DD - Earnings call transcript Q2 2019 | DuPont de Nemours, Inc.

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Operator

Good day and welcome to the DuPont Second Quarter Earnings Call. Today’s conference is being recorded. And at this time, I would like to turn the conference over to Lori Koch. Please go ahead.

Lori Koch

Good morning, everyone. us second joining conference XXXX for call. you for quarter DowDuPont’s earnings Thank

this investors available webcast. are call We making to and via media

We posted supplement call. to and through section have during to website, prepared conference our link this webcast. of our DowDuPont’s These the on comments are the Investor Relations slides slides

disclaimer our slide. Please call and Ed Officer; the on Doyle, read me Financial forward-looking are Marc this Chief Executive Chief Chair. contained Executive Joining today Officer; the statements Jean in Desmond, Breen,

During will the our Because that on we differ uncertainty our or these expectations from may and results and assumptions materially based regarding call, our our statements forward-looking make and statements. actual are predictions factors future. about risks current performance involve statements forward-looking

as and presented by significant Form cause of modified detailed discussion such quarter first all current measures today specified, risks otherwise include historical XX-K and which XX-Q principal our financial differences. excludes Our uncertainties, may report Form items. Unless

to reconciliation and in associated of We in release disclosures press non-GAAP other will slides. our our measures. are and most also to directly the GAAP measure A refer contained financial comparable the appendix

of to our a your in Corteva the we at minutes a.m. to full starts a X:XX order early, then and For about you awareness, XX XX remarks prepared can join end kept have minutes little Q&A that allow so call, which

call turn to Marc. the now over I will

Marc Doyle

Lori, and Thanks, good everyone. morning

and of our the XX years thank specifically accomplishment like they for the Jim June the over get than on April by his we like and businesses service. role more Dow past successful his on Before acknowledge all execute integration industry-defining Dow I’d incredible entire I’d achieved of transaction. also X DuPont X. for I’d years acknowledge DuPont and to that to to did the separation like of the X.X organization Fahey in enabled started, the electronics everyone Corteva to

of Jon the Kemp as will E&I this succeed President Jim announced we morning, As segment.

conditions on end quarter Let’s by We forma EPS growth expanded principles single dedicated digits Slide EBITDA cost the significantly a staying started in in innovation-led grew We control. select quarter the on core X. delivered pro gross and operating market year margins markets adjusted and of our disciplined versus and strong get the dynamic period. navigated high and ago both to

new We also several key high-growth continued to XG, innovation including sources. care, with wins food auto trends, returns our water and spend drive on health sustainable electrification, across

Asia was strength sales an $X.X Looking & Safety closely Construction and X% offset and electronics at by others our X% segments the weakness in down were well-documented EMEA, automotive and Organic X% by in down numbers, sales were the core more billion Canada, X% as basis X.X%. of seeing down total than X% in continued on organic end Regionally, in sales markets. in Latin America. organic in in are the we down down U.S. and up were Pacific

to from drive demand. continued and decline in the by impacting and sales driven Pacific the sales and primarily Asia was declines polysilicon in Canada organic The EMEA. pricing, end electronics automotive the segment non-core Weakened U.S. in weak lower both markets

did were versus see The quarter we XX% second in down first However, segments. in year results our with the our quarter. X% versus of in core increases sales across prior sequential the improvement all China realized

our in improvement pricing spots plant key our and bright basis in than was margin, result the discipline, as of productivity points of improved more of core segments. quarter substantial in control. all the XXX cost Gross a realized One which was margin gross the

leverage a period, expectations operating our weaker $X.X essentially amid the and with pricing spite All year outperform conditions. strong EBITDA ability billion of in EBITDA perspective Operating in, light prolonged line. action efficiencies was to operating swift operating led in challenging and market to prior weakness top of of flat an demonstrates drive us versus market deliver resulting from in

our was EBITDA on currency, core year-over-year a segments in up operating basis. X% Excluding

operating We than year XXXX. basis second also improvement delivered delivered prior operating of margin EBITDA margin improvement the EBITDA XXX of versus points points since XXX greater quarter have and basis of the

we count, will new share EPS, Adjusted tailwind to driven per a Slide date. up evident $XXX did in as million part DowDuPont lower also a of a priority a X% share part amortization. repurchases in on we the from shown and depreciation DuPont as maintain versus in pro basis that have benefited with line prior the of X, from forma on quarter year and was lower $X.XX by The completed as purchases share we that

