Q1 2025 DuPont De Nemours Inc Earnings Call

Thank you for standing by and welcome to the DuPont first quarter, 2035 Ernie's call. All lives are in place in view to prevent any background noise. After the speakers marks, there will be a question and answer session. If you would like to ask a question during this time, simply press far followed by the number one on your telephone keypad. If you would like to withdraw your question, press far one again. Thank you. I would not like to turn the call over to Ed Barney, Investor Relations. You may begin your conference. Thank you.

Speaker Change: Joining me today are Ed Breen, Executive Chairman, Lori Koch, Chief Executive Officer, John Kemp, Current Electronics Business President, and CEO-elect of the Future Independent Electronics Company, and Antonella Franzen, Chief Financial Officer.

Speaker Change: We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking statement that this glamour contained in the slides.

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

Speaker Change: Our Form 10K, as updated by our current and periodic reports, includes detailed discussion of principal risks and uncertainties which may cause such differences. Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and exclusive significant items.

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

Speaker Change: I'll now turn the call over to Lori, who will begin on slide three.

Lori: Good morning and thanks everyone for joining our call. Earlier today we reported solid first quarter results ahead of our previously communicated guidance.

Lori: First quarter sales grew 6% on the organic basis on strong volume growth.

Lori: Operating EBITDA of $788 million increased 16 percent gear over year, demonstrating strong leverage in the quarter. [inaudible]

Lori: Operating EBITDA margin of 25.7% increased 240 basis points from prior year, and adjusted ETS of $1.3 was up 30%.

Lori: From an end-market view, we saw continued broad-based demand in the electronics driven by strength in semi-advanced nodes and AI applications, and strong volume growth in our healthcare and water businesses.

Lori: We continue to see strong order patterns through April consistent with our expectations.

Lori: Regarding our strategic priorities, I am pleased with the continued progress that our teams are making on the intended spin-off of our electronic business, which was announced this week as CUNITY.

Lori: In addition to the naming, we recently achieved several key milestones which enabled us to remain on track for our own a member-first separation date.

Lori: First, we completed key executive leadership appointments. John Kent, current DuPont Electronics business president was named as CEO elect.

Lori: John is well positioned to lead the future independent company, given his proven leadership and extensive experience in the semi-space and broader electronics industry. We are pleased to have John on the call with us this morning.

Lori: Matt Harbob was named as CFO elect. Matt has an impressive track record as a public company CFO along with deep experience in spin-off transactions, and will serve as a valuable business partner to John .

Lori: Next, we've made significant progress on the composition of the CUNITY board, three existing DuPont directors, as well as four external members, rejoin John on the new board.

Lori: This is a group of highly accomplished leaders with the global business experience, diverse industry expertise, and varying key competencies. [inaudible]

Lori: Finally, last week, we submitted the initial filing of the Form 10 Registration Statement with the SEC. This document contains detailed business and financial information related to the future standalone company, as well as information related to the separation.

Lori: Turning to slide four, which details how we are addressing tariff on 13.

Lori: We are a global organization with presence in all key reasons, including a significant manufacturing footprint in the US and Asia. [inaudible]

Lori: Our scale provides ample flexibility to adjust production and product flow, enabling us to mitigate trade risks.

Lori: Additionally, from a sourcing perspective, the vast majority of our raw material buy is purchased in the region it had consumed and is not subject to the new terrace.

Lori: Our teams have been carefully analyzing ongoing global supply chain dynamics, engaging with our customer and supplier base, and actively working on a number of tariff mitigation actions, including production shifts, sourcing alternative, third charges, and product exemption. [inaudible]

Lori: Based on tariffs in place today, our estimated cost exposure in 2025 before mitigation action is about 500 million on an annualized basis.

Lori: We have identified actions to substantially offset this potential headwind with the net cost impact in 2025 currently estimated at about $60 million, which primarily would impact the second half. [inaudible]

Lori: We continue to evaluate additional measures in order to further minimize the potential impact.

Lori: Overall, we have a solid game plan to continue to consistently deliver results, and we are executing well in advancing our strategic priorities. With that, I'll now turn the call over to John , who will begin on Slide 5.

John Kemp: Thanks, Lori, and good morning, everyone. I am honored to be here today as CEO-elect of the Future Independent Electronics Company, which we've named CUNITY.

Lori: The name is inspired by Q, the symbol for electrical charge and unity, reflecting the collaborative way we work with our customers. Thank you very much.

Lori: Cunity will be one of the largest pureplay electronics materials and solutions providers in the industry, with 4.3 billion in net sales in 2024.

Lori: We have a broad portfolio and customer relationships founded on a heritage that spans more than 50 years. [inaudible]

Lori: As the partner of choice for our customers, we have a seated-to-design table working to advance their technology roadmaps, enabling the next generation of advanced computing and connectivity applications.

Lori: As a global technology leader, we offer a diverse portfolio, serving the entire electronics value chain from chip fabrication and advanced packaging to advanced interconnects, assembly

Lori: We bring material science expertise and end to end engineering solutions across the full breath of our portfolio to deliver world-class innovations to our customers. Thank you very much.

Speaker Change: Cunity is well-sufficient to benefit from robust growth in semiconductor markets, while leveraging a strong financial profile.

Speaker Change: With about 60% of net sales and semiconductors, the company will compete with a set of recognized global semi-participants, and we expect to attract an investor base commensurate with this profile.

Speaker Change: We have long-term relationships with all key semiconductor and other electronics OEMs in the industry and a strong history of code development and application engineering to ensure customer success. Thank you very much.

