Q1 2020 Earnings Call
[music].
Please standby.
Good day and welcome to the Dupont first quarter 2020 earnings Conference call. Today's conference is being recorded at this time I'd like to turn the call over to lever. Please go ahead.
Good morning, everyone. Thank you for joining us for departs first quarter 2020 earnings conference call, we're making this call available to investor and media via webcast.
Prepared slides to supplement our comments during this conference call. The funds are posted on the Investor Relations section of departs website and for the linked to our webcast.
Joining me today on the call or at Green, Chief Executive Officer, and Lori Cox, our Chief Financial Officer.
Please read the forward looking statement disclaimer contained in the slide during our call. We will make forward looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainty our actual performance and results may differ materially from our forward looking statements.
Our 2019 form 10-K as updated our current and periodic reports includes detailed discussion of principal risk and uncertainties, which may cause such differences.
Unless otherwise specified all historical financial measures presented today exclude significant items. We will also refer to non-GAAP measures a reconciliation to the most directly comparable GAAP financial measure is included in our press release I'll now turn the call over to add.
Thanks to Wieland and good morning, everyone and thank you for joining US. This is obviously an unprecedented time and I hope you all stay for the well.
Today, we will walk through the discipline plans, we are executing as we navigate the current environment.
Including our overall approach to protecting the health and safety, our employees and maintaining our supply chains and operations.
We will also detail a number of actions we quickly implemented to strengthen our liquidity protect our balance sheet and generate cash.
Because of the Swift actions, we are on solid footing and are well prepared to handle the uncertain times ahead.
We will also provide comments on the first quarter results.
Color on market dynamics in April as well as our current assumptions for the next few months.
Since the outset of its pandemic, our priorities have been clear beginning with the safety and well being of our employees. We have taken aggressive steps to protect our employees by restricting access to our sites implementing enhance cleaning protocols.
Performing contact tracing among our employees administering quarantines, where needed and implementing work from home protocols where possible.
I want to acknowledge the tremendous efforts across our organization.
Overcoming the challenges created by the pandemic.
The determination of our employees from across the Globe commend Jane business continuity has enabled us to continue to via reliable supplier for our customers and the vast majority of our plant sites have been finjan essential in their local jurisdictions and have continued.
Who operate.
As a result, many of our manufacturing and other necessary personnel deserve particular recognition.
They are extraordinary dedication and this incredibly challenging environment has enabled us to keep our sites and supply chains operators, our second priority for managing in these difficult times.
In fact, we have been successful and maintaining our operating base during the global pandemic with only a handful of our manufacturing locations shutdown by local restrictions over the past few months concurrently operations are restricted at only two of our 170 manufacturing site.
We have begun longer term planning for eventual return to the work for non manufacturing employees.
Which will be done in accordance with all relevant government requirements and continued emphasis on health safety and the overall well being of our employees customers and communities.
Our third area of focus has been bolstering our already strong balance sheet.
By enhancing our liquidity position and implementing plans to generate and preserve cash.
We will provide more detail on these actions in a moment.
Lastly, we continued to do our part to help combat this pandemic.
We have donated over 140000, tyvek garments thousands of gallons of hand, sanitizer to healthcare and other frontline workers.
We have also use our threed printing capabilities and they create shield for local hospitals that were experienced a shortages and partner with come is to use Dupont filtration technology to help augment the supply of and 95 respirator masks.
We have also announced the number of initiatives to increase the supply of protective garments by more than $15 million per month since the start of a pandemic.
Including the increased production the pilot garments by more than 9 million per mile primarily by shifting production away from bomb healthcare markets.
And launching the Tyvek together campaign, which enables the production of five to 6 million additional garments per month.
Through the rapid development of a safe easy to use version of Fivek.
And by empowering others to join coupon and protecting frontline responders with free access to our designs and usage as structures.
These are unprecedented volumes and I am personally engaged in that day to day work to respond quickly to the changing environment.
We take our designation as any central business very seriously and.
And are committed to doing all we tend to support our employees our customers our partners, our shareholders and the communities, which we operate.
Slide three details the series of actions, we have been operating expenses the pandemics fights in mid March.
The senior leadership team and I are on top of these items daily to ensure we remain well positioned.
We have analyzed a number of stress case scenarios and are confident we're making the right decisions to ensure we are favorably positioned but whether an unlikely steep.
And prolonged downturn.
