01—Abstract
Summary
Summary of the 8-K filed July 31, 2024. Cited figures are marked; the original filing is the authoritative source.
DuPont de Nemours, Inc. reported second-quarter 2024 results on July 31, 2024, in a press release furnished as Exhibit 99.1.
Net sales were $3,171 milliona, up 2% from $3,094 million a year earlier, with organic sales flat as a 2% volume increase was offset by a 2% price decrease. Portfolio impact of 4%, mainly from the August 2023 Spectrum acquisition, was partly offset by a 2% currency headwind. GAAP income from continuing operations was $176 million, down from $269 million, and GAAP EPS from continuing operations was $0.40, versus $0.55.
Operating EBITDA rose 8% to $798 millionb, with an operating EBITDA margin of 25.2% compared with 23.9%. Adjusted EPS was $0.97, a 14% year-over-year increase. Cash provided by operating activities from continuing operations was $527 million, up 32%, and adjusted free cash flow was $425 million, up 53%.
Electronics & Industrial net sales rose 15% (8% organic), driven by semiconductor, AI-related and interconnect recovery. Water & Protection net sales fell 7% (6% organic), reflecting destocking in medical packaging and in Chinese water distribution. For full-year 2024, DuPont raised guidance for net sales to $12,400 million to $12,500 millionc, operating EBITDA to $3,060 million to $3,110 million, and adjusted EPS to $3.70 to $3.80.
Management expects a return to year-over-year organic sales growth in the third quarter. The filing also highlights the planned separation of the Electronics and Water businesses, announced May 22, 2024, which DuPont expects to complete within 18 to 24 months as a tax-free transaction.
Results were affected by a $74 milliond loss on debt extinguishment and a $39 million interest rate swap mark-to-market loss, both recorded in sundry income (expense). The company also noted the closing of the Donatelle acquisition and a $1 billion share repurchase program announced February 6, 2024, which runs until June 30, 2025.
02—Key points
Key Highlights
- Net sales of $3,171 million rose 2%, while organic sales were flat; the Spectrum acquisition contributed a 4% portfolio impact.
- Operating EBITDA increased 8% to $798 million, and operating EBITDA margin expanded to 25.2% from 23.9%.
- GAAP EPS from continuing operations fell to $0.40 from $0.55, while adjusted EPS grew 14% to $0.97.
- Adjusted free cash flow rose 53% to $425 million, with an adjusted free cash flow conversion of 104%.
- Electronics & Industrial sales grew 15% (8% organic), led by semiconductor technologies and interconnect solutions, while Water & Protection sales declined 7% (6% organic).
- Full-year 2024 guidance was raised: net sales of $12,400 million to $12,500 million, operating EBITDA of $3,060 million to $3,110 million, and adjusted EPS of $3.70 to $3.80.
- The company is pursuing a separation of its Electronics and Water businesses, expected within 18 to 24 months of the May 22, 2024 announcement.
03—Questions
Frequently Asked Questions
Why did GAAP earnings decline even though operating EBITDA increased?
GAAP income from continuing operations fell to $176 million from $269 million. The filing attributes this to losses from debt-related activities, including a $74 million loss on debt extinguishment and a $39 million interest rate swap mark-to-market loss, plus an income tax-related charge and lower interest income. Higher segment earnings and a lower share count partly offset these items.
What is driving the improvement in Electronics & Industrial?
Electronics & Industrial net sales rose 15% to $1,508 million, with 8% organic growth. The filing cites a broad-based electronics recovery, with Semiconductor Technologies sales up more than 20% organically, Interconnect Solutions up low-teens organically, and higher OLED materials volume. Industrial Solutions declined on channel destocking for Kalrez and biopharma markets.
Why did Water & Protection weaken?
Water & Protection net sales fell 7% to $1,391 million, with a 6% organic decline. Safety Solutions was hurt by continued channel destocking of medical packaging products, and Water Solutions by distributor inventory destocking in China. Shelter Solutions grew low-single digits organically.
What is the planned separation, and what are the key conditions?
DuPont announced on May 22, 2024 a plan to separate its Electronics and Water businesses in a tax-free manner, leaving DuPont as a diversified industrial company. The separations are expected within 18 to 24 months and do not require a shareholder vote. They are subject to final Board approval, a tax opinion from counsel, effectiveness of Form 10 registration statements, regulatory approvals and satisfactory financing.
How does the raised guidance compare with prior expectations?
For full-year 2024, DuPont raised guidance for net sales to $12,400 million to $12,500 million, operating EBITDA to $3,060 million to $3,110 million, and adjusted EPS to $3.70 to $3.80. At the midpoints, management estimates net sales of about $12.45 billion, operating EBITDA of about $3.085 billion and adjusted EPS of $3.75. The third-quarter outlook calls for net sales of about $3,200 million, operating EBITDA of about $815 million and adjusted EPS of about $1.03.
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