Q2 2025 DuPont De Nemours Inc Earnings Call
And thank you for standing by. My name is Chris, and I will be your conference operator for today.
At this time, I would like to welcome everyone to the DuPont second quarter 2025 earnings conference call.
All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. We kindly ask that you limit yourself to 1 question and 1 follow-up.
if you would like to ask a question during this time, simply press star 1 on your telephone keypad,
If you wish to withdraw your question, you may also press star 1 again, thank you for that. And I would now like to turn the conference over to VP for investor relations and Gian Christopher you may begin.
Good morning, and thank you for joining us for DuPont's second quarter, 2025 Financial results conference call.
Joining me today are Ed Breen, executive chairman Lori. Cotch chief executive officer.
John Kemp, Karen electronics, business, president and CEO, Alex of the future Community, electronics company, and Antonella Franzen Chief Financial Officer.
We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link.
Please read the forward-looking statement disclaimer contained in the slides.
During this call, we will make forward-looking statements regarding our expectations or predictions about the future.
Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements.
Our Form 10-K, as updated by our current and periodic reports, includes a detailed discussion of principal risks and uncertainties which may cause such differences.
Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclude significant items.
We will also refer to other non-GAAP measures.
A Reconciliation to the most directly comparable. Gaap, Financial measure is included in our press release and presentation, materials, and have been posted to DuPont's investor relations website.
I'll now turn the call over to Lori. Who will begin on slide 3?
Good morning and thanks everyone for joining our second quarter call.
Earlier today, we reported another solid quarter ahead of our previously, communicated guidance.
Second quarter sales of $3.3 billion grew 2% on an organic basis.
Operating ebit da of 859 million increased 8% year-over-year resulting in operating eida margin of 26.4% and increase of 120 basis points from the prior year.
Adjusted EPS of a12, was up 15% year-over-year.
As a result of our strong second quarter of financial performance. We are raising our full year earnings guidance Antella will provide further detail shortly.
Second quarter saw continued strength and electronics driven by AI technology demand. In both interconnect Solutions and semi and strong volume growth in healthcare and water.
This momentum is continuing into the third quarter with order patterns remaining strong through July.
Weakness and construction continued to impact, our Diversified industrial business. During the quarter.
I also wanted to highlight that yesterday. Join me with kamora's and corteva. We announced a settlement with the state of New Jersey to comprehensively resolve all current and future environmental claims including Pas, across the 4 current, and former operating, sites and Statewide for Pas claim.
The settlement will be payable over a 25-year period and our portion of the total settlement is 177 million on an npv basis.
Importantly, this settlement also includes HS, which was less than 1% of the total settlement amount.
The settlement is subject to final court approval.
Regarding our separation. Milestones progress on the intended. Spin-off of Kuni, Electronics continues, and we remain on track for a November 1st, separation date.
In June, we completed the composition of the community board, adding 2 new members that bring a depth of experience and knowledge of the semiconductor sector that complements the existing diverse set of skills.
This amendment to the form 10 registrations.
This will continue to be an iterative process with the SEC as we progress towards separation.
Turning to slide 4.
We are pleased to announce that we will be holding an investor day on September 18th for Dupont and Community focused on introducing both portfolios and their respective strategies for driving value creation.
I continue to be excited about what lies ahead for both future independent companies and the investment potential for each for the new DuPont as a leading Advanced Solutions provider and community. As a peer play technology solutions leader within the semiconductor value chain.
As we look forward to the new Dupont, we've assembled a highly experienced senior leadership. Team consisting of a healthy mix between in-house and external talents who bring great experience in driving growth and margin expansion.
To highlight a few of our new leaders, your room Bloom hard. Currently leads our Healthcare and water Technologies business.
The Rune has both internal and external experience in complex, Global markets, with a strong focus on Commercial Excellence, as well as a growth mindset.
Beth Ferreira recently joined our team to lead our Diversified industrial business.
That brings deep experience and Global Perspective in the industrial space with key roles at ITW and IMI where she successfully LED transformation. Efforts, drove operational efficiencies and fostered a customer-centric culture.