While also being equipped to return to growth when the market recovers.
Our playbook for this environment is straightforward.
Improved cash generation through working capital improvements.
And deferral of certain capital expenditures.
Strengthen our liquidity position and optimize the cost structure of the company.
We will provide more color on how we are driving success.
In each of these areas.
Our scenario planning was broad and stimulative severe downturn cases to assure we could protect the company.
We're also seeing keenly focused on the downside risk in automotive.
Aerospace oil and gas and other industrial markets.
With nearly 15% of our sales connected to the automotive industry.
This is the largest sale you have exposure for us, particularly within our transportation and industrial segment.
The numbers are unprecedented with global auto builds down 24% in the first quarter and the latest estimate suggests the global auto builds will be down more than 40% in the second quarter.
In light of this we develop the plan to the first quarter to begin slowing and idling certain facilities in our network.
Emeril, the fact regional transportation and industrial segments.
In order to align our supply with market demand.
Taking these actions will provide significant working capital improvement.
Inventory reductions over the course of the year.
But will translate into near term earnings headwinds as fixed cost that would otherwise be absorbed in inventory will now flow directly to earnings.
For a.
A very weak topline.
Driven by the expected decline in auto builds as well as year over year price declines.
Coupled with the charges associated with these plant shutdowns is expected to result in Sacramento margin and T. and I have approximately 55% to 65% from the second quarter.
These are not easy decisions, but the confidence to react quickly and decisively is critical and we will continue this mindset as we move forward.
Let me turn it over to lower for additional color on the other actions, we have taken as well as a few comments on the first quarter.
Thanks.
Slide four highlight our strong position, we have always valuing a strong balance sheet and that mindset center accident severity after downturn came into account and Max.
We thought that certain key have access to liquidity and nine affirmed land for refinancing on November 2020 bond maturity I quickly putting that we open medicine campaign bank financing at commercial paper and credit Mark extra initially constrained.
In short order, we were able to take share any 1 billion dollar 364 day revolving credit and many thanks replace the 759 Kennedy atmospheric fire and Jan.
Well, we expected to remain on tax extending and enlarging necessary, let me provide greater certainty to meet our general maintenance needs.
We also have obtained at $2 billion, let me try Paramount to ensure we had a path to pay off in November of attorney and a sense replaced the bank commitment with the short dated time, which I will discuss on an exercise.
These new credit facilities in place and our strong cash position, we feel very confident retirement planning.
We also have opportunities ahead of aspect further cash generation trade working capital improvement and proceeds from divestitures.
We have identified working capital as a key area for improvement and expect to deliver more than $500 million and working capital improvement in the year and we're off to a nice start in the first quarter by reducing our use of cash by 300 million versus the prior year.
Each of our businesses and the series a targeted focus area and lever, our working capital improvement, including inventory reduction through initiatives, such as SKG rationalization and shifting from May to SaaS model can it makes the order motto.
With an accounts receivable our teams have increased their focus on past two accounts and across those accounts receivable and accounts payable we continue to optimize terms with our customers and manner.
In the quarter, we closed the sale of our compound semiconductor solutions business generating over $400 million ingress technique.
We're also taking a prudent action to fall back on certain capex, reducing our spend by about 500 million versus the prior year.
We elected in mid to late March can high share buybacks. After we had repurchased approximately 230 million in the corner.
Shareholder remuneration remains a critical component of our financial policy. This was a practical action at the time in order to conserve cash.
Lastly, our board recently approved the second quarter dividend of 30 cents a share we remain committed to our dividend and are confident they will able to maintain at through these challenging time.
Moving to slide five as I mentioned, just last week, we launched a successful 2 billion dollar bond offering which has replaced the delay draw bank facility. We previously secured.
The proceeds of this three year bond offering will be to satisfy the debt maturities that become due in November of this year.
The newly issued bonds have a stated maturity 2023, but includes a provision accelerates the maturity when we close the FX transaction.
With the receipt of the special cash payment from the enemy and I feel we remain committed to paying down our guys Hi Fi billion dollars.
Makes sense de leveraging payment, we will have no long term debt maturities until the end of 2023.
Getting bonds in place to pay off in November maturity will be net neutral to our definition as at the end of the year and significantly improved our liquidity position.
We havent manageable debt mode, and we are in a position to maintain a strong balance sheet, both now and co CFO, Andy I attacks transaction.
