Du Pont 2Q16 Earnings Call Notes

E.I. du Pont de Nemours & Co. (DD) Edward D. Breen on Q2 2016 Results

Sales grew 1% volumes grew 2%

” I am pleased about the improvement in our sales trend, given the challenging environment in which we are operating. Sales rose 1%, excluding currency and portfolio changes, with Agriculture and Nutrition & Health leading the improvement. Ag did better than expected in a very challenging market, and N&H grew despite the currency pressure. Volumes grew in half of our businesses and volumes grew in total by 2%.”

Scientists are using technologies like CRISPR to produce new products

“Another product of increased productivity and efficiency is freeing up capital to invest in R&D and growth. This is another priority for us. I’ll give you a few examples. To meet growers’ needs better, we are introducing higher-performing products like Zorvec fungicide and Leptra corn hybrids. We’re increasing capacity in faster-growing areas like Tyvek building wrap and medical packaging. Our scientists today are utilizing the newest technologies like CRISPR-Cas gene editing to develop targeted applications to deliver enhanced solutions and greater choice for our customers. In fact, we introduced over 600 new products in the first half of 2016.”

We think we’re still on track to complete the merger

“I think it came out that there might be some remedies. We always went into this saying we would be ready on remedies, if that were needed. So, we’re hoping that that helps out the timeline. So, having said that, I’m not naive. This is a huge merger. Although we are going to split into three, but it is a huge merger and I’m sure it’s going to get a thorough review. But looking at the timeline, I still think we’re on a timeline by the end of the calendar year to accomplish this.”

+1% feels good when you were running -2%

“I sure hate to brag about a sales number that’s around zero, but – and I’m not. We always want to strive to do better. But just to give a little backdrop, the reason it feels better is we were plus 1% organically. For the whole company, we were plus 2% on a volume basis. And the quarters before that, four or five quarters before that, organically, we were kind of running a negative 2%. So, we’ve seen a shift of about 3%, which is not insignificant. So, that’s really, I think, the key change there.”

Probably get a slight lift in electronics in the second half

“d electronics also is one where we’re seeing, on the consumer electronic side, probably I think as everyone else has been reporting for the last three to four months, softness on that end of the market. And we think that picks up slightly in the second half. Originally, we are planning a bigger lift, but we’ve kind of dialed that back a little, thinking we’ll just see a slight lift as we go into the holiday season.”

Nicholas C. Fanandakis – Chief Financial Officer & Executive Vice President

Operating earnings up 14% on 1% revenue growth

“Operating earnings of $1.24 per share increased 14% versus prior year and grew 18% year-over-year when adjusted for currency. Continued strong execution on cost savings across all businesses, lower product costs and volume growth drove improvement in the quarter.”

James C. Collins – Executive Vice President-Agriculture

Agriculture markets continue to face challenges

“Agriculture markets continue to face challenges. As farmers endure tough economic conditions, seed and crop protection suppliers have elevated inventories and credit remains tight.”

Not seeing any bad debt rates above normal

“Credit is one area that we constantly take a look at. We feel like we’re not seeing any kind of bad debt rates that are above anything that we would normally see. But we’re constantly watching it. What’s really happening is because of the lack of credit out there, growers are delaying a lot of their purchase decisions. And you sort of see that in our guidance for the second hal”