01—Abstract
Summary
Summary of the 10-Q filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
DuPont de Nemours, Inc. reported second-quarter 2024 net sales of $3.2 billiona, up 2 percent from $3.1 billion a year earlier, driven by a 4 percent increase from portfolio actions (the Spectrum acquisition) and a 2 percent increase in volume, partly offset by 2 percent declines in local price and product mix and currency.
Net income available to common stockholders was $178 millionb, compared with a loss of $131 million in the prior-year quarter, which included discontinued operations. Income from continuing operations fell to $176 million from $269 million, and diluted earnings per share from continuing operations were $0.40 versus $0.55. Sundry expense of $87 million included a $74 million loss on early debt redemption and a $39 million interest rate swap mark-to-market loss.
The effective tax rate on continuing operations was 40.5 percent for the quarter. Segment performance diverged. Electronics & Industrial net sales rose 15 percent to $1.51 billionc, with volume up 10 percent, led by Semiconductor Technologies and Interconnect Solutions, and Operating EBITDA increased 20 percent to $419 million.
Water & Protection net sales fell 7 percent to $1.39 billiond on a 4 percent volume decline, reflecting customer destocking, and Operating EBITDA declined 7 percent to $344 million. For the six months, net sales were flat at $6.10 billion, and cash provided by continuing operating activities was $1.02 billion. Balance sheet and capital allocation were central to the period.
Cash and cash equivalents declined to $1.50 billion from $2.39 billion, and total debt decreased to $7.17 billion after a $650 million partial redemption of 2038 notes. Discontinued operations used $439 million in the first half, including a $408 million contribution tied to the Water District PFAS settlement, which became final in the second quarter. On May 22, 2024, DuPont announced plans to separate into three independent companies through the separation of its Electronics and Water businesses, expected within 18 to 24 months.
Standard & Poor's and Fitch placed the company on negative credit watch, and Moody's revised its outlook to negative. The company also disclosed ongoing PFAS-related exposure, though it stated that it cannot estimate losses above amounts accrued.
02—Key points
Key Highlights
- Q2 2024 net sales of $3.17 billion rose 2 percent year over year, with portfolio actions (+4 percent) and volume (+2 percent) offsetting declines in local price and product mix (-2 percent) and currency (-2 percent).
- Income from continuing operations was $176 million versus $269 million a year earlier, and diluted EPS from continuing operations was $0.40 versus $0.55; the effective tax rate was 40.5 percent.
- Electronics & Industrial net sales increased 15 percent and Operating EBITDA rose 20 percent to $419 million, while Water & Protection net sales fell 7 percent and Operating EBITDA declined 7 percent to $344 million.
- Sundry expense of $87 million included a $74 million loss on the partial redemption of 2038 notes and a $39 million interest rate swap mark-to-market loss.
- Total debt declined to $7.17 billion from $7.80 billion, and cash and cash equivalents fell to $1.50 billion from $2.39 billion.
- The board announced a plan on May 22, 2024 to separate the Electronics and Water businesses into three independent public companies, expected within 18 to 24 months.
- Credit ratings are BBB+ (S&P, watch negative), Baa1 (Moody's, negative outlook), and BBB+ (Fitch, watch negative), following the separation announcement.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 31, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $1.72B$3.09B | −44.5% |
| Cost of Revenue | $1.13B$2.03B | −44.3% |
| Gross Profit | $586.00M$1.06B | −44.9% |
| R&D Expenses | $134.00M$125.00M | +7.2% |
| SG&A Expenses | $418.00M$358.00M | +16.8% |
| Net Income | $178.00M-$131.00M | +235.9% |
| EPS (Basic) | $0.43$-0.29 | +248.3% |
| EPS (Diluted) | $0.43$-0.28 | +253.6% |
| Shares Outstanding (Basic) | 417.80M459.20M | −9.0% |
| Shares Outstanding (Diluted) | 419.30M460.30M | −8.9% |
05—Questions
Frequently Asked Questions
How did DuPont perform in the second quarter of 2024?
Net sales were $3.17 billion, up 2 percent from the prior-year quarter, with growth from the Spectrum acquisition and higher volume partly offset by lower local price and mix and unfavorable currency. Net income available to common stockholders was $178 million, compared with a loss of $131 million a year earlier, which included discontinued operations. Income from continuing operations was $176 million versus $269 million.
What drove the decline in earnings from continuing operations?
Sundry income (expense) swung to an $87 million expense, including a $74 million loss on early debt redemption and a $39 million interest rate swap mark-to-market loss, compared with $28 million of income a year earlier. Interest income also fell to $21 million from $52 million, reflecting lower cash balances. The effective tax rate on continuing operations rose to 40.5 percent from 24.4 percent.
How are the two segments performing?
Electronics & Industrial net sales rose 15 percent to $1.51 billion on 10 percent volume growth, mainly in Semiconductor Technologies and Interconnect Solutions, and Operating EBITDA increased 20 percent to $419 million. Water & Protection net sales declined 7 percent to $1.39 billion on a 4 percent volume decline, driven by channel destocking, and Operating EBITDA fell 7 percent to $344 million.
What is the company's planned separation and how might it affect investors?
On May 22, 2024, DuPont announced a plan to separate into three independent public companies through the separation of its Electronics and Water businesses, with completion expected within 18 to 24 months and subject to board approval, tax opinions, Form 10 registration, regulatory approvals, and financing. The filing states the separations are expected to be tax-free for U.S. federal income tax purposes, and it identifies risks including dis-synergies, higher borrowing costs, and the possibility that the separations are not completed.
What is the status of the PFAS-related liabilities and the Water District settlement?
The Water District Settlement Agreement resolved PFAS claims of a defined class of U.S. public water systems for $1.185 billion, with DuPont contributing about $400 million. The judgment became final in April 2024, and the related $408 million, including interest, was removed from restricted cash and reflected as a cash outflow from discontinued operations. The company states that it cannot estimate losses above the amounts accrued for PFAS matters, and that additional costs could be significant.
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