David Cook. Just recently joined us from Diana, her and will be our chief operations and Engineering officer. Dave, brings extensive knowledge, and operational excellence with a proven track record of driving performance improvements and implementing Business Systems.
The new Dupont will have a more focused portfolio highlighted by high growth Healthcare and water and markets with a continued. Emphasis on Innovation and customer relationships. We are well positioned to accelerate growth through a more agile and focused organization with that. I'll now turn the call over to John
Thanks, Lori, and good morning, everyone. As we approach our November 1st spin-off, Community is poised to emerge as a premier pure-play technology solutions partner to the semiconductor value chain, with a leading portfolio of focused business models and global and local scale. I could not be more excited about Community's future.
Established with Decades of innovation, quality consistency and Technical know-how. We are a trusted partner to the world's leading semiconductor customers and electronics Industry. Oems our Broad and uniquely positioned portfolio, brings end-to-end Solutions, and competitive advantages that span the entire Electronics value chain. Enabling AI applications as well as high performance Computing. And advanced connectivity Community is, well, positioned for growth powered by a large and expanding addressable market, and multiple industry Tailwinds,
I am equally excited about our upcoming investor day at that event. I will share more about our portfolio and strategy unique competitive advantages and Innovation engine to drive long-term growth
I will now turn the call over to Antonella to cover the financials and Outlook.
Thanks John and good morning everyone. I am pleased with another quarter of organic growth and margin Improvement as continued, volume growth across many key and markets and operational focused by our teams drove strong financial performance in the quarter including solid cash conversions.
Beginning with the second quarter, financial highlights on slide 5.
Net sales of 3.3 billion. Increased 3% versus the year ago period on 2% organic sales growth.
Organic sales growth consisted of a 4% increase in volume, partially offset by a 2% decline in price.
Currency was a 1% benefit in the quarter.
From a segment view. Both segments sell organic sales growth with electronics code and Industrials Co up 6% and 1% respectively.
For organic growth during the quarter was led by high single-digit growth and interconnect Solutions and Healthcare and water Technologies along with mid single digit strengths in semi.
From a regional perspective, asia-pacific, delivered 4%, organic sales growth year-over-year.
Sales were up 2% in Europe and 1% in North America.
Activity benefits were partially offset by growth Investments.
Operating, even a margin during the quarter of 26.4%, increase 120 basis, points year-over-year.
Returns adjusted free, cash flow of 433 million and related conversion of 93% in the quarter.
This was in line with our expected acceleration.
Turning to slide 6, adjusted EPS for the quarter of 1.12 cents, per share, increase 15% from 97 cents in the year ago, period.
Higher segment. Earnings of 11 cents, drove the year-over-year. Increase.
Along with a lower tax rate, which resulted in a 4% benefit.
Turning to the segment results, beginning with Electronics Co on slide 7.
Second quarter, net sales of 1.2 billion, increased 6% versus the year ago, period on both a reported and organic basis, due to an 8% increase in volume partially offset by a 2% decrease in price.
Currency was about flat during the quarter.
At the line of business level organic sales for Semiconductor Technologies were up mid, single digits and continued, strong and market demand driven by Advanced nodes and AI technology applications.
Semi demand was better than expected, driven by timing shifts of about $15 million from the third quarter into the second quarter, primarily in China.
Interconnect Solutions also posted another strong quarter with Organic sales of high single digits reflecting continued demand from AI driven technology ramps.
And benefits from content and share, gains across advanced packaging and thermal management solutions.
Operating ibida for electronic. Sco of 373 million was up 14% versus the year ago period as organic growth and lower legal costs were partially offset by growth Investments to support advanced nutrients and AI technology ramps.
Operating IBA margin during the quarter was 31.9% up, 220 basis points versus the year ago period.
Turning to slide 8.
Industrials, seos second quarter, net sales of 2.1 billion were up 1% versus the year ago period on both a reported and organic basis as 2%. Volume growth was partially offset by a 1% decline in price.
Currency was about flat during the quarter.
For the second quarter, Healthcare and water sales were up high single digits on an organic basis versus the year ago. Period with strong growth in both business
Diversified industrial sales were down low, single digits on an organic basis, primarily due to softness in construction markets.
