Dupont De Nemours - $DD - Earnings Analysis: Strong financial performance with solid fourth quarter results.

Business Model

DuPont generates revenue through technology-based materials and solutions across various industries, including electronics, transportation, construction, water, healthcare, and worker safety.

Revenue Sources

• Electronics & Industrial: Sales driven by semiconductor technologies, interconnect solutions, and industrial solutions.
• Water & Protection: Sales from safety solutions, shelter solutions, and water solutions.
• Corporate & Other: Revenue from auto adhesives & fluids, multibase, and Tedlar businesses.

Income Statement Analysis

• Net sales increased by 7% due to an 8% increase in volume, offset by a 1% decrease in price. The growth was led by strong demand in electronics, medical packaging, biopharma, and water markets.
• Operating EBITDA increased by 13% due to volume gains, higher production rates, and restructuring savings, partially offset by higher variable compensation. Operating EBITDA margin improved by 140 basis points.

Balance Sheet Analysis

• Total Assets decreased by 4.9% from $38,552 million to $36,636 million.
• Total Stockholders' Equity decreased by 3.8% from $24,279 million to $23,350 million.

Cash Flow Analysis

• Cash provided by operating activities from continuing operations increased by 5.9% year over year.
• Cash used for investing activities from continuing operations changed from positive $172 million to negative $849 million year over year, driven by proceeds from sales of property, businesses, and ownership interests in nonconsolidated affiliates, net of cash divested (8 million) Acquisitions of property and businesses, net of cash acquired(-321 million), purchases of investments - million, proceeds from sales and maturities of investments - million Other investing activities, net -43 million
• Cash used for financing activities from continuing operations decreased from $2,989 million to $1,847 million, Payments on long-term debt (687million), Proceeds from issuance of Company stock 50 million, Employee taxes paid for share-based payment arrangements -27 million, Distributions to noncontrolling interests -26 million
• Cash, cash equivalents and restricted cash at end of period decreased by 32.5% year over year.

Capital Allocation

DuPont is focused on optimizing growth opportunities, driving commercial excellence, and enhancing operational excellence. The company has announced the intended separation of its Electronics business targeted for November 1, 2025.The company is deploying cash for separation related transaction costs.

Management Commentary

DuPont closed out a year of strong financial performance with solid fourth quarter results as we saw continued strength in electronics end-markets and a return to year-over-year top-line growth in Water & Protection driven by further improvement in water and medical packaging end-markets.

Our team’s ongoing focus on operational execution and cost discipline throughout 2024 delivered 100 basis points of margin expansion with 17% adjusted EPS growth for the full year, along with strong cash generation and related cash conversion of 105%.

Overall Sentiment: Positive, highlighting strong financial performance, operational execution, and progress on strategic initiatives.

Recommendation

Rating: Hold

Reason for Rating: Considering the ongoing business separation, and strong cash conversion, a Hold recommendation is appropriate.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.

Generated on: 2/11/2025, 11:05:57 PM