Earnings Call: Q1 2021

May 4, 2021

Good morning, everyone. Thank you for joining us for DuPont's Q1 2021 earnings conference call. We're making this call available to investors and media via webcast. We have prepared slides to supplement our comments during this conference call. These slides are posted on the Investor Relations section of DuPont's website and through the link to our webcast. Joining me on the call today are Ed Drane, Chief Executive Officer and Lori Koch, our Chief Financial Officer. Please read the forward looking statement disclaimer contained in the slides. During our call, We will make forward looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risk And uncertainty, our actual performance and results may differ materially from our forward looking statements. Our 2020 Form 10 ks, as updated by our current and periodic reports include detailed discussion of principal risks and uncertainties, which may cause such differences. Unless otherwise specified, all historical Financial measures presented today exclude significant items. 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 posted to the Investor page on our website. I'll now turn the call over to Ed. Thanks, Leland. Good morning, everyone, and thank you for joining I will provide comments on the strong start that we had to 2021, including the advancement of a number of But first, let me acknowledge the tremendous dedication and determination of our teams around the world as we continue to manage the extraordinary circumstances of this pandemic. The The health and well-being of our people remains our top priority. The principles and protocols we've implemented globally and locally to help to protect our people and ensure business continuity As countries face multiple wishes of infection and lockdowns. As an innovation led company, we believe in science And we're encouraging all employees to get vaccinated. And where possible, we're working with public health authorities to facilitate access and distribution. Starting on Slide 2, I will note that one of our priorities for generating value It's consistent operating performance and financial results. This morning, we announced strong top and earnings results for the Q1, both above our expectations. Laurie will take you through the details in a moment, I'd like to highlight the 7% organic revenue growth that we reported, reflecting broad and strong demand In key markets such as semiconductors, smartphones, water, residential construction, This revenue growth along with continued cost discipline led to strong operating leverage and EBITDA margin expansion in the quarter. Our first quarter financial results reflect the agility of our teams To navigate through a challenging environment, all facing escalating raw material and logistics costs as well as global supply constraints of key raw materials, most notably in our M and M segment. With strong order trends continuing and confidence in our team's ability to navigate the supply chain challenges. We are raising our full year guidance for net sales, operating EBITDA 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 and Biosciences business with IFF, We've also unlocked significant value for DuPont and our shareholders. As part of the transaction, We received $7,300,000,000 in cash from IFS and retired slightly more than $197,000,000 coupon shares We're 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 $3,000,000,000 term loan and we will redeem $2,000,000,000 of our long term debt later this month. As a reminder, our next debt maturity will not be due until the 4th Quarter of 2023. In line with our balanced approach, we returned about $660,000,000 to shareholders during the Q1 through share repurchases and dividends. Under our existing share buyback program, We executed $500,000,000 in share repurchases during the Q1. As a reminder, we have about $500,000,000 of repurchase Under that program, which we intend to utilize by June 1 this year. Earlier this quarter, We also announced that our Board of Directors authorized a new $1,500,000,000 share buyback program, which expires on June 30, 2022. We plan to be opportunistic under the new program as we move throughout the year. With respect to dividends, we returned about $160,000,000 of cash to shareholders during the quarter. As we previously mentioned, going forward, we will target a payout ratio between 35% 45% And we intend to work with our Board to increase our dividend annually as we grow our earnings. In March, we announced a definitive agreement to acquire Laird Performance Materials for 2 point $3,000,000,000 When completed, the planned acquisition layer advances DuPont's strategy of growing as a global innovation leader and strengthens our leadership position in Advanced Electronic Materials. The layered business will complement our interconnect solutions business with Amy and I, and it will add critical capabilities and market leading offerings in thermal management and electromagnetic shielding, which are essential to emerging electronic applications. Our E and I team, along with our customers are excited for this opportunity. We recently received regulatory approval for the transaction in Germany and