Before an update I full third for provide as guidance to year the I’ll on Jean our call over discuss to in Slide to expectations detail, the well quarter turn full quarter as X. our the

prolonged imbalance. we organic the reflection For versus automotive weakness short- primarily businesses, expectation our slightly This down causing supply/demand lower prior a pricing in the to both full of and be headwinds year, the result volumes is a now expect in semiconductors, sales cycle the and change of year. as

operating an our range. the to From expect on stated we EBITDA be previously perspective, earnings of low end

headwind million. of fourth $XX authorized actions, during targeting volume in in half. the the from second both to These include actions are addition and to are in a quarter benefit took in cost the up quarter, the quarter $XXX mitigate second towards million to restructuring we million the of price biased the second the cost We $XX new macro and program

versus midpoint, organic our basis versus direct basis to conditions reflection our weak that mitigate can we a the our of control. guidance, about sales lowered XXX is previous lowered in versus ability by All points market approximately the we levers which XX and by prior midpoint with previous points EBITDA

to pro half net share impact updated expected now EPS our and the strong adjusted D&A to at of which assumptions, tax $X.XX forma the of are We range. the and be second per our $X.XX earnings high raising the to end quarter revision the second segment latter of is rate results, guidance reflecting

enable down operating we earnings quarter, an lower deliver be will productivity us to expect despite management to top low a For leverage of sales strong From digits. and we single strong the again spend perspective, line. our tight expect actions organic third

For expect adjusted to the range quarter we forma in be the pro per $X.XX $X.XX of EPS third to share.

commentary, we and the as In provide some well additional appendix model as segment-level guidance.

I’m investments innovation. position on our pleased bottom-line markets to very actions our strong with our our Overall, recover on control capitalizing team navigate levers to uncertainty to well continues by focusing capitalize market within These in as structure and improved deliver strengths results. will us cost fully and on the competitive the

over turn now Jean. the to I’ll call

Jean Desmond

second EBITDA result for and a our Slide operating the each quarter sales snapshot On of Marc. Thanks X can you see of segments.

and GDP move I our leverage. targets: for two of I performance a clear GDP. detail, what current X%, our the into Regardless Before segment medium-term short view target. of global is XXXX, want a was global it’s on financial revenue your assess growth to which medium-term be organic that medium-term target our this organic X% of set of We will growth operating for sales based of year to opposite X% performance well

expect down For organically. the we our to be sales slightly year,

about these such softness Marc overpowering and and double-digit quarter, most our several of probiotics, in end in the While markets, bright talked saw growth the spots. are single as Solutions businesses high Water short-cycle exciting that

to to right move direction. our taking committed we in the have are performance We set targets meeting the and actions are

towards will is us growth. we biased spend Our accelerate our continue to allow high-return to high-growth, areas believe that innovation-led R&D

our We Non-Core, are separate now is in performance. Once our expected portfolio actions a to taking are these also improve in underlying complete, which results. segment reported alone actions

segment Non-Core negatively the to sales expect we XX XXXX, about For our impact growth by basis points. organic

leverage. also me address operating Let

delivering maintain to times greater growth over has as committed basis continuing top growth. our softness X.X EBITDA line our first basis the Through declined where cost are in of XX XXX half, mentioned, operating With additional points we We we’ve leverage. generated environment in the expected Marc top actions, are nearly growth line our operating EBITDA an second half, than taking points. to

with Slide & With Imaging me segment some that, the details X. additional let Starting Electronics results. on provide on

customer continued driven which million levels high demand, EBITDA memory $XXX quarter destocking, sales $XXX mostly reflect was Second of in million consumer by operating coupled and soft sector. with of the inventory

production remained this Our of position next-generation year Advanced smartphones strong. Materials for the in launching later

early the by encouraged of orders. are We pace

OLED gains continue materials. we see volume Additionally, display in strong to

resulted However, volume point versus year-over-year less product XXXX. a softness margin in our of and lowering favorable highest-margin one XXX inventory Technologies, in a led businesses EBITDA Semiconductor to operating decline basis greater-than-expected high These declines second levels of mix, E&I. in quarter by

of this launch the growth we Looking the Solutions also later year soft anticipate models business conditions in forward, continued new see we our semiconductor phone expect in space. market Interconnect as but

across all margin the Biosciences pricing Slide points and can our on basis businesses. cost X, gains and You delivered XXX which of results on see & synergies EBITDA Nutrition expansion year-over-year business operating regions of

