DUPONT DE NEMOURS, INC. 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: •Recent Developments •Result of Operations •Segment Results •Changes in Financial Condition
Overview
As ofJune 30, 2021 , the Company has$6.6 billion of working capital and approximately$4.0 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 continued operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance. OnFebruary 1, 2021 ,DuPont completed the separation and distribution of the Nutrition & Biosciences business segment (the "N&B Business"), and merger ofNutrition & Biosciences, Inc. ("N&B"), aDuPont subsidiary formed to hold the N&B Business, with a subsidiary of International Flavors & Fragrances Inc. ("IFF"). The distribution was effected through an exchange offer (the "Exchange Offer") where, on the terms and subject to the conditions of the Exchange Offer, eligible participatingDuPont stockholders had the option to tender all, some or none of their shares of common stock, par value$0.01 per share, ofDuPont (the "DuPont Common Stock") for a number of shares of common stock, par value$0.01 per share, of N&B (the "N&B Common Stock") and which resulted in all shares of N&B Common Stock being distributed toDuPont stockholders that participated in the Exchange Offer. The consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the "N&B Merger" and, together with the Exchange Offer, the "N&B Transaction"). In connection with and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger,DuPont received a one-time cash payment of approximately$7.3 billion , (the "Special Cash Payment"), which is subject to post-closing adjustment pursuant to the terms of the N&B Separation and Distribution Agreement. The company used a portion of the proceeds to retire its$3 billion term loan facilities onFebruary 1, 2021 and used the proceeds to fund the redemption, in accordance with their terms, of the$2 billion May 2020 Notes issuance. See discussion below and within "Liquidity and Capital Resources" for more information. DWDP Merger and DWDP Distributions EffectiveAugust 31, 2017 , pursuant to the merger of equals transaction contemplated by the Agreement and Plan of Merger, dated as ofDecember 11, 2015 , as amended onMarch 31, 2017 ("Merger Agreement"),The Dow Chemical Company ("TDCC") andE. I. du Pont de Nemours and Company ("EID") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, TDCC and EID became subsidiaries of DowDuPont (the "DWDP Merger"). DowDuPont completed a series of internal reorganizations and realignment steps in order to separate into three, independent, publicly traded companies - one for each of its agriculture, materials science and specialty products businesses. DowDuPont formed two wholly owned subsidiaries: Dow Inc. ("Dow", formerly known asDow Holdings Inc. ), to serve as a holding company for its materials science business, and Corteva, Inc. ("Corteva"), to serve as a holding company for its agriculture business. OnApril 1, 2019 , the Company completed the separation of the materials science business through the spin-off of Dow Inc., including Dow's subsidiary TDCC (the "Dow Distribution"). OnJune 1, 2019 , the Company completed the separation of the agriculture business through the spin-off of Corteva including Corteva's subsidiary EID, (the "Corteva Distribution and together with the Dow Distribution, the "DWDP Distributions"). Following the Corteva Distribution, the Company holds the specialty products business as continuing operations. OnJune 1, 2019 , DowDuPont changed its registered name from "DowDuPont Inc. " to "DuPont de Nemours, Inc. " doing business as "DuPont" (the "Company"). Beginning onJune 3, 2019 , the Company's common stock is traded on the NYSE under the ticker symbol "DD." 44 -------------------------------------------------------------------------------- Table of Contents N&B Transaction The financial position ofDuPont as ofDecember 31, 2020 and the results of operations ofDuPont for the three and six months endedJune 30, 2021 and 2020 present the historical financial results of N&B as discontinued operations. The cash flows and comprehensive income related to N&B have not been segregated and are included in the interim Consolidated Statements of Cash Flows and interim Consolidated Statements of Comprehensive Income, respectively, for all periods presented. Unless otherwise indicated, the information in the notes to the interim Consolidated Financial Statements refer only toDuPont 's continuing operations and do not include discussion of balances or activity of N&B. See Note 2 to the interim Consolidated Financial Statements for additional information on the N&B Transaction. 2021 Segment Realignment Immediately following the separation and distribution of the N&B Business, the Company made changes to its management and reporting structure (the "2021 Segment Realignment") (see Note 22 for additional details). The reporting changes have been retrospectively reflected for all periods presented. RECENT DEVELOPMENTS Laird Performance Materials OnJuly 1, 2021 ,DuPont completed the acquisition of Laird Performance Materials ("Laird") fromAdvent International ("Laird PM Acquisition"). The Laird PM Acquisition includes cash consideration paid toAdvent International of approximately$2.4 billion , which reflects adjustments, including for acquired cash and net working capital.
