DuPont de Nemours, Inc. (DD) Earnings Call Transcript & Summary

Great. Moving right along here with DuPont. We're very happy to have -- Jeff and I are very happy to have CEO, Ed Breen; and CFO, Lori Koch. [Operator Instructions] But before we go to the fireside chat and Q&A, I think Ed and Lori are going to walk through a bit of a presentation. So with that, guys, thanks for joining us. And take it away.

Great. Thanks, Steve and Jeff. Appreciate being here. We put out on our Investor Relations website a few charts. And we also put an 8-K out with the charts on it, if anyone wants to take a look at those. But let me just summarize a couple of the few of the key points that are on there. Number one, we're reconfirming guidance for the first quarter and for the full year on net sales, operating EBITDA and adjusted EPS. So feeling very good about that. Secondly, I would like to just highlight for a moment the Laird acquisition that we announced a week ago for $2.3 billion. Number one, strategically, we feel very good about the fit of this business with our E&I segment. This business really brings 2 key technologies for us. They have a lot of solutions around managing heat and product -- protect devices from electromagnetic interference. And these are 2 very key items that need to be addressed over time with the miniaturization and more computing power that's occurring in the industry that, we think, is a great secular a growth area for us for many, many years to come. And it really touches on a lot of capabilities across the board here, whether it's 5G, smart autonomous vehicles, the Internet of Things, AI and high-performance computing, think of things like gaming consoles and things like that. So really a nice fit. And really, it will give us a solution sale to our OEM and customers in the marketplace, really a complete package. So we're really excited about that. We're highly confident in the synergies we can get from this field. We've announced cost synergies of $60 million. It's going to cost us $40 million to actually get those synergies, but we will have -- achieve a high single-digit ROIC on this by year 5. So very confident in the financials of it. And we basically paid 11x for the business with the cost synergies accounted in there. So again, we feel very good financially and I think a good investment for us, and therefore, for our shareholders. And then let me just close with our capital allocation. As you all know, we had about $5 billion of excess cash going into this year and through this year. A lot of that came from the proceeds we got from the N&B and IFF transaction. And so we will delever the balance sheet here. We got one more payment to make in May with an outstanding bond. And we will have our ratings -- or metrics right where we wanted, 2.75, which is a very strong BBB rating. So balance sheet will be in great shape. We announced last week, in addition to our already outstanding share repurchase, which is $1 billion, and then we just announced $1.5 billion on top of that, that will run for about the next year and a few months. So about $2.5 billion of share repurchase firepower here in the near term. And then, of course, with the $2.3 billion we paid for the Laird acquisition. You can see that about takes care of a lot of the cash very quickly that's excess sitting on our balance sheet. We are looking at -- as I've highlighted on the last earnings call, we're looking at one other tuck-in acquisition. Don't know if it will happen or not. But it's in the $200 million to $300 million range. So that could potentially happen. If that is going to happen, it would be over the next quarter that we would know that and announce that. Again, as we also announced on the last quarterly earnings. We're maintaining our current dividend of $1.20 per share, and we plan on talking to the Board in raising that consistently year in and year out. And we also, on our kind of allocation of capital, are keeping our CapEx at around 5%. We would like to work that down in a couple of years in the range of 4% to 5%, but we have a couple of years here of a couple of big expansion products capped on in our electronics business and our new Line 8 on Tyvek. So that will be in that kind of low-5 range for a couple of years, and then we'll work that down more as we move forward. And R&D will continue to run at 4%. Remember, that's very varied by business, the highest spend, obviously, in the E&I business, the lower spend in the M&M business. Just so I think feel very good about how we're balancing our capital allocation decisions here as we go through 2021. Steve, with that, I think I'll turn it back over to you, and we can open it for Q&A.

Great. Thanks, Ed. Appreciate that. Can you just maybe -- I know you touched on kind of reaffirming the guide, maybe what you're seeing in a couple of the key end markets that I know have been high-level drivers for you guys? Autos, semis, maybe somewhat related these days, perhaps, autos production. Maybe a little bit weaker on supply constraints around semis. What are you seeing out there on kind of the more short-cycle aspects of your business?