Brazil and cleared HSR in the U. S. Last month. As previously indicated, we expect the transaction will close in the Q3 of this year. Finally, we announced previously We have signed definitive agreements to sell our bio materials, clean technologies and supplement businesses. We anticipate receiving more than $900,000,000 in gross proceeds from those divestitures, And we expect those transactions to close in the second half of this year. Before turning it over to Lori to go through the details of the Q1, I'd like to take a moment to provide some context regarding what we saw during the quarter in our key end markets that we serve. Combined, the electronics and automotive markets account for nearly half of our revenues. Electronics continues to perform very well And auto is recovering nicely from its 2020 lows. Within electronics, Demand continues to be broad based as the ramp up of advanced technology nodes and a need for more memory Servers and data centers has accelerated. The server market, which is a large consumer semiconductor And circuit board chemistries continues to show strength and is expected to remain robust as Internet network traffic continues to grow. Furthermore, the deployment of 5 gs infrastructure by leading telecom companies Preparation for the next generation of ultra high speed data transmission should help sustain demand for premium smartphones, which is further enhanced by our favorable content play. With respect to the automotive end market, demand is well above the lows of 20 20, let's not get back to 2019 levels, which sold 22,900,000 vehicles produced in the 1st quarter and nearly 90,000,000 units for the year. The lack of stable supply of critical components, mainly semiconductors, Impact is the ability of the auto OEMs to produce more vehicles and rebuild inventories during the quarter. David, where we participate in the value chain within M and M, I think it's important to note that 1st quarter engineering polymers volumes were not materially affected by the chip shortages as our demand from the Tier 1, Tier 2 suppliers was not lessened as a result of the chip shortage. However, our ability to supply customers was affected by supply constraints of key raw materials, predominantly in our nylon and polyester product lines. This supply situation is gradually improving, but we anticipate several critical products will Continue to constrain our production through the end of the second quarter. We expect that annual loss sales as a result of our raw material constraints will be captured in the second half of the year. Additionally, we believe that the automotive market will remain strong for the balance of the year As 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. Hers' Q1 of 2019 demand for advanced water filtration and purification has Strengthened by solid growth in Asia Pacific, strength in residential and commercial water markets, as well as industrial and desalination segments, past fuel growth. For construction, North America Residential and Do It Yourself markets are up versus Q1 2019. And while demand within the commercial construction This segment has improved from the lows experienced in 2020. It is not back to 2019 levels. Lastly, demand within our industrial end markets versus 2019 levels is mixed. Within the electrical infrastructure and Tyvek protective garment markets, demand is at or above 2019 levels. However, demand in end markets such as aerospace and oil and gas is still below 2019 levels, That's improved since the lows of the second and third quarter of last year. Sequentially, our sales into aero And oil and gas were up over 40%. Our diversified portfolio of products and technologies will serve us as the Global economy continues to recover from the pandemic. We are continuing to invest in competitive levels in R and D and innovation to further solidify our strong market positions and maintain our position as the partner of choice for our customers in 2021 and beyond. With that, let me turn it over to Lori to walk through the details of our first quarter of financial performance. Thanks, Ed, and good morning, everyone. Let me cover our Q1 financial results on Slide 4. As Ed said earlier, I'd also like to acknowledge the commitment of our employees throughout the pandemic and our teams and navigating through supply chain and logistics headwinds this quarter to deliver solid results. Net sales was 4,000,000,000 were up 8% versus the Q1 of 2020, up 7% on an organic basis. Overall sales growth was driven by strong volumes, up 7% versus Q1 of last year, with volume increases in all three reporting segments. Currency provided a 3% tailwind in the quarter led by the euro. Portfolio was a 2% headwind, primarily due to the sale of the Tax Law Styling business last year. Sales were up in All three segments with E and I, M and M and W and P reflecting organic growth of 14%, 8% and 9%, respectively. On a regional basis, organic sales were up 20% in Asia Pacific, our largest region from a sales perspective, with strong results in all three reporting segment. Partially offsetting gains in Asia Pacific are organic sales declines in the U. S. And Canada and EMEA of 4% and 2%, respectively. The declines