DuPont de Nemours 10-Q 2022-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38196

DUPONT DE NEMOURS, INC.

(Exact name of registrant as specified in its charter)

(302) 774-3034

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☑ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☑ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No

The registrant had 508,526,549 shares of common stock, $0.01 par value, outstanding at May 4, 2022.

DuPont de Nemours, Inc.

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended March 31, 2022

TABLE OF CONTENTS

DuPontTM and all products, unless otherwise noted, denoted with TM, SM or ® are trademarks, service marks or registered trademarks of affiliates of DuPont de Nemours, Inc.

FORWARD-LOOKING STATEMENTS

This communication contains "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "see," "will," "would," "target," and similar expressions and variations or negatives of these words. Capitalized terms used in this section but not defined below have the meanings assigned in the Notes to the Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

Forward-looking statements address matters that are, to varying degrees, uncertain and subject to risks, uncertainties, and assumptions, many of which that are beyond DuPont's control, that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statements are not guarantees of future results. Some of the important factors that could cause DuPont's actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) the parties’ ability to meet expectations regarding the timing, completion and accounting and tax treatments of the M&M Divestiture to Celanese, including (x) any failure to obtain necessary regulatory approvals, anticipated tax treatment or to satisfy any of the other conditions to the proposed transaction, (y) the possibility that unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies could impact the value, timing or pursuit of the proposed transaction, and (z) risks and costs and pursuit and/or implementation, timing and impacts to business operations of the separation of business lines in scope for the M&M Divestiture to Celanese, (ii) the timing and outcome of the Delrin® Business Divestiture, including entry into definitive agreements, and the risks, costs and ability to realize benefits from the pursuit of the Delrin® Business Divestiture; (iii) ability to achieve anticipated tax treatments in connection with mergers, acquisitions, divestitures and other portfolio changes actions and impact of changes in relevant tax and other laws; (iv) indemnification of certain legacy liabilities; (v) risks and costs related to each of the parties respective performance under and the impact of the arrangement to share future eligible PFAS costs by and between DuPont, Corteva and Chemours; (vi) failure to timely close on anticipated terms (or at all), realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with mergers, acquisitions, divestitures and other portfolio changes including the Intended Rogers Acquisition and the M&M Divestitures; (vii) risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs, related to operational and supply chain impacts or disruptions, which may result from, among other events, the COVID-19 pandemic and actions in response to it, and geo-political and weather related events; (viii) ability to offset increases in cost of inputs, including raw materials, energy and logistics; (ix) risks, including ability to achieve, and costs associated with DuPont’s sustainability strategy including the actual conduct of the company’s activities and results thereof, and the development, implementation, achievement or continuation of any goal, program, policy or initiative discussed or expected; and (x) other risks to DuPont's business, operations; each as further discussed in DuPont’s most recent annual report and subsequent current and periodic reports filed with the U.S. Securities and Exchange Commission. 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 or supply chain disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. DuPont assumes no 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.

DuPont de Nemours, Inc.

Consolidated Statements of Operations

See Notes to the Consolidated Financial Statements.

DuPont de Nemours, Inc.

Consolidated Statements of Comprehensive Income

See Notes to the Consolidated Financial Statements.

DuPont de Nemours, Inc.

Condensed Consolidated Balance Sheets

See Notes to the Consolidated Financial Statements.

DuPont de Nemours, Inc.

Consolidated Statements of Cash Flows

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Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the interim Consolidated Financial Statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:

• Overview

• Result of Operations

• Segment Results

• Changes in Financial Condition

OVERVIEW

DuPont is a global innovation leader with technology-based materials and solutions that help transform industries and everyday life by applying diverse science and expertise to help customers advance their best ideas and deliver essential innovations in key markets including electronics, transportation, building and construction, healthcare and worker safety.

As of March 31, 2022, the Company has $2.9 billion of working capital and approximately $1.7 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continuing operations.

Outlined below are recent developments and material historical transactions impacting this Quarterly Report on Form 10-Q.