Yes. I'll give a few and maybe Lori wants to jump in also. The semi business, obviously, is running very hot. As you know, it's a high-margin business for us also. So that's a nice sign. But clearly, there's supply disruptions out there, force majeures out there. But having said that, our E&I business is having a very nice quarter. I think you see the numbers out there. Auto production might be down about 1 million units during this period of time here. But it's not a business that's going to be lost. It's just some shifting of business because of the supply issues that are out there in the marketplace. And clearly, there are shipping logistics issues, especially out on the West Coast. So there's a little bit of disruption with that. But having said that, business is running very hot, and things might just shift out a little bit. I would think by the time we get through the second quarter, a lot of these issues will be resolved. So it's not a market share issue for anybody. It's just maybe delaying some -- but the actual auto business, finished goods inventory is low. Polymer inventory is low in the chain. So it's not like there's any buildup there. I mean the demand is there. And it can't totally be supplied in the time frame people want it. But I would just give you maybe another area. The residential business is running very hot, the do-it-yourself stuff on the resi side, really hot. The weaker areas still are commercial construction, oil and gas and aerospace. I would kind of put those in that -- by the way, they are recovering, coming up, but they're not back to kind of 2019 levels. And probably those 3 markets, oil and gas, commercial construction and aerospace are about 12% of our revenue, somewhere in that ZIP Code.

And then how do you see kind of the PP&E-related business moving along here in the next several quarters?

Yes. Our forecast is that the PPE stuff for the frontline responders will start to decline, second, third and fourth quarter. But remember, we're sold out on Tyvek. So what we did last year to help with the pandemic is we shifted more of the production to the protective garments. And what we will now do -- we've been shorting the housing market. We were shorting the medical packaging market. By the way, both are nice margin businesses. And so we'll -- if that occurs, where it starts to slow down, we'll start shifting over to those end markets. And the demand is there for us to do that. So we expect to run Tyvek full out all year. And it's one of the reasons where -- our biggest CapEx program actually is Tyvek Line 8 over in Luxembourg, and that will be online in a couple of years. We've been getting better throughput, as you noticed last year, with Tyvek. So our uptimes or efficiency in our facilities. We've really been putting a lot of work into that, which we're doing across the whole manufacturing platform. And we saw some nice volume increases last year on our production lines, and we're running full capacity, but we got more out of it.

So I guess, is that on net kind of a flat-to-up scenario for that full product line or modestly down? Or what are we -- how do you think about that whole complex there for the year?

Yes. I think you can call it low single digits. And so it obviously runs sold out. There are some multiyear tars that will create some noise. But remember that we also brought Line 1 back online. So that's coming up as we speak. That will add incremental capacity to allow us to drive low single-digit-type volume growth within Tyvek.

Got it. Got it. What's going on in China these days? They obviously, first in, first out, had some nice growth last year. What are you seeing over in China, Ed?

China is running very hot, and it's across all of our divisions. All 3 are nicely double-digit growth rates. So -- and again, it doesn't look like there's a significant buildup yet in the channel. But every single business for January and February was running really good.

And then just on -- one last one for you before I pass it over to Jeff on pricing. You guys definitely had some headwinds there last year. What -- inflation's coming, how do we kind of gauge price this year? Any changes to your expectations there?

Yes. I would say a couple of areas. The pricing is more important in the M&M business. And sequentially, it's improving from the end of the year through the first quarter, as we said, by about 2 percentage points. So we'll be down about 2% still because you're not lapping COVID there. And then pricing is very constructive right now in that business. So we feel like any raw material increases, which, by the way, will be somewhat significant this year, we'll be able to cover that with price. And then you'll see more of the price as we go into the second quarter. Obviously, you'll see the ramp occur as we announced some price increases. We expect some price -- ability to get price in what was S&C or W&P now business. So that would be maybe 1% this year, somewhere in that ZIP Code. And that will ramp up more second, third and fourth quarter in that business. And then the E&I business, Steve, you generally don't get price in that business. It's a volume game. So we've always seen to run about 0% to minus 1% on price, but you're introducing a lot of products quicker cycle. And you get the pricing on the new product when you get some of the feed. So that's kind of how we see the year playing.