Speaker Change: In addition, the business is well equipped to continue to participate in the AI-driven growth acceleration via our advanced node semi-products and advanced packaging applications for youth and data centers and personal devices. [inaudible]

Speaker Change: We further enable key AI applications with high-density interconnect products and layered thermal management solutions.

Speaker Change: We believe these leading positions will continue to drive industry outperformance for the future electronics company. As Lori previously mentioned, we continue to make very good progress on the separation, and I look forward to working more closely with our future board. Thank you very much, George.

Antonella: I will now turn the call over to Antonella to cover the financials and outlook.

Antonella: Thanks, John , and good morning, everyone. I am pleased that the solids start to the year as increase volumes across many key and markets and continued operational focus by our teams grow strong financial performance in the first quarter.

Beginning with first quarter financial highlights on slide six.

Antonella: Net sales of 3.1 billion increased 5 percent versus a year ago period, as 6 percent organic sales growth was slightly offset by a currency headwind of 1 percent. [inaudible]

Antonella: Organic sales growth consisted of an 8% increase in volume partially offset by a 2% increase in price.

Antonella: From a segment view, both segments solar-organic sales growth with electronics co and industrial co, up 14% and 2% respectively.

Antonella: volume gains during the quarter were led by double-digit growth in our businesses serving electronics, health care, and water and markets.

Antonella: From a regional perspective, Asia Pacific delivered 13% organic sales growth year-over-year, including another strong quarter of growth in China, where organic sales were up about 20%. Driven by electronics and water.

Antonella: Organic sales were up 4% in Europe , and flat in North America, given the soft construction and auto markets. [inaudible]

Antonella: First quarter, operating EBITDA of 788 million, increased 16% versus the year ago period, as volume gains and savings from prior year restructuring actions were partially offset by growth investments.

Antonella: Operating EBITDA Margin during the quarter of 25.7%, increased 240 basis points year over year.

Antonella: On a continuing operation basis, operating cash flow for the quarter of 382 million.

Antonella: CapEx of $249 million and $79 million of separation-related transaction cost payments resulted in transaction-adjusted free cash flow of $212 million and related conversion of $49 percent. [inaudible]

Antonella: As a reminder, first quarter cash flow is inclusive of our annual variable compensation payout.

Antonella: We expect cashflow conversion to accelerate as we move through the year with full year conversion of greater than 90 percent.

Antonella: Turning to Slide 7, adjusted EPS for the quarter of $1.03 per share increased 30% from $0.79 in the year ago period.

Antonella: Higher segment earnings of 19 cents as well as below the line benefits totaling 5 cents through the year-over-year increase.

Antonella: Turning to segment results, beginning with electronic scope on slide 8.

Antonella: Electronics Co, first quarter net sales of 1.1 billion, increase 14% versus the year ago period on both a reported and organic basis, due to 16% increase in volume, partially offset by a 2% decrease in price.

Currency was flat during the quarter. [inaudible]

Antonella: At the line of business level, organic sales for semiconductor technologies were up low double digits on strong and market demand, driven by advanced nodes and AI technology applications. [inaudible]

Antonella: Semi-demand in China continued to be strong with better than expected growth driven by timing shifts from second quarter into first quarter. [inaudible]

Antonella: Interconnect Solutions also posted another strong quarter with organic sales of high teens, reflecting broad-based demand.

Antonella: Volume Games from AI-driven technology ramps and continued benefits from content and share games across layered, laminates and medallization.

Antonella: Operating EBITO for Electronics Co. of 373 million was up 26% versus a year ago period, as volume benefits were partially offset by continued growth investments to support advanced new transitions and AI technology ramps.

Antonella: Operating EBITDA margin during the quarter was 33.4% up 340 basis points versus the year-ago period.

Antonella: Turning to Slide 9, industrial's co-first quarter net sales of 1.95 billion, where flat versus the year ago period, as a 2% organic sales growth was offset by a 1% currency headwind and a 1% unfavorable portfolio impact. [inaudible]

Antonella: Organic sales growth of 2% reflects a 3% increase in volume, partially offset by a 1% decrease in price.

Antonella: In connection with the first quarter segment realignment, we have organized industrial's co into two lines of business. [inaudible]

Healthcare and Water Technology, and Diversified Industrials. [inaudible]

Antonella: Healthcare and Water Technologies consists of our high growth businesses of healthcare and water.

Antonella: Our health care portfolio includes Tyvek Medical Packaging and Garmin Offerings, Spectrum and Donatelle Advanced Medical Device Applications,

and Livio Bioformer Processing and Solutions.

Antonella: Our Water Business is a leading technology provider with a comprehensive portfolio of filtration technologies, including reverse osmosis, ion exchange, and ultra filtration.

Antonella: Water also has strong exposure to secular growth drivers and serves key end markets such as industrial water and energy, municipal and desalination, and life sciences. [inaudible]

Antonella: The diversified industrial is a leading provider of innovative products and solutions supported by well-known brand names serving industrial base and markets, including construction, advanced mobility and personal protection. [inaudible]

Antonella: For the first quarter, healthcare and water technology sales were up low teens on an organic basis versus the year ago period, reflecting volume gains in all business lines within healthcare and strength and water led by reverse osmosis. [inaudible]

Antonella: Diversified industrial sales were down mid-single digits on an organic basis due primarily to softness in construction and auto end markets.

Antonella: Operating EBITDA for industrial code during the quarter of 464 million was up 6% versus the year-a-go period due to volume gains and savings from prior year restructuring actions.

