Good day, and welcome to the DuPont de Nemours third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again. In the interest of time, please keep to one question and one follow-up question per person. For operator assistance throughout the call, please press star 0. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Chris Mecray to begin the conference. Chris, over to you. Good morning, and thank you for joining us for DuPont's third quarter of 2023 financial results conference call. Joining me today are Ed Breen, Chief Executive Officer, and Lori Koch, Chief Financial Officer. We have prepared slides to supplement our remarks, which are posted on DuPont's website under the Investor Relations tab and through the webcast link. Please read the forward-looking statement disclaimer contained in the slides. During this call, we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from our forward-looking statements. Our Form 10-K, as updated by our current and periodic reports, includes detailed discussion of principal risks and uncertainties, which may cause such differences. Unless otherwise specified, all historical financial measures presented today are on a continuing operations basis and 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 presentation materials, and have been posted to DuPont's Investor Relations website. I'll now turn the call over to Ed. Good morning, and thank you for joining our third quarter of 2023 financial review. This morning, we announced third quarter results and delivered solid earnings accomplished through strong operating execution by our teams, despite ongoing volume headwinds, including channel inventory destocking and continued weak demand in China. We reported sequential operating EBITDA growth of 5% and margin improvement of 140 basis points in the third quarter. We also produced strong cash flow during the quarter, with adjusted free cash flow almost 50% higher than the year ago period, highlighting our efforts to prioritize working capital improvement in a challenging global business environment and normalizing after last year's global supply chain difficulties. Compared to third quarter 2022, organic revenue declined 10%, due primarily to the impact of incremental channel inventory destocking, along with lower volumes from semiconductor and construction end markets. Within our electronics portfolio, our Interconnect Solutions business recorded a second straight quarter of sequential sales lift, as underlying demand improvement and normal seasonality contributed to an 8% sales increase. We also saw signs of stabilization with the semiconductor markets and expect some sequential sales improvement from Semiconductor Technologies in the fourth quarter. Third quarter volume was lower than expected, primarily due to incremental channel inventory destocking, including with our distributor customers, which was evident in the Water Solutions and Safety Solutions lines of business. In this environment, we remain focused on controlling discretionary spending and are also planning additional restructuring actions to continue to ensure we can drive sound, operational, and financial performance, targeting at least $150 million in annualized run rate cost savings, which we expect to begin seeing later in the first quarter of 2024. It's always difficult to precisely time market inflections, but current industry forecasts within electronic submarkets call for recovery by 2024. This includes forecasts for PC shipments to grow mid-single digits, driven by replacement demand, smartphone shipment growth in the mid-single digits, also driven by replacement demand and new product launches, and for server demand to gradually improve next year. This growth is supported by the rapid surge in demand for AI servers, as well as replacement for traditional servers. In general, demand for high performance and high density memory chips is accelerating, supported by AI growth, as well as overall growth for new mobile product launches. This directly correlates with DuPont's product strengths within the semiconductor and consumer electronics markets. Despite the near-term headwinds we are experiencing, we are confident that our key end markets are well positioned for long-term growth, and we expect these structurally attractive markets will provide the foundation for DuPont's value creation looking ahead. Turning to slide 4, we significantly advanced our strategic and capital allocation priorities during the quarter to drive shareholder value. First, we closed the acquisition of Spectrum on August 1, which fits nicely alongside our Liveo healthcare-related product line within our industrial solutions line of business within E&I. We are pleased with Spectrum's operating results to date, which are aligned with our modeled estimates. We are excited to welcome the Spectrum team, which is currently focused on executing new revenue growth opportunities stemming from significant customer wins earlier in the year. Second, I am pleased to announce that we are in the process of closing today the previously announced sale of our roughly 80% ownership interest in the Delrin business. The remaining piece of the former M&M segment held for sale to the private equity firm, TJC, in a transaction valuing the business at $1.8 billion. This deal was structured to maximize value for our shareholders. It provides significant, significant upfront cash proceeds with minimal expected tax impact, which can then be deployed in line with our strategic priorities. It also provides an opportunity for us to participate in future upside returns upon the exit of our retained interest in Delrin. TJC has an excellent track record of creating value, and we look forward to leveraging their talent and focus to continue to grow the high-quality Delrin business. Regarding share repurchases, in September, we completed the $3.25 billion accelerated share repurchase transaction launched last November. We then launched a new $2 billion ASR, which we expect to complete during the first quarter of 2024. Combining these two ASR transactions, we have repurchased approximately 15% of our outstanding shares when complete, reflecting our continued commitment to returning capital to shareholders as part of our balanced financial policy. Including these ASRs and the proceeds from the Delrin sale, we anticipate finishing the year close to our target net leverage ratio of about 2.1 times. Further, we anticipate using a significant portion of excess cash during 2024 for incremental share repurchases once the ASR is complete. With that, I'll turn it over to Lori. Thanks, Ed, and good morning. Our teams continue to execute well in a softer volume backdrop, driven by broad-based inventory destocking, demonstrating strong financial discipline and focus on operational excellence. I am most pleased with the sequential margin improvement registered by each of our segments