DowDuPont Reports Fourth Quarter and Full Year 2017 Results

• 4Q GAAP Loss Per Share from Continuing Operations of $0.52; Adj. EPS
  Up 41% to $0.83
• 4Q GAAP Net Loss from Continuing Operations of $1.2B; Op. EBITDA Up
  24% to $3.9B
• 4Q Net Sales Rise 13% to $20.1B, with Gains in all Operating Segments
  and Geographies
• 2017 GAAP EPS from Continuing Operations of $0.95; Pro Forma Adj. EPS
  Up 22% to $3.40
• 2017 GAAP Net Income from Continuing Operations of $1.7B; Pro Forma
  Op. EBITDA Up 15% to $16.2B
• 2017 GAAP Net Sales of $62.5B; Pro Forma Net Sales Grow 12% to $79.5B,
  with Gains in all Operating Segments and Geographies

MIDLAND, Mich. & WILMINGTON, Del.–(BUSINESS WIRE)–DowDuPont (NYSE: DWDP):

Fourth Quarter 2017 Highlights

• DowDuPont reported a GAAP loss per share from continuing operations of
  $0.52. Adjusted earnings1 per share increased 41 percent to
  $0.83, compared with pro forma adjusted earnings per share in the
  year-ago period of $0.59. Adjusted earnings per share excludes
  significant items in the quarter totaling net charges of $1.26 per
  share, as well as a $0.09 per share charge for DuPont amortization of
  intangible assets.
• Net sales increased 13 percent to $20.1 billion, with gains in all
  operating segments and geographies, from pro forma net sales of $17.7
  billion in the year-ago period. The primary sales growth drivers by
  division were: Materials Science – Industrial Intermediates &
  Infrastructure (27 percent) and Packaging & Specialty Plastics (17
  percent); Specialty Products – Transportation & Advanced Polymers and
  Nutrition & Biosciences (10 percent each); and Agriculture
  (5 percent). Regional sales increases were led by Europe, Middle East
  and Africa (EMEA) (25 percent) and North America (10 percent), with
  gains in all divisions, led by the Materials Science operating
  segments.
• Volume grew 6 percent on a pro forma basis, with increases in all
  operating segments and geographies on broad-based, consumer-led and
  investment-driven demand. Volume gains were led by Industrial
  Intermediates & Infrastructure (13 percent), Packaging & Specialty
  Plastics (8 percent), Electronics & Imaging (6 percent) and
  Transportation & Advanced Polymers (5 percent). Regional volume growth
  was led by EMEA (10 percent) and Asia Pacific (6 percent).
• Local price rose 5 percent on a pro forma basis, led by increases in
  all geographies and double-digit gains in Industrial Intermediates &
  Infrastructure (12 percent) and Performance Materials & Coatings
  (10 percent).
• Operating EBITDA1 increased 24 percent on a pro forma basis
  to $3.9 billion, driven by volume and price gains, including new
  capacity additions in the U.S. Gulf Coast and Saudi Arabia; cost
  synergies; lower pension/OPEB costs2; and higher equity
  earnings. These gains more than offset higher feedstock costs and
  startup expenses related to new assets on the U.S. Gulf Coast.
• The Company achieved an annual cost synergy run-rate of more than $800
  million and more than $200 million of realized savings in the fourth
  quarter. DowDuPont is announcing today that it is increasing its cost
  synergy commitment from $3 billion to $3.3 billion.
• Cash flow from operations in the quarter was $4.2 billion, driven by
  increased cash earnings and Agriculture’s seasonal cash inflow, partly
  offset by contributions to pension plans.
• The Company returned nearly $2 billion to shareholders in the quarter
  through dividends ($0.9 billion) and share repurchases ($1 billion).
• Fourth quarter GAAP results include net tax benefits of $1.1 billion
  (a significant item of $0.46 per share) related to remeasurements and
  charges as a result of new U.S. tax legislation. The Company expects
  this new legislation to translate into a 1-2 percentage point
  reduction in its 2018 tax rate versus previous expectations.
• The Company is announcing today that it has updated the timing and
  sequence of the intended separation of the companies: Materials
  Science is expected to separate by the end of the first quarter of
  2019, and Agriculture and Specialty Products are expected to separate
  by June 1, 2019.