Operating ibida for Industrials code during the quarter of 509 million, was up 3% versus the year ago period on organic growth and productivity gains.
Operating, even a margin during the quarter was 24.4% up, 50 basis points from the year ago, period.
Turning to slide 9 which outlines our latest view on 2025 Financial guidance.
From a top line perspective, the midpoint of our full year total company. Net sales, guidance of 12.85 billion remains unchanged as currency, benefits are offset by volume softness.
Primarily due to a delayed recovery in construction and markets.
We are raising the midpoint of our full-year operating EBITDA and adjusted EPS guidance to $3.36 billion and $4 per share, respectively.
Driven by our stronger second quarter performance.
Which more than offsets the net impact of tariffs. Now incorporated into the Outlook.
The net tariff impact assumed in the second half of 2025 is currently estimated as a $20 million headwind or $0.04 per share.
Equally split between the third and fourth quarter.
Our updated guidance assumes, no earnings benefit related to currency fluctuations versus the prior guide. Given our Geographic call space,
For the third quarter, we estimate net sales of about $3.32 billion.
875 million.
And adjusted EPS of $1.15, per share.
which includes a 2 cent headwind related to tariffs and a 5-cent year-over-year headwind related to tax
Our third-quarter guidance assumes about 3% organic sales growth versus the prior year, led by continued growth in healthcare, water, and electronics markets, partially offset by continued weakness in construction and related markets.
Overall, another solid quarter and strong first half of the year.
I want to thank our employees, for delivering these results and for their ongoing support of the separation process.
With that, we are pleased to take your questions and let me turn it back to the operator, to open the Q&A.
And with that, ladies and gentlemen, we'll take our first question from Scott Davis of Melius Research.
Hey, good morning everyone. Lori and Mitchell, good morning.
um, I just wanted to
Drill in a little bit on Industrials. Uh, because in 3 months, it's going to be a standalone. The 1% price. Would I assume that's mostly just uh, due to the tieback weakness and some price. You have to kind of give up in that business when material costs are down,
Yeah, good morning Scott. Um no it's more related to the price that we took through the inflationary period and having to give back a little bit as the raw material environment resolved. So it really was more in the Diversified industrial space so it really wasn't anything in the in that uh tieback or Healthcare space. So um, we look to reduce that price headwind as we go through this year, um, just as we lap some of the concessions that started in 20204,
Okay. And will there be an effort to capture price to offset the Tariff impacts then as well? Lori?
We do have some, but the majority of the reductions is related to supply chain moves. So we're able to move product around to avoid the tariffs. Um, there is a little bit of charges that we put in to offset, um, but the majority of the benefits, um, reducing the growth headwind down to the $20 million net headwind is from supply chain moves.
Okay. Uh, that's it for me. I'll pass it on. Thank you. Best of luck in the spin. Thank you. Thanks.
Thank you.
All right. Next up, we have Jeff, sprog of Vertical Research Partners.
Hey, thank you. Good morning, everyone.
Um, hey, good morning. Um, hey on on the settlement, obviously, nice to see that done. Uh, very interesting comment, right that. Um, ale F was, you know, 1% of the settlement amount, you know, you, you've, you've made a long time argument, right? That you shouldn't really be embroiled in a triple F to a significant degree, um, but I, I just wonder how we should read that across, um, you know, 1 could maybe guess that New Jersey was so big and complicated, and there was so much going on that Alf. Considerations were really weigh down the pecking order, uh, but perhaps not, I would just, I'd love your thoughts on how the read that 1% across the other outstanding ale, F kind of open issues that you're dealing with.
Ya know, we were definitely happy to announce the settlement and get another 1 behind us and you know the real important piece for us was it it's paid over a 25 year period so that the cash flow is related to the settlement monthly material to the overall, Dupont cash flows at any period. So um but to your question, the settlement amount that was related to a triple f um is in line with where we said the original water district settlement case would be with about 3 to 7% of the total headwind belonging to DuPont. So if you take our portion is related to a triple F and um, compare it to the 3M announcement earlier in New Jersey, it's in that 5% range. So right in the middle of that 3 to 7%, so that was really important.
