DuPont de Nemours, Inc.

Good morning and welcome to the DuPont first quarter 2020 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. Chris McCrae, you may begin your conference.

Good morning, everyone. Thank you for joining us for a review of DuPont's first quarter of 2022 financial results. Joining me today are Ed Breen, Chief Executive Officer, and Laurie Koch, Chief Financial Officer. We've prepared slides to supplement our comments during this review, which are posted on the investor relations section of DuPont's website and through the webcast link. Please read the forward-looking statement disclaimer contained in the slides. During this financial review, we'll 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 2021 Form 10-K, as updated by current and periodic reports, includes detailed discussion of principal risks and uncertainties which may cause differences. Unless otherwise specified, all historical financial measures presented today exclude significant items. We'll 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.

Good morning and thank you for joining our first quarter financial review. We posted strong results this quarter, but before we discuss that, I would like to thank each of our employees for their continued dedication and strong commitment to our customers. Their perseverance in the face of many obstacles is what made our results possible. I'd especially like to express our appreciation for our China-based colleagues, many of whom have endured weeks of lockdowns, but have continued to operate and get necessary work done. Also, our hearts go out to those affected by the war in Ukraine, and we sincerely hope this conflict can be ended as soon as possible. Our first quarter results from continuing operations included a strong 9% organic sales increase from the prior year, or 14% growth, including the layered acquisition contribution. Organic volume increased 3%, led by an 8% increase in the E&I segment. Overall customer demand remained strong across the vast majority of end markets, led by low double-digit volume growth in both semiconductor and industrial technologies within the E&I segment, and mid-single-digit volume growth in water, and shelter solutions within the water and protection business. Our top-line growth included 6% average pricing increases that we took to offset the continued cost inflation that we are experiencing. We realized price increases in all businesses totaling about $190 million and a fully offset raw material, logistics, and energy cost inflation. I continue to be impressed by the job our teams are doing as we target to remain price-cost neutral for the full year 2022, including the incremental actions taken in March, largely in reaction to the conflict-driven spike in energy and related costs during the period. Turning to slide four, I'd like to update you on key focus areas for 2022 stakeholder value creation, including our portfolio transformation, our balanced approach to capital allocation, and our continued focus on growth execution. First, we believe we are on track with what we noted previously regarding the timing associated with the M&M divestiture to sell in these. The M&M transaction is anticipated to be complete around the end of the year, and we're also continuing with the process to divest the Delrin business. For the Rogers acquisition, Progress is being made on the required regulatory reviews. While we remain optimistic by closing by the end of the second quarter, the process could extend into early third quarter. We continue to see no issue that would prevent a close of this transaction. I'd like to reiterate that DuPont's financial profile pro forma for these transactions will firmly position the company with top quartile revenue growth, operating EBIT margins, and low cyclicality relative to top-tier multi-industrial companies. A greater focus on secular high-growth end markets in electronics, water, industrial technologies, protection, and next-generation automotive will serve as a sound basis for our innovation-led organic growth execution. Regarding the layered performance materials acquisition, We are also on track to achieve cost synergies of $63 million, somewhat ahead of initial expectations. The deal has been a success so far, including overall financial performance ahead of plan for both top and bottom line results and early progress to achieve commercial synergies on top of the cost synergies noted. As one example, we are starting to see some nice synergies with layered process and equipment technology enabling more effective solutions for downstream customers, including auto OEMs, as well as consumer electronics applications. Regarding future capital allocation, and namely the net cash we will receive from our planned divestitures, we will continue to pursue a balanced strategy that includes prioritizing the return of excess capital to shareholders, as well as strategic M&A. This is consistent with our actions taken over the last year, during which we increased our share repurchase and dividend allocation, as well as completed the layered acquisition. Once the Rogers and M&M transactions are completed, we'll be poised to continue to improve our portfolio and financial position, as well as accelerate capital return options. Given the magnitude of the anticipated deal proceeds, we expect that there will be room to execute substantial incremental share buybacks, while disciplined M&A will also remain a key deployment priority. Regarding our existing $1 billion share repurchase program authorized during Q1, we anticipate completing that authorization during 2022 ahead of the one-year duration initially guided. Turning to core growth, We continue to focus on execution of our innovation-based organic growth opportunities. We are pleased with 3% volume growth in the quarter given production constraints due to lack of raw material availability and supply chain challenges. We are excited about visible growth drivers enabled by our technical innovation teams and application engineers who are squarely focused on helping customers solve their most complex challenges. In E&I, continued top-line growth momentum this year is being driven by growth in semiconductor, healthcare, and displays and markets, by cyclical recovery in aerospace markets, and by new share gains and innovation wins, muted somewhat in auto by supply chain constraints. Key examples of recent new product successes driving growth and strong margin performance include newly launched mechanical planarization pads for semiconductor manufacturing, as well as new lithographic photoresists for the high-performance computing market. In WMP, we expect growth in 2022 coming from each of the lines of business. Safety is seeing market growth across major segments, including aerospace, electrical infrastructure, oil and gas, and health care, but muted by lower demand for protective garments. Shelter continues to experience growth opportunities from strong construction and remodeling trends. Water is experiencing strong mid to high single-digit growth globally across all technologies. Examples of new innovation drivers for this segment include several new membrane product families, within water to drive growth in desalination and wastewater markets, as well as the launch of a new building insulation product offering increased sustainability solutions for customers. We also have a strong adhesives business that is positioned well to capture growth with its product offerings in next-generation auto and electric vehicles, especially through the commercial synergy opportunities that we expect through the Rogers acquisition. With that, let me turn it to Lori to discuss the details of the quarter as well as our financial outlook.