Good day and welcome to the DowDuPonts First Quarter 2018 Earnings Call. [Operator Instructions] Also today's call is being recorded. I would now like to turn the call over to Greg Friedman, Vice President Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining us for our first quarter 2018 earnings call. DowDuPont is making this call available to investors and media via webcast. We have prepared slides to supplement our comments on this call. These slides are posted on the Investor Relations section of DowDuPont's website and through the link to our webcast. Speaking on this call today are Ed Breen Chief Executive Officer; and Howard Ungerleider Chief Financial Officer. Also with us in the room for Q&A are Andrew Liveris Director and former Executive Chairman; Jim Fitterling Jim Collins and Marc Doyle Chief Operating Officers for DowDuPont's Materials Science Agriculture and Specialty Products divisions respectively and Neal Sheorey Vice President of Investor Relations. Please read the forward looking statement disclaimers contained in the news release and slides. During the call, we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risk and uncertainty our actual performance and results may differ materially from our forward looking statements. Our 10-K and each of Dow's and DuPont's include a detailed discussion of principal risks and uncertainties which may cause such differences. Also, we will comment on segment results on a divisional basis. So please take note of the divisional disclaimer in our earnings release and slides. Unless otherwise specified, all historical financial measures presented today are on a pro-forma basis and all financials where applicable exclude significant items. We will also refer to non GAAP measures a reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website. I will now turn the call over to Ed.

Thanks, Greg. And thanks, everyone for joining the DowDuPont first quarter earnings call. I'll start by covering the financial highlights. Then I'll provide an update on our progress toward the key strategic drivers, the synergies, our growth plans and intended spins. I'll then hand it over to Howard to discuss the quarterly results in more detail. This past quarter marked the second full quarter of operations for DowDuPont and the teams have come together well and they again delivered strong results. As shown on slide four, here are the first quarter highlights. Sales increased 5% to $21.5 billion. Price rose 3% with gains in all geographies and most segments. Operating EBITDA increased 6% and we grew our adjusted operating EPS 7%. Our results this quarter were due to strong performance from the Materials Science & Specialty Products divisions. Their growth more than overcame severe cold weather in the Northern Hemisphere, which shifted Ag shipments from the first quarter to the second quarter. Our performance in the quarter was driven by solid execution, disciplined price volume management, cost synergies, growth projects and contributions from our value-added customer driven innovations. In Materials Science, the division benefited from strong innovation and product launches and from broad-based price and volume gains, supported by new capacity in the US and the Middle East. A few examples of product innovations in the quarter include Packaging & Specialty Plastics launched a new Bynel tie layer developed to provide improved adhesion between polyolefins and PET and polyamide materials in food and specialty packaging films. Polyurethanes introduced a new VORATEC appliance insulation system with a major appliance manufacturer which provides superior energy efficiency, and in Consumer Solutions we introduced AgeCap smooth cosmetic ingredient, which softens the appearance of wrinkles, while promoting skin glow and softness. In Specialty Products, our…

Thanks, Ed. Moving to slide seven, and a summary of our first quarter results. We once again grew earnings per share, net sales and EBITDA. Drivers of the EPS increase include local price and volume gains in Materials Science & Specialty Products. Cost synergies, a currency tailwind, higher equity earnings and lower pension OPEB/ costs. These gains more than offset the weather related shift we saw in Agriculture, higher feedstock costs and the impact of the freeze related outages on the US Gulf Coast. The sales increase of 5% was broad-based with growth in most operating segments and geographies. Sales rose 15% excluding Ag with double-digit gains in both Materials Science up 17% and Specialty Products up 11%. The sales decline in Agriculture was driven by weather related delays to planting seasons in the Northern Hemisphere and Brazil. Overall volume declined 2% driven by the decline in Ag. Materials Science achieved 14% volume growth in Industrial Intermediates & Infrastructure and 8% growth in Packaging & Specialty Plastics, in spite of weather related supply disruptions enabled by new capacity ads from Sadara and on the US Gulf Coast. Specialty Products delivered volume gains in all segments on solid customer demand in four market verticals, which more than offset weather related shifts in demand, particularly aligned to construction end markets. Local price increased 3% led by Materials Science which was up five on strong supply demand fundamentals across most of its targeted end markets. Equity earnings increased led by improved Sadara results and increased earnings from the Kuwait joint ventures. And the cost synergies continue to hit the bottom line as we have now delivered more than $500 million of cumulative savings since merger closed. These gains translated to operating EBITDA of $4.9 billion in the quarter, excluding Ag operating EBITDA increased…

