DuPont de Nemours, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing, not a standalone fourth-quarter report. Financial results are presented for continuing operations unless noted; divestitures make comparisons with 2022 less comparable.
Business context and financial performance
DuPont is a global specialty materials and solutions company. Its reportable segments are Electronics & Industrial and Water & Protection; Corporate & Other includes retained product lines and corporate costs.
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Net sales | $12.068 billion | $13.017 billion |
| Income from continuing operations | $533 million | $1.061 billion |
| Net income available to common stockholders | $423 million | $5.868 billion |
| Diluted EPS from continuing operations | $1.09 | $2.02 |
| Operating cash flow, continuing operations | $2.191 billion | $1.249 billion |
| Capital expenditures | $619 million | $662 million |
| Cash and cash equivalents | $2.392 billion | $3.662 billion |
| Total debt | $7.800 billion | $8.074 billion |
Sales fell 7%, reflecting an 8% volume decline and 1% unfavorable currency impact, partly offset by 2% higher local price and product mix. Cost of sales was 65% of sales in both years, implying an approximately 35% gross margin. Operating EBITDA, a company-defined non-GAAP measure, was $2.942 billion, down from $3.261 billion; approximately 24% of 2023 sales versus 25% in 2022.
Continuing-operations operating cash flow less capital expenditures was approximately $1.572 billion. Net working capital was $4.416 billion, down from $6.392 billion, and the current ratio declined to 2.43 from 2.78. The company reported $3.486 billion of cash, cash equivalents and restricted cash at year-end, including $411 million restricted; marketable securities were zero. These balances differ from unrestricted cash and should not be treated as fully available liquidity.
Material changes and comparison
- Electronics & Industrial sales declined 10% to $5.337 billion and Operating EBITDA fell 20% to $1.472 billion, chiefly due to semiconductor and electronics destocking, weak consumer electronics demand and reduced production rates.
- Water & Protection sales declined 5% to $5.633 billion; Operating EBITDA fell 3% to $1.388 billion. Lower volumes in safety, construction and water markets were partly offset by pricing.
- DuPont recorded an $804 million non-cash goodwill impairment in the Protection reporting unit, reflecting challenging construction markets and inventory destocking. Remaining Protection goodwill was $4.8 billion, and the unit was identified as remaining at risk of future impairment.
- The November 2023 Delrin sale generated approximately $1.25 billion net cash proceeds, a $350 million note receivable and a 19.9% equity interest in Derby; the reported after-tax gain was $480 million. The majority of Mobility & Materials had been sold to Celanese in 2022. 2022 net income included substantial divestiture gains, so its $5.917 billion total net income is not a like-for-like indicator of operating performance.
- Spectrum Plastics was acquired in August 2023 for approximately $1.792 billion; it contributed $185 million of 2023 sales. DuPont also approved $110 million of charges for a 2023–2024 restructuring program.
Outlook, risks and unusual items
Management expected further inventory destocking and weak China demand in the first quarter of 2024, with some destocking abatement, seasonality and cost savings expected sequentially in the second quarter. For full-year 2024, management anticipated an electronics-market recovery, higher semiconductor fabrication utilization and improved industrial orders as customer inventories normalize. The filing provides no quantified 2024 revenue or earnings guidance. Planned 2024 capital expenditures were approximately $600 million.
- PFAS: DuPont recorded a $487 million 2023 pre-tax charge related to the MOU cost-sharing arrangement, primarily reflecting the public water systems settlement. DuPont’s $400 million contribution was placed in a qualified settlement fund and recorded as restricted cash; the related recorded liability was approximately $405 million including interest. The court granted final approval in February 2024, but the funds and liability were to be derecognized only after final judgment became non-appealable. Further PFAS costs and litigation outcomes remain uncertain.
- Other contingencies: Environmental remediation accruals totaled $300 million; management disclosed reasonably possible exposure up to $348 million above accruals. The company also faces legacy indemnification, tax, product-liability and other litigation risks. It stated that the described environmental proceedings were believed remote to having a material impact, while noting uncertainty around other exposures.
- Liquidity and capital returns: DuPont had $7.8 billion of debt and $3.486 billion of cash, cash equivalents and restricted cash, with $3.486 billion of committed credit facilities available at year-end. It was in compliance with its debt covenant. The $5 billion repurchase authorization was completed after year-end settlement of the 2023 ASR; a new $1 billion authorization and approximately $500 million ASR were announced in 2024. The Board declared a 2024 quarterly dividend of $0.38 per share.
- Key operating risks: Persistent destocking, slower Chinese industrial demand, semiconductor trade restrictions, foreign exchange, input costs and supply disruptions could affect results. The Protection goodwill valuation is particularly sensitive to forecast assumptions.
Important facts for investors to verify
- Whether semiconductor, consumer electronics, construction and China demand recovered as management anticipated, and whether destocking abated.
- Protection reporting-unit performance and goodwill headroom after the $804 million impairment, including assumptions underpinning future cash flows.
- Final, non-appealable status and accounting treatment of the public-water PFAS settlement, plus additional PFAS and environmental liabilities beyond recorded accruals.
- Cash available for operations after restricted settlement funds, repurchases, acquisitions and other obligations; debt maturities and refinancing needs.
- Whether Spectrum integration, the 2023–2024 restructuring and anticipated cost savings deliver expected benefits, and whether Delrin-related note and equity interests retain their stated value.