WILMINGTON, Del., July 30, 2020 /PRNewswire/ --
- 2Q20 GAAP EPS from continuing operations of $(3.37); adjusted EPS of $0.70
- 2Q20 Net Sales of $4.8 billion,
down 12 percent; organic sales down 10 percent
- 2Q20 GAAP Income (Loss) from continuing operations of
$(2.5) billion and Operating EBITDA
of $1.1 billion
- Operating cash flow of $802
million; $564 million free
cash flow in the quarter
- Global slowdown in automotive industry from the impact of
COVID-19 resulted in $2.5 billion
non-cash impairment charge in Transportation & Industrial
segment in the quarter
- Advanced intended separation of Nutrition & Biosciences
business in preparation for intended merger with IFF in 1Q 2021;
IFF shareholder vote set for August 27,
2020
DuPont (NYSE: DD) today announced financial results for the
second quarter 2020.
"In the midst of the ongoing pandemic we delivered results ahead
of expectations, while also continuing our emphasis on the safety
and well-being of our employees and the needs of our customers,"
said Ed Breen, DuPont Executive
Chairman and Chief Executive Officer. "We delivered on our
structural cost commitments and generated organic revenue growth in
the Electronics & Imaging and Nutrition & Biosciences
segments despite significant declines in global economic activity.
Additionally, we saw continued strength in Tyvek® protective
garment and water end markets, achieving double digit revenue
growth for the second consecutive quarter. I am proud of our team's
focus on execution, and I am confident in the actions we have taken
to mitigate the impact of this pandemic. I believe we are
well-positioned to emerge from this as an even stronger
company."
DuPont N&B and IFF
Update(1)
DuPont continued to advance its objective of creating
significant value for its shareholders through the completion of a
number of critical milestones in the intended merger between DuPont
Nutrition & Biosciences and IFF. Recently completed
milestones include:
- Filings with the SEC - DuPont Nutrition & Biosciences
and IFF filed their respective initial registration statements
in May and are advancing the review process with the SEC. On
July 27, IFF filed its definitive
proxy relating to IFF shareholder approval of the transaction. The
IFF shareholder meeting is set to take place on August 27, 2020.
- Executive committee named - Also in May, DuPont and IFF
announced the executive committee of the future combined company,
which will include key senior leaders from DuPont Nutrition &
Biosciences and IFF. Additionally, DuPont and IFF announced two
DuPont appointees who will serve as independent directors on the
board of directors of the future combined company: Matthias Heinzel, President of Nutrition &
Biosciences and John Davidson,
director of Legg Mason, FMC, and TE
Connectivity.
- Additional regulatory clearances - DuPont and IFF
previously announced that the intended merger cleared the U.S.
regulatory process. The transaction subsequently received
clearance from China, Serbia, and
Colombia. Clearance processes in the remaining required
jurisdictions are well underway.
"Each of these accomplishments represents critical milestones to
create a market-leading company and to generate significant value
for our shareholders," Breen continued. "Our business teams,
customers, and partners see tremendous opportunity for growth and
greater innovation as the businesses come together. Over the
next six months, we will continue our integration planning work
with IFF to enable a smooth, successful launch and position the
future combined company to achieve its committed cost and revenue
synergies."
Second Quarter 2020 Results
"The quick and decisive actions we took in the early days of the
pandemic to strengthen our balance sheet, increase our cost savings
initiatives, and differentially manage our portfolio enabled us to
deliver a solid quarter," said Lori
Koch, DuPont Chief Financial Officer. "Our businesses are
well-equipped to build upon their leading market positions and
outperform when markets fully recover."
Net sales totaled $4.8 billion,
down 12 percent versus the year-ago period. On an organic basis,
net sales were down 10 percent as organic growth of 7 percent in
Electronics & Imaging and 1 percent in Nutrition &
Biosciences was more than offset by organic sales declines in the
other segments.
On a regional basis, organic sales increased 1 percent in
Asia Pacific versus the year-ago
period while the U.S. and Canada,
EMEA, and Latin America each
declined mid-to-high teens percent. China sales in our core segments improved 6
percent versus the second quarter 2019 and 20 percent sequentially
from first quarter 2020.
GAAP loss from continuing operations totaled $(2.5) billion, versus GAAP loss from continuing
operations of $(1.1 billion) in the
year-ago period; the decline mostly attributable to a non-cash
impairment charge in the Transportation & Industrial segment
resulting from significant near-term demand weakness in the
automotive industry due to COVID-19 as well as revised views of
market recovery based on third-party estimates. Operating
EBITDA(2) was $1.1
billion, down 20 percent versus operating
EBITDA(2) in the prior year. Strength in semiconductor,
water, Tyvek® protective garment, and health & wellness markets
coupled with approximately $130
million of cost savings was more than offset by volume
declines and charges of $160 million
associated with temporarily idling certain facilities primarily in
the Transportation & Industrial segment.
GAAP EPS from continuing operations totaled $(3.37) versus GAAP EPS from continuing
operations in the year-ago period of $(1.48); the decline is mostly attributable to
the non-cash impairment charge in Transportation & Industrial,
incremental merger-related amortization expense, and lower segment
results, partially offset by the absence of a prior year tax
charge, lower integration and separation costs, lower restructuring
charges, and a lower tax rate. Adjusted EPS(2) decreased
28 percent to $0.70, compared with
adjusted EPS(2) in the year-ago period of $0.97, primarily driven by volume declines and
charges associated with temporarily idled facilities partially
offset by cost savings and a lower base tax rate.
Operating cash flow of $802
million included reductions in working capital of more than
$160 million in the quarter. Capital
expenditures of approximately $240
million resulted in free cash flow(2) of
$564 million.
Second Quarter 2020 Segment Highlights
Electronics & Imaging
Electronics & Imaging
reported net sales of $905 million,
up 5 percent from the year-ago period. Organic sales were up 7
percent with volume up 7 percent and price flat. Currency and
portfolio were each a 1 percent headwind.
Strong volume gains in Semiconductor Technologies more than
offset weaker demand in Interconnect Solutions and Image Solutions.
Double-digit gains in Semiconductor Technologies were led by
continued strength within logic and foundry, driven by the ramp-up
of advanced technology nodes, as well as robust demand for memory
in servers and data centers. Volume declines within Interconnect
Solutions were primarily due to softness in smartphones and select
industrial markets. Within Image Solutions, strength in ink for the
consumer segment was more than offset by weakness in flexographic
plates, textile inks, and OLEDs.
Operating EBITDA for the segment was $277
million, an increase of 13 percent from operating EBITDA of
$246 million in the year-ago period,
driven primarily by volume gains in Semiconductor Technologies and
cost productivity actions. Operating EBITDA margins improved 190
basis points versus the year-ago period.
Nutrition & Biosciences
Nutrition &
Biosciences reported net sales of $1.5
billion, down 1 percent from the year-ago period. Organic
sales were up 1 percent with volume up 1 percent; price was
flat. Currency was a 2 percent headwind.
Mid-single digit growth across 85 percent of the Nutrition &
Biosciences segment driven by strength in food & beverage and
health & wellness end markets was partially offset by declines
in businesses exposed to energy and industrial markets. Sales gains
were led by Food & Beverage on volume gains in the plant-based
meat category and price improvements across the F&B portfolio,
as well as Pharma Solutions which recorded its strongest sales
quarter ever on increased demand in over-the-counter and
prescription pharma applications. Within Health &
Biosciences, the probiotics business recorded another record
quarter with over 30 percent organic growth. Additionally,
sustained consumer demand drove growth in animal nutrition and home
& personal care applications. These areas of strength
within Health & Biosciences were more than offset by
significant demand weakness in biorefinery and microbial control.
In 2019, these two businesses accounted for approximately 15
percent of the Nutrition & Biosciences segment.
