DuPont de Nemours (NYSE:DD) reported first-quarter financial results on Tuesday. The transcript from the company’s first-quarter earnings call has been provided below.
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View the webcast at https://events.q4inc.com/attendee/189504581
Summary
DuPont de Nemours exceeded its Q1 2026 guidance with 2% organic sales growth, 130 basis points of margin expansion, and double-digit adjusted EPS growth.
The company raised its full-year 2026 financial guidance and announced a $275 million accelerated share repurchase as part of its capital allocation strategy.
DuPont de Nemours completed the divestiture of the aramids business and issued its 2026 sustainability report, highlighting new 2035 sustainability goals.
Operational highlights include strong safety performance, employee engagement, and advancements in digital and AI capabilities to enhance innovation and commercial execution.
Healthcare and Water Technologies saw 6% net sales growth, while Diversified Industrials experienced 3% growth, supported by favorable mix and productivity improvements.
Management expressed confidence in navigating macro and geopolitical challenges with continued focus on productivity and operational excellence.
Full Transcript
Bailey (Operator)
Thank you for standing by. My name is Bailey and I will be your conference operator today. At this time I would like to welcome everyone to the Dewpoint first quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press Star and one I would now like to turn the call over to Anne Giancarlo, VP of Investor Relations. You may begin.
Anne Giancarlo (VP of Investor Relations)
Good morning and thank you for joining us for DuPont de Nemours’s first quarter 2026 financial results conference call. Joining me today are Laurie Koch, Chief Executive Officer and Antonella Franzen, Chief Financial Officer. We have prepared slides to supplement our remarks which are posted on DuPont de Nemours’s website under the Investor Relations tab and through the webcast link. Please read the forward-looking statement disclaimer contained in the slides. During this call we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K as updated by our current and periodic reports, includes detailed discussions of principal risks and uncertainties which may cause such differences. Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclude significant items. We will also refer to other non GAAP measures. A reconciliation to the most directly comparable GAAP financial measure is included in our press release and presentation materials and has been posted to DuPont de Nemours’s investor relations website. I’ll now turn the call over to Lori who will begin on slide three.
Laurie Koch (Chief Executive Officer)
Good morning and thanks everyone for joining our call. Earlier today we reported our first quarter financial results which exceeded our previously communicated guidance. Through disciplined commercial and operational execution, we delivered organic sales growth of 2%, 130 basis points of pro forma margin expansion and double digit adjusted Earnings Per Share (EPS) growth. Free cash flow generation and conversion were solid in the quarter. As a result of our first quarter performance along with price increases due to the Middle East conflict, we are raising our full year 2026 financial guidance. Antonella will provide further details shortly. We also announced that we expect to launch a $275 million accelerated share repurchase under our existing program. A clear example of how we continue to advance our strategic priority of driving disciplined capital allocation by returning cash to shareholders. On the next slide I will cover the progress we are making on driving growth and continuous improvement we completed the previously announced divestiture of the Aramids business on April 1. We are confident in our ability to continue to drive growth and opportunity for the employees and customers of the combined businesses. We also recently issued our 2026 sustainability report and announced our new 2035 sustainability goals. A progress we made in 2025 highlights the power of our innovation engine, creating sustainably advanced solutions that help our customers succeed. We continue to reduce our environmental footprint and increase the use of renewable energy sources across our operations while maintaining a strong focus on execution and discipline, Safety and culture continue to differentiate DuPont with record safety, performance and high employee engagement, reinforcing the connection between what we do every day and the value we create for our customers. Our 2035 Sustainability Goals reinforce our commitment to delivering value by embedding sustainability directly into our business strategy. These goals focus on three impact areas: sustainable innovation, resilient operations and people, partners and communities. They are designed to drive growth through innovation, operational excellence and accountability across our value chain while also advancing progress in areas such as climate, action, circularity, safety and responsible sourcing. Moving to slide 4 we continue to advance our strategic priorities and are seeing direct impacts from the implementation of our business system. We strengthen our performance based culture with a clear emphasis on growth and continuous improvement reinforced by the launch of our refresh core values. This is enabling greater consistency across the businesses as we drive excellence in innovation, commercial execution and operations. Starting with innovation, it remains at the core of our value proposition. Our 2025 Vitality Index was 35% above the benchmark we previously outlined, reflecting the strength and relevance of our product portfolio. During the quarter, we delivered a steady cadence of new product introductions and customer wins across healthcare, water and diversified industrial end markets. Recent launches include upgraded FilmTech nanofiltration elements designed to help municipalities and drinking water utilities produce high quality water with lower energy consumption and reduced operating costs. These innovations are being enabled not only by strong R&D execution but but also by continuing investments in digital and AI capabilities. Last week we announced that we are collaborating with an AI-driven platform, an AI driven platform for end to end product and application development focused on accelerating development, improving cycle time and sharpening how we translate ideas into differentiated solutions for customers. This collaboration streamlines and accelerates the work we have been doing on connected lab infrastructure and digital innovation. From a commercial standpoint, we are making steady progress in demand generation and pipeline discipline across the businesses. We are advancing targeted sales plays that bring together our technologies and application expertise to address specific end markets where we see attractive growth and differentiated value. We continue to standardize how opportunities are identified, reviewed and advanced, supported by a clear cadence, better data quality and stronger collaboration between commercial, technical and operations teams. These efforts are driving better visibility, improved conversion and stronger alignment between our commercial team and customers highest value needs Improving the quality and durability of our Pipeline on operational excellence, our teams remain intensely focused on the fundamentals safety, quality, delivery, inventory and productivity. During the quarter, we delivered meaningful improvements in asset reliability and equipment effectiveness across our key facilities which supported better on time delivery and stronger operational throughput. At the same time, we continue to drive productivity through focused maintenance and reliability initiatives, lean execution and Kaizen Activity across our site I am personally excited as we recently kicked off our annual CEO Kaizen event in which myself and the executive leadership team will each participate in events focused on strengthening our value creation processes across the company. We are also advancing how we operate by pairing process discipline with digital and AI capabilities. Over the last several quarters we have expanded the use of data enabled tools to improve maintenance planning, accelerate defect detection and optimize asset performance. These capabilities are allowing our team to convert operational data into actionable insights faster, improving reliability, reducing variability and reinforcing safe operations, all while delivering costs and and productivity benefits. Importantly, this operational rigor positions us well as we navigate a dynamic external environment. While we are mindful of potential macro and geopolitical headwinds, our focus on productivity, automation and structural improvement is creating resilience in the businesses. We are building a strong pipeline of content and improvement projects for the balance of the year aimed at sustaining momentum in growth and productivity. Our first quarter results demonstrate that we are off to a great start. Our April sales were in line with our expectations and we continue to see strong order growth trends across the majority of our businesses. Our teams continue to focus on driving growth and operational discipline and our strategic priorities position us well for long term value creation. With that, I’ll now turn the call over to Antonella to cover the financials and outlook in more detail.
