- Tax-free separations create independent, focused Electronics
and Water companies that are global leaders in their respective
industries
- New DuPont will remain a premier diversified industrial company
with industry-leading brands and solutions
- Reaffirms second quarter and full year 2024 net sales,
operating EBITDA and adjusted EPS financial guidance
- Company to host a call with investors at 8:00 a.m. ET on Thursday, May 23, 2024
WILMINGTON, Del., May 22, 2024
/PRNewswire/ -- DuPont (NYSE: DD) today announced a plan to
separate into three distinct, publicly traded companies. Under the
plan, DuPont would execute the proposed separations of its
Electronics and Water businesses in a tax-free manner to its
shareholders with New DuPont continuing as a premier diversified
industrial company following completion of the separations. As
independent entities, both Electronics and Water will benefit from
increased focus and agility in their respective industries. At
separation, each of the three companies will have strong balance
sheets, attractive financial profiles and compelling growth
opportunities.
As leading standalone companies, each business is expected to
benefit from:
- An ability to tailor capital allocation strategies to pursue
differential strategic growth objectives
- Enhanced strategic flexibility to pursue portfolio enhancing
M&A
- Compelling investment profiles appealing to different investor
bases
- Distinct boards of directors and management teams comprised of
world-class leaders with track records of driving value creation in
each specific industry
"This is an extraordinary opportunity to deliver long-term,
sustainable shareholder value through the creation of three strong,
industry-leading companies," said Ed
Breen, DuPont Executive Chairman and Chief Executive
Officer. "The three-way separation will unlock incremental value
for shareholders and customers and also create new opportunities
for employees. Critically, each company will have greater
flexibility to pursue their own focused growth strategies,
including portfolio enhancing M&A."
Overview of Three Leading Standalone Companies
New DuPont: A Diversified Industrial Company with a
Portfolio of Iconic Brands and Solutions
New DuPont will
be a premier diversified industrial company powered by deep
materials science and application engineering expertise,
industry-leading innovation, top-tier manufacturing capabilities,
and iconic brands such as Tyvek®, Kevlar® and
Nomex®. New DuPont will have a strong presence in
fast-growing healthcare end-markets including applications for
biopharma consumables, medical devices, and medical packaging. The
company will also be a leading provider of key technologies
enabling advanced mobility particularly within electric vehicles.
Finally, New DuPont will remain a provider of advanced solutions
serving safety, construction, aerospace and other industrial-based
end-markets.
New DuPont will be comprised of the existing businesses within
the Water & Protection segment (excluding Water Solutions), the
majority of businesses within Industrial Solutions (including
healthcare), and the retained businesses reported in Corporate
(including adhesives). These businesses generated net sales of
approximately $6.6 billion and
operating EBITDA margin(1) of approximately 24% in
2023.
New DuPont is expected to continue to deliver strong margins,
generate robust cash flow and will have a balanced financial policy
similar to the current DuPont, including the ability to invest in
growth opportunities.
Electronics: A Global Leader for Electronic Materials
including Semiconductor Solutions and Advanced Electronics
Products
Electronics will be a leading global provider
of differentiated electronics materials including key consumables
used in semiconductor chip manufacturing, as well as advanced
electronic materials enabling reliable signal integrity, power
management and thermal management. The company will be well
positioned to capture growth in the semiconductor industry, driven
by high-performance computing demands from AI, high speed
connectivity, smart and autonomous vehicles and the Internet of
Things, among other mega-trend growth drivers.
Electronics will be comprised of the existing Semiconductor
Technologies and Interconnect Solutions lines of business, as well
as the electronics-related product lines from Industrial Solutions.
These businesses generated net sales of approximately $4.0 billion and operating EBITDA
margin(1) of approximately 29% in 2023.
Electronics will focus on innovation-based growth. With robust
cash flow generation, Electronics will be well positioned to pursue
ongoing organic growth initiatives and have flexibility to pursue
inorganic growth opportunities.
