Good day and thank you for standing by. Welcome to the Fourth Quarter 2021 Earnings Call. [Operator Instructions] At this time, I would now like to hand the conference over to your speaker today, Pat Fitzgerald from Investor Relations.

Good morning and thank you for joining us for DuPont’s fourth quarter 2021 earnings conference call. We are making this call available to investors and media via webcast. We have prepared slides to supplement our comments during this conference call. These slides are posted on the Investor Relations section of DuPont’s website and through the link to our webcast. Joining me on the call today are Ed Breen, Chief Executive Officer and Lori Koch, Chief Financial Officer. Please read the forward-looking statement disclaimer contained in the slides. During our call, we will make forward-looking statements regarding our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risk and uncertainty, our actual performance and results may differ materially from our forward-looking statements. Our 2020 Form 10-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 exclude significant items. We will also refer to other non-GAAP measures. A reconciliation to the most directly comparable GAAP financial measure is included in our press release and posted to the Investor page of our website. I will now turn the call over to Ed.

Thanks, Pat and good morning everyone. Thank you for joining our fourth quarter earnings call. In addition to discussing our fourth quarter results and outlook for 2022, this morning, I will also comment on the progress of both our intended acquisition of Rogers and our process for divesting a majority of the M&M segment. Our fourth quarter results were highlighted by 6% volume gains, including a 9% increase in the E&I segment and a 12% increase in W&P. M&M delivered top line results ahead of expectations, including volumes well ahead of global auto builds in the quarter. Customer demand was broad-based across the portfolio, led by greater than 20% volume growth in semiconductor technologies and high-teens volume growth in water. Our top line performance also reflects significant pricing actions we took to offset $250 million of raw material inflation in the quarter. We are seeing increases in all businesses with about three-fourths of the impact in M&M. Our teams have done an outstanding job monitoring our input costs and quickly translating that into price increases to remain price cost neutral for the year. We are taking additional actions as we work to offset logistics costs, which during the fourth quarter, were a $50 million headwind, mostly in W&P. I want to recognize and thank our employees who show up everyday in our factories to keep our lines running and supplying the necessary products and solutions to deliver results that we reported today. Their unwavering commitment in the face of a relentless pandemic, ongoing supply chain disruptions and logistic challenges deserves our gratitude. Turning to Slide 3, I will provide an update on our portfolio transformation and we will review how our focus on those strategic actions, balanced capital allocation and innovation-led growth position us extremely well heading into 2022 to…

Thanks, Ed and good morning, everyone. As Ed mentioned, customer demand in our key end markets remained strong in the fourth quarter. We continue to face unprecedented global supply chain challenges and rising inflation. However, the swift pricing actions that we continue to implement are benefiting top line performance and maintaining earnings on a dollars basis. These factors, along with our intense focus on execution, contributed to net sales, operating EBITDA and adjusted EPS results above our guidance. In addition, we had solid cash flow generation and returned over $650 million in capital to shareholders during the quarter through $500 million in share repurchases and over $150 million in dividends. For the year, we returned more than $2.7 billion in capital to shareholders through $2.1 billion in share repurchases and $600 million in dividends. Turning to Slide 4, net sales of $4.3 billion were up 14% versus the fourth quarter of 2020, up 13% on an organic basis. Organic sales growth consists of 7% price gains, reflecting the continued actions we are taking to address inflationary pressure and 6% volume growth. A 2% portfolio tailwind reflects the net impact of strong top line results related to our acquisition of Laird and headwinds from non-core divestitures. Currency was a 1% headwind in the quarter. Overall, sales growth was broad-based and reflects double-digit organic growth in all four regions and high single-digit to double-digit organic growth in all three reporting segments. From an earnings perspective, we reported fourth quarter operating EBITDA of $973 million and adjusted EPS of $1.08 per share, up 5% and 54% respectively from the year ago period. Our incremental margin in the quarter was pressured by price costs and logistics. Net of these impacts, our incremental margin was about 33% in 4Q. Ed mentioned earlier, the pricing actions…

