abrooklyn
3 days ago
DuPont Reports First Quarter 2024 Results
Source: PR Newswire (US)
Net Sales of $2.9 billion decreased 3%; organic sales decreased 6% versus year-ago period
GAAP Income from continuing operations of $183 million; operating EBITDA of $682 million
GAAP EPS from continuing operations of $0.41; adjusted EPS of $0.79
Cash provided by operating activities from continuing operations of $493 million; adjusted free cash flow of $286 million
$500 million accelerated share repurchase (ASR) transaction launched in February was completed in April
Raises full year 2024 guidance for net sales, operating EBITDA and adjusted EPS
WILMINGTON, Del., May 1, 2024 /PRNewswire/ -- DuPont (NYSE: DD) announced its financial results(1) for the first quarter ended March 31, 2024.
DuPont Logo (PRNewsfoto/DuPont)
"First quarter 2024 financial results exceeded our expectations driven by better-than-expected volumes along with a continued focus by our teams on operational execution and cost discipline," said Ed Breen, DuPont Executive Chairman and Chief Executive Officer. "The first quarter was encouraging as the electronics market saw continued recovery, demonstrated by 11 percent year-over-year volume growth in Semiconductor Technologies and another quarter of volume growth in Interconnect Solutions. Channel inventory destocking within our industrial-based businesses has bottomed and assumed recovery timing is on track with our previous expectations. In addition, we delivered significant year-over-year cash flow improvement during the first quarter driven by our continued focus on working capital improvement," Breen concluded.
First Quarter 2024 Results(1)
Dollars in millions, unless noted
1Q'24
1Q'23
Change
vs. 1Q'23
Organic Sales (2)
vs. 1Q'23
Net sales
$2,931
$3,018
(3) %
(6) %
GAAP Income from continuing operations
$183
$273
(33) %
Operating EBITDA(2)
$682
$714
(4) %
Operating EBITDA(2) margin %
23.3 %
23.7 %
(40) bps
GAAP EPS from continuing operations
$0.41
$0.58
(29) %
Adjusted EPS(2)
$0.79
$0.84
(6) %
Cash provided by operating activities – cont. ops.
$493
$405
22 %
Adjusted free cash flow(2)
$286
$173
65 %
Net sales
Net sales decreased 3% as organic sales(2) decline of 6% and currency headwind of 1% was partially offset by a favorable portfolio impact of 4%, primarily reflecting the August 2023 Spectrum acquisition.
Organic sales(2) decline of 6% consisted of a 5% decrease in volume and a 1% decrease in price.
Lower volume was driven by the impact of continued channel inventory destocking in industrial-based businesses, including for water technologies mainly in China and medical packaging within Safety Solutions, partially offset by strong growth within electronics markets.
10% organic sales(2) decline in Water & Protection; 2% organic sales(2) decline in Electronics & Industrial; 1% organic sales(2) growth in the retained businesses reported in Corporate.
8% organic sales(2) decline in EMEA; 7% organic sales(2) decline in U.S. & Canada; 4% organic sales(2) decline in Asia Pacific.
GAAP Loss from continuing operations
GAAP income/GAAP EPS from continuing operations decreased due primarily to higher charges related to restructuring activities, lower segment earnings and higher net interest expense partially offset by the benefit of a lower share count.
Operating EBITDA(2)
Operating EBITDA(2) decreased as volume declines were partially offset by the impact of lower product costs and the earnings contribution from the Spectrum acquisition.
Adjusted EPS(2)
Adjusted EPS(2) decreased as lower segment earnings and higher net interest expense more than offset the benefit of a lower share count.
Cash provided by operating activities from continuing operations
Cash provided by operating activities from continuing operations in the quarter of $493 million and capital expenditures of $207 million resulted in adjusted free cash flow(2) of $286 million. Adjusted free cash flow conversion(2) during the quarter was 86%.