Antonella: Operating EBITDA margin during the quarter was 23.8%, up 130 basis points from the year ago periods. [inaudible]

Antonella: Turning to slide 10, which outlines our latest view on 2025 financial guidance.

Antonella: For the second quarter, we estimate net sales of about 3.2 billion. [inaudible]

Antonella: Operating EBITDA of about 815 million, an adjusted EPS of $1.05 per share.

Antonella: These estimates include a seasonal sequential sales lift, although muted from prior expectations, given timing shifts from the second quarter into the first quarter and semi. [inaudible]

Antonella: For the full year 2025, we are maintaining our guidance at our prior outlook with estimates for net sales of 12.8 to 12.9 billion.

Antonella: Operating EBITDA of $3.325 to $3.375 billion, an adjusted EPS of $4.30 to $4.40 per share.

Antonella: In addition, as Lori mentioned earlier, for 2025, we currently estimate a net cost impact of tariffs of about 60 million or about 10 cents per share, mainly related to the second half of the year.

Antonella: Our financial guidance does not include this estimated net cost impact as we continue to identify further mitigation actions as well as care of implementation uncertainty.

Antonella: Overall, I am pleased with the solid start of the year and want to thank our employees for delivering these results and for their ongoing support to the separation process. Thank you very much.

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

[inaudible]

Speaker Change: Thank you, ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you have dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, simply press star one again. We also ask that you limit yourself to one question and one follow-up only. Thank you. Thank you very much.

Antonella: Your first question comes from the line of Jeffrey Sprink with vertical research. Please go ahead.

Jeffrey Sprague: Hey, thank you. Good morning, everyone. I hope everyone's well and busy. I see.

Jeffrey Sprague: How many different exemptions do you need, or do you have, and most of what you need relative to this guy is that in hand at this point? [inaudible]

Speaker Change: Thank you for watching. If you liked this video, please subscribe and like. See you in the next video.

Speaker Change: Yeah, Jeff, and good morning. Thanks for the question. When you look at it, total when we think about all of the tariff actions that we're pursuing in terms of. [inaudible]

of Supply Chain Adjustments.

Speaker Change: Sourcing strategies, surcharges in pricing adjustments and mitigations. The product exemptions I would say is probably the smallest of those four categories, really the bulk of the tariff savings and mitigation actions that we've done have really been on the procurement and supply chain optimization side of the house. [inaudible]

Speaker Change: We continue to have very constructive dialogue with both the US and China authorities on the dynamics, particularly in the semiconductor industry. It's a relatively small percentage of our total mitigation strategy, and we continue to have those dialogues with the teams on the ground. Thank you very much.

Speaker Change: Thanks for that, and so on the supply chain optimization side then does that imply...

Speaker Change: You know that you're sourcing from Europe now or trying to source from Europe now or somewhere else into China to get around the need for exemptions and maybe just a little bit more color on what you're actually doing on the supply chain side. And sourcing.

Speaker Change: Yeah, so when we think about our supply routes into China, actually very little of what we produce in China actually comes from the U.S. It's a very small percentage of the total. Most of what we buy for our products in China are actually sourced from non-US, the vast majority of them. And so we're sort of positioned well already given the extensive footprint

Speaker Change: at across the industry and where we have supplier relationships. And in the handful of places where we do have US source materials, generally we have alternatives, suppliers that we've been working with our customers to shift. [inaudible]

Speaker Change: To those alternative suppliers that wouldn't have any difficulty with the tariffs. In some cases, those are materials are already qualified. In some other cases, there's a little bit of a timing lag to make sure that we can qualify those new materials. But in general, we're really well positioned within the electronic space from a sourcing standpoint based on where we're already buying our materials.

Speaker Change: It's just a total company number for sales that we export from the US into China is only about $200 million. So the bulk of the gross impact that we size at 500 million on an annual basis is us moving intermediate product.

Speaker Change: into China, toward final completion and shipping to the customer. And so that's why we're able to flex our own supply chain internally to be able to mitigate a lot of that impact. It's not actually shipping finished product into China. Right, so that those intermediates can come from other places as part of.

The sourcing changes in optimization then. [inaudible]

At the sum degree. Correct.

Thank you for that color. I appreciate it.

Mm-hmm.

Scott Davis: Your next question comes from the line of Scott Davis with Neil Deus Research. Please go ahead. Thank you very much.

Hey, good morning everyone.

Frank Scott. John Roberts and all this.

stuff.

As Jeff said, you guys have been...

is here.

Scott Davis: Hey, I wanted just to see if you could give us the tariff numbers broken down into the two businesses just starting to think about DuPont as completely separate. You know, you've got a few months left. But, um...

Scott Davis: We have that data available to incunity in DuPont. [inaudible]

Thank you.

Scott Davis: Thanks, Scott. It's Antonella. So just a couple of comments related to that. So when you look at our net exposure for 2025, it's actually split pretty evenly between electronics code.

Scott Davis: And Industrial's Co. So about $30 million in each is kind of the way to think about it. When you think about our exposure relative to a percent of our cogs.

Scott Davis: It's actually around 6% for both electronics code and industrial code, so I get... [inaudible]

on a gross basis again, so pretty evenly split. [inaudible]

Scott Davis: The one other thing that I would just mention and bring up related to the impact is we talked about the in-year impact being about $60 million. The one thing I do want to make clear, and as Lori mentioned, that's predominantly in the second half of the year. If you kind of start to look into 2026 and assume nothing changes from where we are today, which is a big assumption, just want to make sure that you don't walk away thinking the 60 becomes 120 next year and that we have an incremental 60 million headwind.