in the third quarter, as well as our strong cash performance in the period. Given volume headwinds, the delivery of stronger margins and better cash flow are attributed to execution around lowering our input costs, coordination with the operating teams to right-size our inventory position, as well as overall progress with productivity via operational excellence initiatives. We are very focused on operating discipline and pleased that site-level operating execution is positively positioning us for solid margin upsides as volumes recover. We expect to see evidence of this in 2024, given expected recovery in key end markets, including electronics. Turning to our financial highlights on slide 5, third quarter net sales of $3.1 billion decreased 8% versus the year-ago period. A 10% organic sales decline was slightly offset by a 2% portfolio benefit, due primarily to revenue contribution from the Spectrum acquisition. The organic sales decline reflects a 10% decrease in volume, resulting primarily from semiconductor and construction end markets, as well as the impact of channel inventory destocking. E&I and W&P organic sales declined 13% and 8%, respectively, while the retained businesses and corporate reported 1% organic sales growth, including mid-single-digit growth in the adhesives portfolio. From a regional perspective, consolidated DuPont sales decreased on an organic basis globally versus the year-ago period, with Asia Pacific, North America, and Europe down 12%, 10%, and 2%, respectively. China sales were down 16% on an organic basis versus the third quarter of 2022, though E&I sales in China increased sequentially in the quarter and saw smaller year-over-year declines in each of the last three quarters. Third quarter operating EBITDA of $775 million decreased 9% versus the year ago period, driven by lower volumes and the impact of reduced production rates, primarily within E&I, as we align inventory with demand, partially offset by lower input costs related to raw materials, logistics, and energy, along with the portfolio benefits from Spectrum. Operating EBITDA margin during the quarter of 25.3% was down 50 basis points versus the year ago period, driven by volume pressure in the high-margin semi business and reduced production rates, primarily within the E&I segment, offset partially by cost deflation benefits, which increased somewhat from second quarter levels. On a sequential basis, operating EBITDA was up 5% and operating EBITDA margin improved 140 basis points. Segmental margin for the quarter was 31%, enabled by cost deflation and aggressive actions taken year to date to reduce spending. As I mentioned earlier, I am pleased with our cash flow improvement during the quarter. Optimizing working capital performance continues to be a top priority for us. On a continued operations basis, cash flow from operations of $740 million, less capital expenditures of $119 million, resulted in adjusted free cash flow of $621 million in the third quarter, a 47% increase versus the year ago period. Adjusted free cash flow conversion during the quarter was 151%, an increase versus last year and much improved compared to the first half of this year. We currently expect to finish the year with conversion around our targeted level of 90%. Turning to slide 6, adjusted EPS for the quarter of $0.92 a share increased 12% compared to $0.82 in the year-ago period. Below-the-line benefits, including a combined $0.16 benefit related to a lower share count and lower net interest expense, more than offset lower segment earnings. Other below-the-line benefits, including a lower tax rate and lower foreign exchange losses, contributed $0.06 to adjusted EPS improvement versus the year-ago period. Our tax rate for the quarter was 24.6%, down from 26.2% in the year-ago period, driven by the impact of a rate true-up in the year-ago period and lower than our previously communicated modeling guidance, as discrete tax headwinds were lower than expected. Our expectation of a full year 2023 base tax rate of 24% remains unchanged. Turning to segment results, beginning with E&I on Slide 7. E&I third quarter net sales of $1.4 billion decreased 9%, as organic sales declined 13%, offset partially by a portfolio benefit of 4% from the Spectrum acquisition. The organic sales decline reflected a 12% decrease in volume and a 1% decrease in price. At the line of business level, organic sales for semiconductor technologies were down high teens versus the year-ago period, resulting from a continuation of inventory destocking across the channel and, to a lesser extent, ongoing weak end market demand and the impact of China trade restrictions. On a reported basis, semiconductor technology sales were flat sequentially in the third quarter. Within Interconnect Solutions, organic sales declined 11% year-over-year due to both volume and price declines, driven by the pass-through of lower metal pricing. Volume continued to be impacted by weak smartphone, PC, and tablet demand, particularly in China, along with more moderate inventory destocking, which we believe is largely complete. On a sequential basis, the interconnect business reported a second straight quarter of sales improvement, with sales up 8%, driven by seasonality as well as some underlying demand improvement within PCB markets. Organic sales for Industrial Solutions were down high single digits versus the year-ago period, due primarily to destocking within biopharma applications for our Liveo product line and continued lower demand in electronics-related end markets. These declines were partially offset by increased demand for OLED display materials. Operating EBITDA for E&I of $383 million was down versus the year-ago period, primarily due to volume declines and lower operating rates to better align inventory with demand, slightly offset by a portfolio benefit related to Spectrum. Operating EBITDA margin increased 140 basis points sequentially during the third quarter. Turning to Slide 8, W&P third quarter net sales of $1.4 billion declined 8% versus last year, as volume decline of 9% was slightly offset by a 1% increase in price due to the carryover impact of actions taken last year. Within Safety Solutions, organic sales were down high single digits due primarily to channel inventory destocking. Shelter Solutions sales were down high single digits on an organic basis, driven by continued demand softness in construction markets and ongoing channel inventory destocking. On a sequential basis from the second quarter, shelter sales increased slightly, and we expect narrower year-over-year declines in fourth quarter. Organic sales for Water Solutions were down mid-single digits versus the year-ago period, due primarily to inventory destocking, including with distributor customers and lower industrial project demand in China, mainly impacting reverse osmosis. We expect generally flat sequential volumes