Divestitures
In the second quarter of 2021, the Company completed the sale of its Solamet® business unit, which is part of Corporate. Total consideration received related to the sale of the business is approximately$190 million , of which$47 million will be received in the third quarter. The sale resulted in a pre-tax gain of$140 million ($105 million net of tax) which was recorded in "Sundry income (expense) - net" in the Company's interim Consolidated Statements of Operations. See Note 2 to the interim Consolidated Financial Statements for additional information.
Dividends
On
On
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RESULTS OF OPERATIONS
Summary of Sales Results Three Months Ended Six Months Ended June
June 30, 30,
In millions 2021 2020 2021 2020
Net sales $ 4,135 $ 3,289 $ 8,111 $ 6,959
The following table summarizes sales variances by segment and geographic region
from the prior year:
Sales Variances by Segment and Geographic Region
Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Percentage change from Local Price & Local Price &
prior year Product Mix Currency Volume Portfolio & Other Total Product Mix Currency Volume Portfolio & Other Total Electronics & Industrial - % 2 % 17 % - % 19 % (1) % 3 % 16 % - % 18 % Water & Protection - 3 11 - 14 - 3 6 - 9 Mobility & Materials 13 6 42 - 61 6 4 22 - 32 Corporate 7 3 2 (20) (8) 3 2 (1) (24) (20) Total 3 % 4 % 20 % (1) % 26 % 2 % 3 % 13 % (1) % 17 % U.S. & Canada 3 % - % 21 % (3) % 21 % 1 % - % 7 % (3) % 5 % EMEA 1 - 9 27 - 36 (2) 8 12 - 18 Asia Pacific 5 3 15 - 23 3 3 17 - 23 Latin America (1) 4 57 - 60 3 (2) 22 - 23 Total 3 % 4 % 20 % (1) % 26 % 2 % 3 % 13 % (1) % 17 %
1.Europe,
The Company reported net sales for the three months endedJune 30, 2021 of$4.1 billion , up 26 percent from$3.3 billion for the three months endedJune 30, 2020 , due to a 20 percent increase in volume, a 4 percent favorable currency impact, and a 3 percent increase in local price and product mix offset by a 1 percent decline in portfolio actions. Volume increased across all operating segments, Mobility & Materials (up 42 percent), Electronics & Industrial (up 17 percent), and Water & Protection (up 11 percent). Volume increased significantly across all regions. Currency was up 4 percent compared with the same period last year, driven primarily by EMEA (up 9 percent),Latin America (up 4 percent) andAsia Pacific currencies (up 3 percent). Local price was up 3 percent with the same period last year driven by Mobility & Materials (up 13 percent). Portfolio and other changes partially offset sales growth with a 1 percent decrease which impacted Corporate (down 20 percent). Net sales for the six months endedJune 30, 2021 were$8.1 billion , up 17 percent from$7.0 billion for the six months endedJune 30, 2020 , due to a 13 percent increase in volume, a 3 percent favorable currency impact, and a 2 percent increase in local price and product mix offset by a 1 percent decline in portfolio actions. Volume increased across all operating segments, the most notable volume increases were in Mobility & Materials (up 22 percent), Electronics & Industrial (up 16 percent) and Water & Protection (up 6 percent). Volume grew across all geographic regions. Currency was up 3 percent compared with the same period last year, driven primarily by EMEA (up 8 percent) andAsia Pacific currencies (up 3 percent). Local price and product mix was up 2 percent with the same period last year. Local price increased across all regions except EMEA (down 2 percent). Portfolio and other changes decreased 1 percent primarily due to the sale of businesses within Corporate (down 24 percent). Cost of Sales Cost of sales was$2.7 billion for the three months endedJune 30, 2021 , up from$2.3 billion for the three months endedJune 30, 2020 . Cost of sales increased for the three months endedJune 30, 2021 primarily due to increased sales volume, currency impacts, and higher raw materials and logistics costs partially offset by approximately$150 million of charges in the prior year associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19. Cost of sales as a percentage of net sales for the three months endedJune 30, 2021 was 64 percent compared with 70 percent for the three months endedJune 30, 2020 . For the six months endedJune 30, 2021 , cost of sales was$5.2 billion , up from$4.6 billion for the six months endedJune 30, 2020 . Cost of sales increased for the six months endedJune 30, 2021 primarily due to increased sales volume, currency impacts, and higher raw materials and logistics costs partially offset by approximately$150 million of charges in the prior year associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19. 46
