DuPont Delivers Record First Quarter Earnings of $1.61 Ex-items

Innovation and Productivity Drive Strong Performance

Apr 19, 2012, 06:00 ET from DuPont

WILMINGTON, Del., April 19, 2012 /PRNewswire/ --

  • First quarter 2012 earnings, before significant items, were $1.61 per share versus $1.52 per share in 2011.  Reported earnings per share were $1.57 versus $1.52 in 2011.
  • Sales of $11.2 billion were up 12 percent versus the prior year.  This reflects 8 percent higher local prices, 1 percent currency headwind, 2 percent lower volume and 7 percent net benefit from portfolio changes. Sales in developing markets grew 15 percent.
  • Segment pre-tax operating income, excluding significant items, increased $252 million, or 12 percent versus the prior year, principally due to Agriculture, Performance Chemicals and the benefit of prior-year acquisitions in Nutrition & Health and Industrial Biosciences.
  • Agriculture delivered 16 percent higher sales and an 18 percent increase in pre-tax operating income, excluding significant items, versus last year's first quarter. This reflects strong global business performance and an early start to the North American and European selling seasons.
  • The company's productivity initiatives continued on track with improvements of approximately $100 million each for fixed costs and working capital.
  • DuPont reaffirmed its full-year earnings outlook range of $4.20 to $4.40 per share, which represents 7 to 12 percent growth versus 2011, excluding significant items.

"DuPont's market-driven science and commitment to innovation and productivity are winning in key markets, despite economic headwinds early in the first quarter," said DuPont Chair and CEO Ellen Kullman.  "Around the world, we are bringing our science closer to local markets by collaborating with customers and partners in our new DuPont Innovation Centers.  We are prioritizing our R&D portfolio to deliver food, energy and protection solutions for the world's growing population."

Global Consolidated Sales and Net Income

First quarter 2012 consolidated net sales of $11.2 billion were 12 percent higher than the prior year, including 7 percent attributable to portfolio changes.  Local prices were 8 percent higher with increases in all regions.  The 2 percent decline in total company volume principally reflects strong Agriculture segment volume gains in all regions offset by lower volume for most segments in Asia.  The table below shows regional sales and variances versus the first quarter 2011.



Three Months Ended
March 31, 2012


Percentage Change Due to:

(Dollars in billions)


$


% Change


Local
Price


Currency
Effect


Volume


Portfolio/
Other

U.S. & Canada


$     4.8


13


9


-


-


4

EMEA*


3.2


14


8


(3)


(1)


10

Asia Pacific


2.0


-


4


1


(13)


8

Latin America


1.2


23


15


(3)


4


7



























Total Consolidated Sales


$   11.2


12


8


(1)


(2)


7



























* Europe, Middle East & Africa











First quarter 2012 net income attributable to DuPont was $1,488 million versus $1,431 million in the first quarter 2011. Excluding significant items, net income attributable to DuPont was $1,520 million versus $1,431 million in the prior year.  The improvement principally reflects earnings growth in Agriculture and Performance Chemicals and income from a prior-year acquisition.  Higher selling prices more than offset increased spending for sales, marketing and research and development, and higher costs for raw materials, energy and freight.

Earnings Per Share

The table below shows year-over-year earnings per share (EPS) variances for the first quarter.





EPS ANALYSIS













EPS 1Q 2011


$1.52






Variances vs. 1Q 2011:








   Local prices


.73


   Variable cost*


(.28)


   Volume


(.01)


   Fixed cost*


(.20)


   Currency


(.06)


   Portfolio changes


.07


   Exchange gains/losses


(.04)


   Income tax


(.06)


   Other


(.06)






EPS 1Q 2012 – Excluding significant items


$1.61


   Significant item - (schedule B)


( .04)






EPS 1Q 2012


$1.57



* Excludes volume and currency impacts









 

 


Business Segment Performance

The table below shows first quarter 2012 segment sales and related variances versus the prior year.