in the fourth quarter versus the third quarter. Operating EBITDA for W&P during the third quarter of $362 million decreased versus the year-ago period due to lower volume, partially offset by the impact of net pricing benefits. Operating EBITDA margin of 25.6% increased 70 basis points year over year and 100 basis points sequentially from the second quarter. Turning to Slide 9, I will close with a few comments on what we are seeing in the fourth quarter and how that translates to our full year 2023 guidance. Underlying consumer electronics demand in the fourth quarter is expected to be generally similar to the third quarter, with some sequential sales growth expected in semiconductor technologies. As mentioned earlier, we saw additional channel inventory destocking and slower industrial demand in China, mainly impacting water solutions compared to prior expectations, and we assume these same trends will continue through the end of the year. As a result of this incremental volume softness, we are adjusting our net sales and operating EBITDA guidance and now expect full year net sales to be about $12.17 billion and operating EBITDA to be at about $2.97 billion, which is at the low end of our prior range. For the fourth quarter, we expect net sales of approximately $3 billion, with a sequential decline versus third quarter, driven predominantly by additional inventory destocking in the Safety Solutions line of business and, to a lesser extent, by the impact of seasonality and incremental currency headwinds. We expect full year 2023 adjusted EPS to be approximately $3.45 per share, which is the midpoint of our prior guidance range. With that, we are pleased to take your questions, and let me turn it back to the operator to open the Q&A. At this time, I would like to remind everyone, in order to ask a question, please press star, then the number one on your telephone keypad. In the interest of time, please keep to one question and one follow-up question per person. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Jeff Furber of Vertical Research Partners. Your line is open. Thank you. Good morning, everyone. Morning, Jeff. Hey, good morning, Ed. A lot going on in these channels, obviously. Do you have any kind of sense, or how do you measure, you know, kind of your sell-in versus sell-through? Trying to kind of understand, you know, kind of what that incremental headwind is from inventory versus just kind of general demand trends. You know, maybe just a little bit of color on, you know, how much more you might have to do on inventory or production to kind of get things where you need them to be balanced out. Yeah, Jeff, so we did a pretty detailed analysis of it, and I think a good way to look at it is what our distributor customers doing versus our direct end customers? So maybe just to give you a couple numbers. On the W&P side of our business, about 50% of our volume goes through distribution, and the other 50% we sell direct to customers. And so we did a whole analysis, obviously, because, you know, the distributors, you can see quick what's going on with them. And almost across the board, the distributor network is destocking pretty broadly. And it's, on a percentage basis, down significantly more than our direct customers. So by the way, just one, because it hit us this quarter, our water business in China, which is mostly reverse osmosis, was down. 36% of it goes through distribution. The rest we sell direct to customers. But the third of our sales that go through distributors in China, it was down 36%. Through distribution was down about 12% direct to the customer base. So if you do that analysis in our safety business, you get very similar trends going on. So clearly, the distributors are going through a destock, and I'm sure as we're approaching year-end, everyone's trying to get their inventories kind of where they want them. Now, by the way, having said that, my take is that the destock obviously goes into the first quarter if we just started to see it in some of these W&P businesses. But I would think the distributors work it down, you know, fairly quickly, you know, after we're kind of exiting the first quarter. But that same trend applies almost across the board when you do that analysis. It's the distributors are way, way down vis-a-vis the direct customer channel. Yeah, and on the absorption question, we're still in the same general ballpark in the second half as where we were in the first half. There's a little bit of a mix in what we'll be taking a little less absorption headwinds in E&I and a little more in W&P as we see the destock continue as we head into the fourth quarter. But in total, the number is about equal to the first half. Great. I was wondering if you could give us a little color on restructuring also. Ed, I think you mentioned, $150 million run rate. Wasn't sure if that was, full year 2024, but maybe just give us a sense of how much, restructuring tail you have in 2023, the incremental benefit you expect in 2024. And as volumes kind of hopefully improve into 2024, is some of that just kind of discretionary, temporary stuff that kind of comes back into the PNL? Yeah. So the on an annual basis, Jeff, will be about $150 million of savings, kind of spread between plant fixed costs and functional costs, or mostly G&A expense, not, not touching R&D and all. But by the way, just to back up on that, Lori and I have been looking at this, kind of how we can do some restructuring, for over a year, so we're not doing it just in response to what's going on. I think I've said on other earnings calls, we started looking at it, actually a summer ago. You know, how could we streamline a little bit more? So we're ready with that. We'll start seeing the benefits of the restructuring, towards the tail end of the first quarter. We'll get going on it, by the middle of December. So, you know, by the time it hits, we get things going, and you'll start to see the benefit then. So you'll kind of get three-quarters of the benefit for a big chunk of that in 2024. A little bit of that would potentially come back on the fixed costs, the plant fixed cost side as volumes pick up, but not all of it. So you'll get a little bit of it coming back in as we see the volumes lift. But that's basically the program. Great. Thank you. Thanks, Jeff. Your next question comes to line of Scott Davis of Melius Research. Your line is open. Hey, good morning, everybody, Ed and Lori. Hey, Scott. Hey, Scott. Chris. Morning. Good morning. A couple of things, I mean, just to follow up on Jeff's question because it just seems like it's so important and topical for you guys. I mean, there's kind of two reasons why people destock inventory, right? I mean, one is maybe lead times come down, and they feel like they can get it fast, and two, is they're really worried about their customers not wanting product. And I'm talking at the distribution