Operating EBITDA for the segment was $418
million, an increase of 8 percent from operating EBITDA of
$386 million in the year-ago period.
Favorable product mix led by gains in probiotics and animal
nutrition as well as cost productivity actions generated a 240
basis point improvement in operating EBITDA margins.
Transportation & Industrial
Transportation &
Industrial reported net sales of $832
million, down 34 percent from the year-ago period. Organic
sales were down 33 percent with volume down 28 percent and price
lower by 5 percent. Currency was a 1 percent headwind.
Volume declined 28 percent due to lower auto builds, as global
automotive production was down approximately 45 percent versus the
year-ago period. The impact of COVID-19 on other key industrial
markets, in addition to automotive, contributed to the double-digit
volume declines.
Operating EBITDA for the segment was $49
million, a decrease of 86 percent from operating EBITDA of
$357 million in the year-ago period,
driven primarily by charges of approximately $130 million associated with temporarily idling
approximately 50 percent of our polymer capacity to align supply
with demand.
Safety & Construction
Safety & Construction
reported net sales of $1.2 billion,
down 7 percent from the year-ago period. Organic sales were down 8
percent with a 2 percent price improvement offset by a 10 percent
decline in volume. Recent acquisitions in the Water Solutions
business increased reported sales by 2 percent. Currency was a 1
percent headwind.
Demand for Tyvek® protective garments continued to be robust,
leading to a greater than 60 percent increase in garment sales
versus last year which was enabled by efforts to increase capacity
and redirect supply from non-personal protection markets. Despite
the strength in Tyvek® protective garments, sales in the Safety
Solutions business declined as demand weakened across industrial,
aerospace, and oil & gas markets as a result of COVID-19.
Similarly, Shelter Solutions sales declined as construction
activity was impacted by stay-at-home orders issued across the
globe. Water Solutions continued to see broad-based demand strength
across desalination, wastewater, and specialty markets leading to
double-digit organic growth.
Operating EBITDA for the segment totaled $349 million, a decrease of 9 percent from
operating EBITDA of $382 million in
the year-ago period, primarily from lower volumes partially offset
by cost productivity actions and favorable product mix.
Non-Core
Non-Core reported net sales of $308 million, down 30 percent from the year-ago
period. Organic sales were down 20 percent driven by 22 percent
volume declines and offset by 2 percent pricing gains. The
September 2019 divestiture of the
DuPont Sustainable Solutions business reduced sales by 9 percent.
Currency was a 1 percent headwind.
Soft volume in trichlorosilane, Tedlar® aircraft films,
photovoltaic metallization pastes, and Sorona® materials for carpet
and apparel applications were partially offset by volume gains in
microcircuit paste materials.
Operating EBITDA for the segment was $93
million, a decrease of 11 percent from operating EBITDA of
$104 million in the year-ago period
with a $64 million gain associated
with a customer settlement more than offset by lower volumes and
the absence of earnings from the DuPont Sustainable Solutions
divestiture.
Outlook
"For third quarter, we expect sales to be slightly up
sequentially with improvement in automotive and residential
construction mostly offset by seasonal patterns in Nutrition &
Biosciences as well as the impact of supply constraints across our
Tyvek® enterprise as we perform routine maintenance on the
assets. Oil & gas, aerospace, industrial, and commercial
construction markets will remain challenged," said Lori Koch, Chief Financial Officer of DuPont.
"We expect third quarter adjusted EPS in the range of $0.71 - $0.73."
Conference Call
The Company will host a live webcast
of its first quarter earnings conference call with investors to
discuss its results and business outlook 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.
About DuPont
DuPont (NYSE: DD) is a global innovation
leader with technology-based materials, ingredients and solutions
that help transform industries and everyday life. Our employees
apply diverse science and expertise to help customers advance their
best ideas and deliver essential innovations in key markets
including electronics, transportation, construction, water, health
and wellness, food and worker safety. More information about the
company, its businesses and solutions can be found at
www.dupont.com. Investors can access information included on the
Investor Relations section of the website at
investors.dupont.com.
DuPont™ and all products, unless otherwise
noted, denoted with ™, SM or ® are
trademarks, service marks or registered trademarks of affiliates of
DuPont de Nemours, Inc.
Cautionary Statement Regarding Forward Looking
Statements
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.
In this context, forward-looking statements often address expected
future business and financial performance and financial condition,
and often contain words such as "expect," "anticipate," "intend,"
"plan," "believe," "seek," "see," "will," "would," "target," and
similar expressions and variations or negatives of these words.
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"). The
company completed the separation of its agriculture business into a
separate and independent public company on June 1, 2019, by way of a pro rata
dividend-in-kind of all the then outstanding stock of Corteva, Inc.
(the "Corteva Distribution").
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.
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. Forward-looking
statements are not guarantees of future results. 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 of IFF's shareholders,
anticipated tax treatment or any required financing or to satisfy
any of the other conditions to the proposed transaction with IFF,
(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 with IFF, (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 (ix) risks and
uncertainties related to the novel coronavirus (COVID-19) and the
responses thereto (such as voluntary and in some cases, mandatory
quarantines as well as shut downs and other restrictions on travel
and commercial, social and other activities) on DuPont's business,
results of operations, access to sources of liquidity and financial
condition which depend on highly uncertain and unpredictable future
developments, including, but not limited to, the duration and
spread of the COVID-19 outbreak, its severity, the actions to
contain the virus or treat its impact, and how quickly and to what
extent normal economic and operating conditions resume. and (x)
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; ability to
effectively manage costs as the company's portfolio evolves;
security threats, such as acts of sabotage, terrorism or war,
global health concerns and pandemics, natural disasters and weather
events and patterns which could or could continue to 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. 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. While the list of factors presented
here is considered representative, no such list should be
considered a complete statement of all potential risks and
uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward-looking statements.
Consequences of material differences in results as compared with
those anticipated in the forward-looking statements could include,
among other things, business disruption, operational problems,
financial loss, legal liability to third parties and similar risks,
any of which could have a material adverse effect on DuPont's
consolidated financial condition, results of operations, credit
rating or liquidity. You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made. 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. 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 I, Item 1A) of
DuPont's 2019 Annual Report on Form 10-K, Item 8.01 of DuPont's
current report on Form 8-K filed on April 20, 2020 and as updated
by DuPont's subsequent periodic and current reports filed with the
SEC.
Overview
Effective August 31, 2017,
pursuant to the merger of equals transaction contemplated by the
Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017, The Dow Chemical Company and its
consolidated subsidiaries ("Historical Dow") and E. I. du Pont de
Nemours and Company and its consolidated subsidiaries ("Historical
EID") each merged with subsidiaries of DowDuPont and as a result,
Historical Dow and Historical EID became subsidiaries of DowDuPont
(the "DWDP Merger"). Prior to the DWDP Merger, DowDuPont did not
conduct any business activities other than those required for its
formation and matters contemplated by the Merger Agreement.
Historical Dow was determined to be the accounting acquirer in the
DWDP Merger and as a result, Historical EID's assets and
liabilities were reflected at fair value as of the close of the
DWDP Merger.
Effective as of 5:00 p.m. on
April 1, 2019, DowDuPont completed
the separation of its materials science business into a separate
and independent public company by way of a distribution of Dow Inc.
("Dow") through a pro rata dividend in-kind of all of the
then-issued and outstanding shares of Dow's common stock, par value
$0.01 per share (the "Dow Common
Stock"), to holders of DowDuPont's common stock, par value
$0.01 per share (the "DowDuPont
Common Stock"), as of the close of business on March 21, 2019 (the "Dow Distribution").
Effective as of 12:01 a.m. on
June 1, 2019, DuPont completed the
separation of its agriculture business into a separate and
independent public company by way of a distribution of Corteva Inc.
