DuPont de Nemours, Inc. 2019 Q4 - Results - Earnings Call Presentation Jan. 30, 2020 • 2 Comments DuPont de Nemours, Inc. (DD) CEO Marc Doyle on Q3 2019 Results - Earnings Call Transcript Non-Core reported fourth quarter net sales of $404 million, down 19 percent from the year-ago period. These risks are and will be more fully discussed in DuPont's current, quarterly and annual reports and other filings made with the U.S. Securities and Exchange Commission, in each case, as may be amended from time to time in future filings with the SEC. Productivity and pricing gains were more than offset by unfavorable mix and lower volume. DuPont Leadership; DuPont Board; Contact the Board of Directors; Contact Investor Relations; Email Alerts; FAQ; DowDuPont Investors - Prior to June 1, 2019. Local price increased across all businesses and in all regions, led by the Safety and Water Solutions businesses. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Significant Items Impacting Results for the Three Months Ended December 31, 2019, Restructuring and asset related charges - net 5, Restructuring and asset related charges - net; Equity in earnings of nonconsolidated affiliates, Equity in earnings of nonconsolidated affiliates; Cost of sales, Less: Merger-related amortization of intangibles, Sundry income (expense) - net; Provision for income taxes on continuing operations, Significant Items Impacting Pro Forma Results for the Three Months Ended December 31, 2018. "Our full year results demonstrate our ability to offset challenging global macro conditions by focusing on the levers within our control," said Marc Doyle, DuPont Chief Executive Officer. Fourth quarter operating EBITDA for the segment was $323 million, a decrease of 2 percent from pro forma operating EBITDA of $330 million in the year-ago period. Nutrition & Biosciences reported fourth quarter net sales of $1.5 billion, down 2 percent from the year-ago period. Forward-looking statements address matters that are, to varying degrees, uncertain and subject to risks, uncertainties and assumptions, many of which that are beyond DuPont's control, that could cause actual results to differ materially from those expressed in any forward-looking statements. For the year, Safety & Construction net sales of $5.2 billion and pro forma operating EBITDA of $1.4 billion were down 2 percent and up 11 percent, respectively, from the year-ago period. Non-GAAP measures included in this release are defined below. Net sales for the segment were up 7 percent versus prior year in Asia Pacific including double-digit growth in China. GAAP EPS from continuing operations totaled $0.24 versus pro forma GAAP EPS from continuing operations in the year-ago period of $0.39; the decline is mostly attributable to lower segment results and a higher tax rate partially offset by lower significant items(2) and the absence of costs historically allocated to Dow and Corteva. Organic sales were down 9 percent driven by 15 percent volume declines offset by 6 percent pricing gains. ET on May 2, 2019, to discuss the Materials Science Division’s financial results within DowDuPont. DuPont (ticker: DD) shares are down 5% year to date, worse than the 15% change of the Dow Jones Industrial Average over the same span.. Double-digit volume gains in Water Solutions, led by strong demand for ion exchange and reverse osmosis membranes in industrial markets, was more than offset by volume declines in Safety Solutions and continued softness in Shelter Solutions. Earnings Release (opens … Reflects a pretax loss on a divestiture in Safety & Construction. Earnings came in 8 cents better than Wall Street expected. For the year, Electronics & Imaging net sales of $3.6 billion and pro forma operating EBITDA of $1.1 billion were down 2 percent and 5 percent, respectively, from the year-ago period. Reconciliations for these non-GAAP measures to U.S. GAAP are provided in the Selected Financial Information and Non-GAAP Measures starting on page 13 and on the Investors section of the Company's website. This communication contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Net (loss) income $ (3,081) $ 35. Analysts are encouraged to join the Company’s earnings conference call at 8 a.m. DuPont assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. • 2020 adjusted earnings per share guidance of $3.70 to $3.90 reflecting headwinds from prior year discrete benefits and nylon market pressures . DuPont de Nemours, Inc. DD recorded earnings (on a reported basis) from continuing operations of 49 cents per share for third-quarter 2019, up from earnings of … Double-digit volume gains in Water Solutions, led by strong demand for ion exchange and reverse osmosis membranes in industrial markets, was more than offset by volume declines in Safety Solutions and continued softness in Shelter Solutions. