10-QPeriod: Q1 FY2014

EIDP, Inc. Quarterly Report for Q1 Ended Mar 31, 2014

Filed April 22, 2014For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont) reported its first-quarter 2014 financial results, indicating a net sales decrease of 3% year-over-year to $10.1 billion. This was driven by a combination of lower selling prices, reduced volume, and adverse currency impacts. Despite the sales dip, income from continuing operations after income taxes rose by 4% to $1.445 billion, or $1.54 per diluted share, up from $1.387 billion, or $1.47 per diluted share, in the prior year's first quarter. The company's financial performance in the quarter was influenced by various factors including ongoing strategic initiatives like the planned separation of its Performance Chemicals segment, adverse weather conditions impacting operations, and significant ongoing legal and environmental matters, notably the Imprelis® herbicide claims and PFOA-related proceedings.

Financial Highlights

52 data points
Beta

Revenue

$8.59B

43.4% Gross Margin

Net Income

$1.45B

16.8% Net Margin

EPS (Diluted)

$1.54

Total Assets

$47.80B

Cash & Equivalents

$3.78B

Free Cash Flow

-$2.74B

Financial Statements
Beta
Revenue$8.59B
Cost of Revenue$4.86B
Gross Profit$3.73B
R&D Expenses$518.00M
SG&A Expenses$1.44B
Operating Expenses$8.34B
Operating Income$2.25B
Interest Expense$103.00M
Net Income$1.45B
EPS (Basic)$1.56
EPS (Diluted)$1.54
Shares Outstanding (Basic)923.46M
Shares Outstanding (Diluted)930.73M

Key Highlights

  • 1Net sales for Q1 2014 decreased by 3% to $10.1 billion compared to $10.4 billion in Q1 2013.
  • 2Income from continuing operations after income taxes increased by 4% to $1.445 billion ($1.54 per diluted share) from $1.387 billion ($1.47 per diluted share) in the prior year.
  • 3The company incurred $16 million in costs related to the planned separation of its Performance Chemicals segment.
  • 4Adverse weather conditions in Q1 2014 are estimated to have impacted earnings per share by $0.07.
  • 5Significant progress was made in addressing Imprelis® herbicide claims, with a settlement entered and charges of $1.175 billion recorded.
  • 6Total debt decreased by $1.1 billion to $11.3 billion due to debt maturities.
  • 7DuPont announced a new $5 billion share buyback program and initiated an accelerated share repurchase (ASR) agreement in Q1 2014.

Frequently Asked Questions

The primary driver for the 3% decrease in net sales to $10.1 billion was a combination of factors: a 1% decrease in selling prices, a 1% decrease in sales volume, and a 1% adverse currency impact, particularly from a weaker Japanese Yen, Brazilian Real, and Indian Rupee.

Despite lower net sales, DuPont's profitability improved. Income from continuing operations after income taxes increased by 4% to $1.445 billion, and diluted earnings per share rose to $1.54 from $1.47 in the same period last year. This improvement was driven by lower income taxes, reduced pension and other postretirement benefit costs, and lower interest expense.

The company continues to address significant legal and environmental matters. These include ongoing proceedings related to the Imprelis® herbicide and PFOA contamination, which have resulted in substantial charges and accruals. Additionally, there are several environmental enforcement actions related to various plant facilities, with DuPont in settlement negotiations with regulatory bodies like the EPA and DOJ.

DuPont announced its intention to separate its Performance Chemicals segment via a tax-free spin-off to shareholders, expected around mid-2015. In the first quarter of 2014, the company incurred $16 million in costs associated with this separation, primarily for professional fees and separation activities. Full-year 2014 costs are estimated at $170 million.