Scott Davis: As John briefly talked about, we do have additional incremental mitigating actions that we're looking at. Some of it relates to qualifying certain products. [inaudible]

Scott Davis: In different areas. So we have incremental mitigating actions that will come into play towards the end of the year that will help mitigate any further impact that we would have in 2026. Assuming there's no changes from where we are right now. [inaudible]

Speaker Change: That's helpful, Antonella. And just to follow up on Jeff's question, that 200 million of intermediate product that's been shipped to China. How long?

Speaker Change: Would there be a long-term plan to try to locate that in China? Is there IP protections? That's one of the reasons why you're shipping it from here to there. Just trying to get a sense. [inaudible]

Speaker Change: You know, of just the challenge of moving that asset base or whether this...

A bit of a permanent structural...

Speaker Change: Yeah, so the $200 million was the finished product export sales from the US to China. So when I talked about the intermediates, that's the bulk of the gross exposure of the $500 million. So besides, I know a lot of numbers lying around. And so, I'm- I'm- I'm- I'm- I'm- I'm-

Speaker Change: Yeah, we believe, as Antonella had mentioned, that we've got continuing actions that we can take either on our own supply chain or favorable outcomes on the exemptions or ultimately pricing actions in excess of the surcharges that we're putting in place. So we're not done yet. Let's go ahead and see what we can do.

Speaker Change: And ideally we get to the place where it's really not a met impact for us. [inaudible]

Okay, but it's not moving your own fixed assets.

I guess that was kind of a question. Yeah.

Okay, all right, turn it on. Thank you. Okay, thanks.

Speaker Change: Your next question comes from the line of Steve's Tusa with JP Morgan, please go ahead.

Hey, good morning.

Speaker Change: I'm just curious how much of these sales in China do you think, you know, are you like?

Speaker Change: Spector with long-term contracts, with your OEMs there, or whoever is buying and integrating your products and the finished products. What percentage of those sales can they substitute? The two.

Speaker Change: So Steve, this is John , good question. So when you think about from an electronics point of view, we've got roughly last year, for example, we had about 1.4 billion of sales into China. Yeah.

Speaker Change: I would say almost half of that went to multinational company sales, and almost a hundred percent of those multinational company sales are materials that are spec'd in. [inaudible]

Speaker Change: There's an additional, probably 25 to 30% that go to the semi-customers where we have what we would call process of record identified, which means that we're specced into their particular technologies. So switching us out immediately for a competitor is not an easy task. It takes time and there's a lot of cost involved in making that switch. And that's it.

Speaker Change: So in general you put those two numbers together and we get to a point where north of 70% of our sales into China are really kind of spec'd in materials. [inaudible]

Speaker Change: Okay, great. And then you don't really have anything that's like coming cross-border into the US, right?

Speaker Change: That's not really the issue here anymore, what you're shipping to China. [inaudible]

That's correct.

Okay. Great. Thanks a lot.

Thank you.

John Mcnulty: Your next question comes from the line of John McNulty with PMO Capital Markets. Please go ahead.

John Mcnulty: Good morning. Thanks for taking my question. Maybe a little bit of a shift away from the tariff question. You know, we've been seeing some of the water markets. [inaudible]

John Mcnulty: You're starting to accelerate a bit, but you guys seem like you're definitely at the high end of some of the results that we're seeing. I guess can you help to unpack that a little bit as to what that demands really stemming from if there's any specific end markets or industries that are maybe driving that, that would be helpful. Thank you.

John Mcnulty: Yeah, so we did have really nice results in water in the quarter, and we expect water to be up kind of high single mid to high single digits for the year. So a piece of it is the favorable comp from last year. So last year, Q1 was our low point for the water business as we saw the tail end of the destocking. Thank you.

Specifically within China taking place. [inaudible]

John Mcnulty: But more broadly, the demand is very strong across the main technology, whether it's RO with all of the desalination requirements as we address the water scarcity issue. [inaudible]

John Mcnulty: ION Exchange is where we get more diversification from an end market and application perspective, so there's a lot of opportunity whether it's in microelectronics for purification of water. [inaudible]

John Mcnulty: or within food and beverage for purification of water. And then there's some key nascent technologies that we're following that aren't in our numbers today, but present my subside for us as we go forward, especially around. Thank you.

John Mcnulty: PFAS cleanup and the DLE so the Direct Lithium Extraction opportunity for us. So we're really excited to have the water opportunity in the portfolio. Thank you very much for your time, and thank you very much for your time.

John Mcnulty: Got it. Okay. No, that's the helpful color. And then just another question on the electronics coast side. I know in the past you've spoken to some of your AI exposure. You know, you specifically called out the interconnect solution side and some of the AI driven technology ramps. I guess, can you help us? [inaudible]

John Mcnulty: To understand the size of that business in interconnect solutions and some of the applications that you're helping to address there.

For us, is about 15% of our portfolio. Let's go.

John Mcnulty: And I would say in the first quarter we had another terrific number. It was actually up mid-teens. [inaudible]

John Mcnulty: In the quarter, really with the growth across all of those categories of the advanced ship, the advanced packaging, the layered thermal materials and AMI shielding materials, and then in particular some high performance laminates.

Great, thanks very much for the collar. [inaudible]

Thank you.

Speaker Change: Your next question comes from the line of Christopher Parkinson with the Wolf Research. Please go ahead.

