- DuPont de Nemours Inc DD shares are down Tuesday morning following its first quarter 2023 results. The company adjusted its high-end of guidance ranges, citing delays in electronics recovery.
- DD reported a first-quarter FY23 sales decrease of 8% year-over-year to $3.02 billion, beating the consensus of $2.94 billion.
- Net sales decreased 8% as organic sales declined 3%, along with currency headwinds of 3% and an unfavorable portfolio impact of 2%.
- Electronics & Industrial sales $1.29 billion (-16% Y/Y) and Water & Protection sales $1.45 billion (+1% Y/Y).
- Adjusted EPS was $0.84 (+2% Y/Y), above the consensus of $0.80.
- Operating EBITDA was $714 million (-13% Y/Y), and the margin contracted 130 bps to 23.7%.
- Operating cash flow for the quarter was $343 million, compared to $209 million a year ago. Adjusted free cash flow was $102 million.
- DD held cash and equivalents of ~$5 billion as of March 31, 2023.
- "We continue to expect ongoing strength throughout the year in areas such as water, automotive, aerospace, and healthcare. Within electronics markets, we continue to see weakness and channel inventory destocking in the near term," commented CFO Lori Koch.
- "Based on recent customer feedback and third-party market forecasts within electronics, we expect customer utilization rates to bottom relatively near-term and to improve during the third quarter, which is about a quarter later than previously expected. Due to the delay in electronics recovery, we are adjusting the high-end of our existing guidance ranges for full-year net sales, operating EBITDA, and adjusted EPS. For the second quarter 2023, we expect similar results to the first quarter as overall market conditions are anticipated to be generally the same," Koch added.
- 2Q23 Outlook: DuPont sees net sales of ~$3.02 billion versus consensus of $3.1 billion, Operating EBITDA of ~$715 million, and Adjusted EPS of ~0.84 versus $0.87 consensus.
- FY23 Outlook: DD sees net sales of $12.3 billion-$12.5 billion (prior $12.3 billion - $12.9 billion) versus $12.69 billion consensus and Adjusted EPS of $3.55-$3.70 (prior $3.50 - $4.00) versus $3.74 consensus.
- M&A: Additionally, DuPont announced the acquisition of Spectrum Plastics Group from AEA Investors for a purchase price of ~$1.75 billion.
- DuPont expects the deal to be immediately accretive to its adjusted EPS and to achieve high single-digit ROIC by year five. The transaction is to close in late 3Q23.
- Spectrum manufactures specialty medical devices and components, serving 22 of the top 26 medical device OEMs.
- Price Action: DD shares are trading lower by 6.88% at $64.61 premarket on Tuesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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