CEO Quote

“Our fourth quarter operating results continued the strong performance
that we delivered throughout 2017, as we grew our top and bottom lines
by double digits in the quarter and the full year,” said Ed Breen, chief
executive officer of DowDuPont. “Our 2017 results reflect robust
underlying demand for many of our products, the power of our innovation
engine and our leading positions in growing markets. We delivered these
results while completing our merger, realigning the business around key
end-markets, and achieving more than $800 million in run-rate savings
from our cost synergy programs. Based on the progress we’ve made, we are
raising our commitment for cost synergies from $3 billion to
$3.3 billion, an increase of 10 percent. We also are making significant
progress standing up the intended public companies, which we now expect
to spin about 14 to 16 months from today.”

2017 Full-Year Highlights

• GAAP earnings per share from continuing operations was $0.95. Pro
  forma adjusted earnings per share increased 22 percent to $3.40 versus
  the year-ago period. Pro forma adjusted earnings per share excludes
  significant items totaling net charges of $1.90 per share, as well as
  a $0.33 per share charge for DuPont amortization of intangible assets.
• GAAP net sales increased 30 percent. Pro forma net sales increased to
  $79.5 billion, up 12 percent versus the year-ago period, with gains in
  all operating segments and all geographies. Primary sales growth
  drivers were: Materials Science – Performance Materials & Coatings (37
  percent), Industrial Intermediates & Infrastructure (17 percent) and
  Packaging & Specialty Plastics (13 percent); Specialty Products –
  Transportation & Advanced Polymers (14 percent) and Electronics &
  Imaging (12 percent); and Agriculture (2 percent). Sales rose
  double-digits in EMEA (17 percent), Asia Pacific (15 percent) and
  North America (10 percent). Sales in Latin America grew 5 percent.
• Pro forma operating EBITDA increased 15 percent to $16.2 billion,
  driven by volume and price gains, including new capacity additions;
  cost synergies and productivity actions; higher equity earnings; lower
  pension/OPEB costs; and the full-year contribution of silicones. These
  gains more than offset higher feedstock costs, startup expenses on the
  U.S. Gulf Coast and the unfavorable impact of hurricanes. Increases
  were achieved in most operating segments, led by double-digit growth
  in Performance Materials & Coatings; Industrial Intermediates &
  Infrastructure; Electronics & Imaging; Transportation & Advanced
  Polymers; and Agriculture.
• Less than two weeks following merger close, DowDuPont announced
  certain targeted portfolio adjustments to the Materials Science and
  Specialty Products divisions to better align with end-markets and
  further enhance the competitive advantages of the intended companies.
• DowDuPont satisfied key regulatory remedies required of the merger
  transaction, including: divesting DuPont’s cereal broadleaf herbicides
  and chewing insecticides portfolios, as well as certain parts of its
  crop protection R&D pipeline and organization to FMC; divesting Dow’s
  PRIMACOR™ ethylene acrylic acid copolymers and ionomers
  business; and divesting a select portion of Dow AgroSciences' corn
  seed business in Brazil. The Company also closed its acquisition of
  FMC's Health and Nutrition business.

Fourth Quarter Segment Information

Agriculture

Sales of $2.8 billion were up 5 percent from pro forma net sales of $2.7
billion in the year-ago period. Volume and currency improvements of 2
percent and 1 percent, respectively, were partially offset by local
price declines. Portfolio-related actions increased sales by 3 percent.

Organic revenue growth was realized in both seed and crop protection.
Seed volume and price rose slightly as earlier Brazil safrinha
deliveries, doubling of corn sales in Argentina, driven by penetration
of Leptra® corn hybrids, and growth in the European sunflower
and corn seed business were partially offset by the reduction in Brazil
summer corn area. Crop protection volume improvement was driven by the
continued penetration of new products such as Vessarya™
fungicide and increased demand for Optinyte™ nitrogen
stabilizers and novel seed treatment solutions. Crop protection pricing
declined, driven by generic pricing pressure, specifically in Latin
America and Asia Pacific.

Operating EBITDA for the segment more than doubled to $224 million,
versus pro forma operating EBITDA of $100 million in the year-ago
period. The improvement resulted primarily from synergies and other cost
reductions, lower pension/OPEB costs, volume increases, and a net
portfolio gain. This improvement was partially offset by lower local
price due to generic crop protection pricing pressure and higher soybean
royalties.

