DuPont Reports Fourth Quarter and Full Year 2023 Results

DuPont announced its financial results⁽¹⁾ for the fourth quarter and full year ended December 31, 2023.

"In the face of inventory destocking that impacted many of our end-markets in 2023 and continued economic softness in China, our teams remained focused on sound operational execution and driving productivity and cost discipline," said Ed Breen, DuPont Executive Chairman and Chief Executive Officer. "We delivered significant year-over-year cash flow improvement in 2023, including a strong fourth quarter finish, which underscores our ongoing prioritization of working capital management."

"We continue to see demand stabilization within Semiconductor Technologies and Interconnect Solutions and we remain confident of a broad-based electronics materials recovery in 2024. We did, however, see incremental channel inventory destocking within our industrial-based businesses as we closed out 2023 and we are seeing similar trends continue as we enter 2024 with recovery timing expected to vary by end-market as the year progresses," Breen added. "We remain confident in the through-cycle strength of our portfolio as our businesses are well-equipped to leverage market-leading positions and accelerate growth as inventories normalize and key end-markets recover."

"We also continue to execute on our capital allocation strategy," Breen continued. "Today we announced completion of the $2 billion accelerated share repurchase transaction launched last September, which completes our previous $5 billion share repurchase program announced in November 2022. We also announced authorization of a new $1 billion share repurchase program and a 6% increase to our quarterly dividend. These actions demonstrate our ongoing commitment to a balanced capital allocation approach focused on value creation for our shareholders."

Fourth Quarter 2023 Results⁽¹⁾

Dollars in millions, unless noted	4Q'23	4Q'22	Change vs. 4Q'22	Organic Sales ⁽²⁾ vs. 4Q'22
Net sales	$2,898	$3,104	(7) %	(10) %
GAAP (Loss) Income from continuing operations	$(300)	$105	(385) %
Operating EBITDA⁽²⁾	$715	$758	(6) %
Operating EBITDA⁽²⁾ margin %	24.7 %	24.4 %	30 bps
GAAP EPS from continuing operations	$(0.72)	$0.20	(460) %
Adjusted EPS⁽²⁾	$0.87	$0.89	(2) %
Cash provided by operating activities – cont. ops.	$646	$185	249 %
Adjusted free cash flow⁽²⁾	$501	$188	166 %

Net sales

Net sales decreased 7% as organic sales⁽²⁾ decline of 10% was partially offset by favorable portfolio impact of 3%, primarily reflecting the August 1^st acquisition of Spectrum.
Organic sales⁽²⁾ decline of 10% consisted of a 9% decrease in volume and a 1% decrease in price.
- Lower volume was driven primarily by the impact of channel inventory destocking within Safety Solutions, most notably for medical packaging, and within Water Solutions mainly in China.
15% organic sales⁽²⁾decline in Water & Protection; 7% organic sales⁽²⁾decline in Electronics & Industrial; 4% organic sales⁽²⁾ decline in the retained businesses reported in Corporate.
13% organic sales⁽²⁾ decline in U.S. & Canada; 11% organic sales⁽²⁾ decline in Asia Pacific; 9% organic sales⁽²⁾ decline in EMEA.

GAAP Loss from continuing operations

GAAP Loss from continuing operations compared to GAAP Income from continuing operations in the year-ago period resulted primarily due to a goodwill impairment charge partially offset by a tax benefit related to internal restructuring.Goodwill ImpairmentIn connection with the preparation of year-end 2023 financial statements, driven by the continuation of a challenging macroeconomic environment primarily impacting construction markets, as well as incremental channel inventory destocking in medical packaging and industrial-based end-markets, DuPont identified a triggering event as of December 31, 2023 and performed an impairment analysis of the Protection reporting unit which consists of the Shelter Solutions and Safety Solutions lines of business within Water & Protection. The carrying value of the Protection reporting unit contains historical DuPont assets and liabilities that were measured at fair value in connection with the merger between Dow and DuPont, including the recognition of significant goodwill and intangible asset balances. Based on the analysis, DuPont recorded an $804 million non-cash goodwill impairment charge which is reflected in fourth quarter and full year 2023 GAAP earnings results.

