Q1 2021 Dupont De Nemours Inc Earnings Call
Good morning, everyone. Thank you for joining us for Dupont's first quarter, 2020 One earnings conference call for.
We're making this call available to investors and media via webcast.
We have prepared slides to supplement our comments during this conference call.
Slides are posted on Investor Relations section of Dupont's website and through the link to our webcast.
And me on the call today are Ed Breen, Chief Executive Officer, Lori Koch, our Chief Financial Officer.
Please read the forward looking statement disclaimer contained in the supply growth.
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.
For 2020 form 10-K, and updated for our current and periodic reports include detailed discussion and principal risks and uncertainties, which may cause such differences.
Unless otherwise specified and all historical financial measures presented today exclude significant items.
We'll also refer to other non-GAAP measures a reconciliation for the most directly comparable GAAP financial measure and included in our press release and posted to the Investor page of our website I will now turn the call over to Ed.
Thanks, Julien good morning, everyone and thank.
And for joining us.
Provide comments from a strong start that we had for 2021.
And we advanced a number of strategic priorities to make Dupont from here.
Industrial Company, Inc.
For through growth and value.
Accretion.
First one bit and mountains for tremendous dedication and determination of our teams around the world as we continue to manage for extraordinary circumstances and this pandemic.
Health and wellbeing of our people remains our top priority.
The principles and protocols, we have implemented globally and locally.
To protect our people and ensure business continuity.
Countries faced multiple wishes of infection and Lockdowns.
As an innovation led company, we believe and science and we're encouraging all employees to get fractionated.
And where possible we are working with public health authorities.
And for access and distribution.
Starting on slide two I will note that one of our priorities for January and value.
And operating performance and financial results.
This morning, we announced strong top line and earnings results for the first quarter, both above our expectations.
Lori will take you through the details and a moment.
But I wanted to highlight for 7% organic revenue growth.
Reported reflecting broad and strong demand.
Key markets such as semiconductors smartphones.
And her.
Incidental construction loans.
Moving.
This revenue growth along with continued cost discipline and strong operating leverage and EBITDA margin expansion and the quarter.
Our first quarter financials.
Offerings, and escalating raw material and logistics costs.
And as global supply constraints on key raw materials.
Most notably and our Eminem segments.
With strong order trends continuing and.
Confidence and our team's ability to navigate the supply chain challenges.
We are raising our full year guidance for net sales.
Operating EBITDA and.
And adjusted EPS.
I will provide more details regarding this increase shortly.
In addition to our financial results.
We've advanced a number of our strategic priorities during the quarter.
First as previously announced we completed the merger of our nutrition <unk> Biosciences business with ISS.
Creating an industry leading company in the food and beverage.
Home and personal care and health and wellness markets.
And as you know this transaction will also unlock significant value for Dupont and our shareholders.
As part of the transaction.
We received seven 3 billion and cash from ISS.
And retired slightly more than $197 million coupon shares.
For about 27% of our outstanding shares at the time with no cash outlay.
We strengthened our balance sheet during the quarter by paying down our $3 billion term loans.
And we will redeem $2 billion of our long term debt.
Later this month.
As a reminder, our next debt maturity will not be due until the fourth quarter of 2023.
In line with our balanced approach, we returned about $660 million and capital to shareholders. During the first quarter for share repurchases and dividends.
Under our existing share buyback program, we executed and $500 million and share repurchases during the first quarter.
As a reminder, we have about $500 million of repurchase authorization remaining under that program.
Which we intend to utilized by June one of this year.
Earlier this quarter, we also announced that our board of directors authorized a new one 5 billion share buyback program.
Which expires on June 32022.
We plan to be opportunistic under the new program.
Moving throughout the year.
With respect to dividends.
We returned about $160 million and cash to shareholders during the quarter.
As we previously mentioned going forward.
We will target a payout ratio between 35% and 45% and we.
And those tend to work with our quarters to increase our dividend as we grow our earnings.
And March we announced the definitive agreement to acquire layer and performance materials from $2 $3 billion.
When completed the planned acquisition of layers and advance the coupon strategy of growing as a global innovation leader and.
And strengthens our leadership position advanced electronic materials.
Footwear business will complement our interconnect solutions business with Eni and.
And they will add critical capabilities and market, leading offerings thermal management and electromagnetic shielding.
Central to emerging electronics applications.
Our Eni and team along with our customers are excited for this opportunity.
