DuPont Reports 1Q 2013 Operating EPS of $1.56 Agriculture Segment Achieves Record Operating Earnings, Company Raises Dividend PR Newswire WILMINGTON, Del., April 23, 2013 WILMINGTON, Del., April 23, 2013 /PRNewswire/ --DuPont (NYSE: DD)today announced first quarter 2013 operating earnings per share (EPS) of $1.56 versus prior year earnings of $1.64. GAAP^1 EPS from continuing operations was $1.47 versus $1.48 in the prior year. Primary drivers of results for the quarter were record Agriculture operating earnings offset by an expected decline in Performance Chemicals. DuPont reaffirmed its full year 2013 EPS outlook and today announced a 5 percent dividend increase. 1Q 2013 Highlights - Sales of $10.4 billion were up 2 percent, reflecting volume growth. A one percent increase in local prices was offset by currency impact. - Record Agriculture operating earnings of $1.5 billion were up 13 percent. Sales increased 14percent driven by strong volume growth, particularly in North America and Latin America, and higher pricing from new seed and crop protection products. - Total segment operating earnings of $2.3 billion were down 8 percent, largely due to a $320 million decline (about $.26 EPS) in Performance Chemicals from last year's high levels. - The company completed the sale of the Performance Coatings segment, executed a $1 billion share buyback and reduced its net debt. - Cost productivity gains and restructuring savings are on track to meet or exceed full year targets. - The company reaffirms its outlook for full-year 2013 operating earnings of $3.85-$4.05 per share, an increase of 2-7 percent from $3.77 per share earned in 2012. "The first quarter finished as expected, with the strong Agriculture performance and Performance Chemicals' decline from peak levels last year," said DuPont Chair and CEO Ellen Kullman. "Our strategies for growth and improved return on capital are working as we continue to focus on delivering science-powered innovation and industry-leading productivity improvement. We remain committed to delivering value to our shareholders as demonstrated by executing our share buyback, strengthening our balance sheet and increasing our dividend." Global Consolidated Sales – 1st Quarter First quarter 2013 sales were $10.4 billion, up 2 percent versus last year, with 2 percent higher volume. Negative currency impact offset higher local selling prices. Volume was primarily driven by increases for Agriculture in North America and Latin America. The table below shows first quarter regional sales and variances versus first quarter 2012. Three Months Ended Percentage Change Due to: March 31, 2013 (Dollars in millions) $ % Change Local Currency Volume Price Effect U.S. & Canada $ 4,848 8 4 - 4 EMEA* 2,727 (1) 1 (1) (1) Asia Pacific 1,754 (8) (6) (2) - Latin America 1,079 4 4 (4) 4 Total Consolidated Sales $ 10,408 2 1 (1) 2 * Europe, Middle East & Africa Segment Sales – 1st Quarter The table below shows first quarter 2013 segment sales with related variances versus the prior year. SEGMENT SALES Three Months Ended Percentage Change (Dollars in millions) March 31, 2013 Due to: $ % Change USD Volume Portfolio/ Price Other Agriculture $ 4,669 14 6 8 - Electronics & Communications 616 (9) (3) (6) - Industrial Biosciences 289 - 1 (1) - Nutrition & Health 868 7 5 4 (2) Performance Chemicals 1,585 (17) (11) (6) - Performance Materials 1,559 (3) (3) 1 (1) Safety & Protection 907 (4) (2) (2) - Other 1 nm Total segment sales 10,494 Elimination of transfers (86) Consolidated net sales $ 10,408 Operating Earnings – 1st Quarter Change vs. 2012 (Dollars in millions) 1Q13 1Q12 $ % Agriculture $ 1,516 $ 1,338 $ 178 13% Electronics & Communications 49 59 (10) -17% Industrial Biosciences 41 39 2 5% Nutrition & Health 76 79 (3) -4% Performance Chemicals 251 571 (320) -56% Performance Materials 292 277 15 5% Safety & Protection 138 159 (21) -13% Other (91) (76) (15) nm 2,272 2,446 (174) -7% Pharmaceuticals 4 27 (23) -85% Total segment operating earnings 2,276 2,473 (197) -8% ^(1) Corporate expenses (214) (251) 37 -15% Interest expense (117) (114) (3) 3% Operating earnings before income 1,945 2,108 (163) -8% taxes and exchange gains/losses Provision for income taxes on operating earnings, excluding (456) (505) 49 nm taxes on exchange gains/losses Net after-tax exchange gains (23) (44) 21 nm (losses) ^(2) Net income attributable to (7) (12) 5 nm noncontrolling interests Operating earnings $ 1,459 $ 1,547 $ (88) -6% Operating earnings per share $ 1.56 $ 1.64 $ (0.08) -5% (1) See Schedules B and C for listing of significant items and their impact by segment. (2) See Schedule