Great. Thanks, Howard. At the close the call, I want to take a moment to acknowledge Andrew Liveris and recognize his more than 40 years at the company and 14 years as Chairman and CEO of Dow. Andrew was a major architect of our deal and has been a strong partner in the past couple of years as we navigated a very robust antitrust approval process and ultimately made our vision of a merger of equals, with the setup of the subsequent spins a reality. I appreciate everything he's done to help deliver the value of this transaction, and Andrew on behalf of everyone on this call and all our shareholders thank you. With that, let me turn it over to Neal to open it up for Q&A.

Thank you, Ed. With that, let's move on to your questions. First, I would like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. Operator, please provide the Q&A instructions.

Thank you [Operator Instructions] And we'll take our first question today from P. J. Juvekar with Citi.

Thank you. And Andrew, thank you and good luck.

Thank you P.J.

You know, my question is on Ag and particularly on seeds. It looks like the industry has lost some seed pricing. So can you talk about that? And to me it seems like during these big mergers nobody really wanted to lose market share. And so going forward what changes that market share mentality, do you see that changing next season?

Hi, T.J. It's probably a little bit early at this point to be calling pricing. I mean, as Howard noted in the update, we're starting this season behind three to four weeks or so behind. We've got good visibility on our year-over-year same bag tag pricing, and as we've always said, we're about flat with some real benefits from mix coming through as we continue to launch newer technology, A-series, soybeans ramping and also continuing to include some of the new line-up in our corn products. So I'd say, overall, mix is really driving value for us, and it's still pretty early in the season to understand what kind of final pricing is going to look like. Will it get competitive? I expect that it will be especially from - as we start to maybe navigate through any shifts that could go on here between corn and soybeans. I have to say based on what we saw last year with A-series soybeans and what we're seeing with our order book this year I'm feeling pretty good about where we're sitting around our soybean shares in North America. So again, little early to talk specifically about that, but where I sit today and what I can see going forward, I feel pretty good about it.

And next we move to Dave Begleiter with Deutsche Bank.

Thank you. Good morning. Ed, with respect to your comments about being actively involved beyond separation, does that mean on the board level or on the management/ CEO level?

Thank you for the question. We will talk more about that in the August, September time frame when we announce further management positions in the company. But I want just to go back to my comment, make it very clear, I will be actively involved even after the spins.

And next we'll move on to Vincent Andrews with Morgan Stanley.

Thank you and good morning, everyone. And just wondering the guidance slide for 2018 that was in the first quarter results didn't make it into the second quarter deck. So I'm just hoping that you can give us sort of a sense of your expectations for the second half of the year and what might have changed versus your thoughts at first quarter? Thanks.

Yes. Thanks. Well, nothing is changed. Let me just walk through, first quarter obviously, we have very a strong quarter, and we're above our guidance and above consensus. I think you could see when you model out the second quarter, it's a very robust quarter across the board in all three divisions. And when you model it out, I think you'll see that both on sales and on EPS and EBITDA we're nicely above consensus there by three or four percentage points. So the first half of the year is racking up really nice and you could tell from all our comments that our end markets across the board are feeling robust to us. And I just say for the year, look it's early in the year. We'll probably give more guidance update next quarter on the year. But I am highly confident we will hit what's out there in consensus for us - for this year.

And next we move to Jeff Zekauskas with JPMorgan.

Thanks very much. If you look at Monsanto's volumes for their February quarter, they were down 4% in seeds, and I think for the first half they were down 6%. So can you comment on the difference between your results and the results of other industry leaders? And in the old [ph] days, Dow had rights to SmartStax. Is SmartStax something that you can commercialize and are you beginning to work on that?

