DuPont de Nemours 10-Q 2024-03-31

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, 2024

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) 295-5783

(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 418,104,390 shares of common stock, $0.01 par value, outstanding at April 29, 2024.

DuPont de Nemours, Inc.

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended March 31, 2024

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," “stabilization,” “confident,” “preliminary,” “initial,” and similar expressions and variations or negatives of these words. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding outlook, expectations and guidance.

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 possibility that the Company may fail to realize the anticipated benefits of the $1 billion share repurchase program announced on February 6, 2024 and that the program may be suspended, discontinued or not completed prior to its termination on June 30, 2025; (ii) risks and uncertainties related to the settlement agreement concerning PFAS liabilities reached June 2023 with plaintiff water utilities by Chemours, Corteva, EIDP and DuPont; (iii) 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, including the outcome of any pending or future litigation related to PFAS or PFOA, including personal injury claims and natural resource damages claims; the extent and cost of ongoing remediation obligations and potential future remediation obligations; changes in laws and regulations applicable to PFAS chemicals; (iv) ability to achieve anticipated tax treatments in connection with completed and future, if any, divestitures, mergers, acquisitions and other portfolio changes actions and impact of changes in relevant tax and other laws; (v) indemnification of certain legacy liabilities; (vi) failure to realize expected benefits and effectively manage and achieve anticipated synergies and operational efficiencies in connection with completed and future, if any, divestitures, mergers, acquisitions, and other portfolio management, productivity and infrastructure actions; (vii) risks and uncertainties, including increased costs and the ability to obtain raw materials and meet customer needs from, among other events, pandemics and responsive actions; timing and recovery from demand declines in consumer-facing markets, including in China; adverse changes in worldwide economic, political, regulatory, international trade, geopolitical, capital markets and other external conditions; and other factors beyond the Company's control, including inflation, recession, military conflicts, natural and other disasters or weather related events, that impact the operations of the Company, its customers and/or suppliers; (viii) ability to offset increases in cost of inputs, including raw materials, energy and logistics; (ix) risks associated with demand and market conditions in the semiconductor industry and associated end markets, including from continuing or expanding trade disputes or restrictions, including on exports to China of U.S.-regulated products and technology; (x) 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 (xi) other risks to DuPont's business and operations, including the risk of impairment; 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, 2024, the Company has $4.0 billion of working capital and approximately $1.9 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 Divestitures

On November 1, 2022, (the "Transaction Date") DuPont completed the previously announced divestiture of the 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”). On February 18, 2022, the Company announced that its Board of Directors approved of the divestiture of the Delrin® acetal homopolymer (H-POM) business (the "Delrin® Divestiture"). On November 1, 2023, the Company closed the sale of the Delrin® business to TJC LP ("TJC"), (the “Delrin® Divestiture”). DuPont acquired a 19.9 percent non-controlling equity interest in Derby Group Holdings LLC, (“Derby”). The Delrin® Divestiture together with the M&M Divestiture (collectively the "M&M Divestitures" and the businesses in scope for the M&M Divestitures collectively the "M&M Businesses") represent a strategic shift that has a major impact on DuPont's operations and results.

The interim results of operations and the interim Consolidated Statements of Cash Flows for the three months ended March 31, 2023 present the financial results of the Delrin® Divestiture, as discontinued operations. The comprehensive income of the Delrin® Divestiture have not been segregated and are included in the 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 Delrin® Divestiture. See Note 4 to the interim Consolidated Financial Statements for additional information.

Recent Developments

Macroeconomic Conditions

The Company anticipates volume improvement throughout the remainder of the year driven by further electronics market recovery as semiconductor and printed circuit board utilization rates are expected to increase, as well as reduced destocking impact in areas such as water, medical packaging and biopharma. The ultimate extent to which these markets will recover in 2024 is not known.

Share Buyback Program

In the first quarter of 2024, the Company completed the $2 billion accelerated share repurchase ("ASR") transaction, which completed the Company’s $5B Share Buyback Program.

Also in the first quarter of 2024, the Company’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $1 billion of common stock (the "$1B Share Buyback Program”). Under the $1B Share Buyback Program, repurchases may be made from time to time on the open market at prevailing market prices or in privately negotiated transactions off market, including additional ASR agreements in accordance with applicable federal securities laws. The $1B Share Buyback Program terminates on June 30, 2025, unless extended or shortened by the Board of Directors. DuPont entered an ASR agreement with one counterparty for the repurchase of about $500 million of common stock (the "Q1 2024 ASR Transaction").