Full-year pro forma net sales of $14.3 billion rose 2 percent from pro
forma net sales of $14.1 billion reported in the year-ago period driven
by higher volumes and a portfolio gain. Full-year seed sales increased 5
percent due to both volume and price improvement. Full-year crop
protection sales were down 1 percent as growth from new products was
more than offset by pricing pressures in Latin America and high
inventory levels in China.

Full-year pro-forma operating EBITDA for the segment improved 12 percent
to $2.6 billion versus pro forma operating EBITDA of $2.3 billion in the
year-ago period. The improvement resulted primarily from higher volumes,
synergies, lower pension/OPEB costs and currency. Pro forma operating
EBITDA growth was partially offset by lower local price due to generic
crop protection pricing pressure and higher soybean royalties.

Materials Science

Performance Materials & Coatings

Performance Materials & Coatings reported net sales of $2.2 billion, up
15 percent versus pro forma net sales of $1.9 billion in the year-ago
period. The year-over-year gain was primarily driven by double-digit
growth in both businesses, as well as double-digit increases across all
geographic regions. Local price increased 10 percent, with gains in all
geographic regions and both businesses. Volume grew 4 percent, driven by
gains in North America, Asia Pacific and Latin America.

Consumer Solutions delivered double-digit sales growth in all geographic
regions, driven by strong gains in local price in Asia Pacific and EMEA;
disciplined price/volume management in upstream silicone intermediate
products; and broad-based demand for downstream applications including
pressure sensitive adhesives and high performance building solutions.
Coatings & Performance Monomers achieved double-digit growth in sales,
on strong local price increases in all geographic regions and higher
demand in North America.

Operating EBITDA increased to $613 million, up 56 percent from pro forma
operating EBITDA of $392 million in the year-ago period, primarily due
to increased pricing, higher equity earnings, strong end-market demand
and cost synergies.

Equity earnings for the segment totaled $223 million, compared with pro
forma equity earnings of $176 million in the year-ago period, driven by
two factors at the HSC Group – higher demand from the photovoltaics
end-market and DowDuPont’s share of a settlement of a long-term
polysilicon sales agreement.

Industrial Intermediates & Infrastructure

Industrial Intermediates & Infrastructure reported net sales of $3.6
billion, up 27 percent versus pro forma net sales of $2.8 billion in the
year-ago period. Double-digit sales gains were reported in all
geographic regions. Volume grew 13 percent while local price rose 12
percent.

Polyurethanes & Chlor-Alkali and Vinyl (CAV) delivered robust sales
growth in all geographic regions, driven by double-digit price and
volume gains. The business also reported strong price and demand
increases in downstream, higher-margin systems applications, as well as
higher merchant sales of methylene diphenyl diisocyanate (MDI) and
caustic where industry supply/demand fundamentals remained tight.
Industrial Solutions grew sales double digits, led by surfactants,
glycol ethers and ethylene glycols in consumer-driven applications,
including electronics processing, crop defense and food and
pharmaceuticals. The business delivered volume and price gains in all
geographic regions. Construction Chemicals delivered sales growth driven
by demand for methyl cellulosics in EMEA. Energy Solutions reported
lower sales due to reduced project activity in energy market sectors.

Operating EBITDA was $677 million, up 38 percent from pro forma
operating EBITDA of $489 million in the year-ago period. Pricing
momentum, improved equity earnings and demand growth in most businesses
more than offset the impact of higher raw material costs.

Equity earnings for the segment totaled $71 million, compared with pro
forma equity earnings of $31 million in the year-ago period. The
year-over-year growth was driven by improvement in Sadara equity losses
due to further progression of facility startups and contributions from
the EQUATE joint venture as a result of higher monoethylene glycol
pricing.

Packaging & Specialty Plastics

The Packaging & Specialty Plastics segment reported net sales of $6.1
billion, up 17 percent from pro forma net sales of $5.2 billion in the
year-ago period. Sales growth was driven by volume gains of 8 percent,
local price increases of 7 percent and a 2 percent tailwind from
currency, primarily in Europe. Volume highlights included double-digit
percent growth in North America and EMEA on higher hydrocarbons sales,
new capacity additions on the U.S. Gulf Coast and ramp-up in Sadara
production. Local price gains were recorded in all geographic regions.

