Dupont De Nemours Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Davis - Melius Research - Analyst : Congrats on the quarter. Hey, and I wanted to come back to your comments on the -- it looks like the bid ask on the 18 to 24 months has narrowed down a bit. But what are the work -- you put the work streams on slide 4, six of them. But, like, what are the gating factors? Kind of why do you feel a little bit more comfortable today, perhaps, than three months ago in that timeframe getting short?

Question: Scott Davis - Melius Research - Analyst : Okay. Fair enough. And guys, the electronics business, the prebuy that you've talked about that the last two quarters, what -- why is there -- I guess, maybe I can get to back up a little bit -- why is there a prebuy? Are they concerned about not having enough or you not being able to supply enough product on time? Why do they want to build inventory, I guess (multiple speakers) --? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:00PM, DD.N - Q3 2024 Dupont De Nemours Inc Earnings Call

Question: Scott Davis - Melius Research - Analyst : That's what happens when you're not a tech analyst. I had no idea. Thank you.

Question: Steve Tusa - JPMorgan - Analyst : Hi, guys. Good morning. Sorry about that.

Question: Steve Tusa - JPMorgan - Analyst : Just a lot going on today, I guess. Can you just talk about the trends you saw in exiting September and October, just for broadly the various businesses in the portfolio? Anything move around materially?

Question: Steve Tusa - JPMorgan - Analyst : Okay. And then in the W&P margins, anything unusual there? Really strong margins in the quarter? And anything going on there? Any raw material relief or maybe price cost, something like that?

Question: Steve Tusa - JPMorgan - Analyst : So that should be able to leverage nicely as volumes come back, I would assume.

Question: Steve Tusa - JPMorgan - Analyst : Okay. Great. Thanks a lot.

Question: Chris Parkinson - Wolfe Research - Analyst : Great. Good morning. Just want to dig in a little bit more into the semi tech side of it. I mean, clearly, you have some benefits from some of the Chinese subs. But can you just dig in a little bit more by product substrate in terms of the pad slurries? It just seems like there's a bit of a bifurcation between some of the product categories versus others based on what evolving in the marketplace. So any color there would be particularly helpful. Thank you.

Question: Chris Parkinson - Wolfe Research - Analyst : That's helpful. And just as a follow-up on the W&P side, you've got some things going pretty well. But it still seems like the macro is overall a little bit sluggish. So just digging to the water side of it, can you hit on kind of the drivers of the ultrafiltration strength? It seems like China is kind of beginning to turn the corner. Just how we should ultimately be thinking about that? Is this now back to normalization as we kind of get into 2025? Or are there any other considerations we should be looking at? Thank you.

Question: Chris Parkinson - Wolfe Research - Analyst : Very helpful. Thank you.

Question: Vincent Andrews - Morgan Stanley & Co. LLC - Analyst : Thank you, and good morning, everybody. Maybe just one more item of something that needs to turn the corner a little bit. The Kalrez destocking, are you sort of at the bottom of that? And should we start to see that inflect?

Question: Vincent Andrews - Morgan Stanley & Co. LLC - Analyst : And then I'd be curious to get your thoughts on interest rates. I think we've all been sort of poised and waiting for these cuts, and they're kind of starting to happen. But the curve is not sort of behaving the way, I think, we all thought it would in that the back end has kind of stayed high and the front end has come down. So maybe you could just talk about, if rates do get cut, which parts of your businesses will benefit the most from the front end coming down versus which parts really need the back end to come down?

Question: Josh Spector - UBS Securities LLC - Analyst : Yeah. Hi, good morning. I wanted to ask on, not necessarily the spin timeline per se. But really, are there alternatives still being explored for any of the businesses, water or electronic, outside of the spins, be it the sale or RMT? And just, if you are, how do you think about maybe achieving something there versus the spin timeline? What would be more important to you?

Question: Josh Spector - UBS Securities LLC - Analyst : Okay. Clear enough. And on the core business, I wanted to ask about -- you had some comments about increased investments, increased variable comp. Obviously, some of that makes sense given the better operating performance. But I was wondering if we think about the level of investment taking place now, is that fully back to normal in that if we look at growth, the incrementals become higher as we look forward? Or are you still investing at a lower level given demand remains tepid? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:00PM, DD.N - Q3 2024 Dupont De Nemours Inc Earnings Call

Question: Josh Spector - UBS Securities LLC - Analyst : Okay. Thanks, [team].

Question: John Roberts - Mizuho Securities USA - Analyst : Thank you. Is China about 50% of the electronic sales? And how much of that would be made in China for China as opposed to imported into China and might have some risk from some trade retaliation by China?

Question: John Roberts - Mizuho Securities USA - Analyst : Okay. And then how is advanced mobility looking with the slowdown in both EVs and ICE vehicles outside of China?

Question: John Roberts - Mizuho Securities USA - Analyst : Great. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:00PM, DD.N - Q3 2024 Dupont De Nemours Inc Earnings Call

Question: Aleksey Yefremov - KeyBanc Capital Markets Inc. - Analyst : Thanks. Good morning. Interconnect, could you discuss two things, the share gains that you cite and then the AI-driven ramps? What products are you seeing ramping in AI? What kind of applications?

Question: Aleksey Yefremov - KeyBanc Capital Markets Inc. - Analyst : Thanks a lot.