We recently received regulatory approval for the transaction and Germany and Brazil.
And cleared HSR and the U S last month.
As previously indicated we expect the transaction will close and the third quarter for sure.
Finally, we announced previously that we have signed definitive agreements.
Well, our biomaterials clean technologies and supplement businesses.
And we anticipate receiving more and more than 900 million and gross proceeds from those divestitures and.
We expect those transactions to close and the second half for this year.
Before turning it over to Lori to go through the details for the first quarter.
And take a moment to provide some context regarding what we sold during the quarter and our key end markets that we serve.
Combined electronics and automotive markets account for nearly half of our revenues.
<unk> continues to perform very well and.
Bordeaux is recovering nicely from its 2020 loans.
Good day electronics demand continues to be broad based.
Is the ramp up of advanced technology nodes and the need for memory and <unk>.
Servers and data centers as accelerating.
The server market, which is a large consumer and semiconductor chips Conservative board and Chemistries.
Continues for show strength and is expected to remain robust.
Internet network traffic continues to grow.
Furthermore, the deployment of Iot and infrastructure buying beauty and telecom companies and preparation for the next generation of ultra high speed data transmission.
Sure It helps sustained demand for premium smartphones.
Which is further enhanced by our favorable crop template.
With respect for the automotive end market.
And as well above and below the 2020, but not yet back to 2019 levels, we sold $22 9 million vehicles purchased and the first quarter and nearly $90 million and industry for the year.
For lack of stable supply of critical components.
Moving to doctors and <unk>.
And the ability of the auto Oems.
And just more vehicles and rebuild inventories throughout the quarter.
And then where we participate and the value chain within Eminem.
I think it's important to note that our first quarter engineering polymers volumes.
Not materially affected by the chip shortages.
Our demand from the tier one tier two suppliers.
Does not lessen as a result, and the chip shortage.
However, our ability and supply customers.
Wasn't impacted by supply constraints for key raw materials for that.
Nominally and our <unk>.
<unk> and polyester product lines.
The supply situation is gradually improving.
We anticipate several critical products will continue to constrain our production through the end of the second quarter.
We expected and you lost sales as a result.
<unk> constraints will be captured and the second half for the year.
Additionally, we believe the automotive market and will remain strong for the balance of the year.
And the Oems look to meet robust demand.
As well as replenish global inventories.
Which are currently below historical averages.
Moving on to the water and construction end markets.
Collectively these two markets account for approximately 20% of our total company sales.
Versus first quarter of 2019.
Demand for advanced water filtration and purification.
Strength and brand by solid growth and Asia Pacific.
Strength in residential and commercial water markets as well as industrial and desalination segment's cash.
<unk> growth.
For construction North America residential and do it yourself markets are off versus first quarter of 2019.
And while demand within the commercial and construction segment has improved from the lows experienced in 2020. It is not back for 2019 loans.
Lastly, demand within our industrial end markets for 2019 levels and mix.
And the electrical infrastructure, and private and protective garment market demand and at or above 2019 levels.
However, demand and markets, such as aerospace and oil and gas.
Below 2019 levels for that.
It's improved since the lows for second and third quarter of last year.
Sequentially, our sales into arrow and oil and gas for.
Over 40%.
Our diversified portfolio of products and technologies.
Our losses to globally.
Bundles from R&D and innovation to further solidify our strong market positions.
And maintain our position as the partner of choice for our customers for 2021 and beyond.
With that let me turn it over to Laura to walk through the details of our first quarter financial performance.
Thanks, Ed for the Marine campaign.
Thanks Tyler.
And thanks, everybody.
And then.
And also like technology.
And our employees and assets.
And.
And habits.
Okay.
And for <unk>.
And right now.
Net sales ex parte.
For our first quarter.
And our 2020.
Thanks, Tom.
Okay.
Yes.
Strong volume.
Price at current quarter Atlassian.
And.
And Brian.
Currency from <unk>.
And we didn't acquire.
Yes.
And I'd like to keep.
Primarily due to cash.
And the complex filings.
And sales.
Great. Thanks.
Eni and Manhattan and banking.
<unk> organic growth efforts.
<unk> for that eight.
Thanks for that.
Secondly.
Hi, Richard.
Organic sales were up 5%.
Yes.
Highlighted from it.
And I strongly doubt and all III and refining.
Partially offsetting.
And it's down.
And he went to Canada.
At 4% and Keefer.
Thank you and me.
And declines in the U S and Canada.
