DuPont announced financial results for the third quarter of 2020.
“Our team remains committed to emphasizing the safety and well-being of our employees, prioritizing the needs of our customers, and executing on a playbook that enables us to quickly respond to the changing environment,” said Ed Breen, DuPont executive chairman and CEO. “We delivered strong performance demonstrating the value our market-leading innovation and technology provides in key end-markets such as semiconductors, smartphones, water filtration, probiotics and personal protective equipment. The actions we have taken to right-size our cost structure and generate significant cash flow are delivering results today and we intend to maintain this momentum as we move forward.”
Net sales totaled $5.1 billion, down 6% versus the year-ago period on both an as reported and organic basis. Growth in Electronics & Imaging was more than offset by sales declines in the other segments, primarily due to the impact of the global pandemic.
GAAP EPS from continuing operations totaled $(0.11) on a GAAP loss from continuing operations of $(72) million, versus GAAP EPS from continuing operations of $0.49 on GAAP income from continuing operations of $372 million in the year-ago period.
Operating EBITDA was $1.3 billion, down 7% versus operating EBITDA in the prior year. The impact of lower demand, cost associated with idled facilities, and portfolio changes more than offset manufacturing productivity gains, approximately $150 million of non-manufacturing cost savings and strong demand in semiconductors, smartphones, water, Tyvek protective garments, and health & wellness.
Adjusted EPS decreased 8% to $0.88, compared with adjusted EPS(2) in the year-ago period of $0.96, primarily driven by lower segment results and a higher base tax rate partially offset by declines in interest expense, foreign exchange losses, and share count.
Operating cash flow of $1.3 billion included improvements in working capital of more than $300 million in the quarter, which was driven by lower inventories. Capital expenditures of approximately $200 million resulted in free cash flow of $1.1 billion. The sale of the trichlorosilane business and the Hemlock Semiconductor joint venture provided $550 million of additional pre-tax cash proceeds in the quarter. Proceeds from these sales as well as organic cashflow generation enabled a reduction in commercial paper balances to less than $400 million as of September 30, 2020; a reduction of $1.2 billion in the quarter.
Electronics & Imaging reported a record quarter with net sales of $1 billion, up 7% from the year-ago period. Organic sales were up 8% driven by a 9% growth in volume offset by a 1% decline in price.
Sales gains were led by Semiconductor Technologies as new technology ramps across logic and foundry delivered high-single-digit organic growth versus the year-ago period. Interconnect Solutions' organic sales also increased high-single digits, despite an overall decline in the global smartphone market, driven by higher material content in premium, next-generation smartphones. Within Image Solutions, mid-single-digit organic growth was led by strength in OLEDs for displays and ink for the consumer segment, partially offset by weakness in flexographic plates and textile inks.
Operating EBITDA for the segment was $357 million, an increase of 12% from operating EBITDA of $320 million in the year-ago period, driven primarily by strong volume growth and continued productivity actions.
“With a continued focus on execution, we anticipate a fourth quarter underscored by additional cash generation and operating leverage across our core segments driven by additional cost savings,” said Lori Koch, CFO of DuPont. “We expect to deliver full-year 2020 adjusted EPS in the range of $3.17 to $3.21 on net sales of $20.1 billion to $20.2 billion.”