For us to get out there to kind of give an indication of where future settlements and states, where we didn't have a site, could land with respect to the overall landscape. And Jeff, we have one more state where we have a site where we've done significant remediation that we continue to. So at some point, you'll probably see something there that'll be North Carolina. But every other state is a triple F and should fall, as Lori said, as this one did in between that 3% to 7%. And then remember the 3% to 7% were a third of the 3% to 7% at DuPont. One of the other things we liked about this, which Lori mentioned, was over 25 years. So I think there's opportunities to structure things like that for the others.
No. Yeah, that's great to hear. Uh, and then, um, just back to um,
Co, um, just looking at Healthcare and water, uh, were they up collectively high? Single digits or both individually were up high single digits. But really, my real question is, um, just, you know,
I would, I would assume we're kind of through the inventory liquidations that have been weighing on those end markets. Uh, but but, can you give some color on that? Have we recoupled the end demand? Anything else going on in the channel there? Um, and just how you see, you know, the back half playing out in those businesses.
Yeah. No, they were both up nicely. Um, so Healthcare was a little bit ahead of water with respect to growth but both up nicely. And as you had mentioned, their decoupling from the, the lapping of the dock that happened in in both row, on the water side and then in in um, medical packaging on the tie back side. So we're really starting to get to a nice position. Um, as we look to the back half of the year, we'll continue to expect outsized growth versus the rest of the portfolio in healthcare and water. Um, really a lot of opportunities on on the water side, just giving the secular Trends around access to clean water and desalination. And on the the healthcare side, just with the Aging population. And we've also been um, pretty clear that we'll look to add to those pieces of the portfolio as we go forward from an m&a perspective. So, really starting to try to bolster that piece today. It's about 40% of. The portfolio will look to increase that as we um can advance some of our m&a activities.
We've had some people play in healthcare bench and you know, uncertainty about, you know, Medicaid, Medicare reimbursements and the like, you're not seeing any of that sort of pressure in your business.
No.
Right. Thank you.
You're welcome.
All right, next up, we have Steve Tusa of JP Morgan.
Hi, good morning.
Morning.
Um, just on this, the electronics trends that are going on up there, there's just a lot of mixed messages. Um, how do you see this cycle in totality? Are you guys at kind of like a normalized run rate of growth? Are we still like, are we at a bottom in some of the consumer markets? Um, and therefore things can accelerate like what what is the do you think the broad messaging on the electronic side?
Thanks Steve. Great. Great question. And I know there's been a a lot of discussion already over the last couple of weeks, there's lots of Industry, players have reported already. What I would say is that we continue to be in a fairly mixed environment, really all of the growth so far. For the last several quarters is really coming from AI driven applications across Advanced nodes, Advanced packaging and data center. Most of the rest of the electronics, uh, economy kind of remains relatively weak. I think we're starting to see the green shoots of stabilization and recovery on, uh, the
Lagging Edge, parts of the market, uh, and we expect kind of slow Improvement as we move through the back, half of the year for the, the, the more industrial focused, lagging Edge, semiconductor nodes. And then, um, we still have a relatively weak consumer environment where you know, consumer devices are expected to be up kind of low single digit. So, you know, we're really happy with uh, with the growth that we've seen and the position of our portfolio with uh Advanced Technologies and data centers and advanced packaging. Um but as we go forward and we start to see broader recovery, I think there's plenty of opportunity to see continued Improvement.
And then just 1 like 1 follow up to that. Um, I if you, I guess there were some news around some changes in the way that they're, uh, assembling and Manufacturing some of these chips with, um, I guess direct to the the board, um, uh, you know, type of process. I'm certainly not a, not an expert on this. Um, I'm not sure if you guys have have heard about that, or looked at it. And what, that would mean for kind of your content in General on, on some, of these new Chips. If they change that process,
Great, thanks a lot. Good luck.
All right. Next up, we have Chris Parkinson of Wolfe research.