("Corteva") through a pro rata dividend in-kind of all of the
then-issued and outstanding shares of Corteva's common stock, par
value $0.01 per share (the "Corteva
Common Stock"), to holders of DuPont de Nemours, Inc.'s common
stock, par value $0.01 per share, as
of the close of business on May 24,
2019 (the "Corteva Distribution" and, together with the Dow
Distribution, the "Distributions").
Following the Corteva Distribution, DuPont holds the specialty
products business as continuing operations. The results of
operations of DuPont for the 2019 interim periods presented
reflect the historical financial results of Dow and Corteva as
discontinued operations, as applicable. The cash flows related to
Dow and Corteva have not been segregated and are included in the
interim Consolidated Statements of Cash Flows for the applicable
periods.
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. A significant portion of these costs relate
to Historical Dow and consist of leveraged services provided
through service centers, as well as other corporate overhead costs
related to information technology, finance, manufacturing, research
& development, sales & marketing, supply chain, human
resources, sourcing & logistics, legal and communications,
public affairs & government affairs functions. These costs are
no longer incurred by the Company following the Distributions.
Unaudited Pro Forma Financial Information
In order to provide the most meaningful comparison of results of
operations and results by segment, supplemental unaudited pro forma
financial information has been included in the following financial
schedules. The unaudited pro forma financial information (the "pro
forma financial statements") is derived from DuPont's Consolidated
Financial Statements and accompanying notes, adjusted to give
effect to certain events directly attributable to the Distributions
and Financings (as defined below). In contemplation of the
Distributions and to achieve the respective credit profiles of each
of DuPont, Dow, and Corteva, in the fourth quarter of 2018,
DowDuPont consummated a public underwritten offer of eight series
of senior unsecured notes (the "2018 Senior Notes") in the
aggregate principal amount of $12.7 billion and entered into a term loan
agreement consisting of two term loan facilities (the "Term Loan
Facilities") in the aggregate principal amount of $3.0 billion. In May
2019, the funds from the Term Loan Facilities were drawn,
along with the issuance of approximately $1.4 billion in commercial paper (the
"Funding CP Issuance" together with the 2018 Senior Notes and Term
Loan Facilities, the "Financings"). The net proceeds from the
Financings together with cash from operations were used to fund
cash contributions to Dow and Corteva, and DowDuPont's $3.0 billion share repurchase program which was
completed in the first quarter of 2019 (the "Share Repurchase
Program").
The pro forma financial statements were prepared in accordance
with Article 11 of Regulation S-X. The historical consolidated
financial information has been adjusted to give effect to pro forma
events that are (1) directly attributable to the Distributions and
the Financings (collectively the "Transactions"), (2) factually
supportable and (3) with respect to the Consolidated Statements of
Operations, expected to have a continuing impact on the results.
The unaudited pro forma Statements of Operations for the six months
ended June 30, 2019 give effect to
the pro forma events as if they had been consummated on
January 1, 2018. There were no pro
forma adjustments for the three or six months ended June 30, 2020 and for the three months ended
June 30, 2019.
Restructuring or integration activities or other costs following
the Distributions that may be incurred to achieve cost or growth
synergies of DuPont are not reflected. The pro forma financial
statements provide shareholders with summary financial information
and historical data that is on a basis consistent with how DuPont
reports current financial information.
The pro forma financial statements are presented for
informational purposes only, and do not purport to represent what
DuPont's results of operations or financial position would have
been had the Transactions occurred on the dates indicated, nor do
they purport to project the results of operations or financial
position for any future period or as of any future date.
Non-GAAP Financial Measures
This earnings release includes information that does not conform
to accounting principles generally accepted in the United States of America ("U.S. GAAP") and
are considered non-GAAP measures. Management uses these measures
internally for planning, forecasting and evaluating the performance
of the Company, including allocating resources. DuPont's management
believes these non-GAAP financial measures are useful to investors
because they provide additional information related to the ongoing
performance of DuPont to offer a more meaningful comparison related
to future results of operations. These non-GAAP financial measures
supplement disclosures prepared in accordance with U.S. GAAP, and
should not be viewed as an alternative to U.S. GAAP. Furthermore,
such non-GAAP measures may not be consistent with similar measures
provided or used by other companies. Reconciliations for these
non-GAAP measures to U.S. GAAP are provided in the Selected
Financial Information and Non-GAAP Measures starting on page 14 and
on the Investors section of the Company's website. Non-GAAP
measures included in this release are defined below. The Company
has not provided forward-looking U.S. GAAP financial measures or a
reconciliation of forward-looking non-GAAP financial measures to
the most comparable U.S. GAAP financial measures on a
forward-looking basis because the Company is unable to predict with
reasonable certainty the ultimate outcome of certain future events.
These events include, among others, the impact of portfolio
changes, including asset sales, mergers, acquisitions, and
divestitures; contingent liabilities related to litigation,
environmental and indemnifications matters; impairments and
discrete tax items. These items are uncertain, depend on various
factors, and could have a material impact on U.S. GAAP results for
the guidance period.
Pro forma adjusted earnings per common share from continuing
operations - diluted ("Pro forma adjusted EPS"), is defined as pro
forma earnings per common share from continuing operations -
diluted, excluding the after-tax impact of significant items,
after-tax impact of amortization expense associated with
intangibles acquired as part of the DWDP Merger, after-tax impact
of non-operating pension / other post employment benefits ("OPEB")
benefits / charges and the after-tax impact of costs historically
allocated to the materials science and agriculture businesses that
did not meet the criteria to be recorded as discontinued
operations. Adjusted earnings per common share from continuing
operations - diluted ("Adjusted EPS"), is defined as earnings per
common share from continuing operations - diluted, excluding the
after-tax impact of significant items, after-tax impact of
amortization expense associated with intangibles acquired as part
of the DWDP Merger and the after-tax impact of non-operating
pension / OPEB benefits / charges. Although amortization of
Historical EID intangibles acquired as part of the DWDP Merger is
excluded from these non-GAAP measures, management believes it is
important for investors to understand that such intangible assets
contribute to revenue generation. Amortization of intangible assets
that relate to past acquisitions will recur in future periods until
such intangible assets have been fully amortized. Any future
acquisitions may result in amortization of additional intangible
assets. Management estimates amortization expense in 2020
associated with intangibles acquired as part of the DWDP Merger to
be approximately $1.9 billion on a
pre-tax basis, or approximately $2.00
per share.
Pro forma operating EBITDA, is defined as earnings (i.e. pro
forma income (loss) from continuing operations before income taxes)
before interest, depreciation, amortization, non-operating pension
/ OPEB benefits / charges, and foreign exchange gains / losses,
excluding the impact of costs historically allocated to the
materials science and agriculture businesses that did not meet the
criteria to be recorded as discontinued operations and adjusted to
exclude significant items. Operating EBITDA, is defined as earnings
(i.e. income (loss) from continuing operations before income taxes)
before interest, depreciation, amortization, non-operating pension
/ OPEB benefits / charges, and foreign exchange gains / losses,
adjusted to exclude significant items. Operating EBITDA margin is
calculated as operating EBITDA divided by net sales.
Significant items are items that arise outside the ordinary
course of the Company's business that management believes may cause
misinterpretation of underlying business performance, both
historical and future, based on a combination of some or all of the
item's size, unusual nature and infrequent occurrence. Management
classifies as significant items certain costs and expenses
associated with integration and separation activities related to
transformational acquisitions and divestitures as they are
considered unrelated to ongoing business performance. Management
estimates these integration and separation costs in 2020 to be
approximately $650 million -
$800 million on a pre-tax basis, or
approximately $0.70 - $0.85 per share.
Organic Sales is defined as net sales excluding the impacts of
currency and portfolio.
Free cash flow is defined as cash provided by/used for operating
activities less capital expenditures. As a result, free cash flow
represents cash that is available to the Company, after investing
in its asset base, to fund obligations using the Company's primary
source of liquidity, cash provided by operating activities.
