Earlier today, we reported our second quarter financial results, which again exceeded our previously communicated guidance. Through our ongoing focus on excellence and productivity, we delivered organic sales growth of 4%, 80 basis points of margin expansion, double-digit adjusted EPS growth, and robust free cash flow conversion in the quarter. As a result of our second quarter performance, we are again raising our full year 2026 financial guidance for organic sales growth, operating EBITDA and adjusted EPS. We expect our free cash flow conversion to be ahead of our 90% target.
Additionally, we announced that in the third quarter, we expect to launch a $250 million share repurchase, which highlights our continued focus on driving a disciplined capital allocation model. We continue to make strong progress advancing our strategic priorities through a more robust and disciplined business system with a clear focus on organic growth, accountability, execution, and continuous improvement across the company. The objective is straightforward: reinforce the operating culture required to deliver sustainable performance while building repeatable capabilities that drive growth, margin expansion, and shareholder value over time. Our pipeline continues to deliver new wins across high growth and emerging applications through differentiated products and application development.
You can see that in the quality and relevance of launches coming through the pipeline. Here we are moving from process deployment to operating discipline, and the early demand generation momentum is encouraging. Overall, we are building a more systemic commercial engine, clear targeting stronger data quality, accelerated demand generation, and more disciplined execution from opportunity creation through conversion, leading to a strong pipeline. It's a growth enabler that improves customer experience, strengthens margins, and enhances our competitive position over time.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales growth | FY2026 | Slightly ahead of 4% (dropping Q2 outperformance to the year) |
| Net sales | FY2026 | Midpoint $7.175B (adjusted down on lower expected currency benefit) |
| Operating EBITDA | FY2026 | Raised to $1.760B at the midpoint (24.5% margin, incl. ~30 bps oil/gas inflation headwind) |
| Adjusted EPS | FY2026 | $7.24 at the midpoint (+$0.15; +18% vs prior-year pro forma) |
| Net sales / Adjusted EPS | Q3 2026 | Net sales ~$1.835B, operating EBITDA $448M (24.4% margin), adjusted EPS $1.80-$1.90 |
| Free cash flow conversion | FY2026 | Ahead of 90% (closer to 100%) |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +4% to $1.8B | 4% organic growth (about a point of price) led by healthcare, aerospace, industrial water and semiconductor markets, with a 1% currency benefit. |
| Operating EBITDA | +8% to $448M | Organic growth and productivity drove 80 bps of margin expansion to 24.6%, including a 30 bps price-cost headwind. |
| Adjusted EPS | +21% to $1.88 | $0.17 from stronger operations plus a $0.15 benefit from below-the-line items (versus prior-year pro forma); GAAP continuing-operations EPS $1.37. |
| Healthcare & Water Technologies sales | +5% ($856M, +4% organic) | Mid-single-digit healthcare (double-digit personal protection and biopharma) and low-single-digit water (double-digit industrial water/semi offset by the Middle East). |
| Diversified Industrials sales | +3% organic ($963M) | Low-single-digit building technologies (resi/non-resi) and mid-single-digit industrial technologies (double-digit aerospace and EV battery). |
| Free cash flow | $326M (127% conversion) | Earnings growth and net-working-capital productivity across DSO, DPO and inventory days. |
| Net productivity | ~200 bps COGS reduction | Contributed ~100 bps of margin expansion; management targets a 3% net productivity run rate within ~18 months. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Post-separation industrial identity | Diversified materials conglomerate | Following the Qnity electronics separation, DuPont completed a reverse stock split and was reclassified to Industrials (GICS), aligning metrics with an industrial peer set. | — |
| Business system rollout | Launched innovation/commercial/OpEx/80-20 frameworks | Moving from deployment to operating discipline: ~35% innovation vitality index, AI-accelerated sales plays (150 opportunities won, ~30% win rate), ~200 bps net productivity, and 80/20 piloted in four Diversified Industrials businesses. | — |
| Middle East water disruption | Logistics constraints and delayed projects | Desalination/RO project timing is shifting (not cancelled) due to the conflict; Middle East is ~10% of water sales, with ex-Middle East water up mid-single-digits and the long-term mid-single-digit water outlook intact. | — |
| Secular growth exposures | Developing positions | Double-digit growth in aerospace and EV battery (adhesives, ~$70M and rising toward triple digits), 20%+ ultrapure-water growth for semiconductor/AI chipmakers, and a new ~$200M direct-lithium-extraction (DLE) opportunity requiring no incremental capital. | — |
| Capital allocation | Balanced approach post-separation | $250M buyback launching in Q3 plus over $1B retained for disciplined M&A (water and healthcare/CDMO) at mid-teens growth valuations moving to lower-teens net of synergies. | — |
| Compensation and culture change | Segment-level bonus, salaried sales force | 2026 short-term incentives moved to the line-of-business level for accountability; sales force moving to commission-based in 2027 to drive a 'hunter' growth mindset. | — |