Thanks, Lori. Let me close by summarizing why I am excited about 2022 at DuPont. Our results demonstrate that our businesses deliver the solutions our customers demand and a tight supply chain and challenging logistics environment, we delivered 6% volume growth well ahead of our expectations coming into the quarter. Our teams continue to work closely with our customers to understand their complex material challenges and to win business by delivering innovative and sustainable solutions. You can also see our teams are managing every lever within our control. This is evident through our delivery of pricing gains to offset every dollar of raw material inflation in 2021, and these actions continue into 2022. In addition to having our fundamentals in place, we are on track to complete a few substantial steps in the transformation of DuPont in 2022 with the planned Rogers acquisition and the M&M divestiture. These transactions as well as the potential for additional M&A in strategic areas, position DuPont as a premier multi-industrial company, focused in the areas of electronics, water, industrial technologies, protection and next-generation auto. And finally, because of our ability to complete this transformation while maintaining a strong balance sheet, we will be in a position to generate value for all stakeholders through organic and inorganic investment in our businesses and by staying committed to our dividend and share repurchases as we announced today. I look forward to providing you updates on each of these areas as we progress through 2022. With that, let me turn it to Pat to open the Q&A.

Thanks, Ed. Before we move to the Q&A portion of our call, I would like to remind you that our forward-looking statements apply to both our prepared remarks and the following Q&A. [Operator Instructions] Operator, please provide the Q&A instructions.

[Operator Instructions] Your first question comes from the line of Jeff Sprague with Vertical Research.

Thank you. Good morning, everyone. Good morning, Ed and Lori.

Good morning.

Two questions for me. First, just on M&M. Ed, is the tenor of the discussion around valuation still in the ballpark of what you were thinking back in November, kind of given the market turmoil that we’re looking at?

Yes. No change to the comment I made last time, feeling very good about the process. Multiple people very interested in the asset, and we’re moving along as quickly as we can here. We will have a deal to announce before the end of the first quarter.

Great. And then just thinking about the portfolio after this, I have done a lot of the benchmarking work myself and the company does look a lot different when this is behind you. But I just wonder if you could give us a sense of what you think the organic growth profile of the company is once you get these two moves done. And should we be expecting kind of other portfolio moves? Or we’re moving more into maybe, I don’t know, maybe bolt-on acquisition mode with a focus on organic growth perhaps.

Yes. Jeff, a couple of comments. And by the way, I think it really does transform the portfolio into a premier multi-industrial. If you look at just the fourth quarter results, if you take M&M out, the portfolio grew volume 10%. It was 6% with M&M in it. And by the way, if you look at the EBITDA margin profile, it would improve by 190 basis points with M&M out. So as we said before, with this move we’re making, we’re definitely going to improve our top line and the stability of it. We’re going to improve our EBITDA margins, and we’re clearly significantly reducing cyclicality M&M portfolio. And by the way, I think in Lori’s comments or my comments, 70% of our raw material increases this year were in the M&M segment. By the way, we’re getting significant price and covering it, but somewhere down the road is commodity, cost online, the pricing unwinds. And if it was in the DuPont portfolio, by the way, our organic growth rate little care for a year. even though the M&M business is a phenomenal business and a great cash generator. So it really fixes a lot of things and have been, of course, adding Laird and Rogers by the way, the consistency of those secular end markets that we’re adding in are very nice. And I give you an overall comment. When you look at the pie chart on a new DuPont after these moves are made, by the way and assuming maybe another key acquisition happens that we add into one of these secular areas we talked about our five areas, you have about 45% of the portfolio that outgrows GDP and about 55% of the portfolio probably somewhere around GDP. So we are really very much tweaking that end market secular exposure we have to have a really consistent nice higher organic growth rate in the company.

Great. Thank you.

Bye, Jeff.

Your next question comes from Scott Davis with Melius Research.