-------------------------------------------------------------------------------- Table of Contents Cost of sales as a percentage of net sales for the six months endedJune 30, 2021 was 64 percent compared with 66 percent for the six months endedJune 30, 2020 . Research and Development Expenses ("R&D") R&D expenses totaled$148 million in the second quarter of 2021, down slightly from$153 million in the second quarter of 2020. R&D as a percentage of net sales was 4 percent and 5 percent for the three months endedJune 30, 2021 and 2020, respectively. For the first six months of 2021, R&D expenses totaled$304 million , down from$326 million in the first six months of 2020. R&D as a percentage of net sales was 4 percent and 5 percent for the six months endedJune 30, 2021 and 2020. The decrease for the six months endedJune 30, 2021 as compared with the same period of the prior year was primarily due to productivity actions and cost reductions related to COVID-19. Selling, General and Administrative Expenses ("SG&A") SG&A expenses were$459 million in the second quarter of 2021, up from$414 million in the second quarter of 2020. SG&A as a percentage of net sales was 11 percent and 13 percent for the three months endedJune 30, 2021 and 2020, respectively. The increase for the three months endedJune 30, 2021 as compared with the same period of the prior year was primarily due to currency fluctuations and higher personnel related expenses. For the first six months of 2021, SG&A expenses totaled$915 million , up from$896 million in the first six months of 2020. SG&A as a percentage of net sales was 11 percent and 13 percent for the six months endedJune 30, 2021 and 2020, respectively. The increase for the six months endedJune 30, 2021 as compared with the same period of the prior year was primarily due to currency fluctuations and higher personnel related expenses. Amortization of Intangibles Amortization of intangibles was$167 million in the second quarter of 2021, down from$177 million in the second quarter of 2020. In the first six months of 2021, amortization of intangibles was$334 million , down from$355 million in the same period of the prior year. The decrease in the amortization of intangibles for the three and six months ended 2021 compared with the same period of the prior year is due to the sale of the TCS business in the third quarter of 2020, coupled with the classification of the Biomaterials business unit as held for sale in the third quarter of 2020. See Note 12 to the Consolidated Financial Statements for additional information on intangible assets. Restructuring and Asset Related Charges - Net Restructuring and asset related charges - net were$10 million in the second quarter of 2021, down from$24 million in the second quarter of 2020. The activity in the second quarter of 2021 is due to a$10 million charge related to the 2020 Restructuring Program. The activity in the second quarter of 2020 included a$21 million impairment charge related to indefinite-lived intangible assets in the Mobility & Materials segment, a$14 million charge related to the 2020 Restructuring Program, a$13 million credit related to the 2019 Restructuring Program and a$2 million charge related to the DowDuPont Cost Synergy Program. In the first six months of 2021, restructuring and asset related charges - net were$12 million , down from$422 million in the same period last year. The activity for the six months of 2021 is related to the 2020 Restructuring Program. The charges in the same period of 2020 included a$270 million impairment charge related to long-lived assets in Corporate, a$21 million impairment charge related to indefinite-lived intangible assets in the Mobility & Materials segment, a$119 million charge related to the 2020 Restructuring Program, a$5 million charge related to the 2019 Restructuring Program and a$7 million charge related to the DowDuPont Cost Synergy Program.
See Note 4 to the interim Consolidated Financial Statements for additional information.
