-
GAAP EPS from Continuing Operations of $0.21; Adj. EPS Increases 35%
to $0.74
-
GAAP Net Income from Continuing Operations of $535MM; Op. EBITDA Up
19% to $3.8B
-
Net Sales Up 10% to $20.1B; Volume and Local Price Gains in All
Divisions and All Regions
-
Announces New $3B Stock Buyback Program, Expected to be Complete by
First Spin
-
Increases Cost Synergy Target to $3.6B; Raises Expected YoY Savings to
$1.5B
-
Reaffirms FY18 Adj. EPS Guidance: Up Low-20s Percent
MIDLAND, Mich. & WILMINGTON, Del.--(BUSINESS WIRE)--
DowDuPont (NYSE: DWDP):
Third Quarter Financial Highlights
-
GAAP earnings per share from continuing operations was $0.21. Adjusted
earnings1 per share increased 35 percent to $0.74, compared
with pro forma adjusted earnings1 per share in the year-ago
period of $0.55. Adjusted earnings per share excludes significant
items in the quarter totaling net charges of $0.42 per share and an
$0.11 per share charge for DuPont amortization of intangible assets.
-
Net sales increased 10 percent to $20.1 billion with gains in all
divisions and all regions, from pro forma net sales of $18.3 billion
in the year-ago period. Net sales grew double-digits in Asia Pacific
and high single digits in all other regions.
-
Volume grew 5 percent on a pro forma basis from the year-ago period,
with gains in all divisions and all regions, led by double-digit
growth in Asia Pacific and Latin America.
-
Local price rose 5 percent on a pro forma basis, with gains in all
divisions and all regions.
-
Operating EBITDA1 increased 19 percent on a pro forma basis
from the year-ago period to $3.8 billion. Operating EBITDA drivers in
the quarter included local price and volume gains, cost synergies and
lower pension/OPEB costs2, which more than offset the
impact of higher raw material costs and a headwind from currency.
-
DowDuPont achieved cost synergy savings of more than $450 million in
the quarter, and since merger close has now delivered more than $1.3
billion of cumulative savings. The Company also delivered a cost
synergy run-rate of greater than $2.5 billion in the quarter,
exceeding its Year 1 cost synergy run-rate target of 75 percent of the
$3.3 billion.
-
DowDuPont is announcing today a new share repurchase program of $3
billion, which it expects to complete by the first intended spin. In
addition, the Company is increasing its cost synergy commitment to
$3.6 billion from $3.3 billion and increasing the expected 2018
year-over-year savings to $1.5 billion from $1.4 billion.
-
Cash flow from operations was a use of cash of $0.3 billion and
included discretionary pension contributions of approximately $2.2
billion. Excluding these discretionary contributions, cash flow from
operations would have been $1.9 billion.
-
The Company returned nearly $2 billion to shareholders in the quarter
through dividends ($0.9 billion) and share repurchases ($1 billion).
Since merger close, DowDuPont has returned $7.5 billion to
shareholders.
CEO Quote
“Our teams generated strong gains in volume, price and operating EBITDA
by continuing to execute our growth strategy, capture cost synergies and
drive productivity improvements,” said Ed Breen, chief executive officer
of DowDuPont. “Organic sales rose 10 percent, equally driven by volume
and local price as customer demand remained strong. We delivered our
year-over-year cost synergies and we are again raising our target, now
to $3.6 billion. We are also reaffirming our full year 2018 EPS guidance
provided in August with our second quarter earnings announcement. Each
division is performing well, and we remain on track to complete the
intended separations, beginning with Materials Science on April 1,
followed by Agriculture and Specialty Products on June 1.”
Third Quarter Division Highlights
Materials Science
-
Net sales increased 13 percent to $12.4 billion versus pro forma net
sales in the year-ago period, with double-digit gains in all segments
and increases in all regions.
-
Volume grew 6 percent, with gains in most segments and all regions.
Local price rose 7 percent, with gains in all segments and all regions.
-
Operating EBITDA rose 8 percent to $2.5 billion versus pro forma
operating EBITDA in the same quarter last year, with gains in most
segments.
Performance Materials & Coatings
Performance Materials & Coatings reported net sales of $2.5 billion, up
11 percent versus pro forma net sales of $2.2 billion in the year-ago
period. The sales increase included double-digit gains in most regions.
Local price increased 13 percent, with double-digit gains in all
regions. Volume declined 1 percent versus the year-ago period, driven
primarily by price/volume management in the Consumer Solutions business.
Currency was a 1 percent headwind.
Consumer Solutions delivered double-digit sales growth due to local
price gains in all regions and disciplined price/volume management in
upstream silicone intermediate products and mix enrichment toward
downstream products. Coatings & Performance Monomers also reported
double-digit sales growth, driven by local price increases in all
regions in response to higher raw material costs.
Operating EBITDA increased to $628 million, up 37 percent from pro forma
operating EBITDA of $460 million in the year-ago period, primarily due
to increased local pricing and cost and growth synergies that more than
offset higher raw material costs.
Industrial Intermediates & Infrastructure
Industrial Intermediates & Infrastructure reported net sales of $3.8
billion, up 18 percent from pro forma net sales of $3.2 billion in the
year-ago period, with growth in all regions and double-digit increases
in Asia Pacific, United States & Canada, and Latin America. Volume grew
14 percent, with gains in all regions. Local price rose 5 percent, with
gains in most regions, led by a double-digit increase in United States &
Canada. Currency was a 1 percent headwind.
Polyurethanes & CAV delivered sales gains in all regions, driven by
volume and local price gains in most regions, more than offsetting
easing isocyanate prices. The volume increase was led by Asia Pacific
and EMEA. Industrial Solutions reported double-digit sales growth,
driven by volume and local price gains in all regions. Volume growth was
led by gains in industrial specialties, with double-digit growth in
intermediates for crop defense; energy heat management; and food and
feed manufacturing. Volume gains in both Polyurethanes & CAV and
Industrial Solutions were further supported by increased supply from the
Sadara joint venture.
Operating EBITDA in the third quarter was $654 million, down 3 percent
from pro forma operating EBITDA of $676 million in the year-ago period.
Rising raw material costs, the easing of isocyanate margins, and an
unplanned outage associated with an isocyanates facility on the U.S.
Gulf Coast more than offset local price and volume gains, as well as
cost synergies.
Equity earnings for the segment totaled $54 million, compared with pro
forma equity earnings of $41 million in the year-ago period. The
year-over-year growth was driven by higher monoethylene glycol (MEG)
pricing that benefited the Kuwait joint ventures.
Packaging & Specialty Plastics
The Packaging & Specialty Plastics segment achieved net sales of $6.1
billion, up 11 percent from pro forma net sales of $5.5 billion in the
year-ago period. Sales rose in all regions, with double-digit increases
in EMEA, Asia Pacific, and United States & Canada. Local price rose 6
percent, with gains in all regions, led by a double-digit increase in
EMEA. Volume grew 5 percent, with increases in all regions.
The Packaging and Specialty Plastics business grew volume, supported by
higher demand in most regions and new capacity additions on the U.S.
Gulf Coast. The business achieved volume gains across its key
end-markets, led by industrial and consumer packaging and health and
hygiene. The business also delivered double-digit growth in elastomers
applications.
Operating EBITDA for the segment totaled $1.2 billion, up 4 percent from
pro forma operating EBITDA of $1.1 billion in the year-ago period. Local
price and volume gains, including increased supply from growth projects,
lower commissioning and startup costs, increased equity earnings and
cost synergies more than offset higher feedstock costs, notably on the
U.S. Gulf Coast.
Equity earnings for the segment were $83 million, up from pro forma
equity earnings of $66 million in the year-ago period. Growth was driven
by higher equity earnings from the Kuwait joint ventures and improved
Sadara results, which more than offset lower earnings from the Thai
joint ventures.
Specialty Products
-
Net sales increased 8 percent to $5.7 billion versus pro forma net
sales in the year-ago period, with gains in all regions and most
segments.
-
Volume grew 3 percent, local price rose 2 percent, and portfolio
benefitted sales by 3 percent.
-
Operating EBITDA grew 17 percent to $1.6 billion versus pro forma
operating EBITDA in the same quarter last year, with gains in all
segments.