Great. Thank you. Uh, John if I could just ask that question slightly differently when I take a step back and I look at the environment heading into 2026. Um, I think most people are aware of the kind of the no transitions, but when you think about your portfolio and where you stand and what you're seeing in terms of second half growth rates and where you think you could ultimately be, could you just quickly comment on what you're seeing across, you know, semi Advanced packaging and I you know, ICS in terms of, you know, data center, um, HPC and hyperscalers. It seems like there's some Divergent growth rates but things should ultimately be moving in the right direction over the next 12 months. So I'd love to hear your thoughts on that. Thank you.
Yeah, Chris, thanks for the question. I I, I think you're absolutely right, you know, the hyperscalers, you know, for the most part, uh, it seemed to continue to be, you know, very robust in their, in, in their Investments and continuing to put in capacity. And, and we see, um, ongoing node migration to support those investments from our customers. You know, we're really excited as we get into the second half of the year on the Node migrations particularly at N2, as well as some of the hbm, whether that's 3 e or 4 on the D Ram side. Um, you know, we're really well positioned with content gains on both end 2 and on, on the hbm side. Um, so we see that as a as a net positive as as those uh, more advanced
Nodes start to scale and then to the to the comment I made earlier as we start to see a a broader Market recovery uh both in the more industrial parts of the market and the consumer parts of the market. As we start to see some of those refresh Cycles, tick up. Um, obviously, that will be, uh, a nice plug as well and and as it gets into, uh, more of 2026, you know, stay tuned for that. As, as we mentioned, we'll be doing investor day in mid-september and we'll provide a lot more color on, uh, on the trends that we're seeing kind of in the second half of the year and heading into next year.
Thank you for the extra detail.
All right. Next up, we have John McNulty of BMO Capital markets.
Yeah, thanks for taking my question, um, wanted to dig into Healthcare and water, a little bit more, the high single digit growth. Um, certainly looks like it did better than what we saw from most in water and, and actually, most in in health care as well. I guess, can you speak to the drivers that you're seeing there? Which of them are kind of industry or End Market driven, and which ones are maybe some of your own initiatives that may be helping to accelerate the growth? Thanks.
You know, thanks. Um, so a little bit was the recovery. So this was probably, the last quarter that we would see the outside number because of the lapping of the dock last year on the row side and on the, um, medical packaging side and then also on the Livio side. So on the Bayou, Bayou side, we're seeing nice growth there. But underlying, um, it's really just goes back to the mega Trends and we're really well positioned to take advantage of those. So we've got really great customer relationships, um, we're leading positions and really all the end markets that we compete in. We've done a really nice job on the water side to, um, really Shore up our position in China. Um, so we had mentioned that last year. We saw a bit of a dto, especially within the distributor channels, um, that that led to uh, negative growth in 2024 and we quickly corrected that and got us back on track to see, um, really nice, uh share regain within the China on the row side. So it's really just being well, positioned in a nicely growing market and as I had mentioned,
We will continue to try to add to that portfolio so that we can continue to drive outside growth for the new DuPont.
Got it. Okay thanks. Uh thanks for the caller on that and then maybe just the second question. Just look, you're splitting up. A company, has a lot of things to do. As I'm sure you're, you're all seeing, I guess. Where does m&a and building up a list of assets for potential acquisition and a team to evaluate them? Where does that fit kind of in your to-do list? And how should we be thinking about that?
That and how are the boards thinking about that? When the assets actually do split, come November.
Yeah. So
Will look to continue to take advantage of. Obviously we completed spectrum and donnatal um the past couple of years that really gave us nice positions in the the med device space and we'll look to add on there and the same in water. So you know making the decision early earlier this year to keep water in the portfolio was the right 1 and we'll continue to add to it. So it's a key focus of our strategy team, they're not really involved in the separation work that goes on so they can obviously dedicate their their full time to looking and scouting out new opportunities for us.
Thanks very much for the caller.
All right, so next up we have David beg, lighter of dorche Bank.
Thank you. Good morning. Uh, John just an internet internet, internet, interconnect solution. Sorry. Uh, organic sales. Growth did slow uh versus q1 or the rate of growth, it's slow. Can you talk to why that occurred
Yeah, I I think it's really just the, the year-over-year comp. So, first quarter of 2024, we were still kind of in the midst. The recovery hadn't, really started yet. And and so, the first quarter of 2024 was a was a pretty easy comp and and we started to see acceleration and growth and the recovery especially on the AI and advanced packaging side. Um, really starting in the second quarter and then continuing through the back half of 2024. So, you know, the ICS is, is now posted.