Goodwill Impairment Charge There were no goodwill related impairments for the three and six months endedJune 30, 2021 . For the three months endedJune 30, 2020 , the goodwill impairment charge was$2,498 million related to the Mobility & Materials and Industrial Solutions reporting units. For the six months endedJune 30, 2020 , the goodwill impairment charge was$3,031 million related to Corporate and the Mobility & Materials and Industrial Solutions reporting units. See Note 12 to the interim Consolidated Financial Statements for additional information. Integration and Separation Costs Integration and separation costs, primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the three and six months endedJune 30, 2021 , these costs were primarily associated 47 -------------------------------------------------------------------------------- Table of Contents with the execution of activities related to strategic initiatives including the planned divestiture of the Held forSale Disposal Group and the divestiture of the Solamet® business unit. For the three and six months endedJune 30, 2020 , these costs were primarily associated with the execution of activities related to the post-DWDP Merger integration and the DWDP Distributions. These costs were$23 million in the second quarter of 2021, up from$16 million in the second quarter of 2020. The increase is related to the execution of these strategic initiatives in 2021. In the first six months of 2021, integration and separation costs were$29 million , down from$139 million in the same period last year. The decline was primarily related to the timing of the post-DWDP Merger integration activities and the DWDP Distributions. Equity in Earnings of Nonconsolidated AffiliatesThe Company's share of the earnings of nonconsolidated affiliates was$25 million in the second quarter of 2021, down from$102 million in the second quarter of 2020. In the first six months of 2021, the Company's share of the earnings of nonconsolidated affiliates was$51 million , down from$141 million in the first six months of 2020. The decrease is primarily due to the sale of theHSC Group in the third quarter of 2020. 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 second quarter of 2021 was income of$146 million compared with a loss of$11 million in the second quarter of 2020. The second quarter of 2021 included benefits related to the sale of assets within the Corporate segment of$140 million and income related to non-operating pension and other post-employment benefit credits of$13 million , partially offset by foreign currency exchange losses of$8 million . The second quarter of 2020 included foreign exchange losses of$18 million , partially offset by income related to non-operating pension and other post-employment benefit credits of$8 million . In the first six months of 2021, sundry income (expense) - net was income of$162 million compared with income of$201 million . The first six months of 2021 included benefits related to the sale of assets within the Corporate and Electronics & Industrial segment of$140 million and$24 million , respectively, and income related to non-operating pension and other post-employment benefit credits of$25 million , partially offset by miscellaneous expenses of$17 million and foreign currency exchange losses of$17 million . The first six months of 2020 included benefits related to the sale of the Compound Semiconductor Solutions business unit of$197 million , income related to non-operating pension and other post employment benefit credits of$19 million and miscellaneous income of$6 million , partially offset by foreign currency exchange losses of$21 million . Interest Expense Interest expense was$129 million and$181 million for the three months endedJune 30, 2021 and 2020, respectively. Interest expense was$275 million and$352 million for the six months endedJune 30, 2021 and 2020, respectively. The decrease for both the three and six months endedJune 30, 2021 compared to the three and six months endedJune 30, 2020 primarily relates to the maturity of theNovember 2020 Notes, the early repayment of the$3.0 billion Term Loan Facilities onFebruary 1, 2021 , and absence of commercial paper borrowings, partially offset by financing costs related to the May Debt Offering. Refer to Note 13 to the interim Consolidated Financial Statements for additional information. Provision for Income Taxes on Continuing OperationsThe 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 second quarter of 2021 was 21.1 percent, compared with an effective tax rate of (0.3) percent for the second quarter of 2020. For the first six months of 2021, the effective tax rate on continuing operations was 14.2 percent, compared with (3.6) percent for the first six months of 2020. The effective tax rate for the first six months of 2021 was principally the result of a$59 million tax benefit related to the step-up in tax basis in the goodwill of the Company's European regional headquarters legal entity. The effective tax rate for the second quarter and for the first six months of 2020 was principally the result of the non-tax-deductible goodwill impairment charge impacting Corporate. 48 -------------------------------------------------------------------------------- Table of Contents SEGMENT RESULTS The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBITDA as earnings (i.e., "Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains / losses, adjusted for significant items. Reconciliations of these measures can be found in Note 22 to the interim Consolidated Financial Statements.
Effective
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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 of semiconductors and integrated
circuits, and provides innovative metallization processes for metal finishing,
decorative, and industrial applications. Electronics & Industrial is a leading
provider of platemaking systems and photopolymer plates for the packaging
graphics industry, digital printing inks and cutting-edge materials for the
manufacturing of displays for organic light emitting diode ("OLED"). In
addition, the segment produces innovative engineering polymer solutions, high
performance parts, medical silicones and specialty lubricants.
