DuPont reported fourth quarter and full-year 2025 results ahead of previously communicated guidance, finishing the year with full year organic sales growth of 2%, operating EBITDA growth of 6%, 100 basis points of margin expansion, and adjusted EPS of $1.68, up 16% year-over-year. Fourth quarter net sales of $1.7 billion were about flat as a 1% organic decline (driven by a $30 million order timing shift into the third quarter ahead of the electronics separation) was offset by currency. During the year the company completed the separation of Qnity Electronics and built out its executive leadership team. Management introduced 2026 guidance in line with its September Investor Day medium-term targets, expecting about 3% organic growth and adjusted EPS of $2.25-$2.30.
Good morning, and thank you for joining us for DuPont's Fourth Quarter and Full-Year 2025 Financial Results Conference Call. Joining me today are Lori Koch, Chief Executive Officer, and Antonella Franzen, Chief Financial Officer. We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking disclaimer contained in the slides. During this call, we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K, as updated by our current and periodic reports, includes detailed discussion of principal risks and uncertainties which may cause such differences.
Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclude significant items. We will also refer to other non-GAAP measures. A reconciliation to the most directly comparable GAAP financial measure is included in our press release and presentation materials and has been posted to DuPont's Investor Relations website. As a quick reminder, on the basis of presentation for our fourth quarter and full year financial results, our total company net sales, operating EBITDA, and adjusted EPS reflect the separation of Qnity and the previously announced divestiture of the Aramids business reported as discontinued operations. I'll now turn the call over to Lori, who will begin on Slide three.
Good morning, and thanks everyone for joining our fourth quarter call. Earlier today, we reported our fourth quarter and full-year financial results, which were ahead of our previously communicated guidance. We finished the year strong, delivering full year organic sales growth of 2%, operating EBITDA growth of 6%, and 100 basis points of margin expansion. Operational discipline and a focus on productivity were key to our earnings growth and margin improvement. These results led to an adjusted EPS of $1.68 per share, up 16% year-over-year. Free cash flow generation was strong in the year. While delivering on our financial metrics, we also executed significant operational and portfolio transformation during the year. We successfully completed the separation of Qnity Electronics, standing up a premier pure-play technology solutions partner to the semiconductor value chain.
We also completed the build-out of my executive leadership team, adding external talent from well-run companies as well as promoting within the organization. We set the strategic direction of new DuPont, starting with enhancing our core values to drive a culture focused on growth and continuous improvement. This includes building a robust business system and continuing the progress on both our commercial and operational excellence frameworks. Finally, we set clear and robust medium-term financial targets aligned with our performance-based culture. I want to thank our employees for remaining focused on delivering these results and driving the transformation during the year. The momentum and progress we made in 2025 is carrying forward to our 2026 strategic priorities, which I will cover on Slide four.
Consistent with what we outlined at Investor Day, our strategic priorities for 2026 are clear: drive above-market organic growth, continue to build out a robust business system, deploy a balanced capital allocation model, all while consistently delivering financial results. We have successfully repositioned ourselves and have a streamlined portfolio of leading businesses, the majority of which are aligned to secular end markets, which will enable strong organic growth. We saw 2% organic growth for full year 2025 and expect that to accelerate to about 3% in 2026. We are well-positioned in secular end markets, and our top-line growth will continue to be bolstered by our innovation engine, which launched more than 125 new products in 2025. Our new products generated greater than $2 billion in sales this past year, and our Vitality Index remained strong at about 30%.
We are advancing the build-out of our business system and made significant progress last year. We introduced a core set of enhanced KPIs focused on driving improvement for our shareholders, customers, and employees. These KPIs are embedded in our refreshed set of management standards, which has added more visibility, rigor, and structure to our business processes. In addition, we will continue to expand the use of Kaizen events across the businesses and functions to identify areas to drive productivity, improve end-to-end processes, and accelerate commercial development. On commercial excellence, we continue to advance the framework across commercial enablement, sales effectiveness, and strategic marketing. We have completed a maturity assessment resulting in the identification of key initiatives in 2026 centered primarily on demand generation and pipeline discipline. Operational excellence enhancements will continue in 2026.
Last year, we rolled out an updated set of KPIs aligned with our focus on safety, quality, delivery, and cost, and refreshed our excellence toolkit with a stronger focus on lean methodologies. In addition, we invested in people and process capabilities across our supply chain and quality functions in order to enhance the customer experience. These improvements and investments will drive overall productivity in 2026. Across these disciplines, we are also actively deploying digital capabilities and AI to accelerate our progress. Within innovation, we are making investments in our labs to enable streamlined workflows and accelerate our product development cycle times. Within operations, we are utilizing tools in the reliability and maintenance space to improve uptime and reduce costs. And on the commercial side, we are focusing on investments in workflow and process automation to improve the customer experience.
On capital allocation, we have a proven model that enables both consistent investments and high-return organic opportunities, as well as bolting on to existing businesses with M&A to enable even greater returns. A strong balance sheet is a priority for us. We will continue to return cash to shareholders through a quarterly dividend in line with our targeted payout ratio, as well as utilizing share repurchases. We previously announced a $2 billion share repurchase authorization, and we executed a $500 million ASR in the fourth quarter of 2025. With these priorities, let's move to our 2026 outlook on slide 5. Our financial guidance for 2026 is in line with the medium-term targets that we outlined at our September Investor Day.
On a reported basis, we expect organic sales to grow about 3% year-over-year, operating margins to expand 60-80 basis points, and adjusted EPS of $2.25-$2.30 per share. On a pro forma basis, our EPS will grow 10%-12% year-over-year. Free cash flow generation will be solid with an expected conversion of greater than 90%. Underpinning our organic growth is a mixed macro environment. Market indicators for Healthcare and Water technologies continue to expect mid-single-digit growth in both spaces on increasing medical procedures to support an aging and growing population and strong global Water demand. Overall automotive demand is about flat in 2026 with weakness in the U.S. and Europe. However, we continue to expect EV builds to significantly outpace overall builds. In construction, after years of declines, market stabilization is expected with flatish demand year-over-year.