We continue to hold strong investment grade rating from each of the leading rating agency and intend to maintain the bank financial policy has positioned us fab.
Turning to slide decks.
We remain committed to delivering our structural cost savings targets.
In March we indicated that we would be doubling the incremental cost actions that we plan to deliver and twentys running from approximately 90 million to 180 million.
We are not impacting your long term growth as a company through the actions. We are planning. It is important to note that the bulk of the savings we have identified our targeted at reducing function on DNA costs, that's maintaining our investment in sales and R&D, we plan to maintain our competitive level of R&D spend of approximately 900 million.
And Tony Tony which will help to ensure that we are well positioned for growth funds market for Tamar.
These cost reductions will enable us to achieve our best in class functional cost structure.
In addition to the structural cost savings, we took a number of actions to control cost increases, including the decision to forego Merit increase it for 20 funny and implementing hiring freeze.
We're also seeing reductions in cost associated with capital projects as we pull back on our capital and lower spending across the company.
These actions implemented quickly and we are seeing the benefit.
Before turning it to add I will comment on the first quarter results on slide seven.
Our teams executed well to deliver a solid quarter above our expectations in each of our core segments.
We delivered net sales of 5.2 billion down 4% in total and down 2% organically with price collapse and volume down 2%.
We've got strong demand across a number of key end markets, including protective garments finer penetrations electronics and probiotics.
Gross margin improved more than 150 basis points on a year over year basis on favorable mix and the benefit from our productivity actions.
Operating EBITDA was 1.3 billion down 8% from the year ago period, driven primarily by the absence of $75 million, a discrete gains and accuracy and you not as well as lower volume and price empty anime.
Adjusted EPS of 84 cents per share with down 9%.
Turning to slide eight for more detail on the segment.
The solid first quarter results and our nutrition and via science business are clear in the number solid topline growth and robust operating leverage that you an operating EBITDA margin improvement have more than 200 basis points.
The operating leverage in NSP was primarily driven by the recovery of the probiotic fitness, which delivers on margin above the segment average.
Probiotics had its strongest quarter ever as key initiatives to strengthen the north American market were implemented and consumer demand for immune how strengthened globally.
And maybe also saw increasing demand and food and beverage home and personal care and animal nutrition market a trend we continue to see any from.
Likewise, 8% organic top line growth and our Eni segment was a solid result, strengthen the quarter with led by double digit growth and interconnect solutions driven by higher material content in premium next generation smartphones and high single digit growth and semiconductor technologies, our new technology ramped within logic and foundry.
Coupled with robust demand from memory and server and data center.
These areas of strength, where more than offset by the after $750 million prior year gains, resulting in operating EBITDA decline of 12%.
The results of our key Eni business were generally as we had anticipated are very difficult environment for both price and volume.
As Ed mentioned, we expect further challenges looking forward as the audit industry slowed dramatically as a result at the current 19 pandemic.
We delivered net sales of 1.1 billion, which included a volume decline of 8% enterprise decline of 4%.
We anticipate a similar year over year pricing trends in the second quarter.
Within SNC demand that protective garments less robust leading to a 55% increase in garment sales versus last year. Our tieback team is working tirelessly to get our protect department and the hands and healthcare and other frontline markers, including many insistence donations that these garments.
We are working closely with our channel partners to increase to speed and availability of personal protective equipment and we are taking great effort to prohibit opportunistic pricing as these vital supplies.
Despite the strength of protective garments sales in the safety solutions business declined mid single digits as demand weakened across industrial aerospace and defense markets. As a result at the covet 19 pandemic and challenges in the oil and gas industry.
Similarly shelter solution sales declined low single digits at construction activity was impacted by phase him orders issued across the globe.
Demand continued to be strong and water solutions, which drove mid single digit organic growth in the corner.
SNC operating EBITDA margin of 28.8% with the highest that have been in several quarters driven by the continued focus on price improvement cost actions and productivity versus first quarter 2019 operated even with down due to the absence of a $26 million game, which was recognized in the prior year.
Turning to me adjusted EPS Bridge on slide nine you'll see that our adjusted EPS declined 9% to 84 cents per share for the first quarter.
Organic topline growth in our Eni and entity segments as well as further execution of our cost savings and productivity actions was not able to offset the six cents headwind, we saw from nylon pricing pressure NRT and I segments as well as the absence of prior gains and he and I can see segments, which reduced adjusted EPS.
