Attached files
| file | filename |
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| 8-K - 8-K - DuPont de Nemours, Inc. | enr8-k1q18.htm |
| EX-99.1 - EXHIBIT 99.1 - DuPont de Nemours, Inc. | exhibit991enrschedules1q18.htm |
DowDuPont
1Q18 Earnings Conference Call
May 3, 2018
Safe Harbor Statement
Regulation G
This presentation includes information that does not conform to U.S. GAAP and are considered non-GAAP measures. These measures include the Company's pro forma consolidated
results and pro forma earnings per share on an adjusted basis, which excludes the after-tax impact of pro forma significant items and the after-tax impact of pro forma amortization
expense associated with DuPont's intangible assets. Management uses these measures internally for planning, forecasting and evaluating the performance of the Company's
segments, including allocating resources. DowDuPont's management believes that these non-GAAP measures best reflect the ongoing performance of the Company during the periods
presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the Company and a more useful
comparison of year-over-year results. These non-GAAP measures supplement the Company's U.S. GAAP disclosures and should not be viewed as an alternative to U.S. GAAP
measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations of non-GAAP
measures to GAAP are provided in the financial schedules attached to the earnings news release and the Investor Relations section of the Company’s website. DowDuPont does not
provide forward-looking GAAP financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most comparable GAAP financial measures on a forward-
looking basis because the Company is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, foreign currency exchange gains
or losses, potential future asset impairments and purchase accounting fair value adjustments, as well as discrete taxable events, without unreasonable effort. These items are
uncertain, depend on various factors, and could have a material impact on GAAP results for the guidance period.
Operating EBITDA is defined as earnings (i.e.,” Income from continuing operations before income taxes”) before interest, depreciation, amortization and foreign exchange gains
(losses), excluding significant items. Pro forma Operating EBITDA is defined as pro forma earnings (i.e., pro forma “Income from continuing operations before income taxes”) before
interest, depreciation, amortization and foreign exchange gains (losses), excluding the impact of adjusted significant items.
Adjusted EPS is defined as “Earnings per common share from continuing operations – diluted” excluding the after-tax impact of significant items and the after-tax impact of amortization
expense associated with DuPont’s intangible assets. Pro forma Adjusted EPS is defined as “Pro forma earnings per common share from continuing operations – diluted” excluding the
after-tax impact of pro forma significant items and the after-tax impact of pro forma amortization expense associated with DuPont’s intangible assets. Full year and prior year
information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X.
Cautionary Statement about Forward-Looking Statements
This communication 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 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and
financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” and similar expressions and variations or
negatives of these words.
On December 11, 2015, The Dow Chemical Company (“Dow”) and E. I. du Pont de Nemours and Company (“DuPont”) entered into an Agreement and Plan of Merger, as amended on
March 31, 2017, (the “Merger Agreement”) under which the companies would combine in an all-stock merger of equals transaction (the “Merger”). Effective August 31, 2017, the Merger
was completed and each of Dow and DuPont became subsidiaries of DowDuPont (Dow and DuPont, and their respective subsidiaries, collectively referred to as the "Subsidiaries").
Forward-looking statements by their nature address matters that are, to varying degrees, uncertain, including the intended separation, subject to approval of the Company’s Board of
Directors, and customary closing conditions, of DowDuPont’s agriculture, materials science and specialty products businesses in one or more tax-efficient transactions on anticipated
terms (the “Intended Business Separations”). Forward-looking statements are not guarantees of future performance and are based on certain assumptions and expectations of future
events which may not be realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the Company’s control. Some of the important factors
that could cause DowDuPont’s, Dow’s or DuPont’s actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) costs
to achieve and achieving the successful integration of the respective agriculture, materials science and specialty products businesses of Dow and DuPont, anticipated tax treatment,
unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, productivity actions, economic performance, indebtedness, financial condition, losses, future prospects,
business and management strategies for the management, expansion and growth of the combined operations; (ii) costs to achieve and achievement of the anticipated synergies by the
combined agriculture, materials science and specialty products businesses; (iii) risks associated with the Intended Business Separations, including conditions which could delay,
prevent or otherwise adversely affect the proposed transactions, including possible issues or delays in obtaining required regulatory approvals or clearances related to the Intended
2 ©2018 DowDuPont. All rights reserved.
