Company Reports

DuPont reported solid second-quarter results as operating EBITDA was up 8% versus the prior-year quarter driven by a strong recovery in the electronics business. Following customer inventory destocking and a 20% segment EBITDA decline in 2023, we had expected the electronics and industrial segment to recover in 2024. However, the first-half results exceeded our expectation for the cadence of the year. Accordingly, we've increased our near-term outlook for the electronics business. Having updated our model to reflect these changes, we're raising our DuPont fair value estimate to $93 from $90. Our narrow moat rating is unchanged.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations. However, by mid-2026, DuPont plans to separate into three companies.

DuPont announced its plan to separate into three companies. DuPont will essentially spin off its electronics and water businesses into separate companies, while the remaining businesses will remain part of DuPont. The separation will likely occur similar to what happened when DowDuPont broke up into three companies. Existing DuPont shareholders will likely end up with shares in all three new companies. We expect the separation will occur by mid-2026.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations. However, by mid-2026, DuPont plans to separate into three companies.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

Against the backdrop of customer inventory destocking weighing on sales and profits, we view DuPont's first-quarter results as supporting our near-term recovery thesis. Companywide operating EBITDA was down over 4% versus the prior-year quarter due to continued destocking, largely in the water and protection business. However, segment operating EBITDA in the electronics and industrial business was up 3% versus the prior-year quarter, driven by rebounding sales in semiconductor technologies and interconnect solutions.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

We maintain our DuPont $85 per share fair value estimate and narrow moat rating after incorporating the firm's detailed fourth-quarter results into our valuation model. The company reported high-level results in late January. We continue to view 2024 as a transition year for DuPont. As destocking began to weigh on volumes and profits at different points in 2023, we expect a varied recovery throughout 2024. However, as the year progresses, we expect the end of destocking and a return to growth in line with end-market demand. We expect 2024 operating EBITDA to be just below 2023. We forecast a recovery in the electronics and industrial segment, where destocking began earlier in 2023 and is offset by a decline in water and protection, where destocking will continue through much of 2024.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

DuPont reported preliminary fourth-quarter and full-year 2023 results. During the year, revenue and operating EBITDA declined 7% and 10%, respectively, as customer inventory destocking weighed on volumes and resulted in negative operating leverage. The company also announced initial 2024 guidance that implies first-half operating EBITDA will decline 12% versus the first half of 2023 as inventory destocking continues to weigh on sales volumes.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

DuPont, Corteva, and Chemours announced a settlement agreement with the state of Ohio for $110 million to help the state restore its natural resources. The deal resolves the state's claims against the company regarding the manufacture and sale of per- and polyfluoroalkyl substances, or PFAS, as well as the state's claims against the companies related to aqueous film-forming foam, or firefighting foam.

DuPont's third quarter showed mixed results that changed our near-term outlook but confirmed our long-term view. Having updated our model for lower near-term results, we trimmed our DuPont fair value estimate to $90 per share from $92. Our narrow moat rating is unchanged.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

In 2022, battery electric vehicles represented nearly 10% of global auto sales, up from a little less than 6% in 2021. Much of the growth occurred in China, which has been a leader in EV sales over the past decade. However, with national EV subsidies in China expiring in 2022 and far lower sales in the U.S. and Europe, the market questions if EV sales can continue to grow without subsides.

On Aug. 21, DuPont announced a transaction to divest of 80.1% of its Delrin business to private equity firm TJC Partners. The deal values the Delrin business at $1.8 billion. We estimate this is roughly a 10 times enterprise value/EBITDA multiple (based on Delrin's 2021 operating EBTIDA, the last time DuPont disclosed Delrin's EBITDA). While the deal is slightly below the average multiple for comparable transactions (11.6 times based on PitchBook data), the deal structure makes it value neutral to DuPont. As a part of the deal, DuPont will receive $1.25 billion in cash proceeds and a $350 million note receivable, while retaining 19.9% of the business.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

After updating our model to incorporate DuPont's second-quarter results, we are maintaining our $92 fair value estimate. Our narrow moat rating is also unchanged.

DuPont de Nemours is a world-renowned specialty chemicals company with a history spanning over 200 years and an ever-evolving portfolio. In the current iteration, DuPont is the specialty chemicals company created in 2019 from the DowDuPont merger and subsequent separations.

DuPont, Corteva, and Chemours (which we collectively refer to as "Historical DuPont") announced a settlement to resolve the vast majority of current perfluoroalkyl and polyfluoroalkyl substances, or PFAS,-related drinking water claims for U.S. water systems where the so-called forever chemicals have either been detected or are subject to monitoring. The settlement totals $1.185 billion, of which DuPont and Corteva will have to pay $400 million and $193 million, respectively.