DowDuPont Q3 Results
- GAAP EPS from Continuing Operations of $0.21; Adj. EPS Increases 35% to $0.74
- GAAP Net Income from Continuing Operations of $535MM; Op. EBITDA Up 19% to $3.8B
- Net Sales Up 10% to $20.1B; Volume and Local Price Gains in All Divisions and All Regions
- Announces New $3B Stock Buyback Program, Expected to be Complete by First Spin
- Increases Cost Synergy Target to $3.6B; Raises Expected YoY Savings to $1.5B
- Reaffirms FY18 Adj. EPS Guidance: Up Low-20s Percent
MIDLAND, Mich. & WILMINGTON, Del.–(BUSINESS WIRE)– DowDuPont (DWDP):
Third Quarter Financial Highlights
- GAAP earnings per share from continuing operations was $0.21. Adjusted earnings1 per share increased 35 percent to $0.74, compared with pro forma adjusted earnings1 per share in the year-ago period of $0.55. Adjusted earnings per share excludes significant items in the quarter totaling net charges of $0.42 per share and an $0.11 per share charge for DuPont amortization of intangible assets.
- Net sales increased 10 percent to $20.1 billion with gains in all divisions and all regions, from pro forma net sales of $18.3 billion in the year-ago period. Net sales grew double-digits in Asia Pacific and high single digits in all other regions.
- Volume grew 5 percent on a pro forma basis from the year-ago period, with gains in all divisions and all regions, led by double-digit growth in Asia Pacific and Latin America.
- Local price rose 5 percent on a pro forma basis, with gains in all divisions and all regions.
- Operating EBITDA1 increased 19 percent on a pro forma basis from the year-ago period to $3.8 billion. Operating EBITDA drivers in the quarter included local price and volume gains, cost synergies and lower pension/OPEB costs2, which more than offset the impact of higher raw material costs and a headwind from currency.
- DowDuPont achieved cost synergy savings of more than $450 million in the quarter, and since merger close has now delivered more than $1.3 billion of cumulative savings. The Company also delivered a cost synergy run-rate of greater than $2.5 billion in the quarter, exceeding its Year 1 cost synergy run-rate target of 75 percent of the $3.3 billion.
- DowDuPont is announcing today a new share repurchase program of $3 billion, which it expects to complete by the first intended spin. In addition, the Company is increasing its cost synergy commitment to $3.6 billion from $3.3 billion and increasing the expected 2018 year-over-year savings to $1.5 billion from $1.4 billion.
- Cash flow from operations was a use of cash of $0.3 billion and included discretionary pension contributions of approximately $2.2 billion. Excluding these discretionary contributions, cash flow from operations would have been $1.9 billion.
- The Company returned nearly $2 billion to shareholders in the quarter through dividends ($0.9 billion) and share repurchases ($1 billion). Since merger close, DowDuPont has returned $7.5 billion to shareholders.
“Our teams generated strong gains in volume, price and operating EBITDA by continuing to execute our growth strategy, capture cost synergies and drive productivity improvements,” said Ed Breen, chief executive officer of DowDuPont. “Organic sales rose 10 percent, equally driven by volume and local price as customer demand remained strong. We delivered our year-over-year cost synergies and we are again raising our target, now to $3.6 billion. We are also reaffirming our full year 2018 EPS guidance provided in August with our second quarter earnings announcement. Each division is performing well, and we remain on track to complete the intended separations, beginning with Materials Science on April 1, followed by Agriculture and Specialty Products on June 1.”
Third Quarter Division Highlights
Industrial Intermediates & Infrastructure
Industrial Intermediates & Infrastructure reported net sales of $3.8 billion, up 18 percent from pro forma net sales of $3.2 billion in the year-ago period, with growth in all regions and double-digit increases in Asia Pacific, United States & Canada, and Latin America. Volume grew 14 percent, with gains in all regions. Local price rose 5 percent, with gains in most regions, led by a double-digit increase in United States & Canada. Currency was a 1 percent headwind.
Polyurethanes & CAV delivered sales gains in all regions, driven by volume and local price gains in most regions, more than offsetting easing isocyanate prices. The volume increase was led by Asia Pacific and EMEA. Industrial Solutions reported double-digit sales growth, driven by volume and local price gains in all regions. Volume growth was led by gains in industrial specialties, with double-digit growth in intermediates for crop defense; energy heat management; and food and feed manufacturing. Volume gains in both Polyurethanes & CAV and Industrial Solutions were further supported by increased supply from the Sadara joint venture.
Operating EBITDA in the third quarter was $654 million, down 3 percent from pro forma operating EBITDA of $676 million in the year-ago period. Rising raw material costs, the easing of isocyanate margins, and an unplanned outage associated with an isocyanates facility on the U.S. Gulf Coast more than offset local price and volume gains, as well as cost synergies.
Equity earnings for the segment totaled $54 million, compared with pro forma equity earnings of $41 million in the year-ago period. The year-over-year growth was driven by higher monoethylene glycol (MEG) pricing that benefited the Kuwait joint ventures.