level, not your direct. What do you think... You know, what do you think are the main drivers of this kind of incremental? Because we've been talking about the inventory destock for several quarters now, and this quarter seemed like it almost got a little bit worse, particularly in water and protection. Yeah, I, you know, Scott, I just give you a ballpark of my thinking. I, I think 2/3 of it, or 75%, something like that, is really that the supply chain healed itself. It's pretty darn normal for everybody again. So everyone sat on excess inventory. I mean, look, we're doing the same thing. We had a 151% cash conversion. We're lowering our inventory levels 'cause we have built up more than we normally would during COVID. And every other CEO I talk to is doing the same thing. So, and by the way, I think as the pressure, you're, you're getting near the end of your year, you're really trying to get things in line for 2024. So I think a big part of it is that, but there certainly is a percent of people just more worried, is there a recession coming? You know, you got an inverted yield curve for 18 months, people start getting nervous. There's always been a recession, so I, I can't say that's not in-- that's in there. But I think the bigger part of it is we just all build excess inventory. You know, we got what we could get, you know, during COVID. And by the way, I'll give you one example, 'cause we're seeing some destocking on the metal packaging side. A year ago, I had most of the CEOs of the medical device companies personally call me, pleading that we could ship more Tyvek material for packaging so they could ship their products out. I remember telling them, well, in fact, I sent a letter to the trade industry. I said, "Our shipments to you are up 18% so far this year. I mean, I, I can't do much more." And, you know, that was everyone scrambling to get it, and then they overshot. And now I, I probably shouldn't be surprised we're seeing some destocking on the medical packaging side. I think that's just a great example. That has nothing to do with a recession. That's just everyone had too much. Yeah, that's great color and makes a lot of sense. Now, I know I want to ask about price. And I know the two segments are just way different. E&I kind of manage price versus cost, and W&P, maybe there's a little bit of a different price strategy. But when you think about, like, this new normal of higher inflation, wages, other costs, you know, not explicitly material costs, but other costs, how do you think about price in kind of a future construct, meaning, you know, maybe entering into 2024? It's probably more of a valid question for W&P, but maybe you can address for both segments and give us a little bit sense of what you think in there. Yeah, I don't think, yeah, Scott, I don't think 2024 will be what you'd consider a normal year. In a normal environment, you know, a few years in a row of just normal things, which we haven't had in 4 years, for anybody, we would always get, like, 1.5%-2% price lift in the W&P business. Our goal in 2024 is to hold on to as much pricing as we can, and you obviously see us and others, we're getting benefit from price cost spread, and we saw it in the third quarter, which helped us out. We'll obviously see it in the fourth quarter. So our goal is to really manage that well for 2024 because there's still, you know, quite a bit there. Now, we're not gonna get all the costs back by renegotiating contracts. Everyone's trying to hold price, so our vendors are trying to hold it, too. But, you know, we're still up to about $225 million that we've gotten back. So, but I mean, that's pretty significant for us, and so we're hoping to hold that for next year. My gut is we're gonna give up some pricing in the shelter business because we don't want to lose market share, but a lot of the other businesses will really be managing that tightly. But then if we ever get back to normal times, hopefully 2025, we would look at that 1.5%-2% price increase. And then electronics, we just try to hold up, you know, about flat. Usually, we're flat to down 1%, but you get nice volume lift. Yeah. Good color. Thank you. I'll pass it on. Appreciate it. Yes, thanks, Scott. Good talking to you. Thank you. Your next question comes from the line of Steve Tusa of J.P. Morgan. Your line is open. Hi, good morning. Good morning. Can you just update us on what you actually expect for... What was the price cost spread this quarter, and what do you expect now for the year? Yeah. So our full year number, we ticked up to $225 million versus the last quarter, we had expected about $140 million. So we're seeing that deflation benefit come through in the back half. So in the third quarter, we saw a net about $75 million benefit. We'll see that tick up to around $100 million in the fourth quarter. Does some of that carry into next year? Yes. Okay. And then I guess, With the caveat of yeah, yeah, the spread will continue into next year with the caveat of we don't quite know to, as earlier comment, what the price is going to do. But we do expect the deflation benefit to continue because it took its time to get through inventory this year. Got it. And then, just kind of a philosophical question on how you, you know, think about next year. I mean, your exit rate now on some of these businesses, just from a revenue perspective, is, you know, more negative. You're taking revenue down. You talked about some of it being destock, which is effectively a, you know, an easier comp next year in the second half of the year. I mean, do you think with this profile that, you know, you guys can still grow revenues next year? Yeah, yeah. I think, I think the first quarter, Steve, to your comment, will be light, you know, more similar to the fourth quarter, 'cause I don't think the destock will end but that quick, but the distributors will move very fast. They, they just stopped ordering for a while, you know. They literally, we've talked directly to them, and they're like: "Just don't ship me something for a few months, and then we'll be back on track." So, yeah, I think, you know, the first quarter will be on the light side, but I, I think after that, we'll see some nice lift. I would certainly by then, the electronics part of our business, which you know is highly profitable, I think we'll be back to, you know, a, a really nice lift. You know, just on the semi side, the fabs are running a little below 70% utilization. I think if you do the math on what the industry's thinking, they're gonna kind of get up as the year goes, more to 80% utilization, the following year, more like the 90% where you would run them at. So you'll start to see some, on a percentage basis, some pretty nice lift. And then we've had two quarters in a row of ICS lifting, so it's clearly off the bottom. You know, that will, I think, continue to grow as we go through next year. So I think, you