DD DuPont de Nemours Inc

WILMINGTON, Del., Jan. 24, 2017 /PRNewswire/ --

DuPont (NYSE: DD), a science company that brings world-class, innovative products, materials, and services to the global marketplace, today announced fourth-quarter 2016 GAAP earnings of $0.29 per share and operating earnings² of $0.51 per share.  Prior year GAAP and operating earnings² were a loss of $(0.26) and earnings of $0.27 per share, respectively.  GAAP income from continuing operations before taxes was $353 million, including charges of $(599) million related to an asset impairment charge and transaction costs offset by a $382 million non-operating pension/OPEB gain.  Prior year GAAP loss from continuing operations before taxes was $(421) million, including a $(775) million charge for restructuring costs.  Refer to Schedule B for details of significant items excluded from operating earnings per share.

For the full-year 2016, DuPont delivered GAAP earnings of $2.85 per share and operating earnings² of $3.35 per share.  Prior-year GAAP and operating earnings² were $2.09 and $2.77 per share, respectively. 

Fourth-quarter sales were $5.2 billion, down 2 percent versus prior year as a 1-percent benefit from currency was offset by a 2-percent decline in local price and a 1-percent decline in volume.  Volume declined as growth in Performance Materials, Electronics & Communications and Industrial Biosciences was more than offset by declines in Agriculture, due to timing of fourth-quarter seed sales primarily due to the southern U.S. route-to-market change.  Excluding this timing change, sales would have increased 2 percent. Full-year sales totaled $24.6 billion, down 2 percent versus prior year due to a 1-percent negative impact from currency and a 1-percent decline in local price. Volume was flat as growth in Performance Materials, Nutrition & Health and Industrial Biosciences was offset by declines in the other segments.  Excluding the change in timing of fourth-quarter seed sales in Agriculture, sales decreased 1 percent.

Free cash flow⁴ improvement of $1.6 billion for the year reflected higher earnings, lower capital expenditures, lower tax payments, working capital improvements, and the absence of Chemours cash outflows.

"2016 was an important year for DuPont as we exceeded our expectations for earnings, cost savings, operating margin expansion and free cash flow improvement," said Ed Breen, chairman and CEO of DuPont. "We made excellent progress on our strategic priorities in 2016 to increase shareholder value, and we will build on this groundwork as we move into 2017. We look forward to closing the merger with Dow and are continuing to have constructive discussions with regulators in key jurisdictions. We now expect the merger to close in the first half of 2017, pending regulatory approval."

Global Consolidated Net Sales – 4th Quarter and Full Year

Segment Net Sales – 4th Quarter and Full Year

Segment Net Sales – 4th Quarter and Full Year, Continued

Operating Earnings – 4th Quarter and Full Year

Operating Earnings – 4th Quarter and Full Year, Continued

The following is a summary of business results for each of the company's reportable segments comparing fourth quarter and full year with the prior year, unless otherwise noted.

Agriculture – For the fourth-quarter 2016, an operating loss of $19 million improved $35 million, or 65 percent.  A benefit from currency of $78 million and cost savings, were partially offset by timing of seed deliveries, primarily related to the southern U.S. route-to-market change.  Operating margins expanded by about 210 basis points.

Full-year operating earnings of $1,758 million increased $112 million, or 7 percent, as cost savings and lower product costs were partially offset by timing of seed deliveries, primarily related to the southern U.S. route-to-market change and negative currency.  Operating margins expanded by about 170 basis points.

Electronics & Communications – Fourth-quarter 2016 operating earnings of $98 million increased $11 million, or 13 percent, on cost savings and volume growth in Solamet^® paste.  Operating margins expanded by about 115 basis points.

Full-year operating earnings of $358 million were even with the prior year as cost savings were offset by lower sales and a $16 million litigation expense.  Sales declined on weakness in consumer electronics markets and decreased demand in the photovoltaic market impacting sales of Tedlar^® film. Operating margins expanded by about 90 basis points.

Industrial Biosciences - Fourth-quarter 2016 operating earnings of $67 million decreased $11 million, or 14 percent, primarily due to declines in CleanTech.  Operating margins contracted by about 295 basis points.

Full-year operating earnings of $270 million increased $27 million, or 11 percent, reflecting cost savings and an increase in sales, partly offset by a negative impact from currency. Operating margins expanded by 155 basis points.

Nutrition & Health – Fourth-quarter 2016 operating earnings of $135 million increased $50 million, or 59 percent, on cost savings and a $27 million gain from an asset sale.  Volume was flat as growth in sweeteners and probiotics was offset by declines in protein solutions. Operating margins expanded by 615 basis points.

Full-year operating earnings of $504 million increased $131 million, or 35 percent, on cost savings, volume growth in probiotics and cultures and a $27 million gain from an asset sale. Operating margins expanded by about 400 basis points.

Performance Materials - Fourth-quarter 2016 operating earnings of $328 million increased $47 million, or 17 percent, as lower product costs, cost savings, and increased demand in global automotive markets, more than offset the absence of $33 million in prior year benefits from the sale of a business and tax benefits associated with a manufacturing site.  Operating margins expanded by 275 basis points.

Full-year operating earnings of $1,297 million increased $81 million, or 7 percent as cost savings, increased volumes, and lower product costs, more than offset a $63 million negative impact from currency and the absence of $49 million of benefits from the prior year, comprised of a net benefit from a joint venture, the sale of a business and the realization of tax benefits associated with a manufacturing site. Operating margins expanded by about 180 basis points.