in U. S. And Canada and EMEA were driven by softness for Arabic fiber, specifically continued softness in aerospace Slide. From an earnings perspective, we delivered operating EBITDA of $1,050,000,000 and adjusted EPS of $0.91 per share, up 15% and 90%, respectively. Volume gains as well as benefit from prior year cost Initiatives and currency drove 160 basis points from operating EBITDA margin expansion and 1.9x operating Incremental margins for the quarter were 46%. I will walk you through the EPS monitor calls in a moment. For total company, gross margin for the quarter was 36.8%, flat on a year over year basis. Gross margin improvement In E and I and M and M, our higher volume and manufacturing productivity was offset by margin decline in W and P resulting from higher unit rates versus the prior year, driven primarily by lower production volumes of Arrowhead Fiber. Gross margin expanded about 2 180 basis points sequentially with margin improvement in all three segments. From a segment perspective, E and I delivered operating EBITDA margin of 33.5 percent and 4 20 basis points of margin expansion versus the year ago period, Since LV asset sales, operating EBITDA margin was up in 39.7 percent year over year improvement of 2 40 basis points. M and M delivered operating EBITDA margins of 22.9 percent and 320 basis points of margin increase versus the year ago period, higher volumes and savings from productivity actions. In W and P, Operating EBITDA was flat for a severe set by higher manufacturing costs, primarily higher unit rates driven by lower production of Arrow and Fibers and increased supply chain costs. For the quarter, cash flow from operating activities and free cash flow were $378,000,000 95,000,000 respectively. These amounts include 1 month of cash flow from our N and P business compared to 3 months of N and P cash flow in the prior year. In addition, cash flow and free cash flow conversion was negatively impacted by working capital headwind of about 300,000,000 led by higher accounts receivable balances, which were up in line with sales. For the year, we continue to and free cash flow conversion of greater than 90%. Slide 5 provides more detail on the year over year changes in net sales, Leading the way for the quarter was D and I with 50 8% volume growth, which had a record quarter. Volume gains were led by double digit growth on robust In addition, share gains from recent wins were CMP slurry and the copper hay material improved results. In interconnect solutions, double digit growth was driven by higher material content in premium next generation Partially resulting from timing shifts as select OEM demand shifted earlier in the year this year, along with broader printed circuit with Board Market Recovery. Within Industrial Solutions, double digit volume gains and display material due to new target launches more than offset continued weakness in aerospace. The end markets within W and P were generally consistent with our expectations. Sales gains were led by water solutions with double digit volume growth, reflecting strong demand for our reverse osmosis and ultrafiltration technology led by Jack. Shelter Solutions had low single digit organic growth versus the year ago period, reflecting high single organic growth in residential construction and retail channel for Do It Yourself applications, offset partially by profits in the commercial construction market. Within safety solutions, currency gains, favorable currency and strengthening demand for air and fibers in industrial and automotive end markets was more than offset by continued weakness in Air and Space and year over year volume declines for Tyvek. Lower Tyvek production volumes for a result of higher planned downtime in the quarter. We are also contributing to strong first quarter top line growth with continued recovery of the global automotive market, which represents about 60% of our M and M segment from an end market perspective. The most recent estimate of 1Q global auto builds were about 20,300,000 units 14% versus the Q1 of last year. As a result, volume in our performance resins business was up over 20% versus the year ago period. Another bright spot in M and M was improved demand for microcircuit materials, which we aligned to the M and M segment earlier These specialized materials, along with adhesive growth, helped drive over 20% organic growth in Advanced Solutions versus the year ago period. Demand in our engineering columnar business was strong. However, global supply constraints for key raw material and suppliers to help mitigate the impact incurred as a result. Additionally, we expect to recover volume loss in the quarter Due to these disruptions and raw material constraints are indicated. Turning to Slide 6, I mentioned that adjusted The EPS for the quarter of $0.91 was up 90% versus the prior year. The largest driver of our year over year growth was a significantly lower share count, mainly resulting from the N and B Exchange offer. The lower share count provided a $0.16 benefit versus versus the prior year. Excluding the lower share count, adjusted EPS growth was still significant, up 56% versus the prior year. Higher segment earnings provided a $0.13 