DuPont Reports Second Quarter 2022 Results

• 2Q22 Net Sales of $3.3 billion, increased 7%; organic sales increased 9% versus year-ago period
• 2Q22 GAAP Income from continuing operations of $365 million; operating EBITDA of $829 million increased 6% versus year-ago period; consistent operating EBITDA margin on year-over-year and sequential basis
• 2Q22 GAAP EPS from continuing operations of $0.71; adjusted EPS of $0.88 increased 11% versus year-ago period
• ~$665 million of capital returned to shareholders during the quarter through $500 million in share repurchases and ~$165 million in dividends
• Pricing actions continue to fully offset higher inflationary costs from raw materials, logistics and energy

WILMINGTON, Del., – DuPont (NYSE: DD) today announced financial results⁽¹⁾ for the second quarter of 2022.

“We delivered second quarter financial results ahead of expectations by maintaining a disciplined focus on pricing actions and operational excellence in the face of continued global supply chain and logistics challenges and ongoing inflationary pressure,” said Ed Breen, DuPont Executive Chairman and Chief Executive Officer. “Underlying demand during the quarter in our key end-markets remained strong. Year-over-year and sequential sales and earnings growth in a volatile macro environment demonstrated the strength of our portfolio, our deep customer relationships and the leading market positions we hold globally.”

“We continue to advance our previously announced portfolio actions of acquiring Rogers Corporation and divesting a substantial portion of the former Mobility & Materials segment,” Breen continued. “Regarding Rogers, we expect to close the acquisition during the third quarter of 2022, with China being the last remaining jurisdiction requiring regulatory approval. For the M&M transactions, we continue to expect the completion of the sale of portions of this business to Celanese to close around year-end.”

“As DuPont drives innovation investment to support long-term growth, we continue to introduce new products across our key growth pillars,” Breen said. “We are excited to have won four 2022 Edison Awards highlighting innovative technologies, while also progressing well with our broader new product pipeline to support growth over the coming years.”

Second Quarter 2022 Results⁽¹⁾

Net sales

• Net sales increased 7% on organic sales⁽²⁾ growth of 9%; portfolio benefit of 1% was more than offset by a 3% currency headwind.
• Organic sales⁽²⁾ growth of 9% consisted of an 8% increase in price and 1% increase in volume.
  • Price increase reflects actions taken to offset continued broad-based cost inflation.
  • Volume increase reflects continued strong demand in semiconductor, general industrial, water and construction end-markets, muted primarily by lower volumes from protective garments within Safety Solutions.
• 9% organic sales⁽²⁾ growth in Water & Protection; 8% organic sales⁽²⁾ growth in Electronics & Industrial; 15% organic sales⁽²⁾ growth in retained businesses reported in Corporate & Other, which predominantly consists of our auto adhesives portfolio.
• Organic sales⁽²⁾ growth in all regions globally, including 13% in U.S & Canada, 8% in EMEA and 6% in Asia Pacific.

GAAP Income/GAAP EPS from continuing operations

• GAAP income/GAAP EPS from continuing operations declined as higher segment earnings and a lower share count were more than offset by lower gains on business divestitures and a higher tax rate compared to the year-ago period.

Operating EBITDA⁽²⁾

• Operating EBITDA⁽²⁾ increased as pricing actions, earnings associated with Laird Performance Materials and volume gains more than offset higher inflationary costs from raw materials, logistics and energy.

Adjusted EPS⁽²⁾

• Adjusted EPS⁽²⁾ increased due to higher segment earnings and a lower share count partially offset by a higher tax rate compared to the year-ago period.

Operating cash flow

• Operating cash flow in the quarter of $86 million and capital expenditures of $135 million resulted in free cash flow⁽²⁾ of $(49) million.