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled "Risk Factors" (Part II, Item 1A) of DuPont's Quarterly Report on Form 10-Q for the period ended September 30, 2019 and its subsequent reports on Form 10-Q, 10-K and Form 8-K. "Our focus on a disciplined operating model will ensure we remain diligent on cost and cash management as we progress through the year.". DuPont (NYSE: DD) is a global innovation leader with technology-based materials, ingredients and solutions that help transform industries and everyday life. Organic sales were up 1 percent. The unaudited pro forma Consolidated Statements of Operations (discussed in the following section) included herein include costs previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with Financial Accounting Standards Codification 205, "Presentation of Financial Statements" ("ASC 205") and thus are reflected in the Company's results of continuing operations. ET Contents: Prepared Remarks; Questions and Answers; Call Participants; Prepared Remarks: Operator. On December 15, 2019, DuPont and IFF announced they had entered definitive agreements to combine DuPont's Nutrition & Biosciences business with IFF in a transaction that would result in IFF issuing shares to DuPont shareholders, pending customary closing conditions, other approvals including regulatory and that of IFF's shareholders. The December 2018 divestiture of the European STYROFOAM™ business reduced sales by 3 percent. Some of the important factors that could cause DuPont's actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction with IFF; changes in relevant tax and other laws, (ii) failure to obtain necessary regulatory approvals, approval, if required, of IFF’s shareholders, anticipated tax treatment or any required financing or to satisfy any of the other conditions to the proposed transaction, (iii) the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies that could impact the value, timing or pursuit of the proposed transaction, (iv) risks and costs and pursuit and/or implementation of the separation of the N&B Business, including timing anticipated to complete the separation, any changes to the configuration of businesses included in the separation if implemented,  (v) risks and costs related to the Dow Distribution and the Corteva Distribution (together, the “Distributions”) including (a) with respect to achieving all expected benefits from the Distributions;   (b) the incurrence of significant costs in connection with the Distributions, including costs to service debt incurred by the Company to establish the relative credit profiles of Corteva, Dow and DuPont and increased costs related to supply, service and other arrangements that, prior to the Dow Distribution, were between entities under the common control of DuPont; (c) indemnification of certain legacy liabilities of E. I. du Pont de Nemours and Company ("Historical EID") in connection with the Corteva Distribution; and (d) potential liability arising from fraudulent conveyance and similar laws in connection with the Distributions; (vi) failure to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio changes, including meeting conditions under the Letter Agreement entered in connection with the Corteva Distribution, related to the transfer of certain levels of assets and businesses; (vii) uncertainty as to the long-term value of DuPont common stock; (viii) potential inability or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade and (ix) other risks to DuPont's business, operations and results of operations including from: failure to develop and market new products and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and currency exchange rates; changes in political conditions, including tariffs, trade disputes and retaliatory actions; impairment of goodwill or intangible assets; the availability of and fluctuations in the cost of energy and raw materials; business or supply disruption, including in connection with the Distributions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could result in a significant operational event for DuPont, adversely impact demand or production; ability to discover, develop and protect new technologies and to protect and enforce DuPont's intellectual property rights; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management's response to any of the aforementioned factors. Pro forma operating EBITDA(1) of $5.6 billion was down 4 percent versus the prior year primarily driven by weakness in automotive and electronic markets, reduced equity affiliate income and currency headwinds partially offset by strong pricing discipline and continued cost savings. On April 1, 2019, the company completed the separation of its materials science business into a separate and independent public company by way of a pro rata dividend-in-kind of all the then outstanding stock of Dow Inc.  (the "Dow Distribution"). Includes a pretax charges of $74 million ($64 million net of tax benefit) related to tax indemnifications, primarily associated with an adjustment to a onetime transition tax liability required by the Tax Cuts and Jobs Act of 2017 and a $48 million charge which reflects a reduction in gross proceeds from lower withholding taxes related to a prior year legal settlement. 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