know, you're kind of through the electronics one, although, you know, we're kind of now doing a destock on the W&P side. And remember, we're mostly short cycle, so, you know, we'll see it first and then, you know, I think by the second quarter you'll see a lot of that destock over with, and, you know, you'll see the volume lift. Ed, one, one last one for you. I mean, you've, you know, you've been through a few cycles, DuPont having, I guess, high single digit, to even double digit organic volume declines. I mean, are we, are we already, you know, in a recession here in your mind? I'm kind of one foot in, yes. I've been there for a while, by the way. I track a lot of economic indicators, and I said earlier, you know, you see the yield curve where it's been and all, there's always been a recession. So I like to manage, I guess, conservatively. So I've been telling the team for a long time, "Just prepare for a softer environment, and if we're wrong, great. You know, we'll have done all the right actions to position ourselves." But yeah, I think there's this quarter, just reading all the results from companies I saw, they were pretty mixed. Right. Great. Thanks a lot. People were mostly missing on the volume than not on their EBITDA. Right. Yep. Thanks a lot. Okay, Steve. Your next question comes from the line of Mike Leithead of Barclays. Your line is open. Great, thanks. Good morning, guys. Ed- Good morning. Just on the Delrin sale, can you maybe speak to why this monetization structure was sort of the best ultimate outcome? And then relatedly, maybe for Lori, when should we expect the note receivable to accrue? Or I guess, when do you get that $350 million in cash? Yeah, so we liked it. Look, we sold Delrin in a tougher environment than when we sold the rest of M&M. So this optimized what we could get for the asset over a few year period. You know, we're getting $1.2 billion upfront. We're retaining 20% equity in it. TJC has a phenomenal track record, so my gut is we have some nice upside coming from the retained interest that we have in the business. That's to be proved out, but I'm highly confident in that. It is a good business; it should do well over the next few years. So we think that optimizes our position. So we sold it at $1.8 billion in value. My gut is we can end up nicely above that, with the equity that we have. So... And by the way, it just goes to our whole capital allocation strategy. It was not a business we wanted to be in long term, even though it's a good business. We're taking the volatility out of the portfolio, and, you know, we'll redeploy that cash. And as we said in our prepared remarks, we will actually do more share repurchase after the ASR ends next year because we're in a great balance sheet position and we'll have good free cash flow, and we plan on buying back more shares. Yeah, and Michael, on the debt. So, we gave them a $350 million loan. It's an eight-year loan if the venture were to go that long. So like, you know, normally they would monetize quicker than that, and then we would get the repayment of the loan. So if it went to the longest haul, it would be eight years, but that's most likely not the reality. Great, that's super helpful. And then second, I was hoping maybe you'd give us a bit more color on the moving pieces within the corporate and other segment. I assume the retained businesses are doing fairly well in the auto backdrop. So can you speak to what's kind of the moving pieces there, and should we expect that business to continue to deliver some level of double-digit millions of EBITDA? Yeah. So, the business is just for a refresher that are in corporate are primarily the auto adhesives business, and then we have Tedlar and Multibase. But the largest end market served is automotive, and there's a large EV exposure there. So we saw a nice mid-single-digit volume growth again. We expect for a full year from a volume growth perspective, the auto adhesives to grow up in the high single digits. And we continue to expect really great things from that business with the EV penetration that we've seen. So, from an earnings perspective, they were up very nicely as well. We saw a nice earnings growth and margin appreciation in the third quarter. In the fourth quarter, we have a little bit of a deceleration, just a lot of their exposure is in the U.S. with automotive, so there's some headwind from the strike that fortunately is now over, but there will be a little bit of a headwind from the October impacts. And then the U.S. car builds right now from IHS are expected to be down. But overall, the trajectory of this business is really strong. They had a great 2023, and we expect a really strong 2024 again. Great. Thank you. Thank you. Your next question comes from the line of John McNulty of BMO Capital Markets. Your line is open. Yeah, thanks for taking my question. So it looks like the, you know, the electronics end markets seem like they're starting to stabilize a little bit. You expect semi technologies to be up quarter-over-quarter. Can you add some color on what you expect from the other two subsectors in the E&I division? Do you see normal 4Q seasonality? Is there maybe a little bit of destock in the industrial solution side? I guess, can you help us think about the trends there? Yeah. So semi will lift a little bit. So I would still say bouncing along the bottom, but getting through the destock. And when I say a little bit, you know, a few percentage points sequentially up in the business. The ICS business will be down some, but that's all seasonality. If you look at it, just the normal drop you see in seasonality, it's less. So the business continues maybe a few more points to improve after the last two quarters of improvement. So kind of less seasonality because the business is recovering. And then on the industrial part of E&I, we'll definitely see a little bit of destocking there. The biopharma destocking, which is in that business, picked up some during the quarter. So I expect that to continue into the fourth quarter and hopefully be kind of done by then with that. And there's just a little bit of other destocking going on with some of our distributors in that business. So, you know, nothing significant, but yeah, I think that'll see a little bit of softness. Got it. Okay, thanks. And then maybe just as a follow-up, I think, you know, as we get to kind of mid-December, the opt-out period should be kind of done on the PFAS side. I guess, can you give us any update on the water district settlement? Is there anything that you can speak to at this point? It seems like that should put a lot of kind of the pressures behind you, but I guess any update there would be helpful. Yeah. So we, the date that's coming up here is the deadline for the opt-outs is December fourth, and then we will see a list of who the opt-out, opt-outs are on December the sixth. And then there's a final