August 2, 2018
DowDuPont Reports Second Quarter 2018 Results
- GAAP EPS from Continuing Operations of $0.76; Adj. EPS Increases 41% to $1.37
- GAAP Net Income from Continuing Operations of $1.8B; Op. EBITDA Up 29% to $5.7B
- Net Sales Up 17% to $24.2B; Volume and Local Price Gains in All Divisions and All Regions
- Cost Synergy Savings of >$375MM; Raises YoY Savings Target >15% to $1.4B
- Expects 3Q Op. EBITDA Growth in All Divisions: Ag mid-20s percent; Materials Science high-single digits percent; Specialty Products mid-teens percent
MIDLAND, Mich. & WILMINGTON, Del.–(BUSINESS WIRE)–
Second Quarter Financial Highlights
- GAAP earnings per share from continuing operations was $0.76. Adjusted earnings1 per share increased 41 percent to $1.37, compared with pro forma adjusted earnings1 per share in the year-ago period of $0.97. Adjusted earnings per share excludes significant items in the quarter totaling net charges of $0.50 per share and an $0.11 per share charge for DuPont amortization of intangible assets.
- Net sales increased 17 percent to $24.2 billion, with double-digit growth in all divisions and gains in all geographic regions, from pro forma net sales of $20.7 billion in the year-ago period. The Agriculture division increased sales 25 percent, driven by a recovery from weather-related delays in the first quarter and local price gains. The Materials Science division grew sales 18 percent, with double-digit gains in all segments and in all regions. The Specialty Products division increased sales 10 percent, with gains in most segments and all regions.
- Volume grew 10 percent on a pro forma basis from the year-ago period, with gains in all divisions and all regions, led by double-digit gains in U.S. & Canada and Asia Pacific. Agriculture volume increased 20 percent, primarily driven by a recovery from weather-related delays in the first quarter. Materials Science and Specialty Products volume increased 10 percent and 4 percent, respectively, both with gains in all segments and regions.
- Local price rose 4 percent on a pro forma basis, with gains in all divisions and all regions, led by a 5 percent increase in Materials Science and a 4 percent increase in Agriculture.
- Operating EBITDA1 increased 29 percent on a pro forma basis from the year-ago period to $5.7 billion. Agriculture achieved 45 percent operating EBITDA growth. Specialty Products delivered operating EBITDA growth of 23 percent. Materials Science delivered operating EBITDA growth of 22 percent.
- Operating EBITDA drivers in the quarter included volume and local price gains, cost synergies, currency, lower pension/OPEB costs2 and higher equity earnings.
- DowDuPont achieved cost synergy savings of more than $375 million in the quarter, reaching cumulative savings of nearly $900 million since merger close. The Company now expects to achieve year-over-year savings of $1.4 billion in 2018, a more than 15 percent increase from its previous target.
- Cash flow from operations was $2.1 billion, driven by increased cash earnings.
- 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 $5.6 billion to shareholders.
“We continued to deliver strong results in the second quarter, including double-digit gains in sales and operating EBITDA,” said Ed Breen, chief executive officer of DowDuPont. “Volume growth, local price gains and operating margin expansion were the key highlights, reflecting a clear focus from the businesses on execution. Our new product launches are resonating with customers, resulting in strong demand across each of our targeted end-markets. These are indicators that our three divisions are making a difference in the marketplace and for shareholders. We have great momentum and our employees are enthusiastic about the future of our intended industry-leading companies – Corteva, Dow and DuPont.”
Second Quarter Division Highlights
Industrial Intermediates & Infrastructure
Industrial Intermediates & Infrastructure delivered net sales of $3.9 billion, up 29 percent versus pro forma net sales of $3.0 billion in the year-ago period. Double-digit sales gains were achieved in all regions. Volume grew 18 percent and local price rose 8 percent, both with gains in all regions. Currency benefited sales by 3 percent.
Polyurethanes & CAV delivered double-digit sales gains in all regions, driven by broad-based local price and volume growth. Volume growth was led by Asia Pacific, driven by the continued ramp up of capacity at the Sadara joint venture, and U.S & Canada on increased demand across vinyl chloride monomer (VCM) and methylene diphenyl diisocyanate (MDI). Industrial Solutions reported double-digit sales growth, driven by volume and local price gains in all regions. Volume growth was led by increasing production from the Sadara joint venture, as well as strong gains in downstream intermediates, including polyglycols and heat transfer fluids.
Operating EBITDA in the second quarter was $682 million, up 64 percent from pro forma operating EBITDA of $417 million in the year-ago period. Local price gains, cost synergies and improved equity earnings more than offset the impact of higher raw material costs.
Equity earnings for the segment totaled $96 million, compared with pro forma equity losses of $13 million in the year-ago period. The year-over-year growth was driven by a reduction in equity losses from the Sadara joint venture, resulting from the operation of new facilities, and higher monoethylene glycol (MEG) pricing that benefited the Kuwait joint ventures.