DuPont de Nemours, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparison is with Q1 2023 unless otherwise noted. DuPont reports Electronics & Industrial, Water & Protection, and Corporate & Other. Prior-year comparisons reflect Delrin as discontinued operations; Spectrum, acquired in August 2023, contributes to current-period results.
Financial performance and position
- Revenue: Net sales were $2.931 billion, down 3%. The decline reflected volume down 5%, local price and mix down 1%, and currency down 1%, partly offset by a 4% portfolio benefit, primarily Spectrum.
- Profit and margins: Continuing-operations income before tax was $267 million versus $356 million; continuing-operations net income was $183 million versus $273 million. Net income attributable to DuPont common stockholders was $189 million versus $257 million. Diluted EPS was $0.45 versus $0.56; continuing-operations diluted EPS was $0.41 versus $0.58. Gross margin, calculated from reported sales and cost of sales, was approximately 34.6% versus 34.3%. Operating EBITDA, a company-defined segment measure, was $682 million versus $714 million, or approximately 23.3% versus 23.7% of sales.
- Segments: Electronics & Industrial sales rose 5% to $1.365 billion and Operating EBITDA rose 3% to $374 million. Water & Protection sales fell 11% to $1.291 billion and Operating EBITDA fell 14% to $295 million. Corporate & Other sales were $275 million versus $273 million; Operating EBITDA was $13 million versus $8 million.
- Cash flow: Continuing-operations operating cash flow was $493 million versus $405 million; investing cash outflow was $202 million versus $250 million; financing cash outflow was $691 million versus $213 million, mainly reflecting the new $500 million share repurchase. Cash used in discontinued operations was $31 million versus $71 million. The filing does not provide a defined free-cash-flow measure.
- Liquidity and debt: Cash and cash equivalents were $1.934 billion at quarter-end, with $413 million of restricted cash; total cash, cash equivalents and restricted cash were $2.347 billion. Long-term debt was $7.776 billion. Current assets were $7.067 billion and current liabilities $3.032 billion; working capital was $4.035 billion and the current ratio 2.33, versus 2.43 at year-end 2023. Management expects operating cash generation and capital-market access to support liquidity. DuPont reported compliance with its revolving-facility financial covenant.
- Shareholder returns: The company paid a $0.38-per-share dividend in Q1 and declared another $0.38 dividend for Q2. It completed the prior $2 billion accelerated repurchase and began a new authorization of up to $1 billion, including a $500 million Q1 accelerated repurchase.
Changes, outlook and notable items
- Management anticipates volume improvement through the rest of 2024, citing expected recovery in electronics and semiconductor markets and reduced destocking in areas including water, medical packaging and biopharma. The extent and timing of recovery remain uncertain. The filing does not provide a clear numerical full-year revenue or earnings guidance figure.
- Water & Protection’s lower sales reflected volume declines, including destocking in medical packaging and water distribution and weaker industrial demand in China. Electronics & Industrial benefited from improving semiconductor demand and Spectrum, while some businesses remained affected by destocking.
- The effective tax rate on continuing operations increased to 31.5% from 23.3%, driven by geographic earnings mix, U.S. taxation of foreign operations and discrete tax items, including an international tax assessment for which DuPont is indemnified.
- Restructuring and asset-related charges were $39 million, versus $14 million. The company also recorded $25 million of raw-material inventory write-offs associated with Water & Protection plant closures. The 2023–2024 program had $146 million of cumulative pre-tax charges and is expected to be substantially complete by year-end 2024.
- PFAS matters remain a significant contingency. DuPont’s accrued liability for the Water District Settlement was approximately $408 million, including interest; the settlement judgment became final in April 2024. The filing says the related restricted funds and liability will be removed in Q2. Separately, MOU-related indemnification liabilities were $211 million. DuPont says its share of the MOU’s $2 billion combined company cap is approximately $1.4 billion and that it had paid about $175 million of Qualified Spend against its portion. Additional PFAS costs above recorded liabilities are reasonably possible but cannot currently be estimated.
- Environmental remediation and restoration liabilities totaled $284 million. The company cautions that additional costs above accrued amounts could materially affect results, financial condition or cash flows. A Water & Protection goodwill reporting unit, with $4.8 billion of remaining goodwill, remains at risk of future impairment following an $804 million impairment recorded in 2023; no impairment was identified in the Q1 2024 tests described.
- Other unusual balance-sheet effects included a $244 million negative cumulative translation adjustment in comprehensive income. Management said there were no material changes to the risk factors disclosed in its 2023 Form 10-K.
Key facts for investors to verify
- Whether anticipated electronics recovery and reduced destocking translate into sustained volume growth, especially in Water & Protection.
- Progress and cash-flow effects of the new share repurchase authorization, alongside dividend payments and liquidity needs.
- Developments in PFAS litigation and the MOU, including settlement implementation, future eligible costs, and any exposure beyond recorded accruals.
- Execution, costs and expected savings from the restructuring program, plus the performance and impairment outlook for the Protection goodwill reporting unit.
- Tax-rate variability and the effect of discrete tax items, foreign earnings and evolving tax rules on future earnings and cash taxes.