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Chemical and specialty materials company DuPont (DD) cruised past Q4 EPS estimates and issued solid guidance, including a forecast for mid-single-digit organic growth in FY25, supported by continued strength in its Electronics & Industrial segment. That strength is mainly emanating from the emergence of new AI applications and stronger demand for consumer electronics in China, resulting in low-teens organic sales growth in the Semiconductor Technologies business and low-double-digit growth for Interconnect Solutions.

• With momentum building for the Electronics business, which produces materials during the fabrication, assembly, and advanced packaging of semiconductors, DD's timing to spin that business off may be right on point. On January 15, the company announced that it was accelerating the separation and is targeting November 1, 2025, to complete the transaction. This morning, the company reaffirmed that timeline, and reiterated another update from January 15: namely, that it now plans to retain the Water business after initially announcing that it intends to separate that business, too.
• Circling back to DD's Q4 results, the sizable EPS beat comes as a bit of a surprise given that the company also reaffirmed its EPS outlook of $0.98 in that January 15 press release. Ultimately, the company generated EPS of $1.13, representing strong yr/yr growth of 30%. Cost discipline and volume gains across the business, leading to greater manufacturing efficiencies, helped drive earnings higher.
• Although the Electronics segment was the clear standout once again, the Water & Protection unit also contributed to the better-than-expected results. In particular, the medical packaging end market saw an upswing in demand, pushing the segment's net sales higher by 6% yr/yr to $1.36 bln. The one soft spot was Shelter Solutions, which serves the residential and commercial construction markets with its protection and insulation products (Tyvek, Styrofoam, ArmorWall). For the quarter, sales for Shelter Solutions were flat on an organic basis.

The main takeaway is that DD's AI exposure continues to pay dividends for the company and is setting it up for a successful spin-off of the Electronics business in November. Following in the footsteps of other industrial giants like General Electric, 3M (MMM), and Honeywell (HON), we anticipate that DD's spin-off will be well-received, providing the stock with a potent catalyst. While a sluggish housing market is keeping a lid on the Shelter Solutions business, the prospect for lower interest rates down the road should provide a lift.