Q3 2024 Earnings Summary
- DuPont's Electronics & Industrial (E&I) segment experienced significant growth, with Semiconductor Technologies revenues increasing over 20%, driven by AI technology ramps and share gains. In China, E&I sales were up over 50%, highlighting DuPont's strong footprint and exposure to advanced nodes.
- DuPont secured a major win in the battery adhesives space with one of the largest European OEMs, solidifying its position in the EV market. Additionally, the company closed the Sonatel acquisition in August, enhancing its healthcare portfolio and opening up cross-selling opportunities across its businesses.
- Operational excellence initiatives, including restructuring actions and productivity improvements, led to strong margins over 26% in the Water & Protection (W&P) segment, demonstrating DuPont's effective execution and cost management.
- Continued year-over-year headwinds in semiconductor CapEx exposed businesses due to destocking, with recovery expected as the company heads into 2025.
- Pricing pressures in the Safety Solutions segment are leading to price decreases to maintain market share, which may impact margins.
- Uncertainty about sustaining high margins and earnings growth in 2025, with management not providing specific guidance and emphasizing the need to maintain top-line growth and productivity initiatives.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +4% | Improved volumes in electronics (particularly semiconductors) compared to prior-year weakness, partially offset by softness in Water & Protection and benefits from acquisitions such as Spectrum. |
Electronics & Industrial | +13% | Rebound in Semiconductor Technologies and Interconnect Solutions volume compared to last year’s declines, helped by AI-driven demand and consumer electronics recovery, partially offset by inventory destocking in Industrial Solutions. |
Industrial Solutions | –7% | Continued inventory destocking (e.g., Kalrez® and biopharma) overshadowed aerospace and automotive gains, resulting in a downturn from higher volumes in the prior-year period. |
Interconnect Solutions | +29% | Strong consumer electronics recovery and early AI-related ramps drove significant volume increases, reversing previous declines from reduced demand and channel destocking. |
Semiconductor Technologies | +24% | Recovery from lower fab utilization in earlier periods, supported by AI-related demand for advanced node chips and OLED material launches, reversing last year’s double-digit volume decline. |
Water & Protection | –2% | Lower volumes in construction and medical packaging (Safety Solutions) offset partial price gains, continuing the prior year’s softness in construction end markets and channel destocking in water solutions. |
Safety Solutions | –5% | Healthcare-related inventory destocking in medical packaging pressured growth that had previously benefited from strong aerospace and automotive markets, leading to a net decline relative to last year’s gains. |
Corporate & Other | –7% | Reduced net sales in retained businesses and lapping divestitures from previous periods led to a top-line decline, though cost efficiencies improved operating contributions. |
Asia Pacific | +8% | Electronics-led growth in China and broader Asia, reversing prior-year weakness in consumer electronics and semiconductor utilization, while currency headwinds remained a partial offset. |
Operating Income (EBIT) | +44% | Higher volumes in high-margin electronics segments and cost-optimization steps from restructuring programs contrasted with last year’s weaker demand, resulting in a substantial profitability boost. |
Net Income | +41% | Improved operational performance and lower significant charges versus last year, reflecting a net swing from previous year’s volume and restructuring impacts to stronger profitability in core businesses. |
Diluted EPS | +56% | Increased earnings from volume and margin improvements, plus share repurchases and operational cost savings, significantly outweighed currency and price headwinds, compared to last year’s reduced electronics demand. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Sales | Q3 2024 | $3.2B | no current guidance | no current guidance |
Operating EBITDA | Q3 2024 | $815M | no current guidance | no current guidance |
Adjusted EPS | Q3 2024 | $1.03 | no current guidance | no current guidance |
Net Sales | Q4 2024 | no prior guidance | $3.07B | no prior guidance |
Operating EBITDA | Q4 2024 | no prior guidance | $719M | no prior guidance |
Adjusted EPS | Q4 2024 | no prior guidance | $0.98 | no prior guidance |
Net Sales Growth (YoY) | Q4 2024 | no prior guidance | 6% | no prior guidance |
Operating EBITDA Growth (YoY) | Q4 2024 | no prior guidance | 10% | no prior guidance |
Adjusted EPS Growth (YoY) | Q4 2024 | no prior guidance | 13% | no prior guidance |
Net Sales | FY 2024 | $12.45B | no current guidance | no current guidance |
Operating EBITDA | FY 2024 | $3.085B | $3.125B | raised |
Adjusted EPS | FY 2024 | $3.75 | $3.90 | raised |
Foreign Currency Impact | FY 2024 | $50M headwind | no current guidance | no current guidance |