Subsequent to quarter end, the Q1 2024 ASR Transaction was completed. The settlement resulted in the delivery of approximately 1 million additional shares of DuPont common stock, which were retired immediately and will be recorded as a reduction of retained earnings in the second quarter of 2024. In total, the Company repurchased 6.9 million shares at an average price of $71.96 per share under the Q1 2024 ASR Transaction.

See Liquidity and Capital Resource below and Note 16 to the interim Consolidated Financial Statements for additional information.

Dividends

On April 17, 2024, the Board of Directors declared a second quarter 2024 dividend of $0.38 per share, payable on June 17, 2024, to shareholders of record on May 31, 2024.

On February 5, 2024, the Company announced that its Board of Directors declared a first quarter 2024 dividend of $0.38 per share which was paid on March 15, 2024, to shareholders of record on February 29, 2024.

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 and previously divested businesses.

2.Europe, Middle East and Africa.

The Company reported net sales for the three months ended March 31, 2024 of $2.9 billion, down 3 percent from $3.0 billion for the three months ended March 31, 2023, due to a 5 percent decrease in volume, a 1 percent decrease in local price and product mix, and a 1 percent unfavorable currency impact, partially offset by a 4 percent increase in portfolio actions. The volume decrease was primarily driven by Water and Protection (down 10 percent). Currency was down 1% compared with the same period last year, driven by Asia Pacific (down 2 percent) and slightly offset by EMEA (up 1 percent). Local price and product mix declined slightly in Asia Pacific (down 2 percent) and EMEA (down 1 percent) but was slightly offset by Latin America (up 2 percent). The increase in portfolio actions was attributable to the acquisition of Spectrum in August 2023.

Cost of Sales

Cost of sales was $1.9 billion for the three months ended March 31, 2024, down slightly from $2.0 billion for the three months ended March 31, 2023. Cost of sales decreased for the three months ended March 31, 2024 primarily due to decreased sales volume, lower raw materials, logistics and energy costs and a favorable currency impact partially offset with the impact from the Spectrum Acquisition and $25 million of raw material inventory write-offs in connection with the 2023-2024 Restructuring Program.

Cost of sales as a percentage of net sales for the three months ended March 31, 2024 was 65 percent compared with 66 percent for the three months ended March 31, 2023. The decrease as a percentage of sales for the three months ended March 31, 2024 as compared with the same period of the prior year was primarily due to lower raw material, logistics and energy costs offset by sales volume and the impact of the Spectrum Acquisition.

Research and Development Expenses ("R&D")

R&D expenses totaled $125 million in the first quarter of 2024, down from $127 million in the first quarter of 2023. R&D as a percentage of net sales was consistent period over period at 4 percent for the three months ended March 31, 2024 and 2023.

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

SG&A expenses were $384 million in the first quarter of 2024, up from $340 million in the first quarter of 2023. SG&A as a percentage of net sales was relatively consistent period over period at 13 percent and 11 percent for the three months ended March 31, 2024 and 2023. The increase for the three months ended March 31, 2024 as compared with the same period of the prior year was primarily due to higher expenses driven by the impact from the Spectrum Acquisition and personnel related expenses.

Amortization of Intangibles

Amortization of intangibles was $149 million in the first quarter of 2024, up from $147 million in the first quarter of 2023. The increase for the three months ended March 31, 2024 as compared with the same period of the prior year was primarily due to the amortization of the intangible assets acquired in the Spectrum Acquisition in the third quarter of 2023, partially offset by the absence of amortization in 2024 from fully amortized assets.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $39 million in the first quarter of 2024, up from $14 million charges in the first quarter of 2023. The activity in the first quarter of 2024 is primarily related to the 2023-2024 Restructuring Program, while the activity in the first quarter of 2023 is primarily related to the 2022 Restructuring Program.

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 $3 million for the three months ended March 31, 2024 and recorded no cost related to continuing operations for the three months ended March 31, 2023*.* For the three months ended March 31, 2024, these costs were primarily associated with the Spectrum Acquisition.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $12 million in the first quarter of 2024, down from $15 million in the first quarter of 2023. The decrease is due to loss from equity earnings from Derby, partially offset by higher equity earnings across other affiliates.

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 2024 was $38 million compared with $29 million in the first quarter of 2023. Interest income was $20 million and $46 million for the three months ended March 31, 2024 and 2023, respectively. The decrease in interest income period over period is due to the decreased cash balance in 2024. The three months ended March 31, 2024 included a $4 million net foreign exchange gain while the three months ended March 31, 2023 included a $20 million net foreign exchange loss.