Bright growth this of spots double-digit Biosciences of with & million portfolio on in EBITDA single-digit to microbial sales billion. within Nutrition N&B the probiotics, growth included $XXX Asia-Pacific, delivered operating in control. which $X.X strength and returned mid particular quarter

to strong functional of unseasonably Beverage in Offsetting America, summer a & trend. sales. saw solutions the these our start also areas we cool Food impacting the meat We season in Food plant-based to see Beverage business growth in North demand continued our & driven market declines from strength, dairy within by

Pharma constraints mix the Volumes higher-margin products. Solutions shift capacity as to low declined towards portfolio in single-digits enrichment we due and

and to by & We in Solutions Pharma trajectory expect return the half. from to Beverage Nutrition see a positive from supported solid growth & growth Biosciences Food businesses second a

the to to We innovation-led spaces drive growth. invest will our R&D into exciting such microbiomes continue dollars as

softness short-cycle and shows mid-teens weaker demand weak global additional percent results to where U.S.-China down also driven E&I, to volumes market weaker exposed & and segment the China. into tariffs. businesses, a Slide continues T&I driven primarily where Similar trade by segment. to is mostly for autos Europe, by were conditions Transportation X export the electronics Industrial the macroeconomic led demand This of our in

In and will decline were year down of anticipate versus the basis prior versus by X% X% period the decline, sequential offset will normalize sales volume partially billion prices organic with gain and modestly strength. $X.X we half, T&I year. an year-over-year pricing XX% diminish supply/demand the on pricing second ago balances

declined $XXX and Operating price headwind with of savings. cost lower offsetting currency synergy million and a volumes more than increases EBITDA XX%

polymer levels quarter, third quarter, out demand we as normalize the result China inventory environment continued polymer the improved by inventory chain. For and volume in anticipate destocking Global in the electronics similar auto lower auto and with to a year-end. of ongoing levels second of in we expect and distribution a weakness

which offset basis & of of on points $XXX be EBITDA We Safety coupled led $X.X million, improvement anticipate margin lower billion, X% X% an by Net sales demand The of The up results on year. of action. operating up shown additional EBITDA partially the regions was prior high XXX gain, construction Shelter pricing led with XX% America operating across all our Construction are X% X. gains in business X% productivity will growth all organic volume included to Safety The organic basis, growth and Slide water volumes offset from businesses growth by which Asia Water residential was lower Solutions growth continued the a Water the Solutions. in Pacific. in in in and This led included on softness by market. business, Solutions North was by single-digit

Growth improvements in productivity synergies, businesses, volumes Water led Safety more cost water local was and by EBITDA where headwind. offset in and a operating currency higher than price gains,

for improvements begin As year to prior as lap to anticipate to we half our second of increases. the Safety we look of price we & pace many price the Construction, decline

and will impact in which several back the earnings. both maintenance our have the shutdowns planned also half We volumes year, our of

me with XX. sheet few Let capital on on comments Slide invested wrap on return balance and the up a

is that few nearly year-end million funding $XXX as at including final see part remaining items, the Swiss before this into a which with planned separation. structure our pension, a is our You’ll capital of point

a higher stand-up receivable increase, required driven the to year-end our greater the activities did quarter separation. our typically the but inventory weaker of we accounts primarily was of net demand due XXXX sheet. normal second of end From a higher intra-year part perspective, as billion. quarter use levels in a was At We balance capital see working see $XX.X an the capital than June, second increase due and debt by versus to

$X working opportunity to of see billion productivity our line continue year-end. working capital expect more We and to capital in bring by

part We week. of will will filed be flow next publish as statement which XX-Q, a the cash

However, it their results until of includes Corteva and up the separation. Dow

meaningful taken This we and midterm invested have organic put an above the two will have this across on Return about we of we revenue XXXX, help place basis metric is shows and to financial now sustainable embedded point of annually. XXX beginning spoke drive a our company, have basis which make that well operating earnings the third growth point a targets: metric growth. DuPont, mindset for driven improvement target leverage. capital XXX actions ROIC financial a have is improvement. I necessary And the since performance stated and in of Earlier,

I’ll now turn the call over to Ed.