Donatelle Acquisition | FY 2024 | offsetting FX headwind | no current guidance | no current guidance |
Adjusted EPS yoy growth | FY 2024 | no prior guidance | 12% | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Net Sales | Q3 2024 | Approximately $3.2B | $3,192M | Met |
Operating EBITDA | Q3 2024 | $815M | ~$892M (586+ 306) | Beat |
Adjusted EPS | Q3 2024 | $1.03 per share | $1.08 per share | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Continued strong demand in E&I | Consistent in Q2, Q1, and Q4, emphasizing AI-enabling technologies (e.g., advanced node chips) | Remains robust with double-digit growth in semiconductors, AI, advanced node chips | Ongoing bullish |
Pricing pressures in E&I | Q2: ~2% decline; Q1: ~1% decline; Q4 targeted a -1% top-line impact | 1% price giveback remains typical, driven by new product launches and minor offsets on older products | Stable, slight negative |
Significant exposure to China in electronics | Q2: $30M pre-buy; Q1: 3% China growth in electronics; Q4: less detail on trade retaliation | ~30% sales exposure; ~$40M in pre-buys; watchful on demand normalization post fab ramps | Consistently highlighted, cautious outlook |
Restructuring and cost-reduction initiatives | Common theme in Q2, Q1, Q4, with restructuring savings supporting margins across segments | Margin expansion (~26.8% EBITDA) aided by plant closures and lower fixed costs | Positive, continuing |
Planned separation of electronics and water businesses | Announced in Q2; not mentioned in Q1 or Q4 | Progressing on creating three standalone companies; on track within 18–24 months from May 2024 | New in Q2, continuing in Q3 |
PFAS liabilities | Detailed in Q2: ~$408M outflow, shared liability agreements, aim to settle before business separations | No mention in Q3 [N/A] | Dropped after Q2 |
Biopharma (Liveo) and Kalrez delayed recoveries | Q1, Q2 noted destocking, partial upturn expected in H2 2024 | No updates in Q3 [N/A] | Not recently discussed |
Growth & margin expansion in Water & Protection | Seen in Q2, Q1, Q4; continued focus on cost discipline and recovery in China | Sequential improvement, ~26% margin, China rebound in water volumes | Positive, consistent |
Lithium extraction for Water Solutions | Highlighted in Q2 with ~$250M potential; Q4 called it a substantial opportunity | Not mentioned in Q3 [N/A] | Sporadic, high future potential |
EV sector growth | Q1 saw double-digit EV-related sales; Q4 noted 25-30% portfolio exposure; no mention in Q2 | Not discussed in Q3 [N/A] | Mentioned early; not repeated |
Revenue impacts from pre-buys, timing shifts, inventory | Discussed each quarter: Q2 ($30M pre-buy), Q1 (destocking emphasis), Q4 (inventory shifts at year-end) | Q3: ~$20M pre-buy in semiconductors; normalizing water-related inventory | Consistent focus on timing and destocking |
-
Spin-Off Timeline
Q: Why more confident shortening spin-off timeline?
A: Ed Breen stated they've made great progress on legal entity work and IT separation, boosting confidence in moving towards an 18-month timeline, potentially completing by December 2025. -
Electronics Prebuy in China
Q: Why is there a prebuy in electronics business?
A: Lori Koch explained that new fabs in China are leading to prebuys to get through qualifications and ramp-up. They mentioned $30 million last quarter and another $20 million this quarter, totaling $40 million over the second half. -
W&P Margins Improvement
Q: What's driving strong W&P margins this quarter?
A: Lori Koch attributed the strong margins to operational execution, restructuring actions, productivity improvements, and shuttering older lines in the safety business, resulting in margins over 26%. -
China Exposure in Electronics
Q: How significant is China in electronics sales? Any risks?
A: China accounts for 30% of electronic sales, with about half being China for China. Their strong position with local players and global OEMs in China favors their results despite potential trade risks. -
2025 Outlook
Q: What are your initial thoughts on 2025 performance?
A: Lori Koch mentioned no significant changes from prior expectations, anticipating accelerated growth in electronics driven by AI and new fabs, recovery in memory markets, and normalized demand in other sectors. -
Pricing Trends
Q: Why are prices decreasing in certain businesses?
A: The decrease is due to prior mid-teens price increases exceeding cost hikes, leading to slight givebacks to maintain market share. This trend is expected to continue. -
Free Cash Flow Deployment
Q: How will free cash flow be used next year?
A: Strong free cash flow conversion is expected, with cash primarily used for separation costs related to the spin-offs. No significant CapEx projects or share repurchases are planned for next year. -
ITC Complaint on Tyvek Imports
Q: What's the status of the ITC complaint on Tyvek imports?
A: Lori Koch stated the ITC filing speaks for itself and they'll defend their patents and trade secrets. The issue arose recently due to observed trade infringements.