Dupont De Nemours, Inc. · NYSE:DD
Dupont De Nemours — DuPont — Investor Day (February 2019)
37 slides from Dupont De Nemours's investor day presentation, Feb 21, 2019
Slide 1: DuPont Analyst Day
DuPont Analyst Day Creating a world-class multi-industry specialty company February 21, 2019
Slide 2: Introduction
Introduction Ed Breen, Executive Chairman Elect, DuPont 2
Slide 3: Key messages
Key messages DuPont has compelling top and DuPont benchmarks well against best- bottom line growth opportunities in-class peers and is delivering against commitments DuPont is advancing key strategic DuPont has multiple levers to deliver initiatives and driving continued shareholder value productivi
Slide 4: Powerful portfolio of businesses
Powerful portfolio of businesses Large global businesses in 5 levers to drive shareholder Strong financial metrics attractive end markets value • Positioned to deliver consistent • Innovation-led growth • GDP+ top line growth top-tier financial returns • Active portfolio management • Strong operatin
Slide 5: Macro view
Macro view Modest deceleration in global economy and destocking in select end markets which began in late 4Q 2018 expected to continue into the first half of 2019 Stronger 2H 2019 driven by recovery in key end markets and regions DuPont end markets present compelling opportunities over the long term
Slide 6: 2019 priorities focused on shareholder value creation
2019 priorities focused on shareholder value creation Drive top line Expand margins Continue to Enable strong Continue to growth through through strong execute portfolio cash generation improve ROIC innovation and productivity focus actions and through earnings through effective pricing discipline a
Slide 7: Business Discussion
Business Discussion Marc Doyle, Chief Executive Officer Elect, DuPont 7
Slide 8: The new DuPont: benchmarking key metrics with top multi-industrials
The new DuPont: benchmarking key metrics with top multi-industrials FISCAL YEAR 2018 Organic Adjusted Operating Adjusted Operating Adjusted Operating Revenue* Growth EBITDA Margin* EBITDA* Growth EBITDA Leverage* 5% 28% 12% 1.6x MMM MMM MMM MMM HON HON** HON** HON** ITW ITW ITW ITW Strong performanc
Slide 9: The new DuPont: performing in-line with best-in-class peers
The new DuPont: performing in-line with best-in-class peers Sales CAGR (2016 – 2018) 2018 Adjusted Operating EBITDA Margin* Transportation & 12% 29% Advanced Polymers (T&AP) VCT EMS 3M Ind. HXL VCT EMS 3M Ind. HXL Electronics 31% & Imaging** 5% (E&I) 1 2 3 VSM 1 CCMP 2 ENTG 3 3M E&E 3M E&E VSM CCMP
Slide 10: The new DuPont: diversified market leadership
The new DuPont: diversified market leadership Large Addressable Markets Represent >$100B Opportunity N&H IB E&I S&C T&AP 6% 16% 18% 14% 19% 11% 23% 29% 35% Industry- 23% 50% 49% leading 21% 18% 23% 22% businesses 13% 28% 27% 25% 30% Probiotics, Cultures & Food Protection Bioactives Semiconductor Tec
Slide 11: Well positioned to benefit from global macro trends
Well positioned to benefit from global macro trends N&B E&I S&C T&AP › Healthcare Health & › Natural Ingredients Wellness › Probiotics › 5G & Big Data Digital Revolution & › Artificial Intelligence Connectivity › Internet of Things › Light Weighting Advanced Mobility › Automotive Electrification › A
Slide 12: The new DuPont: broad end-market exposure
The new DuPont: broad end-market exposure ~25% net sales into markets with Majority of end markets experiencing growth rates short-term destocking consistent with our mid-term expectations Automotive ~15% of Net Sales As destocking starts to resolve in 2Q’19, Medical & Industrial & auto builds are e
Slide 13: Focused on shareholder value creation
Focused on shareholder value creation Goal Where we stand › Supported >1% price improvement in › Drive price improvement and 1 Innovation-led growth sustainable volume growth 2018 from innovation and delivered 3% volume growth › To date, divested ~4% of sales Active portfolio management and › Prune