Electronics & Imaging
Electronics & Imaging delivered net sales of $1.2 billion, flat with the
year-ago period as volume growth of 1 percent was offset by a 1 percent
decline in local price.
Volume growth in the segment was led by continued strength in
semiconductor technologies and double-digit gains in display
technologies. Increased semiconductor content in end-use applications
drove strong demand in both chemical mechanical planarization (CMP) and
advanced packaging market segments. Growth in displays was driven by
strong demand in OLEDs. Partially offsetting this growth was a continued
decline in photovoltaics on reduced demand for Tedlar® film
and Solamet® paste resulting from revised incentive policies
in China.
Operating EBITDA for the segment was $412 million, about flat with the
year-ago period. Cost synergies, volume growth, and lower pension/OPEB
costs were offset by higher raw material costs, higher costs due to
growth investments and lower equity earnings.
Nutrition & Biosciences
The Nutrition & Biosciences segment reported net sales of $1.7 billion,
up 14 percent from pro forma net sales of $1.5 billion in the year-ago
period. The increase was due to an 11 percent net benefit from
portfolio, 3 percent from volume and 1 percent from local
price. Currency was a 1 percent headwind. The net positive impact from
portfolio-related actions was due to the acquisition of FMC’s Health &
Nutrition business.
Volume gains in the segment were led by Nutrition & Health on continued
growth in probiotics and specialty proteins, primarily in Asia Pacific.
In Industrial Biosciences, double-digit improvement in CleanTech, led by
alkylation and acid equipment sales, and growth in bioactives in home
and personal care was offset by declines in microbial control and
biomaterials.
Operating EBITDA for the segment was $414 million, up 33 percent from
pro forma operating EBITDA of $312 million in the year-ago period driven
by a portfolio benefit, cost synergies, volume growth and lower
pension/OPEB costs.
Transportation & Advanced Polymers
Transportation & Advanced Polymers reported net sales of $1.4 billion,
up 8 percent from pro forma net sales of $1.3 billion in the year-ago
period. Organic sales increased 9 percent with strength in both price
and volume. Currency was a 1 percent headwind.
Volume gains of 3 percent reflected increases across all key
end-markets, including strong demand in automotive, electronics and
aerospace. Volume was up in all regions, led by growth in United States
& Canada and Asia Pacific.
Local price increased 6 percent, mainly within engineering polymers,
reflecting tight polymer supply and higher feedstock costs.
Operating EBITDA for the segment totaled $430 million, an increase of 32
percent from pro forma operating EBITDA of $325 million in the year-ago
period. Higher local selling price, volume gains, lower pension/OPEB
costs, and cost synergies contributed to the improvement, partly offset
by higher raw material costs.
Safety & Construction
The Safety & Construction segment reported net sales of $1.4 billion, up
7 percent from pro forma net sales of $1.3 billion in the year-ago
period. Organic sales increased 8 percent driven by strong volume growth
and improved pricing, offset by a 1 percent currency headwind.
Volume gains of 6 percent were driven by broad-based growth across
industrial, life and personal protection, and medical packaging
end-markets, resulting in strong volume growth in aramids, Tyvek®
protective materials and water solutions, partially offset by softness
in construction in the U.S. residential market. Regional volume growth
was led by increases in U.S. & Canada and Asia Pacific.
Local price increased 2 percent led by Kevlar® high-strength materials
and Corian® Design.
Operating EBITDA for the segment totaled $389 million, an increase of 10
percent from pro forma operating EBITDA of $353 million in the year-ago
period. Cost synergies and productivity, lower pension/OPEB costs and
volume gains more than offset the impact of higher raw material and
freight costs and the absence of prior year one-time gains.
Agriculture
-
Net sales of $1.95 billion increased 2 percent from pro forma net
sales of $1.91 billion in the year-ago period, driven by both volume
gains and higher local price in Latin America.
-
Organic sales rose 11 percent, as volume rose 8 percent while local
price grew 3 percent. Currency decreased sales 6 percent while
portfolio subtracted 3 percent.
-
Operating EBITDA improved by $135 million, to a seasonal loss of $104
million versus a pro forma operating EBITDA loss of $239 million in
the prior-year period.
Volume growth primarily reflected new product launches including
Picoxy-based disease management crop protection products, and seed
applied technologies in Latin America; growth from PyraxaltTM,
a new insecticide in Asia Pacific; and gains from corn seeds, partially
driven by an early start to the selling season in Latin America. Price
increases were driven by crop protection in Latin America amid currency
pressures. The portfolio impact reflected inclusion of one month of the
Brazil corn remedy in last year’s quarter.
Within the segment, Crop Protection organic sales grew 17 percent and
Seed organic sales increased 1 percent. Crop Protection growth reflected
volume and price gains in Latin America and Asia Pacific, partly offset
by volume declines in United States & Canada. Seed sales increased on
volume growth, partially driven by an early start to the selling season
in Latin America.
Operating EBITDA improvement reflected cost synergies, sales gains,
lower performance-based compensation and lower pension/OPEB costs,
partly offset by higher raw material costs and increased spending to
continue advancing the new product pipeline.
Outlook
“Global demand for our products remains strong, supported by solid
fundamentals, including business investment, manufacturing output, job
growth and wage increases,” said Howard Ungerleider, chief financial
officer of DowDuPont. “Going forward, we remain well positioned to
continue to drive top-line gains from above-GDP demand growth for our
products and new product launches, while further delivering productivity
and cost synergy savings.”
Conference Call
The Company will host a live
webcast of its third quarter earnings conference call with investors
to discuss its results, business outlook and other matters today at 8:00
a.m. ET. The slide presentation that accompanies the conference call
will be posted on the DowDuPont Investor Relations events and
presentations page.
A replay of the webcast will also be available on the investor events
and presentations page of www.dow-dupont.com.
(1)
|
|
Adjusted earnings per share, Pro forma adjusted earnings per share,
Operating EBITDA and Pro forma operating EBITDA are non-GAAP
measures. See page 9 for further discussion. Third quarter 2017
information is on a pro forma basis and was determined in accordance
with Article 11 of Regulation S-X.
|
(2)
|
|
Pension/OPEB (other post-employment benefit plans) costs include all
components of net periodic benefit cost from continuing operations.
|
|
|
|
About DowDuPont™
DowDuPont (NYSE: DWDP) is a holding company comprised of The Dow
Chemical Company and DuPont with the intent to form strong, independent,
publicly traded companies in agriculture, materials science and
specialty products sectors that will lead their respective industries
through productive, science-based innovation to meet the needs of
customers and help solve global challenges. For more information, please
visit us at www.dow-dupont.com.
Cautionary Statement About Forward-Looking Statements
This communication contains “forward-looking statements” within the
meaning of the federal securities laws, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. In this context, forward-looking
statements often address expected future business and financial
performance and financial condition, and often contain words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,”
“will,” “would,” “target,” and similar expressions and variations or
negatives of these words.
On December 11, 2015, The Dow Chemical Company (“Dow”) and E. I. du Pont
de Nemours and Company (“DuPont”) entered into an Agreement and Plan of
Merger, as amended on March 31, 2017, (the “Merger Agreement”) under
which the companies would combine in an all-stock merger of equals
transaction (the “Merger”). Effective August 31, 2017, the Merger was
completed and each of Dow and DuPont became subsidiaries of DowDuPont.