Electronics & Industrial Three Months Ended Six Months Ended
In millions June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net sales $ 1,320 $ 1,111 $ 2,620 $ 2,226
Operating EBITDA $ 424 $ 336 $ 860 $ 663
Equity earnings $ 10 $ 10 $ 19 $ 19
Electronics & Industrial Three Months Ended Six Months Ended
Percentage change from prior year June 30, 2021 June 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix - % (1) %
Currency 2 3
Volume 17 16
Portfolio & other - -
Total 19 % 18 %
Electronics & Industrial net sales were $1,320 million for the three months
ended June 30, 2021 , up 19 percent from $1,111 million for the three months
ended June 30, 2020 . Net sales increased due to a 17 percent increase in volume
and a 2 percent favorable currency impact. Volume growth was led by Industrial
Solutions reflecting broad-based demand most notably in displays, electronics,
healthcare and automotive markets. Within Interconnect Solutions, volume growth
was driven by higher material content in next-generation smartphones, broad
based electronics demand and recovery in industrial applications. Continued
strength in Semiconductor Technologies was driven by new technology ramps at
advanced nodes within logic and foundry and increased memory demand in servers
and data centers.
Operating EBITDA was $424 million for the three months ended June 30, 2021 , up
26 percent compared with $336 million for the three months ended June 30, 2020
driven by strong volume growth offset by higher raw materials and logistics
costs.
Electronics & Industrial net sales were $2,620 million for the six months ended
June 30, 2021 , up 18 percent from $2,226 million for the six months ended
June 30, 2020 . Net sales increased due to a 16 percent increase in volume and a
3 percent favorable currency impact partially offset by a 1 percent decline in
price. Volume growth was driven by Semiconductor Technologies new technology
ramps at advanced nodes within logic and foundry and increased memory demand in
servers and data centers. Continued volume growth in Industrial Solutions due to
increased demand most notably for display materials and within the healthcare
market. Within Interconnect Solutions, volume growth was driven by higher
material content in next-generation smartphones, broad based electronics demand
and recovery in industrial applications.
Operating EBITDA was $860 million for the six months ended June 30, 2021 , up 30
percent compared with $663 million for the six months ended June 30, 2020 driven
by strong volume growth and a gain on the sale of assets.
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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 Three Months Ended Six Months Ended
In millions June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net sales $ 1,412 $ 1,244 $ 2,740 $ 2,520
Operating EBITDA $ 352 $ 339 $ 707 $ 696
Equity earnings $ 8 $ 5 $ 20 $ 12
Water & Protection Three Months Ended Six Months Ended
Percentage change from prior year June 30, 2021 June 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix - % - %
Currency 3 3
Volume 11 6
Portfolio & other - -
Total 14 % 9 %
Water & Protection net sales were $1,412 million for the three months ended
June 30, 2021 , up 14 percent from $1,244 million for the three months ended
June 30, 2020 . Net sales increased due to a 11 percent increase in volume and a
3 percent favorable currency impact. Local price and portfolio remained flat.
Strong volume gains were led by continued demand for Shelter Solutions in
residential construction and do-it-yourself applications. Within Safety
Solutions, volume growth was driven by recovery in end-markets for aramid
fibers. Volume gains were slightly offset by declines in Water Solutions due to
logistic challenges.
Operating EBITDA was $352 million for the three months ended June 30, 2021 , up 4
percent compared with $339 million for the three months ended June 30, 2020 as
volume gains were offset by higher raw material and logistics costs.
Water & Protection net sales were $2,740 million for the six months ended
June 30, 2021 , up 9 percent from $2,520 million for the six months ended
June 30, 2020 driven by a 6 percent increase in volume and a 3 percent favorable
currency impact. Local price and portfolio remained flat. Volume growth across
the segment was driven by recovery of end markets following the COVID-19
pandemic. Within Shelter Solutions, volume growth was driven by continued demand
in residential construction and do-it-yourself applications.
Operating EBITDA was $707 million for the six months ended June 30, 2021 , up 2
percent compared with $696 million for the six months ended June 30, 2020 as
volume gains were offset by higher raw material and logistics costs.