Water: A Comprehensive Water Solutions Provider with
Leading Filtration Technologies
Water will be a global
technology leader with a comprehensive portfolio of water
filtration and purification solutions with leading technologies in
reverse osmosis, ion exchange and ultrafiltration. Its solutions
provide critical components and systems that generate clean and
fit-for-purpose water across a variety of market segments including
industrial water and energy, life sciences and specialties,
municipal and desalination, and residential and commercial.
Water will be comprised of DuPont's current Water Solutions line
of business which generated net sales of approximately $1.5 billion and operating EBITDA
margin(1) of approximately 24% in 2023.
With profitable growth and strong cash generation, Water will be
well positioned to drive earnings growth through continued
investment in the business as well as potential inorganic growth
opportunities.
(1) Presented on a DuPont segment reporting basis for
informational purposes and should not be viewed as an indication of
the future company's operating results on a standalone basis
assuming completion of the separation transactions. Refer to
Non-GAAP Financial Measures for further information.
Separation Transactions Detail
DuPont expects to execute the proposed separations of
Electronics and Water in a way that will be tax-free for DuPont
shareholders for U.S. federal income tax purposes.
DuPont expects to complete the separations within 18 to 24
months. The separation transactions will not require a shareholder
vote and are subject to satisfaction of customary conditions,
including final approval by DuPont's Board of Directors, receipt of
tax opinion from counsel, the filing and effectiveness of Form 10
registration statements with the U.S. Securities and Exchange
Commission, applicable regulatory approvals and satisfactory
completion of financing.
It is anticipated that all three companies will have strong
balance sheets and will be capitalized to provide the financial
flexibility to take advantage of future growth opportunities. New
DuPont is expected to maintain its investment grade credit
rating.
Leadership Updates
In a separate press release issued today, DuPont announced the
following leadership appointments, effective June 1, 2024:
- Lori Koch, current Chief
Financial Officer is appointed Chief Executive Officer, succeeding
Ed Breen who will retain his role of
Executive Chairman.
- Antonella Franzen, current Chief
Financial Officer of DuPont's Water & Protection segment, is
appointed Chief Financial Officer.
Following completion of the separations, Lori Koch and Antonella
Franzen will remain in their respective positions for New
DuPont. Specifics around additional executive leadership and Board
of Director appointments are expected to be announced in advance of
the respective separations.
Additional information related to the planned separations has
been made available in a supplemental presentation posted on the
Events & Presentations page on DuPont's Investor Relations
website.
2024 Financial Outlook
DuPont reaffirms its second quarter and full year 2024 financial
guidance for net sales, operating EBITDA and adjusted EPS as
provided on May 1, 2024 as part of
its first quarter earnings release.
Advisors
Centerview Partners LLC and Goldman Sachs & Co. LLC are
serving as DuPont's financial advisors. Skadden, Arps, Slate,
Meagher & Flom LLP is serving as legal counsel.
Conference Call Details
DuPont will host a conference call on Thursday, May 23, 2024 at 8:00 a.m. ET to discuss the announcement. The
event will be webcast live and can be accessed on DuPont's
Investors Relations page. A replay, along with the presentation
that accompanies the conference call, will also be posted to the
website. The dial-in number for the conference call is 800-715-9871
toll-free within the U.S. or +1-646-307-1963. The conference ID is
5183725.
About DuPont
DuPont (NYSE: DD) is a global innovation
leader with technology-based materials and solutions that help
transform industries and everyday life. Our employees apply diverse
science and expertise to help customers advance their best ideas
and deliver essential innovations in key markets including
electronics, transportation, construction, water, healthcare and
worker safety. More information about the company, its businesses
and solutions can be found at www.dupont.com. Investors can
access information included on the Investor Relations section of
the website at investors.dupont.com.
DuPont™ and all products, unless otherwise noted,
denoted with ™, SM or ® are
trademarks, service marks or registered trademarks of affiliates of
DuPont de Nemours, Inc.