Mobility & Materials Intended Divestitures

On February 17, 2022, DuPont entered into a Transaction Agreement (the "Transaction Agreement") with Celanese Corporation ("Celanese") to divest a majority of the historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Divestiture”) for $11 billion in cash, subject to customary transaction adjustments in accordance with the Transaction Agreement. Closing is expected around the end of 2022, subject to customary closing conditions and regulatory approvals. The Company also announced on February 18, 2022 that its Board of Directors approved of the divestiture of the Delrin® acetal homopolymer (H-POM) business (the "Delrin® Divestiture"), subject to entry into a definitive agreement and satisfaction of closing conditions. The Delrin® Divestiture together with the M&M Divestiture discussed above (the "M&M Divestitures") represents a strategic shift that will have a major impact on DuPont's operations and results.

The financial position of DuPont as of March 31, 2022 and December 31, 2021 present the businesses to be divested as part of the M&M Divestiture and the Delrin® Divestiture (the "M&M Businesses") as held for sale presented as discontinued operations. The results of operations for the three months ended March 31, 2022 and 2021 present the financial results of the M&M Businesses as discontinued operations. The cash flows and comprehensive income related to the M&M Businesses have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of the M&M Businesses. See Note 4 to the interim Consolidated Financial Statements for additional information.

The Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines (the "Retained Businesses") are not included within the M&M Divestitures. Effective with the signing of the transaction agreement, the Retained Businesses were realigned to Corporate & Other. The reporting changes have been retrospectively applied for all periods presented.

COVID-19 Pandemic

As described in the Analysis of Operations section within the Company's Annual Report on Form 10-K, the novel coronavirus (“COVID-19”) and its variants continue to adversely impact the global economy, including certain suppliers of the Company’s key raw materials. Within the first quarter of 2022, while end-market demand remained strong, the Company experienced supply chain challenges driven by COVID-19, including the related mandatory site shutdowns in China. At this time, the Company is not able to predict the extent to which the COVID-19 pandemic may continue to impact its consolidated results of operations or financial condition.

Russia, Belarus, Ukraine

With respect to the war in the Ukraine, the Company’s business and operational environment is impacted by, among other things, responsive governmental actions including sanctions imposed by the U.S. and other governments. In light of the conflict during the first quarter, the Company suspended its business operations in Russia and Belarus, the net sales from which are less than one percent of DuPont’s consolidated net sales in 2021. The Company does not have operations in the Ukraine. DuPont has experienced supply chain challenges and increased logistics and raw materials costs due in part to the negative impact on the global economy from the ongoing war in Ukraine. The extent to which the conflict may continue to impact DuPont in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, and the extent of supply chain disruptions. DuPont will continue to monitor the conflict and assess the related sanctions and other effects and may take further actions if necessary.

Dividends

On February 7, 2022, the Board of Directors declared a first quarter 2022 dividend of $0.33 per share, which was paid on March 15, 2022, to shareholders of record on February 28, 2022.

On April 21, 2022, the Company announced that its Board declared a second quarter dividend of $0.33 per share payable on June 15, 2022, to shareholders of record on May 31, 2022.

Laird Acquisition

On July 1, 2021, the Company completed the acquisition of Laird Performance Materials ("Laird PM") from Advent International. The Company paid for the acquisition from existing cash balances. See Note 3 to the interim Consolidated Financial Statements and within “Liquidity and Capital Resources” for more information.

N&B Transaction

On February 1, 2021, the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”). The distribution was effected through an exchange offer (the “Exchange Offer”) and the consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and, together with the Exchange Offer, the “N&B Transaction”).

The results of operations of DuPont for the three months ended March 31, 2021 present the historical financial results of N&B as discontinued operations. The cash flows and comprehensive income related to N&B have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for the three months ended March 31, 2021. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of N&B. See Note 4 to the interim Consolidated Financial Statements for additional information on the N&B Transaction.

RESULTS OF OPERATIONS

The following table summarizes sales variances by segment and geographic region from the prior year:

1.Corporate & Other includes activities of the Retained Businesses, Biomaterials and previously divested businesses.

2.Europe, Middle East and Africa.