Interest Expense

Interest expense was $96 million and $95 million for the three months ended March 31, 2024 and 2023, respectively. The increase in interest expense from the prior year is primarily due to the reduction in capitalized interest related to a reduction in capital expenditures, partially offset by the absence of interest expense on the $300 million floating-rate long-term senior unsecured notes that matured in November 2023.

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 2024 was 31.5 percent, compared with an effective tax rate of 23.3 percent for the first quarter of 2023. The higher effective tax rate for the first quarter of 2024 was driven by the geographic mix of earnings offset by the U.S. taxation of foreign operations as well as certain one-time discrete tax expenses, including an international statutory tax assessment received for which the Company is indemnified.

SEGMENT RESULTS

The revenues and certain expenses of the Delrin® Divestiture are classified as discontinued operations for the three months ended March 31, 2023. In addition, the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines within the historical Mobility & Materials segment (the "Retained Businesses") were not included in the scope of the M&M Divestitures and are included in Corporate & Other.

Historical Delrin® costs that were classified as discontinued operation in prior years included only direct operating expenses incurred by Delrin® prior to the November 1, 2023 divestiture. Indirect costs, such as those related to corporate and shared service functions previously allocated to the Delrin® Business, did not meet the criteria for discontinued operations and were reported within continuing operations in the respective prior years. A portion of these historical indirect costs included costs related to activities the Company is undertaking on behalf of Delrin®, and for which it is 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 reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.

On August 1, 2023, the Company completed the previously announced acquisition of Spectrum Plastics Group (“Spectrum”) from AEA Investors (the “Spectrum Acquisition”). Spectrum is part of the Electronics & Industrial segment.

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 / other post-employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items.

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, flexible packaging products, plastic and silicone extrusions, medical silicones, specialty lubricants and critical polymer-based components and devices for medical and other industrial markets.

Electronics & Industrial net sales were $1,365 million for the three months ended March 31, 2024, up 5 percent from $1,296 million for the three months ended March 31, 2023. Net sales increased due to a 8 percent increase in portfolio actions, partially offset by 1 percent decreases in local price and product mix, sales volume and unfavorable currency impacts. The portfolio impact reflects the August 2023 acquisition of Spectrum. Volume declines in Industrial Solutions were related to ongoing channel inventory destocking primarily for Kalrez® parts and within biopharma markets. Within Semiconductor Technologies, volume gains were driven by the start of semiconductor demand recovery and the normalization of customer inventory levels along with increased demand for OLED materials. Volume gains in Interconnect Solutions were driven by increased demand and inventory channel stabilization within Laminates and Metallization & Imaging. These volume gains were mostly offset by local price and product mix declines in Interconnect Solutions, including the impact of lower pass-through metals. The unfavorable currency impact is primarily driven by the Japanese yen and Chinese yuan.

Operating EBITDA was $374 million for the three months ended March 31, 2024, up 3 percent compared with $362 million for the three months ended March 31, 2023, primarily due to the earnings contribution from the Spectrum acquisition and strength in Semiconductor Technologies and Interconnect Solutions partially offset by lower volumes within Industrial Solutions.

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 $1,291 million for the three months ended March 31, 2024, down 11 percent from $1,449 million for the three months ended March 31, 2023. The net sales decreased due to a 10 percent decline in volume and a 1 percent unfavorable currency impact. Volume declines within Safety Solutions were mainly due to channel inventory destocking, primarily in medical packaging products within healthcare markets. Water Solutions volume declines were primarily due to distributor inventory destocking and weaker industrial demand in China. Shelter Solutions was relatively flat. The unfavorable currency impact is primarily driven by the Chinese yuan and Japanese yen partially offset by the European euro.

Operating EBITDA was $295 million for the three months ended March 31, 2024, down 14 percent compared with $344 million for the three months ended March 31, 2023, driven by decreased sales volumes partially offset by lower product costs.

CORPORATE AND OTHER

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines. Related to the Delrin® Divestiture, Corporate & Other includes DuPont's equity interest in Derby Holdings Group, Stranded Costs and Future Reimbursable Indirect Costs. 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.

CHANGES IN FINANCIAL CONDITION

Liquidity & Capital Resources

Information related to the Company's liquidity and capital resources can be found in the Company's 2023 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, 2024.

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. However, DuPont is unable to predict the extent of macroeconomic related impacts which depend on uncertain and unpredictable future developments. In light of this uncertainty, the Company has taken steps to further ensure liquidity and capital resources, as discussed below.