Hi.
Below the line, we saw a 500 basis point increase to our base tax rate driven by discrete items in the first corner.
We expect our full year base tax rate to be in the range of 21% to 23% driven by the first quarter discreet items.
With that I'll turn it back to Ed.
Thanks Laurie.
Slide 10 shows the progress we have made since announcing yet to be.
Transaction last year I remain very excited to bring these two businesses together to create a global leader since the announcement of the transaction in mid December teams have been hard at work.
As I told you in January executive steering team and leaders for key work streams, including separation and integration car financials are key separation and standup legal entity work and talent selection or in place.
Things are progressing as planned in fact as of March we have received antitrust clearance here in the us and our direct you filing was submitted on April Twond here and we're now working with the European Commission to formally notified the transaction and obtained antitrust clearance.
We will file our initial registration statement with the FCC in the coming days.
Also the new leadership team will be announced later this month.
And I accepted tends to hold its shareholder vote in September.
In summary, the teams are energized and all the critical milestones remain on track for Q1 2021 closing.
Let me wrap up with a few comments or what we saw in April as well as our expectations for the second quarter.
We are seeing robust demand continuing within several key end markets such as water filtration.
Food and beverage probiotics electronics and protective garments.
There are some increased demand in these markets as a result pandemic, but these businesses are market leaders and their space and there is undoubtedly underlying growth driving these results as well.
However, as we have highlighted these areas of strength are expected to be more than offset by the well known softness in automotive.
Aerospace oil and gas and other industrial markets.
In April our sales were down low to mid teens percent versus last year.
Earlier I mentioned the actions were taken to run our business for cash through this period, a significant demand weakness.
These actions will result in near term earnings headwinds as fixed costs that otherwise would have rump inventory will flow directly to earnings likewise actions to pull back our production will lead to lower utilization several industrial businesses within our test to see segment.
All in we expect our second quarter detrimental margins to be in the range of 45% to 55%.
On lower volumes by loan pricing pressure lower utilization and cost associated with high yielding facilities.
Excluding our decision to idle facilities are decremental margins would be a range of 35% to 40%.
While it is still impossible to predict timing our markets will eventually stabilize returned to growth.
And we will be well position for the recovery.
In the interim we will continue to prioritize the safety and health of our employees.
We maintain our operations strengthen our balance sheet and partner with other industry leaders to combat the standard.
Now I'll turn it over to Leland open up for Q1 day.
Thanks, Ed before we move to the Q a portion of our call I would like to remind you that are forward looking statements apply to both our prepared remarks and the following Q.
We will allow for one question per person operator, please provide you an instruction.
Thank you she would like to ask a question. Please signal by pressing star one on your telephone keypad using a speaker phone. Please make sure. Your mute function is turned off to like your signal to reach of equipment again that is star one that seems like to ask a question.
Our first question will come from Steve Tusa with JP Morgan.
Hey, guys good morning.
Good morning, Good morning, Steve.
A lot of companies are calling out.
Like gargantuan temporary cost savings.
Three m. talked about 350 $400 million or something in the second quarter alone Honeywell talked about like $1 billion.
I see kind of the structural cost, which is positive obviously because that kind of.
Carries forward.
Maybe frame anything that may be temporary that.
Can kind of defend the margins in the near term.
Yes, Steve. Thanks for the question then obviously, we spent a lot of time on this topic.
So so as you know, we we upped our structural cost savings in the last month or so from 90 million to 180 million.
In addition to that.
Remember that we have another 165 million that as a structural change to the cost of the business.
Thats coming out from the Dow Dupont.
Merger and put those businesses together. So in total we have about 300 and give or take $30 million coming out of the system permanently on top of that we have about another $80 million to $100 million of what I would call.
Opportunities that are key any reduction.
Sternal contractors spend at our facilities.
Hey, we've eliminated the marine increases we for you tie earnings of so things that were in our plans. There is about another give or take $80 million to $100 million that wont get spent that was baked into the plants. So.
When you kind of sit back and look at it we have benchmark every function in the company.
Every business in the company and we are getting the gionee expenditures to best in class benchmarking with with the best companies out there remember that.
For years ago. When I arrived we took about a billion dollars of structural cost out of Dupont and during the Dow Dupont merger. We took another billion dollars of structural cost out of the business on top of what we're now presently doing so I think if you'll look at it we're going to benchmark.