Safe Harbor Statement, continued
Forward-Looking Statements, continued
Business Separations, associated costs, disruptions in the financial markets or other potential barriers; (iv) disruptions or business uncertainty, including from the Intended Business
Separations, could adversely impact DowDuPont’s business (either directly or as conducted by and through Dow or DuPont), or financial performance and its ability to retain and hire key
personnel; (v) uncertainty as to the long-term value of DowDuPont common stock; and (vi) risks to DowDuPont’s, Dow’s and DuPont’s business, operations and results of operations from:
the availability of and fluctuations in the cost of feedstocks and energy; balance of supply and demand and the impact of balance on prices; failure to develop and market new products
and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations
and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage
process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and
currency exchange rates; changes in political conditions, including trade disputes and retaliatory actions; business or supply disruptions; security threats, such as acts of sabotage,
terrorism or war, natural disasters and weather events and patterns which could result in a significant operational event for the Company, adversely impact demand or production; ability to
discover, develop and protect new technologies and to protect and enforce the Company’s intellectual property rights; failure to effectively manage acquisitions, divestitures, alliances, joint
ventures and other portfolio changes; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as
management’s response to any of the aforementioned factors. These risks are and will be more fully discussed in the current, quarterly and annual reports filed with the U. S. Securities
and Exchange Commission by DowDuPont. While the list of factors presented here is, considered representative, no such list should be considered to be a complete statement of all
potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in
results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to
third parties and similar risks, any of which could have a material adverse effect on DowDuPont’s, Dow’s or DuPont’s consolidated financial condition, results of operations, credit rating or
liquidity. None of DowDuPont, Dow or DuPont assumes any obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information,
future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. A detailed discussion of some of the significant
risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part I, Item 1A) of
DowDuPont’s 2017 annual report on Form 10-K.
The Dow Diamond, DuPont Oval logo, DuPont™, the DowDuPont logo and all products, unless otherwise noted, denoted with ™, ℠ or ® are trademarks, service marks or registered
trademarks of The Dow Chemical Company, E. I. du Pont de Nemours and Company, DowDuPont Inc. or their affiliates.
In order to provide the most meaningful comparison of results of operations and results by segment, supplemental unaudited pro forma financial information has been included in the
following financial schedules. The unaudited pro forma financial information is based on the historical consolidated financial statements and accompanying notes of both Dow and DuPont
and has been prepared to illustrate the effects of the Merger, assuming the Merger had been consummated on January 1, 2016. The results for the three months ended March 31, 2018,
are presented on a U.S. GAAP basis. For all other periods presented, adjustments have been made for (1) the preliminary purchase accounting impact, (2) accounting policy alignment, (3)
eliminate the effect of events that are directly attributable to the Merger Agreement (e.g., one-time transaction costs), (4) eliminate the impact of transactions between Dow and DuPont,
and (5) eliminate the effect of consummated divestitures agreed to with certain regulatory agencies as a condition of approval for the Merger. The unaudited pro forma financial information
was based on and should be read in conjunction with the separate historical financial statements and accompanying notes contained in each of the Dow and DuPont Quarterly Reports on
Form 10-Q and Annual Reports on Form 10-K for the applicable periods. The pro forma financial statements were prepared in accordance with Article 11 of Regulation S-X. The unaudited
pro forma financial information has been presented for informational purposes only and is not necessarily indicative of what DowDuPont's results of operations actually would have been
had the Merger been completed as of January 1, 2016, nor is it indicative of the future operating results of DowDuPont. The unaudited pro forma financial information does not reflect any
cost or growth synergies that DowDuPont may achieve as a result of the Merger, future costs to combine the operations of Dow and DuPont or the costs necessary to achieve any cost or
growth synergies.
Discussion of revenue, operating EBITDA and price/volume metrics on a divisional basis for Agriculture is based on the results of the Agriculture segment; for Materials Science is based
on the combined results of the Performance Materials & Coatings, Industrial Intermediates & Infrastructure, and Packaging & Specialty Plastics segments; and for Specialty Products is
based on the combined results of the Electronics & Imaging, Nutrition & Biosciences, Transportation & Advanced Polymers, and Safety & Construction segments. The divisional
discussions are for informational purposes only and do not purport to be indicative of results, including on a pro forma basis, for each of Agriculture, Materials Science and Specialty
Products on a standalone basis as if the Intended Business Separations had already occurred. Furthermore, the divisional discussions should not be construed as representative of future
results of operations or financial condition for each of Agriculture, Materials Science and Specialty Products on a standalone basis in connection with the Intended Business Separations.
3 ©2018 DowDuPont. All rights reserved.
First Quarter Highlights
4 ©2018 DowDuPont. All rights reserved.
