DowDuPont Inc. (NYSE:DWDP) Q3 2018 Earnings Conference Call - Final Transcript

Nov 01, 2018 • 08:00 am ET

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DowDuPont Inc. (NYSE:DWDP) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to DowDuPont's Third Quarter 2018 Earnings Call. (Operator Instructions) Also, today's call is being recorded. I would now like to turn the call over to Mr. Neal Sheorey. Please go ahead, sir.

Executive
Neal Sheorey

Good morning, everyone. Thank you for joining us for DowDuPont's third quarter 2018 earnings conference call. We are making this call available to investors and media via webcast. We have prepared slides to supplement our comments during this conference call. These slides are posted on the IR section of DowDuPont's website, and through the link to our webcast.

Speaking on the call today are Ed Breen, CEO; Howard Ungerleider, CFO; Jim Fitterling, Jim Collins, and Marc Doyle, COOs for DowDuPont's Materials Science, Agriculture, and Specialty Products divisions, respectively; and Jennifer Driscoll and Lori Koch, who will lead IR for Corteva and DuPont, respectively.

(Forward-looking Cautionary Statement) We will also refer to non-GAAP measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website.

I will now turn the call over to Ed.

Executive
Edward Breen

Good morning. Thank you, Neal and thanks to all who have joined for the DowDuPont third quarter earnings call. We delivered another strong quarter as you saw earlier today. I was pleased with the way our teams performed in all 3 divisions, as they successfully grew the top line and bottom line. They did this while delivering cost synergies, executing good price volume discipline, advancing their growth synergies and preparing for the spins.

The financial highlights on Slide 2 are as follows, first sales grew 10%. We saw continued demand for our products and executed well against our new product launches.

While we had higher raw material costs and more currency pressure than we expected, we successfully increased pricing by 5 points while also delivering solid volume growth. The consistency across all divisions and regions was very good.

Second, operating EBITDA increased 19%. We expanded our operating EBITDA margin with volume and price gains, cost synergies and strong executional role, and last, adjusted EPS rose 35%.

As our divisions advance towards separation, they continue to build out the structure and features necessary to their future success. Each of them continues to make progress towards their best-in-class cost structures. Cost synergies this quarter exceeded $450 million. We have executed against the majority of our cost synergy projects and those savings are coming through.

Today, we increased our cost synergy target to $3.6 billion, another $300 million increase to reflect further expected benefits. These increased benefits are expected to begin to show in our results in the second half of 2019 and are primarily related to additional permit savings.

For DowDuPont, we are reaffirming our full year adjusted EPS guidance of low 20s percent growth. This is consistent with the increased guidance we've provided during our second quarter earnings call. It speaks to our team's focus and our ability to continue to deliver a strong full year result, which comes from