Very very well.
Through this and again I wanted to really attack structural costs, so that the permanent home in the business.
Another point, though that I would make.
We did not touch the growth programs in the company, we left all of our sales organizations totally impact and we left all of our R&D spend which is 4% of sales $900 million totally intact and by the way I think we're running our R&D machine.
Very very well, we benchmark every single program, what's the retirement of beyond the program, where we spending what we said is the timing the timing we said it would be so we're going to come out of the downturn I think on a very strong position, we're still cranking out a lot of new products through this so I think we balance this thing very well.
Yeah.
Our next question will come from Scott Davis with millions research.
Hi, good morning add to mine Laurie.
Hey, Scott.
Nice to hear your voices hope everybody is doing okay.
Yes, good to hear in Midtown South.
Yes.
I was encouraged by that comment on April down low teens, and I guess my question I was hoping you could give us some granularity on perhaps by segment on what those numbers were.
'cause out does sound like a pretty a pretty good result versus what we're hearing from others. So far at least.
Yeah. Thanks, Scott So as we mentioned on the call April was down kind of low to mid teens. It with a similar while that we thought in Q1 Penny carry into April and we've lost continued strengths and Eni.
Continued strengthening the strengthening on primarily coming again from semiconductor that we see increased usage and the data.
And server sales.
Hi, and absent the were down.
More than what they were down in Q1 inline with what you would expect with what's going on in automotive automotive right now we expect it to be down about 45 correspondence from Q.
Was down 25% in Q1 in essence, we continue to strengthen tie back within the government based though so garments alone which are about a third historically a tie back they panic, Tom up now to Omnipod apply that we're up about 55% in accordance to really nice strength, there and moving out from capacity.
When you go back can you can grow into Q2, but the headwinds that we're seeing in aerospace and oil and gas will more than offsetting that as well as construction with all this ATM or so net net April down as we did mention about low to mid teens with very similar and Michael Rehaut Biden key line.
Your next question will come from Vincent Andrews with Morgan Stanley.
Thank you and good morning, glad every well and I appreciate the shout out to New York City in the cover slide I assume that's not a small incidents.
[laughter].
Maybe just a follow up on that transportation and maybe just a follow up on that transportation industrials.
You said builds were down 24% one cubic your volume was only down.
8%.
Yeah. It was that sort of trade loading of some sort does that have to reverse in the second quarter such that.
Your auto performance would actually be much worse than that 40% that you're seeing.
And decline in global auto builds.
Okay.
Yeah, So I think.
Well underneath the 12% down 8% violently recorded NTN I hit or with strength that we saw in the healthcare segment that offset some of the weakness.
Okay. We saw in mobility solutions I missed Nobel anyone other than down more auto builds just driven by.
Yes material content that we haven't seen brands toward lightweighting and well it.
Thank you our results are outpacing or there is a little bit of a time lag between when you see on any decline in the back the king.
Well, we primarily fell into with our polymer. So we did see a little bit of acceleration in Q1 as people were loading their supply chains and advancing the downturn. So I think our results.
In Q2 or more mirror, what you're seeing from an end market perspective.
At times it to make it clear this is a business in CNS side, we are truly running so its cash performance in deliveries.
As they do for instance in the semiconductor industry, our earnings with literally be 90 $100 million better, but we're going to roll down the supply chain here.
January.
$200 million to $250 million.
Performance in the company so we will.
A better uptick when those things return a little bit more to normal.
Bank of America. Thanks.
Yes. Thank you. Thank you I appreciate the near term focus on these urgent issues like.
The Corona virus I, just wondered if if that impacted any progress you've made on your piece out.
Slide abilities.
I'm not in your much about that.
Adding just want to know whether or not you could give us an update on that.
The arbitration was core is the litigation.
Hey, sooner or the Ohio, MD Ellen any movement towards.
Yes. Thanks, Thanks for the question Steve.
So on the PFS away front.
Yes in Ohio.
Hi, and us.
Yeah.
Highly confident that will occur.
As you.
No.
Furthermore, the judge ruled in our duration will occur here.
As I said before I like the arbitration process, just because it's a quicker process then.
Very good about that.
But again my opinion is.
There probably will be a settlement with come wars that will.
Our some very key guide posts.
In any agreement that we would come up with some that are important to us.
For multiple years, because I don't see any liabilities on PFS away that are significant.
At any point.
