DuPont De Nemours, Inc. (DD) shares are experiencing a surge following the release of its third-quarter earnings report, which showcased a blend of positive and negative developments. While revenue marginally fell short of analyst expectations, the company delivered strong organic sales growth, a notable increase in operating EBITDA, and exceeded adjusted earnings per share estimates.
DuPont reported a 4% year-over-year increase in sales, reaching $3.192 billion, slightly missing the consensus of $3.204 billion. However, organic sales, which exclude the impact of acquisitions and divestitures, grew by a positive 3% year-over-year, driven by a 5% increase in volume offset by a 2% decrease in price. This growth was geographically diverse, with EMEA seeing a 1% increase, U.S./Canada experiencing a 2% decline, and Asia Pacific recording a robust 9% increase.
Further bolstering the positive narrative, DuPont’s operating EBITDA rose by 11% year-over-year to $857 million, while its margin expanded by a significant 150 basis points to 26.8%. The company’s Electronics & Industrial segment performed particularly well, generating sales of $1.551 billion (a 13% year-over-year increase) and an impressive operating EBITDA margin expansion of 210 basis points to 30.1%. The Water & Protection segment also saw positive developments, with sales reaching $1.382 billion (a 2% decline year-over-year), while its operating EBITDA margin expanded by 70 basis points to 26.3%.
Adding to the positive sentiment, DuPont reported adjusted earnings per share of $1.18 for the quarter, representing a 28% year-over-year increase and surpassing the consensus estimate of $1.03. Operating cash flow from continuing activities for the quarter remained almost flat year-over-year at $737 million, compared to $740 million in the previous year. As of the end of September, DuPont held cash and equivalents totaling $1.7 billion.
DuPont’s CEO, Lori Koch, highlighted the positive factors contributing to the company’s performance, stating, “We are benefiting from continued demand recovery in electronics while also seeing improvement in our water and medical packaging end-markets. In the third quarter, a return to year-over-year organic sales growth coupled with solid execution drove strong operating leverage, resulting in 150 basis points of margin expansion.”
Looking ahead, DuPont provided guidance for the fourth quarter, anticipating net sales of approximately $3.07 billion, slightly below the consensus of $3.14 billion. The company expects adjusted EPS of around $0.98, aligning with the consensus. Antonella Franzen, DuPont’s Chief Financial Officer, commented, “On a year-over-year basis, our fourth quarter guidance reflects continued momentum including sales and earnings growth assumptions for both E&I and W&P. Sequentially, our fourth quarter guidance assumes normal seasonal declines in electronics and construction markets, partially offset by continued recovery in water and medical packaging endmarkets.”
DuPont has also revised its outlook for 2024, raising the adjusted EPS guidance to approximately $3.90, up from the previous range of $3.70 to $3.80. This surpasses the current consensus of $3.77. However, the company has lowered its revenue guidance to $12.365 billion, down from the previous range of $12.40 billion to $12.50 billion, slightly below the $12.44 billion consensus.
It is noteworthy that on May 22, 2024, DuPont announced plans to split into three publicly traded companies through a tax-free separation of its Electronics and Water businesses to shareholders. The company aims to complete these separations within 18 to 24 months from the announcement date.
Following the release of these earnings results, DD shares are trading significantly higher, up by 5.31% at $86.20 at the time of writing.
