Earnings at a downsized DuPont beat estimates as company buys back stock and bolsters balance sheet

DuPont announced earnings that were in line with its forecasts as the company spent $5 billion for share buybacks.

Earnings beat the Zacks estimate as the company pushed through price increases, kept an eye on costs in the face of global challenges and sold off businesses. DuPont is based near Wilmington.

DuPont has continued to shrink with the industrial and material products company selling off much of its Mobility and Materials segment. A merger with Rogers Corp. that would have bolstered its electronics segment fell through after regulatory delays from the Chinese government.

DuPont has beefed up its Delaware manufacturing presence with a new plant on the way near Newark for its electronics segment (formerly Rodel, Rohm and Haas-Dow).

“Our fourth quarter results underpin the quality of our portfolio and our ability to offset a continued challenging global macro environment by focusing on the levers within our control,” said Ed Breen, DuPont CEO. “In the face of weak conditions in certain end-markets, namely electronics and construction, we delivered revenue and operating EBITDA results in line with our expectations.”

“Our leading global market positions, disciplined pricing actions and focus on execution drove sales and earnings growth for the year and these factors will be critical as we navigate continued global macro challenges in 2023,” Breen stated.

“The steps completed in 2022 to further transform our portfolio advance our strategy as a premier multi-industrial company and enable us to move forward with a stronger balance sheet and increased financial flexibility,” Breen said. “For the year, we deployed more than $5 billion of capital through share repurchase programs and dividends and retired $2.5 billion in long-term debt which highlights our ongoing commitment to a balanced capital allocation approach. We also remain focused on value creation by strengthening our position within key growth pillars through continued investment and innovation.”

(1)  During the first quarter of 2022, a substantial portion of the company’s historic Mobility & Materials segment met the criteria to be classified as discontinued operations for current and historical periods.

(2)  Adjusted EPS, Operating EBITDA, Operating EBITDA Margin, organic sales, free cash flow and free cash flow conversion are non-GAAP measures. See page 9 for further discussion, including a definition of significant items. Reconciliation to the most directly comparable GAAP measure, including details of significant items begins on page 14 of this communication.

(3)   2023 adjusted EPS outlook on page 6 assumes that by year-end 2023, the company will substantially complete the remaining repurchase authority under its $5 billion share buyback program announced on November 8, 2022.

(4)   Future dividends are at the discretion of the DuPont Board of Directors.

Fourth Quarter 2022 Results⁽¹⁾

Dollars in millions, unless noted	4Q’22	4Q’21	Change vs. 4Q’21	Organic Sales (2)vs. 4Q’21
Net sales	$3,104	$3,246	(4)%	5%
GAAP Income from continuing operations	$105	$167	(37)%
Operating EBITDA(2)	$758	$752	1%
Operating EBITDA(2) margin %	24.4%	23.2%	120 bps
GAAP EPS from continuing operations	$0.20	$0.29	(31)%
Adjusted EPS(2)	$0.89	$0.77	16%

Net sales

• Net sales decreased 4% as organic sales⁽²⁾ growth of 5% was more than offset by currency headwinds of 5% and portfolio impact of 4%.
• Organic sales⁽²⁾ growth of 5% consisted of a 7% increase in price partially offset by a 2% decline in volume.
  • Price increase reflects actions taken to offset broad-based cost inflation.
  • Volume decline reflects the net result of continued strength in Water Solutions, ongoing growth in the auto adhesives portfolio and gains in certain industrial end-markets which were more than offset by further softening in smartphones and personal computing within Interconnect Solutions, slowdown in semiconductor and construction end-markets, and lower volumes from protective garments within Safety Solutions.
• 12% organic sales⁽²⁾ growth in Water & Protection; 2% organic sales⁽²⁾ declines in Electronics & Industrial; 18% organic sales⁽²⁾ growth in the retained businesses reported in Corporate.
• Organic sales⁽²⁾ growth in all regions globally, including 9% in U.S. & Canada, 7% in EMEA and 2% in Asia Pacific.