For multiple years as we do remediation at these certain sites and all that and then one one other point I would just to make up.
CFO way with us and I certainly acknowledge this.
But it's a little bit of a cloud over us is that we are.
Pieces, but it's very important than I know, Steve you've written extensively about this we never made firefighting phone we had.
One surfactant that was used for 10 years alums seven do you think the biggest issue for Dupont.
To get out of those cases and be able to.
Wrap that up I.
I think is the biggest thing because the rest of the PFS away.
Is very limited before manufacturing sites, where we use that it.
Over the next year or so.
But on the other two items the Ohio, one the cores one I think you'll see.
Some action there on the coming months.
Next question will come from John inch with Gordon Haskett.
Good morning, everybody.
Okay.
Okay, often forget you kind of caught your teeth and operations.
The ROA.
How do you and Lori gone about coming up with more than double.
And Austin companies that start down more of a heavy lifting restructuring past think financial services lots of different sectors actually find there's more.
Our core ops or productivity youre, the quality or whatever or you guys funding.
Similar opportunities as you go through the processes.
Lori jump in in a minute also if you would like.
And Bob Thank you for saying.
Working on that even though maybe reputationally, it's different than that.
Our long running the businesses so.
Uh huh.
I mean, I'm, a big believer in and benchmarking Im a big bold press that how efficient we're running the company.
Stay at home policy for most of our non manufacturing employees.
So I think there some lessons, we're going to loan year on our real estate footprint.
As we move forward, but.
We always intended.
To take out more costs and remember when MB leaves the portfolio.
Sure in the company so that we're still best in class when that revenue when you were doing on the.
You will buy we translate into better cost is we're really going through the company and look at.
No. It every single S.K. you in the company and really looking at a rationalization there I've done this and every other company I've run and there is always very significant opportunity we've already completed in or walk.
Our business and we've taken the margins up about 10 basis points.
The water business and a big part of that one right now in the company and I think we'll continue to get Dom.
Opportunities from that lower you want to comment.
Yes. Thank you.
Next area focus, we've obviously wrong, a lotta cassata Bari over the last few years, there were looking and shifting the focus towards cod. So there are definitely areas opportunities in Cogs and about 13 $14 billion bear.
There's opportunity to increase our reliability increase our up.
Your next question will come from Jeff Sprague with vertical research.
Thanks, Good morning, everyone good ones well.
All right well bore okay.
Just kind of thinking about the trajectory of this thing obvious.
Do you see April being the low watermark.
In terms of kind of sales declines or.
Are we looking at kind of.
Like electronics, maybe softened up a bit.
And maybe as part of that answer head.
A crystal ball here, but I appreciate your perspective on.
Really what you think this does look like in.
Okay.
Scenario planning, we did first Jeff and I appreciate the question though.
And by Leon I was the CEO through.
So I've done a lot of scenario planning in the past thanks.
I never thought I'd have to do it again, but.
We actually.
Did.
Two cases for.
For ourselves and for our board that we presented to the board of directors.
But it was truly just scenario planning, we did a scenario where what if revenue was down 30% for at least.
10% BAML, please which were practically the world will come into and then.
But we did it anyway just to say.
Yep.
We did another scenario and I don't even want to say this one to yet but it was even worse than the 30%. One let me just say about way that we also presented.
To the board.
And I'm, just a big believer in CNL don't be naive here.
Yes things are top for a longer period, how do you run the company through to make sure the company's healthy so I feel very very comfortable.
With where we set than where we put the.
Liquidity on the company through this scenario and.
We get $7.3 billion as passion is more.
Operating environment, our our debt profile will actually be better than it is incurring do.
The risk of excess cash left over from that 7.3 billion.
Gary would you like to comment little more detail.
So I think to your question on the second quarter. So.
You at that point, where we sit cedar second quarter after Lois for the year. So.
As we mentioned the sales in April were download at mid tier.
Yes, I think also.
Do you mentioned the Eni business.
The first quarter is running robust and the second quarter, but you know all indicators are that you know that will turn down.
I'm, a little bit so I could see that happening, but as as Lori just said I I think mid teens down on the revenue is probably.
And your next question.
Oh come from David Begleiter with Dwight Your bank.
[noise] thing a good morning.
At least get somebody got back Oh, good morning on on a cap that productions, what types of projects like some growth projects guidance targets. Thank you.
Yeah. So.
