10-QPeriod: Q2 FY2017

EIDP, Inc. Quarterly Report for Q2 Ended Jun 30, 2017

Filed July 25, 2017For Securities:CTA-PBCTA-PA

Summary

E.I. du Pont de Nemours and Company (DuPont) reported fiscal second quarter 2017 results with net sales of $7.4 billion, a 5% increase year-over-year, driven primarily by a 6% volume increase across its segments. Despite the top-line growth, income from continuing operations after taxes declined to $0.9 billion from $1.0 billion in the prior year, impacted by significant merger-related and restructuring charges totaling $376 million pre-tax. The company is actively navigating a transformative period, highlighted by the pending merger with Dow Chemical and subsequent intended separations of businesses. Regulatory approvals for the merger are progressing, with conditional clearance obtained in Europe and the U.S., Brazil, Canada, and China. Significant progress has also been made on the divestiture of certain crop protection assets to FMC Corporation as part of the merger conditions. While these strategic maneuvers present complexity, the underlying operational performance shows resilience with volume-driven growth across key segments like Agriculture and Electronics & Communications.

Financial Highlights

51 data points
Beta

Revenue

$7.42B

43.5% Gross Margin

Net Income

$862.00M

11.6% Net Margin

EPS (Diluted)

$0.99

Total Assets

$43.21B

Cash & Equivalents

$1.51B

Free Cash Flow

-$2.63B

Financial Statements
Beta
Revenue$7.42B
Cost of Revenue$4.19B
Gross Profit$3.23B
R&D Expenses$441.00M
SG&A Expenses$1.35B
Operating Income$2.18B
Interest Expense$99.00M
Net Income$862.00M
EPS (Basic)$0.99
EPS (Diluted)$0.99
Shares Outstanding (Basic)868.48M
Shares Outstanding (Diluted)872.75M

Key Highlights

  • 1Net sales increased by 5% to $7.4 billion for the three months ended June 30, 2017, compared to the prior year, driven by a 6% volume increase.
  • 2Income from continuing operations after taxes was $0.9 billion for the quarter, a decrease from $1.0 billion in the prior year, impacted by significant merger and restructuring costs.
  • 3The company incurred $376 million in pre-tax charges related to the planned merger with Dow Chemical and related activities ($216 million) and restructuring programs ($160 million).
  • 4The Agriculture segment showed strong performance with a 7% net sales increase in the quarter, driven by volume growth in insecticides, fungicides, and soybeans.
  • 5Electronics & Communications segment sales grew by 11% in the quarter due to increased demand in consumer electronics and semiconductor markets.
  • 6As of June 30, 2017, the company had $3.254 billion in cash and cash equivalents.
  • 7The company is progressing with the planned merger with Dow Chemical and the divestiture of certain crop protection assets to FMC Corporation, with expected closing dates in late 2017 for both transactions, subject to regulatory approvals.

Frequently Asked Questions

DuPont and Dow announced entry into an Agreement and Plan of Merger in December 2015, which was amended in March 2017. Regulatory approvals have been obtained in key jurisdictions, including Europe, the U.S., Brazil, Canada, and China, with conditions. The companies are working to satisfy all closing conditions, with an anticipated closing date no earlier than August 1, 2017, and an extended termination date of August 31, 2017.

DuPont and Chemours have agreed to a global settlement of approximately $670.7 million for personal injury lawsuits related to PFOA. DuPont's share of this settlement is $335.35 million, and a charge of $335 million ($214 million net of tax) was recorded in discontinued operations for the six months ended June 30, 2017. The settlement aims to release all claims by the settling plaintiffs.

In the first quarter of 2017, DuPont committed to a restructuring program aimed at improving plant productivity. This resulted in pre-tax charges of $312 million for the six months ended June 30, 2017, primarily related to the closure of the Protection Solutions segment's Cooper River manufacturing site. These actions are expected to be substantially complete by the end of 2017.

As of June 30, 2017, DuPont had $6.2 billion in cash, cash equivalents, and marketable securities. Total debt increased to $13.6 billion due to debt offerings and increased borrowings, primarily to fund pension contributions and seasonal working capital needs. The company has access to approximately $7.8 billion in unused credit lines, providing support for short-term liquidity.