D for additional information on exchange gains and losses. The following is a summary of business results for each of the company's reportable segments in the first quarter comparing current period with the prior year. References to selling price are on a U.S. dollar basis, including the impact of currency. Agriculture – Operating earnings of $1.5 billion improved 13 percent on higher volume and price, partially offset by higher seed input costs which pressured margin slightly. Earnings improvement was driven by a 14 percent increase in sales reflecting strong corn seed sales in North America and Brazil and strong Crop Protection volumes in North America and Latin America. Electronics & Communications – Operating earnings of $49 million declined $10 million driven largely by lower sales in photovoltaic markets, as share gains were more than offset by lower usage of materials per photovoltaic module. Industrial Biosciences – Operating earnings of $41 million were up 5 percent on higher demand and lower input costs for Sorona^®polymer for carpeting and growth in food enzymes, partially offset by lower enzyme demand for ethanol production. Nutrition & Health – Operating earnings of $76 million decreased $3 million. Pricing gains, strong demand for probiotics and specialty protein solution and the realization of integration synergies were offset by higher raw material costs, primarily in enablers. Performance Chemicals – Operating earnings of $251 million were $320 million lower, due primarily to substantial price declines in the titanium dioxide market and weak demand for fluoropolymers, particularly in North America and Asia Pacific. Titanium dioxide volume was essentially flat year-over-year, but increased 8 percent from fourth quarter 2012. Performance Materials – Operating earnings of $292 million increased 5 percent due primarily to lower feedstock costs and higher sales volume in packaging markets, partially offset by weak demand in the European automotive market and continued softness in the industrial and electronics markets. Safety & Protection – Operating earnings of $138 million decreased $21 million reflecting a weaker sales mix, as well as lower plant utilization. Lower sales primarily reflect significantly reduced demand for military protection products and continued softness in certain industrial markets. Additional information is available on the DuPont Investor Center website at http://www.investors.dupont.com. Outlook The company reaffirms its outlook for full-year 2013 operating earnings of $3.85-$4.05 per share, an increase of 2-7 percent from $3.77 per share earned in 2012,based on continued strong growth in Agriculture and anticipated overall improvement in global industrial market demand. For first-half 2013, the company expectsoperating earnings per share to be about 7-9 percent lower than the first half of 2012, primarily reflecting, as in the first quarter, lower Performance Chemicals earnings from peak levels in the prior year. Use of Non-GAAP Measures Management believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company. Such measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D. DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802. The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment. For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com. Forward-Looking Statements: This news release contains forward-looking statements which may be identified by their use of words like "plans," "expects," "will," "believes," "intends," "estimates," "anticipates" or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company's growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements. Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the company's control. Some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; inability to protect and enforce the company's intellectual property rights; and integration of acquired businesses and completion of divestitures of underperforming or non-strategic assets or businesses. The company undertakes no duty to update any forward-looking statements as a result of future developments or new information. 