SEGMENT SALES*

Three Months Ended


Percentage Change 

(Dollars in billions)

March 31, 2012

Due to:


$


% Change


USD
Price


Volume


Portfolio
and Other

Agriculture

$      4.1


16


8


8


-

Electronics & Communications 

0.7


(17)


1


(18)


-

Industrial Biosciences

0.3


 nm 


 nm 


 nm 


 nm 

Nutrition & Health

0.8


149


-


(5)


154

Performance Chemicals

1.9


6


16


(10)


-

Performance Coatings

1.1


6


6


-


-

Performance Materials

1.6


(6)


6


(10)


(2)

Safety & Protection

0.9


(2)


3


(5)


-


*    Segment sales include transfers

Segment pre-tax operating income (PTOI), excluding significant items, increased 12 percent to $2,377 million, largely driven by higher earnings in Agriculture, Performance Chemicals and acquisition-related improvements in Nutrition & Health and Industrial Biosciences, as shown in the table below.

SEGMENT PTOI excluding Significant Items*




Change versus 2011

(Dollars in millions)


1Q 2012


1Q 2011


$


%










Agriculture


$  1,314


$  1,111


$     203


18%

Electronics & Communications


33


111


(78)


-70%

Industrial Biosciences


41


-


41


nm

Nutrition & Health


83


25


58


232%

Performance Chemicals


512


394


118


30%

Performance Coatings


87


65


22


34%

Performance Materials


240


288


(48)


-17%

Safety & Protection


100


145


(45)


-31%

Other


(60)


(64)


4


nm



$  2,350


$  2,075


$     275


13%

Pharmaceuticals


27


50


(23)


-46%

Total Segment PTOI


$  2,377


$  2,125


$     252


12%

* See Schedules B and C for listing of significant items and their impact by segment.       

The following is a summary of business results for each of the company's reportable segments, comparing first quarter 2012 with first quarter 2011, for sales and PTOI, excluding significant items.  References to selling price are on a U.S. dollar basis, including the impact of currency.

Agriculture - Sales of $4.1 billion were up $576 million, or 16 percent, with 8 percent price and 8 percent volume gains.  Seed sales growth reflects strong global performance with robust North American corn sales, a strong, early start to the European season and commercial success in Brazil's Safrinha season.  Crop Protection product sales growth was underpinned by particular strength in insect control product volumes and price gains across the portfolio.  PTOI of $1.3 billion improved 18 percent on higher volume and price, offset in part by input cost increases and unfavorable currency impact.

Electronics & Communications - Sales of $677 million were down 17 percent on 18 percent lower volume.  Sales reflect continued soft demand in photovoltaics, partially offset by increased demand for smart phones and tablets.  PTOI of $33 million declined from lower volume and plant utilization.

Industrial Biosciences - Sales of $288 million and PTOI of $41 million reflect the acquisition of Danisco's enzyme business.  PTOI includes $5 million of amortization expense associated with the fair value step-up of acquired intangible assets.

Nutrition & Health - Sales of $808 million and PTOI of $83 million reflect the acquisition of Danisco's specialty food ingredients business.  PTOI includes $21 million of amortization expense associated with the fair value step-up of acquired intangible assets. 

Performance Chemicals - Sales of $1.9 billion were up 6 percent, with 16 percent higher selling prices and 10 percent lower volume.  Higher selling prices more than offset higher raw material costs.  Lower volume reflects continued softness in titanium dioxide, particularly in Asia Pacific.  Global demand for titanium dioxide increased sequentially.  PTOI of $512 million increased $118 million on higher selling prices.

Performance Coatings - Sales of $1.1 billion were up 6 percent on higher selling prices.  Higher selling prices across all regions and market segments offset higher raw material costs.  Continued strong demand in OEM motor vehicle and industrial coatings, particularly in the North American heavy duty truck market, was offset by softening in refinish primarily in southern Europe.  PTOI of $87 million increased on higher selling prices, mix enrichment and continued productivity actions.

Performance Materials - Sales of $1.6 billion were down 6 percent, with 10 percent lower volume and a 2 percent reduction from a portfolio change partially offset by 6 percent higher selling prices.  Demand improved in the automotive market, particularly in North America, but was more than offset by continued softness in industrial and electronics markets.  Higher selling prices offset higher raw material costs.  PTOI of $240 million decreased due to lower volume.

