DuPont de Nemours, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the DuPont Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode, and later we will conduct a question-and-answer session. Thank you. I would now like to turn the call over to Leland Weaver to begin.

Good morning, everyone. Thank you for joining us for DuPont's Fourth Quarter 2020 Earnings Conference Call. We are making this call available to investors and media via webcast. We have prepared slides to supplement our comments during this conference call. These 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 Brie, Chief Executive Officer, and Laurie Koch, our Chief Financial Officer. Please read the forward-looking statement disclaimer contained in the slides. During our 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 risk and uncertainty, our actual performance and results may 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 other non-GAAP measures The reconciliation to the most directly comparable GAAP financial measure is included in our press release and posted to the investor page of our website. I'll now turn the call over to Ed.

Thanks, Leland, and good morning, everyone. I will provide comments on the tremendous progress we made on several strategic priorities during the fourth quarter of 2020 and the start of 2021. But first, let me give my appreciation to our employees and partners around the world who rose to the occasion day after day in the face of extraordinary circumstances. 2020 presented us with the challenges of a global health pandemic, social and political unrest, and the worst economic conditions in many years. Despite these challenges, our teams remain focused on health and safety, delivering for our customers, strengthening the financial position of the company and continuing to drive our strategic priorities forward. It is because of our commitment of our employees that today we are able to announce strong financial results as well as significant progress on critical milestones to make DuPont a premier multi-industrial company equipped for growth and value creation. Starting on slide two, On February 1st, we announced the completion of the merger of our N&B business with IFF, creating an $11 billion industry-leading company in the food and beverage, home and personal care, and health and wellness markets. The new IFF will have unmatched capabilities to deliver for customers with leading positions in markets such as nutrition, probiotics, soy proteins, flavors, and fragrances. The combination of these complimentary portfolios puts IFF at the forefront of highly valued consumer ingredients companies that work closely with customers to meet the growing demand in areas such as all natural, clean label, and sustainability. The combined management team has planned and prepared for this integration, and they are committed to delivering for all stakeholders. they are already executing on a playbook to capture both the cost and revenue synergies enabled by the combination. I am now on the IFF board, and I look forward to coming into the lead director role this spring to continue overseeing the transformation of IFF. This transaction also unlocks significant value for DuPont and our shareholders. Earlier this month, we received about $7.3 billion in cash which enables us to further strengthen our balance sheet by reducing our long-term debt and gives us the flexibility to continue generating shareholder value. As you know, we separated the NMB business through a split-off transaction in which DuPont shareholders were given the option to tender their DuPont shares in exchange for shares in IFF at a ratio of 0.718 shares of IFF for every share of DuPont. The exchange offer was fully subscribed and all shares that were tendered were retired by DuPont, resulting in a reduction of 197 million shares or approximately 27% of our outstanding shares. This was a very efficient process for DuPont to get shares out of the market with zero cash outlay. In closing, customers are excited about the potential this strategic combination can deliver. in terms of being a partner of choice, R&D capability, and innovation. Additionally, our N&P colleagues are energized by the opportunities before them, and we wish them continued success as they embark on this exciting new journey. Slide three highlights the impact of other actions we took throughout 2020 to strengthen our balance sheet, and positioned the company to continue generating shareholder value through a disciplined financial policy. As Lori and I came into our roles in February of last year, and with the initial indications of a global pandemic soon thereafter, we quickly implemented actions to improve working capital and tension capital expenditures across each business and function. We achieved an $850 million improvement in working capital and reduced capital expenditures to $1 billion, a reduction of nearly $300 million from our initial targets for the year. Combined, these actions enabled free cash flow conversion of more than 150% for the year. These actions combined with proceeds from non-core divestitures enabled us to close the year with zero commercial paper balances, a reduction of more than $1.8 billion. We expect to further reduce our debt balances by using $5 billion of the cash received from the IFF deal. We have already retired our $3 billion term loan and plan to redeem the $2 billion notes in May. We close the year with greater than $2.5 billion of available cash. And as I mentioned, we expect to have $2.3 billion of cash remaining from the IFF transaction. Combined with the continued strong cash generation and further proceeds from non-core divestitures, we are heading into 2021 in a very favorable liquidity position with no debt maturities due until the fourth quarter of 2023. As we look to uses of our available cash in 2021, our financial policy will remain disciplined and balanced, maintaining a strong balance sheet growing the company through investments in CapEx and R&D, acting on strategic M&A targets, and returning value to our shareholders. We remain committed to maintaining our strong investment grade credit rating and are pleased that we have a stable rating from all the major agencies. We also look to continue our CapEx at about 5% of sales and R&D spending at about 4% of sales for 2021. With regards to dividends, we intend to maintain our current quarterly per share dividend of 30 cents per share. Going forward, we will target a payout ratio between 35 and 45%, and we will work with our board to increase our dividend annually as we grow earnings. Finally, share repurchases remain an important component of our financial policy. and we intend to resume buybacks utilizing our existing plan, which still provides authorization up to $1 billion. We are also actively evaluating a couple acquisition targets, which will enable even further acceleration of growth in TN markets. As we move through the year, we will redeploy our excess capital in ways which maximize shareholder value. Turning to slide four, We also recently signed agreements to sell our clean technologies and Solament businesses, and we expect these transactions to close by mid-2021. Combined with the sale of the biomaterials business, we anticipate more than $900 million in pre-tax proceeds from non-core divestitures this year. Our priority of active portfolio management has focused our portfolio and generated significant cash for the company. Since June 2019, we have divested or signed agreements to divest nine businesses in addition to the separation of N and B, generating over $2 billion in gross proceeds. Additionally, exiting these businesses removes a significant amount of cyclicality from the DuPont portfolio and eliminates much of the volatility that was often in our non-core results. With the agreements on cleantech and Solament, we have divested a substantial portion of the non-core segment. We will wind down the non-core segment reporting in the first quarter of 2021 and report our results in three reportable segments going forward, as we announced last week. I'll ask Lori to provide more color on our new segments, as well as detail on our financial performance. But let me close with a few comments on the settlement agreement that DuPont and Corteva reached with Comores. I am pleased that we have reached an agreement that I believe is in the best interest of all three companies. For DuPont, there were a few key principles. First, it was important that any settlement agreement capped our share of any potential liabilities at a defined amount. We also wanted a long-term agreement with the building of an escrow account over the term to provide stakeholders of all three entities the confidence that the parties to the agreement will be able to satisfy their respective obligations if they were to materialize in the future. The agreement we announced met these principles and was a key step in reducing the uncertainty around potential legacy PFAS liabilities. The other aspect of what we announced a few weeks ago was the settlement of the remaining Ohio multi-district PFOA litigation. Our portion of the settlement is $27 million. To be clear, we continue to believe any exposure for DuPont related to potential legacy PFAS liabilities is contained due to Heritage DuPont's limited manufacture and use of PFOA. and the fact that we never made firefighting foam. Having agreement with Chemours and Corteva enables us to work together as we move forward. With that, let me turn it over to Lori.