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Press release from PR Newswire

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

Thursday, April 19, 2012

DuPont Delivers Record First Quarter Earnings of $1.61 Ex-items06:00 EDT Thursday, April 19, 2012Innovation and Productivity Drive Strong PerformanceWILMINGTON, Del., April 19, 2012 /PRNewswire/ -- First quarter 2012 earnings, before significant items, were $1.61 per share versus $1.52 per share in 2011.  Reported earnings per share were $1.57 versus $1.52 in 2011. Sales of $11.2 billion were up 12 percent versus the prior year.  This reflects 8 percent higher local prices, 1 percent currency headwind, 2 percent lower volume and 7 percent net benefit from portfolio changes. Sales in developing markets grew 15 percent. Segment pre-tax operating income, excluding significant items, increased $252 million, or 12 percent versus the prior year, principally due to Agriculture, Performance Chemicals and the benefit of prior-year acquisitions in Nutrition & Health and Industrial Biosciences. Agriculture delivered 16 percent higher sales and an 18 percent increase in pre-tax operating income, excluding significant items, versus last year's first quarter. This reflects strong global business performance and an early start to the North American and European selling seasons. The company's productivity initiatives continued on track with improvements of approximately $100 million each for fixed costs and working capital. DuPont reaffirmed its full-year earnings outlook range of $4.20 to $4.40 per share, which represents 7 to 12 percent growth versus 2011, excluding significant items. "DuPont's market-driven science and commitment to innovation and productivity are winning in key markets, despite economic headwinds early in the first quarter," said DuPont Chair and CEO Ellen Kullman.  "Around the world, we are bringing our science closer to local markets by collaborating with customers and partners in our new DuPont Innovation Centers.  We are prioritizing our R&D portfolio to deliver food, energy and protection solutions for the world's growing population." Global Consolidated Sales and Net IncomeFirst quarter 2012 consolidated net sales of $11.2 billion were 12 percent higher than the prior year, including 7 percent attributable to portfolio changes.  Local prices were 8 percent higher with increases in all regions.  The 2 percent decline in total company volume principally reflects strong Agriculture segment volume gains in all regions offset by lower volume for most segments in Asia.  The table below shows regional sales and variances versus the first quarter 2011.Three Months Ended March 31, 2012Percentage Change Due to:(Dollars in billions)$% ChangeLocalPriceCurrencyEffectVolumePortfolio/OtherU.S. & Canada$     4.8139--4EMEA*3.2148(3)(1)10Asia Pacific2.0-41(13)8Latin America1.22315(3)47Total Consolidated Sales$   11.2128(1)(2)7* Europe, Middle East & AfricaFirst quarter 2012 net income attributable to DuPont was $1,488 million versus $1,431 million in the first quarter 2011. Excluding significant items, net income attributable to DuPont was $1,520 million versus $1,431 million in the prior year.  The improvement principally reflects earnings growth in Agriculture and Performance Chemicals and income from a prior-year acquisition.  Higher selling prices more than offset increased spending for sales, marketing and research and development, and higher costs for raw materials, energy and freight. Earnings Per ShareThe table below shows year-over-year earnings per share (EPS) variances for the first quarter.EPS ANALYSISEPS 1Q 2011$1.52Variances vs. 1Q 2011:   Local prices.73   Variable cost*(.28)   Volume (.01)   Fixed cost*(.20)   Currency(.06)   Portfolio changes.07   Exchange gains/losses(.04)   Income tax(.06)   Other(.06)EPS 1Q 2012 ? Excluding significant items $1.61   Significant item - (schedule B)( .04)EPS 1Q 2012$1.57* Excludes volume and currency impacts  Business Segment Performance The table below shows first quarter 2012 segment sales and related variances versus the prior year.SEGMENT SALES*Three Months EndedPercentage Change (Dollars in billions)March 31, 2012Due to:$% ChangeUSDPriceVolumePortfolioand OtherAgriculture$      4.11688-Electronics & Communications 0.7(17)1(18)-Industrial Biosciences0.3 nm  nm  nm  nm Nutrition & Health0.8149-(5)154Performance Chemicals1.9616(10)-Performance Coatings1.166--Performance Materials1.6(6)6(10)(2)Safety & Protection0.9(2)3(5)-*    Segment sales include transfersSegment pre-tax operating income (PTOI), excluding significant items, increased 12 percent to $2,377 million, largely driven by higher earnings in Agriculture, Performance Chemicals and acquisition-related improvements in Nutrition & Health and Industrial Biosciences, as shown in the table below.SEGMENT PTOI excluding Significant Items*Change versus 2011(Dollars in millions)1Q 20121Q 2011$%Agriculture$  1,314$  1,111$     20318%Electronics & Communications33111(78)-70%Industrial Biosciences41-41nmNutrition & Health832558232%Performance Chemicals51239411830%Performance Coatings87652234%Performance Materials240288(48)-17%Safety & Protection100145(45)-31%Other(60)(64)4nm$  2,350$  2,075$     27513%Pharmaceuticals2750(23)-46%Total Segment PTOI$  2,377$  2,125$     25212%* See Schedules B and C for listing of significant items and their impact by segment.        