Christopher Parkinson: Great. Thank you so much. Can you hit on very quickly what you're seeing across both Simitech and ICS, and how you're thinking about the China market versus just the non-China market in terms of how things are evolving, that's far too cute, and how that could potentially lead to second half trends. Thank you so much.

Speaker Change: Yeah, Chris, sure. So in China, as we've talked about before, China, the China growth has really been driven by fairly strong domestic demand in China, as well as a bunch of new fab startups that are taking place. And if you recall, you know, when you start up a new fab, typically you're running a lot of material because you're starting out with a fairly low yield. And then over time, your yields will gradually come up. And so as you start up new fabs, the material consumption is a little bit higher. That benefit [inaudible]

Speaker Change: There's not really pull-forward dynamics that are happening in the ICS markets. It's more real-time production. And that demand continues to be strong, both in China and really in the rest of the world, driven from really kind of, I would say, the smartphone PCs bill that is happening in China, as well as some of the data centers and the advanced packaging applications, the OSATs, for example. And then when you go to, and when you go kind of more broadly, [inaudible]

Speaker Change: the rest of the world. We're expecting high single-digit growth from both SEMI and ICS.

Speaker Change: for the rest of the year. So even with a flat China, we see demand really being driven by the AI, advanced nodes, and advanced packaging applications.

Speaker Change: Continuing through the year, and that's really what's fueling most of the growth. Advanced logic and DRAM, continuing in about five utilization rates, and then...

Speaker Change: It's the, as we talked about before, NAND and mature logic are a little bit slower, so if we, I would say if we see any uptick in mature logic in NAND, that would probably give us some nice upside. And, you know, those tax commentaries pretty consistent with what I think what you heard from our customer base in the broader market over the last couple of weeks. [inaudible]

Speaker Change: That's helpful. And actually, you're kind of leading me into my, you know, follow up. You know, when we think about your exposure in packaging and circumstances, we think about kind of the intermediate to long term trends. [inaudible]

Speaker Change: In HBC, can you talk about your competitive positioning? What are we going to be talking about as we approach November 1st as it relates to 26-27 earnings in terms of that specific business and how it's evolving? Thank you.

Speaker Change: Thanks, Chris. So we're excited about our position. We've got a terrific position in both the advanced nodes and the advanced packaging, especially in areas like our CMP business, pad, slurries and cleans, continues to be a very strong business for us. [inaudible]

Speaker Change: And as we go forward into 26 and 27, one of the exciting opportunities you're just starting to see some of those CMP processes that are used today on the front end of the line in the semi-world, moving into the back end of the line into some of the packaging. And that's nice upside. That will help contribute to kind of what I would call content growth in the semi-process because today you're only using those steps mostly on the front end. And as you start to see those processing steps needed on the back end, that'll be some nice upside opportunity for us. [inaudible]

Speaker Change: On the advanced packaging side, we have a broad set of materials going into that market, the largest of which is metalization materials. We're well positioned on both metalization materials and thermal materials. We're working with, in particular, some of the foundry customers to be able to scale up their 2.5D and 3D packaging technologies. And as we continue to see that build out, including some of the vertical scaling that

Speaker Change: It may happen in some of the outer parts of the time horizon that you mentioned that also represents additional upside for us.

Speaker Change: And as we do that, we are seeing some nice share gains.

Speaker Change: in the Advanced Packaging Space in particular, and in our Interconnect Solutions business. So packaging slurries, for example, packaging metalization, IC substrates, are all businesses where we've seen some nice share gains over the last few quarters.

Greg Culler, thank you so much.

Speaker Change: Your next question comes from the line of Josh Spector with UBS. Please go ahead.

Speaker Change: Thank you for joining us. I'm Christopher Mecray. I'll see you next time.

Speaker Change: Yeah, hi, good morning. First, I just want to ask on the guidance and just kind of the logic of not changing the guidance but highlighting the tariff impact. I guess are you messaging that there's potentially more offsets that could then get you into your original guidance range? Or is it just uncertainty and you didn't want to adjust yet? [inaudible]

Speaker Change: Hi, it's Antonella. Two things related to that. So one, as you very well know, it's kind of been a moving target day by day. So we wanted to keep our underlying guidance clean so you can see our operational performance. Thank you very much.

Speaker Change: And as we've been talking about, I would tell you the teams have been working really, really hard to offset. That's it.

Speaker Change: The impact of the tariffs, we started with a 500 million annualized number, our impact for the year currently is around 60 million. We're continuing to work actions. We have not stopped. We will continue to look at that. There clearly could be some incremental mitigation actions that we have in place by the end of the year as well. So we'll continue to watch it. We'll continue to assess it. We'll see what position we're in at the end of the second quarter, and then we'll, depending on where things kind of land, we'll embed it into our guidance. We'll see what position we're in.

Thanks, that's helpful, and if I could follow up on a...

Speaker Change: Anti-competitive review that's going on on Tyvek. Can you comment on that beyond what you guys had in the press release a month or so ago? And then, too, if you can say anything about the potential or lack of potential for further China reviews to spread to other parts of the business. And then, too, if you can say anything about the potential or lack of potential or lack of potential for further China reviews.

Speaker Change: Is that a risk that you're worried about or is it something that you're not worried about? Thanks.

Speaker Change: Yeah, so on the second part of your question first, we don't see a risk of it going beyond the initial tieback investigation. So the investigation is kind of at a steady point so we comply very quickly with all of their requests. Bye.

Speaker Change: and our waiting information from them. As we saw when the initial news came out, if the exposure is not large, it's less than 1% of sales, so it's not a huge number for the total company. And as mentioned, we don't see it creeping into other areas. This is the end of the video.