tailwind in the quarter versus the prior year, along with benefits issued with a lower base tax rate and reduced Our base tax rate for the quarter of 19.4% was lower than forecasted as a result of a Q3 tax in the quarter. Our tax rate in the quarter was significantly lower than last year, resulting from the absence of certain discrete tax headwinds occurred in the prior year. For the full year 2021, we now expect our base tax rate to be in the range of 21% to 22%, That's slightly from the 21% to 23% that we previously estimated at the beginning of the year. Turning to Slide 7. I will provide some commentary on our balance sheet and cash position. I mentioned earlier that net working capital provided Headwinds to free cash flow in the quarter. However, I would like to point out the net working capital productivity gains of about 600,000,000 that we have made the Q1 of last year, decreasing net working capital from about $3,500,000,000 at March of 2020 to 2.9 We have stated that we are committed to maintaining our current strong investment grade credit profile. We started the year with $2,600,000,000 in gross debt. And as Ed mentioned, we paid down our $3,000,000,000 term loan in February, and we will pay down 2,000,000,000 Moving on to cash. Our cash generated from operations last year put us And a strong cash position coming into this year, and that balance grew with a $7,300,000,000 special cash payment from the transaction with ISM. In addition, we expect to receive over $900,000,000 in gross proceeds a year from the previously announced sale of the non core business. Our current deployment plan for 2021 includes a balanced capital allocation approach. Along with our plan for internal investment We plan to grow through targeted M and A in areas of secular growth and will fund the $2,300,000,000 We completed $500,000,000 of share repurchase in the Q1 at an average price of about $73 And we'll remain opportunistic with our remaining share repurchase authorization throughout the rest of the year. On a go forward basis, Our target of 2018 cash balance is about $1,500,000 From a numbers perspective, our net debt to EBITDA target remains at 2.7 Bye, John. With 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 On Slide 8, which includes our view of the Q2 and full year 2021. We are raising our full year guidance We now expect net sales for the year to be about $15,800,000,000 which reflects year over year growth 10%, up from our previous estimate of 8% growth. We expect to improve leverage And now expect operating EBITDA for the year to be about $4,030,000,000 at the midpoint of the range provided, A year over year increase of 17%. These revised estimates reflect our solid start to the year and confidence in our team's ability to continue to navigate global supply lease challenges. We are also raising our adjusted EPS range for the full year by $0.30 per share and now expect adjusted EPS of 3 point The repurchases we are completing under existing programs and the narrowing above our estimated tax ranges of what you mentioned earlier are contributing to the For the Q2 2021, we expect net sales to be about 3.975 And we expect operating EBITDA to be about $1,000,000,000 both at the midpoints of the The range is provided and both well above the results of the Q2 of 2019. At the midpoint of the range provided, we expect adjusted EPS for the Q2 of 2020 of $0.94 per share, which now reflects the full reduction in shares resulting from the NME exchange royalty Thank you, Ed. Before we move to the Q and A portion of our call, I would like to remind you that our forward looking statements apply to both our prepared remarks here and the following Q and A We will allow for one question and one follow-up question for a person. Operator, please provide the Q and A instructions. Thank you. The first response is from Steve Tusa with JPMorgan. Please go ahead. Hey guys, good morning. Hey, good morning. Thank you. Can you just maybe talk about the sequential kind of dynamics in your business into the Q2 and second half? I mean, on the one And you guys are having some supply constraints, which I guess has hurt volumes a bit. But then on the other hand, I'm sure that There's some kind of urgency around ordering in maybe the electronics side, seen some pretty big book to bills at guys like Tycho electronics that are suggest that customers may be stocking up and kind of double ordering perhaps what they can. Everybody is kind of scrambling to get supply, I guess. It muddles the sequential. 