”

“We are confident that our ongoing investments in innovation and the actions we are taking to set up each of our businesses with a best-in-class cost structure will allow for significant growth acceleration over the long term,” Doyle stated.

Third Quarter Results

Net sales for the quarter totaled $5.4 billion, down 5 percent versus the same quarter last year. On an organic basis, net sales were down 2 percent with 1 percent higher price being more than offset by 3 percent lower volume. Currency and portfolio headwinds decreased sales by 2 percent and 1 percent, respectively.

GAAP Income from continuing operations totaled $372 million, versus pro forma GAAP Income from continuing operations of $88 million in the year-ago period. Operating EBITDA⁽¹⁾ was $1.4 billion, down 4 percent versus pro forma operating EBITDA⁽¹⁾ in the prior year. Operating EBITDA margins improved 20 basis points to 25.8 percent versus prior year driven by pricing gains, benefits from portfolio actions and disciplined cost control.

GAAP EPS from continuing operations totaled $0.49 versus pro forma GAAP EPS from continuing operations in the year-ago period of $0.09; the improvement is mostly attributable to the absence of costs historically allocated to Dow and Corteva of $0.24 per share and lower integration and separation costs of $0.23 per share partially offset by higher restructuring and asset related charges of $0.08 per share. Adjusted EPS⁽¹⁾ increased 2 percent to $0.96, compared with pro forma adjusted EPS in the year-ago period of $0.94 primarily driven by lower depreciation and amortization and a lower share count partially offset by currency headwinds and slightly lower segment results.

“I remain impressed with our team’s ability to deliver in a tough macro environment,” said Ed Breen, Executive Chairman of DuPont. “With the entire organization aligned and focused on our strategic priorities, I am confident that we will continue to unlock the value-creating opportunities this portfolio offers.”

Third Quarter Segment Highlights

Electronics & Imaging

Electronics & Imaging reported net sales of $934 million, down 1 percent from the year-ago period. Organic sales were down 1 percent due to a 1 percent decline in price; volumes were flat.

Strong volume gains in Interconnect Solutions, driven by higher content in the next-generation premium smartphones, were offset by softer volumes in Advanced Printing and Semiconductor Technologies.

Within Semiconductor Technologies, gains in logic and foundry were more than offset by ongoing weakness in memory. Sequentially, Semiconductor Technologies volumes were up 5 percent.

Regionally, net sales for the segment were up 3 percent versus prior year in Asia Pacific including double-digit growth in China.

Operating EBITDA for the segment was $320 million, a decrease of 1 percent from pro forma operating EBITDA of $322 million in the year-ago period, as income associated with a planned asset sale was more than offset by unfavorable product mix.

Nutrition & Biosciences

Nutrition & Biosciences reported net sales of $1.5 billion, down 1 percent from the year-ago period. Organic sales were up 2 percent with price and volume each improving 1 percent. Currency and portfolio were headwinds of 2 percent and 1 percent, respectively.

Volume gains in Food & Beverage and Pharma Solutions as well as pricing gains in Pharma Solutions led to the second consecutive quarter of accelerating organic growth for Nutrition & Biosciences. Food & Beverage volumes were driven by gains in specialty proteins and cellulosics from growing demand in plant-based meats. Strong demand in Pharma Solutions led to high-single digit organic growth in the quarter. Within Health & Biosciences, growth in food enzymes and animal nutrition was offset by market-driven softness in biorefineries and probiotics.

Operating EBITDA for the segment was $360 million, a decrease of 1 percent from pro forma operating EBITDA of $364 million in the year-ago period; the decline attributable to the June 2019 divestiture of the Natural Colors business which reduced operating EBITDA by about 1 percent. Pricing gains and cost synergies offset the impact of unfavorable product mix and currency headwinds.

Transportation & Industrial

Transportation & Industrial reported net sales of $1.2 billion, down 11 percent from the year-ago period. Organic sales were down 10 percent with a 1 percent price improvement more than offset by an 11 percent volume decline; currency was a 1 percent headwind.

Volumes declined due to lower auto builds, weak electronics demand and continued destocking in the automotive channel. Both Europe and Asia volumes were down low teens as the impact from China tariffs coupled with inventory destocking impacted demand.

Local price improved across all regions in the quarter.

Operating EBITDA for the segment was $306 million, a decrease of 20 percent from pro forma operating EBITDA of $383 million in the year-ago period with pricing gains and cost reductions more than offset by the impact from lower volumes and currency headwinds.

Safety & Construction

Safety & Construction reported net sales of $1.3 billion, down 3 percent from the year-ago period. Organic sales increased 2 percent with a 3 percent price improvement offset by a 1 percent volume decline. The December 2018 divestiture of the European STYROFOAM™ business reduced sales by 4 percent. Currency was a 1 percent headwind.

Local price increased across all businesses and in all regions, led by the Safety and Water Solutions businesses.

Volume gains in Water Solutions, led by strong demand in industrial and wastewater treatment markets, were more than offset by continued softness in Shelter Solutions driven by North America construction. Within Safety Solutions, demand remains strong across all product lines, however, volume gains in Tyvek^® and Nomex^® were offset by lower volumes in Kevlar^® primarily from limited production due to planned maintenance downtime and raw material disruptions in the supply chain.

Operating EBITDA for the segment totaled $352 million, an increase of 1 percent from pro forma operating EBITDA of $350 million in the year-ago period with pricing gains more than offsetting higher manufacturing costs, primarily from costs associated with planned maintenance, and a currency headwind.

Non-Core

Non-Core reported net sales of $431 million, down 12 percent from the year-ago period. Organic sales were down 8 percent driven by 10 percent volume declines offset by 2 percent pricing gains. The September 2019 divestiture of the DuPont Sustainable Solutions business reduced sales by 3 percent. Currency was a 1 percent headwind.

Volume gains in photovoltaic materials and Clean Technologies were more than offset by declines in trichlorosilane demand due to historically low polysilicon pricing and lower metallization paste sales into electronic and automotive component end markets. Volumes in the Biomaterials business were down primarily due to weakened demand in the carpet and apparel markets.

Operating EBITDA for the segment was $88 million, an increase of 2 percent from pro forma operating EBITDA of $86 million in the year-ago period, with a gain on the sale of DuPont Sustainable Solutions and continued cost productivity offsetting the impact of lower volumes.

Outlook

“With our end markets generally performing consistent with our expectations, today we reiterate our full-year guidance for organic sales of slightly down versus prior year. We also are narrowing the range of our full-year guidance for pro forma adjusted EPS to $3.77 to $3.82, maintaining the midpoint of the prior guidance,” said Jeanmarie Desmond, Chief Financial Officer of DuPont. “I am pleased with our team’s execution enabling us to deliver on all the levers within our control to maintain both our organic revenue and pro forma adjusted EPS expectations for the year.”

Conference Call

The Company will host a live webcast of its third quarter earnings conference call with investors to discuss its results and business outlook today at 8:00 a.m. ET. The slide presentation that accompanies the conference call will be posted on the DuPont’s Investor Relations Events and Presentations page. A replay of the webcast also will be available on the DuPont’s Investor Relations Events and Presentations page following the live event.

About DuPont

DuPont (NYSE: DD) is a global innovation leader with technology-based materials, ingredients and solutions that help transform industries and everyday life. Our employees apply diverse science and expertise to help customers advance their best ideas and deliver essential innovations in key markets including electronics, transportation, construction, water, health and wellness, food and worker safety. More information can be found at www.dupont.com.