Second Quarter 2022 Segment Highlights

Electronics & Industrial

Net sales

• Net sales increased 16% on organic sales⁽²⁾ growth of 8%; a portfolio benefit of 11%, reflecting the acquisition of Laird Performance Materials in the prior year, was slightly offset by a 3% currency headwind.
• Organic sales⁽²⁾ growth of 8% driven by a 6% increase in volume and a 2% increase in price.
  • Semiconductor Technologies sales up mid-teens on an organic⁽²⁾ basis as strong demand continued, led by the on-going transition to more advanced node technologies and strong fab utilization, along with growth in 5G communications and data centers.
  • Industrial Solutions sales up high single-digits on an organic⁽²⁾ basis, reflecting ongoing demand strength for OLED materials, Kalrez® and Vespel® products, and for applications in healthcare markets such as biopharma tubing.
  • Interconnect Solutions sales down low single-digits on an organic⁽²⁾ basis due to volume declines. Volume gains in industrial end-markets were more than offset by the anticipated return to more normal seasonal order patterns in smartphones compared to last year, along with softness in China smartphones, as well as personal computing and in automotive end-markets.

Operating EBITDA

• Increase in operating EBITDA driven by earnings associated with Laird Performance Materials, volume gains and higher pricing which was partially offset by higher raw material and logistics costs.

Water & Protection

Net sales

• Net sales increased 6% as organic sales⁽²⁾ growth of 9% was partially offset by a 3% currency headwind.
• Organic sales⁽²⁾ growth of 9% reflects a 12% increase in price and a 3% decline in volume. The increase in price reflects broad-based actions taken across the segment to offset continued cost inflation.
  • Shelter Solutions sales up high-teens on an organic⁽²⁾ basis driven by pricing gains and continued demand strength in North America residential construction, as well as ongoing growth in commercial construction.
  • Safety Solutions sales up mid-single-digits on an organic⁽²⁾ basis as pricing actions were partially offset by lower volumes, primarily Tyvek® garments.
  • Water Solutions sales up mid-single-digits on an organic⁽²⁾ basis on pricing gains, as well as steady demand for water technologies.

Operating EBITDA

• Operating EBITDA was down slightly as pricing actions taken to offset higher raw material, logistics and energy costs were more than offset by volume declines.

Outlook

“Our strong first half 2022 results reflect positively on the secular end-markets in which we operate and highlight our team’s focus on execution,” said Lori Koch, Chief Financial Officer of DuPont. “As we look towards the second half, demand and overall order trends in our key end-markets remain solid, however, future uncertainties continue to exist including continued inflationary pressure, challenging supply chains, and U.S. dollar strength against global currencies.”

“We are narrowing our full year 2022 adjusted EPS guidance from $3.20-$3.50 to $3.27-$3.43 while maintaining the mid-point of our previous range.” Koch continued. “Our updated full year 2022 guidance ranges for net sales and operating EBITDA reflect incremental foreign currency headwinds and the removal of contribution from the Biomaterials business, which was divested on May 31, 2022.”

“We expect third quarter 2022 net sales and operating EBITDA to be slightly weaker than second quarter 2022 as sequential volume increases are expected to be offset by foreign currency headwinds and the absence of the Biomaterials net sales contribution,” Koch said. “We are also expecting a negative impact during the third quarter on operating EBITDA of approximately $15 million from unplanned downtime at our Spruance site in Virginia within the W&P segment resulting from an unforeseen utility disruption with a third-party supplier. On a year-over-year basis, we expect third quarter net sales to be up 2 percent at the mid-point of the range, or up high single-digits on an organic basis.”

^{(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. See page 5 for further information, including the basis of presentation included in this release.}

^{(2)   Adjusted EPS, operating EBITDA, organic sales and free cash flow are non-GAAP measures. See page 6 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 11 of this communication.}

Conference Call

The Company will host a live webcast of its second quarter earnings conference call with investors to discuss its results and business outlook beginning today at 8:00 a.m. ET. The slide presentation that accompanies the conference call will be posted on the DuPont’s Investor Relations Events and Presentations page. A replay of the webcast also will be available on the DuPont’s Investor Relations Events and Presentations page following the live event.