DuPont de Nemours Inc (DD) — Q1 2021 Earnings Call Transcript

Thanks, Leland. Good morning, everyone, and thank you for joining us. I will provide comments on the strong start that we had to 2021, including the advancement of a number of strategic priorities to make DuPont a premier multi-industrial company, equipped for growth and value creation. 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 health and well-being of our people remains our top priority. The principles and protocols we've implemented globally and locally to help protect our people and ensure business continuity as countries face multiple waves 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 is consistent operating performance and financial results. This morning, we announced strong top line and earnings results for the first quarter, both above our expectations. Lori will take you through the details in a moment. But 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, and automotive. 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 while facing escalating raw material and logistics costs as well as global supply constraints of key raw materials, most notably in our M&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 advanced a number of our strategic priorities during the quarter. First, as previously announced, we completed the merger of our Nutrition & Biosciences business with IFF, creating an industry-leading company in the food and beverage, home and personal care, and health and wellness markets. As you know, this transaction also unlocks significant value for DuPont and our shareholders. As part of the transaction, we received $7.3 billion cash from IFF and retired slightly more than 197 million coupon shares, or about 27% of our outstanding shares at the time with no cash outlay. We strengthened our balance sheet during the quarter by paying down our $3 billion term loan, and we will redeem $2 billion of our long-term debt later this month. As a reminder, our next debt maturity will not be due until the fourth quarter of 2023. In line with our balanced approach, we returned about $660 million of capital to shareholders during the first quarter through share repurchases and dividends. Under our existing share buyback program, we executed $500 million in share repurchases during the first quarter. As a reminder, we have about $500 million of repurchase authorization remaining under that program, which we intend to utilize by June 1 of this year. Earlier this quarter, we also announced that our Board of Directors authorized a new $1.5 billion 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 million in cash to shareholders during the quarter. As we previously mentioned, going forward, we will target a payout ratio between 35% and 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 $2.3 billion. When completed, a planned acquisition of Laird advances DuPont's strategy of growing as a global innovation leader and strengthens our leadership position in advanced electronic materials. The Laird business will complement our Interconnect Solutions business within E&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&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 third quarter of this year. Finally, we announced previously that we have signed definitive agreements to sell our Biomaterials, Clean Technologies, and Solamet businesses. We anticipate receiving more than $900 million 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 first quarter, 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 to servers and data centers has accelerated. The server market, which is a large consumer of semiconductor chips 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 5G infrastructure by leading telecom companies in 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 2020 but not yet back to 2019 levels, which sold 22.9 million vehicles produced in the first quarter and nearly 90 million units for the year. The lack of stable supply of critical components, mainly semiconductors, impacted the ability of the auto OEMs to produce more vehicles and rebuild inventories during the quarter. Even where we participate in the value chain within M&M, I think it's important to note that our first quarter Engineering Polymers volumes were not materially affected by the chip shortages as our demand from the Tier 1 and 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 while we anticipate several critical products will continue to constrain our production through the end of the second quarter. We expect that annual sales as a result of 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. Versus the first quarter of 2019, demand for advanced water filtration and purification has strengthened, driven by solid growth in Asia Pacific. Strength in residential and commercial water markets as well as industrial and desalination segments has shown growth. For construction, North America residential and do-it-yourself markets are up versus the first quarter of 2019. And while demand within the commercial construction 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, but it's improved since the lows of the second and third quarter of last year. Sequentially, our sales in the 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 at competitive levels in R&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 financial performance.