Speaker Change: of the business. And the documents that we turned over to them were all related to just the tie-back business.

Speaker Change: And the only thing I would add is while this is ongoing, there is no changes to the businesses we are able to continue to sell to customers within the area. There's no changes to that as well. [inaudible]

Great, thank you.

Speaker Change: Your next question comes from the light of David Begleiter with Deutsche Bank. [inaudible]

Speaker Change: Please go ahead. Thank you, Laurie. Our Kevlar Nomex core to the new DuPont.

Speaker Change: I would thought there would be, but it sounds like they may not be, so why is that the case? Thank you.

Speaker Change: Yeah, so we've been talking and we made the decision to keep the water business that we would. [inaudible]

Speaker Change: Billed around the high-grows components of the portfolio, which are healthcare and water, and we would look to take complexity out over time. So, IE start to reduce the, you know, and markets in which we play. So, I don't want to comment any further on this speculation around the news from Beat Air and Misbusiness, beyond saying that we've been pretty... [inaudible]

Speaker Change: Vocal about differently investing and driving growth around the healthcare water.

Speaker Change: And Margaret. And just keep quantified the impact of the pull forward of semiconductor technology earnings into Q1 versus Q2. Thank you.

Speaker Change: Yeah, so it's high a sense, and I was so in total, that was, besides that, around $30 million of sales that went into the first quarter, from the second quarter, that's at a pretty high margin rate I would say.

Thank you.

Speaker Change: Your next question comes from the line of John Roberts at Mizuho. Please go ahead.

John Roberts: Thank you. Could you give us a little more granularity for the diversified industrials segment and will attend Q? Have any more additional reporting within that kind of sub-segment? Thank you very much.

John Roberts: No, so the diversified is primarily comprised of the shelter business, you know, which is about a billion seven in sales. Next gen mobility, which is our auto and aerospace exposed businesses, which are about a billion in sales. [inaudible]

Aaron, Aaron, Aaron Miss Business, which is about a billion three. [inaudible]

John Roberts: And the remainder is printing and publishing that came over or printing and packaging, which came over from electronics, which was reported within the industrial solution space. So those are the key components. And, um...

John Roberts: You know, you'll see that we're disaggregating revenue for the new DuPont company at two levels, so you'll see today the healthcare and water under one segment and then diversified industrials underneath another segment. [inaudible]

John Roberts: So, as we get to separation, we'll have to disaggregate that even farther, so you would see most likely the areas that I just identified for diversified, and then you would see that healthcare and water separately for healthcare and water. Thank you very much.

Alright, thank you.

Mm-hmm.

Speaker Change: Your next question comes from the line of Patrick Cunningham with CD, please go ahead.

Good morning.

Patrick Cunningham: You know, you know, the share gains pretty consistently for electronics. I'm just wondering in the current sort of environment where we're seeing normalization and tariff uncertainty, you see any pressure on that out performance, whether it's additional competitive dynamics or changes with customer relationships or engagement on new product introduction. Thank you.

Speaker Change: So, thanks, Patrick. It's a competitive space. Our teams have been, you know, we're fighting the battles kind of on the street, customer by customer, business by business every single day. Our teams are in constant contact with our customers, and we're watching that really closely. It is a competitive environment. We feel good about our competitive position, the dialogue that we have with our customers is strong. And when I think about the way. [inaudible]

Speaker Change: In which our customers continue to work towards more advanced technologies with increasing process complexity and increasing quality requirements, the reality is is...

Speaker Change: The products are used to maximize their performance and that's part of the value proposition that we bring and part of why we have kind of a seat at the design table with them.

Speaker Change: Got it very helpful. You know, in the past, I think there's been restrictions on the US production as to China, namely, and electronics, but could fresh restrictions be a potential retaliatory measure in this trade environment?

Thank you. Thank you.

you know, will continue to do so.

Speaker Change: Your next question comes from the line of Alexi Yefremov with Keybank Capital Markets. Please go ahead.

Alexei Yefremov: Thanks. Good morning, everyone. In a dust trail, your full-year failed dive is for 3 to 4% growth. That's acceleration from flat and one cue. So what would get better here in you? Thank you.

Alexei Yefremov: Yeah, I think you're mixing as reported in organic. So, in Q1, our organic sales for industrials were 2% up and for Q2, we're kind of forecasting most single digits, so a similar profile. And then for the full year, we're saying, organic 3 to 4, and we had mentioned that we were trending towards the lower end. So I think the guidance on organic basis versus a total company reported basis. [inaudible]

Alexei Yefremov: Okay, that's helpful. So not much of a change in trans and sounds like...

Speaker Change: And going back to, okay, thanks. Going back to the electronics in China just to clarify. So, you mentioned the pull in from Q1, from Q2 to Q1. And last year, you've been talking about also potential some of the givebacks from strong sales in China that you could see in 25. Thank you.

Alexei Yefremov: Is that still on the table sometime later in 25, or how do you think about that dynamic just trying to being so strong last year?

Alexei Yefremov: Usually elevated inventories, we do expect that there will be some normalization, so we'll be flat year over year, but we'll have to monitor.

Alexei Yefremov: What we're hearing from our customers is those demand conditions to continue. Thank you.

Thank you, Charles.

Speaker Change: Your next question comes from the line of Mike Leithead with Barclays, please go ahead.