The Company reported net sales for the three months ended March 31, 2022 of $3.3 billion, up 9 percent from $3.0 billion for the three months ended March 31, 2021, due to a 6 percent increase in local price and product mix, a 3 percent increase in volume, and a 2 percent increase in portfolio actions, partially offset by a 2 percent unfavorable currency impact. Local price and product mix increase driven by Water & Protection (up 10 percent) and Corporate & Other (up 10 percent). Local price and product mix increased across all regions. Volume increase was driven by Electronics & Industrial (up 8 percent), partially offset by Corporate & Other (down 6 percent). Portfolio and other changes contributed 2 percent growth as the addition of Laird PM in Electronics & Industrial (up 11 percent) was partially offset by declines within Corporate & Other (down 23 percent) due to the sale of businesses. Currency was down 2 percent compared with the same period last year, driven by EMEA (down 6 percent).

Cost of Sales

Cost of sales was $2.1 billion for the three months ended March 31, 2022, up from $1.9 billion for the three months ended March 31, 2021. Cost of sales increased for the three months ended March 31, 2022 primarily due to increased sales volume, higher raw materials costs and higher logistics costs, primarily related to freight.

Cost of sales as a percentage of net sales for the three months ended March 31, 2022 was 64 percent compared with 62 percent for the three months ended March 31, 2021.

Research and Development Expenses ("R&D")

R&D expenses totaled $143 million in the first quarter of 2022, up from $139 million in the first quarter of 2021. R&D as a percentage of net sales was consistent period over period at 4 percent and 5 percent for the three months ended March 31, 2022 and 2021, respectively.

Selling, General and Administrative Expenses ("SG&A")

SG&A expenses were $389 million in the first quarter of 2022, down from $395 million in the first quarter of 2021. SG&A as a percentage of net sales was consistent period over period at 12 percent and 13 percent for the three months ended March 31, 2022 and 2021, respectively.

Amortization of Intangibles

Amortization of intangibles was $153 million in the first quarter of 2022, up from $125 million in the first quarter of 2021. The increase for the three months ended March 31, 2022 as compared with the same period of the prior year was primarily due to the amortization of the intangible assets acquired in the Laird PM acquisition.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $101 million in the first quarter of 2022, up from $2 million in the first quarter of 2021. The charges in the first quarter of 2022 include a $94 million impairment charge of an equity method investment and a $7 million charge related to the 2021 Restructuring Actions. The activity in the first quarter of 2021 is due to a $2 million charge related to the 2020 Restructuring Program.

See Note 6 to the interim Consolidated Financial Statements for additional information.

Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs, primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. The Company recorded costs of $8 million and $6 million for the three months ended March 31, 2022 and 2021, respectively. For the three months ended March 31, 2022, these costs were primarily associated with the execution of activities related to strategic initiatives including the acquisition of Laird PM and the Intended Rogers Acquisition. For the three months ended March 31, 2021, these costs were primarily associated with the execution of activities related to strategic initiatives, which primarily includes the sale of the Solamet® business unit and the planned divestiture of the Biomaterials business unit.

See Note 4 to the interim Consolidated Financial Statements for additional information.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $26 million in the first quarter of 2022, up from $23 million in the first quarter of 2021. The increase for the three months ended March 31, 2022 compared to 2021 is primarily due to higher equity earnings across the portfolio.

Sundry Income (Expense) - Net

Sundry income (expense) - net includes a variety of income and expense items such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on sales of investments and assets, non-operating pension and other post-employment benefit plan credits or costs, and certain litigation matters. Sundry income (expense) - net in the first quarter of 2022 was income of $3 million compared with income of $19 million in the first quarter of 2021. The first quarter of 2022 included income related to non-operating pension and other post-employment benefit credits of $7 million, partially offset by foreign currency exchange losses of $5 million. The first quarter of 2021 included benefits related to the sale of assets within the Electronics & Industrial segment of $24 million and income related to non-operating pension and other post-employment benefit credits of $6 million, partially offset by a $15 million impairment charge related to an asset sale and foreign currency exchange losses of $6 million.

Interest Expense

Interest expense was $120 million and $146 million for the three months ended March 31, 2022 and 2021, respectively. The decrease in interest expense primarily relates to the reduction in long-term debt following the N&B Transaction, specifically the early repayment of the $3.0 billion Term Loan Facilities in February 2021 and the redemption of the May 2020 notes completed in May 2021. Refer to Note 15 to the interim Consolidated Financial Statements for additional information.