Thanks, Ed, and good morning, everyone. Let me cover our first quarter 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 team in navigating through supply chain and logistics headwinds this quarter to deliver the following results. Net sales of $4 billion were up 8% versus the first quarter of 2020, up 7% on an organic basis. Overall sales growth was driven by strong volume, up 7% versus first quarter 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 trichlorosilane business last year. Sales were up in all three segments, with E&I, M&M, and W&P reflecting organic growth of 14%, 8%, and 1%, 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 segments. Partially offsetting gains in Asia Pacific were 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 aramid fibers, specifically continued softness in aerospace and timing delays in defense as well as auto builds, which were down in these regions. I'll provide more color on our segment top line results on the next slide. From an earnings perspective, we delivered operating EBITDA of $1.05 billion and adjusted EPS of $0.91 per share, up 15% and 90%, respectively. Volume gains as well as benefits from prior year cost initiatives and currency drove 160 basis points of operating EBITDA margin expansion and 1.9x operating leverage. Incremental margins for the quarter were 46%. I will walk you through the EPS later call in a moment. Our total company gross margin for the quarter was 36.8%, flat on a year-over-year basis. Gross margin improvement in E&I and M&M on higher volume and manufacturing productivity was offset by a margin decline in W&P, resulting from higher unit rates versus the prior year, driven primarily by lower production volumes of aramid fibers. Gross margin expanded about 280 basis points sequentially, with margin improvement in all three segments. From a segment perspective, E&I delivered operating EBITDA margin of 33.5% and 420 basis points of margin expansion versus the year-ago period on strong volume growth and a one-time discrete gain related to an asset sale. Excluding the benefit of the asset sale, operating EBITDA margin would have been 31.7%, a year-over-year improvement of 240 basis points. M&M delivered operating EBITDA margins of 22.9% and 320 basis points of margin expansion versus the year-ago period on higher volumes and savings from productivity actions. In W&P, operating EBITDA was flat versus the year-ago period as sales gains and cost productivity actions were offset by higher manufacturing costs, primarily higher unit rates driven by lower production of aramid fibers and increased supply chain costs. For the quarter, cash flow from operating activities and free cash flow were $378 million and $95 million, respectively. These amounts include one month of cash flow from our N&B business compared to three months of N&B cash burn in the prior year. In addition, cash flow and free cash flow conversions were negatively impacted by a working capital headwind of about $300 million, led by higher accounts receivable balances, which were up in line with sales. For the year, we continue to target free cash flow conversion of greater than 90%. Slide 5 provides more details on the year-over-year changes in net sales. Leading the way for the quarter was E&I with 15% volume growth, which had a record quarter. Volume gains were led by double-digit growth on robust demand for semiconductors across Asia. High fabrication utilization rates, driven by demand for new technologies and advanced nodes, along with the ongoing shift in digital transformation drove strong top line growth. In addition, share gains from recent wins for CMP slurry and lithography materials improved results. In Interconnect Solutions, double-digit growth was driven by higher material content in premium next-generation smartphones, partially resulting from timing shifts that select OEM demand shifted earlier in the year this year, along with broader printed circuit board market recovery. Within Industrial Solutions, double-digit volume gains in display materials due to new time launches more than offset continued weakness in aerospace. The end markets within W&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 Asia. Shelter Solutions had low single-digit organic growth versus the year-ago period, reflecting high single-digit organic growth in residential construction and retail channels for do-it-yourself applications, offset partially by softness in the commercial construction market. Within Safety Solutions, pricing gains, favorable currency, and strengthening demand for aramid fibers in industrial and automotive end markets were more than offset by continued weakness in aerospace and year-over-year volume declines for Tyvek. Lower Tyvek production volumes were a result of higher planned downtime in the quarter. Also contributing to strong first quarter top line growth was continued recovery of the global automotive market, which represents about 60% of our M&M segment from an end market perspective. The most recent estimate of 1Q global auto builds were about 20.3 million units towards the quarter, up approximately 14% versus the first quarter 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&M was improved demand for microcircuit materials, which we aligned to the M&M segment earlier this year. These specialized materials, along with adhesive growth, helped drive over 20% organic growth in Advanced Solutions growth in the year-ago period. Demand in our Engineering Polymers business was strong. However, global supply constraints for key raw materials resulted in low single-digit volume decline. Our teams are experienced in navigating trading challenges and have worked diligently with our customers and suppliers to help mitigate the impact incurred as a result. Additionally, we expect to recover volume lost in the quarter due to these disruptions and raw material constraints part of this unit. Turning to Slide 6. I mentioned that adjusted 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&B exchange offer. The lower share count provided a $0.16 benefit 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 this year with a lower base tax rate and reduced interest expense. Our base tax rate for the quarter of 19.4% was lower than forecasted as a result of a few discrete tax benefits in the quarter. Our tax rate in the quarter was significantly lower than last year, resulting from the absence of certain discrete tax headwinds incurred 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%, down 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 in free cash flow in the quarter. However, I would like to point out that net working capital productivity gains of about $600 million that we have made in the first quarter of last year, increasing net working capital for about $3.5 billion at March 2020 to $2.9 billion at March of 2021. Both of these were driving down past due receivables and inventory. From a debt perspective, we have stated that we are committed to maintaining our current strong investment-grade credit profile. We started the year with $15.6 billion in current debt. And as Ed mentioned, we paid down our $3 billion term loan in February, and we will pay down $2 billion of debt later this month. Moving on to cash. Our cash generated from operations last year put us in a strong cash position coming into this year, and that balance grew with a $7.3 billion special cash payment from the transaction with IFF. In addition, we expect to receive over $900 million in gross proceeds this year from the previously announced sale of the noncore businesses. Our current deployment plan for 2021 includes a balanced capital allocation approach. Along with our plan for internal investment this year, we plan to grow through targeted M&A in areas of secular growth and will fund the $2.3 billion planned acquisition of Laird Performance Materials with cash on hand. We intend to continue to return cash to shareholders. Along with our dividend policy, we completed $500 million of share repurchases in the first quarter at an average price of about $73 per share and will remain opportunistic with our remaining share repurchase authorization throughout the rest of the year. On a go-forward basis, our target run and maintain cash balance is about $1.5 billion. And from a leverage perspective, our net debt-to-EBITDA target remains at 2.75x. With that, I'll now turn it back over to Ed to talk about our financial outlook.