Ed Breen

I’ll provide our on an strategic Thanks, Slide Jean. priorities XX. to update

and committed quarter, goals. these are delivering towards we performance the We to continued our in best-in-class performance, advance to

Our our as from focus on robust innovation to R&D growth quarter our continues eighth evidenced accelerate by growth. of pricing consecutive portfolio,

we’ll experiencing businesses. we the are to continue even our during weakness have and We short-cycle in invest in innovation

our in fact, am points of basis cost percentage In was line at quarter, pleased delivering cost spend expansion. productivity, X% margin I to synergies steady R&D the quarter, our million in with of held with over as XXX for a including sales leading $XXX our in the targets.

our in actively are within We also execute Non-Core discussions the to to segment. continue and sell actions businesses portfolio our engaged

priorities divestitures have improvement potential to value for on our From our top Integral free members our you shareholder with focus long the can key and million portfolio of broader year. capital a has goal effective $X billion completion share achieving the We recently the priority a commitment improving pleased payout. meaningful expect which is goal I will within the focused assure its evidenced teams, creating leadership of these value. in creation issued ROIC flow significant to organization’s performance stay on $XXX on term. plan. and ultimate our our organization to this ROIC. calendar the I the grant of a am driving year-to-date to We is metric presents under that repurchases of strategic as by progress perspective, with this over made allocation, cash

the I’ll Q&A. open now turn it to to Lori

Lori Koch

move Ed. to questions. on With let’s Thank you, your that,

First, Please, our you Q&A. apply both prepared statements following I would remarks instruction. to Q&A like that the and remind the to our provide forward-looking

Operator

question Vincent [Operator Stanley. of we Andrews go Instructions] And first our will Morgan Please ahead. from take

Angel Castillosa

This is Angel Castillo on for Vincent.

back around a your half expectations. Just question quick

improvement the about So just you at XQ it’s in trend looking sharp looks had guys E&I – the even third It what for to and in for also improving be guidance like sequentially. but talked implies that XQ T&I quarter then pretty getting guidance though seems XQ. fourth some a worse

trade as curious dependent embedded wish what’s in back do you just just maybe how is it So it – is How actually the and half. on to how resolution.

Ed Breen

question. the for Thanks

an turn first give to little Now year let bit and over first the virtually a the off dropped fourth is and by The more forget detail. a level comp second overview don’t just easier year have an up little me me last Marc you half of bit sales quarter, then our we difference it sequencing high the let for because way the between half just very, And very slightly. through in half flat and year. are They’re the businesses our planning.

in the positive more the Still So that’s comp. negative easier an we’ll have organic growth third, quarter. fourth in but

saying. sequence actually look we’re in the they what at So

– the soft the stuff rest basically the is of semiconductor T&I the businesses, year, which in markets E&I same businesses. staying on the E&I, counting plate short-cycle the and, We’re down

improvement we’re structure so our standpoint, not So actions happening on counting from cost and we’re that. around business any planning that our

But Marc, you that? more little why a detail give don’t on

Marc Doyle

smartphone improvement the market, last Yes. And there’s is slight sequential what to just Thanks, said, mean, changes, quarter. by as a of really build premium Ed. couple that’s yes, driven there E&I Ed on in we said, a I

half, As we’ll in some launches see second sales. happen the additional

the asked confident E&I. started improvement a We’re back the trade then and second slight pick half orders in is that. some for with quarter, And about of resolution. leading that pretty you to the up The to in

any trade change there’s that environment. in assuming not the We’re

the second we’re on course outlook, situation. current the sort of here staying for So half our

Angel Castillo

other very had Great. helpful. the – just with cost on question cutting. And I is That’s

if talked So these about we you come Or million sustainable are back? Or guys things to these second the the how improve, How half. about think $XX here costs that? are in going costs? should

Ed Breen

on comments a Yes. that. couple of Probably

that the at more think out these I permanently looking costs we’re as system. of

million biased second to Marc kick fourth Jean said, second Jean $XX did you for highlight the as the also towards team the time like I’d $XX – make. half, quarter, think more that comment million quarter Marc we in a biased are the more by doing said did and in the I they So another and in.

little R&D we’re – not if softness. a We are touching seeing we’re short-term because just

going team think I We’re has. R&D to important. is run X%, just the maybe X%, the exactly really plans that’s around all – that slightly aligned which with above the detailed of And the

going growth not clip weakness to our We’re prospects little of short-term. because future just on a

Angel Castillo

you. Thank helpful. Very

Operator

from Sprague And Jeff our come Please next ahead. with go Vertical Research. question will

Jeff Sprague

morning, Good everyone. you. Thank

Ed Breen

morning, Good Jeff.