Forward-looking statements by their nature address matters that are, to
varying degrees, uncertain, including the intended separation, subject
to approval of the DowDuPont’s Board of Directors and customary closing
conditions, of DowDuPont’s agriculture, materials science and specialty
products businesses in one or more tax-efficient transactions on
anticipated terms (the “Intended Business Separations”). 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 DowDuPont’s control. Some of
the important factors that could cause DowDuPont’s, Dow’s or DuPont’s
actual results (including DowDuPont’s agriculture business, materials
science business or specialty products business as conducted by and
through Dow and DuPont) to differ materially from those projected in any
such forward-looking statements include, but are not limited to: (i)
costs to achieve and achieving the successful integration of the
respective agriculture, materials science and specialty products
businesses of DowDuPont (either directly or as conducted through Dow and
DuPont, anticipated tax treatment, unforeseen liabilities, future
capital expenditures, revenues, expenses, earnings, productivity
actions, economic performance, indebtedness, financial condition,
losses, future prospects, business and management strategies for the
management, expansion and growth of the combined operations; (ii) costs
to achieve and achievement of the anticipated synergies by the combined
agriculture, materials science and specialty products businesses; (iii)
risks associated with the Intended Business Separations, associated
costs, disruptions in the financial markets or other potential barriers;
(iv) disruptions or business uncertainty, including from the Intended
Business Separations, could adversely impact DowDuPont’s business
(either directly or as conducted by and through Dow or DuPont), or
financial performance and its ability to retain and hire key personnel;
(v) uncertainty as to the long-term value of DowDuPont common stock; and
(vi) risks to DowDuPont’s, Dow’s and DuPont’s business, operations and
results of operations from: the availability of and fluctuations in the
cost of feedstocks and energy; balance of supply and demand and the
impact of balance on prices; failure to develop and market new products
and optimally manage product life cycles; ability, cost and impact on
business operations, including the supply chain, of responding to
changes in market acceptance, rules, regulations and policies and
failure to respond to such changes; outcome of significant litigation,
environmental matters and other commitments and contingencies; failure
to appropriately manage process safety and product stewardship issues;
global economic and capital market conditions, including the continued
availability of capital and financing, as well as inflation, interest
and currency exchange rates; changes in political conditions, including
trade disputes and retaliatory actions; business or supply disruptions;
security threats, such as acts of sabotage, terrorism or war, natural
disasters and weather events and patterns which could result in a
significant operational event for the DowDuPont, adversely impact demand
or production; ability to discover, develop and protect new technologies
and to protect and enforce the DowDuPont’s intellectual property rights;
failure to effectively manage acquisitions, divestitures, alliances,
joint ventures and other portfolio changes; unpredictability and
severity of catastrophic events, including, but not limited to, acts of
terrorism or outbreak of war or hostilities, as well as management’s
response to any of the aforementioned factors. These risks are and will
be more fully discussed in the current, quarterly and annual reports
filed with the U. S. Securities and Exchange Commission by DowDuPont as
well as the preliminary registration statements on Form 10, in each case
as amended from time to time, of each of Dow Holding Inc. and Corteva,
Inc., While the list of factors presented here is, considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted factors may
present significant additional obstacles to the realization of
forward-looking statements. Consequences of material differences in
results as compared with those anticipated in the forward-looking
statements could include, among other things, business disruption,
operational problems, financial loss, legal liability to third parties
and similar risks, any of which could have a material adverse effect on
DowDuPont’s, Dow’s, DuPont’s, Dow Holding Inc.’s or Corteva Inc.’s
consolidated financial condition, results of operations, credit rating
or liquidity. None of DowDuPont, Dow, DuPont Dow Holding Inc. or
Corteva, Inc. assumes any obligation to publicly provide revisions or
updates to any forward-looking statements whether as a result of new
information, future developments or otherwise, should circumstances
change, except as otherwise required by securities and other applicable
laws. A detailed discussion of some of the significant risks and
uncertainties which may cause results and events to differ materially
from such forward-looking statements is included in the section titled
“Risk Factors” (Part I, Item 1A) of the 2017 annual reports on Form 10-K
of each of DowDuPont, Dow and DuPont and as set forth in the preliminary
registration statements on Form 10, in each case as amended from time to
time, of each of Dow Holdings Inc. and Corteva, Inc.
Discussion of segment revenue, operating EBITDA and price/volume metrics
on a divisional basis for Agriculture is based on the results of the
Agriculture segment; for Materials Science is based on the combined
results of the Performance Materials & Coatings, Industrial &
Infrastructure, and Packaging & Specialty Plastics segments; and for
Specialty Products is based on the combined results of the Electronics &
Imaging, Nutrition & Biosciences, Transportation & Advanced Polymers,
and Safety & Construction segments. The segment disclosures have been
presented in this manner for informational purposes only and should not
be viewed as an indication of each division’s current or future
operating results on a standalone basis assuming completion of the
Intended Business Separations.
The Dow Diamond, DuPont Oval logo, DuPont™, the DowDuPont logo and all
products, unless otherwise noted, denoted with ™, ℠ or ® are trademarks,
service marks or registered trademarks of The Dow Chemical Company, E.
I. du Pont de Nemours and Company, DowDuPont Inc. or their affiliates.
Merger of Equals
Effective August 31, 2017, pursuant to the merger of equals transaction
contemplated by the Agreement and Plan of Merger, dated as of December
11, 2015, as amended on March 31, 2017 (the "Merger Agreement"), The Dow
Chemical Company ("Dow") and E. I. du Pont de Nemours & Company
("DuPont") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont"
or the "Company") and, as a result, Dow and DuPont became subsidiaries
of DowDuPont Inc. (the "Merger"). Dow was determined to be the
accounting acquirer in the Merger and, as a result, the historical
financial statements of Dow, prepared under U.S. generally accepted
accounting principles ("U.S. GAAP"), for the periods prior to the Merger
are considered to be the historical financial statements of DowDuPont.
Unaudited Pro Forma Financial Information
In order to provide the most meaningful comparison of results of
operations and results by segment, supplemental unaudited pro forma
financial information has been included in the following financial
schedules. The unaudited pro forma financial information is based on the
historical consolidated financial statements and accompanying notes of
both Dow and DuPont and has been prepared to illustrate the effects of
the Merger, assuming the Merger had been consummated on January 1, 2016.
For the three and nine months ended September 30, 2017, pro forma
adjustments have been made for (1) the preliminary purchase accounting
impact, (2) accounting policy alignment, (3) the elimination of the
effect of events that are directly attributable to the Merger Agreement
(e.g., one-time transaction costs), (4) the elimination of the impact of
transactions between Dow and DuPont, and (5) the elimination of the
effect of consummated divestitures agreed to with certain regulatory
agencies as a condition of approval for the Merger. The unaudited pro
forma financial information was based on and should be read in
conjunction with the separate historical financial statements and
accompanying notes contained in each of the Dow and DuPont Quarterly
Reports on Form 10-Q for the quarter ended September 30, 2017. The pro
forma financial information was prepared in accordance with Article 11
of Regulation S-X. The results for the three and nine months ended
September 30, 2018, are presented on a U.S. GAAP basis.
The unaudited pro forma financial information has been presented for
informational purposes only and is not necessarily indicative of what
DowDuPont's results of operations actually would have been had the
Merger been completed as of January 1, 2016, nor is it indicative of the
future operating results of DowDuPont. The unaudited pro forma
information does not reflect restructuring or integration activities or
other costs following the Merger that may be incurred to achieve cost or
growth synergies of DowDuPont and does not reflect measurement period
adjustments subsequent to the Merger. For further information on the
unaudited pro forma financial information, please refer to the Company's
Current Report on Form 8-K dated October 26, 2017.
Non-GAAP Financial Measures
This earnings release includes information that does not conform to U.S.
GAAP and are considered non-GAAP measures. These measures include the
Company's pro forma consolidated results and pro forma earnings per
share on an adjusted basis. Management uses these measures internally
for planning, forecasting and evaluating the performance of the
Company's segments, including allocating resources. DowDuPont's
management believes that these non-GAAP measures best reflect the
ongoing performance of the Company during the periods presented and
provide more relevant and meaningful information to investors as they
provide insight with respect to ongoing operating results of the Company
and a more useful comparison of year-over-year results. These non-GAAP
measures supplement the Company's U.S. GAAP disclosures and should not
be viewed as an alternative to U.S. GAAP measures of performance.
Furthermore, such non-GAAP measures may not be consistent with similar
measures provided or used by other companies. Non-GAAP measures included
in this release are defined below. Reconciliations for these non-GAAP
measures to U.S. GAAP are provided in the Selected Financial Information
and Non-GAAP Measures starting on page 14. DowDuPont does not provide
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
pending litigation, unusual gains and losses, foreign currency exchange
gains or losses and potential future asset impairments, as well as
discrete taxable events, without unreasonable effort. These items are
uncertain, depend on various factors, and could have a material impact
on U.S. GAAP results for the guidance period.
Adjusted earnings per share is defined as "Earnings per common share
from continuing operations - diluted" excluding the after-tax impact of
significant items and the after-tax impact of amortization expense
associated with DuPont's intangible assets. Pro forma adjusted earnings
per share is defined as "Pro Forma earnings per common share from
continuing operations - diluted" excluding the after-tax impact of pro
forma significant items and the after-tax impact of pro forma
amortization expense associated with DuPont's intangible assets.