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? Yes, I'll start and maybe Laurie wants to jump in. By the way, and I don't think our normal cyclicality plays out this year because of what you just described, very different dynamics Sure. I'd say one of the biggest issues is really the inflation cost on raw materials here and then The pricing actions that we can take, so that's a pretty big dynamic for all of us that you see reporting here. But by the way, the Q1, The cost deflation was very little. It was about $20,000,000 We expect in the second quarter that to about $90,000,000 and we expect the full year impact on raw material inflation to be about 300 $1,000,000,000 So it kind of goes up to kind of $90,000,000 to $100,000,000 in the second quarter holds there for the year, which gets you kind of the 300,000,000 So we've been in a constructive price market, Steve. We think we'll catch most of the 2nd quarter inflation, but maybe not all of We have some contracts that are 30, 60 days, but we're very confident that we'll be able to cover the walls. As you know, as you look at the year in total, We'll be able to make that up. So we're expecting total DuPont for our pricing to be up low single digits for the year, but clearly more so in the M and And the vision where a lot of the raw inflation is, no price increase in electronics, simply because you don't get it there. You get a new Product introductions that you have made and some price increase in water and protections within water and the safety Specifically. So I'd say that's the big dynamic there. And then from a kind of a revenue standpoint, I'd say the other big dynamic is because of the raw material constraints that we're seeing. When we did the Q4 call, Laurie and I talked about a $60,000,000 to $80,000,000 miss in sales that we were expecting in the quarter. Then you had The freeze down in Texas, so we think it's we missed out about $100,000,000 of sales in the quarter, which is $20,000,000 to $25,000,000 of EBITDA. We expect another $100,000,000 in the second quarter, dollars 100,000,000 to $120,000,000 of missed revenue. But like you're hearing from all the others, We're not going to lose the business. We will make it up as we speak. The 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 of sequentially and then going into the second half of the year. Maloy end markets, Steve, played out the way we thought they would. The ones we thought would be hot were hot. The ones we thought we saw, like commercial construction, residential, oil and gas are all lifting nicely Lay off the lows of last year, but not back to 'nineteen levels. So we expect that to continue through the year also. Okay, great. Thanks a lot for the color. I appreciate it. Thanks. Thank you. Your next response is from John Inch of Gordon Haskett. Please go ahead. Good morning, everybody. Good morning, John. Good morning. I would like to just pick up on that theme. So Ed, when you're saying you missed $100,000,000 of sales in the Q1 roughly $100,000,000 to $120,000,000 expected in 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 you're going to see that in terms of sequential growth I'm sorry, in terms of the year over year growth dynamic. And doesn't that create a bit of a tough compare or is that not the way to think about it? Yes. First of all, I'm not sure this will resolve itself in the year either. You've heard quite a few suppliers talk about This is Collin. Potentially into next year, depending on what it is. So inventory levels in the auto chain are Very, very low in the supply chain itself. Finished goods are low. You still got the semiconductor issue that's going to mute things, which I've heard most People think you're going into 2022. So I think you got that dynamic going on here. So I wouldn't gauge you all just throwing it into the second half of the year Carol? Yes. I think the guidance that we provided essentially assumes a similar quarter for revenue like we saw in 1Q. So pushing $4,000,000,000 between around the $3,900,000,000 $3,400,000,000 range in the second quarter. And then if you look at the full year Outlook, you can back into a similar number in the back half of the year. So whatever upside we may see from the M and M portfolio getting back that lost volume The first half, there still does tend to be a little bit of seasonality in our results that would offset that. So land in a flat number dollar wise from a revenue perspective. Okay. So no, that makes sense. And then just as a follow-up, How big can you remind us how big is DuPont in India? And I mean India is obviously in the news as COVID sweeps that country. I'm just wondering, hi, that Hey, Darman, so they have much of a presence there and didn't really seem to hurt your Asia Pac numbers this quarter. Does it create for a little bit of a headwind in future quarters? No, it's India is not a big impact at all right now. One of the biggest upsides for us though is India and the water business. That is a real key market for us, but it's not that big in the scheme of things yet. So no, it didn't have any significant impact Boris? Hey, Jason. If we add N and B in the portfolio, it would have been bigger, but that was really where our your presence as well as in our portfolio. Yes, makes sense. Thanks very much. Thanks, John. Thank you. Your next Response is from Scott Davis of Melius Research. Please go ahead. Hi. Good morning, Ed and Laurie and Leland. Good morning, John. I wanted to follow-up a little bit on comments that Steve made just about supply chain And John as well. But are you seeing kind of any unusual purchasing patterns by your customers that Your customers double ordering or any kind of unusual inventory build? We don't think much. I mean, we sized a couple of customers we know that are building inventory. It's some in Asia We think preorder, but it was like $30,000,000 to $40,000,000 