Hi, good morning, Ed, Lori and Pat.

Good morning, Scott.

Good morning.

Good luck with M&M. Looks like we’re going to get an announcement in another couple of months. But I want to switch over to W&P, because it seems to be back on track, pretty big core growth numbers even excluding price. What was it your ability to meet customer demand in the quarter that changed? Or the actual customer orders go up substantially in the quarter? And is this business just a little lumpier than perhaps we may think it is? And you’re going to have some ebbs and flows.

Yes. A couple of things, Scott. First of all, the order rates have continued to go up. In the last couple of weeks, we’ve had really nice order input in the business. So that’s continuing on a nice trend, and it’s almost every one of those end markets that Lori touched on in her prepared remarks. But we also, in the quarter, did a nice job getting through some of our, call it, past due backlog. By the way, one of the areas, if you all remember this quarter, we had 19% growth in the water business, and the two quarters before that, we highlighted to you that we were having a tough time getting some shipments out the door in the water business. And we had low single-digit growth in the – if you combine the second and third quarter, and it obviously should have been higher in the second and third quarter. So we really got a lot of the logistics cleaned up, the port’s cleaned up a little bit in some of the areas where we ship our water products, and we got 19%. So we flushed out a lot of that second and third quarter. Having said that, the water orders coming in still look very robust. So we’re feeling good about what we’re getting out the door to satisfy our customers and the order intake still coming into the company. So, on the point I made a minute ago to Jeff, you combined W&P and E&I, which will be the new portfolio, 10% volume growth in the quarter on top of us getting pricing.

Right. And Ed is the strategy to price around raws or price and raws plus logistics?

Yes. Scott, it’s to get both. What I think happened to everybody. You see your input costs on the raws, and we’ve been getting pricing, like we said, we covered it 100% in 2021. But the logistics costs, especially ocean freight, just started going bonkers around October, November, kept going up in December. And it wasn’t even up and staying up. It was continuing to go up and some of the ocean freight is literally up 700%, 800%. It’s crazy. So I think everyone is still chasing that, and that’s really a big part of our story in the first quarter in W&P, where we’re implementing more pricing – well, by the way, we’re implementing more pricing actions across the portfolio, but we’re really going at it on the W&P side, because they have more of our logistics costs than the other two businesses. And we’re putting through more pricing there. So as we get into second quarter for W&P will start into see margin improvement keep building as we go through the year.

Okay, helpful. Good luck, everybody.

And your next question comes from the line of Steve Tusa with JPMorgan.

Hi, good morning, guys.

Good morning.

Hi, Steve, good morning.

Are you still thinking kind of the same – I know the market has been a little bit volatile, but any update on your expectation for the multiple for M&M ultimately?

Yes. I stick with my comments that I made last time. I think when I made the comments, our 2021 multiple was a little shy of 11%, and I said we will get more than that for this asset, but I think our multiple now is still a little shy of 11% in 2022. And I stick with my comment that I made last time.

Great. And then just the kind of price cost dynamics first half to second half, I am sure that’s part of the kind of seasonal ramp. I know it’s a little bit tough to tease out what normal seasonality here is for this new portfolio, but maybe just put that in the context of the 1Q EBITDA guide, if you could? I’m sure that’s an aspect.

Yes. So in the first quarter, we still see logistics as a headwind to earnings. They are probably in the same range that we called out for the fourth quarter of $50 million. So as the year goes on, we will expect to offset that to land neutral on a full year basis on those raw material escalation and logistics. So that’s a piece of our sequential margin improvement as the year goes on kind of getting back into more normal patterns in the second half. Another benefit that we will see as the year goes on, it’s really just the volume drift and so we will expect sales to increase coming out of Q1 to get to the full year guide of a midpoint of $17.6 billion. And beyond that, just the lift that we’re expecting around productivity as we enact and productivity actions get more synergies out of the layer transaction. So we’re doing really well there. We’ve actually upped our expectations slightly from $60 million when we announced the deal. So now we’re targeting closer to $63 million from the Laid synergies. So all of those things combined are what’s giving us confidence in the margin ramp coming out of Q1.