Financial & Operational Highlights
– Sales grew 5% with gains in most segments and geographies
– Materials Science +17% and Specialty Products +11%, each with gains in
all regions
– Local price and volume gains in Materials Science and Specialty Products
more than offset weather-related declines in Ag
– Operating EBITDA increased 6%, up in all segments except Ag
– Materials Science +23% and Specialty Products +25%
– Adjusted EPS rose 7%
Cost Synergy Highlights
– >$300MM of cost synergy savings in 1Q
– On pace to deliver 75% of $3.3B run-rate by end of 3Q18
– Raising year-over-year cost savings target in 2018 to $1.2B
Market Access: Deliver a full farm
solution via the combination of
seeds, crop protection & services
New Business Model: Recover
divested businesses
Innovation & Technology:
Incremental pipeline value from
launching in additional regions &
brands
Portfolio: Portfolio combinations &
crop protection mixtures; seed
treatment enhancements from
larger proprietary portfolio
Target: ~$500MM
©2018 DowDuPont. All rights reserved.
Holistic solution offerings provide
customers with a “one stop shop” for
a given structure & differentiated
offerings by upgrading PE with ECP
Packaging: Differentiated offerings in
tie layers to improve durability,
recyclability & product shelf life
Health & Hygiene: Expanded non-
wovens portfolio to satisfy unmet
demands for improved softness &
noise reduction
Infrastructure: Drive growth in
polymer modifiers, which enable
weight reduction & improved wear,
through value chain integration
Consumer: Broad offering in
footwear & cosmetics to improve
bonding, processing & blending for
improved comfort, performance &
durability
Target: ~$100MM
Electronics & Imaging: Partner with
leading OEMs to create integrated
offerings & new products that
leverage enhanced capability across
circuit, semiconductor & display
Safety & Construction: Improved
market access & integrated
application development in
construction & filtration markets
Transportation & Advanced
Polymers: Expanded market access,
application development & leverage
compounding capabilities for auto,
electronics and medical markets
Nutrition & Biosciences: Grow
food, pharma & microbial portfolio;
leverage key account management,
channel access & commercial
capabilities
Target: ~$400MM
Growth Synergies Update
5
• Forms 10
• Complete equity roadshows
• Complete IT systems and
legal entity transitions
• File initial Forms 10
• Begin to deploy IT systems
and stand up legal entities
• Finalize assets and liabilities
by spin
• Finalize agreement terms
• Complete IT design and test
• Establish new legal entities in ~60 countries
• Secure right to operate
• Separate facilities by spin
• Design, test and implement IT systems; transfer IT
system to respective spin
• Set up public company-ready corporate functions,
employees and facilities in each spin
• Assign all assets and liabilities to spins
• Negotiate terms of agreements (site services,
material purchases, IP, separation agreements)
• Finalize capital structures of spins
• Draft, cycle and obtain effectiveness of Forms 10
with the SEC
• Name management teams for intended companies
• Hold equity roadshows
Materials Science by end of 1Q 2019
Specialty Products formed when Ag separates by June 1, 2019
©2018 DowDuPont. All rights reserved. 6
Anticipated Timeline to Expected Spins
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3Q19
3Q18 1Q19 1Q18
1Q 2018 Financial Highlights1
7 ©2018 DowDuPont. All rights reserved.
Highlights
• Price increases in all divisions
• Volume growth in Materials
Science and Specialty Products
• Accelerating cost synergies
• Favorable currency impact
• Lower pension & OPEB costs
• Higher equity earnings
• Weather-related declines in
Agriculture
• Higher feedstock costs
• Weather-related supply
disruptions in Materials Science
• Increased turnaround activity
$0.67
$1.08
1Q1
7
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$1.05
$1.12
Financial Performance Snapshot 1Q18 1Q17 B/(W)
Net Sales ($MM) 21,510 20,467 1,043
Operating EBITDA ($MM) 4,871 4,614 257
GAAP EPS from Continuing Operations ($/share) 0.47 0.72 (0.25)
Adjusted EPS ($/share) 1.12 1.05 0.07
1Q 2018 Pro Forma Adjusted EPS Variance
1. Prior year net sales and non-GAAP information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X.
Materials Science Highlights
Performance Materials & Coatings
• Sales up 12%, driven by local price
increases, a currency tailwind and
double-digit sales growth in Consumer
Solutions
• Consumer Solutions benefited from
strong price gains, robust demand
growth in personal & home care
markets, traction on growth synergies
and disciplined margin management in
silicone intermediates
• Op. EBITDA up 31% on higher pricing,
improved product mix and cost and
growth synergies
©2018 DowDuPont. All rights reserved.