Cautionary Statement about Forward-looking
Statements
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,
"outlook," "stabilization," "confident," "preliminary," "initial,"
and similar expressions and variations or negatives of these words.
All statements, other than statements of historical fact, are
forward-looking statements, including statements regarding outlook,
expectations and guidance. Forward-looking statements address
matters that are, to varying degrees, uncertain and subject to
risks, uncertainties, and assumptions, many of which that are
beyond DuPont's control, that could cause actual results to differ
materially from those expressed in any forward-looking statements.
Forward-looking statements are not guarantees of future results.
Some of the important factors that could cause DuPont's actual
results to differ materially from those projected in any such
forward-looking statements include, but are not limited to: (i) the
ability of DuPont to effect the separation transactions described
above and to meet the conditions related thereto; (ii) the
possibility that the separation transactions will not be completed
within the anticipated time period or at all; (iii) the possibility
that the separation transactions will not achieve their intended
benefits; (iv) the impact of the separation transactions on
DuPont's businesses and the risk that the separations may be
more difficult, time-consuming or costly than expected, including
the impact on DuPont's resources, systems, procedures and controls,
diversion of management's attention and the impact and possible
disruption of existing relationships with customers, suppliers,
employees and other business counterparties; (v) the possibility of
disruption, including disputes, litigation or unanticipated costs,
in connection with the separation transactions; (vi) the
uncertainty of the expected financial performance of DuPont or the
separated companies following completion of the separation
transactions; (vii) negative effects of the announcement or
pendency of the separation transactions on the market price of
DuPont's securities and/or on the financial performance of DuPont;
(viii) the ability to achieve anticipated capital structures in
connection with the separation transactions, including the future
availability of credit and factors that may affect such
availability; (ix) the ability to achieve anticipated credit
ratings in connection with the separation transactions; (x) the
ability to achieve anticipated tax treatments in connection with
the separation transactions and completed and future, if any,
divestitures, mergers, acquisitions and other portfolio changes and
the impact of changes in relevant tax and other laws; (xi) risks
and uncertainties related to the settlement agreement concerning
PFAS liabilities reached June 2023
with plaintiff water utilities by Chemours, Corteva, EIDP and
DuPont; (xii) risks and costs related to each of the parties
respective performance under and the impact of the arrangement to
share future eligible PFAS costs by and between DuPont, Corteva and
Chemours, including the outcome of any pending or future litigation
related to PFAS or PFOA, including personal injury claims and
natural resource damages claims; the extent and cost of ongoing
remediation obligations and potential future remediation
obligations; changes in laws and regulations applicable to PFAS
chemicals; (xiii) indemnification of certain legacy liabilities;
(xiv) the failure to realize expected benefits and effectively
manage and achieve anticipated synergies and operational
efficiencies in connection with the separation transactions and
completed and future, if any, divestitures, mergers, acquisitions,
and other portfolio management, productivity and infrastructure
actions; (xv) the risks and uncertainties, including increased
costs and the ability to obtain raw materials and meet customer
needs from, among other events, pandemics and responsive actions;
(xvi) timing and recovery from demand declines in consumer-facing
markets, including in China;
(xvii) adverse changes in worldwide economic, political,
regulatory, international trade, geopolitical, capital markets and
other external conditions; and other factors beyond DuPont's
control, including inflation, recession, military conflicts,
natural and other disasters or weather-related events, that impact
the operations of the company, its customers and/or its suppliers;
(xviii) the ability to offset increases in cost of inputs,
including raw materials, energy and logistics; (xix) the risks
associated with demand and market conditions in the semiconductor
industry and associated end markets, including from continuing or
expanding trade disputes or restrictions, including on exports to
China of U.S.-regulated products
and technology; (xx) the risks, including ability to achieve, and
costs associated with DuPont's sustainability strategy, including
the actual conduct of the company's activities and results thereof,
and the development, implementation, achievement or continuation of
any goal, program, policy or initiative discussed or expected;
(xxi) other risks to DuPont's business and operations, including
the risk of impairment; (xxii) the possibility that the Company may
fail to realize the anticipated benefits of the $1 billion share repurchase program announced on
February 6, 2024 and that the program
may be suspended, discontinued or not completed prior to its
termination on June 30, 2025;
and (xxiii) other risk factors discussed in DuPont's most recent
annual report and subsequent current and periodic reports filed
with the U.S. Securities and Exchange Commission. 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 or supply
chain disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on DuPont's consolidated financial
condition, results of operations, credit rating or liquidity. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. DuPont assumes no
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.