The following is a summary of business results for each of the company's reportable segments, comparing first quarter 2012 with first quarter 2011, for sales and PTOI, excluding significant items.  References to selling price are on a U.S. dollar basis, including the impact of currency. Agriculture - Sales of $4.1 billion were up $576 million, or 16 percent, with 8 percent price and 8 percent volume gains.  Seed sales growth reflects strong global performance with robust North American corn sales, a strong, early start to the European season and commercial success in Brazil's Safrinha season.  Crop Protection product sales growth was underpinned by particular strength in insect control product volumes and price gains across the portfolio.  PTOI of $1.3 billion improved 18 percent on higher volume and price, offset in part by input cost increases and unfavorable currency impact.Electronics & Communications - Sales of $677 million were down 17 percent on 18 percent lower volume.  Sales reflect continued soft demand in photovoltaics, partially offset by increased demand for smart phones and tablets.  PTOI of $33 million declined from lower volume and plant utilization.Industrial Biosciences - Sales of $288 million and PTOI of $41 million reflect the acquisition of Danisco's enzyme business.  PTOI includes $5 million of amortization expense associated with the fair value step-up of acquired intangible assets. Nutrition & Health - Sales of $808 million and PTOI of $83 million reflect the acquisition of Danisco's specialty food ingredients business.  PTOI includes $21 million of amortization expense associated with the fair value step-up of acquired intangible assets. Performance Chemicals - Sales of $1.9 billion were up 6 percent, with 16 percent higher selling prices and 10 percent lower volume.  Higher selling prices more than offset higher raw material costs.  Lower volume reflects continued softness in titanium dioxide, particularly in Asia Pacific.  Global demand for titanium dioxide increased sequentially.  PTOI of $512 million increased $118 million on higher selling prices.Performance Coatings - Sales of $1.1 billion were up 6 percent on higher selling prices.  Higher selling prices across all regions and market segments offset higher raw material costs.  Continued strong demand in OEM motor vehicle and industrial coatings, particularly in the North American heavy duty truck market, was offset by softening in refinish primarily in southern Europe.  PTOI of $87 million increased on higher selling prices, mix enrichment and continued productivity actions.Performance Materials - Sales of $1.6 billion were down 6 percent, with 10 percent lower volume and a 2 percent reduction from a portfolio change partially offset by 6 percent higher selling prices.  Demand improved in the automotive market, particularly in North America, but was more than offset by continued softness in industrial and electronics markets.  Higher selling prices offset higher raw material costs.  PTOI of $240 million decreased due to lower volume.Safety & Protection - Sales of $941 million were down 2 percent, with 5 percent lower volume, partially offset by 3 percent higher selling prices.  Volume was lower on continued softness in industrial markets.  Higher selling prices reflect value-based pricing.  PTOI of $100 million decreased on lower volume and higher spending for growth initiatives.  Additional information is available on the DuPont Investor Center website at www.dupont.com.Outlook  DuPont reaffirms its full-year 2012 earnings outlook of $4.20 to $4.40 per share, an increase of 7 to 12 percent versus 2011, excluding significant items.   Use of Non-GAAP MeasuresManagement believes that certain non-GAAP measurements are meaningful to investors because they provide insight with respect to ongoing operating results of the company.  Such measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance.  Reconciliations of non-GAAP measures to GAAP are provided in schedules C and D.DuPont (NYSE: DD) has been bringing world-class science and engineering to the global marketplace in the form of innovative products, materials, and services since 1802.  