Great. Alright, thanks a lot, guys. Appreciate it.

Thanks, Steve.

Your next question comes from John Walsh with Credit Suisse.

Hi, good morning, everyone.

Good morning, John.

Maybe just circling back to the guidance, if we look at 2021, you outperformed your initial guide by about 8% on EBITDA at the midpoint in the face of a lot of inflationary pressures. As we think about 2022 and how you kind of set the initial guide, is it really just running forward some supply chain continuation of the current environment or is there anything that’s DuPont specific that we should be aware about when you set that guidance?

No. I wouldn’t say there is anything DuPont-specific. So obviously, we still have caution in the first quarter around not being able to cover the logistics headwind as well as primarily within our W&P segment, some impacts on production because of Omicron. So we’re seeing some lower production rates in January, primarily in our W&P business, which has large facilities here in the U.S. They have seen some absenteeism from the Omicron variant that’s leading to lower production on assets that usually one sold-out, as well as higher labor costs as we deal with some overtime. So the margin profile that we have at the midpoint in Q1 of 22.8%, we expect to escalate as the year goes on landing more to 25% on a full year basis. But to your question, I wouldn’t say there is anything different in our methodology about how we provide guidance for the full year versus any other company.

Yes, I would add one other comment also. Lori and I plan that raw material inflation stays where it’s at for the full year. So that’s an assumption that we have in our planning. So again, we’ve got to continue to get the price to cover the logistics and any other raw inflation that we see. And we are, again, enacting across all the portfolio as we enter the new year here. That continues. But we’re making that assumption that it stays up here, and we got to get it covered.

Yes. So I’ll say we’re expecting another $250 million in Q1 year-over-year, probably about the same range in Q2, and then we expect it to plateau not decline, but plateau in the second half.

Great. Thank you for that color. And then maybe just a follow-up on how you’re thinking about volumes by geography or major countries however you’d like to speak on it as we think about 2022? Thank you.

Yes, we expect continued robust growth again across the different regions. So in 2022, if you look at our guidance for it, 6% of the midpoint on a total company basis. But if you take out the headwind that’s in non-core from the divestiture of the clean tech business, we’re actually at about 8% total growth in 2022. So we see strength again in North America and Europe, Asia Pacific, all kind of up in the high single-digit range with a little tempering in Latin America. But again, Latin America is not a huge portion of our footprint.

Great. Thanks for taking my questions.

Thanks, John.

Your next question comes from David Begleiter with Deutsche Bank.

Thank you. Good morning. Just on W&P pricing in this cycle, how sticky do you think it will be this time around versus maybe prior cycles?

Yes. I mean we are looking to get kind of in the mid-single digit price increases in this year, so we had 5% in Q4. We will look to maintain that pace through the first half. It obviously will temper a bit in the second half on a year-over-year basis as you lap the price increases that we started in Q3 and picked up in Q4. So, I would say W&P price stickiness is a little bit stickier than what we would see in the M&M business. We would expect that to the turnaround once the raw material starts to recede. So, we are hoping that we can maintain those price increases, but we will see what the raw material and the inflation environment looks like as we go forward.

Very good. And Ed, just on PFAS, any update on this issue? And what progress could you hope for this year in terms of removing the overhang? Thank you.

Yes, David. Look, I think we are going to make very good progress this year. I will just give you a couple of things. Chemours, Corteva and DuPont are working extremely well together. I would say we are very synced up on wanting to get some outcomes here in the first half of 2022. So – and I mentioned that, David, because one of the issues we had a year ago before we signed the cooperation agreement and the structure we put in place between the three companies. We were just wasting a lot of time talking internally within the three companies and wasting, I think valuable time not being synced up because we didn’t have that agreement in place. We are really, every single week now, in discussions with third-parties to resolve issues. We are literally synced up on weekly calls, and it feels really good that we can make progress. Obviously, the big focus would be getting the Water District cases settled on the PFAS side of things. We have a few states that will do some settlements with like we did in Delaware. And so we are feeling very, very good that we will make some progress. And again, a lot of conversation is going on presently and that’s productive.

