DowDuPont Provides Update to First Quarter 2019 Modeling Guidance
MIDLAND, Mich. & WILMINGTON, Del. - March 28, 2019 - DowDuPont™ (NYSE:DWDP) today provided an update to its previously stated modeling guidance for the first quarter of 2019, as a result of near-term trends and discrete headwinds in some of its key value chains in the Agriculture and Materials Science divisions.
DowDuPont now expects first quarter 2019 net sales to be down high-single digits percent (versus previous guidance of down mid-single digits percent) and expects operating EBITDA to be down high-teens percent (versus previous guidance of down low-teens percent), both versus the same quarter last year. Key drivers of the Company’s updated modeling guidance for the first quarter include:
- Agriculture: Flooding during the month of March in the Midwestern region of the U.S. has culminated in a federal disaster declaration for the region. Transportation disruptions throughout the region and significant road closures have halted farming operations, limited the ability to deliver products to customers, and delayed pre-season applications. As a result, Division net sales for the first quarter of 2019 are expected to be down 4 - 6 percent and operating EBITDA is expected to be down $125 - $150 million, as compared to the same quarter last year. An assessment of the full year impacts, accounting for delays in first quarter customer deliveries along with expected recoveries, will be provided with the upcoming first quarter earnings release.
- Materials Science: Net sales are expected to be down low-teens percent (versus previous guidance of down high-single digits percent) and operating EBITDA is expected to be down mid-20s percent (versus previous guidance of down low-20s percent). The midpoint of the Division’s updated guidance results in approximately $100 million lower operating EBITDA versus previous guidance, driven primarily by greater-than-expected margin compression globally in Packaging & Specialty Plastics.
- Specialty Products: Net sales and operating EBITDA are expected to be in line with previous guidance.
DowDuPont will release its financial results for the first quarter of 2019 on May 2. Analysts are encouraged to join the Company’s earnings conference call at 8 a.m. ET. DowDuPont will release its first quarter earnings results via press release prior to the call. Dow will also hold a conference call for the first quarter of 2019, at 9 a.m. ET, to discuss the Materials Science Division’s financial results within DowDuPont.
DowDuPont (NYSE: DWDP) is a holding company comprised of The Dow Chemical Company and DuPont with the intent to form strong, independent, publicly traded companies in agriculture, materials science and specialty products sectors that will lead their respective industries through productive, science-based innovation to meet the needs of customers and help solve global challenges. For more information, please visit us at www.dow-dupont.com.
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DowDuPont plans to separate into three, independent, publicly traded companies—one for each of its agriculture, materials science and specialty products businesses (the “Intended Business Separations” and the transactions to accomplish the Intended Business Separations, the “separations”).
In furtherance of the Intended Business Separations, DowDuPont is engaged in a series of reorganization and realignment steps to realign its businesses so that the assets and liabilities aligned with the materials science business will be held by legal entities that will ultimately be subsidiaries of Dow Inc. (“Dow”) and the assets and liabilities aligned with the agriculture business will be held by legal entities that will ultimately be subsidiaries of Corteva Inc. (“Corteva”). Following this realignment, DowDuPont expects to distribute its materials science and agriculture businesses through two separate U.S. federal tax-free spin-offs in which DowDuPont stockholders, at the time of such spin-offs, will receive pro rata dividends of the shares of the capital stock of Dow and of Corteva, as applicable (the “distributions”). Forward-looking statements by their nature address matters that are, to varying degrees, uncertain, including statements about the Intended Business Separations, the separations and distributions. Forward-looking statements, including those related to the DowDuPont’s ability to complete, or to make any filing or take any other action required to be taken to complete, the separations and distributions, are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements also involve risks and uncertainties, many of which are beyond the DowDuPont’s control. Some of the important factors that could cause DowDuPont’s actual results (including DowDuPont’s agriculture business, materials science business or specialty products business) to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) ability and costs to achieve all the expected benefits, including anticipated cost and growth synergies, from the integration of The Dow Chemical Company and E. I. du Pont de Nemours and Company and the Intended Business Separations; (ii) the incurrence of significant costs in connection with the integration of The Dow Chemical Company and E. I. du Pont de Nemours and Company and the Intended Business Separations; (iii) risks outside the control of DowDuPont, which could impact the decision of the DowDuPont Board of Directors to proceed with the Intended Business Separations, including, among others, global economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile foreign currency exchange rates, tax considerations, and other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment and the requirement to redeem $12.7 billion of DowDuPont notes if the Intended Business Separations are abandoned or delayed beyond May 1, 2020; (iv) potential liability arising from fraudulent conveyance and similar laws in connection with the separations and distributions; (v) disruptions or business uncertainty, including from the Intended Business Separations, could adversely impact DowDuPont’s business, or financial performance and its ability to retain and hire key personnel; (vi) uncertainty as to the long-term value of DowDuPont common stock; (vii) potential inability to access the capital markets; and (viii) risks to DowDuPont’s business, operations and results of operations from: the availability of and fluctuations in the cost of feedstocks and energy; balance of supply and demand and the impact of balance on prices; failure to develop and market new products and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and currency exchange rates; changes in political conditions, including trade disputes and retaliatory actions; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could result in a significant operational event for the DowDuPont, adversely impact demand or production; ability to discover, develop and protect new technologies and to protect and enforce the DowDuPont’s intellectual property rights; failure to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio changes; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. These risks are and will be more fully discussed in DowDuPont’s current, quarterly and annual reports and other filings made with the U. S. Securities and Exchange Commission (the “Commission”) as well as the registration statement on Form 10 of Dow and the preliminary registration statement on Form 10 of Corteva, in each case as may be amended from time to time in future filings with the Commission. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DowDuPont’s, Dow’s or Corteva’ s consolidated financial condition, results of operations, credit rating or liquidity. None of DowDuPont, Dow or Corteva assumes any obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part I, Item 1A) of the 2018 annual reports on Form 10-K of DowDuPont and as set forth in the preliminary registration statements on Form 10 of each of Dow and Corteva, in each case as may be amended from time to time in future filings with the Commission.
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