Jeff Sprague

on me. and thinking from want about cash morning. questions Two Good up also I flow. margins then pick to the

So margin very performance impressive. was solid, the gross

Just a Ed little point picking or up on Marc. the bit, prior

Just off. kind or – starting might change thinking in this their – into versus about to synergies actions, at kind And the restructuring ongoing trends, actions more see going cost and that might even of better face say, mix synergies well, how kind of run forward of we might XXXX? of perhaps kind tail of course, we macro

Marc Doyle

is top synergies. But portion I this going see see on, we the mean We’ll We a XQ on of early year delivered areas productivity going-forward about less I’ll already We’ll synergy next as end that. million will take into we’ll of will Jeff, and And you’ll that The mean, basis. last intend delivered so XXXX. Ed program of more $XXX and still take up teed to number what more That that. deliver end be we that, that focus about synergy – be talking we’ve million. $XX the a us yes, here. seeing an the also of Marc. through said, happening as I Yes. in is on about productivity example. year.

Ed Breen

that point the really One which Marc’s focused to going of factory have, as we there, big the program on, know, efficiency about has team future, on, areas large of which pretty is you going in good productivity the And progress we see, is over team basis in have. last A big some we of XXX during our facilities. productivity big some lot with of quarter there. business, that getting for great almost you that facilities in And M&A business, tougher bigger, that the the tremendous are S&C footprint. is has part and the made factory this year, on progress seeing we that the business can up DuPont points has really business, But – on are And in is the in a in we a our year. as that that pricing again, growth. is volume past were but really progress underlying that

a be across This opportunity. that the the a the to it’s program it got efficiency. that. thing. all big that’s So way, And Marc’s happens the by not with comes businesses just team to when factory biggest

Operator

question from next And we Steve will America. Bank Byrne of Please take go our ahead. of

Steve Byrne

And tailwind we where Hi, seeing move this potential I ask forward? as from about you for there to within synergies any you’re revenue wanted is more your businesses.

Marc Doyle

me launches that from is happening bit said Yes. timing. It’s year. to some are there last to revenue what a little The that synergies longer have year due let are been Yes, the Yes, we’ve this take that. build There Steve, take Marc. qualification opportunities portfolio. across

around the combination offering. beta FMC. smart tables. launch plus offerings, of cellulosics the cellulosics, of did was materials also conference of a plant-based portfolio. of some That We meat was Dow new that and integrated That things a offering like are smart coming a DuPont example, Dow out the For

for said at would And those EBITDA, sized three but launches. so five out. more more million we to We’ve synergies around see $XXX of about the and years it be revenue opportunity you’ll

but it five-year the of way portion So three that really is of Dow a put actually overlaps you in the way to objective. to the the localized of think a kicker just those growth it’s growth it’s DuPont and And if exist at I together. segments look at we’ve each

Operator

next go Please question Capital John McNulty from And BMO Markets. we will of ahead. our take

Bhavesh Lodaya

This is John. Bhavesh Lodaya for

if to Or your opportunities value facilitate give the you you do more choose even balance As to potentially sheet? macro options? does may create you think the it the strategic preserve think weakness in about optionality you portfolio,

Marc Doyle

I’ll I Marc. – sure I’m off this it think is something. and kick will then Ed add

opportunity driver macro I probably the think biggest is the not for here. current

future? down you these either the activity I at other we look the the see across say. the of more if Hard that think and macro each of opportunities the road, for businesses in board. strength to current of that portfolio plenty M&A of look potentially opportunities to the the Will or transactions drive in

Ed Breen

think strategic soft don’t I moves I’m bearing the the we Yes. or any has it I whatsoever. it’s more on if would think make macro or – not, – don’t

smart feel and If account. can mentioned, that your be Non-Core it’s you the to whether making going metric about we the exit don’t revenue every make I that into Jean right Non-Core in I highlight front, the growth so cash moves, coming And company deploy into say, as take good value, just the strategic the on on we you’re to way. very would businesses, progress portfolio we’re as rate, will margins, create a though, improves comment, ROIC. practically

we’ll team really those moving the along quickly. focused So really getting transaction on

Marc Doyle

Yes.

some Let me softening well questions I we obviously get on that build a for about potentially on Non-Core. can just tell impact We of and conditions That’s into good and market those here. do value things comment. the divestitures, we’re get whether you would point Ed’s

any interest rolling far. so are good seeing with for products have not that putting businesses. The here. we’re there in lines, We’re assets up everything that issues strong sale we’re They