So I guess for total company, what do you expect for price, like 1 point or 2?

Yes. Somewhere right in there.

That's fair.

Okay. Jeff, you got a couple there?

Ed, I think you signed up for another 3-year stint in managing DuPont. What do you want to accomplish over those 3 years? Like when you come to the end, what is it that you want to have done?

Well, I don't know that 3 years will be the end. So let me just start out by saying that my -- but I -- yes, I did sign up for 3 more years with a new contract. Look, a whole bunch of things. I like where we have the portfolio now. It's been a 5-year journey. We've created, I think, 4 incredible companies with the new Dow, with Corteva, DuPont and now N&B merged in IFF, I think we've created a world leader there. So it was a lot of transformation over that 5-year window. Now I really want to -- I don't know if I use the word settle in because that's not my style, but I like where we have DuPont, and I really want to run it well, consistent results, generate good conversion of our cash to be able to reinvest in the business. And I think we're going to have a nice top line growth company, and we have a lot of opportunities on our gross margin line in the company for improvement. And Lori and I are spending a lot of time there with our management team for improvements there. So if I look out 3 years, I want to be known as one of the premier multi-industrial companies out there, and I want to be valued for that.

Can you restate your gross margin aspirations? What is it that -- where are you now, now that you've separated off IFF? And where do you hope to be?

Yes. So our gross margins, if you just look back over the last 3, 4 years, were kind of in the mid-30s, 35%. We said we'll make 100 basis point improvement this year on it. There's a few areas for us, but the biggest single area we're focused on now is really on the factory floor. We feel like we have a lot of opportunity for improvement in our supply chain, our forecasting, our uptimes, our reliability metrics. And it's all being driven by data analytic tools, Jeff, that are now available out there. And by the way, these tools are not like ERP systems. They are $200,000, $300,000 digital tools that are doing a lot of data mining and really making it better than the human brain can forecast things. And so we've had some real success with that this past year. So we're implementing a digital upgrade programs throughout the company. We've got a phased by facility where we want to do things. And so that's our single biggest opportunity because, Jeff, as you know, in this business, a couple of points of uptime on some of these heavy assets is a big deal. So like think of the Tyvek line, the Kevlar line, the Nomex lines. It's a big, big deal for us. And a great example of that was the improvements we made in Tyvek last year and got the extra volumes out, and it just drops to the bottom line. So that's our single biggest area. And then we've really oriented our R&D towards these higher secular growth areas, and I think that's going to pay off very well for us over the next 3 to 5 years. They happen to be the higher-growth areas like the Laird acquisition and where we're spending R&D, for instance, in the E&I business and those areas I mentioned a few minutes ago. And they happen to be businesses there for that are going to command higher gross margins, and therefore, higher EBITDA margin. So we think we've got a 300 to 500 basis point opportunity in the businesses over multiple years. And so a big focus there. And obviously, pricing plays into gross margin expansion. And as we launch these new products in these growth areas, we'll make sure we get the right price for them. So it's a multipronged approach, but the biggest part of it really is factory efficiency piece that we're working on.

That's a lot of productivity improvement. You're a big company. So if you can get 300 to 500 basis points of gross margin, it's like $500 million, $600 million in EBITDA. Are those realistic -- are those stretched expectations or...

Maybe they're worth...

And I guess, Ed, does that all drop through? I mean is that kind of a gross? Should we just add that to our numbers or you keep that up.

No. It's a gross. It's a gross. We'll reinvest some of it in the business, but we'll get a decent amount drop to the bottom line. So yes -- no, that's -- we've kind of laid out this multiyear program, and I'm highly confident we'll make the progress this year. You'll see it this year, some of it.