fairness hearing in South Carolina on December the fourteenth. So it's all kind of happening that, you know, first two weeks of December. And I really can't add any other color. I just don't have any other facts in front of me. We're feeling obviously very good about it, highly confident that this will get signed off and get done. And Barry, I'd just add, obviously, people are talking to the key water districts around the country. So you know, you know, we're feeling good, and hopefully, we're close to getting that cemented. Great. Thanks very much for the color. Yeah, thanks. Your next question comes from the line of David Begleiter of Deutsche Bank. Your line is open. Thank you. Good morning. Ed and Lori- Morning. On the restructuring, do you have any more, you know, any more color you can provide, some more concrete examples of where that $150 is gonna come from? Yeah. So we had mentioned that it'll primarily come from plant fixed costs and then the G&A or the functional costs, so the overhead structure of the company. So, you know, the plant fixed cost is really a function of the destocking and what we can do from a volume perspective. So looking hard at contractors, looking hard at the plant fixed cost spend, looking hard at making sure that we can temporarily adjust our cost structure to align with the volume environment that we're seeing. And then, on kind of the SG&A side or the functional costs, general administrative, that's just continued leaning out. So as Ed had mentioned, we're constantly looking to make sure that we're running as lean and efficient an organization as possible, so that's where the focus will be. We really won't be touching R&D and marketing and sales. So, you know, we believe this destocking period is temporary, and so we really need to be prepared when it comes back on the other side to be able to take advantage of the upside. So that really won't be the focus. It'll be more on the plant costs and the functional spend. Understood. And then just on interconnects and semis, did you gain any share this year, or is there any new technology, products down the pipeline that you think can grow share, either this year or next year? Yeah. So there's examples in both. So within semi, really around the packaging side, we've seen some nice share gains. And also just in general, we've seen an uptick on the advanced node components. And so if you actually look at our performance in the quarter, we had nice growth with TSMC as they continued to expand their advanced nodes and take advantage of the AI, AI revolution. So we saw a nice growth on the Semi side. And then within ICS, we had a new application with one of the large smartphone producers, which took advantage of a material that crossed over our metallization business to be able to have a key win there. So that was part of the sequential growth that we saw in the quarter, and we continue to see. It's on every single model of the phone for the one producer, so it was a nice win for us. Thank you. Mm-hmm. Your next question comes from the line of Aleksey Yefremov of KeyBanc Capital Markets. Your line is open. Thanks, and, good morning, everyone. This is, this is Ryan- Morning. From KeyBanc. My first question comes around the shelter solutions business. Just in terms of, you know, where do you think we are in the destocking cycle there and demand? And then, you know, how good is your visibility into 2024 here? Yeah. So we saw less of a year-over-year headwind in shelter in the third quarter versus what we saw in the first half, that we feel like things are starting to normalize a little bit. And then our expectations for the fourth quarter are to see less volume declines than we're seeing year-to-date. So it feels like things are normalizing a little bit. You know, obviously, there's a little bit of disparity from a market perspective between the resi and the commercial side. A lot of the growth that was on the commercial side is more in commercial applications where we don't have a big footprint, like, for example, around the data centers. Our exposure in commercial is more around education and healthcare and government, where there hasn't been that step change growth. It's really been more on the data center side. But in general, it feels like we're nearing the end of the significant downturn. We expect the volumes in the fourth quarter to be more down in the mid-single digits versus the double digits that we've seen all year. So it feels like it's starting to normalize, and we do believe the de-stock is now behind us. So now it's just a function of when the demand returns. Okay. Very helpful. Thank you. And then, you know, just a question from me on, you mentioned China trade restrictions and the impact it had on the semiconductor technologies business. Wondering if you might be able to quantify that impact there, and then just, you know, any updated view on the recently announced restrictions there. Thank you. Yeah. So no change to our current view, of about $60 million of a revenue headwind, from the exposure. So a lot of our- For the year? For the year, yes. So it's about $15 million a quarter. So, a lot of the restrictions have more, more been in the advanced node spaces, that we don't have a huge footprint with the Chinese players from that perspective, so it's only about $60 million for us. Your next question comes from the line of Josh Spector of UBS. Your line is open. Yeah, hi. Thanks for taking my question. So I just wanted to ask on the fourth quarter. I mean, it kind of seems like the puck is moving around in different areas in terms of de-stocking, but if I heard you right, your sales guidance is kind of flattish in the different segments sequentially. Semis is ticking up, which has the highest drop through, and you're expecting some higher raw material benefits. So what would drive EBITDA down sequentially, $20-$25 million versus flat to up? Yeah. So we see the underlying revenue down about $100 million once you on an organic basis. So we will get another quarter of the Spectrum business first, third quarter. But if you take that out, we see underlying organic revenue down about $100 billion. So it's about split between seasonality and currency being about half of the headwind, with the seasonality being within the primarily the smartphone and consumer electronics business, and ICS, and shelter as they shrink throughout the summer months. And then currency, we do see as a bit of a headwind sequentially. And then the other half of it is from the medical packaging piece that Ned, Ed had mentioned earlier. So we do see some medical packaging pullback in the fourth quarter as those device makers de-stock from the overbuy that happened over the recent quarters. So it's really just... And then the EBITDA, you have a net benefit from additional spread. We had mentioned there's about $25 million of additional benefit from spread, but that $100 million impact from the volume decline kind of net you out to around the 50 that we guided to for the fourth quarter versus the 775 that we posted in that third quarter. Okay, thanks. No, I appreciate that. And I mean, just if you kind of coming back to electronics and semis, I think, Ed, you said utilization rates in the mid-70s. I think we've maybe troughed in the high 60s, so you guys haven't really felt as much of that pickup. I guess as you look at things improving, how much does semis reconnect in your business year-on-year, just from a reconnection to where the rate is now? I mean, is that mid-single digits or higher, just on where we're run rating now past inventory, or it'd be a different math to get to a different level? Thanks. Well, the facts have been, to your point, running kind of if you lump them all together. I think you would average out in the high 60s. And I think if you go through all the projections out there, and I was talking to our customers, that high 60s is gonna ramp through 2024, up to by the time you get maybe end of third quarter, beginning of fourth quarter, up to maybe a little over 80, 80%. So you still won't be back, according to projections, kind of over 90% till you enter into 2025. But again, going from high 60s to 80% is a nice lift during the year. And then, you know, more of that reduction will be advanced nodes, which back to Lori's point a minute ago, you know, plays to our strength. You know, that's usually why we outgrow 200-300 basis points what the market's doing. But, you know, it's also, by the way, you also got to look customer by customer on the semi side, because some are still were shipping out of inventory. But all the signs I saw from all their reporting publicly, you know, they've seen their bottom, it looks like, pretty much across the board. But I don't think the lift will be, you know, dramatic in the, you know, at the beginning of the year, but I just think as the year sequences, we'll see nice lift occurring in, in that business. Okay, thank you. Yep, thanks. Your next question comes from the line of Vincent Andrews of Morgan Stanley. Your line is open. Thank you. A couple of questions here. First on, you know, the distributor part of, the supply chain, not just for you, but for pretty much everybody, seems to have taken it more on the chin with the overstocking and the, and then the de-stocking. You know, do you have a sense of whether that was just they were a little too overzealous with principal risk, loading up, and then on the way back down, is the issue just that they don't have the same access to credit or just the higher, the higher rates? I guess what I'm getting at is, do you think over time, your terms with distribution and maybe some of your other customers are gonna need to change in a way that might require you to hold more working capital or to give them incentives to move it along? I guess I'm just sort of asking what's gonna ultimately break the logjam of the game of hot potato of nobody wanting to hold inventory? Yeah, I don't think it's— I really think it's just, you know, we all overbuild inventory, you know, direct vendors and distributors through the COVID period. I mean, we all talked about it. And, you know, I go back to my example on the medical packaging side. Customers were just yelling for us to get more to them, and usually when that happens, you see an overshoot happen, you know? And some of them probably even double order. You know, I've been through that before, in my career, and, you know, then you get the snapback. So I think that's what we're going through, is that they're adjusting their inventory back to appropriate levels. They don't have to worry about carrying excess inventory, you know, because supply chains are normalized again. And again, we're doing the same thing. We're feeling confident about, you know, being able to get supply of all our different components, and so we're working our inventory levels down from what were elevated levels because of the COVID stuff. Okay. I don't think we'll have to worry about different terms or anything with our distributors. Okay, good to hear. Lori, can I just ask you? Yep. What's the updated thoughts on minimum cash levels that you want to keep, just as we think about next year and your free cash flow generation versus what you might do from a share repurchase perspective? Yeah. So we'll still target about $1.5 billion of minimum cash levels. As we had mentioned on the call, we'll look to return a significant portion of our cash flow to shareholders next year through share repurchases. So we'll be done with the existing ASR at some point later in the first quarter, and then that'll give us the ability to get back into the market underneath a new program. As Ed had mentioned, we have the Delrin proceeds coming in at some point today. So we'll have that cash come in the door, and then when we're in an open window again, we'll be able to do more share repurchase. Okay, great. Thanks so much. Yep. Your next question comes from the line of Frank Mitsch of Fermium Research. Your line is open. Good morning. Wanted to, Hi, Frank. Want to follow up on... Hey, hey, Ed, how you doing? Wanted- Yeah, good. Wanted to follow up on Spectrum. You indicated that financially it was performing in line with your projections. I was just curious. I think you indicated that you expected, like, something like $45 million EBITDA for the balance of 2023, since you closed it on August 1. And also, I think you guys indicated you get about $20 million of synergies. Are those numbers still accurate? What's your take on Spectrum so far? Yeah. So Spectrum's performing according to plan. They've got nice growth on a year-over-year basis, especially within the medical device side. The majority of the business is medical device. There is a piece that goes into industrial, and it's really based on some nice key wins that they've had with some of the large medical device producers. So we're pleased with the performance that we've seen. The numbers that you had cited earlier are still on track, and then the synergy delivery is $60 million in total. It's over, you know, a couple of year time frame for us to realize those synergies, but that continues to remain on track as well. Obviously, the initial synergy delivery will come from some, you know, overhead consolidation. Then, we'll get after the procurement-related synergies and maybe some of the site-related synergies, over time. Very helpful. Thank you, Lori. And if I could follow up on semiconductor technologies. You indicated that AI growth is going to help this business in the future. Can you give us an idea of the size that you anticipate AI to grow to over 2024, 2025 in terms of your semiconductor business? Well, I would go, Frank, more high level. I think a lot of the growth we'll get will allow the semiconductor business again, well, once we get