01—Abstract
Summary
Summary of the 8-K filed February 6, 2024. Cited figures are marked; the original filing is the authoritative source.
DuPont de Nemours, Inc. reported fourth-quarter and full-year 2023 results on February 6, 2024, as described in Exhibit 99.1, a press release that is incorporated by reference into this report and furnished rather than filed.
For the full year 2023, net sales were $12,068 milliona, down 7% from $13,017 million, with an organic sales decline of 6%. GAAP income from continuing operations was $533 million, down from $1,061 million, reflecting an $804 million non-cash goodwill impairment charge in the Protection reporting unit, partly offset by a $324 million tax benefit from an internal restructuring. Adjusted EPS rose to $3.48 from $3.41, and cash provided by operating activities from continuing operations was $2,191 million, with adjusted free cash flow of $1,572 million.
Operating EBITDA declined to $2,942 millionb from $3,261 million. The company also announced capital allocation actions. It completed the $2 billion accelerated share repurchase launched in September 2023, which finishes the $5 billion program announced in November 2022.
The Board approved a new $1 billionc share repurchase program, which runs through June 30, 2025, with an accelerated share repurchase of $500 million expected to launch imminently and completion expected by the end of 2024. The Board also declared a first-quarter 2024 dividend of $0.38 per share, a 6% increase, payable March 15, 2024.
For 2024, the company guided full-year net sales of $11,900 million to $12,300 milliond, operating EBITDA of $2,800 million to $3,000 million, and adjusted EPS of $3.25 to $3.65. It expects first-quarter sales and earnings to decline sequentially from the fourth quarter, with a return to year-over-year sales and earnings growth in the second half of 2024 as electronics markets recover and industrial customer inventories normalize.
02—Key points
Key Highlights
- Full-year 2023 net sales were $12,068 million, down 7% from $13,017 million, with organic sales down 6%, driven by volume declines of 8%.
- GAAP income from continuing operations fell to $533 million from $1,061 million, primarily due to an $804 million non-cash goodwill impairment charge in the Protection reporting unit.
- Adjusted EPS increased to $3.48 from $3.41 for the full year, helped by a lower share count and lower net interest expense.
- Adjusted free cash flow was $1,572 million for 2023, up from $750 million, on cash from operating activities of $2,191 million.
- The Board approved a new $1 billion share repurchase program running through June 30, 2025, with a $500 million accelerated share repurchase expected to launch imminently.
- The Board declared a first-quarter 2024 dividend of $0.38 per share, a 6% increase, payable March 15, 2024 to holders of record on February 29, 2024.
- 2024 guidance calls for net sales of $11,900 million to $12,300 million, operating EBITDA of $2,800 million to $3,000 million, and adjusted EPS of $3.25 to $3.65.
03—Questions
Frequently Asked Questions
Why did GAAP earnings decline in 2023 while adjusted EPS increased?
GAAP income from continuing operations was reduced by an $804 million non-cash goodwill impairment charge tied to the Protection reporting unit, which includes the Shelter and Safety Solutions businesses. Adjusted EPS excludes significant items such as this charge and amortization of intangibles. Adjusted EPS increased to $3.48 from $3.41, reflecting a lower share count and lower net interest expense, which more than offset lower segment earnings.
How much capital is the company returning to shareholders?
The company completed a $2 billion accelerated share repurchase launched in September 2023, which finishes its $5 billion program from November 2022. It also approved a new $1 billion repurchase program, expected to be completed by the end of 2024, and declared a first-quarter 2024 dividend of $0.38 per share.
What drove the sales decline in 2023?
Full-year organic sales declined 6%, consisting of an 8% decrease in volume partially offset by a 2% increase in price. The filing attributes the volume decline to channel inventory destocking in several end markets, reduced semiconductor fab utilization rates, and weak demand in China.
What does management expect for 2024 and the first quarter?
Management expects first-quarter 2024 net sales of about $2,800 million and operating EBITDA of about $610 million, with a sequential decline from the fourth quarter driven by further destocking and weak demand in China. It expects sales and operating EBITDA to improve in the second quarter, and a return to year-over-year sales and earnings growth in the second half of 2024.
What is the status of the Protection reporting unit after the impairment?
The company performed an impairment analysis after identifying a triggering event as of December 31, 2023, and recorded the $804 million non-cash goodwill impairment charge. The carrying value of the unit reflected historical assets and liabilities measured at fair value in the Dow and DuPont merger, including significant goodwill and intangible asset balances.
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