Yes, thanks for the question. You're right. If you just think about the timing of when they announced their fiscal year versus ours, in our results is part of what you would have recognized in their results, they lower safrinha acres that we saw in Latin America. You see that kind of fully in ours plus, you see this real shift in North America. And that's primarily driven by the differences in our route to market approach, recognize a lot of the amount of the other competitors seeds are pushed out to retail. And so they will book a sale and the revenue of that transaction much earlier in their cycle. All of ours - most of our seeds, especially the pioneer branded seed is sold direct to growers. So we recognize the revenue and shipment. And you heard Howard talk about that recognitions. One of the service models that we offer is the fact that we can deliver seed right to the grower as they are firing up the planter and get the field ready to plant. So we'll sometimes deliver seed within days of their planting. So you see - normally you would see a shift in where our revenue falls versus others. So this year even particularly more dramatic as the season really shift. You'll also see that in some of the guidance we talk about for second quarter where we're going to be up in kind of the low 20s percent range. So we pick all of that up and the reason I'm confident about that is I've got good visibility of that order book, right. I have invoices from growers, I know what those shipments are going to be. It's just matter of physically shipping all of those products.

One of the other points that we're going to do, both new Dow and new DuPont will stick with the same fiscal year that we now have, which is basically the calendar year. But we're going to move the Ag company to a fiscal year like the competitor you just mentioned, where it's a September one start to the end of August. And what that will do is it will get the planting seasons all aligned in the same quarter. Right now, as you can see, what happened this quarter, our shipments happened in the second half of March beginning of April and there could be a major swing. And those will be in the same quarter then. So we won't have that issue and I think it just makes things a little bit clearer. So you will see a shift to that fiscal year on Ag.

Jeff, your second question about SmartStax, you know, we continue through the agreements that Dow previously had to be fully enabled with SmartStax and our teams are thinking through - the different constructs that are available to us now that the different line-ups that we'll have to offer and you'll see more of that as we launch our plans for 2019 and 2020 both in the Northern Hemisphere and the Southern Hemisphere. So stay tuned for that.

And next we move to Hassan Ahmed with Alembic Global.

Good morning, guys. A question around the pace of buybacks. It seems the synergy numbers are tracking well, the time line of the spin is on target as well. But, obviously because of all this macro skittishness in the market, your share price has come down over the last couple of months. So my question is with all of these good things eminently happening why would you guys not accelerate the pace of your buyback?

Yes. Well, look we did $1 billion this past quarter, as Ed and Howard highlighted. We're going to do another $1 billion this quarter. And really the only issue here is, we're literally right in the throes of the capital structure, getting ready to then go with our modeling to the rating agencies. And we really want to get deeper into that process before we make a decision. I think you know a lot of us from our management style. I agree with your comment. You like to put the flip down a little here on share repurchase at these prices, if we have the opportunity during this year once we know a little bit more clarity on that we will seriously be taking a look at it.

And next we move on to Josh Spector with UBS. Josh, your line is open.

Let's go to the next one.

Okay. We move on to Chris Parkinson with Credit Suisse.

Thank you. Last quarter you spoke about re-evaluating several businesses within specialty. I believe it equated to roughly 5% to 10% of the segment. Can you just give us an update here and offer any further insights as for how you're evaluating any longer term portfolio value creation opportunities in addition to synergy capture? Thank you.

Yes. Well, look on specialty the short-term obviously is we're getting the synergies and we've got a much bigger number now because of the portfolio shift that we did putting all the light businesses together. So obviously, we've been very, very focused on that and feel very confident we are on track with all of that. The second big real focus area just to kind of put them in order here is, we have a lot of growth synergy opportunities as we highlighted on the call in SpecCo. So the teams are very focused because they are all high return opportunities kind of within our control safer to do, don't require a lot of excess money to be spent. So a big focus in that area and it's in literally all four of the different divisions of spec co. So we really put a lot of effort into that over the last few months and then we just did this with our board the DowDuPont board and we did it with the advisory board of spec co. We've really laid out a two to three year plan of what we want to do with the portfolio. So they are already well versed on it and yes you're correct. We do have some businesses we would like to exit and get the cash for those and redeploy it in higher growth areas and we have that very defined at this point in time and it is about up to 10% of the portfolio. And we have real opportunities we know we want to shift the spending into in these other areas of high growth that we are talking about. We will be doing some of it this year but the bulk of it we will do right after we do the spins of the company because our teams are so busy now in IT tax rate that we need the same people to do some of this. So you'll see us fuel our groove this year and then clearly there's all kinds of optionalities we've talked about in this portfolio and whatever's best for creating shareholder value we're going to definitely take a look at it. And we've already talked to the board about some of those potential opportunities that we need to study with them during the next six to eight months.

