Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the DuPont First Quarter 2023 Earnings Call.

I would now like to turn the call over to Chris Mecray, Head of Investor Relations. Please go ahead.

Chris Mecray

Good morning, and thank you for joining us for DuPont's first quarter 2023 financial results conference call.

Joining me today are Ed Breen, Chief Executive Officer; and Lori Koch, Chief Financial Officer. supplement the which through Investor link. to DuPont's posted the slides under website Relations prepared our are remarks, on webcast We've tab and read the contained Please statement in forward-looking the slides. disclaimer

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

periodic otherwise reports updated risks presented is by historical and items. of may our XX-K financial significant detailed Form principal includes current and cause Our discussion such specified, measures which uncertainties, exclude differences. today Unless all

also been most release Investor our will reconciliation press to GAAP posted a Relations presentation website. included measures, to directly and materials to in We and the DuPont's have other financial refer non-GAAP comparable measure is

to call turn over now Ed. I'll the

Ed Breen

in we adjusted including team's previously This thank This our results continued with Good short financial volume XXXX morning performance short pressure while driven communicated joining strong and markets, EBITDA term review. construction. and cycle quarter and select our electronics than and facing announced reflects our quarterly slightly first better consumer line you end revenue morning, guidance. for execution, operating EPS and

pressure. actions and and quarter ongoing to Solutions water, benefit healthcare, including was declines Semiconductor period, X% last strength markets Technologies. from in aerospace First pricing organic the and business inflationary versus demand the digit construction Interconnect declined Mitigating along ago despite carryover in our of automotive, offset double year revenue the year of of electronics electronics broad lines with areas taken weakness

from continue we Adjusted capital strategy. EPS benefits X% allocation realize was our up ongoing to as

ago versus volumes. As the by period, expected, lower operating EBITDA driven declined year

also be Given the while short our minimize flow control continue near to slowdown end in volume to cycle pressure, on generation. in focusing optimizing actions we taking proactive within cash markets, term

DuPont industrial new to that financial show portfolio commensurate multi to results our the the returns As will resiliency assets. of we continue expect tier generate and a result, expect top with

commitment end and or $X.XX our devices Spectrum focus of to accretive growing acquire tax capital healthcare components performance, This expanding for agreement definitive critical strategy certain delivery to leading addition generating of focus to fits for a on added billion the This and into after growth our the with manufacturer continue deployment. technology's billion medical we announced deal value industrial markets a to morning, through to $X.XX on attributes. offerings value we operating In our pillar, consistent also market. fast

that XX the demonstrated back devices components. a OEMs of is decades medical Spectrum, has extremely leader had Turning Slide X, for DuPont which we to is in of Spectrum serving long eye medical top growth Their and manufacturing our components advanced with a devices growing current therapeutic focus many recognized customer opportunity. and and specialty strategic XX excited team date predominantly and and time our is relationships have years. on a this is American for over device focused a North on consistent business fast

to about of We XXXX. expect them million generate in revenues $XXX

DuPont's on is quite see existing X, today. can you As strong Slide healthcare portfolio

OEM Safety bringing of reminder, with capabilities healthcare packaging Liveo, total biopharma business world $XXX company fits businesses GDP and deep Tyvek nicely class profitability. is and exceeding reported and biopharma grow represent our The our of customer Solutions. Spectrum solid franchise solutions above revenue comprised at position million at and and consumables manufacturing a and will rates these in our Liveo existing rates of complement average relationships. healthcare the As business business, established key device portfolio of Together, the of well consumables, current medical a our which line part business is through industrial

we high within the increases can on strategic see total in DuPont's transaction represent adds expected of specific can as the approximately are sales. growth XXXX addition market total portfolio XX% transaction These of higher X. healthcare compelling place. rates combined in devices. will The On healthcare to noting worth the faster addressable digit see time portfolio. grow further to Slide single now due even wins impactful significantly Slide while businesses business serve the our has Spectrum presence and you rationale and the cyclicality in to Also over transaction at in is you X, reducing This

business markets. of growth end in centered strategy DuPont's fast existing our The position growing Spectrum expands strengthen healthcare stable customer innovation and

We the complementary side to opportunities to specifically markets. already on core growing generate growth incremental each fit are of and by our leverage ability excited the strengths from top

added of has example and relationships essentially this and DuPont model. Liveo adding enabled with meet has biopharma in the product side new design an customer The biopharma pipeline Spectrum OEMs by leading the capabilities side, advanced manufacturing direct customer set stringent specifications, by proven extensive build new development a on expand relationships. will the and space As to Spectrum for co its adding approved capability

an growth product depth its the DuPont OEMs, of solutions XX expected to players. top XX direct offerings and Spectrum On science as DuPont's the material a Liveo's for Spectrum whole. and Adding as extensive will enhance and line offerings. cooperation with top side, example, has industrial including expand is device medical with technology silicone Spectrum's accelerate leading relationships customers with

the adjustments based moderate return Regarding expected to XX.X price believe In high expected growth excluding on $X.XX tax or after net synergies that opportunities synergies mentioned five, times is acquisition We after represents cost value XX.X purchase EBITDA revenue with the of million. combination. digit business just the certain year single deal can add terms, our the multiple a I described. hurdles of estimates $XX incremental we XXXX deployment, combined to by line ROIC deliver capital for billion

finance hand. We transaction the We do expect third the the to transaction we cash regulatory anticipate end year, plan on close quarter will significant this and of this by with not hurdles.