Thank you.

By the way, it’s very high on the Ed Breen’s personal list. I understand the importance of getting that stuff resolved and personally spending a lot of time on it.

That sounds great. Thank you.

Your next question comes from the line of Chris Parkinson with Mizuho.

Hi. Thank you very much. Just very quickly, could you speak to the current backdrop in semiconductors for ‘22, given the recent sector noise, the competitive environments? And just also how investors should be thinking about the current CapEx cycle flowing through your outlook for ‘23 and even potentially longer term? Thank you.

Well, the CapEx piece, as we have said, we are going to be on the higher side for about 1.5 years here still. We have got a couple of these big expansion projects going on. We are just winding – so by the way, we are going to run about 6% on CapEx. We would like to, over the medium-term, run that more a little bit under 5%, mid-4s, high-4s, somewhere in that range. But we were just finished up the Kapton program, but we have got some water expansion stuff we are looking at. And obviously, we have the big Tyvek expansion which is our single biggest CapEx program going on over in Luxembourg right now that still goes on for about 1.5 years. So, we are going to run a little bit higher. But pretty much where our CapEx is going is where we need capacity, which is maybe a good problem to have.

Yes. And I think on the semi CapEx front, obviously, the industry is running, I think, at about 98% capacity right now. So, contributing to the really strong growth that we saw overall semi in 2021 with 15%. We will look to have this strength again maybe in the high-single digits, low-double digits in 2022. So – and as they invest capacity and CapEx in the semi space obviously benefits our portfolio. So, we tend to outpace MSI for the amount of wafers produced by 200 basis points to 300 basis points. So, that number continues to show strength in the coming years from all of the demand and the capacity that’s going in, we will participate in that uplift as well.

Yes. Part of our growth, by the way, a nice piece of it, if you remember, from the teach-ins that John is a lot of more complex semiconductors, more layered chips and all that, and that plays to our advantage, it gives us growth. But growth is, as you all know, has been a little tempered to Lori’s comment right now because we need new fabs to come on board. So, it looks like a nice business to be in over the next decade as new fabs come on, and we have seen a couple of announcements recently in the U.S. where some fabs are going. So, it looks like a nice trend for the next decade.

And just you hit on all the follow-on topics on W&P between prepared remarks. I just want to push something out in terms of just given the strong pricing outlook, let’s say, the eventually abating P&L and labor-related cost headwinds and then the growth outlook for, let’s say, safety protective versus shelter. Could you just remind us and just give us your updated thoughts on normalized margins for that segment going forward, let’s say ‘23 forward? Thank you.

Yes. So W&P, as we had mentioned, we will see sequential margin deceleration from Q4 into Q1, really driven by the items that we had called out. But if you exclude the raw material and logistics net headwinds and the headwinds that we are seeing from a production perspective, the W&P margins in the quarter should be almost 500 basis points better than what we may post because of those headwinds. And so you are getting that more into the 26% range. I think going forward, that those margins should be in the 26%, 27% EBITDA margin profile.

Thank you very much.

Your next question comes from John McNulty with BMO Capital.

Yes. Thanks for taking my question. Ed, it looks like you are going to have a mountain of cash once mobility is sold off. Can you speak to what you are seeing in terms of the M&A pipeline? It sounds like you have got some chunky targets out there with the volatility that we have seen in the market, have you seen those multiples come in at all? Are they still hanging in there? I guess how should we be thinking about that?