Provision for Income Taxes on Continuing Operations

The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to tax attribute. The effective tax rate on continuing operations for the first quarter of 2022 was 16.8 percent, compared with an effective tax rate of (0.3) percent for the first quarter of 2021. The effective tax rate differential for the first quarter of 2022 was principally the result of a $94 million impairment charge on an equity method investment which resulted in a tax benefit of $29 million. The effective tax rate for the first quarter of 2021 was principally the result of a $59 million tax benefit related to the step-up in tax basis in the goodwill of the Company's European regional headquarters legal entity.

SEGMENT RESULTS

Effective February 2022, the revenues and certain expenses of the M&M Businesses are classified as discontinued operations in the current and historical periods. In addition, the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines within the historic Mobility & Materials segment (the "Retained Businesses") are not included in the scope of the M&M Divestitures. The Retained Businesses are reported in Corporate & Other. The reporting changes have been retrospectively reflected for all periods presented.

Mobility & Material businesses costs classified as discontinued operations include only direct operating expenses incurred by the M&M Businesses which the Company will cease to incur upon the close of the M&M Divestitures. Indirect costs, such as those related to corporate and shared service functions previously allocated to the M&M Businesses, do not meet the criteria for discontinued operations and remain reported within continuing operations. A portion of these indirect costs include costs related to activities the Company will continue to undertake post-closing of the M&M Divestiture, and for which it will be reimbursed (“Future Reimbursable Indirect Costs”). Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs are not subject to future reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.

The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items. Reconciliations of these measures can be found in Note 23 to the interim Consolidated Financial Statements.

ELECTRONICS & INDUSTRIAL

The Electronics & Industrial segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics including mobile devices, television monitors, personal computers and electronics used in a variety of industries. The segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. Electronics & Industrial is a leading provider of platemaking systems and photopolymer plates for the packaging graphics industry, digital printing inks and cutting-edge materials for the manufacturing of displays for organic light emitting diode ("OLED"). In addition, the segment produces innovative engineering polymer solutions, high performance parts, medical silicones and specialty lubricants.

Electronics & Industrial net sales were $1,536 million for the three months ended March 31, 2022, up 18 percent from $1,300 million for the three months ended March 31, 2021. Net sales increased due to an 11 percent portfolio increase, an 8 percent increase in volume and a 1 percent increase in local price, partially offset by 2 percent unfavorable currency impact. The portfolio impact reflects the July 1, 2021 acquisition of Laird PM. Volume growth was led by Semiconductor Technologies which was driven by transition to more advanced node technologies, growth in high performance computing and 5G communications. Within Industrial Solutions, volume gains were driven by growth in display materials, healthcare and industrial markets. Within Interconnect Solutions, volume gains in industrial markets were more than offset by weakness in consumer electronics.

Operating EBITDA was $476 million for the three months ended March 31, 2022, up 9 percent compared with $436 million for the three months ended March 31, 2021 primarily driven by the acquisition of Laird PM and strong volume growth, partially offset by higher raw materials and logistics costs and the absence of a gain on an asset sale.

WATER & PROTECTION

The Water & Protection segment is a leading provider of engineered products and integrated systems for a number of industries including worker safety, water purification and separation, aerospace, energy, medical packaging and building materials. The segment satisfies the growing global needs of businesses, governments, and consumers for solutions that make life safer, healthier, and better. By uniting market-driven science with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.

Water & Protection net sales were $1,429 million for the three months ended March 31, 2022, up 8 percent from $1,328 million for the three months ended March 31, 2021. Net sales increased due to a 10 percent increase in local price, partially offset by a 2 percent unfavorable currency impact. Volume and portfolio remained flat. Strong demand for water technologies within Water Solutions, increased demand in Shelter Solutions residential construction and improvement in commercial construction were offset by volume declines in Safety Solutions. Within Water & Protection pricing actions throughout the segment were led by Shelter Solutions and Safety Solutions.

Operating EBITDA was $341 million for the three months ended March 31, 2022, down 4 percent compared with $355 million for the three months ended March 31, 2021 as pricing actions were more than offset by changes in product mix and higher raw material, logistics and energy costs.