Although amortization of DuPont's intangible assets is excluded from
these non-GAAP measures, management believes it is important for
investors to understand that such intangible assets contribute to
revenue generation. Amortization of intangible assets that relate to
past acquisitions will recur in future periods until such intangible
assets have been fully amortized. Any future acquisitions may result in
amortization of additional intangible assets.
Operating EBITDA is defined as earnings (i.e., "Income from continuing
operations before income taxes") before interest, depreciation,
amortization and foreign exchange gains (losses), excluding the impact
of significant items. Pro forma operating EBITDA is defined as pro forma
earnings (i.e., "Pro Forma income from continuing operations before
income taxes") before interest, depreciation, amortization and foreign
exchange gains (losses), excluding the impact of significant items.
Discussion of segment revenue, operating EBITDA and price/volume metrics
on a divisional basis for Agriculture is based on the results of the
Agriculture segment; for Materials Science is based on the combined
results of the Performance Materials & Coatings segment, the Industrial
Intermediates & Infrastructure segment and the Packaging & Specialty
Plastics segment; and for Specialty Products is based on the combined
results of the Electronics & Imaging segment, the Nutrition &
Biosciences segment, the Transportation & Advanced Polymers segment and
the Safety & Construction segment. The Corporate segment is not included
in the division metrics. The segment disclosures have been presented in
this manner for informational purposes only and should not be viewed as
an indication of each division’s current or future operating results on
a standalone basis assuming completion of the Intended Business
Separations.
|
DowDuPont Inc.
|
Consolidated Statements of Income
|
|
In millions, except per share amounts (Unaudited)
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
Sep 30,
2018
|
|
Sep 30,
2017
|
|
|
Sep 30,
2018
|
|
Sep 30,
2017
|
Net sales
|
|
|
$
|
20,123
|
|
|
$
|
15,354
|
|
|
|
$
|
65,878
|
|
|
$
|
42,418
|
|
Cost of sales
|
|
|
15,477
|
|
|
12,186
|
|
|
|
49,766
|
|
|
33,141
|
|
Research and development expenses
|
|
|
740
|
|
|
528
|
|
|
|
2,311
|
|
|
1,355
|
|
Selling, general and administrative expenses
|
|
|
1,496
|
|
|
1,001
|
|
|
|
5,143
|
|
|
2,480
|
|
Amortization of intangibles
|
|
|
462
|
|
|
244
|
|
|
|
1,424
|
|
|
556
|
|
Restructuring and asset related charges - net
|
|
|
290
|
|
|
179
|
|
|
|
741
|
|
|
166
|
|
Integration and separation costs
|
|
|
666
|
|
|
354
|
|
|
|
1,681
|
|
|
599
|
|
Equity in earnings of nonconsolidated affiliates
|
|
|
178
|
|
|
152
|
|
|
|
685
|
|
|
402
|
|
Sundry income (expense) - net
|
|
|
47
|
|
|
394
|
|
|
|
340
|
|
|
272
|
|
Interest expense and amortization of debt discount
|
|
|
362
|
|
|
283
|
|
|
|
1,072
|
|
|
728
|
|
Income from continuing operations before income taxes
|
|
|
855
|
|
|
1,125
|
|
|
|
4,765
|
|
|
4,067
|
|
Provision for income taxes on continuing operations
|
|
|
320
|
|
|
571
|
|
|
|
1,274
|
|
|
1,239
|
|
Income from continuing operations, net of tax
|
|
|
535
|
|
|
554
|
|
|
|
3,491
|
|
|
2,828
|
|
Loss from discontinued operations, net of tax
|
|
|
—
|
|
|
(20
|
)
|
|
|
(5
|
)
|
|
(20
|
)
|
Net income
|
|
|
535
|
|
|
534
|
|
|
|
3,486
|
|
|
2,808
|
|
Net income attributable to noncontrolling interests
|
|
|
38
|
|
|
20
|
|
|
|
117
|
|
|
85
|
|
Net income available for DowDuPont Inc. common stockholders
|
|
|
$
|
497
|
|
|
$
|
514
|
|
|
|
$
|
3,369
|
|
|
$
|
2,723
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share from continuing operations - basic
|
|
|
$
|
0.22
|
|
|
$
|
0.33
|
|
|
|
$
|
1.45
|
|
|
$
|
2.05
|
|
Loss per common share from discontinued operations - basic
|
|
|
—
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
(0.01
|
)
|
Earnings per common share - basic
|
|
|
$
|
0.22
|
|
|
$
|
0.32
|
|
|
|
$
|
1.45
|
|
|
$
|
2.04
|
|
Earnings per common share from continuing operations - diluted
|
|
|
$
|
0.21
|
|
|
$
|
0.33
|
|
|
|
$
|
1.44
|
|
|
$
|
2.02
|
|
Loss per common share from discontinued operations - diluted
|
|
|
—
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
(0.01
|
)
|
Earnings per common share - diluted
|
|
|
$
|
0.21
|
|
|
$
|
0.32
|
|
|
|
$
|
1.44
|
|
|
$
|
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
|
$
|
—
|
|
|
$
|
0.46
|
|
|
|
$
|
1.14
|
|
|
$
|
1.38
|
|
Weighted-average common shares outstanding - basic
|
|
|
2,296.2
|
|
|
1,577.8
|
|
|
|
2,307.3
|
|
|
1,330.7
|
|
Weighted-average common shares outstanding - diluted
|
|
|
2,311.3
|
|
|
1,595.3
|
|
|
|
2,323.1
|
|
|
1,348.8
|
|
Note:
|
|
The consolidated statements of income for the three and nine months
ended September 30, 2018, reflect the results of Dow and DuPont and
the consolidated statements of income for the three and nine months
ended September 30, 2017, reflect the results of Dow and the results
of DuPont for the period beginning on and after September 1, 2017.
|
|
|
|
DowDuPont Inc.