through this, the downturn here and all that, that this business can grow kind of mid- to high-single-digit, which, by the way, it was doing before all the destock hit. Again, if the market grows 5%-7%, we'll grow 200-300 basis points above that, and that 200-300 basis points is mostly because of that high-end chip, because of AI enablement and all that. You know, that plays to our sweet spot, so that's how we get that outsized growth, usually over the market, and AI plays right into that. Yeah. Gotcha. Maybe just to help describe it for you too. So within our semi portfolio, we, we have about a $700 billion business in data centers overall, and, and about a little more than a third of that is direct to AI. So that's really the nice portion of growth that we continue to see above the overall MSI projections. Very helpful. Thanks so much. Uh-huh. Thanks, Frank. Your next question comes from the line of Steve Burn of Bank of America. Your line is open. Hi, you have Rob Hoffman on for Steve Byrne. Just going back to the Spectrum business, now that you've had the business for a couple of months, do you see any opportunities for cross-selling to these medical device companies? Yeah, that was one of the large theses for the revenue synergy upside, was that they are very strong and have great relationships on the medical device side, and we're very strong and have great relationships on the biopharma side, and how can we bring those two, two pieces together to generate revenue synergy? So it's been a couple of months, and that thesis, as we've initially seen it, continues to play out. And we don't have the revenue synergies on hand right now, but we see nice opportunities as we continue to integrate these two businesses together. I see. That's great. Which of your businesses do you see the most potential for share gains and new product introduction versus volumes that are driven primarily by cyclical recoveries? Yeah, I mean, I think we see, if we take it by segment, within E&I, we've mentioned that, we should see 200-300 basis points of outsized market growth within semi, and that's a combination of share gain and just where our exposure is in advanced nodes in the areas that are growing faster than others. We also see a step change opportunity within the general consumer electronic space. We have seen some nice share gain on the metallization side. It'll continue to show in the top line as the PCB providers start to ramp up their utilization rates to more normal levels. But we have seen our performance versus some of the peers in the metallization space be better. And then within the WP portfolio, we continue to expect nice growth within water. You know, obviously, we're in a destock right now, but we'll see nice growth more from a secular basis. So just that water industry is generally growing in mid-single digits, which is a nice market for us. And on the safety side, it's really gonna be we've added capacity now, and we have to. We'll get step change growth from utilizing that capacity. So we're nearing the completion of an additional line for Tyvek. We've constrained the Tyvek market for years, and so we'll see some nice lift there as we fill up that asset. And we've recently expanded some capacity within a new technology in the Kevlar space. So it's a new opportunity for us to bring a lighter weight Kevlar to the market, and we look for good things from that business as well. I mean, and shelter generally should be more along a GDP-type grower. Understood. Thank you. Thanks. Our final question today comes from the line of Arun Viswanathan of RBC Capital Markets. Your line is open. Thanks for taking my question. Hey, Arun. Hey, just wanted to take a quick try at maybe kind of mid-cycle or longer-term earnings growth. If you think about volumes, kind of, maybe double digits below normal in electronics, and then some leverage on a recovery there. You're exiting the year at around $3 billion of annualized EBITDA. Would that imply something in the 3.3-3.6 kind of range as far as when you take a look at longer term or mid-cycle, where you want to get to? Thanks. Yeah, I mean, longer term, you know, you should, you should get back into the we were running the, the E&I portfolio, I think is where your, your focus was in the more of the 32% margin range. And, and we should see, you know, the volume kind of return there over time as the utilization rates at the large PCB guys and the semi guys return. But if we look more near term, as far as headwinds, tailwinds, as we head into 2024, there's definitely tailwinds from volume growth from the electronics recovery and, and normalization of, of the destock. And there's obviously incremental tailwinds from the deflation we had mentioned as we go forward, and then the benefit of the restructuring actions that we, we are now taking, and we'll start to see the benefit of at some point later in the first quarter. And then just from an EPS perspective, we do continue to lower our share count. So what we'll see lower fourth quarter share count versus the full year, which will carry us into 2024, and then we'll have the incremental benefit of the $2 billion program that we'll complete in the first quarter, and then advance new shares, new share takeout as well. So we'll see a nice EPS benefit that we've seen as we took shares out throughout 2023. The headwinds, though, are... You know, I think we will continue to see the industrial destock impact the water and safety businesses primarily in the first quarter, so that'll be a headwind to the first quarter. We will see most likely some price moderation or give back, primarily in the shelter businesses I had mentioned, so we'll, we'll try, we'll try and maintain that as long as we can, but we will be cognitive of, of potential share loss and potentially have to be giving some back there. And then just we have taken some aggressive actions on the compensation side in 2023, so we are paying a below target variable compensation, payout this year, and so we would most likely see normalization of that as we head into 2024. So those are the big puts and takes, with the one extra exception from a below-the-line perspective around interest income. So we did see about $145 million of interest income this year, just as we held the proceeds from the sale and lease transaction in the first half, before we could deploy them to Spectrum and then the full share repurchase program. So we would see a step down in 2024 from interest income from about $145 million this year to probably $20 million next year. Thanks. Mm-hmm. I would like to hand the call back over to Chris Mecray for closing comments. Okay. Thank you all for joining our call this morning. For your reference, a copy of our transcript will be posted on our website. This concludes our call. Thank you. That does conclude our conference for today. Thank you for participating. You may now all disconnect.