of business. We're not Seeing that people just can't get their hands on enough right now. I mean there's so many force majeures out there across the supply chain, By the way, again, mostly in the auto business I'm talking about, that I don't see inventory build in The channel and historically finished goods and autos is very low right now globally. So we don't see a lot of that. Are people trying to double order? I think there's some of that going on, but everyone's getting allocated product At this point in time, so it's not like they're able to build an inventory base. I'll use DuPont as an example. Our Inventory went up about $100,000,000 and it's mostly in our M and M business, and we couldn't get enough of the other rolls to get the product out the door. So We didn't plan on we're not double ordering. We just couldn't get it out the door to have a finished good. So again, in the scheme of our numbers, that's not a I'm sure there's a decent amount of that going on, but I wouldn't call it double lowering the stockpile. Okay. Good. Helpful. And then just a different cleanup here is just what was the average price And over the asset sales that you have, just any valuation metric that we can think about? You mean for the non core business that we're divesting? Yes, for the non core stuff. Yes. We had mentioned somewhere in the range of Yes. We had mentioned somewhere in the range of a 6 to 8 times EBITDA month in the AlarmNet business. Okay. Okay. Helpful. Thank you. Good luck, guys. Thanks, guys. Thank you. Your next response is from Jeff Sprague Vertical Research Partners. Please go ahead. Thank you. Good morning, everyone. 2 from me, one just on this theme a little bit one more item for me anyhow. On interconnect, Laurie, that sounded like maybe it wasn't Full forward, but demand was the demand pattern was different than what you would typically see. Could you just elaborate on kind of what you said and meant there as Sure. I think you said it correctly. So we did see a little bit of acceleration from an order Perspectives in the Q1, probably the first half versus what we normally see from some of the pharma providers. So from a Size perspective, it's probably about a $10,000,000 benefit for the quarter. They're not hugely material to DuPont, there's not material to the interconnect solutions Thanks, Mitch. If you look at the full year, we've got interconnect solutions we expect to be up kind of in the mid single digit, So it will normalize as the year goes on. Carbonite is due to a very strong comp from last year. So if you recall in the Q4 of last year, we put to a very strong soft and inter And then Secondly, Ed, just on the M and A front, you were able to acquire Laerdegr at what looked like a pretty decent price. And I just I've noticed there's been a few deals going on kind of in some of the spaces I travel that The valuations actually, all things considered, are not off the charts. So I just wonder If you're seeing that kind of what your confidence level on being able to do bolt ons here at a reasonable valuation as we progress through the year. Yes. So Jeff, we're looking at a couple of bolt ons. One of them is exactly what we described the last couple of quarters In the water space, I think what we're looking at is very similar to layered where With synergies, I had high confidence in Byway cost synergies. We get it at a multiple It makes sense for DuPont or by the way, we just won't buy it. We just don't know that final answer yet. So yes, I think there's some of those opportunities It's out there to do that in some of the spaces we really like. There's going to be some great secular growth areas for us in the future. But I'm not talking huge things at this point in time. As I always say, we'll always look at transformative moves if it makes sense for the company. These are truly a couple of loans in the 100 of 1,000,000, not billions that we're looking at. But similar dynamic, I would say, to Laird. So maybe to your question, yes, those opportunities are there for us. Great. Thanks for the color. Thanks, sir. Thank you. Your next response is from David Begleiter with Deutsche Bank. Please go ahead. Thank you. Good morning. Hi, David. Can you Talk a little more about Tyvek. You mentioned the shift back to the more traditional industrial business going forward, I guess, versus some tough comps versus Are you going protective? Yes. I think what we had mentioned about Tyvek in the quarter was Garment volume, as it wanes, we will just pick volume back up in some of the more medical or industrial end markets. So from a demand perspective, there's not a Headwind overall. The headwind that we saw in the quarter was more so around production capabilities. And so we have pushed some of our planned maintenance Activity that was planned for 2020 into 2021 just given the COVID response that was needed in last year. And so that tamped And the volume that we were able to produce and then sell in Q1. If I were to size it, I would probably size it around $1,000,000 in the headwinds in general for Tyvek. And back on the comment on the garment demand potentially making being picked up by other end markets, it's a similar margin profile. So