Oh high level of David. Thank you for the question. So layer you planned on spending 1.3 billion.
This year, and remember world, where a higher than ours.
About three or four key grow projects all hitting it the same time that we feel really good about so that that's the reason for the $1.51 billion. So one five last year down to one.
Billion this year by the everything that we <unk>.
Aid is simply a delay we're not cancelling it because we want you know turn these backup when appropriate but.
On that last year.
That will come on line in a couple years that is a big big project for us.
I'm in the demand.
So is you know very important to us. So so anyway that was in one we cut back on our cat expansion just temporarily.
That was another one and some some of our maintenance cap back. So we have slowed down just a little bit also sort of.
<unk> Hmm programs that we're spending cap.
X. on the Doctor <unk>, we've maintained that at 100% Oh, the spend level and then another area.
Programs, we also slow those down there nice to have from an efficiency standpoint, but you know for six months later on them. It's not the end of the world Oh, So that that's kind of the big buckets, all on what we did and probably as we see things pick up obviously.
We'll go right back to you know spending against those growth programs.
Yeah, if I can get quickly comment on it like I can't stand area. We worry about can't planning placed in April may not capacity and.
To be able to meet that current tie that demand that we not only add it in that in that first quarter allow me usually had about 16 million arm athlete went out for 25 million.
Hi, I met met with care a combination at anytime mental capacity clean that that we've got you could ask me coming on line and that we that lane that started out that any line because.
I'm not in Luxembourg.
And our next question will come from join US Oxcart with Bernstein.
Oh good morning.
<unk>.
[noise] I was wondering you know about your.
Your your cash cues you're buybacks right.
Point.
It's not really asking for a specific week, but like how are you thinking about it.
Yeah, I certainly have.
In the in in the first quarter 6.1 million shares.
Chairs and.
We said we suspended it we have not canceled it if things are picking up through the second half the year, we'll certainly.
Let's see below the balance sheets in great shape, we're going to get the cash from the.
You know the I.S.F.N. Beach.
Next year, so we'll be in a strong position too you know reassess that Ah with the board. So it's it's really just.
<unk>.
You know is Laurie said, you know I think hopefully the second quarter is the local weather yeah, maybe dress, obviously into the third quarter, but you know pick up from there and then we we have that money coming from the the deal by we I'd also just mentioned on.
The and it'd be an I.F. that run you know as as we said in our prepared remarks, we are in great shape you know.
We did get U.S. anti trust approval were in the process with the nowadays you know when this deal there really isn't though it.
By Trust issues Oh, so all the teams are right on Supper February one clothes and you know we're gonna have the shareholder vote in September.
And.
You know I feel good great about that and we also have a shareholder that owns you know give or take 23, 24% of the shares.
Voting in favor of the deal. So you know just in great.
Your next question will come from John Mcnulty with B.M.O. capital market.
Yeah. Good morning, so with the with some of the economy's actually starting to to open up a little bit I guess can you speak to whether you're seeing any incremental demand.
Do you know maybe there was a little bit of inventory to kind of work true, whether we're channels and how long it may take to actually work through that.
Yeah, I'll I'll, let Lori answer the second part of that let me just touch.
On the first part of your question, John and give you a kind of one but data points you know.
And the China economy is coming back first.
And it was interesting within three weeks, so production facilities were up and running after the new year up very impressive by including the one and we were on that we have so we're pretty much back to.
<unk>.
June facilities in China, but let me give you a data point in the first quarter in China.
Oh shut down for a few extra weeks.
But in in April.
Our sales are up.
You know.
The 7% in China. So we're clearly see in the comeback there and again things aren't totally back to normal over there, but from a minus one.
And do a plus six or seven is pretty impressive just to give you a little more granularity around that in similar to comments <unk>.
Made a little bit ago, E.N.I. is a double digit.
And N.B. is up double digit and by weight the real China is double digit growth.
And T.N.I.N.S.C. are kinda flat.
You know so that that's kind of the breakdown of it. So you know as you see economies you know everyone getting out of their homes again in the economy starting to work. That's the numbers were seeing over into trying to market up more or do you want to comment.
Yeah, I think yeah, the inventory discussing at that pattern T.N.I.N.E.N.I.C.S.
M.T. and I, we tax of anything that that call attention. They have their whether a little better prebuying q. wine ended up polymer chain, Hi, I I already got me, a little bit better than where the auto about where.