Corporate & Other

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines, previously reported in the historic Mobility & Materials segment. Related to the M&M Divestitures, Corporate & Other includes Future Reimbursable Indirect Costs. The results of Corporate & Other include the sales and activity of to be divested and previously divested businesses including the operations of Biomaterials, Clean Technologies, and Solamet® business units. Corporate & Other also includes certain enterprise and governance activities including non-allocated corporate overhead costs and support functions, leveraged services, non-business aligned litigation expenses and other costs not absorbed by reportable segments.

Corporate & Other net sales were $309 million for the three months ended March 31, 2022, down from $389 million for the three months ended March 31, 2021. Net sales primarily decreased due to the divestitures of the Clean Technologies and Solamet® businesses in the second half of 2021.

CHANGES IN FINANCIAL CONDITION

Liquidity & Capital Resources

Information related to the Company's liquidity and capital resources can be found in the Company's 2021 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources. Discussion below provides the updates to this information for the three months ended March 31, 2022.

The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries' obligations as they come due.

The Company's cash and cash equivalents at March 31, 2022 and December 31, 2021 were $1.7 billion and $2.0 billion, respectively, of which $1.5 billion at March 31, 2022 and $1.4 billion at December 31, 2021 were held by subsidiaries in foreign countries, including United States territories. The increase in cash and cash equivalents held by subsidiaries in foreign countries is due to operating cashflows during the period, partly offset by repatriation. For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

Total debt at March 31, 2022 and December 31, 2021 was $11.0 billion and $10.8 billion, respectively. The increase was primarily due to the increase in commercial paper issuances.

As of March 31, 2022, the Company is contractually obligated to make future cash payments of $10.7 billion and $5.9 billion associated with principal and interest, respectively, on debt obligations assuming held to maturity. Related to the principal balance, all payments will be due subsequent to December 31, 2022. Related to interest, $504 million will be due in the next twelve months and the remainder will be due subsequent to March 31, 2023.

Special Cash Payment

In connection with and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger, DuPont received a one-time cash payment of approximately $7.3 billion, (the "Special Cash Payment"), which is subject to post-closing adjustment pursuant to the terms of the N&B Separation and Distribution Agreement. The Company utilized the Special Cash Payment to repay the $3 billion Term Loan Facilities and used a portion of the Special Cash Payment to redeem the May 2020 Notes, as discussed below.

Term Loan Facilities

On February 1, 2021, the Company terminated its fully drawn $3 billion term loan facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3 billion, plus accrued and unpaid interest through and including January 31, 2021. The Company funded the repayment with proceeds from the Special Cash Payment.

Revolving Credit Facilities

On April 12, 2022, the Company entered into a new $2.5 billion five-year revolving credit facility (the "$2022 Five-Year Revolving Credit Facility"). As of the effectiveness of the 2022 Five-Year Revolving Credit Facility, the Company's prior $3 billion five-year revolving credit facility entered in May 2019 was terminated. The 2022 Five-Year Revolving Credit Facility is generally expected to remain undrawn and serve as a backstop to the Company’s commercial paper and letter of credit issuance.

On April 12, 2022, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2022 $1B Revolving Credit Facility") as the $1.0 billion 364-day revolving credit facility entered in April 2021 (the “2021 $1B Revolving Credit Facility") had an expiration date in mid-April. As of the effectiveness of the 2022 $1B Revolving Credit Facility, the 2021 $1B Revolving Credit Facility was terminated. The 2022 $1B Revolving Credit facility may be used for general corporate purposes.

May 2020 Debt Offering

On May 1, 2020, the Company completed an underwritten public offering of senior unsecured notes (the “May 2020 Notes”) in the aggregate principal amount of $2 billion of 2.169 percent fixed rate Notes due May 1, 2023 (the “May 2020 Debt Offering”). Upon consummation of the N&B Transaction, the special mandatory redemption feature of the May 2020 Debt Offering was triggered, requiring the Company to redeem all of the May 2020 Notes at a redemption price equal to 100% of the aggregate principal amount of the May 2020 Notes plus accrued and unpaid interest. The Company redeemed the May 2020 Notes on May 13, 2021 and funded the redemption with proceeds from the Special Cash Payment.

Laird Performance Materials

On July 1, 2021, the Company completed the acquisition of Laird PM from Advent International for aggregate consideration of $2.4 billion, which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Interconnect Solutions business within the Electronics & Industrial segment. The Company paid for the acquisition from existing cash balances.