|
Consolidated Balance Sheets
|
|
|
|
|
Sep 30,
|
|
|
Dec 31,
|
In millions, except per share amounts (Unaudited)
|
|
|
2018
|
|
|
2017
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents (variable interest entities restricted -
2018: $133; 2017: $107)
|
|
|
$
|
6,939
|
|
|
|
$
|
13,438
|
|
Marketable securities
|
|
|
370
|
|
|
|
956
|
|
Accounts and notes receivable:
|
|
|
|
|
|
|
Trade (net of allowance for doubtful receivables - 2018: $168; 2017:
$127)
|
|
|
14,542
|
|
|
|
11,314
|
|
Other
|
|
|
5,006
|
|
|
|
5,579
|
|
Inventories
|
|
|
16,441
|
|
|
|
16,992
|
|
Other current assets
|
|
|
2,107
|
|
|
|
1,614
|
|
Total current assets
|
|
|
45,405
|
|
|
|
49,893
|
|
Investments
|
|
|
|
|
|
|
Investment in nonconsolidated affiliates
|
|
|
5,234
|
|
|
|
5,336
|
|
Other investments (investments carried at fair value - 2018: $1,874;
2017: $1,512)
|
|
|
2,712
|
|
|
|
2,564
|
|
Noncurrent receivables
|
|
|
526
|
|
|
|
680
|
|
Total investments
|
|
|
8,472
|
|
|
|
8,580
|
|
Property
|
|
|
|
|
|
|
Property
|
|
|
74,305
|
|
|
|
73,304
|
|
Less accumulated depreciation
|
|
|
39,077
|
|
|
|
37,057
|
|
Net property (variable interest entities restricted - 2018: $769;
2017: $907)
|
|
|
35,228
|
|
|
|
36,247
|
|
Other Assets
|
|
|
|
|
|
|
Goodwill
|
|
|
59,362
|
|
|
|
59,527
|
|
Other intangible assets (net of accumulated amortization - 2018:
$6,915; 2017: $5,550)
|
|
|
31,508
|
|
|
|
33,274
|
|
Deferred income tax assets
|
|
|
1,642
|
|
|
|
1,869
|
|
Deferred charges and other assets
|
|
|
2,836
|
|
|
|
2,774
|
|
Total other assets
|
|
|
95,348
|
|
|
|
97,444
|
|
Total Assets
|
|
|
$
|
184,453
|
|
|
|
$
|
192,164
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Notes payable
|
|
|
$
|
4,757
|
|
|
|
$
|
1,948
|
|
Long-term debt due within one year
|
|
|
3,118
|
|
|
|
2,067
|
|
Accounts payable:
|
|
|
|
|
|
|
Trade
|
|
|
8,631
|
|
|
|
9,134
|
|
Other
|
|
|
4,321
|
|
|
|
3,727
|
|
Income taxes payable
|
|
|
701
|
|
|
|
843
|
|
Accrued and other current liabilities
|
|
|
6,152
|
|
|
|
8,409
|
|
Total current liabilities
|
|
|
27,680
|
|
|
|
26,128
|
|
Long-Term Debt (variable interest entities nonrecourse - 2018: $148;
2017: $249)
|
|
|
27,293
|
|
|
|
30,056
|
|
Other Noncurrent Liabilities
|
|
|
|
|
|
|
Deferred income tax liabilities
|
|
|
5,908
|
|
|
|
6,266
|
|
Pension and other postretirement benefits - noncurrent
|
|
|
15,288
|
|
|
|
18,581
|
|
Asbestos-related liabilities - noncurrent
|
|
|
1,164
|
|
|
|
1,237
|
|
Other noncurrent obligations
|
|
|
7,376
|
|
|
|
7,969
|
|
Total other noncurrent liabilities
|
|
|
29,736
|
|
|
|
34,053
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock (authorized 5,000,000,000 shares of $0.01 par value
each;
issued 2018: 2,351,801,548 shares; 2017: 2,341,455,518 shares)
|
|
|
24
|
|
|
|
23
|
|
Additional paid-in capital
|
|
|
81,838
|
|
|
|
81,257
|
|
Retained earnings
|
|
|
30,933
|
|
|
|
29,211
|
|
Accumulated other comprehensive loss
|
|
|
(10,566
|
)
|
|
|
(8,972
|
)
|
Unearned ESOP shares
|
|
|
(139
|
)
|
|
|
(189
|
)
|
Treasury stock at cost (2018: 57,760,794 shares; 2017: 14,123,049
shares)
|
|
|
(4,000
|
)
|
|
|
(1,000
|
)
|
DowDuPont's stockholders' equity
|
|
|
98,090
|
|
|
|
100,330
|
|
Noncontrolling interests
|
|
|
1,654
|
|
|
|
1,597
|
|
Total equity
|
|
|
99,744
|
|
|
|
101,927
|
|
Total Liabilities and Equity
|
|
|
$
|
184,453
|
|
|
|
$
|
192,164
|
|
|
|
|
|
|
|
|
|
|
|
|
DowDuPont Inc.
|
Pro Forma Consolidated Statements of Income
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
In millions, except per share amounts (Unaudited)
|
|
|
Sep 30,
2018
|
|
Sep 30,
2017
|
|
|
Sep 30,
2018
|
|
Sep 30,
2017
|
|
|
As Reported
|
|
Pro Forma
|
|
|
As Reported
|
|
Pro Forma
|
Net sales
|
|
|
$
|
20,123
|
|
|
$
|
18,285
|
|
|
|
$
|
65,878
|
|
|
$
|
59,469
|
|
Cost of sales 1 |
|
|
15,477
|
|
|
14,224
|
|
|
|
49,766
|
|
|
43,534
|
|
Research and development expenses 1 |
|
|
740
|
|
|
791
|
|
|
|
2,311
|
|
|
2,360
|
|
Selling, general and administrative expenses 1 |
|
|
1,496
|
|
|
1,572
|
|
|
|
5,143
|
|
|
5,151
|
|
Amortization of intangibles
|
|
|
462
|
|
|
423
|
|
|
|
1,424
|
|
|
1,286
|
|
Restructuring and asset related charges - net
|
|
|
290
|
|
|
180
|
|
|
|
741
|
|
|
479
|
|
Integration and separation costs
|
|
|
666
|
|
|
459
|
|
|
|
1,681
|
|
|
997
|
|
Equity in earnings of nonconsolidated affiliates
|
|
|
178
|
|
|
161
|
|
|
|
685
|
|
|
442
|
|
Sundry income (expense) - net 1 |
|
|
47
|
|
|
188
|
|
|
|
340
|
|
|
(18
|
)
|
Interest expense and amortization of debt discount
|
|
|
362
|
|
|
334
|
|
|
|
1,072
|
|
|
902
|
|
Income from continuing operations before income taxes
|
|
|
855
|
|
|
651
|
|
|
|
4,765
|
|
|
5,184
|
|
Provision for income taxes on continuing operations
|
|
|
320
|
|
|
392
|
|
|
|
1,274
|
|
|
1,113
|
|
Income from continuing operations, net of tax
|
|
|
535
|
|
|
259
|
|
|
|
3,491
|
|
|
4,071
|
|
Net income attributable to noncontrolling interests
|
|
|
38
|
|
|
27
|
|
|
|
117
|
|
|
112
|
|
Net income from continuing operations available for DowDuPont Inc.
common stockholders
|
|
|
$
|
497
|
|
|
$
|
232
|
|
|
|
$
|
3,374
|
|
|
$
|
3,959
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share data:
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share from continuing operations - basic
|
|
|
$
|
0.22
|
|
|
$
|
0.10
|
|
|
|
$
|
1.45
|
|
|
$
|
1.70
|
|
Earnings per common share from continuing operations - diluted
|
|
|
$
|
0.21
|
|
|
$
|
0.10
|
|
|
|
$
|
1.44
|
|
|
$
|
1.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding - basic
|
|
|
2,296.2
|
|
|
2,328.0
|
|
|
|
2,307.3
|
|
|
2,322.9
|
|
Weighted-average common shares outstanding - diluted
|
|
|
2,311.3
|
|
|
2,349.7
|
|
|
|
2,323.1
|
|
|
2,346.2
|
|
1.
|
|
Amounts shown in the pro forma consolidated statements of income for
the three and nine months ended September 30, 2017, have been
updated from the Company's Current Report on Form 8-K dated October
26, 2017, to reflect reclassifications required under Accounting
Standards Update 2017-07, "Compensation - Retirement Benefits (Topic
715): Improving the Presentation of Net Periodic Pension Cost and
Net Periodic Postretirement Benefit Cost," which was adopted on
January 1, 2018 and required retrospective application.
|
|
|
|
DowDuPont Inc.