Thanks, Lori. Let me close with our financial outlook on Slide 8, which includes our view of the second quarter and full year 2021. We are raising our full year guidance range for net sales, operating EBITDA, and adjusted EPS. At the midpoint of the range provided, we now expect net sales for the year to be about $15.8 billion, which reflects year-over-year growth of 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 $4.03 billion, 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 challenges. We are also raising our adjusted EPS range for the full year by $0.30 per share and now expect adjusted EPS of $3.67 per share, at the midpoint of the range provided. In addition to the strong operating performance of our businesses, the share repurchases we are completing under our existing programs and the narrowing of our estimated tax range will contribute to the revised estimates. For the second quarter 2021, we expect net sales to be about $3.975 billion, and we expect the operating EBITDA to be about $1 billion, both at the midpoints of the ranges provided and both well above results in the second quarter last year. At the midpoint of the range provided, we expect adjusted EPS for the second quarter of 2021 of $0.94 per share, which now reflects the full reduction in shares resulting from the N&B exchange offer and our weighted average calculation. With that, let me turn it over to Leland to open up for Q&A.

Could you discuss the sequential dynamics of your business for the second quarter and the second half? On one hand, you're experiencing some supply constraints that have impacted volumes a bit. On the other hand, there seems to be urgency around ordering, and companies like Tyco Electronics are seeing significant book-to-bill ratios that suggest customers may be stocking up or double ordering what they can. Everyone seems to be trying to secure supply, which complicates the sequential outlook. Could you share your insights on the sequential activity in those critical stress areas as we head into the second half?

I'll start, and Lori may want to add her thoughts. This year is different due to various dynamics that affect our usual cyclicality. One major concern is the inflation costs on all materials and the pricing actions we can implement. Initially, the cost deflation in the first quarter was minimal, around $20 million, but we expect it to increase to about $90 million in the second quarter, leading to an overall impact of around $300 million for the year. Our expectation is that the second quarter will see costs stabilize between $90 million and $100 million, maintaining that level for the rest of the year to reach the total. We have been in a constructive pricing environment and anticipate covering most of the inflation in the second quarter, although some contracts may cause delays. For the year, we project DuPont's pricing to realize low single-digit growth, particularly in the M&M division, as world inflation affects us. However, there will be no price increases in electronics due to different dynamics; instead, we see new product introductions and some price adjustments in the Water & Protection sector. From a revenue perspective, raw material constraints will also impact us significantly. In our last call, we noted expected sales misses of between $60 million and $80 million for that quarter, but with the Texas freeze, we estimate we lost about $100 million in sales, translating to a $20 million to $25 million EBITDA loss. We're expecting another $100 million to $120 million in missed revenue for the second quarter, but we believe we won't lose these businesses, as the constraints will ease over time. All end markets are behaving as anticipated; those we expected to perform well have done so, including commercial construction and residential oil and gas, which are improving from last year's lows but remain below 2019 levels. We expect this trend to continue throughout the year.

I want to follow up on that topic. Ed, when you mentioned that you missed $100 million in sales during the first quarter and are expecting around $100 million to $120 million in the second quarter, does that suggest that the second half will show an increase of $200 million to $220 million compared to what it would have been without supply chain disruptions? Will we see this reflected in sequential growth or in year-over-year growth? Doesn't that make for a challenging comparison, or is that not the right way to look at 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 going and potentially into next year, depending on what it is. So inventory levels in new autos chain are very, very low in the supply chain itself. Finished goods are low. You still got the semiconductor ratio that's going to mute things, which I've heard most people think of going into 2022. So I think you got that dynamic going on here. So I wouldn't gauge at all just throwing it into the second half of the year at all.

