Q4 2024 Earnings Summary
- DuPont's Water Solutions experienced strong growth, with 11% year-over-year organic growth in Q4 2024 and expectations of mid- to high single-digit growth in 2025, driven by secular tailwinds and DuPont's unique position as the only player with all four key filtration technologies.
- The company's AI-related sales in the Electronics division grew by 30% in 2024 to over $300 million and are expected to remain a key growth driver for ElectronicsCo as it moves towards the spin-off, capitalizing on ongoing AI adoption and transition to advanced nodes.
- DuPont exceeded its guidance on sales, EBITDA, and EPS in Q4 2024, driven by stronger-than-expected performance in Electronics, Water, medical packaging, and biopharma, indicating strong operational execution and positive momentum in key segments.
- Stagnation in Semiconductor Sales in China Expected: The company anticipates that sales in the Semiconductor segment in China will be flat in 2025, following a significant 40% volume growth in 2024, indicating a potential slowdown in a key market.
- Reduction in Free Cash Flow Conversion Forecast: DuPont projects its free cash flow conversion to decrease to greater than 90% in 2025 from 105% in 2024, partly due to expected working capital usage, which may impact cash flow availability.
- Ongoing Destocking Issues in Kalrez Business: The Kalrez business has not yet recovered from destocking and is not expected to return to normal growth levels until mid-2025, suggesting continued weakness in this segment.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +6.7% (from $2,898M to $3,092M) | Increased overall revenue in Q4 2024 is driven primarily by robust growth in key segments and regions—most notably, Asia Pacific (+10.3%, from $1,246M to $1,373M) and Electronics & Industrial (+10.6%, from $1,361M to $1,506M), offsetting challenges in other regions such as EMEA. |
Electronics & Industrial | +10.6% (from $1,361M to $1,506M) | Strong segment performance was mainly due to volume improvements and possibly favorable market factors that built on previously lower performance levels, contributing robustly to overall revenue growth. |
Water & Protection | +6.4% (from $1,277M to $1,359M) | The segment showed modest growth driven by improvements in pricing or volume in certain sub-segments, which built on prior period challenges, resulting in a healthier performance compared to Q4 2023. |
EMEA Region Revenue | -100%+ (from positive $501M to negative $486M) | The dramatic reversal in EMEA reflects a switch from a revenue positive period (due in part to favorable currency impacts or market conditions) in Q4 2023 to significant losses in Q4 2024, possibly due to deteriorated local market conditions or adverse pricing/product mix changes. |
Asia Pacific Revenue | +10.3% (from $1,246M to $1,373M) | Strong performance in Asia Pacific stemmed from a recovery in the electronics end markets and improved local demand dynamics, which built on past lower revenues in the previous year. |
Operating Income (EBIT) | Recovery to $43M from a loss of -$616M | A significant operational recovery occurred, driven by improved production rates, cost controls, and recovery in segment performances. These improvements reversed a deep loss in Q4 2023, highlighting better cost absorption and operational leverage. |
Net Income | Declined to -$106M from -$14M | Despite the operational recovery (EBIT), net income deteriorated sharply due to factors beyond core operations such as increased non-operating expenses, higher acquisition/integration costs, or unfavorable items (e.g., restructuring charges) that exacerbated the decline when compared to the prior period's relatively milder loss. |
EPS | Declined to -$0.28 from -$0.03 | The decline in EPS reflects the net impact of deteriorating profitability despite operating improvements, driven by factors such as a significant drop in net income, increased expenses, and potential dilution effects, worsening the bottom line relative to the previous period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Sales | Q4 2024 | $3.07B | no current guidance | no current guidance |
Operating EBITDA | Q4 2024 | $719M | no current guidance | no current guidance |
