- Tax-free separations create independent, focused Electronics and Water companies that are global leaders in their respective industries
- New DuPont will remain a premier diversified industrial company with industry-leading brands and solutions
- Reaffirms second quarter and full year 2024 net sales, operating EBITDA and adjusted EPS financial guidance
- Company to host a call with investors at 8:00 a.m. ET on Thursday, May 23, 2024
WILMINGTON, Del., May 22, 2024 /PRNewswire/ -- DuPont (NYSE: DD) today announced a plan to separate into three distinct, publicly traded companies. Under the plan, DuPont would execute the proposed separations of its Electronics and Water businesses in a tax-free manner to its shareholders with New DuPont continuing as a premier diversified industrial company following completion of the separations. As independent entities, both Electronics and Water will benefit from increased focus and agility in their respective industries. At separation, each of the three companies will have strong balance sheets, attractive financial profiles and compelling growth opportunities.
As leading standalone companies, each business is expected to benefit from:
- An ability to tailor capital allocation strategies to pursue differential strategic growth objectives
- Enhanced strategic flexibility to pursue portfolio enhancing M&A
- Compelling investment profiles appealing to different investor bases
- Distinct boards of directors and management teams comprised of world-class leaders with track records of driving value creation in each specific industry
"This is an extraordinary opportunity to deliver long-term, sustainable shareholder value through the creation of three strong, industry-leading companies," said Ed Breen, DuPont Executive Chairman and Chief Executive Officer. "The three-way separation will unlock incremental value for shareholders and customers and also create new opportunities for employees. Critically, each company will have greater flexibility to pursue their own focused growth strategies, including portfolio enhancing M&A."
Overview of Three Leading Standalone Companies
New DuPont: A Diversified Industrial Company with a Portfolio of Iconic Brands and Solutions
New DuPont will be a premier diversified industrial company powered by deep materials science and application engineering expertise, industry-leading innovation, top-tier manufacturing capabilities, and iconic brands such as Tyvek®, Kevlar® and Nomex®. New DuPont will have a strong presence in fast-growing healthcare end-markets including applications for biopharma consumables, medical devices, and medical packaging. The company will also be a leading provider of key technologies enabling advanced mobility particularly within electric vehicles. Finally, New DuPont will remain a provider of advanced solutions serving safety, construction, aerospace and other industrial-based end-markets.
New DuPont will be comprised of the existing businesses within the Water & Protection segment (excluding Water Solutions), the majority of businesses within Industrial Solutions (including healthcare), and the retained businesses reported in Corporate (including adhesives). These businesses generated net sales of approximately $6.6 billion and operating EBITDA margin(1) of approximately 24% in 2023.
New DuPont is expected to continue to deliver strong margins, generate robust cash flow and will have a balanced financial policy similar to the current DuPont, including the ability to invest in growth opportunities.
Electronics: A Global Leader for Electronic Materials including Semiconductor Solutions and Advanced Electronics Products
Electronics will be a leading global provider of differentiated electronics materials including key consumables used in semiconductor chip manufacturing, as well as advanced electronic materials enabling reliable signal integrity, power management and thermal management. The company will be well positioned to capture growth in the semiconductor industry, driven by high-performance computing demands from AI, high speed connectivity, smart and autonomous vehicles and the Internet of Things, among other mega-trend growth drivers.
Electronics will be comprised of the existing Semiconductor Technologies and Interconnect Solutions lines of business, as well as the electronics-related product lines from Industrial Solutions. These businesses generated net sales of approximately $4.0 billion and operating EBITDA margin(1) of approximately 29% in 2023.
Electronics will focus on innovation-based growth. With robust cash flow generation, Electronics will be well positioned to pursue ongoing organic growth initiatives and have flexibility to pursue inorganic growth opportunities.
Water: A Comprehensive Water Solutions Provider with Leading Filtration Technologies
Water will be a global technology leader with a comprehensive portfolio of water filtration and purification solutions with leading technologies in reverse osmosis, ion exchange and ultrafiltration. Its solutions provide critical components and systems that generate clean and fit-for-purpose water across a variety of market segments including industrial water and energy, life sciences and specialties, municipal and desalination, and residential and commercial.
Water will be comprised of DuPont's current Water Solutions line of business which generated net sales of approximately $1.5 billion and operating EBITDA margin(1) of approximately 24% in 2023.
With profitable growth and strong cash generation, Water will be well positioned to drive earnings growth through continued investment in the business as well as potential inorganic growth opportunities.
(1) Presented on a DuPont segment reporting basis for informational purposes and should not be viewed as an indication of the future company's operating results on a standalone basis assuming completion of the separation transactions. Refer to Non-GAAP Financial Measures for further information.
Separation Transactions Detail
DuPont expects to execute the proposed separations of Electronics and Water in a way that will be tax-free for DuPont shareholders for U.S. federal income tax purposes.
