DuPont de Nemours, Inc. (DD) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary and Q&A session reveal strong financial metrics, optimistic guidance, and positive shareholder returns, including a $2 billion share repurchase plan. Despite some concerns about regional sales and margin details, the overall sentiment is positive with raised guidance and strategic initiatives like the reverse osmosis expansion in China. These factors suggest a likely positive stock price movement in the short term.
Key Financial Performance
Full Year Organic Sales Growth 2%, driven by operational discipline and productivity focus.
Operating EBITDA Growth 6%, attributed to operational discipline and productivity improvements.
Margin Expansion 100 basis points, due to operational discipline and productivity focus.
Adjusted EPS $1.68 per share, up 16% year-over-year, driven by earnings growth and margin improvement.
Free Cash Flow Generation Strong, no specific figure provided, attributed to operational and portfolio transformation.
Fourth Quarter Net Sales $1.7 billion, flat year-over-year, with a 1% organic sales decline offset by a 1% currency benefit.
Fourth Quarter Operating EBITDA $409 million, up 4% year-over-year, driven by favorable mix and cost productivity.
Fourth Quarter Operating EBITDA Margin 24.2%, increased 80 basis points year-over-year.
Fourth Quarter Adjusted EPS $0.46, up 18% year-over-year, driven by higher segment earnings, lower interest expense, and exchange gains.
Healthcare & Water Technologies Fourth Quarter Net Sales $821 million, up 4% year-over-year, with 3% organic growth and a 1% currency benefit.
Healthcare & Water Technologies Fourth Quarter Operating EBITDA $255 million, up 4% year-over-year, driven by organic growth and productivity gains.
Diversified Industrials Fourth Quarter Net Sales $872 million, down 3% year-over-year, with a 4% organic decline partially offset by a 1% currency benefit.
Diversified Industrials Fourth Quarter Operating EBITDA $197 million, up 2% year-over-year, driven by favorable mix and cost productivity.
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Operating Highlights
New Product Launches: Launched more than 125 new products in 2025, generating over $2 billion in sales. The vitality index remained strong at about 30%.
Market Positioning: Repositioned with a streamlined portfolio aligned to secular end markets, enabling strong organic growth. Organic sales grew 2% in 2025 and are expected to accelerate to 3% in 2026.
Healthcare & Water Technologies: Mid-single-digit growth expected in 2026, driven by demand in medical packaging, medical devices, and industrial/municipal water markets.
Diversified Industrials: Low single-digit growth expected in 2026, with stabilization in U.S. construction markets and strength in aerospace.
Operational Excellence: Introduced enhanced KPIs and expanded Kaizen events to improve productivity and processes. Updated KPIs focused on safety, quality, delivery, and cost. Investments in supply chain and quality functions to enhance customer experience.
Digital and AI Capabilities: Deployed digital tools and AI to improve reliability, maintenance, and customer experience. Investments in lab workflows to accelerate product development.
Portfolio Transformation: Completed separation of Qnity Electronics and divestiture of Aramids business. Built out executive leadership team and set strategic direction for New DuPont.
Capital Allocation: Executed $500 million share repurchase in Q4 2025 as part of a $2 billion authorization. Continued focus on balanced capital allocation, including dividends and M&A.
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Risk or Challenges
Market Conditions: Mixed macro environment with flat overall automotive demand in 2026, weakness in U.S. and Europe automotive markets, and stabilization in construction markets after years of decline.
Segment-Specific Challenges: Diversified Industrials segment experienced a 4% organic sales decline in Q4 2025, with continued weakness in construction markets and low single-digit declines in Industrial Technologies due to printing and packaging market weakness.
Order Timing Shifts: Order timing shifts into Q3 2025 caused a $30 million headwind in Q4 2025, impacting organic sales growth.
Currency Fluctuations: Currency changes had a mixed impact, with a 1% benefit in some segments but also potential risks to financial performance.
Operational Risks: Challenges in maintaining productivity and cost efficiency while investing in growth initiatives and digital capabilities.
Supply Chain and Quality Investments: Investments in supply chain and quality functions to enhance customer experience may face execution risks.
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Guidance & Outlook
2026 Organic Sales Growth: Expected to grow about 3% year-over-year.
Operating Margins: Expected to expand by 60 to 80 basis points in 2026.
Adjusted EPS: Projected to be $2.25 to $2.30 per share, representing a 10% to 12% year-over-year growth on a pro forma basis.