Did several really strong quarters on the back of of some great wins and share gains in both Advanced packaging and data centers. And we expect that momentum to continue into the back half of the year,
Perfect and Lori in the past news. Yesterday your agreeing to buy um rights insurance proceeds from kamor, can you discuss why you're doing that and what that means for potential future support uh, from DuPont?
To Kors. Thank you.
Yeah so um together with corteo we did that too ensure that you know kamora's had the ample liquidity to be able to make the payments over the next 5 years. And I think they were making statements that it covered them through 2030 so they should be in really nice position, um, to be able to make those payments as they come due. And I think reiterating what we had said earlier, just the 25 year payment schedule, um, was really key to that announcement and sets a precedent, hopefully, for for future announcements. So that was really the reason behind it. We, you know, we always have the mou broadly governing the, um,
The payments between the 3 parties. And I think it's been working really well for us.
Yeah and and and we're also highly confident. We're going to recover the insurance money so it's it's not a freebie, we'll get paid back on that.
Thank you.
All right. Next up, we have Josh Spectre of UBS.
Yeah. Hi, good morning. Um, I want to ask a question for John, about the, the mix and electronics. I think 1 of the learnings from us, from the form, 10 fils the greater share of China, exposure within Community. You know, it's about 34% almost double where some of the peers are and I think some of the commentary in the industry is you know, higher exposure to Leading Edge nodes, which helps Drive above average growth, can you just square that view versus higher exposure in China. And you know why that is I guess good exposure in in your opinion? Thanks.
Yeah, thanks Josh. So when you look about China for for a community, you know, it's a last year and I think this is what's in the form 10 we had about 1.4 billion, it's just over 30. It's about a third of our total sales when you look at that. Um, more than half of that is really coming from the ICS part of the portfolio and the PCB and an assembly and and that's just a function of where that part of the market is and and the preponderance of printed B uh printed circuit board and assembly Manufacturing in the world is taking place in China and so it's somewhat natural that our position uh, in the with the technology leaders in that space would would give us some outside sales in China and then on the semi side, you know, it's about, um, nominally, it's about 6.
Out. Typically, we would expect to be about 30% of sales in China and I think that's kind of where we'll normalize to, um, that's fairly consistent with others in the industry. And I, I think China's a large and, and growing Market in electronics and and we're well positioned to win in China. Uh, and you know, we'll particularly in in, like I said, in some of the circle board and assembly Technologies where we've got local teams on the ground there and and we're doing a lot of local for local type strategies. Um, if as supply chain shift, uh, based on, kind of geopolitical or other requirements, you know, we've got a really good Global position and, and we'll shift with our customers as those Supply chains evolved over time.
Thanks, that's very helpful. Um, I wanted to ask separately just if you can comment at all on if there is a process on airman's divestments and you know, if so I guess how you're thinking about in the context of an investor day in a month and a half, is there a goal to maybe have a firm view of if that's in or not the portfolio, before that happens to make an easier communication story for you on the remaining code Dupont, or is this just ongoing and we'll see where it ends up.
And I think so, I mean, no comment our Focus right now obviously as it mentioned is getting Community out the door on November 1st. So no comment on the air Miss speculation. You know, we have been pretty clear though that we'll look to shift the focus of the portfolio towards the, the health care and the water. And that we had incremental portfolio work that we would probably be doing for a new Dupont. So, um, you know, I'll kind of leave it at that. So no incremental comments to the news out there.
Okay, thank you.
Hmm.
Next up, we have John Roberts of Missoula.
Um, thanks. Let me ask this maybe a different way. The agreement with Kors and Corteva has a minimum fee, but the report... So if you do decide to further focus your main charge, um, how much ever doc could you do best thing about going below the minimum requirement for the lower leverage, um, that you're going to have or main co signal that you're going to do acquisitions first? That might give you some feathers after that, and I'm going to leave it out.
