Lori Koch: Yeah, Frank, we had a little north of $200 million of absorption headwinds in 2023. Most of that in E&I. It did kick in a little bit towards the tail end of the year in 2023 for W&P, and that will continue in Q1 as well. So, we do see absorption headwinds in Q1. Right now, given that our full year midpoint guide of $12.1 billion is about flat with this year. On a year-over-year basis, we don’t really see material absorption tailwinds because volumes aren’t materially improving. There will be improvement first half, second half, because the volume story is different first half, second half. But in the guide that we have provided, we didn’t take in material benefits. Obviously, if that plays out, [indiscernible] that could be a change, a positive change, but initially, that’s where we sit.
Frank Mitsch: Okay. Got you. So, perhaps there’s some conservatism built in there, which I kind of got the sense when you’re talking about price cost for ’24 being neutral, I would assume that you saw some benefits from price cost in the fourth quarter. Could you size that for us?
Lori Koch: Yeah. We did see benefit in the fourth quarter in the $50 million to $75 million range. We do see some further tailwinds year-over-year in Q1, just really from that carryover benefit of the raws that we were buying that were stuck in inventory and are now coming out. But right now, our view is that we would still see those benefits about $100 million on a full year basis in ’24, but we expect about a 1% price get back with a lot of it being in the shelter business as we had kind of been flagging all along. That’s where we got the most price to begin with in the 2022, 2023 timeframe.
Frank Mitsch: Okay. Great. Thank you.
Ed Breen: Thanks, Frank.
Operator: Your next question comes from Arun Viswanathan with RBC Capital Markets. Please go ahead.
Arun Viswanathan: Great. Thanks for taking my question. Obviously, a lot of the questions have been answered. But just wanted to reconfirm, so I know that you made the statement that your volumes could snap back quickly. But is that — are you a little at all concerned with that happening now with maybe China growing at a slightly lower structural growth rate going forward? Maybe you can just comment on what you’re hearing out of China.
Lori Koch: Yeah. I mean even if China potentially is at a lower structural growth rate year-over-year, it’s coming off a pretty [indiscernible]. So, full year volumes in China were down in the mid-teens. And so, it’s not a high hurdle to jump off of as you head into 2024 to deliver growth. We still have a lot of confidence longer term in those markets that are highly rooted in China, especially on the electronics side, and on the water side, we expect improvement.
Ed Breen: Yeah. Arun, just turning to the electronics side, I don’t think we’re being overly aggressive. We’ve talked to our large customers when you look at the fab utilizations, we’re basically going from the low 70%s we said to the low 80%s. In really good times, they run in the 90%s. So, we probably still have more upside that would kick in, in that part of the business even going into 2025. It’s not all — we’re not assuming it all snaps back in 2024 to where it had been running.
Arun Viswanathan: Right. And then, given that we have experienced a fair amount of volatility here in cyclicality, one of the transformation kind of strategies was to reduce that peak to trough cyclicality. Do you feel still the same way about the current portfolio as far as lowering that cyclicality post transformation…
Ed Breen: I totally do…
Arun Viswanathan: …or other businesses that would qualify for disposition at this point?
Ed Breen: No. I totally feel, in normal times, it will be more consistent portfolio. An unusual time here with the destock and the inventory build from COVID and all short cycle, but now these are good secular businesses. We’ve got good market position. So, we feel good about where we’re at. Just got to get through this period and start lifting.
Arun Viswanathan: Got it. Thanks.
Operator: Your next question comes from Steve Byrne with Bank of America. Please go ahead.
Steve Byrne: Yeah, thank you. Your businesses within W&P heavily relying on distributors. I’m curious how much visibility do you have, not just on your own products in inventory at these distributors, but competitor products. And the reason I ask is I’m just wondering whether or not you’re seeing the potential for a shift to competitor products perhaps in water in China. Anything that you’re seeing there that is a concern on the competitive front?
Ed Breen: No, Steve. And by the way, we’re tracking — because of [indiscernible], we’re tracking way closer with our distributors. The good news is our distributors in China, there’s a handful of really big ones. So, if we can get our arms around that — we’ve asked the competitive issue, and we’re very close to them. I don’t see any issues there at all.
Steve Byrne: Okay. And how would you look at your businesses and highlight any opportunities for a new technology or a new application of your products that could really drive growth? Anything that you would highlight? An example would be like water moving into lithium extraction. Do you see any meaningful…
Ed Breen: Yeah, I would give you two and you just said the one. The lithium opportunity could be substantial for us because that needs a ton of filtration as you guys know. And the other, I would just say big trend out there that we’ve already talked to, but has a real good opportunity for us because it’s in our sweet spot is the whole AI thing. I would say they would be the two big ones.
Steve Byrne: Thank you.
Ed Breen: All right. Thanks, Steve.
Operator: Our final question comes from Mike Sison with Wells Fargo. Please go ahead.
Mike Sison: Hey, good morning. Ed, when you think about the earnings power of DuPont, when you look at the second half of ’24, the run rate EBITDA is going to be much higher than the first half. So, when we think about growing into ’25 and beyond, so we take that second half run rate and then — where do you think the earnings power is longer term, ’26, ’27 in terms of EBITDA?
Lori Koch: Yeah. I mean we, obviously, exited a higher margin than where we started the year. So, our current expectations is we would exit butting up against 26% EBITDA margin in the fourth quarter. We’ve always said that we think the EBITDA margin profile for the total company should be in that 27%, 28% range, and we don’t have a change to that with E&I being in the low 30%s and W&P in the kind of mid-20%s. So, we exit the year, as I had mentioned, butting up against 26% kind of in the low $800 million range. If you look back to our peak earnings in late 2022, they were more in that $850 million range, and they didn’t have Spectrum in them. There’s still a clearly opportunity for us to see to continue to expand beyond that run rate that we’ll expect to see at the end of this year.
Ed Breen: And maybe just to add one for the longer term, and again, stabilized times, half this portfolio should outgrow GDP and the other half should grow with GDP, just to give you a feel, and that would be the magnitude. One of the things, as I mentioned a minute ago, still has to come back even more in 2025 is the semi industry and the utilization rates still decline from where we would exit ’24.
Mike Sison: Got it. Thank you.
Ed Breen: Yeah, thank you.
Operator: This concludes our Q&A session. I will now turn the call back to Chris Mecray for any closing remarks.
Chris Mecray: Well, thank you all for joining the call. For your reference, a copy of the transcript will be posted on our website as usual. This concludes our call. Thank you.
Operator: This concludes today’s conference. You may now disconnect.