(1)
Results and cash flows are presented on a continuing operations basis. See page 5 for further information, including the basis of presentation included in this release.
(2)
Organic sales, operating EBITDA, operating EBITDA margin, adjusted EPS, adjusted free cash flow and adjusted free cash flow conversion are non-GAAP measures and only reflect continuing operations. 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. Adjusted EPS outlook on page 3 assumes the $1B share repurchase program is substantially complete by year-end 2024.
(3)
During first quarter 2024, the Company realigned the management and reporting structure of certain product lines within the three E&I lines of business. E&I line of business revenue amounts for historical periods have been recast to conform to the new structure.
First Quarter 2024 Segment Highlights
Electronics & Industrial
Dollars in millions, unless noted
1Q'24
1Q'23
Change
vs. 1Q'23
Organic Sales(2)
vs. 1Q'23
Net sales
$1,365
$1,296
5 %
(2) %
Operating EBITDA
$374
$362
3 %
Operating EBITDA margin %
27.4 %
27.9 %
(50) bps
Net sales
Net sales increased 5% as favorable portfolio impact of 8% primarily reflecting the Spectrum acquisition was partially offset by organic sales(2) decline of 2% and a currency headwind of 1%.
Organic sales(2) decline of 2% reflects a 1% decline in price and a 1% decline in volume.
Semiconductor Technologies(3) sales up 10% on an organic basis driven by the start of semiconductor demand recovery and normalization of customer inventory levels, along with increased demand for OLED materials.
Interconnect Solutions(3) sales up slightly on an organic basis as mid-single digit volume gains were mostly offset by the impact of lower pass-through metals prices.
Industrial Solutions(3) sales down about 20% on an organic basis due primarily to ongoing channel inventory destocking for Kalrez® parts and within biopharma markets.
Operating EBITDA
Operating EBITDA increased as strength in Semiconductor Technologies and Interconnect Solutions and the earnings contribution from the Spectrum acquisition was partially offset by the impact of lower volumes in Industrial Solutions.
Water & Protection
Dollars in millions, unless noted
1Q'24
1Q'23
Change
vs. 1Q'23
Organic Sales(2)
vs. 1Q'23
Net sales
$1,291
$1,449
(11) %
(10) %
Operating EBITDA
$295
$344
(14) %
Operating EBITDA margin %
22.9 %
23.7 %
(80) bps
Net sales
Net sales decreased 11% due to a 10% decrease in volume and a currency headwind of 1%.
Safety Solutions sales down low-teens on an organic(2) basis on volume declines driven mainly by channel inventory destocking, most notably for medical packaging products within healthcare markets.
Water Solutions sales down mid-teens on an organic(2) basis driven by lower volumes resulting from distributor inventory destocking and weaker industrial demand in China.
Shelter Solutions sales flat on an organic(2) basis.
Operating EBITDA
Operating EBITDA decreased due to lower volumes partially offset by the impact of lower product costs.
Financial Outlook
Dollars in millions, unless noted
2Q'24E
Full Year 2024E
Net sales
~$3,025
$12,100 - $12,400
Operating EBITDA(2)
~$710
$2,900 - $3,050
Adjusted EPS(2)
~$0.84
$3.45 - $3.75
"We are raising our financial guidance for the year for net sales, operating EBITDA and adjusted EPS," said Lori Koch, Chief Financial Officer of DuPont. "At the mid-point of our updated guidance ranges for full year 2024, we now estimate net sales of about $12.25 billion, operating EBITDA of about $2.975 billion and adjusted EPS of $3.60 per share."
"For the second quarter of 2024, we expect sequential sales and earnings improvement driven by favorable seasonality, continued electronics recovery, and reduced channel inventory destocking in industrial-based end-markets including water and medical packaging" Koch continued. "Year-over-year sales and earnings growth assumed in the second half of 2024 is expected to be driven by further electronics market recovery and a return to volume growth in W&P."
