DuPont de Nemours, Inc.

Good morning, everyone. Thank you for joining us for DuPont's first quarter 2021 earnings conference call. We're making this call available to investors and media via webcast. We prepared slides to supplement our comments during this conference call. These slides are posted on the industrial relations section of DuPont's website and through the link to our webcast.

Joining me on the call today are Ed Green, Chief Executive Officer, and Lori 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 2020 Form 10-K, as updated by our current and periodic reports, includes detailed discussion of principal risk and uncertainty may cause such differences. I'll otherwise specify all restorable financial measures presented today, excluding 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 posted to the investor page of our website. I'll now turn the call over to Ed. Thanks, Julian. Good morning, everyone, and thank you for joining us. I will provide comments on the strong start that we had to 2021, including the advancement of a number of strategic priorities to make DuPont a premier of multi-industrial companies, equipped for growth and value creation. But first, let me acknowledge the tremendous dedication and determination of our teams around the world as we continue to manage the extraordinary circumstances of this pandemic. The health and well-being of our people remains our top priority. The principles and protocols we've implemented globally and locally have helped to protect our people and ensure business continuity as countries face multiple waves of infection and lockdowns. As an innovation-led company, we believe in science, and we're encouraging all employees to get vaccinated. And where possible, we're working with public health authorities to facilitate access and distribution. Starting on slide two, I will note that one of our priorities for generating value is consistent operating performance and financial results. This morning we announced strong top line and earnings results for the first quarter, both above our expectations. Lori will take you through the details in a moment, but I'd like to highlight the 7% organic revenue growth that we reported reflecting broad and strong demand in key markets such as semiconductors, smartphones, water, residential construction, and a lot of moves. This revenue growth, along with continued cost discipline, led to strong operating leverage and even a margin expansion in the quarter. Our first quarter financial results reflect the agility of our teams to navigate through a challenging environment facing escalating raw material and logistics costs, as well as global supply constraints of key raw materials, most notably in our M&M segments. With strong order trends continuing and confidence in our team's ability to navigate the supply chain challenges, we are raising our four-year guidance for net sales, operating unit, and adjusted EPS. In addition to our financial results, we've advanced a number of our strategic priorities during the quarter. First, as previously announced, we completed the merger of our nutrition and bioscientist business with IFF, creating an industry-leading company in the food and beverage, home and personal care, and health and wellness markets. As you know, this transaction also unlocks significant As part of the transaction, we received $7.3 billion in cash from IFS and retired slightly more than 197 million coupon shares, or about 27% of our outstanding shares at the time, with no cash outlay. We strengthened our balance sheet during the quarter by paying down our $3 billion term loan, and we will redeem $2 billion of our long-term debt later this month. As a reminder, our next debt maturity will not be due until the fourth quarter of 2023. In line with our balanced approach, we returned about $660 million in capital to shareholders during the first quarter through share repurchases and dividends. Under our existing share buyback program, we executed $500 million in share repurchases during the first quarter. As a reminder, we have about $500 million of repurchase authorization remaining under that program, which we intend to utilize by June 1 of this year. Earlier this quarter, we also announced that our Board of Directors authorized a new $1.5 billion share buyback program, which expires on June 30, 2022. We plan to be opportunistic under the new program as we move throughout the With respect to dividends, we return about $160 million in cash to shareholders during the quarter. As we previously mentioned, going forward, we will target a payout ratio between 35% and 45%, and we intend to work with our board to increase our dividends annually as we grow our audience. In March, we announced a definitive agreement materials for $2.3 billion. When completed, a planned acquisition of Laird expands the coupon strategy of growing as a global innovation leader and strengthens our leadership position to advance electronic materials. The Laird business will complement our interconnect solutions business within E&I, and it will add critical capabilities and market-leading offerings to thermal management and electromagnetic which are essential to emerging electronic applications. Our E&I team, along with our customers, are excited for this opportunity. We recently received regulatory approval for the transaction in Germany and Brazil, and cleared HSR in the US last month. As previously indicated, we expect the transaction will close in the third quarter of this year. Finally, we announced previously that we sell our biomaterials, clean technologies, and solvent businesses. We anticipate receiving more than 900 million gross proceeds from those divestitures, and we expect those transactions to close in the second half of this year. Before turning it over to Lori to go through the details of the first quarter, I'd like to take a moment to provide some context regarding what we saw during the quarter. in our key end markets that we serve. Combined, the electronics and automotive markets account for nearly half of our revenues. Electronics continues to perform very well, and auto is recovering nicely from its 2020 lows. Within electronics, demand continues to be broad-based as the ramp-up of advanced technology knows, and a need for more memory to servers and data centers have accelerated. The solar market, which is a large consumer of semiconductor chips and circuit board chemistries, continues to show strength and is expected to remain robust as internet network traffic continues to grow. Furthermore, the deployment of 5G infrastructure by leading telecom companies to collaboration for the next generation of ultra-high speed data should help sustain demand for premium smartphones, which is further enhanced by our favorable content play. With respect to the automotive end market, demand is well above the lows of 2020, but not yet back to 2019 levels, which saw 22.9 million vehicles produced in the first quarter and nearly 9 million units per year. The lack of stable supply of critical components and the semiconductors impacted the ability of the oil OEMs to produce more vehicles and rebuild them towards the run core. Even where we participate in the value chain within M&M, I think it's important to note that our first quarter engineering polymer volumes were not materially affected by the chip shortages, as our demand from the Tier 1 and Tier 2 suppliers was not lessened. as a result of the chip shortage. However, our ability to supply customers was affected by supply constraints of key raw materials, predominantly in our nylon and polyester product lines. This supply situation is gradually improving, but we anticipate several critical products will continue to constrain our production through the end of the second quarter. We expect that any lost sales as a result of our raw material constraints will be captured in the second half of the year. Additionally, we believe that the automotive market will remain strong for the balance of the year, as OEMs look to meet robust demand, as well as pre-plunged global inventories, which are currently below historical averages. Moving on to the water and construction Collectively, these two markets account for approximately 20% of our total company sales. Versus first quarter of 2019, demand for advanced water filtration and purification has strengthened, led by solid growth in Asia Pacific. Strength in residential and commercial water markets, as well as industrial and desalination segments, has fueled growth. North America residential and do-it-yourself markets are up versus first quarter 2019. And while demand within the commercial construction segment has improved from the lows experienced in 2020, it is not back to 2019 levels. Lastly, demand within our industrial and markets versus 2019 levels is mixed. Within the electrical infrastructure and private protective garment market, demand is at or above 2019 levels. However, demand in end markets such as aerospace and oil and gas is still below 2019 levels, but has improved since the lows of the second and third quarter of last year. Sequentially, our sales into aero and oil and gas were up over 40%. Our diversifying portfolio serve us as the global economy continues to recover from the pandemic. We are continuing to invest at competitive levels in R&D and innovation to further solidify our strong market positions and maintain our position as the partner of choice for our customers in 2021 and beyond. With that, let me turn it over to Lori to walk through the details