DuPont de Nemours, Inc.

Thank you for standing by. My name is Sydney and I will be your conference operator today. At this time, I would like to welcome everyone to the DuPont second quarter 2023 earnings 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 and a 1. Thank you. Chris McRae, you may now begin your conference.

Good morning, and thank you for joining us for DuPont's second quarter 2023 financial results conference call. Joining me today are Ed Green, Chief Executive Officer, and Lori Koch, Chief Financial Officer. We have 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 are on a continuing operations basis and exclude significant items. We will also refer to other non-GAAP measures. Our reconciliation to the most directly comparable GAAP financial measure is included in our press release and presentation materials that have 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 second quarter 2023 financial review. This morning, we announced quarterly results with revenue and operating EBITDA better than our previously communicated guidance. This performance reflects our team's ongoing strong execution while facing continued volume pressure and consumer-driven end markets, mainly electronics. In the second quarter, organic revenue declined We continue to see broad demand strength in industrial and markets, including water, automotive, aerospace, as well as healthcare, along with continued carryover benefit of pricing actions taken last year to offset inflationary pressure. Notably, operating EBITDA, operating EBITDA margin, and adjusted EPS were all up sequentially from first quarter. After nearly a year-long downturn, We also saw a sequential sales lift in interconnect solutions of 7%. We also continue to be proactive in taking additional actions within our control to minimize the impact of volume declines, given near-term slowdown in select end markets, while also focusing on optimizing cash generation. Turning to slide four, we continue to advance the number and value-added capital deployment. Yesterday, we announced completion of the Spectrum Acquisition, a leader in critical specialty devices for healthcare and markets. This acquisition fully aligns with our strategic objectives of increasing top-line growth through customer-driven innovation and expanding our industrial technologies growth pillar, while adding to our current offerings in the high-growth healthcare market. Spectrum is being integrated into our industrial solutions line of business where it fits nicely with our existing Livio franchise. With annual sales of about 500 million, Spectrum together with Livio and our Tyvek healthcare packaging business increases our total revenue in healthcare markets to about 10% of our portfolio with expected growth rates above the company average. Spectrum's year-to-date performance has been solid model estimates, which include an estimated operating EBITDA margin of approximately 22%. We are excited by Spectrum's complementary fit, and specifically our ability to leverage incremental growth opportunities, including synergies from cross-selling into complementary accounts, new and faster product development, and deeper design and co-development partnerships with OEMs. Further on M&A, we continue There has been good interest in the asset today. Regarding share repurchases, we expect we will complete the 3.25 billion accelerated share repurchase transaction launched last November within a month. We also intend to complete our remaining authorization through a new 2 billion ASR to be executed shortly thereafter. Regarding the water district settlement that was announced in June, public water systems, serving the vast majority of the U.S. population. Our portion of the settlement is about $400 million, and we expect final approval about six months following preliminary approval, which we expect to receive shortly. Regarding broader capital allocation goals, yesterday's closing of the Spectrum deal and the new $2 billion ASR essentially invested here last November. Our current capitalization remains very sound, and as a reminder, we have no significant debt maturities until November 2025. We are comfortable with a net leverage point around 2x as an equilibrium target going forward. Before I turn it over to Lori to review our financial performance, let me add that we remain excited about the visible growth complex challenges. To name just a few, strong growth is expected in the semiconductor industry with the ongoing global investment in new fabs. Overall growth in the semiconductor industry is anticipated to be high single digits over the coming five-year period. We have the leading materials to enable the next includes significant technology and support from the emerging generative AI revolution. Within water, we continue to drive growth in desalination and wastewater markets and in helping customers achieve their sustainability goals. Finally, our auto adhesives business is well positioned to continue to capture growth with its product offerings and electric vehicles.