Antonella Franzen (Chief Financial Officer)
Thanks Lori and good morning everyone. The first quarter marked a strong operational start to the year with results exceeding our financial guidance. Favorable top line mix and effective productivity actions drove strong operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) performance and meaningful margin expansion in the quarter. Throughout today’s call, I will provide comments on our results against our prior year reported financials as well as on a pro forma basis which adjusts for our post separation corporate cost, interest, expense and income tax rate. This is consistent with the methodology and financial metrics that we Provided at our 2025 Investor Day beginning with our first quarter financial highlights on slide 5, net sales of 1.7 billion were up 4% versus the year ago period on 2% organic sales growth and a 2% benefit from currency. Organic sales growth was led by strength in healthcare and aerospace, partially offset by continued softness in construction markets and logistics disruptions due to the conflict in the Middle East. These disruptions primarily impacted sales in our water business in the quarter. From a segment view, during the quarter organic sales grew 3% in healthcare and water technologies with organic sales growth about flat in diversified industrials. First quarter operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of 414 million increased 15% versus the year ago period on organic sales growth, favorable mix and productivity. This resulted in operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin of 24.6% in the quarter, an increase of 230 basis points year over year. On a pro forma basis, operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) increased 10% with margins expanding 130 basis points year over year. Turning to cash flow, we delivered transaction adjusted free cash flow of 147 million and related conversion of 65%, a solid start to the year. Turning to Slide 6 on a reported basis, adjusted Earnings Per Share (EPS) for the quarter of $0.55 increased 53% year over year. On a pro forma basis, adjusted Earnings Per Share (EPS) for The quarter was up 20% versus the year ago period. The increase was primarily driven by higher segment earnings of $0.06 with an additional $0.03 benefit coming from a lower tax rate, share count and exchange gains and losses. Turning to Slide 7 Healthcare and Water Technologies first quarter net sales of 806 million were up 6% versus the year ago period on 3% organic growth and a 3% benefit from currency. For the first quarter. Health care sales were up high single digits percent on an organic basis versus the year ago period. Organic growth was broad based led by continued strength in medical, packaging and biopharma. Water sales were down low to mid single digits percent on an organic basis as strength in industrial, water and microelectronics markets were more than offset by logistics disruptions in the Middle East. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the segment during the quarter of 244 million was up 9% versus the year ago period on organic growth, favorable mix and productivity gains. This resulted in operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin of 30.3% in the quarter, an increase of 110 basis points year over year. Turning to diversified industrials on slide 8, first quarter net sales of 875 million increased 3% versus the year ago period on a 3% benefit from currency. Organic sales growth was about flat in the quarter. At the line of business level, organic sales for building technologies were down low single digits percent on continued weakness in construction markets, industrial technologies organic sales were up low single digits percent as continued strength in aerospace and growth in automotive were partially offset by declines in the printing and packaging businesses. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for diversified industrials of 200 million was up 8% versus the year ago period on favorable mix and productivity. Operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin during the quarter was 22.9% expanding 110 basis points versus the year ago period. Turning to slide 9 we are raising our full year 2026 financial guidance given our strong start to the year as well as now including the interest income benefit from the aromage transaction. For the second quarter we estimate net sales of about 1.8 billion, operating Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of about 430 million and adjusted Earnings Per Share (EPS) of $0.59 per share. Our second quarter net sales guidance assumes about 3% organic growth year over year. Currency is expected to be a slight tailwind in the quarter. For the healthcare and water segment we expect second quarter organic sales growth in the mid single digits percent range led by strength in medical, device, biopharma and industrial water markets. For the diversified industrial segment we expect second quarter organic sales growth in the low single digits percent range on continued strength in aerospace and growth in printing and packaging partially offset by continued softness in construction markets. For the first half, our estimated net sales of about 3.5 billion …
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