Ed, many DuPont shareholders are holders of IFF. And can you talk about the role that you're playing there? I know that IFF has invited Scott Ferguson to be on the Board at Sachem Head -- from Sachem Head. Do you know him? How do you see that company changing?

Yes. So I don't want to go into too many details, but I'd certainly make a few comments on it. Yes, I do know Scott. He's a great guy, and he gets it. And look, strategically, this is a phenomenal company we're putting together. And I haven't heard from anybody that does not agree with that comment. The breadth of what we'll have to offer for end customers here is pretty incredible. And Jeff, it's very interesting, all the deals I've done in my career, it's the only time I really remember a bunch of customers call and say, "I can't wait to talk to you about the solutions that you can provide us, with what you're putting together." Just -- you don't hear that often. In this case, it really did happen. And look, the key right now is to come out of the shoot and operationally run this company very well. There's cost synergies to get. There's revenue synergies to get. And we got to come out running and running hard on it. So I will -- I'm on the Board, and I'll become the lead director, I guess, right around May, whenever the shareholder meeting is. And I purposely wanted to be on the Board to make things -- sure things go well because it is a lot of our shareholders that are in the IFF stock, and we want to make sure it goes well. So we had the right to appoint 6 Board members. And then the legacy members of the IFF Board that were on it are 7 right now. And then a year later, it will go to 6:6. So we wanted representation to make sure we really come out good.

Ed, can you -- also, I must tell you that when I speak to the customers of IFF and DuPont, they really do want the companies to come together and to execute in that DuPont was so active in early R&D and product development with consumer products companies and the companies want IFF to take that R&D and come up with a product and bring it to market more quickly. So I have the same impression that you did. Ed, can you can you...

Well, Jeff, I would also comment, one of the advantages of that company is the scale of the R&D. And we're not going to slash and burn R&D. That's not the game here. We've got real scale. And because of the breadth of the organization, it's not just the big consumer companies that we can service really well. They're very interested in us solving solutions for but the combined package. But remember, we have the feet on the street, the capability and the application engineering in that business to really handle the medium-sized customer and the small local customers, which is becoming a bigger piece of that marketplace. And there's not a lot of companies that have the scale we're going to have to address that full customer set.

Ed, are you making any progress on PFAS litigation? And how difficult a problem is that to make any progress on?

Yes. Look, I feel good about where we've gotten to so far. I've always said it's kind of -- I look at it as a 3-pronged approach. One was to resolve the rest of the MDL in Ohio. We did that across DuPont, $27 million. I think the biggest thing, though, on that same announcement was we finally got a deal done. I think we were working on it for about a year, me personally, by the way. And we have a deal now worked out between Corteva, Chemours and us. That's really key to now how we resolve the rest of the issues. Because there's a blueprint, everybody knows their responsibility. And more importantly, Jeff, the 3 companies are holding hands and working together on these issues where we were -- I would just say we were not holding hands before. So that makes a huge difference now because we're all aligned. And so the third piece of it really in my mind is the confusion that people have around firefighting foam. As you know, we never made it. I think it's the bigger of the issues just from a perception standpoint. The reality of us getting out of it is very different than some of the perception of what you read in articles and some of the analysts say the exposure could be. So now that we can all work together, I think there's a path to resolve the firefighting foam, which is the bulk of all the cases left, whether it's states, it's individual claims. The good news is that's mostly consolidated into an MDL down in South Carolina. And so you can actually wrap your arms around either letting it play out through the court system, which will prove out DuPont has extremely low exposure here when the facts keep coming out, or do we take the path of potentially the 3 companies working together to come up with a settlement agreement. Remember, we're not the big company here that the bigger pay day is going to come from. It's something we can really show here is our exposure, if any. And can we get them a settlement that way, like, by the way, we did up in Ohio. And so I'm confident we can make a lot of progress in 2021. I don't want to put a date on it, but it's no longer 3 years out resolve it. We're getting in that window where that's now possible. And so I'll personally be spending time on that. And remember, if there is a settlement, it's split between 3 companies. So -- and I think the blueprint -- by the way, I would look at the agreement, if you read it close, between the 3 companies, where our total exposure in that is $1.35 billion. But I never believe the number would be anywhere near that high. So one of the compromises was we'll put x amount of cash into like a trust fund, and the amount of cash we're putting in is way, way, way less than that number because I don't want dead money sitting around. That's not going to be used. So that's how we structured it. And by the way, we also want to make sure the other 2 companies are standing up to their obligation. If there's cash sitting aside solely for this purpose, that's a good thing. But we're not going to overfund it.

