DowDuPont Inc. DWDP recorded earnings (on a reported basis) from continuing operations of 76 cents per share for second-quarter 2018, compared with $1.07 per share it logged in the comparable quarter a year ago.
Barring one-time items, earnings came in at $1.37 per share for the quarter, which topped the Zacks Consensus Estimate of $1.33.
DowDuPont raked in net sales of $24,245 million for the reported quarter, up 17% from the year-ago adjusted sales. It also surpassed the Zacks Consensus Estimate of $23,671 million.
The company witnessed higher sales volumes and gains in local prices across all segments and geographic regions. It also gained from new product launches and strong demand across its targeted end-markets.
Volumes (as adjusted) rose 10% in the quarter with gains witnessed in all regions and segments. The company saw a 4% rise in adjusted local prices on gains across the board.
Segment Highlights
Materials Science: Revenues from the division went up 18% from the year-ago adjusted sales to $12.6 billion in the quarter on gains in all segments and regions.
Within Materials Science, net sales from the Performance Materials & Coatings unit were $2.6 billion, up 15%, 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 29% to $3.9 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 $6.1 billion. Sales were driven by higher volumes and pricing and favorable currency impact.
Specialty Products: Revenues from the division rose 10% to $5.9 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 favorable currency impact were more than offset by the unfavorable impact from portfolio.
Nutrition & Biosciences unit’s net sales rose 19% to $1.8 billion on favorable currency impact, benefits from portfolio changes and higher volumes and pricing.
Net sales from the Transportation & Advanced Polymers unit went up 14% to $1.5 billion, driven by higher volume, currency benefits and increased local price.
The Safety & Construction unit recorded net sales of $1.4 billion, up 6%, supported by higher volume and favorable currency impact.
Agriculture: Net sales from the division rose roughly 25% to $5.7 billion in the reported quarter on the back of sales recovery from weather-related delays to the Northern Hemisphere planting season, higher local prices and double-digit growth in insecticides. Volumes rose 20% while pricing improved 4%.
Financials
DowDuPont had cash and cash equivalents of roughly $9.2 billion at the end of the quarter. Long-term debt was roughly $26.9 billion.
Cash flow from operations for the reported quarter was $2.1 billion.
DowDuPont also returned nearly $2 billion to shareholders in the second quarter through dividends and share repurchases.
Outlook
Moving ahead, DowDuPont expects above-market growth through most of its business portfolio, driven by its growth investments, geographic reach, innovations and leading market positions.
The company realized cost synergy savings of more than $375 million in the second quarter. It now expects to achieve year-over-year savings of $1.4 billion this year, a more than 15% increase from its earlier target.
DowDuPont expects net sales in the third quarter to increase more than 10% and operating EBITDA to rise more than 12% on a year-over-year basis.
Price Performance
DowDuPont has outperformed the industry it belongs to over the past three months. The company’s shares have gained around 7.1% over this period, compared with roughly 6.4% growth recorded by the industry.
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Zacks Rank & Stocks to Consider
DowDuPont currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space include KMG Chemicals, Inc. KMG, Ingevity Corporation NGVT and Celanese Corporation CE each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have gained roughly 44% over a year.
Ingevity has an expected long-term earnings growth rate of 12%. The company’s shares have rallied around 67% in a year.
Celanese has an expected long-term earnings growth rate of 10%. Its shares have shot up roughly 21% over a year.
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