Jen/Ann
YoY Sales Change: Vol -1%,
Local Price +9%, Currency +4%, Port./Other –
Division Highlights 1Q18 1Q17
Net Sales ($MM) 12,029 10,292
Op. EBITDA ($MM) 2,583 2,107
Op. EBITDA Margin 21.5% 20.5%
• Net sales up 17%; Op. EBITDA grew 23% with double-digit gains
in all segments; Op. EBITDA margin expanded 100 basis points
• $81MM benefit to equity earnings on improved Sadara results
YoY Sales Change: Vol +8%,
Local Price 0%, Currency +4%, Port./Other –
• Polyurethanes & CAV benefited from
improved pricing and customer wins
in downstream systems applications,
improved supply from new capacity
at Sadara and ongoing tight MDI and
caustic soda fundamentals
• Industrial Solutions sales grew in
consumer-led applications, including
electronics processing, crop defense
and food and pharma
• Op. EBITDA up 28% on higher price,
demand growth, cost synergies and
increased equity earnings
• Sales up 12%; volume grew 8% with
gains in all geographic regions
• Robust demand growth in food &
specialty, industrial & consumer and
rigid packaging end-markets
• Local price increases in ethylene
derivatives were offset by declines in
hydrocarbons prices
• Op. EBITDA up 17% as PE price
increases, volume gains supported
by growth projects, higher equity
earnings and cost synergies more
than offset increased feedstock costs
Industrial Intermediates & Infrastructure Packaging & Specialty Plastics
Division Sales Change
Vol +8%
Local Price +5%
Currency +4%
Port./Other –
8
1Q18 1Q17
Net Sales ($MM) 2,304 2,063
Op. EBITDA ($MM) 628 481
Op. EBITDA Margin 27.3% 23.3%
1Q18 1Q17
Net Sales ($MM) 3,715 2,847
Op. EBITDA ($MM) 654 512
Op. EBITDA Margin 17.6% 18.0%
1Q18 1Q17
Net Sales ($MM) 6,010 5,382
Op. EBITDA ($MM) 1,301 1,114
Op. EBITDA Margin 21.6% 20.7%
YoY Sales Change: Vol +14%,
Local Price +11%, Currency +5%, Port./Other –
Prior year information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X.
Specialty Products Highlights
Electronics & Imaging
1Q18 1Q17
Net Sales ($MM) 1,153 1,164
Op. EBITDA ($MM) 357 327
Op. EBITDA Margin 31.0% 28.1%
• Continued strong demand in
key end markets, led by
double-digit growth in semis
and interconnect solutions;
partially offset by declines in
PV & Adv. Materials
• Op. EBITDA up 9% as lower
pension/OPEB costs, cost
synergies, volume growth
and a currency benefit more
than offset a negative impact
from portfolio and higher unit
costs
9 ©2018 DowDuPont. All rights reserved.
Jen/Ann
YoY Sales change: Vol +1%, Local Price +1%
Currency +2%, Port./Other (5)%
Division Highlights 1Q18 1Q17
Net Sales ($MM) 5,597 5,052
Op. EBITDA ($MM) 1,566 1,257
Op. EBITDA Margin 28.0% 24.9%
• Volume gains delivered by all four segments in most regions
• Op. EBITDA margin expanded by 310 bps; growth in all segments
1Q18 1Q17
Net Sales ($MM) 1,720 1,424
Op. EBITDA ($MM) 418 317
Op. EBITDA Margin 24.3% 22.3%
YoY Sales change: Vol +4%, Local Price +1%
Currency +4%, Port./Other +12%
1Q18 1Q17
Net Sales ($MM) 1,425 1,251
Op. EBITDA ($MM) 437 321
Op. EBITDA Margin 30.7% 25.7%
YoY Sales change: Vol +3%, Local Price +5%
Currency +6% , Port./Other –
1Q18 1Q17
Net Sales ($MM) 1,299 1,213
Op. EBITDA ($MM) 354 292
Op. EBITDA Margin 27.3% 24.1%
YoY Sales change: Vol +3%, Local Price –
Currency +4%, Port./Other –
• Volume growth led by N&H
with double-digit growth in
probiotics and pharma,
coupled with gains in
systems & texturants
• Volume growth in IB led by
double-digits gains in
CleanTech, coupled with
growth in microbial control
solutions and bioactives
• Op. EBITDA up 32% on a
portfolio benefit, volume
growth, cost synergies and
lower pension/OPEB costs
• Gains in local price were
driven by nylon and
polyesters amid tight supply
and higher feedstock costs
• Volume gains led by
performance solutions for
electronics and aerospace
markets; performance
resins also up
• Op. EBITDA rose 36% on
lower pension/OPEB costs,
currency, sales gains and
cost synergies
• Volume gains were led by
Tyvek® and Nomex®
• Demand from industrial
markets remained strong;
construction sales reflected
weather-related delays
• Op. EBITDA increased 21%
primarily due to lower
pension/OPEB costs, cost
synergies, reliability
improvements and
currency; partially offset by
higher costs
Nutrition & Biosciences Transportation &
Advanced Polymers
Safety & Construction
Division Sales Change
Vol +3%
Local Price +2%
Currency +4%
Port./Other +2%
Prior year information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X.
