DuPont (DD) Q3 2026 earnings review
DuPont raises its profit plan, while water sales lag
DuPont's industrial and building units accelerated in the third quarter while its water unit remained slow. The maker of Tyvek wraps, water filters and medical packaging grew sales from businesses owned a year ago by 5%, or about 7% by our math after stripping out orders that shifted early last year. Chief executive Lori Koch raised the full-year profit plan for a third straight quarter and bought back about $350 million of stock.
| Sales from businesses owned a year ago | +5% ~7% excluding last year's order shift, by our math |
|---|---|
| Operating EBITDA | $469M +8% from a year ago (25.1% margin) |
| Profit per share, excluding one-offs | $2.09 +62% from a year ago |
| Full-year operating EBITDA outlook | Raised $25M to ~$1,785M (+10% from 2025) |
⚖️ Verdict: 🟢 Bullish
The story got better because the industrial and construction businesses expanded their profit margins and beat the company's third-quarter plan without borrowing from the fourth quarter. One caution: the water unit still grew only low-single digits due to Middle East disruptions, and discontinued operations booked another $45 million after-tax loss.
The question now is whether the 5% underlying sales growth reflects rising customer volume or mostly temporary price surcharges for oil and gas costs, and whether Middle East water projects will ship in time to meet the implied 7% fourth-quarter growth target. The price-volume split in the quarterly filing and fourth-quarter water sales will tell.
🐂 Bull Case
Industrial and Building Units Led the Acceleration
DuPont now runs on two divisions after spinning off its electronics unit and selling its Kevlar fibers business: Healthcare & Water Technologies and Diversified Industrials. Sales from businesses owned a year ago rose 5%, beating the 3% plan. Last year's third quarter included $30 million of early orders ahead of the electronics spin-off, so underlying sales grew about 7% by our math.
- Diversified Industrials underlying sales: up 5%, or about 7% excluding last year's $15 million order shift, on "continued strength in aerospace and electric vehicle battery applications"
- Building Technologies: up about 5% on North America and Asia demand, accelerating after a slow start to the year
- Healthcare Technologies: up about 5% on "growth in personal protection and medical packaging"
- Cost of making products: down 1.4 percentage points to 64.3% of sales, while overhead fell 0.6 percentage points to 13.9%
This matters because the industrial and construction businesses are no longer holding back the healthcare unit. Factory efficiency lowered manufacturing costs as a share of sales, which lifted the industrial division's operating EBITDA margin (profit before interest, taxes, depreciation and one-offs) by 1.4 percentage points to 24.1%.
What to watch: the split between price and volume in the quarterly filing. A volume gain above 3% would prove that customer demand, rather than temporary oil-linked price surcharges, drove the 5% underlying growth.
Third Straight Outlook Raise Is the Biggest Yet
Finance chief Antonella Franzen said the chemical and materials maker "now expect organic growth to be about 4.5%, operating EBITDA to be about $1.785 billion and adjusted EPS to be in the range of $7.47 - $7.52 per share". It is the third straight quarter DuPont has raised its full-year profit plan, and the $25 million operating EBITDA increase is larger than the $5 million and $15 million raises that came before it.
The company beat its third-quarter operating EBITDA target by $21 million and raised the full-year target by $25 million, so it kept the entire third-quarter beat and added $4 million to the fourth quarter. That contradicts the concern that third-quarter strength merely pulled profit forward from the end of the year.
What to watch: fourth-quarter operating EBITDA against the $455 million target. Beating that figure would mark five straight quarterly beats and put full-year margin expansion more than 1 percentage point above 2025.
Debt Paydown and Buybacks Drive Per-Share Profit
"Mid-single-digit organic growth, strong operating leverage and disciplined capital allocation drove significant adjusted EPS growth," chief executive Lori Koch said. While operating EBITDA rose 8% to $469 million, profit per share excluding one-offs rose 62% to $2.09 because DuPont used cash from its break-up to retire debt and buy back stock.
Net interest costs fell by $54 million from a year ago to $13 million, and the diluted share count dropped 3.5% to 135.1 million. The materials group bought back about $350 million of stock in the third quarter — $100 million more than it planned three months ago — and plans another $250 million in the fourth quarter while still holding $1.66 billion in cash.
What to watch: diluted share count in the fourth quarter. A drop below 134 million shares would confirm the fourth-quarter buyback is retiring stock fast enough to add another 3% to 4% to next year's per-share profit.
🐻 Bear Case
Water Stays Slow Ahead of Fourth-Quarter Target
Water Technologies makes filters and membranes used to purify industrial water, semiconductor water and seawater. Its underlying sales grew only low-single digits in the third quarter because "continued disruptions in the Middle East" offset demand from chipmakers and industrial plants. That dragged Healthcare & Water Technologies underlying growth to 4%, lagging the industrial division's 5%.
This matters because the raised full-year outlook of 4.5% underlying growth implies about 7% growth in the fourth quarter by our math. Two percentage points of that step-up come from comparing against a weak fourth quarter last year, when $30 million of orders shifted early, but the rest relies on delayed Middle East water shipments finally arriving.