over capital Given announced year, sheet place share end we remaining Slide the of actions the billion November through plans down from a paying cash capital allocation on briefly billion review $X.X quarter. senior a $X the and the lot process. account disciplined at reducing in on through first took six gross the billion full undrawn last zero received and a by let's for balance of authorization months, to in status sale deployment we our M&M the of year to and billion quarter our From our in have In paper closing and repurchase commercial to fourth of from actions deleverage last $X.X moving notes $XX X. through allocation parts sale today,

expect $X complete billion share repurchase shortly to deployment $X.XX hand program the essentially of ASR of of we as the an the repurchases, announcement And from cash any remaining with acquire the share completes remaining excess cash on quarter in year. the accelerated last M&M thereafter. launched Today's completing authorization billion committed Regarding this Spectrum remain November still third to transaction.

will plans by are sell planned In with additional continue to business and Delrin end transaction to note our that we cash terms close the of XXXX. I to year progressing sources, expect that

maturities with no remains current until XXXX. November debt sound very capitalization significant Our

the deployment sale, year we communicated currently Delrin actions finish net the of to leverage expect all inclusive around through X times. Looking

level is peers line multi forward. We our as leverage equilibrium more which point with are expect going industrial we comfortable an that and at to in with target that remain

it financial me and review turn let With outlook. performance to over Lori our to that,

Lori Koch

Ed, Thanks, morning. and good

and on quarter construction, XXXX. operational first excellence on minimize drive results EBITDA levers business. ongoing the we margin lines electronics financial began environment decrements team's focused operating Our reflect operational focus despite execution a pressured are as strong some and volume our and impact our of we profitable to volume our consumer of most in within control In within solid

highlights X. financial our to Slide Turning on

key sales consumer from the weakness Pricing consumer reported to on and and resulting most $X versus basis year more broad X% we and notably a from decline. as of X% billion and euro, logistics carryover during impact X% First offset channel volume in changes. decreased construction. taken strength cycle Breaking Lower a organic than and inflation ongoing X% driven period. by healthcare markets. an dollar partially in and mitigated based actions end inventory saw in raw automotive, reflects ago currencies, X% volume yen, softness a materials, headwind short of markets by electronics in quarter energy. gains sales destock organic Currency resulted the reflects pricing these X% consumer to portfolio was were also decreased X% the strength decline down related related aerospace against decline, spending, the headwind yuan to in offset XXXX Volume water, net

perspective, Europe electronics sales were Asia up single while X%, within markets volume sales XX% organic construction driven down versus nearly the our on while was low combination, electronics the was Pacific and teens were businesses aggregate in a America high principally China quarter digits. From respectively, regional the during XX%, and an up end year period. quarter period, the North ago the in by remaining were versus in down and down basis, weakness. year ago X% Taken

business. within Currency margin that inclusive lower with of of was driven related the production points, a in basis align of was of by and XX% headwind. decreased headwinds scale XX.X% better impacts margin demand. also volumes year mixed volume $XXX EBITDA electronics operating by quarter to we lower million volumes quarter the Operating during First pressure the period, XXX high EBITDA versus as driven ago reduced and down semi to rates production the

Decremental margin the quarter XX%. was

the the teen our increased Given will profitable of decrementals within of businesses in impacted shortly. I overall are which were quarter DuPont last detail the electronics $X.XX the year, disproportionately portfolio, declines our Adjusted per versus portfolio. EPS some share high these X% volume in most as

for cost cash of less associated performance, of to the million. and related adjusted M&M closing payments million free within free $XXX flow both cash deal at divestiture of Delrin $XXX headwinds during about operations $XXX costs. CapEx $XX cash million, flow, quarter with our cash cash million of from cash flow transaction Included in the ongoing resulted paid Looking

per related of including initiated to X% more $X.XX than the year Turning quarter were an to adjusted compared benefits to benefit line volume Headwinds overall EPS $X.XX ago Slide last expense by lower in November. program upfront the XX, declines share increased the and of ASR the benefit related a offset share $X.XX interest $X.XX benefit ongoing for period. our to net to Including repurchases. the below due

for rate tax the geographic to XX.X% driven the ago by adjusted period, set two year in in resulting of XX.X% from mix a earnings. primarily up headwind EPS Our quarter

Slide Turning was organic decrease segment sales in on X%. E&I with E&I declines volume, portfolio unfavorable billion sales down along X% which for decreased offset and E&I channel XX% and of XX% The by and impact increase destocking. by currency in driven organic a was beginning declined decline results Semiconductor tablet Interconnect demand, partially organic which Technologies, sales X% XX% The The decrease XX% mid-teens. along Interconnect first sales to headwinds PC in a quarter of net with Solutions down with XX. was smartphone, $X.X by reflect was driven as inventory of weak price.