Protection Solutions – Fourth-quarter 2016 operating earnings of $142 million decreased $5 million, or 3 percent, as cost savings were more than offset by higher costs due to lower plant utilization and the negative impact from currency. Operating margins contracted by about 60 basis points.

Full-year operating earnings of $668 million increased $27 million, or 4 percent, as cost savings were partially offset by the impact of lower sales. Operating margins expanded by about 150 basis points.

First-Quarter 2017 Outlook
We expect the merger to close in the first half of 2017, pending regulatory approval. Therefore, only guidance for the first quarter of 2017 is being provided. The company expects first-quarter 2017 GAAP earnings to decrease about 18 percent from prior year.  The company's first-quarter 2017 GAAP earnings include an expected charge of about $0.15 per share for transaction costs associated with the planned merger with Dow. Prior year GAAP earnings included a net benefit of $0.18 per share from significant items, primarily due to a gain on the sale of an entity. 

First-quarter 2017 operating earnings² are expected to increase about 8 percent versus prior year driven by benefits from cost savings and the impact of the change in timing for seed deliveries, primarily related to the southern U.S. route-to-market change in Agriculture.  These benefits are anticipated to be partially offset by the expected reduction in planted corn acres in the U.S.

DuPont will hold a conference call and webcast on Tuesday, Jan. 24, 2017, at 8:00 AM ET to discuss this news release.  The webcast and additional presentation materials can be accessed by visiting the company's investor website (Events & Presentations) at www.investors.dupont.com.  A replay of the conference call webcast will be available for 90 days by calling 1-630-652-3042, Passcode 6670063#.  For additional information see the investor center at http://www.dupont.com.

Use of Non-GAAP Measures
This earnings release includes information that does not conform to U.S. generally accepted accounting principles (GAAP) and are considered non-GAAP measures.  These measures include the company's consolidated results and earnings per share on an operating earnings basis, which excludes significant items and non-operating pension and other postretirement employee benefit costs (operating earnings and operating EPS), total segment pre-tax operating earnings, operating costs and corporate expenses on an operating earnings basis.  Management uses these measures internally for planning, forecasting and evaluating the performance of the company's segments, including allocating resources and evaluating incentive compensation.  From a liquidity perspective, management uses free cash flow, which is defined as cash provided/used by operating activities less purchases of property, plant and equipment.  Free cash flow is useful to investors and management to evaluate the company's cash flow and financial performance, and is an integral financial measure used in the company's financial planning process. Management believes that these non-GAAP measurements are meaningful to investors as they provide insight with respect to ongoing operating results of the company and provide a more useful comparison of year-over-year results.  These non-GAAP measurements supplement our GAAP disclosures and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in schedules A, C and D.  Details of significant items are provided in schedule B.

About DuPont
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 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," similar expressions, and variations or negatives of these words.

Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. 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; ability to respond to market acceptance, rules, regulations and policies affecting products based on biotechnology and, in general, for products for the agriculture industry; outcome of significant litigation and environmental matters, including realization of associated indemnification assets, if any; 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, natural disasters and weather events and patterns which could affect demand as well as availability of products for the agriculture industry; ability to protect and enforce the company's intellectual property rights; successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses; and risks related to the agreement entered on December 11, 2015, with The Dow Chemical Company pursuant to which the companies have agreed to effect an all-stock merger of equals, including the completion of the proposed transaction on anticipated terms and timing, the ability to fully and timely realize the expected benefits of the proposed transaction and risks related to the intended business separations contemplated to occur after the completion of the proposed transaction. Important risk factors relating to the proposed transaction and intended business separations  include, but are not limited to, (i) the completion of the proposed transaction on anticipated terms and timing, including obtaining  regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the new combined company's operations and other conditions to the completion of the merger, (ii) the various approvals, authorizations and declarations of non-objection from certain regulatory and governmental authorities may not be obtained, on a timely basis or otherwise, including that these regulatory or governmental agencies may impose conditions on the granting of such approvals, including requiring the respective Dow and DuPont businesses to divest certain assets if necessary in order to obtain certain regulatory approvals or otherwise limiting the ability of the combined company to integrate parts of the DuPont and Dow businesses, (iii) the ability of Dow and DuPont to integrate the business successfully and to achieve anticipated synergies, risks and costs and pursuit and/or implementation of the potential separations, including anticipated timing, any changes to the configuration of businesses included in the potential separation if implemented, (iv) the intended separation of the agriculture, material science and specialty products businesses of the combined company post-mergers in one or more tax efficient transactions on anticipated terms and timing, including a number of conditions which could delay, prevent or otherwise adversely affect the proposed transactions, including possible issues or delays in obtaining required regulatory approvals or clearances, disruptions in the financial markets or other potential barriers, (v) continued availability of capital and financing and rating agency actions, (vi) potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect DuPont's financial performance, and (vii) certain restrictions during the pendency of the merger that may impact DuPont's ability to pursue certain business opportunities or strategic transactions. These risks, as well as other risks associated with the proposed merger, are more fully discussed in the joint proxy statement of Dow and DuPont and the prospectus of DowDuPont included in the definitive registration statement on Form S-4 (File No. 333-209869), (as amended, the Registration Statement). While the list of factors presented here is, and the list of factors presented in the Registration Statement are, 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 DuPont's consolidated financial condition, results of operations, credit rating or liquidity. The company undertakes no duty to publicly revise or update any forward-looking statements whether as a result of future developments, new information or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.