10-QPeriod: Q1 FY2012

EIDP, Inc. Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 24, 2012For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont) reported strong financial results for the first quarter of 2012, with net sales increasing by 12% to $11.2 billion and net income attributable to DuPont rising 4% to $1.5 billion. This growth was primarily driven by the successful integration of the Danisco acquisition and robust performance in the Agriculture segment, which saw a 16% increase in sales. Despite a 2% decrease in overall volume, strategic price increases and portfolio enhancements, particularly from Danisco, compensated for this dip and contributed significantly to the top-line growth. The company continues to focus on innovation and productivity, with R&D expenses increasing to support new product development, especially in Agriculture. Management highlighted ongoing productivity initiatives that yielded approximately $100 million in savings for both fixed costs and working capital in the quarter. DuPont's financial position remains strong, supported by substantial cash reserves and access to credit lines, enabling consistent dividend payments and share repurchases. However, the company is managing significant contingent liabilities, including ongoing litigation related to Imprelis® herbicide and PFOA environmental matters, which could lead to further charges.

Financial Highlights

50 data points
Beta

Revenue

$10.18B

41.7% Gross Margin

Net Income

$1.50B

14.8% Net Margin

EPS (Diluted)

$1.58

Total Assets

$50.22B

Cash & Equivalents

$3.41B

Free Cash Flow

-$2.18B

Financial Statements
Beta
Revenue$10.18B
Cost of Revenue$5.93B
Gross Profit$4.25B
R&D Expenses$508.00M
SG&A Expenses$955.00M
Operating Expenses$8.39B
Operating Income$2.42B
Interest Expense$114.00M
Net Income$1.50B
EPS (Basic)$1.60
EPS (Diluted)$1.58
Shares Outstanding (Basic)933.91M
Shares Outstanding (Diluted)944.24M

Key Highlights

  • 1Net sales for Q1 2012 increased 12% to $11.2 billion, driven by portfolio changes (notably Danisco acquisition) and higher prices, partially offset by lower volumes.
  • 2Net income attributable to DuPont grew 4% to $1.5 billion, or $1.57 per diluted share, compared to $1.4 billion, or $1.52 per diluted share, in Q1 2011.
  • 3The Agriculture segment was a strong performer, with sales up 16% and pre-tax operating income up 14%, benefiting from strong global performance and an early selling season.
  • 4The Danisco acquisition integration is progressing well, contributing significantly to sales growth in Nutrition & Health and Industrial Biosciences segments.
  • 5The company recorded $225 million in charges related to Imprelis® herbicide claims, with an additional $50 million charge in Q1 2012. Total potential charges could range up to $575 million.
  • 6Cash used for operating activities was $1.9 billion, impacted by a $0.5 billion contribution to the U.S. pension plan; free cash flow was negative at $(2.2) billion.
  • 7DuPont maintained its strong financial position with $3.6 billion in cash, cash equivalents, and marketable securities, and approximately $4.3 billion in unused credit lines.

Frequently Asked Questions

Sales growth was primarily driven by a 12% increase in net sales to $11.2 billion. This was fueled by a 7% net increase from portfolio changes, largely due to the Danisco acquisition, and an 8% increase in local prices. The Agriculture segment also showed strong performance with 16% higher sales.

The Danisco acquisition significantly contributed to DuPont's results, particularly in the Nutrition & Health and Industrial Biosciences segments. These segments saw substantial sales and pre-tax operating income increases due to the integration of Danisco's specialty food ingredients and enzyme businesses, as well as realization of cost synergies.

Investors should be aware of significant contingent liabilities and potential charges. These include ongoing litigation and claims related to the Imprelis® herbicide, for which DuPont has recorded charges and estimates potential future costs up to $575 million. Additionally, environmental matters related to PFOA are ongoing, with potential for future liabilities and costs associated with remediation and medical monitoring.

DuPont generated $1.8 billion in cash from financing activities, largely offsetting cash used in operations and investing. Despite negative free cash flow of $(2.2) billion for the quarter (driven by significant pension contributions and capital expenditures), the company maintains strong liquidity with $3.6 billion in cash, cash equivalents, and marketable securities, and has access to substantial unused credit lines, ensuring its ability to meet financial obligations and return cash to shareholders.