the Our well in China cycle an first inventory. tech quarter PCB chip in in mid-XXs, the due from operate The weekend of rates fab which as destocking with decline rates semi is customers utilization results demand reduced as utilization downstream in finished low. to semiconductor market expected

which inventories. chip Semi dip work quarter averaged XX%, quarter down the customers somewhat rates as we second these in utilization the first expect fab to in around

basis strength to as and We referenced ongoing lower low $XXX quarter. were largely third advanced Industrial expect healthcare volume specifications rates million applications. and biopharma up versus in to recovery Solutions corresponds as which during single consumer organic lighting customer also primarily operating were and as consumables to offset Aerospace such by as Sales the products in demand for rates, for E&I mentioned. such the Vespel drop on digits period, partially pricing was in and printing due of our the begin rates an Operating impact utilization just lower EBITDA of areas the lower year driven down through ago declines, for and fab

headwind. a by increase price offset net sales by of Tyvek X% actions especially last the led mid-single strength water resulting digits up reverse of billion in as was for segment XX, Safety digits in X% Water carryover growth growth growth gains. was quarter Nomex was with double organic growth which coupled on currency up lines. X% sales by basis to Volume Solutions, growth sales a and pricing driven demand continued osmosis decrease pricing an offset reflects solution sales markets, Organic X% by first taken was EVs, organic demand and Turning by from product pricing healthcare. volumes. aerospace increased automotive on impact Kapton a X% strong for and in were in of Slide Organic mostly volume filtration and year, led on $X.XX W&P partially low

volume Shelter Solutions largely and and disciplined to to softness digits currency headwinds material million for Operating due was pricing. $XXX pricing offset markets, primarily basis greater an organic raw costs, EBITDA and of down XX% inflationary offset cost on on pressure, construction declines than higher by lower mid-single increased as cost partially by in control volume. related were X% W&P energy

to Before I turn a our Slide quarter few on on XX. Ed, it financial close XXXX outlook and back I'll guidance for comments and with full year second

their channel such Within at inventory look to continue demand electronics in current we the the we aerospace we to to and near previously by throughout year rates destocking term. water, near bottom expect term third and the we utilization during expected. markets, improve commentary continue echoed customer As the about to in than feedback, a strength see is quarter public market customer recent healthcare. expect party areas environment, on ongoing in quarter, which and weakness as automotive, forecast, later third relatively Based

markets both highlight market semiconductor XX. and smartphone we've forecast these To on included assumptions, Slide current for

last down above research with For now compared XX% digits, utilization the back XXXX suggests full estimates the in to MSI mid-single expected XX% third beginning will year ramp up for indicating fourth be fab down semiconductors, quarter. to party quarter

adjusted Due and see delay assumptions end the gradual to for we full to high net you be range For during more billion quarter, share. quarter. end $XX.X per $X adjusted sales $X.XX guidance in markets, term both adjusting than and EBITDA a $X.X $X.XX reflects expect which the and expected of We improvement the recovery, be the third beginning the $XX.X billion year these between be sales, operating and net now of to EBITDA last operating and pace billion near full EPS. between between our can the are billion, year EPS and later somewhat to

are four quarter expect we confidence three this the quarter in For quarters, a electronics term as the second as to generally are view, results about first we data get year. suggests be to anticipated lasting these growth us conditions which historical in short, downturns for market XXXX, markets the for similar consistent. longer On term longer overall through gives

turn back Ed. to it that, With

Ed Breen

Thanks, Lori.

ongoing I'd questions, yesterday, to report highlight that globe Before employees our we across our work across published sustainability our of of we all take commitments meet the your to like annual ESG. highlighting the aspects

in and are the customers. a innovation, planet As reminder, advancing. pillars, protecting the three the on our sustainability goals be and employees which and and making we impressed strategy are XXXX speed we to I our is of progress of remain empowering grounded continue people proud in

a set ahead and reduction by On XXXX. XX% to climate have new a emissions XXXX been reach acting we we validated change, which goal on emissions to by exceeded X gas climate Scope XX%, goal reduce X by well our SBTi schedule. greenhouse has And of in

customers. innovation, source used sustainability our We're water materials reverse emissions seawater drinking water, programs for helping of top of as innovation to protection. we've osmosis value Within our to be a and through carbon also XX% potable enable reduce helped Regarding technology. deliver building innovation with

our over community, markets, manufacturing. requirements directly over battery we are auto DE&I XXX making aspects And projects our partners a standpoint, performance within focused in stories as Overall, purpose in STEM safer materials increased world's XXX to In From In continue across Magazine's tremendous education. delivering report for XX are we're thermal we've community teams enabled examples many vehicle be electronics, the female semiconductor with one management. teams engaged on XXXX year on countries with electric a many second sustainability. company's There great how of example. driving our marked inclusive and are on our and done of job. list our recognized. top culture friendly have Forbes our nonprofit

operator back to we turn that, to With it Q&A. to the me and let take your are pleased open the questions

Operator

now comes first JP is Tusa Our Morgan. open question proceed. Instructions] questions. from Steve from floor your [Operator The Please for

Steve Tusa

morning. Good guys. Hey,

Ed Breen

morning, Steve. Good

Lori Koch

Good morning.

Steve Tusa

as Could left the stand you're you the then on year to set expecting that amount on for you when and And the the what buy back Delrin level expect do rest with closes, just remind pace have and to us far -- just as of proceeds of us you the where help there cash? left that? you'd

Steve Tusa

Yes, I'll take repurchase. share the

and get expected So we will still have We'll of the six billion sometime August-September it the take the back to timeframe. we do will be the started comment? $X complete current the for authorization. $X billion on left which to the to then usually and shares about Delrin complete, out is take on able second which ASR, Ed full program to the completion us it upfront, months the XX% Turn in of

Ed Breen

Yes.

