DowDuPont Announces Third Quarter 2017 Results

DowDuPont, a science company supplying first-class, innovative products, materials and services to the global market, today reported GAAP diluted earnings per share from continuing operations for the third quarter of 2017 at USD 0.32. Proforma adjusted earnings of USD 0.55 per share recorded a 10% increase compared to the same period of the prior year. DowDuPont reported GAAP diluted earnings of USD 0.32 per share. Proforma adjusted earnings of USD 0.55 per share recorded a 10% increase compared to the same period of the prior year. Proforma adjusted per-share earnings exclude certain significant items in the quarter. The total per-share charges for these amounted to USD 0.37, while DuPont intangible asset amortization came to USD 0.08 per share. GAAP net sales increased 23%. Proforma net sales rose 8% compared to the same period of the prior year to reach USD 18.3 billion, reflecting gains in Material Science segment lines Industrial Intermediates & Infrastructure (16%), Packaging & Specialty Products and Performance Materials & Coatings (8% each), as well as Specialty Products segment lines Transportation & Advanced Polymers (9%) and Safety & Construction (6%).

Sales reached double-digit figures in Europe, Middle East and Africa (EMEA) (16%) and Asia-Pacific (10%) regions.

Sales in North America recorded 4% growth, while sales in Latin America declined due to lower corn acreage projected in the Agriculture business and delayed start of summer season in Brazil. Proforma volume recorded 4% growth, reflecting consumer-driven demand seen in packaging, electronics, transportation, oil and gas, construction and building and consumer care end markets. Volume grew in virtually all operating segments, led by Electronics & Imaging (13%), as well as Packaging & Specialty Plastics and Safety & Construction (6% each). Asia-Pacific (10%) and EMEA (5%) led regional volume gains. Proforma local prices recorded 3% increase, led by Industrial Intermediates & Infrastructure (12%), Performance Materials & Coatings 6%, as well as Transportation & Advanced Polymers (3%). Proforma local prices rose in all regions except Latin America. Proforma operating EBITDA reached USD 3.2 billion, a 7% increase, driven by volume and price gains, higher equity earnings and lower pension/OPEB costs related to purchase accounting. These gains were more than offset by higher raw material costs, weak conditions in agricultural markets, startup costs related to new Gulf Coast assets in the U.S. due to hurricane impacts.

DowDuPont Chief Executive Officer Ed Breen stated, "We achieved growth in both revenue and earnings in the third quarter. These results represent a solid start for our newly formed company.

The increase in our operating earnings reflects broad-based demand growth in our key end markets; we delivered disciplined margin management that more than offset a series of challenges we faced, including hurricane impacts, rising raw material costs and delayed start of the summer season in Brazil agriculture," he continued: "Additionally, we achieved these results while advancing a number of value-creation initiatives, including completing the merger integration, completing our comprehensive portfolio review and establishing new synergy targets for each division. Going forward, we will focus on delivering against our USD 3 billion cost synergy commitment and advancing preparations to create three focused growth companies in Agriculture, Material Science and Specialty Products." DowDuPont Board Chairman Andrew Liveris stated, "Consumer-driven demand continues to be the engine of broad-based global economic activity that maintains its strength in most major economies, including Europe, China and the United States. Our overall demand outlook remains positive in the majority of our key end markets," he continued: "We continue to see challenges in the market: the most noteworthy challenge for us is in agriculture.

As a result, we continue to closely monitor conditions in Brazil due to the slow start to the season. However, we remain confident that our newly combined Agriculture business will have a solid year from all perspectives."

"Looking ahead, DowDuPont has all the levers it needs to deliver against our near-term priorities: growing earnings and cash flow; executing on our cost synergy actions and realizing savings; advancing stand-up activities for the planned growth companies; and generating shareholder value creation that is expected to result from this transformational transaction." • On September 12, DowDuPont announced that it would make certain targeted portfolio adjustments in Material Science and Specialty Products divisions to align with end markets and develop competitive advantages for the planned companies. • The company opened new ethylene and ELITE™ advanced polyethylene facilities, both located in Freeport, Texas. The Sadara partnership commenced full commercial operations at all 26 production facilities at its global complex. • DowDuPont continued to fulfill all conditional regulatory approvals required in connection with the company merger. On November 1, DuPont completed the acquisition of FMC's Health and Nutrition business with the divestment of cereal broadleaf herbicides and certain chewing insecticides product portfolios and portions of the crop protection R&D division and organization in favor of FMC.

On September 1, Dow completed the sale of its global PRIMACOR™ ethylene acrylic acid copolymers and ionomers business. Dow expects to complete the divestment of select portions of Dow AgroSciences' corn seed business in Brazil during the fourth quarter of 2017.

• The company continued to make progress in integrating the three divisions while also beginning work on preparations for the planned separation into three independent companies in Agriculture, Material Science and Specialty Products. • DowDuPont reiterated its USD 3 billion cost synergy commitment while updating expectations by business line: Agriculture – USD 1.0 billion; Material Science – USD 1.2 billion; Specialty Products – USD 0.8 billion. • The company launched its strategy to realize USD 1 billion in growth synergies. For example, the Agriculture business will implement its enhanced multi-brand, multi-channel approach designed to deliver greater value to customers through expanded options and integrated agricultural solutions. The Packaging & Specialty Plastics business initiated the process of integrating DuPont's resin and ethylene copolymer product portfolios to provide high-performance packaging solutions. The Electronics & Imaging business identified existing opportunities to strengthen deeper channel access with its customers and a broader material range (OLED films, laminates, semiconductor materials). • DowDuPont today announced actions being implemented to achieve USD 3 billion in cost savings. These actions are designed to integrate the organization following the company merger and establish strong foundations for the three planned companies. The bulk of this work will come from procurement synergies, global workforce reductions, building and facility consolidations and selected asset closures, among other activities. In connection with actions approved to date, DowDuPont reported that it would make pre-tax payments of USD 180 million in the third quarter. The company expects total pre-tax payments of approximately USD 2 billion, including the anticipated approximately USD 1 billion amount expected in the fourth quarter of 2017. The program is projected to reach 70% of the long-term projection by the end of a 12-month period and 100% within 24 months.