So good we’re potential. generation cash the feeling pretty about

Operator

And our with Bernstein. from Please next question ahead. Jonas will Oxgaard come go

Jonas Oxgaard

have high-level I mind. question, if you a pretty don’t guys. morning, Good

would cause be With that certainly seems that idiosyncratic see trade me happening. but people drop, war demand I effect. war, there automotive to didn’t smarter know, to don’t some, foresaw the I than maybe the lingering Like trade

call positive other idiosyncratic you? are actually that keeps you’re about? be conversely, there for Or could as trade war effects what seeing so And already you’re that effects the worrying going, there or are I’ll that

Marc Doyle

Yes, good Jonas. question,

all read but I it are if think, weakening was about There war, factors, that’s was to wouldn’t a trade you clearly automotive say demand the the I some think multiple And factor. hard of reports. industry predict. I

are other The think around of some that relatively we’re the you semiconductor OEMs dynamics clearly about Chinese headlines positioned. a the U.S. suppliers. well read the is Chinese interesting lot industry and I industry And there electronics industry, and

for a some in automotive those local. of companies lot We product dynamics to But and how both our to have our U.S. time, been our electronics quite Asia U.S.-China We’ve ground those production in affect on we positioned relationship the the might in watch of competitiveness have lines. continue and there.

Operator

And we will take our next question Suisse. from Christopher go Please Parkinson with ahead. Credit

Christopher Parkinson

you. Thank Great.

Pharma and the in also, thoughts cultures a on faster growing potential us And through can long-term So bright expected. walk the if takes with just walk from puts rest N&B the segment mix through clip like you issue now exceptions the can was capacity just which constraint for you than you quarter, saw of few spot at including just then a be a bioactives, your Can pharma and portfolio. that probiotics, the well us benefits the Solutions? the

for Just any would XXXX outlook how your XXXX that and on be comments your affect could margin you. Thank appreciated.

Ed Breen

your Yes. Marc part. part take I’ll first can and on the add also second

single years sets every N&B of good a expansion generally – N&H We’ve margin except single but had and expansion for watching been every You’ve what with now it’s businesses. in the now one. was those quarter three margin quarter

had a a one like XX of blip. bit row, we quarters in a So little there’s

we’ve obviously, growth record. helped a really you good us. So And way, when had the that’s dig the organic by pretty detail track into –

side, of on a the on Our been an doing in a or But that your that. do the It’s job they’ve still team you’re story, synergies play cost great so should years. of making enrichment actually couple and very impact biggest There G&A chart actually a done been Dow out is FMC question. great so you because business if fair coming that. the stuff job the has amount on that in, conscious they’re waterfall your and next was comment

you and there. company we way, I margins towards businesses think if more class by them best take something up or So of the you our in I isolate room and fairly are core your still to do unless average But probiotic consistently think competitors, the up mean, like to our drive compare that. a the we have player be

we’ll what but into pharma, what the a can half? second mix as and biggest So Marc, But part happen It’s in it’s the don’t of you said. probiotics – forward and is why the puts you go piece, and as get couple those get pieces. that takes we

Marc Doyle

Yes.

more question. Let you a first give little the me bit on

positive, R&D significant the quarter, for capacity growth. some probiotics, some Ed as to back the spots product double-digit pretty with companies. in the So We the in and bright launches, during both also N&B new clearly, other investments, partnerships mentioned, quarter announced additional

one, I’d So we’re long-term a down pretty market. run. plant-based And in also mid-single is the trajectory. clearly back up the see. doubling we’re to think And business mention well obviously, for that good digits meat fantastic I that’s mentioned, in trend Ed growth as the and in long enricher was to margins continue that a microbial mix quarter. great That the positioned was

space. the of that We’re space It’s margins R&D choice the today. average higher the that the small working a enricher. in business than segment. in margins It’s also for be partner to hard companies The in are mix a

to long-term going that’s So growth be good a driver.

the of to coin, tough I’d say really continues the continues market to side business other clearly a have the market. be industrial On struggles. enzymes some Bioethanol

course driven issues which in primarily. one XXXX. the pharma, really in capacity get by in And we’re of and through Near a to, hopefully during see the the weakness looking to recovery we year so was some had quarter term, that that’s maybe

there in market strong. we market. demand do so business is expect It’s back least the we’ll second single-digit a And growth. pharma half see the The to low long-term good the usual

weakness because quarter, back and will of in in a we single that pass. think had digit second We to bit half. be low Food also little of We weather the system business & Beverage in think will the up the solutions

that’s of kind product-by-product. a And so rundown

Operator

David And Bank. Please our question from will Begleiter come next with Deutsche go ahead.