Yes. I believe the guidance we provided assumes a revenue quarter similar to what we experienced in the first quarter, aiming for around $3.9 billion to $4 billion in the second quarter. Looking at the full year outlook, you can infer a comparable figure for the latter half of the year. Although there may be some potential upside from the M&M portfolio recovering lost volume in the first half, we typically see some seasonality in our results that could counterbalance that. Ultimately, we expect to end up with a flat revenue figure.

Okay, that makes sense. As a follow-up, can you remind us how large DuPont is in India? India is currently in the news due to COVID impacting the country. I'm curious about the presence of Tyvek garments there. It didn't seem to negatively affect your Asia Pacific numbers this quarter. Will it pose a slight challenge in upcoming quarters?

No. India is not a big impact at all in that one. The biggest upside for us though is India in the water business. That's 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 for us. If we add N&B in the portfolio, it would have been bigger, but that was really where our bigger presence was in our portfolio.

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? Are your customers double ordering? Or any kind of unusual inventory build?

We don’t see much in terms of inventory build. We’ve mentioned a few customers who are building their inventory, mainly in Asia, but it's a small business, around $30 million to $40 million. Currently, demand is high, and supply chain challenges, particularly in the auto sector, are prevalent. Finished goods inventory for autos is low globally, so we aren’t observing significant stockpiling. While some customers may be trying to order more, they are mostly receiving allocated products, which limits their ability to increase inventory. For instance, at DuPont, we have about $100 million in inventory, primarily in our M&M business, but we struggled to dispatch it effectively. We’re not double ordering; the issue is more about getting products out the door. Overall, this isn't a major concern for our numbers, but there may be some instances of inventory accumulation, though I wouldn’t categorize it as double ordering.

What was the average price of the asset sales, or any valuation metric that we can consider?

You mean for the noncore businesses that we're divesting?

Yes, for the noncore stuff, in terms if you have.

Yes. We had mentioned that we are in the range of 6 to 8 times EBITDA multiple on those businesses.

Two things for me. First, regarding the theme, I wanted to ask about interconnect. Lori, it seemed like the demand pattern was unusual and possibly not a pull forward. Could you clarify what you meant when you discussed that segment?

Sure. Yes, I think you said it correctly. So we did see a little bit of acceleration from an order perspective in the first quarter, probably the first half versus what we normally see from some of the smart homes providers. So from a site perspective, probably about a $10 million benefit for the quarter. They're not hugely material to DuPont raw materials. I think they're fairly minor to our segment. If you look at the full year, we've got Interconnect Solutions. We expect to be up kind of in the mid-single digits, so it will normalize as the year goes on. Part of that is due to very strong comps from last year. So if you recall, in the fourth quarter of last year, we saw interconnect as some of those producers pulled some volume into 2020 as well.

Yes, Jeff, we are exploring a few smaller acquisitions. One of these is in the water sector, similar to what we've discussed in previous quarters. We are confident that with synergies, particularly cost synergies, we can justify a valuation that aligns with DuPont's standards, otherwise, we won't proceed with the acquisition. At this point, we don't have a final decision. There are some opportunities we are considering in areas we believe will experience substantial growth in the future. However, I am not referring to significant acquisitions at this time. As I frequently mention, we will consider transformative opportunities if they align with our company's strategy. Currently, we are looking at a couple of smaller acquisitions in the hundreds of millions range, rather than billions, but the dynamic is similar to what we observed with Laird. So to answer your question, yes, those opportunities are available to us.

Can you talk a little more about Tyvek? You mentioned a shift back to the more traditional industrial business going forward, I guess, versus some tough comps versus a year ago in protective?

Yes. I think what we had mentioned about Tyvek in the quarter was garment volume. It adds, it wanes, it picks volume back up in some of the more medical or industrial end markets. And 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 down 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 $20 million of a headwind in general for Tyvek. And back on the comment on the garment demand potentially being mainly picked up by other end markets, it's a similar margin profile. So there's no headwind there from that perspective.

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 the same margin impact. And that's why our biggest CapEx program is a new line over in Europe that will come on in 2023. It's our single biggest CapEx program, and we're flat out.

Got it. And 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 in the first quarter, and that will also translate 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% in sales that translated to about a 7% increase in AR. And as I had mentioned, we were opportunistic in buying lots and we could get them. But surely, inventory increased. So I would expect on a full year basis, I might be in right now for working capital to be used, just given the top line growth as we're expecting, probably more so in the $200 million range. So improvement coming out of Q1. But I think more importantly, the measure that we pay attention to is net working capital term. And so we saw significant improvement last year to the June, ending the year at about 5.2 turns. We'll look to target about 5.3 turns as we close the year.

