DuPont de Nemours, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Second quarter sales totaled $3.3 billion, up 2% organically; operating EBITDA was $859 million, up 8%; adjusted EPS was $1.12, up 15% year-over-year. Full-year earnings guidance is being raised.
• Settlement with New Jersey: DuPont announced a settlement with New Jersey to resolve environmental claims, including PFAS, payable over 25 years with DuPont's portion at $177 million on an NPV basis. AFFF was less than 1% of the total settlement amount.
• Qnity Spin-off: On track for a November 1 separation date. The Qnity Board was composed in June, and a first amendment to the Form 10 registration statement was filed with the SEC in June.
• Investor Day: Scheduled for September 18, focusing on introducing DuPont and Qnity portfolios and their strategies.
• New DuPont Leadership: Assembled a senior leadership team including Jeroen Bloemhard (Healthcare and Water Technologies), Beth Ferreira (Diversified Industrials), and David Cook (Chief Operations and Engineering Officer).

Segment Performance

• ElectronicsCo: Second quarter net sales were $1.2 billion, up 6% year-over-year on both reported and organic bases. Volume increased 8%, offset by a 2% price decrease. Organic sales for semiconductor technologies grew mid-single digits due to strong end market demand from advanced nodes and AI applications, while Interconnect Solutions had high single-digit organic sales growth. Operating EBITDA was $373 million, up 14% year-over-year, with a margin of 31.9%, up 220 basis points from the prior year.
• IndustrialsCo: Second quarter net sales were $2.1 billion, up 1% year-over-year on both reported and organic bases. Volume grew 2%, offset by a 1% price decrease. Healthcare & Water sales were up high single digits organically, while Diversified Industrial sales were down low single digits organically due to construction market softness. Operating EBITDA was $509 million, up 3% year-over-year, with a margin of 24.4%, up 50 basis points from the prior year.

Guidance

• Full-year total company net sales midpoint remains unchanged at $12.85 billion. The full-year operating EBITDA midpoint is raised to $3.36 billion, and adjusted EPS midpoint is raised to $4.40 per share.
• Third quarter net sales are estimated at $3.32 billion, operating EBITDA at $875 million, and adjusted EPS at $1.15 per share, including a $0.02 tariff headwind and a $0.05 year-over-year tax headwind. The third quarter assumes about 3% organic sales growth led by healthcare, water, and electronics end markets, partially offset by construction weakness.

Risks

• Tariff Impact: Net tariff impact in the second half of 2025 is estimated as a $20 million headwind or $0.04 per share, equally split between the third and fourth quarters.
• Environmental Claims: Potential future environmental claims related to PFAS and AFFF, with settlements structured over extended periods.

Question and Answer

Q: Drill in on IndustrialsCo price decline A: Related to price adjustments from the inflationary period, looking to reduce the headwind by lapsing concessions from 2024.

Q: Settlement and AFFF A: Settlement paid over 25 years, AFFF portion in line with expected range, North Carolina site to be addressed with similar structured settlements.

Q: Healthcare & Water growth A: Both businesses up nicely, recovering from destock, driven by megatrends and strong customer relationships.

Q: Electronics trends A: Mixed environment, AI-driven applications driving growth, well positioned in advanced nodes and semiconductor packaging.

Q: Healthcare & Water drivers A: Megatrends, strong customer relationships, market position, and China share regain after destock.

Q: Interconnect Solutions growth slowdown A: Year-over-year comp, recovery starting, momentum to continue into the back half of the year.

Q: PFAS agreement EBITDA A: Minimum EBITDA reset at separation, providing a cushion for future divestments.

Q: Aramids divestment A: No comment, focus on Qnity separation by November 1.

Q: Chinese Tyvek investigation A: Dismissed, suspended, happy with the conclusion as it was related solely to Tyvek.

Q: Tariff impact $20 million A: Based on a 90-day pause in tariffs, watching changes, with over 90% of the headwind mitigated by supply chain movements.

Q: Water business core to New DuPont A: Yes, considered core, with plans to grow and invest in the Healthcare & Water portfolio driven by megatrends.