And So work. Delrin, been the close the out expecting doing carve by all the year. we're end of to we've

So we're to that. about on talk very what we it for, $XXX I'm million far business. all the is EBIT sell along about the on but accomplishing not going

you of year. that cash beginning So in as the zip year forward. somewhere on the out of should move of we Again, figure code that kind kind next be

Steve Tusa

in Got any then there, spread businesses What's positive for for lastly year, second on on prior non-electronics it. And pricing million price any it benefit I in was the there's outlook if just And the $XXX cost. guide. the think for update the half? or your something

Ed Breen

we're Yes, we we've have with teams how going obviously, before, handle to changed as hard we've said we're that, conservative, our Steve. worked very this. Maybe not being on

will our time get It got and chain kind little we of to little the potentially the get it, the a the pricing. is. logistics next to quarter of we'll W&P it the rates figure have picture of of window remember, But -- it $XXX that like finished changed bulk out And shipping update four month assumption clearer because you've the the forward, seeing is what which on everybody more to but of will sold by we renegotiate we a have good on is we're through by timing side. as being be be on supply the very timing and that and we raised contracts that raws. that's into we'll not we And big down. just bit As then a a of way million move of it

Lori Koch

Yes. And on the side. pricing

decelerating in that W&P. It X% saw X% benefits. as total was we So see XXXX the in we We lap QX.

expect really X% the about And and W&P an lift, in quarter, B&I. X% in so second price overall we flat

Steve Tusa

Great. Thanks a lot.

Ed Breen

Thanks, Steve.

Operator

comes Sprague line Jeff Please next question Our of from the Partners. proceed. Vertical from Research

Jeff Sprague

Thank morning, you. Good everyone.

Ed Breen

Good morning, Jeff.

Jeff Sprague

plus morning. the maybe Delrin What kind the a of or you of Ed, responded side don't happens, active that Good should on like little combination proceeds on pipeline I we expect more M&A additional you of the buy repo color how looks potential M&A? like. when M&A. use of are even some think to this

Ed Breen

Yes, Jeff.

on year Our extremely year leaning acquisition way, well. next on is spectrum now that. other is By the side. screen M&A did get deal the the we on right We the focus nothing going done, the Laird the the to else over radar want

I a there. of there's had time. we've about think we one, for the So period quite out nothing on that eyes way, see we're by excited that This our

a said customer they're I in our As we actually think ours. of comments,

additional where had proceeds, now share I focused to with I for So any If lean repurchase. think this our and is thinking. with been say half kind right the we towards last of would year, extra we've year a really

then the ASR of take we Lori's one, till going about said. market, taking end the next we're existing launch ASR to to year that and And the us will it's of still comments, XXXX. be billion, over as quarter for out still new of as about we'll the remember finish soon But we -- first we'll shares as this that $X the

on we So towards depends multiple it now any good with we’ll time, lean point that My is, at share excess in the the is company. the obviously, if cash environment, where deal but like but environment were for it the repurchase. is

Jeff Sprague

to, you that. speak of And contingency lack guess, could term -- you Could better Thanks planning. kind a for I of for

stuff. I [intel] what customers and and down you your but as (ph) a to stuff, and customers the tried parties chasing like it are your on you, own On these electronic of third triangulate of the some you think look hill some telling ball this here are said, does between feel

of So control, you control cost you or that be taking there's considering. things might is, some the question you can't but action things can kind

working wonder markets. And some in kind capital speak kind that could work we also electronics down this of cycling the of of additional unlock part if the to you from to I opportunity maybe answer through as cash

Ed Breen

you do Just the overall couple but the interesting. it's Jeff, some back and hit industry, way, is to of softness. though, by up and destock pockets great study the downturn. -- all an go go other going semi it's comment Remember The semi decades, you as these a some of always next

started -- us at look this quarter. you actually the down beginning coming but for our sales at So when four semi the rates, of

two the we're downturn. quarters So full into

the is we more down are Now first right in quarter just we quarter. now from the the think bottom, slightly

they're them, quarters is top of look Remember, usually some lot obviously. at four a three of of a destock. to softness on consumer you this maximum destock When

conversation cost real cost this your of obviously, take and hard side going at So we're to just we're the said haven't a back price deep would other in appear question to then It got the on would into to that actions ourselves. And a protect ton Steve couple we to direct had it. Tusa, we we've point baked layers though, pretty having this with in time. thing work

So that be. two would be levers where would the

Lori Koch

Yes.

on the too. think I piece inventory on the

rates. production we E&I $XX better the a did able of margins headwind in action first that and million to take quarter align about million to to So inventory to be $XX was

We'll the can on we second demand line doing see But saw headwind a Ed’s total amount that of actions back we out in our try our as was go really function in as well the as see as said That the to P&L mode that expense restructuring that as fair the in as in we'll are XXXX order XQ travel headwind took we where reiterate just tail of XQ we inventory [SAR] to (ph). more with point, of is. a the and we side, well and did signal as you And into get continue discretionary to XX% a in well. the so continue face of we there. really and to sales end of we about that on tensioning

Jeff Sprague

Great. Thank you.

Ed Breen

Jeff. Thanks,

Operator

question Our next of Melius Davis from Research. comes Scott proceed. line the from Please

Scott Davis

Thank Lori Chris. you, ED, operator. Good and morning,

Ed Breen

Good morning, Scott.

Lori Koch

Good morning.