GAAP Income/GAAP EPS from continuing operations

• GAAP income/GAAP EPS from continuing operations decreased as higher net charges related to significant items⁽²⁾, primarily the termination fee associated with the Intended Rogers Transaction, more than offset lower net interest expense and a lower share count.

Operating EBITDA⁽²⁾

• Operating EBITDA⁽²⁾ increased as pricing actions and disciplined cost control more than offset inflationary cost pressure, currency headwinds, portfolio impact from prior year non-core business divestitures and lower volumes.

Adjusted EPS⁽²⁾

• Adjusted EPS increased due to a lower share count, lower net interest expense and higher segment earnings which were partially offset by a higher tax rate.

Operating cash flow

• Operating cash outflow in the quarter of $126 million, capital expenditures of $185 million and adjustments totaling $213 million for a tax prepayment related to the M&M Divestiture and the Intended Rogers Transaction termination fee resulted in a free cash flow⁽²⁾ use of $98 million. 
• Free cash flow in the quarter includes headwinds of about $200 million for transaction costs related to the M&M Divestitures and an approximately $100 million cash outflow associated with accounts payable prepaid in advance of the M&M Divestiture which was reimbursed to the Company as part of transaction closing and reported within investing activities.

Full Year 2022 Results⁽¹⁾

Dollars in millions, unless noted	FY’22	FY’21	Changes. FY’21	Organic Sales (2)vs. FY’21
Net sales	$13,017	$12,566	4%	8%
GAAP Income from continuing operations	$1,061	$1,207	(12)%
Operating EBITDA(2)	$3,261	$3,152	3%
Operating EBITDA(2) margin %	25.1%	25.1%	Flat
GAAP EPS from continuing operations	$2.02	$2.16	(6)%
Adjusted EPS(2)	$3.41	$3.04	12%

Net sales

• Net sales increased 4% as organic sales⁽²⁾ growth of 8% was partially offset by currency headwinds of 3% and portfolio impact of 1%.
• Organic sales⁽²⁾ growth of 8% consisted of a 7% increase in price and 1% increase in volume.
  • Price increase reflects actions taken to offset broad-based cost inflation.
  • Volume increase reflects strong growth in semiconductor, water and industrial end-markets mostly offset by softness in smartphones and personal computing within Interconnect Solutions primarily during the second half of 2022, and lower volumes from protective garments within Safety Solutions.
• 11% organic sales⁽²⁾ growth in Water & Protection; 5% organic sales⁽²⁾ growth in Electronics & Industrial; 15% organic sales⁽²⁾ growth in retained businesses reported in Corporate.
• Organic sales⁽²⁾ growth in all regions globally, including 14% in U.S. & Canada, 7% in EMEA and 4% in Asia Pacific.

GAAP Income/GAAP EPS from continuing operations

• GAAP income/GAAP EPS from continuing operations decreased as higher net charges related to significant items⁽²⁾ and a higher tax rate more than offset higher segment earnings, lower net interest expense and a lower share count.

Operating EBITDA⁽²⁾

• Operating EBITDA⁽²⁾ increased primarily on volume gains as pricing actions were mostly offset by inflationary cost pressure driven by higher raw material, logistics and energy costs.

Adjusted EPS⁽²⁾

• Adjusted EPS increased due to a lower share count, higher segment earnings and lower net interest expense which were partially offset by a higher tax rate.

Operating cash flow

• Operating cash flow for the year of $588 million, capital expenditures of $743 million, and adjustments totaling $328 million for tax prepayments related to the M&M Divestiture and the Intended Rogers Transaction termination fee resulted in free cash flow⁽²⁾ of $173 million.
• Free cash flow for the year includes headwinds of about $550 million for transaction costs related to the M&M Divestitures and an approximately $100 million cash outflow associated with accounts payable prepaid in advance of the M&M Divestiture which was reimbursed to the Company as part of transaction closing and reported within investing activities.

The company announced that its board declared a first quarter dividend of $0.36 per share on its outstanding common stock, representing a 9 percent increase to its quarterly dividend⁽⁴⁾, payable March 15, 2023, to holders of record at the close of business on February 28, 2023.