Ed, when you think about kind of like the potential for like a more kind of like global solution to this problem, industry-wide, I mean, are you saying that you think that the federal government is going to get involved here in the next kind of 12 to 18 months and put a stamp on this? Or are you just talking about your kind of pocket with the 3 companies that you're kind of dealing with?

Yes. So look, I think the one thing, Steve, that can happen with the federal government, especially now with the Biden administration is and more focused on the EPA and issues, they could designate this as a hazardous material. We've been supportive of that because we would like a national standard set instead of every state doing something different and then you're dealing with that. So we actually think the path they could potentially head down, that doesn't bother us at all. But my gut is if we want to resolve 90% of this, it's our 3 companies coming up with a settlement in a consolidated MDL.

Right. That makes a lot of sense. Right. Jeff, did you have anything else?

One last question.

Go ahead.

When I think about the electric vehicle opportunity for DuPont, it seems that the opportunity is not only in the electronics business, but in transportation and industrial business and in safety and construction. So is the meaning of it that net-net, it's negative for T&I but positive overall for the company? And when you think about which segment benefits most from EV, which one is it? Is it electronics?

Yes. I can walk through the conversion that we've mentioned in the past, and it's going to change with the acquisition of Laird. And so with the acquisition of Laird, we get access to the ADAS side of the autonomous vehicle component of the conversion to hybrid and electricals. So we'll have to reset our content for vehicle metrics once we have a full understanding of what that looks like. But for the heritage DuPont portfolio, it is going from about $170 a car today for an ICE engine up to north of $300 for a fully electric vehicle. And so there's puts and takes within the M&M portfolio, as you mentioned. So there would be less polymer use when you lose the engine component. But there's also additional volume on the adhesive side. And so we have an application that we see growing very nicely alongside the electric vehicle conversion for an adhesive that goes in as a gap filler within the battery. But I would say the largest opportunity for us, as you mentioned, does sit within electronics, just as you have the entire vehicle from infotainment to the semiconductor side to electrify everything being the beneficiary. And real quick on the water and protection side, the application there is that you can use Nomex as a battery separator. And so there is, as you mentioned, the application across all 3 that contribute to the -- from the $170 to the $320. I would say the largest component and benefactor is E&I that's now even better with the Laird acquisition.

Steve, over to you.

Yes. Just to wrap up here, had a question on the other side of the price/cost dynamics. We have a little bit of inflation coming through. Maybe talk about any updated thoughts on kind of the raw material side for you guys. I know it's kind of less of an issue than for other chemical companies, but what's the updated outlook there, raw material prices?

Yes. So we had originally mentioned it would be about $100 million of a headwind, with the predominance of that being within the M&M segment. It's larger than that now. It's kind of hard to size with everything going on, but the key takeaway is we're confident that whatever the increase in raw is we'll get it back in price. And so the environment is very conducive to raising price in both water and protection and M&M, and we're taking advantage. So if there is -- obviously, you'll have a headwind to the actual gross margin percentage but not an EBITDA impact.

Within the water and protection business, what are some of the more exciting kind of meaningful growth businesses there? You mentioned the construction business, obviously. You guys mentioned water quite a bit, but we don't hear about it a lot. And I'm not quite sure it's that sizable yet, but like what are some of the more attractive growth drivers there longer term?