Management believes free cash flow, even though it may be defined
differently from other companies, is useful to investors, analysts
and others to evaluate the Company's cash flow and financial
performance, and it is an integral measure used in the Company's
financial planning process.
(1)
|
Closing of
transaction with IFF is subject to IFF shareholder approval,
regulatory approval and customary closing
conditions.
|
(2)
|
Adjusted EPS,
operating EBITDA and free cash flow are non-GAAP measures. See page
8 for further discussion. Reconciliation to the most directly
comparable GAAP measure, including details of significant items
begins on page 14 of this communication.
|
DuPont de Nemours,
Inc.
Consolidated Statements of Operations
|
|
In millions, except
per share amounts (Unaudited)
|
Three Months
Ended
June
30,
|
Six Months
Ended
June
30,
|
2020
|
2019
|
2020
|
2019
|
Net sales
|
$
|
4,828
|
|
$
|
5,468
|
|
$
|
10,049
|
|
$
|
10,882
|
|
Cost of
sales
|
3,291
|
|
3,496
|
|
6,609
|
|
7,117
|
|
Research and
development expenses
|
209
|
|
232
|
|
445
|
|
499
|
|
Selling, general and
administrative expenses
|
541
|
|
642
|
|
1,174
|
|
1,368
|
|
Amortization of
intangibles
|
528
|
|
252
|
|
1,061
|
|
508
|
|
Restructuring and
asset related charges - net
|
19
|
|
137
|
|
423
|
|
208
|
|
Goodwill impairment
charges
|
2,498
|
|
1,175
|
|
3,031
|
|
1,175
|
|
Integration and
separation costs
|
145
|
|
347
|
|
342
|
|
958
|
|
Equity in earnings of
nonconsolidated affiliates
|
103
|
|
49
|
|
142
|
|
89
|
|
Sundry income
(expense) - net
|
(14)
|
|
(19)
|
|
197
|
|
65
|
|
Interest
expense
|
193
|
|
165
|
|
376
|
|
316
|
|
Loss from continuing
operations before income taxes
|
(2,507)
|
|
(948)
|
|
(3,073)
|
|
(1,113)
|
|
(Benefit from)
provision for income taxes on continuing operations
|
(36)
|
|
155
|
|
8
|
|
64
|
|
Loss from continuing
operations, net of tax
|
(2,471)
|
|
(1,103)
|
|
(3,081)
|
|
(1,177)
|
|
Income from
discontinued operations, net of tax
|
—
|
|
566
|
|
—
|
|
1,212
|
|
Net (loss)
income
|
(2,471)
|
|
(537)
|
|
(3,081)
|
|
35
|
|
Net income
attributable to noncontrolling interests
|
7
|
|
34
|
|
13
|
|
85
|
|
Net loss available
for DuPont common stockholders
|
$
|
(2,478)
|
|
$
|
(571)
|
|
$
|
(3,094)
|
|
$
|
(50)
|
|
|
Per common share
data:
|
|
|
|
|
Loss per common share
from continuing operations - basic
|
$
|
(3.37)
|
|
$
|
(1.48)
|
|
$
|
(4.20)
|
|
$
|
(1.59)
|
|
Earnings per common
share from discontinued operations - basic
|
—
|
|
0.72
|
|
—
|
|
1.52
|
|
Loss per common share
- basic
|
$
|
(3.37)
|
|
$
|
(0.76)
|
|
$
|
(4.20)
|
|
$
|
(0.07)
|
|
Loss per common share
from continuing operations - diluted
|
$
|
(3.37)
|
|
$
|
(1.48)
|
|
$
|
(4.20)
|
|
$
|
(1.59)
|
|
Earnings per common
share from discontinued operations - diluted
|
—
|
|
0.72
|
|
—
|
|
1.52
|
|
Loss per common share
- diluted
|
$
|
(3.37)
|
|
$
|
(0.76)
|
|
$
|
(4.20)
|
|
$
|
(0.07)
|
|
|
Weighted-average
common shares outstanding - basic
|
734.3
|
|
749.0
|
|
736.5
|
|
749.6
|
|
Weighted-average
common shares outstanding - diluted
|
734.3
|
|
749.0
|
|
736.5
|
|
749.6
|
|
DuPont de Nemours,
Inc.
Consolidated Balance Sheets
|
|
In millions, except
share and per share amounts (Unaudited)
|
Jun 30,
2020
|
Dec 31,
2019
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
equivalents
|
$
|
3,737
|
|
$
|
1,540
|
|
Accounts and notes
receivable - net
|
3,615
|
|
3,802
|
|
Inventories
|
4,307
|
|
4,319
|
|
Other current
assets
|
327
|
|
338
|
|
Total current
assets
|
11,986
|
|
9,999
|
|
Investments
|
|
|
Investments in
nonconsolidated affiliates
|
1,212
|
|
1,204
|
|
Other
investments
|
24
|
|
24
|
|
Noncurrent
receivables
|
31
|
|
32
|
|
Total
investments
|
1,267
|
|
1,260
|
|
Property, plant and
equipment - net of accumulated depreciation (June 30, 2020 -
$5,466; December 31, 2019 - $4,969)
|
9,909
|
|
10,143
|
|
Other
Assets
|
|
|
Goodwill
|
30,018
|
|
33,151
|
|
Other intangible
assets
|
12,349
|
|
13,593
|
|
Deferred income tax
assets
|
195
|
|
236
|
|
Deferred charges and
other assets
|
1,029
|
|
1,014
|
|
Total other
assets
|
43,591
|
|
47,994
|
|
Total
Assets
|
$
|
66,753
|
|
$
|
69,396
|
|
Liabilities and
Equity
|
|
|
Current
Liabilities
|
|
|
Short-term borrowings
and finance lease obligations
|
$
|
3,559
|
|
$
|
3,830
|
|
Accounts
payable
|
2,632
|
|
2,934
|
|
Income taxes
payable
|
323
|
|
240
|
|
Accrued and other
current liabilities
|
1,496
|
|
1,342
|
|
Total current
liabilities
|
8,010
|
|
8,346
|
|
Long-Term
Debt
|
15,608
|
|
13,617
|
|
Other Noncurrent
Liabilities
|
|
|
Deferred income tax
liabilities
|
3,174
|
|
3,514
|
|
Pension and other post
employment benefits - noncurrent
|
1,166
|
|
1,172
|
|
Other noncurrent
obligations
|
1,218
|
|
1,191
|
|
Total other noncurrent liabilities
|
5,558
|
|
5,877
|
|
Total
Liabilities
|
$
|
29,176
|
|
$
|
27,840
|
|
Commitments and
contingent liabilities
|
|
|
Stockholders'
Equity
|
|
|
Common stock
(authorized 1,666,666,667 shares of $0.01 par value each;
issued 2020: 733,819,825 shares; 2019:
738,564,728 shares)
|
7
|
|
7
|
|
Additional paid-in
capital
|
50,191
|
|
50,796
|
|
(Accumulated deficit)
Retained earnings
|
(11,728)
|
|
(8,400)
|
|
Accumulated other
comprehensive loss
|
(1,465)
|
|
(1,416)
|
|
Total DuPont
stockholders' equity
|
37,005
|
|
40,987
|
|
Noncontrolling
interests
|
572
|
|
569
|
|
Total
equity
|
37,577
|
|
41,556
|
|
Total Liabilities and
Equity
|
$
|
66,753
|
|
$
|
69,396
|
|
DuPont de Nemours,
Inc.