there's no headwind there or half expected. And we're sold out on those assets. So as we move things around, it's not like we're picking up extra volume right now. We'll get Same margin impact, and that's why our biggest CapEx program is a new line gate over in Europe that will come on in 2023 is our single biggest comp base program and we're flat out. Got it. And Laura, just on working capital for the full year, where do you think you'll end up when it is all done? Yes. I expect to drive improvement from where we were The Q1 and that also translates to improvement in free cash flow conversion. So we'll continue to target greater than 90% of the year, which implies a significant improvement from where we were In Q1. So Q1 was really a function of the higher sales, so we were up about 8% sales that translated to about 7% increase in AR. And as I had mentioned, And we were opportunistic and buying lots and we could get them for sure the inventory increase. So I would expect on a full year As I see it right now, for working capital to be a use, just given the top line growth that we're expecting, probably more so in the $200,000,000 range, So improvement coming out of Q1. But I think more importantly, the measure that we pay attention to is net working capital term. So we saw significant improvement last year to the June of ending the year at about 5.2 turns. Thank you. Your next response is from Steve Byrne, Bank of America. Please go ahead. Yes. Thank you. This water solution Business of year seems to be increasingly a growth engine for you. Can you split that growth between On the municipalities that are using your technology to purify drinking water versus Industrial applications and on the industrial side, do you see any Opportunity down the road, not so much on the purification side, but on the filtrate side, such as Trying to extract particular materials like lithium. Yes. I think the growth, a lot of it is coming from the desalination side. Also, we have a largely growing small today, but it's growing nicely Opportunity within the residential space. And so we've now got the leading technologies from all three applications between reverse osmosis, ion exchange and altered filtration in our acquisition. So we feel comfortable and as I had mentioned, continue Look at opportunities for us to expand our presence there. So I think filtration continues to be a large opportunity for us as well. So as you had You mentioned whether it's lithium or other types of filtration being focused on you to be a big player in that space. Yes. I mean with all of us with Our ESG goals out there in the industrial world, I mean, the secular growth opportunity here looks like it's going to be pretty awesome for the next couple of So I think we all have metrics we're trying to hit on clean water and we all have these facilities around the world. So it should be a really nice opportunity. And, Liat, one of the reasons we would like to grow this business organically and inorganically. And I think another opportunity in addition to ESG is the potential underneath the infrastructure I am entitled targeted investments in the water filtration and water purification space. And just to follow-up on this Laird acquisition and as you mentioned some cost synergies, But do you how would you compare that opportunity versus your ability to maybe cross sell since that There'll be a drop in and it's in different technologies and chemistries that you don't seem to have. So is it a cross selling opportunity And or maybe an expansion of some of their technologies into new end markets, do you see any opportunities to do that as well? It's definitely look, we bought and closed as a cross sell. I mean, when you get right down the way it broadens out the portfolio very significantly in a couple of key technology that are needed as there's more advanced technologies coming here, especially thermal management being a key one. So The call is so you're decent with Laurie and I are just going to go get it real quickly just to get it out of the way. But we wanted for the growth opportunity and the cross sell opportunity to Able to bring more solutions to our customers. Remember, in that business, we have a lot of application engineers that are resolving customer issues. And with shrinkage in size of all these Some of these technologies become more and more important. And so that's the reason we bought it strategically. We think it's a great fit. It's where the industry is headed. And it's for really the growth reason in that business, but we'll get the cost synergies. So we bought it at a nice number from a multiple standpoint. Thank you. Thank you. Your next response is from John Roberts of UBS. Please go ahead. Thank you. Ed, my understanding is ISS is recommended against you going on to the IFF Board. Are there any remaining connections between DuPont and IFF that would create a conflict? Or is that just a position they have against previous management being on the Board of a You own it. Yes. So usually, John, it's an issue of CEO Sitting on 2 boards, external boards, but I think in general, and they have also happened to the issue you just raised. Mike, in general, our investors understand