The Packaging and Specialty Plastics business grew volume on continued
consumer-led demand across key end-markets. Notable highlights included
double-digit sales growth in food and specialty packaging as well as in
industrial and consumer packaging end-markets in EMEA, enabled by the
contributions of volumes from the Sadara joint venture. Volume growth in
North America was driven by robust demand in food and specialty
packaging as well as in health and hygiene applications, supported by
start-up of the ELITE™ polyethylene unit. Gradual recovery
from hurricane-related supply limitations continued to impact
polyethylene sales volumes, particularly exports to Latin America, as
well as global sales of ethylene copolymers and products for wire and
cable applications. The business also delivered volume gains in
elastomers applications, including: footwear and photovoltaics
applications in Asia Pacific; hot melt adhesives in EMEA; and
infrastructure applications in North America.

Operating EBITDA for the segment totaled $1.3 billion, flat with pro
forma operating EBITDA in the year-ago period. Price and volume gains,
including the benefit of new capacity additions, were offset by
increased feedstock costs; cost and production impacts from
hurricane-related disruptions and maintenance activities; as well as
commissioning and startup costs for the U.S. Gulf Coast growth projects.

Equity earnings for the segment were $59 million, down from pro forma
equity earnings of $64 million in the year-ago period. Improvement in
Sadara equity losses, driven by higher sales of polyethylene, were more
than offset by reduced earnings at the Thai joint ventures, due to
rising raw material costs, and at the Kuwait joint ventures, driven by
planned maintenance activities.

Specialty Products

Electronics & Imaging

Electronics & Imaging delivered net sales of $1.2 billion, an increase
of 1 percent versus pro forma net sales in the year-ago period. Net
sales growth was led by volume gains of 6 percent, which more than
offset a 5 percent negative impact from portfolio-related actions (sales
of the Display Films and Authentication businesses).

Volume growth in the segment was driven by double-digit gains in
consumer electronics, industrial and semiconductor end-markets,
primarily in Asia Pacific. Continued demand for mobile phones and other
consumer electronics, as well as industrial applications drove volume
gains. Increased semiconductor content in end-use applications drove
strong demand in both memory and logic market segments. Partially
offsetting this growth was a decline in photovoltaics as demand for
Tedlar® film was more than offset by continued declines in
Solamet® paste due to competitive pressure.

Operating EBITDA for the segment was $367 million, up 11 percent from
pro forma operating EBITDA of $331 million in the year-ago period.
Volume growth, lower pension/OPEB costs, and cost synergies more than
offset hurricane-related costs, a negative impact from portfolio and
higher raw material costs.

Nutrition & Biosciences

Nutrition & Biosciences reported net sales of $1.6 billion, up from pro
forma net sales of $1.4 billion in the year-ago period. Net sales growth
of 10 percent was due to a 6 percent net benefit from portfolio, a
2 percent benefit from volume and a 2 percent benefit from currency. The
positive impact from portfolio-related actions was due to the
acquisition of FMC’s Health & Nutrition business.

Volume growth in the segment was led by increased demand for bioactives,
continued growth in probiotics, demand for microbial control solutions
in energy markets in North America, and growth in pharmaceuticals,
including excipients and vegetal-based encapsulations. Growth in
bioactives reflected strength in home and personal care and animal
nutrition markets due to new product introductions. Continued growth in
probiotics was driven by demand in Asia Pacific and Europe. Partially
offsetting this growth were declines in systems and texturants due to
continued weakness in packaged food markets, primarily in North America,
and specific actions taken to exit low-margin market segments.

Operating EBITDA for the segment was $352 million, up 14 percent from
pro forma operating EBITDA of $309 million in the year-ago period driven
by a portfolio benefit, lower pension/OPEB costs, cost synergies, and
volume growth. Partially offsetting these gains was the absence of a $27
million gain from a prior-year asset sale.

Transportation & Advanced Polymers

Transportation & Advanced Polymers reported net sales of $1.3 billion,
up from pro forma net sales of $1.2 billion in the year-ago period. Net
sales growth of 10 percent included volume gains of 5 percent, local
price benefits of 4 percent and 1 percent from currency. The growth,
which was achieved in most geographies, was led by strong demand from
the automotive market and broad-based demand from electronics and
industrial markets. Focused application development and continued trends
in light weighting of vehicles and higher temperature environments
fueled stronger demand for adhesives and engineered polymers. The
segment continued to outpace global industry auto builds, which
according to IHS rose 1 percent in the quarter versus last year.