Yes, I mean, I think generally, the multiples are hanging in there, but we will see how the year goes. We are, John, most likely won’t do an acquisition until after we get the proceeds from M&M, which will be in the fourth quarter. And we are not missing out on something we want by waiting in that time window. So, we will see where things sit at that point in time. By the way, what we are looking at are things that are right in the wheelhouse of those five core secular growth areas I mentioned to you. So, we are not looking at something that’s off another leg on the stool or something like that. We really feel we can beef up our opportunities in existing customers bases and expand customer bases and technology areas that we already know we sell into, and we can expand it and add to it. I think by the way, Laird and Rogers are two perfect examples of that. I am not saying it’s in that area, but something like that defense will get a kind of cost synergies out of when we do it. So, that’s kind of our timeline of what we are thinking that as we exit next – this year we are in now, possibility for an acquisition or two. By the way, this number could be, give or take, $1 billion, but we will probably be sitting on between cash flow, selling M&M, buying Rogers, CapEx, everything else that kind of goes into it, we will probably be sitting just for planning purposes with like $6 billion of excess cash, somewhere in that ZIP code as we consummate this year.

Got it. No, that’s helpful. And then just a question on the raw material and inflation front. I guess at this point, do you have actual constraints from a supply chain perspective where you are not – you are being kind of held back and putting out product at this point, like whether it’s force majeures or logistical challenges or what have you? Are you pretty well squared away at this point? And now it’s just the inflation that you have to worry about? And when will that maybe settle then?

Yes. I would say, in general, the raw material constraints are pretty much behind us. There are some force majeures that we are dealing with, but they are not holding back our production. What is holding back our production is what I had mentioned earlier with some of the Omicron absenteeism at some of our sites in the U.S. that’s primarily impacting the W&P segment. So, we had planned our Q1 guidance, but that doesn’t materially get better versus what we saw in January. So, that’s really the only place where we are seeing constraints in production.

And we would think that’s really a one quarter issue the way Omicron is now coming down. We had a key production facility. We missed two days of production. I think it was two weeks ago, lack of staffing. We were back up on the third day. It’s things like that. We are paying everyone overtime to work more hours, and that’s costing us money. And a lot of that, we obviously plan will subside here sometime in the first quarter. But from a planning purpose, we just made the assumption that January, February and March will all look the same because of Omicron and those type of issues.

Got it. Thanks very much for the color.

Yes. Thank you.

And your next question comes from Steve Byrne with Bank of America.

Yes. Thank you. Would you attribute the 9% volume growth in E&I to your customers just running harder and some capacity expansions, or is this also from share gains? And if the latter, what precludes you from not getting more price in the segment? Is that only possible with a price mix shift? And can you preclude the legacy products from declining in price?

Yes. So, I would say it’s a combination of just a really robust end markets within E&I as well as some share gain primarily within the semi space. And so our semi segment was up 22% in the quarter. That’s mainly volume. Back to the earlier comment around the fabs running full out as well as some share gains on our point and also some benefit in the mix of chips that are being produced or those chips that have more advanced nodes favor our portfolio. And as far as price, we are getting price. It’s netting out to a slight headwinds because there is a normalcy that goes on within the Electronics segment. And so we have sized that about 1% annual fees in the E&I segment that happens across the electronics industry. That’s not something that’s just a DuPont factor that goes on across electronics. And so if you take that out, we actually did net some price to be able to offset the raw material headwinds that we are seeing within E&I. But back to the pie chart that we provided in our slides, E&I is the smallest portion of our portfolio that has headwinds on the raw material front, only about 10% of the headwinds that we saw of the $250 million in the quarter was from E&I.

And in your remarks, Lori, you mentioned about the water technologies focusing on industrial end markets and desalination. So, you clearly have the platform for purification. My question for you, do you have the right technology or do you need to hold on to it to expand from purification to extraction such as extracting minerals out of brine like lithium?

