DowDuPont (DWDP) Tops Earnings, Revenue Estimates In Q1

DowDuPont Inc. (NYSE:DWDP) recorded a profit (on a reported basis) of $1.1 billion or 47 cents per share for first-quarter 2018, compared with $888 million or 72 cents per share logged in the comparable quarter a year ago.

Barring one-time items, earnings came in at $1.12 per share for the quarter, which topped the Zacks Consensus Estimate of $1.08.

DowDuPont raked in net sales of $21,510 million for the reported quarter, up 5% from the comparable quarter a year ago. It also surpassed the Zacks Consensus Estimate of $21,320 million. The company witnessed higher sales across most operating segments and geographic regions.

Volumes (as adjusted) fell 2% in the quarter as a result of a weather-related shift in the agriculture business. The company saw a 3% rise in adjusted local prices on gains in all regions.

Segment Highlights

Materials Science: Revenues from the division went up 17% from the year-ago adjusted sales to $12 billion in the quarter on gains in all segments and regions.

Within Materials Science, net sales from the Performance Materials & Coatings unit were $2.3 billion, up 12%, supported by gains across all geographic regions. The unit also saw increases in local prices in the quarter.

Net sales from the Industrial Intermediates & Infrastructure unit jumped 30% to $3.7 billion in the quarter driven by gains in all geographies, volume gains and higher pricing.

The Packaging & Specialty Plastics unit saw net sales rising 12% to $6 billion. Sales were driven by higher volumes and favorable currency impact.

Specialty Products: Revenues from the division rose 11% to $5.6 billion with gains witnessed in all regions and most segments.

Within Specialty Products, net sales from the Electronics & Imaging unit edged down 1% to $1.2 billion as higher volume and pricing were more than offset by the unfavorable impact from portfolio.

Nutrition & Biosciences unit’s net sales rose 21% to $1.7 billion on favorable currency impact, benefits from portfolio changes and higher volumes.

Net sales from the Transportation & Advanced Polymers unit went up 14% to $1.4 billion, driven by higher volume, currency benefits and increased local price.

The Safety & Construction unit recorded net sales of $1.3 billion, up 7%, supported by higher volume and favorable currency impact.

Agriculture: Net sales from the division declined roughly 25% to $3.8 billion in the reported quarter, hurt by weather-related delays in the Northern Hemisphere and Brazil seasons. Volumes fell 28% while pricing improved 1%.

Financials

DowDuPont had cash and cash equivalents of roughly $10.3 billion at the end of the quarter. Long-term debt was roughly $29.3 billion.

DowDuPont returned around $2 billion to shareholders in the reported quarter in the form of dividends and share repurchases.

Outlook

The company noted that it has realized cost synergy savings of more than $300 million in the first quarter and is on track to deliver a 75% run-rate against its $3.3 billion cost synergy target by the end of the third-quarter 2018. It also returned around $2 billion to shareholders in the first quarter through dividends and share repurchases.

DowDuPont expects net sales in the second quarter to increase more than 10% and operating EBITDA to rise more than 20% on a year-over-year basis.

DowDuPont will remain committed to achieve the cost synergy target, execute its growth projects and deliver new products from its innovation pipeline. The company also expects the spin-off of its Materials Science business to complete by the end of first-quarter 2019 followed by the separation of Agriculture and Specialty Products businesses by Jun 1, 2019.

Price Performance

DowDuPont has underperformed the industry it belongs to over the past six months. The company’s shares have lost around 10.8% over this period, compared with roughly 6.7% decline recorded by the industry.

Zacks Rank & Other Stocks to Consider

DowDuPont is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the basic materials space are Kronos Worldwide Inc. (NYSE:KRO) , Celanese Corporation (NYSE:CE) and Methanex Corporation (NASDAQ:MEOH) .

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1. The company’s shares have moved up around 38% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1. Its shares have gained roughly 26% over a year.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2 (Buy). Its shares have roughly 43% over a year.

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