Safety & Protection - Sales of $941 million were down 2 percent, with 5 percent lower volume, partially offset by 3 percent higher selling prices.  Volume was lower on continued softness in industrial markets.  Higher selling prices reflect value-based pricing.  PTOI of $100 million decreased on lower volume and higher spending for growth initiatives. 

Additional information is available on the DuPont Investor Center website at www.dupont.com.

Outlook 

DuPont reaffirms its full-year 2012 earnings outlook of $4.20 to $4.40 per share, an increase of 7 to 12 percent versus 2011, excluding significant items.  

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 generally accepted accounting principles (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 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," "anticipates," "believes," "intends," "estimates" 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.

#   #   #

04/19/12

  

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,

2012

2011

Net sales

$        11,230

$     10,034

Other income, net 

26

25

Total

11,256

10,059

Cost of goods sold and other operating charges (a)

7,527

6,831

Selling, general and administrative expenses

1,169

1,027

Research and development expense 

505

399

Interest expense 

114

100

Total

9,315

8,357

Income before income taxes

1,941

1,702

Provision for (benefit from) income taxes (a)

441

258

Net income 

1,500

1,444

Less:  Net income attributable to noncontrolling interests

12

13

Net income attributable to DuPont

$          1,488

$       1,431

Basic earnings per share of common stock

$            1.59

$         1.54

Diluted earnings per share of common stock 

$            1.57

$         1.52

Dividends per share of common stock

$            0.41

$         0.41

Average number of shares outstanding used in earnings per share (EPS) calculation:

  Basic

933,910,000

924,897,000

  Diluted

944,238,000

940,909,000

(a) See Schedule B for detail of significant items.

  

E. I. du Pont de Nemours and Company Condensed Consolidated Balance Sheets (Dollars in millions, except per share amounts)

SCHEDULE A (continued)

March 31, 2012

December 31, 2011

Assets

Current assets

Cash and cash equivalents

$     3,410

$           3,586

Marketable securities

191

433

Accounts and notes receivable, net 

8,626

6,022

Inventories 

6,616

7,195

Prepaid expenses 

260

151

Deferred income taxes 

706

671

Total current assets

19,809

18,058

Property, plant and equipment, net of accumulated depreciation    (March 31, 2012 - $19,695; December 31, 2011 - $19,349)

13,395

13,412

Goodwill

5,443

5,413

Other intangible assets 

5,410

5,413

Investment in affiliates

1,121

1,117

Deferred income taxes 

4,052

4,067

Other assets 

993

1,012

Total

$   50,223

$         48,492

Liabilities and Equity

Current liabilities

Accounts payable

$     4,180

$           4,816

Short-term borrowings and capital lease obligations 

3,593

817

Income taxes 

585

255

Other accrued liabilities 

4,178

5,297

Total current liabilities

12,536

11,185

Long-term borrowings and capital lease obligations 

11,232

11,736

Other liabilities 

14,935

15,508

Deferred income taxes 

1,093

1,001

Total liabilities

39,796

39,430

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, 2012 - 1,023,888,000; December 31, 2011 - 1,013,164,000

307

304

Additional paid-in capital

10,086

10,107

Reinvested earnings

14,522

13,422

Accumulated other comprehensive loss 

(8,465)

(8,750)

Common stock held in treasury, at cost (87,041,000 shares    at March 31, 2012 and December 31, 2011)

(6,727)

(6,727)

Total DuPont stockholders' equity

9,960

8,593

Noncontrolling interests

467

469

Total equity

10,427

9,062

Total

$   50,223

$         48,492

  

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,

2012

2011

Cash provided by (used for) operating activities

$ (1,877)

$ (1,484)

Investing activities

Purchases of property, plant and equipment

(301)

(323)

Net (increase) decrease in short-term financial instruments

248

1,585

Forward exchange contract settlements

(87)

(210)

(Increase) decrease in restricted cash 

-

(1,991)

Other investing activities - net

(16)

(26)

(156)

(965)

Financing activities

Dividends paid to stockholders

(386)

(383)

Net increase (decrease) in borrowings

2,278

1,991

Prepayment for the repurchase of common stock (a)

(400)

-

Repurchase of common stock

-

(272)

Proceeds from exercise of stock options

389

605

Other financing activities - net

(36)

(12)

Cash provided by (used for) financing activities

1,845

1,929

Effect of exchange rate changes on cash

12

53

Increase (decrease) in cash and cash equivalents

(176)

(467)

Cash and cash equivalents at beginning of period

3,586

4,263

Cash and cash equivalents at end of period

$  3,410

$  3,796

(a) In the first quarter 2012, the company initiated a $400 million share repurchase program, which will be completed

  no later than May 2012.

