DuPont Posts EPS Growth Despite Sales Drop; Plans Restructuring For Savings In 2024

DuPont De Nemours, Inc. DD reported a third-quarter FY23 sales decline of 8% year-over-year to $3.06 billion (-10% Y/Y on an organic basis), missing the consensus of $3.15 billion.

An organic sales decline of 10% reflects lower volume primarily from semiconductor and construction end-markets, as well as the impact of channel inventory destocking.

Electronics & Industrial sales $1.37 billion (-9% Y/Y) and Water & Protection sales $1.41 billion (-8% Y/Y).

Adjusted EPS was 92 cents (+12% Y/Y), above the consensus of 84 cents.

Operating EBITDA fell 9% Y/Y to $775 million, and the margin contracted 50 bps to 25.3%.

Operating cash flow for the quarter was $740 million, compared to $578 million a year ago. Adjusted free cash flow was $621 million (+47% Y/Y).

DD held cash and cash equivalents of $1.34 billion as of Sept. 30, 2023.

"We delivered solid third quarter earnings despite ongoing volume headwinds from channel inventory destocking and continued softness in China," said Ed Breen, DuPont Executive Chairman and chief executive officer.

"Sequential operating EBITDA growth of 5% and margin improvement of 140 basis points in the third quarter demonstrated sound operating execution, while strong cash generation and conversion during the quarter also highlighted our efforts to prioritize working capital improvement in the currently uneven global business climate," he added.

The company also announced that it will close the previously announced sale of 80.1% ownership interest in the Delrin® business to TJC.

“As we look at the fourth quarter, underlying consumer electronics demand is expected to be similar with the third quarter and reflected by stable order rates from our customers, with some sequential sales lift expected in Semiconductor Technologies,” said Lori Koch, chief financial officer of DuPont.

“However, versus our prior guidance, we are seeing additional channel inventory destocking and slower industrial water demand in China. We are revising our 2023 full year net sales and operating EBITDA guidance to reflect near-term volume headwinds and are also planning additional restructuring actions with realization of savings expected to begin later in the first quarter of 2024,” she added.

FY23 Outlook: DD revised net sales guidance to ~$12.17 billion (Prior view $12.45 billion - $12.55 billion) and Adjusted EPS of ~$3.45 (prior $3.40 - $3.50).

The company sees an Operating EBITDA of ~$2.975 billion (Prior $2.975 billion -$3.025 billion).

Price Action: DD shares were trading lower by 6.74% to $67.97 at the time of publication Wednesday.

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