Free Cash Flow Generation: Expected conversion of greater than 90% in 2026.
Healthcare & Water Technologies Growth: Mid-single-digit growth expected, driven by increasing medical procedures and strong global water demand.
Automotive Demand: Overall demand expected to be flat in 2026, with EV builds significantly outpacing overall builds.
Construction Market: Market stabilization expected with flattish demand year-over-year after years of decline.
Industrial Technologies Business: Improving order trends indicate market stabilization and recovery.
Capital Allocation: Continued investments in high-return organic opportunities, M&A, and returning cash to shareholders through dividends and share repurchases.
First Quarter 2026 Guidance: Net sales of about $1.67 billion, operating EBITDA of about $395 million, and adjusted EPS of $0.48 per share.
Healthcare & Water Segment 2026 Growth: Mid-single-digit organic sales growth expected, driven by demand in medical packaging, medical devices, and industrial/municipal water markets.
Diversified Industrial Segment 2026 Growth: Low single-digit organic sales growth expected, with stabilization in U.S. construction markets and recovery in industrial-based product lines.
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Shareholder Return Plan
Quarterly Dividend: DuPont will continue to return cash to shareholders through a quarterly dividend, in line with their targeted payout ratio.
Share Repurchase Authorization: DuPont previously announced a $2 billion share repurchase authorization and executed a $500 million Accelerated Share Repurchase (ASR) in the fourth quarter of 2025.
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Key Q&A
Q:Can you provide more details on the Industrial side of the business, particularly regarding U.S. industrial production and industrial orders?
A:Lori Koch explained that the industrial side, excluding the Shelter business, is expected to see low single-digit growth for the year. Advanced mobility businesses, including automotive and aerospace, and consumer packaged goods are driving growth. Aerospace orders showed low double-digit improvement, contributing to the overall positive trend.
Q:What is the outlook for price cost and inflation in 2026?
A:Antonella Franzen stated that organic growth of 3% in 2026 is predominantly volume-driven. They do not expect significant headwinds from raw materials, logistics, or utilities, which are expected to remain flat. Productivity initiatives are expected to improve gross margins year-over-year.
Q:How is the Shelter business expected to perform in 2026?
A:Antonella Franzen mentioned that the Shelter business, which was down mid-single digits in 2025, is expected to start slightly down in 2026 but improve throughout the year to achieve flat performance overall.
Q:What is the significance of the Vitality Index, and how does it impact the business?
A:Lori Koch highlighted that the Vitality Index, which measures new product sales, was 30% in 2024 and is expected to remain the same in 2025. New products contribute to both top-line growth and margin improvement, with 125 new products launched last year. The margin profile of these products is higher than the overall company margin.
Q:Is there potential upside in productivity for 2026, and how is the company tracking against its margin expansion plan?
A:Antonella Franzen noted that the company is starting 2026 in a strong position, with at least 20 basis points of margin expansion expected from productivity. The teams are executing well, and the company is on track with its three-year plan.
Q:What are the plans for the $1.1 billion proceeds from the Aramids divestiture?
A:Lori Koch stated that $500 million has already been deployed for a share repurchase program. The remaining proceeds will be used for shareholder-friendly initiatives, including potential M&A opportunities, particularly in healthcare, while ensuring strong returns.
Q:What drove the diversified margin lift in Q4, and what is the outlook for 80-20 initiatives?
A:Antonella Franzen explained that the Q4 margin lift was driven by business mix and productivity improvements. The benefits of 80-20 initiatives are expected to materialize in the future as the program is still in its early stages.
Q:What are some of the exciting innovations in the pipeline?
A:Lori Koch mentioned the enhanced Tyvek garment with improved breathability and protection, and advancements in reverse osmosis technology for water treatment, with commercialization expected in 2027. These innovations are part of the 125 new products launched last year.
Q:Can you provide margin details for the four subsegments: Water, Health, Building, and Industrial?
A:Antonella Franzen stated that margin improvement is expected in both reportable segments, with additional expansion from lower corporate costs, contributing to 60-80 basis points of margin expansion in 2026.
Q:Why were Asia Pacific sales down 2% organically, and what is the outlook for the region?
A:Lori Koch attributed the decline to a supply chain change in the Shelter business, which is not permanent. The company expects to return to growth across all regions in 2026.
Q:What is the outlook for the Water business in China and its impact on the overall segment?