The company believes that by collaborating with customers, governments, NGOs, and thought leaders we can help find solutions to such global challenges as providing enough healthy food for people everywhere, decreasing dependence on fossil fuels, and protecting life and the environment.  For additional information about DuPont and its commitment to inclusive innovation, please visit http://www.dupont.com.Forward-Looking Statements:  This news release contains forward-looking statements which may be identified by their use of words like "plans," "expects," "will," "anticipates," "believes," "intends," "estimates" or other words of similar meaning.  All statements that address expectations or projections about the future, including statements about the company's growth strategy, product development, regulatory approval, market position, anticipated benefits of acquisitions, outcome of contingencies, such as litigation and environmental matters, expenditures and financial results, are forward-looking statements.  Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future events which may not be realized.  Forward-looking statements also involve risks and uncertainties, many of which are beyond the company's control.  Some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements are: fluctuations in energy and raw material prices; failure to develop and market new products and optimally manage product life cycles; significant litigation and environmental matters; failure to appropriately manage process safety and product stewardship issues; changes in laws and regulations or political conditions; global economic and capital markets conditions, such as inflation, interest and currency exchange rates; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, weather events and natural disasters; inability to protect and enforce the company's intellectual property rights; and integration of acquired businesses and completion of divestitures of underperforming or non-strategic assets or businesses.  The company undertakes no duty to update any forward-looking statements as a result of future developments or new information.#   #   #04/19/12  E. I. du Pont de Nemours and CompanyConsolidated Income Statements(Dollars in millions, except per share amounts)SCHEDULE AThree Months EndedMarch 31,20122011Net sales$        11,230$     10,034Other income, net 2625Total11,25610,059Cost of goods sold and other operating charges (a)7,5276,831Selling, general and administrative expenses1,1691,027Research and development expense 505399Interest expense 114100Total9,3158,357Income before income taxes1,9411,702Provision for (benefit from) income taxes (a)441258Net income 1,5001,444Less:  Net income attributable to noncontrolling interests1213Net income attributable to DuPont$          1,488$       1,431Basic earnings per share of common stock$            1.59$         1.54Diluted earnings per share of common stock $            1.57$         1.52Dividends per share of common stock$            0.41$         0.41Average number of shares outstanding used in earnings per share (EPS) calculation:  Basic933,910,000924,897,000  Diluted944,238,000940,909,000(a) See Schedule B for detail of significant items.   E. I. du Pont de Nemours and CompanyCondensed Consolidated Balance Sheets(Dollars in millions, except per share amounts)SCHEDULE A (continued)March 31, 2012December 31, 2011AssetsCurrent assetsCash and cash equivalents$     3,410$           3,586Marketable securities191433Accounts and notes receivable, net 8,6266,022Inventories 6,6167,195Prepaid expenses 260151Deferred income taxes 706671Total current assets19,80918,058Property, plant and equipment, net of accumulated depreciation    (March 31, 2012 - $19,695; December 31, 2011 - $19,349)13,39513,412Goodwill5,4435,413Other intangible assets 5,4105,413Investment in affiliates1,1211,117Deferred income taxes 4,0524,067Other assets 9931,012Total$   50,223$         48,492Liabilities and EquityCurrent liabilitiesAccounts payable$     4,180$           4,816Short-term borrowings and capital lease obligations 3,593817Income taxes 585255Other accrued liabilities 4,1785,297Total current liabilities12,53611,185Long-term borrowings and capital lease obligations 11,23211,736Other liabilities 14,93515,508Deferred income taxes 1,0931,001Total liabilities39,79639,430Commitments and contingent liabilities Stockholders' equityPreferred stock237237Common stock, $0.30 par value; 1,800,000,000 shares authorized;    issued at March 31, 2012 - 1,023,888,000; December 31, 2011 - 1,013,164,000307304Additional paid-in capital10,08610,107Reinvested earnings14,52213,422Accumulated