You know why.
Every key indicators that we look at in China is the vehicle alert and bite pretty high amount I think in 80 in February and then came back down nicely admire times have I think.
Any idea Mccain obvious things like having the issue.
And.
I can stay down 45% <unk> <unk> Scouting air supply to ensure that they had adequate feedback what's it benefited key wine how do they benefitting.
A lot of that as a kid too, especially within the family chain.
About more and all that read some spikes and Keyuan M.P.N. I'd it back phenomenon and probably a lot on but.
Yeah.
I don't next question will come from court with Goldman Sachs.
It's very much good morning.
Good morning.
So you get that you know net.
Price mix was flat.
Comment a little bit I guess from T.I.N.S. and see you do have some petrochemical backbones what did the raw material Bill look like in the first quarter and.
Guess, we're still.
Seeing some softness in nylon in some other things too how do you sort of see that price mix development into the.
The middle part of the year.
Are benefit from lower arrive within the oil dynamic with the U.S.N.T.N.I.N.X.T.C. from the full year perspective.
Yeah see segment correctly things kind of raw hadwin, N.N.N.B. and I'm addressing base ingredient.
The pricing and demand with a little bit lower and we had it that are mixed that nylons. They often at all last corner when the when we did.
That's one actual nylon price to create that too.
On paper nylon neck, we found more the African descent nylon so <unk>.
Method and the price that let out that within S.N.C. weekend.
And you can be really ballots deriving valuing you probably think we continue to see price last with N.S.N.C.N. Q1, So obsessed idea tiny might continue into cute too back to tea.
Kind of down.
Single digit price overall, P.N.I.N. Q2 sequentially I think than those that.
Yeah.
Next question will come from John Roberts with U.B.S.
Thanks in glad you all sound well and this bank, saying I segment to T.N.I. segment was originally part of new down and then it was moved to Dupont. After it was thought to be a better fit with Dupont.
I I just could we <unk> revisit the thinking like.
For movie opening discussions without.
Oh.
[laughter] <unk>, yeah. So remember what we really we still did movie key part of the T.N.I. business over.
To doubt, which really fit more with them with exactly what they did so is auto but we're duponts a big player obviously in the in the auto and market not Justin.
The T.N.I. businesses strategically.
You know I think the fit with us was better there, but remember the other 40% of the T.N.I. business.
This is oh, they're really great and markets as Lori mentioned one of them.
You know look I I'll, just say overall, you know I I like where the Dupont portfolio ways having.
Possible scenario out there and you know, it's something down the road looks like it'll create significant value for us I easy N.B.I.F.D.L. You know, we certainly will look at it will not with the things being you know exactly the way they are or or T. is the great.
Shareholder value.
Right now Lori nine that team are very focused on the operations of business generating cash and we're really.
<unk>, it's interesting to note and I'm not surprised by this.
Cool.
Hmm, Yeah, a quarter, we have three per cent organic growth in the business. So those type of businesses are going to hold up extremely well we're afford a nice.
Multiple in that sector, which I think it deserves so when you're really then look at a minute. Most of you about all of you have written about this when you look at remain code Dupont and what a trade that I'm a multiple basis, it's pretty incredible.
From Chris Parkinson with credit Suisse.
Great. Thank you I'll take care of speaking in and I'm glad to hear a everybody's doing alright, given the circumstances <unk> on the correctly, but just.
Thank you.
<unk> had in this a little bit as it pertains to the.
18 construction segments, just given the differential current growth rate you very much.
Yeah, we had pets is really strong market. Thank you want and we had mentioned said 28.8.
Hi back at four o'clock high end of our thanks.
Compare it across the different sentences and often see assets.
It's like I think that they made a quick <unk> the head winter, obviously with in child care with kids and allow and and Martin.
Oh, that's where we fell into while in gas and and era.
The decker amount on Mars in in essence D.
Thanks for that company really primarily at some slowing down from production side. So we had mentioned with N.P.N.I. that were actually taking item.
In the corridor.
[noise] Alright, N.S.N. say you are not taking production down to the point, where we need to take item mail.
I have plants coddling higher unit rate they care, what are causing the detrimental to me a little bit worse than that we test then for the total company at 28, 29% segment, Mark and for S.C.
[laughter].
Oh, so you're reference to copy of the trend trend will be posted on the farm website.
Concludes our call.
Thank you for your participation you may now disconnect.