Delaware-based DuPont reported lower sales and earnings for the third quarter as customers cut inventories.
“We delivered solid third-quarter earnings despite ongoing volume headwinds from channel inventory destocking and continued softness in China. 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,” said Ed Breen, DuPont CEO.
“As expected, our Interconnect Solutions business within the electronics portfolio recorded a second straight quarter of sequential sales lift and we are seeing signs of demand stabilization within semiconductor end-markets. We are, however, seeing additional channel destocking as well as slower industrial water demand in China. In response to these ongoing volume headwinds, we continue to control our spending and are also planning to take additional restructuring actions to continue to drive operational performance.” Breen added.
“This morning (Monday) we also announced that today we will close the previously announced sale of our 80.1% ownership interest in the Delrin business to TJC,” Breen continued. “With this Delrin sale, completion of our $3.25 billion accelerated share repurchase transaction and launch of a new $2 billion ASR in September, we have significantly advanced our strategic priorities aimed at driving shareholder value.”
Third Quarter 2023 Results
| Dollars in millions, unless noted | 3Q’23 | 3Q’22 | Changevs. 3Q’22 | Organic Sales (2)vs. 3Q’22 |
| Net sales | $3,058 | $3,317 | (8)% | (10)% |
| GAAP Income from continuing operations | $291 | $359 | (19)% | |
| Operating EBITDA(2) | $775 | $856 | (9)% | |
| Operating EBITDA(2) margin % | 25.3 % | 25.8 % | (50)bps | |
| GAAP EPS from continuing operations | $0.62 | $0.69 | (10)% | |
| Adjusted EPS(2) | $0.92 | $0.82 | 12% | |
| Cash provided by operating activities – cont. ops. | $740 | $578 | 28% | |
| Adjusted free cash flow(2) | $621 | $423 | 47% |
Outlook
| Dollars in millions, unless noted | Full Year 2023E | |
| Net sales | $12,170 | |
| Operating EBITDA | $2,975 | |
| Adjusted EPS | $3.45 |
“Our teams continue to successfully execute in a constrained volume environment through strong internal discipline and focus on operational excellence,” said Lori Koch, chief financial officer of DuPont. “I am pleased with our sequential margin improvement despite volume headwinds and by our strong cash performance during the third quarter.”
“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,” Koch said. “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.”