We are – let me just answer it this way. We are – we would love to do an acquisition in the water area, and you would probably pick up some technologies in that area. There are technologies we would like to add in the portfolio. By the way, there is not a ton of water assets out there. But as you know, we did four acquisitions. I don’t know what – the end of ‘19 and moved the track at time here. They were all smaller, but now we are growing really nice. So, that is a potential path for us. If there is not something a little chunkier that we really, really like. But that’s a space we just feel the next couple of decades are great secular growth areas, and we have got great technology already we would like to add to, probably very similar in the Laird and Rogers coming into E&I, how that adds on to existing technologies we have. So, definitely an area of interest and could pick up some of those technologies in that extraction area.

Thank you.

Thanks, Steve.

Your next question comes from John Roberts with UBS.

Thank you. You had uneven quarterly comps in interconnects in 2021 due to the smartphone launch timings and automotive. Any insights into the quarterly comps as we go through 2022, where are the really uneven comparisons?

Yes. So, we will go back to a more seasonal pattern in 2022, so that does create a headwind in Q1 because in Q1 of 2021, we were un-seasonally high. That will resolve as the year goes on and create a tailwind in the back half. But overall, the seasonality will be more normal with Q3 being the highest as we supply materials into the smartphone space in advance of the Christmas sales.

Then on Slide 5, can you help us understand the headwinds that stay with DuPont or would continue in DuPont versus M&M.? So, how much of the logistics $50 million is continuing DuPont versus M&M? And in the part of M&M that stays with DuPont, is it performing in line with the rest of M&M, or is it outperforming overall?

Yes. So, on the logistics front, of the $50 million, about $40 million stays in DuPont with the biggest piece of that being in W&P. So, only about 10 of the 50 was within M&M. And as far as the business is staying with DuPont, it’s primarily adhesives and multi-based heritage Dow businesses. Fair margin profile is lower than the M&M segment today. We saw some significant headwinds on the price cost in 2021. We will look for that to improve heading into 2022, but their margin profile was slightly below where M&M is.

Thank you.

Your next question comes from Vincent Andrews with Morgan Stanley.

Hi. Thank you. Good morning. Just a couple of cleanup questions here. I know you laid out sort of the shape of your raw material expectations for 2022. On logistics, as you called out, the crazy numbers that we are seeing in ocean freight, are you assuming that, that stays the same through the year, or are you allowing for that to correct a little bit in the back half?

So, it corrects in the back half, primarily in the fourth quarter as we lap that $50 million headwind that we saw in 4Q 2021. So, we will look for them to remain elevated Q1 through Q3 on a year-over-year basis and then Q4 moderate. The one difference coming out of Q1 is we do expect to get price coming out of Q1 into Q2 and beyond to offset that headwind in logistics.

Okay. And then just on the semis and maybe just going even into the tiers and the auto customers. There is chatter out there depending on who you are listening to that maybe there is some double ordering in semis or maybe the tiers have built up inventory waiting for the auto production to come back. But as you look across your businesses and your customer relationships and what you are seeing and hearing, what’s your point of view on any of that stuff?

Yes. We are not feeling any inventory build that would create a headwind as you head into 2020. I mean keep in mind, there is a little bit of a timing disconnect between the results within the M&M segment from a volume perspective and auto builds. And so in 2021, we significantly outpaced with volumes up 12% versus auto build up 2%. So, that could moderate a bit with respect to our performance versus auto builds in 2022. But overall, I don’t feel like any inventory is building in the channel. And on the semi front, I think it would be hard to be building inventory in semi just given the market is constrained. So, we don’t feel it there either.

Okay. Thank you very much.

Ladies and gentlemen, we have reached the allotted time for questions today. I will now turn the conference back over to Pat Fitzgerald for closing comments.

Thank you, everyone, for joining our call. For your reference, a copy of our transcript will be posted to the DuPont website. Please join us on March 3rd for our next teach-in, which will include the Industrial Solutions line of business within our E&I segment. I hope you can join us. Thank you again. This concludes our call.

Ladies and gentlemen, this does conclude today’s conference call. Thank you for your participation. You may now disconnect your lines.