And we'll move on to Frank Mitsch with Wells Fargo Securities.

Yes, hi. Good morning, gentlemen. And Andrew was a pleasure working with you and best wishes on your retirement from Dow.

I'll be tracking you Frank.

Vice versa, as well. Vice versa, as well. Following up on Dow and specifically packaging Howard you mentioned a couple of things that I thought were interesting. Well more than a couple of things. But just a couple US pricing was positive on the packaging side although Asia and EMEA was off but you also indicated that demand was keeping pace with the supply additions which of course everybody is tracking closely? So my question is how do you see polyethylene pricing and margins playing out as we progress through 2018 and into 2019?

It's Jim. I've got my voice back so Howard is going to let me talk. So actually plastics pricing and demand held up well through the quarter. We had positive price momentum right through the end of the quarter and we start out strong into second quarter. I think what you've got going on right now is obviously the pace of capacity additions on polyethylene has not kept up with the pace of ethylene capacity additions. And these things happen obviously whenever you're bringing big assets online. Global GDP is running north of 3% right now. We're running north of 4.5% growth on plastics. That's very, very robust demand. There's not enough plastics capacity coming online this year to keep up with that, and when you look at the plastic capacity across the different mixes that's leading to some positive moves there. Yeah I think in Asia you see some compression in the margins in Asia because you've got higher oil prices in their oil based feedstocks over there. So that's compressing margins a bit but I'm not concerned about pricing as we move through the quarters and into the back half of the year. And I am not concerned about capacity yet. At this rate the GDP growth we need about the equivalent of three to four world scale crackers to be built - a four to five world scale crackers to be built and started up in each year. And for the next three years, we've got about three coming online total. So I think we're in a constructive environment here.

And Steve Byrne with Bank of America will have our next question.

With respect to the Ag division what level of cost synergies have been realized so far since the merger? And can you quantify what you describe as them being second half weighted, what do you expect to realize later in the year? And then just one other comment you made Howard about the expectations to recover divested revenues or divested businesses. Can you elaborate on whether or not that's just in seeds but it's also in crop chemicals?

Yes, this is Ed and Jim, you should jump in also. We've had about $100 million $125 million cost saving so far in Ag, but remember the Ag is the only business with the bigger delay because you've got to get to the next planting season. So we've taken a lot of actions on a percentage basis already in Ag. For instance we've moved production into our facilities and we're going to get a major cost reduction or COGS improvement from doing that. We know exactly what it is and we've been taking those actions. You don't actually see it in the results yet. So when you actually see all our run rate we talked about being at 75% at the end of the year all part of that is Ag starting to kick in. So in the second half of the year, the big drivers in Ag are the new product launches which are kicking in. And the other big one is actually the synergy some of them finally starting to kick-in because we're starting to get around to that year from when we did it. So those are the two big drivers that lift the second half a lot in Ag. Jim, you want to take the divestment question?

Sure, Steve. You're right. We're in the middle at looking at the total portfolio both on the seeds and the crop protection perspective. On the seeds side what we'll do is we'll typically look to understand these different crops that are maybe tangential or not core versus crops that are core. So corn, soybeans, wheat rice, those will be our core focus and we look to continue to invest and expand in our geographies around the world. But in the past, we've taken a look at about - we've looked at sorghum, we've looked at some of the other secondary crops and made some decisions. Now that we've combined the portfolios, we'll have an opportunity to do some more of that on the divestiture side. On the acquisition side on seeds, I think as we continue to look at diversifying and looking at markets around the world, the vegetable seed industry for us is an interesting place to look, and there are some players out there that could represent some good value for us. In Crop Protection, we are taking kind of a best owner mindset and looking at our portfolio to understand where these products are on their maturity curves, the level of generic competition that they face around the world and the opportunity for us to invest more heavily in our pipeline. And as Ed said, is a real part of our strength in the second half of the year and certainly our strength over the next couple of years. At the investor conference earlier in the year, we talked about $4.5 billion of peak sales from launches that are occurring right now. And making sure that we've got the kind of resourcing to drive those launches out of the pipeline not just leak them out but launch them out in an aggressive way is a core strategy for the leadership team.