Mike Lighthead: Great. Good morning, team. Appreciate it. My first question is, my understanding is water and some of the industrial's businesses are often sold through distributors. So I guess do you have any sense of channel inventories and any impact of potential pre-bying in that segment?

Mike Lighthead: Yeah, so you're right. So the new DuPont is about 50-50 between direct and distribution. It's heaviest in shelters. You know, that's what's kind of driving up the average, but...

Mike Lighthead: You know, we in water to your specific question, we saw all of the desuck activity, you know, kind of as we headed into the tail end of 23 and in the beginning of 24. So the inventory levels are definitely normalized and we don't see anything building there again. Thank you very much.

Mike Lighthead: Or Need to perform an impairment analysis, but can you just talk a bit more about what drove that they're right down? Was it volume, profitability decline? Was it recent or was it long ago, closer to when the merger occurred? Just some sort of context on that would be helpful. Okay, let's go.

Mike Lighthead: Val, on a standalone basis. Again, no changes to what was expected in terms of performance, but when you look at the carrying value versus the fair value, the carrying value, the fair value is lower, so we had to take the impairment charts during the quarter. So it all stems from the realignment of the businesses during Q1. [inaudible]

Okay, thank you.

Your next question comes from the lot of Mike Sison.

Victor Loss Fargo, please go ahead.

Mike Sison: Hey, good morning. Congrats, John . Question for you. In terms of community, you know, comparisons, how should investors think about sort of the right companies to compare you with in the thought? What?

Mike Sison: You know, it was time to get after materials and equipment folks, but you've seen pretty significant multiple compression at the Tigris and others, and then...

Mike Sison: On the other side, a lot of the higher quality, you know, materials companies, like the Lindy, Sherwin, Jivenon, EcoLab, their multiples have held up really really well.

Speaker Change: So, you know, how do you think about the right comps for your business and how we've looked to value the company post-spin?

Speaker Change: Yeah, thanks Mike. I still think that the industry, the semi industry pure plays are still probably the best peer set for us. So, you know, in Tigris is still a good peer. I recognize there's been a little, there's been some compression in the short term, but I think over the long term, the industry dynamics are still very favorable with long term growth and where we're going broadly across the electronic space. And I think that that'll support kind of over time. That'll support a long term very nice

for us and for others in the electronics industry. Thank you very much.

Speaker Change: Got it. As a quick follow-up, Harris, if you'd like to help pine on AI, there's a lot of questions and whether we peek, whether we're continuing to grow, what we're early in the potential. Obviously, that's probably a good driver for this business longer term.

Speaker Change: Yeah, so look, I think when I think about AI, I think we're we continue to believe that that we're still in the very early days of the AI, the adoption of AI use cases, and that there's still a lot of opportunities for further adoption and further growth. I think that's being reaffirmed a lot by the hyper scalers that have come out and if anything, they're not pulling back their investment, they're increasing the size of their investment in the space. When we think about our AI exposure.

Speaker Change: And we see more and more adoption of use cases to the extent that AI use cases become more broadly affordable for more people. That will only accelerate you because fundamentally it comes back down to needing more compute and more connectivity and both of those trends support growth for our business. Thank you.

Thank you.

Frank Mitch: Your next question comes from the line of Frank Mitsch, the Fermian Research.

Please go ahead.

Frank Mitch: Hey, good morning and thanks. I wanted to drill into the industrial co-sider of the house, obviously very strong in the healthcare and water. Thank you very much.

Frank Mitch: Did low teams. I believe that initially there was a thought that the healthcare and waterside would grow amid the high single digits.

Frank Mitch: Having done low teens in the first quarter, what your thoughts are for the for the balance of the year. [inaudible]

Frank Mitch: And then secondly, taking a look at diversified industrials obviously down in one to what your thoughts are in terms of growth rates on that side of the business. Thank you.

Frank Mitch: Lifting as we go through the year, you know, on the water side from new system limitations being put in place in the second half and on the healthcare side, pick up on the med device side, describing the growth there. Thank you.

Frank Mitch: But the first quarter being up, you know, 14% and 11% organically for those businesses was a function of strong markets, but also the prior year comp, which as we had mentioned earlier in the call, the water was...

Frank Mitch: Lowe, from the completion of the D-Soc, and we were still seeing the D-Soc on the high-vec medical packaging side in the first quarter of last year. So we do see those…

Frank Mitch: Roserate's moderating as we head into the second quarter, but still very robust. Bye.

Frank Mitch: And on diversified, the 4% organic decline was really driven by shelter and automotive, so those businesses are well telegraphed to be softening shelter kind of across.

Frank Mitch: Mainly the largest softest filling on the residential side and the do-it-yourself side, and on the automotive side it's...

Frank Mitch: Europe and the U.S. auto markets and the revisions that came out from my chest in this last cycle since the full year goes down, you know, about 120 days at this point. So that was reflected in the key one numbers. We do see a little bit of a take up in the second half really around. We're going down.

Frank Mitch: The personal protection space in the arrow piece of industrial remaining strong. And then obviously continue ensuring that, as I mentioned, in health care and water for good.

Frank Mitch: Very helpful, very helpful, and just follow up on the building and construction and autoside. How are your order books looking, you know, April May, for 2Q relative to how they are historically? Are you seeing a lot less visibility? [inaudible]

How could you characterize the water books there? [inaudible]

Frank Mitch: Yeah, so no change there. We have mentioned April , April turned out strong for us. You know, within Industrial Elisco, we typically start with about 75% of the orders on the books for the month. And so we're in good shape there.