Volume gains were also achieved by Kalrez® and Vespel®
high-performance parts as demand from the electronics and aerospace
markets remained robust while demand for specialty silicones in medical
devices remained solid. Volume growth was led by Asia Pacific, followed
by the Americas and Europe.

Operating EBITDA for the segment was $365 million, up 32 percent from
pro forma operating EBITDA of $276 million in the year-ago period.
Benefits from lower pension/OPEB costs, volume gains, improved local
price and cost synergies more than offset higher raw material costs.

Safety & Construction

Safety and Construction delivered net sales of $1.3 billion, compared
with pro forma net sales of $1.2 billion for the year-ago period. Net
sales growth of 4 percent was driven by volume gains of 4 percent and
currency of 1 percent, partly offset by a decrease in local price of 1
percent. Volume growth reflected continued solid demand across
industrial markets, construction and medical packaging. Local price
declines reflected pressure in isolated areas of aramids as well as
product mix, partly offset by gains in building solutions.

The volume gain was led by Tyvek® protective materials, which
achieved double-digit percent volume growth due to increased demand from
industrial and construction markets as well as medical packaging.
Contributing to the volume gain was a high-single-digit percent increase
in Kevlar® high-strength materials, reflecting higher demand
from industrial markets. A low-single-digit percent volume gain from
water filtration reflected strength in ion exchange resins and
ultra-filtration in industrial applications. Building Solutions volumes
also rose by the low-single-digits percent with gains in foam board amid
stronger construction demand. Nomex® thermal-resistant
garment volumes were even with strong sales in the prior year’s quarter
while Corian® design volume was constrained by raw material
availability. Regionally, volume growth was driven by Europe, followed
by Asia Pacific and Latin America. Drivers included Tyvek®
for graphics and house wrap in EMEA, and gains from Kevlar®
in Asia Pacific.

Operating EBITDA for the segment was $285 million, up 26 percent from
pro forma operating EBITDA of $227 million in the year-ago period as
lower pension/OPEB costs and broad-based volume growth was partly offset
by the impact of lower local price and higher raw material costs.

Outlook

“The trajectory of global economic expansion has gained momentum –
driven by robust fundamentals in consumer and business confidence,
employment and wage growth and manufacturing and infrastructure
investment activity,” said Andrew Liveris, executive chairman of
DowDuPont. “In developed economies in particular, such as the United
States, Germany, France, Canada and the U.K., we continue to see strong
leading indicators of broad-based growth. Furthermore, early signs from
the business community point to U.S. tax reform as a catalyst for
further domestic capital investments, which will take advantage of
enhanced competitiveness and pro-business incentives. Adding to this,
the emerging middle class in developing economies, most notably in India
and China, but also in Africa and the Middle East, continues to support
sustainable growth.

“All of this bodes well for the products and technologies within
DowDuPont’s portfolio, which are well positioned to meet growing needs
in the Materials Science, Agriculture and Specialty Product sectors.
Looking ahead, our levers of value creation are clear: continuing to
further unlock the cost and growth synergies of this merger transaction,
capitalizing on our early success and achieving the enhanced cost
synergy commitment we are announcing today; delivering new products from
our in-flight growth investments and powerful innovation pipeline; and
quickly standing and separating into three industry-leading companies on
the new accelerated timeline we announced today.”

Conference Call

The Company will host a live
webcast of its fourth quarter and full-year earnings conference call
with investors to discuss its results, business outlook and other
matters today at 8:00 a.m. ET. The slide presentation that accompanies
the conference call will be posted on the DowDuPont Investor Relations
events and presentations page.
A replay of the webcast will also be available on the investor events
and presentations page of www.dow-dupont.com.

Contacts

DowDuPont
Investors:
Greg Friedman
[email protected]
+1
302-774-4994
or
Neal Sheorey
[email protected]
+1
989-636-6347
or
Media:
Rachelle Schikorra
[email protected]
+1
989-638-4090
or
Dan Turner
[email protected]
+1
302-996-8372

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