The Company's cash, cash equivalents at March 31, 2024 and December 31, 2023 were $1.9 billion and $2.4 billion, respectively, of which approximately $1.1 billion at March 31, 2024 and $1.3 billion at December 31, 2023 were held by subsidiaries in foreign countries, including United States territories. The change in the balance in cash and cash equivalents held by subsidiaries in foreign countries is due to cash flows during the period, 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. Refer to subsequent paragraphs for drivers of the change in cash, cash equivalents.

Total debt at March 31, 2024 and December 31, 2023 was $7,776 million and $7,800 million, respectively. The slight decrease, as shown in the table above, was primarily due to the changes in the fair value of interest rate swaps designated as fair value hedges.

As of March 31, 2024, the Company is contractually obligated to make future cash payments of $7.9 billion and $4.9 billion associated with principal and interest, respectively, on debt obligations. Related to the principal, no payments will be due in the next twelve months. Related to interest, $394 million will be due in the next twelve months, and the remainder will be due subsequent to March 31, 2025. The majority of interest obligations will be due in 2029 or later.

Revolving Credit Facilities

On May 10, 2023, the Company entered into a $1 billion 364-day revolving credit facility (the "364-Day Revolving Credit Facility"), which terminates on May 8, 2024. The 364-Day Revolving Credit Facility will be used for general corporate purposes. There were no drawdowns of the facility during the three month period ended March 31, 2024. The Company is in the process of standing a new $1 billion 364-day revolving credit facility with an expected effective date in May 2024.

Water District Settlement Agreement

In 2023, the Company utilized the MOU escrow account balance of approximately $100 million and cash on hand to make its $400 million contribution to the Water District Settlement Fund. The $400 million contribution, plus interest, to the Water District Settlement Fund is reflected as "Restricted cash and cash equivalents" on the interim Condensed Consolidated Balance sheets. The $400 million contribution, plus interest, will be reflected as a cash outflow within cash flows from discontinued operations during the second quarter 2024 as the judgment became final in April 2024. See Note 14 to the interim Consolidated Financial Statement for additional information.

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 26, 2024, 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 $1B 364-Day Revolving Credit Facility contains 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, 2024, the Company was in compliance with this financial covenant.

Summary of Cash Flows

Beginning in the second quarter of 2023, the Company has segregated the cash flows from discontinued operations from the cash flows from continuing operations in accordance with ASC 230, Statement of Cash Flows. The interim Consolidated Statements of Cash Flows have been recast for all periods to reflect the change in presentation.

The Company’s cash flows from operating, investing and financing activities from continuing operations and cash used in discontinued operations, as reflected in the interim Consolidated Statements of Cash Flows, are summarized in the following table.

Cash Flows from Operating Activities - Continuing Operations

In the first three months of 2024, cash provided by operating activities of continuing operations was $493 million, compared with $405 million in the same period last year. The increase in cash provided by operating activities of continuing operations is primarily from improvements in net working capital.

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

Cash Flows from Investing Activities - Continuing Operations

In the first three months of 2024, cash used for investing activities of continuing operations was $202 million, compared with $250 million in the first three months of 2023. The decrease in cash used for investing activities of continuing operations is primarily attributable to the reduction in capital expenditures and purchases of investments.

Cash Flows from Financing Activities - Continuing Operations

In the first three months of 2024, cash used for financing activities of continuing operations was $691 million compared with $213 million in the same period last year. The increase in cash used for financing activities of continuing operations is primarily attributable to the Q1 2024 ASR Transaction.

Cash Flows from Discontinued Operations

In the first three months of 2024, cash used from discontinued operations was $31 million compared with $71 million in the same period last year. The cash used from discontinued operations primarily includes MOU activity and transaction costs, refer to Note 4 to the interim Consolidated Financial Statements for additional information. For the three months ended March 31, 2023, the interim Consolidated Statements of Cash Flows present the cash flows of Delrin® and transaction cost from the M&M Divestiture as discontinued operations.

Dividends

On February 5, 2024, the Board of Directors declared a first quarter 2024 dividend of $0.38 per share, paid on March 15, 2024, to shareholders of record on February 29, 2024.

On April 17, 2024, the Board of Directors declared a second quarter 2024 dividend of $0.38 per share, payable on June 17, 2024, to shareholders of record on May 31, 2024.