4/23/13 ^1Generally Accepted Accounting Principles (GAAP) E. I. du Pont de Nemours and Company Consolidated Income Statements (Dollars in millions, except per share amounts) SCHEDULE A Three Months Ended March 31, 2013 2012 Net sales $ 10,408 $ 10,180 Other income, net^ 92 14 Total 10,500 10,194 Cost of goods sold and other 7,105 6,816 operating charges ^(a) Selling, general and 983 955 administrative expenses Research and development 521 508 expense Interest expense 117 114 Total 8,726 8,393 Income from continuing 1,774 1,801 operations before income taxes Provision for income taxes on 387 392 continuing operations ^(a) Income from continuing 1,387 1,409 operations after income taxes Net income from discontinued 1,968 95 operations after taxes Net income 3,355 1,504 Less: Net income attributable 7 12 to noncontrolling interests Net income attributable to $ 3,348 $ DuPont 1,492 Basic earnings per share of common stock ^(b): Basic earnings per share of $ $ common stock from continuing 1.48 1.49 operations Basic earnings per share of common stock from discontinued 2.12 0.10 operations Basic earnings per share of $ $ common stock 3.60 1.60 Diluted earnings per share of common stock ^(b): Diluted earnings per share of $ $ common stock from continuing 1.47 1.48 operations Diluted earnings per share of common stock from discontinued 2.10 0.10 operations Diluted earnings per share of $ $ common stock 3.58 1.58 Dividends per share of common $ $ stock 0.43 0.41 Average number of shares outstanding used in earnings per share (EPS) calculation: Basic 928,348,000 933,910,000 Diluted 935,390,000 944,238,000 (a) See Schedule B for detail of significant items. (b) The sum of the individual earnings per share amounts may not equal the total due to rounding. Reconciliation of Non-GAAP Measures Summary of Earnings Comparison Three Months Ended March 31, 2013 2012 % Change Income from continuing $ operations after income taxes $ 1,387 1,409 -2% (GAAP) Less: Significant items benefit (charge) included in income from continuing operations after 20 (32) income taxes (per Schedule B) Non-operating pension/OPEB costs included in income from continuing operations after (99) (118) income taxes Net income attributable to 7 12 noncontrolling interest Operating earnings $ 1,459 $ -6% 1,547 EPS from continuing operations $ $ -1% (GAAP) 1.47 1.48 Significant items benefit (charge) included in EPS (per 0.02 (0.04) Schedule B) Non-operating pension/OPEB costs (0.11) (0.12) included in EPS Operating EPS $ $ -5% 1.56 1.64 E. I. du Pont de Nemours and Company Condensed Consolidated Balance Sheets (Dollars in millions, except per share amounts) SCHEDULE A (continued) March 31, December 31, 2013 2012 Assets Current assets Cash and cash equivalents $ 6,555 $ 4,284 Marketable securities 26 123 Accounts and notes receivable, net 7,950 5,452 Inventories 6,916 7,565 Prepaid expenses 268 204 Deferred income taxes 699 613 Assets held for sale - 3,076 Total current assets 22,414 21,317 Property, plant and equipment, net of accumulated depreciation 12,590 12,741 (March 31, 2013 - $19,233; December 31, 2012 - $19,085) Goodwill 4,543 4,616 Other intangible assets 4,970 5,126 Investment in affiliates 1,169 1,163 Deferred income taxes 3,957 3,936 Other assets 921 960 Total $ 50,564 $ 49,859 Liabilities and Equity Current liabilities Accounts payable $ 3,957 $ 4,853 Short-term borrowings and capital lease 2,006 1,275 obligations Income taxes 945 343 Other accrued liabilities 4,615 5,997 Liabilities related to assets held for - 1,084 sale Total current liabilities 11,523 13,552 Long-term borrowings and capital lease 11,279 10,465 obligations Other liabilities 14,526 14,687 Deferred income taxes 921 856 Total liabilities 38,249 39,560 Commitments and contingent liabilities Stockholders' equity Preferred stock 237 237 Common stock, $0.30 par value; 1,800,000,000 shares authorized; Issued at March 31, 2013 - 302 306 1,007,234,000; December 31, 2012 - 1,020,057,000 Additional paid-in capital 10,394 10,655 Reinvested earnings 16,709 14,383 Accumulated other comprehensive loss (8,662) (8,646) Common stock held in treasury, at cost (87,041,000 shares (6,727) (6,727) at March 31, 2013 and December 31, 2012) Total DuPont stockholders' equity 12,253 10,208 Noncontrolling interests 62 91 Total equity 12,315 10,299 Total $ 50,564 $ 49,859 E. I. du Pont de Nemours and Company Condensed Consolidated Statement of Cash Flows (Dollars in millions) SCHEDULE A (continued) Three Months Ended March 31, Total Company 2013 2012 Net income $ 3,355 $ 1,504 Adjustments to reconcile net income to cash used for operating activities: Depreciation 327 349 Amortization 106 106 Other noncash charges and credits - net (23) 311 Gain on sale of business (2,683) - Contributions to pension plans (110) (614) Change in operating assets and liabilities (3,639) (3,533) - net Cash provided by (used for) operating $ (2,667) $ (1,877) activities Investing activities Purchases of property, plant and equipment (321) (301) Proceeds from sale of business 4,815 - Net (increase) decrease in short-term 99 248 financial