  

E. I. du Pont de Nemours and Company Schedule of Significant Items (Dollars in millions, except per share amounts)

SCHEDULE B

SIGNIFICANT ITEMS

Pre-tax

After-tax

($ Per Share)

2012

2011

2012

2011

2012

2011

1st Quarter

Customer claims charge (a)

$(50)

$  -

$(32)

$  -

$(0.04)

$  -

1st Quarter - Total

$(50)

$  -

$(32)

$  -

$(0.04)

$  -

(a) First quarter 2012 included a charge of $50 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 $225 at March 31, 2012.  The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonably possible that additional charges could result from this evaluation.  While there is a high degree of uncertainty, total charges could range as high as $575. The company intends to seek recovery from its insurance carriers for costs associated with this matter in excess of $100.  This matter relates to the Agriculture segment.

See Schedule C for detail by segment.

  

E. I. du Pont de Nemours and Company Consolidated Segment Information (Dollars in millions)

SCHEDULE C

Three Months Ended March 31,

SEGMENT SALES (1)

2012

2011

Agriculture

$   4,080

$   3,504

Electronics & Communications

677

811

Industrial Biosciences

288

-

Nutrition & Health

808

324

Performance Chemicals

1,900

1,797

Performance Coatings

1,050

993

Performance Materials

1,600

1,707

Safety & Protection

941

965

Other

1

36

Total Segment sales

11,345

10,137

Elimination of transfers

(115)

(103)

Consolidated net sales

$ 11,230

$ 10,034

(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,

PRE-TAX OPERATING INCOME/(LOSS) (PTOI)

2012

2011

Agriculture 

$ 1,264

$ 1,111

Electronics & Communications

33

111

Industrial Biosciences

41

-

Nutrition & Health

83

25

Performance Chemicals

512

394

Performance Coatings

87

65

Performance Materials

240

288

Safety & Protection

100

145

Pharmaceuticals 

27

50

Other

(60)

(64)

Total Segment PTOI

2,327

2,125

Net exchange gains (losses) (1)

(80)

(143)

Corporate expenses & net interest

(306)

(280)

Income before income taxes

$ 1,941

$ 1,702

Three Months Ended March 31,

SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)

2012

2011

Agriculture 

$    (50)

$         -

Electronics & Communications

-

-

Industrial Biosciences

-

-

Nutrition & Health

-

-

Performance Chemicals

-

-

Performance Coatings

-

-

Performance Materials

-

-

Safety & Protection

-

-

Pharmaceuticals 

-

-

Other

-

-

Total significant items by segment

$    (50)

$         -

Three Months Ended March 31,

PTOI EXCLUDING SIGNIFICANT ITEMS

2012

2011

Agriculture 

$ 1,314

$ 1,111

Electronics & Communications

33

111

Industrial Biosciences

41

-

Nutrition & Health

83

25

Performance Chemicals

512

394

Performance Coatings

87

65

Performance Materials

240

288

Safety & Protection

100

145

Pharmaceuticals 

27

50

Other

(60)

(64)

Total Segment PTOI excluding significant items

$ 2,377

$ 2,125

(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

Summary of Earnings Comparisons

Three Months Ended March 31, 

2012

2011

% Change

Segment PTOI

$           2,327

$          2,125

10%

Significant items (benefit) charge included in PTOI (per Schedule C)

50

-

Segment PTOI excluding significant items

$           2,377

$          2,125

12%

Net income attributable to DuPont

$           1,488

$          1,431

4%

Significant items (benefit) charge included in net income

attributable to DuPont (per Schedule B)