And next we'll move to Arum Viswanathan with RBC Capital Markets.

Great. Thanks. Good morning. Just wanted to go back to the F Q2 and full year guidance. You've spoken a little bit about Ag and materials co. There is a lot of percentages given for this specialty businesses as well. What would drive some of the estimates to the upper end of those ranges in each business within specialty? And then similarly is there any upside for you guys to as the year progresses to again go back to the full year guidance to be above our expectation right now? Thanks.

Look, things feel really good right now. We have strength virtually in every end market we're serving. The only one that was a little bit soft on this quarter was the construction market and it was totally weather related in Japan and in the US. If you look at our guidance for the second quarter, we see a significant pickup in Safety & Construction as you can see here high single digits on the sales line and mid 30s on the EBITDA line, so it was going to be a very strong quarter. So that was literally the only one was softer that we thought that was literally driven by that. You see us digging right out of that right away. So in the first quarter, just to rundown some of the specialty for you, probiotics grew 30%. Pharma grew 18%. As you know we're very excited about pharma because we took the businesses together from FMC, Dow and DuPont and we really have a solid position there now. Semiconductor was up 10%. One I'd like to highlight is auto where we've been running for three years way above auto builds and our growth this last quarter was 8% on an average. All through 2017 it was 8%. So, you can clearly see because of electrification and light weighting we're just getting more content into cars and we see that demand continuing. So long story short if everything holds up where we're seeing it, we're feeling very solid going into, obviously, the second quarter with the guides we're giving and just go into the second half of the year. And as Jim Fitterling just got on talking about the cycle in the business and how it feels, it's a really good feeling now. In fact, it's amazing the stock market in the last 60 days especially with large stock versus where we feel things are and all it's the biggest disconnect I think I've ever seen in my career. That is what it is, but we're worrying about running the business. Demand feels good. And as I said I'm highly confident we'll hit consensus and you can take that how you guys want.

And I think the other thing Arun that you got to consider is we delivered that strong first quarter. We had some wintertime planned outages in the first quarter. So probably cost us 65 million on the material side in first quarter that we're not going to have in the second quarter. We've got some higher turnaround in the second quarter but we've got more plant capacity coming on and plastics through the year. So our view is things are very positive this year. I think are people confusing what's happening financial market with what's happening in our real end markets, so our real end markets are strong.

And next we move to Jonas Oxgaard with Bernstein.

Good morning, guys.

Good morning.

First curious the sirens I keep hearing the background is that your, we beat the quarter signal or - beyond that I was wondering a little bit about the noise with China, the trade war. Could you talk a little bit about your exposure to China? I mean, what products and how much revenue are we talking about is actually being shipped from the U.S. to China today, and what's your general thinking about the whole trade war situation?

Well, let's take it by its pieces and Jim Fitterling why don't you hit it first.

Look I don't think we're looking at a major trade war here Jonas. I think some of that's been overplayed. I think what's going on here is we're trying to find a path toward fair treatment with trade with all countries including making sure the IP is protected and making sure that products aren't being dumped back here in the United States. I think people have got us in the crosshairs on the trade war thing and I don't think that's what's going to happen. So nothing's been imposed at this time that's having a dramatic impact on us. And remember, we have global assets to cater to the demand in China. The whole reason we built Sadara was to serve the eastern part of the world and so that's what's happening today. We've built the US Gulf Coast to serve North America and South America. And I think equally in Ag with the global trade of those products Jim Collins knows that if product from Americas not going to go to China product from some other country is and that American product is going to move around.