Operating EBITDA⁽²⁾

Operating EBITDA⁽²⁾ decreased as volume declines and the impact of reduced production rates to better align inventory with demand were partially offset by lower input costs, certain discrete items which benefited earnings by about $40 million and the earnings contribution from the Spectrum acquisition.

Adjusted EPS⁽²⁾

Adjusted EPS⁽²⁾ decreased as lower segment earnings, foreign exchange losses led by devaluation of the Argentinian peso and higher depreciation more than offset the impact of a lower share count and a lower tax rate.

Cash provided by operating activities from continuing operations

Cash provided by operating activities from continuing operations in the quarter of $646 million and capital expenditures of $145 million resulted in adjusted free cash flow⁽²⁾ of $501 million. Adjusted free cash flow conversion⁽²⁾ during the quarter was 133%.

Full Year 2023 Results⁽¹⁾

Dollars in millions, unless noted	FY'23	FY'22	Change vs. FY'22	Organic Sales ⁽²⁾ vs. FY'22
Net sales	$12,068	$13,017	(7) %	(6) %
GAAP Income from continuing operations	$533	$1,061	(50) %
Operating EBITDA⁽²⁾	$2,942	$3,261	(10) %
Operating EBITDA⁽²⁾ margin %	24.4 %	25.1 %	(70)bps
GAAP EPS from continuing operations	$1.09	$2.02	(46) %
Adjusted EPS⁽²⁾	$3.48	$3.41	2 %
Cash provided by operating activities – cont. ops.	$2,191	$1,249	75 %
Adjusted free cash flow⁽²⁾	$1,572	$750	110 %

Net sales

Net sales decreased 7% on organic sales⁽²⁾ decline of 6% and a currency headwind of 1%.
Organic sales⁽²⁾ decline of 6% consisted of an 8% decrease in volume partially offset by a 2% increase in price.
11% organic sales⁽²⁾decline in Electronics & Industrial; 4% organic sales⁽²⁾decline in Water & Protection; 3% organic sales⁽²⁾ growth in the retained businesses reported in Corporate.
11% organic sales⁽²⁾ decline in Asia Pacific; 6% organic sales⁽²⁾ decline in U.S. & Canada; 1% organic sales⁽²⁾ decline in EMEA.

GAAP Income/GAAP EPS from continuing operations

GAAP income/GAAP EPS from continuing operations decreased as a goodwill impairment charge and lower segment earnings more than offset a tax benefit related to internal restructuring, lower net interest expense and the impact of a lower share count.

Operating EBITDA⁽²⁾

Operating EBITDA⁽²⁾ decreased as volume declines and the impact of reduced production rates to better align inventory with demand were partially offset by the carryover impact of pricing actions and lower input costs.

Adjusted EPS⁽²⁾

Adjusted EPS⁽²⁾ increased as the impact of a lower share count and lower net interest expense more than offset lower segment earnings.

Cash provided by operating activities from continuing operations

Cash provided by operating activities from continuing operations for the year of $2.2 billion and capital expenditures of $0.6 billion resulted in adjusted free cash flow⁽²⁾ of $1.6 billion. Adjusted free cash flow conversion⁽²⁾ for the year was 100%.

(1)	Results and cash flows are presented on a continuing operations basis. See page 8 for further information, including the basis of presentation included in this release.
(2)	Adjusted EPS, operating EBITDA, organic sales, adjusted free cash flow and adjusted free cash flow conversion are non-GAAP measures and only reflect continuing operations. See pages 9-10 for further discussion, including a definition of significant items. Reconciliation to the most directly comparable GAAP measure, including details of significant items begins on page 15 of this communication. Adjusted EPS outlook on page 6 assumes $1B share repurchase program is substantially complete by year-end 2024.
(3)	Future dividends are at the discretion of the DuPont Board of Directors.