Conference Call
The Company will host a live webcast of its quarterly 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.
About DuPont
DuPont (NYSE: DD) is a global innovation leader with technology-based materials 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, healthcare 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.
DuPontTM and all products, unless otherwise noted, denoted with TM, SM or ® are trademarks, service marks or registered trademarks of affiliates of DuPont de Nemours, Inc.
Overview
On November 1, 2023, DuPont completed the divestiture of the Delrin® acetal homopolymer (H-POM) business to TJC LP, (the "Delrin® Divestiture"). The results of operations for the three months ended March 31, 2023 present the financial results of the Delrin® Divestiture as discontinued operations. Unless otherwise indicated, the discussion of results, including the financial measures further discussed below, refers only to DuPont's Continuing Operations and does not include discussion of balances or activity of the Delrin® Divestiture.
Effective as of January 1, 2024, Electronics & Industrial realigned certain product lines that comprise its business units (Industrial Solutions, Interconnect Solutions and Semiconductor Technologies) that are intended to optimize business operations across the segment leading to enhanced value for our customers and cost savings. The realignment did not result in changes to total Electronics and Industrial segment net sales.
Cautionary Statement about 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," "stabilization," "confident," "preliminary," "initial," and similar expressions and variations or negatives of these words. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding outlook, expectations and guidance.
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 possibility that the Company may fail to realize the anticipated benefits of the $1 billion share repurchase program announced on February 6, 2024 and that the program may be suspended, discontinued or not completed prior to its termination on June 30, 2025; (ii) risks and uncertainties related to the settlement agreement concerning PFAS liabilities reached June 2023 with plaintiff water utilities by Chemours, Corteva, EIDP and DuPont; (iii) risks and costs related to each of the parties respective performance under and the impact of the arrangement to share future eligible PFAS costs by and between DuPont, Corteva and Chemours, including the outcome of any pending or future litigation related to PFAS or PFOA, including personal injury claims and natural resource damages claims; the extent and cost of ongoing remediation obligations and potential future remediation obligations; changes in laws and regulations applicable to PFAS chemicals; (iv) ability to achieve anticipated tax treatments in connection with completed and future, if any, divestitures, mergers, acquisitions and other portfolio changes actions and impact of changes in relevant tax and other laws; (v) indemnification of certain legacy liabilities; (vi) failure to realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with completed and future, if any, divestitures, mergers, acquisitions, and other portfolio management, productivity and infrastructure actions; (vii) risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs from, among other events, pandemics and responsive actions; timing and recovery from demand declines in consumer-facing markets, including in China; adverse changes in worldwide economic, political, regulatory, international trade, geopolitical, capital markets and other external conditions; and other factors beyond the Company's control, including inflation, recession, military conflicts, natural and other disasters or weather related events, that impact the operations of the Company, its customers and/or suppliers; (viii) ability to offset increases in cost of inputs, including raw materials, energy and logistics; (ix) risks associated with demand and market conditions in the semiconductor industry and associated end markets, including from continuing or expanding trade disputes or restrictions, including on exports to China of U.S.-regulated products and technology; (x) risks, including ability to achieve, and costs associated with DuPont's sustainability strategy including the actual conduct of the company's activities and results thereof, and the development, implementation, achievement or continuation of any goal, program, policy or initiative discussed or expected; and (xi) other risks to DuPont's business and operations, including the risk of impairment; each as further discussed in DuPont's most recent annual report and subsequent current and periodic reports filed with the U.S. Securities and Exchange Commission. 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 or supply chain 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.
Non-GAAP Financial Measures
Unless otherwise indicated, all financial metrics presented reflect continuing operations only.
This communication 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 11 and in the Reconciliation to Non-GAAP Measures on the Investors section of the Company's website. Non-GAAP measures included in this communication 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.