Share Buyback Programs

In the third quarter of 2023, DuPont entered into new accelerated share repurchase agreements with three financial counterparties to repurchase an aggregate of $2 billion of common stock ("$2B ASR Transaction"). DuPont paid an aggregate of $2 billion to the counterparties and received initial deliveries of 21.2 million shares in aggregate of DuPont common stock, which were retired immediately and recorded as a reduction to retained earnings of $1.6 billion. In the first quarter of 2024, the $2B ASR Transaction was completed. The settlement resulted in the delivery of 6.7 million additional shares of DuPont common stock, which were retired immediately and were recorded as a reduction of retained earnings in the first quarter of 2024. In total, the Company repurchased 27.9 million shares at an average price of $71.67 per share under the $2B ASR Transaction. The completion of the $2B ASR Transaction effectively completes the $5B Share Buyback Program and the Company's stock repurchase authorization.

In the first quarter 2024, the Company’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $1 billion of common stock (“the $1B Share Buyback Program”). Under the $1B Share Buyback Program, repurchases may be made from time to time on the open market at prevailing market prices or in privately negotiated transactions off market, including additional ASR agreements in accordance with applicable federal securities laws.

In the first quarter 2024, DuPont entered an ASR agreement with one counterparty for the repurchase of $500 million of common stock ("Q1 24 ASR Transaction"). DuPont paid an aggregate of $500 million to the counterparty and received initial deliveries of 6.0 million shares of DuPont common stock, which were retired immediately and recorded as a reduction of retained earnings of $400 million. The remaining $100 million was evaluated as an unsettled forward contract indexed to DuPont common stock, classified within stockholders' equity as of March 31, 2024.

Subsequent to quarter end, the Q1 2024 ASR Transaction was completed. The settlement resulted in the delivery of approximately 1 million additional shares of DuPont common stock, which were retired immediately and will be recorded as a reduction of retained earnings in the second quarter of 2024. In total, the Company repurchased 6.9 million shares at an average price of $71.96 per share under the Q1 2024 ASR Transaction.

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 $44 million by year-end 2024 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 December 2023, the Company approved targeted restructuring actions to capture near-term cost reductions due to macroeconomic factors as well as to further simplify certain organizational structures following the Spectrum Acquisition and Delrin® Divestiture (the "2023-2024 Restructuring Program"). As a result, the Company recorded pre-tax restructuring charges of $146 million inception-to-date, consisting of severance and related benefit costs of $103 million and asset related charges of $43 million. At March 31, 2024, total liabilities related to the 2023-2024 Restructuring Program were $83 million for severance and related benefit costs, recognized in "Accrued and other current liabilities" in the interim Consolidated Balance Sheets. Raw material inventory write-offs for plant line closures within the Water & Protection segment in connection with the 2023-2024 Restructuring Program were $25 million in "Cost of Sales" within the interim Consolidated Statements of Operations. The Company expects the program to be substantially complete by the end of 2024. See Note 6 and 21 to the interim Consolidated Financial Statements for more information on the Company's restructuring programs.

See Note 19 to the interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the Company's 2023 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, 2024, 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 14 to the interim Consolidated Financial Statements.

Litigation

See Note 14 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. EIDP 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 EIDP), 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, EIDP, and certain DuPont subsidiaries. NJDEP’s allegations relate to former operations of EIDP 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 historical 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.”

There have been no material changes in the Company's risk factors discussed in Part I, Item 1A, Risk Factors, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES

Issuer Purchases of Equity Securities

In November 2022, DuPont’s Board of Directors approved a share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock (the “$5B Share Buyback Program"). In the first quarter 2024, the Company’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $1 billion of common stock (“the $1B Share Buyback Program”).

The following table provides information regarding purchases of the Company’s common stock by the Company during the three months ended March 31, 2024:

1. In September 2023, DuPont entered into accelerated share repurchase agreements (the "$2B ASR Transaction") with each of three financial institutions to repurchase an aggregate of $2 billion of common stock, under the $5B Share Buyback Program. On September 8, 2023, DuPont received initial deliveries of 21.2 million shares of common stock in the aggregate. On January 19, 22 and 23, 2024, the final 6.7 million shares were received and retired for a total of 27.9 million shares based on the volume-weighted average stock price for DuPont common stock during the terms of the $2B ASR Transaction, less an agreed upon discount. See Note 16 to the interim Consolidated Financial Statements for additional information.

2. In February 2024, DuPont entered into accelerated share repurchase agreements (the "Q1 24 ASR Transaction") with a financial institution to repurchase an aggregate of $500 million of common stock, under the $1B Share Buyback Program. On February 9, 2024, DuPont received initial deliveries of 6.0 million shares of common stock in the aggregate. See Note 16 to the interim Consolidated Financial Statements for additional information.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Insider Trading Arrangements and Policies

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

*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 1, 2024