why I'm doing it. I don't need to do other things in my life, but I think they And it's very important to me and to DuPont that this goes well. We get off. I mean, more than half the company is what we put into Which is what we put into IFM. So it's extremely important to our shareholder base. So I think it's morally the right thing to do. But under the definition by I am an independent director. There's absolutely no doubt about that. And it's very similar to I went on the Corteva Board The help in the transition there, I don't see this as any different than I think it's the right thing to do. Okay. Thank you. Thanks. Thank you. Your next response is from Mike Sison, Wells Fargo. Hey, good morning. Nice start to the year. Just wanted to get a little better feel for the second half. EBITDA does it Looks like it's going to go high single digits. And just curious, do you expect demand to Improve in the second half as the pandemic sort of subsides hopefully? And is the lower growth rate More maybe raw materials and other issues. And then longer term, what do you think the EBITDA growth potential For the new DuPont is? Yes. I think the potential lower growing rate in the second half is really just a And Harrison, so obviously, the second half second quarter is going to be the largest year growth driver for us, just That was the weak point of last year and then we improved as the year went on. So, I don't see a material change in the actual EBITDA number kind of similar to the revenue conversation we had earlier. So I think a similar environment. As I mentioned earlier from an end Market perspective, we're generally back and even above 2019 in those cases. There's a full year guidance that we have out there As our revenue was 6% versus 2019, and the guide that we put, I think, was EBITDA kind of low teens. And so we're generally back, and then some in the markets that are weak are really just a handful and they're more around the aerospace, which is up off the bottom, but still off of 2019 and commercial construction, which in the aggregate don't make up the material portion of our portfolio. Got it. Thank you. Thank you. Your next response is Hey, good morning. Thanks for taking my question. I'm just curious, now that the portfolio, you've gone through health and nutrition, the separation there Sure. We've made some acquisitions here to both of E and I separated into new segments as well as water. What else are you guys thinking of as far as Continued kind of portfolio management, also the non core is mostly out. Is the business kind of operating at A level that you're comfortable with, I know 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 Moving forward for the new DuPont. Thanks. Yes, sir. Look, I would say short term here, we're very focused operationally running the company. But remember, We just closed the N and P transaction 2 months ago, it seems like forever, and there's a lot of heavy lift there. We still have To finish cars and do the 3 non core businesses, which will get out after midyear Out of the portfolio and that will bring in $900,000,000 of proceeds. So we still have a heavy lift going on there. And then remember, at the same time, we're going to Started the integration of the Laird business into the portfolio. So we got a lot of that In addition to looking at a couple of targeted M and A opportunities, as I had mentioned. So but I That's a lot going on portfolio wise still this year and with all of the issues we talked about, managing raw material inputs and Pricing for all that in kind of a crazy but fun year. We've got our hands full. So I would say portfolio kind of getting to kind of where we want it. Again, we would Never take off the table looking at some transformative things, but generally cleaning up the non core, getting layered in and operationally really just knows to the grindstone here. Great. Thanks a lot. Thanks, Rich. Thank you. Your next response is from Alex Yaczoriel with KeyBanc. Please go ahead. Thank you. Good morning, everyone. Good morning. Could you elaborate on share gains in the C and P, Larry? Did you introduce new products there? And do you expect Additional share gains in this product or maybe anywhere else in semiconductors in coming quarters? Yes, it really comes from the new products we had mentioned within EMT, slurry, lithography, Also within company advanced packaging space. So if you look at our revenue performance within Technic Investor Technology versus for the market That we were up about 18% in total. We estimate MSI, which is the market indicator that we look at, which is dramatically first produced, It was probably up about 9% in the quarter. We think we got about 4% or so just from where we play. So Some of the spaces within the semiconductor space grew higher than the market average, and then the remaining 4% would have been from that share gain perspective. Thank you. At this time, there are no further questions in the queue. Thank you. Thank you, everyone, for joining our call. For your reference, A copy of our transfer will be posted on the DuPont website. This concludes our call. This concludes today's conference call. Thank you for participating. You may now disconnect.