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MOBILITY & MATERIALS
The Mobility & Materials segment provides high-performance engineering resins
and adhesives to engineers and designers in the transportation, electronics,
industrial and consumer end-markets to enable systems solutions for demanding
applications and environments. The segment delivers a broad range of
polymer-based high-performance materials in its product portfolio, including
elastomers and thermoplastic and thermoset engineering polymers which are used
by customers to fabricate components for mechanical, chemical and electrical
systems. In addition, the segment supplies key materials for the manufacturing
of photovoltaic cells and panels, including backsheet materials and silicone
encapsulates and adhesives. The segment provides specialty pastes and films used
in consumer electronics, automotive, and aerospace markets. Mobility & Materials
is a global leader of advanced materials that provides technologies that
differentiate customers' products with improved performance characteristics
enabling the transition to hybrid-electric-connected vehicles and high speed
high frequency connectivity.
Mobility & Materials Three Months Ended Six Months Ended
In millions June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
Net sales $ 1,270 $ 790 $ 2,485 $ 1,881
Operating EBITDA $ 294 $ (23) $ 572 $ 192
Equity earnings $ 5 $ 7 $ 8 $ 8
Mobility & Materials Three Months Ended Six Months Ended
Percentage change from prior year June 30, 2021 June 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix 13 % 6 %
Currency 6 4
Volume 42 22
Portfolio & other - -
Total 61 % 32 %
Mobility & Materials net sales were $1,270 million for the three months ended
June 30, 2021 , up from $790 million for the three months ended June 30, 2020 .
Net sales increased due to a 42 percent increase in volume, a 13 percent
increase in local price, and a 6 percent favorable currency impact. Volume
growth across the segment was driven by the recovery of key industrial end
markets following the COVID-19 pandemic, most notably the recovery of the global
automotive market.
Operating EBITDA was $294 million for the three months ended June 30, 2021
compared with $(23) million for the six months ended June 30, 2020 . The increase
was driven by higher volumes, pricing gains, and the absence of approximately
$130 million of charges recorded in the prior year associated with temporarily
idling several manufacturing facilities during the COVID-19 pandemic.
Mobility & Materials net sales were $2,485 million for the six months ended
June 30, 2021 , up from $1,881 million for the six months ended June 30, 2020 .
Net sales increased due to a 22 percent increase in volume, a 6 percent increase
in local price and a 4 percent favorable currency impact. Volume growth was
attributable to the continued recovery of the automotive industry and the other
key industrial end markets. Within Engineering Polymers, volume growth was
partially offset due to global supply constraints on key raw materials.
Operating EBITDA was $572 million for the six months ended June 30, 2021 ,
compared with $192 million for the six months ended June 30, 2020 driven by
higher volumes and the absence of charges recorded in the prior year associated
with temporarily idling several manufacturing facilities, as referenced above.
Corporate
Corporate 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. The sales and activity of to be divested and previously
divested businesses including the operations of Biomaterials, Clean
Technologies, and Solamet® business units, and the trichlorosilane business
("TCS Business") along with its equity ownership interest in DC HSC Holdings LLC
and Hemlock Semiconductor L.L.C. (the "HSC Group ") historically included in the
Non-Core segment are reflected as Corporate activity.
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CHANGES IN FINANCIAL CONDITION
Liquidity & Capital Resources
Information related to the Company's liquidity and capital resources can be
found in the Company's Current Report on Form 8-K filed on June 3, 2021 , 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 six months ended June 30, 2021 .
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.
In millions June 30, 2021 December 31, 2020
Cash and cash equivalents $ 3,962 $ 2,544
Total debt 1 $ 10,628 $ 15,612
1.Includes the current portion of long-term debt that's within the "Accrued and other current liabilities" line in the Condensed Consolidated Balance Sheets.