Indirect costs, such as those related to corporate and shared service functions previously allocated to the Delrin® Divestiture, do not meet the criteria for discontinued operations and were reported within continuing operations in the respective prior years. A portion of these historical indirect costs include costs related to activities the Company is undertaking on behalf of Delrin® and for which it is reimbursed ("Future Reimbursable Indirect Costs"). Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs is not subject to future reimbursement ("Stranded Costs"). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.
Adjusted Earnings (formerly referred to as "Adjusted results") 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 / other post employment benefits ("OPEB") credits / costs and Future Reimbursable Indirect Costs. Adjusted Earnings is the numerator used in the calculation of Adjusted EPS, as well as the denominator in Adjusted Free Cash Flow Conversion.
Adjusted EPS is defined as Adjusted Earnings per common share - diluted. Management estimates amortization expense in 2024 associated with intangibles to be about $600 million on a pre-tax basis, or approximately $1.10 per share.
The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., "Income from continuing operations before income taxes") 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. Reconciliations of these measures are provided on the following pages.
Operating EBITDA Margin is defined 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.
Organic Sales is defined as net sales excluding the impacts of currency and portfolio.
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 that neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business liquidity. As a result, adjusted 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 from continuing operations. Management believes adjusted 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. Management notes that there were no exclusions for items that are unusual in nature and/or infrequent in occurrence for the three-month periods ended March 31, 2024 and March 31, 2023.
Adjusted Free Cash Flow Conversion is defined as Adjusted Free Cash Flow divided by Adjusted Earnings. Management uses Adjusted Free Cash Flow Conversion as an indicator of our ability to convert earnings to cash. The Company updated its definition of Adjusted Free Cash Flow Conversion in the fourth quarter 2023 and all periods were recast to reflect the change. Refer to Reconciliation to Non-GAAP Measures under the Events & Presentation tab on the Investors section of the Company's website for the recast information
XenaLives
1 year ago
Very strange tape after market today...
Trades>=1K today...
12/08/22 19:00:00 69.85 69.40 70.29 495,100
12/08/22 18:30:00 69.85 69.41 70.29 495,100
12/08/22 16:10:00 69.85 68.00 71.00 495,100
12/08/22 16:03:21 69.85 68.00 71.00 1,400
12/08/22 16:03:21 69.85 68.00 71.00 1,600
12/08/22 16:03:21 69.85 68.00 71.00 4,800
12/08/22 16:03:21 69.85 68.00 71.00 2,000
12/08/22 16:03:21 69.85 68.00 71.00 2,100
12/08/22 16:03:20 69.85 68.00 71.00 7,700
12/08/22 16:03:19 69.85 68.00 71.00 3,800
12/08/22 16:03:19 69.85 68.00 71.00 2,200
12/08/22 16:03:19 69.85 68.00 71.00 495,100
12/08/22 16:03:18 69.85 68.00 71.00 495,100
12/08/22 15:59:25 69.82 69.81 69.82 1,400
12/08/22 15:58:39 69.83 69.81 69.82 1,600
12/08/22 15:55:18 69.74 69.73 69.74 1,100
12/08/22 15:54:01 69.68 69.65 69.66 1,000
12/08/22 15:53:46 69.67 69.66 69.67 1,400
