01—Abstract
Summary
Summary of the 10-Q filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.
DuPont de Nemours, Inc. reported first-quarter 2024 net sales of $2.93 billiona, down 3 percent from $3.02 billion a year earlier, with volume down 5 percent and a 4 percent contribution from portfolio actions, primarily the Spectrum acquisition.
Income from continuing operations, net of tax, fell to $183 millionb from $273 million, and diluted earnings per share were $0.45 versus $0.56, with continuing operations contributing $0.41 versus $0.58. Operating EBITDA declined to $682 million from $714 million, with Water & Protection down 14 percent to $295 million on lower volumes while Electronics & Industrial rose to $374 million. Net income was $197 million, including a $14 million gain from discontinued operations driven largely by a $35 million tax-related item.
Cash flow from continuing operations operating activities improved to $493 millionc from $405 million, which the filing attributes primarily to improvements in net working capital. Cash and cash equivalents fell to $1.93 billion from $2.39 billion, mainly because of $500 million in share repurchases and forward contracts. The company completed its $5 billion buyback program with the final $2 billion accelerated share repurchase settlement and began a new $1 billion program, under which a $500 million accelerated share repurchase was executed.
Total debt was $7.78 billiond, and the company reported ratings of BBB+ (S&P), Baa1 (Moody's), and BBB+ (Fitch), all stable. The filing highlights continuing PFAS-related exposure. DuPont has recorded a $408 million liability, including interest, for the Water District Settlement Agreement, which was funded through a $400 million contribution to a restricted settlement fund.
The judgment became final in April 2024, and the company expects to reflect the outflow in discontinued operations in the second quarter. Management also notes it is reasonably possible that eligible PFAS costs and indemnifiable losses could exceed amounts accrued and could have a significant effect on financial condition or cash flows, though the company cannot estimate a range of loss above its accrual.
02—Key points
Key Highlights
- Net sales of $2.93 billion, down 3 percent year over year, with volume down 5 percent and Water & Protection volume down 10 percent.
- Diluted EPS of $0.45 versus $0.56 in Q1 2023; continuing operations diluted EPS of $0.41 versus $0.58.
- Operating EBITDA of $682 million versus $714 million; Electronics & Industrial rose to $374 million, while Water & Protection fell 14 percent to $295 million.
- Effective tax rate on continuing operations of 31.5 percent, up from 23.3 percent, driven by geographic earnings mix and one-time discrete items.
- Completed the $2 billion accelerated share repurchase, completing the $5 billion program; launched a $1 billion buyback program with a $500 million ASR executed in Q1 2024.
- Recorded a $408 million liability, including interest, for the Water District PFAS Settlement Agreement, which became final in April 2024; the $400 million contribution will flow through discontinued operations in Q2 2024.
- Cash and cash equivalents of $1.93 billion at March 31, 2024, versus $2.39 billion at December 31, 2023; total debt of $7.78 billion; credit ratings BBB+ / Baa1 / BBB+, all stable.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 1, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $1.60B$3.02B | −47.0% |
| Cost of Revenue | $1.10B$1.98B | −44.6% |
| Gross Profit | $501.00M$1.03B | −51.6% |
| R&D Expenses | $125.00M$127.00M | −1.6% |
| SG&A Expenses | $384.00M$340.00M | +12.9% |
| Net Income | $188.00M$257.00M | −26.8% |
| EPS (Basic) | $0.44$0.56 | −21.4% |
| EPS (Diluted) | $0.44$0.56 | −21.4% |
| Shares Outstanding (Basic) | 422.80M458.80M | −7.8% |
| Shares Outstanding (Diluted) | 424.30M460.20M | −7.8% |
05—Questions
Frequently Asked Questions
How did DuPont's core operations perform in the first quarter of 2024?
Net sales declined 3 percent to $2.93 billion, driven by a 5 percent volume decrease and a 1 percent decline in local price and product mix, partially offset by a 4 percent gain from portfolio actions tied to the Spectrum acquisition. Electronics & Industrial grew net sales 5 percent to $1.37 billion and Operating EBITDA 3 percent to $374 million, while Water & Protection net sales fell 11 percent to $1.29 billion and Operating EBITDA fell 14 percent to $295 million.
Why did net income and earnings per share decline?
Income from continuing operations, net of tax, fell to $183 million from $273 million. The filing attributes the decline to lower sales volume in Water & Protection, a higher effective tax rate of 31.5 percent versus 23.3 percent, higher SG&A of $384 million versus $340 million, and lower interest income of $20 million versus $46 million. Net income was partly supported by a $14 million gain from discontinued operations.
What is the status of the PFAS-related liabilities and settlements?
DuPont has accrued $408 million, including interest, for the Water District Settlement Agreement, and separately accrued $211 million for indemnification liabilities under the MOU. The Water District judgment became final in April 2024, and the related contribution will be removed from restricted cash and the accrued liability in the second quarter of 2024. The company states it is reasonably possible that eligible PFAS costs could exceed accruals, and it cannot estimate a range of loss above the amounts accrued.
How is DuPont returning capital to shareholders?
In the first quarter, DuPont completed a $2 billion accelerated share repurchase, which finished its $5 billion program, and entered a $500 million ASR under a new $1 billion buyback program that runs through June 30, 2025. Quarterly dividends were $0.38 per share, with a second-quarter dividend declared on April 17, 2024, payable June 17, 2024. Dividends paid in the quarter totaled $159 million.
What liquidity and balance sheet position does DuPont report?
The company reported $4.0 billion of working capital and cash and cash equivalents of about $1.9 billion at March 31, 2024. Total debt was $7.78 billion, and the company stated it was in compliance with its $1 billion 364-day revolving credit facility covenant requiring a ratio of Total Indebtedness to Total Capitalization not exceeding 0.60. Operating cash flow from continuing operations was $493 million, and management is in the process of standing up a new $1 billion 364-day revolving credit facility with an expected effective date in May 2024.
06—Continue