DuPont(DD) - 2024 Q2 - Quarterly Results

Financial Performance - Net sales increased 2% to $3.2 billion, with organic sales flat year-over-year[2][4] - GAAP income from continuing operations decreased 35% to $176 million, while operating EBITDA increased 8% to $798 million[2][4] - Adjusted EPS increased 14% to $0.97, driven by higher segment earnings and a lower share count[2][7] - Cash provided by operating activities from continuing operations increased 32% to $527 million, with adjusted free cash flow up 53% to $425 million[2][8] - Net sales for Q2 2024 were $3.171 billion, a 2.5% increase compared to $3.094 billion in Q2 2023[37] - Net income for Q2 2024 was $185 million, a significant improvement from a net loss of $117 million in Q2 2023[37] - Cash provided by operating activities for the first six months of 2024 was $1.020 billion, a 26.7% increase compared to $805 million in the same period of 2023[42] - Adjusted free cash flow for Q2 2024 was $425 million, a 53% increase from $277 million in Q2 2023[49] - Adjusted earnings (non-GAAP) for Q2 2024 were $408 million, compared to $391 million in Q2 2023[49] - Reported earnings (GAAP) for Q2 2023 were $356 million in pretax income, $255 million in net income, and $0.55 EPS[51] - Adjusted earnings (non-GAAP) for Q2 2023 were $528 million in pretax income, $391 million in net income, and $0.85 EPS[51] - Reported earnings (GAAP) for the six months ended June 30, 2024 were $563 million in pretax income, $344 million in net income, and $0.82 EPS[52] - Adjusted earnings (non-GAAP) for the six months ended June 30, 2024 were $1,037 million in pretax income, $742 million in net income, and $1.76 EPS[52] - Reported earnings (GAAP) for the six months ended June 30, 2023 were $712 million in pretax income, $520 million in net income, and $1.13 EPS[53] - Adjusted earnings (non-GAAP) for the six months ended June 30, 2023 were $1,043 million in pretax income, $779 million in net income, and $1.69 EPS[53] Segment Performance - Electronics & Industrial segment net sales increased 15% to $1.508 billion, with organic sales growth of 8%[9] - Water & Protection segment net sales decreased 7% to $1.391 billion, with organic sales decline of 6%[12][13] - Net sales for the Electronics & Industrial segment increased to $1.508 billion in Q2 2024, up 15% from $1.312 billion in Q2 2023[43] - Operating EBITDA for the Electronics & Industrial segment rose to $419 million in Q2 2024, up 20% from $349 million in Q2 2023[47] - Net sales in the U.S. & Canada region grew to $1.127 billion in Q2 2024, an 8% increase from $1.045 billion in Q2 2023[43] - The Asia Pacific region contributed $1.368 billion in net sales for Q2 2024, a 1% increase from $1.350 billion in Q2 2023[43] Cash Flow and Liquidity - Cash and cash equivalents decreased to $1.503 billion as of June 30, 2024, down from $2.392 billion at the end of 2023[40] - Long-term debt decreased to $7.168 billion as of June 30, 2024, compared to $7.800 billion at the end of 2023[40] - Capital expenditures for the first six months of 2024 were $309 million, a 12.9% decrease compared to $355 million in the same period of 2023[42] - Adjusted free cash flow conversion for Q2 2024 was 104%, compared to 71% in Q2 2023[49] Non-GAAP Financial Measures - The Company defines Operating EBITDA as earnings before interest, depreciation, amortization, non-operating pension/OPEB benefits/charges, and foreign exchange gains/losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items[30] - Operating EBITDA Margin is defined as Operating EBITDA divided by Net Sales[30] - Incremental Margin is the change in Operating EBITDA divided by the change in Net Sales for the applicable period[30] - Adjusted Free Cash Flow is defined as cash provided by/used for operating activities from continuing operations less capital expenditures and excluding the impact of cash inflows/outflows that are unusual in nature and/or infrequent in occurrence[32] - Adjusted Free Cash Flow Conversion is defined as Adjusted Free Cash Flow divided by Adjusted Earnings[33] - Organic Sales is defined as net sales excluding the impacts of currency and portfolio[31] - 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[31] - Adjusted Earnings is defined as income from continuing operations excluding the after-tax impact of significant items, after-tax impact of amortization expense of intangibles, the after-tax impact of non-operating pension/OPEB credits/costs and Future Reimbursable Indirect Costs[29] - 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[27] - The company will introduce supplemental non-GAAP financial measures, including Transaction Adjusted Free Cash Flow, starting in Q3 2024[34] - Transaction Adjusted Free Cash Flow is defined as cash from operating activities minus capital expenditures and transaction costs related to business separations[35] - Transaction Adjusted Free Cash Flow Conversion is calculated as Adjusted Free Cash Flow (excluding transaction costs) divided by Adjusted Earnings[35] Significant Items and Adjustments - Significant items impacting Q2 2024 results included a $74 million loss on debt extinguishment and a $39 million interest rate swap mark-to-market loss[50] - Total significant items impacting Q2 2023 results were $22 million in pretax income, $18 million in net income, and $0.04 EPS[51] - Total significant items impacting the six months ended June 30, 2024 were $184 million in pretax income, $175 million in net income, and $0.42 EPS[52] - Total significant items impacting the six months ended June 30, 2023 were $30 million in pretax income, $24 million in net income, and $0.05 EPS[53] - Amortization of intangibles for the six months ended June 30, 2024 was $300 million in pretax income, $231 million in net income, and $0.54 EPS[52] Strategic Initiatives - The company completed the acquisition of Donatelle, expanding healthcare offerings in medical device markets[3] - The company plans to separate its Electronics and Water businesses into three distinct publicly traded companies within 18-24 months[23] - Management estimates amortization expense in 2024 associated with intangibles to be about $600 million on a pre-tax basis, or approximately $1.08 per share[29] Share Count and Equity - Weighted-average common shares outstanding decreased to 417.8 million (basic) and 419.3 million (diluted) in Q2 2024, compared to 459.2 million and 460.3 million respectively in Q2 2023[38] - Total equity earnings included in operating EBITDA were $23 million in Q2 2024, up from $14 million in Q2 2023[48] Full-Year Guidance - Full-year 2024 guidance raised: net sales expected to be $12.4-$12.5 billion, operating EBITDA $3.06-$3.11 billion, and adjusted EPS $3.70-$3.80[15]