32

-

Net income attributable to DuPont

excluding significant items

$           1,520

$          1,431

6%

EPS

$             1.57

$            1.52

3%

Significant items (benefit) charge included in EPS (per Schedule B)

0.04

-

EPS excluding significant items

$             1.61

$            1.52

6%

Average number of diluted shares outstanding

944,238,000

940,909,000

0.4%

Reconciliation of Earnings Per Share (EPS) Outlook

Year Ended December 31,

2012 Outlook

2011 Actual

Earning per share - excluding significant items

$4.20 - $4.40

$            3.93

2Q 2012 Sale of an equity method investment - estimate

0.08 to 0.09

-

Danisco acquisition related costs

-

(0.22)

Customer claims charges

(0.04)

(0.12)

Charges related to a licensing agreement

-

(0.03)

Sale of a business

-

0.13

Restructuring charge/adjustments

-

(0.01)

Reported EPS

$4.24 to $4.45

$            3.68

  

E. I. du Pont de Nemours and Company Reconciliation of Non-GAAP Measures (Dollars in millions, except per share amounts)

SCHEDULE D (continued)

Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income Statements

Three Months Ended March 31,

2012

2011

Income before income taxes

$   1,941

$   1,702

Less: Net income attributable to noncontrolling interests

12

13

Add:  Interest expense 

114

100

Adjusted EBIT

2,043

1,789

Add: Depreciation and amortization 

455

361

Adjusted EBITDA

$   2,498

$   2,150

Calculation of Free Cash Flow

Three Months Ended

March 31,

2012

2011

Cash provided by (used for) operating activities

$ (1,877)

$ (1,484)

Less: Purchases of property, plant and equipment

301

323

Free cash flow

$ (2,178)

$ (1,807)

Reconciliations of Fixed Costs as a Percent of Sales

Three Months Ended March 31,

2012

2011

Total charges and expenses - consolidated income statements

$   9,315

$   8,357

Remove:  

   Interest expense

(114)

(100)

   Variable costs (1)

(5,137)

(4,722)

   Significant items - benefit (charge) (2)

(50)

-

       Fixed costs

$   4,014

$   3,535

Consolidated net sales

$ 11,230

$ 10,034

Fixed costs as a percent of consolidated net sales

35.7%

35.2%

(1)  Includes variable manufacturing costs, freight, commissions and other selling expenses which vary with the volume of sales.

(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 (continued)

Exchange Gains/(Losses)

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,

2012

2011

Subsidiary/Affiliate Monetary Position Gain (Loss)

Pre-tax exchange gains (losses) (includes equity affiliates)

$      48

$    230

Local tax benefits (expenses)

(8)

5

Net after-tax impact from subsidiary exchange gains (losses)

$      40

$    235

Hedging Program Gain (Loss)

Pre-tax exchange gains (losses)

$  (128)

$  (373)

Tax benefits (expenses)

44

130

Net after-tax impact from hedging program exchange gains (losses)

$    (84)

$  (243)

Total Exchange Gain (Loss)

Pre-tax exchange gains (losses)

$    (80)

$  (143)

Tax benefits (expenses)

36

135

Net after-tax exchange gains (losses)

$    (44)

$      (8)

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)."  

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, and significant items. 

Three Months Ended March 31,

2012

2011

Income before income taxes 

$ 1,941

$ 1,702

Add:  Significant items - (benefit) charge (1)

50

-

Less:  Net exchange gains (losses)

(80)

(143)

Income before income taxes, significant items and exchange gains/losses

$ 2,071

$ 1,845

Provision for (benefit from) income taxes

$    441

$    258

Add:  Tax benefits (expenses) on significant items

18

-

          Tax benefits (expenses) on exchange gains/losses

36

135

Provision for income taxes, excluding taxes on significant items and exchange gains/losses

$    495

$    393

Effective income tax rate

22.7%

15.2%

Significant items effect

0.3%

0.0%

Tax rate before significant items

23.0%

15.2%

Exchange gains (losses) effect

0.9%

6.1%

Base income tax rate

23.9%

21.3%

(1)  See Schedule B for detail of significant items.

 

SOURCE DuPont



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