Yeah, so we'll reset the minimum ebit da between community and new dupin at separation and that'll kind of set the new minimum floor for each of those entities. So there will be a cushion in each side, if they're wanting to be incremental divestment, um, to be made to be able to, to more of the portfolio. So, um, there is room there at the outset, obviously, the intent, I think, on both organizations, uh,
If they're if they were divestments would be to redeploy the proceeds in m&a to continue to grow. Um, so that you don't um, run into problems with the core type of side that are agreement, but there will be some cushion at the outset.
So, you know, today our combined e but uh is over. So each of them will have an over
All right. Next up, we have Alexi. Yep, of keybanc capital markets.
Alexi your line is now open.
Perhaps you have a song mute Alexi.
I think we can just move to the next question.
Well, do you have, Patrick Cunningham of City?
Hi, good morning, everyone.
So, you have 3, pretty robust, you know, margin performance and Industrials and posting pretty strong incremental, margins, despite price down and can you help us? Think about the margin progression? You know, for the second half giving you lots of bulk of docking and and maybe have some additional mixed normalization there.
God that's helpful and then just to follow up on Industrial stuff on pricing. Just just to clarify, we should expect less of a drag for pricing the second half and now that this will be a standalone business, you know, how should we think about pricing across, you know, the sub businesses that are more normalized environment?
Yes. So as Laurie mentioned earlier, so 1 yes we will continue to see pricing be less of a component of that in terms of price going down. Um, as Laurie mentioned earlier, where we have been seeing some of the, the pricing is on the Diversified industrial side. Because when you take a look back at the last couple of years, we had some really strong pricing that clearly more than all set. Um, the impact of some of the increase costs that we had. So we always take a look at the trade-off between volume and price and you always got to look at each business individually when you're doing that from a line of business level. And what's most important at the end is that we continue to grow the business. From an organic perspective and continue to have healthy margins.
Great, thank you so much.
All right, next up, we have Michael Sisson of Wells Fargo.
Hey, good morning. Um, just for Industrial Co, you know, volumes and EBA performance this year has been, you know, much more stable than my traditional chemical coverage. Anything else to point out to folks?
Um as you as you look to maybe shift that SIC code to a to to Industrials or or manufacturing versus chemicals that that you that you might highlight as your analyst day, but just give us maybe a preview of the case there. Um, given the results this year.
yeah, I think when you kind of take a look at our
portfolio, it's pretty clear that Industrial
Within our performance. So, when you take a look at kind of the composition of Industrials Co and 40% of it being in healthcare and water and then even when you look at the Diversified side, although there are a couple of different components within that piece of Port the portfolio. It's clearly much more akin to an industrial portfolio and I think that that's very clear. We are continuing to progress down the path relative to to the Geeks code. Um it will be looked at and we'll see ultimately where we land but I think that there's no question that, we're an industrial company.
Great, and a quick, follow-up for electronics. Go. Can you remind us, you know, kind of where we're at in terms of, um, how much the portfolio is is, uh, is is an advanced nodes and you know how much AI will continue to drive the growth there, uh, down the road.
Yeah, um Michael. So for advanced nodes, we have about uh 35% of our semiconductor, exposure is in advanced nodes, um, which compares to about kind of 20% of the total industry. So nice outsized outperformance there, which is kind of contributing to us, growing better than the market on the AI side. You know what we've said before is AI high performance Computing, and data center, um, is about 15% of our portfolio and it's it's growing nicely in the second quarter. For example, we saw growth rates above 20% in that, AI data center space. So really, uh, really pleased by the performance there.
Alright, thank you.
And next up we have Frank Mitch of fermium research.
Yes. Hi, good morning. Um, so the, uh, the Chinese investigation into, uh, into Tyvek uh, was dismissed. I was curious if you have any further, uh, uh, dialogue with with the Chinese. And, you know, are there any uh, other investigations that, uh, that they may or may not be uh, undertaking.
No, no. So we were happy to see it suspended and closed. And so, you know, it was, it was when it first came out, um, news that we quickly said with related to Tyvek and and Tyvek only, and now it's been suspended. So we were happy with that conclusion. All right, terrific. And then, you know, the adjustment downward of the Tariff impact from 60 million to 20 million. Can you provide any more context on the on the 20 million? And, you know, could that, you know, obviously things are changing on a daily basis, but any, uh, any context you can provide around, uh, that the expectations for the, for the 20 million.