Adjusted EPS | Q4 2024 | $0.98 | no current guidance | no current guidance |
Net Sales Growth (YoY) | Q4 2024 | 6% | no current guidance | no current guidance |
Operating EBITDA Growth (YoY) | Q4 2024 | 10% | no current guidance | no current guidance |
Adjusted EPS Growth (YoY) | Q4 2024 | 13% | no current guidance | no current guidance |
Operating EBITDA | FY 2024 | $3.125B | no current guidance | no current guidance |
Adjusted EPS | FY 2024 | $3.90 | no current guidance | no current guidance |
Net Sales | Q1 2025 | no prior guidance | $3.025B | no prior guidance |
Operating EBITDA | Q1 2025 | no prior guidance | $760M | no prior guidance |
Adjusted EPS | Q1 2025 | no prior guidance | $0.95 | no prior guidance |
Organic Growth | Q1 2025 | no prior guidance | mid-single-digit | no prior guidance |
Currency Headwind | Q1 2025 | no prior guidance | 1.5% | no prior guidance |
Consolidated Net Sales | FY 2025 | no prior guidance | $12.8B - $12.9B | no prior guidance |
Operating EBITDA | FY 2025 | no prior guidance | $3.325B - $3.375B | no prior guidance |
Adjusted EPS | FY 2025 | no prior guidance | $4.30 - $4.40 | no prior guidance |
Organic Growth | FY 2025 | no prior guidance | mid-single-digit | no prior guidance |
Currency Headwind | FY 2025 | no prior guidance | 1% | no prior guidance |
Tax Rate | FY 2025 | no prior guidance | ~1% higher than previous year | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Net Sales | Q4 2024 | ~$3.07 billion | $3.092 billion | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Electronics & Semiconductor Demand | Mentioned in all previous quarters with double-digit growth, driven by semiconductor recovery and AI-related applications. | Still strong in Q4 2024 with double-digit growth and a 6%-7% 2025 outlook. | Recurring topic; sentiment remains bullish. |
AI Adoption & Advanced Node Transition | Featured across Q1-Q3 with AI ramps driving higher material content and emphasis on advanced nodes. | In Q4 2024, AI-specific exposures grew 30% and advanced nodes are ~40% of semi portfolio. | Recurring with strengthened outlook and large future impact. |
China Semiconductor Sales & Potential Stagnation | Q1-Q3 highlighted strong sales in China, boosted by prebuying and new fab activity. | In Q4 2024, noted 40% growth in 2024 but flat expected in 2025 due to normalization. | Recurring topic; sentiment shifting from high growth to stagnation. |
Water & Protection Segment Growth | Q1 saw -11% declines; Q2 expected flat; Q3 showed stabilization; all indicated eventual improvement. | In Q4 2024, segment up 6% year-over-year, with mid- to high single-digit 2025 outlook. | Recurring; sentiment improved from declines to moderate growth. |
Lithium Extraction in Water Business | Mentioned in Q2 2024 as a $250 million opportunity. No mention in Q1/Q3. | In Q4 2024, viewed as an incremental longer-term opportunity, not materializing in 2025. | Recurring but limited; future potential remains noted. |
Battery Adhesives for EV | In Q1 2024, EV-related sales up double digits; in Q3 2024, a long-term agreement with a major European OEM. | No mention in Q4 2024. | Formerly highlighted segment; no mention in current period. |
PFAS Litigation | Discussed in Q1/Q2 2024 (personal injury cases, partial settlements, $408 million MOU outflow). | No mention in Q4 2024. | No mention in current period; previously an ongoing concern. |
Kalrez Business Destocking | Q1-Q3 noted destocking with some sequential improvement; still below normal levels. | In Q4 2024, not fully recovered, targeting midyear 2025 for normal growth. | Recurring; gradual recovery continues. |
Spinoff of ElectronicsCo | Q2 2024 targeted an 18-24 month separation, Q3 accelerated timeline; no Q1 mention. | In Q4 2024, spinoff targeted for November 1, 2025, with costs under $700 million. | Recurring; more definitive timing and cost clarity. |
Cash Flow Conversion Changes | Q1 was 86%, Q2 96%, Q3 113% quarter rate. | Q4 2024 at 105% for full year; targeting >90% in 2025, excluding spinoff costs. | Recurring; remains strong, slightly lower guidance due to growth-related outlays. |
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AI-Related Revenue Growth
Q: Can you size AI-related revenues and growth rates?
