DuPont de Nemours, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Delivered full year 2025 organic sales growth of 2%, operating EBITDA growth of 6%, and 100 basis points of margin expansion. Adjusted EPS was $1.68 per share, up 16% year over year. Free cash flow generation was strong.
• Operational Transformations: Successfully completed separation of Community Electronics, built out executive team, set strategic direction with enhanced core values, and advanced commercial and operational excellence frameworks.
• Innovation: Launched over 125 new products in 2025, generating over $2 billion in sales, with a vitality index of about 30%.
• Capital Allocation: Proven model for high-return organic opportunities and M&A, with plans to return cash to shareholders via dividends and share repurchases, including a $2 billion share repurchase authorization and a $500 million ASR in 2025.

Segment Performance

• Healthcare and Water Technologies: Fourth quarter net sales were $821 million, up 4% year over year (3% organic growth, 1% benefit from currency). Operating EBITDA was $255 million, up 4% year over year. For full year 2026, organic sales growth is expected in the mid-single digits, driven by healthcare (medical packaging, medical devices) and water (industrial water markets).
• Diversified Industrials: Fourth quarter net sales were $872 million, down 3% year over year (4% organic decline, 1% benefit from currency). Operating EBITDA was $197 million, up 2% year over year. For full year 2026, organic sales growth is expected in the low single digits, with building technologies flat and industrial technologies having low single-digit growth.

Guidance

• 2026 Financial Guidance: Expect organic sales to grow about 3% year over year, operating margins to expand 60 to 80 basis points, and adjusted EPS of $2.25 to $2.30 per share. Pro forma EPS will grow 10% to 12% year over year. Free cash flow conversion is expected to be greater than 90%.
• First Quarter 2026 Guidance: Estimates net sales of about $1.67 billion, operating EBITDA of about $395 million, and adjusted EPS of $0.48 per share.

Risks

• Macro Environment: Mixed macro environment with automotive demand flat in US and Europe, and construction market stabilization but flattish demand.
• Execution: Risks related to achieving operational and financial targets, as actual performance may differ materially from forward-looking statements due to unforeseen risks and uncertainties.

Question and Answer

• Q: Jeffrey Sprague asked about industrial orders and channel inventories.

A: Lori Koch responded that on the industrial side, there's nice order pickup, especially in aerospace, and channel inventories are being monitored.

• Q: Scott Davis inquired about the shelter business cadence and vitality index.

A: Lori Koch answered that the shelter business is expected to be slightly down at the start of 2026 but improve through the year, and the vitality index of 30% helps with top-line and margin growth via new products and value engineering.

• Q: Shagusa Cotopo asked about margin bridge and Aramis divestiture capital deployment.

A: Lori Koch stated margin expansion is tracking well, and the Aramis divestiture proceeds will be used for shareholder-friendly activities including M&A and share repurchases.

• Q: John McNulty asked about diversified margin lift.

A: Lori Koch explained that while 80/20 efforts are ongoing, fourth quarter margin expansion was due to mix and productivity.

• Q: Joshua Spector asked about water growth in China.

A: Lori Koch responded that China water growth is starting in low single digits due to reduced industrial production but will ramp up to mid-single digits.