Slide 14: Progress on key initiatives – Driving innovation-led growth
Progress on key initiatives – Driving innovation-led growth Key Initiatives Current Actions / Examples Accelerate innovation by ensuring high ROIC R&D › Differentiated R&D spending biased towards high-growth investments potential › Cross-selling to key accounts and channel consolidation Capture grow
Slide 15: Progress on key initiatives – Driving innovation-led growth
Progress on key initiatives – Driving innovation-led growth R&D as a Percent of Net Sales – 2018 Actual R&D Investment 7% › Differentially manage R&D investment across 6% businesses 5% 4% › Differentiation driven by innovation headroom 3% › No business spends in excess of peer average 2% 1% 0% Total
Slide 16: Targeting innovative platforms tied to secular growth markets
Targeting innovative platforms tied to secular growth markets 5G Connectivity Microbiome Health Automotive Electrification ~$6B addressable market* ~$5B addressable market** ~$6B addressable market† 50%+ CAGR 20%+ CAGR 10%+ CAGR Why we are positioned to win Why we are positioned to win Why we are po
Slide 17: Progress on key initiatives – Active portfolio management
Progress on key initiatives – Active portfolio management Actions* Impact to date Target 8 >25 >$0.6B ~$0.9B › Overall goal of divesting ~10% of businesses businesses portfolio cash revenue divested** consolidated proceeds divested › Improve top line growth by >50 bps 12 >15 >$0.5B >50 bps and opera
Slide 18: Progress on key initiatives – Best-in-class operating model
Progress on key initiatives – Best-in-class operating model Gross margin improvements SG&A and R&D productivity › Investing in automation & manufacturing reliability › Implemented lean regional cost structure › Sourcing synergies › R&D efficiency and enhanced returns › Leveraging contract operations
Slide 19: Progress on key initiatives – Performance-based culture
Progress on key initiatives – Performance-based culture Management focused on ROIC improvements High-return growth investments › Earnings growth 2019 Capex (est) › Site consolidations Tyvek® Line 8 Expansion (S&C) $185 million › Portfolio rationalization Human Milk Oligosaccharides (N&B) $40 million
Slide 20: Key takeaways
Key takeaways We have leading We are committed We have a plan to We will maximize positions in attractive to top line growth increase ROIC and shareholder value growth markets and above-market drive value creation through prudent earnings improvement portfolio actions Focused on consistently deliver
Slide 21: Financial Discussion
Financial Discussion Jeanmarie Desmond, Chief Financial Officer Elect, DuPont 21
Slide 22: 2018 key metrics
2018 key metrics 2018 Results Comments Organic Revenue* › Achieved top-end of medium-term organic Growth 5% growth target Driven by strong volumes (+3%) and Adjusted Operating pricing discipline (+2%) EBITDA Margin* 28% › > 100 bps improvement in adjusted operating Adjusted Operating EBITDA margin E
Slide 23: 2018 segment results
2018 segment results Net sales Comments Organic Sales* in millions 2018 Growth Segment Analysis (Net Sales): Electronics & Imaging $ 4,720 Flat › Volume growth in all segments Nutrition & Biosciences $ 6,801 4% › Price gains in most segments with T&AP at 6% Transportation & Advanced Polymers $ 5,620
Slide 24: Hemlock Semiconductor equity affiliate income
Hemlock Semiconductor (Hemlock) equity affiliate income Comments Income Associated with Contract Settlements & Other Specific Items › A majority of equity affiliate income from Hemlock is recognized in the second half of the year as customers satisfy Year 2016 2017 2018 annual purchase requirements
Slide 25: 2019E net sales and adjusted operating EBITDA bridge