©2018 DowDuPont. All rights reserved.
U.S. Weather Impact on Agriculture Segment
10
Key Business Data Points
Many seed reps provide deliveries to our farmer customers within a few days or less of
planting
A majority of Pioneer-branded seed in the U.S. is delivered over a 4-week period just ahead
of planting
Currently corn plantings are expected to be ~3-4
weeks delayed
Corn shipments through April 1 were ~1/3 of
previous year
Soil temps of 50 degrees are optimal for corn
planting
Majority of corn belt was still below 50 degrees on
April 1
Soil Temperatures April 1-7, 2018 U.S. Corn Planting Progress
Source: USDA
Agriculture Highlights
1Q18 1Q17
Net Sales ($MM) 3,808 5,049
Op. EBITDA ($MM) 891 1,461
Op. EBITDA Margin 23.4% 28.9%
YoY Sales change: Vol (28)%, Local Price +1%
Currency +2%, Port./Other –
First Quarter Results
First Half Outlook
Innovation
• Seed sales of $2.3 billion declined 34% driven by a delayed start to the Northern
Hemisphere and Brazil seasons and an expected reduction in planted area in the North
American and Brazil seasons. Volume was also negatively impacted by lower sales in
Brazil as farmers moved towards lower technology corn offerings due to the shortened
safrinha season.
• Crop Protection sales of $1.5 billion declined 3% as favorable price and currency were
more than offset by lower volumes due to the delayed seasons. Volume reductions
were partially offset by strong insecticide sales growth and local selling price increases
in crop protection driven by continuing efforts to capture value in established brands
across the portfolio globally.
• Operating EBITDA of $891 million declined 39% due to the delay in Northern
Hemisphere and Brazil seasons and lower expected planted area in North America and
Brazil, which was partially offset by cost synergies, favorable currency, higher local
pricing and lower pension/OPEB costs.
11
• First half sales expected to decline low-single digits percent and operating EBITDA is
expected to decline mid-single digits percent versus prior year. Expected growth in new
product sales, local pricing gains, and cost synergy realization are anticipated to be
more than offset by lower planted area in North America and Brazil, a lower-technology
seed mix in Brazil, and higher product costs driven by higher soybean royalty costs.
©2018 DowDuPont. All rights reserved.
• Select new products contributing to growth in 2018 (weighted towards 2H)
• RinskorTM and ArylexTM herbicides
• VessaryaTM and ZorvecTM fungicides
• PyraxaltTM and IsoclastTM insecticides
Q1 2018 Net Sales
Seed Crop Protection
Prior year information is on a pro forma basis and was determined in accordance with Article 11 of Regulation S-X.
12
©2018 DowDuPont. All rights reserved.
