DuPont de Nemours Q2 Earnings Call Highlights

Key Points

• DuPont raised its full-year 2026 outlook after second-quarter results beat prior guidance, with organic sales growth of 4%, operating EBITDA up 8% to $448 million, adjusted EPS up 21% to $1.88 and free-cash-flow conversion of 127%.
• The company now expects slightly above 4% organic sales growth, $1.760 billion in operating EBITDA and adjusted EPS of $7.24 for 2026. It also expects full-year free-cash-flow conversion to approach 100% and plans to begin a $250 million share-repurchase program in the third quarter.
• Growth remains strongest in healthcare, aerospace, industrial water and semiconductor applications, while DuPont is pursuing productivity and commercial initiatives and evaluating acquisition opportunities in water and healthcare with more than $1 billion available for potential deals.

DuPont de Nemours NYSE: DD raised its full-year 2026 outlook after reporting second-quarter results that exceeded its prior guidance, supported by organic growth, productivity gains and cash-flow generation.

Chief Executive Officer Lori Koch said the company delivered 4% organic sales growth, 80 basis points of margin expansion and double-digit adjusted earnings-per-share growth during the quarter. DuPont also plans to begin a $250 million share-repurchase program in the third quarter.

The company completed its previously announced reverse stock split in June, and its GICS classification changed to industrial in July. Koch said the revised classification better reflects the company’s industrial portfolio following its transformation in recent years.

Second-Quarter Results

Second-quarter net sales were $1.8 billion, up 4% from the prior-year period on 4% organic growth. Growth was broad-based, led by healthcare, aerospace, industrial water and semiconductor markets, Chief Financial Officer Antonella Franzen said. Building technologies also grew year over year, supported by residential and non-residential construction activity.

Operating EBITDA rose 8% to $448 million, while operating EBITDA margin expanded 80 basis points to 24.6%. The margin result included a 30-basis-point headwind from price-cost dynamics, according to Franzen.

Adjusted EPS increased 21% year over year to $1.88. Franzen said stronger operations contributed $0.17 per share to the increase, while below-the-line items contributed another $0.15 per share.

Transaction-adjusted free cash flow totaled $326 million, producing 127% conversion during the quarter. The company said earnings growth and working-capital productivity supported the result.

• Healthcare & Water Technologies: Sales rose 5% to $856 million, including 4% organic growth and a 1% currency benefit. Segment operating EBITDA increased 4% to $258 million, though margin declined 30 basis points to 30.1% due to mix and growth investments.
• Diversified Industrials: Sales rose 3% to $963 million, entirely from organic growth. Operating EBITDA increased 7% to $213 million, and margin rose 70 basis points to 22.1%.

Within Healthcare & Water Technologies, healthcare sales increased at a mid-single-digit organic rate, with double-digit gains in personal protection and biopharma. Water sales grew at a low-single-digit rate, as double-digit growth in industrial water and semiconductor applications was partly offset by weakness in the Middle East.

Outside the Middle East, water organic sales increased at a mid-single-digit rate. Koch said the Middle East represents about 10% of water sales and that project timing has shifted due to the regional conflict, rather than any structural change in the market. The company expects most of the delayed project revenue to arrive in the fourth quarter.

Raised 2026 Guidance

DuPont now expects full-year organic sales growth to be slightly above 4%. The company adjusted the midpoint of its sales outlook to $7.175 billion, reflecting a lower expected currency benefit as the U.S. dollar strengthens.

The company raised the midpoint of its operating EBITDA outlook to $1.760 billion and its adjusted EPS midpoint to $7.24, a $0.15 increase from its prior forecast. The adjusted EPS outlook would represent an 18% increase from the prior-year pro forma result.

Full-year operating EBITDA margin is expected to be 24.5%, including a 30-basis-point headwind from oil and gas inflation. DuPont expects full-year free-cash-flow conversion to be closer to 100% than its prior target of 90%, Franzen said.

For the second half, DuPont expects approximately 6% organic sales growth, including pricing actions already implemented. The company forecasts second-half sales of $3.675 billion and operating EBITDA of $900 million. Second-half operating EBITDA margin is expected to be 24.5%, including a 50-basis-point headwind from oil and gas inflation.

Third-quarter guidance calls for sales of $1.835 billion, operating EBITDA of $448 million and adjusted EPS of $1.80 to $1.90 per share. Reported third-quarter organic growth is expected to be about 3%, or about 5% after adjusting for a prior-year sales timing shift associated with systems activity before the Qnity separation.

Operational and Commercial Initiatives

Koch said DuPont is integrating innovation, commercial excellence, operational excellence and 80/20 initiatives into a single business system intended to improve growth, margins and execution. The company reported more than a 100-basis-point improvement in on-time, in-full delivery during the quarter and said it is reducing its cost of poor quality.

DuPont’s cost of poor quality stands at about 4% of sales, compared with a benchmark of roughly 5%, Koch said. The company is targeting net productivity of 3% of cost of goods sold annually and expects to reach that run rate across the organization within about 18 months. Second-quarter productivity represented about a 200-basis-point reduction on a cost-of-goods-sold basis, contributing about 100 basis points of margin expansion as a percentage of revenue.

The company has also piloted 80/20 initiatives across four Diversified Industrials businesses. Koch said the work has identified opportunities to simplify product portfolios, improve manufacturing yield, optimize production sequencing and reallocate commercial and technical resources toward higher-growth markets. DuPont expects a few million dollars of EBITDA benefit in the second half from those efforts, primarily through margin improvement.

On the commercial side, DuPont said it has won about 150 opportunities through sales plays, representing a nearly 30% win rate compared with its historical rate in the high teens. Koch said artificial intelligence has accelerated the preparation and launch of sales plays, cutting the process from months to about four weeks, while commercial organization changes have supported the higher win rate.

Growth Markets and Capital Allocation

Management cited continued momentum in aerospace, electric-vehicle batteries, industrial water and semiconductor applications. Industrial water sales to semiconductor customers, which provide ultrapure water for chip manufacturing, grew more than 20% and are expected to continue growing, Franzen said.

DuPont’s electric-vehicle battery business currently generates about $70 million in revenue, primarily from adhesives. Koch said the company expects the business to move into the triple-digit-million-dollar range in 2026 and 2027. More broadly, the company sees a several-hundred-million-dollar EV opportunity within its approximately $900 million automotive portfolio.

The company also introduced an integrated direct-lithium-extraction solution incorporating membranes and ion-exchange resins. Koch said the opportunity requires no incremental capital expenditure and estimated the direct-lithium-extraction market at about $200 million.

Alongside the planned buyback, DuPont said it retains more than $1 billion for potential acquisitions. Koch said the company sees an active pipeline in water and healthcare, including packaging and contract development and manufacturing opportunities, but will remain disciplined on valuation and expected returns.

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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