Yeah, Richard if I not net for Aaron.
And fire.
Net.
Eric.
Hi.
And about <unk>. Thank you for that.
I'll provide more color. Thank you for top line right now.
Hi.
Alright and earnings.
Thank you and they've been operating EBITDA line.
Hi.
And adjusted EPS of <unk> 99 per share income.
Great.
And secondly.
Volume gains and lower benefits from prior year comp.
Current kind of 100 and.
Thank you.
The EBITDA margin.
And one nine times operating leverage.
Incremental margins for the acquired and performing right now.
From a rocky for any EPS miner.
And then.
For total company credit mining credit pointed at a 36, 8%.
Yeah, but you have any day.
Margin improvement.
And and higher volume and manufacturing productivity and Bob.
And that high margin decline and everything.
And from higher unit rate versus the prior year, driven primarily by lower production volume and aramid fibers.
Gross margin expanded and a few hundred and HD, Inc.
H and.
And Chris.
Segment.
And thank you.
Eni and delivered operating EBITDA margin.
And for 120 days.
Arguments for and a year ago.
Armstrong.
And in my time and speaking.
And now.
Excluding that benefit.
And our.
Operating EBITDA margin would have been very nice and Greg Blatt, Chairman and President and CEO.
240 day.
And then and delivered operating EBITDA margin of 19, 9%.
300 <unk>.
Occupancy for the year ago period for higher volume and David.
Yeah.
And now even T breakeven and was flat and up here yet.
The comp.
Net by higher manufacturing cost.
Primarily higher interest rate driven by lower production and either.
Uh huh.
And the corridor.
Cash from operating activity and the cash.
Cash flow break 370, and 99, respectively.
And if my math is cash flow.
And then.
And cash burn guidance.
And here.
And in addition, cash flow and free cash flow conversion and negatively impacted by working capital.
That $300 million.
Higher accounts receivable.
Mitra.
And for.
And a year and we continue to target free cash flow conversion and I think.
Thank you Krishna.
Slide five provides more detail on the year over year and net down.
Leading the way for the quarter with Eni and Keith.
For that line.
Okay and record quarter.
Volume gains from it.
And I'll just get growth.
Demand for semiconductor and a coffee shop.
Hi, fabrication utilization rate driven by demand for new technologies and advanced yet.
Along with the ongoing shift to digital and transportation.
And on top line growth.
In addition share gain.
And then for CMP slurry and pad.
And material right.
And and.
And interconnect for him.
For digit growth was driven by higher material content and premium next generation smartphones.
Partially resulting from the timing shift and select Oems today and shifting earlier.
And here.
And with broader printed circuit board market recovery.
And industrial installation.
Volume and display material.
You try and bucket.
More than offset continued Aaron's Inc.
And markets and wip for generally consistent with our expectation.
And those gains were led by water solution.
Yeah.
Reflecting strong demand for Ari.
And I'll turn frustration and technology.
Jack.
Self installation and those things.
Organic growth.
Okay great.
Hi.
Organic growth and cash.
And so construction and retail channels, but do you worry about that.
And partially by market share.
And Mark.
Thank you for this.
Pricing gains favorable currency and strengthening demand for aramid fibers, and industrial and automotive end markets.
But more than offset by continued weak and guarantee and.
And he ever year volume declines for China.
Overtime and production volume for me now.
And that's why.
And.
And also contributing to the strong first quarter topline growth and cash.
And you and recovery of the global automotive market, which represents about 60% are eminent segment and market perspective.
And I'm, sorry for asking that have much lower I don't know for them.
$5 3 million.
And for her.
And I think 14% versus the current quarter from last year.
As a result volume and our performance revenue.
And I was up over 20%.
A year ago period and all.
And there are bright spots and EBITDAX for the current demand for micro circuit material.
And in that segment earlier day here.
These specialized materials along with it.
Helped drive over 20% for organic growth and dance.
For the year ago period.
Demand and our engineering polymers and restaurant, however, and level of supply constraints for key raw materials.
And your Vickie volume decline.
Got it.
And <unk>.
And our cost.
And the buyer and help mitigate the impact and Kurt.
Additionally, we expect to recover volume off and Nick.
For the JV.
Our constraint.
And it.
Turning to pricing.
And that adjusted EPS for the quarter of 91 nine.
And 90% for pioneer.
China and every aircraft and the signet.
Our share count.
And the resulting from the.
Top line.