2Q18 Modeling Guidance
2
Q
1
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Corporate Segment Operating EBITDA ($190)MM – ($210)MM
Operational Tax Rate
(excl. EGL, DuPont Amort. & Sig. Items)
20-23%
D&A (includes the DuPont Amortization expense
below)
$1.5B – $1.6B
(includes step-up D&A)
DuPont Non-operating pension/OPEB
(included in Op. EBITDA)
$190MM – $200MM YoY
DuPont Amortization expense
(this is added back while calculating Adj. EPS)
~$320MM pre-tax
Taxed at ~21%
Net Interest Expense
(net of Interest Income, which is reported in
Sundry Income/Expense line)
$320MM – $350MM
Net Income attributable to non-controlling
Interests (reduced from net income)
~$40MM Share Count ~2,330MM
Division Outlook (2Q18 vs. 2Q171) Net Sales Op. EBITDA
(incl. Equity Earnings)
Agriculture
Up low-twenties percent
1H down low-single digits percent
Up high-thirties percent
1H down mid-single digits percent
Materials Science Up low- to mid-teens percent Up mid-teens percent
Electronics & Imaging Down low-single digits percent
Down mid-single digits percent
(Up mid-single digits percent)2
Nutrition & Biosciences Up mid-teens percent Up low-thirties percent
Transportation & Advanced Polymers Up about 10% Up high-thirties percent
Safety & Construction Up high-single digits percent Up mid-thirties percent
Net Sales: $23.3B - $24.0B up ~14% Op. EBITDA: $5.3B - $5.5B up ~23%
1. All 2Q17 numbers are on a pro forma basis
2. Excluding gain on sale of business in 2Q17
Refer to slide 15 in Appendix for additional commentary on segment outlook
YoY Synergy Savings Realized in 2Q18: $325MM – $350MM
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Appendix
15
2Q18 Segment Expectations
1. 2Q17 on a pro forma basis
Segments Key Sales and Operating EBITDA Outlook Drivers (2Q18 vs. 2Q171)
Safety & Construction
Sales to be up by the high-single digits percent on currency benefits and volume gains from building solutions, filtration and
Tyvek® enterprise. Operating EBITDA estimated to increase by the mid-thirties percent on lower pension/OPEB costs, sales
gains, cost synergies, and improved plant performance, partly offset by higher costs.
Transportation &
Advanced Polymers
Sales to rise by about 10 percent due to local price, currency benefits and volume gains, reflecting new product launches
and strong market demand. Operating EBITDA projected to increase by the high-thirties percent on gains from favorable
currency, cost synergies, lower pension/OPEB expense, higher local price and volume gains, partly offset by higher raw
materials costs.
Nutrition & Biosciences
Sales expected to be up mid-teens percent on benefits from portfolio-related actions (FMC acquisition), currency and local
price and volume gains. Operating EBITDA expected to be up in the low-thirty percent range on sales gains, cost synergies,
lower pension/OPEB costs, partially offset by higher costs due to growth investments.
Electronics & Imaging
Sales expected to be down low-single digits percent as volume growth and a benefit from currency will be more than offset
by a negative impact from portfolio-related actions and lower local price. Operating EBITDA expected to be down mid-single
digits percent as cost synergies, lower pension/OPEB costs and volume growth will be more than offset by the absence of a
prior year gain on the sale of a business ($48 million) and lower local price.
Refer in conjunction with slide 12.
©2018 DowDuPont. All rights reserved.
Agriculture
Second quarter sales expected to increase low-twenties percent driven by higher volumes from the delayed start to the
planting season in the Northern Hemisphere and higher local selling price partially offset by expected lower planted area in
the Northern Hemisphere. Second quarter Operating EBITDA expected to increase high-thirties percent driven by higher
volumes, cost synergies, higher local selling price, and lower pension/OPEB cost partially offset by higher soybean royalty
costs and higher commissions due to the timing of seed sales. First half sales expected to decline low-single digits and first
half Operating EBITDA to decline mid-single digits due to expected lower planted area in the Northern Hemisphere and
Brazil, weaker Brazil seed sales due to the shortened safrinha season, and higher soybean royalty costs partially offset by
higher local selling price, cost synergies, favorable currency and lower pension/OPEB costs.
Packaging & Specialty
Plastics
Sales growth supported by new capacity from the U.S. Gulf Coast and currency tailwinds. Operating EBITDA up modestly
as earnings contribution from new capacity, pricing gains, lower startup costs (~$20MM in 2Q18) and cost synergies are
partly offset by higher feedstock costs, increased turnaround activity ($130 to $150MM) and lack of a prior one time benefit
($23MM). 2Q18 equity earnings expected to improve (up ~$25MM), driven by a reduction in Sadara equity losses.
Industrial Intermediates
& Infrastructure
Sales and Operating EBITDA growth on volume from new Sadara capacity and pricing momentum supported by tight
supply-demand fundamentals and currency on top of ramping cost synergies. 2Q18 equity earnings expected to improve (up
~$110MM), driven by ramp up in Sadara volume and higher earnings from EQUATE.
Performance Materials
& Coatings
Sales up on pricing momentum and currency tailwinds with strong downstream market demand expected to continue.
Operating EBITDA growth driven by pricing gains and volume/mix, especially in upstream Silicone intermediates as well as
cost synergies. 2Q18 HSC equity earnings are expected to be ~$25MM.