12/08/22 15:45:38 69.59 69.58 69.59 1,100
12/08/22 15:44:04 69.65 69.64 69.66 1,143
12/08/22 15:43:42 69.63 69.63 69.64 1,200
12/08/22 15:43:23 69.62 69.62 69.63 1,000
12/08/22 15:40:12 69.62 69.61 69.62 1,000
12/08/22 15:14:19 69.81 69.77 69.80 1,687
12/08/22 14:56:37 69.9151 69.91 69.93 1,500
12/08/22 14:52:39 69.875 69.86 69.89 87,524
12/08/22 14:51:23 69.803 69.79 69.81 1,000
12/08/22 14:40:05 69.83 69.82 69.84 1,000
12/08/22 14:26:11 69.84 69.84 69.86 1,000
12/08/22 14:16:02 69.74 69.73 69.76 3,100
12/08/22 14:00:59 70.145 70.13 70.16 1,400
12/08/22 13:52:40 70.23 70.22 70.25 1,000
12/08/22 13:49:22 70.28 70.25 70.28 1,220
12/08/22 13:29:22 70.1801 70.20 70.22 5,300
12/08/22 13:29:01 70.18 70.18 70.20 1,700
12/08/22 13:15:29 70.1601 70.16 70.18 1,000
12/08/22 13:13:09 70.23 70.22 70.23 1,000
12/08/22 12:57:31 70.16 70.14 70.16 1,000
12/08/22 12:52:35 70.09 70.08 70.10 1,100
12/08/22 12:41:10 70.0894 70.08 70.10 1,000
12/08/22 12:30:15 70.13 70.13 70.16 1,400
12/08/22 11:57:01 70.2639 70.25 70.29 1,000
12/08/22 11:48:13 70.24 70.24 70.26 1,000
12/08/22 11:45:30 70.205 70.19 70.22 1,131
12/08/22 11:33:26 70.27 70.28 70.31 3,900
12/08/22 11:31:21 70.23 70.21 70.23 1,000
12/08/22 11:26:11 70.005 69.99 70.02 2,100
12/08/22 11:26:11 70.005 69.99 70.02 2,700
12/08/22 11:09:46 70.36 70.33 70.35 7,563
12/08/22 11:03:56 70.4042 70.39 70.42 1,600
12/08/22 11:03:48 70.355 70.34 70.37 1,100
12/08/22 10:53:38 70.56 70.54 70.56 1,200
12/08/22 10:47:36 70.55 70.52 70.54 1,000
12/08/22 10:46:57 70.52 70.50 70.53 1,000
12/08/22 10:45:43 70.4927 70.47 70.51 1,400
12/08/22 10:40:36 70.49 70.49 70.53 3,800
12/08/22 10:37:24 70.63 70.62 70.65 1,300
12/08/22 10:35:30 70.60 70.60 70.63 1,000
12/08/22 10:20:42 70.57 70.55 70.59 1,000
12/08/22 09:54:56 70.59 70.56 70.60 1,064
12/08/22 09:53:50 70.515 70.49 70.55 2,376
12/08/22 09:52:57 70.43 70.43 70.49 1,700
12/08/22 09:49:12 70.36 70.30 70.39 1,400
Oleblue
1 year ago
Looks like they sold the polymer division:
Celanese will buy DuPont's engineering polymer and elastomer businesses for $11 billion – Chemical & Engineering News
September 9, 2022 by Civil Engg Notes
In a deal that will combine two of the world’s leading engineering polymer businesses, Celanese has agreed to acquire most of DuPont’s Mobility and Materials unit for $11 billion.
The businesses, which DuPont earmarked for sale in November, had sales of $3.5 billion and profit before taxes of $800 million in 2021. The acquisition will be a major one for Celanese, which had sales of $8.5 billion last year, and will more than double the size of the firm’s engineered materials unit.
Roughly 5,000 employees and 29 manufacturing sites will move to Celanese in the deal, which the companies aim to complete around year-end.
The transaction includes many materials used in demanding applications, such as automotive and electronics parts. One key polymer is nylon 6,6, which has been a part of DuPont for over 80 years. DuPont sold its nylon fiber business in 2004. In addition, Celanese will get DuPont’s long-chain and performance nylons, polybutylene terephthalate, and polyethylene terephthalate. DuPont’s polyester and ethylene acrylic elastomers and its Mylar and Melinex polyester films are also part of the deal.
“This is a very high-quality business,” Scott Richardson, Celanese’s chief financial officer, said on a Feb. 18 conference call with analysts. “A high-margin business that very much kind of fits hand and glove with our engineered materials business.”