The Company's cash and cash equivalents atJune 30, 2021 andDecember 31, 2020 were$4.0 billion and$2.5 billion , respectively, of which$1.3 billion atJune 30, 2021 and$1.8 billion atDecember 31, 2020 were held by subsidiaries in foreign countries, includingUnited States territories. The decrease in cash and cash equivalents held by subsidiaries in foreign countries is due to repatriation activities necessary for completing the acquisition of Laird Performance Materials. 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 tothe United States . Total debt atJune 30, 2021 andDecember 31, 2020 was$10.6 billion and$15.6 billion , respectively. The decrease was primarily due to the termination and repayment of the Company's$3 billion Term Loan Facilities in the first quarter of 2021, and the redemption of theMay 2020 Notes, described further below, in accordance with special mandatory redemption feature in the second quarter of 2021. As ofJune 30, 2021 , the Company is contractually obligated to make future cash payments of$10,700 million and$6,184 million associated with principal and interest, respectively, on debt obligations assuming held to maturity. Related to the principal balance, the majority of it will be due subsequent toJune 30, 2022 . Related to interest,$503 million will be due in the next twelve months and the remainder will be due subsequent toJune 30, 2022 . The decrease in debt and interest obligations sinceDecember 31, 2020 is mostly due to the termination and repayment of the$3 billion Term Loan Facilities and the redemption of theMay 2020 Notes. Special Cash Payment In connection with and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger,DuPont received a one-time cash payment of approximately$7.3 billion , (the "Special Cash Payment"), which is subject to post-closing adjustment pursuant to the terms of the N&B Separation and Distribution Agreement. The Company utilized the Special Cash Payment to repay the$3 billion Term Loan Facilities and used a portion of the Special Cash Payment to redeem theMay 2020 Notes, as discussed below. Term Loan and Revolving Credit Facilities InNovember 2018 , the Company entered into a term loan agreement that establishes two term loan facilities in the aggregate principal amount of$3 billion , (the "Term Loan Facilities") as well as a five-year$3 billion revolving credit facility (the "Five-Year Revolving Credit Facility"). EffectiveMay 2, 2019 , the Company fully drew the two Term Loan Facilities in the aggregate principal amount of$3.0 billion and the Five-Year Revolving Credit Facility became effective and available. The Five-Year Revolving Credit Facility is generally expected to remain undrawn, and serve as a backstop to the Company's commercial paper and letter of credit issuance. OnFebruary 1, 2021 , the Company terminated its fully drawn$3 billion Term Loan Facilities. The termination triggered the repayment of the aggregate outstanding principal amount of$3 billion , plus accrued and unpaid interest through and includingJanuary 31, 2021 . The Company funded the repayment with proceeds from the Special Cash Payment. 53
-------------------------------------------------------------------------------- Table of Contents OnApril 15, 2021 , the Company entered into an updated$1.0 billion 364-day revolving credit facility (the "2021$1B Revolving Credit Facility") as the$1.0 billion 364-day revolving credit facility entered inApril 2020 (the "2020$1B Revolving Credit Facility") expired mid-April. As of the effectiveness of the 2021$1B Revolving Credit Facility, the 2020$1B Revolving Credit Facility was terminated. The$1B Revolving Credit facility may be used for general corporate purposes. May Debt Offering OnMay 1, 2020 , the Company completed an underwritten public offering of senior unsecured notes (the "May 2020 Notes") in the aggregate principal amount of$2 billion of 2.169 percent fixed rate Notes dueMay 1, 2023 (the "May Debt Offering"). Upon consummation of the N&B Transaction, the special mandatory redemption feature of the May Debt Offering was triggered, requiring the Company to redeem all of theMay 2020 Notes at a redemption price equal to 100% of the aggregate principal amount of theMay 2020 Notes plus accrued and unpaid interest. The Company redeemed theMay 2020 Notes onMay 13, 2021 and funded the redemption with proceeds from the Special Cash Payment. Laird Performance Materials OnJuly 1, 2021 , the Company completed the acquisition of Laird Performance Materials ("Laird") fromAdvent International for aggregate consideration of$2.4 billion , which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Electronic & Industrials segment. The Company paid for the acquisition from existing cash balances. Credit Ratings The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to a strong financial position and strong investment-grade rating. AtJuly 30, 2021 ,DuPont 's credit ratings were as follows: Credit Ratings Long-Term Rating Short-Term Rating Outlook Standard & Poor's BBB+ A-2 Stable Moody's Investors Service Baa1 P-2 Stable Fitch Ratings BBB+ F-2 Stable The Company's indenture covenants related to its 2018 Senior Notes contain certain limitations on the Company's ability to incur liens and enter into sale lease-back transactions, mergers and consolidations as well as customary events of default. The Five-Year Revolving Credit Facility and the 2021$1B Revolving Credit Facilities contain a financial covenant, typical for companies with similar credit ratings, requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60. AtJune 30, 2021 , the Company was in compliance with this financial covenant.
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