10-QPeriod: Q3 FY2014

EIDP, Inc. Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 28, 2014For Securities:CTA-PBCTA-PA

Summary

E.I. du Pont de Nemours and Company (DuPont) reported net sales of $7.5 billion for the third quarter of 2014, a 3% decrease from the prior year, primarily due to portfolio changes. Despite the sales decline, income from continuing operations after income taxes significantly increased by 65% to $434 million, driven by the absence of prior year charges and improved operating income. For the first nine months of 2014, net sales were $27.3 billion, down 2% year-over-year, while income from continuing operations after taxes rose 10% to $3.0 billion. The company is actively managing its portfolio, with plans to separate its Performance Chemicals segment by mid-2015. Significant events include the sale of Glass Laminating Solutions/Vinyls and the ongoing restructuring initiative aimed at improving productivity and agility. DuPont also continued its share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

52 data points
Beta

Revenue

$5.91B

37.4% Gross Margin

Net Income

$434.00M

7.3% Net Margin

EPS (Diluted)

$0.47

Total Assets

$47.91B

Cash & Equivalents

$3.98B

Free Cash Flow

-$261.00M

Financial Statements
Beta
Revenue$5.91B
Cost of Revenue$3.70B
Gross Profit$2.21B
R&D Expenses$486.00M
SG&A Expenses$1.16B
Operating Expenses$5.63B
Operating Income$686.00M
Interest Expense$93.00M
Net Income$434.00M
EPS (Basic)$0.47
EPS (Diluted)$0.47
Shares Outstanding (Basic)910.76M
Shares Outstanding (Diluted)917.76M

Key Highlights

  • 1Net sales for Q3 2014 were $7.5 billion, down 3% from $7.7 billion in Q3 2013, attributed to portfolio changes.
  • 2Income from continuing operations after taxes for Q3 2014 significantly increased by 65% to $434 million, compared to $263 million in Q3 2013.
  • 3For the first nine months of 2014, net sales were $27.3 billion (down 2% year-over-year), and income from continuing operations after taxes was $3.0 billion (up 10% year-over-year).
  • 4The company is proceeding with the separation of its Performance Chemicals segment, expected by mid-2015.
  • 5DuPont recorded a $263 million pre-tax restructuring charge in the first nine months of 2014 for a global initiative to improve productivity and agility.
  • 6Cash used for operating activities was $1.8 billion for the nine months ended September 30, 2014, an improvement from $2.3 billion used in the prior year period.
  • 7The company repurchased approximately $2 billion in shares through accelerated share repurchase agreements and open market purchases in the first nine months of 2014.

Frequently Asked Questions

The substantial increase in net income from continuing operations was largely due to the absence of significant prior year charges, such as those related to the Imprelis® herbicide claims and titanium dioxide antitrust litigation. Additionally, improved segment pre-tax operating income (PTOI), particularly in Safety & Protection and Nutrition & Health, and cost savings from restructuring initiatives contributed to the profit growth.

DuPont is actively managing its portfolio, evidenced by the planned separation of its Performance Chemicals segment by mid-2015 and the recent sale of its Glass Laminating Solutions/Vinyls (GLS/Vinyls) business. The company is also implementing a global restructuring program to enhance productivity and agility across its operations.

For the first nine months of 2014, cash used for operating activities decreased compared to the prior year, partly due to lower income tax payments. The company has also been actively repurchasing its own stock, having completed $2 billion in accelerated share repurchases and open market purchases in the first nine months of 2014 under a new $5 billion authorization, demonstrating a commitment to shareholder returns.

Yes, DuPont is involved in ongoing litigation and environmental matters. Notably, there are claims related to the Imprelis® herbicide and PFOA contamination, which have resulted in accruals and ongoing legal defense. The company also settled an environmental enforcement action at its Belle Plant facility for $1.28 million and is engaged in negotiations for other facilities. While management believes these will not have a materially adverse effect on financial position or liquidity, potential liabilities could be significant to future results of operations.