DuPont de Nemours, Inc. DD announced a strategic plan to separate into three distinct, publicly traded companies aimed at unlocking value for shareholders and enhancing operational focus. The proposed separations of the Electronics and Water businesses will be executed in a tax-free manner for DuPont shareholders, resulting in New DuPont, Electronics and Water as independent entities. Each company will benefit from increased agility and focus within their respective industries while maintaining strong balance sheets and attractive financial profiles.
New DuPont will remain a leading diversified industrial company and stand as a cornerstone of innovation, boasting a diverse portfolio anchored by iconic brands like Tyvek, Kevlar and Nomex. With a strategic focus on healthcare, advanced mobility solutions and a wide array of industrial applications, New DuPont is expected to have a strong presence across multiple sectors. It will comprise the current businesses within the Water & Protection segment, most businesses within Industrial Solutions and the retained businesses reported in Corporate. In 2023, these business segments collectively contributed $6.6 billion to net sales, with a robust operating EBITDA margin of 24%. New DuPont is expected to have a balanced financial policy similar to existing DuPont and continue to deliver strong margins and generate solid cash flows.
As a global frontrunner in electronic materials, Electronics will stand at the vanguard of technological advancement, offering cutting-edge solutions tailored for semiconductor chip manufacturing and high-performance electronics. It will consist of the existing Semiconductor Technologies and Interconnect Solutions lines and the electronics-related product lines from Industrial Solutions. With net sales reaching $4 billion in 2023 and a healthy operating EBITDA margin of 29%, Electronics is positioned as a catalyst for innovation and growth within the semiconductor industry. With the development of next-generation electronic materials and technologies, Electronics will be positioned well to address the burgeoning demand and execute organic and inorganic growth opportunities.
Water will emerge as a pivotal player in the vital realm of water filtration and purification, catering to the diverse needs of industrial, municipal, commercial and residential markets. With a steadfast focus on profitability and innovation, Water leverages its expertise to deliver advanced technologies that ensure access to clean and potable water. Generating $1.5 billion in net sales and boasting a commendable operating EBITDA margin of 24% in 2023, Water will prioritize profitable growth and strategic investments in advanced technologies and pursue potential inorganic growth opportunities.
DuPont de Nemours, Inc. Price and Consensus
DuPont de Nemours, Inc. price-consensus-chart | DuPont de Nemours, Inc. Quote
The separations are expected to be completed within 18-24 months, subject to customary conditions and regulatory approvals. These transactions will be tax-free for DD shareholders and will not require a shareholder vote. All three resulting companies are anticipated to have strong balance sheets and sufficient capitalization to pursue future growth opportunities. New DuPont is expected to maintain its investment-grade credit rating.
DuPont reaffirmed its 2024 financial outlook provided on May 1. It expects approximately $12.25 billion in net sales, around $2.975 billion in operating EBITDA and an adjusted EPS of approximately $3.60 per share, based on the mid-point of its guidance ranges.
DuPont’s shares have increased 18.5% in a year compared with a 2.6% rise of the industry.
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Zacks Rank & Key Picks
DuPont currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, sporting a Zacks Rank #1 (Strong Buy), ATI Inc. ATI and Ecolab Inc. ECL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CRS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 15.1%. The company’s shares have soared 136.8%% in the past year.
ATI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 8.34%. The company’s shares have surged 65.8% in the past year.
The Zacks Consensus Estimate for Ecolab’s current year earnings is pegged at $6.59 per share, indicating a year-over-year rise of 26.5%. The Zacks Consensus Estimate for ECL’s current-year earnings has been going up in the past 30 days. ECL beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 1.3%. The stock has rallied nearly 39.4% in the past year.
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