Scott Davis

look -- you you giant, more Can talk opportunity it it just can I it's do -- but better know you not you an make guys it's can that right American it move if -- there the it needle Synergies take there What model? Spectrum. based. there to commented North fairly Is on anything returns maybe asset to Is a do. to you drive with the just perhaps do little up those than higher being But that that is anything can modest conservative. you globally? can deal

Ed Breen

synergies. account we into Scott, take revenue any Well, Yes. didn't

cost which second. the a are let only just a the the what synergy talk million of only to obviously, to way synergies, piece X% low compared So of revenue, side. X% on is, which cost put me by We $XX in deals normally is

OEMs, device lot by at Remember, our times that $XX goes companies way just So like that are our DuPont into I relationships they're growth real industry. Spectrum technology are with is side. mainly relationships our opportunity the medical deep but based and Spectrums of biopharma the to is a with through the here are going actually pretty conservative The very on OEMs. be net on the think million. more XX.X

to when the the when the and opposite we some at So joint with growth And that a look we [indiscernible] market very long to Spectrum medical together, look talking there. material the device at the opportunity of for been that have Spectrum ability talking And we space. way, into I'm this could technologies looking we've drive to for we its science move opportunities DuPont moving them by could time. nice incremental at into and biopharma and the

will the benefit. some we that's synergies? So has I think Can Probably But This we yet. cost on be growth. can, get big haven't more growing. business the it it been counted but

then, four big kind wins can a our couple around from it's in OEM year. a last little going of faster bit U.S. grow new globally. this globally because the side. charts see players we the got can customers. are medical on sell of lot based over a years, broaden device companies more You the of Liveo to But it footprint that They've of out XX% our actually And right remember,

recently, say other big the other points. opportunity, the we the to a They XXX is, about have The Scott, up basis Spectrum margins path we have get of one very I in years last year, capacity the put four row just think of of growth because you getting a in been a When fair up that's filled about amount new they've XX%. production rate, on.

and the factory basis get another expansion So points. fair they we drive we'll them margins XXX as have those assets the utilized, side. And on fill a amount that completing they're just up

would cost opportunity. margin would more that expansion that be and of me to lever revenue -- than bigger that one. It'd the even be the So a then

Scott Davis

just Lori, comps of drop quick there -- Okay. on that down. sequential to The that kind Interesting. And then you jack – just prices or we're tougher just you up is okay. more the is comments Is price ago mathematically, that made, follow-up. a the as when a year getting

sequential no there's weakness. So

Lori Koch

year, There's Last any February-March more of magnitude the the like, time just in, baked lapping. was in. bulk no frame. sequential of price It's declines raise

Scott Davis

That's what I figured.

of Best great. luck. Appreciate Thanks. it. Okay,

Ed Breen

Scott. Thanks,

Operator

Mizuho. proceed. Parkinson question the Christopher Our of from line from next comes Please

Christopher Parkinson

much. you so Thank Great.

those of for terms has on resiliency potential where Can the natural second two specifically solid. the and half guidance? of in obviously, Depending is expectations on, side which your the control. you your pretty of W&P, water in just the safety Thank performance Your speak you. the us, been out embedded macro businesses to in takes

Lori Koch

Yeah.

expect strength So still water. continued we in

what the we and quarter. we the expect favoring side, well basis the the the had year. highlighted we continue areas, on strength seeing water as to we organic as both on to our that portfolio especially we're So On right now. in first portfolio. a our volume and price in healthcare lot trends And acquisition of into nice There's safety respect growth a Spectrum secular the of with head rest most

very about business in that's million performing Tyvek got a we've nicely. medical So $XXX packaging

those So of see secular we trends the continuing throughout XXXX. rest

One safety other within EV piece. the portfolio growth of is area highlight we that too can the

So e-motor paper that quarter the seeing that Nomex we'll within first as there's for nice in a well. and nice for continue the growth application to look we're

Christopher Parkinson

a the to XX%, front, expectation Lori, expectations back with the Thank real helpful. the line for very given term of in terms near results the roughly give outlook update your long to intermediate Can progression in you XX%. that just those quarter. your That's just to And on for levels? us your margin first Is you. still quick on

Lori Koch

that's big now the the and One obviously between still those expectation recover E&I back mean three low I into and margins volume Yes. getting is then. in with tailwinds XXs. our

demand. So the we of dipped the actions align reflection a volume in QX. That we was with and took production really to

million So that headwind million in to $XX $XX a first created the quarter.

not that will So that itself. is resolve permanent,

cost tailwind the Another price is piece.

future a will So accretive can for us. as margin be benefit that there see potential we

levers. And so, mix component. the then two those biggest the And final obviously, are the piece is

it’s of get its highest the you back piece margin E&I our as obviously, trajectory, So portfolio. growth on

as there lift mix favorable a to recover. starts that there's So market

Christopher Parkinson

Thank always. so as much. Helpful you

Operator

Please proceed. Our the Barclays. line comes from Leithead Mike next question of from

Mike Leithead

Great. Thanks. Good morning, guys.

Ed Breen

morning. Good

Mike Leithead

in it First possible and on for business? EBITDA this Apologies to the is Spectrum. XXXX revenue question, just missed provide the I but if materials, the

Lori Koch

Yes.

about million. $XX $XXX million revenue EBITDA So and XXXX was was about

Mike Leithead

Thank And Or X.XX. conservatism there? about secondly, frame target about just help in Is you. you just of this instead of more leverage X.X now of pivot kind rate just environment? then the current Great. kind lower the talk the can

Ed Breen

And up reason, it's more just is, reason way, industrial X one in. X.XX. exactly I think set We there. times number environment the rate to of we it's were kind Yes, kind if higher but It's look at that you are premier what another companies are leverage. targeted By of not it, around interest at centered the all, prudent said. multi you

environment, to interest So rate this we that place just it's think be. environment prudent a

ourselves we -- where key And X strategic environment Delrin the so below slightly always really maybe where we forward. depending our rate like to about there, the actually that of we'll we get. preserve the but interest little we'd there, target And that's have year then, kind times reason. the moving that's But a flexibility proceeds on end is

Mike Leithead

Great. Thank you.