The lower share count provided a 16th net benefit.
And here.
Excluding the lower share count adjusted EPS.
I still think epic and 56%.
And here.
Segment earnings provided a 13 net tailwind for that.
And the prior year.
And finally for condition based tax rate ex U.
Okay.
Our base tax rate for the quarter of 19, 4%.
And then for Canada as a result.
And the partner.
Our tax rate and in Florida, and significantly lower than last year, resulting from the average and certain.
Certain discreet tax headwinds and current in the prior and year.
For the full year 2025, we now expect our.
<unk> tax rate.
And the 21% to 22% down slightly from the 21% to 23%.
And at the beginning of the current.
Turning to slide seven items.
And commentary on our balance sheet and cash position and.
And I said earlier net net working capital provided headwinds and free cash flow and the partner.
And I thought I would like to point out and net working capital productivity.
About $600 million.
The first quarter of last year, decreasing net working capital for about $3 5 million at March.
For $2022 9 billion at March of 2020 five.
And three driving down cost and receivable and.
Inventories.
And that perspective.
And we are committed to maintaining our current strong investment grade credit profile.
We started the year and 56 million Inc.
And as Ed mentioned, the Paydown of 3 billion dollar terms and in February and.
And we will keep it at $2 billion.
And Pat Beyer.
Moving on to cash our cash generated from operations last year and finish strong cash position.
Coming into the year and that grew with a seven 3 billion dollar special cash net.
Transactions like that.
In addition, we expect to be over 900 million and group.
And here from the previously announced.
For me.
Our current deployment plan for 2020 one.
The balanced capital allocation and France.
Our current plan for and Charlotte.
We plan to crowd through targeted M&A and area and the sector back in there for us.
And we'll find that $2 $3 billion planned acquisition of America.
And with cash on hand.
We intend to continue to return cash to shareholders.
And with our dividend policy and completed $500 million and share repurchase and the first partner and an average price of about $73 per share.
And we'll remain opportunistic share repurchase amount for Britney crap.
Craft beer.
On a go forward and meet our top.
And about an 18 cashback and the top line.
One 5 billion.
Perspective.
Net EBITDA targets.
Uh huh.
And that I'll now turn it back over to Ed to talk about our financial outlook.
Thanks, Laurie, let me close with our financial outlook for <unk>.
Right.
And second quarter for full year 2021.
And we're raising our full year guidance range for net sales opportunities.
And adjusted EPS.
And the pinpoint and brands provide.
And I expect net sales for the year to be about.
Yeah.
Which reflects year over year growth.
Net.
Up from our previous estimate of 8% approach.
We expect to improve leverage.
And now expect operating EBITDA for the year.
And 1.0 rebuilt.
The midpoint of the range provided.
Year over year for increase of 17%.
Due to revised estimates to reflect for a solid start for the here and.
And so our teams ability to continue to that.
Global supply challenges.
We are also raising our adjusted EPS range for the full year by 30 cents per share and now.
I'll expect adjusted EPS of $3 67 per share.
Pinpointed the range provided.
And in addition to the strong operating performance of our businesses.
The share repurchases, we are completing some of our existing programs and then.
Net of our estimated range.
[noise] contributing to that.
For the second quarter 2021.
We expect net sales to be about three five.
Hi, Julien.
And we would expect operating EBITDA.
And $1 billion.
And good points for the range provide and both volleyball and response from the second quarter sales.
At the midpoint of the range provided.
Adjusted EPS for the second quarter 2020 loans of 94 cents per share.
And now refresh before reduction and shares resulting from the SBA exchangeable and.
And our weighted average.
Yes.
The growth.
For Q&A.
Thanks for that before we move to Q&A portion of our call I would like to remind you that our forward looking statements.
And for August and the following Q&A.
And will allow for one question and one follow up question per person operator, please provide the Q&A instructions.
Thank you to ask a question you will need to press star one on your telephone to.
To withdraw your question press, the pedal and ski please standby, while we compile the Q&A roster.
The first responses from Steve Tusa with Jpmorgan. Please go ahead.
Hey, guys. Good morning, Hey, good morning.
Can you just maybe talk about B C.
Sequential kind of dynamics and your business into the second quarter and second half I mean on the one and <unk>.
Guys are having some supply constraints, which I guess is.
Hurt volume is a bit.
But then on the other hand I am sure that there is.
And kind of urgency around ordering and and maybe the electronics side seems a pretty big book to bills that guys like Tyco electronics that are.