David Begleiter

capacity morning. half weaker Good in Tyvek good constrained did call & very But maybe strong first Construction, in out half, really Safety you back and on a just aramids. a results. and Marc, you’re

given forward. XXXX? higher drive Or should know Thank safety capacity bit you’re Maybe price drive dynamics, we and I slower you those So – how to can in given think a about slashed margins? little going results? But on growth you.

Marc Doyle

Yes. great cylinders. firing Thanks, FMC David. It’s a all on obviously is question.

which has working coming margin several we team As said, expansion, years, through. for been is the on the

We’re is do going the construction in at and back. U.S., demand great The demand business. expect the business, point seeing safety great we weakness some the come in only that’s to in water residential

And so here. really we’re bullish

mean, booming. Pricing and say, we’ve up exposure now. which worker sites, safety, XXXX, are which in market bit is the real strong that outlook. continue slug there, to of so a just the going little The I for globally all Safety markets that’s want are good Demand has plant cost. think a that in those we Construction as are real water, that come spaces softening. like The aerospace also to turnarounds. business. and growth don’t drivers got a second I’d big half, the continued a some to I’d forever. we’re right look The assume But is sequential now. We business those cautious to of some on we’re I say the bit are to has right positive primary that clean PMMAs, The there, shutdowns, lead been factor & defense, being sizable once strong when which

the positive. market a exposure definitely there on side is the So

Operator

with Sachs. Goldman ahead. will And Please go Bob come our from next Koort question

Dylan Campbell

second quarter, planning X% broke were on guys key your up of assumptions second is assuming deliveries Bob. automobiles in half, Good Last out morning. kind up the smartphone global were the you half. in X% Dylan This Campbell for

kind the assumptions? guys in see do any do With have I what to those guidance of you And mean, changes embedded your new guidance? today, you

Ed Breen

Yes.

in hit – jump Jean, by Marc; also. that, just way, the Just or

smartphones. the So obviously, the auto – just areas business soft. is we down. business really I areas putting little And aside, piece because was – E&I talked it’s soft. is the about before, soft, soft semi business a those construction three of But The there’s residential is

autos around So the getting to really that year. the and the about inventories improvement including like levels. half in are we’re the pretty much way, the it no autos X%, planning normal world, in are globally still China, back looks second down By saying of is

chain, But some to inventory. to an cleaned actually on, improvement it’s So up the gets Marc we make in improvement think orders, smartphone that the does because mentioned, sure not It’s Jean still go or global up. the the goods we then have side, still that’s think, And as but see commented finished supply in had we as on down. saw demand is months actually smartphones.

the seeing see put that extra begin And we the in those those – mostly second did for we orders driving quarter content. side. orders are the in XG content on we we’re It’s

comment the the those that’s my to semi of half half, the two planning Therefore, second revenue for the planning in back and – improvement So of of the no on kind areas. of conditions kind inside soft rest big on ago, the kind questions a assumption expecting few flat, by And we’re company. in year. first we’re

I think that’s a good assumption. planning

that. and all We we our So overspend. cost don’t controls watch

Marc Doyle

Yes.

Ed comment. the have mentioned Ed’s Let full build me assumptions. revised auto, planning on smartphones. Semiconductor, just year we

So that we would growth. of this it early single-digit were saying MSI be year low sort

just are be down. particularly that’s Memory that’s expecting down. down to a in are we’re what memory. going We’re the And with now prices consistent way market, Volumes seeing bit. that in

semiconductor has and impacting soft Korean the really our The materials in second market quarter, here that’s sales. been

node investing few volume qualifications total just we is we’re for products, year. which percent, expected starting the the down aggressively than next-gen semi as by different advanced Even is in a in

expectations. the And that areas year are we’ve those full so really primary our revised

Operator

question from from next Josh our Please will come go ahead. come UBS. with And will Spector

Josh Spector

guys. Hey

guys a kind Is Just pension what I has buckets expecting? guess million, thinking flow use? Slide cash to $XXX incremental you were free is $X,XXX million cash restructuring clarification adding that you couple were talking prior that around similar cash, size, about were before? in of when XX guidance, $XXX million. you numbers costs you gave around that a the same So around more Or

Jean Desmond

half actually just Yes. numbers pointing the of we No, the outflow the second to year. those are in expecting. same were the That’s