|
Net Sales by Segment and Geographic Region
|
|
Net Sales by Segment and Geographic Region
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
In millions (Unaudited)
|
|
|
As Reported
|
|
Pro Forma
|
|
|
As Reported
|
|
Pro Forma
|
Agriculture
|
|
|
$
|
1,946
|
|
|
$
|
1,911
|
|
|
|
$
|
11,484
|
|
|
$
|
11,555
|
Performance Materials & Coatings
|
|
|
2,476
|
|
|
2,227
|
|
|
|
7,379
|
|
|
6,558
|
Industrial Intermediates & Infrastructure
|
|
|
3,821
|
|
|
3,226
|
|
|
|
11,421
|
|
|
9,086
|
Packaging & Specialty Plastics
|
|
|
6,119
|
|
|
5,490
|
|
|
|
18,228
|
|
|
16,300
|
Electronics & Imaging
|
|
|
1,195
|
|
|
1,197
|
|
|
|
3,551
|
|
|
3,582
|
Nutrition & Biosciences
|
|
|
1,678
|
|
|
1,466
|
|
|
|
5,173
|
|
|
4,371
|
Transportation & Advanced Polymers
|
|
|
1,408
|
|
|
1,299
|
|
|
|
4,301
|
|
|
3,834
|
Safety & Construction
|
|
|
1,402
|
|
|
1,310
|
|
|
|
4,112
|
|
|
3,852
|
Corporate
|
|
|
78
|
|
|
159
|
|
|
|
229
|
|
|
331
|
Total
|
|
|
$
|
20,123
|
|
|
$
|
18,285
|
|
|
|
$
|
65,878
|
|
|
$
|
59,469
|
U.S. & Canada
|
|
|
$
|
6,838
|
|
|
$
|
6,339
|
|
|
|
$
|
25,199
|
|
|
$
|
23,952
|
EMEA 1 |
|
|
5,687
|
|
|
5,204
|
|
|
|
18,900
|
|
|
16,348
|
Asia Pacific
|
|
|
5,096
|
|
|
4,440
|
|
|
|
15,284
|
|
|
13,013
|
Latin America
|
|
|
2,502
|
|
|
2,302
|
|
|
|
6,495
|
|
|
6,156
|
Total
|
|
|
$
|
20,123
|
|
|
$
|
18,285
|
|
|
|
$
|
65,878
|
|
|
$
|
59,469
|
|
|
|
|
|
|
|
Pro Forma Net Sales Variance by Segment, Geographic Region and
Division
|
|
|
Three Months Ended Sep 30, 2018
|
|
|
Nine Months Ended Sep 30, 2018
|
|
|
Local
Price &
Product
Mix
|
|
Currency
|
|
Volume
|
|
Portfolio
/ Other
2
|
|
Total
|
|
|
Local
Price &
Product
Mix
|
|
Currency
|
|
Volume
|
|
Portfolio
/ Other
2
|
|
Total
|
Percent change from prior year
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture
|
|
|
3
|
%
|
|
(6
|
)%
|
|
8
|
%
|
|
(3
|
)%
|
|
2
|
%
|
|
|
3
|
%
|
|
1
|
%
|
|
(4
|
)%
|
|
(1
|
)%
|
|
(1
|
)%
|
Performance Materials & Coatings
|
|
|
13
|
|
|
(1
|
)
|
|
(1
|
)
|
|
—
|
|
|
11
|
|
|
|
11
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
13
|
|
Industrial Intermediates & Infrastructure
|
|
|
5
|
|
|
(1
|
)
|
|
14
|
|
|
—
|
|
|
18
|
|
|
|
8
|
|
|
2
|
|
|
16
|
|
|
—
|
|
|
26
|
|
Packaging & Specialty Plastics
|
|
|
6
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
11
|
|
|
|
3
|
|
|
2
|
|
|
7
|
|
|
—
|
|
|
12
|
|
Electronics & Imaging
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
(3
|
)
|
|
(1
|
)
|
Nutrition & Biosciences
|
|
|
1
|
|
|
(1
|
)
|
|
3
|
|
|
11
|
|
|
14
|
|
|
|
—
|
|
|
2
|
|
|
4
|
|
|
12
|
|
|
18
|
|
Transportation & Advanced Polymers
|
|
|
6
|
|
|
(1
|
)
|
|
3
|
|
|
—
|
|
|
8
|
|
|
|
5
|
|
|
3
|
|
|
4
|
|
|
—
|
|
|
12
|
|
Safety & Construction
|
|
|
2
|
|
|
(1
|
)
|
|
6
|
|
|
—
|
|
|
7
|
|
|
|
1
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
7
|
|
Total
|
|
|
5
|
%
|
|
(1
|
)%
|
|
5
|
%
|
|
1
|
%
|
|
10
|
%
|
|
|
4
|
%
|
|
2
|
%
|
|
4
|
%
|
|
1
|
%
|
|
11
|
%
|
U.S. & Canada
|
|
|
5
|
%
|
|
—
|
%
|
|
2
|
%
|
|
1
|
%
|
|
8
|
%
|
|
|
3
|
%
|
|
—
|
%
|
|
1
|
%
|
|
1
|
%
|
|
5
|
%
|
EMEA 1 |
|
|
7
|
|
|
(1
|
)
|
|
2
|
|
|
1
|
|
|
9
|
|
|
|
5
|
|
|
6
|
|
|
4
|
|
|
1
|
|
|
16
|
|
Asia Pacific
|
|
|
4
|
|
|
(1
|
)
|
|
11
|
|
|
1
|
|
|
15
|
|
|
|
3
|
|
|
1
|
|
|
13
|
|
|
—
|
|
|
17
|
|
Latin America
|
|
|
6
|
|
|
(5
|
)
|
|
10
|
|
|
(2
|
)
|
|
9
|
|
|
|
6
|
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
6
|
|
Total
|
|
|
5
|
%
|
|
(1
|
)%
|
|
5
|
%
|
|
1
|
%
|
|
10
|
%
|
|
|
4
|
%
|
|
2
|
%
|
|
4
|
%
|
|
1
|
%
|
|
11
|
%
|
Agriculture
|
|
|
3
|
%
|
|
(6
|
)%
|
|
8
|
%
|
|
(3
|
)%
|
|
2
|
%
|
|
|
3
|
%
|
|
1
|
%
|
|
(4
|
)%
|
|
(1
|
)%
|
|
(1
|
)%
|
Materials Science
|
|
|
7
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
13
|
|
|
|
6
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
16
|
|
Specialty Products
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
8
|
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
|
10
|
|
Total
|
|
|
5
|
%
|
|
(1
|
)%
|
|
5
|
%
|
|
1
|
%
|
|
10
|
%
|
|
|
4
|
%
|
|
2
|
%
|
|
4
|
%
|
|
1
|
%
|
|
11
|
%
|
1.
|
|
Europe, Middle East and Africa.
|
2.
|
|
Pro forma net sales for Agriculture excludes sales related to the
November 30, 2017, divestiture of a portion of Dow AgroSciences'
corn seed business in Brazil for the period January 1, 2017 through
August 31, 2017. Sales for the month of September 2017 are included
in Portfolio/Other. Pro forma net sales for Packaging & Specialty
Plastics excludes sales related to the September 1, 2017,
divestiture of the global Ethylene Acrylic Acid ("EAA") copolymers
and ionomers business for the period January 1, 2017 through August
31, 2017. Portfolio & Other includes sales for the acquisition of
the H&N Business acquired on November 1, 2017, impacting Nutrition &
Biosciences. Portfolio & Other also reflects the following
divestitures: SKC Haas Display Films group of companies (divested
June 30, 2017) and the authentication business (divested on January
6, 2017), both impacting Electronics & Imaging; and, the divestiture
of the global food safety diagnostic business (divested February 28,
2017), impacting Nutrition & Biosciences.
|
|
|
|
DowDuPont Inc.