Intended Rogers Acquisition

On November 2, 2021, the Company announced that it had entered into a definitive agreement to acquire all the outstanding shares of Rogers for about $5.2 billion. The acquisition is expected to to close late in the second quarter or early in the third quarter of 2022 subject to regulatory approvals and other customary closing conditions.

Concurrent with the signing of the definitive agreement, the Company entered into a Bridge Commitment Letter (the "Bridge Letter") in an aggregate principal amount of $5.2 billion to secure committed financing for the Intended Rogers Acquisition. On November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion (the "2021 Term Loan Facility"). The 2021 Term Loan Facility is intended to fund the Intended Rogers Acquisition and will be drawn upon contemporaneously with the close of the Intended Rogers Acquisition. The 2021 Term Loan Facility is required to be repaid upon completion of the intended divestiture of the In-Scope M&M Businesses. Commensurate with the entry into the 2021 Term Loan Facility, the commitments under the Bridge Letter were terminated.

Credit Ratings

The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position with a balanced financial policy focused on maintaining a strong investment-grade rating and driving shareholder value and remuneration. At April 30, 2022, DuPont's credit ratings were as follows:

The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. The senior unsecured notes (the "2018 Senior Notes") also contain customary default provisions. The 2021 Term Loan Facility, the Five-Year Revolving Credit Facility, the 2021 $1B Revolving Credit Facilities and the revolving credit facilities entered into in 2022 contain a financial covenant, typical for companies with similar credit ratings, requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60. At March 31, 2022, the Company was in compliance with this financial covenant.

Summary of Cash Flows

The Company’s cash flows from operating, investing and financing activities, as reflected in the interim Consolidated Statements of Cash Flows, are summarized in the following table. The cash flows related to N&B and the M&M Divestitures have not been segregated and are included in the interim Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021.

Cash Flows from Operating Activities

In the first three months of 2022, cash provided by operating activities was $209 million, compared with $378 million in the same period last year. The decrease in cash provided by operating activities was primarily due to an increase in the use of cash related to net working capital and other assets and liabilities, including cash paid for accrued employee related variable compensation.

The table below reflects net working capital on a continuing operations basis:

1.Net working capital has been presented to exclude the assets and liabilities related to the M&M Divestitures. The assets and liabilities related to the M&M Divestitures are presented as assets of discontinued operations and liabilities of discontinued operations, respectively.

Cash Flows from Investing Activities

In the first three months of 2022, cash used for investing activities was $229 million, compared with cash used for investing activities of $2,260 million in the first three months of 2021. The decrease in cash usage was primarily attributable to a decrease in purchases of investments, related in 2021 to investment proceeds from the N&B Transaction, as well as a slight decrease in capital expenditures.

Cash Flows from Financing Activities

In the first three months of 2022, cash used for financing activities was $258 million compared with cash used for financing activities of $2,458 million in the same period last year. The decrease in cash used for financing activities in the first three months of 2022 versus the same period in prior year is primarily driven by a reduction in repayment of long-term debt, an increase in issuance of short-term notes payable, and lower repurchases of common stock, offset by a reduction in issuance of long-term debt.

Dividends

On February 7, 2022, the Board of Directors declared a first quarter 2022 dividend of $0.33 per share, paid on March 15, 2022, to shareholders of record on February 28, 2022.

On April 21, 2022, the Company announced that its Board declared a second quarter dividend of $0.33 per share payable on June 15, 2022, to shareholders of record on May 31, 2022.

Share Buyback Programs

On June 1, 2019, the Company's Board of Directors authorized a $2.0 billion share buyback program, which expired on June 1, 2021 ("2019 Share Buyback Program"). At the expiry of the 2019 Share Buyback Program, the Company had completed the 2019 Share Buyback Program having repurchased and retired a total cost of 29.9 million shares at a cost of $2.0 billion.

In the first quarter of 2021, the Company's Board of Directors authorized a $1.5 billion share buyback program, which expires on June 30, 2022 ("2021 Share Buyback Program"). As of March 31, 2022, the Company completed the 2021 Share Buyback Program having repurchased and retired a total of 19.6 million shares for $1.5 billion.

In February 2022, the Company's Board of Directors authorized an additional $1.0 billion share buyback program which expires on March 31, 2023, (the "2022 Share Buyback Program"). As of March 31, 2022, the Company had not yet repurchased shares under the 2022 Share Buyback Program.

See Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, for additional information.

Pension and Other Post-Employment Plans

DuPont expects to make additional contributions in the aggregate of approximately $65 million by year-end 2022 to pension and other post-employment benefit plans. Any such contribution could be funded by existing cash balances and/or cash from other available sources of liquidity.

Restructuring

In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions"). As a result of these actions, the Company has recorded pre-tax restructuring charges of $53 million inception to date, comprised of $31 million of severance and related benefit costs and $22 million of asset related charges. At March 31, 2022, total liabilities related to the 2021 Restructuring Actions were $18 million for severance and related benefits. The Company expects actions related to this program to be substantially complete by the first half of 2022.

In March 2020, the Company approved restructuring actions designed to capture near-term cost reductions and to further simplify certain organizational structures in anticipation of the N&B Transaction (the "2020 Restructuring Program"). As a result of these actions, the Company recorded pre-tax restructuring charges of $159 million inception-to-date, consisting of severance and related benefit costs of $107 million and asset related charges of $52 million. Actions associated with the 2020 Restructuring Program are considered substantially complete. Future cash payments related to the 2020 Restructuring Program are anticipated to be $5 million primarily related to the payment of severance and related benefits.

See Note 6 to the interim Consolidated Financial Statements for more information on the Company's restructuring programs.

See Note 21 to the interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the Company's 2021 Annual Report on Form 10-K for information on the Company's utilization of financial instruments and an analysis of the sensitivity of these instruments.

Evaluation of Disclosure Controls and Procedures

The Company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in the Company's reports filed or submitted under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

As of March 31, 2022, the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), together with management, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are subject to various litigation matters, including, but not limited to, product liability, patent infringement, antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. Information regarding certain of these matters is set forth below and in Note 16 to the interim Consolidated Financial Statements.

Litigation

See Note 16 to the interim Consolidated Financial Statements.

Environmental Proceedings

The Company believes it is remote that the following matters will have a material impact on its financial position, liquidity or results of operations. The description is included per Regulation S-K, Item 103(c) of the Securities Exchange Act of 1934.

Divested Neoprene Facility, La Place, Louisiana - EPA Compliance Inspection

In 2016, the EPA conducted a focused compliance investigation at the Denka Performance Elastomer LLC (“Denka”) neoprene manufacturing facility in La Place, Louisiana. EID sold the neoprene business, including this manufacturing facility, to Denka in the fourth quarter of 2015. Subsequent to this inspection, the U.S. Environmental Protection Agency (“EPA”), the U.S. Department of Justice (“DOJ”), the Louisiana Department of Environmental Quality (“DEQ”), the Company (originally through EID), and Denka began discussions in the spring of 2017 relating to the inspection conclusions and allegations of noncompliance arising under the Clean Air Act, including leak detection and repair. DuPont, Denka, EPA, DOJ and DEQ are continuing these discussions, which include potential settlement options.

New Jersey Directive PFAS

On March 25, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) issued a Directive and Notice to Insurers to a number of companies, including Chemours, DowDuPont, EID, and certain DuPont subsidiaries. NJDEP’s allegations relate to former operations of EID involving poly- and perfluoroalkyl substances, (“PFAS”), including PFOA and PFOA- replacement products. The NJDEP seeks past and future costs of investigating, monitoring, testing, treating, and remediating New Jersey’s drinking water and waste systems, private drinking water wells and natural resources including groundwater, surface water, soil, sediments and biota. The Directive seeks certain information as to future costs and information related to the historic uses of PFAS and replacement chemicals including “information ranging from use and discharge of the chemicals through wastewater treatment plants, air emissions, and sales of products containing the chemicals to current development, manufacture, use and release of newer chemicals in the state.”

Other than the risk factor set forth below, there have been no material changes in the Company's risk factors discussed in Part I, Item 1A, Risk Factors, in the Company’s 2021 Annual Report on Form 10-K for the year ended December 31, 2021.

DuPont is pursuing plans to divest a substantial majority of its historic Mobility & Materials segment, including its announced transaction with Celanese, which are subject to uncertainties and risks, including completion risks.