What to watch: Water Technologies underlying sales growth in the fourth quarter. Another low-single-digit reading would mean Middle East project delays have spilled into 2027.
Legal and Environmental Charges Keep Hitting GAAP Profit
DuPont highlights profit per share excluding one-offs of $2.09 and cash conversion of 121%, which leave out ongoing legal, tax and environmental bills from current and former product lines. Reported profit from continuing operations was $1.24 per share, and total net profit was $0.91 per share after a $45 million after-tax loss in discontinued operations.
- Discontinued operations cash drain: $210 million used in operating cash flow over the first nine months
- Corian Quartz legal costs: $7 million pre-tax in the third quarter and $18 million over nine months for personal-injury cases
- Legacy environmental remediation (Corporate DDOB): $4 million in the quarter and $14 million over nine months
- Other non-current obligations on the balance sheet: $1,328 million, up $132 million since December
These items cut against the claim of clean cash conversion because discontinued operations and legal settlements require real cash. While continuing operations generated $793 million of free cash flow over nine months, discontinued operations consumed $216 million of operating and investing cash over the same period.
What to watch: the legal contingencies note in the third-quarter 10-Q filing. It will show whether the $45 million discontinued-operations loss and higher balance-sheet obligations came from new PFAS water-contamination accruals.
Risks this quarter didn't answer
Three standing risks from earlier quarters could not be tested from the earnings release alone and await the conference call or quarterly 10-Q filing.
- Oil and gas price surcharges: DuPont previously planned about $90 million of second-half price increases to cover energy and material costs, and the release does not split the 5% underlying sales growth between price and volume.
- Acquisition spending: cash reached $1.66 billion after the Aramids sale, and the release gives no update on acquisitions to reach the two-thirds Healthcare & Water revenue target.
- Currency drag: a stronger dollar cut third-quarter sales by 1% and implies a similar drag in the fourth quarter.
💲 Other KPIs
Cash from continuing operations minus capital spending and break-up bills was $341 million, down 1.4% from $346 million a year ago. Over the first nine months, it reached $814 million, up from $461 million last year, equal to 106% of profit excluding one-offs.
Spending on product development fell 19.2% from $52 million a year ago, matching the $42 million spent in the second quarter. As a share of sales, it dropped by 0.65 percentage points to 2.25%, down from 2.90% in last year's third quarter.
Customer bills owed to the industrial group rose 3.5% since December to $1,728 million, while inventory rose 5.6% to $1,238 million. Together they grew roughly in line with nine-month sales growth of 4.1%, absorbing $116 million of working-capital cash year to date.
🔮 Guidance
Raised. The full-year sales plan moved to the top of the prior range, pointing to 5.0% reported growth and about 4.5% growth from businesses owned a year ago (up from slightly above 4%). That leaves fourth-quarter underlying growth at about 7% by our math, up from 5% this quarter.
New. The fourth-quarter target sits at the bottom of the $1,825–$1,855 million range that the prior full-year plan implied by our math, because currency is a slight drag. It represents 7.8% reported growth from last year's fourth quarter, when early spin-off orders reduced sales by $30 million.
Raised. The middle of the plan moved up by $25 million, to 9.6% growth from 2025. It is the third raise this year, and each raise has grown larger: +$5 million in the first quarter, +$15 million in the second, and +$25 million now.
New. The plan calls for 11.2% growth from a year ago and a 24.9% margin, compared with 7.6% growth in the third quarter. DuPont has beaten its quarterly target by an average of 5.0% over the past four quarters; if the pattern holds, fourth-quarter operating EBITDA would reach about $478 million by our math.
Raised. The middle of the range rose by 25 cents to $7.495, or 48.7% above last year's split-adjusted $5.04. That follows raises of 30 cents in the first quarter and 12 cents in the second quarter.
New. The middle of the range is $1.925, up 39.5% from a year ago (adjusted for the 1-for-3 reverse split) and down 7.9% from the third quarter's $2.09 on normal seasonal volume.
❓ Key Questions
How much of the 5% growth came from price?
DuPont previously planned about $90 million of price increases to cover oil and gas cost inflation in the second half. The release does not say how much of the third quarter's 5% underlying growth came from volume versus temporary surcharges.
What drove the $45 million loss in discontinued operations?
Discontinued operations booked a $45 million after-tax loss in the quarter and used $210 million of operating cash over nine months, while non-current obligations rose by $132 million. Investors need to know how much relates to PFAS water-contamination settlements.
Will delayed Middle East water orders ship in Q4?
Water Technologies grew only low-single digits in the third quarter due to Middle East disruptions, yet the full-year plan implies about 7% underlying sales growth in the fourth quarter. Management has not quantified the water backlog scheduled to ship by December.
Why did research spending fall to 2.25% of sales?
Research and development spending dropped to $42 million from $52 million a year ago, or 2.25% of sales versus a stated target near 2.5%. Management has not said whether the lower run-rate is permanent after the break-up.