Consolidated Statement of Cash Flows
|
|
In millions
(Unaudited)
|
Six Months
Ended
June 30,
|
2020
|
2019
|
Operating
Activities
|
|
|
Net (loss)
income
|
$
|
(3,081)
|
|
$
|
35
|
|
Adjustments to
reconcile net (loss) income to net cash provided by (used for)
operating activities:
|
|
|
Depreciation and
amortization
|
1,546
|
|
2,163
|
|
Credit for deferred
income tax and other tax related items
|
(310)
|
|
(560)
|
|
Earnings of
nonconsolidated affiliates (in excess of) less than dividends
received
|
(103)
|
|
733
|
|
Net periodic pension
benefit cost (credit)
|
16
|
|
(53)
|
|
Pension
contributions
|
(49)
|
|
(463)
|
|
Net gain on sales of
assets, businesses and investments
|
(193)
|
|
(55)
|
|
Restructuring and
asset related charges - net
|
423
|
|
482
|
|
Goodwill impairment
charges
|
3,031
|
|
1,175
|
|
Amortization of
merger-related inventory step-up
|
—
|
|
253
|
|
Other net
loss
|
92
|
|
274
|
|
Changes in assets and
liabilities, net of effects of acquired and divested
companies:
|
|
|
Accounts and notes
receivable
|
111
|
|
(2,535)
|
|
Inventories
|
(12)
|
|
302
|
|
Accounts
payable
|
34
|
|
(695)
|
|
Other assets and
liabilities, net
|
15
|
|
(1,107)
|
|
Cash provided by
(used for) operating activities
|
1,520
|
|
(51)
|
|
Investing
Activities
|
|
|
Capital
expenditures
|
(719)
|
|
(1,800)
|
|
Investment in gas
field developments
|
—
|
|
(25)
|
|
Proceeds from sales
of property and businesses, net of cash divested
|
427
|
|
126
|
|
Acquisitions of
property and businesses, net of cash acquired
|
(73)
|
|
—
|
|
Proceeds from sale of
ownership interests in nonconsolidated affiliates
|
—
|
|
21
|
|
Purchases of
investments
|
(1)
|
|
(192)
|
|
Proceeds from sales
and maturities of investments
|
1
|
|
228
|
|
Other investing
activities, net
|
17
|
|
(15)
|
|
Cash used for
investing activities
|
(348)
|
|
(1,657)
|
|
Financing
Activities
|
|
|
Changes in short-term
notes payable
|
(274)
|
|
2,517
|
|
Proceeds from
issuance of long-term debt
|
2,025
|
|
4,005
|
|
Payments on long-term
debt
|
(27)
|
|
(6,892)
|
|
Purchases of common
stock
|
(232)
|
|
(1,681)
|
|
Proceeds from
issuance of Company stock
|
34
|
|
67
|
|
Employee taxes paid
for share-based payment arrangements
|
(13)
|
|
(76)
|
|
Distributions to
noncontrolling interests
|
(10)
|
|
(12)
|
|
Dividends paid to
stockholders
|
(442)
|
|
(1,165)
|
|
Cash held by Dow and
Corteva at the respective Distributions
|
—
|
|
(7,315)
|
|
Debt extinguishment
costs
|
—
|
|
(104)
|
|
Other financing
activities, net
|
(11)
|
|
(5)
|
|
Cash provided by
(used for) financing activities
|
1,050
|
|
(10,661)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(30)
|
|
48
|
|
Increase
(Decrease) in cash, cash equivalents and restricted
cash
|
2,192
|
|
(12,321)
|
|
Cash, cash
equivalents and restricted cash from continuing operations,
beginning of period
|
1,577
|
|
8,591
|
|
Cash, cash
equivalents and restricted cash from discontinued operations,
beginning of period
|
—
|
|
5,431
|
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
1,577
|
|
14,022
|
|
Cash, cash
equivalents and restricted cash from continuing operations, end of
period
|
3,769
|
|
1,701
|
|
Cash, cash
equivalents and restricted cash from discontinued operations, end
of period
|
—
|
|
—
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
3,769
|
|
$
|
1,701
|
|
DuPont de Nemours,
Inc.
Pro Forma Consolidated Statements of Operations
|
|
In millions, except
per share amounts (Unaudited)
|
Six Months
Ended
|
June 30,
2020
|
June 30,
2019
|
As
Reported
|
Pro Forma
1
|
Net sales
|
$
|
10,049
|
|
$
|
10,882
|
|
Cost of
sales
|
6,609
|
|
7,139
|
|
Research and
development expenses
|
445
|
|
499
|
|
Selling, general and
administrative expenses
|
1,174
|
|
1,368
|
|
Amortization of
intangibles
|
1,061
|
|
508
|
|
Restructuring and
asset related charges - net
|
423
|
|
208
|
|
Goodwill impairment
charges
|
3,031
|
|
1,175
|
|
Integration and
separation costs
|
342
|
|
785
|
|
Equity in earnings of
nonconsolidated affiliates
|
142
|
|
89
|
|
Sundry income
(expense) - net
|
197
|
|
65
|
|
Interest
expense
|
376
|
|
345
|
|
Loss from continuing
operations before income taxes
|
(3,073)
|
|
(991)
|
|
Provision for income
taxes on continuing operations
|
8
|
|
94
|
|
Loss from continuing
operations, net of tax
|
(3,081)
|
|
(1,085)
|
|
Net income
attributable to noncontrolling interests from continuing
operations
|
13
|
|
13
|
|
Net loss from
continuing operations available for DuPont common
stockholders
|
$
|
(3,094)
|
|
$
|
(1,098)
|
|
|
|
|
Per common share
data:
|
|
|
Loss per common share
from continuing operations - basic
|
$
|
(4.20)
|
|
$
|
(1.47)
|
|
Loss per common share
from continuing operations - diluted
|
$
|
(4.20)
|
|
$
|
(1.47)
|
|
|
|
|
Weighted-average
common shares outstanding - basic
|
736.5
|
|
749.6
|
|
Weighted-average
common shares outstanding - diluted
|
736.5
|
|
749.6
|
|
1.
|
Refer to page 17 for
additional detail on the pro forma adjustments included in the pro
forma Consolidated Statements of Operations.
|
DuPont de Nemours,
Inc.