|
Selected Financial Information and Non-GAAP Measures
|
|
|
|
|
|
|
|
|
Operating EBITDA by Segment
1
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
In millions (Unaudited)
|
|
|
As Reported
|
|
Pro Forma
|
|
|
As Reported
|
|
Pro Forma
|
Agriculture
|
|
|
$
|
(104
|
)
|
|
$
|
(239
|
)
|
|
|
$
|
2,472
|
|
|
$
|
2,387
|
|
Performance Materials & Coatings
|
|
|
628
|
|
|
460
|
|
|
|
1,749
|
|
|
1,374
|
|
Industrial Intermediates & Infrastructure
|
|
|
654
|
|
|
676
|
|
|
|
1,990
|
|
|
1,605
|
|
Packaging & Specialty Plastics
|
|
|
1,191
|
|
|
1,147
|
|
|
|
3,822
|
|
|
3,424
|
|
Electronics & Imaging
|
|
|
412
|
|
|
411
|
|
|
|
1,217
|
|
|
1,259
|
|
Nutrition & Biosciences
|
|
|
414
|
|
|
312
|
|
|
|
1,265
|
|
|
944
|
|
Transportation & Advanced Polymers
|
|
|
430
|
|
|
325
|
|
|
|
1,313
|
|
|
954
|
|
Safety & Construction
|
|
|
389
|
|
|
353
|
|
|
|
1,084
|
|
|
908
|
|
Corporate
|
|
|
(185
|
)
|
|
(224
|
)
|
|
|
(536
|
)
|
|
(627
|
)
|
Total
|
|
|
$
|
3,829
|
|
|
$
|
3,221
|
|
|
|
$
|
14,376
|
|
|
$
|
12,228
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Earnings (Losses) of Nonconsolidated Affiliates by
Segment
2
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
In millions (Unaudited)
|
|
|
As Reported
|
|
Pro Forma
|
|
|
As Reported
|
|
Pro Forma
|
Agriculture
|
|
|
$
|
(3
|
)
|
|
$
|
(12
|
)
|
|
|
$
|
(1
|
)
|
|
$
|
(9
|
)
|
Performance Materials & Coatings
|
|
|
3
|
|
|
9
|
|
|
|
4
|
|
|
31
|
|
Industrial Intermediates & Infrastructure
|
|
|
54
|
|
|
41
|
|
|
|
299
|
|
|
101
|
|
Packaging & Specialty Plastics
|
|
|
83
|
|
|
66
|
|
|
|
250
|
|
|
135
|
|
Electronics & Imaging
|
|
|
35
|
|
|
36
|
|
|
|
124
|
|
|
158
|
|
Nutrition & Biosciences
|
|
|
4
|
|
|
5
|
|
|
|
12
|
|
|
16
|
|
Transportation & Advanced Polymers
|
|
|
—
|
|
|
4
|
|
|
|
4
|
|
|
10
|
|
Safety & Construction
|
|
|
6
|
|
|
4
|
|
|
|
19
|
|
|
15
|
|
Corporate
|
|
|
(4
|
)
|
|
8
|
|
|
|
(26
|
)
|
|
(15
|
)
|
Total
|
|
|
$
|
178
|
|
|
$
|
161
|
|
|
|
$
|
685
|
|
|
$
|
442
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of "Income from continuing operations, net of tax"
to "Operating EBITDA"
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
|
|
Sep 30, 2018
|
|
Sep 30, 2017
|
In millions (Unaudited)
|
|
|
As Reported
|
|
Pro Forma
|
|
|
As Reported
|
|
Pro Forma
|
Income from continuing operations, net of tax
|
|
|
$
|
535
|
|
|
$
|
259
|
|
|
|
$
|
3,491
|
|
|
$
|
4,071
|
|
+ Provision for income taxes on continuing operations
|
|
|
320
|
|
|
392
|
|
|
|
1,274
|
|
|
1,113
|
|
Income from continuing operations before income taxes
|
|
|
$
|
855
|
|
|
$
|
651
|
|
|
|
$
|
4,765
|
|
|
$
|
5,184
|
|
+ Depreciation and amortization
|
|
|
1,470
|
|
|
1,389
|
|
|
|
4,450
|
|
|
4,095
|
|
- Interest income 3 |
|
|
38
|
|
|
65
|
|
|
|
144
|
|
|
169
|
|
+ Interest expense and amortization of debt discount
|
|
|
362
|
|
|
334
|
|
|
|
1,072
|
|
|
902
|
|
- Foreign exchange gains (losses), net 3, 4 |
|
|
(103
|
)
|
|
(123
|
)
|
|
|
(258
|
)
|
|
(378
|
)
|
- Significant items 5 |
|
|
(1,077
|
)
|
|
(789
|
)
|
|
|
(3,975
|
)
|
|
(1,838
|
)
|
Operating EBITDA 1 |
|
|
$
|
3,829
|
|
|
$
|
3,221
|
|
|
|
$
|
14,376
|
|
|
$
|
12,228
|
|
1.
|
|
The Company uses Operating EBITDA (for the three and nine months
ended September 30, 2018) and Pro Forma Operating EBITDA (for the
three and nine months ended September 30, 2017), as its measure of
profit/loss for segment reporting. The Company defines Operating
EBITDA as earnings (i.e., “Income from continuing operations before
income taxes”) before interest, depreciation, amortization and
foreign exchange gains (losses), excluding the impact of significant
items. Pro Forma Operating EBITDA is defined as pro forma earnings
(i.e., pro forma “Income from continuing operations before income
taxes”) before interest, depreciation, amortization and foreign
exchange gains (losses), excluding the impact of adjusted
significant items.
|
2.
|
|
Does not exclude the impact of significant items.
|
3.
|
|
Included in "Sundry income (expense) - net."
|
4.
|
|
Excludes a $50 million pretax foreign exchange loss significant item
related to adjustments to foreign currency exchange contracts for
the change in the U.S. tax rate during the nine months ended
September 30, 2018.
|
5.
|
|
For the three and nine months ended September 30, 2017, significant
items exclude the impact of one-time transaction costs directly
attributable to the Merger and reflected in the pro forma
adjustments.
|
|
|
|
DowDuPont Inc.
|
Selected Financial Information and Non-GAAP Measures
|
|
Significant Items Impacting Results for the Three Months Ended
Sep 30, 2018
|
In millions, except per share amounts (Unaudited)
|
|
|
Pretax
1
|
|
|
Net
Income
2
|
|
|
EPS
3
|
|
|
Income Statement Classification
|
Reported results
|
|
|
$
|
855
|
|
|
|
$
|
497
|
|
|
|
$
|
0.21
|
|
|
|
|
Less: Significant items
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up amortization
|
|
|
(109
|
)
|
|
|
(79
|
)
|
|
|
(0.03
|
)
|
|
|
Cost of sales
|
Integration and separation costs
|
|
|
(666
|
)
|
|
|
(643
|
)
|
|
|
(0.28
|
)
|
|
|
Integration and separation costs
|
Restructuring and asset related charges - net
|
|
|
(290
|
)
|
|
|
(235
|
)
|
|
|
(0.10
|
)
|
|
|
Restructuring and asset related charges - net
|
Loss on change in joint venture ownership 4 |
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
Sundry income (expense) - net
|
Loss on early extinguishment of debt
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
Sundry income (expense) - net
|
Income tax related items 5 |
|
|
—
|
|
|
|
(12
|
)
|
|
|
(0.01
|
)
|
|
|
Provision for income taxes on continuing operations
|
Total significant items
|
|
|
$
|
(1,077
|
)
|
|
|
$
|
(980
|
)
|
|
|
$
|
(0.42
|
)
|
|
|
|
Less: DuPont amortization of intangibles
|
|
|
(310
|
)
|
|
|
(245
|
)
|
|
|
(0.11
|
)
|
|
|
Amortization of intangibles
|
Adjusted results (non-GAAP)
|
|
|
$
|
2,242
|
|
|
|
$
|
1,722
|
|
|
|
$
|
0.74
|
|
|
|
|
|
Significant Items Impacting Pro Forma Results for the Three
Months Ended Sep 30, 2017
|
In millions, except per share amounts (Unaudited)
|
|
|
Pretax
1
|
|
|
Net
Income
2
|
|
|
EPS
3
|
|
|
Income Statement Classification
|
Pro forma results
|
|
|
$
|
651
|
|
|
|
$
|
232
|
|
|
|
$
|
0.10
|
|
|
|
|
Less: Significant items
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up amortization
|
|
|
(367
|
)
|
|
|
(298
|
)
|
|
|
(0.13
|
)
|
|
|
Cost of sales ($360 million); Equity in earnings of nonconsolidated
affiliates ($7 million)
|
Integration and separation costs
|
|
|
(459
|
)
|
|
|
(315
|
)
|
|
|
(0.14
|
)
|
|
|
Integration and separation costs
|
Restructuring and asset related charges - net
|
|
|
(180
|
)
|
|
|
(125
|
)
|
|
|
(0.05
|
)
|
|
|
Restructuring and asset related charges - net
|
Gain on divestiture 6 |
|
|
227
|
|
|
|
135
|
|
|
|
0.06
|
|
|
|
Sundry income (expense) - net
|
Transaction costs and productivity actions
|
|
|
(10
|
)
|
|
|
(6
|
)
|
|
|
—
|
|
|
|
Cost of sales ($8 million);
Selling, general and administrative
expenses ($2 million)
|
Income tax related items 7 |
|
|
—
|
|
|
|
(267
|
)
|
|
|
(0.11
|
)
|
|
|
Provision for income taxes on continuing operations
|
Total significant items
|
|
|
$
|
(789
|
)
|
|
|
$
|
(876
|
)
|
|
|
$
|
(0.37
|
)
|
|
|
|
Less: DuPont amortization of intangibles
|
|
|
(268
|
)
|
|
|
(183
|
)
|
|
|
(0.08
|
)
|
|
|
Amortization of intangibles
|
Adjusted pro forma results (non-GAAP)
|
|
|
$
|
1,708
|
|
|
|
$
|
1,291
|
|
|
|
$
|
0.55
|
|
|
|
|
1.
|
|
"Income from continuing operations before income taxes" or pro forma
"Income from continuing operations before income taxes."
|
2.
|
|
"Net income available for DowDuPont Inc. common stockholders"
excluding the impact of discontinued operations, or pro forma "Net
income from continuing operations available for DowDuPont Inc.
common stockholders." The income tax effect on significant items was
calculated based upon the enacted tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
|
3.
|
|
"Earnings per common share from continuing operations - diluted" or
pro forma "Earnings per common share from continuing operations -
diluted."