A: Lori Koch stated they saw 30% growth in AI-related sales, which are now over $300 million. They expect this to remain a key growth area for ElectronicsCo as they move toward separation later in the year. -
Incremental Margins Outlook
Q: How are incremental margins expected to perform in 2025?
A: Incremental margins were in the low to mid-60% range in 2024 and are projected to be in the mid-40% range for 2025. Despite a 1% price headwind anticipated in 2025, they see the net impact as neutral due to offsetting factors like inflation and absorption tailwinds. Strong margins are expected across both new DuPont and Electronics. -
Water Business Growth
Q: What drives growth in the Water segment for 2025?
A: The Water business experienced 11% organic growth year-over-year in the fourth quarter and anticipates mid- to high single-digit organic growth in 2025. This growth is fueled by secular trends in access to clean water and their unique position as the only player with all four key filtration technologies. They also see long-term opportunities in direct lithium extraction (DLE) and PFAS. -
Semiconductor Outlook
Q: How will node transitions impact Semi-Tech growth in 2025?
A: ElectronicsCo expects 6%-7% organic growth overall, evenly split between Semiconductors and Interconnected Solutions (ICS). The first quarter, benefiting from favorable comparisons, is projected to have low double-digit growth, with moderation throughout the year. This builds on a strong performance in 2024. -
Separation Costs and Dissynergies
Q: What's the update on separation and associated costs?
A: Separation costs are expected to be slightly less than $700 million, as retaining the Water business reduces expenses. Dissynergies, initially estimated at $60 million, are now expected to be closer to $40 million. Stranded costs are anticipated to be minimal due to preparations for operating as two fit-for-purpose organizations. -
Pre-Buying Impact
Q: Was there demand pull-forward due to tariffs or other factors?
A: Approximately $20 million in pre-buying occurred in the fourth quarter within the semiconductor space, mainly due to new fab start-ups rather than tariff concerns. There might have been minor effects related to tariffs expected in 2025. -
Kalrez Business Update
Q: What's the status of the Kalrez business and destocking effects?
A: The destocking in the Kalrez business is expected to resolve by mid-2025, returning to normal growth patterns thereafter. -
M&A Strategy in IndustrialsCo
Q: Are there plans for M&A in Water and Healthcare sectors?
A: Yes, they are exploring both divestitures and bolt-on acquisitions to enhance the portfolio. The focus is on investing in the Healthcare and Water businesses, aiming to expand capabilities and market exposure in these areas. -
Potential Asset Divestitures
Q: Is there an opportunity to divest assets before the spin-off?
A: While it's technically possible to divest assets before the November 1 separation without assigning liabilities, the company is fully focused on completing the Electronics separation by that date. -
Industry Reclassification Efforts
Q: Any progress on reclassifying from chemical to industrial sector?
A: They are actively working toward reclassification from the chemical to the industrial sector post-separation, aligning with their portfolio's nature and financial metrics. -
Free Cash Flow Outlook
Q: What is the free cash flow conversion expectation for 2025?
A: They anticipate a free cash flow conversion of greater than 90% in 2025, excluding transaction costs. Despite some working capital usage due to growth, they remain confident in achieving this target. -
Share Buyback Plans
Q: Why halt share buybacks until after the separation?
A: Share buybacks are paused until the separation is complete, as cash is prioritized for the transaction costs associated with the spin-off in the near term. -
Tyvek Pricing Trends
Q: How do Tyvek price trends vary across markets?
A: There are no significant price differences across Tyvek's end markets. The product maintains high value consistently, with continued benefits from recovery in the medical packaging sector. -
Shelter Segment Outlook
Q: What is the outlook for remodeling activity in Shelter?
A: Remodeling activity within the Shelter business is expected to be relatively flat year-over-year, aligning with current market conditions. -
Cash Deployment Timing
Q: When will cash deployment focus shift post-transaction costs?
A: Most transaction costs, slightly less than $700 million, will occur in 2025 prior to the separation. While some costs may extend into the following year, the majority will be settled in 2025, after which cash deployment strategies can be adjusted.