And just to talk in the Ag business, just use the example of Brazil ships more the soybeans into China. We will take up the slack because the global demand is needed. In fact last year there was more consumption than there was production. So everything that's being made globally is needed. And by the way most of the soybeans are made in Argentina grown in Argentina Brazil and the U.S. So our demand in the U.S. if something happened would start going into markets like Vietnam Indonesia Mexico Turkey, which have been bigger consumers than actually growing consumers of soybeans.

Jonas, I'll just add one more thing. For the actual products that we sell into China as you know our seed businesses locally sourced essentially 100% with JV partners in China. And on the crop protection chemistry sales about half of our sales today are locally sourced. And the others are brought into country and those are essentially already placed in country for the remainder of 2018 and already for a part of 2019. So from a product cycle we are also in pretty good shape.

Yes. And just to wrap that up of from a specialty standpoint, we see no impact there. Our biggest business in China is in the electronics area and we're pretty much all locally sourced in the market.

And next we move on to Peter Butler of Societe Research [ph]

Good morning.

Good morning.

Hey, Andrew, we might not be hearing you on Dow's quarterly conference calls. But I think in the future I now expect to hear you as a major global leader on the Davos scale, so.

Maybe Davos and the desert, Peter but we'll see.

Okay. Well, the question is when do you folks intend to increase the visibility on the stock market stories for the proposed spins? Basically, you've been asking investors to discount a two-year old story. We had a great spin, pardon me, we had a great merger and now we're going to have spins. People need to have a lot more details on where you're going with these three pieces.

Yeah. Peter, it's a good question. And we haven't pinned down the exact date. But our plan is in the kind of that September, October timeframe is to do a major Investor Day for each of the three businesses. And then we'll be following up obviously very quickly after that because we're going into last months of this with all our filings that go out with a lot of detail, and then we'll be doing our road shows. So we'll be talking a lot more about portfolio strategy going forward, a lot more of that. You will see capital structure and all will be done and where our leading management team in each of the three companies and uses of cash et cetera et cetera. So we're not that many months off from doing a lot more of that.

Peter, this is Howard. I mean I think the only thing I would add a couple of points we'll get the Form 10s out in the fall as well. And I would respectfully disagree with the thesis this is two year old story. I mean, we are focusing on delivering results whether it's volume growth, pricing growth, cost synergies are hitting the bottom line. We've got new assets that have come online that are hitting the bottom line both in the materials division and in the specialty division. And the Ag is a shift from Q1 to Q2. So the businesses are all performing at or above their market comps.

And next we'll move on to John Roberts with UBS.

Thanks. I thought it was a good quarter and I know you're coming up on the hour. So I just wanted to say thank you to Andrew for all your years of service and best wishes in your new role at Aramco.

Thank you, John.

Great. Thank you.

And our final question today we'll hear from Kevin McCarthy with Vertical Research Partners.

Yes, good morning. Thanks for squeezing me in. As we look across your industrial results it occurs to me that volumes are quite strong in areas like Industrial Intermediates & Infrastructure perhaps construction phasing markets. It sounded like they will be even stronger were it not for weather. So in that context, as you survey material sciences, where do you think you might need to de-bottleneck or consider Brownfield capacity additions over the next couple of years? And then, secondly, what are your thoughts on planned maintenance activity in 2Q versus 1Q?

Yes. Thanks, Kevin for that question. Look, we have a high return on invested capital opportunities in front of us, what I would call, incremental size investments not anything like the magnitude of what we did in the Gulf Coast and Sadara. Although, those incremental opportunities in plastics would add up to a similar amount of peak capacity and much less capital. We are able to do all that within our D&A levels in Materials Science. So I think that's very positive. We have some growth in all of the segments. So in Consumer Solutions and silicone, you're going to see some need for some additional capacity both for my business and for Mark's specialty downstream business. You are going to see that in Polyurethanes and our assistance business, which has been growing double digit. You are going to see some de-bottlenecking in Industrial Solutions in our EO Derivatives business, which is not had a lot of capital added over time. And I think you're going to see continued good strong growth, the value creation and high free cash flow coming out of those businesses.

And that will conclude today's call. We thank you for your participation.