DuPont de Nemours, Inc. (DD) Earnings

Management highlights

Through disciplined commercial and operational execution, delivered organic sales growth of 2%, 130 basis points of pro forma margin expansion, and double-digit adjusted EPS growth. Completed the investiture of the Aramids business. Issued 2026 sustainability report and announced new 2035 sustainability goals. In growth and continuous improvement: innovation saw steady cadence of new product introductions and customer wins across healthcare, water, and diversified industrial end markets; commercial had steady progress in demand generation and pipeline discipline; operational excellence had teams focused on fundamentals with meaningful improvements in asset reliability and equipment effectiveness, and advancing use of data-enabled tools to improve maintenance, planning, etc.

Guidance

Raising full year 2026 financial guidance. Second quarter estimated net sales of about $1.8 billion, operating EBITDA of about $430 million, and adjusted EPS of $0.59 per share. First half estimated net sales of about 3.5 billion assumes growth of about 4% year over year, translating into operating EBITDA of about 844 million. Full year 2026 at midpoint now expects net sales of about 7.185 billion, net increase of 80 million vs prior guide; net sales guidance assumes about 4% organic growth including about 1% from pricing actions; operating EBITDA at midpoint expected to be about 1.745 billion; adjusted EPS range expected to be $2.35 to $2.40 per share, a 10 cent increase vs prior guidance

Segment performance

First quarter net sales were 1.7 billion, up 4% vs year-ago period on 2% organic sales growth and 2% currency benefit. Organic sales growth was led by strength in healthcare and aerospace, partially offset by softness in construction markets and Middle East conflict-related logistics disruptions. From a segment view, organic sales grew 3% in healthcare and water technologies with organic sales growth about flat in diversified industrials. First quarter operating EBITDA of 414 million increased 15% vs year-ago period. On a pro forma basis, operating EBITDA increased 10% with margins expanding 130 basis points year over year. Health care and water technologies first quarter net sales of $806 million were up 6% vs year-ago period on 3% organic growth and 3% currency benefit. Operating EBITDA for the segment during the quarter of $244 million was up 9% vs year-ago period with margin of 30.3%, an increase of 110 basis points year over year. Diversified industrials first quarter net sales of 875 million increased 3% vs year-ago period on 3% currency benefit. Organic sales growth was about flat. Operating EBITDA for diversified industrials of 200 million was up 8% vs year-ago period with margin of 22.9%, expanding 110 basis points vs year-ago period

Risks & headwinds

Middle East conflict causing logistics disruptions impacting some business sales, e.g., water business losing about $10 million in sales in first quarter; raw material cost increase pressure requiring pricing actions to offset; macro and geopolitical headwinds potentially affecting performance

Analyst Q&A

• Q: Scott Davis asked about 80-20 process and impact on topline.

  A: Well into process within diversified industrials portfolio, about two-thirds through initial study, no impact on full-year guide on topline or margin yet but expect margin appreciation over time.

• Q: John McNulty inquired about water business impacts from Middle East logistics.

  A: About $10 million of sales didn't ship from Middle East in first quarter, isolating that impact would have been flat to slightly down, materials shipped in April, Q2 expectations not baked in much disruption, full year expected to be up mid-single digits.

• Q: Christopher Parkinson asked about healthcare exposure.

  A: Healthcare segment about $2 billion in sales, nicely positioned in med device profile, intent to continue add to portfolio with robust pipeline of accretive and affordable assets.

• Q: Josh Spector followed up on Middle East impacts around water.

  A: Total Middle East exposure around $300 million, 4% of top line, teams found alternative routes to mitigate impact.

• Q: David Biglieto asked about construction weakness and Middle East conflict opportunities.

  A: Construction markets expected flat full year, 1% price in space for slight organic growth, well positioned from share and asset base perspective to navigate disruptions.

• Q: Matthew Duell inquired about healthcare and water trends.

  A: Healthcare expected up mid-single digits with nice positions in packaging and biopharma, water down in first quarter due to volume not shipped and project timing, expected flat first half and up high single digits second half.

• Q: Vincent Andrews asked about PFAS litigation.

  A: No update.

• Q: Patrick Cunningham asked about free cash flow and microelectronics in water.

  A: Free cash flow generation still expected >90% for 2026, teams managing working capital well; microelectronics in water is about 20% of ion exchange, saw nice volume in first quarter due to data center AI trend.

• Q: Mike Season asked about Middle East conflict resolution assumption and healthcare demand trends.

  A: Full year guidance anticipates current situation continues, pricing actions already in place cover it, healthcare growth driven by aging population and healthcare access.

• Q: Arun Viswanathan asked about 80-20 strategy and stock buybacks.

  A: 80-20 work in diversified to enhance margin profile, happy with current portfolio but always looking for M&A opportunities; will continue to evaluate capital return opportunities with $2 billion program, having used $500 million and now $275 million ASR