DuPont de Nemours, Inc.

Good morning. My name is Rob and I will be your conference operator today. At this time, I'd like to welcome everyone to the DuPont fourth quarter 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you, Chris McRae, Vice President, Investor Relations. You may begin your conference.

Good morning, and thank you for joining us for DuPont's fourth quarter and full year 2022 financial results conference call. Joining me today are Ed Breen, Chief Executive Officer, and Lori Koch, Chief Financial Officer. We've prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking statement disclaimer contained in the slides. During this 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 risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K, as updated by our 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 non-GAAP measures, a reconciliation to the most directly comparable GAAP financial measures included in our press release, and has been posted to DuPont's Investor Relations website.

I'll now turn the call over to Ed. Good morning, and thank you for joining our fourth quarter of the year 2022 financial review. We post the strong quarterly top and bottom line results in line with our previously communicated guidance in an uneven global economy. Fourth quarter revenue included 5% organic growth versus the year-ago period. Strong volume in water and other adhesives, as well as ongoing strength in industrial and markets such as healthcare and aerospace, helped mitigate volume declines in consumer electronics and markets, and softening conditions in North American construction markets. Strong price and growth in the quarter reflects actions taken largely prior to the fourth quarter to offset persistent inflationary pressures in raw materials, logistics, and energy. We sold over $800 million in year-over-year inflation headwinds for full year 2022. We delivered year-over-year operating EBITDA growth in the fourth quarter despite a slight volume decline, currency headwinds, and the impact of portfolio divestitures. We also saw a margin improvement of 120 basis points demonstrating solid operational execution and focus on items we can control within the highly diverse end markets where we participate. The closing of the M&M sale was a milestone event in the fourth quarter and our last contemplated large-scale divestiture. The transaction further transforms our portfolio to concentrate in more stable, secular, higher growth, and higher margin end markets. As you can see on slide four, our transformation actions have significantly strengthened our balance sheet, increased our financial flexibility, and positioned the company to continue to generate shareholder value through disciplined capital allocation. Following the M&M sale, we acted quickly in accelerating return of capital to shareholders. We authorized a new $5 billion share repurchase program in November and launched an accelerated share repurchase transaction for $3.25 billion of common stock, allowing the retirement of about 39 million common shares in the fourth quarter. We anticipate completing this ASR in the third quarter of 2023 and plan to execute share repurchases under the plan's remaining authorization as soon as we can. In the quarter, we also retired $2.5 billion of long-term debt, which was due to mature in November 2023, and reduced our commercial paper balance to zero as of year end. The long-term debt retirement reduced refinancing risk and generated pre-tax annualized interest expense savings of approximately $100 million. We also announced today an increase in our quarterly dividend to $0.36 per share, or a 9% increase versus last year. Going forward, we continue to target a dividend payout ratio of between 35% and 45% and expect to increase our dividend annually alongside earnings growth. In total, we deployed more than $7.5 billion of capital in 2022 through significant share repurchases, deleveraging, and dividend payments, which reflects our overall balanced capital allocation strategy. We exited the year in a favorable balance sheet and liquidity position, and we look to further allocate excess capital over time to maximize value creation through both opportunistic M&A and incremental share purchases. Our M&A focus remains on targets that fit within our growth pillars and are aligned with key secular growth trends that we have highlighted. Further, our disciplined approach to portfolio management will ensure that DuPont focuses on growing businesses where we are the best strategic owner. Regarding the Delawarean sale process, we continue to advance our internal work required to divest the business. We are being prudent with the deal process to ensure suitable market conditions and still expect to have a completed sale in 2023. Finally, we also continue to invest internally in innovation and incremental operating capacity to fuel and support our organic growth. In 2023, we expect to allocate CapEx at about 5% of sales as we wrap up some larger scale projects this year, and we target R&D spending at about 4% of sales on a consolidated basis longer term, investing differentially within our business lines. based on growth potential. Turning to slide five before I hand it over to Lori, I want to thank our teams who remain focused on operational execution in a difficult environment, which allow us to produce solid revenue and earnings growth this past year. I also want to thank our teams for the continued efforts made during 2022 in transforming our portfolio. We are excited about the longer term growth potential of our business in its newly constituted form centered around the secular high growth pillars of electronics, water, protection, industrial technologies, and next generation automotive. Our end market mix is notably tilted towards electronics at about one third of our portfolio. Within electronics, we have a key presence in consumer based end markets, mainly chips, films, displays, and printed circuit board materials used in smartphones, PCs, and tablets. The bulk of our remaining electronics exposure is in areas such as data centers and telecommunications, as well as industrial and automotive applications, primarily consumables used in the semiconductor chip manufacturing process. Despite short-term volume pressure, we are pleased with our electronics market position and confident this exposure will help generate strong growth over time. Our presence in electronics is enviable, with higher margins versus the company average and a solid competitive position across the key products we supply. Likewise, our water business at 12% of our portfolio operates in markets that are expected to grow near the high single digits, driven by the global response to concerns such as water scarcity and circularity. Additionally, our participation in the auto market at about 13% of sales is much more connected to high-growth, advanced technologies enabling long-term secular trends like hybrid and electric vehicles for items such as battery applications. A solid portion of our auto exposure is aligned to EVs, which are growing at a significant pace. Given these and our equally strong market positions in many other end markets, including within our protection and industrial technologies pillars, we believe that our financial results over time will bear out the view that the new DuPont will grow and generate returns on par with the best industrial assets in the public markets. In response to near-term short cycle end market slowing expected in the first half of 2023, We have been doing scenario planning for some time now and are proactively taking actions within our control to minimize volume impacts on margins. As a result, we expect to be able to show the resiliency of the new DuPont portfolio this year. I look forward to providing you with updates as we progress through 2023. With that, let me turn it over to Lori to review our financial performance and outlook.