DuPont de Nemours, Inc. (DD) 2024 Q2 Earnings Call Summary
July 31, 2024 
DuPont de Nemours, Inc. (DD)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Strong Q2 Financial Performance: DuPont reported second quarter financial results ahead of guidance, with net sales and operating EBITDA up year-over-year and sequentially. A 17% increase in operating EBITDA from the first quarter was noted.
- Electronics Recovery: The company experienced a broad-based electronics recovery, particularly in the semi business, driven by growth in advanced technology applications including AI.
- Acquisition of Donatelle: DuPont closed the acquisition of Donatelle, enhancing its position in the high-growth medical device market.
- Cash Generation: Demonstrated strong cash generation with a conversion of over 100%, highlighting disciplined working capital management.
- Raised Full-Year 2024 Guidance: Based on the quarter's performance, DuPont raised its guidance for net sales, operating EBITDA, and adjusted EPS for the full year 2024.
Pessimistic Highlights
- Price Decreases: Organic sales were flat as a 2% increase in volume was offset by a 2% decrease in price.
- W&P Segment Decline: The Water & Protection (W&P) segment saw a 7% decline in net sales versus the year-ago period due to organic sales decline and currency headwind.
- PFAS Litigation Update: Although the South Carolina MDL personal injury cases are expected to reduce, the litigation remains a concern with no trials expected in 2024.
Company Outlook
- Continued Recovery and Growth: DuPont expects continued recovery in its key markets, particularly in electronics, with a positive outlook for AI-driven demand.
- Separation Plans Progressing: The company is moving forward with its plans to separate the electronics and water businesses into independent companies, aiming to complete executive leadership appointments and corporate governance aspects by early 2025.
- Full-Year 2024 Guidance Raised: Reflecting confidence in its operational performance and market recovery, DuPont has raised its full-year guidance for net sales, operating EBITDA, and adjusted EPS.
Q & A Highlights
Q: Can you elaborate on the electronics market recovery and AI-driven demand? (Jeff Sprague, Vertical Research Partners)
A: The majority of growth in the semi and ICS business was market recovery, with about $30 million of pre-buy in Asia Pacific. AI is contributing significantly to growth, with AI-related sales around $250 million. (Lori Koch)
Q: What's driving the decrease in price, especially in the W&P segment? (Scott Davis, Melius Research)
A: The decrease in price is partly due to timing of price increases in previous years, especially where pricing over the last 2 years was in the mid-teens to compensate for cost increases. (Antonella Franzen)
Q: How does AI-driven demand impact product mix in electronics? (Scott Davis, Melius Research)
A: The same products are used for AI applications, but advanced nodes require more material due to more stacks and thermal management requirements. (Lori Koch)
Q: What's the outlook for EBITDA seasonality and the PFAS litigation update? (Steve Tusa, JPMorgan)
A: Seasonality is muted due to market recovery, with a $30 million rise from Q2 to Q3. For PFAS, about half of the 6,000 cases are expected to be dismissed, with DuPont's responsibility in the 3% to 7% range. (Lori Koch, Edward Breen)
Q: Can you discuss the momentum in Water & Safety Solutions into Q3? (Laurence Alexander, Jefferies)
A: Expectations are for flat sales from Q2 to Q3 in water, with a sequential increase in Q4, and some improvement in safety solutions. (Lori Koch)