Ed Breen

Thanks, Mike.

Operator

the line Our comes KeyBanc. from from Aleksey next proceed. of Yefremov question Please

Aleksey Yefremov

margin your to XXX on the higher? I to ROIC you. basis clarify. number Is follow-up push for morning, Ed, everyone. point this opportunity opportunity digit in expansion it or could Thank Spectrum Good number your single wanted high

Ed Breen

it's No, in there.

be pay have to north just you it, won't on XX% at We I if of look they're specific a I rate numbers. they're growth right year. -- now, be into get -- They'll the growth this mean, going

period hiring So you're needle digestion that just you're especially system kind and the through it, going that on, new us, there sitting in you're built for the leverage really people place into up. ramping they as with adding you're of moves when capacity just

So as year we mentioned said, just $XXX this their be year, revenues will million. Lori, the XXXX, this like revenues

get trajectory to. So nice and through where the you that's those system, growth play you just numbers

Lori Koch

I a improvement. that had really management of numbers they XX% their back already And points a margin. nice first you actually. of expected mentioned basis have XXX XX%, be EBITDA XXXX into the for about XXXX, if to quarter that's so even ahead is And plan

So trajectory million EBITDA a that on to of in $XXX achieve very they're XXXX. average nice

Aleksey Yefremov

gain Thanks. a year? continuing And to challenging markets and it's outgrowth? market. you Are your in this these interconnect, discuss clearly, content in a follow-up, Can semis you as

Lori Koch

[indiscernible] see reporting. space share would Yeah. We to seeing underneath are that. the packaging we're that some And the still we expect in in numbers gains actually the

MSI performance the clouding is the piece. versus what is So our destock

that destock top MSI of significant, the numbers deck. on pretty going would that's the So another had the headwind that we half the presented be in first in is on

we story that expect what's able but be to exposure that's bit, to little and advances [indiscernible] to so, crowding in still the that content total. a us And give performance

Aleksey Yefremov

Thanks a lot.

Operator

next proceed. Morgan Our Please from Anders comes question the line of Vincent from Stanley.

Vincent Andrews

sort Thank you point Ed, historical electronic downturn. on three of quarter the morning good cycle, taken four everyone. to and the

for it looking would quarter, Just first quarter some curious And I is come the still some is, in seasonal reason third what the mean can if recovery there's into quarter. play reason by the that in the fourth might out? come in any kicked why sensitivity doesn't there if get third it that? quarter it you're the for to If or that

Ed Breen

Remember, it in now, No, pretty there's what Vincent. we've downturn to no XX% seasonal other downturns. is down correct. is modeled there. significant month It's tell this exactly reason, hard But is the all

You're by the other destocking. that factor here one little a kind then, And pretty hitting there's it quick on way, the out pushed it of bit.

one One going the through mention players. name, of quarter hard to not their of but on the and the that's fab the I'm very big large public first semiconductor running players utilization knowledge. kept

just publicly their pretty is that I to So take got that the also down here. a week so rapidly And they think talked that ago. creating about they fact or utilization

little one gets got was a also. So that go and of they pushed to other destock reasons of kind it the out through that

Vincent Andrews

on just folks and mentioned see compete products? their that if are they Spectrum, any don't you tend can But to And ask I materials it. critical what to this I I didn't before, polymers And particular there against? know are

Lori Koch

Yes.

and So some of they compete Nordson are Integer] against (ph) [TE, their competitors. larger

they they as and input materials med specialty As complexity players. large the high the design manufacture their expertise for polymers far device -- very use side, on to are

with -- And to two the really mentioned positions of nice got biopharma able where the nice that's being really we positions with really got a earlier, guys as portfolios. sweet nice and so medical They've the I spot guys. see device we've leverage had

ahead. for science portfolios, portfolio being us So we our opportunity leverage see broader to bring where able expertise the the and across two our is material

Vincent Andrews

Thanks very much.

Operator

from proceed. Our next Spector from question line Please comes Josh UBS. of the

Josh Spector

Yeah. Hi. for taking my Thanks question.

E&I you're mean, your how of clear look and a sales some you're kind pretty for to interconnect guiding the Just well. as line. down, towards up basically in XQ. is rates come at guidance I utilization semis sequentially I when push I mean, slightly flat

what And doing note that's industrials maybe than different there anything better you is So you there sequentially? is expected?

Lori Koch

No.

