DuPont de Nemours, Inc.

Good morning and welcome to DuPont 2Q 2022 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 McCray, you may begin your conference.

Good morning, everyone. Thank you for joining us for a review of DuPont's second quarter 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 a form of statements. Our 2021 Form 10-K, as updated by 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 exclude significant items. We'll also refer to other non-GAAP measures. A reconciliation to the most directly comparable GAAP measures are 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 second quarter financial review. We posted strong quarterly results above expectations in a difficult environment. Our top-line revenue growth of 7% versus the year-ago period included solid organic growth of 9%. Overall, customer demand remains strong across our key end markets, as E&I delivered a 6% volume increase driven by ongoing strength in semiconductor technologies and industrial solutions. In terms of inflation, our pricing actions continue to fully offset higher costs associated with raw materials, logistics, and energy. Early in the quarter, our expectation for full year 2022 was about $600 million of increased costs, and that number has now risen to over $700 million. mainly due to higher energy and logistics costs. We still expect to remain price-cost neutral in the second half and for the full year based on pricing actions we have taken. Overall, our second quarter results reflect year-over-year and sequential earnings growth. These results highlight the strength of our end markets and our team's efforts to successfully navigate the challenging macro environments. which was further complicated by China's COVID lockdowns during the quarter. We were very pleased that the lockdowns alleviated by mid-June and that our China-based colleagues, who operated diligently under difficult circumstances, have been able to return to some form of normalcy. More broadly, our focus on execution continues to drive results as we increase our use of digital tools and other plant site investments to drive additional productivity and capacity release. Finally, with regards to sustainability, I am pleased to highlight that last month we announced our commitment to setting targets to reduce greenhouse gas emissions in line with the Paris Accord Science-Based Targets Initiative, or SBTI. This is an important step toward reducing our overall climate impact, and it builds on our existing commitment to protect the planet by reducing the carbon footprint across our value chains in partnership with customers and suppliers. Turning to slide four, I'd like to update you on key initiatives for 2022 stakeholder value creation, namely our portfolio transformation and our balanced approach to capital allocation. In addition, I will highlight our continued focus on growth execution on the following slide. First, as it relates to the Rogers acquisition, progress is being made on the required regulatory reviews, with China being the last jurisdiction outstanding. We expect a deal to close during the third quarter. Regarding Rogers' first quarter 2022 performance, we were satisfied with top-line progress for the business, with growth in the high single digits, and we are especially pleased to see new wins and ongoing growth in the electric vehicle space. Rogers' business in the period was impacted by a price-cost gap and several operational challenges that held back full earnings potential, but we remain confident in the actions that the Rogers team is taking, and we expect improvement as we move forward. For the M&M transactions, we are on track regarding timing associated with the M&M divestiture to sell on ease. with a completion anticipated around year-end. We continue to make the necessary progress to separate the business, and we were pleased to see Selenese secure permanent financing in the last few weeks. We also continue to move forward with plans to divest the Dell Rent business and affirm our expectation for completion around mid-year 2023. This past July 1st marked the one-year anniversary of our acquisition of Laird Performance Materials. I've commented previously on how successful this acquisition has been for us, including overall financial performance ahead of plan on both the top and bottom lines. We also continue to advance commercial synergy opportunities on top of cost synergies previously noted. Finally, we complete the sale of the biomaterials business at the end of May which was the last of our previously announced non-core business divestitures. Since 2019, we generated gross proceeds of over $2.2 billion by divesting eight non-core businesses, which collectively produced lower growth, lower margins, and overall higher volatility in earnings. We received solid value for these divestitures, selling them at a low double-digit EBITDA multiple. Shifting the capital allocation, we continue to pursue a balanced strategy that includes prioritizing the return of excess capital to shareholders as well as both on M&A. During the second quarter, we repurchased $500 million of shares, bringing our year-to-date total to $875 million, which represents 2.5% of total shares outstanding. We anticipate completing the $500 million of authorization remaining on our existing share repurchase program during the remainder of this year. As I noted during our last earnings call, given the magnitude of anticipated proceeds from the M&M divestitures, we expect there will be room to execute substantial incremental share buybacks, while disciplined M&A will also remain a key deployment priority over time. as we continue to seek accretive and opportunistic transactions that can leverage our existing growth even further. Finally, our balance sheet remains strong, and this remains a key priority, particularly in uncertain, volatile macro environments. Turning to slide five, another key value driver for us is innovation-led growth. Greater focus on secular, high-growth end markets in electronics, water, protection, industrial technologies, and next-generation automotive will serve as a sound basis for our organic growth execution. We continue to invest actively in both advancing the technology within our existing product portfolio and also introducing new products around the pillars highlighted here. With an overall R&D investment rate of around 4% of total sales in line with best-in-class peers, This investment is coupled with substantial application engineering focus, where our technical personnel have a seat at our customers' table in the design phases of their products. This past quarter, we had a number of highlights, which we note on the slide, but I'd emphasize that we are proud to have won four Edison Awards across different technology platforms, and we continue to make progress in introducing new technologies, such as applications in EV batteries, which has strong growth potential. With that, let me turn it to Lori to discuss the details of the quarter as well as our financial outlook.