So as new cash we’ve companies. a before, year, our say to was for had is the we’ve the setting I – wouldn’t free for substantial structures of cash of capital the flow which, is lot view our primarily any XXXX flow three up for noted change free

second half. on color providing just So the

Operator

ahead. Please go next question come Markets. with our And Arun from Capital RBC will Viswanathan

Arun Viswanathan

for Thanks my taking Great. question.

continue? lapping maybe Just curious to price And of You pricing you you pricing segment. year I those How going momentum, can gains think about the if mentioned prior by on expect increases. guess. forward? should kind Do we that describe just Thanks

Marc Doyle

Why don’t I take that? This is Marc.

segment So clearly. it’s segment, to different

the S&C segment. less see we’ll also we’re back in lap of And the in to start T&I assuming are the actions We a assuming the price to significant business little bit starting some we’re that half. in price

about so being as down basis year, per end get two by half we’ll been nets the it the year. the We in price. the first we’ve And of a second to half flat closer the quarter, of year-over-year on think on running plus out,

Now it supply depends and depends situation. very assumptions on the environment, these demand are clearly on planning much it

change these So quickly. relatively things can

predictable us been strong One for nylon in the T&I very demand in the just our product not drivers supply of but for has the stable, also pricing lines. situation, particularly

that we’ve producers been customers deliver. can to count of one And really continue on the so to

So of disruptions supply drive that in if further try take to industry capability in pricing. we’ll and the any there’s strong continue to supply advantage

Operator

take go we from ahead. Mitsch Frank our from And Please Research. Fermium will question next

Frank Mitsch

included a $X.XX intrigued – that? about to $X.XX in behind QX Is better out was in is comment your that curious month Good what morning, of What speaking the folks. getting Then guidance? expectations you’re getting by settlement the customer terms that the and year-over-year was you the world. July part in that magnitude of us the of so in regarding seeing quarter, now XQ, of the are also, called the China what to Non-Core. versus to I order just declines as declines

Marc Doyle

Frank. Yes,

– question sequential it happening long would take China. But hand over strong remember the Most growth that around orders bright for about It’s has bit of to China a and E&I bragging I improvement, little strength our a because Also, been across market, Jean. in statement in of growth life. me and continues Let a which was I we be phones China. the sign X% is can’t a I’ll largely it’s second was up. long, market minus The time. I’d growth in first spot several semi very question that the premium The then the say was E&I China. a is little bit be laughing those rare it is for of S&C is segments. displays starting semi. notably, to a Also, that there happening in a

there, notable and really business water side, is products market a and as team is we’ve be residential quarter –sort in China of growth water to well industrial of the booming. for continues great water job out of put some the is just gains growth that new in S&C the water double-digit there. doing booming continuing are growth On that capturing That both industrial in as operations couple a have And the for share us. cleanup

kind that’s the China of of now. the positive story So side right

Jean Desmond

our in to They’re there you third call one. are a hard in one thinking question quarter the as of settlements. affiliate of right; history an your we equity settlements have to that would There do part the when third terms and has those hit. guidance be of And are that always could in around the non-core are guidance. going for But quarter, non-core we be

Operator

from And come Barclays. from Please our Duffy ahead. final go question Fischer will

Duffy Fischer

Yes, good morning.

back go if to we to could. want S&C, Just

up Your low in guidance May was teens. kind of

you EBITDA. decent time, you high-XXs thinking on going You And that were pricing. to up get at ended were

just up changed ended I’m what final that understand from number trying to much so it to May So better. the

Marc Doyle

productivity Yes, pricing bottom-line the both and Duffy. in a two the over-delivered in there, I came actions actions, cost little terms biggest than stronger water mean, segments is and question, good safety, of expected.

environment. really driving the around was it on the the what will well different. side we of team knew We equation. deliver continuing say controlling control, pricing would then strong executed productivity I So and demand could notably to environment But be the a

half so being a less the little good the like little second keep I’m we’re our And of we’re it’ll But are the bit in and a too. Again, driver S&C, quarter, execution. pricing during delivering control good going side. and it’s that expecting story half, a good that to be for cautious things a some second demand the on in

Lori Koch

joining you, our call. for Thank everyone,

For website. DuPont’s your a reference, This be posted concludes of the copy on call. will our transcript

Operator

And you today’s conference. this your concludes participation you now may and for disconnect. Thank

DuPont de Nemours (DD) 1 Aug 192019 Q2 Earnings call transcript