10-QPeriod: Q2 FY2018

EIDP, Inc. Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 3, 2018For Securities:CTA-PBCTA-PA

Summary

E.I. du Pont de Nemours and Company (DuPont), as a subsidiary of DowDuPont, reported net sales of $8.5 billion for the three months ended June 30, 2018, an increase from $7.0 billion in the prior year's quarter, primarily driven by higher sales in the U.S. & Canada due to weather-related recovery in agriculture. For the six-month period, net sales increased to $15.2 billion from $14.3 billion year-over-year, led by growth in EMEA and Asia Pacific. However, the company experienced a significant net loss of $1.4 billion attributable to DuPont for the quarter, a stark contrast to the $1.2 billion comprehensive income in the prior year, largely due to substantial foreign currency translation adjustments impacting other comprehensive income. Despite operational improvements, the company continues to navigate integration and separation costs related to the DowDuPont merger, with significant restructuring charges recorded. Financially, DuPont's liquidity remains a key focus, with cash, cash equivalents, and marketable securities decreasing to $4.8 billion from $8.2 billion, primarily due to funding seasonal working capital needs and distributions to DowDuPont. Total debt increased slightly to $13.4 billion. The company's balance sheet shows a substantial goodwill of $45.5 billion and other intangible assets of $26.9 billion, reflecting the impact of the merger. While the company operates in a complex environment shaped by the ongoing DowDuPont integration and pending business separations, its focus remains on core operations and managing integration costs.

Financial Highlights

23 data points
Beta

Total Assets

$108.01B

Cash & Equivalents

$4.94B

Financial Statements
Beta
Cash & Equivalents$4.94B
Short-term Investments$374.00M
Inventory$6.30B
Total Current Assets$20.14B
Property, Plant & Equipment$11.83B
Goodwill$45.51B
Total Assets$108.01B
Accounts Payable$4.00B
Total Current Liabilities$10.87B
Long-term Debt$9.73B
Total Liabilities$35.24B
Retained Earnings-$1.20B
Stockholders' Equity$72.77B

Key Highlights

  • 1Net sales increased by 22% to $8.5 billion for the three months ended June 30, 2018, compared to $7.0 billion in the prior year quarter, driven by strong performance in the U.S. & Canada.
  • 2Comprehensive loss attributable to DuPont was $1.4 billion for the quarter, significantly impacted by foreign currency translation adjustments, compared to a comprehensive income of $1.2 billion in the prior year.
  • 3Cash, cash equivalents, and marketable securities decreased by $3.4 billion to $4.8 billion, primarily due to working capital needs and distributions to DowDuPont.
  • 4The company incurred significant integration and separation costs of $327 million in the quarter, reflecting ongoing efforts post-merger.
  • 5Restructuring and asset-related charges amounted to $91 million for the quarter, primarily related to the DowDuPont Cost Synergy Program.
  • 6Goodwill stands at $45.5 billion, and other intangible assets total $26.9 billion, reflecting the accounting impact of the DowDuPont merger.
  • 7The company has adopted new revenue recognition standards (ASC 606) and made accounting presentation changes to align with DowDuPont's reporting.

Frequently Asked Questions

The primary driver for the increase in net sales to $8.5 billion from $7.0 billion was a 29% higher sales in the U.S. & Canada region. This was mainly attributed to recovery from weather-related delays that impacted the start of the planting seasons in the Northern Hemisphere within the agriculture product line. Sales also saw growth in EMEA and Asia Pacific due to higher volume and favorable currency movements in those regions.

The company reported a comprehensive loss attributable to DuPont of $1.4 billion for the quarter, a substantial shift from the $1.2 billion comprehensive income in the prior year's quarter. This drastic change was primarily driven by substantial negative cumulative translation adjustments amounting to $(1.9) billion within other comprehensive income, largely due to currency fluctuations.

The DowDuPont merger has significantly impacted DuPont's financial statements. DuPont's assets and liabilities are reflected at fair value as of the merger date due to push-down accounting. This has resulted in substantial goodwill of $45.5 billion and other intangible assets of $26.9 billion on the balance sheet. The financial statements are presented under 'Successor' and 'Predecessor' columns to distinguish periods before and after the merger, with amounts not being directly comparable due to the fair value step-up and changes in accounting presentation.

The company's liquidity has decreased, with cash, cash equivalents, and marketable securities falling to $4.8 billion as of June 30, 2018, from $8.2 billion at the end of 2017. This reduction is primarily due to funding the company's seasonal working capital requirements and making significant distributions to DowDuPont. Total debt has slightly increased to $13.4 billion. The company believes its operational cash flow and access to capital markets remain adequate to meet its obligations.