Yes. So for us, today, water is about a $1.3 billion business in the portfolio. We significantly added on to it at the end of 2019 with 4 acquisitions. And then, as I mentioned, we're scouting another acquisition right now, which would expand our footprint in emerging regions. And so we look for it to grow kind of in the mid- to high single digits. But the areas of opportunity with the highest growth are around commercial and residential use, wastewater treatment and desalinization. So we'll look to deploy our technology portfolio, which is the broadest in the industry. So we've got applications in reverse osmosis exchange and now water filtration with the acquisitions. So we look to deploy that technology play across the landscape. But the largest is in residential and wastewater and desalination. And then regionally, the largest opportunity, of course, is in Asia Pacific as they look to have more access to clean water.

And how fast is that business growing now? Or did that perform reasonably well in the downturn? And how do we look at it kind of coming out?

It did. Last year, it was up low single digits, so we started very strong and then we had some challenges with logistics towards the end of the year. This year, we're off to a good start and we'll look to target, as I had mentioned, mid- to high single-digit growth.

Got it. Okay. Jeff, anything else for you?

Are the comparisons in electronics difficult in 2021 given how much cell phone demand there was in 2020 and if people were at home and the world went more virtual? Or is the comparison not a specially difficult given the opportunities you have?

So I think they get more challenging potentially in the second half just given the second half of 2020 was stronger than the first half. As Ed had mentioned, we're off to a very strong start in the guidance that we provided for the full year. We were a little bit more conservative on the back half in electronics just given how hot we ran at the end of this year and the expectation for growth in the first half. But importantly, if we're wrong on that, we'll participate in the upside. And so we have a great portfolio. We have no share concerns. We'll continue to grow in excess of the market. So should the market continue to run very hot, then we'll continue to participate and very high growth there. But last year, I think our heritage E&I portfolio before we made the transition was up high single digits. And so a very nice grower for us.

Yes. And Jeff, one of the areas, remember, it was interesting to watch. We have the 5G applications with the Kapton technology, and that's just beginning. We just started getting the orders. I think it was the second quarter last year we ramped up shipments on. And then it did not slow down in the fourth quarter, which would normally be the decline because the phones were made for the holiday season. So as more phones are just replaced with 5G phones, I think there's potentially a little bit of a different cycle going on in that piece of the business. Look, the interesting thing, none of us know is, yes, everyone's been working at home, but it sounds like everyone's going hybrid in the future. And what does that do to computing and advanced nodes and data centers? And it's hard to let it play out. But as Lori said, if it's hotter market than we think, we'll participate. It's not a market share issue. But maybe we planned a little conservative. I don't know.

I've got one from the line here. Is it right that nylon 66 ends up within auto, mostly in hot and harsh environments in the engine, such that losing this in EV overwhelms the benefits of the electronics? You guys addressed that to a degree, but maybe a bit more specifics there on that front in particular?

Yes. So a lot of the nylon applications are under the hood, but there's applications that potentially offset that headwind, as I had mentioned, in the adhesive application in the battery, but also the adhesives more broadly go into the body of the car. So as you have to bind structures together with more lightweight applications, the adhesive play that we have, it already has a market today that will continue to grow. So there are puts and takes that put us in a nice position to enable that $170 to overall north of $300 that I had mentioned.

Right. Yes. That makes sense. Sorry, Jeff. Go ahead.

How do you approach the market and electronics? That is, do you have hundred small businesses that work together to sell to the major electronics customers and there's some kind of bundling element? Or are all of the businesses really discrete, and they really all sell on their own? And so you have, I don't know, an archipelago of businesses. Is it one? Or is it many or somewhere in between?

That was a big word, Jeff. Go ahead, Lori and I'll...

Yes. I mean I think within electronics, I can -- we sell -- we have great relations with the tier players and the OEMs where we can influence both sides of it. So we have relationships down on the OEM where that may not be where we directly sell into. We may sell into the tier providers that they influence what they spec in with the tier providers. And so we usually -- we don't have salespeople in general that cross outside the segment. And so we have dedicated people within electronics and several electronics players, obviously, within water and protection to sell those players in M&M. So there's not a lot of cross-segment selling. But we do, as appropriate, bring a broad portfolio of products to the OEMs to enable specific technologies that they need to continue their technology road maps. And so back to the Laird acquisition, now within Interconnect Solutions, we'll be able to have even a broader set that we can bring to the consumer electronics space, the telecom space on the 5G infrastructure side. So today, our 5G exposure was really on the device side. With the Laird acquisition, we now get exposure on the infrastructure side. And so that's our intent is to continue to be a provider through application development with a broad technology portfolio.