DuPont expects to complete the separations within 18 to 24 months. The separation transactions will not require a shareholder vote and are subject to satisfaction of customary conditions, including final approval by DuPont's Board of Directors, receipt of tax opinion from counsel, the filing and effectiveness of Form 10 registration statements with the U.S. Securities and Exchange Commission, applicable regulatory approvals and satisfactory completion of financing.
It is anticipated that all three companies will have strong balance sheets and will be capitalized to provide the financial flexibility to take advantage of future growth opportunities. New DuPont is expected to maintain its investment grade credit rating.
Leadership Updates
In a separate press release issued today, DuPont announced the following leadership appointments, effective June 1, 2024:
- Lori Koch, current Chief Financial Officer is appointed Chief Executive Officer, succeeding Ed Breen who will retain his role of Executive Chairman.
- Antonella Franzen, current Chief Financial Officer of DuPont's Water & Protection segment, is appointed Chief Financial Officer.
Following completion of the separations, Lori Koch and Antonella Franzen will remain in their respective positions for New DuPont. Specifics around additional executive leadership and Board of Director appointments are expected to be announced in advance of the respective separations.
Additional information related to the planned separations has been made available in a supplemental presentation posted on the Events & Presentations page on DuPont's Investor Relations website.
2024 Financial Outlook
DuPont reaffirms its second quarter and full year 2024 financial guidance for net sales, operating EBITDA and adjusted EPS as provided on May 1, 2024 as part of its first quarter earnings release.
Advisors
Centerview Partners LLC and Goldman Sachs & Co. LLC are serving as DuPont's financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel.
Conference Call Details
DuPont will host a conference call on Thursday, May 23, 2024 at 8:00 a.m. ET to discuss the announcement. The event will be webcast live and can be accessed on DuPont's Investors Relations page. A replay, along with the presentation that accompanies the conference call, will also be posted to the website. The dial-in number for the conference call is 800-715-9871 toll-free within the U.S. or +1-646-307-1963. The conference ID is 5183725.
About DuPont
DD) is a global innovation leader with technology-based materials and solutions that help transform industries and everyday life. Our employees apply diverse science and expertise to help customers advance their best ideas and deliver essential innovations in key markets including electronics, transportation, construction, water, healthcare and worker safety. More information about the company, its businesses and solutions can be found at www.dupont.com. Investors can access information included on the Investor Relations section of the website at investors.dupont.com.
DuPont and all products, unless otherwise noted, denoted with , SM or ® are trademarks, service marks or registered trademarks of affiliates of DuPont de Nemours, Inc.
Cautionary Statement about Forward-looking Statements
Non-GAAP Financial Measures
This communication includes information that does not conform to accounting principles generally accepted in the United States of America ("U.S. GAAP") and are considered non-GAAP measures. Management uses these measures internally for planning, forecasting and evaluating the performance of the company, including allocating resources. DuPont's management believes these non-GAAP financial measures are useful to investors because they provide additional information related to the ongoing performance of DuPont to offer a more meaningful comparison related to future results of operations. These non-GAAP financial measures supplement disclosures prepared in accordance with U.S. GAAP, and should not be viewed as an alternative to U.S. GAAP. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations of non-GAAP measures to U.S. GAAP are provided in the Reconciliation to Non-GAAP Measures on the Investors section of DuPont's website. Non-GAAP measures referred to in this communication are defined below. DuPont has not provided forward-looking U.S. GAAP financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most comparable U.S. GAAP financial measures on a forward-looking basis because the company is unable to predict with reasonable certainty the ultimate outcome of certain future events. These events include, among others, the impact of portfolio changes, including the separation transactions, asset sales, mergers, acquisitions, and divestitures; contingent liabilities related to litigation, environmental and indemnifications matters; impairments and discrete tax items. These items are uncertain, depend on various factors, and could have a material impact on U.S. GAAP results for the guidance period. We encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.
DuPont's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the company's chief operating decision maker ("CODM") assesses performance and allocates resources. The company defines Operating EBITDA as earnings (i.e., "Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, and adjusted for significant items.
Operating EBITDA Margin is defined as Operating EBITDA divided by net sales.
Significant items are items that arise outside the ordinary course of the company's business that management believes may cause misinterpretation of underlying business performance, both historical and future, based on a combination of some or all of the item's size, unusual nature and infrequent occurrence. Management classifies as significant items certain costs and expenses associated with integration and separation activities related to transformational acquisitions and divestitures as they are considered unrelated to ongoing business performance.
Discussion of net sales and Operating EBITDA Margin related to New DuPont, Electronics and Water is on the same basis as DuPont's segment reporting and reflects the aggregate results for the businesses to be included within each of the future companies. Corporate expenses included by DuPont within Corporate & Other are not included in these financial disclosures. These measures have been presented in this manner for informational purposes only and should not be viewed as an indication of each future company's operating results on a standalone basis assuming completion of the separation transactions.
Effective as of January 1, 2024, Electronics & Industrial realigned certain product lines that comprise its business units (Industrial Solutions, Interconnect Solutions and Semiconductor Technologies). The realignment did not result in changes to total Electronics & Industrial segment net sales.
SOURCE DuPont
