10-QPeriod: Q3 FY2016

EIDP, Inc. Quarterly Report for Q3 Ended Sep 30, 2016

Filed October 25, 2016For Securities:CTA-PBCTA-PA

Summary

E. I. du Pont de Nemours and Company (DuPont) reported its third-quarter 2016 financial results, indicating a slight increase in net sales to $4.9 billion, driven by volume growth which offset lower prices. While segment operating earnings showed improvement across most segments due to cost savings and higher volumes, the company's income from continuing operations after taxes significantly decreased to $13 million from $131 million in the prior year's quarter. This decline was largely influenced by substantial charges, including a $158 million impairment of intangible assets and $122 million in merger-related costs associated with the proposed merger with Dow Chemical. For the nine-month period, net sales were down 2% due to currency headwinds and lower prices, but income from continuing operations after taxes saw a notable increase of 7% to $2.3 billion, benefiting from ongoing cost savings initiatives, including the 2016 Global Cost Savings and Restructuring Plan which is on track to deliver significant reductions. Liquidity remains a focus, with cash, cash equivalents, and marketable securities at $5.5 billion, though total debt increased primarily due to borrowings under new credit facilities and seasonal working capital needs. Investors should monitor the progress of the pending merger with Dow, which is progressing through regulatory reviews with an expected closing in the first quarter of 2017, and the subsequent intended separation of businesses.

Financial Highlights

52 data points
Beta

Revenue

$4.92B

37.2% Gross Margin

Net Income

$6.00M

0.1% Net Margin

EPS (Diluted)

$0.00

Total Assets

$42.48B

Cash & Equivalents

$4.45B

Free Cash Flow

$131.00M

Financial Statements
Beta
Revenue$4.92B
Cost of Revenue$3.09B
Gross Profit$1.83B
R&D Expenses$410.00M
SG&A Expenses$1.02B
Operating Income$2.25B
Interest Expense$93.00M
Net Income$6.00M
Shares Outstanding (Basic)874.29M
Shares Outstanding (Diluted)879.39M

Key Highlights

  • 1Net sales for the third quarter of 2016 were $4.9 billion, a 1% increase year-over-year, driven by a 3% volume increase partially offset by a 2% decrease in local prices.
  • 2Income from continuing operations after taxes was $13 million for the third quarter of 2016, a significant decrease from $131 million in the prior year's quarter.
  • 3The company incurred significant charges in Q3 2016, including a $158 million impairment of indefinite-lived intangible assets and $122 million in costs related to the proposed merger with Dow Chemical.
  • 4For the nine months ended September 30, 2016, income from continuing operations after taxes increased by 7% to $2.3 billion.
  • 5The 2016 Global Cost Savings and Restructuring Plan is on track to deliver $730 million in cost reductions for the full year 2016.
  • 6Total debt increased by $2.5 billion to $11.4 billion as of September 30, 2016, primarily due to borrowings under new credit facilities.
  • 7The proposed merger with Dow Chemical is progressing, with an expected closing in the first quarter of 2017, subject to regulatory approvals.

Frequently Asked Questions

The merger agreement with Dow Chemical was announced in December 2015. DuPont's shareholders approved the merger in July 2016. The European Commission has initiated a Phase II review, and the review process is ongoing with an expected completion in early February 2017. Consummation of the merger is anticipated in the first quarter of 2017, contingent on regulatory approvals from key jurisdictions.

For the third quarter of 2016, income from continuing operations after taxes significantly decreased to $13 million, down from $131 million in the same period of 2015. This decline was primarily due to substantial charges, including an impairment charge of $158 million for intangible assets and $122 million in merger-related costs.

As of September 30, 2016, DuPont had $5.5 billion in cash, cash equivalents, and marketable securities. Total debt increased to $11.4 billion, up from $8.8 billion at the end of 2015, mainly due to borrowings under new term loan and repurchase facilities, and seasonal working capital needs. The company has access to approximately $7.9 billion in unused credit lines.

The company operates through segments including Agriculture, Electronics & Communications, Industrial Biosciences, Nutrition & Health, Performance Materials, and Protection Solutions. For the third quarter of 2016, net sales increased in most segments due to higher volumes, with notable growth in Agriculture, Nutrition & Health, and Performance Materials. Segment operating earnings generally improved due to cost savings and increased volumes.