And our suggests that customers may be stocking up and kind of.
Double ordering perhaps what they can and everybody's kind of scrambling to get supply I guess.
And Muddles the sequential and maybe if you could just talk about what you see as kind of the sequential activity in those key stress areas heading into the second half.
Yeah, I'll start and Don maybe you already wants to jump in.
And probably weigh and I don't think our normal cyclicality plays out for share being close to what you just described.
And different dynamics for here I'd say one of the biggest issues.
And this really be.
For the inflation and cost.
And all materials here and then the price.
And we can take so that's a pretty big dynamic for us and you see reported here.
First quarter the.
Cost deflation was very little and it was about $20 million.
And the second quarter that list for about $90 million and we expect a full year impact.
Raw material inflation to be about $300 million silicon and it goes on to got it.
Our second quarter holds there for the year, what do you guys have kind of the 300 million. So we've been.
And a constructive price markets.
And we think we'll catch most of the second quarter inflation from maybe not all of it is we have some contracts are 30 60 days.
We're very confident that we'll be able to cover the walls.
And total.
And we'll be able to make that up so we're expecting for all.
Total Dupont for our pricing to be up low single digits for the year, but clearly more so and the evidence and fishing, where a lot of the wall.
Inflation is.
Price increase day and electronics.
Got it fair share.
New product introductions, and some price increase and water and protections.
And safety business separately, so I'd say, that's the big.
And the dynamic there and then from a kind of a revenue standpoint.
And the other big dynamic is.
And the raw material constraints that we're seeing within the fourth quarter call Lorie and I talked about a 60 day $80 billion.
Sales and we were expecting in the quarter.
The freeze down in Texas, and we think it's Michel and about $100 million of sales.
Core, which is 2025 gig and EBITDA.
Expect for another 100 million and our second quarter Hunter for 120 <unk> mist.
And Mr revenue.
And you are hearing from all the others were not lose the business, we will make at all of his day to constraints kind of worked our way through because everyone's kind of dealing with the same issue here. So I'd say, that's the large dynamics up sequentially and then go and into the second half for the year.
And Mark and Steve played out the way before day one.
The ones, we thought it would be hard for hot once people saw but commercial construction and residential oil and gas.
And lifting nicely off the lows of last year, but not back to 19 level. So we expect that to continue through the year also.
Great. Thanks, a lot for the color I appreciate it.
Yes.
Thank you for your next response is from John inch of joining from please go ahead.
Good morning, everybody.
Good morning, guys.
Good morning, I would like to just pick up on that theme. So and when you are saying you missed the $100 million of sales and the first quarter roughly 100 day 120 ex the expected and the second quarter.
Does that imply then that the second half.
Is up 200 to 220 more than it would have been if you hadn't had these supply chain disruptions like youre going to see that in terms of sequential growth or I'm, sorry in terms of the year over year growth dynamic and doesn't that create a bit of a tough compare or not the way to think about it.
First of all I'm not sure this will resolve itself and the area around.
And for quite a few suppliers talking about this column.
And the next year and depending on what it is so.
Inventory levels, and yours train or very very low and the supply chain and sell finished goods for awhile.
And you still got for semi conductor ratio, it's gone and things where they got for most people think interest going into 2022, and so I think you've got that dynamic going on here. So I wouldnt engage all just rolling it into the second half for the year.
At all.
Yeah, I think the guidance that we provided.
And shall we assume that similar for our revenue and I'd be fine Mike.
For the OEM to me.
And I can speak for about $1 range.
And you look at the full year outlook and came back and get a similar number in the back half of a year and whatever upside and we think beef and pork.
Getting back and lock volume and mix.
And so that would probably be a bit.
Bob.
So Robert.
From a dollar line correct.
Thank you for them.
Okay, No that makes sense and then just as a follow up how.
How big can you remind us how big is Dupont and India and India is obviously and the news is COVID-19 sweeps that country I'm, just wondering how that garments. So they have much of a presence there and it didn't really seem to hurt your Asia Pac numbers. This quarter does it quite for a little bit of a headwind in future quarters.
And there is not a big impact it already and that was the biggest upside for US, though is India and the water business.
It's a real key market for us, but it's not that big and the scheme of things yet.
So it didn't have any significant impact for us.
Thanks, very much and we had.
And it would be and the portfolio and it would have been bigger but that.
And I was really for our bigger presence both from a portfolio.