A:Lori Koch noted slower growth in China due to reduced industrial production, with low single-digit growth expected in the region. The overall Water business is forecasted to grow mid-single digits in 2026, with no material change in mix or margins.
Q:What are the current trends in the auto sector, and how is the company positioned?
A:Lori Koch stated that auto builds are expected to be flat in 2026, but the company anticipates slight outperformance due to growth in electric vehicles (EVs).
Q:Is there potential for structural pricing gains across the portfolio?
A:Lori Koch confirmed that structural pricing gains are possible, with some price increases expected in 2026 despite unwinding price raises in the Shelter business.
Q:What is the margin uplift from new products in the Vitality Index?
A:Lori Koch mentioned that products introduced in the past five years have a margin uplift of about 145 basis points compared to the overall company margin.
Q:What is the outlook for the Healthcare portfolio, and which areas are driving growth?
A:Lori Koch highlighted strong growth across med packaging, med devices, and biopharma, particularly in cardiovascular applications. The portfolio is expected to grow mid- to high-single digits in 2026.
Q:What is the company's position in the Water business, and are there plans for expansion?
A:Lori Koch stated that the company has leading technology in water filtration and is exploring opportunities to expand beyond filtration. A recent acquisition in China has strengthened the company's local supply chain.
Q:What is the outlook for U.S. construction in 2026?
A:Antonella Franzen stated that nonresidential and repair/remodel construction are expected to grow low single digits, while residential construction is expected to decline low to mid-single digits.
Q:Is the company considering a change in its industry designation?
A:Antonella Franzen confirmed that the company is working to change its GICS classification to better reflect its portfolio, which is not typical of a chemical company.
Q:Was there any destocking in Healthcare and Water, and what is the outlook?
A:Lori Koch confirmed that destocking in these segments occurred in early 2025 and inventory levels are now normalized. Both segments have robust outlooks for 2026.
Q:Review of Unclear Management Responses
A:Management avoided providing specific margin details for the four subsegments (Water, Health, Building, and Industrial), citing a preference to give color on revenue instead. Additionally, they did not provide detailed margin uplift figures for specific product lines, such as the enhanced Tyvek garment, opting instead to discuss overall margin improvements from new products.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI progress
ASR priority
Conference
Corporate FPA
Day priority
DuPont Full
DuPont core
EV build
Electronics play
Europe EV
Investor Day
addition
allocation model
capability
capital allocation
culture
customer experience
development
discipline
excellence framework
flow generation
function
improvement
product
productivity
result sale
return
separation Qnity
set KPIs
share repurchase
system progress
term target
transformation
workflow
DD Transcript
DuPont de Nemours, Inc. (DD) Q4 2025 Earnings Call Transcript
Positive2-10
The earnings call summary and Q&A session reveal strong financial metrics, optimistic guidance, and positive shareholder returns, including a $2 billion share repurchase plan. Despite some concerns about regional sales and margin details, the overall sentiment is positive with raised guidance and strategic initiatives like the reverse osmosis expansion in China. These factors suggest a likely positive stock price movement in the short term.
DuPont de Nemours, Inc. (DD) Q3 2025 Earnings Call Transcript
Positive11-6
The company raised its earnings guidance, announced a significant share repurchase plan, and demonstrated strong performance in key sectors like healthcare and water. The Q&A revealed operational excellence initiatives and a robust M&A pipeline, further supporting growth. Although there are some uncertainties, such as the timing benefit and construction market outlook, the overall sentiment is positive, with strong management confidence in achieving growth targets.
DuPont de Nemours, Inc. (DD) Q2 2025 Earnings Call Transcript
Positive8-5
DuPont's earnings call indicates a positive sentiment with strong growth expectations in healthcare and water, a well-positioned electronics segment, and a strategic focus on M&A in fragmented markets. The Qnity spin-off and effective tariff mitigation further boost confidence. Despite some uncertainties, such as the Aramids divestment, the overall outlook is optimistic, suggesting a positive stock price movement.
DuPont de Nemours, Inc. (NYSE:DD) Q1 2025 Earnings Call Transcript
Positive5-3
The earnings report shows strong financial performance with a significant EPS increase, robust EBITDA growth, and healthy margins. The guidance for 2025 indicates optimistic growth in key segments, despite some tariff challenges. The Q&A reveals strong demand in water markets and AI exposure, with management effectively mitigating tariff impacts. Overall, the company's strategic initiatives and financial health suggest a positive outlook, likely leading to a stock price increase.
DD Slides
DD Report
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