Came out Sunday night into Monday. Um, is not necessarily included. In the 2000. We continue to watch it. Closely as do all other companies and continue to work our mitigating actions as we move forward.
Thank you so much.
Next up, we have Vincent Andrews of Morgan Stanley.
Uh, thank you and good morning. Just wanted to revisit Electronics Co and um, the the margins and maybe some thoughts into the 3Q on the margins. You know, you had volume up 8% sounds like that had some favorable mix to it as well, but price was down 2 and you still got, uh, IBA, margins up, 220 basis points, which is a robust increase. There was also a call out of lower legal costs. So could you just help us understand, you know, which parts of that are sustainable into where the the margin in 3 Q should be um and and how you're able to offset that that that negative price. Thank you.
Yeah. Thanks thanks. Mitch now the the the price um decline that we saw it's it's really a more of a mix issue. We with the with the strong growth that we had in ICS ICS typically has a slightly lower margin than I said than our semi business. So as the ICS business as a percentage of the sales is a little bit higher, it it brings the margin down just a little bit. Uh, but not too much. Still still pretty healthy levels as it relates to um, to the overall margin potential, uh, very similar to what Antonella comes.
Mented on earlier, the teams do continue to do a really nice job of of balancing, the volume and price equation and then driving underlying productivity. Obviously, as we get more volume, uh, we do see nice incremental, uh, as we put more volume through the plant sites and, and then the teams continue to drive additional productivity on, top of that giving us opportunity to continue to invest in our technology, roadmaps to really sustain and fuel, the organic growth of the business. So I I feel good about kind of where margins are at and and I think there are in a quite healthy place for us as we look to the second half of the year.
Okay, thank you. And and and and Al. If I could ask you on on sundry expense, um, there's been a pretty big swing in it, uh, year to date of about 137 million. Um, how much of that is stuff that sort of was 1 time items and was excluded versus stuff that uh you know, is actually in the numbers and and where do you think that that they'll wind up being for the full year? Is it just sort of self out through the course of the year? And is there some way we can tease it out of the the guidance that's on. I think it's slide 14 that you have the, the below, the line stuff.
Yeah, so when you look at our son expense, 1 of the big things in there is the Market to Market on the swap. So that's really what's driving the number within that line item and that is excluded from our underlying results that we put on.
Okay, all right. Thanks very much.
All right, and with that our final question for today will come from Aaron this 1 of RBC Capital markets.
Hi. This is Adam on, for roon. Thanks for taking my question and uh, congratulations on a great quarter. Uh, you know, you guys have already spoken at length about 3 reasons for the cancellation of the water spin previously. But you know, looking past the community spin November.
Are you looking at the water business as as core to the new Dupont, or do you think you could potentially revisit that in the future?
No, thanks for the question. Yeah, we definitely see it as core to the new Dupont. So, you know, the decision to keep and Shore up the growth portfolio and then do Dupont with the right 1. So we've got roundly, 40% of our Revenue, um, today in healthcare and water. And we'll look to add to that, to, to bolster it, and get it, um, increased in the future. So, no intent to do anything, but grow, and invest in the business.
Great, thanks for that. And if I could slip in 1 more, uh, just to dig a little bit more into the Tariff comments, you mentioned that you're taking a lot of mitigating factors is that mostly from moving volumes around your network, uh, changes in procurement. I think Joe mentioned local for local strategy. Uh, or is it a combination of all that uh any additional colored on? That would be helpful. Thanks.
Yeah, so I would say about more than 90% of it is really related to supply chain movements. And then, as Laurie mentioned earlier, there is a small piece related to search charges.
And with that ladies and gentlemen, this does conclude our Q&A session so I'll turn things back over to an for concluding remarks.
Great. Thank you everyone, for joining our call for your reference, a copy of our transcript will be posted to DuPont's website. This officially concludes today's call. Thank you.
Now, disconnect your lines and thank you again for joining us today.