DuPont de Nemours NYSE: DD reported first-quarter 2026 results that exceeded its prior guidance, driven by organic growth, margin expansion and improved earnings, while management also raised full-year expectations and outlined actions to return cash to shareholders.
Quarterly performance tops guidance
Chief Executive Officer Lori Koch said the company “delivered organic sales growth of 2%, 130 basis points of pro forma margin expansion, and double-digit adjusted EPS growth,” citing “disciplined commercial and operational execution.” Koch added that free cash flow generation and conversion were “solid in the quarter.”
Chief Financial Officer Antonella Franzen said net sales were $1.7 billion, up 4% year over year, including 2% organic sales growth and a 2% benefit from currency. Organic growth was “led by strength in healthcare and aerospace,” Franzen said, but was “partially offset by continued softness in construction markets and logistics disruptions due to the conflict in the Middle East,” which primarily affected the water business.
Operating EBITDA for the quarter was $414 million, up 15% versus the year-ago period, with operating EBITDA margin of 24.6%, an increase of 230 basis points year over year. On a pro forma basis, Franzen said operating EBITDA increased 10% and margins expanded 130 basis points.
Transaction-adjusted free cash flow was $147 million, with conversion of 65%, which Franzen called “a solid start to the year.” Adjusted EPS was $0.55, up 53% on a reported basis, while pro forma adjusted EPS increased 20%. Franzen attributed the pro forma increase primarily to higher segment earnings, with additional benefit from “a lower tax rate, share count, and exchange gains and losses.”
Segment trends: healthcare strength offsets water and construction headwinds
In Healthcare & Water Technologies, first-quarter net sales were $806 million, up 6% year over year on 3% organic growth and a 3% currency benefit. Franzen said healthcare sales rose high single digits organically, led by “continued strength in medical packaging and biopharma.” Water sales declined low to mid-single digits organically as strength in industrial water and microelectronics was more than offset by Middle East-related logistics disruption. Segment operating EBITDA was $244 million, up 9%, and operating EBITDA margin rose 110 basis points to 30.3%.
Diversified Industrials posted first-quarter net sales of $875 million, up 3%, driven by currency, with organic sales “about flat,” Franzen said. Building technologies declined low single digits organically due to weak construction markets, while industrial technologies grew low single digits on aerospace strength and automotive growth, partially offset by declines in printing and packaging. Diversified Industrials operating EBITDA was $200 million, up 8%, and operating EBITDA margin expanded 110 basis points to 22.9%.
On automotive, Koch said DuPont’s outperformance in a “tough market” was supported by battery adhesive volumes, noting the company has “about roundly $300 million of sales that go into EVs,” with incremental growth tied to new volume and customer wins.
Middle East logistics: Q1 disruption, mitigation and pricing actions
Management discussed the impact of the Middle East conflict on logistics and input costs, particularly in water. Koch said about $10 million of water-related sales in the quarter “weren’t able to ship out of the Middle East,” adding those materials “have already shipped in April.” She said DuPont did not “bake in a ton of disruption in Q2 with respect to the Middle East for the water business,” and reiterated expectations that water will be up mid-single digits for the full year, with performance weighted to the second half due to the timing of large projects.
Franzen provided broader exposure context, saying total company exposure related to the Middle East is “around $300 million,” or about 4% of revenue, split between sales into the region and sourcing from the region. She said the company was able to mitigate disruption through alternative routes and supply chain actions, telling an analyst, “All that math is not necessary,” in reference to estimating ongoing quarterly impacts.
On inflation tied to the conflict, Franzen said DuPont expects incremental costs of about $90 million and “expect[s] to fully cover” them through price and surcharges. She said pricing actions begin to take effect in the second quarter, with the second quarter including “around $25 million or so of price on the topline to cover those costs.”
Asked about the earnings outlook if the conflict persists, Franzen said the company’s full-year guidance assumes the “current situation continues through the remainder of the year,” including “current oil prices, current natural gas prices,” and that those assumptions are covered by pricing actions already in place.
Margins, productivity initiatives and portfolio actions
Franzen said first-quarter margin strength reflected both mix and productivity, with mix adding about 50 basis points and “net productivity” contributing about 70 basis points. She said the company remains on track toward margin expansion targets outlined at its investor day.
Koch highlighted progress on operational execution, including improvements in asset reliability and equipment effectiveness, and said DuPont is expanding the use of digital and AI tools in maintenance, planning and defect detection. She also pointed to the company’s collaboration with Uncountable, an “AI-driven platform for end-to-end product and application development,” aimed at accelerating development and improving cycle time.
On business simplification efforts, Koch said DuPont is “well into” implementing an 80/20 process within Diversified Industrials. The company selected four businesses to start and is “about two-thirds through the initial study.” She said the company did not incorporate 80/20 impacts into the full-year guide but expects “nice margin appreciation with minimal topline impact” over time for the businesses in scope.
Franzen addressed stranded costs, saying DuPont estimates about $30 million of stranded costs to remove within the first two years. For 2026, she said the company expects to remove roughly $10 million, and that on a run-rate basis it would be “actually halfway there,” adding DuPont is “right on cadence.”
DuPont also completed the previously announced divestiture of its Aramids business on April 1. Koch said the transaction generated about $1.2 billion of gross proceeds and about $1.1 billion of net proceeds, which the company is balancing between shareholder returns and potential M&A. Koch said management is not planning to “lever up to do a deal,” noting a target of 2x leverage and that the company is “a little below that today.”
In capital allocation, Koch said DuPont expects to launch a $275 million accelerated share repurchase (ASR) under its existing program. Franzen noted the company previously completed a $500 million ASR and reminded investors it has a $2 billion repurchase program, of which the $500 million and $275 million have been used.
Guidance raised for 2026; Q2 outlook provided
Based on first-quarter execution and the inclusion of interest income from the Aramids transaction, Franzen said DuPont is raising full-year 2026 guidance.
- Second quarter 2026 (estimated): net sales of about $1.8 billion, operating EBITDA of about $430 million, and adjusted EPS of $0.59, assuming about 3% organic sales growth.
- Full year 2026 (midpoint): net sales of about $7.185 billion (up $80 million versus the prior guide), operating EBITDA of about $1.745 billion, and adjusted EPS of $2.35 to $2.40 (a $0.10 increase versus the prior range).
For the full year, Franzen said the net sales outlook assumes about 4% organic growth, including about 1% from pricing actions intended to offset higher input costs tied to the Middle East conflict. She added that a stronger U.S. dollar reduced the expected currency benefit to less than 1%.
Franzen said the EPS outlook also includes higher interest income from the Aramids transaction and a lower expected tax rate in the 24% to 25% range.
On demand, Koch said April sales were “in line with our expectations,” and management said it continued to see strong order growth trends across most businesses, with Franzen telling analysts that April demand looked similar to prior trends and showed “nice increases overall on a year-over-year basis.”
About DuPont de Nemours NYSE: DD
DuPont de Nemours NYSE: DD is a global science and engineering company that develops and supplies specialty materials, chemicals and industrial biosciences for a wide range of markets. Headquartered in Wilmington, Delaware, the company traces its origins to 1802 and has evolved through more than two centuries of innovation. In recent history DuPont participated in a major combination with Dow Chemical and subsequent reorganization that refocused the company on differentiated, specialty businesses built around science-based solutions.
DuPont's operations center on advanced materials and technologies used by manufacturers and OEMs in industries such as transportation, electronics, construction, industrial manufacturing and worker safety.
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