Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 4, 2026 · Beat 7 of last 7 quarters
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DuPont's water segment continues to benefit from AI-driven semiconductor demand, with ultra-pure water sales up over 20% and expected to remain strong. The company's AI-enabled commercial and operational initiatives are driving faster sales cycles and productivity gains, supporting margin expansion. While DuPont's direct AI exposure is narrow, its role in providing critical materials for semiconductor manufacturing and data center cooling positions it as an indirect beneficiary of the AI infrastructure buildout.
DuPont delivered Q2 net sales of $1.8 billion, up 4% organically, with operating EBITDA of $448 million (up 8%) and adjusted EPS of $1.88 (up 21%). Healthcare & Water Technologies grew 4% organically, with healthcare up mid-single digits and water up low single digits (double-digit growth in industrial water and semiconductor, partially offset by Middle East weakness). Diversified Industrials grew 3% organically, with Building Technologies up low single digits and Industrial Technologies up mid-single digits. The company raised full-year guidance and announced a $250 million share repurchase.
Management raised full-year 2026 guidance for organic sales growth (slightly above 4%), operating EBITDA (midpoint to $1.760 billion), and adjusted EPS (midpoint to $7.24, up $0.15). The second half assumes ~6% organic growth, driven by healthcare, industrial water, aerospace, and carryforward pricing, with ~2 points of pricing from oil and gas inflation. Operating EBITDA margin is expected to be 24.5% for the full year, including a 30 bps oil and gas headwind. Management expects free cash flow conversion ahead of the 90% target, and announced a $250 million share repurchase in Q3. They also highlighted continued progress on the business system, including 80/20 execution, AI-driven commercial plays, and a shift to commission-based sales compensation in 2027.
“We have won about 150 opportunities, which represents a nearly 30% win rate. This sits firmly ahead of our historical percentage as well as above industry benchmarks.”
on AI sales plays
“So while we are not quite sizing what the upside is with respect to innovation, we're firmly committed to the minimum 3% or 4% organic sales growth that we had put out at Investor Day where, in fact, if you look at our full year numbers running either in line or ahead on all of the metrics, whether it's organic growth, margin expansion or EPS growth with respect to those targets.”
on Innovation and growth
“So I would clearly expect that on a full year basis, we're much closer to 100% than we are to the 90% in terms of conversion.”
on Free cash flow conversion
Can you give us something to anchor on in terms of thinking about contribution to sales or product vitality? And on the cost of poor quality and OTIF also, I'm just wondering if you could kind of anchor us on kind of your start point there where you're at on that progression.
Lori noted a vitality index of about 35%, with a focus on shifting mix toward growth. Cost of poor quality is at about 4% of sales versus a benchmark of 5%, with further improvement expected. 80/20 work in four DI businesses is already yielding a few million in second-half EBITDA benefit.
I wanted to start with the Middle East. I think last quarter, you guys were calling out some logistics constraints and then some delayed shipments also in project timing that was supposed to come through in the second half of the year. Can you just give us an update on where those projects stand and like whether you've seen any type of alleviation on the constraints that you saw last quarter?
Lori confirmed the $10 million shift from Q1 to Q2 occurred in April. Middle East expectations for the second half remain unchanged, with projects on the books expected to hit mostly in Q4. She noted the step-up in Q4 organic growth to 7% is driven by large projects globally, not just Middle East.
So I guess when I look at the second half outlook for growth versus the second quarter, it looks like things accelerate a bit. I guess, can you help unpack that, what may be driving that? And then also thoughts on the incremental operating leverage that you have, especially with some of the 80/20 starting to kick in, how should we be thinking about that in the back half?
Antonella explained that the second-half acceleration is driven by incremental pricing (about 2 points) related to oil and gas headwinds, not significant volume uplift. Incremental margins in the second half are around 40% year-over-year, adjusted for price/cost.