Net Sales by Segment and Geographic Region
|
|
Net Sales by
Segment and Geographic Region
|
Three Months
Ended
|
Six Months
Ended
|
In millions
(Unaudited)
|
Jun 30,
2020
|
Jun 30,
2019
|
Jun 30,
2020
|
Jun 30,
2019
|
Electronics &
Imaging
|
$
|
905
|
|
$
|
858
|
|
$
|
1,789
|
|
$
|
1,683
|
|
Nutrition &
Biosciences
|
1,539
|
|
1,558
|
|
3,090
|
|
3,093
|
|
Transportation &
Industrial
|
832
|
|
1,269
|
|
1,976
|
|
2,586
|
|
Safety &
Construction
|
1,244
|
|
1,341
|
|
2,520
|
|
2,624
|
|
Non-Core
|
308
|
|
442
|
|
674
|
|
896
|
|
Total
|
$
|
4,828
|
|
$
|
5,468
|
|
$
|
10,049
|
|
$
|
10,882
|
|
U.S. &
Canada
|
$
|
1,513
|
|
$
|
1,826
|
|
$
|
3,255
|
|
$
|
3,602
|
|
EMEA
1
|
1,065
|
|
1,291
|
|
2,336
|
|
2,671
|
|
Asia
Pacific
|
2,012
|
|
2,034
|
|
3,925
|
|
3,979
|
|
Latin
America
|
238
|
|
317
|
|
533
|
|
630
|
|
Total
|
$
|
4,828
|
|
$
|
5,468
|
|
$
|
10,049
|
|
$
|
10,882
|
|
Net Sales Variance
by Segment and Geographic Region
|
Three Months Ended
June 30, 2020
|
|
Local Price
&
Product Mix
|
Volume
|
Total
Organic
|
Currency
|
Portfolio /
Other
|
Total
|
|
Percent change from
prior year (Unaudited)
|
|
Electronics &
Imaging
|
—
|
%
|
7
|
%
|
7
|
%
|
(1)
|
%
|
(1)
|
%
|
5
|
%
|
|
Nutrition &
Biosciences
|
—
|
|
1
|
|
1
|
|
(2)
|
|
—
|
|
(1)
|
|
|
Transportation &
Industrial
|
(5)
|
|
(28)
|
|
(33)
|
|
(1)
|
|
—
|
|
(34)
|
|
|
Safety &
Construction
|
2
|
|
(10)
|
|
(8)
|
|
(1)
|
|
2
|
|
(7)
|
|
|
Non-Core
|
2
|
|
(22)
|
|
(20)
|
|
(1)
|
|
(9)
|
|
(30)
|
|
|
Total
|
—
|
%
|
(10)
|
%
|
(10)
|
%
|
(1)
|
%
|
(1)
|
%
|
(12)
|
%
|
|
U.S. &
Canada
|
(1)
|
%
|
(16)
|
%
|
(17)
|
%
|
—
|
%
|
—
|
%
|
(17)
|
%
|
|
EMEA
1
|
—
|
|
(16)
|
|
(16)
|
|
(2)
|
|
—
|
|
(18)
|
|
|
Asia
Pacific
|
—
|
|
1
|
|
1
|
|
(1)
|
|
(1)
|
|
(1)
|
|
|
Latin
America
|
3
|
|
(21)
|
|
(18)
|
|
(5)
|
|
(2)
|
|
(25)
|
|
|
Total
|
—
|
%
|
(10)
|
%
|
(10)
|
%
|
(1)
|
%
|
(1)
|
%
|
(12)
|
%
|
|
Net Sales Variance
by Segment and Geographic Region
|
Six Months Ended
June 30, 2020
|
|
Local Price
&
Product Mix
|
Volume
|
Total
Organic
|
Currency
|
Portfolio /
Other
|
Total
|
|
Percent change from
prior year (Unaudited)
|
|
Electronics &
Imaging
|
—
|
%
|
7
|
%
|
7
|
%
|
(1)
|
%
|
—
|
%
|
6
|
%
|
|
Nutrition &
Biosciences
|
1
|
|
1
|
|
2
|
|
(2)
|
|
—
|
|
—
|
|
|
Transportation &
Industrial
|
(5)
|
|
(18)
|
|
(23)
|
|
(1)
|
|
—
|
|
(24)
|
|
|
Safety &
Construction
|
2
|
|
(7)
|
|
(5)
|
|
(1)
|
|
2
|
|
(4)
|
|
|
Non-Core
|
2
|
|
(17)
|
|
(15)
|
|
(1)
|
|
(9)
|
|
(25)
|
|
|
Total
|
—
|
%
|
(6)
|
%
|
(6)
|
%
|
(1)
|
%
|
(1)
|
%
|
(8)
|
%
|
|
U.S. &
Canada
|
(1)
|
%
|
(9)
|
%
|
(10)
|
%
|
—
|
%
|
—
|
%
|
(10)
|
%
|
|
EMEA
1
|
—
|
|
(10)
|
|
(10)
|
|
(2)
|
|
(1)
|
|
(13)
|
|
|
Asia
Pacific
|
(1)
|
|
1
|
|
—
|
|
(1)
|
|
—
|
|
(1)
|
|
|
Latin
America
|
3
|
|
(12)
|
|
(9)
|
|
(4)
|
|
(2)
|
|
(15)
|
|
|
Total
|
—
|
%
|
(6)
|
%
|
(6)
|
%
|
(1)
|
%
|
(1)
|
%
|
(8)
|
%
|
|
1. Europe, Middle
East and Africa.
|
DuPont de Nemours,
Inc.
Selected Financial Information and Non-GAAP Measures
|
|
Operating
EBITDA by Segment
|
Three Months
Ended
|
Six Months
Ended
|
|
Jun 30,
2020
|
Jun 30,
2019
|
Jun 30,
2020
|
Jun 30,
2019
|
In millions
(Unaudited)
|
As
Reported
|
As
Reported
|
As
Reported
|
Pro
Forma
|
Electronics &
Imaging
|
$
|
277
|
|
$
|
246
|
|
$
|
530
|
|
$
|
534
|
|
Nutrition &
Biosciences
|
418
|
|
386
|
|
803
|
|
735
|
|
Transportation &
Industrial
|
49
|
|
357
|
|
357
|
|
730
|
|
Safety &
Construction
|
349
|
|
382
|
|
717
|
|
756
|
|
Non-Core
|
93
|
|
104
|
|
135
|
|
202
|
|
Corporate
|
(51)
|
|
(53)
|
|
(86)
|
|
(105)
|
|
Total
|
$
|
1,135
|
|
$
|
1,422
|
|
$
|
2,456
|
|
$
|
2,852
|
|
|
|
|
|
|
Equity in Earnings
of Nonconsolidated Affiliates
|
Three Months
Ended
|
Six Months
Ended
|
|
Jun 30,
2020
|
Jun 30,
2019
|
Jun 30,
2020
|
Jun 30,
2019
|
In millions
(Unaudited)
|
As
Reported
|
As
Reported
|
As
Reported
|
Pro
Forma
|
Equity earnings
(GAAP)
|
$
|
103
|
|
$
|
49
|
|
$
|
142
|
|
$
|
89
|
|
Significant items
included in equity earnings 1
|
—
|
|
1
|
|
—
|
|
2
|
|
Equity earnings
included in operating EBITDA (non-GAAP)
|
$
|
103
|
|
$
|
50
|
|
$
|
142
|
|
$
|
91
|
|
|
|
|
|
|
Equity earnings
included in operating EBITDA by segment
|
|
|
|
Electronics &
Imaging
|
$
|
10
|
|
$
|
5
|
|
$
|
19
|
|
$
|
8
|
|
Nutrition &
Biosciences
|
1
|
|
—
|
|
1
|
|
—
|
|
Transportation &
Industrial
|
1
|
|
2
|
|
2
|
|
2
|
|
Safety &
Construction
|
5
|
|
7
|
|
12
|
|
15
|
|
Non-Core
|
86
|
|
36
|
|
108
|
|
66
|
|
Total equity earnings
included in operating EBITDA (non-GAAP)
|
$
|
103
|
|
$
|
50
|
|
$
|
142
|
|
$
|
91
|
|
1. Reflects
restructuring charges related to a joint venture in the Non-Core
segment.
|
|
|
|
|
|
Reconciliation of
"Income (Loss) from continuing operations, net of tax" to
"Operating EBITDA"
|
Three Months
Ended
|
Six Months
Ended
|
Jun 30,
2020
|
Jun 30,
2019
|
Jun 30,
2020
|
Jun 30,
2019
|
In millions
(Unaudited)
|
As
Reported
|
As
Reported
|
As
Reported
|
Pro
Forma
|
Loss from continuing
operations, net of tax (GAAP)
|
$
|
(2,471)
|
|
$
|
(1,103)
|
|
$
|
(3,081)
|
|
$
|
(1,085)
|
|
+ (Benefit from)
Provision for income taxes on continuing operations
|
(36)
|
|
155
|
|
8
|
|
94
|
|
Loss from continuing
operations before income taxes
|
$
|
(2,507)
|
|
$
|
(948)
|
|
$
|
(3,073)
|
|
$
|
(991)
|
|
+ Depreciation and
amortization
|
774
|
|
507
|
|
1,546
|
|
1,034
|
|
- Interest
income 1
|
2
|
|
9
|
|
4
|
|
49
|
|
+ Interest expense
2
|
181
|
|
165
|
|
354
|
|
345
|
|
- Non-operating
pension/OPEB benefit 1
|
8
|
|
18
|
|
19
|
|
39
|
|
- Foreign
exchange losses, net 1
|
(23)
|
|
(17)
|
|
(31)
|
|
(78)
|
|
+ Costs historically
allocated to the materials science and agriculture businesses
3
|
—
|
|
—
|
|
—
|
|
256
|
|
- Adjusted
significant items
|
(2,674)
|
|
(1,708)
|
|
(3,621)
|
|
(2,218)
|
|
Operating EBITDA
(non-GAAP)
|
$
|
1,135
|
|
$
|
1,422
|
|
$
|
2,456
|
|
$
|
2,852
|
|
1.
