Kevlar, Tyvek parent DuPont's stock surges after big profit beat, raised outlook

By Tomi Kilgore

CEO Ed Breen says results confirm that electronics business is now past the bottom, and 'on road to recovery'

Shares of DuPont de Nemours Inc. jumped toward a two-year high Wednesday, after the specialty materials and electronics company reported first-quarter results that beat expectations and raised the full-year outlook, amid strength in the electronics and industrial business and cost discipline.

"Our results for the period exceeded our expectations, driven by better-than-expected volumes in all segments," said Chief Executive Ed Breen on the post-earnings call with analysts, according to an AlphaSense transcript. "Broadly, the first quarter confirmed that we are past the bottom in electronics and on the road to recovery."

Within electronics, Breen said the sales in the semiconductor technologies business grew 8% from the fourth quarter and 10% from the same period a year ago, due to "a pickup in the underlying chip demand and normalization of customer inventory levels."

DuPont makes dry film photoresists, laminates and metallization used in making chips and electronics parts.

The stock (DD) shot up 7.6% toward a nine-month high. It was also headed for the biggest one-day gain since it rallied 8.8% on Nov. 2, 2021.

The company, with brands including Kevlar, Tyvek, Styrofoam and Corian, said net income fell to $164 million, or 45 cents a share, from $257 million, or 56 cents a share, in the same period a year ago.

Excluding nonrecurring items, earnings per share of 79 cents beat the FactSet consensus of 65 cents. That was the 17th straight quarter EPS beat expectations, and the beat was by the biggest margin since the first quarter of 2022, according to FactSet data.

Sales slipped 2.9% to $2.93 billion but were above the FactSet consensus of $2.81 billion. The sales beat was by the biggest margin since the fourth quarter of 2021.

Electronics and industrial sales grew 5.3% to $1.37 billion, above the FactSet consensus of $1.31 billion.

Breen said electronic end markets have "positively inflected," and he expects a continued pickup in volume in both chips and integrated circuits for the rest of the year.

"We are pleased to participate in the [artificial-intelligence]-driven growth acceleration within electronics via our semi-related products geared towards advanced node chips for data centers and other key AI applications such as mobile products," Breen said.

Elsewhere, water and protection sales dropped 10.9% to $1.29 billion, as volume decreased 10%, but beat expectations of $1.24 billion.

"We believe demand for filtration products, which have been impacted by slower project work in the last year, and associated distributor destocking, has bottomed and will begin to recover later in the second quarter," Breen said.

For 2024, the company raised its guidance ranges for adjusted EPS to $3.45 to $3.75 from $3.25 to $3.65 and for sales to $12.1 billion to $12.4 billion from $11.9 billion to $12.3 billion.

The stock has gained 1.4% year to date, while the S&P 500 index has advanced 5.4%.

-Tomi Kilgore

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05-01-24 1153ET

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