DuPont de Nemours, Inc.

Good day and welcome to the DuPont second quarter 2020 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Leland Weaver. Please go ahead.

Good morning, everyone. Thank you for joining us for DuPont's second quarter 2020 earnings conference call. We're making this call available to investors and media via webcast. We have prepared slides to supplement our comments during this conference call. Slides are posted on the investor relations section of DuPont's website and through the link to our webcast. Joining me on the call today are Ed Breen, Chief Executive Officer, and Lori Koch, our Chief Financial Officer. Please read the forward-looking statement disclaimer contained in the slide. During the call, we will make forward-looking statements regarding our expectations or predictions about the future. Because the statements are based on current assumptions and factors that involve risk and uncertainty, our actual performance and results may vary. differ materially from our forward-looking statements. Our 2019 Form 10-K, as updated by our current and periodic reports, includes detailed discussion of principal risk and uncertainties, which may cause such differences. Unless otherwise specified, all historical financial measures presented today exclude significant items. We will also refer to non-GAAP measures. Reconciliation to the most comparable GAAP financial measure is included in our press release. I'll now turn the call over to Ed.

Thanks, Leland, and good morning, everyone, and thank you for joining us. I hope you and your loved ones are safe and well. Last quarter, I laid out our priorities for operating in this unprecedented environment. I am pleased to say that the quick actions that we took to protect our employees, ensure the safe operations of our sites, strengthen the financial position of the company, and do our part to combat this pandemic are working. Additionally, I'd like to acknowledge the tremendous efforts of all of our employees to deliver solid results this quarter in the face of this global pandemic. Lori will cover the specifics of the quarter, but first I'd like to discuss our performance versus our priorities in the current environment. First and foremost, the safety and well-being of our employees remains paramount. We continue to restrict access to our sites, execute enhanced cleaning protocols, administer quarantines where needed, and enable our employees to work from home where possible. In addition to the extra measures taken in response to the pandemic, our employees have remained laser-focused on safety as we achieved our all-time best safety performance in the second quarter. We remain focused on safely maintaining our operations through the incredible effort across our organization 100% of our 170 manufacturing sites around the globe are currently operating according to plan. We also made nice progress on our third priority, bolstering our already strong balance sheet. As we discussed the last quarter, we launched a successful $2 billion bond offering, which will be used to satisfy the long-term debt maturities that come due in November of this year. and extended and upsized our liquidity facility. Looking ahead, we plan on using $5 billion in special cash payment associated with the NMV and IFF deal to pay down debt, which will leave us in a very favorable position with no long-term debt maturities until the end of 2023. Finally, we believe it is critically important for companies like ours to continue partnering with other industry leaders to deliver essential products needed to support the significant efforts to combat COVID-19. I am proud of what we've achieved thus far with the Tyvek Together campaign, which in combination with our efforts to increase our production capacity, has significantly improved the supply of protective garments to healthcare workers and others on the front line of this pandemic. We also continue to advance other critical priorities across the company, In fact, just last week we published our inaugural sustainability report at the new DuPont. With this report, we are not only able to convey our progress towards our 2030 sustainability goals, but we are also able to highlight our innovations across the company, which create a positive impact in people's lives every day. This is an exciting time for our company, and I look forward to the progress we will make in the coming years. Moving to slide three, I am also pleased with the progress we've made executing the playbook that we implemented in mid-March as the pandemic intensified. We remained committed to a best-in-class cost structure and delivered approximately $130 million in cost savings during the quarter, two-thirds of which are structural. We have made great progress towards delivering the $180 million of structural cost savings we announced earlier this year, and the majority of the actions to deliver the savings are in place. In addition to these cost savings, we're also realizing benefits from the tail of the Dow DuPont synergies and the restructuring actions we put in place in 2019. As I've noted before, our cost actions are targeted toward G&A expenses and aimed at enabling a highly productive cost structure, which is appropriately scaled to the size of the organization. While we will continuously monitor our cost structure for optimization opportunities, we will also drive growth through innovation, which remains a key component of our strategy. We are continuing to invest in key areas like sales, application development, and R&D so that when we fully emerge from this softness, we will be well positioned to capture growth. We are also studying the temporary savings that we are experiencing in areas such as T&E, to better understand what changes we can make to ensure some portion of these temporary savings become more structural. Additionally, longer term we are evaluating the most effective approach to the way we work in order to generate further potential savings from consolidation of our asset footprint driven by hoteling or other office sharing initiatives. Cost productivity is an instilled mindset at DuPont and we are consistently scouting for new areas to drive improvement. We also made the decision to reduce 2020 CapEx to approximately $1 billion, which is about $500 million lower than 2019. We are not reducing any safety-related capital expenditures and have developed detailed plans for restarting our growth projects to ensure we are able to capture the demand when markets fully recover. Through the first half of the year, we remain on track to deliver our goal. From a working capital perspective, we made good progress reducing our past two accounts in a quarter, which is notable in the current environment. However, the majority of the benefits we generated were from lower sales and idling facilities versus systemic productivity improvements. Our teams have developed a number of detailed plans to generate working capital benefits beyond those that you would expect in a soft macro environment, and we anticipate these initiatives will favorably impact the second half and enable the greater than $500 million improvement that we are targeting for 2020. Our focus on cash generation not only ensures we have a strong balance sheet, but positions us well to act on our commitment of returning excess capital to the shareholders when we and the board feel it is appropriate to do so. I believe that our playbook is working. We have solid plans in place and are keenly focused on all the levers within our control. We are confident in the strength of our businesses and are well positioned for growth when markets fully recover. Before turning it over to Laurie, I'd like to make a few comments on diversity, equality, and inclusion. The significant challenge that has been put before all of us as individuals and as a company to confront deep-rooted issues of inequality, racism, and discrimination is one that we must take head on. My leadership team and I are committed to supporting racial equity with an intensified focus on the experiences of black Americans through programs specifically aimed at improving our hiring, training, and talent development practices within DuPont, as well as extensive efforts to eliminate barriers to equality for people of color in our broader communities. This is the right thing to do and a necessity for any company that wants to achieve long-term sustainable leadership. I am confident that DuPont will once again be an agent of change to make meaningful and lasting progress in this vital area. Now let me turn it over to Lori to walk through some of the details for the quarter.