Celanese’s engineering polymer line includes polyacetal, ultra-high-molecular-weight polyethylene, liquid crystal polymers, and polyphenylene sulfide. DuPont’s nylon and polybutylene terephthalate production will provide raw material for Celanese’s compounding operations in those areas.
The purchase will also extend Celanese’s reach in Asia, helping the firm recover some of the presence it relinquished in 2020 when it sold its stake in the Polyplastics joint venture with Japan’s Daicel. Overall, Celanese executives say, the firm will achieve $450 million worth of annual benefits by integrating the DuPont polymer business with its own.
Celanese has been pushing to grow its engineered materials business. Late last year, it bought ExxonMobil’s Santoprene thermoplastic vulcanizate business for $1.15 billion.
Celanese and DuPont left DuPont’s Delrin polyacetal business out of the deal to ease approval from antitrust authorities. Celanese’s Richardson told analysts that he doesn’t expect regulators to require any meaningful concessions before approving the transaction.
DuPont now plans to separately market the Delrin business, which has annual sales of about $550 million. “There is substantial interest in this high-quality asset,” DuPont CEO Edward Breen says in a statement. The company expects to sell that business by the first quarter of 2023.
Tedlar polyvinyl fluoride films, used on solar panels, were also left out of the sale. DuPont says it will keep that business, as well as its auto adhesive and Multibase polymer additive businesses.
DuPont plans to use the sale proceeds to pay for its pending $5.2 billion purchase of the electronic materials firm Rogers and to finance further acquisitions and share buybacks.
Stock analysts say the deal will indeed be transformational for Celanese. With the DuPont businesses, Celanese will have the “broadest and most differentiated” portfolio of engineered materials in the world, Frank J. Mitsch of Fermium Research writes in a note to clients. In the process, Celanese’s more commodity-like acetyl chemical business will become “a smaller amount of the total pie.” Acetyls accounted for 64% of the firm’s sales in 2021.
In a report, Vertical Research Partners analyst Kevin W. McCarthy calls the purchase an “attractive strategic fit” for Celanese. “The transaction vaults Celanese to a different league on the global stage as it creates a world-class leader in engineered materials,” he writes.
McCarthy says the purchase may set the stage for future transactions. The scale that the DuPont business provides, he observes, could give Celanese “critical mass” to split off its acetyl business “at some point down the road after the incremental debt has been digested sufficiently.”
This article was originally published on Feb. 18, 2022. It was updated on Feb. 24, 2022, to include comment about the deal from stock analysts.
Article:
Enterprising Investor
9 years ago
DuPont’s Interim Boss Edward Breen Is a Breakup Expert (10/06/15)
Former Tyco chief broke up conglomerate twice, raising possibility of future split at DuPont
By Joann S. Lublin and David Benoit
Edward D. Breen, the new temporary leader of DuPont Co. , knows a lot about breaking up big businesses, a skill he could put to use at the chemicals conglomerate that has fought off calls for a split for most of this year.
During his decadelong tenure as chief executive of Tyco International Ltd. , Mr. Breen, now 59, broke up the company twice.
First, in 2007, when Tyco was a $41 billion conglomerate with nearly 240,000 employees, he split it apart, hiving off two units: a medical-products company which became Covidien PLC and an electronics-component maker, now known as TE Connectivity Ltd.
The second time around, he spun off its ADT residential-alarm business and a unit that made industrial valves and pipes, leaving Tyco as a provider of security and fire systems—a comedown for a company that bought hundreds of businesses over five decades.
“He’s not shy about doing breakups,’’ said Michael Useem, a management professor at University of Pennsylvania’s Wharton School who has known Mr. Breen for years and advised Tyco about governance issues.
Shares of DuPont rose 7.7% Tuesday, its biggest one-day percentage gain since 2009, but the stock remains down 21% for the year.