You had walked through pieces. the

So overall of semi interconnect within industrial, split little sequentially. bit we continued still between There's expect a and strength industrial.

the Ed what or little E&I in So not in material then QX pulling the semi a space. And had a within actually see we then really interconnect, you'll total from there's and a of net-net, seasonal QX QX. this bit But a QX. in happens one normally to that QX of the see on customers revenue of primarily company to overbuilding change in smartphone larger build function earlier little to mentioned deceleration QX start bit for from back of sequential in

Josh Spector

Okay. push pushes sales If talked should anything or would were -- some I that to realignment. cut, $XXX else Thanks. of kind million forward semis of again you any lever question, cost following be push $XXX decrement guess, maybe about that. the again due out kind again, this And this No. all out would additional recovery production an million Appreciate you consider. difference another this had EBITDA quarter, be up expect, cut, we either in there that on to prior or you if a in price

Lori Koch

so that back the Yes. that, I million see $XX E&I mean, we second in of in from pulling now, QX right expect would and not we headwind the half. production that -- there in first in half we'll roundly being QX

any guide the again make one cost the you that we recur have pushed in that, is million this caveat expect quarter. $XX weakness into out recovery if that the so to then that recovery don't could we would price And is will extends if the fourth to third offset decremental The quarter, that piece. baked into

baked So second material now. become now see based right could a what versus we we what in we to don't tailwind have the half right that on anything see

Josh Spector

Okay. Thank you.

Operator

from Please the Credit line of Our next from comes proceed. Suisse. John question Roberts

John Roberts

solutions? same Healthcare a safety the Shelter of XX% alone you. the into segment create do Spectrum a the to now you reportable larger is segment will or safety rest into where move Healthcare and healthcare industrial of Thank be size put as almost So safety going you do be about segment?

Ed Breen

at The by of report will the of Yes, looking the it. Yes, water portfolio. XX% is to interesting. John, healthcare portfolio now. developed the It's into business how it's XX% be way something we've been

I good rates, over really for both think growth obviously, years us coming both end secular higher nice of markets at those.

it So look anything, XXXX to decision but look at on no a that. as if see -- we yet. we'll enter We do we'll at don't that probably we take

John Roberts

orders yet? electronics. in long have Okay. you show any an on the that And demand then inflection in Do delay time actually lead

Ed Breen

we'll said in you so that’s short season ICS a business, cycle bit the in little she it's the because can't have And really as -- going said, year. lift you're a as later for us the into business. No, holiday Lori typical of

smartphone there. shipments piece you and the see in just can So we fourth start alone one picks our charts, of third, our quarter

quick. business see short we'll pretty and it's So we begin ship cycle shipments there. and it we'll But it past that,

John Roberts

you. Okay, thank

Operator

the comes line next from BOA. proceed. Please Steve Byrne Our question from of

Steve Byrne

are more And treatment growth, to using compounds, you water by for water any seeing demand Yes. or EPA about on it's for that those scrutiny due I are buckets drinking of increased of to driven being discharge? standards you either wanted that's or both from fluorinated material? water any that EPA's say ask a treatment your consumption underway fluorinated the company wastewater would for

Lori Koch

have so treatment. the seen industrial be would towards more XX% on the growth business industrial wastewater is mean, I No. the side, favor about we

growth. is from remediation the the groundwater driving with So coming There's any that's material what's out to nothing EPA. that we're respect seeing

Ed Breen

recurring. our ESG working all at that we're trend should XX% the sites. that that it's these industrial just replacing on it's because for a greenhouse including business gas And We're continue Steve, remember, other membranes all is besides DuPont, it's of And And emissions, big and targets. secular one.

Steve Byrne

shelter. it's solutions? through curious Is downturn, likely Shelter view about on a for to a but cyclical And longer going just core term remain business then one it you? Clearly, your on

Ed Breen

mentioned No, of market. business all that Tyvek, including construction very end for against nice which medical margin market with franchise, us. the markets a the nice core that key service very of a Tyvek for business us is it's packaging. really I Obviously, a for is remember a Lori that we our component is

So it's definitely portfolio. part the of

Steve Byrne

Okay. Thank you.

Ed Breen

Thanks.

Operator

Please McNulty next Capital. from BMO line the proceed. Our John of comes from question

John McNulty

Yes, good morning. question. Thanks for taking my

materials, know we thinking the that P&L, some time the of us can much help in work how raw to the takes raw you it might So through material be from peak down should to about that? what that you be and understand how said topic you're the I is basket buying on guess terms curious, of in today, I'm the acknowledging I guide.

Lori Koch

Yeah.

$XXX of the the logistics energy. was escalation raws around XX% split and rest year. about and million roughly saw we It last So between

logistics energy the seeing are side. and in We deceleration on

and rates freight So the seeing and European natural well. can obviously, we're been a sizable as pullback U.S. there's look at tailwinds gas ocean you there and see

And so far that's amount material on say a both seen we've where the Either on the the of we're bulk spend. the raw I wouldn't or side. on material thus seeing most tail deceleration. buy

is So we upside we as see in head raw that's an to volume. the when year rest material the the of inflection the start into

John McNulty

Okay.

not actually, -- them haven't you're you buying So lower now.

So work Is right? through P&L. and that's to the to then that come still has it

Lori Koch

Correct. Yes.