Yes, it makes sense, thanks very much price.
Sure.
And clearly it makes me sound like from Scott Davis of Melius Research. Please go ahead.
Hi, good morning, and Lori and Leland.
Okay.
Just wanted to follow up a little bit on.
Comments that Steve made I, just just about our supply chain and.
And John as well, but are you seeing kind of any unusual purchasing patterns by your customers that.
For your customers double ordering or any any kind of unusual.
Inventory build.
Okay.
And we don't say much I mean, we decided for cobalt customers. We know they were building inventory.
And Asia, we think pretty more but it was like $30 million to $40 million.
Yes.
We're not seeing it for the people just can't get their hands on enough right now I mean, they are selling force matures out there.
And the supply chain.
And again, mostly in the oil business I'm talking about.
And I don't see inventory build and the trial and then.
Historically finished goods and autos is very low right now.
Globally. So so we don't see a lot of that are people trying to sell the water I think for some of that going on for everyone's getting allocated product at this point in time, so it's not like they're able to build.
And inventory base.
And I use Dupont as an example, our inventory went up from about $100 million net interest.
And mostly in our M&A business and we couldn't get enough for the other was to get the products out the door so weighted.
Plan on warehouse double ordering and we just couldnt get it out the door to have a finished goods. So.
And our denim and skew our numbers, that's about a big deal, but I'm sure. There's a decent amount of that going on but I wouldn't call. It the ore stockpile.
Okay.
And then just a different.
Cleanup here, it's just what was the average price kind of for the asset sales that you had.
Just any valuation metric.
And then we can think about.
You mean for the non core, but right now and I think.
Yeah for the non core and stuff.
And three.
Yeah, we had mentioned somewhere in that range for the six to eight times EBITDA.
And that's it.
Okay.
Okay. Okay. Thank you good luck guys.
Thank you. Your next response is from Jeff Sprague from vertical Research partners. Please go ahead.
Thank you and good morning, everyone.
Hey.
And two for me one just on this theme a little bit one more item for me anyhow on interconnect Laurie.
And that sounded like maybe it was the pull forward, but demand was.
And the pattern will be different than what you would typically see could you just elaborate on kind of what you said and meant there as you went through that segment.
Sorry, I think you said it.
Correct wait till we get from a bit of an acceleration from the.
Florida.
And the first quarter and probably the first half versus operating normally.
And our non provider.
So I think back and probably about $1 billion core.
Yeah.
And not hugely material and you talk from me.
And Kerry on for Dan.
And you'll get that for year, we got Interconnects for patient base back to GAAP.
And all that yet.
The year day by Carbonite, and Vito and very strong.
If you recall and it's why I got my share Cadbury chocolate, Boston and I cannot.
Some of that for each day.
Volume and Brown.
And then secondly, just tell me and.
And the front.
You were you able to acquire a layered for what looked like a pretty decent price and I just.
And I've noticed there's been a few deals going on kind of and some of the spaces I travel that.
And the valuations actually all things considered.
Not off the charts and I just wonder.
If you are seeing that kind of what your.
Confidence level and being able to do bolt ons here at a reasonable valuation as we progress through the year.
Yes.
And if we're looking at a core bolt ons and one of them and that's exactly what we described the last couple of quarters.
And the water space.
I think what we're looking at is very similar to layer in and where with the synergies.
Hi, Collin, it's and byway core synergies.
And it up multiple that makes sense for Dupont and <unk>.
Highway and we just felt by it.
And can we just don't know what that final answer yet.
So I think there are some.
And of those opportunities out there.
And do that and some of the spaces and we'd really like there's going to be a great secular growth areas and of course in the future.
But I'm not talking huge things at this point and time, because I always say, we'll always look at transformative and so if it makes sense for the company and there's something called walk and these are truly a couple bolt ons and the hundreds of millions not billions.
Looking at the similar dynamic I would say to layer. So maybe to your question and you know those opportunities are there.
For us.
Great. Thanks for the color.
Thanks for it.
Thank you for your nice response from David Begleiter with Deutsche Bank. Please go ahead.
Thank you and good morning.
Talk a little more about the tie back you mentioned the shift back to the more traditional industrial business going forward, I guess versus some tough comps versus a year ago and protective.
Yeah.
I mentioned about hydro and nuclear with a garment volume and price.
And technology and backup and from Macquarie.
Medical industrial and market their products.
And for secondary share.
And.