Question: David Begleiter - Deutsche Bank - Analyst : Thank you. Good morning. Lori, E&I margins were above 30% in the quarter. Is that level sustainable for the entirety of 2025?

Question: David Begleiter - Deutsche Bank - Analyst : Very good. And just in safety solutions, what's driving the decrease in pricing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:00PM, DD.N - Q3 2024 Dupont De Nemours Inc Earnings Call

Question: David Begleiter - Deutsche Bank - Analyst : Thank you.

Question: Frank Mitsch - Fermium Research - Analyst : Hey, good morning and nice results. I want to stay on the pricing area. In E&I, price was down 1%. Volumes were very impressive, but price was down 1%. You have to go back to the second quarter of last year when you saw price flat. Since then, it's been ticking down. Can you expand upon what's driving the lower price and what your outlook is there?

Question: Frank Mitsch - Fermium Research - Analyst : Got you. So as you're pricing new products, you're giving discounts to the customers?

Question: Frank Mitsch - Fermium Research - Analyst : All right. Understood. Thank you. And just on the restructuring benefits, I believe the last time you mentioned it was going to be about $115 million benefit in 2024. Is that still a good number, and any initial thoughts on 2025?

Question: Frank Mitsch - Fermium Research - Analyst : Thank you.

Question: Mike Sison - Wells Fargo Securities, LLC- - Analyst : Hey, good morning. Nice quarter and outlook. Ed, a lot of the chemical companies thus far have kind of painted an exciting picture for the first half of '25 and maybe '25 in total. As you've noted, your end markets are different. So I know it's a little bit early to get specific outlook for 2025. But could you sort of give us your thoughts on how maybe semiconductors, electronics, and some of the water and industrial businesses shape up for next year?

Question: Mike Sison - Wells Fargo Securities, LLC- - Analyst : Great. Thank you.

Question: Patrick Cunningham - Citi Investment Research - Analyst : Hi, good morning. Are you still anticipating price givebacks in shelter in 4Q and maybe into 2025? And what was the dynamic between positive growth in commercial construction versus resi? And any sort of early view on a broad-based resi recovery into the next year?

Question: Patrick Cunningham - Citi Investment Research - Analyst : Understood. Very helpful. And then just on consolidated W&P, I mean, it seems you have easier comps on water, medical packaging. Is most of that sequential EBITDA decline come from more typical seasonality on shelter and safety? And if you could remind us what was the $25 million discrete impact from last year, and that won't repeat this year, just for clarification.

Question: Patrick Cunningham - Citi Investment Research - Analyst : Great. Thank you.

Question: Bhavesh Lodaya - BMO Capital Markets - Analyst : Hi, good morning. This is Bhavesh Lodaya for John. Can you talk about some of the competitive dynamics around your electronic peers in China? China is bringing in a lot of new fabs, as you mentioned. But they also invest in kind of like a homegrown domestic supply chain. You mentioned gaining some market share. I'm not sure if that was in China as well. But overall, how do you see this landscape developing over the next few years?

Question: Bhavesh Lodaya - BMO Capital Markets - Analyst : Thank you.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Hi, greetings. Thanks for taking my question. Just wanted to go back to maybe some initial thoughts on '25. So this year, you showed -- it looks like you're showing pretty good mid-teens EBITDA growth in E&I, although you have been -- that's been offset slightly by some of that water destocking and headwinds. As you look into next year, maybe if you adjust for the prebuy that you saw in E&I, would that kind of decrease maybe to like a high single-digit rate and then -- but maybe you could see some recovery in W&P, and so overall, you still expect maybe mid- to high single-digit EBITDA growth for next year?

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Okay. I understand. And just on that note then, assuming that you do see some continued margin growth, how should we think about free cash flow and maybe how you deploy that? Are there any significant extra CapEx projects in the pipeline, or will you likely be using most of your cash for standing up the businesses? Or could you potentially deploy more and return more to shareholders? Thanks.

Question: Arun Viswanathan - RBC Capital Markets - Analyst : Great. Thanks.

Question: Mike Leithead - Barclays Capital Inc. - Analyst : Great. Thanks. Good morning, team. I think DuPont filed an ITC complaint last month around a legal Tyvek imports, I guess. First, is the issue you're seeing somebody else claiming and naming something to be Tyvek and it's not? Or did it name something else and the issue is they're using DuPont's proprietary technology? And then just more broadly, how is the Tyvek business performing today?

Question: Mike Leithead - Barclays Capital Inc. - Analyst : Great. Thank you.

Question: Steve Byrne - BofA Global Research - Analyst : Yes. I'd like to ask another one about that ITC complaint. When did you start to see these competing versions of Tyvek coming into the states? And is this across your broad platform? Is this Tyvek house rep? Is this packaging? Is this PPE? Is it all of them, and you're seeing this competing version? When did this happen? And just curious on the timing of this.

Question: Steve Byrne - BofA Global Research - Analyst : And then maybe just one more across New DuPont, any new products in development that you could be enrolling, that could drive growth in New DuPont other than just the recovery in end markets? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 05, 2024 / 1:00PM, DD.N - Q3 2024 Dupont De Nemours Inc Earnings Call

Question: Steve Byrne - BofA Global Research - Analyst : Thank you.