Mr. Breen, who joined DuPont’s board in February, takes over next week on an interim basis as CEO and chairman from Ellen Kullman who Monday announced her surprise retirement. Ms. Kullman survived a bitter proxy fight waged this spring by Nelson Peltz’s Trian Fund Management LP, which had sought to split the 213-year-old maker of Kevlar fibers and Pioneer corn seeds into two separate businesses, one focused on agriculture and the other on industrial materials.
Ms. Kullman—with the support of DuPont’s board of directors, including Mr. Breen—prevailed in the proxy vote that rejected Trian’s strategy and opposed the fund’s attempt to nominate directors for the board. But the company’s results worsened and Ms. Kullman ultimately agreed to step down.
Now as Mr. Breen takes the reins as interim CEO, his previous support for keeping the company together may evolve especially in the face of deteriorating results. While announcing the CEO change Monday, DuPont also lowered its earnings forecast for this year.
During a conference call after Monday’s announcement, Mr. Breen said he planned “a deep dive” into DuPont’s cost structure and to evaluate its investment decisions to make sure shareholders get appropriate returns.
In the past, he has defended DuPont’s structure and credited Ms. Kullman with already restructuring the company.
In a company presentation for investors earlier this year, he was quoted as saying that at Tyco “we faced a very different set of facts” that “required extreme measures.”
Mr. Breen is committed “to effective decision-making based on the specific facts and circumstances of that particular company,’’ a DuPont spokeswoman said Tuesday.
On a call Monday with analysts, Mr. Breen said his appointment as interim CEO shouldn’t be a signal for strategy change.
“I would not read anything into that,” he said.
Even so, analysts and investors couldn’t help but read into it. Deutsche Bank analysts in a report Tuesday said they view a breakup as “highly likely” because Ms. Kullman was viewed as “the single biggest impediment, in our view, to a breakup of DuPont.”
Citigroup analysts said in a report they see “significant strategic changes” and suggested that splitting up like Trian suggested could lead the separate agricultural company to find a deal with Dow Chemical Co.
Former colleagues at Tyco recall Mr. Breen being a detail-oriented executive who kept a close eye on operational matters and held nothing sacred. Bruce Gordon, a former Tyco director who now is chairman of the spun-off ADT Corp. , recalled how Mr. Breen knew everything from the size of each unit’s sales force to its customer attrition rate.
When he assumed the helm at Tyco, Mr. Breen had to make some tough decisions. The former Motorola Inc. president took over from L. Dennis Kozlowski in 2002, who lost his job amid imminent charges of sales-tax evasion. That probe grew into a bigger case, and Mr. Kozlowski was criminally convicted of systematically looting the company and served more than six years in prison.
In the face of a liquidity crisis and accounting mess, Mr. Breen cast the deciding vote to replace the entire Tyco board and shed almost 300 people at the corporate headquarters.
At DuPont, Mr. Breen “will get down very deeply into these businesses,’’ and decide whether all of DuPont units “are worth keeping,’’ said Jack Krol, a retired DuPont CEO who was Tyco’s lead independent director during most of Mr. Breen’s tenure.
It wasn’t immediately clear if Mr. Breen—who remains Tyco chairman and is the lead director for Comcast Corp.—wants to be considered for the permanent top spot at DuPont. However, “Ed will participate in the search for the new CEO,’’ the company spokeswoman said.
DuPont’s next boss will still have to contend with Trian. The fund has continued to buy shares in DuPont even after losing the battle for board seats, said Ed Garden, Trian’s chief investment officer in a CNBC interview before Monday’s announcement. Trian declined to comment.
Despite backing the breakup of Tyco, Mr. Breen isn’t in favor of splitting apart companies in response to activist pressure. “If activists find a weakness, they jump,’’ he said during a 2012 interview with The Wall Street Journal. “It is not the most elegant way to get it done.”
http://www.wsj.com/articles/duponts-interim-boss-is-a-breakup-expert-1444175784
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