|
4.
|
|
Reflects a pretax loss for post-closing adjustments related to the
Dow Silicones ownership restructure.
|
5.
|
|
Related to the effects of U.S. Tax Reform ($116 million benefit), a
tax valuation allowance recorded against the net deferred tax asset
position of a Brazilian legal entity ($75 million expense), a tax
charge related to the elimination of a tax benefit resulting from
DuPont’s third quarter 2018 principal U.S. pension plan
discretionary contribution ($27 million expense) and a tax charge
related to an internal legal entity restructuring associated with
the Intended Business Separations ($26 million expense).
|
6.
|
|
Pretax gain related to the sale of Dow's global EAA copolymers and
ionomers business.
|
7.
|
|
Related to changes in tax attributes resulting from the Merger,
including a reduction in a deferred tax asset in Germany and the
recognition of deferred tax gains in the United States.
|
|
|
|
DowDuPont Inc.
|
Selected Financial Information and Non-GAAP Measures
|
|
Significant Items Impacting Results for the Nine Months Ended Sep
30, 2018
|
In millions, except per share amounts (Unaudited)
|
|
|
Pretax
1
|
|
|
Net
Income
2
|
|
|
EPS
3
|
|
|
Income Statement Classification
|
Reported results
|
|
|
$
|
4,765
|
|
|
|
$
|
3,374
|
|
|
$
|
1.44
|
|
|
|
|
Less: Significant items
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up amortization
|
|
|
(1,494
|
)
|
|
|
(1,245
|
)
|
|
(0.53
|
)
|
|
|
Cost of sales
|
Integration and separation costs
|
|
|
(1,681
|
)
|
|
|
(1,446
|
)
|
|
(0.62
|
)
|
|
|
Integration and separation costs
|
Restructuring and asset related charges - net
|
|
|
(741
|
)
|
|
|
(590
|
)
|
|
(0.25
|
)
|
|
|
Restructuring and asset related charges - net
|
Net loss on divestitures and change in joint venture ownership 4 |
|
|
(3
|
)
|
|
|
(8
|
)
|
|
—
|
|
|
|
Sundry income (expense) - net
|
Loss on early extinguishment of debt
|
|
|
(6
|
)
|
|
|
(5
|
)
|
|
—
|
|
|
|
Sundry income (expense) - net
|
Income tax related items 5 |
|
|
(50
|
)
|
|
|
(128
|
)
|
|
(0.06
|
)
|
|
|
Sundry income (expense) - net ($50 million);
Provision for income taxes on continuing operations ($78 million)
|
Total significant items
|
|
|
$
|
(3,975
|
)
|
|
|
$
|
(3,422
|
)
|
|
$
|
(1.46
|
)
|
|
|
|
Less: DuPont amortization of intangibles
|
|
|
(958
|
)
|
|
|
(757
|
)
|
|
(0.33
|
)
|
|
|
Amortization of intangibles
|
Adjusted results (non-GAAP)
|
|
|
$
|
9,698
|
|
|
|
$
|
7,553
|
|
|
$
|
3.23
|
|
|
|
|
|
Significant Items Impacting Pro Forma Results for the Nine Months
Ended Sep 30, 2017
|
In millions, except per share amounts (Unaudited)
|
|
|
Pretax
1
|
|
|
Net
Income
2
|
|
|
EPS
3
|
|
|
Income Statement Classification
|
Pro forma results
|
|
|
$
|
5,184
|
|
|
|
$
|
3,959
|
|
|
$
|
1.68
|
|
|
|
|
Less: Significant items
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory step-up amortization
|
|
|
(367
|
)
|
|
|
(298
|
)
|
|
(0.13
|
)
|
|
|
Cost of sales ($360 million); Equity in earnings of nonconsolidated
affiliates ($7 million)
|
Litigation related charges, awards and judgments 6 |
|
|
(332
|
)
|
|
|
(215
|
)
|
|
(0.08
|
)
|
|
|
Sundry income (expense) - net
|
Integration and separation costs
|
|
|
(997
|
)
|
|
|
(677
|
)
|
|
(0.29
|
)
|
|
|
Integration and separation costs
|
Restructuring and asset related charges - net
|
|
|
(480
|
)
|
|
|
(319
|
)
|
|
(0.13
|
)
|
|
|
Restructuring and asset related charges - net
|
Gains on divestitures 7 |
|
|
396
|
|
|
|
226
|
|
|
0.10
|
|
|
|
Sundry income (expense) - net
|
Transaction costs and productivity actions
|
|
|
(58
|
)
|
|
|
(37
|
)
|
|
(0.02
|
)
|
|
|
Cost of sales ($49 million);
Selling, general and administrative
expenses ($9 million)
|
Income tax related items 8 |
|
|
—
|
|
|
|
(196
|
)
|
|
(0.09
|
)
|
|
|
Provision for income taxes on continuing operations
|
Total significant items
|
|
|
$
|
(1,838
|
)
|
|
|
$
|
(1,516
|
)
|
|
$
|
(0.64
|
)
|
|
|
|
Less: DuPont amortization of intangibles
|
|
|
(819
|
)
|
|
|
(558
|
)
|
|
(0.24
|
)
|
|
|
Amortization of intangibles
|
Adjusted pro forma results (non-GAAP)
|
|
|
$
|
7,841
|
|
|
|
$
|
6,033
|
|
|
$
|
2.56
|
|
|
|
|
1.
|
|
"Income from continuing operations before income taxes" or pro forma
"Income from continuing operations before income taxes."
|
2.
|
|
"Net income available for DowDuPont Inc. common stockholders"
excluding the impact of discontinued operations, or pro forma "Net
income from continuing operations available for DowDuPont Inc.
common stockholders." The income tax effect on significant items was
calculated based upon the enacted tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment.
|
3.
|
|
"Earnings per common share from continuing operations - diluted" or
pro forma "Earnings per common share from continuing operations -
diluted."
|
4.
|
|
Includes a $20 million pretax gain related to Dow's sale of its
equity interest in MEGlobal, a $24 million pretax gain on
Agriculture asset sales and a pretax loss of $47 million for
post-closing adjustments related to the Dow Silicones ownership
restructure.
|
5.
|
|
Includes a $38 million benefit related to the effects of U.S. Tax
Reform, offset by a $50 million pretax foreign exchange loss ($38
million expense) related to adjustments to foreign currency exchange
contracts for the change in the U.S. tax rate. Also includes a tax
valuation allowance recorded against the net deferred tax asset
position of a Brazilian legal entity ($75 million expense), a tax
charge related to the elimination of a tax benefit resulting from
DuPont’s third quarter 2018 principal U.S. pension plan
discretionary contribution ($27 million expense) and a tax charge
related to an internal legal entity restructuring associated with
the Intended Business Separations ($26 million expense).
|
6.
|
|
Reflects a pretax gain related to a Dow patent infringement matter
with Nova Chemicals Corporation ($137 million) and a pretax charge
for Dow AgroSciences' arbitration matter with Bayer CropScience
($469 million).
|
7.
|
|
Reflects pretax gains of $227 million related to the sale of Dow's
global EAA copolymers and ionomers business, $162 million related to
the sale of DuPont's global food safety diagnostics business and $7
million related to post-closing adjustments on the 2015 split-off of
Dow's chlorine value chain.
|
8.
|
|
Related to changes in tax attributes resulting from the Merger,
including a reduction in a deferred tax asset in Germany and the
recognition of deferred tax gains in the United States (expense of
$267 million); the elimination of a DuPont tax benefit recorded in
2016 due to DuPont's second quarter 2017 principal U.S. pension plan
contribution (expense of $29 million); and a reduction in DuPont's
unrecognized tax benefits and reversal of associated interest due to
the closure of various tax statutes of limitations (benefit of $100
million).
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181101005465/en/
DowDuPont
Investors:
Jennifer Driscoll
jen.driscoll@dupont.com
+1
302-774-4994
or
Lori Koch
lori.d.koch@dupont.com
+1
302-774-4994
or
Neal Sheorey
nrsheorey@dow.com
+1
989-636-6347
or
Media:
Rachelle Schikorra
ryschikorra@dow.com
+1
989-638-4090
or
Dan Turner
daniel.a.turner@dupont.com
+1
302-996-8372
Source: DowDuPont