On February 17, 2022, DuPont and certain of its subsidiaries entered into a Transaction Agreement (the “Transaction Agreement”) with Celanese Corporation, a Delaware Corporation (“Celanese”), pursuant to which, subject to the satisfaction of the conditions set forth in the Transaction Agreement, DuPont has agreed to sell to Celanese a majority of the Company’s historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Performance Resins and Advanced Solutions business lines (the “M&M Business”) for $11 billion in cash, subject to customary transaction adjustments in accordance with the Transaction Agreement (the “M&M Divestiture”).

Consummation of the M&M Divestiture is subject to the satisfaction or waiver of certain customary mutual closing conditions, including (i) the absence of an injunction in certain agreed jurisdictions that would prohibit consummation of the M&M Divestiture and (ii) the expiration or termination of the required waiting, notice or review periods and approvals or clearances under the Hart-Scott-Rodino Act, as amended, and certain other approvals under non-U.S. regulatory laws, as applicable, including, without limitation, the European Union, China, Brazil, Mexico, South Korea and Turkey. The obligation of each party to consummate the M&M Divestiture is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Transaction Agreement.

There can be no assurance that the M&M Divestiture will be consummated in a timely manner, or at all, or that DuPont will realize all or any of the expected benefits of the M&M Divestiture. The consummation of the M&M Divestiture and the expected benefits to DuPont are subject to risks and uncertainties including (x) the ability of the parties to obtain necessary regulatory approvals or to satisfy any of the other closing conditions; (y) the performance of the M&M Business, which may be impacted by, among other things, the ability to offset increased costs, obtain raw materials, meet customer needs, operational and supply chain impacts or disruptions, which may result from, among other events, the COVID-19 pandemic and actions in response to it, and geo-political and weather related events; and (z) timing, costs and other impacts of the pursuit of the separation of the M&M Business on DuPont’s business operations, including the M&M Business and the former Mobility & Materials business lines not in-scope for the M&M Divestiture.

The announcement, pendency and consummation (or termination) of the M&M Divestiture could cause disruptions in DuPont’s business, including potential adverse reactions or changes to business relationships and competitive responses to the M&M Divestiture. The M&M Divestiture will require significant amounts of time and effort which could divert management’s attention from operating and growing our business. DuPont has incurred and expects to incur a number of non-recurring costs in connection with the M&M Divestiture. These costs and expenses include financial, legal, accounting, consulting and other advisory fees and expenses; reorganization and restructuring costs; severance/employee benefit-related expenses; and other related charges some of which are payable by DuPont regardless of whether the proposed M&M Divestiture is consummated. The Transaction Agreement generally requires DuPont to operate the M&M Business in the ordinary course, pending consummation, of the M&M Divestiture and restricts DuPont, without Celanese’s consent, from taking certain specified actions until the M&M Divestiture is consummated or the Transaction Agreement is terminated, including making certain acquisitions and divestitures and entering into certain contracts. Any of the foregoing could adversely affect DuPont’s business, financial condition and results of operations. Declines in sales, earnings and cash flows could also result in future asset impairments (including goodwill).

As part of the Company’s announcement on February 18, 2022 of the transaction with Celanese, DuPont also announced that its Board of Directors approved the divestiture of the Delrin® acetal homopolymer (H-POM) business, (the “Delrin® Business”) subject to entry into a definitive agreement and satisfaction of customary closing conditions. There can be no assurance as to the outcome, timing or ability to realize expected benefits from the Delrin® Business divestiture process.

While DuPont is engaged in certain internal reorganization activities to separate the M&M Business into separate subsidiaries and to align such subsidiaries for disposition in a tax-efficient manner, such disposition is expected to be a taxable disposition for the Company. Additionally, if certain internal transactions related to the separation of the M&M Business fail to qualify for their intended tax treatment under U.S. federal, state, local tax and/or foreign tax law, DuPont could incur additional tax liabilities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of the Company’s common stock by the Company during the three months ended March 31, 2022:

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

None.

*Filed herewith

**The Company has omitted certain schedules and other similar attachments to such agreement pursuant to Item 601(a)(5) of

Regulation S-K. The Company will furnish a copy of such omitted documents to the SEC upon request.

†Certain provisions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DUPONT DE NEMOURS, INC.

Registrant

Date: May 6, 2022