other comprehensive loss (8,465)(8,750)Common stock held in treasury, at cost (87,041,000 shares    at March 31, 2012 and December 31, 2011)(6,727)(6,727)Total DuPont stockholders' equity9,9608,593Noncontrolling interests467469Total equity10,4279,062Total$   50,223$         48,492   E. I. du Pont de Nemours and CompanyCondensed Consolidated Statement of Cash Flows(Dollars in millions)SCHEDULE A (continued)Three Months EndedMarch 31,20122011Cash provided by (used for) operating activities$ (1,877)$ (1,484)Investing activitiesPurchases of property, plant and equipment(301)(323)Net (increase) decrease in short-term financial instruments2481,585Forward exchange contract settlements(87)(210)(Increase) decrease in restricted cash -(1,991)Other investing activities - net(16)(26)(156)(965)Financing activitiesDividends paid to stockholders(386)(383)Net increase (decrease) in borrowings2,2781,991Prepayment for the repurchase of common stock (a)(400)-Repurchase of common stock-(272)Proceeds from exercise of stock options389605Other financing activities - net(36)(12)Cash provided by (used for) financing activities1,8451,929Effect of exchange rate changes on cash1253Increase (decrease) in cash and cash equivalents(176)(467)Cash and cash equivalents at beginning of period3,5864,263Cash and cash equivalents at end of period$  3,410$  3,796(a) In the first quarter 2012, the company initiated a $400 million share repurchase program, which will be completed  no later than May 2012.   E. I. du Pont de Nemours and CompanySchedule of Significant Items(Dollars in millions, except per share amounts)SCHEDULE BSIGNIFICANT ITEMSPre-taxAfter-tax($ Per Share)2012201120122011201220111st QuarterCustomer claims charge (a)$(50)$  -$(32)$  -$(0.04)$  -1st Quarter - Total$(50)$  -$(32)$  -$(0.04)$  -(a) First quarter 2012 included a charge of $50 recorded in Cost of goods sold and other operating charges associated with thecompany's process to fairly resolve claims related to the use of Imprelis® herbicide, bringing the total charges to $225 at March 31,2012.  The company will continue to evaluate reported claim damage as additional information becomes available. It is reasonablypossible that additional charges could result from this evaluation.  While there is a high degree of uncertainty, total charges could range as high as $575. The company intends to seek recovery from its insurance carriers for costs associated with this matter in excess of $100.  This matter relates to the Agriculture segment.See Schedule C for detail by segment.   E. I. du Pont de Nemours and CompanyConsolidated Segment Information(Dollars in millions)SCHEDULE CThree Months EndedMarch 31,SEGMENT SALES (1)20122011Agriculture$   4,080$   3,504Electronics & Communications677811Industrial Biosciences288-Nutrition & Health808324Performance Chemicals1,9001,797Performance Coatings1,050993Performance Materials1,6001,707Safety & Protection941965Other136Total Segment sales11,34510,137Elimination of transfers(115)(103)Consolidated net sales$ 11,230$ 10,034(1)   Sales for the reporting segments include transfers.   E. I. du Pont de Nemours and CompanyConsolidated Segment Information(Dollars in millions)SCHEDULE C (continued)Three Months EndedMarch 31,PRE-TAX OPERATING INCOME/(LOSS) (PTOI)20122011Agriculture $ 1,264$ 1,111Electronics & Communications33111Industrial Biosciences41-Nutrition & Health8325Performance Chemicals512394Performance Coatings8765Performance Materials240288Safety & Protection100145Pharmaceuticals 2750Other(60)(64)Total Segment PTOI2,3272,125Net exchange gains (losses) (1)(80)(143)Corporate expenses & net interest(306)(280)Income before income taxes$ 1,941$ 1,702Three Months EndedMarch 31,SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) (2)20122011Agriculture $    (50)$         -Electronics & Communications--Industrial Biosciences--Nutrition & Health--Performance Chemicals--Performance Coatings--Performance Materials--Safety & Protection--Pharmaceuticals --Other--Total significant items by segment$    (50)$         -Three Months EndedMarch 31,PTOI EXCLUDING SIGNIFICANT ITEMS20122011Agriculture $ 1,314$ 1,111Electronics & Communications33111Industrial Biosciences41-Nutrition & Health8325Performance Chemicals512394Performance Coatings8765Performance Materials240288Safety & Protection100145Pharmaceuticals 2750Other(60)(64)Total Segment PTOI excluding significant items$ 2,377$ 2,125(1)  See Schedule D for additional information on exchange gains and losses.(2)  See Schedule B for detail of significant items.   