Yes. This Water Solutions business of yours seems to be increasingly a growth engine for you. Can you split that growth between 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. A significant portion of our growth is driven by the desalination sector. We also see a promising opportunity in the residential market, which is currently small but expanding well. Our acquisition has equipped us with leading technology across all three applications: reverse osmosis, ion exchange, and filtration. We are confident in this direction, and as Ed mentioned, we will continue to explore opportunities to enhance our presence. Filtration represents a substantial opportunity for us. As Ed pointed out, whether it involves lithium or other types of filtration, we are committed to being a major player in that area.

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 decades. So I mean 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 by the way, one of the reasons we would like to grow this business organically and inorganically.

And I think about our opportunity in addition to ESG is the potential underneath the infrastructure plan that has targeted investments in the water filtration require a perfect purification space.

We purchased it primarily for cross-selling, as it significantly expands our portfolio in several key technology areas that are essential given the advancements in technology, particularly in thermal management. Our aim is to leverage this acquisition for growth and cross-selling opportunities, allowing us to provide more solutions to our customers. In this business, we have numerous application engineers who address customer challenges. As components shrink in size, these technologies become increasingly important. Hence, we made this strategic acquisition, believing it's a strong fit for our future direction in the industry. While it's driven by growth potential, we also expect cost synergies and acquired it at a favorable valuation.

Ed, my understanding is IFF has recommended against you going on to the IFF Board. Are there any remaining connections between DuPont and IFF that would create a conflict? Or that's just the position they have against previous management being on the Board of a new owner?

Yes. Typically, this situation arises when a CEO is serving on two external boards. However, I believe our investors recognize my motivations. I don't have other commitments outside of this role, and they understand how crucial it is for me and for DuPont to ensure this venture succeeds, especially since we are investing over half of our company into IFF. This is fundamentally important to our shareholders, and I feel it's the right course of action. According to the standards for independent directors, I meet those criteria without question. The same rationale applies to my position on the Corteva Board, assisting with their transition. I see no difference here; I believe it's the right approach.

I would like to gain a clearer understanding of the second half. It appears that EBITDA will grow in the high single digits. Are you anticipating an improvement in demand during the second half as the pandemic eases? Is the lower growth rate primarily due to issues with raw materials and other factors? Additionally, what do you see as the long-term EBITDA growth potential for the new DuPont?

Yes, I think the potential for lower growth in the second half is mainly due to comparison factors. The second quarter will likely be our strongest year-over-year growth quarter since it was the low point last year, and we improved as the year progressed. I don't anticipate a significant change in the EBITDA figure, similar to our earlier discussion on revenue. From an end market perspective, we are generally performing at or even above 2019 levels in many cases. Our full-year guidance shows a projected revenue increase of 6% compared to 2019, with EBITDA expected to be in the low teens percentage-wise. Overall, we are on track, and the markets that are underperforming are just a few, mainly in aerospace, which has improved from its lowest point but is still lagging behind 2019, and in commercial construction, which does not significantly impact our portfolio as a whole.

Great. I'm just curious now that the portfolio, you've gone through health and nutrition or the separation thereafter you've made some acquisitions here to bulk up E&I, you separated into new segments as well with water. What else are you guys thinking of as far as continued kind of portfolio management? Also the noncore 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 see moving forward for the new DuPont.

Yes. Right now, our main focus is on running the company operationally. It's important to remember that we just completed the N&B transaction two months ago, which has required significant effort. We still need to wrap up sales and divest the three noncore businesses, which we plan to do by mid-year, bringing in $900 million in proceeds. There's a lot of work ahead. Simultaneously, we will begin integrating the Laird business into our portfolio. There’s a lot to manage this year, particularly with the challenges of handling raw material inputs and pricing during what has been a hectic yet exciting year. We have plenty on our plate. I believe our portfolio is moving towards what we envision. While we're focusing on cleaning up the noncore assets and integrating Laird, we remain open to exploring transformative opportunities. Overall, our focus remains on operational execution while we handle these developments.

Could you elaborate on the share gains in the CMP slurry? 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 CMP slurry lithography also within company in the advanced packaging space. So if you look at our revenue performance within semiconductor technology versus where the market does, we were up about 18% in total. We estimate FSI, which is the market indicator that we look at, which is the amount that we first produced 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.