10-QPeriod: Q1 FY2016

EIDP, Inc. Quarterly Report for Q1 Ended Mar 31, 2016

Filed April 26, 2016For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont) reported net sales of $7.4 billion for the first quarter of 2016, a decrease of 6% compared to $7.8 billion in the prior year. This decline was primarily driven by a 4% negative currency impact and a 2% reduction in volume, partially offset by local price and product mix gains in certain segments. Net income available to common stockholders was $1.226 billion ($1.40 per share), an increase from $1.031 billion ($1.13 per share) in the same period last year. The company recognized a significant pre-tax gain of $369 million from the sale of DuPont (Shenzhen) Manufacturing Limited, contributing to the improved net income. DuPont continues to navigate a transformative period, highlighted by the pending all-stock merger of equals with The Dow Chemical Company, expected in the second half of 2016. Management is focused on strategic initiatives, including cost savings and restructuring plans, which are on track to deliver significant reductions. The company also reported a $75 million charge related to the decision to not restart an insecticide manufacturing facility in La Porte, Texas. Overall, DuPont demonstrated resilience in a challenging market, with solid earnings driven by effective cost management and a notable gain from asset divestiture, while progressing strategically towards its merger with Dow.

Financial Highlights

51 data points
Beta

Revenue

$7.41B

42.7% Gross Margin

Net Income

$1.23B

16.6% Net Margin

EPS (Diluted)

$1.39

Total Assets

$41.80B

Cash & Equivalents

$4.17B

Free Cash Flow

-$2.16B

Financial Statements
Beta
Revenue$7.41B
Cost of Revenue$4.24B
Gross Profit$3.16B
R&D Expenses$418.00M
SG&A Expenses$1.13B
Operating Income$1.22B
Interest Expense$92.00M
Net Income$1.23B
EPS (Basic)$1.40
EPS (Diluted)$1.39
Shares Outstanding (Basic)873.55M
Shares Outstanding (Diluted)877.25M

Key Highlights

  • 1Net sales decreased by 6% to $7.4 billion in Q1 2016 compared to $7.8 billion in Q1 2015, primarily due to currency headwinds and lower volumes.
  • 2Net income attributable to DuPont shareholders increased to $1.226 billion ($1.40 per share) from $1.031 billion ($1.13 per share) year-over-year.
  • 3The company recognized a significant pre-tax gain of $369 million ($214 million after-tax) from the sale of DuPont (Shenzhen) Manufacturing Limited.
  • 4A $75 million pre-tax charge was recorded due to the decision to not restart the La Porte, Texas insecticide manufacturing facility.
  • 5Selling, General, and Administrative (SG&A) expenses decreased by 8% to $1.1 billion, reflecting cost savings and currency benefits.
  • 6Research and Development (R&D) expenses decreased by 13% to $418 million, also impacted by cost savings and currency.
  • 7The company incurred $24 million in costs related to the proposed merger with The Dow Chemical Company during the quarter.

Frequently Asked Questions

For the full year 2016, DuPont anticipates currency to be a less significant headwind due to a weakening US dollar. The Agriculture segment expects higher corn planted area to partially offset impacts from the Pioneer agency-based model. Transaction costs related to the Dow merger are estimated at $420 million ($0.40 per share). Workforce reductions have led to revised expectations for reductions in long-term employee benefit expenses.

DuPont and Dow announced an all-stock merger of equals on December 11, 2015, expected to close in the second half of 2016. The combined entity will be named DowDuPont. Following the merger, the companies intend to separate into three distinct businesses: agriculture, specialty products, and material science. During the first quarter of 2016, DuPont incurred $24 million in costs associated with this proposed merger.

In March 2016, DuPont sold 100% of its ownership in DuPont (Shenzhen) Manufacturing Limited, resulting in a pre-tax gain of $369 million ($214 million net of tax). This gain was recorded in 'Other income, net' for the first quarter of 2016 and contributed positively to the company's net income for the period.

DuPont has an accrual of $14 million for PFOA matters as of March 31, 2016, with Chemours indemnifying DuPont for these liabilities. The company is involved in various legal proceedings, including a class action settlement and individual lawsuits related to PFOA exposure. While the company is appealing a jury award in one case, it denies the allegations in these lawsuits and is defending itself vigorously. The company also has an accrual of $492 million for environmental remediation activities, with Chemours indemnifying DuPont for a portion of these liabilities.