DuPont de Nemours Inc

RESULTS OF OPERATIONS

The following table summarizes sales variances by segment and geographic region from the prior year:

1. Europe, Middle East and Africa.

The Company reported net sales for the three months ended March 31, 2025 of $3.1 billion, up 5 percent from $2.9 billion for the three months ended March 31, 2024, due to a 8 percent increase in volume, partially offset by a 2 percent decrease in local price and product mix and a 1 percent unfavorable currency impact. The volume increase was primarily driven by ElectronicsCo (up 16 percent). Local price and product mix declined in ElectronicsCo (down 2 percent) and IndustrialsCo (down 1 percent). The 1 percent unfavorable currency impact compared with the same period last year was driven by EMEA (down 3 percent).

Cost of Sales

Cost of sales remained flat at $1.9 billion for both the three months ended March 31, 2025 and 2024. Cost of sales as a percentage of net sales for the three months ended March 31, 2025 was 63 percent compared with 65 percent for the three months ended March 31, 2024. The decrease as a percentage of sales for the three months ended March 31, 2025 as compared with the same period of the prior year was primarily due to increased productivity and the impact of product mix.

Research and Development Expenses ("R&D")

R&D expenses totaled $137 million in the first quarter of 2025, up from $125 million in the first quarter of 2024. R&D as a percentage of net sales was consistent period over period at 4 percent for the three months ended March 31, 2025 and 2024.

Selling, General and Administrative Expenses ("SG&A")

SG&A expenses were $369 million in the first quarter of 2025, down from $384 million in the first quarter of 2024. SG&A as a percentage of net sales remained relatively consistent at 12 percent and 13 percent for the three months ended March 31, 2025 and 2024, respectively. The decrease for the three months ended March 31, 2025 as compared with the same period of the prior year was primarily due to lower personnel related expenses.

Amortization of Intangibles

Amortization of intangibles was $146 million in the first quarter of 2025, down from $149 million in the first quarter of 2024. The slight decrease for the three months ended March 31, 2025 as compared with the same period of the prior year was primarily due to the absence of amortization in the current period from fully amortized assets.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $47 million in the first quarter of 2025, up from $39 million charges in the first quarter of 2024. The activity for the first quarters of 2025 is primarily related to the Transformational Separation-Related Restructuring Program. The activity for the three months of 2024 is primarily related to the 2023-2024 Restructuring Program. See Note 6 to the interim Consolidated Financial Statements for additional information.

Goodwill Impairment Charges

For the three months ended March 31, 2025, goodwill impairment charges of $768 million related to the IndustrialsCo segment. For the three months ended March 31, 2024 there were no goodwill impairment charges. See Note 12 for additional information.

Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting and other professional advisory fees. The Company recorded $125 million and $3 million for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, these costs were associated with the Intended Electronics Separation, while the three months ended March 31, 2024 were primarily associated with the Spectrum Acquisition.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was a $1 million loss in the first quarter of 2025, down from $12 million in the first quarter of 2024. The decrease in 2025 is due to a loss from equity earnings from Derby and lower equity earnings across all affiliates. See Note 11 to the interim Consolidated Financial Statements for additional information.

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, losses on debt extinguishments and assets, non-operating pension and other post-employment benefit plan credits or costs, interest rate swap mark-to-market adjustments, interest rate swap net interest settlement and certain litigation matters. Sundry income (expense) - net in the first quarter of 2025 was $101 million of income compared with $38 million of income in the first quarter of 2024. The three months ended March 31, 2025, included a $78 million gain related to interest rate swap activity including mark-to-market adjustments. Interest income was $21 million and $20 million for the three months ended March 31, 2025 and 2024, respectively. The three months ended March 31, 2025 included a $3 million net foreign exchange loss while the three months ended March 31, 2024 included a $4 million net foreign exchange gain. See Notes 7 and 19 to the interim Consolidated Financial Statements for additional information.

Interest Expense

Interest expense was $83 million and $96 million for the three months ended March 31, 2025 and 2024, respectively. The decrease in interest expense from the prior year is primarily due to the absence of interest expense on the partial redemption of $650 million aggregate principal amount of the 2038 notes and the dedesignation of 2022 Swaps. See Note 19 to the interim Consolidated Financial Statements for further detail on the 2022 Swaps.

Provision for Income Taxes on Continuing Operations

The 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 first quarter of 2025 was (27.7) percent, compared with an effective tax rate of 31.5 percent for the first quarter of 2024. The decrease of the effective tax rate for the first quarter of 2025 compared to the first quarter of 2024 was principally the result of the non-tax-deductible goodwill impairment charge of $768 million.