The headwind that we saw and accordingly, Martha around production and sell.
And we had price from about.
Maintenance activity that was planned for.
For 2020, and densify funny line, just given the COVID-19 response.
And last year and for that Tamped down the volume that we read about bringing in from a barrel key line, if I read a size and a recovery.
And.
And back on the comment on the farm economy demand for fashion and picked up by other and.
And the spending.
And our margin for us.
And we're sold out of those assets. So it's when you move things around and it's not like we're picking up extra volume right and I won't have the same margin impact and that's why our biggest.
Capex programs and new lighting.
For your growth.
And it won't come on in 2023, it's our single biggest capex.
Capex program and.
For flat out.
Got it and well.
Just on working capital for the full year, what do you think you'll end up.
What's what when it is all done.
Yeah, I think to drive improvement from where we were in the first quarter and that offer trade based on current balance cash.
By comparison, and we'll continue to target greater than 90 for the year, which and.
And Chris.
From our plan and Q on Q1, and really a function of our.
Higher sales and we.
And we're up about eight or something for banking.
Thanks for that.
Thanks, Tom and create them along and that's a problem.
And we are opportunistic and by line.
And I, certainly inventory and Craig I would expect on a full year basis.
Right now for working capital.
And given the top line growth.
And probably by far.
That's $200 million range.
And kind of out of other key why that didn't work for me the measure that we pay attention to and net working capital.
Okay.
Stops significant.
Oh sure.
Yeah.
And in here and about five to 10.
And the target about five three turns from here.
Yeah.
Very helpful. Thank you.
Thank you. Your next response is from Steve Byrne Bank.
Bank of America. Please go ahead.
Yes. Thank you.
This water solutions business of yours seems to be increasingly a growth engine for you.
Can you split that and grace between and <unk>.
Disabilities and.
And using your technology to <unk>.
And I drink the water versus industrial applications and <unk>.
And the only industrial side.
Do you see any.
Opportunity down there and not so much on the pure for casing side, but on the poultry side.
And is trying to extract particular materials like lithium.
Yeah, I think that created a lot of it is coming from a desalination and also and we have a large and growing and call today that kind of nicely.
And you need.
And so we've now got the leading technologies from all three application between Riverside.
Iron exchange and Altra frustration.
Yeah.
And we feel comfortable and as I had mentioned continue to look at Opex and now he's back.
And I.
And so I think yeah filtration and spend needs to be a large opportunity for us.
And I can't mention by name, but yes.
Okay. Thank you.
And I think bear in that day.
And with all of us with our ESG goals out there and the industrial world.
And the secular growth opportunities for years, it looks like it's gonna be pretty awesome for the next couple of decades. So I think we all have metrics for trying to hit on clean water and for all of these facilities around the world.
And should be a really nice opportunity and why.
And one of the reasons, we would like to grow this business organically and Inorganically and I.
I think that opportunity.
And that comes out.
For spectrum.
And the wire for training and Maya and Kerr Mcgee.
And just to follow up on your layered acquisition and.
And as you mentioned.
No.
And some cost synergies, but do you how would you compare that opportunity versus <unk>.
And your ability to maybe cross sales since that will be a drop in and knits and different technologies and Chemistries that you that you don't seem to have so we did a cross selling opportunity and maybe and expansion of some of their technologies into new end markets do you see any opportunities.
And do that as well.
And it's definitely look we bought and closes for cross sell.
And you get right down the weighted borrowers and.
Style for portfolio very significantly and a couple of key technology areas that are needed.
And there is more advanced technologies for call it here and especially in thermal management and being a key one.
The cost synergies with Loren and I are just going to go get it real quickly just to get it out of the way, but reported for the growth opportunity for cross sell opportunity.
To be able to bring more solutions to our customers remember and our business. We have a lot of application engineers.
And customer issues and Wichita.
For engage and size of all of these components. Some of these technologies from more and more important and so that that's the reason we reported strategically.
Great.
For the industry.
And.
For the credit to groceries and within that business, but we will get the cost synergies so reported at a price.
From a whole from the standpoint.
Thank you.
Thank you for your next response is from John Roberts with UBS. Please go ahead.
Thank you Ed My understanding is that ISS has recommended against you going on from the ISF Board are there any remaining connections between Dupont and I ask that that would create a conflict.
That's just the position they have against previous management being one and the core of a new owner.
Yeah.
Mutually.
And issue of CEO of <unk>.
And they don't want to boards ex.