|
Included in "Sundry
income (expense) - net."
|
2.
|
The three and six
months ended June 30, 2020 excludes N&B financing fee
amortization. Refer to pages 15 and 16 for details of significant
items.
|
3.
|
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 ASC 205.
|
Reconciliation of
"Cash provided by (used for) operating activities" to Free Cash
Flow
|
Three Months
Ended
|
Six Months
Ended
|
|
|
In millions
(Unaudited)
|
Jun 30,
2020
|
Jun 30,
2019
|
Jun 30,
2020
|
Jun 30,
2019
|
|
Cash provided by
(used for) operating activities (GAAP) 1
|
$
|
802
|
|
$
|
(77)
|
|
$
|
1,520
|
|
$
|
(51)
|
|
|
Capital
expenditures
|
(238)
|
|
(661)
|
|
(719)
|
|
(1,800)
|
|
|
Free cash flow
(non-GAAP)
|
$
|
564
|
|
$
|
(738)
|
|
$
|
801
|
|
$
|
(1,851)
|
|
|
1.
|
Refer to the
Consolidated Statement of Cash Flows included in the schedules
above for major GAAP cash flow categories as well as further detail
relating to the changes in "Cash provided by (used for) operating
activities" for the six month periods noted. In addition, 2019
includes cash activity related to Dow and Corteva prior to the
Distributions.
|
DuPont de Nemours,
Inc.
Selected Financial Information and Non-GAAP Measures
|
|
Significant Items
Impacting Results for the Three Months Ended June 30,
2020
|
In millions, except
per share amounts (Unaudited)
|
Pretax
1
|
Net Income
2
|
EPS
3
|
Income Statement
Classification
|
Reported results
(GAAP)
|
$
|
(2,507)
|
|
$
|
(2,478)
|
|
$
|
(3.37)
|
|
|
Less: Significant
items
|
|
|
|
|
Integration and
separation costs 4
|
(145)
|
|
(112)
|
|
(0.16)
|
|
Integration and
separation costs
|
Restructuring and
asset related charges - net 5
|
2
|
|
1
|
|
—
|
|
Restructuring and
asset related charges - net
|
Goodwill impairment
charges 6
|
(2,498)
|
|
(2,498)
|
|
(3.40)
|
|
Goodwill impairment
charges
|
Asset impairment
charges 7
|
(21)
|
|
(16)
|
|
(0.02)
|
|
Restructuring and
asset related charges - net
|
N&B financing fee
amortization 8
|
(12)
|
|
(9)
|
|
(0.01)
|
|
Interest
expense
|
Total significant
items
|
$
|
(2,674)
|
|
$
|
(2,634)
|
|
$
|
(3.59)
|
|
|
Less: Merger-related
amortization of intangibles
|
(474)
|
|
(364)
|
|
(0.49)
|
|
Amortization of
intangibles
|
Less: Non-op pension
/ OPEB benefit
|
8
|
|
6
|
|
0.01
|
|
Sundry income
(expense) - net
|
Adjusted results
(non-GAAP)
|
$
|
633
|
|
$
|
514
|
|
$
|
0.70
|
|
|
|
Significant Items
Impacting Results for the Three Months Ended June 30,
2019
|
In millions, except
per share amounts (Unaudited)
|
Pretax
1
|
Net Income
2
|
EPS
3
|
Income Statement
Classification
|
Reported results
(GAAP)
|
$
|
(948)
|
|
$
|
(1,112)
|
|
$
|
(1.48)
|
|
|
Less: Significant
items
|
|
|
|
|
Integration and
separation costs 4
|
(347)
|
|
(255)
|
|
(0.34)
|
|
Integration and
separation costs
|
Restructuring and
asset related charges - net 5
|
(75)
|
|
(58)
|
|
(0.08)
|
|
Restructuring and
asset related charges - net; Equity in earnings of nonconsolidated
affiliates
|
Goodwill impairment
charges 9
|
(1,175)
|
|
(1,173)
|
|
(1.57)
|
|
Goodwill impairment
charges
|
Asset impairment
charges 10
|
(63)
|
|
(47)
|
|
(0.06)
|
|
Restructuring and
asset related charges - net
|
Income tax related
item
|
(48)
|
|
(167)
|
|
(0.22)
|
|
Sundry income
(expense) - net; Provision for income taxes on continuing
operations
|
Total significant
items
|
$
|
(1,708)
|
|
$
|
(1,700)
|
|
$
|
(2.27)
|
|
|
Less: Merger-related
amortization of intangibles
|
(199)
|
|
(157)
|
|
(0.21)
|
|
Amortization of
intangibles
|
Less: Non-op pension
/ OPEB benefit
|
18
|
|
20
|
|
0.03
|
|
Sundry income
(expense) - net
|
Adjusted pro forma
results (non-GAAP)
|
$
|
941
|
|
$
|
725
|
|
$
|
0.97
|
|
|
1.
|
(Loss) Income from
continuing operations before income taxes.
|
2.
|
Net (loss) income
from continuing operations available for DuPont common
stockholders. The income tax effect on significant items was
calculated based upon the enacted tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
|
3.
|
(Loss) Earnings per
common share from continuing operations - diluted.
|
4.
|
Integration and
separation costs related to the Merger, post-Merger integration,
the Distributions and, beginning in the fourth quarter of 2019, the
intended separation of the Nutrition & Biosciences
business.
|
5.
|
Includes Board
approved restructuring plans and other asset related
charges.
|
6.
|
Reflects a non-cash,
goodwill impairment charge related to the Transportation &
Industrial segment. In the second quarter of 2020, continued
near-term demand weakness in global automotive production resulting
from the COVID-19 pandemic, along with revised views of recovery
based on third party market information, served as a triggering
event requiring the Company to perform an impairment analysis of
the goodwill associated with its Transportation & Industrial
reporting unit as of June 30, 2020. The carrying value of the
Transportation & Industrial reporting unit is comprised
substantially of Historical EID's assets and liabilities which were
measured at fair value in connection with the Merger, and thus
inherently considered at risk for impairment. Based on the analysis
performed, the Company concluded that the carrying amount of the
reporting unit exceeded its fair value resulting by $2,498
million.
|
7.
|
Reflects an
impairment charge related to other intangible assets in the
Transportation & Industrial segment.
|
8.
|
Included in "Interest
expense" and relates to committed financing in connection with the
intended separation of the N&B Business.
|
9.
|
Reflects goodwill
impairment charges related to the Nutrition & Biosciences and
Non-Core segments.
|
10.
|
Reflects an
impairment charge related to an equity method investment within the
Nutrition & Biosciences segment.
|
DuPont de Nemours,
Inc.