E. I. du Pont de Nemours and CompanyReconciliation of Non-GAAP Measures(Dollars in millions, except per share amounts)SCHEDULE DSummary of Earnings ComparisonsThree Months Ended March 31, 20122011% ChangeSegment PTOI$           2,327$          2,12510%Significant items (benefit) charge included in PTOI (per Schedule C)50-Segment PTOI excluding significant items$           2,377$          2,12512%Net income attributable to DuPont$           1,488$          1,4314%Significant items (benefit) charge included in net incomeattributable to DuPont (per Schedule B)32-Net income attributable to DuPontexcluding significant items$           1,520$          1,4316%EPS$             1.57$            1.523%Significant items (benefit) charge included in EPS (per Schedule B)0.04-EPS excluding significant items$             1.61$            1.526%Average number of diluted shares outstanding944,238,000940,909,0000.4%Reconciliation of Earnings Per Share (EPS) OutlookYear Ended December 31,2012 Outlook2011 ActualEarning per share - excluding significant items$4.20 - $4.40$            3.932Q 2012 Sale of an equity method investment - estimate0.08 to 0.09-Danisco acquisition related costs-(0.22)Customer claims charges(0.04)(0.12)Charges related to a licensing agreement-(0.03)Sale of a business-0.13Restructuring charge/adjustments-(0.01)Reported EPS$4.24 to $4.45$            3.68   E. I. du Pont de Nemours and CompanyReconciliation of Non-GAAP Measures(Dollars in millions, except per share amounts)SCHEDULE D (continued)Reconciliations of Adjusted EBIT / EBITDA to Consolidated Income StatementsThree Months EndedMarch 31,20122011Income before income taxes$   1,941$   1,702Less: Net income attributable to noncontrolling interests1213Add:  Interest expense 114100Adjusted EBIT2,0431,789Add: Depreciation and amortization 455361Adjusted EBITDA$   2,498$   2,150Calculation of Free Cash FlowThree Months EndedMarch 31,20122011Cash provided by (used for) operating activities$ (1,877)$ (1,484)Less: Purchases of property, plant and equipment301323Free cash flow$ (2,178)$ (1,807)Reconciliations of Fixed Costs as a Percent of SalesThree Months EndedMarch 31,20122011Total charges and expenses - consolidated income statements$   9,315$   8,357Remove:     Interest expense(114)(100)   Variable costs (1)(5,137)(4,722)   Significant items - benefit (charge) (2)(50)-       Fixed costs$   4,014$   3,535Consolidated net sales$ 11,230$ 10,034Fixed costs as a percent of consolidated net sales35.7%35.2%(1)  Includes variable manufacturing costs, freight, commissions and other selling expenses which vary with the volume of sales.(2)  See Schedule B for detail of significant items.    E. I. du Pont de Nemours and CompanyReconciliation of Non-GAAP Measures(Dollars in millions, except per share amounts)SCHEDULE D (continued)Exchange Gains/(Losses)The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in Other income, net and the related tax impact is recorded in Provision for (benefit from) income taxes on the Consolidated Income Statements.Three Months Ended March 31,20122011Subsidiary/Affiliate Monetary Position Gain (Loss)Pre-tax exchange gains (losses) (includes equity affiliates)$      48$    230Local tax benefits (expenses)(8)5Net after-tax impact from subsidiary exchange gains (losses)$      40$    235Hedging Program Gain (Loss)Pre-tax exchange gains (losses)$  (128)$  (373)Tax benefits (expenses)44130Net after-tax impact from hedging program exchange gains (losses)$    (84)$  (243)Total Exchange Gain (Loss)Pre-tax exchange gains (losses)$    (80)$  (143)Tax benefits (expenses)36135Net after-tax exchange gains (losses)$    (44)$      (8)As shown above, the "Total Exchange Gain (Loss)" is the sum of the "Subsidiary/Affiliate Monetary Position Gain (Loss)" and the "Hedging Program Gain (Loss)."  Reconciliation of Base Income Tax Rate to Effective Income Tax RateBase income tax rate is defined as the effective income tax rate less the effect of exchange gains/losses, as defined above, and significant items. Three Months Ended March 31,20122011Income before income taxes $ 1,941$ 1,702Add:  Significant items - (benefit) charge (1)50-Less:  Net exchange gains (losses)(80)(143)Income before income taxes, significant items and exchange gains/losses$ 2,071$ 1,845Provision for (benefit from) income taxes$    441$    258Add:  Tax benefits (expenses) on significant items18-          Tax benefits (expenses) on exchange gains/losses36135Provision for income taxes, excluding taxes on significant items and exchange gains/losses$    495$    393Effective income tax rate22.7%15.2%Significant items effect0.3%0.0%Tax rate before significant items23.0%15.2%Exchange gains (losses) effect0.9%6.1%Base income tax rate23.9%21.3%(1)  See Schedule B for detail of significant items. SOURCE DuPontFor further information: Media Contact: Michael Hanretta, +1-302-774-4005, michael.j.hanretta@usa.dupont.com; Investor Contact: +1-302-774-4994