Ed Breen

that would there a curve. materials where but I kind have the driven that quite basic be think unlock supply maintained Even others John, inflation it are to benchmark could at of kind relief that are while there down take price terms in really of prices, already there. raw dynamic very are And individual and of lot it's we things if today. suggest that buy lower we there of a note buying be and an any a take could you that to important are that

the year that's and through of later energy, savings here Lori the back less from think is takes that referenced that million netting benefit inclusive are we logistics in give the that go have I out there puts than could some be but the $XXX today yes, well there's model some necessary. and that we the potential So but punch portfolio, net as within line of and

there. in look as could yes, So there but much we through lot benefit that that present seen come opportunity haven't really isn't today. And forward, I suppose we of an a

John McNulty

Got it.

on And then enough. the Fair question one just acquisition. Okay.

demand XXXX memory device during rate the recalls, to number. is chunky soft. So at pretty same like actually the a COVID pretty period, growth was the medical if from XX% time, But of XXXX

of lot whole a have didn't access to suite. surgical You

products on make thinking your others maybe understated based that medical should that? or run that So is specific kind How didn't a it in is they we some just of mind in about that did. pressure rate it's maybe fair be the XX% have devices and that

Lori Koch

same had elective the pressure the mean Yes, into I magnitude other of providers wouldn't surgery. some the it have of

essential of So more type, so it's non-elective kind the the selling surgery. into

So wouldn't have seen that as significant of headwind. COVID a

back forward. materially say bit the we high single it are the obviously where really saw process get awesome digit for we that half decelerating customer in already and as volume nice of underlying in growth new strong the XXXX but really of on back to would they as XX% it clip nice and would a us head wins we the nice I from to of ramping then CAGR XXXX We growth little be into that kept see well as still So had too the a XXXX some a sizable to going see as really XXXX range, well.

John McNulty

the very much it. it. color. for Thanks Got Appreciate

Operator

next of proceed. Our Begleiter Please David question from the Deutsche comes line from Bank.

David Begleiter

Ed, trial you. do Thank Florida? update of the you ahead have an in and upcoming on PFAS the MDL

Ed Breen

Yes.

month in trial plaintiffs. the talking just out And pretty the about I'll we've with up regularly a So been say now, David. comes

the actively did these we're conversations mediator a quarter, the involved last regular very having. by mentioned I've is point with way, As judge of who,

we're feeling it I'll but right So at now. leave that positive,

David Begleiter

Thank And resi you North a that's color in space? can more little and non-resi construction, American you. any you're it. still that Got ongoing in on provide destocking weakness the versus seeing

Lori Koch

across similar markets. end pretty volume three all saw We declines

versus So commercial like the it more and markets. just large commercial reminder And do and construction it's side residential yourself, on education so on cities. commercial, the exposure healthcare downtown in in

those don't in deceleration volume a for we similar markets. And pickup XXXX so material We a saw a have from performance all plans in three.

don't an construction So in we inflection perform, general. in they see to but we we'll how like continue electronic do see and

David Begleiter

Thank you.

Operator

of from Please Markets. Viswanathan Arun Our Capital proceed. the comes RBC from line next question

Arun Viswanathan

Great. you're Hope question. doing taking for well. my Thanks

at looking $XXX half QX that $XXX billion $X.XX EBITDA year around first So would at full $X.XX imply your million. of around guidance second of million, billion of and that the just your and your the is half midpoint is

items there to for the So is million Are special kind half the comps second uplift we that easier almost any you of when that cadence? side think volume at about look $XXX that half, we mainly consider getting on E&I? should uplift or other $XXX when million first

Lori Koch

Yes, to more I to versus favored mean, it's mostly within E&I QX that be lift and QX. it's going

on the you both MSI we As at presented semi the slides and side. look that smartphones

second versus bit is that electronics to So it half bit mentioned most recovery. that I it play a QX. a There first And favor had is second that of is QX would versus half a that most into little of as seasonality is half recovery. more of But anticipated little comp.

Arun Viswanathan

Okay. Thanks. M&A. And just one quick on one

now within and/or you of complete the you been is say you've looking reentered transformation considering at? that Would market now five So with portfolio guys are the acquisition. you kind the the that other opportunities still have markets Spectrum

Ed Breen

would the here. like You're we we're looking at. complete feel never, where period summarize of we guess, piece yes, we're I at. I time were This a but for like We complete, it, last was

don't see the anything against next year of so, period. over just time And I like state

portfolio run the is to We operationally it where just well. like we want think at. I

Arun Viswanathan

Thanks. Perfect.

Ed Breen

Thanks. Great.

Operator

Our final Fargo. comes of proceed. Wells the from Mike question from Please line Sison

Mike Sison

Good morning. Hey.

terms there? healthcare plastics. is market. In terms other I But time? a unit better in opportunity this there of is an exited of pretty over Spectrum, much to back is plastics big big You And a runway acquisitions you're pretty get it. Healthcare build end sort into of plastics, a

Ed Breen

And more like add to definitely you we it again, There's secularly. it. could

of why between a opportunity what and doubled area. remember, So lot had of have down in we already we had. we've that's they kind But this

that. So of really we like it because

synergize, really in, the the with want like it we down to get want yes, to this want road, it's other but it get layer, we our So humming business. opportunities just get there's we to

that's over focused So the be we'll year, what next on.

Mike Sison

take E&I Slide isn't I improve even Does look quarter end when third a results if sort if destocking much of and follow-up quick at in XX. inventory done. an is that XQ the could the of improvement a just Then sequentially, destocking

Lori Koch

We Yeah. Yes. moderating do QX. in the desocking see

of XQ kind in the bit it off QX. QX, and pulling then it in XQ, a we So peaked timeframe see

Mike Sison

you. Thank

Ed Breen

Thanks.

Operator

Chris to remarks. for would turn call closing to the I Mecray like over now

Chris Mecray

Thank thank joining be posted a transcript everyone call. And on call. copy our this your the reference, website. Yes, our our for you. you of for will And concludes

Operator

ladies today's you, you participation. call. Thank for gentlemen. and This does Thank conclude your

You may now disconnect.

DuPont de Nemours (DD) 2 May 232023 Q1 Earnings call transcript