2019E net sales and adjusted operating EBITDA bridge Net sales Comments $22.4- +2-3% › Anticipate top-line currency headwind of ~$200-$250 million primarily $22.6B ~(1%) ~(2%) $22.6B driven by the EUR and CNY › Negative portfolio impact on net sales from announced divestments › Forecasted organic re
Slide 26: The new DuPont: stand-alone company costs
The new DuPont: stand-alone company costs Corporate Costs Comments In millions $390 ($90) ($150) $150 › On a stand-alone basis, DuPont will incur corporate and pre-commercial R&D and other business support costs which are outside of current divisional results (included in DWDP Corporate segment) › P
Slide 27: Full year 2019 net sales segment guidance
Full year 2019 net sales segment guidance Net Sales Growth As Reported Organic* Specialty Products Up 2-3% Division of DWDP About Flat Excludes portfolio (~-2%) and currency (~-1%) Transportation & Advanced Polymers Flat to down 1% Up 1-2% Electronics & Up 2-3% Up 2-3% Imaging Safety & Down 2-3% Up
Slide 28: 2019 guidance, continued
2019 guidance, continued Key Metrics: Return on Invested Capital >100 bps improvement Free Cash Flow Conversion* >90% Other: R&D Expense 4% of Net Sales (~$900 million) Capex 4-5% of Net Sales (~$1 billion) Additional Interest Expense ~$700 million Base Tax Rate 20-22% Modeling Guidance Year-over-ye
Slide 29: Capital structure
Capital structure Total Debt (in Billions) New DuPont will be a strong investment-grade company › Credit Rating Achieved: A- (Standard & Poor’s); $1 Baa1 (Moody’s); BBB+ (Fitch) $3 Bond Maturity (in Billions) Total Adjusted Debt $2.0 $4.7 $2.3 $3.8 ~$17B $13 Long Term Debt Term Loan Pension Obligati
Slide 30: Capital allocation – sources & uses of cash
Capital allocation – sources & uses of cash Sources of Cash Uses of Cash Strong Cash From Multi-year working Investment Other Recurring Uses Operations with Free capital improvement Cash Flow Conversion opportunity of R&D ~ $900 million Interest ~ $700 million [4% of Sales] >90% ~$1 billion CapEx ~
Slide 31: Appendix
Appendix 31
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Electronics & Imaging in millions 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 4Q18 2018 Pro Forma Pro Forma Pro Forma As Reported Pro Forma As Reported As Reported As Reported As Reported As Reported Operating EBITDA $ 407 $ 441 $ 411 $ 581 $ 1,840 $ 398 $ 407 $ 412 $ 685 $ 1,902
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Electronics & Imaging in millions 1Q17 2Q17 3Q17 4Q17 2017 1Q18 2Q18 3Q18 4Q18 2018 Pro Forma Pro Forma Pro Forma As Reported Pro Forma As Reported As Reported As Reported As Reported As Reported Operating EBITDA Margins 35.0% 36.1% 34.3% 48.7% 38.5% 34.5% 33.8% 34.5% 58.6% 4
Slide 34: Key terms
Key terms Organic revenue includes price and volume and excludes impacts of currency and portfolio Adjusted Operating EBITDA is defined as operating EBITDA excluding non-operating pension/OPEB costs and credits Adjusted Operating EBITDA Margin reflects Adjusted Operating EBITDA divided by net sales
Slide 35: Safe Harbor Statement
Safe Harbor Statement Cautionary Statement About Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 19
Slide 36: Safe Harbor Statement
Safe Harbor Statement Cautionary Statement About Forward-Looking Statements, continued Segment Information: DowDuPont’s measure of profit/loss for segment reporting purposes is Operating EBITDA (for the twelve months ended December 31, 2018) and pro forma Operating EBITDA (for the twelve months ende
Slide 37: Copyright © 2019 DuPont and Dow. All rights reserved.
Copyright © 2019 DuPont and Dow. All rights reserved. The DuPont Oval Logo and DuPont™ are trademarks of E. I. du Pont de Nemours and Company or its affiliates. The Dow Diamond Logo, Dow™ are trademarks of the Dow Chemical Company or its affiliates. Nothing contained herein shall be construed as a r