LVMH: The Wolf in Cashmere’s Conglomerate - [Business Breakdowns, EP. 68]

This is Matt Reustle and today we are breaking down DuPont. We admire leaders that are in the trenches with their team members; never above any task and willing to share in risks. But, wow, did the Dupont family set a standard in that category. Whether it was Pierre Samuel Du Pont's 1818 death fighting a fire at their powder mill, Alexis Du Pont’s 1857 death in an explosion at a powder yard, or Lammot Du Pont’s famous 1884 death in an explosion while experimenting with nitroglycerines. The Du Pont family pushed the limits.

In the 1900s the company evolved away from their roots in gunpowder and dynamite and it's hard to find an industry they haven’t touched since then. To break down DuPont, we are joined by Seth Goldstein from Morningstar. Seth covers what separates commodity chemicals from specialty chemicals, we get some quick chemistry lessons on what's happening to create these well-known products like Nylon and Tyvek, and why after all of the years as a behemoth in the industry, DuPont has "unbundled" into several independent companies. Please enjoy our Breakdown of DuPont.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

[00:03:38] - [First question] - Key products that define Dupont’s history and where their products show up in our everyday lives

[00:06:23] - The science that goes into developing their products and what being a speciality chemicals business looks like

[00:10:30] - The thought process that went into their merger with Dow in December 2015

[00:13:21] - Commodity chemicals versus speciality chemicals

[00:16:01] - The importance of patents and early products that first had them

[00:19:47] - Their economic model and profile and current businesses

[00:23:56] - How their EBITDA margins today compare to the business historically

[00:25:27] - Overview and duration of their merger supply agreements

[00:27:52] - Producing on a per-order basis or on market speculation

[00:31:00] - Stability and internal investment of their cash flow cycle

[00:32:28] - History of the Dupont family and key leadership changes

[00:34:24] - Thoughts on the bull case for Dupont that will put them back on the pedestal

[00:36:28] - The percentage of the market they represent today and their current competitors

[00:37:56] - Metrics used when valuing commodity and speciality chemical businesses

[00:40:03] - Prior regulatory fines and potential risks going forward

[00:46:44] - Key lessons for operators and investors from Dupont’s story