Frank Mitch: We haven't seen any slowdown in orders. We actually usually see orders check up as you start the year and we nicely saw that. So no change in momentum from that perspective. Thank you.

Terrific. Thank you so much. Thank you so much.

Vincent Andrews: Your next question comes from the line of Vincent Andrews with Morgan Stanley , please go ahead.

Vincent Andrews: Thank you, and good morning, everyone. I wonder if you can give us an update on PFAS and whether you think we'll be any material developments between now and November , and either in the State Attorney General's or in the individual litigation.

Vincent Andrews: Yeah, it doesn't seem like anything big will happen until, um, if they were always kind of going towards the tail end of this calendar year, you have. Yeah.

Vincent Andrews: Two things coming up, you have the Chamber's work, New Jersey trial, which starts some time this month, but that'll, it's in phases, so that'll probably most likely go through the whole summer.

Vincent Andrews: And then the, I'd say the bigger issue that'd be nice to get settled is the personal injury ones in the first bell weather cases for that or in October of this year. So really nothing imminent in the kind of the next six months. [inaudible]

Okay. Thanks very much. I'll pass it along.

Speaker Change: Thanks. Your next question comes from the line of Aaron Viswanathan with RBC capital markets. Please go ahead.

Aaron Viswanathan: Great, thanks for taking my, I hope you guys are well. Maybe I can just ask a question about-

Aaron Viswanathan: You know, the logistics of the spin. So, you know, I guess, is there, is it possible that you could pursue any M&A? Okay.

Ahead of the stand, you talked about growth and...

Tough care and water. [inaudible]

Aaron Viswanathan: You know, if you were to possibly monetize some up, and could you potentially monetize any other assets ahead of the spins, or is that something that we should expect after November 1st? Thanks.

Aaron Viswanathan: Yeah, I would say probably nothing material before the November 1. So obviously, I'll hand on deck to get the November 1 separation complete, but we are actively looking at areas where we can either add to the portfolio.

Aaron Viswanathan: I'll speak to Remainco and maybe John can talk a little bit to in Cunity, if they're looking at stuff, but we're always looking in have robust pipeline, but there's nothing that I would say is imminent, but it would happen before the November 1st separation.

Speaker Change: And I would, for Cunity, it would be very similar to Hillary characterised it. [inaudible]

Okay, great. And then just as a follow-up...

Speaker Change: Have you seen any change in your order patterns amongst some of the industrial customers, maybe in different countries on the water side? Do you see any change in behavior as far as pulling back, or maybe extending out orders as it relates to tariffs or any other macro concerns or have, you know, that momentum kind of continued. Thanks. Thank you.

Speaker Change: Yeah, I know we haven't seen any oddities in the order patterns for New DuPont. So, as I had mentioned, April was strong. The order book is consistent with our expectations as we see it through the second quarter. So, let's take a closer look at our sound.

Thanks.

Speaker Change: The next question will be if Byrne's the last question for today with Bank of America, please go ahead. [inaudible]

Yes, thank you. A couple days ago, the EPA. Thank you.

Speaker Change: Put out their PFAS action item list, and I'm really anxious to hear your view of it. It is quite detailed and quite a few action items.

Speaker Change: It seems to be a little bit of a different approach than the way they've taken on to cut lots of other environmental regs. But a couple of items from there that I wondered what your view is. They're proposing to develop some effluent guidelines which...

Speaker Change: You know, Laura, you had mentioned the potential of benefiting your water business from treatment for PFAS. Maybe excellent guidelines could. Thank you very much.

Speaker Change: Could assist in that, although they might cut or change drinking water standards, and the other one they've highlighted was the liability framework. Whether or not you think that could have an effect on some of the future litigation.

Speaker Change: Yeah, I mean, we continue to study it. I think, as I had mentioned, there's no change right now on the opportunity side within the water business to address the PFAS cleanup and remediation work. And, you know, I think on the liability side. [inaudible]

Speaker Change: We continue to make progress within the South Carolina MDL, which from our experience, our exposure is most concentrated. So we got the large one out of the way, like a year and a half ago with the water districts as Ed had mentioned. Thank you very much, and thank you very much for joining us today.

Speaker Change: The bell-weather case is on the personal injury front start in October , so we'll see how discussions go as you get closer to that date. And then we continue to manage our own kind of state-by-state exposure with the Attorney General. So we'll read through the documents, see if there's any changes to our...

Aren't you? [inaudible]

Speaker Change: And remember the commercial injury case is coming up our firefighting phone, which we never made it. So I think the parameters we had in the last big settlement would clearly apply here also. Thank you.

Speaker Change: And then, one quick follow-up, this 200 million of finished goods shipments from the U.S. to China. What products are those? What business is that? And how are you avoiding this 125 percent tariffs? And then, one quick follow-up, this 200 million of finished goods shipments from the U.S. to China.

Speaker Change: Yeah, so those are exports from the U.S. to our customers, and so the tariff would be on them with respect to payment. So, you know, obviously we're working to make sure that maybe all the exemptions that could mitigate that piece for them would be in place. Evenly, you know, that's what kind of evenly between electronics and industrial code that 200 million from an export perspective. Thank you.

Okay, thank you.

Mm-hmm.

Speaker Change: Question and answer session for today. I will now turn the call over back to Ed Barna for closing remarks.

Speaker Change: Thank you everyone for joining today. For your reference, a copy of our transcript that we posted on DuPont's website, this concludes our call.

Speaker Change: Ladies and gentlemen, Disco Closed to Conference, you may now disconnect. Thank you for your participation. Thank you very much.

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