instruments Forward exchange contract settlements (47) (87) Other investing activities - net 62 (16) Cash provided by (used for) investing 4,608 (156) activities Financing activities Dividends paid to stockholders (405) (386) Net increase (decrease) in borrowings 1,558 2,278 Prepayment for the repurchase of common (1,000) (400) stock Proceeds from exercise of stock options 117 389 Other financing activities - net 61 (36) Cash provided by (used for) financing 331 1,845 activities Effect of exchange rate changes on cash (96) 12 Increase (decrease) in cash and cash 2,176 (176) equivalents Cash and cash equivalents at beginning of 4,379 3,586 period Cash and cash equivalents at end of period $ 6,555 $ 3,410 Reconciliation of Non-GAAP Measure Calculation of Free Cash Flow - Total Company Three Months Ended March 31, 2013 2012 Cash provided by (used for) operating $ (2,667) $ (1,877) activities Purchases of property, plant and equipment (321) (301) Free cash flow $ (2,988) $ (2,178) E. I. du Pont de Nemours and Company Schedule of Significant Items from Continuing Operations (Dollars in millions, except per share amounts) SCHEDULE B SIGNIFICANT ITEMS FROM CONTINUING OPERATIONS Pre-tax After-tax ($ Per Share) 2013 2012 2013 2012 2013 2012 1st Quarter Customer $ $ $ $ $ $ claims charge (35) (50) (22) (32) (0.02) (0.04) ^(a) Income tax - - 42 - 0.04 - items ^(b) 1st Quarter - $ $ $ $ $ $ Total (35) (50) 20 (32) 0.02 (0.04) First quarter 2013 and first quarter 2012 included charges of $(35) and $(50), respectively, recorded in Cost of goods sold and other operating charges associated with the company's process to fairly resolve claims related to the use of Imprelis® herbicide, bringing the total charges to $(785) at March 31, 2013. The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonably possible that additional charges could (a) result from this evaluation. While there is a high degree of uncertainty, total charges could range as high as $(900). The company has an applicable insurance program with a deductible equal to the first $100 of costs and expenses. The insurance program limits are $725 for costs and expenses in excess of the $100. The company has submitted and will continue to submit requests for payment to its insurance carriers for costs associated with this matter. The process of seeking insurance recovery is ongoing and the timing and outcome are uncertain. This matter relates to the Agriculture segment. First quarter 2013 included a net tax benefit of $42 consisting of a (b) $68 benefit for the 2013 extension of certain U.S business tax provisions offset by a ($26) charge related to the global distribution of Performance Coatings cash proceeds. E. I. du Pont de Nemours and Company Consolidated Segment Information (Dollars in millions) SCHEDULE C Three Months Ended March 31, SEGMENT SALES ^(1) 2013 2012 Agriculture $ 4,669 $ 4,080 Electronics & Communications 616 677 Industrial Biosciences 289 288 Nutrition & Health 868 808 Performance Chemicals 1,585 1,900 Performance Materials 1,559 1,600 Safety & Protection 907 941 Other 1 1 Total Segment sales 10,494 10,295 Elimination of transfers (86) (115) Consolidated net sales $ 10,408 $ 10,180 (1) Sales for the reporting segments include transfers. E. I. du Pont de Nemours and Company Consolidated Segment Information (Dollars in millions) SCHEDULE C (continued) Three Months Ended March 31, INCOME/(LOSS) FROM CONTINUING OPERATIONS (GAAP) 2013 2012 Agriculture $ 1,481 $ 1,288 Electronics & Communications 49 59 Industrial Biosciences 41 39 Nutrition & Health 76 79 Performance Chemicals 251 571 Performance Materials 292 277 Safety & Protection 138 159 Pharmaceuticals 4 27 Other (91) (76) Total Segment PTOI 2,241 2,423 Corporate expenses (214) (251) Interest expense (117) (114) Non-operating pension/OPEB costs (147) (176) Net exchange gains (losses) ^(1) 11 (81) Income before income taxes from continuing $ 1,774 $ 1,801 operations Three Months Ended March 31, SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) ^(2) 2013 2012 Agriculture $ (35) $ (50) Electronics & Communications - - Industrial Biosciences - - Nutrition & Health - - Performance Chemicals - - Performance Materials - - Safety & Protection - - Pharmaceuticals - - Other - - Total significant items by segment (35) (50) Corporate expenses - - Total significant items before income taxes $ (35) $ (50) Three Months Ended March 31, OPERATING EARNINGS 2013 2012 Agriculture $ 1,516 $ 1,338 Electronics & Communications 49 59 Industrial Biosciences 41 39 Nutrition & Health 76 79 Performance Chemicals 251 571 Performance Materials 292 277 Safety & Protection 138 159 Pharmaceuticals 4 27 Other (91) (76) Total segment operating earnings 2,276 2,473 Corporate expenses (214) (251) Interest expense (117) (114) Operating earnings before income taxes and exchange 1,945 2,108 gains (losses) Net exchange gains (losses) ^(1) 11 (81) Operating earnings before income taxes $ 1,956 $ 2,027 (1) See Schedule D for additional information on exchange gains and losses. (2) See Schedule B for detail of significant items. E. I. du Pont de Nemours and Company Reconciliation of Non-GAAP Measures (Dollars in millions, except per share amounts) SCHEDULE D Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements Three Months Ended March 31, 2013 2012 Income from continuing operations before income $ $ taxes 1,774 1,801 Less: Net income attributable to noncontrolling 7 12 interests Add: Interest expense 117 114 Adjusted EBIT from continuing operations 1,884 1,903 Add: Depreciation and amortization 433 427 Adjusted EBITDA from continuing operations $ $ 2,317 2,330 Reconciliation of Operating Earnings Per Share (EPS) Outlook The reconciliation below represents the company's outlook on an operating earnings basis, defined as earnings from continuing operations excluding significant items and non-operating pension/OPEB costs. Year Ended December 31, 2013 Outlook 2012 Actual Operating EPS $3.85 - $ $4.05 3.77 Significant items Tax items 0.04 - Sale of an equity method investment - 0.08 Customer claims charges (0.02) (0.39) Restructuring charge/adjustments - (0.17) Litigation settlement - (0.13) Asset impairment charge - (0.19) Sale of business - 0.08 Non-operating pension/OPEB costs - estimate (0.42) (0.46) Impact of LIFO accounting change - 0.02 EPS from continuing operations (GAAP) $3.45 - $ $3.65 2.61 E. I. du Pont de Nemours and Company Reconciliation of Non-GAAP Measures (Dollars in millions) SCHEDULE D (continued) Exchange Gains/Losses on Operating Earnings The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in Other income, net and the related tax impact is recorded in Provision for (benefit from) income taxes on the Consolidated Income Statements. Three Months Ended March 31, 2013 2012 Subsidiary/Affiliate Monetary Position Gain (Loss) Pre-tax exchange gains (losses) (includes $ $ equity affiliates) (95) 47 Local tax benefits (expenses) 3 (7) Net after-tax impact from subsidiary $ $ exchange gains (losses) (92) 40 Hedging Program Gain (Loss) Pre-tax exchange gains (losses) $ 106 $ (128) Tax benefits (expenses) (37) 44 Net after-tax impact from hedging program $ $ exchange gains (losses) 69 (84) Total Exchange Gain (Loss) Pre-tax exchange gains (losses) $ $ 11 (81) Tax benefits (expenses) (34) 37 Net after-tax exchange gains (losses) ^(1) $ $ (23) (44) As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary/Affiliate Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)." (1) The above Net after-tax exchange gains (losses) excludes gains (losses) attributable to discontinued operations of ($5) and $0 for the three months ended March 31, 2013 and 2012, respectively. Reconciliation of Base Income Tax Rate to Effective Income Tax Rate Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), as defined above, significant items and non-operating pension/OPEB costs. Three Months Ended March 31, 2013 2012 Income from continuing operations before $ 1,774 $ income taxes 1,801 Add: Significant items - (benefit) charge 35 50 ^(2) Non-operating pension/OPEB costs 147 176 Less: Net exchange (losses) gains 11 (81) Income from continuing operations before income taxes, significant items, exchange gains (losses), and non-operating $ 1,945 $ pension/OPEB costs 2,108 Provision for income taxes on continuing $ 387 $ operations 392 Add: Tax benefits (expenses) on significant 55 18 items Tax benefits (expenses) on 48 58 non-operating pension/OPEB costs Tax benefits (expenses) on (34) 37 exchange gains/losses Provision for income taxes on operating $ 456 $ earnings, excluding exchange gains (losses) 505 Effective income tax rate 21.8% 21.8% Significant items effect and non-operating pension/OPEB 3.3% 1.3% costs effect Tax rate, from continuing operations, before significant items and non-operating 25.1% 23.1% pension/OPEB costs Exchange gains (losses) effect (1.7%) 0.9% Base income tax rate from 23.4% 24.0% continuing operations (2) See Schedule B for detail of significant items. SOURCE DuPont Website: http://www.dupont.com Contact: Media Contact: Michael Hanretta, 302-774-4005, firstname.lastname@example.org; Investor Contact: 302-774-4994
DuPont Reports 1Q 2013 Operating EPS of $1.56
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