Selected Financial Information and Non-GAAP Measures
|
|
Significant Items
Impacting Results for the Six Months Ended June 30,
2020
|
In millions, except
per share amounts (Unaudited)
|
Pretax
1
|
Net Income
2
|
EPS
3
|
Income Statement
Classification
|
Reported results
(GAAP)
|
$
|
(3,073)
|
|
$
|
(3,094)
|
|
$
|
(4.20)
|
|
|
Less: Significant
items
|
|
|
|
|
Integration and
separation costs 4
|
(342)
|
|
(266)
|
|
(0.36)
|
|
Integration and
separation costs
|
Restructuring and
asset related charges - net 5
|
(132)
|
|
(101)
|
|
(0.14)
|
|
Restructuring and
asset related charges - net
|
Goodwill impairment
charges 6
|
(3,031)
|
|
(3,031)
|
|
(4.12)
|
|
Goodwill impairment
charges
|
Asset impairment
charges 7
|
(291)
|
|
(222)
|
|
(0.30)
|
|
Restructuring and
asset related charges - net
|
Net gain on
divestiture 8
|
197
|
|
102
|
|
0.14
|
|
Sundry income
(expense) - net
|
N&B financing fee
amortization 9
|
(22)
|
|
(17)
|
|
(0.02)
|
|
Interest
expense
|
Income tax related
item
|
—
|
|
28
|
|
0.04
|
|
Provision for income
taxes on continuing operations
|
Total significant
items
|
$
|
(3,621)
|
|
$
|
(3,507)
|
|
$
|
(4.76)
|
|
|
Less: Merger-related
amortization of intangibles
|
(956)
|
|
(732)
|
|
(1.00)
|
|
Amortization of
intangibles
|
Less: Non-op pension
/ OPEB benefit
|
19
|
|
14
|
|
0.02
|
|
Sundry income
(expense) - net
|
Adjusted results
(non-GAAP)
|
$
|
1,485
|
|
$
|
1,131
|
|
$
|
1.54
|
|
|
|
Significant Items
Impacting Pro Forma Results for the Six Months Ended June 30,
2019
|
In millions, except
per share amounts (Unaudited)
|
Pretax
1
|
Net Income
2
|
EPS
3
|
Income Statement
Classification
|
Pro forma results
(GAAP)
|
$
|
(991)
|
|
$
|
(1,098)
|
|
$
|
(1.47)
|
|
|
Less: Significant
items
|
|
|
|
|
Integration and
separation costs 4
|
(785)
|
|
(600)
|
|
(0.80)
|
|
Integration and
separation costs
|
Restructuring and
asset related charges - net 5
|
(147)
|
|
(113)
|
|
(0.15)
|
|
Restructuring and
asset related charges - net; Equity in earnings of nonconsolidated
affiliates
|
Goodwill impairment
charges 10
|
(1,175)
|
|
(1,173)
|
|
(1.57)
|
|
Goodwill impairment
charges
|
Asset impairment
charges 11
|
(63)
|
|
(47)
|
|
(0.06)
|
|
Restructuring and
asset related charges - net
|
Income tax related
item
|
(48)
|
|
(105)
|
|
(0.14)
|
|
Sundry income
(expense) - net; Provision for income taxes on continuing
operations
|
Total significant
items
|
$
|
(2,218)
|
|
$
|
(2,038)
|
|
$
|
(2.72)
|
|
|
Less: Merger-related
amortization of intangibles
|
(399)
|
|
(314)
|
|
(0.42)
|
|
Amortization of
intangibles
|
Less: Non-op pension
/ OPEB benefit
|
39
|
|
37
|
|
0.04
|
|
Sundry income
(expense) - net
|
Less: Costs
historically allocated to the materials science and agriculture
businesses 12
|
(256)
|
|
(197)
|
|
(0.26)
|
|
Cost of sales;
Research and development expense; Selling, general and
administrative expenses
|
Adjusted pro forma
results (non-GAAP)
|
$
|
1,843
|
|
$
|
1,414
|
|
$
|
1.89
|
|
|
1.
|
(Loss) Income from
continuing operations before income taxes.
|
2.
|
Net (loss) income
from continuing operations available for DuPont common
stockholders. The income tax effect on significant items was
calculated based upon the enacted tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
|
3.
|
(Loss) Earnings per
common share from continuing operations - diluted.
|
4.
|
Integration and
separation costs related to the Merger, post-Merger integration,
the Distributions and, beginning in the fourth quarter of 2019, the
intended separation of the Nutrition & Biosciences
business.
|
5.
|
Includes Board
approved restructuring plans and other asset related
charges.
|
6.
|
Reflects a $533
million pre-tax, non-cash goodwill impairment charges recorded in
the first quarter 2020 related to the Non-Core segment and a $2,498
million pre-tax, non-cash goodwill impairment charge recorded in
the second quarter 2020 related to the Transportation &
Industrial segment.
|
7.
|
Reflects a $270
million pre-tax impairment charge recorded in first quarter 2020
related to a long-lived asset group within the Non-Core segment and
a $21 million pre-tax impairment charge recorded in the second
quarter 2020 related to other intangible assets within the
Transportation & Industrial segment.
|
8.
|
Reflects a gain on
the sale of the Company's Compound Semiconductor Solutions business
within the Electronics & Imaging segment.
|
9.
|
Included in "Interest
expense" and relates to committed financing in connection with the
intended separation of the N&B Business.
|
10.
|
Reflects goodwill
impairment charges related to the Nutrition & Biosciences and
Non-Core segments.
|
11.
|
Reflects an
impairment charge related to an equity method investment within the
Nutrition & Biosciences segment.
|
12.
|
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 ASC 205.
|
DuPont de Nemours,
Inc.
Supplemental Unaudited Pro Forma Combined Financial
Information
|
|
Unaudited Pro
Forma Combined Statement of Income
|
Six Months Ended
June 30, 2019
|
In millions, except
per share amounts
|
DuPont
1
|
Pro Forma
Adjustments2
|
Pro
Forma
|
Net sales
|
$
|
10,882
|
|
$
|
—
|
|
$
|
10,882
|
|
Cost of
sales
|
7,117
|
|
22
|
|
7,139
|
|
Research and
development expenses
|
499
|
|
—
|
|
499
|
|
Selling, general and
administrative expenses
|
1,368
|
|
—
|
|
1,368
|
|
Amortization of
intangibles
|
508
|
|
—
|
|
508
|
|
Restructuring and
asset related charges - net
|
208
|
|
—
|
|
208
|
|
Goodwill impairment
charges
|
1,175
|
|
—
|
|
1,175
|
|
Integration and
separation costs
|
958
|
|
(173)
|
|
785
|
|
Equity in earnings of
nonconsolidated affiliates
|
89
|
|
—
|
|
89
|
|
Sundry income
(expense) - net
|
65
|
|
—
|
|
65
|
|
Interest
expense
|
316
|
|
29
|
|
345
|
|
Loss from continuing
operations before income taxes
|
(1,113)
|
|
122
|
|
(991)
|
|
Provision for income
taxes on continuing operations
|
64
|
|
30
|
|
94
|
|
Loss from continuing
operations, net of tax
|
(1,177)
|
|
92
|
|
(1,085)
|
|
Net income
attributable to noncontrolling interests from continuing
operations
|
13
|
|
—
|
|
13
|
|
Net loss from
continuing operations attributable to DuPont
|
$
|
(1,190)
|
|
$
|
92
|
|
$
|
(1,098)
|
|
|
|
|
|
Per common share
data:
|
|
|
|
Loss per common share
from continuing operations - basic
|
$
|
(1.59)
|
|
|
$
|
(1.47)
|
|
Loss per common share
from continuing operations - diluted
|
$
|
(1.59)
|
|
|
$
|
(1.47)
|
|
|
|
|
|
Weighted-average
common shares outstanding - basic
|
749.6
|
|
|
749.6
|
|
Weighted-average
common shares outstanding - diluted
|
749.6
|
|
|
749.6
|
|
1.
|
See the historical
U.S. GAAP Consolidated Statements of Operations.
|
2.
|
Certain pro forma
adjustments were made to illustrate the estimated effects of the
Transactions, assuming that the Transactions had occurred on
January 1, 2018. The pro forma adjustments are consistent with
those identified and disclosed in the Company's Current Report on
Form 8-K filed with the SEC on June 7, 2019. The adjustments
include the impact to "Cost of sales" of different pricing than
historical intercompany and intracompany practices related to
various supply agreements entered into in connection with the Dow
Distribution, adjustments to "Integration and separation costs" to
eliminate one time transaction costs directly attributable to the
Distributions, and adjustments to "Interest expense" to reflect the
impact of the Financings.
|
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SOURCE DuPont