We are off to a good start to the year. Our January sales were in line with expectations, and overall, we are seeing improving order trends in our Industrial Technologies business, which we view as an indication that these markets, which were down last year, are beginning to stabilize and recover. Overall, our teams are executing with a focus on driving growth and operational discipline, and our strategic priorities position us well for long-term value creation. With that, I'll now turn the call over to Antonella to cover the financials and outlook in more detail.
Thanks, Lori, and good morning, everyone. The fourth quarter marked a strong operational finish to the year. We exceeded our financial guidance on better-than-expected top-line mix and productivity, resulting in strong EBITDA and margin improvement in the quarter. Beginning with fourth quarter financial highlights on slide 6. Net sales of $1.7 billion were about flat versus the year-ago period, as a 1% organic sales decline was offset by a 1% benefit from currency. Organic sales consisted of a 1% decrease in volume, which included a $30 million or 2% headwind from order timing shifts into the third quarter from the fourth quarter due to system cutover activities in advance of the electronic separation. Adjusting for the timing shift, organic sales would have grown 1% in the quarter. Looking at the second half, organic sales increased 2% versus the year-ago period.
From a segment view, during the quarter, organic sales grew 3% in healthcare and Water technologies, offset by a 4% decline in Diversified Industrials. From a second-half perspective, healthcare and Water technologies grew 5% on an organic basis, partially offset by a 1% decline in Diversified Industrials. From a regional perspective, in the quarter, we saw organic growth in Europe up 2% year-over-year, with Asia-Pacific down 2%. North America was about flat year-over-year. Fourth quarter operating EBITDA of $409 million increased 4% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter of 24.2% increased 80 basis points year-over-year. Turning to Slide seven. Adjusted EPS for the quarter of $0.46 was up 18% versus the year-ago period.
The increase was driven by higher segment earnings of $0.02, lower interest expense of $0.04, and a $0.02 benefit from exchange gains and losses. This was partially offset by a $0.01 headwind from a higher tax rate. Turning to Slide eight. Healthcare and Water technologies fourth quarter net sales of $821 million were up 4% versus the year-ago period on a 3% organic growth and a 1% benefit from currency. Organic growth included a headwind of approximately $15 million or 2% in order timing shifts into the third quarter. Adjusting for this headwind, organic sales growth was 5% in the quarter. For the fourth quarter, healthcare sales were up mid-single digits on an organic basis versus the year-ago period. Organic growth was broad-based, led by continued strength in medical packaging and medical devices.
Water sales were up low single digits on an organic basis, primarily due to strength in industrial Water markets. A majority of the headwind from the order timing shift was within Water. Operating EBITDA for the segment during the quarter of $255 million was up 4% versus the year-ago period on organic growth and productivity gains, partially offset by growth investments. Operating EBITDA margin during the quarter was 31.1%, flat with the prior year. Turning to Diversified Industrials on slide 9. Fourth quarter net sales of $872 million decreased 3% versus the year-ago period on a 4% organic decline, partially offset by a 1% benefit from currency. The organic decline included a headwind of approximately $15 million in order timing shifts into the third quarter. Adjusting for this headwind, organic sales declined 2% in the quarter.
At the line of business level, organic sales for Building Technologies were down high single digits on continued weakness in construction markets. Industrial Technologies organic sales were down low single digits as strength in aerospace was more than offset by weakness in printing and packaging markets. A majority of the headwind from the order timing shift was within Industrial Technologies. Operating EBITDA for Diversified Industrials of $197 million was up 2% versus the year-ago period on favorable mix and cost productivity. Operating EBITDA margin during the quarter was 22.6%, up 110 basis points versus the year-ago period. Turning to slide 10, which outlines our first quarter and full year 2026 financial guidance. For the first quarter, we estimate net sales of about $1.67 billion, operating EBITDA of about $395 million, and adjusted EPS of $0.48 per share.
Our first quarter net sales guidance assumes about 2% organic growth and about a 2% benefit from currency. Our operating EBITDA assumes a 10% increase year-over-year and margin expansion driven by business improvement and lower corporate costs. For the full year 2026, as Lori noted, our guidance is in line with our medium-term targets. We expect net sales of about $7.1 billion, operating EBITDA of about $1.74 billion, and adjusted EPS of $2.25-$2.30 per share. Our full year net sales guidance assumes about 3% organic growth and a currency benefit of about 1%. Our operating EBITDA assumes a 6%-8% increase year-over-year with 60 to 80 basis points of margin expansion. Our adjusted EPS guidance at the midpoint assumes about a 35% increase on a reported basis and an 11% increase on a pro forma basis.
For the Healthcare and Water segment, we expect full year 2026 organic sales growth in the mid-single-digits percent range. This assumed growth is expected to be driven by broad-based strength within healthcare, primarily due to demand in medical packaging applications and medical devices. In Water, we expect continued growth primarily driven by demand for reverse osmosis and ion exchange within industrial and municipal Water markets. For the diversified Industrial segment, we expect full year 2026 organic sales growth in the low single-digits percent range.
Within building technologies, after a year of market declines, we are expecting 2026 to be about flat, primarily driven by stabilization within U.S. construction markets. In Industrial Technologies, we expect a low single-digit growth year-over-year driven by strength in aerospace and demand recovery within markets served by our industrial-based product lines. With that, we are pleased to take your questions, and let me turn it back to the operator to open the Q&A.