Non-GAAP Financial Measures
This communication
includes information that does not conform to accounting principles
generally accepted in the United States
of America ("U.S. GAAP") and are considered non-GAAP
measures. Management uses these measures internally for planning,
forecasting and evaluating the performance of the company,
including allocating resources. DuPont's management believes these
non-GAAP financial measures are useful to investors because they
provide additional information related to the ongoing performance
of DuPont to offer a more meaningful comparison related to future
results of operations. These non-GAAP financial measures supplement
disclosures prepared in accordance with U.S. GAAP, and should not
be viewed as an alternative to U.S. GAAP. Furthermore, such
non-GAAP measures may not be consistent with similar measures
provided or used by other companies. Reconciliations of non-GAAP
measures to U.S. GAAP are provided in the Reconciliation to
Non-GAAP Measures on the Investors section of DuPont's website.
Non-GAAP measures referred to in this communication are defined
below. DuPont has not provided forward-looking U.S. GAAP financial
measures or a reconciliation of forward-looking non-GAAP financial
measures to the most comparable U.S. GAAP financial measures on a
forward-looking basis because the company is unable to predict with
reasonable certainty the ultimate outcome of certain future events.
These events include, among others, the impact of portfolio
changes, including the separation transactions, asset sales,
mergers, acquisitions, and divestitures; contingent liabilities
related to litigation, environmental and indemnifications matters;
impairments and discrete tax items. These items are uncertain,
depend on various factors, and could have a material impact on U.S.
GAAP results for the guidance period. We encourage investors to
review our financial statements and publicly filed reports in their
entirety and not to rely on any single financial measure.
DuPont's measure of profit/loss for segment reporting purposes
is Operating EBITDA as this is the manner in which the company's
chief operating decision maker ("CODM") assesses performance and
allocates resources. The company defines Operating EBITDA as
earnings (i.e., "Income from continuing operations before income
taxes") before interest, depreciation, amortization, non-operating
pension / OPEB benefits / charges, and foreign exchange gains /
losses, and adjusted for significant items.
Operating EBITDA Margin is defined as Operating EBITDA divided
by net sales.
Significant items are items that arise outside the ordinary
course of the company's business that management believes may cause
misinterpretation of underlying business performance, both
historical and future, based on a combination of some or all of the
item's size, unusual nature and infrequent occurrence. Management
classifies as significant items certain costs and expenses
associated with integration and separation activities related to
transformational acquisitions and divestitures as they are
considered unrelated to ongoing business performance.
Discussion of net sales and Operating EBITDA Margin related to
New DuPont, Electronics and Water is on the same basis as DuPont's
segment reporting and reflects the aggregate results for the
businesses to be included within each of the future companies.
Corporate expenses included by DuPont within Corporate & Other
are not included in these financial disclosures. These measures
have been presented in this manner for informational purposes only
and should not be viewed as an indication of each future company's
operating results on a standalone basis assuming completion of the
separation transactions.
Effective as of January 1, 2024,
Electronics & Industrial realigned certain product lines that
comprise its business units (Industrial Solutions, Interconnect
Solutions and Semiconductor Technologies). The realignment did not
result in changes to total Electronics & Industrial segment net
sales.
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SOURCE DuPont