External boards, but I think and general and borrowings did they also have that issue you just raised price.
And in general our investors understand why I'm doing it.
And do other things for my life, but I think that.
I understand it's very important to me and to Dupont.
But you know.
And this goes well, we could off I mean more than half. The company is what we should put into iff's. So it's extremely important to our shareholder base. So I think it's morally and the right thing to do but under that definition.
And independent director perception and no debt.
How about that and.
It's very similar to I went on the core type of award.
And the transition there and see this as any different than I think it's for anything to do.
Thank you.
Okay.
Yeah.
Thank you. Your next response is from Mike Sison and Wells Fargo.
Hey, good morning, nice start to the year.
Just wanted to get it for them.
Just wanted to get a little better feel for the second half EBITDA does it.
It looks like it's going to grow high single digits and.
And just curious.
Did you do you expect demand to.
Improve and the second half is it depends and make sort of subsides, hopefully and and as the lower growth rate.
And more maybe raw materials and other issues and and.
And then longer term what do you think the EBITDA growth potential for the new Dupont is.
Yeah, I think so but potentially lower grade and statement and second half it really get that comparison and obviously.
And second half second quarter and alignment.
Okay.
Drive and breakfast and get them out with quite a ride sharing and <unk>.
And for that.
And I don't see a material change and the actual.
Net dot number kind of similar to the revenue.
Earlier.
And our environment.
As I mentioned earlier kind of end market perspective.
For generally back and be even above 2019 and murky for yoga.
And we have out there and our revenue line.
For 2019 and the.
But I think EBITDA.
And definitely back.
And thank them and the market and we couldn't really get the handful and therefore around the aerospace.
And I want to buy them.
From 2019 bumps for herself construction and the aggregate something come from material question about portfolio.
Got it thank you.
Yeah.
Thank you. Your next response is from items.
And that's one of them.
Capital markets.
Yes.
Great. Thanks, Hey, good morning, Thanks for taking my question and I'm. Just curious you know now that the portfolio you've gone through our health and nutrition the separation thereafter.
And acquisitions here to bulk up eni separated into new segments as well as water.
What else are you guys thinking of as far as.
Continued kind of portfolio management and also the non core mostly out.
As the business kind of operating at a level that you're comfortable with.
And you've also undertaken a lot of cost reductions, but maybe strategically you can just.
Give us your thoughts on maybe some of the next steps as you see moving forward for the new Dupont.
Yes.
And I would say short term here.
And we're really focused operationally broadly and the company, but remember.
And we just closed the <unk> transaction two months ago. It seems like forever and there was a heavy lift there we still have to finish cars due to three non core businesses.
And which will get out.
For mid year.
And the portfolio and that will bring at $900 million and proceeds so we still have a heavy lift from.
Going on there and then remember at the same time, we are going to be started the integration of the layer and business.
And as a portfolio so.
We got we got a lot of that type of work on in addition to look and get a couple long targeted M&A opportunities as I had mentioned so that's what I think.
A lot going along portfolio wise still this year and with all day.
And as we talked about managing raw material inputs and pricing for all of that and a good trend.
And of the Crazy for five year.
We've got our hands full so I would say portfolio of kind of getting to kind of where we want it to get we would never take off the table.
Formative stage, but.
Generally cleaning up the non core getting layered and and operationally really just noticed for the grindstone here.
Great. Thanks, a lot.
Yes.
Thank you and your next response is from Alex <unk>.
And <unk> with Keybanc. Please go ahead.
Thank you good morning, everyone and goodbye.
And maybe.
Could you elaborate on the share gains and <unk>.
Gary.
And we introduced new products, there and do you expect additional share gains and this product or maybe anywhere else and semiconductors and how many quarters.
Yeah, it really kind of from that and new products, where you had mentioned with and Keith.
Sorry.
Operating income and advanced packaging space and you look at our revenue for bonds, I guess semiconductor technologies for our spread and market that they were up about 18% and Philadelphia, we estimate about five or six day market and mechanics, and you look at inadequate for speaking, that's probably up about 9% and the corner.
And we think we got about 4% ourselves and from where we buy.
And then.
And that they cannot get Batesville, ARINC and the market average and on the.
The remaining for restaurant and from that share gain perspective.
Thank you.
Yeah.
At this time there are no further questions and the queue. Thank you.
Thank you everyone for joining our call for your reference a copy of our transcribed and will be posted on our website.
And close our call.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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