Yes, Jeff, think of it -- maybe I'll summarize it also. Think of it as having -- and this is a strength to DuPont. I mean we think it's a real strength of Laird also. But on the E&I front, the company is very strong in application engineers that kind of live with the end customer, the OEM. By the way, the IFF company with N&B is the same way. It's a lot of application engineers that will live with a customer to resolve -- come up with solutions to their technical issues. And so that's how you can bring the package together to create a kind of more of a packaged solution sale versus each individual piece being worked on.

Yes. And on the semi side, the same thing, there's very few semi players, right? So we bring a broad array of products to be able to enable the production of the chip to the handful of semi producers today.

And when it comes to -- another kind of question around portfolio, are there more kind of big ones out there? I know you mentioned there's going to be a small bolt-on. You've got the $2.5 billion of buyback that's out there. This was a little bit earlier than I would have expected for a big deal like this. Are there a couple more like this out there over the next 18 months?

I don't think, Steve, over the next 18 months. In the next couple of year window, maybe a little longer, could there be another one? Yes, there is some interesting things potentially out there. This one just -- we've been eyeballing this one for a long time. We knew it strategically fit very well. By the way, there was a couple of other companies that would love to have this asset. And so we moved on it. We knew about it for quite a period of time. It's just such a beautiful fit with us. So I don't see anything in the next year to 18 months. In a little bit longer window, could there be? Yes. And could there be a couple of other bolt-ons besides one we're working on? Of course, there could be. But let me just summarize it by saying, we're not going deal crazy now. It's not like we're going to turn around and start buying companies left the right. That's not the game plan.

Right. And then, Lori, I know there's some buzz about -- today about tax -- U.S. corporate tax going back up to 28%. How would that kind of influence you guys, assuming just that part of the whole equation was kind of rolled back up to 28%?

Yes. There's a couple of headwinds in the Biden plan besides just the U.S. corporate rate going up to 28%. There's also the impact on the foreign earnings piece that we're working through. And so if the full Biden plan goes into effect, then it puts the U.S.-based companies at a disadvantage. It puts our tax rate higher than the OECD countries and everything else. So we're still working through it, but it would be a few hundred basis point increase in our tax rate if the full plan were implemented.

And then on a cash basis, you said -- you mentioned something about -- that, that would be a cash hit to the foreign earnings?

Yes. So you wouldn't be able to take the credit that you take today through some of the tax structures that we have for foreign earnings. And so our cash taxes are less than our book taxes. We haven't really sized in the past how much less they are, but they are less. So the bigger component that we're paying attention to is how those foreign earnings are taxed.

Got it. And then one last one, Ed, I know there was like a lot of debate around some of the parts, and you guys would throw out various multiples for your business over time. I think you believed in a bit of a sum of the parts. Are we now kind of -- look, we're operating steady state now. This is the portfolio that we're married to for the next couple of years. Or are there -- are you -- is there a chance to be more opportunistic with another move?

Yes. Look, it just depends on what comes along with you. I think everyone knows my history. If something's interesting, it creates a lot of shareholder value. Of course, we're going to look at it. We're not tied to anything. But I would just say, generally, we like where we're at. My guts is we're going to run it this way in the next couple of years, grow the business organically, a little bit inorganically and string together a lot of consistent quarters here. But you never know what comes along the -- you'll look at.

Great. I think that's all the time we have now. I really appreciate you guys spending 40 minutes with us. And best of luck over the course of this year, and have a great day. Thanks.

Great. Thanks. Thanks for having us.

Thanks, Jeff. Thank you.